Document:

Exhibit
      10.4

     

    ARBIOS
      SYSTEMS, INC. 

     

    

     

    November
      13, 2007

     

    Mr.
      Walter Ogier

    433
      Main
      Street

    Winchester,
      MA 01890

    

    Dear
      Walter:

    

    The
      purpose of this letter agreement (the “Agreement”) is to set forth the terms
      regarding your separation of employment from Arbios Systems, Inc. (the
“Company”). As more fully set forth below, the Company desires to provide you
      with severance pay and benefits in exchange for certain agreements by you.
      This
      agreement shall become effective (the “Effective Date”) upon full execution and
      upon expiration of the revocation period (without revocation by you) set forth
      in paragraph 10 below. 

     

    1. Separation
      of Employment.
      You
      acknowledge that your employment with the Company terminated, or will terminate,
      effective September 21, 2007 (the “Separation Date”), which includes a
      termination from all positions and offices with the Company and as a member
      of
      the Company’s Board of Directors effective on the Separation Date. You
      acknowledge that from and after the Separation Date, you have not had and shall
      not have any authority and have not and shall not represent yourself as an
      officer director, employee or agent of the Company. 

     

    2. Acknowledgement
      of Payment.
      You
      acknowledge that you have been paid all salary, bonus and accrued vacation
      due
      to you for the period of employment through the Separation Date, except that
      the
      amount of $30,000 which may become due you as a Performance Bonus under the
      incentive compensation plan approved by the Company’s Board of Directors on July
      12, 2007. Such amount shall be earned conditioned on, and paid not later than
      thirty (30) days following, the closing by the Company of a financing
      transaction, including a transaction involving a strategic collaboration, in
      which the Company receives net proceeds of not less than $5,000,000 within
      one
      hundred eighty (180) days following the Separation Date. You also will be
      reimbursed for all expenses incurred, submitted and approved in accordance
      with
      the Company’s policies on expense reimbursement. Such payments were or, as the
      case may be, will be made without any requirement that you accept this
      agreement.

     

    3. Severance
      Compensation.
      In
      exchange for the mutual covenants set forth in this agreement, the Company
      agrees to provide you with the following:

     

    (a) Severance
      Pay.
      Payment
      of an amount equal to twelve (12) months of your gross monthly base salary
      of
      $25,000, less all applicable federal, state, local and other employment-related
      deductions, such payments to be made in approximately equal monthly installments
      beginning on the first regularly scheduled Company payday for senior executives
      which is at least ten (10) days after your acceptance of this Agreement.

     

    
      
         

      

      
         

        
          

        

      

      
         

      

    

     

    (b) Health
      Insurance.
      In the
      event that you choose to exercise your right under Chapter 176J, Section 9
      of
      the Massachusetts General Laws to continue your participation in the Company’s
      health insurance plan (which you may do, to the extent permitted by such
      statute, regardless of whether you accept this Agreement), the Company shall
      pay
      its normal share of the costs for such coverage (the “Severance Benefits”) for a
      period of twelve (12) month(s) beginning on the Separation Date to the same
      extent that such insurance is provided to persons then currently employed by
      the
      Company, provided, however, that notwithstanding any other provision of this
      Agreement, this obligation shall cease on the date you become eligible to
      receive health insurance benefits through any other employer you subsequently
      work for. Your co-pay, if any, shall be deducted from the monthly severance
      payments described in subsection (a) above or, if no such payments remain to
      be
      paid, shall be paid by you directly to the Company within seven (7) days of
      receipt of notice such payment is due. 

     

    (c) Notice
      of Eligibility for other Health Care Insurance.
      You
      agree to provide the Company with written notice immediately upon becoming
      eligible for coverage under another employer’s health insurance plan. The notice
      described herein shall be given in the same manner as prescribed for acceptance
      of this Agreement.

     

    (d) Options.
      All
      unvested options under your Stock Option Agreement dated as of November 8,
      2005
      (Stock Option Number 61 and Stock Option Number 62 and hereinafter jointly
      the
“2005 Option”) shall become exercisable as of the Separation Date. Options for
      60,000 shares under your Stock Option Agreement dated as of July 10, 2007 (the
      “2007 Option”) shall become exercisable as of the Separation Date. Any vested
      options under both agreements shall be exercisable for ninety (90) days
      following the Separation Date in accordance with the terms of these
      agreements
      and for
      the additional twelve (12) month consulting period described in Section 5 below;
      in addition, should such twelve (12) month consulting period be extended by
      mutual agreement, the period in which you may extend the options shall be
      extended by an equal length of time.
      

     

    You
      acknowledge and agree that the Severance Compensation provided in this Agreement
      is not otherwise due or owing to you under any Company employment agreement
      (oral or written) or Company policy or practice, and that this Severance
      Compensation to be provided to you is not intended to, and shall not constitute,
      a severance plan, and shall confer no benefit on anyone other than the parties
      hereto. You further acknowledge that except for the specific financial
      consideration set forth in this Agreement, you are not and shall not in the
      future be entitled to any other compensation including, without limitation,
      wages, bonuses, vacation pay, holiday pay or any other form of compensation
      or
      benefit. 

     

    Notwithstanding
      any other provision of this Agreement, the Company, its officers, directors,
      employees, attorneys and agents make no guarantee of any tax consequences with
      respect to the payments or compensation set forth herein, including, without
      limitation, Section 409A of the Internal Revenue Code of 1986, as
      amended.

