Document:

LICENSE
AGREEMENT

 

THIS LICENSE AGREEMENT
(the “Agreement”) is entered into by and between FIFTY-SIX HOPE ROAD MUSIC LIMITED, a Bahamian limited liability
company (“Licensor”), and the licensee identified below (“Licensee”) as of the Effective
Date set forth herein. This Agreement replaces and supersedes the license agreement dated March 31, 2010 under which Licensor’s
former licensee, Marley Coffee, LLC, and Licensee have been operating since Licensee’s first offering of MARLEY COFFEE products
(the "2010 License Agreement"), and the 2010 License Agreement is hereby terminated upon execution of this Agreement
by the parties. This Agreement consists of the Summary of Commercial Terms and Select Definitions set forth below (“Summary
of Commercial Terms”), the Standard Terms & Conditions and all Exhibits and Schedules attached hereto, which are
incorporated herein by reference. In the event of a conflict between this Summary of Commercial Terms and the Standard Terms &
Conditions set forth below, the Summary of Commercial Terms shall supersede, govern and control.

 

SUMMARY OF COMMERCIAL TERMS AND SELECT
DEFINITIONS

 

	A.	Effective Date:	August 7, 2012.
	 	 	 
	B.	Exclusive Licensed Products:	Coffee in all its forms and derivations, regardless of portions, sizes, or packaging.
	 	 	 
	C.	Non-Exclusive Licensed Products:	Coffee cups, coffee mugs, coffee glasses, saucers, milk steamers, machines for brewing coffee, espresso, and/or cappuccino, grinders, water treatment products, tea products, chocolate products, and ready-to-use (instant) coffee products
	 	 	 
	D.	Licensed Products:	Exclusive Licensed Products and Non-Exclusive Licensed Products
	 	 	 
	E.	Licensed Services: 	Coffee roasting services, coffee production services, and coffee sales, supply, distribution and support services, excluding coffee houses.  By way of clarity, Licensee may sell coffee to coffee houses, but may not open retail coffee houses under the licensed marks.

 

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	F.	Licensee:	
        Jammin Java Corp., a Nevada corporation. 

	 	 	 
	 	·   Address:	
        8200 Wilshire Blvd., Suite 200

        Beverly Hills, CA 90211

         

	 	·   Telephone No.:	
        (323) 556-0746

         

	 	·   Contact:	
        Anh Tran

         

	 	·   E-Mail:	
        anh@jamminjavacoffee.com

         

	 	·   Website:	
        www.marleycoffee.com and jamminjavacoffee.com

         

	G.	Licensed Property:	
        Those trademarks, trade names and logos
        set forth on Exhibit D to this Agreement.

         

	H.	Term:	
        From the Effective Date for fifteen (15)
        years (the “Initial Term”).

 

        This Agreement may be renewed for two fifteen
        (15) year renewal terms (each a “Renewal Term”, together with the Initial Term, the “Term”);
        provided that (i) Licensee delivers written notice of its election to exercise its option to renew no less than six (6) months
        prior to the expiration of the Initial Term or Renewal Term, as the case may be, and (ii) Licensee is not in default of any material
        terms of this Agreement at the time of its exercise of the option or on the last day of the Initial

         

	I.	Territory:	
        Worldwide.

         

	J.	Exclusivity / Scope:	
        Exclusive license to the Licensed Property for the
Exclusive Licensed Products and the Licensed Services. 

 

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	K.	Earned Royalties and Payments	
        “Earned Royalties” shall
        mean, for each calendar quarter of the Contract Year, the royalties earned by Licensor under this Agreement, which shall be due
        and payable to Licensor in arrears within thirty (30) days following the completion of each calendar quarter of each Contract Year.
        Earned Royalties shall be three percent (3%) of Net Sales.

 

        “Net Sales”
shall mean the invoiced billing price of all Licensed Products sold and shipped by Licensee to its customers, excluding only federal
and state taxes and shipping costs. Net Sales may be credited by returns evidenced by credit memoranda, all of which shall not
exceed ten percent (10%) of annual gross sales of Licensed Products. No deduction may be made for early payments, bad debts, advertising
allowances or special promotions of any kind or for costs incurred in the manufacture, sale, advertising or promotion of the Licensed
Products.

 

	L.	Permitted Distribution Channels:	
        all channels of distribution, except as
        limited by Section 1(b) below.

         

	I.	Number of Samples:	
        Licensee shall provide Licensor a reasonable
        number of samples in accordance with Sections 6 and 7 below; provided, that Licensor shall not be entitled to more than (i) three
        pre-production samples per Licensed Product, and (ii) twelve production samples for each Licensed Product.

 

        Licensee will be required to send
samples of any Licensed Product and must obtain written permission before the manufacturing process begins in accordance with
Sections 6 and 7 below. 

 

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STANDARD TERMS & CONDITIONS

 

Certain defined terms used herein shall
have the meaning ascribed to them in the Summary of Commercial Terms section of the Agreement.

 

1.            Grant
of Licenses.

 

(a)          Licensor
hereby grants to Licensee during the Term the exclusive, non-transferable, non-assignable, non-sublicensable, non-divisible right
and license, to utilize the Licensed Property solely within the Territory and solely in connection with the manufacture, advertising,
promotion, sale, offering for sale, and distribution of the Exclusive Licensed Products and in connection with the Licensed Services.
Licensee may continue with sublicenses that were entered before June 1, 2012 (the “Sublicenses”), provided that (i)
Licensee provides copies of all such Sublicenses to Licensor before execution of this Agreement; and (ii) the Sublicenses are not
renewed and will expire on their own terms. Those Sublicenses are the Trademark License Agreement between Licensee and Blue Mountain
Coffee Europe Limited, dated March 22, 2012; the Supplier Business Relationship Agreement between Licensee and Bike Caffe dated
April 14, 2012, the Sublicense Agreement between Licensee and AVT Vending Inc., dated April 18, 2012, and the Sublicense Agreement
between Licensee and Real Cup, dated October 13, 2011. Licensee shall also have the non-exclusive right to use the Licensed Property
on advertising and promotional materials that pertain solely to the sale of Licensed Products. Licensor represents that it is currently
the only other entity that uses MARLEY COFFEE. Although the rights granted herein are expansive, Licensee agrees to only market,
distribute, and sell the Licensed Products in those jurisdictions in which Licensor owns valid trademark registrations covering
the Licensed Property in connection with the Licensed Products or the Licensed Services as identified in Exhibit E
hereto. Licensee shall promptly notify Licensor if it foresees significant business opportunities in additional jurisdiction(s)
that justify the expense and effort associated with applying for registrations covering the Licensed Property in connection with
the Licensed Products or the Licensed Services in such additional jurisdiction(s).  Licensor, upon confirmation that the Licensee
has reasonable and material prospects in such jurisdiction(s), shall use commercially reasonable efforts to obtain such registrations. 
Licensee acknowledges and agrees that Licensor shall have no liability if such commercially reasonable efforts to obtain such registrations
are unsuccessful.

 

(b)          Licensed
Products may only be sold through the Permitted Distribution Channels. Without limiting the foregoing, except to the extent that
Licensee sells through the website(s) included within its Permitted Distribution Channels, and except as otherwise provided within
the Summary of Commercial Terms, Licensee shall not sell or distribute Licensed Products by any direct marketing methods, including,
without limitation, television, infomercials (DRTV) or direct mail, without the prior written approval of Licensor in each instance,
which shall be granted or withheld in Licensor’s absolute and sole discretion. Notwithstanding the foregoing, the Licensed
Products may be advertised, marketed, and promoted on television or direct mail, but may not be sold through or on television or
direct mail, with the exception of QVC. Licensee may sell the Licensed Products through QVC provided that Licensee submits the
proposed distribution agreement with QVC to Licensor for approval prior to entry of such agreement.

 

 

 

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(c)          Unless
expressly specified in the Summary of Commercial Terms, the rights granted herein do not include the rights in or to any images,
persona, photographs or other copyrighted works of or relating to Robert Marley, aka Bob Marley. Licensee shall be solely responsible
for obtaining written clearance from the copyright owner(s) whose image(s) and/or photograph(s) is (are) to be used on the materials
that advertise and/or promote Licensed Products and for all costs and expenses relating thereto.

 

(d)          Licensee
understands that Licensor has not authorized Licensee to use any musical composition, song lyrics, song titles, master recording,
audio-visual recording, video and/or motion picture in connection with Licensed Products and/or in connection with any advertising
or promotional material used to advertise or promote the sale of Licensed Products. Licensee shall be solely responsible for obtaining
written clearance from the copyright owner(s) or the administrator(s) whose musical composition, song lyrics, song titles, master
recording, audio-visual recording, video and/or motion picture is used and for the payment of all costs and expenses relating thereto.

 

(e)          All
Licensed Products shall bear at least one Licensed Property and no Licensed Products shall be sub-branded, co-branded or sold or
otherwise distributed under any marks other than the Licensed Property. All rights in and to the Licensed Property not specifically
granted and licensed to Licensee hereunder are hereby reserved by Licensor and Licensor may exercise such rights at any time.

 

(f)          Licensor
and/or one or more of its affiliates shall have the right to purchase from Licensee such quantities of Licensed Products as Licensor
shall from time to time desire for resale through Licensor Channels (as hereinafter defined) within the Territory and/or through
any distribution channels outside the Territory. Any purchases of Licensed Products from Licensee by Licensor and/or its affiliates
shall be made on such terms as Licensee extends to its best customers, including, without limitation, Licensee’s lowest wholesale
price and first priority treatment with respect to order fulfillment and service. For the purposes hereof, “Licensor Channels”
shall mean any of the following operating under the Licensed Property or other intellectual property related to Robert Marley:
(i) retail stores; (ii) mail order and/or catalogs; and/or (iii) internet shopping websites. To the extent permitted by applicable
law, Licensor and/or its affiliates shall not resell Licensed Products purchased from Licensee under this Section at a price below
the lowest retail price unless otherwise mutually agreed to by the parties.

 

(g)          Licensee
agrees to sell to Licensor, its affiliates and other licensees (collectively, the "Promotional Parties")
reasonable amounts of Licensed Products for Promotional Purposes (as defined below) at Licensee’s FOB
delivery cost of such Licensed Products on net 60 day terms. The Promotional Parties shall only
use such Licensed Products for Promotional Purposes, and shall not resell such Licensed Products on a stand alone
basis.  In the event Licensee is unable to supply the Promotional Parties with Licensed Products as set forth in this
Section 1(g), the Promotional Parties shall have the right to source products from third parties that are substantially similar
to the Licensed Products, and such activity shall not be deemed a breach of any exclusivity
rights that may be granted under this Agreement.  For purposes of this Agreement, Promotional Purposes shall mean charitable
giving, giveaways, gifts with purchase programs and other promotional activities.

 

 

 

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(h)          If
so requested by Licensor, Licensee shall make Licensed Products available for purchase on one or more websites owned or operated
by Licensor and/or its affiliates or other licensees (“Licensor Websites”) on terms to be mutually agreed.

 

(i)          Licensor
agrees to provide Licensee with a list of its current licensees that sell food and/or beverage so that Licensee may contact them
to inquire as to purchasing Licensed Products from Licensee.

 

2.            Initial
Term; Renewal.

 

(a)          The
Initial Term, Renewal Term and Term are defined in the Summary of Commercial Terms, unless sooner terminated in accordance with
the terms of this Agreement.

 

(b)          This
Agreement may be renewed by Licensee for a Renewal Term as shall be set forth in the Summary of Commercial Terms, unless sooner
terminated in accordance with the terms of this Agreement.

 

(c)          In
the event Licensee exercises its renewal option, to the extent applicable, the Minimum Net Sales for the Renewal Term shall be
calculated as set forth in the Summary of Commercial Terms.

 

3.            Earned
Royalties; Compensation.

 

(a)          In
consideration of the rights granted herein, Licensee shall pay the Earned Royalties to Licensor as specified in the Summary of
Commercial Terms, except as provided in Section 4(c).

 

(b)          Licensee
shall have the unfettered right to establish the prices that it charges its customers for any Licensed Products sold pursuant to
this Agreement.

 

(c)          Licensee
shall be solely responsible for the payment of all taxes applicable to the transactions contemplated by this Agreement, including,
without limitation, any and all sales, use, value-added, local privilege, withholding and excise taxes, tariffs, duties and the
like (other than taxes on Licensor’s net income).

 

 

 

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4.            Payments;
Accountings.

 

(a)          Licensee
will compute Earned Royalties hereunder on the basis set forth in the Summary of Commercial Terms and shall furnish to Licensor
within thirty (30) days following the end of each calendar quarter during the Term a complete and accurate statement, in the form
attached hereto as Exhibit A (each, a “Quarterly Statement”), setting forth the number of Licensed
Products sales made, the total gross revenues of Licensee relating thereto and the calculation of the amount of Earned Royalties
due to Licensor for such calendar quarter. On reasonable request from Licensor, Licensee shall provide Licensor with backup and
support materials with respect to any item contained in any Quarterly Statement, such that Licensor will have sufficient information
to evaluate the sources of any item contained in such Quarterly Statement and to track Licensee’s performance under this
Agreement. Each Quarterly Statement shall be accompanied by a certification signed by Licensee’s chief financial officer
(or equivalent) indicating that he or she has reviewed the Quarterly Statement and verifies the accuracy of all information contained
in such Quarterly Statement.

 

(b)          In
addition, within forty-five (45) days following the end of each year of this Agreement (“Contract Year”), Licensee
shall furnish to Licensor a complete and accurate statement, in the form attached hereto as Exhibit A (each, an “Annual
Statement”), setting forth the same information required to be submitted by Licensee in accordance with Section 4(a)
above, except that such Annual Statement shall cover the entire Contract Year. Such Annual Statement shall be accompanied by a
certification signed by Licensee’s chief financial officer (or equivalent) indicating that he or she has reviewed and agrees
will all information contained in such Annual Statement.

 

(c)          Provided
compliance with the material terms of the License, Licensor agrees to defer the payment of the Earned Royalties for the first year
and 8 months of the License (the "Accrued Royalties"). Thereafter, simultaneously with the mailing of each Quarterly
Statement, Licensee shall pay all sums due to Licensor for the applicable calendar quarter for which such Quarterly Statement is
rendered and all Accrued Royalties due for the first year and 8 months, in equal quarterly installments until the Accrued Royalties
are paid in full. For clarity, beginning in the fourth quarter of the second and third year of the License, Licensee shall pay
then existing quarterly royalties together with the 50% of the Accrued Royalties due until the Accrued Royalties are paid off.
All Earned Royalties payable to Licensor shall be deemed held in trust for and on behalf of Licensor until such time as such sums
are paid to Licensor in accordance with the terms of this Agreement.

 

(d)          Licensee
shall keep appropriate books of account and records in respect of its manufacture, sale and distribution of Licensed Products.
Licensee shall maintain such records throughout the Term of this Agreement, and for a period of two (2) years following the termination
of this Agreement (the “Post-Term Retention Period”). Licensor shall have the right to inspect and copy the
financial books and records of Licensee insofar as such books and records relate to amounts payable to Licensor under this Agreement.
Licensor shall be permitted to inspect such books and records no more frequently than one (1) time during any six (6) month period,
including, without limitation, with respect to the Post-Term Retention Period, upon reasonable prior written notice to Licensee
at the offices of Licensee. If any such inspection reveals a discrepancy in the amount paid to Licensor equal to three percent
(3%) or more of the amount payable to Licensor hereunder for the period in question, then Licensee shall also reimburse Licensor
for the cost of such audit. In any event, Licensee shall make all payments required to be made to eliminate any discrepancy revealed
by any such inspection within thirty (30) days after Licensor’s demand therefor.

 

 

 

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(e)          If
Licensor has any objection to any Quarterly or Annual Statement, then Licensor will give Licensee specific notice of that objection
and reasons for it within two (2) years after the date that Licensor receives such statement. Except for claims of fraudulent accounting,
each statement will become conclusively binding on Licensor at the end of such two (2) year period. Licensor will not have the
right to bring any action in connection with any statement or accounting unless Licensor commences such action within three (3)
years following Licensor’s receipt of such statement.

 

(f)          Licensor
shall have access at all times during reasonable business hours to the facilities where Licensed Products are stored in order to
verify inventory.

 

(g)          All
sums required to be paid to Licensor under this Agreement shall be paid to Licensor and payment agent at the address set forth
in the Summary of Commercial Terms, or such other address as Licensor may specify in writing pursuant to Section 20(b).

 

(h)          Within
thirty (30) days after each calendar quarter during the Term, Licensee shall deliver to Licensor a copy of Licensee’s full
and complete financial statements. Within ninety (90) days of the year end, Licensee shall provide Licensor a copy of Licensee’s
annual audited financial statements.

 

5.            Marketing
and Advertising. All Advertisements (as defined in Section 6 below) must be approved in accordance with Section 6 below.

 

6.            Licensed
Production; Quality Control.

 

(a)          Licensor
shall have the right to approve all elements of Licensed Products, including, without limitation: (i) concept; (ii) rough artwork;
(iii) final artwork; (iv) prototype samples (“Prototype Samples”); and (v) production samples (“Production
Samples”). All submissions under this Agreement shall be made on such forms as Licensor shall prescribe from time to
time, including, without limitation the Product Development Form attached hereto as Exhibit B. To the greatest extent
possible, all materials shall be submitted electronically, in such format as may be requested by Licensor, unless otherwise requested
by Licensor or mutually agreed by the parties.

 

(b)          Prior
to the manufacture of any Licensed Products, Licensee shall submit to Licensor Prototype Samples for each Licensed Product for
approval by Licensor. All Licensed Product elements must be re-submitted for approval each time a revision is made incorporating
any changes. Licensee shall submit by e-mail all submissions to Licensor prior to the creation of Prototype Samples and/or Production
Samples as set forth in Section 7 below. Approvals prior to the creation of Prototype Samples and Production Samples will be approved
by return e-mail. If Licensor does not respond in writing within fifteen (15) days after receipt of a Prototype Sample or Production
Sample for approval, then the sample shall be deemed disapproved.

 

 

 

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(c)          (i)          Prior
to the broadcast, publication, posting, public distribution or use of any advertisement or other promotional material (each, an
“Advertisement”) which is intended to be used in conjunction with the sale or distribution of Licensed Products,
Licensee shall submit the Advertisement to Licensor for its written approval. If Licensor has not responded in writing within ten
(10) days after receipt of a proposed Advertisement for approval, then the applicable material shall be deemed disapproved.

 

(ii)         Once
an Advertisement has been approved, Licensee need not submit variations of that Advertisement for re-approval when such variations
are merely of size or date and the like; provided, however, that any substantive changes to the Advertisement must
be approved in advance pursuant to this Section 6.

 

(iii)        Licensee
acknowledges that the approval or disapproval of any Advertisement may be based, without limitation, solely on subjective aesthetic
standards.

 

(d)          Prior
to the manufacture of any Licensed Products, Licensee shall submit to Licensor a prototype of the design of all tags, hangtags,
labels, packaging and wrapping for such Licensed Products (hereinafter the “Packaging”) for approval by Licensor.
Such Packaging must comply with Licensor’s style guide and other brand guidelines, and shall include all required legal notices,
as specified in Section 8(a). If Licensor does not respond in writing within fifteen (15) day after receipt of the proposed Packaging
for approval, then the same shall be deemed disapproved. The Packaging for the Licensed Products used by Licensee as of the Effective
Date of this Agreement has been and is deemed approved by Licensor.

 

(e)          The
manufacture of Licensed Products may take place within or outside the Territory by Licensee, its agents or employees; provided,
however, that Licensed Products may only be sold in the Permitted Distribution Channels in the Territory. If Licensee wishes
to subcontract any or all of the manufacture of Licensed Products beyond the license agreement Licensee has entered with Jammin’
Java, which is approved by Licensor, Licensee may do so only with the prior written approval of Licensor. Licensee shall make such
request to Licensor in writing and provide Licensor with the name and address of the proposed party and all of its principals,
the products which such party has previously produced and a written undertaking in the form set forth at Exhibit C.
Licensee will use its best efforts to ensure that its subcontractors abide by the terms of this Agreement. All acts of any such
subcontractors shall be deemed to be the acts of Licensee for all purposes of this Agreement.

 

(f)          Licensee
acknowledges that, if Licensed Products manufactured and sold by it are of inferior quality in quality, material and/or workmanship,
then the substantial goodwill which Licensor has built up and now possesses in the Licensed Property will be impaired. Accordingly,
Licensee shall use its best efforts to ensure that the Licensed Products are of such a quality standard and appearance and as shall
be suited to their exploitation and best advantage, and Licensee warrants to Licensor that all Licensed Products will maintain
the high standards, appearance and quality of the approved Prototype Samples. If there is a substantial or material departure from
the approved sample of Licensed Products made and/or distributed by or on behalf of Licensee, then Licensor shall have the right,
in the reasonable exercise of its sole and absolute discretion, to withdraw the approval of such Licensed Products by written notice
thereof to Licensee, at which time this Agreement shall automatically terminate with respect to such Licensed Products.

 

 

 

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(g)          Licensee
shall cause to appear on the Licensed Products, and on their containers, packaging, labels, tags, and the like, and on all marketing,
advertising, and promotional materials which display any of the Licensed Property: (i) Licensee’s trade name or trademark
in a manner sufficient to inform consumers that the Licensed Products are manufactured, distributed and/or sold by Licensee, as
the case may be, under license from Licensor, and that the Licensed Property are owned by Licensor; and (ii) such other legends,
markings, and notices as may be required by any law or regulation in the geographic area in which the Licensed Products are sold
and as Licensor may reasonably request.

 

7.            Samples.

 

(a)          Immediately
upon creation of any Prototype Sample and/or the manufacture of any Licensed Products, Licensee shall deliver to Licensor the number
of Prototype Samples and/or Production Samples, as the case may be, as set forth in the Summary of Commercial Terms of each of
the Licensed Products free of charge. Licensor shall have the right to modify the number of samples required to be supplied by
Licensee in its sole discretion.

