MEMBERSHIP PLEDGE AGREEMENT

 

THIS MEMBERSHIP PLEDGE AGREEMENT (this “Pledge Agreement”), dated as of July 31,
2013 is made by and between Xcel Brands, Inc., a Delaware corporation
(“Pledgor”), and Bank Hapoalim B.M. (“Lender”).

 

BACKGROUND

 

IM Brands, LLC, a Delaware limited liability company (“Borrower”) delivered to
Lender a Promissory Note dated as of the date hereof (as the same may be amended
or otherwise modified from time to time, the “Note”) pursuant to which Lender
will make a $13,000,000 loan (the “Loan”) to Borrower.

 

Pledgor is the legal and beneficial owner of the Pledged Interests (as
hereinafter defined).

 

In order to induce Lender to make the Loan evidenced by the Note, Pledgor has
agreed to execute and deliver this Pledge Agreement.

 

NOW, THEREFORE, in consideration of the premises and to induce Lender to make
the Loan, Pledgor hereby agrees with Lender as follows:

 

1.           Defined Terms.

 

(a)           The following terms which are defined in the Code (as defined
below) are used herein as so defined: Accounts, Chattel Paper, General
Intangibles and Instruments.

 

(b)           Capitalized terms used herein which are not defined in this Pledge
Agreement shall have the meanings given to them in the Note.

 

(c)           The following terms shall have the following meanings:

 

“Code”: the Uniform Commercial Code from time to time in effect in the State of
New York.

 

“Collateral”: (i) the Pledged Interests, (ii) all General Intangibles arising
out of the Operating Agreement in respect of the Pledged Interests, (iii) all
Accounts arising out of the Operating Agreement in respect of the Pledged
Interests, and (iv) to the extent not otherwise included, all Proceeds of any
and all of the foregoing.

 

“Commodity Exchange Act”: the Commodity Exchange Act (7 U.S.C. § 1 et seq.), as
amended from time to time, and any successor statute.

 

“Event of Default”: as defined in Section 8.

 

 

 

 

“Excluded Swap Obligation”: with respect to Pledgor, any Swap Obligation if, and
to the extent that, all or a portion of the grant by Pledgor of a security
interest to secure such Swap Obligation (or any guaranty thereof) is or becomes
illegal under the Commodity Exchange Act or any rule, regulation or order of the
Commodity Futures Trading Commission (or the application or official
interpretation of any thereof) by virtue of Pledgor’s failure for any reason to
constitute an “eligible contract participant” as defined in the Commodity
Exchange Act and the regulations thereunder at the time the grant of such
security interest becomes effective with respect to such Swap Obligation (or
guaranty thereof). If a Swap Obligation arises under a master agreement
governing more than one swap, such exclusion shall apply only to the portion of
such Swap Obligation that is attributable to swaps for which such security
interest is or becomes illegal.

 

“Guaranty” means the Guaranty of even date herewith made by Pledgor in favor of
Lender, as the same may be amended or otherwise modified from time to time.

 

“Operating Agreement”: the Operating Agreement of Borrower dated as of April 1,
2011, as amended, restated, supplemented and otherwise modified from time to
time in accordance with the terms thereof.

 

“Person” means an individual, a partnership, a corporation (including a business
trust), a joint stock company, a trust, an unincorporated association, a joint
venture, a limited liability company, a limited liability partnership or other
entity, or a government or any agency, instrumentality or political subdivision
thereof.

 

“Pledged Interests”: all of the limited liability interest in Borrower,
including, without limitation, all of Pledgor’s right, title and interest to
participate in the operation or management of Borrower, if any, and all of
Pledgor’s rights to properties, assets, membership interests and distributions
under the Operating Agreement, if any, together with all certificates, options
or rights of any nature whatsoever that may be issued or granted by Borrower to
Pledgor in respect of Pledged Interests and any other limited liability company
interest obtained by Pledgor in Borrower during the term hereof.

