<PAGE>
As filed with the Securities and Exchange Commission on October 3, 1997
Registration No. 333-
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
---------------------
FORM S-1
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
---------------------
I.C. ISAACS & COMPANY, INC.
(Exact name of registrant as specified in its charter)
<TABLE>
<S> <C> <C>
DELAWARE 2253 52-1377061
(State of Incorporation) (Primary Standard Industrial (I.R.S. Employer
Classification Code Number) Identification No.)
3840 BANK STREET
BALTIMORE, MARYLAND 21224-2522
(410) 342-8200
</TABLE>
(Address, including zip code, and telephone number,
including area code, of registrant's principal executive offices)
<TABLE>
<S> <C>
ROBERT J. ARNOT GERALD W. LEAR
CHAIRMAN OF THE BOARD AND CO-CHIEF EXECUTIVE OFFICER PRESIDENT AND CO-CHIEF EXECUTIVE OFFICER
I.C. ISAACS & COMPANY, INC. I.C. ISAACS & COMPANY, INC.
350 FIFTH AVENUE, SUITE 1029 3840 BANK STREET
NEW YORK, NEW YORK 10118 BALTIMORE, MARYLAND 21224-2522
(212) 563-2720 (410) 342-8200
</TABLE>
(Name, address, including zip code, and telephone number,
including area code, of agent for service)
------------------------------
Copies of all communications,
including all communications sent to the agent for service, should be sent to:
<TABLE>
<S> <C>
EARL S. WELLSCHLAGER, ESQUIRE JOEL J. HUGHEY, ESQUIRE
PIPER & MARBURY L.L.P. ALSTON & BIRD LLP
36 SOUTH CHARLES STREET 1201 W. PEACHTREE STREET
BALTIMORE, MARYLAND 21201 ATLANTA, GEORGIA 30309
(410) 539-2530 (404) 881-7000
</TABLE>
APPROXIMATE DATE OF COMMENCEMENT OF PROPOSED SALE TO THE PUBLIC: AS SOON AS
PRACTICABLE AFTER THE EFFECTIVE DATE OF THIS REGISTRATION STATEMENT.
IF ANY OF THE SECURITIES BEING REGISTERED ON THIS FORM ARE TO BE OFFERED ON
A DELAYED OR CONTINUOUS BASIS PURSUANT TO RULE 415 UNDER THE SECURITIES ACT OF
1933, CHECK THE FOLLOWING BOX: / /
IF THIS FORM IS FILED TO REGISTER ADDITIONAL SECURITIES FOR AN OFFERING
PURSUANT TO RULE 462(B) UNDER THE SECURITIES ACT, PLEASE CHECK THE FOLLOWING BOX
AND LIST THE SECURITIES ACT REGISTRATION STATEMENT NUMBER OF THE EARLIER
EFFECTIVE REGISTRATION STATEMENT FOR THE SAME OFFERING: / /
- ------------------------
IF THIS FORM IS A POST-EFFECTIVE AMENDMENT FILED PURSUANT TO RULE 462(C)
UNDER THE SECURITIES ACT, CHECK THE FOLLOWING BOX AND LIST THE SECURITIES ACT
REGISTRATION STATEMENT NUMBER OF THE EARLIER EFFECTIVE REGISTRATION STATEMENT
FOR THE SAME OFFERING: / /
IF DELIVERY OF THE PROSPECTUS IS EXPECTED TO BE MADE PURSUANT TO RULE 434,
PLEASE CHECK THE FOLLOWING BOX: / /
CALCULATION OF REGISTRATION FEE
<TABLE>
<CAPTION>
PROPOSED PROPOSED MAXIMUM
TITLE OF EACH CLASS OF AMOUNT TO BE MAXIMUM OFFERING AGGREGATE OFFERING AMOUNT OF
SECURITIES TO BE REGISTERED REGISTERED(1) PRICE PER UNIT(2) PRICE REGISTRATION FEE
<S> <C> <C> <C> <C>
COMMON STOCK, $.0001 PAR VALUE........... 4,370,000 $14.00 $61,180,000.00 $18,540.00
</TABLE>
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
<PAGE>
(1) INCLUDES 570,000 SHARES OF COMMON STOCK SUBJECT TO AN OPTION GRANTED TO THE
UNDERWRITERS BY THE COMPANY (AS HEREINAFTER DEFINED) TO COVER
OVER-ALLOTMENTS, IF ANY. SEE "UNDERWRITING."
(2) ESTIMATED SOLELY FOR THE PURPOSE OF CALCULATING THE REGISTRATION FEE IN
ACCORDANCE WITH RULE 457 UNDER THE SECURITIES ACT.
THE REGISTRANT HEREBY AMENDS THIS REGISTRATION STATEMENT ON SUCH DATE OR
DATES AS MAY BE NECESSARY TO DELAY ITS EFFECTIVE DATE UNTIL THE REGISTRANT SHALL
FILE A FURTHER AMENDMENT WHICH SPECIFICALLY STATES THAT THIS REGISTRATION
STATEMENT SHALL THEREAFTER BECOME EFFECTIVE IN ACCORDANCE WITH SECTION 8(A) OF
THE SECURITIES ACT OF 1933 OR UNTIL THE REGISTRATION STATEMENT SHALL BECOME
EFFECTIVE ON SUCH DATE AS THE COMMISSION, ACTING PURSUANT TO SAID SECTION 8(A),
MAY DETERMINE.
<PAGE>
SUBJECT TO COMPLETION, DATED OCTOBER 3, 1997
PROSPECTUS
INFORMATION CONTAINED HEREIN IS SUBJECT TO COMPLETION OR AMENDMENT. A
REGISTRATION STATEMENT RELATING TO THESE SECURITIES HAS BEEN FILED WITH THE
SECURITIES AND EXCHANGE COMMISSION. THESE SECURITIES MAY NOT BE SOLD NOR MAY
OFFERS TO BUY BE ACCEPTED PRIOR TO THE TIME THE REGISTRATION STATEMENT BECOMES
EFFECTIVE. THIS PROSPECTUS SHALL NOT CONSTITUTE AN OFFER TO SELL OR THE
SOLICITATION OF AN OFFER TO BUY, NOR SHALL THERE BE ANY SALE OF THESE SECURITIES
IN ANY STATE IN WHICH SUCH OFFER, SOLICITATION OR SALE WOULD BE UNLAWFUL PRIOR
TO REGISTRATION OR QUALIFICATION UNDER THE SECURITIES LAWS OF ANY SUCH STATE.
<PAGE>
3,800,000 SHARES
[LOGO] I.C. ISAACS & COMPANY, INC.
COMMON STOCK
All of the 3,800,000 shares of Common Stock offered hereby are being sold by
I.C. Isaacs & Company, Inc. (the "Company"). Prior to the Offering, there has
been no public market for the Common Stock of the Company. It is currently
anticipated that the initial public offering price will be between $12.00 and
$14.00 per share. See "Underwriting" for information relating to the
determination of the initial public offering price. Application has been made to
list the Common Stock on the Nasdaq National Market under the symbol "ISAC."
SEE "RISK FACTORS" BEGINNING ON PAGE 7 FOR A DISCUSSION OF CERTAIN
INFORMATION THAT SHOULD BE CONSIDERED BY PROSPECTIVE PURCHASERS OF THE COMMON
STOCK OFFERED HEREBY.
---------------------
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS THE
SECURITIES AND EXCHANGE COMMISSION OR ANY STATE SECURITIES
COMMISSION PASSED UPON THE ACCURACY OR ADEQUACY OF
THIS PROSPECTUS. ANY REPRESENTATION TO THE
CONTRARY IS A CRIMINAL OFFENSE.
<TABLE>
<CAPTION>
UNDERWRITING
PRICE TO DISCOUNTS AND PROCEEDS TO
PUBLIC COMMISSIONS(1) COMPANY(2)
<S> <C> <C> <C>
Per Share.......................................... $ $ $
Total(3)........................................... $ $ $
</TABLE>
(1) See "Underwriting" for a description of the indemnification arrangements
with the Underwriters and other matters.
(2) Before deducting offering expenses payable by the Company estimated to be
$ .
(3) The Company has granted the Underwriters a 30-day option to purchase up to
570,000 additional shares of Common Stock solely to cover over-allotments,
if any. If such option is exercised in full, the total Price to Public,
Underwriting Discounts and Commissions and Proceeds to Company will total
$ , $ and $ , respectively. See "Underwriting."
The shares of Common Stock are offered severally by the Underwriters named
herein, subject to prior sale, when, as and if received and accepted by them,
subject to their right to reject orders, in whole or in part, and to certain
other conditions. It is expected that delivery of the certificates representing
such shares will be made against payment therefor in immediately available funds
at the office of The Robinson-Humphrey Company, LLC on or about , 1997.
------------------------
The Robinson-Humphrey Company Legg Mason Wood Walker
Incorporated
The date of this Prospectus is , 1997
4
<PAGE>
[PHOTOS OF PRODUCTS AND MODELS]
NO DEALER, SALESPERSON OR ANY OTHER PERSON HAS BEEN AUTHORIZED IN CONNECTION
WITH ANY OFFERING MADE HEREBY TO GIVE ANY INFORMATION OR TO MAKE ANY
REPRESENTATION OTHER THAN AS CONTAINED IN THIS PROSPECTUS, AND, IF GIVEN OR
MADE, SUCH INFORMATION OR REPRESENTATION MUST NOT BE RELIED UPON AS HAVING BEEN
AUTHORIZED BY THE COMPANY OR BY THE UNDERWRITERS. THIS PROSPECTUS DOES NOT
CONSTITUTE AN OFFER TO SELL OR A SOLICITATION OF AN OFFER TO BUY ANY SECURITY
OTHER THAN THE SHARES OF COMMON STOCK OFFERED HEREBY, NOR DOES IT CONSTITUTE AN
OFFER TO BUY ANY SECURITY OTHER THAN THE SHARES OF COMMON STOCK OFFERED HEREBY
TO ANY PERSON IN ANY JURISDICTION IN WHICH IT IS UNLAWFUL TO MAKE ANY SUCH OFFER
OR SOLICITATION TO SUCH PERSON. NEITHER THE DELIVERY OF THIS PROSPECTUS NOR ANY
SALE MADE HEREUNDER SHALL UNDER ANY CIRCUMSTANCES IMPLY THAT THE INFORMATION
CONTAINED HEREIN IS CORRECT AS OF ANY DATE SUBSEQUENT TO THE DATE HEREOF.
------------------------
"Lord Isaacs-Registered Trademark-," "I. C. Isaacs-Registered Trademark-,"
"Pizzazz-Registered Trademark-" and "I.G. Design-Registered Trademark-" are
trademarks of the Company. In addition, subject to the closing of the Settlement
(as described herein), "Boss-Registered Trademark-" will also be a trademark of
the Company. All other trademarks or service marks, including Beverly Hills Polo
Club-Registered Trademark-, appearing in this Prospectus are the property of
their respective owners and are not the property of the Company.
------------------------
CERTAIN PERSONS PARTICIPATING IN THIS OFFERING MAY ENGAGE IN TRANSACTIONS
THAT STABILIZE, MAINTAIN OR OTHERWISE AFFECT THE PRICE OF THE COMMON STOCK,
INCLUDING OVER-ALLOTMENT, STABILIZING AND SHORT-COVERING TRANSACTIONS IN SUCH
SECURITIES, AND THE IMPOSITION OF A PENALTY BID, IN CONNECTION WITH THE
OFFERING. FOR A DESCRIPTION OF THESE ACTIVITIES, SEE "UNDERWRITING."
2
<PAGE>
PROSPECTUS SUMMARY
THE FOLLOWING SUMMARY IS QUALIFIED IN ITS ENTIRETY BY THE MORE DETAILED
INFORMATION AND FINANCIAL STATEMENTS (INCLUDING THE NOTES THERETO) APPEARING
ELSEWHERE IN THIS PROSPECTUS. UNLESS OTHERWISE NOTED, THE "COMPANY" REFERS TO
I.C. ISAACS & COMPANY, INC. (FORMERLY I.G. DESIGN, INC.) AND ITS PREDECESSORS,
SUBSIDIARIES AND AFFILIATED COMPANIES, INCLUDING I.C. ISAACS & COMPANY L.P. (SEE
"COMPANY ORGANIZATION"). UNLESS OTHERWISE NOTED, ALL COMMON STOCK SHARE AMOUNTS,
PER SHARE DATA AND OTHER INFORMATION SET FORTH IN THIS PROSPECTUS (I) HAVE BEEN
ADJUSTED TO REFLECT A 370.4847-FOR-1 STOCK SPLIT, WHICH WILL BE EFFECTED PRIOR
TO CONSUMMATION OF THE OFFERING, (II) GIVE EFFECT TO THE REORGANIZATION (AS
DEFINED IN "COMPANY ORGANIZATION") AND (III) ASSUME THAT THE UNDERWRITERS'
OVER-ALLOTMENT OPTION HAS NOT BEEN EXERCISED.
THE COMPANY
I.C. Isaacs & Company, Inc. is a rapidly growing designer, manufacturer and
marketer of branded sportswear. Founded in 1913, the Company offers full lines
of sportswear for young men, women and boys under the BOSS brand in the United
States and Puerto Rico and sportswear for men and women under the Beverly Hills
Polo Club brand in the United States, Puerto Rico and Europe. Through a focused
strategy of providing fashionable, branded merchandise at value prices, the
Company has emerged as a significant fashion source for youthful consumers who
purchase sportswear and outerwear through specialty and department stores. The
Company also offers women's sportswear under various other Company-owned brand
names as well as under third-party private labels. In the first six months of
1997, net sales and operating income totaled $77.7 million and $8.8 million,
respectively, as compared to $51.9 million and $3.7 million in the first six
months of 1996.
The Company manufactures and markets sportswear under the BOSS brand for
sale at specified price points in the United States and Puerto Rico and has
positioned the BOSS line to appeal to consumers who desire a fresh, urban,
fashion-forward look. Through creative and innovative marketing, the Company has
created powerful brand appeal for the BOSS line and has become an active
influence in young men's fashion. The BOSS collection has been expanded from an
initial line of denim products into a full array of sportswear consisting of
jeans, tee shirts, sweatshirts, shorts, knit and woven shirts and outerwear, all
of which are characterized by innovative design, creative graphics and bold uses
of color. The Company also markets a juniors' sportswear line under the BOSS
brand for young women, which includes a full selection of denim products and
active sportswear. Over the past three years, the Company's net sales of BOSS
sportswear increased at a compounded annual growth rate of 24.7%. In 1996, net
sales of BOSS sportswear accounted for 72.6% of the Company's net sales.
As exclusive licensee for Beverly Hills Polo Club sportswear in the United
States, Puerto Rico and Europe, the Company targets men and women who desire
updated traditional sportswear at competitive prices. To reach a broader
demographic customer base, the Beverly Hills Polo Club collection combines
contemporary design details and innovative fabrics with classic American
sportswear styling. The Beverly Hills Polo Club collection consists primarily of
cotton clothing, including jeans, pants, shorts, knit and woven shirts and
outerwear targeting the active, image-conscious consumer. Since the line's
introduction in the spring of 1994, the Company's net sales of Beverly Hills
Polo Club sportswear increased at a compounded annual growth rate of 92.7%. In
1996, net sales of Beverly Hills Polo Club sportswear accounted for 12.0% of the
Company's net sales.
In the late 1980's, management made a decision to change the Company's
marketing focus from a manufacturing-driven to a brand-driven strategy. As a
result, the Company believes it has developed distinct competitive strengths
that position it for continued success. The Company's key competitive strengths
include:
- EMPHASIS ON BRAND IDENTITY. The Company believes that brand identity, as
well as the image and lifestyle that a brand conveys, are important
factors that influence retail purchasing decisions. Both the BOSS and
Beverly Hills Polo Club lines have strong brand identities and enable the
Company
3
<PAGE>
to offer a broad continuum of designs and products well recognized by
fashion-conscious consumers.
- COMBINATION OF FASHION AND VALUE. Through its manufacturing, sourcing and
merchandising expertise, the Company achieves a distinct combination of
fashion and value. The Company provides its customers with fashionable,
brand name sportswear which typically sells at retail prices below those
of many well known designer brands.
- CREATIVE AND INNOVATIVE MARKETING. Through a coordinated merchandising,
advertising and marketing strategy, the Company has built strong name
recognition and brand image for its products. The Company targets youthful
consumers who are influenced by fashion, music and sports by utilizing a
variety of advertising media, including television, print, outdoor signage
and professional sports sponsorships.
- FLEXIBLE MANUFACTURING AND SOURCING. The Company believes that its ability
to source products from its United States facilities and third party
foreign and domestic manufacturers enhances the Company's production
flexibility and capacity while enabling it to control more efficiently the
delivery, quality and pricing of its products.
The Company's growth strategy includes continued capitalization on its
competitive strengths and the implementation of specific strategies for
continued expansion. The Company's principal growth strategies are as follows:
- BROADEN PRODUCT OFFERINGS. The Company believes that significant
additional expansion opportunities exist in certain product categories
under both the BOSS and Beverly Hills Polo Club brands. Expansion within
the BOSS product line is expected to be driven by tops and outerwear as
well as the development of the boys', youth and juniors' lines. In
addition, the Company recently added two new product categories under the
BOSS brand, polo shirts and swimwear, which are in the early stages of
development. Similarly, the Beverly Hills Polo Club brand includes a
number of product lines that are in the early stages of market
penetration, such as outerwear, and a number of potential product line
expansions, such as men's dress shirts. To further develop the Beverly
Hills Polo Club brand, product offerings within the women's line are being
expanded, and the Company is reorganizing and increasing its women's sales
force.
- ENHANCE MARKETING PROGRAMS. While the Company believes that its current
marketing strategy is one of its primary competitive strengths, the
Company intends to continue its efforts to increase sales by enhancing
consumer recognition of its brand names and images through expanded
marketing efforts. These efforts will include increased television, print,
outdoor and point-of-sale advertising, as well as an expanded
"Shop-in-Shop" program at the retail level.
- EXPAND CHANNELS OF DISTRIBUTION. As demand for its sportswear increases,
the Company believes that it can continue to expand and penetrate various
channels of distribution. In recent years, the Company has expanded its
distribution channels beyond specialty stores and specialty store chains
with its BOSS label to begin significant distribution to department store
customers. The Beverly Hills Polo Club brand has not penetrated the
department store channel to the same extent as the BOSS brand, and the
expanded distribution of Beverly Hills Polo Club products is a primary
growth focus of the Company.
- INCREASE EUROPEAN PRESENCE. The Company believes that it is well
positioned to capitalize on the acceptance of the Beverly Hills Polo Club
brand name by continuing to expand its European sportswear distribution.
The classic American sportswear look conveyed by the Beverly Hills Polo
Club line is popular with European youth, and the Company is expanding its
wholesale and retail channels of distribution in Europe to meet this
increasing demand. The Company currently has distributors in eight
countries in Europe and has three franchise stores in Spain.
4
<PAGE>
The Company's principal executive offices are located at 3840 Bank Street,
Baltimore, Maryland 21224-2522 (telephone number (410) 342-8200) and 350 Fifth
Avenue, Suite 1029, New York, New York 10118 (telephone number (212) 563-2720).
THE OFFERING
<TABLE>
<S> <C>
Common Stock offered by the Company hereby......... 3,800,000 shares
Common Stock to be outstanding after the Offering 9,800,000 shares
(1)..............................................
Use of Proceeds.................................... The estimated net proceeds of the
Offering of approximately $45.4 million
will be used (i) to repay approximately
$20.0 million of the Company's
outstanding debt under the Company's
credit facilities, (ii) to pay the
Initial S Corporation Distribution (as
hereinafter defined) of approximately
$15.4 million and the Subsequent S
Corporation Distribution (as
hereinafter defined) estimated to be
between $4.0 million and $5.0 million
and (iii) for general corporate and
working capital purposes. See "Use of
Proceeds."
Nasdaq National Market Symbol...................... Application has been made for quotation
of the Common Stock on the Nasdaq
National Market under the symbol
"ISAC."
</TABLE>
- ------------------------
(1) Excludes 500,000 shares of Common Stock reserved for issuance under the
Company's 1997 Omnibus Stock Plan. See "Management--1997 Omnibus Stock
Plan."
RISK FACTORS
See "Risk Factors" beginning on page 7 for a discussion of certain
information that should be considered by prospective purchasers of the Common
Stock offered hereby.
5
<PAGE>
SUMMARY HISTORICAL AND PRO FORMA CONSOLIDATED FINANCIAL DATA
The summary historical and pro forma consolidated financial data set forth
below should be read in conjunction with the more detailed consolidated
financial statements, including the notes thereto, and "Management's Discussion
and Analysis of Financial Condition and Results of Operations" included
elsewhere herein.
<TABLE>
<CAPTION>
SIX MONTHS ENDED
YEAR ENDED DECEMBER 31, JUNE 30,
------------------------------------------------------ --------------------
<S> <C> <C> <C> <C> <C> <C> <C>
1992 1993 1994 1995 1996 1996 1997
--------- --------- --------- --------- ---------- --------- ---------
<CAPTION>
(IN THOUSANDS, EXCEPT PER SHARE DATA)
<S> <C> <C> <C> <C> <C> <C> <C>
STATEMENT OF INCOME DATA:
Net sales...................................... $ 62,232 $ 72,414 $ 85,298 $ 93,271 $ 118,655 $ 51,899 $ 77,710
Cost of sales.................................. 48,051 54,880 62,216 68,530 84,421 36,224 52,021
--------- --------- --------- --------- ---------- --------- ---------
Gross profit................................... 14,181 17,534 23,082 24,741 34,234 15,675 25,689
Selling, distribution, general and
administrative expenses...................... 12,282 15,214 18,333 20,267 25,627 12,018 16,984
Recovery of legal fees......................... -- -- -- -- (718) -- (117)
--------- --------- --------- --------- ---------- --------- ---------
Operating income............................... 1,899 2,320 4,749 4,474 9,325 3,657 8,822
Interest expense............................... 997 1,260 1,191 1,247 1,365 660 922
Other income (expense) (1)..................... 55 1,215 1,235 (3) 85 82 22
Minority interest.............................. -- -- (53) (33) (82) (31) (79)
--------- --------- --------- --------- ---------- --------- ---------
Income before extraordinary items (1)(2)....... 957 2,275 4,740 3,191 7,963 3,048 7,843
PRO FORMA STATEMENT OF INCOME DATA:
Income before income taxes..................... 3,184 2,275 5,129 3,191 7,963 3,048 7,843
Income tax provision (3)....................... 1,236 933 2,103 1,308 3,265 1,250 3,216
--------- --------- --------- --------- ---------- --------- ---------
Net income..................................... $ 1,948 $ 1,342 $ 3,026 $ 1,883 $ 4,698 $ 1,798 $ 4,627
--------- --------- --------- --------- ---------- --------- ---------
--------- --------- --------- --------- ---------- --------- ---------
Net income per share (4)....................... $ 0.65 $ 0.64
---------- ---------
---------- ---------
Weighted average common shares outstanding
(4).......................................... 7,185 7,185
</TABLE>
<TABLE>
<CAPTION>
AS OF JUNE 30, 1997
--------------------------------------
<S> <C> <C> <C>
AS FURTHER
AS ADJUSTED ADJUSTED
ACTUAL (5) (5)
--------- -------------- -----------
<CAPTION>
(IN THOUSANDS)
<S> <C> <C> <C>
BALANCE SHEET DATA:
Working capital........................................................................ $ 19,388 $ 3,988 $ 49,388
Total assets........................................................................... 55,116 56,416 67,516
Distribution payable................................................................... -- 15,400 --
Notes payable and long-term debt....................................................... 19,352 19,352 452
Stockholders' equity................................................................... 22,865 8,766 54,165
</TABLE>
- ------------------------
(1) Includes income from settlement of license disputes of $0.3 million, $1.5
million and $1.2 million in 1992, 1993 and 1994, respectively.
(2) Before extraordinary gains of $2.2 million in 1992 and $0.4 million in 1994
related to extinguishment of debt.
(3) Reflects historical provision for income taxes in 1992 and pro forma
provision for income taxes as if the Company had been taxed as a C
corporation for the years ended December 31, 1993, 1994, 1995 and 1996 and
the six months ended June 30, 1996 and 1997, respectively.
(4) Pro forma income per share is based on the weighted average number of shares
of Common Stock outstanding plus the estimated number of shares being sold
by the Company which would be necessary to fund the distribution of earned
and undistributed S corporation earnings totaling approximately $15.4
million as of June 30, 1997. See "Use of Proceeds."
(5) Adjusted to reflect (i) the liability for the Initial S Corporation
Distribution consisting of all earned but undistributed S corporation
earnings as of June 30, 1997 and (ii) the recording of an estimated $1.3
million of deferred tax assets and corresponding tax benefit determined as
if the Company's S corporation status had been terminated on June 30, 1997.
Further adjusted to reflect the sale of 3.8 million shares of Common Stock
by the Company assuming an initial public offering price of $13.00 and the
application of approximately $15.4 million of the net proceeds to pay the
Initial S Corporation Distribution and oustanding borrowings under its
credit facilities. The Company anticipates that the Subsequent S Corporation
Distribution (as hereinafter defined) consisting of all earned but
undistributed S corporation earnings for the period beginning on July 1,
1997 and ending on the S Termination Date (as hereinafter defined) will be
between $4.0 million and $5.0 million. See "Use of Proceeds" and "Company
Organization."
6
<PAGE>
RISK FACTORS
PROSPECTIVE PURCHASERS OF THE COMMON STOCK OFFERED HEREBY SHOULD CONSIDER
CAREFULLY THE FACTORS SET FORTH BELOW, AS WELL AS OTHER INFORMATION SET FORTH IN
THIS PROSPECTUS, IN EVALUATING AN INVESTMENT IN THE COMMON STOCK. THIS
PROSPECTUS CONTAINS FORWARD-LOOKING STATEMENTS WHICH INVOLVE RISKS AND
UNCERTAINTIES. THE COMPANY'S ACTUAL RESULTS AND THE TIMING OF CERTAIN EVENTS
COULD DIFFER MATERIALLY FROM THOSE ANTICIPATED BY SUCH FORWARD-LOOKING
STATEMENTS AS A RESULT OF CERTAIN FACTORS DISCUSSED IN THIS PROSPECTUS,
INCLUDING THE FACTORS SET FORTH BELOW AND IN "MANAGEMENT'S DISCUSSION AND
ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS" AND "BUSINESS," AS
WELL AS THOSE DISCUSSED ELSEWHERE IN THIS PROSPECTUS.
COMPETITION AND OTHER FACTORS AFFECTING THE APPAREL AND RETAILING INDUSTRIES
The apparel industry is highly competitive, fragmented and subject to
rapidly changing consumer demands and preferences. The Company believes that its
success depends in large part upon its ability to anticipate, gauge and respond
to changing consumer demands and fashion trends in a timely manner and upon the
continued appeal to consumers of the BOSS and Beverly Hills Polo Club brand
names. Failure by the Company to identify and respond appropriately to changing
consumer demands and fashion trends could adversely affect consumer acceptance
of its products and could have a material adverse effect on the Company's
financial condition and results of operations. The Company competes with
numerous apparel manufacturers and distributors, many of which have greater
financial resources than the Company. The Company's products also compete with a
substantial number of designer and non-designer lines. Although the level and
nature of competition differ among its product categories, the Company believes
that it competes primarily on the basis of brand image, quality of design and
value pricing. Increased competition by existing and future competitors could
result in reductions in sales or prices of the Company's products, which could
have a material adverse effect on the Company's financial condition and results
of operations. In addition, the apparel industry historically has been subject
to substantial cyclical variations, and a recession in the general economy or
uncertainties regarding future economic prospects that affect consumer spending
habits could have a material adverse effect on the Company's financial condition
and results of operations.
DEPENDENCE UPON THIRD PARTY RIGHTS AND LICENSES
The Company's business is heavily dependent upon its use of the BOSS and
Beverly Hills Polo Club brand names and images, which are in turn dependent upon
the existence and continuation of certain third party rights and covenants. The
Company's right to use the BOSS brand in the manufacture and sale of apparel
will be substantially dependent on third party concurrent use and license
agreements. Pursuant to a recent settlement of litigation among the Company,
Brookhurst, Inc. ("Brookhurst") and certain other parties (the "Settlement"),
and subject to the satisfaction of certain conditions to the closing of the
Settlement, the Company will acquire certain domestic and foreign trademark
common law and registration rights to the BOSS name previously owned by
Brookhurst, the Company's former licensor. The Company will then convey the
foreign rights to the BOSS brand to a third party and receive a license to
continue to manufacture apparel in certain foreign countries using the BOSS
brand for sale in the United States and Puerto Rico. The Company will retain
ownership of domestic rights to the BOSS brand, which will be subject to a
concurrent use agreement. The Company's owned and licensed rights will be
subject to material restrictions on the Company's right to manufacture and sell
apparel using the BOSS brand. The Company's use of the BOSS brand name and image
will be limited to certain specified products at specified price points in the
United States and Puerto Rico. The initial term of the BOSS agreements is four
years; however, such agreements may be extended at the Company's option through
December 31, 2007. The Company is also dependent upon the rights of the licensor
of the Beverly Hills Polo Club brand name in the use of such name on the
Company's products. The Company's licenses for use of the Beverly Hills Polo
Club brand name and image are limited to certain specified products in the
United States, Puerto Rico and Europe and may be extended at the Company's
option through December 31, 2004. There can be no assurance that the Company
will be able to retain its right to use the BOSS And Beverly Hills Polo Club
brand names or enter into comparable arrangements upon the expiration of the
current
7
<PAGE>
agreements. In addition, each of the agreements contains provisions that, under
certain circumstances (not all of which are under the Company's control), could
permit the licensor and third parties to terminate the agreements. Such
provisions include, among other things (i) a default in the payment of certain
amounts payable under the applicable agreement that continues beyond the
specified grace period and (ii) the failure to comply with the covenants
contained in the applicable agreement. Any termination could have a material
adverse effect on the Company's financial condition or results of operations. In
addition, under the operative agreements, the licensor and third parties will
retain the right to produce, distribute, advertise and sell, and to authorize
others to produce, distribute, advertise and sell, directly or through others,
certain garments that are similar to some of the Company's products. Any such
production, distribution, advertisement or sale of such garments by such parties
or other authorized parties could have a material adverse effect on the
Company's financial condition or results of operations.
No assurance can be given that others will not assert rights in, or
ownership of, these trademarks or other proprietary rights. If successful on the
merits, such claims could have a material adverse effect on the Company's
financial condition or results of operations. In the event of any litigation
arising from such claim, any claiming party could have significantly greater
resources than the Company to pursue litigation of such claims and the Company
could be forced to incur substantial costs to defend legal actions taken against
it relating to the Company's use of trademarks or other proprietary rights. In
addition, if any such third party is successful in challenging the Company's use
of trademarks, the Company could be forced to pay significant damages or enter
into expensive royalty or licensing arrangements with such third party. See
"Business--License and Other Rights Agreements."
RISKS ASSOCIATED WITH ACHIEVING AND MANAGING GROWTH
The Company's net sales have grown substantially over the last three years.
No assurance can be given that the level of net sales will not decline or that
the Company will be successful in increasing net sales in the future. To manage
growth effectively, the Company must anticipate trends, changes in styles and
customer demand, continue to implement changes in certain aspects of its
business, continue to expand its operations (including the development of a new
distribution facility), attract and retain qualified personnel (including
management), and develop, train and manage an increasing number of
management-level and other employees. Any unexpected difficulties encountered
during expansion, including possible delays in the construction and opening of
the Company's new distribution facility, could have a material adverse effect on
the Company's financial condition or results of operations. In addition, the
Company extends credit to its customers and, due to growth, continues to
experience increases in the amount of its outstanding accounts receivable. The
failure to accurately assess the credit risk from its customers, changes in
overall economic conditions and other factors could cause the Company's credit
losses to increase, which could have a material adverse effect on the Company's
financial condition or results of operations.
DEPENDENCE UPON UNAFFILIATED MANUFACTURERS; FOREIGN OPERATIONS AND SOURCING
Approximately 70% of the Company's manufacturing needs are currently met
through contracting with third party manufacturers such that the Company is
largely dependent upon independent contractors for the manufacture of its
products. The Company believes that its dependence on independent contractors
will continue to increase. The Company currently contracts with approximately 50
manufacturers in more than 10 countries. The Company does not have long-term
contracts with any manufacturers. During 1996, approximately 9% of the Company's
purchases of raw materials, labor and finished goods for its apparel were made
in Mexico; approximately 28% were made in Asia; approximately 23% were made at
third party facilities elsewhere in the United States; and the balance was made
in Company-operated facilities in the United States. The inability of a
manufacturer to ship the Company's products in a timely manner or to meet the
Company's quality standards could adversely affect the Company's ability to
deliver products to its customers in a timely manner. Delays in delivery caused
by manufacturing delays, disruption in services of delivery carriers or other
factors could result in cancellations of orders, refusals to accept deliveries
or a reduction in purchase prices, any of which could have a material adverse
effect on the Company's financial condition or results of operations. The
Company's operations may also be affected
8
<PAGE>
adversely by political instability resulting in the disruption of trade with the
countries in which the Company's contractors are located, the imposition of
additional regulations relating to imports, the imposition of additional duties,
tariff and other charges on imports, significant fluctuations in the value of
the dollar against foreign currencies or restrictions on the transfer of funds.
The Company manufactures a substantial portion of its BOSS brand apparel
through unaffiliated foreign manufacturers and, under the Settlement, the
Company's activities through these manufacturers will be subject to a foreign
manufacturing rights agreement. This agreement contains certain restrictions
governing use of the BOSS brand and the operations of third party manufacturers
over which the Company may have limited control. Any material breach of the
terms of the foreign manufacturing rights agreement could result in a
termination of the Company's rights to manufacture BOSS brand apparel in one or
more foreign countries, or loss of its overall rights to manufacture abroad
under the BOSS brand, either of which could have a material adverse effect on
the Company's financial condition and results of operations. See "-- Dependence
Upon Third Party Rights and Licenses."
The Company's import operations are subject to constraints imposed by
bilateral textile agreements between the United States and a number of foreign
countries. These agreements, which have been negotiated bilaterally either under
the framework established by the Arrangement Regarding International Trade in
Textiles, known as the Multifiber Agreement, or other applicable statutes,
impose quotas on the amounts and types of merchandise that may be imported into
the United States from these countries. These agreements also allow the United
States to impose restraints at any time and on very short notice on the
importation of categories of merchandise that, under the terms of the
agreements, are not currently subject to specified limits. Imported products are
also subject to United States customs duties, which comprise a material portion
of the cost of the merchandise. A substantial increase in customs duties could
have a material adverse effect on the Company's financial condition or results
of operations. The United States and the countries in which the Company's
products are produced or sold may, from time to time, impose new quotas, duties,
tariffs or other restrictions, or adversely adjust prevailing quota, duty or
tariff levels, any of which could have a material adverse effect on the
Company's financial condition or results of operations.
The Company's policy is to notify its independent manufacturers through its
agents of the expectation that such manufacturers operate in compliance with
applicable laws and regulations. While the Company's policies promote ethical
business practices and the Company's staff periodically visits and monitors the
operations of its independent manufacturers, the Company does not control such
manufacturers or their labor practices. The violation of labor or other laws by
an independent manufacturer of the Company or the divergence of an independent
manufacturer's labor practices from those generally accepted as ethical in the
United States could have a material adverse effect on the Company's financial
condition and results of operations. See "Business--Manufacturing and Product
Sourcing."
DEPENDENCE UPON KEY PERSONNEL
The success of the Company is largely dependent upon the personal efforts
and abilities of its senior management, particularly Messrs. Robert J. Arnot,
Chairman of the Board and Co-Chief Executive Officer, Gerald W. Lear, President
and Co-Chief Executive Officer, Gary B. Brashers, Vice President-- Manufacturing
and Chief Operating Officer, Eugene C. Wielepski, Vice President--Finance and
Chief Financial Officer, and Thomas P. Ormandy, Vice President--Sales. Effective
upon consummation of the Offering, these individuals, in the aggregate, will
beneficially own approximately 23.4% of the Company's outstanding Common Stock.
The Company has entered into employment agreements with each of these
individuals. See "Management--Employment Agreements." The loss of the services
of one or more of such individuals for an extended period of time could have a
material adverse effect on the Company's financial condition or results of
operations. The Company maintains and is the beneficiary of life insurance
policies in the amount of $1.0 million on the lives of each of Messrs. Arnot,
Lear and Brashers and in the amount of $0.5 million on the life of Mr.
Wielepski.
9
<PAGE>
DEPENDENCE UPON CERTAIN CUSTOMERS
The Company's three largest customers accounted for an aggregate of
approximately 20% of net sales in 1996. No single customer or group of related
customers accounted for more than 13.0% of the Company's net sales in 1996. The
retail apparel industry has periodically experienced consolidation and other
ownership changes. In the future, the Company's customers may consolidate,
undergo restructurings, reorganizations or bankruptcies, or realign these
affiliations, any of which could decrease the number of stores that carry the
Company's products or increase the ownership concentration within the retail
apparel industry. See "Business--Customers and Sales."
AVAILABILITY AND PRICE OF FABRICS
The Company is dependent upon the ability of its suppliers to furnish
fabrics in sufficient volumes at fair prices and to meet performance, quality
and delivery criteria for its domestic and Mexican pant producers. The Company
does not have any contracts with its suppliers that obligate them to continue
selling fabrics to the Company. If shortages of fabrics occur or if the prices
of these fabrics rise, and if the Company is unable to increase its prices to
recover such costs increases, a material adverse effect on the Company's
financial condition or results of operations could result. See
"Business--Manufacturing and Product Sourcing" and "--Quality Control."
ENVIRONMENTAL CONTROLS AND OTHER REGULATORY REQUIREMENTS
The Company is subject to various federal, state and local environmental
laws and regulations governing, among other things, the discharge, storage,
handling and disposal of a variety of hazardous and nonhazardous substances and
wastes used in or resulting from its present and past operations. The Company's
operations also are governed by laws and regulations relating to employee safety
and health, principally the Occupational Safety and Health Act and regulations
thereunder, that, among other things, establish exposure limitations for cotton
dust, formaldehyde, asbestos and noise and regulate chemical and ergonomic
hazards in the workplace. There can be no assurance that regulatory requirements
will not become more stringent in the future or that the Company will not incur
significant costs relating to these matters in the future. See
"Business--Environmental Matters."
LACK OF SIGNIFICANT OPERATING HISTORY IN EUROPE
The Company acquired a license to distribute, manufacture and market Beverly
Hills Polo Club brand sportswear in Europe in the third quarter of 1996 and has
had no significant operating history against which to assess the reasonableness
of its strategy to expand sales internationally. The Company's European business
strategy relies heavily upon its ability to align itself with effective
distributors that are able to market the Beverly Hills Polo Club products to
retailers. The Company is also dependent upon the services of contract warehouse
facilities for the timely and accurate shipment of its products to its
distributors and retail stores. A general failure by the Company to maintain and
control its existing international distribution arrangements or to procure
additional international distribution relationships could adversely affect the
Company's growth strategy, which could adversely affect the Company's financial
condition or results of operations. Thus, no assurance can be given that the
Company's international strategy will be successfully and properly implemented.
In addition, due to the Company's utilization of franchise store arrangements in
Europe, the Company's European expansion strategy is also dependent upon
selecting franchisees that can successfully execute a retail strategy.
CONTROL BY EXISTING STOCKHOLDERS
Following the consummation of the Offering, the Company's existing
stockholders, all of whom are parties to the Amended and Restated Shareholders'
Agreement (the "Restated Shareholders' Agreement"), will beneficially own an
aggregate of approximately 61.2% of the outstanding Common Stock. Accordingly,
such stockholders will have the ability to control the election of directors and
the results of other matters submitted to a vote of stockholders. Such
concentration of ownership, together with the Restated Shareholders' Agreement
and the anti-takeover effects of certain provisions in the Delaware
10
<PAGE>
General Corporation Law and in the Company's Amended and Restated Certificate of
Incorporation (the "Restated Certificate") and Amended and Restated By-laws (the
"Restated By-laws"), may have the effect of delaying or preventing a change in
control of the Company. See "--Anti-Takeover Provisions," "Description of
Capital Stock" and "Certain Transactions--Restated Shareholders' Agreement."
ANTI-TAKEOVER PROVISIONS
The Company's Restated Certificate and Restated By-laws include provisions
that may have the effect of discouraging a non-negotiated takeover of the
Company and preventing certain changes of control. These provisions, among other
things (i) classify the Company's Board of Directors into three classes serving
staggered, three-year terms, (ii) permit the Company's Board of Directors,
without further stockholder approval, to issue up to 5.0 million shares of
preferred stock with rights and preferences determined by the Board of Directors
at the time of issuance, (iii) require a 66 2/3% vote of the Company's
stockholders to approve any amendment, addition, or termination of the Restated
By-laws of the Company and (iv) restrict the ability of stockholders to call
special meetings of the stockholders, nominate individuals for election to the
Board of Directors, or submit stockholder proposals. The Restated Shareholders'
Agreement designates Messrs. Robert J. Arnot, Gerald W. Lear, Ira J. Hechler and
Jon Hechler as principal shareholders (the "Principal Shareholders") and
provides that the other stockholders subject to the Restated Shareholders'
Agreement (the "Non-Principal Shareholders") shall vote, in elections of
directors to fill Class I or Class II of the Board of Directors, for nominees of
the Principal Shareholders. In addition, pursuant to the terms of the Company's
agreement for use of the BOSS brand name, certain specified changes in the
control of ownership of the Company may result in termination of such agreement.
The Restated Shareholders' Agreement also provides for certain rights of first
refusal and "drag along" rights. The provisions of the Restated Certificate, the
Restated By-laws and the Restated Shareholders' Agreement might, therefore, have
the effect of inhibiting stockholders' ability to realize the maximum value for
their shares of Common Stock that might otherwise be realized because of a
merger or other event affecting the control of the Company. See "Description of
Capital Stock" and "Certain Transactions--Restated Shareholders' Agreement."
DILUTION
The initial public offering price is substantially higher than the book
value per share of Common Stock. Investors purchasing shares of Common Stock in
the Offering will therefore incur immediate and substantial dilution of $7.80
per share. See "Dilution."
ABSENCE OF PUBLIC MARKET AND POSSIBLE VOLATILITY OF STOCK PRICE
Prior to the Offering, there has been no public market for the Common Stock,
and there can be no assurance that an active trading market will develop or be
sustained. The initial public offering price of the Common Stock offered hereby
will be determined through negotiations among the Company and the Underwriters
and may bear no relationship to the market price for the Common Stock after the
Offering. Subsequent to the Offering, prices for the Common Stock will be
determined by the market and may be influenced by a number of factors, including
depth and liquidity of the market for the Common Stock, investor perceptions of
the Company, changes in conditions or trends in the Company's industry or in the
industry of the Company's significant customers, publicly traded comparable
companies and general economic and other conditions. See "Underwriting."
FUTURE SALES BY EXISTING STOCKHOLDERS; SHARES ELIGIBLE FOR FUTURE SALE
The Common Stock offered hereby will be freely tradable (other than by an
"affiliate" of the Company as such term is defined in the Securities Act of
1933, as amended ( the "Securities Act")) without restriction or registration
under the Securities Act. Immediately after the Offering, the Company's existing
stockholders will beneficially own an aggregate of approximately 61.2% of the
outstanding Common Stock. Subject to the restrictions set forth below, such
stockholders will be free to sell such shares from time to time to take
advantage of favorable market conditions or for any other reason. Future sales
of shares of
11
<PAGE>
Common Stock by the Company and/or its stockholders could adversely affect the
prevailing market price of the Common Stock. The Company and each of its
executive officers, directors and stockholders beneficially owning in the
aggregate 6.0 million shares of Common Stock have entered into lock-up
agreements with The Robinson-Humphrey Company, LLC and Legg Mason Wood Walker,
Incorporated, as representatives of the Underwriters, pursuant to which they
have agreed not to, directly or indirectly, sell, offer to sell, contract to
sell, solicit an offer to buy, grant any option for the purchase or sale of,
assign, pledge, distribute or otherwise transfer, dispose of or encumber any of
their shares of Common Stock (other than those being sold pursuant to this
Offering) or any securities convertible into or exercisable or exchangeable for
shares of Common Stock without the prior written consent of the representatives
of the Underwriters, for a period of 180 days after the date of this Prospectus.
In addition, certain restrictions on transfers of shares of Common Stock by the
existing stockholders of the Company are contained in the Restated Shareholders'
Agreement. Thereafter, approximately 5.96 million shares of Common Stock will be
eligible for sale pursuant to Rule 144 promulgated under the Securities Act.
Sales of substantial amounts of Common Stock in the public market, or the
perception that such sales may occur, could have a material adverse effect on
the market price of the Common Stock. See "Shares Eligible for Future Sale,"
"Underwriting" and "Certain Transactions--Restated Shareholders' Agreement."
FORWARD-LOOKING STATEMENTS
This Prospectus contains certain forward-looking statements including, among
other things, the Company's anticipated growth strategies, the Company's
intention to continue to develop new products under the BOSS and Beverly Hills
Polo Club brand names, the Company's future expenditures on capital projects and
advertising, construction and opening of the Company's new distribution
facility, continued operation under the license and third party agreements
relating to the BOSS and Beverly Hills Polo Club brands, European expansion, the
Company's ability to limit credit risk exposure to its customers and other
aspects of the business of the Company. These forward-looking statements are
subject to risks and uncertainties, many of which are beyond the Company's
control, which could cause actual results to differ materially from those
contemplated in such forward-looking statements, including in particular the
risks and uncertainties described under "Risk Factors," including, among other
things (i) changes in the marketplace for the Company's products, including
consumer tastes, (ii) the introduction of new products or pricing changes by the
Company's competitors, (iii) changes in the economy and (iv) termination of one
or more of its agreements for use of the BOSS and Beverly Hills Polo Club brand
names in the manufacture and sale of the Company's products. Prospective
investors are cautioned not to place undue reliance on these forward-looking
statements, which speak only as of the date hereof. The Company undertakes no
obligation to publicly update or revise any of these forward-looking statements,
whether as a result of new information, future events or circumstances or
otherwise. There can be no assurance that the events described in these
forward-looking statements will occur.
COMPANY ORGANIZATION
BACKGROUND
The Company was founded by Mr. Isaac C. Isaacs in Baltimore, Maryland in
1913. It remained a family-owned business until 1984, when it was reorganized as
I.C. Isaacs & Company L.P. (the "Partnership") by a group comprised of
management and outside investors. Since that time, the Company has operated as
the Partnership's general partner. Ira J. Hechler, a director and stockholder of
the Company, is currently the Partnership's limited partner. The business of the
Company is conducted through the Partnership. Upon consummation of the Offering,
the Company's wholly-owned subsidiary, Isaacs Design, Inc., will become the
limited partner of the Partnership. See "--The Reorganization."
PRIOR S CORPORATION STATUS
Since January 1, 1993, the Company has elected to be treated for federal and
state income tax purposes as an S corporation under Subchapter S of the Internal
Revenue Code of 1986, as amended (the "Code"), and under comparable state laws.
As a result, the Company's stockholders, rather than the
12
<PAGE>
Company, have been taxed directly on the income of the Company for federal and
certain state income tax purposes, whether or not such income was distributed.
One day prior to the consummation of the transactions related to the Offering,
the Company's S corporation status will be terminated (the "S Termination
Date").
On the S Termination Date the Company will declare the following dividend
distributions to the stockholders of record of the Company: (i) a dividend
distribution in the aggregate amount of approximately $15.4 million, which
represents all earned but undistributed S corporation earnings of the Company as
of June 30, 1997 (the "Initial S Corporation Distribution"); and (ii) a dividend
distribution in the aggregate amount of the Company's earned but undistributed S
corporation earnings for the period beginning on July 1, 1997 and ending on the
S Termination Date (the "Subsequent S Corporation Distribution" and, together
with the Initial S Corporation Distribution, the "S Corporation Distribution").
Only stockholders of record as of the S Termination Date will participate in the
S Corporation Distribution. The Initial S Corporation Distribution is expected
to be paid on the date of consummation of the transactions relating to the
Offering (the "Closing Date"); the Subsequent S Corporation Distribution is
expected to be paid within 30 days after the Closing Date. The Company expects
to pay the S Corporation Distribution with a portion of the net proceeds from
this Offering. See "Use of Proceeds." On and after the S Termination Date, the
Company will no longer be treated as an S corporation and, accordingly, will be
fully subject to federal and state income taxes. See "Capitalization" and
Summary of Accounting Policies to the Company's consolidated financial
statements.
THE REORGANIZATION
Prior to the Closing Date, the Company will (i) form a wholly-owned
subsidiary, Isaacs Design, Inc., which will acquire the outstanding 1% limited
partnership interest in the Partnership from Ira J. Hechler in exchange for
approximately $280,000 in cash, which is an amount equal to the book value of
that interest, (ii) file with the Secretary of State of Delaware an Amended and
Restated Certificate of Incorporation changing the authorized shares of capital
of the Company from 20,000 shares of common stock, par value $1.00 per share
("Old Common Stock"), to 50.0 million shares of Common Stock, par value $.0001
per share (the "Common Stock"), and 5.0 million shares of preferred stock, par
value $.0001 per share (the "Preferred Stock"), (iii) effect a 370.4847 for 1
stock split and (iv) declare a dividend in the amount of the S Corporation
Distribution. All of such transactions are referred to collectively herein as
the "Reorganization."
USE OF PROCEEDS
The net proceeds to be received by the Company from the Offering are
estimated to be approximately $45.4 million, assuming an initial public offering
price of $13.00 (the mid-point of the range set forth on the cover page of this
Prospectus) and after deducting the estimated underwriting discount and offering
expenses payable by the Company. The Company intends to use such net proceeds as
follows: (i) to repay approximately $20.0 million of the Company's outstanding
borrowings under its credit facilities; (ii) to pay the S Corporation
Distribution (estimated to be between $19.0 million and $20.0 million); and
(iii) for general corporate and working capital purposes. The Company's credit
facilities consist of a $1.0 million term loan, which will mature on June 30,
2001 and has an annual interest rate equal to the prime rate of interest plus
2.5%, and a revolving line of credit, which will mature on June 30, 1998 and has
an annual interest rate equal to the prime rate of interest plus 1.0%. Amounts
outstanding under the Company's credit facilities were used for working capital
purposes. Pending application of the net proceeds as described above, the
Company will invest the net proceeds in short-term, interest bearing instruments
or other investment grade securities. See "Company Organization" and
"Management's Discussion and Analysis of Financial Condition and Results of
Operations--Liquidity and Capital Resources."
13
<PAGE>
DIVIDEND POLICY
Since January 1, 1993, the Company has elected to be treated for federal and
state income tax purposes as an S corporation. As a result, the Company's
stockholders, rather than the Company, have been taxed directly on the earnings
of the Company for federal and certain state income tax purposes, whether or not
such earnings were distributed. In 1995, 1996 and thus far in 1997, the Company
made cash distributions to its stockholders in the amounts of $2.9 million, $3.2
million and $6.4 million, respectively, all of which were used to fund the
stockholders' tax obligations as a result of the Company's status as an S
corporation. One day prior to the Closing Date, the Company's S corporation
status will be terminated. See "Company Organization."
The Company anticipates that, after payment of the S Corporation
Distribution to stockholders of record as of the S Termination Date, all
earnings of the Company will be retained for the foreseeable future for use in
the operations of the Company's business. Purchasers of shares of Common Stock
in the Offering will not receive any portion of the S Corporation Distribution.
Any future determination as to the payment of dividends will be at the
discretion of the Company's Board of Directors and will depend upon the
Company's results of operations, financial condition, contractual restrictions
and other factors deemed relevant by the Board of Directors.
14
<PAGE>
CAPITALIZATION
The following table sets forth the capitalization of the Company (i) as of
June 30, 1997, (ii) as adjusted as of that date to give effect to the Initial S
Corporation Distribution, termination of the Company's S corporation status and
the recording of an estimated $1.3 million of net deferred tax assets determined
as if the Company's S corporation status had been terminated on June 30, 1997
and (iii) as further adjusted to reflect the sale of 3.8 million shares of
Common Stock by the Company in the Offering at an assumed initial public
offering price of $13.00 per share (the mid-point of the range set forth on the
cover page of this Prospectus), after deducting the estimated underwriting
discount and offering expenses payable by the Company, and the application of
the estimated net proceeds therefrom to pay the Initial S Corporation
Distribution, outstanding borrowings under the credit facilities and the
application of the remainder of the net proceeds as further described under "Use
of Proceeds." The information below should be read in conjunction with the
Company's consolidated financial statements and the related notes thereto, which
are included elsewhere in this Prospectus.
<TABLE>
<CAPTION>
AS OF JUNE 30, 1997
-------------------------------------
AS AS FURTHER
ACTUAL ADJUSTED(1) ADJUSTED(2)
--------- ------------- -----------
<S> <C> <C> <C>
(IN THOUSANDS)
Short-term debt:
Current maturities of term loan and revolving line of credit............ $ 18,300 $ 18,300 $ --
Current maturities of capital lease obligations......................... 179 179 179
--------- ------------- -----------
Total short-term debt................................................. $ 18,479 $ 18,479 179
--------- ------------- -----------
--------- ------------- -----------
Distribution payable...................................................... $ -- $ 15,400 $ --
--------- ------------- -----------
--------- ------------- -----------
Long-term debt:
Term loan, net of current maturities.................................... 600 600 --
Capital lease obligations............................................... 273 273 273
--------- ------------- -----------
Total long-term debt.................................................. 873 873 273
Stockholders' equity:
Preferred Stock, par value $.0001 per share, 5,000,000 shares -- -- --
authorized, none issued and outstanding...............................
Common Stock, par value $.0001 per share, 50,000,000 shares authorized, 1 1 1
6,037,048 shares issued; 6,000,000 shares outstanding, 9,837,048
shares issued and outstanding as further adjusted(3)..................
Additional paid-in capital.............................................. 266 266 45,666
Retained earnings....................................................... 22,613 8,513 8,513
Treasury stock, at cost (37,048 shares)................................. (15) (15) (15)
--------- ------------- -----------
Total stockholders' equity............................................ 22,865 8,766 54,165
--------- ------------- -----------
Total capitalization.................................................. $ 23,738 $ 9,639 $ 54,438
--------- ------------- -----------
--------- ------------- -----------
</TABLE>
- ------------------------------
(1) The as-adjusted amounts reflect the liability for the Initial S Corporation
Distribution to the stockholders of approximately $15.4 million, which
represents the earned but undistributed S corporation earnings as of June
30, 1997, the termination of the Company's S corporation status and the
recording of an estimated $1.3 million of net deferred tax assets. See "Use
of Proceeds" and "Company Organization."
(2) Adjusted to reflect (i) the liability for the Initial S Corporation
Distribution consisting of all earned but undistributed S corporation
earnings as of June 30, 1997 and (ii) the recording of an estimated $1.3
million of net deferred tax assets determined as if the Company's S
corporation status had been terminated on June 30, 1997. Further adjusted to
reflect the sale of 3.8 million shares of Common Stock by the Company
assuming an initial public offering price of $13.00 and the application of
approximately $15.4 million of the net proceeds to pay the Initial S
Corporation Distribution and outstanding borrowings under its credit
facilities. See "Use of Proceeds" and "Company Organization."
(3) Excludes 500,000 shares of Common Stock reserved for issuance pursuant to
awards under the 1997 Omnibus Stock Plan (the "Plan"). See
"Management--Employment Agreements" and "--1997 Omnibus Stock Plan."
15
<PAGE>
DILUTION
The net tangible book value of the Company at June 30, 1997 was
approximately $21.0 million, or $3.51 per share of Common Stock. After giving
effect to the Reorganization and the Initial S Corporation Distribution, as if
the distribution had been recorded as of June 30, 1997 and the Company's S
corporation status had terminated at such date, the as adjusted net tangible
book value of the Company at June 30, 1997 would have been approximately $5.6
million or $0.93 per share of Common Stock. After giving effect to the sale by
the Company of shares of Common Stock in the Offering at an assumed initial
public offering price of $13.00 per share (the mid-point of the range set forth
on the cover page of this Prospectus) and after deducting the estimated
underwriting discount and offering expenses payable by the Company and the
application of the estimated net proceeds therefrom to pay the Initial S
Corporation Distribution, the as further adjusted net tangible book value of the
Company at June 30, 1997 would have been approximately $51.0 million, or $5.20
per share. See "Company Organization" and "Use of Proceeds." This represents an
immediate increase in net tangible book value of $4.27 per share to the
Company's existing stockholders and an immediate net tangible book value
dilution of $7.80 per share to investors purchasing shares in the Offering. The
following table illustrates this per share dilution:
<TABLE>
<S> <C> <C>
Initial public offering price per share (1)................. $ 13.00
Net tangible book value per share at June 30, 1997........ $ 3.51
Decrease attributable to pro forma adjustments............ (2.58)
---------
As adjusted net tangible book value per share at June 30,
1997...................................................... .93
Increase attributable to new investors in the Offering.... 4.27
---------
Net tangible book value, as further adjusted, per share
after the Offering (2).................................... 5.20
---------
Dilution per share to new investors......................... $ 7.80
---------
---------
</TABLE>
The following table summarizes, on a pro forma basis as of June 30, 1997,
the number of shares of Common Stock purchased from the Company, the total
consideration paid and the average consideration paid per share by the existing
stockholders and by the new investors, assuming an initial public offering price
of $13.00 per share but before deducting the underwriting discount and estimated
offering expenses:
<TABLE>
<CAPTION>
SHARES PURCHASED TOTAL CONSIDERATION
----------------------- -------------------------- AVERAGE PRICE
NUMBER PERCENT AMOUNT PERCENT PER SHARE
---------- ----------- ------------- ----------- -------------
<S> <C> <C> <C> <C> <C>
Existing stockholders............................... 6,000,000 61.2% $ 252,113 0.5% $ 0.04
New investors....................................... 3,800,000 38.8 49,400,000 99.5 $ 13.00
---------- ----- ------------- -----
Total............................................. 9,800,000 100.0% $ 49,652,113 100.0%
---------- ----- ------------- -----
---------- ----- ------------- -----
</TABLE>
- ------------------------
(1) Before deducting estimated underwriting discounts and commissions and
estimated expenses of the Offering payable by the Company.
(2) Excludes 500,000 shares of Common Stock reserved for issuance pursuant to
awards under the Plan. See "Management--1997 Omnibus Stock Plan."
16
<PAGE>
SELECTED FINANCIAL DATA
The selected financial data set forth below have been derived from the
consolidated financial statements of the Company and the related notes thereto.
The statement of income data for the years ended December 31, 1994, 1995 and
1996 and the balance sheet data as of December 31, 1995 and 1996 are derived
from the consolidated financial statements of the Company, which have been
audited by BDO Seidman, LLP, independent certified public accountants, and which
are contained elsewhere in this Prospectus. The statement of income data for the
years ended December 31, 1992 and 1993 and the balance sheet data as of December
31, 1992, 1993 and 1994 are derived from the consolidated financial statements
of the Company, which have been audited but are not contained herein. Financial
data as of June 30, 1997, and for the six months ended June 30, 1996 and 1997,
are derived from consolidated financial statements which are unaudited but, in
the opinion of management, include all adjustments, consisting only of normal
recurring adjustments, necessary for a fair presentation of such data. The
results of operations for the six months ended June 30, 1997 are not necessarily
indicative of the results to be expected for the entire year. The following
selected financial data should be read in conjunction with the Company's
consolidated financial statements and the related notes thereto and
"Management's Discussion and Analysis of Financial Condition and Results of
Operations," which are included elsewhere in this Prospectus.
<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31,
-----------------------------------------------------
1992 1993 1994 1995 1996
--------- --------- --------- --------- ---------
<S> <C> <C> <C> <C> <C>
(IN THOUSANDS, EXCEPT PER SHARE DATA)
STATEMENT OF INCOME DATA:
Net sales.......................................................... $ 62,232 $ 72,414 $ 85,298 $ 93,271 $ 118,655
Cost of sales...................................................... 48,051 54,880 62,216 68,530 84,421
--------- --------- --------- --------- ---------
Gross profit..................................................... 14,181 17,534 23,082 24,741 34,234
Selling expenses................................................... 6,679 9,035 10,474 12,101 16,715
Distribution and shipping expenses................................. 3,756 4,276 2,046 2,379 2,669
General and administrative expenses................................ 1,847 1,903 5,813 5,787 6,243
Recovery of legal fees............................................. -- -- -- -- (718)
--------- --------- --------- --------- ---------
Operating income................................................. 1,899 2,320 4,749 4,474 9,325
Interest, net...................................................... 997 1,260 1,191 1,247 1,365
Other income (expense) (1)......................................... 55 1,215 1,235 (3) 85
Minority interest.................................................. -- -- (53) (33) (82)
--------- --------- --------- --------- ---------
Income before extraordinary item................................... 957 2,275 4,740 3,191 7,963
Extraordinary item (2)............................................. 2,227 -- 389 -- --
--------- --------- --------- --------- ---------
Net income....................................................... $ 3,184 $ 2,275 $ 5,129 $ 3,191 $ 7,963
--------- --------- --------- --------- ---------
--------- --------- --------- --------- ---------
PRO FORMA STATEMENT OF INCOME DATA:
Income before income taxes......................................... 3,184 2,275 5,129 3,191 7,963
Income tax provision (3)........................................... 1,236 933 2,103 1,308 3,265
--------- --------- --------- --------- ---------
Net income....................................................... $ 1,948 $ 1,342 $ 3,026 $ 1,883 $ 4,698
--------- --------- --------- --------- ---------
--------- --------- --------- --------- ---------
Net income per share (4)........................................... $ 0.65
---------
---------
Weighted average common shares outstanding (4)..................... 7,185
<CAPTION>
SIX MONTHS ENDED
--------------------
JUNE 30, JUNE 30,
1996 1997
--------- ---------
<S> <C> <C>
STATEMENT OF INCOME DATA:
Net sales.......................................................... $ 51,899 $ 77,710
Cost of sales...................................................... 36,224 52,021
--------- ---------
Gross profit..................................................... 15,675 25,689
Selling expenses................................................... 8,057 11,630
Distribution and shipping expenses................................. 1,227 1,978
General and administrative expenses................................ 2,734 3,376
Recovery of legal fees............................................. -- (117)
--------- ---------
Operating income................................................. 3,657 8,822
Interest, net...................................................... 660 922
Other income (expense) (1)......................................... 82 22
Minority interest.................................................. (31) (79)
--------- ---------
Income before extraordinary item................................... 3,048 7,843
Extraordinary item (2)............................................. -- --
--------- ---------
Net income....................................................... $ 3,048 $ 7,843
--------- ---------
--------- ---------
PRO FORMA STATEMENT OF INCOME DATA:
Income before income taxes......................................... 3,048 7,843
Income tax provision (3)........................................... 1,250 3,216
--------- ---------
Net income....................................................... $ 1,798 $ 4,627
--------- ---------
--------- ---------
Net income per share (4)........................................... $ 0.64
---------
---------
Weighted average common shares outstanding (4)..................... 7,185
</TABLE>
<TABLE>
<CAPTION>
AS OF JUNE 30, 1997
DECEMBER 31, --------------------------
----------------------------------------------------- AS
1992 1993 1994 1995 1996 ACTUAL ADJUSTED (5)
--------- --------- --------- --------- --------- --------- ---------------
<S> <C> <C> <C> <C> <C> <C> <C>
(IN THOUSANDS)
BALANCE SHEET DATA:
Working capital............................... $ 5,343 $ 6,787 $ 10,035 $ 10,807 $ 16,274 $ 19,388 $ 3,988
Total assets.................................. 24,443 27,201 30,103 31,764 37,257 55,116 56,416
Distribution payable.......................... -- -- -- -- -- -- 15,400
Total debt.................................... 8,640 9,405 8,798 8,645 7,796 19,352 19,352
Stockholders' equity.......................... 9,924 10,824 14,428 14,645 19,393 22,866 8,766
<CAPTION>
AS FURTHER
ADJUSTED (5)
---------------
<S> <C>
BALANCE SHEET DATA:
Working capital............................... $ 49,388
Total assets.................................. 67,516
Distribution payable.......................... --
Total debt.................................... 452
Stockholders' equity.......................... 54,165
</TABLE>
- ------------------------
(1) Includes income from settlement of license disputes of $0.3 million, $1.5
million and $1.2 million in 1992, 1993 and 1994, respectively.
(2) In connection with the early extinguishment of certain debt, the Company
recorded an extraordinary gain of $2.2 million and $0.4 million in 1992 and
1994, respectively.
(3) Reflects historical provision for income taxes in 1992 and pro forma
provision for income taxes as if the Company had been taxed as a C
corporation for the years ended December 31, 1993, 1994, 1995 and 1996 and
the six months ended June 30, 1996 and 1997, respectively.
(4) Pro forma income per share is based on the weighted average number of shares
of Common Stock outstanding plus the estimated number of shares being sold
by the Company which would be necessary to fund the distribution of earned
and undistributed S corporation earnings totaling approximately $15.4
million as of June 30, 1997.
(5) Adjusted to reflect (i) the liability for the Initial S Corporation
Distribution consisting of all earned but undistributed S corporation
earnings as of June 30, 1997 and (ii) the recording of an estimated $1.3
million of net deferred tax assets determined as if the Company's S
corporation status had been terminated on June 30, 1997. Further adjusted to
reflect the sale of 3.8 million shares of Common Stock by the Company
assuming an initial public offering price of $13.00 and the application of
approximately $15.4 million of the net proceeds to pay the Initial S
Corporation Distribution and outstanding borrowings under its credit
facilities.
17
<PAGE>
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
THE FOLLOWING DISCUSSION AND ANALYSIS SHOULD BE READ IN CONJUNCTION WITH THE
"SELECTED FINANCIAL DATA" AND THE COMPANY'S CONSOLIDATED FINANCIAL STATEMENTS
AND THE RELATED NOTES THERETO, WHICH ARE INCLUDED ELSEWHERE IN THIS PROSPECTUS.
OVERVIEW
During its first 77 years, the Company became one of the leading
manufacturers of pants, trousers and jeans in the United States. The Company was
able to utilize its fabric sourcing and manufacturing expertise to build a well
known franchise in the men's and women's bottoms segment of the apparel
industry. In this period, the Company's marketing efforts were typically driven
by its manufacturing capabilities, and branding was limited to Company-owned
brands and third-party private labels.
In the late 1980's, management made a decision to change the Company's
marketing focus from a manufacturing-driven to a brand-driven strategy. This
fundamental shift within the Company reflected senior management's belief that
the American sportswear market would be dominated by recognized brands with
clearly established images. Management also concluded that increasing market
share would go to those companies that were market-driven and able to service
their customers with diversified manufacturing and sourcing capabilities.
Recognizing its strength in bottoms manufacturing, in 1990 the Company entered
into a license agreement for the exclusive use of the BOSS brand name on men's
denim apparel and on all types of juniors' sportswear for the young women's
market. In 1994, the Company expanded its license agreement to include use of
the BOSS brand name on men's, women's, boys' and youth sportswear in the United
States and Puerto Rico. In 1997, the Company's rights to manufacture and market
BOSS sportswear were further expanded to allow broader product offerings and
significant Company control over styling, advertising and distribution. In the
fall of 1993, the Company entered into license agreements for the use of the
Beverly Hills Polo Club brand name on men's and women's sportswear in the United
States and Puerto Rico. License rights were expanded to include Europe in 1996
and to include men's dress shirts in 1997. See "Business--License and Other
Rights Agreements." The Company also manufactures and markets women's sportswear
under its own "I.C. Isaacs," "Lord Isaacs" and "Pizzazz" brand names and under
third-party private labels.
Over the past three years, the Company has completed its strategic
repositioning from a manufacturing-driven company to a marketing and
brand-driven company. Through a focused strategy of providing fashionable,
branded merchandise at value prices, the Company has emerged as a significant
fashion influence for youthful consumers who purchase sportswear through
specialty and department stores. The Company's brand-driven market strategy is
evidenced by the increase of licensed, branded apparel as a percentage of the
Company's net sales. In 1996, the BOSS and Beverly Hills Polo Club brands
comprised 72.6% and 12.0% of net sales, respectively. Concurrent with this
strategy, the Company has also shifted its product mix from predominately
bottoms to a full array of sportswear, including tops and outerwear. As a
result, net sales of the BOSS tops and outerwear lines have more than doubled
since 1994 to approximately $29 million in 1996. The Company has also expanded
its branded lines to include sportswear for boys, youth and juniors. The
Company's growth is also demonstrated by the increase in its backlog. As of June
30, 1997, the Company had unfilled orders of approximately $60 million, compared
to approximately $43 million of such orders as of June 30, 1996. The Company
expects to fill substantially all of these orders in 1997. See
"Business--Backlog and Seasonality." The following table sets forth, for the
periods indicated, the Company's net sales categorized by brand and product
category:
18
<PAGE>
<TABLE>
<CAPTION>
SIX MONTHS ENDED
YEAR ENDED DECEMBER 31, JUNE 30,
------------------------------- --------------------
<S> <C> <C> <C> <C> <C>
1994 1995 1996 1996 1997
--------- --------- --------- --------- ---------
<CAPTION>
(IN THOUSANDS)
<S> <C> <C> <C> <C> <C>
MEN'S(1)
BOSS Bottoms.................................................... $ 37,724 $ 37,234 $ 44,667 $ 21,224 $ 29,075
BOSS Tops....................................................... 6,709 15,883 29,284 11,268 19,447
BOSS Boys'...................................................... 1,834 3,264 6,736 2,055 6,771
Men's BHPC...................................................... 2,795 5,219 12,226 4,598 11,822
Men's Private Label............................................. 3,227 4,299 500 427 50
--------- --------- --------- --------- ---------
Men's total................................................. 52,289 65,898 93,414 39,572 67,165
--------- --------- --------- --------- ---------
WOMEN'S(1)
BOSS Juniors'(2)................................................ 9,528 5,423 5,413 3,464 1,954
Women's BHPC.................................................... 1,047 1,833 2,043 774 819
Women's Other(3)................................................ 22,433 20,116 17,786 8,089 7,772
--------- --------- --------- --------- ---------
Women's total............................................... 33,009 27,373 25,242 12,327 10,545
--------- --------- --------- --------- ---------
Total net sales............................................. $ 85,298 $ 93,271 $ 118,655 $ 51,899 $ 77,710
--------- --------- --------- --------- ---------
--------- --------- --------- --------- ---------
</TABLE>
- ------------------------
(1) The net sales totals incorporate product returns allocated in proportion to
gross sales.
(2) Results for the year ended December 31, 1994 include approximately $2.5
million of net sales of tee shirts and sweatshirts with unisex styling that
were discontinued after the Company obtained a license to manufacture and
sell men's BOSS tops in the fourth quarter of 1994. As a result, these
products were recategorized in men's BOSS tops in 1995 and thereafter.
(3) Includes Company-owned brands and third-party private labels.
RESULTS OF OPERATIONS
The following table sets forth, for the periods indicated, the percentage
relationship to net sales of certain items in the Company's consolidated
statements of income for the periods shown below:
<TABLE>
<CAPTION>
SIX MONTHS ENDED
YEAR ENDED DECEMBER 31, JUNE 30,
--------------------------------- --------------------
<S> <C> <C> <C> <C> <C>
1994 1995 1996(1) 1996 1997(1)
--------- --------- ----------- --------- ---------
Net sales................................................ 100.0% 100.0% 100.0% 100.0% 100.0%
Cost of sales............................................ 72.9 73.5 71.1 69.8 66.9
--------- --------- ----- --------- ---------
Gross profit............................................. 27.1 26.5 28.9 30.2 33.1
Selling expenses......................................... 12.3 13.0 14.1 15.5 15.0
Distribution and shipping expenses....................... 2.4 2.6 2.3 2.4 2.5
General and administrative expenses...................... 6.8 6.2 4.7 5.3 4.2
--------- --------- ----- --------- ---------
Operating income......................................... 5.6% 4.7% 7.8% 7.0% 11.4%
--------- --------- ----- --------- ---------
--------- --------- ----- --------- ---------
</TABLE>
- ------------------------
(1) Includes the receipt in 1996 and 1997 of approximately $0.7 million and $0.1
million, respectively, related to an agreement with the Company's insurance
carrier to reimburse it for legal fees associated with litigation billed in
prior years.
19
<PAGE>
SIX MONTHS ENDED JUNE 30, 1997 COMPARED TO SIX MONTHS ENDED JUNE 30, 1996
NET SALES. Net sales increased 49.7% to $77.7 million in the six months
ended June 30, 1997 from $51.9 million in the six months ended June 30, 1996.
Substantially all of this increase was due to higher volume shipments of BOSS
and Beverly Hills Polo Club sportswear. Net sales of BOSS sportswear increased
$19.2 million or 50.5% to $57.2 million primarily driven by strong growth in the
men's tops, boys' and youth segments and continued strength of the jeans
segment. Net sales of the BOSS tops segment were $19.4 million in the six months
ended June 30, 1997 versus $11.3 million in the six months ended June 30, 1996.
Net sales of Beverly Hills Polo Club sportswear increased $7.2 million or 133.3%
to $12.6 million over the same period, primarily driven by strong growth in the
men's business. International sales were insignificant in the six months ended
June 30, 1997. Although international orders were received in the first quarter
of 1997, the Company began to fulfill such orders in April, 1997.
GROSS PROFIT. Gross profit increased 63.7% to $25.7 million in the six
months ended June 30, 1997 from $15.7 million in the six months ended June 30,
1996. Gross profit as a percentage of sales increased to 33.1% from 30.2% over
the same period. The increase in gross margin was due in part to the expansion
of the BOSS tops product line, which typically carries a higher gross margin
than the bottoms product line. In addition, the tops line had improved gross
margins due to reduced costs on imported tops resulting from volume purchase
discounts. Also, the continued shift of production of denim bottoms from the
United States to Mexico and the accompanying decrease in labor and overhead
costs contributed to the improved gross margin. The Company's improved gross
margin was also a result of increased sales of products at full margin,
particularly in the first quarter, offset somewhat by markdowns taken in the
second quarter related to unsold spring and summer goods.
SELLING, DISTRIBUTION, GENERAL AND ADMINISTRATIVE EXPENSES. Selling,
distribution, general and administrative ("SG&A") expenses increased 40.8% to
$16.9 million in the six months ended June 30, 1997 from $12.0 million in the
six months ended June 30, 1996. As a percentage of net sales SG&A expenses
decreased to 21.7% from 23.2% over the same period. This improvement reflects
overall declines in SG&A expenses resulting from cost containment efforts in
certain expense areas and expense leverage associated with the Company's growth.
Selling expenses increased $3.5 million to $11.6 million as a result of higher
commissions to the Company's salespersons and higher royalty payments as sales
of branded apparel continued to increase as a percentage of overall net sales.
The Company believes that its royalty expense will continue to increase as the
percentage of net sales of branded products increase. Advertising costs rose
$0.3 million to $1.6 million over the same period as the Company continued to
focus on enhancing the identity and image of its brands through increased media
exposure. Distribution and shipping expenses increased $0.8 million to $2.0
million due to higher unit shipments and increased overtime costs. The Company
opted to incur additional overtime wages rather than adding personnel to process
the increase in unit shipments. General and administrative expenses rose $0.6
million to $3.3 million due to salary increases for existing employees and
salaries and costs associated with the hiring of new management and
administrative personnel.
OPERATING INCOME. Operating income increased 137.8% to $8.8 million or
11.4% of net sales in the six months ended June 30, 1997, from $3.7 million or
7.0% of net sales in the six months ended June 30, 1996. This increase resulted
primarily from the increase in net sales and gross profit margins.
INTEREST EXPENSE. Interest expense increased $0.2 million to $0.9 million
in the six months ended June 30, 1997 due to an increase in working capital
borrowing requirements. In the six months ended June 30, 1997, the average debt
balance was $15.9 million, with an average effective interest rate of 9.50%. In
the six months ended June 30, 1996, the average debt balance was $9.9 million
with an average effective interest rate of 9.25%.
20
<PAGE>
YEAR ENDED DECEMBER 31, 1996 COMPARED TO YEAR ENDED DECEMBER 31, 1995
NET SALES. Net sales increased 27.2% to $118.7 million in 1996 from $93.3
million in 1995. Substantially all of the increase in net sales was due to
greater unit volume shipments of both the BOSS and Beverly Hills Polo Club
sportswear lines. Net sales of BOSS sportswear increased 39.3% to $86.1 million
in 1996 from $61.8 million in 1995. The volume increase in BOSS sportswear was
primarily driven by strong growth in the tops segment, continued strength of the
jeans segment and, to a lesser extent, growth in the boys' and youth segments.
Net sales of BOSS tops and outerwear nearly doubled from $15.9 million in 1995
to $29.3 million in 1996, as a result of the Company's continued product
expansion and increased consumer acceptance and demand. The BOSS bottoms segment
also showed strong growth, as net sales increased 20.2% in 1996 to $44.7
million. Net sales of Beverly Hills Polo Club sportswear increased 101.4% to
$14.3 million during the same period primarily driven by strong growth in the
men's segment. This success was due in part to increased acceptance of the
product after its first full year of sales and the ongoing reconfiguration of
the Company's Beverly Hills Polo Club sales force to more effectively market to
specialty store customers. These increases in net sales were partially offset by
a decline in sales of the Company's men's private label collection and women's
Company-owned and private label collections as the Company continued to place
more emphasis on branded labels. The Company discontinued the men's private
label collection in 1996 due to unsatisfactory gross margins relative to BOSS
and Beverly Hills Polo Club sportswear. International sales were insignificant
in 1996.
GROSS PROFIT. Gross profit increased 38.5% to $34.2 million in 1996 from
$24.7 million in 1995. Gross profit as a percentage of net sales increased to
28.9% in 1996 from 26.5% in 1995. The increase in gross profit was primarily due
to the expansion of the BOSS tops product line as a percentage of total net
sales. The tops line had a higher gross margin due to reduced costs on imported
tops resulting from volume purchase discounts. Also, the continued shift of
production of denim bottoms from the United States to Mexico and accompanying
decrease in labor and overhead costs contributed to the improved gross margin.
SELLING, DISTRIBUTION, GENERAL AND ADMINISTRATIVE EXPENSES. SG&A expenses
increased 22.7% to $24.9 million in 1996 from $20.3 million in 1995. As a
percentage of net sales, SG&A expenses decreased to 21.1% in 1996 from 21.8% in
1995. This improvement reflects overall declines in SG&A expenses resulting from
cost containment efforts in certain expense areas and expense leverage
associated with the Company's growth. Selling expense increased $4.6 million to
$16.7 million over the same period, as a result of higher commissions to the
Company's salespersons and higher royalty payments to licensors on increased
sales of branded merchandise. Also, advertising expenditures increased to $2.5
million from $1.5 million as the Company initiated an advertising campaign to
promote the BOSS brand. Distribution and shipping expenses increased $0.3
million to $2.7 million due to higher unit shipments and overtime wages for
employees at the Company's distribution center. The Company opted to incur
additional overtime wages rather than adding personnel to process the increase
in unit shipments. General and administrative expenses increased $0.4 million to
$6.2 million during the same period primarily due to higher data processing
expenses.
OPERATING INCOME. Operating income increased 106.7% to $9.3 million or 7.8%
of net sales in 1996, from $4.5 million or 4.7% of net sales in 1995. This
increase primarily resulted from the increase in net sales and gross profit
margins as well as the receipt of approximately $0.7 million related to an
agreement with the Company's insurance carrier to reimburse it for legal fees
associated with litigation billed in prior years.
INTEREST EXPENSE. Interest expense increased to $1.4 million from $1.2
million in 1996 due to an increase in working capital borrowing requirements
which was partially offset by a reduction in borrowing costs. For 1996, the
average outstanding short-term debt balance was $9.8 million, with an average
effective interest rate of 9.25%. For 1995, the average balance was $8.5
million, with an average effective interest rate of 9.88%.
21
<PAGE>
YEAR ENDED DECEMBER 31, 1995 COMPARED TO YEAR ENDED DECEMBER 31, 1994
NET SALES. Net sales increased 9.4% to $93.3 million in 1995 from $85.3
million in 1994. Substantially all of this increase was due to greater unit
shipments of BOSS sportswear which was due to greater penetration of the
specialty store channel and initial shipments to a major department store chain.
Net sales of BOSS sportswear increased $6.0 million or 10.8% to $61.8 million in
1995 primarily due to the expansion of the tops product line. The overall
increase in net sales was partially offset by weaker sales of colored denim
shorts. Net sales of Beverly Hills Polo Club sportswear increased $3.3 million
or 86.8% to $7.1 million over the same period as it continued to grow from its
initial introduction by the Company in the first quarter of 1994. There were no
international sales in 1995 or 1994.
GROSS PROFIT. Gross profit increased 6.9% to $24.7 million in 1995 from
$23.1 million in 1994. However, gross profit as a percentage of net sales
decreased to 26.5% from 27.1% over the same period. The decrease in gross profit
as a percentage of net sales resulted from weaker sales of higher gross margin
colored denim shorts combined with stronger sales of the Company's lower gross
margin private label products.
SELLING, DISTRIBUTION, GENERAL AND ADMINISTRATIVE EXPENSES. SG&A expenses
increased 10.9% to $20.3 million in 1995 from $18.3 million in 1994. As a
percentage of net sales, SG&A expenses increased to 21.8% from 21.5% in 1994 as
the Company increased investment in organizational structure and personnel to
support growth and expanded advertising. Selling expenses increased $1.6 million
to $12.1 million during the same period primarily due to a $1.1 million increase
in advertising expenditures. Total advertising expenditures more than tripled to
$1.5 million as the Company significantly expanded its campaign to increase
awareness of the BOSS brand. Also, commission expenses to the Company's
salespersons and royalty payments to licensors rose as sales of BOSS and Beverly
Hills Polo Club sportswear continued to increase as a percentage of total net
sales. Distribution and shipping expenses increased $0.4 million to $2.4 million
over the same period as a result of increased unit shipments and overtime wages
for employees at the Company's distribution center. General and administrative
expenses were essentially unchanged from the $5.8 million experienced in 1994 as
the Company contained personnel costs.
OPERATING INCOME. Operating income decreased 4.3% to $4.5 million or 4.7%
of net sales in 1995, from $4.7 million or 5.6% of net sales in 1994. This
decrease primarily resulted from lower gross margins coupled with higher SG&A
expenses.
INTEREST EXPENSE. Interest expense increased minimally to $1.3 million in
1995 primarily due to an increase in average outstanding borrowings. For 1995,
the average outstanding short-term debt balance was $8.5 million, with an
average effective interest rate of 9.88%. For 1994, the average balance was $6.6
million, with an average effective interest rate of 9.72%.
OTHER INCOME (EXPENSE). There was no significant other income in 1995 as
compared to other income of $1.2 million in 1994. In 1994, the Company received
approximately $1.2 million as the final payment related to the settlement of a
license dispute with a third party.
EXTRAORDINARY ITEM. The Company recognized an extraordinary gain of $0.4
million in 1994 related to early extinguishment of senior subordinated debt due
a former partner. There was no comparable item in 1995.
LIQUIDITY AND CAPITAL RESOURCES
The Company has relied primarily on internally generated funds, trade credit
and asset-based borrowings to finance its operations and expansion. The
Company's capital requirements primarily result from working capital needed for
inventory and accounts receivable.
22
<PAGE>
OPERATING CASH FLOW
Cash used by operations totaled $5.9 million for the six months ended June
30, 1997 due to a significant increase in accounts receivable and inventory
which resulted from higher sales of BOSS and Beverly Hills Polo Club sportswear.
This was partially offset by higher levels of accounts payable and improved
operating results. Cash used for investing activities totaled $0.6 million for
the six months ended June 30, 1997 and was used primarily for the purchase of
machinery for the Company's factories. Cash provided by financing activities
totaled $7.1 million for the six months ended June 30, 1997. The Company
borrowed $7.4 million under its credit facilities primarily to finance the
growth in accounts receivable and inventory and borrowed $4.4 million to fund
distributions to its stockholders for the payment of federal and state income
taxes.
As of June 30, 1997, the Company had working capital of $19.4 million
compared to $16.3 million at December 31, 1996. The $3.1 million increase in
working capital primarily resulted from a $8.9 million increase in accounts
receivable and a $7.9 million increase in inventories resulting from higher
sales of BOSS and Beverly Hills Polo Club sportswear and higher levels of
finished goods. This was partially offset by a $1.1 million increase in accounts
payable, a $1.0 million increase in the overdraft directly related to the higher
inventory levels necessary to support anticipated sales growth in early 1997 and
a $11.8 million increase in outstanding borrowings under the Company's revolving
line of credit.
Capital expenditures were $0.6 million for the six months ended June 30,
1997 and $0.7 million in both 1996 and 1995. The Company's capital expenditures
were comprised primarily of purchases of computer equipment and sewing machinery
for its domestic factories. The Company anticipates that capital expenditures
will be approximately $6.0 to $7.0 million in 1998, primarily related to the
construction of a new 150,000 square foot distribution center in Milford,
Delaware to be financed through a mortgage loan.
As of June 30, 1997, the Company had outstanding borrowings under its
revolving line of credit and term loan facility of $18.9 million compared to
$7.2 million as of December 31, 1996. The higher borrowing level was necessary
to support the growth in accounts receivable and inventory experienced in the
first half of 1997.
Because of the Company's treatment as an S corporation for federal and state
income tax purposes, the Company has provided funds to its stockholders for the
payment of income taxes on the earnings of the Company. Accordingly, the Company
made cash distributions to its stockholders in the amounts of $2.9 million, $3.2
million and $4.4 million in 1995, 1996 and thus far in 1997, respectively. Prior
to the Closing Date, the Company will declare the S Corporation Distribution. On
and after the S Terminiation Date, the Company will no longer be treated as an S
corporation. After completion of the Offering, the Company's immediate cash flow
needs will not reflect any dividend distributions to the Company's stockholders
for payment of income taxes on the earnings of the Company. However, the Company
will assume responsibility for payment of federal and state income taxes, which
will partially offset the Company's former cash commitment to provide its
stockholders with funds for the payment of income taxes.
CREDIT FACILITIES
The Company has an asset-based revolving line of credit with a lender that
allows it to borrow up to $30 million based on a percentage of eligible accounts
receivable and inventory. Outstanding borrowings at December 31, 1995 and 1996
were $7.2 million and $6.3 million, respectively. Borrowings under the revolving
line of credit bear interest at the lender's prime rate plus 1.0%. Also, the
Company has a term loan facility with the lender, which allows it to continually
borrow up to $1.0 million. Outstanding borrowings under the term loan were $0.3
million and $0.9 million at December 31, 1995 and 1996, respectively. The
Company will use a portion of the net proceeds of the Offering to repay the
amounts outstanding under these credit facilities. See "Use of Proceeds." The
Company intends to enter into a new credit facility after consummation of the
Offering, which will replace the existing revolving line of credit and term loan
facilities.
23
<PAGE>
In October 1997, the Company borrowed $11.3 million to finance the
acquisition of certain BOSS trademark rights. This obligation is evidenced by a
secured, limited recourse promissory note which matures on December 31, 2007
(the "Note"). The Note bears interest at 10.0% per annum, payable quarterly;
principal is payable in full upon maturity of the Note, which is collateralized
by the Trademark Rights. The Company has no recourse liability for payment of
the principal. See "Business--License and Other Rights Agreements."
The Company extends credit to its customers. Accordingly, the Company may
have significant risk in collecting accounts receivable from its customers. The
Company has credit policies and procedures which it uses to minimize its
exposure to credit losses. As a result, the Company has experienced credit
losses of less than one-half of one percent of net sales in 1994, 1995 and 1996
and in the six months ended June 30, 1997.
The Company believes that the net proceeds of the Offering, cash from
operations and its existing credit facilities will be sufficient to meet its
working capital requirements for the next 12 months.
PRO FORMA ADJUSTMENTS FOR INCOME TAXES
Prior to the Reorganization, the Company's earnings were not subject to
federal, state and local income taxes. In connection with the Reorganization,
the Company's earnings will become subject to such taxes. In addition, as a
result of the Reorganization, the Company will record a net deferred tax asset
and a corresponding tax benefit in its statement of income in accordance with
the provisions of Statement of Financial Accounting Standards No. 109,
"Accounting for Income Taxes." If the Offering occurred on June 30, 1997, the
deferred tax asset and corresponding tax benefit would have been approximately
$1.3 million. The Company's pro forma effective tax rate, which excludes the
non-recurring tax benefit discussed above, for the years ended December 31,
1994, 1995 and 1996 and for the six months ended June 30, 1997 and June 30, 1996
was 41.0%. The effect of taxes is not discussed herein because the historic
taxation of the earnings of the Company is not meaningful with respect to
periods after the Reorganization.
SELECTED QUARTERLY RESULTS
The Company's business is impacted by the general seasonal trends that are
characteristic of the apparel and retail industries. In the Company's segment of
the apparel industry, sales are generally higher in the first and third
quarters. However, the Company's strong growth in 1996 minimized this seasonal
effect. Historically, the Company has taken greater markdowns in the second and
fourth quarter. As the timing of the shipment of products may vary from year to
year, the results for any particular quarter may not be indicative of results
for the full year. The Company has not had significant overhead and other costs
generally associated with large seasonal variations.
The following table sets forth certain unaudited quarterly financial
information for the periods shown:
<TABLE>
<CAPTION>
QUARTER ENDED
--------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
MARCH 31, JUNE 30, SEPTEMBER 30, DECEMBER 31, MARCH 31, JUNE 30,
1996 1996 1996 1996 1997 1997
----------- ----------- ------------- ------------- ----------- -----------
<CAPTION>
(DOLLARS IN THOUSANDS)
<S> <C> <C> <C> <C> <C> <C>
Net sales............................. $ 25,902 $ 25,997 $ 34,481 $ 32,275 $ 39,312 $ 38,398
Gross profit.......................... 7,839 7,837 10,716 7,842 13,313 12,376
Gross profit margin................... 30.3% 30.2% 31.1% 24.3% 33.9% 32.2%
Operating income...................... $ 2,089 $ 1,567 $ 3,924 $ 1,745 $ 4,854 $ 3,968
Operating margin...................... 8.1% 6.0% 11.4% 5.4% 12.3% 10.3%
</TABLE>
INFLATION
The Company does not believe that the relatively moderate rates of inflation
experienced in the United States over the last three years have had a
significant effect on its net sales or profitability. Although higher rates of
inflation have been experienced in a number of foreign countries in which the
Company's products are manufactured, the Company does not believe that they have
had a material effect on the Company's net sales or profitability.
24
<PAGE>
IMPACT OF RECENT ACCOUNTING PRONOUNCEMENTS
In October 1995, the Financial Accounting Standards Board issued Statement
of Financial Accounting Standards No. 123, Accounting for Stock-Based
Compensation ("SFAS 123"). SFAS 123 will begin to affect the Company in 1997
with the establishment of the 1997 Omnibus Stock Plan. See "Management-- 1997
Omnibus Stock Plan." The Company will adopt only the disclosure provisions of
SFAS 123 and account for stock-based compensation using the intrinsic value
method set forth in APB Opinion 25.
In March 1997, the Financial Accounting Standards Board issued Statement of
Financial Accounting Standards No. 128, Earnings Per Share ("SFAS 128"). SFAS
128 provides a different method of calculating earnings per share than is
currently used in APB Opinion 15. SFAS 128 provides for the calculation of basic
and diluted earnings per share. Basic earnings per share includes no dilution
and is computed by dividing income available to common stockholders by the
weighted average number of common shares outstanding for the period. Diluted
earnings per share reflects the potential dilution of securities that could
share in the earnings of an entity, similar to existing fully diluted earnings
per share. As required by the policies of the Securities and Exchange Commission
(the "Commission"), the Company has treated the shares being sold to fund the S
Corporation Distribution as outstanding prior to the Offering. SFAS 128 does not
have a provision requiring such treatment. The Commission is currently
evaluating its policies concerning this issue. Assuming shares issued to fund
the S Corporation Distribution continue to be treated as outstanding prior to
the Offering, the Company believes adopting SFAS 128 will not have a material
effect on its calculation of earnings per share. The Company will adopt the
provisions for computing earnings per share set forth in SFAS 128 in December
1997.
Statement of Financial Accounting Standards No. 129, Disclosure of
Information about Capital Structure ("SFAS 129"), effective for periods ending
after December 15, 1997, establishes standards for disclosing information about
an entity's capital structure. SFAS 129 requires disclosure of the pertinent
rights and privileges of various securities outstanding (stock, options,
warrants, preferred stock, debt and participation rights) including dividend and
liquidation preferences, participant rights, call prices and dates, conversion
or exercise prices and redemption requirements. Adoption of SFAS 129 will have
no effect on the Company as it currently discloses the information specified.
In June 1997, the Financial Accounting Standards Board issued two new
disclosure standards. The Company's results of operations and financial position
will be unaffected by implementation of these new standards.
Statement of Financial Accounting Standards No. 130, Reporting Comprehensive
Income ("SFAS 130"), establishes standards for reporting and display of
comprehensive income, its components and accumulated balances. Comprehensive
income is defined to include all changes in equity except those resulting from
investments by owners and distributions to owners. Among other disclosures, SFAS
130 requires that all items that are required to be recognized under current
accounting standards as components of comprehensive income be reported in a
financial statement that is displayed with the same prominence as other
financial statements.
Statement of Financial Accounting Standards No. 131, Disclosure about
Segments of a Business Enterprise ("SFAS 131"), establishes standards for the
way that public enterprises report information about operating segments in
annual financial statements and requires reporting of selected information about
operating segments in interim financial statements issued to the public. It also
establishes standards for disclosures regarding products and services,
geographic areas and major customers. SFAS 131 defines operating segments as
components of an enterprise about which separate financial information is
available and that is evaluated regularly by the chief operating decision maker
in deciding how to allocate resources and in assessing performance.
Both SFAS 130 and SFAS 131 are effective for financial statements for
periods beginning after December 15, 1997 and require comparative information
for earlier years to be restated. Due to the recent issuance of these standards,
management has been unable to fully evaluate the impact, if any, they may have
on future financial statement disclosures.
25
<PAGE>
BUSINESS
INTRODUCTION
I.C. Isaacs & Company, Inc. is a rapidly growing designer, manufacturer and
marketer of branded sportswear. Founded in 1913, the Company offers full lines
of sportswear for young men, women and boys under the BOSS brand in the United
States and Puerto Rico and sportswear for men and women under the Beverly Hills
Polo Club brand in the United States, Puerto Rico and Europe. Through a focused
strategy of providing fashionable, branded merchandise at value prices, the
Company has emerged as a significant fashion source for youthful consumers who
purchase sportswear and outerwear through specialty and department stores. The
Company also offers women's sportswear under various Company-owned brand names
as well as under third-party private labels. Net sales of the Company grew from
$85.3 million in 1994 to $118.7 million in 1996, and operating income grew from
$4.7 million in 1994 to $9.3 million in 1996, a compounded annual growth rate of
40.1%. In the first six months of 1997, net sales and operating income to
totaled $77.7 million, $8.8 million, respectively, as compared to $51.9 million
and $3.7 million in the first six months in 1996.
The Company manufactures and markets sportswear under the BOSS brand at
specified price points in the United States and Puerto Rico and has positioned
the BOSS line to appeal to consumers who desire a fresh, urban, fashion-forward
look. Through creative and innovative marketing, the Company has created
powerful brand appeal for the BOSS line and has become an active influence in
young men's fashion. The BOSS collection has been expanded from an initial line
of denim products into a full array of sportswear consisting of jeans, tee
shirts, sweatshirts, shorts, knit and woven shirts and outerwear, many of which
are characterized by innovative design, creative graphics and bold uses of
color. The Company also markets a juniors' sportswear line under the BOSS brand
for young women, which includes a full selection of denim products and active
sportswear. Over the past three years, the Company's net sales of BOSS
sportswear increased at a compounded annual growth rate of 24.7%. In 1996, net
sales of BOSS sportswear accounted for 72.6% of the Company's net sales.
As exclusive licensee for Beverly Hills Polo Club sportswear in the United
States, Puerto Rico and Europe, the Company targets men and women who desire
updated traditional sportswear at competitive prices. To reach a broader
demographic customer base, the Beverly Hills Polo Club collection combines
contemporary design details and innovative fabrics with classic American
sportswear styling. The Beverly Hills Polo Club collection consists primarily of
cotton clothing, including jeans, pants, shorts, knit and woven shirts and
outerwear targeting the active, image-conscious consumer. Since the line's
introduction in the spring of 1994, the Company's net sales of Beverly Hills
Polo Club sportswear increased at a compounded annual growth rate of 92.7%. In
1996, net sales of Beverly Hills Polo Club sportswear accounted for 12.0% of the
Company's net sales.
COMPETITIVE STRENGTHS
In the late 1980's, management made a decision to change the Company's
marketing focus from a manufacturing-driven to a brand-driven strategy. As a
result, the Company believes it has developed distinct competitive strengths
which position it for continued success. The Company's key competitive strengths
include:
EMPHASIS ON BRAND IDENTITY. The Company believes that brand identity, as
well as the image or lifestyle it conveys, are important factors that influence
retail consumers' purchasing decisions. As a result of its branded product
focus, the Company believes that the BOSS and Beverly Hills Polo Club brands
have developed strong name recognition and consumer appeal. The Company has
consistently positioned the BOSS line to be a fashion-forward brand with an
urban attitude. The word "boss" conveys images of power and authority and is
commonly used by today's youth as an expression of excellence. Similarly, the
Company believes that the Beverly Hills Polo Club brand name, together with the
accompanying distinctive horse and rider logo, connotes a "classic American"
upscale image with which retail consumers easily
26
<PAGE>
identify. The combination of these two brands enables the Company to offer a
broad continuum of products and designs well recognized by fashion conscious
consumers.
COMBINATION OF FASHION AND VALUE. The Company is able to provide consumers
with fashionable brand name sportswear at affordable prices. The BOSS and
Beverly Hills Polo Club product lines both consistently provide exciting,
fashion-forward products using fresh colors, striking graphic designs, unique
fabrics, unusual trimmings and elaborate embroidery. The Company offers a wide
array of traditional products (such as jeans, tee shirts, polo shirts and
sweatshirts) that are updated with creative design details and innovative
fabrics. The Company's manufacturing, sourcing and merchandising expertise
enables it to provide its customers with fashion, image-oriented products at
value prices. As a result, BOSS and Beverly Hills Polo Club products typically
sell at retail prices below those of many well known designer brands.
CREATIVE AND INNOVATIVE MARKETING. The Company has built the strong name
recognition and brand image of its products through a coordinated merchandising,
advertising and promotion strategy. Since the Company has not had the resources
to commit to a major mass media campaign, it has relied on innovation and
creativity to reach its target customers who are image conscious and influenced
by fashion, music and sports. In advertising its products, the Company uses
magazines such as VIBE, SOURCE, SLAM, GQ and POV, television shows and networks
including Turner Network Television (TNT), Black Entertainment Television (BET),
MTV: Music Television, Univision, Telemundo and various amateur and professional
sporting events. The Company is also a sponsor of the Chicago Bulls, New York
Knicks, New Jersey Nets, Atlanta Hawks, Detroit Pistons and Los Angeles Clippers
professional basketball teams and promotes the image of its products by
providing celebrities with its branded clothing and featuring its products in
television programs and movies. The Company influences the presentation of its
brands and products at the retail level by providing in-store signage, video
advertisements and most recently, the "Shop-in-Shop" concept.
FLEXIBLE MANUFACTURING AND SOURCING. The Company believes that its ability
to source products from its United States facilities and third party foreign and
domestic manufacturers provides it with significant manufacturing flexibility.
The Company owns and operates three manufacturing facilities in the United
States for the production of bottoms. In addition, the Company contracts for the
manufacture of its products through third party foreign and domestic
manufacturers. Currently, the Company utilizes approximately 50 factories in
more than 10 countries including China, Hong Kong, Korea, Mexico, the
Philippines, Taiwan, Thailand and the United States. The Company takes full
advantage of a rapid delivery capability by producing jeans in its own
manufacturing facilities and tee shirts at domestic contractors. In addition,
the Company gains a significant cost advantage by utilizing factories in Mexico
and Asia for the manufacture of innovative and labor intensive products that
typically cannot be produced competitively in the United States. This
combination of manufacturing and sourcing capabilities enhances the Company's
production flexibility and capacity while effectively enabling it to control the
timing, quality and pricing of its products.
GROWTH STRATEGY
The Company's growth strategy includes continued capitalization on its
competitive strengths and the implementation of specific strategies for
continued expansion. The Company's principal growth strategies are as follows:
BROADEN PRODUCT OFFERINGS. The Company believes that significant additional
expansion opportunities exist in certain product categories under both the BOSS
and Beverly Hills Polo Club brands. As the BOSS brand has developed, the Company
has shifted its product mix from predominantly bottoms to a broader collection
of sportswear, driven by tops and outerwear. This evolution is consistent with
many sportswear companies, which generally sell several tops for each pair of
bottoms. Currently, the Company sells approximately the same number of units of
tops and bottoms but believes this ratio will increase to three to four tops for
each pair of bottoms sold. The continued evolution of the product mix provides
significant
27
<PAGE>
growth opportunities for the Company's tops segment. The Company is growing its
BOSS line by adding new product categories, such as polo shirts and swimwear,
broadening its outerwear collection and expanding its boys', juniors' and youth
lines. Similarly, the Beverly Hills Polo Club brand includes a number of product
lines that are in the early stages of market penetration, such as outerwear. To
further develop the Beverly Hills Polo Club brand, the Company plans to
introduce men's dress shirts as part of its 1998 fall collection. Product
offerings within the Beverly Hills Polo Club women's line are also being
expanded, and the Company is reorganizing and increasing its women's sales
force.
ENHANCE MARKETING PROGRAMS. While the Company believes that its current
marketing strategy is one of its primary competitive strengths, it intends to
continue its efforts to increase net sales by enhancing consumer recognition of
its brand names and images through expanded marketing efforts. The BOSS brand is
currently advertised through a variety of media, including television and print,
while the Beverly Hills Polo Club brand is primarily advertised through print
media. As the Company continues to grow, it plans to use its increased financial
resources to further support and expand the brand exposure for BOSS and Beverly
Hills Polo Club through increased television and print advertising, and various
forms of outdoor advertising such as billboards and signage on buses and at bus
stops. To further differentiate its products at the retail level, the Company
also plans to expand its point-of-sale advertising. Specifically, the Company
intends to build upon its existing programs to provide signage and posters and
to expand its presence in the stores by providing additional permanently
identified free-standing fixtures and presentation services. The Company also
plans to enhance visual presentation of its products at the retail level through
the "Shop-in-Shop" concept. The Company believes an expanded "Shop-in-Shop"
program will further stimulate retailers to make longer term commitments to the
Company's products and will encourage each store to carry a broader array of
product lines each season.
EXPAND CHANNELS OF DISTRIBUTION. With increased demand for its sportswear,
the Company believes that it can continue to expand and penetrate certain
channels of distribution, primarily the department store channel. In recent
years, the Company has moved beyond the specialty stores and specialty store
chains with its BOSS label to begin significant distribution to department store
customers. As a result, J.C. Penney Company, Inc. was the Company's largest
customer in 1996. Under the BOSS brand, the Company is also selling to other
major department stores including The May Department Stores Company, Federated
Department Stores, Inc. and Dayton Hudson Corporation. Further penetration of
these accounts with the BOSS product line is a primary focus of the Company, and
the recently introduced "Shop-in-Shop" concept should help facilitate this
department store expansion. The Beverly Hills Polo Club brand has not penetrated
the department store channel to the same extent as the BOSS brand, and the
expanded distribution of Beverly Hills Polo Club products in department stores
is a primary growth focus of the Company. In addition, the Company will continue
to increase the number of products distributed to specialty stores and specialty
store chains. The Company already sells to over 4,000 specialty stores and
specialty store chains and believes that this broad cross-section of active
accounts distinguishes it from many of its competitors. Utilizing its 44 sales
representatives and in-house credit department, the Company plans to expand the
product categories that it sells to the specialty store channel of distribution
while maintaining its excellent credit risk experience.
INCREASE EUROPEAN PRESENCE. The Company believes it is well positioned to
capitalize on the appeal of its Beverly Hills Polo Club licensed brand name to
continue to expand its European product distribution. The classic American
sportswear look conveyed by the Beverly Hills Polo Club line is popular with
European youth, due in part to the proliferation of American entertainment,
including music, movies, television programs and professional sports. While the
Company has only recently entered the European market in the fourth quarter of
1996, it currently has distributors in Belgium, France, Greece, Luxembourg, the
Netherlands, Norway, Portugal and the United Kingdom. To meet the consumer
demand for its Beverly Hills Polo Club sportswear, the Company has been moving
to expand its network of wholesale distributors in Europe and is currently
negotiating agreements to add distribution in Austria, Germany, Italy, and
Switzerland. In addition, the Company has established three franchise stores in
Spain, including
28
<PAGE>
a franchise store in Madrid. Discussions are currently underway for several
additional franchise stores in Spain and elsewhere in Europe.
PRODUCTS
The Company's sportswear collections under the BOSS and Beverly Hills Polo
Club brands provide a broad range of product offerings for young men, women and
boys, including a variety of tops, bottoms and outerwear. While each brand
reflects a distinct image and style, both are targeted to consumers who are
seeking high quality, fashionable products at competitive prices. The Company
also manufactures and markets women's sportswear under its own "I.C. Isaacs,"
"Lord Isaacs" and "Pizzazz" brand names as well as under third-party private
labels. Consistent with its focus on branded products, the Company discontinued
its manufacture of men's private label apparel in the fourth quarter of 1996.
The Company may seek to acquire additional licenses or brand names as a
continuation of its branded-market strategy. The following table sets forth, for
the periods indicated, the Company's net sales categorized by brand and product
category:
<TABLE>
<CAPTION>
SIX MONTHS ENDED
YEAR ENDED DECEMBER 31, JUNE 30,
------------------------------- --------------------
<S> <C> <C> <C> <C> <C>
1994 1995 1996 1996 1997
--------- --------- --------- --------- ---------
<CAPTION>
(IN THOUSANDS)
<S> <C> <C> <C> <C> <C>
MEN'S(1)
BOSS Bottoms.................................................... $ 37,724 $ 37,234 $ 44,667 $ 21,224 $ 29,075
BOSS Tops....................................................... 6,709 15,883 29,284 11,268 19,447
BOSS Boys'...................................................... 1,834 3,264 6,736 2,055 6,771
Men's BHPC...................................................... 2,795 5,219 12,226 4,598 11,822
Men's Private Label............................................. 3,227 4,299 500 427 50
--------- --------- --------- --------- ---------
Men's total................................................. 52,289 65,898 93,414 39,572 67,165
--------- --------- --------- --------- ---------
WOMEN'S(1)
BOSS Juniors'(2)................................................ 9,528 5,423 5,413 3,464 1,954
Women's BHPC.................................................... 1,047 1,833 2,043 774 819
Women's Other(3)................................................ 22,433 20,116 17,786 8,089 7,772
--------- --------- --------- --------- ---------
Women's total............................................... 33,009 27,373 25,242 12,327 10,545
--------- --------- --------- --------- ---------
Total net sales............................................. $ 85,298 $ 93,271 $ 118,655 $ 51,899 $ 77,710
--------- --------- --------- --------- ---------
--------- --------- --------- --------- ---------
</TABLE>
- ------------------------
(1) The net sales totals incorporate product returns allocated in proportion to
gross sales.
(2) Results for the year ended December 31, 1994 include approximately $2.5
million of net sales of tee shirts and sweatshirts with unisex styling that
were discontinued after the Company obtained a license to manufacture and
sell men's BOSS tops in the fourth quarter of 1994. As a result, these
products were recategorized in men's BOSS tops in 1995 and thereafter.
(3) Includes Company-owned brands and third-party private labels.
BOSS PRODUCTS
The BOSS brand is a full sportswear line characterized by innovative
fabrication, creative graphics and bold uses of color. BOSS products appeal to
young men, young women and boys, who want a fresh, fashion-forward look with an
urban attitude at a competitive price. As the line has expanded and matured, the
demographics of BOSS customers have expanded beyond their urban base to include
fashion-conscious young consumers across the United States. Over the past three
years, the Company has placed increased emphasis on expansion of the top's
segment, and it anticipates that this segment will continue to be the fastest
growing category of products in the BOSS collection.
Bottoms
The Company's BOSS products began as a line of high-quality jeans and other
denim casual wear. The bottoms line currently consists of a wide variety of
denim jeans in a broad array of colors, designs and styles together with
corduroy and twill pants. Many of the BOSS jeans feature elements such as unique
29
<PAGE>
pocket treatments, innovative trim and embroidered logos. The Company maintains
its own washing facilities, which allow it to create a variety of washes for its
denim products. The Company identified an underserved niche in the young men's
market for fashion jeans at moderate price points as compared with many designer
jeans, which retail for $60 and up per pair. The estimated retail price for the
Company's jeans is between $35 and $50 per pair. In the spring of 1997, the
Company expanded its product offerings by introducing a swimwear collection.
Estimated retail prices for swimwear range from $30 to $40.
Tops and Outerwear
The BOSS young men's line includes a variety of tops, tee shirts and
outerwear. The BOSS tops collection consists of a range of products including
cotton tee shirts, polo shirts, cotton pique shirts, novelty knit tops and
fleece sweatshirts. These products utilize unique combinations of textured
polyester fabrications, as well as a broad array of appliqued logos and
innovative graphics. The styling of many of the BOSS tops is influenced by
sports clothing and uniforms and conveys an energetic, youthful attitude. The
Company has expanded its outerwear line, which includes a variety of products
including nylon jackets and downfilled parkas. The estimated retail prices range
from $19 to $22 for tee shirts, $30 to $55 for tops and $50 to $100 for
outerwear products.
Boys', Youth and Juniors' (Young Women)
The Company complements its BOSS young men's line with BOSS boys' and youth
lines which are targeted to appeal to boys ages 4 to 7 and youth ages 8 to 16.
The BOSS boys' and youth product lines are substantially similar to the young
men's line and include jeans, tee shirts, tops, sweatshirts and outerwear.
Because the boys' market is more price conscious, some of the styles use less
expensive fabrication and design detail. The boys' and youth lines typically
sell at retail prices approximately 10% to 20% below the young men's line.
The BOSS juniors' line is the female counterpart to the BOSS young men's
line and is targeted to appeal to fashion-conscious girls and women ages 16 to
25. The BOSS juniors' collection maintains its own identity as contemporary
sportswear with an urban attitude. The product line includes denim jeans, tee
shirts, skirts, tops and jackets. Many of these styles are characterized by
close-fitting designs utilizing textured fabrics and bold colors. The estimated
retail prices for the juniors' line range from $15 to $20 for tee shirts, $25 to
$50 for tops, $30 to $45 for jeans and $30 to $75 for outerwear.
BEVERLY HILLS POLO CLUB PRODUCTS
The Beverly Hills Polo Club sportswear products are positioned to be an
updated traditional sportswear brand. The products combine contemporary design
details and innovative fabric with classic American styling. With a broader
demographic appeal than the BOSS brand, Beverly Hills Polo Club products are
targeted to appeal to consumers 16 years and older. Today, the Beverly Hills
Polo Club name and accompanying horse and rider logo symbolize quality,
traditional sportswear at competitive prices.
Tops and Outerwear
The Company has merchandised the Beverly Hills Polo Club men's line to place
more emphasis on tops, including a full line of tee shirts, polo shirts, rugby
shirts, denim shirts and sweatshirts made primarily in cotton fabrics such as
pique, jersey and jersey fleece. While classic in styling, the tops line is
distinguished by innovative use of design, embroidery and fabric detail. The
collections also include more contemporary styles and a broader array of novelty
fabrics as well as product offerings such as woven shirts and outerwear,
including jackets and downfilled parkas. In 1998, the Company intends to
introduce a new line of men's dress shirts. Estimated retail prices range from
$19 to $22 for tee shirts, $30 to $60 for tops and $60 to $120 for outerwear.
30
<PAGE>
Bottoms
While the primary focus of the Beverly Hills Polo Club men's line has been
on tops, the collection also includes a full line of bottoms consisting of denim
jeans, twill pants and corduroy casual pants. While somewhat more conservative
in styling compared to the BOSS line, the Beverly Hills Polo Club bottoms line
combines classic styling with unique trim, embroidery and pocket treatments.
Estimated retail prices for jeans and casual pants range from $40 to $55 per
pair.
Women's
The Company's Beverly Hills Polo Club women's sportswear line has a focus
similar to that of the men's sportswear line. It targets active, image-conscious
women 16 years and older and combines classic American styling with distinctive
design detail and fabrication. The product offerings include tee shirts, polo
shirts, denim shirts, jeans and casual pants. The collection also includes many
activewear items which utilize a variety of fabrics and graphic elements.
Estimated retail prices range from $18 to $20 for tee shirts, $30 to $60 for
tops and $40 to $55 for bottoms.
COMPANY-OWNED AND THIRD-PARTY PRIVATE LABEL PRODUCTS
The Company also produces sportswear for women under its own brands,
including "I.C. Isaacs," "Lord Isaacs" and "Pizzazz," as well as under
customers' private labels. These brands focus on pull-on elastic waist pants and
belted trousers in cotton, bleached and stonewashed denim, blended polyester and
rayon. These pants are designed to appeal to more mature women looking for basic
styling at value prices. The Company offers pants in a variety of fits including
missy, petite and large sizes. Color-coordinated tops and sweaters in cotton,
acrylic, blended polyester rayon and ramie cottons complete the mix. Estimated
retail prices range from $13 to $50 for bottoms and $20 to $60 for tops.
CUSTOMERS AND SALES
The Company's BOSS products are sold throughout the United States and Puerto
Rico in over 1,500 specialty stores and specialty store chains, such as Fine's
and Miller's Outpost. The Company's newest level of distribution is to
department stores, and its single largest customer in 1996 was J.C. Penney
Company, Inc., which accounted for approximately 13.0% of net sales. Other
department store customers include Federated Department Stores, Inc., The May
Department Stores Company and Dayton Hudson Corporation. The Company's BOSS
products are sold and marketed under the direction of its national sales office
headquartered in New York. In addition to executive selling based in New York
and Dallas, the Company has 18 commissioned sales representatives who work out
of regional showrooms throughout the United States and Puerto Rico. The Company
considers its professional sales force to be one of its major assets and one of
the principal reasons why it has been successful in establishing relationships
with department stores and thousands of specialty stores and specialty retail
chains.
The Company's Beverly Hills Polo Club sportswear is sold in the United
States, Puerto Rico and Europe. Although the Company is only in its third year
of distributing Beverly Hills Polo Club sportswear, the products are sold to
over 1,000 specialty stores and specialty store chains. The Company has begun to
sell Beverly Hills Polo Club products to department stores and believes that
there is significant potential for expanded department store sales. The
Company's Beverly Hills Polo Club products are sold and marketed under the
direction of its men's and women's national sales offices in New York. In
addition to executive selling based in New York and Dallas, the Company has a
sales force consisting of 14 sales representatives for its line of men's
sportswear and 11 sales representatives for its line of women's sportswear. To
more effectively market the Beverly Hills Polo Club women's collection, the
Company is currently in the process of reconfiguring and increasing its women's
sales force.
The Company's Beverly Hills Polo Club sportswear has recently begun to be
sold throughout Europe through wholesale distributors, all of whom buy products
directly from the Company. Since January 1,
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1997, the Company has entered into wholesale distribution arrangements with
distributors in Belgium, France, Greece, Luxembourg, the Netherlands, Norway,
Portugal and the United Kingdom and is negotiating agreements with distributors
in Austria, Germany, Italy and Switzerland. Under these arrangements, the
distributors purchase goods from the Company's Spanish subsidiary in U.S.
dollars under irrevocable letters of credit or by prepayment, thereby minimizing
the Company's credit risk. In addition, the Company has established three
franchise stores in Spain, including a showcase store in Madrid. Discussions are
currently underway for several additional franchise stores in Spain and
elsewhere in Europe.
The Company-owned branded products and third-party private label products
are sold under the direction of the women's sales headquarters in New York and
by 15 commissioned sales representatives throughout the United States. The
products are distributed to department stores such as Dayton Hudson Corporation,
Mercantile Stores Company, Inc. and Sears Roebuck and Co.; mass merchandisers
and discounters such as Hills Department Store Company and Ames Department
Stores, Inc.; catalogs such as National Wholesale Co., Inc. and Arizona
Mail-Order Company, Inc. and approximately 1,500 specialty stores nationwide.
DESIGN AND MERCHANDISING
The Company prides itself on its ability to identify and to respond to
fashion trends. The Company's designers and merchandisers travel around the
world in order to monitor emerging fashion trends and search for styling
inspiration and fabrics. These sources, together with new styling and graphics
developed by the Company's designers, serve as the primary creative influences
for the Company's product lines. In addition, designers and merchandisers
regularly meet with sales management to gain additional market insight and
further refine the products to be consistent with the needs of each of the
Company's markets. The Company's in-house design and product development is
carried out by merchandising departments in New York. Many of the Company's
products are developed using computer-aided design equipment, which allows
designers to view and easily modify images of a new design.
ADVERTISING AND MARKETING
The Company aggressively communicates and reinforces the brand and image of
its BOSS and Beverly Hills Polo Club products through creative and innovative
advertising and marketing efforts. The Company's advertising and marketing
strategies are directed by its national sales offices and developed in
collaboration with its advertising agency. The Company's advertising strategy is
geared towards its youthful consumers whose lifestyles are influenced by music,
sports and fashion. The Company has been advertising the BOSS brand since 1992
and the Beverly Hills Polo Club brand since 1994, and its advertising campaigns
have evolved from trade magazines to a wide variety of media, including
billboards, television, fashion magazines and professional sports endorsements.
Print advertisements for the BOSS brand appear regularly in VIBE, SOURCE and
SLAM magazines, while television advertisements appear on various networks
including Turner Network Television (TNT), Black Entertainment Television (BET),
MTV: Music Television, Univision and Telemundo. Advertisements for the BOSS
brand also appear on a variety of outdoor advertising media, including
billboards and bus stops. Print advertisements for the Beverly Hills Polo Club
brand are targeted to appeal to a broader demographic base and appear in
magazines such as GQ and POV. Television advertisements for the Beverly Hills
Polo Club brand are currently being developed. The Company's products can also
be seen on some of today's most visible sports and music celebrities, whose
attitude and image are captured by the BOSS and Beverly Hills Polo Club brands.
In addition, the Company is a sponsor of selected professional basketball teams,
including the Chicago Bulls, New York Knicks, New Jersey Nets, Atlanta Hawks,
Detroit Pistons and Los Angeles Clippers.
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The Company prides itself on its ability to efficiently utilize its
advertising budget. Although the Company has increased its expenditures on
advertising to approximately $2.5 million or 2.1% of net sales in 1996, this is
still a relatively modest amount as compared with some of its competitors. As
the Company continues to grow, it plans to use its increased financial resources
to further support and expand the brand exposure for BOSS and Beverly Hills Polo
Club.
Recognizing that point of sale advertising is highly effective, the Company
provides an array of in-store signage, fixtures and product videos for both BOSS
and Beverly Hills Polo Club products. In addition, through the "Shop-in-Shop"
concept, the Company seeks to enhance brand recognition and to differentiate its
products from other branded apparel by creating an environment that is
consistent with the image of its products. For example, J.C. Penney Company,
Inc. currently has approximately 250 stores using the "Shop-in-Shop" concept to
showcase BOSS young men's products and approximately 75 stores using the
"Shop-in-Shop" concept to showcase Beverly Hills Polo Club men's merchandise.
The Company plans to expand the "Shop-in-Shop" program to build longer term
commitments with the retailer and enable the retailer to carry a broader array
of the product lines each season.
MANUFACTURING AND PRODUCT SOURCING
GENERAL
The Company believes that its flexible manufacturing and sourcing
capabilities enable it effectively to control the timing, quality and pricing of
products while providing customers with increased value. The Company uses its
own facilities as well as both domestic and foreign contractors for the
production of its products. During 1996, approximately 9% of the Company's
purchases of raw materials, labor and finished goods for its apparel were made
in Mexico; approximately 28% were made in Asia; approximately 23% were made at
third-party facilities in the United States; and the balance was made at the
Company's facilities in the United States. For the first half of 1997,
approximately 71% of the Company's manufacturing and sourcing was done by third
parties, all through arrangements with independent contractors. The Company
evaluates its contractors frequently and believes that there are a number of
manufacturers capable of producing products that meet the Company's quality
standards. The Company represents all or a significant portion of many of its
contractors' production and has the ability to terminate its arrangements with
any of its contractors at any time.
UNITED STATES AND MEXICO
The Company operates three manufacturing facilities in the United States and
currently utilizes seven contractors in the United States and three in Mexico.
The majority of the production in these facilities is for bottoms and tee
shirts. The Company produces approximately 50% of its bottoms (slacks, jeans,
shorts and skirts) in three Company-operated manufacturing facilities in
Mississippi, which combine to employ approximately 720 people. All three
facilities are efficient plants utilizing a level of automation that enables the
Company to competitively price its products and maintain the flexibility
necessary to meet its customers' changing demands.
The Company safeguards its manufacturing capacity by utilizing contractors
in both the United States and Mexico to produce the same product lines. The
Company has established ongoing relationships with all of these contractors but
is not bound by written agreements to continue to do business with any of them.
The Company also uses a variety of contractors in both the United States and
Mexico as needed for value added functions such as embroidery, screen printing
and laundering. Seasonal fluctuations in production requirements are
accommodated by adjusting contracted quantities, while maintaining more
consistent levels of production in Company-operated facilities. All contractors
in the United States and Mexico are selected and managed by the Company's
manufacturing staff in Mississippi and Mexico.
The Company uses a variety of raw materials, principally consisting of woven
fabrics including denim, cotton, polyrayons and various trim items. The Company
must make commitments for a significant portion
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of its fabric purchases in advance of sales, although the Company's risk is
reduced because a substantial portion of the Company's products are sewn in
basic denim.
ASIA
In addition to the Company's domestic and Mexican pant and tee shirt
production facilities, the balance of the Company's sportswear products is
produced by approximately 50 different manufacturers in more than 10 countries.
Virtually all of the Company's products other than pants and tee shirts are
produced in Asia, but none of the Asian contractors engaged by the Company
accounted for more than 10% of the Company's total production in 1996. The
Company has well established relationships with many of its contractors although
it does not have written agreements with them. The Company retains independent
buying agents in various countries in Asia to assist in selecting and overseeing
independent manufacturers, sourcing fabric, trim and other materials, monitoring
quotas and performing certain quality control functions. The sourcing and
merchandising staffs in the Company's New York offices oversee all aspects of
Asian fabric and product development, apparel manufacturing, price negotiation
and quality control, as well as researching and developing new Asian sources of
supply.
The Company seeks to achieve the most efficient means for the timely
delivery of its high quality products. With rare exceptions, the Company does
not purchase fabrics but instead negotiates a finished garment price from its
contractors. The contractor must then purchase the approved fabric as part of
the package. Orders are generally placed after the Company has received customer
orders, and delivery of finished goods to customers occurs generally 90 to 150
days after placement of the order. All of the Company's products manufactured
abroad are paid for in United States dollars. Accordingly, the Company does not
engage in any currency hedging transactions. During the last several years, the
volume of the Company's products produced in Asia has increased dramatically,
and this trend is likely to continue in the future.
WAREHOUSING AND DISTRIBUTION
The Company has serviced its United States customers for the last 38 years
utilizing a Company-owned and operated distribution center in Milford, Delaware.
This primary facility has been expanded during that time, resulting in its
present size of approximately 70,000 square feet. Over the last few years, the
Company has leased additional space in the Milford area to accommodate increased
capacity requirements fueled by growth in sales. The Company is in the process
of establishing a computerized "Warehouse Management System" with real-time
internal tracking information and the ability to provide its customers with
electronically transmitted "Advance Shipping Notices." The accuracy of shipments
is increased by the ability to scan coded garments at the packing operation.
This process also provides for computerized routing and customer invoicing. The
vast majority of shipments are handled by UPS, common carriers or parcel post.
The Company believes that its increased distribution requirements as a
result of rapid growth can be better met by consolidating its warehousing and
distribution functions into a new 150,000 square foot facility to be located in
Milford, Delaware. Consolidating all the receiving, stocking, packing and
shipping functions into one facility should result in improved management
control and less redundancy in supervision and operational functions. The
Company believes that its engineering plan for the new facility will provide the
capacity to accommodate substantial growth in the Company's domestic volume and
will reduce labor costs and improve response times. The Company believes the
construction of this facility should be completed in 1998 at an estimated cost
of between $6.0 million and $7.0 million to be financed through a mortgage loan.
In order to ensure against the possibility of interrupted flow of goods to its
customers, the Company plans to occupy the new facility in phases.
The Company currently services its European customers through a contractual
arrangement with a distribution center in Barcelona, Spain, where the Company
maintains its European headquarters.
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QUALITY CONTROL
The Company's quality control program is designed to ensure that all of the
Company's products meet its high quality standards. The quality of piece goods
is monitored prior to garments being produced, and prototypes of each product
are inspected and approved before production runs are commenced.
The goods produced by Company-operated facilities, as well as by United
States and Mexican contractors, undergo continual audits by quality personnel
during production. The quality control efforts of Company-operated facilities
are directed and coordinated by the Company's Quality Control Manager located in
Mississippi. Frequent visits are made by the Quality Control Manager and other
support staff, to all outside contractors to ensure compliance with the
Company's rigorous quality standards. Audits are also performed by quality
personnel at the Milford, Delaware distribution center on all categories of
incoming merchandise. The Company employs a full-time staff of 43 persons
dedicated to the quality control efforts of its United States and Mexican
production.
All garments produced for the Company in Asia must be produced in accordance
with the Company's specifications. The Company's import quality control program
is designed to ensure that all of the Company's products meet its high quality
standards. The Company monitors the quality of fabrics prior to the production
of garments and inspects prototypes of products before production runs are
commenced. In many cases, the Company requires its agents or manufacturers to
submit fabric to an independent outside laboratory for testing prior to
production. The Company requires each agent to perform both in-line and final
quality control checks during and after production before the garments leave the
contractor. Personnel from the Company's New York office also visit Asia to
conduct inspections.
BACKLOG AND SEASONALITY
The Company's business is impacted by the general seasonal trends that are
characteristic of the apparel and retail industries. In the Company's segment of
the apparel industry, sales are generally higher in the first and third
quarters. The Company generally receives orders for its products three to five
months prior to the time the products are delivered to stores. As a result of
the Company's recent growth, as of June 30, 1997, the Company had unfilled
orders of approximately $60 million, compared to approximately $43 million of
such orders as of June 30, 1996. The Company expects to fill substantially all
of these orders in 1997. The backlog of orders at any given time is affected by
a number of factors, including seasonality, scheduling of manufacturing and
shipment of products. All such orders are subject to cancellation for late
delivery. Accordingly, a comparison of backlogs of orders from period to period
is not necessarily meaningful and may not be indicative of eventual actual
shipments.
LICENSE AND OTHER RIGHTS AGREEMENTS
BOSS TRADEMARK RIGHTS
In 1990, the Company obtained a license from Brookhurst to use the
registered trademark BOSS in the United States and Puerto Rico in connection
with certain items of sportswear for men and women. Brookhurst and its
predecessors had utilized the BOSS trademark since the late nineteenth century.
Upon the closing of the Settlement, Brookhurst will (i) sell its BOSS trademark
rights worldwide (excluding Mexico), goodwill and registrations to the Company,
(ii) transfer its rights under certain agreements with third parties relating
thereto (the rights under (i) and (ii) above referred to collectively as the
"BOSS Trademark Rights") to the Company and (iii) cease to use the BOSS name
(except for a limited sell-off of certain uniforms and samples bearing the BOSS
mark). As part of the Settlement, the Company will sell its foreign BOSS
trademark rights and its rights under related agreements acquired from
Brookhurst (the "BOSS Foreign Trademark Rights") to a third party, in return for
the third party's assumption of a purchase money note of $11.0 million delivered
by the Company to Brookhurst (the "Brookhurst Note") pursuant to the purchase.
The Company will also enter into a foreign manufacturing rights agreement with
the third party (the "Foreign Rights Agreement") under which the Company will be
licensed to manufacture apparel in certain foreign countries for sale in the
United States using the BOSS name. The Company will retain its ownership of
domestic BOSS Trademark Rights ("Domestic BOSS Trademark Rights") subject to a
third party concurrent use agreement (the "Concurrent Use Agreement") governing
the Company's use of the Domestic BOSS Trademark Rights.
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Under the agreements entered into in connection with the Settlement, the
Company's BOSS rights will be expanded to allow broader product offerings and
additional Company control over styling, advertising and distribution. In
addition to the categories of apparel which the Company was permitted to
manufacture, distribute, market and sell under its previous license agreement
with Brookhurst, under the Settlement, the Company will have the right to
manufacture, distribute, market and sell, within specified wholesale price
points, the following categories of apparel under the BOSS brand in a specified
microgramma style (the "BOSS Logotype"): swimwear, jogging suits, polo shirts
and belts (as parts of garments). The Company may use the BOSS trademark in
forms other than the BOSS Logotype with prior approval of the other parties to
the agreements. The Company will not be permitted to use the BOSS brand on
footwear, formal and tailored clothing, leather clothing, body wear, underwear,
intimate apparel, loungewear, sleepwear and robes and clothing designed for the
primary purpose of engaging in skiing, tennis, motor sports, windsurfing and any
non-apparel items. The Concurrent Use Agreement sets forth specific parameters
governing the use by the Company of the BOSS trademark with respect to wholesale
pricing points, size, location, appearance, style and coloring of the trademark
on different product categories and advertising, and requires that the Company
use the phrase "BOSS by I.G. Design" in the BOSS logotype on all products.
Under the Foreign Rights Agreement, the Company will have the right to
continue manufacturing BOSS apparel in foreign countries, including those in
which the Company is currently manufacturing BOSS apparel. The Foreign Rights
Agreement will terminate on December 31, 2001, but may be extended, at the
Company's option, through December 31, 2007.
Under the Foreign Rights Agreement, the Company will pay annual royalties of
12 1/2% on the first $32.0 million of net sales attributable to apparel
manufactured in specified foreign countries ("Territory Net Sales") for each of
the first four years of the agreement; on the first $20.0 million in Territory
Net Sales for year five of the agreement; and on the first $16.0 million of
Territory Net Sales in years six through ten of the agreement. Such base
royalties will increase upon any prepayment of the Note. For the first four
years of the agreement, an aggregate additional royalty of 5% is payable
annually on Territory Net Sales from $84.0 million to approximately $105.3
million and an aggregate additional royalty of 4% is payable annually on
Territory Net Sales of $158.0 million and up. Additional royalties in years five
through ten of the agreement increase for certain corresponding sales levels.
The Company is required, subject to certain royalty payment caps set forth in
the agreement, to generate minimum annual Territory Net Sales of at least $32.0
million for each of the first four years of the agreement; $20.0 million for the
fifth year of the agreement and $16.0 million for each of years six through ten
of the agreement. The Company's Territory Net Sales for any given year under the
agreement must equal at least 95% of total net sales attributable to apparel
manufactured worldwide. To the extent that the Company does not achieve the
required Territory Net Sales, the Company will have the right, in order to avoid
termination of the agreement, to pay royalties as if such Territory Net Sales
had been achieved.
The Foreign Rights Agreement may be terminated by the licensor upon the
occurrence of certain events, including, but not limited to (i) a material
breach by the Company after expiration of the applicable grace period, (ii)
certain events of bankruptcy, insolvency or assignment for the benefit of all
creditors relating to the Company or the appointment of a receiver or trustee
for the Company (a "Bankruptcy Event"), (iii) certain specified changes in the
control of the ownership of the Company, and (iv) certain uncured breaches by
the Company's foreign manufacturers of the terms of the agreements. In addition
to terminating the agreement, the licensor may require the Company to pay on an
accelerated basis all royalties due under certain sales assumptions through the
then current term of the agreement upon the occurrence of certain events
including, but not limited to (i) the failure of the Company to pay royalties
when due or to meet certain minimum sales requirements, (ii) the failure of the
Company to manufacture products in certain foreign countries, (iii) the sale of
the licensed products outside the United States, (iv) certain attempts by the
Company to create or establish trademark rights in the word BOSS in its own name
anywhere outside of the United States, (v) the willful and material breach of
the agreement and (vi) the occurrence of a Bankruptcy Event. The Company's
rights to use the BOSS name will terminate upon exercise of the Option (as
hereinafter defined) or upon earlier termination of any of the other agreements.
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A third party holds an option to purchase the Domestic BOSS Trademark Rights
from the Company (the "Option") for an amount equal to the principal of the Note
(i) at any time between the ninth anniversary of the Option's execution and
December 31, 2007, (ii) upon certain breaches of the Concurrent Use Agreement,
(iii) an event of default under the Note, or (iv) termination for any reason of
the Foreign Rights Agreement. See "Risk Factors--Dependence Upon Third Party
Rights and Licenses" and "Management's Discussion and Analysis of Financial
Condition and Results of Operations--Liquidity and Capital Resources."
BEVERLY HILLS POLO CLUB LICENSES
Beverly Hills Polo Club Domestic Licenses
Since 1993, the Company has had exclusive wholesale licensing agreements
(collectively, the "BHPC Agreements") with BHPC Marketing, Inc. for the
manufacture and promotion of certain men's and women's sportswear bearing the
registered trademark Beverly Hills Polo Club with an accompanying horse and
rider design (the "BHPC Trademark") for sale to moderate or better department
stores and specialty stores in the United States and its possessions, including
Puerto Rico. Under the BHPC Agreements, the Company may sell up to 25% of its
total volume for each of the men's and women's categories to warehouse clubs.
The licenses generally allow the Company to use the BHPC Trademark on sportswear
designed by or for the Company, subject to a quality approval process for
marketing and advertising materials, manufacturing premises and products bearing
the trademark. Under each of these licenses, as amended through April 1997, the
Company is required to make payments to the licensor in an amount equal to 5% of
the Company's net invoiced sales of licensed merchandise and to spend an amount
equal to 1% of net invoiced sales of such merchandise in advertising for the
licensed products. Under each license, the Company pays a monthly royalty equal
to the greater of 1/12th of the guaranteed minimum annual royalty or the actual
royalty earned by the licensor in the preceding month.
Under the Beverly Hills Polo Club men's agreement (the "Men's Agreement")
the Company has been granted an exclusive license to use the BHPC Trademark in
connection with menswear fashions made of materials other than silk in the
following categories: denim sportswear, outerwear, knit, woven, and dress
shirts, knit and woven casual pants and shorts, sweaters, basic and fashion
fleece tops and bottoms, overalls and shortalls, knit tops (including tee-shirts
and polo shirts), swimwear and warm-ups. The Men's Agreement has an initial term
expiring December 31, 1998 and is renewable at the option of the Company,
provided the Company is not in breach thereof at the time renewal notice is
given, for two consecutive three-year periods commencing January 1, 1999,
through December 31, 2004.
The Company's payment of royalties under the Men's Agreement is subject to a
guaranteed minimum annual royalty of $350,000 for the contract year ending
December 31, 1997 and $400,000 for the contract year ending December 31, 1998. A
guaranteed minimum annual royalty payment of $300,000, which was required for
the contract year ending December 31, 1996, was exceeded by the Company.
Notwithstanding its term, the Men's Agreement may be terminated by the licensor
in the event the Company fails to make net shipments of products for the
contract year ending December 31, 1997 in the amount of $7.0 million and for the
contract year ending December 31, 1998 in the amount of $8.0 million. Guaranteed
minimum annual royalties and guaranteed annual net shipments for each of the
renewal terms will be the greater of (i) 80% of the immediately preceding
contract year's actual royalties and net shipments, or (ii) the previous year's
guaranteed minimum royalty and guaranteed net shipments.
The Beverly Hills Polo Club women's agreement (the "Women's Agreement")
grants the Company the right to use the BHPC Trademark in connection with
women's, missy, junior, petite and large size coordinated sportswear, sweaters,
sweater dresses, sweater suits, basic fleece tops and bottoms, basic tee-shirts,
basic polo shirts, warm ups in knit and woven fabrics and women's tennis and
golf related shorts sets, skort sets and pant sets in knit and woven fabrics.
The Women's Agreement has an initial term expiring December 31, 1998 and is
renewable at the option of the Company, provided the Company is not in breach
thereof at the time renewal notice is given, for two consecutive three-year
periods commencing January 1, 1999, through December 31, 2004.
The Company's payment of royalties under the Women's Agreement is subject to
a guaranteed minimum annual royalty of $100,000 for the contract year ending
December 31, 1997 and $150,000 for the
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contract year ending December 31, 1998. No guaranteed minimum annual royalty
payment was required for the contract year ending December 31, 1996.
Notwithstanding the term of the Women's Agreement, the women's license may be
terminated by the licensor in the event the Company fails to make net shipments
of products for the contract year ending December 31, 1997 in the amount of $2.0
million and for the contract year ending December 31, 1998 in the amount of $3.0
million. Such termination provision has been waived for the contract year ending
December 31, 1997. Guaranteed minimum annual royalties and guaranteed annual net
shipments for each of the renewal terms will be the greater of (i) 80% of the
immediately preceding contract year's actual royalties and net shipments, or
(ii) the previous year's guaranteed minimum royalty and guaranteed net
shipments.
Each of the Men's and the Women's Agreements may be terminated by the
licensor upon the occurrence of certain events, including but not limited to the
following: (i) a breach by the Company of any obligation under the Agreement
that remains uncured within 30 days following the receipt of written notice of
such breach, (ii) the Company becomes insolvent, is the subject of a petition in
bankruptcy or otherwise enters into any composition with its creditors,
including reorganization, or (iii) the Company has committed three breaches of
the Agreement, in which case no right to cure the breach is afforded to the
Company.
During the term of the Beverly Hills Polo Club domestic Men's and Women's
Agreements, the Company is prohibited from manufacturing or otherwise
distributing any merchandise under a brand name which closely resembles the BHPC
Trademark and from using on non-Beverly Hills Polo Club products any graphic,
style or design which closely resembles any items supplied to the Company by the
licensor. In addition, the rights of the Company under the Men's and Women's
Agreements are subject to the terms of a Settlement Agreement and Consent
Judgment between the licensor and Polo Fashions Inc., which imposes certain
restrictions on the licensor's manner of use and advertising of the BHPC
Trademark, including a prohibition on the use of the words "Polo" and "Polo
Club" alone on any item of apparel. The Company believes that the BHPC
Trademark, as licensed to the Company, complies with those restrictions.
Beverly Hills Polo Club International Licenses
On August 15, 1996, I.C. Isaacs Europe, S.L., a Spanish limited corporation
and wholly-owned subsidiary of the Company, entered into retail and wholesale
license agreements (collectively, the "International Agreements") for use of the
BHPC Trademark in Europe. The International Agreements, as amended through April
28, 1997, provide certain exclusive rights to use the BHPC Trademark in all
countries of Europe for an initial term of three years ending December 31, 1999,
renewable at the Company's option through two consecutive three-year extensions
ending December 31, 2004. The International Agreements are subject to
substantially the same terms and conditions as the BHPC Agreements described
above. The Company commenced its operations under the International Agreements
by January 1, 1997, as required by the terms thereof.
The international retail agreement (the "Retail Agreement") grants the
Company the right to use the BHPC Trademark in connection with the manufacture
and sale through authorized Beverly Hills Polo Club retail stores and franchised
stores in Europe of the following categories of products: (i) men's pants, woven
shirts, knit shirts, jeans, shorts, sweaters, outerwear (excluding dress shirts
and suits); (ii) women's slacks, skirts, dresses, sweaters, outerwear, blouses
and jeans; and (iii) all other products licensed by the Beverly Hills Polo Club
licensor to other third parties (which must be purchased by the Company from the
authorized third-party licensees). The Retail Agreement excludes dress shirts
and suits. Under the Retail Agreement, the Company is required to pay the
licensor royalties equal to (i) 4% of the wholesale purchases by the Company of
Beverly Hills Polo Club products sold to Beverly Hills Polo Club retail stores,
and (ii) 2% of retail sales of licensed products by Beverly Hills Polo Club
retail stores. The Company is subject to guaranteed minimum annual royalty
payments of $60,000 in 1998 and $100,000 in 1999 and guaranteed net shipment
volumes of $1.0 million in 1998 and $2.0 million in 1999. There are no
guaranteed minimum annual royalty payments or guaranteed net shipment volumes
for the contract year ended December 31, 1997. The Retail Agreement is subject
to applicable franchising laws in Europe and, as a result, the licensor may
terminate the agreement if the Company is unable to obtain any necessary
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governmental approval or to make any necessary governmental filings within four
months from the date of the first franchise agreement.
The international wholesale agreement (the "Wholesale Agreement") grants the
Company the right to use the BHPC Trademark in connection with the manufacture
and sale at wholesale, for distribution to department stores and specialty
stores in Europe, of the following categories of products: (i) men's apparel
(excluding suits, ties, underwear, shoes and full length rainwear); and (ii)
women's apparel (excluding hosiery, intimate apparel, business suits, underwear,
accessories, shoes and full length rainwear). Under the Wholesale Agreement, the
Company is required to pay the licensor a royalty equal to 6% of net shipments
by the Company of licensed products directly to authorized Beverly Hills Polo
Club distributors or to retail stores. The Wholesale Agreement imposes
guaranteed minimum annual royalty payments of $120,000 in 1998 and $240,000 in
1999 and guaranteed net shipment volumes of $2.0 million in 1998 and $4.0
million in 1999. There are no guaranteed minimum annual royalty payments or
guaranteed net shipment volumes for the contract year ended December 31, 1997.
CREDIT CONTROL
The Company manages its own credit and collection functions and has never
used a factoring service or outside credit insurance. The Company sells to
approximately 4,100 accounts throughout the United States and Puerto Rico. All
of the functions necessary to service this large volume of accounts are handled
by the Company's in-house credit department in Baltimore, Maryland. The Company
currently employs eight people in its credit department and believes that
managing its own credit gives it unique flexibility as to which customers the
Company can sell and how much business it can do with each. The Company believes
this provides a selling advantage over those competitors that are factored. In
each of the last three years, the Company's actual bad debt as a percentage of
net sales has been less than one-half of one percent.
COMPETITION
The apparel industry is highly competitive and fragmented and is subject to
rapidly changing consumer demands and preferences. The Company believes that its
success depends in large part upon its ability to anticipate, gauge and respond
to changing consumer demands and fashion trends in a timely manner and upon the
continued appeal to consumers of the BOSS and Beverly Hills Polo Club brands.
The Company competes with numerous apparel brands and distributors (including
Calvin Klein, Fila, FUBU, Guess, JNCO, Tommy Hilfiger and Nautica). Many of the
Company's competitors have greater financial resources than the Company.
Although the level and nature of competition differ among its product
categories, the Company believes that it competes on the basis of its brand
image, quality of design and value pricing. In addition, under the Concurrent
Use Agreement and the BHPC Agreements, certain third parties have retained the
right to produce, distribute, advertise and sell, and to authorize others to
produce, distribute, advertise and sell certain garments that are similar to
some of the Company's products, including, in the case of the BOSS brand,
similar garments using the BOSS trademark at generally higher wholesale price
points. Any such production, distribution, advertisement or sale of such
garments by such licensor or another authorized party could have a material
adverse effect on the Company's financial condition or results of operations.
MANAGEMENT INFORMATION SYSTEMS
The Company believes that advanced information processing is essential to
maintaining its competitive position. The Company is currently upgrading systems
that allow areas of the business to be more pro-active to customer requirements,
to improve internal communication flow, to increase process efficiency and to
support management decisions. The Company's systems provide, among other things,
comprehensive order processing, production, accounting and management
information for the marketing, selling, manufacturing, retailing and
distribution functions of the Company's business. The Company's software program
allows it to track, among other things, orders, manufacturing schedules,
inventory and sales of its products. The program includes centralized management
information systems, which provide the various operating departments with
financial, sales, inventory and distribution related information. Via electronic
39
<PAGE>
data interchange, the Company is able to ship orders to certain customers within
24 to 72 hours from the time of order receipt.
EMPLOYEES
The Company believes that its employees are one of its most valuable
resources. As of June 30, 1997, the Company had approximately 900 full-time
employees. The Company is not a party to any labor agreements, and none of its
employees is represented by a labor union. The Company considers its
relationship with its employees to be good and has not experienced any
significant interruption of its operations due to labor disputes. See "Risk
Factors--Dependence on Unaffiliated Manufacturers."
PROPERTIES
Certain information concerning the Company's principal facilities is set
forth below:
<TABLE>
<CAPTION>
LEASED OR APPROXIMATE AREA
LOCATION OWNED USE IN SQUARE FEET
- ----------------------------------------- ----------- ----------------------------------------- ----------------
<S> <C> <C> <C>
Baltimore, MD............................ Owned Administrative Headquarters and Office 40,000
Facilities
New York, NY............................. Leased Sales, Merchandising, Marketing and 7,449
Sourcing Headquarters
New York, NY............................. Leased Sales, Marketing and Sourcing 4,300
Headquarters
Barcelona, Spain......................... Leased European Headquarters 2,000
Milford, DE.............................. Owned Distribution Center 70,000
Newton, MS............................... Leased Manufacturing Plant 101,000
Carthage, MS............................. Leased Manufacturing Plant 110,000
Raleigh, MS.............................. Leased Manufacturing Plant 90,000
</TABLE>
The Company also has regional sales offices, all of which are leased, in the
following cities: Atlanta, Georgia; Dallas, Texas; Miami, Florida; Seattle,
Washington; Los Angeles, California; Philadelphia, Pennsylvania; Boston,
Massachusetts; Minneapolis, Minnesota; Charlotte, North Carolina; and Santurce,
Puerto Rico. The Company believes that its existing facilities are well
maintained and in good operating condition. The Company also believes that its
increased distribution requirements can be better met by consolidating its
warehousing and distribution functions into a new 150,000 square foot facility
to be located in Milford, Delaware. See Note 5 of Notes to Consolidated
Financial Statements for further information regarding current lease
obligations.