 

(b)          Licensee
agrees to maintain the quality of the Licensed Products substantially in the form they now exist, which quality Licensor deems
acceptable. On an annual basis, Licensee agrees to submit samples of the Licensed Products (including each variation of the Licensed
Products), together with the packaging therefor, utilizing the Licensed Property, which must be approved in writing by Licensor
before the Licensed Products are advertised, distributed or sold. Any article submitted and not approved within ten business
days after receipt of same by Licensor will be deemed to have been approved. After the requisite samples have been approved by
Licensor, all Licensed Products must materially conform to such a quality standard and appearance as demonstrated by the samples.
In the event there is a departure from the approved samples produced or distributed by Licensee, or in the event there is an occurrence
connected with the Licensed Products which reflects unfavorably upon Licensor, Licensor may withdraw its approval, at which time
this Agreement will automatically terminate with respect to the type of Licensed Products that did not conform to the quality standards
set out by Licensor. Thereupon, Licensee shall immediately cease the use of the Licensed Property on or in connection with the
Licensed Products, including but not limited to, the sale, advertising, production and /or distribution of such Licensed Products
upon notice from Licensor; and within thirty (30) days thereafter will remit all amounts due and owing to Licensor hereunder. If
there are other Licensed Products under this Agreement not affected by this paragraph, this Agreement will remain in full force
and effect as to those other Licensed Products only.

 

(c)          Each
time samples are submitted for approval, they shall be submitted to each of the following addresses (or such other address as Licensor
may specify in writing pursuant to Section 20(b)), in equal quantities, as set forth in the Summary of Commercial Terms or as Licensor
may otherwise indicate from time to time:

 

 

 

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Mr. Ziggy Marley

Tuff Gong Worldwide, Inc.

269 South Beverly Drive, #175

Beverly Hills, CA 90210

Facsimile No.: (310) 205-0590

E-mail Address: ziggy@tuffgongworldwide.com

 

Ms. Cedella Marley

12505 Crescent Way

Miami, FL 33156

Facsimile No.: (786) 953-4677

E-mail Address: cedella@bobmarley.com

 

8.            Copyright
and Trademark.

  

(a)          Each
Licensed Product and all Packaging and Advertisements shall bear appropriate copyright, trademark and credit notices as designated
by Licensor, either directly on the Licensed Product, Packaging and/or Advertisement or on tags, stickers or labels affixed thereto.
(The form in which such notices are to appear is set forth on Schedule 1 hereto.) Licensee shall be obligated to purchase
at Licensee’s expense specially designed labels and/or stickers directly from Labeltex, 350 Fifth Ave, Suite 5622, New York,
NY 10118), and affix same to Licensed Products. However, Licensee may use an alternative vendor if Labeltex does not offer reasonable
or market pricing, provided that such alternative vendor shall be subject to the prior written approval of Licensor, which approval
shall not be unreasonably withheld or delayed. Licensor may change the form of notice to be used on the Products under this Section
8(a) by giving not less than ninety (90) days prior written notice thereof to Licensee.

 

(b)          Ownership
of all intellectual property rights, whether recognized currently or in the future, including, without limitation, copyright, patent
and trademark rights in and to any or all Licensed Products and in all designs, artwork, packaging, copy, literary text, advertising
material and promotion material of any sort utilizing Licensed Property, including all such materials as may be developed by Licensee,
shall vest in Licensor, and title thereto shall be in the name of Licensor or its respective designees. All such items and all
Licensed Products shall bear all legal notices that Licensor may from time to time prescribe. Any and all additions to, and new
renderings, modifications or embellishments of, Licensed Property shall, notwithstanding their invention, creation and use by Licensee
and/or its agents, be and remain the sole and exclusive property of Licensor, and Licensor may use, and license others to use,
the same, subject only to the provisions of this Agreement. Licensee shall enter into written agreements with all of its employees
and independent contractors: (i) providing that all artwork and designs created by them in the course of Licensee’s performance
under this Agreement shall be the property of Licensor either as works for hire under United States copyright law or otherwise,
or (ii) obligating them to assign all rights in and to such artwork and designs to Licensee, which Licensee shall be deemed to
have automatically assigned to Licensor, but Licensee shall, during the Term, have a non-exclusive license to copy and use such
artwork for the purposes set forth herein, subject to the terms of this Agreement. Upon the request of Licensor, Licensee shall
submit to Licensor for approval copies of all such agreements prior to the use of any material created or developed thereunder.
Licensee shall not permit any of its employees or independent contractors to obtain or reserve, by written or oral agreement or
otherwise, any rights as “authors” or “inventors” of any such artwork or designs (as such terms are used
in present or future United States copyright and/or patent statutes or judicial decisions). Licensee shall furnish to Licensor,
at Licensor’s request, full information concerning the invention and creation of such artwork and designs, together with
the originals of assignments of all rights therein obtained from all such third parties to Licensor.

  

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(c)          Licensor
acknowledges that Licensee may already have in existence copyrightable material (“Licensee’s Existing Copyrightable
Material”) that it may or may not use in conjunction with Licensed Property. Further, Licensee may create copyrightable
material (“Licensee’s Future Copyrightable Material”) for use with the Licensed Property and other subject
matter separate from the Licensed Property. To the extent that Licensee’s Existing and Future Copyrightable material are
separable from Licensed Property, such copyrights shall remain vested in Licensee, provided that they do not include the name,
image, photo, persona, trademark and likeness of Robert Marley and/or the Licensed Property.

 

(d)          Licensee
shall assist Licensor, at Licensor’s request and sole cost and expense, in the procurement and maintenance of Licensor’s
rights in Licensed Property (including, without limitation, all intellectual property rights thereon, whether recognized currently
or in the future). In connection therewith, Licensee shall, without limitation, execute and deliver to Licensor, in such form as
it may reasonably request, all instruments necessary to: (i) effectuate copyright and trademark protection; (ii) record Licensee
as a registered user of any trademarks pursuant to this Agreement; or (iii) cancel any such registration. Such registration shall
be handled by attorneys selected or approved by Licensor, in its sole discretion. Licensor makes no representation or warranty
that copyright or trademark protection shall be secured in Licensed Property.

 

(e)          Licensor
and Licensee shall cooperate to ensure that third parties do not unlawfully infringe Licensed Property or engage in any acts of
unfair competition involving Licensed Property. Licensee shall promptly notify Licensor of any such infringements or acts of unfair
competition by third parties that come to its attention. Licensor shall have the exclusive right, exercisable at its discretion,
to institute in its own name and/or Licensee’s name and to control all claims, suits and actions against third parties relating
to the Licensed Property, and other proprietary rights in and to the same, at Licensor’s sole cost and expense. With respect
to any such claim, suit or action, Licensor shall employ counsel of its own choice to direct the handling of the claim, any litigation
related thereto and any settlement thereof. Licensor shall be entitled to receive and retain all amounts awarded, if any, as damages,
profits or otherwise in connection with such claims, suits and/or actions. Licensee shall not, without Licensor’s prior written
consent, make any claim, institute any suit or take any action on account of such infringements, acts of unfair competition or
unauthorized uses. If, with Licensor’s prior written consent, Licensee makes such a claim or institutes, at its sole cost
and expense, such a suit or action, then Licensee shall be entitled to recover all reasonable costs and expenses incurred in connection
with such claim, suit or action from any financial recovery awarded or obtained and the remainder shall be paid to Licensor, less
twenty percent (20%) which Licensee may retain. If Licensee does not prevail on any such claim, suit and/or action, or if there
is a discrepancy, then Licensee may not recover any sums from Licensor in connection with such claim, suit and/or action. Licensor
has no obligation to commence or approve the making or commencement of any claim, suit and/or action. Licensor shall incur no liability
by reason of Licensor’s failure or refusal to prosecute, or by Licensor’s refusal to permit Licensee to prosecute,
any alleged infringement by third parties, or by reason of any settlement to which Licensor may agree.

  

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(f)          Licensor
may withdraw any or all elements of Licensed Property, or any component part thereof, from the rights granted pursuant to the terms
of this Agreement (the “Withdrawn Rights”) if Licensor determines that the exploitation thereof would or might
violate or infringe the copyright, trademark or other proprietary rights of any third parties, or subject Licensor or Licensee
to any liability or violate any law, court order, government regulation or other ruling of any governmental agency or authority,
or if, on account of the expiration or sooner termination of any agreement between Licensor and a third party from whom Licensor
has obtained certain underlying rights relating to the exploitation of Licensed Property hereunder or otherwise, Licensor shall
no longer have the right to act in the capacity herein contemplated on behalf of any third party or parties, or if Licensor determines
that it cannot adequately protect its rights in Licensed Property under the copyright, trademark or other laws of the Territory
or any portion thereof. Such a withdrawal shall not be deemed a breach of this Agreement. Within five (5) business days following
Licensee’s receipt of written notice of such withdrawal, Licensee shall, if so requested by Licensor, in Licensor’s
sole discretion: (a) destroy, or (b) deliver to Licensor at Licensor’s sole cost and expense any Licensed Products which
are in Licensee’s inventory that bear or feature any of the Withdrawn Rights. Licensor shall indemnify Licensee for the direct
production cost of such destroyed or returned Licensed Products; provided, however, that Licensee must furnish Licensor
with: (i) a detailed inventory of such Licensed Products; (ii) source documentation supporting such direct production costs; and
(iii) an affidavit of destruction, if applicable, in a form acceptable to Licensor, evidencing the same. Licensee need not recall
any goods bearing the Withdrawn Rights that have been shipped to retailers as of the date of Licensor’s notice to Licensee
under this paragraph.

 

(g)          Licensee
shall not use any of the Licensed Property, other than as permitted hereunder and, in particular, shall not incorporate the name
or trademark “MARLEY”, Licensor’s name, or any of the trademarks included within the Licensed Property as or
in Licensee’s corporate or business name in any manner whatsoever. Licensee agrees that, in using Licensed Property as permitted
hereunder, it will in no way represent that it has any right, title and/or interest in or to any of the Licensed Property. Licensee
further agrees that, except for the use of the Licensed Property as expressly permitted herein, it will not use or authorize the
use, either during or after the Term, of any configuration, trademark, trade name, or other designation confusingly or substantially
similar to the name or trademark “MARLEY”, the Licensed Property, or any element thereof.

  

    	13

    	 

    

  

(h)          Licensee
acknowledges and agrees that any and all intellectual property rights arising from or relating to the Licensed Products that are
created or developed by Licensee under this Agreement and that qualify as works of authorship belong to Licensor and are “works
made for hire” as defined in Section 101 et seq. of the United States Copyright Act, Title 17, United States Code (“Copyright
Act”). With respect to any and all intellectual property rights created or developed by Licensee under this Agreement
and arising from or relating to the Licensed Products which are not “works made for hire” as defined in the Copyright
Act, including, without limitation, inventions, Licensee hereby assigns all right, title and interest in and to such intellectual
property rights to Licensor. Licensee will execute and deliver any and all documents, including, without limitation, short form
assignments, determined by Licensor to be necessary to perfect its right, title and interest in and to any such intellectual property
rights. Notwithstanding the foregoing, this Section shall not apply to any intellectual property rights that Licensee owned prior
to the Effective Date. If Licensee incorporates into any Licensed Product any invention, design or other work of authorship previously
owned by Licensee, or in which Licensee has an interest (each, a “Prior Work”), Licensee grants to Licensor
a non-exclusive, royalty-free, irrevocable, perpetual, worldwide and assignable license to make, have made, use, or sell Licensed
Products employing or incorporating each such Prior Work.

 

9.            Domain
Name Ownership.

 

(a)          As
between Licensor and Licensee, Licensor shall own all right, title and interest (including, without limitation, all intellectual
property rights) in any URLs and domain names using or incorporating the Licensed Property (including without limitation www.marleycoffee.com),
or any variation thereof. Prior to any use of the Licensed Property on the internet by Licensee or any Permitted Distribution Channel,
Licensee shall use its commercially reasonable best efforts to monitor any use of the Licensed Property on the internet by any
Permitted Distribution Channel and shall submit copies of all proposed uses by Licensee and the Permitted Distribution Channels
to Licensor. Licensee agrees that, to the extent that Licensor finds any use of a Licensed Property on the internet by a Permitted
Distribution Channel to be objectionable, as determined by Licensor in its sole and absolute discretion, Licensee shall use its
commercially reasonable efforts to cause the Permitted Distribution Channel to cease its use of the Licensed Property on the internet.

 

(b)          Licensee
shall have no right to, and hereby agrees not to, register any URL and/or domain name incorporating the Licensed Property or any
variation thereof without the prior written consent of Licensor in each instance, which shall be granted or withheld in Licensor’s
sole and absolute discretion. Licensor shall have the sole right to apply for and obtain at its own cost any URL and/or domain
name that includes any aspect of the Licensed Property and/or any variation thereof in any level domain. If Licensee desires to
use a URL / domain name that incorporates any aspect of the Licensed Property or any variation thereof, it shall submit its proposal
therefor to Licensor in writing. Licensor shall, in its sole and absolute discretion, approve or disapprove such URL and/or domain
name, and Licensor reserves the right to register any such requested URL and/or domain name in its own name or the name of an affiliate
and license it to Licensee. Licensee agrees to cooperate with Licensor in the execution, filing, application and/or registration
of any URL and/or domain name that Licensor may choose to register.

  

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10.           Representations
and Warranties.

 

(a)          Licensor
warrants and represents to Licensee that: (i) it either owns or controls the rights granted herein; (ii) it is authorized to enter
into this Agreement and to license the rights herein granted to Licensee; (iii) it has not sold, assigned, leased, licensed or
in any manner disposed of or encumbered the rights herein granted to Licensee and is otherwise under no disability, restriction
or prohibition from entering into or performing its obligations under this Agreement; and (iv) to the best of its knowledge, Licensee’s
exercise of its rights under this Agreement will not infringe or violate the trademark rights, copyright, right of publicity or
any other intellectual property right of any other person or entity.

 

(b)          Licensee
warrants and represents to Licensor that: (i) it is authorized to enter into this Agreement and to exercise the rights herein granted
to Licensee; (ii) it is under no disability, restriction or prohibition from entering into or performing its obligations under
this Agreement; (iii) Licensee’s exercise of its rights under this Agreement will not infringe upon or violate the trademark
rights, copyright, right of publicity or any other intellectual property right of any other person or entity; (iv) Licensee will
conduct the advertising, promotion and sale of Licensed Products in a manner commensurate with the promotion and sale of high quality
merchandise and in a manner in keeping with the philosophy of Licensor as expressed to Licensee; (v) no manufacturer of Licensed
Products engaged by or on behalf of Licensee shall employ “sweat shop” or inhumane labor conditions; and (vi) it owns
or controls all of Licensee’s Existing or Future Copyrighted Material which Licensee may use in connection with Licensed
Products or any Packaging or Advertisement and the same does not and will not infringe or violate the trademark rights, copyright,
right of publicity or any other intellectual property right of any other person or entity.

 

(c)          All
costs and expenses of manufacture, advertising, promotion, samples, packaging, stickers, labels, tags and other costs and expenses
related to the manufacture, sale, distribution, advertising and promotion of Licensed Products shall be borne by Licensee.

 

11.           Disputes.

 

(a)          Each
party shall promptly notify the other in writing of any dispute arising from the sale of Licensed Products or the use or misuse
of any of the Licensed Property.

 

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(b)          Licensor
in its sole discretion shall determine whether or not it shall commence litigation, or take any other action, in connection with
the use or misuse of the Licensed Property.

 

(c)          Licensee
shall have no authority to make claims, negotiate, settle or compromise any dispute in connection with the Licensed Property.

 

12.         Indemnification.

 

(a)          Licensor
shall indemnify, defend and hold harmless Licensee, and its parents, subsidiaries, affiliated companies and their respective officers,
managers, members, employees, licensees, agents, attorneys, successors and assigns (each, individually, a “Licensee Indemnified
Party”) from and against any and all claims, liabilities, demands, causes of action, judgments, settlements, costs and
expenses (including, without limitation, reasonable attorney fees and court costs) arising solely out of or in connection with:
(i) the breach by Licensor of a representation, warranty or covenant in this Agreement; (ii) the failure by Licensor to perform
any of its obligations under this Agreement; (iii) the gross negligence, bad faith or unlawful conduct of Licensor; and/or (iv)
Licensee’s use of the Licensed Property strictly as authorized hereunder. Licensor shall not be liable to any Licensee Indemnified
Party under this Section 12(a) to the extent that: (A) any loss, claim, damage, liability or expense is determined by a court of
competent jurisdiction to result directly from any such Licensee Indemnified Party’s willful misconduct or gross negligence;
or (B) to the extent that Licensee is required to indemnify Licensor pursuant to Section 12(b) below.

 

(b)          Licensee
shall indemnify, defend and hold harmless Licensor and its parents, subsidiaries, affiliated companies and their respective officers,
directors, shareholders, employees, licensees, agents, attorneys, successors and assigns (each, individually, a “Licensor
Indemnified Party”) from and against any and all claims, liabilities, demands, causes of action, judgments, settlements,
costs and expenses (including, without limitation, reasonable attorney’s fees and court costs) arising out of or in connection
with: (i) the breach by Licensee of a representation, warranty or covenant in this Agreement; (ii) the failure by Licensee to perform
any of its obligations under this Agreement; (iii) the gross negligence, bad faith or unlawful conduct of Licensee; (iv) the design,
manufacture, packaging, distribution, shipment, advertising, promotion, sale and/or exploitation of Licensed Products; (v) any
claim related to the use of third party copyrighted materials on or in connection with Licensed Products; (vi) any representation,
warranty, claim, statement or promise made by Licensee with respect to Licensed Products, including, without limitation, actions
claiming deceptive or misleading advertising or promotion related to Licensed Products or any materials relating thereto; (vii)
the use of Licensed Products, including, without limitation, any bodily injury, death or other product liability claims arising
therefrom; (viii) any claims by any local, state or federal government or regulatory agency, authority or board relating to Licensed
Products or any advertisement for Licensed Products; (ix) claims of copyright infringement, trademark infringement or other intellectual
property infringement relating to Licensed Products (except to the extent covered by Section 12(a) above); and (x) any action or
omission of Licensee in connection with the conduct of Licensee’s business. Licensee shall not be liable to any Licensor
Indemnified Party under this Section 12(b) to the extent that: (A) any loss, claim, damage, liability or expense is determined
by a court of competent jurisdiction to result directly from any such Licensor Indemnified Party’s willful misconduct or
gross negligence; or (B) to the extent that Licensor is required to indemnify Licensee pursuant to Section 12(a) above.

 

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(c)          The
party to be indemnified hereunder (the “Indemnitee”) must give the indemnifying party hereunder (the “Indemnitor”)
prompt written notice of any such action, claim or proceeding, and the Indemnitor, in its sole discretion, then may take such action
as it deems advisable under the circumstances to defend such action, claim or proceeding on behalf of the Indemnitee. In the event
that appropriate action is not taken by the Indemnitor within thirty (30) days after its receipt of written notice from the Indemnitee,
the Indemnitee shall have the right to defend such action, claim or proceeding, but no settlement thereof may be made without the
prior written approval of the Indemnitor, which approval shall not be unreasonably withheld, delayed or conditioned. Even if appropriate
action is taken by the Indemnitor, the Indemnitee may, at its own cost and expense, be represented by its own counsel in such action,
claim or proceeding. In any event, the Indemnitee and the Indemnitor shall keep each other fully advised of all developments and
shall cooperate fully with each other in all respects in connection with any such action, claim or proceeding.

 

(d)          LIMITATION
OF LIABILITY. IN NO EVENT WILL EITHER PARTY BE LIABLE TO THE OTHER FOR ANY SPECIAL, INCIDENTAL, OR CONSEQUENTIAL DAMAGES, WHETHER
BASED ON BREACH OF CONTRACT, TORT, PRODUCT LIABILITY, OR OTHERWISE, AND WHETHER OR NOT SUCH PARTY HAS BEEN ADVISED OF THE POSSIBILITY
OF SUCH DAMAGES. The parties have agreed that the limitations specified in this Section 12(d) will survive and apply even if any
limited remedy specified in this Agreement is found to have failed of its essential purpose.

 

13.         Insurance.
Licensee agrees to obtain, at its sole cost and expense, and to cause its manufacturers to obtain, at their sole cost and expense,
comprehensive general liability insurance, including product liability insurance, from an insurance company reasonably acceptable
to Licensor, providing adequate protection for Licensor and Licensee against any claims or suits arising out of or in connection
with the rights granted under this Agreement in an amount not less than Five Million Dollars ($5,000,000.00) per incident or occurrence,
or Licensee’s standard insurance policy limits, whichever is greater. Such insurance shall remain in force at all times during
the Term and for a period of three (3) years thereafter. Within thirty (30) days from the date hereof, Licensee will submit to
Licensor a certificate of insurance naming Licensor as an additional insured and prohibiting the insurer from canceling, terminating
or materially modifying the underlying insurance policy unless it gives written notice of such termination, cancellation or modification
to Licensor at least thirty (30) days in advance thereof.

 

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14.         Additional
Licensee Obligations.

 

(a)          During
the Term, Licensee shall use its best efforts to develop, manufacture, promote, advertise, sell and ship Licensed Products in the
Permitted Distribution Channels in the Territory and shall continuously and diligently seek to fill all accepted purchase orders
for Licensed Products. In connection therewith, Licensee shall establish and maintain an adequately staffed organization to operate
the business contemplated by this Agreement. A cessation of the above efforts for a continuous period of ninety (90) days shall
be grounds for immediate termination of this Agreement, in Licensor’s sole discretion.