 

“Proceeds”: all “proceeds” as such term is defined in Section 9-102(a)(64) of
the Code and, in any event, shall include, without limitation, all dividends or
other income from the Pledged Interests, collections thereon or distributions
with respect thereto.

 

“Secured Obligations”: all of the indebtedness, obligations and liabilities of
Borrower to Lender, individually or collectively, whether direct or indirect,
joint or several, absolute or contingent, due or to become due, now existing or
hereafter arising under or in respect of any of the Loan Documents, all
Obligations under and as defined in the Guaranty and all of Pledgor’s
obligations under this Pledge Agreement provided that Secured Obligations shall
in no event include Excluded Swap Obligations.

 

“Swap Obligation”: with respect to Pledgor, any obligation to pay or perform
under any agreement, contract or transaction that constitutes a “swap” within
the meaning of section 1a(47) of the Commodity Exchange Act.

 

2.           Pledge; Grant of Security Interest. As collateral security for the
prompt and complete payment and performance when due (whether at the stated
maturity, by acceleration or otherwise) of the Secured Obligations, Pledgor
hereby transfers and assigns to Lender all of the Pledged Interests and hereby
grants to Lender a first priority security interest in the Collateral.

 

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3.           Delivery to Lender.

 

(a)           Pledgor shall deliver to Lender (i) promptly (but in any event
within three (3) Business Days of receipt thereof by Pledgor) following delivery
of such certificates to Pledgor from its existing lenders, all certificates
representing the Pledged Interests and (ii) promptly upon the receipt thereof by
or on behalf of Pledgor, all other certificates and instruments constituting
Collateral. Prior to delivery to Lender, all such certificates and instruments
constituting Collateral shall be held in trust by Pledgor for the benefit of
Lender pursuant hereto. All such certificates shall be delivered in suitable
form for transfer by delivery or shall be accompanied by duly executed
instruments of transfer or assignment in blank, substantially in the form
provided in Schedule 1 attached hereto.

 

(b)           If any amount payable under or in connection with any of the
Collateral shall be or become evidenced by any promissory note, other Instrument
or Chattel Paper, such note, Instrument or Chattel Paper shall be immediately
delivered to Lender, duly endorsed in a manner reasonably satisfactory to
Lender, to be held as Collateral pursuant to this Pledge Agreement.

 

(c)           Pledgor authorizes Lender to file such UCC or other applicable
financing statements as may be required by Lender in order to perfect and
protect the security interest created hereby in the Collateral.

 

(d)           Pledgor agrees to execute and deliver to Lender such other
consents, acknowledgments, agreements, instruments and documentation as Lender
may reasonably request from time to time to effectuate the conveyance, transfer,
assignment and grant to Lender of all of such Pledgor’s right, title and
interest in and to the Collateral and any distributions with respect thereto.

 

4.           Representations and Warranties. Pledgor represents and warrants to
Lender that, as of the date hereof:

 

(a)           The Pledged Interests constitute all of Pledgor’s limited
liability company interests or other beneficial interests of any kind in
Borrower and accurately reflects the ownership interest of Pledgor in Borrower.

 

(b)           All required equity contributions to Borrower by Pledgor have been
made in connection with the Pledged Interests.

 

(c)           Pledgor is the record and beneficial owner of, and has good and
marketable title to, the Pledged Interests, free of any and all Liens or options
in favor of, or claims of, any other Person, except for the security interest
created by this Pledge Agreement.

 

(d)           So long as done in accordance with laws affecting the offering and
sale of securities and the Uniform Commercial Code in the applicable
jurisdiction, the exercise by Lender of its rights and remedies hereunder will
not violate any material contractual restriction or, to the best of Pledgor’s
knowledge, any law or governmental regulation, in each case, binding on or
affecting Pledgor or any of its property.

