Exhibit 10.1

 

FIRST AMENDMENT TO SECOND AMENDED AND RESTATED FIRST LIEN CREDIT AGREEMENT

 

FIRST AMENDMENT TO SECOND AMENDED AND RESTATED FIRST LIEN CREDIT AGREEMENT (this
“Amendment”), dated as of December 4, 2015 between

 

SEQUENTIAL BRANDS GROUP, INC., a Delaware corporation (formerly known as Singer
Madeline Holdings, Inc., the “Borrower” or “Sequential”),

 

SQBG, INC., a Delaware corporation (formerly known as Sequential Brands Group,
Inc., “SQBG”),

 

the Guarantors party hereto,

 

the Lenders party hereto, and

 

BANK OF AMERICA, N.A., as administrative agent and collateral agent (the
“Agent”).

 

WITNESSETH:

 

WHEREAS, SQBG, which on the First Amendment Effective Date (as defined below)
shall become a subsidiary of Sequential, the Guarantors, the Lenders and the
Agent are party to that certain Second Amended and Restated First Lien Credit
Agreement dated as of April 8, 2015 (as modified by the Limited Consent and
Waiver related to the Second Amended and Restated First Lien Credit Agreement,
dated as of September 11, 2015, and as further amended or otherwise modified in
accordance with its terms and in effect on and prior to the date hereof, the
“Credit Agreement”);

 

WHEREAS, as of the date hereof, Heeling Management Corp., a Texas corporation,
Heeling Holding Corporation, a Nevada corporation, Heelys, Inc., a Delaware
corporation, Bella Rose, LLC, a California limited liability company, and
William Rast Sourcing, LLC, a California limited liability company
(collectively, the “Specified Guarantors”) have been designated as Immaterial
Subsidiaries, and the Borrower has requested that the Agent and the Lenders
release the Specified Guarantors from their Obligations under the Loan
Documents, including but not limited to (i) any guarantees pursuant to Facility
Guaranty and (ii) any Liens or other security interests of the Agent on the
Collateral owned by the Specified Guarantors; and

 

 -1- 

 

 

WHEREAS, SQBG has entered into (i) an Agreement and Plan of Merger, dated as of
June 22, 2015 (the “MSLO Acquisition Agreement”), by and among Martha Stewart
Living Omnimedia, Inc. (“MSLO”), Madeline Merger Sub, Inc., a Delaware
corporation, the Borrower, SQBG, and Singer Merger Sub, Inc. (the transactions
contemplated by the MSLO Acquisition Agreement, the “MSLO Acquisition
Transactions”), and (ii) that certain Senior Secured Term Loan Agreement, dated
as of the date hereof (the “Amended and Restated Second Lien Credit Agreement”),
by and among the Borrower, SQBG, the guarantors party thereto, the lenders party
thereto (the “Second Lien Lenders”) and Wilmington Trust, National Association,
as administrative agent and collateral agent (the “Second Lien Agent”), pursuant
to which the Second Lien Lenders will (a) continue to extend credit in an
aggregate amount of $215,500,000 in the form of outstanding term loans under
that certain Amended and Restated Second Lien Credit Agreement, dated as of
April 8, 2015, among SQBG, the guarantors party thereto, the lenders party
thereto and the Second Lien Agent (the “Existing Second Lien Credit Agreement”)
and (b) extend credit in an aggregate amount of $152,500,000 in the form of new
term loans (collectively, the “Financing” and, together with the MSLO
Acquisition Transactions, the “Transactions”), the proceeds of which are
intended to be used (w) to refinance all outstanding indebtedness under the
Existing Second Lien Credit Agreement, (x) to fund a portion of the
consideration payable by the Borrower pursuant to the MSLO Acquisition
Agreement, (y) to pay related costs and expenses related to the Transactions and
(z) for general corporate purposes; and

 

WHEREAS, in connection with the Transactions, the Borrower has requested that
the Tranche A-1 Term Lenders make an additional Tranche A-1 Term Loan on the
First Amendment Effective Date (as defined below); and

 

WHEREAS, in connection with the Transactions, the Borrower, SQBG, the
Guarantors, the Lenders and the Agent have agreed to amend the Credit Agreement
as set forth herein.

 

NOW THEREFORE, in consideration of the mutual promises and agreements herein
contained, each of the parties hereto hereby agrees as follows:

 

1.Incorporation of Terms. All capitalized terms used and not otherwise defined
herein shall have the same meaning as in the Credit Agreement.

 

2.Representations and Warranties. The Borrower hereby represents and warrants
that as of the date hereof after giving effect to this Amendment, (i) no Default
or Event of Default exists and is continuing under the Credit Agreement or under
any other Loan Document, and (ii) all representations and warranties contained
in the Credit Agreement and the other Loan Documents are true and correct in all
material respects, except (a) to the extent that such representations and
warranties specifically refer to an earlier date, in which case they shall be
true and correct as of such earlier date, and (b) in the case of any
representation and warranty qualified by materiality, they shall be true and
correct in all respects.