 

(b)          During
the Term, Licensee will not use, or allow third parties to make use of, any Licensed Products for the purpose of premium offers,
giveaways, sales incentives or other such promotional purposes, unless prior written approval is granted by Licensor upon terms
to be mutually agreed.

 

(c)          During
the Term, Licensee will manufacture, advertise, promote, market, sell and distribute Licensed Products in a lawful and ethical
manner and in accordance with the terms and intent of this Agreement.

 

(d)          During
the Term, Licensee will protect to the best of its ability its right to manufacture, sell and distribute Licensed Products hereunder.

 

(e)          During
the Term and at all times thereafter, Licensee will not directly or indirectly attack or challenge the ownership, validity, or
use of the Licensor’s rights in or to the Licensed Property or of any other proprietary rights of Licensor, or assist any
third party in doing the same. Licensee shall not file any applications to register the Licensed Property or any works, names,
trademarks, designs, or logos that are confusingly similar to the Licensed Property in any country of the world for any goods or
services, and shall not register any domain names containing the Licensed Property, any phonetic equivalent thereof, or any domain
names confusingly similar to the Licensed Property in any country of the world, other than <marleycoffee.com>. Licensee shall
not at any time apply for any registration of any copyright, patent, trademark or other designation which would affect the ownership
of the Licensed Property or of any proprietary rights of Licensor, nor file any document with any governmental authority or take
any action which would affect the ownership of any proprietary rights of Licensor, nor aid or abet any other party in doing so.

 

(f)          During
the Term and at all times thereafter, Licensee will not and shall not misuse or bring into disrepute the name and character of
Robert Marley.

 

(g)          During
the Term and at all times thereafter, Licensee will not create any expenses chargeable to Licensor without the prior written approval
of Licensor.

 

(h)          During
the Term and at all times thereafter, Licensee will give Licensor prompt written notice of any adverse use of, application to register,
or registration of, the Licensed Property or other designation similar to the Licensed Property of which Licensee is or becomes
aware. Licensor will have the right, but not the obligation, to bring infringement or unfair competition actions involving the
Licensed Property. If, after written request by Licensee, Licensor declines to bring an infringement or unfair competition action
involving the Licensed Property, then Licensee may do so at its own expense, and Licensor will reasonably cooperate in any such
action as requested by Licensee at Licensee’s expense.

 

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15.         Termination.

 

(a)          Licensor
shall have the right to suspend its performance hereunder or terminate this Agreement in its entirety upon the occurrence of any
of the following events:

 

(i)          The
failure of Licensee to make any payment required to be made under this Agreement, which failure is not cured within ten (10) business
days of Licensee’s receipt of written notice from Licensor specifying the nature of such failure with particularity; or

 

(ii)         The
breach by Licensee of any of its representations or warranties herein or the failure of Licensee to comply with any of the other
terms of this Agreement or otherwise discharge its duties hereunder, and such breach or failure is not cured within fifteen (15)
business days of Licensee’s receipt of written notice from Licensor specifying the nature of such breach or failure with
particularity; or

 

(iii)        Any
act of gross negligence or wanton misconduct by Licensee, and such action is not corrected within fifteen (15) business days of
Licensee’s receipt of written notice from Licensor specifying the nature of such action with particularity; or

 

(iv)        The
cessation of operations by Licensee, or the making by Licensee of an assignment for the benefit of creditors, or the filing by
or against Licensee of any petition under any federal, national, state or local bankruptcy, insolvency or similar laws, if such
filing shall not have been dismissed or stayed within sixty (60) days after the date thereof; or

 

(v)         Any
negative or unlawful finding of Licensee’s or Jammin’ Javas’ activities by the Securities & Exchange Commission
or any similar government agency in any country, territory or possession.

 

(b)          Licensee
shall have the right to suspend its performance hereunder or terminate this Agreement in its entirety upon the occurrence of any
of the following events:

 

(i)          The
breach by Licensor of any of its representations or warranties herein or the failure of Licensor to comply with the terms of this
Agreement or otherwise discharge its duties hereunder, and such breach or failure is not cured within thirty (30) business days
of Licensor’s receipt of written notice from Licensee specifying the nature of such breach or failure with particularity;
or

 

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(ii)         The
cessation of operations by Licensor, or the making by Licensor of an assignment for the benefit of creditors, or the filing by
or against Licensor of any petition under any federal or state bankruptcy, insolvency or similar laws, if such filing shall not
have been dismissed or stayed within sixty (60) days after the date thereof; or

 

(c)          Unless
otherwise provided herein, the right of any party to terminate this Agreement hereunder shall not be affected in any way by its
waiver of or failure to take action with respect to any previous breach or default.

 

(d)          Liability
For Termination. Neither party to this Agreement shall be liable to the other by reason of termination of this Agreement for
compensation, reimbursement or damages on account of any loss of prospective profits on anticipated sales or on account of expenditures,
investments, leases or other commitments relating to the business or goodwill of either party, notwithstanding any law to the contrary.
Licensee will cease all display, advertising and use of all of the Licensed Property and any other names, marks, logos and designations
of Licensor, and will not thereafter use, advertise or display any name, trademark, domain name, vanity telephone number, or logo
which is, or any part of which is, similar to or confusing with the Licensed Property or any such designation associated with Licensor.
Licensee will not alter, erase, deface or overprint any proprietary rights notice(s) on anything provided by Licensor to Licensee.

 

16.         Effect
of Termination.

 

(a)          Subject
to Section 17 below, upon any expiration or termination of this Agreement for any reason whatsoever, all rights in and to the Licensed
Property shall revert to Licensor and Licensee shall have no further rights whatsoever with respect to Licensed Products the Licensed
Property and/or any other intellectual property rights relating thereto. Licensee shall, at its sole cost and expense, return any
of Licensor’s intellectual property, artwork or materials of any kind that are then in its possession or under its control.

 

(b)          Licensee
shall not have any right at any time to remainder or “dump” any Licensed Products. In particular, Licensee may not
sell any Licensed Products at a discount on the trade wholesale price of greater than fifty percent (50%).

 

(c)          In
no event shall any expiration or termination of this Agreement excuse any party from any breach or violation of this Agreement
and full legal and equitable remedies shall remain available therefor, nor shall it excuse the making of any payment due under
this Agreement with respect to any period prior to the date of expiration or termination. Notwithstanding any provision of this
Agreement to the contrary, Sections 4 and Sections 8-21 hereof shall survive any expiration or termination of this Agreement.

 

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17.         Sell-Off
Period. Provided that Licensee is not in breach of any material term of this Agreement, including by way of example and without
limitation, Section 6, then Licensee shall have the non-exclusive right to sell-off existing inventory for a period of one hundred
eighty days following the expiration of the Term (the “Sell-Off Period”). During such period, Licensee shall
not be entitled to use Licensed Property in any new or additional Licensed Products, Advertisements or Packaging of any kind. It
is specifically understood and agreed that Licensee shall not have the right to manufacture or have manufactured any Licensed Products
after the expiration of the Term or for a period of three months prior to the expiration except to fill orders. Following
the expiration of the Sell-Off Period, Licensor shall have the right, but not the obligation, to purchase all existing Licensed
Products remaining in inventory at Licensee’s actual manufacturing cost thereof. If Licensor elects not to purchase any Licensed
Products, then Licensee shall destroy the same and furnish Licensor with a certificate of destruction.

 

18.         Cumulative
Rights and Remedies. All rights and remedies conferred upon or reserved to the parties in this Agreement shall be cumulative
and concurrent and shall be in addition to all other rights and remedies available to such parties at law or in equity or otherwise,
including without limitation requests for temporary and/or permanent injunctive relief. Such rights and remedies are not intended
to be exclusive of any other rights or remedies and the exercise by either party of any right or remedy herein provided shall be
without prejudice to the exercise of any other right or remedy by such party provided herein or available at law or in equity.

 

19.         Confidentiality.

 

(a)          Each
party acknowledges that it may have access to the other party’s Confidential Information, whose value may be impaired by
misuse or by disclosure to third parties. The receiving party agrees that it will not disclose such Confidential Information to
third parties, or use such Confidential Information except to perform its obligations under this Agreement. The receiving party
shall take reasonable precautions to protect the confidentiality of the other party’s Confidential Information. Such precautions
may, if requested by the disclosing party, include the use of separate written confidentiality agreements, in a form approved by
the disclosing party. Following the expiration or termination of this Agreement, no party shall disclose or use any of the other
parties’ Confidential Information for any purpose, unless otherwise agreed in writing by the disclosing party.

 

(b)          All
Confidential Information will remain the property of the disclosing party. The confidentiality of Confidential Information and
the obligation of confidentiality hereunder shall survive any expiration or termination of this Agreement until such time as the
information in question ceases to be confidential.

 

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(c)          For
the purposes hereof, the term “Confidential Information” shall mean any and all proprietary information, technical
data, trade secrets and know-how, including, without limitation, research, product plans, products, services, customers, customer
lists, potential licensees, suppliers, retailers, manufacturers, markets, developments, inventions, processes, formulas, technology,
designs, drawings, manufacturing information, marketing, finances and other business information, which is obtained, received,
developed or derived by any party, either directly or indirectly, by any means of communication or expression, prior to or during
the Term of this Agreement. Confidential Information shall also include the terms and conditions of this Agreement. As used in
this Agreement, the term Confidential Information shall not include any information that is: (i) in the public domain through no
fault of the receiving party; (ii) generally known by persons other than the disclosing party (or its subsidiaries or affiliates),
or persons employed by, in control of or otherwise affiliated with the disclosing party (or its subsidiaries or affiliates); (iii)
general industry practices and industry specific information generally known or by persons with a knowledge of the business within
which the disclosing party operates; (iv) known by the receiving party, by lawful means, prior to the Effective Date; (v) already
known to the receiving party at the time of such disclosure other than as a result of disclosure from a third party subject to
a confidentiality obligation; (vi) subsequently received by the receiving party in good faith from a third party having prior right
to make such subsequent disclosure; (vii) independently developed by the receiving party without use of any confidential or proprietary
information of the disclosing party; (viii) approved in writing for unrestricted release or unrestricted disclosure by the disclosing
party; or (ix) produced or disclosed pursuant to applicable laws, regulations or court order, provided the receiving party has
given the disclosing party written notice of such request (to the extent practicable under the circumstances) such that the disclosing
party has an opportunity to defend, limit or protect such production or disclosure.

 

20.         Miscellaneous.

 

(a)          Relationship
of the Parties. Nothing herein contained shall be construed to constitute the parties hereto as partners or as joint venturers,
or either as the agent of the other and neither party shall have any power to obligate or bind the other party in any manner whatsoever.

 

(b)          Notices.
All notices, requests, demands and other communications required or permitted to be made hereunder shall be in writing and shall
be deemed duly given if hand delivered against a signed receipt therefor, sent by registered or certified mail, return receipt
requested, first class postage prepaid, sent by nationally recognized overnight delivery service, sent by confirmed facsimile transmission,
or sent by confirmed e-mail, in each case addressed to the party entitled to receive the same at the address specified below:

 

(i)           If
to Fifty Six, then to:

 

Hope Road Merchandising, LLC

c/o Doreen Crujeiras

c/o Mike Mitnick

Berdon LLP

360 Madison Avenue

New York, NY 10017

 

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(ii)          If
to Licensee, then to:

 

Jammin’ Java Corp.

8200 Wilshire Blvd., Suite 200

Beverly Hills, CA 90211

Attn: Anh Tran

Telephone No.: (323) 556-0746

 

Either party may alter
the address to which communications are to be sent by giving notice of such change of address in conformity with the provisions
of this Section providing for the giving of notice. Notice shall be deemed to be effective, if personally delivered, when delivered;
if mailed, at midnight on the third business day after being sent by registered or certified mail; if sent by nationally recognized
overnight delivery service, on the next business day following delivery to such delivery service; or on the same day if sent by
confirmed facsimile transmission or confirmed e-mail; provided, however, that if sent by confirmed facsimile transmission
or confirmed e-mail, a copy is also sent by one of the other methods set forth in this Section.

 

(c)          Assignment.
Licensee shall not assign or transfer this Agreement or any of its rights or obligations hereunder, directly or indirectly, by
operation of law or otherwise, without the prior written consent of Licensor. Any attempted assignment or transfer by Licensee
without the prior written consent of Licensor shall be void and of no force or effect. Notwithstanding the foregoing, Licensee
may assign this Agreement without the consent of Licensor as part of a sale of all or substantially all of the assets of Licensee
to any third party (“Purchaser”), in which case this Agreement shall be assumed by and binding upon the Purchaser to
the same extent it would be binding upon Licensee if not for the assignment, sale, transfer or other delegation. Licensor shall
have the right to assign or transfer any or all of its obligations under this Agreement without the knowledge or consent of Licensee,
subject only to Licensor’s obligation to provide written notice thereof to Licensee following the completion of such assignment
or transfer. This Agreement shall be binding upon and inure to the benefit of the parties to this Agreement and their respective
successors and permitted assigns.

 

(d)          Disclaimer.
This Agreement in no manner absolves Licensee of its responsibility, if any, to procure legally sufficient permission from the
copyright owner(s) of any photographs, illustrations and/or artwork utilized in conjunction with the manufacture and distribution
of Licensed Products.

 

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(e)          Governing
Law; Jurisdiction; Waiver of Jury Trial. This Agreement and the legal relations among the parties hereto shall be governed
by and construed in accordance with the laws of the State of California, notwithstanding any conflict of law provisions to the
contrary. The United Nations Convention on Contracts for the International Sale of Goods shall not apply to this Agreement. Any
action which in any way involves the rights, duties and obligations of any party hereto under this Agreement shall be brought in
the courts (State or Federal) located in Los Angeles, CA, and the parties hereto hereby submit to the personal jurisdiction of
such courts, and hereby agree that service of process on any party may be effected by certified mail, return receipt requested,
first class postage prepaid. Each of the parties waives any objection which it may have based on improper venue or forum non conveniens
to the conduct of any such suit or action in any such court. If any action, suit or other proceeding is instituted to remedy, prevent
or obtain relief from a default in the performance by any party of such party’s obligations under this Agreement, the prevailing
party shall recover all of such party’s reasonable attorneys’ fees and costs incurred in each and every such action,
suit or other proceeding, including, without limitation, any and all appeals or petitions therefrom. Each of the parties hereby
waives the right to trial by jury in any and all actions or proceedings in any court, whether the same is between them or to which
they may be parties, and whether arising out of, under, or by reason of this Agreement, or any acts or transactions hereunder or
the interpretation or validity thereof, or out of, under or by reason of any other contract, agreement or transaction of any kind,
nature or description whatsoever, whether between them or to which they may be parties. THIS IS A SPECIFICALLY NEGOTIATED PROVISION
OF THE AGREEMENT. THE PARTIES ACKNOWLEDGE THAT THEY HAVE CONSULTED COUNSEL OF THEIR CHOICE AS TO THE LEGAL IMPACT OF THIS PROVISION.

 

(f)          Attorneys’
Fees. If either party breaches this Agreement, the prevailing party in any proceeding to enforce the terms of this Agreement
is entitled to its reasonable attorneys’ fees and all other costs and/or expenses resulting or made necessary by the bringing
of any action, motion or other proceeding to enforce any of the terms, covenants or conditions of this Agreement.

 

(g)          Entire
Agreement. This Agreement sets forth the entire agreement and understanding between the parties with respect to the subject
matter hereof, and supersedes all prior agreements, understandings, inducements and conditions, whether express or implied, oral
or written, except as herein contained. The express terms hereof shall control and supersede any course of performance and/or usage
of trade inconsistent with any of the terms hereof.

 

(h)          Amendment
and Modification. This Agreement may be amended, modified and supplemented only by written agreement duly executed and delivered
by each of the parties hereto.

 

(i)          Waiver.
A waiver by any party of any of the terms and conditions of, or rights under, this Agreement shall not be effective unless signed
by the party waiving such term, condition or right and shall not bar the exercise of the same right on any subsequent occasion
or any other right at any time or be deemed or construed to be a waiver of such terms or conditions for the future.

 

(j)          Delays.
Neither the failure of nor any delay on the part of any party to exercise any right, remedy, power or privilege under this Agreement
shall operate as a waiver thereof, nor shall any single or partial exercise of any right, remedy, power or privilege preclude any
other or further exercise of the same or of any other right, remedy, power or privilege.

 

    	24

    	 

    

 

(k)          Severability.
If and to the extent that any court of competent jurisdiction holds any provision or any part of this Agreement to be invalid or
unenforceable, such holding shall in no way affect the validity or enforceability of the remainder of this Agreement, and this
Agreement shall be construed as if such invalid or unenforceable provision had never been contained herein. The parties further
agree to replace such void or unenforceable provision of this Agreement with a valid and enforceable provision that will achieve,
to the extent possible, the economic, business and other purposes of the void or unenforceable provision, or to otherwise construe
such provision in a manner that renders it valid and enforceable.

 

(l)          Headings.
Headings in this Agreement are included for ease of reference only and shall have no legal effect.

 

(m)          Counterparts.
This Agreement may be executed in counterparts, each of which shall be deemed to constitute an original of the same Agreement,
and all of which together shall constitute one single agreement, which shall be effective upon the execution hereof by all parties.
A complete set of counterparts shall be made available to each party.

 

(n)          Form
and Construction. The headings used in this Agreement are for convenience of reference only and do not constitute substantive
matter to be considered in construing the terms of this Agreement. As used in this Agreement, the masculine gender shall include
the feminine and the singular form of words shall include the plural, or vice versa, as necessary in order that this Agreement
may be interpreted so as to conform to the subject matter actually existing. The language of this Agreement shall be construed
as a whole and not strictly for or against any of the parties regardless of who drafted or was principally responsible for drafting
this Agreement or any of its specific terms or conditions.

 

(o)          Schedules
and Exhibits. All schedules and exhibits referenced in this Agreement, if any, are hereby incorporated by reference into, and
made a part of, this Agreement.

 

(p)          Transaction
Expenses. Each party shall be responsible for its own expenses relating to the negotiation of this Agreement.

 

(q)          Currency
and Exchange Rate Issues. All sums set forth in this Agreement and any appendices, exhibits or schedules hereto are, and are
intended to be, expressed in United States dollars. All payments or remittances due under this Agreement shall be paid in the United
States in United States Dollars at the “Foreign Exchange Rate.” For the purposes hereof, the term “Foreign
Exchange Rate” means, for any particular currency, the spot rate for such currency as quoted at www.oanda.com (to the
extent that www.oanda.com provides quotations therefore, or such other resource that is mutually satisfactory to the Licensor and
Licensee) at 9:00 a.m., Eastern time, on the third business day prior to the date on which any relevant payment hereunder is made.

 

    	25

    	 

    

 

(r)          Further
Assurances. From and after the date of this Agreement, upon the request of either party, each party will execute and deliver
such instruments, documents or other writings as may be reasonably necessary or desirable to confirm and carry out and to effectuate
fully the intent and purposes of this Agreement.

 

(s)          Equitable
Remedies. Each party to this Agreement shall be entitled to obtain equitable relief to protect its interests herein, including
without limitation injunctive relief, without the need to prove actual damages or for the posting of a bond.

 

21.         Bootlegging
Activity. Neither Licensee nor any of its subsidiaries, affiliated companies and/or their principals (i.e., owners, officers,
directors and/or managers) shall be involved, directly or indirectly, in any act of counterfeiting or piracy or in the unauthorized
manufacture, distribution, advertising, sale and/or offering of any merchandise or products bearing the name, trademark, logo or
likeness of any other person or entity. Without limiting any other provision of this Agreement, any violation by or on behalf of
Licensee of this Section shall constitute a material breach entitling Licensor to immediately terminate this Agreement.

 

LICENSEE, BY ITS SIGNATURE,
ACKNOWLEDGES THAT IT HAS READ THIS AGREEMENT, UNDERSTANDS IT, AND AGREES TO ALL OF ITS TERMS AND CONDITIONS.

 

    	26

    	 

    

 

This Agreement shall
not become effective until it has been signed by Licensee and accepted by Licensor at its offices on the date indicated below.

 

IN WITNESS WHEREOF, the parties hereto have
executed this Agreement as of the Effective Date.

 

	LICENSEE:	 	LICENSOR:
	 	 	 
	JAMMIN JAVA CORP.	 	FIFTY-SIX HOPE ROAD MUSIC LIMITED
	 	 	 	 
	By:	/s/ Anh Tien Tran	 	By: HOPE ROAD MERCHANDISING, L.L.C., a Florida limited liability company, the licensing agent for FIFTY-SIX HOPE ROAD MUSIC LIMITED
	 	 	 	 	 
	Print:	Anh Tien Tran	 	By:	/s/ Rohan Marley 
	 	 	 	 	 
	Title:	President	 	Print:	Rohan Marley
	 	 	 	 	 
	Date: September 13, 2012 	 	Title:	Director
	 	 	 	 	 
	 	 	 	Date of acceptance: September 13, 2012

 

    	27

    	 

    

  

SCHEDULE
1

 

Legal Notices

 

This SCHEDULE 1 is attached to and made
part of the Agreement. Such legal notices may be amended and modified unilaterally from time
to time by Licensor, and for the purposes of this Agreement will take effect upon written notice to Licensee.

 

Each Licensed Product and all Packaging
and Advertisements shall bear one or more of the following notices, as appropriate:

 

BOB MARLEY, MARLEY COFFEE, MARLEY COFFEE STIR IT UP!,
and the Lion Logo are trademarks of Fifty-Six Hope Road Music Limited.

 

The following registered Bob Marley logo
and copyright notice must be prominently displayed on all products.

 

 

copyright notice:

 

©FIFTY-SIX HOPE ROAD MUSIC LIMITED.

 

www.bobmarley.com

 

Please note that on all non-apparel products the year of first
publication should precede Fifty-Six Hope Road Music Limited. (i.e. © 2007 Fifty-Six Hope Road Music Limited.)