ENVIRONMENTAL MATTERS
The Company is subject to federal, state and local laws, regulations and
ordinances that (i) govern activities or operations that may have adverse
environmental effects (such as emissions to air, discharges to water, and the
generation, handling, storage and disposal of solid and hazardous wastes) or
(ii) impose liability for the costs of clean up or other remediation of
contaminated property, including damages from spills, disposals or other
releases of hazardous substances or wastes, in certain circumstances without
regard to fault. Certain of the Company's operations routinely involve the
handling of chemicals and wastes, some of which are or may become regulated as
hazardous substances. The Company has not incurred, and does not expect to
incur, any significant expenditures or liabilities for environmental matters. As
a result, the Company believes that its environmental obligations will not have
a material adverse effect on its financial condition or results of operations.
LITIGATION
The Company is a party to various claims, complaints and other legal actions
that have arisen in the ordinary course of business from time to time. The
Company believes that the outcome of such pending legal proceedings, in the
aggregate, will not have a material adverse effect on the Company's financial
condition or results of operations.
40
<PAGE>
MANAGEMENT
DIRECTORS AND EXECUTIVE OFFICERS
The following table sets forth certain information concerning the directors
and executive officers of the Company:
<TABLE>
<CAPTION>
NAME AGE POSITION
- ----------------------------------------------------- --- -----------------------------------------------------
<S> <C> <C>
Robert J. Arnot...................................... 49 Chairman of the Board, Co-Chief Executive Officer and
Director
Gerald W. Lear....................................... 54 President, Co-Chief Executive Officer and Director
Gary B. Brashers..................................... 49 Vice President--Manufacturing, Chief Operating
Officer and Director
Eugene C. Wielepski.................................. 51 Vice President--Finance, Chief Financial Officer and
Director
Ira J. Hechler....................................... 79 Director
Jon Hechler.......................................... 44 Director
Ronald S. Schmidt.................................... 53 Director
Thomas P. Ormandy.................................... 46 Vice President--Sales
</TABLE>
The Company has two Chief Executive Officers, Robert J. Arnot and Gerald W.
Lear. Mr. Arnot and Mr. Lear share decision-making responsibility with respect
to business strategy, product pricing, budgeting, financial management,
institutional relationships, licensing decisions, European operations and legal
issues.
ROBERT J. ARNOT has been a Director of the Company since 1984, Vice
President of Planning and Corporate Development from 1989 to 1991, Chairman of
the Board of Directors since 1991, and Co-Chief Executive Officer since 1996. He
has been employed by the Company since 1989. In addition to sharing overall
decision-making responsibility as described above, Mr. Arnot has lead
responsibility for the following operating areas, which report directly to him
in New York: BOSS and Beverly Hills Polo Club design and merchandising, Asian
sourcing and manufacturing, BOSS and Beverly Hills Polo Club sales management
and advertising.
GERALD W. LEAR has been a Director of the Company since 1980 and President
and Chief Executive Officer since 1987. He was Vice President from 1975 to 1984
and Executive Vice President from 1984 to 1986. He has been employed by the
Company since 1962. In addition to sharing overall decision-making
responsibility as described above, Mr. Lear has lead responsibility for the
following operating areas, which report directly to him in Baltimore: United
States and Mexican production of bottoms, United States tee shirt production,
I.C. Isaacs bottoms merchandising, bottoms design department, cost accounting,
shipping and warehousing and corporate administration (which includes management
information systems, credit, accounting, customer service and personnel).
GARY B. BRASHERS has been a Director and Chief Operating Officer since 1988
and Vice President-- Manufacturing since 1985. Prior to that he held positions
with the Company in quality control and manufacturing. He has been employed by
the Company since 1978. Prior to joining the Company, he held various
manufacturing management positions in the apparel industry since 1969.
41
<PAGE>
EUGENE C. WIELEPSKI has been a Director, Vice President--Finance and Chief
Financial Officer of the Company since 1991. He has held the positions of
Secretary and Treasurer since 1976. From 1976 to 1990 he was Controller. He is a
Certified Public Accountant and has been employed by the Company since 1973.
IRA J. HECHLER has been a Director of the Company since 1984. He is a
private investor who is also a member of the Board of Directors of American
Banknote Corporation and Concord Camera Corporation. He is Vice Chairman of the
Board of Directors of A.R.T./New York and a member of the Board of Trustees and
Treasurer of the Nassau County Museum of Art.
JON HECHLER has been a Director of the Company since 1984. He has been
employed by Ira J. Hechler and Associates, an investment company, since 1980. He
also serves as President of T. Eliot, Inc., a manufacturer of bathroom
equipment. He is the son of Ira J. Hechler.
RONALD S. SCHMIDT has been a Director of the Company since 1990. He is
President and Chief Executive Officer of I.B. Diffusion, a manufacturer of
ladies' apparel.
THOMAS P. ORMANDY has been Vice President--Sales of the Company since 1986.
Previously, he was a salesman with Thompson and Company, an apparel
manufacturer, since 1975. He is responsible for the sales and marketing of the
BOSS men's, boys' and juniors' lines as well as the Beverly Hills Polo Club
men's line.
BOARD OF DIRECTORS
The Company's Board of Directors is currently comprised of seven members.
There are currently two vacancies, and following the consummation of the
Offering, the Company intends to appoint two additional directors who will be
neither officers nor employees of the Company or its affiliates.
The Company's Board of Directors is divided into three classes of three
members each. Directors of each class will be elected at the annual meeting of
stockholders held in the year in which the term for such class expires and will
serve for three years thereafter. The first class, whose term will expire at the
first annual meeting after the Offering, currently consists of Messrs. Arnot,
Lear and Wielepski; the second class, whose term will expire at the second
annual meeting after the Offering, currently consists of Messrs. Ira J. Hechler,
Jon Hechler and Gary B. Brashers; the third class, whose term will expire at the
third annual meeting after the Offering, currently consists of Mr. Ronald S.
Schmidt. The vacancies in Class III will be filled when the Company appoints two
additional directors after the Offering. For further information on the effect
of the classified Board of Directors, see "Description of Capital Stock--Certain
Certificate of Incorporation, By-law and Statutory Provisions Affecting
Stockholders."
Pursuant to the Restated Shareholders' Agreement, all of the existing
stockholders of the Company have agreed to vote their shares of Common Stock in
elections to fill Class I and Class II of the Board of Directors in favor of the
nominees of the Principal Stockholders (as defined). See "Certain Transactions--
Restated Shareholders' Agreement."
The Company has established a Compensation Committee consisting of Messrs.
Ira J. Hechler, Jon Hechler and Ronald S. Schmidt. The Compensation Committee is
responsible for reviewing and approving all compensation arrangements with
officers of the Company and will also be responsible for administering the 1997
Omnibus Stock Plan. See "--1997 Omnibus Stock Plan."
Within 90 days following the consummation of the Offering, the Board of
Directors will establish an Audit Committee. The Audit Committee will be
responsible for recommending to the Board of Directors the engagement of the
independent auditors of the Company and reviewing with the independent auditors
the scope and results of the audits, the internal accounting controls of the
Company, audit practices and the professional services furnished by the
independent auditors.
The General Corporation Law of the State of Delaware (the "Delaware
Corporation Law") provides that a company may indemnify its directors and
officers as to certain liabilities. The Company's Restated
42
<PAGE>
Certificate and Restated By-laws provide for the indemnification of the
Company's directors and officers to the fullest extent permitted by law, and the
Company intends to enter into separate indemnification agreements with each of
its directors and officers to effectuate these provisions and to purchase
directors' and officers' liability insurance. The effect of such provisions is
to indemnify, to the fullest extent permitted by law, the directors and officers
of the Company against all costs, expenses and liabilities incurred by them in
connection with any action, suit or proceeding which they are involved by reason
of their affiliation with the Company. See "Description of Capital
Stock--Certain Certificate of Incorporation, Bylaw and Statutory Provisions
Affecting Stockholders" and "--Director and Officer Indemnification."
COMPENSATION OF DIRECTORS
Directors who are employees of the Company receive no compensation for
serving on the Board of Directors. Directors who are not employees of the
Company will receive an annual retainer fee of $10,000 for their services and
attendance fees of $750 per Board or committee meeting attended. All directors
are reimbursed for expenses incurred in connection with attendance at Board or
committee meetings. In addition, members of the Board of Directors will be
eligible to participate in the Company's 1997 Omnibus Stock Plan. See "--1997
Omnibus Stock Plan."
EXECUTIVE COMPENSATION
The following table sets forth the compensation paid or awarded to, or
earned by, the Co-Chief Executive Officers and the four most highly compensated
officers other than the Co-Chief Executive Officers (the "Named Executive
Officers") for the year ended December 31, 1996.
SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
ANNUAL COMPENSATION(1)(2)
--------------------------------
<S> <C> <C> <C>
NAME AND PRINCIPAL POSITION YEAR SALARY BONUS
- ----------------------------------------------------------------------------------- --------- ---------- ---------
Robert J. Arnot.................................................................... 1996 $ 275,676 $ 50,000
Chairman of the Board and
Co-Chief Executive Officer
Gerald W. Lear..................................................................... 1996 300,220 50,000
President and
Co-Chief Executive Officer
Gary B. Brashers................................................................... 1996 200,220 25,000
Vice President--Manufacturing and
Chief Operating Officer
Eugene C. Wielepski................................................................ 1996 160,220 20,000
Vice President--Finance and
Chief Financial Officer
Thomas P. Ormandy.................................................................. 1996 240,000 110,000
Vice President--Sales
Marc Baff.......................................................................... 1996 107,620 --
Vice President--Sales
</TABLE>
- ------------------------
(1) In their capacity as stockholders of the Company, the officers listed above
were reimbursed during 1996 for payment of taxes on income of the Company
that was passed through to the stockholders. See "Dividend Policy."
(2) Perquisites did not exceed the lesser of $50,000 or 10% of the total salary
and bonus for any of the Named Executive Officers.
43
<PAGE>
EMPLOYMENT AGREEMENTS
The Company has entered into individual employment agreements (the
"Executive Employment Agreements") with each of Messrs. Arnot, Lear, Brashers,
Wielepski and Ormandy (collectively, the "Executives"). The initial term of the
Executive Employment Agreements began on May 15, 1997 (the "Effective Date") and
will terminate on the third anniversary of the Effective Date in the case of
Messrs. Arnot and Lear and on the second anniversary of the Effective Date in
the case of Messrs. Brashers, Wielepski and Ormandy. The Executive Employment
Agreements will automatically extend after the initial term for successive
one-year terms, unless notice not to extend is given by either party at least 60
days prior to the end of the then current term. The Executive Employment
Agreements provide for an annual base salary of $400,000, $400,000, $240,000,
$200,000, and $300,000 plus up to 20% thereof as bonus, respectively, which may
be increased based on periodic reviews by the Compensation Committee. In
addition, the Executive Employment Agreements provide that the Executives are
entitled to participate in any bonus and stock option plans, programs,
arrangements and practices sponsored by the Company as may be established from
time to time by the Board of Directors of the Company for the benefit of such
executive employees, in accordance with the terms of such plans. Each Executive
is also entitled to certain fringe benefits, including Company-paid health and
life insurance. If any of the Executives is terminated without cause (as such
term is defined in the Executive Employment Agreements), then such Executive
will receive as severance his then current base salary for the remainder of his
term of employment. The Executive will also continue to participate in
Company-sponsored health, life insurance and other fringe benefit plans and
programs during the severance period. The Executive Employment Agreements also
include certain noncompetition, nonsolicitation and confidentiality provisions.
1997 OMNIBUS STOCK PLAN
On May 15, 1997, the Board of Directors of the Company and the Company's
stockholders adopted the 1997 Omnibus Stock Plan (the "Plan"). The purpose of
the Plan is to promote the long-term growth and profitability of the Company by
providing key people with incentives to improve stockholder value and contribute
to the growth and financial success of the Company, and by enabling the Company
to attract, retain and reward the best-available persons for positions of
substantial responsibility. The maximum number of shares of Common Stock that
may be issued with respect to awards granted under the Plan is 500,000. The Plan
is administered by the Compensation Committee of the Board of Directors.
Participation in the Plan will be open to all employees, officers, directors and
consultants of the Company or any of its affiliates, as may be selected by the
Compensation Committee from time to time. The Plan allows for stock options,
stock appreciation rights, stock awards, phantom stock awards and performance
awards to be granted. The Compensation Committee will determine the prices,
vesting schedules, expiration dates and other material conditions upon which
such awards may be exercised.
DEFINED BENEFIT PENSION PLAN
The Company maintains a defined benefit pension plan (the "Pension Plan")
for its employees. The normal retirement benefit, payable at age 65, is 20% of
base compensation up to $10,000 plus 39.5% of base compensation over $10,000,
prorated for service less than 30 years. A reduced benefit is also payable on
early retirement, after age 55 and after 15 years of service. The Pension Plan
also provides disability retirement and death benefits. The Company pays the
full cost of the benefits under the Pension Plan through its contributions to a
trust. The Company's cash contributions to the Pension Plan during the year
ended December 31, 1996 aggregated $0.6 million.
44
<PAGE>
The Pension Plan Table below provides the estimated annual benefits payable
under the I.C. Isaacs Pension Plan upon retirement in specified compensation and
years of service classifications.
PENSION PLAN TABLE
<TABLE>
<CAPTION>
YEARS OF SERVICE
-----------------------------------------------------
RENUMERATION
- -------------
<C> <S> <C> <C> <C> <C> <C>
15 20 25 30 35
--------- --------- --------- --------- ---------
$ 100,000 ............................................. $ 10,875 $ 14,500 $ 18,126 $ 21,751 $ 21,751
125,000 ............................................. 10,875 14,500 18,126 21,751 21,751
150,000 ............................................. 10,875 14,500 18,126 21,751 21,751
175,000 ............................................. 10,875 14,500 18,126 21,751 21,751
200,000 ............................................. 10,875 14,500 18,126 21,751 21,751
225,000 ............................................. 10,875 14,500 18,126 21,751 21,751
250,000 ............................................. 10,875 14,500 18,126 21,751 21,751
300,000 ............................................. 10,875 14,500 18,126 21,751 21,751
400,000 ............................................. 10,875 14,500 18,126 21,751 21,751
450,000 ............................................. 10,875 14,500 18,126 21,751 21,751
500,000 ............................................. 10,875 14,500 18,126 21,751 21,751
</TABLE>
The compensation considered in determining benefits under the plan (as
provided in the column titled "Remuneration") is the annual average compensation
for the five consecutive calendar years producing the highest average. The
compensation considered is limited to $75,000. All amounts of salary, bonus and
other compensation as reported in the Summary Compensation Table, up to $75,000,
are included in compensation considered under the plan. The amounts of benefit
provided in the Pension Plan Table are the amounts of benefit payable per year
in equal monthly installments for the life expectancy of the participants (i.e.,
straight life annuity amounts). The plan is integrated with Social Security, and
its benefit formula is as follows: (i) 0.6667% of compensation, multiplied by
years of service up to 30 years; plus (ii) 0.65% of compensation in excess of
$10,000 multipled by years of service up to 30 years.
The estimated credited years of service for each of the Named Executive
Officers are as follows, estimated as of January 1, 1997:
<TABLE>
<CAPTION>
ESTIMATED CREDITED
NAME YEARS OF SERVICE
- -------------------------------------------------------------------------- -----------------------
<S> <C>
Robert J. Arnot........................................................... 5
Gerald W. Lear............................................................ 34
Gary B. Brashers.......................................................... 18
Eugene C. Wielepski....................................................... 23
Thomas P. Ormandy......................................................... 10
Marc Baff................................................................. 19
</TABLE>
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
The Company did not have a Compensation Committee during 1996, but each of
Messrs. Arnot and Lear (each of whom also served as an executive officer of the
Company during 1996) participated in deliberations concerning executive
compensation. The Executive Employment Agreements were approved by the Company's
current Compensation Committee.
KEY MAN INSURANCE
The following individuals are key employees of the Company, and their
contribution to the Company has been and will be a significant factor in the
Company's future success: Robert J. Arnot, Gerald W. Lear, Gary B. Brashers and
Eugene C. Wielepski. The loss of the services of one or more of these executive
45
<PAGE>
officers for an extended period of time could have a material adverse effect on
the Company's financial condition or results of operations. The Company
maintains and is the beneficiary of life insurance policies in the amount of
$1.0 million on the lives of each of Messrs. Arnot, Lear and Brashers and in the
amount of $0.5 million on the life of Mr. Wielepski.
CERTAIN TRANSACTIONS
RESTATED SHAREHOLDERS' AGREEMENT
The Company's Shareholders' Agreement dated December 20, 1984, as amended,
has been amended and restated, effective as of the time of consummation of the
Offering. Pursuant to the Restated Shareholders' Agreement, Messrs. Robert J.
Arnot, Gerald W. Lear, Ira J. Hechler and Jon Hechler are designated as
Principal Shareholders and the other stockholders of the Company immediately
prior to consummation of the Offering are designated as Non-Principal
Shareholders. The Principal Shareholders and the Non-Principal Shareholders have
agreed to vote their shares of Common Stock, in elections to fill Class I and
Class II of the Board of Directors, to elect nominees of the Principal
Shareholders. The Restated Shareholders' Agreement provides that each of the
Principal Shareholders has granted to each of the other Principal Shareholders
and to the Company rights of first refusal with respect to the sale of any
shares of the Company's outstanding Common Stock. The Restated Shareholders'
Agreement provides that each of the Non-Principal Shareholders holding, at the
time of the contemplated transfer, in excess of 0.5% of the outstanding Common
Stock of the Corporation has granted to (i) each of the Principal Shareholders,
(ii) each Non-Principal Shareholder and (iii) the Company, rights of first
refusal with respect to the sale of any shares of the Company's outstanding
Common Stock. The Restated Shareholders' Agreement also provides that in the
event that any two of (i) Robert J. Arnot, (ii) Gerald W. Lear and (iii) Ira J.
Hechler and Jon Hechler (a "Majority") agree to enter into a transaction with a
third party for the tender of shares (including, without limitation, in a change
of control transaction), the rights of first refusal set forth above shall not
apply and the Majority and/or the Company may require the other Principal
Shareholders and Non-Principal Shareholders to participate in such transaction
on the same terms and conditions applicable to the Majority.
ACQUISITION OF LIMITED PARTNERSHIP INTEREST
Prior to the Closing Date, the Company's wholly-owned subsidiary, Isaacs
Design, Inc., will acquire the outstanding 1% limited partnership interest in
the Partnership from Ira J. Hechler, a director and stockholder of the Company,
in exchange for $280,000 in cash. See "Company Organization."
46
<PAGE>
PRINCIPAL STOCKHOLDERS
The following table sets forth certain information with respect to the
beneficial ownership of the Company's Common Stock as of September 30, 1997, and
as adjusted to reflect the sale of the Common Stock being offered hereby
(assuming no exercise of the Underwriters' over-allotment option) by (i) each
person (or group of affiliated persons) who is known by the Company to own
beneficially more than 5% of the outstanding Common Stock, (ii) each of the
Company's directors, (iii) each of the Named Executive Officers and (iv) all
directors and executive officers of the Company as a group:
<TABLE>
<CAPTION>
BENEFICIAL OWNERSHIP OF BENEFICIAL OWNERSHIP
COMMON STOCK PRIOR TO OF COMMON STOCK
THE OFFERING AFTER THE OFFERING
----------------------- -----------------------
NAME OF BENEFICIAL OWNERS (1) NUMBER PERCENT NUMBER PERCENT
- --------------------------------------------------------------------- ---------- ----------- ---------- -----------
<S> <C> <C> <C> <C>
Robert J. Arnot...................................................... 671,688 11.19% 671,688 6.85%
Gerald W. Lear....................................................... 671,688 11.19 671,688 6.85
Gary B. Brashers..................................................... 432,355 7.21 432,355 4.41
Eugene C. Wielepski.................................................. 277,863 4.63 277,863 2.84
Thomas P. Ormandy.................................................... 237,480 3.96 237,480 2.42
Ira J. Hechler....................................................... 1,217,042 20.28 1,217,042 12.42
Jon Hechler.......................................................... 548,687 9.14 548,687 5.60
The Stanley Keller Irrevocable Trust (2)............................. 395,307 6.59 395,307 4.03
Ronald S. Schmidt.................................................... 0 * 0 *
Marc Baff............................................................ 0 * 0 *
All directors and executive officers as a group (10 persons)......... 4,452,110 74.20% 4,452,110 45.43%
</TABLE>
- ------------------------
* Less than one percent.
(1) The business address of each person listed above beneficially owning more
than 5% of the outstanding Common Stock is c/o I.C. Isaacs & Company, Inc.,
3840 Bank Street, Baltimore, Maryland 21224-2522. Except as described below
and subject to the Restated Shareholders' Agreement and applicable community
property laws and similar laws, each person listed above has sole voting and
investment power with respect to such shares. See "Certain
Transactions--Restated Shareholders' Agreement."
(2) The trustees of the Stanley Keller Irrevocable Trust are Barbara Keller and
Howard Schultz.
47
<PAGE>
SHARES ELIGIBLE FOR FUTURE SALE
Prior to the Offering, there has been no public market for the Common Stock.
No predictions can be made as to the effect, if any, that future sales of Common
Stock, and options to acquire shares of Common Stock, or the availability of
shares for future sale, will have on the market price prevailing from time to
time. Sales of substantial amounts of Common Stock in the public market, or the
perception that such sales may occur, could have a material adverse effect on
the market price of the Common Stock. See "Risk Factors--Future Sales by
Existing Stockholders; Shares Eligible for Future Sale" and "Management--1997
Omnibus Stock Plan."
Upon the consummation of the Offering, the Company will have 9.8 million
shares of Common Stock outstanding. Of these shares, the 3.8 million shares of
Common Stock sold by the Company in the Offering will be freely tradable without
restriction or further registration under the Securities Act, unless held by an
"affiliate" of the Company (as that term is defined under the Securities Act).
Any such affiliate will be subject to the resale limitations of Rule 144 adopted
under the Securities Act. The remaining 6.0 million shares of Common Stock
outstanding are "restricted securities" for purposes of Rule 144 and are held by
"affiliates" of the Company within the meaning of Rule 144 under the Securities
Act. Restricted securities may not be resold in a public distribution except in
compliance with the registration requirements of the Securities Act or pursuant
to an exemption therefrom, including the exemption provided by Rule 144.
In general, under Rule 144, a person (or persons whose shares are
aggregated), including a person who may be deemed to be an "affiliate" of the
Company, is entitled to sell within any three-month period a number of shares
beneficially owned for at least one year that does not exceed the greater of (i)
1% of the then outstanding shares of Common Stock or (ii) the average weekly
trading volume of the outstanding shares of Common Stock during the four
calendar weeks preceding such sale. Sales under Rule 144 are also subject to
certain requirements as to the manner of sale, notice and the availability of
current public information about the Company. However, a person (or persons
whose shares are aggregated) who is not an "affiliate" of the Company during the
90 days preceding a proposed sale by such person and who has beneficially owned
"restricted securities" for at least two years is entitled to sell such shares
under Rule 144 without regard to the volume, manner of sale or notice
requirements.
The Company, together with each of its executive officers, directors and
stockholders beneficially owning in the aggregate 61.2% of the shares of Common
Stock outstanding after the Offering have entered into lock-up agreements with
The Robinson-Humphrey Company, LLC and Legg Mason Wood Walker, Incorporated, as
representatives of the Underwriters, pursuant to which they have agreed not to,
directly or indirectly, sell, offer to sell, contract to sell, solicit an offer
to buy, grant any option for the purchase or sale of, assign, pledge, distribute
or otherwise transfer, dispose of or encumber (or make any announcement with
respect to any of the foregoing), any of their shares of Common Stock (other
than those being sold pursuant to this Offering) or any options, rights,
warrants or other securities convertible into or exercisable or exchangeable for
Common Stock or evidencing any right to purchase or subscribe for shares of
Common Stock for a period of up to 180 days following the date of this
Prospectus without the prior written consent of the representatives of the
Underwriters. In addition, certain restrictions on transfers of shares of Common
Stock by the existing stockholders of the Company are contained in the Restated
Stockholders' Agreement. Sales of substantial amounts of Common Stock in the
public market, or the perception that such sales may occur, could have a
material adverse effect on the market price of the Common Stock. See "Certain
Transactions--Restated Shareholders' Agreement."
The Company has adopted the 1997 Omnibus Stock Plan, pursuant to which an
aggregate of 500,000 shares are available for option grants and other equity
awards. See "Management--1997 Omnibus Stock Plan." The Company intends to file a
registration statement on Form S-8 under the Securities Act to register all of
the shares of Common Stock reserved for issuance under the Plan. Such
registration statement is expected to be filed as soon as practicable after the
date of the Offering and will automatically become effective upon filing. Shares
issued under the 1997 Omnibus Stock Plan after the registration statement is
filed may thereafter be sold in the public market, subject, in the case of the
various holders, to the Rule 144 volume limitations applicable to affiliates,
the lock-up agreement described above and any transfer or vesting restrictions
imposed on the date of the grant.
48
<PAGE>
DESCRIPTION OF CAPITAL STOCK
The following summary description of the capital stock of the Company is
qualified in its entirety by reference to the form of Restated Certificate and
the form of Restated By-laws, each to become effective upon consummation of the
Offering and each filed as an exhibit to the Registration Statement of which
this Prospectus forms a part.
The authorized capital stock of the Company consists of 50.0 million shares
of Common Stock, par value $.0001 per share, and 5.0 million shares of Preferred
Stock, par value $.0001 per share.
COMMON STOCK
Holders of Common Stock are entitled to one vote for each share held on all
matters submitted to a vote of the stockholders, including the election of
directors. The Restated Certificate does not provide for cumulative voting in
the election of directors. Accordingly, holders of a majority of the shares of
Common Stock entitled to vote in any election of directors may elect all of the
directors standing for election. Subject to preferences that may be applicable
to any Preferred Stock outstanding at the time, holders of Common Stock are
entitled to receive ratably such dividends, if any, as may be declared from time
to time by the Board of Directors out of funds legally available therefor. See
"Dividend Policy." In the event of a liquidation, dissolution or winding up of
the Company, holders of Common Stock have no preemptive rights and no rights to
convert their Common Stock into any other securities and there are no redemption
provisions with respect to such shares. All of the outstanding shares of Common
Stock are fully paid and non-assessable. The rights, preferences and privileges
of holders of Common Stock are subject to, and may be adversely affected by, the
rights of the holders of shares of any series of Preferred Stock that the Board
of Directors may designate and that the Company may issue in the future.
At present there is no established trading market for the Common Stock.
Application has been made for quotation of the Common Stock on the Nasdaq
National Market under the symbol "ISAC."
The transfer agent and registrar for the Common Stock is American Stock
Transfer & Trust Company, New York, New York.
PREFERRED STOCK
The Restated Certificate provides that the Board of Directors, without
further action by the stockholders, may issue shares of the Preferred Stock in
one or more series and may fix or alter the relative, participating, optional or
other rights, preferences, privileges and restrictions, including the voting
rights, redemption provisions (including sinking fund provisions), dividend
rights, dividend rates, liquidation preferences and conversion rights, and the
description of and number of shares constituting any wholly unissued series of
Preferred Stock. The Board of Directors, without further stockholder approval,
can issue Preferred Stock with voting and conversion rights, which could
adversely affect the voting power of the holders of Common Stock. No shares of
Preferred Stock presently are outstanding, and the Company currently has no
plans to issue shares of Preferred Stock. The issuance of Preferred Stock in
certain circumstances may have the effect of delaying or preventing a change of
control of the Company without further action by the stockholders, may
discourage bids for the Company's Common Stock at a premium over the market
price of the Common Stock and may adversely affect the market price and the
voting and other rights of the holders of Common Stock.
CERTAIN CERTIFICATE OF INCORPORATION, BY-LAW AND STATUTORY PROVISIONS AFFECTING
STOCKHOLDERS
CLASSIFIED BOARD OF DIRECTORS. The Company's Board of Directors is divided
into three classes of directors, designated Class I, Class II and Class III.
Each class shall consist, as nearly as possible, of one-third of the total
number of directors. The term of the initial Class I directors will terminate on
the date of the 1998 annual meeting of stockholders (an "Annual Meeting"), the
term of the initial Class II directors
49
<PAGE>
will expire on the date of the 1999 Annual Meeting, and the term of the initial
Class III directors will expire on the date of the 2000 Annual Meeting. At each
Annual Meeting, beginning in 1998, successors to the class of directors whose
term expires at that Annual Meeting will be elected for a three-year term. See
"Management--Board of Directors." At least two annual meetings of stockholders,
instead of one, generally will be required to change the majority of the
Company's Board of Directors.
SPECIAL MEETINGS OF STOCKHOLDERS; STOCKHOLDER ACTION BY WRITTEN
CONSENT. The Restated Certificate provides that any action required or
permitted to be taken by the Company's stockholders may be effected without a
meeting, without prior notice and without a vote if a consent in writing is
signed by the holders of a number of shares that would be sufficient to take
such action at a meeting of the stockholders. Additionally, the Restated By-laws
provide that special meetings of the stockholders of the Company may be called
only by the Chairman of the Board of Directors, the Chief Executive Officer or
the President of the Company.
ADVANCE NOTICE REQUIREMENTS OF STOCKHOLDER PROPOSALS AND DIRECTOR
NOMINATIONS. The Restated By-laws provide that stockholders seeking to bring
business before or to nominate directors at any meeting of stockholders, must
provide timely notice thereof in writing. To be timely, a stockholder's notice
must be delivered to, or mailed and received at, the principal executive offices
of the Company not less than 60 days nor more than 90 days prior to the
anniversary date of the immediately preceding annual meeting of stockholders;
provided, however, that (i) in the event that the annual meeting is called for a
date that is not within 30 days before or after such anniversary date or (ii) in
the case of the annual meeting of stockholders held during the 1998 fiscal year
of the Company, notice by the stockholder in order to be timely must be so
received not later than the close of business on the tenth day following the day
on which notice of the date of the annual meeting was mailed or public
disclosure of the date of the annual meeting was made, whichever first occurs.
The Restated By-laws also specify certain requirements for a stockholder's
notice to be in proper written form. These provisions may preclude some
stockholders from bringing matters before the stockholders or from making
nominations for directors.
DIRECTOR AND OFFICER INDEMNIFICATION. The Delaware Corporation Law provides
that a Delaware corporation may include provisions in its certificate of
incorporation relieving each of its directors of monetary liability arising out
of his or her conduct as a director for breach of his or her fiduciary duty
except liability for (i) any breach of such director's duty of loyalty to the
corporation or its stockholders, (ii) acts or omissions that are not in good
faith or involve intentional misconduct or a knowing violation of law, (iii)
conduct violating Section 174 of the Delaware Corporation Law (which section
relates to unlawful distributions) or (iv) any transaction from which a director
derived an improper personal benefit. The Company's Restated Certificate
includes such provisions.
To the fullest extent permitted by the Delaware Corporation Law, as amended
from time to time, the Company's Restated Certificate and Restated By-laws
provide that the Company shall indemnify and advance expenses to each of its
currently acting and former directors and officers, and may so indemnify and
advance expenses to each of its current and former employees and agents. The
Company believes the foregoing provisions are necessary to attract and to retain
qualified persons as directors and officers. Prior to the consummation of the
Offering, the Company intends to enter into separate indemnification agreements
with each of its directors and executive officers in order to effectuate such
provisions.
50
<PAGE>
UNDERWRITING
Subject to the terms and conditions of the Underwriting Agreement, the
Underwriters named below, for whom The Robinson-Humphrey Company, LLC and Legg
Mason Wood Walker, Incorporated are acting as representatives (the
"Representatives"), have severally agreed to purchase from the Company and the
Company has agreed to sell to the Underwriters, the number of shares of Common
Stock set forth opposite their respective names.
<TABLE>
<CAPTION>
NUMBER
OF
UNDERWRITER SHARES
- --------------------------------------------------------------------------------- ----------
<S> <C>
The Robinson-Humphrey Company, LLC...............................................
Legg Mason Wood Walker, Incorporated.............................................
----------
Total........................................................................ 3,800,000
----------
----------
</TABLE>
The Underwriting Agreement provides that the obligations of the several
Underwriters thereunder are subject to approval of certain legal matters by
counsel and to various other conditions. The nature of the Underwriters'
obligations is such that they are committed to purchase all shares of Common
Stock offered hereby if any are purchased.
The Underwriters propose to offer the shares of Common Stock directly to the
public at the initial public offering price set forth on the cover page of this
Prospectus and to certain dealers at such price less a concession not in excess
of $ per share. The Underwriters may allow, and such dealers may reallow, a
concession not in excess of $ per share in sales to certain other dealers.
After the Offering, the public offering price and other selling terms may be
changed.
The Company has granted to the Underwriters a 30-day option to purchase up
to an additional 570,000 shares of Common Stock at the Offering price less the
underwriting discount set forth on the cover page of this Prospectus to cover
over-allotments, if any.
Prior to the offering made hereby, there has been no public market for the
Common Stock. The initial public Offering price for the Common Stock will be
determined through negotiations among the Company and the Representatives and
will not be based upon any independent appraisal or valuation of the Company.
Among the factors to be considered in making such determination are prevailing
market and general economic conditions, the market capitalization of
publicly-traded companies that the Company and the Representatives believe to be
comparable to the Company, the revenues and earnings of the Company in recent
periods, the experience of the Company's management, the economic characteristic
of the business in which the Company competes, estimates of the business
potential of the Company, the present state of the Company's development and
other factors deemed relevant.
The Underwriters do not intend to confirm sales of shares of Common Stock to
any account over which they exercise discretionary authority. The
Representatives intend to make a market in the Common Stock after completion of
this Offering.
The Company, together with each of its executive officers and directors and
stockholders beneficially owning in the aggregate __ million shares of Common
Stock, have entered into lock-up agreements with the Representatives pursuant to
which they have agreed not to, directly or indirectly, sell, offer to sell,
contract to sell, solicit an offer to buy, grant any option for the purchase or
sale of, assign, pledge, distribute or otherwise transfer, dispose of or
encumber (or make any announcement with respect to any of the foregoing) any
shares of Common Stock (other than those being sold pursuant to this Offering)
or any options, rights, warrants or other securities convertible into or
exercisable or exchangeable for Common
51
<PAGE>
Stock or evidencing any right to purchase or subscribe for shares of Common
Stock for a period of 180 days from the date of this Prospectus without the
prior written consent of the Representatives.
In connection with the Offering, the Underwriters may purchase and sell
shares of Common Stock in the open market. These transactions may include
over-allotment and stabilizing transactions and purchases to cover syndicate
short positions created in connection with the Offering. Stabilizing
transactions consist of certain bids or purchases for the purpose of preventing
or retarding a decline in the market price of the Common Stock, and syndicate
short positions involve the sale by the Underwriters of a greater number of
shares of Common Stock than they are required to purchase from the Company in
the Offering. The Underwriters also may impose a penalty bid, whereby selling
concessions allowed to syndicate members or other broker-dealers in respect of
the shares sold in the Offering may be reclaimed by the syndicate if such shares
of Common Stock are repurchased by the syndicate in stabilizing or covering
transactions. These activities may stabilize, maintain or otherwise affect the
market price of the Common Stock, which may be higher than the price that might
otherwise prevail in the open market; and these activities, if commenced, may be
discontinued at any time. These transactions may be effected in the Nasdaq
National Market, in the over-the-counter market or otherwise.
The Company has agreed to indemnify the Underwriters against, and to
contribute to losses arising out of, certain liabilities, including liabilities
under the Securities Act.
LEGAL MATTERS
The validity of the Common Stock offered hereby will be passed upon for the
Company by Piper & Marbury L.L.P. Certain legal matters relating to the Offering
will be passed upon for the Underwriters by Alston & Bird LLP.
EXPERTS
The consolidated financial statements and schedule included in this
Prospectus and in the Registration Statement have been audited by BDO Seidman,
LLP, independent certified public accountants, to the extent and for the periods
set forth in their reports appearing elsewhere herein and in the Registration
Statement and have been included herein in reliance upon such reports given upon
the authority of said firm as experts in accounting and auditing.
52
<PAGE>
ADDITIONAL INFORMATION
The Company has filed with the Securities and Exchange Commission (the
"Commission") a Registration Statement on Form S-1 (the "Registration
Statement") under the Securities Act with respect to the Common Stock offered
hereby. This Prospectus, which is part of the Registration Statement, does not
contain all of the information set forth in the Registration Statement and the
exhibits and schedules thereto, certain items of which are omitted as permitted
by the rules and regulations of the Commission. For further information with
respect to the Company or the Common Stock, reference is made to the
Registration Statement and the exhibits and schedules filed as a part thereof.
Statements contained in this Prospectus regarding the contents of any contract
or any other document are not necessarily complete and, in each instance,
reference is hereby made to the copy of such contract or other document filed as
an exhibit to such Registration Statement. The Registration Statement, including
exhibits thereto, may be inspected, without charge, and copies of all or any
part thereof may be obtained upon payment of prescribed fees at the public
reference facilities of the Commission, maintained by the Commission at its
principal office located at 450 Fifth Street, N.W., Washington, D.C. 20549, the
New York Regional Office located at Seven World Trade Center, 13th Floor, New
York, New York 10048, and the Chicago Regional Office located at Northwestern
Atrium Center, 500 West Madison Street, Suite 1400, Chicago, Illinois 60661.
Such material may also be accessed electronically by means of the Commission's
home page on the Internet at http:\\www.sec.gov.
Statements contained in this Prospectus concerning the contents of any
contract or other document are not necessarily complete and, in each instance,
reference is made to the copy of such contract or other document filed as an
exhibit to the Registration Statement, each such statement being qualified in
all respects by such reference.
The Company intends to furnish its stockholders with annual reports
containing financial statements audited by independent accountants and with
quarterly reports containing unaudited financial information for each of the
first three quarters of each fiscal year.
53
<PAGE>
INDEX TO CONSOLIDATED FINANCIAL STATEMENTS
<TABLE>
<S> <C>
Report of Independent Certified Public Accountants.................................... F-2
Consolidated Balance Sheets at December 31, 1995, 1996 and June 30, 1997
(unaudited)......................................................................... F-3
Consolidated Statements of Income for the years ended December 31, 1994, 1995, 1996
and the six months ended June 30, 1996 and June 30, 1997 (unaudited)................ F-4
Consolidated Statements of Stockholders' Equity for the years ended December 31, 1994,
1995, 1996 and the six months ended June 30, 1996 and June 30, 1997 (unaudited)..... F-5
Consolidated Statements of Cash Flows for the years ended December 31, 1994, 1995,
1996 and the six months ended June 30, 1996 and June 30, 1997 (unaudited)........... F-6
Notes to Consolidated Financial Statements............................................ F-7
</TABLE>
F-1
<PAGE>
REPORT OF INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS
To the Board of Directors and Stockholders
I.C. Isaacs & Company, Inc.
Baltimore, Maryland
We have audited the accompanying consolidated balance sheets of I.C. Isaacs
& Company, Inc. and subsidiaries as of December 31, 1995 and 1996 and the
related consolidated statements of income, stockholders' equity and cash flows
for each of the three years in the period ended December 31, 1996. These
financial statements are the responsibility of the Company's management. Our
responsibility is to express an opinion on these financial statements based on
our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audits provide a reasonable basis for our opinion.
In our opinion, the consolidated financial statements referred to above
present fairly, in all material respects, the financial position of I.C. Isaacs
& Company, Inc. and subsidiaries at December 31, 1995 and 1996 and the results
of their operations and their cash flows for each of the three years in the
period ended December 31, 1996 in conformity with generally accepted accounting
principles.
BDO Seidman, LLP
Washington, D.C.
March 31, 1997, except
for Note 9, the dates of
which are May 15, 1997
and September 24, 1997
and Note 5, the
date of which is
September 30, 1997
F-2
<PAGE>
I.C. ISAACS & COMPANY, INC.
CONSOLIDATED BALANCE SHEETS
<TABLE>
<CAPTION>
DECEMBER 31, PRO FORMA
---------------------------- JUNE 30, JUNE 30,
1995 1996 1997 1997
------------- ------------- ------------- -------------
<S> <C> <C> <C> <C>
(UNAUDITED)
ASSETS
Current
Cash, including temporary investments of $779,436, $368,175
and $421,534................................................ $ 1,411,954 $ 938,799 $ 1,503,654 $ 1,224,114
Accounts receivable, less allowance for doubtful accounts of
$350,000, $660,000 and $700,000 (Note 3).................... 10,365,050 16,582,990 25,470,164 25,470,164
Inventories (Notes 1 and 3)................................... 14,323,730 14,090,974 22,007,213 22,007,213
Prepaid expenses and other.................................... 703,267 1,266,655 1,505,699 1,505,699
------------- ------------- ------------- -------------
Total current assets............................................ 26,804,001 32,879,418 50,486,730 50,207,190
Property, Plant and Equipment, at cost, less accumulated
depreciation and amortization (Notes 2 and 3)................. 2,818,637 2,399,822 2,595,631 2,595,631
Goodwill, less accumulated amortization of $731,025, $797,265
and $813,825.................................................. 1,921,075 1,854,835 1,821,715 1,821,715
Other Assets (Note 5)........................................... 219,941 122,565 212,113 1,512,113
------------- ------------- ------------- -------------
$ 31,763,654 $ 37,256,640 $ 55,116,189 $ 56,136,649
------------- ------------- ------------- -------------
------------- ------------- ------------- -------------
LIABILITIES AND STOCKHOLDERS' EQUITY
Current
Checks issued against future deposits......................... $ 1,217,832 $ 1,150,679 $ 2,177,148 $ 2,177,148
Current maturities of term loan and revolving line of credit
(Note 3).................................................... 7,417,500 6,520,418 18,300,006 18,300,006
Current maturities of capital lease obligations (Note 3)...... 223,999 216,764 178,931 178,931
Accounts payable.............................................. 5,110,126 6,378,310 7,481,040 7,481,040
Accrued expenses and other current liabilities (Note 4)....... 1,816,957 2,144,277 2,719,607 2,719,607
Accrued compensation.......................................... 210,810 194,710 241,682 241,682
Distribution payable.......................................... -- -- -- 15,400,000
------------- ------------- ------------- -------------
Total current liabilities....................................... 15,997,224 16,605,158 31,098,414 46,498,414
------------- ------------- ------------- -------------
Long-term Debt (Note 3)
Term loan..................................................... 116,649 699,994 599,992 599,992
Capital lease obligations..................................... 575,403 358,638 272,636 272,636
Junior subordinated notes..................................... 311,130 -- -- --
------------- ------------- ------------- -------------
Total long-term debt............................................ 1,003,182 1,058,632 872,628 872,628
------------- ------------- ------------- -------------
Minority interest............................................... 118,431 200,273 279,540 --
------------- ------------- ------------- -------------
Commitments and Contingencies (Notes 3,
5 and 6)
STOCKHOLDERS' EQUITY (Note 9):
Preferred stock; $.0001 par value; 5,000,000 shares
authorized, none outstanding................................ -- -- -- --
Common stock; $.0001 par value; 50,000,000 shares authorized;
6,037,048 shares issued; 6,000,000 shares outstanding....... 604 604 604 604
Additional paid-in capital.................................... 266,377 266,377 266,377 266,377
Retained earnings............................................. 14,392,704 19,140,464 22,613,494 8,513,494
Treasury stock, at cost (37,048 shares)....................... (14,868) (14,868) (14,868) (14,868)
------------- ------------- ------------- -------------
Total stockholders' equity...................................... 14,644,817 19,392,577 22,865,607 8,765,607
------------- ------------- ------------- -------------
$ 31,763,654 $ 37,256,640 $ 55,116,189 $ 56,136,649
------------- ------------- ------------- -------------
------------- ------------- ------------- -------------
</TABLE>
See accompanying summary of accounting policies and notes to consolidated
financial statements.
F-3
<PAGE>
I.C. ISAACS & COMPANY, INC.
CONSOLIDATED STATEMENTS OF INCOME
<TABLE>
<CAPTION>
SIX MONTHS
YEARS ENDED DECEMBER 31, ENDED JUNE 30,
-------------------------------------------- ----------------------------
1994 1995 1996 1996 1997
------------- ------------- -------------- ------------- -------------
<S> <C> <C> <C> <C> <C>
(UNAUDITED)
Net sales.................................. $ 85,298,186 $ 93,271,157 $ 118,655,253 $ 51,898,868 $ 77,709,554
Cost of sales.............................. 62,216,041 68,529,969 84,421,651 36,223,683 52,020,970
------------- ------------- -------------- ------------- -------------
Gross profit............................... 23,082,145 24,741,188 34,233,602 15,675,185 25,688,584
------------- ------------- -------------- ------------- -------------
Operating Expenses
Selling (Note 5)......................... 10,473,631 12,101,456 16,714,871 8,056,958 11,630,072
Distribution and shipping................ 2,045,911 2,378,728 2,669,093 1,227,549 1,977,534
General and administrative............... 5,813,853 5,786,524 6,243,327 2,733,753 3,375,974
Recovery of legal fees (Note 5).......... -- -- (718,558) -- (117,435)
------------- ------------- -------------- ------------- -------------
Total operating expenses................... 18,333,395 20,266,708 24,908,733 12,018,260 16,866,145
------------- ------------- -------------- ------------- -------------
Operating income........................... 4,748,750 4,474,480 9,324,869 3,656,925 8,822,439
------------- ------------- -------------- ------------- -------------
Other Income (Expense)
Interest................................. (1,191,047) (1,247,353) (1,365,163) (659,972) (922,251)
Other, net (Note 8)...................... 1,235,030 (3,178) 84,795 81,792 22,198
------------- ------------- -------------- ------------- -------------
Total other income (expense)............... 43,983 (1,250,531) (1,280,368) (578,180) (900,053)
------------- ------------- -------------- ------------- -------------
Income before minority interest and
extraordinary item....................... 4,792,733 3,223,949 8,044,501 3,078,745 7,922,386
Minority interest.......................... (52,520) (32,593) (81,842) (30,974) (79,267)
------------- ------------- -------------- ------------- -------------
Income before extraordinary item........... 4,740,213 3,191,356 7,962,659 3,047,771 7,843,119
Extraordinary Item--Gain on extinguishment
of debt (Note 3)......................... 388,770 -- -- -- --
------------- ------------- -------------- ------------- -------------
Net income................................. $ 5,128,983 $ 3,191,356 $ 7,962,659 $ 3,047,771 $ 7,843,119
------------- ------------- -------------- ------------- -------------
------------- ------------- -------------- ------------- -------------
Pro forma financial information:
Income before income taxes, as presented... $ 5,128,983 $ 3,191,356 $ 7,962,659 $ 3,047,771 $ 7,843,119
Pro forma provision for income taxes
(unaudited).............................. 2,103,000 1,308,000 3,265,000 1,250,000 3,216,000
------------- ------------- -------------- ------------- -------------
Pro forma net income (unaudited)........... $ 3,025,983 $ 1,883,356 $ 4,697,659 $ 1,797,771 $ 4,627,119
------------- ------------- -------------- ------------- -------------
------------- ------------- -------------- ------------- -------------
Pro forma earnings per share (unaudited)... $ 0.65 $ 0.64
Weighted average shares outstanding........ 7,184,615 7,184,615
</TABLE>
See accompanying summary of accounting policies and notes to consolidated
financial statements.
F-4
<PAGE>
I.C. ISAACS AND COMPANY, INC.
CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY
<TABLE>
<CAPTION>
PREFERRED STOCK COMMON STOCK ADDITIONAL
------------------------ ---------------------- PAID-IN RETAINED TREASURY
SHARES AMOUNT SHARES AMOUNT CAPITAL EARNINGS STOCK TOTAL
----------- ----------- --------- ----------- ----------- ---------- --------- ----------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Balance at December 31, 1993... -- -- 6,037,048 $ 604 $ 247,589 $10,611,742 $ (63,143) $10,796,792
Net income..................... -- -- -- -- -- 5,128,983 -- 5,128,983
Stockholder distributions...... -- -- -- -- -- (1,603,511) -- (1,603,511)
Purchase of treasury stock
(100 shares)................. -- -- -- -- -- -- (13,579) (13,579)
----------- ----------- --------- ----------- ----------- ---------- --------- ----------
Balance at December 31, 1994... -- -- 6,037,048 604 247,589 14,137,214 (76,722) 14,308,685
Net income..................... -- -- -- -- 3,191,356 -- 3,191,356
Stockholder distributions...... -- -- -- -- -- (2,935,866) (2,935,866)
Sale of treasury stock (100
shares)...................... -- -- -- -- 18,788 -- 61,854 80,642
----------- ----------- --------- ----------- ----------- ---------- --------- ----------
Balance at December 31, 1995... -- -- 6,037,048 604 266,377 14,392,704 (14,868) 14,644,817
Net income..................... -- -- -- -- -- 7,962,659 7,962,659
Stockholder distributions...... -- -- -- -- -- (3,214,899) -- (3,214,899)
----------- ----------- --------- ----------- ----------- ---------- --------- ----------
Balance at December 31, 1996... -- -- 6,037,048 604 266,377 19,140,464 (14,868) 19,392,577
Net income (unaudited)......... -- -- -- -- -- 7,843,119 -- 7,843,119
Stockholder distributions
(unaudited).................. -- -- -- -- -- (4,370,089) -- (4,370,089)
----------- ----------- --------- ----------- ----------- ---------- --------- ----------
Balance at June 30, 1997
(unaudited).................. -- -- 6,037,048 $ 604 $ 266,377 $22,613,494 $ (14,868) $22,865,607
----------- ----------- --------- ----------- ----------- ---------- --------- ----------
----------- ----------- --------- ----------- ----------- ---------- --------- ----------
</TABLE>
See accompanying summary of accounting policies and notes to consolidated
financial statements.
F-5
<PAGE>
I.C. ISAACS & COMPANY, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
<TABLE>
<CAPTION>
SIX MONTHS ENDED
YEARS ENDED DECEMBER 31, JUNE 30,
---------------------------------- -----------------------
1994 1995 1996 1996 1997
---------- ---------- ---------- ---------- -----------
<S> <C> <C> <C> <C> <C>
(UNAUDITED)
Operating Activities
Net income..................................... $5,128,983 $3,191,356 $7,962,659 $3,047,771 $ 7,843,119
Adjustments to reconcile net income to net cash
provided by operating activities
Write-off of other assets.................... 61,981 -- -- -- --
Extraordinary gain........................... (388,770) -- -- -- --
Provision for doubtful accounts.............. 278,338 398,451 1,193,693 391,646 553,895
Write-off of accounts receivable............. (428,338) (398,451) (883,693) (391,646) (513,895)
Provision for sales returns and discounts.... 5,545,414 5,104,266 5,955,658 2,297,288 4,790,896
Sales returns and discounts.................. (5,483,107) (5,062,285) (5,717,525) (2,169,616) (5,190,096)
Provision of overcharges..................... -- -- -- -- 150,450
Depreciation and amortization................ 1,512,934 1,477,450 1,359,252 766,529 495,669
(Gain) loss on sale of assets................ -- 99,115 (71,800) -- --
Minority interest............................ 52,520 32,594 81,842 30,975 79,267
(Increase) decrease in assets
Accounts receivable........................ (2,915,062) 886,051 (6,766,073) (5,747,646) (8,678,424)
Inventories................................ 470,913 (2,936,042) 232,756 (1,323,231) (7,916,239)
Prepaid expenses and other................. 459,543 (161,621) (563,388) (119,115) (239,044)
Other assets............................... (325,000) -- -- -- --
Increase (decrease) in liabilities
Checks issued against future deposits...... 440,374 345,929 (67,153) 245,239 1,026,469
Accounts payable........................... (1,099,403) 971,255 1,268,184 1,725,557 1,102,730
Accrued expenses and other current
liabilities.............................. 665,696 43,334 327,320 (430,376) 46,972
Accrued compensation......................... 52,470 (44,030) (16,100) (79,663) 575,331
---------- ---------- ---------- ---------- -----------
Cash provided by (used in) operating
activities....................................... 4,029,486 3,947,372 4,295,632 (1,756,288) (5,872,900)
---------- ---------- ---------- ---------- -----------
Investing Activities
(Purchase) sale of treasury stock.............. (13,579) 80,642 -- -- --
Proceeds from sale of assets................... -- 13,750 71,800 -- --
Capital expenditures........................... (676,648) (669,464) (701,821) (163,244) (639,609)
---------- ---------- ---------- ---------- -----------
Cash used in investing activities................ (690,227) (575,072) (630,021) (163,244) (639,609)
---------- ---------- ---------- ---------- -----------
Financing Activities
Stockholder distributions...................... (1,603,511) (2,935,866) (3,214,899) (1,476,959) (4,370,089)
Principal payments on debt..................... (1,783,263) (760,618) (1,632,216) (222,001) (223,836)
Principal proceeds from debt................... 833,230 291,552 783,349 3,453,782 11,779,587
Deferred financing costs....................... -- -- (75,000) (75,000) (108,298)
---------- ---------- ---------- ---------- -----------
Cash provided by (used in) financing
activities....................................... (2,553,544) (3,404,932) (4,138,766) 1,679,822 7,077,364
---------- ---------- ---------- ---------- -----------
Increase (decrease) in cash and cash
equivalents...................................... 785,715 (32,632) (473,155) (239,710) 564,855
Cash and Cash Equivalents, at beginning of
period........................................... 658,871 1,444,586 1,411,954 1,411,954 938,799
---------- ---------- ---------- ---------- -----------
Cash and Cash Equivalents, at end of period...... $1,444,586 $1,411,954 $ 938,799 $1,172,244 $ 1,503,654
---------- ---------- ---------- ---------- -----------
---------- ---------- ---------- ---------- -----------
</TABLE>
See accompanying summary of accounting policies and notes to consolidated
financial statements.
F-6
<PAGE>
I.C. ISAACS & COMPANY, INC.
SUMMARY OF ACCOUNTING POLICIES
(INFORMATION AS OF JUNE 30, 1997 AND FOR THE
SIX MONTHS ENDED JUNE 30, 1996 AND 1997 IS UNAUDITED)
BASIS OF PRESENTATION
The consolidated financial statements include the accounts of I.C. Isaacs &
Company, Inc. ("ICI"), I.C. Isaacs Europe, S.L. ("Isaacs Europe") and I.C.
Isaacs & Company L.P. (the "Partnership"). Collectively, ICI, Isaacs Europe and
the Partnership are referred to herein as the "Company." ICI, operates as the
general partner of the Partnership and has a 99% ownership interest. The limited
partner, with a 1% ownership interest, is an individual. The Company has
accounted for the 1% limited partner's ownership as a minority interest in the
accompanying consolidated financial statements. The Company established Isaacs
Europe in July 1996 as the exclusive licensee of Beverly Hills Polo Club
sportswear in Europe. Isaacs Europe did not have any significant revenue or
expenses in 1996 or through June 30, 1997. All intercompany balances and
transactions have been eliminated.
BUSINESS DESCRIPTION
The Company, which operates in one business segment, designs, manufactures
and markets branded sportswear for men, women and boys under the BOSS brand in
the United States and Puerto Rico and under the Beverly Hills Polo Club brand in
the United States, Puerto Rico and Europe. The Company also manufactures women's
sportswear under various Company-owned brand names as well as under third-party
private labels.
INTERIM FINANCIAL INFORMATION
The financial information as of June 30, 1997 and for the six months ended
June 30, 1996 and 1997 is unaudited. In the opinion of management, such
information contains all adjustments, consisting only of normal recurring
adjustments, necessary for a fair presentation of the results for such periods.
Results for interim periods are not necessarily indicative of results to be
expected for an entire year.
REORGANIZATION AND PRO FORMA INFORMATION (UNAUDITED)
ICI has or will initiate certain events (the "Reorganization") in connection
with its initial public offering of common stock. ICI has established a
wholly-owned subsidiary ("Isaacs Design, Inc.") to purchase, at book value, the
ownership interest in the Partnership held by the limited partner. Consequently,
upon completion of the initial public offering, the consolidated group will
include ICI, Isaacs Design, Inc., Isaacs Europe and the Partnership. In
connection with the Reorganization, ICI will declare a dividend to the
stockholders representing earned but undistributed earnings through the closing
date of the Reorganization.
Concurrently with the Reorganization, ICI will terminate its Subchapter S
corporation status and will become subject to federal and state income taxes.
The accompanying consolidated statements of income reflect a pro forma provision
for income taxes for the years ended December 31, 1994, 1995 and 1996 and for
the six-month periods ended June 30, 1996 and 1997, based upon pretax income as
if the consolidated group discussed above had been subject to federal and state
income taxes, based on an estimated effective tax rate of 41.0%. In connection
with termination of its Subchapter S corporation status, ICI will record a net
deferred tax asset and accompanying tax benefit to reflect the differences in
the financial statement and income tax bases of the assets and liabilities which
principally relate to uniform inventory capitalization, allowance for doubtful
accounts, depreciation and other accruals. If the Subchapter S corporation
status had terminated on June 30, 1997, the net deferred tax asset that would
have been recognized would have been approximately $1.3 million.
F-7
<PAGE>
I.C. ISAACS & COMPANY, INC.
SUMMARY OF ACCOUNTING POLICIES (CONTINUED)
(INFORMATION AS OF JUNE 30, 1997 AND FOR THE
SIX MONTHS ENDED JUNE 30, 1996 AND 1997 IS UNAUDITED)
Pro forma earnings per share are based on pro forma net income and the
weighted average number of shares of common stock outstanding adjusted to
include the estimated number of shares (1,184,615) being sold by ICI which would
be necessary to fund the distribution of all previously earned but undistributed
Subchapter S corporation earnings. This amount, estimated at $15.4 million as of
June 30, 1997, will be paid as the initial Subchapter S corporation distribution
upon the closing of the initial public offering.
Supplementary pro forma net income per share for the year ended December 31,
1996 and the six months ended June 30, 1997 of $0.69 and $0.59, respectively, is
based upon the weighted number of shares of common stock used in the calculation
of pro forma net income per share increased by the sale of 555,416 and 1,453,846
shares, respectively, assuming an initial offering price of $13.00, the proceeds
of which would be necessary to repay approximately $7,220,408 and $18,899,998,
respectively, of the Company's term loan and revolving line of credit.
The pro forma balance sheet as of June 30, 1997 reflects the termination of
the Subchapter S corporation status, establishment of the net deferred tax
asset, declaration of the dividend of the earned but undistributed Subchapter S
corporation earnings and the purchase of the minority interest as if they had
occurred on June 30, 1997.
RISKS AND UNCERTAINTIES
The apparel industry is highly competitive. The Company competes primarily
with larger, well capitalized companies, which may seek to increase market share
through price reductions. The risk to the Company is that such a strategy may
ultimately lead to reduced profit margins. In the past several years, many of
the Company's competitors have switched much of their apparel manufacturing from
the United States to foreign locations such as Mexico, the Dominican Republic
and throughout Asia. As competitors lower production costs it gives them greater
flexibility to alter prices. Over the last several years, the Company has
switched a significant portion of its production to contractors outside the
United States to reduce costs. Management believes that it will continue this
strategy for the foreseeable future.
The Company faces the uncertainty of the continued availability of increases
in its borrowing capacity. Adequate working capital is essential to an apparel
manufacturer due to the significant cash investment in inventory and accounts
receivable and the long lead time between payment for such inventory and
collection of customer receivables. The Company believes that it has an
excellent relationship with its asset-based lender and that it will be able to
obtain sufficient working capital to finance its requirements.
The Company faces other risks inherent in the apparel industry. These risks
include changes in fashion trends and related consumer acceptance and the
continuing consolidation in the retail segment of the apparel industry. The
Company's ability, or inability, to manage these risk factors could influence
future financial and operating results.
USE OF ESTIMATES
The preparation of financial statements in accordance with generally
accepted accounting principles requires management to make certain estimates and
assumptions, particularly regarding valuation of accounts receivable and
inventory, recognition of liabilities and disclosure of contingent assets and
liabilities at the date of the financial statements. Actual results could differ
from those estimates.
F-8
<PAGE>
I.C. ISAACS & COMPANY, INC.
SUMMARY OF ACCOUNTING POLICIES (CONTINUED)
(INFORMATION AS OF JUNE 30, 1997 AND FOR THE
SIX MONTHS ENDED JUNE 30, 1996 AND 1997 IS UNAUDITED)
CONCENTRATION OF CREDIT RISK
Financial instruments which potentially expose the Company to concentrations
of credit risk consist primarily of trade accounts receivable. The Company's
customer base is not concentrated in any specific geographic region but is
concentrated in the retail industry. For the years ended December 31, 1994, 1995
and 1996 sales to one customer were 20.0%, 19.0% and 13.0% of total sales,
respectively. The significant customer was the same in 1994 and 1995, but was
different in 1996. For the six months ended June 30, 1996 and 1997 sales to one
customer were 14.0% and 13.0% of total sales, respectively. The Company reviews
a customer's credit history before extending credit and establishes an allowance
for doubtful accounts based upon factors surrounding the credit risk of specific
customers, historical trends and other information. The Company's actual bad
debt as a percentage of net sales has been less than one-half of one percent.
The Company is also subject to concentrations of credit risk with respect to
its cash and cash equivalents, which it minimizes by placing these funds with
high-quality institutions.
INVENTORIES
Inventories are stated at the lower of cost or market. Cost is determined by
the first-in, first-out (FIFO) method.
PROPERTY, PLANT AND EQUIPMENT
Property and equipment are stated at cost. Depreciation is computed over the
estimated useful lives of the assets by both straight-line and accelerated
methods. Leasehold improvements are amortized using the straight-line method
over the life of the lease.
GOODWILL
The Company has recorded goodwill based on the excess of purchase price over
net assets acquired, and it is being amortized on a straight-line basis over 40
years. The Company periodically evaluates goodwill for possible impairment. The
analysis consists of a comparison of future projected undiscounted cash flows to
the carrying value of the goodwill. Any excess goodwill would be written off due
to impairment.
LICENSES
Included in other assets is the cost of certain licenses which allow the
Company to manufacture and market certain branded apparel. The Company
capitalized the cost of obtaining the licenses, and the cost of the licenses is
being amortized on a straight-line basis over the initial term of three years.
The Company accrues royalty expense related to the licenses at the greater of
the specified percentage of sales or the minimum guaranteed royalty set forth in
the license agreements.
REVENUE RECOGNITION
Sales are recognized upon shipment of products. Allowances for estimated
returns are provided when sales are recorded.
F-9
<PAGE>
I.C. ISAACS & COMPANY, INC.
SUMMARY OF ACCOUNTING POLICIES (CONTINUED)
(INFORMATION AS OF JUNE 30, 1997 AND FOR THE
SIX MONTHS ENDED JUNE 30, 1996 AND 1997 IS UNAUDITED)
ADVERTISING COSTS
Advertising costs, included in selling expenses, are expensed as incurred
and were $368,765, $1,498,001, $2,529,109, $1,310,092 and $1,619,346 for the
years ended December 31, 1994, 1995, 1996 and six months ended June 30, 1996 and
1997, respectively.
CASH EQUIVALENTS
For purposes of the statements of cash flows, all temporary investments
purchased with a maturity of three months or less are considered to be cash
equivalents.
INCOME TAXES
The entities in the consolidated group include principally a Subchapter S
corporation and a partnership which are not subject to federal or certain state
income taxes. Therefore, the Company has made no provision for income taxes in
the accompanying financial statements as taxes are the liability of the
respective stockholders and partners.
The Company accounts for income taxes in accordance with Statement of
Financial Accounting Standards No. 109, Accounting for Income Taxes ("SFAS
109"). Under SFAS 109, deferred taxes are determined using the liability method
which requires the recognition of deferred tax assets and liabilities based on
differences between financial statement and income tax bases using presently
enacted tax rates.
FAIR VALUE OF FINANCIAL INSTRUMENTS
Financial instruments of the Company include long-term debt. Based upon
current borrowing rates available to the Company, estimated fair values of these
financial instruments approximate their recorded amounts.
RECENT ACCOUNTING PRONOUNCEMENTS
In October 1995, the Financial Accounting Standards Board issued Statement
of Financial Accounting Standards No. 123, Accounting for Stock-Based
Compensation ("SFAS 123"). SFAS 123 will begin to affect the Company in fiscal
1997 with the establishment of the 1997 Omnibus Stock Plan. See
"Management--1997 Omnibus Stock Plan." The Company will adopt only the
disclosure provisions of SFAS 123 and account for stock-based compensation using
the intrinsic value method set forth in APB Opinion 25.
In March 1997, the Financial Accounting Standards Board issued Statement of
Financial Accounting Standards No. 128, Earnings Per Share ("SFAS 128"). SFAS
128 provides a different method of calculating earnings per share than is
currently used in APB Opinion 15. SFAS 128 provides for the calculation of basic
and diluted earnings per share. Basic earnings per share includes no dilution
and is computed by dividing income available to common stockholders by the
weighted average number of common shares outstanding for the period. Diluted
earnings per share reflects the potential dilution of securities that could
share in the earnings of an entity, similar to existing fully diluted earnings
per share. As required by the policies of the Securities and Exchange Commission
(the "Commission"), the Company has treated the shares being sold to fund the S
Corporation Distribution as outstanding prior to the Offering. SFAS 128 does not
have a provision requiring such treatment. The Commission is currently
evaluating its policies concerning this issue. Assuming shares issued to fund
the S Corporation Distribution continue to be treated as outstanding prior to
the Offering, the Company believes adopting SFAS 128 will not have a
F-10
<PAGE>
I.C. ISAACS & COMPANY, INC.
SUMMARY OF ACCOUNTING POLICIES (CONTINUED)
(INFORMATION AS OF JUNE 30, 1997 AND FOR THE
SIX MONTHS ENDED JUNE 30, 1996 AND 1997 IS UNAUDITED)
material effect on its calculation of earnings per share. The Company will adopt
the provisions for computing earnings per share set forth in SFAS 128 in
December 1997.
Statement of Financial Accounting Standards No. 129, Disclosure of
Information about Capital Structure ("SFAS 129") effective for periods ending
after December 15, 1997, establishes standards for disclosing information about
an entity's capital structure. SFAS 129 requires disclosure of the pertinent
rights and privileges of various securities outstanding (stock, options,
warrants, preferred stock, debt and participation rights) including dividend and
liquidation preferences, participant rights, call prices and dates, conversion
or exercise prices and redemption requirements. Adoption of SFAS 129 will have
no effect on the Company as it currently discloses the information specified.
In June 1997, the Financial Accounting Standards Board issued two new
disclosure standards. The Company's results of operations and financial position
will be unaffected by implementation of these new standards.
Statement of Financial Accounting Standards No. 130, Reporting Comprehensive
Income ("SFAS 130"), establishes standards for reporting and display of
comprehensive income, its components and accumulated balances. Comprehensive
income is defined to include all changes in equity except those resulting from
investments by owners and distributions to owners. Among other disclosures, SFAS
130 requires that all items that are required to be recognized under current
accounting standards as components of comprehensive income be reported in a
financial statement that is displayed with the same prominence as other
financial statements.
Statement of Financial Accounting Standards No. 131, Disclosure about
Segments of a Business Enterprise ("SFAS 131"), establishes standards for the
way that public enterprises report information about operating segments in
annual financial statements and requires reporting of selected information about
operating segments in interim financial statements issued to the public. It also
establishes standards for disclosures regarding products and services,
geographic areas and major customers. SFAS 131 defines operating segments as
components of an enterprise about which separate financial information is
available that is evaluated regularly by the chief operating decision maker in
deciding how to allocate resources and in assessing performance.
Both SFAS 130 and SFAS 131 are effective for financial statements for
periods beginning after December 15, 1997 and require comparative information
for earlier years to be restated. Due to the recent issuance of these standards,
management has been unable to fully evaluate the impact, if any, they may have
on future financial statement disclosures.
F-11
<PAGE>
I.C. ISAACS & COMPANY, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(INFORMATION AS OF JUNE 30, 1997 AND FOR THE
SIX MONTHS ENDED JUNE 30, 1996 AND 1997 IS UNAUDITED)
1. INVENTORIES
Inventories consist of the following:
<TABLE>
<CAPTION>
DECEMBER 31,
---------------------------- JUNE 30,
1995 1996 1997
------------- ------------- -------------
<S> <C> <C> <C>
Raw materials and work-in-process............... $ 5,068,996 $ 6,491,950 $ 7,533,430
Finished goods.................................. 9,254,734 7,599,024 14,473,783
------------- ------------- -------------
$ 14,323,730 $ 14,090,974 $ 22,007,213
------------- ------------- -------------
------------- ------------- -------------
</TABLE>
2. PROPERTY, PLANT AND EQUIPMENT
Property, plant and equipment consists of the following:
<TABLE>
<CAPTION>
DECEMBER 31, ESTIMATED
-------------------------- JUNE 30, USEFUL
1995 1996 1997 LIVES
------------ ------------ ------------ -----------
<S> <C> <C> <C> <C>
Land................................. $ 185,660 $ 185,660 $ 188,160
Buildings and improvements........... 5,301,761 5,301,761 5,301,761 18 years
Machinery, equipment and fixtures.... 7,878,836 8,570,577 9,112,546 5-7 years
Other................................ 1,025,362 1,035,442 1,130,582 various
------------ ------------ ------------
14,391,619 15,093,440 15,733,049
Less accumulated depreciation and
amortization....................... 11,572,982 12,693,618 13,137,418
------------ ------------ ------------
$2,818,637 $ 2,399,822 $ 2,595,631
------------ ------------ ------------
------------ ------------ ------------
</TABLE>
F-12
<PAGE>
I.C. ISAACS & COMPANY, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
(INFORMATION AS OF JUNE 30, 1997 AND FOR THE
SIX MONTHS ENDED JUNE 30, 1996 AND 1997 IS UNAUDITED)
3. LONG-TERM DEBT
Long-term debt consists of the following:
<TABLE>
<CAPTION>
DECEMBER 31,
-------------------------- JUNE 30,
1995 1996 1997
------------ ------------ -------------
<S> <C> <C> <C>
Term loan (a)..................................... $ 316,653 $ 899,998 $ 799,996
Revolving line of credit (a)...................... 7,207,496 6,320,414 18,100,002
Installment purchase obligations (b).............. 10,000 -- --
------------ ------------ -------------
7,534,149 7,220,412 18,899,998
Capital lease obligations (c)..................... 799,402 575,402 451,567
Junior subordinated notes (d)..................... 311,130 -- --
------------ ------------ -------------
Total............................................. $ 8,644,681 $ 7,795,814 $ 19,351,565
Less current maturities of long-term debt and
revolving line of credit........................ 7,417,500 6,520,418 18,300,006
Less current maturities of capital lease
obligations..................................... 223,999 216,764 178,931
------------ ------------ -------------
$ 1,003,182 $ 1,058,632 $ 872,628
------------ ------------ -------------
------------ ------------ -------------
</TABLE>
(a) The Company has a renewable term loan agreement with a borrowing limit
of $1,000,000. The term loan facility is payable in 60 monthly installments of
$16,667 and is collateralized by property and equipment. The term loan facility
may be renewed for periods of 60 months at the option of the lender. The term
loan facility bears interest at the prime rate of interest plus 2.5%
(effectively 11.0% at June 30, 1997) and is payable monthly.
The revolving line of credit agreement and letter of credit arrangement
provide that the Company may borrow up to 80% of the net amount of eligible
accounts receivable and a portion of imported inventory, as defined in the
financing agreement. The revolving line of credit expires on June 30, 1998.
Borrowings under the revolving line of credit and outstanding letters of credit
(limited to $10.0 million) may not exceed $30.0 million and bear interest at the
prime rate of interest plus 1.0% (effectively 9.5% at June 30, 1997). Additional
borrowings available under the revolving line of credit and letter of credit
agreements are approximately $2.6 million at June 30, 1997. Borrowings under
these agreements are collateralized by the Company's accounts receivable,
imported inventories and other assets. Outstanding letters of credit
approximated $9.5 million at June 30, 1997. Among the provisions of the
financing agreement are requirements to maintain specified levels of working
capital and net worth. Retained earnings of approximately $8.0 million are
restricted as to the payment of dividends.
F-13
<PAGE>
I.C. ISAACS & COMPANY, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
(INFORMATION AS OF JUNE 30, 1997 AND FOR THE
SIX MONTHS ENDED JUNE 30, 1996 AND 1997 IS UNAUDITED)
3. LONG-TERM DEBT (CONTINUED)
Average short-term borrowings and the related interest rates are as follows:
<TABLE>
<CAPTION>
SIX MONTHS
YEARS ENDED ENDED
DECEMBER 31, JUNE 30,
---------------------------- -------------
1995 1996 1997
------------- ------------- -------------
<S> <C> <C> <C>
Borrowings under revolving line of credit....... $ 7,207,496 $ 6,320,414 $ 11,779,587
Weighted average interest rate.................. 9.88% 9.25% 9.50%
Maximum month-end balance during the period..... $ 10,649,725 $ 11,024,807 $ 18,261,269
Average balance during the period............... $ 8,518,496 $ 9,814,896 $ 15,880,483
</TABLE>
(b) The Company's plants were financed by the issuance of industrial revenue
and general obligation bonds by municipalities in Mississippi. These obligations
bore interest at rates varying between 5% and 14%. The Company repaid the
remaining obligation in 1996.
(c) The Company leases equipment under various capital leases which are
included in property, plant and equipment in the amount of $1,048,037 at
December 31, 1995 and 1996 and June 30, 1997. Amortization expense related to
assets under capital leases amounted to $276,080, $190,987, $150,058, $116,856
and $58,947 for the years ended December 31, 1994, 1995, 1996 and the six months
ended June 30, 1996 and 1997, respectively.
As of December 31, 1996, future net minimum lease payments under capital
leases that have initial or remaining noncancelable lease terms in excess of one
year are as follows:
<TABLE>
<S> <C>
1997.............................................................. $ 267,208
1998.............................................................. 202,827
1999.............................................................. 189,551
2000.............................................................. 6,296
---------
Total minimum lease payments...................................... 665,882
Less: amount representing interest................................ (90,480)
---------
Present value of net minimum lease payments....................... 575,402
Less: current portion............................................. (216,764)
---------
Long-term capital lease obligations............................... $ 358,638
---------
---------
</TABLE>
(d) Junior subordinated notes totaling $311,130 were due to stockholders of
ICI and had a maturity date of June 1998. Interest was calculated at the prime
rate of interest plus 1.5% but could not exceed 16.0%. The Company repaid these
subordinated notes in October 1996.
As of December 31, 1993, the Company had two junior subordinated notes
outstanding to a former partner in the Partnership which totalled $1,500,000
plus approximately $150,000 in contingent fees. The notes were due in full by
February 1995. On September 30, 1994, the Company repaid the two notes, at a
discount of 15.0%, as well as accrued interest through September 30, 1994. The
Company recognized an extraordinary gain of $388,770 for the difference between
the carrying value of the subordinated debt,
F-14
<PAGE>
I.C. ISAACS & COMPANY, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
(INFORMATION AS OF JUNE 30, 1997 AND FOR THE
SIX MONTHS ENDED JUNE 30, 1996 AND 1997 IS UNAUDITED)
3. LONG-TERM DEBT (CONTINUED)
including accrued interest and contingent payments of $1,810,104 and the
repayment amount of $1,421,334.
Scheduled maturities of the Company's term loan and revolving line of credit
are as follows:
<TABLE>
<S> <C>
1997............................................................... $6,520,418
1998............................................................... 200,004
1999............................................................... 200,004
2000............................................................... 200,004
2001............................................................... 99,982
---------
$7,220,412
---------
---------
</TABLE>
4. ACCRUED EXPENSES
Accrued expenses consist of the following:
<TABLE>
<CAPTION>
DECEMBER 31,
-------------------------- JUNE 30,
1995 1996 1997
------------ ------------ ------------
<S> <C> <C> <C>
Royalties........................................... $ 878,918 $ 1,194,637 $ 1,592,350
Accrued professional fees........................... 100,000 150,000 100,000
Payable to salesmen................................. 233,818 152,701 228,056
Severance agreements................................ 145,913 103,745 14,129
Payroll tax withholdings............................ 231,142 145,736 359,416
Customer credit balances............................ 177,402 254,244 211,120
Accrued bonuses..................................... -- -- 151,000
Other............................................... 49,764 143,214 63,536
------------ ------------ ------------
$ 1,816,957 $ 2,144,277 $ 2,719,607
------------ ------------ ------------
------------ ------------ ------------
</TABLE>
5. COMMITMENTS AND CONTINGENCIES
The Company rents real and personal property under leases expiring at
various dates through 1999. Certain of the leases stipulate payment of real
estate taxes and other occupancy expenses. Minimum annual rental commitments
under noncancellable operating leases in effect at December 31, 1996 are
summarized as follows:
<TABLE>
<CAPTION>
COMPUTER
TRUCKS SHOWROOMS HARDWARE MACHINERY TOTAL
---------- ------------ ---------- ---------- ------------
<S> <C> <C> <C> <C> <C>
1997.................................................... $ 137,942 $ 365,677 $ 138,585 $ 189,969 $ 832,173
1998.................................................... 98,898 171,020 144,731 77,269 491,918
1999.................................................... 56,784 133,350 52,851 3,653 246,638
2000.................................................... 56,784 135,572 22,224 -- 214,580
2001.................................................... 56,784 138,684 5,556 -- 201,024
Thereafter.............................................. 42,588 219,583 -- -- 262,171
---------- ------------ ---------- ---------- ------------
$ 449,780 $ 1,163,886 $ 363,947 $ 270,891 $ 2,248,504
---------- ------------ ---------- ---------- ------------
---------- ------------ ---------- ---------- ------------
</TABLE>
F-15
<PAGE>
I.C. ISAACS & COMPANY, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
(INFORMATION AS OF JUNE 30, 1997 AND FOR THE
SIX MONTHS ENDED JUNE 30, 1996 AND 1997 IS UNAUDITED)
5. COMMITMENTS AND CONTINGENCIES (CONTINUED)
Total rent expense is as follows:
<TABLE>
<CAPTION>
SIX MONTHS
YEARS ENDED DECEMBER 31, ENDED JUNE 30,
------------------------------------ ----------------------
1994 1995 1996 1996 1997
---------- ---------- ------------ ---------- ----------
<S> <C> <C> <C> <C> <C>
Minimum rentals.................................... $ 536,862 $ 344,047 $ 773,987 $ 388,595 $ 422,108
Other lease costs.................................. 397,705 566,533 459,823 214,484 254,724
---------- ---------- ------------ ---------- ----------
$ 934,567 $ 910,580 $ 1,233,810 $ 603,079 $ 676,832
---------- ---------- ------------ ---------- ----------
---------- ---------- ------------ ---------- ----------
</TABLE>
During 1990, the Company executed a license agreement for the manufacture
and sale of "sports-wear" under the "BOSS" trademark. This "BOSS" agreement
expires in December 1999 with additional options to extend it through 2004. The
Company may terminate the agreement if certain sales and/or profit levels are
not attained. The agreement provides for certain minimum license fees and
additional license fees of 5% of denim sales and 6% of non-denim sales, as
defined. Total license fees amounted to $2,908,532, $2,753,422, $4,209,750,
$3,305,162 and $3,651,325 for the years ended December 31, 1994, 1995, 1996 and
the six months ended June 30, 1996 and 1997, respectively. The Company executed
certain agreements on September 30, 1997, which upon closing, will allow it to
acquire the BOSS trademark, subject to certain restrictions on foreign
manufacturing and conveyance of the foreign rights to the BOSS brand to a third
party.
The percentage of BOSS sportswear sales to total sales was 65.1%, 66.3%,
72.2%, 69.8% and 73.4% for the years ended December 31, 1994, 1995 and 1996 and
the six months ended June 30, 1996 and 1997, respectively.
In September 1993, the Company purchased a license to manufacture and sell
certain apparel under the Beverly Hills Polo Club trademark. The agreement was
amended in 1996 and expires in December 1998, with options to extend through
2004. The licensor may terminate the agreement if the Company does not meet
minimum sales requirements as set forth in the agreement. The agreement provides
for minimum annual license fees or license fees of 5% of sales whichever is
greater. Also, the Company is required to spend 1% of annual sales on product
advertising. The license fees were $103,661, $421,234, $607,287, $273,122 and
$600,356 for the years ended December 31, 1994, 1995, 1996 and the six months
ended June 30, 1996 and 1997, respectively.
In 1996, Isaacs Europe executed an exclusive license for the manufacture and
sale, in Europe, of sportswear under the Beverly Hills Polo Club trademark. The
license agreement has an initial term of three years with three one-year renewal
options. The agreement provides for minimum annual license fees, beginning in
the second year, or 6% of sales whichever is greater.
F-16
<PAGE>
I.C. ISAACS & COMPANY, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
(INFORMATION AS OF JUNE 30, 1997 AND FOR THE
SIX MONTHS ENDED JUNE 30, 1996 AND 1997 IS UNAUDITED)
5. COMMITMENTS AND CONTINGENCIES (CONTINUED)
The minimum license fees under the Beverly Hills Polo Club agreement are as
follows:
<TABLE>
<CAPTION>
YEAR ENDING DECEMBER 31,
- ----------------------------------------------------------------------------------
<S> <C>
1997.............................................................................. $ 112,500
1998.............................................................................. 330,000
1999.............................................................................. 360,000
----------
$ 802,500
----------
----------
</TABLE>
In February 1993, suit was filed against the licensor of the "BOSS"
trademark in the United States and several licensees, including the Company. The
complaint alleges trademark infringement related to use of the "BOSS" trademark.
However, the complaint does not challenge the exclusive right of the Company to
use the "BOSS" trademark in connection with the manufacture and sale of certain
clothing as set forth in its exclusive license agreement.
The Company executed certain agreements on September 30, 1997, which upon
closing will result in settlement of the BOSS trademark litigation described
above. This settlement will allow the Company to acquire the BOSS trademark for
use in the manufacture and sale of apparel, subject to certain restrictions as
set forth in the agreements, and the Company's transfer of the BOSS foreign
rights to a third party. The Company also entered into a foreign rights
manufacturing agreement with the third party under which the Company will be
licensed to manufacture apparel in foreign countries in which the Company is
currently manufacturing BOSS products for sale in the United States and Puerto
Rico. Under the foreign rights agreement, the Company will pay royalties based
on a specified percentage of net sales attributable to apparel manufactured
worldwide and will be subject to an annual net sales requirement. To the extent
that the Company does not achieve the net sales requirements, it will have the
right, in order to avoid termination of the foreign rights agreement, to pay
royalties as if it had achieved such net sales requirement. The foreign rights
agreement has an initial term of four years but may be extended at the Company's
option through December 31, 2007. The BOSS trademark is subject to an option to
purchase from the Company under conditions set forth in the agreements.
The Company is party to employment agreements with five executive officers
which provide for specified levels of compensation and certain other benefits.
The agreements also provide for severance payments from the termination date
through the expiration date under certain circumstances.
6. RETIREMENT PLAN
The Company sponsors a defined benefit pension plan that covers
substantially all employees with more than one year of service. The Company's
policy is to fund pension costs accrued. Contributions to the plan reflect
benefits attributed to employees' service to date, as well as service expected
to be earned in the future. The benefits are based on the number of years of
service and the employee's compensation during the three consecutive complete
years of service prior to or including the year of termination of employment.
Plan assets consist primarily of common stocks, fixed income securities and
cash. The latest available actuarial valuation is as of December 31, 1996.
F-17
<PAGE>
I.C. ISAACS & COMPANY, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
(INFORMATION AS OF JUNE 30, 1997 AND FOR THE
SIX MONTHS ENDED JUNE 30, 1996 AND 1997 IS UNAUDITED)
6. RETIREMENT PLAN (CONTINUED)
Pension expense for the years ended December 31, 1994, 1995 and 1996 and the
six months ended June 30, 1996 and June 30, 1997 was $305,000, $310,000,
$284,000, $182,000 and $165,000, respectively. The components of pension expense
for the last three years are as follows:
<TABLE>
<CAPTION>
YEARS ENDED DECEMBER 31,
----------------------------------
<S> <C> <C> <C>
1994 1995 1996
---------- ---------- ----------
Service cost of current period........................... $ 244,000 $ 223,000 $ 208,000
Interest on the projected benefit obligation............. 470,000 485,000 555,000
Return on plan assets.................................... (456,000) (445,000) (526,000)
Net other costs.......................................... 47,000 47,000 47,000
---------- ---------- ----------
Pension cost............................................. $ 305,000 $ 310,000 $ 284,000
---------- ---------- ----------
---------- ---------- ----------
</TABLE>
The following table sets forth the Plan's funded status and amounts
recognized at December 31, 1995 and 1996:
<TABLE>
<CAPTION>
1995 1996
------------ ------------
<S> <C> <C>
Vested benefits................................................... $ 5,987,000 $ 6,730,000
Nonvested benefits................................................ 37,000 56,000
------------ ------------
Accumulated benefit obligation.................................... 6,024,000 6,786,000
Effect of anticipated future compensation levels and other
events.......................................................... 457,000 862,000
------------ ------------
Projected benefit obligation...................................... 6,481,000 7,648,000
Fair value of assets held in the plan............................. 6,139,000 7,357,000
------------ ------------
Excess of projected benefit obligation over plan assets........... (342,000) (291,000)
Unrecognized net loss from past experience different from that
assumed......................................................... 344,000 661,000
Unrecognized prior service cost................................... 159,000 143,000
Unamortized liability at transition............................... 155,000 124,000
------------ ------------
Net prepaid periodic pension cost................................. $ 316,000 $ 637,000
------------ ------------
------------ ------------
</TABLE>
With respect to the above table, the weighted average discount rate used to
measure the projected benefit obligation was 8.0%; the rate of increase in
future compensation levels was 3.0%; and the expected long-term rate of return
on assets was 8.0%.
7. SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION
Cash paid for interest amounted to $1,192,040, $1,272,794, $1,389,023,
$961,864 and $668,096 for the years ended December 31, 1994, 1995, 1996 and the
six months ended June 30, 1996 and 1997, respectively.
During 1994 and 1995 the Company purchased property and equipment totalling
$731,792 and $316,245, respectively, by issuing notes payable.
F-18
<PAGE>
I.C. ISAACS & COMPANY, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
(INFORMATION AS OF JUNE 30, 1997 AND FOR THE
SIX MONTHS ENDED JUNE 30, 1996 AND 1997 IS UNAUDITED)
8. NON-RECURRING INCOME
During 1991, the Company received $6.0 million under the provisions of a
settlement agreement related to termination of a license. Additionally, the
agreement provided that, if certain conditions are met, the Company could
receive up to $3.0 million through 1998. The Company had received the maximum
amount allowable under this agreement as of December 31, 1994. Included in other
income for 1994 are payments of approximately $1.18 million.
9. COMMON AND PREFERRED STOCK
In May 1997, the Board of Directors of ICI authorized the filing of a
registration statement for an initial public offering of the Company's common
stock.
In May 1997, the stockholders approved an amended and restated Certificate
of Incorporation which increased the authorized common shares from 20,000 to
50.0 million and established a class of preferred shares with 5.0 million shares
authorized. On September 24, 1997, the Board of Directors of ICI approved a
370.4847-for-1 stock split of the common stock, which will be paid in the form
of a stock dividend to the stockholders effective September 24, 1997. The change
in the Company's common stock for the stock dividend has been given retroactive
effect for all periods presented.
In May 1997, the Company adopted the 1997 Omnibus Stock Plan (the "Plan").
Under the Plan, the Company may grant qualified and nonqualified stock options,
stock appreciation rights, restricted stock or performance awards, payable in
cash or shares of common stock, to selected employees. The Plan will be
administered by the Board of Directors. The Company has reserved 500,000 shares
of common stock for issuance under the Plan.
F-19
<PAGE>
- -------------------------------------------
-------------------------------------------
- -------------------------------------------
-------------------------------------------
NO DEALER, SALES PERSON OR OTHER INDIVIDUAL HAS BEEN AUTHORIZED TO GIVE ANY
INFORMATION OR MAKE ANY REPRESENTATIONS NOT CONTAINED IN THIS PROSPECTUS IN
CONNECTION WITH THE OFFERING COVERED BY THIS PROSPECTUS. IF GIVEN OR MADE, SUCH
INFORMATION OR REPRESENTATION MUST NOT BE RELIED UPON AS HAVING BEEN AUTHORIZED
BY THE COMPANY OR THE UNDERWRITERS. THIS PROSPECTUS DOES NOT CONSTITUTE AN OFFER
TO SELL, OR A SOLICITATION OF AN OFFER TO BUY, THE COMMON STOCK IN ANY
JURISDICTION WHERE, OR TO ANY PERSON TO WHOM, IT IS UNLAWFUL TO MAKE SUCH OFFER
OR SOLICITATION. NEITHER THE DELIVERY OF THIS PROSPECTUS NOR ANY SALE MADE
HEREUNDER SHALL, UNDER ANY CIRCUMSTANCES, CREATE ANY IMPLICATION THAT THERE HAS
NOT BEEN ANY CHANGE IN THE FACTS SET FORTH IN THIS PROSPECTUS OR IN THE AFFAIRS
OF THE COMPANY SINCE THE DATE HEREOF.
------------------------
TABLE OF CONTENTS
<TABLE>
<CAPTION>
PAGE
-----
<S> <C>
Prospectus Summary............................. 3
Risk Factors................................... 7
Company Organization........................... 12
Use of Proceeds................................ 13
Dividend Policy................................ 14
Capitalization................................. 15
Dilution....................................... 16
Selected Financial Data........................ 17
Management's Discussion and Analysis of
Financial Condition and Results of
Operations................................... 18
Business....................................... 26
Management..................................... 41
Certain Transactions........................... 46
Principal Stockholders......................... 47
Shares Eligible for Future Sale................ 48
Description of Capital Stock................... 49
Underwriting................................... 51
Legal Matters.................................. 52
Experts........................................ 52
Additional Information......................... 53
Index to Financial Statements.................. F-1
</TABLE>
--------------------------
UNTIL __________, 1997 (25 DAYS AFTER THE DATE OF THIS PROSPECTUS), ALL
DEALERS EFFECTING TRANSACTIONS IN THE COMMON STOCK OFFERED HEREBY, WHETHER OR
NOT PARTICIPATING IN THIS DISTRIBUTION, MAY BE REQUIRED TO DELIVER A PROSPECTUS.
THIS DELIVERY REQUIREMENT IS IN ADDITION TO THE OBLIGATION OF DEALERS TO DELIVER
A PROSPECTUS WHEN ACTING AS UNDERWRITERS AND WITH RESPECT TO THEIR UNSOLD
ALLOTMENTS OR SUBSCRIPTIONS.
3,800,000 SHARES
I.C. ISAACS & COMPANY, INC.
[LOGO]
COMMON STOCK
---------------------
PROSPECTUS
---------------------
The Robinson-Humphrey Company
Legg Mason Wood Walker
Incorporated
, 1997
- -------------------------------------------
-------------------------------------------
- -------------------------------------------
-------------------------------------------
<PAGE>
PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
ITEM 13. OTHER EXPENSES OF ISSUANCE AND DISTRIBUTION.
The following table sets forth the expenses in connection with this
Registration Statement. The Company will pay all expenses of the Offering. All
of such expenses are estimates, other than the filing fees payable to the
Securities and Exchange Commission, NASD and Nasdaq.
<TABLE>
<S> <C>
Securities and Exchange Commission Filing Fee...................................... $ 18,591
NASD Filing Fee.................................................................... 6,618
Nasdaq Listing Fee................................................................. 43,425
Printing and Engraving Fees and Expenses........................................... *
Legal Fees and Expenses............................................................ *
Accounting Fees and Expenses....................................................... *
Blue Sky Fees and Expenses......................................................... *
Transfer Agent Fees................................................................ *
Miscellaneous...................................................................... *
TOTAL...................................................................... *
</TABLE>
- ------------------------
* To be completed in an amendment.
ITEM 14. INDEMNIFICATION OF DIRECTORS AND OFFICERS.
Pursuant to Section 145 of the General Corporation Law of Delaware (the
"Delaware Corporation Law"), Article IX of the Restated By-laws of the
Registrant, a copy of which is filed as Exhibit 3.02 to this Registration
Statement, provides that the Registrant shall indemnify any person in connection
with any threatened, pending or completed legal proceeding (other than a legal
proceeding by or in the right of the Registrant) by reason of the fact that he
is or was a director, officer, employee or agent of the Registrant or is or was
serving at the request of the Registrant as a director, officer, employee or
agent of another corporation, partnership, joint venture, trust or other
enterprise against expenses (including attorneys' fees), judgments, fines and
amounts paid in settlement actually and reasonably incurred in connection with
such legal proceeding if he acted in good faith and in a manner that he
reasonably believed to be in or not opposed to the best interests of the
Registrant, and with respect to any criminal action or proceeding, if he has no
reasonable cause to believe that his conduct was unlawful. If the legal
proceeding is by or in the right of the Registrant, the director or officer may
be indemnified by the Registrant against expenses (including attorneys' fees)
actually and reasonably incurred in connection with the defense or settlement of
actually and reasonably incurred in connection with the defense or settlement of
such legal proceeding if he acted in good faith and in a manner he reasonably
believed to be in or not opposed to the best interest of the Registrant and
believed to be in or not opposed to the best interest of the Registrant and
except that he may not be indemnified in respect of any claim, issue or matter
as to which he shall have been adjudged to be liable to the Registrant unless a
court determines otherwise.
Article IX of the Registrant's Restated By-laws also allows the Registrant
to maintain liability insurance on behalf of any person who is or was a
director, officer, employee or agent of the Registrant or such person who serves
or served as director, officer, employee or agent of another corporation,
partnership, joint venture, trust or other enterprise at the request of the
Registrant.
Pursuant to Section 102(b)(7) of the Delaware Corporation Law, Article VII
of the Restated Certificate of the Registrant, a copy of which is filed with
Exhibit 3.1 to this Registration Statement, provides that no director of the
Registrant shall be personally liable to the Registrant or its stockholders for
monetary damages for any breach of his fiduciary duty as a director; provided,
however, that such
II-1
<PAGE>
clause shall not apply to any liability of a director (1) for any breach of his
loyalty to the Registrant or its stockholders, (2) for acts or omissions that
are not in good faith or involve intentional misconduct or a knowing violation
of the law, (3) under Section 174 of the Delaware Corporation Law, or (4) for
any transaction from which the director derived an improper personal benefit.
The form of Underwriting Agreement, filed as Exhibit 1.01 hereto, contains
provisions by which the Underwriters will agree to indemnify the Registrant and
each officer, director and controlling person of the Registrant against certain
liabilities.
The Form of Indemnification Agreement, filed as Exhibit 10.09 hereto,
contains provisions by which the Registrant will agree to indemnify each of its
officers and directors against certain liabilities.
ITEM 15. RECENT SALES OF UNREGISTERED SECURITIES.
In January 1997, the Company issued 37,048 shares of Common Stock to Thomas
P. Ormandy, an executive officer of the Company, for $39,485 cash.
In June 1997, the Company issued 8,619 shares of Common Stock to existing
stockholders of the Company in consideration of the cancellation of stock
certificates that had been issued at a time when the Company did not have a
sufficient number of authorized shares of Common Stock.
Immediately prior to the consummation of the Offering the Company will
effect a 370.4847-for-1 stock split pursuant to which it will issue an aggregate
of approximately 6.0 million shares of Common Stock to the Company's existing
stockholders. See "Company Organization."
Each of the foregoing transactions was exempt from the registration
requirements of the Securities Act of 1933, as amended (the "Securities Act"),
in reliance on Section 3(a)(9) and/or Section 4(2) of the Securities Act on the
basis that such transaction was solely with existing security holders and/or did
not involve a public offering. No underwriters were involved in connection with
any of the foregoing transactions.
ITEM 16. EXHIBITS AND FINANCIAL STATEMENT SCHEDULES.
(A) EXHIBITS:
<TABLE>
<CAPTION>
EXHIBIT NO DESCRIPTION
- ----------- ------------------------------------------------------------------------------------------------
<C> <S>
*1.01 Form of Underwriting Agreement
3.01 Amended and Restated Certificate of Incorporation
3.02 Amended and Restated By-laws
4.01 Specimen Common Stock Certificate
5.01 Opinion of Piper & Marbury L.L.P.
10.01 Form of Amended and Restated Shareholders' Agreement
10.02 Employment Agreement dated as of May 15, 1997, between the Registrant and Robert J. Arnot
10.03 Employment Agreement dated as of May 15, 1997, between the Registrant and Gerald W. Lear
10.04 Employment Agreement dated as of May 15, 1997, between the Registrant and Gary B. Brashers
10.05 Employment Agreement dated as of May 15, 1997, between the Registrant and Eugene C. Wielepski
10.06 Employment Agreement dated as of May 15, 1997, between the Registrant and Thomas Ormandy
10.07 1997 Omnibus Stock Plan
10.08(a) Accounts Financing Agreement dated June 16, 1992
10.08(b) Covenant Supplement to Accounts Financing Agreement dated June 16, 1992
10.08(c) Inventory and Equipment Security Agreement Supplement to Accounts Financing Agreement dated June
16, 1992
10.08(d) Trade Financing Agreement Supplement to Accounts Financing Agreement (Security Agreement) dated
June 16, 1992
</TABLE>
II-2
<PAGE>
<TABLE>
<CAPTION>
EXHIBIT NO DESCRIPTION
- ----------- ------------------------------------------------------------------------------------------------
10.08(e) Amendment to Financing Agreements dated October 30, 1992
<C> <S>
10.08(f) Second Amendment to Financing Agreements dated January 4, 1993
10.08(g) Third Amendment to Financing Agreements dated March 10, 1993
10.08(h) Fourth Amendment to Financing Agreements dated May 1, 1993
10.08(i) Fifth Amendment to Financing Agreements dated January 1, 1994
10.08(j) Sixth Amendment to Financing Agreements dated September 1, 1993
10.08(k) Seventh Amendment to Financing Agreements dated August , 1994
10.08(l) Eighth Amendment to Financing Agreements dated December 31, 1994
10.08(m) Ninth Amendment to Financing Agreements dated April , 1995
10.08(n) Tenth Amendment to Financing Agreements dated June 23, 1995
10.08(o) Eleventh Amendment to Financing Agreements dated January 1, 1996
10.08(p) Twelfth Amendment to Financing Agreements dated June 25, 1996
10.08(q) Thirteenth Amendment to Financing Agreements dated August , 1996
10.08(r) Term Promissory Note dated June , 1996
10.08(s) Trademark Collateral Assignment and Security Agreement dated June 16, 1992
10.09 Form of Indemnification Agreement
**10.10 BOSS Master License Agreement dated September 30, 1997
**+10.11 BOSS Manufacturing Rights Agreement dated September 30, 1997
**10.12 Beverly Hills Polo Club Exclusive Domestic License Agreement dated December 14, 1995
**10.13 Beverly Hills Polo Club Amendment to Exclusive License Agreement (Men's) dated June 3, 1997
**10.14 Beverly Hills Polo Club Exclusive Domestic License Agreement dated June 1, 1993
**10.15 Beverly Hills Polo Club Assignment of Licenses (Women's) dated August 31, 1993
**10.16 Beverly Hills Polo Club Amendment (Women's) dated September 1, 1993
**10.17 Beverly Hills Polo Club Amendment to Exclusive License Agreement (Women's) dated June 3, 1997
*10.18 Amendment to License Agreement
10.19 Beverly Hills Polo Club Amendment to Exclusive License Agreement (Men's) dated July 29, 1997
**10.20 Beverly Hills Polo Club International Exclusive License Agreement (Wholesale) dated August 15,
1996
**10.21 Beverly Hills Polo Club Amendment to Exclusive License Agreement (Wholesale) dated June 3, 1997
**10.22 Beverly Hills Polo Club International Exclusive License Agreement (Retail) dated August 15, 1996
10.23 Beverly Hills Polo Club Amendment to Exclusive License Agreement (Retail) dated June 3, 1997
10.24 Beverly Hills Polo Club Amendment to Exclusive License Agreement dated July 29, 1997
21.01 List of Subsidiaries
23.01 Consent of BDO Seidman, LLP
23.02 Consent of Piper & Marbury L.L.P. (included in Exhibit 5.01)
24.01 Power of Attorney (included on signature pages hereto)
</TABLE>
- ------------------------
* To be filed by amendment.
** Certain portions of this exhibit have been omitted pursuant to a request for
confidential treatment and have been filed separately with the Securities
and Exchange Commission.
+ Certain portions of this exhibit have not yet been finalized and will be
filed by amendment.
(B) FINANCIAL STATEMENT SCHEDULES:
<TABLE>
<CAPTION>
SCHEDULE
NUMBER DESCRIPTION PAGE NO.
- --------- ----------------------------------------------------------------------------- -------------
<S> <C> <C>
II Valuation and Qualifying Accounts S-2
</TABLE>
II-3
<PAGE>
ITEM 17. UNDERTAKINGS.
Insofar as indemnification for liabilities arising under the Securities Act
of 1933, as amended (the "Securities Act") may be permitted to directors,
officers and controlling persons of the Registrant pursuant to the provisions
described in this Registration Statement or otherwise, the Registrant has been
advised that in the opinion of the Commission such indemnification is against
public policy as expressed in the Act and is, therefore, unenforceable. In the
event that a claim for indemnification against such liabilities (other than the
payment by the Registrant of expenses incurred or paid by a director, officer or
controlling persons of the Registrant in the successful defense of any action,
suit or proceeding) is asserted by such director, officer or controlling person
in connection with the securities being registered, the Registrant will, unless
in the opinion of its counsel the matter has been settled by controlling
precedent, submit to a court of appropriate jurisdiction the question of whether
such indemnification by it is against public policy as expressed in the Act and
will be governed by the final adjudication of such issue.
The undersigned registrant hereby undertakes to provide to the underwriters
at the closing specified in the Underwriting Agreement (filed herewith as
Exhibit 1.01) certificates in such denominations and registered in such names as
required by the underwriter to permit prompt delivery to each purchaser.
The undersigned registrant hereby undertakes that:
(1) For purposes of determining any liability under the Securities Act,
the information omitted from the form of prospectus filed as part of this
Registration Statement in reliance upon Rule 430A and contained in a form of
prospectus filed by the Registrant pursuant to Rule 424(b)(1) or (4) or
497(h) under the Securities Act shall be deemed to be part of this
Registration Statement as of the time it was declared effective.
(2) For the purpose of determining any liability under the Securities
Act, each post-effective amendment that contains a form of prospectus shall
be deemed to be a new registration statement relating to the securities
offered therein, and the offering of such securities at that time shall be
deemed to be the initial bona fide offering thereof.
II-4
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the Registrant
has duly caused this Registration Statement to be signed on its behalf by the
undersigned, thereunto duly authorized, in Baltimore, Maryland on this 3rd day
of October, 1997.
I.C. ISAACS & COMPANY, INC.
By: /s/ ROBERT J. ARNOT
-----------------------------------------
Robert J. Arnot
Chairman of the Board
and Co-Chief Executive Officer
Know all men by these presents, that each person whose signature appears
below constitutes and appoints Robert J. Arnot, Gerald W. Lear and Eugene C.
Wielepski (with full power to each of them to act alone) as his true and lawful
attorney-in-fact and agent, with full power of substitution, for him and in his
name, place and stead in any and all capacities to sign any or all amendments or
post-effective amendments to this Registration Statement, including amendments
made pursuant to Rule 462 under the Securities Act of 1933, as amended, and to
file the same with all exhibits thereto and other documents in connection
therewith, with the Securities and Exchange Commission, to sign any and all
applications, registration statements, notices or other document necessary or
advisable to comply with the applicable state securities laws, and to file the
same, together with all other documents in connection therewith, with the
appropriate state securities authorities, granting unto said attorneys-in-fact
and agents or any of them, or their or his substitute or substitutes, full power
and authority to do and perform each and every act and thing requisite and
necessary to be done in and about the premises, as fully to all intents and
purposes as he might or could do in person, thereby ratifying and confirming all
that said attorneys-in-fact and agents or any of them, or their or his
substitute or substitutes, may lawfully do or cause to be done by virtue hereof.
Pursuant to the requirements of the Securities Act of 1933, this
Registration Statement has been signed below by the following persons in the
capacities and on the dates indicated.
SIGNATURE TITLE DATE
- ------------------------------ -------------------------- -------------------
/s/ ROBERT J. ARNOT Chairman of the Board and October 3, 1997
- ------------------------------ Co-Chief Executive Officer
Robert J. Arnot and Director (Principal
Executive Officer)
/s/ GERALD W. LEAR President and Co-Chief October 3, 1997
- ------------------------------ Executive Officer and
Gerald W. Lear Director (Principal
Executive Officer)
II-5
<PAGE>
SIGNATURE TITLE DATE
- ------------------------------ -------------------------- -------------------
/s/ EUGENE C. WIELEPSKI Vice President and Chief October 3, 1997
- ------------------------------ Financial Officer and
Eugene C. Wielepski Director (Principal
Financial and Accounting
Officer)
/s/ GARY B. BRASHERS Director October 3, 1997
- ------------------------------
Gary B. Brashers
/s/ IRA J. HECHLER Director October 3, 1997
- ------------------------------
Ira J. Hechler
/s/ JON HECHLER Director October 3, 1997
- ------------------------------
Jon Hechler
/s/ RONALD S. SCHMIDT Director October 3, 1997
- ------------------------------
Ronald S. Schmidt
II-6
<PAGE>
REPORT OF INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS
ON FINANCIAL STATEMENT SCHEDULE
I.C. Isaacs & Company, Inc.
The audits referred to in our report to I.C. Isaacs & Company, Inc., dated
March 31, 1997, except for Note 9 the dates of which are May 15, 1997 and
September 24, 1997, and Note 5 the date of which is September 30, 1997, which is
contained in the Prospectus constituting part of this Registration Statement,
included the audit of the financial statement schedule listed in the
accompanying index for each of the three years in the period ended December 31,
1996. This financial statement schedule is the responsibility of the Company's
management. Our responsibility is to express an opinion on the financial
statement schedule based upon our audits.
In our opinion, such schedule presents fairly, in all material respects, the
information set forth therein.
/s/ BDO Seidman, LLP
Washington, D.C.
March 31, 1997
S-1
<PAGE>
SCHEDULE II
I.C. ISAACS & COMPANY, INC.
VALUATION AND QUALIFYING ACCOUNTS
(IN THOUSANDS)
<TABLE>
<CAPTION>
CHARGED
BALANCE AT TO COSTS BALANCE AT
BEGINNING AND END
DESCRIPTION OF YEAR EXPENSES DEDUCTION OF YEAR
- -------------------------------------------------------------------- ------------- ----------- ----------- -------------
<S> <C> <C> <C> <C>
Year ended December 31, 1994
Allowance for doubtful accounts................................... $ 500 $ 278 $ (428) $ 350
Reserve for sales returns and discounts........................... $ 382 $ 5,546 $ (5,483) $ 445
Year ended December 31, 1995
Allowance for doubtful accounts................................... $ 350 $ 398 $ (398) $ 350
Reserve for sales returns and discounts........................... $ 445 $ 5,104 $ (5,062) $ 487
Year ended December 31, 1996
Allowance for doubtful accounts................................... $ 350 $ 1,194 $ (884) $ 660
Reserve for sales returns and discounts........................... $ 487 $ 5,956 $ (5,718) $ 725
</TABLE>
S-2
<PAGE>
AMENDED AND RESTATED
CERTIFICATE OF INCORPORATION
I.G. DESIGN, INC.
I.G. Design, Inc., a Delaware corporation having its principal Delaware
office in Wilmington, Delaware (the "Corporation") hereby certifies to the
Secretary of State of the State of Delaware that:
FIRST: The name of the Corporation is I.G. Design, Inc. The
Corporation, was originally incorporated under the name Isbuyco, Inc., and
the original Certificate of Incorporation was filed with the Secretary of
State of the State of Delaware on August 2, 1984. An Amended and Restated
Certificate of Incorporation was filed on April 16, 1987.
SECOND: This Amended and Restated Certificate of Incorporation (the
"Certificate") was duly adopted and declared advisable by unanimous written
consent of the Board of Directors in accordance with the applicable
provisions of Sections 242 and 141 of the General Corporation Law of the
State of Delaware.
THIRD: The stockholders of the Corporation duly adopted this
Certificate in a Special Meeting of the stockholders in accordance with the
applicable provisions of Sections 211, 242 and 245 of the General Corporation
Law of the State of Delaware.
FOURTH: The Certificate of Incorporation of the Corporation is amended
and restated in its entirety to read as follows:
AMENDED AND RESTATED CERTIFICATE OF INCORPORATION
I.C. ISAACS & COMPANY, INC.
FIRST. Name. The name of the Corporation is I.C. Isaacs & Company,
Inc.
SECOND. Registered Office and Agent. The address of the registered
office of the Corporation in the State of Delaware is 1013 Centre Road, in
the City of Wilmington, County of New Castle. The name of its registered
agent at such address is Corporation Service Company.
THIRD. Purpose. The purposes for which the Corporation is formed are
to engage in any lawful act or activity for which corporations may be
organized under the General Corporation Law of Delaware, as amended from time
to time, (the "DGCL") and to possess and exercise all of the powers and
privileges granted by such law and other laws of Delaware.
FOURTH. Capital Stock. The total number of shares of capital stock of
all classes that the Corporation shall have authority to issue is 55,000,000
shares. The authorized capital stock is divided into 50,000,000 shares of
common stock, with the par value of $.0001 each (the "Common Stock") and
5,000,000 shares of preferred stock, with the par value of $.0001 each (the
"Preferred Stock"). Stockholders shall not have preemptive rights to acquire
additional shares of stock of any class which the Corporation may elect to
issue or sell.
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(b) Common Stock. Subject to all of the rights of the holders of
Preferred Stock provided for by resolution or resolutions of the Board of
Directors pursuant to this Article FOURTH or provided for by the DGCL, each
holder of Common Stock shall have one vote per share of Common Stock held by
such holder on all matters on which holders of Common Stock are entitled to
vote and shall have the right to receive notice of and to vote at all
meetings of the stockholders of the Corporation. The holders of Common Stock
shall have the right to receive dividends as and if declared by the Board of
Directors in its sole discretion, subject to any limitations on the declaring
of dividends imposed by the DGCL or the rights of holders of Preferred Stock
provided for by resolutions or resolutions of the Board of Directors pursuant
to this Article FOURTH.
(c) Preferred Stock. Authority is hereby expressly granted to the Board
of Directors of the Corporation, subject to the provisions of this Article
FOURTH and to the limitations prescribed by the DGCL, to authorize the
issuance of one or more classes of Preferred Stock and, with respect to each
such class, to fix by resolution or resolutions providing for the issue of
such class, the voting powers, full or limited, if any, of the shares of such
class, the designations, preferences and relative, participating, optional or
other special rights, and qualifications, limitations or restrictions
thereof. The authority of the Board of Directors with respect to each class
thereof shall include, but not be limited to, the determination or fixing of
the following:
(i) the designation of such class;
(ii) the number of shares to compose such class, which number the
Board of Directors may thereafter (except where otherwise provided in a
resolution designating a particular class) increase (but not above the total
number of authorized shares of the class) or decrease (but not below the
number of shares thereof then outstanding);
(iii) the dividend rate of such class, the conditions and dates
upon which such dividends shall be payable, the relation which such dividends
shall bear to the dividends payable on any other class or classes of capital
stock of the Corporation and whether such dividends shall be cumulative or
noncumulative;
(iv) whether the shares of such class shall be subject to
redemption by the Corporation and, if made subject to such redemption, the
times, prices and other terms and conditions of such redemption;
(v) the terms and amount of any sinking fund provided for the
purchase or redemption of the shares of such class;
(vi) whether the shares of such class shall be convertible into or
exchangeable for shares of any other class or classes of any capital stock or
any other securities of the Corporation, and, if provision is made for
conversion or exchange, the times, prices, rates, adjustments and other terms
and conditions of such conversion or exchange;
(vii) the extent, if any, to which the holders of shares of such
class shall be entitled to vote with respect to the election of directors or
otherwise;
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(viii) the restrictions, if any, on the issuance or reissuance of
any additional Preferred Stock;
(ix) the rights of the holders of the shares of such class upon the
dissolution of, voluntary or involuntary liquidation, winding up or the
distribution of assets of the Corporation; and
(x) the manner in which any facts ascertainable outside the
resolution or resolutions providing for the issue of such class shall operate
upon the voting powers, designations, preferences, rights and qualifications,
limitations or restrictions of such class.
(d) Subject to all of the rights of the holders of Preferred Stock
provided for by resolution or resolutions of the Board of Directors pursuant
to this Article FOURTH or by the DGCL, the Board of Directors is hereby
authorized to create and to authorize and direct the issuance (on either a
pro rata or a non-pro rata basis) by the Corporation of rights, options and
warrants for the purchase of shares of capital stock of the Corporation,
other securities of the Corporation or shares or other securities of any
successor in interest of the Corporation (a "Successor"), at such times, in
such amounts, to such persons, for such consideration (if any), with such
form and content (including without limitation the consideration for which
any shares of capital stock of the Corporation, other securities of the
Corporation or shares or other securities of any Successor are to be issued)
and upon such terms and conditions as it may from time to time determine,
subject only to the restrictions, limitations, conditions and requirements
imposed by the DGCL, other applicable laws and this Certificate.
FIFTH. Term. The Corporation is to have perpetual existence.
SIXTH. Management of the Affairs of the Corporation. (a) The
business and affairs of the Corporation shall be managed by its Board of
Directors, which may exercise all the powers of the Corporation and do all
such lawful acts and things that are not conferred upon or reserved to the
stockholders by law, by this Certificate or by the Amended and Restated
By-laws of the Corporation (the "By-laws").
(b) The following provisions are inserted for the limitation and
regulation of the powers of the Corporation and of its directors and
stockholders:
(i) The Board of Directors shall have the power to make, alter,
amend, change or repeal the By-laws by the affirmative vote of a majority of
the members of the Board of Directors then in office. In addition, the
By-laws may be made, altered, amended, changed or repealed by the
stockholders of the Corporation upon the affirmative vote of the holders of
at least 66-2/3% of the outstanding capital stock entitled to vote thereon.
(ii) The number of directors of the Corporation shall be as from
time to time fixed by, or in the manner provided in, the By-laws of the
Corporation. The directors shall be divided into three classes, designated
Class I, Class II and Class III. Each class shall consist, as nearly as may
be possible, of one-third of the total number of directors constituting the
entire Board of Directors. The term of the initial Class I directors shall
terminate on the date of the 1998
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annual meeting of stockholders; the term of the initial Class II directors
shall terminate on the date of the 1999 annual meeting of stockholders; and
the term of the initial Class III directors shall terminate on the date of
the 2000 annual meeting of stockholders. At each annual meeting of
stockholders beginning in 1998, successors to the class of directors whose
term expires at that annual meeting shall be elected for a three year term.
If the number of directors is changed, any increase or decrease shall be
apportioned among the classes so as to maintain the number of directors in
each class as nearly equal as possible, but in no case will a decrease in the
number of directors shorten the term of any incumbent director. A director
shall hold office until the annual meeting for the year in which his term
expires and until his successor shall be elected and shall qualify, subject,
however, to prior death, resignation, retirement, disqualification or removal
from office.
The term of a director elected to fill a newly created directorship or
other vacancy shall expire at the same time as the terms of the other
directors of the class for which the new directorship is created or in which
the vacancy occurred. Any vacancy on the Board of Directors that results
from an increase in the number of directors and any other vacancy occurring
on the Board of Directors, howsoever resulting, may be filled by a majority
of the directors then in office, even if less than a quorum, or by a sole
remaining director. Any director so elected by the Board of Directors to fill
a vacancy shall hold office for a term that shall coincide with the term of
the class to which such director shall have been elected.
Notwithstanding the foregoing, whenever the holders of any one or more
classes or series of Preferred Stock issued by the Corporation shall have the
right, voting separately by class or series, to elect directors at an annual
or special meeting of stockholders, the election, term of office, filling of
vacancies and other features of such directorships shall be governed by the
terms of this Certificate or the resolution or resolutions adopted by the
Board of Directors pursuant to Article FOURTH applicable thereto, and such
directors so elected shall not be divided into classes pursuant to this
clause (b) of Article SIXTH unless expressly provided by such terms.
(iii) Subject to the rights, if any, of the holders of shares of
Preferred Stock then outstanding, any or all of the directors of the
Corporation may be removed from office at any time by the stockholders of the
Corporation, but only for cause and only by the affirmative vote of the
holders of a majority of the outstanding shares of the Corporation then
entitled to vote generally in the election of directors, considered for
purposes of this paragraph as one class.
(iv) The Corporation may in its By-laws confer powers upon the Board
of Directors in addition to the foregoing and in addition to the powers and
authorities expressly conferred upon the Board of Directors by applicable law.
SEVENTH. Limitation on Liability. No director of the Corporation shall
be personally liable to the Corporation or to any stockholder of the
Corporation for monetary damages for breach of fiduciary duty as a director,
provided that this provision shall not limit the liability of a director (i)
for any breach of the director's duty of loyalty to the Corporation or its
stockholders, (ii) for acts or omissions not in good faith or which involved
intentional misconduct
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or a knowing violation of law, (iii) under Section 174 of the DGCL, or (iv)
for any transaction from which the director derived an improper personal
benefit.
If the DGCL or any other statute of the State of Delaware hereafter is
amended to authorize the further elimination or limitation of the liability
of directors of the Corporation, then the liability of a director of the
Corporation shall be limited to the fullest extent permitted by the statutes
of the State of Delaware, as so amended, and such elimination or limitation
of liability shall be in addition to, and not in lieu of, the limitation on
the liability of a director provided by the foregoing provisions of this
Article SEVENTH.
Any repeal of or amendment to this Article SEVENTH shall be prospective
only and shall not adversely affect any limitation on the liability of a
director of the Corporation existing at the time of such repeal or amendment.
EIGHTH. Meetings of Stockholders. Meetings of stockholders may be held
within or without the State of Delaware, as the By-laws may provide.
NINTH. Corporate Records. The books of the Corporation may be kept
(subject to any provision contained in applicable statutes) outside the State
of Delaware at such place or places as may be designated from time to time by
the Board of Directors or in the By-laws.
TENTH. Right to Amend. The Corporation reserves the right to amend,
alter, change or repeal any provision contained in this Certificate and in
any certificate amendatory hereof, in the manner now or hereafter prescribed
by statute, and all rights conferred upon stockholders or others hereunder or
thereunder are granted subject to this reservation. Notwithstanding the
foregoing, the affirmative vote of the holders of at least 66-2/3% of the
outstanding shares of Common Stock shall be required to amend or repeal, or
adopt any provision inconsistent with, clause (b) of Article SIXTH or this
Article TENTH of this Certificate.
ELEVENTH. Indemnification. (a) The Corporation shall, to the fullest
extent permitted by Section 145 of the DGCL, indemnify each person who was or
is a party or is threatened to be made a party to any threatened, pending or
completed action, suit or proceeding, whether civil, criminal, administrative
or investigative, by reason of the fact that he is or was, or has agreed to
become, a director or officer of the Corporation, or is or was serving, or
has agreed to serve, at the request of the Corporation, as a director,
officer or trustee of, or in a similar capacity with, another corporation,
partnership, joint venture, trust or other enterprise (including any employee
benefit plan), or by reason of any action alleged to have been taken or
omitted in such capacity, against all expenses (including attorneys' fees),
judgments, fines and amounts paid in settlement actually and reasonably
incurred by him or on his behalf in connection with such action, suit or
proceeding and any appeal therefrom.
(b) Indemnification may include payment by the Corporation of expenses
in defending an action or proceeding in advance of the final disposition of
such action or proceeding upon receipt of an undertaking by the person
indemnified to repay such payment if it is ultimately determined that such
person is not entitled to indemnification under this Article ELEVENTH,
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which undertaking may be accepted without reference to the financial ability
of such person to make such repayment.
(c) The Corporation shall not indemnify any such person seeking
indemnification in connection with a proceeding (or part thereof) initiated
by such person unless the initiation thereof was approved by the Board of
Directors of the corporation.
(d) The indemnification rights provided in this Article ELEVENTH (i)
shall not be deemed exclusive of any other rights to which those indemnified
may be entitled under any law, agreement or vote of stockholders or
disinterested directors or otherwise, and (ii) shall inure to the benefit of
the heirs, executors and administrators of such persons. The Corporation
may, to the extent authorized from time to time by its Board of Directors,
grant indemnification rights to other employees or agents of the Corporation
or other persons serving the Corporation and such rights may be equivalent
to, or greater or less than, those set forth in this Article ELEVENTH.
This Certificate shall be effective upon its filing with the Secretary of
State of the State of Delaware.
I, THE UNDERSIGNED, being the sole incorporator hereinbefore named, for
the purpose of forming a Corporation pursuant to the General Corporation Law
of the State of Delaware, do make this certificate, hereby declaring and
certifying that this is my act and deed and the facts herein stated are true
and, accordingly, have hereunto set my hand this 2nd day of August, 1984.
/s/ Wendy J. Saunders
--------------------------
Wendy J. Saunders
--------------------------
Sole Incorporator
IN WITNESS WHEREOF, the Corporation has caused its corporate seal to
be affixed hereto and this Certificate to be signed by its President and
Co-Chief Executive Officer and attested to by its Secretary this ____ day of
_____, 1997.
I.G. DESIGN, INC.
By: /s/ GERALD W. LEAR
-----------------------
Gerald W. Lear, President
and Co-Chief Executive Officer
Attested: /s/ EUGENE C. WIELEPSKI
-----------------------
Eugene C. Wielepski
Secretary
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I.C. ISAACS & COMPANY, INC.
AMENDED AND RESTATED BY-LAWS
ARTICLE I
OFFICES
Section 1.1 REGISTERED OFFICE. The registered office shall be at the
office of Corporation Service Company in the City of Wilmington, County of New
Castle, State of Delaware, and the resident agent of the Corporation shall be
Corporation Service Company.
Section 1.2 OTHER OFFICES. The Corporation may also have offices at
such other places both within and without the State of Delaware as the Board of
Directors may from time to time determine or the business of the Corporation may
require.
ARTICLE II
MEETINGS OF STOCKHOLDERS
Section 2.1 TIME AND PLACE OF MEETINGS. All meetings of the
stockholders shall be held at such time and place, within or without the State
of Delaware, as shall be stated in the notice of the meeting or in a duly
executed waiver of notice thereof.
Section 2.2 ANNUAL MEETING. A meeting of stockholders shall be held in
each year for the election of directors at such time and place as the Board of
Directors shall determine. Any other proper business, notice of which was given
in the notice of the meeting or in a duly executed waiver of notice thereof, may
be transacted at the annual meeting. Elections of directors shall be by written
ballot, unless otherwise provided in the Certificate of Incorporation.
Section 2.3 NOTICE OF ANNUAL MEETINGS. Unless otherwise provided by
law, written notice of the annual meeting of stockholders, stating the time,
place and date thereof shall be given to each stockholder entitled to vote
thereat not less than ten nor more than sixty days before the date of the
meeting.
Section 2.4 LIST OF STOCKHOLDERS. The officer who has charge of the
stock ledger of the Corporation shall prepare and make, at least ten days before
every election of directors, a complete list of the stockholders entitled to
vote at said election, arranged in alphabetical order, showing the address of
each stockholder and the number of shares registered in the name of each
stockholder. Such list shall be open to the examination of any stockholder, for
any purpose germane to the meeting, during ordinary business hours, for a period
of at least ten days prior to the election, either at a place within the city,
town or village where the election is to be held and which place shall be
specified in the notice of the meeting, or, if not specified, at the place where
said meeting is to be held, and the list shall be produced and kept at the time
and place of election during the whole time thereof, and subject to the
inspection of any stockholder who may be present.
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Section 2.5 SPECIAL MEETINGS. Special meetings of the stockholders, for
any purpose or purposes, unless otherwise prescribed by statute or by the
Certificate of Incorporation, may be called by the Chairman of the Board, the
Chief Executive Officer or the President. Business transacted at any special
meeting of stockholders shall be limited to the purpose or purposes stated in
the notice.
Section 2.6 NOTICE OF SPECIAL MEETINGS. Unless otherwise provided by
law, written notice of a special meeting of stockholders, stating the time,
place, date and purpose or purposes thereof, shall be given to each stockholder
entitled to vote thereat, not less than ten nor more than sixty days before the
date fixed for the meeting.
Section 2.7 QUORUM. The holders of a majority of the stock issued and
outstanding and entitled to vote thereat, present in person or represented by
proxy, shall constitute a quorum at all meetings of the stockholders for the
transaction of business except as otherwise provided by statute or by the
Certificate of Incorporation. If, however, such quorum shall not be present or
represented at any meeting of the stockholders, the stockholders entitled to
vote thereat, present in person or represented by proxy, shall have power to
adjourn the meeting from time to time, without notice other than announcement at
the meeting except as provided in Section 4.2, until a quorum shall be present
or represented. At such adjourned meeting at which a quorum shall be present or
represented, any business may be transacted which might have been transacted at
the meeting as originally notified.
Section 2.8 ORGANIZATION. The Chairman of the Board or, in the absence
of the Chairman of the Board, the Chief Executive Officer or, in the absence of
the Chief Executive Officer, the President or, in the absence of the President,
any Executive Vice President, shall preside at meetings of the stockholders.
The Secretary of the Corporation shall act as Secretary, but in the absence of
the Secretary the presiding officer shall appoint a Secretary.
Section 2.9 STOCKHOLDER NOMINATIONS AND PROPOSALS. (a) No proposal for
a stockholder vote (a "Stockholder Proposal") shall be submitted to the
stockholders of the Corporation unless the stockholder submitting such proposal
(the "Proponent") shall have filed a written notice setting forth with
particularity (i) the names and business addresses of the Proponent and all
Persons (as such term is defined in Section 3(a)(9) of the Securities Exchange
Act of 1934, as amended, (the "Exchange Act")) acting in concert with the
Proponent; (ii) the names and addresses of the Proponent and the Persons
identified in clause (i), as they appear on the Corporation's books (if they so
appear); (iii) the class and number of shares of the Corporation beneficially
owned by the Proponent and the Persons identified in clause (i); (iv) a
description of the Stockholder Proposal containing all information material
thereto; (v) a description of all arrangements or understandings between the
Proponent and any other Persons (including the names of such other Persons) in
connection with the Stockholder Proposal and any material interest of the
Proponent or such Persons in such Stockholder Proposal and (vi) such other
information as the Board of Directors reasonably determines is necessary or
appropriate to enable the Board of Directors and stockholders to consider the
Stockholder Proposal. Upon receipt of the Stockholder Proposal and prior to the
stockholders' meeting at which such
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Stockholder Proposal will be considered, if the Board of Directors or a
designated committee or the officer who will preside at the meeting of the
stockholders determines that the information provided in a Stockholder Proposal
does not satisfy the requirements of this Section 2.9 or is otherwise not in
accordance with applicable law, the Secretary of the Corporation shall promptly
notify the Proponent of the deficiency in the notice. Such Proponent shall have
the opportunity to cure the deficiency by providing additional information to
the Secretary within the period of time, not to exceed five days from the date
such deficiency notice is given to the Proponent, determined by the Board of
Directors, such committee or such officer. If the deficiency is not cured
within such period, or if the Board of Directors, such committee or such officer
determines that the additional information provided by the Proponent, together
with the information previously provided, does not satisfy the requirements of
this Section 2.9 or is otherwise not in accordance with applicable law, then
such Stockholder Proposal shall not be presented for action at the stockholders'
meeting in question.
(b) Only persons who are selected and recommended by the Board of
Directors or the nominating committee thereof, or who are nominated by the
stockholders in accordance with the procedures set forth in this Section 2.9,
shall be eligible for election or qualified to serve as directors. Nominations
of individuals for election to the Board of Directors at any annual meeting or
special meeting of the stockholders at which directors are to be elected may be
made by any stockholder of the Corporation entitled to vote for the election of
directors at that meeting by compliance with the procedures set forth in this
Section 2.9 except as may be otherwise provided in the Certificate of
Incorporation with respect to the right of holders of Preferred Stock of the
Corporation to nominate and elect a specified number of directors in certain
circumstances. Nominations by stockholders shall be made by written notice (a
"Nomination Notice"), which shall set forth (i) as to each individual nominated
(A) the name, date of birth, business address and residence address of such
nominee; (B) the business experience during the past five years of such nominee,
including his or her principal occupations or employment during such period, the
name and principal business of any Corporation or other organization in which
such occupations and employment were carried on, and such other information as
to the nature of his or her responsibilities and the level of professional
competence as may be sufficient to permit assessment of his or her prior
business experience; (C) whether the nominee is or has ever been at any time a
director, officer or owner of 5% or more of any class of capital stock,
partnership interests or other equity interest of any Corporation, partnership
or other entity; (D) any directorships held by such nominee in any company with
a class of securities registered pursuant to section 12 of the Exchange Act or
subject to the requirements of section 15(d) of the Exchange Act or any company
registered as an investment company under the Investment Company Act of 1940, as
amended; (E) whether, in the last five years, such nominee has been convicted in
a criminal proceeding or has been subject to a judgment, order, finding or
decree of any federal, state or other governmental entity, concerning any
violation of federal, state, or other law, or any proceeding in bankruptcy,
which conviction, judgment, order, finding, decree or proceeding may be material
to the evaluation of the ability or integrity of the nominee; and (F) any other
information relating to the nominee that would be required to be disclosed in a
proxy statement or other filings required to be made in connection with
solicitations of proxies for election of
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directors pursuant to section 14 of the Exchange Act, and the rules and
regulations promulgated thereunder; and (ii) as to the person submitting the
Nomination Notice and any Person acting in concert with such Person, (w) the
name and business address of such person and Persons, (x) the name and business
address of such person and Persons as they appear on the books of the
Corporation (if they so appear); (y) the class and number of shares of the
Corporation which are beneficially owned by such person and Persons, and (z) any
other information relating to such stockholder that would be required to be
disclosed in a proxy statement or other filings required to be made in
connection with solicitations of proxies for election of directors pursuant to
section 14 of the Exchange Act and the rules and regulations promulgated
thereunder. A written consent to being named in a proxy statement as a nominee,
and to serve as a director if elected, signed by the nominee, shall be filed
with any Nomination Notice. If the presiding officer at any stockholders'
meeting determines that a nomination was not made in accordance with the
procedures prescribed by these By-laws, he shall so declare to the meeting and
the defective nomination shall be disregarded.
(c) Nomination Notices and Stockholder Proposals must be delivered to the
Secretary at the principal executive office of the Corporation or mailed and
received at the principal executive offices of the Corporation (a) in the case
of any annual meeting, not less than 60 days nor more than 90 days prior to the
anniversary date of the immediately preceding annual meeting of stockholders;
provided, however, that (i) in the event that the annual meeting is called for a
date that is not within 30 days before or after such anniversary date, or (ii)
in the case of the annual meeting of stockholders held during the 1998 fiscal
year of the Corporation, notice by the stockholder in order to be timely must be
so received not later than the close of business on the tenth day following the
day on which notice of the date of the annual meeting was mailed or public
disclosure of the date of the annual meeting was made, whichever first occurs;
and (b) in the case of a special meeting of stockholders called for the purpose
of electing directors, not later than the close of business on the tenth day
following the day on which notice of the date of the special meeting was mailed
or public disclosure of the date of the special meeting was made, whichever
first occurs.
Section 2.10 ACTION BY STOCKHOLDERS. When a quorum is present at any
meeting, the vote of the holders of a majority of the stock having voting power
present in person or represented by proxy shall decide any question brought
before such meeting, unless the question is one upon which by express provision
of these By-laws, applicable law, or of the Certificate of Incorporation, a
different vote is required, in which case such express provision shall govern
and control the decision of such question.
Section 2.11 VOTING; PROXIES. Each stockholder shall at every meeting of
the stockholders be entitled to one vote in person or by proxy for each share of
the capital stock having voting power held by such stockholder, but no proxy
shall be voted on after three years from its date, unless the proxy provides for
a longer period, and, except where the transfer books of the Corporation have
been closed or a date has been fixed as a record date for the determination of
its stockholders entitled to vote, no share of stock which has been transferred
on
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the books of the Corporation within twenty days preceding an election of
directors shall be voted on at such election of directors.
Section 2.12 WRITTEN ACTION. Any action required to be taken at any
annual or special meeting of stockholders, or any action which may be taken at
any annual or special meeting of such stockholders, may be taken without a
meeting, without prior notice and without a vote, if a consent in writing,
setting forth the action so taken, shall be signed by the holders of outstanding
stock having not less than the minimum number of votes that would be necessary
to authorize or take such action at a meeting at which all shares entitled to
vote thereon were present and voted. Prompt notice of the taking of the
corporate action without a meeting by less than unanimous written consent shall
be given to those stockholders who have not consented in writing.
ARTICLE III
BOARD OF DIRECTORS
Section 3.1 NUMBER AND QUALIFICATIONS. The business and affairs of the
Corporation shall be managed by or under the direction of its Board of
Directors. Subject to the rights, if any, of holders of Preferred Stock of the
Corporation, the number of, retirement age of, and other restrictions and
qualifications for directors constituting the Board of Directors shall be as
authorized from time to time exclusively by a majority vote of the members of
the Board of Directors then in office, provided that no amendment to the By-laws
decreasing the number of directors shall have the effect of shortening the term
of any incumbent director and provided that the number of directors shall not be
increased by fifty percent (50%) or more in any twelve-month period without the
approval by at least 66 2/3% of the members of the Board of Directors then in
office. Except as provided in Section 3.2 of this Article, directors shall be
elected by a plurality of the votes cast at meetings of stockholders, and each
director so elected shall hold office until his successor is elected and
qualified or until his earlier death, removal or resignation. None of the
directors need be stockholders of the Corporation.
Section 3.2 VACANCIES AND NEW DIRECTORSHIPS. Vacancies and newly
created directorships resulting from any increase in the authorized number of
directors may be filled by a majority of the directors then in office, though
less than a quorum, or by a sole remaining director. Any director elected to
fill a vacancy shall hold office for a term that shall coincide with the term of
the class to which such director shall have been elected.
Section 3.3 POWERS. The business of the Corporation shall be managed by
its Board of Directors, which may exercise all such powers of the Corporation
and do all such lawful acts and things as are not by statute or by the
Certificate of Incorporation or by these By-laws directed or required to be
exercised or done by the stockholders.
MEETINGS OF THE BOARD OF DIRECTORS
Section 3.4 PLACE OF MEETINGS. The Board of Directors of the
Corporation may hold meetings, both regular and special, either within or
without the State of Delaware.
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Section 3.5 NOTICE OF REGULAR MEETINGS. Regular meetings of the Board
of Directors may be held without notice at such time and at such place as shall
from time to time be determined by the Board.
Section 3.6 NOTICE OF SPECIAL MEETINGS. Special meetings of the Board
may be called by the Chairman of the Board, the Chief Executive Officer, the
President or the Secretary on two days notice to each director, either
personally or by mail, telephone or telegram; special meetings shall be called
in like manner and on like notice on the written request of at least two
directors.
Section 3.7 QUORUM; VOTING. At all meetings of the Board, a majority of
directors shall constitute a quorum for the transaction of business, and the act
of a majority of the directors present at any meeting at which there is a quorum
shall be the act of the Board of Directors, except as may be otherwise
specifically provided by applicable law, the Certificate of Incorporation or
these By-laws. If a quorum shall not be present at any meeting of the Board of
Directors, the directors present thereat may adjourn the meeting from time to
time, without notice other than announcement at the meeting, until a quorum
shall be present.
Section 3.8 WRITTEN ACTION. Unless otherwise restricted by the
Certificate of Incorporation or these By-laws, any action required or permitted
to be taken at any meeting of the Board of Directors or of any committee thereof
may be taken without a meeting, without prior notice and without a vote, if all
members of the Board or of such committee, as they case may be, consent thereto
in writing, and the writing or writings are filed with the minutes of
proceedings of the Board or committee.
Section 3.9 COMMITTEES. The Board of Directors may, by resolution
passed by a majority of the whole Board, designate such committees as the Board
of Directors deems appropriate, each committee to consist of one or more of the
directors of the Corporation. In the absence or disqualification of a member of
a committee, the member or members thereof present at any meeting and not
disqualified from voting, whether or not he or they constitute a quorum, may
unanimously appoint another member of the Board of Directors to act at the
meeting in the place of any such absent or disqualified member. Any such
committee, to the extent provided in the resolution of the Board of Directors,
shall have and may exercise all the powers and authority of the Board of
Directors in the management of the business and affairs of the Corporation, and
may authorize the seal of the Corporation to be affixed to all papers which may
require it; but no such committee shall have the power or authority in reference
to amending the Certificate of Incorporation, adopting an agreement of merger or
consolidation, recommending to the stockholders the sale, lease or exchange of
all or substantially all of the Corporation's property and assets, recommending
to the stockholders a dissolution of the Corporation or a revocation of a
dissolution or amending the By-laws of the Corporation; unless the resolution
expressly so provides, no such committee shall have the power or authority to
declare a dividend, authorize the issuance of stock or adopt a certificate of
ownership pursuant to Section 253 of the General Corporation Law of the State of
Delaware.
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Unless otherwise ordered by the Board of Directors, a majority of the
members of any committee appointed by the Board of Directors pursuant to this
section shall constitute a quorum at any meeting thereof, and the act of a
majority of the members present at a meeting at which a quorum is present shall
be the act of such committee. Any such committee shall prescribe its own rules
for calling and holding meetings and its method of procedure, subject to any
rules prescribed by the Board of Directors, and shall keep a written record of
all action taken by it and report the same to the Board of Directors when
required.
Each committee shall keep regular minutes of its meetings and report the
same to the Board of Directors when requested by the Board of Directors.
Section 3.11 COMPENSATION COMMITTEE. The Board of Directors shall by
resolution passed by a majority of the whole Board, designate a Compensation
Committee, to which the Board shall delegate the authority to fix the
compensation of the directors.
Section 3.12 AUDIT COMMITTEE. The Board of Directors shall, by
resolution passed by a majority of the whole Board, designate an Audit
Committee, which shall have duty to recommend to the Board of Directors the
accounting firm to be selected by the Board, or to be recommended by it for
stockholder approval, as independent auditor of the Corporation and to act on
behalf of the Board in meeting and reviewing with the independent auditors, the
chief internal auditor and the appropriate corporate officers, matters relating
to corporate financial reporting and accounting procedures and policies,
adequacy of financial, accounting and operating controls and the scope of the
respective audits of the independent auditors and the internal auditor. The
committee shall review the results of such audits with the respective auditing
agency and shall promptly report to the Board of Directors. The committee shall
additionally submit to the Board of Directors any recommendations it may have
from time to time with respect to financial reporting and accounting practices
and policies and financial, accounting, and operation controls and safeguards.
Section 3.13 PARTICIPATION IN MEETING BY TELEPHONE. Members of the Board
of Directors or any committee designated by such Board may participate in a
meeting of the Board or of a committee of the Board by means of conference
telephone or similar communications equipment by means of which all persons
participating in the meeting can hear each other, and participation in a meeting
pursuant to this subsection shall constitute presence in person at such meeting.
ARTICLE IV
NOTICES
Section 4.1 GENERALLY. Notices to directors and stockholders shall be
in writing and delivered personally or mailed to the directors or stockholders
at their addresses appearing on the books of the Corporation. Notice by mail
shall be deemed to be given at the time when the same shall be mailed. Notice
to directors may also be given by telegram or telephone.
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Section 4.2 ADJOURNMENTS. Whenever a meeting of stockholders, annual or
special, is adjourned to another date, time or place, notice need not be given
of the adjourned meeting if the date, time and place thereof are announced at
the meeting at which the adjournment is taken. If the adjournment is for more
than 30 days, or if after the adjournment a new record date is fixed for the
adjourned meeting, a notice of the adjourned meeting shall be given to each
stockholder entitled to vote thereat. At the adjourned meeting, any business
may be transacted which might have been transacted at the original meeting.
Section 4.3 WAIVER. Whenever any notice is required to be given under
the provisions of the statutes or of the Certificate of Incorporation or by
these By-laws, a waiver thereof in writing, signed by the person or persons
entitled to said notice, whether before or after the time stated therein, shall
be deemed equivalent to notice. Attendance of a person at a meeting shall
constitute a waiver of notice of such meeting, except when the person attends a
meeting for the express purpose of objecting, at the beginning of the meeting,
to the transaction of any business because the meeting is not lawfully called or
convened. Neither the business to be transacted at, nor the purpose of, any
regular, or special meeting of the stockholders, directors, or members of a
committee of directors need be specified in any written waiver of notice.
ARTICLE V
OFFICERS
Section 5.1 GENERALLY. The officers of the Corporation shall be chosen
by the Board of Directors and shall be a Chairman of the Board, Chief Executive
Officer, President, a Chief Operating Officer, a Chief Financial Officer, a
Secretary and a Treasurer. The Board of Directors may also choose one or more
Vice-Presidents (which may include Senior Vice-Presidents and Executive
Vice-Presidents), one or more Assistant Secretaries and Assistant Treasurers and
such other officers or agents as the Board of Directors may from time to time
deem necessary or advisable in the conduct of the business and affairs of the
Corporation. Any number of offices may be held by the same person and any
office may be shared by more than one person unless the Certificate of
Incorporation or these By-laws otherwise provide.
Section 5.2 COMPENSATION. The compensation of all officers and agents
of the Corporation who are also directors of the Corporation shall be fixed by
the Board of Directors. The Board of Directors may delegate the power to fix the
compensation of all other officers and agents of the Corporation to an officer
of the Corporation.
Section 5.3 SUCCESSION. The officers of the Corporation shall hold
office until their successors are chosen and qualified. Any officer elected or
appointed by the Board of Directors may be removed at any time by the
affirmative vote of a majority of the Board of Directors. Any vacancy occurring
in any office of the Corporation shall be filled by the Board of Directors.
Section 5.4 AUTHORITIES AND DUTIES. The officers of the Corporation
shall have such authority and shall perform such duties as are customarily
incident to their respective offices, or
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as may be specified from time to time by the directors regardless of whether
such authority and duties are customarily incident to such office.
ARTICLE VI
CERTIFICATES OF STOCK
Section 6.1 CERTIFICATES. Every owner of stock in the Corporation shall
be entitled to have a certificate signed by, or in the name of the Corporation
by, the Chairman or Vice-Chairman of the Board or Chief Executive Officer, or
President or a Vice-President and the Treasurer or an Assistant Treasurer, or
the Secretary or an Assistant Secretary of the Corporation, certifying the
number of shares owned by him in the Corporation.
Section 6.2 TRANSFER AGENTS; REGISTRARS. Where a certificate is signed
(l) by a transfer agent or an assistant transfer agent or (2) by a transfer
clerk acting on behalf of the Corporation and a registrar, the signature of any
such Chairman or Vice-Chairman of the Board of Directors, Chief Executive
Officer, President, Vice-President, Treasurer, Assistant Treasurer, Secretary or
Assistant Secretary may be facsimile. In case any officer or officers who have
signed, or whose facsimile signature or signatures have been used on, any such
certificate or certificates shall cease to be such officer or officers of the
Corporation, whether because of death, resignation or otherwise, before such
certificate or certificates have been delivered by the Corporation, such
certificate or certificates may nevertheless be adopted by the Corporation and
be issued and delivered as though the person or persons who signed such
certificate or certificates or whose facsimile signature or signatures have been
used thereon had not ceased to be such officer or officers of the Corporation.
Section 6.3 LOST, DESTROYED OR MUTILATED CERTIFICATES. The Board of
Directors may direct a new certificate or certificates to be issued in place of
any certificate or certificates theretofore issued by the Corporation alleged to
have been lost, destroyed, or mutilated upon the making of an affidavit of that
fact by the person claiming the certificate of stock to be lost, destroyed or
mutilated. When authorizing such issue of a new certificate or certificates,
the Board of Directors may, in its discretion and as a condition precedent to
the issuance thereof, require the owner of such lost, destroyed or mutilated
certificate or certificates, or his legal representative, to give the
Corporation a bond in such sum as it may direct as indemnity against any claim
that may be made against the Corporation with respect to the certificate alleged
to have been lost, destroyed or mutilated upon the issuance of such new
certificate.
Section 6.4 TRANSFERS OF STOCK. (a) Upon surrender to the Corporation
or the transfer agent of the Corporation of a certificate for shares duly
endorsed or accompanied by proper evidence of succession, assignment or
authority to transfer, it shall be the duty of the Corporation to issue a new
certificate to the person entitled thereto, cancel the old certificate and
record the transactions upon its books, unless the Corporation has a duty to
inquire as to adverse claims with respect to such transfer and such duty has not
been discharged. The Corporation shall have no duty to inquire into adverse
claims with respect to such transfer unless (i) the Corporation has received a
written notification of an adverse claim at a time and in a manner
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which affords the Corporation a reasonable opportunity to act on it prior to the
issuance of a new, reissued or re-registered share certificate and the
notification identifies the claimant, the registered owner and the issue of
which the share or shares is a part and provides an address for communications
directed to the claimant; or (ii) the Corporation has required and obtained,
with respect to a fiduciary, a copy of a will, trust, indenture, articles of
co-partnership, By-laws or other controlling instruments, for a purpose other
than to obtain appropriate evidence of the appointment or incumbency of the
fiduciary, and such documents indicate, upon reasonable inspection, the
existence of an adverse claim.
(b) The Corporation may discharge any duty of inquiry by any reasonable
means, including notifying an adverse claimant by registered or certified mail
at the address furnished by him or, if there be no such address, at his
residence or regular place of business that the security has been presented for
registration of transfer by a named person, and that the transfer will be
registered unless within thirty days from the date of mailing the notification,
either (i) an appropriate restraining order, injunction or other process issues
from a court of competent jurisdiction; or (ii) an indemnity bond, sufficient in
the Corporation's judgment to protect the Corporation and any transfer agent,
registrar or other agent of the Corporation involved from any loss which it or
they may suffer by complying with the adverse claim, is filed with the
Corporation.
Section 6.5 FIXING RECORD DATE. (a) In order that the Corporation may
determine the stockholders entitled to notice or to vote at any meeting of
stockholders or any adjournment thereof, or to express consent to corporate
action in writing without a meeting, or entitled to receive payment of any
dividend or other distribution or allotment of any rights, or entitled to
exercise any rights in respect of any change, conversion or exchange of stock or
for the purpose of any other lawful action, the Board of Directors may fix, in
advance, a record date, which shall not be more than sixty nor less than ten
days before the date of such meeting, nor more than sixty days prior to any
other action.