     

    
      
         

      

      
        2

        
          

        

      

      
         

      

    

     

    4. Unemployment
      Benefits.
      The
      Company agrees that it will not contest any claim for unemployment benefits
      by
      you with the Massachusetts Department of Employment and Training. The Company,
      of course, shall not be required to falsify any information.

     

    5. Consulting.
      In
      exchange for the consideration set forth herein, including the extension of
      the
      option exercise period for an additional twelve (12) months as described in
      Section 3(d) above, you agree to provide the Company, at reasonable times and
      places as requested by the Company, including at the Company’s premises if
      needed, consulting services for eight (8) hours per month, for twelve (12)
      consecutive months, commencing on the Effective Date. The Company in making
      such
      requests shall take into account and attempt to accommodate your other work
      and
      personal commitments. If requested by the Company, you will provide it with
      a
      written summary from time to time of the services provided and the time spent
      on
      each activity. The twelve (12) month consulting period may be extended by mutual
      agreement in exchange for a further extension of the option exercise period
      as
      described in Section 3(d) above. 

     

    6. Cooperation. You
      agree
      that both during and at any time after your employment, you shall cooperate
      fully with the Company in connection with any matter or event relating to your
      employment or events that occurred during your employment, including, without
      limitation, in the defense or prosecution of any claims or actions now in
      existence or which may be brought or threatened in the future against or on
      behalf of the Company, including any claims or actions against its affiliates
      and its and their officers and employees. Your cooperation in connection with
      such matters, actions and claims shall include, without limitation, being
      available, upon reasonable notice to meet with the Company regarding matters
      in
      which you have been involved, and any contract matters or audits; to prepare
      for, attend and participate in any proceeding (including, without limitation,
      depositions, consultation, discovery or trial); to provide affidavits; to assist
      with any audit, inspection, proceeding or other inquiry; and to act as a witness
      in connection with any litigation or other legal proceeding affecting the
      Company. You further agree that should you be contacted (directly or indirectly)
      by any person or entity (for example, by any party representing an individual
      or
      entity) adverse to the Company, you shall promptly notify the Chief Executive
      Officer or the Chairman of the Board of the Company. You shall be reimbursed
      for
      any reasonable costs and expenses incurred in connection with providing such
      cooperation under this section.

     

    7. Additional
      Covenants by You.
      You
      expressly acknowledge and agree to the following:

     

    (a) that
      you
      have returned to the Company, and have not retained, all Company files and
      documents (and any copies thereof in any form or media) and property, including
      without limitation, any cell phone, computer, keys, key cards and vehicles,
      and
      that you shall abide by any and all contractual, common law and/or statutory
      obligations relating to protection and non-disclosure of the Company’s trade
      secrets and/or confidential and proprietary documents and information; provided,
      however, that ownership of the Company laptop computer you have been using
      shall
      be
      transferred to you, and possession of it returned to you, after you have
      delivered it to the Company and permitted the Company, with verification by
      its
      Chief Financial Officer, to remove all Company information and property
      contained thereon;

     

    
      
         

      

      
        3

        
          

        

      

      
         

      

    

     

    (b) that
      all
      information relating in any way to the negotiation of this Agreement, including
      the terms and amount of financial consideration provided for in this Agreement,
      shall be held confidential by you and shall not be publicized or disclosed
      to
      any person (other than an immediate family member, legal counsel or financial
      advisor, provided that any such individual to whom disclosure is made agrees
      to
      be bound by these confidentiality obligations), business entity or government
      agency (except as mandated by state or federal law); 

     

    (c) that
      you
      will not make any statements that are professionally or personally disparaging
      about, or adverse to, the interests of the Company (including its officers,
      directors and employees) including, but not limited to, any statements that
      disparage any person, product, service, finances, financial condition,
      capability or any other aspect of the business of the Company, and that you
      will
      not engage in any conduct which is intended to harm professionally or personally
      the reputation of the Company (including its officers, directors and employees).
      Nothing herein shall apply to any legal action or proceeding to enforce the
      provisions of this Agreement, to any legal proceeding between you and any person
      subject to this provision, or to any communication required or privileged by
      law; and

     

    (d) that
      the
      breach of any of the foregoing covenants by you shall constitute a material
      breach of this Agreement and shall relieve the Company of any further
      obligations hereunder and, in addition to any other legal or equitable remedy
      available to the Company, shall entitle the Company to recover any Severance
      Compensation already paid to you and/or, where applicable, the cost of same
      to
      the Company and to rescind and revoke any action taken pursuant to this
      Agreement.

     

    8. Additional
      Covenants by the Company. 

     

    (a) Nondisparagement.
      The
      Company agrees that its officers and directors shall not make, or cause to
      be
      made, any statement (whether oral or written) that disparages you and will
      not
      engage in conduct which is intended to harm your reputation. Nothing herein
      shall apply to any legal action or proceeding to enforce the provisions of
      this
      Agreement, to any legal proceeding between you and any person subject to this
      provision, or to any communication required or privileged by
      law. 

     

    (b) Reference.
      In
      response to requests for references received by officers, directors or senior
      management of the Company, the Company will respond to the effect that you
      were
      in good standing with the Company through the period of your employment.

