Document:

Exhibit 10.17

 

 

Our Mission: Healthy hearing available to all.

 

June 3, 2020

 

Emmanuel Simons

c/o Akouos, Inc. 

645 Summer Street

Suite 200

Boston, MA 02210

 

Dear Manny:

 

On behalf of Akouos, Inc. (the “Company”), I am pleased to set forth below the terms of your continued employment with the Company, which will take effect as of the closing of the Company’s initial public offering of its common stock (the “IPO”), provided that such IPO takes place on or before December 31, 2020 (the “Effective Date”):

 

1.                        Employment.  You will continue to be employed to serve on a full-time basis as the Company’s President and Chief Executive Officer, responsible for such duties as are consistent with such position, plus such other duties as may from time to time be assigned to you by the Company’s board of directors (the “Board”).  You shall continue to report to the Board, and you agree to devote your full business time, best efforts, skill, knowledge, attention and energies to the advancement of the Company’s business and interests and to the performance of your duties and responsibilities as an employee of the Company.  You agree to abide by the rules, regulations, instructions, personnel practices and policies of the Company and any changes therein that may be adopted from time to time by the Company.

 

2.                        Base Salary.  Commencing on the Effective Date, your base salary will be increased to the rate of $20,833.33 per semi-monthly pay period (which if annualized equals $500,000), to be paid in installments in accordance with the Company’s regular payroll practices.  Such base salary may be adjusted from time to time in accordance with normal business practices and in the sole discretion of the Company.

 

3.                        Discretionary Bonus.  Following the end of each fiscal year and subject to the approval of the Company’s Board of Directors, you may be eligible for an annual  performance bonus, based on your performance and the Company’s performance during the applicable fiscal year, as determined by the Board (or a committee thereof) in its sole discretion.  Upon the Effective Date, your target bonus will be increased to fifty percent (50%) of your annualized base salary.  You must be an active employee of the Company on the date any bonus is distributed in order to be eligible for and to earn a bonus award, as it also serves as an incentive to remain employed by the Company.

 

Akouos, Inc. | 645 Summer Street, Suite 200, Boston, MA 02210 | www.akouos.com

 

 

4.                        Benefits; Expenses.

 

a.              You may continue to participate in any and all benefit programs that the Company establishes and makes available to its employees from time to time, provided that you are eligible under (and subject to all provisions of) the plan documents that govern those programs.  Benefits are subject to change at any time in the Company’s sole discretion.

 

b.              You will be reimbursed for your actual, necessary and reasonable business expenses pursuant to Company policy in effect from time to time, subject to the provisions of Section 3 of Exhibit A attached hereto.

 

5.                        Equity Grant.   Subject to and effective upon the commencement of trading of our Common Stock, $0.0001 par value per share (the “Common Stock”) on the Nasdaq Global Market, pursuant to the terms and provisions of the Company’s 2020 Stock Plan (the “Plan”), you shall be granted an incentive stock option (or to the extent that the applicable provisions of the Internal Revenue Code of 1986, as amended (the “Code”), do not fully permit any of such grants to be treated as an incentive stock option, then the balance in the form of a nonstatutory stock option), to purchase that number of shares of Common Stock equal to 4.34% times the Fully Diluted IPO Shares (as defined below) minus the total number of shares of Common Stock held by you (assuming the exercise of all stock options held by you as of the date hereof), at an exercise price per share equal to the price per share at which the Common Stock is to be sold to the public in the Company’s IPO (such award, the “Option”).  The shares subject to the Option shall commence vesting on the date of grant and vest as to 2.0833% of the shares subject thereto each month thereafter until fully vested on the fourth anniversary of the date of grant, and such Option shall otherwise have the terms set forth in the Plan and the form of stock option agreement approved by the Board.  The number of shares subject to the Option are subject to adjustment in the event of any stock split, combination, stock dividend or other recapitalization or reclassification effected following the date hereof. You will be eligible to receive additional equity awards, if any, at such times and on such terms and conditions as the Board shall, in its sole discretion, determine.  “Fully Diluted IPO Shares” means 421,074,685 (as adjusted for any stock split, combination, stock dividend or other recapitalization or reclassification effected following the date hereof) plus the total number of shares of Common Stock sold to the underwriters pursuant to the underwriting agreement executed in connection with the IPO (and excluding any shares issued or issuable to the underwriters upon exercise of any over-allotment option contemplated by the underwriting agreement).

 

6.                        Paid Time Off.  You will continue to be eligible for paid time off pursuant to Company policy, as established and as may be modified in the sole discretion of the Company from time to time.

 

 

7.                        Invention, Non-Disclosure, Non-Competition and Non-Solicitation Obligations.   In exchange for your continued employment with the Company pursuant to the terms and conditions herein, you hereby acknowledge and reaffirm your obligations set forth in the enclosed Proprietary Information and Inventions Agreement dated November 23, 2016 (the “PIIA”) you previously executed for the benefit of the Company, which remains in full force and effect; provided, however, that Section 4 of the PIIA shall be superseded by the terms of the enclosed Non-Competition and Non-Solicitation Agreement, which you agree to execute on the later of the Effective Date or the eleventh day following your receipt of the Non-Competition and Non-Solicitation Agreement and which you agree to adhere to.  By executing this letter agreement, you acknowledge that your eligibility for the grant of equity set forth in Section 5 of this letter agreement and to receive severance in accordance with Section 10 of this letter agreement is contingent upon your agreement to the non-competition provisions set forth in the Non-Competition and Non-Solicitation Agreement.  You further acknowledge that such consideration was mutually agreed upon by you and the Company and is fair and reasonable in exchange for your compliance with such non-competition obligations and that you were provided at least ten (10) business days to review the Non-Competition and Non-Solicitation Agreement.

 

8.                        At-Will Employment.  This letter agreement shall not be construed as an agreement, either express or implied, to employ you for any stated term, and shall in no way alter the Company’s policy of employment at-will, under which both the Company and you remain free to end the employment relationship for any reason, at any time, with or without cause or notice.  Similarly, nothing in this letter agreement shall be construed as an agreement, either express or implied, to pay you any compensation or grant you any benefit beyond the end of your employment with the Company, except as otherwise explicitly set forth herein.  As of the Effective Date, this letter agreement supersedes all prior understandings, whether written or oral, relating to the terms of your employment, including, without limitation, the Employment Agreement by and between you and the Company dated as of July 17, 2018; provided, however, that the PIIA remains in full force and effect, except as specifically modified by Section 7 above.  For the avoidance of doubt, in the event that the IPO does not take place on or before December 31, 2020, this letter agreement will not become effective and the Employment Agreement by and between you and the Company dated as of July 17, 2018, as well as the PIIA, will remain in full force and effect.

 

9.                        Termination of Employment.  You or the Company may terminate your employment at any time for any reason, with or without cause, subject to the following provisions:

 

a.              Termination for Cause:  The Company may terminate your employment for Cause, as defined below, upon written notice to you setting forth in reasonable detail the nature of the Cause.  For purposes of this letter agreement “Cause” shall mean (i) your failure (except where due to Disability (as defined below), neglect, or refusal to perform in any material respect your duties and responsibilities, (ii) any act of yours that has, or could reasonably be expected to have, the effect of

 

 

injuring the business of the Company or its affiliates in any material respect, (iii) your commission of: (x) a felony or (y) any other criminal charge involving deceit, dishonesty or fraud or that has, or could be reasonably expected to have, an adverse impact on the performance of your duties to the Company or otherwise result in material injury to the reputation or business of the Company, (iv) your commission of an act of fraud or embezzlement against the Company, or any other act that creates or reasonably could create negative or adverse publicity for the Company; (v) any violation by you of the policies of the Company, including but not limited to those relating to sexual harassment or business conduct, and those otherwise set forth in the manuals or statements of policy of the Company, (vi) your violation of federal or state securities laws, or (vii) your breach of this letter agreement, the PIAA or the Non-Competition and Non-Solicitation Agreement, provided, that any breach of your obligations under the PIAA shall only be deemed to constitute “Cause” for purposes of this definition if such breach materially and adversely impacts the Company.  Termination of your employment by the Company for Cause will result in no severance pay or benefits hereunder.

 

b.              Termination without Cause:  The Company may terminate your employment at any time other than for Cause upon written notice to you.

