Exhibit 10.1

 

 

 

EXECUTION COPY

 

 

PURCHASE AGREEMENT

 

by and among

 

SEQUENTIAL BRANDS GROUP, INC.,

 

ETPH ACQUISITION, LLC

 

and

 

B®AND MATTER, LLC

 

Dated as of March 28, 2013

 

 

 

 

 

TABLE OF CONTENTS

 

    Page     ARTICLE I Purchase and Sale of COMPANY INTERESTS 1       Section
1.1. Purchase and Sale of Company Interests 1 Section 1.2. Closing Statement;
Closing Payments 1 Section 1.3. Closing; Closing Deliverables 3 Section 1.4.
Withholding 3 Section 1.5. Tax Treatment of Payments 3       ARTICLE II
REPRESENTATIONS AND WARRANTIES OF SELLER 3       Section 2.1. Due Organization,
Good Standing and Power 3 Section 2.2. Authorization; Noncontravention 4 Section
2.3. Ownership of Company Interests; Capitalization of the Company 5 Section
2.4. Consents and Approvals 5 Section 2.5. Financial Statements; No Undisclosed
Liabilities 6 Section 2.6. Absence of Certain Changes 6 Section 2.7. Compliance
with Laws 7 Section 2.8. Permits 7 Section 2.9. Litigation 7 Section 2.10.
Employee Benefit Plans 8 Section 2.11. Labor Matters 9 Section 2.12. Tax Matters
10 Section 2.13. Intellectual Property 11 Section 2.14. Broker’s or Finder’s Fee
13 Section 2.15. Material Contracts 13 Section 2.16. Owned Real Property 14
Section 2.17. Affiliate Transactions 14 Section 2.18. Indebtedness 15 Section
2.19. Insurance 15 Section 2.20. Relationships with Customers of Licensees 15
Section 2.21. Confidential Information 15 Section 2.22. Independent
Investigation 15 Section 2.23. Exclusivity of Representations 16       ARTICLE
III REPRESENTATIONS AND WARRANTIES OF PURCHASER 16       Section 3.1. Due
Organization, Good Standing and Power 16 Section 3.2. Authorization;
Noncontravention 16 Section 3.3. Capitalization of Purchaser 17 Section 3.4.
Consents and Approvals 18 Section 3.5. Broker’s or Finder’s Fee 18 Section 3.6.
SEC Documents 18 Section 3.7. Independent Investigation 18 Section 3.8.
Exclusivity of Representations 19

 

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ARTICLE IV COVENANTS 19       Section 4.1. Further Assurances 19 Section 4.2.
Confidentiality 19 Section 4.3. Public Announcements 20 Section 4.4.
Notification of Certain Matters 20 Section 4.5. Company Member Litigation and
Bankruptcy Litigation 20 Section 4.6. Termination of Certain Arrangements 21
Section 4.7. Payments from Third Parties After Closing 21 Section 4.8.
Intellectual Property Rights Matters 21 Section 4.9. Settlement of Certain
Liabilities 22       ARTICLE V TAX MATTERS 22       Section 5.1. Tax Returns and
Payment of Taxes 22 Section 5.2. Controversies 23 Section 5.3. Allocation 24
Section 5.4. Post-Closing Access and Cooperation 24       ARTICLE VI SURVIVAL;
INDEMNIFICATION 24       Section 6.1. Survival of Representations, Warranties
and Covenants 24 Section 6.2. Indemnification of Purchaser 25 Section 6.3.
Indemnification of Seller 25 Section 6.4. Limitation on Indemnification 26
Section 6.5. Losses Net of Insurance 26 Section 6.6. Indemnification Procedure
27 Section 6.7. Third-Party Claims 28 Section 6.8. Sole Remedy/Waiver 29 Section
6.9. Release of the Indemnity Escrow Amount 29       ARTICLE VII MISCELLANEOUS
29       Section 7.1. Fees and Expenses 29 Section 7.2. Extension; Waiver 30
Section 7.3. Notices 30 Section 7.4. Entire Agreement 31 Section 7.5. Binding
Effect; Benefit; Assignment 31 Section 7.6. Amendment 32 Section 7.7.
Counterparts 32 Section 7.8. Applicable Law 32 Section 7.9. Severability 32
Section 7.10. Specific Enforcement 33 Section 7.11. Waiver of Jury Trial 33
Section 7.12. No Recourse 33 Section 7.13. Releases 34 Section 7.14. Rules of
Construction 35

 

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ARTICLE VIII DEFINITIONS 35       Section 8.1. Definitions 35 Section 8.2.
Additional Defined Terms 42 Section 8.3. Construction 43 Section 8.4. Exhibits,
the Seller Disclosure Letter and the Schedules 44 Section 8.5. Knowledge 45
Section 8.6. Seller and Purchaser Acknowledgement 45

 

 

EXHIBITS:

 

Exhibit A – Closing Estimate Statement

Exhibit B – Closing Bankruptcy Payments

Exhibit C – Other Closing Payments

Exhibit D – Open Matter Schedule

Exhibit E – Bankruptcy Settlement Agreement

Exhibit F – Escrow Agreement

Exhibit G – Intellectual Property Confirmatory Assignment Agreement

Exhibit H – Seller Closing Payments

 

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PURCHASE AGREEMENT

 

This PURCHASE AGREEMENT (this “Agreement”) is dated as of March 28, 2013, by and
among Sequential Brands Group, Inc., a corporation incorporated under the laws
of Delaware (“Purchaser”), ETPH Acquisition, LLC, a limited liability company
organized under the laws of Delaware (“Seller”), and, solely for purposes of
Section 7.13, B®and Matter, LLC, a limited liability company organized under the
laws of Delaware (the “Company”).

 

WITNESSETH:

 

WHEREAS, Seller owns all of the issued and outstanding equity interests of the
Company (the “Company Interests”);

 

WHEREAS, Purchaser desires to purchase from Seller, and Seller desires to sell
to Purchaser, the Company Interests, pursuant to the terms set forth in this
Agreement; and

 

WHEREAS, it is the intention of the parties hereto that, upon consummation of
the purchase and sale of the Company Interests pursuant to this Agreement,
Purchaser shall own all of the issued and outstanding equity interests of the
Company.

 

NOW, THEREFORE, in consideration of the premises and of the mutual covenants,
representations, warranties and agreements herein contained and of other good
and valuable consideration, the receipt and sufficiency of which are hereby
acknowledged, the parties, intending to be legally bound, agree as follows:

 

ARTICLE I

 

Purchase and Sale of COMPANY INTERESTS

 

Section 1.1.          Purchase and Sale of Company Interests. Upon the terms set
forth in this Agreement, Seller hereby sells, assigns, transfers and conveys to
Purchaser at the Closing, free and clear of all Liens (other than any
restriction on the transfer thereof under applicable securities Laws), and
Purchaser hereby purchases and acquires from Seller at the Closing, the Company
Interests.

 

Section 1.2.          Closing Statement; Closing Payments.

 

(a)          Seller has delivered to Purchaser a statement setting forth the
amount of the Closing Funded Indebtedness and the Company Transaction Expenses
as of the Closing Date, the identity of each Person owed Closing Funded
Indebtedness and/or Company Transaction Expenses and the amount thereof owed to
such Person (the “Closing Statement”), a copy of which is attached hereto as
Exhibit A.

 

(b)          On March 22, 2013, Seller caused the Company to pay, solely from
available cash on hand and without incurring any Indebtedness, on behalf of the
Seller and the Company (and in the case of amounts payable in connection with
the Bankruptcy Settlement Agreement and Bankruptcy Settlement Approval Order,
the defendants to the Bankruptcy Litigation), by wire transfer of immediately
available funds, the amounts specified in Exhibit B to the parties identified
therein.

 

 

 

  

(c)          At the Closing, Purchaser shall, in full consideration for the
purchase by Purchaser of the Company Interests: (i) pay to Seller the cash
portion of the Closing Payment by wire transfer of immediately available funds
to an account designated by Seller in writing to Purchaser prior to the Closing;
(ii) direct the Transfer Agent to issue the portion of the Closing Payment
consisting of the Payment Shares to and in the name of Seller; and (iii) make
the other payments to be made by Purchaser set forth in this Section 1.2.

 

(d)          At the Closing, Purchaser shall deposit (or cause to be deposited)
with the Escrow Agent the Indemnity Escrow Amount. The Escrow Agent shall
disburse the Indemnity Escrow Amount in accordance with Section 6.9 and the
Escrow Agreement.

 

(e)          Seller has delivered to Purchaser a duly executed payoff letter
from each holder of Closing Funded Indebtedness (each, a “Debt Payoff Letter”).
At the Closing, Purchaser shall pay (or cause to be paid) to the holders of such
Closing Funded Indebtedness the aggregate amount set forth in the Debt Payoff
Letters, in each case by wire transfer of immediately available funds pursuant
to written instructions provided therein.

 

(f)          Seller has delivered to Purchaser an invoice from each Person owed
any Company Transaction Expenses (each, an “Expense Invoice”), which Expense
Invoice (i) sets forth the amount required to pay all Company Transaction
Expenses owned to such Person through the Closing Date, and (ii) sets forth the
wire transfer instructions for the payment of such Company Transaction Expenses
to such Person. At the Closing, Purchaser shall pay (or cause to be paid) all
Company Transaction Expenses as set forth in such Expense Invoices, in each case
by wire transfer of immediately available funds pursuant to written instructions
provided therein (it being understood that any Company Transaction Expenses
payable in respect of a change of control bonus shall be paid through the
Company payroll at or after the Closing (as may be agreed with the recipient of
such bonus) and shall be subject to withholding and employment Taxes).

 

(g)          At the Closing, Purchaser shall pay, on behalf of Seller and the
Company, by wire transfer of immediately available funds, the amounts specified
in Exhibit C to the parties identified therein. Without limiting the foregoing,
from and after the Closing, Purchaser shall pay, perform and discharge when due,
and shall be solely responsible for, any payments or obligations of the Seller
and/or its Subsidiaries or the Company to any of the parties identified in
Exhibit C, whether related to the matters on Exhibit C or otherwise, other than
any such payments or obligations resulting from any arrangement between Seller
and/or any of its Subsidiaries, on the one hand, and any of the parties
identified in Exhibit C, on the other hand, entered into after the Closing.

 

(h)          At the Closing, Seller shall pay, by wire transfer of immediately
available funds, the amounts specified in Exhibit H to the parties identified
therein.

 

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Section 1.3.          Closing; Closing Deliverables.

 

(a)          The closing of the transactions contemplated by this Agreement (the
“Closing”) shall occur simultaneously with the execution and delivery of this
Agreement. The Closing shall be deemed to occur at 12:01 A.M. on the date
hereof. Such date herein is referred to as the “Closing Date”.

 

(b)          At the Closing, Seller shall deliver or cause to be delivered to
Purchaser:

 

(i)          a non-foreign person affidavit from Seller as required by Section
1445 of the Code;

 

(ii)         the Intellectual Property Confirmatory Assignment Agreement in the
form attached hereto as Exhibit G, duly executed by each party thereto; and

 

(iii)        a duly executed written resignation by Seller as the sole managing
member of the Company and termination by Seller of the Company’s limited
liability company agreement.

 

Section 1.4.          Withholding. Notwithstanding anything in this Agreement to
the contrary, Purchaser shall be entitled to withhold and deduct from the
consideration otherwise payable pursuant to this Agreement, such amounts as
Purchaser is required to withhold and deduct with respect to the making of such
payment under any provision of federal, state, local or foreign Tax Law. To the
extent that amounts are so withheld by Purchaser such withheld amounts shall be
treated for all purposes of this Agreement as having been paid to the recipients
in respect of which such deduction and withholding was made by Purchaser.

 

Section 1.5.          Tax Treatment of Payments. Any indemnification payments
made pursuant to Article VI shall be deemed to be, and each of Purchaser and
Seller shall (and Purchaser shall cause the Company to) treat such payments as,
an adjustment to the Purchase Price for all federal, state, local and foreign
income tax purposes.

 

ARTICLE II

 

REPRESENTATIONS AND WARRANTIES OF SELLER

 

Except as set forth in the disclosure letter delivered by Seller to Purchaser
concurrently with the execution of this Agreement (the “Seller Disclosure
Letter”), Seller hereby represents and warrants to Purchaser as of the date
hereof as follows:

 

Section 2.1.          Due Organization, Good Standing and Power.

 

(a)          The Company is a limited liability company duly organized, validly
existing and in good standing under the laws of the State of Delaware, and has
all requisite limited liability company power and authority to own, lease and
operate its properties and to carry on its business as now being conducted. The
Company is duly qualified or licensed to do business and is in good standing (or
the equivalent thereof) in each jurisdiction in which the property owned, leased
or operated by the Company, or the nature of the business conducted by the
Company, makes such qualification necessary, except where the failure to be so
qualified or licensed or in good standing has not had and would not reasonably
be expected to have, individually or in the aggregate, a Material Adverse
Effect. Seller has made available to Purchaser prior to the date hereof true and
complete copies of the Company’s certificate of formation and the Company’s
limited liability company agreement, in each case, as amended and in full force
and effect as of the date hereof.

 

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(b)          Seller is a limited liability company duly organized, validly
existing and in good standing under the laws of the State of Delaware, and has
all requisite limited liability company power and authority to own, lease and
operate its properties and to carry on its business as now being conducted,
except where the failure to be so organized, existing and in good standing or to
have such power and authority would not result in a material adverse effect on
its ability to consummate the Transactions.

 

Section 2.2.          Authorization; Noncontravention.

 

(a)          Seller has the requisite limited liability company power and
authority and has taken all limited liability company action necessary to
execute and deliver this Agreement and the other Transaction Documents to which
it is a party, to perform its obligations hereunder and thereunder and to
consummate the Transactions. The execution, delivery and performance by Seller
of this Agreement and the other Transaction Documents to which it is a party,
and the consummation by Seller of the Transactions, have been duly authorized
and approved by all necessary limited liability company action. No other limited
liability company action on the part of Seller is necessary to authorize the
execution, delivery and performance by Seller of this Agreement or the other
Transaction Documents to which it is a party and the consummation of the
Transactions. This Agreement has been, and the other Transaction Documents to
which Seller is a party, when executed will be, duly executed and delivered by
Seller, and assuming that this Agreement and other Transaction Documents to
which Seller is a party constitutes a valid and binding obligation of the other
parties thereto, constitute a valid and binding obligation of Seller enforceable
against Seller in accordance with their terms, except to the extent that their
enforceability may be subject to applicable bankruptcy, insolvency,
reorganization, moratorium or other similar Laws affecting the enforcement of
creditors’ rights generally and by general equitable principles.

 

(b)          The execution and delivery of this Agreement and the other
Transaction Documents to which Seller is a party do not, and the consummation of
the transactions contemplated by this Agreement and the other Transaction
Documents will not, (i) conflict with any of the provisions of the certificate
of formation or limited liability company agreement of Seller or the Company, in
each case, as amended to the date of this Agreement, (ii) subject to the
consents, approvals, authorizations, declarations, filings and notices referred
to in Section 2.4, conflict with or result in a breach of, or default under, any
Contract to which Seller or the Company or any of their respective Subsidiaries
is a party to or by which Seller or the Company or any of their respective
Subsidiaries or any of their respective properties or assets are bound
(including any Material Contract or IP License) or, (iii) subject to the
consents, approvals, authorizations, declarations, filings and notices referred
to in Section 2.4, contravene any Law or any Order currently in effect, which,
in the case of clauses (ii) and (iii) above, would reasonably be expected to
have, individually or in the aggregate, a Material Adverse Effect.

 

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Section 2.3.          Ownership of Company Interests; Capitalization of the
Company.

 

(a)          As of the date hereof, the authorized capital of the Company
consists of the Company Interests, all of which are issued and outstanding and
owned by the Seller, free and clear of all Liens (other than any restriction on
the transfer thereof under applicable securities Laws), and Seller is the record
and beneficial owner of the Company Interests.

 

(b)          All issued and outstanding equity interests of the Company
described in Section 2.3(a) have been duly authorized and validly issued and are
fully paid and nonassessable, and are not subject to any preemptive rights. No
other equity interests or securities of the Company are issued, reserved for
issuance or outstanding. The Company is not a party to any outstanding or
authorized option, warrant, right (including any preemptive right),
subscription, claim of any character, agreement, obligation, convertible or
exchangeable securities, or other commitments contingent or otherwise, relating
to the equity or voting interests in the Company, pursuant to which the Company
is or may become obligated to issue, deliver or sell or cause to be issued,
delivered or sold, any equity or voting interests in the Company or any
securities convertible into, exchangeable for, or evidencing the right to
subscribe for or acquire, any equity or voting interests in the Company. There
are no outstanding or authorized stock appreciation, phantom stock, profit
participation or similar rights with respect to the equity or voting interests
in the Company. The Company does not have any authorized or outstanding bonds,
debentures, notes or other Indebtedness the holders of which have the right to
vote (or convertible into, exchangeable for, or evidencing the right to
subscribe for or acquire securities having the right to vote) with the members
of the Company on any matter. There are no irrevocable proxies and no voting
agreements with respect to any equity or voting interests in the Company. There
are no restrictions of any kind that prevent or restrict the payment of
dividends or other distributions by the Company other than (i) those imposed by
the Laws of the State of Delaware and (ii) as set forth on Schedule 2.3(b) of
the Seller Disclosure Letter.