     

    9. Release
      of Claims.
      You
      hereby agree that by signing this agreement and accepting the Severance
      Compensation, and other good and valuable consideration provided for in this
      Agreement, you are waiving and releasing your right to assert any form of legal
      claim against the Company1 
      whatsoever for any alleged action, inaction or circumstance existing or arising
      from the beginning of time through the Separation Date. Your waiver and release
      herein is intended to bar any form of legal claim, charge, complaint or any
      other form of action (jointly referred to as “Claims”) against the Company
      seeking any form of relief including, without limitation, equitable relief
      (whether declaratory, injunctive or otherwise), the recovery of any damages
      or
      any other form of monetary recovery whatsoever (including, without limitation,
      back pay, front pay, compensatory damages, emotional distress damages, punitive
      damages, attorneys fees and any other costs) against the Company, for any
      alleged action, inaction or circumstance existing or arising through the
      Separation Date.

     

    

    
      1
        For the
        purposes of this section, the parties agree that the term “Company” shall
        include Arbios Systems, Inc., its divisions, affiliates, parents and
        subsidiaries, and its and their respective officers, directors, shareholders,
        owners, employees, attorneys, agents and assigns.

    

    
      
         

      

      
        4

        
          

        

      

      
         

      

    

     

    Without
      limiting the foregoing general waiver and release, you specifically waive and
      release the Company from any Claim arising from or related to your employment
      relationship with the Company or the termination thereof, including, without
      limitation: 

     

    
      	 	
              ·

            	
              Claims
                under any state or federal discrimination, fair employment practices
                or
                other employment related statute, regulation or executive order (as
                they
                may have been amended through the Separation Date) prohibiting
                discrimination or harassment based upon any protected status including,
                without limitation, race, national origin, age, gender, marital status,
                disability, veteran status or sexual orientation. Without limitation,
                specifically included in this paragraph are any Claims arising under
                the
                federal Age Discrimination in Employment Act, the Older Workers Benefit
                Protection Act, the Civil Rights Acts of 1866 and 1871, Title VII
                of the
                Civil Rights Act of 1964, the Civil Rights Act of 1991, the Equal
                Pay Act,
                the Americans With Disabilities Act and any similar Massachusetts
                or other
                state statute.

            

    

     

    
      	 	
              ·

            	
              Claims
                under any other state or federal employment related statute, regulation
                or
                executive order (as they may have been amended through the Separation
                Date) relating to wages, hours or any other terms and conditions
                of
                employment. Without limitation, specifically included in this paragraph
                are any Claims arising under the Fair Labor Standards Act, the National
                Labor Relations Act, the Employee Retirement Income Security Act
                of 1974,
                the Consolidated Omnibus Budget Reconciliation Act of 1985 (COBRA)
                and any
                similar Massachusetts or other state statute.

            

    

     

    
      	 	
              ·

            	
              Claims
                under any state or federal common law theory including, without
                limitation, wrongful discharge, breach of express or implied contract,
                promissory estoppel, unjust enrichment, breach of a covenant of good
                faith
                and fair dealing, violation of public policy, defamation, interference
                with contractual relations, intentional or negligent infliction of
                emotional distress, invasion of privacy, misrepresentation, deceit,
                fraud
                or negligence. 

            

    

     

    
      	 	
              ·

            	
              Any
                other Claim arising under local, state or federal
                law.

            

    

     

    Notwithstanding
      the foregoing, this section does not:

    

    
      	 	
              ·

            	
              release
                the Company from any obligation expressly set forth in this Agreement
                or
                from any obligation, including without limitation obligations under
                the
                Workers Compensation laws, which as a matter of law cannot be
                released;

            

    

     

    
      
         

      

      
        5

        
          

        

      

      
         

      

    

     

    
      	 	
              ·

            	
              prohibit
                you from filing a charge with the Equal Employment Opportunity Commission
                (“EEOC”); 

            

    

     

    
      	 	
              ·

            	
              prohibit
                you from participating in an investigation or proceeding by the EEOC
                or
                any comparable state or local
                agency.

            

    

     

    Your
      waiver and release, however, are intended to be a complete bar to any recovery
      or personal benefit by or to you with respect to any claim whatsoever, including
      those raised through a charge with the EEOC, except those which, as a matter
      of
      law, cannot be released. 

     

    You
      acknowledge and agree that, but for providing this waiver and release, you
      would
      not be receiving the Severance Pay being provided to you under the terms of
      this
      Agreement.

     

    10. Waiver
      of Employment.
      You
      hereby waive and release forever any right or rights you may have to employment
      with the Company and any affiliate thereof at any time in the future and agree
      not to seek or make application for employment with the Company or any affiliate
      thereof. 

     

    11. Assignment
      on Death.
      Notwithstanding paragraph 3 above or any provision of this Agreement, should
      you
      die before all of the Severance Compensation set forth in paragraph 3 above
      is
      paid, the Company will (1) make all remaining Severance Compensation payments
      to
      your estate, and/or (2) allow the exercise of stock options by your estate
      within the period set forth in Section 2(d) above. 