 

c.               Termination for Good Reason:  You may terminate your employment hereunder for Good Reason, as defined below, by providing written notice to the Company of the condition giving rise to the Good Reason, specifying in reasonable detail the basis for such claim of Good Reason, no later than sixty (60) days following the occurrence of the condition, by giving the Company thirty (30) days to remedy the condition and by terminating employment for Good Reason within thirty (30) days thereafter if the Company fails to remedy the condition.  The following, if occurring without your consent, shall constitute “Good Reason” for termination by you: (i) a material diminution or your duties, or responsibilities, (ii) a material reduction in your then-current base salary (other than pursuant to an across-the-board reduction applicable to all similarly situated executives), (iii) the relocation of your principal place of employment more than fifty (50) miles from its current location, or (iv) any other material breach of a provision of this letter agreement by the Company (other than a provision that is covered by clause (i), (ii), or (iii) above). You acknowledge and agree that your exclusive remedy in the event of any breach of this letter agreement shall be to assert Good Reason pursuant to the terms and conditions of this letter agreement. Notwithstanding the foregoing, during the term of your employment, in the event that the Company reasonably believes that you may have engaged in conduct that could constitute Cause hereunder, the Company may, in its sole and absolute discretion, suspend you from performing your duties hereunder, and in no event shall any such suspension constitute an event pursuant to which you may terminate employment with Good Reason or otherwise constitute a breach hereunder; provided, that no

 

 

such suspension shall alter the Company’s obligations under this letter agreement during such period of suspension.

 

d.              Termination without Good Reason:  You may terminate your employment with the Company other than for Good Reason at any time subject to your provision of thirty (30) days’ advance written notice to the Company (the “Applicable Notice Period”), provided, however, that the Company may, in its sole discretion, in lieu of all or part of the Applicable Notice Period, pay you an amount equal to the base salary that would otherwise have been payable to you had you remained employed for the duration of the Applicable Notice Period.  In such instance, your termination will become effective on the date set forth in a written notice of termination to be provided by the Company (the “Early Termination Date”), and you will be paid an amount equal to the base salary you would have received had you remained employed by the Company between the Early Termination Date and the end of the Applicable Notice Period (the “Early Termination Payment”), with the Early Termination Payment to be made no later than the 30th day following the end of the Applicable Notice Period.  For the avoidance of doubt, except for the Early Termination Payment, you will not be entitled to receive any severance pay or benefits.

 

e.               Termination Due to Death or Disability:   Your employment shall automatically terminate in the event of your death during employment.  The Company may terminate your employment, upon notice to you, in the event of your Disability.  For purposes of this letter agreement, “Disability” shall mean any physical or mental disability or infirmity of yours that prevents your performance of your duties (or is expected to a reasonable degree of medical certainty to prevent your performance of your duties) for a period of (i) ninety (90) consecutive days or (ii) one hundred twenty (120) non-consecutive days during any twelve (12) month period, notwithstanding any reasonable accommodation(s), as that term is defined by applicable state and federal law.  Any question as to the existence, extent or potentiality of your Disability upon which you and the Company cannot agree will be determined by a qualified, independent physician selected by the Company and approved by you (which approval shall not be unreasonably withheld).  The determination of any such physician shall be final and conclusive for all purposes of this letter agreement.

 

10.                 Severance and other Matters Related to Termination; Change of Control:

 

a.              Termination by the Company without Cause or by You for Good Reason: Subject to Sections 10(b), 10(d) and 11(b) below and Exhibit A attached hereto, in the event that your employment is terminated by the Company without Cause pursuant to Section 9(b) of this letter agreement or by you for Good Reason pursuant to Section 9(c) of this letter agreement, in either case prior to or more than twelve (12) months following a Change in Control, in addition to the

 

 

Accrued Compensation (as defined below), the Company shall provide you with the severance payments and benefits specified below:

 

(i) the Company shall pay you an amount equal to your annualized base salary, at the rate then in effect and payable in equal installments in accordance with the Company’s regular payroll practices as then in effect, for a period of twelve (12) months commencing at the time set forth in Section 10(e) hereof (the “Severance Period”);

 

(ii)   the Company shall pay you in one lump sum at the time set forth in Section 10(e) hereof,  a pro-rata amount of your target annual bonus for the year in which your termination occurs, calculated by multiplying your target annual bonus for such year by a fraction, the numerator of which is the number of days you were employed during such year and the denominator of which is 365; and

 

(iii)  subject to your eligibility for and timely election to continue participation in the Company’s group health and dental plans under COBRA or Massachusetts law and to your copayment of premium amounts at the active employees’ rate, and only for so long as you are eligible for such coverage through COBRA or Massachusetts law, the Company shall continue to pay the employer portion of the premiums for the Company’s group health and dental program for you in order to allow you to continue to participate in the Company’s group health and dental program for twelve (12) months following the date of your termination of employment, or, if earlier, until the date you become eligible to enroll in such plans of any new employer, unless the Company’s provision of such payments would violate the nondiscrimination requirements of applicable law, in which case this benefit will not apply.

 

b.              Termination by the Company without Cause or by You for Good Reason in Connection with a Change of Control:  Subject to Sections 10(d) and 11(b)  below and Exhibit A attached hereto, in the event that your employment is terminated by the Company without Cause pursuant to Section 9(b) of this letter agreement or by you for Good Reason pursuant to Section 9(c) of this letter agreement, in either case within twelve (12) months following a Change of Control (as defined below), in addition to the Accrued Compensation, in lieu of any payments and benefits provided in Section 10(a) above, the Company shall provide you with the severance payments and benefits specified below:

 

(i) the Company shall pay you in one lump sum, at the time set forth in Section 10(e) hereof, an amount equal to the sum of (A) your annualized base salary, at the rate then in effect, and (B) your target annual bonus for the year in which your termination of employment occurs; and

 

(ii)   subject to your eligibility for and timely election to continue participation in the Company’s group health and dental plans under COBRA and your copayment of premium amounts at the active employees’ rate, and only for so long as you are eligible for such coverage through COBRA (or Massachusetts laws), the Company shall continue

 

 

to pay, the employer portion of the premiums for the Company’s group health and dental program for you in order to allow you to continue to participate in the Company’s group health and dental program for twelve (12) months following the date of your termination of employment, or, if earlier, until the date you become eligible to enroll in such plans of any new employer, unless the Company’s provision of such payments would violate the nondiscrimination requirements of applicable law, in which case this benefit will not apply; and

 

(iii)  all outstanding and unvested stock options and other equity awards that vest based solely on the passage of time then held by you shall become fully vested and exercisable and, with respect to any stock options then held by you, those options shall remain exercisable for the period of time set forth in the applicable grant agreement.

 

c.               Any Other Termination:  In the event your employment with the Company terminates for any reason other than by the Company without Cause pursuant to Section 9(b) of this letter agreement, or by you for Good Reason pursuant to Section 9(c) of this letter agreement, the Company shall pay you the Accrued Compensation.  For purposes of this letter agreement, “Accrued Compensation” means (i) any base salary earned but not paid through the date of the termination of employment and to the extent consistent with general Company policy, accrued but unused paid time off through and including the effective date of such termination, to be paid in accordance with the Company’s regular payroll procedure and applicable law but no later than the next regularly scheduled pay period, (ii) unreimbursed business expenses for which expenses you have timely submitted appropriate documentation in accordance with Company policy, and (iii) any amounts or benefits to which you are then entitled under the terms of the benefit plans then-sponsored by the Company in accordance with their terms (and not accelerated to the extent acceleration does not satisfy Section 409A of the Code).