 

The following notice should be used with the trademark MARLEY
COFFEE:

 

MARLEY COFFEE®

 

The logo can appear in either one color or full color.

 

 

    	28

    	 

    

 

 

    	29

    	 

    

 

 

    	30

    	 

    

 

 

    	31

    	 

    

 

 

    	32

    	 

    

 

 

    	33

    	 

    

 

EXHIBIT B

 

LICENSOR APPROVAL/EVALUATION FORM

 

DATE:

 

SUBMITTING LICENSEE:

 

STAGE IN DEVELOPMENT: CONCEPT OR SAMPLE

 

STYLE # AND DESCRIPTION:

 

In connection with the above noted submission for approval,
our response is as follows:

 

	APPROVED	BY:__________________  DATE:
	 	 
	RESUBMIT	BY:__________________  DATE:
	WITH CHANGES	 

 

	CHANGES:	________________________________________________
	 	 
	 	________________________________________________
	 	 
	 	________________________________________________

 

ANY MATERIAL SUBMITTED FOR APPROVAL WHICH REQUIRES ANY CHANGES
OR MODIFICATION MUST BE RESUBMITTED FOR FURTHER APPROVAL. NO APPROVAL SHALL BE DEEMED GIVEN BY MERELY MAKING THE REQUESTED CHANGES.

 

	DISAPPROVED	BY:__________________  DATE:

 

	EXPLANATION:	_________________________________________
	 	 
	 	_________________________________________

 

ADDITIONAL COMMENTS

 

	 
	 
	 

 

    	34

    	 

    

 

EXHIBIT C

 

MANUFACTURERS AGREEMENT

 

This Manufacturer’s Agreement is made
by and between ________________________ “LICENSEE” and _____________________ “Manufacturer” located at
______________________.

 

WHEREAS, LICENSEE has entered into a License
Agreement with Hope Road Merchandising, L.L.C. (“OWNER”) dated ___________________ for the manufacture, distribution
and sale of certain LICENSED PRODUCTS bearing certain trademarks of OWNER that are identified on the attached EXHIBIT
1 (“PROPERTY”);

 

WHEREAS, LICENSEE desires Manufacturer to
manufacture or supply materials for the manufacture of certain LICENSED PRODUCTS bearing the PROPERTY, which are subject to such
License Agreement;

 

WHEREAS, pursuant to said License Agreement,
all suppliers and manufacturers utilized by LICENSEE in the manufacture of LICENSED PRODUCTS must agree to certain conditions;

 

NOW, THEREFORE, for good and valuable consideration,
the receipt and sufficiency of which are hereby acknowledged, Manufacturer agrees as follows:

 

1.          Manufacturer
acknowledges that the PROPERTY are the sole property of OWNER and that Manufacturer’s right to manufacture the LICENSED PRODUCTS
with the PROPERTY thereon is in all respects subject to the terms and conditions of the License Agreement. All manufacturing
rights to the LICENSED PRODUCTS are subject to the restrictions on the use of the PROPERTY and the termination provisions of the
License Agreement. The manufacture of the LICENSED PRODUCTS shall give Manufacturer no right to use the PROPERTY or to sell LICENSED
PRODUCTS bearing the PROPERTY beyond the term or outside the scope of the License Agreement. If OWNER terminates the License Agreement,
Manufacturer shall have no claim against OWNER for any reason whatsoever.

 

2.          Manufacturer
shall not make or sell, or cause to be made or sold, the LICENSED PRODUCTS to any person or entity except LICENSEE.

 

    	35

    	 

    

 

3.          Manufacturer
shall conform to all local laws and customs regarding hiring practices, wage and working conditions. Manufacturer shall comply
with all of the provisions of the attached Standards of Manufacturing Practices, (a copy of which shall be provided to Manufacturer
by Licensee upon signing hereof), including, without limitation, Owner’s right to inspect Manufacturer’s facilities.
Under no circumstances shall Manufacturer involve the production of LICENSED PRODUCTS in an environment where underage labor is
employed. Manufacturer shall not utilize factories or production facilities that force work to be performed by unpaid laborers
or those who must otherwise work against their will. LICENSEE shall monitor Manufacturer’s factories and work environment
to ensure compliance to these policies and obtain verification of compliance. If Manufacturer is found not to be in compliance
with the above requirements, they will no longer be permitted to be a manufacturer of LICENSED PRODUCTS and this Manufacturer’s
Agreement shall automatically terminate.

 

4.          OWNER
shall be deemed an intended third party beneficiary of this Agreement and shall have the right, in its sole discretion, to enforce
its provisions against Manufacturer.

 

	MANUFACTURER	 	LICENSEE
	 	 	 	 	 
	By:	 	 	By:	 
	 	Signature	 	 	Signature
	 	 	 	 	 
	 	 	 	 
	Printed Name	 	 	Printed Name
	 	 	 	 	 
	 	 	 	 
	Title	 	 	Title
	 	 	 	 	 
	 	 	 	 
	Date	 	 	Date

 

    	36

    	 

    

 

Standards of Manufacturing Practices

Overview

In order to maintain high standards for
decent and humane working conditions in the manufacturing operations of OWNER or its LICENSEES, OWNER has established specific
minimum guidelines for its manufacturing partners around the world. OWNER’s supplier selection process requires all factories
with which OWNER or its LICENSEES contracts to operate in compliance with local laws and, in addition, to meet the specific Standards
of Manufacturing Practices set forth below through a monitored certification process.

 

OWNER believes that the following set of
standards will help ensure that decent and humane working conditions are provided to the employees of the factories with which
OWNER or its LICENSEE's contracts. Where a factory is found to be in violation of the Standards, corrective action will
be initiated and unless the violation is corrected, OWNER may require the LICENSEE to cease to do business with the offending factory.
OWNER believes that consumers can have confidence that products manufactured in compliance with these standards are not produced
under exploitative or inhumane conditions.

 

Standards of Practice

 

Forced Labor

MANUFACTURER certifies that it
does not use any forced labor - prison, indentured, bonded or otherwise.

 

Child Labor

MANUFACTURER certifies that no
person shall be employed in any factory at an age younger than 15 (or 14 where the law of the country of manufacture allows) or
younger than the age for completing compulsory education in the country of manufacture where such age is higher than 15.

 

Harassment or Abuse

MANUFACTURER certifies every
employee shall be treated with respect and dignity. No employee shall be subject to any physical, sexual, psychological or verbal
harassment or abuse.

 

Nondiscrimination

MANUFACTURER certifies that no
person shall be subject to any discrimination in employment, including hiring, salary, benefits, advancement, discipline, termination
or retirement, on the basis of race, religion, gender, age, disability, sexual orientation, nationality, political opinion, social
or ethnic origin, or any other characteristic that is protected by applicable law.

 

Health and Safety

MANUFACTURER certifies that workers
will be provided a safe and healthy working environment to prevent accidents and injury to health arising out of, linked with,
or occurring in the course of work or as a result of the operation of contractors’ facilities.

    	37

    	 

    

 

Freedom of Association and Collective
Bargaining

MANUFACTURER certifies that,
as applicable, employees’ rights to freedom of association and collective bargaining will be recognized and respected.

 

Wages and Benefits 

MANUFACTURER certifies that it
complies with all applicable wage and hour laws and regulations, and that employees will be paid at least the minimum wage required
by local law, or the prevailing industry wage, whichever is higher.

 

Hours of Work/Overtime

MANUFACTURER certifies that it
complies with applicable regulations concerning work hours mandated by local laws and uses overtime only when employees are compensated
according to local law. MANUFACTURER further certifies that it will not allow employees to exceed the maximum number of overtime
hours provided by local law.

 

Benefits

MANUFACTURER certifies that it
complies with all applicable provisions for legally-mandated benefits, including but not limited to health care; child care; sick
leave; contributions for social security; life, health, worker’s compensation and other insurance mandated by local law.

 

Environment

MANUFACTURER certifies that it
complies with applicable country environmental regulations.

 

Documentation and Inspection

MANUFACTURER agrees
to:

		(A)	Certify to OWNER on an annual basis in writing that each of the above-listed Standards is
being met.

		(B)	Maintain on file such documentation as may be needed to demonstrate compliance with the Standards
of Manufacturing Practices

		(C)	Make these documents available in the English language to LICENSEE for audit inspection upon request.

		(D)	Provide employees with the opportunity to report noncompliance with workplace standards outlined
herein, free from punishment or prejudice for so doing.

		(E)	Post the Standards in the language of the country of manufacture in a common area accessible
by all employees.

 

    	38

    	 

    

 

EXHIBIT D

 

TRADEMARKS

 

1.          MARLEY
COFFEE

 

2.          MARLEY
COFFEE STIR IT UP

 

		3.	

 

		4.	

 

    	39

    	 

    

 

EXHIBIT E

 

TRADEMARK APPLICATIONS AND REGISTRATIONS

OF MARLEY COFFEE

 

Licensor owns the following trademarks and
applications of MARLEY and MARLEY COFFEE STIR IT UP & DESIGN:

 

	trademark	application no./
 registration no.	filing date/
 registration date	country	Status
	
        MARLEY COFFEE STIR IT UP & Design

        
	
        1,297,157

        1,297,157
	
        4/30/09

        10/14/10
	Australia	Registered
	
        MARLEY COFFEE STIR IT UP & Design

        
	1,437,697	5/11/09	Canada	Pending
	
        MARLEY COFFEE

         
	
        1,369,423

        TMA 733,013
	
        10/26/07

        1/22/09
	Canada	Registered
	
        MARLEY COFFEE STIR IT UP & Design

        
	
        8,260,821

        8,260,821
	
        4/29/09

        12/1/09
	European Union	Registered
	
        MARLEY COFFEE STIR IT UP & Design

        
	
        301,345,491

        301,345,491
	
        5/19/09

        10/8/09
	Hong Kong	Registered
	
        MARLEY COFFEE STIR IT Up & Design

        
	
        2009-050272

        5,311,805
	
        7/2/09

        3/26/10
	Japan	Registered
	
        MARLEY COFFEE STIR IT UP & Design

        
	
        2009-033033

        5,405,033
	
        4/30/09

        4/8/11
	Japan	Registered

 

    	40

    	 

    

 

	trademark	application no./
 registration no.	filing date/
 registration date	country	Status
	
        MARLEY COFFEE STIR IT UP & Design

        
	
        2010-042113

        5,338,881

        divisional
	
        5/27/10

        7/16/10
	Japan	Registered
	
        MARLEY COFFEE STIR IT UP & Design

        
	53849	4/19/10	Jamaica	Registered
	MARLEY COFFEE	TMA 733,013	1/22/09	Canada	Registered
	MARLEY COFFEE	77/465,753	5/5/08	U.S.	Allowed
	MARLEY COFFEE	77/465,923	5/5/08	U.S.	Allowed
	MARLEY COFFEE	77/465,974	5/5/08	U.S.	Allowed
	MARLEY COFFEE	3,871,574	11/2/10	U.S.	Registered
	MARLEY COFFEE	77/466,002	5/5/08	U.S.	Allowed
	MARLEY COFFEE	77/466,111	5/5/08	U.S.	Allowed
	MARLEY COFFEE	77/466,142	5/5/08	U.S.	Allowed
	MARLEY COFFEE	3,778,736	4/20/10	U.S.	Registered
	MARLEY COFFEE	77/466,194	5/5/08	U.S.	Allowed

 

    	41Wells Fargo Bank

 

CREDIT AGREEMENT

 

dated as of

 

September 27, 2012

 

among

 

JAKKS PACIFIC, INC.,

a Delaware corporation, and

ITS DIRECT AND INDIRECT SUBSIDIARIES

THAT NOW OR FROM TIME TO TIME HEREAFTER BECOME PARTIES HERETO,

as Borrowers,

 

and

 

WELLS FARGO BANK, NATIONAL ASSOCIATION,

as Bank

 

$75,000,000

  

 

 

    	 

    	 

    

 

TABLE OF
CONTENTS

 

	 	 	Page
	 	 	 
	ARTICLE I DEFINITIONS AND INTERPRETATIONS	1
	 	 
	1.1	Definitions	1
	 	 	 
	1.2	Accounting Terms and Determinations	33
	 	 	 
	1.3	UCC Terms	33
	 	 	 
	1.4	Computation of Time Periods	33
	 	 	 
	1.5	Construction	33
	 	 	 
	1.6	Exhibits and Schedules	33
	 	 	 
	1.7	No Presumption Against Any Party	33
	 	 	 
	1.8	Independence of Provisions	33
	 	 	 
	ARTICLE II TERMS OF THE CREDIT	34
	 	 
	2.1	Revolving Loans	34
	 	 	 
	2.2	Reserved	34
	 	 	 
	2.3	Reserved	34
	 	 	 
	2.4	Interest Rates; Payments of Interest	35
	 	 	 
	2.5	Notice of Borrowing Requirements	36
	 	 	 
	2.6	Conversion or Continuation Requirements	37
	 	 	 
	2.7	LIBOR Costs	38
	 	 	 
	2.8	Illegality; Impossibility	39
	 	 	 
	2.9	Inability to Determine Rates	39
	 	 	 
	2.10	Recovery of Additional Costs	39
	 	 	 
	2.11	Notes; Statements of Obligations	40
	 	 	 
	2.12	Holidays	40
	 	 	 
	2.13	Time and Place of Payments	40

 

    	i

    	 

    

  

	2.14	Reserved	41
	 	 	 
	2.15	Fees	41
	 	 	 
	ARTICLE III LETTERS OF CREDIT	41
	 	 
	3.1	Letters of Credit	41
	 	 	 
	3.2	Procedure for Issuance of Letters of Credit	42
	 	 	 
	3.3	Fees, Commissions and Other Charges	43
	 	 	 
	3.4	Outstanding Letters of Credit Following Event of Default; Outstanding Letters of Credit Following the Revolving Loans Maturity Date	43
	 	 	 
	3.5	Conflicting Terms	44
	 	 	 
	ARTICLE IV CONDITIONS PRECEDENT	44
	 	 
	4.1	Conditions to Initial Loans or Letter of Credit	44
	 	 	 
	4.2	Conditions to all Loans and Letters of Credit	45
	 	 	 
	4.3	Conditions Subsequent to all Loans and Letters of Credit	46
	 	 	 
	ARTICLE V REPRESENTATIONS AND WARRANTIES	46
	 	 
	5.1	Legal Status	47
	 	 	 
	5.2	No Violation; Compliance	47
	 	 	 
	5.3	Authorization; Enforceability	47
	 	 	 
	5.4	Approvals; Consents	47
	 	 	 
	5.5	Liens	47
	 	 	 
	5.6	Debt	47
	 	 	 
	5.7	Litigation	48
	 	 	 
	5.8	No Default	48
	 	 	 
	5.9	Ownership of Parent; Subsidiaries	48
	 	 	 
	5.10	Taxes	48
	 	 	 
	5.11	Correctness of Financial Statements; No Material Adverse Change	49
	 	 	 
	5.12	ERISA	49

 

    	ii

    	 

    

 

	5.13	Full Disclosure	49
	 	 	 
	5.14	Other Obligations	49
	 	 	 
	5.15	Investment Company Act	50
	 	 	 
	5.16	Patents, Trademarks, Copyrights, and Intellectual Property	50
	 	 	 
	5.17	Environmental Condition	50
	 	 	 
	5.18	Solvency	50
	 	 	 
	5.19	Disclosure	50
	 	 	 
	5.20	Labor Matters	51
	 	 	 
	5.21	Deposit Accounts	51
	 	 	 
	5.22	Brokers	51
	 	 	 
	5.23	Customer and Trade Relations	51
	 	 	 
	5.24	Material Contracts	51
	 	 	 
	5.25	Casualty	52
	 	 	 
	5.26	Eligible Accounts	52
	 	 	 
	5.27	Eligible Inventory	52
	 	 	 
	5.28	OFAC	52
	 	 	 
	5.29	Patriot Act	52
	 	 	 
	ARTICLE VI AFFIRMATIVE COVENANTS	52
	 	 
	6.1	Punctual Payments	52
	 	 	 
	6.2	Books and Records; Collateral Audits; Appraisals	53
	 	 	 
	6.3	Collateral Reporting and Financial Statements	53
	 	 	 
	6.4	Existence; Preservation of Licenses; Compliance with Law	55
	 	 	 
	6.5	Insurance	55
	 	 	 
	6.6	Assets	56
	 	 	 
	6.7	Taxes and Other Liabilities	56

 

    	iii

    	 

    

 

	6.8	Notice to Bank	56
	 	 	 
	6.9	Employee Benefits	57
	 	 	 
	6.10	Further Assurances	58
	 	 	 
	6.11	Bank Accounts	58
	 	 	 
	6.12	Environment	58
	 	 	 
	6.13	Additional Collateral	58
	 	 	 
	6.14	Additional Borrowers or Guarantors	59
	 	 	 
	6.15	Factoring Agreements	59
	 	 	 
	6.16	Customs Broker/Carrier Agreements; Collateral Access Agreements	59
	 	 	 
	ARTICLE VII NEGATIVE COVENANTS	59
	 	 
	7.1	Use of Funds; Margin Regulation	59
	 	 	 
	7.2	Debt	59
	 	 	 
	7.3	Liens	60
	 	 	 
	7.4	Merger, Consolidation, Transfer of Assets	60
	 	 	 
	7.5	Reserved	60
	 	 	 
	7.6	Sales and Leasebacks	60
	 	 	 
	7.7	Dispositions	60
	 	 	 
	7.8	Investments	60
	 	 	 
	7.9	Character of Business	60
	 	 	 
	7.10	Restricted Payments	60
	 	 	 
	7.11	Guarantee	61
	 	 	 
	7.12	Capital Expenditures	61
	 	 	 
	7.13	Transactions with Affiliates	61
	 	 	 
	7.14	Stock Issuance	62
	 	 	 
	7.15	Financial Condition	62

 

    	iv

    	 

    

 

	7.16	Transactions Under ERISA	62
	 	 	 
	7.17	OFAC	63
	 	 	 
	7.18	Fiscal Year	63
	 	 	 
	7.19	Burdensome Agreements	63
	 	 	 
	ARTICLE VIII EVENTS OF DEFAULT AND REMEDIES	63
	 	 
	8.1	Events of Default	63
	 	 	 
	8.2	Remedies	66
	 	 	 
	8.3	Appointment of Receiver or Trustee	66
	 	 	 
	8.4	Remedies Cumulative	66
	 	 	 
	8.5	Application of Proceeds	66
	 	 	 
	ARTICLE IX TAXES	67
	 	 
	9.1	Taxes on Payments	67
	 	 	 
	9.2	Indemnification For Taxes	67
	 	 	 
	9.3	Evidence of Payment	68
	 	 	 
	ARTICLE X MISCELLANEOUS	68
	 	 
	10.1	Notices	68
	 	 	 
	10.2	No Waivers	68
	 	 	 
	10.3	Expenses; Documentary Taxes; Indemnification	68
	 	 	 
	10.4	Amendments and Waivers	70
	 	 	 
	10.5	Successors and Assigns; Participations; Disclosure; Register	70
	 	 	 
	10.6	Confidentiality	71
	 	 	 
	10.7	Counterparts; Integration	72
	 	 	 
	10.8	Severability	72
	 	 	 
	10.9	Knowledge	72
	 	 	 
	10.10	Bank Product Providers	72

 

    	v

    	 

    

 

	10.11	Additional Waivers	73
	 	 	 
	10.12	Destruction of Borrowers’ Documents	73
	 	 	 
	10.13	Revival and Reinstatement of Obligations	74
	 	 	 
	10.14	CHOICE OF LAW AND VENUE; JURY TRIAL WAIVER	74
	 	 	 
	10.15	ARBITRATION	75
	 	 	 
	10.16	Updating Disclosure Schedules	77
	 	 	 
	10.17	Patriot Act Notification	77
	 	 	 
	ARTICLE XI JOINT AND SEVERAL LIABILITY; SINGLE LOAN ACCOUNT	78
	 	 
	11.1	Joint and Several Liability	78
	 	 	 
	11.2	Primary Obligation; Waiver of Marshaling	78
	 	 	 
	11.3	Financial Condition of Borrowers	78
	 	 	 
	11.4	Continuing Liability	78
	 	 	 
	11.5	Additional Waivers	79
	 	 	 
	11.6	Settlements or Releases	80
	 	 	 
	11.7	No Election	81
	 	 	 
	11.8	Indefeasible Payment	81
	 	 	 
	11.9	Single Loan Account	81
	 	 	 
	11.10	Apportionment of Proceeds of Loans	82
	 	 	 
	11.11	Parent as Agent for Borrowers	82

 

    	vi

    	 

    

 

Exhibits and Schedules

 

	Exhibit 1.1A	Form of Addendum
	Exhibit 1.1B	Form of Borrowing Base Certificate
	Exhibit 2.5(b)	Form of Notice of Borrowing
	Exhibit 2.6(b)	Form of Notice of Conversion or Continuation
	Exhibit 6.3(c)	Form of Compliance Certificate
	 	 
	Schedule 1.1B	Initial Borrowers
	Schedule 1.1E	Locations of Eligible Inventory
	Schedule 5.7	Litigation
	Schedule 5.9(a)	Ownership of Parent
	Schedule 5.9(b)	Ownership of Subsidiaries
	Schedule 5.12	Employee Benefit Plans
	Schedule 5.17	Environmental Condition
	Schedule 5.20	Labor Matters
	Schedule 5.21	Deposit Accounts
	Schedule 5.24	Material Contracts

 

    	vii

    	 

    

 

CREDIT AGREEMENT

 

This CREDIT AGREEMENT,
dated as of September 27, 2012, is entered into by and among JAKKS PACIFIC, INC., a Delaware corporation (“Parent”),
the Persons listed on Schedule 1.1B, and one or more additional direct or indirect Subsidiaries of Parent, hereafter acquired
or formed, which become party to this Agreement by executing an Addendum (Parent, the Persons listed on Schedule 1.1B, and
such other Subsidiaries are sometimes individually referred to herein as a “Borrower” and collectively referred
to herein as “Borrowers”), and Wells Fargo Bank, National Association (“Bank”).