     

    12. Entire
      Agreement/Modification/Waiver/Choice of Law/Enforceability/Jury
      Waiver.
      You
      acknowledge and agree that, with the exception of your November
      3, 2005 Employee
      Invention Assignment and Confidentiality Agreement and any other agreement
      relating to inventions and/or confidentiality, your November 3, 2005
      Indemnification Agreement, and the 2005 Option and the 2007 Option,
      the
      terms
      of all of which you and the Company hereby acknowledge, reaffirm and agree
      to,
this
      Agreement supersedes any and all prior or contemporaneous oral and/or written
      agreements between you and the Company, and sets forth the entire agreement
      between you and the Company. No variations or modifications hereof shall be
      deemed valid unless reduced to writing and signed by the parties hereto. The
      failure of the Company to seek enforcement of any provision of this Agreement
      in
      any instance or for any period of time shall not be construed as a waiver of
      such provision or the Company's right to seek enforcement of such provision
      in
      the future. This Agreement shall be deemed to have been made in the Commonwealth
      of Massachusetts, shall take effect as an instrument under seal within the
      Commonwealth of Massachusetts, and shall be governed by and construed in
      accordance with the laws of the Commonwealth of Massachusetts, without giving
      effect to conflict of law principles. You agree that any action, demand, claim
      or counterclaim relating to the terms and provisions of this Agreement, or
      to
      its formation or breach, shall be commenced in the Commonwealth of Massachusetts
      in a court of competent jurisdiction, and you further acknowledge that venue
      for
      such actions shall lie exclusively in the Commonwealth of Massachusetts and
      that
      material witnesses and documents would be located in the Commonwealth of
      Massachusetts. The provisions of this Agreement are severable, and if for any
      reason any part hereof shall be found to be unenforceable, the remaining
      provisions shall be enforced in full.

     

    
      
         

      

      
        6

        
          

        

      

      
         

      

    

     

    By
      executing this Agreement, you are acknowledging that you have been afforded
      sufficient time to understand the terms and effects of this agreement, that
      your
      agreements and obligations hereunder are made voluntarily, knowingly and without
      duress, and that neither the Company nor its agents or representatives have
      made
      any representations inconsistent with the provisions of this
      agreement.

     

    This
      Agreement may be signed on one or more copies, each of which when signed will
      be
      deemed to be an original, and all of which together will constitute one and
      the
      same Agreement.

     

    If
      the
      foregoing correctly sets forth our agreement, please sign, date and return
      the
      enclosed copy of this agreement to me at Arbios Systems, Inc. by hand delivery
      or by mailing by first-class mail or overnight delivery within twenty-one (21)
      days of the date of this letter. You may revoke such acceptance in the same
      manner within seven (7) days of such acceptance. 

     

    
      	 	
              Very
                truly yours,

               

            	 
	 	
              ARBIOS
                SYSTEMS, INC.

            	 
	 	 	 	 
	 	 	 	 
	 	
              By:

            	
              /s/
                Tom Tully

            	 
	 	 	 	 
	 	
              Name:

            	
              Tom
                Tully

            	 
	 	 	 	 
	 	
              Title:

            	 	 
	 	 	 	 
	 	
              Dated:

            	
              November
                13, 2007

            	 

    

     

     

    Confirmed
      and Agreed:

     

    /s/
      Walter Ogier

    Walter
      Ogier

     

    Dated: November
      13, 2007

     

    
      
         

      

      
        7Exhibit
      10.1

    

    NOTE
      AND SECURITY AGREEMENT

    

    This
      Note
      and Security Agreement (“Agreement”),
      dated
      November 7, 2007, is entered by ARTFUL
      HOLDINGS, LLC, a
      Delaware limited liability company (“Borrower”),
      and
      given to ICONIX
      BRAND GROUP, INC.,
      a
      Delaware corporation (“Lender”).
      

    

    BACKGROUND

    

    WHEREAS,
      Borrower entered into that certain Asset Purchase Agreement, dated as of
      November 7, 2007 (the “Acquisition
      Agreement”),
      by
      and among the party thereto as seller (“Seller”),
      the
      parties thereto as principals, Borrower and Scion LLC (“Scion”),
      pursuant to which Borrower acquired (the “Acquisition”)
      certain assets of Seller (“Acquired
      Assets”);

     

    WHEREAS,
      Borrower has requested that Lender make available to it a senior secured term
      loan facility in the aggregate amount of Twelve
      Million Dollars ($12,000,000) the
      proceeds of which shall be used to finance the Acquisition and to pay related
      fees and expenses;

     

    NOW,
      THEREFORE, in consideration of the premises and the agreements hereinafter
      set
      forth, the parties hereto hereby agree as follows:

     

    1. 
 (a)        On
      the
      Effective Date, Lender shall make available to Borrower a term loan facility
      in
      a principal amount not to exceed in the aggregate Twelve Million Dollars
      ($12,000,000). The term loan facility advances shall, so long as no Event of
      Default has occurred and is continuing, be available to Borrower as follows:
      (i)
      Tranche A, in a principal amount not to exceed Ten Million Five Hundred Thousand
      Dollars ($10,500,000) (“Tranche
      A Loan”)
      and
      (ii) Tranche B, in a principal amount not to exceed in the aggregate One Million
      Five Hundred Thousand Dollars ($1,500,000) (“Tranche
      B Loan”
and
      along with tranche A Loan, collectively, the “Loan”).
      

     

    (b)  So
      long
      as all the conditions to closing set forth in Section 5 of this Agreement have
      been satisfied, Lender shall advance the Tranche A Loan on the Effective Date
      (as defined below) and Borrower shall use the proceeds thereof to pay the
      purchase price for the Acquisition in accordance with the terms of the
      Acquisition Agreement and to pay related fees and expenses.

     

    (c)  So
      long
      as no Event of Default has occurred and is continuing, Lender shall advance
      the
      Tranche B Loan, or portion thereof, upon Borrower’s request.