 

d.              Release:  Any obligation of the Company to provide the severance payments or other benefits (including accelerated vesting of stock options and other equity awards) described in this Section 10 (for the avoidance of doubt, other than Accrued Compensation), is conditioned on your execution of a separation and release of claims agreement in the form provided by the Company (which will include, at a minimum, a release of all releasable claims, non-disparagement and cooperation obligations, a reaffirmation of your continuing obligations under the PIIA and Non-Competition and Non-Solicitation Agreement, and an agreement not to compete with the Company for twelve (12) months following your separation from employment) (the “Release”), which Release must become irrevocable within sixty (60) days following the date of such termination of employment (or such shorter period as may be directed by the Company). The Release shall not require you to release (i) claims for indemnification in your capacity as an officer or director of the Company under the Company’s Certificate of Incorporation, Bylaws, insurance or other written agreements, if any, providing

 

 

for director or officer indemnification, (ii) rights to receive insurance payments under any policy maintained by the Company, (iii) vested rights as an equity holder or option holder, (iv) rights to receive retirement and other benefits that are accrued and fully vested at the time of your termination, and (v) any other claims that cannot be released as a matter of law.  Subject to the terms of Exhibit A, any payments to be made either in a lump sum or in the form of salary continuation pursuant to the terms of this letter agreement shall be payable in accordance with the normal payroll practices of the Company, with such payment or, as may be applicable, the first such payment (which shall be retroactive to the day immediately following the date of your termination of employment) due and payable in the first regular payroll following the date the Release becomes effective.  Notwithstanding the foregoing, if the date your employment terminates occurs in one taxable year and the date that is sixty (60) days following such termination date occurs in a second taxable year, to the extent required by Section 409A, such payment or, as may be applicable, first payment shall not be made prior to the first regular payroll of the second taxable year.  For the avoidance of doubt, if you do not execute a Release within the period specified in this Section 10(d), or if you revoke the executed Release within the time period permitted by law, you will not be entitled to any payments or benefits (including the accelerated vesting of stock options or other equity awards) set forth herein (other than the Accrued Compensation), any stock options and other equity awards that vested on account of such termination as provided for in this letter agreement shall be cancelled with no consideration due to you, and the Company will not have any further obligations to you under this letter agreement or otherwise.  You agree that, should you become eligible to participate in the health and, if applicable, dental, plan of any subsequent employer while the Company is making payments to you pursuant to Section 10(a)(iii) or Section 10(b)(iii), as may be applicable, you will provide the Company with written notice thereof within five (5) business days of such eligibility.

 

e.               Survival, Conditions to Severance:  Provisions of this letter agreement shall survive any termination if so provided in this letter agreement or if necessary or desirable to accomplish the purposes of other surviving provisions of the letter agreement, the PIIA, the Non-Competition and Non-Solicitation Agreement, and the Release.  The obligation of the Company to make severance payments to you or on your behalf is expressly conditioned upon (i) your full performance, and continued performance during any applicable severance periods, of your material obligations under this letter agreement, the PIIA, the Non-Competition and Non-Solicitation Agreement, the Release, and any subsequent agreement between you and the Company relating to, without limitation, confidentiality, non-competition, proprietary information or the like, and (ii) your execution and non-revocation of the Release as set forth above.

 

f.                Definition of Change of Control:  For purposes of this letter agreement, “Change of Control” shall mean the occurrence of any of the following events,

 

 

provided that such event or occurrence constitutes a change in the ownership or effective control of the Company, or a change in the ownership of a substantial portion of the assets of the Company, as defined in Treasury Regulation §§ 1.409A-3(i)(5)(v), (vi) and (vii): (i) the acquisition by an individual, entity or group (within the meaning of Section 13(d)(3) or 14(d)(2) of the Securities Exchange Act of 1934, as amended (the “Exchange Act”)) (a “Person”) of beneficial ownership of any capital stock of the Company if, after such acquisition, such Person beneficially owns (within the meaning of Rule 13d-3 under the Exchange Act) fifty percent (50%) or more of either (x) the then-outstanding shares of common stock of the Company (the “Outstanding Company Common Stock”) or (y) the combined voting power of the then-outstanding securities of the Company entitled to vote generally in the election of directors (the “Outstanding Company Voting Securities”); provided, however, that for purposes of this subsection (i), the following acquisitions shall not constitute a Change in Control: (1) any acquisition directly from the Company or (2) any acquisition by any entity pursuant to a Business Combination (as defined below) which complies with clauses (x) and (y) of subsection (iii) of this definition; or (ii) a change in the composition of the Board that results in the Continuing Directors (as defined below) no longer constituting a majority of the Board (or, if applicable, the Board of Directors of a successor corporation to the Company), where the term “Continuing Director” means at any date a member of the Board (x) who was a member of the Board on the Effective Date or (y) who was nominated or elected subsequent to such date by at least a majority of the directors who were Continuing Directors at the time of such nomination or election or whose election to the Board was recommended or endorsed by at least a majority of the directors who were Continuing Directors at the time of such nomination or election; provided, however, that there shall be excluded from this clause (y) any individual whose initial assumption of office occurred as a result of an actual or threatened election contest with respect to the election or removal of directors or other actual or threatened solicitation of proxies or consents, by or on behalf of a person other than the Board; or (iii) the consummation of a merger, consolidation, reorganization, recapitalization or share exchange involving the Company, or a sale or other disposition of all or substantially all of the assets of the Company (a “Business Combination”), unless, immediately following such Business Combination, each of the following two (2) conditions is satisfied: (x) all or substantially all of the individuals and entities who were the beneficial owners of the Outstanding Company Common Stock and Outstanding Company Voting Securities immediately prior to such Business Combination beneficially own, directly or indirectly, more than fifty percent (50%) of the then-outstanding shares of common stock and the combined voting power of the then-outstanding securities entitled to vote generally in the election of directors, respectively, of the resulting or acquiring corporation in such Business Combination (which shall include, without limitation, a corporation which as a result of such transaction owns the Company or substantially all of the Company’s assets either directly or

 

 

through one (1) or more subsidiaries) (such resulting or acquiring corporation is referred to herein as the “Acquiring Corporation”) in substantially the same proportions as their ownership of the Outstanding Company Common Stock and Outstanding Company Voting Securities, respectively, immediately prior to such Business Combination and (y) no Person (excluding any employee benefit plan (or related trust) maintained or sponsored by the Company or by the Acquiring Corporation) beneficially owns, directly or indirectly, fifty percent (50%) or more of the then-outstanding shares of common stock of the Acquiring Corporation, or of the combined voting power of the then-outstanding securities of such corporation entitled to vote generally in the election of directors (except to the extent that such ownership existed prior to the Business Combination); or (iv) the liquidation or dissolution of the Company.

 

11.                 Taxes.

 

a.              Withholding.  All compensation payable to you shall be subject to all applicable taxes and withholding.

 

b.              Section 280G.

 

i.      Notwithstanding any other provision of this letter agreement, except as set forth in Section 11(b)(ii), in the event that the Company undergoes a “Change in Ownership or Control” (as defined below), the Company shall not be obligated to provide to you a portion of any “Contingent Compensation Payments” (as defined below) that you would otherwise be entitled to receive to the extent necessary to eliminate any “excess parachute payments” (as defined in Code Section 280G(b)(1)) for you.  For purposes of this Section 11(b), the Contingent Compensation Payments so eliminated shall be referred to as the “Eliminated Payments” and the aggregate amount (determined in accordance with Treasury Regulation Section 1.280G-1, Q/A-30 or any successor provision) of the Contingent Compensation Payments so eliminated shall be referred to as the “Eliminated Amount.”

 

ii.  Notwithstanding the provisions of 11(b)(i), no such reduction in Contingent Compensation Payments shall be made if (i) the Eliminated Amount (computed without regard to this sentence) exceeds (ii) 100% of the aggregate present value (determined in accordance with Treasury Regulation Section 1.280G-1, Q/A-31 and Q/A-32 or any successor provisions) of the amount of any additional taxes that would be incurred by you if the Eliminated Payments (determined without regard to this sentence) were paid to you (including, state and federal income taxes on the Eliminated Payments, the excise tax imposed by Section 4999 of the Code payable with respect to all of the Contingent Compensation Payments in excess of your “base amount” (as defined in Section 280G(b)(3) of the Code), and any withholding taxes).  The override of such reduction in Contingent Compensation Payments pursuant to this Section 11(b)(ii) shall be referred to as a “Section 11(b)(ii) Override.” 

 

 

For purposes of this paragraph, if any federal or state income taxes would be attributable to the receipt of any Eliminated Payment, the amount of such taxes shall be computed by multiplying the amount of the Eliminated Payment by the maximum combined federal and state income tax rate provided by law.

 

iii.     For purposes of this Section 11(b) the following terms shall have the following respective meanings:

 

(A) “Change in Ownership or Control” shall mean a change in the ownership or effective control of the Company or in the ownership of a substantial portion of the assets of the Company determined in accordance with Section 280G(b)(2) of the Code.

 

(B) “Contingent Compensation Payment” shall mean any payment (or benefit) in the nature of compensation that is made or made available (under this letter agreement or otherwise) to a “disqualified individual” (as defined in Section 280G(c) of the Code) and that is contingent (within the meaning of Section 280G(b)(2)(A)(i) of the Code) on a Change in Ownership or Control of the Company.

