Exhibit 10.29

 

EXECUTION VERSION

 

AMENDMENT NO. 2 TO
CREDIT AND SECURITY AGREEMENT

 

THIS AMENDMENT NO. 2 TO CREDIT AND SECURITY AGREEMENT (this "Amendment") is
entered into as of March 27, 2017 and effective as of December 31, 2016, by and
among the lenders identified on the signature pages hereto (each of such
lenders, together with its successors and permitted assigns, is referred to
hereinafter as a "Lender", and collectively, "Lenders"), TCW ASSET MANAGEMENT
COMPANY, as Agent for each of the Lenders (in such capacity, together with its
successors and assigns in such capacity, "Agent"), DIFFERENTIAL BRANDS GROUP
INC., a Delaware corporation ("Parent"), DBG SUBSIDIARY INC., a Delaware
corporation ("DBG"), HUDSON CLOTHING, LLC, a California limited liability
company ("Hudson"), RG PARENT LLC, a Delaware limited liability company (the "RG
Parent"), ROBERT GRAHAM HOLDINGS, LLC, a New York limited liability company ("RG
Holding"), ROBERT GRAHAM DESIGNS, LLC, a New York limited liability company ("RG
Designs"), DFBG SWIMS, LLC, a Delaware limited liability company ("Swims"),
ROBERT GRAHAM RETAIL LLC, a Delaware limited liability company ("RG Retail" and
together with Parent, DBG, Hudson, RG Parent, RG Holding, RG Designs, and Swims,
collectively, the "Borrowers", and each a  "Borrower"), and the Guarantors party
hereto.

WHEREAS, Borrowers, Parent, Guarantors, Agent and Lenders are party to that
certain Credit and Security Agreement, dated as of January 28, 2016 (as amended,
supplemented or otherwise modified from time to time and in effect as of the
date hereof, the "Credit Agreement");

WHEREAS, the parties hereto have agreed to make certain modifications to the
Credit Agreement, as more fully set forth herein;

NOW THEREFORE,  in consideration of the premises and other good and valuable
consideration, and subject to the satisfaction of the conditions precedent set
forth in herein, Parent, Borrowers, Guarantors, the Lenders and Agent hereby
agree as follows:

1. Definitions.  All terms used herein that are defined in the Credit Agreement
and not otherwise defined herein shall have the meanings assigned to them in the
Credit Agreement, as amended hereby. 

2. Amendment.  In reliance upon the representations and warranties of Borrowers
herein, and subject to the satisfaction of the conditions to effectiveness
herein, the Credit Agreement is hereby amended as follows:

(a) Schedule 1.1 to the Credit Agreement is hereby amended by adding the
following definitions thereto:

"Pro Forma EBITDA" means, with respect to any fiscal period, with respect to any
target acquired in an Acquisition permitted hereunder, the consolidated net
income (or loss) of such target for such period adjusted in a manner consistent
with the adjustments to consolidated net income (or loss) of

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Parent and its Subsidiaries set forth in the definition of EBITDA, in each case
to the extent applicable, as calculated by Borrowers for such period in
accordance with GAAP.

"Liquidity" means, as of any date of determination, the sum of (a) Availability
(as defined in the ABL Credit Agreement as in effect as of the date hereof) and
(b) cash and Cash Equivalents of the Loan Parties that would not appear as
"restricted" on a consolidated balance sheet of the Loan Parties, in each case,
as of such date.

"Liquidity Testing Period" means (a) the period commencing on the Second
Amendment Date and ending on the first date after June 30, 2017 on which a
Compliance Certificate and corresponding financial statements are delivered to
Agent demonstrating that the Net Senior Leverage Ratio for the most recently
ended period of four consecutive Fiscal Quarters of Parent and its Subsidiaries
is less than 4.25 to 1.00 (the period defined in this clause (a), the "Initial
Liquidity Testing Period") and (b) with respect to any date after the Initial
Liquidity Testing Period, the period commencing on the date on which a
Compliance Certificate and corresponding financial statements are delivered to
Agent demonstrating that the Net Senior Leverage Ratio for the most recently
ended period of four consecutive Fiscal Quarters of Parent and its Subsidiaries
is equal to or greater than 4.25 to 1.00, and ending on the next date on which a
Compliance Certificate and corresponding financial statements are delivered to
Agent demonstrating that the Net Senior Leverage Ratio for the most recently
ended period of four consecutive Fiscal Quarters of Parent and its Subsidiaries
is less than 4.25 to 1.00.