     

    (d)  Borrower
      agrees to pay interest on the outstanding principal balance of the Loan from
      time to time at the per annum rate equal to Prime plus 5.00%; provided, that
      upon the occurrence and during the continuance of an Event of Default hereunder,
      such per annum rate shall be equal to Prime plus 7.50%. “Prime”
on
      any
      day of determination shall mean the rate of interest per annum published on
      such
      day (or, if not then published, on the most recently preceding day) in The
      Wall
      Street Journal as the “Prime Rate”; changes in the rate payable hereunder shall
      be effective on each day on which a change in the “Prime Rate” is published.
      Interest shall be calculated on the basis of a year of 360 days based on the
      actual number of days elapsed, and shall be due and payable on the first
      business day of each month and on the Maturity Date. In no event shall the
      amount of interest paid or agreed to be paid to Lender hereunder exceed the
      highest lawful rate permissible under any law which a court of competent
      jurisdiction may deem applicable hereto. All contractual rates of interest
      chargeable on this outstanding Loan shall continue to accrue and be paid even
      after default, maturity, acceleration, termination of the Loan, judgment,
      bankruptcy, insolvency proceedings of any kind or the happening of any event
      or
      occurrence similar or dissimilar. 

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

    (e)  The
      outstanding principal amount of the Loan and accrued interest, fees, costs
      and
      expenses shall be due and payable
      on
      November 7, 2012 (the “Maturity
      Date”).
      

     

    (f)  Borrower
      shall, on the last business day of each of January, April, July and October,
      commencing with January 30, 2008, prepay the Loan in an amount equal to fifty
      percent (50%) of the Excess Cash Flow for the most recently completed fiscal
      quarter immediately preceding such last business day. For the purpose of this
      Agreement, “Excess
      Cash Flow”
means,
      for any fiscal quarter, the difference, if any, of (a) (i) the net income
      of Borrower for such fiscal quarter, determined in accordance with GAAP,
plus
      (ii) all
      non-cash items of Borrower that caused a reduction in the calculation of such
      net income such fiscal quarter minus
      (b)  the aggregate amount of all optional prepayments of the Loan and all
      interest paid with respect to the Loan, in each case during such fiscal quarter.
      

     

    2.  In
      order
      to secure all existing and future liabilities and obligations of every kind
      or
      nature at any time owing by Borrower to Lender in connection herewith, the
      transactions contemplated hereby, administration thereof or otherwise, whether
      related or unrelated, primary or secondary, matured or contingent, direct or
      indirect, due or to become due, and whether principal, interest (including
      interest which may accrue as post-petition interest in connection with any
      bankruptcy or similar proceeding), fees, costs or expenses (including without
      limitation attorneys’ fees), and any extensions, modifications, substitutions,
      increases and renewals thereof, and the payment of all reasonable amounts
      advanced or costs incurred by Lender, to preserve, protect and enforce its
      rights hereunder and/or in connection herewith (collectively, “Obligations”),
      Borrower hereby assigns and transfers to Lender, and hereby grants to Lender,
      a
      security interest in, all of the following property now owned or at any time
      hereafter acquired by Borrower or in which Borrower now has or at any time
      in
      the future may acquire any right, title or interest (collectively, the
“Collateral”) (unless otherwise defined herein, each capitalized term used in
      this Section 2 shall have the meanings given to them in the Uniform Commercial
      Code in effect from time to time in the State of New York):

     

    (a)  all
      Accounts;

     

    (b)  all
      Chattel Paper;

     

    (c)  all
      Contracts (including, without limitation, the rights of Borrower under the
      Acquisition Agreement);

     

    (d)  all
      Deposit Accounts;

     

    (e)  all
      Documents;

     

    (f)  all
      Equipment;

     

    (g)  all
      General Intangibles;

     

    (h)  all
      Instruments;

     

    (i)  all
      rights, priorities and privileges relating to intellectual property, whether
      arising under United States, multinational or foreign laws or otherwise,
      including, without limitation, copyrights, copyright licenses, software,
      databases, patents, patent licenses, trademarks, trademark licenses, trademark
      applications, service marks, service mark licenses, service mark applications,
      trade names, brand names, domain names, mask works, mask work licenses,
      technology and related improvements, know-how and processes, trade secrets,
      all
      registrations and applications related to any of the above, and all rights
      to
      sue at law or in equity for any infringement or other impairment thereof,
      including the right to receive all proceeds and damages therefrom,

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

    (j)  all
      Inventory;

     

    (k)  all
      Investment Property; 

     

    (l)  all
      Letter-of-Credit Rights;

     

    (m)  all
      Goods
      and other property not otherwise described above;

     

    (n)  all
      books
      and records pertaining to the Collateral; and

     

    (o)  to
      the
      extent not otherwise included, all Proceeds and products of any and all of
      the
      foregoing, all Supporting Obligations in respect of any of the foregoing and
      all
      collateral security and guarantees given by any individual, partnership,
      corporation, limited liability company, business trust, joint stock company,
      trust, unincorporated association, joint venture, governmental authority or
      other entity of whatever nature with respect to any of the
      foregoing.