 

iv.     Any payments or other benefits otherwise due to you following a Change in Ownership or Control that could reasonably be characterized (as determined by the Company) as Contingent Compensation Payments (the “Potential Payments”) shall not be made until the dates provided for in this Section 11(b)(iv).  Within 30 days after each date on which you first become entitled to receive (whether or not then due) a Contingent Compensation Payment relating to such Change in Ownership or Control, the Company shall determine and notify you (with reasonable detail regarding the basis for its determinations) (i) which Potential Payments constitute Contingent Compensation Payments, (ii) the Eliminated Amount and (iii) whether the Section 11(b)(ii) Override is applicable.  Within 30 days after delivery of such notice to you, you shall deliver a response to the Company (the “Executive Response”) stating either (A) that you agree with the Company’s determination pursuant to the preceding sentence, or (B) that you disagree with such determination, in which case you shall set forth (i) which Potential Payments should be characterized as Contingent Compensation Payments, (ii) the Eliminated Amount, and (iii) whether the Section 11(b)(ii) Override is applicable.  In the event that you fail to deliver an Executive Response on or before the required date, the Company’s initial determination shall be final.  If and to the extent that any Contingent Compensation Payments are required to be treated as Eliminated Payments pursuant to this Section 11(b), then the payments shall be reduced or eliminated, as determined by the Company, in the following order: (i) any cash payments, (ii) any taxable benefits, (iii) any nontaxable benefits, and (iv) any vesting of equity awards in each case in reverse order beginning with payments or benefits that are to be paid the farthest in time from the date that triggers the applicability of the excise tax, to the extent necessary to maximize the Eliminated Payments.  If you state in the Executive Response that you agree with the Company’s determination, the 

 

 

Company shall make the Potential Payments to you within three business days following delivery to the Company of the Executive Response (except for any Potential Payments which are not due to be made until after such date, which Potential Payments shall be made on the date on which they are due).  If you state in the Executive Response that you disagree with the Company’s determination, then, for a period of 60 days following delivery of the Executive Response, you and the Company shall use good faith efforts to resolve such dispute.  If such dispute is not resolved within such 60-day period, such dispute shall be settled exclusively by arbitration in the Commonwealth of Massachusetts, in accordance with the rules of the American Arbitration Association then in effect.  Judgment may be entered on the arbitrator’s award in any court having jurisdiction.  The Company shall, within three business days following delivery to the Company of the Executive Response, make to you those Potential Payments as to which there is no dispute between the Company and you regarding whether they should be made (except for any such Potential Payments which are not due to be made until after such date, which Potential Payments shall be made on the date on which they are due).  The balance of the Potential Payments shall be made within three business days following the resolution of such dispute.  Subject to the limitations contained in Sections 11(b)(i) and 11(b)(ii) hereof, the amount of any payments to be made to you following the resolution of such dispute shall be increased by the amount of the accrued interest thereon computed at the prime rate announced from time to time by The Wall Street Journal, compounded monthly from the date that such payments originally were due.

 

The provisions of this Section 11(b) are intended to apply to any and all payments or benefits available to you under this letter agreement or any other agreement or plan of the Company under which you may receive Contingent Compensation Payments.

 

12.                 Notices.  Any notice delivered under this letter agreement shall be deemed duly delivered three (3) business days after it is sent by registered or certified mail, return receipt requested, postage prepaid, or one business day after it is sent for next-business day delivery via a reputable nationwide overnight courier service, to the Company at its principal headquarters and to you at the address most recently shown on the personnel records of the Company.  Either party may change the address to which notices are to be delivered by giving notice of such change to the other party in the manner set forth in this Section 12.

 

13.                 Pronouns.  Whenever the context may require, any pronouns used in this letter agreement shall include the corresponding masculine, feminine or neuter forms, and the singular forms of nouns and pronouns shall include the plural, and vice versa.

 

14.                 Amendment.  This letter agreement may be amended or modified only by a written instrument executed by both the Company and you and approved by the Board.

 

 

15.                 Governing Law and Jurisdiction.  This letter agreement shall be governed by and construed in accordance with the laws of the Commonwealth of Massachusetts (without reference to the conflicts of laws provisions thereof).  Any action, suit or other legal proceeding arising under or relating to any provision of this letter agreement shall be commenced only in a court of the Commonwealth of Massachusetts (or, if appropriate, a federal court located within the Commonwealth of Massachusetts), and you and the Company each consent to the jurisdiction of such a court.

 

16.                 Successors and Assigns.  This letter agreement shall be binding upon and inure to the benefit of both parties and their respective successors and assigns, including any corporation with which, or into which, the Company may be merged or which may succeed to the Company’s assets or business, provided, however, that your obligations are personal and shall not be assigned by you.

 

17.                 Waivers.  No delay or omission by the Company in exercising any right under this letter agreement shall operate as a waiver of that or any other right.  A waiver or consent given by the Company on any one occasion shall be effective only in that instance and shall not be construed as a bar to or waiver of any right on any other occasion.

 

18.                 Captions.  The captions of the sections of this letter agreement are for convenience of reference only and in no way define, limit or affect the scope or substance of any section of this letter agreement.

 

19.                 Severability.  In case any provision of this letter agreement shall be invalid, illegal or otherwise unenforceable, the validity, legality and enforceability of the remaining provisions shall in no way be affected or impaired thereby.

 

If this letter agreement correctly sets forth the terms under which you will continue to be employed by the Company, please sign and return to me, no later than June 5, 2020, the enclosed duplicate of this letter and please retain the Non-Competition and Non-Solicitation Agreement to sign and return in accordance with Section 7.

 

	
 
    	
Sincerely,
    
	
 
    	
 
    
	
 
    	
By:
    	
/s/ Edward Mathers
    
	
 
    	
 
    	
Edward   T. Mathers, Director
    

 

 

The foregoing correctly sets forth the terms of my continued at-will employment with Akouos, Inc. that will take effect on the Effective Date.  I am not relying on any representations other than those set forth above.

 

	
/s/ Emmanuel John Simons
    	
 
    	
6/5/2020
    
	
Emmanuel Simons
    	
 
    	
Date
    

 

 

EXHIBIT A

 

Payments Subject to Section 409A

 

1. Subject to this Exhibit A, any severance payments that may be due under the letter agreement shall begin only upon the date of your “separation from service” (determined as set forth below) which occurs on or after the termination of your employment.  The following rules shall apply with respect to distribution of the severance payments, if any, to be provided to you under the letter agreement, as applicable:

 

(a)   It is intended that each installment of the severance payments provided under the letter agreement shall be treated as a separate “payment” for purposes of Section 409A of the Internal Revenue Code (“Section 409A”).  Neither the Company nor you shall have the right to accelerate or defer the delivery of any such payments except to the extent specifically permitted or required by Section 409A.

 

(b)   If, as of the date of your “separation from service” from the Company, you are not a “specified employee” (within the meaning of Section 409A), then each installment of the severance payments shall be made on the dates and terms set forth in the letter agreement.

 

(c)   If, as of the date of your “separation from service” from the Company, you are a “specified employee” (within the meaning of Section 409A), then:

 

(i)             Each installment of the severance payments due under the letter agreement that, in accordance with the dates and terms set forth herein, will in all circumstances, regardless of when your separation from service occurs, be paid within the short-term deferral period (as defined under Section 409A) shall be treated as a short-term deferral within the meaning of Treasury Regulation Section 1.409A-1(b)(4) to the maximum extent permissible under Section 409A and shall be paid on the dates and terms set forth in the Agreement; and

 

(ii)          Each installment of the severance payments due under the letter agreement that is not described in this Exhibit A, Section 1(c)(i) and that would, absent this subsection, be paid within the six-month period following your “separation from service” from the Company shall not be paid until the date that is six months and one day after such separation from service (or, if earlier, as soon as practicable following your death), with any such installments that are required to be delayed being accumulated during the six-month period and paid in a lump sum on the date that is six months and one day following your separation from service and any subsequent installments, if any, being paid in accordance with the dates and terms set forth herein; 

 

 

provided, however, that the preceding provisions of this sentence shall not apply to any installment of payments if and to the maximum extent that that such installment is deemed to be paid under a separation pay plan that does not provide for a deferral of compensation by reason of the application of Treasury Regulation 1.409A-1(b)(9)(iii) (relating to separation pay upon an involuntary separation from service).  Any installments that qualify for the exception under Treasury Regulation Section 1.409A-1(b)(9)(iii) must be paid no later than the last day of your second taxable year following the taxable year in which the separation from service occurs.

 

2. The determination of whether and when your separation from service from the Company has occurred shall be made and in a manner consistent with, and based on the presumptions set forth in, Treasury Regulation Section 1.409A-1(h).  Solely for purposes of Section 2 of this Exhibit A, “Company” shall include all persons with whom the Company would be considered a single employer under Section 414(b) and 414(c) of the Code.