 

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(e)           No authorization, approval or action by, and no notice of filing
with Borrower is required either (i) for the pledge made by Pledgor or for the
granting of the security interest by Pledgor pursuant to this Pledge Agreement
or (ii) to the best of Pledgor’s knowledge, for the exercise by Lender of its
rights and remedies hereunder (except as may be required by the Uniform
Commercial Code in the applicable jurisdiction or laws affecting the offering
and sale of securities).

 

5.           Covenants. Pledgor covenants and agrees with Lender that:

 

(a)           If Pledgor shall, as a result of its ownership of the Pledged
Interests, become entitled to receive or shall receive any certificate
(including, without limitation, any certificate representing a dividend or a
distribution in connection with any reclassification, increase or reduction of
capital or any certificate issued in connection with any reorganization), option
or rights, whether in addition to, in substitution of, as a conversion of, or in
exchange for any shares of the Pledged Interests, or otherwise in respect
thereof, Pledgor shall accept the same as the agent of Lender, hold the same in
trust for Lender and deliver the same forthwith to Lender in the exact form
received, duly endorsed by Pledgor to Lender, if required, together with duly
executed instruments of transfer or assignments in blank, substantially in the
form provided Schedule 1 attached hereto to be held by Lender, subject to the
terms hereof, as additional collateral security for the Secured Obligations. Any
sums paid upon or in respect of the Pledged Interests as a dividend or other
distribution or upon the liquidation or dissolution of Borrower shall be paid
over to Lender to be held by it hereunder as additional collateral security for
the Secured Obligations, and in case any distribution of capital shall be made
on or in respect of the Pledged Interests or any property shall be distributed
upon or with respect to the Pledged Interests pursuant to any recapitalization,
reclassification or reorganization of Borrower, the property so distributed
shall be delivered to Lender to be held by it hereunder as additional collateral
security for the Secured Obligations. If any sums of money or property so paid
or distributed in respect of the Pledged Interests shall be received by Pledgor,
Pledgor shall, until such money or property is paid or delivered to Lender, hold
such money or property in trust for Lenders, segregated from other funds of
Pledgor, as additional collateral security for the Secured Obligations.

 

(b)           Pledgor will not (1) sell, assign, transfer, exchange, or
otherwise dispose of, or grant any option with respect to, the Collateral or any
portion thereof, (2) create, incur or permit to exist any security interest,
encumbrance, lien or option in favor of, or any claim of any Person with respect
to, any of the Collateral, or any interest therein, except for the security
interests created by this Pledge Agreement or (3) enter into any agreement or
undertaking restricting the right or ability of Pledgor to sell, assign or
transfer any of the Collateral.

 

(c)           Pledgor shall warrant and defend title to and ownership of the
Collateral at his own expense against the claims and demands of all other
parties claiming an interest therein, shall maintain the security interest
created by this Pledge Agreement as a first priority security interest and shall
defend such security interest against claims and demands of all Persons
whomsoever. At any time and from time to time, upon the written request of
Lender, Pledgor will promptly and duly execute and deliver such further
instruments and documents and take such further actions at his expense as Lender
may reasonably request for the purposes of obtaining or preserving the full
benefits of this Pledge Agreement and of the rights and powers herein granted.

 

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(d)           Pledgor shall not amend the Operating Agreement.

 

6.           Voting Rights. Unless an Event of Default shall have occurred and
be continuing, Pledgor shall be permitted to exercise all voting and company
rights with respect to the Pledged Interests; provided, however, that no vote
shall be cast or company right exercised or other action taken which, in
Lender’s reasonable judgment, would impair the Collateral or which would be
inconsistent with or result in any violation of any provision of the Loan
Documents.