     

    3.  Borrower
      covenants that it shall not sell, transfer, convey, lease, or otherwise dispose
      of any of the Collateral (other than obsolete or unused equipment or inventory
      disposed of by Borrower in the ordinary course of Borrower’s business) and shall
      ensure that the liens and security interests granted hereunder to Lender are
      at
      all times first priority perfected liens on and security interests in the
      Collateral, except for Permitted Liens. For the purposes hereof, “Permitted
      Liens” shall mean (a) unrecorded liens which have priority over the Lender’s
      liens on the Collateral by operation of law, (b) liens for taxes, assessments
      or
      other governmental charges not delinquent or being contested in good faith
      and
      by appropriate proceedings, or (c) or liens which do not have a Material Adverse
      Effect, as determined by Lender in its reasonable discretion. For the purpose
      of
      Section 3(c), “Material Adverse Effect” shall mean a material adverse effect on
      (i) the financial condition of the Borrower, (ii) the Borrower’s ability to pay
      or perform the Obligations in accordance with the terms hereof or (iii) the
      ability of Lender to enforce the Obligations or its rights and remedies under
      this Agreement or the other Loan Documents.

     

    4.  Lender
      is
      hereby authorized by Borrower to file any financing statements covering the
      Collateral or an amendment that adds collateral covered by a financing statement
      and Lender may file such financing statements and amendments to financing
      statements describing the Collateral in any filing office as Lender, in its
      sole
      discretion, may determine, including financing statements containing language
      indicating that the acquisition by a third party of any right, title or interest
      in or to the Collateral without Lender’s consent, shall be a violation of
      Lender’s rights. Borrower shall perform all further acts that may be lawfully
      and reasonably required by Lender to secure Lender and effectuate the intentions
      and objects of this Agreement. 

     

    5.  This
      Agreement shall take effect upon satisfaction of the following conditions
      precedent: (the “Effective
      Date”).

     

    (a)  Lender
      shall have received this Agreement and the other Loan Documents executed and
      delivered by each of the parties thereto.

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

    (b)  The
      Acquisition shall have been consummated in accordance with the terms of the
      Acquisition Agreement, as in effect on the date thereof, in all material
      respects without any waiver, modification or amendment thereof that is
      materially adverse to Lender (as determined by Lender), unless consented to
      by
      Lender.

     

    (c)  Scion
      LLC
      shall deliver a Guaranty Agreement dated as of the date hereof in favor of
      Lender, in form and substance reasonably satisfactory to Lender (“Guaranty”).

     

    (d)  Shawn
      Carter shall deliver that certain Limited Guarantee and Pledge Agreement dated
      as of the date hereof in favor of Lender, in form and substance reasonably
      satisfactory to Lender (“Limited
      Guaranty”
      together with the Guaranty and this Agreement, the “Loan
      Documents”).

     

    (e)  No
      Event
      of Default shall have occurred and be continuing on the Effective Date or after
      giving effect to the Tranche A Loan made on the Effective Date.

     

    6.  Each
      of
      the following events shall constitute an event of default (“Event
      of Default”):

     

    (a)  Payments
      - if
      Borrower fails to make any payment of principal or interest on the date when
      such payment is due and payable and with respect to the failure to make any
      payment of interest, such failure continues for a period of ten (10) days;
      or

     

    (b)  Other
      Charges
      - if
      Borrower fails to pay any other charges, fees, costs or expenses or other
      monetary obligations owing to Lender, arising out of or incurred in connection
      with this Agreement on the date when such payment is due and payable, whether
      upon maturity, acceleration, demand or otherwise and such failure continues
      for
      a period of ten (10) days after Borrower receives written notice of such
      failure; or

     

    (c)  Agreements
      with Others
      - if
      Borrower shall default beyond any grace period under any agreement with any
      creditor for borrowed money having an aggregate principal amount in excess
      of
      $100,000, and the effect of such default is to cause Borrower's obligations
      which are the subject thereof to become due prior to its maturity date;
      or

     

    (d)  Assignment
      for Benefit of Creditors, etc.
      - if
      Borrower makes or proposes an assignment for the benefit of creditors generally,
      offers a composition or extension to creditors, or makes or sends notice of
      an
      intended bulk sale of any business or assets now or hereafter owned or conducted
      by Borrower which might materially and adversely affect Borrower; or

     

    (e)  Bankruptcy,
      Dissolution, etc.
      - upon
      the commencement of any action for the dissolution or liquidation of Borrower
      or
      the commencement of any proceeding to avoid any transaction entered into by
      Borrower or the commencement of any case or proceeding for reorganization or
      liquidation of Borrower’s debts under the Bankruptcy Code or any other state or
      federal law, now or hereafter enacted for the relief of debtors, whether
      instituted by or against Borrower; provided, however, that Borrower shall have
      sixty (60) days to obtain the dismissal or discharge of involuntary proceedings
      filed against Borrower, it being understood that during such sixty (60) day
      period, Lender shall be under no obligation to extend any credit hereunder
      and
      Lender may seek adequate protection in any bankruptcy proceeding; or

     

    (f)  Receiver
      - upon
      the appointment of a receiver, liquidator, custodian, trustee or similar
      official or fiduciary for Borrower or for any of Borrower’s Property; or

