Exhibit 10.4

 

Execution Version

 

May 15, 2020

VIA EMAIL

 

Sequential Brands Group, Inc.

601 West 26th Street

9th Floor

New York, NY 10001

Attention: Mr. David Conn

 

RE:Proposed SBA Loan

Dear Mr. Conn:

 

We refer to that certain Third Amended and Restated Credit Agreement,  dated as
of July 1, 2016 (as amended, modified, supplemented and restated from time to
time, the “Credit Agreement”) by and among Sequential Brands Group, Inc., a
Delaware corporation (“Borrower” or “you”), the Guarantors party thereto, the
Lenders from time to time party thereto and Wilmington Trust, National
Association, as Agent for the Lenders thereunder (in such capacity and together
with its successors and assigns, “Agent” or “us”) for the Lenders.  Capitalized
terms used but not defined herein shall have the meaning set forth in the Credit
Agreement.

 

You have informed us that you intend to incur certain loan obligations in
reliance on the Small Business Administration’s Paycheck Protection Program (the
“Paycheck Protection Program”) under the Coronavirus Aid,  Relief,  and Economic
Security Act (P.L. 116-136) (the “CARES Act”) in an aggregate principal amount
of up to $769,295 (the “SBA Loan”; and the unsecured Indebtedness evidenced
thereby, the “SBA Loan Debt”).  The incurrence of the SBA Loan Debt requires the
consent of Agent (at the direction of the Required Lenders) under the Credit
Agreement, and accordingly, you have requested our consent to incur the SBA Loan
Debt.  Agent (at the direction of the Required Lenders) hereby consents to the
incurrence of the SBA Loan Debt and agrees that, notwithstanding anything to the
contrary contained in the Credit Agreement, such SBA Loan Debt shall constitute
Permitted Indebtedness under the terms of Section 7.03 of the Credit Agreement,
Indebtedness and Consolidated Total Indebtedness for all purposes under the
Credit Agreement and other Loan Documents, including, without limitation, for
purposes of calculating the financial covenants under Section 7.15 of the Credit
Agreement, subject to the following terms and conditions:

 

(a)

Borrower shall have submitted all required forms, applications and certificates
required for, and shall have been conditionally approved to receive, the SBA
Loan under the Paycheck Protection Program;  

 

(b)

Borrower shall (i) at all times comply with all terms applicable to the SBA
Loan, including without limitation, any requirements with respect to the use of
proceeds of the SBA Loan, and (ii) make only regularly scheduled payments of
interest accruing

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on, and to the extent required under, the SBA Loan at a rate not exceeding 1.0%
per annum in respect thereof;

 

(c)

Prior to the effectiveness of the foregoing consent, Agent and the Lenders shall
have received a corresponding consent from all applicable third parties to the
extent such consent is required in connection with the SBA Loan or this consent
(collectively, the “Required Consents”);

 

(d)

Borrower shall furnish to Agent and the Lenders (it being understood that the
Borrower may send each of the following via e-mail to the Agent and Lender’s
e-mail addresses specified on Schedule 10.02 of the Credit Agreement): (i) no
later than the 15th day of each calendar month, a detailed description of how
the proceeds of the SBA Loan have been applied by Borrower (and, if applicable,
the other Loan Parties and their Subsidiaries)  through the end of the
immediately prior 14-day period, (ii) no later than the 29th day of each
calendar month, a detailed description of how the proceeds of the SBA Loan have
been applied by Borrower (and, if applicable, the other Loan Parties and their
Subsidiaries)  through the end of the immediately prior 14-day period, (iii)
promptly and in any event within five (5) Business Days after submission, copies
of all documents submitted by Borrower to request and justify forgiveness of the
SBA Loan Debt, and (iv)  promptly and in any event within five (5) Business Days
after receipt, copies of any notices received by the applicable lender or
Governmental Authority with respect to the SBA Loan;

 

(e)