 

7.           Rights of Lender. If an Event of Default shall occur and be
continuing, at Lender’s option, (1) Lender shall have the right to receive any
and all cash dividends or other distributions paid in respect of the Pledged
Interests and to make application thereof as provided in Section 9(a), and (2)
the Pledged Interests shall be registered in the name of Lender or its nominee,
and Lender or its nominee may thereafter exercise (A) all voting and other
rights pertaining to the Pledged Interests at any meeting of owners of Borrower
or otherwise and (B) any and all rights of conversion, exchange, subscription
and any other rights, privileges or options pertaining to the Pledged Interests
as if it were the absolute owner thereof (including, without limitation, the
right to exchange at its discretion any and all of the Pledged Interests upon
the merger, consolidation, reorganization, recapitalization or other fundamental
change in the company structure of Borrower, or upon the exercise by Pledgor or
Lender of any right, privilege or option pertaining to the Pledged Interests,
and in connection therewith, the right to deposit and deliver any and all of the
Pledged Interests with any committee, depository, transfer agent, registrar or
other designated agency upon such terms and conditions as Lender may determine),
all without liability except to account for property actually received by it,
but Lender shall have no duty to Pledgor to exercise any such right, privilege
or option and shall not be responsible for any failure to do so or delay in so
doing.

 

8.           Events of Default: An Event of Default (as defined in the Loan
Documents or any other Loan Document) shall constitute an Event of Default
hereunder.

 

9.           Remedies.

 

(a)           If an Event of Default shall have occurred and be continuing, at
any time at Lender’s election, Lender may apply all or any part of Proceeds held
by Lender in payment of the Secured Obligations in such order as Lender may
elect.

 

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(b)           If an Event of Default shall have occurred and be continuing,
Lender may exercise, in addition to all other rights and remedies granted in
this Pledge Agreement and in any other instrument or agreement securing,
evidencing or relating to the Secured Obligations, all rights and remedies of a
secured party under the Code. Without limiting the generality of the foregoing,
Lender, without resort to any other collateral or remedy under any Loan Document
or demand of performance or other demand, presentment, protest, advertisement or
notice of any kind (except any notice required by law referred to below) to or
upon Pledgor or any other Person (including without limitation Borrower) (all
and each of which demands, defenses, advertisements and notices are hereby
waived), may in such circumstances forthwith collect, receive, appropriate and
realize upon the Collateral, or any part thereof, and/or may forthwith sell,
assign, give an option or options to purchase or otherwise dispose of and
deliver the Collateral or any part thereof (or contract to do any of the
foregoing), in one or more parcels at public or private sale or sales, in the
over-the-counter market, at any exchange, broker’s board or office of Lender or
elsewhere upon such terms and conditions as it may deem advisable and at such
prices as it may deem best, for cash or on credit or for future delivery without
assumption of any credit risk. Lender shall apply any Proceeds from time to time
held by it and the net proceeds of any such collection, recovery, receipt,
appropriation, realization or sale, after deducting all reasonable costs and
expenses of every kind incurred in respect thereof or incidental to the care or
safekeeping of any of the Collateral or in any way relating to the Collateral or
its rights hereunder, including, without limitation, actual and reasonable
attorneys’ fees and disbursements of counsel to Lender, to the payment in whole
or in part of the Secured Obligations, in such order as Lender may elect, and
only after such application and after the payment by Lender of any other amount
required by any provision of law, including, without limitation, Section 9-615
of the Code, need Lender account for the surplus, if any, to Pledgor. To the
extent permitted by applicable law, Pledgor waives all claims, damages and
demands it may acquire against Lender arising out of the exercise by it of any
rights hereunder except for any claim, damage or demand arising from the gross
negligence or willful misconduct of Lender. If any notice of a proposed sale or
other disposition of Collateral shall be required by law, such notice shall be
deemed reasonable and proper if given in writing at least ten (10) days before
such sale or other disposition. Pledgor shall remain liable for any deficiency
if the proceeds of any sale or other disposition of Collateral are insufficient
to pay the Secured Obligations and the reasonable fees and disbursements of any
attorneys employed by Lender to collect such deficiency.

 

10.           Irrevocable Authorization and Instruction to Borrower. Pledgor
hereby authorizes and instructs Borrower to comply with any instruction received
by Pledgor from Lender in writing that (a) states that an Event of Default has
occurred and (b) is otherwise in accordance with the terms of this Pledge
Agreement, without any other or further instructions from Pledgor, and Pledgor
agrees that Borrower shall be fully protected in so complying.

