PROMISSORY NOTE


 


U.S.$9,000,000


Dated:April 1, 2014,


New York, New York


 


 1.       Obligation and Repayment: For value received, Borrower absolutely and unconditionally promises to pay to the order of the Bank, at the Office, without defense, setoff or counterclaim, the principal amount of NINE MILLION United States Dollars ($9,000,000.00), together with interest and any other sum(s) due and payable as specified below. The principal amount of this Note shall be due and payable in quarterly installments on the dates and in the respective amount shown below:




 





	Date of Payment	 	Amount of 

Principal Payment	 
	April 1, 2014, July 1, 2014, October 1, 2014 and January1, 2015	 	$	0	 
	April 1, 2015, July 1, 2015, October 1, 2015and January1, 2016	 	$	375,000	 
	April 1, 2016, July1, 2016, October 1 2016 and January1, 2017	 	$	625,000	 
	April 1, 2017, July 1, 2017, October 1, 2017 and January 1, 2018	 	$	750,000	 
	April 1, 2018, July 1, 2018, October 1, 2018 and January 1, 2019	 	$	500,000	 



 


2.          Interest:
Subject to paragraph A(2) of the Terms and Conditions, interest shall accrue on the principal amount of this Note outstanding from
time to time at the following rate described in the Rider referred to in Paragraph 3 below (the "Loan Rate"). Interest
shall be payable in accordance with the attached Rider.


 


3.          Riders:
In the event of any inconsistency between this Note and any Rider(s) to which this Note is subject, the provisions of such Rider(s)
shall prevail. This Note is subject to the Rider to Promissory Note, dated as of the date hereof.


 


4.          Address
and Identification of Borrower:


 


Address: 475 Tenth Avenue

New York, New York


Telephone: 347-532-5894


Fax: 347-436-9178



Social Security or Taxpayer ID number: 46-4757029


 


5.          Agreement
to All Terms and Conditions; Authorization to Complete Blanks: This Note is subject to all of the Terms and Conditions set
forth below. Each of the undersigned agrees to all of the provisions of this Note, including the Terms and Conditions and any Rider(s).


 


6.          No
Representations or Agreements by the Bank: Each of the undersigned acknowledges that the Bank has made no representation, covenant,
commitment or agreement to Borrower except pursuant to any written document executed by the Bank.


 


7.          No
Representation of Nonenforcement: Each of the undersigned acknowledges that no representative or agent of the Bank has represented
or indicated that the Bank will not enforce any provision of this Note, including the Terms and Conditions and any Rider(s), in
the event of litigation or otherwise.


 


[Remainder of this page
intentionally left blank; signature appears on the next page;


Terms and Conditions appear
following the signature page]


 




    	 



    	 



    

 


8.          Waiver
of Jury Trial: Borrower waives, and understands that the Bank waives, the right to a jury trial with respect to any dispute
arising hereunder or relating to any of the Liabilities; any judicial proceeding with respect to any such dispute shall take place
without a jury.


 


9.          Execution
of Promissory Note: Borrower understands that by signing this Note it is agreeing to all of the terms as contained in this
Note and all other Terms and Conditions and Rider(s) attached hereto and made a part hereof.


 


	JR LICENSING, LLC	 
	 	 	 
	By: 	XCEL BRANDS, INC.	 
	 	Its: Manager	 
	 	 	 
	By:	/s/ James Haran	 
	 	Name: James Haran	 
	 	Title:  CFO	 


 


[Terms
and Conditions appear commencing on the next page]





SIGNATURE PAGE TO PROMISSORY NOTE






 




    	 



    	 



    









 


TERMS AND CONDITIONS


 


Definitions are set forth in paragraph
N.


 


A.           Calculation
and Accrual of Interest: (1) Generally. Interest shall be calculated on a daily basis on outstanding balances at the
Applicable Rate, divided by 365, on a month consisting of actual days elapsed. During any time that the Applicable Rate would exceed
the applicable maximum lawful rate of interest, the Applicable Rate shall automatically be reduced to such maximum rate. Any interest
payment made in excess of such maximum rate shall be applied as, and deemed to be, in the Bank's sole discretion, a payment of
any of the Liabilities, in such manner as determined by the Bank. (2) Increased Rate. Interest shall accrue at the Increased
Rate upon and after (a) the occurrence of any Debtor Relief Action, (b) any demand of payment of this Note (if payable on demand)
or (c) the occurrence of any Event of Default (if this Note is payable other than on demand). (3) Accrual. To the extent
permitted by Law, interest shall accrue at the Applicable Rate on all unpaid Liabilities under this Note, including but not limited
to any unpaid interest and any unpaid obligation owed pursuant to paragraph B (Indemnification).


 