 

(c)          The Company does not own any equity interest in any Person.

 

Section 2.4.          Consents and Approvals. No consent, approval or
authorization of or filing with any Governmental Entity or any other Person must
be obtained or made in connection with (a) the execution and delivery of this
Agreement or any other Transaction Document or the performance thereunder by
Seller or (b) the consummation by Seller of the Transactions, except for, in
each case, (x) the consents, approvals, authorizations or filings set forth on
Schedule 2.4 of the Seller Disclosure Letter, which schedule shall set forth all
consents, approvals, authorizations, filings or waivers required under the IP
Licenses, and (y) other than consents required pursuant to any IP License, any
other consents, approvals, authorizations or filings which, if not made or
obtained, would not reasonably be expected to have, individually or in the
aggregate, a Material Adverse Effect, and the consents, approvals,
authorizations or filings set forth on Schedule 2.4 of the Seller Disclosure
Letter.

 

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Section 2.5.          Financial Statements; No Undisclosed Liabilities.

 

(a)          Seller has furnished Purchaser with (i) the audited balance sheet
of the Company as at December 31, 2011 and December 31, 2010 and the related
audited statements of income, member’s equity and cash flows for the fiscal
years ended December 31, 2011 and December 31, 2010, all certified by the
Company’s accountants, and (ii) the interim unaudited balance sheet of the
Company as at December 31, 2012 (the “Balance Sheet Date”) and the related
interim unaudited statements of income, member’s equity and cash flows for the
fiscal year then ended. The financial statements referred to above, including
the footnotes thereto (collectively, the “Financial Statements”), except as
described therein, and in the case of interim Financial Statements, except for
the absence of notes thereto and subject to normal year-end audit adjustments,
have been prepared in accordance with GAAP consistently followed throughout the
periods indicated.

 

(b)          The audited balance sheets of the Company referred to in
Section 2.5(a)(i) fairly present, in all material respects, the financial
position of the Company as at December 31, 2011 and December 31, 2010,
respectively, and the related audited statements of income, member’s equity and
cash flows fairly present, in all material respects, the results of the
operations, member’s equity and cash flows of the Company for the fiscal years
then ended. The unaudited balance sheet of the Company referred to in
Section 2.5(a)(ii) fairly presents, in all material respects, the financial
position of the Company as at the Balance Sheet Date and the related statements
of income, member’s equity and cash flows fairly present, in all material
respects, the results of the operations, member’s equity and cash flows of the
Company for the period indicated.

 

(c)          The Company does not have any claims or Liabilities of any kind,
except for (i) claims or Liabilities set forth in the unaudited Financial
Statements of the Company as at and for the twelve (12) fiscal month period
ended December 31, 2012, (ii) future executory Liabilities arising under any
Material Contract or IP License (other than as a result of breach thereof) and
(iii) accounts payable to trade creditors and accrued expenses, in each case,
incurred subsequent to the Balance Sheet Date in the ordinary course of business
consistent with past practice; and (iv) Liabilities set forth on Schedule 2.5(c)
of the Seller Disclosure Letter.

 

Section 2.6.          Absence of Certain Changes. Since the Balance Sheet Date
through the date hereof:

 

(a)          there has not been any event, circumstance, development, state of
facts, occurrence, change or effect which has had or would reasonably be
expected to have, individually or in the aggregate, a Material Adverse Effect;
and

 

(b)          other than as set forth on Schedule 2.6(b) of the Seller Disclosure
Letter, the Company has not:

 

(i)          declared, paid or set aside any dividend or made any distribution
with respect to any equity or voting interest in the Company;

 

(ii)         paid any Company Transaction Expenses;

 

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(iii)        increased the compensation payable (including wages, salaries,
bonuses or any other remuneration) or to become payable to, or made any bonus,
profit sharing, pension, retirement or insurance payment, distribution or
arrangement to or with, any officer, manager, director, employee, independent
contractor or agent of the Company,

 

(iv)        made any bonus, profit sharing, pension, retirement or insurance
payment, distribution or arrangement to or with any officer, manager, director,
employee, independent contractor or agent of the Company, except for payments
that were explicitly reflected or reserved against in the Financial Statements;

 

(v)         (A) delayed or extended the payment of any accounts payables beyond
the due date thereof, (B) caused or requested any amounts payable to the Company
under any Material Contract or IP License to be paid to the Company prior to the
due date applicable to such amount thereunder, or (C) wrote-off as uncollectible
any notes or accounts receivable;

 

(vi)        paid, discharged, settled or satisfied any actions or Liabilities,
other than (A) the Bankruptcy Litigation and (B) payments, discharges,
settlements or satisfactions of Liabilities in the ordinary course of business
consistent with past practice or explicitly reflected or reserved against in the
Financial Statements;

 

(vii)       made any loans, advances or capital contributions to, or investments
in, any other Person; or

 

(viii)      entered into any Contract or committed or agreed (whether or not
such Contract, commitment or agreement is legally binding) to do any of the
foregoing actions in this Section 2.6(b).

 

Section 2.7.          Compliance with Laws. Except as set forth on Schedule 2.7
of the Seller Disclosure Letter, the Company is not currently conducting, and
since December 31, 2009, has not conducted, its operations in violation of any
Law or Order applicable to the Company in any material respect. Since December
31, 2009, the Company has not received any written notice that any such
violation is being or may be alleged.

 

Section 2.8.          Permits. The Company possesses all material federal,
state, local and foreign permits, approvals, licenses, authorizations,
certificates, rights, exemptions and orders from Governmental Entities
(collectively, the “Permits”) that are necessary for the operation of the
business of the Company as presently conducted, or that are necessary for the
lawful ownership of its properties and assets. All such Permits are valid and
have not lapsed or been cancelled, terminated or withdrawn. The Company is in
compliance with all such Permits in all material respects.

 

Section 2.9.          Litigation. Except as set forth in Schedule 2.9 of the
Seller Disclosure Letter, there is no action, suit, proceeding at law or in
equity, or any arbitration or any administrative or other proceeding by, before
or against any Governmental Entity or any other Person, pending, or, to the
Knowledge of Seller, threatened, against or affecting the Company or any of its
properties, assets or rights, including the Company Intellectual Property or any
Employee Benefit Plan. The Company is not subject to any Order that restricts
the operation of its business or which has had or would reasonably be expected
to have, individually or in the aggregate, a Material Adverse Effect.

 

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Section 2.10.         Employee Benefit Plans.

 

(a)          Set forth in Schedule 2.10(a) of the Seller Disclosure Letter is an
accurate and complete list of each material employee benefit plan, within the
meaning of Section 3(3) of the Employee Retirement Income Security Act of 1974,
as amended, and the rules and regulations thereunder (“ERISA”), whether or not
subject to ERISA, and each stock option, stock appreciation right, restricted
stock, stock purchase, stock unit, performance share, incentive, bonus,
profit-sharing, savings, deferred compensation, health, medical, dental, life
insurance, disability, accident, supplemental unemployment or retirement,
employment, severance or salary or benefits continuation or fringe benefit plan,
program, arrangement, agreement or commitment (i) maintained by the Company or
to which the Company contributes (or has any obligation to contribute), has any
liability or is a party and (ii) under which any employee of the Company has any
right to benefits (collectively, the “Employee Benefit Plans”). No trade or
business (whether or not incorporated) which is treated as a single employer
together with the Company, within the meaning of Sections 414(b), (c), (m) or
(o) of the Code, maintains, contributes or has material liability with respect
to any employee benefit plan covered by Title IV of ERISA or subject to Section
412 of the Code or Section 302 of ERISA.

 

(b)          Except as set forth on Schedule 2.10(b) of the Seller Disclosure
Letter, each Employee Benefit Plan is in compliance with all applicable Laws
(including ERISA and the Code) and has been administered and operated in all
material respects in accordance with its terms, except for any failure to so
comply, administer or operate that could not, individually or in the aggregate,
reasonably be expected to result in a material liability of the Company.

 

(c)          Each Employee Benefit Plan which is intended to be “qualified”
within the meaning of Section 401(a) of the Code has received a favorable
determination letter from the IRS or is comprised of a master or prototype plan
that has received a favorable opinion letter from the IRS, and, to the Knowledge
of Seller, no event has occurred and no condition exists which could reasonably
be expected to result in the revocation of the qualified status of any such
plan.

 

(d)          The Company has no obligation to pay, gross up, or otherwise
indemnify any individual for any taxes imposed under Section 409A or Section
4999 of the Code. The Company has no obligation to any Person to cause any
Employee Benefit Plan to comply with Section 409A of the Code other than under
applicable Law.

 

(e)          No Employee Benefit Plan is covered by Title IV of ERISA or subject
to Section 412 of the Code or Section 302 of ERISA.

 

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(f)          All material payments have been timely made of all amounts which
the Company is required under applicable Law or under any Employee Benefit Plan
or related agreement to have paid as of the last day of the most recent fiscal
year of each Employee Benefit Plan ended prior to the date hereof or have been
timely reflected on the most recent consolidated balance sheet filed prior to
the date hereof or accrued in the account records of the Company, and the
Company has timely deposited all amounts withheld from employees into the
appropriate trusts or accounts.

 

(g)          Except as set forth on Schedule 2.10(g) of the Seller Disclosure
Letter, the execution of this Agreement and the consummation of the transactions
contemplated hereby do not constitute a triggering event under any Employee
Benefit Plan, policy, arrangement, statement, commitment or agreement, which
(either alone or upon the occurrence of any additional or subsequent event) will
or may result in any payment, “parachute payment” (as such term is defined in
Section 280G of the Code), severance, bonus, retirement or job security or
similar-type benefit, or increase any benefits or accelerate the payment,
vesting or funding of any benefits to any employee or former employee or
director of the Company or limit or restrict the right of the Company to merge,
amend or terminate any Employee Benefit Plan.

 

(h)          Except as set forth on Schedule 2.10(h) of the Seller Disclosure
Letter, to the Knowledge of Seller, the Company has classified all individuals
who perform services for it correctly under each Employee Benefit Plan, ERISA,
the Code and all other applicable Laws as common law employees, independent
contractors or leased employees.

 

(i)          The Company has made available or caused to be made available to
Purchaser true and complete copies of each Employee Benefit Plan, together with
all amendments thereto, including, in the case of any Employee Benefit Plan not
set forth in writing, a written description thereof, and, to the extent
applicable, (i) all current summary plan descriptions and any summaries of
material modifications, (ii) all current trust agreements, declarations of trust
and other documents establishing funding arrangements (and all amendments
thereto and the latest financial statements thereof), (iii) the most recently
completed annual report on IRS Form 5500-series, including any attachments
thereto, (iv) the most recent actuarial valuation report, (v) the most recent
determination letter and/or opinion letter, (vi) any materials relating to any
material government investigation or audit or any submissions under any
voluntary compliance procedures, and (vii) all material contracts and agreements
relating to each Employee Benefit Plan.

 

Section 2.11.         Labor Matters.

 

(a)          The Company is not subject to, bound by or currently negotiating
any collective bargaining or other agreement with any labor union. There are no
pending or, to the Knowledge of Seller, threatened strikes, lockouts, union
organization activities (including union organization campaigns or requests for
representation), pickets, material slowdowns, material stoppages, or material
labor disputes in respect of the business of the Company.

 

-9-

 

 

(b)          Schedule 2.11(b) of the Seller Disclosure Letter sets forth as of
the date hereof: (i) the name of each employee of the Company; (ii) each such
employee’s title or position; (iii) each such employee’s current annualized base
salary; and (iv) each such employee’s most recent year-end bonus and target
bonus (if applicable and determinable) for the year ending December 31, 2013.

 

Section 2.12.         Tax Matters.

 

(a)          Tax Returns. The Company and Seller have filed or caused to be
filed, or shall file or cause to be filed on or prior to the Closing, all
material returns, statements, forms and reports for Taxes (each, a “Return”)
that are required to be filed by, or with respect to, the income, assets or
operations of, the Company on or prior to the Closing (taking into account any
applicable extension of time within which to file).

 

(b)          Payment of Taxes. All material Taxes and material Tax liabilities
of, or with respect to the income, assets or operations of, the Company that are
due and payable on or prior to the Closing have been (or will be) timely paid on
or prior to the Closing or accrued on the books and records of the Company in
accordance with GAAP.

 

(c)          Other Tax Matters.

 

(i)          The Company is not currently and has not been the subject of an
audit or other examination relating to the payment of a material amount of Taxes
of the Company by the Tax authorities of any nation, state or locality (and no
such audit is pending or, to the Knowledge of Seller, contemplated) nor has the
Company received any written notices from any Taxing authority that such an
audit or examination is pending or relating to any issue which would reasonably
be expected to affect the Tax liability of, or with respect to the income,
assets or operations of, the Company.

 

(ii)         The Company is not presently contesting any material Tax liability
of, or with respect to the income, assets or operations of, the Company before
any Governmental Entity.

 

(iii)        All Taxes that the Company is (or was) required by Law to withhold
or collect in connection with amounts paid or owing to any employee, independent
contractor, creditor, member or other Person have been duly withheld or
collected, and have been timely paid over to the proper authorities to the
extent due and payable.

 

(iv)        There are no Tax-sharing, allocation, indemnification or similar
Contracts in effect as between the Company or any predecessor or Affiliate
thereof and any other party (including Seller and any predecessors or Affiliates
thereof) under which Purchaser or the Company could be liable for any Taxes or
other claims of any party.

 

(v)         The Company is and has always been since its formation properly
characterized as a disregarded entity for U.S. federal income tax purposes.

 

(vi)        The Company is not currently subject and has never been subject to a
requirement to pay Federal, state, local or foreign income Taxes (“Income
Taxes”) or to file Returns with respect to Income Taxes (“Income Tax Returns”),
including, but not limited to, Income Tax Returns with respect to any taxable
year or other taxable period ending on or before the Closing Date.

 

-10-

 

  

Section 2.13.         Intellectual Property.

 

(a)          Schedule 2.13(a) of the Seller Disclosure Letter is a complete and
accurate list of all domestic and foreign patents and patent applications,
trademark registrations and applications therefor, service mark registrations
and applications therefor, material unregistered trademarks and service marks,
Internet domain names and registered copyrights owned by the Company (together
with all other Intellectual Property owned, used, or held for use by the
Company, Seller or any of Seller’s Subsidiaries in connection with the business
of the Company, including all Intellectual Property in the name of Seller, any
Subsidiary of Seller and Ellen Tracy Inc., collectively the “Company
Intellectual Property”). Except as set forth in Schedule 2.13(a) of the Seller
Disclosure Letter, the Company exclusively owns, free and clear of all Liens,
Orders and other adverse claims with respect thereto, the Company Intellectual
Property set forth in Schedule 2.13(a) of the Seller Disclosure Letter. No
Affiliate of the Company or Seller, including Seller, is using, owns or has
rights to use any of the Company Intellectual Property or Company IT Systems,
and no such Affiliate shall own or have the right to use any of the Company
Intellectual Property or Company IT Systems following the Closing.

 

(b)          To the extent indicated on such Schedule, the Company Intellectual
Property listed in Schedule 2.13(a) of the Seller Disclosure Letter has been
duly registered in, filed in, or issued by the United States Patent and
Trademark Office (“USPTO”), United States Copyright Office (“USCO”), a duly
accredited and appropriate domain name registrar, the appropriate offices in the
various states of the United States or the appropriate offices of other
jurisdictions (foreign and domestic), and, to the Knowledge of Seller, each such
registration, filing, and issuance has not been terminated or repudiated and, to
the Knowledge of Seller, remains binding as of the date hereof. None of the
Company Intellectual Property listed in Schedule 2.13(a) of the Seller
Disclosure Letter has been cancelled, abandoned, or otherwise terminated, and
all renewal and maintenance fees in respect thereof that were due prior to the
date hereof have been duly paid. The Company has the exclusive right to file,
prosecute and maintain all applications and registrations with respect to the
Company Intellectual Property listed in Schedule 2.13(a) of the Seller
Disclosure Letter.