 

11.           Appointment as Attorney-in-Fact.

 

(a)           Pledgor hereby irrevocably constitutes and appoints Lender and any
officer or agent of Lender, with full power of substitution, as his true and
lawful limited attorney-in-fact with full irrevocable power and authority in the
place and stead of Pledgor and in the name of Pledgor and in Lender’s own name
to take any and all appropriate action and to execute any and all documents and
instruments which may be necessary or desirable to accomplish the purposes of
this Pledge Agreement, including, without limitation, any financing statements,
endorsement, assignment or other instruments of transfer, but Lender may act
pursuant to this power-of-attorney only if an Event of Default is continuing.

 

(b)           All powers, authorizations and agencies contained in this Pledge
Agreement are coupled with an interest and are irrevocable until this Pledge
Agreement is terminated and the security interests created hereby are released.

 

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12.           Duty of Lender. Lender’s sole duty with respect to the custody,
safekeeping and physical preservation of the Collateral in its possession, under
Section 9-207 of the Code or otherwise, shall be to deal with it in the same
manner as Lender deals with similar securities and property for its own account.
Neither Lender nor any of its directors, officers, employees or agent shall be
liable for failure to demand, collect or realize upon any of the Collateral or
for any delay in doing so shall be under any obligation to sell or otherwise
dispose of any Collateral upon the request of Pledgor or any other Person or to
take any other action whatsoever with regard to the Collateral or any part
thereof.

 

13.           Execution of Financing Statements. Pledgor authorizes Lender to
file financing statements with respect to the Collateral without the signature
of Pledgor in such form and in such filing offices as Lender reasonably
determines necessary to perfect the security interests of Lender under this
Pledge Agreement.

 

14.           Indemnification. Pledgor hereby agrees to indemnify, defend and
hold Lender and its successors and assigns, harmless from and against any and
all actual damages (and not special, consequential, exemplary or punitive
damages), losses, claims, costs or expenses (including reasonable attorneys’
fees) and any other liabilities whatsoever that Lender or its successors or
assigns may incur by reason of this Pledge Agreement or by reason of any
assignment of Pledgor’s right, title and interest in and to any or all of the
Collateral, except for damages, losses, claims, costs or expenses (including
reasonable attorneys’ fees) or other liabilities arising out the gross
negligence or willful misconduct of Lender.

 

15.           Consent and Waiver. Pledgor agrees that, without the prior written
consent of Lender, Pledgor shall not take any action that would operate to
dilute the interest of Pledgor in Borrower. Pledgor further hereby expressly
waives any and all rights under the Operating Agreement which, whether exercised
by Pledgor or not, would prevent, inhibit or interfere with the granting of a
security interest in the Collateral, the foreclosure of such security interest
in the Collateral by Lender or the full realization by Lender of any of its
other rights under this Pledge Agreement. Pledgor agrees that any assignee of
the Pledged Interests shall not be liable for the obligations and liabilities of
Pledgor with respect to Borrower arising before such assignee’s admission to
Borrower, except to the extent required by law.

 

16.           Notices. All notices, requests and demands and other
communications hereunder, shall be in writing and shall be deemed to have been
sufficiently given when received (whether by delivery or deposit in the mail),
addressed as follows:

 

  if to Pledgor: Xcel Brands, Inc.
475 Tenth Avenue
New York, New York 10018
Attention:  James Haran
Facsimile No.: (347) 436-9178

 

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  with copies to: Blank Rome LLP
The Chrysler Building
405 Lexington Avenue
New York, New York 10174-0208
Attention:  Robert Mittman, Esq.
Facsimile No.:  (917) 332-3711         and, if to Lender, as follows: Bank
Hapoalim B.M.
1177 Avenue of the Americans
New York, New York 10036
Attention:  Mitchell Barnett
Facsimile No.: (212) 782-2345         With copies to: Loeb & Loeb LLP
345 Park Avenue
New York, New York 10154
Attn:  Miriam L. Cohen, Esq.
Facsimile No.:  {212) 401-4717

 

Either party may change the persons to whom notices are to be sent or its/his
address to other locations by notice to the other party, provided, however, that
in no event shall more than two copies of any notice be required to be sent.