(i) By not later than June 5, 2020 (or such later date as the KKR Representative
may agree in its sole discretion), Borrower shall cause all proceeds of the SBA
Loan (and no other funds) to be deposited in into a segregated deposit account
(the “SBA Loan Account”), which such deposit account shall constitute an
Excluded Account; (ii) Borrower shall use funds from the SBA Loan Account solely
for the purposes set forth in Section 1106(b) of the CARES Act and otherwise in
compliance with all other provisions or requirements of the CARES Act applicable
in order for the SBA Loan Debt to be eligible for forgiveness and (iii) Borrower
shall apply for, and submit all documents required to obtain, forgiveness or
other relief of the SBA Loan Debt by all deadlines required by the CARES Act;
and

 

(f)

In no event shall Borrower or any Loan Party or any of their
respective Affiliates directly or indirectly purchase, redeem, defease, prepay
or repay any principal of, premium, if any, interest or other amount payable in
respect of seventy-five percent (75%) of the initial principal amount of the SBA
Loan Debt, other than (i) the cancellation and forgiveness of all or any portion
of the SBA Loan Debt, (ii) if funded from funds in the SBA Loan Account,  or
(iii) to the extent Agent otherwise consents in writing at the direction of the
Required Lenders in their sole discretion.

 

The Borrower agrees that any failure to comply with any of the foregoing
conditions that occurs (and in the case of any such failure to comply which is
capable of being cured has not been cured within three (3) Business Days) shall
constitute an immediate and automatic Event of Default.

 

2

 

 

 

The Borrower hereby represents and warrants to Agent and the Lenders that (i)
the Borrower has determined in good faith, after consultation with counsel on
all matters related to the SBA Loan, that it is eligible to apply as a borrower
under the Paycheck Protection Program, including the application of the Paycheck
Protection Program’s affiliation rules, and have taken into consideration in
making such determination the Interim Final Rule and all FAQs issued by the
Small Business Administration as of the date hereof, including determining that
the current economic uncertainty makes the loan request necessary to support its
ongoing operations taking into account Borrower’s current business activity and
its ability to access other sources of liquidity sufficient to support its
ongoing operations in a manner that is not significantly detrimental to the
business; (ii) all applications, documents and other information submitted to
any Governmental Authority with respect to the SBA Loan were at the time of
submission, and continue to be, true and correct in all material respects as of
the date hereof;  (iii) neither the Agent nor any Lender or any Affiliates
thereof are deemed an “affiliate” of any Loan Party or any of its Subsidiaries
for any purpose related to the SBA Loan, including the eligibility criteria with
respect thereto; (iv) Borrower is responsible for making its own independent
judgment with respect to the SBA Loan and the process leading thereto, and it
has not relied on Agent, any Lender or any of their affiliates with respect to
any of such matters; and (v) after giving effect to this consent, the execution,
delivery and performance of the documents governing the SBA Loan do not conflict
with or violate the terms of the Credit Agreement and the other Loan Documents
and the rights and remedies of Agent and the Lenders thereunder.  Borrower
hereby further represents and warrants that all of the Required Consents have
been obtained on or prior to the date hereof.

 

Each Loan Party agrees that it will not make any claim that Agent, any Lender or
any of their affiliates have rendered advisory services of any nature or respect
in connection with the SBA Loan,  the Paycheck Protection Program or the process
leading thereto.

 

In addition to and the foregoing, Borrower, Guarantors and Agent hereby agree as
follows:

 

1. The consent set forth in this letter agreement is effective solely for the
purposes set forth herein and shall be limited precisely as written and shall
not be deemed to: (a) except as expressly provided herein, be a consent to any
amendment, waiver or modification of any term or condition of the Credit
Agreement or of any other Loan Document, which shall remain and continue in full
force and effect; (b) prejudice any right that Agent or the Lenders have or may
have in the future under or in connection with the Credit Agreement or any other
Loan Document;  (c) waive any Default and/or Event of Default that may exist and
is continuing as of the date hereof or occur hereafter; or (d) establish a
custom or course of dealing among Borrower or any other Loan Party, on the one
hand, and Agent or any Lender, on the other hand.