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

    Upon
      the
      occurrence of an Event of Default and at any time thereafter, Lender may declare
      all Obligations secured hereby immediately due and payable, all without demand,
      notice, presentment or protest or further action of any kind (it also being
      understood that the occurrence of any of the events or conditions set forth
      in
      subparagraphs (d), (e), or (f) shall automatically cause an acceleration of
      the
      Obligations), and Lender shall have, in addition to any remedies provided herein
      or by any applicable law, all of the rights and remedies of a Lender under
      the
      Uniform Commercial Code, as enacted in the applicable jurisdiction and as in
      effect from time to time. Unless the Collateral is perishable or threatens
      to
      decline speedily in value or is of a type customarily sold on a recognized
      market, Lender will give Borrower reasonable notice of the time and place of
      any
      public sale thereof or of the time after which any private sale or any other
      intended disposition thereof is to be made. The requirements of reasonable
      notice shall be met if such notice is mailed, postage prepaid, to the business
      address of Borrower shown in this Agreement at least seven (7) days before
      the
      time of the intended sale or disposition. Expenses of retaking, holding,
      preparing for sale, selling or the like shall include Lender’s reasonable
      attorneys’ fees and legal expenses, incurred or expended by Lender to enforce
      any payment due it under this Agreement either as against Borrower, or in the
      prosecution or defense of any action (all of which shall be included in the
      Obligations). All rights and remedies granted Lender hereunder and under any
      agreements, instruments or documents executed and/or delivered in connection
      with the Loan Documents, or otherwise available at law or in equity, shall
      be
      deemed concurrent and cumulative, and not alternative remedies, and Lender
      may
      proceed with any number of remedies at the same time until all Obligations
      are
      satisfied in full. The exercise of any one right or remedy shall not be deemed
      a
      waiver or release of any other right or remedy, and Lender, upon or at any
      time
      after the occurrence of an Event of Default, may proceed against Borrower,
      at
      any time, under any agreement, with any available remedy and in any
      order.

    

    7.  
(a)  Lender
      shall not be deemed to have waived any of Lender’s right hereunder or under any
      other agreement, instrument or paper signed by Borrower unless such waiver
      is in
      writing and signed by Lender. No delay or omission on the part of Lender in
      exercising any right shall operate as a waiver of such right or any other right.
      A waiver on any one occasion shall not be construed as a bar to or waiver of
      any
      right or remedy on any future occasion.

     

    (b)  The
      Borrower agrees to pay, indemnify or reimburse Lender, its s affiliates, and
      its
      officers, directors, trustees, employees, advisors, agents and controlling
      persons (each, an “Indemnitee”) for, and hold each Indemnitee, solely in its
      capacity as Lender and not as a direct or indirect equity owner of Borrower
      or
      Scion LLC, harmless from and against any and all other liabilities, obligations,
      losses, damages, penalties, actions, judgments, suits, costs, expenses or
      disbursements of any kind or nature whatsoever incurred by an Indemnitee or
      asserted against any Indemnitee arising out of, in connection with, or as a
      result of (i) the execution or delivery of this Agreement, any other Loan
      Document or any agreement or instrument contemplated hereby or thereby, the
      performance by the parties hereto or thereto of their respective obligations
      hereunder or thereunder or the consummation of the transactions contemplated
      hereby or thereby, (ii) the Loan or the use or proposed use of the proceeds
      thereof, or (iii) any actual or prospective claim, litigation, investigation
      or
      proceeding relating to any of the foregoing, whether based on contract, tort
      or
      any other theory, and regardless of whether any Indemnitee is a party thereto
      (all the foregoing, collectively, the “Indemnified Liabilities”), provided, that
      Borrower shall have no obligation hereunder to any Indemnitee with respect
      to
      Indemnified Liabilities to the extent such Indemnified Liabilities are found
      by
      a final and nonappealable decision of a court of competent jurisdiction to
      have
      resulted from the gross negligence or willful misconduct of such Indemnitee
      or
      any affiliate thereof. All amounts due under this Section shall be payable
      not
      later than 30 days after written demand therefor. The agreements in this Section
      shall survive repayment of the Loans and all other amounts payable
      hereunder.

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

    (c)  Lender
      shall not be liable for, and Borrower hereby agrees that Lender’s liability in
      the event of a breach by Lender of this Agreement shall be limited to Borrower’s
      direct damages suffered and shall not extend to, any consequential or incidental
      damages. In the event Borrower brings suit against Lender in connection with
      the
      transactions contemplated hereunder, and Lender is found not to be liable,
      Borrower shall indemnify and hold Lender harmless from all costs and expenses,
      including attorneys’ fees, incurred by Lender in connection with such
      suit.

     

    (d)  The
      liability of Borrower hereunder is absolute and unconditional and shall not
      be
      reduced, impaired or affected in any way by reason of (i) any failure to obtain,
      retain or preserve, or the lack of prior enforcement of, any rights against
      any
      person or persons, or in any property, (ii) the invalidity or unenforceability
      of any Obligations or rights in any Collateral, (iii) any delay in making demand
      upon other Borrower or any delay in enforcing, or any failure to enforce, any
      rights against other Borrower or in any Collateral even if such rights are
      thereby lost, (iv) any failure, neglect or omission to obtain, perfect or retain
      any lien upon, protect, exercise rights against, or realize on, any property
      of
      Borrower, or any other party securing the Obligations, (v) the commencement
      of
      any bankruptcy, reorganization, liquidation, dissolution or receivership
      proceeding or case filed by or against any of Borrower.