 

3.Amendments to Credit Agreement. The provisions of the Credit Agreement are
hereby amended as follows:

 

a.The introductory paragraph of the Credit Agreement is hereby amended by
deleting the words “(the “Borrower”)” set forth therein.

 

 -2- 

 

 

b.Section 1.01 of the Credit Agreement is hereby amended by adding the following
new definitions in appropriate alphabetical order:

 

“Consolidated First Lien Leverage Ratio” means, as of any date of determination,
the ratio of (a) Indebtedness of the Borrower and its Subsidiaries on a
Consolidated basis under this Agreement as of such date to (b) Consolidated
EBITDA for the trailing four quarters most recently ended.

 

“First Amendment” means that certain First Amendment to Second Amended and
Restated First Lien Credit Agreement dated as of December 4, 2015.

 

“First Amendment Effective Date” means the earliest date that all conditions
precedent as set forth in Section 7 of the First Amendment have been satisfied
or waived by the Agent and the Lenders.

 

“Joe’s Holdings” means Joe’s Holdings LLC, a Delaware limited liability company.

 

“Joe’s Jeans Acquired Brands” means certain intellectual property assets used or
held prior to September 11, 2015 for use in the business of Joe’s Jeans, Inc., a
Delaware corporation, and certain of its subsidiaries and affiliates operated
under the brand names “Joe’s Jeans” and certain other brands and certain other
assets as more fully described in the Joe’s Jeans Acquisition Agreement, to be
owned on and after September 11, 2015 by Joe’s Holdings, pursuant to the terms
of the Joe’s Jeans Acquisition Agreement.

 

“Joe’s Jeans Acquisition” means the acquisition of the Joe’s Jeans Acquired
Brands pursuant to the Joe’s Jeans Acquisition Agreement.

 

“Joe’s Jeans Acquisition Agreement” means that certain Asset Purchase Agreement,
dated as of September 8, 2015 by and among Joe’s Jeans Inc., Joe’s Holdings and
the Borrower.

 

“Limited Condition Acquisition” means a Permitted Acquisition by the Borrower or
one or more of its Subsidiaries whose consummation is not conditioned, in the
applicable Limited Condition Acquisition Agreement, on the availability of, or
on obtaining, third party financing.

 

“Limited Condition Acquisition Agreement” has the meaning provided in Section
2.14(g).

 

“MSLO” means Martha Stewart Living Omnimedia, Inc., a Delaware corporation.

 

“MSLO Acquisition” means the acquisition, by the Borrower, of MSLO, pursuant to,
and in accordance with, the terms of the MSLO Acquisition Agreement.

 

 -3- 

 

  

“MSLO Acquisition Agreement” means the Agreement and Plan of Merger, dated as of
June 22, 2015, by and among MSLO, Madeline Merger Sub, Inc., SQBG, the Borrower,
and Singer Madeline Holdings, Inc.

 

“MSLO Acquisition Transactions” means the transactions contemplated by the MSLO
Acquisition Agreement.

 

“Pro Forma Transaction” means any (a) Investment that results in a Person
becoming a Subsidiary or constituting an acquisition of assets constituting a
business unit, line of business or division of another Person, (b) Acquisition,
(c) Disposition that results in a Subsidiary ceasing to be a Subsidiary or of a
business unit, line of business or division of the Borrower or any Subsidiary,
in each case whether by merger, consolidation, amalgamation or otherwise and (d)
other transaction that by the terms of this Agreement requires a financial ratio
or test to be determined on a “pro forma basis” or to be given “pro forma
effect”.

 

“Regulation S-X” means Regulation S-X of the General Rules and Regulations
promulgated by the SEC pursuant to the Securities Laws.

 

“Sequential” means Sequential Brands Group, Inc., a Delaware corporation
(formerly known as Singer Madeline Holdings, Inc.), and the direct parent of
SQBG.

 

“SQBG” means SQBG, Inc., a Delaware corporation (formerly known as Sequential
Brands Group, Inc.) and a direct and wholly-owned subsidiary of Sequential.

 

“Tranche A-1 Term Loan First Amendment Commitment” means, as to each Tranche A-1
Term Lender, its obligation to make the additional Tranche A-1 Term Loan on the
First Amendment Effective Date in an aggregate principal amount equal to the
amount set forth opposite such Tranche A-1 Term Lender’s name on Schedule A to
the First Amendment. As of the First Amendment Effective Date, the aggregate
Tranche A-1 Term Loan First Amendment Commitments total $8,000,000.