 

NOW, THEREFORE, the
parties hereto hereby agree as follows:

 

ARTICLE
I

DEFINITIONS AND INTERPRETATIONS

 

1.1           Definitions.
The following terms, as used herein, shall have the following meanings:

 

“Acceptable
Document of Title” means, with respect to any Inventory, a tangible or electronic negotiable bill of lading or other
Document (as defined in the UCC) that (a) is issued by a common carrier or freight consolidator which is not an Affiliate of the
Foreign Vendor or any Loan Party and which is in actual possession of such Inventory, (b) is issued to the order of a Loan Party
or, if so requested by Bank after the occurrence and during the continuance of a Default or Event of Default, to the order of Bank,
(c) is not subject to any Lien (other than Permitted Liens), and (d) is on terms otherwise reasonably acceptable to Bank.

 

“Acceptable
Letter of Credit” means a standby letter of credit, issued by a bank or financial institution acceptable to Bank in its
Permitted Discretion, in form and substance satisfactory to Bank in its Permitted Discretion, in an amount equal to 105% of the
Letter of Credit Usage, naming Bank as beneficiary to reimburse payments of drafts drawn under outstanding Letters of Credit.

 

“Account Debtor”
has the meaning given to such term in the UCC.

 

“Accounts”
means any and all of each Borrower’s presently existing and hereafter arising accounts (as defined in the UCC).

 

“ACH Transactions”
means any cash management or related services (including the Automated Clearing House processing of electronic fund transfers through
the direct Federal Reserve Fedline system) provided by Bank for the account of a Borrower.

 

“Addendum”
means an Addendum hereto in the form of Exhibit 1.1A.

 

“Administrative
Borrower” has the meaning given to such term in Section 11.11.

 

    	1

    	 

    

 

“Affiliate”
means any Person (i) that, directly or indirectly, controls, is controlled by or is under common control with any Borrower
or any Subsidiary; (ii) which directly or indirectly beneficially owns or controls ten percent (10%) or more of any class
of voting stock of any Borrower or any Subsidiary; or (iii) ten percent (10%) or more of the voting stock of which is directly
or indirectly beneficially owned or held by any Borrower or any Subsidiary. For purposes of the foregoing, control (including controlled
by and under common control with) shall mean the possession, directly or indirectly, of the power to direct or cause the direction
of the management and policies of a Person, whether through the ownership of voting securities, by contract or otherwise.

 

“Agreement”
means this Credit Agreement, as amended, supplemented, restated or otherwise modified from time to time in accordance with its
terms.

 

“Applicable
Laws” means all applicable laws, rules, regulations and orders of any Governmental Authority, including without limitation,
regulations issued by the Office of the Comptroller of the Currency, Credit Protection Laws, the Fair Labor Standards Act, and
the Americans With Disabilities Act.

 

“Applicable
Margin” means the margin set forth in the table below for the Type of Loan indicated opposite the applicable Funded Debt
to Consolidated EBITDA Ratio disclosed in the latest Compliance Certificate delivered pursuant to Section 6.3(c), subject to Section
2.4(f) (provided that if an Event of Default has occurred and is continuing, at Bank’s option, in addition to and
not in substitution of any of Bank’s other rights and remedies with respect to such Event of Default, the Applicable Margin
shall be Level II notwithstanding anything to the contrary herein):

 

	Level	 	Funded Debt to
 Consolidated
 EBITDA Ratio	 	Applicable Margin
 for Prime Lending
 Rate Portions	 	Applicable Margin
 for LIBOR Lending
 Rate Portions
	I	 	Less than 2.50:1.0	 	-0.50 percentage points (-50 basis points)	 	1.50 percentage points (150 basis points)
	II	 	Greater than or equal to 2.50:1.0	 	0.00 percentage points (0 basis points)	 	2.00 percentage points (200 basis points)

 

“Applicable
Percentage” means the percentage set forth in the table below opposite the applicable Funded Debt to Consolidated EBITDA
Ratio disclosed in the latest Compliance Certificate delivered pursuant to Section 6.3(c), subject to Section 2.4(f) (provided
that if an Event of Default has occurred and is continuing, at Bank’s option, in addition to and not in substitution of any
of Bank’s other rights and remedies with respect to such Event of Default, the Applicable Percentage shall be Level II notwithstanding
anything to the contrary herein):

 

    	2

    	 

    

 

	Level	 	Funded Debt to
 Consolidated EBITDA
 Ratio	 	Applicable Percentage
 for Standby Letter of
 Credit Fee	 	 	Applicable
 Percentage for
 Unused Revolving
 Credit
 Commitment Fee	 
	I	 	Less than 2.50:1.0	 	 	1.50	%	 	 	0.125	%
	II	 	Greater than or equal to 2.50:1.0	 	 	2.00	%	 	 	0.25	%

 

“Appraisal
Fee” has the meaning given to such term in Section 6.2.

 

“Asset”
means any interest of a Person in any kind of property or asset, whether real, personal, or mixed real and personal, and whether
tangible or intangible.

 

“Attributable
Indebtedness” means, on any date, (a) in respect of any Capital Lease Obligation of any Person, the capitalized amount
thereof that would appear on a balance sheet of such Person prepared as of such date in accordance with GAAP, and (b) in respect
of any Synthetic Lease Obligation, the capitalized amount of the remaining lease or similar payments under the relevant lease or
other applicable agreement or instrument that would appear on a balance sheet of such Person prepared as of such date in accordance
with GAAP if such lease, agreement or instrument were accounted for as a capital lease.

 

“Audit Fee”
has the meaning given to such term in Section 6.2.

 

“Authorized
Officer” means, with respect to any Borrower, any officer of such Borrower authorized by specific resolution of such
Borrower to request Loans as set forth in such Borrower’s resolutions delivered to Bank on the Closing Date (and updated
from time to time as necessary).

 

“Availability
Reserve” means, as of any date of determination, such amounts (expressed as either a specified amount or as a percentage
of a specified category or item) as Bank may from time to time establish and adjust in reducing the Borrowing Base (a) to reflect
events, conditions, contingencies or risks which, as reasonably determined by Bank in its Permitted Discretion, can reasonably
be expected to materially and adversely affect (i) the Collateral or its value, taken as a whole, (ii) the Assets, business or
prospects of the Borrowers taken as a whole, or (iii) the security interests and other rights of Bank in the Collateral (including
the enforceability, perfection and priority thereof), or (b) to reflect Bank’s reasonable judgment that any collateral report
or financial information furnished by or on behalf of Borrowers to Bank is incomplete, inaccurate or misleading in any material
respect, (c) in respect of any state of facts that Bank reasonably determines constitutes an Event of Default or Default, or (d)
to reflect Bank's reasonable estimate of the amount of any Priority Payables Reserve.

 

“Bank”
has the meaning given to such term in the Preamble.

 

“Bank Product”
means the following financial accommodation extended to any Borrower by Bank (other than pursuant to this Agreement) including:
(a) credit cards, (b) credit card processing services, (c) debit cards, (d) stored value cards, (e) purchase cards (including so-called
“procurement cards” or “P-cards”), (f) Cash Management Services, or (g) transactions under Hedge Agreements.

 

    	3

    	 

    

 

“Bank Product
Agreements” means those agreements entered into from time to time by any Borrower with Bank in connection with the obtaining
of any of the Bank Products.

 

“Bank Product
Collateralization” means providing cash collateral (pursuant to documentation reasonably satisfactory to Bank) to be
held by Bank for the benefit of the Bank Product Providers (other than the Hedge Providers) in an amount determined by Bank as
sufficient to satisfy the reasonably estimated credit exposure with respect to the then existing Bank Product Obligations (other
than Hedge Obligations).

 

“Bank Product
Obligations” means (a) all obligations, liabilities, reimbursement obligations, fees, or expenses owing by the applicable
Borrower to any Bank Product Provider pursuant to or evidenced by a Bank Product Agreement and irrespective of whether for the
payment of money, whether direct or indirect, absolute or contingent, due or to become due, now existing or hereafter arising,
(b) all Hedge Obligations, and (c) all amounts that Bank is obligated to pay to a Bank Product Provider as a result of Bank purchasing
participations from, or executing indemnities or reimbursement obligations to, a Bank Product Provider with respect to the Bank
Products provided by such Bank Product Provider to Borrower.

 

“Bank Product
Provider” means Bank or any of its Affiliates.

 

“Bank Product
Reserve Amount” means as of any date of determination, the Dollar amount of reserves that Bank has determined is necessary
or appropriate to establish (based upon the Bank Product Providers’ reasonable determination of their credit exposure to
Borrowers in respect of Bank Product Obligations) in respect of Bank Products then provided or outstanding.

 

“Bankruptcy
Code” means The United States Bankruptcy Code (11 U.S.C.), as amended or supplemented from time to time, or any
successor statute, and any and all rules and regulations issued or promulgated in connection therewith.

 

“Borrower”
and “Borrowers” have the meaning given to such terms in the Preamble.

 

“Borrowers’
Account” means Parent’s general operating account number 4121085245 maintained with Bank, or such other operating
account of any Borrower maintained at Bank which Borrowers shall designate in the applicable Notice of Borrowing.

 

“Borrowing”
means a borrowing of Loans from Bank pursuant to the terms and conditions hereof.

 

“Borrowing
Base” means, as of the date of determination, the lesser of (a) the Revolving Credit Commitment, or (b) the result of:

 

(i)          70%
of the Eligible Accounts, plus

 

(ii)         80%
of Credit Enhanced Eligible Accounts, plus

 

    	4

    	 

    

 

(iii)        the
least of (x) the Inventory Advance Rate times the Eligible Inventory, (y) 80% of the Net Orderly Liquidation Value of the
Eligible Inventory, and (z) the Inventory Sublimit; plus

 

(iv)         the
least of (x) the Inventory Advance Rate times the Eligible In-Transit Inventory, (y) 80% of the Net Orderly Liquidation
Value of the Eligible In-Transit Inventory, and (z) the Eligible In-Transit Inventory Sublimit; minus

 

(v)          the
Reserves.

 

Provided, however, Bank may
reduce the advance rates against the Eligible Accounts, Credit Enhanced Eligible Accounts, Eligible Inventory, and/or the Eligible
In-Transit Inventory, without declaring an Event of Default, in the exercise of its Permitted Discretion; provided that
Bank will take into account at least six (6) months of Borrowers’ business activity in making its determination that any
such reduction is necessary; provided further that any such reduction will be effective thirty (30) days after Parent’s
receipt of written notice of such reduction.

 

“Borrowing
Base Certificate” means a certificate from an Authorized Officer of Administrative Borrower certifying the Borrowing
Base, in the form of Exhibit 1.1B, or such other form as Bank shall supply from time to time.

 

“Business
Day” means any day other than a Saturday, a Sunday, or a day on which commercial banks in the city of Los Angeles, California,
are authorized or required by law or executive order or decree to close; provided that with respect to a LIBOR Lending Rate
Borrowing, “Business Day” means a day on which major commercial banks are open for international business (including
dealings in Dollar deposits) in Los Angeles, California, New York, New York, and London, England.

 

“Capital Expenditures”
means expenditures made in cash, or financed with long term debt, by any Person for the acquisition of any fixed Assets or improvements,
replacements, substitutions, or additions thereto that have a useful life of more than one (1) year, including the direct or indirect
acquisition of such Assets by way of increased product or service charges, offset items, or otherwise, and the principal portion
of payments with respect to Capital Lease Obligations, calculated in accordance with GAAP.

 

“Capital Lease”
means any lease of an Asset by a Person as lessee which would, in conformity with GAAP, be required to be accounted for as an Asset
and corresponding liability on the balance sheet of that Person.

 

“Capital Lease
Obligations” of a Person means the amount of the obligations of such Person under all Capital Leases which would be shown
as a liability on a balance sheet of such Person prepared in accordance with GAAP.

 

“Capital Stock”
means (a) in the case of a corporation, capital stock, (b) in the case of an association or business entity, any and all shares,
interests, participations, rights or other equivalents (however designated) of capital stock, (c) in the case of a partnership,
partnership interests (whether general or limited), (d) in the case of a limited liability company, membership interests and (e)
any other interest or participation that confers on a Person the right to receive a share of the profits and losses of, or distributions
of assets of, the issuing Person.

 

    	5

    	 

    

 

“Cash Equivalents”
means (a) marketable direct obligations issued by, or unconditionally guaranteed by, the United States or issued by any agency
thereof and backed by the full faith and credit of the United States or solely with respect to Investments made by a Foreign Subsidiary,
marketable direct obligations issued by, or unconditionally guaranteed by Canada or the government of a country with similar credit
quality rating or issued by any agency thereof and backed by the full faith and credit of Canada, in each case maturing within
one (1) year from the date of acquisition thereof, (b) marketable direct obligations issued by any state of the United States or
any political subdivision of any such state or any public instrumentality thereof maturing within one (1) year from the date of
acquisition thereof and, at the time of acquisition, having one of the two highest ratings obtainable from either S&P or Moody’s,
(c) commercial paper maturing no more than 270 days from the date of creation thereof and, at the time of acquisition, having a
rating of at least A-1 from S&P or at least P-1 from Moody’s, (d) certificates of deposit or bankers’ acceptances
maturing within one (1) year from the date of acquisition thereof issued by any bank organized under the laws of the United States
or any state thereof having at the date of acquisition thereof combined capital and surplus of not less than $250,000,000, (e)
Deposit Accounts maintained with any bank that satisfies the criteria described in clause (d) above (and solely with respect to
Investments made by a Foreign Subsidiary, any bank organized under the laws of a foreign jurisdiction that otherwise complies with
the criteria in (d) above), and (f) Investments in money market funds substantially all of whose assets are invested in the types
of assets described in clauses (a) through (e) above.

 

“Cash Management
Services” means any cash management or related services including treasury, depository, return items, overdraft, controlled
disbursement, merchant store value cards, e-payables services, electronic funds transfer, interstate depository network, automatic
clearing house transfer (including ACH Transactions) and other cash management arrangements.

 

    	6

    	 

    

 

“Change of
Control” means the time at which (a) any Person (including a Person’s Affiliates and associates) or group (within
the meaning of Sections 13(d) and 14(d)(2) of the Securities Exchange Act of 1934) (other than the Owners of Parent on the Closing
Date) becomes the beneficial owner (as defined in Rule 13d 3 under the Securities Exchange Act of 1934) of a percentage of the
Capital Stock of Parent equal to at least twenty-five percent (25%), (b) there shall be consummated any consolidation or merger
of Parent pursuant to which Parent’s Capital Stock would be converted into cash, securities or other property, other than
a merger or consolidation of Parent in which the holders of such Capital Stock immediately prior to the merger have substantially
the same proportionate ownership in the aggregate, directly or indirectly, of Capital Stock of the surviving Person immediately
after the merger as it had of Parent’s Capital Stock immediately prior to such merger, (c) all or substantially all of Parent’s
Assets shall be sold, leased, conveyed or otherwise disposed of as an entirety or substantially as an entirety to any Person (including
any Affiliate or associate of Parent) in one or a series of transactions, (d) any Change of Management shall occur, unless on or
before 90 days following the date of such Change of Management, a successor has commenced employment with Parent and is actively
performing the functions of the departed individual, (e) Parent shall fail to own less than the percentage interest of the issued
and outstanding Capital Stock of each other Loan Party set forth on Schedule 5.9(b), free and clear of all Liens, other
than Permitted Liens, (f) during any period of twelve (12) consecutive months, a majority of the members of the board of directors
or other equivalent governing body of Parent cease to be composed of individuals (i) who were members of that board or equivalent
governing body on the first day of such period, (ii) whose election or nomination to that board or equivalent governing body was
approved by individuals referred to in clause (i) above constituting at the time of such election or nomination at least a majority
of that board or equivalent governing body or (iii) whose election or nomination to that board or other equivalent governing body
was approved by individuals referred to in clauses (i) and (ii) above constituting at the time of such election or nomination at
least a majority of that board or equivalent governing body (excluding, in the case of both clause (ii) and clause (iii), any individual
whose initial nomination for, or assumption of office as, a member of that board or equivalent governing body occurs as a result
of an actual or threatened solicitation of proxies or consents for the election or removal of one or more directors by any person
or group other than a solicitation for the election of one or more directors by or on behalf of the board of directors), or (g)
any Person, or two or more Persons acting in concert, shall have acquired by contract or otherwise, or shall have entered into
a contract or arrangement that, upon consummation thereof, will result in its or their acquisition of the power to exercise, directly
or indirectly, a controlling influence over the management or policies of Parent, or control over the Capital Stock of Parent entitled
to vote for members of the board of directors or equivalent governing body of Parent on a fully-diluted basis (and taking into
account all such securities that such Person or Persons have the right to acquire pursuant to any option right) representing 25%
or more of the combined voting power of such securities.

 

“Change of
Management” means if any of the individuals performing the functions of the President or Chief Financial Officer, respectively,
on the Closing Date shall cease for any reason to perform such functions, whether by reason of death, disability, resignation,
action by the Board of Directors or shareholders of Borrowers, or otherwise.

 

“Closing Date”
means the date when all of the conditions set forth in Section 4.1 have been fulfilled to the satisfaction of Bank and its
counsel.

 

“Collateral”
has the meaning given to such term in any Loan Document.

 

“Collateral
Access Agreement” means a landlord waiver, mortgagee waiver, bailee letter, or acknowledgement agreement of any warehouseman,
processor, lessor, consignee, or other Person in possession of, having a Lien upon, or having rights or interests in the Equipment
or Inventory, in each case, in form and substance satisfactory to Bank.

 

“Collateral
Assignment of Factoring Agreements” means that certain Collateral Assignment of Rights Under Accounts Receivable Purchase
Agreements, dated as of even date herewith, between Bank and Parent.

 

“Commercial
Letter of Credit Agreement” means that certain Commercial Letter of Credit Agreement, dated as of even date herewith,
among Borrowers and Bank.

 

“Commitment
Fee” has the meaning given to such term in Section 2.15(a).

 

“Commitment”
means the Revolving Credit Commitment.

 

    	7

    	 

    

 

“Compliance
Certificate” means a certificate of compliance to be delivered quarterly in accordance with Section 6.3(c), substantially
in the form of Exhibit 6.3(c).

 

“Consolidated”
means the consolidation in accordance with GAAP of the accounts or other items as to which such term applies.

 

“Consolidated
EBITDA” means, for any specified period, the total of the following of Parent and its Subsidiaries for such period (in
each case determined in accordance with GAAP on a Consolidated basis and without duplication): (i) Consolidated operating income,
plus (ii) depreciation, plus (iii) amortization, plus (iv) to the extent deducted in the calculation of Consolidated
operating income, one-time non-cash charges with the consent of Bank, plus (v) non-cash expenses recognized pursuant to
FASB ASC 718 (Compensation-Stock Compensation), plus (vi) net income from joint ventures and other minority interests owned
by any Borrower or any Subsidiary when earned and received. No adjustment to Consolidated EBITDA for the write-down of license
advances and minimum guarantees shall be permitted, except for the Fiscal Year ended December 31, 2011.

 

“Consolidated
Net Profit” means, with respect to any period, difference of Parent’s and the Subsidiaries Consolidated total revenues
less Consolidated total expenses after all federal, state and local income taxes reflected on Parent’s Consolidated Financial
Statement for such period (excluding the one-time, non-recurring expense of a deferred tax Asset write-down up to a total amount
of $82,000,000 in Fiscal Year 2012), calculated in accordance with GAAP.

 

“Convertible
Notes” has the meaning of “Securities” as defined in the Indenture.

 

“Credit Enhanced
Eligible Account” means any Account that would be an Eligible Account except that it does not qualify under clause (e)
of the definition of “Eligible Account” set forth herein; provided that (a) such Account is supported by an
irrevocable letter of credit reasonably satisfactory to Bank (as to form, substance, and issuer or domestic confirming bank) that
has been delivered to Bank and is directly drawable by Bank, or (b) such Account is covered by credit insurance in form and amount,
and by an insurer, reasonably satisfactory to Bank.

 

“Customs Broker/Carrier
Agreement” means an agreement in form and substance satisfactory to Bank among a Borrower, a customs broker, freight
forwarder, consolidator or carrier, and Bank, in which the customs broker, freight forwarder, consolidator or carrier acknowledges
that it has control over and holds the documents evidencing ownership of the subject Inventory for the benefit of Bank and agrees,
upon notice from Bank, to hold and dispose of the subject Inventory solely as directed by Bank.

 

“Debt”
means, as of the date of determination, the sum, but without duplication, of any and all of a Person’s: (a) indebtedness
heretofore or hereafter created, issued, incurred or assumed by such Person (directly or indirectly) for or in respect of money
borrowed; (b) Attributable Indebtedness; (c) obligations evidenced by bonds, debentures, notes, or other similar instruments;
(d) obligations for the deferred purchase price of property or services (other than trade accounts payable in the ordinary
course of business; (e) current liabilities in respect of unfunded vested benefits under any Plan; (f) contingent obligations
under letters of credit; (g) obligations under acceptance facilities; (h) Guarantees; (i) obligations secured by any
Lien on any Asset of such Person, whether or not such obligations have been assumed; (j) the net obligations under Swaps (which
net obligation under any Swap shall be deemed to be the Swap Termination Value of such Swap); and (k) obligations to purchase,
redeem, retire, defease or otherwise make any payment in respect of any Capital Stock in such Person or any other Person (including,
without limitation, Disqualified Stock), or any warrant, right or option to acquire such Capital Stock, valued, in the case of
a redeemable preferred interest, at the greater of its voluntary or involuntary liquidation preference plus accrued and unpaid
dividends.