B.           Indemnification:
To the extent permitted by Law: (1) Taxes. All payments under this Note shall be made free and clear of, and without deduction
for, any Taxes. If Borrower shall be required to deduct any Taxes in respect of any sum payable under this Note, then (a) the sum
payable shall be increased so that the Bank shall receive an amount equal to the sum the Bank would have received had no deductions
been made, and (b) Borrower shall make such deductions and shall pay the amount deducted to the relevant Governmental Authority.
Borrower shall pay to the Bank on demand, and shall indemnify and hold the Bank harmless from, any and all Taxes paid by the Bank
and any and all liability (including penalties, interest and expenses) with respect thereto arising out of the Borrower’s
failure to comply with the provisions of this clause (1), whether or not such Taxes were correctly or legally asserted. Within
30 days after any Taxes are paid by Borrower, Borrower shall furnish evidence thereof to the Bank. The Bank shall provide Borrower
two copies of appropriate tax forms properly completed and duly executed by the Bank claiming complete exemption from, or a reduced
rate of, U.S. federal withholding tax on all payments by Borrower under this Agreement and the other Loan Documents. Such forms
shall be delivered by the Bank on or before the first date it is entitled to receive any payment under this Note or any other Loan
Document. In addition, the Bank shall deliver such forms promptly upon the obsolescence or invalidity of any form previously delivered
by the Bank. The Bank shall promptly notify the Borrower at any time it determined that it is no longer in a position to provide
any previously delivered certificate to the Borrower (or any other form of certification adopted by the U.S. taxing authorities
for such purpose). (2) Regulatory Costs. In the event that in connection with the transaction(s) contemplated by this Note
and/or the Bank's funding of such transaction(s), the Bank is required to incur any Regulatory Costs in order to comply with any
Law issued after the date of this Note, then Borrower shall pay to the Bank on demand, and shall indemnify and hold the Bank harmless
from, any and all such Regulatory Costs. (3) Costs and Expenses. Borrower shall pay the Bank, and shall indemnify and hold
the Bank harmless from, any and all Costs and Expenses within ten (10) days after the Bank’s invoice to Borrower with respect
thereto. (4) Prepayment Costs. If Borrower makes any payment of Prepaid Principal (voluntarily or not), then Borrower shall
pay to the Bank an amount equal to the Applicable Percentage multiplied by the amount of Prepaid Principal; provided that no such
amount shall be payable on up to $3,000,000 of principal prepaid prior to the first anniversary of the date of this Note or on
any amount paid to the Bank as a result of the Cash Flow Recapture (as such term is defined in the Letter Agreement). (5) Bank
Certificate. The Bank's certificate as to any amounts owing under this paragraph shall be prima facie evidence of Borrower's
obligation.


 


C.           Set
Off: Every Account of Borrower with the Bank shall be subject to a lien and during the existence of any Event of Default to
being set off against the Liabilities. The Bank may at any time during the existence of any Event of Default at its option and
without notice, except as may be required by law, charge and/or appropriate and apply all or any part of any such Account toward
the payment of any of the Liabilities. The Bank agrees promptly to notify the Borrower after any such set off and application made
by the Bank, provided that the failure to give such notice shall not affect the validity of such set off and application.


 




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D.           Events
of Default: Each of the following shall be an Event of Default hereunder: (1) Nonpayment. The nonpayment when due of
any principal amount of the Liabilities; (a) the non-payment within three (3) Business Days after the same shall become due of
any interest or any other part of the Liabilities; (b) the prohibition by any Law of payment of any part of any of the Liabilities;
(2) Bankruptcy; Adverse Proceedings. (a) The occurrence of any Debtor Relief Action; (b) the appointment of a receiver,
trustee, committee, custodian, personal representative or similar official for any Party or for any Material part of any Party’s
property; (c) any action taken by any Party to authorize or consent to any action set forth in subparagraph D(2)(a) or (b); (d)
the rendering against any Party of one or more judgments, orders, decrees and/or arbitration awards (whether for the payment of
money or injunctive or other relief) which in the aggregate are Material to such Party, if they continue in effect for 30 days
without being vacated, discharged, stayed, satisfied or performed and involve an aggregate liability of $750,000 or more (excluding
amounts covered by insurance to the extent the relevant third parties insurer has agreed in writing to cover such amount); (e)
the issuance or filing of any warrant, process, order of attachment, garnishment or other lien or levy against any Material part
of any Party’s property which shall not have been vacated, discharged, stayed or bonded pending appeal within thirty (30)
days; (f) the commencement of any proceeding under, or the use of any of the provisions of, any Law against any Material part of
any Party’s property which shall not have been vacated, discharged, stayed or bonded pending appeal within thirty (30) days,
including but not limited to any Law (i) relating to the enforcement of judgments or (ii) providing for forfeiture to, or condemnation,
appropriation, seizure or taking possession by, or on order of, any Governmental Authority; (g) the forfeiture to, or the condemnation,
appropriation, seizure, or taking possession by, or on order of, any Governmental Authority, of any Material part of any Party’s
property; (h) any Party being charged with a crime by indictment, information or the like. (3) Noncompliance. (a) any Party
fails to perform under Sections 4(e), (f), (t) and (u) of the Letter Agreement, Sections 5.4, 5.6 and 5.7 of the IP Security Agreement
and Section 10.1 of the Security Agreement and such failure is not cured within thirty (30) days of the earlier to occur of (i)
the date upon which Borrower or Guarantor becomes aware of such failure and (ii) the date upon which written notice thereof is
given to Borrower by Bank; (b) other than those items separately covered by a clause contained in this Section (D), any “Event
of Default” (as such term is defined in each Loan Document) by any Party with respect to any Loan Document; (c) the giving
to the Bank by or on behalf of any Party at any time of any materially incorrect or incomplete representation, warranty, statement
or information; (c) the failure of any Party to furnish to the Bank copies of its financial statements and such other information
respecting such Party’s business, properties, condition or operations, financial or otherwise, promptly when and in such
form as reasonably required or requested by the Bank; (d) any Party’s failure or refusal, upon reasonable notice from the
Bank (unless an Event of Default has occurred and is continuing, in which case no notice is necessary), to permit the Bank's representative(s)
to visit such Party’s premises during normal business hours and to examine and make photographs, copies and extracts of such
Party’s property and of its books and records subject to the limitations set forth in the Letter Agreement; (e) any Party’s
concealing, removing or permitting to be concealed or removed, any part of its property with the intent to hinder or defraud any
of its creditors; (f) any Party’s making or suffering any Transfer of any of its property, which Transfer is deemed fraudulent
under the law of any applicable jurisdiction; (g) any material provision of any Loan Document shall for any reason cease to be
valid and binding on or enforceable against any Party thereto or any such Party shall so state in writing or bring an action to
limit its obligations or liabilities thereunder; or any Loan Document that creates a security interest in the collateral purported
to be be covered thereby shall for any reason (other than pursuant to the terms thereof) cease to create a valid security interest
in the collateral purported to be covered thereby or such security interest shall for any reason cease to be a perfected and first
priority security interest subject only to Permitted Liens. (4) Adverse Changes. (a) The annual guaranteed minimum annual
royalty payments payable to Borrower under the QVC Agreement are at any time less than $6,000,000; (b) the dissolution or liquidation
of any Party; (c) any Party’s failure to be and remain in good standing and qualified to do business in each jurisdiction
Material to such Party; (d) any Party shall (i) default in making any payment of any principal of any indebtedness (excluding
the Liabilities) on the scheduled or original due date with respect thereto; or (ii) default in making any payment of any
interest on any such indebtedness beyond the period of grace, if any, provided in the instrument or agreement under which such
indebtedness was created; or (iii) default in the observance or performance of any other agreement or condition relating to
any such indebtedness or contained in any instrument or agreement evidencing, securing or relating thereto, or any other event
shall occur or condition exist, the effect of which default or other event or condition is to cause, or to permit the holder or
beneficiary of such indebtedness (or a trustee or agent on behalf of such holder or beneficiary) to cause, with the giving of notice
if required, such indebtedness to become due prior to its stated maturity; provided, that a default, event or condition
described in clause (i), (ii) or (iii) of this clause (d) shall not at any time constitute an Event of Default unless,
at such time, one or more defaults, events or conditions of the type described in clauses (i), (ii) and (iii) of this paragraph (d)
shall have occurred and be continuing with respect to indebtedness the outstanding principal amount of which exceeds in the aggregate
$500,000; (e) Borrower becoming insolvent, as defined in the Uniform Commercial Code; (f) any Party’s Material failure to
pay any tax when due; (g) any loss, suspension, nonrenewal or invalidity of any Material permit, franchise or Trademark (as such
term is defined in the Letter Agreement) or the like of Borrower; (h) the occurrence of any event which gives any Person (other
than Bank) the right to assert a lien, levy or right of forfeiture against any Material part of any Party’s property; (i)
Borrower's failure to give the Bank notice, within 10 Business Days after Borrower had notice or knowledge, of the occurrence of
any event which, with the giving of notice and/or lapse of time, would constitute an Event of Default. (5) Business Changes.
(a) any change in Control of Borrower; (b) any merger or consolidation involving any Party not permitted under the terms of a Loan
Document; (c) any Party’s sale or other Transfer of substantially all of its property; (d) any Material change in the nature
or structure of any Party’s business; (e) Robert W. D’Loren shall no longer be the Chairman of the Board of Directors
of Borrower or Guarantor or have the duties of the Chairman of the Board of Directors of Borrower or Guarantor. (6) Material
License Termination or Default. The termination of, any amendment or other modification to, or any default under the QVC Agreement
but only to the extent such event could reasonably be expected to have a Material adverse effect on Borrower’s business or
financial condition and Borrower has not replaced such license within sixty (60) days of such termination with a license which
generates revenue at least equivalent to the QVC Agreement which was terminated. (7) IM Brands Default. The occurrence of
a default or event of default under the IM Brands Loan Documents.