 

c.Section 1.01 of the Credit Agreement is hereby amended by deleting the
definitions of “Amended and Restated Second Lien Credit Agreement” and “Second
Lien Credit Agreement” set forth therein in their entirety and by substituting
the following in appropriate alphabetical order in their stead:

 

“Second Lien Credit Agreement” shall mean that certain Second Amended and
Restated Credit Agreement dated as of December 4, 2015 by and among the
Borrower, the Guarantors party thereto, Wilmington Trust, National Association,
as administrative agent and collateral agent thereunder, and the lenders party
thereto, as the same may be amended, restated, supplemented or otherwise
modified, and any refinancings, refundings, renewals or extensions thereof
permitted hereunder.”

 

 -4- 

 

 

d.Section 1.01 of the Credit Agreement is hereby amended by deleting the
definition of “Borrower” set forth therein in its entirety and the following
substituted in its stead:

 

“Borrower” means (a) prior to the First Amendment Effective Date, SQBG, and (b)
on and following the First Amendment Effective Date, Sequential.

 

e.Section 1.01 of the Credit Agreement is hereby amended by deleting the
definition of “Consolidated EBITDA” set forth therein in its entirety and the
following substituted in its stead:

 

“Consolidated EBITDA” means, at any date of determination, an amount equal to
Consolidated Net Income of the Borrower and its Subsidiaries on a Consolidated
basis for the applicable measurement period, plus (a) the following to the
extent deducted in calculating such Consolidated Net Income: (i) Consolidated
Interest Charges, (ii) the provision for Federal, state, local and foreign
income Taxes, (iii) depreciation and amortization expense, (iv) fees, expenses
and charges (including restructuring charges, integration costs, net cost
savings and transaction expenses) incurred in connection with (A) any Permitted
Acquisition (of the type referred to in clause (ii) of the definition thereof)
or fees in connection with any Permitted Indebtedness in an amount not to exceed
$5,000,000 in any Fiscal Year of the Borrower, (B) the Simpson Acquisition in an
amount not to exceed $4,000,000 in the aggregate for the twelve-month period
ending on the one year anniversary of the Effective Date, (C) the Galaxy
Transactions in an amount not to exceed $7,500,000 in the aggregate for the
twelve-month period ending August 15, 2016, (D) the Joe’s Jeans Acquisition in
an amount not to exceed $2,500,000 in the aggregate for the twelve month period
ending September 11, 2016, and (E) the MSLO Acquisition in an amount not to
exceed $20,000,000 in the aggregate for the twelve-month period ending on the
one year anniversary of the First Amendment Effective Date (v) non-cash
compensation, (vi) other unusual or non-recurring expenses reducing such
Consolidated Net Income which do not represent a cash item in such period or any
future period, and (vii) management fees and expenses incurred or paid to
Tengram Capital Management L.P. to the extent permitted to be paid hereunder (in
each case of or by the Borrower and its Subsidiaries for such period), minus (b)
the following to the extent included in calculating such Consolidated Net
Income: (i) Federal, state, local and foreign income tax credits and (ii) all
non-cash items increasing Consolidated Net Income (in each case of or by the
Borrower and its Subsidiaries for such period), all as determined on a
Consolidated basis in accordance with GAAP.

 

 -5- 

 

 

Notwithstanding anything to the contrary contained above, for purposes of
determining Consolidated EBITDA for the purposes of calculating the Consolidated
First Lien Leverage Ratio (a) with respect to any Fiscal Quarter which ends
prior to August 15, 2016, Consolidated EBITDA with respect to GBH for each
applicable Fiscal Quarter occurring prior to August 15, 2015 shall be calculated
as the greater of (i) $6,250,000 and (ii) Consolidated EBITDA for GBH for such
Fiscal Quarter (on a standalone basis without giving effect to the Galaxy Brands
Merger), (b) with respect to any Fiscal Quarter which ends prior to April 8,
2017, Consolidated EBITDA with respect to With You for each applicable Fiscal
Quarter occurring prior to April 8, 2016 shall be calculated as the greater of
(i) $3,500,000 and (ii) Consolidated EBITDA for With You for such Fiscal Quarter
(on a standalone basis without giving effect to the Simpson Acquisition), (c)
with respect to any Fiscal Quarter which ends on or prior to September 30, 2017,
Consolidated EBITDA with respect to Joe’s Holdings for each applicable Fiscal
Quarter occurring on or prior to September 30, 2016 shall be calculated as the
greater of (i) $2,000,000 and (ii) Consolidated EBITDA for Joe’s Holdings for
such Fiscal Quarter (on a standalone basis without giving effect to the Joe’s
Jeans Acquisition) and (d) with respect to any Fiscal Quarter which ends on or
prior to December 31, 2017, Consolidated EBITDA with respect to MSLO for each
applicable Fiscal Quarter occurring on or prior to December 31, 2016 shall be
calculated as the greater of (i) $7,500,000 and (ii) Consolidated EBITDA for
MSLO for such Fiscal Quarter (on a standalone basis without giving effect to the
MSLO Acquisition). For purposes of determining Consolidated EBITDA as a whole
for each applicable Fiscal Quarter identified in clauses (a), (b), (c) and (d)
above, such amounts determined for GBH, With You, Joe’s Holdings and MSLO in
clauses (a), (b), (c) and (d), as applicable, shall then be added to the
calculation of Consolidated EBITDA for such applicable Fiscal Quarter for the
Borrower (on a standalone basis without giving effect to the Galaxy Brands
Merger, the Simpson Acquisition, the Joe’s Jeans Acquisition and/or MSLO
Acquisition, as applicable).