 

    	8

    	 

    

 

“Default”
means any condition or event which with the giving of notice or lapse of time or both would, unless cured or waived, become an
Event of Default.

 

“Disposition”
means the sale, transfer, license, lease or other disposition (whether in one transaction or in a series of transactions, and including
any sale and leaseback transaction and any sale, transfer, license or other disposition) of any property (including, without limitation,
any Capital Stock) by any Person (or the granting of any option or other right to do any of the foregoing), including any sale,
assignment, transfer or other disposal, with or without recourse, of any notes or accounts receivable or any rights and claims
associated therewith.

 

“Disqualified
Stock” means any Capital Stock that, by its terms (or by the terms of any security into which it is convertible, or for
which it is exchangeable, in each case at the option of the holder thereof), or upon the happening of any event, matures or is
mandatorily redeemable, pursuant to a sinking fund obligation or otherwise, or redeemable at the option of the holder thereof,
in whole or in part, on or prior to the date that is ninety-one (91) days after the date on which the Loans mature; provided,
however, that (i) only the portion of such Capital Stock which so matures or is mandatorily redeemable, is so convertible
or exchangeable or is so redeemable at the option of the holder thereof prior to such date shall be deemed to be Disqualified Stock
and (ii) with respect to any Capital Stock issued to any employee or to any plan for the benefit of employees of any Borrower or
its Subsidiaries or by any such plan to such employees, such Capital Stock shall not constitute Disqualified Stock solely because
it may be required to be repurchased by such Borrower or one of its Subsidiaries in order to satisfy applicable statutory or regulatory
obligations or as a result of such employee’s termination, resignation, death or disability and if any class of Capital Stock
of such Person that by its terms authorizes such Person to satisfy its obligations thereunder by delivery of an Capital Stock that
is not Disqualified Stock, such Capital Stock shall not be deemed to be Disqualified Stock. The amount of Disqualified Stock deemed
to be outstanding at any time for purposes of this Agreement will be the maximum amount that a Borrower and its Subsidiaries may
become obligated to pay upon maturity of, or pursuant to any mandatory redemption provisions of, such Disqualified Stock or portion
thereof, plus accrued dividends. For purposes of this Agreement, the Convertible Notes shall not be deemed to be Disqualified Stock.

 

“Distributions”
means dividends or distributions of earnings made by a Borrower to its shareholders, partners or members, as the case may be.

 

“Documentary
Letter of Credit Fee” has the meaning given to such term in Section 3.3(b).

 

“Dollars”
or “$” means lawful currency of the United States of America.

 

    	9

    	 

    

 

“Domestic
Subsidiary” means any direct or indirect Subsidiary of Parent organized under the laws of any state of the United States
or the District of Columbia.

 

“Eligible
Accounts” means those Accounts created by a Borrower in the ordinary course of business (or purchased by a Borrower pursuant
to the terms of a Factoring Agreement), that arise out of such Loan Party’s sale of goods or rendition of services, that
comply in all material respects with each and all of the representations and warranties respecting Accounts made by Borrowers to
Bank in this Agreement and the Loan Documents, and that are and at all times continue to be reasonably acceptable to Bank in all
material respects; provided, however, that standards of eligibility may be fixed and revised from time to time by Bank in
Bank’s Permitted Discretion to address the results of any audit or appraisal performed by Bank from time to time after the
Closing Date. In determining the amount to be included, Eligible Accounts shall be calculated net of
customer deposits and unapplied cash remitted to the applicable Borrower. Eligible Accounts shall not include the following:

 

(a)          Accounts
that are Past Due;

 

(b)          Accounts
owed by an Account Debtor or any of its Affiliates where 20% or more of all Accounts owed by that Account Debtor (or such Affiliates)
are deemed ineligible under clause (a) above (except with respect to Wal-Mart, Target, and Toys R Us, for each which the cross-aging
limit be 50%);

 

(c)          Accounts
with respect to which the Account Debtor or any of its Affiliates is an officer, director, shareholder, employee, Affiliate, or
agent of any Borrower;

 

(d)          Accounts
(or portions thereof) with respect to which goods are placed on consignment, guaranteed sale, sale or return, sale on approval,
bill and hold, or other terms by reason of which the payment by the Account Debtor may be conditional;

 

(e)          Accounts
that are not payable in Dollars or with respect to which the Account Debtor: (i) does not maintain its chief executive office in
the United States or Canada (except open account Accounts due from an Investment Grade foreign subsidiary of an Account Debtor
domiciled in the United States; provided that the aggregate amount of all such Accounts does not exceed an amount equal
to 15% of the Borrowing Base); (ii) is not organized under the laws of the United States, or any State thereof (except open account
Accounts due from an Investment Grade foreign subsidiary of an Account Debtor domiciled in the United States; provided that
the aggregate amount of all such Accounts does not exceed an amount equal to 15% of the Borrowing Base); or (iii) is the government
of any foreign country or sovereign state, or of any state, province, municipality, or other political subdivision thereof, or
of any department, agency, public corporation, or other instrumentality thereof;

 

(f)          Accounts
with respect to which the Account Debtor is either (i) the United States or any department, agency, or instrumentality of the United
States (exclusive, however, of Accounts with respect to which the applicable Borrower has complied, to the reasonable satisfaction
of Bank, with the Assignment of Claims Act, 31 USC § 3727), or (ii) any state of the United States (exclusive, however, of
(y) Accounts owed by any state that does not have a statutory counterpart to the Assignment of Claims Act, or (z) Accounts owed
by any state that does have a statutory counterpart to the Assignment of Claims Act but as to which the applicable Borrower has
complied to Bank’s satisfaction);

 

    	10

    	 

    

 

(g)         Accounts
with respect to which the Account Debtor or any of its Affiliates is a creditor of the applicable Borrower, has or has asserted
a right of setoff, has disputed its liability, or has made any claim with respect to the Account, to the extent of such setoff,
dispute or claim;

 

(h)         Accounts
with respect to an Account Debtor or its Affiliates whose total obligations owing to Borrowers exceed 25% of all Accounts, to the
extent of the obligations owing by such Account Debtor or its Affiliates in excess of such percentage (except with respect to Wal-Mart,
Target, and Toys R Us, for each which the concentration aging limit be 35%);

 

(i)      
   Accounts with respect to which the Account Debtor is subject to an Insolvency Proceeding, is
not Solvent, has gone out of business, or as to which Borrowers have received notice of an imminent Insolvency Proceeding or
a material impairment of the financial condition of such Account Debtor;

 

(j)          Accounts
the collection of which Bank, in its reasonable credit judgment, believes to be doubtful by reason of the Account Debtor’s
financial condition;

 

(k)         Accounts
not supported by (i) any written contract or purchase order or (ii) an electronic data interchange;

 

(l)          Accounts
which are in default or collection;

 

(m)        Accounts
on C.O.D. terms;

 

(n)         Accounts
with respect to which the goods giving rise to such Account have not been shipped and billed to the Account Debtor, the services
giving rise to such Account have not been performed and accepted by the Account Debtor, or the Account otherwise does not represent
a final sale;

 

(o)         Accounts
that are not subject to a valid and perfected first priority Lien in favor of Bank;

 

(p)         Reserved;

 

(q)         Accounts
that represent progress payments or other advance billings that are due prior to the completion of performance by the applicable
Borrower of the subject contract for goods or services.

 

(r)          Accounts
evidenced by Chattel Paper or an Instrument (as such terms are defined in the Security Agreement) unless such Chattel Paper or
Instrument has been duly assigned and delivered to Bank in accordance with the terms of the Security Agreement; and

 

(s)         Any
other Accounts that Bank in its Permitted Discretion deems ineligible.

 

    	11

    	 

    

 

“Eligible
Assignee” means (a) a commercial bank, commercial finance company or other asset based lender, having total assets in
excess of $200,000,000; (b) any Affiliate of Bank; and (c) if an Event of Default exists, any Person reasonably acceptable to Bank.

 

“Eligible
In-Transit Inventory” means, as of any date of determination thereof, without duplication of other Eligible Inventory,
In-Transit Inventory:

 

(a)          Which
has been shipped from a foreign location for receipt by the applicable Borrower, but which has not yet been delivered to such Borrower,
which In-Transit Inventory has been in transit for seventy-five (75) days or less from the date of shipment of such Inventory;

 

(b)          For
which the purchase order is in the name of the applicable Borrower and title and risk of loss has passed to such Borrower;

 

(c)          For
which an Acceptable Document of Title has been issued, and in each case as to which at all times Bank has control (as defined in
the UCC) over the documents of title which evidence ownership of the subject Inventory pursuant to a Customs Broker/Carrier Agreement;

 

(d)          Which
is insured to the reasonable satisfaction of Bank (including, without limitation, marine cargo insurance); and

 

(e)          Which
otherwise would constitute Eligible Inventory but for clauses (i) and (iii) of the definition of “Eligible Inventory”
set forth herein;

 

Provided, that Bank may, in its
discretion, exclude any particular Inventory from the definition of “Eligible In-Transit Inventory” in the event Bank
determines that such Inventory is subject to any Person’s right of reclamation, repudiation, stoppage in transit or any event
has occurred or is reasonably anticipated by Bank to arise which may otherwise adversely impact the ability of Bank to realize
upon such Inventory.

 

“Eligible
In-Transit Inventory Sublimit” an amount equal to 20% of the Borrowing Base, as of any date of determination.

 

“Eligible
Inventory” means, without duplication, (a) Eligible In-Transit Inventory, and (b) other Inventory consisting of unused,
first quality finished goods held for sale in the ordinary course of a Borrower’s business, that complies in all material
respects with each of the representations and warranties respecting Eligible Inventory made by Borrowers in the Loan Documents,
and that is not excluded as ineligible by virtue of the one or more of the criteria set forth below; provided, however,
that such criteria may be fixed and revised from time to time by Bank in Bank’s Permitted Discretion to address the results
of any audit or appraisal performed by Bank from time to time after the Closing Date. In determining the amount to be so included,
Inventory shall be valued at the lower of cost or market on a basis consistent with Borrowers’ historical accounting practices.
An item of Inventory shall not be included in Eligible Inventory if:

 

(i)          it
is not located in the United States;

 

    	12

    	 

    

 

(ii)         the
applicable Borrower does not have good, valid, and marketable title thereto;

 

(iii)        it
is not located at one of the locations set forth on Schedule 1.1E or in transit from one such location to another such
location;

 

(iv)         it
is located on real property leased by the applicable Borrower or in a contract warehouse, in each case, unless it is subject to
a Collateral Access Agreement duly executed by the lessor, warehouseman, or other third party, as the case may be, and unless it
is segregated or otherwise separately identifiable from goods of others, if any, stored on the premises;

 

(v)          it
is not subject to a valid and perfected first priority Lien in favor of Bank;

 

(vi)         it
consists of damaged or defective goods returned or rejected by the applicable Borrower’s customers;

 

(vii)        it
consists of Slow Moving Inventory, goods that are obsolete, restrictive or custom items, raw materials, work-in-process, goods
that constitute spare parts, packaging and shipping materials, display items, supplies used or consumed in the applicable Borrower’s
business, bill and hold goods, defective goods, “seconds,” or Inventory acquired on consignment;

 

(viii)      it
is subject to third party Intellectual Property, licensing or other proprietary rights, unless Bank has received a Licensor Consent
covering such Inventory, duly executed by the Licensor thereof, providing, to Bank’s satisfaction, that such Inventory can
be freely sold by Bank on and after the occurrence of an Event of a Default despite such third party rights, or

 

(ix)         it
is otherwise any other Inventory that Bank in its Permitted Discretion deems ineligible.

 

“Environmental
Laws” has the meaning given to such term in Section 5.16.

 

“Equipment”
has the meaning given to such term in the Security Agreement.

 

“ERISA”
means the Employee Retirement Income Security Act of 1974, as amended from time to time, or any successor statute, and any and
all regulations thereunder.

 

“ERISA Event”
means (a) a Reportable Event with respect to a Plan or Multiemployer Plan, (b) the withdrawal of a member of the ERISA Group
from a Plan during a plan year in which it was a substantial employer (as defined in Section 4001(a)(2) of ERISA), (c) the
providing of notice of intent to terminate a Plan in a distress termination (as described in Section 4041(c) of ERISA), (d) the
institution by the PBGC of proceedings to terminate a Plan or Multiemployer Plan, (e) any event or condition (i) that
provides a basis under Section 4042(a)(1), (2), or (3) of ERISA for the termination of or the appointment of a trustee to
administer, any Plan or Multiemployer Plan, or (ii) that may result in termination of a Multiemployer Plan pursuant to Section 4041A
of ERISA, (f) the partial or complete withdrawal within the meaning of Sections 4203 and 4205 of ERISA of a member of
the ERISA Group from a Multiemployer Plan, or (g) providing any security to any Plan under Section 401(a)(29) of the
Internal Revenue Code by a member of the ERISA Group.

 

    	13

    	 

    

 

“ERISA Group”
means Parent and all members of a controlled group of corporations and all trades or business (whether or not incorporated) under
common control which, together with Parent are treated as a single employer under Section 414 of the Internal Revenue Code.

 

“Event of
Default” has the meaning set forth in Section 8.1.

 

“Excluded
Taxes” means federal, state or local income taxes, franchise taxes, branch profits taxes or similar taxes imposed on
Bank.

 

“Expenses”
means: (a) all reasonable out-of-pocket expenses of Bank paid or incurred in connection with its diligence and investigation
of Loan Parties, including appraisal, filing, recording, documentation, publication and search fees and other such expenses, and
all reasonable out-of-pocket attorneys’ fees and expenses (including reasonable attorneys’ fees incurred pursuant to
proceedings arising under the Bankruptcy Code) incurred in connection with the structuring, negotiation, drafting, preparation,
execution and delivery of this Agreement, the Loan Documents, and any and all other documents, instruments and agreements entered
into in connection herewith; (b) all reasonable out-of-pocket expenses of Bank, including reasonable out-of-pocket attorneys’
fees and expenses (including reasonable attorneys’ fees incurred pursuant to proceedings arising under the Bankruptcy Code)
paid or incurred in connection with the negotiation, preparation, execution and delivery of any waiver, forbearance, consent, amendment
or addition to this Agreement or any Loan Document, or the termination hereof and thereof; (c) all reasonable out-of-pocket
costs and expenses paid or advanced by Bank which are required to be paid by Borrowers under this Agreement or the Loan Documents,
including taxes and insurance premiums of every nature and kind of Bank; (d) if an Event of Default occurs, all reasonable
out-of-pocket expenses paid or incurred by Bank, including reasonable attorneys’ fees and expenses (including reasonable
attorneys’ fees incurred pursuant to proceedings arising under the Bankruptcy Code), costs of collection, suit, arbitration,
judicial reference and other enforcement proceedings, and any other out-of-pocket expenses incurred in connection therewith or
resulting therefrom, whether or not suit is brought, (e) all reasonable out-of-pocket expenses paid or incurred by Bank in connection
with any refinancing or restructuring of the Obligations, any of the Loan Documents, or any other document, instrument or agreement
entered into in connection herewith in the nature of a workout; (f) the reasonable out-of-pocket costs and expenses incurred if
Bank shall hire or pay someone else to help enforce this Agreement and/or the Loan Documents; and (g) all court costs and such
additional fees as may be directed by the court.

 

“Extraordinary
Receipt” means any cash received by or paid to or for the account of any Person not in the ordinary course of business,
including tax refunds, pension plan reversions, proceeds of insurance (other than proceeds of business interruption insurance to
the extent such proceeds constitute compensation for lost earnings), condemnation awards (and payments in lieu thereof), indemnity
payments and any purchase price adjustments.

 

    	14

    	 

    

 

“Facility
Guaranties” and “Facility Guaranty” means, individually or collectively as the context requires, each
certain Continuing Guaranty executed by a Guarantor in favor of Bank.

 

“Factoring
Agreements” means, collectively, (a) that certain Accounts Receivable Purchase Agreement, dated as of September 27, 2012,
between Parent, as purchaser, and JAKKS Hong Kong and the JAKKS Hong Kong Subsidiaries, as sellers, and (b) that certain Accounts
Receivable Purchase Agreement, dated as of September 27, 2012, between Parent, as purchaser, and JAKKS Canada, as seller (each,
a “Factoring Agreement”).

 

“Federal Funds
Rate” means for any day, the weighted average of the rates on overnight Federal funds transactions with members of the
Federal Reserve System arranged by Federal funds brokers, as published on the next succeeding Business Day by the Federal Reserve
Bank of San Francisco, or, if such rate is not so published for any day which is a Business Day, the average of the quotations
for the day of such transactions received by Bank from three Federal funds brokers of recognized standing selected by it.

 

“Fees”
means the Commitment Fee, the Unused Revolving Credit Commitment Fee, the Standby Letter of Credit Fees, the Documentary Letter
of Credit Fee, the Audit Fees, and the Appraisal Fees.

 

“Financial
Statement(s)” means, with respect to any accounting period of any Person, statements of income and statements of cash
flows of such Person for such period, and balance sheets of such Person as of the end of such period, setting forth in each case
in comparative form figures for the corresponding period in the preceding Fiscal Year or, if such period is a full Fiscal Year,
corresponding figures from the preceding annual audit, all prepared in reasonable detail and in accordance with GAAP, subject to
year-end adjustments in the case of monthly or quarterly Financial Statements. Financial Statement(s) shall include the schedules
thereto and annual Financial Statements shall also include the footnotes thereto.

 

“Fiscal Month”
means any of the monthly accounting periods of Borrowers.

 

“Fiscal Quarter”
means any of the quarterly accounting periods of Borrowers.

 

“Fiscal Year”
means the 12-Fiscal Month period of Borrowers ending on December 31 of each year.

 

“Foreign Subsidiary”
means any direct or indirect Subsidiary of Parent that is not a Domestic Subsidiary.

 

“Foreign Vendor”
means a Person that sells In-Transit Inventory to a Borrower.

 

“Foreign Vendor
Agreement” means an agreement between a Foreign Vendor and Bank in form and substance satisfactory to Bank and pursuant
to which, among other things, the parties shall agree upon their relative rights with respect to In-Transit Inventory of the applicable
Borrower purchased from such Foreign Vendor.

 

    	15

    	 

    

 

“Funded Debt”
means as of the date of determination, the sum of (a) the Loans, (b) the Letter of Credit Usage, (c) the Convertible Notes, (d)
any other Subordinate Debt, and (e) any other Consolidated Debt of Parent and its Subsidiaries, heretofore or hereafter created,
issued, incurred or assumed (directly or indirectly) for or in respect of borrowed money, whether current or long-term, including
contingent obligations under letters of credit (including standby and commercial), all purchase money indebtedness, bankers’
acceptances and similar instruments to the extent such instruments or agreements support financial obligations.

 

“Funded Debt
to Consolidated EBITDA Ratio” means, as of the date of determination, the ratio of (a) Funded Debt, to (b) Consolidated
EBITDA for the trailing four Fiscal Quarter period ending on the date of determination.

 

“GAAP”
means generally accepted accounting principles in the United States of America, consistently applied, which are in effect as of
the date of this Agreement. If any changes in accounting principles from those in effect on the date hereof are hereafter occasioned
by promulgation of rules, regulations, pronouncements or opinions by or are otherwise required by the Financial Accounting Standards
Board or the American Institute of Certified Public Accountants (or successors thereto or agencies with similar functions), and
any of such changes results in a change in the method of calculation of, or affects the results of such calculation of, any of
the financial covenants, standards or terms found herein, then the parties hereto agree to enter into and diligently pursue negotiations
in order to amend such financial covenants, standards or terms so as to equitably reflect such changes, with the desired result
that the criteria for evaluating financial condition and results of operations of Borrowers and the Subsidiaries shall be the same
after such changes as if such changes had not been made.

 

“Governing
Documents” means the certificate or articles or certificate of incorporation, by-laws, articles or certificate of organization,
operating agreement, or other organizational or governing documents of any Person.

 

“Governmental
Authority” means any federal, state, local or other governmental department, commission, board, bureau, agency, central
bank, court, tribunal or other instrumentality or authority or subdivision thereof, domestic or foreign, exercising executive,
legislative, judicial, regulatory or administrative functions of or pertaining to government.

 

“Guarantee”
means, as to any Person, (a) any obligation, contingent or otherwise, of such Person guaranteeing or having the economic effect
of guaranteeing any Debt or other obligation payable or performable by another Person (the “primary obligor”) in any
manner, whether directly or indirectly, and including any obligation of such Person, direct or indirect, (i) to purchase or pay
(or advance or supply funds for the purchase or payment of) such Debt or other obligation, (ii) to purchase or lease property,
securities or services for the purpose of assuring the obligee in respect of such Debt or other obligation of the payment or performance
of such Debt or other obligation, (iii) to maintain working capital, equity capital or any other financial statement condition
or liquidity or level of income or cash flow of the primary obligor so as to enable the primary obligor to pay such Debt or other
obligation, or (iv) entered into for the purpose of assuring in any other manner the obligee in respect of such Debt or other obligation
of the payment or performance thereof or to protect such obligee against loss in respect thereof (in whole or in part), or (b)
any Lien on any assets of such Person securing any Debt or other obligation of any other Person (or any right, contingent or otherwise,
of any holder of such Debt to obtain any such Lien). The amount of any Guarantee shall be deemed to be an amount equal to the stated
or determinable amount of the related primary obligation, or portion thereof, in respect of which such Guarantee is made or, if
not stated or determinable, the maximum reasonably anticipated liability in respect thereof as determined by the guaranteeing Person
in good faith. The term “Guarantee” as a verb has a corresponding meaning.

 

    	16

    	 

    

 

“Guarantor(s)”
means, individually or collectively as the context requires, every Person who now or hereafter executes a Facility Guaranty in
favor of Bank with respect to the Obligations.