 

3. All reimbursements and in-kind benefits provided under the letter agreement shall be made or provided in accordance with the requirements of Section 409A to the extent that such reimbursements or in-kind benefits are subject to Section 409A, including, where applicable, the requirements that (i) any reimbursement is for expenses incurred during your lifetime (or during a shorter period of time specified in the letter agreement), (ii) the amount of expenses eligible for reimbursement during a calendar year may not affect the expenses eligible for reimbursement in any other calendar year, (iii) the reimbursement of an eligible expense will be made on or before the last day of the calendar year following the year in which the expense is incurred and (iv) the right to reimbursement is not subject to set off or liquidation or exchange for any other benefit.

 

4. The Company makes no representation or warranty and shall have no liability to you or to any other person if any of the provisions of the letter agreement (including this Exhibit A) are determined to constitute deferred compensation subject to Section 409A but that do not satisfy an exemption from, or the conditions of, that section.

 

5. The letter agreement is intended to comply with, or be exempt from, Section 409A and shall be interpreted accordingly.

 

[Remainder of page intentionally left blank.]Exhibit 10.1

 

Execution

 

AMENDMENT NO. 2 TO FOURTH AMENDED

AND RESTATED LOAN AND SECURITY AGREEMENT

 

AMENDMENT NO. 2 TO
FOURTH AMENDED AND RESTATED LOAN AND SECURITY AGREEMENT, dated as of June 3, 2020 (this “Amendment No. 2”),
is entered into by and among Lerner New York, Inc., a Delaware corporation (“Lerner”),
Lernco, Inc., a Delaware corporation (“Lernco”), Lerner
New York Outlet, LLC, a Massachusetts limited liability company (“Lerner Outlet”), Lerner
New York FTF, LLC, a Delaware limited liability company (“Lerner FTF”, and together with Lerner, Lernco
and Lerner Outlet, collectively, “Borrowers” and individually each a “Borrower”), RTW
Retailwinds, Inc., a Delaware corporation (“RTW”), Lerner New
York Holding, Inc., a Delaware corporation (“Parent”), New York
 & Company Stores, Inc., a New York corporation (“NY & Co Stores”), Lerner
New York GC, LLC, an Ohio limited liability company (“Lerner GC”), and FTF GC, LLC, an Ohio limited
liability company (“FTF”, and together with RTW, Parent, NY &Co Stores and Lerner GC, collectively, “Guarantors”
and each a “Guarantor”), Wells Fargo Bank, National Association,
in its capacity as administrative and collateral agent (in such capacity, “Agent”) pursuant to the Loan Agreement
(as hereinafter defined) acting for and on behalf of the financial institutions which are parties to the Loan Agreement as lenders
(individually, each a “Lender” and collectively, “Lenders”).

 

W I T N E S S E T H:

 

WHEREAS,
Agent, Lenders, Borrowers and Guarantors are parties to financing arrangements pursuant to which Lenders (or Agent on behalf of
Lenders) have made and may make loans and advances and provide other financial accommodations to Borrowers as set forth in the
Fourth Amended and Restated Loan and Security Agreement, dated October 24, 2014, as amended (as the same now exists and is amended
and supplemented pursuant hereto and may hereafter be further amended, modified, supplemented, extended, renewed, restated or
replaced, the “Loan Agreement”) and together with all agreements, documents and instruments at any time executed
and/or delivered in connection therewith or related thereto (as may from time to time be amended, modified, supplemented, extended,
renewed, restated, or replaced, collectively, the “Financing Agreements”);

 

WHEREAS,
Agent has become aware that certain Events of Default, as described on Exhibit A attached hereto, have occurred and are
continuing as of the date hereof (such Event of Default being collectively referred to herein as the “Existing Defaults”);

 

WHEREAS,
as a result of the Existing Defaults, and in accordance with the terms of the Loan Agreement and applicable law, the Agent and
the Lenders may, among other things, (i) declare all or any portion of the unpaid principal amount of the loans, and all other
amounts owing or payable thereunder or under any other Financing Agreement, to be immediately due and payable, (ii) continue to
charge the Default Rate, (iii) terminate any then outstanding commitments to lend to the Borrowers, without presentment, demand,
protest or other notice of any kind, and (iv) exercise on behalf of itself and the Lenders all rights and remedies available to
it and the Lenders thereunder or under any other Financing Agreement, at law or equity;

 

WHEREAS,
notwithstanding the foregoing, the Borrowers have requested that the Agent and the Lenders agree to forbear temporarily from exercising
their rights and remedies against the Borrowers based upon the Existing Defaults, and the Agent and the Lenders are willing to
do so, but only to the extent, and on the terms and conditions, expressly set forth herein;

 

    

     

    

 

WHEREAS, Borrowers
and Guarantors have also requested that Agent and Lenders agree to amend certain terms and conditions of the Loan Agreement as
set forth in this Amendment No. 2;

 

NOW THEREFORE, in
consideration of the foregoing and the mutual agreements and covenants contained herein, and other good and valuable consideration,
the receipt and sufficiency of which are hereby acknowledged, the parties hereto agree as follows:

 

1.          Definitions.
For purposes of this Amendment No. 2, unless otherwise defined herein, all capitalized terms used herein which are defined in
the Loan Agreement shall have the meanings given to such terms in the Loan Agreement.

 

2.          Amendments
to Loan Agreement. As of the Amendment No. 2 Effective Date, the Loan Agreement is amended as follows:

 

(a)              Section
1.1. Section 1.1 of the Loan Agreement is amended by the addition, in alphabetical order, or the amendment and restatement,
as applicable, of the following definitions to read in their entirety as follows:

 

“Amendment
No. 2” means Amendment No. 2 to Fourth Amended and Restated Loan and Security Agreement, dated as of June 3, 2020, among
Agent, Lenders, Borrowers and Guarantors, as may be amended, modified, supplemented, extended, renewed, restated or replaced.

 

“Amendment
No. 2 Effective Date” means the date on which all of the conditions precedent to the effectiveness of Amendment No.
2 shall have been satisfied or shall have been waived by Agent in writing.

 

“Applicable
LC Margin” means at any time as to the Letter of Credit Rate for documentary Letters of Credit and the Letter of Credit
Rate for standby Letters of Credit, the applicable percentages (on a per annum basis) as follows: (a) 2.50% for Standby Letters
of Credit; and (b) 1.25% for Documentary Letters of Credit.

 

“Applicable
Margin” means, at any time, as to the Interest Rate for Base Rate Loans and the Interest Rate for LIBOR Rate Loans,
the applicable percentages (on a per annum basis) as follows: (a) 2.50% for LIBOR Rate Loans (the “LIBOR Rate Margin”)
and (b) 1.50% for Base Rate Loans (the “Base Rate Margin”).

 

“Benchmark
Replacement” means the sum of: (a) the alternate benchmark rate that has been selected by Agent and Borrowers giving
due consideration to (i) any selection or recommendation of a replacement rate or the mechanism for determining such a rate by
the Relevant Governmental Body or (ii) any evolving or then-prevailing market convention for determining a rate of interest as
a replacement to LIBOR for US Dollar-denominated syndicated credit facilities and (b) the Benchmark Replacement Adjustment; provided,
that, if the Benchmark Replacement as so determined would be less than 0.50%, the Benchmark Replacement will be deemed to be 0.50%
for the purposes of this Agreement.

 

“Borrowing
Base” means, at any time, the amount equal to:

 

(a)               the
sum of:

 

    -2-

     

    

 

(i)        the
lesser of (A) the sum of (1) ninety percent (90%) of the Net Amount of Eligible Sell-Off Vendors Receivables of Borrowers, plus
(2) ninety percent (90%) of the Net Amount of Eligible Damaged Goods Vendors Receivables of Borrowers, and (B) $3,500,000, plus

 

(ii)       ninety
percent (90%) of the Net Amount of the Eligible Credit Card Receivables of Borrowers other than PayPal Receivables, plus

 

(iii)      the
lesser of (A) ninety percent (90%) of the Net Amount of Eligible Credit Card Receivables of Borrowers consisting of PayPal Receivables
and (B) $500,000, plus

 

(iv)      ninety
percent (90%) of the Net Recovery Percentage multiplied by the Value of the Eligible Landed Inventory of Borrowers, plus

 

(v)       the
lesser of (A) the sum of (1) ninety percent (90%) of the Net Recovery Percentage multiplied by the Landed Value of Eligible
In-Transit Inventory of Borrowers plus (2) ninety percent (90%) of the Net Recovery Percentage multiplied by the Landed Value
of Eligible In-Transit LC Inventory of Borrowers, and (B) the amount equal to the lesser of (1) fifteen percent (15%) of the Borrowing
Base and (2) $5,000,000, plus

 

(vi)      one
hundred percent (100%) of Eligible Cash Collateral; minus,

 

(b)       the
Reserves and the Bank Product Reserves.

 

Agent shall have the right to
revise the advance rates in, establish Reserves against or sublimits in the Borrowing Base in such amounts and with respect to
such matters as Agent in its good faith discretion shall deem necessary or appropriate, at all times and after Agent has completed
its updated field audits, examinations and appraisals of the Collateral; provided, that, (i) so long as no Default or Event of
Default exists or has occurred and is continuing, Agent shall give to Borrowers ten (10) Business Days’ telephonic or electronic
notice and (ii) if a Default or Event of Default exists or has occurred and is continuing, Agent shall give to Borrowers three
(3) Business Days’ telephonic or electronic notice if (A) Agent establishes Reserves relating to new categories of Reserves,
(B) Agent changes the methodology of calculating Reserves, (C) Agent establishes sublimits in the Borrowing Base or (D) Agent
revises the advance rates set forth in subparagraph (a)(iii) and (a)(iv) above based on the results of appraisals of the Inventory
conducted in accordance with Section 7.3 hereof that are on a “going out of business sale” basis, net of liquidation
expenses. The amounts of Eligible Inventory shall be determined based on the lesser of the amount of Inventory set forth in the
general ledgers of Borrowers or the perpetual inventory records maintained by Borrowers. The foregoing notwithstanding, in the
event Agent is required to establish Reserves to preserve or protect or maximize the value of the Collateral, Agent shall only
provide Borrowers with notice at the time such Reserve is established.

 

“Letter
of Credit Sublimit” means $10,000,000.

 

“LIBOR
Rate” means the greater of (a) 0.50% and (b) the rate per annum as published by ICE Benchmark Administration Limited
(or any successor page or other commercially available source as the Agent may designate from time to time) as of 11:00 a.m.,
London time, two Business Days prior to the commencement of the requested Interest Period, for a term, and in an amount, comparable
to the Interest Period and the amount of the LIBOR Rate Loan requested (whether as an initial LIBOR Rate Loan or as a continuation
of a LIBOR Rate Loan or as a conversion of a Base Rate Loan to a LIBOR Rate Loan) by Borrowers in accordance with this Agreement
(and, if any such published rate is below zero, then the rate determined pursuant to this clause (b) shall be deemed to be zero).
Each determination of the LIBOR Rate shall be made by the Agent and shall be conclusive in the absence of manifest error.

 

    -3-

     

    

 

“Material
Budget Deviation” shall mean, on a cumulative basis for the four-week period ending May 30, 2020 and on a rolling four-week
basis as of the last day of each week thereafter, “Net Cash Flow” as set forth in the Budget for such period is (a)
if such amount is a positive number, less than 85% of the projected surplus cash flow or (b) if such amount is a negative number,
more than 115% of the projected deficit cash flow.

 

“Revolver
Commitment” means, with respect to each Revolving Loan Lender, its Revolver Commitment, and, with respect to all Revolving
Loan Lenders, their Revolver Commitments, in each case as such Dollar amounts are set forth beside such Revolving Loan Lender’s
name under the applicable heading on Schedule C-1 to this Agreement or in the Assignment and Acceptance pursuant to which
such Revolving Loan Lender became a Revolving Loan Lender under this Agreement, as such amounts may be reduced or increased from
time to time pursuant to assignments made in accordance with the provisions of Section 13.1 hereof, and as such amounts
may be decreased by the amount of reductions in the Revolver Commitments made in accordance with Section 2.6 hereof.

 

(b)             Section
2.5. Section 2.5 of the Loan Agreement is deleted in its entirety and replaced with the following:

 

2.5       [Reserved]

 

(c)             Section
6.4. Section 6.4 of the Loan Agreement is amended by the addition of new clauses (e) and (f) to read in their entirety as
follows:

 

(e)       If,
as of the close of business on June 13, 2020 or any Business Day thereafter, the aggregate amount of cash in any Deposit
Account maintained by Borrowers and Guarantors exceeds $40,000,000, then Borrowers shall, on the next Business Day thereafter,
prepay Revolving Loans in an aggregate principal amount equal to such excess (up to the amount of such outstanding Revolving Loans).

 

(f)       Borrowers
shall cause the outstanding principal balance of the Revolving Loans to be reduced to $0 on or before August 15, 2020.

 

(d)             Section
7.1. Sections 7.1(a)(i), (ii), (iii) and (iv) of the Loan Agreement are amended and restated in their entirety to read as
follows:

 

(a)       Borrowers
shall provide Agent with the following documents in a form satisfactory to Agent:

 

(i)       as
soon as possible after the end of each week (but in any event within three (3) Business Days after the end thereof), as of the
end of the preceding week: (A) Inventory reports by category, and (B) a Collateral mix report, in form and substance satisfactory
to Agent;

 

    -4-

     

    

 

(ii)       as
soon as possible after the end of each week (but in any event within three (3) Business Days after the end thereof), as of the
end of the preceding week, a Borrowing Base Certificate, certified by the principal accounting officer, treasurer or principal
financial officer of each Borrower as true and correct, which shall include the calculation of the Compliance Excess Availability
and the calculation of Net Amount of Eligible Credit Card Receivables, Net Amount of Eligible Damaged Goods Vendors Receivables
and Net Amount of Eligible Sell-Off Vendors Receivables after giving effect to the assertion of any claims, offsets, defenses
or counterclaims by any account debtor, or any disputes with account debtors, or any settlement, adjustment or compromise thereof;

 

(iii)      as
soon as possible after the end of each week (but in any event within three (3) Business Days after the end thereof), as of the
end of the preceding week, (A) perpetual Inventory reports by location and category (and including the amounts of Inventory and
the value thereof at any leased locations and at premises of warehouses, bailees or other third parties in possession of the Collateral),
(B) the addresses of all new retail store locations of any Borrower or Guarantor opened, and existing retail store locations closed
or sold, in each case during the immediately preceding fiscal month, and (C) a report of all deposit accounts (including without
limitation local retail store deposit accounts) opened by any Borrower or Guarantor with any bank during the immediately preceding
fiscal month, which report shall include the Borrower or Guarantor in whose name the account is maintained, the account number
of such account, the name and address of the bank at which such account is maintained, the purpose of such account and the amount
held in such account if any, on or about the date of such report;

 

(iv)      as
soon as possible after the end of each week (but in any event within three (3) Business Days after the end thereof), as of the
end of the preceding week, a report detailing Inventory turnover;

 

(e)             Section
9.6. Section 9.6(a)(ii) of the Loan Agreement is deleted in its entirety and replaced with the following:

 

(ii)       [reserved];

 

(f)              Section
9.6. Section 9.6 of the Loan Agreement is amended by the addition of new clause (e) to read in its entirety as follows:

 

(e)       Budget.

 

(i)        Borrowers
have prepared and delivered to Agent and Lenders their weekly cash forecast, commencing with the week ending May 9, 2020 through
the week ending August 29, 2020, attached as Exhibit B to Amendment No. 2. The weekly cash forecast attached as Exhibit
B to Amendment No. 2 shall be updated on or before June 30, 2020 to cover the thirteen (13) week period commencing June 27,
2020 through the week ending September 19, 2020 (the cash forecast attached as Exhibit B, together with the updated
cash forecast delivered to Agent and Lenders, and acceptable to Agent, in accordance with the terms of this Agreement is referred
to herein as the “Budget”).

 

(ii)       Not
later than the close of business on the Tuesday following the end of each week, Borrowers
shall deliver or cause to be delivered to Agent and Lenders, in form and substance satisfactory to Agent in its Permitted Discretion,
a report (the “Budget Compliance Report”) that sets forth, on (A) on a cumulative basis for the four-week period
ending June 6, 2020 and on a rolling four week basis thereafter, a comparison of the actual cash receipts and disbursements for
each line item of the Budget to the projected cash receipts and disbursements for the previous week, and (B) a certification from
chief financial officer, treasurer or chief accounting officer of Borrowers that the information
contained in the Budget Compliance Report is true and accurate. 

 

    -5-

     

    

 

(g)             Section
10.1. Sections 10.1 of the Loan Agreement is amended by deleting “.” At the end of clause (o) and adding “;
or” in its place, and by the addition of new clause (p) to read in its entirety as follows:

 

(p)       the
occurrence of a Material Budget Deviation.

 

3.          References.
Each reference in the Loan Agreement to “this Agreement,” “hereunder,” “hereof,” “herein”
or words of similar import, and each reference in the other Financing Agreements to the “Loan Agreement” (including,
without limitation, by means of words such as “thereunder” or “thereof” and words of similar import),
shall mean and be a reference to the Loan Agreement, as amended by this Amendment No. 2. Agent, each of the Lenders signatory
hereto, each Borrower and each Guarantor consent to the amendment of the Loan Agreement pursuant to this Amendment No. 2.

 

4.          Acknowledgment
of Existing Defaults. Each Borrower acknowledges and agrees that each of the Existing Defaults has occurred and continues
to exist as of the date of this Amendment No. 2.

 

5.          Agent
and Lenders’ Agreement to Forbear from Enforcement Action. Subject to the terms and conditions contained herein, the
Agent and the Lenders agree to forbear from exercising their rights and remedies under the Financing Agreements that arise solely
as a result of the occurrence of the Existing Defaults during (but only during) the period (such period being hereafter referred
to as the “Forbearance Period”) commencing on the Amendment No. 2 Effective Date and ending on the earliest
to occur of: (i) June 30, 2020, (ii) the date any breach by any Borrower of any of the terms set forth in this Amendment No. 2,
and (iii) the date of the occurrence of any additional Defaults or Events of Default under the Loan Agreement or other Financing
Agreements (other than the Existing Defaults) (the “Forbearance Termination Date”). The forbearance contained
in this Amendment No. 2 shall not constitute a waiver of any of the Existing Defaults or any other default or event of default
that has occurred as of the date hereof, that may be continuing as of the date hereof or that may occur after the date hereof,
whether any such defaults or events of default are the same or similar to the Existing Defaults. Each Borrower hereby acknowledges
and affirms that, at any time on or after the Forbearance Termination Date, the agreement of the Agent and the Lenders to forbear
from exercising their rights and remedies under the Loan Agreement and other Financing Agreements shall automatically and without
further action terminate and be of no force and effect; it being understood and agreed that the effect of such termination will
be to permit Agent and Lenders to immediately exercise, without any further notice or forbearance of any kind, all of its rights
and remedies under the Loan Agreement, Financing Agreements, applicable law or otherwise, without further notice or demand.

 

6.          Representations
and Warranties. Each Borrower and each Guarantor, jointly and severally, represents and warrants with and to Agent, the other
members of the Lender Group and Bank Product Providers as follows:

 

(a)              No
Default or Event of Default exists or has occurred and is continuing as of the date hereof other than the Existing Defaults;

 

    -6-

     

    

 

(b)              The
execution, delivery and performance of this Amendment No. 2 and any other agreements, documents and instruments executed or delivered
by any Borrower or Guarantor in connection herewith (together with this Amendment No. 2, the “Amendment Documents”)
and the consummation of the transactions contemplated hereby or thereby, and compliance with the provisions hereof or thereof
by each Borrower and Guarantor (i) are all within such Borrower’s or Guarantor’s corporate or limited liability
company powers, (ii) have been duly authorized, (iii) are not in contravention of law or the terms of such Borrower’s or
Guarantor’s certificate of incorporation, certificate of formation, bylaws, operating agreement or other organizational
documentation, or any indenture, agreement or undertaking to which such Borrower or Guarantor is a party or by which such Borrower
or Guarantor or its property are bound, except for those lease agreements of Lerner for which Lerner did not obtain consents from
the parties thereto with respect to this Amendment No. 2, and (iv) will not result in the creation or imposition of, or require
or give rise to any obligation to grant, any lien, security interest, charge or other encumbrance upon any property of such Borrower
or Guarantor other than liens in favor of Agent or any Lender as contemplated by the Financing Agreements;

 

(c)              Each
of the Amendment Documents to which each Borrower and Guarantor is a party constitute legal, valid and binding obligations of
such Borrower or Guarantor enforceable in accordance with their respective terms;

 

(d)              All
of the representations and warranties set forth in the Loan Agreement, and the other Financing Agreements, are true and correct
in all material respects after giving effect to the provisions of this Amendment No. 2, except to the extent any such representations
and warranties expressly relate solely to an earlier date (in which case such representations and warranties shall have been true
and accurate in all material respects on and as of such earlier date); and

 

(e)              No
action of, or filing with, or consent of any Governmental Authority, and no approval or consent of any other party, is required
to authorize, or is otherwise required in connection with, the execution, delivery and performance of any of the Amendment Documents
by any Borrower or Guarantor, except for any actions or filings already made or taken and approvals or consents previously obtained.

 

7.          Conditions
Precedent. The effectiveness of this Amendment No. 2 shall be subject to the satisfaction of each of the following conditions
precedent in a manner satisfactory to Agent:

 

(a)              On
or prior to the Amendment No. 2 Effective Date, Agent shall have received a prepayment in an amount not less than $20,000,000
to be applied to the outstanding principal balance of Revolving Loans;

 

(b)              No
Default or Event of Default shall exist or have occurred and be continuing other than the Existing Defaults;

 

(c)              Agent
shall have received counterparts of this Amendment No. 2, duly authorized, executed and delivered by Borrowers, Guarantors, and
the Lenders;

 

(d)             
Agent shall have received, in form and substance satisfactory to Agent, an officer’s certificate or secretary’s
certificate from each Borrower and Guarantor, duly authorized, executed and delivered by an appropriate officer of such Borrower
or Guarantor, in form and substance reasonably satisfactory to Agent, setting forth the incumbency and specified signatures of
each applicable officer and approving the transactions contemplated by this Amendment No. 2, together with organizational documents
and records of all requisite corporate or limited liability company action and proceedings in connection with this Amendment No.
2.

 

    -7-

     

    

 

8.          Release
and Covenant Not to Sue.

 

(a)             Release.

 

(i)        In
consideration of the agreements of Agent and Lenders contained herein and the making of Loans and providing of Letters of Credit
by or on behalf of Agent and Lenders to Borrowers pursuant to the Loan Agreement, and for other good and valuable consideration,
the receipt and sufficiency of which is hereby acknowledged, each Borrower and Guarantor on behalf of itself and its successors,
assigns, and other legal representatives, hereby, jointly and severally, absolutely, unconditionally and irrevocably releases,
remises and forever discharges Agent and each Lender and their present and former shareholders, affiliates, subsidiaries, divisions,
predecessors, directors, officers, attorneys, employees, agents and other representatives (Agent, each Lender and all such other
parties being hereinafter referred to collectively as the “Releasees” and individually as a “Releasee”),
of and from all demands, actions, causes of action, suits, covenants, contracts, controversies, agreements, promises, sums of
money, accounts, bills, reckonings, damages and any and all other claims, counterclaims, defenses, rights of set-off, demands
and liabilities whatsoever (individually, a “Claim” and collectively, “Claims”) of every
name and nature, known or unknown, suspected or unsuspected, matured or contingent both at law and in equity, which any Borrower
or Guarantor, or any of its successors, assigns, or other legal representatives may now own, hold, have or claim to have against
the Releasees or any of them for, upon, or by reason of any nature, cause or thing whatsoever which arises at any time on or prior
to the date of this Amendment No. 2, including, without limitation, for or on account of, or in relation to, or in any way in
connection with the Loan Agreement, as amended and supplemented through the date hereof and the other Financing Agreements.

 

(ii)       Each
Borrower and Guarantor understands, acknowledges and agrees that the release set forth above may be pleaded as a full and complete
defense and may be used as a basis for an injunction against any action, suit or other proceeding which may be instituted, prosecuted
or attempted in breach of the provisions of such release.

 

(iii)      Each
Borrower and Guarantor agrees that no fact, event, circumstance, evidence or transaction which could now be asserted shall affect
in any manner the final and unconditional nature of the release set forth above.

 

(iv)      Each
Borrower and Guarantor represents and warrants that each such Person is the sole and lawful owner of all right, title and interest
in and to all of the claims released hereby and each such Person has not heretofore voluntarily, by operation of law or otherwise,
assigned or transferred or purported to assign or transfer to any person any such claim or any portion thereof.

 

(v)       Nothing
contained herein shall constitute an admission of liability with respect to any Claim on the part of any Releasee.

 

(b)            
Covenant Not to Sue. Each Borrower and Guarantor, on behalf of itself and its successors, assigns, and other legal
representatives, hereby absolutely, unconditionally and irrevocably, jointly and severally, covenants and agrees with each Releasee
that it will not sue (at law, in equity, in any regulatory proceeding or otherwise) any Releasee on the basis of any Claim released,
remised and discharged by such Borrower or Guarantor under Section 11(a) hereof. If any Borrower or Guarantor violates the foregoing
covenant, each Borrower and Guarantor agrees to pay, in addition to such other damages as any Releasee may sustain as a result
of such violation, all attorneys’ fees and costs incurred by any Releasee as a result of such violation.

 

    -8-

     

    

 

(c)             Waiver
of Statutory Provisions. EACH BORROWER AND GUARANTOR HEREBY EXPLICITLY WAIVES ALL RIGHTS UNDER AND ANY BENEFITS OF ANY COMMON
LAW OR STATUTORY RULE OR PRINCIPLE WITH RESPECT TO THE RELEASE OF SUCH CLAIMS, AND EACH BORROWER AND GUARANTOR AGREES THAT NO
SUCH COMMON LAW OR STATUTORY RULE OR PRINCIPLE SHALL AFFECT THE VALIDITY OR SCOPE OR ANY OTHER ASPECT OF THIS RELEASE.

 

9.          Effect
of this Amendment. Except as expressly set forth herein, no other amendments, changes or modifications to the Financing Agreements
are intended or implied, and in all other respects the Financing Agreements are hereby specifically ratified, restated and confirmed
by all parties hereto as of the Amendment No. 2 Effective Date and Borrowers and Guarantors shall not be entitled to any other
or further amendment by virtue of the provisions of this Amendment No. 2 or with respect to the subject matter of this Amendment
No. 2. To the extent of conflict between the terms of this Amendment No. 2 and the other Financing Agreements, the terms of this
Amendment No. 2 shall control. The Loan Agreement and this Amendment No. 2 shall be read and construed as one agreement.

 

10.        No
Novation. The amendment and restatement of the Loan Agreement pursuant to this Amendment No. 2 and the Loan Agreement shall
not, in any manner, be construed to constitute payment of, or impair, limit, cancel or extinguish, or constitute a novation in
respect of, the Obligations and other obligations and liabilities of Borrowers and Guarantors evidenced by or arising under the
Loan Agreement as amended by this Amendment No. 2 or any of the other Financing Agreements. Each Borrower and each Guarantor confirms
and agrees that it continues to remain liable for all such Obligations and other obligations and liabilities, and the liens and
security interests in the Collateral of Agent securing such Obligations and other obligations and liabilities shall not in any
manner be impaired, limited, terminated, waived or released, but shall continue in full force and effect in favor of Agent for
the benefit of the Secured Parties.

 

11.        Governing
Law. The validity, interpretation and enforcement of this Amendment No. 2 and any dispute arising out of the relationship
between the parties hereto, whether in contract, tort, equity or otherwise, shall be governed by the internal laws of the State
of New York but excluding any principles of conflicts of law or other rule of law that would cause the application of the law
of any jurisdiction other than the laws of the State of New York.

 

12.        Binding
Effect. This Amendment No. 2 shall be binding upon and inure to the benefit of each of the parties hereto and their respective
successors and assigns.

 

13.        Headings.
The headings listed herein are for convenience only and do not constitute matters to be construed in interpreting this Amendment
No. 2.

 

14.        Counterparts.
This Amendment No. 2 and any notices delivered under this Amendment No. 2, may be executed by means of (a) an electronic signature
that complies with the federal Electronic Signatures in Global and National Commerce Act, state enactments of the Uniform Electronic
Transactions Act, or any other relevant and applicable electronic signatures law; (b) an original manual signature; or (c) a faxed,
scanned, or photocopied manual signature. Each electronic signature or faxed, scanned, or photocopied manual signature shall for
all purposes have the same validity, legal effect, and admissibility in evidence as an original manual signature. Agent reserves
the right, in its sole discretion, to accept, deny, or condition acceptance of any electronic signature on this Amendment No.
2 or on any notice delivered to Agent under this Amendment No. 2. This Amendment No. 2 and any notices delivered under this Amendment
No. 2 may be executed in any number of counterparts, each of which shall be deemed to be an original, but such counterparts shall,
together, constitute only one instrument. Delivery of an executed counterpart of a signature page of this Amendment No. 2 and
any notices as set forth herein will be as effective as delivery of a manually executed counterpart of the Amendment No. 2 or
notice.

 

    -9-

     

    

 

15.        Further
Assurances. Borrowers and Guarantors shall execute and deliver such additional documents and take such additional action as
may be reasonably requested by the Agent to effectuate the provisions and purposes of this Amendment No. 2.

 

 

[REMAINDER OF PAGE INTENTIONALLY
LEFT BLANK]

 

    -10-

     

    

 

IN WITNESS WHEREOF, the parties hereto
have caused this Amendment No. 2 to be duly executed and delivered by their authorized officers as of the day and year first above
written.

 

	 	 	BORROWERS
	 	 	 
	 	 	LERNER NEW YORK, INC.
	 	 	 
	 	 	 
	 	 	By:	/s/ Sheamus Toal
	                                                                                                                              	 	Name:	Sheamus Toal
	 	 	Title:	Chief Executive Officer,
    Chief Financial Officer & Treasurer
	 	 	 
	 	 	 
	 	 	LERNCO, INC.
	 	 	 
	 	 	 
	 	 	By:	/s/ Sheamus Toal
	 	 	Name:	Sheamus Toal
	 	 	Title:	President
	 	 	 	 
	 	 	 	 
	 	 	LERNER NEW YORK OUTLET, LLC
	 	 	 
	 	 	 
	 	 	By:	/s/ Sheamus Toal
	 	 	Name:	Sheamus Toal
	 	 	Title:	President, Chief Executive
    Officer, Chief Financial Officer & Treasurer
	 	 	 
	 	 	 
	 	 	LERNER NEW YORK FTF, LLC
	 	 	 
	 	 	 
	 	 	By:	/s/ Sheamus Toal
	 	 	Name:	Sheamus Toal
	 	 	Title:	President & Chief
    Financial Officer
	 	 	 
	 	 	GUARANTORS
	 	 	 
	 	 	RTW RETAILWINDS, INC.
	 	 	 
	 	 	 
	 	 	By:	/s/ Sheamus Toal
	 	 	Name:	Sheamus
    Toal
	 	 	Title:	Chief Executive Officer,
    Chief Financial Officer & Treasurer

 

[Amendment
No. 2 to Fourth Amended and Restated Loan and Security Agreement]

 

     

     

    

 

	 	 	LERNER NEW YORK HOLDING, INC. 
	 	 	 
	 	 	 
	 	 	By:	/s/ Sheamus Toal 
	 	 	Name:	Sheamus Toal
	                                                                                                                                        	 	Title:	Chief Executive Officer, Chief Financial Officer & Treasurer
	 	 	 
	 	 	 
	 	 	LERNER NEW YORK GC, LLC
	 	 	 
	 	 	 
	 	 	By:	/s/ Sheamus Toal
	 	 	Name:	Sheamus Toal
	 	 		Title:
    President
	 	 	 
	 	 	 
	 	 	NEW YORK & COMPANY STORES, INC.
	 	 	 
	 	 	By:	/s/ Sheamus Toal
	 	 	Name:
    	Sheamus Toal
	 	 	Title:	Chief Executive Officer, Chief Financial Officer & Treasurer
	 	 	 
	 	 	FTF GC LLC
	 	 	 
	 	 	By:	/s/ Sheamus Toal
	 	 	Name:	Sheamus Toal
	 	 	Title:	President & Chief Executive Officer

 

[Amendment No. 2
to Fourth Amended and Restated Loan and Security Agreement]

 

     

     

    

 

	 	 	WELLS FARGO BANK, NATIONAL

    ASSOCIATION, as Agent and Revolving Loan 

    Lender
	 	 	 
	 	 	 
	                                                                 	 	By:	/s/ Michele L. Riccobono
	 	 	Name:	Michele L. Riccobono
	 	 	Title:	Authorized Signatory

 

[Amendment
No. 2 to Fourth Amended and Restated Loan and Security Agreement]

 

     

     

    

 

Exhibit
A

 

To

 

AMENDMENT NO. 2 TO FOURTH AMENDED

AND RESTATED LOAN AND SECURITY AGREEMENT AND JOINDER

  

     

     

    

 

Exhibit
B

 

To

 

AMENDMENT NO. 2 TO FOURTH AMENDED

AND RESTATED LOAN AND SECURITY AGREEMENT AND JOINDER

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