 

f.Section 1.01 of the Credit Agreement is hereby amended by amending the
definition of “Immaterial Subsidiary” set forth therein by deleting the
reference to the “Effective Date” in the first line of clause (x) thereof and by
substituting the words “First Amendment Effective Date” in its stead.

 

g.Section 1.01 of the Credit Agreement is hereby amended by amending the
definition of “Change of Control” set forth therein by deleting “(excluding, in
the case of both clause (ii) and clause (iii), any individual whose initial
nomination for, or assumption of office as, a member of that board or equivalent
governing body occurs as a result of an actual or threatened solicitation of
proxies or consents for the election or removal of one or more directors by any
person or group other than a solicitation for the election of one or more
directors by or on behalf of the board of directors)” at the end of clause (b)
thereof.

 

 -6- 

 

 

h.Section 1.01 of the Credit Agreement is hereby amended by amending the
definition of “Permitted Acquisition” set forth therein by adding “(a) the MSLO
Acquisition or (b)” immediately at the beginning of clause (ii) thereto.

 

i.Section 1.01 of the Credit Agreement is hereby amended by amending the
definition of “Permitted Indebtedness” set forth therein by deleting clause (a)
thereof in its entirety and by substituting the following in its stead:

 

“(a) (i) Indebtedness in respect of the Second Lien Credit Agreement and any
Permitted Refinancing thereof (collectively, the “Second Lien Facility);
provided that (A) the aggregate outstanding principal amount of any Indebtedness
in respect of the Second Lien Facility shall not exceed the sum of (x)
$368,000,000 plus (y) such additional amounts that would not, after giving pro
forma effect to the incurrence thereof, cause the Consolidated Total Leverage
Ratio (as defined in the Second Lien Credit Agreement as in effect on the First
Amendment Effective Date) to exceed 6.00:1.00 and (B) any Indebtedness in
respect of the Second Lien Facility shall not have an earlier maturity date than
the Maturity Date or a decreased weighted average life than the Second Lien
Facility in effect on the First Amendment Effective Date and (ii) any other
Indebtedness outstanding on the Effective Date and listed on Schedule 7.03
hereto and, in the case of the foregoing clause (ii), any Permitted Refinancing
thereof;”

 

j.The following shall be added as a new Section 1.06 of the Credit Agreement:

 

1.06        Pro Forma Calculations.

 

(a)           Notwithstanding anything to the contrary herein, the Consolidated
First Lien Leverage Ratio shall be calculated in the manner prescribed by this
Section 1.06.

 

(b)           For purposes of calculating the Consolidated First Lien Leverage
Ratio, Pro Forma Transactions (and the incurrence or repayment of any
Indebtedness in connection therewith) that have been consummated (i) during the
most recent Fiscal Quarter of the Borrower or (ii) subsequent to such Fiscal
Quarter and prior to, or simultaneously with, the event for which the
calculation of any such ratio is made shall be calculated on a pro forma basis
assuming that all such Pro Forma Transactions (and any increase or decrease in
Consolidated EBITDA and the component financial definitions used therein
attributable to any Pro Forma Transaction) had occurred on the first day of such
Fiscal Quarter.

 

(c)  If pro forma effect is to be given to a Pro Forma Transaction, the pro
forma calculations shall be made in good faith by a financial or accounting
Responsible Officer of the Borrower and include only those adjustments that
would be permitted or required by Regulation S-X together with those adjustments
that (i) have been certified by such Responsible Officer of the Borrower as
having been prepared in good faith based upon reasonable assumptions and (ii)
are (x) directly attributable to the Pro Forma Transactions with respect to
which such adjustments are to be made, (y) expected to have a continuing impact
on the Loan Parties and (z) factually supportable and reasonably identifiable.

 

 -7- 

 

 

(d) In the event that the Borrower or any Subsidiary incurs (including by
assumption or guarantees) or repays (including by redemption, repayment,
retirement or extinguishment) any Indebtedness included in the calculations of
the Consolidated First Lien Leverage Ratio (other than Indebtedness incurred or
repaid under any revolving credit facility in the ordinary course of business
for working capital purposes) subsequent to the end of the most recent Fiscal
Quarter of the Borrower and prior to, or simultaneously with, the event for
which the calculation of any such ratio is made, then such ratio shall be
calculated after giving pro forma effect to such incurrence or repayment of
Indebtedness, to the extent required, as if the same had occurred on the last
day of such Fiscal Quarter.