 




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E. Remedies: (1) Acceleration
at Bank's Option. Upon any failure to pay this Note in full on demand (if payable on demand) or (if this Note is payable other
than on demand) upon the occurrence of any Event of Default other than any Debtor Relief Action, then any and all Liabilities,
not then due, shall, at the Bank's option, become immediately due and payable, without notice, which Borrower waives. (2) Automatic
Acceleration. Upon the occurrence of any Debtor Relief Action, then, whether or not any of the Liabilities are payable upon
demand and notwithstanding paragraph F, any and all Liabilities not then due, shall automatically become immediately due and payable,
without notice or demand, which Borrower waives. (3) Additional Remedies. Bank shall have all rights and remedies available
to it under any applicable Loan Document or Law after any applicable notice or cure period.


 


F. Waiver of Protest, etc.: Notice,
presentment, protest, notice of dishonor and (except for such of the Liabilities as are payable on demand, but subject to subparagraph
E(2)) demand for payment are hereby waived as to all of the Liabilities.


 




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G. Payment: (1) Manner. Any payment
by other than immediately available funds shall be subject to collection. Interest shall continue to accrue until the funds by
which payment is made are available to the Bank. If and to the extent any payment of any of the Liabilities is not made when due,
the Bank is authorized in its discretion to effect payment by charging any amount so due against any Account of Borrower with the
Bank without prior notice, except as may be required by law, whether or not such charge creates an overdraft and of which event
the Bank will provide notice following such charging of an Account. (2) Application. Any payment received by the Bank (including
a deemed payment under paragraph A, a set-off under paragraph C or a charge against an Account under this paragraph G) shall be
applied to pay any obligation of indemnification (including but not limited to under paragraph B) and to pay any other Liabilities
(including interest thereon and the principal thereof) in such order as the Bank shall elect in its discretion. Borrower will continue
to be liable for any deficiency. (3) Prepayment. Borrower shall be entitled to pay any outstanding principal amount or installment
under this Note on any Business Day prior to the applicable Due Date without the prior consent of the Bank, provided that (a) any
such payment shall be together with payment of all Liabilities then due and all interest accrued on the Prepaid Principal to the
date of such payment, and (b) any such payment shall be on not less than 5 Business Days' notice to the Bank and shall be accompanied
by any amount required pursuant to subparagraph B(4). Any such payment shall, unless otherwise consented to by the Bank, be applied
pro rata to the last outstanding principal amount(s) to become due under this Note in inverse order of maturity. (4) Non-Business
Days. If any payment of any of the Liabilities is due on any day that is not a Business Day, it shall be payable on the next
Business Day. The additional day(s) shall be included in the computation of interest. (5) Extension at Bank's Option. The
Bank shall have the option, which may be exercised one or more times by notice(s) to Borrower, to extend the date on which any
amount is payable hereunder to one or more subsequent date(s) set forth in such notice(s). (6) Late Payment. Without limiting
or waiving any rights or remedies of the Bank contained in the Note or under applicable law, and without implying that the Bank
has any obligation to declare or to notify the Borrower of the occurrence of any Event of Default, if the Bank has neither declared
nor notified the Borrower of the occurrence of an Event of Default, and if any amount of any required payment of principal, interest
fees and/or Late Charge (as defined below) under the Note is not paid in full within (7) seven days after the same is due, then
in addition to all interest, penalty interest or other fees due to the Bank pursuant to the Note, any rider to the Note or any
agreement or document related to this credit facility, the Borrower shall pay the Bank a late fee equal to $14.30 for each day
thereafter. Any amount due under this paragraph shall be referred to herein as a "Late Charge". The Borrower shall pay
any and all such Late Charges in addition to all payments of principal, interest and fees (if any) under the Note, provided, however,
that during any time that any of the above Late Charges would cause the total interest payable under the Note to exceed the applicable
maximum lawful rate of interest, then the sum of (a) all such Late Charges and (b) the amount of interest payable at the Applicable
Rate shall automatically be reduced to an amount that shall not exceed the amount of interest payable at such maximum rate.


 


H. Parties; Counterparts; No Transfer
by Borrower: If Borrower is more than one Person, all of them shall be jointly and severally liable under this Note. This Note
and any Rider hereto may be executed in counterparts, each of which shall constitute an original, but all of which when taken together
shall constitute a single instrument. Any signature delivered by a party by facsimile or electronic transmission (including email
transmission of a PDF image) shall be deemed an original signature hereto. Without the Bank's written consent, Borrower shall have
no right to make any Transfer of any of the Liabilities; any such purported Transfer shall be void. Subject to the foregoing, the
provisions of this Note shall be binding on Borrower's successors and assigns.


 


I. Bank Transfers: (1) Transferability.
Without limiting the Bank's rights hereunder, and subject to the prior written consent of Borrower not to be unreasonably withheld
(which consent shall not be required after the occurrence and during the continuance of an Event of Default) the Bank may make
a Transfer of all or any part of (a) the Liabilities), (b) any obligation of any other Party in connection with any of the Liabilities,
(c) any Loan Document of any Party in connection with any of the Liabilities or any agreement related thereto, (d) any collateral,
mortgage, lien or security interest, however denominated, securing any of the Liabilities, and/or (e) the Bank's rights and, if
any, obligations with respect to any of the foregoing. (2) Extent of Transfer. In the event the Bank shall make any Transfer
(and has obtained the consent of Borrower to the extent required hereunder) of any of the foregoing items ("Transferred Items"),
then - to the extent provided by the Bank with respect to such Transfer - the Transferee shall have the rights, powers, privileges
and remedies of the Bank. The Bank shall thereafter, to the extent of such Transfer, be forever relieved and fully discharged from
all liability or responsibility, if any, that it may have to any Person with respect thereto, except for claims, if any, arising
prior to or upon such Transfer. The Bank shall retain all its rights and powers with respect to any Transferred Items to the extent
that it has not made a Transfer thereof. Without limiting the foregoing, to the extent of any such Transfer with respect to which
Borrower has provided its consent or such consent is not required, paragraph B (Indemnification) shall apply to any Taxes, Regulatory
Costs, and Costs and Expenses of, or incurred by, any Transferee, and paragraphs C (Set-Off) and G(1) (Payment-Manner) shall apply
to any Account of Borrower with any Transferee and if the required Borrower consent is not so obtained, then such Transferee shall
be entitled to reimbursement or compensation under the foregoing paragraphs only to the extent such amounts would have been payable
to Bank if the Transfer had not occurred. (3) Disclosures. The Bank is authorized to disclose to any prospective or actual
Transferee any information that the Bank may have or acquire about Borrower and any information about any other Person submitted
to the Bank by or on behalf of Borrower provided that such prospective or actual Transferee agrees to maintain the confidentiality
of such information consistent with the terms of the Loan Document. (4) Negotiability Defenses Waived. If this Note is not a negotiable
instrument, Borrower waives all defenses (except such defenses as may be asserted against a holder in due course of a negotiable
instrument) which Borrower may have or acquire against any Transferee who takes this Note, or any complete or partial interest
in it, for value, in good faith and without notice that it is overdue or has been dishonored or of any defense against or claim
to it on the part of any Person.


 




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J. No Oral Changes; No Waiver by the
Bank; Partial Unenforceability: This Note may not be changed orally. Neither a waiver by the Bank of any of its options, powers
or rights in one or more instances, nor any delay on the part of the Bank in exercising any of them, nor any partial or single
exercise thereof, shall constitute a waiver thereof in any other instance. Any provision of this Note which is prohibited, unenforceable
or not authorized in any jurisdiction shall, as to such jurisdiction, be ineffective to the extent of such prohibition, unenforceability
or nonauthorization, without invalidating the remaining provisions of this Note in that or any other jurisdiction and without affecting
the validity, enforceability or legality of such provision in any other jurisdiction.


 


K. Disputes and Litigation: (1) Governing
Law. This Note and the rights and obligations of the Bank and Borrower hereunder shall be governed by the internal laws of
the State of New York without giving effect to conflict of laws principles. (2) Jurisdiction, Venue, and Service of Process.
Borrower and the Bank each submit to the nonexclusive jurisdiction of the federal and state courts in the State of New York in
New York County with respect to any dispute arising hereunder or relating to any of the Liabilities. Service of process may be
made on Borrower or the Bank by personal delivery at, or by mail addressed to, any address to which the Bank is authorized to address
notices to Borrower. (3) Waiver of Defenses, Setoffs, Counterclaims and Certain Damages. Borrower waives the right to assert
to the extent permitted by applicable law any defense (other than the defense of payment), setoff or counterclaim in any proceeding
relating in any way to this Note or any transaction contemplated hereby. The Bank shall not have any liability for negligence,
except solely to the extent required by law and not disclaimable, and except for its own gross negligence or willful misconduct.
In any event, the Bank shall not have any liability for any special, consequential or punitive damages. (4) Sovereign Immunity.
Borrower irrevocably waives, with respect to itself and its property, any sovereign immunity that it may have or hereafter acquire,
including but not limited to immunity from the jurisdiction of any court, from any legal process, from attachment prior to judgment,
from attachment in aid of execution, from execution or otherwise.


 


L. OFAC and Patriot Act: Borrower
shall: Comply with all Anti-Terrorism Laws; immediately to notify the Bank if it obtains knowledge that it or any of its Affiliates
has become or been listed as a Restricted Party or has been charged with or has engaged in any violation of any Anti-Terrorism
Law; not to receive any funds from a Restricted Party and, in any case, to exclude any funds derived from any Restricted Party
or from any person or entity involved in the violation of any Anti-Terrorism Law from being used to pay debt service or any other
amounts owing under the Note; not to transfer or permit the transfer of any legal or beneficial ownership interest of any kind
in Borrower to a Restricted Party or any person or entity involved in the violation of any Anti-Terrorism Law; not to acquire,
directly or indirectly, ownership interest of any kind in any Restricted Party or any person or entity involved in the violation
of any Anti-Terrorism Law, not to form any partnership or joint venture or conduct any business with any Restricted Party or any
person or entity involved in the violation of any Anti-Terrorism Law, and not to act, directly or indirectly, as the agent or representative
of any Restricted Party or any person or entity involved in the violation of any Anti-Terrorism Law; and to indemnify the Bank
for any costs incurred by any of them as a result of any violation of an Anti-Terrorism Law by Borrower.


 




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M. Notice: Any notice in connection
with any of the Liabilities shall be in writing and may be delivered personally or by cable, telex, telecopy or other electronic
means of communication, or by certified mail, return receipt requested, addressed (a) to Borrower or Parent at 475 Tenth Avenue,
4th Floor, New York, New York 10018 or to such other address that the Bank has received written notice from Borrower
or Parent as being Borrower’s or Parent’s address, and (b) to the Bank at Bank Hapoalim B.M., 1177 Avenue of the Americas,
New York, New York 10036, Attention: Legal Department. Any such notice shall be addressed to such other address (es) as may be
designated in writing hereafter. All such notices shall be deemed given when delivered personally or electronically or when mailed,
except notice of change of address, which shall be deemed to have been given when received.


 


N. Definitions:
The following definitions apply in this Note: (1) Acceleration: any acceleration of payment or requirement of prepayment
of any Debt, or any Debts becoming due and payable prior to stated maturity. (2) Account: (a) the balance of any account
of Borrower with any Person, and/or (b) any property in the possession or custody of, or in transit to, any Person, whether for
safekeeping, collection, pledge or otherwise, as to which Borrower has any right, power or interest - in each case whether existing
now or hereafter, in any jurisdiction worldwide, and whether or not denominated in the same currency as any of the Liabilities.
(3) Applicable Percentage: (a) one percent (1.00%) in the case of a prepayment on or prior to March 15, 2015, (b) two percent
(2.00%) in the case of a prepayment on or after March 16, 2015 but on or before March 15, 2016, (c) one percent (1.00%) in the
case of a prepayment on or after March 16, 2016 but on or before March 15, 2017 and (d) zero percent (0.00%) on or after March
16, 2017. (4) Applicable Rate: whichever of the Loan Rate or Increased Rate is the applicable interest rate at any time.
(5) Anti-Terrorism Law: any U.S. State or Federal law relating to terrorism, money laundering or any related seizure, forfeiture
or confiscation of assets, including: (a) the Executive Order No. 13224 of September 23, 2001 - Blocking Property and Prohibiting
Transactions With Persons Who Commit, Threaten to Commit, or Support Terrorism; (b) the Uniting and Strengthening America by Providing
Appropriate Tools Required to Intercept and Obstruct Terrorism Act of 2001 (the USA PATRIOT Act), Public Law 107-56; and (c) the
Money Laundering Control Act of 1986, Public Law 99-570 (6) Bank: Bank Hapoalim B.M. (6) Borrower: the Person(s)
executing this Note at paragraph 10 or any one or more of them. "Borrower" may refer to one or more Persons. (7) Business
Day: any day on which both (a) banks are regularly open for business in New York City and (b) the Office is open for ordinary
business. In the Bank's discretion, the Office may be closed on any Saturday, Sunday, legal holiday or other day on which it is
lawfully permitted to close. (8) Control: the power, alone or in conjunction with others, directly or indirectly, through
voting securities, by contract or otherwise, to direct or cause the direction of a Person's management and policies. (9) Costs
and Expenses: any and all reasonable costs and expenses (including but not limited to reasonable attorneys' fees and disbursements)
incurred in connection with the Loan Documents and/or the Liabilities, including but not limited to those for (a) any action taken,
whether or not by litigation, to collect, or to protect rights or interests with respect to, or to preserve any collateral securing,
any of the Liabilities, (b) compliance with any legal process or any order or directive of any Governmental Authority with respect
to any Party, (c) any litigation or administrative proceeding relating to any Party, and/or (d) any amendment, modification, extension
or waiver with respect to any of the Liabilities. (10) Debt: any Party's obligation of any sort (in whole or in part) for
the payment of money to any Person, whether (a) absolute or contingent, (b) secured or unsecured, (c) joint, several or independent,
(d) now or hereafter existing, or (e) due or to become due. (11) Debtor Relief Action: the commencement by any Party or
(unless dismissed or terminated within 60 days) against any Party of any proceeding under any law of any jurisdiction (domestic
or foreign) relating to bankruptcy, reorganization, insolvency, arrangement, composition, receivership, liquidation, dissolution,
moratorium or other relief of financially distressed debtors, or the appointment of a receiver, trustee, committee, custodian,
personal representative or similar official for Borrower or for any Material part of Borrower's property, or the making by any
Party of an assignment for the benefit of creditors. (12) Default: any breach, default or event of default under, or any
failure to comply with, any provision of any Loan Document after giving effect to any applicable notice, grace or cure period.
(13) Event of Default: any event set forth in paragraph D. (14) Executive Order: Executive Order No. 13224
of September 23, 2001 - Blocking Property and Prohibiting Transactions With Persons Who Commit, Threaten to Commit, or Support
Terrorism; (15) Governmental Authority: any domestic or foreign, national or local, (a) government, (b) governmental, quasi-governmental
or regulatory agency or authority, (c) court or (d) central bank or other monetary authority. (16) Guarantor: collectively,
Xcel Brands, Inc., a Delaware corporation and IM Brands. (16A) IM Brands: IM Brands, LLC, a Delaware limited liability company.
(16B) IM Brands Guaranty: the guaranty executed by the Borrower in favor of the Bank pursuant to which the Borrower guarantees
to the Bank the IM Brands Liabilities. (16C) IM Brands Liabilities: any and all of the Debt of IM Brands to, or held or
to be held by, the Bank, including, without limitation the IM Brands Loan Documents.  (16D) IM Brands Loan Documents:  collectively,
all documents executed and delivered in connection with the loans made by the Bank to IM Brands. (17) Increased Rate: the
Loan Rate plus 2% per year. (18) IP Security Agreement: the Intellectual Property Security Agreement, dated as of the date
hereof and as may be amended, restated, supplemented or otherwise modified from time to time, between the Borrower and the Bank.
(19) Law: any treaty, law, regulation, rule, judgment, order, decree, guideline, interpretation or request (whether or not
having the force of law) issued by any Governmental Authority. (20) Letter Agreement: the letter agreement, dated as of
the date hereof and as may be amended, restated, supplemented or otherwise modified from time to time, between the Borrower and
the Bank. (21) Liabilities: (a) any and all of the Debt evidenced by this Note, and any and all other Debt of Borrower to,
or held or to be held by, the Bank under the Loan Documents, (b) any and all obligations of any other Party with respect to any
of such Debt and (c) any and all Debt under the IM Brands Guaranty. (22) License: shall have the meaning assigned to such
term in the IP Security Agreement. (23) Loan Documents: means, collectively, the Letter Agreement, this Note, the Security
Agreement and all documents executed and delivered in connection with the foregoing. (24) Loan Rate: the interest rate determined
under paragraph 2. (25) Material: material to the business or financial condition of any Party on a consolidated or consolidating
basis. (26) Material Royalty Default: An Event of Default pursuant to paragraph D(7) hereof. (27)  Office:
the Bank's office at 1177 Avenue of the Americas, New York, New York 10036, or such other place within the United States as the
Bank may specify by notice. (28) Party: (a) Borrower; (b) any maker, co-maker or endorser of any Loan Document evidencing-,
or any guarantor, surety, accommodation party or indemnitor with respect to-, or any Person that provides any collateral as security
for, or any Person that issues a subordination, comfort letter, standby letter of credit, repurchase agreement, put agreement,
option, other agreement or other credit support with respect to, any of the Liabilities; and (c) if any Party is a partnership
or joint venture, any general partner or joint venturer in such Party. (29) Payment Date: any Business Day on which any
part of the principal or any installment of this Note becomes due and payable under paragraph 1 (and not on account of an Acceleration).
(30) Person: any person, partnership, joint venture, company, corporation, unincorporated organization or association, trust,
estate, Governmental Authority, or any other entity. (31) Prepaid Principal: any amount of principal or any installment
of this Note which Borrower pays prior to the applicable Payment Date for such amount. (32) Intentionally Omitted. (33)
Prime Rate: the Bank's New York Branches' stated Prime Rate as reflected in its books and records as such Prime Rate may change
from time to time. The Bank's determination of its Prime Rate shall be conclusive and final. The Prime Rate is a reference rate
and not necessarily the lowest interest rate charged by the Bank. (34) QVC Agreement: that certain License Agreement dated
as of April 1, 2014 by among QVC, Inc., a Delaware corporation, Borrower, Xcel Brands, Inc., a Delaware corporation, JSB Marketing
Corp., a New York corporation, and, with respect to certain provisions, Judith Ripka Berk, as amended, supplemented or otherwise
modified from time to time. (35) Regulatory Costs: any and all costs and expenses of complying with any Law adopted or taking
effect after the date hereof, including but not limited to with respect to (a) any reserves or special deposits maintained for
or with, or pledges to, or assessments, insurance premiums or special charges paid to, any Governmental Authority, or (b) any capital,
capital equivalency ledger account, ratio of assets to liabilities, risk-based capital assessment or any other capital substitute,
risk-based or otherwise. (36) Restricted Party: (a) any individual or entity: listed in the Annex to the Executive Order
or is otherwise subject to the provisions of the Executive Order; (b) listed on the "Specially Designated Nationals and Blocked
Persons" list maintained by the Office of Foreign Assets Control (OFAC) of the United States Department of the Treasury, as
updated or amended from time to time, or any similar list issued by OFAC; or (c) whose property has been blocked, or is subject
to seizure, forfeiture or confiscation, by any order relating to terrorism or money laundering issued by the President, Attorney
General, Secretary of State, Secretary of Defense, Secretary of the Treasury or any other U.S. State or Federal governmental official
or entity. (37) Taxes: any and all present and future taxes, levies, imposts, deductions, charges and withholdings in any
jurisdiction worldwide, and all liabilities with respect thereto, which are imposed by a Governmental Authority with respect to
this Note or to any amount payable under this Note, excluding taxes determined on the basis of the net income of a Person or of
any of its offices. (38) Transfer: any negotiation, assignment, participation, conveyance, grant of a security interest,
lease, delegation, or any other direct or indirect transfer of a complete or partial, legal, beneficial, economic or other interest
or obligation. (39) Transferee: any Person to whom a Transfer is made. (40) Transferred Items: items defined in paragraph
I. (41) Variable Prime Rate: any Applicable Rate which is determined based upon the Prime Rate. Any such rate shall change
automatically when and as the Prime Rate changes,


 




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RIDER TO PROMISSORY
NOTE


LOAN(S) DENOMINATED IN U.S. OR OTHER
CURRENCY


LIBOR-BASED OR PRIME RATE


 


This Rider is referred to in paragraph 3 of, and constitutes
a part of the Promissory Note of Borrower to the Bank dated as of April 1, 2014 in the amount
of up to $9,000,000.00 (as amended, modified, supplemented and restated from time to time, the “Note”).





	 







 


Specific Terms


 


Libor Margin: plus 3.50% per year; Prime Margin: plus
0.50% per year


 





	(b)  Interest Period:  1, 2 or 3 months	 
	 	 
	(c)  Minimum Draw Amount:      $	[ x ] None
	 	 
	(d)  Minimum Multiple Amount:  $	[ x ] None







	 







 


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Borrower agrees to the above Specific Terms and to all of the
Terms and Conditions set forth below.


 


JR LICENSING, LLC


 


	By:	XCEL BRANDS, INC.	 
	 	Its: Manager	 
	 	 	 
	By:	/s/ James Haran	 
	 	Name: James Haran	 
	 	Title:  CFO	 


 


 


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continue on the following page]


 




    	 



    	 



    

 


Terms and Conditions


 


Certain capitalized terms are defined in paragraph 4.


 


1.          Advances.
Borrower may receive a Loan in any principal amount upon Borrower’s request to the Bank and the Bank’s agreement thereto,
subject to all of the following conditions:


 


		(a)	Agreement of the Bank and Borrower. Subject to subparagraphs 1(b), 1(c) and 2(b), the Bank and Borrower shall have agreed,
not later than the Determination Time, with respect to the Loan’s (i) principal amount, (ii) LIBOR-Based Rate and (iii) Interest
Period; provided, however, that if the Bank determines that by such Determination Time, Borrower has failed or declined to agree
on the LIBOR-Based Rate and/or Interest Period with respect to such Outstanding Principal Amount, then interest on such Outstanding
Principal Amount shall accrue at the LIBOR-Based Rate without the agreement of Borrower, and the Interest Period shall be of the
same duration as the Interest Period just ended with respect to such Outstanding Principal Amount or, if there was no such prior
Interest Period, one month.



 


		(b)	Applicable limitations. (i) The applicable Payment Date shall not be later than the Due Date; (ii) the total of the
Outstanding Principal Amounts of all Loans shall not exceed the principal amount set forth in the Note; (iii) the principal amount
of any single Loan request shall be not less than any Minimum Draw Amount set forth under Specific Terms; and (iv) the principal
amount of any single Loan request shall be an integral multiple of any Minimum Multiple Amount set forth under Specific Terms.



 


		(c)	Borrower’s request and agreement. Borrower’s request for a Loan and Borrower’s agreement to the terms
thereof shall be communicated to the Bank in any form that is acceptable in each instance to the Bank in its sole discretion, which
may include telephone, telex, fax, email or a writing executed by Borrower. Borrower shall have provided the Bank with documentation,
satisfactory in form and substance to the Bank in its sole discretion, confirming the authority of the person(s) agreeing to such
terms on behalf of Borrower.



 


2.          Payment
of Principal and Interest. Subject to the other provisions of the Note:


 


(a)           Obligation,
Time and Manner of Payment. Subject to the other provisions of the Note and this Rider, the Outstanding Principal Amount shall
be due and payable at the applicable Payment Date. Unless specified otherwise in the Note or in a Rider thereto, every payment
to be made by or on behalf of the Borrower under the Note shall be made in U.S. Dollars, and the designation of U.S. Dollars as
the currency of payment is of the essence. Every payment or delivery under the Note by or on behalf of Borrower of any money denominated
in any Currency shall be made at the Office and/or to such account or accounts as the Bank may designate from time to time by notice
to Borrower, in immediately available and freely transferable funds in the Currency in which the applicable obligation is denominated
and in Currency that is unrestricted, unblocked and free of exchange controls, without set off, counterclaim, withholding or deduction
of any kind whatsoever. Except as otherwise provided herein, any payment due under the Note on a day that is not a Business Day
shall be payable on the next succeeding Business Day.


 




    	 



    	 



    

 


(b)           Loan
Rate. Interest on any Outstanding Principal Amount shall accrue, at the option of the Borrower (with written notice of such
option being given to the Bank), at either (i) the Prime-Based Rate; or (ii) the LIBOR-Based Rate; provided, however, that if the
Bank determines (i) that by the Determination Time (A) by reason of circumstances affecting the London Interbank Market generally,
adequate and fair means do not exist for ascertaining an applicable LIBOR rate or it is impractical for the Bank to fund or continue
to fund the Outstanding Principal Amount during the applicable Interest Period, or (B) quotes for funds in the relevant Currency
in sufficient amounts comparable to the relevant Outstanding Principal Amount and for the duration of the applicable Interest Period
would not be available to the Bank in the London Interbank Market, or (C) quotes for funds in the relevant Currency in the London
Interbank Market will not accurately reflect the cost to the Bank of making a Loan or of funding the relevant Outstanding Principal
Amount during the applicable Interest Period, or (ii) that at any time the making or funding of loans, or charging of interest
at rates, based on LIBOR shall be unlawful or unenforceable for any reason, then as long as such circumstance(s) shall continue,
interest on the relevant Outstanding Principal Amount shall accrue at the Alternate Rate.


 


(c)           Payment
and Calculation of Interest. Interest shall be payable (i) at each Payment Date or (whenever the Applicable Rate is a Variable
Prime-Based Rate) monthly, (ii) at the Due Date and (iii) at any time that any Outstanding Principal Amount or part thereof is
paid. Interest shall be calculated as set forth in the Note.


 


(d)           Currency
of Payment. All loans and repayments of principal, interest or any other costs and charges shall be made in U.S. dollars.


 


3.           Bank’s
Conclusive Determinations and Schedule. The Bank’s determination with respect to any matter hereunder shall be conclusive,
final and binding on Borrower, absent manifest error. The Bank shall from time to time record the date and amount of each Loan,
the Applicable Rate, each date on which any part of principal, interest or any other amount shall be due and payable, and the amount
and date of each payment of principal, interest or any other amount, on a schedule, which in the Bank’s discretion may be
computer-generated and/or may be taken from the Bank’s general books and records, and which schedule is incorporated in,
and is a part of, the Note and this Rider (the “Schedule”). The Schedule shall be conclusive, final and binding upon
Borrower, absent manifest error, provided, however, that the failure of the Bank to record any of the foregoing shall not limit
or otherwise affect the obligation of Borrower to pay all amounts owed to the Bank under the Note. Without limiting the foregoing,
Borrower acknowledges that the Interest Period and the Applicable Rate with respect to any Outstanding Principal Amount are subject
to the Bank’s consent ordinarily negotiated between Borrower and the Bank by telephone, and Borrower agrees that in the event
of any dispute as to any of the terms of any Loan, the determination of the Bank and its respective entry with respect thereto
on its books and records and/or on the Schedule shall be conclusive, final and binding on Borrower, absent manifest error.


 




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4.          Definitions.
Each capitalized term not defined herein shall have the meaning ascribed thereto in the Note. The following definitions apply in
this Rider and in the Note, and shall prevail over any different definitions in the Note.


 


(a)          Alternate
Rate: an annual Variable Prime-Based Rate equal to the Prime Rate plus the Prime Margin.


 


(b)          Applicable
Rate: whichever of the Loan Rate or Increased Rate is the applicable interest rate at any time with respect to any Outstanding
Principal Amount.


 


(c)          Currency:
money denominated in the lawful currency of any country (including but not limited to the lawful currency of the United States)
or any unit of account or single or unified currency of the European Community.


 


(d)          Determination
Time: 12:00 noon (or any later time determined by the Bank in its sole discretion), New York City time, of a Working Day that
is two Working Days prior to the date of the Loan.


 


(e)          Due
Date: the date set forth in paragraph 1 of the Note or, if the Bank has extended such date pursuant to paragraph G(5) of the
Note or by an agreement with Borrower, such extended date.


 


(f)          Interest
Period: any term of 1, 2 or 3 months, or such other term as may be acceptable to the Bank in its discretion, as set forth above
under Specific Terms or if not so set forth, as selected or agreed to by the Bank in its discretion. A term shall not be considered
an “Interest Period” during any period that the Applicable Rate is a Variable Prime-Based Rate. Each Interest Period
shall commence immediately at the end of the preceding Interest Period, if any. If there had been no immediately preceding Interest
Period with respect to any Outstanding Principal Amount, the Interest Period shall commence on the first Business Day on which
(i) such amount shall be outstanding and (ii) the Applicable Rate is not a Variable Prime-Based Rate. If any Interest Period would
otherwise come to an end on a day that is not a Working Day, its termination shall be postponed to the next day that is a Working
Day unless it would thereby terminate in the next calendar month. In such case, such Interest Period shall terminate on the immediately
preceding Working Day.


 


(g)          LIBOR
for each Interest Period: the rate per annum (carried out to the fifth decimal) equal to the rate determined by the Bank to be
the offered rate on a page or service (whether provided by Bridge Telerate, Reuters, Bloomberg or any other service) that displays
an average ICE Benchmark Administration Ltd.(or any other Person which takes over the administration of such rate) rate for deposits
in U.S. dollars (for delivery on the first Working Day of such Interest Period) with a term equivalent to such Interest Period,
determined as of approximately 11:00 a.m. (London time) two (2) Working Days prior to the first Working Day of such Interest Period.
At the Borrower’s request, the Bank will provide the Borrower with identifying information with respect to the page or service
so used by the Bank. If the Bank determines that the rate referenced in the first sentence of this paragraph is not available,
then “LIBOR” will mean, as applicable to any Interest Period, the rate determined (i) on the basis of the offered rates
for deposits in U.S. dollars with a term equivalent to such Interest Period, which are offered by four major banks selected by
the Bank in the London interbank market at approximately 11:00 a.m. London time, on the Working Day that is two (2) Working Days
prior to the first Working Day of such Interest Period; or (ii) by applying such other recognized source of London Eurocurrency
deposit rates as the Bank may determine from time to time. If the Bank determines in its sole discretion that LIBOR cannot be determined
or does not represent its effective cost of maintaining a Loan, then interest shall accrue at the effective cost to the Bank to
maintain the Loan (as determined by the Bank in its sole discretion).


 




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(h)          LIBOR-Based
Rate: an annual rate equal to LIBOR plus the Libor Margin, as determined by the Bank.


 


(i)          Libor
Margin: as set forth under Specific Terms.


 


(j)          Loan:
(i) any loan advanced by the Bank to Borrower under the Note, (ii) any rollover by the Bank of any such loan that is otherwise
due and payable, or (iii) any conversion of the Applicable Rate for any Outstanding Principal Amount from a rate that is a Variable
Prime-Based Rate to one that is not, or vice versa.


 


(k)          Loan
Rate: the interest rate determined under subparagraph 1(a) and/or 2(b).


 


(l)          Note:
the note of which this Rider is a part (including any and all riders and amendments to the Note).


 


(m)          Outstanding
Principal Amount: the outstanding principal amount of each Loan.


 


(n)          Payment
Date: the last Business Day of the applicable Interest Period or, if the applicable Loan Rate is a Variable Prime-Based Rate,
the Due Date.


 


(o)          Prime-Based
Rate: an annual rate equal to the Prime Rate plus the Prime Margin, as determined by the Bank.


 


(p)          Prime
Margin: as set forth under Specific Terms.


 


(q)          Prime
Rate: that rate of interest announce by the Bank, from time to time, as its Prime Rate. The Prime Rate is not necessarily the
lowest rate of interest charged by the Bank to any particular class of customers.


 


(r)          Working
Day: a Business Day on which banks are regularly open for business in London.


 




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