 

“Hazardous
Materials” means all or any of the following: (a) substances that are defined or listed in, or otherwise classified
pursuant to, any Environmental Laws as hazardous substances, hazardous materials, hazardous wastes, toxic substances, or any other
formulation intended to define, list, or classify substances by reason of deleterious properties such as ignitability, corrosivity,
reactivity, carcinogenicity, reproductive toxicity, or EP toxicity or are otherwise regulated for the protection of persons, property
or the environment; (b) oil, petroleum, or petroleum derived substances, natural gas, natural gas liquids, synthetic gas, drilling
fluids, produced waters, and other wastes associated with the exploration, development, or production of crude oil, natural gas,
or geothermal resources; (c) any flammable substances or explosives or any radioactive materials; and (d) asbestos in
any form or electrical equipment which contains any oil or dielectric fluid containing levels of polychlorinated biphenyls in excess
of fifty (50) parts per million.

 

“Hedge Agreement”
means a Swap with one or more Bank Product Providers.

 

“Hedge Obligations”
means any and all obligations or liabilities, whether absolute or contingent, due or to become due, now existing or hereafter arising,
of a Borrower arising under, owing pursuant to, or existing in respect of Hedge Agreements entered into with one or more of the
Bank Product Providers.

 

“Hedge Provider”
means Bank or any of its Affiliates.

 

“Indemnified
Person(s)” has the meaning given to such term in Section 10.3(c).

 

“Indenture”
means that certain Indenture, dated as of November 10, 2009, between Parent, and Bank, as trustee, pursuant to which Parent issued
the Convertible Notes.

 

“Insolvency
Proceeding” means any proceeding commenced by or against any Person, under any provision of the Bankruptcy Code, or under
any other bankruptcy or insolvency law, including, but not limited to, assignments for the benefit of creditors, formal or informal
moratoriums, compositions, or extensions with some or all creditors.

 

    	17

    	 

    

 

“Intellectual
Property” means all present and future: trade secrets, know-how and other proprietary information; trademarks, trademark
applications, internet domain names, service marks, trade dress, trade names, business names, designs, logos, slogans (and all
translations, adaptations, derivations and combinations of the foregoing) indicia and other source and/or business identifiers,
and all registrations or applications for registrations which have heretofore been or may hereafter be issued thereon throughout
the world; copyrights and copyright applications; (including copyrights for computer programs) and all tangible and intangible
property embodying the copyrights, unpatented inventions (whether or not patentable); patents and patent applications; industrial
design applications and registered industrial designs; license agreements related to any of the foregoing and income therefrom;
books, records, writings, computer tapes or disks, flow diagrams, specification sheets, computer software, source codes, object
codes, executable code, data, databases and other physical manifestations, embodiments or incorporations of any of the foregoing;
all other intellectual property; and all common law and other rights throughout the world in and to all of the foregoing.

 

“Interest
Payment Date” means:

 

(a)          with
respect to each Prime Lending Rate Portion, the first day of each and every month, and the Revolving Loans Maturity Date, as applicable;
and

 

(b)          with
respect to each LIBOR Lending Rate Portion, the earliest of: (i) the last day of the Interest Period with respect thereto,
(ii) if the Interest Period has a duration of more than three months, every Business Day that occurs during such Interest
Period every three months from the first day of such Interest Period, and (iii) the Revolving Loans Maturity Date, as applicable.

 

“Interest
Period” means, with respect to each LIBOR Lending Rate Portion, the period commencing on the date of such LIBOR Lending
Rate Portion and ending on the numerically corresponding day one (1), two (2), three (3), or six (6) months thereafter as Borrowers
may elect pursuant to the applicable Notice of Borrowing or Notice of Conversion or Continuation; provided, however, that:

 

(a)          any
Interest Period which would otherwise end on a day which is not a Business Day shall be extended to the next succeeding Business
Day unless such Business Day falls in another calendar month in which case such Interest Period shall end on the immediately preceding
Business Day;

 

(b)          any
Interest Period which begins on the last Business Day of the calendar month (or on a day for which there is no numerically corresponding
day in the calendar month at the end of such Interest Period) shall end on the last Business Day of the calendar month in which
it would have ended if there were a numerically corresponding day in such calendar month; and

 

(c)          no
Interest Period respecting a Revolving Loan may extend beyond the Revolving Loans Maturity Date.

 

“Internal
Revenue Code” means the Internal Revenue Code of 1986, as amended from time to time, or any successor statute, and any
and all regulations thereunder.

 

“In-Transit
Inventory” means Inventory of a Borrower that is in the possession of a common carrier and is in transit from a Foreign
Vendor from a location outside of the continental United States to a location of such Borrower that is within the continental United
States.

 

“Inventory”
has the meaning given to such term in the Security Agreement.

 

    	18

    	 

    

 

“Inventory
Advance Rate” means (a) 60% in the case of Inventory that is subject to a license agreement with a Licensor, and (b)
50% in the case of all other Inventory.

 

“Inventory
Sublimit” means an amount equal to 50% of the Borrowing Base, as of any date of determination.

 

“Inventory
Reserves” means such reserves as may be established from time to time by the Bank in its Permitted Discretion, with respect
to the determination of the saleability, at retail, of the Eligible Inventory, which reflect such other factors as affect the market
value of the Eligible Inventory or which reflect claims and liabilities that Bank determines in its Permitted Discretion, will
need to be satisfied in connection with the realization upon the Inventory. No Inventory Reserve shall be established at any time
when there is no Inventory included in the Borrowing Base. Without limiting the generality of the foregoing, Inventory Reserves
may, in Bank’s Permitted Discretion, include (but are not limited to) reserves based on:

 

(a)          Obsolescence;

 

(b)          Seasonality;

 

(c)          Shrink;

 

(d)          Imbalance;

 

(e)          Change
in Inventory character;

 

(f)          Change
in Inventory composition;

 

(g)          Change
in Inventory mix;

 

(h)          Mark-downs
(both permanent and point of sale);

 

(i)          Retail
mark-ons and mark-ups inconsistent with prior period practice and performance, industry standards, current business plans or advertising
calendar and planned advertising events; and

 

(j)          Out-of-date
and/or expired Inventory.

 

“Investment”
means, with respect to any Person, any investment by such Person in any other Person (including Affiliates) in the form of
loans, Guarantees, advances, capital contributions (excluding (a) commission, travel, and similar advances to officers and employees
of such Person made in the ordinary course of business, and (b) bona fide Accounts arising in the ordinary course of business consistent
with past practice), or acquisitions of Debt, Capital Stock, or all or substantially all of the Assets of such other Person (or
of any division or business line of such other Person), and any other items that are or would be classified as investments on a
balance sheet prepared in accordance with GAAP.

 

    	19

    	 

    

 

“Investment
Grade” means, in reference to any Person, that such Person has (a) a rating from S&P of (i) A-1 or better for its
commercial paper or (ii) BBB or better for its long term debt, or (b) a rating from Moody's of (i) P-1 or better for its commercial
paper or (ii) Baa or better for its long term debt.

 

“ISP”
means the International Standby Practices (1998 version), and any subsequent versions or revisions approved by a Congress of
the International Chamber of Commerce Publication 590 and adhered to by Bank.

 

“JAKKS Canada”
means JAKKS Pacific (Canada), Inc., a company organized under the laws of the province of New Brunswick, Canada, and a Subsidiary
of Parent.

 

“JAKKS Hong
Kong” means JAKKS Pacific (H.K.) Limited (Hong Kong), a company incorporated in Hong Kong with registered number 468246,
and a Subsidiary of Parent.

 

“JAKKS Hong
Kong Subsidiaries” means, collectively, all Subsidiaries of JAKKS Hong Kong (other than JAKKS Pacific Shenzhen Company),
including, Jakks Pacific (Asia) Limited, Moose Mountain Toymakers Limited, Arbor Toys Company Limited, Disguise Limited, Kids Only
Limited, Play Along (Hong Kong) Limited, Tollytots Limited, and A.S. Design Limited.

 

“Knowledge”
has the meaning given to such term in Section 10.9.

 

“Lending Office”
means Bank’s office located at its address set forth on the signature pages hereof, or such other office of Bank as it may
hereafter designate as its Lending Office by notice to Borrowers.

 

“Letter(s)
of Credit” means any standby or documentary letter(s) of credit issued by Bank, pursuant to Section 3.1.

 

“Letter of
Credit Application” means Bank’s standard form of Letter of Credit Application.

 

“Letter of
Credit Sublimit” means (a) $5,000,000 with respect to standby Letters of Credit, and (b) $5,000,000 with respect to documentary
Letters of Credit.

 

“Letter of
Credit Usage” means, on any date of determination, the aggregate maximum amounts available to be drawn under all outstanding
Letters of Credit, without regard to whether any conditions to drawing could then be met.

 

“LIBOR”
means, with respect to each Interest Period for each LIBOR Borrowing, that rate of interest equal to the quotient of (a) the interest
rate appearing on Reuters Screen LIBOR01 Page (or any successor or substitute page or service providing quotations of interest
rate available to dollar deposits in the London interbank market comparable to those currently provided on such page, as determined
by Bank from time to time) at approximately 11:00 a.m. Pacific time, three (3) Business Days prior to the commencement of such
Interest Period, as the rate for dollar deposits with a maturity comparable to such Interest Period (rounded up to the nearest
1/8th of 1%), divided by (b) 100% minus the LIBOR Reserve Percentage; provided that, to the extent that an interest
rate is not ascertainable pursuant to the foregoing provisions of this definition, “LIBOR” shall mean the interest
rate per annum determined by Bank to be the average of the rates per annum at which deposits in Dollars are offered for such Interest
Period to major banks in the London interbank market by Bank at approximately 11:00 a.m., London time, Pacific time, three (3)
Business Days prior to the commencement of such Interest Period.

 

    	20

    	 

    

 

“LIBOR Lending
Rate” means, with respect to a LIBOR Lending Rate Portion, the rate per annum, determined as the sum of (a) LIBOR for
the relevant Interest Period of such LIBOR Lending Rate Portion, plus (b) the Applicable Margin.

 

“LIBOR Lending
Rate Portion” means any portion of any Loan bearing interest with reference to the LIBOR, in accordance with the terms
and conditions hereof.

 

“LIBOR Reserve
Percentage” means, for any Interest Period of any LIBOR Lending Rate Portion, the daily average of the stated maximum
rate (rounded upward to the nearest 1/8th eighth of 1%) determined by Bank in accordance with its usual procedures (which
determination shall be conclusive in the absence of manifest error), at which reserves are required to be maintained during such
Interest Period by Bank (including supplemental, marginal, and emergency reserves) under Regulation D by Bank against Eurocurrency
liabilities (as such term is defined in Regulation D), but without benefit or credit of proration, exemptions, or offsets that
might otherwise be available to Bank from time to time under Regulation D. Without limiting the generality of the foregoing, LIBOR
Reserve Percentage shall include any other reserves required to be maintained by Bank against (i) any category of liabilities that
includes deposits by reference to which the LIBOR Lending Rate for a LIBOR Lending Rate Portion is being determined and (ii) any
category of extension of credit or other assets that includes LIBOR Lending Rate Portion.

 

“License Agreement
Guarantee” means a Guarantee by Parent of the obligations of any of its Subsidiaries owing to a Licensor under the licensing
agreement between such Subsidiary and such Licensors.

 

“Licensor”
means an owner of certain Intellectual Property that licenses all or any portion of such Intellectual Property to a Borrower.

 

“Licensor
Consent” means an agreement between a Licensor and Bank in form and substance reasonably satisfactory to Bank and pursuant
to which, among other things, the Licensor grants to Bank a limited license to exercise all rights that the applicable Borrower
could exercise under its license agreement with the Licensor assuming there exists no defaults under such license agreement.

 

“Lien”
means any mortgage, deed of trust, pledge, security interest, hypothecation, assignment, deposit arrangement or other preferential
arrangement, charge or encumbrance (including, any conditional sale or other title retention agreement, or finance lease) of any
kind.

 

“Liquidity”
means, as of any date of determination, the amount of Borrowers’ Consolidated unencumbered cash and short-term marketable
securities.

 

“Loan Document(s)”
means each of the following documents, instruments, and agreements, individually or collectively as the context requires:

 

(a)          the
Notes;

 

    	21

    	 

    

 

(b)          the
Security Agreement;

 

(c)          the
Factoring Agreements;

 

(d)          the
Collateral Assignment of Factoring Agreements;

 

(e)          the
Letter of Credit Applications;

 

(f)          the
Commercial Letter of Credit Agreement and the Standby Letter of Credit Agreement;

 

(g)          the
Facility Guaranties;

 

(h)          the
Collateral Access Agreements;

 

(i)          the
Bank Product Agreements (other than Hedge Agreements);

 

(j)          the
Licensor Consents;

 

(k)          the
Customs Broker/Carrier Agreements; and

 

(l)          such
other documents, instruments, and agreements (including intellectual property security agreements, control agreements, financing
statements and fixture filings) as Bank may reasonably request in connection with the transactions contemplated hereunder, other
than any Hedge Agreement, or to perfect or protect the liens and security interests granted to Bank in connection herewith.

 

“Loans”
means the Revolving Loans (each, a “Loan”).

 

“Loan Parties”
means individually and collectively, Borrowers, all Guarantors, JAKKS Canada, JAKKS Hong Kong, all JAKKS Hong Kong Subsidiaries,
and all other Material Subsidiaries (each a “Loan Party”).

 

“Material
Adverse Effect” means a material adverse effect on (i) the business, Assets, condition (financial or otherwise),
prospects, or results of operations of Parent and its Subsidiaries, taken as a whole; (ii) the ability of Borrowers to perform
their obligations under this Agreement and the Loan Documents to which they are a party (including, without limitation, repayment
of the Obligations as they come due), or the ability of any Guarantor to perform its obligations under the Loan Documents to which
it is a party, (iii) the validity or enforceability of this Agreement, the Loan Documents, or the rights or remedies of Bank
hereunder and thereunder, (iv) the value of the Assets, taken as a whole, assigned or pledged to Bank as Collateral, or (v) the
priority of Bank’s Liens with respect to the Collateral.

 

“Material
Contract” means, with respect to any Borrower, each contract or agreement to which such Borrower is a party that is deemed
to be a material contract or material definitive agreement under any Securities Laws as applied to Parent and its Subsidiaries
on a consolidated basis, taken as a whole.

 

    	22

    	 

    

 

“Material
Subsidiary” means, as of any date of determination, any direct or indirect Subsidiary of Parent that (a) has Assets that
represent more than 7.5% of the Consolidated GAAP value of the Assets of Parent and its Subsidiaries, inclusive of the subject
Subsidiary, as of such date, (b) contributed more than 7.5% of the revenues of Parent and its Subsidiaries on a Consolidated basis,
inclusive of the subject Subsidiary, during the most recently-ended four-Fiscal Quarter period of Borrowers (taken as a single
period), (c) with respect to any new Person acquired or created by Borrower, (i) had Assets that represent more than 7.5% of the
Consolidated GAAP value of the Assets of Parent and its Subsidiaries, inclusive of the subject Subsidiary, as of such date, or
(ii) would have contributed more than 7.5% of the revenues of Parent and its Subsidiaries on a Consolidated basis, inclusive of
the subject Subsidiary, on a Pro Forma Basis, or (d) owns, directly or indirectly, Capital Stock in one or more other Subsidiaries
of Parent Borrower that, when aggregated with such Subsidiary, (i) has Assets that represent more than 7.5% of the Consolidated
GAAP value of the Assets of Parent and its Subsidiaries, inclusive of the subject Subsidiary, as of such date, or (ii) contributed
more than 7.5% of the revenues of Parent and its Subsidiaries on a consolidated basis, inclusive of the subject Subsidiary, during
the most recently ended four-Fiscal Quarter period of Borrowers (taken as single period).

 

“Maturity
Date” means the Revolving Loans Maturity Date.

 

“Moody’s”
means Moody’s Investors Service, Inc.

 

“Multiemployer
Plan” means a multiemployer plan as defined in Section 4001(a)(3) of ERISA or Section 3(37) of ERISA to which
any member of the ERISA Group has contributed, or was obligated to contribute, within the preceding six plan years (while a member
of such ERISA Group) including for these purposes any Person which ceased to be a member of the ERISA Group during such six year
period.

 

“Net Proceeds”
means (a) with respect to any Disposition by any Loan Party or any of its Subsidiaries, or any Extraordinary Receipt received or
paid to the account of any Loan Party or any of its Subsidiaries, the excess, if any, of (i) the sum of cash and Cash Equivalents
received in connection with such transaction (including any cash or cash equivalents received by way of deferred payment pursuant
to, or by monetization of, a note receivable or otherwise, but only as and when so received) over (ii) the sum of (A) the principal
amount of any Debt that is secured by a Lien permitted hereunder on the applicable Asset which is senior to Bank’s Lien on
such Asset and that is required to be repaid (or to establish an escrow for the future repayment thereof) in connection with such
transaction (other than Debt under the Loan Documents), and (B) the reasonable and customary out-of-pocket expenses incurred by
such Loan Party or such Subsidiary in connection with such transaction (including, without limitation, appraisals, and brokerage,
legal, title and recording or transfer tax expenses, other taxes paid in cash in connection with the consummation of such transaction,
and commissions) paid by any Loan Party to third parties (other than Affiliates); and (b) with respect to the sale or issuance
of any Capital Stock by any Loan Party or any of its Subsidiaries, or the incurrence or issuance of any Debt by any Loan Party
or any of its Subsidiaries, the excess of (i) the sum of the cash and cash equivalents received in connection with such transaction
over (ii) the underwriting discounts and commissions, and other reasonable and customary out-of-pocket expenses, incurred by such
Loan Party or such Subsidiary in connection therewith.

 

    	23

    	 

    

 

“Net Orderly
Liquidation Value” means a professional opinion of the probable Net Proceeds that could be realized at a properly advertised
and professionally conducted liquidation sale, conducted under orderly sale conditions for an extended period of time (usually
six to nine months), under the economic trends existing at the time of the appraisal.

 

“Notes”
means, collectively, the Revolving Loans Note, and any other promissory note issued by Borrowers to Bank from time to time pursuant
to this Agreement (each, a “Note”).

 

“Notice of
Borrowing” means an irrevocable notice from Borrowers to Bank of Borrowers’ request for a Borrowing pursuant to
the terms of Section 2.5, substantially in the form of Exhibit 2.5(b).

 

“Notice of
Conversion or Continuation” means a written notice given pursuant to the terms of Section 2.6(b), substantially
in the form of Exhibit 2.6(b).

 

“Obligations”
means any and all indebtedness, liabilities, and obligations of Borrowers (or any of them) owing to Bank, and to its successors
and assigns, previously, now, or hereafter incurred, and howsoever evidenced, whether direct or indirect, absolute or contingent,
joint or several, liquidated or unliquidated, voluntary or involuntary, due or not due, legal or equitable, whether incurred before,
during, or after any Insolvency Proceeding and whether recovery thereof is or becomes barred by a statute of limitations or is
or becomes otherwise unenforceable or unallowable as claims in any Insolvency Proceeding, together with all interest thereupon
(including interest under Section 2.4(b) and including any interest that, but for the provisions of the Bankruptcy Code, would
have accrued during the pendency of an Insolvency Proceeding). The Obligations shall include, without limiting the generality of
the foregoing, all principal and interest and other payment obligations owing under the Loans, all Reimbursement Obligations, all
Bank Product Obligations, all Expenses, the Fees, any other fees and expenses due hereunder and under the Loan Documents (including
any fees or expenses that, but for the provisions of the Bankruptcy Code, would have accrued during the pendency of an Insolvency
Proceeding), and all other indebtedness evidenced by this Agreement and/or the Loan Documents.

 

“OFAC”
means The Office of Foreign Assets Control of the U.S. Department of the Treasury.

 

“Operating
Lease” means any lease of an Asset by a Person which, in conformity with GAAP, is not a Capital Lease.

 

“Overadvance”
has the meaning set forth in Section 2.1(e).

 

“Owner”
means, with respect to any Loan Party, a shareholder, partner or member of such Loan Party.

 

“Parent Sublimit”
means the lesser of (a) $75,000,000, or (b) the Revolving Credit Commitment.

 

“Participant”
has the meaning set forth in Section 10.5(d).

 

    	24

    	 

    

 

“Past Due”
means (a) for Accounts with terms up to net 30 days, any Account outstanding longer than three times normal trade terms or 90 days
from invoice date, whichever is less, and (b) for Accounts with terms greater than net 30 days, past due more than 30 days of the
invoice due date, or outstanding more than 180 days from invoice date, whichever is less.

 

“Patriot Act”
means the USA Patriot Act, Title III of Pub. L. 107-56, signed into law October 26, 2001.

 

“PBGC”
means the Pension Benefit Facility Guaranty Corporation or any entity succeeding to any or all of its functions under ERISA.

 

“PCAOB”
means the Public Company Accounting Oversight Board.