 

k.Section 2.01 of the Credit Agreement is hereby amended by adding the following
clause (d) at the end thereof:

 

“(d)            Subject to the terms and conditions set forth herein, each
Tranche A-1 Term Lender severally agrees to make an additional Tranche A-1 Term
Loan to the Borrower on the First Amendment Effective Date in an aggregate
principal amount equal to such Tranche A-1 Term Lender’s Tranche A-1 Term Loan
First Amendment Commitment in immediately available funds in accordance with
instructions provided by the Borrower. The aggregate amount of the additional
Tranche A-1 Term Loan made on the First Amendment Effective Date shall not
exceed the aggregate Tranche A-1 Term Loan First Amendment Commitments. The
additional Tranche A-1 Term Loan made on the First Amendment Effective Date
shall be a LIBOR Rate Loan with an initial Interest Period of one month. Once
made, the additional Tranche A-1 Term Loan shall become part of the outstanding
Tranche A-1 Term Loan and shall be subject to all provisions herein regarding
the Tranche A-1 Term Loan.”

 

l.Section 2.02 of the Credit Agreement is hereby amended by deleting the words
“or a whole multiple of $1,000,000 in excess thereof” in the eighth line of
clause (b) thereof.

 

m.Section 2.14 of the Credit Agreement is hereby amended as follows:

 

i.by deleting “$60,000,000” in the fourth line of clause (a) thereof and by
substituting the following in its stead:

 

 -8- 

 

 

“such amount that would, after giving pro forma effect to the incurrence
thereof, cause the Consolidated First Lien Leverage Ratio, as of the last day of
the most recently ended Fiscal Quarter of the Borrower for which financial
statements are required to have been delivered to the Agent, to exceed
2.00:1.00”; and

 

ii.by adding the following as a new clause (g) thereof:

 

(g)            Limited Condition Acquisition. Notwithstanding anything in this
Section 2.14 to the contrary to the extent the proceeds of any increase
requested pursuant to this Section 2.14 will be used to finance a Limited
Condition Acquisition, upon the Borrower’s request, the lenders providing such
increase may agree to “funds certain provision” that (i) provides for the
testing of the Consolidated First Lien Leverage Ratio set forth in Section
2.14(a) as of the date on which the acquisition agreement for such Limited
Condition Acquisition (a “Limited Condition Acquisition Agreement”) is executed
and effective and (ii) does not impose as a condition to funding thereof that no
Default or Event of Default (other than a Default under Section 8.01(a) or
8.01(f) or 8.01(g)) exist at the time such Limited Condition Acquisition is
consummated, in which case the condition set forth in Section 2.14(e)(i)(B)(2)
shall be required to be satisfied on the date the Limited Condition Acquisition
Agreement is executed.

 

n.Section 6.02 of the Credit Agreement is hereby amended by deleting the words
“and Section 7.15(b) of the Amended and Restated Second Lien Credit Agreement”
in clause (g) thereof.

 

o.Section 6.05 of the Credit Agreement is hereby amended by deleting the last
sentence thereof and by substituting the following in its stead:

 

“Notwithstanding the foregoing, no provision herein or in any other Loan
Document shall be deemed to restrict the dissolution of any Immaterial
Subsidiary (including, without limitation, William Rast Europe Holdings, LLC, a
Delaware limited liability company, Heeling Management Corp., a Texas
corporation, Heeling Holding Corporation, a Nevada Corporation, Heelys, Inc., a
Delaware corporation, Bella Rose, LLC, a California limited liability company,
and William Rast Sourcing, LLC, a California limited liability company), and
such dissolution is expressly permitted hereunder.

 

p.Section 6.15 of the Credit Agreement is hereby amended by adding the following
new clause (c) at the end thereof:

 

 -9- 

 

 

“(c)          Notwithstanding the foregoing provisions of this Section 6.15,
with respect to any Collateral acquired by the Borrower or any other Loan Party
pursuant to the MSLO Acquisition Agreement, to the extent any security interest
in such Collateral is not granted or perfected on the First Amendment Effective
Date (other than (x) grants with respect to the Collateral subject to the UCC
and the delivery of UCC financing statements and (y) the delivery of stock
certificates and stock powers (but with respect to the stock certificates of any
entity acquired pursuant to the MSLO Acquisition Agreement, solely to the extent
such stock certificates have been timely received by the Borrower on or prior to
the First Amendment Effective Date)) after the Loan Parties’ commercially
reasonable efforts to do so without undue burden or expenses, then the grant or
perfection of such security interest shall be granted or perfected, as the case
may be, within 60 days after the First Amendment Effective Date (or such longer
period as Agent may agree in its sole discretion); provided further, that the
obligation to deliver such stock certificates and stock powers shall be deemed
to have been satisfied, to the extent such stock certificates and stock powers
are delivered to, or are in the possession of, the Second Lien Agent, if and
only to the extent the Second Lien Agent holds such stock certificates for the
benefit of the Credit Parties.”