 

2. Borrower and Agent hereby acknowledge and agree that this letter agreement
constitutes a Loan Document and that this letter agreement cannot be modified or
terminated except with the written consent of each of the undersigned. 

 

3. The provisions of the Credit Agreement regarding choice of law, jurisdiction,
venue and jury trial waiver are expressly incorporated herein and shall govern
this letter agreement.  No Person other than the parties hereto, shall have any
rights hereunder or be entitled to rely on this letter agreement and all
third-party beneficiary rights are hereby expressly disclaimed.

 

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4. This letter agreement may be executed in any number of counterparts and by
any combination of the parties hereto in separate counterparts, each of which
counterparts shall be an original and all of which taken together shall
constitute one and the same letter agreement.  Electronic signatures shall have
the same effect as original signatures.  This letter agreement shall become
effective as of the date first above written when counterparts of this letter
agreement shall have been executed by the Loan Parties, the Lenders and Agent.

 

5. The Lenders party hereto, constituting the Required Lenders under the Credit
Agreement, hereby direct and authorize (acting pursuant to and subject to the
provisions of the Credit Agreement, including Section 9 thereof) the Agent to
execute and deliver this letter agreement.

 

6. Each Loan Party hereby acknowledges that:  (a) it has no defenses, claims or
set‑offs to the enforcement by Agent or Lenders of the Obligations on the date
hereof; (b) to its knowledge, Agent and the Lenders have fully performed all
undertakings and obligations owed to it as of the date hereof; and (c) except to
the limited extent expressly set forth in this letter agreement, Agent and
Lenders do not waive, diminish or limit any term or condition contained in the
Credit Agreement or any of the other Loan Documents. 

 

Please counter-sign this letter agreement below to indicate your consent and
agreement to the terms and conditions set forth herein.

4

 

 

 

Sincerely,

WILMINGTON TRUST, NATIONAL ASSOCIATION, as Agent

By: /s/ David
Bergstrom_______________________________________________________________________________

Name: David Bergstrom

Title: Vice President

 

 

 

[Signature Page to Consent Letter – Sequential Brands Group, Inc.]

 

 

 

Borrower, each Guarantor and each Lender hereby acknowledges, understands and
agrees to the terms and conditions set forth above, and have caused this letter
agreement to be duly executed by their respective authorized officers as of the
day and year first above written.

BORROWER:

 

SEQUENTIAL BRANDS GROUP, INC.

 

By /s/ David Conn
Name:  David Conn
Title:  Chief Executive Officer

 

 

GUARANTORS:

SQBG, INC.

By:  /s/ David Conn
Name:  David Conn
Title:  Chief Executive Officer

SEQUENTIAL LICENSING, INC.

By:  /s/ David Conn
Name:  David Conn
Title:  Chief Executive Officer

WILLIAM RAST LICENSING, LLC

By:  /s/ David Conn
Name:  David Conn
Title:  Chief Executive Officer

HEELING SPORTS LIMITED 

By:  /s/ David Conn
Name:  David Conn
Title:  Chief Executive Officer

 

 

[Signature Page to Consent Letter – Sequential Brands Group, Inc.]

 

 

 

B®AND MATTER, LLC

By: /s/ David Conn
Name:  David Conn
Title:  Chief Executive Officer

 

SBG FM, LLC

By:  /s/ David Conn
Name:  David Conn
Title:  Chief Executive Officer

 

SBG UNIVERSE BRANDS, LLC

By:  /s/ David Conn
Name:  David Conn
Title:  Chief Executive Officer

 

GALAXY BRANDS LLC

By:  /s/ David Conn
Name:  David Conn
Title:  Chief Executive Officer

 

The Basketball Marketing Company, Inc.