"Second Amendment Date" means March 27, 2017.

(b) Schedule 1.1 to the Credit Agreement is hereby amended by amending and
restating each of the following definitions therein:

"Applicable Margin" means (a) the applicable rate per annum corresponding to the
applicable Net Senior Leverage Ratio, all as set forth in the following table:

 

 

 

Net Senior Leverage Ratio

Base Rate

LIBOR Rate

≥ 5.00 to 1.00

9.50%

10.50%

≥ 4.00 to 1.00, but
< 5.00 to 1.00

8.75%

9.75%

≥ 3.00 to 1.00, but
< 4.00 to 1.00

8.00%

9.00%

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≥ 2.50 to 1.00, but
< 3.00 to 1.00

7.50%

8.50%

<2.50 to 1.00

6.00%

7.00%

 

and (b) with respect to any Incremental Term Loans, a percent per annum set
forth in the applicable Incremental Facility Amendment.

The Applicable Margin shall be adjusted quarterly, to the extent applicable, as
of the first Business Day following the date on which financial statements are
required to be delivered pursuant to Section 6.1 (including with respect to the
last Fiscal Quarter of each Fiscal Year) after the end of each related Fiscal
Quarter based on the Net Senior Leverage Ratio as of the last day of such Fiscal
Quarter; provided that, commencing on the Second Amendment Date and ending on
the date on which financial statements are required to be delivered pursuant to
Section 6.1 with respect to the Fiscal Quarter ending March 31, 2017, the
Applicable Margin shall be the rates corresponding to the Net Senior Leverage
Ratio of ≥ 4.00 to 1.00, but < 5.00 to 1.00 in the foregoing
table.  Notwithstanding the foregoing, (a) if Borrowers fail to deliver the
financial statements and the related Compliance Certificate required by Section
6.1, by the respective date required thereunder after the end of any related
Fiscal Quarter, if requested in writing by Agent or Required Lenders, the
Applicable Margin, to the extent applicable, shall be the rates corresponding to
the Net Senior Leverage Ratio of ≥ 5.00 to 1.00 in the foregoing table until
such financial statements and Compliance Certificate are delivered (plus, if
requested by Agent or Required Lenders, the default rate of interest as
described in Section 2.6(b)), and (b) no reduction to the Applicable Margin
shall become effective at any time when an Event of Default has occurred and is
continuing; provided, that any such reduction shall occur on the date all such
Events of Default have been cured or waived in accordance with the terms of this
Agreement.

If, as a result of any restatement of or other adjustment to the financial
statements of the Loan Parties or for any other reason, Agent determines that
(a) the Net Senior Leverage Ratio as calculated by Borrowers as of any
applicable date was inaccurate and (b) a proper calculation of the Net Senior
Leverage Ratio would have resulted in a different Applicable Margin for any
period, then (i) if the proper calculation of the Net Senior Leverage Ratio
would have resulted in a higher Applicable Margin for such period, Borrowers
shall automatically and retroactively be obligated to pay to Agent, for the
benefit of the applicable Lenders, promptly on demand by Agent (accompanied by
back-up calculations relating thereto in accordance with this Agreement), an
amount equal to the excess of the amount of interest and fees that should have
been paid for such period over the amount of interest and fees actually paid for
such

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period; and (ii) if the proper calculation of the Net Senior Leverage Ratio
would have resulted in a lower Applicable Margin for such period, neither Agent
nor any Lender shall have any obligation to repay any interest  to Borrowers;
provided, such excess shall be credited in a manner reasonably acceptable to
Agent against interest and fees payable hereunder in the next succeeding period,
and provided further, that, if as a result of any restatement or other event a
proper calculation of the Net Senior Leverage Ratio would have resulted in a
higher Applicable Margin for one or more periods and lower pricing for one or
more other periods (due to the shifting of income or expenses from one period to
another period or any similar reason), then (x) the amount payable by Borrowers
pursuant to clause (i) above shall be based upon the excess, if any, of the
amount of interest  that should have been paid for all applicable periods over
the amount of interest and fees paid for all such periods and (y) the amount
credited to Borrowers pursuant to clause (ii) above shall be based upon the
excess, if any, of the amount of interest  paid by Borrowers for all applicable
periods over the amount of interest that should have been paid for all such
periods.