 

q.Section 6.17 of the Credit Agreement is hereby amended by adding the following
sentence at the end thereof: 

 

“Notwithstanding the foregoing, each of the Agent and the Lenders acknowledge
and agree that the right of first refusal set forth in this Section 6.17 is
hereby waived with respect to the financing of the MSLO Acquisition.”

 

r.Section 7.04 of the Credit Agreement is hereby amended by deleting “and” at
the end of clause (d) thereof, by re-lettering clause (e) as clause (f), and by
adding the following new clause (e) thereto:

 

“(e) the Loan Parties may consummate the MSLO Acquisition Transactions; and”

 

s.Section 7.12(a)(ii) of the Credit Agreement is hereby amended by deleting
“Amended and Restated Second Lien Credit Agreement” and by substituting “Second
Lien Credit Agreement” in its stead.

 

4.Amendments to Exhibits and Schedules. The Schedules to the Credit Agreement
are hereby amended by amending and restating in its entirety each Schedule
thereto in the form of such Schedule annexed hereto as Annex A. Exhibit D
(Compliance Certificate) to the Credit Agreement is hereby amended and restated
in its entirety in the form of such Exhibit annexed hereto as Annex B.

 

 -10- 

 

 

5.Release of Specified Guarantors.

 

a.In connection with the designation of the Specified Guarantors as Immaterial
Subsidiaries as of the date hereof, the Borrower and the Existing Guarantors
have requested that the Agent release (i) the Specified Guarantors from their
obligations under the Loan Documents, and (ii) the Lien of the Agent on the
Collateral owned by the Specified Guarantors. Accordingly, the Agent hereby
releases as of the date hereof (i) the Specified Guarantors from their
obligations under the Loan Documents (except to the extent such obligations
survive such release by their terms), and (ii) all Liens on the Collateral owned
by the Specified Guarantors.

 

b.Nothing herein shall be deemed a release by the Agent of (i) any Loan Party
(other the Specified Guarantors) from any of its obligations under the Loan
Documents, or (ii) any Liens securing the Obligations (other than Liens on the
Collateral owned by the Specified Guarantors). Each of the Loan Parties (other
the Specified Guarantors) acknowledges and agrees that the Credit Agreement and
the other Loan Documents and the Liens granted thereunder remain in full force
and effect as of the date hereof.

 

c.Each of the Specified Guarantors hereby acknowledges and agrees that it has no
offsets, defenses, claims, or counterclaims against any Credit Party or any
parents, affiliates, predecessors, successors, or assigns thereof, or their
respective officers, directors, employees, attorneys, or representatives, with
respect to the Obligations, and that if any of the Specified Guarantors now has,
or ever did have, any offsets, defenses, claims, or counterclaims against such
Persons, whether known or unknown, at law or in equity, from the beginning of
the world through this date and through the time of execution of this Amendment,
all of them are hereby expressly WAIVED, and each of the Specified Guarantors
hereby RELEASES such Persons from any liability therefor.

 

6.Consent to Intercreditor Amendment. By their execution below, each of the
Lenders hereby acknowledges that it has received and reviewed a copy of the
Intercreditor Amendment (as defined in Section 7(b) below), and hereby consents
to the terms and provisions set forth in the Intercreditor Amendment, including,
without limitation, the subordination by the Administrative Agent of its Lien on
and security interest in certain Collateral as set forth in the Intercreditor
Amendment.

 

7.Conditions to Effectiveness. This Amendment shall become effective on the
earliest date on which each of the following conditions precedent has been
fulfilled to the satisfaction of the Agent:

 

a.This Amendment shall have been duly executed and delivered by the Borrower,
the Guarantors and the Required Lenders.

 

b.The Agent and the Second Lien Agent shall have entered into an amendment to
the Second Lien Intercreditor Agreement (the “Intercreditor Amendment”) in form
and substance reasonably satisfactory to the Agent.

 

c.All action on the part of the Borrower and the Guarantors reasonably necessary
for the valid execution and delivery of, and the performance under, this
Amendment, by the Borrower and the Guarantors shall have been duly and
effectively taken.

 

 -11- 

 

 

d.(i) Sequential shall have entered into a joinder and assumption agreement in
form and substance reasonably satisfactory to the Agent, pursuant to which such
agreement Sequential shall become the Borrower under the Loan Documents and (ii)
Sequential, SQBG, MSLO, and each of the Subsidiaries listed on Annex C hereto
(collectively, the “New Guarantors”) shall have entered into a joinder agreement
in form and substance reasonably satisfactory to the Agent, pursuant to which
such agreement each of the New Guarantors shall become a Guarantor under the
Loan Documents and each such Person shall grant the Agent a Lien on, and
security interest in, all Collateral owned by each such Person.

 

e.Since the date of the MSLO Acquisition Agreement, no change, state of facts,
circumstance, occurrence, development, event or effect that, individually or in
the aggregate, has had or would reasonably be expected to have a “MSLO Material
Adverse Effect” (as defined in the MSLO Acquisition Agreement, without giving
effect to any amendment or modification of such definition after the date of the
MSLO Acquisition Agreement unless approved by the Agent in its reasonable
discretion) shall have occurred.