 

(c)          Schedule 2.13(c) of the Seller Disclosure Letter sets forth a
complete and accurate list of all licenses, sublicenses, and other Contracts
under which the Company grants or receives any rights to Intellectual Property,
including all Contracts that involve the Company Intellectual Property (whether
such Contracts are held in the name of the Company, Seller, any Affiliate of
Seller or the Company, or any predecessor to Seller or the Company or their
respective Affiliates, including CJ Apparel Group, LLC, Ellen Tracy LLC, Ellen
Tracy Inc., and Fashionology LLC), and all Intellectual Property settlement and
coexistence agreements (collectively, the “IP Licenses”); provided that for
purposes of scheduling only, it shall not be a breach of this provision if the
schedule omits licenses with respect to commercially available “off-the-shelf”
software applications with one time or annual license fees of less than ten
thousand dollars ($10,000).

 

(d)          Except as set forth on Schedule 2.13(d) of the Seller Disclosure
Letter, the Company either exclusively owns, free and clear of all Liens, or has
the valid right to use pursuant to an IP License to which the Company is a
party, all Company Intellectual Property. The Company Intellectual Property
constitutes all Intellectual Property necessary to conduct the business of the
Company in the manner in which it is presently conducted and presently
contemplated to be conducted in the future.

 

-11-

 

  

(e)          The conduct of the business of the Company (including the
marketing, licensing, sale or distribution of products and the general conduct
and operations of the business of the Company) does not violate, infringe or
misappropriate any Intellectual Property of any Person, including any right of
privacy or publicity, and is not libelous, slanderous, or defamatory. Except as
set forth in Schedule 2.13(e) of the Seller Disclosure Letter, since December
31, 2009, the Company has not received any written notice, threat, offer to
license, or claim from any Person challenging its right to use any Intellectual
Property. Except as set forth in Schedule 2.13(e) of the Seller Disclosure
Letter, there are no pending or, to the Knowledge of Seller, threatened,
Actions, or claims by any Person or Governmental Entity alleging that the
conduct of the business of the Company or the use of the Company Intellectual
Property by any Person violates, infringes, misuses, or misappropriates any
Intellectual Property owned by any Person. Except as set forth in
Schedule 2.13(e) of the Seller Disclosure Letter, there are no pending, or to
the Knowledge of Seller, threatened, Actions, or claims by any Person
challenging the validity of any Company Intellectual Property owned by the
Company or by Seller, any of Seller’s Subsidiaries or Ellen Tracy Inc. in
connection with the business of the Company (the “Owned Intellectual Property”)
(including Internet domain names) or that seeks to challenge or limit the
Company’s ownership of or right to enforce any of the Company Intellectual
Property. Except as set forth in Schedule 2.13(e) of the Seller Disclosure
Letter or non-final office actions received in the course of prosecution, there
are no interferences, cancellation proceedings, oppositions, or other contested
proceedings pending or, to the Knowledge of Seller, threatened, in the USPTO,
USCO, or any Governmental Entity relating to any pending application or issuance
with respect to the Owned Intellectual Property.

 

(f)          To the Knowledge of Seller no Person is infringing,
misappropriating or otherwise violating the Owned Intellectual Property nor has
the Company made any claim in writing of a violation, infringement, misuse, or
misappropriation by any Person (including any employee or former employee of
Seller or the Company) of its rights to, or in connection with any of the Owned
Intellectual Property, which claim is still pending, and there are no pending,
outstanding, threatened or imminent Actions asserting the same.

 

(g)          The Company owns or has a valid right to access and use all
computer systems, networks, hardware, software, databases, websites, and
equipment used to process, store, maintain and operate data, information, and
functions used in connection with the business of the Company (the “Company IT
Systems”). The Company IT Systems are adequate for, and operate and perform in
all material respects as required in connection with, the operation of the
business of the Company as currently conducted. The Company has implemented
commercially reasonable backup, security and disaster recover technology,
consistent in all material respects with applicable regulatory standards and
customary industry practices.

 

(h)          The Company has taken all commercially reasonable steps to protect
and maintain the confidentiality of all Trade Secrets related to the business of
the Company.

 

-12-

 

  

Section 2.14.         Broker’s or Finder’s Fee. No agent, broker, Person or firm
acting on behalf of Seller or the Company is, or shall be, entitled to any
broker’s fees, finder’s fees or commissions from the Company in connection with
this Agreement or any of the Transactions.

 

Section 2.15.         Material Contracts.

 

(a)          Schedule 2.15(a) of the Seller Disclosure Letter sets forth an
accurate and complete list as of the date hereof of the following Contracts (in
each case, other than any Employee Benefit Plan) (each such Contract required to
be set forth on such Schedule, a “Material Contract”) to which the Company is a
party or by which it is bound:

 

(i)          all Contracts that contain restrictions with respect to payment of
dividends or any other distribution in respect of the equity interests of the
Company;

 

(ii)         all Contracts involving a loan (other than accounts receivable
owing from trade debtors in the ordinary course of business) or advance to
(other than travel and entertainment advances to the employees of the Company
extended in the ordinary course of business), or investment in, any Person or
any Contract relating to the making of any such loan, advance or investment;

 

(iii)        all Contracts involving Indebtedness of the Company or granting or
evidencing a Lien on any property or asset of the Company, other than a
Permitted Lien, or under which any Person (other than the Company) has directly
or indirectly guaranteed Indebtedness of the Company;

 

(iv)        all Contracts involving the lease or sublease of real property;

 

(v)         all IP Licenses;

 

(vi)        any management service, consulting, financial advisory or any other
similar type Contract and all Contracts with investment or commercial banks;

 

(vii)       all Contracts limiting the ability of the Company to engage in any
line of business or to compete with any Person or in any geographical area;

 

(viii)      all Contracts (other than this Agreement and any agreement or
instrument entered into pursuant to this Agreement) with (A) Seller or any of
the members of Seller or their respective Affiliates or any Affiliate of the
Company or (B) any current or former officer, manager or director of the
Company;

 

(ix)         all Contracts (including letters of intent) (A) involving the
future disposition or acquisition of assets or properties involving
consideration of more than $50,000 individually or $250,000 in the aggregate, or
any merger, consolidation or similar business combination transaction, or (B)
relating to the acquisition by the Company of any operating business or the
capital stock or other equity interests of any other Person pursuant to which
the Company has continuing obligations as of the date hereof;

 

-13-

 

  

(x)          all Contracts establishing any joint venture, partnership,
strategic alliance, joint development or similar arrangement;

 

(xi)         all Contracts involving any resolution or settlement of any actual
or threatened litigation, arbitration, claim or other dispute;

 

(xii)        all Contracts (A) for the employment of any officer, individual
employee or other Person on a full-time or consulting basis who cannot be
dismissed immediately without notice and without liability or obligation of any
kind whatsoever in excess of $50,000 and (B) Contracts requiring severance
payments or payments upon a change-in-control;

 

(xiii)       all Contracts that involve the performance of services for, or
delivery of goods or materials to, the Company during the twelve (12) month
period immediately prior to the date hereof of an amount or value in excess of
$50,000; and

 

(xiv)      all other Contracts that impose any direct or indirect payment
obligation of more than $50,000 in the aggregate over the life of such Contract.

 

(b)          Each Material Contract has not been terminated or been repudiated.
Each Material Contract is in full force and effect and is the legal, valid and
binding obligation of the Company and, to the Knowledge of Seller, each of the
other parties thereto, enforceable in accordance with the terms thereof, except
to the extent that its enforceability may be subject to applicable bankruptcy,
insolvency, fraudulent conveyance, reorganization, moratorium and other similar
Laws relating to or affecting creditors’ rights generally, general equitable
principles (whether considered in a proceeding in equity or at law) or the
implied covenant of good faith and fair dealing. Except as set forth in
Schedule 2.15(b) of the Seller Disclosure Letter, there exists no default or
event of default, nor any event, occurrence, condition or act (including the
sale and transfer of the Company Interests contemplated hereby) which, with the
giving of notice, the lapse of time or the happening of any other event or
condition, would become a default or event of default thereunder with respect to
any Material Contract other than any such default, event of default, event,
occurrence, condition or act which has not had and would not reasonably be
expected to have, individually or in the aggregate, a Material Adverse Effect.
To the Knowledge of Seller, all of the covenants to be performed by any other
party to any Material Contract set forth in Schedule 2.15(a) of the Seller
Disclosure Letter (or required to be set forth in Schedule 2.15(a) of the Seller
Disclosure Letter) have been fully performed in all material respects.

 

Section 2.16.         Owned Real Property. The Company does not own any interest
in real property.

 

Section 2.17.         Affiliate Transactions. Except as set forth on
Schedule 2.17 of the Seller Disclosure Letter and except with respect to
compensation and benefits arrangements with the Company’s employees under the
Employee Benefit Plans, there are no Contracts or Liabilities between the
Company, on the one hand, and Seller or any of its members or Subsidiaries, on
the other hand.

 

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Section 2.18.         Indebtedness. Schedule 2.18 of the Seller Disclosure
Letter sets forth a true and complete description (including the amount) of all
of the outstanding Indebtedness of the Company.

 

Section 2.19.         Insurance. Set forth in Schedule 2.19 of the Seller
Disclosure Letter is an accurate and complete list as of the date hereof of all
material insurance policies which cover the Company or its business, properties,
assets or employees (including self-insurance). Such policies are valid, binding
and enforceable, all premiums thereon have been paid, and the Company is
otherwise in compliance with the terms and provisions of such policies, other
than any such non-compliance which has not had and would not reasonably be
expected to have, individually or in the aggregate, a Material Adverse Effect or
result in the cancellation of, any such policy.

 

Section 2.20.         Relationships with Customers of Licensees. No material
customer of any licensee under any IP License has, during the six (6) months
prior to the date hereof, notified the Company or Seller or, to the Knowledge of
Seller, such licensee, that such customer intends (a) to cancel or otherwise
modify in any material respect its relationship with such licensee, or (b) to
decrease or limit its ongoing commercial relationship with such licensee.

 

Section 2.21.         Confidential Information. No Confidential Information has
been disclosed to any member of Seller (other than to such members who are
officers or managers of the Company or Seller and in such capacity), other than
information that is subject to confidentiality obligations contained in Seller’s
limited liability company agreement and periodic financial statements for the
Company consisting of balance sheets and related statements of income, member’s
equity and cash flows.

 

Section 2.22.         Independent Investigation. Seller acknowledges and agrees
that (a) except for the specific representations and warranties of Purchaser
contained in Article III, none of Purchaser, its Affiliates or any of their
respective stockholders, controlling persons or Representatives makes or has
made, and Seller is not relying on, any representation or warranty, either
express or implied, (i) with respect to Purchaser or its business, operations,
technology, assets, liabilities, results of operations, financial condition,
prospects, projections, budgets, estimates or operational metrics, or (ii) as to
the accuracy or completeness of any of the information (including any statement,
document or agreement delivered pursuant to this Agreement and any financial
statements and any projections, estimates or other forward-looking information)
provided or otherwise made available to Seller, the Company or any of their
respective Affiliates, members or Representatives and (b) none of Purchaser or
its Affiliates or any of their respective stockholders, controlling Persons or
Representatives shall have any liability or responsibility whatsoever to Seller
or its Affiliates, members or Representatives on any basis (including in
contract or tort, at law or in equity, under federal or state securities Laws or
otherwise) based upon any information provided or made available, or statements
made (or any omissions therefrom), to Seller, the Company or their respective
Affiliates, members or Representatives, except as and only to the extent
expressly set forth in this Agreement.

 

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Section 2.23.         Exclusivity of Representations. Except as and to the
extent expressly set forth in this Article II, Seller makes no representations
or warranties, express or implied, with respect to itself, the Company, or any
of their businesses, assets or liabilities, to Purchaser or any other Person,
and Seller hereby disclaims all liability and responsibility for any other
representation or warranty made, communicated, or furnished to Purchaser or any
of its Affiliates, Representatives or financing sources.

 

ARTICLE III

 

REPRESENTATIONS AND WARRANTIES OF PURCHASER

 

Except as disclosed in Purchaser’s Annual Report on Form 10-K for the Fiscal
Year Ended December 31, 2011 and any Purchaser SEC Reports filed after December
31, 2011 and prior to the date hereof (excluding any risk factor disclosure and
disclosure included in any “forward-looking statements” disclaimer or other
statements included therein that are predictive, forward-looking, non-specific
or primarily cautionary in nature (but including any specific factual
information contained therein)), Purchaser represents and warrants to Seller as
follows:

 

Section 3.1.          Due Organization, Good Standing and Power. Purchaser is a
corporation duly organized, validly existing and in good standing under the laws
of the State of Delaware, and has all requisite corporate power and authority to
own, lease and operate its properties and to carry on its business as now being
conducted. Purchaser is duly qualified or licensed to do business and is in good
standing (or the equivalent thereof) in each jurisdiction in which the property
owned, leased or operated by Purchaser, or the nature of the business conducted
by Purchaser makes such qualification necessary, except where the failure to be
so qualified to licensed or in good standing would not have a material adverse
effect on the ability of Purchaser to consummate the Transactions. Purchaser has
made available to Seller prior to the date hereof true and complete copies of
Purchaser’s certificate of incorporation and by-laws (or equivalent governing
documents), in each case, as amended and in full force and effect as of the date
hereof.

 

Section 3.2.          Authorization; Noncontravention.

 

(a)          Purchaser has the requisite corporate power and authority and has
taken all corporate action necessary to execute and deliver this Agreement and
the other Transaction Documents to which it is a party, to perform its
obligations hereunder and thereunder and to consummate the Transactions. The
execution, delivery and performance by Purchaser of this Agreement and the other
Transaction Documents to which it is a party, and the consummation by Purchaser
of the Transactions, have been duly authorized and approved by all necessary
corporate action. No other corporate action on the part of Purchaser is
necessary to authorize the execution, delivery and performance by Purchaser of
this Agreement or the other Transaction Documents to which it is a party and the
consummation of the Transactions. This Agreement has been, and the other
Transaction Documents to which Purchaser is a party, when executed will be, duly
executed and delivered by Purchaser, and assuming that this Agreement and the
other Transaction Documents to which Purchaser is a party constitute a valid and
binding obligation of the other parties thereto, constitute a valid and binding
obligation of Purchaser enforceable against Purchaser in accordance with their
terms, except to the extent that their enforceability may be subject to
applicable bankruptcy, insolvency, reorganization, moratorium or other similar
laws affecting the enforcement of creditors’ rights generally and by general
equitable principles.

 

-16-

 

  

(b)          The execution and delivery of this Agreement and the other
Transaction Documents to which Purchaser is a party do not, and the consummation
of the transactions contemplated by this Agreement and the other Transaction
Documents will not, (i) conflict with any of the provisions of Purchaser’s
certificate of incorporation or by-laws, in each case, as amended to the date of
this Agreement, (ii) subject to the consents, approvals, authorizations,
declarations, filings and notices referred to in Section 3.4, conflict with or
result in a breach of, or default under, any material contract to which
Purchaser is a party to, or (iii) subject to the consents, approvals,
authorizations, declarations, filings and notices referred to in Section 3.4,
contravene any Law or any Order currently in effect, which, in the case of
clauses (ii) and (iii) above, would reasonably be expected to have a material
adverse effect on the ability of Purchaser to consummate the Transactions.

 

Section 3.3.          Capitalization of Purchaser. As of the date hereof, the
authorized capital stock of Purchaser consists of (x) 150,000,000 shares of
Purchaser Common Stock and (y) 10,000,000 shares of preferred stock, par value
$0.001 per share, of which 19,400 shares have been designated as Purchaser
Preferred Stock. As of the close of business on March 15, 2013 there were
outstanding (a) 7,493,343 shares of Purchaser Common Stock, (b) 14,500 shares of
Purchaser Preferred Stock, (c) options to purchase an aggregate of 397,000
shares of Purchaser Common Stock (of which options to purchase an aggregate of
351,760 shares of Purchaser Common Stock were exercisable), and (d) warrants to
purchase an aggregate of 2,250,762 shares of Purchaser Common Stock.
Additionally, as of March 15, 2013, there were zero (0) shares of Purchaser
Common Stock held by Purchaser as treasury stock. All outstanding shares of
capital stock or other equity securities of Purchaser are, and all shares of
capital stock of Purchaser that may be issued pursuant to the options and
warrants set forth in this Section 3.3 when issued in accordance with the
respective terms thereof will be, and Payment Shares when issued will be, in
each case, duly authorized, validly issued and fully paid and non-assessable. No
shares of capital stock or other equity interests of Purchaser are entitled to
or have been issued in violation of any preemptive rights. Except as set forth
above, the Purchaser Convertible Debt and that certain stockholders agreement,
dated as of February 22, 2012, among People’s Liberation, Inc. (n/k/a
Purchaser), Colin Dyne, TCP WR Acquisition, LLC and the other parties thereto,
(i) no other equity securities of Purchaser are issued, reserved for issuance or
outstanding, (ii) Purchaser is not a party to any outstanding or authorized
option, warrant, right (including any preemptive right), subscription, claim of
any character, agreement, obligation, convertible or exchangeable securities, or
other commitments contingent or otherwise, relating to the equity or voting
interests in Purchaser, pursuant to which Purchaser is or may become obligated
to issue, deliver or sell or cause to be issued, delivered or sold, any equity
or voting interests in Purchaser or any securities convertible into,
exchangeable for, or evidencing the right to subscribe for or acquire, any
equity or voting interests in Purchaser, (iii) there are no outstanding or
authorized stock appreciation, phantom stock, profit participation or similar
rights with respect to the equity or voting interests in Purchaser, (iv)
Purchaser does not have any authorized or outstanding bonds, debentures, notes
or other Indebtedness the holders of which have the right to vote (or
convertible into, exchangeable for, or evidencing the right to subscribe for or
acquire securities having the right to vote) with the members of Purchaser on
any matter, and (v) there are no irrevocable proxies and no voting agreements
with respect to any equity or voting interests in Purchaser.