"Available Increase Amount" means $0.

"EBITDA" means, with respect to any fiscal period, the consolidated net income
(or loss) of Parent and its Subsidiaries, plus (a) without duplication and to
the extent deducted in determining net income for such period, the sum of (i)
Interest Expense for such period (including, without limitation, fees and
expenses payable in respect of the Factoring Agreement and any other factoring
arrangement subject to terms reasonably acceptable to Agent), (ii) any provision
for taxes based on income or profits or capital (including federal, state and
local taxes, franchise taxes, excise taxes and similar taxes, including any
penalties or interest with respect thereto) for such period, (iii) all amounts
attributable to depreciation and amortization expense for such period, (iv) any
extraordinary charges for such period, (v) any other non-cash expenditure,
charge or loss for such period (other than any non-cash expenditure, charge or
loss (i) relating to write-offs, write-downs or reserves with respect to
accounts and Inventory, other than certain one-time Inventory obsolescence
charges in the amount of $139,250 for the three month period ending March 31,
2016, $139,250 for the three month period ending June 30, 2016, $794,250 for the
three month period ending September 30, 2016, and $139,250 for the three month
period ending December 31, 2016, or (ii) in respect of an item that was included
in net income in a prior period), (vi) management fees paid in cash during such
period to the extent permitted to be paid under the Loan Documents, (vii)
expenses incurred during such period related to discontinued operations (which
shall in any event include any expenses, charges and costs arising out of or
related to the wind-down of retail stores of Parent or any of its Subsidiaries),
(viii) noncash foreign exchange translation losses with respect to currency
hedges and currency remeasurements of indebtedness, (ix) any fees, expenses,
commissions, costs or other charges related to any issuance of Stock or any
investment, acquisition,

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disposition, recapitalization or the incurrence or repayment of Indebtedness
(including with respect to indebtedness, a refinancing thereof), in each case
whether or not consummated, and any amendment or modification to the terms of
any such transactions, (x) without duplication of fees, expenses and charges
incurred pursuant to clause (xi) below, reasonable and documented out of pocket
fees, costs and expenses incurred in connection with the administration of the
Loans after the Closing Date, (xi) fees, expenses or charges related to the
execution, delivery and performance by the Loan Parties of this Agreement, other
Loan Documents, Term Loan Documents, the Merger Agreement, the Stock Purchase
Agreements, the Rollover Agreement and the Asset Purchase Agreements, the
borrowing of Loans and Term Loans and other credit extensions, the use of the
proceeds thereof and the issuance of Letters of Credit hereunder (collectively,
the "Transaction") and incurred before, on or after (but not later than 90 days
after) the Closing Date in aggregate amount not to exceed $7,000,000, (xii)
fees, expenses or charges related to any litigation or other adverse proceeding
arising directly out of the Transaction, (xiii) solely to be added  for any
computation period ending (I) on or before December 31, 2016 in an amount not to
exceed $5,600,000, and (II) after December 31, 2016 and on or before December
31, 2017 in an amount not to exceed $1,000,000, the amount of severance expenses
and cost savings attributable to (A) wage expense (and associated benefits and
taxes) and (B) product sourcing costs as a result of diversifying the vendor
base) projected by the Borrowers in good faith to result from actions taken or
expected to be taken in connection with the Transaction after the Closing Date
(in each case calculated on a pro forma basis as though such cost savings had
been realized on the first day of such period and as if such cost savings were
realized during the entirety of such period), net of the amount of actual
benefits realized during such period from such actions; provided that such cost
savings are (1) reasonably supportable and quantifiable in the good faith
judgment of the Borrowers, and (2) reasonably anticipated to be realized within
12 months after the Closing Date, (xiv) the amount of any restructuring charges
and related charges, restructuring costs, integration costs, transition costs,
consolidation and closing costs for stores and other facilities, project
start-up costs, relocation costs, signing, retention and completion bonuses and
other restructuring charges, accruals or reserves, (xv) severance expenses and
pro forma adjustments, reflecting any synergies, operating expense reductions
and other operating improvements expected to be taken in connection with any
acquisition and reasonably anticipated to be realized within 12 months after the
consummation of the acquisition (in each case calculated on a pro forma basis as
though such cost savings had been realized on the first day of such period and
as if such cost savings were realized during the entirety of such period), net
of the amount of actual benefits realized during such period from such actions;
provided that such cost savings are reasonably supportable and quantifiable in
the good faith judgment of the Borrowers; provided that, for purposes of
calculating EBITDA for any period, written consent of the Agent shall be
required to the extent the sum of all add-backs pursuant clauses (iv), (ix),
(xii),

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(xiv) and this clause (xv) exceeds 10% of EBITDA (before giving effect to any
increases pursuant to this clause (xv)), (xvi) non-cash income reduction
adjustments derived from realigning Hudson Clothing Holdings, Inc.'s accounting
policies to mirror accounting policies used by Parent, (xvii) expenses incurred
in connection with store pre-opening and opening costs to the extent consistent
with past practice, (xviii) fees, expenses or charges incurred during such
period related to the Key Man Life Insurance Policy in an aggregate amount not
to exceed $100,000 in any Fiscal Year, (xix) non-cash income reduction
adjustments derived from purchase accounting, and (xx) to the extent an
Acquisition permitted hereunder has been consummated during such period, Pro
Forma EBITDA attributable to such Acquisition (but only that portion of Pro
Forma EBITDA attributable to the portion of such period that occurred prior to
the date of consummation of such Acquisition), minus (b) without duplication and
to the extent included in net income, (i) any credit for taxes (including
federal, state and local taxes, franchise taxes, excise taxes and similar taxes)
based on net income tax, and (ii) any extraordinary gains and any non-cash items
of income for such period on a consolidated basis in accordance with GAAP.
Notwithstanding the foregoing, EBITDA for (i) the three-month period ended March
31, 2015 shall be deemed to be $6,306,000, (ii) the three-month period ended
June 30, 2015 shall be deemed to be $3,882,000, (iii) the three-month period
ended September 30, 2015 shall be deemed to be $3,143,000 and (iv) the
three-month period ended December 31, 2015 shall be deemed to be $5,653,000.

(c)     Section 8 of the Credit Agreement is amended and restated in its
entirety as follows:

8.FINANCIAL COVENANTS.

Each Borrower and Guarantor covenants and agrees that, until indefeasible
payment in full of the Obligations (other than contingent indemnification
obligations not yet accrued and payable), Borrowers shall not:

(a)Net Senior Leverage Ratio.  Permit the Net Senior Leverage Ratio for any
period of 4 consecutive Fiscal Quarters of Parent and its Subsidiaries for which
the last Fiscal Quarter ends on a date set forth below to be greater than the
ratio set forth opposite such date:

 

 

Fiscal Quarter End

Net Senior Leverage Ratio

June 30, 2016

4.20 to 1.00

September 30, 2016

4.20 to 1.00

December 31, 2016

4.25 to 1.00

March 31, 2017

5.75 to 1.00

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Fiscal Quarter End

Net Senior Leverage Ratio

June 30, 2017

5.25 to 1.00

September 30, 2017

5.25 to 1.00

December 31, 2017

4.50 to 1.00

March 31, 2018

4.54 to 1.00

June 30, 2018

4.09 to 1.00

September 30, 2018

4.09 to 1.00

December 31, 2018

4.02 to 1.00

March 31, 2019

4.04 to 1.00

June 30, 2019

3.64 to 1.00

September 30, 2019

3.60 to 1.00

December 31, 2019

3.51 to 1.00

March 31, 2020

3.50 to 1.00

June 30, 2020

3.08 to 1.00

September 30, 2020

3.06 to 1.00

December 31, 2020
and each March 31, June 30, September 30 and December 31 thereafter

2.98 to 1.00

 

(b)Net Senior Rent Adjusted Leverage Ratio.  Permit the Net Senior Rent Adjusted
Leverage Ratio for any period of 4 consecutive Fiscal Quarters of Parent and its
Subsidiaries for which the last Fiscal Quarter ends on a date set forth below to
be greater than the ratio set forth opposite such date:

 

 

Fiscal Quarter End

Net Senior Rent Adjusted
Leverage Ratio

June 30, 2016

5.29 to 1.00

September 30, 2016

5.29 to 1.00

December 31, 2016

5.49 to 1.00

March 31, 2017

6.60 to 1.00

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Fiscal Quarter End

Net Senior Rent Adjusted
Leverage Ratio

June 30, 2017

6.25 to 1.00

September 30, 2017

6.25 to 1.00

December 31, 2017

5.75 to 1.00

March 31, 2018

5.81 to 1.00

June 30, 2018

5.52 to 1.00

September 30, 2018

5.55 to 1.00

December 31, 2018

5.50 to 1.00

March 31, 2019

5.52 to 1.00

June 30, 2019

5.26 to 1.00

September 30, 2019

5.25 to 1.00

December 31, 2019

5.17 to 1.00

March 31, 2020

5.18 to 1.00

June 30, 2020

4.92 to 1.00

September 30, 2020

4.93 to 1.00

December 31, 2020
and each March 31, June 30, September 30 and December 31 thereafter

4.86 to 1.00

 

(c)Fixed Charge Coverage Ratio.  Permit the Fixed Charge Coverage Ratio for any
period of 4 consecutive Fiscal Quarters of Parent and its Subsidiaries for which
the last Fiscal Quarter ends on a date set forth below to be less than the ratio
set forth opposite such date:

 

 

Fiscal Quarter End

Fixed Charge Coverage Ratio

June 30, 2016

1.56 to 1.00

September 30, 2016

1.77 to 1.00

December 31, 2016

1.71 to 1.00

March 31, 2017

1.25 to 1.00

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Fiscal Quarter End

Fixed Charge Coverage Ratio

June 30, 2017

1.25 to 1.00

September 30, 2017

1.20 to 1.00

December 31, 2017

1.10 to 1.00

March 31, 2018

1.20 to 1.00

June 30, 2018

1.20 to 1.00

September 30, 2018

1.20 to 1.00

December 31, 2018

1.20 to 1.00

March 31, 2019

1.20 to 1.00

June 30, 2019

1.20 to 1.00

September 30, 2019

1.20 to 1.00

December 31, 2019

1.20 to 1.00

March 31, 2020

1.20 to 1.00

June 30, 2020

1.20 to 1.00

September 30, 2020

1.20 to 1.00

December 31, 2020
and each March 31, June 30, September 30 and December 31 thereafter

1.20 to 1.00

 

(d)Liquidity.During any Liquidity Testing Period, permit Liquidity to be less
than $10,000,000 at any time.

3.   Reaffirmation and Confirmation.  Each of Parent, each Borrower and each
Guarantor hereby (a) ratifies, affirms, acknowledges and agrees that the Credit
Agreement and the other Loan Documents represent the valid and binding
obligations of such Loan Party, enforceable against such Loan Party in
accordance with its respective terms, except as enforcement may be limited by
equitable principles or by bankruptcy, insolvency, reorganization, moratorium,
or similar laws relating to or limiting creditors' rights generally, (b) agrees
that this Amendment in no way acts as a release or relinquishment of the Liens
and rights securing payments of the Obligations and (c) ratifies, affirms,
acknowledges and agrees to the Liens and rights securing payment of the
Obligations in all respects.

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4.   Conditions to Effectiveness.  This Amendment shall become effective only
upon the satisfaction in full of the following conditions precedent:

(a) Agent shall have received counterparts hereof, duly executed and delivered
by all the parties hereto;

(b) no Default or Event of Default shall have occurred and be continuing on the
date hereof after giving effect to this Amendment;

(c) after giving effect to this Amendment, each of the representations and
warranties made by the Loan Parties in this Amendment and/or in any other Loan
Document shall be true and correct in all material respects on and as of the
date hereof except (i) to the extent that any such representation or warranty
relates to a specific date, in which case such representation and warranty shall
be true and correct in all material respects as of such earlier date and (ii)
that such materiality qualifier shall not be applicable to any representations
and warranties that are already qualified or modified by materiality in the text
thereof;

(d) Borrowers shall have paid to Agent, for the account of each Lender, all fees
and all reasonable and documented out-of-pocket expenses under the Credit
Agreement, this Amendment and the other Loan Documents (including the
outstanding fees and expenses of Agent, including without limitation, legal fees
and expenses) to the extent such fees and expenses have been invoiced to
Borrowers at least one (1) Business Day prior to the date hereof; and

(e) Agent shall have received a fully executed copy of an amendment to the ABL
Credit Agreement, dated the date hereof, among the Borrowers, the Guarantors,
the Parent and Wells Fargo Bank, National Association as the sole lenders party
thereto (the "ABL Amendment"), which shall be in form and substance reasonably
satisfactory to the Agent, the conditions to effectiveness of the ABL Amendment
shall have been satisfied and the ABL Amendment shall be in full force and
effect.

5. Representations and Warranties.  Each of Parent and each Borrower represents,
warrants and covenants to Agent and the Lenders as of the date hereof (and after
giving effect to the consent contained herein):

(a) each of Parent, each Borrower and each Guarantor is duly authorized to
execute and deliver this Amendment to the Lenders and Agent;

(b) the execution, delivery and performance of this Amendment, (i) has been duly
authorized by all necessary action on the part of each Loan Party party or any
of its Subsidiaries party thereto, (ii) does not violate the Governing Documents
of any Loan Party or any of its Subsidiaries, (iii) does not and will not
require any registration with, consent, or approval of, or notice to, or other
action with or by, any Governmental Authority, other than registrations,
consents, approvals, notices or actions that have been obtained and that are in
force and effect, (iv) does not violate any provision of federal, state,
provincial, foreign or local law or regulation applicable to any Loan Party or
any of its Subsidiaries or any order, judgment, or decree of any court or other
Governmental Authority binding on any Loan Party or any of its Subsidiaries, and
(v) does not conflict with, result in a breach of, or constitute (with due
notice or

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lapse of time or both) a default under any material agreement of any Loan Party
or any of its Subsidiaries; and

(c) no Default or Event of Default has occurred and is continuing on the date
hereof after giving effect to this Amendment.

6. Miscellaneous.

(a) Costs and Expenses.  Each of Parent and each Borrower agrees to pay on
demand all reasonable and documented fees and out-of-pocket expenses of
designated counsel to Lenders and Agent in connection with this Amendment in
accordance with the Credit Agreement.

(b) Loan Document.  Each of Parent and each Borrower hereby acknowledges and
agrees that this Amendment constitutes a "Loan Document" under the Credit
Agreement. 

(c) No Waiver; Full Force and Effect.  Except as expressly stated herein,
nothing contained herein shall be deemed to (i) constitute a modification or
alteration of the terms, conditions or covenants of the Credit Agreement or any
other Loan Document or a waiver of compliance with any term or condition
contained in the Credit Agreement or any of the other Loan Documents or (ii)
prejudice any right or rights which the Lenders may now have or may have in the
future under or in connection with any Loan Documents or any of the instruments
or agreements referred to therein, as the same may be amended from time to
time.  Nothing contained herein shall constitute a course of conduct or dealing
among the parties.  Except as expressly stated herein, Agent and the Lenders
reserve all rights, privileges and remedies under the Loan Documents.  Except as
amended hereby, the Credit Agreement and other Loan Documents shall remain
unchanged and shall continue in full force and effect.  All references in the
Loan Documents to the Credit Agreement shall be deemed to be references to the
Credit Agreement as amended or modified hereby. 

(d) Release.  In consideration of the agreements of Agent and Lenders contained
herein and for other good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, each Loan Party, on behalf of
itself and its successors and assigns, and its present and former members,
shareholders, affiliates, subsidiaries, divisions, predecessors, directors,
officers, attorneys, employees, agents, legal representatives and other
representatives (each Loan Party and all such other Persons being hereinafter
referred to collectively as the "Releasing Parties" and individually as a
"Releasing Party"), hereby absolutely, unconditionally and irrevocably releases,
remises and forever discharges Agent, each Lender and their respective
successors and assigns, and their present and former shareholders, affiliates,
subsidiaries, divisions, predecessors, directors, officers, attorneys,
employees, agents, legal representatives and other representatives (all such
Persons being hereinafter referred to collectively as the "Releasees" and
individually as a "Releasee"), of and from all demands, actions, causes of
action, suits, covenants, contracts, controversies, agreements, promises, sums
of money, accounts, bills, reckonings, damages and any and all other claims,
counterclaims, defenses, rights of set‑off, demands and liabilities whatsoever
(individually, a "Claim" and collectively, "Claims") of every kind and nature,
at law or in equity, which any Releasing Party

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now owns, holds, has or claims to have against the Releasees or any of them and
which are actually known by such Releasing Party, for, upon, or by reason of any
circumstance, action, cause or thing whatsoever which arises at any time on or
prior to the date of this Amendment for or on account of, or in relation to, or
in any way

in connection with this Amendment, the Credit Agreement, or any of the other
Loan Documents or any of the transactions hereunder or thereunder.  Each Loan
Party understands, acknowledges and agrees that the release set forth above may
be pleaded as a full and complete defense to any Claim released thereby, and may
be used as a basis for an injunction against any action, suit or other
proceeding which may be instituted, prosecuted or attempted in breach of the
provisions of such release.  Each Loan Party agrees that no fact, event,
circumstance, evidence or transaction which could now be asserted shall affect
in any manner the final, absolute and unconditional nature of the release set
forth above.  Each of the Releasing Parties hereby absolutely, unconditionally
and irrevocably, covenants and agrees with, and in favor of, each Releasee that
it will not sue (at law, in equity, in any regulatory proceeding or otherwise)
any Releasee on the basis of any Claim expressly released, remised and
discharged by any Releasing Party pursuant to this Section 6(d).  If any
Releasing Party violates the foregoing covenant, each Loan Party, for itself and
its successors and assigns, and its present and former members, shareholders,
affiliates, subsidiaries, divisions, predecessors, directors, officers,
attorneys, employees, agents, legal representatives and other representatives,
jointly and severally agrees to pay, in addition to such other damages as any
Releasee may sustain as a result of such violation, all reasonable attorneys'
fees and costs incurred by any Releasee as a result of such violation.

(e) Counterparts.  This Amendment may be executed in any number of counterparts,
and by the parties hereto on the same or separate counterparts, and each such
counterpart, when executed and delivered, shall be deemed to be an original, but
all such counterparts shall together constitute one and the same
Amendment.  Delivery of an executed counterpart of this Amendment by facsimile
or other electronic delivery (including ".pdf") shall be equally effective as
delivery of an original executed counterpart of this Amendment.

(f) Governing Law.  This Amendment shall be a contract made under and governed
by the internal laws of the State of New York.  The choice of law and venue,
jury trial waiver and judicial reference provisions set forth in Section 13 of
the Credit Agreement are incorporated herein by reference and shall apply in all
respects to this Amendment. 

(g) No Third Party Beneficiaries.  This Amendment shall be binding upon and
inure to the benefit of the respective successors and permitted assignees of the
parties hereto. The terms and provisions of this Amendment are for the purpose
of defining the relative rights and obligations of the parties hereto with
respect to the transactions contemplated hereby and no Person shall be a third
party beneficiary of any of the terms and provisions of this Amendment.

(h) Headings.  Section and paragraph headings herein are included for
convenience of reference only and shall not constitute a part of this Amendment
for any other purpose.

-12-

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(i) Severability.  Any provision of this Amendment that is prohibited or
unenforceable in any jurisdiction shall, as to such jurisdiction, be ineffective
to the extent of such prohibition or unenforceability without invalidating the
remaining portions hereof or affecting the validity or enforceability of such
provision in any other jurisdiction.

 

[Remainder of page intentionally left blank.]

 

-13-

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IN WITNESS WHEREOF, the parties hereto have caused this Amendment to be executed
by their respective officers thereunto duly authorized, as of the date first
above written.