(b) If no record date is fixed:
(1) The record date for determining stockholders entitled to notice
of or to vote at a meeting of stockholders shall be at the close of business on
the day next preceding the day on which notice is given, or, if notice is
waived, at the close of business on the day next preceding the day on which the
meeting is held.
(2) The record date for determining stockholders entitled to express
consent to corporate action in writing without a meeting, when no prior action
by the Board of Directors is necessary, shall be the day on which the first
written consent is expressed.
(3) The record date for determining stockholders for any other
purpose shall be at the close of business on the day on which the Board of
Directors adopts the resolution relating thereto.
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(c) A determination of stockholders of record entitled to notice of or to
vote at a meeting of stockholders shall apply to any adjournment of the meeting;
provided, however, that the Board of Directors may fix a new record date for the
adjourned meeting.
Section 6.6 REGISTERED STOCKHOLDERS. Prior to due presentment for
transfer of any share or shares, the Corporation shall treat the registered
owner thereof as the person exclusively entitled to vote, to receive
notifications and to all other benefits of ownership with respect to such share
or shares, and shall not be bound to recognize any equitable or other claim to
or interest in such share or shares on the part of any other person, whether or
not it shall have express or other notice thereof, except as otherwise provided
by applicable law.
ARTICLE VII
GENERAL PROVISIONS
Section 7.1 DIVIDENDS. Dividends upon the capital stock of the
Corporation, subject to the provisions of the Certificate of Incorporation, if
any, may be declared by the Board of Directors at any regular or special
meeting, pursuant to law. Dividends may be paid in cash, in property, or in
shares of the capital stock, subject to the provisions of the Certificate of
Incorporation.
Before payment of any dividend, there may be set aside out of any funds of
the Corporation available for dividends such sum or sums as the directors from
time to time, in their absolute discretion, think proper as a reserve or
reserves to meet contingencies, or for equalizing dividends, or for repairing or
maintaining any property of the Corporation, or for such other purpose as the
directors shall think conducive to the interest of the Corporation, and the
directors may modify or abolish any such reserve in the manner in which it was
created.
Section 7.3 ANNUAL STATEMENT. The Board of Directors shall present at
each annual meeting, and at any special meeting of the stockholders when called
for by vote of the stockholders, a full and clear statement of the business and
condition of the Corporation.
Section 7.4 CHECKS. All checks or demands for money and notes of the
Corporation shall be signed by such officer or officers or such other persons as
the Board of Directors may from time to time designate.
Section 7.5 FISCAL YEAR. The fiscal year of the Corporation shall be
the calendar year.
Section 7.6 SEAL. The corporate seal shall have inscribed thereon the
name of the Corporation, the year of its organization and the words "Corporate
Seal, Delaware". The seal may be used by causing it or a facsimile thereof to
be impressed or affixed or in any manner reproduced.
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ARTICLE VIII
AMENDMENTS
Section 8.1 AMENDMENTS. These By-laws may be altered or repealed or new
By-laws may be adopted, either by the Board of Directors or by the stockholders
of the Corporation upon the affirmative vote of the holders of at least 66-2/3%
of the outstanding capital stock entitled to vote thereon.
ARTICLE IX
INDEMNIFICATION
Section 9.1 RIGHT OF INDEMNIFICATION. (a) The Corporation shall
indemnify any person who was or is a party or is threatened to be made a party
to any threatened, pending or completed action, suit or proceeding, whether
civil, criminal, administrative or investigative (other than an action by or in
the right of the Corporation) by reason of the fact that he is or was a
director, officer, employee or agent of the Corporation, or is or was serving at
the request of the Corporation as a director, officer, employee or agent of
another Corporation, partnership, joint venture, trust or other enterprise,
against expenses (including attorneys' fees), judgments, fines and amounts paid
in settlement actually and reasonably incurred by him in connection with such
action, suit or proceeding if he acted in good faith and in a manner he
reasonably believed to be in or not opposed to the best interests of the
Corporation, and, with respect to any criminal action or proceeding, had no
reasonable cause to believe his conduct was unlawful. The termination of any
action, suit or proceeding by judgment, order, settlement, conviction, or upon a
plea of nolo contendere or its equivalent, shall not, of itself, create a
presumption that the person did not act in good faith and in a manner which he
reasonably believed to be in or not opposed to the best interests of the
Corporation, and, with respect to any criminal action or proceeding, had
reasonable cause to believe that his conduct was unlawful. The Corporation
shall be required to indemnify a person in connection with a proceeding (or part
thereof) initiated by such person only if the proceeding (or part thereof) was
authorized by the Board of Directors.
(b) The Corporation shall indemnify any person who was or is a party, or
is threatened to be made a party to any threatened, pending or completed action
or suit by or in the right of the Corporation to procure a judgment in its favor
by reason of the fact that he is or was a director, officer, employee or agent
of the Corporation, or is or was serving at the request of the Corporation as a
director, officer, employee or agent of another Corporation, partnership, joint
venture, trust or other enterprise against expenses (including attorneys' fees)
actually and reasonably incurred by him in connection with the defense or
settlement of such action or suit if he acted in good faith and in a manner he
reasonably believed to be in or not opposed to the best interests of the
Corporation; except that no indemnification shall be made in respect of any
claim, issue or matter as to which such person shall have been adjudged to be
liable to the Corporation unless, and only to the extent that, the Court of
Chancery or the court in which such action or suit was brought shall determine
upon application that, despite the adjudication of liability but in
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view of all the circumstances of the case, such person is fairly and reasonably
entitled to indemnity for such expenses which the Court of Chancery or such
other court shall deem proper.
(c) o the extent that a director, officer, employee or agent of the
Corporation has been successful on the merits or otherwise in defense of any
action, suit or proceeding referred to Sections 9.1(a) or 9.1(b), or in defense
of any claim, issue or matter therein, he shall be indemnified against expenses
(including attorneys' fees) actually and reasonably incurred by him in
connection therewith.
(d) Any indemnification under sections 9.1(a) or 9.1(b) (unless ordered by
a court) shall be made by the Corporation only as authorized in the specific
case upon a determination that indemnification of the director, officer,
employee or agent is proper in the circumstances because he has met the
applicable standard of conduct set forth in such section. Such determination
shall be made:
(i) By the Board of Directors by a majority vote of a quorum
consisting of directors who were not parties to such action, suit or
proceeding, even though less than a quorum, or
(ii) If there are no such directors, or if such directors so direct,
by independent legal counsel in a written opinion, or
(iii) By the stockholders.
Section 9.2 UNDERTAKINGS FOR ADVANCEMENT OF EXPENSES. Expenses incurred
in defending a civil or criminal action, suit or proceeding may be paid by the
Corporation in advance of the final disposition of such action, suit or
proceeding upon receipt of an undertaking by or on behalf of the director,
officer, employee or agent to repay such amount if it shall ultimately be
determined that he is not entitled to be indemnified by the Corporation as
authorized in this Article. Such expenses incurred by other employees and
agents may be so paid upon such terms and conditions, if any, as the Board of
Directors deems appropriate.
Section 9.3 CLAIMS. If a claim for indemnification or payment of
expenses under this Article IX is not paid with 60 days after a written claim
therefor is received by the Corporation, the claimant may recover the unpaid
amount of such claim and, if successful in whole or in part, shall be entitled
to be paid the expense of prosecuting the claim. In any such action, the
Corporation shall have the burden of proving that the claimant was not entitled
to the requested indemnification or payment of expenses under applicable law.
Section 9.4 RELATIONSHIP TO OTHER RIGHTS. The indemnification and
advancement of expenses provided by, or granted pursuant to, this Article shall
not be deemed exclusive of any other rights to which those seeking
indemnification or advancement of expenses may be entitled under any agreement,
vote of stockholders or disinterested directors or otherwise, both as to action
in his official capacity and as to action in another capacity while holding such
office.
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<PAGE>
Section 9.5 INSURANCE. The Corporation shall have power to purchase and
maintain insurance on behalf of any person who is or was a director, officer,
employee or agent of the Corporation, or is or was serving at the request of the
Corporation as a director, officer, employee or agent of another Corporation,
partnership, joint venture, trust or other enterprise against any liability
asserted against him and incurred by him in any such capacity, or arising out of
his status as such, whether or not the Corporation would have the power to
indemnify him against such liability under the provisions of this Article.
Section 9.6 CONTINUATION OF RIGHTS. The indemnification and advancement
of expenses provided by or granted pursuant to, this Article IX shall, unless
otherwise provided when authorized or ratified, continue as to a person who has
ceased to be a director, officer, employee or agent and shall inure to the
benefit of the heirs, executors and administrators of any such person.
Section 9.7 AMENDMENTS. All rights to indemnification under this by-law
shall be deemed to be a contract between the Corporation and each director,
officer, employee or agent of the Corporation who serves or served in such
capacity at any time while this by-law is in effect. No amendment or repeal of
this bylaw or of any relevant provisions of the Delaware General Corporation Law
or any other applicable laws shall adversely affect or deny to any director,
officer, employee or agent of the Corporation any rights to indemnification
which such person may have, or change or release any obligations of the
Corporation, under this by-law with respect to any costs, charges, expenses
(including attorneys' fees), judgments, fines and amounts paid in settlement
which arise out of any action, suit or proceeding based in whole or in
substantial part on any act or failure to act, actual or alleged, which takes
place while or before this by-law is in effect. The provision of this section
shall apply to any such action, suit or proceeding whenever commenced, including
such action, suit or proceeding commenced after any amendment or repeal of this
by-law.
Section 9.8 SEVERABILITY. In the event that any of the provisions of
this Article IX (including any provision within a single section, paragraph or
sentence) is held by a court of competent jurisdiction to be invalid, void or
otherwise enforceable, the remaining provisions are severable and shall remain
enforceable to the full extent permitted by law.
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Exhibit 4.01
I. C. Isaacs & Company, Inc.
CERTIFICATE
No. *
For * Shares
Issued to
*
Dated * 19 *
FROM WHOM TRANSFERRED
*
Dated 19
NO. ORIGINAL NO. ORIGINAL NO. OF SHARES
CERTIFICATE SHARES TRANSFERRED
Received CERTIFICATE NO.
For Shares
this day of 19
SPECIMEN
INCORPORATED UNDER THE LAWS OF THE
State of Delaware
NUMBER SHARES
* *
I. C. ISAACS & COMPANY, INC.
AUTHORIZED CAPITAL: 50,000,000 SHARES OF
Common Stock
THIS CERTIFIES that SPECIMEN is the
registered holder of * * * Shares
of Common Stock (Par Value $.0001) of I. C. Isaacs & Company, Inc.
transferable only on the books of the Corporation by the holder hereof in
person or by Attorney upon surrender of this Certificate properly endorsed.
IN WITNESS WHEREOF, the said Corporation has caused this Certificate to be
signed by its duly authorized officers and its Corporate Seal to be hereunto
affixed this * day of * A.D. 19 *
/s/ Eugene C. Wielepski /s/ Gerald W. Lear
- ------------------------------ ------------------------------
Secretary President
(SEAL)
SHARES Par Value EACH
$.0001
<PAGE>
For Value Received, hereby sell, assign and transfer unto
Shares
represented by the within Certificate, and do hereby
irrevocably constitute and appoint
Attorney
to transfer the said Shares on the books of the within named
Corporation with full power of substitution in the premises.
Dated 19
In presence of
NOTICE. THE SIGNATURE OF THIS ASSIGNMENT
MUST CORRESPOND WITH THE NAME AS WRITTEN UPON THE
FACE OF THE CERTIFICATE, IN EVERY PARTICULAR, WITHOUT
ALTERNATION OR ENLARGEMENT OR ANY CHANGE WHATEVER
CERTIFICATE
FOR A FULL STATEMENT OR SUMMARY OF THE
DESIGNATIONS AND ANY PREFERENCES,
* CONVERSION AND OTHER RIGHTS, VOTING
POWERS, RESTRICTIONS, LIMITATIONS AS
SHARES TO DIVIDENDS, QUALIFICATIONS, AND
TERMS AND CONDITIONS OF REDEMPTION
Common Stock OF THE STOCK OF EACH CLASS WHICH THE
CORPORATION IS AUTHORIZED TO ISSUE
of AND THE AUTHORITY OF THE BOARD OF
DIRECTORS TO SET THE RELATIVE RIGHTS
I. C. Isaacs AND PREFERENCES OF ANY SERIES OF
& Company, INc. CAPITAL STOCK, WILL BE FURNISHED TO
ANY SHAREHOLDER, WITHOUT CHARGE,
UPON REQUEST TO THE SECRETARY OF THE
ISSUED TO CORPORATION AT THE CORPORATION'S
PRINCIPAL OFFICE.
SPECIMEN
DATED
*
<PAGE>
Exhibit 5.01
PIPER & MARBURY
L.L.P.
CHARLES CENTER SOUTH
36 SOUTH CHARLES STREET WASHINGTON
Baltimore, Maryland 21201-3018 NEW YORK
410-539-2530 PHILADELPHIA
FAX: 410-539-0489 EASTON
October 3, 1997
I.C. Isaacs & Company, Inc.
3840 Bank Street
Baltimore, Maryland 21224-2522
Re: Registration Statement on Form S-1
Ladies and Gentlemen:
We have acted as counsel to I.C. Isaacs & Company, Inc., a Delaware
corporation (the "Company") in connection with the Company's Registration
Statement on Form S-1 (the "Registration Statement") filed October 3, 1997
with the Securities and Exchange Commission (the "Commission") under the
Securities Act of 1933, as amended (the "Act"). The Registration Statement
relates to up to 4,370,000 shares (including 570,000 shares to cover
over-allotments, if any) of the Company's Common Stock, par value $.0001 per
share, all of which will be newly issued by the Company (the "Shares").
In this capacity, we have examined the Company's Amended and Restated
Certificate of Incorporation and Amended and Restated By-Laws, the
proceedings of the Board of Directors of the Company relating to the issuance
of the Shares and such other documents, instruments and matters of law as we
have deemed necessary to the rendering of this opinion. In such examination,
we have assumed the genuineness of all signatures, the authenticity of all
documents submitted to us as originals and the conformity with originals of
all documents submitted to us as copies.
Based upon the foregoing, we are of the opinion and advise you that each
of the Shares described in the Registration Statement has been duly
authorized and, upon sale of such Shares as contemplated by the Registration
Statement, will be validly issued, fully paid and nonassessable.
We hereby consent to the filing of this opinion as an exhibit to the
Registration Statement. In giving our consent, we do not thereby admit that
we are in the category of
<PAGE>
PIPER & MARBURY
L.L.P.
I.C. Isaacs & Company, Inc.
October 3, 1997
Page 2
persons whose consent is required under Section 7 of the Act or the Rules and
Regulations of the Commission thereunder.
Very truly yours,
Piper & Marbury L.L.P.
/s/ Piper & Marbury L.L.P.
<PAGE>
I.G. DESIGN, INC.
AMENDED AND RESTATED
SHAREHOLDERS' AGREEMENT
This AMENDED AND RESTATED SHAREHOLDERS' AGREEMENT (the "Restated
Agreement") is entered into as of May 15, 1997, by and among the Principal
Shareholders (as hereinafter defined), the shareholders listed on Schedule A
hereto (the "Non-Principal Shareholders" and, together with the Principal
Shareholders, the "Shareholders"), and I.G. Design, Inc., a Delaware
corporation having its principal office and place of business at 3840 Bank
Street, Baltimore, Maryland 21224-2522 (the "Corporation").
WHEREAS, the Shareholders are currently the owners of 16,195 shares,
which presently constitutes all of the issued and outstanding shares of the
Corporation's capital stock (the "Stock"), and
WHEREAS, after the proposed offering of up to 3 million shares of common
stock by the Corporation, the Shareholders will continue to own approximately
65% of the Corporation's issued and outstanding common stock (the "Common
Stock");
WHEREAS, the Shareholders and the Corporation are parties to a
Shareholders' Agreement dated as of December 20, 1984, as amended, (the
"Shareholders' Agreement"), which governs, among other issues, the management
and ownership of the shares of Common Stock owned by the Shareholders; and
WHEREAS, the Shareholders and the Corporation desire to amend and restate
the Shareholders' Agreement in its entirety.
NOW, THEREFORE, in consideration of the premises and the mutual covenants
set forth herein, the parties hereto agree that the Shareholders' Agreement
is hereby further amended and restated to read in its entirety as follows:
1. DEFINITIONS
The following terms shall have the meanings set forth in this Section 1:
A. Beneficial Owner. Beneficial Owner shall have the meaning set forth
in Rule 13d-3 of the Securities Exchange Act of 1934, as amended.
B. Change of Control. Change of Control shall mean (i) the sale of all
or substantially all of the assets of the Company, (ii) the sale of more than
fifty percent (50%) of the outstanding Common Stock in a non-public sale,
(iii) the dissolution or liquidation of the Company, or (iv) any merger or
consolidation of the Company, if immediately after any such transaction
either (A) persons who were directors of the Company immediately prior to
such transaction do not constitute at least a majority of the directors of
the surviving entity, or
<PAGE>
(B) persons who hold a majority of the voting stock of the surviving entity
are not persons who held a majority of the Common Stock of the Company
immediately prior to such transaction.
C. Corporation First Refusal Period. Corporation First Refusal Period
shall mean the period within which the Corporation may exercise its Right of
First Refusal. With respect to Stock proposed for transfer by Principal
Shareholders, the Corporation First Refusal Period shall be the ten (10) days
following the last day of the Principal Shareholder First Refusal Period and,
with respect to Stock proposed for transfer by Non-Principal Shareholders,
the Corporation First Refusal Period shall be the five (5) days following the
last day of the Non-Principal Shareholder First Refusal Period.
D. Involuntary Transfer. Involuntary Transfer shall mean any transfer,
proceeding or action by or in which a Shareholder shall be deprived or
divested of any right, title or interest in or to any of the Stock,
including, without limitation, any seizure under levy of attachment or
execution, any transfer in connection with bankruptcy (whether pursuant to
the filing of a voluntary or an involuntary petition under the United States
Bankruptcy Code, as amended, or any modifications or revisions thereto) or
other court proceeding to a debtor in possession, trustee in bankruptcy or
receiver or other officer or agency, any transfer to a state or to a public
officer or agency pursuant to any statute pertaining to escheat or abandoned
property, any transfer pursuant to a divorce or separation agreement or a
final decree of a court in a divorce action, and any transfer by operation of
a will or the laws of intestacy.
E. Market Value. Market Value shall have the following meaning:
(i) In the event that, as of the date of the Transfer Notice, the
Corporation is a Reporting Company, the Market Value of the Stock for any
purpose shall mean the last reported sale price per share of Stock, on the
date of the Transfer Notice or, in case no such sale takes place on such
date, the average of the 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 if the
Stock is not so listed or admitted to trading or included for quotation, the
last quoted price, or if the Stock is not so quoted, the average of the high
bid and low asked prices, in the over-the-counter market, as reported by the
National Association of Securities Dealers, Inc. Automated Quotation System
or, if such system is no longer in use, the principal other automated
quotations system that may then be in use or, if the 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 Stock as
selected in good faith by the Board or by such other source or sources as
shall be selected in good faith by the Board. If, as the case may be, the
relevant date 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
Stock is not listed or admitted to trading on a national securities exchange
or included for quotation on the Nasdaq-National Market, any business day.
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(ii) If, as of the date of the Transfer Notice, the Corporation is
not a Reporting Company, the Market Value shall be the appraised market value
as of the date of the Transfer Notice, as determined by an independent
appraiser of recognized standing selected by the Corporation.
F. Non-Elected Shares. Non-Elected Shares shall mean Stock which has
not been, or will not be, purchased pursuant to a Right of First Refusal.
G. Principal Shareholders. Principal Shareholders means the
individuals in the group comprising Robert J. Arnot ("Arnot"), Gerald W. Lear
("Lear"), and Ira J. Hechler and Jon Hechler (collectively, the "Hechler
Group"), or, in each case, each Principal Shareholders' Permitted Transferees
(as hereinafter defined).
H. Principal Shareholder Action. Principal Shareholder Action shall
mean the approval of any two of (i) Arnot, (ii) Lear and (iii) the Hechler
Group (a "Majority").
I. Principal Shareholder First Refusal Period. The Principal
Shareholder First Refusal Period shall mean the period within which Principal
Shareholders may exercise their Right of First Refusal. With respect to
Stock proposed for transfer by Principal Shareholders, the Principal
Shareholder First Refusal Period shall be fifteen (15) days, and with respect
to Stock proposed for transfer by Non-Principal Shareholders, the Principal
Shareholder First Refusal Period shall be ten (10) days.
J. Reporting Company. Reporting Company shall mean a company the common
stock of which is registered under Section 12 of the Securities Exchange Act of
1934, as amended.
2. VOTING AGREEMENT
Upon consummation of the Offering, the Board of Directors shall be
classified into three classes of directors serving three-year, staggered
terms as further specified in the By-laws of the Corporation adopted May 15,
1997. Each of the Shareholders agrees that, in elections to fill Class I or
Class II of the Board of Directors of the Corporation, such Shareholder will
vote (or cause the voting of) all Stock then owned by such Shareholder (or
any such Stock which such Shareholder has the right to vote pursuant to any
agreement or proxy), in favor of nominees specified in writing by Principal
Shareholder Action.
3. LEGENDS ON CERTIFICATES
The certificates evidencing the Stock held by the Shareholders 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 "DGCL"):
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"The shares represented by this Certificate may not be
assigned, sold, transferred, hypothecated, or otherwise
disposed of, except in accordance with the Amended and
Restated Shareholders' Agreement dated as of May 15, 1997,
which is on file at the office of the issuer."
4. RESTRICTIONS ON DISPOSITION
A. Limitations on Transfers. Subject to Subsection F. of this Section
4, no Shareholder shall voluntarily transfer, sell, assign, pledge, encumber,
grant any option with respect to, or otherwise create any legal or equitable
interest in any Stock owned by such Shareholder except pursuant to a sale of
all or any part of such Stock made in accordance with Subsection B. or C.
below.
B. Stock Held by Principal Shareholders. (i) Except as otherwise
provided in Subsection F. below, before any Stock may be voluntarily sold or
transferred by a Principal Shareholder, including any contemplated sale of
shares on a national securities exchange, the Principal Shareholder seeking
to transfer such Stock (the "Transferring Principal Shareholder") shall first
provide written notice of the proposed sale or transfer to the other
Principal Shareholders and the Corporation, which notice shall include the
number of shares of Stock proposed for transfer (the "Offered Shares"), the
price per share of Stock, (the "Offer Price"), the name of the proposed
transferee or, if the shares are proposed to be transferred on the stock
market, the name of the proposed broker (the "Proposed Transferee"), a
representation that the agreement to sell or transfer constitutes a bona-fide
offer to purchase and all other terms and conditions of the transfer (the
"Transfer Notice").
(ii) The other Principal Shareholders shall then have the right to
purchase the Offered Shares at the lesser of the Offer Price or Market Value.
Such Right of First Refusal shall be exercisable upon written notice to the
Transferring Principal Shareholder within the Principal Shareholder First
Refusal Period, which notice shall specify the number of Offered Shares to be
purchased by the Principal Shareholder. Each Principal Shareholder electing
to exercise the Right of First Refusal (an "Electing Principal Shareholder")
may purchase a number of Offered Shares equal to the total number of Offered
Shares multiplied by a fraction, the numerator of which is equal to the
number of shares of Stock held by such Principal Shareholder and the
denominator of which is equal to the total number of shares of Stock owned by
all Electing Principal Shareholders. Any Principal Shareholder who elects
not to purchase the full number of Offered Shares to which such Principal
Shareholder is entitled shall, within five (5) days prior to the expiration
of the Principal Shareholder First Refusal Period, notify the other Principal
Shareholders (other than the Transferring Principal Shareholder), each of
whom shall then be entitled to purchase that number of Non-Elected Shares
equal to the number of Non-Elected Shares multiplied by a fraction, the
numerator of which is the number of shares of Stock held by such Principal
Shareholder and the denominator of which is the aggregate number of shares of
Stock held by all Electing Principal Shareholders who wish to purchase
Non-Elected Shares.
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(iii) If, upon termination of the Principal Shareholder First
Refusal Period, the Principal Shareholders have not exercised their Rights of
First Refusal with respect to some or all of the Offered Shares, the
Corporation shall have a Right of First Refusal with respect to some or all
of such Non-Elected Shares, exercisable upon written notice to the
Transferring Principal Shareholder within the Corporation First Refusal
Period.
(iv) If, upon termination of the Corporation First Refusal Period,
the Principal Shareholders and the Corporation have not exercised their Right
of First Refusal with respect to some or all of the Offered Shares, the
Transferring Principal Shareholder may sell such Non-Elected Shares to the
Proposed Transferee at any time within three months after the termination of
the Corporation First Refusal Period without again complying with this
Section 4.
C. Stock Held By Non-Principal Shareholders. (i) Except as otherwise
provided in Subsection F. below or unless this Subsection C. is waived by a
Majority of the Principal Shareholders, before any Stock may be voluntarily
sold or transferred by a Non-Principal Shareholder holding, at the time of
such contemplated transfer, in excess of one half of one percent (.5%) of the
outstanding Stock of the Corporation (a "Transferring Non-Principal
Shareholder"), such Transferring Non-Principal Shareholder shall first
provide a Transfer Notice to the Principal Shareholders and each of the
Non-Principal Shareholders who holds in excess of one half of one percent
(.5%) of the outstanding Stock of the Corporation (the "Eligible
Non-Principal Shareholders") and to the Corporation.
(ii) The Principal Shareholders shall then have a Right of First
Refusal, exercisable upon written notice to the Transferring Non-Principal
Shareholder within the Principal Shareholder First Refusal Period. Such
notice shall specify the number of Offered Shares sought to be purchased by
the Principal Shareholder. Each Electing Principal Shareholder may purchase
a number of Offered Shares equal to the total number of Offered Shares
multiplied by a fraction, the numerator of which is equal to the number of
shares of Stock held by such Principal Shareholder and the denominator of
which is equal to the total number of shares of Stock owned by all Electing
Principal Shareholders. Any Principal Shareholder who elects not to purchase
the full number of Offered Shares to which such Principal Shareholder is
entitled shall, within five (5) days prior to the expiration of the Principal
Shareholder First Refusal Period, notify the other Principal Shareholders,
each of whom shall then be entitled to purchase that number of shares of
Stock equal to the total number of Non-Elected Shares multiplied by a
fraction, the numerator of which is the number of shares of Stock held by
such Principal Shareholder and the denominator of which is the aggregate
number of shares held by all Electing Principal Shareholders who wish to
purchase Non-Elected Shares.
(iii) If, upon expiration of the Principal Shareholder
Notification Period, the Principal Shareholders have not exercised their
Right of First Refusal with respect to some or all of the Offered Shares, the
Eligible Non-Principal Shareholders shall have a Right of First Refusal with
respect to such Non-Elected Shares, exercisable upon written notice to the
Transferring Non-Principal Shareholder within five (5) days after the
Principal Shareholder First Refusal
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<PAGE>
Period (the "Non-Principal Shareholder First Refusal Period"). Such notice
shall specify the number of Offered Shares sought to be purchased by the
Eligible Non-Principal Shareholder. Each Eligible Non-Principal Shareholder
electing to exercise the Right of First Refusal (an "Electing Non-Principal
Shareholder") may purchase a number of Offered Shares equal to the total
number of Offered Shares multiplied by a fraction, the numerator of which is
equal to the number of shares of Stock held by such Eligible Non-Principal
Shareholder and the denominator of which is equal to the total number of
shares of Stock owned by all Electing Non-Principal Shareholders.
(iv) If, upon termination of the Non-Principal Shareholder First
Refusal Period, the Eligible Non-Principal Shareholders have not exercised
their Right of First Refusal with respect to some or all of the Offered
Shares, the Corporation shall have a Right of First Refusal with respect to
such Non-Elected Shares, exercisable upon written notice to the Transferring
Non-Principal Shareholder within the Corporation First Refusal Period.
(v) If, upon termination of the Corporation First Refusal Period, the
Principal Shareholders, the Eligible Non-Principal Shareholders and the
Corporation have not exercised their Right of First Refusal with respect to some
or all of the Offered Shares, the Transferring Non-Principal Shareholder may
sell such Non-Elected Shares to the Proposed Transferee any time within three
months after the Transfer Notice without again complying with this Section 4.
D. Involuntary Transfers. Any Involuntary Transfer by a Shareholder
(an "Involuntary Transferor") shall be subject to the Rights of First Refusal
set forth in Section 4B. (in the case of an Involuntary Transfer of Stock
owned by a Principal Shareholder) or Section 4C. (in the case of Stock owned
by a Non-Principal Shareholder) as if the Involuntary Transfer had been a
proposed voluntary transfer except that:
(i) the provisions of Subsections 4B.(i) and 4C.(i) shall not
apply, but the Involuntary Transferor or the Involuntary Transferor's estate
shall notify the Shareholders and the Corporation as soon as practicable upon
obtaining knowledge of the Involuntary Transfer;
(ii) the Principal Shareholder First Refusal Period shall run from
the date of receipt by the Corporation of the notice of Involuntary Transfer;
(iii) such Right of First Refusal shall be exercised by notice to
the Involuntary Transferee rather than to the Shareholders who suffered or will
suffer the Involuntary Transfer; and
(iv) The purchase price per Offered Share shall be Market Value.
E. Settlement. If the Principal Shareholders, the Eligible Non-Principal
Shareholders or the Corporation elect to exercise their Rights of First Refusal
to acquire all or any portion of the Offered Shares, settlement shall be made as
follows:
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(i) If, at the time of the Transfer Notice, the Corporation is a
Reporting Company, within the Principal Shareholder First Refusal Period, the
Non-Principal Shareholder First Refusal Period or Corporation First Refusal
Period, as applicable; or
(ii) If, at the time of the Transfer Notice, the Corporation is not
a Reporting Company, within 30 days of the Transfer Notice.
F. Permitted Transfers. Nothing in this Section shall prohibit the
transfer (i) by a Shareholder during any three month period of Stock
amounting, in the aggregate, to less than two percent (2%) of the Stock held
by such Shareholder or (ii) by any Shareholder of all or any portion of such
Shareholder's Stock (a) to the spouse or any one or more of the lineal
descendants of such Shareholder; (b) to any trust, partnership or limited
liability company established solely for estate and gift planning purposes
and solely for the benefit of such Shareholder, his or her spouse and/or
lineal descendants (transferees described under subparagraphs (a) and (b)
shall be deemed "Permitted Transferees"); (c) to the Corporation; or (d) in
connection with a registered offering of Stock as provided under Section 6
below. Any successor or transferee who receives Stock pursuant to an event
described in clauses (a) or (b) above shall, as a condition of such transfer,
enter into an agreement to be bound by the provisions of this Restated
Agreement in its entirety and shall be deemed to be a "Shareholder" hereunder.
5. "DRAG-ALONG" RIGHTS
If a Majority of the Principal Shareholders enter into a transaction with
a third party for the sale or tender of Stock held by such Principal
Shareholders (including, without limitation, a Change of Control
transaction), the Right of First Refusal set forth in Section 4 above shall
not apply and the Corporation and/or the Majority may require the other
Shareholders to participate in such transaction on the same terms and
conditions as the Principal Shareholders by giving such Shareholders written
notice thereof at least 30 days in advance of the date of closing of the
transaction. Upon receipt of such notice, each of the other Shareholders
shall tender the same proportion of Stock owned by him or her as the members
of the Majority propose to sell on the same terms and conditions applicable
to the Stock of the members of the Majority in the transaction.
6. REGISTRATION RIGHTS
To the extent that the Corporation grants registration rights to one or
more of the Principal Shareholders (a "Participating Principal Shareholder")
under a registration statement filed with the Securities and Exchange
Commission (a "Registration Statement"), each of the other Shareholders shall
have the right to sell a number of shares of Stock to be registered under the
Registration Statement equal to the number of shares held by such Shareholder
multiplied by a fraction, the numerator of which is equal to the number of
shares of Stock held by Participating Principal Shareholders that are to be
registered pursuant to the Registration Statement and the denominator of
which is equal to the total number of shares of Stock held by the
Participating Principal Shareholders.
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<PAGE>
7. ARBITRATION OF DISPUTES
Any dispute regarding any aspect of this Restated Agreement or any act
which allegedly has or would violate any provision of this Restated Agreement
will be submitted to binding arbitration. Such arbitration shall be
conducted before an arbitrator sitting in Baltimore, Maryland or in such
other location as may be agreed upon by the Corporation and the Shareholder,
in accordance with the rules of the American Arbitration Association then in
effect. Judgment may be entered on the award of the arbitrator in any court
having competent jurisdiction.
8. BENEFIT
Except upon the occurrence of a termination event as provided in Section
16, this Restated Agreement shall be binding upon and shall operate for the
benefit of the parties hereto, their respective successors and assigns.
9. INVALIDITY OF ANY PROVISION
The invalidity or unenforceability of any provision of this Restated
Agreement shall not affect the other provisions hereof, and the Restated
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.
10. MODIFICATION OF AGREEMENT
No modification, amendment or waiver of any of the provisions of this
Restated Agreement shall be valid unless made in writing and signed by the
Corporation and Shareholders owning, in the aggregate, a majority of the
Stock subject to this Restated Agreement.
11. FURTHER ACTION
A. The Corporation shall not register, and shall instruct any transfer
agent for the Common Stock not to register, on the books of the Corporation
any transfer, pledge or encumbrance of any Stock subject to this Agreement,
unless such transfer, pledge or encumbrance complies with terms of this
Agreement and the Shareholders agree to provide the Corporation (or any such
transfer agent) with such documents, including an opinion of counsel as to
compliance with the terms of this Restated Agreement, as the Corporation (or
any such transfer agent) may reasonably request.
B. A copy of this Restated Agreement shall be made a part of the
minutes of the Corporation.
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12. ATTORNEY'S FEES AND COSTS
If any action at law or in equity (including any arbitration proceeding
under Section 7 above) is necessary to enforce or interpret the terms of this
Restated Agreement, the prevailing party shall be entitled to reasonable
attorneys' fees, costs, and necessary disbursements, in addition to any other
relief to which he may be entitled.
13. APPLICABLE LAW
This Restated Agreement shall be construed in accordance with the laws of
the State of Delaware.
14. ENTIRE AGREEMENT
This Restated Agreement supersedes all agreements as to the subject
matter hereof among the Shareholders and the Corporation including in each
case amendments thereto, previously executed by the Shareholders and the
Corporation. This Restated Agreement sets forth all of the provisions,
covenants, agreements, conditions and undertakings between the parties hereto
with respect to the subject matter hereof, and superseded all prior and
contemporaneous agreements and understandings express or implied, oral or
written as to the subject matter hereof.
15. NOTICES
Unless otherwise specified herein, all notices, requests, demands and
other communications to be given under this Restated 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 CORPORATION: 3840 Bank Street, Baltimore, MD 21224-2522, with copies
to each Director and each Shareholder as their names
and addresses appear on the records of the Corporation;
TO ANY SHAREHOLDER: As the name and address of such Shareholder appears on
the records of the Corporation;
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.
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16. TERM OF AGREEMENT
This Restated Agreement shall be effective
(i) With respect to Section 4C., from the date of consummation of the
Offering until the earlier to occur of (A) the fourth anniversary of the
execution of this Restated Agreement or (B) the Principal Shareholders'
ceasing to be the Beneficial Owners of more than 30% of the issued and
outstanding Stock; provided that a Principal Shareholder shall be deemed to
be the Beneficial Owner of Stock held by a family trust established by such
Principal Shareholder.
(ii) With respect to all other Sections of this Restated Agreement,
from the date of consummation of the Offering until the earlier to occur of
(A) the sixth anniversary of the execution of this Restated Agreement or
(B) the Principal Shareholders' ceasing to be the Beneficial Owners of more
than 30% of the issued and outstanding Stock; provided that a Principal
Shareholder shall be deemed to be the Beneficial Owner of Stock held by a
family trust established by such Principal Shareholder.
ATTEST: I.G. DESIGN, INC.
___________________________ By: ________________________________
Name:
Title:
WITNESS:
___________________________ _________________________________
Andrew Joe Adkinson
WITNESS:
___________________________ _________________________________
Julian Adler
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WITNESS:
___________________________ _________________________________
Charles Boutwell
WITNESS:
___________________________ _________________________________
Gary Brashers
WITNESS:
___________________________ _________________________________
Charles M. Chamblee
WITNESS:
___________________________ _________________________________
Joe W. Chamblee
WITNESS:
___________________________ _________________________________
Marion Felton
WITNESS:
___________________________ _________________________________
Hillary Figinski-Spieker
WITNESS:
___________________________ _________________________________
Robert Flynn, Jr.
WITNESS:
___________________________ _________________________________
Charles Godfrey
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WITNESS:
___________________________ __________________________________
Madlyn Goldman
WITNESS:
___________________________ __________________________________
David Hechler
WITNESS:
___________________________ __________________________________
Richard Hechler
WITNESS:
___________________________ __________________________________
Robin Hechler
WITNESS:
___________________________ __________________________________
Steven Hechler
WITNESS:
___________________________ __________________________________
Stanley Keller
WITNESS:
___________________________ __________________________________
Joyce Kingsley
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WITNESS:
___________________________ __________________________________
Susan Mark
WITNESS:
___________________________ __________________________________
William Myatt
WITNESS:
___________________________ __________________________________
Thomas Ormandy
WITNESS:
___________________________ __________________________________
Eugene C. Wielepski
WITNESS:
___________________________ __________________________________
Robert J. Arnot
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WITNESS:
___________________________ __________________________________
Gerald W. Lear
WITNESS:
___________________________ _________________________________
Ira J. Hechler
WITNESS:
___________________________ __________________________________
Jon Hechler
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SCHEDULE A
----------
Andrew Joe Adkinson
Julian Adler
Charles Boutwell
Gary Brashers
Charles M. Chamblee
Joe W. Chamblee
Marion Felton
Hillary Figinski-Spieker
Robert Flynn, Jr.
Charles Godfrey
Madlyn Goldman
David Hechler
Richard Hechler
Robin Hechler
Steven Hechler
Stanley Keller
Joyce Kingsley
Susan Mark
William Myatt
Thomas Ormandy
Eugene C. Wielepski
<PAGE>
EXECUTIVE EMPLOYMENT AGREEMENT
THIS EXECUTIVE EMPLOYMENT AGREEMENT is made this 15th day of May 1997, by
and between I. C. Isaacs & Company, L.P., a Delaware limited partnership (the
"Company"), and Robert J. Arnot (the "Executive").
EXPLANATORY STATEMENT
The Company desires to continue to employ the Executive as the Chairman of
the Board and Co-Chief Executive Officer on the terms and conditions herein set
forth, and the Executive has agreed to accept employment with the Company on the
terms and conditions herein set forth.
NOW, THEREFORE, in consideration of the premises and the mutual promises
made herein, the parties agree as follows:
1. Employment. The Company hereby employs the Executive as its Chairman
of the Board and Co-Chief Executive Officer and agrees to continue the Executive
in that position during the term of this Agreement.
2. Term. This Agreement shall begin May 15, 1997 and shall continue
until May 15, 2000. (the "Employment Period") Thereafter, this Agreement shall
renew automatically from Employment Year to Employment Year, subject to the
right of either party to terminate this Agreement as of the end of any
Employment Year upon sixty (60) days' prior written notice to the other party.
An "Employment Year" begins each May 15, and ends on the following May 15.
3. Base Salary. The Executive's base salary for the first Employment
Year under this Agreement (May 15, 1997 through May 15, 2000) shall be at the
rate of Four Hundred Thousand Dollars ($400,000) per annum. Such base salary
may be increased based on periodic reviews by the Compensation Committee of
the Board of Directors. The Executive's base salary shall be paid throughout
the year, in accordance with normal payroll practices of the Company.
4. Bonuses; Stock Plans. In addition to his base salary, during the term
of this Agreement, the Executive shall be entitled to participate in any bonus
and stock option plans, programs, arrangements and practices sponsored by the
Company for the benefit of executive employees serving in similar capacities
with the Company (and/or its affiliates), if any, as may be established from
time to time by the Board of Directors of the Company for the benefit of such
executive employees, in accordance with the terms of such plans, as amended by
the Company from time to time; it being understood that there is no assurance
with respect to the establishment of such plans or, if established, the
continuation of such plans during the term of this Agreement.
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5. Other Benefits. During the term of this Agreement, the Executive
shall also be entitled to participate in or receive benefits under all of the
Company's benefit plans, programs, arrangements and practices, including
pension, disability, and group life, sickness, accident or health insurance
programs, if any, as may be established from time to time by the Board of
Directors of the Company for the benefit of executive employees serving in
similar capacities with the Company (and/or its affiliates), in accordance with
the terms of such plans, as amended by the Company from time to time; it being
understood that there is no assurance with respect to the establishment of such
plans or, if established, the continuation of such plans during the term of this
Agreement.
6. Duties.
A. During the term of this Agreement, the Executive shall serve as
the Chairman of the Board and Co-Chief Executive Officer, have such powers and
shall perform such duties as are incident and customary to his office, including
those described in the Company's By-Laws (as amended from time to time), and
shall perform such other additional executive and administrative duties and
functions commensurate with such position as from time to time shall be assigned
to him by the Board of Directors of the Company. The Executive shall perform
such additional duties and functions without separate compensation, unless
otherwise authorized by the Board.
B. The Executive shall devote his full time, attention, skill, and
energy to the performance of his duties under this Agreement, and shall comply
with all reasonable professional requests of the Company; provided, however,
that the Executive will be permitted to engage in and manage personal
investments and to participate in community and charitable affairs, so long as
such activities do not interfere with his duties under this Agreement.
7. Vacation and Sick Leave.
A. The Executive shall be entitled to a total of four (4) weeks of
vacation each Employment Year, such vacation to be in accordance with the terms
of the Company's announced policy for executive employees, as in effect from
time to time. The Executive may take his vacation at such time or times as
shall not interfere with the performance of his duties under this Agreement.
B. The Executive shall be entitled to paid sick leave and holidays
in accordance with the Company's announced policy for executive employees, as in
effect from time to time.
8. Expenses. The Company shall reimburse the Executive for all
reasonable expenses, including but not limited to expenses for first class
service for international air travel, incurred in connection with his duties on
behalf of the Company, provided that the Executive shall keep, and present to
the Company, records and receipts relating to reimbursable expenses incurred by
him. Such records and receipts shall be maintained and presented in a format,
and
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with such regularity, as the Company reasonably may require in order to
substantiate the Company's right to claim income tax deductions for such
expenses. Without limiting the generality of the foregoing, the Executive shall
be entitled to reimbursement for any business-related travel, business-related
entertainment, whether at his residence or otherwise, and other costs and
expenses reasonably incident to the performance of his duties on behalf of the
Company.
9. Termination of Employment for Cause. Notwithstanding the provisions
of Section 2 of this Agreement, the Executive's employment (and all of his
rights and benefits under this Agreement) shall terminate immediately and
without further notice upon the happening of any one or more of the following
events:
A. The Executive has been or is guilty of (i) a criminal offense
involving moral turpitude, (ii) criminal or dishonest conduct pertaining to the
business or affairs of the Company (including, without limitation, fraud and
misappropriation), (iii) any act or omission the intended or likely consequence
of which is material injury to the Company's business, property or reputation,
which act or omission continues uncured for a period of ten (10) days after the
Executive has received written notice from the Company, and/or (iv) gross
negligence or willful misconduct which continues uncured for a period of ten
(10) days after the Executive has received written notice from the Company;
B. The Executive persists, for a period of ten (10) days after
written notice from the Company, in a course of conduct reasonably determined by
the Board of Directors of the Company to be in violation of his duties to the
Company under this Agreement or otherwise in violation of the covenants,
agreements or obligations under the terms of this Agreement;
C. The Executive's death; or
D. The continuous and uninterrupted inability to perform the
Executive's duties on behalf of the Company, by reason of accident, mental or
physical illness or impairment, or disease, for a period of one hundred and
eighty (180) days from the first day of such inability to perform his duties.
(Subsections A, B, C, & D of this Section 9 hereinafter referred to collectively
and individually as "Cause").
In the event of a termination for Cause, the Company shall pay the
Executive his base salary through the effective date of the employment
termination, and the Executive shall immediately thereafter forfeit all rights
and benefits (other than vested benefits), including but not limited to any
right to compensation pursuant to Section 4 of this Agreement, he would
otherwise have been entitled to receive under this Agreement. The Company and
the Executive thereafter shall have no further obligations under this Agreement
except as otherwise provided in Sections 13 and 14 of this Agreement.
10. Termination of Employment by the Company Without Cause.
Notwithstanding the provisions of Section 2 of this Agreement, the Board of
Directors may terminate the
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Executive's employment, as provided under this Agreement, at any time, for
reasons other than for Cause by notifying the Executive in writing of such
termination. If the Executive is terminated pursuant to this Section 10, (i)
during the remainder of the Non-Competition Period (as hereinafter defined),
the Company shall pay the Executive his base salary at the rate and in the
manner required by Section 3 and in effect immediately prior to the date of
termination and (ii) after the Employment Period, the Company and the
Executive shall have no further obligations under this Agreement except as
otherwise provided in Sections 13 and 14 of this Agreement.
11. Termination of Employment by the Executive. Notwithstanding the
provisions of Section 2 of this Agreement, the Executive may terminate this
Agreement at any time by giving the Board of Directors written notice of his
intent to terminate, delivered at least sixty (60) days prior to the effective
date of such termination.
Upon expiration of the sixty (60) day notice period (or such earlier date as
may be approved by the Board of Directors), the termination by the Executive
shall become effective. Upon the effective date of such termination, the
Company's obligations under Sections 3, 4 and 5 of this Agreement shall
immediately expire, except to the extent that the benefits described in
Section 5 have vested and continue after termination under the terms of the
benefit plans and programs that generally apply to executive employees
serving in similar capacities with the Company.
12. Non-Renewal. If, upon termination of the Employment Period, the
Company shall decide not to renew this Agreement and the Company does not
waive the provisions of Section 13 below, (i) during the remainder of the
Non-Competition Period, the Company shall pay the Executive his base salary
at the rate and in the manner required by Section 3 of this Agreement and in
effect immediately prior to the date of termination and (ii) after the
Employment Period, the Company and the Executive shall have no further
obligations under this Agreement except as otherwise provided in Sections 13
and 14 of this Agreement.
13. Non-Competition. The Executive and the Company recognize that due to
the nature of his employment, and his relationship with the Company, the
Executive has had and will have access to, and has acquired and will acquire,
and has assisted and will assist in developing, confidential and proprietary
information relating to the business and operations of the Company (for purposes
of this Section 13 and Section 14 below, the Company shall mean the Company,
I. G. Design, Inc., or any of its/their affiliates or successors) including,
without limitation, information with respect to their present and prospective
services, systems, products, clients, customers, agents, and sales and
marketing methods. The Executive acknowledges that such information has been
and will be of central importance to the Company's business and that
disclosure of it to others or its use by others could cause substantial loss
to the Company. The Executive and the Company also recognize that an
important part of the Executive's duties will be to develop good will for the
Company through his personal contact with the Company's clients, and that
there is a danger that this good will, a proprietary asset of the Company,
may follow the Executive if and when his relationship with the Company is
terminated.
A. The Executive agrees that, during the term of his employment with
the Company, and for a period of two (2) years after the termination of his
employment for any reason whatsoever (including the non-renewal of this
Agreement by either party):
(i) The Executive will not directly or indirectly, within the
United States, whether as a partner, proprietor, employee, consultant, agent or
otherwise, participate or engage in any business that competes with, restricts,
or
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<PAGE>
interferes with the business of the Company, including, without limitation,
any business in the young men's and women's contemporary sportswear industry.
(ii) The Executive will not directly or indirectly (for his own
account, or for the account of others) interfere with, solicit, or accept for
himself, his benefit, or for anyone other than the Company, any of the clients
or customers of the Company, at the time of said termination, or any potential
clients or customers solicited or being solicited by the Company at the time of
such termination or within the period two (2) years prior thereto, or perform
any services of any competitive nature in connection with said clients or
customers for anyone other than the Company.
(iii) The Executive further agrees that he shall not, at any
time, directly or indirectly, urge any client (or customer) or potential client
(or potential customer) of the Company to discontinue business, in whole or in
part, or not to do business, with the Company.
(iv) The Executive further agrees that he shall not, at any
time, directly or indirectly, solicit, hire or arrange to hire any person who at
the time of such hire or within two (2) years prior to the time of such hire was
an employee of the Company and was not involuntarily terminated by the Company,
for himself or for any business entity with which he may be, or may be planning
to be, affiliated or associated, or otherwise interfere with the retention of
employees that the Company desires to retain as such.
B. The Executive expressly acknowledges and agrees (i) that the
restrictions set forth herein are reasonable, in terms of scope, duration,
geographic area, and otherwise, (ii) that the protections afforded to the
Company hereunder are necessary to protect its legitimate business interests,
and (iii) that the agreement to observe such restrictions form a material part
of the consideration for this Agreement and the Executive's employment by the
Company.
14. Confidential Information. The Executive agrees that, during the term
of his employment with the Company, and for a period of two (2) years after the
termination of his employment for any reason whatsoever, he shall not disclose
to any person or use the same in any way, other than in the discharge of his
duties under this Agreement in connection with the business of the Company, any
trade secrets or confidential or proprietary information of the Company,
including, without limitation, any information or knowledge relating to (i) the
business, operations or internal structure of the Company, (ii) the clients (or
customers) or potential clients (or potential customers) of the Company, (iii)
any method and/or procedure (such as records, programs, systems, correspondence,
or other documents), relating or pertaining to projects developed by the Company
or contemplated to be developed by the Company, or (iv) the Company's
business, which information or knowledge the Executive shall have obtained
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<PAGE>
during the term of this Agreement, and which is otherwise of a secret or
confidential nature. Further, upon leaving the employ of the Company for any
reason whatsoever, the Executive shall not take with him, without prior written
consent of the Board of Directors of the Company, any documents, forms, or other
reproductions of any data or any information relating to or pertaining to the
Company, any clients (or customers) or potential clients (or potential
customers) of the Company, or any other confidential information or trade
secrets.
15. Entire Agreement; Amendments, Other Agreements. This Agreement
contains the entire understanding of the Executive and the Company with respect
to employment of the Executive and supersedes any and all prior understandings,
written or oral. This Agreement may not be amended, waived, discharged or
terminated orally, but only by an instrument in writing. Any earlier employment
agreements between the Executive and the Company are hereby terminated and shall
be of no further effect after the effective date hereof.
16. Miscellaneous.
A. Any notices required by this Agreement shall (i) be made in
writing and mailed by certified mail, return receipt requested, with adequate
postage prepaid; (ii) be deemed given when so mailed; (iii) be deemed received
by the addressee within ten (10) days after given or when the certified mail
receipt for such mail is executed, whichever if earlier; and (iv) in the case of
the Company, be mailed to its principal office, or in the case of the Executive,
be mailed to the last address that the Executive has given to the Company.
B. This Agreement shall be binding upon and inure to the benefit of,
the parties, their successors, assigns, personal representatives, distributees,
heirs, and legatees.
C. This Agreement shall be governed by, and construed and enforced in
accordance with, the laws of the State of Maryland, without giving effect to the
principles of conflicts of law thereof.
D. 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 a location agreed to by the Company and the Executive
within fifty (50) miles of the location of the Executive's principal place of
employment, in accordance with the rules of the American Arbitration Association
then in effect. Each party will be entitled to limited discovery, to consist of
a maximum of three (3) depositions (maximum two (2) hours each), and twenty-five
(25) written interrogatories per party, which will be completed within one
hundred twenty (120) days following the selection of the arbitrator. Judgment
may be entered on the award of the arbitrator in any court having competent
jurisdiction.
E. Any failure by the Company to insist upon strict compliance with any
term or provision of this Agreement, to exercise any option, to enforce any
right, or to seek any remedy upon any breach by the Executive shall not affect,
or constitute a waiver of, the Company's right to insist upon such strict
compliance, exercise such option, enforce such right, or seek such
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<PAGE>
remedy with respect to such breach or any prior, contemporaneous, or subsequent
breach. No custom or practice of the Company at variance with any provision of
this Agreement shall affect or constitute a waiver of, the Company's right to
demand strict compliance with all provisions of this Agreement.
F. Any provision of this Agreement which is prohibited or unenforceable
in any jurisdiction shall, as to such jurisdiction, be deemed severable from the
remainder of this Agreement, and the remaining provisions contained in this
Agreement shall be construed to preserve to the maximum permissible extent the
intent and purposes of this Agreement. Any such prohibition or unenforceability
in any jurisdiction shall not invalidate or render unenforceable such provision
in any other jurisdiction.
G. In the event that the Executive violates the provisions of Sections
13 and 14 above, upon notice from the Company informing him of the nature of
such violation, the Executive shall immediately terminate any actions which
constitute such violation. The existence of this right shall not preclude
any other rights and remedies at law or in equity which the Company may have.
H. It is recognized that damages in the event of breach of any provision
of Sections 13 and 14 above by the Executive would be difficult, if not
impossible, to ascertain, and it is therefore agreed that the Company, in
addition to and without limiting any other remedy or right it may have, will be
entitled to a decree of specific performance, mandamus or other appropriate
remedy to enforce performance of such requirements.
IN WITNESS WHEREOF, the parties hereto have duly executed this Agreement as
of the day and year first hereinabove written.
I.C. ISAACS & COMPANY, LP
I. G. DESIGN, INC.
By: /s/ Gerald W. Lear
-------------------
Gerald W. Lear
President
EXECUTIVE
/s/ Robert J. Arnot
-------------------
Robert J. Arnot
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<PAGE>
EXECUTIVE EMPLOYMENT AGREEMENT
THIS EXECUTIVE EMPLOYMENT AGREEMENT is made this 15th day of May 1997,
by and between I. C. Isaacs & Company, L.P., a Delaware limited partnership
(the "Company"), and Gerald W. Lear (the "Executive").
EXPLANATORY STATEMENT
The Company desires to continue to employ the Executive as the President
and Co-Chief Executive Officer on the terms and conditions herein set forth,
and the Executive has agreed to accept employment with the Company on the
terms and conditions herein set forth.
NOW, THEREFORE, in consideration of the premises and the mutual promises
made herein, the parties agree as follows:
1. Employment. The Company hereby employs the Executive as its
President and Co-Chief Executive Officer and agrees to continue the Executive
in that position during the term of this Agreement.
2. Term. This Agreement shall begin May 15, 1997 and shall continue
until May 15, 2000. (the "Employment Period") Thereafter, this Agreement
shall renew automatically from Employment Year to Employment Year, subject to
the right of either party to terminate this Agreement as of the end of any
Employment Year upon sixty (60) days' prior written notice to the other
party. An "Employment Year" begins each May 15 and ends on the following May
15.
3. Base Salary. The Executive's base salary for the first Employment
Year under this Agreement (May 15, 1997 through May 15, 2000) shall be at the
rate of Four Hundred Thousand Dollars ($400,000) per annum. Such base salary
may be increased based on periodic reviews by the Compensation Committee of
the Board of Directors. The Executive's base salary shall be paid throughout
the year, in accordance with normal payroll practices of the Company.
4. Bonuses; Stock Plans. In addition to his base salary, during the
term of this Agreement, the Executive shall be entitled to participate in any
bonus and stock option plans, programs, arrangements and practices sponsored
by the Company for the benefit of executive employees serving in similar
capacities with the Company (and/or its affiliates), if any, as may be
established from time to time by the Board of Directors of the Company for
the benefit of such executive employees, in accordance with the terms of such
plans, as amended by the Company from time to time; it being understood that
there is no assurance with respect to the establishment of such plans or, if
established, the continuation of such plans during the term of this Agreement.
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<PAGE>
5. Other Benefits. During the term of this Agreement, the Executive
shall also be entitled to participate in or receive benefits under all of the
Company's benefit plans, programs, arrangements and practices, including
pension, disability, and group life, sickness, accident or health insurance
programs, if any, as may be established from time to time by the Board of
Directors of the Company for the benefit of executive employees serving in
similar capacities with the Company (and/or its affiliates), in accordance
with the terms of such plans, as amended by the Company from time to time; it
being understood that there is no assurance with respect to the establishment
of such plans or, if established, the continuation of such plans during the
term of this Agreement.
6. Duties.
A. During the term of this Agreement, the Executive shall serve as
the President and Co-Chief Executive Officer, have such powers and shall
perform such duties as are incident and customary to his office, including
those described in the Company's By-Laws (as amended from time to time), and
shall perform such other additional executive and administrative duties and
functions commensurate with such position as from time to time shall be
assigned to him by the Board of Directors of the Company. The Executive
shall perform such additional duties and functions without separate
compensation, unless otherwise authorized by the Board.
B. The Executive shall devote his full time, attention, skill, and
energy to the performance of his duties under this Agreement, and shall
comply with all reasonable professional requests of the Company; provided,
however, that the Executive will be permitted to engage in and manage
personal investments and to participate in community and charitable affairs,
so long as such activities do not interfere with his duties under this
Agreement.
7. Vacation and Sick Leave.
A. The Executive shall be entitled to a total of four (4) weeks of
vacation each Employment Year, such vacation to be in accordance with the
terms of the Company's announced policy for executive employees, as in effect
from time to time. The Executive may take his vacation at such time or times
as shall not interfere with the performance of his duties under this
Agreement.
B. The Executive shall be entitled to paid sick leave and holidays
in accordance with the Company's announced policy for executive employees, as
in effect from time to time.
8. Expenses. The Company shall reimburse the Executive for all
reasonable expenses, including but not limited to expenses for first class
service for international air travel, incurred in connection with his duties
on behalf of the Company, provided that the Executive shall keep, and present
to the Company, records and receipts relating to reimbursable expenses
incurred by him. Such records and receipts shall be maintained and presented
in a format, and with such regularity, as the Company reasonably may require
in order to substantiate the
2
<PAGE>
Company's right to claim income tax deductions for such expenses. Without
limiting the generality of the foregoing, the Executive shall be entitled to
reimbursement for any business-related travel, business-related
entertainment, whether at his residence or otherwise, and other costs and
expenses reasonably incident to the performance of his duties on behalf of
the Company.
9. Termination of Employment for Cause. Notwithstanding the
provisions of Section 2 of this Agreement, the Executive's employment (and
all of his rights and benefits under this Agreement) shall terminate
immediately and without further notice upon the happening of any one or more
of the following events:
A. The Executive has been or is guilty of (i) a criminal offense
involving moral turpitude, (ii) criminal or dishonest conduct pertaining to
the business or affairs of the Company (including, without limitation, fraud
and misappropriation), (iii) any act or omission the intended or likely
consequence of which is material injury to the Company's business, property
or reputation, which act or omission continues uncured for a period of ten
(10) days after the Executive has received written notice from the Company,
and/or (iv) gross negligence or willful misconduct which continues uncured
for a period of ten (10) days after the Executive has received written notice
from the Company;
B. The Executive persists, for a period of ten (10) days after
written notice from the Company, in a course of conduct reasonably determined
by the Board of Directors of the Company to be in violation of his duties to
the Company under this Agreement or otherwise in violation of the covenants,
agreements or obligations under the terms of this Agreement;
C. The Executive's death; or
D. The continuous and uninterrupted inability to perform the
Executive's duties on behalf of the Company, by reason of accident, mental or
physical illness or impairment, or disease, for a period of one hundred and
eighty (180) days from the first day of such inability to perform his duties.
(Subsections A, B, C, & D of this Section 9 hereinafter referred to
collectively and individually as "Cause").
In the event of a termination for Cause, the Company shall pay the
Executive his base salary through the effective date of the employment
termination, and the Executive shall immediately thereafter forfeit all
rights and benefits (other than vested benefits), including but not limited
to any right to compensation pursuant to Section 4 of this Agreement, he
would otherwise have been entitled to receive under this Agreement. The
Company and the Executive thereafter shall have no further obligations under
this Agreement except as otherwise provided in Sections 13 and 14 of this
Agreement.
10. Termination of Employment by the Company Without Cause.
Notwithstanding the provisions of Section 2 of this Agreement, the Board of
Directors may terminate the Executive's employment, as provided under this
Agreement, at any time, for reasons other than
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<PAGE>
for Cause by notifying the Executive in writing of such termination. If the
Executive is terminated pursuant to this Section 10, (i) during the remainder
of the Non-Competition Period (as hereinafter defined), the Company shall
pay the Executive his base salary at the rate and in the manner required by
Section 3 and in effect immediately prior to the date of termination and (ii)
after the Employment Period, the Company and the Executive shall have no
further obligations under this Agreement except as otherwise provided in
Sections 13 and 14 of this Agreement.
11. Termination of Employment by the Executive. Notwithstanding the
provisions of Section 2 of this Agreement, the Executive may terminate this
Agreement at any time by giving the Board of Directors written notice of his
intent to terminate, delivered at least sixty (60) days prior to the
effective date of such termination.
Upon expiration of the sixty (60) day notice period (or such earlier
date as may be approved by the Board of Directors), the termination by the
Executive shall become effective. Upon the effective date of such
termination, the Company's obligations under Sections 3, 4 and 5 of this
Agreement shall immediately expire, except to the extent that the benefits
described in Section 5 have vested and continue after termination under the
terms of the benefit plans and programs that generally apply to executive
employees serving in similar capacities with the Company.
12. Non-Renewal. If, upon termination of the Employment Period, the
Company shall decide not to renew this Agreement and the Company does not
waive the provisions of Section 13 below, (i) during the remainder of the
Non-Competition Period, the Company shall pay the Executive his base salary
at the rate and in the manner required by Section 3 of this Agreement and in
effect immediately prior to the date of termination and (ii) after the
Employment Period, the Company and the Executive shall have no further
obligations under this Agreement except as otherwise provided in Sections 13
and 14 of this Agreement.
13. Non-Competition. The Executive and the Company recognize that due
to the nature of his employment, and his relationship with the Company, the
Executive has had and will have access to, and has acquired and will acquire,
and has assisted and will assist in developing, confidential and proprietary
information relating to the business and operations of the Company (for
purposes of this Section 13 and Section 14 below, the Company shall mean the
Company, I. G. Design, Inc., or any of its/their affiliates or successors)
including, without limitation, information with respect to their present and
prospective services, systems, products, clients, customers, agents, and
sales and marketing methods. The Executive acknowledges that such
information has been and will be of central importance to the Company's
business and that disclosure of it to others or its use by others could cause
substantial loss to the Company. The Executive and the Company also
recognize that an important part of the Executive's duties will be to develop
good will for the Company through his personal contact with the Company's
clients, and that there is a danger that this good will, a proprietary asset
of the Company, may follow the Executive if and when his relationship with
the Company is terminated.
A. The Executive agrees that, during the term of his employment
with the Company, and for a period of two (2) years after the termination of
his employment for any reason whatsoever, including the non-renewal of this
Agreement by either party (the "Non-Competition Period"):
(i) The Executive will not directly or indirectly, within
the United States, whether as a partner, proprietor, employee,
consultant, agent or otherwise, participate or engage in any business
that competes with, restricts, or interferes with the business of the
Company, including, without limitation, any business in the young
men's and women's contemporary sportswear industry.
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<PAGE>
(ii) The Executive will not directly or indirectly (for
his own account, or for the account of others) interfere with,
solicit, or accept for himself, his benefit, or for anyone other
than the Company, any of the clients or customers of the Company,
at the time of said termination, or any potential clients or
customers solicited or being solicited by the Company at the time
of such termination or within the period two (2) years prior thereto,
or perform any services of any competitive nature in connection with
said clients or customers for anyone other than the Company.
(iii) The Executive further agrees that he shall not, at
any time, directly or indirectly, urge any client (or customer) or
potential client (or potential customer) of the Company to discontinue
business, in whole or in part, or not to do business, with the Company.
(iv) The Executive further agrees that he shall not, at
any time, directly or indirectly, solicit, hire or arrange to hire
any person who at the time of such hire or within two (2) years prior
to the time of such hire was an employee of the Company and was not
involuntarily terminated by the Company, for himself or for any
business entity with which he may be, or may be planning to be,
affiliated or associated, or otherwise interfere with the retention
of employees that the Company desires to retain as such.
B. The Executive expressly acknowledges and agrees (i) that the
restrictions set forth herein are reasonable, in terms of scope, duration,
geographic area, and otherwise, (ii) that the protections afforded to the
Company hereunder are necessary to protect its legitimate business interests,
and (iii) that the agreement to observe such restrictions form a material
part of the consideration for this Agreement and the Executive's employment
by the Company.
14. Confidential Information. The Executive agrees that, during the
term of his employment with the Company, and for a period of two (2) years
after the termination of his employment for any reason whatsoever, he shall
not disclose to any person or use the same in any way, other than in the
discharge of his duties under this Agreement in connection with the business
of the Company, any trade secrets or confidential or proprietary information
of the Company, including, without limitation, any information or knowledge
relating to (i) the business, operations or internal structure of the
Company, (ii) the clients (or customers) or potential clients (or potential
customers) of the Company, (iii) any method and/or procedure (such as
records, programs, systems, correspondence, or other documents), relating or
pertaining to projects developed by the Company or contemplated to be
developed by the Company, or (iv) the Company's business, which information
or knowledge the Executive shall have obtained during the term of this
Agreement, and which is otherwise of a secret or confidential nature.
Further, upon leaving the employ of the Company for any reason whatsoever,
the Executive shall
5
<PAGE>
not take with him, without prior written consent of the Board of Directors of
the Company, any documents, forms, or other reproductions of any data or any
information relating to or pertaining to the Company, any clients (or
customers) or potential clients (or potential customers) of the Company, or
any other confidential information or trade secrets.
15. Entire Agreement; Amendments, Other Agreements. This Agreement
contains the entire understanding of the Executive and the Company with
respect to employment of the Executive and supersedes any and all prior
understandings, written or oral. This Agreement may not be amended, waived,
discharged or terminated orally, but only by an instrument in writing. Any
earlier employment agreements between the Executive and the Company are
hereby terminated and shall be of no further effect after the effective date
hereof.
16. Miscellaneous.
A. Any notices required by this Agreement shall (i) be made in
writing and mailed by certified mail, return receipt requested, with adequate
postage prepaid; (ii) be deemed given when so mailed; (iii) be deemed
received by the addressee within ten (10) days after given or when the
certified mail receipt for such mail is executed, whichever if earlier; and
(iv) in the case of the Company, be mailed to its principal office, or in the
case of the Executive, be mailed to the last address that the Executive has
given to the Company.
B. This Agreement shall be binding upon and inure to the benefit
of, the parties, their successors, assigns, personal representatives,
distributees, heirs, and legatees.
C. This Agreement shall be governed by, and construed and enforced
in accordance with, the laws of the State of Maryland, without giving effect
to the principles of conflicts of law thereof.
D. 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 a location agreed to by the Company and the
Executive within fifty (50) miles of the location of the Executive's
principal place of employment, in accordance with the rules of the American
Arbitration Association then in effect. Each party will be entitled to
limited discovery, to consist of a maximum of three (3) depositions (maximum
two (2) hours each), and twenty-five (25) written interrogatories per party,
which will be completed within one hundred twenty (120) days following the
selection of the arbitrator. Judgment may be entered on the award of the
arbitrator in any court having competent jurisdiction.
E. Any failure by the Company to insist upon strict compliance with
any term or provision of this Agreement, to exercise any option, to enforce
any right, or to seek any remedy upon any breach by the Executive shall not
affect, or constitute a waiver of, the Company's right to insist upon such
strict compliance, exercise such option, enforce such right, or seek such
remedy with respect to such breach or any prior, contemporaneous, or
subsequent breach. No custom or practice of the Company at variance with any
provision of this Agreement shall affect
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or constitute a waiver of, the Company's right to demand strict compliance
with all provisions of this Agreement.
F. Any provision of this Agreement which is prohibited or
unenforceable in any jurisdiction shall, as to such jurisdiction, be deemed
severable from the remainder of this Agreement, and the remaining provisions
contained in this Agreement shall be construed to preserve to the maximum
permissible extent the intent and purposes of this Agreement. Any such
prohibition or unenforceability in any jurisdiction shall not invalidate or
render unenforceable such provision in any other jurisdiction.
G. In the event that the Executive violates the provisions of
Sections 13 and 14 above, upon notice from the Company informing him of the
nature of such violation, the Executive shall immediately terminate any
actions which constitute such violation. The existence of this right shall
not preclude any other rights and remedies at law or in equity which the
Company may have.
H. It is recognized that damages in the event of breach of any
provision of Sections 13 and 14 above by the Executive would be difficult, if
not impossible, to ascertain, and it is therefore agreed that the Company, in
addition to and without limiting any other remedy or right it may have, will
be entitled to a decree of specific performance, mandamus or other
appropriate remedy to enforce performance of such requirements.
IN WITNESS WHEREOF, the parties hereto have duly executed this Agreement
as of the day and year first hereinabove written.
I. C. ISAACS & COMPANY, L.P.
I. G. DESIGN, INC.
By: /s/ Robert J. Arnot
---------------------------------
Robert J. Arnot
Co-Chief Executive Officer
EXECUTIVE
/s/ Gerald W. Lear
------------------------------------
Gerald W. Lear
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EXECUTIVE EMPLOYMENT AGREEMENT
THIS EXECUTIVE EMPLOYMENT AGREEMENT is made this 15th day of May 1997, by
and between I. C. Isaacs & Company, L.P., a Delaware limited partnership (the
"Company"), and Gary Brashers (the "Executive").
EXPLANATORY STATEMENT
The Company desires to continue to employ the Executive as Vice President
and Chief Operating Officer on the terms and conditions herein set forth, and
the Executive has agreed to accept employment with the Company on the terms
and conditions herein set forth.
NOW, THEREFORE, in consideration of the premises and the mutual promises
made herein, the parties agree as follows:
1. Employment. The Company hereby employs the Executive as Vice
President and Chief Operating Officer and agrees to continue the Executive in
that position during the term of this Agreement.
2. Term. This Agreement shall begin May 15, 1997 and shall continue
until May 15, 1999. (the "Employment Period") Thereafter, this Agreement
shall renew automatically from Employment Year to Employment Year, subject to
the right of either party to terminate this Agreement as of the end of any
Employment Year upon sixty (60) days' prior written notice to the other
party. An "Employment Year" begins each May 15 and ends on the following May
15.
3. Base Salary. The Executive's base salary for the first Employment
Year under this Agreement (May 15, 1997 through May 15, 1999) shall be at the
rate of Two Hundred Forty Thousand Dollars ($240,000) per annum. Such base
salary may be increased based on periodic reviews by the Compensation
Committee of the Board of Directors. The Executive's base salary shall be paid
throughout the year, in accordance with normal payroll practices of the
Company.
4. Bonuses; Stock Plans. In addition to his base salary, during the
term of this Agreement, the Executive shall be entitled to participate in any
bonus and stock option plans, programs, arrangements and practices sponsored
by the Company for the benefit of executive employees serving in similar
capacities with the Company (and/or its affiliates), if any, as may be
established from time to time by the Board of Directors of the Company for
the benefit of such executive employees, in accordance with the terms of such
plans, as amended by the Company from time to time; it being understood that
there is no assurance with respect to the establishment of such plans or, if
established, the continuation of such plans during the term of this
Agreement.
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5. Other Benefits. During the term of this Agreement, the Executive
shall also be entitled to participate in or receive benefits under all of the
Company's benefit plans, programs, arrangements and practices, including
pension, disability, and group life, sickness, accident or health insurance
programs, if any, as may be established from time to time by the Board of
Directors of the Company for the benefit of executive employees serving in
similar capacities with the Company (and/or its affiliates), in accordance
with the terms of such plans, as amended by the Company from time to time; it
being understood that there is no assurance with respect to the establishment
of such plans or, if established, the continuation of such plans during the
term of this Agreement.
6. Duties.
A. During the term of this Agreement, the Executive shall serve as
Vice President and Chief Operating Officer, have such powers and shall
perform such duties as are incident and customary to his office, including
those described in the Company's By-Laws (as amended from time to time), and
shall perform such other additional executive and administrative duties and
functions commensurate with such position as from time to time shall be
assigned to him by the Board of Directors of the Company. The Executive
shall perform such additional duties and functions without separate
compensation, unless otherwise authorized by the Board.
B. The Executive shall devote his full time, attention, skill, and
energy to the performance of his duties under this Agreement, and shall
comply with all reasonable professional requests of the Company; provided,
however, that the Executive will be permitted to engage in and manage
personal investments and to participate in community and charitable affairs,
so long as such activities do not interfere with his duties under this
Agreement.
7. Vacation and Sick Leave.
A. The Executive shall be entitled to a total of four (4) weeks of
vacation each Employment Year, such vacation to be in accordance with the
terms of the Company's announced policy for executive employees, as in effect
from time to time. The Executive may take his vacation at such time or times
as shall not interfere with the performance of his duties under this
Agreement.
B. The Executive shall be entitled to paid sick leave and holidays
in accordance with the Company's announced policy for executive employees, as
in effect from time to time.
8. Expenses. The Company shall reimburse the Executive for all
reasonable expenses incurred in connection with his duties on behalf of the
Company, provided that the Executive shall keep, and present to the Company,
records and receipts relating to reimbursable expenses incurred by him. Such
records and receipts shall be maintained and presented in a format, and with
such regularity, as the Company reasonably may require in order to
substantiate
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the Company's right to claim income tax deductions for such expenses.
Without limiting the generality of the foregoing, the Executive shall be
entitled to reimbursement for any business-related travel, business-related
entertainment, whether at his residence or otherwise, and other costs and
expenses reasonably incident to the performance of his duties on behalf of
the Company.
9. Termination of Employment for Cause. Notwithstanding the provisions
of Section 2 of this Agreement, the Executive's employment (and all of his
rights and benefits under this Agreement) shall terminate immediately and
without further notice upon the happening of any one or more of the following
events:
A. The Executive has been or is guilty of (i) a criminal offense
involving moral turpitude, (ii) criminal or dishonest conduct pertaining to
the business or affairs of the Company (including, without limitation, fraud
and misappropriation), (iii) any act or omission the intended or likely
consequence of which is material injury to the Company's business, property
or reputation, which act or omission continues uncured for a period of ten
(10) days after the Executive has received written notice from the Company,
and/or (iv) gross negligence or willful misconduct which continues uncured
for a period of ten (10) days after the Executive has received written notice
from the Company;
B. The Executive persists, for a period of ten (10) days after
written notice from the Company, in a course of conduct reasonably determined
by the Board of Directors of the Company to be in violation of his duties to
the Company under this Agreement or otherwise in violation of the covenants,
agreements or obligations under the terms of this Agreement;
C. The Executive's death; or
D. The continuous and uninterrupted inability to perform the
Executive's duties on behalf of the Company, by reason of accident, mental or
physical illness or impairment, or disease, for a period of one hundred and
eighty (180) days from the first day of such inability to perform his duties.
(Subsections A, B, C, & D of this Section 9 hereinafter referred to
collectively and individually as "Cause").
In the event of a termination for Cause, the Company shall pay the
Executive his base salary through the effective date of the employment
termination, and the Executive shall immediately thereafter forfeit all
rights and benefits (other than vested benefits), including but not limited
to any right to compensation pursuant to Section 4 of this Agreement, he
would otherwise have been entitled to receive under this Agreement. The
Company and the Executive thereafter shall have no further obligations under
this Agreement except as otherwise provided in Sections 13 and 14 of this
Agreement.
10. Termination of Employment by the Company Without Cause.
Notwithstanding the provisions of Section 2 of this Agreement, the Board of
Directors may terminate the Executive's employment, as provided under this
Agreement, at any time, for reasons other than
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for Cause by notifying the Executive in writing of such termination. If the
Executive is terminated pursuant to this Section 10, (i) during the remainder
of the Non-Competition Period (as hereinafter defined), the Company shall pay
the Executive his base salary at the rate and in the manner required by
Section 3 and in effect immediately prior to the date of termination and (ii)
after the Employment Period, the Company and the Executive shall have no
further obligations under this Agreement except as otherwise provided in
Sections 13 and 14 of this Agreement.
11. Termination of Employment by the Executive. Notwithstanding the
provisions of Section 2 of this Agreement, the Executive may terminate this
Agreement at any time by giving the Board of Directors written notice of his
intent to terminate, delivered at least sixty (60) days prior to the
effective date of such termination.
Upon expiration of the sixty (60) day notice period (or such earlier date
as may be approved by the Board of Directors), the termination by the
Executive shall become effective. Upon the effective date of such
termination, the Company's obligations under Sections 3, 4 and 5 of this
Agreement shall immediately expire, except to the extent that the benefits
described in Section 5 have vested and continue after termination under the
terms of the benefit plans and programs that generally apply to executive
employees serving in similar capacities with the Company.
12. Non-Renewal. If, upon termination of the Employment Period, the
Company shall decide not to renew this Agreement and the Company does not
waive the provisions of Section 13 below, (i) during the remainder of the
Non-Competition Period, the Company shall pay the Executive his base salary
at the rate and in the manner required by Section 3 of this Agreement and in
effect immediately prior to the date of termination and (ii) after the
Employment Period, the Company and the Executive shall have no further
obligations under this Agreement except as otherwise provided in Sections 13
and 14 of this Agreement.
13. Non-Competition. The Executive and the Company recognize that due
to the nature of his employment, and his relationship with the Company, the
Executive has had and will have access to, and has acquired and will acquire,
and has assisted and will assist in developing, confidential and proprietary
information relating to the business and operations of the Company (for
purposes of this Section 13 and Section 14 below, the Company shall mean the
Company, I. G. Design, Inc., or any of its/their affiliates or successors)
including, without limitation, information with respect to their present and
prospective services, systems, products, clients, customers, agents, and
sales and marketing methods. The Executive acknowledges that such
information has been and will be of central importance to the Company's
business and that disclosure of it to others or its use by others could cause
substantial loss to the Company. The Executive and the Company also
recognize that an important part of the Executive's duties will be to develop
good will for the Company through his personal contact with the Company's
clients, and that there is a danger that this good will, a proprietary asset
of the Company, may follow the Executive if and when his relationship with
the Company is terminated.
A. The Executive agrees that, during the term of his employment
with the Company, and for a period of one (1) year after the termination of
his employment for any reason whatsoever (including the non-renewal of this
Agreement by either party):
(i) The Executive will not directly or indirectly, within the
United States, whether as a partner, proprietor, employee, consultant,
agent or otherwise, participate or engage in any business that competes
with, restricts, or interferes with the business of the Company,
including, without limitation, any business in the young men's and
women's contemporary sportswear industry.
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(ii) The Executive will not directly or indirectly (for his own
account, or for the account of others) interfere with, solicit, or accept
for himself, his benefit, or for anyone other than the Company, any of
the clients or customers of the Company, at the time of said termination,
or any potential clients or customers solicited or being solicited by the
Company at the time of such termination or within the period one (1) year
prior thereto, or perform any services of any competitive nature in
connection with said clients or customers for anyone other than the
Company.
(iii) The Executive further agrees that he shall not, at
any time, directly or indirectly, urge any client (or customer) or
potential client (or potential customer) of the Company to discontinue
business, in whole or in part, or not to do business, with the Company.
(iv) The Executive further agrees that he shall not, at any
time, directly or indirectly, solicit, hire or arrange to hire any person
who at the time of such hire or within one (1) year prior to the time of
such hire was an employee of the Company and was not involuntarily
terminated by the Company, for himself or for any business entity with
which he may be, or may be planning to be, affiliated or associated, or
otherwise interfere with the retention of employees that the Company
desires to retain as such.
B. The Executive expressly acknowledges and agrees (i) that the
restrictions set forth herein are reasonable, in terms of scope, duration,
geographic area, and otherwise, (ii) that the protections afforded to the
Company hereunder are necessary to protect its legitimate business interests,
and (iii) that the agreement to observe such restrictions form a material
part of the consideration for this Agreement and the Executive's employment
by the Company.
13. Confidential Information. The Executive agrees that, during the
term of his employment with the Company, and for a period of one (1) year
after the termination of his employment for any reason whatsoever, he shall
not disclose to any person or use the same in any way, other than in the
discharge of his duties under this Agreement in connection with the business
of the Company, any trade secrets or confidential or proprietary information
of the Company, including, without limitation, any information or knowledge
relating to (i) the business, operations or internal structure of the
Company, (ii) the clients (or customers) or potential clients (or potential
customers) of the Company, (iii) any method and/or procedure (such as
records, programs, systems, correspondence, or other documents), relating or
pertaining to projects developed by the Company or contemplated to be
developed by the Company, or (iv) the Company's business, which information
or knowledge the Executive shall
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have obtained during the term of this Agreement, and which is otherwise of a
secret or confidential nature. Further, upon leaving the employ of the
Company for any reason whatsoever, the Executive shall not take with him,
without prior written consent of the Board of Directors of the Company, any
documents, forms, or other reproductions of any data or any information
relating to or pertaining to the Company, any clients (or customers) or
potential clients (or potential customers) of the Company, or any other
confidential information or trade secrets.
14. Entire Agreement; Amendments, Other Agreements. This Agreement
contains the entire understanding of the Executive and the Company with
respect to employment of the Executive and supersedes any and all prior
understandings, written or oral. This Agreement may not be amended, waived,
discharged or terminated orally, but only by an instrument in writing. Any
earlier employment agreements between the Executive and the Company are
hereby terminated and shall be of no further effect after the effective date
hereof.
15. Miscellaneous.
A. Any notices required by this Agreement shall (i) be made in
writing and mailed by certified mail, return receipt requested, with adequate
postage prepaid; (ii) be deemed given when so mailed; (iii) be deemed
received by the addressee within ten (10) days after given or when the
certified mail receipt for such mail is executed, whichever if earlier; and
(iv) in the case of the Company, be mailed to its principal office, or in the
case of the Executive, be mailed to the last address that the Executive has
given to the Company.
B. This Agreement shall be binding upon and inure to the benefit
of, the parties, their successors, assigns, personal representatives,
distributees, heirs, and legatees.
C. This Agreement shall be governed by, and construed and enforced
in accordance with, the laws of the State of Maryland, without giving effect
to the principles of conflicts of law thereof.
D. 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 a location agreed to by the Company and the
Executive within fifty (50) miles of the location of the Executive's
principal place of employment, in accordance with the rules of the American
Arbitration Association then in effect. Each party will be entitled to
limited discovery, to consist of a maximum of three (3) depositions (maximum
two (2) hours each), and twenty-five (25) written interrogatories per party,
which will be completed within one hundred twenty (120) days following the
selection of the arbitrator. Judgment may be entered on the award of the
arbitrator in any court having competent jurisdiction.
E. Any failure by the Company to insist upon strict compliance
with any term or provision of this Agreement, to exercise any option, to
enforce any right, or to seek any remedy upon any breach by the Executive
shall not affect, or constitute a waiver of, the Company's right to insist
upon such strict compliance, exercise such option, enforce such right, or
seek such remedy with respect to such breach or any prior, contemporaneous,
or subsequent breach. No custom or practice of the Company at variance with
any provision of this Agreement shall affect
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or constitute a waiver of, the Company's right to demand strict compliance
with all provisions of this Agreement.
F. Any provision of this Agreement which is prohibited or
unenforceable in any jurisdiction shall, as to such jurisdiction, be deemed
severable from the remainder of this Agreement, and the remaining provisions
contained in this Agreement shall be construed to preserve to the maximum
permissible extent the intent and purposes of this Agreement. Any such
prohibition or unenforceability in any jurisdiction shall not invalidate or
render unenforceable such provision in any other jurisdiction.
G. In the event that the Executive violates the provisions of
Sections 13 and 14 above, upon notice from the Company informing him of the
nature of such violation, the Executive shall immediately terminate any
actions which constitute such violation. The existence of this right shall
not preclude any other rights and remedies at law or in equity which the
Company may have.
H. It is recognized that damages in the event of breach of any
provision of Sections 13 and 14 above by the Executive would be difficult, if
not impossible, to ascertain, and it is therefore agreed that the Company, in
addition to and without limiting any other remedy or right it may have, will
be entitled to a decree of specific performance, mandamus or other
appropriate remedy to enforce performance of such requirements.
IN WITNESS WHEREOF, the parties hereto have duly executed this Agreement
as of the day and year first hereinabove written.
I. C. ISAACS & COMPANY, L.L.P.
I. G. DESIGN, INC.
By: /s/ Gerald W. Lear
___________________________
Gerald W. Lear
President
EXECUTIVE
/s/ Gary Brashers
_______________________________
Gary Brashers
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EXECUTIVE EMPLOYMENT AGREEMENT
THIS EXECUTIVE EMPLOYMENT AGREEMENT is made this 15th day of May 1997, by
and between I. C. Isaacs & Company, L.P., a Delaware limited partnership (the
"Company"), and Eugene C. Wielepski (the "Executive").
EXPLANATORY STATEMENT
The Company desires to continue to employ the Executive as the Vice
President and Chief Financial Officer on the terms and conditions herein set
forth, and the Executive has agreed to accept employment with the Company on the
terms and conditions herein set forth.
NOW, THEREFORE, in consideration of the premises and the mutual promises
made herein, the parties agree as follows:
1. Employment. The Company hereby employs Vice President and Chief
Financial Officer and agrees to continue the Executive in that position during
the term of this Agreement.
2. Term. This Agreement shall begin May 15, 1997 and shall continue
until May 15, 1999. (the "Employment Period") Thereafter, this Agreement shall
renew automatically from Employment Year to Employment Year, subject to the
right of either party to terminate this Agreement as of the end of any
Employment Year upon sixty (60) days' prior written notice to the other party.
An "Employment Year" begins each May 15 and ends on the following May 15.
3. Base Salary. The Executive's base salary for the first Employment
Year under this Agreement (May 15, 1997 through May 15, 1999) shall be at the
rate of Two Hundred Thousand Dollars ($200,000) per annum. Such base salary
may be increased based on periodic reviews by the Compensation Committee of
the Board of Directors. The Executive's base salary shall be paid throughout
the year, in accordance with normal payroll practices of the Company.
4. Bonuses; Stock Plans. In addition to his base salary, during the term
of this Agreement, the Executive shall be entitled to participate in any bonus
and stock option plans, programs, arrangements and practices sponsored by the
Company for the benefit of executive employees serving in similar capacities
with the Company (and/or its affiliates), if any, as may be established from
time to time by the Board of Directors of the Company for the benefit of such
executive employees, in accordance with the terms of such plans, as amended by
the Company from time to time; it being understood that there is no assurance
with respect to the establishment of such plans or, if established, the
continuation of such plans during the term of this Agreement.
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5. Other Benefits. During the term of this Agreement, the Executive
shall also be entitled to participate in or receive benefits under all of the
Company's benefit plans, programs, arrangements and practices, including
pension, disability, and group life, sickness, accident or health insurance
programs, if any, as may be established from time to time by the Board of
Directors of the Company for the benefit of executive employees serving in
similar capacities with the Company (and/or its affiliates), in accordance with
the terms of such plans, as amended by the Company from time to time; it being
understood that there is no assurance with respect to the establishment of such
plans or, if established, the continuation of such plans during the term of this
Agreement.
6. Duties.
A. During the term of this Agreement, the Executive shall serve as
Vice President and Chief Financial Officer, have such powers and shall perform
such duties as are incident and customary to his office, including those
described in the Company's By-Laws (as amended from time to time), and shall
perform such other additional executive and administrative duties and functions
commensurate with such position as from time to time shall be assigned to him by
the Board of Directors of the Company. The Executive shall perform such
additional duties and functions without separate compensation, unless otherwise
authorized by the Board.
B. The Executive shall devote his full time, attention, skill, and
energy to the performance of his duties under this Agreement, and shall comply
with all reasonable professional requests of the Company; provided, however,
that the Executive will be permitted to engage in and manage personal
investments and to participate in community and charitable affairs, so long as
such activities do not interfere with his duties under this Agreement.
7. Vacation and Sick Leave.
A. The Executive shall be entitled to a total of four (4) weeks of
vacation each Employment Year, such vacation to be in accordance with the terms
of the Company's announced policy for executive employees, as in effect from
time to time. The Executive may take his vacation at such time or times as
shall not interfere with the performance of his duties under this Agreement.
B. The Executive shall be entitled to paid sick leave and holidays
in accordance with the Company's announced policy for executive employees, as in
effect from time to time.
8. Expenses. The Company shall reimburse the Executive for all
reasonable expenses incurred in connection with his duties on behalf of the
Company, provided that the Executive shall keep, and present to the Company,
records and receipts relating to reimbursable expenses incurred by him. Such
records and receipts shall be maintained and presented in a format, and with
such regularity, as the Company reasonably may require in order to substantiate
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<PAGE>
the Company's right to claim income tax deductions for such expenses. Without
limiting the generality of the foregoing, the Executive shall be entitled to
reimbursement for any business-related travel, business-related entertainment,
whether at his residence or otherwise, and other costs and expenses reasonably
incident to the performance of his duties on behalf of the Company.
9. Termination of Employment for Cause. Notwithstanding the provisions
of Section 2 of this Agreement, the Executive's employment (and all of his
rights and benefits under this Agreement) shall terminate immediately and
without further notice upon the happening of any one or more of the following
events:
A. The Executive has been or is guilty of (i) a criminal offense
involving moral turpitude, (ii) criminal or dishonest conduct pertaining to the
business or affairs of the Company (including, without limitation, fraud and
misappropriation), (iii) any act or omission the intended or likely consequence
of which is material injury to the Company's business, property or reputation,
which act or omission continues uncured for a period of ten (10) days after the
Executive has received written notice from the Company, and/or (iv) gross
negligence or willful misconduct which continues uncured for a period of ten
(10) days after the Executive has received written notice from the Company;
B. The Executive persists, for a period of ten (10) days after
written notice from the Company, in a course of conduct reasonably determined by
the Board of Directors of the Company to be in violation of his duties to the
Company under this Agreement or otherwise in violation of the covenants,
agreements or obligations under the terms of this Agreement;
C. The Executive's death; or
D. The continuous and uninterrupted inability to perform the
Executive's duties on behalf of the Company, by reason of accident, mental or
physical illness or impairment, or disease, for a period of one hundred and
eighty (180) days from the first day of such inability to perform his duties.
(Subsections A, B, C, & D of this Section 9 hereinafter referred to collectively
and individually as "Cause").
In the event of a termination for Cause, the Company shall pay the
Executive his base salary through the effective date of the employment
termination, and the Executive shall immediately thereafter forfeit all rights
and benefits (other than vested benefits), including but not limited to any
right to compensation pursuant to Section 4 of this Agreement, he would
otherwise have been entitled to receive under this Agreement. The Company and
the Executive thereafter shall have no further obligations under this Agreement
except as otherwise provided in Sections 13 and 14 of this Agreement.
10. Termination of Employment by the Company Without Cause.
Notwithstanding the provisions of Section 2 of this Agreement, the Board of
Directors may terminate the Executive's employment, as provided under this
Agreement, at any time, for reasons other than
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for Cause by notifying the Executive in writing of such termination. If the
Executive is terminated pursuant to this Section 10, (i) during the remainder
of the Non-Competition Period (as hereinafter defined), the Company shall
pay the Executive his base salary at the rate and in the manner required by
Section 3 and in effect immediately prior to the date of termination and (ii)
after the Employment Period, the Company and the Executive shall have no
further obligations under this Agreement except as otherwise provided in
Sections 13 and 14 of this Agreement.
11. Termination of Employment by the Executive. Notwithstanding the
provisions of Section 2 of this Agreement, the Executive may terminate this
Agreement at any time by giving the Board of Directors written notice of his
intent to terminate, delivered at least sixty (60) days prior to the effective
date of such termination.
Upon expiration of the sixty (60) day notice period (or such earlier date
as may be approved by the Board of Directors), the termination by the Executive
shall become effective. Upon the effective date of such termination, the
Company's obligations under Sections 3, 4 and 5 of this Agreement shall
immediately expire, except to the extent that the benefits described in Section
5 have vested and continue after termination under the terms of the benefit
plans and programs that generally apply to executive employees serving in
similar capacities with the Company.
12. Non-Renewal. If, upon termination of the Employment Period, the
Company shall decide not to renew this Agreement and the Company does not
waive the provisions of Section 13 below, (i) during the remainder of the
Non-Competition Period, the Company shall pay the Executive his base salary
at the rate and in the manner required by Section 3 of this Agreement and in
effect immediately prior to the date of termination and (ii) after the
Employment Period, the Company and the Executive shall have no further
obligations under this Agreement except as otherwise provided in Sections 13
and 14 of this Agreement.
13. Non-Competition. The Executive and the Company recognize that due to
the nature of his employment, and his relationship with the Company, the
Executive has had and will have access to, and has acquired and will acquire,
and has assisted and will assist in developing, confidential and proprietary
information relating to the business and operations of the Company (for purposes
of this Section 13 and Section 14 below, the Company shall mean the Company,
I. G. Design, Inc., or any of its/their affiliates or successors) including,
without limitation, information with respect to their present and prospective
services, systems, products, clients, customers, agents, and sales and marketing
methods. The Executive acknowledges that such information has been and will be
of central importance to the Company's business and that disclosure of it to
others or its use by others could cause substantial loss to the Company. The
Executive and the Company also recognize that an important part of the
Executive's duties will be to develop good will for the Company through his
personal contact with the Company's clients, and that there is a danger that
this good will, a proprietary asset of the Company, may follow the Executive if
and when his relationship with the Company is terminated.
A. The Executive agrees that, during the term of his employment with
the Company, and for a period of one (1) year after the termination of his
employment for any reason whatsoever (including the non-renewal of this
Agreement by either party):
(i) The Executive will not directly or indirectly, within
the United States, whether as a partner, proprietor, employee,
consultant, agent or otherwise, participate or engage in any business
that competes with, restricts, or interferes with the business of the
Company, including, without limitation, any business in the young
men's and women's contemporary sportswear industry.
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(ii) The Executive will not directly or indirectly (for his
own account, or for the account of others) interfere with, solicit, or
accept for himself, his benefit, or for anyone other than the Company,
any of the clients or customers of the Company, at the time of said
termination, or any potential clients or customers solicited or being
solicited by the Company at the time of such termination or within the
period one (1) year prior thereto, or perform any services of any
competitive nature in connection with said clients or customers for
anyone other than the Company.
(iii) The Executive further agrees that he shall not, at
any time, directly or indirectly, urge any client (or customer) or
potential client (or potential customer) of the Company to discontinue
business, in whole or in part, or not to do business, with the
Company.
(iv) The Executive further agrees that he shall not, at any
time, directly or indirectly, solicit, hire or arrange to hire any
person who at the time of such hire or within one (1) year prior to
the time of such hire was an employee of the Company and was not
involuntarily terminated by the Company, for himself or for any
business entity with which he may be, or may be planning to be,
affiliated or associated, or otherwise interfere with the retention of
employees that the Company desires to retain as such.
B. The Executive expressly acknowledges and agrees (i) that the
restrictions set forth herein are reasonable, in terms of scope, duration,
geographic area, and otherwise, (ii) that the protections afforded to the
Company hereunder are necessary to protect its legitimate business interests,
and (iii) that the agreement to observe such restrictions form a material part
of the consideration for this Agreement and the Executive's employment by the
Company.
14. Confidential Information. The Executive agrees that, during the term
of his employment with the Company, and for a period of one (1) year after the
termination of his employment for any reason whatsoever, he shall not disclose
to any person or use the same in any way, other than in the discharge of his
duties under this Agreement in connection with the business of the Company, any
trade secrets or confidential or proprietary information of the Company,
including, without limitation, any information or knowledge relating to (i) the
business, operations or internal structure of the Company, (ii) the clients (or
customers) or potential clients (or potential customers) of the Company, (iii)
any method and/or procedure (such as records, programs, systems, correspondence,
or other documents), relating or pertaining to projects developed by the Company
or contemplated to be developed by the Company, or (iv) the Company's
business, which information or knowledge the Executive shall have obtained
during the term of this Agreement, and which is otherwise of a secret or
confidential nature. Further, upon leaving the employ of the Company for any
reason whatsoever, the Executive shall not take with him, without prior written
consent of the Board of Directors of the Company, any
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documents, forms, or other reproductions of any data or any information
relating to or pertaining to the Company, any clients (or customers) or
potential clients (or potential customers) of the Company, or any other
confidential information or trade secrets.
15. Entire Agreement; Amendments, Other Agreements. This Agreement
contains the entire understanding of the Executive and the Company with respect
to employment of the Executive and supersedes any and all prior understandings,
written or oral. This Agreement may not be amended, waived, discharged or
terminated orally, but only by an instrument in writing. Any earlier employment
agreements between the Executive and the Company are hereby terminated and shall
be of no further effect after the effective date hereof.
16. Miscellaneous.
A. Any notices required by this Agreement shall (i) be made in
writing and mailed by certified mail, return receipt requested, with adequate
postage prepaid; (ii) be deemed given when so mailed; (iii) be deemed received
by the addressee within ten (10) days after given or when the certified mail
receipt for such mail is executed, whichever if earlier; and (iv) in the case of
the Company, be mailed to its principal office, or in the case of the Executive,
be mailed to the last address that the Executive has given to the Company.
B. This Agreement shall be binding upon and inure to the benefit of,
the parties, their successors, assigns, personal representatives, distributees,
heirs, and legatees.
C. This Agreement shall be governed by, and construed and enforced
in accordance with, the laws of the State of Maryland, without giving effect to
the principles of conflicts of law thereof.
D. 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 a location agreed to by the Company and the Executive
within fifty (50) miles of the location of the Executive's principal place of
employment, in accordance with the rules of the American Arbitration Association
then in effect. Each party will be entitled to limited discovery, to consist of
a maximum of three (3) depositions (maximum two (2) hours each), and twenty-five
(25) written interrogatories per party, which will be completed within one
hundred twenty (120) days following the selection of the arbitrator. Judgment
may be entered on the award of the arbitrator in any court having competent
jurisdiction.
E. Any failure by the Company to insist upon strict compliance with
any term or provision of this Agreement, to exercise any option, to enforce any
right, or to seek any remedy upon any breach by the Executive shall not affect,
or constitute a waiver of, the Company's right to insist upon such strict
compliance, exercise such option, enforce such right, or seek such remedy with
respect to such breach or any prior, contemporaneous, or subsequent breach. No
custom or practice of the Company at variance with any provision of this
Agreement shall affect
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or constitute a waiver of, the Company's right to demand strict compliance
with all provisions of this Agreement.
F. Any provision of this Agreement which is prohibited or
unenforceable in any jurisdiction shall, as to such jurisdiction, be deemed
severable from the remainder of this Agreement, and the remaining provisions
contained in this Agreement shall be construed to preserve to the maximum
permissible extent the intent and purposes of this Agreement. Any such
prohibition or unenforceability in any jurisdiction shall not invalidate or
render unenforceable such provision in any other jurisdiction.
G. In the event that the Executive violates the provisions of
Sections 13 and 14 above, upon notice from the Company informing him of the
nature of such violation, the Executive shall immediately terminate any actions
which constitute such violation. The existence of this right shall not preclude
any other rights and remedies at law or in equity which the Company may have.
H. It is recognized that damages in the event of breach of any
provision of Sections 13 and 14 above by the Executive would be difficult, if
not impossible, to ascertain, and it is therefore agreed that the Company, in
addition to and without limiting any other remedy or right it may have, will be
entitled to a decree of specific performance, mandamus or other appropriate
remedy to enforce performance of such requirements.
IN WITNESS WHEREOF, the parties hereto have duly executed this Agreement as
of the day and year first hereinabove written.
I. C. ISAACS & COMPANY, L.P.
I. G. DESIGN, INC.
By: /s/ Gerald W. Lear
------------------------
Gerald W. Lear
President
EXECUTIVE
/s/ Eugene C. Wielepski
-------------------------
Eugene C. Wielepski
<PAGE>
EXECUTIVE EMPLOYMENT AGREEMENT
THIS EXECUTIVE EMPLOYMENT AGREEMENT is made this 15th day of May 1997, by
and between I. C. Isaacs & Company, L.P., a Delaware limited partnership (the
"Company"), and Thomas Ormandy (the "Executive").
EXPLANATORY STATEMENT
---------------------
The Company desires to continue to employ the Executive as Vice President
on the terms and conditions herein set forth, and the Executive has agreed to
accept employment with the Company on the terms and conditions herein set forth.
NOW, THEREFORE, in consideration of the premises and the mutual promises
made herein, the parties agree as follows:
1. Employment. The Company hereby employs the Executive as Vice
President and agrees to continue the Executive in that position during the term
of this Agreement.
2. Term. This Agreement shall begin May 15, 1997 and shall continue
until May 15, 1999. (the "Employment Period") Thereafter, this Agreement
shall renew automatically from Employment Year to Employment Year, subject to
the right of either party to terminate this Agreement as of the end of any
Employment Year upon sixty (60) days' prior written notice to the other
party. An "Employment Year" begins each May 15 and ends on the following May
15.
3. Base Salary. The Executive's base salary for the first Employment
Year under this Agreement (May 15, 1997 through May 15, 1999) shall be at the
rate of Three Hundred Thousand Dollars ($300,000) per annum. Such base
salary may be increased based on periodic reviews by the Compensation
Committee of the Board of Directors. The Executive's base salary shall be
paid throughout the year, in accordance with normal payroll practices of the
Company.
4. Bonuses; Stock Plans. In addition to his base salary, during the
term of this Agreement, the Executive shall be eligible to receive a bonus of
up to $60,000 per year, the amount of such bonus to be determined by the
Board of Directors in its sole discretion, and shall be entitled to
participate in any stock option plans, programs, arrangements and practices
sponsored by the Company for the benefit of executive employees serving in
similar capacities with the Company (and/or its affiliates), if any, as may
be established from time to time by the Board of Directors of the Company for
the benefit of such executive employees, in accordance with the terms of such
plans, as amended by the Company from time to time; it being understood that
there is no assurance with respect to the establishment of such plans or, if
established, the continuation of such plans during the term of this
Agreement.
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<PAGE>
5. Other Benefits. During the term of this Agreement, the Executive
shall also be entitled to participate in or receive benefits under all of the
Company's benefit plans, programs, arrangements and practices, including
pension, disability, and group life, sickness, accident or health insurance
programs, if any, as may be established from time to time by the Board of
Directors of the Company for the benefit of executive employees serving in
similar capacities with the Company (and/or its affiliates), in accordance with
the terms of such plans, as amended by the Company from time to time; it being
understood that there is no assurance with respect to the establishment of such
plans or, if established, the continuation of such plans during the term of this
Agreement.
6. Duties.
A. During the term of this Agreement, the Executive shall serve
as Vice President, have such powers and shall perform such duties as are
incident and customary to his office, including those described in the
Company's By-Laws (as amended from time to time), and shall perform such
other additional executive and administrative duties and functions
commensurate with such position as from time to time shall be assigned to him
by the Board of Directors of the Company. The Executive shall perform such
additional duties and functions without separate compensation, unless
otherwise authorized by the Board.
B. The Executive shall devote his full time, attention, skill, and
energy to the performance of his duties under this Agreement, and shall comply
with all reasonable professional requests of the Company; provided, however,
that the Executive will be permitted to engage in and manage personal
investments and to participate in community and charitable affairs, so long as
such activities do not interfere with his duties under this Agreement.
7. Vacation and Sick Leave.
A. The Executive shall be entitled to a total of four (4) weeks of
vacation each Employment Year, such vacation to be in accordance with the terms
of the Company's announced policy for executive employees, as in effect from
time to time. The Executive may take his vacation at such time or times as
shall not interfere with the performance of his duties under this Agreement.
B. The Executive shall be entitled to paid sick leave and holidays
in accordance with the Company's announced policy for executive employees, as in
effect from time to time.
8. Expenses. The Company shall reimburse the Executive for all
reasonable expenses incurred in connection with his duties on behalf of the
Company, provided that the Executive shall keep, and present to the Company,
records and receipts relating to reimbursable expenses incurred by him. Such
records and receipts shall be maintained and presented in a format, and with
such regularity, as the Company reasonably may require in order to substantiate
the Company's right to claim income tax deductions for such expenses. Without
limiting the
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<PAGE>
generality of the foregoing, the Executive shall be entitled to reimbursement
for any business-related travel, business-related entertainment, whether at
his residence or otherwise, and other costs and expenses reasonably incident
to the performance of his duties on behalf of the Company.
9. Termination of Employment for Cause. Notwithstanding the provisions
of Section 2 of this Agreement, the Executive's employment (and all of his
rights and benefits under this Agreement) shall terminate immediately and
without further notice upon the happening of any one or more of the following
events:
A. The Executive has been or is guilty of (i) a criminal offense
involving moral turpitude, (ii) criminal or dishonest conduct pertaining to
the business or affairs of the Company (including, without limitation, fraud
and misappropriation), (iii) any act or omission the intended or likely
consequence of which is material injury to the Company's business, property
or reputation, which act or omission continues uncured for a period of ten
(10) days after the Executive has received written notice from the Company,
and/or (iv) gross negligence or willful misconduct which continues uncured
for a period of ten (10) days after the Executive has received written notice
from the Company;
B. The Executive persists, for a period of ten (10) days after
written notice from the Company, in a course of conduct reasonably determined
by the Board of Directors of the Company to be in violation of his duties to
the Company under this Agreement or otherwise in violation of the covenants,
agreements or obligations under the terms of this Agreement;
C. The Executive's death; or
D. The continuous and uninterrupted inability to perform the
Executive's duties on behalf of the Company, by reason of accident, mental or
physical illness or impairment, or disease, for a period of one hundred and
eighty (180) days from the first day of such inability to perform his duties.
(Subsections A, B, C, & D of this Section 9 hereinafter referred to collectively
and individually as "Cause").
In the event of a termination for Cause, the Company shall pay the
Executive his base salary through the effective date of the employment
termination, and the Executive shall immediately thereafter forfeit all
rights and benefits (other than vested benefits), including but not limited
to any right to compensation pursuant to Section 4 of this Agreement, he
would otherwise have been entitled to receive under this Agreement. The
Company and the Executive thereafter shall have no further obligations under
this Agreement except as otherwise provided in Sections 13 and 14 of this
Agreement.
10. Termination of Employment by the Company Without Cause.
Notwithstanding the provisions of Section 2 of this Agreement, the Board of
Directors may terminate the Executive's employment, as provided under this
Agreement, at any time, for reasons other than
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<PAGE>
for Cause by notifying the Executive in writing of such termination. If the
Executive is terminated pursuant to this Section 10, (i) during the remainder
of the Non-Competition Period (as herein after defined), the Company shall
pay the Executive his base salary at the rate and in the manner required by
Section 3 and in effect immediately prior to the date of termination and (ii)
after the Employment Period, the Company and the Executive shall have no
further obligations under this Agreement except as otherwise provided in
Sections 13 and 14 of this Agreement.
11. Termination of Employment by the Executive. Notwithstanding the
provisions of Section 2 of this Agreement, the Executive may terminate this
Agreement at any time by giving the Board of Directors written notice of his
intent to terminate, delivered at least sixty (60) days prior to the
effective date of such termination.
Upon expiration of the sixty (60) day notice period (or such earlier date
as may be approved by the Board of Directors), the termination by the
Executive shall become effective. Upon the effective date of such
termination, the Company's obligations under Sections 3, 4 and 5 of this
Agreement shall immediately expire, except to the extent that the benefits
described in Section 5 have vested and continue after termination under the
terms of the benefit plans and programs that generally apply to executive
employees serving in similar capacities with the Company.
12. Non-Renewal. If, upon termination of the Employment Period, the
Company shall decide not to renew this Agreement and the Company does not
waive the provisions of Section 13 below, (i) during the remainder of the
Non-Competition Period, the Company shall pay the Executive his base salary
at the rate and in the manner required by Section 3 of this Agreement and in
effect immediately prior to the date of termination and (ii) after the
Employment Period, the Company and the Executive shall have no further
obligations under this Agreement except as otherwise provided in Sections 13
and 14 of this Agreement.
13. Non-Competition. The Executive and the Company recognize that due
to the nature of his employment, and his relationship with the Company, the
Executive has had and will have access to, and has acquired and will acquire,
and has assisted and will assist in developing, confidential and proprietary
information relating to the business and operations of the Company (for
purposes of this Section 13 and Section 14 below, the Company shall mean the
Company, I. G. Design, Inc., or any of its/their affiliates or successors)
including, without limitation, information with respect to their present and
prospective services, systems, products, clients, customers, agents, and
sales and marketing methods. The Executive acknowledges that such
information has been and will be of central importance to the Company's
business and that disclosure of it to others or its use by others could cause
substantial loss to the Company. The Executive and the Company also
recognize that an important part of the Executive's duties will be to develop
good will for the Company through his personal contact with the Company's
clients, and that there is a danger that this good will, a proprietary asset
of the Company, may follow the Executive if and when his relationship with
the Company is terminated.
A. The Executive agrees that, during the term of his employment
with the Company, and for a period of one (1) year after the termination of
his employment for any reason whatsoever (including the non-renewal of this
Agreement by either party):
(i) The Executive will not directly or indirectly, within
the United States, whether as a partner, proprietor, employee,
consultant, agent or otherwise, participate or engage in any business
that competes with, restricts, or interferes with the business of the
Company, including, without limitation, any business in the young
men's and women's contemporary sportswear industry.
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<PAGE>
(ii) The Executive will not directly or indirectly (for his
own account, or for the account of others) interfere with, solicit, or
accept for himself, his benefit, or for anyone other than the Company,
any of the clients or customers of the Company, at the time of said
termination, or any potential clients or customers solicited or being
solicited by the Company at the time of such termination or within the
period one (1) year prior thereto, or perform any services of any
competitive nature in connection with said clients or customers for
anyone other than the Company.
(iii) The Executive further agrees that he shall not, at
any time, directly or indirectly, urge any client (or customer) or
potential client (or potential customer) of the Company to discontinue
business, in whole or in part, or not to do business, with the
Company.
(iv) The Executive further agrees that he shall not, at any
time, directly or indirectly, solicit, hire or arrange to hire any
person who at the time of such hire or within one (1) year prior to
the time of such hire was an employee of the Company and was not
involuntarily terminated by the Company, for himself or for any
business entity with which he may be, or may be planning to be,
affiliated or associated, or otherwise interfere with the retention of
employees that the Company desires to retain as such.
B. The Executive expressly acknowledges and agrees (i) that the
restrictions set forth herein are reasonable, in terms of scope, duration,
geographic area, and otherwise, (ii) that the protections afforded to the
Company hereunder are necessary to protect its legitimate business interests,
and (iii) that the agreement to observe such restrictions form a material
part of the consideration for this Agreement and the Executive's employment
by the Company.
14. Confidential Information. The Executive agrees that, during the term
of his employment with the Company, and for a period of one (1) year after the
termination of his employment for any reason whatsoever, he shall not disclose
to any person or use the same in any way, other than in the discharge of his
duties under this Agreement in connection with the business of the Company, any
trade secrets or confidential or proprietary information of the Company,
including, without limitation, any information or knowledge relating to (i) the
business, operations or internal structure of the Company, (ii) the clients (or
customers) or potential clients (or potential customers) of the Company, (iii)
any method and/or procedure (such as records, programs, systems, correspondence,
or other documents), relating or pertaining to projects developed by the Company
or contemplated to be developed by the Company, or (iv) the Company's
business, which information or knowledge the Executive shall have obtained
during the term of this Agreement, and which is otherwise of a secret or
confidential nature. Further, upon leaving the employ of the Company for any
reason whatsoever, the Executive shall
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<PAGE>
not take with him, without prior written consent of the Board of Directors of
the Company, any documents, forms, or other reproductions of any data or any
information relating to or pertaining to the Company, any clients (or
customers) or potential clients (or potential customers) of the Company, or
any other confidential information or trade secrets.
15. Entire Agreement; Amendments, Other Agreements. This Agreement
contains the entire understanding of the Executive and the Company with
respect to employment of the Executive and supersedes any and all prior
understandings, written or oral. This Agreement may not be amended, waived,
discharged or terminated orally, but only by an instrument in writing. Any
earlier employment agreements between the Executive and the Company are
hereby terminated and shall be of no further effect after the effective date
hereof.
16. Miscellaneous.
A. Any notices required by this Agreement shall (i) be made in
writing and mailed by certified mail, return receipt requested, with adequate
postage prepaid; (ii) be deemed given when so mailed; (iii) be deemed
received by the addressee within ten (10) days after given or when the
certified mail receipt for such mail is executed, whichever if earlier; and
(iv) in the case of the Company, be mailed to its principal office, or in the
case of the Executive, be mailed to the last address that the Executive has
given to the Company.
B. This Agreement shall be binding upon and inure to the benefit
of, the parties, their successors, assigns, personal representatives,
distributees, heirs, and legatees.
C. This Agreement shall be governed by, and construed and enforced
in accordance with, the laws of the State of Maryland, without giving effect
to the principles of conflicts of law thereof.
D. 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 a location agreed to by the Company and the
Executive within fifty (50) miles of the location of the Executive's
principal place of employment, in accordance with the rules of the American
Arbitration Association then in effect. Each party will be entitled to
limited discovery, to consist of a maximum of three (3) depositions (maximum
two (2) hours each), and twenty-five (25) written interrogatories per party,
which will be completed within one hundred twenty (120) days following the
selection of the arbitrator. Judgment may be entered on the award of the
arbitrator in any court having competent jurisdiction.
E. Any failure by the Company to insist upon strict compliance
with any term or provision of this Agreement, to exercise any option, to
enforce any right, or to seek any remedy upon any breach by the Executive
shall not affect, or constitute a waiver of, the Company's right to insist
upon such strict compliance, exercise such option, enforce such right, or
seek such remedy with respect to such breach or any prior, contemporaneous,
or subsequent breach. No
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<PAGE>
custom or practice of the Company at variance with any provision of this
Agreement shall affect or constitute a waiver of, the Company's right to
demand strict compliance with all provisions of this Agreement.
F. Any provision of this Agreement which is prohibited or
unenforceable in any jurisdiction shall, as to such jurisdiction, be deemed
severable from the remainder of this Agreement, and the remaining provisions
contained in this Agreement shall be construed to preserve to the maximum
permissible extent the intent and purposes of this Agreement. Any such
prohibition or unenforceability in any jurisdiction shall not invalidate or
render unenforceable such provision in any other jurisdiction.
G. In the event that the Executive violates the provisions of
Sections 13 and 14 above, upon notice from the Company informing him of the
nature of such violation, the Executive shall immediately terminate any actions
which constitute such violation. The existence of this right shall not preclude
any other rights and remedies at law or in equity which the Company may have.
H. It is recognized that damages in the event of breach of any
provision of Sections 13 and 14 above by the Executive would be difficult, if
not impossible, to ascertain, and it is therefore agreed that the Company, in
addition to and without limiting any other remedy or right it may have, will
be entitled to a decree of specific performance, mandamus or other
appropriate remedy to enforce performance of such requirements.
IN WITNESS WHEREOF, the parties hereto have duly executed this Agreement
as of the day and year first hereinabove written.
I. C. ISAACS & COMPANY, L.P.
I. G. DESIGN, INC.
By: /s/ Gerald W. Lear
--------------------------------
Gerald W. Lear
President
EXECUTIVE
/s/ Thomas Ormandy
---------------------------------
Thomas Ormandy
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<PAGE>
I. G. DESIGN, INC.
1997 OMNIBUS STOCK PLAN
1. Establishment, Purpose and Types of Awards
I. G. Design, Inc. hereby establishes the I. G. DESIGN, INC. 1997 OMNIBUS
STOCK PLAN (the "Plan"). The purpose of the Plan is to promote the long-term
growth and profitability of I. G. Design, Inc. (the "Corporation") by (i)
providing key people with incentives to improve stockholder value and to
contribute to the growth and financial success of the Corporation, and (ii)
enabling the Corporation to attract, retain and reward the best-available
persons for positions of substantial responsibility.
The Plan permits the granting of stock options (including incentive stock
options qualifying under Code section 422 and nonqualified stock options), stock
appreciation rights, restricted or unrestricted stock awards, phantom stock,
performance awards, or any combination of the foregoing.
2. Definitions
Under this Plan, except where the context otherwise indicates, the
following definitions apply:
(a) "Affiliate" shall mean any entity, whether now or hereafter existing,
which controls, is controlled by, or is under common control with, the
Corporation (including, but not limited to, joint ventures, limited liability
companies, and partnerships). 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 entity.
(b) "Award" shall mean any stock option, stock appreciation right, stock
award, phantom stock award, or performance award.
(c) "Board" shall mean the Board of Directors of the Corporation.
(d) "Code" shall mean the Internal Revenue Code of 1986, as amended, and
any regulations promulgated thereunder.
(e) "Common Stock" shall mean shares of common stock of the Corporation,
par value of $0.0001 per share.
(f) "Exchange Act" shall mean the Securities Exchange Act of 1934, as
amended.
(g) "Fair Market Value" of a share of the Corporation's Common Stock for
any purpose on a particular date shall be determined in a manner such as the
Administrator shall in good faith determine to be appropriate; provided that in
the event the Common Stock shall become registered under Section 12 of the
Exchange Act, then thereafter the Fair Market Value of the Corporation's Common
Stock for any purpose on a particular date shall mean the last reported sale
price per share of Common Stock, regular way, on such date or, in case no such
sale takes place on such date, the average of the closing bid and asked prices,
regular way, 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 if the Common Stock is not so listed or admitted to
trading or included for quotation, the last quoted price, or if the Common Stock
is not so quoted, the average of the high bid and low asked prices, regular way,
in the over-the-counter market, as reported by the National Association of
Securities Dealers, Inc. Automated Quotation System 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, regular way, as furnished by a
professional market maker making a market in the
<PAGE>
Common Stock as selected in good faith by the Administrator or by such other
source or sources as shall be selected in good faith by the Administrator. If,
as the case may be, the relevant date 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, any
business day.
(h) "Grant Agreement" shall mean a written document memorializing the
terms and conditions of an Award granted pursuant to the Plan and shall
incorporate the terms of the Plan.
(i) "Parent" shall mean a corporation, whether now or hereafter existing,
within the meaning of the definition of "parent corporation" provided in Code
section 424(e), or any successor thereto.
(j) "Subsidiary" and "subsidiaries" shall mean only a corporation or
corporations, whether now or hereafter existing, within the meaning of the
definition of "subsidiary corporation" provided in Section 424(f) of the Code,
or any successor thereto.
3. Administration
(a) Administration of the Plan. The Plan shall be administered by the
Board or by such committee or committees as may be appointed by the Board from
time to time (the Board, committee or committees hereinafter referred to as the
"Administrator").
(b) Powers of the Administrator. The Administrator shall have all the
powers vested in it by the terms of the Plan, such powers to include authority,
in its sole and absolute discretion, to grant Awards under the Plan, prescribe
Grant Agreements evidencing such Awards and establish programs for granting
Awards.
The Administrator shall have full power and authority to take all other
actions necessary to carry out the purpose and intent of the Plan, including,
but not limited to, the authority to: (i) determine the eligible persons to
whom, and the time or times at which Awards shall be granted; (ii) determine the
types of Awards to be granted; (iii) determine the number of shares to be
covered by or used for reference purposes for each Award; (iv) impose such
terms, limitations, restrictions and conditions upon any such Award as the
Administrator shall deem appropriate; (v) modify, amend, extend or renew
outstanding Awards, or accept the surrender of outstanding Awards and substitute
new Awards (provided however, that, except as provided in Section 7(d) of the
Plan, any modification that would materially adversely affect any outstanding
Award shall not be made without the consent of the holder); (vi) accelerate or
otherwise change the time in which an Award may be exercised or becomes payable
and to waive or accelerate the lapse, in whole or in part, of any restriction or
condition with respect to such Award, including, but not limited to, any
restriction or condition with respect to the vesting or exercisability of an
Award following termination of any grantee's employment; and (vii) establish
objectives and conditions, if any, for earning Awards and determining whether
Awards will be paid after the end of a performance period.
The Administrator shall have full power and authority, in its sole and
absolute discretion, to administer and interpret the Plan and to adopt and
interpret such rules, regulations, agreements, guidelines and instruments for
the administration of the Plan and for the conduct of its business as the
Administrator deems necessary or advisable.
(c) Non-Uniform Determinations. The Administrator's determinations under
the Plan (including without limitation, determinations of the persons to receive
Awards, the form, amount and timing of such Awards, the terms and provisions of
such Awards and the Grant Agreements evidencing such Awards) need not
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<PAGE>
be uniform and may be made by the Administrator selectively among persons who
receive, or are eligible to receive, Awards under the Plan, whether or not such
persons are similarly situated.
(d) Limited Liability. To the maximum extent permitted by law, no member
of the Administrator shall be liable for any action taken or decision made in
good faith relating to the Plan or any Award thereunder.
(e) Indemnification. To the maximum extent permitted by law and by the
Corporation's charter and by-laws, the members of the Administrator shall be
indemnified by the Corporation in respect of all their activities under the
Plan.
(f) Effect of Administrator's Decision. All actions taken and decisions
and determinations made by the Administrator on all matters relating to the Plan
pursuant to the powers vested in it hereunder shall be in the Administrator's
sole and absolute discretion and shall be conclusive and binding on all parties
concerned, including the Corporation, its stockholders, any participants in the
Plan and any other employee of the Corporation, and their respective successors
in interest.
4. Shares Available for the Plan; Maximum Awards
Subject to adjustments as provided in Section 7(d) of the Plan, the shares
of Common Stock that may be issued with respect to Awards granted under the Plan
shall not exceed an aggregate of 500,000 shares of Common Stock after the
Company's initial public offering. The Corporation shall reserve such number of
shares for Awards under the Plan, subject to adjustments as provided in Section
7(d) of the Plan. If any Award, or portion of an Award, under the Plan expires
or terminates unexercised, becomes unexercisable or is forfeited or otherwise
terminated, surrendered or canceled as to any shares, or if any shares of Common
Stock are surrendered to the Corporation in connection with any Award (whether
or not such surrendered shares were acquired pursuant to any Award), the shares
subject to such Award and the surrendered shares shall thereafter be available
for further Awards under the Plan; provided, however, that any such shares that
are surrendered to the Corporation in connection with any Award or that are
otherwise forfeited after issuance shall not be available for purchase pursuant
to incentive stock options intended to qualify under Code section 422.
5. Participation
Participation in the Plan shall be open to all employees, officers,
directors and consultants of the Corporation, or of any Affiliate of the
Corporation, as may be selected by the Administrator from time to time.
6. Awards
The Administrator, in its sole discretion, establishes the terms of all
Awards granted under the Plan. Awards may be granted individually or in tandem
with other types of Awards. All Awards are subject to the terms and conditions
provided in the Grant Agreement.
(a) Stock Options. The Administrator may from time to time grant to
eligible participants Awards of incentive stock options as that term is defined
in Code section 422 or nonqualified stock options; provided, however, that
Awards of incentive stock options shall be limited to employees of the
Corporation or of any Parent or Subsidiary of the Corporation. Options intended
to qualify as incentive stock options under Code section 422 must have an
exercise price at least equal to Fair Market Value on the date of grant, but
nonqualified stock options may be granted with an exercise price less than Fair
Market Value. No stock option shall be an incentive stock option unless so
designated by the Administrator at the time of grant or in the Grant Agreement
evidencing such stock option.
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<PAGE>
(b) Stock Appreciation Rights. The Administrator may from time to time
grant to eligible participants Awards of Stock Appreciation Rights ("SAR"). An
SAR entitles the grantee to receive, subject to the provisions of the Plan and
the Grant Agreement, a payment having an aggregate value equal to the product of
(i) the excess of (A) the Fair Market Value on the exercise date of one share of
Common Stock over (B) the base price per share specified in the Grant Agreement,
times (ii) the number of shares specified by the SAR, or portion thereof, which
is exercised. Payment by the Corporation of the amount receivable upon any
exercise of an SAR may be made by the delivery of Common Stock or cash, or any
combination of Common Stock and cash, as determined in the sole discretion of
the Administrator. If upon settlement of the exercise of an SAR a grantee is to
receive a portion of such payment in shares of Common Stock, the number of
shares shall be determined by dividing such portion by the Fair Market Value of
a share of Common Stock on the exercise date. No fractional shares shall be
used for such payment and the Administrator shall determine whether cash shall
be given in lieu of such fractional shares or whether such fractional shares
shall be eliminated.
(c) Stock Awards. The Administrator may from time to time grant
restricted or unrestricted stock Awards to eligible participants in such
amounts, on such terms and conditions, and for such consideration, including no
consideration or such minimum consideration as may be required by law, as it
shall determine. A stock Award may be paid in Common Stock, in cash, or in a
combination of Common Stock and cash, as determined in the sole discretion of
the Administrator.
(d) Phantom Stock. The Administrator may from time to time grant Awards
to eligible participants denominated in stock-equivalent units ("phantom stock")
in such amounts and on such terms and conditions as it shall determine. Phantom
stock units granted to a participant shall be credited to a bookkeeping reserve
account solely for accounting purposes and shall not require a segregation of
any of the Corporation's assets. An Award of phantom stock may be settled in
Common Stock, in cash, or in a combination of Common Stock and cash, as
determined in the sole discretion of the Administrator. Except as otherwise
provided in the applicable Grant Agreement, the grantee shall not have the
rights of a stockholder with respect to any shares of Common Stock represented
by a phantom stock unit solely as a result of the grant of a phantom stock unit
to the grantee.
(e) Performance Awards. The Administrator may, in its discretion, grant
performance awards which become payable on account of attainment of one or more
performance goals established by the Administrator. Performance awards may be
paid by the delivery of Common Stock or cash, or any combination of Common Stock
and cash, as determined in the sole discretion of the Administrator.
Performance goals established by the Administrator may be based on the
Corporation's or an Affiliate's operating income or one or more other business
criteria selected by the Administrator that apply to an individual or group of
individuals, a business unit, or the Corporation or an Affiliate as a whole,
over such performance period as the Administrator may designate.
7. Miscellaneous
(a) Withholding of Taxes. Grantees and holders of Awards shall pay to the
Corporation, or make provision satisfactory to the Administrator for payment of,
any taxes required to be withheld in respect of Awards under the Plan no later
than the date of the event creating the tax liability. The Corporation may, to
the extent permitted by law, deduct any such tax obligations from any payment of
any kind otherwise due to the grantee or holder of an Award. In the event that
payment to the Corporation of such tax obligations is made in shares of Common
Stock, such shares shall be valued at Fair Market Value on the applicable date
for such purposes.
(b) Loans. The Corporation may make or guarantee loans to grantees to
assist grantees in exercising Awards and satisfying any withholding tax
obligations.
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<PAGE>
(c) Transferability. Except as otherwise determined by the Administrator,
and in any event in the case of an incentive stock option or a stock
appreciation right granted with respect to an incentive stock option, no Award
granted under the Plan shall be transferable by a grantee otherwise than by will
or the laws of descent and distribution. Unless otherwise determined by the
Administrator in accord with the provisions of the immediately preceding
sentence, an Award may be exercised during the lifetime of the grantee, only by
the grantee or, during the period the grantee is under a legal disability, by
the grantee's guardian or legal representative.
(d) Adjustments; Business Combinations. In the event of changes in the
Common Stock of the Corporation by reason of any stock dividend, split-up,
recapitalization, merger, consolidation, business combination or exchange of
shares and the like, the Administrator shall, in its discretion, make
appropriate adjustments to the maximum number and kind of shares reserved for
issuance or with respect to which Awards may be granted under the Plan as
provided in Section 4 of the Plan and to the number, kind and price of shares
covered by Awards granted, and shall, in its discretion and without the consent
of holders of Awards, make any other adjustments in Awards, including but not
limited to reducing the number of shares subject to Awards or providing or
mandating alternative settlement methods such as settlement of the Awards in
cash or in shares of Common Stock or other securities of the Corporation or of
any other entity, or in any other matters which relate to Awards as the
Administrator shall, in its sole discretion, determine to be necessary or
appropriate.
Notwithstanding anything in the Plan to the contrary and without the
consent of holders of Awards, the Administrator, in its sole discretion, may
make any modifications to any Awards, including but not limited to cancellation,
forfeiture, surrender or other termination of the Awards in whole or in part
regardless of the vested status of the Award, in order to facilitate any
business combination that is authorized by the Board to comply with requirements
for treatment as a pooling of interests transaction for accounting purposes
under generally accepted accounting principles.
The Administrator is authorized to make, in its discretion and without the
consent of holders of Awards, adjustments in the terms and conditions of, and
the criteria included in, Awards in recognition of unusual or nonrecurring
events affecting the Corporation, or the financial statements of the Corporation
or any Subsidiary, or of changes in applicable laws, regulations, or accounting
principles, whenever the Administrator determines that such adjustments are
appropriate in order to prevent dilution or enlargement of the benefits or
potential benefits intended to be made available under the Plan.
(e) Termination, Amendment and Modification of the Plan. The Board may
terminate, amend or modify the Plan or any portion thereof at any time.
(f) Non-Guarantee of Employment or Service. Nothing in the Plan or in any
Grant Agreement thereunder shall confer any right on an individual to continue
in the service of the Corporation or shall interfere in any way with the right
of the Corporation to terminate such service at any time.
(g) No Trust or Fund Created. Neither the Plan nor any Award shall create
or be construed to create a trust or separate fund of any kind or a fiduciary
relationship between the Corporation and a grantee or any other person. To the
extent that any grantee or other person acquires a right to receive payments
from the Corporation pursuant to an Award, such right shall be no greater than
the right of any unsecured general creditor of the Corporation.
(h) Governing Law. The validity, construction and effect of the Plan, of
Grant Agreements entered into pursuant to the Plan, and of any rules,
regulations, determinations or decisions made by the Administrator relating to
the Plan or such Grant Agreements, and the rights of any and all persons having
or claiming to have any interest therein or thereunder, shall be determined
exclusively in accordance with applicable federal laws and the laws of the State
of Delaware, without regard to its conflict of laws principles.
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<PAGE>
(i) Effective Date; Termination Date. The Plan is effective as of the
date on which the Plan was adopted by the Board, subject to approval of the
stockholders within twelve months before or after such date. No Award shall be
granted under the Plan after the close of business on the day immediately
preceding the tenth anniversary of the effective date of the Plan. Subject to
other applicable provisions of the Plan, all Awards made under the Plan prior to
such termination of the Plan shall remain in effect until such Awards have been
satisfied or terminated in accordance with the Plan and the terms of such
Awards.
Date Approved by the Board: May 15, 1997
Date Approved by the Stockholders: May 15, 1997
<PAGE>
ACCOUNTS FINANCING AGREEMENT
[SECURITY AGREEMENT]
BETWEEN
CONGRESS FINANCIAL CORPORATION
1133 AVENUE OF THE AMERICAS
NEW YORK, NEW YORK 10036
AND
I.C. ISAACS & COMPANY L.P.
---------------------------------------
(NAME OF CLIENT)
3480 Bank Street
---------------------------------------
(STREET ADDRESS)
Baltimore, Maryland 21224
---------------------------------------
(CITY) (STATE)
[LOGO] A CoreStates Company
<PAGE>
June 16, 1992
Congress Financial Corporation
1133 Avenue of the Americas
New York, New York 10036
Gentlemen:
This Agreement states the terms and conditions upon which, effective as
of the date of acceptance by you, we may obtain loans and other financial
accommodations from you for our general corporate and business purposes upon
the security referred to herein. We shall be, if two or more in number,
jointly and severally bound hereunder. See Rider annexed hereto for language
to be inserted after asterisks in applicable Sections hereof.
Section 1. DEFINITIONS.
1.1. All terms used herein which are defined in Article 1 or Article 9 of
the Uniform Commercial Code ("UCC") shall have the meanings given therein,
unless otherwise defined in this Agreement and all references to the plural
herein shall also mean the singular.
1.2. "ACCOUNTS" shall mean all of our present and future accounts,
contract rights, general intangibles, chattel paper, documents and
instruments, as such terms are defined in the UCC, including, without
limitation, all obligations for the payment of money arising out of our sale,
lease or other disposition of goods or other property or rendition of
services.
1.3. "ACCOUNT DEBTOR" shall mean each debtor or obligor in any way
obligated on or in connection with any Account.
1.4. "COLLATERAL" shall have the meaning set forth in Section 4.1 hereof.
1.5. "ELIGIBLE ACCOUNTS" shall mean Accounts created by us in the
ordinary course of business arising out of our sale of goods or rendition of
services, which are and at all times shall continue to be acceptable to you
in all respects. Standards of eligibility may be fixed and revised from time
to time solely by you in your exclusive judgment. In determining eligibility,
you may, but need not, rely on agings, reports and schedules of Accounts
furnished by us, but reliance by you thereon from time to time shall not be
deemed to limit your right to revise standards of eligibility at any time as
to both our present and future Accounts. In general, an Account shall not be
deemed eligible unless: (a) the Account Debtor on such Account is and at all
times continues to be acceptable to you, (b) such Account complies in all
respects with the representations, covenants and warranties hereinafter set
forth, and (c) no more than 90 days have elapsed since the invoice date of
such Account.
1.6. "EVENTS OF DEFAULT" shall have the meaning set forth in Section 8.1
hereof.
1.7. "MAXIMUM CREDIT" shall mean the amount of $10,000,000.
1.8. "NET AMOUNT OF ELIGIBLE ACCOUNTS" shall mean the gross amount of
Eligible Accounts less sales, excise or similar taxes, and less returns,
discounts, claims, credits and allowances of any nature at any time issued,
owing, granted, outstanding, available or claimed.
1.9. "OBLIGATIONS" shall mean any and all loans, indebtedness,
liabilities and obligations of any kind owing by us to you, however
evidenced, whether as principal, guarantor or otherwise, whether arising
under this Agreement, any supplement hereto, or otherwise, whether now
existing or hereafter arising, whether direct or indirect, absolute or
contingent, joint or several, due or not due, primary or secondary,
liquidated or unliquidated, secured or unsecured, original, renewed or
extended, and whether arising directly or acquired from others (including,
without limitation, your participations or interests in our obligations to
others) and including, without limitation, your charges, commissions,
interest, expenses, costs and * attorneys' fees chargeable to us in connection
with all of the foregoing.
1.10. "RECORDS" shall have the meaning set forth in Section 4.1(f)
hereof.
1.11. "RENEWAL DATE" shall have the meaning set forth in Section 9.1
hereof.
Section 2. LOANS.
2.1. You shall, in your discretion, make loans to us from time to time,
at our request, of up to eighty percent (80%) of the Net Amount of Eligible
Accounts (or such greater or lesser percentage thereof as you shall in your
sole discretion determine from time to time).
2.2. All loans shall be charged to a loan account in our name on your
books. You shall render to us each month a statement of our loan account
which shall be considered correct and deemed accepted by, and conclusively
binding upon, us as an account stated, except to the extent that you receive
a written notice of any specific exceptions by us thereto within thirty (30)
days after the date of such statement.
2.3. Except in your sole discretion, the outstanding aggregate principal
amount of all loans by you to us hereunder, under any supplement hereto or
evidenced by any promissory note, * shall not exceed the Maximum Credit at any
time. Without limiting your right to demand payment of the Obligations, or
any portion thereof, in accordance with any other terms of this Agreement, or
any supplement hereto, in the event that the outstanding aggregate principal
amount of loans by you to us exceeds the Maximum Credit or the formula set
forth in Section 2.1 hereof, we shall remain liable therefor and the entire
amount of such excess(es) shall, at your option, become immediately due and
payable, upon your demand.
2.4. At your option, all principal, interest, fees, commissions, costs,
expenses or other charges with respect to this Agreement or any supplement
hereto (all of which shall be cumulative and not exclusive) and any and all
loans and advances by you to us may be charged directly to our account
maintained by you.
2.5. All loans shall be payable at your office specified above or at
such other place as you may hereafter designate from time to time and, at
your option and upon your request, we shall execute and deliver to you one or
more promissory notes in form and substance satisfactory to you to further
evidence such loans.
Section 3. INTEREST AND FEES.
3.1. Interest shall be payable by us to you on the first day of each
month upon the closing daily balances in our loan account for each day during
the immediately preceding month, at a rate equal to two and one-half percent
(2 1/2%) per annum in excess of the prime commercial interest rate (presently
6 1/2% per annum) from time to time publicly announced by Philadelphia
National Bank, incorporated as CoreStates Bank, N.A., Philadelphia,
Pennsylvania, whether or not such announced rate is the best rate available
at such bank. The interest rate charged hereunder shall increase or decrease
by an amount equal to each increase or decrease, respectively, in said prime
loan rate, effective on the first day of the month after any change in said
prime loan rate based on the prime loan rate in effect on the last day of the
month in which any such change occurs. The rate of interest in effect
hereunder on the date hereof, expressed in terms of simple interest, is nine
percent (9%) per annum.*
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<PAGE>
3.2 On and after the date of any Event of Default or termination or
non-renewal hereof, interest on all outstanding unpaid Obligations shall
accrue at a rate equal to two percent (2%) per annum in excess of the
pre-default rate set forth above from the date of such Event of Default or
termination or non-renewal, and all interest accruing hereunder shall
thereafter be payable on demand.
3.3 Interest shall be calculated on the basis of a 360-day year and
shall be included in each monthly statement of our loan account. You shall
have the right, at your option, to charge all interest to our loan account
on the first day of each month, and such interest shall be deemed to be paid
by the first amounts subsequently credited thereto.
3.4 In no event shall charges constituting interest, payable by us under
this Agreement, exceed the rate permitted under any applicable law or
regulation, and if any part or provision of this Agreement is in
contravention of any such law or regulation, such part or provision shall be
deemed amended to conform thereto.
3.5 If the average outstanding daily principal balance of all loans by
you to us under this Agreement or any supplement hereto in any calendar month
shall be less than $8,000,000, we shall pay to you on or before the tenth
(10th) day of the next succeeding calendar month an unused line fee equal to
one half of one percent (1/2 of 1%) per annum upon the amount by which
$8,000,000 exceeds the average outstanding daily principal balance of all
such loans in respect of such month.
3.6 We shall pay to you an auditing fee in an amount equal to $2,000 on
or before the tenth (10th) day of each calendar month, in respect of
your services for the preceding calendar month, during the term, including
all renewal terms, of this Agreement or so long as any of the Obligations
are outstanding.
3.7 We shall pay to you a closing fee in an amount equal to $100,000,
payable simultaneously with the execution hereof, which fee is fully earned
as of the date hereof.
Section 4. SECURITY INTEREST.
4.1 As security for the prompt performance, observance and payment in
full of all Obligations, we hereby grant to you a continuing security
interest in, a lien upon and a right of setoff against, and we hereby assign,
transfer, pledge and set over to you the following (which together with any
of our other property in which you may at any time have a security interest
or lien, whether pursuant to this Agreement or any supplement hereto, or
otherwise, are herein collectively referred to as the "COLLATERAL"): All
present and future (a) Accounts; (b) moneys, securities and other property
and the proceeds thereof, now or hereafter held or received by, or in transit
to, you from or for us, whether for safekeeping, pledge, custody,
transmission, collection or otherwise, and all of our deposits (general or
special), balances, sums and credits with you at any time existing; (c) all
of our right, title and interest, and all of our rights, remedies, security
and liens, in, to and in respect of the Accounts and other Collateral,
including, without limitation, rights of stoppage in transit, replevin,
repossession and reclamation and other rights and remedies of an unpaid
vendor, lienor or secured party, guaranties or other contracts of suretyship
with respect to the Accounts, deposits or other security for the obligation
of any Account Debtor, and credit and other insurance; (d) all of our right,
title and interest in, to and in respect of all goods relating to, or which
by sale have resulted in, Accounts including, without limitation, all goods
described in invoices, documents, contracts or instruments with respect to,
or otherwise representing or evidencing, any Accounts or other Collateral,
including without limitation, all returned, reclaimed or repossessed goods;
(e) all deposit accounts; *(f) all books, records, ledger cards, computer
programs, and other property and general intangibles evidencing or relating
to the Accounts and any other Collateral or any Account Debtor, together with
the file cabinets or containers in which the foregoing are stored
("RECORDS"); (g) all other general intangibles of every kind and description,
including without limitation, trade names and trademarks, and the goodwill of
the business symbolized thereby, patents, copyrights, licenses and Federal,
State and local tax refund claims of all kinds and (h) all proceeds of the
foregoing, in any form, including, without limitation, any claims against
third parties for loss or damage to or destruction of any or all of the
foregoing.
4.2. We shall keep and maintain, at our cost and expense, satisfactory and
complete books and records of all Accounts, all payments received or credits
granted thereon, and all other dealings therewith. At such times as you may *
request, we shall deliver to you all original documents evidencing the sale and
delivery of goods or the performance of services which created any Accounts,
including but not limited to all original contracts, orders, invoices, bills of
lading, warehouse receipts, delivery tickets and shipping receipts, together
with schedules describing the Accounts and/or written confirmatory assignments
to you of each Account, in form and substance satisfactory to you and duly
executed by us, together with such other information as you may * request. In
no event shall the making or the failure to make or the content of any schedule
or assignment or our failure to comply with the provisions hereof be deemed or
construed as a waiver, limitation or modification of your security interest in,
lien upon and assignment of the Collateral or our representations, warranties or
covenants under this Agreement or any supplement hereto.
Section 5. COLLECTION AND ADMINISTRATION.
5.1. Until our authority to do so is curtailed or terminated at any time
by you, we shall, at our expense and on your behalf, collect, as your property
and in trust for you, all remittances and all amounts unpaid on Accounts, and we
shall not commingle such collections with our own funds. We shall on the day
received remit all such collections to you in the form received duly endorsed by
us for deposit with you, unless you shall direct us otherwise. All amounts
collected on Accounts when received by you shall be credited to our loan
account, after adding five (5) business days for collection, clearance and
transfer of remittances, * conditional upon final payment to you **
5.2. You or your representatives shall at all times * have free access to
and right of inspection of the Collateral and have full access to and the right
to examine and make copies of our Records, to confirm and verify all Accounts,
to perform general audits and to do whatever else you deem ** necessary to
protect your interests. You may at any time remove from our premises or require
us or any accountants and auditors employed by us to deliver any Records and you
may, without cost or expense to you, use such of our personnel, supplies,
computer equipment and space at our places of business as may be reasonably
necessary for the handling of collections.
5.3. We shall immediately upon obtaining knowledge thereof report to you
all reclaimed, repossessed or returned goods, Account Debtor claims and any
other matter affecting the value, enforceability or collectibility of Accounts.
* At your request, ** any goods reclaimed or repossessed by or returned to us
will be set aside, marked with your name and held by us for your account and
subject to your security interest. All claims and disputes relating to Accounts
are to be promptly adjusted within a reasonable time, at our own cost and
expense. You may, ** at your option, settle, adjust or compromise claims and
disputes relating to Accounts which are not adjusted by us within a reasonable
time.
5.4. We shall, in the manner requested by you from time to time, direct
that all proceeds of Accounts, letters of credit, bankers' acceptances and other
proceeds of Collateral shall be payable to a lock box or post office box
designated by you and under your control and/or deposited into a blocked account
under your control and/or deposited into an account maintained in your name and
under your control and in connection therewith shall execute such lock box,
blocked account or other agreement as you in your sole discretion shall specify.
Section 6. REPRESENTATIONS, WARRANTIES AND COVENANTS.
We hereby represent, warrant and covenant to you the following (which shall
survive the execution and delivery of this Agreement), the truth and accuracy of
which, or compliance with, being a continuing condition of the making of loans
hereunder by you or under any supplement hereto:
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6.1. We are and shall be, with respect to all Collateral and all our
inventory now existing or hereafter acquired, the owner of such Collateral and
inventory free from any lien, security interest, claim or encumbrance of any
kind, except in your favor and as otherwise consented to in writing by you, *
and we shall defend the same against the claims of all persons.
6.2. We will not directly or indirectly sell, lease, transfer, abandon or
otherwise dispose of all or any substantial portion of our property or assets or
consolidate or merge with or into any other entity or permit any other entity to
consolidate or merge with or into us. We will at all times preserve, renew and
keep in full force and effect our existence as a * and the rights and
franchises with respect thereto and continue to engage in business of the same
type as we are engaged as of the date hereof. We shall give you thirty (30)
days prior written notice of any proposed change in our * name which
notice shall set forth the new name.
6.3. Our Records and chief executive office are maintained at the address
referred to below. We shall not change such location without your prior written
consent and prior to making any such change, we agree to execute any additional
financing statements or other documents or notices which you may require.
6.4. We shall maintain our shipping forms, invoices and other related
documents in a form satisfactory to you and shall maintain our books, records
and accounts in accordance with generally accepted accounting principles
consistently applied. We agree to furnish you monthly with accounts receivable
agings, inventory reports (if requested by you), and interim financial
statements (including balance sheet, statement of income and surplus account,
and cash flow statements), and to furnish you, at any time or from time to time
with such other information regarding our business affairs and financial
condition as you may reasonably request, including, without limitation, balance
sheets, statements of profit and loss, financial statements, cash flow and other
projections, earnings forecasts, schedules, agings and reports. We hereby
irrevocably authorize and direct all accountants, auditors or other third
parties to deliver to you, at our expense, copies of our financial statements,
papers related thereto, and other accounting records of any nature in their
possession and to disclose to you any information they may have regarding our
business affairs and financial condition. We shall furnish you with audited
financial statements on an annual basis certified by independent public
accountants selected by us and acceptable to you. All such statements and
information shall fairly present our financial condition as of the dates and
the results of our operations for the periods, for which the same are furnished.
Any documents, schedules, invoices or other papers delivered to you may be
destroyed or otherwise disposed of by you one (1) year after the date the same
are delivered to you, * unless we make written request therefor and pay all
expenses attendant to their return, in which event you shall return same when
your actual or anticipated need therefor has ceased.
6.5. Each Eligible Account represents a valid and legally enforceable
indebtedness based upon an actual and bona fide sale and delivery of goods or
rendition of services in the ordinary course of our business * which has been
finally accepted by the Account Debtor and for which the Account Debtor is
unconditionally liable to make payment of the amount stated in each invoice,
document or instrument evidencing the Eligible Account in accordance with the
terms thereof, without offset, defense or counterclaim and will be paid in full
at maturity. **
6.6 All statements made and all unpaid balances appearing in the invoices,
documents and instruments evidencing each Eligible Account are * true and
correct and are in all respects what they purport to be and all signatures and
endorsements that appear thereon are genuine and all signatories and endorsers
have full capacity to contract and each Account Debtor is solvent and
financially able to pay in full the Eligible Account when it matures. None of
the transactions underlying or giving rise to any Account shall violate any
state or federal laws or regulations, and all documents relating to the Accounts
shall be legally sufficient under such laws or regulations and shall be legally
enforceable in accordance with their terms and all recording, filing and other
requirements of giving public notice under any applicable law have been duly
complied with.
6.7. We shall duly pay and discharge all taxes, assessments, contributions
and governmental charges * upon or against us or our properties or assets prior
to the date on which penalties attach thereto. ** We shall be liable for any
tax or penalty imposed upon any transaction under this Agreement or any
supplement hereto or giving rise to the Accounts or any other Collateral or
which you may be required to withhold or pay for any reason and we agree to
indemnify and hold you harmless with respect thereto, and to repay to you on
demand the amount thereof, and until paid by us such amount shall be added to
and deemed part of your loans to us.
6.8. Except as otherwise disclosed to you in writing, there is no present
investigation by any governmental agency pending or threatened against us and
there is no action, suit, proceeding or claim pending or threatened against us
or our assets or goodwill, or affecting any transactions contemplated by this
Agreement, or any supplement hereto, or any agreements, instruments or documents
delivered in connection herewith or therewith before any court, arbitrator, or
governmental or administrative body or agency which if adversely determined with
respect to us would result in any material adverse change in our business,
properties, assets, goodwill, or condition, financial or otherwise.
6.9. *
6.10. We shall, at our expense, duly execute and deliver, or shall cause
to be duly executed and delivered, such further agreements, instruments and
documents, including, without limitation, additional security agreements,
mortgages, deeds of trust, deeds to secure debt, collateral assignments, Uniform
Commercial Code financing statements or amendments or continuations thereof,
landlord's or mortgagee's waivers of liens and consents to the exercise by you
of all your rights and remedies hereunder, under any supplement hereto or
applicable law with respect to the Collateral and do or cause to be done such
further acts as may be necessary or proper in your opinion * to evidence,
perfect, maintain and enforce your security interest and the priority thereof in
the Collateral and to otherwise effectuate the provisions or purposes of this
Agreement or any supplement hereto. Where permitted by law, we hereby authorize
you to execute and file one or more Uniform Commercial Code financing
statements signed only by you **
Section 7. SPECIFIC POWERS.
7.1. We hereby constitute you and your agent and any designee, as our
attorney-in-fact, at our own cost and expense, to exercise at any time all or
any of the following powers which, being coupled with an interest, shall be
irrevocable until all Obligations have been paid in full: (a) to receive, take,
endorse, assign, deliver, accept and deposit, in your or our name, * any and all
checks, notes, drafts, remittances and other instruments and documents relating
to the Collateral; (b) on or after the occurrence of an Event of Default to
receive open and dispose of all mail addressed to us and to notify postal
authorities to change the address for delivery thereof to such address as you
may designate; (c) to transmit to Account Debtors notice of your interest
therein and to request from such Account Debtors at any time, in your or our
name or that of your designee, information concerning the Accounts and the
amounts owing thereon; (d) on or after the occurrence of an Event of Default, to
notify Account Debtors to make payment directly to you; (e) on or after the
occurrence of an Event of Default, to take or bring, in your or our name, all
steps, actions, suits or proceedings deemed by you necessary or desirable to
effect collection of the Collateral; and (f) to execute in our name and on our
behalf any UCC financing statements or amendments thereto. ** We hereby release
you and your officers, employees and designees, from any liability arising from
any act or acts under this Agreement or in furtherance thereof, whether of
omission or commission, and whether based upon any error of judgment or mistake
of law or fact.
Section 8. EVENTS OF DEFAULT AND REMEDIES.
8.1. All Obligations shall be, at your option, immediately due and payable
without notice or demand (notwithstanding any deferred or installment payments
allowed, if any, by any instrument evidencing or relating to the Obligations)
and any provision of this Agreement or any
<PAGE>
supplement hereto, as to future loans and advances by you shall, at your
option, terminate forthwith, upon the termination or non-renewal of this
Agreement or upon the occurrence of any one or more of the following ("EVENTS
OF DEFAULT"): (a) if we shall fail to pay to you any amounts owing to you
under any Obligation,* or shall breach any of the terms, covenants,
conditions or provisions of this Agreement, any supplement hereto or any
other agreement between you and us or between any other third person or
entity and us;** (b) if any guarantor, endorser or other person liable on the
Obligations shall terminate or breach any of the terms, covenants, conditions
or provisions of any guarantee, endorsement or other agreement of such person
with, or in favor of, you or any other third person or entity; (c) if any
representation, warranty, or statement of fact made to you at any time by us
or on our behalf is false or misleading in any material respect; (d) if we,
or any guarantor, endorser or other person liable on the Obligations, shall
become insolvent, fail to meet our or their debts as they mature, call a
meeting of creditors or have a creditors' committee appointed, make an
assignment for the benefit of creditors, commence or have commenced against
us or them any action or proceeding for relief under any bankruptcy law, or
if a judgment is rendered against us or them,**** or if we or they suspend or
discontinue doing business for any reason, or if a receiver, custodian or
trustee of any kind is appointed for us or them or any of our or their
respective properties; (e) if there shall be a material adverse change in our
business, assets or condition (financial or otherwise) from the date hereof;
(f) if there is any change in our majority control or ownership; or (g) if at
any time you shall, in your sole discretion,***** consider the Obligations
insecure or any part of the Collateral unsafe, insecure or insufficient and
we shall not on your demand furnish other Collateral or make payment on
account, satisfactory to you.
8.2. Upon the occurrence of any Event of Default and at any time
thereafter, you shall have the right (in addition to any other rights you may
have under this Agreement, any supplement hereto or otherwise) without
further notice to us, to appropriate, set off and apply to the payment of any
or all of the Obligations, any or all Collateral, in such manner as you shall
in your sole discretion determine, to enforce payment of any Collateral, to
settle, compromise or release in whole or in part, any amounts owing on the
Collateral, to prosecute any action, suit or proceeding with respect to the
Collateral, to extend the time of payment of any and all Collateral, to make
allowances and adjustments with respect thereto, to issue credits in your or
our name, to sell, assign and deliver the Collateral (or any part thereof), at
public or private sale, at broker's board, for cash, upon credit or
otherwise, at your sole option and discretion, and you may bid or become
purchaser at any such sale, if public, free from any right of redemption
which is hereby expressly waived.
8.3. In the event you seek to take possession of all or any portion of
the Collateral by judicial process, we irrevocably waive: (a) the posting of
any bond, surety or security with respect thereto which might otherwise be
required, (b) any demand for possession prior to the commencement of any suit
or action to recover the Collateral, and (c) any requirement that you retain
possession and not dispose of any Collateral until after trial or final
judgment.
8.4. We agree that the giving of * days notice by you, sent by ** mail,
postage prepaid, to our address set forth below, designating the place and
time of any public sale or of the time after which any private sale or other
intended disposition of the Collateral is to be made, shall be deemed to be
reasonable notice thereof and we waive any other notice with respect thereto.
8.5. The net cash proceeds resulting from the exercise of any of the
foregoing rights or remedies shall be applied by you to the payment of the
Obligations in such order as you may elect, and we shall remain liable to you
for any deficiency. Without limiting the generality of the foregoing, if you
enter into any credit transaction, directly or indirectly, in connection with
the disposition of any Collateral, you shall have the option, at any time, in
your sole discretion, to reduce the Obligations by the principal amount of
such credit transaction or to defer the reduction thereof until actual
receipt by you of cash or other immediately available funds in connection
therewith.
8.6. The enumeration of the foregoing rights and remedies is not
intended to be exclusive, and such rights and remedies are in addition to and
not by way of limitation of any other rights or remedies you may have under
the UCC or other applicable law. You shall have the right, in your sole
discretion, to determine which rights and remedies, and in which order any of
the same, are to be exercised, and to determine which Collateral is to be
proceeded against and in which order, and the exercise of any right or remedy
shall not preclude the exercise of any others, all of which shall be
cumulative.
8.7. No act, failure or delay by you shall constitute a waiver of any of
your rights and remedies. No single or partial waiver by you of any provision
of this Agreement or any supplement hereto, or breach or default thereunder,
or of any right or remedy which you may have shall operate as a waiver of any
other provision, breach, default, right or remedy or of the same provision
breach, default, right or remedy on a future occasion.
8.8. We waive presentment, notice of dishonor, protest and notice of
protest of all instruments included in or evidencing any of the Obligations
or the Collateral and any and all notices or demands whatsoever (except as
expressly provided herein). You may, at all times, proceed directly against
us to enforce payment of the Obligations and shall not be required to take
any action of any kind to preserve, collect or protect your or our rights in
the Collateral.
Section 9. EFFECTIVE DATE; TERMINATION; COSTS.
9.1. This Agreement shall become effective upon acceptance by you and
shall continue in full force and effect for a term ending two (2) years from
the date hereof (the "RENEWAL DATE") and from year to year thereafter, unless
sooner terminated pursuant to the terms hereof. Either party may terminate
this Agreement on the Renewal Date or on the anniversary of the Renewal Date
in any year by giving the other party at least sixty (60) days prior written
notice by registered or certified mail, return receipt requested, and, in
addition, you shall have the right to terminate this Agreement immediately at
any time upon the occurrence of an Event of Default. No termination of this
Agreement, however, shall relieve or discharge us of our duties, obligations
and covenants hereunder until all Obligations have been paid in full, and
your continuing security interest in the Collateral shall remain in effect
until such Obligations have been fully discharged.
9.2. If you terminate this Agreement upon the occurrence of an Event of
Default or at our request, in view of the impracticability and extreme
difficulty of ascertaining actual damages and by mutual agreement of the
parties as to a reasonable calculation of your lost profits as a result
thereof, we hereby agree that we shall pay to you, upon the effective date of
such termination, an early termination fee in an amount equal to: *
Such
termination fee shall be presumed to be the amount of damages sustained by
said early termination and we agree that it is reasonable under the
circumstances currently existing. The early termination fee provided for in
this paragraph 9.2 shall be deemed included in the Obligations.
9.3. This Agreement, any supplement hereto, and any agreements,
instruments or documents delivered or to be delivered in connection herewith
represent our entire agreement and understanding concerning the subject
matter hereof and thereof, and supersede all other prior and contemporaneous
agreements, understandings, negotiations and discussions, representations,
warranties, commitments, offers, contracts, whether oral or written.
9.4. No provision hereof shall be modified or amended orally or by
course of conduct but only by a written instrument expressly referring hereto
signed by both parties.
9.5. Upon your request we shall pay to you, or reimburse you for, all
sums, costs and expenses which you may pay or incur in connection with or
related to the negotiation, preparation, consummation, administration and
enforcement of this Agreement, any supplement hereto, and
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<PAGE>
all other agreements, instruments and documents in connection herewith and
therewith, and the transactions contemplated hereunder and thereunder,
together with any amendments, supplements, consents or modifications which
may be hereafter made or entered into in respect hereof or thereof, and all
efforts made to defend, protect or enforce the security interest granted
herein or therein or in enforcing payment of the Obligations, including
without limitation, appraisal fees, filing fees and taxes, title insurance
premiums, recording taxes, expenses for searches, expenses heretofore
incurred by you and from time to time hereafter during the course of periodic
field examinations of the Collateral and our operations, wire transfer fees,
check dishonor fees, the * fees and disbursements of counsel to you, all fees
and expenses for the service and filing of papers, premiums on bonds and
undertakings, fees of marshalls, sheriffs, custodians, auctioneers and
others, travel expenses and all court costs and collection charges, all of
which shall be part of the Obligations and shall accrue interest after demand
thereof at a rate equal to the highest rate then payable on any of the
Obligations.
Section 10. NOTICES.
10.1. All notices, requests and demands to or upon the respective parties
hereto shall be deemed to have been duly given or made: if by hand, telex,
telegram or facsimile, immediately upon sending; if by Federal Express,
Express Mail or any other overnight delivery service, one (1) day after
dispatch; and if mailed by certified mail, return receipt requested, five (5)
days after mailing. All notices, requests and demands are to be given or made
to the respective parties at the address (or to such other addresses as
either party may designate by notice in accordance with the provisions of
this paragraph) set forth herein.
Section 11. WAIVER OF JURY TRIAL; JURISDICTION; CHOICE OF LAW.
11.1. We and you each hereby waive all rights to a trial by jury in any
action or proceeding of any kind arising out of or relating to this
Agreement, any supplement hereto, the Obligations, the Collateral or any such
other transaction. We hereby waive rights of setoff and rights to interpose
counterclaims in the event of any litigation with respect to any matter
connected with this Agreement, any supplement hereto, the Obligations, the
Collateral or any other transaction between the parties and we hereby
irrevocably consent and submit to the non-exclusive jurisdiction of the
Supreme Court of the State of New York and the United States District Court
for the Southern District of New York in connection with any action or
proceeding of any kind arising out of or relating to this Agreement, any
supplement hereto, the Obligations, the Collateral or any such other
transaction.
11.2. In any such litigation we waive personal service of any summons,
complaint or other process and agree that service thereof may be made by
certified or registered mail directed to us at our address set forth below.
Within * days after such mailing, we shall appear in answer to such summons,
complaint or other process, failing which we shall be deemed in default and
judgment may be entered by you against us for the amount of the claim and
other relief requested therein.
11.3. This Agreement and all transactions thereunder shall be deemed to
be consummated in the State of New York and shall be governed by and
interpreted in accordance with the laws of that State. If any part or
provision of this Agreement is invalid or in contravention of any applicable
law or regulation, such part or provision shall be severable without
affecting the validity of any other part or provision of this Agreement.
Very truly yours,
I.C. ISAACS & COMPANY L.P.
By: ISBUYCO, INC. General Partner
-----------------------------
By: /s/ Robert J. Arnot
-------------------------
Title: Chairman
----------------------
Address:
3840 Bank Street
-----------------------------
Baltimore, Maryland 21224
-----------------------------
Accepted at New York, New York
on June 16, 1992
CONGRESS FINANCIAL CORPORATION
By: /s/ Steven Stone
---------------------------
Title: VP
------------------------
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<PAGE>
RIDER
TO
ACCOUNTS FINANCING AGREEMENT [SECURITY AGREEMENT]
between
Congress Financial Corporation
and
I.C. Isaacs & Company L.P.
This Rider sets forth modifying terms to the respective indicated Sections
of the Agreement corresponding to the asterisks in such Sections of the
Agreement.
Section 1.9 * reasonable
Section 2.3 * and other financial accommodations extended by you to
us or for our account, including, without limitation
the indebtedness evidenced by the Term Promissory Note
in the original principal amounts of $1,000,000
executed and delivered by us to you of even date hereof
and the outstanding balance of all letters of credit,
guaranties and indemnities issued or caused to be
issued by you for our account,
Section 3.1 * In the event that the outstanding aggregate amount of
loans by you to us, together with the outstanding
principal of other financial accommodations extended by
us to you or for our account, exceeds the Maximum
Credit, or the formula set forth in Section 2.1 hereof
or any other formula or sublimit set forth in any
supplement hereto, interest on the entire amount of
such excess(es) shall be payable at the rate set forth
in Section 3.2 hereof (whether or not such excess(es)
arise or are made with or without your knowledge or
consent).
Section 4.1 * relating to the proceeds of Collateral
Section 4.2 * reasonably
Section 5.1 * , except for federal funds, as to which two (2)
business days shall be added,
** , provided, however, solely for purposes of determining
our loan availability under the lending formulas
hereunder, such collections shall be credited to our
loan account as of the next business day after the date
of receipt by you.
Section 5.2 * during normal business hours or upon reasonable notice
at other times
<PAGE>
** reasonably
Section 5.3 * (collectively, "Claims and Deductions") in any material
amount relative to the amount of unpaid Accounts and,
within ten (10) days of the issuance of a credit or
creation of a reserve with respect to all Claims and
Deductions in the ordinary course of our business,
report to you in writing the amounts thereof.
** on or after the occurrence of an Event of Default,
Section 6.1 * including, without limitation, in the Covenant
Supplement hereto,
Section 6.2 * limited partnership
Section 6.4 * , PROVIDED, HOWEVER, you shall not destroy any original
invoices or other original documentation, books or
records delivered by us to you evidencing any Account
without giving us thirty (30) days prior written
notice thereof,
Section 6.5 * , to the best of our knowledge,
** In the event that any dispute arises pertaining to an
Account previously classified as an Eligible Account or
the Account Debtor obligated thereon is insolvent, such
Account shall no longer constitute an Eligible Account
for purposes hereof.
Section 6.6 * in all material respects
Section 6.7 * , except for any of the foregoing which on a combined
basis do not exceed the aggregate amount of $10,000 at
any time and which are not a lien on any of our
properties,
** , PROVIDED HOWEVER, that if such taxes, assessments,
contributions and governmental charges are being
contested in food faith by us by appropriate
proceedings diligently pursued, prior to the creation of
any lien on our properties with respect thereto or
commencement of foreclosure or other similar
proceedings, and the same are adequately escrowed for or
reserved against in you judgment, exercised in good
faith, failure to pay and discharge the same shall not
constitute an Event of Default hereunder
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<PAGE>
Section 6.9 * The execution, delivery and performance of this
Agreement, any supplement hereto, or any agreements,
instruments and documents executed and delivered in
connection herewith, are within our limited partnership
powers, have been duly authorized, are not in
contravention of law or the terms of our Certificate of
Limited Partnership, limited partnership agreement or
any papers relating to our formation or internal
governance, or of any indenture, agreement or
undertaking to which we are a party or by which we are
bound.
Section 6.10 * , exercised in good faith,
** with respect to the Collateral.
Section 7.1 * , with any such deposits in your name being credited to
our loan account(s) maintained by you,
** relating to the Collateral
Section 8.1 * which remains unpaid five (5) days after the due date
or maturity date thereof
** and, except as to any breaches resulting from our
intentional misconduct or actions or inactions which by
their nature are not capable of being cured, which
remain uncured fifteen (15) days after the occurrence
thereof
*** , except if, within fifteen (15) days after such
termination or breach by such guarantor, you receive a
new or additional, written guarantee (in form and
substance similar to the guarantee which has been
terminated or is in default) from one or more of the
other individual guarantors of the Obligations or any
other person, reasonably acceptable to you, in an
amount not less than the maximum liability under the
guarantee which has been terminated or is in default
**** which, together with all other unsatisfied judgments
against us or them, exceeds $50,000 in the aggregate or
which is a lien against any of our properties
***** exercised in good faith
Section 8.4 * ten (10)
** certified
Section 9.2 * (a) four (4%) percent of the Maximum Credit if such
termination occurs on or prior to the first anniversary
of this Agreement, or (b) three (3%) percent of the
Maximum Credit
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<PAGE>
if such termination occurs after the first anniversary
of this Agreement but prior to the second anniversary
of this Agreement.
Section 9.5 * reasonable
Section 11.2 * forty-five (45)
SRK42/I11
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<PAGE>
COVENANT SUPPLEMENT TO
ACCOUNTS FINANCING AGREEMENT
[SECURITY AGREEMENT]
June 16, 1992
Congress Financial Corporation
1133 Avenue of the Americas
New York, New York 10036
Gentlemen:
This Covenant Supplement ("Supplement") is a supplement to the Accounts
Financing Agreement [Security Agreement] between I.C. Isaacs & Company L.P.,
a Delaware limited partnership, (together with its successors and assigns,
"Borrower") and Congress Financial Corporation, a California corporation
(together with its successors and assigns, "Congress"), dated as of the date
hereof (the "Accounts Agreement", and together with this Supplement, any and
all other supplements thereto, and all other agreements, documents and
instruments now or at any time hereafter executed and/or delivered in
connection therewith or related thereto, including, without limitation the
Term Note and the Mortgages (each as hereinafter further defined) as the same
now exist or may hereafter be amended, modified, supplemented, extended,
renewed, restated or replaced, individually and collectively, the "Financing
Agreements"). This Supplement is (a) hereby incorporated into the Accounts
Agreement, (b) made a part thereof and (c) subject to the terms, conditions,
covenants and warranties thereof. All terms (including capitalized terms)
used herein shall have the meanings ascribed to them respectively in the
Accounts Agreement, unless otherwise defined in this Supplement.
Section 1. ADDITIONAL DEFINITIONS
As used herein:
1.1 "Affiliate" shall mean, with respect to a specified Person, any
other Person (a) who, directly or indirectly, through one or more
intermediaries, controls or is controlled by or is under common control with
such Person, or (b) who is a limited partner, general partner (including
managing general partner), director, officer, shareholder or employee of such
Person.
<PAGE>
1.2 "Arnot" shall mean Robert Arnot.
1.3 "Brashers" shall mean Gary Brashers.
1.4 "Capital Expenditures" shall mean all expenditures for, or
contracts for expenditures for, any fixed assets or improvements, or for
replacements, substitutions or additions thereto, which have a useful life of
more than one (1) year, including, but not limited to, the direct or indirect
acquisition of such assets by way of increased product service charges,
offset items or otherwise, and shall include capitalized lease payments.
1.5 "CEA/EEI" shall mean CEA/EEI Portfolio Liquidation, L.P. a
Delaware limited partnership and its successors and assigns.
1.6 "Chase" shall mean Chase Manhattan Bank (National Association), a
national banking corporation and its successors and assigns.
1.7 "EEI" shall mean EEI Portfolio Liquidation L.P., a Delaware
limited partnership and its successors and assigns.
1.8 "Excess Availability" shall mean at any time an amount equal to
the loan availability from Congress, as determined by Congress, pursuant to
the advance formula with respect to Eligible Accounts of Borrower, subject to
the Maximum Credit or any sublimits with respect thereto, after deducting the
amount of all then outstanding Obligations and reserves under and pursuant to
the Financing Agreements.
1.9 "Financing Agreements" shall have the meaning set forth in the
first paragraph hereof.
1.10 "GAAP" shall mean generally accepted accounting principles as in
effect on the date hereof consistently applied.
1.11 "Hechler" shall mean Ira Hechler.
1.12 "Indebtedness" shall mean, as to any Person, all items which, in
accordance with GAAP, would be included in determining total liabilities
shown on the liability side of its balance sheet as at the date such
Indebtedness is to be calculated and, in any event, shall include any
liabilities secured by any mortgage, pledge, lien or security interest
existing on such person's owned or acquired property.
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<PAGE>
1.13 "Keller" shall mean Stanley Keller.
1.14 "Lear" shall mean Gerald Lear.
1.15 "Mortgages" shall mean that certain Mortgage and Security
Agreement with respect to Borrower's Milford, Delaware premises, that certain
Deed of Trust with respect to Borrower's Baltimore, Maryland premises, that
certain Collateral Leasehold Assignment with respect to Borrower's Carthage,
Mississippi premises, that certain Leasehold Assignment with respect to
Borrower's Newton, Mississippi premises and that certain Collateral Leasehold
Assignment with respect to Borrower's Raleigh, Mississippi premises as the
same now exist or may hereafter be amended, modified, supplemented, extended,
renewed or replaced.
1.16 "NatWest" shall mean National Westminister Bank USA, a national
banking corporation and its successors and assigns.
1.17 "Net Worth" shall mean, as to any Person at any time, in
accordance with GAAP, the amount equal to the difference between: (a) the
aggregate net book value of all assets, calculating the book value of
inventory for this purpose on a first-in-first-out basis, after deducting
from such book values all appropriate reserves (including all reserves for
doubtful receivables, bad debts, obsolescence, depreciation and amortization)
and (b) the aggregate Indebtedness of such Person (including tax and other
proper accruals).
1.18 "Payment Blockage Event" shall mean the occurrence of any one or
more of the following:
(a) Borrower shall fail to pay to Congress when due any amounts
owing under the Obligations;
(b) Borrower shall breach any of the material representations,
warranties or covenants contained in the Financing Agreements relating to any
material part of the Collateral; or
(c) Borrower shall fail to comply with any of the provisions of
Sections 4.12, 4.13, 4.14 or 4.15 of this Supplement; or
(d) Borrower shall fail to deliver to Congress, within the
required time period, any financial statements required to be delivered by
Borrower pursuant to Section 6.4 of the Accounts Agreement; or
(e) Any Event of Default arising from the willful misconduct of
the Borrower; or
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<PAGE>
(f) Borrower shall become insolvent, fail to pay its debts as
they mature, call a meeting of its creditors or have a creditors' committee
appointed, make an assignment for the benefit proceeding for relief under any
bankruptcy law, or Borrower shall suspend or discontinue doing business, or a
receiver, custodian or trustee of any kind is appointed for Borrower or all
or any party of its properties.
1.19 "Permitted Lien" shall have the meaning set forth in Section 4.4
hereof.
1.20 "Person" or "person" shall mean any individual, sole
proprietorship, limited partnership, general partnership, corporation
(including a business trust), unincorporated association, joint stock
corporation, trust, joint venture or other entity or government or any agency
or instrumentality or political subdivision thereof.
1.21 "Subordinated Notes" shall mean those certain notes further
described on Exhibit A annexed hereto and made a part hereof.
1.22 "Subsidiary" or "subsidiary" shall mean any corporation,
association or organization, active or inactive, as to which more than fifty
(50%) percent of the outstanding voting stock or shares or shares or
interests shall now or hereafter be owned or controlled, directly or
indirectly by any Person, any Subsidiary of such Person, or any Subsidiary of
such Subsidiary.
1.23 "Sunburst" shall mean Sunburst Bank, a Mississippi banking
association and its successors and assigns.
1.24 "Term Loan" shall mean the outstanding Obligations owed to
Congress by Borrower related to the secured term loan made by Congress to
Borrower as provided for in Section 3.2 hereof.
1.25 "Term Note" shall mean the Term Promissory Note, dated of even
date herewith, made by Borrower and payable to Lender in the original
principal amount of One Million ($1,000,000) Dollars, as the same now exists
or may hereafter be amended, modified, supplemented, extended, renewed,
restated or replaced.
1.26 "Tradestyle" shall have the meaning set forth in Section 4.3
hereof.
1.27 "Wielepski" shall mean Eugene Wielepski.
1.28 "Working Capital" shall mean, as to any Person, at any time, the
amount equal to the difference between: (a) the aggregate net book value of
all assets of such Person and its subsidiaries, on a consolidated basis,
which would, in accordance with GAAP, be classified as current assets,
calculating the book
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<PAGE>
value of inventory for this purpose on a first-in-first-out basis), and (b)
all Indebtedness of such Person and its subsidiaries, on a consolidated
basis, which would, in accordance with GAAP, be classified as current
liabilities.
Section 2. ADDITIONAL CONDITIONS PRECEDENT
Each of the following, unless specifically waived by Congress in
writing, is an additional condition precedent to Congress making any loans to
Borrower pursuant to the Accounts Agreement, this Agreement and any other
supplement thereto and the other Financing Agreements, including the making
of the initial and any future loans (including the Term Loan), advances and
other financial accommodations contemplated hereunder or thereunder:
2.1 Congress shall have received, in form and substance satisfactory
to Congress, all consents, waivers, releases, terminations and other
documents as Congress may request to evidence and effectuate the termination
and release by NatWest, Chase and/or Sunburst of any and all Indebtedness and
guarantees owed by Borrower to NatWest, Chase and/or Sunburst, respectively,
and any and all security interests and liens of NatWest, Chase and/or
Sunburst, respectively, in the Collateral, including but not limited to, UCC
termination statements for all UCC financing statements and releases,
reassignments and/or satisfactions of all real property mortgages, deeds of
trust and assignments of leaseholds previously filed or recorded by NatWest,
Chase and/or Sunburst, as secured party, against Borrower, as debtor;
2.2 Congress shall have received, in form and substance satisfactory
to Congress, evidence that Borrower has exercised its purchase option and
repurchased the limited partnership interests of EEI and CEA/EEI in Borrower,
together with all indebtedness owed to EEI and CEA/EEI by Borrower, and, in
full consideration for such purchases, has issued subordinated notes in the
aggregate principal amount of $2,600,000 to EEI and CEA/EEI, payment of such
notes being subordinated to the Obligations, and related matters duly
authorized, executed and delivered by EEI, CEA/EEI and Borrower;
2.3 Borrower shall have an Excess Availability, as determined by
Congress as of the date hereof in an amount not less than $750,000;
2.4 Congress shall have received, in form and substance satisfactory
to Congress, a Limited Guarantee and Waiver in favor of Congress regarding
the Obligations of Borrower to Congress by each of Arnot, Brashers, Keller,
and Lear, each limited to $55,000 of the Obligations, and of Wielepski,
limited to $30,000 of the Obligations, and of Hechler, limited to $750,000 of
the Obligations;
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<PAGE>
2.5 Congress shall have received, in form and substance satisfactory to
Congress, Subordination Agreements in favor of Congress executed by the
payees or other holders of each of the Subordinated Notes;
2.6 Congress shall have received, in form and substance satisfactory to
Congress, all consents, waivers, acknowledgements and other agreements from
third persons which Congress may deem necessary or desirable, in its good
faith judgment, in order to permit, protect and perfect its security
interests in and liens upon the Collateral or to effectuate the provisions or
purposes of this Agreement and the other Financing Agreements, including,
without limitation, waivers by lessors, mortgagees and warehousemen of any
security interests, liens or other claims by such person to the Collateral
and agreements permitting Congress access to the premises to exercise its
rights and remedies and otherwise deal with the Collateral;
2.7 Congress shall have received evidence of insurance and loss payee
endorsements in favor of Congress required hereunder and under the other
Financing Agreements, including without limitation, title insurance with
respect to the Mortgages, as required by Congress, in form and substance
satisfactory to Congress, and certificates of insurance policies and/or
endorsements naming Congress as loss payee, all at Borrower's cost and
expense;
2.8 Congress shall have received, in form and substance satisfactory to
Congress, such opinion letters of counsel to Borrower with respect to the
Financing Agreements and such other matters as Congress may reasonably
request; PROVIDED, that such opinion letters shall only be a condition to the
initial advance under the Accounts Agreement and the initial Credit provided
under the Trade Financing Supplement thereto;
2.9 the other Financing Agreements and all instruments and documents
hereunder and thereunder shall have been duly executed and delivered to
Congress, in form and substance reasonably satisfactory to Congress;
2.10 all representations and warranties contained herein and in the
other Financing Agreements shall be true and correct in all material
respects; and
2.11 no Event of Default shall have occurred and no event shall have
occurred or condition be existing which, with notice or passage of time or
both, would constitute an Event of Default.
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Section 3. ADDITIONAL LOAN PROVISIONS
3.1 TERMINATION. Notwithstanding anything to the contrary contained in
in Section 9 of the Accounts Agreement, the Accounts Agreement may not be
terminated by Borrower pursuant to Section 9.1 or at Borrower's request
pursuant to Section 9.2 thereof unless each of the other Financing Agreements
is terminated simultaneously therewith in accordance with their terms. No
termination of the Financing Agreements shall relieve or discharge Borrower
of its duties, obligations and covenants until all Obligations have been
indefeasibly paid in full and Congress' continuing security interests shall
remain in effect until such Obligations have been so discharged.
3.2 TERM LOAN. Subject to, and upon the terms and conditions contained
herein, Congress shall make the Term Loan to Borrower in the original
principal amount of One Million ($1,000,000) Dollars. The Term Loan shall be
(a) evidenced by the Term Note, (b) repaid, together with interest and other
amounts due thereunder, in accordance with the terms and provisions of the
Term Note and the other Financing Agreements, and (c) secured by all of the
Collateral.
3.3 RESERVES. Without limiting any other rights or remedies of Congress
hereunder or under the other Financing Agreements, the availability of all
loans, advances and other financial accommodations otherwise available to
Borrower by Congress shall be subject to Congress' continuing right, in its
discretion, exercised in good faith, to withhold a reserve, and to increase
and decrease such reserve from time to time, if and to the extent that, in
Congress' discretion, exercised in good faith, Congress believes such reserve
is necessary to protect Congress against possible non-payment for any reason
by any Account Debtor, possible non-payment of any Indebtedness owed by
Borrower to third parties, or in respect of any state of facts which does or
would, with the passage of time or notice or both, constitute an Event of
Default under any of the Financing Agreements.
Section 4. ADDITIONAL REPRESENTATIONS, WARRANTIES AND COVENANTS
In addition to the representations, warranties and covenants contained
in the Accounts Agreement and the other Financing Agreements, Borrower hereby
represents, warrants and covenants to Congress the following, the truth and
accuracy of which in all material respects are, and compliance therewith
being, in accordance with Section 2.10 hereof, a continuing condition of the
making of loans and providing other financial accommodations to Borrower by
Congress under the Accounts Agreement or under any supplement thereto:
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4.1 USE OF PROCEEDS AND OTHER FINANCIAL ACCOMMODATIONS.
Borrower shall use a portion of the initial proceeds of the loans and
advances by Congress to repay all of the outstanding and unpaid Indebtedness
consisting of loans to Borrower by NatWest, Chase and Sunburst, respectively.
All other loans, advances and other financial accommodations provided by
Congress to Borrower pursuant to the Accounts Agreements, this Agreement and
any other supplement thereto and the other Financing Agreements shall be used
by Borrower for general operating and working capital purposes of Borrower
and such other purposes as are permitted hereunder.
4.2 SUBSIDIARIES.
(a) Borrower does not have any Subsidiaries as of the date hereof
except for Topper Fabrics, Inc., which is an inactive corporation with no
material assets.
(b) Borrower shall not form or acquire any Subsidiaries without the
prior written consent of Congress. In the event Congress so consents,
promptly upon such formation or acquisition, Borrower will execute and
deliver, or will cause any such Subsidiary to execute and deliver, to
Congress, in form and substance satisfactory to Congress and its counsel:
(i) an absolute and unconditional guarantee of payment of any and all present
and future Obligations of Borrower to Congress, (ii) a general security
agreement granting to Congress a first and only lien (except as otherwise
consented to by Congress in writing and as permitted pursuant to Section 4.4
hereof) upon all of such Subsidiary's assets, (iii) related Uniform
Commercial Code Financing Statements, and (iv) such other agreements,
documents and instruments as Congress may require, including, but not limited
to, supplements and amendments hereto and other loan agreements or
instruments evidencing the obligations and Indebtedness of such new
Subsidiary to Congress.
4.3 TRADE NAMES. Some of Borrower's invoices may from time to time be
rendered to customers under the trade names or tradestyles listed on Exhibit
B hereto (which, together with any new trade names or tradestyles used after
the date hereof are referred to collectively as the "Tradestyles" and
individually, as a "Tradestyle"). As to the Tradestyles used by it, and the
related Accounts, Borrower hereby agrees that:
(a) each Tradestyle is a trade name and style (and not an
independent corporation or other legal entity) by which Borrower may
identify and sell certain of its goods or services and conduct a portion of
its business;
(b) all Accounts and proceeds thereof (including any returned
merchandise) which arise from the sale of goods or rendition of services
invoiced under the Tradestyle shall be
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owned solely by Borrower and shall be subject to the security interests of
Congress and other terms of the Accounts Agreement and the other Financing
Agreements;
(c) all assignments or confirmatory schedules of Accounts delivered
to Congress by Borrower, whether in the name of any of the Tradestyles or
Borrower, shall be executed by Borrower as owner of such assigned Accounts;
and
(d) new Tradestyles may be used by Borrower, but only if
(i) Congress is given at least thirty (30) days prior written notice of the
intended use of any new Tradestyle, which notice shall set forth the proposed
new Tradestyle and (ii) such supplemental financing statements as Congress
shall request shall be executed and delivered by Borrower for filing by
Congress prior to the use of such new Tradestyle.
4.4 LIMITATION ON LIENS. Borrower shall not, and Borrower shall not
permit any subsidiary to create or suffer to exist any mortgage, pledge,
security interest, lien, encumbrance, defect in title or restriction upon the
use of their real or personal properties, including, without limitation its
existing and hereafter acquired inventory, whether now owned or hereafter
acquired, except the following, each being a "Permitted Lien":
(a) the liens or security interests in favor of Congress;
(b) tax, mechanics' and other like statutory liens arising in the
ordinary course of Borrower's or its Subsidiaries' respective businesses to
the extent (i) such liens secure Indebtedness which is not overdue or
(ii) until foreclosure or similar proceedings shall have been commenced, such
liens secure Indebtedness relating to claims or liabilities which are being
contested in good faith by appropriate proceedings available to Borrower or
its subsidiaries prior to the commencement of foreclosure or other similar
proceedings and are adequately escrowed for or reserved against in Congress'
judgment;
(c) purchase money mortgages or other purchase money liens or
security interests upon any specific fixed assets hereafter acquired, or
mortgages, liens or security interests existing on such such future fixed
assets at the time of acquisition thereof (including, without limitation,
capitalized or finance leases), PROVIDED, THAT, (i) no such purchase money or
other mortgage, lien or security interest (or capitalized or finance lease,
as the case may be) with respect to specific future fixed assets or as
refinanced shall extend to or cover any other property, other than the
specific fixed assets so acquired and normal and customary parts and
accessions to such specific fixed assets, or acquired subject to such
mortgage, lien or security interest (or lease) and the proceeds thereof,
(ii) such mortgage, lien or security interest secures the obligation to pay
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<PAGE>
the purchase price of such specific fixed assets only (or the obligations
under the capitalized or finance lease), (iii) the principal amount secured
thereby shall not exceed one hundred (100%) percent of the cost of the fixed
assets so acquired and (iv) the acquisition of such specified fixed assets
shall not violate the provisions of Section 4.12 hereof; and
(d) the existing liens, encumbrances or security interests described
on Exhibit C hereto.
4.5 INDEBTEDNESS. Borrower shall not, and shall not permit any
Subsidiary to, create, incur, assume or permit to exist, contingently or
otherwise, any Indebtedness, except:
(a) Indebtedness to Congress;
(b) Indebtedness consisting of unsecured current liabilities
incurred in the ordinary course of its business which are not unpaid more
than thirty (30) days after their original or extended due dates;
(c) Indebtedness incurred in the ordinary course of its business
secured only by liens permitted under Section 4.4(b) and 4.4(c) hereof;
(d) Indebtedness of Borrower, evidenced by the Subordinated Notes,
which Indebtedness is, and shall be, in all respects, subject and subordinate
to the Obligations; PROVIDED, THAT,: (i) Borrower shall not, directly or
indirectly, (A) make any payments in respect of such Indebtedness except as
permitted pursuant to Section 4.15 hereof, (B) redeem, retire, defease,
purchase or otherwise acquire such Indebtedness, or set aside or otherwise
deposit or invest any sums for such purpose, or (C) amend, modify, alter or
change the terms of such Indebtedness or any agreement or instrument related
thereto in any material respect; and (ii) Borrower shall furnish to Congress
all notices, demands or other materials concerning such Indebtedness, after
receipt thereof or sent by it concurrently with the sending thereof, as the
case may be; and
(e) Indebtedness existing on the date hereof which is described on
Exhibit D hereto; PROVIDED, THAT: (i) Borrower and its Subsidiaries may only
make regularly scheduled payments of principal and interest in respect of
such Indebtedness as set forth in Exhibit D; (ii) Borrower and its
Subsidiaries shall not, directly or indirectly, (A) make any prepayments or
other non-mandatory payments in respect of such Indebtedness or (B) redeem,
retire, defease, purchase or otherwise acquire such Indebtedness, or set
aside or otherwise deposit or invest any sums for such purpose, or
(C) materially amend, modify, alter or change the terms of such Indebtedness
or any agreement or instrument related thereto; and (iii) Borrower and its
Subsidiaries shall furnish to
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Congress all notices, demands or other materials concerning such Indebtedness,
after receipt thereof or sent by any of them concurrently with the sending
thereof, as the case may be.
4.6 TRANSACTIONS WITH AFFILIATES. Borrower shall not, and shall not
permit any Subsidiary to, directly or indirectly:
(a) purchase, acquire or lease any property or receive any services
from, or sell, transfer or lease any property or services to, any Affiliate of
Borrower, except on prices and terms no less favorable than would have been
obtained in an arm's length transaction with a non-affiliated person; or
(b) lend or advance money or property to any Affiliate or pay or
agree to be liable for the Indebtedness of any Affiliate; or
(c) make any payment of salaries, management fees or the principal
amount of or interest on any Indebtedness owing to any Affiliate of Borrower;
PROVIDED, HOWEVER, this Section 4.6(c) shall not restrict or prohibit payments
of salaries or other customary compensation in reasonable amounts to any person
who is an employee of Borrower notwithstanding that such person may be an
Affiliate of Borrower.
4.7 LOANS, INVESTMENTS, GUARANTIES, ETC. Borrower will not, and will not
permit any Subsidiary to, directly or indirectly, make any loans or advance
money or property to any Person, or invest in (by capital contribution or
otherwise) or purchase or repurchase the stock or Indebtedness or all or a
substantial part of the assets or property of any Person, or guarantee, assume,
endorse, or otherwise become responsible for (directly or indirectly) the
Indebtedness, performance, obligations or dividends of any Person or agree to do
any of the foregoing, EXCEPT:
(a) distributions described in Section 4.10 of this Agreement;
(b) guarantees by any Affiliate or Subsidiary of Borrower of the
Obligations in favor of Congress;
(c) the endorsement of instruments for collection or deposit in the
ordinary course of business;
(d) after written notice thereof to Congress, investments in the
following instruments, which shall be pledged and delivered to Congress upon
Congress' request, (i) marketable obligations issued or guaranteed by the United
States of America or an instrumentality or agency thereof, maturing not more
than one (1) year after the date of acquisition thereof, (ii) certificates of
deposit or other obligations maturing not more than one (1) year after the date
of acquisition thereof issued by
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any bank or trust company organized under the laws of and located in the United
States of America or any State thereof and having capital, surplus and undivided
profits of at least $50,000,000, and (iii) open market commercial paper with a
maturity not in excess of two hundred seventy (270) days from the date of
acquisition thereof which have the highest credit rating by either Standard &
Poor's Corporation or Moody's Investors Service, Inc.; and
(e) loans and advances permitted under Section 4.6(b) and Section
4.6(c) of this Agreement.
4.8 ENVIRONMENTAL COMPLIANCE. The representations, warranties and
covenants of this Section 4.8 are made to the best of Borrower's knowledge,
information and belief.
(a) Borrower and its Affiliates have not generated, used, stored,
treated, transported, manufactured, handled, produced or disposed of any
hazardous materials, on or off Borrower's premises (whether or not owned by it)
in any manner which at any time violates any materially applicable statute, rule
or regulation relating to environmental pollution and employee health and
safety, or any license, permit, certificate, approval or similar authorization
thereunder and the operations of Borrower and its Affiliates comply in all
material respects with all such statutes, rules and regulations and all
licenses, permits, certificates, approvals and similar authorizations
thereunder.
(b) There is no pending or threatened investigation, proceeding,
complaint, order, directive, claim, citation or notice by any governmental
authority or any other Person with respect to any alleged non-compliance with or
violation of the requirements of any statute, rule or regulation relating to
environmental pollution and employee health and safety, by Borrower or any of
its Affiliates or the release, spill or discharge, threatened or actual, of any
hazardous material or the generation, use, storage, treatment, transportation,
manufacture, handling, production or disposal of any hazardous materials or any
other environmental, health or safety matter, which affects Borrower or any of
its Affiliates or any of their businesses, operations or assets or any
properties at which Borrower or any of its Affiliates transported, stored or
disposed of any hazardous materials.
(c) Borrower and its Affiliates have no material liability
(contingent or otherwise) in connection with hazardous materials or the
generation, use, storage, treatment, transportation, manufacture, handling,
production or disposal of any hazardous materials.
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(d) Borrower and its Affiliates have all licenses, permits,
certificates, approvals or similar authorizations required to be obtained or
filed in connection with the operations of Borrower and its Affiliates under any
statute, rule or regulation relating to environmental pollution and employee
health and safety, and all of such licenses, permits, certificates, approvals or
similar authorizations are valid and in full force and effect.
4.9 COMPLIANCE WITH LAWS, REGULATIONS, ETC. Borrower shall, and shall
cause each Subsidiary to, at all times comply in all material respects with all
applicable provisions of laws, rules, regulations, licenses, permits, approvals
and orders and duly observe all material requirements, of any foreign, federal,
state or local governmental authority, including, without limitation, the
Employee Retirement Income Security Act of 1974, as amended, the Internal
Revenue Code of 1986, as amended, the Occupational Safety and Health Act of
1970, as amended, the Fair Labor Standards Act of 1938, as amended and the rules
and regulations thereunder and all other statutes, rules, regulations, orders,
permits and stipulations relating to environmental pollution and employee health
and safety, including, without limitation, the Comprehensive Environmental
Response, Compensation and Liability Act of 1980, as amended and the Resource
Conservation and Recovery Act of 1976 and any similar state or local statutes
with respect thereto.
4.10 DISTRIBUTIONS. Borrower will not, and will not permit any Subsidiary
to, directly or indirectly, during any fiscal year, commencing with the current
fiscal year, declare or pay any distribution to its partners in respect of the
general and limited partnership interests now or hereafter outstanding, or set
aside or otherwise deposit or invest any sums for such purpose, or redeem,
retire, defease, purchase or otherwise acquire (or set aside or otherwise
deposit or invest any sums for such purpose) any such general or limited
partnership interest or capital stock of any partner, general or limited, or
agree to do any of the foregoing. Notwithstanding the foregoing, unless there
exists any Event of Default or any condition or event which with notice or the
passage of time or both would constitute an Event of Default hereunder or under
any of the Financing Agreements, Borrower shall be permitted to make
distributions to its general and limited partners (including such distributions
to EEI and CEA/EEI with respect to their former partnership interests) for the
payment of federal and state income taxes for which they are liable solely as a
result of their respective partnership interests in Borrower's income, PROVIDED
that Borrower gives Congress thirty (30) days prior written notice of any such
intended distribution and, upon Congress' request, promptly furnishes
documentation reasonably satisfactory to Congress evidencing compliance of any
such intended distribution with the provisions hereof.
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4.11 INDEMNIFICATION FOR RETURNED ITEMS. Borrower agrees that Congress may
pay any and all amounts demanded by any person which Borrower has given an
indemnification for returned items and Congress may treat such amounts as
advances to Borrower and change such amounts to any account of Borrower with
Congress, all without inquiry as to whether such amounts are actually due and
owing to such person and without regard to any dispute or claim that Borrower
may have or assert against such person and/or other parties.
4.12 CAPITAL EXPENDITURES. Borrower will not, in the aggregate, directly
or indirectly, expend or commit to expend, Capital Expenditures in excess of
$300,000 in any fiscal year of Borrower.
4.13 NET WORTH. Borrower will, at all times, until all Obligations have
been indefeasibly paid in full, maintain a Net Worth of not less than $8,000,000
on the date hereof and at all times thereafter.
4.14 WORKING CAPITAL. Borrower will, at all times, maintain a Working
Capital of not less than $5,000,000.
4.15 PAYMENTS PERMITTED UNDER SUBORDINATED NOTES. Provided that there
exists no Event of Default, or condition or event which with notice or passage
of time or both would constitute an Event of Default hereunder or under any of
the Financing Agreements:
(a) Borrower may make regularly scheduled payments of interest, on an
unaccelerated basis, with respect to the Subordinated Notes in accordance with
the terms of each Subordinated Note as in effect on the date hereof (but not any
prepayments or payments pursuant to acceleration or claims of breach or
otherwise);
(b) Borrower may make regularly scheduled payments of principal, on
an unaccelerated basis with respect to the Subordinated Notes payable to the
Estate of Harry Isaacs (but not any prepayments or payments pursuant to
acceleration or claims of breach or otherwise); and
(c) notwithstanding the foregoing provisions of this Section 4.15,
Borrower may make regularly scheduled payments of principal and interest on an
unaccelerated basis, with respect to the Subordinated Notes payable to EEI and
CEA/EEI (but not any prepayments or payments pursuant to acceleration or claims
of breach or otherwise) PROVIDED, that a Payment Blockage Event does not then
exist or arise as a result thereof and Borrower shall have an Excess
Availability:
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(i) in an average daily amount during the thirty (30) day
period immediately upon prior to September 30, 1992, the due date of the first
scheduled principal payment under the Subordinated Notes payable to EEI and
CEA/EEI ("First Principal Payment") in an amount not less than $1,600,000 and an
Excess Availability of an amount equal to or greater than $1,600,000 immediately
before making the First Principal Payment;
(ii) in an average daily amount during the thirty (30) day
period immediately prior to September 30, 1993, the due date of the second
scheduled principal payment under the Subordinated Notes payable to EEI and
CEA/EEI ("Second Principal Payment") in an amount not less than $2,000,000 and
an Excess Availability of an amount equal to or greater than $2,000,000
immediately before making the Second Principal Payment; and
(iii) not less than $500,000 immediately after making each of the
First Principal Payment and Second Principal Payment;
and, PROVIDED, FURTHER, that immediately before Borrower makes the First
Principal Payment and immediately before Borrower makes the Second Principal
Payment, not more than $200,000 in the aggregate of Borrower's outstanding and
unpaid accounts payable are delinquent past the maturity date thereof or their
stated payment terms, and at Congress' request, compliance with such accounts
payable status is confirmed to Congress' satisfaction by Congress' auditors
before the making of the First Principal Payment and the Second Principal
Payment, PROVIDED, FURTHER, such delinquent accounts payable shall not be deemed
to include outstanding and unpaid accounts payable of Borrower which are
disputed in good faith by Borrower and as to which the same are adequately
reserved against by Borrower in Congress' judgment, exercised in good faith.
4.16 APPLICATION OF PROCEEDS. Any and all proceeds earned or collected by
Borrower with respect to the Collateral, including but not limited to, in
connection with the Settlement Agreement between Borrower and VF, Inc. with
respect to trademark infringement litigation, shall be applied to the
outstanding Obligations.
Section 5. ADDITIONAL REMEDIES AND RELATED PROVISIONS.
5.1 ADDITIONAL REMEDIES. Without limiting any rights or remedies of
Congress at any time on or after an Event of Default pursuant to the other
Financing Agreements or applicable law, Congress may, at its option, cure any
default by Borrower or any of its Affiliates under any agreement, law,
regulation, permit, license or approval with, or issued or promulgated by, any
Person, which constitutes, or with notice or passage of time or both would
constitute an Event of Default hereunder or under any
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<PAGE>
of the other Financing Agreements, or pay or bond on appeal any judgment, order,
directive, claim or citation entered or made against Borrower (irrespective of
the amount of said judgment or the time elapsed since entry thereof) and charge
Borrower's account therefor, such amounts to be repayable by Borrower to
Congress on demand, together with interest thereon at the rate of interest then
payable by Borrower under the Accounts Agreement; PROVIDED, HOWEVER, Congress
shall be under no obligation to effect such cure, payment or bonding and shall
not, by making any payment for Borrower's account, be deemed to have assumed any
obligation or liability of Borrower or any such Affiliate.
Very truly yours,
I.C. ISAACS & COMPANY L.P.
By: ISBUYCO, INC., General Partner
By: /s/ Robert J. Arnot
--------------------------------
Title: Chairman
-----------------------------
ACCEPTED:
CONGRESS FINANCIAL CORPORATION
By: /s/ Steven Stone
---------------------------
Title: VP
------------------------
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EXHIBIT A TO COVENANT SUPPLEMENT
SUBORDINATED NOTES
EEI PORTFOLIO LIQUIDATION, L.P.
1. $549,500.00 Junior Subordinated Note dated June ____, 1992, payable on
or before September 30, 1992
2. $750,000.00 Junior Subordinated Note dated June ____, 1992, payable on
or before June 30, 1993
CEA/EEI PORTFOLIO LIQUIDATION, L.P.2.
1. $549,500.00 Junior Subordinated Note dated June ____, 1992, payable on
or before September 30, 1992
2. $750,000.00 Junior Subordinated Note dated June ____, 1992, payable on
or before June 30, 1993
HARRY Z. ISAACS
1. $600,000.00 Senior Subordinated Note dated May 4, 1990; outstanding
principal balance $250,000.00
IRA J. HECHLER
1. $ 64,055.56 Senior Subordinated Note dated November 19, 1990
2. $ 62,777.78 Senior Subordinated Note dated April 30, 1991
3. $ 61,250,00 Senior Subordinated Note dated July 2, 1991
4. $ 43,384.00 Junior Subordinated Note dated December 20, 1984
5. $ 7,737.42 Junior Subordinated Note dated March 31, 1988
6. $ 9,259.42 Junior Subordinated Note dated September 30, 1990
7. $ 4,941.15 Junior Subordinated Note dated June 30, 1991
JOHN HECHLER
1. $ 9,001.00 Junior Subordinated Note dated December 20, 1984
2. $ 1,605.30 Junior Subordinated Note dated March 31, 1988
<PAGE>
3. $ 1,921.08 Junior Subordinated Note dated September 30, 1990
4. $ 1,025.15 Junior Subordinated Note dated June 30, 1991
ROBERT ARNOT
1. $ 9,001.00 Junior Subordinated Note dated December 20, 1984
2. $ 1,605.30 Junior Subordinated Note dated March 31, 1988
3. $ 1,921.08 Junior Subordinated Note dated September 30, 1990
4. $ 1,025.15 Junior Subordinated Note dated June 30, 1991
HERBERT SCHWARTZ
1. $ 900.00 Junior Subordinated Note dated December 20, 1984
2. $ 160.52 Junior Subordinated Note dated March 31, 1988
3. $ 192.09 Junior Subordinated Note dated September 30, 1990
4. $ 102.50 Junior Subordinated Note dated June 30, 1991
SUSAN MARK
1. $ 338.00 Junior Subordinated Note dated December 20, 1984
2. $ 60.28 Junior Subordinated Note dated March 31, 1988
3. $ 72.14 Junior Subordinated Note dated September 30, 1990
4. $ 38.50 Junior Subordinated Note dated June 30, 1991
HECHLER VENTURES
1. $ 12,376.00 Junior Subordinated Note dated December 20, 1984
2. $ 2,207.23 Junior Subordinated Note dated March 31, 1988
3. $ 2,641.40 Junior Subordinated Note dated September 30, 1990
4. $ 1,409.54 Junior Subordinated Note dated June 30, 1991
<PAGE>
JULIAN ADLER
1. $ 15,000.00 Junior Subordinated Note dated December 20, 1984
2. $ 2,675.23 Junior Subordinated Note dated March 31, 1988
3. $ 3,201.44 Junior Subordinated Note dated September 30, 1990
4. $ 1,708.40 Junior Subordinated Note dated June 30, 1991
STANLEY KELLER
1. $ 24,000.00 Junior Subordinated Note dated December 20, 1984
2. $ 4,280.32 Junior Subordinated Note dated March 31, 1988
3. $ 5,122.30 Junior Subordinated Note dated September 30, 1990
4. $ 2,733.44 Junior Subordinated Note dated June 30, 1991
GERALD LEAR
1. $ 24,000.00 Junior Subordinated Note dated December 20, 1984
2. $ 4,280.32 Junior Subordinated Note dated March 31, 1988
3. $ 5,122.30 Junior Subordinated Note dated September 30, 1990
4. $ 2,733.44 Junior Subordinated Note dated June 30, 1991
EUGENE WIELEPSKI
1. $ 12,000.00 Junior Subordinated Note dated December 20, 1984
2. $ 2,140.16 Junior Subordinated Note dated March 31, 1988
3. $ 2,561.15 Junior Subordinated Note dated September 30, 1990
4. $ 1,366.72 Junior Subordinated Note dated June 30, 1991
GARY BRASHERS
1. $ 6,000.00 Junior Subordinated Note dated December 20, 1984
2. $ 3,000.00 Junior Subordinated Note dated December 20, 1984
<PAGE>
3. $ 1,070.09 Junior Subordinated Note dated March 31, 1988
4. $ 535.04 Junior Subordinated Note dated March 31, 1988
5. $ 1,280.58 Junior Subordinated Note dated September 30, 1990
6. $ 640.29 Junior Subordinated Note dated September 30, 1990
7. $ 683.36 Junior Subordinated Note dated June 30, 1991
8. $ 341.68 Junior Subordinated Note dated June 30, 1991
BILLIE THERRELL
1. $ 6,000.00 Junior Subordinated Note dated December 20, 1984
2. $ 1,070.09 Junior Subordinated Note dated March 31, 1988
3. $ 1,280.58 Junior Subordinated Note dated September 30, 1990
4. $ 683.36 Junior Subordinated Note dated June 30, 1991
ANDREW ADKISSON
1. $ 6,000.00 Junior Subordinated Note dated December 20, 1984
2. $ 1,070.09 Junior Subordinated Note dated March 31, 1988
3. $ 1,280.58 Junior Subordinated Note dated September 30, 1990
4. $ 683.36 Junior Subordinated Note dated June 30, 1991
JOE W. CHAMBLEE
1. $ 6,000.00 Junior Subordinated Note dated December 20, 1984
2. $ 1,070.09 Junior Subordinated Note dated March 31, 1988
3. $ 1,280.58 Junior Subordinated Note dated September 30, 1990
4. $ 683.36 Junior Subordinated Note dated June 30, 1991
MARTIN NADLER
1. $ 6,000.00 Junior Subordinated Note dated December 20, 1984
2. $ 1,070.09 Junior Subordinated Note dated March 31, 1988
<PAGE>
3. $ 1,280.58 Junior Subordinated Note dated September 30, 1990
4. $ 683.36 Junior Subordinated Note dated June 30, 1991
THOMAS ORMANDY
1. $ 4,500.00 Junior Subordinated Note dated December 20, 1984
2. $ 802.57 Junior Subordinated Note dated March 31, 1988
3. $ 960.43 Junior Subordinated Note dated September 30, 1990
4. $ 512.52 Junior Subordinated Note dated June 30, 1991
CHARLES CHAMBLEE
1. $ 3,000.00 Junior Subordinated Note dated December 20, 1984
2. $ 535.04 Junior Subordinated Note dated March 31, 1988
3. $ 640.29 Junior Subordinated Note dated September 30, 1990
4. $ 341.68 Junior Subordinated Note dated June 30, 1991
WILLIAM MYATT
1. $ 3,000.00 Junior Subordinated Note dated December 20, 1984
2. $ 535.04 Junior Subordinated Note dated March 31, 1988
3. $ 640.29 Junior Subordinated Note dated September 30, 1990
4. $ 341.68 Junior Subordinated Note dated June 30, 1991
<PAGE>
EXHIBIT B
TRADESTYLES FOR BILLING
I.C. Isaacs & Co. L.P.
-18-
<PAGE>
EXHIBIT C TO COVENANT SUPPLEMENT
ADDITIONAL PERMITTED LIENS
Outstanding
A. Financing Statements Amount Secured
--------------
DEBTOR I.C. ISAACS & COMPANY L.P.
MARYLAND - STATE DEPARTMENT
1. 5/2/88 - Liber 3018, folio 1987, I.D. No.
81237962; Secured Party: Storage Technology $4,586.95/month
Corporation; Collateral: STC equipment Balance: $101,132.00
lease to Isaacs.
2. 5/8/89 - Liber 3132, folio 1854, I.D. No.
91287666; Secured Party; Storage Technology Same as No. A.1.
Corporation; Collateral: STC equipment above
leased to Isaacs.
3. 3/5/90 - Liber 3220, folio 1398, I.D. No.
100648427; Secured Party/Assignee; $1,261.51/month
The CIT Group; Collateral: Specific Balance: $10,088.00
equipment. (approx.)
4. 6/18/90 - Liber 3248, folio 2282, I.D. No.
101698361; Secured Party/Assignee: The CIT
Group; Collateral: Specific equipment with Same as No. A.3.
additional note "Assignments of Inventory above
According to TAX PROPERTY ARTICLE #12-108(k) -
Conditional Sales Contract."
MASSACHUSETTS - SECRETARY OF STATE
1. 2/16/90 - File No. 938546; Secured Same as No. A.3.
Party/Assignee: The CIT Group; above
Collateral: Specific equipment.
MASSACHUSETTS - CITY OF BOSTON
1. 2/15/90 - File No. 343185; Secured
Party/Assignee: The CIT Group; Same as No. A.3.
Collateral: Specific Equipment. above
<PAGE>
B. Judgments
I.C. ISAACS & COMPANY L.P.
New York County - State tax lien dated October 21, 1991 in the amount of
$6,370.68
SRK42a/I117/prf
- 2 -
<PAGE>
EXHIBIT D TO COVENANT SUPPLEMENT
PERMITTED INDEBTEDNESS
----------------------
EEI PORTFOLIO LIQUIDATION, L.P.
1. $549,500.00 Junior Subordinated Note dated June ____,
1992, payable on or before September 30, 1992
2. $750,000.00 Junior Subordinated Note dated June ____,
1992, payable on or before June 30, 1993
CEA/EEI PORTFOLIO LIQUIDATION, L.P.2.
1. $549,500.00 Junior Subordinated Note dated June ____,
1992, payable on or before September 30, 1992
2. $750,000.00 Junior Subordinated Note dated June ____,
1992, payable on or before June 30, 1993
HARRY Z. ISAACS
1. $600,000.00 Senior Subordinated Note dated May 4, 1990;
outstanding principal balance $250,000.00
IRA J. HECHLER
1. $ 64,055.56 Senior Subordinated Note dated November 19,
1990
2. $ 62,777.78 Senior Subordinated Note dated April 30, 1991
3. $ 61,250.00 Senior Subordinated Note dated July 2, 1991
4. $ 43,384.00 Junior Subordinated Note dated December 20,
1984
5. $ 7,737.42 Junior Subordinated Note dated March 31, 1988
6. $ 9,259.42 Junior Subordinated Note dated September 30,
1990
7. $ 4,941.15 Junior Subordinated Note dated June 30, 1991
JOHN HECHLER
1. $ 9,001.00 Junior Subordinated Note dated December 20,
1984
2. $ 1,605.30 Junior Subordinated Note dated March 31, 1988
3. $ 1,921.08 Junior Subordinated Note dated September 30,
1990
4. $ 1,025.15 Junior Subordinated Note dated June 30, 1991
<PAGE>
ROBERT ARNOT
1. $ 9,001.00 Junior Subordinated Note dated December 20,
1984
2. $ 1,605.30 Junior Subordinated Note dated March 31, 1988
3. $ 1,921.08 Junior Subordinated Note dated September 30,
1990
4. $ 1,025.15 Junior Subordinated Note dated June 30, 1991
HERBERT SCHWARTZ
1. $ 900.00 Junior Subordinated Note dated December 20,
1984
2. $ 160.52 Junior Subordinated Note dated March 31, 1988
3. $ 192.09 Junior Subordinated Note dated September 30,
1990
4. $ 102.50 Junior Subordinated Note dated June 30, 1991
SUSAN MARK
1. $ 338.00 Junior Subordinated Note dated December 20,
1984
2. $ 60.28 Junior Subordinated Note dated March 31, 1988
3. $ 72.14 Junior Subordinated Note dated September 30,
1990
4. $ 38.50 Junior Subordinated Note dated June 30, 1991
HECHLER VENTURES
1. $ 12,376.00 Junior Subordinated Note dated December 20,
1984
2. $ 2,207.23 Junior Subordinated Note dated March 31, 1988
3. $ 2,641.40 Junior Subordinated Note dated September 30,
1990
4. $ 1,409.54 Junior Subordinated Note dated June 30, 1991
JULIAN ADLER
1. $ 15,000.00 Junior Subordinated Note dated December 20,
1984
2. $ 2,675.23 Junior Subordinated Note dated March 31, 1988
3. $ 3,201.44 Junior Subordinated Note dated September 30,
1990
4. $ 1,708.40 Junior Subordinated Note dated June 30, 1991
<PAGE>
STANLEY KELLER
1. $ 24,000.00 Junior Subordinated Note dated December 20,
1984
2. $ 4,280.32 Junior Subordinated Note dated March 31, 1988
3. $ 5,122.30 Junior Subordinated Note dated September 30,
1990
4. $ 2,733.44 Junior Subordinated Note dated June 30, 1991
GERALD LEAR
1. $ 24,000.00 Junior Subordinated Note dated December 20,
1984
2. $ 4,280.32 Junior Subordinated Note dated March 31, 1988
3. $ 5,122.30 Junior Subordinated Note dated September 30,
1990
4. $ 2,733.44 Junior Subordinated Note dated June 30, 1991
EUGENE WIELEPSKI
1. $ 12,000.00 Junior Subordinated Note dated December 20,
1984
2. $ 2,140.16 Junior Subordinated Note dated March 31, 1988
3. $ 2,561.15 Junior Subordinated Note dated September 30,
1990
4. $ 1,366.72 Junior Subordinated Note dated June 30, 1991
GARY BRASHERS
1. $ 6,000.00 Junior Subordinated Note dated December 20,
1984
2. $ 3,000.00 Junior Subordinated Note dated December 20,
1984
3. $ 1,070.09 Junior Subordinated Note dated March 31, 1988
4. $ 535.04 Junior Subordinated Note dated March 31, 1988
5. $ 1,280.58 Junior Subordinated Note dated September 30,
1990
6. $ 640.29 Junior Subordinated Note dated September 30,
1990
7. $ 683.36 Junior Subordinated Note dated June 30, 1991
8. $ 341.68 Junior Subordinated Note dated June 30, 1991
<PAGE>
BILLIE THERRELL
1. $ 6,000.00 Junior Subordinated Note dated December 20,
1984
2. $ 1,070.09 Junior Subordinated Note dated March 31, 1988
3. $ 1,280.58 Junior Subordinated Note dated September 30,
1990
4. $ 683.36 Junior Subordinated Note dated June 30, 1991
ANDREW ADKISSON
1. $ 6,000.00 Junior Subordinated Note dated December 20,
1984
2. $ 1,070.09 Junior Subordinated Note dated March 31, 1988
3. $ 1,280.58 Junior Subordinated Note dated September 30,
1990
4. $ 683.36 Junior Subordinated Note dated June 30, 1991
JOE W. CHAMBLEE
1. $ 6,000.00 Junior Subordinated Note dated December 20,
1984
2. $ 1,070.09 Junior Subordinated Note dated March 31, 1988
3. $ 1,280.58 Junior Subordinated Note dated September 30,
1990
4. $ 683.36 Junior Subordinated Note dated June 30, 1991
MARTIN NADLER
1. $ 6,000.00 Junior Subordinated Note dated December 20,
1984
2. $ 1,070.09 Junior Subordinated Note dated March 31, 1988
3. $ 1,280.58 Junior Subordinated Note dated September 30,
1990
4. $ 683.36 Junior Subordinated Note dated June 30, 1991
THOMAS ORMANDY
1. $ 4,500.00 Junior Subordinated Note dated December 20,
1984
2. $ 802.57 Junior Subordinated Note dated March 31, 1988
3. $ 960.43 Junior Subordinated Note dated September 30,
1990
4. $ 512.52 Junior Subordinated Note dated June 30, 1991
<PAGE>
CHARLES CHAMBLEE
1. $ 3,000.00 Junior Subordinated Note dated December 20,
1984
2. $ 535.04 Junior Subordinated Note dated March 31, 1988
3. $ 640.29 Junior Subordinated Note dated September 30,
1990
4. $ 341.68 Junior Subordinated Note dated June 30, 1991
WILLIAM MYATT
1. $ 3,000.00 Junior Subordinated Note dated December 20,
1984
2. $ 535.04 Junior Subordinated Note dated March 31, 1988
3. $ 640.29 Junior Subordinated Note dated September 30,
1990
4. $ 341.68 Junior Subordinated Note dated June 30, 1991
CARTHAGE IRB
$299,000.00
<PAGE>
[LOGO]
INVENTORY AND EQUIPMENT SECURITY AGREEMENT
SUPPLEMENT TO ACCOUNTS FINANCING AGREEMENT
[SECURITY AGREEMENT]
Congress Financial Corporation
1133 Avenue of the Americas
- -----------------------------
New York, New York 10036
- -----------------------------
entlemen:
This Inventory and Equipment Security Agreement ("Supplement") is a
supplement to the Accounts Financing Agreement [Security Agreement] between
us, dated of even date herewith (the "Agreement"). This Supplement is (a)
hereby incorporated into the Agreement, (b) made a part thereof and (c)
subject to the other terms, conditions, covenants and warranties thereof. All
terms (including capitalized terms) used herein shall have the meanings
ascribed to them respectively in the Agreement, unless otherwise defined in
this Supplement. See Rider annexed hereto for language to be inserted after
the asterisks in applicable Sections hereof.
SECTION 1. ADDITIONAL SECURITY INTEREST.
As additional security for the prompt performance, observance and
payment in full of all Obligations, we hereby grant to you a continuing
security interest in, a lien upon, and a right of setoff against, and we
hereby assign, transfer, pledge and set over to you the following (which is
and shall be deemed part of the Collateral as defined and used in the
Agreement):
1.1. All raw materials, work in process, finished goods, and all other
inventory of whatsoever kind of nature, wherever located, whether now owned
or hereafter existing or acquired by us * ("Inventory"), including without
limitation, all wrapping, packaging, advertising, shipping materials, and all
other goods consumed in our business, all labels and other devices, names or
marks affixed or to be affixed thereto for purposes of selling or of
identifying the same or the seller or manufacturer thereof and all of our
right, title and interest therein and thereto;
1.2. All equipment, machinery, computers and computer hardware,
vehicles, tools, dies, jigs, furniture, trade fixtures and fixtures; all
attachments, accessions and property now or hereafter affixed thereto or used
in connection therewith, substitutions and replacements thereof, wherever
located, whether now owned or hereafter acquired by Borrower ("Equipment");
1.3. All books, records, documents, other property and general
intangibles at any time relating to the Inventory and the Equipment; and
1.4. All products and proceeds of the foregoing, in any form,
including, without limitation, insurance proceeds and any claims against
third parties for loss or damage to or destruction of any or all of the
foregoing.
SECTION 2. ADDITIONAL REPRESENTATIONS, WARRANTIES AND COVENANTS.
We hereby represent, warrant and covenant to you the following (which
shall survive the execution and delivery of this Supplement), the truth and
accuracy of which, and compliance with, being a continuing condition of the
making of loans by you under the Agreement or any other supplement thereto:
2.1. We are and shall be, with respect to the Equipment, the owner of
such Equipment free from any lien, security interest, claim and encumbrance
of any kind, except in your favor and as set forth on Exhibit A if any,
annexed hereto and made a part hereof.
2.2. The only locations of any Collateral are those addresses listed on
Exhibit B annexed hereto and made a part hereof. Exhibit B sets forth the
owner and/or operator of the premises at such addresses for all locations
which we do not own and operate and all mortgages, if any, with respect to
the premises. We shall not remove any Collateral from such locations, without
your prior written consent, except for sales of Inventory in the ordinary
course of our business. *
2.3. We shall at all times maintain, with financially sound and
reputable insurers, casualty and hazard insurance with respect to the
Collateral for not less than its full market value and against all risks to
which it may be exposed. All such insurance policies shall be in such form,
substance, amounts and coverage as may be * satisfactory to you and shall
provide for ** days' minimum prior cancellation notice in writing to you. You
may act as attorney for us in obtaining, adjusting, settling, amending and
cancelling such insurance. We shall promptly (a) obtain endorsements to all
existing and future insurance policies with respect to the Collateral
specifying that the proceeds of such insurance shall be payable to you and us
as our interests may appear and further specifying that you shall be paid
regardless of any act, omission or breach of warranty by us, (b) deliver to
you an original executed copy of, or executed certificate of the insurance
carrier with respect to, such endorsement and, at your request, the original
or a certified duplicate copy of the underlying insurance policy, and (c)
deliver to you such other evidence which is satisfactory to you of compliance
with the provisions hereof.
2.4. We shall promptly notify you in writing of the details of any
loss, damage, investigation, action, suit, proceeding or claim relating to
the Collateral or which would result in any material adverse change in our
business, properties, assets, goodwill or condition, financial or otherwise.
2.5. At your option, you may apply any insurance monies received at any
time to the cost of repairs to or replacement for the Inventory and/or
Equipment and/or to payment of any of the Obligations, whether or not due, in
any order and in such manner as you, in your sole discretion, may determine.
2.6. Upon your * request, at any time and from time to time, we shall,
at our sole cost and expense, execute and deliver to you written reports or
appraisals as to the Inventory and Equipment listing all items and categories
thereof, describing the condition of same and setting forth the value thereof
(the lower of cost or market value of the Inventory and the lower of net cost
less depreciation, fair market value and/or liquidation value of the
Equipment), in such form as is satisfactory to you.
2.7. We shall, at our own expense, keep the Equipment in first class
order, repair, running and marketable condition.
2.8. We shall (a) use, store and maintain the Inventory and the
Equipment with all reasonable care and caution, and (b) use the Inventory and
Equipment for lawful purposes only and in conformity * with applicable laws,
ordinances and regulations.
<PAGE>
2.9. All Inventory shall be produced in accordance with the
requirements of the Federal Fair Labor Standards Act of 1938, as amended and
all * rules, regulations and orders related thereto.
2.10. The Inventory and the Equipment are and shall be used in our
business and not for personal, family, household or farming use.
2.11. The Equipment is now and shall remain personal property and we
shall not permit any of the Equipment to be or become a part of or affixed to
real property without (a) prior written notice to you and your written
consent and (b) first making all arrangements, and delivering or causing to
be delivered to you, such agreements and other documentation requested by you
for the protection and preservation of your security interests and liens, in
form and satisfactory to you, including, without limitation, waivers and
subordination agreements by any landlords or mortgages of statutory and
non-statutory liens and rights of distraint.
2.12. We assume all responsibility and liability arising from or
relating to the use, sale or other disposition of the Inventory and the
Equipment.
SECTION 3. ADDITIONAL REMEDIES.
Upon the occurrence of an Event of Default and at any time thereafter,
you shall have the right (in addition to any other rights you may have under
the Agreement, this Supplement or otherwise), without notice to us, at any
time and from time to time, in your discretion, with or without judicial
process or the aid or assistance of others and without cost to you:
3.1. To enter upon any premises on or in which any of the Inventory or
Equipment may be located and, without resistance or interference by us, take
possession of the Inventory and the Equipment;
3.2. To complete processing, manufacturing and repair of all or any
portion of the Inventory;
3.3. To sell, foreclose or otherwise dispose of any part or all of the
Inventory and the Equipment on or in any of our premises or premises of any
other party;
3.4. To require us, at our expense, to assemble and make available to
you any part or all of the Inventory and the Equipment at any place and time
* designated by you; and
3.5. To remove any or all of the Inventory and the Equipment from any
premises on or in which the same may be located, for the purpose of effecting
the sale, foreclosure or other disposition thereof or for any other purpose
(and if any of the Inventory or the Equipment consists of motor vehicles, you
may use our registrations and license plates).
IN WITNESS WHEREOF, we have caused these presents to be duly executed
this 16th day of June, 1992.
By: I.C. ISAACS & COMPANY, INC.
By: ISBUYCO, INC., General Partner
By: /s/ Robert J. Arnot
-----------------------------
Title: Chairman
--------------------------
<PAGE>
RIDER
TO
INVENTORY AND EQUIPMENT SECURITY AGREEMENT SUPPLEMENT
TO ACCOUNTS FINANCING AGREEMENT [SECURITY AGREEMENT]
between
Congress Financial Corporation
and
I.C. Isaacs & Company L.P.
This Rider sets forth modifying terms to the respective indicated
Sections of the Supplement corresponding to the asterisks in such Sections of
the Supplement.
Section 1.1 * which are imported by us or which are covered by
letters of credit issued or indemnified by you
Section 2.2 * or sales or trade-ins of Equipment having an
aggregate appraised value in any calendar year,
based upon the most recent appraisal thereof
delivered to you, of not more than $50,000,
PROVIDED, THAT, (a) any such sales shall be sold
for cash and the sale proceeds shall be remitted
to you for application to the Obligations, and
(b) any such trade-ins shall be replaced by
Equipment having a cost in excess of the appraised
value of the Equipment for which it was traded.
Section 2.3 * reasonably
** thirty (30)
Section 2.6 * reasonable
Section 2.8 * in all material aspects
Section 2.9 * materially applicable
Section 3.4 * reasonably
SRK42/I19
<PAGE>
EXHIBIT A
EXISTING LIENS
OUTSTANDING
A. FINANCING STATEMENTS AMOUNT SECURED
DEBTOR I.C. ISAACS & COMPANY L.P.
MARYLAND--STATE DEPARTMENT
1. 5/2/88--Liber 3018, folio 1987, I.D. No.
81237962; Secured Party: Storage $4,586.95/month
Techology Corporation; Collateral: Balance: $101,132.00
STC equipment lease to Isaacs.
2. 5/8/89--Liber 3132, folio 1854, I.D. No.
91287666; Secured Party; Storage Same as No. A.1.
Technology Corporation; Collateral: above
STC equipment leased to Isaacs.
3. 3/5/90--Liber 3220, folio 1398, I.D. No.
100648427; Secured Party/Assignee; The $1,261.51/month
CIT Group; Collateral: Specific Balance: $10,088.00
equipment. (approx.)
4. 6/18/90--Liber 3248, folio 2282, I.D.
No. 101698361; Secured Party/Assignee:
The CIT Group; Collateral: Specific Same as No. A.3.
equipment with additional note above
"Assignments of Inventory
According to TAX PROPERTY ARTICLE #12-
108(k)--Conditional Sales Contract."
MASSACHUSETTS--SECRETARY OF STATE
1. 2/16/90--File No. 938546; Secured Same as No. A.3.
Party/Assignee: The CIT Group; above
Collateral: Specific equipment.
MASSACHUSETTS--CITY OF BOSTON
1. 2/15/90--File No. 343185; Secured
Party/Assignee: The CIT Group; Same as No. A.3.
Collateral: Specific Equipment. above
B. Judgements
I.C. ISAACS & COMPANY L.P.
New York County--State tax lien dated October 21, 1991 in the amount of
$6,370.68
SRK42a/I117/prf
-2-
<PAGE>
EXHIBIT B TO
INVENTORY AND EQUIPMENT SECURITY AGREEMENT SUPPLEMENT
LOCATIONS OF COLLATERAL
-----------------------
1. I.C. Isaacs & Company, L.P.
3840 Bank Street
Baltimore, MD 21224
2. Sussex Co.
McColley & S.E. 4th Street
Milford, DE 19963
3. Lord Isaacs Factory Outlet
678A North Dupont Highway
Milford, Delaware 19963
4. Newton Co.
300 North Newton Avenue
Newton, MS 39345
5. Carthage Co.
511 East Franklin Street
Carthage, MS 39051
6. Raleigh Co.
Highway 18 West
Box 278
Raleigh, MS 39153
7. 1410 Broadway
New York, NY 10018
8. Empire State Building
New York, NY 10118
9. Atlanta Apparel Mart
240 Peachtree Street, N.W.
Suite 2200
Atlanta, GA 30043
10. Bayside Mdse. Mart
150-160 Mt. Vernon Street
Boston, MA 02125
11. California Mart
110 East Ninth Street
Suite A727
Los Angeles, CA 90079
12. Miami International Mdse. Mart
777 N.W. 72nd Avenue
Miami, FL 33126
13. Dallas Market Center
2100 Stemmons Freeway
Dallas, Texas 75207
351.Z00999A:06/11/92
12898-8
<PAGE>
[LOGO]
TRADE FINANCING AGREEMENT
SUPPLEMENT TO ACCOUNTS FINANCING AGREEMENT
[SECURITY AGREEMENT]
Congress Financial Corporation
1133 Avenue of the Americas
- ------------------------------
New York, New York 10036
- ------------------------------
Gentlemen:
This Trade Financing Agreement ("Supplement") is a supplement to the
Accounts Financing Agreement [Security Agreement] between us dated of even
date herewith (the "Agreement"). This Supplement is (a) hereby incorporated
into the Agreement, (b) made a part thereof and (c) subject to the other
terms, conditions, covenants and warranties thereof. All terms, including
capitalized terms, used herein shall have the meanings ascribed to them
respectively in the Agreement, unless otherwise defined in this Supplement.
This Supplement will confirm the terms and conditions upon which you
may, from time to time in your sole discretion, assist us in establishing or
opening foreign or domestic letters of credit and extend other financial
accommodations for our account. Accordingly, each of us hereby agrees as
follows:
SECTION 1. CREDIT ACCOMMODATIONS
1.1. You may, in your sole discretion, from time to time, for our
account, at our request, provide one or more of the following financial
accommodations to us or our designee(s): (a) issue, open, or cause the
issuance or opening of letters of credit or purchase or other guaranties for
the purchase of goods and services in the ordinary course of our or any such
designee's business or for any other purpose approved by you, (b) assist us
in establishing or opening letters of credit for such purposes by
indemnifying the issuer thereof or guaranteeing our payment or performance to
such issuer in connection therewith, (c) make payments for our or such
designee's account in connection with such purchases. All such letters of
credit or purchase or other guaranties and other financial accommodations are
referred to herein individually as a "Credit" and collectively as "Credits".
*and continuing **and
1.2. The opening or issuance of any Credit shall at all times and in
all respects be in your sole discretion. The amount and extent of any Credit
and the terms, conditions and provisions thereof shall in all respects be
determined solely by you and shall be subject to change, modification and
revision by you, in your sole discretion, at any time and from time to time.
The maturity of each Credit shall not exceed one hundred and eighty (180)
days after opening or issuance, except in your sole discretion.
1.3. Our loan availability under the Agreement and any other
Supplements thereto shall be reduced fifty (50%) percent of the amount of all
outstanding letters of credit for the importation of goods issued or caused
to be issued by you or as which you indemnify the issuer thereof and one
hundred (100%) percent of the amount of all other Credits or such lesser
amount as you may elect in your discretion.
1.4. All outstanding Credits shall be secured by all collateral in
which you are now or hereafter granted a security interest by us or any
guarantor of our Obligations. All outstanding Credits shall be deemed loans
for purposes of determining whether the Maximum Credit has been exceeded.
1.5. Except in your sole discretion, the amount of all Credits and all
other commitments and obligations made or incurred by you for our account in
connection therewith shall not exceed a 1,500,000 in the aggregate at any
time outstanding.
1.6. All indebtedness, liabilities, expenses and obligations of any
kind paid, arising or incurred by you in connection with this Supplement, any
Credit or any documents, drafts and acceptances thereunder, whether present
or future, whether arising or incurred before or after termination or
nonrenewal of this Agreement shall be incurred solely as an accommodation to
us and for our account and constitute part of the Obligations, including
without limitations; (a) all amounts due or which may become due under any
Credit or any drafts or acceptances thereunder; (b) all amounts charged or
chargeable to you or us by any bank or other issuer of any Credit or any
correspondent which opens, issues or is otherwise involved with any Credit,
including without limitation, all fees, expenses and commissions; (c) your
fees, expenses and commissions; (d) duties, freight, taxes, costs, insurance
and all such other charges and expenses which may pertain directly or
indirectly to any Obligations or to the Credits or goods or documents
relating thereto; and (e) all other indebtedness and obligations owed by us
to you pursuant to, in connection with or arising from this Supplement, the
Credits or any drafts or acceptances relating thereto.
1.7. All such Obligations shall accrue interest at the rate provided
for in the Agreement, commencing on the date any payment is made, or
non-contingent obligation incurred, by you and all such Obligations shall,
together with interest thereon and other sums owed by us to youhereunder, be
payable and evidenced as provided in the Agreement.
1.8. In addition to all other fees, charges and expenses payable under
the Agreement, this Supplement, and to any bank or other issuer or
correspondent in connection with any Credit, we agree to pay to you the
following commissions for your services hereunder, which shall be due and
payable on the opening or issuance of each Credit or, if the original term is
extended, on the extension thereof: a charge of .2083% of such face amount
for each thirty (30) days, or any portion thereof of the original term or any
extension thereof. We also agree to pay you, your and any bank's, other
issuer's or correspondent's customary charges for amendments, extensions and
administration relating to any Credit, which charges shall be due and payable
on the first day of the month following the date of incurrence and, at your
option may be charged to any of our account(s) maintained by you.
1.9. Nothing contained hereon shall be deemed or construed to grant us
any right, power or authority to pledge your credit in any manner. You shall
have no liability of any kind with respect to any Credit opened or issued by
a bank or other issuer or any draft or acceptance with respect thereto unless
and until you shall have first duly executed and delivered your guarantee or
indemnification in writing with respect thereto, as provided herein.
SECTION 2. ADDITIONAL SECURITY INTEREST
2.1. As additional security for the prompt performance, observance and
payment in full of all Obligations, we hereby grant to you a continuing
security interest in, a lien upon, and a right to set off against, and we
hereby assign, transfer, pledge and set over to you all following property
acquired by us in connection with any Credit or otherwise owned by us,
whether now owned or hereafter acquired (which, is and shall be deemed a part
of the Collateral as defined and used in the Agreement): (a) all raw
materials, work-in-process, finished goods and all other inventory and goods
of whatsoever kind or nature, wherever located, including inventory or goods
in transit ("Inventory"), including without limiations, all wrapping,
packaging, advertising and shopping materials, and all other goods consumed
in our business, all labels and other devices, names ormarks affixed or to be
affixed thereto for purposes of selling or of identifying the same or the
seller or manufacturer thereof and all of our right, title and interest
therein and thereto; (b) documents of payments, transport and title or the
equivalent thereof, including with-
- -----------------
* inventory imported by us and all of the
<PAGE>
out limitation, original contracts, orders, invoices, checks, drafts, notes,
letters of credit, documents, warehouse receipts, bills of lading, shipping
receipts, dock receipts, delivery tickets and documents made available to us
for the purpose of ultimate sale or exchange of Inventory or for the purpose
of loading, unloading, storing, shipping, transhipping, manufacturing,
processing or otherwise dealing with Inventory in a manner preliminary to
their sale or exchange; (c) all books, records, other property and general
intangibles relating to the foregoing; and (d) all products and proceeds of
the foregoing in any form, including without limitation, insurance proceeds
and any claims against third parties for loss or damage to or destruction of
any or all of the foregoing.
2.2. We hereby recognize and admit that until all of the Obligations
have been fully and indefeasibly paid and discharged, you may be deemed to
have absolute ownership in and unqualified right to the possession and
disposal of the following: (a) all property shipped under or pursuant to or
in connection with any Credit or in any way related thereto and, including,
but not limited to, the documents, drafts or acceptances drawn thereunder,
whether or not released to us, (b) in and to all shipping documents,
warehouse receipts, policies, or certificates of insurance and other
documents accompanying or relative to documents, drafts or acceptances drawn
under or relating to any Credit, and (c) all proceeds of each of the
foregoing.
2.3. You may, on or after occurrence of any Event of Default, exercise
any or all of your rights of ownership, including the rights of possession
and sale or other disposition, with or without notice to us, without
liability to you and entirely at our expense and without relieving us from
any Obligations.
SECTION 3. ADDITIONAL REPRESENTATIONS, WARRANTIES AND COVENANTS.
We hereby represent, warrant and covenant to you the following (which
shall survive the execution and delivery of this Supplement), the truth and
accuracy of which, or compliance with, being a continuing condition of the
making of loans by you under the Agreement or any supplement thereto and the
extension by you of each Credit and other financial accommodations pursuant
hereto:
3.1. All sales of any Inventory shall be made by us only in the
ordinary course of business and the Accounts arising from such sales and
proceeds thereof shall be and are hereby transferred and assigned to you and
we confirm that your lien and security interest extends and attaches to those
Accounts and proceeds.
3.2. Except as you may otherwise specifically consent in writing prior
to the opening or issuance of any Credit, all Credits shall be opened or
issued to cover the actual purchase and delivery of Inventory solely for our
account.
3.3. All shipments made under any Credit are in accordance with the
governmental laws and regulations of the countries in which the shipments
originate and terminate, and are not prohibited by any such laws and
regulations.
3.4. We assume all risk, liability and responsibility for, and agree to
pay and discharge, all present and future local, state, federal or foreign
taxes, duties, or levies. Any embargo, restriction, laws, customs or
regulations of any country, state, city, or other political subdivision,
where the Collateral is or may be located, or wherein payments are to be
made, or wherein drafts may be drawn, negotiated, accepted, or paid, shall be
solely our risk, liability and responsibility.
3.5. All documents, instruments, notices and statements relating to any
Credit and/or the Collateral, if any, shall at your request, be promptly
delivered to you.
3.6. We shall procure promptly, or cause to be procured, any necessary
licenses for the shipping of goods and comply or cause any drawer under, or
beneficiary of, any Credit (or any transferee or assignee thereof), to comply
with all foreign and domestic governmental laws and regulations in regard to
the shipping of the Inventory, the financing thereof or payment therefor,
including governmental laws and regulations pertaining to transactions
involving designated foreign countries or their nationals and to furnish such
certificates in that respect as you or any bank or other issuer or
correspondent may at any time require.
3.7. The only locations of any Collateral are those addresses listed on
Exhibit A annexed hereto and made a part hereof. Exhibit A sets forth the
owner and/or operator of the premises at such addresses, for all locations
which we do not own and operate and all mortgages, if any, with respect to
the premises. We shall not remove any Collateral from such locations, without
your prior written consent, except for sales of Inventory in the ordinary
course of our business.
3.8. We shall at all times maintain, with financially sound and
reputable insurers, casualty and hazard insurance with respect to the
Collateral for not less than its full market value and against all risks to
which it may be exposed. All such insurance policies shall be in such form,
substance, amounts and coverage as may be reasonably satisfactory to you and
shall provide for thirty (30) days' minimum prior cancellation notice in
writing to you. You may act as attorney for us in obtaining, adjusting,
settling, amending and cancelling such insurance. We shall promptly (a)
obtain endorsements to all existing and future insurance policies with
respect to the Collateral specifying that the proceeds of such insurance
shall be payable to you as your interests may appear and further specifying
that you shall be paid regardless of any act, omission or breach of warranty
by us, (b) deliver to you an original executed copy of, or executed
certificate of the insurance carrier with respect to, such endorsement and,
at your request, the original or a certified duplicate copy of the underlying
insurance policy and (c) deliver to you such other evidence which is
satisfactory to you of compliance with the provisions hereof.
3.9. We shall promptly notify you in writing of the details of any
loss, damage, investigation, action, suit, proceeding or claim relating to
the Collateral or which would result in any material adverse change in our
business, assets, goodwill or condition, financial or otherwise.
3.10. At your option, you may apply any insurance monies received at any
time to the cost of repairs to or replacement for the Inventory and/or to
payment of any of the Obligations, whether or not due, in any order and in
such manner as you, in your sole discretion, may determine.
3.11. Upon your request, at any time and from time to time, we shall, at
our sole cost and expense, execute and deliver to you written reports or
appraisals as to the Inventory listing all locations, items and categories
thereof, describing the condition of same and setting forth the lower of cost
or fair market value thereof, in such form as is reasonably satisfactory to you.
3.12. We shall (a) use, store and maintain the Inventory with all
reasonable care and caution and (b) use the Inventory for lawful purposes
only and in conformity with applicable laws, ordinances, regulations and
insurance policies.
3.13. We assume all responsibility and liability arising from or
relating to the use, sale or other disposition of the Inventory and other
Collateral.
SECTION 4. INDEMNIFICATION AND RELEASE.
4.1. We shall and do hereby indemnify you and hold you harmless from
and against, and agree to pay you on demand the amount of, any and all
losses, costs, claims,demands, causes of action, liabilities or expenses
(collectively, "Liabilities") which you may suffer or incur arising from or
in connection with any transactions or occurrences relating to any Credit,
the Collateral and any documents, drafts or acceptances thereunder or
relating thereto, including, but not limited to, Liabilities due to any
action taken by any bank or other issuer or correspondent with respect to any
Credit except for any such Liabilities arising from your own willful
misconduct. We further agree to and do hereby release and hold you harmless
for any acts, waivers, errors, delays or omissions, whether caused by you, by
any bank or other issuer or correspondent or otherwise with respect to or
relating to any Credit except for any such acts, waivers, errors, delays or
omissions arising from your own willful misconduct. Our unconditional
obligation to you hereunder shall not be modified or diminished for any reason
or in any manner whatsoever. Any fees, commissions or other charges made to
you with respect to any Credit or other Obligations by any bank or other
issuer or correspondent thereof shall be conclusive and may be charged by you
to any of our account(s) maintained by you.
<PAGE>
all risk, loss, liabilities, charges and expenses with respect to their acts
or omissions.
*, absent your own willful misconduct,
4.3. If any Credit provides that payment is to be made by any bank,
other issuer or correspondent, you shall not be responsible for the failure
of any of the documents specified in any Credit to come into your possession
or for any delay in connection therewith, and our obligation to make
reimbursement shall not be affected by such failure or delay in the receipt
by you of any such documents, absent your willful misconduct.
4.4. We agree that any action taken by you, or any action taken by any
bank or other issuer or correspondent under or in connection with any Credit,
the Collateral and any documents, drafts or acceptances thereunder, shall,
notwithstanding any judgment or instructions we may or may not express to the
contrary or inconsistent therewith, be conclusive and binding on us and shall
not create any resulting liability to you, except for your own willful
misconduct or gross negligence. In furtherance thereof, you shall have the
full and sole right and authority to, in good faith,: (a) clear and resolve
any questions of non-compliance of documents; (b) give any instructions as to
acceptance or rejection of any documents or goods; (c) execute any and all
applications for steamship or airway guaranties, indemnities or delivery
orders; (d) grant any extensions of the maturity of, time of payment for, or
time of presentation of, any drafts, acceptances, or documents; and (e) agree
to any amendments, renewals, extensions, modifications, changes or
cancellations of any of the terms or conditions of any of the applications,
Credits, or documents, drafts or acceptances thereunder or any letters of
credit included in the Collateral; all in your sole name, and any bank or
other issuer or correspondent shall be entitled to comply with and honor any
and all such documents or instruments executed by or received solely from
you, all without any notice to or any consent from us.
4.5. Without your express consent and endorsement in writing, we agree
not to: (a) approve or resolve any questions of non-compliance of documents;
(b) give any instructions as to acceptance or rejection of any documents or
goods; (c) execute any and all applications for steamship or airway
guaranties, indemnities or delivery orders; (d) grant any extensions of the
maturity of, time of payment for, or time of presentation of, any drafts,
acceptances or documents; or (e) agree to any amendments, renewals,
extensions, modifications, changes or cancellations of any of the terms or
conditions of any of the applications, Credits, or documents, drafts or
acceptances thereunder.
4.6. Any rights, remedies, duties or obligations granted or undertaken
by us to any bank or other issuer or correspondent in any application for any
Credit, or any outstanding agreement relating to the opening or issuance of
any Credit or acceptances or otherwise, shall be deemed to have been granted to
you and apply in all respects to you and shall be in addition to any rights,
remedies, duties or obligations contained herein.
4.7. Any duties or obligations undertaken by you to any bank or other
issuer or correspondent in any application for or in connection with any
Credit, including any outstanding agreement relating to the opening or
issuance of any Credit or otherwise, shall be deemed to have been undertaken
by us and apply in all respects to us and shall be in addition to the duties
or obligations contained herein.
SECTION 5. ADDITIONAL REMEDIES
Upon the occurence of any Event of Default and at any time thereafter,
you shall have the right (in addition to any other rights you may have under
the Agreement, this Supplement or otherwise), without notice to us, at any
time and from time to time, in your discretion, with or without judicial
process or the aid or assistance of others and without cost to you:
5.1. To enter upon any premises on or in which any of the Inventory may
be located and, without resistance or interference by us, take possession
of the Inventory;
5.2. To complete processing, manufacturing, repair and shipment to
customers of all or any portion of the Inventory;
5.3. To sell, foreclose or otherwise dispose of any part or all of the
Inventory on or in any of our premises or premises of any other party;
5.4. To require us, at our expense, to assemble and make available to
you any part or all of the Inventory at any place and time reasonably
designated by you;
5.5. To remove any or all of the Inventory from any premises on or in
which the same may be located, for the purpose of effecting the sale,
foreclosure or other disposition thereof or for any other purpose (and if any
of the Inventory consists of motor vehicles, you may use our registrations
and license plates).
IN WITNESS WHEREOF, we have caused these presents to be duly executed
this 16th day of June, 1992.
By: I.C. ISAACS & COMPANY L.P.
By: ISBUYCO, INC., General Partner
/s/ Robert J. Arnot
By:---------------------------------
Chairman
Title:------------------------------
<PAGE>
EXHIBIT A TO
TRADE FINANCING AGREEMENT SUPPLEMENT
LOCATIONS OF COLLATERAL
1. I.C. Isaacs & Company, L.P.
3840 Bank Street
Baltimore, MD 21224
2. Sussex Co.
McColley & S.E. 4t Street
Milford, DE 19963
3. Lord Isaacs Factory Outlet
678A North Dupont Highway
Milford, Delaware 19963
4. Newton Co.
300 North Newton Avenue
Newton, MS 39345
5. Carthage Co.
511 East Franklin Street
Carthage, MS 39051
6. Raleigh Co.
Highway 18 West
Box 278
Raleigh, MS 39153
7. 1410 Broadway
New York, NY 10018
8. Empire State Building
New York, NY 10118
9. Atlanta Apparel Mart
240 Peachtree Street, N.W.
Suite 2200
Atlanta, GA 30043
10. Bayside Mdse. Mart
150-160 Mt. Vernon Street
Boston, MA 02125
11. California Mart
110 East Ninth Street
Suite A727
Los Angeles, CA 90079
12. Miami International Mdse. Mart
777 N.W. 72nd Avenue
Miami, FL 33126
13. Dallas Market Center
2100 Stemmons Freeway
Dallas, Texas 75207
<PAGE>
Exhibit 10.08(e)
October 30, 1992
Congress Financial Corporation
1133 Avenue of the Americas
New York, NY 10036
Re: Amendment to Financing Agreements
Dear Gentlemen:
Reference is made to the Account Financing Agreement [Security Agreement]
between Congress Financial Corporation ("Congress") and I.C. Isaacs & Company
L.P. ("Borrower") dated as of June 16, 1992 (the "Accounts Agreement") and
all supplements thereto, and all other agreements, documents and instruments
related thereto and executed in connection therewith including, the Covenant
Supplement to Account Financing Agreement {Security Agreement} ("Covenant
Supplement"), as the same now exists or may hereafter be amended, modified,
supplemented, extended, renewed, restated or replaced (collectively, the
"Financing Agreements"). Capitalized terms used herein, unless otherwise
defined herein shall have the meaning set forth in the Financing Agreements.
Borrower has requested certain modifications to the Financing Agreements
and Congress is willing to agree to such modifications, subject to the terms
and conditions set forth herein.
In consideration of the foregoing, and the mutual agreements and covenants
contained herein and for other good and valuable consideration, Borrower and
Congress hereby agree as follows:
1. Subordinated Notes. Exhibit A of the Covenant Supplement shall be
and is hereby amended by adding the following thereto:
"Charles Boutwell
$3,386.26 Junior Subordinated Note, dated September 28, 1992.
Robert Flynn, Jr.
$3,386.26 Junior Subordinated Note, dated September 28, 1992.
<PAGE>
Marion Pelton
$3,386.26 Junior Subordinated Note, dated September 28, 1992.
Joanne Kraft
$3,386.26 Junior Subordinated Note, dated September 28, 1992.
Charles Godfrey
$8,465.65 Junior Subordinated Note, dated September 21, 1992.
Thomas Ormandy
$1,693.13 Junior Subordinated Note, dated September 28, 1992.
Eugene C. Wielepski
$3,961.92 Junior Subordinated Note, dated September 28, 1992.
Charles Chamblee
$575.66 Junior Subordinated Note, dated September 28, 1992.
William Myatt
$575.66 Junior Subordinated Note, dated September 28, 1992.
2. Permitted Indebtedness. Exhibit D to Covenant Supplement is
hereby amended by adding the following thereto:
"Charles Boutwell
$3,386.26 Junior Subordinated Note, dated September 28, 1992.
Robert Flynn, Jr.
$3,386.26 Junior Subordinated Note, dated September 28, 1992.
Marion Pelton
$3,386.26 Junior Subordinated Note, dated September 28, 1992.
Joanne Kraft
$3,386.26 Junior Subordinated Note, dated September 28, 1992.
Charles Godfrey
$8,465.65 Junior Subordinated Note, dated September 21, 1992.
Thomas Ormandy
$1,693.13 Junior Subordinated Note, dated September 28, 1992.
Eugene C. Wielepski
$3,961.92 Junior Subordinated Note, dated September 28, 1992.
Charles Chamblee
$575.66 Junior Subordinated Note, dated September 28, 1992.
William Myatt
$575.66 Junior Subordinated Note, dated September 28, 1992.
2
<PAGE>
3. Effect and Entirety of this Amendment. Except as specifically
modified pursuant hereto, no other changes or modifications to the Financing
Agreements are intended or implied and, in all other respects, the Financing
Agreements are hereby ratified and confirmed by all parties hereto as of the
date hereof. This Amendment represents and incorporates the entire
understanding and agreements of the parties with respect to the matters
set forth herein and the parties hereto agree that there are no
representations, warranties, covenants or understandings of any kind, nature
or description whatsoever made by Congress to Borrower with respect to this
Amendment, except as specifically set forth herein. This Amendment represents
the final agreement between the parties and may not be contradicted by
evidence or prior, contemporaneous or subsequent oral agreements of the
parties.
4. Waiver, Modification, Etc. No provision or term hereof may be
modified, altered, waived, discharged or terminated orally, but only by an
instrument in writing executed by the party against whom such modification,
alteration, waiver, discharge or termination is sought.
5. Further Assurances. The parties hereto shall execute and deliver such
additional documents and take such additional action as may be necessary to
effectuate the provisions and purposes of this Amendment.
6. Counterparts. This Amendment may be executed in one or more
counterparts which, taken together, shall constitute the agreement of the
parties.
Very truly yours,
I.C. Isaacs & Company L.P.
By: Isbyco, Inc., General Partner
By: /s/ Eugene C. Wielepski
___________________________
Title: VP
________________________
Agreed and Accepted:
CONGRESS FINANCIAL CORPORATION
By: /s/ Alan Lapidus
________________________
Title: AVP
_____________________
3
<PAGE>
As of January 4, 1993
Congress Financial Corporation
1133 Avenue of the Americas
New York, NY 10036
Re: Second Amendment to Financing Agreements
Dear Gentlemen:
Reference is made to Accounts Financing Agreement [Security Agreement]
between Congress Financial Corporation ("Congress") and I.C. Issacs & Co.
L.P. ("Borrower") dated as of June 16, 1992 ( the "Accounts Agreement") and
all supplements thereto, and all other agreements, documents and instruments
related thereto and executed in connection therewith including, the Covenant
Supplement to Accounts Financing Agreement [Security Agreement] ("Covenant
Supplement") and the Inventory and Equipment Security Agreement Supplement to
Accounts Financing Agreement [Security Agreement] ("Inventory and Equipment
Security Agreement"), as each is amended by the amendment to Financing
Agreements dated October 30, 1992, as the same now exists or may hereafter be
further amended, modified, supplemented, extended, renewed, restated or
replaced (collectively, the "Financing Agreements"). Capitalized terms used
herein, unless otherwise defined herein shall have the meaning set forth in
the Financing Agreements.
Borrower has requested supplemental loans in an amount up to $500,000
under the Financing Agreements and certain modifications to the Financing
Agreements and Congress is willing to agree to such supplemental loans and
modifications, subject to the terms and conditions set forth herein.
In consideration of the foregoing, and the mutual agreements and covenants
contained herein and for other good and valuable consideration, Borrower and
Congress hereby agree as follows:
1. Maximum Credit. All references to "Maximum Credit" in the Financing
Agreements, including but not limited to Section 1.7 of the Accounts
Agreement, shall be deemed and each such reference is hereby amended by
replacing the figure "$10,000,000" with the figure "$11,000,000".
2. Supplemental Loans. Section 2.1 of the Accounts Agreement is hereby
deleted in its entirety and replaced with the following:
<PAGE>
"2.1. You shall, in your discretion, make loans to us from time to time,
at our request, of up to eighty percent (80%) of the Net Amount of Eligible
Accounts (or such greater or lesser percentage thereof as you shall in your
sole discretion determine from time to time). Subject to the terms and
conditions hereof, you may also, in your discretion, make loans to us from
time to time, at our request, of up to $500,000 in excess of such lending
formula until May 28, 1993, subject to reduction thereof as hereafter set
forth, (the "Supplemental Loans"); provided, however, the maximum
aggregate outstanding amount of such Supplemental Loans shall not exceed
the lesser of (a) $500,000 and (b) the sum of (i) fifty percent (50%) of
the "Value" (as hereinafter defined) of our first quality imported
finished goods Inventory (as such term is defined in the Inventory and
Equipment Security Agreement) for our current selling season, acceptable
to you in all respects, plus (ii) up to five percent (5%) of the Net Amount
of Eligible Accounts. "Value" shall mean the lower of (a) cost computed on
a first-in-first-out basis or (b) market price, as determined by you.
Notwithstanding anything to the contrary contained herein, the maximum
amount of permitted Supplemental Loans available to us from you shall
decrease on the dates and in the amounts indicated below and any
outstanding Supplemental Loans in excess of such permitted maximum amount
shall be repaid concurrently with such reduction:
Date of Reduction Reduced Maximum Amount
----------------- ----------------------
May 7, 1993 $375,000
May 14, 1993 $250,000
May 21, 1993 $125,000
May 28, 1993 -0- "
3. Capital Expenditures. Section 4.12 of the Covenant Supplement is hereby
deleted in its entirety and replaced with the following:
"4.12 Capital Expenditures. Borrower will not, in the aggregate,
directly or indirectly, expend or commit to expend, Capital Expenditures in
excess of $431,000 in fiscal year 1992 or in excess of $300,000 in any fiscal
year thereafter."
4. Fee. In partial consideration of the amendments to the Financing
Agreements as set forth herein, Borrower agrees to pay Congress a fee in an
amount equal to $10,000, payable simultaneously with the execution hereof,
which fee is fully
- 2 -
<PAGE>
earned as of the data hereof. At Congress' option, Congress may charge such
fee directly to Borrower's loan account.
5. Effect and Entirety of this Amendment. Except as specifically
modified pursuant hereto, no other changes or modifications to the Financing
Agreements are intended or implied and, in all others respects, the Financing
Agreements are hereby ratified and confirmed by all parties hereto as of the
date hereof. This Amendment represents and incorporates the entire
understanding and agreements of the parties with respect to the matters set
forth herein and the parties hereto agree that there are no representations,
warranties, covenants or understandings of any kind, nature or description
whatsoever made by Congress to Borrower with respect to this Amendment,
except as specifically set forth herein. This Amendment represents the final
agreement between the parties and may not be contradicted by evidence or
prior, contemporaneous or subsequent oral agreements of the parties.
6. Waiver, Modification, Etc. No provision or term hereof may be
modified, altered, waived, discharged or terminated orally, but only by an
instrument in writing executed by the party against whom such modification,
alteration, waiver, discharge or termination is sought.
7. Further Assurances. The parties hereto shall execute and deliver
such additional documents and take such additional action as may be necessary
to effectuate the provisions and purposes of this Amendment.
8. Counterparts. This Amendment may be executed in one or more
counterparts which, taken together, shall constitute the agreement of the
parties.
Very truly yours,
I.C. ISAACS & CO. L.P.
By: ISBUYCO, INC., General Partner
By: /s/ Eugene C. Wielepski
--------------------------
Title: VP
-----------------------
Agreed and Accepted:
CONGRESS FINANCIAL CORPORATION
By: /s/ Alan M. Lapidus
- -------------------------------
Title: AVP
------------------------
- 3 -
<PAGE>
As of March 10, 1993
Congress Financial Corporation
1133 Avenue of the Americas
New York, NY 10036
Re: Third Amendment to Financing Agreements
Dear Gentlemen:
Reference is made to the Accounts Financing Agreement [Security Agreement]
between Congress Financial Corporation ("Congress") and I.C. Isaacs & Co.
L.P. ("Borrower") dated as of June 16, 1992 (the "Accounts Agreement") and
all supplements thereto, and all other agreements, documents and instruments
related thereto and executed in connection therewith including, the Covenant
Supplement to Accounts Financing Agreement [Security Agreement] ("Covenant
Supplement") and the Inventory and Equipment Security Agreement Supplement to
Accounts Financing Agreement [Security Agreement] ("Inventory and Equipment
Security Agreement"), as each is amended by the Amendment to Financing
Agreements dated October 30, 1992 and Second Amendment to Financing
Agreements dated as of January 4, 1993, as the same now exists or may
hereafter be further amended, modified, supplemented, extended, renewed,
restated or replaced (collectively, the "Financing Agreements"). Capitalized
terms used herein, unless otherwise defined herein shall have the meaning set
forth in the Financing Agreements.
Borrower has requested certain modifications to the Financing Agreements
and Congress is willing to agree to such modifications, subject to the terms
and conditions set forth herein.
In consideration of the foregoing, and the mutual agreements and
covenants contained herein and for other good and valuable consideration,
Borrower and Congress hereby agree as follows:
1. Supplemental Loans. Section 2.1 of the Accounts Agreement, as amended
by the Second Amendment, is hereby deleted in its entirety and replaced with
the following:
"2.1 You shall, in your discretion, make loans to us from time to
time, at our request, of up to eighty percent (80%) of the Net Amount of
Eligible Accounts (or such greater or lesser percentage thereof as you shall
in your sole discretion determine from time to time). Subject to the terms
and conditions hereof, you
<PAGE>
may also, in your discretion, make loans to us from time to time, at our
request, of up to $1,000,000 in excess of such lending formula until July
29, 1993, subject to reduction thereof as hereafter set forth, (the
"Supplemental Loans"); provided, however, the maximum aggregate
outstanding amount of such Supplemental Loans shall not exceed the lesser
of (a) $1,000,000 and (b) the sum of (i) fifty percent (50%) of the
aggregate "Value" (as hereinafter defined) of our first quality (A)
imported finished goods Inventory (as such term is defined in the
Inventory and Equipment Security Agreement), (B) imported raw materials
Inventory and (C) imported raw materials Inventory which has been
manufactured in the United States into finished goods Inventory, provided,
however, in each such cash such Inventory is held by us for manufacturing
and/or resale in our current selling season and is acceptable to you in
all respects, plus (ii) up to five percent (5%) of the Net Amount of
Eligible Accounts. "Value" shall mean the lower of (a) cost computed on a
first-in-first-out basis or (b) market price, as determined by you.
Notwithstanding anything to the contrary contained herein the outstanding
balance of Supplemental Loans shall be repaid in full on July 30, 1993."
2. Fee. In partial consideration of the amendments to the Financing
Agreements as set forth herein, Borrower agrees to pay Congress a fee in an
amount equal to $7,500, payable simultaneously with the execution hereof,
which fee is fully earned as of the date hereof. At Congress' option,
Congress may charge such fee directly to Borrower's loan account.
3. Inventory Reports. In addition to any reports or appraisals as to
Inventory which Borrower is currently required to deliver to Congress
pursuant to the Financing Agreements, Borrower shall deliver to Congress, not
less than once a week, a report of its first quality imported raw materials
Inventory, imported finished goods Inventory and imported raw materials
Inventory that has been converted into finished goods Inventory, all in a
form satisfactory to Congress.
4. Effect and Entirety of this Amendment. Except as specifically modified
pursuant hereto, no other changes or modifications to the Financing
Agreements are intended or implied and, in all other respects, the Financing
Agreements are hereby ratified and confirmed by all parties hereto as of the
date hereof. This Amendment represents and incorporates the entire
understanding and agreements of the parties with respect to the matters set
forth herein and the parties hereto agree that there are no representations,
warranties, covenants or understandings of any kind, nature or description
whatsoever made by Congress to
-2-
<PAGE>
Borrower with respect to this Amendment, except as specifically set forth
herein. This Amendment represents the final agreement between the parties and
may not be contradicted by evidence or prior, contemporaneous or subsequent
oral agreements of the parties.
5. Waiver, Modification, Etc. No provision or term hereof may be modified,
altered, waived, discharged or terminated orally, but only by an instrument
in writing executed by the party against whom such modification, alteration,
waiver, discharge or termination is sought.
6. Further Assurances. The parties hereto shall execute and deliver such
additional documents and take such additional action as may be necessary to
effectuate the provisions and purposes of this Amendment.
7. Counterparts. This Amendment may be executed in one or more
counterparts which, taken together, shall constitute the agreement of the
parties.
Very truly yours,
I.C. ISAACS & CO. L.P.
By: ISBUYCO, INC., General Partner
By: /s/ Gerald W. Lear
-------------------
Title: CEO
-------------------
Agreed and Accepted:
CONGRESS FINANCIAL CORPORATION
By: /s/ Alan M. Lapidus
---------------
Title: AVP
---------------
Acknowledged:
/s/ Robert J. Arnot
---------------
ROBERT ARNOT
/s/ Gary Brashers
---------------
GARY BRASHERS
/s/ Stanley Keller
---------------
STANLEY KELLER
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<PAGE>
[SIGNATURES CONTINUED FROM PREVIOUS PAGE]
/s/ Gerald Lear
- ------------
GERALD LEAR
/s/ Eugene Wielepski
- ------------
EUGENE WIELEPSKI
/s/ Ira Hechler
- ------------
IRA HECHLER
- 4 -
<PAGE>
May 1, 1993
Congress Financial Corporation
1133 Avenue of the Americas
New York, NY 10036
Re: Fourth Amendment to Financing Agreements
Gentlemen:
Reference is made to the Accounts Financing Agreement [Security Agreement]
between Congress Financial Corporation ("Congress") and I.C. Isaacs & Co.
L.P. ("Borrower") dated as of June 16, 1992 (the "Accounts Agreement") and
all supplements thereto, and all other agreements, documents and instruments
related thereto and executed in connection therewith including, the Covenant
Supplement to Accounts Financing Agreement [Security Agreement] ("Covenant
Supplement") and the Inventory and Equipment Security Agreement Supplement to
Accounts Financing Agreement [Security Agreement] ("Inventory and Equipment
Security Agreement"), as each is amended by the Amendment to Financing
Agreements dated October 30, 1992, Second Amendment to Financing Agreements
dated as of January 4, 1993 and the Third Amendment to Financing Agreements
dated as of March 10, 1993, as the same now exists or may hereafter be
further amended, modified, supplemented, extended, renewed, restated or
replaced (collectively, the "Financing Agreements"). Capitalized terms used
herein, unless otherwise defined herein shall have the meaning set forth in
the Financing Agreements.
Borrower has requested supplemental loans in an amount up to $2,500,000
under the Financing Agreements and certain modifications to the Financing
Agreements and Congress is willing to agree to such supplemental loans and
modifications, subject to the terms and conditions set forth herein.
In consideration of the foregoing, and the mutual agreements and covenants
contained herein and for other good and valuable consideration, Borrower and
Congress hereby agree as follows:
1. Maximum Credit. All references to Maximum Credit in the Financing
Agreements, including but not limited to Section 1.7 of the Accounts
Agreement, shall be deemed and each such reference is hereby amended by
replacing the figure "$11,000,000" with the figure "$14,000,000".
<PAGE>
2. Supplemental Loans. Section 2.1 of the Accounts Agreement, as amended
by the Third Amendment, is hereby deleted in its entirety and replaced with
the following:
"2.1. You shall, in your discretion, make loans to us from time to
time, at our request, of up to eighty percent (80%) of the Net Amount of
Eligible Accounts (or such greater or lesser percentage thereof as you
shall in your sole discretion determine from time to time). Subject to the
terms and conditions hereof, you may also, in your discretion, make loans
to us from time to time, at our request, of up to $2,500,000 in excess of
such lending formula until November 11, 1993, subject to reduction thereof
as hereafter set forth, (the "Supplemental Loans"); provided, however, the
maximum aggregate outstanding amount of such Supplemental Loans shall be
reduced, commencing September 10, 1993, in successive and cumulative
amount of $250,000 each on September 10, 1993 and the last business day of
each week thereafter. Notwithstanding anything to the contrary contained
herein the entire outstanding balance of all Supplemental Loans shall be
repaid in full not later than November 12, 1993."
3. Supplemental Loan and Increased Line Fee. In partial consideration of
the increase in the Maximum Credit and Supplemental Loans as set forth
herein, Borrower agrees to pay Congress a fee in an amount equal to $45,000,
payable simultaneously with the execution hereof, which fee is fully earned
as of the date hereof. At Congress' option, Congress may charge such fee
directly to Borrower's loan account.
4. Unused Line Fee. Section 3.5 of the Accounts Agreement is amended by
replacing the figure "$8,000,000" in two (2) places therein with the figure
"$11,500,000" in such two (2) places.
5. Effect and Entirety of this Amendment. Except as specifically modified
pursuant hereto, no other changes or modifications to the Financing
Agreements are intended or implied and, in all other respects, the Financing
Agreements are hereby ratified and confirmed by all parties hereto as of the
date hereof. This Amendment represents and incorporates the entire
understanding and agreements of the parties with respect to the matters set
forth herein and the parties hereto agree that there are no representations,
warranties, covenants or understandings of any kind, nature or description
whatsoever made by Congress to Borrower with respect to this Amendment,
except as specifically set forth herein. This Amendment represents the final
agreement between the parties and may not be contradicted by evidence or
-2-
<PAGE>
prior, contemporaneous or subsequent oral agreements of the parties.
6. Waiver, Modification, Etc. No provision or term hereof may be
modified, alter, waived, discharged or terminated orally, but only by an
instrument in writing executed by the party against whom such modification,
alteration, waiver, discharge or termination is sought.
7. Further Assurances. The parties hereto shall execute and deliver
such additional documents and take such additional action as may be necessary
to effectuate the provisions and purposes of this Amendent.
8. Counterparts. This Amendent may be executed in one or more
counterparts which, taken together, shall constitute the agreement of the
parties.
Very truly yours,
I.C. ISAACS & CO. L.P.
By: ISBUYCO, INC., General Partner
By: /s/ Gerald W. Lear
--------------------------
Title: CEO
--------------------------
Agreed and Accepted:
CONGRESS FINANCIAL CORPORATION
By: /s/ James DeSantis
---------------------------
Title: Vice President
------------------------
ACKNOWLEDGED:
/s/ Ira Hechler
- -------------------------------
IRA HECHLER
/s/ Robert Arnot
- -------------------------------
ROBERT ARNOT
/s/ Gerald Lear
- -------------------------------
GERALD LEAR
/s/ Eugene Wielepski
- -------------------------------
EUGENE WIELEPSKI
/s/ Gary Brashers
- -------------------------------
GARY BRASHERS
/s/ Stanley Keller
- -------------------------------
STANLEY KELLER
- 3 -
<PAGE>
January 1, 1994
Congress Financial Corporation
1133 Avenue of the Americas
New York, NY 10036
Re: Fifth Amendment to Financing Agreements
Gentlemen:
Reference is made to the Accounts Financing Agreement [Security Agreement]
between Congress Financial Corporation ("Congress") and I.C. Isaacs & Co.
L.P. ("Borrower") dated as of June 16, 1992 (the "Accounts Agreement") and
all supplements thereto, and all other agreements, documents and instruments
related thereto and executed in connection therewith including, the Covenant
Supplement to Accounts Financing Agreement [Security Agreement] ("Covenant
Supplement"), the Inventory and Equipment Security Agreement Supplement to
Accounts Financing Agreement [Security Agreement] ("Inventory and Equipment
Security Agreement") and the Trade Financing Agreement Supplement to Accounts
Financing Agreement [Security Agreement] (the "Trade Financing Agreement"),
as each is amended by the Amendment to Financing Agreements dated October 30,
1992, Second Amendment to Financing Agreements dated as of January 4, 1993,
Third Amendment to Financing Agreements dated as of March 10, 1993 and Fourth
Amendment to Financing Agreements dated May 1, 1993, as the same now exist or
may hereafter be further amended, modified, supplemented, extended, renewed,
restated or replaced (collectively, the "Financing Agreements"). Capitalized
terms used herein, unless otherwise defined herein, shall have the meaning
set forth in the Financing Agreements.
Borrower has requested an extension of, and certain modifications to, the
Financing Agreements and Congress is willing to agree to such extension and
modifications, subject to the terms and conditions set forth herein.
In consideration of the foregoing, and the mutual agreements and covenants
contained herein and for other good and valuable consideration, Borrower and
Congress hereby agree as follows:
1. Supplemental Loans. Section 2.1 of the Accounts Agreement, as amended
by the Fourth Amendment, is hereby deleted in its entirety and replaced with
the following:
"2.1. You shall, in your discretion, make loans to us from time to
time, at our request, of up to eighty percent (80%) of the Net Amount of
Eligible Accounts (or such greater or lesser percentage thereof as you shall
in your sole discretion determine from time to time). Subject to the terms
and conditions hereof, you may also, in your discretion, make loans to us from
time to time, in excess of such lending formula, at our request, of up to (a)
$2,000,000 from the date hereof until February 28, 1994, and (b) $1,500,000
from March 1, 1994 until August 31, 1994,
<PAGE>
subject to further reduction thereof as hereafter set forth (collectively,
the "Supplemental Loans"); provided, however, the maximum aggregate
outstanding amount of such Supplemental Loans shall be further reduced,
commencing August 12, 1994, in successive and cumulative amounts of
$375,000 each on August 12, 1994, August 19, 1994, August 26, 1994 and
August 31, 1994. Notwithstanding anything to the contrary contained
herein, the outstanding balance of any Supplemental Loans in excess of
$1,500,000 shall be repaid not later than March 1, 1994 and the entire
outstanding balance of all Supplemental Loans shall be repaid in full not
later than August 31, 1994."
2. Renewal Date. Section 9.1 of the Accounts Agreement is hereby amended
by deleting the first sentences thereof in it entirety and substituting the
following therefor:
"9.1. This Agreement shall become effective upon acceptance by you and
shall continue in full force and effect for a term ending June 16, 1995
(the "Renewal Date") and from year to year thereafter, unless sooner
terminated pursuant to the terms hereof."
3. Early Termination Fee. Section 9.2 of the Accounts Agreement is hereby
amended by adding the following sentence at the end of Section 9.2 set forth
on the Rider to the Accounts Agreement:
", or (c) one-half of one (1/2 of 1%) percent of the Maximum Credit if
such termination occurs after the second anniversary of this Agreement
but prior to the third anniversary of this Agreement."
4. Letter of Credit Sublimit. Section 1.5 of the Trade Financing Agreement
is hereby amended by deleting the reference to "$1,500,000" and replacing it
with "$2,000,000".
5. Supplemental Loan and Extension Fee. In partial consideration of the
extension of the term of the Financing Agreements, the Supplemental Loans and
the other modifications to the Financing Agreements as set forth herein,
Borrower agrees to pay Congress a fee in an amount equal to $35,000, payable
simultaneously with the execution hereof, which fee is fully earned as of the
date hereof. At Congress' option, Congress may charge such fee directly to
Borrower's loan account.
6. Effect and Entirety of this Amendment. Except as specifically modified
pursuant hereto, no other changes or modifications to the Financing
Agreements are intended or implied and, in all other respects, the Financing
Agreements are hereby ratified and confirmed by all parties hereto as of the
date hereof. This Amendment represents and incorporates the entire
understanding and agreements of the parties with respect to the matters set
forth herein and the parties hereto agree that there are no representations,
warranties, covenants or understandings of any kind, nature or description
whatsoever made by Congress to Borrower with respect to this Amendment,
except as specifically set forth herein. This Amendment represents the final
agreement between the parties and may not be contradicted by evidence or
-2-
<PAGE>
prior, contemporaneous or subsequent oral agreements of the parties.
7. Waiver, Modification, Etc. No provision or term hereof may be modified,
altered, waived, discharged or terminated orally, but only by an instrument
in writing executed by the party against whom such modification, alteration,
waiver, discharge or termination is sought.
8. Further Assurances. The parties hereto shall execute and deliver such
additional documents and take such additional action as may be necessary to
effectuate the provisions and purposes of this Amendment.
9. Counterparts. This Amendment may be executed in one or more counterparts
which, taken together, shall constitute the agreement of the parties.
Very truly yours,
I.C. ISAACS & CO. L.P.
By: ISBUYCO, INC., General Partner
By: /s/ Robert J. Arnot
--------------------------
Title: Chairman
-----------------------
Agreed and Accepted:
CONGRESS FINANCIAL CORPORATION
By: /s/ James DeSantis
---------------------
Title: Vice President
------------------
ACKNOWLEDGED:
/s/ Ira Hechler
- -------------------------
Ira Hechler
/s/ Robert Arnot
- -------------------------
Robert Arnot
/s/ Gerald Lear
- -------------------------
Gerald Lear
/s/ Eugene Wielepski
- -------------------------
Eugene Wielepski
/s/ Gary Brashers
- -------------------------
Gary Brashers
/s/ Stanley Keller
- -------------------------
Stanley Keller
- 3 -
<PAGE>
[Letterhead]
September 1, 1993
Congress Financial Corporation
1133 Avenue of the Americas
New York, New York 10036
Re: Sixth Amendment to Financing Agreements
Gentlemen:
Reference is made to our letter agreement with respect to
the above, dated May 1, 1993 (the "Fourth Amendment"). All
capitalized terms used herein shall have the meanings set forth
in the Fourth Amendment.
This will confirm our mutual agreement as follows:
1. The Maximum Credit as defined in the Fourth
Amendment and the Financing Agreements shall be increased to the
sum of $15,000,000 on and after the date hereof;
2. Section 3.5 of the Accounts Agreement is amended
as of the date hereof by replacing the figure "$11,500,000 in
two places therein with the figure "12,500,000" in such two
places;
3. In consideration of the foregoing, the undersigned
agrees to pay you a fee in the amount of $10,000, payable
simultaneously with the execution hereof, which fee is fully
earned as of the date hereof and, at your option, you may charge
such fee directly to our loan account with you;
4. Except as hereinabove specifically provided, the
Financing Agreements are hereby ratified, confirmed and extended;
and
5. This letter may be executed in one or more
counterparts which, taken together shall constitute the agreement
of the parties.
Very truly yours,
I.C. ISAACS & CO. L.P.
By: ISBUYCO, INC., General Partner
By: /s/ Eugene C. Wiclopski
-------------------------------
Title: VP
----------------------------
Agreed and Accepted:
CONGRESS FINANCIAL CORPORATION
By: /s/ Alan M. Lapidus
--------------------------
Title: AVP
-----------------------
<PAGE>
August 31 , 1994
--
Congress Financial Corporation
1133 Avenue of the Americas
New York, NY 10036
Re: Seventh Amendment to Financing Agreements
Gentlemen:
Reference is made to the Accounts Financing Agreement [Security Agreement]
between Congress Financial Corporation ("Congress") and I.C. Isaacs & Co.
L.P. ("Borrower") dated as of June 16, 1992 ( the "Accounts Agreement") and
all supplements thereto, and all other agreements, documents and instruments
related thereto and executed in connection therewith including, the Covenant
Supplement to Accounts Financing Agreement [Security Agreement], the
Inventory and Equipment Security Agreement Supplement to Accounts Financing
Agreement [Security Agreement] and the Trade Financing Agreement Supplement
to Accounts Financing Agreement [Security Agreement], as from time to time
amended, including the Fifth Amendment to Financing Agreements dated January
1, 1994, as the same now exist or may hereafter be further amended, modified,
supplemented, extended, renewed, restated or replaced (collectively, the
"Financing Agreements"). Capitalized terms used herein, unless otherwise
defined herein, shall have the meaning set forth in the Financing Agreements.
Borrower has requested certain modifications to the Financing Agreements
and Congress is willing to agree to such modifications, subject to the terms
and conditions set forth herein.
In consideration of the foregoing, and the mutual agreements and covenants
contained herein and for other good valuable consideration, Borrower and
Congress hereby agree as follows:
1. Supplemental Loans. Section 2.1 of the Accounts Agreement, as amended
by the Fifth Amendment, is hereby amended by (a) deleting all references to
"August 31, 1994" contained therein and replacing them with "October 31,
1994", (b) deleting all references to "August 12, 1994" contained therein and
replacing them with "October 10, 1994", (c) deleting the reference to "August
19, 1994" contained therein and replacing it with "October 17, 1994" and (d)
deleting the reference to "August 26, 1994" contained therein and replacing
it with "October 24, 1994".
2. Extension Fee. In partial consideration of the extension of the
repayment of the Supplemental Loans as set forth herein, Borrower agrees to
pay Congress an extension fee in an amount equal to $25,000, payable
simultaneously with the execution hereof, which fee is fully earned as of the
date
<PAGE>
hereof. At Congress' option, Congress may charge such fee directly to
Borrower's loan account.
3. Effect and Entirety of this Amendment. Except as specifically modified
pursuant hereto, no other changes or modifications to the Financing
Agreements are intended or implied and, in all other respects, the Financing
Agreements are hereby ratified and confirmed by all parties hereto as of the
date hereof. This Amendment represents and incorporates the entire
understanding and agreements of the parties with respect to the matters set
forth herein and the parties hereto agree that there are no representations,
warranties, covenants or understandings of any kind, nature or description
whatsoever made by Congress to Borrower with respect to this Amendment,
except as specifically set forth herein. This Amendment represents the final
agreement between the parties as to the subject matter hereof and may not be
contradicted by evidence or prior, contemporaneous or subsequent oral
agreements of the parties.
4. Waiver, Modification, Etc. No provision or term hereof may be modified,
altered, waived, discharged or terminated orally, but only by an instrument
in writing executed by the party against whom such modification, alteration,
waiver, discharge or termination is sought.
5. Further Assurances. The parties hereto shall execute and deliver such
additional documents and take such additional action as may be necessary to
effectuate the provisions and purposes of this Amendment.
6. Counterparts. This Amendment may be executed in one or more
counterparts which, taken together, shall constitute the agreement of the
parties.
Very truly yours,
I.C. ISAACS & CO. L.P.
By: ISBUYCO, INC., General Partner
By: /s/ Gerald W. Lear
--------------------
Title: President
--------------------
Agreed and Accepted:
CONGRESS FINANCIAL CORPORATION
By: /s/James DeSantis
--------------------
Title: Vice President
--------------------
[SIGNATURES CONTINUE ON NEXT PAGE]
- 2 -
<PAGE>
[SIGNATURES CONTINUED FROM PREVIOUS PAGE]
ACKNOWLEDGED:
/s/ Ira Hechler
- ---------------------
IRA HECHLER
/s/ Robert Arnot
- ---------------------
ROBERT ARNOT
/s/ Gerald Lear
- ---------------------
GERALD LEAR
/s/ Eugene Wielepski
- ---------------------
EUGENE WIELEPSKI
/s/ Gary Brashers
- ---------------------
GARY BRASHERS
/s/ Stanley Keller
- ---------------------
STANLEY KELLER
- 3 -
<PAGE>
December 31, 1994
Congress Financial Corporation
1133 Avenue of the Americas
New York, NY 10036
Re: Eighth Amendment to Financing Agreements
Gentlemen:
Reference is made to the Accounts Financing Agreement [Security Agreement]
between Congress Financial Corporation ("Congress") and I.C. Isaacs & Co.
L.P. ("Borrower") dated as of June 16, 1992, as amended (the "Accounts
Agreement") and all supplements thereto, and all other agreements, documents
and instruments related thereto and executed in connection therewith
(collectively, all of the foregoing, as the same now exist or may hereafter
be further amended, modified, supplemented, extended, renewed, restated or
replaced, the "Financing Agreements"). Capitalized terms used herein, unless
otherwise defined herein, shall have the meaning set forth in the Financing
Agreements.
Borrowers has requested certain amendments to the Financing Agreements and
Congress is willing to agree to such amendments, subject to the terms and
conditions set forth herein.
In consideration of the foregoing, and the mutual agreements and
covenants contained herein and for other good and valuable consideration,
Borrower and Congress hereby agree as follows:
1. Definitions. The definition of "Financing Agreements" contained in the
Covenant Supplement to the Accounts Agreement between Borrower and Congress
is hereby amended to include, without limitation, the letter agreement re:
Inventory Loans, dated of even date herewith, by Borrower in favor of
Congress.
2. Letter of Credit Sublimit. Section 1.5 of the Trade Financing Agreement
and Supplement to Accounts Agreement, dated June 16, 1992, by Borrower in
favor of Congress, is hereby amended by deleting the reference to
"$3,000,000" and replacing it with "$5,000,000".
3. Effect and Entirety of this Amendment. Except as specifically modified
pursuant hereto, no other changes or modifications to the Financing
Agreements are intended or implied and, in all other respects, the Financing
Agreements are hereby ratified and confirmed by all parties hereto as of the
date hereof. This Amendment represents and incorporates the entire
understanding and agreements of the parties with respect to the matters set
forth herein and the parties hereto agree that there are no representations,
warranties, covenants or understandings of any kind, nature or description
whatsoever made by Congress to Borrower with respect to this Amendment,
except as specifically set forth herein. This Amendment represent the final
agreement
<PAGE>
between the parties as to the subject matter hereof and may not be
contradicted by evidence or prior, contemporaneous or subsequent oral
agreements of the parties.
4. Waiver, Modification, Etc. No provision or term hereof may be
modified, altered, waived, discharged or terminated orally, but only by an
instrument in writing executed by the party against whom such modification,
alteration, waiver, discharge or termination is sought.
5. Further Assurances. The parties hereto shall execute and deliver
such additional documents and take such additional action as may be necessary
to effectuate the provisions and purposes of this Amendment.
6. Counterparts. This Amendment may be executed in one or more
counterparts which, taken together, shall constitute the agreement of the
parties.
Very truly yours,
I.C. ISAACS & CO. L.P.
By: ISBUYCO, INC., General Partner
By: /s/ Robert J. Arnot
-------------------------
Title: Chairman
-------------------------
Agreed and Accepted:
CONGRESS FINANCIAL CORPORATION
By: /s/ Eric S. Miller
-------------------------
Title: Asst. Vice President
-------------------------
ACKNOWLEDGED:
/s/ Ira Hechler
- -------------------------------
IRA HECHLER
/s/ Robert Arnot
- -------------------------------
ROBERT ARNOT
/s/ Gerald Lear
- -------------------------------
GERALD LEAR
/s/ Eugene Wielepski
- -------------------------------
EUGENE WIELEPSKI
/s/ Gary Brashers
- -------------------------------
GARY BRASHERS
/s/ Stanley Keller
- -------------------------------
STANLEY KELLER
<PAGE>
April , 1995
Congress Financial Corporation
1133 Avenue of the Americas
New York, New York 10036
Re: Ninth Amendment to Financing Agreements
Gentlemen:
Reference is made to the Accounts Financing Agreement [Security Agreement]
between Congress Financial Corporation ("Congress") and I.C. Isaacs & Co.
L.P. ("Borrower") dated as of June 16, 1992, as amended (the "Accounts
Agreement") and all supplements thereto, and all other agreements, documents
and instruments related thereto and executed in connection therewith
(collectively, all of the foregoing, as the same now exist or may hereafter
be further amended, modified, supplemented, extended, renewed, restated or
replaced, the "Financing Agreements"). Capitalized terms used herein, unless
otherwise defined herein, shall have the meaning set forth in the Financing
Agreements.
Borrower has requested an extension of, and certain modifications to, the
Financing Agreements and Congress is willing to agree to such extension and
modifications, subject to the terms and conditions set forth herein.
In consideration of the foregoing, and the mutual agreements and covenants
contained herein and for other good and valuable consideration, Borrower and
Congress hereby agree as follows:
1. Supplemental Loans. Section 2.1 of the Accounts Agreement, as
amended, is hereby deleted in its entirety and replaced with the following:
"2.1 You shall, in your discretion, make loans to us from time to
time, at our request, of up to eighty (80%) percent of the Net Amount
of Eligible Accounts (or such greater or lesser percentage thereof as
you shall in your sole discretion determine from time to time).
Subject to the terms and conditions hereof, you may also, in your
discretion, make loans to us from time to time, in excess of such
lending formula, at our request, of up to $1,000,000 from June 15,
1995 until August 15, 1995 (the "Supplemental Loans"). Notwithstanding
anything to the contrary contained herein, the entire outstanding
balance of all Supplemental Loans shall be repaid in full not later
than August 15, 1995."
2. Interest. Effective June 1, 1995, Section 3.1 of the Accounts
Agreement shall be automatically amended by deleting the reference to "two
and one-half percent (2-1/2%): and replacing it with "one percent (1%)".
<PAGE>
3. Unused Line Fee. Effective June 1, 1995, Section 3.5 of the
Accounts Agreement, as amended, shall be automatically further amended by
deleting all references to "$12,500,000" and replacing them with
"$10,000,000".
4. Servicing Fee. Effective June 1, 1995, Section 3.6 of the
Accounts Agreement shall be automatically amended by deleting the reference
to "$2,000" and replacing it with "$1,500".
5. Clearance Days. Effective June 1, 1995, Section 5.1 of the
Accounts Agreement shall be automatically amended by deleting the reference
to "two (2) business days" and replacing it with "one (1) business day".
6. Renewal Date. Section 9.1 of the Accounts Agreement, as
amended, is hereby further amended by deleting the first sentence thereof in
its entirety and substituting the following therefor:
"9.1 This Agreement shall become effective upon acceptance by
you and shall continue in force and effect for a term ending June 16,
1996 (the "Renewal Date") and from year to year thereafter, unless
sooner terminated pursuant to the terms hereof."
7. Early Termination Fee. Section 9.2 of the Accounts Agreement,
as amended, is hereby further amended by deleting the period, and adding the
following, at the end of the first sentence of such Section:
", or (d) one (1%) percent of the Maximum Credit if such
termination occurs after the third anniversary of this Agreement but
prior to the fourth anniversary of this Agreement."
8. Letter of Credit Fee. Effective June 1, 1995, Section 1.5 of
the Trade Financing Agreement Supplement to Accounts Agreement, dated June
16, 1992, by Borrower in favor of Congress, shall be automatically amended by
deleting the reference to ".2083%" and replacing it with ".1667%".
9. Effect and Entirety of this Amendment. Except as
specifically modified pursuant hereto, no other changes or modifications to
the Financing Agreements are intended or implied and, in all other respects,
the Financing Agreements are hereby ratified and confirmed by all parties
hereto as of the date hereof. This Amendment represents and incorporates the
entire understanding and agreements of the parties with respect to the
matters set forth herein and the parties hereto agree that there are no
representations, warranties, covenants or understandings of any kind, nature
or description whatsoever made by Congress to Borrower with respect to this
Amendment, except as specifically set forth herein. This Amendment
represents the final agreement between the parties as to the subject matter
hereof and may not
- 2 -
<PAGE>
be contradicted by evidence or prior, contemporaneous or subsequent oral
agreements of the parties.
10. Waiver, Modification, Etc. No provision or term hereof may be
modified, altered, waived, discharged or terminated orally, but only by an
instrument in writing executed by the party against whom such modification,
alteration, waiver, discharge or termination is sought.
11. Further Assurances. The parties hereto shall execute and deliver such
additional documents and take such additional action as may be necessary to
effectuate the provisions and purposes of this Amendment.
12. Counterparts. This Amendment may be executed in one or more
counterparts which, taken together, shall constitute the agreement of the
parties.
Very truly yours,
I.C. ISAACS & CO. L.P.
By: ISBUYCO, Inc., General Partner
By: /s/ Robert J. Arnot
--------------------------
Title: Chairman
-----------------------
Agreed and Accepted:
CONGRESS FINANCIAL CORPORATION
By: /s/ Eric S. Miller
--------------------------
Title: Asst. Vice President
-----------------------
ACKNOWLEDGED:
/s/ Ira Hechler
- ------------------------------
IRA HECHLER
/s/ Robert J. Arnot
- ------------------------------
ROBERT ARNOT
/s/ Gerald W. Lear
- ------------------------------
GERALD LEAR
/s/ Eugene Wielepski
- ------------------------------
EUGENE WIELEPSKI
/s/ Gary Brashers
- ------------------------------
GARY BRASHERS
/s/ Stanley Keller
- ------------------------------
STANLEY KELLER
-3-
<PAGE>
June 23, 1995
Congress Financial Corporation
1133 Avenue of the Americas
New York, New York 10036
Re: Tenth Amendment to Financing Agreements
Gentlemen:
Reference is made to the Accounts Financing Agreement [Security Agreement]
between Congress Financial Corporation ("Congress") and I.C. Isaacs & Co.
L.P. ("Borrower") dated as of June 16, 1992, as amended (the "Accounts
Agreement") and all supplements thereto, and all other agreements, documents
and instruments related thereto and executed in connection therewith
(collectively, all of the foregoing, as the same now exist or may hereafter
be further amended, modified, supplemented, extended, renewed, restated or
replaced, the "Financing Agreements"). Capitalized terms used herein, unless
otherwise defined herein, shall have the meaning set forth in the Financing
Agreements.
Borrower has requested certain amendments to the Financing Agreements and
Congress is willing to agree to such amendments, subject to the terms and
conditions set forth herein.
In consideration of the foregoing, and the mutual agreements and covenants
contained herein and for other good and valuable consideration, Borrower and
Congress hereby agree as follows:
1. Supplemental Loans. Section 2.1 of the Accounts Agreement, as
amended, is hereby deleted in its entirety and replaced with the following:
"2.1 You shall, in your discretion, make loans to us from time to
time, at our request, of up to eighty (80%) percent of the Net Amount
of Eligible Accounts (or such greater or lesser percentage thereof as
you shall in your sole discretion determine from time to time). Subject
to the terms and conditions hereof, you may also, in your discretion,
make loans to us from time to time, in excess of such lending formula,
at our request, of up to $1,500,000 from June 15, 1995 until August 15,
1995 (the "Supplemental Loans"). Notwithstanding anything to the
contrary contained herein, the entire outstanding balance of all
Supplemental Loans shall be repaid in full not later than August 15,
1995."
2. Letter of Credit Sublimit. Section 1.5 of the Trade Financing
Agreement Supplement to Accounts Financing
<PAGE>
Agreement, dated June 16, 1992, by Borrower in favor of Congress (the "Trade
Financing Supplement"), is hereby amended by deleting the reference to
"$5,000,000" and replacing it with "$6,000,000".
3. Letter of Credit Fee. Effective June 1, 1995, Section 1.8 of the Trade
Financing Supplement shall be automatically amended by deleting the reference
to ".2083%" and replacing it with ".1667%".
4. Effect and Entirety of this Amendment. Except as specifically modified
pursuant hereto, no other changes or modifications to the Financing
Agreements are intended or implied and, in all other respects, the Financing
Agreements are hereby ratified and confirmed by all parties hereto as of the
date hereof. This Amendment represents and incorporates the entire
understanding and agreements of the parties with respect to the matters set
forth herein and the parties hereto agree that there are no representations,
warranties, covenants or understandings of any kind, nature or description
whatsoever made by Congress to Borrower with respect to this Amendment,
except as specifically set forth herein. This Amendment represents the final
agreement between the parties as to the subject matter hereof and may not be
contradicted by evidence or prior, contemporaneous or subsequent oral
agreements of the parties.
5. Waiver, Modification, Etc. No provision or term hereof may be modified,
altered, waived, discharged or terminated orally, but only by an instrument
in writing executed by the party against whom such modification, alteration,
waiver, discharge or termination is sought.
6. Further Assurances. The parties hereto shall execute and deliver such
additional documents and take such additional action as may be necessary to
effectuate the provisions and purposes of this Amendment.
7. Counterparts. This Amendment may be executed in one or more
counterparts which, taken together, shall constitute the agreement of the
parties.
Very truly yours,
I.C. ISAACS & CO. L.P.
By: ISBUYCO, INC. General Partner
By: /s/ Gerald W. Lear
--------------------------
Title: Pres - CEO
------------------------
[SIGNATURES CONTINUE ON FOLLOWING PAGE]
- 2 -
<PAGE>
[SIGNATURES CONTINUED FROM PREVIOUS PAGE]
Agreed and Accepted:
CONGRESS FINANCIAL CORPORATION
By: /s/ Eric S. Miller
-------------------------------
Title: Asst. Vice President
----------------------------
ACKNOWLEDGED:
/s/ IRA HECHLER
- ------------------------------
IRA HECHLER
/s/ ROBERT ARNOT
- ------------------------------
ROBERT ARNOT
/s/ GERALD LEAR
- ------------------------------
GERALD LEAR
/s/ EUGENE WIELEPSKI
- ------------------------------
EUGENE WIELEPSKI
/s/ GARY BRASHERS
- ------------------------------
GARY BRASHERS
/s/ STANLEY KELLER
- ------------------------------
STANLEY KELLER
- 3 -
<PAGE>
As of January 1, 1996
Congress Financial Corporation
1133 Avenue of the Americas
New York, New York 10036
Re: Eleventh Amendment to Financing Agreements
Gentlemen:
Reference is made to the Accounts Financing Agreement
[Security Agreement] between Congress Financial Corporation
("Congress") and I.C. Isaacs & Co. L.P. ("Borrower") dated as of
June 16, 1992, as amended (the "Accounts Agreement") and all
supplements thereto, and all other agreements, documents and
instruments related thereto and executed in connection therewith
(collectively, all of the foregoing, as the same now exist or may
hereafter be further amended, modified, supplemented, extended,
renewed, restated or replaced, the "Financing Agreements").
Capitalized terms used herein, unless otherwise defined herein,
shall have the meaning set forth in the Financing Agreements.
Borrower has requested certain amendments to the Financing
Agreements and Congress is willing to agree to such amendments,
subject to the terms and conditions set forth herein.
In consideration of the foregoing, and the mutual agreements
and covenants contained herein and for other good and valuable
consideration, Borrower and Congress hereby agree as follows:
1. Supplemental Loans. Section 2.1 of the Accounts
Agreement, as amended, is hereby deleted in its entirety and
replaced with the following:
"2.1 You shall, in your discretion, make loans to
us from time to time, at our request, of up to eighty
(80%) percent of the Net Amount of Eligible Accounts
(or such greater or lesser percentage thereof as you
shall in your sole discretion determine from time to
time). Subject to the terms and conditions hereof, you
may also, in your discretion, make loans to us from
time to time, in excess of such lending formula, at our
request, of up to $1,500,000 from January 1, 1996 until
February 29, 1996 (the "Supplemental Loans").
Notwithstanding anything to the contrary contained
herein, the entire outstanding balance of all
Supplemental Loans shall be repaid in full not later
than February 29, 1996."
2. Fees. In consideration of Congress' agreement to
make the Supplemental Loans available as set froth in paragraph 1
<PAGE>
hereof, Borrower agrees to pay Congress a fee in an amount equal to $7,500,
which fee shall be payable simultaneously with the execution hereof, and
which fee is fully earned as of the date hereof.
3. Effect and Entirety of this Agreement. Except as specifically modified
pursuant hereto, no other changes or modifications to the Financing
Agreements are intended or implied and, in all other respects, the Financing
Agreements are hereby ratified and confirmed by all parties hereto as of the
date hereof. This Amendment represents and incorporates the entire
understanding and agreements of the parties with respect to the matters set
forth herein and the parties hereto agree that there are no representations,
warranties, covenants or understandings of any kind, nature or description
whatsoever made by Congress to Borrower with respect to this Amendment,
except as specifically set forth herein. This Amendment represents the final
agreement between the parties as to the subject matter hereof and may not be
contradicted by evidence or prior, contemporaneous or subsequent oral
agreements of the parties.
4. Waiver, Modification, Etc. No provision or term hereof may be modified,
altered, waived, discharged or terminated orally, but only by an instrument
in writing executed by the party against whom such modification, alteration,
waiver, discharge or termination is sought.
5. Further Assurances. The parties hereto shall execute and deliver such
additional documents and take such additional action as may be necessary to
effectuate the provisions and purposes of this Amendment.
6. Counterparts. This Amendment may be executed in one or more
counterparts which, taken together, shall constitute the agreement of the
parties.
Very truly yours,
I.C. ISAACS & CO. L.P.
By: ISBUYCO, INC., General Partner
By: /s/ Robert J. Arnot
---------------------------
Title: /s/ Chairman
------------------------
[SIGNATURES CONTINUE ON FOLLOWING PAGE]
- 2 -
<PAGE>
[SIGNATURES CONTINUED FROM PREVIOUS PAGE]
Agreed and Accepted:
CONGRESS FINANCIAL CORPORATION
By: /s/ Eric S. Miller
-------------------------
Title: Asst. Vice President
----------------------
ACKNOWLEDGED:
/s/ Ira Hechler
- -------------------------------
IRA HECHLER
/s/ Robert Arnot
- --------------------------------
ROBERT ARNOT
/s/ Gerald Lear
- --------------------------------
GERALD LEAR
/s/ Eugene Wielepski
- --------------------------------
EUGENE WIELEPSKI
/s/ Gary Brashers
- --------------------------------
GARY BRASHERS
/s/ Stanley Keller
- --------------------------------
STANLEY KELLER
- 3 -
<PAGE>
June 25, 1996
Congress Financial Corporation
1133 Avenue of the Americas
New York, New York 10036
Re: Twelfth Amendment to Financing Agreements
Gentlemen:
Reference is made to the Accounts Financing Agreement
[Security Agreement] between Congress Financial Corporation ("Congress") and
I.C. Isaacs & Company L.P. ("Borrower") dated as of June 16, 1992, as amended
(the "Accounts Agreement") and all supplements thereto, and all other
agreements, documents and instruments related thereto and executed in
connection therewith (collectively, all of the foregoing, as the same now
exist or may hereafter be further amended, modified, supplemented, extended,
renewed, restated or replaced, the "Financing Agreements"). Capitalized
terms used herein, unless otherwise defined herein, shall have the meaning
set forth in the Financing Agreements.
Borrower has requested an extension of, and certain modifications to, the
Financing Agreements and Congress is willing to agree to such extension and
modifications, subject to the terms and conditions set forth herein.
In consideration of the foregoing, and the mutual agreements and
covenants contained herein and for other good and valuable consideration,
Borrower and Congress hereby agree as follows:
1. Definitions.
(a) Additional Definition. As used herein the term "Amended
Term Note" shall mean the Amended and Restated Term Promissory Note, dated of
even date herewith, made by Borrower payable to the order of Congress in the
original principal amount of $1,000,000 as the same now exists or may
hereafter be amended, modified, supplemented, extended, renewed, restated or
replaced.
(b) Amendments to Definitions.
(i) All references to the term "Term Note" herein and in the
Covenant Supplement and the other Financing Agreements shall be deemed and
each such reference is hereby amended to mean the Amended Term Note as
defined herein.
<PAGE>
(ii) All references to the term "Term Loan" herein and in the Covenant
Supplement and the other Financing Agreements shall be deemed and each such
reference is hereby amended to mean the outstanding Obligations owed to
Congress by Borrower consisting of the indebtedness evidenced by the Amended
Term Note.
(c) Interpretation. For purposes of this Amendment, unless otherwise
defined herein, all terms used herein, including, but not limited to, those
terms used and/or defined in the recitals hereto, shall have the respective
meanings assigned to such terms in the other Financing Agreements.
2. Term Loan.
(a) Borrower hereby acknowledges, confirms and agrees that as of June
1, 1996, the aggregate principal amount outstanding in respect of the Term
Loan (as such term is defined in the Financing Agreements immediately prior
to the effectiveness of this Amendment) is $216,651. On the date hereof,
subject to the terms and conditions contained herein, Congress shall make an
additional advance to Borrower in the amount of $783,349, so that the
outstanding principal balance of the Term Loan shall be increased to
$1,000,000. Such Term Loan shall be (i) evidenced by the Amended Term Note
executed and delivered by Borrower to Congress concurrently herewith, (ii)
repaid, together with interest and other amounts due thereunder, in accordance
with the terms and provisions of such Amended Term Note and the other
Financing Agreements, and (iii) secured by all of the Collateral. Borrower
may not reborrow any principal amounts prepaid pursuant to the Amended Term
Note.
(b) The amendment and restatement contained herein, shall not, in any
manner, be construed to constitute payment of, or impair, limit, cancel or
extinguish, or constitute a novation in respect of, the Obligations evidenced
by or arising under the Financing Agreements, and the liens and security
interests securing such Obligations shall not in any manner be impaired,
limited, terminated, waived or released.
3. Maximum Credit.
(a) Effective as of April 8, 1996, all references to the Maximum Credit
in the Financing Agreements, including but not limited to Section 1.7 of the
Accounts Agreement, shall be deemed and each such reference is hereby amended
by replacing "$15,000,000" with "$25,000,000". Notwithstanding the foregoing,
during the period from June 15, 1996 through and including September 15,
1996, all references to the Maximum Credit in the Financing Agreements shall
automatically be deemed and each such
- 2 -
<PAGE>
reference shall be automatically amended by replacing "$25,000,000" with
$27,000,000".
(b) Notwithstanding anything to the contrary contained in the Financing
Agreements, and without limiting the right of Congress to demand payment of
the Obligations, or any portion thereof, in accordance with any other terms
of the Financing Agreements, if the outstanding aggregate principal amount of
loans made by Congress to Borrower on and after September 16, 1996 exceeds
the Maximum Credit, Borrower shall remain liable therefor and such excess
shall automatically, without notice or demand, be absolutely and
unconditionally due and payable in cash or other immediately available funds
on September 16, 1996.
4. Accounts Advances. Section 2.1 of the Accounts Agreement, as amended,
is hereby deleted in its entirety and replaced with the following:
"2.1 You shall, in your discretion, make loans to us from time to time,
at our request, of up to eighty (80%) percent of the Net Amount of Eligible
Accounts (or such greater or lesser percentage thereof as you shall in your
sole discretion determine from time to time); provided, that, for the period
May 1, 1996 through July 31, 1996, you shall, in your discretion, make loans
to us from time to time, at our request, of up to eighty-five (85%) percent
of the Net Amount of Eligible Accounts (or such greater or lesser percentage
thereof as you shall in your sole discretion as determined from time to
time)."
5. Supplemental Loans.
(a) In addition to the loans and advances which may be made by Congress to
Borrower pursuant to the lending formulas set forth in the Financing
Agreements, upon the request of Borrower made at any time and from time to
time during the period April 1, 1996 to July 31, 1996, Congress shall,
subject to the terms and conditions contained in the Financing Agreements,
make supplemental loans to Borrower in such amounts from time to time as
Congress shall in good faith determine, in its discretion, of up to
$1,000,000 in excess of the amounts otherwise available to Borrower under the
lending formulas set forth in the Financing Agreements, as calculated by
Congress (the "Supplemental Loans").
(b) The Supplemental Loans shall be secured by all Collateral and shall be
payable ON DEMAND. In any event, unless sooner demanded by Congress, all
outstanding and unpaid obligations arising pursuant to the Supplemental Loans
(including, but not limited to, principal, interest, fees, costs
- 3 -
<PAGE>
and expenses) shall automatically, without notice or demand, be absolutely
and unconditionally due and payable in cash or other immediately available
funds on July 31, 1996.
6. Unused Line Fee. Effective as of April 8,
1996, Section 3.5 of the Accounts Agreement, as amended, is hereby further
amended by deleting all references to "$10,000,000" and replacing them with
"$20,000,000".
7. Renewal Date. Section 9.1 of the Accounts Agreement,
as amended, is hereby further amended by deleting the first two sentences
thereof in their entirety and substituting the following therefor:
"9.1 This Agreement shall become effective upon
acceptance by you and shall continue in force and effect for a
term ending June 30, 1998 (the "Renewal Date"), unless sooner
terminated pursuant to the terms hereof. You shall have the right
to terminate this Agreement immediately at any time upon the
occurrence of an Event of Default."
8. Early Termination Fee. Section 9.2 of the Accounts
Agreement, as amended, is hereby deleted in its entirety and replaced with
the following:
"9.2 If you terminate this Agreement upon the
occurrence of an Event of Default or at our request, in
view of the impracticability and extreme difficulty of
ascertaining actual damages and by mutual agreement of
the parties as to a reasonable calculation of your lost
profits as a result thereof, we hereby agree that we
shall pay you, upon the effective date of such
termination, an early termination fee, in an amount equal
to: (i) $150,000 if such termination occurs on or prior to
June 30, 1997 or (ii) $100,000 if such termination occurs after
June 30, 1997 but prior to June 30, 1998."
9. Inventory Loans.
(a) During the period from May 1, 1996 through
July 31, 1996, and only for such period, Section 2 of the letter re:
Inventory Loans, dated December 31, 1994, by Borrower in favor of Congress
(the "Inventory Loan Letter") is hereby amended by replacing the
reference to "fifty (50%) percent" with "sixty (60%) percent".
(b) Effective as of May 1, 1996, Section 3(b)
of the Inventory Loan Letter is hereby amended by deleting the
reference to "$2,500,000" and replacing it with "$4,000,000".
- 4 -
<PAGE>
10. Letter of Credit Sublimit. Effective as of May 1, 1996, Section
1.5 of the Trade Financing Agreement Supplement to Accounts Agreement, dated
June 16, 1992, by Borrower in favor of Congress is hereby amended by deleting
the reference to "$6,000,000" and replacing it with "$8,000,000".
11. Fee. In partial consideration of the extension of the term of the
Financing Agreements, the Supplemental Loans, the increase in the Maximum
Credit and the other modifications to the Financing Agreements as set forth
herein, Borrower agrees to pay Congress a fee in an amount equal to $75,000,
payable as of May 1, 1996, which fee is fully earned as of May 1, 1996. At
Congress' option, Congress may charge such fee directly to Borrower's loan
account.
12. Conditions Precedent. The effectiveness of the amendments to the
Financing Agreements provided for herein shall only be effective upon the
satisfaction of each of the following conditions precedent in a manner
satisfactory to Congress:
(a) no Event of Default shall have occurred and be continuing and no
event shall have occurred or condition be existing and continuing which, with
notice or passage of time or both, would constitute an Event of Default;
(b) Congress shall have received, in form and substance satisfactory to
Congress, an original of the Amended Term Note, duly authorized, executed and
delivered by Borrower; and
(c) Congress shall have received, in form and substance satisfactory to
Congress, an original of this Amendment, duly authorized, executed and
delivered by Borrower, Ira Hechler, Robert Arnot, Gerald Lear, Eugene
Wielepski, Gary Brashers and Stanley Keller.
13. Effect and Entirety of this Amendment. Except as specifically
modified pursuant hereto, no other changes or modifications to the Financing
Agreements are intended or implied and, in all other respects, the Financing
Agreements are hereby ratified and confirmed by all parties hereto as of the
date hereof. This Amendment represents and incorporates the entire
understanding and agreements of the parties with respect to the matters set
forth herein and the parties hereto agree that there are no representations,
warranties, covenants or understandings of any kind, nature or description
whatsoever made by Congress to Borrower with respect to this Amendment,
except as specifically set forth herein. This Amendment represents the final
agreement between the parties as to the subject matter hereof and may not be
contradicted by evidence or prior, contemporaneous or subsequent oral
agreements of the parties.
- 5 -
<PAGE>
14. Waiver, Modification, Etc. No provision or term hereof may be
modified, altered, waived, discharged or terminated orally, but only by an
instrument in writing executed by the party against whom such modification,
alteration, waiver, discharge or termination is sought.
15. Further Assurances. The parties hereto shall execute and deliver such
additional documents and take such additional action as may be necessary to
effectuate the provisions and purposes of this Amendment.
16. Counterparts. This Amendment may be executed in one or more
counterparts which, taken together, shall constitute the agreement of the
parties.
Very truly yours,
I.C. ISAACS & COMPANY L.P.
By: ISBUYCO, INC., General Partner
By: /s/ Robert Arnot
--------------------------
Title: Chairman
-----------------------
Agreed and Accepted:
CONGRESS FINANCIAL CORPORATION
By: /s/ Eric S. Miller
--------------------------
Title: Asst. Vice President
-----------------------
ACKNOWLEDGED:
/s/ Ira Hechler
- ------------------------------
IRA HECHLER
/s/ Robert Arnot
- ------------------------------
ROBERT ARNOT
/s/ Gerald Lear
- ------------------------------
GERALD LEAR
/s/ Eugene Wielepski
- ------------------------------
EUGENE WIELEPSKI
/s/ Gary Brashers
- ------------------------------
GARY BRASHERS
/s/ Stanley Keller
- ------------------------------
STANLEY KELLER
-6-
<PAGE>
August , 1996
Congress Financial Corporation
1133 Avenue of the Americas
New York, New York 10036
Re: Thirteenth Amendment to Financing Agreements
Gentlemen:
Reference is made to the Accounts Financing Agreement [Security Agreement]
between Congress Financial Corporation ("Congress") and I.C. Isaacs & Company
L.P. ("Borrower") dated as of June 16, 1992, as amended (the "Accounts
Agreement") and all supplements thereto, and all other agreements, documents
and instruments related thereto and executed in connection therewith
(collectively, all of the foregoing, as the same now exist or may hereafter
be further amended, modified, supplemented, extended, renewed, restated or
replaced, the "Financing Agreements"). Capitalized terms used herein, unless
otherwise defined herein, shall have the meaning set in the Financing
Agreements.
Borrower has requested certain modifications to the Financing Agreements
and Congress is willing to agree to such modifications, subject to the terms
and conditions set forth herein.
In consideration of the foregoing, and the mutual agreements and
covenants contained herein and for other good and valuable consideration,
Borrower and Congress hereby agree as follows:
1. Definitions. For purposes of this Amendment, unless otherwise
defined herein, all terms used herein, including, but not limited to, those
terms used and/or defined in the recitals hereto, shall have the
respective meanings assigned to such terms in the other Financing Agreements.
2. Accounts Advances. Section 2.1 of the Accounts Agreement, as
amended, is hereby deleted in its entirety and replaced with the following:
"2.1 You shall, in your discretion, make loans to us from time
to time, at our request, of up to eighty (80%) percent of the Net Amount of
Eligible Accounts (or such greater or lesser percentage thereof as you shall
in your sole discretion determine from time to time); provided, that, for the
period May 1, 1996 through August 31, 1996, you shall, in your discretion,
make loans to us from time to time, at our request, of
<PAGE>
up to eighty-five (85%) percent of the Net Amount of
Eligible Accounts (or such greater or lesser percentage
thereof as you shall in your sole discretion as
determined from time to time)."
3. Supplemental Loans.
(a) In addition to the loans and advances which
may be made by Congress to Borrower pursuant to the lending
formulas set forth in the Financing Agreements, upon the request
of Borrower made at any time and from time to time during the
period April 1, 1996 to August 31, 1996, Congress shall, subject
to the terms and conditions contained in the Financing
Agreements, make supplemental loans to Borrower in such amounts
from time to time as Congress shall in good faith determine, in
its discretion, of up to $1,000,000 in excess of the amounts
otherwise available to Borrower under the lending formulas set
forth in the Financing Agreements, as calculated by Congress (the
"Supplemental Loans").
(b) The Supplemental Loans shall be secured by
all Collateral and shall be payable ON DEMAND. In any event,
unless sooner demanded by Congress, all outstanding and unpaid
obligations arising pursuant to the Supplemental Loans
(including, but not limited to, principal, interest, fees, costs
and expenses) shall automatically, without notice or demand, be
absolutely and unconditionally due and payable in cash or other
immediately available funds on August 31, 1996.
4. Inventory Loans. During the period from May 1,
1996 through August 31, 1996, and only for such period, Section 2
of the letter re: Inventory Loans, dated December 31, 1994, by
Borrower in favor of Congress (the "Inventory Loan Letter") is
hereby amended by replacing the reference to "fifty (50%)
percent" with "sixty (60%) percent".
5. Conditions Precedent. The effectiveness of the
amendments to the Financing Agreements provided for herein shall
only be effective upon the satisfaction of each of the following
conditions precedent in a manner satisfactory to Congress:
(a) no Event of Default shall have occurred and be
continuing and no event shall have occurred or condition be
existing and continuing which, with notice or passage of time or
both, would constitute an Event of Default; and
(b) Congress shall have received, in form and
substance satisfactory to Congress, an original of this
Amendment, duly authorized, executed and delivered by Borrower,
Ira Hechler, Robert Arnot, Gerald Lear, Eugene Wielepski, Gary
Brashers and Stanley Keller.
- 2 -
<PAGE>
6. Effect and Entirety of this Amendment. Except as specifically
modified pursuant hereto, no other changes or modifications to the Financing
Agreements are intended or implied and, in all other respects, the Financing
Agreements are hereby ratified and confirmed by all parties hereto as of the
date hereof. This Amendment represents and incorporates the entire
understanding and agreements of the parties with respect to the matters set
forth herein and the parties hereto agree that there are no representations,
warranties, covenants or understandings of any kind, nature or description
whatsoever made by Congress to Borrower with respect to this Amendment, except
as specifically set forth herein. This Amendment represents the final
agreement between the parties as to the subject matter hereof and may not be
contradicted by evidence or prior, contemporaneous or subsequent oral
agreements of the parties.
7. Waiver, Modification, Etc. No provision or term hereof may
be modified, altered, waived, discharged or terminated orally, but only by an
instrument in writing executed by the party against whom such modification,
alteration, waiver, discharge or termination is sought.
8. Further Assurances. The parties hereto shall execute and
deliver such additional documents and take such additional action as may be
necessary to effectuate the provisions and purposes of this Amendment.
9. Counterparts. This Amendment may be executed in one or more
counterparts which, taken together, shall constitute the agreement of the
parties.
Very truly yours,
I.C. ISAACS & COMPANY L.P.
By: I.G. DESIGN, INC.,
formerly known as Isbuyco, Inc.,
General Partner
By: /s/ Gerald W. Lear
-----------------------
Title: President
--------------
Agreed and Accepted:
CONGRESS FINANCIAL CORPORATION
By: Eric S. Miller
------------------------
Title: Asst. Vice President
----------------------
[SIGNATURES CONTINUED ON NEXT PAGE]
-3-
<PAGE>
[SIGNATURES CONTINUED FROM PREVIOUS PAGE]
ACKNOWLEDGED:
/s/ Ira Hechler by John Hechler as Attorney-in-Fact
- ---------------------------------------------------
IRA HECHLER
/s/ Robert Arnot
- ---------------------------------------------------
ROBERT ARNOT
/s/ Gerald Lear
- ---------------------------------------------------
GERALD LEAR
/s/ Eugene Wielepski
- ---------------------------------------------------
EUGENE WIELEPSKI
/s/ Gary Brashers
- ---------------------------------------------------
GARY BRASHERS
/s/ Stanley Keller
- ---------------------------------------------------
STANLEY KELLER
-4-
<PAGE>
Exhibit 10.08(r)
TERM PROMISSORY NOTE
--------------------
$1,000,000 New York, New York
June __, 1992
FOR VALUE RECEIVED, I.C. ISAACS & COMPANY L.P., a Delaware limited
partnership (the "Debtor"), hereby unconditionally promises to pay to the order
of CONGRESS FINANCIAL CORPORATION, a California corporation (the "Payee"), at
the offices of Payee at 1133 Avenue of the Americas, New York, New York 10036,
or at such other place as the Payee or any holder hereof may from time to time
designate, the principal sum of ONE MILLION ($1,000,000) DOLLARS in lawful money
of the United States of America and in immediately available funds, in sixty
(60) consecutive monthly installments (or earlier as hereinafter referred to)
on the first day of each month commencing August 1, 1992 of which the first
fifty-nine (59) installments shall each be in the amount of SIXTEEN THOUSAND SIX
HUNDRED SIXTY SEVEN ($16,667) DOLLARS, and the last and sixtieth (60th)
installment shall be in the amount of the entire unpaid balance of this Note.
Debtor hereby further promises to pay interest to the order of Payee in
like money at said office or place from the date hereof, commencing July 1,
1992 and on the first day of each month thereafter, on the unpaid principal
balance hereof at a rate prior to an Event of Default (as hereinafter defined)
or termination or non-renewal of the Financing Agreements (as hereinafter
defined), of two and one-half (2 1/2%) percent per annum in excess of the Prime
Rate (as hereinafter defined), and at a rate, upon and after a Event of Default
or termination or non-renewal of the Financing Agreements, of four and one-half
(4 1/2%) percent per annum in excess of the Prime Rate. For purposes hereof,
"Prime Rate" shall mean the prime commercial interest rate from time to time
publicly announced by Philadelphia National Bank, incorporated as CoreStates
Bank, N.A., Philadelphia, Pennsylvania, or its successors or assigns, whether or
not such announced rate is the best rate available at such bank. For purposes
hereof, "Event of Default" shall mean an Event of Default, as such term is
defined in the Accounts Financing Agreement [Security Agreement], dated of even
date herewith, between Debtor and Payee (the "Accounts Agreement").
The interest rate payable hereunder shall increase or decrease by an amount
equal to each increase or decrease, respectively, in such Prime Rate, effective
on the first day of the month after any change in such Prime Rate, based on the
Prime Rate in effect on the
<PAGE>
last day of the month in which any such change occurs. Interest shall be
calculated on the basis of a three hundred sixty (360) day year and actual days
elapsed. In no event shall the interest charged hereunder exceed the maximum
permitted under the laws of the State of New York or other applicable law.
This Note is issued pursuant to the terms and provisions of the Accounts
Agreement, together with all supplements thereto, to evidence the "Term Loan"
(as defined in the Covenant Supplement to the Accounts Agreement) by Payee to
Debtor. This Note is secured by the "Collateral" described in the Accounts
Agreement and any agreement, document or instrument now or at any time hereafter
executed and/or delivered in connection therewith or related thereto (the
foregoing, as the same now exist or may hereafter be amended, modified,
supplemented, renewed, extended, restated or replaced, are hereinafter
collectively referred to as the "Financing Agreements"), and is entitled to all
of the benefits and rights thereof and of the Financing Agreements. At the time
any payment is due hereunder, at its option, Payee may charge the amount thereof
to any account of Debtor maintained by Payee.
[Debtor may prepay this Note in whole or in part at any time without early
termination fee, penalty or premium.]
If any principal or interest payment is not made within five (5) days after
it is due and payable hereunder, or if any other Event of Default shall occur
for any reason which has not been waived in writing by Payee, or if the
Financing Agreements shall be terminated or not renewed for any reason
whatsoever, then and in any such event, in addition to all rights and remedies
of Payee under the Financing Agreements, applicable law or otherwise, all such
rights and remedies being cumulative, not exclusive and enforceable
alternatively, successively and concurrently, Payee may, at its option, declare
any or all of Debtor's obligations, liabilities and indebtedness owing to Payee
under the Financing Agreements (the "Obligations"), including, without
limitation, all amounts owing under this Note, to be due and payable, whereupon
the then unpaid balance hereof, together with all interest accrued thereon,
shall forthwith become due and payable, together with interest accruing
thereafter at the then applicable rate stated above until the indebtedness
evidenced by this Note is paid in full, plus the costs and expenses of
collection hereof, including, but not limited to, reasonable attorneys' fees and
expenses.
Debtor (i) waives diligence, demand, presentment, protest and notice of any
kind, other than such notices, if any, as may be required under the Financing
Agreements, (ii) agrees that it will not be necessary for any holder hereof to
first institute suit in
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<PAGE>
order to enforce payment of this Note and bill, consents to pay any one or more
extensions or postponements of time of payment, release, surrender or
substitution of collateral, security, or forbearance or other indulgence,
without notice or consent. The pleading of any statute of limitations as a
defense to any demand against Debtor is expressly hereby waived. Upon any Event
of Default or termination or non-renewal of the Financing Agreements, Payee
shall have the right, but not the obligation to setoff against this Note all
money owed by Payee to Debtor.
Payee shall not be required to resort to any Collateral for payment, but
may proceed against Debtor and any guarantors or endorsers hereof in such order
and manner as Payee may choose. None of the rights of Payee shall be waived or
diminished by any failure or delay in the exercise thereof.
Debtor hereby waives the right to a trial by jury and all rights of setoff
and rights to interpose counterclaims and crossclaims, (other than compulsory
counterclaims), in any litigation or proceeding arising in connection with this
Note, the Accounts Agreement, the other Financing Agreements, the Obligations or
the Collateral. Debtor hereby irrevocably consents to the non-exclusive
jurisdiction of the Supreme Court of the State of New York and the United States
District Court for the Southern District of New York for all purposes in
connection with any action or proceeding arising out of or relating to this
Note, the Accounts Agreement, the other Financing Agreements, the Obligations or
the Collateral and further consents that any process or notice of motion or
other application to said Courts or judge thereof, or any notice in connection
with any proceeding hereunder may be served (i) inside or outside the State of
New York by registered or certified mail, return receipt requested, and service
or notice so served shall be deemed complete five (5) days after the same shall
have been posted or (ii) in such other manner as may be permissible under the
rules of said Courts.
The execution and delivery of this Note has been authorized by the board of
directors of the general partner of Debtor, all necessary partnership action and
by any necessary vote or consent of the limited partners of Debtor.
This Note, the other Obligations and the Collateral shall be governed by
and construed in accordance with the laws of the State of New York and shall be
binding upon the successors and assigns of Debtor and inure to the benefit of
Payee and its successors, endorsees and assigns. If any term or provision of
this Note shall
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<PAGE>
be held invalid, illegal or unenforceable, the validity of all other terms and
provisions hereof shall in no way be affected thereby.
This Note may not be changed, modified or terminated orally, but only by an
agreement in writing signed by the Payee or the holder hereof.
Whenever used herein, the terms "Debtor" and "Payee" shall be deemed to
include their respective successors and assigns.
I.C. ISAACS & COMPANY L.P.
By: ISBUYCO, INC. General Partner
By:
/s/ Gerald W. Lear
------------------------------------
Title: President/CEO
---------------------------------
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<PAGE>
Exhibit 10.08(s)
TRADEMARK COLLATERAL ASSIGNMENT AND SECURITY AGREEMENT
AGREEMENT made this 16th day of June, 1992 by and between I.C. ISAACS &
COMPANY L.P., a Delaware limited partnership ("Debtor"), with its principal
place of business at 3480 Bank Street, Baltimore, Maryland 21224 and CONGRESS
FINANCIAL CORPORATION, a California corporation ("Secured Party"), having an
office at 1133 Avenue of the Americas, New York, New York 10036.
W I T N E S S E T H :
- - - - - - - - - - -
WHEREAS, Debtor has adopted, used and is using, and is the owner of the
entire right, title, and interest in and to the trademarks, trade names,
terms, designs and applications therefor described in Exhibit A annexed
hereto and made a part hereof; and
WHEREAS, Secured Party and Debtor are contemporaneously herewith entering
into financing arrangements pursuant to which Secured Party will make loans
and advances and provide other financial accommodations to Debtor as set
forth in the Accounts Financing Agreement [Security Agreement], dated of even
date herewith, by and between Secured Party and Debtor (the "Accounts
Agreement"), together with various other agreements, documents and
instruments referred to therein or at any time executed and/or delivered in
connection therewith or related thereto, including, but not limited to, this
Agreement (all of the foregoing, as the same now exist or may hereafter be
amended, modified, supplemented, extended, renewed, restated or replaced,
being collectively referred to herein as the "Financing Agreements"); and
WHEREAS, in order to induce Secured Party to enter into the Financing
Agreements and make loans and advances and provide other financial
accommodations to Debtor pursuant thereto, Debtor has agreed to grant to
Secured Party certain collateral security as set forth herein;
NOW, THEREFORE, in consideration of the premises and for other good and
valuable consideration, the receipt and sufficiency of which are hereby
acknowledged, Debtor hereby agrees as follows:
1. GRANT OF SECURITY INTEREST
As collateral security for the prompt performance, observance and
indefeasible payment in full of all of the Obligations (as hereinafter
defined), Debtor hereby grants to Secured Party a continuing security
interest in and a general lien upon: (a) all of Debtor's now existing or
hereafter acquired right, title, and interest in and to: all of Debtor's
trademarks, trade names, trade styles and service marks; all prints and
labels on which said trademarks, trade names, trade styles and service marks
appear, have appeared or will appear, and all designs and general
<PAGE>
intangibles of a like nature; all applications, registrations and recordings
relating to the foregoing in the United States Patent and Trademark Office or
in any similar office or agency of the United States, any state thereof, any
political subdivision thereof or in any other countries, and all reissues,
extensions and renewals thereof including those trademarks, terms, designs
and applications described in Exhibit A hereto (the "Trademarks"); (b) the
goodwill of the business symbolized by each of the Trademarks, including,
without limitation, all customer lists and other records relating to the
distribution of products or services bearing the Trademarks; and (c) any and
all proceeds of any of the foregoing, including, without limitation, any
claims by Debtor against third parties for infringement of the Trademarks or
any licenses with respect thereto (all of the foregoing are collectively
referred to herein as the "Collateral").
2. OBLIGATIONS SECURED
The security interest, lien and other interests granted to Secured Party
pursuant to this Agreement shall secure the prompt performance, observance
and indefeasible payment in full of any and all loans, indebtedness,
liabilities and obligations of any kind owing by Debtor to Secured Party,
however evidenced, whether as principal, guarantor or otherwise, whether
arising under the Financing Agreements or otherwise, whether now existing or
hereafter arising, whether direct or indirect, absolute or contingent, joint
or several, due or not due, primary or secondary, liquidated or unliquidated,
secured or unsecured, original, renewed or extended and whether arising
directly or acquired from others (including, without limitation, Secured
Party's participations or interests in Debtor's obligations to others) and
including, without limitation, Secured Party's charges, commissions,
interest, expenses, costs and reasonable attorneys' fees chargeable to Debtor
under this Agreement or in connection with any of the foregoing (all
hereinafter referred to as "Obligations").
3. REPRESENTATIONS, WARRANTIES AND COVENANTS
Debtor hereby covenants, represents and warrants with and to Secured
Party that (all of such covenants, representations and warranties being
continuing so long as any of the Obligations are outstanding):
(a) Debtor will pay and perform all of the Obligations according to
their terms.
(b) All of the existing Collateral is valid and subsisting in full
force and effect, and Debtor owns the sole, full, and clear title to the
Collateral, and the right and power to grant the security interests granted
hereunder. Debtor will, at Debtor's expense, perform all acts and execute all
documents to the extent reasonably necessary to maintain the existence of the
Collateral as valid, subsisting and registered trademarks, includ-
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<PAGE>
ing, without limitation, the filing of any renewal affidavits and
applications. The Collateral is not subject to any liens, claims, mortgages,
assignments, licenses, security interests, or encumbrances of any nature
whatsoever, except: (i) the security interests granted hereunder and pursuant
to the Accounts Agreement, (ii) the security interests permitted under the
Accounts Agreement, (iii) the licenses specifically described on Exhibit B
thereto and (iv) limited, revocable and non-exclusive licenses granted to
specific sellers of goods to Debtor, solely for the purpose, and only to the
extent necessary, to permit such sellers to use any of the Trademarks to
produce goods to be sold and delivered to Debtor.
(c) Debtor will not assign, sell, mortgage, lease, transfer,
pledge, hypothecate, grant a security interest in or lien upon, encumber,
grant an exclusive or non-exclusive license relating thereto, except as
permitted herein, or otherwise dispose of any of the Collateral without the
prior written consent of Secured Party. Nothing in this Agreement shall be
deemed a consent by Secured Party to any such action, except as such action
is expressly permitted hereunder.
(d) Debtor will, at Debtor's expense, perform all acts and execute
all documents reasonably requested at any time by Secured Party to evidence,
perfect, maintain, record, or enforce the security interest in the Collateral
granted hereunder or to otherwise further the provisions of this Agreement.
Debtor hereby authorizes Secured party to execute and file one or more
financing statements (or similar documents) with respect to the Collateral,
signed only by Secured Party or as otherwise determined by Secured Party.
Debtor further authorizes Secured Party to have this or any other similar
security agreement filed with the Commissioner of Patents and Trademarks or
other appropriate federal, state or government office.
(e) As of the date hereof, Debtor does not have any Trademarks
registered in, or the subject of pending applications in, the United States
Patent and Trademark Office or any similar office or agency in the United
States or any other country, other than those described in Exhibit A annexed
hereto and has not granted any licenses with respect thereto other than as
set forth in Exhibit B hereto or permitted in Section 3(b) above.
(f) Debtor will, concurrently with the execution and delivery of
this Agreement, execute and deliver to Secured Party five (5) originals of a
Power of Attorney in the form of Exhibit C annexed hereto for the
implementation of the assignment, sale or other disposition of the Collateral
pursuant to Secured Party's exercise of the rights and remedies granted to
Secured Party hereunder.
(g) Secured Party may, in its discretion, exercised in good faith,
pay any amount or do any act which Debtor fails to pay
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<PAGE>
or do as required hereunder or as requested by Secured Party to preserve,
defend, protect, maintain, record, amend or enforce the Collateral, or the
security interest granted hereunder, including, but not limited to, all
filing or recording fees, court costs, collection charges and reasonable
attorneys' fees and legal expenses. Debtor will be liable to Secured Party
for any such payment, which payment shall be deemed an advance by Secured
Party to Debtor, shall be payable on demand together with interest at the
then applicable rate set forth in the Financing Agreements and shall be part
of the Obligations secured hereby.
(h) Debtor will not file any application for the registration of a
Trademark with the United States Patent and Trademark Office or any similar
office or agency in the United States, any state therein, or any other
country, unless Debtor has by ten (10) days prior written notice informed
Secured Party of such action. Upon request of Secured Party, Debtor will
execute and deliver to Secured Party any and all assignments, agreements,
instruments, documents, and such other papers as may be requested by Secured
Party to evidence the security interests of Secured Party in such Trademark.
(i) Debtor has not abandoned any of the Trademarks and Debtor will
not do any act, nor omit to do any act, whereby the Trademarks may become
abandoned, invalidated, unenforceable, avoided, or avoidable. Debtor will
notify Secured Party immediately if it knows or has reason to know of any
reason why any application, registration, or recording may become abandoned,
cancelled, invalidated, avoided, or avoidable.
(j) Debtor will render any reasonable assistance, as Secured Party
shall determine in its good faith judgement, necessary to Secured Party in
any proceeding before the United States Patent and Trademark Office, any
federal or state court, or any similar office or agency in the United States
or any state therein or any other country to maintain such application and
registration of the Trademarks as Debtor's exclusive property and to protect
Secured Party's interest therein, including, without limitation, filing of
renewals, affidavits of use, affidavits of incontestability and opposition,
interference, and cancellation proceedings.
(k) Debtor will promptly notify Secured Party if Debtor (or any
affiliate or subsidiary thereof) learns of any use by any person of any term
or design likely to cause confusion with any Trademark. If requested by
Secured Party, Debtor, at Debtor's expense, shall join with Secured Party in
such action as Secured Party, in its discretion, may deem advisable for the
protection of Secured Party's interest in and to the Trademarks.
(l) Debtor assumes all responsibility and liability arising from
the use of the Trademarks and Debtor hereby indemnifies and holds Secured
Party harmless from and against any
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<PAGE>
claim, suit, loss, damage, or expense (including attorneys' fees) arising out
of any alleged defect in any product manufactured, promoted, or sold by
Debtor (or any affiliate or subsidiary thereof) in connection with any
Trademark or out of the manufacture, promotion, labelling, sale or
advertisement of any such product by Debtor (or any affiliate or subsidiary
thereof).
(m) Debtor will promptly pay Secured Party for any and all
expenditures made by Secured Party pursuant to the provisions of this
Agreement or for the defense, protection, or enforcement of the Obligations,
the Collateral, or the security interests granted hereunder, including, but
not limited to, all filing or recording fees, court costs, collection
charges, travel expenses, and reasonable attorneys' fees and legal expenses.
Such expenditures shall be payable on demand, together with interest at the
then applicable rate set forth in the Financing Agreements and shall be part
of the Obligations secured hereby.
4. EVENTS OF DEFAULT
All Obligations shall become immediately due and payable, without notice
or demand at the option of Secured Party, upon the occurrence of any one or
more of the following events, each of which shall constitute and be deemed an
Event of Default under this Agreement and the other Financing Agreements:
(a) Debtor shall fail to pay to Secured Party when due any amounts
owing to Secured Party under any Obligation which remains unpaid five [5]
days after the due date or maturity date thereof, or shall breach any of the
terms, covenants, conditions or provisions of this Agreement, any of the
other Financing Agreements or any other agreement between Secured Party and
Debtor or between any third person or entity and us and, except as to any
breaches resulting from Debtor's intentional misconduct or actions or
inactions which by their nature are not capable of being cured, which remain
uncured fifteen (15) days after the occurrence thereof; or
(b) any guarantor, endorser or other person liable on the
Obligations shall terminate or breach any of the terms, covenants, conditions
or provisions of any guarantee, endorsement or other agreement of such person
with, or in favor of, Secured Party, except if, within fifteen (15) days
after such termination or breach by such guarantor you receive a new or
additional, written guarantee (in form and substance similar to the guarantee
which has been terminated or is in default) from one or more of the
individual guarantors of the Obligations or any other person reasonably
acceptable to you, in an amount not less than the maximum liability under the
guarantee which has been terminated or is in default, or between any third
person or entity and us; or
-5-
<PAGE>
(c) any representation, warranty, or statement of fact made to
Secured Party at any time by Debtor or on Debtor's behalf is false or
misleading in any material respect; or
(d) Debtor or any guarantor, endorser or other person liable on
the Obligations, shall become insolvent, fail to meet Debtor's or their Debts
as they mature, call a meeting of creditors or have a creditors' committee
appointed, make an assignment for the benefit of creditors, commence or have
commenced against it, any action or proceeding for the appointment of any
trustee, receiver, custodian or liquidator of it or all or any part of its
properties or assets, or commence any action or proceeding under any
bankruptcy law, or if a judgment is rendered against Debtor or any
guarantor, endorser or other person liable on the Obligations which, together
with all other unsatisfied judgments against Debtor or any guarantor
endorser or other person liable on the Obligations, in an amount which
exceeds $50,000 in the aggregate or which is a lien against any of Debtor's
properties or if a receiver, custodian or trustee of any kind is appointed
for Debtor or any guarantor, endorser or other person liable on the
Obligations or any of Debtor's or their respective properties; or
(e) there shall be a material adverse change in the business,
assets or condition (financial or otherwise) of Debtor from the date hereof;
or
(f) there is any change in Debtor's majority control or ownership;
or
(g) at any time Secured Party shall, in Secured Party's sole
discretion, exercised in good faith, consider the Obligations insecure or any
part of the Collateral unsafe, insecure or insufficient and Debtor shall not
on Secured Party's demand furnish other Collateral or make payment on
account, satisfactory to Secured Party.
5. RIGHTS AND REMEDIES
-------------------
Upon the occurrence of any such Event of Default and at any time
thereafter, in addition to all other rights and remedies of Secured Party,
whether provided under law, the Financing Agreements or otherwise, Secured
Party shall have the following rights and remedies which may be exercised
without notice to, or consent by, Debtor except as such notice or consent is
expressly provided for hereunder.
(a) Secured Party may require that neither Debtor nor any
affiliate or subsidiary of Debtor make any use of the Trademarks or any marks
similar thereto for any purpose whatsoever. Secured Party may make use of any
Trademarks for the sale of goods, completion of work in process or rendering
of
-6-
<PAGE>
services in connection with enforcing any other security interest granted to
Secured Party by Debtor or any subsidiary of Debtor.
(b) Secured Party may grant such license or licenses relating to
the Collateral for such term or terms, on such conditions, and in such
manner, as Secured Party shall in its discretion deem appropriate. Such
license or licenses may be general, special, or otherwise, and may be granted
on an exclusive or non-exclusive basis throughout all or any part of the
United States of America, its territories and possessions, and all foreign
countries.
(c) Secured Party may assign, sell, or otherwise dispose of the
Collateral or any part thereof, either with or without special conditions or
stipulations except that if notice to Debtor of intended disposition of
Collateral is required by law, ten (10) days notice by Secured Party sent by
certified mail, postage prepaid, of the proposed disposition of any of the
Collateral shall be deemed reasonable notice thereof and Debtor waives any
other notice with respect thereto. Secured Party shall have the power to buy
the Collateral or any part thereof, and Secured Party shall also have the
power to execute assurances and perform all other acts which Secured Party
may, in its discretion, deem appropriate or proper to complete such
assignment, sale, or disposition. In any such event, Debtor shall be liable
for any deficiency.
(d) In addition to the foregoing, in order to implement the
assignment, sale, or other disposition of any of the Collateral pursuant to
Subparagraph 5(c) hereof, Secured Party may at any time execute and deliver
on behalf of Debtor, pursuant to the authority granted in the Powers of
Attorney described in Subparagraph 3(f) hereof, one or more instruments of
assignment of the Trademarks (or any application, registration, or recording
relating thereto), in form suitable for filing, recording, or registration.
Debtor agrees to pay Secured Party on demand all costs incurred in any such
transfer of the Collateral, including, but not limited to, any taxes, fees,
and reasonable attorneys' fees and legal expenses.
(e) Secured Party may first apply the proceeds actually received
from any such license, assignment, sale, or other disposition of Collateral
to the costs and expenses thereof, including, without limitation, reasonable
attorneys' fees and all legal, travel, and other expenses which may be
incurred by Secured Party. Thereafter, Secured Party may apply any remaining
proceeds to such of the Obligations as Secured Party may in its discretion
determine. Debtor shall remain liable to Secured Party for any expenses or
obligations remaining unpaid after the application of such proceeds, and
Debtor will pay Secured Party on demand any such unpaid amount, together with
interest at a rate equal to the highest rate then payable on the Obligations.
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<PAGE>
(f) Debtor shall supply to Secured Party or to Secured Party's
designee, Debtor's knowledge and expertise relating to the manufacture and
sale of the products and services bearing the Trademarks and Debtor's
customer lists and other records relating to the Trademarks and the
distribution thereof.
(g) Nothing contained herein shall be construed as requiring
Secured Party to take any such action at any time. All of Secured Party's
rights and remedies, whether provided under law, the Financing Agreements,
this Agreement, or otherwise, shall be cumulative and none is exclusive. Such
rights and remedies may be enforced alternatively, successively, or
concurrently.
6. MISCELLANEOUS
-------------
(a) Any failure or delay by Secured Party to require strict
performance by Debtor of any of the provisions, warranties, terms, and
conditions contained herein or in any other agreement, document, or
instrument, shall not affect Secured Party's right to demand strict
compliance and performance therewith, and any waiver of any default shall not
waive or affect any other default, whether prior or subsequent thereto, and
whether of the same or of a different type. None of the warranties,
conditions, provisions, and terms contained herein or in any other agreement,
document, or instrument shall be deemed to have been waived by any act or
knowledge of Secured Party, its agents, officers, or employees, but only by
an instrument in writing, signed by an officer of Secured Party and directed
to Debtor, specifying such waiver.
(b) Except as otherwise provided, all notices, requests and
demands to or upon the respective parties hereto shall be deemed to have been
duly given or made: if by hand, telex, telegram or facsimile, immediately
upon sending; if by Federal Express, Express Mail or any other overnight
delivery service, one (1) day after dispatch; and if mailed by certified mail,
return receipt requested, five (5) days after mailing. All notices, requests
and demands are to be given or made to the respective parties at the address
(or to such addresses as either party may designate by notice in accordance
with the provisions of this paragraph) set forth herein.
(c) In the event that any provision hereof shall be deemed to be
invalid by any court, such invalidity shall not affect the remainder of this
Agreement.
(d) All references to Debtor and Secured Party herein shall
include their respective successors and assigns. All references to the term
"person" herein shall mean an individual, a partnership, a corporation
(including a business trust), a joint stock company, a trust, an
unincorporated association, a joint venture or other entity or a government or
any agency, instrumentality or political subdivision thereof.
-8-
<PAGE>
(e) This Agreement shall be binding upon and for the benefit of
the parties hereto and their respective successors and assigns. No provision
hereof shall be modified, altered or limited except by a written instrument
expressly referring to this Agreement signed by the party to be charged
thereby.
(f) The validity, interpretation, and effect of this Agreement
shall be governed by the laws of the State of New York. Debtor hereby waives
all rights of setoff and rights to interpose counterclaims (except compulsory
counterclaims) in the event of any litigation with respect to any matter
connected with this Agreement, the Obligations or the Collateral and
irrevocably submits and consents to the non-exclusive jurisdiction of the
Supreme Court of the State of New York and the United States District Court
for the Southern District of New York and Debtor waives all rights to a trial
by jury in any action in connection with this Agreement, the Obligations or
the Collateral. Service of process or notice in connection with any
proceedings may be served (i) inside or outside the State of New York by
registered or certified mail, return receipt requested, addressed to the
Debtor at the address set forth above or of which Debtor has advised Secured
Party in writing and service or notice so served shall have been deemed
complete five (5) days after the same shall have been posted, or (ii) in such
manner as may be permissible under the rules of said courts. Within
forty-five (45) days after such mailing, Debtor shall appear in answer to
such process or notice of motion or other application to said Courts, failing
which Debtor shall be deemed in default and judgment may be entered by
Secured Party against Debtor for the amount of the claim and other relief
requested therein.
(g) In the event that any term or provision of this Agreement
conflicts with any term or provision of the Accounts Agreement, the term or
provision of the Accounts Agreement shall control.
IN WITNESS WHEREOF, Debtor and Secured Party have executed this
Agreement as of the day and year first above written.
I.C. ISAACS & COMPANY L.P.
By: ISBUYCO, INC., General Partner
By: /s/ Robert J. Arnot
--------------------------
Title: Chairman
-----------------------
CONGRESS FINANCIAL CORPORATION
By: /s/ Steven Stone
--------------------------
Title: VP
-----------------------
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<PAGE>
STATE OF NEW YORK )
) ss.:
COUNTY OF NEW YORK )
On this 15th day of June, 1992, before me personally came /s/ [Illegible],
to me known, who being duly sworn, did depose and say, that he is the
Chairman of ISBUYCO, INC., a corporation duly organized under the laws of the
State of Delaware, having its principal place of business at 3840 Bank Street,
Baltimore, Maryland 21224; that said corporation is the general partner of
I.C. Isaacs & Company L.P., a Delaware limited partnership, the firm
described in and which executed the foregoing instrument; and that he signed
his name thereto by order or the Board of Directors of said corporation, and
he acknowledged to me that said instrument was executed by said corporation
as the act and deed of said partnership for the uses and purpose therein
mentioned.
/s/ Joanne Defillippo
-------------------------------
Notary Public
STATE OF NEW YORK ) JOANNE DEFILLIPPO
) ss.: Notary Public, State of New York
COUNTY OF NEW YORK ) No. 24-4988297
Qualified in Kings County
Commission Expires Nov. 4, 1993
On this 15th day of June, 1992, before my personally came Steven A.
Stone, to me known, who, being duly sworn, did depose and say, that he is the
Vice President of CONGRESS FINANCIAL CORPORATION, the corporation described
in and which executed the foregoing instrument; and that he signed his name
thereto by order or the Board of Directors of said corporation.
/s/ Joanne Defillippo
-------------------------------
Notary Public
JOANNE DEFILLIPPO
Notary Public, State of New York
No. 24-4988297
Qualified in Kings County
Commission Expires Nov. 4,1993
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<PAGE>
EXHIBIT A TO
TRADEMARK COLLATERAL ASSIGNMENT AND SECURITY AGREEMENT
LIST OF TRADEMARKS
Trademark Reg. No. Issue Date
--------- -------- ----------
Over the Top & Design 299,851 December 27, 1932
Over the Top & Design 312,899 May 15, 1934
Over the Top & Design 312,978 May 15, 1934
Over the Top & Design 314,393 June 26, 1934
Over the Top & Design 332,003 January 28, 1936
Over the Top & Design 342,581 January 19, 1937
Over the Top & Design 365,093 February 21, 1939
Over the Top & Design 377,425 May 7, 1940
Justa-Jean 500,797 July 1, 1952
Bronco Buster 562,330 July 29, 1952
Trimfit 573,063 April 7, 1953
Fit-All 573,778 April 28, 1953
Pipestem 573,779 April 28, 1953
Royal Gem 592,234 July 6, 1954
Over the Top 597,641 November 2, 1954
Slim Jean 598,793 November 30, 1954
Norsking 598,815 November 30, 1954
Madrid 608,899 July 12, 1955
Gemsheen 622,349 February 28, 1956
Beau Gem 626,605 May 8, 1956
<PAGE>
Turn-to 629,565 June 26, 1956
Broncho 632,768 August 24, 1956
Slicfit 633,221 August 21, 1956
Whipsaw 633,696 August 28, 1956
All Time 641,446 February 12, 1957
Royalon 641,468 February 12, 1957
PHd 642,677 March 12, 1957
Zacari 716,902 June 13, 1961
Zacari, Ltd. 716,903 June 13, 1961
Crestline 786,446 March 9, 1965
All-Ways Prest 823,417 January 31, 1967
Lady Isaacs 846,064 March 12, 1968
Lord Isaacs 847,484 April 9, 1968
Trimfit 881,746 December 2, 1969
Lord Isaacs 989,010 July 23, 1974
Lady Isaacs 989,011 July 23, 1974
Double Dare 1,037,543 April 6, 1976
Foreward Pass 1,130,017 January 29, 1980
Pizzazz 1,140,864 October 28, 1980
ZAC Ltd. 1,141,851 November 25, 1980
ZAC 1,142,654 December 9, 1980
Pocket Design 1,192,904 March 30, 1982
Pocket Design 1,193,435 April 6, 1982
Pocket Design 1,194,537 April 27, 1982
Pocket Design 1,196,001 May 18, 1982
Pocket Design 1,212,011 October 5, 1982
<PAGE>
Pocket Design 1,217,112 November 16, 1982
Pocket Design 1,248,009 August 9, 1983
Pocket Design 1,289,558 August 7, 1984
Pocket Design 1,289,559 August 7, 1984
PENDING APPLICATIONS
--------------------
Turn - 2 491,040 July 23, 1984
Powder Point
Isaacs Group
Barbell Blues
Gibson Isle
<PAGE>
EXHIBIT B TO
TRADEMARK COLLATERAL ASSIGNMENT AND SECURITY AGREEMENT
LIST OF LICENSES
1. License dated August 27, 1990 with Brookhurst, Inc. re: "Boss"
for menswear.
2. License dated January, 1991 with Brookhurst, Inc. re: "Boss" for
ladieswear.
<PAGE>
EXHIBIT C
SPECIAL POWER OF ATTORNEY
STATE OF NEW YORK )
) ss.:
COUNTY OF NEW YORK )
KNOW ALL MEN BY THESE PRESENTS, that I.C. ISAACS & COMPANY L.P.
("Debtor"), having an office at 3840 Bank Street, Baltimore, Maryland 21224,
hereby appoints and constitutes, CONGRESS FINANCIAL CORPORATION ("Secured
Party"), and each of its officers, its true and lawful attorney, with full
power of substitution and with full power and authority to perform the following
acts on behalf of Debtor:
1. Execution and delivery of any and all agreements, documents,
instrument of assignment, or other papers which Secured Party, in its
discretion, deem necessary or advisable for the purpose of assigning, selling,
or otherwise disposing of all right, title, and interest of Debtor in and to any
trademarks and all registrations, recordings, reissues, extensions, and renewals
thereof, or for the purpose of recording, registering and filing of, or
accomplishing any other formality with respect to the foregoing.
2. Execution and delivery of any and all documents, statements,
certificates or other papers which Secured Party, in its discretion, deems
necessary or advisable to further the purposes described in Subparagraph 1
hereof.
This Power of Attorney is made pursuant to Trademark Collateral
Assignment and Security Agreement between Debtor and Secured Party, of even date
herewith (the "Security Agreement") and may not be revoked until indefeasible
payment in full of all Debtor's "Obligations", as such term is defined in the
Security Agreement and is subject to the terms and provisions thereof.
, 1992 I.C. ISAACS & COMPANY L.P.
- -------- --
By: ISBUYCO, INC., General Partner
By:
--------------------------
Title:
-----------------------
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<PAGE>
STATE OF NEW YORK )
) ss.:
COUNTY OF NEW YORK )
On this ____ day of ______, 1992, before me personally came
________________________________, to me known, who being duly sworn, did depose
and say, that he/she is the ________________ of ISBUYCO, INC., a corporation
duly organized under the laws of the State of Delaware, having its principal
place of business at 3840 Bank Street, Baltimore, Maryland 21224; that said
corporation is the general partner of I.C. Isaacs & Company L.P., a Delaware
limited partnership, the firm described in and which executed the foregoing
instrument; and that he/she signed his/her name thereto by order of the Board of
Directors of said corporation, and he/she acknowledged to me that said
instrument was executed by said corporation as the act and deed of said
partnership for the uses and purpose therein mentioned.
-----------------------------
Notary Public
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<PAGE>
[FORM OF]
INDEMNIFICATION AGREEMENT
INDEMNIFICATION AGREEMENT, dated as of _____________ 1997 (this
"AGREEMENT"), by and between I. C. Isaacs & Company, Inc., a Delaware
corporation (the "COMPANY"), and _________________________ ("INDEMNITEE").
W I T N E S S E T H:
WHEREAS, the Company desires to attract and retain the services of able
persons to serve as its officers and directors;
WHEREAS, the Company and Indemnitee recognize the increasing difficulty
in obtaining officers' and directors' liability insurance, the significant
increase in the cost of such insurance and the general reduction in the
coverage of such insurance;
WHEREAS, the Company and Indemnitee further recognize the substantial
increase in corporate litigation in general, subjecting officers and
directors to litigation risks at the same time that liability insurance has
been severely limited; and
WHEREAS, neither Indemnitee nor the Company regards statutory
indemnification protection as fully adequate given the present circumstances;
NOW THEREFORE, the Company and Indemnitee hereby agree as follows:
1. (a) THIRD-PARTY PROCEEDINGS. The Company shall indemnify
Indemnitee to the fullest extent of Delaware law, except as otherwise
provided in Section 3 of this Agreement, if Indemnitee is or was a party or
is threatened to be made a party to any threatened, pending or completed
suit, action, proceeding, arbitration or alternative dispute resolution
mechanism, investigation, administrative hearing, whether civil, criminal,
administrative or investigative (any such suit, action, proceeding,
arbitration or alternative dispute resolution mechanism, investigation,
administrative hearing being referred to herein as a "PROCEEDING") (other
than an action by or in the right of the Company) by reason of the fact that
Indemnitee is or was a director, officer, employee or agent of the Company or
any subsidiary or affiliated entity (each, a "Subsidiary") of the Company, by
reason of any action or inaction on the part of Indemnitee while an officer
or director of the Company or any Subsidiary of the Company or by reason of
the fact that Indemnitee is or was serving at the request of the Company as a
director, officer, employee or agent of another Person (as defined in Section
6(d)), against expenses (including attorneys' fees), judgments, fines and
amounts paid in settlement (if such settlement is approved in advance by the
Company, which approval shall not be unreasonably withheld) actually and
reasonably incurred by Indemnitee in connection with such action or
proceeding if Indemnitee acted in good faith and in a manner Indemnitee
reasonably believed to be in or not opposed to the best interests of the
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<PAGE>
Company and its stockholders, and with respect to any criminal action or
proceeding, had no reasonable cause to believe his conduct was unlawful.
(b) PROCEEDINGS BY OR IN THE RIGHT OF THE COMPANY. The Company shall
indemnify Indemnitee to the fullest extent of Delaware law, except as
otherwise provided in Section 3 of this Agreement, if Indemnitee is or was a
party or is threatened to be made a party to any threatened, pending or
completed Proceeding by or in the right of the Company or any subsidiary of
the Company to procure a judgment in its favor by reason of the fact that
Indemnitee is or was a director, officer, employee or agent of the Company or
any Subsidiary of the Company, by reason of any action or inaction on the
part of Indemnitee while an officer or director of the Company or any
Subsidiary of the Company or by reason of the fact that Indemnitee is or was
serving at the request of the Company as a director, officer, employee or
agent of another Person, against expenses (including attorneys' fees) and, to
the fullest extent permitted by Delaware law, amounts paid in settlement (if
such settlement is approved by the Company, which approval shall not be
unreasonably withheld), in each case to the extent actually and reasonably
incurred by Indemnitee in connection with the defense or settlement of such
Proceeding if Indemnitee acted in good faith and in a manner Indemnitee
reasonably believed to be in or not opposed to the best interests of the
Company and its stockholders, except that no indemnification shall be made in
respect of any claim, issue or matter as to which Indemnitee shall have been
adjudged to be liable to the Company and its stockholders in the performance
of Indemnitee's duty to the Company and its stockholders unless and only to
the extent that the Court of Chancery of the State of Delaware, or the court
in which such action or proceeding shall have been brought or is pending,
shall determine that in view of all the circumstances of the case, Indemnitee
is fairly and reasonably entitled to indemnity for expense, and then only to
the extent that the court shall determine.
(c) SELECTION OF COUNSEL. In the event the Company shall be
obligated under Section 1(a) or (b) hereof to pay the expenses of any
Proceeding against Indemnitee, the Company shall be entitled to assume the
defense of such Proceeding, with counsel approved by Indemnitee (who shall
not unreasonably withhold such approval), upon the delivery to Indemnitee of
written notice of its election so to do. After delivery of such notice,
approval of such counsel by Indemnitee and the retention of such counsel by
the Company, the Company will not be liable to Indemnitee under this
Agreement for any fees of counsel subsequently incurred by Indemnitee with
respect to the same Proceeding, PROVIDED, THAT, (i) Indemnitee shall have the
right to employ his counsel in any such proceeding at Indemnitee's expense;
and (ii) if (A) the employment of counsel by Indemnitee has been previously
authorized in writing by the Company, (B) Indemnitee shall have reasonably
concluded that there may be a conflict of interest between the Company and
Indemnitee in the conduct of any such defense and shall have notified the
company in writing thereof, (C) Indemnitee shall have reasonably concluded
that there may be a conflict of interest between Indemnitee and other
indemnitees of the Company being represented by counsel retained by the
Company in the same proceeding and shall have notified the Company in writing
thereof, or (D) the Company shall not, in fact, have employed counsel to
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<PAGE>
assume the defense of such proceeding, then the fees and expenses of
Indemnitee's counsel shall be at the expense of the Company.
2. CONTRIBUTION. If, when Indemnitee has met the applicable standard of
conduct, the indemnification provisions set forth in Section 1 should, under
applicable law, be to any extent unenforceable, then the Company agrees that
it shall be treated as though it is or was a party to the threatened, pending
or completed Proceeding in which Indemnitee is or was involved and that the
Company shall contribute to the amounts paid or payable by Indemnitee as a
result of such expenses (including attorneys' fees), judgments in third-party
Proceedings, fines and amounts paid in settlement actually and reasonably
incurred by Indemnitee in such proportion as is appropriate to reflect the
relative fault of the Company on the one hand and Indemnitee on the other in
connection with such action or inaction, or alleged action or inaction, as
well as any other relevant equitable considerations.
For purposes of this Section 2, the relative benefit to the Company
shall be deemed to be the benefits accruing to it and to all of its
directors, officers, employees and agents (other than Indemnitee), as a group
and treated as one entity, and the relative benefit to Indemnitee shall be
deemed to be an amount not greater than Indemnitee's yearly base salary or
director's compensation as the case may be, from the Company during the first
year in which the action or inaction, or alleged action or inaction, forming
the basis for the threatened, pending or contemplated Proceeding was alleged
to have occurred plus the amount, if any, of monetary benefit and other
consideration received by Indemnitee in the transaction (s) that gave rise to
such Proceeding. The relative fault shall be determined by reference to,
among other things, the fault of the Company and all of its directors,
officers, employees and agents (other than Indemnitee), as a group and
treated as one entity, and such group's relative intent, knowledge, access to
information and opportunity to have altered or prevented the action or
inaction, or alleged action or inaction, forming the basis for the
threatened, pending or contemplated Proceeding, and Indemnitee's relative
fault in light of such factors on the other hand.
3. LIMITATIONS TO RIGHTS OF INDEMNIFICATION AND ADVANCEMENT OF EXPENSES.
Except as otherwise provided in Sections 9 and 12 of this Agreement,
Indemnitee shall not be entitled to indemnification or advancement of
expenses under this Agreement:
(a) with respect to any Proceeding initiated, brought or made by
Indemnitee (i) against the Company, unless a Change in Control(as defined in
Section 5(b) of this Agreement) shall have occurred, or (ii) against any
person other than the Company, unless approved in advance by the Board of
Directors of the Company (the "Board");
(b) on account of any suit in which it shall be determined by
final judgment by a court having jurisdiction in the matter that Indemnitee
intentionally caused or intentionally contributed to the injury complained of
with the knowledge that such injury would occur;
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<PAGE>
(c) on account of Indemnitee's conduct which shall be determined
by final judgment by a court having jurisdiction in the mater that Indemnitee
was knowingly fraudulent, deliberately dishonest, engaged in willful
misconduct or that Indemnitee received an improper personal benefit;
(d) for any expenses incurred by Indemnitee with respect to any
proceeding instituted by Indemnitee to enforce or interpret this Agreement,
to the extent that a court of competent jurisdiction determines that any of
the material assertions made by Indemnitee in such proceeding was not made in
good faith or was frivolous;
(e) for expenses or liabilities of any type whatsoever (including,
but not limited to, judgments, fines, ERISA excise taxes or penalties and
amounts paid in settlement) which have been paid directly to Indemnitee by an
insurance carrier under a policy of officers' and directors' liability
insurance maintained by the Company;
(f) for expenses or the payment of profits arising from the
purchase and sale by Indemnitee of securities in violation of Section 16(b)
of the Securities Exchange Act of 1934, as amended (the "EXCHANGE ACT"), or
any similar successor statute; or
(g) if it shall be determined by final judgment by a court having
jurisdiction in the matter that such indemnification is not lawful.
4. PROCEDURE FOR DETERMINATION OF ENTITLEMENT TO INDEMNIFICATION. (a)
To obtain indemnification under this Agreement, Indemnitee shall submit to
the Company a written request, including such documentation and information
as is reasonably available to Indemnitee and is reasonably necessary to
determine whether and to what extent Indemnitee is entitled to
indemnification. The Secretary of the Company shall, promptly upon receipt
of such a request for indemnification, advise the Board in writing that
Indemnitee has requested indemnification.
(b) Upon written request by Indemnitee for indemnification, a
determination with respect to Indemnitee's entitlement thereto shall be made
in the specific case as follows:
(i) if a Change in Control (as defined in section 5(b) of
this Agreement) shall have occurred, by Independent Counsel (as defined in
Section 5(a) of this Agreement) in a written opinion to the Board, a copy of
which shall be delivered to Indemnitee (unless Indemnitee shall request that
such determination be made by the Board or the Stockholders, in which case
the determination shall be made in the manner provided below in clause (ii);
or
(ii) if a Change in Control shall not have occurred, (A) by
the Board by a majority vote of a quorum consisting of disinterested
directors, (B) if a quorum of the Board consisting of disinterested directors
is not obtainable or, even if obtainable, such quorum of disinterested
directors so directs, by Independent Counsel in a written opinion to the
Board, a copy of which shall be delivered to Indemnitee or (C) by the
stockholders of the Company.
-4-
<PAGE>
(c) If it is so determined that Indemnitee is entitled to
indemnification, payment to Indemnitee shall be made within ten (10) days
after such determination. Indemnitee shall cooperate with the person,
persons or entity making such determination with respect to Indemnitee's
entitlement to indemnification, including providing to such person, persons
or entity upon reasonable advance request any documentation or information
that is not privileged or otherwise protected from disclosure and that is
reasonably available to Indemnitee and reasonably necessary to such
determination. Any costs or expenses (including attorneys' fees and
disbursements) incurred by Indemnitee in so cooperating shall be borne by the
Company (irrespective of the determination as to Indemnitee's entitlement to
indemnification) and the Company hereby indemnifies and agrees to hold
Indemnitee harmless therefrom.
(d) If a Change in Control shall not have occurred, the Independent
Counsel shall be selected by the Board, and the Company shall give written
notice to Indemnitee advising him of the identity of the Independent counsel
so selected. If a Change in Control shall have occurred, the Independent
Counsel shall be selected by Indemnitee (unless Indemnitee shall request that
such selection be made by the Board), and Indemnitee shall give written
notice to the Company advising it of the identity of the Independent Counsel
so selected. In either event, Indemnitee or the Company, as the case may be,
a written objection to such selection. Such objection may be asserted only
on the ground that the Independent Counsel so selected may not serve as
Independent Counsel unless and until a court has determined that such
objection is without merit. If, twenty (20) days after submission by
Indemnitee of a written request for indemnification pursuant to Section 4
hereof, no Independent Counsel shall have been selected or if selected, shall
have been objected to, in accordance with this Section 4(d), either the
Company or Indemnitee may petition the Court of Chancery of the State of
Delaware or other court of competent jurisdiction for resolution of any
objection which shall have been made by the Company or Indemnitee to the
other's selection of Independent Counsel and/or for the appointment as
Independent Counsel of a person selected by the court or by such other person
as the court shall designate. The person with respect to whom an objection
is favorably resolved or the person so appointed shall act as Independent
Counsel under Section 4 hereof. The Company shall pay any and all reasonable
fees and expenses incident to the procedures of this Section 4, including
reasonable fees and expenses incurred by such Independent Counsel regardless
of the manner in which such Independent Counsel was selected or appointed.
Upon the due commencement of any judicial proceeding or arbitration pursuant
to Section 12 of this Agreement, Independent Counsel shall be discharged and
relieved of any further responsibility in such capacity (subject to the
applicable standards of professional conduct then prevailing).
5. (a) "Independent Counsel" means a law firm or a member of a law firm
that neither at the time in question, nor in the five years immediately
preceding such time has been retained to represent (i) the Company or
Indemnitee in any matter material to either such party or (ii) any other
party to the proceeding giving rise to a claim for indemnification under this
Agreement. Notwithstanding the foregoing, the term "Independent Counsel"
shall not include any person who, under the applicable standards of
professional conduct then prevailing under the law of the
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<PAGE>
State of Delaware, would be precluded from representing either the Company or
Indemnitee in an action to determine Indemnitee's rights under this Agreement.
(b) "Change in Control" means the occurrence of any of the
following events:
(i) the Company is merged, consolidated or reorganized into
or with another corporation or other entity, and as a result of such merger,
consolidation or reorganization less than a majority of the combined voting
power of the then-outstanding securities of such corporation or entity
immediately after such transaction are held in the aggregate by the holders
of voting stock immediately prior to such transaction;
(ii) the Company sells or otherwise transfers all or
substantially all of its assets to another corporation or other entity in
which, after giving effect to such sale or transfer, the holders of voting
stock of the Company immediately prior to such sale or transfer hold in the
aggregate less than a majority of the combined voting power of the
then-outstanding securities of such other corporation;
(iii) there is a report filed on Schedule 13D or Schedule
14D-1 (or any successor schedule, form or report or item therein), each as
promulgated pursuant to the Exchange Act, disclosing that any person or
entity, other than any shareholder of the Company (and its affiliates) owning
10% or more of the Company's voting stock on the date hereof, has become the
beneficial owner (as the term "beneficial owner" is defined under Rule 13d-3
or any successor rule or regulation promulgated under the Exchange Act) of
securities representing 50% or more of the combined voting power of the
Company's voting stock; or
(iv) if during any period of two consecutive years individuals
who at the beginning of any such period constitute the Board cease for any
reason to constitute at least a majority thereof; PROVIDED, HOWEVER, that for
purposes of this clause (iv) each director of the Company who is first
elected, or first nominated for election by the Company's stockholders, by a
vote of at least majority of the directors of the Company (or a committee of
the Board) then still in office who were directors of the Company at the
beginning of any such period shall be deemed to have been a director of the
Company at the beginning of such period.
Notwithstanding the provisions of clause (iii) above, unless otherwise
determined in the specific case by majority vote of the Board, a "Change in
Control" shall not be deemed to have occurred solely because the Company, any
subsidiary or any employee stock ownership plan or any other employee benefit
plan of the Company or any subsidiary either files or becomes obligated to
file a report or a proxy statement under or in response to Schedule 13D,
Schedule 14D-1 or Schedule 14A (or any successor schedule, form or report or
item therein) under the Exchange Act disclosing beneficial ownership by it of
shares of voting stock of the Company, whether in excess of 50% or otherwise,
or because the Company reports that a change in control of the Company has
occurred or will occur in the future by reason of such beneficial ownership.
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<PAGE>
6. PRESUMPTIONS AND EFFECT OF CERTAIN PROCEEDINGS. (a) In making a
determination with respect to entitlement to indemnification hereunder, the
person, persons or entity making such determination shall presume that
Indemnitee is entitled to indemnification under this Agreement if Indemnitee
has submitted a request for indemnification in accordance with Section 4 of
this Agreement, and the Company shall bear the burden of proof to rebut that
presumption in connection with the making by any person, persons or entity of
any determination contrary to that presumption.
(b) The termination of any Proceeding or of any claim, issue
or matter therein by judgment, order, settlement or conviction, or upon a
plea of nolo contendere or its equivalent, shall not (except as otherwise
expressly provided in this Agreement) of itself adversely affect the right of
Indemnitee to indemnification or create a presumption that Indemnitee did not
act in good faith and in a manner which he reasonably believed to be in or
not opposed to the best interests of the Company, or, with respect to any
criminal action or proceeding, that Indemnitee had reasonable cause to
believe that his conduct was unlawful.
(c) Indemnitee's conduct with respect to an employee benefit
plan for a purpose he reasonably believed to be in the interests of the
participants in and beneficiaries of the plan shall be deemed to be conduct
that Indemnitee reasonably believed to be in or not opposed to the best
interests of the Company.
(d) For purposes of any determination hereunder, Indemnitee
shall be deemed to have acted in good faith and in a manner he reasonably
believed to be in or not opposed to the best interests of the Company, or,
with respect to any criminal action or proceeding, to have had no reasonable
cause to believe his conduct was unlawful, if his action was based on (i) the
records or books of account of the Company or another Person, including
financial statements, (ii) information supplied to him by the officers of the
Company or another Person in the course of their duties, (iii) the advice of
legal counsel for the Company or another Person, or (iv) information or
records given or reports made to the Company or another Person by an
independent certified public accountant or by an appraiser or other expert
selected with reasonable care by the Company or another Person. the term
"another Person" as used in this Agreement shall mean any other corporation
or any partnership, joint venture, trust, employee benefit plan or other
enterprise of which Indemnitee is or was serving at the request of the
Company as an officer, director, partner, trustee, employee or agent. The
provisions of this Section 6(d) shall not be deemed to limit in any way the
other circumstances in which Indemnitee may be deemed to have met the
applicable standard of conduct set forth in Section 1.
7. SUCCESS ON MERITS OR OTHERWISE. Notwithstanding any other provision
of this Agreement, to the extent that Indemnitee has been successful on the
merits or otherwise in defense of any action, suit or proceeding described in
Section 1 hereof, or in defense of any claim, issue or matter therein, he
shall be indemnified against expenses (including attorneys' fees) actually
and reasonably incurred by him in connection with the investigation, defense,
settlement or appeal thereof. For purposes of this Section 7, the term
"successful on the merits or otherwise" shall include, but not be limited to,
(i) any termination, withdrawal or dismissal (with
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<PAGE>
or without prejudice) of any Proceeding against Indemnitee without any
express finding of liability or guilt against him, (ii) the expiration of 180
days after the making of any claim or threat of a Proceeding without the
institution of the same and without any promise of payment or payment made to
induce a settlement or (iii) the settlement of any Proceeding under Section
1, pursuant to which Indemnitee pays less than $10,000.
8. PARTIAL INDEMNIFICATION. If Indemnitee is entitled under any
provision of this Agreement to indemnification by the Company for some or a
portion of the claims, damages, expenses (including attorneys' fees),
judgments, fines or amounts paid in settlement by Indemnitee in connection
with the investigation, defense, settlement or appeal of any Proceeding
specified in Section 1, but not, however, for the total amount thereof, the
Company shall nevertheless indemnify Indemnitee for the portion thereof to
which Indemnitee is entitled. The party or parties making the determination
shall determine the portion (if less than all) of such claims, damages,
expenses (including attorneys' fees), judgments, fines or amounts paid in
settlement for which Indemnitee is entitled to indemnification under this
Agreement.
9. COSTS. All the costs of making the determination required by Section
4 hereof shall be borne solely by the Company, including, but not limited to,
the costs of legal counsel, proxy solicitations and judicial determinations.
The Company shall also be solely responsible for paying (i) all reasonable
expenses incurred by Indemnitee to enforce this Agreement, including, but not
limited to, the costs incurred by Indemnitee to obtain court-ordered
indemnification pursuant to Section 12, regardless of the outcome of any such
application or proceeding, and (ii) all costs of defending any Proceedings
challenging payments to Indemnitee under this Agreement.
10. ADVANCE OF EXPENSES. The Company shall advance all expenses incurred
by or on behalf of Indemnitee in connection with any Proceeding within twenty
(20) days after the receipt by the Company of a statement or statements from
Indemnitee requesting such advance or advances from time to time, whether
prior to or after final disposition of such Proceeding. Such statement or
statements shall reasonably evidence the expenses incurred by Indemnitee and
shall include or be preceded or accompanied by an undertaking by or on behalf
of Indemnitee to repay any expenses advanced if it shall ultimately be
determined that Indemnitee is not entitled to be indemnified against such
expenses, which undertaking shall be accepted by or on behalf of the Company
with reference to the financial ability of Indemnitee to make repayment, and
without the pledging of any security by Indemnitee. Notwithstanding
Indemnitee's above-described rights to advancement of expenses, no advance of
expenses shall be made in the circumstances proscribed by Section 3(a).
Notwithstanding any other provision of this Agreement, if Indemnitee requests
an adjudication or an award in arbitration pursuant to the provisions of
Section 12 below in order to establish an entitlement to indemnification or
advancement of expenses, any determination made pursuant to Section 4 of this
Agreement that Indemnitee is not entitled to indemnification or to receive
advancement of expenses shall not be binding and Indemnitee shall not be
required to reimburse the Company for any expense advance unless and until a
final judicial determination or award in arbitration is made with respect
thereto as to which all rights of appeal therefrom have been exhausted or
lapsed.
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<PAGE>
11. INDEMNIFICATION FOR EXPENSES OF A WITNESS. Not withstanding any
other provision of this Agreement, to the extent that Indemnitee is, by
reason of any event or occurrence related to the fact that Indemnitee is or
was a director, officer, employee or agent of the Company or any subsidiary
of the Company, or is or was serving at the request of the Company as a
director, officer, employee or agent of another Person, a witness in any
Proceeding, whether instituted by the Company or any other party, and to
which Indemnitee is not a party, he shall be indemnified against all expenses
actually and reasonably incurred by him or on his behalf in connection
therewith.
12. ENFORCEMENT. (a) If a claim for indemnification or advancement of
expenses made to the Company pursuant to Section 3 or 10 is not timely paid
in full to Indemnitee by the Company as required by Section 3 or 10,
respectively, Indemnitee shall be entitled to seek judicial enforcement of
the Company's obligations to make such payment in an appropriate court of the
State of Delaware or any other court of competent jurisdiction. In the event
that a determination is made that Indemnitee is not entitled to
indemnification or advancement of expenses hereunder, (i) Indemnitee may seek
a de novo adjudication of Indemnitee's entitlement to such indemnification or
advancement either, at Indemnitee's sole option, or (A) an appropriate court
of the State of Delaware or any other court of competent jurisdiction or (B)
an arbitration to be conducted by a single arbitrator pursuant to the rules
of the American Arbitration Association; (ii) any such judicial proceeding or
arbitration shall not in any way be prejudiced by, and Indemnitee shall not
be prejudiced in any way by such adverse determination; and (iii) in any such
judicial proceeding or arbitration the Company shall have the burden of
proving that Indemnitee is not entitled to indemnification or advancement of
expenses under this Agreement. Indemnitee shall commence a proceeding seeking
an adjudication of Indemnitee's right to indemnification or advancement of
expenses pursuant to the preceding sentence within one year following the
date on which Indemnitee first has the right to commence such proceeding
pursuant to this Section 12(a); PROVIDED, HOWEVER, that the foregoing time
limitation shall not apply in respect of a proceeding brought by Indemnitee
to enforce Indemnitee's rights under Section 7 hereof.
(b) The Company shall be precluded from asserting in any
judicial proceeding or arbitration commenced pursuant to the provisions of
Section 12(a) that the procedures and presumptions of this Agreement are not
valid, binding and enforceable and shall stipulate in any such court or
before any such arbitrator that the Company is bound by all the provisions of
this Agreement.
(c) In any action brought under this Section 12, it shall be
a defense to a claim for indemnification (other than an action brought to
enforce a claim for advancement of expenses) that Indemnitee has not met the
standards of conduct which make it permissible under Delaware law for the
Company to indemnify Indemnitee for the amount claimed. The burden of
proving such defense shall be on the Company.
(d) It is the intent of the Company that Indemnitee not be
required to incur the expenses associated with the enforcement of his rights
under this Agreement by litigation or
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other legal action because the cost and expense thereof would substantially
detract from the benefits intended to be extended to Indemnitee hereunder.
Accordingly, if it should appear to Indemnitee that the Company has failed to
comply with any of its obligations under this Agreement or in the event that the
Company or any other person takes any action to declare this Agreement void or
unenforceable, or institutes any proceeding designed (or having the effect of
being designed) to deny, or to recover from Indemnitee the benefits intended to
be provided to Indemnitee hereunder the Company irrevocably authorizes
Indemnitee from time tot time to retain counsel of his choice, at the expense of
the Company as hereafter provided, to represent Indemnitee in connection with
the initiation or defense of any litigation or other legal action, whether by or
against the Company or any director, officer, stockholder or other person
affiliated with the Company, in any jurisdiction. Regardless of the outcome
thereof, but subject to Indemnitee having acted in good faith, the Company shall
pay and be solely responsible for any and all costs, charges and expenses,
including attorneys' and others' fees and expenses, incurred by Indemnitee (i)
as a result of the Company's failure to perform this Agreement or any provision
thereof, or (ii) as a result of the Company's or any person's contesting the
validity or enforceability of this Agreement or any provision thereof as
aforesaid.
13. LIABILITY INSURANCE AND FUNDING. To the extent the Company
maintains an insurance policy or policies providing directors' and officers'
liability insurance, Indemnitee shall be covered by such policy or polices,
in accordance with its or their terms, to the maximum extent of the coverage
available for any director or officer of the Company. If, at the time of the
receipt of a notice of a claim pursuant to Section 4 hereof, the Company has
directors' and officers' liability insurance in effect, the Company shall
give prompt notice of the commencement of such proceeding to the insurers in
accordance with the procedures set forth in the respective policies. The
Company shall thereafter take all necessary or desirable action to cause such
insurers to pay, on behalf of Indemnitee, all amounts payable as a result of
such proceeding in accordance with the terms of such policies. The Company
shall have no obligation to obtain or maintain such insurance.
14. MERGER OR CONSOLIDATION. In the event that the Company shall be a
constituent corporation in a merger, consolidation or other reorganization,
the Company shall require as a condition thereto, (a) if it shall not be the
surviving, resulting or other corporation therein, the surviving, resulting
or acquiring corporation to agree to indemnify Indemnitee to the full extent
provided herein, and (b) whether or not the Company is the surviving,
resulting or acquiring corporation therein, Indemnitee shall also stand in
the same position under this Agreement with respect to the surviving,
resulting or acquiring corporation as Indemnitee would have with respect to
the Company if the Company's separate existence had continued.
15. NONDISCLOSURE OF PAYMENTS. Except as expressly required by federal
securities laws or other applicable laws, Indemnitee shall not disclose any
payments made under this Agreement, whether indemnification or advancement of
expenses, unless prior written approval of the Company is obtained. Any
payments to Indemnitee that must be disclosed shall, unless otherwise
required by law, be described only in the Company proxy or information
statements relating to special and/or annual meetings of the Company's
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stockholders, and the Company shall afford Indemnitee the reasonable
opportunity to review all such disclosures and, if requested, to explain in
such statement any mitigating circumstances regarding the events reported.
16. NONEXCLUSIVITY AND SEVERABILITY; SUBROGATION. (a) The right to
indemnification and advancement of expenses provided by this Agreement shall
not be exclusive of any other rights to which Indemnitee may be entitled
under the Amended and Restated Certificate of Incorporation (the
"Certificate") or Amended and Restated Bylaws (the "Bylaws") of the Company,
Delaware law, any other statute, insurance policy, agreement, vote of
stockholders of the Company or of the Board (or otherwise), both as to
actions in his official capacity and as to actions in another capacity while
holding such office, and shall continue after Indemnitee has ceased to be a
director or officer of the Company and shall inure to the benefit of his
heirs, executors and administrators; PROVIDED, HOWEVER, that to the extent
Indemnitee otherwise would have any greater right to indemnification and/or
advancement of expenses under any provision of the Certificate or the Bylaws
of the Company, Indemnitee shall be deemed to have such greater right
pursuant to this Agreement; and, PROVIDED, FURTHER, that to the extent that
any change is made to the Delaware law (whether by legislative action or
judicial decision), the Certificate and/or the Bylaws that permits any
greater right to indemnification and/or advancement of expenses than that
provided under this Agreement as of the date hereof, Indemnitee shall be
deemed to have such greater right pursuant to this Agreement. No amendment,
alteration, or repeal of this Agreement or of any provision hereof shall
limit or restrict any right of Indemnitee under this Agreement in respect of
any action taken or omitted by such Indemnitee prior to such amendment,
alteration, or repeal.
(b) If any provision or provisions of this Agreement are held
to be invalid, illegal or unenforceable for any reason whatsoever: (i) the
validity, legality and enforceability of the remaining provisions of this
Agreement (including, without limitation, all portions of any provisions of
this Agreement containing any such provision held to be invalid, illegal or
unenforceable, that are not themselves invalid, illegal or unenforceable)
shall not in any way be affected or impaired thereby and (ii) to the fullest
extent possible, the provisions of this Agreement (including, without
limitation, all portions of any provisions of this Agreement containing any
such provision held to be invalid, illegal or unenforceable, that are not
themselves invalid, illegal or unenforceable) shall be construed so as to
give effect to the intent manifested by the provision held invalid, illegal
or unenforceable.
(c) In the event of any payment under this Agreement, the
Company shall be subrogated to the extent of such payment to all of the
rights of recovery of Indemnitee, who shall execute all papers required and
take all actions necessary to secure such rights, including execution of such
documents as are necessary to enable the Company to bring suit to enforce
such rights.
17. NOTICES. All notices, requests, demands and other communications
under this Agreement shall be in writing and shall be deemed duly given (i)
if delivered by hand and receipted for by the party addressed, on the date of
such receipt, or (ii) if mailed by domestic
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certified or registered mail with postage prepaid, on the third business day
after the date postmarked. Addresses for notice to either party are as shown on
the signature page of this Agreement, or as subsequently modified by written
notice.
18. MUTUAL ACKNOWLEDGMENT. Both the Company and Indemnitee acknowledge
that in certain instances federal law or public policy may override
applicable state law and prohibit the Company from indemnifying its directors
and officers under this Agreement or otherwise. For example, the Company and
Indemnitee acknowledge that the Securities and Exchange Commission (the
"COMMISSION") has taken the position that indemnification is not permissible
for liabilities arising under certain federal securities laws, and federal
legislation prohibits indemnification for certain ERISA violations.
INDEMNITEE understands and acknowledges that the Company has undertaken or
may be required in the future to undertake with the Commission to submit the
question of indemnification to a court in certain circumstances for a
determination of the Company's right under public policy to indemnify
Indemnitee.
19. GOVERNING LAW. This Agreement shall be governed by and construed in
accordance with the laws of the State of Delaware, without giving effect to
principles of conflict of laws.
20. CONSENT TO JURISDICTION. The Company and Indemnitee each hereby
irrevocably consent to the jurisdiction of the courts of the State of
Delaware for all purposes in connection with any action, suit or proceeding
which arises out of or relates to this Agreement.
21. IDENTICAL COUNTERPARTS. This Agreement may be executed in one or
more counterparts, each of which shall for all purposes be deemed to be an
original but all of which together shall constitute one and the same
Agreement. Only one such counterpart signed by the party against whom
enforcement is sought needs to be produced to evidence the existence of this
Agreement.
22. MODIFICATION; SURVIVAL. This Agreement may be modified only by an
instrument in writing signed by both parties hereto. The provisions of this
Agreement shall survive the death, disability or incapacity of Indemnitee or
the termination of Indemnitee's service as a director or officer of the
Company and shall inure to the benefit of Indemnitee's heirs, executors and
administrators.
IN WITNESS WHEREOF, the parties hereto have executed this agreement as
of the date first above written.
INDEMNITEE: I. C. ISAACS & COMPANY, INC.
_______________________________ By: _______________________________
Title:
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Exhibit 10.10
WORLDWIDE RIGHTS ACQUISITION AGREEMENT
AGREEMENT dated as of September 30, 1997, by and among I. C. Isaacs &
Company L.P., a limited partnership organized and existing under the laws of
Delaware ("Buyer"); Brookhurst, Inc., a corporation organized and existing under
the laws of California ("Seller"); and William Ott (individually, "Ott", and
collectively, with Brookhurst, the "Selling Parties").
W I T N E S S E T H :
WHEREAS, Buyer desires to purchase from Seller, and Seller desires to sell
to Buyer, all of Seller's right, title and interest in and to all "BOSS"
trademarks and other proprietary interests, if any, related thereto owned by
Seller and used in connection with its business throughout the world together
with the goodwill symbolized by such trademarks, on the terms and conditions set
forth herein;
NOW, THEREFORE, in consideration of the mutual promises contained herein
the parties hereby agree as follows:
ARTICLE I
PURCHASE AND SALE
1.1 Purchase and Sale of BOSS Assets. Upon the terms and conditions
herein set forth, Seller shall sell, convey, transfer, assign and deliver to
Buyer on the Closing Date (as hereinafter defined), and Buyer shall purchase
from Seller on the Closing Date, the following assets, properties and rights of
Seller throughout the world (excluding Mexico) (the "Trademark Assets"), all of
which, taken together, represent the business of Seller operating under the BOSS
marks:
<PAGE>
(a) any and all right, title and interest of the Selling Parties in and to
the trademarks, service marks, trade names, logos, insignias, designs,
copyrights (if any), and other proprietary interests therein, containing the
term "BOSS" or constituting a stylized B, throughout the world (excluding
Mexico), including, without limitation, all registrations and applications for
registration (including, to the fullest extent permitted by law, all "intent to
use" applications) therefor throughout the world (excluding Mexico) (the
"Trademarks"), and the goodwill symbolized by the Trademarks, together with all
causes of action and the proceeds thereof (except as set forth in paragraph
1.1(d)) in favor of the Selling Parties heretofore accrued or hereafter accruing
with respect to the Trademarks;
(b) all rights of the Selling Parties under license agreements, concurrent
use agreements and other agreements listed on Schedule 1.1(b) and all files
relating thereto (the "Assumed Agreements"), including, without limitation, an
assignment of all copyrights, if any, that the Selling Parties jointly or
severally may own as a result of designs and other works created by any licensee
of any portion of the Seller's BOSS business (including any works created by
Buyer and owned by Seller under Buyer's license from Seller); and
(c) all right, title and interest in and to all records and other
information the Selling Parties or either of them have within their possession
or control applicable to the products they or either of them have previously
licensed under the Trademarks and all trademark files relating to the Trademark
Assets, provided, however, that Seller shall not be responsible for (i)
destruction of records caused by an Act of God or other "Force Majeure" event,
or (ii) any immaterial non-intentional destruction of records.
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(d) Notwithstanding the foregoing, the parties acknowledge and agree that
Buyer is not acquiring any rights of Seller under its license agreements
(including, without limitation, rights to institute legal proceedings pursuant
to such license agreements) with Buyer, Boss Sportswear (U.S.A.) Inc. and
Checkmate Group LLC, all of which license agreements have been (or will at
Closing be) terminated. Nothing set forth in this Section 1.1 (d) shall limit
Seller's rights, if any, to seek indemnification and contribution from licensees
of Seller with regard to Excluded Liabilities, as hereinafter defined, which
rights are specifically reserved to Seller.
1.2 Liabilities. Buyer shall assume no liabilities or obligations,
whether now existing or arising in the future, fixed or contingent, known, or
unknown, relating to the use by the Selling Parties (including, without
limitation, use by any of Seller's affiliates, subsidiaries, predecessors or
licensees other than Buyer) of the Trademarks and any other matter relating to
the conduct of any business relating thereto prior to the Closing or with
respect to any permitted activities of Seller, or any of its affiliates,
subsidiaries, predecessors or licensees after the Closing Date ("Excluded
Liabilities").
1.3 Encumbrances. The sale and transfer of the Trademark Assets
shall be free and clear of all pledges, security interests, mortgages and liens
("Encumbrances").
ARTICLE
CONSIDERATION
2.1 Consideration. In consideration of the sale and transfer of the
Trademark Assets to Buyer,
(a) on the Closing Date, Buyer shall pay * by wire transfer to a
bank account designated in writing by Seller;
* Text omitted pursuant to a request for confidential treatment and filed
separately with the Securities and Exchange Commission.
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(b) on the Closing Date, Buyer shall pay * to the escrow agent
identified in the Escrow Agreement;
(c) on the Closing Date, Buyer shall deliver an executed Promissory
Note in the form annexed hereto as Exhibit A (the "Note"); and
(d) on the Closing Date, Buyer shall deliver a guaranty by * of
Buyer's obligations under the Note in the form annexed hereto as Exhibit B
(the"Guaranty").
ARTICLE
THE CLOSING
3.1 Time and Place of Closing. The closing of the purchase and sale
of the Trademark Assets hereunder (the "Closing") shall take place at the
offices of Coudert Brothers located at 1114 Avenue of the Americas, New York,
New York 10036 at 10:00 a.m. local time on a date agreed to by the parties (the
"Closing Date"), which date shall not be later than eight (8) business days
following the date on which the applicable waiting period, including any
extension thereof, under the HSR Act (as hereinafter defined) shall have
expired.
3.2 Deliveries To Be Made by the Seller. On the Closing Date, Seller
shall have executed and delivered to Buyer the following:
(a) executed trademark assignments substantially in the forms
attached hereto as Exhibit C;
(b) possession of (i) an original of each of Seller's Trademark
registrations currently in effect (except that a copy of Seller's California
state registration may be delivered); (ii) an original of any other
registrations for the Trademarks to the extent in Seller's possession,
* Text omitted pursuant to a request for confidential treatment and filed
separately with the Securities and Exchange Commission.
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<PAGE>
custody or control; and (iii) Seller's original trademark application and
registration files including, for example, letters or other materials from
each of Seller's domestic and foreign trademark counsel showing deadlines for
trademark office actions to the extent in Seller's possession, custody or
control;
(c) an agreement of assignment and assumption of Assumed Agreements
in the form annexed hereto as Exhibit D (the "Assumption Agreement");
(d) an Escrow Agreement substantially in the form attached hereto as
Exhibit E (the "Escrow Agreement");
(e) an executed copy of the Note;
(f) an agreement terminating the License Agreement dated August 11,
l994 between Buyer and Seller substantially in the form annexed hereto as
Exhibit F (the "Termination Agreement"); and
(g) such other instruments and documents as may be elsewhere herein
required.
3.3 Deliveries To Be Made by Buyer. On the Closing Date, Buyer shall
have executed and delivered to Seller the following:
(a) the cash payment provided for in Section 2.1(a);
(b) the executed Note;
(c) the Assumption Agreement;
(d) the Escrow Agreement;
(e) delivery of the payment described in Section 2.1(b) to the
Escrow Agent;
(f) the Guaranty duly executed by *; and
(g) the Termination Agreement.
* Text omitted pursuant to a request for confidential treatment and filed
separately with the Securities and Exchange Commission.
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ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF THE SELLING PARTIES
Each of the Selling Parties hereby jointly and severally makes the
following representations and warranties, each of which is complete and correct
on and as of the date hereof (it being acknowledged and agreed that *.
4.1 Organization and Good Standing of the Seller. Seller is a
corporation duly organized, validly existing and in good standing under the
laws of the State of California. * All qualifications of such company to do
business as well as similar registrations to do business or business name
registrations have been or will within 90 days after the Closing Date hereof
be altered, changed or withdrawn to reflect such name change.
4.2 Authority; Execution. Seller has all the requisite power and
authority, corporate and otherwise, to execute, deliver and perform its
obligations under this Agreement. The execution and delivery of this Agreement,
and each of the other instruments of transfer, conveyance and assignment
delivered hereunder, have been duly and validly authorized by all necessary
corporate and other action on the part of each of the Selling Parties, as
applicable, and this Agreement and each of such other instruments has been duly
executed by each of the Selling Parties, as applicable. This Agreement
constitutes the valid and binding agreement of each of the Selling Parties, as
applicable, enforceable against the Selling Parties in accordance with its
respective terms.
* Text omitted pursuant to a request for confidential treatment and filed
separately with the Securities and Exchange Commission.
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4.3 Breach of Statute or Contract.
(a) The execution, delivery and performance of this Agreement by the
Selling Parties and the consummation of the transactions contemplated hereby
will not: (i) violate or conflict with any provision of the charter
documents or by-laws of Seller; (ii) violate or conflict with, result in the
breach or termination of or otherwise give any other contracting party the
right to terminate, or constitute a default (or an event which, with the
lapse of time, or the giving of notice, or both, will constitute a default)
under, any contract or other instrument to which either Selling Party is a
party and which relate to the Trademark Assets or by which either Selling
Party is bound, or result in the creation of any Encumbrance upon any of the
Trademark Assets pursuant to the terms of any such contract or instrument, or
(iii) violate or conflict with any judgment, order, writ, injunction or
decree of any court or governmental body of any jurisdiction applicable to
either Selling Party (excluding any judgments, orders, writs, injunctions or
decrees in any actions or proceedings involving * or its affiliates) or, to
the knowledge of Seller, any law or regulation materially adversely affecting
Buyer's ability to exploit the Trademark Assets.
(b) Except as set forth on Schedule 4.3(b), there are no notices,
licenses, consents, permissions or approvals of any nature whatsoever which are
required to be obtained by Seller from any Federal, state or local governmental
or regulatory body or other third party or, to Seller's knowledge, from any
foreign governmental or regulatory body for the consummation of the transactions
contemplated by this Agreement, or as a condition to the sale, assignment and
transfer of the Trademark Assets to be effected hereunder.
* Text omitted pursuant to a request for confidential treatment and filed
separately with the Securities and Exchange Commission.
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4.4 No Claims or Litigation. Except as set forth on Schedule 4.4(a), no
litigation, judicial or arbitral action, claim asserted in writing and
received by Seller or the Selling Parties within the preceding two years or,
to the knowledge of Seller, administrative or regulatory proceeding or
adversarial proceeding in any trademark office, or governmental investigation
involving the Trademark Assets or the transactions contemplated by this
Agreement, including, without limitation, any claim of conflict with or
violation of any proprietary or other right (collectively, "Litigation") is
pending or, to the knowledge of Seller, threatened against Seller. For
purposes of the foregoing, "Litigation" shall not be deemed to include any
actions, proceedings or claims involving * or its affiliates. Except as set
forth on Schedule 4.4(b), there is no judgment, order, injunction, decree or
award outstanding (whether rendered by a court, tribunal, administrative
agency or arbitral tribunal and excluding any judgments, orders, injunctions,
decrees or awards in any actions or proceedings involving * or its
affiliates), against Seller or referencing Seller by name or, to Seller's
knowledge, by which Seller is bound which affects the Trademark Assets or the
use of the Trademark Assets in any way.
4.5 Trademarks. Schedule 4.5.A hereto sets forth a correct and complete
list of all registrations currently in effect and pending applications for
registration of the Trademarks, together with dates of registration, including,
without limitation, pending copyright applications or registrations currently in
effect and current trade name or d/b/a applications or registrations, if any.
Schedule 4.5B sets forth, to the knowledge of Seller, all registrations and
applications for registration of Trademarks which are no longer in effect. All
registrations described in Schedule 4.5A are currently in effect and have not
been found to be invalid, and, except as set
* Text omitted pursuant to a request for confidential treatment and filed
separately with the Securities and Exchange Commission.
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<PAGE>
forth in Schedule 4.5.C hereto, to Seller's knowledge, as of the date hereof
no filings or other action is required for at least 120 days from the date
hereof to maintain the registrations or applications described in Schedule
4.5.A in full force and effect. Except as set forth in Schedule 4.5.D,
Seller is not currently licensing any person to use or operate under any of
the Trademarks. True and complete copies and, if not available, descriptions
of all such licenses, including all amendments or modifications, have
heretofore been delivered to Buyer. Except as set forth in Schedule 4.5.E,
and except for customary sell-off rights granted to alleged infringers,
Seller has not affirmatively agreed or consented to the non-use by Seller, or
use by any third party, of any mark containing the word BOSS. * there are no
countries in which Seller or its licensees (other than Buyer) currently
manufacture products bearing the Trademarks. Other than with respect to
counterfeiters whose identities are unknown to Seller, Seller has, or will
within 30 days after the Closing Date have, delivered to Buyer all written
materials in its possession relating to any possible infringement, unfair
competition or other interference with Seller's rights in the Trademarks
involving apparel by any third party.
* Text omitted pursuant to a request for confidential treatment and filed
separately with the Securities and Exchange Commission.
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Seller has paid, or will pay within a reasonable period of time, in full (or
otherwise to the satisfaction of the invoicing party) all outstanding
invoices of domestic and foreign trademark counsel (except counsel in Mexico)
for work done and disbursements incurred on behalf of the Selling Parties
(whether or not billed on or by the date hereof).
4.6 No Alienation of Rights. Except as set forth in the Assumed
Agreements or any other documents identified on Schedule 4.5.D or E or Schedule
4.6, no Selling Party has transferred, assigned, licensed (which license is
currently outstanding) or otherwise encumbered with Encumbrances any of its
rights in any Trademark Asset.
4.7 *
* Text omitted pursuant to a request for confidential treatment and filed
separately with the Securities and Exchange Commission.
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4.8 Ownership of Trademark Assets. As between the Selling Parties and
all affiliates and other persons or entities related in any manner to any
Selling Party, Seller owns all rights in and to the Trademark Assets.
4.9 Knowledge. Whenever a statement regarding the existence or absence of
facts in this Agreement is qualified by a phrase such as to Seller's knowledge
or words to similar effect, it is intended by the parties that the information
attributed to Seller be actually known, or information which should have been
known based on reasonable inquiry by *.
4.10 Materiality. The phrase "materially adversely affecting Buyer's
ability to exploit the Trademark Assets" or words of similar effect, shall be
deemed to mean (i) the existence or occurrence at any time from and after the
date hereof of any actual harm, or the existence of any reasonably anticipated
actual harm, to Buyer's ability to exploit the Trademark Assets or (ii) either
(x) the failure of Seller to remedy the breach in question assuming the breach
is remediable or (y) the inability of Seller to remedy the breach in question
without prejudice to Buyer's ability to exploit the Trademark Assets. For
purposes of this Section 4.10, no "actual
* Text omitted pursuant to a request for confidential treatment and filed
separately with the Securities and Exchange Commission.
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<PAGE>
harm" shall be deemed to exist as to the first six claims of harm unless such
claim of harm reasonably involves at least the following amounts in damage or
loss:
First Claim *
Second Claim *
Third Claim *
Fourth Claim *
Fifth Claim *
Sixth Claim *
it being agreed that, without prejudice to, or limitation of, Seller's ability
to claim that such a subsequent claim involves no "actual harm", no such
monetary threshold applies to any subsequent claims.
ARTICLE V
REPRESENTATIONS AND WARRANTIES OF BUYER
Buyer hereby makes the following representations and warranties each of
which is complete and correct on and as of the date hereof:
5.1 Organization and Good Standing of Buyer. Buyer is a limited
partnership duly organized and validly existing under the laws of Delaware
5.2 Authority; Execution. Buyer has all requisite power and authority,
corporate and otherwise, to execute, deliver and perform its obligations under
this Agreement. The execution and delivery of this Agreement, and each of the
other instruments of transfer, conveyance and assignment delivered hereunder, by
Buyer have been duly and validly authorized by all necessary corporate and other
action on the part of Buyer, and this Agreement and each of such other
* Text omitted pursuant to a request for confidential treatment and filed
separately with the Securities and Exchange Commission.
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<PAGE>
instruments has been duly executed by Buyer, as applicable. This Agreement
constitutes the valid and binding agreement of Buyer, enforceable against
Buyer in accordance with its terms.
5.3 Breach of Statute or Contract.
(a) The execution, delivery and performance of this Agreement by
Buyer and the consummation of the transactions contemplated hereby will not:
(i) violate or conflict with any provision of the certificate of limited
partnership and other organizational documents of Buyer; (ii) violate or
conflict with, result in the breach or termination of or otherwise give any
other contracting party the right to terminate, or constitute a default (or an
event which, with the lapse of time, or the giving of notice, or both, will
constitute a default) under, any contract or other instrument to which Buyer is
a party; or (iii) violate or conflict with any judgment, order, writ, injunction
or decree of any court or governmental body of any jurisdiction applicable to
Buyer (excluding any judgments, orders, injunctions, decrees or awards in any
actions or proceedings involving Seller or its affiliates) or, to the knowledge
of Buyer, any law or regulation materially adversely affecting Buyer's ability
to consummate the transaction contemplated by this Agreement.
(b) Except as provided in Schedule 5.3(B), there are no notices,
licenses, consents, permissions or approvals of any nature whatsoever which are
required to be obtained by Buyer from any Federal, state or local governmental
or regulatory body or other third party or, to Buyer's knowledge, from any
foreign governmental or regulatory body for the consummation of the transactions
contemplated by this Agreement, or as a condition to the sale, assignment and
transfer of the Trademark Assets to be effected hereunder.
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<PAGE>
ARTICLE VI
COVENANTS
6.1 Further Assurances.
(a) From time to time until the expiration of * from the Closing
Date, upon the request and at the expense of Buyer but without further
consideration, Seller shall:
(i) do, execute, acknowledge, deliver and file, or shall cause
to be done, executed, acknowledged, delivered and filed, all such further acts,
deeds, transfers, conveyances, assignments or assurances (including, without
limitation, for purposes of transferring record ownership of the Trademark
Assets to Buyer) as may be reasonably requested by Buyer for transferring,
conveying, assigning and reducing to Buyer's possession, ownership and use of
the Trademark Assets including, without limitation, executing on the Closing
Date any assignments of foreign Trademarks in recordable form reasonably
requested by Buyer; and
(ii) deliver to Buyer such other records, documentation and
information in Seller's possession or control as may be reasonably requested by
Buyer to assist Buyer in the use and protection of the Trademark Assets.
(b) Seller shall keep and preserve any and all records,
documentation and information which relate to the Trademark Assets except as
otherwise provided herein. Seller may dispose or destroy any such records,
documentation and information at any time, provided that Seller first shall
notify Buyer so that Buyer may, at its expense and within a reasonable time
after receipt of such notice, obtain from Seller any or all of said records,
documentation and information. Seller shall not be responsible for (i)
destruction of records caused by an Act of
* Text omitted pursuant to a request for confidential treatment and filed
separately with the Securities and Exchange Commission.
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<PAGE>
God or other "Force Majeure" event, or (ii) any immaterial
non-intentional destruction of records.
6.2 No Further Use of "BOSS". From and after the Closing Date hereof,
Selling Parties, (including, without limitation, all affiliates thereof) shall
cease all use of the name and mark "BOSS", all variations thereon and all other
names and marks which incorporate the term "BOSS" and will never use the name or
mark "BOSS", any variation thereon or any other names and marks which
incorporate the term "BOSS" in the future, except to the limited extent
permitted in Section 6.6. Notwithstanding the foregoing, Seller may make such
limited use of the name and mark "BOSS" as is permitted under the Settlement
Agreement (as hereinafter defined).
6.3 No Effect on Use of Other Marks of Seller. Nothing in this
Agreement shall prohibit the use by Seller, for any purpose, of the name or
mark "Brookhurst," or the name or mark * as to which trademarks Brookhurst
retains all right, title and interest.
6.4 *
* Text omitted pursuant to a request for confidential treatment and filed
separately with the Securities and Exchange Commission.
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<PAGE>
*
6.5 Mail and Communications. From and after the Closing Date, Seller
shall promptly remit or refer to Buyer any mail or other communications,
including, without limitation, any written inquiries, relating to the
Trademarks Assets which are received by Seller from and after the Closing for
a period of *.
6.6 Sell-off of Inventories. (a) Seller currently has: approximately
* finished career apparel garments with a label that bears a BOSS logo in its
possession, the substantial majority of which constitutes uniforms for *
(such garments being hereinafter collectively referred to as the "Career
Apparel Garments"). Notwithstanding anything to the contrary contained
herein, Seller may for a period of * after the Closing Date: (i) continue to
sell and distribute the Career Apparel Garments in its possession on the date
hereof with a label that bears a * logo in the typeface which is set forth on
Exhibit G; provided, that Seller may extend the aforesaid limited use of *
labels up to an aggregate additional period of three years, provided it pays
in advance an annual license fee of * and executes a license agreement with
Buyer in a form mutually agreed to by the parties. Seller agrees that after
the Closing Date it will not order any new labels with a BOSS logo,
manufacture or cause to be manufactured any garments which will bear
* Text omitted pursuant to a request for confidential treatment and filed
separately with the Securities and Exchange Commission.
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<PAGE>
a BOSS logo or label and will destroy its current inventory of labels with a
BOSS logo beyond those already used in the existing inventory of Career
Apparel Garments and will make no further use of any labels with a BOSS logo.
The use of any labels with a BOSS logo, or the sale or distribution of any
Career Apparel Garments with a label containing a BOSS logo in accordance
with the terms of this paragraph shall not constitute a breach of this
Agreement. None of the Career Apparel Garments bears a BOSS mark on the
exterior of such garments.
6.7 HSR Matters. As promptly as possible after the date hereof, but in
any case, not later than * following the date hereof, unless the parties
shall otherwise agree filing is unnecessary, Buyer and Seller shall file
their respective Notification and Report Forms under the Hart-Scott Rodino
Antitrust Improvements Act of 1976 as amended (the "HSR Act") with respect to
the transactions contemplated hereby. The parties further agree to request
early termination of the waiting period applicable to such filings under the
HSR Act and to respond as promptly as practicable to any request for
additional information made pursuant to the HSR Act.
ARTICLE VII
CONDITIONS PRECEDENT TO OBLIGATIONS OF BUYER AND SELLER
7.1 Conditions Precedent to Obligations of Buyer. The obligation of
Buyer to consummate the transactions contemplated under this Agreement is
subject to the fulfillment, as of the Closing Date, of each of the following
conditions (any or all of which may be waived by Buyer):
(a) the representations and warranties of the Selling Parties set
forth in Article IV hereof shall be true and correct in all material respects;
* Text omitted pursuant to a request for confidential treatment and filed
separately with the Securities and Exchange Commission.
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<PAGE>
(b) the Selling Parties shall have performed and complied in all
material respects with all covenants, obligations and undertakings required by
this Agreement to be performed or complied with on or prior to the Closing Date:
(c) Buyer shall have been furnished with a certificate, dated the
Closing Date and *;
(d) the applicable waiting period, including any extension thereof,
under the HSR Act shall have expired without action taken to prevent
consummation of the transactions contemplated by this Agreement;
(e) no judgment, order or decree shall have been rendered which has
the effect of enjoining the consummation of the transactions contemplated by
this Agreement;
(f) a settlement agreement by and among *
* Text omitted pursuant to a request for confidential treatment and filed
separately with the Securities and Exchange Commission.
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<PAGE>
*
(i) with respect to any intent-to-use applications for the
Trademarks presently outstanding for which use has been made prior to the date
hereof, a list of first use dates for each product listed in each of said
applications, if any, and documentary support for same to support "amendments
to allege use" shall have been delivered to Buyer; and
(j) the Escrow Agreement shall have been entered into by all parties
thereto.
7.2 Conditions Precedent to Obligations of Seller. The obligations of
Seller to consummate the transactions contemplated under this Agreement are
subject to the fulfillment, as of the Closing Date, of each of the following
conditions (any or all of which may be waived by Seller):
(a) the representations and warranties of Buyer set forth in Article
V shall be true and correct in all material respects as of the Closing Date;
(b) Buyer shall have performed and complied in all material respects
with all obligations and undertakings required by this Agreement to be performed
or complied with by Buyer on or prior to the Closing Date;
* Text omitted pursuant to a request for confidential treatment and filed
separately with the Securities and Exchange Commission.
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(c) Seller shall have been furnished with a certificate, dated the
Closing Date and executed by an officer of Buyer certifying to the fulfillment
of the conditions specified in Sections 7.2(a) and (b);
(d) the applicable waiting period, including any extension thereof,
under the HSR Act shall have expired without action taken to prevent
consummation of the transactions contemplated by this Agreement;
(e) no judgment, order or decree shall have been rendered which has
the effect of enjoining the consummation of the transactions contemplated by
this Agreement; and
*
(i) the Escrow Agreement shall have been entered into by all parties
thereto.
ARTICLE VIII
SURVIVAL OF REPRESENTATIONS AND WARRANTIES
INDEMNIFICATION
8.1 All representations and warranties contained in or made pursuant to
this Agreement shall be continuing and shall survive and remain in full force
and effect after the date hereof for a period of * notwithstanding any
investigation conducted by any party hereto. All claims for indemnification
under this Agreement shall be brought by the parties exclusively pursuant to,
* Text omitted pursuant to a request for confidential treatment and filed
separately with the Securities and Exchange Commission.
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and shall be disposed of exclusively in accordance with the terms of, this
Article VIII.
8.2 *
* Text omitted pursuant to a request for confidential treatment and filed
separately with the Securities and Exchange Commission.
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<PAGE>
*
8.3 *
* Text omitted pursuant to a request for confidential treatment and filed
separately with the Securities and Exchange Commission.
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<PAGE>
*
8.4 Notification of Claims. In the event of the occurrence of any event
which any party asserts constitutes a Buyer Indemnity Claim or Seller Indemnity
Claim, as applicable, the indemnified party shall provide the indemnifying party
with prompt notice of such event, including, without limitation, any facts and
circumstances which give rise to such claim, and shall otherwise make available
to the indemnifying party all relevant information which is material to the
claim and which is in the possession of the indemnified party. If such event
involves the claim of any third party (a "Third-Party Claim"), the indemnifying
party shall have the right to elect to join in the defense, settlement,
adjustment or compromise of any such Third-Party Claim, and to employ counsel to
assist such indemnifying party in connection with the handling of such claim, at
the sole expense of the indemnifying party, and no such claim shall be settled,
adjusted or compromised, or the defense thereof terminated, without the prior
consent of the indemnifying party unless and until the indemnifying party shall
have failed, after the lapse of a reasonable period of time, but in no event
more than 30 days after written notice to it of the Third-Party Claim, to join
in the defense, settlement, adjustment or compromise of the same. An
indemnified party's failure within a reasonable time to give notice or to
furnish the indemnifying party with any relevant data and documents in its
possession in connection with any Third-Party Claim shall not constitute a
defense (in part or in whole) to any claim for indemnification by such party,
except and only to the extent that such failure shall result in any material
prejudice to the indemnifying party. If so desired by any indemnifying party,
such party may elect, at such party's sole expense, to assume control of the
* Text omitted pursuant to a request for confidential treatment and filed
separately with the Securities and Exchange Commission.
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<PAGE>
defense, settlement, adjustment or compromise of any Third-Party Claim, insofar
as the claim relates to the liability of the indemnifying party, provided that
such indemnifying party shall obtain the consent of all indemnified parties
before entering into any settlement, adjustment and compromise of such claim, or
ceasing to defend against such claim, if as a result thereof, or pursuant
thereto, there would be imposed on an indemnified party any liability or
obligation not covered by the indemnification obligations of the indemnifying
party under this Agreement (including, without limitation, any injunctive relief
or other remedy).
If Buyer has not received a written notice from Seller disputing Buyer's
Buyer Indemnity Claim within ninety (90) days after Buyer's submission of a
notice of such claim to Seller, then Buyer may provide a further notice sent to
Seller by registered or certified mail to the effect that Seller has not
disputed such claim and that Buyer intends to submit a Settlement Notice (as
defined in the Escrow Agreement) based on Seller having been deemed to have
consented to such claim and the computation thereof, as applicable. If Seller
does not within thirty (30) days after receipt of such latter notice dispute in
writing the Buyer Indemnity Claim by notice to Buyer and Escrow Agent, then
Seller shall be deemed to have consented to such claim and, to the extent set
forth in Buyer's notices, the computation thereof.
8.5 Escrow Agreement. (a) At the Closing, Buyer will deposit * with
the Escrow Agent, which amount shall be deemed to be part of the "Escrow
Fund" as defined in the Escrow Agreement. In addition, under the terms of
the Note and the Escrow Agreement, Buyer is obligated to deposit portions of
certain installments of principal and interest due under the Note with the
Escrow Agent on and as of the date payment of each such installment is due.
Effective upon each such deposit, such funds shall be deemed to become part
of the "Escrow
* Text omitted pursuant to a request for confidential treatment and filed
separately with the Securities and Exchange Commission.
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<PAGE>
Fund" for all purposes thereunder and shall be disbursed pursuant to the terms
of the Escrow Agreement.
8.6 *
8.7 *
ARTICLE IX
GENERAL
9.1 Waiver. Any failure of Buyer, on the one hand, or the Selling
Parties, on the other, to comply with any of the obligations or agreements set
forth in this Agreement or to fulfill any condition set forth in this Agreement
may be waived only by written instrument signed by the other party. No failure
by any party to exercise, and no delay in exercising, any right hereunder shall
operate as a waiver of such right, nor shall any single or partial exercise of
any right hereunder by any party preclude any other or future exercise of that
right or any other right hereunder by that party.
* Text omitted pursuant to a request for confidential treatment and filed
separately with the Securities and Exchange Commission.
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9.2 Notices. All notices, requests or other communications required or
permitted hereunder (excluding, however, mail and/or communications covered
under paragraph 6.5 hereof) shall be given or made in writing and shall be (i)
delivered personally (including commercial carrier), (ii) sent by registered or
certified airmail, return receipt requested, postage prepaid or (iii) sent by
telecopier, addressed to the party to whom they are directed at the following
addresses, or at such other address as may from time to time be designated by
such party to the others in accordance with this Section 9.2:
If to Seller, to:
Brookhurst, Inc.
107 West Carob Street
Compton, California 90220
Attention: William Ott
Telecopier: 310/763-3846
William Ott
107 West Carob Street
Compton, California 90220
Telecopier: 310/763-3846
With a copy to:
Shereff, Friedman, Hoffman & Goodman, LLP
919 Third Avenue
New York, New York 10022
Attention: Robert J. Jossen, Esq.
Telecopier: 212/758-9526
If to Buyer, to:
I. C. Isaacs & Company L.P.
3840 Bank Street
Baltimore, Maryland 21224
Attention: President and Co-Chief Executive Officer
Telecopier: 410/558-2096
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<PAGE>
I. C. Isaacs & Company L.P.
350 Fifth Avenue
Suite 1029
New York, New York 10118
Attention: Chairman and Co-Chief Executive Officer
Telecopier: 212/695-7579
With a copy to:
Piper & Marbury L.L.P.
Charles Center South
36 South Charles Street
Baltimore, Maryland 21201-3010
Attention: Robert J. Mathias, Esq.
Telecopier: 410/576-1604
Any notice, request or other communications shall be deemed to have been
given and to be effective upon receipt or refusal by the addressee. Any party
may change its address for notices hereunder, effective upon giving of notice of
such change hereunder to the other parties.
9.3 No Third Party Beneficiaries. Neither this Agreement nor any
provision hereof, nor any document or instrument executed or delivered pursuant
hereto, shall be deemed to create any right in favor of or impose any obligation
upon any person or entity other than Buyer and Selling Parties and their
respective successors and assigns.
9.4 *
* Text omitted pursuant to a request for confidential treatment and filed
separately with the Securities and Exchange Commission.
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<PAGE>
*
9.5 Captions and Paragraph Headings. Captions and paragraph headings used
in this Agreement are for convenience only and are not a part of this Agreement
and shall not be used in interpreting or construing it.
9.6 Entire Agreement. The making, execution and delivery of this
Agreement by the parties has been induced by no representations, statements,
warranties or agreements other than those herein expressed. This Agreement
embodies the entire understanding of the parties with respect to the subject
matter hereof. Notwithstanding the foregoing, the parties acknowledge that a
number of different agreements and instruments of which the parties are
signatory are all being executed simultaneously with this Agreement and at
Closing. The parties acknowledge that this Agreement or instrument is to be
interpreted and enforced separately and independently of any other such
* Text omitted pursuant to a request for confidential treatment and filed
separately with the Securities and Exchange Commission.
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<PAGE>
agreement or instrument, and the breach of any such agreement by a party shall
not affect the rights of such party under this Agreement. This Agreement may be
amended or modified only by an instrument of equal formality signed by the
parties or their duly authorized representatives. The parties have made no
representations or warranties not expressly set forth in this Agreement. This
Agreement supersedes and terminates all prior discussions, negotiations,
understandings, arrangements and agreements among the parties relating to the
subject matter hereof, except as expressly set forth herein.
9.7 Counterparts. This Agreement may be executed in any number of
duplicate counterparts, each of which shall be deemed an original and all of
which together shall constitute one and the same instrument.
9.8 Assignability. No party hereto may assign any of its interests,
rights or obligations under the Agreement without the prior written consent of
the other parties. Notwithstanding the foregoing, Buyer may assign its rights,
but not its obligations, under this Agreement to any entity under common control
with Buyer or to any assignee or other successor in interest to any of the
Trademark Assets without the consent of Seller, and Seller may assign its rights
under the Note and the Escrow Agreement in accordance with the terms of such
instruments, provided, that neither party may assign any rights referred to in
this Section 9.8 unless it has complied with all of its obligations under the
instrument the rights under which it wishes to assign. Any impermissible
attempted assignment of this Agreement without such prior written consent shall
be void as to the other parties to this Agreement. Nothing in this Section 9.8
shall be construed as requiring Seller's consent to any assignment of Buyer's
rights under this Agreement to * or any affiliate thereof and the
* Text omitted pursuant to a request for confidential treatment and filed
separately with the Securities and Exchange Commission.
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<PAGE>
assumption by such assignee of any obligations of Buyer (if any) relating
thereto.
9.9 Expenses. The parties shall each bear their own expenses in
connection with the negotiation, execution and delivery of this Agreement and
the performance of their respective obligations hereunder.
9.10 Successors and Assigns. This Agreement and the provisions thereof
shall be binding upon and inure to the benefit of the respective successors and
permitted assigns of the parties hereto.
9.11 Governing Law. The validity, construction, operation and effect of
any and all of the terms and provisions of this Agreement shall be determined
and enforced in accordance with the laws of * without giving effect to
principles of conflicts of law thereunder except as to matters solely
involving foreign trademark rights, in which case the applicable foreign
trademark laws shall be applied to determine such foreign trademark rights.
In the event any legal action becomes necessary to enforce or interpret the
terms of this Agreement, the parties agree that such action will be brought
in *.
9.12 *
* Text omitted pursuant to a request for confidential treatment and filed
separately with the Securities and Exchange Commission.
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<PAGE>
*
* Text omitted pursuant to a request for confidential treatment and filed
separately with the Securities and Exchange Commission.
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<PAGE>
*
* Text omitted pursuant to a request for confidential treatment and filed
separately with the Securities and Exchange Commission.
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<PAGE>
*
9.13 *
* Text omitted pursuant to a request for confidential treatment and filed
separately with the Securities and Exchange Commission.
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<PAGE>
9.14 *
9.15 *
* Text omitted pursuant to a request for confidential treatment and filed
separately with the Securities and Exchange Commission.
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<PAGE>
*
* Text omitted pursuant to a request for confidential treatment and filed
separately with the Securities and Exchange Commission.
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<PAGE>
*
* Text omitted pursuant to a request for confidential treatment and filed
separately with the Securities and Exchange Commission.
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<PAGE>
*
* Text omitted pursuant to a request for confidential treatment and filed
separately with the Securities and Exchange Commission.
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<PAGE>
IN WITNESS WHEREOF, the parties have duly signed this Agreement the day and
year first written above.
BROOKHURST, INC.
By:
---------------------------------
Name: William Ott
Title: President
I. C. ISAACS & COMPANY L.P., a Delaware
limited partnership
By: /s/ Robert J. Arnot
--------------------------------
Name: Robert J. Arnot
Title: Chairman and Co-Chief
Executive Officer
By: /s/ Gerald W. Lear
--------------------------------
Name: Gerald W. Lear
Title: President and Co-Chief
Executive Officer
WILLIAM OTT
---------------------------------
<PAGE>
IN WITNESS WHEREOF, the parties have duly signed this Agreement the day and
year first written above.
BROOKHURST, INC.
By: /s/ William Ott
----------------------------------
Name: William Ott
Title: President
I. C. ISAACS & COMPANY L.P., a Delaware
limited partnership
By:
--------------------------------
Name: Robert J. Arnot
Title: Chairman and Co-Chief
Executive Officer
By:
--------------------------------
Name: Gerald W. Lear
Title: President and Co-Chief
Executive Officer
WILLIAM OTT
/s/ William Ott
---------------------------------
<PAGE>
"CERTAIN OBLIGATIONS (AS DEFINED ABOVE) OF I.C. ISAACS & COMPANY L.P.
("ISAACS") HAVE BEEN ASSUMED BY * AND THE SELLING PARTIES HAVE RELEASED
ISAACS FROM SAID OBLIGATIONS.
BROOKHURST, INC.
By:__________________________(Seal)
WILLIAM OTT, PRESIDENT
___________________________________
WILLIAM OTT, INDIVIDUALLY"
* Text omitted pursuant to a request for confidential treatment and filed
separately with the Securities and Exchange Commission.
<PAGE>
WORLDWIDE RIGHTS ACQUISITION AGREEMENT
EXHIBITS
Exhibit A The Promissory Note
Exhibit B The * Guaranty
Exhibit C Trademark Assignments
Exhibit D Assumption Agreement
Exhibit E Escrow Agreement
Exhibit F Termination Agreement
Exhibit G "BOSS by Brookhurst" logo typeface
Exhibit H Certain Provisions in Settlement Agreement
* Text omitted pursuant to a request for confidential treatment and filed
separately with the Securities and Exchange Commission.
<PAGE>
SCHEDULE 1.1(b)
ASSUMED AGREEMENTS
*
* Text omitted pursuant to a request for confidential treatment and filed
separately with the Securities and Exchange Commission.
<PAGE>
SCHEDULE 4.3(b)
THIRD PARTY CONSENTS AND WAIVERS
Hart-Scott-Rodino approval.
<PAGE>
SCHEDULE 4.4(a)
LITIGATION
*
* Text omitted pursuant to a request for confidential treatment and filed
separately with the Securities and Exchange Commission.
<PAGE>
*
* Text omitted pursuant to a request for confidential treatment and filed
separately with the Securities and Exchange Commission.
<PAGE>
*
* Text omitted pursuant to a request for confidential treatment and filed
separately with the Securities and Exchange Commission.
<PAGE>
*
*
* Text omitted pursuant to a request for confidential treatment and filed
separately with the Securities and Exchange Commission.
<PAGE>
LIST OF MACAU PROCEEDINGS
*
* Text omitted pursuant to a request for confidential treatment and filed
separately with the Securities and Exchange Commission.
<PAGE>
JAPAN
List of All Legal Matters Involving Boss Trademark
TRIALS
*
* Text omitted pursuant to a request for confidential treatment and filed
separately with the Securities and Exchange Commission.
<PAGE>
SCHEDULE 4.4(b)
JUDGMENTS AND ORDERS
*
* Text omitted pursuant to a request for confidential treatment and filed
separately with the Securities and Exchange Commission.
<PAGE>
SCHEDULE 4.5.A
CURRENT TRADEMARK REGISTRATIONS AND APPLICATIONS
*
* Prior to Closing, the Acquisition Agreement shall not be deemed to be
breached by inclusion of incorrect information relating to the Marks and
Classes in this Schedule. Said information shall be reviewed, corrected if
necessary, updated and confirmed by Seller prior to Closing.
* Text omitted pursuant to a request for confidential treatment and filed
separately with the Securities and Exchange Commission.
<PAGE>
2
SCHEDULE 4.5.A
*
* Text omitted pursuant to a request for confidential treatment and filed
separately with the Securities and Exchange Commission.
<PAGE>
3
SCHEDULE 4.5.A
*
* Text omitted pursuant to a request for confidential treatment and filed
separately with the Securities and Exchange Commission.
<PAGE>
SCHEDULE 4.5B
PREVIOUS TRADEMARK REGISTRATIONS AND APPLICATIONS
*
* Text omitted pursuant to a request for confidential treatment and filed
separately with the Securities and Exchange Commission.
<PAGE>
Mexico
*
* Text omitted pursuant to a request for confidential treatment and filed
separately with the Securities and Exchange Commission.
2
<PAGE>
SCHEDULE 4.5.C
FILINGS AND ACTIONS REQUIRED WITHIN 120 DAYS
*
* Text omitted pursuant to a request for confidential treatment and filed
separately with the Securities and Exchange Commission.
<PAGE>
SCHEDULE 4.5.D
CURRENT BOSS LICENSES
*
* Text omitted pursuant to a request for confidential treatment and filed
separately with the Securities and Exchange Commission.
<PAGE>
SCHEDULE 4.5.E
AGREEMENTS RE USE OF TRADEMARK
*
* Text omitted pursuant to a request for confidential treatment and filed
separately with the Securities and Exchange Commission.
<PAGE>
2
SCHEDULE 4.5.E
*
* Text omitted pursuant to a request for confidential treatment and filed
separately with the Securities and Exchange Commission.
<PAGE>
SCHEDULE 4.6
ALIENATION OF RIGHTS
[NONE]
<PAGE>
SCHEDULE 5.3(B)
THIRD PARTY CONSENTS
Hart-Scott-Rodino approval.
Approval from secured lender, Congress Financial Corporation.
<PAGE>
Exhibit A to 10.10
EXHIBIT A/WWA
PROMISSORY NOTE
October __, 1997
FOR VALUE RECEIVED, I.C. ISAACS & COMPANY L.P., a limited
partnership organized and existing under the laws of Delaware with its
principal place of business at 3840 Bank Street, Baltimore, MD 21224 ( Maker
), hereby promises to pay to BROOKHURST, INC., a corporation organized and
existing under the laws of the State of California with its principal place
of business located at 107 West Carob Street, Compton, California 90220-5206
("Brookhurst"), the principal sum of U. S. $11,000,000, on the dates and in
the amounts hereinafter set forth. This Promissory Note is the promissory
note issued by Maker pursuant to a Worldwide Rights Acquisition Agreement by
and between Maker and Brookhurst (the Rights Agreement"). Capitalized terms
used but not defined herein shall have the respective meanings ascribed to
them in the Rights Agreement. This Promissory Note is hereinafter referred
to as the "Note".
1. Interest. The outstanding principal amount of this Note shall
bear simple interest at the per annum rate of * (computed on the basis of a
365 day year and the number of actual days elapsed), and shall be payable
quarterly, commencing with the quarterly payment due January 1, 1998 as set
forth in paragraph 2. Interest shall accrue as of the date of this Note and
thereafter on the outstanding and unpaid principal amount of this Note, and
shall be payable quarterly, as set forth in paragraph 2.
2. Principal, Interest and Maturity Date.
(a) Subject to paragraph 2(b) below, the following
principal and interest payments are to be made by Maker to
Brookhurst on the dates indicated:
Payment Due Date Principal Due Quarterly Interest
- ----------------- -------------- ------------------
Jan. 1, 1998 *
Apr. 1, 1998 *
July 1, 1998 *
Oct. 1, 1998 *
* Text omitted pursuant to a request for confidential treatment and filed
separately with the Securities and Exchange Commission.
<PAGE>
Jan. 1, 1999 *
Apr. 1, 1999 *
July 1, 1999 *
Oct. 1, 1999 * *
Jan. 1, 2000 *
Apr. 1, 2000 *
July 1, 2000 *
Oct. 1, 2000 * *
Jan. 1, 2001 *
Apr. 1, 2001 *
July 1, 2001 *
Oct. 1, 2001 * *
Jan. 1, 2002 *
Apr. 1, 2002 *
July 1, 2002 *
Oct. 1, 2002 * *
(b) The parties agree that subject to the provision of paragraph 3.2(e)
of the Escrow Agreement by and between Maker and Brookhurst of even date
herewith ("Escrow Agreement") * due under paragraph 2(a) of this Note shall
be transmitted by Maker to the Escrow Agent for deposit in the Escrow Fund
(as defined in the Escrow Agreement) under the terms and conditions of the
Escrow Agreement.
3. Prepayment. This Note may be prepaid at any time by Maker
upon payment of the total amount of principal and interest due as provided in
paragraph 2 *, less payments previously made hereunder, or upon such other
terms as the parties may agree.
4. General Payment Provisions. All payments of principal and
interest and other sums due pursuant to this Note to Brookhurst shall be made
* or to such other account as Brookhurst shall have previously designated to
Maker in writing not later than * Business Days (as defined below) prior to
the date on which such payment becomes due.
(ii) All payments of principal and interest and other
sums due pursuant to this Note to the Escrow Fund shall be made
pursuant to the requirements of the Escrow Agreement.
* Text omitted pursuant to a request for confidential treatment and filed
separately with the Securities and Exchange Commission.
2
<PAGE>
(iii)If the due date of any payment under this Note
would otherwise fall on a day which is not a Business Day, such
date will be extended to the immediately succeeding Business Day.
The term "Business Day" shall mean any day other than Saturday,
Sunday, or a banking holiday of the United States, State of New
York, or *.
(iv) A late payment fee of * of any principal or interest payment
made more than * days after the due date hereunder shall be due with such
late payment, notwithstanding any right of cure by Maker. All such late
payments shall continue to accrue interest of the rate of * per annum from
the due date until the date actually paid.
5. Events of Default. An Event of Default shall
occur upon one or more of the following events:
(a) Maker shall default in the payment when due of any principal
or interest under this Note and such default shall continue unremedied for a
period of *, provided, however, that upon written notice from Brookhurst
Maker shall have * to cure any such non-payment, and such cure shall preclude
Brookhurst from declaring an Event of Default based upon non-payment; or
(b) Maker shall admit in writing its inability to, or
be generally unable to, pay its debts as such debts generally
become due; or
(c) Maker shall (i) apply for or consent in writing to
the appointment of, or the taking of possession by, a receiver,
custodian, trustee or liquidation of itself or of all or a
substantial part of its property, (ii) make a general assignment
for the benefit of its creditors, (iii) commence a voluntary case
under Title II of the United States Code (as now or hereafter in
effect) (the "Bankruptcy Code"), or such other such similar law
in any jurisdiction, (iv) file a petition seeking to take
advantage of any other law relating to bankruptcy, insolvency,
reorganization, winding-up, or composition or readjustment of
debts, (v) acquiesce in writing to any petition filed against it
in an involuntary case under the Bankruptcy Code, or (vi) take
any corporate action for the purpose of effecting any of the
foregoing; or
(d) a proceeding or case shall be commenced, without
the application or consent of Maker in any court of competent
jurisdiction, seeking (i) its liquidation, reorganization,
dissolution or winding-up, or the composition or readjustment of
its debts, (ii) the appointment of a trustee, receiver,
custodian, liquidator or the like of such entity or
* Text omitted pursuant to a request for confidential treatment and filed
separately with the Securities and Exchange Commission.
3
<PAGE>
of all or any substantial part of its assets, or (iii) similar
relief in respect of such entity, under any law relating to
bankruptcy, insolvency, reorganization, winding-up, or
composition or adjustment of debts, and such proceeding or case
shall continue undismissed, or an order, judgment or decree
approving or ordering any of the foregoing shall be entered and
continue unstayed and in effect, for a period of ninety (90)
days; or an order for relief against any such entity shall be
entered in an involuntary case under the Bankruptcy Code or such
other similar law in any jurisdiction;
Upon and during the continuance of an Event of Default, and subject
to the provisions of Section 15 of this Note, (i) Brookhurst may, by written
notice to Maker, declare the principal amount then outstanding of, and the
total interest on, this Note (ie., *), to be forthwith due and payable,
whereupon such amount shall be immediately due and payable without
presentment, demand, protest or other formalities of any kind, all of which
are hereby expressly waived by Maker; (ii) Maker shall pay all of the
expenses of Brookhurst incurred for the collection of this Note, including
reasonable attorneys' fees and legal expenses, and (iii) Brookhurst may
exercise from time to time any other rights and remedies available to it by
law, including without limitation those available under any agreement or
other instrument relating to the amounts owed under this Note. No delay on
the part of Brookhurst in the exercise of any right or remedy shall operate
as a waiver thereof, and no single or partial exercise by Brookhurst of any
right or remedy shall preclude other or further exercise thereof or the
exercise of any other right or remedy.
6. *
7. No Assignment. The rights and obligations under this Note may
be assigned by Maker only with the written consent of Brookhurst; provided
that nothing in this Section 7 shall be construed as requiring Brookhurst's
consent to an assumption of the obligations and assignment of the rights of
Maker under this Note by * or its subsidiary * as permitted under Section 15
of this Note and nothing in this Section 7 shall be construed as affecting
Maker's rights under Section 15. Upon assignment, Brookhurst agrees that the
assignee shall stand in the shoes of Maker, and shall have all of the
obligations and rights as Maker, including, without limitation, the rights
and obligations assumed by Maker under the Rights Agreement, the Escrow
Agreement, and the right of setoff as provided in paragraph 6 of this Note.
Brookhurst may assign this Note to any third party, provided that such
assignment does not in any way limit Maker's right of setoff as provided in
paragraph 6 of this Note.
* Text omitted pursuant to a request for confidential treatment and filed
separately with the Securities and Exchange Commission.
4
<PAGE>
8. Entire Agreement. Except as set forth in this
Section 8 and the definition of capitalized terms used in this
Note, the terms of this Note evidence the entire agreement
between Maker and Brookhurst regarding the indebtedness evidenced
by this Note and the terms and provisions of the Rights Agreement
shall in no way control, interpret, amend, add to or affect the
rights, duties and obligations of Maker and Brookhurst under this
Note.
9. Governing Law. This Note shall be governed by, and construed
in accordance with, the laws of * applicable to contracts made and to be
performed entirely in the * without regard to such state's choice of law
rules.
10. Notices. All notices, demands or requests or
other communications relating to any matter set forth herein
shall be given or made in writing and shall be (i) delivered
personally (including commercial courier), or (ii) sent by
registered or certified airmail, return receipt requested,
postage prepaid, addressed to the party to whom they are directed
at the following address, or at such other address as may be
designated by notice from such party.
If to Brookhurst: Brookhurst, Inc.
107 West Carob Street
Compton, California 90220-5206
Attn.: William E. Ott
with a copy to: Shereff, Friedman, Hoffman &
Goodman, LLP
919 Third Avenue
New York, New York 10022-9998
Attn.: Robert J. Jossen, Esq.
If to Maker: I.C. Isaacs & Company, L.P.
3840 Bank Street
Baltimore, MD 21224
Attn: Gerald W. Lear
President and Co-Chief
Executive Officer
* Text omitted pursuant to a request for confidential treatment and filed
separately with the Securities and Exchange Commission.
5
<PAGE>
and
I.C. Isaacs & Company, L.P.
350 Fifth Avenue
Suite 1029
New York, New York 10118
Attn: Robert J. Arnot
Chairman and Co-Chief
Executive Officer
With a copy to:
Piper & Marbury L.L.P.
Charles Center South
36 South Charles Street
Baltimore, MD 21201-3010
Attn: Robert J. Mathias, Esq.
Any notice, request, demand or other communication
given or made in the manner prescribed in this paragraph shall be
deemed to have been given and to be effective upon receipt or
refusal by the addressee. Any party may change its address for
notices hereunder, effective upon giving notice of such change
hereunder to the other party.
11. Adjustment of Interest Rate or Fees. No provision
of this Note shall require the payment of interest to the extent
that receipt of any such payment by Brookhurst would be contrary
to the provisions of United States law, if any, limiting the
maximum amount of interest or fees that may be charged to or
collected from Maker, and if any sum in excess of such maximum
rate of interest of fees is paid or charged, the excess will be
returned to Maker, without premium or penalty, and all payments
made thereafter will be appropriately applied to interest and
principal to give effect to such maximum rate, and after such
application any amount paid in excess of principal due Brookhurst
shall be immediately refunded to Maker.
If the maximum rate of interest, if any, now permitted
by law to be charged for this transaction is increased, then for
so long as the increase is in effect, the applicable maximum rate
permitted to be charged as referred to in the paragraph
immediately preceding will be deemed to be such increased rate.
If the maximum rate of interest, if any, now permitted by law to
be charged for this transaction should be eliminated so that
there would be no maximum rate, then interest on this Note shall
thereafter be paid at the rate provided in this Note.
6
<PAGE>
12. Waiver. Maker hereby waives diligence,
presentment, protest, demand for payment and notice of default,
dishonor or nonpayment to or upon Maker with respect to this Note
except as otherwise provided herein. No delay on the part of
Brookhurst in exercising any right hereunder shall operate as a
waiver of such right under this Note.
13. Modifications in Writing. This Note may not be
changed orally, but only by an agreement in writing, signed by
the party against whom enforcement of any waiver, change,
modification or discharge is sought.
14. *
15. *
* Text omitted pursuant to a request for confidential treatment and filed
separately with the Securities and Exchange Commission.
7
<PAGE>
*
* Text omitted pursuant to a request for confidential treatment and filed
separately with the Securities and Exchange Commission.
8
<PAGE>
16. Execution by Brookhurst. Notwithstanding anything
in this Note to the contrary, this Note shall not be effective
and enforceable against Maker unless and until it has been signed
below by Brookhurst. Brookhurst signs below to further evidence
Brookhurst's agreement to be bound by the terms of this Note.
I.C. ISAACS & COMPANY L.P., a Delaware
limited partnership
By: I.G. DESIGN, INC., a Delaware
corporation, its general partner
By: ___________________________________
Name: Gerald W. Lear
Title: President and Co-Chief
Executive Officer
By: ___________________________________
Name: Robert J. Arnot
Title: Chairman and Co-Chief
Executive Officer
Brookhurst, Inc.
By: ___________________________________
Name:
Title:
THE OBLIGATIONS (AS DEFINED ABOVE) OF I.C. ISAACS & COMPANY L.P. ( ISAACS )
HAVE BEEN ASSUMED BY * AND BROOKHURST HAS RELEASED ISAACS FROM THE
OBLIGATIONS. ISAACS HAS NO OBLIGATIONS UNDER THIS NOTE OR THE ESCROW
AGREEMENT.
BROOKHURST, INC.
By: (Seal)
William Ott, President
* Text omitted pursuant to a request for confidential treatment and filed
separately with the Securities and Exchange Commission.
9
<PAGE>
EXHIBIT B/WWA
GUARANTY OF PROMISSORY NOTE
For valuable consideration, the undersigned, * ("Guarantor"),
hereby unconditionally guarantees the due, prompt and complete performance
(including payment) at stated maturity, by acceleration or otherwise by I.C.
Isaacs & Company L.P., a Delaware limited partnership ("Buyer"), of each and
every obligation and liability now or hereafter existing of Buyer under that
certain Promissory Note, dated September ___, 1997 ("Note") to Brookhurst,
Inc. ("Seller") whether for principal, interest, fees, expenses, attorneys'
fees, court costs and collection charges incurred by Seller in enforcing this
Guaranty ("the "Obligations") or otherwise.
The obligations of Guarantor under this Guaranty are independent of
the obligations of Buyer, and a separate action or actions may be brought
against Guarantor, whether action is brought against Buyer or whether Buyer is
joined in any such action or actions; provided, however, Seller shall be
required to first comply with any procedures specified in the Note or any
agreement ancillary thereto with respect to demands to be made against Buyer or
actions to be taken in order to quantify an amount due or identify an issue in
dispute.
If any provision of this Guaranty is held invalid or unenforceable,
the remainder of this Guaranty shall not be affected thereby, the provisions of
this Guaranty being severable in any such instance.
Guarantor guarantees that the Obligations will be paid strictly in
accordance with the terms of the Note, regardless of any law, regulation or
order, except an order with respect to the liability of Buyer or Guarantor under
this Note now or hereafter in effect in any jurisdiction affecting any of such
terms or the rights of Seller with respect thereto. The liability of Guarantor
under this Guaranty *
* Text omitted pursuant to a request for confidential treatment and filed
separately with the Securities and Exchange Commission.
<PAGE>
*
Any action, inaction, change, extension, waiver, or consent referred to above
may be in such manner and upon such terms Seller and Buyer may deem proper, and
without notice to or further assent from the Guarantor, and all without
affecting this Guaranty or the obligations of the Guarantor hereunder, which
shall continue in full force and effect until all of the Obligations and all
obligations of the Guarantor hereunder shall be fully paid and performed.
Guarantor hereby waives promptness, diligence, presentment, demand,
protest, notice of acceptance or of the occurrence of an Event of Default and
any other notice with respect to any of the Obligations and this Guaranty and
any requirement that Seller exhaust any right or take any action against Buyer
or other person or entity.
Guarantor hereby represents and warrants as follows:
(i) The execution, delivery and performance by Guarantor of this
Guaranty do not contravene any law or contractual restriction
binding on or affecting Guarantor.
(ii) No authorization or approval or other action by, and no notice
to or filing with, any governmental authority or regulatory
body is required for the due execution, delivery and
performance by Guarantor of this Guaranty.
* Text omitted pursuant to a request for confidential treatment and filed
separately with the Securities and Exchange Commission.
2
<PAGE>
(iii) This Guaranty is a legal, valid and binding obligation of
Guarantor, enforceable in accordance with its terms.
No amendment or waiver of any provision of this Guaranty nor consent
to any departure by Guarantor therefrom shall in any event be effective unless
the same shall be in writing and signed by Seller.
No failure on the part of Seller to exercise, and no delay in
exercising, any right hereunder shall operate as a waiver thereof; nor shall any
single or partial exercise of any right hereunder preclude any other or further
exercise thereof or the exercise of any other right. The remedies herein
provided are cumulative and not exclusive of any remedies provided by law.
*
*
This Guaranty shall be governed by, and construed in accordance
with, the laws of * without reference to its choice of law rules.*
IN WITNESS WHEREOF, Guarantor has caused this Guaranty to be duly
executed and delivered by its officer thereunto duly authorized as of the date
first above written. This Guaranty shall terminate immediately upon satisfaction
of the Note.
Dated September ___, 1997 *
By:
-------------------------
Name:
-----------------------
Title:
----------------------
* Text omitted pursuant to a request for confidential treatment and filed
separately with the Securities and Exchange Commission.
3
<PAGE>
WITNESSES:
-------------------------
-------------------------
4
<PAGE>
EXHIBIT C/WWA
TRADEMARK ASSIGNMENT
This Assignment is effective as of the ____ day of __________________,
1997, by and between Brookhurst, Inc., a California corporation with its
principal place of business at 107 West Carob Street, Compton, California 90220
("Assignor") and I.C. Isaacs, L.P., a Delaware Limited Partnership with its
principal place of business at 3840 Bank Street, Baltimore, Maryland 21224
("Assignee").
WITNESSETH:
WHEREAS, Assignor is the owner of certain trademarks in the United States
of America constituting or containing the word BOSS and the Stylized B,
including common law rights and rights in certain trademark registrations and
applications for registration listed on the "Schedule of Trademarks" attached
hereto, together with the good will of the business associated therewith (the
"Trademarks");
WHEREAS, Assignee desires to acquire all right, title and interest of
Assignor in and to the Trademarks;
NOW, THEREFORE, to All Whom It May Concern, be it known that for good and
valuable consideration, the receipt and adequacy of which are hereby
acknowledged, Assignor does hereby sell, assign, transfer and set over, to
Assignee, its successors and assigns forever, its entire right, title and
interest in and to the Trademarks, the same to be held and enjoyed by Assignee
for its own use and enjoyment, and for the use and enjoyment of its successors,
assigns or other legal representatives forever, as fully and entirely as the
same would have been held and enjoyed by Assignor had the assignment and sale
set forth herein not been made.
<PAGE>
IN TESTIMONY WHEREOF, Assignor has caused these presents to be signed by
its officer thereunto duly authorized, and its corporate seal to be hereto
affixed.
BROOKHURST, INC.
By:
-------------------------------
Name:
Title:
COUNTY OF NEW YORK :
:ss:
STATE OF NEW YORK :
On this ____ day of _____________, 1997, before me personally appeared
________________, to me personally known, who, being duly sworn, did say that he
is ________________ of ____________________, a California corporation, and that
the foregoing instrument was signed and sealed on behalf of the corporation by
authority of its Board of Directors, and that he acknowledges such instrument to
be the free deed and act of said corporation for the purposes therein set forth
and intending that this instrument be recorded.
--------------------------------
Notary Public
-2-
<PAGE>
SCHEDULE OF TRADEMARKS
Brookhurst, Inc.'s BOSS
U.S. Trademark Applications/Registrations
*
* Prior to Closing, the Acquisition Agreement shall not be deemed to be
breached by inclusion of incorrect information relating to the
Classification or Status in this Schedule. Said information shall be
reviewed, corrected if necessary, updated and confirmed by Seller prior to
Closing.
** For ease of reference the description of goods in this chart is
generalized.
- ------------------------------------------------------------------------------
* Text omitted pursuant to a request for confidential treatment and filed
separately with the Securities and Exchange Commission.
- ------------------------------------------------------------------------------
<PAGE>
U.S. Trademark Applications/Registrations (Page 2 of 3)
*
* Text omitted pursuant to a request for confidential treatment and filed
separately with the Securities and Exchange Commission.
<PAGE>
U.S. Trademark Applications/Registrations (Page 3 of 3)
*
* Text omitted pursuant to a request for confidential treatment and filed
separately with the Securities and Exchange Commission.
<PAGE>
EXHIBIT C/WWA
TRADEMARK ASSIGNMENT
This Assignment is effective as of the ____ day of __________________,
1997, by and between Brookhurst, Inc., a California corporation with its
principal place of business at 107 West Carob Street, Compton, California 90220
("Assignor") and I.C. Isaacs, L.P., a Delaware Limited Partnership with its
principal place of business at 3840 Bank Street, Baltimore, Maryland 21224
("Assignee").
WITNESSETH:
WHEREAS, Assignor is the owner of certain trademarks outside of the United
States of America except Mexico constituting or containing the word BOSS and the
Stylized B, including common law rights and rights in trademark registrations
and applications for registration outside the United States of America except
Mexico and listed on the Schedule of Trademarks attached hereto, together with
the good will of the business outside the United States of America except Mexico
associated therewith throughout the world (the "Trademarks");
WHEREAS, Assignee desires to acquire all right, title and interest of
Assignor in and to the Trademarks;
NOW, THEREFORE, to All Whom It May Concern, be it known that for and in
consideration of good and valuable consideration, the receipt and adequacy of
which are hereby acknowledged. Assignor does hereby sell, assign, transfer and
set over, to Assignee, its successors and assigns forever, its entire right,
title and interest in and to the Trademarks, the same to be held and enjoyed by
Assignee for its own use and enjoyment, and for the use and enjoyment of its
successors, assigns or other legal representatives forever, as fully and
entirely as the same would have been held and enjoyed by Assignor had the
assignment and sale set forth herein not been made.
<PAGE>
IN TESTIMONY WHEREOF, Assignor has caused these presents to be signed by
its officer thereunto duly authorized, and its corporate seal to be hereto
affixed.
BROOKHURST, INC.
By:_________________________
Name:
Title:
COUNTY OF NEW YORK :
:ss:
STATE OF NEW YORK :
On this ____day of _____________, 1997, before me personally appeared
_____________, to me personally known, who, being duly sworn, did say that he is
________________ of ___________________, a California corporation, and that the
foregoing instrument was signed and sealed on behalf of the corporation by
authority of its Board of Directors, and that he acknowledges such instrument to
be the free deed and act of said corporation for the purposes therein set forth
and intending that this instrument be recorded.
______________________
Notary Public
-2-
<PAGE>
SCHEDULE OF TRADEMARKS
Brookhurst Inc.'s BOSS
Non-U.S. Trademark Applications/Registrations*
*
* Prior to Closing, the Acquisition Agreement shall not be deemed to be
breached by inclusion of incorrect information relating to the
Classification or Status in this Schedule. Said informaion shall be
reviewed, corrected if necessary, updated and confirmed by Seller prior to
Closing.
** For ease of reference the decsription of goods in this chart is
generalized.
- ------------------------------------------------------------------------------
* Text omitted pursuant to a request for confidential treatment and filed
separately with the Securities and Exchange Commission.
- ------------------------------------------------------------------------------
<PAGE>
EXHIBIT D/WWA
ASSIGNMENT AND ASSUMPTION AGREEMENT
THIS ASSIGNMENT AND ASSUMPTION AGREEMENT is made and entered into this ___
day of September, 1997, by and between Brookhurst, Inc., a California
corporation ("Brookhurst") and I.C. Isaacs & Company L.P., a Delaware limited
partnership ("Isaacs").
W I T N E S S E T H:
WHEREAS, Brookhurst has agreed to sell, transfer and assign to Isaacs, and
Isaacs has agreed to purchase and accept from Brookhurst certain assets of
Brookhurst pursuant to a Worldwide Rights Acquisition Agreement entered into on
September __, 1997 between Brookhurst and Isaacs (the "Acquisition Agreement");
WHEREAS, Isaacs has agreed to assume certain obligations related to said
acquired assets;
NOW, THEREFORE, in consideration of the mutual covenants contained herein,
and other good and valuable consideration, the receipt and sufficiency of which
is hereby acknowledged, it is agreed as follows:
1. Capitalized terms used herein and not defined herein shall have the
meanings given such terms in the Acquisition Agreement.
2. Brookhurst hereby assigns to Isaacs all its rights under the agreements
identified on the schedule attached hereto constituting the Assumed Agreements,
and all files relating thereto, free and clear of all Encumbrances.
3. Isaacs hereby assumes all obligations of Seller arising from and after
the date hereof under the Assumed Agreements solely insofar as they arise after
Closing.
IN WITNESS WHEREOF, the parties have hereunto set their hands and seals
the day, month and year first above written.
BROOKHURST, INC.
By:_________________________
Name:_______________
Title:______________
<PAGE>
I. C. ISAACS & COMPANY L.P., a Delaware
limited partnership
By:_______________________________________________
Name: Robert J. Arnot
Title: Chairman and Co-Chief Executive Officer
By:_______________________________________________
Name: Gerald W. Lear
Title: President and Co-Chief Executive Officer
-2-
<PAGE>
SCHEDULE
See Schedule 1.1(b)
<PAGE>
Exhibit E to 10.10
EXHIBIT E/WWA
ESCROW AGREEMENT
THIS ESCROW AGREEMENT is entered into this ___ day of September 1997, by
and among (i) I. C. Isaacs & Company L.P., a Delaware limited partnership
("Buyer"); (ii) Brookhurst, Inc., a California corporation ("Seller") and
(iii) ______________________________________________ (the "Escrow Agent").
W I T N E S S E T H :
WHEREAS, Seller and Buyer are parties to a Worldwide Rights Acquisition
Agreement dated September __, 1997 (the "Acquisition Agreement") pursuant to
which Seller has sold to Buyer, and Buyer has purchased from Seller, subject
to the terms and conditions set forth in the Agreement, certain assets,
subject to certain liabilities, of Seller constituting the assets of the
BOSS business of Seller;
WHEREAS, Buyer and Seller wish to enter into this Escrow Agreement in
order to establish an escrow arrangement for certain funds that are being and
will be deposited with the Escrow Agent pursuant to the terms of the
Acquisition Agreement and a promissory note of even date herewith in favor of
Seller (the "Note");
WHEREAS, funds deposited with the Escrow Agent hereunder shall be
referred to as the "Escrow Fund";
WHEREAS, Buyer and Seller wish to appoint the Escrow Agent, and the
Escrow Agent has agreed to act, as a depository and administrator of the
Escrow Fund upon the terms, conditions and provisions hereinafter set forth;
and
NOW, THEREFORE, in consideration of the mutual promises and covenants
contained herein and other good and valuable consideration, receipt of which
is hereby acknowledged by the Escrow Agent, it is hereby agreed among the
parties hereto as follows:
1. Appointment of the Escrow Agent
1.1 Buyer and Seller hereby designate the Escrow Agent, and the Escrow
Agent hereby agrees to act, as a depository and administrator of the Escrow
Fund, subject to the terms and conditions set forth herein.
<PAGE>
1.2 The Escrow Agent's duties and responsibilities, in its capacity as
such, shall be limited to those expressly set forth in this Escrow Agreement,
and the Escrow Agent shall not be subject to, nor obligated to recognize, any
other agreement between any or all of the parties hereto even though
reference thereto may be made herein, except to the extent that definitions
contained in the Acquisition Agreement are incorporated into this Escrow
Agreement. This Escrow Agreement may not be amended at any time in such a
way as to affect the rights, responsibilities, obligations, liabilities or
fees of the Escrow Agent except with the Escrow Agent's prior written
consent, as evidenced by an instrument in writing signed by all the parties
hereto.
1.3 The Escrow Agent, in its capacity as such, is authorized, in its
sole discretion, to disregard any and all notices or directions given by
Buyer or Seller or by any other person, firm or corporation, except (i) such
notices, directions, instructions as are specifically provided for herein,
(ii) joint written instructions received by the Escrow Agent from Buyer and
Seller and (iii) a Final Order (as hereinafter defined). If any property
subject hereto is at any time attached, garnished or levied upon under a
Final Order, or in case the payment, assignment, transfer, conveyance or
delivery of any such property shall be stayed or enjoined by the Final Order,
or in case the Final Order shall be made or entered affecting such property
or any part thereof, then and in any of such events the Escrow Agent is
authorized to rely upon and comply with any such Final Order which the Escrow
Agent is advised by competent and experienced legal counsel of its own
choosing, or by legal counsel selected by mutual consent of Seller and Buyer,
is not subject to further review or appeal and is binding upon the Escrow
Agent for purposes hereof . The term "Final Order" as used herein shall mean
a final judgment, order or award of a court of competent jurisdiction or
arbitrator, as evidenced by a certified copy of such judgment, order or
award, as certified by such court or arbitrator, as the case may be, provided
that such judgment, order or award is not appealable or the time for taking
an appeal has expired, or in the case of an arbitral award, payment is not
stayed by a court of competent jurisdiction.
1.4 (a) In the event that the Escrow Agent shall be uncertain as to its
duties or actions hereunder, or shall receive instructions from Buyer or
Seller which, in the opinion of the Escrow Agent, are in conflict with any of
the provisions of this Agreement, it shall be entitled to maintain the Escrow
Fund and may decline to take any further action until the Escrow Agent
receives joint written instructions from Buyer and Seller (or a Final Order)
directing the disbursement of all or any portion of such Escrow Fund, in
which case the Escrow Agent shall then make such disbursement in accordance
with such instructions (or Final Order). Should any dispute arise with
respect to the payment or ownership or right of possession of any proposed
disbursement, the Escrow Agent is authorized and directed to retain in its
possession, without liability to anyone, all or any part of the amount of
such proposed disbursement until such dispute shall have been settled either
by mutual agreement of the parties concerned or by a Final Order, provided
that the Escrow Agent shall be under no duty whatsoever to institute or
defend any such proceedings, and, provided further, that if any such dispute
continues for more than 120 days, the Escrow Agent may, in its discretion,
upon written notice to Buyer and Seller
<PAGE>
interplead the Escrow Fund (or that portion thereof which is the subject of such
dispute) to a court of competent jurisdiction (subject to the provisions of
Section 6.4(b) hereof).
(b) Notwithstanding the foregoing, the interpleader by the Escrow
Agent of any sum to a court of competent jurisdiction (the "Interpleader
Action") shall in no way operate to alter or affect the parties' obligations
to arbitrate any dispute pursuant to paragraph 6.4(b) of this Agreement. In
furtherance of the parties' obligations to arbitrate any dispute arising
hereunder the parties agree to execute any reasonably necessary document,
including but not limited to any stipulation, stipulated order and/or
stipulation of discontinuance, to cause any sum interpleaded to a court of
competent jurisdiction by the Escrow Agent to be transferred to an account
under the control of the arbitrator(s) selected pursuant to paragraph 6.4(b)
of this Agreement and to have the Interpleader Action dismissed.
Thereafter, the dispute related to the interpleaded funds shall be resolved
in arbitration pursuant to paragraph 6.4(b) of the Agreement.
1.5 (a) It is understood and agreed that the Escrow Agent shall:
(i) be under no duty to accept notices or instructions from any
person other than as expressly provided for in this Escrow Agreement;
(ii) be protected in acting upon any notice, opinion, request,
certificate, approval, consent or other document reasonably believed by it
to be genuine and what it purports to be;
(iii)be deemed conclusively to have given and delivered any
notice required to be given or delivered hereunder if the same is in
writing, signed by any one of its authorized officers and (A) mailed, by
registered or certified mail, return receipt requested, postage prepaid,
(B) sent via expedited courier service that regularly requires signed
receipts evidencing delivery, or (C) hand delivered, in a sealed wrapper,
manually receipted for by the addressee, in each case to Buyer or Seller
with a copy to the other party to this Agreement at the addresses set
forth in Section 6.3 hereof;
(iv) be indemnified and held harmless jointly by Buyer and
Seller from and against any claim made against it by reason of its acting
or failing to act in connection with any of the transactions contemplated
hereby and against any loss, liability or expense, including reasonable
attorneys' fees and other reasonable expenses of defending itself against
any claim of liability it may sustain in carrying out the terms of this
Escrow Agreement, except for claims which are successfully asserted
against the Escrow Agent based upon the Escrow Agent's failure to comply
with the terms and conditions of this Escrow Agreement or the bad faith,
gross negligence or willful misconduct of the Escrow Agent; provided
however, that (A) promptly after the receipt by the Escrow Agent of
notice of any demand or claim or the commencement of any such action,
suit or proceeding, the Escrow Agent shall notify all parties hereto in
writing of the existence of such demand, claim, action, suit or
proceeding; (B) the
<PAGE>
indemnitor shall be entitled, at its own expense, to participate in
and assume the defense of any such action, suit or proceeding; and (C)
the aforesaid indemnity obligations shall survive the termination of
this Escrow Agreement or the resignation of the Escrow Agent;
(v) have no liability in respect of or duty to inquire into
the terms and conditions of the Acquisition Agreement or any other
document or agreement executed in connection with or pursuant to the
Acquisition Agreement, its duties under this Escrow Agreement being
understood by the parties to be ministerial in nature;
(vi) be permitted to consult with counsel of its choice which
is reasonably experienced in legal matters of a nature similar to those
arising under this Escrow Agreement, and shall not be liable for any
action taken, suffered or omitted by it in good faith in accordance with
the advice of such counsel; provided, however, that nothing contained in
this subsection (vi), nor any action taken by the Escrow Agent or by such
counsel, shall relieve the Escrow Agent from liability for any claims
which are occasioned by its failure to comply with the terms and
conditions of this Escrow Agreement or the bad faith, gross negligence or
willful misconduct of the Escrow Agent, as provided in subparagraph (iv)
above;
(vii) not be bound by any modification, amendment, termination,
cancellation, rescission or supersession of this Escrow Agreement, unless
the same shall be in writing and signed by both Buyer and Seller and
notice thereof is provided to the Escrow Agent, except to the extent that
any such modification, amendment, termination, cancellation, rescission
or supersession affects the rights, responsibilities, obligations,
liabilities or fees of the Escrow Agent hereunder, in which case any
document or instrument reflecting such changes shall also be signed by
the Escrow Agent;
(viii) be entitled to refrain from taking any action other than
to keep all cash and other payments and all other property held by it in
escrow and to make the investments as herein provided until it shall be
directed otherwise in writing by Buyer and Seller, or as otherwise
provided herein or by a Final Order; and
(ix) not have any interest in the Escrow Fund, other than
possession thereof in its capacity as escrow agent hereunder.
(b) Any payments of interest or income from the Escrow Fund shall
be subject to withholding regulations then in force with respect to federal,
state and local taxes. The parties will provide the Escrow Agent with
appropriate W-9 forms for taxpayer identification number certifications. It
is understood that the Escrow Agent shall be responsible for income reporting
only with respect to income earned on investment of funds which are part of
the Escrow Fund and shall not be responsible for any other reporting. This
paragraph shall survive
<PAGE>
notwithstanding any termination of this Escrow Agreement or the resignation
of the Escrow Agent.
(c) Notwithstanding anything to the contrary herein, unless and
until funds are deposited with the Escrow Agent pursuant to Section 2.1, the
Escrow Agent shall not have any liability or responsibility whatsoever to
Buyer or Seller or any other person under this Escrow Agreement, except for
its failure or refusal to accept delivery of any funds deposited in escrow
with the Escrow Agent in the manner specified in Section 2.1 or to hold such
funds thereafter pursuant to the terms hereof.
1.6 From and after the date hereof, Buyer and Seller shall deliver or
cause to be delivered to the Escrow Agent such further documents and
instruments, or cause to be done such further acts, as the Escrow Agent may
reasonably request in order to enable the Escrow Agent to carry out more
effectively the provisions and purposes of this Escrow Agreement, to evidence
compliance with this Escrow Agreement or to assure itself that it is
reasonably protected in acting under this Escrow Agreement.
1.7 (a) For its services hereunder, the Escrow Agent shall be entitled
to be paid an annual fee in the amount specified in Exhibit A, payable in
advance. The Escrow Agent hereby acknowledges receipt from Buyer and Seller
of the fee for the first annual period hereunder. Payment of the relevant
fee for all subsequent annual periods shall be due on each anniversary of
the date hereof.
(b) All fees of the Escrow Agent hereunder shall be paid by Buyer
and Seller, such parties sharing equally in such costs.
2. Establishment of Escrow Fund
2.1 The parties acknowledge and agree that * has been deposited with the
Escrow Agent as of the date hereof and from time to time further funds will
be deposited with the Escrow Agent. The parties further agree that subject
to the provisions of paragraph 3.2(e), * due under paragraph 2 of the Note
shall be transmitted by the maker thereunder to the Escrow Agent for deposit
in the Escrow Fund. Under no circumstances shall Seller be obligated to
deposit any funds in the Escrow Fund beyond the amounts set forth in this
Section 2.1 which are deposited by the maker with the Escrow Agent.
2.2 The Escrow Fund shall be held by the Escrow Agent in a separate
account and disbursed to Buyer or Seller in accordance with the terms of this
Agreement.
2.3 The Escrow Agent shall invest all funds on deposit from time to time
in the Escrow Fund, and all undistributed income earned thereon, and keep the
same invested in certain instruments as Seller shall from time to time direct
the Escrow Agent in writing, subject to the restrictions and limitations
hereinafter provided, and disburse the same
* Text omitted pursuant to a request for confidential treatment and filed
separately with the Securities and Exchange Commission.
<PAGE>
terms, conditions and provisions hereof. The Escrow Agent shall invest the
Escrow Fund solely in accordance with Seller's instructions, provided that
Seller's instructions and the Escrow Agent's authority shall be restricted
to: (i) obligations issued or unconditionally guaranteed by the Government of
the United States of America or any State or political subdivision thereof;
(ii) certificates of deposit and interest-bearing deposit accounts of any
domestic bank or trust company which has a combined capital and surplus of at
least $200,000,000; (iii) certificates of deposit with a maturity not to
exceed one year or (iv) commercial paper with a maturity of no more than one
year issued by any corporation organized and existing under the laws of the
United States of America or any state thereof, which at the time of purchase
has been rated, and the ratings for which are not less than, "A-1" if rated
by Standard and Poor's Corporation or "P-1" if rated by Moody's Investors
Services, Inc. In no event shall the Escrow Agent invest the Escrow Fund or
any undistributed income earned thereon in any security or instrument having
a maturity extending beyond one year, provided, that such limitation shall
not apply to the obligations described in clause (i) above. The Escrow Agent
shall have authority to invest daily cash receipts received by the Escrow
Fund in the Paine Webber Money Market Fund, or equivalent brokerage house
money market fund pending investment of such funds in accordance with the
provisions of this Section 2.3.
3. Disposition of Escrow Fund
3.1 All funds on deposit from time to time in the Escrow Fund shall be
held, invested and reinvested by the Escrow Agent pursuant to the terms of
this Escrow Agreement until the funds therein shall be disbursed in
accordance with the terms of this Escrow Agreement.
3.2 The Escrow Agent shall make disbursement of funds on deposit in the
Escrow Fund only as set forth in this Section 3.2.
(a) Buyer shall promptly provide Seller and the Escrow Agent with a
copy of all Buyer Indemnity Claims submitted by Buyer pursuant to Section 8.2
of the Acquisition Agreement, whether such Buyer Indemnity Claims are issued
before or after any funds are deposited into escrow hereunder.
(b) Promptly following its receipt of notice of any Buyer Indemnity
Claims, and without any further duty of investigation or inquiry on its part,
the Escrow Agent shall establish a reserve (a "Reserve") in the Escrow Fund,
which in all events shall be equal to the full amount of each claim
identified in such notice (which shall include, without limitation, Buyer's
good faith estimate of the costs and expenses reasonably expected to be
incurred by Buyer in investigating and disposing of any such claim). Subject
to Sections 9.12(b) and (c) of the Acquisition Agreement concerning release
of funds from the Escrow Fund following *, the Escrow Agent shall not be
authorized to release any funds from the Escrow Fund as to which a Reserve
has been established pursuant to this Section 3.2(b) unless and until the
relevant Buyer Indemnity Claim that gave rise to such Reserve has been
Definitively Resolved and the Escrow Agent has received written notice of
such resolution pursuant to the requirements of Section 3.2(c) below. Until
they are Definitively Resolved in
* Text omitted pursuant to a request for confidential treatment and filed
separately with the Securities and Exchange Commission.
<PAGE>
the manner hereinafter provided, all unresolved Buyer Indemnity Claims shall
be referred to herein as "Pending Claims."
(c) For purposes hereof, a Pending Claim shall be deemed to have
been "Definitively Resolved" when any of the following events has occurred:
(i) a claim is settled by mutual written agreement of Buyer and Seller; or
(ii) a Final Order deciding such claim has been rendered; or
(iii) ninety (90) days have elapsed since Seller's initial receipt of
notice of a Buyer Indemnity Claim ("First Notice") and neither
Buyer nor Escrow Agent has received, on or before that date, a
written notice from Seller disputing such claim in whole or in
part, and Buyer has provided a further notice ("Second Notice")
sent to Seller by registered or certified mail to the effect that
Seller has not disputed such claim and that Buyer intends to submit
a Settlement Notice (as hereinafter defined) and Seller has not
within thirty (30) days after receipt of such Second Notice
disputed in writing the Buyer Indemnity Claim by written notice to
Buyer or Escrow Agent.
The Escrow Agent shall not be deemed to have received notice that a Pending
Claim has been Definitively Resolved, and shall not be obligated to take any
action with respect thereto, until 10 days after the Escrow Agent shall have
received one of the following (a "Settlement Notice"): (A) with respect to
subparagraph (i) above, a copy of joint written instructions duly signed by
Buyer and Seller stating that a Pending Claim has been settled by mutual
agreement of Buyer and Seller; (B) with respect to subparagraph (ii) above, a
certified copy of the final arbitration award which has not been stayed by a
court of competent jurisdiction within 30 days thereafter, or the final
non-appealable judgment, order or award of the relevant court, together with
a certificate duly signed by the prevailing party in such proceeding
certifying that such judgement, order or award is final and non-appealable
for all purposes hereof; and (C) with respect to subparagraph (iii) above,
written certification from Buyer issued to the Escrow Agent in good faith to
the effect that Buyer has provided the First Notice and the Second Notice as
described in subparagraph (iii) above without having received a written
dispute notice from Seller, as provided above. Each Settlement Notice shall
stipulate the amount(s) to be paid to Buyer or Seller in connection with
such Definitively Resolved claim, and copies thereof shall be provided to
each of the parties hereunder at the same time it is provided to the Escrow
Agent. Buyer and Seller hereby acknowledge and agree that the Escrow Agent
shall have the right to rely upon any Settlement Notice duly given jointly by
Buyer and Seller under (A) in the preceding sentence, by Buyer or Seller
under (B) in the preceding sentence and by Buyer under (C) in the preceding
sentence, and shall be authorized to act upon any such written notice.
(d) A Buyer Indemnity Claim that has been Definitively Resolved
shall be referred to herein as a "Settled Claim". To the extent that a
Settled Claim has been resolved in favor of Buyer, the Escrow Agent shall
promptly disburse the full amount (or the relevant
<PAGE>
portion, as applicable) of such claim to Buyer (or such other person as Buyer
may direct) from the Escrow Fund (to the extent of funds in the Escrow Fund)
in accordance with the relevant Settlement Notice. Following such payment,
all Reserves that relate to such Buyer Indemnity Claim and are not due Buyer
in accordance with the terms of the Settlement Notice shall be released, but
the funds subject thereto shall remain in the Escrow Fund until otherwise
disbursed in accordance with the terms hereof.
(e) On November 30, 1999, the excess of the outstanding principal
amount of the Escrow Fund over *, as such excess amount is further reduced by
the aggregate amount of all outstanding Reserves, shall be disbursed by the
Escrow Agent to Seller on five (5) days' prior written notice to Buyer. On
November 30, 2000, the excess of the outstanding principal amount of the
Escrow Fund over *, as such excess amount is further reduced by the aggregate
amount of all outstanding Reserves, shall be disbursed by the Escrow Agent to
Seller on five (5) days' prior written notice to Buyer. On November 30,
2001, the excess of the outstanding principal amount of the Escrow Fund over
*, as such amount is further reduced by the aggregate amount of all
outstanding Reserves, shall be disbursed by the Escrow Agent to Seller on
five (5) days' prior written notice to Buyer. On November 30, 2002, the
excess of the outstanding principal amount of the Escrow Fund over the
aggregate amount of all outstanding Reserves, shall be disbursed by the
Escrow Agent to Seller on five (5) days' prior written notice to Buyer.
(f) Subject to paragraph (e) above, all funds deposited with the
Escrow Agent shall continue to be held in escrow hereunder until November 30,
2002, on which date the balance of the Escrow Fund, net of any Reserves,
shall be distributed to Seller. Any amounts remaining with the Escrow Agent
thereafter shall be released from time to time as and when all remaining
Pending Claims to which such funds relate have been Definitively Resolved.
The Escrow Agent shall promptly disburse to Buyer the full amount of each
Settled Claim resolved in favor of Buyer in accordance with the relevant
Settlement Notice and any funds in the Escrow Fund in excess of remaining
Reserves shall be distributed to Seller. Notwithstanding the foregoing, all
funds deposited with the Escrow Agent shall be distributed to Buyer and/or
Seller in accordance with any joint written instructions of Buyer and Seller.
(g) The Escrow Agent shall provide written notice of any proposed
distributions of funds to Buyer or Seller hereunder five (5) days before
making any such disbursement. For purposes of such five (5)-day notice
period, such period shall commence on the date on which the relevant notice
is given by the Escrow Agent to Buyer and Seller and shall terminate at
midnight on the fifth business day thereafter. The Escrow Agent shall also
send copies of all notices it receives hereunder to the other parties hereto.
3.3 The party or parties receiving a disbursement from the Escrow Fund
shall, upon request, furnish to the Escrow Agent concurrently with its
receipt of such disbursement, a signed receipt for the amount of such
disbursement.
* Text omitted pursuant to a request for confidential treatment and filed
separately with the Securities and Exchange Commission.
<PAGE>
4. Disposition of Income
All income earned from time to time by the Escrow Fund ("Income") shall
be pooled with all other funds held in the Escrow Fund for investment
purposes and shall become part of the Escrow Fund for all purposes, provided
that on December 31 of each calendar year or any other date mutually
agreeable to Buyer, Seller and the Escrow Agent, Escrow Agent shall disburse
to Seller * (net of losses or any other expenses) unless such Income amounts
are subject to a Reserve, Pending Claim or Settled Claim. Any losses
realized upon any investment of the Escrow Fund pursuant to Section 2.3 or
otherwise shall be charged to the Escrow Fund.
5. Term
5.1 The term of this Escrow Agreement shall commence on the date hereof
and continue until the entire amount of principal and Income on deposit in
the Escrow Fund shall have been disbursed by the Escrow Agent as provided in
this Escrow Agreement, whereupon this Escrow Agreement and the escrow
arrangements created hereunder shall terminate, and the Escrow Agent shall be
released and discharged from all further duties and obligations hereunder,
but without prejudice to any liability of the Escrow Agent for its failure to
comply with the terms and conditions of this Escrow Agreement or its bad
faith, gross negligence or willful misconduct hereunder.
5.2 The Escrow Agent shall have the right, upon termination of this
Escrow Agreement as hereinabove provided, to require the other parties
hereto, as a condition to receiving a final disbursement from the Escrow
Fund, if applicable, to execute, acknowledge and deliver to the Escrow Agent
releases of the Escrow Agent, in its capacity as such, reasonably
satisfactory to the Escrow Agent in form and content; provided, however, that
the Escrow Agent shall have accounted to each party delivering such release
with respect to the Escrow Agent's administration of the Escrow Fund and
provided further that any such release shall not extend to any acts of bad
faith, gross negligence or willful misconduct on its part in connection with
the Escrow Agent's administration of the Escrow Fund.
6. Miscellaneous
6.1 (a) Buyer and Seller may, upon at least 30 days' prior written
notice to the Escrow Agent executed by each of them, dismiss the Escrow Agent
hereunder and jointly appoint a successor. In such event, the Escrow Agent
shall promptly account for and deliver to the successor escrow agent named in
such notice the then balance of the Escrow Fund, if any, including all
investments thereof and accrued income thereon. Upon acceptance thereof and
of such accounting by such successor escrow agent, and upon reimbursement to
the Escrow Agent by Buyer and Seller of all expenses due to it hereunder
through the date of such accounting and delivery, the Escrow Agent, in its
capacity as such, shall be released and discharged from all of its duties and
obligations hereunder, but without prejudice to any liability of the Escrow
* Text omitted pursuant to a request for confidential treatment and filed
separately with the Securities and Exchange Commission.
<PAGE>
Agent for failure to comply with the terms and conditions of this Escrow
Agreement or its bad faith, gross negligence or willful misconduct hereunder.
(b) (i) Without limiting the foregoing, the Escrow Agent (and any
successor escrow agent hereunder) shall have the right, as provided in (ii)
below, at any time to resign as such by delivering the Escrow Fund to any
successor escrow agent jointly designated by the other parties hereto in
writing , or to any escrow agent which constitutes a national banking
association with assets in excess of _________________ who is willing to
serve under this Agreement], or to any court of competent jurisdiction,
[or to an account under the control of the arbitrator(s) selected pursuant to
paragraph 9.12 of the Acquisition Agreement, whereupon the Escrow Agent shall be
discharged of and from any and all further obligations arising in connection
with this Escrow Agreement, but without prejudice to any liability of the
Escrow Agent for its bad faith, gross negligence or willful misconduct
hereunder.
(ii) The resignation of the Escrow Agent will take effect on the
earlier of (a) the appointment of a successor escrow agent (including a
court of competent jurisdiction) or (b) the day which is 30 business days
after the date of delivery of its written notice of resignation to the
other parties hereto. If at that time the Escrow Agent has not received a
designation of a successor escrow agent hereunder, the Escrow Agent's sole
responsibility after that time shall be to safekeep the Escrow Fund until
receipt of a designation of successor escrow agent hereunder or a joint
written disposition instruction by the other parties hereto or a final
order.
6.2 This Escrow Agreement shall inure to the benefit of, and shall be
binding upon, the parties hereto and their respective successors, heirs,
remaindermen, assigns, executors, administrators, personal representatives,
trustees and fiduciaries. The Escrow Agent shall have the right to rely upon
any proper evidence of the authority of any such successors, heirs,
remaindermen, assigns, executors, administrators, personal representatives,
trustees and fiduciaries. Notwithstanding anything to the contrary herein
contained, no beneficial interest of any person in the Escrow Fund shall be
subject to anticipation or assignment by such person, nor shall the Escrow
Fund be subject to interference or control of any creditor of such person, or
be taken or reached by any legal or equitable process in satisfaction of any
debt or other liability of such person prior to disbursement, and each party
hereby agrees to indemnify the other parties in connection with any loss or
diminution of such party's interest in the Escrow Fund as a result of any
such matter.
6.3 Any notice, direction, instruction or other communications required
or permitted hereunder shall be given or made in writing and shall be (i)
delivered personally (including commercial carrier), (ii) sent by registered
or certified airmail, return receipt requested, postage prepaid or (iii) sent
by telecopier, addressed to the party to whom they are directed at the
following addresses, or at such other address as may from time to time be
designated by such party to the others in accordance with this Section 6.3:
<PAGE>
If to Buyer, to:
I. C. Isaacs & Company L.P.
3840 Bank Street
Baltimore, Maryland 21224
Attention: President and Co-Chief Executive Officer
Telecopier: 410/558-2096
I. C. Isaacs & Company L.P.
350 Fifth Avenue
Suite 1029
New York, New York 10118
Attention: Chairman and Co-Chief Executive Officer
Telecopier: 212/695-7579
With a copy to:
Piper & Marbury L.L.P.
Charles Center South
36 South Charles Street
Baltimore, Maryland 21201-3010
Attention: Robert J. Mathias, Esq.
Telecopier: 410/576-1604
If to Seller, to:
Brookhurst, Inc.
107 West Carob Street
Compton, California 90220
Attention: William E. Ott
Telecopier: 310/763-3846
With a copy to:
Shereff, Friedman, Hoffman & Goodman, LLP
919 Third Avenue
New York, New York 10022
Attention: Robert J. Jossen, Esq.
Telecopier: 212/758-9526
<PAGE>
If to the Escrow Agent, to:
____________________
____________________
____________________
Attention:
Telecopier:
Copies of any written communications sent by Buyer or Seller to the
Escrow Agent relating to this Escrow Agreement shall be sent to the other
parties hereto, and copies of any written communications sent by the Escrow
Agent relating to this Escrow Agreement shall be sent to Buyer and Seller.
Notwithstanding the foregoing, Buyer and Seller shall have the right to
engage in direct written communications between themselves relating to this
Escrow Agreement without providing copies thereof to the Escrow Agent, except
to the extent otherwise required under the terms of this Escrow Agreement.
All notices, directions, instructions and communications hereunder shall
be effective, and deemed given, if and when delivered, on and as of the date
of receipt thereof, as evidenced by a written receipt by or on behalf of the
party to which the same is so delivered, and, if mailed or sent by expedited
courier, on and as of the date of delivery, as evidenced by the
acknowledgement of delivery issued with respect thereto by the applicable
postal authorities or by the confirmation of delivery issued by the
applicable courier service. Any party may change its address for notices
hereunder, effective upon giving of notice of such change hereunder to the
other parties.
6.4 (a) The validity, construction, operation, and effect of any and
all of the terms and provisions of this Agreement shall be determined and
enforced in accordance with the laws of the State of New York, without giving
effect to principles of conflicts of law thereunder, except as to matters
solely involving foreign trademark rights, in which case the applicable
foreign trademark laws shall be applied to determine such foreign trademark
rights. In the event any legal action becomes necessary to enforce or
interpret the terms of this Agreement, the parties agree that such action
will be brought in *.
*
* Text omitted pursuant to a request for confidential treatment and filed
separately with the Securities and Exchange Commission.
<PAGE>
*
6.5 This Escrow Agreement, and any notice, direction or other document
or instrument delivered in connection herewith, may be executed in
counterparts, each of which shall constitute an original instrument, but all
of which together shall constitute a single agreement, notice, direction,
document or instrument as the case may be. Buyer and Seller agree to
cooperate with each other in good faith in joining in any notices or written
instructions that are required to be delivered to the Escrow Agent jointly by
Buyer and Seller.
6.6 The provisions of this Escrow Agreement shall not be altered or
terminated by operation of law or by the occurrence of any event (except as
otherwise specified herein), including, without limitation, the death or
incapacity or the termination of the legal existence of any party hereto.
6.7 No party hereto may assign any of its interests, rights or
obligations under this Agreement without the prior written consent of the
other parties. Notwithstanding the foregoing, Buyer may, without the consent
of Seller, assign rights and obligations under this Agreement to any entity
under common control with Buyer or to any successor-in-interest, in whole or
in part, to the assets acquired by Buyer from Seller, and Seller may assign
its rights and obligations to any successor-in-interest to the assets of
Seller by merger or liquidation. In addition, Seller may direct in writing
to Escrow Agent (with a copy sent to Buyer) that proceeds of the Escrow Fund
be paid to any third party Seller shall designate in writing. Nothing in
this Agreement shall be construed as requiring Seller's or the Escrow Agent's
consent to (a) the assignment, in whole or in part, of ICI's (as hereinafter
defined) rights under this Agreement (including the right to make claims
against and obtain proceeds from the Escrow Fund) to *, any affiliate of *,
or (b) the assumption, in whole or in part, of ICI's obligations under this
Agreement by *. In the event of such assignment and/or assumption, * shall
be recognized as "Buyer" for purposes of all claims submitted by * as Buyer
pursuant to Section 3, including, without limitation, for purposes of
* Text omitted pursuant to a request for confidential treatment and filed
separately with the Securities and Exchange Commission.
<PAGE>
distribution of funds pursuant to Settled Claims resulting therefrom.
Nothing in this Agreement shall be construed as affecting Buyer's rights
under Section 6.10.
6.8 All monetary amounts stated herein or determined hereunder are and
shall be denominated in United States dollars, and all liabilities and
obligations of any party hereunder, to the extent calling for the payment of
money, shall be satisfied in United States dollars.
IN WITNESS WHEREOF, the parties have executed this Escrow Agreement as of
the day and year first above written.
I. C. ISAACS & COMPANY L.P., a Delaware
limited partnership
By: ____________________________________
Name: Robert J. Arnot
Title: Chairman and Co-Chief Executive
Officer
By: ____________________________________
Name: Gerald W. Lear
Title: President and Co-Chief Executive
Officer
BROOKHURST, INC.
By: ____________________________________
Name: ________________
Title: _________________
_____________________________,
as Escrow Agent
By:
Name:
Title:
<PAGE>
EXHIBIT F/WWA
TERMINATION OF LICENSE AGREEMENT
THIS TERMINATION OF LICENSE AGREEMENT ("Agreement") is entered into and
effective as of the ____ day of ______, 1997 ("Effective Date"), by and between
BROOKHURST, INC., a California corporation ("LICENSOR"), and I.C. ISAACS & CO.,
L.P., a Delaware limited partnership ("LICENSEE").
RECITALS
A. LICENSOR and LICENSEE entered into that certain License Agreement dated
August 11, 1994 regarding the use of the mark BOSS ("License Agreement").
B. LICENSOR and LICENSEE mutually desire to terminate the License
Agreement effective as of the Effective Date.
NOW, THEREFORE, the parties agree as follows:
1. TERMINATION
The License Agreement is hereby terminated in all respects except as
otherwise provided herein, effective as of the Effective Date.
2. ROYALTIES
On or before 30 days after the Effective Date, LICENSEE shall pay to
LICENSOR *. On or before 90 days after the Effective
Date, Licensee shall pay to Licensor *. Notwithstanding anything to the contrary
contained in the License Agreement, the sole permitted deduction from Royalties
earned shall be a deduction for bad debts incurred by the Licensee in connection
with the sale of the Licensed Products. *
* Text omitted pursuant to a request for confidential treatment and filed
separately with the Securities and Exchange Commission.
<PAGE>
3. *
4. *
IN WITNESS WHEREOF, the parties agree that this Agreement shall take
effect as of the date first written above.
BROOKHURST, INC., a
California corporation
By:_______________________
William Ott, President
I.C. ISAACS & CO., L.P., a
Delaware limited partnership
By: Isbuyco, Inc., General Partner
By:_______________________
* Text omitted pursuant to a request for confidential treatment and filed
separately with the Securities and Exchange Commission.
<PAGE>
Exhibit G
["Boss by Brookhurst." logo typeface]
<PAGE>
EXHIBIT H/WWA
1. *
2. *
3. *
* Text omitted pursuant to a request for confidential treatment and filed
separately with the Securities and Exchange Commission.
<PAGE>
4. *
* Text omitted pursuant to a request for confidential treatment and filed
separately with the Securities and Exchange Commission.
2
<PAGE>
ATTACHMENT TO EXHIBIT H
From 1889 to 1997, Brookhurst and its predecessor companies manufactured and
sold clothing under the Brookhurst BOSS label.
<PAGE>
Exhibit 10.11
CBYNO
September 30, 1997
FOREIGN BOSS RIGHTS ACQUISITION AGREEMENT
AGREEMENT dated as of September 30, 1997, by and between *, a corporation
organized and existing under the laws of Delaware ("Buyer") and I. C. Isaacs
& Company L.P., a limited partnership organized and existing under the laws
of Delaware ("Seller").
W I T N E S S E T H :
WHEREAS, Seller has entered into a Worldwide Rights Acquisition Agreement
dated as of September 30, 1997 with Brookhurst, Inc. ("Brookhurst") and
William Ott to acquire all of Brookhurst's right, title and interest in and
to all "BOSS" trademarks and other proprietary interests, if any, related
thereto owned by Brookhurst and used in connection with its business
throughout the world together with the goodwill symbolized thereby (the
"Worldwide Rights Acquisition Agreement").
WHEREAS, Buyer desires to purchase from Seller, and Seller desires to
sell to Buyer, all of Seller's right, title and interest outside of the
United States of America and its territories and possessions (hereinafter,
the "United States of America") in and to all "BOSS" trademarks and other
proprietary interests outside of the United States of America, if any,
related thereto acquired and owned by Seller and used in connection with its
business outside of the United States of America, together with the goodwill
symbolized by such trademarks, on the terms and conditions set forth herein;
NOW, THEREFORE, in consideration of the mutual promises contained herein
the parties hereby agree as follows:
* Text omitted pursuant to a request for confidential treatment and filed
separately with the Securities and Exchange Commission.
<PAGE>
ARTICLE I
PURCHASE AND SALE
1.1 Purchase and Sale of BOSS Assets. Upon the terms and conditions
herein set forth, Seller shall sell, convey, transfer, assign and deliver to
Buyer on the Closing Date (as hereinafter defined), and Buyer shall purchase
from Seller on the Closing Date, the following assets, properties and rights
of Seller (the "Trademark Assets"), all of which, taken together, represent
the business of Seller operating under the BOSS marks outside of the United
States of America acquired from Brookhurst:
(a) any and all right, title and interest of Seller in and to the
trademarks, service marks, trade names, logos, insignias, designs, copyrights
(if any), and other proprietary interests therein, containing the term "BOSS"
or constituting a stylized B, outside of the United States of America,
including, without limitation, all registrations and applications for
registration therefor throughout the world but not including the United
States of America (collectively, the "Trademarks"), and the goodwill
symbolized by the Trademarks relating to their use outside the United States
of America, together with all causes of action and the proceeds thereof in
favor of Seller heretofore accrued with respect to the Trademarks outside of
the United States of America;
(b) all rights of Seller under license agreements, concurrent use
agreements and other agreements listed on Schedule 1.1(b) insofar as they
relate to the Trademarks being acquired by Buyer from Seller hereunder,
including, without limitation, all rights of Seller under the Worldwide
Rights Acquisition Agreement and the Escrow Agreement referred to therein
relating to the Trademarks (the "Assumed Agreements") and all files relating
thereto, it being
-2-
<PAGE>
agreed that Seller shall retain all of Seller's rights under the Worldwide
Rights Acquisition Agreement and the Escrow Agreement insofar as they relate
to the trademark properties retained by Seller in the United States of
America. In clarification of the foregoing, the parties acknowledge and
agree that Buyer shall have recourse directly against Brookhurst and Ott
under the Worldwide Rights Acquisition Agreement and the Escrow Fund as
defined and set forth in the Escrow Agreement for any matters involving the
breach of covenants, representations, warranties or conditions set forth in
the Worldwide Rights Acquisition Agreement insofar as they relate to the
Trademark Assets acquired by Buyer hereunder from Seller;
(c) all right, title and interest in and to all records and other
information the Selling Parties (as defined in the Worldwide Rights
Acquisition Agreement) or either of them have within their possession or
control applicable to the products they or either of them have previously
licensed under the Trademarks and all trademark files relating to the
Trademark Assets.
(d) any and all copyrights that Seller may own arising outside of the
United States of America as a result of designs and other works created by
Seller, Brookhurst, or any licensee, nominee or manufacturer of either of
them, in connection with the BOSS business.
1.2 Liabilities. Buyer shall assume the obligations of Seller arising
from and after Closing under the Assumed Agreements solely insofar as they
relate to the use of the Trademark Assets after Closing. Buyer shall assume
no liabilities or obligations, whether now existing or arising in the future,
fixed or contingent, known, or unknown, relating to the use by Seller
(including, without limitation, use by any of Seller's affiliates,
subsidiaries, predecessors or
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licensees) of the Trademarks and any other matter relating to the conduct of
any business relating thereto prior to the Closing ("Excluded Liabilities").
1.3 Encumbrances. The sale and transfer of the Trademark Assets shall
be free and clear of all pledges, security interests, mortgages and liens
made or created by Seller ("Encumbrances").
1.4 Exclusions. Notwithstanding any other provision of this Agreement,
Seller makes no representations or warranties of any kind, and shall have no
responsibility, liability or obligations whatsoever to Buyer or any affiliate
thereof (including, without limitation, for any claims for indemnity), with
respect to any matter relating to the Trademark Assets prior to the time
Seller acquired the Trademark Assets, including, without limitation, the
quality of title, the condition or use of the Trademark Assets or the conduct
of the business thereunder prior to the time Seller acquired the Trademark
Assets from Brookhurst except as expressly set forth in this Agreement.
ARTICLE II
CONSIDERATION
2.1 Consideration. In consideration of the sale and transfer of the
Trademark Assets to Buyer on the Closing Date, Buyer shall assume any and all
obligations of Seller under the Promissory Note in the principal amount of US
$11,000,000 of Seller referred to in the Worldwide Rights Acquisition Agreement
and payable to the order of Brookhurst (the "Note").
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ARTICLE III
THE CLOSING
3.1 Time and Place of Closing. The closing of the purchase and sale of
the Trademark Assets hereunder (the "Closing") shall take place at the
offices of Coudert Brothers located at 1114 Avenue of the Americas, New York,
New York 10036 at 10:00 a.m. local time on a date agreed to by the parties
(the "Closing Date"), which date shall not be later than eight (8) business
days following the date on which the applicable waiting period, including any
extension thereof, under the Hart-Scott Rodino Antitrust Improvements Act of
1976, as amended, relating to the transactions contemplated by the Worldwide
Rights Acquisition Agreement shall have expired.
3.2 Deliveries To Be Made by the Seller. On the Closing Date, Seller
shall have executed and delivered to Buyer the following:
(a) executed trademark assignments in the forms attached hereto as
Exhibit A;
(b) an agreement of assignment and assumption of Assumed Agreements
in the form annexed hereto as Exhibit B (the "Assumption Agreement");
(c) a concurrent use agreement between Seller and * in the form
annexed hereto as Exhibit C (the "Concurrent Use Agreement");
(d) a foreign manufacturing rights agreement between Seller and
Buyer in the form annexed as Exhibit D (the "Foreign Manufacturing Rights
Agreement");
(e) an option agreement between Seller and Buyer in the form
annexed as Exhibit F (the "Option Agreement");
* Text omitted pursuant to a request for confidential treatment and filed
separately with the Securities and Exchange Commission.
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(f) a secured limited recourse promissory note in the form annexed as
Exhibit F (the "ICI Note");
(g) an agreement of assumption of the Note and assignment of all rights
related thereto (the "Note Assumption Agreement") in the form annexed hereto
as Exhibit G; and
(h) such other instruments and documents as may be elsewhere herein
required.
3.3 Deliveries To Be Made by Buyer. On the Closing Date, Buyer shall
have executed or caused to be executed and delivered to Seller the following:
(a) the Note Assumption Agreement;
(b) the Assumption Agreement;
(c) the Concurrent Use Agreement, duly executed by *;
(d) the Foreign Manufacturing Rights Agreement;
(e) the Option Agreement;
(f) the ICI Note; and
(g) A Guaranty by * of the Note in the form annexed
hereto as Exhibit H (the "Guaranty");
(h) an Agreement regarding Consent to Release and Waiver of
Brookhurst Note Claims in the form annexed hereto as Exhibit I (the "Consent
Agreement"); and
(i) such other instruments and documents as may be elsewhere herein
required.
* Text omitted pursuant to a request for confidential treatment and filed
separately with the Securities and Exchange Commission.
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ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF THE SELLER
Seller makes the following representations and warranties, each of which
is complete and correct on and as of the date hereof. As used in this
Agreement, including, without limitation, this Article IV, the term Seller
shall not be construed to include reference to Seller's
predecessor-in-interest to the Trademark Assets, namely Brookhurst.
4.1 Organization and Good Standing of the Seller. Seller is a limited
partnership duly organized, validly existing and in good standing under the
laws of the State of Delaware.
4.2 Authority; Execution. Seller has all the requisite power and
authority, corporate and otherwise, to execute, deliver and perform its
obligations under this Agreement. The execution and delivery of this
Agreement, and each of the other instruments of transfer, conveyance and
assignment delivered hereunder, have been duly and validly authorized by all
necessary corporate and other action on the part of Seller, and this
Agreement and each of such other instruments has been duly executed by
Seller. This Agreement constitutes the valid and binding agreement of Seller
enforceable against Seller in accordance with its respective terms.
4.3 Breach of Statute or Contract.
(a) The execution, delivery and performance of this Agreement by Seller
and the consummation of the transactions contemplated hereby will not: (i)
violate or conflict with any provision of the charter documents or by-laws of
Seller; (ii) violate or conflict with, result in the breach or termination of
or otherwise give any other contracting party the right to terminate, or
constitute a default (or an event which, with the lapse of time, or the
giving of notice, or both, will constitute a default) under, any contract or
other instrument to which Seller is a party
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and which relate to the Trademark Assets or by which Seller is bound, or
result in the creation of any Encumbrance upon any of the Trademark Assets
pursuant to the terms of any such contract or instrument, or (iii) violate or
conflict with any judgment, order, writ, injunction or decree of any court or
governmental body of any jurisdiction applicable to Seller (excluding any
judgments, orders, writs, injunctions or decrees in any actions or
proceedings involving * or its affiliates) or, to the knowledge of Seller,
any law or regulation materially adversely affecting Buyer's ability to
exploit the Trademark Assets.
(b) Except as set forth on Schedule 4.3(b), there are no notices,
licenses, consents, permissions or approvals of any nature whatsoever which
are required to be obtained by Seller from any Federal, state or local
governmental or regulatory body or other third party or, to Seller's
knowledge, from any foreign governmental or regulatory body for the
consummation of the transactions contemplated by this Agreement, or as a
condition to the sale, assignment and transfer of the Trademark Assets to be
effected hereunder.
4.4 No Claims or Litigation. Except as set forth on Schedule 4.4(a), no
litigation, judicial or arbitral action, claim asserted in writing and
received by Seller within the preceding two years or, to the knowledge of
Seller, administrative or regulatory proceeding or adversarial proceeding in
any trademark office, or governmental investigation involving the Trademark
Assets or the transactions contemplated by this Agreement, including, without
limitation, any claim of conflict with or violation of any proprietary or
other right (collectively, "Litigation") is pending or, to the knowledge of
Seller, threatened against Seller. For purposes of the foregoing,
"Litigation" shall not be deemed to include any actions, proceedings or
claims involving * or its affiliates. Except as set forth on Schedule
4.4(b), there is no
* Text omitted pursuant to a request for confidential treatment and filed
separately with the Securities and Exchange Commission.
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judgment, order, injunction, decree or award outstanding (whether rendered by
a court, tribunal, administrative agency or arbitral tribunal and excluding
any judgments, orders, injunctions, decrees or awards in any actions or
proceedings involving * or its affiliates), against Seller or referencing
Seller by name or, to Seller's knowledge, by which Seller is bound which
affects the Trademark Assets or the use of the Trademark Assets in any way.
4.5 Trademarks. Except as set forth in Schedule 4.5.A, Seller is not
currently licensing any person to use or operate under any of the Trademarks.
True and complete copies and, if not available, descriptions of all such
licenses, including all amendments or modifications, have heretofore been
delivered to Buyer. Except as set forth in Schedule 4.5.B, and except for
customary sell-off rights granted to alleged infringers, Seller has not
affirmatively agreed or consented to the non-use by Seller, or use by any
third party, of any mark containing the word BOSS. To Seller's knowledge
(such knowledge being based solely on Seller's actual knowledge), the
countries in which Seller currently manufactures products bearing the
Trademarks are: Hong Kong, Indonesia, Macao, Mexico, People's Republic of
China, Phillipines, Republic of South Korea, Taiwan and Thailand. Seller
has paid, or will pay within a reasonable period of time, in full (or
otherwise to the satisfaction of the invoicing party) all outstanding
invoices of domestic and foreign trademark counsel for work done and
disbursements incurred on behalf of Seller (whether or not billed on or by
the date hereof).
4.6 No Alienation of Rights By Seller. Except as set forth in the
Assumed Agreements or any other documents identified on Schedule 4.5.A or B
or Schedule 4.6, Seller has not transferred, assigned, licensed (which
license is currently outstanding) or otherwise encumbered with Encumbrances
any of its rights in any Trademark Asset.
* Text omitted pursuant to a request for confidential treatment and filed
separately with the Securities and Exchange Commission.
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4.7 Ownership Trademark Assets. As between Seller and all affiliates
and other persons or entities who have an ownership interest in Seller (or
any affiliate thereof) or who may have been expressly authorized by Seller to
use the Trademark Assets, Seller owns all rights in and to the Trademark
Assets (as defined in the Worldwide Rights Acquisition Agreement and as
acquired from Brookhurst under said agreement).
4.8 Knowledge. Whenever a statement regarding the existence or absence
of facts in this Agreement is qualified by a phrase such as to Seller's
knowledge or words to similar effect, it is intended by the parties that the
information attributed to Seller be actually known, or information which
should have been known based on reasonable inquiry by the Chairman and
Co-Chief Executive Officer, President and Co-Chief Executive Officer or Chief
Financial Officer of Seller.
4.9 Materiality. The phrase "materially adversely affecting Buyer's
ability to exploit the Trademark Assets" or words of similar effect, shall be
deemed to mean (i) the existence or occurrence at any time from and after the
date hereof of any actual harm, or the existence of any reasonably
anticipated actual harm, to Buyer's ability to exploit the Trademark Assets
or (ii) either (x) the failure of Seller to remedy the breach in question
assuming the breach is remediable or (y) the inability of Seller to remedy
the breach in question without prejudice to Buyer's ability to exploit the
Trademark Assets. For purposes of this Section 4.10, no "actual
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harm" shall be deemed to exist as to any of the first three claims of harm
unless any such claim of harm reasonably involves at least the following
amounts in damage or loss:
First Claim *
Second Claim *
Third Claim *
it being agreed that, without prejudice to, or limitation of, Seller's
ability to claim that any subsequent claim involves no "actual harm", no such
monetary threshold applies to any subsequent claims.
ARTICLE V
REPRESENTATIONS AND WARRNTIES OF BUYER
Buyer hereby makes the following representations and warranties each of
which is complete and correct on and as of the date hereof:
5.1 Organization and Good Standing of Buyer. Buyer is a corporation
duly organized and validly existing under the laws of Delaware. Buyer is a
wholly-owned direct subsidiary of *, a corporation organized and existing
under the laws of *.
5.2 Authority; Execution. Buyer has all requisite power and authority,
corporate and otherwise, to execute, deliver and perform its obligations
under this Agreement. The execution and delivery of this Agreement, and each
of the other instruments of transfer, conveyance and assignment delivered
hereunder, by Buyer have been duly and validly authorized by all necessary
corporate and other action on the part of Buyer, and this Agreement and each
of such other
* Text omitted pursuant to a request for confidential treatment and filed
separately with the Securities and Exchange Commission.
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instruments has been duly executed by Buyer, as applicable. This Agreement
constitutes the valid and binding agreement of Buyer, enforceable against
Buyer in accordance with its terms.
5.3 Breach of Statute or Contract.
(a) The execution, delivery and performance of this Agreement by Buyer
and the consummation of the transactions contemplated hereby will not: (i)
violate or conflict with any provision of the Certificate of Incorporation or
by-laws of Buyer; (ii) violate or conflict with, result in the breach or
termination of or otherwise give any other contracting party the right to
terminate, or constitute a default (or an event which, with the lapse of
time, or the giving of notice, or both, will constitute a default) under, any
contract or other instrument to which Buyer is a party; or (iii) violate or
conflict with any judgment, order, writ, injunction or decree of any court or
governmental body of any jurisdiction applicable to Buyer (excluding any
judgments, orders, injunctions, decrees or awards in any actions or
proceedings involving Seller or its affiliates) or, to the knowledge of
Buyer, any law or regulation materially adversely affecting Buyer's ability
to consummate the transaction contemplated by this Agreement.
(b) Except as provided in Schedule 5.3(b), there are no notices,
licenses, consents, permissions or approvals of any nature whatsoever which
are required to be obtained by Buyer from any Federal, state or local
governmental or regulatory body or other third party or, to Buyer's
knowledge, from any foreign governmental or regulatory body for the
consummation of the transactions contemplated by this Agreement, or as a
condition to the sale, assignment and transfer of the Trademark Assets to be
effected hereunder.
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ARTICLE VI
COVENANTS
6.1 Further Assurances.
(a) From time to time until the expiration of * from the Closing
Date, upon the request and at the expense of Buyer but without further
consideration, Seller shall:
(i) do, execute, acknowledge, deliver and file, or shall cause
to be done, executed, acknowledged, delivered and filed, all such further
acts, deeds, transfers, conveyances, assignments or assurances (including,
without limitation, for purposes of transferring record ownership of the
Trademark Assets to Buyer) as may be reasonably requested by Buyer for
transferring, conveying, assigning and reducing to Buyer's possession,
ownership and use of the Trademark Assets, including, without limitation,
executing on the Closing Date any assignments of Trademarks in recordable
form requested by Buyer; and
(ii) deliver to Buyer such other records, documentation and
information in Seller's possession or control as may be reasonably requested
by Buyer to assist Buyer in the use and protection of the Trademark Assets.
(b) Seller shall keep and preserve any and all invoices, letters of
credit, bills of lading, and purchase orders which relate to the Trademark
Assets for * from and after the Closing Date, except as otherwise provided
herein. Seller may dispose or destroy any such records, documentation and
information at any time, provided that Seller first shall notify Buyer so
that Buyer may, at its expense and within a reasonable time after receipt of
such notice, obtain from Seller any or all of said records, documentation and
information. Seller
* Text omitted pursuant to a request for confidential treatment and filed
separately with the Securities and Exchange Commission.
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shall not be responsible for (i) destruction of records caused by an Act of
God or other "Force Majeure" event, or (ii) any immaterial non-intentional
destruction of records.
6.2 Mail and Communications. From and after the Closing Date, Seller
shall promptly remit or refer to Buyer any mail or other communications,
including, without limitation, any written inquiries, relating solely to the
Trademark Assets, and copies of any such mail or communications which relate
to the Trademark Assets and other matters, which are received by Seller from
and after the Closing for a period of * from the date hereof.
ARTICLE VII
CONDITIONS PRECEDENT TO OBLIGATIONS OF BUYER AND SELLER
7.1 Conditions Precedent to Obligations of Buyer. The obligation of
Buyer to consummate the transactions contemplated under this Agreement is
subject to the fulfillment, as of the Closing Date, of each of the following
conditions (any or all of which may be waived by Buyer):
(a) the representations and warranties of Seller set forth in
Article IV hereof shall be true and correct in all material respects as of
the Closing Date;
(b) Seller shall have performed and complied in all material
respects with all covenants, obligations and undertakings required by this
Agreement to be performed or complied with on or prior to the Closing Date:
(c) Buyer shall have been furnished with a certificate, dated the
Closing Date and executed by an officer of Seller, certifying to the
fulfillment of the conditions specified in Sections 7.1(a) and (b);
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* Text omitted pursuant to a request for confidential treatment and filed
separately with the Securities and Exchange Commission.
<PAGE>
*
(h) the closing under the Worldwide Rights Acquisition Agreement
shall have been completed;
(i) Seller and all other parties thereto shall have executed and
delivered the Foreign Manufacturing Rights Agreement;
* Text omitted pursuant to a request for confidential treatment and filed
separately with the Securities and Exchange Commission.
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(j) Seller shall have delivered to Buyer possession of (i) an
original of each of Seller's Trademark registrations currently in effect;
(ii) an original of any other registrations for the Trademarks to the extent
in Seller's possession, custody or control; and (iii) Seller's original
trademark application and registration files relating to the Trademarks
including, for example, letters or other materials from each of Seller's
domestic and foreign trademark counsel showing deadlines for trademark office
actions to the extent in Seller's possession, custody or control; provided,
however, if any of such items apply to both the Trademark Assets and the
trademark properties retained by Seller with respect to its BOSS business in
the United States of America, then such information may be provided to Buyer
by photocopy rather than original;
(k) Seller and all other parties thereto shall have executed and
delivered the Concurrent Use Agreement;
(l) Brookhurst and William Ott shall have consented to the
assignment and assumption by Buyer of all rights and obligations of Seller
under the Note and of all rights and obligations of Seller under the
Worldwide Rights Acquisition Agreement (except all "intent-to-use" trademark
applications) and Escrow Agreement relating to the Trademark Assets;
(m) Buyer and Seller shall have entered into a license agreement,
consistent with the terms of Exhibit C, providing for an exclusive
royalty-free license to Buyer of the right to use the Trademarks which are
the subject of intent-to-use applications in the U.S. Patent & Trademark
Office ("PTO") which were acquired by Seller from Brookhurst, on the products
referred to in said applications, together with the right to have such
trademarks transferred to Buyer upon such marks becoming registered with the
PTO, and on such other terms as shall be mutually agreed by the parties (the
"BOSS GOLF et al. License Agreement"); and
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(n) * and Isaacs shall have executed and delivered the
Indemnification Agreement in the form annexed hereto as Exhibit L.
7.2 Conditions Precedent to Obligations of Seller. The obligations of
Seller to consummate the transactions contemplated under this Agreement are
subject to the fulfillment, as of the Closing Date, of each of the following
conditions (any or all of which may be waived by Seller):
(a) the representations and warranties of Buyer set forth in
Article V shall be true and correct in all material respects as of the
Closing Date;
(b) Buyer shall have performed and complied in all material
respects with all obligations and undertakings required by this Agreement to
be performed or complied with by Buyer on or prior to the Closing Date;
(c) Seller shall have been furnished with a certificate, dated the
Closing Date and executed by an officer of Buyer certifying to the
fulfillment of the conditions specified in Sections 7.2(a) and (b);
*
(g) no judgment, order or decree shall have been rendered which has
the effect of enjoining the consummation of the transactions contemplated by
this Agreement;
(h) the closing under the Worldwide Rights Acquisition Agreement
shall have been completed;
* Text omitted pursuant to a request for confidential treatment and filed
separately with the Securities and Exchange Commission.
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(i) Buyer and all other parties thereto shall have executed and
delivered the Foreign Manufacturing Rights Agreement;
(j) * and all other parties thereto shall have executed and
delivered the Concurrent Use Agreement; and
(k) Brookhurst and William Ott shall have consented to the
assignment and assumption by Buyer of all rights and obligations of Seller
under the Note and of all rights and obligations of Seller under the
Worldwide Rights Acquisition Agreement (except all "intent-to-use" trademark
applications) and Escrow Agreement relating to the Trademark Assets and
Brookhurst and William Ott shall have fully and unconditionally released
Seller from such obligations in the form attached hereto as Exhibit K;
(l) the BOSS GOLF et al License Agreement shall have been entered
by all Parties thereto; and
(m) * and Isaacs shall have executed and delivered the
Indemnification Agreement in the form annexed hereto as Exhibit L.
ARTICLE VIII
SURVIVAL OF REPRESENTATIONS AND WARRANTIES
INDEMNIFICATION
8.1 All representations and warranties contained in or made pursuant to
this Agreement *
* Text omitted pursuant to a request for confidential treatment and filed
separately with the Securities and Exchange Commission.
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*
*
* Text omitted pursuant to a request for confidential treatment and filed
separately with the Securities and Exchange Commission.
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8.3 *
8.4 Notification of Claims. In the event of the occurrence of any event
which any party asserts constitutes a Buyer Indemnity Claim or Seller
Indemnity Claim, as applicable, the
* Text omitted pursuant to a request for confidential treatment and filed
separately with the Securities and Exchange Commission.
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indemnified party shall provide the indemnifying party with prompt notice of
such event, including, without limitation, any facts and circumstances which
give rise to such claim, and shall otherwise make available to the
indemnifying party all relevant information which is material to the claim
and which is in the possession of the indemnified party. If such event
involves the claim of any third party (a "Third-Party Claim"), the
indemnifying party shall have the right to elect to join in the defense,
settlement, adjustment or compromise of any such Third-Party Claim, and to
employ counsel to assist such indemnifying party in connection with the
handling of such claim, at the sole expense of the indemnifying party, and no
such claim shall be settled, adjusted or compromised, or the defense thereof
terminated, without the prior consent of the indemnifying party unless and
until the indemnifying party shall have failed, after the lapse of a
reasonable period of time, but in no event more than 30 days after written
notice to it of the Third-Party Claim, to join in the defense, settlement,
adjustment or compromise of the same. An indemnified party's failure within a
reasonable time to give notice or to furnish the indemnifying party with any
relevant data and documents in its possession in connection with any
Third-Party Claim shall not constitute a defense (in part or in whole) to any
claim for indemnification by such party, except and only to the extent that
such failure shall result in any material prejudice to the indemnifying
party. If so desired by any indemnifying party, such party may elect, at
such party's sole expense, to assume control of the defense, settlement,
adjustment or compromise of any Third-Party Claim, insofar as the claim
relates to the liability of the indemnifying party, provided that such
indemnifying party shall obtain the consent of all indemnified parties before
entering into any settlement, adjustment and compromise of such claim, or
ceasing to defend against such claim, if as a result thereof, or pursuant
thereto, there
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would be imposed on an indemnified party any liability or obligation not
covered by the indemnification obligations of the indemnifying party under
this Agreement (including, without limitation, any injunctive relief or other
remedy).
8.5 *
ARTICLE IX
GENERAL
9.1 Waiver. Any failure of Buyer, on the one hand, or the Seller, on
the other, to comply with any of the obligations or agreements set forth in
this Agreement or to fulfill any condition set forth in this Agreement may be
waived only by written instrument signed by the other party. No failure by
any party to exercise, and no delay in exercising, any right hereunder shall
operate as a waiver of such right, nor shall any single or partial exercise
of any right hereunder by any party preclude any other or future exercise of
that right or any other right hereunder by that party.
9.2 Notices. All notices, requests or other communications required or
permitted hereunder (excluding, however, mail and/or communications covered
under paragraph 6.2 hereof) shall be given or made in writing and shall be
(i) delivered personally (including
* Text omitted pursuant to a request for confidential treatment and filed
separately with the Securities and Exchange Commission.
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commercial carrier), (ii) sent by registered or certified airmail, return
receipt requested, postage prepaid or (iii) sent by telecopier, addressed to
the party to whom they are directed at the following addresses, or at such
other address as may from time to time be designated by such party to the
others in accordance with this Section 9.2:
If to Seller, to:
I. C. Isaacs & Company L.P.
3840 Bank Street
Baltimore, Maryland 21224
Attention: President and Co-Chief Executive Officer
Telecopier: 410/558-2096
I. C. Isaacs & Company L.P.
350 Fifth Avenue
Suite 1029
New York, New York 10118
Attention: Chairman and Co-Chief Executive Officer
Telecopier: 212/695-7579
With a copy to:
Piper & Marbury L.L.P.
Charles Center South
36 South Charles Street
Baltimore, Maryland 21201-3010
Attention: Robert J. Mathias, Esq.
Telecopier: 410/576-1604
If to Buyer, to:
*
* Text omitted pursuant to a request for confidential treatment and filed
separately with the Securities and Exchange Commission.
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With a copy to:
Coudert Brothers
1627 I Street, N.W.
Washington, D.C. 20006
Attention: Wendy L. Addiss, Esq.
Telecopier: 202/775-1168
and
Howrey & Simon
1299 Pennsylvania Avenue, N.W.
Washington, D.C. 20004
Attention: Robert M. Bruskin, Esq.
Telecopier: 202/383-6610
If to *, to:
*
With a copy to:
Coudert Brothers
(as specified above)
and
Howrey & Simon
(as specified above)
Any notice, request or other communications shall be deemed to have been
given and to be effective upon receipt or refusal by the addressee. Any
party may change its address for notices hereunder, effective upon giving of
notice of such change hereunder to the other parties.
9.3 No Third Party Beneficiaries. Neither this Agreement nor any
provision hereof, nor any document or instrument executed or delivered
pursuant hereto, shall be deemed to create
* Text omitted pursuant to a request for confidential treatment and filed
separately with the Securities and Exchange Commission.
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any right in favor of or impose any obligation upon any person or entity
other than Buyer and Seller and their respective successors and assigns.
9.4 *
* Text omitted pursuant to a request for confidential treatment and filed
separately with the Securities and Exchange Commission.
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9.5 Captions and Paragraph Headings. Captions and paragraph headings
used in this Agreement are for convenience only and are not a part of this
Agreement and shall not be used in interpreting or construing it.
9.6 Entire Agreement. The making, execution and delivery of this
Agreement by the parties has been induced by no representations, statements,
warranties or agreements other than those herein expressed. This Agreement
embodies the entire understanding of the parties with respect to the subject
matter hereof. Notwithstanding the foregoing, the parties acknowledge that a
number of different agreements and instruments of which the parties are
signatory are all being executed simultaneously, as of the Closing Date, with
this Agreement. The parties acknowledge that this Agreement or instrument is
to be interpreted and enforced separately and independently of any other such
agreement or instrument, and the breach of any such agreement by a party
shall not affect the rights of such party under this Agreement. This
Agreement may be amended or modified only by an instrument of equal formality
signed by the parties or their duly authorized representatives. The parties
have made no representations or warranties not expressly set forth in this
Agreement. This Agreement supersedes and terminates all prior discussions,
negotiations, understandings, arrangements and agreements among the parties
relating to the subject matter hereof, except as expressly set forth herein.
9.7 Counterparts. This Agreement may be executed in any number of
duplicate counterparts, each of which shall be deemed an original and all of
which together shall constitute one and the same instrument.
9.8 Assignability. No party hereto may assign any of its interests,
rights or obligations under this Agreement without the prior written consent
of the other parties. Notwithstanding
-26-
<PAGE>
the foregoing, Buyer may assign its rights, but not its obligations, under
this Agreement to any entity under common control with Buyer or to any
successor in interest to Trademark Assets without the consent of Seller. Any
impermissible attempted assignment of this Agreement without such prior
written consent shall be void as to the other parties to this Agreement.
Notwithstanding anything to the contrary set forth in this Agreement, Seller
shall be permitted to assign and transfer Seller's rights under this
Agreement to any parent, subsidiary or other affiliate of Seller if Seller or
its successor in interest remains fully liable for the performance of this
Agreement by such assignee or transferee and indemnifies Buyer with respect
to any costs and damages Buyer may incur because of such assignment or
transfer.
9.9 Expenses. The parties shall each bear their own expenses in
connection with the negotiation, execution and delivery of this Agreement and
the performance of their respective obligations hereunder.
9.10 Successors and Assigns. This Agreement and the provisions thereof
shall be binding upon and inure to the benefit of the respective successors
and permitted assigns of the parties hereto.
9.11 Governing Law. The validity, construction, operation and effect of
any and all of the terms and provisions of this Agreement shall be determined
and enforced in accordance with the laws of *
* Text omitted pursuant to a request for confidential treatment and filed
separately with the Securities and Exchange Commission.
-27-
<PAGE>
*
9.12 *
* Text omitted pursuant to a request for confidential treatment and filed
separately with the Securities and Exchange Commission.
-28-
<PAGE>
*
9.13 *
* Text omitted pursuant to a request for confidential treatment and filed
separately with the Securities and Exchange Commission.
-29-
<PAGE>
IN WITNESS WHEREOF, the parties have duly signed this Agreement the day
and year first written above.
I. C. ISAACS & COMPANY L.P., a Delaware
limited partnership
By: /s/ Robert J. Arnot
----------------------------------
Name: Robert J. Arnot
Title: Chairman and Co-Chief Executive
Officer
By: /s/ Gerald W. Lear
-----------------------------------
Name: Gerald W. Lear
Title: President and Co-Chief Executive
Officer
*
By: /s/ *
------------------------------------
Name:
Title:
* hereby irrevocably and unconditionally guarantees to Seller the full
and timely performance of Buyer's obligations to Seller under this Agreement.
* covenants and agrees to indemnify and save harmless Seller from and
against any damage, liability and expense resulting from Buyer's breach of
this Agreement.
*
By: /s/ *
---------------------------------------
Name:
Title:
* Text omitted pursuant to a request for confidential treatment and filed
separately with the Securities and Exchange Commission.
-30-
<PAGE>
FOREIGN BOSS RIGHTS ACQUISITION AGREEMENT
EXHIBITS
Exhibit A Trademark Assignments
Exhibit B Assumption Agreement
Exhibit C Concurrent Use Agreement
Exhibit D Foreign Manufacturing Rights Agreement
Exhibit E Option Agreement
Exhibit F The ICI Note
Exhibit G Note Assumption Agreement
Exhibit H * Guaranty
Exhibit I Consent Agreement
Exhibit J Certain Provisions in Settlement Agreement
Exhibit K Form of Release
Exhibit L *
* Text omitted pursuant to a request for confidential treatment and filed
separately with the Securities and Exchange Commission.
-31-
<PAGE>
FOREIGN
SCHEDULE 1.1(b)
ASSUMED AGREEMENTS
For all of the following agreements to the extent they apply outside the U.S.:
*
* Text omitted pursuant to a request for confidential treatment and filed
separately with the Securities and Exchange Commission.
<PAGE>
FOREIGN
SCHEDULE 4.3(b)
THIRD PARTY CONSENTS AND WAIVERS
Hart-Scott-Rodino approval.
Approval from secured lender, Congress Financial Corporation.
<PAGE>
FOREIGN
SCHEDULE 4.4(a)
LITIGATION
*
* Text omitted pursuant to a request for confidential treatment and filed
separately with the Securities and Exchange Commission.
<PAGE>
FOREIGN
SCHEDULE 4.4(a)
*
* Text omitted pursuant to a request for confidential treatment and filed
separately with the Securities and Exchange Commission.
<PAGE>
*
* Text omitted pursuant to a request for confidential treatment and filed
separately with the Securities and Exchange Commission.
<PAGE>
*
* Text omitted pursuant to a request for confidential treatment and filed
separately with the Securities and Exchange Commission.
<PAGE>
*
* Text omitted pursuant to a request for confidential treatment and filed
separately with the Securities and Exchange Commission.
<PAGE>
FOREIGN
SCHEDULE 4.4(b)
JUDGMENTS AND ORDERS
*
* Text omitted pursuant to a request for confidential treatment and filed
separately with the Securities and Exchange Commission.
<PAGE>
FOREIGN
SCHEDULE 4.5.A
CURRENT BOSS LICENSES
*
* Text omitted pursuant to a request for confidential treatment and filed
separately with the Securities and Exchange Commission.
<PAGE>
FOREIGN
SCHEDULE 4.5.B
AGREEMENTS RE USE OF TRADEMARK
*
* Text omitted pursuant to a request for confidential treatment and filed
separately with the Securities and Exchange Commission.
<PAGE>
FOREIGN
SCHEDULE 4.5.B
*
* Text omitted pursuant to a request for confidential treatment and filed
separately with the Securities and Exchange Commission.
2
<PAGE>
SCHEDULE 4.6
ALIENATION OF RIGHTS
NONE
FOREIGN
SCHEDULE 5.3(B)
THIRD PARTY CONSENTS
NONE
<PAGE>
EXHIBIT A/FRA
TRADEMARK ASSIGNMENT
This Assignment is effective as of the ____ day of __________________,
1997, by and between I.C. Isaacs, L.P., a Delaware Limited Partnership with
its principal place of business at 3840 Bank Street Baltimore, Maryland 21224
("Assignor") and *, a Delaware corporation with its principal place of
business at 1209 Orange Street, Wilmington, Delaware 19801 and ("Assignee").
W I T N E S S E T H:
WHEREAS, Assignor is the owner of certain trademarks outside of the United
States of America except Mexico constituting or containing the word BOSS and the
Stylized B, including common law rights and rights in trademark registrations
and applications for registration outside the United States of America except
Mexico listed on the "Schedule of Trademarks" attached hereto, together with the
good will of the business outside the United States of America except Mexico
associated therewith (the "Trademarks");
WHEREAS Assignee desires to acquire all right, title and interest of
Assignor in and to the Trademarks;
NOW, THEREFORE, to All Whom It May Concern, be it known that for good and
valuable consideration, the receipt and adequacy of which are hereby
acknowledged, Assignor does hereby sell, assign, transfer and set over, to
Assignee, its successors and assigns forever, its entire right, title and
interest in and to the Trademarks, the same to be held and enjoyed by Assignee
for its own use and enjoyment, and for the use and enjoyment of its successors,
assigns or other legal representatives forever, as fully and entirely as the
same would have been held and enjoyed by Assignor had the assignment and sale
set forth herein not been made.
* Text omitted pursuant to a request for confidential treatment and filed
separately with the Securities and Exchange Commission.
<PAGE>
IN TESTIMONY WHEREOF, Assignor has caused these presents to be signed by
its officer thereunto duly authorized, and its corporate seal to be hereto
affixed.
I.C. ISAACS, L.P.
By:__________________________
Name:
Title:
COUNTY OF NEW YORK :
:ss:
STATE OF NEW YORK :
On this ____ day of _____________, 1997, before me personally appeared
________________, to me personally known, who, being duty sworn, did say that he
is _________________ of ____________________, a Delaware Limited Partnership,
and that the foregoing instrument was signed and sealed on behalf of the
corporation by authority of its _____________________________, and that he
acknowledges such instrument to be the free deed and act of said corporation for
the purposes therein set forth and intending that this instrument be recorded.
______________________
Notary Public
-2-
<PAGE>
SCHEDULE OF TRADEMARKS
I.C. Isaacs & Co., L.P.'s BOSS
Non-U.S. Trademark Applications/Registrations*
*
* Prior to Closing, the Acquisition Agreement shall not be deemed to be
breached by inclusion of incorrect information relating to the
Classification and Status in this Schedule. Said information shall be
reviewed, corrected if necessary, updated and confirmed by Seller prior to
Closing.
** For ease of reference the description of goods in this chart is
generalized.
* Text omitted pursuant to a request for confidential treatment and filed
separately with the Securities and Exchange Commission.
<PAGE>
EXHIBIT B/FRA
ASSIGNMENT AND ASSUMPTION AGREEMENT
THIS ASSIGNMENT AND ASSUMPTION AGREEMENT is made and entered into this
____ day of September, 1997, by and between I.C. Isaacs & Company L.P., a
Delaware limited partnership ("Isaacs") and *, a Delaware corporation *.
W I T N E S S E T H:
WHEREAS, Isaacs has agreed to sell, transfer and assign to *, and *
has agreed to purchase and accept from Isaacs certain assets of Isaacs
pursuant to a Foreign Boss Rights Acquisition Agreement entered into on
September __,1997 between Isaacs and * (the "Acquisition Agreement");
WHEREAS. * has agreed to assume certain obligations of Isaacs related
to said acquired assets;
NOW, THEREFORE, in consideration of the mutual covenants contained herein,
and other good and valuable consideration, the receipt and sufficiency of which
is hereby acknowledged, it is agreed as follows:
1. Capitalized terms used herein and not defined herein shall have the
meanings given such terms in the Acquisition Agreement.
2. Isaacs hereby assigns to * all its rights under the agreements
identified on the schedule attached hereto constituting the Assumed
Agreements insofar as they relate to the Trademarks acquired by * from Isaacs
pursuant to the Acquisition Agreement, and all files relating thereto, free
and clear of all Encumbrances.
3. * hereby assumes all obligations of Isaacs arising from and after
the date hereof under the Assumed Agreements solely insofar as they relate to
the use of the Trademark Assets after Closing.
* Text omitted pursuant to a request for confidential treatment and filed
separately with the Securities and Exchange Commission.
<PAGE>
IN WITNESS WHEREOF, the parties have hereunto set their hands and seals
the day, month and year first above written.
I.C. ISAACS & COMPANY L.P., a Delaware
limited partnership
By ____________________________
Name: Robert J. Arnot
Title: Chairman and Co-Chief Executive
Officer
By: ____________________________
Name: Gerald W. Lear
Title: President and Co-Chief Executive
Officer
*
By: __________________________
Name: __________________
Title: ___________________
* Text omitted pursuant to a request for confidential treatment and filed
separately with the Securities and Exchange Commission.
-2-
<PAGE>
SCHEDULE
See Schedule 1.1(b)
<PAGE>
Exhibit C to 10.11
CONCURRENT USE AGREEMENT
THIS CONCURRENT USE AGREEMENT ("Agreement") is effective as of the ___
day of ______________, 1997 ("Effective Date"), by and between *, a
corporation of *, and I. C. Isaacs & Company L.P. ("ISAACS"), a Delaware
Limited Partnership.
R E C I T A L S
A. * is the owner of various trademarks including the word "BOSS"
throughout the world and in the United States (* Marks"). * and its
predecessors in interest have used for many years the mark BOSS and * Marks
and have developed certain intellectual property rights in connection
therewith.
B. ISAACS, as the successor in interest of Brookhurst, Inc., is the
owner of certain United States trademark rights in and registrations of the
word BOSS. ISAACS and its predecessors in interest have used for many years
the mark BOSS on certain products in the United States and have developed
certain intellectual property rights in connection therewith.
C. The parties intend that consistent with the terms of this Agreement,
ISAACS will be able to market Isaacs' Trademark Products (as defined below)
contemplated by this Agreement without causing confusion in the marketplace
with the * and related brands marketed by * ("* Trademark Products"), and
that * will be able to continue to market * Trademark Products without
causing confusion in the marketplace with the BOSS and related brands
marketed by ISAACS.
NOW, THEREFORE, in consideration of the mutual agreements set forth in
this Agreement, the parties agree as follows:
1. DEFINITIONS
For purposes of this Agreement, the following terms shall have the
meanings set forth below:
a. "Isaacs' Mark" or "Isaacs' Marks" shall mean the trademarks BOSS in
the Microgramma Typestyle and the stylized B (as set forth on Exhibit A
attached hereto) whether used alone or in combination with other words or
symbols, with the appearance and/or style of the said trademark in compliance
with the provisions of Exhibit A.
b. "Isaacs' Trademark Product" or "Isaacs' Trademark Products" shall
mean solely the products listed in Exhibit B, Section I, as modified by
Section II, bearing Isaacs' Marks in compliance with Exhibit A and sold
pursuant to the schedule in Exhibit C.
* Text omitted pursuant to a request for confidential treatment and filed
separately with the Securities and Exchange Commission.
<PAGE>
c. "United States" mean the United States of America, its territories,
possessions and commonwealths, except Saipan and American Samoa. "United
States" includes, without limitations, Puerto Rico.
2. CONCURRENT USE AGREEMENT
a. Unless otherwise agreed to by the parties in writing, ISAACS
agrees to use Isaacs' Trademark Products solely in accordance with Exhibits
A, B and C. The parties recognize, however, that the marketplace is an
ever changing environment and that it is not possible to predict the future
trends. Accordingly, to ensure that there is no substantial likelihood of
confusion between the marks of the parties, the parties agree that * shall,
solely at its discretion, have the right commencing on January 1, 2008 to
evaluate whether the type style and appearance of Isaacs' Marks remains
unlikely to cause confusion with the * Marks and may, in its sole discretion,
cause Isaacs to alter, change, amend or revise the typestyle and appearance
of Isaacs' Marks.
b. Unless otherwise agreed to by the parties in writing, ISAACS agrees
that it shall not use the Isaacs' Marks in connection with the advertisement,
promotion, distribution or sale of any products other than Isaacs' Trademark
Products.
c. Unless otherwise agreed to by the parties in writing, ISAACS agrees
that it will not distribute or sell any Isaacs' Trademark Products bearing
the Isaacs' Marks to athletic stores whose primary product line is composed
of products intended to be used in connection with golf, tennis, skiing,
sailing, windsurfing, motor sports or any combination thereof or at golf,
tennis, skiing, sailing, windsurfing, or motor sports athletic events,
without the prior written consent of *. The foregoing shall not prevent
ISAACS from selling Isaacs' Trademark Products to general sporting goods
stores selling multiple lines of products for a variety of sports (e.g., *).
d. With respect to the limitations on the use of the Isaacs' Marks on
Isaacs' Trademark Products described in Exhibit A, ISAACS shall begin to
phase some of the limitations into its product line beginning with products
produced by or for ISAACS after January 1, 1998. Thereafter, * percent * of
the products bearing Isaacs' Marks produced by or for ISAACS during the
period August 1, 1998 through December 31, 1998 (as measured by the number of
styles) must comply therewith. ISAACS agrees to use its reasonable efforts
to ensure that * percent * of its projected volume of such goods comply with
the limitations described in Exhibit A. ISAACS shall be in full compliance
with Exhibit A for all products bearing a BOSS mark produced on or after
December 31, 1998 and for that season and thereafter may not manufacture or
produce any products bearing a BOSS mark which are not in full compliance
with Exhibit A.
e. On those products listed on Exhibit C, * agrees to use the word
BOSS, whether used alone or in combination with other words, phrases or
designs on such
* Text omitted pursuant to a request for confidential treatment and filed
separately with the Securities and Exchange Commission.
2
<PAGE>
products solely in accordance with the price points contained in Exhibit C;
provided, however, that such Exhibit C shall not apply to such products used
or distributed by * or its licensees for promotional purposes.
f. * agrees that without ISAACS' written consent, which consent may be
withheld in ISAACS' sole discretion, * shall not license any nonaffiliated
third party to use * Marks alone in connection with the sale of the
sportswear products listed in Exhibit C at or below ISAACS' maximum wholesale
prices listed therein.
g. Nothing herein is intended to or shall prevent or otherwise restrict
* from designing, manufacturing, advertising, promoting, distributing
or selling or licensing others to design, manufacture, distribute, advertise,
promote or sell in the United States any product, whether or not bearing a
mark including the word BOSS, listed in and consistent with Exhibit C, or any
other product not listed in Exhibit C, provided that such products do not use
the Microgramma typestyle shown in Exhibit A.
h. Neither * nor ISAACS shall use on or in connection with apparel
bearing the word "BOSS" sold in the United States, any apparel style, design,
pattern, art work or color which are or have been primarily associated with
products distributed by the other (or any licensee of the other) except those
which are traditional or standard in the industry.
i. Notwithstanding any other provision of this Agreement, Isaacs may,
during 1998, use the Isaacs' Marks on the following goods so long as such
goods are not intended to be sold to the public and are intended to be used
solely in connection with and for the promotion of Isaacs' Trademark
Products: compact discs, videos, stickers, stick-on-tattoos, photographs and
posters, whistles, notebooks, lanyards, non-leather I.D. tags, basketballs,
cassette tapes, sweatbands and visors; provided further that ISAACS shall not
contest in any way the manufacturing, distributing or selling by * or its
licensees of any of the above items with * Marks. Each year thereafter
ISAACS shall submit for approval a list of goods it intends to use (subject
to the terms and conditions of this Section 2.i.) for promotional purposes.
* shall consider the request in good faith and advise ISAACS within ten (10)
business days of receipt of such list which of the goods *, in the exercise
of its sole discretion, approves; provided however, that notwithstanding the
provision of Section 12.d., ISAACS may seek arbitration solely as to whether *
has acted in good faith in considering ISAACS' request. Absent such approval,
ISAACS shall not use Isaacs' Marks on such goods.
j. Each party acknowledges the other party's legal and beneficial
ownership interests in and to its respective trademarks referred to herein
and undertakes that it will not take any action which may in any way impair
the other party's rights in its marks, including, without limitation, by
challenging or opposing, or raising or allowing to be raised, on any grounds
whatsoever, any questions concerning or obligations to the validity of the
other party's trademarks.
3
* Text omitted pursuant to a request for confidential treatment and filed
separately with the Securities and Exchange Commission.
<PAGE>
3. GEOGRAPHIC SCOPE OF AGREEMENT
a. ISAACS acknowledges that * owns extensive trademark rights relating
to the word BOSS both within and outside of the United States. ISAACS does
not and shall not own, or purport to own, any trademark rights relating to
the word BOSS outside of the United States.
b. ISAACS agrees that it will not sell or offer for sale or resale
Isaacs Trademark Products anywhere in the world other than in the United
States. ISAACS shall not sell or cause to be sold, directly or indirectly,
any Isaacs' Trademark Products to any party which ISAACS knows, or has reason
to know, has resold or distributed, is reselling or distributing, or is
likely to resell or distribute such Isaacs' Trademark Products (i) outside of
the United States; or (ii) as duty free merchandise. Within thirty (30) days
after the Effective Date of this Agreement and thereafter from time to time
as is reasonable, ISAACS shall advise each of its customers (other than
consumers or other end users) in writing of the restrictions on such sales.
c. The parties agree that ISAACS may sell Isaacs' Trademark Products to
the United States military solely for resale on United States military
installations in the United States. In making such sales, ISAACS shall seek
to obtain agreement from ISAACS' United States military customers that
Isaacs' Trademark Products will not be sold in United States military
installations outside the United States ("Military Agreement").
(i) If ISAACS is unable to obtain a Military Agreement with any
military customer, or if the obtaining of any such Military Agreement
substantially adversely affects ISAACS' ability to make military sales in
the United States, then ISAACS shall promptly notify *. Any such notice
by ISAACS shall include a written explanation and documentation of all
efforts by ISAACS to obtain such agreement and shall include (1) data
disclosing ISAACS' sales of Isaacs' Trademark Products to the military
customer(s) at issue during the immediate prior 12-month period, (2)
projected sales of Isaacs' Trademark Products over the next 12-month
period, (3) the basis for ISAACS' belief that obtaining such an agreement
will substantially adversely affect ISAACS' military sales, and (4) all
information known or reasonably available to ISAACS about sales of
Isaacs' Trademark Products by the military customer(s) at U.S. military
installations outside the United States.
(ii) Upon receipt of such notice and at * request, the parties shall
meet and confer within five (5) business days, to agree upon any further
steps to be taken by ISAACS to obtain the Military Agreement. Thereafter,
absent an agreement between the parties on this issue, or in the event
such steps as may be agreed upon do not result in a Military Agreement
and ISAACS does not agree to discontinue sales of Isaacs' Trademark
Products to any such military customer, *
* Text omitted pursuant to a request for confidential treatment and filed
separately with the Securities and Exchange Commission.
4
<PAGE>
*
4. ADVERTISING AND PROMOTION
*
* Text omitted pursuant to a request for confidential treatment and filed
separately with the Securities and Exchange Commission.
5
<PAGE>
*
5 PREVENTION OF CONFUSION
a. The parties agree that adherence by both parties to the terms of
this Agreement will avoid confusion between their respective products.
b. The parties agree that nothing in this Agreement shall require
either party to do business with any third party wholesaler or retailer. The
parties further agree that each
* Text omitted pursuant to a request for confidential treatment and filed
separately with the Securities and Exchange Commission.
6
<PAGE>
party shall have the right at its sole discretion to take all steps necessary
to prevent its products from being offered for sale to the public in
proximity to the products of the other party or one of its licensees.
c. Except as otherwise provided herein, the parties agree that each
shall have no right to require the other to make any change in the rights or
obligations set forth in this Agreement. The parties further agree that they
will institute no legal action against each other based solely upon conduct
which is expressly permitted by and in accordance with this Agreement.
6. USE AND DISPLAY OF THE MARKS
ISAACS agrees to use, in connection with the Isaacs' Trademark Products
only, labels, tags, signs, banners, stationery, order forms, business cards
and other forms of identification for such products which are consistent with
the terms of Exhibit A and Exhibit D. ISAACS agrees that it shall not use
the name BOSS in any corporate, partnership or other trade name or as a form
of entity identification. ISAACS shall not use the word BOSS or authorize
any third party to use the word BOSS in connection with the name of any store
or retail establishment; provided that nothing in this Section 6 shall be
construed as prohibiting use of the Isaacs' Marks in shop-within-a-shop
situations. ISAACS may continue its factory outlet operations in proximity
to its distribution facilities which are currently located in Milford,
Delaware; provided, however, that the word BOSS shall not be used in or as
part of the name of the store. ISAACS agrees to provide * with written notice
of any change in the location of such factory outlet. To the extent ISAACS
uses and/or provides design layouts and/or fixtures for use in stores or
retail establishments, it shall not use design layouts and/or fixtures which
are or have been primarily associated with products distributed by * or its
licensees, except those which are traditional or standard in the industry.
7. NONTRANSFERABILITY OF RIGHTS
a. ISAACS shall not grant, assign or otherwise convey or transfer any
rights inuring to ISAACS or any obligations or duties owed by ISAACS to *
under this Agreement, without the prior written consent of * and any
attempted transfer or assignment shall be null and void. * shall consider in
good faith any request for such consent and promptly notify ISAACS of *
decision, said decision to be in * sole discretion. Nothing in this Section
7 is intended to prevent ISAACS from offering and selling stock to the
public.
b. Notwithstanding anything to the contrary set forth in this
Agreement, ISAACS shall be permitted to assign and transfer ISAACS' rights
under this Agreement to any parent, subsidiary or other affiliate of ISAACS
if ISAACS or its successor in interest remains fully liable for the
performance of this Agreement by such Assignee or Transferee and indemnifies
7
* Text omitted pursuant to a request for confidential treatment and filed
separately with the Securities and Exchange Commission.
<PAGE>
* with respect to any costs and damages * may incur because of such
assignment or transfer.
c. * shall provide ISAACS with written notice if *
intends to assign or transfer to any third party any of its rights or
obligations under this Agreement.
8. NO AFFILIATION
The parties hereby agree that ISAACS is and shall be wholly independent
of *, and vice-versa, and that no agency, license, joint venture,
partnership, franchise or affiliation is created by this Agreement. Neither
party shall incur any obligation in the name of the other party.
9.*
10. LEGAL ACTIONS
a. Unless otherwise agreed to by the parties, the parties shall be
responsible for the protection and enforcement of their respective marks (*
for * Marks and ISAACS for Isaacs' Marks) in the United States.
b. The parties agree to reasonably cooperate with and assist each
other in protecting and defending the parties' trademark rights (* Marks and
Isaacs' Marks). Each party shall promptly notify the other in writing of any
infringements, counterfeiting, claims or actions by third parties that the
party reasonably believes may be a violation of the other party's trademark
rights.
* Text omitted pursuant to a request for confidential treatment and filed
separately with the Securities and Exchange Commission.
8
<PAGE>
c. The parties agree that they shall determine solely at their own
discretion and not subject to dispute by the other party or review in any
arbitration or litigation their respective conduct of such protection and
enforcement, and neither party shall have a claim for damages or other relief
against the other based thereon.
d. * and ISAACS shall each have the right to record, or continue the
recordation of, their respective trademarks (* Marks and Isaacs' Marks) with
the Customs Service of the United States and neither party shall interfere
with the efforts of the other, and each party shall cooperate with the other
in such efforts.
11. NOTICES
All notices, requests or other communications required or permitted
hereunder shall be given or made in writing and shall be (i) delivered
personally (including commercial carrier), (ii) sent by registered or
certified airmail, return receipt requested, postage prepaid or (iii) sent by
telecopier, addressed to the party to whom they are directed at the following
addresses, or at such other address as may from time to time be designated by
such party to the others in accordance with this Section 11:
If to *, to:
*
With a copy to:
Coudert Brothers
1627 I Street, N.W.
Washington, D.C. 20006
Attention: Wendy L. Addiss, Esq.
Telecopier: 202/775-1168
and
Howrey & Simon
1299 Pennsylvania Avenue, N.W.
Washington, D.C. 20004
Attention: Robert M. Bruskin, Esq.
Telecopier: 202/383-6610
* Text omitted pursuant to a request for confidential treatment and filed
separately with the Securities and Exchange Commission.
9
<PAGE>
If to ISAACS, to:
I. C. Isaacs & Company L.P.
3840 Bank Street
Baltimore, Maryland 21224
Attention: Gerald W. Lear, President and Co-Chief Executive Officer
Telecopier: 410/558-2096
I. C. Isaacs & Company L.P.
350 Fifth Avenue
Suite 1029
New York, New York 10118
Attn: Robert J. Arnot, Chairman and Co-Chief Executive Officer
Telecopier: 212/695-7579
With a copy to:
Piper & Marbury L.L.P.
Charles Center South
36 South Charles Street
Baltimore, Maryland 21201-3010
Attention: Robert J. Mathias, Esq.
Telecopier: 410/576-1604
Any notice, request or other communications shall be deemed to have been
given and to be effective upon receipt or refusal by the addressee. Any party
may change its address for notices hereunder, effective upon giving of notice of
such change hereunder to the other parties.
12. GOVERNING LAW AND RESOLUTION OF DISPUTES
a. The validity, construction and effect of any and all of the terms and
provisions of this Agreement shall be determined and enforced in accordance
with the laws of *
* Text omitted pursuant to a request for confidential treatment and filed
separately with the Securities and Exchange Commission.
10
<PAGE>
*
* Text omitted pursuant to a request for confidential treatment and filed
separately with the Securities and Exchange Commission.
11
<PAGE>
13. BINDING EFFECT
This Agreement shall be binding on the parties, their subsidiaries,
successors, affiliates, permitted licensees and assigns (if any), and they each
warrant that the undersigned are authorized to execute this Agreement on behalf
of their respective parties.
14. GENERAL PROVISIONS
a. No waiver or modification of any of the terms or provisions of this
Agreement shall be valid unless contained in a written document signed by
both parties. No course of conduct of dealing between the parties shall act
as a waiver of any provision of this Agreement.
b. This Agreement, including the entirety of Exhibits A through F2,
attached hereto, contains the entire understanding of the parties as to the
subject matter herein, and there are no representations, warranties, promises
or undertakings other than those contained herein. This Agreement supersedes
and cancels all previous agreements between the parties hereto. This
Agreement shall be construed against both parties equally, regardless of the
party that drafted it. *
* Text omitted pursuant to a request for confidential treatment and filed
separately with the Securities and Exchange Commission.
12
<PAGE>
d. If any provision of this Agreement should be held to be void or
unenforceable, such provision will be treated as severable, leaving valid
the remainder of this Agreement.
e. The parties agree to execute promptly any documents necessary to
effectuate the purpose and intent of this Agreement.
f. This Agreement may be executed in any number of duplicate
counterparts, each of which shall be deemed an original and all of which
together shall constitute one and the same instrument.
g. Captions and paragraph headings used in this Agreement are for
convenience only and are not a part of this Agreement and shall not be used
in interpreting or construing it.
13
<PAGE>
IN WITNESS WHEREOF, the parties agree that this Agreement shall take effect
as of the Effective Date.
*
By:
_______________________________
Name:
Title:
By:
_______________________________
Name:
Title:
I. C. ISAACS & COMPANY L.P.
By:
_______________________________
Name: Robert J. Arnot
Title: Chairman and Co-Chief
Executive Officer
By:
_______________________________
Name: Gerald W. Lear
Title: President and Co-Chief
Executive Officer
* Text omitted pursuant to a request for confidential treatment and filed
separately with the Securities and Exchange Commission.
14
<PAGE>
LIST OF EXHIBITS
Exhibit A: Specifications and limitations on ISAACS' use of Isaacs' Marks
Exhibit B: List of products on which ISAACS is permitted and forbidden to
use Isaacs' Marks
Exhibit C: Price Points
Exhibit D: ISAACS advertising rules
Exhibit E: * advertising rules
Exhibit F1: *
Exhibit F2: *
* Text omitted pursuant to a request for confidential treatment and filed
separately with the Securities and Exchange Commission.
<PAGE>
EXHIBIT A
ISAACS MARKS
[LOGO]
( The Microgramma Typestyle )
[LOGO]
<PAGE>
In using these Isaacs' Marks on Isaacs' Trademark Products and in all
advertising and promotional uses, ISAACS will comply with the following:
*
* Text omitted pursuant to a request for confidential treatment and filed
separately with the Securities and Exchange Commission.
2
<PAGE>
*
* Text omitted pursuant to a request for confidential treatment and filed
separately with the Securities and Exchange Commission.
3
<PAGE>
*
8. Unless otherwise agreed to by the parties, ISAACS shall not use the
terms * or any other words that are similar in sound, sight or meaning, as
exemplified in Attachment 8 to this Exhibit A. * In addition, the parties
may, from time to time, submit to each other exemplars of logos, designs or
decorative motifs which they are using or plan to use in the next selling
season, provided that such logos, designs, or decorative motifs shall not
have been used by the other party. The party so notified shall not use any
such logos, designs or decorative motifs, or anything similar to them in the
following selling season, without the other party's written permission;
provided, however, that either party may use logos, designs or decorative
motifs that are standard in the industry. Notwithstanding the foregoing,
ISAACS shall not use any design or decorative motif similar to the BOSS SPORT
patch shown in Attachment 9 to Exhibit A.
9. For purposes of this Agreement, "polo shirt" or "polo shirts"
shall mean a pullover shirt for sportswear that is made of knitted fabric and
has short or long sleeves and a turnover collar or a round banded collar and
placket. In addition to all other rules herein applicable to tops, ISAACS
may use the word "BOSS" by itself on the exterior of polo shirts only in
accordance with the following:
* Text omitted pursuant to a request for confidential treatment and filed
separately with the Securities and Exchange Commission.
4
<PAGE>
*
* Text omitted pursuant to a request for confidential treatment and filed
separately with the Securities and Exchange Commission.
5
<PAGE>
10. Prior to use, ISAACS may submit to * for approval typestyles other
than Microgramma for the word "BOSS", provided those typestyles are less
similar to the typestyles used by * than the Microgramma typestyle used by
ISAACS. ISAACS shall not use any such typestyle unless *
* Text omitted pursuant to a request for confidential treatment and filed
separately with the Securities and Exchange Commission.
<PAGE>
ATTACHMENT 1
TO EXHIBIT A
o Exemplars of interior and exterior permanent/temporary labels, tags, etc.
with acceptable "BOSS by I G Design."
<PAGE>
BMA-1368 -- info tag [Graphic Logo]
THESE EXAMPLARS DO NOT SUPERSEDE
THE RATIO REQUIREMENTS AS OTHERWISE
PROVIDED BY THIS EXHIBIT A
<PAGE>
BMA-1241R -- [Graphic Logo]
THESE EXAMPLARS DO NOT SUPERSEDE
THE RATIO REQUIREMENTS AS OTHERWISE
PROVIDED BY THIS EXHIBIT A
<PAGE>
Jr. Hang Tag/BJ-537W
FRONT
[Graphic Logo]
22 DEG. ANGLE
6 TO 1 RATIO
THESE EXAMPLARS DO NOT SUPERSEDE
THE RATIO REQUIREMENTS AS OTHERWISE
PROVIDED BY THIS EXHIBIT A
<PAGE>
BMA-458 -- [Graphic Logo]
THESE EXAMPLARS DO NOT SUPERSEDE
THE RATIO REQUIREMENTS AS OTHERWISE
PROVIDED BY THIS EXHIBIT A
<PAGE>
Jr. Hang Tag/BJ-537
BACK
[Graphic Logo]
22 DEG. ANGLE
6 TO 1 RATIO
THESE EXAMPLARS DO NOT SUPERSEDE
THE RATIO REQUIREMENTS AS OTHERWISE
PROVIDED BY THIS EXHIBIT A
<PAGE>
[Graphic Logo]
BMA-1242
22 DEG. ANGLE
6 TO 1 RATIO
THESE EXAMPLARS DO NOT SUPERSEDE
THE RATIO REQUIREMENTS AS OTHERWISE
PROVIDED BY THIS EXHIBIT A
<PAGE>
[Graphic Logo] -- Shirt
<PAGE>
[Graphic Logo] -- Shirt
<PAGE>
[Graphic Logo] -- Shirt
<PAGE>
[Graphic Logo]
<PAGE>
[Graphic Logo]
<PAGE>
ATTACHMENT 2
TO EXHIBIT A
o Exemplars of acceptable graphic environments.
<PAGE>
[Graphic Logo]
<PAGE>
[Graphic Logo]
<PAGE>
[Graphic Logo]
<PAGE>
[Graphic Logo]
<PAGE>
[Graphic Logo]
<PAGE>
[Graphic Logo]
<PAGE>
[Graphic Logo]
<PAGE>
[Graphic Logo]
<PAGE>
[Graphic Logo]
<PAGE>
[Graphic Logo]
<PAGE>
[Graphic Logo]
<PAGE>
[Graphic Logo]
<PAGE>
[Graphic Logo]
<PAGE>
[Graphic Logo]
<PAGE>
[Graphic Logo] -- Jeans
<PAGE>
[Graphic Logo] -- Jeans
<PAGE>
[Graphic Logo] -- Jeans
<PAGE>
[Graphic Logo] *
* Text omitted pursuant to a request for confidential treatment and filed
separately with the Securities and Exchange Commission.
<PAGE>
[Graphic Logo]
<PAGE>
[Graphic Logo] -- Shirt
<PAGE>
[Graphic Logo]
<PAGE>
[Graphic Logo]
<PAGE>
[Graphic Logo] -- Shirt
<PAGE>
[Graphic Logo] -- Shirt
<PAGE>
[Graphic Logo]
<PAGE>
[Graphic Logo]
<PAGE>
[Graphic Logo]
<PAGE>
[Graphic Logo] -- Shirt
<PAGE>
[Graphic Logo]
<PAGE>
[Graphic Logo]
<PAGE>
[Graphic Logo] -- Shirt
<PAGE>
[Graphic Logo]
<PAGE>
[Graphic Logo]
<PAGE>
[Graphic Logo]
<PAGE>
[Graphic Logo]
<PAGE>
[Graphic Logo]
<PAGE>
[Graphic Logo]
<PAGE>
[Graphic Logo]
<PAGE>
[Graphic Logo]
<PAGE>
o Exemplars of unacceptable graphic environments
<PAGE>
[Graphic Logo]
<PAGE>
[Graphic Logo]
<PAGE>
[Graphic Logo]
<PAGE>
[Graphic Logo] -- Shirt
<PAGE>
[Graphic Logo]
<PAGE>
[Graphic Logo]
<PAGE>
<PAGE>
[Graphic Logo]
<PAGE>
[Graphic Logo] -- Jeans
<PAGE>
[Graphic Logo] -- Shirt
<PAGE>
[Graphic Logo]
<PAGE>
[Graphic Logo]
<PAGE>
[Graphic Logo]
<PAGE>
[Graphic Logo]
<PAGE>
[Graphic Logo]
<PAGE>
[Graphic Logo] -- Shirt
<PAGE>
[Graphic Logo] -- Shirt
<PAGE>
[Graphic Logo]
<PAGE>
[Graphic Logo]
<PAGE>
[Graphic Logo]
<PAGE>
ATTACHMENT 3
TO EXHIBIT A
o Exemplars of acceptable distorted letters.
<PAGE>
[Graphic Logo]
<PAGE>
[Graphic Logo]
<PAGE>
[Graphic Logo]
<PAGE>
[Graphic Logo]
<PAGE>
[Graphic Logo]
<PAGE>
[Graphic Logo]
<PAGE>
[Graphic Logo] -- Jeans
<PAGE>
[Graphic Logo] -- Jeans
<PAGE>
[Graphic Logo]
<PAGE>
[Graphic Logo]
<PAGE>
[Graphic Logo]
<PAGE>
[Graphic Logo]
<PAGE>
ATTACHMENT 4
TO EXHIBIT A
o Exemplars of 24(degree) slant.
<PAGE>
[Graphic Logo]
<PAGE>
ATTACHMENT 5
TO EXHIBIT A
o Exemplars of 22(degree) slant.
<PAGE>
[Graphic Logo]
<PAGE>
ATTACHMENT 6A
TO EXHIBIT A
o Exemplars of vertical alignment.
<PAGE>
[Graphic Logo] -- Shirt
<PAGE>
[Graphic Logo] -- Shirt
<PAGE>
[Graphic Logo] -- Jeans
<PAGE>
[Graphic Logo] -- Shirt
<PAGE>
[Graphic Logo] -- Shirt
<PAGE>
[Graphic Logo] -- Shirt
<PAGE>
[Graphic Logo] -- Shirt
<PAGE>
[Graphic Logo] -- Shirt
<PAGE>
[Graphic Logo] -- Jeans
<PAGE>
[Graphic Logo] -- Jeans
<PAGE>
[Graphic Logo] -- Shirt
<PAGE>
[Graphic Logo]
<PAGE>
[Graphic Logo] -- Jeans
<PAGE>
[Graphic Logo]
<PAGE>
ATTACHMENT 6B
TO EXHIBIT A
o Exemplars of 19(degree) slant.
<PAGE>
[Graphic Logo]
<PAGE>
ATTACHMENT 7A
TO EXHIBIT A
o Exemplars of acceptable vertical BOSS logos.
<PAGE>
[Graphic Logo] -- Shirt
<PAGE>
[Graphic Logo]
<PAGE>
[Graphic Logo]
<PAGE>
[Graphic Logo]
<PAGE>
[Graphic Logo]
<PAGE>
[Graphic Logo]
<PAGE>
[Graphic Logo]
<PAGE>
ATTACHMENT 7B
TO EXHIBIT A
o Exemplars of unacceptable vertical BOSS logos.
<PAGE>
[Graphic Logo]
<PAGE>
ATTACHMENT 8
TO EXHIBIT A
o Exemplars of forbidden words.
*
* Text omitted pursuant to a request for confidential treatment and filed
separately with the Securities and Exchange Commission.
<PAGE>
ATTACHMENT 9
TO EXHIBIT A
o The BOSS Sport Patch
<PAGE>
[Graphic Logo]--Shirt
<PAGE>
[Graphic Logo]
<PAGE>
ATTACHMENT 10
TO EXHIBIT A
o Exemplars of acceptable coloration for "BOSS by I G Design" on polo
shirts.
<PAGE>
[Graphic Logo] -- Shirt
<PAGE>
[Graphic Logo] -- Shirt
<PAGE>
[Graphic Logo] -- Shirt
<PAGE>
[Graphic Logo] -- Shirt
<PAGE>
[Graphic Logo] -- Shirt
<PAGE>
[Graphic Logo] -- Shirt
<PAGE>
[Graphic Logo] -- Shirt
<PAGE>
[Graphic Logo] -- Shirt
<PAGE>
o Exemplar of unacceptable coloration for "BOSS by I G Design" on polo
shirts.
<PAGE>
[Graphic Logo]
<PAGE>
[Graphic Logo]
<PAGE>
[Graphic Logo]
<PAGE>
[Graphic Logo]
<PAGE>
[Graphic Logo]
<PAGE>
[Graphic Logo]
<PAGE>
[Graphic Logo]
<PAGE>
[Graphic Logo]
<PAGE>
[Graphic Logo]
<PAGE>
[Graphic Logo]
<PAGE>
[Graphic Logo]
<PAGE>
ATTACHMENT 11
TO EXHIBIT A
o Exemplar of acceptable shirts under Exhibit A, Section 9.a.
<PAGE>
[Graphic shirts]
<PAGE>
[Graphic Logo] -- Shirts
<PAGE>
[Graphic Logo] -- Shirts
<PAGE>
[Graphic shirts]
<PAGE>
[Graphic Logo] -- Shirts
<PAGE>
[Graphic Logo] -- Shirts
<PAGE>
o Exemplar of acceptable shirts under Exhibit A, Section 9.b.
<PAGE>
[Graphic Logo] -- Shirts
<PAGE>
[Graphic shirts]
<PAGE>
[Graphic Logo] -- Shirts
<PAGE>
[Graphic Logo] -- Shirts
<PAGE>
o Exemplar of acceptable shirts under Exhibit A, Section 9.c.
<PAGE>
[Graphic shirts]
<PAGE>
[Graphic Logo] -- Shirts
<PAGE>
[Graphic Logo] -- Shirts
<PAGE>
[Graphic shirts]
<PAGE>
[Graphic Logo] -- Shirts
<PAGE>
[Graphic Logo] -- Shirts
<PAGE>
[Graphic Logo] -- Shirts
<PAGE>
[Graphic Logo] -- Shirts
<PAGE>
EXHIBIT B
I. PRODUCTS BEARING ISAACS' MARKS THAT ISAACS MAY SELL
A. Men's Apparel
1. Sportswear and Activewear. All sportswear and activewear clothing
other than the exclusions listed below. All fabrications may be
used.
2. Outerwear. All jackets, coats, vests, capes and ponchos other than
the exclusions listed below. Such outerwear garments may be
reversible, lined, unlined, filled and or fabric treated
(waterproofed, coated, etc.) and may have detachable sleeves, hoods
and/or interlinings. Lengths of such garments shall be 22" to 60".
All fabrications may be used except fur (except as trim) and leather
(except as trim).
3. Headwear. All sports hats, visors and caps.
4. Swimwear. All types of swimwear.
5. Jogging Suits. All types of warm-ups and jogging suits of any
fabrication
6. Belts. Belts bearing Isaacs' Marks provided that such belts shall be
sold only as part of a Bottom and shall not be made out of leather.
B. Women's Apparel
1. Sportswear and Activewear. All sportswear and activewear clothing
for juniors, contemporary, misses and large sizes other than the
exclusions listed below. All fabrications may be used.
2. Outerwear. All jackets coats, vests, capes and ponchos other than
the exclusions listed below. Such outerwear garments may be
reversible, lined, unlined, filled and/or fabric treated
(waterproofed coated, etc.) and may have detachable sleeves, hoods
and/or interlinings. Lengths of such garments shall be 22" to 60".
All fabrications may be used except fur (except as trim) and leather
(except as trim).
3. Headwear. All sports hats, visors and caps.
4. Swimwear. All types of swimwear.
5. Jogging Suits. All types of warm-ups and jogging suits of any
fabrication.
6. Belts. All belts bearing Isaacs' Marks provided that such belts
shall be sold only as part of a Bottom and shall not be made out of
leather.
<PAGE>
7. Other. Women's knit garments to be worn on the upper torso that are
either snapped or fixed through the crotch and the top portion of
which may be a halter, shoulder strap, short sleeve or long sleeve.
C. Children's Apparel
l. Children's Sportswear and Activewear. All sportswear and activewear
clothing other than the exclusions listed below. All fabrications
may be used.
2. Outerwear. All jackets, coats, vests, capes and ponchos other than
the exclusions listed below. Such outerwear garments may be
reversible, lined, unlined, filled and/or fabric treated
(waterproofed, coated, etc.) and may have detachable sleeves, hoods
and/or interlinings. All fabrications may be used except fur (except
as trim) and leather (except as trim).
3. Headwear. All sports hats, visors and caps.
4. Swimwear. All types of swimwear.
5. Jogging Suits. All types of warm-ups and jogging suits of any
fabrication.
6. Belts. All belts bearing Isaacs' Marks provided that such belts
shall be sold only as part of a Bottom and shall not be made out of
leather.
D. Other
1. All apparel, including uniforms and work clothes, which is intended to be
worn solely and exclusively while persons are performing the normal duties
of their employment.
<PAGE>
II. PRODUCTS BEARING ISAACS' MARKS THAT ISAACS SHALL NOT SELL
A. Notwithstanding the foregoing, the parties agree that Isaacs' Trademark
Products do not include any of the following men's, women's or children's
apparel:
1. All styles of tailored clothing, furnishings and accessories,
including but not limited to tuxedos, gowns and evening wear, sportcoats,
blazers, jackets, suits, dress pants, career apparel including blouses,
skirts and dresses, raincoats, top coats, dress shirts, ties, dress vests,
hosiery (including but not limited to socks, stockings and hose), and
leather belts.
2. All types of leather clothing (although leather trim may be used
on all products listed in Section I of this Exhibit B).
3. All styles of shoes and other footwear.
4. Clothing designed and sold for the primary purpose of engaging in
[to be deleted and dealt with in * Boss Golf License Agreement]
golf, tennis, skiing, motor sports, windsurfing, or sailing.
5. Except as described in Exhibit B Section I.B.7. above, bodywear,
including but not limited to underwear (including t-shirts intended to be
worn as underwear); loungewear and intimate apparel; and sleepwear and
robes.
B. Except as agreed upon in writing by the parties, the parties further
agree that Isaacs' Trademark Products shall not include any non-apparel products
of any kind.
* Text omitted pursuant to a request for confidential treatment and filed
separately with the Securities and Exchange Commission.
<PAGE>
EXHIBIT 10.11(c)(3)
EXHIBIT C
PRICE POINTS
1. ISAACS shall sell products bearing Isaacs' Marks and permitted under
the schedule contained in Exhibit B that bear wholesale prices prior to any
bona fide trade, quantity and early payment discounts and any other credits,
no greater than those listed below. * shall sell or license others to sell
products bearing * Marks and permitted under the schedule contained in
Exhibit B that bear wholesale prices prior to any bona fide trade, quantity
and early payment discounts and any other credits, no less than those listed
below:
- --------------------------------------------------------------------------------
*
ISAACS' MAXIMUM MINIMUM
WHOLESALE WHOLESALE
- --------------------------------------------------------------------------------
All long bottoms except jeans and warm-up
(or jogging) suits
- --------------------------------------------------------------------------------
Cotton * *
- --------------------------------------------------------------------------------
Synthetic Blend * *
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
All short bottoms except jeans and warm-up
(or jogging) suits
- --------------------------------------------------------------------------------
Cotton * *
- --------------------------------------------------------------------------------
Synthetic Blend * *
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
Jeans
- --------------------------------------------------------------------------------
Basic * *
- --------------------------------------------------------------------------------
Fashion * *
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
Jean Shorts
- --------------------------------------------------------------------------------
Basic * *
- --------------------------------------------------------------------------------
Fashion * *
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
Overalls
- --------------------------------------------------------------------------------
Short * *
- --------------------------------------------------------------------------------
Long * *
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
Outerwear
- --------------------------------------------------------------------------------
Filled * *
- --------------------------------------------------------------------------------
Lined * *
- --------------------------------------------------------------------------------
Waterproof * *
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
Vest
- --------------------------------------------------------------------------------
* Text omitted pursuant to a request for confidential treatment and filed
separately with the Securities and Exchange Commission.
<PAGE>
- --------------------------------------------------------------------------------
*
ISAACS' MAXIMUM MINIMUM
WHOLESALE WHOLESALE
- --------------------------------------------------------------------------------
Filled * *
- --------------------------------------------------------------------------------
Lined * *
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
Polo Shirts and Knit Tops
- --------------------------------------------------------------------------------
Basic Short * *
- --------------------------------------------------------------------------------
Basic Long * *
- --------------------------------------------------------------------------------
Fashion Short * *
- --------------------------------------------------------------------------------
Fashion Long * *
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
Sweatshirts
- --------------------------------------------------------------------------------
Basic * *
- --------------------------------------------------------------------------------
Fashion * *
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
Warm-up (or jogging) suits
- --------------------------------------------------------------------------------
Cotton * *
- --------------------------------------------------------------------------------
Synthetic * *
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
T-shirts
- --------------------------------------------------------------------------------
Basic * *
- --------------------------------------------------------------------------------
Fashion * *
- --------------------------------------------------------------------------------
Embroidered * *
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
Sweaters
- --------------------------------------------------------------------------------
Basic * *
- --------------------------------------------------------------------------------
Fashion * *
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
Hats
- --------------------------------------------------------------------------------
Basic * *
- --------------------------------------------------------------------------------
Fashion * *
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
Woven Shirts
- --------------------------------------------------------------------------------
Basic Short * *
- --------------------------------------------------------------------------------
Basic Long * *
- --------------------------------------------------------------------------------
Fashion Short * *
- --------------------------------------------------------------------------------
Fashion Long * *
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
Swimwear
- --------------------------------------------------------------------------------
Basic * *
- --------------------------------------------------------------------------------
Fashion * *
- --------------------------------------------------------------------------------
* Text omitted pursuant to a request for confidential treatment and filed
separately with the Securities and Exchange Commission.
<PAGE>
2. All price points are expressed in 1997 dollars. ISAACS price points
shall adjust over the term of this Agreement with changes in the rate of
inflation applicable to clothing according to the Producer Price Index for
Apparel and Other Finished Products Made From Fabrics and Similar Materials.
* price points shall remain as stated herein.
3. To the extent ISAACS desires to add additional products to its line, or
to the extent either party desires to use fabrics or constructions materially
different from those currently being used consistent with the limitations of
Exhibit B, the parties will in good faith negotiate reasonable price points
applicable to such products.
4. The parties agree that the price points included in this Exhibit C are
based upon existing market conditions and reasonably foreseeable changes in such
market conditions. In the event that market conditions relating to the
manufacture, distribution or sale of products contained in Exhibit B should
change substantially, to a degree not contemplated by the price points in this
Exhibit C, and such change would result in economic hardship to a party to this
Agreement, the parties agree to negotiate in good faith to agree upon reasonable
alternative price points.
* Text omitted pursuant to a request for confidential treatment and filed
separately with the Securities and Exchange Commission.
<PAGE>
EXHIBIT 10.11(c)(4)
EXHIBIT D
ADVERTISING AND PROMOTION
(ISAACS)
1. On all advertising and promotional materials for Isaac's Trademark
Products, ISAACS may use the word "BOSS", provided the phrase "BOSS by I G
Design" appears at least once in accordance with the rules listed in Sections 2.
3 and 4 below of this Exhibit D.
2. In all print or Internet advertising and promotions for Isaacs'
Trademark Products, whether by ISAACS, or by retailers, or by any other entity
authorized by ISAACS, each and every page shall prominently feature "BOSS by I G
Design" as illustrated by the acceptable exemplars shown in Attachment 1 to this
Exhibit D.
3. In all radio, television and motion picture advertising for Isaacs'
Trademark Products, the first and last time BOSS is shown or mentioned, it shall
be as part of the phrase "BOSS by I G Design".
4. In all visual presentations of the phrase "BOSS by I G Design" in
advertising and promotions for Isaacs' Trademark Products, including but not
limited to print, Internet, television, motion picture, billboards, posters,
flyers, in-store signage, point-of-sale displays, sports sponsorships,
promotional tie-ins and/or samples, whether by ISAACS, or by retailers, or by
any other entity authorized by ISAACS, the size ratio between the word "BOSS"
and the phrase "I G Design" shall be similar to, and in no event greater than,
that shown in Attachment 1 to this Exhibit D.
5. ISAACS shall be entitled to display Isaacs' Trademark Products and
people wearing Isaacs' Trademark Products in all advertising and promotional
material, provided that such Isaacs' Trademark Products comply with Exhibit A
and Exhibit B.
6. Nothing in this Agreement is intended to give * any right to
approve or disapprove any aspect of the contents of any advertising other than
as expressly set forth above and in Exhibit A and Exhibit B; provided, however,
that ISAACS shall not use any advertising style or format which is or has been
primarily associated with * advertising of its products other than
those which are traditional or standard in the industry.
7. ISAACS agrees to take reasonable steps to achieve compliance with this
Exhibit D in advertising and promotions by retailers and other entities
authorized by ISAACS including, but not limited to, providing such entities
periodically with appropriate guidelines for use of the Isaacs' Marks consistent
with this Agreement. However, acts of retailers and other entities which are
beyond the control of ISAACS will not constitute a breach of this Agreement.
* Text omitted pursuant to a request for confidential treatment and filed
separately with the Securities and Exchange Commission.
<PAGE>
ATTACHMENT 1 TO
EXHIBIT D
o Exemplars of BOSS/I G Design.
For all uses where the word "BOSS" is less than one inch (1"):
(4:1)
<PAGE>
1/2" 22(degrees) WIDE/CAPS 4-1
(graphic logo)
4/4/97
<PAGE>
1/2" 22(degrees) NARROW/LOWER CASE 4-1
(graphic logo)
4/4/97
<PAGE>
1/2" STRT.NARROW/LOWER CASE 4-1
(graphic logo)
4/4/97
<PAGE>
1/2" STRAIGHT NARROW/CAPS 4-1
(graphic logo)
4/4/97
<PAGE>
1/2" 22(degrees) NARROW/CAPS 4-1
(graphic logo)
4/4/97
<PAGE>
1/2" STRT.WIDE/CAPS 4-1
(graphic logo)
4/4/97
<PAGE>
1/2" 22(degrees) WIDE/LOWER CASE 4-1
(graphic logo)
4/4/97
<PAGE>
1/2" STRT.WIDE/LOWER CASE 4-1
(graphic logo)
4/4/97
<PAGE>
For all uses where the word "BOSS" is one inch (1") or larger:
(5:1)
<PAGE>
1" 22(degrees) WIDE/LOWER 5:1
(graphic logo)
4/4/97
<PAGE>
1" STRT.WIDE/CAPS 5:1
(graphic logo)
4/4/97
<PAGE>
1" STRT.(degree)WIDE/LOWER CASE 5:1
(graphic logo)
4/4/97
<PAGE>
1" 22(degrees)WIDE/CAPS 5:1
(graphic logo)
4/4/97
<PAGE>
10.11(c)(5)
EXHIBIT E
ADVERTISING
( * )
1. In all print or Internet advertising for products listed in Exhibit
B, Section I as modified by Exhibit B, Section II, whether by *, or by
retailers, or by any other entity authorized by *, each and every page shall
prominently feature the words "*", regardless of whether these words appear
alone or in connection or combination with any other words.
2. In all radio, television and motion picture advertising for products
listed in Exhibit B, Section I as modified by Exhibit B, Section II, the
first and last time the word "BOSS" is shown or mentioned, it shall include
the phrase "*", regardless of whether these words appear alone or in
connection or combination with any other words.
3. Nothing in this Agreement is intended to give ISAACS any right to
approve or disapprove any aspect of the contents of any advertising other
than as set forth above; provided, however, that * shall not use any
advertising style or format which is or has been primarily associated with
ISAACS' advertising of Isaacs' Trademark Products, other than those which are
traditional or standard in the industry.
4. * agrees to take reasonable steps to achieve compliance with this
Exhibit E in advertising and promotions by retailers and other entities
authorized by * including, but not limited to, providing such entities
periodically with appropriate guidelines for use of the words "*" consistent
with this Agreement. However, acts of retailers and other entities which are
beyond the control of * will not constitute a breach of this Agreement.
* Text omitted pursuant to a request for confidential treatment and filed
separately with the Securities and Exchange Commission.
<PAGE>
10.11(c)(6)
EXHIBIT F1
*
* Text omitted pursuant to a request for confidential treatment and filed
separately with the Securities and Exchange Commission.
<PAGE>
*
* Text omitted pursuant to a request for confidential treatment and filed
separately with the Securities and Exchange Commission.
<PAGE>
10.11(c)(7)
EXHIBIT F2
*
* Text omitted pursuant to a request for confidential treatment and filed
separately with the Securities and Exchange Commission.
<PAGE>
*
* Text omitted pursuant to a request for confidential treatment and filed
separately with the Securities and Exchange Commission.
<PAGE>
*
* Text omitted pursuant to a request for confidential treatment and filed
separately with the Securities and Exchange Commission.
<PAGE>
Exhibit D to 10.11
FOREIGN MANUFACTURING RIGHTS AGREEMENT
THIS FOREIGN MANUFACTURING RIGHTS AGREEMENT ("Agreement") is entered
into and effective as of the ____ day of ____________, 1997 ("Effective
Date"), by and between * a Delaware corporation ("LICENSOR") and I. C. Isaacs
& Company L.P. ("LICENSEE"), a Delaware limited partnership.
R E C I T A L S
A. LICENSOR is the successor in interest of I. C. Isaacs & Company L.P.
which is in turn, the successor-in-interest of Brookhurst, Inc., to certain
trademark rights outside the United States (as defined below) including in
the Territory, as defined below, in the word BOSS.
B. LICENSEE desires to obtain a license to be able to cause others to
manufacture such products in the Territory and LICENSOR is willing to license
such trademarks to LICENSEE for such purpose in accordance with the terms
hereof.
C. In countries where necessary and appropriate, LICENSOR desires that
LICENSEE be recorded as a registered user of the Marks (as hereinafter
defined) in relation to the manufacture of the Licensed Products in the
Territory.
NOW, THEREFORE, in consideration of the mutual agreements set forth in
this Agreement, the parties agree as follows:
1. DEFINITIONS
For purposes of this Agreement, the following terms shall have the
meanings set forth below:
a. "Mark" or "Marks" shall mean the trademarks BOSS and the stylized
BOSS (as set forth on Exhibit A attached hereto) whether used alone or in
combination with other words, phrases or designs, with the appearance and/or
style of the said trademark in compliance with the provisions of Exhibit A.
b. *
* Text omitted pursuant to a request for confidential treatment and filed
separately with the Securities and Exchange Commission.
<PAGE>
c. "Licensed Product" or "Licensed Products" shall mean solely the
products specified in Exhibit B attached hereto bearing Marks in compliance
with Exhibit A.
d. "Territory" or "Licensed Territory" shall mean any and all countries
listed on Exhibit C.
e. "United States" shall mean the United States of America, its
territories, possessions and commonwealths, except Saipan and American Samoa.
"United States" includes, without limitation, Puerto Rico.
f. *
g. *
* Text omitted pursuant to a request for confidential treatment and filed
separately with the Securities and Exchange Commission.
2
<PAGE>
2. RIGHTS GRANTED
a. LICENSEE acknowledges that LICENSOR owns, pursuant to that certain
Foreign Boss Rights Acquisition Agreement between LICENSOR and LICENSEE dated
September 30, any and all trademark rights relating to the word BOSS within
the Licensed Territory that BROOKHURST transferred to LICENSEE pursuant to
that certain Worldwide Rights Acquisition Agreement between LICENSEE,
BROOKHURST and William Ott dated September 30, 1997. LICENSEE acknowledges
that it does not own, or purport to own, any trademark rights relating to the
word BOSS in the Licensed Territory. Unless specifically stated to the
contrary, the provisions of this Agreement relate solely to use of the Marks
within the Licensed Territory and are not intended to apply to LICENSEE'S
activities in the United States.
b. LICENSOR hereby grants to LICENSEE, and LICENSEE accepts, upon the
terms and conditions set forth herein, a limited, nonexclusive right and
license to use, and to cause and permit third-party manufacturers
("Designated Manufacturer(s)") to use, the Marks solely in connection with
the manufacture of Licensed Products, labels, displays, and other materials
used in connection with the Licensed Products within the Territory for sale
solely to LICENSEE. The license and rights granted to LICENSEE under this
Agreement are sometimes referred to herein as the "Licensed Rights."
c. LICENSEE shall require that the Designated Manufacturer(s) perform
all obligations ascribed to such Designated Manufacturer(s) under this
Agreement, including but not limited to those obligations listed in Section
2.c. (i-xxii), and shall, within sixty (60) days of the effective date of
this Agreement, require each Designated Manufacturer(s) to enter into a
binding written agreement (whether by purchase order or otherwise) with
LICENSEE, under which each such Designated Manufacturer(s) agrees to
undertake the following obligations:
*
* Text omitted pursuant to a request for confidential treatment and filed
separately with the Securities and Exchange Commission.
3
<PAGE>
*
* Text omitted pursuant to a request for confidential treatment and filed
separately with the Securities and Exchange Commission.
4
<PAGE>
*
* Text omitted pursuant to a request for confidential treatment and filed
separately with the Securities and Exchange Commission.
5
<PAGE>
*
f. Notwithstanding Section 2.b. above, LICENSEE may manufacture or
cause others to manufacture the Licensed Products within the Licensed
Territory subject to the terms and restrictions contained in this Section.
The parties agree that they will amend Exhibit C to include countries listed
in Exhibit C1 upon (or as soon thereafter as is practicable) the issuance to
*, or its designee, in each such country, of trademark registration(s) for
the word BOSS for use on products listed in Exhibit B, Section I, as modified
by Section II; provided, however, that any such amendment shall conform to
and be limited by the scope of any such trademark registration obtained. In
those countries listed in Exhibit C1 where * presently has no trademark
application(s) pending, LICENSOR agrees, upon the
* Text omitted pursuant to a request for confidential treatment and filed
separately with the Securities and Exchange Commission.
6
<PAGE>
written request of LICENSEE, to cause * to make such application, and to take
appropriate steps to prosecute such application and LICENSEE agrees to
reimburse * for * of the costs, including attorney's fees and filing fees, of
obtaining such registration. The parties agree that they will amend Exhibit
C to include Exhibit C2 when the later of the following two events occurs (or
as soon thereafter as is practicable): (1) the issuance to * or its
designee, of trademark registrations for the word BOSS for use on products
listed in Exhibit B, Section I, as modified by Section II, or (2) the
resolution to the satisfaction of * of pending disputes among third parties.
At any time after the execution of this Agreement, LICENSEE may notify
LICENSOR of countries other than those referenced in Exhibits C, C1 and C2 in
which LICENSEE desires to manufacture Licensed Products. LICENSOR shall
consider such a request in good faith, and consistent with the principles
incorporated above relating to the countries listed in Exhibit C. If
LICENSOR agrees to any such request, LICENSOR and LICENSEE will either amend
this Agreement, or execute a separate manufacturing rights agreement upon
mutually agreeable terms as set forth above. The parties agree to execute
individual Manufacturing Rights Agreements for any country on Exhibit C, if
required by the laws or regulations of that country or to protect the Mark.
LICENSEE shall only manufacture or cause others to manufacture Licensed
Products in those countries identified in Exhibit C or any other country as
may be later agreed upon pursuant to this section; provided, however, that
nothing in this subsection 2.f. shall prevent LICENSEE from manufacturing
goods in the United States pursuant to its own trademark rights.
g. Notwithstanding Section 2.b. hereof, neither LICENSEE nor the
Designated Manufacturer(s) shall have the right to use the Marks in the
Licensed Territory in any manner that conflicts with the rights of any third
party. For purposes of this Section 2.g., the term "third party" shall not
include any natural person under control of LICENSOR, any entity owned by,
controlled by, or affiliated with LICENSOR, any natural person or entity that
owns or controls LICENSOR, or any entity with whom LICENSOR enters into an
agreement relating to, or creating, the rights that conflict with LICENSEE'S
rights hereunder. If the use of the Marks on any or all of the Licensed
Products conflicts with the rights of any third party, or if a third party
makes a bona fide claim alleging such a conflict, LICENSEE agrees to
immediately terminate or modify such use in accordance with LICENSOR'S
reasonable instructions, and LICENSEE shall have no right of damage or offset
in connection with this Agreement. In the event LICENSEE fails to terminate
or modify such use, as reasonably directed by LICENSOR, LICENSOR may
terminate this Agreement under the provisions of Section 15 below as to such
country in which the rights of the third party exists or with respect to
which a bona fide claim has been made without limiting LICENSOR'S other
rights and remedies hereunder or at law or in equity. *
* Text omitted pursuant to a request for confidential treatment and filed
separately with the Securities and Exchange Commission.
7
<PAGE>
h. *
i. LICENSOR shall obtain from * throughout the term of this Agreement a
license of such of its rights (if any) relating to the manufacture of the
Products under the Marks as it possesses in the Territory such that LICENSOR
may sublicense said rights (if any) to LICENSEE to the extent described in
the grant of rights set forth in Section 2.a. and .b. hereof, and LICENSOR
hereby acknowledges that it is sublicensing said rights to LICENSEE under
said Section 2.a. and .b.
*
*
3. TRANSFER AND OWNERSHIP OF PROPERTY
a. LICENSEE agrees that, during the term of this Agreement, it shall
not use the Marks in the Territory in any manner other than as expressly set
forth in this Agreement.
b. LICENSEE agrees that LICENSOR is and shall be the sole owner of all
items of Property. Subject to the express requirements of Exhibit A, Exhibit
B and Exhibit C of this Agreement, the parties agree that LICENSOR shall have
no right to prevent LICENSEE from using, during or after the term of this
Agreement, any fabrics, styles, designs and colors that are standard or
traditional in the industry or not primarily associated with the Licensed
Rights.
c. Following termination of this Agreement, LICENSEE agrees that it
will terminate any and all use of the Marks in the Territory, except as
otherwise expressly provided in this Agreement.
* Text omitted pursuant to a request for confidential treatment and filed
separately with the Securities and Exchange Commission.
8
<PAGE>
4. *
* Text omitted pursuant to a request for confidential treatment and filed
separately with the Securities and Exchange Commission.
9
<PAGE>
*
* Text omitted pursuant to a request for confidential treatment and filed
separately with the Securities and Exchange Commission.
10
<PAGE>
*
* Text omitted pursuant to a request for confidential treatment and filed
separately with the Securities and Exchange Commission.
11
<PAGE>
*
5. TERM
a. This Agreement shall continue in full force and effect until
December 31, 2001, when it shall terminate, unless renewed in accordance with
the terms below, or unless terminated sooner in accordance with the terms and
conditions set forth in this Agreement.
b. LICENSEE may, at it sole option, renew this Agreement for a period
of three (3) additional years commencing on January 1, 2002, and ending
December 31, 2004, if LICENSEE provides written notice of its intention to
extend by no later than June 30, 2001. LICENSEE may, at its sole option,
extend the term of this Agreement for an additional three (3) year period
commencing on January 1, 2005, and ending on December 31, 2007, if LICENSEE
provides written notice of its intention to extend by no later than June 30,
2004.
c. With respect to the limitations on the use of the Mark described in
Exhibit A, LICENSEE shall begin to phase some of the limitations into its
product line beginning with products produced by or for LICENSEE after
January 1, 1998. Thereafter, * of the products bearing the Marks produced by
or for LICENSEE during the period August 1, 1998 through December 31, 1998
(as measured by the number of styles) must comply therewith. LICENSEE agrees
to use its reasonable efforts to ensure that * of its projected volume of
such goods comply with the limitations described in Exhibit A. LICENSEE shall
be in full compliance with Exhibit A for all products bearing the Marks
produced on or after December 31, 1998 and for that season and thereafter may
not manufacture or produce any products bearing the Marks which are not in
full compliance with Exhibit A.
6. LICENSE FEE AND ROYALTIES
a. LICENSEE agrees to pay to LICENSOR a royalty on Licensed Products
manufactured in the Territory by or on behalf of LICENSEE in accordance with
Exhibit F attached hereto. *
* Text omitted pursuant to a request for confidential treatment and filed
separately with the Securities and Exchange Commission.
12
<PAGE>
b. *
c. *
7. *
b. All payments required under this Agreement shall be in U.S. Dollars
and made payable to the order of "*"
*
* Text omitted pursuant to a request for confidential treatment and filed
separately with the Securities and Exchange Commission.
13
<PAGE>
*
d. LICENSEE acknowledges and agrees that any manner of payment other
than that stated herein, or as required by law, including, without
limitation, offsets, payment into an escrow account or to any other third
party, shall constitute a material breach of this Agreement.
8. BOOKS AND RECORDS
a. LICENSEE shall keep complete and accurate records of all Licensed
Products manufactured and of LICENSEE'S activities under this Agreement, and
shall make the same readily available to LICENSOR and its agents and
representatives at such reasonable times as LICENSOR may from time to time
request for inspection, copying and extracting.
b. Such books and records shall be kept in accordance with generally
accepted accounting principles, consistently applied, and shall be retained
by LICENSEE and *
* Text omitted pursuant to a request for confidential treatment and filed
separately with the Securities and Exchange Commission.
14
<PAGE>
*
d. No later than one hundred twenty (120) days after the close of
LICENSEE's fiscal year, LICENSEE shall provide LICENSOR with its annual
financial statements, audited or unaudited, prepared by an independent
certified accountant. If unaudited, an officer of LICENSEE shall certify
under penalty of perjury that the financial statements are true and correct,
and have been prepared in accordance with generally accepted accounting
principles, consistently applied.
e. LICENSOR agrees that it will maintain in confidence those records of
LICENSEE disclosed to LICENSOR pursuant to paragraphs 8.a., 8.c., and 8.d.
above and any other oral or written confidential information about LICENSEE's
business and product line disclosed to LICENSOR.
9. LABELING
LICENSEE agrees to use the proper trademark and copyright notices in
connection with the Marks in the Territory. Upon the execution of this
Agreement, LICENSEE shall no longer place orders in the Territory for
Licensed Products bearing any prior trademark and copyright notice in
connection with the Licensed Rights and will take reasonable steps to ensure
that such goods are no longer manufactured in the Territory; provided,
however, that LICENSEE shall not be required to remove prior trademark and
copyright notices already affixed to such garments or to unreasonably disrupt
work in progress; any other changes shall be subject to a reasonable phase-in
period. Where appropriate, such notices shall appear in the screen for any
screen-printed design, in the salvage of any fabric, in the neck label or
waist label of any Licensed Products, and on any label or tag affixed to the
Licensed Products or otherwise attached to the Licensed Products.
10. OWNERSHIP OF THE MARKS
a. LICENSEE agrees that it has no right to ownership in the Marks in
the Territory and, in furtherance thereof, hereby transfers and conveys all
rights, title and interest, if any, in the Marks to *, and will
not at any time represent or authorize a Designated Manufacturer(s) to
represent that such manufacturer has any title or right of ownership in the
Marks.
b. LICENSEE agrees that nothing contained in this Agreement shall give
to LICENSEE or the Designated Manufacturer(s) any right, title or interest in
the Marks except the limited license granted to LICENSEE herein, that such
Licensed Rights are the sole and exclusive property of LICENSOR and that all
such uses by LICENSEE or the Designated Manufacturer(s) of the Licensed
Rights shall inure only to the benefit of LICENSOR.
* Text omitted pursuant to a request for confidential treatment and filed
separately with the Securities and Exchange Commission.
15
<PAGE>
c. LICENSEE agrees that it will not seek or obtain any registration of
the Marks in any name or participate directly or indirectly in such
registration without LICENSOR'S prior written permission. Subject solely to
the rights and interest granted herein, LICENSEE further agrees and
acknowledges that if it has obtained or obtains in the future, in the
Territory, any right, title or interest in the Marks, or in any marks which
are confusingly similar to the Licensed Rights, or in any other trademark or
service mark owned by LICENSOR, that LICENSEE has acted or will act as an
agent and for the benefit of LICENSOR for the limited purpose of obtaining
such registrations in the name and on behalf of LICENSOR. LICENSEE further
agrees to execute any and all instruments deemed by LICENSOR and/or its
attorneys or representatives to be necessary to transfer such right, title or
interest to LICENSOR.
d. LICENSEE agrees not to take any action which may in any way impair
LICENSOR's rights in and to the Marks, including, without limitation,
challenging or opposing, or raising or allowing to be raised, either during
the term of this Agreement or after its termination, on any grounds
whatsoever, any questions concerning, or objections to, the validity of the
Marks or LICENSOR'S rights therein, or any other trademarks or service marks
owned by LICENSOR containing the word BOSS in any manner.
e. *
f. LICENSEE acknowledges that materials related to this Agreement and
uniquely and specifically associated with the Marks and/or the Licensed
Products (collectively "Works"), whether developed solely by LICENSEE or
jointly with others may qualify for copyright protection under applicable
local laws. LICENSEE agrees that such Works are to be deemed as Works "made
for hire" for the benefit of LICENSOR and that if such Works, by operation of
law or otherwise, are not Works "made for Hire," LICENSEE agrees (i) to
assign, and does hereby assign, to LICENSOR or its designee any and all of
LICENSEE'S right, title and interest in the copyright in such Works
throughout the world, and (ii) not to seek or obtain registration of such
copyright in its own name.
g. *
11. INSURANCE
*
* Text omitted pursuant to a request for confidential treatment and filed
separately with the Securities and Exchange Commission.
16
<PAGE>
*
b. LICENSEE shall provide to LICENSOR, within thirty (30) days of the
Effective Date of this Agreement, a certificate showing proof that such
policy of insurance is in effect. In no event shall LICENSEE manufacture,
offer for sale, sell, advertise, promote, ship and/or distribute the Licensed
Products prior to the receipt by LICENSOR of such certificate of insurance.
c. LICENSEE agrees to give LICENSOR, or cause the insurer to give
LICENSOR, as the case may be, thirty (30) days prior written notice of any
reduction in limits or termination of such policy of insurance, or of any
intention on the part of LICENSEE not to pay the premium thereof.
12. NON-TRANSFERABILITY OF RIGHTS
a. LICENSEE shall not grant, assign, sublicense or otherwise convey or
transfer any rights inuring to LICENSEE or any obligations or duties owed by
LICENSEE to LICENSOR under this Agreement, without the prior written consent
of LICENSOR, and any attempted transfer or assignment shall be null and void.
LICENSOR shall consider in good faith any request for such consent and
promptly notify LICENSEE of LICENSOR'S decision, said decision to be in
LICENSOR's sole discretion. LICENSEE shall have the right to transfer or
assign its rights under this Agreement to an affiliate of LICENSEE (i.e., an
entity in control of, controlled by or under common control with LICENSEE),
provided that any such transfer or assignment does not in any way diminish,
extinguish, or adversely affect LICENSEE'S obligations to LICENSOR under this
Agreement. Nothing in this Section 12 is intended to prevent LICENSEE, its
partners or affiliates from offering and selling stock to the public.
LICENSOR shall provide LICENSEE with written notice if LICENSOR intends to
assign or transfer to any third party any of its rights or obligations under
this Agreement.
b. *
* Text omitted pursuant to a request for confidential treatment and filed
separately with the Securities and Exchange Commission.
17
<PAGE>
13. INDEPENDENT CONTRACTOR
The parties hereby agree that LICENSEE is and shall be an independent
contractor and that no agency (except as specified in Section 10.g.), joint
venture or partnership is created by this Agreement. The legal relationship
of any person or entity performing services for LICENSEE shall be one solely
between such parties. Neither party shall incur any obligation in the name
of the other party without the prior written consent of that party.
14. *
15. TERMINATION
a. In the event LICENSEE commits any of the accelerating acts (defined
at Section 15.f.) or fails to make payments required under Section 15.f.,
LICENSOR may terminate this Agreement in its entirety.
b. LICENSOR may terminate this Agreement as it pertains to any country
included in the Licensed Territory only upon any of the following events in
that country:
* Text omitted pursuant to a request for confidential treatment and filed
separately with the Securities and Exchange Commission.
18
<PAGE>
*
c. Termination shall be effective upon expiration of the applicable
cure period, if any, and receipt of written notice from LICENSOR of such
expiration. Upon any such termination, all of the rights and licenses granted
hereunder shall terminate. Any such termination by LICENSOR shall be without
prejudice to LICENSOR'S other rights and remedies for breach, including
damages.
d. If permitted under any applicable laws, including U.S. Bankruptcy
laws, LICENSOR may terminate this Agreement immediately upon: (i) the
insolvency of LICENSEE; (ii) the filing of a voluntary petition in bankruptcy
for liquidation by LICENSEE; (iii) the filing of an involuntary petition in
bankruptcy for liquidation against LICENSEE that is not vacated within one
hundred
* Text omitted pursuant to a request for confidential treatment and filed
separately with the Securities and Exchange Commission.
19
<PAGE>
twenty (120) days from the date of filing; (iv) the appointment of a receiver
or trustee for LICENSEE, provided that such appointment is not vacated within
one hundred twenty (120) days from the date of such appointment; or (v) the
execution by LICENSEE of an assignment for the benefit of all creditors
generally.
e. LICENSEE shall notify LICENSOR of any change in ownership of more
than *
LICENSOR agrees that LICENSEE, its partners and
affiliates, may offer and sell stock to the public and,
subject to the provisions of this Section 15.e., nothing in
this Agreement shall prevent or interfere with LICENSEE, or
its partners or affiliates offering and selling stock to the
public.
f. *
* Text omitted pursuant to a request for confidential treatment and filed
separately with the Securities and Exchange Commission.
20
<PAGE>
*
* Text omitted pursuant to a request for confidential treatment and filed
separately with the Securities and Exchange Commission.
21
<PAGE>
*
g. Either party may, by written notice to the other, terminate this
Agreement upon sale by LICENSEE of its United States trademark rights to BOSS
to LICENSOR or any of its affiliates (including parents).
h. *
i. LICENSEE shall have the option to terminate this Agreement at any
time, upon providing LICENSOR with ninety (90) days written notice, if all of
the following occur:*
j. Notwithstanding any other provision of this Agreement, upon
termination of this Agreement, LICENSEE (and its secured inventory lender),
shall be entitled, subject to the terms and conditions of this Agreement, on
a non-exclusive basis, for a period of nine (9) months from the date of
termination, to complete manufacture of Licensed Products in progress on the
date of termination, and to export, such completed products and any products
in Licensee's inventory on the date of termination; provided, however, that
such rights as are granted herein apply only to orders placed and goods
manufactured in the ordinary course of LICENSEE's business. After
* Text omitted pursuant to a request for confidential treatment and filed
separately with the Securities and Exchange Commission.
22
<PAGE>
the expiration of such nine (9) month period, LICENSEE shall completely
remove the marks from any products not manufactured before the expiration of
such nine (9) month period.
16. RESULTS OF TERMINATION
*
* Text omitted pursuant to a request for confidential treatment and filed
separately with the Securities and Exchange Commission.
23
<PAGE>
17. *
18. *
* Text omitted pursuant to a request for confidential treatment and filed
separately with the Securities and Exchange Commission.
24
<PAGE>
19. NOTICES
All notices, requests or other communications required or permitted
hereunder shall be given or made in writing and shall be (i) delivered
personally (including commercial carrier), (ii) sent by registered or
certified airmail, return receipt requested, postage prepaid or (iii) sent by
telecopier, addressed to the party to whom they are directed at the following
addresses, or at such other address as may from time to time be designated by
such party to the others in accordance with this Section 19:
If to LICENSOR, to:
*
*
With a copy to:
Coudert Brothers
1627 I Street, N.W.
Washington, D.C. 20006
Attention: Wendy L. Addiss, Esq.
Telecopier: 202/775-1168
and
Howrey & Simon
1299 Pennsylvania Avenue, N.W.
Washington, D.C. 20006
Attention: Robert M. Bruskin, Esq.
Telecopier: 202/383-6610
* Text omitted pursuant to a request for confidential treatment and filed
separately with the Securities and Exchange Commission.
25
<PAGE>
If to LICENSEE, to:
I. C. Isaacs & Company L.P.
3840 Bank Street
Baltimore, Maryland 21224
Attention: President and Co-Chief Executive Officer
Telecopier: 410/558-2096
I. C. Isaacs & Company L.P.
350 Fifth Avenue
Suite 1029
New York, New York 10118
Attention: Chairman and Co-Chief Executive Officer
Telecopier: 212/695-7579
With a copy to:
Piper & Marbury L.L.P.
Charles Center South
36 South Charles Street
Baltimore, Maryland 21201-3010
Attention: Robert J. Mathias, Esq.
Telecopier: 410/576-1064
Any notice, request or other communications shall be deemed to have been
given and to be effective upon receipt or refusal by the addressee. Any
party may change its address for notices hereunder, effective upon giving of
notice of such change hereunder to the other parties.
20.*
* Text omitted pursuant to a request for confidential treatment and filed
separately with the Securities and Exchange Commission.
26
<PAGE>
*
21. *
22. BINDING EFFECT
This Agreement shall be binding on the parties, their parents,
subsidiaries, successors and assigns (if any), and they each warrant that the
undersigned are authorized to execute this Agreement on behalf of the
respective parties.
23. *
* Text omitted pursuant to a request for confidential treatment and filed
separately with the Securities and Exchange Commission.
27
<PAGE>
*
24. GENERAL PROVISIONS
a. No waiver or modification of any of the terms or provisions of this
Agreement shall be valid unless contained in a written document signed by
both parties. No course of conduct of dealing between the parties shall act
as a waiver of any provision of this Agreement.
b. This Agreement, including the entirety of Exhibits A through H1
attached hereto, contains the entire understanding of the parties as to the
subject matter herein, and there are no representations, warranties, promises
or undertakings other than those contained herein. This Agreement supersedes
and cancels all previous agreements between the parties hereto. This
Agreement shall be construed against both parties equally, regardless of the
party that drafted it. *
c. If any provision of this Agreement shall be held to be void or
unenforceable, such provision will be treated as severable, leaving valid the
remainder of this Agreement.
*
e. The parties agree to execute promptly any documents necessary to
effectuate the purpose and intent of this Agreement.
* Text omitted pursuant to a request for confidential treatment and filed
separately with the Securities and Exchange Commission.
28
<PAGE>
f. Captions and paragraph headings used in this Agreement are for
convenience only and are not a part of this Agreement and shall not be used
in interpreting or construing it.
g. This Agreement may be executed in any number of duplicate
counterparts, each of which shall be deemed an original and all of which
together shall constitute one and the same instrument.
25. *
* Text omitted pursuant to a request for confidential treatment and filed
separately with the Securities and Exchange Commission.
29
<PAGE>
party to pay some or all of the costs and expenses, including legal fees,
incurred by the other party.
26. *
IN WITNESS WHEREOF, the parties agree that this Agreement shall take
effect as of the date first written above.
*
By: __________________________________
Name:
Title:
By: ___________________________________
Name:
Title:
*
By: ___________________________________
Name:
Title:
By: ____________________________________
Name:
Title:
* Text omitted pursuant to a request for confidential treatment and filed
separately with the Securities and Exchange Commission.
30
<PAGE>
I.C. ISAACS & COMPANY L.P., a Delaware
limited partnership
By: I.G. DESIGN, INC., a Delaware
corporation, its general partner
By: ________________________________________
Name: Robert J. Arnot
Title: Chairman and Co-Chief
Executive Officer
By: ________________________________________
Name: Gerald W. Lear
Title: President and Co-Chief
Executive Officer
31
<PAGE>
FOREIGN MANUFACTURING RIGHTS AGREEMENT
LIST OF EXHIBITS
Exhibit A: Specifications and limitations on LICENSEE's use of the Marks
Exhibit B: List of products on which LICENSEE is permitted to use the Marks
Exhibit C: List of countries
Exhibit C1: List of pending/not filed countries
Exhibit C2: List of special circumstances
Exhibit D: List of LICENSOR Agreements
Exhibit E: Prohibited stitching designs
Exhibit F: Royalty payment schedule
Exhibit F1: Minimum Territory Net Sale schedule
Exhibit F2: Royalty calculation sheet
Exhibit G: Customs letter
Exhibit H: *
Exhibit H1: *
* Text omitted pursuant to a request for confidential treatment and filed
separately with the Securities and Exchange Commission.
<PAGE>
EXHIBIT A
ISAACS MARKS
BOSS
("The Microgramma Typestyle")
[LOGO]
<PAGE>
In using these Marks on Licensed Products, LICENSEE will comply with the
following:
*
* Text omitted pursuant to a request for confidential treatment and filed
separately with the Securities and Exchange Commission.
<PAGE>
*
* Text omitted pursuant to a request for confidential treatment and filed
separately with the Securities and Exchange Commission.
<PAGE>
*
7. LICENSEE shall not use words which indicate that its product is the
only or first BOSS product, e.g., "authentic," "genuine" or "original,"
except that LICENSEE may use such words to directly modify the phrase "I G
Design" (or such other name as LICENSOR approves).
8. LICENSEE shall not use the terms * or any other words that are
similar in sound, sight or meaning, as exemplified in Attachment 8 to this
Exhibit A. The parties agree that LICENSEE may use the phrases "U.S.A." and
"United States" on Licensed Products, including in graphic depictions with or
near the Marks; provided, however, that such words are not incorporated into
a corporate identity, brand, or product extension logo with the word "BOSS."
In addition, LICENSOR, by itself or on behalf of * or LICENSEE
may, from time to time, submit to each other exemplars of logos, designs or
decorative motifs which they are using or plan to use in the next selling
season, provided that such logos, designs, or decorative motifs shall not
have been used by the other party. The party so notified shall not use any
such logos, designs or decorative motifs, or anything similar to them in the
following selling season, without the other party's written permission;
provided, however, that either party may use logos, designs or decorative
motifs that are standard in the industry. Notwithstanding the foregoing,
LICENSEE shall not use any design or decorative motif similar to the BOSS
SPORT patch shown in Attachment 9 to Exhibit A.
9. For purposes of this Agreement, "Polo shirt" shall mean a pullover
shirt for sportswear that is made of knitted fabric and has short or long
sleeves and a turnover collar or a round banded collar and placket. In
addition to all other rules herein applicable to tops, LICENSEE may use the
word "BOSS" by itself on the exterior of polo shirts only in accordance with
the following:
*
* Text omitted pursuant to a request for confidential treatment and filed
separately with the Securities and Exchange Commission.
<PAGE>
*
10. Prior to use, LICENSEE may submit to LICENSOR for approval
typestyles other than the Microgramma for the word "BOSS", provided those
typestyles are less similar to the typestyles used by the LICENSOR than the
Microgramma typestyle used by LICENSEE. LICENSEE shall not use any such
typestyle unless LICENSOR *.
* Text omitted pursuant to a request for confidential treatment and filed
separately with the Securities and Exchange Commission.
<PAGE>
ATTACHMENT 1
TO EXHIBIT A
o Exemplars of interior and exterior permanent/temporary labels, tags, etc.
with acceptable "BOSS by I G Design."
<PAGE>
BMA-1368 -- info tag [Graphic Logo]
THESE EXAMPLARS DO NOT SUPERSEDE
THE RATIO REQUIREMENTS AS OTHERWISE
PROVIDED BY THIS EXHIBIT A
<PAGE>
BMA-1241R -- [Graphic Logo]
THESE EXAMPLARS DO NOT SUPERSEDE
THE RATIO REQUIREMENTS AS OTHERWISE
PROVIDED BY THIS EXHIBIT A
<PAGE>
Jr. Hang Tag/BJ-537W
FRONT
[Graphic Logo]
22 DEG. ANGLE
6 TO 1 RATIO
THESE EXAMPLARS DO NOT SUPERSEDE
THE RATIO REQUIREMENTS AS OTHERWISE
PROVIDED BY THIS EXHIBIT A
<PAGE>
BMA-458 -- [Graphic Logo]
THESE EXAMPLARS DO NOT SUPERSEDE
THE RATIO REQUIREMENTS AS OTHERWISE
PROVIDED BY THIS EXHIBIT A
<PAGE>
Jr. Hang Tag/BJ-537
BACK
[Graphic Logo]
22 DEG. ANGLE
6 TO 1 RATIO
THESE EXAMPLARS DO NOT SUPERSEDE
THE RATIO REQUIREMENTS AS OTHERWISE
PROVIDED BY THIS EXHIBIT A
<PAGE>
[Graphic Logo]
BMA-1242
22 DEG. ANGLE
6 TO 1 RATIO
THESE EXAMPLARS DO NOT SUPERSEDE
THE RATIO REQUIREMENTS AS OTHERWISE
PROVIDED BY THIS EXHIBIT A
<PAGE>
[Graphic Logo] -- Shirt
<PAGE>
[Graphic Logo] -- Shirt
<PAGE>
[Graphic Logo] -- Shirt
<PAGE>
[Graphic Logo]
<PAGE>
[Graphic Logo]
<PAGE>
ATTACHMENT 2
TO EXHIBIT A
o Exemplars of acceptable graphic environments.
<PAGE>
[Graphic Logo]
<PAGE>
[Graphic Logo]
<PAGE>
[Graphic Logo]
<PAGE>
[Graphic Logo]
<PAGE>
[Graphic Logo]
<PAGE>
[Graphic Logo]
<PAGE>
[Graphic Logo]
<PAGE>
[Graphic Logo]
<PAGE>
[Graphic Logo]
<PAGE>
[Graphic Logo]
<PAGE>
[Graphic Logo]
<PAGE>
[Graphic Logo]
<PAGE>
[Graphic Logo]
<PAGE>
[Graphic Logo]
<PAGE>
[Graphic Logo] -- Jeans
<PAGE>
[Graphic Logo] -- Jeans
<PAGE>
[Graphic Logo] -- Jeans
<PAGE>
[Graphic Logo] -- Jeans
<PAGE>
[Graphic Logo]
<PAGE>
[Graphic Logo] -- Shirt
<PAGE>
[Graphic Logo]
<PAGE>
[Graphic Logo]
<PAGE>
[Graphic Logo] -- Shirt
<PAGE>
[Graphic Logo] -- Shirt
<PAGE>
[Graphic Logo]
<PAGE>
[Graphic Logo]
<PAGE>
[Graphic Logo]
<PAGE>
[Graphic Logo] -- Shirt
<PAGE>
[Graphic Logo]
<PAGE>
[Graphic Logo]
<PAGE>
[Graphic Logo] -- Shirt
<PAGE>
[Graphic Logo]
<PAGE>
[Graphic Logo]
<PAGE>
[Graphic Logo]
<PAGE>
[Graphic Logo]
<PAGE>
[Graphic Logo]
<PAGE>
[Graphic Logo]
<PAGE>
[Graphic Logo]
<PAGE>
[Graphic Logo]
<PAGE>
o Exemplars of unacceptable graphic environments
<PAGE>
[Graphic Logo]
<PAGE>
[Graphic Logo]
<PAGE>
[Graphic Logo]
<PAGE>
[Graphic Logo] -- Shirt
<PAGE>
[Graphic Logo]
<PAGE>
[Graphic Logo]
<PAGE>
[Graphic Logo]
<PAGE>
[Graphic Logo]
<PAGE>
[Graphic Logo] -- Jeans
<PAGE>
[Graphic Logo] -- Shirt
<PAGE>
[Graphic Logo]
<PAGE>
[Graphic Logo]
<PAGE>
[Graphic Logo]
<PAGE>
[Graphic Logo]
<PAGE>
[Graphic Logo]
<PAGE>
[Graphic Logo] -- Shirt
<PAGE>
[Graphic Logo] -- Shirt
<PAGE>
[Graphic Logo]
<PAGE>
[Graphic Logo]
<PAGE>
[Graphic Logo]
<PAGE>
ATTACHMENT 3
TO EXHIBIT A
o Exemplars of acceptable distorted letters.
<PAGE>
[Graphic Logo]
<PAGE>
[Graphic Logo]
<PAGE>
[Graphic Logo]
<PAGE>
[Graphic Logo]
<PAGE>
[Graphic Logo]
<PAGE>
[Graphic Logo]
<PAGE>
[Graphic Logo] -- Jeans
<PAGE>
[Graphic Logo] -- Jeans
<PAGE>
[Graphic Logo]
<PAGE>
[Graphic Logo]
<PAGE>
[Graphic Logo]
<PAGE>
[Graphic Logo]
<PAGE>
ATTACHMENT 4
TO EXHIBIT A
o Exemplars of 24(degree) slant.
<PAGE>
[Graphic Logo]
<PAGE>
ATTACHMENT 5
TO EXHIBIT A
o Exemplars of 22(degree) slant.
<PAGE>
[Graphic Logo]
<PAGE>
ATTACHMENT 6A
TO EXHIBIT A
o Exemplars of vertical alignment.
<PAGE>
[Graphic Logo] -- Shirt
<PAGE>
[Graphic Logo] -- Shirt
<PAGE>
[Graphic Logo] -- Jeans
<PAGE>
[Graphic Logo] -- Shirt
<PAGE>
[Graphic Logo] -- Shirt
<PAGE>
[Graphic Logo] -- Shirt
<PAGE>
[Graphic Logo] -- Shirt
<PAGE>
[Graphic Logo] -- Shirt
<PAGE>
[Graphic Logo] -- Jeans
<PAGE>
[Graphic Logo] -- Jeans
<PAGE>
[Graphic Logo] -- Shirt
<PAGE>
[Graphic Logo]
<PAGE>
[Graphic Logo] -- Jeans
<PAGE>
[Graphic Logo]
<PAGE>
ATTACHMENT 6B
TO EXHIBIT A
o Exemplars of 19(degree) slant.
<PAGE>
[Graphic Logo]
<PAGE>
ATTACHMENT 7A
TO EXHIBIT A
o Exemplars of acceptable vertical BOSS logos.
<PAGE>
[Graphic Logo] -- Shirt
<PAGE>
[Graphic Logo]
<PAGE>
[Graphic Logo]
<PAGE>
[Graphic Logo]
<PAGE>
[Graphic Logo]
<PAGE>
[Graphic Logo]
<PAGE>
[Graphic Logo]
<PAGE>
ATTACHMENT 7B
TO EXHIBIT A
o Exemplars of unacceptable vertical BOSS logos.
<PAGE>
[Graphic Logo]
<PAGE>
ATTACHMENT 8
TO EXHIBIT A
o Exemplars of forbidden words.
*
* Text omitted pursuant to a request for confidential treatment and filed
separately with the Securities and Exchange Commission.
<PAGE>
ATTACHMENT 9
TO EXHIBIT A
o The BOSS Sport Patch
<PAGE>
[Graphic Logo]--Shirt
<PAGE>
[Graphic Logo]
<PAGE>
ATTACHMENT 10
TO EXHIBIT A
o Exemplars of acceptable coloration for "BOSS by I G Design" on polo
shirts.
<PAGE>
[Graphic Logo] -- Shirt
<PAGE>
[Graphic Logo] -- Shirt
<PAGE>
[Graphic Logo] -- Shirt
<PAGE>
[Graphic Logo] -- Shirt
<PAGE>
[Graphic Logo] -- Shirt
<PAGE>
[Graphic Logo] -- Shirt
<PAGE>
[Graphic Logo] -- Shirt
<PAGE>
[Graphic Logo] -- Shirt
<PAGE>
o Exemplar of unacceptable coloration for "BOSS by I G Design" on polo
shirts.
<PAGE>
[Graphic Logo]
<PAGE>
[Graphic Logo]
<PAGE>
[Graphic Logo]
<PAGE>
[Graphic Logo]
<PAGE>
[Graphic Logo]
<PAGE>
[Graphic Logo]
<PAGE>
[Graphic Logo]
<PAGE>
[Graphic Logo]
<PAGE>
[Graphic Logo]
<PAGE>
[Graphic Logo]
<PAGE>
[Graphic Logo]
<PAGE>
ATTACHMENT 11
TO EXHIBIT A
o Exemplar of acceptable shirts under Exhibit A, Section 9.a.
<PAGE>
[Graphic shirts]
<PAGE>
[Graphic Logo] -- Shirts
<PAGE>
[Graphic Logo] -- Shirts
<PAGE>
[Graphic shirts]
<PAGE>
[Graphic Logo] -- Shirts
<PAGE>
[Graphic Logo] -- Shirts
<PAGE>
o Exemplar of acceptable shirts under Exhibit A, Section 9.b.
<PAGE>
[Graphic Logo] -- Shirts
<PAGE>
[Graphic shirts]
<PAGE>
[Graphic Logo] -- Shirts
<PAGE>
[Graphic Logo] -- Shirts
<PAGE>
o Exemplar of acceptable shirts under Exhibit A, Section 9.c.
<PAGE>
[Graphic shirts]
<PAGE>
[Graphic Logo] -- Shirts
<PAGE>
[Graphic Logo] -- Shirts
<PAGE>
[Graphic shirts]
<PAGE>
[Graphic Logo] -- Shirts
<PAGE>
[Graphic Logo] -- Shirts
<PAGE>
[Graphic Logo] -- Shirts
<PAGE>
[Graphic Logo] -- Shirts
<PAGE>
10.11(d)(2)
EXHIBIT B
I. LICENSED PRODUCTS
A. Men's Apparel
1. Sportswear and Activewear. All sportswear and activewear clothing
other than the exclusions listed below. All fabrications may be used.
2. Outerwear. All jackets, coats, vests, capes and ponchos other than the
exclusions listed below. Such outerwear garments may be reversible,
lined, unlined, filled and/or fabric treated (waterproofed, coated,
etc.) and may have detachable sleeves, hoods and/or interlinings.
Lengths of such garments shall be 22" to 60". All fabrications may be
used except fur (except as trim) and leather (except as trim).
3. Headwear. All sports hats, visors and caps.
4. Swimwear. All types of swimwear.
5. Jogging Suits. All types of warm-ups and jogging suits of any
fabrication.
6. Belts. Belts bearing the Mark provided that such belts shall be sold
only as part of a Bottom and shall not be made out of leather.
B. Women's Apparel
1. Sportswear and Activewear. All sportswear and activewear clothing for
juniors, contemporary, misses and large sizes other than the
exclusions listed below. All fabrications may be used.
2. Outerwear. All jackets, coats, vests, capes and ponchos other than the
exclusions listed below. Such outerwear garments may be reversible,
lined, unlined, filled and/or fabric treated (waterproofed, coated,
etc.) and may have detachable sleeves, hoods and/or interlinings.
Lengths of such garments shall be 22" to 60". All fabrications may be
used except fur (except as trim) and leather (except as trim).
3. Headwear. All sports hats, visors and caps.
4. Swimwear. All types of swimwear.
5. Jogging Suits. All types of warm-ups and jogging suits of any
fabrication.
<PAGE>
6. Belts. All belts bearing the Mark provided that such belts shall be
sold only as part of a Bottom and shall not be made out of leather.
7. Other. Women's knit garments to be worn on the upper torso that are
either snapped or fixed through the crotch and the top portion of
which may be a halter, shoulder strap, short sleeve or long sleeve.
C. Children's Apparel
1. Children's Sportswear and Activewear. All sportswear and activewear
clothing other than the exclusions listed below. All fabrications may
be used.
2. Outerwear. All jackets, coats, vests, capes and ponchos other than the
exclusions listed below. Such outerwear garments may be reversible,
lined, unlined, filled and/or fabric treated (waterproofed, coated,
etc.) and may have detachable sleeves, hoods and/or interlinings. All
fabrications may be used except fur (except as trim) and leather
(except as trim).
3. Headwear. All sports hats, visors and caps.
4. Swimwear. All types of swimwear.
5 Jogging Suits. All types of warm-ups and jogging suits of any
fabrication.
6. Belts. All belts bearing the Mark provided that such belts shall be
sold only as part of a Bottom and shall not be made out of leather.
D. Other
All apparel, including uniforms and work clothes, which is intended to
be worn solely and exclusively while persons are performing the normal
duties of their employment.
II. PRODUCTS BEARING A BOSS MARK THAT ISAACS SHALL NOT MANUFACTURE
A. Notwithstanding the foregoing, the parties agree that Licensed Products
do not include any of the following men's, women's or children's apparel:
1. All styles of tailored clothing, furnishings and accessories,
including but not limited to tuxedos, gowns and evening wear, sportcoats,
blazers, jackets, suits, dress pants, career apparel including blouses,
skirts and dresses, raincoats, top coats, dress shirts, ties, dress vests,
hosiery (including but not limited to socks, stockings and hose), and
leather belts.
<PAGE>
2. All types of leather clothing (although leather trim may be used on
all products listed in Section 1);
3. All styles of shoes and other footwear.
4. Clothing designed and sold for the primary purpose of engaging in
golf, tennis, skiing, motor sports, windsurfing or sailing.
5. Except as described in Exhibit B Section I.B.7. above, bodywear,
including but not limited to underwear (including tee shirts intended to be
worn as underwear); loungewear and intimate apparel; and sleepwear and
robes.
B. Unless otherwise agreed to by the parties, Licensed Products shall not
include any non-apparel products of any kind.
<PAGE>
10.11(d)(3)(a)
EXHIBIT C
OVERSEAS MANUFACTURING RIGHTS GRANTED
*
* Text omitted pursuant to a request for confidential treatment and filed
separately with the Securities and Exchange Commission.
<PAGE>
10.11(d)(3)(b)
EXHIBIT C1
*
* Text omitted pursuant to a request for confidential treatment and filed
separately with the Securities and Exchange Commission.
<PAGE>
10.11(d)(3)(c)
EXHIBIT C2
*
* Text omitted pursuant to a request for confidential treatment and filed
separately with the Securities and Exchange Commission.
<PAGE>
10.11(d)(4)
EXHIBIT D
List of LICENSOR Agreements pursuant to Paragraph 2.h.
*
* Text omitted pursuant to a request for confidential treatment and filed
separately with the Securities and Exchange Commission.
<PAGE>
10.11(d)(5)
EXHIBIT E
o Prohibited stitching designs.
<PAGE>
[PHOTOGRAPH OF JEANS]
[GRAPHIC OMITTED]
<PAGE>
EXHIBIT A
Int. Cl.: 25
Prior U.S. Cl.: 39
Reg. No. 1,139,254
United States Patent and Trademark Office Registered Sep. 2, 1980
- --------------------------------------------------------------------------------
TRADEMARK
Principal Register
[GRAPHIC OMITTED]
Levi Strauss & Co. (Delaware corporation) For: PANTS, JACKETS, DRESSES AND
Two Embarcadero Cir. SHORTS, in CLASS 25 (U.S. CL. 39).
San Francisco, Calif. 94106 First use 1873: in commerce 1873
Owner of U.S. Reg. No. 404 248
Reg. No. 169,399
Filed May 8, 1972
M.I. LEAHY, Primary Examiner
<PAGE>
10.11(d)(6)(a)
EXHIBIT F
ROYALTY PAYMENTS
LICENSEE shall pay to LICENSOR a royalty as follows:
A. For years 1-4:
1. Base Royalty: For years 1-4 of this Agreement on the first $32,000,000
of Territory Net Sales: Twelve and One Half Percent (12.5%), provided, however,
that should LICENSEE prepay the Secured Limited Recourse Promissory Note between
the parties, base royalties on the remaining portion of the first $32,000,000
Territory Net Sales made after such prepayment shall be at sixteen percent
(16%).(1)
2. Additional Royalty: For all Territory Net Sales above $83,999,999, a
royalty based on the following percentages:
Territory Net Sales Level achieved by LICENSEE Additional Royalty Percentage
---------------------------------------------- -----------------------------
YEARS 1-2(2)
------------
$84,000,000-105,249,999 5%
105,250,000-157,999,999 0%
158,000,000 and up 4%
- ----------
(1) If the Effective Date of this Agreement is prior to January 1, 1998,
LICENSEE shall also pay a base royalty in accordance with this Exhibit prorated
by the number of days in 1997 this Agreement is in effect, such royalty payment
due on January 31, 1998.
(2) The additional royalty payment to LICENSOR for 1998 shall be
calculated by applying the royalty payment schedule to the sum of LICENSEE's
Territory Net Sales for the last quarter of calendar year 1997 and the full
calendar year 1998.
<PAGE>
B.
*
* Text omitted pursuant to a request for confidential treatment and filed
separately with the Securities and Exchange Commission.
<PAGE>
* Text omitted pursuant to a request for confidential treatment and filed
separately with the Securities and Exchange Commission.
<PAGE>
*
* Text omitted pursuant to a request for confidential treatment and filed
separately with the Securities and Exchange Commission.
<PAGE>
10.11(d)(6)(b)
EXHIBIT F1
Minimum Territory Net Sales
Contract Year Minimum Territory Net Sales
1998 $ 32,000,000
1999 $ 32,000,000
2000 $ 32,000,000
2001 $ 32,000,000
Optional Term (1st Extension)
2002
$ 20,000,000
2003 $ 16,000,000
2004 $ 16,000,000
Optional Term (2nd Extension)
2005
$ 16,000,000
2006 $ 16,000,000
2007 $ 16,000,000
<PAGE>
10.11(d)(6)(c)
EXHIBIT F2
CALCULATION OF ANNUAL ROYALTY PAYMENT
CONTRACT YEAR
*
Remittance Enclosed:
Check No. ___________________
THE UNDERSIGNED, being the ____________________ of I.C. Isaacs & Company
L.P., hereby certifies pursuant to Section _____ of the Agreement dated
__________, 1997, by and between ___________ and I.C. Isaacs & Company L.P.,
that the information continued in the attached Verification of Licensed Products
Sold is true and correct in all material respects as of the date hereof.
SIGNED:
-------------------------
NAME:
-------------------------
Title:
-------------------------
Date:
-------------------------
* Text omitted pursuant to a request for confidential treatment and filed
separately with the Securities and Exchange Commission.
<PAGE>
For the period: January 1 to December 31.
- --------------------------------------------------------------------------------
ANNUAL
ITEM QUANTITY SOLD SALES FIGURE (#)
- --------------------------------------------------------------------------------
Pants, including Men _____________________ _____________________
slacks & trousers Women _____________________ _____________________
Children _____________________ _____________________
- --------------------------------------------------------------------------------
Jeans without belts Men _____________________ _____________________
Women _____________________ _____________________
Children _____________________ _____________________
- --------------------------------------------------------------------------------
Jeans with belts Men _____________________ _____________________
Women _____________________ _____________________
Children _____________________ _____________________
- --------------------------------------------------------------------------------
Shorts, including Men _____________________ _____________________
shortalls Women _____________________ _____________________
Children _____________________ _____________________
- --------------------------------------------------------------------------------
Jean Shorts Men _____________________ _____________________
Women _____________________ _____________________
Children _____________________ _____________________
- --------------------------------------------------------------------------------
Sweatpants Men _____________________ _____________________
Women _____________________ _____________________
Children _____________________ _____________________
- --------------------------------------------------------------------------------
Overalls Men _____________________ _____________________
Women _____________________ _____________________
Children _____________________ _____________________
- --------------------------------------------------------------------------------
T-Shirts Men _____________________ _____________________
Women _____________________ _____________________
Children _____________________ _____________________
- --------------------------------------------------------------------------------
Polo Shirts Men _____________________ _____________________
Women _____________________ _____________________
Children _____________________ _____________________
- --------------------------------------------------------------------------------
Tanktops Men _____________________ _____________________
Women _____________________ _____________________
Children _____________________ _____________________
- --------------------------------------------------------------------------------
Sweatshirts Men _____________________ _____________________
Women _____________________ _____________________
Children _____________________ _____________________
- --------------------------------------------------------------------------------
<PAGE>
- --------------------------------------------------------------------------------
All other shirts, Men _____________________ _____________________
including knit and Women _____________________ _____________________
woven sportshirts, Children _____________________ _____________________
tunics, smocks,
beach cover-ups and
pullover style shirts
- --------------------------------------------------------------------------------
Sweaters, including Men _____________________ _____________________
pullover style Women _____________________ _____________________
Children _____________________ _____________________
- --------------------------------------------------------------------------------
Warm-up sets and Men _____________________ _____________________
Jogging Suits Women _____________________ _____________________
Children _____________________ _____________________
- --------------------------------------------------------------------------------
Jumpsuits Men _____________________ _____________________
Women _____________________ _____________________
Children _____________________ _____________________
- --------------------------------------------------------------------------------
Jackets, including Men _____________________ _____________________
blousons and parkas Women _____________________ _____________________
Children _____________________ _____________________
- --------------------------------------------------------------------------------
Denim Jackets Men _____________________ _____________________
Women _____________________ _____________________
Children _____________________ _____________________
- --------------------------------------------------------------------------------
Vests Men _____________________ _____________________
Women _____________________ _____________________
Children _____________________ _____________________
- --------------------------------------------------------------------------------
Coats, including Men _____________________ _____________________
short coats Women _____________________ _____________________
Children _____________________ _____________________
- --------------------------------------------------------------------------------
Rainwear Men _____________________ _____________________
Women _____________________ _____________________
Children _____________________ _____________________
- --------------------------------------------------------------------------------
Swimwear, Men _____________________ _____________________
including swimtanks Women _____________________ _____________________
and bathing suits Children _____________________ _____________________
- --------------------------------------------------------------------------------
Sports hats, Men _____________________ _____________________
including caps Women _____________________ _____________________
Children _____________________ _____________________
- --------------------------------------------------------------------------------
Sports visors, Men _____________________ _____________________
including sports Women _____________________ _____________________
headbands Children _____________________ _____________________
- --------------------------------------------------------------------------------
<PAGE>
10.11(d)(7)
EXHIBIT G
Customs Letter
TO WHOM IT MAY CONCERN:
I.C. Isaacs & Company L.P. trading as "Boss by I G Design," markets and
distributes "BOSS" branded clothing in the United States of America pursuant
to its trademark rights in the USA. *, a wholly-owned subsidiary of *, has
authorized I.C. Isaacs & Company L.P. pursuant to a Manufacturing Rights
Agreement dated as of ____________ to manufacture "BOSS" branded sportswear
in ________________ for export to the USA only. Therefore, shipments of such
"BOSS" branded clothing from ________________ co-signed to I.C. Isaacs &
Company L.P. for ultimate shipment to the USA are under authority from *
and *.
*
By:
-----------------------------
-----------------------------
Officer of General Partner
ATTENTION: ONLY THE ORIGINAL; EXECUTED VERSION OF THIS LETTER IS VALID, NO
COPIES ARE ACCEPTABLE, AND THE ORIGINAL IS VALID FOR ONLY ONE YEAR FROM THE DATE
OF THIS LETTER.
* Text omitted pursuant to a request for confidential treatment and filed
separately with the Securities and Exchange Commission.
<PAGE>
EXHIBIT 10.11(d)(8)(a)
EXHIBIT H
*
* Text omitted pursuant to a request for confidential treatment and filed
separately with the Securities and Exchange Commission.
<PAGE>
*
* Text omitted pursuant to a request for confidential treatment and filed
separately with the Securities and Exchange Commission.
<PAGE>
EXHIBIT 10.11(d)(8)(b)
EXHIBIT H1
*
* Text omitted pursuant to a request for confidential treatment and filed
separately with the Securities and Exchange Commission.
<PAGE>
*
* Text omitted pursuant to a request for confidential treatment and filed
separately with the Securities and Exchange Commission.
<PAGE>
Exhibit E to 10.11
EXHIBIT E/FRA
OPTION AGREEMENT
THIS OPTION AGREEMENT is entered into as of this ___ day of September,
l997 by and between *, a corporation organized and existing under the laws of
Delaware ("Buyer") and I.C. ISAACS & COMPANY L.P., a limited partnership
organized and existing under the laws of the State of Delaware ("Seller").
WHEREAS, simultaneously with the execution of this Option Agreement,
Buyer is lending to Seller funds in the amount of *, which indebtedness of
Seller to Buyer is evidenced in a Secured Limited Recourse Promissory Note of
Seller of even date herewith (the "Note"), which funds are to be used by
Seller to purchase certain trademark rights and related assets from
Brookhurst, Inc. ("Brookhurst") referred to as the "Trademark Assets" in that
certain Worldwide Rights Acquisition Agreement dated September __, l997 by
and among Seller, Brookhurst and William Ott (the "Acquisition Agreement");
WHEREAS, simultaneously herewith, Buyer has purchased from Seller all of
Seller's right, title and interest outside of the United States of America and
its territories and possessions in and to all "BOSS" trademarks and other
proprietary interests, if any, related thereto, together with the good will
related thereto;
WHEREAS, Buyer wishes to acquire an option to purchase from Seller all of
the remaining Trademark Assets of Seller and all rights of Seller under the
Acquisition Agreement and the Escrow Agreement referred to therein, subject to
all obligations of Seller thereunder,
* Text omitted pursuant to a request for confidential treatment and filed
separately with the Securities and Exchange Commission.
<PAGE>
and Seller is willing to grant such option on the terms and subject to the
conditions hereinafter set forth;
NOW, THEREFORE, in consideration of the mutual promises herein contained,
the parties hereto agree as follows:
ARTICLE I
GRANT OF OPTION
1.1 Grant of Option. Upon the terms and subject to the conditions
hereinafter set forth, Seller hereby grants to Buyer the right and option (the
"Option") to purchase (i) all of the Trademark Assets and all rights relating
to, or derived from, the Trademark Assets not already acquired by Buyer, and
(ii) all rights of Seller under the Acquisition Agreement, including, without
limitation, all rights of Seller under the Escrow Agreement referred to therein,
(the "Option Assets"). In the event the Option is exercised, the Option Assets
shall be sold free and clear of all pledges, security interests, mortgages and
liens (other than the lien of Buyer established pursuant to the Note and any
liens on the Option Assets which existed prior to the acquisition of the
Trademark Assets by Seller from Brookhurst) (collectively, "Encumbrances")
subject to the obligations of Seller arising from and after the Closing (as
hereinafter defined) under the Assumed Agreements (as defined in the Acquisition
Agreement) solely insofar as they relate to the use of the Option Assets after
Closing.
1.2 Timing and Exercise Procedure. (a) The Option may be exercised:
(i) At any time during the period commencing on the ninth anniversary
of the date hereof and ending on December 31, 2007; or
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(ii) Prior to the ninth anniversary of the date hereof on or
after such date as (x) Seller shall have been in substantial material
breach of any of Section 2.a, 2.b, 3.b., or 7.a. of the Concurrent Use
Agreement by and between Seller and *, which breach has not
been is not cured within thirty (30) days after the date of written
notice by Buyer to Seller of such breach; (y) an "Event of Default"
shall have occurred under the Note, or (z) the Foreign Manufacturing
Rights Agreement of even date herewith by and between Buyer and Seller
(the "Manufacturing Rights Agreement") shall terminate for any reason;
(in either case, the "Exercise Period"). The Option may be exercised by written
notice given by Buyer to Seller (an "Option Notice") at any time during the
Exercise Period, which written notice shall be given in accordance with the
notice provision of this Option Agreement.
*
1.3 Exercise Price. In consideration for the sale of the Option Assets,
Buyer agrees to pay to Seller the amount of *
* Text omitted pursuant to a request for confidential treatment and filed
separately with the Securities and Exchange Commission.
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*
1.4 Closing. The closing of the purchase of the Option Assets (the
"Closing") shall take place, in the event the Option is exercised pursuant to
Section 1.2(a)(i), on December 31, 2007 or, in the event of exercise pursuant to
Section 1.2(ii) or the exercise of the Put Option pursuant to Section 1.2 (b) on
the date thirty (30) days after the Exercise Date (the "Closing Date") at the
offices of Coudert Brothers, 1114 Avenue of the Americas, New York, New York at
10:00 a.m. local time or at such other time and place mutually agreed to by the
parties. At the Closing the parties shall exchange the various closing
documents referred to in Article II of this Option Agreement.
ARTICLE II
CLOSING DELIVERIES
2.1 Deliveries to be Made by Seller. On the Closing Date, Seller shall
have executed and delivered to Buyer the following:
(a) executed trademark assignments in forms reasonably acceptable to
Buyer and Seller transferring all trademarks (and other proprietary interests
related thereto, if any,) including the good will related thereto, constituting
or relating to Option Assets (the "Trademarks") to Buyer;
(b) possession of (i) an original of each of Seller's trademark
registrations then currently in effect and constituting Option Assets (except
that a copy of Seller's California state
* Text omitted pursuant to a request for confidential treatment and filed
separately with the Securities and Exchange Commission.
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registration may be delivered) and (ii) Seller's original trademark application
and registration files relating to the Option Assets including, for example,
letters or other materials from each of Seller's domestic trademark counsel
showing deadlines for trademark office actions to the extent in Seller's
possession, custody or control;
(c) appropriate original instruments of consent or waiver executed by
third parties whose consent or waiver is required to consummate the transactions
contemplated hereby;
(d) an executed agreement of assignment and assumption of Assumed
Agreements (the "Assumption Agreement") in a form reasonably acceptable to Buyer
and Seller; and
(e) such other instruments and documents as may be elsewhere herein
required.
2.2 Deliveries To Be Made by Buyer. On the Closing Date, Buyer shall have
executed and delivered to Seller the following:
(a) the payment provided for in Section 1.3(a), which payment may be
satisfied by offset against principal amounts owing to Buyer under the Note; and
(b) the Assumption Agreement.
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF SELLER
Seller hereby represents and warrants to Buyer as follows:
3.1 Organization and Good Standing of the Seller. Seller is a limited
partnership duly organized, validly existing and in good standing under the laws
of the State of Delaware.
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3.2 Authority; Execution. Seller has all the requisite power and
authority, corporate and otherwise, to execute, deliver and perform its
obligations under this Option Agreement. The execution and delivery of this
Option Agreement, and each of the other instruments of transfer, conveyance and
assignment to be delivered hereunder, have been duly and validly authorized by
all necessary corporate and other action on the part of Seller, and this Option
Agreement has been and each of such other instruments to be delivered hereunder
will be duly executed by Seller. This Option Agreement constitutes the valid
and binding agreement of Seller, enforceable against Seller in accordance with
its respective terms.
3.3 Breach of Statute or Contract.
(a) The execution, delivery and performance of this Option Agreement
by Seller and the consummation of the transactions contemplated hereby will
not: (i) violate or conflict with any provision of the charter documents
or by-laws of Seller; (ii) violate or conflict with, result in the breach
or termination of or otherwise give any other contracting party the right
to terminate, or constitute a default (or an event which, with the lapse of
time, or the giving of notice, or both, will constitute a default) under,
any contract or other instrument to which Seller is a party and which
relate to the Option Assets or by which Seller is bound, or result in the
creation of any Encumbrance upon any of the Option Assets pursuant to the
terms of any such contract or instrument, or (iii) violate or conflict with
any judgment, order, writ, injunction or decree of any court or
governmental body of any jurisdiction applicable to Seller (excluding any
judgments, orders, writs, injunctions or decrees in any actions or
proceedings involving * or its affiliates) or, to the
knowledge of Seller, any law or regulation materially adversely affecting
Buyer's ability to exploit the Option Assets.
* Text omitted pursuant to a request for confidential treatment and filed
separately with the Securities and Exchange Commission.
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(b) There are no notices, licenses, consents, permissions or approvals
of any nature whatsoever which are required to be obtained by Seller from any
Federal, state or local governmental or regulatory body or other third party or,
to Seller's knowledge, from any foreign governmental or regulatory body for the
consummation of the transactions contemplated by this Option Agreement, or as a
condition to the sale, assignment and transfer of the Option Assets to be
effected hereunder.
3.4 No Alienation of Rights. Seller has not transferred, assigned,
licensed or otherwise encumbered with Encumbrances any of its rights in any
Option Asset.
3.5 Ownership of Option Assets. As between Seller and all
affiliates and other persons or entities who have an ownership interest in
Seller (or any affiliate thereof) or who may have been expressly authorized by
Seller to use the Option Assets, Seller owns all rights in and to the Option
Assets.
3.6 Knowledge. Whenever a statement regarding the existence or
absence of facts in this Option Agreement is qualified by a phrase such as to
Seller's knowledge or words to similar effect, it is intended by the parties
that the information attributed to Seller be actually known, or information
which should have been known based on reasonable inquiry by the President, the
Chairman, any Chief Executive Officer or the Chief Financial Officer of Seller.
3.7 Materiality. The phrase "materially adversely affecting Buyer's
ability to exploit the Option Assets" shall be deemed to mean (i) the existence
or occurrence at any time from and after the date hereof of any actual harm, or
the existence of any reasonably anticipated actual harm, to Buyer's ability to
exploit the Option Assets or (ii) either (x) the failure of Seller to remedy the
breach in question assuming the breach is remediable or (y) the inability of
Seller
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to remedy the breach in question without prejudice to Buyer's ability to exploit
the Option Assets. For purposes of this Section 3.7, no "actual harm" shall be
deemed to exist as to any of the first three claims of harm unless any such
claim of harm reasonably involves at least the following amounts in damage or
loss:
First Claim *
Second Claim *
Third Claim *
it being agreed that, without prejudice to, or limitation of, Seller's ability
to claim that any subsequent claim involves no "actual harm", no such monetary
threshold applies to any subsequent claims.
3.8 No Representations and Warranties as to Trademark Assets. Seller
makes no representations and warranties of any kind, and shall have no
responsibility, liability or obligations whatsoever to Buyer or any affiliate
thereof (including, without limitation, for any claims for indemnity) with
respect to any matter relating to the Trademark Assets prior to the time Seller
acquired them, including, without limitation, the quality of title, the
condition or use of the Trademark Assets or the conduct of the business
thereunder prior to the time Seller acquired the Trademark Assets or with
respect to any actions taken at the direction of Buyer.
ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF BUYER
4.1 Organization and Good Standing of Buyer. Buyer is a corporation
duly organized and validly existing under the laws of Delaware.
4.2 Authority; Execution. Buyer has all requisite power and
authority, corporate and otherwise, to execute, deliver and perform its
obligations under this Option Agreement. The
* Text omitted pursuant to a request for confidential treatment and filed
separately with the Securities and Exchange Commission.
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execution and delivery of this Option Agreement, and each of the other
instruments of transfer, conveyance and assignment delivered hereunder, by Buyer
have been duly and validly authorized by all necessary corporate and other
action on the part of Buyer, and this Option Agreement and each of such other
instruments has been duly executed by Buyer, as applicable. This Option
Agreement constitutes the valid and binding agreement of Buyer, enforceable
against Buyer in accordance with its terms.
4.3 Breach of Statute or Contract.
(a) The execution, delivery and performance of this Option Agreement
by Buyer and the consummation of the transactions contemplated hereby will not:
(i) violate or conflict with any provision of the Certificate of Incorporation
or by-laws of Buyer; (ii) violate or conflict with, result in the breach or
termination of or otherwise give any other contracting party the right to
terminate, or constitute a default (or an event which, with the lapse of time,
or the giving of notice, or both, will constitute a default) under, any contract
or other instrument to which Buyer is a party; or (iii) violate or conflict with
any judgment, order, writ, injunction or decree of any court or governmental
body of any jurisdiction applicable to Buyer (excluding any judgments, orders,
injunctions, decrees or awards in any actions or proceedings involving Seller or
its affiliates) or, to the knowledge of Buyer, any law or regulation materially
adversely affecting Buyer's ability to consummate the transactions contemplated
by this Option Agreement.
(b) There are no notices, licenses, consents, permissions or
approvals of any nature whatsoever which are required to be obtained by Buyer
from any Federal, state or local governmental or regulatory body or other third
party or, to Buyer's knowledge, from any
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foreign governmental or regulatory body for the consummation of the transactions
contemplated by this Option Agreement, or as a condition to the sale, assignment
and transfer of the Trademark Assets to be effected hereunder.
ARTICLE V
CONDITIONS PRECEDENT TO OBLIGATIONS OF BUYER AND SELLER
5.1 Conditions Precedent to Obligations of Buyer. The obligations of Buyer
to consummate the transactions contemplated under this Option Agreement are
subject to the fulfillment, as of the Closing Date, of each of the following
conditions (any or all of which may be waived by Buyer):
(a) the representations and warranties of Seller contained in Article
III of this Option Agreement shall be true and correct in all material respects
as of the Closing Date;
(b) Seller shall have performed and complied in all material
respects with all obligations, covenants and undertakings required by this
Option Agreement to be performed or complied with by Seller on or prior to the
Closing Date;
(c) there has been no material adverse change within the control of
Seller in the Option Assets; provided that in no event shall a decrease in sales
of products sold under the Option Assets or a change in the market for such
products be deemed such a material adverse change;
(d) Buyer shall have been furnished with a certificate, dated the
Closing Date and executed by an officer of Seller, certifying to the fulfillment
of the conditions specified in Sections 5.1(a), (b) and (c); and
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(e) no judgment, order or decree shall have been rendered which has
the effect of enjoining the consummation of the transactions contemplated by
this Option Agreement.
5.2 Conditions Precedent to Obligations of Seller. The obligations of
Seller to consummate the transactions contemplated under this Option Agreement
are subject to the fulfillment, as of the Closing Date, of each of the following
conditions (any or all of which may be waived by Seller):
(a) the representations and warranties of Buyer set forth in Article
IV of this Option Agreement shall be true and correct in all material respects
as of the Closing Date;
(b) Buyer shall have performed and complied in all material respects
with all obligations, covenants and undertakings required by this Option
Agreement to be performed or complied with by Buyer on or prior to the Closing
Date;
(c) Seller shall have been furnished with a certificate, dated the
Closing Date and executed by an officer of Buyer, to certifying the fulfillment
of the conditions specified in Sections 5.2(a) and (b); and
(d) no judgment, order or decree shall have been rendered which has
the effect of enjoining the consummation of the transactions contemplated by
this Option Agreement.
5.3 Effect of Closing. The parties acknowledge and agree that proceeding
with the Closing shall not prejudice any rights or remedies of either party for
breach of any covenant, representation or warranty of the other party existing
at or prior to Closing.
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ARTICLE VI
SURVIVAL OF REPRESENTATIONS AND WARRANTIES;
INDEMNIFICATION
6.1 All representations and warranties contained in or made pursuant to
this Option Agreement shall *
6.2*
* Text omitted pursuant to a request for confidential treatment and filed
separately with the Securities and Exchange Commission.
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*
6.3 *
* Text omitted pursuant to a request for confidential treatment and filed
separately with the Securities and Exchange Commission.
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*
6.4 Notification of Claims. In the event of the occurrence of any event
which any party asserts constitutes a Buyer Indemnity Claim or Seller Indemnity
Claim, as applicable, the indemnified party shall provide the indemnifying party
with prompt notice of such event, including, without limitation, any facts and
circumstances which give rise to such claim, and shall otherwise make available
to the indemnifying party all relevant information which is material to the
claim and which is in the possession of the indemnified party. If such event
involves the claim of any third party (a "Third-Party Claim"), the indemnifying
party shall have the right to elect to join in the defense, settlement,
adjustment or compromise of any such Third-Party Claim, and to employ counsel to
assist such indemnifying party in connection with the handling of such claim, at
the sole expense of the indemnifying party, and no such claim shall be settled,
adjusted or compromised, or the defense thereof terminated, without the prior
consent of the indemnifying party unless and until the indemnifying party shall
have failed, after the lapse of a reasonable period of time, but in no event
more than 30 days after written notice to it of the Third-Party Claim, to join
in the defense, settlement, adjustment or compromise of the same. An
indemnified party's failure within a reasonable time to give notice or to
furnish the indemnifying party with any relevant data and documents in its
possession in connection with any Third-Party Claim shall not constitute a
defense (in part or in whole) to any claim for indemnification by such party,
except and only to the extent that such failure shall result in any material
prejudice to the indemnifying party. If so desired by any indemnifying party,
such party may elect, at such party's sole expense, to assume control of the
defense, settlement,
* Text omitted pursuant to a request for confidential treatment and filed
separately with the Securities and Exchange Commission.
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adjustment or compromise of any Third-Party Claim, insofar as the claim relates
to the liability of the indemnifying party, provided that such indemnifying
party shall obtain the consent of all indemnified parties before entering into
any settlement, adjustment and compromise of such claim, or ceasing to defend
against such claim, if as a result thereof, or pursuant thereto, there would be
imposed on an indemnified party any liability or obligation not covered by the
indemnification obligations of the indemnifying party under this Option
Agreement (including, without limitation, any injunctive relief or other
remedy).
ARTICLE VII
COVENANTS
7.1 *
7.2 *
* Text omitted pursuant to a request for confidential treatment and filed
separately with the Securities and Exchange Commission.
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*
* Text omitted pursuant to a request for confidential treatment and filed
separately with the Securities and Exchange Commission.
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7.3 Further Assurances.
(a) From time to time until the expiration of * from the Closing
Date, upon the request and at the expense of Buyer but without further
consideration, Seller shall:
(i) do, execute, acknowledge, deliver and file, or shall cause
to be done, executed, acknowledged, delivered and filed, all such further
acts, deeds, transfers, conveyances, assignments or assurances (including,
without limitation, for purposes of transferring record ownership of the
Option Assets to Buyer) as may be reasonably requested by Buyer for
transferring, conveying, assigning and reducing to Buyer's possession,
ownership and use of the Option Assets from and after Closing, including,
without limitation, executing on the Closing Date any assignments of
Trademarks in recordable form requested by Buyer; and
(ii) deliver to Buyer such other records, documentation and
information in Seller's possession or control as may be reasonably
requested by Buyer to assist Buyer in the use and protection of the Option
Assets from and after Closing.
(b) *
* Text omitted pursuant to a request for confidential treatment and filed
separately with the Securities and Exchange Commission.
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*
ARTICLE VIII
GENERAL
8.1 Waiver. Any failure of Buyer, on the one hand, or Seller, on the
other, to comply with any of the obligations or agreements set forth in this
Option Agreement or to fulfill any condition set forth in this Option Agreement
may be waived only by written instrument signed by the other party. No failure
by any party to exercise, and no delay in exercising, any right hereunder shall
operate as a waiver of such right, nor shall any single or partial exercise of
any right hereunder by any party preclude any other or future exercise of that
right or any other right hereunder by that party.
8.2 Notices. All notices, requests or other communications required or
permitted hereunder (excluding, however, mail and/or communications covered
under paragraph 7.3(c) hereof) shall be given or made in writing and shall be
(i) delivered personally (including commercial carrier), (ii) sent by registered
or certified airmail, return receipt requested, postage prepaid or (iii) sent by
telecopier, addressed to the party to whom they are directed at the following
addresses, or at such other address as may from time to time be designated by
such party to the others in accordance with this Section 8.2:
* Text omitted pursuant to a request for confidential treatment and filed
separately with the Securities and Exchange Commission.
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If to Seller, to:
I. C. Isaacs & Company L.P.
3840 Bank Street
Baltimore, Maryland 21224
Attention: President and Co-Chief Executive Officer
Telecopier: 410/558-2096
I. C. Isaacs & Company L.P.
350 Fifth Avenue
Suite 1029
New York, New York 10118
Attention: Chairman and Co-Chief Executive Officer
Telecopier: 212/695-7579
With a copy to:
Piper & Marbury L.L.P.
Charles Center South
36 South Charles Street
Baltimore, Maryland 21201-3010
Attention: Robert J. Mathias, Esq.
Telecopier: 410/576-1604
If to Buyer, to:
*
With a copy to:
Coudert Brothers
1627 I Street, N.W.
Washington, D.C. 20006
Attention: Wendy L. Addiss, Esq.
Telecopier: 202/775-1168
* Text omitted pursuant to a request for confidential treatment and filed
separately with the Securities and Exchange Commission.
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and
Howrey & Simon
1299 Pennsylvania Avenue, N.W.
Washington, D.C. 20004
Attention: Robert M. Bruskin, Esq.
Telecopier: 202/383-6610
Any notice, request or other communications shall be deemed to have been
given and to be effective upon receipt or refusal by the addressee. Any party
may change its address for notices hereunder, effective upon giving of notice of
such change hereunder to the other parties.
8.3 No Third Party Beneficiaries. Neither this Option Agreement nor any
provision hereof, nor any document or instrument executed or delivered pursuant
hereto, shall be deemed to create any right in favor of or impose any obligation
upon any person or entity other than Buyer and Seller and their respective
successors and assigns.
8.4 *
* Text omitted pursuant to a request for confidential treatment and filed
separately with the Securities and Exchange Commission.
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*
8.5 Captions and Paragraph Headings. Captions and paragraph headings used
in this Option Agreement are for convenience only and are not a part of this
Option Agreement and shall not be used in interpreting or construing it.
8.6 Entire Agreement. The making, execution and delivery of this Option
Agreement by the parties has been induced by no representations, statements,
warranties or agreements other than those herein expressed. This Option
Agreement embodies the entire understanding of the parties with respect to the
subject matter hereof. Notwithstanding the foregoing, the parties acknowledge
that a number of different agreements and instruments of which the parties are
signatory are all being executed simultaneously with this Option Agreement.
This Option Agreement may be amended or modified only by an instrument of equal
formality signed by the parties or their duly authorized representatives. The
parties have made no representations or warranties not expressly set forth in
this Option Agreement. This Option Agreement supersedes and terminates all
prior discussions, negotiations, understandings, arrangements and agreements
among the parties relating to the subject matter hereof, except as expressly set
forth herein.
* Text omitted pursuant to a request for confidential treatment and filed
separately with the Securities and Exchange Commission.
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8.7 Counterparts. This Option Agreement may be executed in any number of
duplicate counterparts, each of which shall be deemed an original and all of
which together shall constitute one and the same instrument.
8.8 Assignability. Neither party hereto may assign any of its interests,
rights or obligations under this Option Agreement without the prior written
consent of the other party. Notwithstanding the foregoing, Buyer may assign its
rights, but not its obligations, under this Option Agreement to any entity under
common ownership and control with Buyer or to any successor-in-interest of Buyer
to the Option Assets without the consent of Seller. Any impermissible attempted
assignment of this Option Agreement without such prior written consent shall be
void as to the other parties to this Option Agreement. Notwithstanding anything
to the contrary set forth in this Agreement, Seller shall be permitted to assign
and transfer Seller's rights under this Agreement to any parent, subsidiary or
other affiliate of Seller if Seller or its successor in interest remains fully
liable for the performance of this Agreement by such assignee or transferee and
indemnifies Buyer with respect to any costs and damages Buyer may incur because
of such assignment or transfer.
8.9 Expenses. The parties shall each bear their own expenses in
connection with the negotiation, execution and delivery of this Option Agreement
and the performance of their respective obligations hereunder.
8.10 Successors and Assigns. This Option Agreement and the provisions
thereof shall be binding upon and inure to the benefit of the respective
successors and permitted assigns of the parties hereto.
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8.11 Governing Law. The validity, construction, operation and effect of
any and all of the terms and provisions of this Option Agreement shall be
determined and enforced in accordance with *
8.12 *
* Text omitted pursuant to a request for confidential treatment and filed
separately with the Securities and Exchange Commission.
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*
8.13 *
* Text omitted pursuant to a request for confidential treatment and filed
separately with the Securities and Exchange Commission.
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*
* Text omitted pursuant to a request for confidential treatment and filed
separately with the Securities and Exchange Commission.
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IN WITNESS WHEREOF, the parties have duly signed this Option Agreement the
day and year first written above.
I.C. ISAACS & COMPANY L.P., a Delaware limited
partnership
By:_______________________________________
Name: Robert J. Arnot
Title: Chairman and Co-Chief Executive
Officer
By:_______________________________________
Name: Gerald W. Lear
Title: President and Co-Chief Executive
Officer
*
By:_______________________________________
Name:
Title:
* Text omitted pursuant to a request for confidential treatment and filed
separately with the Securities and Exchange Commission.
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Exhibit F to 10.11
EXHIBIT F/FRA
SECURED LIMITED RECOURSE PROMISSORY NOTE
September __, 1997
FOR VALUE RECEIVED I.C. ISAACS & COMPANY L.P., a limited partnership
organized and existing under the laws of the State of Delaware with its
principal place of business located at 3840 Bank Street, Baltimore, MD 21224
("Maker"), hereby promises to pay to *, a corporation organized and
existing under the laws of Delaware with its principal place of business
located at c/o The Corporation Trust Company, 1209 Orange Street, Wilmington,
New Castle County, Delaware 19801 ("Lender"), the principal sum of U.S. $*,
on December 31, 2007. This Promissory Note is hereinafter referred to as the
"Note".
1. Interest. The outstanding principal sum of this Note shall bear
simple interest at the per annum rate of * (computed on the basis of a
365-day year and the number of actual days elapsed). Interest shall accrue
as of the date of this Note, and shall be payable quarterly on each January
31, April 30, July 31 and October 31 following the date hereof commencing on
January 31, 1998.
2. Prepayment. This Note may be prepaid at any time by Maker upon
payment of the total amount of principal (or, at the option of Maker, upon
termination of the Manufacturing Rights Agreement (as hereinafter defined)
for any reason, by the tender to Lender of the Option Assets pursuant to the
exercise by Maker of the "*" pursuant to the Option Agreement between Maker
and Lender of even date herewith (the "Option Agreement") and all interest
and late fees accrued but unpaid as of the date of prepayment (or the closing
date of the transfer of the Option Assets pursuant to the exercise of the *,
as the case may be), or upon such other terms as the parties may agree.
3. General Payment Provisions. (a) All payments of principal and
interest and other sums due pursuant to this Note shall be made by wire
transfer of immediately available funds to
_______________________________________ or to such other account as Lender
shall have previously designated to Maker in writing not later than fifteen
(15) Business Days (as defined below) prior to the date on which such payment
becomes due.
(b) If the due date of any payment under this Note would otherwise
fall on a day which is not a Business Day, such date will be extended to the
immediately succeeding Business Day. The term "Business Day" or " Business
Days" shall mean any day other than Saturday, Sunday, or a banking holiday of
the United States, State of New York, or *.
* Text omitted pursuant to a request for confidential treatment and filed
separately with the Securities and Exchange Commission.
<PAGE>
(c) A late payment fee of * per month of any principal or interest
payment made after the due date hereunder shall be due with any such late
payment, notwithstanding any right of cure by Maker.
(d) Payment of principal under this Note will constitute a
nonrecourse obligation of Maker payable solely from the Collateral (as
hereinafter defined). It is understood that the preceding sentence shall not
(A) prevent recourse to the Collateral for any sums due or to become due or
(B) constitute a waiver, release or discharge of any indebtedness or
obligation evidenced by or secured by this Note, but the same shall continue
until paid or discharged; provided, that the foregoing provisions of this
paragraph 3(d) shall not limit the right of Lender to name Maker as a party
defendant in any action, suit or in the exercise of any other remedy under
this Note, so long as no judgment in the nature of a deficiency judgment or
seeking personal liability of Maker with regard to the principal amount shall
be asked for or (if obtained) enforced against Maker.
4. Events of Default. An "Event of Default" shall occur upon one or
more of the following events:
(a) Maker shall default in the payment when due of any principal or
interest under this Note and such default shall continue unremedied for a
period of thirty (30) days after written notice from Lender; or
(b) Maker shall default in any material respect in the observance
or performance of its Obligations (as hereinafter defined) other than the
obligation to pay principal or interest hereunder, which default is not cured
within thirty (30) days after written notice from Lender; provided, that with
respect to the Foreign Manufacturing Rights Agreement between Lender and
Maker of even date herewith ("Manufacturing Rights Agreement"), an Event of
Default under this Note shall be deemed to have occurred only in the event of
an "Accelerating Act" as defined in the Manufacturing Rights Agreement and
with respect to the Concurrent Use Agreement between * and Maker of even date
herewith (the "Concurrent Use Agreement"), an Event of Default under the Note
shall be deemed to have occurred only in the event of a substantial material
breach of Sections 2.a., 2.b., 3.b. or 7.a. of the Concurrent Use Agreement; or
(c) Maker shall admit in writing its inability to, or be generally
unable to, pay its debts as such debts generally become due; or
(d) Maker shall (i) apply for or consent in writing to the
appointment of, or the taking of possession by, a receiver, custodian,
trustee or liquidation of itself or of all or a substantial part of its
property, (ii) make a general assignment for the benefit of its creditors,
(iii) commence a voluntary case under Title II of the United States Code (as
now or hereafter in effect) (the "Bankruptcy Code"), or such other such
similar law in any jurisdiction, (iv) file a petition seeking to take
advantage of any other law relating to bankruptcy, insolvency,
reorganization, winding-up, or composition or readjustment of debts, (v)
acquiesce in writing
* Text omitted pursuant to a request for confidential treatment and filed
separately with the Securities and Exchange Commission.
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<PAGE>
to any petition filed against it in an involuntary case under the Bankruptcy
Code, or (vi) take any corporate action for the purpose of effecting any of
the foregoing; or
(e) a proceeding or case shall be commenced, without the
application or consent of Maker in any court of competent jurisdiction,
seeking (i) its liquidation, reorganization, dissolution or winding-up, or
the composition or readjustment of its debts, (ii) the appointment of a
trustee, receiver, custodian, liquidator or the like of such entity or of all
or any substantial part of its assets, or (iii) similar relief in respect of
such entity, under any law relating to bankruptcy, insolvency,
reorganization, winding-up, or composition or adjustment of debts, and such
proceeding or case shall continue undismissed, or an order, judgment or
decree approving or ordering any of the foregoing shall be entered and
continue unstayed and in effect in any such event, for a period of 120 days;
or an order for relief against any such entity shall be entered in an
involuntary case under the Bankruptcy Code or such other similar law in any
jurisdiction.
Upon and during the continuance of an Event of Default: (i) Lender may,
by written notice to Maker, declare the principal amount then outstanding of,
and the total interest on, this Note to be forthwith due and payable,
whereupon such amount shall be immediately due and payable without
presentment, demand, protest or other formalities of any kind, all of which
are hereby expressly waived by maker; (ii) Maker shall pay all of the
expenses of Lender incurred for the collection of this Note, including
reasonable attorneys' fees and legal expenses; and (iii) Lender may exercise
from time to time any other rights and remedies available to it by law,
including, without limitation, those available under any agreement or other
instrument relating to the amounts owed under this Note. No delay on the
part of Lender in the exercise of any right or remedy shall operate as a
waiver thereof, and no single or partial exercise by Lender of any right or
remedy shall preclude other or further exercise thereof or the exercise of
any other right or remedy.
5. Security.
(a) Definitions. For purposes of this Note, the following terms
have the meanings set forth below:
"Collateral" means all right, title and interest of Maker in and to the
Trademark Assets as defined in that certain Worldwide Rights Acquisition
Agreement dated September __, l997 (the "Acquisition Agreement"), except to
the extent such interests have been transferred to Lender pursuant to the
Foreign Acquisition Agreement (as hereinafter defined), together with the
goodwill related thereto, all rights of Maker under the Acquisition Agreement
and the Escrow Agreement referred to therein and all proceeds therefrom, and
all intellectual property rights uniquely associated with the Trademark
Assets including, but not limited to, titles, trademarks, names, as well as
any of the following used in connection with or as identifiers of the
trademarks constituting Trademark Assets: fabrics, styles, designs, and
colors other than those which are standard or traditional in the industry,
logos, symbols, copyrights, art work, inventions, (patented or unpatentable),
confidential information, trade secrets, patents and
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<PAGE>
pending patent applications. Notwithstanding the foregoing, "Collateral"
shall not include any intent-to-use trademark applications.
"Lien" means a pledge, assignment, lien, charge, mortgage, encumbrance or
other security interest in the Collateral securing the payment of
indebtedness and any other obligations of Maker to Lender or * as provided
under this Note.
"Obligations" means the obligations of Maker (i) to make all payments of
principal, interest and other amounts due under this Note (ii) under the
Option Agreement and the Concurrent Use Agreement, and (iii) under the
Manufacturing Rights Agreement.
"Trademarks" means the trademarks constituting Trademark Assets.
(b) Grant of Security Interest. Maker hereby pledges, assigns and
grants to Lender a Lien in all of its respective right, title and interest in
and to the Collateral as security for the Obligations. All property and
rights constituting Collateral are assigned hereunder by Maker to Lender as
security for the payment or other satisfaction, as applicable, of the
Obligations. Upon the occurrence and during the continuance of an Event of
Default, Lender shall have all rights and remedies of a secured party under
the Uniform Commercial Code. All rights of Lender and all Liens hereunder
and all obligations of Maker hereunder shall be absolute and unconditional
irrespective of any lack of validity or enforceability of this Note, any
release or nonperfection of any portion of the Collateral, or any other
circumstance which might otherwise constitute a defense available to, or a
discharge of Maker in respect of the Obligations or this Agreement.
(c) Performance under Contract. Maker shall remain liable to
perform all of its duties and obligations under any contracts which have been
pledged or assigned hereunder to Lender (including, without limitation, the
Acquisition Agreement and the Escrow Agreement), except to the extent said
obligations have been assumed by Lender pursuant to the Foreign Boss Rights
Acquisition Agreement between Lender and Maker dated September __, 1997 (the
"Foreign Acquisition Agreement"), to the same extent as if this Note had not
been executed, and the exercise by Lender of any of its rights hereunder
shall not release Maker from any of its respective duties or obligations
under such agreements.
(d) Delivery and Perfection. Maker shall, promptly upon Lender's
written request, execute and file financing or continuation statements and
amendments thereto and collateral assignments of trademarks with the
appropriate state and local authorities and the U.S. Patent & Trademark
Office ("USPTO") relating to all or any part of the Collateral where
permitted by applicable law and take all such other actions and to execute,
deliver and file, or cause to be filed, financing and continuation statements
or such other instruments or documents or amendments thereto, and perform
such acts as Lender may reasonably require in order to create, perfect,
establish, preserve and maintain a perfected, valid and continuing security
interest of Lender in the Collateral. To the extent permitted by law, Maker
hereby grants to Lender a Power of Attorney to execute and file any and all
of the foregoing documents and
* Text omitted pursuant to a request for confidential treatment and filed
separately with the Securities and Exchange Commission.
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<PAGE>
instruments and to take all such actions and perform all such acts in the
name of Maker as Lender shall deem appropriate or necessary in its sole
discretion in order to create, perfect, establish, preserve and maintain a
perfected, valid and continuing security interest of Lender in the Collateral
Copies of all documents executed by Lender on Maker's behalf under such
power of attorney shall be delivered by Lender to Maker.
(e) Use of Collateral. Except upon the occurrence and during the
continuation of any Event of Default, Maker may in the ordinary course of
its business use the Collateral in accordance with the Concurrent Use
Agreement.
(f) Covenants. During the term of this Agreement, Maker shall:
(i) perform or observe any contract constituting the Collateral
(including, without limitation, the Acquisition Agreement and Escrow
Agreement), except to the extent the obligations thereunder have been assumed
by Lender pursuant to the Foreign Acquisition Agreement, and enforce all such
contracts. Without limiting the generality of the foregoing, Lender shall
have the right to direct Maker to enforce the rights of Maker against
Brookhurst and the "Escrow Agent" under the terms of the Acquisition
Agreement and Escrow Agreement, as applicable, provided that Lender pays all
costs incurred by Maker thereby. In that connection, Maker shall promptly
provide to Lender copies of all notices received under such contracts. Maker
shall not give any notice under any such contract without the prior written
consent of Lender, which shall not be unreasonably withheld or delayed.
Unless otherwise agreed by the parties hereto, with respect to any amounts
which Maker is entitled to receive pursuant to a Buyer Indemnity Claim under
the Acquisition Agreement, whether pursuant to the Escrow Agreement as a
result of a Settled Claim as defined therein, or otherwise, the parties agree
that Maker shall have the right to receive payments of all Actual Costs, as
defined below, from the proceeds of such claim. For purposes of this Section
5, Actual Costs means (a) Maker's actual incurred costs with respect to the
prosecution, litigation and settlement of a Buyer Indemnity Claim of Maker,
and any proceedings brought in connection therewith (including reasonable
attorneys' fees), and (b) any damages awarded Maker or settlement amounts
paid or payable to Maker in connection with the matters described in clause
(a) to the extent they represent recovery of out-of-pocket costs or expenses
of Maker. Any proceeds of any Buyer Indemnity Claim of Maker in excess of
Actual Costs shall be remitted directly to Lender, and Maker shall direct to
the Escow Agent that they be remitted directly to Lender and, to the extent
any such funds come into the possession of Maker, they shall be held in trust
by Maker for the benefit of Lender until remitted to Lender.
(ii) maintain all Collateral in full force and effect to the extent
so directed by Lender under paragraph (g)(i) and at Lender's cost, including,
without limitation, by using all reasonable efforts to prosecute all
applications for registration of trademarks constituting the Trademark
Assets, using all Trademarks in accordance with the Concurrent Use Agreement
and otherwise as Lender shall direct in such manner as to preserve the
continued existence and registration of such Trademarks on all products for
which they are registered or applied for in the USPTO and policing the U.S.
markets for infringers and counterfeiters.
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<PAGE>
(iii) not without the prior written consent or direction of
Lender sell, assign or otherwise dispose of or cause to be disposed of, any
Collateral either directly or indirectly or by operation of law, or create or
suffer to exist any lien, other than the Lien in favor of Lender, or take any
action that might reasonably be expected to materially impair the value of
the Collateral or the security interest granted herein.
(g) *
* Text omitted pursuant to a request for confidential treatment and filed
separately with the Securities and Exchange Commission.
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<PAGE>
*
(h) Duties of Lender. The powers conferred on Lender hereunder are
to protect Lender's interest in the Collateral and, except as otherwise
provided herein, shall not impose any duty upon it to exercise any such
powers. Except for the safe custody of any Collateral or any portion thereof
in its possession, Lender shall have no duty as to the Collateral or as to
the taking of any necessary steps to preserve rights against other parties.
(i) *
(j) Excluded Property. Promptly upon Maker's written request from
time to time, Lender shall execute and deliver to Maker (or such other
persons as Maker may designate)
* Text omitted pursuant to a request for confidential treatment and filed
separately with the Securities and Exchange Commission.
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<PAGE>
such documents as Maker may reasonably request to confirm to Maker (and any
such designee) that under this Note Lender holds no lien or security interest
in or upon any Excluded Property. As used in this Note, the term "Excluded
Property" means any property or assets of Maker other than the Collateral and
includes specifically Maker's inventory and products in progress bearing the
Trademarks, which inventory and products in progress are subject to the
sell-off and related rights contained in Section 7.2(c) of the Option
Agreement and in Section 15.j. of the Manufacturing Rights Agreement.
6. No Assignment. The rights and obligations under this Note may not
be assigned by Maker without the prior written consent of Lender. Lender may
assign this Note to any third party. Notwithstanding anything to the
contrary set forth in this Note, Maker shall be permitted to assign and
transfer Maker's rights under this Note to any parent, subsidiary or other
affiliate of Maker if Maker or its successor in interest remains fully liable
for the performance of this Note by such assignee or transferee and
indemnifies Lender with respect to any costs and damages Lender may incur
because of such assignment or transfer.
7. Entire Agreement. The terms of this Note evidence the entire
agreement between Maker and Lender regarding the indebtedness evidenced by
this Note.
8. Governing Law. This Note shall be governed by, and construed in
accordance with, the laws of *
9. Notices. All notices, requests or other communications required or
permitted hereunder shall be given or made in writing and shall be (i)
delivered personally (including commercial carrier), (ii) sent by registered
or certified airmail, return receipt requested, postage prepaid or (iii) sent
by telecopier, addressed to the party to whom they are directed at the
following addresses, or at such other address as may from time to time be
designated by such party in accordance with this Section 9:
If to Maker, to:
I. C. Isaacs & Company L.P.
3840 Bank Street
Baltimore, Maryland 21224
Attention: President and Co-Chief Executive Officer
Telecopier: 410/558-2096
* Text omitted pursuant to a request for confidential treatment and filed
separately with the Securities and Exchange Commission.
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<PAGE>
I. C. Isaacs & Company L.P.
350 Fifth Avenue
Suite 1029
New York, New York 10018
Attention: Chairman and Co-Chief Executive Officer
Telecopier: 212/695-7579
With a copy to:
Piper & Marbury L.L.P.
Charles Center South
36 South Charles Street
Baltimore, Maryland 21201-3010
Attention: Robert J. Mathias, Esq.
Telecopier: 410/576-1064
If to Lender, to:
*
*
With a copy to:
Coudert Brothers
1627 I Street, N.W.
Washington, D.C. 20006
Attn.: Wendy L. Addiss, Esq.
Telecopier: 202/775-1168
* Text omitted pursuant to a request for confidential treatment and filed
separately with the Securities and Exchange Commission.
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<PAGE>
and
Howrey & Simon
1299 Pennsylvania Avenue, N.W.
Washington, D.C. 20004
Attention: Robert M. Bruskin, Esq.
Telecopier: 202/383-6610
Any notice, request, demand or other communications shall be deemed to
have been given and to be effective upon receipt or refusal by the addressee.
Any party may change its address for notices hereunder, effective upon
giving notice of such change hereunder to the other parties.
10. Adjustment of Interest Rate or Fees. No provision of this Note
shall require the payment of interest to the extent that receipt of any such
payment by Lender would be contrary to the provisions of United States law,
if any, limiting the maximum amount of interest or fees that may be charged
to or collected from Maker, and if any sum in excess of such maximum rate of
interest or fees is paid or charged, the excess will be returned to Maker,
without premium or penalty, and all payments made thereafter will be
appropriately applied to interest and principal to give effect to such
maximum rate, and after such application any amount paid in excess of
principal due Lender shall be immediately refunded to Maker.
If the maximum rate of interest, if any, now permitted by law to be
charged for this transaction is increased, then for so long as the increase
is in effect, the applicable maximum rate permitted to be charged as referred
to in the paragraph immediately preceding will be deemed to be such increased
rate. If the maximum rate of interest, if any, now permitted by law to be
charged for this transaction should be eliminated so that there would be no
maximum rate, then interest on this Note shall thereafter be paid at the rate
provided in this Note.
11. Waiver. Maker hereby waives diligence, presentment, protest, demand
for payment and notice of default, dishonor or nonpayment to or upon Maker
with respect to this Note, except as otherwise provided herein. No delay on
the part of Lender in exercising any right hereunder shall operate as a
waiver of such right under this Note.
12. Modifications in Writing. This Note may not be changed orally, but
only by an agreement in writing, signed by the party against whom enforcement
of any waiver, change, modification or discharge is sought.
13. Execution by Lender. Notwithstanding anything in this Note to the
contrary, this Note shall not be effective and enforceable against Maker
unless and until it has been signed below by Lender. Lender signs below to
further evidence Lender's agreement to be bound by the terms of this Note.
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<PAGE>
14. *
15. Release of Collateral; Return of Note. Upon payment to Lender of
all principal and accrued and unpaid interest thereon, and any late charge
due under this Note, and subject to the rights of Lender under the Option
Agreement, Lender's Lien on the Collateral shall immediately cease, terminate
and be released and Lender shall execute and deliver to Maker such releases,
re-assignments and termination statements as may be legally necessary or
customary to further effect such release and termination, and Lender shall
promptly return the original of this Note to Lender marked "Satisfied and
Cancelled."
* Text omitted pursuant to a request for confidential treatment and filed
separately with the Securities and Exchange Commission.
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<PAGE>
16. *
* Text omitted pursuant to a request for confidential treatment and filed
separately with the Securities and Exchange Commission.
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<PAGE>
I.C. ISAACS & COMPANY L.P., a Delaware
limited partnership
By:_____________________________
Name: Robert J. Arnot
Title: Chairman and Co-Chief
Executive Officer
By:_____________________________
Name: Gerald W. Lear
Title: President and Co-Chief
Executive Officer
*
By:_____________________________
Name:
Title:
* Text omitted pursuant to a request for confidential treatment and filed
separately with the Securities and Exchange Commission.
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<PAGE>
EXHIBIT 10.11(G)
EXHIBIT G/FRA
NOTE ASSUMPTION AGREEMENT
THIS NOTE ASSUMPTION AGREEMENT is made and entered into this ___ day of
September 1997, by and between I.C. Isaacs & Company L.P., a Delaware limited
partnership ("Isaacs") and *, a Delaware corporation ("*").
W I T N E S S E T H:
WHEREAS, Isaacs has agreed to sell, transfer and assign to *, and
* has agreed to purchase and accept from Isaacs certain assets of Isaacs
pursuant to a Foreign Boss Rights Acquisition Agreement entered into on
September __, 1997 between Isaacs and * (the "Acquisition Agreement");
WHEREAS, * has agreed to assume, pay and fully discharge all
obligations of Isaacs under that certain Promissory Note of even date hereof
of Isaacs issued to Brookhurst, Inc. (the "Note");
NOW, THEREFORE, in consideration of the mutual covenants contained herein,
and other good and valuable consideration, the receipt and sufficiency of which
is hereby acknowledged, it is agreed as follows:
1. Capitalized terms used herein and not defined herein shall have the
meanings given such terms in the Acquisition Agreement.
2. * hereby fully, unconditionally and irrevocably assumes and
covenants to fully pay and fully discharge all obligations of Isaacs under
the Note.
3. Isaacs hereby assigns to * all its rights under the Note free and
clear of all Encumbrances made, created or caused by Isaacs.
4. *
5. * hereby covenants to execute and deliver to Isaacs such further
assurances of this Assumption Agreement as Isaacs may require from time to
time.
* Text omitted pursuant to a request for confidential treatment and filed
separately with the Securities and Exchange Commission.
<PAGE>
IN WITNESS WHEREOF, the parties have hereunto set their hands and seals
the day, month and year first above written.
I.C. ISAACS & COMPANY L.P., a Delaware
limited partnership
By:
--------------------------------------
Name: Robert J. Arnot
Title: Chairman and Chief
Co-Executive Officer
By:
--------------------------------------
Name: Gerald W. Lear
Title: President and Co-Chief
Executive Officer
*
By:
--------------------------------------
Name:________________________
Title:_______________________
* Text omitted pursuant to a request for confidential treatment and filed
separately with the Securities and Exchange Commission.
<PAGE>
EXHIBIT H/FRA
EXHIBIT 10.11(H)
GUARANTY OF PROMISSORY NOTE
For valuable consideration, the undersigned, *, a *
corporation ("Guarantor"), hereby unconditionally guarantees the due, prompt
and complete performance (including payment) at stated maturity, by
acceleration or otherwise by I.C. Isaacs & Company L.P., a Delaware limited
partnership ("Buyer"), of each and every obligation and liability now or
hereafter existing of Buyer under that certain Promissory Note, dated
September __ 1, 1997 ("Note") to Brookhurst, Inc. ("Seller") whether for
principal, interest, fees, expenses, attorneys' fees, court costs and
collection charges incurred by Seller in enforcing this Guaranty ("the
"Obligations") or otherwise.
The obligations of Guarantor under this Guaranty are independent of
the obligations of Buyer, and a separate action or actions may be brought
against Guarantor, whether action is brought against Buyer or whether Buyer is
joined in any such action or actions; provided, however, Seller shall be
required to first comply with any procedures specified in the Note or any
agreement ancillary thereto with respect to demands to be made against Buyer or
actions to be taken in order to quantify an amount due or identify an issue in
dispute.
If any provision of this Guaranty is held invalid or unenforceable,
the remainder of this Guaranty shall not be affected thereby, the provisions of
this Guaranty being severable in any such instance.
Guarantor guarantees that the Obligations will he paid strictly in
accordance with the terms of the Note, regardless of any law, regulation or
order, except an order with respect to the liability of Buyer or Guarantor under
this Note now or hereafter in effect in any jurisdiction affecting any of such
terms or the rights of Seller with respect thereto. The liability of Guarantor
under this Guaranty shall be absolute and unconditional irrespective of:
*
* Text omitted pursuant to a request for confidential treatment and filed
separately with the Securities and Exchange Commission.
<PAGE>
*
Any action, inaction, change, extension, waiver, or consent referred to above
may be in such manner and upon such terms Seller and Buyer may deem proper, and
without notice to or further assent from the Guarantor, and all without
affecting this Guaranty or the obligations of the Guarantor hereunder, which
shall continue in full force and effect until all of the Obligations and all
obligations of the Guarantor hereunder shall be fully paid and performed.
Guarantor hereby waives promptness, diligence, presentment, demand,
protest, notice of acceptance or of the occurrence of an Event of Default and
any other notice with respect to any of the Obligations and this Guaranty and
any requirement that Seller exhaust any right or take any action against Buyer
or other person or entity.
Guarantor hereby represents and warrants as follows:
(i) The execution, delivery and performance by Guarantor of this
Guaranty do not contravene any law or contractual restriction
binding on or affecting Guarantor.
(ii) No authorization or approval or other action by, and no notice
to or filing with, any governmental authority or regulatory
body is required for the due execution, delivery and
performance by Guarantor of this Guaranty.
* Text omitted pursuant to a request for confidential treatment and filed
separately with the Securities and Exchange Commission.
2
<PAGE>
(iii) This Guaranty is a legal, valid and binding obligation of
Guarantor, enforceable in accordance with its terms.
No amendment or waiver of any provision of this Guaranty nor consent
to any departure by Guarantor therefrom shall in any event be effective unless
the same shall be in writing and signed by Seller.
No failure on the part of Seller to exercise, and no delay in
exercising, any right hereunder shall operate as a waiver thereof; nor shall any
single or partial exercise of any right hereunder preclude any other or further
exercise thereof or the exercise of any other right. The remedies herein
provided are cumulative and not exclusive of any remedies provided by law.
This Guaranty is *
Seller *, may proceed to exercise any right or remedy which it
may have under this Guaranty without pursuing or exhausting any right or
remedy which it may have against Buyer or any other person or entity, for any
or all of the Obligations; and Seller may proceed to exercise any right or
remedy which it may have under this Guaranty without regard to any actions or
omissions of Buyer or any other person or entity subject to the right of
set-off set forth in Section 6 of the Note and Section 9.12 of the
Acquisition Agreement.
This Guaranty shall be governed by, and construed in accordance
with, the laws of * without reference to its choice of law rules. *
IN WITNESS WHEREOF, Guarantor has caused this Guaranty to be duly
executed and delivered by its officer thereunto duly authorized as of the date
first above written. This Guaranty shall terminate immediately upon satisfaction
of the Note.
Dated: September __, 1997 *
By:
------------------------------
Name:
----------------------------
Title:
---------------------------
* Text omitted pursuant to a request for confidential treatment and filed
separately with the Securities and Exchange Commission.
3
<PAGE>
WITNESSES:
---------------------------------
---------------------------------
<PAGE>
EXHIBIT I/FRA
10.11(I)
AGREEMENT REGARDING CONSENT TO RELEASE
AND WAIVER OF BROOKHURST NOTE CLAIMS
THIS AGREEMENT made as of the _____ day of __________, 1997, by and
among *, a corporation organized and existing under the laws of * and I.C.
ISAACS & COMPANY L.P., a limited partnership organized and existing under the
laws of the State of Delaware ("Isaacs").
Recitals; Certain Defined Terms
A. Isaacs has agreed to execute and deliver to Brookhurst, Inc., a
corporation organized and existing under the laws of the State of California
("Brookhurst") a Promissory Note in the principal amount of $11,000,000
("Brookhurst Note"), as part of the purchase price under that certain Worldwide
Rights Acquisition Agreement between Isaacs and Brookhurst ("Worldwide
Acquisition Agreement") dated September ___, 1997.
B. *, a corporation organized and existing under the laws of the State
of Delaware ("*") has agreed to assume all of Isaacs obligations under the
Brookhurst Note pursuant to the terms of a Note Assumption Agreement dated on
or about the same date as this Agreement.
C. * has agreed to execute and deliver to Brookhurst a Guaranty of the
Brookhurst Note ("* Guaranty").
D. Brookhurst has agreed to release Isaacs from all obligations under
the Brookhurst Note at such time as * assumes the obligations of Isaacs under
the Brookhurst Note, and * provides the * Guaranty to Brookhurst.
NOW, THEREFORE, in consideration of the foregoing, and the receipt of *
and other good and valuable consideration, the receipt of which is hereby
acknowledged, * hereby agrees as follows for the benefit of Isaacs.
1. * hereby irrevocably consents to the full release of Isaacs from all
liability under the Brookhurst Note and agrees to be bound by that release in
accordance with the provisions of the Brookhurst Note.
2. * shall not have any recourse whatsoever to Isaacs or Isaacs' assets
at any time for any obligations under the Brookhurst Note, and hereby
irrevocably waives any claims that * may have against Isaacs and Isaacs'
assets in respect of the Brookhurst Note. Without limiting the generality of
the foregoing, if * shall pay or perform its obligations under the * Guaranty
or under the Brookhurst Note, * shall not have, and hereby irrevocably
waives, any claim, including without limitation any claim for reimbursement,
contribution or indemnity from Isaacs or its partners to which * may be
entitled at any time under applicable law relating to the * Guaranty or the
Brookhurst Note, whether in * capacity as a guarantor, endorser,
* Text omitted pursuant to a request for confidential treatment and filed
separately with the Securities and Exchange Commission.
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<PAGE>
surety, or co-obligor or in any other capacity. Nothing set forth herein shall
be deemed to affect the indemnification obligations of Isaacs to * under the
Foreign Boss Rights Acquisition Agreement between * and Isaacs.
3. This Agreement shall be binding upon * and its successors and
assigns.
In Witness Whereof, and intending to be legally bound hereby, * and
Isaacs execute this Agreement as of the date first above written.
*
By:
------------------------------
Name:
Title:
I.C. ISAACS & COMPANY L.P.
By: I.G. Design, Inc.
By:
---------------------------
Name:
Title:
By:
---------------------------
Name:
Title:
* Text omitted pursuant to a request for confidential treatment and filed
separately with the Securities and Exchange Commission.
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<PAGE>
10.11(J)
EXHIBIT J/FRA
1. Brookhurst may retain copies of records and documents containing the
name and mark "BOSS" for archival purposes and may make (i) oral references,
(ii) the written references set forth in the Attachment hereto, and (iii)
with the prior written approval of *, which shall not be unreasonably
withheld, other written references to the name and mark "BOSS", in each such
case in connection with its uniform business solely for purposes of
describing the history of Brookhurst but shall not be used for sales or
promotional purposes. In addition, Brookhurst may make reference to its past
use of the name and mark BOSS in its financial statements and, to the extent
required, in any public filing. In addition, posters bearing the Trademarks
may be retained and displayed in the private offices of Brookhurst's
executives but may not, under any circumstances, be displayed in any public
areas of Brookhurst's business premises such as reception areas and showrooms.
2. Isaacs Samples. Brookhurst owns approximately 4000 finished
sportswear garments manufactured by Isaacs with a label that bears a BOSS
logo in its possession, including but not limited to denim jeans, shorts,
jackets, coats, skirts, crew neck shirts, sweat shirts, collar and placket
shirts, blouses and hats (such garments referred to in this paragraph 2 being
hereinafter referred to as the "Isaacs Samples"). Brookhurst shall permit *
and/or its attorneys to (i) review; (ii) obtain two dozen Isaacs Samples at
no cost to *; and (iii) purchase, at wholesale cost, any additional Isaacs
Samples. Thereafter, Brookhurst may, only for a period of six months after
the Closing Date, sell and distribute the Isaacs Samples in its possession;
provided, however, that Brookhurst shall not sell or offer any Isaacs Samples
for sale or resale (i) outside of the United States, its territories,
possessions or commonwealths or (ii) to athletic stores whose primary product
line is composed of products intended to be used in connection with golf,
tennis, skiing, sailing, windsurfing, motor sports or any combination
thereof, or at golf, tennis, skiing, sailing, windsurfing, or motor sports
athletic events.
3. Old Logo Samples. Brookhurst owns approximately 119 finished
sportswear garments manufactured by or on behalf of * including but not
limited to crew neck shirts, sweat shirts, collar and placket shirts, hats,
and jackets (such garments referred to in this paragraph 3 being hereinafter
referred to as the "Old Logo Samples"). Brookhurst shall not sell or
otherwise distribute the Old Logo Samples in its possession except in
accordance with this paragraph 3. Brookhurst may retain and distribute to its
executives and attorneys no more than twenty-four (24) Old Logo Samples.
Brookhurst shall tender, at no cost to *, the remaining Old Logo Samples, and
* within 60 days shall either donate the Old Logo Samples to charity, or
otherwise dispose of the Old Logo Samples, in * sole discretion. If * donates
the Old Logo Samples to charity, * shall make reasonable efforts to obtain a
receipt on behalf of Brookhurst evidencing
* Text omitted pursuant to a request for confidential treatment and filed
separately with the Securities and Exchange Commission.
3
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such donation. If * fails to donate the Old Logo Samples to charity or
dispose of them within 60 days, Brookhurst may donate such samples to the
charity or charities of its choice.
4. New Logo Samples. Brookhurst owns approximately _____ finished
sportswear garments manufactured by or on behalf *, including but not limited
to crew neck shirts, sweat shirts, collar and placket shirts, hats, and
jackets (such garments referred to in this paragraph 4 being hereinafter
referred to as the "New Logo Samples"). Brookhurst shall permit * and/or its
attorneys to (i) review; (ii) obtain two dozen New Logo Samples at no cost to
* and (iii) purchase, at wholesale cost, any additional New Logo Samples.
Thereafter, Brookhurst may, only for a period of six (6) months after the
Closing Date, sell and distribute the New Logo Samples in its possession,
provided; however, that neither Brookhurst nor any affiliate thereof shall
sell, or offer any New Logo Samples for sale or resale (i) outside of the
United States, its territories, possessions or commonwealths or (ii) to
athletic stores whose primary product line is composed of products intended
to be used in connection with golf, tennis, skiing, sailing, windsurfing,
motor sports or any combination thereof or at golf, tennis, skiing, sailing,
windsurfing, or motor sports athletic events.
4
* Text omitted pursuant to a request for confidential treatment and filed
separately with the Securities and Exchange Commission.
<PAGE>
ATTACHMENT TO EXHIBIT J
From 1889 to 1997, Brookhurst and its predecessor companies manufactured and
sold clothing under the Brookhurst BOSS label.
<PAGE>
10.11(K)
<PAGE>
10.11(L)
EXHIBIT L/FRA
*
*
* Text omitted pursuant to a request for confidential treatment and filed
separately with the Securities and Exchange Commission.
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*
* Text omitted pursuant to a request for confidential treatment and filed
separately with the Securities and Exchange Commission.
-2-
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*
* Text omitted pursuant to a request for confidential treatment and filed
separately with the Securities and Exchange Commission.
-3-
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*
* Text omitted pursuant to a request for confidential treatment and filed
separately with the Securities and Exchange Commission.
-4-
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*
* Text omitted pursuant to a request for confidential treatment and filed
separately with the Securities and Exchange Commission.
-5-
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* Text omitted pursuant to a request for confidential treatment and filed
separately with the Securities and Exchange Commission.
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EXCLUSIVE DOMESTIC LICENSE AGREEMENT BHPC.12
THIS AGREEMENT is made and entered into this 14th day of December, 1995 by
and between BHPC Marketing, Inc., a corporation duly organized and existing
under the laws of California, having its principal place of business at 620
West 135th Street, Gardena, California 90248 (hereinafter referred to as
"LICENSOR"), and I. C. Isaacs & Co., L.P., a Delaware Limited Partnership,
having its principal place of business at 3840 Bank Street, Baltimore,
Maryland, 21224 (hereinafter referred to as "LICENSEE").
WHEREAS, LICENSOR is the owner with the right to grant licenses of the
Trademarks illustrated in Exhibit "A" attached hereto (the "Trademarks"); and
WHEREAS, LICENSEE is desirous of obtaining the exclusive right to use
the aforesaid Trademarks in connection with the import or manufacture and
sale of certain licensed products defined herein.
NOW, THEREFORE, it is agreed by the parties as follows:
1. DEFINITIONS
The following terms shall have meanings as set forth below:
a. "Trademarks" shall mean the Trademarks set forth in Exhibit "A", and
any such variations as LICENSEE develops with LICENSOR's prior written
approval.
b. "Territory" shall mean that geographical area defined in item 1 of the
attached License Agreement Detail Schedule.
c. "Licensed Product" shall be defined as set forth in item 2 of the
attached License Agreement Detail Schedule.
d. *
2. RIGHTS GRANTED
LICENSOR hereby grants to LICENSEE, upon the terms and conditions set
forth herein, an exclusive, personal, non-transferable, non- assignable
license, without the right to grant sublicenses, to use the Trademarks
solely on or in conjunction with the design, manufacture, import,
distribution, advertising, promotion, shipment, and sale of the
Licensed Product in the Territory. This license is extended to and
* Text omitted pursuant to a request for confidential treatment and filed
separately with the Securities and Exchange Commission.
<PAGE>
BHPC.12
includes wholesale sales only and does not include retail sales.
3. *
4. GOOD WILL AND PROMOTIONAL VALUE
a. LICENSEE recognizes the value of the good will associated with the
Trademarks and acknowledges that the Trademarks, and all rights therein
and the good will pertaining thereto, belong exclusively to LICENSOR.
LICENSEE further recognizes and acknowledges that the Trademarks have
acquired secondary meaning in the mind of the public.
b. LICENSEE agrees that its use of the Trademarks shall inure to the
benefit of LICENSOR and that LICENSEE shall not, at any time, acquire
any rights in the Trademarks by virtue of any use it may make of the
Trademarks.
c. LICENSEE acknowledges that LICENSOR is entering into this Agreement not
only in consideration of the royalties paid hereunder but also for the
good will and promotional value to be secured by LICENSOR for the
Trademarks as a result of the manufacture, offering for sale, sale,
advertising, promotion, shipment and distribution of the Licensed
Product by LICENSEE.
5. *
* Text omitted pursuant to a request for confidential treatment and filed
separately with the Securities and Exchange Commission.
2
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BHPC.12
*
* Text omitted pursuant to a request for confidential treatment and filed
separately with the Securities and Exchange Commission.
3
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BHPC.12
*
d. LICENSEE agrees that the Licensed Product and all Promotional and
Packaging Material shall contain only those proprietary legends,
markings and/or notices as reasonably required from time to time by
LICENSOR to give appropriate notice to the consuming public of
LICENSOR's right, title and interest thereto. The form of such legends,
markings and notices shall be as described in "Exhibit A" attached
hereto, unless the parties agree otherwise.
e. LICENSOR may, periodically and from time to time during the term of
this Agreement, at reasonable intervals, require that LICENSEE submit
to LICENSOR, at no cost to LICENSOR, or LICENSOR or its designees may
randomly select and retain during the inspection referred to in
Subparagraph 5f, below, one (1) additional set of Production Samples of
the Licensed Product and/or the Promotional and Packaging Material
relating to the Licensed Product for subsequent review and written
approval of trademark usage and notice on same. LICENSOR will promptly
advise LICENSEE of any concerns regarding trademark
* Text omitted pursuant to a request for confidential treatment and filed
separately with the Securities and Exchange Commission.
4
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BHPC.12
usage and notice, and the parties will cooperate in good faith to
resolve the concerns.
f. *
g. *
6. ADVERTISING/USE OF THE TRADEMARK
a. LICENSEE will adopt and carry out its own marketing and advertising
program with respect to the Licensed Product. LICENSEE agrees that
LICENSEE's advertising, public relations and sales promotion activities
will be subject to prior consultation with, and written approval by,
LICENSOR as to the general form and content only with respect to the
use of the Trademarks and other notices.
b. *
* Text omitted pursuant to a request for confidential treatment and filed
separately with the Securities and Exchange Commission.
5
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c. Subject to Licensed Product availability at the time of the
request, LICENSEE agrees that upon request of LICENSOR, and at
LICENSOR's cost for shipping, delivery and insurance, it shall loan a
reasonable number of Licensed Products to LICENSOR and its other
licensees for advertising and promotional purposes. LICENSEE shall
receive the same benefit from other licensees of LICENSOR. Said
products shall be returned to LICENSEE in the original condition.
d. *
e. Advertising directed to the public may not feature the name of
LICENSEE. If approved, advertising directed to the trade may feature
the following: BHPC Marketing, Inc. under Trademark License to (Name of
LICENSEE).
f. LICENSEE agrees that the Trademark will appear on each Licensed
Product and its packaging, if any. LICENSEE shall use only those tags,
labels and packaging materials which have been previously approved in
writing. All tags, labels and packaging materials bearing the Trademark
must be submitted on the "Advertising Approval Form" (Exhibit "B-3").
g. LICENSEE shall affix such legends, markings and notices on all
License Product as are required by LICENSOR under Subparagraph 5.d. and
the law.
h. LICENSEE must submit for approval to LICENSOR a printer's proof of
each advertising and promotional item before final printing.
7. DURATION OF THE AGREEMENT
a. This Agreement shall continue for three (3) consecutive Contract
Years in respective durations as set forth in item 3 of the attached
License Agreement Detail Schedule (hereinafter collectively the
"Initial Term") and shall then expire unless sooner terminated in
accordance with the terms and conditions set forth herein.
b. If LICENSEE is not in breach of this Agreement at the time renewal
notice is given to LICENSOR, LICENSEE shall have three (3) consecutive
options to renew this Agreement for three (3) consecutive contract
periods, i.e. Contract Years, of one (1) year each (hereinafter
collectively the "Renewal Term"). In order to exercise each individual
option, LICENSEE must provide LICENSOR with written notice of its
* Text omitted pursuant to a request for confidential treatment and filed
separately with the Securities and Exchange Commission.
6
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intention to exercise each respective option and such written notice
must be received by LICENSOR no later than * prior to the expiration of
the Initial Term or immediately preceding Contract Year of the Renewal
Term. * Except as specifically set forth herein to the contrary,
LICENSEE's performance in the Renewal Term shall be pursuant to the same
terms and conditions recited herein for the Initial Term.
8. ROYALTIES
a. "Royalty", as used in this Agreement, shall consist of the sum of
the following:
(i) LICENSEE agrees to pay LICENSOR, during the term of this
Agreement, a Royalty in an amount equal to five percent (5%) of the Net
Shipments by LICENSEE for Licensed Product sold under the Trademarks;
and
(ii) LICENSEE agrees to expend during the term of this Agreement,
an amount equal to one percent (1%) of the Net Shipments by LICENSEE
for Licensed Product sold under the Trademarks in advertising of the
Licensed Product and Trademarks. *
* Text omitted pursuant to a request for confidential treatment and filed
separately with the Securities and Exchange Commission.
7
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*
e. LICENSEE shall keep complete, detailed and accurate records of all
Promotional and Off-priced Merchandise sales, which records shall be
available to LICENSOR for inspection at LICENSEE's premises during
regular business hours.
f. *
9. PAYMENT
*
* Text omitted pursuant to a request for confidential treatment and filed
separately with the Securities and Exchange Commission.
8
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*
b. LICENSEE's statements and all amounts payable to LICENSOR by
LICENSEE shall be submitted to:
BHPC Marketing, Inc.
620 West 135th Street
Gardena, California 90248
Attn: Royalty Receivables Department
c. *
d. All payments made hereunder shall be in United States currency or
checks drawn on a United States bank.
e. *
* Text omitted pursuant to a request for confidential treatment and filed
separately with the Securities and Exchange Commission.
9
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*
10. GUARANTEES
a. Guaranteed Annual Royalty Payments - LICENSEE shall pay, for each
Contract Year during the term of this Agreement, beginning with the
First Contract Year, the respective Guaranteed Annual Royalty Payments
set forth in item 7 of the attached License Agreement Detail Schedule.
b. Guaranteed Target Net Shipments - If, in any Contract Year,
LICENSEE does not achieve the Guaranteed Target Net Shipment Volume
figure set forth in item 7 of the attached License Agreement Detail
Schedule LICENSOR may, at its option, immediately thereafter terminate
this Agreement in writing by giving LICENSEE written notice not later
than * after the end of the Contract Year.
c. Guaranteed Net Shipments - If, in any Contract Year, LICENSEE does
not achieve the Guaranteed Net Shipments figure set forth
in item 7 of the attached License Agreement Detail Schedule LICENSOR
may, at its option, immediately thereafter terminate this Agreement in
writing by giving LICENSEE written notice not later than *
after the end of the Contract Year.
d. *
e. *
f. *
* Text omitted pursuant to a request for confidential treatment and filed
separately with the Securities and Exchange Commission.
10
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*
11. EXPLOITATION BY LICENSEE
a. LICENSEE agrees to commence, and diligently continue thereafter, the
distribution, shipment and sale of each category of the Licensed Product in
commercially reasonable quantities in the Territory on or before the
respective distribution date set forth next to each category of the
Licensed Product described in item 2 of the attached License Agreement
Detail Schedule.
b. LICENSEE agrees that the Licensed Product will be sold, shipped and
distributed outright, at a competitive price determined by LICENSEE, and
not on an approval, tie-in, consignment, or "sale or return" basis.
LICENSEE further agrees that the Licensed Product will only be knowingly
sold to retailers, jobbers, wholesalers and distributors for sale,
shipment and distribution to retail stores and merchants commonly
considered and referred to in the industry as moderate or better
department stores and specialty stores for sale, shipment and
distribution direct to the public. Notwithstanding the foregoing to the
contrary, LICENSOR agrees that the Licensed Product may also be sold to
those retail stores commonly considered and referred to in the industry
as "Warehouse Clubs" * so long as the total Net Shipment volume of
Licensed Product sold to such "Warehouse Clubs" does not exceed twenty
five percent (25%) of LICENSEE's annual Net Shipment volume. * The
manner and scope of the distribution of the Licensed Product,
availability, variety, fabrication, colors and sizes are critical to the
promotion, enhancement and protection of the Trademarks and their
associated goodwill. *
* Text omitted pursuant to a request for confidential treatment and filed
separately with the Securities and Exchange Commission.
11
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c. *
12. *
a. *
b. *
* Text omitted pursuant to a request for confidential treatment and filed
separately with the Securities and Exchange Commission.
12
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*
13. INSURANCE
LICENSEE shall, throughout the term of this Agreement, obtain and maintain
at its own cost and expense from a qualified insurance company acceptable
to LICENSOR, a policy or policies of insurance, insuring against those
risks customarily insured against under broad form comprehensive general
liability policies arising out of any defects or failure to perform,
alleged or otherwise, of the Licensed Product or any use thereof, including
"product liability", "completed operations", "advertisers' liability
insurance", etc and any liability of LICENSEE arising out of Paragraph 20,
below. *
The policies shall provide for ten (10) days notice to LICENSOR from the
insurer by Registered or Certified Mail, return receipt requested, in the
event of any modification, cancellation or termination. LICENSEE agrees to
furnish LICENSOR a certificate of insurance or copy of the policies
evidencing same within thirty (30) days after execution of this Agreement
and from time to time as requested by LICENSOR within ten
* Text omitted pursuant to a request for confidential treatment and filed
separately with the Securities and Exchange Commission.
13
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(10) days of LICENSOR's request; in no event, shall LICENSEE manufacture,
offer for sale, sell, advertise, promote, ship and/or distribute the
Licensed Product prior to receipt by LICENSOR of such evidence of
insurance. If LICENSEE fails to procure, maintain and/or pay for at the
times and for the durations specified in this Agreement, the insurance
required hereunder, or fails to carry insurance required by any
governmental requirement, LICENSOR may (but without obligation to do so),
and without notice to LICENSEE, perform such obligations on behalf of
LICENSEE, and the cost thereof, together with interest thereon at the
maximum rate allowed by law, shall immediately become due and payable to
LICENSOR.
14. USE, DISPLAY, AND SALE INVOLVING THE TRADEMARKS AND COPYRIGHT
a. In order to protect the Trademarks and LICENSOR's reputation, LICENSEE will
manufacture, distribute and sell the Licensed Product in compliance with
all applicable laws. *
b. *
c. LICENSEE shall exercise reasonable efforts, within the limits allowed by
the laws and governmental regulations in effect in the Territory, to ensure
that its merchandising and sale of the Licensed Product shall conform to
policies and methods suitable for goods of high quality sold under a
prestigious label of worldwide repute.
15. OWNERSHIP OF THE TRADEMARKS
a. LICENSEE agrees that nothing in this Agreement shall give LICENSEE any
right, title, or interest in the
* Text omitted pursuant to a request for confidential treatment and filed
separately with the Securities and Exchange Commission.
14
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Trademarks other that the license to use the Trademarks on the Licensed
Product; that such marks are the sole property of LICENSOR; that all such
uses by LICENSEE of such marks shall inure only to the benefit of LICENSOR;
and it being understood that all right, title and interest relating thereto
are expressly reserved by the LICENSOR except for the rights being licensed
hereunder.
b. LICENSEE recognizes that LICENSOR may already have entered into license
agreements with respect to the Trademarks for products which fall into the
same general product category as the Licensed Product, but which are not
sold to the same retail store departments as the Licensed Product, and
which may be similar to, but not the same as, the Licensed Product in terms
of function, or otherwise. LICENSOR will advise LICENSEE of the specifics
of each such agreement. LICENSEE hereby expressly concedes that the
existence of said licenses does not and shall not constitute a breach of
this Agreement by the LICENSOR. Nothing herein shall permit LICENSOR to
license a retail outlet directly to make Licensed Products or products
substantially similar thereto, it being understood that any such products
to be sold by the retail outlet must be purchased from LICENSEE.
c. *
d. *
16. COMPLIANCE WITH LIMITATIONS ON USE OF TRADEMARKS
LICENSEE agrees that the Licensed Product, and all labels, hang tags,
packaging and other trade dress, used in connection with such Licensed
Products, shall not violate any restrictions on use or display of the marks
as provided in that Settlement Agreement and Consent Judgement with Polo
Fashions, Inc., a copy of which
* Text omitted pursuant to a request for confidential treatment and filed
separately with the Securities and Exchange Commission.
15
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BHPC.12
is attached hereto as Exhibit "D". Nothing contained in this
Agreement makes Polo Fashions, Inc., or any related company,
a third party beneficiary of this Agreement. *
17. *
18. ASSIGNABILITY AND MANUFACTURING
a. The license granted hereunder is, and shall remain, personal
to LICENSEE and shall not be granted, assigned, or otherwise
conveyed by any act of LICENSEE or by operation of law. For
the purposes of this Paragraph 18, any sale or transfer of any
ownership interest in LICENSEE shall constitute a prohibited
assignment of the license granted hereunder. LICENSEE shall
have no right to grant any sublicenses without LICENSOR'S prior
express written approval. Any attempt on the part of LICENSEE
to arrange to sublicense or assign to third parties its right
under this Agreement, shall constitute a material breach of
this Agreement. Nothing herein precludes LICENSEE from
pledging this Agreement as collateral or security for
financing to its primary lenders or hiring third parties to
manufacture, assemble or sell the Licensed
* Text omitted pursuant to a request for confidential treatment and filed
separately with the Securities and Exchange Commission.
16
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BHPC.12
Products.
b. LICENSOR shall have the right to assign its rights and
obligations under this Agreement without the approval of
LICENSEE.
19. NO AGENCY, JOINT VENTURE, PARTNERSHIP
The parties hereby agree that no agency, joint venture, or
partnership is created by this Agreement, and that neither
party shall incur any obligation in the name of the other
without the other's prior written consent.
20. *
* Text omitted pursuant to a request for confidential treatment and filed
separately with the Securities and Exchange Commission.
17
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BHPC.12
*
21. TERMINATION
a. In addition to the termination rights provided elsewhere in
this Agreement, each party will have the right to terminate
this Agreement in the event that:
*
22. EFFECT OF EXPIRATIONS OR TERMINATION
a. Except for the limited purposes indicated below, upon
expiration or termination of this Agreement, all rights and
licenses granted to LICENSEE hereunder shall immediately
expire, shall forthwith revert to LICENSOR, and LICENSEE shall
immediately cease and desist from using the Trademarks and any
technical information supplied by LICENSOR to LICENSEE
hereunder. To this end, LICENSEE will be
* Text omitted pursuant to a request for confidential treatment and filed
separately with the Securities and Exchange Commission.
18
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BHPC.12
deemed to have automatically assigned to LICENSOR, pursuant to
the express provisions of this Agreement, upon such expiration
or termination, the Trademarks, equities, good will, titles,
and other rights in or to the Licensed Product and all
adaptations, compilations, modifications, translations and
versions thereof, and all other trademarks used in connection
therewith (not including any of LICENSEE's trademarks and
logos) which have been or may be obtained by LICENSEE or which
may vest in LICENSEE and which have not already been assigned
to LICENSOR but not including any generic or standard styles,
labels, tags, designs, graphics and the like. LICENSOR may
thereafter, it its sole discretion enter into such
arrangements as it deems desirable, with any other party, for
the manufacture, promotion and sale of the Licensed Product in
the Territory.
b. Any Licensed Products, finished or in progress, shall be
disposed of as follows:
*
* Text omitted pursuant to a request for confidential treatment and filed
separately with the Securities and Exchange Commission.
19
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BHPC.12
*
* Text omitted pursuant to a request for confidential treatment and filed
separately with the Securities and Exchange Commission.
20
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BHPC.12
*
23. MODIFICATION; WAIVER
No modification of any of the terms or provisions of this Agreement shall
be valid unless contained in a writing signed by the parties. No waiver by
either party of a breach or a default hereunder shall be deemed a waiver by
such party of a subsequent breach or default of a like or similar nature.
Except as otherwise stated in this Agreement, resort by LICENSOR or
LICENSEE to any remedies referred to in this Agreement or arising by reason
of a breach of this Agreement by LICENSEE or LICENSOR shall not be
construed as a waiver by LICENSOR of its right to resort to any and all
other legal and equitable remedies available to LICENSOR or LICENSEE.
24. FORCE MAJEURE
Neither LICENSOR nor LICENSEE shall be liable to each other or be deemed in
breach or default of any obligations contained in this Agreement, for any
delay or failure to perform due to causes beyond its reasonable control,
including but not limited to delay due to the elements, acts of the United
States Government, acts of a foreign government, acts of God, fires,
floods, epidemics, embargoes, riots, strikes, any of the foregoing events
being referred to as a "Force Majeure" condition. In such event, dates for
performance shall be extended for the period of delay resulting from the
Force Majeure condition. The party affected by a Force Majeure condition
shall, as soon as practicable, notify the other party of the nature and
extent of such condition.
25. NOTICE
All notices, approvals, consents, requests, demands, or other
communications to be given to either party in
* Text omitted pursuant to a request for confidential treatment and filed
separately with the Securities and Exchange Commission.
21
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BHPC.12
writing may be effected by personal delivery or by depositing the same in
the United States mail, certified and return receipt requested, postage
prepaid. Such communication shall be addressed to LICENSEE and LICENSOR at
their respective addresses as set forth in the preamble above.
26. CONSTRUCTION; VENUE
This Agreement shall be construed in accordance with the laws of
*, and the parties agree that it is executed and delivered in that
state, and any claims arising hereunder shall, at LICENSOR's election,
be prosecuted in the appropriate Court of *.
27. ENTIRE AGREEMENT
This Agreement, contains the entire understanding of the parties and there
are no representations, warranties, promises, or undertakings other than
those contained herein. This Agreement supersedes and cancels all previous
agreements between the parties hereto.
28. *
29. *
* Text omitted pursuant to a request for confidential treatment and filed
separately with the Securities and Exchange Commission.
22
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BHPC.12
*
30. *
31. BINDING EFFECT
This Agreement shall be binding on the parties, and their successors and
assigns.
32. *
33. SEVERABILITY
In the event that any term or provision of this Agreement shall for any
reason be held to be invalid, illegal or unenforceable in any respect, such
invalidity or unenforceability shall not affect any other term or provision
and this Agreement shall be interpreted and construed as if such term or
provision, to the extent the same shall have been held to be invalid,
illegal or unenforceable, had never been contained herein.
34. CAPTIONS
The captions used in connection with the paragraphs and subparagraphs of
this Agreement are inserted only for purpose of reference. Such captions
shall not be deemed to govern, limit, modify or in any other manner affect
the scope, meaning or intent of the provisions of this Agreement or any
part thereof nor shall such captions otherwise be given any legal effect.
* Text omitted pursuant to a request for confidential treatment and filed
separately with the Securities and Exchange Commission.
23
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BHPC.12
35. INCORPORATION OF EXHIBITS
LICENSOR and LICENSEE acknowledge and agree that the provisions of Exhibits
"A" through "D" attached hereto (the "Exhibits") are integral to this
Agreement and that the provisions of the Exhibits are all hereby
incorporated herein and made a part hereof as if set out in full in this
Agreement.
36. *
37. APPROVALS
All approvals or consents required to be given by one party to the other
under this Agreement shall not be unreasonably withheld or delayed
notwithstanding anything in the Agreement to the contrary.
* Text omitted pursuant to a request for confidential treatment and filed
separately with the Securities and Exchange Commission.
24
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BHPC.12
IN WITNESS WHEREOF, the parties hereto agree that this Agreement shall take
effect as of the date and year first above written above.
LICENSOR: LICENSEE:
BHPC MARKETING, INC., I.C. ISAACS & CO., L.P.
a California Corporation a Delaware Limited Partnership
BY: /s/ Don Garrison BY: /s/ Gerald W. Lear
-------------------------------- ------------------------------------
Don Garrison Jerry Lear
Licensing Director President, C.E.O.
Date: 12/18/95 Date: 12/20/95
---------- ----------
25
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BHPC.12
LICENSE AGREEMENT DETAIL SCHEDULE
1. DEFINITION OF TERRITORY: United States, all its territories and
possessions
2. DEFINITION OF LICENSED PRODUCT: DISTRIBUTION DATE:
------------------------------- ------------------
Men's denim sportswear January 1, 1996
Men's outerwear
Men's woven shirts, excluding dress shirts
Men's knit and woven casual pants and shorts
Men's sweaters
Men's basic and fashion fleece tops and bottoms
Men's overalls and shortalls
Men's knit tops, including t-shirts and polo shirts
Men's swimwear
Men's warm ups
All silk products are excluded from this Definition of
Licensed Product
3. INITIAL TERM: FROM TO
------------- ---- --
First Contract Year: January 1, 1996 December 31, 1996
Second Contract Year: January 1, 1997 December 31, 1997
Third Contract Year: January 1, 1998 December 31, 1998
4. RENEWAL TERM:
-------------
Fourth Contract Year (if any): January 1, 1999 December 31, 1999**
Fifth Contract Year (if any): January 1, 2000 December 31, 2000
Sixth Contract Year (if any): January 1, 2001 December 31, 2001
5. *
6. ROYALTY RATE:
5% of Net Shipments, plus 1% Advertising Royalty, to be spent by Licensee in
Advertising the Licensed Product in the Territory
* Text omitted pursuant to a request for confidential treatment and filed
separately with the Securities and Exchange Commission.
<PAGE>
AMENDMENT TO EXCLUSIVE DOMESTIC LICENSE AGREEMENT
This Amendment is made and entered into by and between BHPC Marketing, Inc.
("LICENSOR") and I.C. Isaacs Co., L.P. ("LICENSEE") and is dated as of June
3, 1997. This Amendment amends and modifies that certain Exclusive Domestic
License Agreement between LICENSOR and LICENSEE dated December 14, 1995.
(I)
The promises, covenants, agreements and declarations made and set forth
herein are intended to and shall have the same force and effect as if set
forth at length in the body of the Agreement. To the extent that the
provisions of this Amendment are inconsistent with the terms and conditions
of the AGREEMENT, the terms set forth herein shall control.
(II)
1. Effective as of May 1, 1997, the License Agreement Detail Schedule
(Men's) is hereby amended by replacing it with the License Agreement
Detail Schedule attached hereto.
2. Paragraph 7(b) of the Agreement is hereby amended by deleting all
references to one-year renewal periods and referring in their place to
the three-year-renewal terms provided for in the License Agreement Detail
Schedule attached hereto.
3. The Amendment to the Agreement dated April 28, 1997, is no longer in effect.
(III)
LICENSOR and LICENSEE acknowledge and agree that the Agreement, as amended by
this Amendment, remains in full force and effect and represents the entire
Agreement of the parties with respect to the matters contained herein.
<PAGE>
IN WITNESS WHEREOF, the parties hereto agree that this Amendment shall take
effect as of the date and year first written above.
LICENSOR: LICENSEE:
BHPC MARKETING, INC. I.C. ISAACS & CO., L.P.
BY: Don Garrison BY: Robert Arnot
-------------------------- --------------------------
Don Garrison Robert Arnot
Director of Licensing Chairman of the Board
DATE: 6/16/97 DATE: 6/12/97
-------------------------- -------------------------
BY: Gerald Lear
--------------------------
Gerald Lear
President, C.E.O.
DATE: 6/12/97
-------------------------
<PAGE>
LICENSE AGREEMENT DETAIL SCHEDULE
1. DEFINITION OF TERRITORY: The United States, its territories and possessions
2. DEFINITION OF LICENSED PRODUCT (BY CATEGORY):
Men's denim sportswear, outwear, woven shirts (excluding
dress shirts), knit and woven casual pants and shorts,
sweaters, basic and fashion fleece tops and bottoms,
overalls and shortalls, knit tops (including t-shirts and polo
shirts), swimwear, warm-ups.
3. INITIAL TERM: FROM TO
---- --
First Contract Year: January 1, 1996 December 31, 1996
Second Contract Year: January 1, 1997 December 31, 1997
Third Contract Year: January 1, 1998 December 31, 1998
4. RENEWAL TERM:
First Renewal Period (if any): January 1, 1999 December 31, 2001
Second Renewal Period (if any): January 1, 2002 December 31, 2004
5. ROYALTY RATE:
Five percent (5%) of Net Shipments
6. ADVERTISING:
One percent (1%) of net Sales to be spent in the Territory by LICENSEE.
<PAGE>
7. GUARANTEES:
(A) (B) (C) (D)
Guaranteed Guaranteed Guaranteed
Target Guaranteed Annual Monthly
Net Net Royalty Royalty
Shipments Shipments Payments Payments
(in United States Dollars)
_____________________________
First Contract Year * $6,000,000 * *
Second Contract Year * $7,000,000 * *
Third Contract Year * $8,000,000 * *
*
INITIALS DATE
-------- ----
LICENSOR, BHPC: /s/ DG 6/2/97
-------------- ------
LICENSEE, I.C.ISAACS: /s/ RJA 6/3/97
--------------- ------
* Text omitted pursuant to a request for confidential treatment and filed
separately with the Securities and Exchange Commission.
<PAGE>
Exhibit 10.14
EXCLUSIVE DOMESTIC LICENSE AGREEMENT BHPC.12
THIS AGREEMENT is made and entered into this 1st day of June, 1993 by and
between BHPC Marketing, Inc., a corporation duly organized and existing under
the laws of California, having its principal place of business at 620 West
135th Street, Gardena, California 90248 (hereinafter referred to as
"LICENSOR"), and Heather-Paige II Industries, Inc., a California corporation,
having its principal place of business at 7929 Ruffner Avenue, Van Nuys,
California, 91406 (hereinafter referred to as "LICENSEE").
WHEREAS, LICENSOR is the owner with the right to grant licenses of the
Trademarks illustrated in Exhibit "A" attached hereto (the "Trademarks"); and
WHEREAS, LICENSEE is desirous of obtaining the exclusive right to use the
aforesaid Trademarks in connection with the import or manufacture and sale of
certain licensed products defined herein.
NOW, THEREFORE, it is agreed by the parties as follows:
1. DEFINITIONS
The following terms shall have meanings as set forth below:
a. "Trademarks" shall mean the Trademarks set forth in Exhibit "A",
b. "Territory" shall mean that geographical area defined in item 1 of
the attached License Agreement Detail Schedule.
c. "Licensed Product" shall be defined as set forth in item 2 of the
attached License Agreement Detail Schedule.
d. *
2. RIGHTS GRANTED
LICENSOR here grants to LICENSEE, upon the terms and conditions set forth
herein, an exclusive, personal, non-transferable, non-assignable license,
without the right to grant sublicenses, to use the Trademarks solely on
or in conjunction with the design, manufacture, import, distribution,
advertising, promotion, shipment, and sale of the Licensed Product in the
Territory. This license is extended to and includes
* Text omitted pursuant to a request for confidential treatment and filed
separately with the Securities and Exchange Commission.
<PAGE>
wholesale sales only and does not include retail sales.
3. *
4. GOOD WILL AND PROMOTIONAL VALUE
a. LICENSEE recognizes the value of the good will associated with the
Trademarks and acknowledges that the Trademarks, and all rights
therein and the good will pertaining thereto, belong exclusively to
LICENSOR. LICENSEE further recognizes and acknowledges that the
Trademarks have acquired secondary meaning in the mind of the public.
b. LICENSEE agrees that its use of the Trademarks shall inure to the
benefit of LICENSOR and that LICENSEE shall not, at any time, acquire
any rights in the Trademarks by virtue of any use it may make of the
Trademarks.
c. LICENSEE acknowledges that LICENSOR is entering into this Agreement
not only in consideration of the royalties paid hereunder but also
for the good will and promotional value to be secured by LICENSOR for
the Trademarks as a result of the manufacture, offering for sale,
sale, advertising, promotion, shipment and distribution of the Licensed
Product by LICENSEE.
5. *
* Text omitted pursuant to a request for confidential treatment and filed
separately with the Securities and Exchange Commission.
2
<PAGE>
*
d. LICENSEE agrees that the Licensed Product and all Promotional and
Packaging Material shall contain only those legends, markings and/or
* Text omitted pursuant to a request for confidential treatment and filed
separately with the Securities and Exchange Commission.
3
<PAGE>
notices as required from time to time by LICENSOR to give appropriate notice
to the consuming public of LICENSOR's right, title and interest thereto.
*
6. ADVERTISING/USE OF THE TRADEMARK
a. LICENSEE will adopt and carry out its own marketing and advertising
* Text omitted pursuant to a request for confidential treatment and filed
separately with the Securities and Exchange Commission.
4
<PAGE>
program with respect to the Licensed Product. LICENSEE agrees that
LICENSEE'S advertising, public relations and sales promotion activities
will be subject to prior consultation with, and written approval by,
LICENSOR as to the general form and content only with respect to the
use of the Trademarks and other notices.
b. *
c. LICENSEE agrees that upon request of LICENSOR, it shall loan a
reasonable number of products to LICENSOR and its other licensees for
advertising and promotional purposes.
d. *
e. Advertising directed to the public may not feature the name of
LICENSEE. If approved, advertising directed to the trade may feature
the following: BHPC Marketing, Inc. under Trademark License to (Name of
LICENSEE). Advertising expenditures by LICENSEE are not credited
toward the Advertising Fund provision of Subparagraph 8a (ii).
f. LICENSEE agrees that the Trademark will appear on each Licensed Product
and its packaging, if any. LICENSEE shall use only those tags, labels
and packaging materials which have been previously approved in writing.
All tags, labels and packaging materials bearing the Trademark must be
submitted on the "Advertising Approval Form" (Exhibit "B-3").
g. LICENSEE shall affix such legends, markings and notices on all License
Product as are required by LICENSOR and the law.
h. LICENSEE must submit for approval to LICENSOR a printer's proof of each
item before final printing.
7. DURATION OF THE AGREEMENT
a. This Agreement shall continue for three (3) consecutive Contract Years
in respective durations as set forth in item 3 of the attached License
Agreement Detail Schedule (hereinafter collectively the "Initial Term")
and shall then expire unless sooner terminated in accordance with the
* Text omitted pursuant to a request for confidential treatment and filed
separately with the Securities and Exchange Commission.
5
<PAGE>
terms and conditions set forth herein.
b. If LICENSEE fully performs according to all of the terms and conditions
hereof including, without limitation, the terms and conditions
specifically enumerated below, LICENSEE shall have three (3)
consecutive options to renew this Agreement for three (3) consecutive
contract periods, i.e. Contract Years, of one (1) year each
(hereinafter collectively the "Renewal Term"). In order to exercise
each individual option, LICENSEE must provide LICENSOR with written
notice of its intention to exercise each respective option and such
written notice must be received by LICENSOR no later than * prior to
the expiration of the Initial Term or immediately preceding Contract
Year of the Renewal Term. * Except as specifically set
forth herein to the contrary, LICENSEE's performance in the Renewal
Term shall be pursuant to the same terms and conditions recited herein
for the Initial Term.
8. ROYALTIES
a. "Royalty", as used in this Agreement, shall consist of the sum of the
following:
(i) LICENSEE agrees to pay LICENSOR, during the term of this
Agreement, a Royalty *
* Text omitted pursuant to a request for confidential treatment and filed
separately with the Securities and Exchange Commission.
6
<PAGE>
b. *
c. *
d. *
e. LICENSEE shall keep complete, detailed and accurate records of all
Promotional and Off-priced Merchandise sales, which records shall be
available to LICENSOR for inspection during regular business hours.
f. *
* Text omitted pursuant to a request for confidential treatment and filed
separately with the Securities and Exchange Commission.
7
<PAGE>
*
9. PAYMENT
a. *
b. LICENSEE's statements and all amounts payable to LICENSOR by LICENSEE
shall be submitted to:
BHPC Marketing, Inc.
620 West 135th Street
Gardena, California 90248
Attn: Royalty Receivables Department
c. *
* Text omitted pursuant to a request for confidential treatment and filed
separately with the Securities and Exchange Commission.
8
<PAGE>
*
d. All payments made hereunder shall be in the United States currency or
checks drawn on a United States bank.
e. *
10. GUARANTEES
a. Guaranteed Annual Royalty Payments - LICENSEE shall pay, for each
Contract Year during the term of this Agreement, beginning with the
First Contract Year, the respective Guaranteed Annual Royalty Payments
set forth in item 7 of the attached License Agreement Detail Schedule.
b. Guaranteed Target Net Shipments - If, in any Contract Year, LICENSEE
does not achieve the Guaranteed Target Net Shipment Volume figure set
forth in item 7 of the attached License Agreement Detail Schedule
LICENSOR may, at its option, immediately thereafter terminate this
Agreement in writing.
c. Guaranteed Net Shipments - If, in any Contract Year, LICENSEE does not
achieve the Guaranteed Net Shipments figure set forth in item 7 of the
attached License Agreement Detail Schedule LICENSOR may, at its option,
immediately thereafter terminate this Agreement in writing.
d. *
* Text omitted pursuant to a request for confidential treatment and filed
separately with the Securities and Exchange Commission.
-9-
<PAGE>
*
e. *
11. EXPLOITATION BY LICENSEE
a. LICENSEE agrees to commence, and diligently continue thereafter, the
distribution, shipment and sale of each category of the Licensed
Product in commercially reasonable quantities in the Territory on or
before the respective distribution date set forth next to each category
of the Licensed Product described in item 2 of the attached License
Agreement Detail Schedule.
b. LICENSEE agrees that the Licensed Product will be sold, shipped and
distributed outright, at a competitive price that does not exceed the
price generally and customarily charged the trade by LICENSEE, and not
on an approval, tie-in, consignment, or "sale or return" basis.
LICENSEE further agrees that the Licensed Product will only be sold to
retailers, jobbers, wholesalers and distributors for sale, shipment and
distribution to retail stores and merchants commonly considered and
referred to in the industry as fine department stores and better
specialty stores and/or to fine department stores and better specialty
stores for sale, shipment and distribution direct to the public.
Notwithstanding the foregoing to the contrary, LICENSOR agrees that the
Licensed Product may also be sold to those retail stores commonly
considered and referred to in the industry as "Warehouse Clubs" * so
long as the total Net Shipment volume of Licensed Product sold to such
"Warehouse Clubs" does not exceed twenty five percent (25%) of
LICENSEE's annual Net Shipment volume. *
* Text omitted pursuant to a request for confidential treatment and filed
separately with the Securities and Exchange Commission.
-10-
<PAGE>
* The manner and scope of the distribution of the Licensed Product,
availability, variety, fabrication, colors and sizes are critical to
the promotion, enhancement and protection of the Trademarks and their
associated goodwill. *
c. *
12. *
* Text omitted pursuant to a request for confidential treatment and filed
separately with the Securities and Exchange Commission.
11
<PAGE>
*
13. INSURANCE
LICENSEE shall, throughout the term of this Agreement, obtain and
maintain at its own cost and expense from a qualified insurance company
acceptable to LICENSOR, a policy or policies of insurance, insuring
against those risks customarily insured against under broad form
comprehensive general liability policies arising out of any defects or
failure to perform, alleged or otherwise, of the Licensed Product or any
* Text omitted pursuant to a request for confidential treatment and filed
separately with the Securities and Exchange Commission.
12
<PAGE>
use thereof, including "product liability", "completed operations",
"advertisers' liability insurance", etc and any liability of LICENSEE
arising out of Paragraph 20, below. *
The policies shall provide for ten (10) days notice to LICENSOR from the
insurer by Registered or Certified Mail, return receipt requested, in the
event of any modification, cancellation or termination. LICENSEE agrees
to furnish LICENSOR a certificate of insurance or copy of the policies
evidencing same within thirty (30) days after execution of this Agreement
and from time to time as requested by LICENSOR within ten (10) days of
LICENSOR's request; in no event, shall LICENSEE manufacture, offer for
sale, sell, advertise, promote, ship and/or distribute the Licensed
Product prior to receipt by LICENSOR of such evidence of insurance. If
LICENSEE fails to procure, maintain and/or pay for at the times and for
the durations specified in this Agreement, the insurance required
hereunder, or fails to carry insurance required by any governmental
requirement, LICENSOR may (but without obligation to do so), and without
notice to LICENSEE, perform such obligations on behalf of LICENSEE, and
the cost thereof, together with interest thereon at the maximum rate
allowed by law, shall immediately become due and payable to LICENSOR.
14. USE, DISPLAY, AND SALE INVOLVING THE TRADEMARKS AND COPYRIGHT
A. In order to protect the Trademarks and LICENSOR's reputation, LICENSEE
* Text omitted pursuant to a request for confidential treatment and filed
separately with the Securities and Exchange Commission.
13
<PAGE>
will manufacture, distribute and sell the Licensed Product in compliance
with all applicable laws. *
b. *
c. LICENSEE shall exercise all reasonable efforts, within the limits
allowed by the laws and governmental regulations in effect in the
Territory, to ensure that its merchandising and sale of the Licensed
Product shall conform to policies and methods suitable for goods of high
quality sold under a prestigious label of worldwide repute.
15. OWNERSHIP OF THE TRADEMARKS
a. LICENSEE agrees that nothing in this Agreement shall give LICENSEE any
right, title or interest in the Trademarks other than the license to use
the Trademarks on the Licensed Product; that such marks are the sole
property of LICENSOR; that all such uses by LICENSEE of such marks shall
inure only to the benefit of LICENSOR; and it being understood that all
right, title and interest relating thereto are expressly reserved by the
LICENSOR except for the rights being licensed hereunder.
b. LICENSEE recognizes that LICENSOR may already have entered into, and may
in the future enter into, license agreements with respect to the
Trademarks for products which fall into the same general product category
as the Licensed Product, but which are not sold to the same retail store
departments as the Licensed Product, and which may be
* Text omitted pursuant to a request for confidential treatment and filed
separately with the Securities and Exchange Commission.
14
<PAGE>
similar to, but not the same as, the Licensed Product in terms of
function, or otherwise. LICENSEE hereby expressly concedes that the
existence of said licenses does not and shall not constitute a breach of
this Agreement by the LICENSOR.
c. *
d. *
16. COMPLIANCE WITH LIMITATIONS ON USE OF TRADEMARKS
LICENSEE agrees that the Licensed Product, and all labels, hang tags,
packaging and other trade dress, used in connection with such Licensed
Products, shall not violate any restrictions on use or display of the
marks as provided in *
17. *
* Text omitted pursuant to a request for confidential treatment and filed
separately with the Securities and Exchange Commission.
15
<PAGE>
*
18. ASSIGNABILITY AND MANUFACTURING
a. The license granted hereunder is, and shall remain, personal to LICENSEE
and shall not be granted, assigned, or otherwise conveyed by any act of
LICENSEE or by operation of law. For the purposes of this Paragraph 18,
any sale or transfer of any ownership interest in LICENSEE shall
constitute a prohibited assignment of the license granted hereunder.
LICENSEE shall have no right to grant any sublicenses without LICENSOR's
prior express written approval. Any attempt on the part of LICENSEE to
arrange to sublicense or assign to third parties its rights under this
Agreement, shall constitute a material breach of this Agreement.
b. LICENSOR shall have the right to assign its rights and obligations under
this Agreement without the approval of LICENSEE.
19. NO AGENCY, JOINT VENTURE, PARTNERSHIP
The parties hereby agree that no agency, joint venture, or partnership is
created by this Agreement, and that neither party shall incur any
obligation in the name of the other without the other's prior written
consent.
20. *
* Text omitted pursuant to a request for confidential treatment and filed
separately with the Securities and Exchange Commission.
16
<PAGE>
*
21. TERMINATION
a. In addition to the termination rights provided elsewhere in this
Agreement, LICENSOR will have the right to terminate this Agreement in the
event that:
*
b. *
22. EFFECT OF EXPIRATION OR TERMINATION
a. Upon expiration or termination of this Agreement, all rights and
licenses granted to LICENSEE hereunder shall immediately expire, shall
forthwith revert to LICENSOR, and LICENSEE shall immediately cease and desist
* Text omitted pursuant to a request for confidential treatment and filed
separately with the Securities and Exchange Commission.
<PAGE>
from using the Trademarks and any technical information supplied by LICENSOR
to LICENSEE hereunder. To this end, LICENSEE will be deemed to have
automatically assigned to LICENSOR, upon such expiration or termination, the
Trademarks, equities, good will, titles, and other rights in or to the
Licensed Product and all adaptations, compilations, modifications,
translations and versions thereof, and all other trademarks used in
connection therewith which have been or may be obtained by LICENSEE or which
may vest in LICENSEE and which have not already been assigned to LICENSOR.
LICENSOR may thereafter, in its sole discretion enter into such arrangements
as it deems desirable, with any other party, for the manufacture, promotion
and sale of the Licensed Product in the Territory. Any Licensed Product,
finished or in progress, shall be disposed of as follows: *
* Text omitted pursuant to a request for confidential treatment and filed
separately with the Securities and Exchange Commission.
<PAGE>
*
*
* Text omitted pursuant to a request for confidential treatment and filed
separately with the Securities and Exchange Commission.
19
<PAGE>
*
23. MODIFICATION; WAIVER
No modification of any of the terms or provisions of this Agreement shall be
valid unless contained in a writing signed by the parties. No waiver by
either party of a breach or a default hereunder shall be deemed a waiver by
such party of a subsequent breach or default of a like or similar nature.
Resort by LICENSOR to any remedies referred to in this Agreement or arising
by reason of a breach of this Agreement by LICENSEE shall not be construed as
a waiver by LICENSOR of its right to resort to any and all other legal and
equitable remedies available to LICENSOR.
24. FORCE MAJEURE
Neither LICENSOR nor LICENSEE shall be liable to each other or be deemed in
breach or default of any obligations contained in this Agreement, for any
delay or failure to perform due to causes beyond its reasonable control,
including but not limited to delay due to the elements, acts of the United
States Government, acts of a foreign government, acts of God, fires,
floods, epidemics, embargoes, riots,
* Text omitted pursuant to a request for confidential treatment and filed
separately with the Securities and Exchange Commission.
20
<PAGE>
strikes, any of the foregoing events being referred to as a "Force
Majeure" condition. In such event, dates for performance shall be
extended for the period of delay resulting from the Force Majeure
condition. The party affected by a Force Majeure condition shall, as
soon as practicable, notify the other party of the nature and extent of
such condition.
25. NOTICE
All notices, approvals, consents, requests, demands, or other
communications to be given to either party in writing may be effected by
personal delivery or by depositing the same in the United States mail,
certified and return receipt requested, postage prepaid. Such
communication shall be addressed to LICENSEE and LICENSOR at their
respective addresses as set forth in the preamble above.
26. CONSTRUCTION; VENUE
This Agreement shall be construed in accordance with the laws of the
State of California, U.S.A., and the parties agree that it is executed
and delivered in that state, and any claims arising hereunder shall, at
LICENSOR's election, be prosecuted in the appropriate Court of the State
of California in Los Angeles County or any Federal District Court
therein.
27. ENTIRE AGREEMENT
This Agreement, contains the entire understanding of the parties and
there are no representations, warranties, promises, or undertakings
other than those contained herein. This Agreement supersedes and cancels
all previous agreements between the parties hereto.
28. *
* Text omitted pursuant to a request for confidential treatment and filed
separately with the Securities and Exchange Commission.
21
<PAGE>
*
29. *
30. *
31. BINDING EFFECT
This Agreement shall be binding on the parties, and their successors and
assigns.
32. SURVIVAL OF THE RIGHTS
Notwithstanding anything to the contrary contained herein, such
obligations which remain executory after expiration of the term or
termination of this Agreement shall remain in full force and effect
until discharged by performance and such rights as pertain thereto shall
remain in force until their expiration.
33. SEVERABILITY
In the event that any term or provision of this Agreement shall for any
* Text omitted pursuant to a request for confidential treatment and filed
separately with the Securities and Exchange Commission.
22
<PAGE>
reason be held to be invalid, illegal or unenforceable in any respect,
such invalidity or unenforceability shall not affect any other term or
provision and this Agreement shall be interpreted and construed as if
such term or provision, to the extent the same shall have been held to
be invalid, illegal or unenforceable, had never been contained herein.
34. CAPTIONS
The captions used in connection with the paragraphs and subparagraphs of
this Agreement are inserted only for purpose of reference. Such
captions shall not be deemed to govern, limit, modify or in any other
manner affect the scope, meaning or intent of the provisions of this
Agreement or any part thereof nor shall such captions otherwise be given
any legal effect.
35. INCORPORATION OF EXHIBITS
LICENSOR and LICENSEE acknowledge and agree that the provisions of
Exhibits "A" through "C" attached hereto (the "Exhibits") are integral
to this Agreement and that the provisions of the Exhibits are all hereby
incorporated herein and made a part hereof as if set out in full in this
Agreement.
IN WITNESS WHEREOF, the parties hereto agree that this Agreement shall
take effect as of the date and year first above written above.
LICENSOR: LICENSEE:
BHPC MARKETING, INC., PAIGE II INDUSTRIES, INC.
a California Corporation a California Corporation
BY: /s/ Don Garrison BY: /s/ Howard W. Regen
-------------------------- --------------------------
Don Garrison Howard W. Regen
Licensing Director President
Date: 3/18/93 Date: 3/13/93
------------------------ ------------------------
23
<PAGE>
LICENSE AGREEMENT DETAIL SCHEDULE
1. Definition of Territory: The United States, its territories and
possessions
2. Definition of Licensed Product (by category): DISTRIBUTION DATE:
Missy, large size and petite coordinated August 1, 1993
sportswear
<TABLE>
<CAPTION>
3. Initial Term: FROM TO
<S> <C> <C>
First Contract Year: June 1, 1993 November 30, 1994
Second Contract Year: December 1, 1994 November 30, 1995
Third Contract Year: December 1, 1994 November 30, 1996
</TABLE>
4. Renewal Term:
<TABLE>
<CAPTION>
<S> <C> <C>
Fourth Contract Year (if any): December 1, 1996 November 30, 1997
Fifth Contract Year (if any): December 1, 1997 November 30, 1998
Sixth Contract Year (if any): December 1, 1998 November 30, 1999
</TABLE>
5. *
6. Royalty Rate:
6%
Plus 2% of Net Sales for Advertising Royalty
7. Guarantees:
<TABLE>
<CAPTION>
(A) (B) (C) (D)
<S> <C> <C> <C> <C>
Guaranteed Guaranteed Guaranteed
Target Guaranteed Annual Monthly
Net Net Royalty Royalty
Shipments Shipments Payments Payments
--------------------------------------------
</TABLE>
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C>
First Contract Year * * * *
Second Contract Year * * * *
Third Contract Year * * * *
</TABLE>
INITIALS
LICENSOR: ----------
LICENSEE: ----------
* Text omitted pursuant to a request for confidential treatment and filed
separately with the Securities and Exchange Commission.
<PAGE>
SECTION (I)
NET SHIPMENT STATEMENT
----------------------
The written statement of Net Shipments of Licensed Product (a copy of which
is attached hereto as Exhibit "F") referred to in Paragraph 9a must be
certified as accurate by LICENSEE and will include, but will not be limited
to, information as to: *
SECTION (II)
*
* Text omitted pursuant to a request for confidential treatment and filed
separately with the Securities and Exchange Commission.
EXHIBIT "C"
Page 1 of 3
<PAGE>
SECTION (III)
INSURANCE REQUIREMENTS
----------------------
*
The policies shall provide for ten (10) days notice to LICENSOR from the
insurer by Registered or Certified Mail, return receipt requested, in the
event of any modification, cancellation or termination. LICENSEE agrees to
furnish LICENSOR a certificate of insurance or copy of the policies
evidencing same within thirty (30) days after execution of this Agreement and
from time to time as requested by LICENSOR within ten (10) days of LICENSOR'S
request; in no event, shall LICENSEE manufacture, offer for sale, sell,
advertise, promote, ship and/or distribute the Licensed Product prior to
receipt by LICENSOR of such evidence of insurance.
SECTION (IV)
*
* Text omitted pursuant to a request for confidential treatment and filed
separately with the Securities and Exchange Commission.
EXHIBIT "C"
Page 2 of 3
<PAGE>
*
* Text omitted pursuant to a request for confidential treatment and filed
separately with the Securities and Exchange Commission.
EXHIBIT "C"
Page 3 of 3
<PAGE>
Int. Ch: 25
Prior U.S. Ch: 39
Reg. No. 1,429,311
United States Patent and Trademark Office Registered Feb. 17, 1997
- --------------------------------------------------------------------------------
TRADEMARK
PRINCIPAL REGISTER
[LOGO]
EXHIBIT A
<PAGE>
PAGE ______ OF ____
DATE ______________
FORM MUST BE SUBMITTED COMPLETE SUBMIT TO THE ATTENTION OF:
BHPC MARKETING, INC.
620 W. 135th Street
Gardena, CA 90248
SAMPLE APPROVAL FORM
(FOR STYLE ONLY! SEE SWATCH APPROVAL FORM FOR FABRIC)
NAME OF LICENSEE ______________________________________________________________
LICENSED PRODUCT ______________________________________________________________
LICENSEE'S ADDRESS ____________________________________________________________
PLEASE PICTURE BELOW
SEASON ____________________
STYLE # ___________________
FABRICATION _______________
WHOLESALE PRICE ___________
COLORS ____________________
___________________________
SIZES _____________________
START TAKING ORDERS _________________________
END TAKING ORDERS ___________________________
START SHIP __________________________________
END SHIP ____________________________________
_____________________________ ___________________________
SIGNATURE OF LICENSEE SIGNATURE OF LICENSOR
APPROVED ______________ DISAPPROVED __________
COMMENTS ______________________________________________________________________
_______________________________________________________________________________
DATE RETURNED TO LICENSEE ___________________________
BHPC MARKETING, INC., 620 West 135th Street, Gardena, CA 90248
EXHIBIT "B-1"
<PAGE>
PAGE ______ OF ____
DATE ______________
FORM MUST BE SUBMITTED COMPLETE SUBMIT TO THE ATTENTION OF:
BHPC MARKETING, INC.
620 W. 135th Street
Gardena, CA 90248
SWATCH AND/OR COLOR APPROVAL FORM
(FABRIC AND COLOR ONLY! SEE SAMPLE APPROVAL FORM FOR STYLE)
NAME OF LICENSEE ______________________________________________________________
LICENSED PRODUCT ______________________________________________________________
LICENSEE'S ADDRESS ____________________________________________________________
SEASON ________________________________________________________________________
LIST STYLE NUMBERS OF GARMENTS TO BE MANUFACTURED IN THIS FABRIC ______________
_______________________________________________________________________________
FABRIC # AND NAME OF SUPPLIER _________________________________________________
_______________________________________________________________________________
FABRIC CONTENT AND WEIGHT _____________________________________________________
PLEASE ATTACH 1 SET OF SWATCHES BELOW
APPROVED ______________ DISAPPROVED __________
COMMENTS ______________________________________________________________________
_______________________________________________________________________________
_____________________________ ___________________________
SIGNATURE OF LICENSEE SIGNATURE OF LICENSOR
DATE RETURNED TO LICENSEE ___________________________
BHPC MARKETING, INC., 620 West 135th Street, Gardena, CA 90248
EXHIBIT "B-2"
<PAGE>
PAGE ______ OF ____
DATE ______________
FORM MUST BE SUBMITTED COMPLETE SUBMIT TO THE ATTENTION OF:
BHPC MARKETING, INC.
620 W. 135th Street
Gardena, CA 90248
ADVERTISING APPROVAL FORM
NAME OF LICENSEE ______________________________________________________________
LICENSED PRODUCT ______________________________________________________________
LICENSEE'S ADDRESS ____________________________________________________________
CIRCLE THE FORM OF ADVERTISING WHICH IS BEING SUBMITTED: LABEL, HANGTAG,
BUSINESS CARDS, BUSINESS FORMS, RADIO SPOT, TV, FULL PAGE AD, 1/2 PAGE AD,
PACKAGING, DISPLAY, OTHER.
PLACE ADVERTISING TO BE SUBMITTED HERE OF AFFIX
TO THIS PAGE
1) USE PERIOD From _________________________________ To _____________________
2) IF SUBMISSION IS LABELS OR HANGTAG, PLEASE GIVE NAME & ADDRESS OF
SUPPLIER ___________________________________________________________________
3) IF AD IS TO RUN IN A PUBLICATION: NAME OF PUBLICATION ______________________
APPROVED ______________ DISAPPROVED __________
COMMENTS ______________________________________________________________________
_______________________________________________________________________________
_______________________________________________________________________________
_____________________________ ___________________________
SIGNATURE OF LICENSEE SIGNATURE OF LICENSOR
DATE RETURNED TO LICENSEE ___________________________
BHPC MARKETING, INC., 620 West 135th Street, Gardena, CA 90248
EXHIBIT "B-3"
<PAGE>
[LOGO] STATEMENT OF ROYALTIES (DOM
FOR ____________________________TO _______________
(Month)
LICENSEE NAME
---------------------------
LICENSEE ADDRESS
------------------------
- -----------------------------------------
LICENSEE PRODUCT(S)
---------------------
<TABLE>
<CAPTION>
ITEM/ NUMBER OF NUMBER OF UNIT WHOLESALE GROSS LESS
STYLE NO UNITS SOLD UNITS RETURNED PRICE SALES ALLOWANCES*
-------- ---------- -------------- -------------- ----- -----------
<S> <C> <C> <C> <C> <C>
------- ---------- ----------- ---------- ----- ----------
------- ---------- ----------- ---------- ----- ----------
------- ---------- ----------- ---------- ----- ----------
------- ---------- ----------- ---------- ----- ----------
------- ---------- ----------- ---------- ----- ----------
------- ---------- ----------- ---------- ----- ----------
------- ---------- ----------- ---------- ----- ----------
------- ---------- ----------- ---------- ----- ----------
------- ---------- ----------- ---------- ----- ----------
------- ---------- ----------- ---------- ----- ----------
------- ---------- ----------- ---------- ----- ----------
------- ---------- ----------- ---------- ----- ----------
TOTALS
---------- ----------- ---------- ----- ----------
</TABLE>
SEND STATEMENT TO: BHPC MARKETING, INC.
620 West 135th Street I CERTIFY THAT THE
Gardena, CA 90248
-------------------
* PLEASE SEE THE LICENSE AGREEMENT -------------------
FOR THE AMOUNT OF PERMISSIBLE DEDUCTIONS.
<PAGE>
SETTLELMENT AGREEMENT
This Settlement Agreement is made, in multiple originals, by and among
* will hereinafter be collectively referred to as the "Beverly Hills Polo
Club Parties."
WITNESSETH:
WHEREAS, there are presently pending before the United States District
Court for the Central District of California two civil actions entitled
*
* Text omitted pursuant to a request for confidential treatment and filed
separately with the Securities and Exchange Commission.
EXHIBIT "C"
<PAGE>
*
WHEREAS, the parties hereto have vigorously contested the BHPC Action and
the * Action (collectively the "Civil Actions"), and have expended
considerable time and effort, and have incurred considerable expense, in
doing so; and
WHEREAS, in order to avoid the additional expense which would be
necessary for the continued prosecution of the Civil Actions, the parties are
willing to resolve the controversy among them and to settle the Civil Actions
under the terms and conditions set forth herein;
NOW, THEREFORE, in mutual consideration of the convenants and premises
contained herein, the parties agree as follows:
1. Except as provided in paragraph 3 hereunder, as of February 15, 1985,
the Beverly Hills Polo Club Parties, their affiliates, officers, agents and
employees and any person or entity under their direction or control, or in
active concert or participation with them, shall cease and desist from
anywhere in the world:
*
* Text omitted pursuant to a request for confidential treatment and filed
separately with the Securities and Exchange Commission.
- 2 -
<PAGE>
*
*
(c) Using as a design or decoration on or in connection with the Subject
Products and Services, including but not limited to related packaging,
labels, tags and other trade dress, or as a trademark or service mark, the
design of *
* Text omitted pursuant to a request for confidential treatment and filed
separately with the Securities and Exchange Commission.
- 3 -
<PAGE>
which is shown in Exhibit A (the "*"), or any design which is a colorable
imitation or simulation thereof;
(d) Using as a design or decoration on or in connection with the Subject
Products and Services, including but not limited to related packaging,
labels, tags and other trade dress, or as a trademark, service mark or trade
name the design of a * which is shown in Exhibit B (the "BHPC Symbol"), or
any design which is a colorable imitation or simulation thereof or is
substantially similar thereto, in an overall size smaller than five and a
half inches by five and a half inches (5-1/2" x 5-1/2") (measured from mallet
head to hoof and from nose to tail), except as may be permitted by paragraph
2 hereof;
(e) Using either of the typefaces shown in Exhibit C (identified
hereinafter as the "Subject Typefaces") for the name "Beverly Hills Polo
Club";
(f) Placing or causing to be placed any advertisements or using any
materials of any type making reference, either directly or indirectly to
* or to * or their licensees and affiliates; and
(g) Using dark blue as the background color of any packaging, label, tag
or trade dress containing the words "Beverly Hills Polo Club", and/or the
BHPC Symbol.
* Text omitted pursuant to a request for confidential treatment and filed
separately with the Securities and Exchange Commission.
- 4 -
<PAGE>
2. Notwithstanding the size limitations imposed by paragraph 1(d)
hereof, the Beverly Hills Polo Club Parties may use the BHPC Symbol in an
overall size smaller than the five and a half inches by five and a half
inches (5 1/2" x 5 1/2") set forth in paragraph 1(d) hereof but only if
(a) the same is used in combination with and in close proximity to the
words "Beverly Hills Polo Club" in the configuration shown in Exhibit D
annexed hereto (the "Composite BHPC Logo") or the label shown in Exhibit E
annexed hereto (the "BHPC Label"); or
(b) the BHPC Symbol is used in a repetitive pattern covering
substantially all of the front or back of any of the Subject Products,
provided that the initials "BHPC" shall appear in close proximity to the
BHPC Symbol, and that somewhere on each of the Subject Products the words
"Beverly Hills Polo Club" shall be prominently displayed.
3. The Beverly Hills Polo Club Parties may sell or otherwise dispose of
any and all articles of clothing and accessories which are represented by
them to be in their possession or under their control as of February 15,
1985, as set forth in Exhibit F, to be added hereto not later than March 1,
1985, which would otherwise come within the prohibitions of paragraph 1 of
this Agreement, and may fill orders accepted on or before such date for any
clothing or accessories coming within such prohibitions so long as such
orders are filled within ninety (90) days of such date. Notwithstanding the
foregoing,
-5-
<PAGE>
BHPC may have until June 15, 1985 to dispose of garments in the process of
manufacture in the Orient as of February 15, 1985. * or its attorneys or such
attorneys' agents, on reasonable notice, which notice shall not be required
to exceed ten (10) days, may review purchase orders, bills of lading, or
inventory records at the place of business of any Beverly Hills Polo Club
Parties sufficient to verify compliance with this paragraph. Such information
is to be used solely to verify and enforce compliance, and shall be held in
confidence by * attorneys or their agents.
4. Simultaneously with its execution of this settlement agreement,
*
* Text omitted pursuant to a request for confidential treatment and filed
separately with the Securities and Exchange Commission.
-6-
<PAGE>
5. Neither * nor any person or entity under its direction or control,
may oppose the registration by the Beverly Hills Polo Club Parties of any
trademark which the Beverly Hills Polo Club Parties are entitled to register
under this Agreement, nor shall they petition to cancel, either directly or
through court action the registration of any such trademark unless said mark
or registration is the basis for legal action by BHPC, Lang or any affiliated
entity against * or its licensees. If * learns that any of its licensees
objects to the registration by any of the Beverly Hills Polo Club Parties of
the words "Beverly Hills Polo Club," and/or the Composite BHPC Logo and/or
the BHPC Label, then * will inform such objecting licensee in writing of
the terms of this Agreement, and provide written confirmation thereof to BHPC.
6. The parties agree to entry in the Civil Actions of Final Judgment
Upon Consent in the form annexed hereto as Exhibit H, or in such other form
as the Court may require consistent with the terms and conditions of this
Settlement Agreement.
7. *
* Text omitted pursuant to a request for confidential treatment and filed
separately with the Securities and Exchange Commission.
-7-
<PAGE>
*
8. The parties will not initiate any publicity concerning the terms and
conditions of this Agreement and such terms and conditions shall be held in
confidence except as otherwise provided herein. The Beverly Hills Polo Club
Parties may provide a copy of this Settlement Agreement or portions or
summaries thereof to any person or entity licensed or otherwise permitted to
use the name "Beverly Hills Polo Club," the BHPC Symbol or the Composite BHPC
Logo, to potential licensees, to sales representatives or, upon inquiry being
made, to customers. Either party may refer to the terms and conditions of
this Agreement in conjunction with its registration, or judicial or
administrative protection or enforcement of its trademarks, trade names and
service marks.
9. This Settlement Agreement represents no concession by any party as
to the validity or merit of any of the claims raised in the Civil Actions by
any other party, except as may be set forth in the Final Judgment of Exhibit
H.
10. * and its officers, agents, employees and sales representatives
shall not make, directly or indirectly, any claim that the purchase of
products complying with the terms of this Agreement from BHPC or Lang or
their distributors or sublicensees constitutes trademark infringement, unfair
competition or trademark dilution, nor threaten sanctions with respect
thereto. This undertaking does not in any way admit or imply
* Text omitted pursuant to a request for confidential treatment and filed
separately with the Securities and Exchange Commission.
-8-
<PAGE>
that *, or anyone acting on its behalf, has in the past made any such
claims or threatened any such sanctions.
11. *
12. *
13. This Settlement Agreement represents the entire understanding between
the parties with respect to the subject matter hereof; shall not be varied or
amended except by a
* Text omitted pursuant to a request for confidential treatment and filed
separately with the Securities and Exchange Commission.
-9-
<PAGE>
writing signed by all parties; shall be binding upon the parties, their
successors and assigns; and shall, as respects contractual construction, be
governed by and construed in accordance with the laws of *. Neither party
hereby waives any claim as to the propriety of venue or as to the existence
of personal jurisdiction, in any lawsuit or other proceeding that may arise
concerning the subject matter of this Settlement Agreement.
14. * warrants and represents that it has full right and power to enter
into this Settlement Agreement.
15. Lang warrants and represents that it has full right and power to enter
into this Settlement Agreement.
16. BHPC warrants and represents that it has full right and power to enter
into this Settlement Agreement.
17. Wessler warrants and represents as follows:
(a) He is the president and sole shareholder of BHPC and Lang; and
(b) He has the full right, power and authority to enter into this
Settlement Agreement.
*
* Text omitted pursuant to a request for confidential treatment and filed
separately with the Securities and Exchange Commission.
-10-
<PAGE>
"polo clubs") or items of wearing apparel which have come to be described by
the word polo (e.g. "polo shirts" or "polo coats"), provided, however, that
any such use will not violate any of the terms and conditions of this
Agreement.
19. The Beverly Hills Polo Club Parties shall take all steps reasonably
necessary to ensure that any person or entity which is licensed or otherwise
permitted to use the term "Beverly Hills Polo Club", the BHPC Symbol or the
Composite BHPC Logo, complies fully with the restrictions set forth in
paragraph 1 hereof.
20. * acknowledges that the rights of any person or entity which it
licenses or otherwise permits to use the * Marks are subject to the terms
and conditions of this Agreement and that such rights cannot be used in
contravention of the provisions of paragraphs 5 and 10 hereof. * agrees to
inform any of its licensees whom it learns object to the use by the Beverly
Hills Polo Club Parties of any of the names or marks which they are permitted
to use hereunder of the foregoing acknowledgements.
21. In the event that a dispute arises between the parties as to the
subject matter of this Agreement, then the parties shall attempt to amicably
resolve the same prior to seeking judicial intervention. If the parties are
unable to resolve such dispute within thirty (30) days after it arises,
11
* Text omitted pursuant to a request for confidential treatment and filed
separately with the Securities and Exchange Commission.
<PAGE>
then either party may take such action as it deems appropriate to protect its
rights.
IN WITNESS WHEREOF, the parties have executed this Settlement on the days
indicated adjacent to their respective signatures below.
*
Dated: 2/15/85 By: /s/ *
------------- --------------------------------
*
BEVERLY HILLS POLO CLUB, INC.
Dated: 2/20/85 By: /s/ Stephen Wessler, President
------------- --------------------------------
Stephen Wessler, President
STEPHEN WESSLER
Dated: 2/20/85 By: /s/ Stephen Wessler
------------- --------------------------------
GREGORY LANG, INC.
Dated: 2/20/85 By: /s/ Stephen Wessler, President
------------- --------------------------------
Stephen Wessler, President
12
* Text omitted pursuant to a request for confidential treatment and filed
separately with the Securities and Exchange Commission.
<PAGE>
[GRAPHIC]
EXHIBIT A
---------
<PAGE>
[GRAPHIC]
EXHIBIT B
---------
<PAGE>
[GRAPHIC]
EXHIBIT C
---------
<PAGE>
[GRAPHIC]
Note: Typeface to be changed per Paragraph 1(e).
EXHIBIT D
---------
<PAGE>
[GRAPHIC]
Note: Typeface to be changed per Paragraph 1(e).
EXHIBIT E
---------
<PAGE>
Exhibit 10.15
ASSIGNMENT OF LICENSES
This Assignment is made and entered into this 31 day of August, 1993, by
and between Heather Paige II Industries, Inc., a California corporation
("ASSIGNOR"), and I.C. Isaacs & Co., L.P., a Delaware limited partnership
("ASSIGNEE").
WHEREAS, ASSIGNOR is the licensee under two Exclusive Domestic License
Agreements (the "License Agreements") dated, respectively, June 1, 1993 and
December 1, 1993, between BHPC Marketing, Inc., a California corporation
("Licensor"), and ASSIGNOR concerning the license of rights to use Licensor's
marks and designs relating to the name "Beverly Hills Polo Club" (the
"Marks") in connection with the design, manufacture, import, distribution,
advertising, promotion, shipment and sale of certain women's apparel products
throughout the United States and all of its territories and possessions; and
WHEREAS, ASSIGNOR desires to assign the Licenses Agreements, and all of
its right, title and interest thereunder, to ASSIGNEE, and ASSIGNEE desires
to obtain such an assignment.
NOW, THEREFORE, it is agreed by the parties as follows:
1. ASSIGNMENT
For valuable consideration received, ASSIGNOR hereby grants and
assigns to ASSIGNEE the License Agreements and all of ASSIGNOR's right, title
and interest arising thereunder. ASSIGNOR further agrees, without further
consideration, to take such acts and execute such documents and instruments
as ASSIGNEE may reasonably request to effectuate fully this Assignment. In
furtherance of the transfer of such license rights, ASSIGNOR shall promptly
deliver to ASSIGNEE certain patterns, designs, samples and the like as have
been mutually agreed upon by the parties. Further, ASSIGNEE shall receive all
right, title and interest which ASSIGNOR has or may acquire with respect to
use of the Marks in China, and ASSIGNOR shall take all acts and execute all
documents or instruments which ASSIGNEE may reasonably request in furtherance
of ASSIGNEE's receiving such right, title and interest.
2. PAYMENT FOR ASSIGNMENT
As consideration for the Assignment effected hereby, ASSIGNEE agrees
to pay ASSIGNOR a total sum of * in cash, of which * has already been
delivered to ASSIGNOR pursuant to Paragraph 2(a) of that certain letter of
intent dated August 19,
* Text omitted pursuant to a request for confidential treatment and filed
separately with the Securities and Exchange Commission.
1
<PAGE>
1993 and the balance of * shall be paid upon execution and delivery of this
Assignment. In addition to the foregoing sums, if, at any time within three
years from the date of this Assignment, ASSIGNEE acquires the right, either
under a direct license from the Licensor or a sub-license from any licensee,
in either case on terms acceptable to ASSIGNEE in its sole discretion, to use
the Marks in China, ASSIGNEE shall pay a further sum of * to ASSIGNOR. The
parties hereby acknowledge and agree that, as of the date hereof, neither
ASSIGNOR nor ASSIGNEE has been granted any rights with respect to the use of
the Marks in China.
3. MISCELLANEOUS
3.1 ENTIRE AGREEMENT. This instrument contains the entire agreement of
the parties and may not be modified except by an agreement in writing signed
by the party against whom enforcement of any waiver, change, modification,
extension or discharge is sought.
3.2 SUCCESSORS AND ASSIGNS. This Assignment shall inure to the benefit
of and shall be binding upon the parties hereto and their respective
successors and assigns.
3.3 COUNTERPARTS. This Assignment may be executed in one or more
counterparts, each of which shall be deemed an original, but all of which
together shall constitute one and the same instrument.
ASSIGNEE: ASSIGNOR:
I.C. ISAACS & CO., L.P. HEATHER PAIGE II
INDUSTRIES, INC.
By /s/ Robert Arnot By /s/ Howard Regen
-------------------------- ---------------------------
Robert Arnot Howard Regen
Chairman of the Board President
By /s/ Gerald Lear
--------------------------
Gerald Lear
President and Chief Executive Officer
CONSENT OF LICENSOR
The undersigned hereby consents to the above-described Assignment of the
"License Agreements" (as defined in the first
* Text omitted pursuant to a request for confidential treatment and filed
separately with the Securities and Exchange Commission.
2
<PAGE>
recital above), and all of Heather Paige II Industries, Inc.'s right, title
and interest arising thereunder, to I.C. Isaacs & Co., L.P. The undersigned
hereby acknowledges and affirms that ASSIGNEE does not assume and shall have
no responsibility or liability with respect to any obligations arising under
the License Agreements prior to the effectiveness of the Assignment, except
that ASSIGNEE shall be obligated to make the minimum royalty payments * due
under the License Agreements for August, 1993.
LICENSOR:
Dated: 9/1, 1993 BHPC MARKETING, INC.
By /s/ Don Garrison
---------------------------------
Don Garrison
Licensing Director
3
* Text omitted pursuant to a request for confidential treatment and filed
separately with the Securities and Exchange Commission.
<PAGE>
Exhibit 10.16
AMENDMENT
Simultaneously with the execution by I.C. Isaacs & Co., L.P.
("Isaacs") of an "Assignment of Licenses" attached hereto as Exhibit A
with respect to the assignment to Isaacs of certain "Exclusive Domestic
License Agreements" identified therein (the "Women's License Agreements"),
Isaacs and BHPC Marketing, Inc., the Licensor in said Women's License
Agreements, hereby agree to amend the Women's Licenser Agreements as follows:
1. The royalty rate identified in the "License Agreement Detail
Schedule" and in Paragraph 8 (a) (i) that is a part of each Women's License
Agreement is deleted and amended to be Five Percent (5%) for the term and any
renewal of each Women's License Agreement.
2. Paragraph 8 (a) (ii) of each Women's License Agreement is deleted in
its entirety and amended to read the same as Paragraph 8 (a) (ii) of the
"Exclusive Domestic License Agreement" for men's wear executed by Licensor
and Isaacs simultaneously herewith (the "Men's Agreement"). A conforming
change shall be made in Item 6 of the "License Agreement Detail Schedule"
attached to each Women's License Agreement.
3. The changes noted in highlighted or handwritten fashion on the
attached copy (as exhibit B) of the Men's Agreement (which do not include any
changes in the "License Agreement Detail Schedule" of the Women's License
Agreements except as stated above) are hereby made a part of each Women's
License Agreement. For purposes of clarity, the parties may choose to restate
each Women's License Agreement to reflect these amendments.
4. Licensor has granted to Isaacs a right of first refusal with respect
to women's wear on the same terms as Paragraph 36 of the Men's License, for
women's active wear including, but not limited to, basic T-shirts and basic
sweat shirts.
Executed as of September 1, 1993, intending this document to be binding.
/s/ Robert J. Arnot /s/ Don Garrison
- ------------------------------------- --------------------------------
I.C. Isaacs & Co., L.P. BHPC Marketing, Inc.
Title: Chairman Title: Director of Licensing
------------------------------ --------------------------
<PAGE>
EXHIBIT A
ASSIGNMENT
<PAGE>
EXHIBIT B
CONFORMING CHANGES TO WOMEN'S LICENSE AGREEMENTS
------------------------------------------------
<PAGE>
EXCLUSIVE DOMESTIC LICENSE AGREEMENT BHPC.12
THIS AGREEMENT is made and entered into this 1st day of September, 1993
by and between BHPC Marketing, Inc., a corporation duly organized and
existing under the laws of California, having its principal place of business
at 620 West 135th Street, Gardena, California 90248 (hereinafter referred to
as "LICENSOR"), and I.C. Isaacs & Co., L.P., a Delaware Limited Partnership,
having its principal place of business at 3840 Bank Street, Baltimore,
Maryland, 21224 (hereinafter referred to as "LICENSEE").
WHEREAS, LICENSOR is the owner with the right to grant licenses of the
Trademarks illustrated in Exhibit "A" attached hereto (the "Trademarks"); and
WHEREAS, LICENSEE is desirous of obtaining the exclusive right to use
the aforesaid Trademarks in connection with the import or manufacture and
sale of certain licensed products defined herein.
NOW, THEREFORE, it is agreed by the parties as follows:
1. DEFINITIONS
The following terms shall have meanings as set forth below:
a. "Trademarks" shall mean the Trademarks set forth in Exhibit "A", AND
ANY SUCH VARIATIONS AS LICENSEE DEVELOPS WITH LICENSOR'S PRIOR WRITTEN
APPROVAL;
b. "Territory" shall mean that geographical area defined in item 1 of the
attached License Agreement Detail Schedule.
c. "Licensed Product" shall be defined as set forth in item 2 of the
attached License Agreement Detail Schedule.
d. *
2. RIGHTS GRANTED
LICENSOR hereby grants to LICENSEE, upon the terms and conditions set
forth herein, an exclusive, personal, non-transferable, non-assignable
license, without the right to grant sublicenses, to use the Trademarks
solely on or in conjunction with the design, manufacture, import,
* Text omitted pursuant to a request for confidential treatment and filed
separately with the Securities and Exchange Commission.
<PAGE>
distribution, advertising, promotion, shipment, and sale of the
Licensed Product in the Territory. This license is extended to and
includes wholesale sales only and does not include retail sales.
3. *
4. GOOD WILL AND PROMOTIONAL VALUE
a. LICENSEE recognizes the value of the good will associated with the
Trademarks and acknowledges that the Trademarks, and all rights therein
and the good will pertaining thereto, belong exclusively to LICENSOR.
LICENSEE further recognizes and acknowledges that the Trademarks have
acquired secondary meaning in the mind of the public.
b. LICENSEE agrees that its use of the Trademarks shall inure to the
benefit of LICENSOR and that LICENSEE shall not, at any time, acquire
any rights in the Trademarks by virtue of any use it may make of the
Trademarks.
c. LICENSEE acknowledges that LICENSOR is entering into this Agreement not
only in consideration of the royalties paid hereunder but also for the
good will and promotional value to be secured by LICENSOR for the
Trademarks as a result of the manufacture, offering for sale, sale,
advertising, promotion, shipment and distribution of the Licensed
Product by LICENSEE.
* Text omitted pursuant to a request for confidential treatment and filed
separately with the Securities and Exchange Commission.
2
<PAGE>
BHPC.12
5. *
* Text omitted pursuant to a request for confidential treatment and filed
separately with the Securities and Exchange Commission.
3
<PAGE>
BHPC.12
*
* Text omitted pursuant to a request for confidential treatment and filed
separately with the Securities and Exchange Commission.
4
<PAGE>
*
* Text omitted pursuant to a request for confidential treatment and filed
separately with the Securities and Exchange Commission.
5
<PAGE>
with this Agreement, including, but not limited to, laboratory testing.
g. *
6. ADVERTISING/USE OF THE TRADEMARK
a. LICENSEE will adopt and carry out its own marketing and advertising
program with respect to the Licensed Product. LICENSEE agrees that
LICENSEE's advertising, public relations and sales promotion
activities will be subject to prior consultation with, and written
approval by, LICENSOR as to the general form and content only with
respect to the use of the Trademarks and other notices.
b. *
c. *
d. *
e. *
* Text omitted pursuant to a request for confidential treatment and filed
separately with the Securities and Exchange Commission.
6
<PAGE>
*
g. LICENSEE shall affix such legends, markings and notices on all License
Product as are required by LICENSOR UNDER SUBPARAGRAPH 5.D. AND the
law.
h. LICENSEE must submit for approval to LICENSOR a printer's proof of
each ADVERTISING AND PROMOTIONAL ITEM before final printing.
7. DURATION OF THE AGREEMENT
a. This Agreement shall continue for three (3) consecutive Contract Years
in respective durations as set forth in item 3 of the attached License
Agreement Detail Schedule (hereinafter collectively the "Initial
Term") and shall then expire unless sooner terminated in accordance
with the terms and conditions set forth herein.
b. If LICENSEE is not in breach of this Agreement at the time of renewal,
notice is given to LICENSOR, LICENSEE shall have three (3) consecutive
options to renew this Agreement for three (3) consecutive contract
periods, i.e. Contract Years, of one (1) year each (hereinafter
collectively the "Renewal Term"). In order to exercise each individual
option, LICENSEE must provide LICENSOR with written notice of its
intention to exercise each respective option and such written notice
must be received by LICENSOR no later than *
prior to the expiration of the Initial Term or immediately
preceding Contract Year of the Renewal Term. *
* Text omitted pursuant to a request for confidential treatment and filed
separately with the Securities and Exchange Commission.
7
<PAGE>
* Except as specifically set forth herein to the contrary, LICENSEE's
performance in the Renewal Term shall be pursuant to the same terms
and conditions recited herein for the Initial Term.
8. ROYALTIES
a. "Royalty", as used in this Agreement, shall consist of the sum of the
following:
(i) LICENSEE agrees to pay LICENSOR, during the term of this
Agreement, a Royalty in an amount equal to five percent (5%) of the
Net Shipments by LICENSEE for Licensed Product sold under the
Trademarks; and
(ii) LICENSEE agrees to expend during the term of this Agreement, an
amount equal to one percent (1%) of the Net Shipments by LICENSEE for
Licensed Product sold under the Trademarks in advertising of the
Licensed Product and Trademarks. *
* Text omitted pursuant to a request for confidential treatment and filed
separately with the Securities and Exchange Commission.
8
<PAGE>
BHPC.12
*
9. PAYMENT
a. *
* Text omitted pursuant to a request for confidential treatment and filed
separately with the Securities and Exchange Commission.
9
<PAGE>
BHPC.12
*
b. LICENSEE's statements and all amounts payable to LICENSOR by LICENSEE
shall be submitted to:
BHPC Marketing, Inc.
620 West 135th Street
Gardena, California 90240
Attn: Royalty Receivables Department
*
d. All payments made hereunder shall be in United States currency or
* Text omitted pursuant to a request for confidential treatment and filed
separately with the Securities and Exchange Commission.
10
<PAGE>
BHPC.12
*
10. GUARANTEES
a. Guaranteed Annual Royalty Payments - LICENSEE shall pay, for each
Contract Year during the term of this Agreement, beginning with the First
Contract Year, the respective Guaranteed Annual Royalty Payments set
forth in item 7 of the attached License Agreement Detail Schedule.
b. Guaranteed Target Net Shipments - If, in any Contract Year, LICENSEE
does not achieve the Guaranteed Target Net Shipment Volume figure set
forth in item 7 of the attached License Agreement Detail Schedule
LICENSOR may, at its option, immediately thereafter terminate this
Agreement in writing BY GIVING LICENSEE WRITTEN NOTICE NOT LATER THAN
* AFTER THE END OF THE CONTRACT YEAR.
c. Guaranteed Net Shipments - If, in any Contract Year, LICENSEE does not
achieve the Guaranteed Net Shipments figure set forth in item 7 of the
attached License Agreement Detail Schedule LICENSOR may, at its option,
immediately thereafter terminate this Agreement in writing by giving
LICENSEE WRITTEN NOTICE NOT LATER THAN * AFTER THE END
OF THE CONTRACT YEAR.
D. *
E. *
* Text omitted pursuant to a request for confidential treatment and filed
separately with the Securities and Exchange Commission.
11
<PAGE>
BHPC.12
*
11. EXPLOITATION BY LICENSEE
a. LICENSEE agrees to commence, and diligently continue thereafter, the
distribution, shipment and sale of each category of the Licensed
Product in commercially reasonable quantities in the Territory on or
before the respective distribution date set forth next to each
category of the Licensed Product described in item 2 of the attached
License Agreement Detail Schedule.
b. LICENSEE agrees that the Licensed Product will be sold, shipped and
distributed outright, at a competitive price DETERMINED BY LICENSEE,
and not on an approval, tie-in, consignment, or "sale or return"
basis. LICENSEE further agrees that the Licensed Product will only be
KNOWINGLY sold to retailers, jobbers, wholesalers and distributors for
sale, shipment and distribution to retail stores and merchants
commonly considered and referred to in the industry as MODERATE OR
BETTER department stores and specialty stores for sale, shipment and
distribution direct to the public. Notwithstanding the foregoing to the
contrary, LICENSOR agrees that the Licensed Product may also be sold to
those retail stores commonly considered and referred to in the industry
as "Warehouse Clubs" * so long as the total Net Shipment volume of
Licensed Product sold to such "Warehouse Clubs" does not exceed twenty
five percent (25%)
* Text omitted pursuant to a request for confidential treatment and filed
separately with the Securities and Exchange Commission.
12
<PAGE>
BHPC.12
of LICENSEE's annual Net Shipment volume. * The manner and
scope of the distribution of the Licensed Product, availability,
variety, fabrication, colors and sizes are critical to the promotion,
enhancement and protection of the Trademarks and their associated
goodwill. *
c. *
12. *
* Text omitted pursuant to a request for confidential treatment and filed
separately with the Securities and Exchange Commission.
13
<PAGE>
BHPC.12
*
13. INSURANCE
LICENSEE shall, throughout the term of this Agreement, obtain and
maintain at its own cost and expense from a qualified insurance company
acceptable to LICENSOR, a policy or policies of insurance, insuring
* Text omitted pursuant to a request for confidential treatment and filed
separately with the Securities and Exchange Commission.
14
<PAGE>
BHPC.12
against those risks customarily insured against under broad form
comprehensive general liability policies arising out of any defects or
failure to perform, alleged or otherwise, of the Licensed Product or
any use thereof, including "product liability", "completed operations",
"advertisers' liability insurance", etc and any liability of LICENSEE
arising out of Paragraph 20, below. *
The policies shall provide for ten (10) days notice to LICENSOR from
the insurer by Registered or Certified Mail, return receipt requested,
in the event of any modification, cancellation or termination. LICENSEE
agrees to furnish LICENSOR a certificate of insurance or copy of the
policies evidencing same within thirty (30) days after execution of
this Agreement and from time to time as requested by LICENSOR within
ten (10) days of LICENSOR's request; in no event, shall LICENSEE
manufacture, offer for sale, sell, advertise, promote, ship and/or
distribute the Licensed Product prior to receipt by LICENSOR of such
evidence of insurance. If LICENSEE fails to procure, maintain and/or
pay for at the times and for the durations specified in this Agreement,
the insurance required hereunder, or fails to carry insurance required
by any governmental requirement, LICENSOR may (but without obligation
to do so), and without notice to LICENSEE, perform such obligations on
behalf of LICENSEE, and the cost thereof, together with interest
thereon at the
* Text omitted pursuant to a request for confidential treatment and filed
separately with the Securities and Exchange Commission.
15
<PAGE>
BHPC.12
maximum rate allowed by law, shall immediately become due and payable
to LICENSOR.
14. USE, DISPLAY, AND SALE INVOLVING THE TRADEMARKS AND COPYRIGHT
a. In order to protect the Trademarks and LICENSOR's reputation,
LICENSEE will manufacture, distribute and sell the Licensed Product in
compliance with all applicable laws. *
b. *
c. LICENSEE shall exercise reasonable efforts, within the limits
allowed by the laws and governmental regulations in effect in the
Territory, to ensure that its merchandising and sale of the Licensed
Product shall conform to policies and methods suitable for goods of
high quality sold under a prestigious label of worldwide repute.
15. OWNERSHIP OF THE TRADEMARKS
a. LICENSEE agrees that nothing in this Agreement shall give LICENSEE
any right, title, or interest in the Trademarks other than the license
to use the Trademarks on the Licensed Product; that such marks are the
sole property of LICENSOR; that all such uses by LICENSEE of such marks
shall inure only to the benefit of LICENSOR; and it being understood
that all
* Text omitted pursuant to a request for confidential treatment and filed
separately with the Securities and Exchange Commission.
16
<PAGE>
BHPC.12
right, title and interest relating thereto are expressly reserved by
the LICENSOR except for the rights being licensed hereunder.
b. LICENSEE recognizes that LICENSOR may already have entered into
license agreements with respect to the Trademarks for products which
fall into the same general product category as the Licensed Product,
but which are not sold to the same retail store departments as the
Licensed Product, and which may be similar to, but not the same as, the
Licensed Product in terms of function, or otherwise. LICENSOR WILL
ADVISE LICENSEE OF THE SPECIFICS OF EACH SUCH AGREEMENT. LICENSEE
hereby expressly concedes that the existence of said xxxxxxx xxxx xxx
and shall xxx xxxxxxx x breach of this Agreement by the LICENSOR.
NOTHING HEREIN SHALL PERMIT LICENSOR TO LICENSE A RETAIL OUTLET
DIRECTLY TO MAKE LICENSED PRODUCTS OR PRODUCTS SUBSTANTIALLY SIMILAR
THERETO, IT BEING UNDERSTOOD THAT ANY SUCH PRODUCTS TO BE SOLD BY THE
RETAIL OUTLET MUST BE PURCHASED FROM LICENSEE.
c. *
d. *
16. COMPLIANCE WITH LIMITATIONS ON USE OF TRADEMARKS
LICENSEE agrees that the Licensed Product, and all labels, hang
tags, packaging and other trade dress, used in connection with such
Licensed Products, shall not violate any restrictions on use or display
of the
* Text omitted pursuant to a request for confidential treatment and filed
separately with the Securities and Exchange Commission.
17
<PAGE>
marks as provided in that Settlement Agreement and Consent Judgement
with *, a copy of which is attached hereto as Exhibit
"D". Nothing contained in this Agreement makes *, or
any related company, a third party beneficiary of this Agreement. *
17. *
18. ASSIGNABILITY AND MANUFACTURING
a. The license granted hereunder is, and shall remain, personal to LICENSEE
and shall not be granted, assigned, or otherwise conveyed by any act of
LICENSEE or by operation of law. For the purposes of this Paragraph 18,
any sale or transfer of any ownership interest in LICENSEE shall
constitute a prohibited assignment of the license granted hereunder.
* Text omitted pursuant to a request for confidential treatment and filed
separately with the Securities and Exchange Commission.
18
<PAGE>
LICENSEE shall have not right to grant any sublicenses without LICENSOR's
prior to express written approval. Any attempt on the part of LICENSEE
to arrange to sublicense or assign to third parties its rights under
this Agreement, shall constitute a material breach of this Agreement.
NOTHING HEREIN PRECLUDES LICENSEE FROM PLEDGING THIS AGREEMENT AS
COLLATERAL OR SECURITY FOR FINANCING TO ITS PRIMARY LENDERS OR HIRING
THIRD PARTIES TO MANUFACTURE, ASSEMBLE OR SELL THE LICENSED PRODUCTS.
b. LICENSOR shall have the right to assign its rights and obligations under
this Agreement without the approval of LICENSEE.
19. NO AGENCY, JOINT VENTURE, PARTNERSHIP
The parties hereby agree that no agency, joint venture, or partnership
is created by this Agreement, and that neither party shall incur any
obligation in the name of the other without the other's prior written
consent.
20. *
* Text omitted pursuant to a request for confidential treatment and filed
separately with the Securities and Exchange Commission.
19
<PAGE>
*
21. TERMINATION
a. In addition to the termination rights provided elsewhere in this
Agreement, EACH PARTY will have the right to terminate this Agreement in
the event that:
*
* Text omitted pursuant to a request for confidential treatment and filed
separately with the Securities and Exchange Commission.
20
<PAGE>
*
22. EFFECT OF EXPIRATION OR TERMINATION
a. EXCEPT FOR THE LIMITED PURPOSES INDICATED BELOW, upon expiration or
termination of this Agreement, all rights and licenses granted to
LICENSEE hereunder shall immediately expire, shall forthwith revert to
LICENSOR, and LICENSEE shall immediately cease and desist from using the
Trademarks and any technical information supplied by LICENSOR to
LICENSEE hereunder. To this end, LICENSEE will be deemed to have
automatically assigned to LICENSOR, PURSUANT TO THE EXPRESS PROVISIONS
OF THIS AGREEMENT, upon such expiration or termination, the Trademarks,
equities, good will, titles, and other rights in or to the Licensed
Product and all adaptations, compilations, modifications, translations
and versions thereof, and all other trademarks used in connection
therewith (NOT INCLUDING ANY OF LICENSEE'S TRADEMARKS AND LOGOS) which
have been or may be obtained by LICENSEE or which may vest in LICENSEE
and which have not already been assigned to LICENSOR BUT NOT INCLUDING
ANY GENERIC OR STANDARD STYLES, LABELS, TAGS, DESIGNS, GRAPHICS, AND THE
LIKE. LICENSOR may thereafter, in its sole discretion enter into such
arrangements as it deems desirable, with any other party, for the
manufacture, promotion and sale of the Licensed Product in the Territory.
b. Any Licensed Product, finished or in progress, shall be disposed of as
follows:
*
* Text omitted pursuant to a request for confidential treatment and filed
separately with the Securities and Exchange Commission.
21
<PAGE>
*
* Text omitted pursuant to a request for confidential treatment and filed
separately with the Securities and Exchange Commission.
22
<PAGE>
BHPC.12
*
* Text omitted pursuant to a request for confidential treatment and filed
separately with the Securities and Exchange Commission.
23
<PAGE>
BHPC.12
*
23. MODIFICATION; WAIVER
No modification of any of the terms or provisions of this agreement
shall be valid unless contained in a writing signed by the parties. No
waiver by either party of a breach or a default hereunder shall be
deemed a waiver by such party of a subsequent breach or default of a
like or similar nature. EXCEPT AS OTHERWISE STATED IN THIS AGREEMENT,
resort by LICENSOR OR LICENSEE to any remedies referred to in this
Agreement or arising by reason of a breach of this Agreement by LICENSEE
OR LICENSOR shall not be construed as a waiver by LICENSOR of its right
to resort to any and all other legal and equitable remedies available to
LICENSOR OR LICENSEE.
24. FORCE MAJEURE
Neither LICENSOR nor LICENSEE shall be liable to each other or be
deemed in breach or default of any obligations contained in this
Agreement, for any delay or failure to perform due to causes beyond its
reasonable control, including but not limited to delay due to the
elements, acts of the United States Government, acts of a foreign
government, acts of God, fires, floods, epidemics, embargoes, riots,
strikes, any of the foregoing events being referred to as a "Force
Majeure" condition. In such event, dates for performance shall be
extended for the period of delay resulting from the Force Majeure
condition. The party affected by a Force Majeure condition shall, as
soon as practicable, notify the other party of the nature and extent of
such condition.
25. NOTICE
All notices, approvals, consents, requests, demands, or other
communications to be given to either party in writing may be effected by
personal delivery or by depositing the same in the United States mail,
certified and return receipt requested, postage prepaid. Such
* Text omitted pursuant to a request for confidential treatment and filed
separately with the Securities and Exchange Commission.
24
<PAGE>
BHPC.12
communication shall be addressed to LICENSEE and LICENSOR at their
respective addresses as set forth in the preamble above.
26. CONSTRUCTION; VENUE
This Agreement shall be construed in accordance with the * , and the
parties agree that it is executed and delivered in that state, and any
claims arising hereunder shall, at LICENSOR's election, be prosecuted in *
27. ENTIRE AGREEMENT
This Agreement, contains the entire understanding of the parties and
there are no representations, warranties, promises, or undertakings
other than those contained herein. This Agreement supersedes and
cancels all previous agreements between the parties hereto.
28. *
29. *
* Text omitted pursuant to a request for confidential treatment and filed
separately with the Securities and Exchange Commission.
25
<PAGE>
BHPC.12
*
30. *
31. BINDING EFFECT
This Agreement shall be binding on the parties, and their successors and
assigns.
32. *
33. SEVERABILITY
In the event that any term or provision of this Agreement shall for any
reason be held to be invalid, illegal or unenforceable in any respect,
such invalidity or unenforceability shall not affect any other term or
provision and this Agreement shall be interpreted and construed as if
such term or provision, to the extent the same shall have been held to
be invalid, illegal or unenforceable, had never been contained herein.
34. CAPTIONS
The captions used in connection with the paragraphs and subparagraphs of
this Agreement are inserted only for purpose of reference. Such
* Text omitted pursuant to a request for confidential treatment and filed
separately with the Securities and Exchange Commission.
26
<PAGE>
BHPC.12
captions shall not be deemed to govern, limit, modify or in any other
manner affect the scope, meaning or intent of the provisions of this
Agreement or any part thereof nor shall such captions otherwise be given
any legal effect.
35. INCORPORATION OF EXHIBITS
LICENSOR and LICENSEE acknowledge and agree that the provisions of
Exhibits "A" through "D" attached hereto (the "Exhibits") are integral
to this Agreement and that the provisions of the Exhibits are all hereby
incorporated herein and made a part hereof as if set out in full in this
Agreement.
36. *
37. APPROVALS
ALL APPROVALS OR CONSENTS REQUIRED TO BE GIVEN BY ONE PARTY TO THE OTHER
UNDER THIS AGREEMENT SHALL NOT BE UNREASONABLY WITHHELD OR DELAYED
NOTWITHSTANDING ANYTHING IN THE AGREEMENT TO THE CONTRARY.
* Text omitted pursuant to a request for confidential treatment and filed
separately with the Securities and Exchange Commission.
27
<PAGE>
BHPC.12
IN WITNESS WHEREOF, the parties hereto agree that this Agreement shall
take effect as of the date and year first above written above.
LICENSOR: LICENSEE:
BHPC MARKETING, INC., I. C. ISAACS & CO., L.P.
a California Corporation a Delaware Limited Partnership
BY: BY:
-------------------------------- ------------------------------
Don Garrison Jerry Lear
Licensing Director President, C.E.O.
Date: Date:
------------------------------ ----------------------------
28
<PAGE>
BHPC.12
SECTION (I)
NET SHIPMENT STATEMENT
The written statement of Net Shipments of Licensed Product (a copy of
which is attached hereto as Exhibit "F") referred to in Paragraph 9a must be
certified as accurate by LICENSEE and will include, but will not be limited
to, information as to: *
SECTION (II)
*
EXHIBIT "C"
Page 1 of 3
* Text omitted pursuant to a request for confidential treatment and filed
separately with the Securities and Exchange Commission.
<PAGE>
BHPC.12
SECTION (III)
INSURANCE REQUIREMENTS
*
The policies shall provide for ten (10) days notice to LICENSOR from the
insurer by Registered or Certified Mail, return receipt requested, in the
event of any modification, cancellation or termination. LICENSEE agrees to
furnish LICENSOR a certificate of insurance or copy of the policies
evidencing same within thirty (30) days after execution of this Agreement and
from time to time as requested by LICENSOR within ten (10) days of LICENSOR's
request, in no event, shall LICENSEE manufacture, offer for sale, sell,
advertise, promote, ship and/or distribute the Licensed Product prior to
receipt by LICENSOR of such evidence of insurance.
SECTION (IV)
*
EXHIBIT "C"
Page 2 of 3
* Text omitted pursuant to a request for confidential treatment and filed
separately with the Securities and Exchange Commission.
<PAGE>
BHPC.12
*
EXHIBIT "C"
Page 3 of 3
* Text omitted pursuant to a request for confidential treatment and filed
separately with the Securities and Exchange Commission.
<PAGE>
Exhibit 10.17
AMENDMENT TO EXCLUSIVE DOMESTIC LICENSE AGREEMENT
This Amendment is made and entered into by and between BHPC Marketing, Inc.
("LICENSOR") and I. C. Isaacs Co., L.P. ("LICENSEE") and is dated as of June
3, 1997. This Amendment amends and modifies that certain Exclusive Domestic
License Agreement between LICENSOR and LICENSEE dated June 1, 1993.
(I)
The promises, covenants, agreements and declarations made and set forth
herein are intended to and shall have the same force and effect as if set
forth at length in the body of the Agreement. To the extent that the
provisions of this Amendment are inconsistent with the terms and conditions
of the AGREEMENT, the terms set forth herein shall control.
(II)
1. Effective as of May 1, 1997, the License Agreement Detail Schedule
(Women's), as previously amended, is hereby further amended by replacing
it with the License Agreement Detail Schedule attached hereto.
2. Paragraph 7(b) of the Agreement is hereby amended by deleting all
references to one-year renewal periods and referring in their place to the
three-year renewal terms provided for in the License Agreement Detail
Schedule attached hereto, and by including in the references to the Initial
Term the Contract Years shown in the attached Schedule to be now a part of
the Initial Term.
3. The Amendment to the Agreement dated April 28, 1997, is no longer in
effect.
(III)
LICENSOR and LICENSEE acknowledge and agree that the Agreement, as amended by
this Amendment and the September 1, 1993 Amendment, remains in full force and
effect and represents the entire Agreement of the parties with respect to the
matters contained herein.
<PAGE>
IN WITNESS WHEREOF, the parties hereto agree that this Amendment shall take
effect as of the date and year first written above.
LICENSOR: LICENSEE:
BHPC MARKETING,INC. I.C. ISAACS & CO., L.P.
BY: /s/ Don Garrison BY: /s/ Robert Arnot
---------------------------- ----------------------------
Don Garrison Robert Arnot
Director of Licensing Chairman of the Board
DATE: 6/16/97 DATE: 6/12/97
BY: /s/ Gerald Lear
----------------------------
Gerald Lear
President, C.E.O.
DATE: 6/12/97
<PAGE>
LICENSE AGREEMENT DETAIL SCHEDULE
1. DEFINITION OF TERRITORY: The United States, its territories and
possessions
2. DEFINITION OF LICENSED PRODUCT (BY CATEGORY):
Women's missy, junior, petite and large size coordinated
sportswear; sweaters, sweater dresses and sweater suits; basic
fleece tops and bottoms; basic t-shirts and basic polo shirts;
warm ups in knit and woven fabrics; women's tennis and
golf related short sets, skort sets and pant sets in knit and
woven fabrics
3. INITIAL TERM: FROM TO
---- --
First Contract Year: January 1, 1996 December 31, 1996
Second Contract Year: January 1, 1997 December 31, 1997
Third Contract Year: January 1, 1998 December 31, 1998
4. RENEWAL TERM:
First Renewal Period (if any): January 1, 1999 December 31, 2001
Second Renewal Period (if any): January 1, 2002 December 31, 2004
5. ROYALTY RATE:
Five percent (5%)
6. ADVERTISING: 1% of net Sales to be spent in the Territory by LICENSEE.
<PAGE>
7. GUARANTEES:
(A) (B) (C) (D)
Guaranteed Guaranteed Guaranteed
Target Guaranteed Annual Monthly
Net Net Royalty Royalty
Shipments Shipments Payments Payments
(in United States Dollars)
---------------------------------
First Contract Year * $0.00 $0.00 *
Second Contract Year * $2,000,000 $100,000 *
Third Contract Year * $3,000,000 $150,000 *
*
INITIALS DATE
-------- ----
LICENSOR, BHPC: /s/ DG 6/2/97
---------------------- --------
LICENSEE, I.C. ISAACS: /s/ RJA 6/3/97
------------------ --------
* Text omitted pursuant to a request for confidential treatment and filed
separately with the Securities and Exchange Commission.
<PAGE>
To be filed by amendment.
<PAGE>
Exhibit 10.19
AMENDMENT TO EXCLUSIVE LICENSE AGREEMENT
This Amendment is made and entered into by and between BHPC Marketing, Inc.
("LICENSOR") and I. C. Isaacs Co., L.P. ("LICENSEE") and is dated as of July
29, 1997. This Amendment amends and modifies that certain Exclusive License
Agreement between LICENSOR and LICENSEE, dated December 14, 1995 (the
"Agreement").
(I)
The promises, covenants, agreements and declarations made and set forth
herein are intended to and shall have the same force and effect as if set
forth at length in the body of the Agreement. To the extent that the
provisions of this Amendment are inconsistent with the terms and conditions
of the Agreement, the terms set forth herein shall control.
(II)
1. The following category has been added effective August 1, 1997 for
distribution January 1, 1998 to the Domestic License Agreement as
detailed above.
"Product:
---------
Men's dress shirts with neck sizes and sleeve lengths in assorted fabrics
to include natural and synthetic fibers."
Territory:
----------
The United States, its territories and possessions."
(III)
LICENSOR AND LICENSEE acknowledge and agree that the Agreement, as amended by
this Amendment, remains in full force and effect and represents the entire
agreement of the parties with respect to the matters contained herein.
<PAGE>
IN WITNESS WHEREOF, the parties hereto agree that this Amendment shall take
effect as of the date and year first written above.
LICENSOR: LICENSEE:
BHPC MARKETING, INC. I. C. ISAACS & CO., L.P.
BY : /S/ Roger Tomlinson BY: /S/ Robert Arnot
----------------------- ------------------------
Robert Tomlinson Robert Arnot
Director of Marketing Chairman of the Board
DATE: 07/29/97 DATE: 8/7/97
--------------------- ------------------------
BY: /s/ Gerald W. Lear
------------------------
Gerald Lear
President, C.E.O.
DATE: 8/7/97
------------------------
<PAGE>
Exhibit 10.20
INTERNATIONAL
EXCLUSIVE LICENSE AGREEMENT BHPC.12I
---------------------------
THIS AGREEMENT is made and entered into this 15th day of August, 1996 by
and between BHPC Marketing, Inc., a corporation duly organized and existing
under the laws of California, having its principal place of business at 620
West 135th Street, Gardena, California 90248 (hereinafter referred to as
"LICENSOR"), and Zacari 2000, S.L., a Spanish Limited Corporation, having its
principal place of business at c/LLULL 88, B1, 08005, Barcelona, Spain
(hereinafter referred to as "LICENSEE").
WHEREAS, LICENSOR is the owner with the right to grant licenses of the
Trademarks illustrated in Exhibit "A" attached hereto (the "Trademarks"); and
WHEREAS, LICENSEE is desirous of obtaining the exclusive right to use
the aforesaid Trademarks in connection with the import or manufacture and
sale of certain licensed products defined herein.
NOW, THEREFORE, it is agreed by the parties as follows:
1. DEFINITIONS
-----------
The following terms shall have meanings as set forth below:
a. "Trademarks" shall mean the Trademarks set forth in Exhibit "A".
b. "Territory" shall mean that geographical area defined in item 1 of the
attached License Agreement Detail Schedule.
c. "Licensed Product" shall be defined as set forth in item 2 of the
attached License Agreement Detail Schedule.
d. *
2. RIGHTS GRANTED
--------------
LICENSOR hereby grants to LICENSEE, upon the terms and conditions set
forth herein, an exclusive, personal, non-transferable, non-assignable
license, without the right to grant sublicenses, to use the Trademarks
solely on or in conjunction with the design, manufacture, import,
distribution, advertising, promotion, shipment, and sale of the Licensed
Product in the Territory. This license is extended to and includes wholesale
sales only and does not include retail sales. LICENSEE is hereby authorized
to enter
* Text omitted pursuant to a request for confidential treatment and filed
separately with the Securities and Exchange Commission.
<PAGE>
BHPC.12I
into distributorship agreements, with prior written approval of LICENSOR,
said approval not to be unreasonably withheld.
3. *
4. GOOD WILL AND PROMOTIONAL VALUE
-------------------------------
a. LICENSEE recognizes the value of the good will associated with the
Trademarks and acknowledges that the Trademarks, and all rights therein and
the good will pertaining thereto, belong exclusively to LICENSOR.
LICENSEE further recognizes and acknowledges that the Trademarks have
acquired secondary meaning in the mind of the public.
b. LICENSEE agrees that its use of the Trademarks shall inure to the benefit
of LICENSOR and that LICENSEE shall not, at any time, acquire any rights in
the Trademarks by virtue of any use it may make of the Trademarks.
c. LICENSEE acknowledges that LICENSOR is entering into this Agreement not
only in consideration of the royalties paid hereunder but also for the good
will and promotional value to be secured by LICENSOR for the Trademarks as a
result of the manufacture, offering for sale, sale, advertising, promotion,
shipment and distribution of the Licensed Product by LICENSEE.
5. *
* Text omitted pursuant to a request for confidential treatment and filed
separately with the Securities and Exchange Commission.
2
<PAGE>
BHPC.12I
*
* Text omitted pursuant to a request for confidential treatment and filed
separately with the Securities and Exchange Commission.
3
<PAGE>
BHPC.12I
*
d. LICENSEE agrees that the Licensed Product and all Promotional and
Packaging Material shall contain only those legends, markings and/or
notices as required from time to time by LICENSOR to give appropriate
notice to the consuming public of LICENSOR's right, title and interest
thereto.
e. LICENSOR may, periodically and from time to time during the term of this
Agreement, require that LICENSEE submit to LICENSOR, at no cost to
LICENSOR, or LICENSOR or its designees may randomly select and retain
during the inspection referred to in Subparagraph 5f, below, one (1)
additional set of Production Samples of the Licensed Product and/or the
Promotional and Packaging Material relating to the Licensed Product for
subsequent review and written approval of the quality of, trademark usage
and notice on same, and for any other purpose that LICENSOR deems
appropriate.
f. To assure that the provisions of this Paragraph 5 are being observed,
LICENSEE agrees that it will allow LICENSOR or its designees,
periodically and from time to time during the term of this Agreement, to
enter LICENSEE's premises and/or the premises where the Licensed Product
is being manufactured or inventoried during regular business hours and
upon reasonable notice, for the purposes of inspecting and approving the
Licensed Product and the Promotional and Packaging Material relating to
the Licensed Product.
g. *
6. ADVERTISING/USE OF THE TRADEMARK
--------------------------------
a. LICENSEE will adopt and carry out its own marketing and advertising
program with respect to the Licensed Product. LICENSEE agrees that
LICENSEE's advertising, public relations and sales promotion activities
will be subject to prior consultation with, and written approval by,
LICENSOR as to the general form and content only with respect to the use
of the Trademarks and other notices.
* Text omitted pursuant to a request for confidential treatment and filed
separately with the Securities and Exchange Commission.
4
<PAGE>
BHPC.12I
b. *
c. LICENSEE agrees that upon request of LICENSOR, it shall loan a reasonable
number of products to LICENSOR and its other licensees for advertising
and promotional purposes.
d. *
e. Advertising directed to the public may not feature the name of LICENSEE.
If approved, advertising directed to the trade may feature the following:
BHPC Marketing, Inc. under Trademark License to (Name of LICENSEE).
f. LICENSEE agrees that the Trademark will appear on each Licensed Product
and its packaging, if any. LICENSEE shall use only those tags, labels and
packaging materials which have been previously approved in writing. All
tags, labels and packaging materials bearing the Trademark must be
submitted on the "Advertising Approval Form" (Exhibit "B-3").
g. LICENSEE shall affix such legends, markings and notices on all License
Product as are required by LICENSOR and the law.
h. LICENSEE must submit for approval to LICENSOR a printer's proof of each
item before final printing.
7. DURATION OF THE AGREEMENT
-------------------------
a. This Agreement shall continue for three (3) consecutive Contract Years
in respective durations as set forth in item 3 of the attached License
Agreement Detail Schedule (hereinafter collectively the "Initial Term")
and shall then expire unless sooner terminated in accordance with the
terms and conditions set forth herein.
b. If LICENSEE fully performs according to all of the terms and conditions
hereof including, without limitation, the terms and conditions
specifically enumerated below, LICENSEE shall have three (3) consecutive
options to renew this Agreement for three (3) consecutive contract
periods, i.e., Contract Years, of one (1) year each (hereinafter
collectively the "Renewal Term"). In order to exercise each individual
option, LICENSEE must provide LICENSOR with written notice of its
intention to exercise each respective option and such written notice
must be received by LICENSOR no later than *
* Text omitted pursuant to a request for confidential treatment and filed
separately with the Securities and Exchange Commission.
5
<PAGE>
BHPC.12I
prior to the expiration of the Initial Term or immediately preceding
Contract Year of the Renewal Term. * Except as specifically set forth
herein to the contrary, LICENSEE's performance in the Renewal Term shall
be pursuant to the same terms and conditions recited herein for the
Initial Term.
8. ROYALTIES
---------
a. "Royalty", as used in this Agreement, shall consist of:
(i) LICENSEE paying to LICENSOR, during the term of this Agreement, a
Royalty in an amount equal to six percent (6%) of the Net Shipments by
LICENSEE for Licensed Product sold under the Trademarks directly to
Authorized BHPC Distributors. Any sales of Licensed Product to
Distributors will be under approved Distributorship Agreements by
LICENSOR.
(ii) LICENSEE paying to LICENSOR, during the term of this Agreement, a
Royalty in an amount equal to six percent (6%) of the Net Shipments by
LICENSEE for Licensed Product sold under the Trademarks directly to
Retail Stores.
*
* Text omitted pursuant to a request for confidential treatment and filed
separately with the Securities and Exchange Commission.
6
<PAGE>
BHPC.12I
*
9. PAYMENT
-------
*
c. LICENSEE's statements shall be submitted to:
BHPC Marketing, Inc.
620 West 135th Street
Gardena, California 90248
Attn: Royalty Receivables Department
* Text omitted pursuant to a request for confidential treatment and filed
separately with the Securities and Exchange Commission.
7
<PAGE>
BHPC.12I
All amounts payable to LICENSOR by LICENSEE shall be wire transferred to:
Bank Name: First Interstate Bank
Bank ABA#: 122000218
Bank Address: 707 Wilshire Blvd.
Los Angeles, CA 90017
Account Name: BHPC Marketing, Inc.
Account Number: 149-6-38302
*
10. GUARANTEES
----------
a. Guaranteed Annual Royalty Payments - LICENSEE shall pay, for each
Contract Year during the term of this Agreement, beginning with the First
Contract Year, the respective Guaranteed Annual Royalty Payments set
forth in item 7 of the attached License Agreement Detail Schedule.
b. Guaranteed Target Net Shipments - If, in any Contract Year, LICENSEE does
not achieve the Guaranteed Target Net Shipment Volume figure set forth in
item 7 of the attached License Agreement Detail Schedule LICENSOR may, at
its option, immediately thereafter terminate this Agreement in writing.
* Text omitted pursuant to a request for confidential treatment and filed
separately with the Securities and Exchange Commission.
8
<PAGE>
BHPC.12I
c. Guaranteed Net Shipments - If, in any Contract Year, LICENSEE does not
achieve the Guaranteed Net Shipments figure for a particular country set
forth in item 7 of the attached Licensed Agreement Detail Schedule
LICENSOR may, at its option, immediately thereafter terminate this
Agreement in writing for that particular country only.
d. *
e. *
11. EXPLOITATION BY LICENSEE
------------------------
a. LICENSEE agrees to commence, and diligently continue thereafter, the
distribution, shipment and sale of the Licensed Product in commercially
reasonable quantities in the Territory on or before the respective
distribution date set forth next to the Licensed Product described in
item 2 of the attached License Agreement Detail Schedule.
b. LICENSEE agrees that the Licensed Product will only be sold to retailers,
jobbers, wholesalers and BHPC Authorized Distributors for sale, shipment
and distribution to retail stores and merchants commonly considered and
referred to in the industry as fine department stores and better
specialty stores and/or to fine department stores and better specialty
stores for sale, shipment and distribution direct to the public. The
manner and scope of the distribution of the Licensed Product,
availability, variety, fabrication, colors and sizes are critical to the
promotion, enhancement and protection of the Trademarks and their
associated
* Text omitted pursuant to a request for confidential treatment and filed
separately with the Securities and Exchange Commission.
9
<PAGE>
BHPC.12I
goodwill. LICENSEE acknowledges that it has no right to and shall not
sell or distribute the Licensed Product to any diverter or to anyone
outside of the Territory or to any Distributor who is not a BHPC
Authorized Distributor.
c. *
12. *
* Text omitted pursuant to a request for confidential treatment and filed
separately with the Securities and Exchange Commission.
10
<PAGE>
BHPC.12I
*
13. USE, DISPLAY, AND SALE INVOLVING THE TRADEMARKS AND COPYRIGHT
-------------------------------------------------------------
a. In order to protect the Trademarks and LICENSOR's reputation, LICENSEE
will manufacture, distribute and sell the Licensed Product in compliance
with all applicable laws. *
b. LICENSEE shall exercise all reasonable efforts, within the limits allowed
by the laws and governmental regulations in effect in the Territory, to
ensure that its merchandising and sales of the Licensed Product shall
conform to policies and methods suitable for goods of high quality sold
under a prestigious label of worldwide repute.
14. OWNERSHIP OF THE TRADEMARKS
---------------------------
a. LICENSEE agrees that nothing in this Agreement shall give LICENSEE any
right, title, or interest in the Trademarks, other than the license to
use the Trademarks on the Licensed Product; that such marks are the sole
property of Licensor; that all such uses by LICENSEE of such marks shall
inure only to the benefit of LICENSOR; and it being understood that all
right, title and interest relating thereto are expressly reserved by the
LICENSOR except for the rights being licensed hereunder.
b. LICENSEE agrees and acknowledges that if it has obtained or obtains in
the future, in any country, any right, title, or interest in any marks
which are confusingly similar to the Trademark, (including the filing of
any application for trademarks or service mark registration or the
obtaining of any issued registration), that LICENSEE has acted or will
act as an agent and for the benefit of LICENSOR. LICENSEE further agrees
to execute any and all instruments deemed by LICENSOR, its attorneys or
representatives, to be necessary
* Text omitted pursuant to a request for confidential treatment and filed
separately with the Securities and Exchange Commission.
11
<PAGE>
BHPC.12I
to transfer such right, title, or interest to LICENSOR to protect
LICENSOR's right, title and interest in such marks.
c. *
15. COMPLIANCE WITH LIMITATIONS ON USE OF TRADEMARKS
------------------------------------------------
LICENSEE agrees that the Licensed Product, and all labels, hang tags,
packaging and other trade dress, used in connection with such Licensed
Products, shall not violate any restrictions on use or display of the
marks as provided in that Settlement Agreement and Consent Judgement with
Polo Fashions, Inc., a copy of which is attached hereto as Exhibit "D".
Nothing contained in this Agreement makes Polo Fashions, Inc., or any
related company, a third party beneficiary of this Agreement.
16. THIRD PARTY INFRINGEMENT
------------------------
LICENSEE agrees to notify LICENSOR in writing of any infringements or
imitations by third parties of the Trademarks, the Licensed Product
and/or the Promotional and Packaging Material which may come to
LICENSEE's attention. *
17. ASSIGNABILITY AND MANUFACTURING
-------------------------------
a. The license granted hereunder is, and shall remain, personal to LICENSEE
and shall not be granted, assigned, or otherwise conveyed by any act of
LICENSEE or by operation of law. For the purposes of this Paragraph 17,
any sale or transfer of any ownership interest in LICENSEE shall
constitute a prohibited assignment of the license granted hereunder.
LICENSEE shall have not right to grant any sublicenses without LICENSOR's
prior express written approval. Any attempt on the part of LICENSEE to
arrange to sublicense or assign to third parties its rights under this
Agreement, shall constitute a material breach of this
* Text omitted pursuant to a request for confidential treatment and filed
separately with the Securities and Exchange Commission.
12
<PAGE>
Agreement.
b. LICENSOR shall have the right to assign its rights and obligations under
this Agreement without the approval of LICENSEE.
18. NO AGENCY, JOINT VENTURE, PARTNERSHIP
The parties hereby agree that no agency, joint venture, or partnership is
created by this Agreement, and that neither party shall incur any obligation
in the name of the other without the other's prior written consent.
19. *
20. TERMINATION
a. In addition to the termination rights provided elsewhere in this
Agreement, LICENSOR will have the right to terminate this Agreement in the
event that: *
* Text omitted pursuant to a request for confidential treatment and filed
separately with the Securities and Exchange Commission.
13
<PAGE>
*
21. EFFECT OF EXPIRATION OR TERMINATION
a. Upon expiration or termination of this Agreement, all rights and
licenses granted to LICENSEE hereunder shall immediately expire, shall
forthwith revert to LICENSOR, and LICENSEE shall immediately cease and
desist from using the Trademarks and any technical information supplied by
LICENSOR to LICENSEE hereunder. To this end, LICENSEE will be deemed to
have automatically assigned to LICENSOR, upon such expiration or
termination, the Trademarks, equities, good will, titles, and other rights
in or to the Licensed Product and all adaptions, compilations,
modifications, translations and versions thereof, and all other trademarks
used in connection therewith which have been or may be obtained by LICENSEE
or which may vest in LICENSEE and which have not already been assigned to
LICENSOR. LICENSOR may thereafter, in its sole discretion enter into such
arrangements as it deems desirable, with any other party, for the
manufacture, promotion and sale of the Licensed Product in the Territory.
LICENSEE shall, within thirty (30) days after expiration or termination of
this Agreement as the case may be, furnish LICENSOR with a full and detailed
written statement of the Licensed Product in its inventory or the Licensed
Product in progress. LICENSOR shall have the option of conducting a physical
inventory at the time of expiration or termination and/or at a later date in
order to ascertain or verify such statement. In the event that the LICENSEE
refuses to permit LICENSOR to conduct such physical inventory, LICENSEE
shall forfeit its rights hereunder to dispose of such inventory. In addition
to such forfeiture, LICENSOR shall have recourse to all other remedies
available to it.
b. Upon the termination of this Agreement, *
* Text omitted pursuant to a request for confidential treatment and filed
separately with the Securities and Exchange Commission.
14
<PAGE>
*
* Text omitted pursuant to a request for confidential treatment and filed
separately with the Securities and Exchange Commission.
15
<PAGE>
BHPC.12I
*
22. MODIFICATION; WAIVER
--------------------
No modification of any of the terms or provisions of this Agreement shall
be valid unless contained in a writing signed by the parties. No waiver
by either party of a breach or a default hereunder shall be deemed a
waiver by such party of a subsequent breach or default of a like or
similar nature. Resort by LICENSOR to any remedies referred to in this
Agreement or arising by reason of a breach of this Agreement by LICENSEE
shall not be construed as a waiver by LICENSOR of its right to resort to
any and all other legal and equitable remedies available to LICENSOR.
23. FORCE MAJEURE
-------------
Neither LICENSOR nor LICENSEE shall be liable to each other or be deemed
in breach or default of any obligations contained in this Agreement, for
any delay or failure to perform due to causes beyond its reasonable
control, including but not limited to delay due to the elements, acts of
the United States Government, acts of a foreign government, acts of God,
fires, floods, epidemics, embargoes, riots, strikes, any of the foregoing
events being referred to as a "Force Majeure" condition. In such event,
dates for performance shall be extended for the period of delay resulting
from the Force Majeure condition. The party affected by a Force Majeure
condition shall, as soon as practicable, notify the other party of the
nature and extent of such condition.
24. NOTICE
------
All notices, approvals, consents, requests, demands, or other
communications to be given to either party in
* Text omitted pursuant to a request for confidential treatment and filed
separately with the Securities and Exchange Commission.
16
<PAGE>
BHPC.12I
writing may be effected by personal delivery or by depositing the same in
the mail, certified and return receipt requested, postage prepaid. Such
communication shall be addressed to LICENSEE and LICENSOR at their
respective addresses as set forth in the preamble above.
25. CONSTRUCTION; VENUE
-------------------
This Agreement shall be construed in accordance with the laws of the
State of California, U.S.A., and the parties agree that it is executed
and delivered in that state, and any claims arising hereunder shall, at
LICENSOR's election, be prosecuted in the appropriate Court of the State
of California in Los Angeles County or any Federal District Court
therein.
26. ENTIRE AGREEMENT
----------------
This Agreement, contains the entire understanding of the parties and
there are no representations, warranties, promises, or undertakings
other than those contained herein. This Agreement supersedes and cancels
all previous agreements between the parties hereto.
27. *
28. *
* Text omitted pursuant to a request for confidential treatment and filed
separately with the Securities and Exchange Commission.
17
<PAGE>
BHPC.12I
*
29. *
30. BINDING EFFECT
--------------
This Agreement shall be finding on the parties, and their successors and
assigns.
31. *
32. SEVERABILITY
------------
In the event that any term or provision of this Agreement shall for any
reason be held to be invalid, illegal or unenforceable in any respect,
such invalidity or unenforceability shall not affect any other term or
provision and this Agreement shall be interpreted and construed as if
such term or provision, to the extent the same shall have been held to be
invalid, illegal or unenforceable, had never been contained herein.
33. CAPTIONS
--------
The captions used in connection with the paragraphs and subparagraphs of
this Agreement are inserted only for purpose of reference. Such captions
shall not be deemed to govern, limit, modify or in any other manner
affect the scope, meaning or intent of the provisions of this Agreement
or any part thereof nor shall such captions otherwise be given any legal
effect.
34. INCORPORATION OF EXHIBITS
-------------------------
LICENSOR and LICENSEE acknowledge and agree that the provisions of
Exhibits "A" through "E" attached hereto (the Exhibits") are integral to
this Agreement and that the provisions of the Exhibits are all hereby
incorporated herein and made a part hereof as if set out in full in this
Agreement.
* Text omitted pursuant to a request for confidential treatment and filed
separately with the Securities and Exchange Commission.
18
<PAGE>
BHPC.12I
35. ENGLISH LANGUAGE
----------------
This Agreement is entered into the English language only. Any
translation thereof into any other language shall be for purposes of
convenience only and shall not be considered in connection with the
interpretation of the provisions hereof.
36. REQUIRED FILING OF AGREEMENT
----------------------------
LICENSEE shall cause this Agreement to be filed with, and approved by,
all necessary governmental authorities, including the appropriate
exchange control authorities, whenever such filing and approval may be
required for the purpose of authorizing the payments herein provided.
LICENSEE shall be solely responsible for the filing of this document
with the appropriate authorities and shall bear the cost thereof, if
any. In the event of LICENSEE failing to obtain the approvals or
completing the filing set forth above within four (4) months from the
date of this Agreement, LICENSOR may terminate this Agreement forthwith.
37. REGISTRATION IN TERRITORY
-------------------------
LICENSOR will exert its best efforts to obtain trademark registration of
the Trademarks for the Licensed Product in the Territory. However,
LICENSOR has made no representation or warranty that the Trademarks will
be registered or are registerable in the Territory, and the failure to
obtain or maintain registrations thereon shall not be deemed a breach
hereunder by LICENSOR. A listing of the registrations in class 25 in the
Territory is shown in Exhibit "E", attached hereto.
19
<PAGE>
IN WITNESS WHEREOF, the parties hereto agree that this Agreement shall
take effect as of the date and year first above written.
LICENSOR: LICENSEE:
BHPC MARKETING, INC., ZACARI, S.L.
a California Corporation a Spanish Limited Corporation
BY: /s/ Don Garrison BY: /s/ Robert Arnot
Don Garrison Robert Arnot
Licensing Director Chairman/Managing Director
Date: 8/19/96 Date: 8/15/96
------- -------
20
<PAGE>
[Statement of Royalties Form]
<PAGE>
SETTLEMENT AGREEMENT
This Settlement Agreement is made, in multiple originals, by and among *
will hereinafter be collectively referred to as the "Beverly Hills Polo Club
Parties."
WITNESSETH:
WHEREAS, there are presently pending before the United States District
Court for the Central District of California two civil actions entitled *
EXHIBIT D
* Text omitted pursuant to a request for confidential treatment and filed
separately with the Securities and Exchange Commission.
<PAGE>
*
WHEREAS, the parties hereto have vigorously contested the BHPC Action and
the * Action (collectively the "Civil Actions"), and have expended
considerable time and effort, and have incurred considerable expense, in doing
so; and
WHEREAS, in order to avoid the additional expense which would be
necessary for the continued prosecution of the Civil Actions, the parties are
willing to resolve the controversy among them and to settle the Civil Actions
under the terms and conditions set forth herein;
NOW, THEREFORE, in mutual consideration of the covenants and premises
contained herein, the parties agree as follows:
1. Except as provided in paragraph 3 hereunder, as of February 15, 1985,
the Beverly Hills Polo Club Parties, their affiliates, officers, agents and
employees and any person or entity under their direction or control, or in
active concert or participation with them, shall cease and desist from
anywhere in the world:
*
* Text omitted pursuant to a request for confidential treatment and filed
separately with the Securities and Exchange Commission.
2
<PAGE>
*
*
(c) Using as a design or decoration on or in connection with the
Subject Products and Services, including but not limited to related
packaging, labels, tags and other trade dress, or as a trademark or
service mark, the design of *
* Text omitted pursuant to a request for confidential treatment and filed
separately with the Securities and Exchange Commission.
3
<PAGE>
which is shown in Exhibit A (the *), or any design which is a colorable
imitation or simulation thereof;
(d) Using as a design or decoration on or in connection with the
Subject Products and Services, including but not limited to related
packaging, labels, tags and other trade dress, or as a trademark, service
mark or trade name the design of * which is shown in Exhibit B (the
"BHPC Symbol"), or any design which is a colorable imitation or simulation
thereof or is substantially similar thereto, in an overall size smaller
than five and a half inches by five and a half inches (5 1/2" x 5 1/2")
(measured from mallet head to hoof and from nose to tail), except as may
be permitted by paragraph 2 hereof;
(e) Using either of the typefaces shown in Exhibit C (identified
hereinafter as the "Subject Typefaces") for the name "Beverly Hills Polo
Club";
(f) Placing or causing to be placed any advertisements or using any
materials of any type making reference, either directly or indirectly to
* or to * or their licensees and affiliates;
and
(g) Using dark blue as the background color of any packaging, label,
tag or trade dress containing the words "Beverly Hills Polo Club", and/or
the BHPC Symbol.
* Text omitted pursuant to a request for confidential treatment and filed
separately with the Securities and Exchange Commission.
4
<PAGE>
2. Notwithstanding the size limitations imposed by
paragraph 1(d) hereof, the Beverly Hills Polo Club Parties may use the BHPC
Symbol in an overall size smaller than the five and a half inches by five and
a half inches ( 5 1/2" x 5 1/2" ) set forth in paragraph 1(d) hereof but only
if
(a) the same is used in combination with and in
close proximity to the words "Beverly Hills Polo Club" in the configuration
shown in Exhibit D annexed hereto (the "Composite BHPC Logo") or the label
shown in Exhibit E annexed hereto (the "BHPC Label"); or
(b) the BHPC Symbol is used in a repetitive
pattern covering substantially all of the front or back of any of the Subject
products, provided that the initials "BHPC" shall appear in close proximity
to the BHPC Symbol, and that somewhere on each of the Subject Products the
words "Beverly Hills Polo Club" shall be prominently displayed.
3. The Beverly Hills Polo Club Parties may sell or
otherwise dispose of any and all articles of clothing and accessories which
are represented by them to be in their possession or under their control as
of February 15, 1985, as set forth in Exhibit F, to be added hereto not later
than March 1, 1985, which would otherwise come within the prohibitions of
paragraph 1 of this Agreement, and may fill orders accepted on or before such
date for any clothing or accessories coming within such prohibitions so long
as such orders are filled within ninety (90) days of such date.
Notwithstanding the foregoing,
5
<PAGE>
BHPC may have until June 15, 1985 to dispose of garments in the process of
manufacture in the Orient as of February 15, 1985. * or its attorneys or
such attorneys' agents, on reasonable notice, which notice shall not be
required to exceed ten (10) days, may review purchase orders, bills of
lading, or inventory records at the place of business of any Beverly Hills
Polo Club Parties sufficient to verify compliance with this paragraph. Such
information is to be used solely to verify and enforce compliance, and shall
be held in confidence by * attorneys or their agents.
4. Simultaneously with its execution of this settlement
agreement, *
* Text omitted pursuant to a request for confidential treatment and filed
separately with the Securities and Exchange Commission.
6
<PAGE>
5. Neither * nor any person or entity under its
direction or control, may oppose the registration by the Beverly Hills Polo
Club Parties of any trademark which the Beverly Hills Polo Club Parties are
entitled to register under this Agreement, nor shall they petition to cancel,
either directly or through court action the registration of any such
trademark unless said mark or registration is the basis for legal action
by BHPC, Lang or any affiliated entity against * or its licensees. If *
learns that any of its licensees objects to the registration by any of the
Beverly Hills Polo Club Parties of the words "Beverly Hills Polo Club,"
and/or the Composite BHPC Logo and/or the BHPC Label, then * will inform
such objecting licensee in writing of the terms of this Agreement, and
provide written confirmation thereof to BHPC.
6. The parties agree to entry in the Civil Actions of
Final Judgement Upon Consent in the form annexed hereto as Exhibit H, or in
such other form as the Court may require consistent with the terms and
conditions of this settlement Agreement.
7. *
* Text omitted pursuant to a request for confidential treatment and filed
separately with the Securities and Exchange Commission.
7
<PAGE>
*
8. The parties will not initiate any publicity concerning
the terms and conditions of this Agreement and such terms and conditions shall
be held in confidence except as otherwise provided herein. The Beverly Hills
Polo Club Parties may provide a copy of this Settlement Agreement or portions
or summaries thereof to any person or entity licensed or otherwise permitted
to use the name "Beverly Hills Polo Club," the BHPC Symbol or the composite
BHPC Logo, to potential licensees, to sales representatives or, upon inquiry
being made, to customers. Either party may refer to the terms and conditions
of this Agreement in conjunction with its registration, or judicial or
administrative protection or enforcement of its trademarks, trade names and
service marks.
9. This Settlement Agreement represents no concession by
any party as to the validity or merit of any of the claims raised in the
Civil Actions by any other party, except as may be set forth in the Final
Judgement of Exhibit H.
10. * and its officers, agents, employees and sales
representatives shall not make, directly or indirectly, any claim that the
purchase of products complying with the terms of this Agreement from BHPC or
Lang or their distributors or sub-licensees constitutes trademark
infringement, unfair competition or trademark dilution, nor threaten sanctions
with respect thereto. This undertaking does not in any way admit or imply
* Text omitted pursuant to a request for confidential treatment and filed
separately with the Securities and Exchange Commission.
8
<PAGE>
that *, or any acting on its behalf, has in the past made any such claims
or threatened any such sanctions.
11. *
12. *
13. This Settlement Agreement represents the entire understanding
between the parties with respect to the subject matter hereof; shall not be
varied or amended except by a
* Text omitted pursuant to a request for confidential treatment and filed
separately with the Securities and Exchange Commission.
9
<PAGE>
writing signed by all parties; shall be binding upon the parties, their
successors and assigns; and shall, as respects contractual construction, be
governed by and construed in accordance with the laws of * . Neither party
hereby waives any claim as to the propriety of venue or as to the existence
of personal jurisdiction, in any lawsuit or other proceeding that may arise
concerning the subject matter of this Settlement Agreement.
14. * warrants and represents that it has full right and power to
enter into this Settlement Agreement.
15. Lang warrants and represents that it has full right and power to
enter into this Settlement Agreement.
16. BHPC warrants and represents that it has full right and power to
enter into this Settlement Agreement.
17. Wessler warrants and represents as follows:
(a) He is the president and sole shareholder of BHPC and Lang; and
(b) He has the full right, power and authority to enter into this
Settlement Agreement.
18. *
* Text omitted pursuant to a request for confidential treatment and filed
separately with the Securities and Exchange Commission.
10
<PAGE>
"polo clubs") or items of wearing apparel which have come to be described by
the word polo (e.g. "polo shirts" or "polo coats"), provided, however, that
any such use will not violate any of the terms and conditions of this
Agreement.
19. The Beverly Hills Polo Club Parties shall take all steps reasonably
necessary to ensure that any person or entity which is licensed or otherwise
permitted to use the term "Beverly Hills Polo Club", the BHPC Symbol or the
Composite BHPC Logo, complies fully with the restrictions set forth in
paragraph 1 hereof.
20. * acknowledges that the rights of any person or entity which it
licenses or otherwise permits to use the * Marks are subject to the terms
and conditions of this Agreement and that such rights cannot be used in
contravention of the provisions of paragraphs 5 and 10 hereof. * agrees to
inform any of its licensees whom it learns object to the use by the Beverly
Hills Polo Club Parties of any of the names or marks which they are permitted
to use hereunder of the foregoing acknowledgements.
21. In the event that a dispute arises between the parties as to the
subject matter of this Agreement, then the parties shall attempt to amicably
resolve the same prior to seeking judicial intervention. If the parties are
unable to resolve such dispute within thirty (30) days after it arises,
11
* Text omitted pursuant to a request for confidential treatment and filed
separately with the Securities and Exchange Commission.
<PAGE>
then either party may take such action as it deems appropriate to protect its
rights.
IN WITNESS WHEREOF, the parties have executed this Settlement on the
days indicated adjacent to their respective signatures below.
*
Dated: 2/15/85 By: /s/ *
*
BEVERLY HILLS POLO CLUB, INC.
Dated: 2/20/85 By: /s/ Stephen Wessler, President
Stephen Wessler, President
STEPHEN WESSLER
Dated: 2/20/85 /s/ Stephen Wessler
GREGORY LANG, INC.
Dated: 2/20/85 By: /s/ Stephen Wessler, President
Stephen Wessler, President
12
* Text omitted pursuant to a request for confidential treatment and filed
separately with the Securities and Exchange Commission.
<PAGE>
[LOGO]
EXHIBIT A
<PAGE>
[LOGO]
EXHIBIT B
<PAGE>
[LOGO]
EXHIBIT C
<PAGE>
[LOGO]
EXHIBIT D
<PAGE>
[LOGO]
Note: Typeface to be changed per Paragraph 1(e).
EXHIBIT E
<PAGE>
LICENSE AGREEMENT DETAIL SCHEDULE
1. Definition of Territory: Wholesale sales in Europe and Eastern Europe as
follows:
Portugal Andorra Italy France Belgium
Holland Greece Switzerland Austria Germany
Luxembourg Liechtenstein Latvia Norway Denmark
Sweden Poland Hungary Czech Republic Slovakia
Estonia Ukraine Belarus San Marino Cypress
Chechnia Moldavia Russia N. Ireland Ireland
Lithuania Romania Bulgaria Monaco Iceland
Finland Spain United Kingdom
2. Definition of Licensed Product (by category): DISTRIBUTION DATE:
A. Men's apparel (excluding suits, ties, underwear, January 1, 1997
shoes and full-length rainwear)
B. Women's apparel (excluding hosiery, intimate
apparel, business suits, underwear, accessories,
shoes and full length raincoats)
3. Initial Term: FROM TO
First Contract Year: July 1, 1996 December 31, 1997
Second Contract Year: January 1, 1998 December 31, 1998
Third Contract Year: January 1, 1999 December 31, 1999
4. Renewal Term:
Fourth Contract Year (if any): January 1, 2000 December 31, 2000
Fifth Contract Year (if any): January 1, 2001 December 31, 2001
Sixth Contract Year (if any): January 1, 2002 December 31, 2002
5. *
6. Royalty Rate:
Six percent (6%) of Net Shipments
* Text omitted pursuant to a request for confidential treatment and filed
separately with the Securities and Exchange Commission.
<PAGE>
7. Guarantees:
(A) (B) (C) (D)
Guaranteed Guaranteed Guaranteed
Target Guaranteed Annual Monthly
Net Net Royalty Royalty
Shipments Shipments Payments Payments
(in United States Dollars)
---------------------------------
First Contract Year * $00 $00 *
Second Contract Year * $2,000,000 $120,000 *
Third Contract Year * $4,000,000 $240,000 *
INITIALS
LICENSOR: /s/DG
-----
LICENSEE: /s/ RJA
-------
* Text omitted pursuant to a request for confidential treatment and filed
separately with the Securities and Exchange Commission.
<PAGE>
SECTION (I)
NET SHIPMENT STATEMENT
The written statement of Net Shipments of Licensed Product (a copy of which
is attached hereto as Exhibit "B-4") referred to in Paragraph 9a must be
certified as accurate by LICENSEE and will include, but will not be limited
to, information as to: *
SECTION (II)
*
EXHIBIT "C"
Page 1 of 2
* Text omitted pursuant to a request for confidential treatment and filed
separately with the Securities and Exchange Commission.
<PAGE>
SECTION (III)
*
EXHIBIT "C"
Page 2 of 2
* Text omitted pursuant to a request for confidential treatment and filed
separately with the Securities and Exchange Commission.
<PAGE>
BEVERLY HILLS POLO CLUB REGISTRATIONS
IN CLASS 25 IN TERRITORY
*
EXHIBIT "E"
* Text omitted pursuant to a request for confidential treatment and filed
separately with the Securities and Exchange Commission.
<PAGE>
Inc. Cls 25
Prior U.S. Cls 39
Reg. No. 1,429,311
United States Patent and Trademark Office Registered Feb. 17, 1987
- ------------------------------------------------------------------------------
TRADEMARK
PRINCIPAL REGISTER
BEVERLY HILLS
POLO CLUB
[LOGO]
EXHIBIT A
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Page of
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DATE
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FORM MUST BE SUBMITTED COMPLETE SUBMIT TO THE ATTENTION OF:
BHPC MARKETING, INC.
620 W. 135th Street
Gardena, CA 90248
SAMPLE APPROVAL FORM
(FOR STYLE ONLY! SEE SWATCH APPROVAL FORM FOR FABRIC)
NAME OF LICENSEE
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LICENSED PRODUCT
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LICENSEE'S ADDRESS
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PLEASE PICTURE BELOW
SEASON
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STYLE #
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FABRICATION
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WHOLESALE PRICE
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COLORS
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SIZES
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START TAKING ORDERS
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END TAKING ORDERS
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START SHIP
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END SHIP
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SIGNATURE OF LICENSEE SIGNATURE OF LICENSOR
APROVED DISAPPROVED
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COMMENTS
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DATE RETURNED TO LICENSEE
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BHPC MARKETING, INC., 620 West 135th Street, Gardena, CA 90248
EXHIBIT "B-1"
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PAGE OF
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DATE
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FORM MUST BE SUBMITTED COMPLETE SUBMIT TO THE ATTENTION OF:
BHPC MARKETING, INC.
620 W. 135th Street
Gardena, CA 90248
SWATCH AND/OR COLOR APPROVAL FORM
(FABRIC AND COLOR ONLY! SEE SAMPLE APPROVAL FORM FOR STYLE)
NAME OF LICENSEE
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LICENSED PRODUCT
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LICENSEE'S ADDRESS
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SEASON
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LIST STYLE NUMBERS OF GARMENTS TO BE MANUFACTURED IN THIS FABRIC
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FABRIC # AND NAME OF SUPPLIER
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FABRIC CONTENT AND WEIGHT
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PLEASE ATTACH 1 SET OF SWATCHES BELOW
APPROVED DISAPPROVED
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COMMENTS
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SIGNATURE OF LICENSEE SIGNATURE OF LICENSOR
DATE RETURNED TO LICENSEE
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BHPC MARKETING, INC., 620 West 135th Street, Gardena, CA 90248
EXHIBIT "B-2"
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Page of
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Date
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FORM MUST BE SUBMITTED COMPLETE SUBMIT TO THE ATTENTION OF:
BHPC MARKETING, INC.
620 W. 135th Street
Gardena, CA 90248
ADVERTISING APPROVAL FORM
NAME OF LICENSEE
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LICENSED PRODUCT
--------------------------------
LICENSEE'S ADDRESS
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CIRCLE THE FORM OF ADVERTISING WHICH IS BEING SUBMITTED: LABEL, HANG TAG,
BUSINESS CARDS, BUSINESS FORMS, RADIO SPOT, TV, FULL PAGE AD, 1/2 PAGE AD,
PACKAGING, DISPLAY, OTHER.
PLACE ADVERTISING TO BE SUBMITTED HERE, OR AFFIX TO THIS PAGE
USE PERIOD From to
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IF SUBMISSION IS LABELS OR HANG TAGS, PLEASE GIVE NAME & ADDRESS OF SUPPLIER
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IF AD IS TO RUN IN A PUBLICATION, NAME OF PUBLICATION
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APPROVED DISAPPROVED
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COMMENTS
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Signature of Licensee Signature of Licensor
DATE RETURNED TO LICENSEE
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BHPC Marketing, Inc. - 620 W. 135th Street - Gardena, CA 90248
(310) 354-1444 - FAX (310) 354-1445
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[Statement of Royalties (Foreign) Form]
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Exhibit 10.21
AMENDMENT TO INTERNATIONAL EXCLUSIVE LICENSE AGREEMENT
This Amendment is made and entered into by and between BHPC Marketing, Inc.
("LICENSOR") and I.C. Isaacs Europe, S.L. by name change from Zacari 2000,
S.L. ("LICENSEE") and is dated as of June 3, 1997. This Amendment amends and
modifies that certain International Exclusive License Agreement between
LICENSOR and LICENSEE dated August 15, 1996 (the "Agreement").
(I)
The promises, covenants, agreements and declarations made and set forth
herein are intended to and shall have the same force and effect as if set
forth at length in the body of the Agreement. To the extent that the
provisions of this Amendment are inconsistent with the terms and conditions
of the AGREEMENT, the terms set forth herein shall control.
(II)
1. Effective as of May 1, 1997, the License Agreement Detail Schedule
(Wholesale sales) is hereby deleted and the following is hereby inserted:
"4. Renewal Term FROM TO
------------ ---- --
First Renewral Period (if any): January 1, 2000 December 31, 2002
Second Renewal Period (if any): Janaury 1, 2002 December 31, 2004"
2. Paragraph 7(b) of the Agreement is hereby amended by deleting all
references to one-year renewal periods and referring in their place to
the three-year renewal terms provided for in the License Agreement Detail
Schedule as amended above.
3. The Amendment to the Agreement dated April 28, 1997, is no longer in
effect.
(III)
LICENSOR and LICENSEE acknowledge and agree that the Agreement, as amended by
this Amendment, remains in full force and effect and represents the entire
Agreement of the parties with respect to the matters contained herein.
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IN WITNESS WHEREOF, the parties hereto agree that this Amendment shall take
effect as of the date and year first written above.
LICENSOR: LICENSEE:
BHPC MARKETING, INC. I. C. ISAACS & CO., L.P.
BY: /s/ Don Garrison BY: /s/ Robert Arnot
----------------------- -----------------------------
Don Garrison Robert Arnot
Director of Licensing Chairman of the Board
DATE: 6/23/97 DATE: 6/24/97
---------------------- -----------------------------
BY: /s/ Gerald Lear
------------------------------
Gerald Lear
President, C.E.O.
DATE: 6/24/97
-----------------------------
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Exhibit 10.22
INTERNATIONAL
-------------
EXCLUSIVE LICENSE AGREEMENT
--------------------------- BHPC.12I
THIS AGREEMENT is made and entered into this 15th day of August, 1996 by
and between BHPC Marketing, Inc., a corporation duly organized and existing
under the laws of California, having its principal place of business at 620
West 135th Street, Gardena, California 90248 (hereinafter referred to as
"LICENSOR"), and Zacari 2000, S.L., a Spanish Limited Corporation, having its
principal place of business at c/LLULL 88, B1, 08005, Barcelona, Spain
(hereinafter referred to as "LICENSEE").
WHEREAS, LICENSOR is the owner with the right to grant licenses of the
Trademarks illustrated in Exhibit "A" attached hereto (the "Trademarks"); and
WHEREAS, LICENSEE is desirous of obtaining the exclusive right to use
the aforesaid Trademarks in connection with the import or manufacture and
sale of certain licensed products defined herein.
NOW, THEREFORE, it is agreed by the parties as follows:
1. DEFINITIONS
-----------
The following terms shall have meanings as set forth below:
a. "Trademarks" shall mean the Trademarks set forth in Exhibit "A".
b. "Territory" shall mean that geographical area defined in item 1 of the
attached License Agreement Detail Schedule.
c. "Licensed Product" shall be defined as set forth in item 2 of the
attached License Agreement Detail Schedule.
d. *
2. RIGHTS GRANTED
--------------
LICENSOR hereby grants to LICENSEE, upon the terms and conditions set
forth herein, an exclusive, personal, non-transferable, non-assignable
license, without the right to grant sublicenses, to use the Trademarks
solely on or in conjunction with the design, manufacture, import,
distribution, advertising, promotion, shipment, and sale of the Licensed
Product in the Territory. This license is extended to and includes retail
sales only, and includes the right the grant franchise agreements in the
Territory.
* Text omitted pursuant to a request for confidential treatment and filed
separately with the Securities and Exchange Commission.
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BHPC.12I
3. *
4. GOOD WILL AND PROMOTIONAL VALUE
-------------------------------
a. LICENSEE recognizes the value of the good will associated with the
Trademarks and acknowledges that the Trademarks, and all rights therein
and the good will pertaining thereto, belong exclusively to LICENSOR.
LICENSEE further recognizes and acknowledges that the Trademarks have
acquired secondary meaning in the mind of the public.
b. LICENSEE agrees that its use of the Trademarks shall inure to the benefit
of LICENSOR and that LICENSEE shall not, at any time, acquire any rights
in the Trademarks by virtue of any use it may make of the Trademarks.
c. LICENSEE acknowledges that LICENSOR is entering into this Agreement not
only in consideration of the royalties paid hereunder but also for the
good will and promotional value to be secured by LICENSOR for the
Trademarks as a result of the manufacture, offering for sale, sale,
advertising, promotion, shipment and distribution of the Licensed Product
by LICENSEE.
5. *
* Text omitted pursuant to a request for confidential treatment and filed
separately with the Securities and Exchange Commission.
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BHPC.12I
b. *
c. *
(i) *
(ii) *
(iii) *
* Text omitted pursuant to a request for confidential treatment and filed
separately with the Securities and Exchange Commission.
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BHPC.12I
*
d. LICENSEE agrees that the Licensed Product and all Promotional and
Packaging Material shall contain only those legends, markings
and/or notices as required from time to time by LICENSOR to give
appropriate notice to the consuming public of LICENSOR's right,
title and interest thereto.
e. LICENSOR may, periodically and from time to time during the
term of this Agreement, require that LICENSEE submit to LICENSOR,
at no cost to LICENSOR, or LICENSOR or its designees may randomly
select and retain during the inspection referred to in
Subparagraph 5f, below, one (1) additional set of Production
Samples of the Licensed Product and/or the Promotional and
Packaging Material relating to the Licensed Product for subsequent
review and written approval of the quality of, trademark usage and
notice on same, and for any other purpose that LICENSOR deems
appropriate.
f. To assure that the provisions of this Paragraph 5 are being
observed, LICENSEE agrees that it will allow LICENSOR or its
designees, periodically and from time to time
during the term of this Agreement, to enter LICENSEE's premises
and/or the premises where the Licensed Product is being
manufactured or inventoried during regular business hours and upon
reasonable notice, for the purposes of inspecting and approving the
Licensed Product and the Promotional and Packaging Material
relating to the Licensed Product.
g. *
6. ADVERTISING/USE OF THE TRADEMARK
--------------------------------
a. LICENSEE will adopt and carry out its own marketing and advertising
program with respect to the Licensed Product. LICENSEE agrees
that LICENSEE's advertising, public relations and sales promotion
activities will be subject to prior consultation with, and written
approval by, LICENSOR as to the general form and content only with
respect to the use of the Trademarks and other notices.
b. LICENSEE shall, on the last day of each respective Contract Year,
submit to LICENSOR any documentation as shall be reasonably
requested by LICENSOR to evidence the expenditure of such
Advertising Expense. In the event that LICENSEE fails to spend the
entire Advertising Expense during the
* Text omitted pursuant to a request for confidential treatment and filed
separately with the Securities and Exchange Commission.
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BHPC.12I
respective Contract Year in which the Advertising Expense was to
be expended hereunder, LICENSEE will, on the day following the
last day of the respective Contract Year, pay to LICENSOR the
total sum of the Advertising Expense which was not expended
hereunder.
c. *
d. LICENSEE agrees that upon request of LICENSOR, it shall loan a
reasonable number of products to LICENSOR and its other licensees
for advertising and promotional purposes.
e. *
f. *
g. *
h. LICENSEE shall affix such legends, markings and notices on all
License Product as are required by LICENSOR and the law.
i. LICENSEE must submit for approval to LICENSOR a printer's proof of
each item before final printing.
7. DURATION OF THE AGREEMENT
-------------------------
a. This Agreement shall continue for three (3) consecutive Contract
Years in respective durations as set forth in item 3 of the
attached License Agreement Detail Schedule (hereinafter
collectively the "Initial Term") and shall then expire unless
sooner terminated in accordance with the terms and conditions set
forth herein.
b. If LICENSEE fully performs according to all of the terms and
conditions hereof including, without limitation, the terms and
conditions specifically enumerated below, LICENSEE shall have
three (3) consecutive options to renew this Agreement for three
(3) consecutive contract periods, i.e. Contract Years,
* Text omitted pursuant to a request for confidential treatment and filed
separately with the Securities and Exchange Commission.
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BHPC.12I
of one (1) year each (hereinafter collectively the "Renewal
Term"). In order to exercise each individual option, LICENSEE must
provide LICENSOR with written notice of its intention to exercise each
respective option and such written notice must be received by LICENSOR
no later than * prior to the expiration of
the Initial Term or immediately preceding Contract Year of the Renewal
Term. * Except as specifically set forth herein to the
contrary, LICENSEE's performance in the Renewal Term shall be pursuant
to the same terms and conditions recited herein for the Initial Term.
8. ROYALTIES
---------
a. "Royalty", as used in this Agreement, shall consist of:
(i) "LICENSEE" paying to LICENSOR, during the term of this Agreement, a
Royalty in an amount equal to four percent (4%) of the Wholesale
Purchases by "LICENSEE" for Licensed Product under the Trademarks to
Beverly Hills Polo Club Retail Stores. *
(ii) LICENSEE paying to LICENSOR, during the term of this Agreement, a
Royalty in an amount equal to two percent (2%) of retail sales of
Licensed Product by Beverly Hills Polo Club Franchise Retail Stores.
b. *
c. *
* Text omitted pursuant to a request for confidential treatment and filed
separately with the Securities and Exchange Commission.
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BHPC.12I
*
9. PAYMENT
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a. *
b. *
* Text omitted pursuant to a request for confidential treatment and filed
separately with the Securities and Exchange Commission.
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BHPC.12I
c. LICENSEE's statements shall be submitted to:
BHPC Marketing, Inc.
620 West 135th Street
Gardena, California 90248
Attn: Royalty Receivables Department
All amounts payable to LICENSOR by LICENSEE shall be wire transferred to:
Bank Name: First Interstate Bank
Bank ABA#: 122000218
Bank Address: 707 Wilshire Blvd.
Los Angeles, CA 90017
Account Name: BHPC Marketing, Inc.
Account Number: 149-6-38302
d. *
e. All payments made hereunder shall be in United States dollars in United
States currency; amounts shall be computed at the exchange rate existing at
noon on the last business day preceding the day payment is due to be made
hereunder. If payment is late, LICENSOR has the option to require that
payment be made at the exchange rate on the day preceding actual payment.
f. *
10. GUARANTEES
a. Guaranteed Annual Royalty Payments - LICENSEE shall pay, for each
Contract Year during the term of
* Text omitted pursuant to a request for confidential treatment and filed
separately with the Securities and Exchange Commission.
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BHPC.12I
this Agreement, beginning with the First Contract Year, the respective
Guaranteed Annual Royalty Payments set forth in item 7 of the attached
License Agreement Detail Schedule.
b. Guaranteed Target Net Shipments - If, in any Contract Year, LICENSEE does
not achieve the Guaranteed Target Net Shipment Volume figure set forth in
item 7 of the attached License Agreement Detail Schedule LICENSOR may, at
its option, immediately therefter terminate this Agreement in writing.
c. Guaranteed Net Shipments - If, in any Contract Year, LICENSEE does not
achieve the Guaranteed Net Shipments figure for a particular country set
forth in item 7 of the attached Licensed Agreement Detail Schedule
LICENSOR may, at its option, immediately therafter terminate this Agreement
in writing for that particular country only.
d. *
e. *
11. EXPLOITATION BY LICENSEE
a. LICENSEE agrees to commence, and diligently continue thereafter, the
distribution, shipment and sale of the Licensed Product in commercially
reasonable quantities in the Territory on or before the respective
distribution date set forth next to the Licensed Product described in
item 2 of the attached License Agreement Detail Schedule.
b. LICENSEE agrees that the Licensed Product will only be shipped to and
sold by authorized Beverly Hills
* Text omitted pursuant to a request for confidential treatment and filed
separately with the Securities and Exchange Commission.
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BHPC.12I
Polo Club Retail stores. The manner and scope of the distribution of the
Licensed Product, availability, variety, fabrication, colors and sizes are
critical to the promotion, enhancement and protection of the Trademarks and
their associated goodwill. LICENSEE acknowledges that it has no right to
and shall not sell or distribute the Licensed Product to any diverter or to
anyone outside of the Territory or to any Distributor who is not a BHPC
Authorized Distributor.
c. *
12. *
* Text omitted pursuant to a request for confidential treatment and filed
separately with the Securities and Exchange Commission.
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BHPC.12I
*
13. INSURANCE
LICENSEE shall obtain and maintain at its sole cost and expense
throughout the Term and the Disposal Period standard product liability
insurance, the form of which must be acceptable to LICENSOR, from a
qualified insurance company licensed to do business naming LICENSOR as
additional named insured, which policy shall provide protection against
any and all claims, demands and causes of action arising out of any
defects or failure to perform, alleged or otherwise, in the Licensed
Product or any material used in connection therewith or any use thereof.
*
14. USE, DISPLAY, AND SALE INVOLVING THE TRADEMARKS AND COPYRIGHT
*
* Text omitted pursuant to a request for confidential treatment and filed
separately with the Securities and Exchange Commission.
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BHPC.12I
*
b. *
15. OWNERSHIP OF THE TRADEMARKS
---------------------------
a. LICENSEE agrees that nothing in this Agreement shall give LICENSEE any
right, title, or interest in the Trademarks, other than the license to use
the Trademarks on the Licensed Product; that such marks are the sole
property of LICENSOR; that all such uses by LICENSEE of such marks shall
inure only to the benefit of LICENSOR; and it being understood that all
right, title and interest relating thereto are expressly reserved by the
LICENSOR except for the rights being licensed hereunder.
b. LICENSEE agrees and acknowledges that if it has obtained or obtains
in the future, in any country, any right, title, or interest in any marks
which are confusingly similar to the Trademark, (including the filing of
any application for trademarks or service mark registration or the
obtaining of any issued registration), that LICENSEE has acted or will act
as an agent and for the benefit of LICENSOR. LICENSEE further agrees to
execute any and all instruments deemed by LICENSOR, its attorneys or
representatives, to be necessary to transfer such right, title, or
interest to LICENSOR to protect LICENSOR's right, title and interest in
such marks.
c. *
16. COMPLIANCE WITH LIMITATIONS ON USE OF TRADEMARKS
------------------------------------------------
LICENSEE agrees that the Licensed Product, and all labels, hang tags,
packaging and other trade dress, used in connection with such Licensed
Products, shall not violate any restrictions on use or display of the marks
as provided in that Settlement Agreement and Consent Judgement with Polo
Fashions, Inc., a copy of which is attached hereto as Exhibit "D". Nothing
contained in this Agreement makes Polo Fashions, Inc., or any
* Text omitted pursuant to a request for confidential treatment and filed
separately with the Securities and Exchange Commission.
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BHPC.12I
related company, a third party beneficiary of this Agreement.
17. THIRD PARTY INFRINGEMENT
------------------------
LICENSEE agrees to notify LICENSOR in writing of any infringements or
imitations by third parties of the Trademarks, the Licensed Product and/or
the Promotional and Packaging Material which may come to LICENSEE's
attention. *
18. ASSIGNABILITY AND MANUFACTURING
-------------------------------
a. The license granted hereunder is, and shall remain, personal to LICENSEE
and shall not be granted, assigned, or otherwise conveyed by any act of
LICENSEE or by operation of law. For the purposes of this Paragraph 18,
any sale or transfer of any ownership interest in LICENSEE shall
constitute a prohibited assignment of the license granted hereunder.
LICENSEE shall have no right to grant any sublicenses without LICENSOR's
prior express written approval. Any attempt on the part of LICENSEE to
arrange to sublicense or assign to third parties its rights under this
Agreement, shall constitute a material breach of this Agreement.
b. LICENSOR shall have the right to assign its rights and obligations under
this Agreement without the approval of LICENSEE.
c. LICENSEE has the right to enter into franchise agreements using
franchise agreements previously approved by LICENSOR. Any material change
to said franchise agreement must be approved in writing by LICENSOR.
19. NO AGENCY, JOINT VENTURE, PARTNERSHIP
-------------------------------------
The parties hereby agree that no agency, joint venture, or partnership
is created by this Agreement, and that neither party shall incur any
obligation in the name of the other without the other's prior written
consent.
20. *
* Text omitted pursuant to a request for confidential treatment and filed
separately with the Securities and Exchange Commission.
13
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BHPC.12I
*
21. TERMINATION
-----------
a. In addition to the termination rights provided elsewhere in this
Agreement, LICENSOR will have the right to terminate this Agreement in the
event that: *
b. *
22. EFFECT OF EXPIRATION OR TERMINATION
-----------------------------------
a. Upon expiration or termination of this Agreement, all rights and
licenses granted to LICENSEE hereunder
* Text omitted pursuant to a request for confidential treatment and filed
separately with the Securities and Exchange Commission.
14
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BHPC.12I
shall immediately expire, shall forthwith revert to LICENSOR, and LICENSEE
shall immediately cease and desist from using the Trademarks and any
technical information supplied by LICENSOR to LICENSEE hereunder. To this
end, LICENSEE will be deemed to have automatically assigned to LICENSOR,
upon such expiration or termination, the Trademarks, equities, good will,
titles, and other rights in or to the Licensed Product and all adaptions,
compilations, modifications, translations and versions thereof, and all
other trademarks used in connection therewith which have been or may be
obtained by LICENSEE or which may vest in LICENSEE and which have not
already been assigned to LICENSOR. LICENSOR may thereafter, in its sole
discretion enter into such arrangements as it deems desirable, with any
other party, for the manufacture, promotion and sale of the Licensed Product
in the Territory. LICENSEE shall, within thirty (30) days after expiration
or termination of this Agreement as the case may be, furnish LICENSOR with
a full and detailed written statement of the Licensed Product in its
inventory or the Licensed Product in progress. LICENSOR shall have the
option of conducting a physical inventory at the time of expiration or
termination and/or at a later date in order to ascertain or verify such
statement. In the event that the LICENSEE refuses to permit LICENSOR to
conduct such physical inventory, LICENSEE shall forfeit its right hereunder
to dispose of such inventory. In addition to such forfeiture, LICENSOR
shall have recourse to all other remedies available to it.
b. Upon the termination of this Agreement, *
c. *
* Text omitted pursuant to a request for confidential treatment and filed
separately with the Securities and Exchange Commission.
15
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BHPC.12I
*
* Text omitted pursuant to a request for confidential treatment and filed
separately with the Securities and Exchange Commission.
16
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BHPC.12I
signed by LICENSEE's Chief Executive Officer certifying under penalty of
perjury that such inventory, molds, patterns, transfers, and other property
have been destroyed.
23. MODIFICATION: WAIVER
No modification of any of the terms or provisions of this Agreement shall
be valid unless contained in a writing signed by the parties. No waiver by
either party of a breach or a default hereunder shall be deemed a waiver
by such party of a subsequent breach or default of a like or similar
nature. Resort by LICENSOR to any remedies referred to in this Agreement
or arising by reason of a breach of this Agreement by LICENSEE shall not
be construed as a waiver by LICENSOR of its right to resort to any and all
other legal and equitable remedies available to LICENSOR.
24. FORCE MAJEURE
Neither LICENSOR nor LICENSEE shall be liable to each other or be deemed
in breach or default of any obligations contained in this Agreement, for
any delay or failure to perform due to causes beyond its reasonable
control, including but not limited to delay due to the elements, acts of
the United States Government, acts of foreign government, acts of God,
fires, floods, epidemics, embargoes, riots, strikes, any of the foregoing
events being referred to as a "Force Majeure" condition. In such event,
dates for performance shall be extended for the period of delay resulting
from the Force Majeure condition. The party affected by a Force Majeure
condition shall, as soon as practicable, notify the other party of the
nature and extend of such condition.
25. NOTICE
All notices, approvals, consents, requests, demands, or other
communications to be given to either party in writing may be effected by
personal delivery or by depositing the same in the mail, certified and
return receipt requested, postage prepaid. Such communication shall be
addressed to LICENSEE and LICENSOR at their respective addresses as set
forth in the preamble above.
26. CONSTRUCTION: VENUE
This agreement shall be construed in accordance with the laws of *
*, and the parties agree that it is executed and delivered in that
state, and any claims arising hereunder shall, at LICENSOR's election,
be prosecuted in *
17
* Text omitted pursuant to a request for confidential treatment and filed
separately with the Securities and Exchange Commission.
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BHPC.12I
*
27. ENTIRE AGREEMENT
This Agreement, contains the entire understanding of the parties and there
are not representations, warranties, promises, or undertakings other than
those contained herein. This Agreement supersedes and cancels all previous
agreements between the parties hereto.
28. *
29. *
30. *
* Text omitted pursuant to a request for confidential treatment and filed
separately with the Securities and Exchange Commission.
18
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BHPC.12I
31. BINDING EFFECT
This Agreement shall be binding on the parties, and their successor and
assigns.
32. *
33. SEVERABILITY
In the event that any term or provision of this Agreement shall for any
reason be held to be invalid, illegal or unenforceable in any respect, such
invalidity or unenforceability shall not affect any other term or provision
and this Agreement shall be interpreted and construed as if such term or
provision, to the extent the same shall have been held to be invalid,
illegal or unenforceable, had never been contained herein.
34. CAPTIONS
The captions used in connection with the paragraphs and subparagraphs of
this Agreement are inserted only for purpose of reference. Such captions
shall not be deemed to govern, limit, modify or in any other manner affect
the scope, meaning or intent of the provisions of this Agreement or any
part thereof nor shall such captions otherwise be given any legal effect.
35. INCORPORATION OF EXHIBITS
LICENSOR and LICENSEE acknowledge and agree that the provisions of
Exhibits "A" through "E" attached hereto (the Exhibits") are integral to
this Agreement and that the provisions of the Exhibits are all hereby
incorporated herein and made a part hereof as if set out in full in this
Agreement.
36. ENGLISH LANGUAGE
This Agreement is entered into the English language only. Any translation
thereof into any other language shall be for purposed of convenience only
and shall not be considered in connection with the interpretation of the
provision hereof.
37. REQUIRED FILING OF AGREEMENT
LICENSEE shall cause this Agreement to be filed with, and approved by, all
necessary governmental authorities, including the appropriate exchange
control authorities, whenever such filing and approval may
* Text omitted pursuant to a request for confidential treatment and filed
separately with the Securities and Exchange Commission.
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BHPC.12I
be required for the purpose of authorizing the payments herein provided.
LICENSEE shall be solely responsible for the filing of this document with
the appropriate authorities and shall bear the cost thereof, is any. In
the event of LICENSEE failing to obtain the approvals or completing the
filing set forth above within four (4) months from the date of the first
franchise agreement being signed, LICENSOR may terminate this Agreement
forthwith.
38. REGISTRATION IN TERRITORY
LICENSOR will exert its best efforts to obtain trademark registration of
the Trademarks for the Licensed Product in the Territory. However, LICENSOR
has made no representation or warranty that the Trademarks will be
registered or are registerable in the Territory, and the failure to obtain
or maintain registrations thereon shall not be deemed a breach hereunder
by LICENSOR. A listing of the registrations in class 25 in the Territory
is shown in Exhibit "E", attached hereto.
39. LICENSEE agrees that any Licensed Product purchased for the Territory
will be purchased from other official Beverly Hills Polo Club licensees
within said Territory. If a licensee does not exist in the Territory for a
specific product category, then LICENSEE may purchase the Licensed Product
from any other official Beverly Hills Polo Club licensee, worldwide.
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IN WITNESS WHEREOF, the parties hereto agree that this Agreement shall
take effect as of the date and year first above written.
LICENSOR: LICENSEE:
BHPC MARKETING, INC., ZACARI, S.L.
a California Corporation a Spanish Limited Corporation
BY: /s/ Don Garrison BY: /s/ Robert Arnot
------------------------------ ---------------------------------
Don Garrison Robert Arnot
Licensing Director Chairman/Managing Director
Date: 8/19/96 Date: 8/15/96
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LICENSE AGREEMENT DETAIL SCHEDULE
---------------------------------
1. Definition of Territory: Retail Stores in Europe and Eastern Europe:
------------------------
Portugal Andorra Italy France Belgium
Holland Greece Switzerland Austria Germany
Luxembourg Liechtenstein Latvia Norway Denmark
Sweden Poland Hungary Czech Republic Slovakia
Estonia Ukraine Belarus San Marino Cypress
Chechnia Moldavia Russia N. Ireland Ireland
Lithuania Romania Bulgaria Monaco Iceland
Finland Spain United Kingdom
2. Definition of Licensed Product (by category): DISTRIBUTION DATE:
-------------------------------------------- -----------------
A. Men's apparel: pants, woven shirts, knit shirts, January 1, 1997
jeans, shorts, sweaters, outerwear (excluding
dress shirts & suits)
B. Women's apparel: slacks, skirts, dresses,
sweaters, outerwear, blouses and jeans
C. All other BHPC Licensed Product produced by other Licensees.
3. Initial Term: FROM TO
------------ ---- --
First Contract Year: July 1, 1996 December 31, 1997
Second Contract Year: January 1, 1998 December 31, 1998
Third Contract Year: January 1, 1999 December 31, 1999
4. Renewal Term:
------------
Fourth Contract Year (if any): January 1, 2000 December 31, 2000
Fifth Contract Year (if any): January 1, 2001 December 31, 2001
Sixth Contract Year (if any): January 1, 2002 December 31, 2002
5. *
6. Royalty Rate:
------------
Four percent (4%) of Wholesale Purchases by Beverly Hills Polo Club
Retail Stores, and two percent (2%) of Retail Sales by Beverly Hills Polo
Club Franchise Retail Stores.
* Text omitted pursuant to a request for confidential treatment and filed
separately with the Securities and Exchange Commission.
<PAGE>
7. Guarantees:
----------
(A) (B) (C) (D)
Guaranteed Guaranteed Guaranteed
Target Guaranteed Annual Monthly
Net Net Royalty Royalty
Shipments Shipments Payments Payments
(in United States Dollars)
--------------------------------
First Contract Year * $00 $00 *
Second Contract Year * $1,000,000 $ 60,000 *
Third Contract Year * $2,000,000 $120,000 *
INITIALS
--------
LICENSOR: /s/ DG
---------
LICENSEE: /s/ RJA
---------
* Text omitted pursuant to a request for confidential treatment and filed
separately with the Securities and Exchange Commission.
<PAGE>
Int. Cmt. 25
Prior U.S. Cht 39
Reg. No. 1,429,311
United States Patent and Trademark Office Registered Feb. 17, 1987
- -------------------------------------------------------------------
TRADEMARK
PRINCIPAL REGISTER
[LOGO]
EXHIBIT A
<PAGE>
PAGE OF
--- ---
DATE
----------
FORM MUST BE SUBMITTED COMPLETE SUBMIT TO THE ATTENTION OF:
BHPC MARKETING, INC.
620 W. 135th Street
Gardena, CA 90248
SAMPLE APPROVAL FORM
(FOR STYLE ONLY! SEE SWATCH APPROVAL FORM FOR FABRIC)
NAME OF LICENSEE
-----------------------------------------------------
LICENSED PRODUCT
-----------------------------------------------------
LICENSEE'S ADDRESS
---------------------------------------------------
PLEASE PICTURE BELOW
SEASON
--------------------
STYLE #
-------------------
FABRICATION
-----------------
WHOLESALE PRICE
-------------
COLORS
----------------------
SIZES
-----------------------
START TAKING ORDERS
---------
END TAKING ORDERS
-----------
START SHIP
------------------
END SHIP
--------------------
- ----------------------------------- -----------------------------
SIGNATURE OF LICENSEE SIGNATURE OF LICENSOR
APPROVED DISAPPROVED
----------- ----------
COMMENTS
-------------------------------------------------------------
- ---------------------------------------------------------------------
DATE RETURNED TO LICENSEE
-----------------------
BHPC MARKETING, INC., 620 West 135th Street, Gardena, CA 90248
EXHIBIT "B-1"
<PAGE>
PAGE OF
------- ------
DATE
----------------
FORM MUST BE SUBMITTED COMPLETE SUBMIT TO THE ATTENTION OF:
BHPC MARKETING, INC.
630 W. 135th Street
Gardena, CA 90248
SWATCH AND/OR COLOR APPROVAL FORM
(FABRIC AND COLOR ONLY! SEE SAMPLE APPROVAL FORM FOR STYLE)
NAME OF LICENSEE
--------------------------------------------------------------
LICENSED PRODUCT
--------------------------------------------------------------
LICENSEE'S ADDRESS
--------------------------------------------------------------
SEASON
------------------------------------------------------------------------
LIST STYLE NUMBERS OF GARMENTS TO BE MANUFACTURED IN THIS FABRIC
--------------
- ------------------------------------------------------------------------------
FABRIC # AND NAME OF SUPPLIER
------------------------------------------------
- ------------------------------------------------------------------------------
FABRIC CONTENT AND WEIGHT
-----------------------------------------------------
PLEASE ATTACH 1 SET OF SWATCHES BELOW
APPROVED DISAPPROVED
---------------- --------------
COMMENTS----------------------------------------------------------------------
- ------------------------------------------------------------------------------
- -------------------------------- -------------------------------
SIGNATURE OF LICENSEE SIGNATURE OF LICENSOR
DATE RETURNED OF LICENSEE
-------------------------
BHPC MARKETING, INC., 620 West 135th Street, Gardena, CA 90248
EXHIBIT "B-2"
<PAGE>
Page of
----- -----
Date
------------
FORM MUST BE SUBMITTED COMPLETE SUBMIT TO THE ATTENTION OF:
BHPC MARKETING, INC.
620 W. 135th Street
Gardena, CA 90248
ADVERTISING APPROVAL FORM
NAME OF LICENSEE
----------------------------
LICENSED PRODUCT
----------------------------
LICENSEE'S ADDRESS
--------------------------------------------------------
CIRCLE THE FORM OF ADVERTISING WHICH IS BEING SUBMITTED: LABEL, HANG TAG,
BUSINESS CARDS, BUSINESS FORMS, RADIO SPOT, TV, FULL PAGE AD, 1/2 PAGE AD,
PACKAGING, DISPLAY, OTHER.
PLACE ADVERTISING TO BE SUBMITTED HERE, OR AFFIX TO THIS PAGE
USE PERIOD From to
--------- ---------
IF SUBMISSION IS LABELS OR HANG TAGS, PLEASE GIVE NAME & ADDRESS OF SUPPLIER
- ------------------------------------------------------------------------------
IF AD IS TO RUN IN A PUBLICATION, NAME OF PUBLICATION
-------------------------
APPROVED DISAPPROVED
------------ -----------
COMMENTS
----------------------------------------------------------------------
- ------------------------------------------------------------------------------
- ----------------------------- ---------------------------
Signature of Licensee Signature of Licensor
DATE RETURNED TO LICENSEE
---------------
BHPC Marketing, Inc. - 620 W. 135th Street - Gardena, CA 90248
(310) 354-1444 - FAX (310) 354-1445
<PAGE>
<TABLE>
<CAPTION>
STATEMENT OF ROYALTIES (FOREIGN)
FOR SALES TO RETAIL STORES
FOR --------------- TO --------------- 19 -----
(MONTH)
LICENSEE NAME -------------------------------- ROYALTY % -----
LICENSEE ADDRESS ----------------------------- CONVERSION RATE ------------ TO ------------ US DOLLARS
- ---------------------------------------------- DATE OF CONVERSION RATE ------------------------------
- ---------------------------------------------- LICENSED PRODUCT -------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
- ---------------------------------------------------------------------------------------------------------------------------------
CUSTOMER GROSS LESS NET SALES NET SALES GROSS ROYALTIES TAXES PAID NET ROYALTY AMT.
NAME SALES RETURNS* LOCAL CUR. US$ US$ US$ US$
- ---------------------------------------------------------------------------------------------------------------------------------
- ---------------------------------------------------------------------------------------------------------------------------------
- ---------------------------------------------------------------------------------------------------------------------------------
- ---------------------------------------------------------------------------------------------------------------------------------
- ---------------------------------------------------------------------------------------------------------------------------------
- ---------------------------------------------------------------------------------------------------------------------------------
- ---------------------------------------------------------------------------------------------------------------------------------
TOTALS -------------------------------------------------------------------------------------------------------------------------
Send Statement to: BHPC Marketing, Inc.
620 West 135th Street I CERTIFY THAT THE ABOVE IS ACCURATE
Gardena, CA 90248
U.S.A. ----------------------------------------------------- -------------
Signature and Title Date
Please see License Agreement for the amount of permissible deductions.
Exhibit "B-4"
</TABLE>
<PAGE>
<TABLE>
[logo] STATEMENT OF ROYALTIES (FOREIGN)
FOR TO 19
---------------- ------------- -----
(Quarter)
LICENSEE NAME
--------------------------------
LICENSEE ADDRESS CONVERSION RATE TO U.S. DOLLARS ROYALTY %
------------------------------ ----------- --------- ---------------
- --------------------------------------------- DATE OF CONVERSION RATE
----------------------------
LICENSEE PRODUCT(S)
---------------------------
- ----------------------------------------------------------------------------------------------------------------------------------
ITEM/ NUMBER OF NUMBER OF UNIT WHOLESALE GROSS LESS LESS LESS TRADE LESS NET SALES LOCAL
STYLE NO. UNITS SOLD UNITS RETURNED PRICE SALES ALLOWANCES* MARKDOWNS* DISCOUNTS* RETURNS* CURRENCY
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
- ----------------------------------------------------------------------------------------------------------------------------------
- ----------------------------------------------------------------------------------------------------------------------------------
- ----------------------------------------------------------------------------------------------------------------------------------
- ----------------------------------------------------------------------------------------------------------------------------------
- ----------------------------------------------------------------------------------------------------------------------------------
- ----------------------------------------------------------------------------------------------------------------------------------
- ----------------------------------------------------------------------------------------------------------------------------------
- ----------------------------------------------------------------------------------------------------------------------------------
- ----------------------------------------------------------------------------------------------------------------------------------
- ----------------------------------------------------------------------------------------------------------------------------------
- ----------------------------------------------------------------------------------------------------------------------------------
- ----------------------------------------------------------------------------------------------------------------------------------
TOTALS
---------------------------------------------------------------------------------------------------------------------
<CAPTION>
- ---------------------------------------------------------------------------------------------------------------------------------
NET SALES GROSS ROYALTIES TAXES PAID NET ROYALTY AMT.
U.S. DOLLARS U.S. DOLLARS U.S. DOLLARS U.S. DOLLARS
<S> <C> <C> <C>
- ---------------------------------------------------------------------------------------------------------------------------------
- ---------------------------------------------------------------------------------------------------------------------------------
- ---------------------------------------------------------------------------------------------------------------------------------
- ---------------------------------------------------------------------------------------------------------------------------------
- ---------------------------------------------------------------------------------------------------------------------------------
- ---------------------------------------------------------------------------------------------------------------------------------
- ---------------------------------------------------------------------------------------------------------------------------------
- ---------------------------------------------------------------------------------------------------------------------------------
- ---------------------------------------------------------------------------------------------------------------------------------
- ---------------------------------------------------------------------------------------------------------------------------------
- ---------------------------------------------------------------------------------------------------------------------------------
TOTALS
-----------------------------------------------------------------------------------------------------------------
</TABLE>
<TABLE>
<S> <C> <C>
SEND STATEMENT TO: BHPC MARKETING, INC. I CERTIFY THAT THE ABOVE IS ACCURATE
620 W. 135th Street
Gardena, CA 90248 ------------------------------------ -------------------------------------
SIGNATURE TITLE
------------------------------------ -------------------------------------
NAME DATE
*PLEASE SEE THE LICENSE AGREEMENT FOR
THE AMOUNT OF PERMISSIBLE DEDUCTIONS.
</TABLE>
<PAGE>
SECTION (I)
NET SHIPMENT STATEMENT
The written statement of Net Shipments of Licensed Product (a copy of which
is attached hereto as Exhibit "B-4") referred to in Paragraph 9a must be
certified as accurate by LICENSEE and will include, but will not be
limited to, information as to: *
SECTION (II)
*
EXHIBIT "C"
Page 1 of 3
* Text omitted pursuant to a request for confidential treatment and filed
separately with the Securities and Exchange Commission.
<PAGE>
SECTION (III)
INSURANCE REQUIREMENTS
*
The policies shall provide for ten (10) days notice to LICENSOR from the
insurer by Registered or Certified Mail, return receipt requested, in the
event of any modification, cancellation or termination. LICENSEE agrees to
furnish LICENSOR a certificate of insurance or copy of the policies
evidencing same within thirty (30) days after execution of this Agreement
and from time to time as requested by LICENSOR within ten (10) days of
LICENSOR's request; in no event, shall LICENSEE manufacture, offer for sale,
sell, advertise, promote, ship and/or distribute the Licensed Product prior
to receipt by LICENSOR of such evidence of insurance.
SECTION (IV)
*
EXHIBIT "C"
Page 2 of 3
* Text omitted pursuant to a request for confidential treatment and filed
separately with the Securities and Exchange Commission.
<PAGE>
*
EXHIBIT "C"
* Text omitted pursuant to a request for confidential treatment and filed
separately with the Securities and Exchange Commission.
Page 3 of 3
<PAGE>
BEVERLY HILL POLO CLUB REGISTRATIONS
IN CLASS 25 IN TERRITORY
MARK COUNTRY STATUS
*
EXHIBIT "E"
* Text omitted pursuant to a request for confidential treatment and filed
separately with the Securities and Exchange Commission.
<PAGE>
SETTLEMENT AGREEMENT
--------------------
This Settlement Agreement is made, in multiple originals, by and
among * will hereinafter be
collectively referred to as the "Beverly Hills Polo Club Parties."
WITNESSETH:
WHEREAS, there are presently pending before the United States
District Court for the Central District of California two civil actions
entitled *
EXHIBIT D
* Text omitted pursuant to a request for confidential treatment and filed
separately with the Securities and Exchange Commission.
<PAGE>
*
WHEREAS, the parties hereto have vigorously contested the BHPC
Action and the * Action (collectively the "Civil Actions"), and have
expended considerable time and effort, and have incurred considerable
expense, in doing so; and
WHEREAS, in order to avoid the additional expense which would be
necessary for the continued prosecution of the Civil Actions, the parties are
willing to resolve the controversy among them and to settle the Civil Actions
under the terms and conditions set forth herein;
NOW, THEREFORE, in mutual consideration of the covenants and
premises contained herein, the parties agree as follows:
1. Except as provided in paragraph 3 hereunder, as of February
15, 1985, the Beverly Hills Polo Club Parties, their affiliates, officers,
agents and employees and any other person or entity under their direction or
control, or in active concert or participation with them, shall cease and
desist from anywhere in the world:
*
2
* Text omitted pursuant to a request for confidential treatment and filed
separately with the Securities and Exchange Commission.
<PAGE>
*
(c) Using as a design or decoration on or in connection with
the Subject Products and Services, including but not limited to
related packaging, labels, tags and other trade dress, or as a
trademark or service mark, the design of *
* Text omitted pursuant to a request for confidential treatment and filed
separately with the Securities and Exchange Commission.
3
<PAGE>
which is shown in Exhibit A (the *), or any design
which is a colorable imitation or simulation thereof;
(d) Using as a design or decoration on or in connection with
the Subject Products and Services, including but not limited to
related packaging, labels, tags and other trade dress, or as a
trademark, service mark or trade name the design of * which is
shown in Exhibit B (the "BHPC Symbol"), or any design which is a
colorable imitation or simulation thereof or is substantially
similar thereto, in an overall size smaller than five and a half
inches by five and a half inches (5 1/2" x 5 1/2") (measured from
mallet head to hoof and from nose to tail), except as may be
permitted by paragraph 2 hereof;
(e) Using either of the typefaces shown in Exhibit C
(identified hereinafter as the "Subject Typefaces") for the name
"Beverly Hills Polo Club";
(f) Placing or causing to be placed any advertisements or
using any materials of any type making reference, either directly or
indirectly to * or to * or their licensees and affiliates; and
(g) Using dark blue as the background color of any
packaging, label, tag or trade dress containing the words "Beverly
Hills Polo Club", and/or the BHPC Symbol.
4
* Text omitted pursuant to a request for confidential treatment and filed
separately with the Securities and Exchange Commission.
<PAGE>
2. Notwithstanding the size limitations imposed by paragraph 1(d)
hereof, the Beverly Hills Polo Club Parties may use the BHPC Symbol in an
overall size smaller than the five and a half inches by five and a half
inches (5 1/2 x 5 1/2) set forth in paragraph 1(d) hereof but only if
(a) the same is used in combination with and in close proximity
to the words "Beverly Hills Polo Club" in the configuration shown in
Exhibit D annexed hereto (the "Composite BHPC Logo") or the label shown
in Exhibit E annexed hereto (the "BHPC Label"); or
(b) the BHPC Symbol is used in a repetitive pattern covering
substantially all of the front or back of any of the Subject Products,
provided that the initials "BHPC" shall appear in close proximity to the
BHPC Symbol, and that somewhere on each of the Subject Products the words
"Beverly Hills Polo Club" shall be prominently displayed.
3. The Beverly Hills Polo Club Parties may sell or otherwise dispose
of any and all articles of clothing and accessories which are represented by
them to be in their possession or under their control as of February 15,
1985, as set forth in Exhibit F, to be added hereto not later than March 1,
1985, which would otherwise come within the prohibitions of paragraph 1 of
this Agreement, and may fill orders accepted on or before such date for any
clothing or accessories coming within such prohibitions so long as such
orders are filled within ninety (90) days of such date. Notwithstanding the
foregoing,
5
<PAGE>
BHPC may have until June 15, 1985 to dispose of garments in
the process of manufacture in the Orient as of February 15, 1985. * or
its attorneys or such attorneys' agents, on reasonable notice, which notice
shall not be required to exceed ten (10) days, may review purchase orders,
bills of lading, or inventory records at the place of business of any Beverly
Hills Polo Club Parties sufficient to verify compliance with the paragraph.
Such information is to be used solely to verify and enforce compliance, and
shall be held in confidence by *'s attorneys or their agents.
4. Simultaneously with its execution of this settlement agreement,
*
6
* Text omitted pursuant to a request for confidential treatment and filed
separately with the Securities and Exchange Commission.
<PAGE>
5. Neither * nor any person or entity under its direction or
control, may oppose the registration by the Beverly Hills Polo Club Parties
of any trademark which the Beverly Hills Polo Club Parties are entitled to
register under this Agreement, nor shall they petition to cancel, either
directly or through court action the registration of any such trademark
unless said mark or registration is the basis for legal action by BHPC, Lang
or any affiliated entity against * or its licensees. If * learns that
any of its licencees objects to the registration by any of the Beverly Hills
Polo Club Parties of the words "Beverly Hills Polo Club," and/or the
Composite BHPC Logo and/or the BHPC Label, then * will inform such
objecting licensee in writing of the terms of this Agreement, and provide
written confirmation thereof to BHPC.
6. The parties agree to entry in the Civil Actions of Final Judgment
Upon Consent in the form annexed hereto as Exhibit H, or in such other form
as the Court may require consistent with the terms and conditions of this
Settlement Agreement.
7. *
7
* Text omitted pursuant to a request for confidential treatment and filed
separately with the Securities and Exchange Commission.
<PAGE>
*
8. The parties will not initiate any any publicity concerning the
terms and conditions of this Agreement and such terms and conditions shall be
held in confidence except as otherwise provided herein. The Beverly Hills
Polo Club Parties may provide a copy of this Settlement Agreement or portions
or summaries thereof to any person or entity licensed or otherwise permitted
to use the name "Beverly Hills Polo Club," the BHPC Symbol or the Composite
BHPC Logo, to potential licensees, to sales representatives or, upon inquiry
being made, to customers. Either party may refer to the terms and conditions
of this Agreement in conjunction with its registration, or judicial or
administrative protection or enforcement of its trademarks, trade names and
service marks.
9. This Settlement Agreement represents no concession by any party as
to the validity or merit of any of the claims raised in the Civil Actions by
any other party, except as may be set forth in the Final Judgment of Exhibit H.
10. * and its officers, agents, employees and sales representatives
shall not make, directly or indirectly, any claim that the purchase of
products complying with the terms of this Agreement from BHPC or Lang or
their distributors or sublicensees constitutes trademark infringement, unfair
competition or trademark dilution, nor threaten sanctions with respect
thereto. This undertaking does not in any way admit or imply
8
* Text omitted pursuant to a request for confidential treatment and filed
separately with the Securities and Exchange Commission.
<PAGE>
that *, or anyone acting on its behalf, has in the past made any such
claims or threatened any such sanctions.
11. *
12. *
13. This Settlement Agreement represents the entire understanding
between the parties with respect to the subject matter hereof; shall not be
varied or amended except by a
9
* Text omitted pursuant to a request for confidential treatment and filed
separately with the Securities and Exchange Commission.
<PAGE>
writing signed by all parties; shall be binding upon the parties, their
successors and assigns; and shall, as respects contractual construction, be
governed by and construed in accordance with the laws of *.
Neither party hereby waives any claim as to the propriety of venue or
as to the existence of personal jurisdiction, in any lawsuit or other
proceeding that may arise concerning the subject matter of this Settlement
Agreement.
14. * warrants and represents that it has full right and power
to enter into this Settlement Agreement.
15. Lang warrants and represents that it has full right and power
to enter into this Settlement Agreement.
16. BHPC warrants and represents that it has full right and power
to enter into this Settlement Agreement.
17. Wessler warrants and represents as follows:
(a) He is the president and sole shareholder of BHPC and
Lang; and
(b) He has the full right, power and authority to enter into
this Settlement Agreement.
18. *
10
* Text omitted pursuant to a request for confidential treatment and filed
separately with the Securities and Exchange Commission.
<PAGE>
"polo clubs") or items of wearing apparel which have come to be described by
the word polo (e.g. "polo shirts" or "polo coats"), provided, however, that
any such use will not violate any of the terms and conditions of this
Agreement.
19. The Beverly Hills Polo Club Parties shall take all steps
reasonably necessary to ensure that any person or entity which is licensed or
otherwise permitted to use the term "Beverly Hills Polo Club", the BHPC
Symbol or the Composite BHPC Logo, complies fully with the restrictions set
forth in paragraph 1 hereof.
20. * acknowledges that the rights of any person or entity which
it licenses or otherwise permits to use the * Marks are subject to the
terms and conditions of this Agreement and that such rights cannot be used in
contravention of the provisions of paragraphs 5 and 10 hereof. * agrees to
inform any of its licensees whom it learns object to the use by the Beverly
Hills Polo Club Parties of any of the names or marks which they are permitted
to use hereunder of the foregoing acknowledgements.
21. In the event that a dispute arises between the parties as to
the subject matter of this Agreement, then the parties shall attempt to
amicably resolve the same prior to seeking judicial intervention. If the
parties are unable to resolve such dispute within thirty (30) days after it
arises,
11
* Text omitted pursuant to a request for confidential treatment and filed
separately with the Securities and Exchange Commission.
<PAGE>
then either party may take such action as it deems appropriate to protect its
rights.
IN WITNESS WHEREOF, the parties have executed this Settlement on
the days indicated adjacent to their respective signatures below.
*
Dated: 2/15/85 By: /s/ *
--------------------------- ---------------------------------
*
BEVERLY HILLS POLO CLUB, INC.
Dated: 2/20/85 By: /s/ Stephen Wessler, President
--------------------------- ---------------------------------
Stephen Wessler, President
STEPHEN WESSLER
Dated: 2/20/85 /s/ Stephen Wessler
--------------------------- ------------------------------------
GREGORY LANG, INC.
Dated: 2/20/85 By: /s/ Stephen Wessler, President
0028m --------------------------- ---------------------------------
Stephen Wessler, President
12
* Text omitted pursuant to a request for confidential treatment and filed
separately with the Securities and Exchange Commission.
<PAGE>
[LOGO]
EXHIBIT A
<PAGE>
[LOGO]
EXHIBIT B
<PAGE>
BEVERLY HILLS
POLO CLUB
[LOGO]
EXHIBIT C
<PAGE>
BEVERLY HILLS
POLO CLUB
[LOGO]
Note: Typeface to be changed per Paragraph 1(e).
EXHIBIT D
<PAGE>
BEVERLY HILLS
POLO CLUB
[LOGO]
Note: Typeface to be changed per Paragraph 1(e).
EXHIBIT E
<PAGE>
Exhibit 10.23
AMENDMENT TO INTERNATIONAL EXCLUSIVE LICENSE AGREEMENT
This Amendment is made and entered into by and between BHPC Marketing, Inc.
("LICENSOR") and I.C. Isaacs Europe, S.L. by name change from Zacari 2000,
S.L. ("LICENSEE") and is dated as of June 3, 1997. This Amendment amends and
modifies that certain International Exclusive License Agreement between
LICENSOR and LICENSEE dated August 15, 1996 (the "Agreement").
(I)
The promises, covenants, agreements and declarations made and set forth
herein are intended to and shall have the same force and effect as if set
forth at length in the body of the Agreement. To the extent that the
provisions of this Amendment are inconsistent with the terms and conditions
of the AGREEMENT, the terms set forth herein shall control.
(II)
1. Effective as of May 1, 1997, the License Agreement Detail Schedule
(Retail Stores) is hereby deleted and the following is hereby inserted:
"4. Renewal Term FROM TO
------------ ---- --
First Renewal Period (if any): January 1, 2000 December 31, 2002
Second Renewal Period (if any): January 1, 2002 December 31, 2004"
2. Paragraph 7(b) of the Agreement is hereby amended by deleting all
references to one-year renewal periods and referring in their place to
the three-year renewal terms provided for in the License Agreement Detail
Schedule as amended above.
3. The Amendment to the Agreement dated April 28, 1997, is no longer in
effect.
(III)
LICENSOR and LICENSEE acknowledge and agree that the Agreement, as amended by
this Amendment, remains in full force and effect and represents the entire
Agreement of the parties with respect to the matters contained herein.
<PAGE>
IN WITNESS WHEREOF, the parties hereto agree that this Amendment shall take
effect as of the date and year first written above.
LICENSOR: LICENSEE:
BHPC MARKETING, PNC. I. C. ISAACS & CO., L.P.
BY: /s/ DON GARRISON BY: /s/ ROBERT ARNOT
------------------------- -------------------------
Don Garrison Robert Arnot
Director of Licensing Chairman of the Board
DATE: 6/23/97 DATE: 6/24/97
----------------- ------------------
BY: /s/ GERALD LEAR
-------------------------
Gerald Lear
President, C.E.O.
DATE: 6/24/97
------------------
<PAGE>
Exhibit 10.24
AMENDMENT TO EXCLUSIVE LICENSE AGREEMENT
This Amendment is made and entered into by and between BHPC Marketing, Inc.
("LICENSOR") and I.C. Isaacs Europe S.L. ("LICENSEE") and is dated as of July
29, 1997. This Amendment amends and modifies that certain Exclusive License
Agreement between LICENSOR and LICENSEE, dated August 15, 1996 (the
"Agreement").
(I)
The promises, covenants, agreements and declarations made and set forth
herein are intended to and shall have the same force and effect as if set
forth at length in the body of the Agreement. To the extent that the
provisions of this Amendment are inconsistent with the terms and conditions
of the Agreement, the terms set forth herein shall control.
(II)
1. The following product category is hereby added to the License Agreement
for wholesale sales and retail stores (Europe) and is effective August 1,
1997 for distribution January 1, 1998.
"Men's dress shirts with neck sizes and sleeve lengths to include
fabrics of 100% cotton and cotton and synthetic mixtures."
(III)
LICENSOR AND LICENSEE acknowledge and agree that the Agreement, as amended by
this Amendment, remains in full force and effect and represents the entire
agreement of the parties with respect to the matters contained herein.
<PAGE>
IN WITNESS WHEREOF, the parties hereto agree that this Amendment shall take
effect as of the date and year first written above.
LICENSOR: LICENSEE:
BHPC MARKETING, INC. I.C. ISAACS & CO., L.P.
BY: /s/ Roger Tomlinson BY: /s/ Robert Arnot
---------------------------- ----------------------------
Roger Tomlinson Robert Arnot
Director of Marketing Chairman of the Board
DATE: 7/29/97 DATE: 8/7/97
---------------------- ----------------------
BY: /s/ Gerald W. Lear
----------------------------
Gerald Lear
President, C.E.O.
DATE: 8/7/97
----------------------
<PAGE>
Exhibit 21.01
List of Subsidiaries
State or Jurisdiction of
Incorporation or
Name Organization
I.C. Isaacs Europe, S.L. Spain
Isaacs Europe, Inc. Delaware
I.C. Isaacs (Far East) Limited Hong Kong
I.C. Isaacs & Company, L.P.(1) Delaware
Isaacs Design, Inc. Delaware
_______________
(1) I.C. Isaacs & Company, L.P. is a partnership. The partnership's general
partner is I.C. Isaacs & Company, Inc. and, upon the Reorganization, the
partnership's limited partner will be Isaacs Design, Inc., a wholly-owned
subsidiary of I.C. Isaacs & Company, Inc. See "Company Organization."
<PAGE>
Exhibit 23.01
CONSENT OF INDEPENDENT CERTIFIED
PUBLIC ACCOUNTANTS
To the Board of Directors
I.C. Isaacs & Company, Inc.
We hereby consent to the use in the Prospectus constituting a part of this
Registration Statement on Form S-1 of our reports dated March 31, 1997, except
for Note 9, the dates of which are May 15, 1997 and September 24, 1997, and Note
5 the date of which is September 30, 1997, relating to the consolidated
financial statements and schedule of I.C. Isaacs & Company, Inc.
We also consent to the reference to our firm under the caption "Experts" in
the Prospectus.
/s/ BDO Seidman, LLP
Washington, D.C.
October 3, 1997
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 5
<LEGEND>
This schedule contains summary financial information extracted from I.C. Isaacs
Company, Inc. consolidated balance sheets and consolidated statements of income
found on pages F-3 and F-4 of the Company's Form S-1 and is qualified in its
entirety by reference to such financial statements.
</LEGEND>
<MULTIPLIER> 1
<CURRENCY> U.S. DOLLARS
<S> <C> <C>
<PERIOD-TYPE> YEAR 6-MOS
<FISCAL-YEAR-END> DEC-31-1996 DEC-31-1997
<PERIOD-START> JAN-01-1996 JAN-01-1997
<PERIOD-END> DEC-31-1996 JUN-30-1997
<EXCHANGE-RATE> 1 1
<CASH> 938,799 1,503,654
<SECURITIES> 0 0
<RECEIVABLES> 17,242,990 26,170,164
<ALLOWANCES> (660,000) (700,000)
<INVENTORY> 0 0
<CURRENT-ASSETS> 12,693,618 50,486,730
<PP&E> 15,093,440 15,733,049
<DEPRECIATION> (12,693,618) (13,137,418)
<TOTAL-ASSETS> 37,256,640 55,116,189
<CURRENT-LIABILITIES> 16,605,158 31,098,414
<BONDS> 1,058,632 872,628
0 0
0 0
<COMMON> 604 604
<OTHER-SE> 19,391,973 22,865,003
<TOTAL-LIABILITY-AND-EQUITY> 37,256,640 55,116,189
<SALES> 118,655,253 77,709,554
<TOTAL-REVENUES> 118,655,253 77,709,554
<CGS> 84,421,651 52,020,970
<TOTAL-COSTS> 84,421,651 52,020,970
<OTHER-EXPENSES> 0 0
<LOSS-PROVISION> 1,193,693 553,895
<INTEREST-EXPENSE> 1,365,163 922,251
<INCOME-PRETAX> 7,962,659 7,843,119
<INCOME-TAX> 0 0
<INCOME-CONTINUING> 7,962,659 7,843,119
<DISCONTINUED> 0 0
<EXTRAORDINARY> 0 0
<CHANGES> 0 0
<NET-INCOME> 7,962,659 7,962,659
<EPS-PRIMARY> 0 0
<EPS-DILUTED> 0 0
</TABLE>