 

-17-

 

 

Section 3.4.          Consents and Approvals. No consent, approval or
authorization of or filing with any Governmental Entity or any other Person must
be obtained or made in connection with (a) the execution and delivery of this
Agreement or any other Transaction Document by Purchaser or (b) the consummation
by Purchaser of the Transactions, except for, in each case, any consents,
approvals, authorizations or filings which, if not made or obtained, would not
reasonably be expected to have, individually or in the aggregate, a material
adverse effect on the ability of Purchaser to consummate the Transactions.

 

Section 3.5.          Broker’s or Finder’s Fee. No agent, broker, Person or firm
acting on behalf of Purchaser is or shall be entitled to any fee, commission or
broker’s or finder’s fees in connection with this Agreement or any of the
transactions contemplated hereby from any of the other parties hereto or from
any Affiliate of the other parties hereto.

 

Section 3.6.          SEC Documents. Purchaser has timely filed with or
furnished to the SEC all forms, reports, proxy statements, schedules,
registration statements and other documents (including all exhibits, schedules
and annexes thereto) required to be filed or furnished by it under the
Securities Act or the Exchange Act since January 1, 2012 (collectively, the “SEC
Reports”). Together with the disclosures set forth on Schedule 3.6, as of its
filing date, and if amended, as of the date of the last amendment prior to the
date of this Agreement, each SEC Report complied as to form in all material
respects with the applicable requirements of the Securities Act, the Exchange
Act and the related rules and regulations promulgated thereunder, as the case
may be and did not contain any untrue statement of a material fact or omit to
state a material fact required to be stated therein or necessary in order to
make the statements therein, in light of the circumstances under which they were
made, not misleading.

 

Section 3.7.          Independent Investigation. Purchaser acknowledges and
agrees that (a) except for the specific representations and warranties of Seller
contained in Article II (including any that are subject to the Seller Disclosure
Letter), none of Seller, its Affiliates or any of its members, controlling
persons or Representatives makes or has made, and Purchaser is not relying on,
any representation or warranty, either express or implied, (i) with respect to
the Company, Seller or their respective businesses, operations, technology,
assets, liabilities, results of operations, financial condition, prospects,
projections, budgets, estimates or operational metrics, or (ii) as to the
accuracy or completeness of any of the information (including any statement,
document or agreement delivered pursuant to this Agreement and any financial
statements and any projections, estimates or other forward-looking information)
provided (including in any management presentations, information or descriptive
memorandum, certain “data rooms” maintained by Seller, its Affiliates or any of
its members, controlling Persons or Representatives, supplemental information or
other materials or information with respect to any of the above) or otherwise
made available to Purchaser or any of its Affiliates, stockholders or
Representatives and (b) none of Seller, its Affiliates or any of its members,
controlling Persons or Representatives shall have any liability or
responsibility whatsoever to Purchaser, its Affiliates, stockholders or
Representatives on any basis (including in contract or tort, at law or in
equity, under federal or state securities Laws or otherwise) based upon any
information provided or made available, or statements made (or any omissions
therefrom), to Purchaser, its Affiliates, stockholders or Representatives,
except as and only to the extent expressly set forth in this Agreement.

 

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Section 3.8.          Exclusivity of Representations. Except as and to the
extent expressly set forth in this Article III, Purchaser makes no
representations or warranties, express or implied, with respect to Purchaser or
any of its businesses, assets or liabilities, to Seller or any other Person, and
Purchaser hereby disclaims all liability and responsibility for any other
representation or warranty made, communicated, or furnished to Seller or its
Affiliates or Representatives.

 

ARTICLE IV

COVENANTS

 

Section 4.1.          Further Assurances. On and after the Closing Date, and at
the reasonable request of any party hereto and at such requesting party’s
expense, any other party shall, and shall cause its Affiliates to, cooperate and
use its commercially reasonable efforts to take, or cause to be taken, (a) all
appropriate action, to execute and deliver, or cause to be executed and
delivered, all such documents and instruments and (b) all such further or other
actions as the requesting party may reasonably deem necessary or desirable to
evidence and effectuate the transactions contemplated by this Agreement.

 

Section 4.2.          Confidentiality.

 

(a)          Seller and Purchaser acknowledge and agree that, effective upon the
Closing, the Confidentiality Agreement by and between Seller and Purchaser,
dated May 3, 2012 (the “Confidentiality Agreement”), has been be terminated and
is no longer binding and has no further force or effect; provided, however, that
the non-use and non-disclosure provisions contained in the Confidentiality
Agreement to the extent related to Seller and its Subsidiaries (other than the
Company) shall survive the Closing in accordance with the terms of the
Confidentiality Agreement.

 

(b)          Seller acknowledges that it is in possession of Confidential
Material concerning the Company and its business and operations. From and after
the date hereof, Seller shall, and shall cause its Affiliates and
Representatives to, treat confidentially and not disclose all or any portion of
such Confidential Material and not use such Confidential Material for any
purpose. Seller acknowledges and agrees that such Confidential Material is
proprietary and confidential in nature and may not be disclosed to any other
Person, and that Seller shall be responsible for any disclosure by any other
Person. If Seller or any of its Affiliates or Representatives are requested or
required to disclose any of the Confidential Material (whether by deposition,
interrogatory, request for documents, subpoena, civil investigative demand or
similar process), Seller shall, or shall cause such Affiliate or Representative,
to provide Purchaser with prompt written notice of such request (and consult
with Purchaser about its intention to make, and the proposed contents of, such
disclosure) so that Purchaser may seek an appropriate protective order or other
appropriate remedy, and shall, if requested by Purchaser, use its commercially
reasonable efforts (at Purchaser’s sole cost and expense) to avoid such
disclosure. At any time that such protective order or remedy has not been
obtained, Seller or such Affiliate or Representative may disclose only that
portion of the Confidential Material which such Person is legally required to
disclose or of which disclosure is required to avoid sanction for contempt or
any similar sanction, and Seller shall, if requested by Purchaser after notice
thereof, exercise its commercially reasonable efforts, at Purchaser’s sole cost
and expense, to obtain assurance that confidential treatment will be accorded to
such Confidential Material so disclosed. Notwithstanding anything to the
contrary in this Agreement, Seller and its Affiliates may use and disclose any
Confidential Information with respect to any Action arising out of or related to
this Agreement or the Transactions, provided that Seller shall use its
commercially reasonable efforts to obtain an appropriate confidentiality order
with respect to such Confidential Information.

 

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(c)          From and after the date hereof, Seller agrees to use its
commercially reasonable efforts to enforce the confidentiality provisions
contained in its limited liability company agreement.

 

Section 4.3.          Public Announcements. Each party hereto shall (a) consult
with the other parties hereto before issuing any press release or otherwise
making any public statement with respect to the transactions contemplated by
this Agreement, (b) provide to the other parties hereto for review a copy of any
such press release or public statement and (c) not issue any such press release
or make any such public statement prior to such consultation and review and the
receipt of the prior consent of Purchaser and Seller, unless required by
applicable Law or the regulations of any applicable stock exchange.

 

Section 4.4.          Notification of Certain Matters. From the date hereof
through (and including) the Claim Expiration Date, Seller shall promptly notify
Purchaser of (a) any material actions, suits, claims or proceedings in
connection with the transactions contemplated by this Agreement threatened in
writing (and received by Seller or any of its Subsidiaries) against the Company
or Purchaser, (b) any notice or other communication received by Seller or any of
its Subsidiaries relating to a default or event that, with notice or lapse of
time or both, would become a default under any IP License or Contract disclosed
(or required to be disclosed) in Schedule 2.15 of the Seller Disclosure Letter,
and (c) any notice or other communication received by Seller or any of its
Subsidiaries from any Person alleging that the consent of such Person was
required in connection with the transactions contemplated by this Agreement, in
each case of clauses (a), (b) and (c) to the extent such notices or other
communications are received after the date hereof.

 

Section 4.5.          Company Member Litigation and Bankruptcy Litigation. From
the date hereof through (and including) the Claim Expiration Date, Seller shall
(a) promptly notify Purchaser of (i) any Action commenced (or threatened in
writing) after the Closing by any member of Seller against Seller, the Company,
Purchaser and/or their respective Representatives arising from or relating to
this Agreement, any other Transaction Document or any of the Transactions (a
“Member Litigation”), and (ii) any developments after the Closing in respect of
the Bankruptcy Proceedings which would reasonably be expected to adversely
affect the Company, and (b) not settle any Member Litigation or any other Action
in connection with the Bankruptcy Proceedings, in each case in a manner which is
adverse to the Company or Purchaser without Purchaser’s prior written consent
(not to be unreasonably withheld, conditioned or delayed).

 

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Section 4.6.          Termination of Certain Arrangements. Seller and Purchaser
acknowledge and agree that, upon the Closing, that certain consent, dated
December 19, 2012, made by the Company and executed by Purchaser, shall
terminate and that neither the Company nor any other Person (including the “BM
Indemnified Parties” (as defined therein)) shall have any further rights or
obligations thereunder; provided, that section 7 thereof shall survive such
termination and that Seller shall be deemed to be a third party beneficiary of
such section. Effective upon the Closing, Seller hereby terminates the
arrangement between Seller and the Company described in item 1 on Schedule 2.17
of the Seller Disclosure Letter and acknowledges and agrees that the Company has
no further Liability to Seller under such arrangement (or any other arrangement
pursuant to which the Company is required to pay any amounts to Seller).

 

Section 4.7.          Payments from Third Parties After Closing. In the event
that Seller or any of its Subsidiaries receives any payment from a third party
after the Closing due to the Company, Seller shall, or shall cause such
Subsidiary to, forward such payment, as promptly as practicable, to the Company.
In the event that Purchaser or any of their respective Subsidiaries receives any
payment from a third party after the Closing due to Seller, Purchaser shall, or
shall cause such Subsidiary to, forward such payment, as promptly as
practicable, to Seller.

 

Section 4.8.          Intellectual Property Rights Matters. From and after the
Closing, to the extent that any Company Intellectual Property, including the
Company Intellectual Property set forth on Schedule 4.8, is not in the current
legal name of the Company (including any asset or license agreement that is used
by or in connection with the business of the Company but that is in the name of
Seller, any Affiliate of Seller or the Company, or any predecessor to Seller or
the Company or their respective Affiliates), is subject to a chain of title
defect, or is subject to any form of Lien (other than an IP License), Seller
shall, and shall cause each of its Subsidiaries to, cooperate with and assist
the Company and Purchaser in their preparation, execution, filing and
recordation of all instruments and documents necessary to cure such title
defects, provide for current ownership of the asset by the Company (or current
right to use the asset pursuant to an IP License in the name of the Company) and
remove the Lien (other than an IP License) in such Company Intellectual Property
as promptly as practicable (all such actions, the “IP Title Defect Correction
Actions”). Seller and each of its Subsidiaries shall be responsible for and pay
its own expenses incurred as a result of such cooperation and assistance in
connection with any IP Title Defect Correction Actions taken by the Company
and/or Purchaser; provided, however, that Seller and its Subsidiaries shall not
be responsible for any filing fees or costs due to any Governmental Entity in
connection with any IP Title Defect Correction Action nor shall Seller and its
Subsidiaries be responsible for any legal costs or expenses incurred by the
Company and/or Purchaser in connection with the preparation, filing and
recordation of instruments and documents with any Governmental Entity as part of
an IP Title Defect Correction Action.

 

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Section 4.9.          Settlement of Certain Liabilities. From and after the
Closing Date, Seller shall in good faith, through counsel of its choosing, use
its commercially reasonable efforts to negotiate and settle on behalf of the
Company all of the matters set forth in Exhibit D (the “Open Matter”). Purchaser
shall cooperate and use its commercially reasonable efforts to take, or cause to
be taken, all reasonable and appropriate action to assist Seller in such
efforts. Each of Seller and Purchaser shall bear their own fees and expenses
incurred in connection with negotiating and implementing such settlement of the
Open Matter. Any settlement agreement with respect to the Open Matter (the “Open
Matter Settlement Agreement”) shall be in writing, provide for a full and
unconditional release of the Company and Purchaser from any Liabilities relating
to the Open Matter, and otherwise be in form and substance reasonably
satisfactory to Purchaser. Purchaser shall promptly pay when due (a) any
settlement fee or other payment required pursuant to the terms of the Open
Matter Settlement Agreement and (b) if a settlement cannot be reached, any
amounts payable by the Company after the date hereof in connection with the Open
Matter (any such settlement fee, other payment or amounts payable, the “Open
Matter Payments”); provided, that notwithstanding the foregoing, Purchaser shall
not be required to pay more than the amount set forth as item 1 on Schedule 4.9
in the aggregate pursuant to this sentence, and Seller shall be responsible for
and pay any remaining balance of the Open Matter Payments. To the extent that
Seller settles the Open Matter in accordance with this Section 4.9 for an
aggregate amount which is less than the amount set forth as item 2 on
Schedule 4.9, Purchaser shall reasonably promptly thereafter pay to Seller an
amount determined in accordance with item 3 of Schedule 4.9.

 

ARTICLE V

 

TAX MATTERS

 

Section 5.1.          Tax Returns and Payment of Taxes. 

 

(a)          Seller shall have the authority and obligation to prepare, or cause
to be prepared, all Returns of the Company that are due with respect to any
taxable year or other taxable period ending on or before the Closing Date. To
the extent relating to non-Income Taxes, such Returns shall be prepared by
treating items on such Returns in a manner consistent with the past practices of
the Company with respect to such items. If Purchaser consents to such non-Income
Tax Returns (which consent shall not be unreasonably withheld, conditioned or
delayed) Purchaser shall execute and file such Returns as prepared by Seller. In
addition, Seller shall pay to Purchaser, at least five (5) days prior to the due
date, any amount due and payable on such Returns.

 

(b)          Except as provided in Section 5.1(a), Purchaser shall have the
exclusive authority and obligation to prepare and timely file, or cause to be
prepared and timely filed, all Returns of the Company with respect to any
taxable period ending after the Closing Date.

 

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(c)          All Taxes and Tax liabilities with respect to the income, property
or operations of the Company that relate to the Overlap Period shall be
apportioned between Seller, on the one hand, and Purchaser, on the other hand,
as follows: (i) in the case of Taxes other than income, sales and use and
withholding Taxes, on a per-diem basis, and (ii) in the case of income, sales
and use and withholding Taxes, as determined from the books and records of the
Company as though the taxable year of the Company terminated at the close of
business on the Closing Date. Seller shall be liable for Taxes of the Company
that are attributable to the portion of the Overlap Period ending on and
including the Closing Date, and shall pay such amounts to Purchaser on or before
five (5) days prior to the due date of such Taxes.

 

(d)          All transfer, sales and use, registration, stamp and similar Taxes
imposed in connection with any transaction that occurs pursuant to this
Agreement shall be borne solely by Seller.

 

Section 5.2.          Controversies.