 

 

BORROWERS:

 

 

 

DIFFERENTIAL BRANDS GROUP INC., a Delaware corporation

 

 

 

By:

/s/ Bob Ross

 

Name:

Bob Ross

 

Title:

Chief Financial Officer

 

 

 

 

 

 

DBG SUBSIDIARY INC., a Delaware corporation

 

 

 

By:

/s/ Bob Ross

 

Name:

Bob Ross

 

Title:

Chief Financial Officer

 

 

 

 

 

 

HUDSON CLOTHING, LLC, a California limited liability company

 

 

 

By:

/s/ Bob Ross

 

Name:

Bob Ross

 

Title:

Chief Financial Officer

 

 

 

 

 

 

RG PARENT LLC, a Delaware limited liability company

 

 

 

By:

/s/ Bob Ross

 

Name:

Bob Ross

 

Title:

Chief Financial Officer

 

 

 

 

 

 

ROBERT GRAHAM RETAIL LLC a Delaware limited liability company

 

 

 

By:

/s/ Bob Ross

 

Name:

Bob Ross

 

Title:

Chief Financial Officer

 

 

 

 

 

 

ROBERT GRAHAM DESIGNS, LLC, a New York limited liability company

 

 

 

By:

/s/ Bob Ross

 

Name:

Bob Ross

 

Title:

Chief Financial Officer

 

 

 

 

 

Signature Page to Amendment No. 2 to Credit and Security Agreement

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ROBERT GRAHAM HOLDINGS, LLC, a New York limited liability company

 

 

 

By:

/s/ Bob Ross

 

Name:

Bob Ross

 

Title:

Chief Financial Officer

 

 

 

 

 

 

DFBG SWIMS, LLC, a Delaware limited liability company

 

 

 

By:

/s/ Bob Ross

 

Name:

Bob Ross

 

Title:

Chief Financial Officer

 

 

 

Signature Page to Amendment No. 2 to Credit and Security Agreement

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GUARANTORS:

 

 

 

INNOVO WEST SALES, INC., a Texas corporation

 

 

 

 

 

By:

/s/ Bob Ross

 

Name:

Bob Ross

 

Title:

Chief Financial Officer

 

 

 

 

 

 

 

DBG HOLDINGS SUBSIDIARY INC., a California corporation

 

 

 

 

 

By:

/s/ Bob Ross

 

Name:

Bob Ross

 

Title:

Chief Financial Officer

 

 

 

 

 

 

 

HUDSON CLOTHING HOLDINGS, INC., a Delaware corporation

 

 

 

 

 

By:

/s/ Bob Ross

 

Name:

Bob Ross

 

Title:

Chief Financial Officer

 

 

 

 

 

 

 

HC ACQUISITION HOLDINGS, INC., a Delaware corporation

 

 

 

 

 

By:

/s/ Bob Ross

 

Name:

Bob Ross

 

Title:

Chief Financial Officer

 

 

 

Signature Page to Amendment No. 2 to Credit and Security Agreement

--------------------------------------------------------------------------------

 

 

 

 

 

 

 

RGH GROUP LLC, a Delaware limited liability company

 

 

 

By:

/s/ Bob Ross

 

Name:

Bob Ross

 

Title:

Chief Financial Officer

 

 

 

 

 

 

 

MARCO BRUNELLI IP, LLC, a Delaware limited liability company

 

 

 

By:

/s/ Bob Ross

 

Name:

Bob Ross

 

Title:

Chief Financial Officer

 

Signature Page to Amendment No. 2 to Credit and Security Agreement

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AGENT:

 

 

 

TCW ASSET MANAGEMENT COMPANY

 

 

 

By:

/s/ Suzanne Grosso

 

Name:

Suzanne Grosso

 

Title:

Managing Director

 

Signature Page to Amendment No. 2 to Credit and Security Agreement

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LENDERS:

 

 

 

TCW DIRECT LENDING LLC

 

By TCW Asset Management Company LLC

 

Its Investment Advisor,

 

as a Lender

 

 

 

By:

/s/ Suzanne Grosso

 

Name:

Suzanne Grosso

 

Title:

Managing Director

 

 

 

 

 

 

 

TCW DIRECT LENDING STRATEGIC VENTURES LLC,

 

as a Lender

 

 

 

By:

/s/ Suzanne Grosso

 

Name:

Suzanne Grosso

 

Title:

Managing Director

 

 

 

 

 

 

 

WEST VIRGINIA DIRECT LENDING LLC

 

By TCW Asset Management Company LLC

 

Its Investment Advisor,

 

as a Lender

 

 

 

By:

/s/ Suzanne Grosso

 

Name:

Suzanne Grosso

 

Title:

Managing Director

 

 

Signature Page to Amendment No. 2 to Credit and Security Agreement

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