 

17.           Severability. Any provision of this Pledge Agreement which 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 provisions hereof, and any such prohibition or
unenforceability in any jurisdiction shall not invalidate or render
unenforceable such provision in any other jurisdiction.

 

18.           Amendments in Writing; No Waiver; Cumulative Remedies.

 

(a)           None of the terms or provisions of this Pledge Agreement may be
waived, amended, restated, supplemented or otherwise modified except by a
written instrument executed by Pledgor and Lender, provided that any provision
of this Pledge Agreement may be waived by Lender in a letter or agreement
executed by Lender or by facsimile transmission from Lender.

 

(b)           Lender shall not by any act (except by a written instrument
pursuant to Section 18(a) hereof), delay, indulgence, omission or otherwise be
deemed to have waived any right or remedy hereunder or to have acquiesced in any
Event of Default or in any breach of any of the terms and conditions hereof. No
failure to exercise, nor any delay in exercising on the part of Lender, any
right, power or privilege hereunder shall operate as a waiver thereof. No single
or partial exercise of any right, power or privilege hereunder shall preclude
any other or further exercise thereof or the exercise of any other right, power
or privilege. A waiver by Lender of any right or remedy hereunder on any one
occasion shall not be construed as a bar to any right or remedy which Lender
would otherwise have on any future occasion.

 

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(c)           The rights and remedies herein provided are cumulative, may be
exercised singly or concurrently and are not exclusive of any other rights or
remedies provided by law.

 

19.           Section Headings. The section headings used in this Pledge
Agreement are for convenience of reference only and are not to affect the
construction hereof or be taken into consideration in the interpretation hereof.

 

20.           Successors and Assigns. This Pledge Agreement shall be binding
upon the heirs, administrators, successors and permitted assigns of Pledgor and
shall inure to the benefit of Lender and its successors and permitted assigns,
provided that Pledgor may not assign his rights or obligations under this Pledge
Agreement and any such purported assignment shall be null and void.

 

21.           Governing Law. THIS PLEDGE AGREEMENT AND THE RIGHTS AND
OBLIGATIONS OF THE PARTIES HEREUNDER SHALL BE GOVERNED BY, AND CONSTRUED AND
INTERPRETED IN ACCORDANCE WITH, THE LAW OF THE STATE OF NEW YORK, WITHOUT
REFERENCE TO CONFLICTS OF LAWS RULES.

 

22.           Submission to Jurisdiction; Waiver of Jury Trial. EACH OF PLEDGOR
AND LENDER HEREBY IRREVOCABLY SUBMITS TO THE NON-EXCLUSIVE JURISDICTION OF ANY
UNITED STATES FEDERAL OR NEW YORK STATE COURT SITTING IN NEW YORK IN ANY ACTION
OR PROCEEDING ARISING OUT OF OR RELATING TO THIS PLEDGE AGREEMENT AND EACH OF
PLEDGOR AND LENDER HEREBY IRREVOCABLY AGREES THAT ALL CLAIMS IN RESPECT OF SUCH
ACTION OR PROCEEDING MAY BE HEARD AND DETERMINED IN ANY SUCH COURT AND
IRREVOCABLY WAIVES ANY OBJECTION IT MAY NOW OR HEREAFTER HAVE AS TO THE VENUE OF
ANY SUCH SUIT, ACTION OR PROCEEDING BROUGHT IN SUCH A COURT OR THAT SUCH COURT
IS AN INCONVENIENT FORUM. NOTHING HEREIN SHALL LIMIT THE RIGHT OF LENDER TO
BRING PROCEEDINGS WITH RESPECT TO THE COLLATERAL AGAINST PLEDGOR IN THE COURTS
OF ANY OTHER JURISDICTION TO THE EXTENT NECESSARY TO EXERCISE RIGHTS AND
REMEDIES WITH RESPECT TO THE COLLATERAL. PLEDGOR AND LENDER HEREBY WAIVE TRIAL
BY JURY IN ANY JUDICIAL PROCEEDING INVOLVING, DIRECTLY OR INDIRECTLY, ANY MATTER
(WHETHER SOUNDING IN TORT, CONTRACT OR OTHERWISE) IN ANY WAY ARISING OUT OF,
RELATED TO, OR CONNECTED WITH THIS PLEDGE AGREEMENT OR THE RELATIONSHIPS
ESTABLISHED THEREUNDER.

