Execution Version


 


AMENDED AND RESTATED EMPLOYMENT AGREEMENT


 


THIS AMENDED AND RESTATED
EMPLOYMENT AGREEMENT (this “Agreement”) is made as of February __, 2012 by and between XCel Brands, Inc. a Delaware
corporation (the “Company”), and Giuseppe Falco (the “Executive”), each a “Party”
and collectively the “Parties.”  This Agreement amends and restates that certain employment agreement
dated as of August 1, 2011, by and between the Company and the Executive. Unless otherwise indicated, capitalized terms used herein
are defined in Section 2.1.


 


WHEREAS, the Company
has determined that it is in the best interests of the Company and its shareholders to enter into an employment agreement with
the Executive and the Executive is willing to serve as an employee of the Company.


 


NOW, THEREFORE, in
consideration of the mutual covenants and agreements set forth herein, it is agreed by and between the Executive and the Company
as follows:


 


ARTICLE I


EMPLOYMENT TERMS


 


1.1           Employment.  The
Company will employ the Executive, and the Executive accepts employment with the Company, upon the terms and conditions set forth
in this Agreement for the period beginning on the Effective Date and ending as provided in Section 1.4(a) hereof (the “Employment
Period”).  Notwithstanding anything to the contrary contained in this Agreement, if the Effective Date does
not occur on or prior to October 1, 2011, then this Agreement shall be deemed terminated; provided, however, that the provisions
contained in Section 1.5 shall remain in full force and effect.


 


1.2         Position and Duties.


 


(a)           Generally.  The
Executive shall serve as the President, Chief Operating Officer of the Isaac Mizrahi Brand (“IMB”) and in such
capacity shall be responsible for the general management of IMB , shall perform such duties as are customarily performed by an
officer with similar title and responsibilities of a company of a similar size and shall have such power and authority as shall
reasonably be required to enable him to perform his duties hereunder; provided, however, that in exercising such power and authority
and performing such duties, he shall at all times be subject to the authority, control and direction of the Chief Executive Officer
of the Company.


 


(b)           Duties
and Responsibilities.  The Executive shall report directly to Robert D’Loren, the Chief Executive Officer of the
Company, or his successor, and shall devote his full business time and attention to the business and affairs of the Company and
its Subsidiaries.  The Executive shall have such duties, responsibility and authority as are customary and consistent
with his position.  The Executive shall perform his duties and responsibilities in a diligent, trustworthy, businesslike
and efficient manner and shall use his best efforts during the Employment Period to protect, encourage and promote the best interests
of the Company and its stockholders.  The Executive shall not engage in any other business activities that could reasonably
be expected to conflict with the Executive’s duties, responsibilities and obligations hereunder. Notwithstanding the foregoing,
nothing herein shall prohibit Executive from (i) serving on corporate, civic or charitable boards or committees, (ii)
delivering lectures or fulfilling speaking engagements and (iii) managing personal investments, so long as such activities
do not materially interfere with the performance of Executive’s responsibilities hereunder.  During the Employment
Period, the Executive shall promptly bring to the Company or its Subsidiaries, as applicable, all investment or business opportunities
relating to the Business of which the Executive becomes aware.


 


(c)           Principal
Office.  The principal place of performance by the Executive of his duties hereunder shall be the Company’s principal
executive offices in the New York Metropolitan area, although the Executive may be required to travel outside of the area where
the Company’s principal executive offices are located in connection with the performance of Executive’s duties for
the Company.


 



    	 



    	 



    

 


1.3         Compensation.


 


(a)           Base
Salary.  The Executive’s base salary shall be $350,000 per annum (the “Base Salary”).  The
Base Salary payable for Fiscal Year 2011 shall be prorated based on the number of days from and including the Effective Date through
and including December 31, 2011.  The Base Salary will be payable to the Executive by the Company in regular installments
in accordance with the Company’s general payroll practices.  The Executive shall receive such increases (but not
decreases) in his Base Salary as the Board of Directors, or the compensation committee of the Board of Directors, may approve in
its sole discretion from time to time; provided that the Executive’s Base Salary will be reviewed for potential upward adjustment
not less often than annually.


 


(b)           Cash
Bonuses.  Executive shall be entitled to a cash bonus of up to $50,000 per annum (“Cash Bonus”) based upon
the following: one half of one percent (0.5%) of all Isaac Mizrahi Live net sales in excess of $60 million on QVC as reported by
QVC to the Company.  The Cash Bonus shall be awarded to Executive on the date that is the earlier of (i) the 90th day
following the end of the fiscal year to which the Cash Bonus relates and (ii) the first business day following the date the Company’s
annual report on Form 10-K for the fiscal year to which the Cash Bonus relates is filed with the Securities and Exchange Commission.
Executive shall be eligible to receive a pro rata portion of the Cash Bonus if Executive’s employment is less than a full
year or ceases prior to the end of the calendar year for which a Cash Bonus has not yet been paid.  The Executive is
eligible to receive additional cash bonuses at the discretion of the Company’s compensation committee.


 


(c)           Withholding.  All
payments made under this Agreement (including Base Salary, Cash Bonuses, and other amounts) shall be subject to withholding for
income taxes, payroll taxes and other legally required deductions.


 


(d)           Expenses.  The
Company will reimburse the Executive for all reasonable expenses incurred by him in the course of performing his duties under this
Agreement that are consistent with the Company’s policies in effect at that time with respect to travel, entertainment and
other business expenses, subject to the Company’s requirements with respect to reporting and documentation of such expenses.
All expense reimbursement payments pursuant to this Section 1.3(d) shall be made within thirty (30) days after the date that the
Executive notifies the Company of such expense; provided, however, that the Executive shall notify the Company of such expenses
no later than six (6) months after the end of the calendar year in which such expenses were incurred.


 


(e)           Vacation;
Holiday Pay and Sick Leave.  The Executive shall be entitled to four (4) weeks’ paid vacation in each calendar
year, which if not taken during any year may be carried forward to any subsequent year.  Executive shall receive holiday
pay and paid sick leave as provided to other executive employees of the Company.


 


(f)           Additional
Benefits.  During the Employment Period, the Executive shall be entitled to participate (for himself and, as applicable,
his dependents) in the group medical, life, 401(k) and other insurance programs, employee benefit plans and perquisites which may
be adopted by the Board, or the compensation committee of the Board, from time to time, for participation by the Company’s
senior management or executives, as well as dental, life and disability insurance coverage, with payment of, or reimbursement for,
such insurance premiums by the Company, subject to, in all cases, the terms and conditions established by the Board with respect
to such plans (collectively, the “Benefits”); provided, however, that the Board, in its reasonable discretion,
may revise the terms of any Benefits so long as such revision does not have a disproportionately negative impact on the Executive
vis-à-vis other Company employees, to the extent applicable.


 


(g)           Indemnification.  The
Executive shall be entitled to indemnification by the Company in the same circumstances and to the same extent as the other executive
officers and directors of the Company, which indemnification shall in no event be less favorable to the Executive than the fullest
scope of indemnification permitted by applicable Delaware law (or any such greater scope of indemnification provided by agreement
or by the terms of the Company’s Certificate of Incorporation or By-Laws to any executive officer or director of the Company).


 


(h)           Stock
Options. In the event that the Company elects from time to time during the Employment Period to award to its senior management
or executives, generally, options to purchase shares of the Company’s stock pursuant to any stock option plan or similar
program, the Executive shall be entitled to participate in any such stock option plan or similar program on a basis consistent
with the participation of other senior management or executives of the Company. 


 



    	 



    	 



    




 


(i)           
Warrant. On the Closing Date, the Executive shall receive warrants (the “Warrant Grant”) a warrant to purchase
100,000 shares of Company’s common stock, with an exercise price per share equal to the price per share of common stock (without
allocating any value to any warrants, if any, sold with the common stock) sold in the private placement anticipated to close on
or about the same day as the Closing Date and a 10-year term (the “Warrant”). The Warrant shall vest equally
over two years; 50,000 shares shall vest on the first anniversary of the Closing Date, and 50,000 shares shall vest on the
second anniversary of the Closing Date.  The shares of the Company’s Common Stock underlying the Warrant shall
have customary piggy back registration and cashless exercise rights.


 


		1.4	Term and Termination.



 


(a)           Duration.  The
Employment Period shall commence on the Effective Date and the initial term shall terminate two (2) years from the Effective Date
(the “Initial Term”), unless earlier terminated by the Company or the Executive as set forth in this Section
1.4 .  The Term shall renew automatically for an additional one-year period, unless either party gives the other party
written notice of its intention not to renew the Agreement no later than 30 days prior to the expiration of the then current Term
(the “Term”).  At the end of the three-year Term, the parties shall negotiate in good faith any extension
and the terms and conditions thereof. The Employment Period shall be terminated prior to the then-applicable expiration of the
Term upon the first to occur of (i) termination of the Executive’s employment by the Company for Cause, (ii) termination
of the Executive’s employment by the Company without Cause, (iii) the Executive’s resignation with Good Reason, (iv)
the Executive’s resignation other than for Good Reason, or (v) the Executive’s death or Disability.  The
Executive shall not terminate the Employment Period, with or without Good Reason, unless he gives the Company written notice that
he intends to terminate the Employment Period at least 90 days prior to the Executive’s proposed Termination Date.  As
a condition to Executive receiving any payments or benefits under Section 1.4(b), the Executive shall execute and deliver to the
Company the General Release in the form attached hereto as Exhibit A.


 


(b)           Severance
Upon Termination Without Cause, Upon Resignation by the Executive For Good Reason or Failure to Renew Term.  If the Employment
Period is terminated by the Company without Cause or if the Executive resigns for Good Reason, or if the Company fails to renew
the Term (in which case termination of the Executive’s employment shall be effective at the expiration of the then-current
Term), then the Executive will be entitled to receive (1) any unpaid Base Salary through and including the Termination Date and
any other amounts, including any amounts due for  Cash Bonus, or other entitlements then due and owing to the Executive
as of the Termination Date; (2) an amount equal to the Executive’s Base Salary (at the rate in effect on the date the Executive’s
employment is terminated) for a 6 month period following the Executive’s termination of employment as described in this Section
1.4(b) , payable in a lump sum on the date that is six months following the Executive’s “separation from service”
(within the meaning of Section 409A of the Code) occurring in connection with such termination (provided, however, that an amount
that qualifies for involuntary separation pay exception (within the meaning of Code Section 409A and Final Treasury Regulations
Section 1.409A-1(b)(9)(iii)(A)) and is otherwise permissible under Section 409A and the Final Treasury Regulations, shall not be
subject to such six-month delay and shall be paid to Executive in a lump sum within thirty (30) days of the Executive’s “separation
from service”) and (3) continue to participate in the Company’s group medical plan on the same basis as he previously
participated or receive payment of, or reimbursement for, COBRA premiums (or, if COBRA coverage is not available, reimbursement
of premiums paid for other medical insurance in an amount not to exceed the COBRA premium) for a six-month period following the
Executive’s termination of employment; provided that if the Executive is provided with health insurance coverage by
a successor employer, any such coverage by the Company shall cease (each of (1), (2) and (3) referred to as the “Severance
Payment”).  The Executive also shall be entitled to receive payment for all reimbursable expenses or other
entitlements then due and owing to the Executive as of the Termination Date.  If the Executive breaches his obligations
under Section 1.6, 1.7, 1.8 or 1.9 of this Agreement, the Company’s obligation to make any Severance Payments and provide
any Benefits shall cease as of the date of such breach; provided, that if the Executive cures such breach within 10 days of receiving
written notice from the Company of such breach (which notice the Company shall provide promptly to the Executive after learning
of such breach), the Company shall promptly pay all Severance Payments not made during such period of dispute and resume making
Severance Payments and providing Benefits promptly following such cure.


 



    	 



    	 



    

 


(c)           Death
and Disability.  In the event of the death or Disability of the Executive, the Company shall pay the Executive his Base
Salary through the Termination Date, at the rate then in effect, and all expenses or accrued Benefits arising prior to such termination
which are payable to the Executive pursuant to this Agreement through the Termination Date.  Executive or his estate
shall also receive the pro-rata portion of the Cash Bonus for the year in which his employment hereunder terminates, calculated
based on the number of months Executive worked during that year (including the month in which the termination occurs). Any other
rights and benefits the Executive may have under employee benefit plans and programs of the Company generally in the event of the
Executive’s Disability shall be determined in accordance with the terms of such plans and programs.  In the event
of Executive’s death, any rights and benefits that the Executive’s estate or any other person may have under employee
benefit plans and programs of the Company generally in the event of the Executive’s death shall be determined in accordance
with the terms of such plans and programs.


 


(d)           Salary
and Other Payments Through Termination.  If the Executive’s employment with the Company is terminated during the
Term (i) by the Company for Cause or (ii) by the Executive other than for Good Reason, the Executive will be entitled to receive
his Base Salary through the Termination Date, but will not be entitled to receive any Severance Payments or Benefits after the
Termination Date.  The Executive shall be entitled to receive payment for all reimbursable expenses or other entitlements
then due and owing to the Executive as of the Termination Date.


 


(e)           Other
Rights.  Except as set forth in this Section 1.4 and Section 1.3, all of the Executive’s rights to receive Base
Salary, Benefits and Cash Bonuses hereunder (if any) which accrue or become payable after the termination of the Employment Period
shall cease upon such termination.


 


(f)           Continuing
Benefits. Notwithstanding Section 1.4(e), termination pursuant to this Section 1.4 shall not modify or affect in any way whatsoever
any vested right of the Executive to benefits payable under any retirement or pension plan or under any other employee benefit
plan of the Company, and all such benefits shall continue, in accordance with, and subject to, the terms and conditions of such
plans, to be payable in full to, or on account of, the Executive after such termination.


 


(g)           No
Duty of Mitigation.  The Executive shall not be required to mitigate the amount of any payment provided for in this Article
I by seeking other employment or otherwise.


 


1.5          Confidential
Information.


 


(a)           The
Executive shall not disclose or, directly or indirectly, use at any time, during the Employment Period or thereafter, any Confidential
Information (as defined below) of which the Executive is or becomes aware, whether or not such information is developed by him,
alone or with others, except to the extent that (i) such disclosure or use is required by the Executive’s performance of
the duties assigned to the Executive by the Board of Directors, (ii) the Executive is required by subpoena or similar process to
disclose or discuss any Confidential Information, provided, that in such case, the Executive shall promptly inform the Company
in writing of such event, shall cooperate with the Company in attempting to obtain a protective order or to otherwise limit or
restrict such disclosure to the greatest extent possible, and shall disclose only that portion of the Confidential Information
as is strictly required, or (iii) such Confidential Information is or becomes generally known to and available for use by the public,
other than as a result of any action or inaction directly or indirectly by the Executive.  At the Company’s expense,
the Executive shall take all appropriate steps to safeguard Confidential Information and to protect it against disclosure, misuse,
espionage, loss and theft.  The Executive acknowledges that the Confidential Information obtained by him during the course
of his employment with the Company is the sole and exclusive property of the Company and its Subsidiaries, as applicable.


 


(b)           The
Executive understands that the Company and its Subsidiaries will receive from third parties confidential or proprietary information
(“Third Party Information”) subject to a duty on the part of the Company and its Subsidiaries to maintain the
confidentiality of such information and to use it only for certain limited purposes.  During the Employment Period and
in the period specified in such confidentiality agreements, and without in any way limiting the provisions of Section 1.5(a) above,
the Executive will hold Third Party Information in confidence, consistent with the obligations applicable to Confidential Information
of the Company generally, and will not disclose to anyone (other than personnel and agents of the Company or its Subsidiaries who
need to know such information in connection with their work for the Company or its Subsidiaries) or use, except in connection with
his work for the Company or its Subsidiaries, Third Party Information unless expressly authorized by the Board in writing.


 



    	 



    	 



    

 


(c)           As
used in this Agreement, the term “Confidential Information” means information that is not generally known to
the public and that is related in any way to the actual or anticipated business of the Company, its Subsidiaries, its Affiliates
or any of their respective predecessors in interest, including but not limited to (i) business development, growth and other strategic
business plans, (ii) properties available for acquisition, financing development or sale, (iii) accounting and business methods,
(iv) services or products and the marketing of such services and products, (v) fees, costs and pricing structures, (vi) designs,
(vii) analysis, (viii) drawings, photographs and reports, (ix) computer software, including operating systems, applications and
program listings, (x) flow charts, manuals and documentation, (xi) data bases, (xii) inventions, devices, new developments, methods
and processes, whether patentable or unpatentable and whether or not reduced to practice, (xiii) copyrightable works, (xiv) all
technology and trade secrets, (xv) confidential terms of material agreements and customer relationships, and (xvi) all similar
and related information in whatever form or medium.  Confidential Information also expressly excludes Executive’s
general know-how and business contacts contained in Executive’s rolodex, be it electronic or otherwise, as of the Effective
Date  to the extent that the use of such information does not violate or breach the terms of Section 1.9.


 


1.6           Inventions
and Patents.  Executive acknowledges that all discoveries, concepts, ideas, inventions, innovations, improvements, developments,
products, methods, processes, techniques, programs, designs, analyses, drawings, reports, patents, copyrightable works and mask
works (whether or not including any Confidential Information) and all issuances, registrations or applications related thereto,
all other proprietary information or intellectual property and all similar or related information (whether or not patentable) conceived,
developed, contributed to, made, or reduced to practice by Executive (either alone or with others) while employed by Company or
any of its Subsidiaries or Affiliates or any of their respective predecessors in interest (including prior to the date of this
Agreement) and within the scope of the Executive’s employment and duties and responsibilities or using the materials, facilities
or resources of the Company or any of its Subsidiaries or Affiliates or any of their respective predecessors in interest within
the scope of the Executive’s employment and duties and responsibilities (collectively, “Company Works”)
is the sole and exclusive property of the Company and its Subsidiaries. Executive hereby assigns all right, title and interest
in and to all Company Works to the Company and its Subsidiaries and waives any moral rights he may have therein, without further
obligation or consideration.  Any copyrightable work prepared in whole or in part by the Executive will be deemed “a
work made for hire” under Section 201(b) of the 1976 Copyright Act, and the Company and its Subsidiaries shall own all of
the rights comprised in the copyright therein.  The Executive shall promptly and fully disclose in writing all Company
Works to the Company and shall cooperate with the Company and its Subsidiaries to protect, maintain and enforce the Company’s
and its Subsidiaries’ interests in and rights to such Company Works (including, without limitation, providing reasonable
assistance in securing patent protection and copyright registrations and executing all affidavits, assignments, powers-of-attorney
and other documents as reasonably requested by the Company, whether such requests occur prior to or after termination of the Executive’s
employment with the Company).


   


1.7           Delivery
of Materials Upon Termination of Employment.  As requested by the Company from time to time and in any event upon the
termination of the Executive’s employment with the Company , the Executive shall promptly deliver to the Company, or at the
Company’s election, destroy, all copies and embodiments, in whatever form or medium, of all Confidential Information, Company
Works and other property and assets of the Company and its Subsidiaries in the Executive’s possession or within his control
(including, but not limited to, office keys, access cards, written records, notes, photographs, manuals, notebooks, documentation,
program listings, flow charts, magnetic media, disks, diskettes, tapes computers and handheld devices (including all software,
files and documents thereon) and any other materials containing any Confidential Information or Company Works) irrespective of
the location or form of such material and, if requested by the Company, shall provide the Company with written confirmation that
all such materials have been delivered to the Company or destroyed, as applicable.


 



    	 



    	 



    

 


1.8           Non-Compete
and Non-Solicitation Covenants.


 


(a)           The
Executive acknowledges and agrees that the Executive’s services to the Company and its Subsidiaries are unique in nature
and that the Company and its Subsidiaries would be irreparably damaged if the Executive were to provide similar services to any
Person competing with the Company and its Subsidiaries or engaged in the Business.  The Executive further acknowledges
that, in the course of his employment with the Company, he will become familiar with the Company’s and its Subsidiaries’
trade secrets and with other Confidential Information.  During the Noncompete Period, he shall not, directly or indirectly,
whether for himself or for any other Person, permit his name to be used by or participate in any business or enterprise (including,
without limitation, any division, group or franchise of a larger organization) that engages or proposes to engage in the Business
in the Restricted Territories, other than the Company and its Subsidiaries or except as otherwise directed or authorized by the
Board.  For purposes of this Agreement, the term “participate in” shall include, without limitation, having
any direct or indirect interest in any Person, whether as a sole proprietor, owner, stockholder, partner, member, joint venturer,
creditor or otherwise, or rendering any direct or indirect service or assistance to any Person (whether as a director, officer,
supervisor, employee, agent, consultant or otherwise).  Nothing herein will prohibit the Executive from mere passive
ownership of not more than five percent (5%) of the outstanding stock of any class of a publicly held corporation whose stock is
traded on a national securities exchange or in the over-the-counter market.  As used herein, the phrase “mere passive
ownership” shall include voting or otherwise granting any consents or approvals required to be obtained from such Person
as an owner of stock or other ownership interests in any entity pursuant to the charter or other organizational documents of such
entity, but shall not include, without limitation, any involvement in the day-to-day operations of such entity.


 


(b)           During
the Nonsolicitation Period, the Executive will not directly, or indirectly through another Person, solicit, induce or attempt to
induce any customer, supplier, licensee, or other business relation of the Company or any of its Subsidiaries, or solicit, induce
or attempt to induce any person who is, or was during the then-most recent 12-month period, a corporate officer, general manager
or other employee of the Company or any of its Subsidiaries to terminate such employee’s employment with the Company or any
of its Subsidiaries, or hire any such person unless such person’s employment was terminated by the Company or any of its
Subsidiaries, or in any way interfere with the relationship between any such customer, supplier, licensee, employee or business
relation and the Company or any of its Subsidiaries.  The restrictions of this Section 1.8(b) shall not apply to any
customer, supplier, licensee, or other business relation of the Company or any of its Subsidiaries with whom Executive had a prior
business relationship before he started performing services for the Company. The Executive acknowledges and agrees that the Company
and its Subsidiaries would be irreparably damaged if the Executive were to breach any of the provisions contained in this Section
1.8(b).


 


(c)           Executive
acknowledges that this Agreement, and specifically, this Section 1.8, does not preclude Executive from earning a livelihood, nor
does it unreasonably impose limitations on Executive’s ability to earn a living.  In addition, Executive agrees
and acknowledges that the potential harm to the Company of its non-enforcement outweighs any harm to Executive of its enforcement
by injunction or otherwise.


 


1.9           Enforcement.  If,
at the time of enforcement of Section 1.5, 1.6, 1.7, 1.8, 1.9 or 1.10, a court holds that the restrictions stated herein are unreasonable
under circumstances then existing, the Parties agree that, to the extent permitted by applicable law, the maximum period, scope
or geographical area reasonable under such circumstances will be substituted for the Noncompete Period, scope or area.  Because
the Executive’s services are unique and because the Executive has access to Confidential Information and Company Works, the
Parties agree that money damages may be an inadequate remedy for any breach of Section 1.5 , 1.6 , 1.7 , 1.8 , 1.9 or 1.10 .  Therefore,
in the event of a breach or threatened breach of Section 1.5 , 1.6 , 1.7 , 1.8 , 1.9 or 1.10 , the Company or any of its Subsidiaries
or any of their respective successors or assigns may, in addition to other rights and remedies existing in their favor, apply to
any court of competent jurisdiction for specific performance and/or injunctive or other relief in order to enforce, or prevent
any violations of, the provisions hereof (without posting a bond or other security).  The Parties hereby acknowledge
and agree that (a) performance of the services of the Executive hereunder may occur in jurisdictions other than the jurisdiction
whose law the Parties have agreed shall govern the construction, validity and interpretation of this Agreement, (b) the law of
the  State of New York shall govern construction, validity and interpretation of this Agreement to the fullest extent
possible, and (c) Section 1.5 , 1.6 , 1.7 , 1.8 , 1.9 or 1.10 shall restrict the Executive only to the extent permitted by applicable
law.


 


1.10           Survival.  Sections
1.5, 1.6, 1.7, 1.8, 1.9 and 1.10 will survive and continue in full force in accordance with their terms notwithstanding any termination
of the Employment Period.


 



    	 



    	 



    

 


ARTICLE II


DEFINED TERMS


 


2.1           Definitions.
For purposes of this Agreement, the following terms will have the following meanings:


 


 ”Business”
means the business of acquiring and licensing consumer brands worldwide.


 


“Cause”
means with respect to the Executive, the occurrence of one or more of the following:  (i) conviction of a felony involving
moral turpitude, misappropriation of Company property, embezzlement of Company funds, violation of the securities laws or dishonesty,
(ii) the willful and continued failure by the Executive to attempt in good faith to substantially perform his obligations under
this Agreement (other than any such failure resulting from the Executive’s incapacity due to a Disability); (iii) reporting
to work under the influence of alcohol or illegal drugs, or the use of illegal drugs (whether or not at the workplace), or (iv)
any willful breach of Sections 1.6, 1.7, 1.8 or 1.9 of this Agreement.  Notwithstanding the foregoing, termination by
the Company for Cause (other than pursuant to clause (i) above) shall not be effective until and unless Executive fails to cure
such alleged act or circumstance within 30 days of receipt of notice thereof, to the satisfaction of the Chief Executive Officer
in the exercise of his reasonable judgment (or, if within such 30-day period the Executive commences and proceeds to take all reasonable
actions to effect such cure, within such reasonable additional time period (no longer than 60 days) as may be necessary).


 


“Closing Date” means
September 29, 2011.


 


“Code”
means the Internal Revenue Code of 1986 and the Treasury regulations thereunder, each as amended from time to time.


 


“Disability”
shall have the meaning set forth in a policy or policies of long-term disability insurance, if any, the Company obtains for the
benefit of itself and/or its employees.  If there is no definition of “disability” applicable under any such
policy or policies, if any, then the Executive shall be considered disabled due to mental or physical impairment or disability,
despite reasonable accommodations by the Company and its Subsidiaries, to perform his customary or other comparable duties with
the Company or its Subsidiaries immediately prior to such disability for a period of at least 120 consecutive days or for at least
180 non-consecutive days in any 12-month period.


 


“Effective
Date” means September 16, 2011.


 


“Fiscal Year”
means the fiscal year of the Company and its Subsidiaries.


 


“Good Reason”
means the occurrence, without the Executive’s written consent, of one or more of the following events:  (i) the
Company reduces the amount of Executive’s Base Salary or Cash Bonus, (ii) the Company requires that the Executive relocate
his principal place of employment to a site that is more than 50 miles from the Company’s offices in the New York area  or
if the Company changes the location of its headquarters without the consent of Executive to a location that is more than 50 miles
from such location, (iii) the Company materially reduces the Executive’s authority, duties or responsibilities or removes
the Executive from the position of President and Chief Operating Officer of IMB other than pursuant to a termination of his employment
for Cause, or upon the Executive’s death or Disability, (iv) the failure or unreasonable delay of the Company to provide
to the Executive any of the payments or benefits contemplated hereby or (v) the Company otherwise materially breaches the terms
of this Agreement; provided that no such event shall constitute Good Reason hereunder unless (a) the Executive shall have given
written notice to the Company of the Executive’s intent to resign for Good Reason within 30 days after the Executive becomes
aware of the occurrence of any such event, which notice shall describe in reasonable detail the event or events constitute the
basis for the Executive’s intention to resign for Good Reason and (b) such event or occurrence, if a breach susceptible to
cure, shall not have been cured or otherwise shall not have been resolved to the Executive’s reasonable satisfaction, in
each case within 30 days of the Company’s receipt of such notice.  In such case the Executive’s resignation
shall become effective on the 31st day after the Company’s receipt of the aforementioned notice.



    	 



    	 



    

 


“Merger Agreement” means
the Merger Agreement entered into by and among NetFabric Holdings, Inc., the Company and a subsidiary of NetFabric Holdings, Inc.
formed for the purpose of acquiring the Company.


 


“Noncompete
Period” means the Employment Period and 6 months thereafter.


 


“Nonsolicitation
Period” means the Employment Period and 6 months thereafter.


 


“Person”
means an individual, a partnership, a corporation, a limited liability company, an association, a joint stock company, a trust,
a joint venture, an unincorporated organization, or the United States of America any other nation, any state or other political
subdivision thereof, or any entity exercising executive, legislative, judicial, regulatory or administrative functions of government.


 


“Restricted
Territories” means (i) the United States and its territories and possessions and (ii) any foreign country in which the
Company engages in Business as of the Termination Date.


 


“Subsidiary”
means, with respect to any Person, any corporation, limited liability company, partnership, association, or business entity of
which (i) if a corporation, a majority of the total voting power of shares of stock entitled (without regard to the occurrence
of any contingency) to vote in the election of directors, managers, or trustees thereof is at the time owned or controlled, directly
or indirectly, by that Person or one or more of the other Subsidiaries of that Person or a combination thereof, or (ii) if a limited
liability company, partnership, association, or other business entity (other than a corporation), a majority of  partnership
or other similar ownership interest thereof is at the time owned or controlled, directly or indirectly, by that Person or one or
more Subsidiaries of that Person or a combination thereof.  For purposes hereof, a Person or Persons shall be deemed
to have a majority ownership interest in a limited liability company, partnership, association, or other business entity (other
than a corporation) if such Person or Persons shall be allocated a majority of limited liability company, partnership, association,
or other business entity gains or losses or shall be or control any managing director or general partner or manager or managing
member of such limited liability company, partnership, association, or other business entity.  For purposes hereof, references
to a “Subsidiary” of any Person shall be given effect only at such times that such Person has one or more Subsidiaries,
and, unless otherwise indicated, the term “Subsidiary” refers to a Subsidiary of the Company.


 


“Termination
Date” means the effective date of the Executive’s termination of employment with the Company.


 


		2.2	Other Definitional Provisions.



 


(a)           Section
references contained in this Agreement are references to sections in this Agreement, unless otherwise specified.  Each
defined term used in this Agreement has a comparable meaning when used in its plural or singular form.  Each gender-specific
term used in this Agreement has a comparable meaning whether used in a masculine, feminine or gender-neutral form.


 


(b)           Whenever
the term “including” (whether or not that term is followed by the phrase “but not limited to” or “without
limitation” or words of similar effect) is used in this Agreement in connection with a listing of items within a particular
classification, that listing will be interpreted to be illustrative only and will not be interpreted as a limitation on, or an
exclusive listing of, the items within that classification.


 



    	 



    	 



    

 


ARTICLE III


MISCELLANEOUS TERMS


 


3.1                 Defense
of Claims. The Executive agrees that, during the Employment Period, and for a period of six months after termination of the Executive’s
employment, upon request by the Company, the Executive shall reasonably cooperate with the Company in connection with any matters
the Executive worked on during his employment with the Company and any related transitional matters.  In addition, during
the Employment Period and thereafter, the Executive agrees to reasonably cooperate with the Company in the defense of any claims
or actions that may be made by or against the Company that affect the Executive’s prior areas of responsibility or involve
matters about which the Executive has knowledge, except if the Executive’s reasonable interests are adverse to the Company
in such claim or action and provided that after the Employment Period such level of cooperation shall be reasonable and shall take
due account of the Executive’s work and personal commitments. The Company’s request for “reasonable cooperation”
shall take into consideration Executive’s personal and business commitments and the amount of notice provided to Executive
by the Company. The Company agrees to promptly reimburse the Executive for all of the Executive’s reasonable travel and other
direct expenses incurred, or to be reasonably incurred, to comply with the Executive’s obligations under this Section 3.1.


 


3.2                 Nondisparagement.
The Executive agrees to refrain from (i) making, directly or indirectly, any derogatory comments concerning the Company or its
Subsidiaries or any current or former officers, directors, employees or shareholders thereof or (ii) taking any other action with
respect to the Company or its Subsidiaries which is reasonably expected to result, or does result in, damage to the business or
reputation of the Company, its Subsidiaries or any of its current or former officers, directors, employees or shareholders.  The
Company agrees to refrain from (i) making, directly or indirectly, any derogatory comments concerning the Executive or (ii) taking
any other action with respect to the Executive which is reasonably expected to result, or does result in, damage to the reputation
of the Executive.  Notwithstanding anything to the contrary contained herein, nothing in this Agreement shall prohibit
or restrict either party from, truthfully and in good faith: (i) making any disclosure of information required by law; (ii) providing
information to, or testifying or otherwise assisting in any investigation or proceeding brought by, any federal regulatory or law
enforcement agency or legislative body, any self-regulatory organization, or the Company’s or the Executive’s designated
legal, compliance or human resources officers; or (iii) filing, testifying, participating in or otherwise assisting in a proceeding
relating to an alleged violation of any federal, state or municipal law relating to fraud, or any rule or regulation of the Securities
and Exchange Commission or any self-regulatory organization.


 


3.3                 Source
of Payments. All payments provided under this Agreement, other than payments made pursuant to a plan which provides otherwise and
except as otherwise provided herein, shall be paid in cash from the general funds of the Company, and no special or separate fund
shall be established, and no other segregation of assets shall be made, to assure payment. The Executive shall have no right, title
or interest whatsoever in or to any investments which the Company or its Subsidiaries may make to aid the Company in meeting its
obligations hereunder. To the extent that any person acquires a right to receive payments from the Company hereunder, such right
shall be no greater than the right of an unsecured creditor of the Company.


 


3.4                 Notices.
Any notice provided for in this Agreement must be in writing and must be either personally delivered, mailed by first class mail
(postage prepaid and return receipt requested), sent by reputable overnight courier service (charges prepaid) or sent by facsimile
(with receipt confirmed) to the recipient at the address or facsimile number indicated below:


 


	 	To the Company:
	 	 
	 	XCel Brands, Inc.
	 	475 Tenth Avenue, 4th Floor
	 	New York, New York 10018
	 	 
	 	With a copy (which shall not constitute notice) to:
	 	 
	 	Blank Rome
	 	The Chrysler Building
	 	405 Lexington Avenue
	 	New York, NY 10174-0208
	 	Attn:  Robert Mittman, Esquire
	 	Facsimile: (212) 885-5557


 



    	 



    	 



    

 


	 	To the Executive:
	 	 
	 	Joe Falco
	 	35 Cambridge Drive
	 	Smithtown, NY 11787
	 	Home: 631.382.2467
	 	 
	 	With copies to:
	 	 
	 	Outten & Golden LLP
	 	3 Park Avenue, 29th Floor
	 	New York, NY 10016
	 	(212) 245-1000
	 	Attn:  Wendi S. Lazar, Esq.


 


or such other address or to the attention
of such other Person as the recipient Party will have specified by prior written notice to the sending Party.  Any notice
under this Agreement will be deemed to have been given when so delivered or sent.


 


3.5                 Severability.  Subject
to the express provisions of Section 1.10 relating to certain specified changes, whenever possible, each provision of this Agreement
will be interpreted in such manner as to be effective and valid under applicable law, but if any provision of this Agreement is
held to be invalid, illegal or unenforceable in any respect under any applicable law or rule in any jurisdiction, such invalidity,
illegality or unenforceability will not affect any other provision or any other jurisdiction, but this Agreement will be reformed,
construed and enforced in such jurisdiction as if such invalid, illegal or unenforceable provision had never been contained herein.


 


3.6                 Complete
Agreement.  This Agreement embodies the complete agreement and understanding among the Parties with regard to the subject
matter hereof and supersedes and preempts any prior understandings, agreements or representations by or among the Parties, written
or oral, which may have related to the subject matter hereof in any way.  To the extent that this Agreement provides
greater benefits to the Executive or fewer obligation of the Executive than available or set forth under the Company’s employee
handbook or other corporate policies, then this Agreement shall prevail.


 


3.7                 Counterparts.  This
Agreement may be executed in separate counterparts, each of which is deemed to be an original and all of which taken together constitute
one and the same agreement.


 


3.8                 Assignment.  Without
the Executive’s consent, the Company may not assign its rights and obligations under this Agreement except (i) to a “Successor”
(as defined below) or (ii) to an entity that is formed and controlled by the Company or any of its Subsidiaries.  This
Agreement is personal to the Executive, and the Executive shall not have the right to assign the Executive’s interest in
this Agreement, any rights under this Agreement or any duties imposed under this Agreement, nor shall the Executive have the right
to pledge, hypothecate, transfer, assign or otherwise encumber the Executive’s right to receive any form of compensation
hereunder without the prior written consent of the Board.  As used in Section 3.8 and 3.9, “Successor”
shall include any Person that at any time, whether by purchase, merger or otherwise, directly or indirectly acquires all or substantially
all of the assets of, or ownership interests in, the Company and its Subsidiaries.


 


3.9                 Successors
and Assigns.  This Agreement is intended to bind and inure to the benefit of and be enforceable by the Company, the Executive,
and their respective heirs, successors and permitted assigns.


 


3.10                 Choice
of Law.  This Agreement and the performance of the parties hereunder shall be governed by the internal laws (and not
the law of conflicts) of the State of New York. Any claim or controversy arising out of or in connection with this Agreement, or
the breach thereof, shall be adjudicated exclusively by the Supreme Court, New York County, State of New York, or by a federal
court sitting in Manhattan in New York City, State of New York. The parties hereto agree to the personal jurisdiction of such courts
and agree to accept process by regular mail in connection with any such dispute.


 


3.11                 Waiver
of Jury Trial.  AS A SPECIFICALLY BARGAINED FOR INDUCEMENT FOR EACH OF THE PARTIES HERETO TO ENTER INTO THIS AGREEMENT
(AFTER HAVING THE OPPORTUNITY TO CONSULT WITH COUNSEL), EACH PARTY HERETO EXPRESSLY WAIVES THE RIGHT TO TRIAL BY JURY IN ANY LAWSUIT
OR PROCEEDING RELATING TO OR ARISING IN ANY WAY FROM THIS AGREEMENT OR THE MATTERS CONTEMPLATED HEREBY.


 



    	 



    	 



    

 


3.12                 Legal
Fees and Court Costs.  In the event that any action, suit or other proceeding in law or in equity is brought to enforce
the provisions of this Agreement, and such action results in the award of a judgment for money damages or in the granting of any
injunction in favor of the Company, all expenses (including reasonable attorneys’ fees) of the Company in such action, suit
or other proceeding shall be paid by the Executive. In the event that any action, suit or other proceeding in law or in equity
is brought to enforce the provisions of this Agreement, and such action results in the award of a judgment for money damages or
in the granting of any injunction in favor of the Executive, all expenses (including reasonable attorneys’ fees and travel
expenses) of the Executive in such action, suit or other proceeding shall be paid by the Company.


  


3.13                 Remedies.  Each
Party will be entitled to enforce its rights under this Agreement specifically, to recover damages and costs caused by any breach
of any provision of this Agreement and to exercise all other rights existing in its favor.  Subject to Section 3.12 ,
nothing herein shall prohibit any arbitrator or judicial authority from awarding attorneys’ fees or costs to a prevailing
Party in any arbitration or other proceeding to the extent that such arbitrator or authority may lawfully do so.


 


3.14                 Amendment
and Waiver.  The provisions of this Agreement may be amended or waived only with the prior written consent of the Company
and the Executive, and no course of conduct or failure or delay in enforcing the provisions of this Agreement will affect the validity,
binding effect or enforceability of this Agreement.


 


3.15                 Third
Party Beneficiaries.  This Agreement will not confer any rights or remedies upon any Person other than the Parties and
their respective successors and permitted assigns and other than, in the event of the Executive’s death, his estate, to which
all of Executive’s rights and remedies set forth herein shall accrue.


 


3.16                 The
Executive’s Representations.  The Executive hereby represents and warrants to the Company that (a) the execution,
delivery and performance of this Agreement by the Executive do not and shall not conflict with, breach, violate or cause a default
under any contract, agreement, instrument, order, judgment or decree to which the Executive is a party or by which he is bound,
(b) the Executive is not a party to or bound by any employment agreement, noncompete agreement or confidentiality agreement with
any other Person (or other agreement with any other person containing a restriction on the Executive’s right to do business
or obligating him to do business with any other Person on a priority or preferential basis), (c) upon the execution and delivery
of this Agreement by the Company, this Agreement shall be the valid and binding obligation of the Executive, enforceable in accordance
with its terms and (d) upon the execution and delivery of this Agreement by the Company, Executive shall not be in violation of
clause (i) set forth in the definition of Cause and shall not be disabled.


 


3.17                 Section
409A of the Code.


 


(a)           Compliance.  Notwithstanding
anything herein to the contrary, this Agreement is intended to be interpreted and applied so that the payments and benefits set
forth herein either shall either be exempt from the requirements of Section 409A of the Internal Revenue Code of 1986, as amended
(the “Code”), or shall comply with the requirements of Code Section 409A, and, accordingly, to the maximum extent permitted,
this Agreement shall be interpreted to be exempt from or in compliance with Code Section 409A.  To the extent that the
Company determines that any provision of this Agreement would cause Executive to incur any additional tax or interest under Code
Section 409A, the Company shall be entitled to reform such provision to attempt to comply with or be exempt from Code Section 409A
through good faith modifications.  To the extent that any provision hereof is modified in order to comply with Code Section
409A, such modification shall be made in good faith and shall, to the maximum extent reasonably possible, maintain the original
intent and economic benefit to Executive and the Company without violating the provisions of Code Section 409A.


 


(b)           Separate
Payments.  Notwithstanding anything in this Agreement to the contrary, the right to receive installment payments hereunder
shall be treated as a right to receive a series of separate payments in accordance with Code Section 409A and Final Treasury Regulation
Section 1.409A-2(b)(2)(iii).


 



    	 



    	 



    

 


(c)           Short-Term
Deferral.  Except as otherwise specifically provided, amounts payable under this Agreement, other than those expressly
payable on a deferred or installment basis, will be paid as promptly as practicable following the date on which they are earned
and vested and, in any event, on or prior to March 15 of the year following the first calendar year in which such amounts are no
longer subject to a substantial risk of forfeiture, as such term is defined in Section 409A of the Code.


 


(d)           Separation
from Service.  Notwithstanding anything in this Agreement or elsewhere to the contrary, a termination of employment shall
not be deemed to have occurred for purposes of any provision of this Agreement providing for the payment of any amounts or benefits
that constitute “non-qualified deferred compensation” within the meaning of Code Section 409A upon or following a termination
of Executive’s employment unless such termination is also a “separation from service” within the meaning of Code
Section 409A and, for purposes of any such provision of this Agreement, references to a “termination,” “termination
of employment” or like terms shall mean “separation from service” and the date of such separation from service
shall be the Termination Date for purposes of any such payment or benefits.


 


(e)           No
Designation.  In no event may Executive, directly or indirectly, designate the calendar year of any payment to be made
under this Agreement or otherwise which constitutes a “deferral of compensation” within the meaning of Code Section
409A.


 


(f)           Expense
Reimbursement. With regard to any provision herein that provides for reimbursement of costs and expenses or in-kind benefits, except
as permitted by Code Section 409A, (i) the right to reimbursement or in-kind benefits shall not be subject to liquidation or exchange
for another benefit, (ii) the amount of expenses eligible for reimbursement, or in-kind benefits, provided during any taxable year
shall not affect the expenses eligible for reimbursement, or in-kind benefits to be provided, in any other taxable year, and (iii)
such payments shall be made on or before the last day of Executive’s taxable year following the taxable year in which the
expense was incurred.


 


 [END OF PAGE]


[SIGNATURE PAGE FOLLOWS]


 



    	 



    	 



    

 


IN WITNESS WHEREOF,
the Parties have executed this Employment Agreement as of the date first written above.


 


	 	XCel Brands, Inc.
	 	 	 	 
	 	By:	/s/ Robert W. D’Loren
	 	 	Name:	Robert W. D’Loren
	 	 	Title:	Chairman and CEO
	 	 
	 	/s/ Giuseppe Falco
	 	Giuseppe Falco


 



    	 



    	 



    

 


EXHIBIT A


 


FORM OF RELEASE


 


I, Giuseppe Falco, on behalf of myself
and my heirs, successors and assigns, in consideration of the performance by XCel Brands, Inc., a Delaware corporation (together
with its Subsidiaries, the “Company”), of its material obligations under the Employment Agreement, dated as
of July XX, 2011 (the “Agreement”), do hereby release and forever discharge as of the date hereof the Company,
its Affiliates, each such Person’s respective successors and assigns and each of the foregoing Persons’ respective
present and former directors, officers, partners, stockholders, members, managers, agents, representatives, employees (and each
such Person’s respective successors and assigns) (collectively, the “Released Parties”) to the extent
provided below.


 


1.           I
understand that any payments or benefits paid or granted to me under Section 1.4(b) of the Agreement represent, in part, consideration
for signing this General Release and are not salary, wages or benefits to which I was already entitled.  I understand
and agree that I will not receive the payments and benefits specified in Section 1.4(b) of the Agreement unless I execute this
General Release and do not revoke this General Release within the time period permitted hereafter or breach this General Release.


 


2.           I
knowingly and voluntarily release and forever discharge the Company and the other Released Parties from any and all claims, controversies,
actions, causes of action, cross-claims, counter-claims, demands, debts, compensatory damages, liquidated damages, punitive or
exemplary damages, other damages, claims for costs and attorneys’ fees, or liabilities of any nature whatsoever in law and
in equity, both past and present (through the date of this General Release), whether under the laws of the United States or another
jurisdiction and whether known or unknown, suspected or claimed against the Company or any of the Released Parties which I, my
spouse, or any of my heirs, executors, administrators or assigns, have or may have, which arise out of or are connected with my
employment with, or my separation from, the Company (including, but not limited to, any allegation, claim or violation, arising
under:  Title VII of the Civil Rights Act of 1964, as amended; the Civil Rights Act of 1991; the Age Discrimination in
Employment Act of 1967, as amended (including the Older Workers Benefit Protection Act); the Equal Pay Act of 1963, as amended;
the Americans with Disabilities Act of 1990; the Family and Medical Leave Act of 1993; the Civil Rights Act of 1866, as amended;
the Worker Adjustment Retraining and Notification Act; the Employee Retirement Income Security Act of 1974; any applicable Executive
Order Programs; the Fair Labor Standards Act; Occupational Safety and Health Act of 1970, as amended, under the Worker Adjustment
and Retraining Notification Act of 1988, as amended, under the Family and Medical Leave Act of 1993, as amended, under the Fair
Credit Reporting Act of 1970, as amended, and under the Sarbanes-Oxley Act of 2002, under the Civil Rights Act of 1870, 42 U.S.C.
§ 1981, as amended, under the Civil Rights Act of 1871, as amended, under the Americans With Disabilities Act of 1990, as
amended, under the Americans with Disabilities Act Amendments of 2008, under the Rehabilitation Act of 1973, as amended, under
the Immigration Reform and Control Act of 1986, as amended, under the Vietnam Era Veterans Readjustment Assistance Act of 1974,
as amended, under the Uniformed Service Employment and Reemployment Rights Act of 1994, as amended, under the Consolidated Omnibus
Budget Reconciliation Act of 1985 (“COBRA”), and any and all claims under the New York State Human Rights Law, under
the New York City Human Rights Law,  and under the New York Labor Laws, and any and all claims under any other federal,
state, or local labor law, civil rights law, fair employment practices law, human rights law, family and medical leave law, occupational
safety and health law, whistleblower protection law, and equal pay law; or any and all claims of slander, libel, defamation, invasion
of privacy, intentional or negligent infliction of emotional distress, intentional or negligent misrepresentation, fraud, prima
facie torts or other tort; or any and all claims based on the design or administration of any of the Company’s employee benefit
plan or program, or arising under any Company policy, practice, or procedure, or employee benefit plan; any and all claims for
wages, commissions bonuses, vacation pay or other paid time off, employee benefits equity-based compensation, or other compensation
or payments of any kind or nature, or for continued employment with the Company in any position; or under any other local, state,
or federal law, regulation or ordinance; or under any public policy, contract or tort, or under common law; or any claim for wrongful
discharge, breach of contract, or infliction of emotional distress; or any claim for costs, fees, or other expenses, including
attorneys’ fees incurred in these matters) (all of the foregoing collectively referred to herein as the “Claims”);
provided , however, that nothing contained in this General Release shall apply to, or release the Company from, (i) any obligation
of the Company contained in the Agreement to be performed after the date hereof or (ii) any vested or accrued benefits pursuant
to any employee benefit plan, program or policy of the Company.


 



    	 



    	 



    

 


3.           I
represent that I have made no assignment or transfer of any right, claim, demand, cause of action, or other matter covered by paragraph
2 above.


 


4.           I
agree that this General Release does not waive or release any rights or claims that I may have under the Age Discrimination in
Employment Act of 1967 which arise after the date I execute this General Release.  I acknowledge and agree that my separation
from employment with the Company in compliance with the terms of the Agreement shall not serve as the basis for any claim or action
(including, without limitation, any claim under the Age Discrimination in Employment Act of 1967).


 


5.           In
signing this General Release, I acknowledge and intend that it shall be effective as a bar to each and every one of the Claims
hereinabove mentioned or implied. I expressly consent that this General Release shall be given full force and effect according
to each and all of its express terms and provisions, including those relating to unknown and unsuspected Claims (notwithstanding
any state statute that expressly limits the effectiveness of a general release of unknown, unsuspected and unanticipated Claims),
if any, as well as those relating to any other Claims hereinabove mentioned or implied. I acknowledge and agree that this waiver
is an essential and material term of this General Release and that without such waiver the Company would not have agreed to the
terms of the Agreement.  I covenant that I shall not directly or indirectly, commence, maintain or prosecute or sue any
of the Released Persons either affirmatively or by way of cross-complaint, indemnity claim, defense or counterclaim or in any other
manner or at all on any Claim covered by this General Release.  I further agree that in the event I should bring a Claim
seeking damages against the Company, or in the event I should seek to recover against the Company in any Claim brought by a governmental
agency on my behalf, this General Release shall serve as a complete defense to such Claims. I further agree that I am not aware
of any pending charge or complaint of the type described in paragraph 2 as of the execution of this General Release.


 


6.           I
agree that neither this General Release, nor the furnishing of the consideration for this General Release, shall be deemed or construed
at any time to be an admission by the Company, any Released Party or myself of any improper or unlawful conduct.


 


7.           I
agree that this General Release is confidential and agree not to disclose any information regarding the terms of this General Release,
except to my immediate family and any tax, legal or other counsel I have consulted regarding the meaning or effect hereof or as
required by law, and I will instruct each of the foregoing not to disclose the same to anyone.


 


8.           Any
non-disclosure provision in this General Release does not prohibit or restrict me (or my attorney) from responding to any inquiry
about this General Release or its underlying facts and circumstances by the Securities and Exchange Commission, the National Association
of Securities Dealers, Inc. or any other self-regulatory organization or governmental entity.


 


9.           Without
limitation of any provision of the Agreement, I hereby expressly re-affirm my obligations under Sections1.5,1.6, 1.7, 1.8, 1.9,
1.10 and 3.1.


 


10.           Whenever
possible, each provision of this General Release shall be interpreted in such manner as to be effective and valid under applicable
law, but if any provision of this General Release is held to be invalid, illegal or unenforceable in any respect under any applicable
law or rule in any jurisdiction, such invalidity, illegality or unenforceability shall not affect any other provision or any other
jurisdiction, but this General Release shall be reformed, construed and enforced in such jurisdiction as if such invalid, illegal
or unenforceable provision had never been contained herein.


 


“Affiliate” means, with respect to any Person, any
Person that controls, is controlled by or is under common control with such Person or an Affiliate of such Person.


 


“Person” means an individual, a partnership, a limited
liability company, a corporation, an association, a joint stock company, a trust, a joint venture, an unincorporated organization,
investment fund, any other business entity and a governmental entity or any department, agency or political subdivision thereof.


 



    	 



    	 



    

 


“Subsidiary” means, with respect to any Person,
any corporation, limited liability company, partnership, association, or business entity of which (i) if a corporation, a majority
of the total voting power of shares of stock entitled (without regard to the occurrence of any contingency) to vote in the election
of directors, managers, or trustees thereof is at the time owned or controlled, directly or indirectly, by that Person or one or
more of the other Subsidiaries of that Person or a combination thereof, or (ii) if a limited liability company, partnership, association,
or other business entity (other than a corporation), a majority of  partnership or other similar ownership interest thereof
is at the time owned or controlled, directly or indirectly, by that Person or one or more Subsidiaries of that Person or a combination
thereof.  For purposes hereof, a Person or Persons shall be deemed to have a majority ownership interest in a limited
liability company, partnership, association, or other business entity (other than a corporation) if such Person or Persons shall
be allocated a majority of limited liability company, partnership, association, or other business entity gains or losses or shall
be or control any managing director or general partner of such limited liability company, partnership, association, or other business
entity.


 


BY SIGNING THIS GENERAL RELEASE, I REPRESENT
AND AGREE THAT:


 


(a)           I
HAVE READ IT CAREFULLY;


 


(b)           I
UNDERSTAND ALL OF ITS TERMS AND KNOW THAT I AM GIVING UP IMPORTANT RIGHTS, INCLUDING BUT NOT LIMITED TO, RIGHTS UNDER THE AGE DISCRIMINATION
IN EMPLOYMENT ACT OF 1967, AS AMENDED, TITLE VII OF THE CIVIL RIGHTS ACT OF 1964, AS AMENDED; THE EQUAL PAY ACT OF 1963, THE AMERICANS
WITH DISABILITIES ACT OF 1990; AND THE EMPLOYEE RETIREMENT INCOME SECURITY ACT OF 1974, AS AMENDED;


 


(c)           I
VOLUNTARILY CONSENT TO EVERYTHING IN IT;


 


(d)           I
HAVE BEEN ADVISED TO CONSULT WITH AN ATTORNEY (VIA THE AGREEMENT AND THIS RELEASE) BEFORE EXECUTING IT AND I HAVE DONE SO OR, AFTER
CAREFUL READING AND CONSIDERATION, I HAVE CHOSEN NOT TO DO SO OF MY OWN VOLITION;


 


(e)           I
HAVE HAD AT LEAST 21 DAYS FROM THE DATE OF MY RECEIPT OF THIS RELEASE SUBSTANTIALLY IN ITS FINAL FORM ON _______________ __, _____
TO CONSIDER IT AND THE CHANGES MADE SINCE THE _______________ __, _____ VERSION OF THIS RELEASE ARE NOT MATERIAL AND WILL NOT RESTART
THE REQUIRED 21-DAY PERIOD;


 


(f)           THE
CHANGES TO THE AGREEMENT SINCE _______________ ___, _____ EITHER ARE NOT MATERIAL OR WERE MADE AT MY REQUEST.


 


(g)           I
UNDERSTAND THAT I HAVE SEVEN DAYS AFTER THE EXECUTION OF THIS RELEASE TO REVOKE IT AND THAT THIS RELEASE SHALL NOT BECOME EFFECTIVE
OR ENFORCEABLE UNTIL THE EIGHTH DAY FOLLOWING EXECUTION OF THE AGREEMENT;


 


(h)           I
ACKNOWLEDGE THAT MY acceptance of any of the monies paid by the COMPANY as described in sections __ of the employment Agreement,
at any time more than seven days after the execution of this Agreement will constitute an admission by ME that I did not revoke
this Agreement during the revocation period of seven days; and will further constitute an admission by ME that this Agreement has
become effective and enforceable.


 


(i)           I
HAVE SIGNED THIS GENERAL RELEASE KNOWINGLY AND VOLUNTARILY AND WITH THE ADVICE OF ANY COUNSEL RETAINED TO ADVISE ME WITH RESPECT
TO IT; AND


 



    	 



    	 



    

 


(j)           I
AGREE THAT THE PROVISIONS OF THIS GENERAL RELEASE MAY NOT BE AMENDED, WAIVED, CHANGED OR MODIFIED EXCEPT BY AN INSTRUMENT IN WRITING
SIGNED BY AN AUTHORIZED REPRESENTATIVE OF THE COMPANY AND BY ME.


 


	DATE: ___________ __, ______	 
	 	Giuseppe Falco


 


Acknowledged and agreed as of the date first written above:


 


 XCel Brands, Inc.


 


	By:	 	 
	 	Name:	Robert W. D’Loren	 
	 	Title:	Chairman & CEO