     

    8.  Each
      of
      the officers of Lender or its representative is hereby irrevocably made,
      constituted and appointed the true and lawful attorney for Borrower (without
      requiring it to act as such) with full power of substitution to do the
      following: (a) endorse the name of Borrower upon any and all checks, drafts,
      money orders and other instruments for the payment of monies that are payable
      to
      Borrower and constitute collections on the Collateral; (b) execute in the name
      of Borrower, schedules, assignments, instruments, documents and statements
      that
      Borrower is obligated to give Lender hereunder or is necessary to perfect (or
      continue to evidence the perfection of such security interest or lien); and
      (c) do such other and further acts and deeds in the name of Borrower that
      Lender may reasonably deem necessary or desirable to enforce any Collateral
      or
      perfect Lender’s security interest or lien in the Collateral.

     

    9.  THIS
      AGREEMENT AND THE RIGHTS AND OBLIGATIONS OF THE PARTIES UNDER THIS AGREEMENT
      SHALL BE GOVERNED BY, AND CONSTRUED AND INTERPRETED IN ACCORDANCE WITH, THE
      LAW
      OF THE STATE OF NEW YORK.

     

    10.  The
      provisions of this Agreement and other agreements and documents referred to
      herein are to be deemed severable, and the invalidity or unenforceability of
      any
      provision shall not affect or impair the remaining provisions which shall
      continue in full force and effect. All covenants of Borrower hereunder or under
      any related agreement, instrument or document, shall be deemed continuing until
      all of the Obligations are paid in full. 

     

    11.  This
      Agreement together with any documents referenced herein constitute the entire
      understanding of the parties hereto regarding the subject matter hereof, and
      no
      amendment to, or modification of, this Agreement shall be binding unless in
      writing and signed by Borrower and Lender.

     

    12.  Each
      individual signatory hereto represents and warrants that he or she is duly
      authorized to execute this Agreement on behalf of his principal and that he
      executes the Agreement in such capacity and not as a party.

     

    13.  All
      provisions herein shall inure to, become binding upon the successors,
      representatives, trustees, administrators, executors, heirs and assigns of
      the
      parties hereto, except that Borrower shall not assign its obligations or rights
      hereunder without the prior written consent of Lender.

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

    14.  LENDER
      AND BORROWER HEREBY IRREVOCABLY AND UNCONDITIONALLY WAIVE ANY RIGHTS THEY MAY
      HAVE TO A JURY TRIAL IN ANY AND ALL DISPUTES BETWEEN LENDER AND BORROWER
      HEREUNDER.

     

    15.  Any
      notice, request, demand, waiver, consent, approval or other communication which
      required or permitted hereunder shall be in writing and shall be deemed given
      only if delivered personally or sent by registered or certified mail or by
      nationally recognized overnight courier service, postage prepaid, or by
      facsimile, with written confirmation to follow, as follows:

     

    

    
      	
            	If
              to Lender:	
              Iconix
                Brand Group, Inc.

            

    

    1450
      Broadway, 4th Floor

    New
      York,
      NY 10018

    Attn:
      Neil Cole, CEO

    Telecopy:
      212-391-2057

    Telephone:
      212-730-0030

    
      

      
        	
              	If
                to Borrower:	Artful Holdings,
                LLC

    

    103
      Foulk
      Road

    Wilmington,
      DE 19803

    Attn:
      Andrew Tarshis, Esq.

    Telecopy:
      212-391-0127

    Telephone:
      212-730-0030

    With
      a
      copy to:

    Scion
      LLC

    c/o
      Iconix Brand Group, Inc.

    1450
      Broadway

    New
      York,
      NY 10018

    Attn:
      Neil Cole, CEO

    Telecopy:
      212-391-2057

    Telephone:
      212-730-0030

    

    and
      all
      such other address as the addressee may have specified in a notice duly given
      to
      the sender as provided herein. Such notice, request, demand, waiver, consent,
      approval or other communication will be deemed to have been given as of the
      date
      so delivered.

    

    16.  Borrower
      will pay all reasonable
      expenses of Lender on demand (including, without limitation, search costs,
      audit
      fees, appraisal fees, and the reasonable fees and expenses of legal counsel
      for
      Lender) relating to this Agreement and the Loan Documents, and all related
      agreements and documents, including, without limitation, expenses incurred
      in
      the analysis, negotiation, preparation, closing, administration and enforcement
      of this Agreement and any and all related agreements, instruments and documents,
      the enforcement, protection and defense of the rights of Lender hereunder and
      with respect to the Collateral, and any reasonable expenses relating to
      extensions, amendments, waivers or consents pursuant to the provisions hereof,
      or any related agreements and documents or relating to agreements with other
      creditors, or termination of this Agreement. Any such expenses not paid upon
      demand by Lender shall bear interest at the per annum rate set forth herein
      with
      respect to Loan.

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

    17.  No
      rights
      are intended to be created hereunder, or under any related agreements or
      documents for the benefit of any third party donee, creditor or incidental
      beneficiary of Borrower. Nothing contained in this Agreement shall be construed
      as a delegation to Lender of Borrower’s duty of performance, including, without
      limitation, Borrower’s duties under any account or contract with any other
      person.

     

    18.  Signature
      by pdf or facsimile shall bind the parties hereto.

     

    

    [Signature
      Appears on Following Page]

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

     

    Dated
      as
      of the date and year first set forth above.

    

    
      	 	
              ARTFUL
                HOLDINGS, LLC

              By:
                Scion LLC, its sole Member and
                Manager

              

              

              By:  /s/John
                Meneilly     

              John
                Meneilly

              Manager

            

    

     

    

     

    

    

    

    

    

    [Signature
      Page to Note and Security Agreement]

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