By:  /s/ David Conn
Name:  David Conn
Title:  Chief Executive Officer

 

AMERICAN SPORTING GOODS CORPORATION

By:  /s/ David Conn
Name:  David Conn
Title:  Chief Executive Officer

[Signature Page to Consent Letter – Sequential Brands Group, Inc.]

 

 

 

LNT BRANDS LLC

By:  /s/ David Conn
Name:  David Conn
Title:  Chief Executive Officer

 

JOE’S HOLDINGS LLC

By:  /s/ David Conn
Name:  David Conn
Title:  Chief Executive Officer

 

GAIAM BRAND HOLDCO, LLC

By:  /s/ David Conn
Name:  David Conn
Title:  Chief Executive Officer

GAIAM AMERICAS, INC.

By:  /s/ David Conn
Name:  David Conn
Title:  Chief Executive Officer

SBG-GAIAM HOLDINGS, LLC

By:  /s/ David Conn
Name:  David Conn
Title:  Chief Executive Officer

 

 

[Signature Page to Consent Letter – Sequential Brands Group, Inc.]

 

 

 

LENDERS:

 

FS KKR CAPITAL CORP.

 

By: /s/ Jessica Woolf_______________

Name: Jessica Woolf

Title: Authorized Signatory

                        

FS KKR MM CLO 1 LLC

 

By: /s/ Jessica Woolf_______________

Name: Jessica Woolf

Title: Authorized Signatory

 

 

DARBY CREEK LLC

 

By: /s/ Jessica Woolf_______________

Name: Jessica Woolf

Title: Authorized Signatory

 

 

FS KKR CAPITAL CORP. II

 

By: /s/ Jessica Woolf_______________

Name: Jessica Woolf

Title: Authorized Signatory

 

 

DUNLAP FUNDING LLC

 

By: /s/ Jessica Woolf_______________

Name: Jessica Woolf

Title: Authorized Signatory

 

 

[Signature Page to Consent Letter – Sequential Brands Group, Inc.]

 

 

 

LENDERS:  

 

APOLLO CENTRE STREET PARTNERSHIP, L.P.

By: Apollo Centre Street Advisors (APO DC), L.P., its general partner

By: Apollo Centre Street Advisors (APO DC‐GP), LLC, its general partner

 

By: /s/ Joseph D. Glatt____________

Name: Joseph D. Glatt

Title: Vice President

 

 

APOLLO UNION STREET PARTNERS, L.P.

By: Apollo Union Street Advisors, L.P., its General Partner

By: Apollo Union Street Capital Management, LLC, its General Partner

 

By: /s/ Joseph D. Glatt____________

Name: Joseph D. Glatt

Title: Vice President

 

 

APOLLO KINGS ALLEY CREDIT FUND, LP

By: Apollo Kings Alley Credit Advisors, L.P., its general partner

By: Apollo Kings Alley Credit Capital Management, LLC, its general partner

 

By: /s/ Joseph D. Glatt____________

Name: Joseph D. Glatt

Title: Vice President

 

 

APOLLO MOULTRIE CREDIT FUND, L.P.

By: Apollo Moultrie Credit Fund Management, LLC, its investment manager

 

By: /s/ Joseph D. Glatt____________

Name: Joseph D. Glatt

Title: Vice President

 

 

[Signature Page to Consent Letter – Sequential Brands Group, Inc.]

 

 

 

APOLLO TACTICAL VALUE SPN INVESTMENTS, L.P.

By: Apollo Tactical Value SPN Advisors (APO DC), L.P., its General Partner

By: Apollo Tactical Value SPN Capital Management (APO DC-GP), LLC, its General
Partner

 

By: /s/ Joseph D. Glatt____________

Name: Joseph D. Glatt

Title: Vice President

 

 

APOLLO INVESTMENT CORPORATION

By: Apollo Investment Management, L.P., as Advisor

By: ACC Management, LLC, as its General Partner

 

By: /s/ Joseph D. Glatt____________

Name: Joseph D. Glatt

Title: Vice President

 

[Signature Page to Consent Letter – Sequential Brands Group, Inc.]