 

(a)          Purchaser shall promptly notify Seller upon receipt by Purchaser or
any Affiliate of Purchaser (including the Company after the Closing Date) of
written notice of any inquiries, claims, assessments, audits or similar events
with respect to Taxes relating to a taxable period ending on or prior to the
Closing Date for which the Company or Seller may be liable under this Agreement
(any such inquiry, claim, assessment, audit or similar event, a “Tax Matter”).
Seller, or its Representative, at Seller’s sole expense, shall have the
authority to represent the interests of the Company with respect to any Tax
Matter before the IRS, any other taxing authority or any other Governmental
Entity and shall have the right to control the defense, compromise or other
resolution of any Tax Matter, including responding to inquiries, filing Tax
Returns and contesting, defending against and resolving any assessment for
additional Taxes or notice of Tax deficiency or other adjustment of Taxes of, or
relating to, a Tax Matter; provided, that Seller and its Affiliates shall not
enter into any settlement of or otherwise compromise any Tax Matter relating to
non-Income Taxes that adversely affects or may adversely affect the Tax
liability of Purchaser or the Company or any of their respective Subsidiaries or
Affiliates for any period ending after the Closing Date, including the portion
of the Overlap Period that is after the Closing Date, without the prior written
consent of Purchaser, which consent shall not be unreasonably withheld,
conditioned or delayed. Seller shall keep Purchaser fully and timely informed
with respect to the commencement, status and nature of any Tax Matter relating
to non-Income Taxes. Seller shall, in good faith, allow Purchaser to make
comments to Seller regarding the conduct of or positions taken in any such
proceeding relating to non-Income Taxes.

 

(b)          Except as otherwise provided in Section 5.2(a), or if Seller does
not elect to control a proceeding pursuant to Section 5.2(a), Purchaser shall
have the sole right to control any audit or examination by any Tax authority,
initiate any claim for refund, amend any Return, and contest, resolve and defend
against any assessment for additional Taxes, notice of Tax deficiency or other
adjustment of Taxes of or relating to, the income, assets or operations of the
Company for all taxable periods.

 

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Section 5.3.          Allocation. Seller shall prepare an allocation of the
Purchase Price among the assets of the Company in accordance with Section 1060
of the Code. Seller shall deliver such allocation to Purchaser within sixty (60)
days after the Closing Date. If within sixty (60) days of receipt of the
allocation schedule, Purchaser notifies Seller in writing that Purchaser objects
to one or more items reflected in the allocation schedule, Seller and Purchaser
shall negotiate in good faith to resolve such dispute. If the parties fail to
agree with twenty (20) days of Purchaser’s written notice, then the disputed
items shall be resolved by an Accounting Firm, whose determination shall be
final and binding on the parties. The cost of the services of such independent
accounting firm shall be borne equally by Seller and Purchaser. Neither party
shall file any Return or other document or otherwise take any position which is
inconsistent with the allocation determined pursuant to this Section 5.5, except
as may be adjusted by subsequent agreement following an audit by the IRS or by
an Order; provided, that neither party (nor their respective Affiliates) shall
be obligated to litigate any challenge to such allocation of the Purchase Price
by any Governmental Entity. The allocation of the Purchase Price shall be
revised to take into account subsequent adjustments to the Purchase Price in the
manner provided by Section 1060 of the Code and the Treasury Regulations
thereunder and consistent with the preparation of the Purchase Price allocation.
The parties hereto shall cooperate with each other in good faith to promptly
amend the allocation. The parties hereto shall promptly inform one another of
any challenge by any Governmental Entity to any allocation made pursuant to this
Section 5.5 and agree to consult with and keep one another informed with respect
to the state of, and any discussion, proposal or submission with respect to,
such challenge.

 

Section 5.4.          Post-Closing Access and Cooperation.

 

(a)          After the Closing Date, Purchaser and the Company, on the one hand,
and Seller, on the other hand, shall furnish or cause to be furnished to each
other, upon request, as promptly as practicable, such information and assistance
(including access to books, records, work papers and Returns for Pre-Closing
Periods) relating to the Company as is reasonably necessary for the preparation
of any Return, claim for refund or audit, and the prosecution or defense of any
claim, suit or proceeding relating to any proposed Tax adjustment. Upon
reasonable notice, each of Seller and Purchaser shall make its, or shall cause
the Company to make their, employees and facilities available on a mutually
convenient basis to provide reasonable explanation of any documents or
information provided hereunder.

 

(b)          Any request for information or documents pursuant to this
Section 5.6 shall be made by the requesting party in writing. The other party
shall promptly (and in no event later than thirty (30) days after receipt of the
request) provide the requested information. The requesting party shall indemnify
the other party for any reasonable out-of-pocket expenses incurred by such party
in connection with providing any information or documentation pursuant to this
Section 5.6. Any information obtained under this Section 5.6 shall be kept
confidential, except as otherwise reasonably may be necessary in connection with
the filing of Returns or claims for refund or in conducting any Tax audit,
dispute or contest.

 

ARTICLE VI

SURVIVAL; INDEMNIFICATION

 

Section 6.1.          Survival of Representations, Warranties and Covenants. The
respective representations and warranties of Seller and Purchaser contained in
Article II and Article III, respectively, shall survive the Closing until 5:00
p.m. New York time on April 15, 2014 (the “Claim Expiration Date”). Claims for
indemnification in respect of any covenant of Seller or Purchaser hereunder may
be made until the Claim Expiration Date. No Person shall be liable for any claim
for indemnification under this Article VI unless a Claim Certificate is
delivered by the Person seeking indemnification to the Person from whom
indemnification is sought prior to the Claim Expiration Date, in which case the
representation, warranty, covenant or agreement which is the subject of such
claim shall survive, to the extent of the claims described in such Claim
Certificate only, until such claim is resolved.

 

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Section 6.2.          Indemnification of Purchaser. Subject to the other
provisions of this Article VI, from and after the Closing, Purchaser, the
Company and each of their respective Representatives, Subsidiaries, direct and
indirect parent companies, shareholders, partners, members, managers, officers
and directors (the “Purchaser Indemnitees”) shall be entitled to receive
proceeds from the Indemnity Escrow Amount as indemnification against any Losses
suffered, incurred or paid, directly or indirectly, by them as a result of,
arising out of or related to: (a) any breach of any representation or warranty
(without giving effect to any “material”, “materially”, “materiality”, “Material
Adverse Effect”, “material adverse effect”, “material adverse change” or similar
materiality qualification contained in any such representation or warranty other
than those contained in Section 2.5, Section 2.6(a) and Section 2.15 (solely
with respect to the defined term “Material Contract”)) made by Seller in
Article II, other than with respect to Excluded Taxes; (b) any breach of any
covenant or agreement by Seller contained in this Agreement; (c) any Member
Litigation (including any Member Litigation related to, resulting from or in
connection with items 2 or 3 set forth on Schedule 2.9 of the Seller Disclosure
Letter); (d) any breach by Seller or any of its members or its Subsidiaries
(other than the Company (after the Closing) and William Sweedler) of the
Bankruptcy Settlement Agreement or the Bankruptcy Settlement Approval Order;
(e) the Bankruptcy Proceedings, including any employee claims; (f) any
Indebtedness of the Company as of the Closing Date in excess of the Closing
Funded Indebtedness set forth on the Closing Statement; and (g) any Company
Transaction Expenses not accounted for, or any inaccuracy in the amount of
Company Transaction Expenses payable set forth, in the Closing Statement; and
(h) (i) all Taxes, other than Excluded Taxes, imposed on, asserted against or
attributable to the properties, income or operations of the Company or any Taxes
for which the Company is otherwise liable, for all Pre-Closing Periods, (ii) all
Taxes, other than Excluded Taxes, imposed on, asserted against or attributable
to the properties, income or operations of the Company as a result of the
provisions of Treasury Regulations Section 1.1502-6 or the analogous provisions
of any state, local or foreign Law, and (iii) all Taxes, other than Excluded
Taxes, imposed on the Company, Purchaser or any of Purchaser’s Affiliates, or
for which the Company, Purchaser or any of Purchaser’s Affiliates may be liable,
as a result of any transaction contemplated by this Agreement.

 

Section 6.3.          Indemnification of Seller. Subject to other provisions of
this Article VI, from and after the Closing, Purchaser shall indemnify Seller
and each of its Representatives, Subsidiaries, direct and indirect parent
companies, shareholders, partners, members, managers, officers and directors
(the “Seller Indemnitees”) against any Losses suffered, incurred or paid,
directly or indirectly, by them as a result of, arising out of or related to:
(a) any breach of any representation or warranty (without giving effect to any
“material”, “materially”, “materiality”, “material adverse effect”, “material
adverse change” or similar qualification contained in any such representation or
warranty other than those contained in Section 3.6) made by Purchaser in Article
III ; and (b) any breach of any covenant or agreement by Purchaser contained in
this Agreement.

 

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Section 6.4.          Limitation on Indemnification. Notwithstanding anything to
the contrary contained in this Agreement:

 

(a)          neither the Purchaser Indemnitees nor the Seller Indemnitees, as
the case may be, shall be entitled to indemnification pursuant to Section 6.2(a)
or Section 6.3(a), as the case may be, for any Losses unless and until the
aggregate amount of Losses suffered, incurred or paid by the Purchaser
Indemnitees or the Seller Indemnitees, as the case may be, equal or exceed
$100,000 (the “Deductible”), in which case the Purchaser Indemnitees (as a
group) or the Seller Indemnitees (as a group), as the case may be, shall only be
entitled to indemnification for the aggregate amount of such Losses in excess of
the Deductible;

 

(b)          the limitations set forth in Section 6.4(a) shall not apply to
Losses suffered, incurred or paid by any Purchaser Indemnitee or any Seller
Indemnitee in connection with or arising from any breach of any Fundamental
Representation or any representation or warranty in Section 2.12 (Tax Matters);

 

(c)          the maximum aggregate amount of indemnifiable Losses which may be
recovered for indemnification pursuant to (i) Section 6.2 and Section 5.4 shall
be the Indemnity Escrow Amount and (ii) Section 6.3 shall be the Purchaser
Indemnification Amount;

 

(d)          the Purchaser Indemnitees shall not be entitled to indemnification
with respect to any specific claim pursuant to Section 6.2(a) if Seller is able
to demonstrate that William Sweedler had actual knowledge as of the date hereof
that the representation or warranty applicable to such claim was breached when
made; provided, that notwithstanding the foregoing, the Purchaser Indemnitees
shall remain entitled to indemnification for such claim if Purchaser is able to
demonstrate that any of Eric Kaup, Jeff Branman, Rick Platt or Charlie Bang had
actual knowledge as of the date hereof that such representation or warranty was
breached when made; and

 

(e)          (i) the sole and exclusive remedy of the Purchaser Indemnitees with
respect to any indemnification claim under Section 6.2 shall be the right to be
paid out of the Indemnity Escrow Amount, if any, in accordance with the terms of
this Agreement, and (ii) on the date that the Indemnity Escrow Amount is reduced
to zero, Seller shall not have any further liability to any Purchaser Indemnitee
in respect of any indemnification claim made under Section 6.2 and the Purchaser
Indemnitees shall have no further rights to indemnification hereunder.

 

Section 6.5.          Losses Net of Insurance. The amount of any Loss for which
indemnification is provided under Section 6.2 or Section 6.3 shall be net of (a)
any specific accruals or reserves on the Financial Statements, (b) any amounts
recovered by the Indemnified Party (net of any costs of investigation of the
underlying claim and of collection) from a third party relating to such Loss,
including pursuant to any indemnification by or indemnification agreement with
such third party (other than this Agreement), and (c) any insurance proceeds
(net of any costs of investigation of the underlying claim and of collection)
received as an offset against such Loss (each source of recovery referred to in
clauses (b) and (c), a “Collateral Source”). If the amount to be netted
hereunder in connection with a Collateral Source from any payment required under
Section 6.2 or Section 6.3 is received after payment by the Responsible Party of
any amount otherwise required to be paid to an Indemnified Party pursuant to
this Article VI, the Indemnified Party shall repay to the Responsible Party,
promptly after such receipt, any amount that the Responsible Party would not
have had to pay pursuant to this Article VI had such receipt occurred at the
time of such payment.

 

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Section 6.6.          Indemnification Procedure.

 

(a)          Promptly after the incurrence of any Losses by any Person entitled
to indemnification pursuant to Section 6.2 or Section 6.3 (an “Indemnified
Party”), including any claim by a third party described in Section 6.7 which
might give rise to indemnification hereunder, the Indemnified Party shall, in
the case of a Purchaser Indemnitee, as promptly as practicable notify Seller,
and in the case of a Seller Indemnitee, as promptly as practicable notify
Purchaser (such notified party, the “Responsible Party”) and deliver thereto a
certificate (a “Claim Certificate”), which Claim Certificate shall:

 

(i)          state that the Indemnified Party has paid or anticipates it will
incur liability for Losses for which such Indemnified Party is entitled to
indemnification pursuant to this Agreement; and

 

(ii)         specify in reasonable detail each individual item of Loss included
in the amount so stated, the date such item was paid (if paid), the basis for
any anticipated Liability and the nature of the misrepresentation, breach of
warranty, breach of covenant or claim to which each such item is related and the
computation of the amount to which such Indemnified Party claims to be entitled
hereunder.

 

(b)          As promptly as practicable after the resolution of any
indemnification claim hereunder and pursuant to the terms of the Escrow
Agreement, the Responsible Party shall: (i) if the Responsible Party is Seller,
execute and deliver a joint written instruction to the Escrow Agent instructing
the Escrow Agent to release to Purchaser from the Indemnity Escrow Amount the
amount of such resolved indemnification claim (provided, that if such amount is
greater than the remaining balance of the Indemnity Escrow Amount, such
instruction shall instruct the Escrow Agent to release the entire balance of the
Indemnity Escrow Amount to Purchaser), and (ii) if the Responsible Party is
Purchaser, pay to Seller the amount of such resolved indemnification claim
(provided, that if such amount is greater than the remaining balance of the
Purchaser Indemnification Amount, Purchaser shall pay the entire balance of the
Purchaser Indemnification Amount to Seller).

 

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Section 6.7.          Third-Party Claims. If a claim by a third party, other
than a Tax Matter, is made against any Indemnified Party with respect to which
the Indemnified Party intends to seek indemnification hereunder for any Loss
under this Article VI, the Indemnified Party shall promptly notify the
Responsible Party of such claim. The Responsible Party shall have the right to
conduct and control, through counsel of its choosing and at the Responsible
Party’s expense (it being understood and agreed that, if Seller is the
Responsible Party, such expenses shall not reduce or be paid from the Indemnity
Escrow Amount), any third-party claim, action, suit or proceeding (a
“Third-Party Claim”), and the Indemnified Party shall have the right to
participate in such Third-Party Claim at the Indemnified Party’s own expense;
provided, that notwithstanding the foregoing, the Responsible Party shall not be
entitled to assume control of such Third-Party Claim and the Indemnified Party
shall have the right to assume and control such Third-Party Claim at the
Responsible Party’s expense (it being understood and agreed that, if Seller is
the Responsible Party, such expenses of the Indemnified Party shall constitute
Losses and be paid from the Indemnity Escrow Amount) (and the Responsible Party
may participate in such Third-Party Claim through counsel of its choosing at the
Responsible Party’s expense (it being understood and agreed that, if Seller is
the Responsible Party, such expenses shall not reduce or be paid from the
Indemnity Escrow Amount)) if (i) such Third-Party Claim could give rise to
Losses which are more than two times the remaining balance of the Indemnity
Escrow Amount, (ii) the claim for indemnification relates to or arises in
connection with any criminal proceeding, action, indictment, allegation or
investigation against the Indemnified Party, (iii) such Third-Party Claim seeks
an injunction or equitable relief against the Indemnified Party, (iv) the
Indemnified Party has been advised in writing by counsel that a reasonable
likelihood exists of a conflict of interest between the Responsible Party and
the Indemnified Party, (v) the Indemnified Party reasonably believes that an
adverse determination with respect to such Third-Party Claim would be
detrimental to or injure the Indemnified Party’s reputation or future business
prospects in circumstances where indemnification alone would not be an adequate
remedy for such detriment or injury, (vi) such Third-Party Claim is asserted by
a licensee or prospective licensee of the Indemnified Party, (vii) there are one
or more legal defenses available to the Indemnified Party with a reasonable
prospect of success which are not available to the Responsible Party or
(viii) the Responsible Party elected to conduct such Third-Party Claim and then
failed to conduct or withdrew from such Third-Party Claim. Notwithstanding the
foregoing, Purchaser shall not have the right to assume and control any Member
Litigation against Seller (it being understood and agreed that Purchaser may
assume and control Member Litigation to the extent against Purchaser and its
Subsidiaries). The failure of any Indemnified Party to give written notice of
any Third-Party Claim as provided herein shall not relieve the Responsible Party
of its obligations under this Article VI except to the extent that such failure
adversely affected the ability of the Responsible Party to defend or settle such
Third-Party Claim. The Responsible Party, in conducting the defense of any
Third-Party Claim, shall not, except with the prior written consent of the
Indemnified Party (which consent shall not be unreasonably withheld, conditioned
or delayed), consent to entry of any judgment or enter into any settlement
unless such judgment or settlement (1) is entirely indemnifiable by the
Responsible Party pursuant to this Article VI, (2) includes as an unconditional
term thereof the giving by the claimant or plaintiff to the Indemnified Party of
an unconditional release from all Liability and obligations in respect of such
Third-Party Claim, and (3) does not impose any injunctive relief or other
restrictions of any kind or nature on the Indemnified Party. If the Responsible
Party is conducting the defense of a Third-Party Claim, the Indemnified Party
shall furnish such information regarding itself or such Third-Party Claim and
provide such cooperation as the Responsible Party may reasonably request in
writing and as shall be reasonably required in connection with such defense. The
Responsible Party shall not be obligated to indemnify any Indemnified Party
hereunder for, and no Indemnified Party shall be entitled to any recovery
hereunder in respect of, any settlement or consent to entry of any judgment
effected without the Responsible Party’s prior written consent (which consent
shall not be unreasonably withheld, conditioned or delayed).