 

23.           Venue. The parties hereto hereby irrevocably waive any objection
which they may now or hereafter have to the laying of venue of any of the
aforesaid actions or proceedings arising out of or in connection with this
Pledge Agreement brought in the courts referred to in Section 23 above and
hereby further irrevocable waive and agree not to plead or claim in any such
court that any such action or proceeding brought in any such court has been
brought in an inconvenient forum.

 

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24.           Termination. This Pledge Agreement, and the assignments, pledges
and security interests created or granted hereby, shall automatically terminate
when all Secured Obligations shall have been paid in full. Notwithstanding the
foregoing, Pledgor agrees that if any payment made and applied to the Secured
Obligations is at any time annulled, avoided, set aside, rescinded, invalidated,
declared to be fraudulent or preferential or otherwise required to be refunded
or repaid, or the proceeds of Collateral are required to be returned by Lender
to Pledgor or any other Person under any bankruptcy law, state or federal law,
common law or equitable cause, then, to the extent of such payment or repayment,
any lien or other collateral securing such liability shall be and remain in full
force and effect, as fully as if such payment had never been made or, if prior
thereto the lien granted hereby or other Collateral securing such liability
hereunder shall have been released or terminated by virtue of such cancellation
or surrender, such lien or other Collateral shall be reinstated in full force
and effect, and such prior cancellation or surrender shall not diminish,
release, discharge, impair or otherwise affect any lien or other Collateral
securing the obligations of Pledgor in respect of the amount of such payment.

 

[SIGNATURES ON NEXT PAGE]

 

 

 

 

IN WITNESS WHEREOF, the undersigned have caused this Pledge Agreement to be duly
executed and delivered as of the date first above written.

 

  XCEL BRANDS, INC.       By: /s/ James F. Haran     Name: James F. Haran    
Title: Chief Financial Officer

 

  BANK HAPOALIM B.M.       By: /s/ Mitchell Barnett     Name:  Mitchell Barnett
    Title:  Senior Vice President

 

  By: /s/ Lavea Eisenberg     Name:  Lavea Eisenberg Barnett     Title:  First
Vice President

 

SIGNATURE PAGE TO
MEMBERSHIP PLEDGE AGREEMENT

 

 

SCHEDULE 1

 

IRREVOCABLE TRANSFER POWER

 

FOR VALUE RECEIVED, the undersigned hereby sells, assigns and transfers to
_________________________________________________________________ the following
equity interest in IM Brands, LLC, a Delaware limited liability company.

 

  Certificate No. No. of Units/Interests

 

and irrevocably appoints

 

his agent and attorney-in-fact to transfer all or any part of such equity
interest and to take all necessary and appropriate action to effect any such
transfer. The agent and attorney-in-fact may substitute and appoint one or more
persons to act for him. The effectiveness of a transfer pursuant to this
transfer power shall be subject to any and all transfer restrictions referenced
on the face of the certificates evidencing such interest or in the operating
agreement of the subject limited liability company, to the extent they may from
time to time exist.

 

 

Date:     XCEL BRANDS, INC.

 

Witness by:   By:         Name:       Title: