Document:

Exhibit 10.3

 

  

PROMISSORY NOTE

 

U.S.$10,000,000

Dated: December 22, 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 TEN MILLION United States Dollars ($10,000,000.00), 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	 
	January 1, 2015, April 1, 2015 and October 1, 2015	 	$	0	 
	January 1, 2016, April 1, 2016, July 1, 2016 and October 1, 2016	 	$	375,000	 
	January 1, 2017, April 1, 2017, July1, 2017 and  October 1 2017	 	$	625,000	 
	January 1, 2018, April 1, 2018, July 1, 2018 and October 1, 2018	 	$	750,000	 
	January 1, 2019, April 1, 2019, July 1, 2019 and October 1, 2019	 	$	750,000	 

 

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: xx-xxxxxxx

 

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.

 

H 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 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.

  

    	1

    	 

    

 

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.

 

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 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 are at any time less than $6,000,000 in any fiscal year commencing with the 2016 fiscal year;
(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; (j) the occurrence
of any event with Elizabeth Arden that results in a Material adverse effect on the value of the intellectual property purchased
pursuant to the Acquisiton Agreement. (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 or the Master License 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 or the Master License Agreement as applicable, which was terminated. (7) IM Brands Default. The occurrence
of a default or event of default under the IM Brands Loan Documents. (8) JR Licensing Default. The occurrence
of a default or event of default under the JR Licensing Loan Documents.

  

    	2

    	 

    

  

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.

 

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.

 

    	3

    	 

    

   

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.

  

    	4

    	 

    

   

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.

  

    	5

    	 

    

   

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.

 

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.

  

    	6

    	 

    

  

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) three percent (3.00%) in the case of a prepayment on or prior to December 22, 2016,
(b) two percent (2.00%) in the case of a prepayment on or after December 22, 2016 but on or before December 22, 2017, (c) one percent
(1.00%) in the case of a prepayment on or after December 22, 2017 but on or before December 22, 2018 and (d) zero percent (0.00%)
on or after December 22, 2018. (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, JR Licensing 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. (18A) JR Licensing: JR Licensing, LLC, a Delaware
limited liability company. (18B) JR Licensing Guaranty: the guaranty executed by the Borrower in favor of the Bank
pursuant to which the Borrower guarantees to the Bank the JR Licensing Liabilities. (18C) JR Licensing Liabilities: any
and all of the Debt of JR Licensing to, or held or to be held by, the Bank, including, without limitation the JR Licensing
Loan Documents. (18D) JR Licensing Loan Documents: collectively, all documents executed and delivered in connection with
the loans made by the Bank to JR Licensing. (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, (c) any and all Debt under the IM Brands Guaranty and (d) any and all Debt
under the JR Licensing 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)
Master License Agreement: that certain Master License Agreement dated as of December 22, 2014 by and between Borrower and The
H Company IP, LLC. (25A) 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 December 22, 2014 by among QVC, Inc., a Delaware corporation, Borrower and Xcel Brands, Inc., a Delaware corporation, 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,

 

    	7

    	 

    

 

 

 

 

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 December 22, 2014 in the amount of up to
$10,000,000.00 (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

 

 

 

[Remainder of this page intentionally left
blank;

signature page appears on the next page;

Riders continue after the signature page]

 

    	 

    	 

    

 

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

 

	H LICENSING, LLC	 
	 	 
	By:	XCEL BRANDS, INC.	 
	 	Its: Manager	 

 

	By:	/s/ James Haran	 
	 	Name: James Haran	 
	 	Title: CFO	 

 

[Riders continue on the following page]

 

SIGNATURE
PAGE TO

RIDER TO PROMISSORY NOTE

 

    	 

    	 

    

 

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.

 

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.

 

    	4

    	 

    

 

(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).

 

    	5

    	 

    

 

(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.

 

    	6Exhibit 10.4

  

AMENDMENT NO. 1

TO

PROMISSORY NOTE, LINE LETTER AGREEMENT AND
SECURITY AGREEMENTS

 

THIS AMENDMENT NO.
1 TO PROMISSORY NOTE, LINE LETTER AGREEMENT AND SECURITY AGREEMENTS (this “Amendment”) is entered into as of
December 22, 2014, by and among JR LICENSING, LLC, a Delaware limited liability company (“Borrower”), XCEL BRANDS,
INC., a Delaware corporation (“Guarantor”) and BANK HAPOALIM B.M. (“Bank”).

 

BACKGROUND

 

Borrower, Guarantor
and Bank are parties to a Line Letter Agreement dated as of April 1, 2014 (as amended, restated, supplemented or otherwise modified
from time to time, the “Letter Agreement”) pursuant to which Bank made a term loan to Borrower.

 

On April 1, 2014 Borrower
executed a Promissory Note in the original principal amount of $9,000,000 in favor of Bank (as amended, modified, supplemented
and restated from time to time, the “Note”) to evidence such term loan.

 

Guarantor has guaranteed
the payment and performance of Borrower’s obligations to Bank under the Note and the Letter Agreement pursuant to a Guaranty
dated as of April 1, 2014 (as amended, modified, supplement and restated from time to time, the “Guaranty”).

 

To secure Borrower’s
and Guarantor’s obligations to Bank, Guarantor pledged to Bank the membership interests held by Guarantor in Borrower pursuant
to a Membership Pledge Agreement dated as of April 1, 2014 (as amended, modified, supplemented and restated from time to time,
the “Pledge Agreement”).

 

Guarantor has requested
that Bank provide financial accommodations to H Licensing, LLC, a Delaware limited liability company (“H Licensing”),
a wholly owned subsidiary of Guarantor. In order to induce Bank to provide such financial accommodations, Guarantor and Borrower
agree to guarantee H Licensing’s obligations to Bank and agree to amend the Loan Documents on the terms and conditions set
forth herein.

 

NOW, THEREFORE, in
consideration of the financial accommodations to be provided to H Licensing by Bank, and for other good and valuable consideration,
the receipt and sufficiency of which are hereby acknowledged, the parties hereto hereby agree as follows:

 

1.           Definitions.
All capitalized terms not otherwise defined herein shall have the meanings given to them in the Letter Agreement and the Note,
as applicable.

 

2.           Amendment
to Letter Agreement. The Letter Agreement is hereby amended as follows:

 

    	 

    	 

    

  

(a)          Section
3(a)(ii) is amended in its entirety to provide as follows:

 

“(ii)         Quarterly
Financial Statements. As soon as available and in any event within sixty (60) days after the end of each of the first three
quarterly periods of each fiscal year of Parent, a copy of internally prepared financial statement of Parent and its Subsidiaries
on a consolidated basis together with consolidating balance sheets of Parent and each of its Subsidiaries as of the end of such
quarter and, the related statements of income and of cash flows for such quarter and the portion of the fiscal year through the
end of such quarter together with a summary of Parent Allocable Expenses consistent with such expenses reported in Parent’s
filings with the Securities and Exchange Commission, setting forth commencing with the fiscal quarter ending June 30, 2015 in each
case in comparative form the figures as of the end of and for the corresponding period, in the previous year.”

 

(b)          Sections
4(a), (b), (c) and (d) are amended in its entirety to provide as follows:

 

“(a)          Minimum
Net Worth. Net Worth of Parent and its Subsidiaries on a consolidated basis shall not be less than $40,000,000 at the end of
any fiscal quarter.

 

(b)          Minimum
Liquid Assets. Liquid Assets of Parent and its Subsidiaries on a consolidated basis shall be at least $4,500,000 at all times.

 

(c)          Fixed
Charge Coverage Ratio. The Fixed Charge Ratio of Parent and its Subsidiaries on a consolidated basis at the end of each fiscal
quarter for the twelve fiscal month period ending on such fiscal quarter shall not be less than 1.20 to 1.00.

 

(d)          Capital
Expenditures. Capital Expenditures of Parent and its Subsidiaries on a consolidated basis in any fiscal year shall not exceed
$1,300,000 of which not more than $500,000 shall be Capital Expenditures for the retail division for the fiscal year ending on
December 31, 2015 and $500,000 for the fiscal year ending on December 31, 2016 and each fiscal year end thereafter, provided that
Bank may, in its reasonable discretion, permit Capital Expenditures for the retail division based upon profitable operations of
the retail division.”

 

(c)          Section
4(e)(ii) is amended to provide as follows:

 

“(ii)         Minimum
EBITDA of Parent. EBITDA of Parent and its subsidiaries on a consolidated basis shall not be less than $5,500,000 for the fiscal
year ending December 31, 2014, not less than $7,500,000 for the fiscal year ending December 31, 2015, not less than $15,500,000
for the fiscal year ending on December 31, 2016 and not less than $17,000,000 for fiscal year ending December 31, 2017 and each
fiscal year end thereafter.”

 

    	2

    	 

    

  

(d)          Section
4(h) is amended in its entirety to provide as follows:

 

“(h) Consents; Taxes.
Borrower and Parent shall (i) obtain or cause to be obtained, maintain in full force and effect and comply in all material respects
with the conditions and restrictions (if any) imposed in, or in connection with, every material consent, authorization, material
license or approval of governmental or public bodies or authorities or courts and do, or cause to be done, all other acts and things,
which may from time to time be necessary or desirable under applicable law for the continued due performance of all its obligations
under the Loan Documents; (ii) comply in all material respects with all applicable laws, rules, regulations and orders of any governmental
agency having jurisdiction over Borrower or Parent; (iii) pay to the appropriate governmental authorities when due, all Federal,
state, local and other Taxes required to be paid or deposited by Borrower or Parent, except that Borrower or Parent may defer any
such payment while Borrower or Parent is diligently contesting the respective Taxes in good faith by appropriate proceedings, but
any such deferment shall not extend beyond the time when such unpaid Taxes would become a lien upon any of Borrower’s or
Parent’s assets. Borrower will furnish the Bank promptly at the Bank’s request with evidence satisfactory to the Bank
establishing payment of such Taxes, assessments and contributions. In the Bank’s discretion, the Bank shall have the right
(but shall not be obligated) to pay any such Tax, assessment or contribution (including any interest or penalties thereon) for
Borrower’s or Parent’s benefit in the event Borrower or Parent shall fail timely to do so and provided the non-payment
of such Tax will result in a lien or security interest encumbering the assets which will be prior to the lien and security interest
held by the Bank; any such payment shall be deemed an advance hereunder bearing interest at the Loan Rate (as such term is defined
in the Promissory Note) and payable in the manner specified therein. Borrower shall, promptly on demand, reimburse the Bank for
any such payment and any costs and expenses (including reasonable attorneys’ fees) which the Bank may incur in connection
therewith.”

 

    	3

    	 

    

  

(e)          4(k)
is amended in its entirety to provide as follows:

 

“(k)          Indebtedness.
Neither Borrower nor Guarantor shall incur, create, assume, become or be liable in any manner with respect to, or permit to exist,
any indebtedness for borrowed money, reimbursement or payment obligations or any obligation evidenced by notes, bonds, debentures
or similar instruments other than (a) pursuant to the Loan Documents; (b) indebtedness to Guarantor or any of its Subsidiaries;
provided that any such indebtedness to Guarantor or any of its Subsidiaries shall be subordinated to the Liabilities on terms and
conditions reasonably satisfactory to the Bank; (c) indebtedness (including, without limitation, capital lease obligations) secured
by liens permitted by clause (vii) of Section 4(h) in an aggregate principal amount not to exceed $750,000 at any one time outstanding;
(d) indebtedness outstanding on the date hereof and listed on Schedule II hereto and any refinancings, refundings, renewals or
extensions thereof (without any increase in the principal amount thereof and any shortening of the maturity of any principal amount
thereof) except that Borrower and Guarantor may amend the indebtedness listed on Schedule II to (i) modify the manner, calculations
or mechanics by which amounts thereunder are payable in capital stock of Guarantor and (ii) extend the maturity of all or any portion
of the indebtedness evidenced thereby; (e) unsecured indebtedness not to exceed $500,000 in the aggregate at any time outstanding;
(f) indebtedness under Rate Contracts entered in the ordinary course of business in order to mitigate interest rate, currency or
similar risks and not for speculative purposes with respect to the Term Loan; (g) guarantee obligations of Guarantor with respect
to the obligations of any Subsidiary of Guarantor; (h) guarantee obligations of Borrower with respect to the obligations of IM
Brands and H Licensing, LLC to the Bank.”

 

(f)          Section
4(l) is amended in its entirety to provide as follows:

 

“(l) No Merger.
Neither Borrower nor Parent shall merge or consolidate with any other Person, acquire all or substantially all of the assets or
Stock of any Person except (a) any Subsidiary of Borrower may be merged or consolidated with or into Borrower provided Borrower
shall be the continuing or surviving entity; (b) any Subsidiary of Borrower may dispose of any or all of its assets (upon voluntary
liquidation or otherwise) to Borrower only; (c) any Subsidiary of Parent (other than Borrower, H Licensing and IM Brands) may be
merged or consolidated with or into Parent provided Parent shall be the continuing or surviving entity; (d) any Subsidiary
of Parent (other than Borrower, H Licensing and IM Brands) may dispose of any or all of its assets (upon voluntary liquidation
or otherwise) to Parent; (e) as otherwise expressly permitted pursuant to the terms of the Promissory Note; and (f) Parent may
acquire the assets or stock of any Person provided that such acquisition is not financed in whole or in part from any distributions,
loans or other assets of Borrower, any Subsidiary of Borrower, H Licensing or IM Brands.”

 

(g)          Section
4(p) is amended in its entirety to provide as follows:

 

“(p) Cash Flow Recapture.
If for any fiscal year commencing with the fiscal year ending on December 31, 2014, there shall be Excess Cash Flow for such fiscal
year, the Borrower shall pay to Bank an amount equal to fifty percent (50%) of such Excess Cash Flow (the “Cash Flow Recapture
Requirement”), to be applied by Bank to the principal amount of the Term Loan in the reverse order of maturity. The Cash
Flow Recapture Requirement for any such fiscal year shall be received by the Bank no later than the date of delivery of the financial
statements for such fiscal year required pursuant to Section 3(a)(i).”

 

    	4

    	 

    

  

(h)          The
defined term “Excess Cash Flow” in Section 5 is amended in its entirety to provide as follows:

 

“Excess Cash Flow”
shall mean (without duplication), for any fiscal period, Cash Flow from Operations for such period less (a) Capital Expenditures
not made through the incurrence of indebtedness less (b) all cash interest and principal (including indebtedness owed to the Bank)
paid or payable during such period less (c) all Taxes paid or payable during such period less (d) all Tax Distributions made during
such period.

 

(i)          The
defined term “Fixed Charges” in Section 5 is amended in its entirety to provide as follows:

 

“Fixed Charges”
shall mean for any period, as respects any Person, the sum of (a) the cash interest expense of such Person for such period, (b) the
principal amount of total debt of such Person having a scheduled due date during such period, (c) all Tax Distributions and (d)
all other cash distributions or dividends made by such Person.

 

3.           Amendment
to Note. The Note is hereby amended as follows:

 

(a)          The
defined term “Liabilities” in Section N of the Terms and Conditions is amended in its entirety to provide as
follows:

 

“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 H Licensing Guaranty.

 

(b)          The
following defined terms are inserted in the appropriate alphabetical order in Terms and Conditions Section N

 

H Licensing: H Licensing,
LLC, a Delaware limited liability company. H Licensing Guaranty: the guaranty executed by
the Borrower in favor of the Bank pursuant to which the Borrower guarantees to the Bank the H Licensing Liabilities. H Licensing
Liabilities: any and all of the Debt of H Licensing to, or held or to be held by, the Bank under the H Licensing Loan Documents.
H Licensing Loan Documents: collectively, all documents executed and delivered in connection with the loans made
by the Bank to H Licensing. 

 

(c)          Section
D is amended by inserting the following additional Event of Default:

 

    	5

    	 

    

  

“H Licensing Default.
The occurrence of a default or event of default under the H Licensing Loan Documents.”

 

4.           Amendment
to Security Agreements. Borrower hereby confirms that the term “Obligations” as used in the Security Agreement,
includes, without limitation, the obligations now existing or hereinafter arising under or in respect of the H Licensing Guaranty
and reaffirms and pledges, hypothecates, assigns, transfers and sets over to Bank and grants Bank a continuing security interest
in all the Collateral, now owned or at any time hereinafter acquired by Borrower or in which Borrower now or has or at any time
in the future may acquires any right, title or interest.

 

5.           Amendment
to IP Security Agreement. Borrower hereby confirms that the term “Secured Obligations” as used in
the IP Security Agreement, includes, without limitation, the obligations now existing or hereinafter arising under or in respect
of the H Licensing Guaranty and reaffirms and pledges, hypothecates, assigns, transfers and sets over to Bank and grants Bank a
continuing security interest in all the Collateral, now owned or at any time hereinafter acquired by Borrower or in which Borrower
now or has or at any time in the future may acquires any right, title or interest.

 

6.           Amendment
to Pledge Agreement. Borrower hereby confirms that the term “Secured Obligations” as used in the Pledge
Agreement, includes, without limitation, the obligations now existing or hereinafter arising under or in respect of the H Licensing
Guaranty and reaffirms and pledges, hypothecates, assigns, transfers and sets over to Bank and grants Bank a continuing security
interest in all the Collateral, now owned or at any time hereinafter acquired by Borrower or in which Borrower now or has or at
any time in the future may acquires any right, title or interest.

 

7.           Conditions
of Effectiveness. This Amendment shall become effective upon a Lender’s receipt of this Amendment executed by Borrower
and Guarantor in form and substance satisfactory to Bank.

 

8.           Representations
and Warranties. Each of Borrower and Guarantor hereby represents and warrants as follows:

 

(a)          This
Amendment and the Loan Documents, as amended hereby, constitute legal, valid and binding obligations of Borrower and Guarantor,
to the extent a party thereto and are enforceable against Borrower and Guarantor in accordance with their respective terms, except
to the extent that such enforceability may be limited by applicable bankruptcy, insolvency, reorganization, moratorium or other
similar laws affecting the enforcement of creditors’ rights generally or limiting the right of specific performance.

 

(b)          Upon
the effectiveness of this Amendment, each of Borrower and Guarantor hereby reaffirms all covenants, representations and warranties
made in the Loan Documents to the extent the same are not amended hereby and agree that all such covenants, representations and
warranties shall be deemed to have been remade as of the effective date of this Amendment.

 

    	6

    	 

    

  

(c)          No
Event of Default has occurred and is continuing or would exist after giving effect to this Amendment.

 

(d)          Neither
Borrower nor Guarantor has any defense, counterclaim or offset with respect to the Loan Documents.

 

9.           Effect
on the Loan Documents.

 

(a)          Upon
the effectiveness of this Amendment, each reference to a Loan Document shall mean and be a reference to such Loan Document as amended
hereby.

 

(b)          Except
as specifically amended herein, the Loan Documents, shall remain in full force and effect, and are hereby ratified and confirmed.

 

(c)          The
execution, delivery and effectiveness of this Amendment shall not operate as a waiver of any right, power or remedy of Lender,
nor constitute a waiver of any provision of any Loan Document.

 

10.          Governing
Law. This Amendment shall be binding upon and inure to the benefit of the parties hereto and their respective successors and
assigns and shall be governed by and construed in accordance with the laws of the State of New York.

 

11.          Headings.
Section headings in this Amendment are included herein for convenience of reference only and shall not constitute a part of this
Amendment for any other purpose.

 

12.          Counterparts;
Electronic Transmission. This Amendment may be executed by the parties hereto in one or more counterparts, each of which shall
be deemed an original and all of which when taken together shall constitute one and the same agreement. Any signature delivered
by a party by facsimile transmission shall be deemed to be an original signature hereto.

 

    	7

    	 

    

  

IN WITNESS WHEREOF,
this Amendment has been duly executed as of the day and year first written above.

 

	 	JR LICENSING, LLC
	 	By:  Xcel Brands, Inc., its Manager
	 	 	 
	 	By:	/s/ James Haran
	 	 	Name: James Haran
	 	 	Title: CFO
	 	 	 
	 	XCEL BRANDS, INC.
	 	 	 
	 	By:	/s/ Robert D’Loren
	 	 	Name: Robert D’Loren
	 	 	Title: CEO
	 	 
	 	BANK HAPOALIM B.M.
	 	 	 
	 	By:	Authorized Signature
	 	 	Name:
	 	 	Title:
	 	 	 
	 	By:	Authorized Signature
	 	 	Name:
	 	 	Title:

 

SIGNATURE PAGE TO

AMENDMENT NO. 1

Source: [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00238-of-00352.parquet"}, [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00238-of-00352.parquet"}]]