 

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Section 6.8.          Sole Remedy/Waiver. Except as otherwise provided in
Section 7.10, the parties hereto acknowledge and agree that indemnification
pursuant to this Article VI shall be the sole and exclusive remedy of any party
hereto and each of their respective Affiliates for any misrepresentation or
breach of any representations, warranties, covenants or other provisions or
agreements contained in this Agreement or any other claims to the extent arising
out of, under or related to this Agreement, the negotiation or execution hereof
or the Transactions. Purchaser acknowledges and agrees that the Purchaser
Indemnitees’ sole source of recovery for any Losses indemnifiable under this
Article VI shall be limited to recoveries from the Indemnity Escrow Amount, and
that no Purchaser Indemnitee shall have any recourse against Seller or any other
Person. Notwithstanding the foregoing, nothing in this Section 6.8 shall relieve
any Person from liability for any actual and intentional fraud committed by such
Person.

 

Section 6.9.          Release of the Indemnity Escrow Amount.

 

(a)          On April 16, 2014 or, if such date is not a Business Day, the
following Business Day (the “Release Date”), the following amount shall be
released to Seller from the Indemnity Escrow Amount: an amount equal to the
excess of (i) the remaining Indemnity Escrow Amount over (ii) the aggregate
amount of all indemnification claims of the Purchaser Indemnitees resolved (but
not yet paid) or pending as of the Release Date. Purchaser and Seller shall
cooperate in good faith to determine the amount of cash to be released to Seller
pursuant to this Section 6.9(a) from any remaining Indemnity Escrow Amount. As
promptly as practicable thereafter, Purchaser and Seller shall execute and
deliver to the Escrow Agent a joint written instruction instructing the Escrow
Agent to release to Seller from the Indemnity Escrow Amount the amount of cash
determined pursuant to the foregoing sentence. After the resolution (and
payment, if required) of all such pending indemnification claims, Purchaser and
Seller shall execute and deliver to the Escrow Agent a joint written instruction
instructing the Escrow Agent to release to Seller any remaining balance of the
Indemnity Escrow Amount and the Indemnity Escrow Amount shall be reduced to
zero; provided, that if both (x) any such pending indemnification claim is not
resolved and (y) Purchaser has not filed a complaint against Seller with respect
to such indemnification claim with a court of competent jurisdiction, in each
case, prior to the date that is the forty-fifth (45th) day after the Release
Date, then promptly after such forty-fifth (45th) day, Purchaser and Seller
shall execute and deliver to the Escrow Agent a joint written instruction
instructing the Escrow Agent to release to Seller from the Indemnity Escrow
Amount an amount in cash equal to the amount of such pending indemnification
claim.

 

(b)          Any interest earned on any cash deposited in the Escrow Fund shall
not be considered part of the Indemnity Escrow Amount and shall be for the
account of Seller, and shall be released to Seller in accordance with the Escrow
Agreement.

 

ARTICLE VII

 

MISCELLANEOUS

 

Section 7.1.          Fees and Expenses. Except as otherwise expressly provided
herein, all costs and expenses incurred in connection with this Agreement and
the consummation of the transactions contemplated hereby shall be paid by the
party incurring such costs and expenses.

 

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Section 7.2.          Extension; Waiver. Subject to the express limitations
herein, Purchaser or Seller may (a) extend the time for the performance of any
of the obligations or other acts of the other party hereto, (b) waive any
inaccuracies in the representations and warranties contained herein by the other
party or in any document, certificate or writing delivered pursuant hereto by
such other party or (c) waive compliance by the other party with any of the
agreements contained herein; provided, that any such extension or waiver by such
party shall be valid only if set forth in an instrument in writing signed by or
on behalf of such party; provided, further, that no such extension or waiver by
a party shall be valid with respect to any other party. No failure or delay on
the part of any party hereto in the exercise of any right hereunder shall impair
such right or be construed as a waiver of, or acquiescence in, any breach of any
representation, warranty, covenant or agreement herein, nor shall any single or
partial exercise of any such right preclude other or further exercise thereof or
of any other right.

 

Section 7.3.          Notices. Except as otherwise provided herein, all notices,
requests, claims, demands, waivers and other communications hereunder shall be
in writing and shall be (x) delivered by hand or overnight courier service,
(y) mailed by certified or registered mail or (z) sent by telecopier, facsimile
or email transmission to the respective parties as follows (or, in each case, as
otherwise notified by any of the parties hereto) and shall be effective and
deemed to have been given (i) immediately when sent by telecopier, facsimile or
email between 9:00 A.M. and 6:00 P.M. (New York City time) on any Business Day
(and when sent outside of such hours, at 9:00 A.M. (New York City time) on the
next Business Day), and (ii) when received if delivered by hand or overnight
courier service or certified or registered mail on any Business Day:

 

(a)          If to Seller, at:

 

ETPH Acquisition, LLC
1450 Broadway, 8th Floor
New York, New York 10018
Attention: Lead Members

 

with a copy (which shall not constitute notice) to:

 

Paul, Weiss, Rifkind, Wharton & Garrison LLP
1285 Avenue of the Americas
New York, New York 10019-6064
Attention: Justin G. Hamill, Esq.
Fax: (212) 757-3990
Email: jhamill@paulweiss.com

 

(b)          if to Purchaser, at:

 

Sequential Brands Group, Inc.
1065 Sixth Avenue, 17th Floor
New York, NY 10008
Attention: General Counsel

 

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Notices sent by multiple means, each of which is in compliance with the
provisions of this Agreement will be deemed to have been received at the
earliest time provided for by this Agreement.

 

Section 7.4.          Entire Agreement. This Agreement together with Exhibits
hereto, and the Seller Disclosure Letter, contains the entire understanding of
the parties hereto with respect to the subject matter contained herein and
supersedes all prior agreements and understandings, oral and written, with
respect thereto, other than the Confidentiality Agreement. This Section 7.4
shall not be deemed to be an admission or acknowledgement by any of the parties
hereto that any prior agreements or understandings, oral or written, with
respect to the subject matter hereof exist, other than the Confidentiality
Agreement. No representation, warranty, inducement, promise, understanding or
condition not set forth in this Agreement has been made or relied upon by any of
the parties. The parties have voluntarily agreed to define their rights,
liabilities and obligations respecting the subject matter hereof exclusively in
contract pursuant to the express terms and provisions of this Agreement and the
parties expressly disclaim that they are owed any duties by any other party
hereto or are entitled to any remedies not expressly set forth in this
Agreement. Furthermore, the parties hereby acknowledge that this Agreement
embodies the justifiable expectations of sophisticated parties derived from
arm’s-length negotiations; the parties specifically acknowledge that no party
has any special relationship with another party that would justify any
expectation beyond that of ordinary parties in an arm’s-length transaction.

 

Section 7.5.          Binding Effect; Benefit; Assignment.

 

(a)          This Agreement shall inure to the benefit of and be binding upon
the parties hereto and their permitted successors and assigns. Except with
respect to the provisions of: (i) Article VI, which shall inure to the benefit
of each Purchaser Indemnitee and each Seller Indemnitee, (ii) Section 7.12,
which shall inure to the benefit of each Non-Recourse Party, and
(iii) Section 7.13, which shall inure to the benefit of the released Persons
identified therein, all of whom are intended as express third-party
beneficiaries thereof, no other Person not party to this Agreement (including
any current or former employee of the Company, Seller, Purchaser or any of their
respective Affiliates) shall be entitled to the benefits of this Agreement or
any other rights or remedies (including any right to employment or continued
employment for any specified period or continued participation in any Employee
Benefit Plan). Notwithstanding the foregoing, only Seller and Purchaser shall be
entitled to assert claims pursuant to Article VI, and each of them shall assert
any such claims on behalf of the other Seller Indemnitees or Purchaser
Indemnitees, as applicable, when Seller or Purchaser, as applicable, deem
appropriate.

 

(b)          Neither this Agreement nor any of the rights, interests or
obligations hereunder shall be assigned by any of the parties hereto without the
prior written consent of each of the other parties; provided, that Purchaser may
assign its rights, interests and obligations hereunder (i) to any direct or
indirect wholly-owned Subsidiary of Purchaser or to any Affiliate of which
Purchaser is a direct or indirect wholly-owned Subsidiary, (ii) in connection
with the transfer by Purchaser of all or substantially all of the equity
interests and/or assets of the Company and/or (iii) in connection with any
financing of the transactions contemplated hereby; provided, further, that no
such assignment by Purchaser pursuant to the foregoing clauses (i), (ii) or
(iii) shall relieve Purchaser of its obligations hereunder. Any attempted
assignment in violation of this Section 7.5 will be void.

 

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Section 7.6.          Amendment. This Agreement (including the Seller Disclosure
Letter) may not be amended, supplemented or modified except by a written
instrument executed by all parties to this Agreement.

 

Section 7.7.          Counterparts. This Agreement may be executed in several
counterparts, each of which shall be deemed to be an original, and all of which
together shall be deemed to be one and the same instrument. Signed counterparts
of this Agreement may be delivered by facsimile or by scanned portable document
format image.

 

Section 7.8.          Applicable Law. THIS AGREEMENT AND THE LEGAL RELATIONS
BETWEEN THE PARTIES HERETO SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH
THE LAWS OF THE STATE OF NEW YORK, WITHOUT REGARD TO THE CONFLICT OF LAWS RULES
THEREOF. THE STATE OR FEDERAL COURTS LOCATED WITHIN NEW YORK COUNTY IN THE STATE
OF NEW YORK SHALL HAVE EXCLUSIVE JURISDICTION OVER ANY AND ALL DISPUTES BETWEEN
THE PARTIES HERETO, WHETHER IN LAW OR EQUITY, ARISING OUT OF OR RELATING TO THIS
AGREEMENT AND THE OTHER TRANSACTION DOCUMENTS, AND THE PARTIES CONSENT TO AND
AGREE TO SUBMIT TO THE EXCLUSIVE JURISDICTION OF SUCH COURTS. EACH OF THE
PARTIES HERETO HEREBY WAIVES AND AGREES NOT TO ASSERT IN ANY SUCH DISPUTE, TO
THE FULLEST EXTENT PERMITTED BY APPLICABLE LAW, ANY CLAIM THAT (I) SUCH PARTY IS
NOT PERSONALLY SUBJECT TO THE JURISDICTION OF SUCH COURTS, (II) SUCH PARTY AND
SUCH PARTY’S PROPERTY IS IMMUNE FROM ANY LEGAL PROCESS ISSUED BY SUCH COURTS OR
(III) ANY LITIGATION OR OTHER PROCEEDING COMMENCED IN SUCH COURTS IS BROUGHT IN
AN INCONVENIENT FORUM. THE PARTIES HEREBY AGREE THAT MAILING OF PROCESS OR OTHER
PAPERS IN CONNECTION WITH ANY SUCH ACTION OR PROCEEDING IN THE MANNER PROVIDED
IN SECTION 7.3, OR IN SUCH OTHER MANNER AS MAY BE PERMITTED BY LAW, SHALL BE
VALID AND SUFFICIENT SERVICE THEREOF AND HEREBY WAIVE ANY OBJECTIONS TO SERVICE
ACCOMPLISHED IN THE MANNER HEREIN PROVIDED.

 

Section 7.9.          Severability. If any term, provision, covenant or
restriction contained in this Agreement is held by a court of competent
jurisdiction or other authority to be invalid, void, unenforceable or against
its regulatory policy, the remainder of the terms, provisions, covenants and
restrictions contained in this Agreement shall remain in full force and effect
and shall in no way be affected, impaired or invalidated, and this Agreement
shall be reformed, construed and enforced in such jurisdiction as if such
invalid, illegal or unenforceable term, provision, covenant or restriction or
any portion thereof had never been contained herein.

 

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Section 7.10.         Specific Enforcement. The parties hereto agree that
irreparable damage would occur in the event that any of their respective
obligations under this Agreement were not performed in accordance with their
specific terms or were otherwise breached or threatened to be breached and that
an award of money damages would be inadequate in such event. Accordingly, it is
acknowledged that the parties hereto shall be entitled to, without proof of
actual damages, an injunction or injunctions or Orders for specific performance
to prevent breaches of this Agreement and to enforce specifically the terms and
provisions of this Agreement. Each party hereto further agrees that no party
shall be required to obtain, furnish or post any bond or similar instrument in
connection with or as a condition to obtaining any remedy referred to in this
Section 7.10, and each party hereto irrevocably waives any right it may have to
require the obtaining, furnishing or posting of any such bond or similar
instrument. Each party hereto further agrees that the only permitted objection
that it may raise in response to any action for equitable relief is that it
contests the existence of a breach or threatened breach of this Agreement.

 

Section 7.11.         Waiver of Jury Trial. EACH OF THE PARTIES TO THIS
AGREEMENT HEREBY IRREVOCABLY WAIVES, AND AGREES TO CAUSE ITS SUBSIDIARIES TO
WAIVE, ALL RIGHT TO A TRIAL BY JURY IN ANY ACTION, PROCEEDING OR COUNTERCLAIM
ARISING OUT OF OR RELATING TO THIS AGREEMENT OR THE TRANSACTIONS CONTEMPLATED
HEREBY. EACH PARTY CERTIFIES AND ACKNOWLEDGES THAT (A) NO OTHER PARTY OR
REPRESENTATIVE THEREOF HAS REPRESENTED, EXPRESSLY OR OTHERWISE, THAT SUCH OTHER
PARTY WOULD NOT SEEK TO ENFORCE THE FOREGOING WAIVER IN THE EVENT OF A LEGAL
ACTION, (B) SUCH PARTY HAS CONSIDERED AND UNDERSTANDS THE IMPLICATIONS OF THIS
WAIVER, (C) SUCH PARTY MAKES THIS WAIVER VOLUNTARILY AND (D) SUCH PARTY HAS BEEN
INDUCED TO ENTER INTO THIS AGREEMENT BY, AMONG OTHER THINGS, THE MUTUAL WAIVERS
AND CERTIFICATIONS IN THIS SECTION.

 

Section 7.12.         No Recourse. To the extent any claim or cause of action
(whether in contract or in tort, in law or in equity, or granted by statute) is
based upon, is in respect of, arises under, out or by reason of, is connected
with, or relates in any manner to this Agreement, or the negotiation, execution
or performance of this Agreement (including any representation or warranty made
in, in connection with, or as an inducement to, this Agreement), such claim or
cause of action may be made by the parties hereto only against the Persons that
are expressly identified as parties to this Agreement and are signatories
thereto. No other Person, including any Representative, incorporator, member,
partner, stockholder or Affiliate of any party to this Agreement or any
Representative, incorporator, member, partner, stockholder or Affiliate of any
of the foregoing (each, a “Non-Recourse Party”) shall have any liability to any
party hereto (whether in contract or in tort, in law or in equity, or granted by
statute) for any such claims or causes of action.

 

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Section 7.13.         Releases. 

 

(a)          Effective as of the Closing, Seller agrees that none of Purchaser
or the Company or any of the current or former officers, managers, directors or
members of the Company or Purchaser shall have any liability or responsibility
to Seller (and Seller unconditionally releases such Persons from) any
obligations or Liability: (i) arising out of, or relating to, the organization,
management or operation of the businesses of the Company relating to any matter,
occurrence, action or activity on or prior to the date hereof; (ii) relating to
this Agreement and the transactions contemplated hereby; (iii) arising out of or
due to any inaccuracy or breach of any representation or warranty or the breach
of any covenant, undertaking or other agreement contained in this Agreement, the
Exhibits and Schedules hereto or in any certificate contemplated hereby and
delivered in connection herewith, in each case, prior to the date hereof;
(iv) or relating to any information (whether written or oral), documents or
materials furnished by or on behalf of the Company or Purchaser on or prior to
the date hereof; provided, that the foregoing shall not in any manner limit or
affect Seller’s indemnification rights under Article VI.

 

(b)          Effective as of the Closing, Purchaser and the Company agree that
none of Seller or any of the current or former officers, managers, directors or
members of Seller shall have any liability or responsibility to Purchaser or the
Company (and Purchaser and the Company unconditionally release such Persons
from) any obligations or Liability: (i) arising out of, or relating to, the
organization, management or operation of the businesses of the Company relating
to any matter, occurrence, action or activity on or prior to the date hereof;
(ii) relating to this Agreement and the transactions contemplated hereby;
(iii) arising out of or due to any inaccuracy or breach of any representation or
warranty or the breach of any covenant, undertaking or other agreement contained
in this Agreement, the Exhibits and Schedules hereto or in any certificate
contemplated hereby and delivered in connection herewith, in each case, on or
prior to the date hereof; (iv) or relating to any information (whether written
or oral), documents or materials furnished by or on behalf of Seller on or prior
to the date hereof; provided, that the foregoing shall not in any manner limit
or affect Purchaser’s indemnification rights under Article VI.

 

(c)          Effective as of the Closing (but for the avoidance of doubt,
without prejudice to any rights, claims or interests arising in respect of or
under this Agreement), Seller hereby irrevocably releases, acquits and forever
discharges, to the fullest extent permitted by Law, the Company of, from and
against any and all Actions, causes of action, claims, demands, damages,
judgments, Liabilities, debts, dues and suits of every kind, nature and
description whatsoever, which Seller ever had, now has or may have or claim to
have against the Company, in each case, arising prior to the Closing.

 

(d)          Effective as of the Closing (but for the avoidance of doubt,
without prejudice to any rights, claims or interests arising in respect of or
under this Agreement), the Company hereby irrevocably releases, acquits and
forever discharges, to the fullest extent permitted by Law, Seller of, from and
against any and all Actions, causes of action, claims, demands, damages,
judgments, Liabilities, debts, dues and suits of every kind, nature and
description whatsoever, which the Company ever had, now has or may have or claim
to have against Seller, in each case, arising prior to the Closing.

 

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(e)          Notwithstanding the foregoing, nothing in this Section 7.13 will
relieve (i) any Person from liability for any actual and intentional fraud
committed by such Person or (ii) any Person set forth on Schedule 7.13 from
liability to Seller for any breach of that certain management representation
letter deliver to Seller concurrently herewith.

 

Section 7.14.         Rules of Construction. The parties hereto agree that they
have been represented by counsel during the negotiation and execution of this
Agreement and have participated jointly in the drafting of this Agreement and,
therefore, waive the application of any Law, holding or rule of construction
providing that ambiguities in an agreement or other document will be construed
against the party drafting such agreement or document.

 

ARTICLE VIII

 

DEFINITIONS

 

Section 8.1.          Definitions. When used in this Agreement, the following
terms shall have the respective meanings set forth herein:

 

“Accounting Firm” shall mean BDO Seidman, or if unavailable, a
nationally-recognized public accounting firm that is independent with respect to
Seller, the Company and Purchaser (within the meaning of Rule 2-01 under
Securities and Exchange Commission Regulation S-X) to be agreed upon by Seller
and Purchaser in writing.

 

“Action” shall mean any legal, administrative, governmental or regulatory
proceeding or other action, suit, proceeding, appeal, demand, assessment,
litigation, hearing, claim, arbitration, mediation, alternative dispute
resolution procedure, inquiry or investigation by or before any arbitrator,
mediator, court or other Governmental Entity, at law or in equity.

 

“Affiliate” of any Person shall mean any other Person directly or indirectly
controlling, controlled by, or under common control with, such Person; provided,
that, for the purposes of this definition, “control” (including, with
correlative meanings, the terms “controlled by” and “under common control
with”), as used with respect to any Person, shall mean the possession, directly
or indirectly, of the power to direct or cause the direction of the management
and policies of such Person, whether through the ownership of voting securities,
by Contract or otherwise; provided, further, that an Affiliate of any Person
shall also include (a) any Person that directly or indirectly owns, or in which
such Person directly or indirectly owns more than ten percent (10%) of any class
of capital stock or other equity interest of such Person, (b) in the case of a
corporation, any officer or director of such corporation, (c) in the case of a
partnership, any general partner of such partnership, (d) in the case of a
trust, any trustee or beneficiary of such trust, (e) any spouse, parent, sibling
or child or lineal descendant of any individual described in clauses (a) through
(d) above, and (f) any trust for the benefit of any individual described in
clauses (a) through (e) above.

 

“Bankruptcy Court” shall mean the United States Bankruptcy Court for the
Southern District of New York.

 

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“Bankruptcy Litigation” shall mean (i) the adversary proceeding filed on October
5, 2011, styled Albert Togut, as Chapter 7 Trustee of Ellen Tracy, LLC v. Hilco
Consumer Capital, L.P., Hilco Consumer Capital, LLC, CJ Apparel Group, LLC,
Seller, the Company, WJ Investments, LLC, Fashionology Group, LLC, Stuart
Jamieson, Barry Sternlicht, Matthew Eby, James J. Salter, Jeffrey B. Hecktman,
Kenneth Finkelstein, Isaac Benitah, Kenneth Ragland, Marvin Traub, William
Sweedler, Mark Mendelson, and James Ammeen, and (ii) any negotiations and
discussions relating to the subject matter of such adversary proceeding prior to
the filing thereof.

 

“Bankruptcy Proceedings” shall mean the Chapter 7 bankruptcy proceeding
commenced on August 14, 2009 for the debtor Ellen Tracy, LLC in the Bankruptcy
Court, Case No. 09-14994 (MG).

 

“Bankruptcy Settlement Agreement” shall mean that certain Settlement Agreement,
dated as of March 4, 2013, by and among Albert Togut, solely in his capacity as
Chapter 7 trustee of the estate of debtor Ellen Tracy, LLC, Wells Fargo Trade
Capital Services, Inc., Israel Discount Bank of New York, the “Hilco Defendants”
(as defined therein) and the “Non-Hilco Defendants” (as defined therein), and
attached hereto as Exhibit E.

 

“Bankruptcy Settlement Approval Order” shall mean that certain order entered by
the Bankruptcy Court dated March 4, 2013, approving the Bankruptcy Settlement
Agreement.

 

“Business Day” shall mean any day except a Saturday, a Sunday or any other day
on which commercial banks are required or authorized to close in the State of
New York.

 

“Closing Funded Indebtedness” shall mean the aggregate outstanding amount of
Funded Indebtedness of the Company as of immediately prior to the Closing other
than the amounts and liabilities specified on Exhibit C.

 

“Closing Payment” shall mean the Purchase Price, reduced by (a) the Closing
Funded Indebtedness as set forth on the Closing Statement, (b) the Company
Transaction Expenses as set forth on the Closing Statement, and (c) the
Indemnity Escrow Amount, which such Closing Payment (after taking into account
the reductions in the foregoing clauses (a) through (c)) shall consist of (x)
the Payment Shares and (y) an amount in cash equal to Thirty-One Million Four
Hundred Seventeen Thousand Three Hundred Seventy-Two Dollars ($31,417,372).

 

“Code” shall mean the United States Internal Revenue Code of 1986, as amended,
and the regulations promulgated and the rulings issued thereunder.

 

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“Company Transaction Expenses” shall mean (a) all out-of-pocket costs, fees and
disbursements of financial advisors, attorneys, accountants and other advisors
and service providers excluding any directors, officers or employees of the
Company (other than as provided in clauses (b) and (c)), (b) the payments set
forth on the Closing Statement and (c) all bonuses, retention payments and any
other change-of-control or similar payments to officers and employees of the
Company to the extent payable by the Company as a result of or in connection
with the Transaction pursuant to any Contract entered into prior to the date
hereof (including any change of control bonus payable to Rick Platt pursuant to
his employment agreement), other than any such bonuses, retention payments and
any other change-of-control or similar payments which (1) were awarded by
William Sweedler to any such officers or employees without the approval of the
Board of Representatives of Seller and/or (2) become payable as a result of any
action taken by Purchaser or the Company after the Closing (including any
termination of employment), in each case of clause (a), (b) or (c), to the
extent payable by the Company in connection with the sale of the Company to
Purchaser and not paid as of the Closing Date. For clarity, Company Transaction
Expenses shall not include any amounts attributable to payments or liabilities
specified in Exhibit C.

 

“Confidential Material” shall mean all information (written or oral) that is
confidential or proprietary to the Company or is not otherwise generally
available to the public regarding the Company. The term “Confidential Material”
shall not include information that (a) is or becomes generally available to the
public, other than as a result of disclosure by Seller or any of its
Representatives in violation of this Agreement, or (b) becomes available to
Seller after the date hereof from a Person (other than Seller or any of its
Affiliates) on a non-confidential basis; provided that such Person was not known
by Seller to be bound by a confidentiality agreement with or other contractual,
legal or fiduciary obligation of confidentiality to the Company, Purchaser or
their Representatives with respect to such materials.

 

“Contract” shall mean any note, bond, mortgage, indenture, guarantee, license,
franchise, permit, agreement, understanding, arrangement, contract, commitment,
letter of intent, or other instrument or obligation (whether oral or written),
and any amendments thereto.

 

“Escrow Agent” shall mean Citibank, N.A., to serve as escrow agent pursuant to
the terms of the Escrow Agreement.

 

“Escrow Agreement” shall mean that certain Escrow Agreement in the form attached
hereto as Exhibit F, to be entered into at the Closing by Purchaser, Seller and
the Escrow Agent.

 

“Exchange Act” shall mean the Securities Exchange Act of 1934, as amended and
the rules and regulations promulgated thereunder.

 

“Excluded Taxes” shall mean non-Income Taxes that are incurred in the ordinary
course of business for a taxable period beginning after December 31, 2012 that
are not due and payable on or before the Closing Date.

 

“FIRPTA” shall mean the Foreign Investment in Real Property Tax Act of 1980, as
amended.

 

“Fundamental Representations” shall mean (a) the representations and warranties
of Seller in Section 2.1 (Due Organization; Good Standing and Power),
Section 2.2 (Authorization; Noncontravention), Section 2.3 (Ownership of Company
Interests; Capitalization of the Company) and Section 2.14 (Broker’s or Finder’s
Fee), and Section 2.18 (Indebtedness) and (b) the representations and warranties
of Purchaser in Section 3.1 (Due Organization; Good Standing and Power), Section
3.2 (Authorization; Noncontravention), Section 3.3 (Capitalization of Purchaser)
and Section 3.5 (Broker’s or Finder’s Fee).

 

-37-

 

 

“Funded Indebtedness” of any Person shall mean and include (a) indebtedness for
borrowed money or indebtedness issued or incurred in substitution or exchange
for indebtedness for borrowed money, and (b) all accrued and unpaid interest,
premiums, penalties, breakage costs, unwind costs, fees, termination costs,
redemption costs, expenses and other charges with respect thereto.

 

“GAAP” shall mean generally accepted accounting principles of the United States
of America consistently applied, as in effect from time to time.

 

“Governmental Entity” shall mean any United States or non-United States federal,
state, provincial or local court, arbitral tribunal, administrative agency or
commission or other governmental or regulatory agency or authority or any
securities exchange.

 

“Indebtedness” of any Person shall mean any (a) indebtedness for borrowed money
or indebtedness issued or incurred in substitution or exchange for indebtedness
for borrowed money, (b) amounts owing as deferred purchase price for property or
services, including all seller notes and “earn-out” payments, whether or not
matured, (c) indebtedness evidenced by any note, bond, debenture, mortgage or
other debt instrument, debt security or other similar instrument, (d)
indebtedness of the type described in clauses (a), (b), (c) and (e) secured by a
Lien on assets or properties of such Person, (e) any liability of such Person in
respect of banker’s acceptances or letters of credit (to the extent drawn), (f)
direct or indirect guarantees or other contingent liabilities (including so
called “make-whole”, “take-or-pay” or “keep-well” agreements) with respect to
any indebtedness, obligation, claim or liability of any other Person of a type
described in clauses (a) through (e) above, or (g) with respect to any
indebtedness, obligation, claim or liability of a type described in clauses
(a) through (f) above, all accrued and unpaid interest, premiums, penalties,
breakage costs, unwind costs, fees, termination costs, redemption costs,
expenses and other charges with respect thereto. Indebtedness shall not,
however, include (x) accounts payable to trade creditors, (y) accrued expenses
arising in the ordinary course of business or (z) endorsements of negotiable
instruments for collection in the ordinary course of business.

 

“Indemnity Escrow Amount” shall mean an amount in cash equal to One Million
Dollars ($1,000,000) to be held and disbursed by the Escrow Agent in accordance
with Section 6.9 and the Escrow Agreement.

 

“Intellectual Property” shall mean all of the following in any jurisdiction
throughout the world: (a) patents, patent applications, patent disclosures and
inventions, including any continuations, divisions, continuations-in-part,
renewals and reissues for any of the foregoing; (b) Internet domain names,
trademarks, service marks, trade dress, trade names, logos, slogans, and
corporate names, and registrations and applications for registration thereof,
together with all of the goodwill associated therewith; (c) copyrights
(registered or unregistered) and original works of authorship and registrations
and applications for registration thereof, including all moral rights of authors
and all copyrights in website content, artwork, photographs, designs, patterns,
advertising and promotional materials; (d) mask works and registrations and
applications for registration thereof; (e) software and computer code (whether
in source or object code), data, databases and documentation thereof; (f) Trade
Secrets; (g) rights of publicity and privacy; (h) all other proprietary or
intellectual property rights recognized by applicable Law; and (i) all renewals,
derivatives, and improvements of any of the foregoing, and all rights to sue and
collect damages for past, present or future improvements, misappropriations or
violations thereof.

 

-38-

 

 

“IRS” shall mean the United States Internal Revenue Service.

 

“Law” shall mean any statute, law, ordinance, policy, rule or regulation of any
Governmental Entity and all judicial interpretations thereof.

 

“Liabilities” shall mean any and all Indebtedness, liabilities and obligations,
whether accrued or fixed, known or unknown, absolute or contingent, matured or
unmatured or determined or determinable.

 

“Liens” shall mean any liens, security interests, options, rights of first
refusal, claims, easements, mortgages, charges, indentures, deeds of trust,
rights of way, restrictions on the use of real property, encroachments, licenses
to third parties, leases to third parties, security agreements, or any other
encumbrances and other restrictions or limitations on ownership or use of real
property or irregularities in title thereto.

 

“Loss” or “Losses” shall mean, without duplication, (a) any and all claims,
actions, causes of action, judgments, awards, Liabilities, losses, costs or
damages, including (i) reasonable fees and expenses of attorneys, accountants
and other professional advisors and (ii) consequential damages solely with
respect to matters relating Intellectual Property, and (b) any losses or costs
incurred in investigating, defending or settling any of claim, action or cause
of action described in clause (a), whether or not the underlying claim, action
or cause of action is actually asserted or is merely alleged or threatened;
provided, that “Losses” shall not include any special, consequential (other than
the consequential damages described in the foregoing clause (ii)), indirect or
punitive damages, including business interruptions or loss of business
opportunity, other than any such damages actually paid to a third party.

 

“Material Adverse Effect” shall mean any event, circumstance, development, state
of facts, occurrence, change or effect that is materially adverse to the
business, assets, condition (financial or otherwise) or results of operations of
the Company; provided, that none of the following shall constitute, and no
event, circumstance, development, state of facts, occurrence, change or effect
to the extent resulting from any of the following shall constitute, a Material
Adverse Effect: (a) any national, international or any foreign or domestic
regional economic, financial, social or political conditions (including changes
therein) or events in general, including the results of any primary or general
elections, (b) changes in the United States or global or any regional financial,
debt, credit, capital or banking markets or conditions, (c) changes in general
economic conditions that affect the brand licensing industry in which the
Company operates, (d) changes in interest, currency or exchange rates or the
price of any commodity, security or market index, (e) the occurrence,
escalation, outbreak or worsening of any hostilities, war, police action, acts
of terrorism or military conflicts, whether pursuant to the declaration of an
emergency or war or otherwise, (f) the existence, occurrence or continuation of
any force majeure events, including any earthquakes, floods, hurricanes,
tropical storms, fires or other natural disasters or any national, international
or regional calamity, (g) the announcement of this Agreement and of the
transactions contemplated hereby, (h) changes in legal or regulatory conditions
including any changes in Laws, Orders, accounting requirements or principles
(including GAAP) or interpretations or enforcement thereof, (i) any failure in
and of itself (as distinguished from any change or event giving rise or
contributing to such failure) by the Company to meet any internal projections or
forecasts, and (j) compliance by Seller with the terms of this Agreement or any
other Transaction Document, in each case with respect to actions specifically
required to be taken or not taken; other than, with respect to clauses (a), (b),
(c), (d), (e), (f) and (h), changes that disproportionately and adversely impact
the Company relative to other companies in the brand licensing industry in which
the Company operates.