 

f.Prior to, or contemporaneously with, the effectiveness of this Amendment, the
Borrower shall consummate MSLO Acquisition substantially in accordance with the
terms and conditions set forth in each of the MSLO Acquisition Agreement and the
Amended and Restated Second Lien Credit Agreement, as applicable, in each case
without any amendment, modification or waiver of any of the terms or conditions
thereof that would be materially adverse to the Agent and the Lenders without
the consent of the Agent (such consent not to be unreasonably withheld, delayed
or conditioned).

 

g.Immediately after giving effect to this Amendment, no Default or Event of
Default shall have occurred and be continuing.

 

8.Binding Effect. The terms and provisions hereof shall be binding upon and
inure to the benefit of the parties hereto and their heirs, representatives,
successors and assigns.

 

9.Expenses. The Borrower shall reimburse the Agent for all expenses incurred in
connection herewith, including, without limitation, reasonable and documented
attorneys’ fees to the extent such expenses and fees are required, under the
Credit Agreement, to be paid by the Borrower.

 

10.Multiple Counterparts. This Amendment may be executed in multiple
counterparts, each of which shall constitute an original and together which
shall constitute but one and the same instrument. Delivery of an executed
counterpart of a signature page of this Amendment by facsimile or in electronic
(i.e. “pdf” or “tif”) format shall be effective as delivery of a manually
executed counterpart of this Amendment.

  

11.Governing Law. THIS AMENDMENT SHALL BE GOVERNED BY, AND CONSTRUED IN
ACCORDANCE WITH, THE LAW OF THE STATE OF NEW YORK.

 

 -12- 

 

 

IN WITNESS WHEREOF, this Amendment has been duly executed and delivered by each
of the parties hereto as of the date first above written.

 

BORROWER:

 

  SEQUENTIAL BRANDS GROUP, INC.         By:   /s/ Gary Klein   Name:  Gary Klein
  Title:  Chief Financial Officer         SQBG, INC.         By: /s/ Gary Klein
  Name:  Gary Klein   Title:  Chief Financial Officer

 

GUARANTORS:

 

  SEQUENTIAL LICENSING, INC.       By: /s/ Gary Klein   Name:  Gary Klein  
Title:  Chief Financial Officer       WILLIAM RAST LICENSING, LLC       By:
  /s/ Gary Klein   Name:  Gary Klein   Title:  Chief Financial Officer      
HEELING SPORTS LIMITED         By:   /s/ Gary Klein   Name:  Gary Klein  
Title:  Chief Financial Officer       B®AND MATTER, LLC       By:   /s/ Gary
Klein   Name:  Gary Klein   Title:  Chief Financial Officer

 

[Signature Page to First Amendment to Second Amended and Restated First Lien
Credit Agreement]

 

 

 

 

  SBG REVO HOLDINGS, LLC       By:   /s/ Gary Klein   Name:  Gary Klein  
Title:  Chief Financial Officer       SBG FM, LLC       By:  /s/ Gary Klein  
Name:  Gary Klein   Title:  Chief Financial Officer       SBG UNIVERSE BRANDS,
LLC       By:   /s/ Gary Klein   Name:  Gary Klein   Title:  Chief Financial
Officer       GALAXY BRANDS LLC       By:  /s/ Gary Klein   Name:  Gary Klein  
Title:  Chief Financial Officer       The Basketball Marketing Company, Inc.    
  By:  /s/ Gary Klein   Name:  Gary Klein   Title:  Chief Financial Officer    
  AMERICAN SPORTING GOODS CORPORATION       By:  /s/ Gary Klein   Name:  Gary
Klein   Title:  Chief Financial Officer       LNT BRANDS LLC       By:   /s/
Gary Klein   Name:  Gary Klein   Title:  Chief Financial Officer       JOE’S
HOLDINGS LLC       By:  /s/ Gary Klein   Name:  Gary Klein   Title:  Chief
Financial Officer

 

[Signature Page to First Amendment to Second Amended and Restated First Lien
Credit Agreement]

 

 

 

 

  MARTHA STEWART LIVING OMNIMEDIA, INC.       By:  /s/ Gary Klein   Name:  Gary
Klein   Title:  Chief Financial Officer       MSO IP HOLDINGS, INC.       By:
  /s/ Gary Klein   Name:  Gary Klein   Title:  Chief Financial Officer      
martha stewart, inc.       By:   /s/ Gary Klein   Name:  Gary Klein  
Title:  Chief Financial Officer       body & soul omnimedia, inc.       By:
  /s/ Gary Klein   Name:  Gary Klein   Title:  Chief Financial Officer      
MSLO PRODUCTIONS, INC.       By:  /s/ Gary Klein   Name:  Gary Klein  
Title:  Chief Financial Officer       MSLO PRODUCTIONS – HOME, INC.       By:
  /s/ Gary Klein   Name:  Gary Klein   Title:  Chief Financial Officer      
MSLO PRODUCTIONS – EDF, INC.       By:  /s/ Gary Klein   Name:  Gary Klein  
Title:  Chief Financial Officer       FLOUR PRODUCTIONS, INC.       By:   /s/
Gary Klein   Name:  Gary Klein   Title:  Chief Financial Officer

 

[Signature Page to First Amendment to Second Amended and Restated First Lien
Credit Agreement]

 

 

 

 

  EMERIL PRIMETIME MUSIC, INC.       By:  /s/ Gary Klein   Name:  Gary Klein  
Title:  Chief Financial Officer       EMERIL PRIMETIME PRODUCTIONS, INC.      
By:   /s/ Gary Klein   Name:  Gary Klein   Title:  Chief Financial Officer      
GOOD THING PRODUCTIONS, INC.       By:  /s/ Gary Klein   Name:  Gary Klein  
Title:  Chief Financial Officer       MSLO SHARED IP SUB, LLC       By:  /s/
Gary Klein   Name:  Gary Klein   Title:  Chief Financial Officer       MSLO
EMERIL ACQUISITION SUB, LLC       By:   /s/ Gary Klein   Name:  Gary Klein  
Title:  Chief Financial Officer

 

[Signature Page to First Amendment to Second Amended and Restated First Lien
Credit Agreement]

 

 

 

 

  bank of america, n.a., as Agent and as a Lender       By:   /s/ Andrew Curussi
  Name:  Andrew Cerussi   Title:  Director

 

[Signature Page to First Amendment to Second Amended and Restated First Lien
Credit Agreement]

 

 

 

 

  ISRAEL DISCOUNT BANK OF NEW YORK, as a Lender       By:   /s/ James M. Morton
  Name:  James M. Morton   Title:  Senior Vice President       By:   /s/ Michael
Paul   Name:  Michael Paul   Title:  Senior Vice President

 

[Signature Page to First Amendment to Second Amended and Restated First Lien
Credit Agreement]

 

 

 

 

  BANK HAPOALIM B.M., as a Lender       By:   /s/ Howard Applebaum  
Name:  Howard Applebaum   Title:  Executive Vice President       By:   /s/
Amanda Milazzo   Name:  Amanda Milazzo   Title:  Vice President

 

[Signature Page to First Amendment to Second Amended and Restated First Lien
Credit Agreement]

 

 

 

 

  FIFTH THIRD BANK, as a Lender       By:  /s/ Todd S. Robinson   Name:  Todd S.
Robinson   Title:  Vice President

 

[Signature Page to First Amendment to Second Amended and Restated First Lien
Credit Agreement]

 

 

 

 

SCHEDULE A

 

Tranche a-1 term lenders and tranche a-1 term loan first amendment commitments

 

Lender  Tranche A-1 Term Loan
First Amendment
Commitment   Applicable Percentage
with respect to Tranche
A-1 Term Loan
Commitment   Applicable Percentage  Bank of America, N.A.  $4,210,526.00  
 52.631578947%   52.631578947% Israel Discount Bank of New York  $1,684,210.00  
 21.052631579%   21.052631579% Fifth Third Bank  $1,052,632.00    13.157894737% 
 13.157894737% Bank Hapoalim B.M.  $1,052,632.00    13.157894737% 
 13.157894737% TOTAL:  $8,000,000.00    100.000000000%   100.000000000%

 

[Annex A to First Amendment to Second Amended and Restated First Lien Credit
Agreement]

 

 

 

 

Annex A

 

Amended and Restated Schedules to Credit Agreement

 

[see attached]

 

[Annex A to First Amendment to Second Amended and Restated First Lien Credit
Agreement] 

 

 

 

 

Annex B

 

Amended and Restated Exhibit D (Compliance Certificate) to Credit Agreement

 

[see attached]

 

[Annex B to First Amendment to Second Amended and Restated First Lien Credit
Agreement]

 

 

 

 

Annex C

 

New Subsidiary Guarantors

 

MSO IP Holdings, Inc., a California corporation.

Martha Stewart, Inc., a Connecticut corporation.

Body & Soul Omnimedia, Inc., a Delaware corporation.

MSLO Productions, Inc., a Delaware corporation.

MSLO Productions – Home, Inc., a Delaware corporation.

MSLO Productions – EDF, Inc., a Delaware corporation.

Flour Productions, Inc., a Delaware corporation.

Emeril Primetime Music, Inc., a Delaware corporation.

Emeril Primetime Productions, Inc., a Delaware corporation.

Good Thing Productions, Inc., a Delaware corporation.

MSLO Shared IP Sub, LLC, a Delaware limited liability company.

MSLO Emeril Acquisition Sub, LLC, a Delaware limited liability.

  

[Annex B to First Amendment to Second Amended and Restated First Lien Credit
Agreement]