 

-39-

 

 

“Order” shall mean any judgment, order, injunction, decree, writ, permit or
license of any Governmental Entity or any arbitrator.

 

“Overlap Period” shall mean with respect to the Company, the portion of any
taxable year or period beginning on or before and ending after the Closing Date.

 

“Payment Shares” shall mean two million three hundred seventy-five thousand
eight hundred eighteen (2,375,818) shares of Purchaser Common Stock.

 

“Permitted Liens” shall mean (a) Liens consisting of zoning, building code or
planning restrictions or regulations, easements, Permits, restrictive covenants,
encroachments, rights-of-way and other restrictions or limitations on the use of
real property or irregularities in, or exceptions to, title thereto which,
individually or in the aggregate, do not materially detract from the value of,
or impair the use of, such property by the Company, (b) Liens for Taxes not yet
due and payable or which may thereafter be paid without penalty, in each case
for which adequate reserves have been made with respect thereto, (c) mechanics’,
carriers’, workmen’s, repairmen’s or other like Liens arising in the ordinary
course of business securing amounts that are not past due, and (d) leases,
subleases and similar agreements concerning real property set forth in
Schedule 2.15 of the Seller Disclosure Letter.

 

“Person” shall mean and include an individual, a partnership, a limited
liability partnership, a joint venture, a corporation, a limited liability
company, a trust, an unincorporated organization, a group or a Governmental
Entity.

 

“Pre-Closing Period” shall mean all taxable years or other taxable periods that
end on or before the Closing Date and, with respect to any taxable year or other
taxable period beginning on or before and ending after the Closing Date, the
portion of such taxable year or period ending on and including the Closing Date.

 

“Purchase Price” shall mean Seventy Million Six Hundred Thousand Dollars
($70,600,000).

 

“Purchaser Common Stock” shall mean the common stock, par value $0.001 per
share, of Purchaser.

 

-40-

 

 

“Purchaser Convertible Debt” shall mean the Variable Rate Senior Secured
Convertible Debentures in an aggregate principal amount equal to $14,500,000
issued by Purchaser to TCP WR Acquisition, LLC pursuant to that certain
Securities Purchase Agreement, dated February 2, 2012, by and between Purchaser
and TCP WR Acquisition, LLC.

 

“Purchaser Indemnification Amount” shall mean an amount in cash equal to One
Million Dollars ($1,000,000).

 

“Purchaser Preferred Stock” shall mean the Series A preferred stock, par value
$0.001 per share, of Purchaser having the designations, preferences and other
rights set forth in the Certificate of Designation of Preferences, Rights and
Limitations of Series A Preferred Stock of Purchaser, filed with the Secretary
of State of the State of Delaware on February 3, 2012.

 

“Representatives” of any Person shall mean such Person’s directors, managers,
officers, employees, agents, attorneys, consultants, advisors, representatives
or other Persons acting on behalf of such Person.

 

“SEC” means the Securities and Exchange Commission of the United States of
America.

 

“Securities Act” shall mean the Securities Act of 1933, as amended, and the
rules and regulations promulgated thereunder.

 

“Subsidiary”, with respect to any Person, shall mean (a) any corporation more
than fifty percent (50%) of whose stock of any class or classes having by the
terms thereof ordinary voting power to elect a majority of the directors of such
corporation (irrespective of whether or not at the time stock of any class or
classes of such corporation shall have or might have voting power by reason of
the happening of any contingency) is owned by such Person directly or indirectly
through one or more subsidiaries of such Person and (b) any partnership,
association, joint venture or other entity in which such Person directly or
indirectly through one or more subsidiaries of such Person has more than a fifty
percent (50%) equity interest.

 

“Taxes” shall mean all taxes, assessments, charges, duties, fees, levies or
other governmental charges including all United States federal, state, local,
foreign and other income, franchise, profits, gross receipts, capital gains,
capital stock, transfer, sales, use, value added, occupation, property, excise,
severance, windfall profits, stamp, license, payroll, social security,
withholding and other taxes, assessments, charges, duties, fees, levies or other
governmental charges of any kind whatsoever (whether payable directly or by
withholding and whether or not requiring the filing of a Return), all estimated
taxes, deficiency assessments, additions to tax, penalties and interest and
shall include any liability for such amounts as a result of (a) being a
transferee or successor or member of a combined, consolidated, unitary or
affiliated group, or (b) a contractual obligation to indemnify any Person.

 

-41-

 

 

“Trade Secrets” shall mean, collectively, trade secrets, proprietary and
confidential information, including ideas, formulas, compositions, inventions
(whether patentable or unpatentable and whether or not reduced to practice),
know-how, manufacturing and production processes and techniques, research and
development information, drawings, specifications, designs, plans, proposals,
data (including proprietary, manufacturing, customer and employee data),
copyrightable works, financial and marketing plans and customer and supplier
lists and information.

 

“Transactions” shall mean the transactions contemplated by this Agreement and
the other Transaction Documents.

 

“Transaction Documents” shall mean, collectively, this Agreement and all other
instruments and agreements to be delivered as contemplated by this Agreement.

 

“Transfer Agent” shall mean Stalt, Inc., the transfer agent for Purchaser.

 

“Treasury Regulations” shall mean the Treasury Regulations promulgated pursuant
to the Code, as amended from time to time, including the corresponding
provisions of any successor regulations.

 

Section 8.2.          Additional Defined Terms. In addition to the terms defined
in Section 8.1, additional defined terms used herein shall have the respective
meanings assigned thereto in the Sections indicated below.

 

Defined Term  

Section Reference

      Agreement   Preamble Balance Sheet Date   Section 2.5(a) Claim Certificate
  Section 6.6(a) Claim Expiration Date   Section 6.1 Closing   Section 1.3(a)
Closing Date   Section 1.3(a) Closing Statement   Section 1.2(a) Collateral
Source   Section 6.5 Company   Preamble Company Intellectual Property  
Section 2.13(a) Company Interests   Recitals Company IT Systems   Section
2.13(g) Confidentiality Agreement   Section 4.2(a) Debt Payoff Letter   Section
1.2(e) Deductible   Section 6.4(a) Employee Benefit Plans   Section 2.10(a)
ERISA   Section 2.10(a) Expense Invoice   Section 1.2(f) Financial Statements  
Section 2.5(a) Income Tax Returns   Section 2.12(c)(vi) Income Taxes  
Section 2.12(c)(vi) Indemnified Party   Section 6.6(a) IP Licenses  
Section 2.13(c) IP Title Defect Correction Actions   Section 4.8 Knowledge of
Seller   Section 8.5

 

-42-

 

 

Defined Term   Section Reference       Material Contract   Section 2.15(a)
Member Litigation   Section 4.5 Non-Recourse Party   Section 7.12 Open Matter  
Section 4.9 Open Matter Payments   Section 4.9 Open Matter Settlement Agreement
  Section 4.9 Permits   Section 2.8 Purchaser   Preamble Purchaser Indemnitees  
Section 6.2 Responsible Party   Section 6.6(a) Release Date   Section 6.9(a)
Return   Section 2.12(a) SEC Reports   Section 3.6 Seller   Preamble Seller
Disclosure Letter   Article II Seller Indemnitees   Section 6.3 Tax Matter  
Section 5.2(a) Third-Party Claim   Section 6.7 USCO   Section 2.13(b) USPTO  
Section 2.13(b)

 

Section 8.3.          Construction.  In this Agreement, unless the context
otherwise requires:

 

(a)          references to “writing” or comparable expressions include a
reference to facsimile transmission or comparable means of communication
(including electronic mail);

 

(b)          the phrases “delivered” or “made available” shall mean that the
information referred to has been physically or electronically delivered to the
relevant parties (including, in the case of “made available” to Purchaser,
material that has been posted, retained and thereby made available to Purchaser
through the on-line “virtual data room” established by the Company);

 

(c)          words expressed in the singular number shall include the plural and
vice versa; words expressed in the masculine shall include the feminine and
neuter gender and vice versa;

 

(d)          references to Articles, Sections, Exhibits, Schedules, the
Preamble, Recitals and Schedules of the Seller Disclosure Letter are references
to articles, sections, exhibits, schedules, the preamble and recitals of this
Agreement and schedules of the Seller Disclosure Letter, and the descriptive
headings of the several Articles, Sections, Exhibits and Schedules of this
Agreement and the Schedules of the Seller Disclosure Letter are inserted for
convenience only, do not constitute a part of this Agreement and shall not
affect in any way the meaning or interpretation of this Agreement;

 

-43-

 

 

 

(e)          whenever this Agreement refers to a number of days, that number
shall refer to calendar days unless Business Days are specified and whenever any
action must be taken under this Agreement on or by a day that is not a Business
Day, then that action may be validly taken on or by the next day that is a
Business Day;

 

(f)          references to “the date hereof” shall mean the date of this
Agreement;

 

(g)          the words “hereof”, “herein”, “hereto” and “hereunder”, and words
of similar import, shall refer to this Agreement as a whole and not to any
provision of this Agreement;

 

(h)          this “Agreement” or any other agreement or document shall be
construed as a reference to this Agreement or, as the case may be, such other
agreement or document as the same may have been, or may from time to time be,
amended, varied, novated or supplemented;

 

(i)          “include”, “includes”, and “including” are deemed to be followed by
“without limitation” whether or not they are in fact followed by such words or
words of similar import; and

 

(j)          references to “Dollars”, “dollars” or “$”, without more, are to the
lawful currency of the United States of America.

 

Section 8.4.          Exhibits, the Seller Disclosure Letter and the Schedules.

 

(a)          The Exhibits and the Seller Disclosure Letter and the Schedules are
incorporated into and form an integral part of this Agreement.

 

(b)          Except as otherwise provided in the Seller Disclosure Letter, all
capitalized terms therein shall have the meanings assigned to them in this
Agreement. The inclusion of any matter, information, item or other disclosure
set forth in any schedule of the Seller Disclosure Letter shall not be deemed to
constitute an admission of any liability of Seller or the Company or otherwise
imply that such matter, information, item or other disclosure is material or is
required to be referred to or disclosed under this Agreement. The information
contained in the Seller Disclosure Letter is disclosed solely for purposes of
this Agreement and no disclosure in the Seller Disclosure Letter relating to any
possible breach or violation of any agreement or Law shall be construed as an
admission or indication that any such breach or violation exists or has actually
occurred. Each Schedule of the Seller Disclosure Letter corresponds to the
section of this Agreement to which it relates; provided, that any information
disclosed in any Schedule of the Seller Disclosure Letter will qualify any
representation or warranty in this Agreement to the extent that a reasonable
Person would reasonably infer, based on the location and content of such
disclosure as set forth on such Schedule, the relevance or applicability of the
information disclosed to such representation or warranty, notwithstanding the
absence of a reference or cross-reference to such representation or warranty on
any such Schedule of the Seller Disclosure Letter or the absence of a reference
or cross-reference to such Schedule of the Seller Disclosure Letter in such
representation or warranty. Seller’s representations and warranties contained in
this Agreement are the product of negotiations among the parties thereto and are
solely for the benefit of Purchaser. Any inaccuracies in such representations
and warranties are subject to waiver by the parties hereto in accordance with
Section 7.2(b) and are qualified by the Seller Disclosure Letter. Consequently,
Seller’s representations and warranties in this Agreement may not be relied upon
by Persons other than the parties hereto as characterizations of actual facts or
circumstances as of the date of this Agreement or as of any other date.

 

-44-

 

 

Section 8.5.          Knowledge. When any representation, warranty, covenant or
agreement contained in this Agreement is expressly qualified by reference to the
“Knowledge of Seller” or words of similar import, it shall mean the knowledge of
the individuals set forth on Schedule 8.5 of the Seller Disclosure Letter, in
each case, after reasonable due inquiry.

 

Section 8.6.          Seller and Purchaser Acknowledgement. Seller and Purchaser
hereby acknowledge and agree that at any time following the eighteen (18) month
anniversary of the Closing Date, the Board of Representatives of Seller (or any
other governing body or Person managing the affairs of Seller) may, in its sole
and absolute discretion, dissolve and wind up the affairs of Seller, including
the liquidation of the assets of Seller, in accordance with the terms of the
constituent documents of Seller; provided, that Seller shall (a) provide written
notice of such dissolution to Purchaser no later than forty-five (45) days prior
to the effective date of such dissolution and (b) provide, prior to such
dissolution, Purchaser or the Company with powers of attorney and other
authorizations reasonably requested by Purchaser or the Company for the purpose
of effectuating the transactions contemplated by Section 4.8.

 

* * * * *

 

-45-

 

 

IN WITNESS WHEREOF, the parties hereto have duly executed or caused this
Agreement to be duly executed by their respective officers thereunto duly
authorized, all as of the day and year first above written.

 

  PURCHASER:       SEQUENTIAL BRANDS GROUP, INC.       By: /s/ Gary Klein  
Name: Gary Klein   Title: Chief Financial Officer       SELLER:       ETPH
ACQUISITION, LLC       By: /s/ Eric W. Kaup   Name: Eric W. Kaup   Title:
Secretary       COMPANY:       Solely for purposes of Section 7.13,       B®AND
MATTER, LLC       By: /s/ Eric W. Kaup   Name: Eric W. Kaup   Title: Secretary

 

[Signature Page to Purchase Agreement]

 

 

 

 

EXHIBIT A

 

Closing Statement

 

[See attached.]

 

 

 

 

EXHIBIT B

 

Closing Bankruptcy Payments

 

On March 22, 2013, the Company paid, on behalf of the defendants to the
Bankruptcy Litigation, by wire transfer of immediately available funds, an
amount in cash equal to Two Million One Hundred Thousand Dollars ($2,100,000)
for the account of Albert Togut, as Chapter 7 Trustee of Ellen Tracy, LLC, in
accordance with and in satisfaction of the obligations of such defendants under
the Bankruptcy Settlement Agreement and the Bankruptcy Settlement Approval
Order.

 

 

 

 

EXHIBIT C

 

Other Closing Payments

 

1.Eight Hundred Thousand Dollars ($800,000) payable to Purchaser’s legal counsel
in connection with the Bankruptcy Litigation, the Bankruptcy Settlement
Agreement and the Bankruptcy Settlement Approval Order, in each case, through
the date of this Agreement.

 

2.One Hundred Fifty Thousand Dollars ($150,000) payable to Israel Discount Bank
of New York in connection with the Bankruptcy Litigation, the Bankruptcy
Settlement Agreement and the Bankruptcy Settlement Approval Order.

 

3.In respect of any and all change-of-control payments payable to Mark Mendelson
in connection with the Transactions: (i) One Million Five Hundred Thousand Two
Dollars ($1,500,002) in cash payable to Mark Mendelson; (ii) Three Hundred
Thirty-Three Thousand Three Hundred Thirty-Three (333,333) shares of Purchaser
Common Stock issued to and in the name of Mark Mendelson; and (iii) One Hundred
Eleven Thousand One Hundred Eleven (111,111) shares of Purchaser Common Stock
issued to and in the name of Suzanne Klevorick.

 

 

 

 

EXHIBIT D

 

Open Matter Schedule

 

Any and all Liabilities of the Company arising from, related to or in connection
with the attached agreement, dated as of an uncertain date in 2011, by and
between the Company and ET SPORTSWEAR LLC.

 

 

 

 

EXHIBIT E

 

Bankruptcy Settlement Agreement

 

[See attached.]

 

 

 

 

EXHIBIT F

 

Escrow Agreement

 

[See attached.]

 

 

 

 

EXHIBIT G

 

Intellectual Property Confirmatory Assignment Agreement

 

[See attached.]

 

 

 

 

EXHIBIT H

 

Seller Closing Payments

 

1.Twenty-Five Thousand Dollars ($25,000) payable to Charlie Bang.

 

 

 

 

Schedule 4.9

 

1.Three Hundred Ninety-Five Thousand Dollars ($395,000)

 

2.Eight Hundred Thousand Dollars ($800,000)

 

3.To the extent that Seller settles the Open Matter in accordance with
Section 4.9 for an aggregate amount (the amount of such settlement, the “Open
Matter Settlement Amount”) which is less than the amount set forth as item 2 on
this Schedule 4.9, Purchaser shall reasonably promptly thereafter pay to Seller
an amount in cash equal to the excess of (i) Four Hundred Thousand Dollars
($400,000) over (ii) fifty percent (50%) of the Open Matter Settlement Amount.