 

“Permitted
Acquisition” means any acquisition (a) by a Borrower of all of the Capital Stock of any Person or (b) by a Borrower or
any of its wholly-owned Subsidiaries, whether by purchase, merger or otherwise, of all or substantially all of the Assets of, all
of the Capital Stock of, or a business line or unit or a division of, any Person; provided that,

 

(i)          immediately
prior to, and after giving effect thereto, no Event of Default or Default shall have occurred and be continuing or would result
therefrom;

 

(ii)         all
transactions in connection therewith shall be consummated, in all material respects, in accordance with all Applicable Laws;

 

(iii)        Borrowers
shall have taken, or caused to be taken, as of the date of such acquisition, each of the actions set forth in Sections 6.13 and/or
6.14, as applicable;

 

(iv)         Borrowers
and the Subsidiaries shall be in compliance with the financial covenants set forth in Sections 7.12 and 7.15 on a Pro Forma Basis;

 

(v)          if
the total consideration for such acquisition of Assets or Capital Stock is in excess of $10,000,000, Borrowers shall have delivered
to Bank (A) at least 10 days prior to such proposed acquisition, (i) a Compliance Certificate evidencing compliance with Sections
7.12 and 7.15 as required under clause (iv) above, and (ii) all relevant financial information with respect to such acquired
Assets, including, without limitation, the aggregate consideration for such acquisition and any other information required to demonstrate
compliance with Sections 7.12 and 7.15; and (B) promptly upon request by Bank, (i) a copy of the purchase agreement related
to the proposed Permitted Acquisition (and any related documents reasonably requested by Bank), and a summary thereof with a description
of the acquisition, price of acquisition (to include cash and non-cash portions, including earn-outs, etc.), and (ii) quarterly
and annual financial statements of the Person whose Capital Stock or Assets are being acquired, if available, for the twelve month
(12) month period immediately prior to such proposed Permitted Acquisition, including any audited financial statements that are
available;

 

(vi)         any
Person or assets or division as acquired in accordance herewith shall be in the business of sales of consumer products;

 

(vii)        reserved;

 

    	25

    	 

    

 

 

 

(viii)      any
seller carryback Debt incurred in connection with the proposed acquisition shall be Subordinate Debt, shall contain no covenants,
and shall otherwise be on terms and conditions (including maturity, rate of interest and amortization) acceptable to Bank in their
sole and absolute discretion.

 

(ix)         such
Permitted Acquisition shall be non-hostile and the applicable seller shall have taken all corporate, partnership or limited liability
company, as applicable, action necessary to authorize the execution and delivery of the applicable Purchase Agreement and Purchase
Documents, and the consummation of the transactions contemplated thereby;

 

(x)          the
aggregate consideration payable in connection with all such acquisitions of Assets or Capital Stock that are consummated after
the Closing Date in any Fiscal Year shall not exceed $50,000,000.

 

“Permitted
Debt” means (a) Debt owing to Bank, (b) Debt owing by Borrowers up to a maximum aggregate amount of $5,000,000 outstanding
at any one time incurred in the ordinary course of business and (i) secured by Purchase Money Liens, or (ii) owing under Capital
Lease Obligations, (c) Subordinate Debt, (d) contingent liabilities with respect to a $1,000,000 letter of credit outstanding on
the Closing Date issued by Barclays Bank, to Her Royal Majesty’s Customs, as beneficiary, (e) earn-out obligations existing
on the Closing Date with respect to acquisitions made by Parent prior to the Closing Date in the aggregate amount of $43,520,000,
(f) trade payables, (g) contingent Debt owing by Parent to Licensors under all License Agreement Guarantees, and other contingent
liabilities incurred by any of the Loan Parties in the ordinary course of business and consistent with past practice, (h) Guarantees
by Parent of the obligations of any of its Subsidiaries with respect to tenant obligations under real estate leases, (i) Guarantees
by Parent of the obligations of any of its Subsidiaries under any Permitted Acquisition or similar acquisitions that were consummated
prior to the Closing Date, up to a maximum aggregate amount of $10,000,000 per Fiscal Year, (j) Synthetic Lease Obligations owing
by Borrowers up to a maximum aggregate amount of $5,000,000 outstanding at any one time, and (k) 401(k) deferrals and matches that
are paid within thirty (30) days of the applicable payroll withholding date.

 

“Permitted
Discretion” means a determination made in the exercise of reasonable (from the perspective of a secured commercial lender)
business judgment.

 

“Permitted
Dispositions” means (a) Dispositions in the ordinary course of business of Equipment, (b) sales of Inventory to buyers
in the ordinary course of business, (c) the use or transfer of money or Cash Equivalents in a manner that is not prohibited by
the terms of this Agreement or the other Loan Documents, and (d) the licensing of patents, trademarks, copyrights, and other intellectual
property rights in the ordinary course of business.

 

“Permitted
Investments” means (a) Investments in cash and Cash Equivalents, (b) Investments in negotiable instruments for collection,
(c) advances made in connection with purchases of goods or services or intangibles or licenses entered into in the ordinary course
of business, (d) Investments consisting of intercompany loans and advances made (i) by any Subsidiary of Parent to a Loan Party,
(ii) by any Subsidiary of Parent that is not a Loan Party to any other Subsidiary of Parent that is not a Loan Party, or (iii)
by any Subsidiary of Parent to Parent to the extent a Distribution to Parent pursuant to Section 7.10 in such amount would be permitted
at such time, (e) Investments consisting of capital contributions or other investments in equity (i) by Parent in any Loan Party,
(ii) by any Borrower in another Borrower, and (iii) by any Subsidiary of Parent that is not a Loan Party in another Subsidiary
of Parent that is not a Loan Party, (f) Permitted Acquisitions, and (g) other Investments (other than Permitted Acquisitions) of
up to $25,000,000 in the aggregate from the Closing Date until the Revolving Loans Maturity Date.

 

    	26

    	 

    

 

“Permitted
Liens” means (a) Liens for current taxes, assessments or other governmental charges which are not delinquent or
remain payable without any penalty, or are being contested in good faith by appropriate proceedings, provided that, if delinquent,
adequate reserves have been set aside with respect thereto as required by GAAP and, by reason of nonpayment, no property is subject
to a material risk of loss or forfeiture; (b) Liens in favor of Bank, in accordance with the Loan Documents, (c) statutory
Liens, such as inchoate mechanics’, inchoate materialmen’s, landlord’s, warehousemen’s, and carriers’
liens, and other similar liens, other than those described in clause (a) above, arising in the ordinary course of business
with respect to obligations which are not delinquent or are being contested in good faith by appropriate proceedings, provided
that, if delinquent, adequate reserves have been set aside with respect thereto as required by GAAP and, by reason of nonpayment,
no property is subject to a material risk of loss or forfeiture; (d) judgment Liens that do not constitute an Event of Default
under Section 8.1(i); (e) Purchase Money Liens securing Debt described in clause (b) of the definition of “Permitted
Debt” hereinabove; (f) Liens (other than any Lien imposed by ERISA) (1) incurred or deposits made
in the ordinary course of business in connection with general insurance maintained by Parent and its Subsidiaries, (2) incurred
or deposits made in the ordinary course of business of Parent and its Subsidiaries in connection with workers’ compensation,
unemployment insurance and other types of social security, the remittance or payment of which is not yet due and payable, (3) to
secure the performance by Parent and its Subsidiaries of tenders, statutory obligations not yet due and payable (other than excise
taxes), surety, stay, customs and appeal bonds, statutory bonds, bids, leases, government contracts, trade contracts, performance
and return of money bonds and other similar obligations (exclusive of obligations for the payment of borrowed money) to the extent
incurred in the ordinary course of business, (4) consisting of deposits to secure the performance by Parent and its Subsidiaries
of leases of real property, to the extent incurred or made in the ordinary course of business consistent with past practices, and
(5) other deposits made solely in the ordinary course of Borrowers’ business; (g) licenses, sublicenses, leases or subleases
granted to third Persons in the ordinary course of business not interfering in any material respect with the business of Parent
or any of its Subsidiaries; (h) easements, rights-of-way, restrictions, minor defects or irregularities in title, encroachments
and other similar charges or encumbrances, in each case not securing Debt and not interfering in any material respect with the
ordinary conduct of the business of Parent or any of its Subsidiaries; and (i) customary rights of setoff in favor of banks or
depository institutions.

 

    	27

    	 

    

 

“Permitted
Restricted Payments” means: (a) Distributions payable solely in its common stock or other Capital Stock of a Loan Party
(other than of any Pledged Loan Party); (b) any purchase, redemption or acquisition of shares of common stock or other common Capital
Stock or warrants or options to acquire any such shares with the proceeds received from the substantially concurrent issuance of
new shares of common stock or other common Capital Stock of a Loan Party (other than of any Pledged Loan Party); (c) any payment
on, in respect of, or in connection with Parent’s (i) stock incentive plan, stock option plan or other equity-based compensation
plan or arrangement or (ii) Capital Stock, options, warrants and other rights to acquire Capital Stock issued or granted in connection
with any Permitted Acquisition (including, without limitation, the issuance of Ownership equity interests, including Capital Stock,
as consideration in connection with any acquisition permitted hereunder, whether as original purchase consideration or in satisfaction
of subsequent contingent consideration obligations, and the sale of equity interests, including Capital Stock, for the sole purpose
of financing any acquisition permitted hereunder); (d) cash Distributions by Parent in an amount up to $10,000,000 per Fiscal Year;
provided that both immediately before and immediately after giving effect thereto, on a Pro Forma Basis, no Default or Event
of Default shall have occurred and be continuing, or shall result therefrom; and (e) other Restricted Payments with the prior written
consent of Bank.

 

“Person”
means and includes natural persons, corporations, limited partnerships, general partnerships, limited liability companies, limited
liability partnerships, joint stock companies, joint ventures, associations, companies, trusts, banks, trust companies, land trusts,
business trusts, or other organizations, irrespective of whether they are legal entities, and governments and agencies and political
subdivisions thereof.

 

“Plan”
means an employee benefit plan as defined in Section 3(3) of ERISA in which any personnel of any member of the ERISA Group
participate or from which any such personnel may derive a benefit or with respect to which any member of the ERISA Group may incur
liability, excluding any Multiemployer Plan, but including any plan either established or maintained by any member of the ERISA
Group or to which such Person contributes under the laws of any foreign country.

 

“Pledged Loan
Party” means JAKKS Hong Kong and any other Loan Party the Capital Stock of which has been pledged to Bank to secure the
Obligations pursuant to the terms and conditions hereof or any Loan Document.

 

“Prime Lending
Rate” means a per annum rate equal to the sum of the Prime Rate plus the Applicable Margin.

 

“Prime Lending
Rate Portion” means any portion of the Revolving Loans designated by Borrower as bearing interest at the Prime Lending
Rate permitted by Section 2.5 or 2.6 in accordance with the terms and conditions thereof.

 

“Prime Rate”
means the variable per annum rate of interest equal to the highest of (i) the Federal Funds Rate plus 1.5%, (ii) a rate reasonably
determined by Bank to be 1.5% above LIBOR for a one month Interest Period, or (iii) the rate of interest most recently announced
by Bank at its corporate headquarters as the “Wells Fargo Bank, National Association Prime Rate,” with the understanding
that the “Wells Fargo Bank, National Association Prime Rate” is one of Bank’s index rates and merely serves as
a basis upon which effective rates of interest are calculated for loans making reference thereto and may not be the lowest or best
rate at which Bank calculates interest or extends credit.

 

    	28

    	 

    

 

“Priority
Payables Reserve” means, at any time, the full amount of the indebtedness, liabilities and obligations at such time which
have a trust imposed to provide for payment or Liens ranking or capable of ranking senior to or pari passu with Liens securing
the Obligations on any of the Collateral under federal, provincial, state, county, municipal, or local law including, without limitation,
claims for unremitted and accelerated rents, taxes, wages, severance pay, termination pay, vacation pay, workers' compensation
obligations, government royalties or pension fund obligations, claims under the Wage Earner Protection Program Act (Canada)
together with the aggregate value, determined in accordance with GAAP, of all Inventory which Bank reasonably considers may be
or may become subject to a right of a supplier to recover possession thereof under any federal, provincial or state law, where
such supplier's right may have priority over Liens securing the Obligations including, without limitation, Inventory subject to
a right of a supplier to repossess goods pursuant to Section 81.1 of the Bankruptcy and Insolvency Act (Canada) and successor
legislation thereto.

 

“Pro Forma
Basis” means:

 

(a)          for
purposes of the calculation of the covenants contained in Sections 7.12 and 7.15 in connection with any Permitted Acquisition,
such covenants calculated on a pro forma basis after giving effect to the consummation of such acquisition, and the incurrence
or assumption by the Loan Parties of any Debt associated therewith, as if such acquisition had occurred on the first day of the
period of four consecutive Fiscal Quarters most recently ended for which the Financial Statements are available, with adjustments
for (i) non-recurring or one-time expenses that have actually been incurred, and (ii) charges that have actually been incurred
but would not have been incurred if the relevant acquisition had been consummated on the first day of such period, determined by
Borrowers in good faith; 

 

(b)          for
purposes of making a Permitted Restricted Payment of the type described in clause (d) of the definition thereof, the determination
of the existence of a Default or Event of Default, and the calculation of the Funded Debt to Consolidated EBITDA Ratio, on a pro
forma basis after giving effect to such Permitted Restricted Payment as if such Permitted Restricted Payment had been made on the
first day of the period of four consecutive Fiscal Quarters most recently ended for which the Financial Statements are available,
determined by Borrowers in good faith; and

 

(c)          for
purposes of determining whether any new Person acquired or created by a Borrower is a Material Subsidiary under clause (c) of the
definition thereof, the determination of revenues on a pro forma basis as of the last day of the most recently ended four-Fiscal
Quarter period of Borrowers.

 

“Purchase
Money Lien” means a Lien on any item of equipment of any Borrower; provided that (i) such Lien attaches only to
that item of equipment and (ii) the purchase-money obligation secured by such item of equipment does not exceed one hundred percent
(100%) of the purchase price of such item of equipment.

 

“Registered
Public Accounting Firm” has the meaning specified by the Securities Laws and shall be independent of Parent and its Subsidiaries
as prescribed by the Securities Laws.

 

“Regulation
D” means Regulation D of the Board of Governors of the Federal Reserve System, as such regulation may be amended or supplemented
from time to time.

 

    	29

    	 

    

 

“Reimbursement
Obligations” means the obligations of Borrowers to reimburse Bank pursuant to the Commercial Letter of Credit Agreement
and the Standby Letter of Credit Agreement amounts drawn under Letters of Credit.

 

“Rent Reserve”
means a reserve for rent at leased locations subject to landlords liens, past due rent, and up to three months future rent that
would be payable to a landlord that has not executed and delivered a Collateral Access Agreement.

 

“Reportable
Event” means any of the events described in Section 4043(c) of ERISA other than a Reportable Event as to which the
provision of 30 days’ notice to the PBGC is waived under applicable regulations.

 

“Reserves”
means the Availability Reserve, the Bank Product Reserve Amount, Inventory Reserves, and the Rent Reserve. Bank shall have the
right, at any time and from time to time after the Closing Date in its Permitted Discretion to establish, modify or eliminate Reserves.

 

“Restricted
Payment” means (a) any payment of principal or interest or any purchase, redemption, retirement, acquisition or defeasance
with respect to any Subordinate Debt, (b) any Distribution on account of any Capital Stock of any Loan Party, now or hereafter
outstanding, (c) any purchase, redemption, retirement, sinking fund, or other direct or indirect acquisition for value any of Capital
Stock of any Loan Party now or hereafter outstanding, (d) any distribution of Assets to any Owners of any Loan Party, whether in
cash, Assets, or in obligations of such Loan Party, (e) any allocation or other set apart of any sum for the payment of any Distribution
on, or for the purchase, redemption or retirement of, any Capital Stock of any Loan Party, or (f) any other distribution by reduction
of capital or otherwise in respect of any Capital Stock of any Loan Party.

 

“Retiree Health
Plan” means an employee welfare benefit plan within the meaning of Section 3(1) of ERISA that provides benefits
to individuals after termination of their employment, other than as required by Section 601 of ERISA.

 

“Revolving
Credit Availability” means, as of the date of determination, the difference between (a) the Borrowing Base, minus
(b) the sum of (i) the aggregate outstanding Revolving Loans, plus (ii) the Letter of Credit Usage.

 

“Revolving
Credit Commitment” means $75,000,000.

 

“Revolving
Credit Commitment Fee” has the meaning given to such term in Section 2.15(a).

 

“Revolving
Loans” has the meaning given to such term in Section 2.1.

 

“Revolving
Loans Maturity Date” means April 30, 2013.

 

“Revolving
Loans Note” means that certain Secured Promissory Note (Revolving Loans), dated as of even date herewith, executed by
Borrowers to the order of Bank, in the original principal amount of $75,000,000, to evidence the Revolving Loans.

 

    	30

    	 

    

 

“S&P”
means Standard & Poor’s, a division of The McGraw-Hill Companies, Inc.

 

“Sarbanes-Oxley”
means the Sarbanes-Oxley Act of 2002.

 

“SEC”
means the Securities and Exchange Commission, or any Governmental Authority succeeding to any of its principal functions.

 

“Securities
Laws” means the Securities Act of 1933, the Securities Exchange Act of 1934, Sarbanes-Oxley, and the applicable accounting
and auditing principles, rules, standards and practices promulgated, approved or incorporated by the SEC or the PCAOB.

 

“Security
Agreement” means that certain Security Agreement, dated as of even date herewith, among Borrowers and Bank.

 

“Slow Moving
Inventory” means Inventory remaining unsold in Borrowers’ stock for greater than twelve months.

 

“Solvent”
means, with respect to any Person on the date any determination thereof is to be made, that on such date: (a) the present
fair valuation of the Assets of such Person is greater than such Person’s probable liability in respect of existing debts;
(b) such Person does not intend to, and does not believe that it will, incur debts beyond such Person’s ability to pay
as such debts mature; and (c) such Person is not engaged in business or a transaction, and is not about to engage in business
or a transaction, which would leave such Person with Assets remaining which would constitute unreasonably small capital after giving
effect to the nature of the particular business or transaction. For purposes of this definition (i) the fair valuation of
any property or assets means the amount realizable within a reasonable time, either through collection or sale of such Assets at
their regular market value, which is the amount obtainable by a capable and diligent Person from an interested buyer willing to
purchase such property or assets within a reasonable time under ordinary circumstances; and (ii) the term debts includes any
payment obligation, whether or not reduced to judgment, equitable or legal, matured or unmatured, liquidated or unliquidated, disputed
or undisputed, secured or unsecured, absolute, fixed or contingent.

 

“Standby Letter
of Credit Agreement” means that certain Standby Letter of Credit Agreement, dated as of even date herewith, among Borrowers
and Bank.

 

“Standby Letter
of Credit Fee” has the meaning given to such term in Section 3.3(a).

 

“Subordinate
Debt” means (a) the Convertible Notes, and (b) any other Debt of any Loan Party that is expressly subordinated to the
Obligations pursuant to a subordination agreement satisfactory in form and substance to Bank, and otherwise in amount, terms and
conditions approved in writing by Bank.

 

    	31

    	 

    

 

“Subsidiary”
means any corporation, limited liability company, partnership, trust or other entity (whether now existing or hereafter organized
or acquired) of which Parent or one or more Subsidiaries of Parent at the time owns or controls directly or indirectly more than
50% of the Capital Stock having general voting power under ordinary circumstances to elect a majority of the board of directors,
managers or trustees or otherwise exercising control of such corporation, limited liability company, partnership, trust or other
entity (irrespective of whether at the time stock or any other form of ownership of any other class or classes shall have or might
have voting power by reason of the happening of any contingency).

 

“Subsidiary
Borrower” means any Borrower other than Parent.

 

“Subsidiary
Borrower Sublimit” means, with respect to any Subsidiary Borrower, the lesser of (a) $5,000,000, or (b) the Revolving
Credit Commitment.

 

“Swap”
means a “swap agreement” as that term is defined in Section 101(53B)(A) of the Bankruptcy Code.

 

“Swap Termination
Value” means, with respect to any Swap, at any time, after taking into account the effect of any legally enforceable
netting or master agreement relating to such Swap and the effect of all Swaps outstanding under such netting or master agreement,
(a) for any date on or after the date that such Swaps have been closed out pursuant to an early termination date, the net close-out,
settlement or termination value derived thereby, and (b) for any other date, the net close-out, settlement or termination value
that would be determined as of such date under the relevant netting or master agreement, if any, as if such Swaps were subject
to early termination due to default of the applicable Borrower or its Affiliates.

 

“Synthetic
Lease Obligation” means the monetary obligation of a Person under (a) a so-called synthetic, off-balance sheet or tax
retention lease, or (b) an agreement for the use or possession of property creating obligations that do not appear on the balance
sheet of such Person but which, upon the insolvency or bankruptcy of such Person, would be characterized as the indebtedness of
such Person (without regard to accounting treatment).

 

“Taxes”
has the meaning set forth in Section 9.1.

 

“Transferee”
has the meaning set forth in Section 10.5(d).

 

“Type”
means, with respect to any Loan or Borrowing, whether the rate of interest on such Loan, or on the Loans comprising such Borrowing,
is determined by reference to the LIBOR or the Prime Rate.

 

“UCC”
means the California Uniform Commercial Code, as amended or supplemented from time to time.

 

“Uniform Customs”
means the Uniform Customs and Practice for Documentary Credits (1993 Revision), International Chamber of Commerce Publication No.
500, as the same may be amended from time to time.

 

“Unused Revolving
Credit Commitment Fee” has the meaning set forth in Section 2.15(b).

 

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1.2           Accounting
Terms and Determinations. Unless otherwise specified herein, all accounting terms used herein shall be interpreted,
all accounting determinations hereunder shall be made, and all Financial Statements required
to be delivered hereunder shall be prepared in accordance with GAAP.

 

1.3           UCC
Terms. Any and all terms used in this Agreement or in any Loan Document which are defined in the UCC shall be construed
and defined in accordance with the meaning and definition ascribed to such terms under the UCC, unless otherwise defined herein
or in such Loan Document.

 

1.4           Computation
of Time Periods.  In this Agreement, with respect to the computation of periods of time from a specified date
to a later specified date, the word from means from and including and the words to and until each mean to but excluding. Periods
of days referred to in this Agreement shall be counted in calendar days unless otherwise stated.

 

1.5           Construction.
Unless the context of this Agreement clearly requires otherwise, references to the plural include the singular and to the singular
include the plural, references to any gender include any other gender, the term including is not limiting, and the term or has,
except where otherwise indicated, the inclusive meaning represented by the phrase and/or. References in this Agreement to determination
by Bank include good faith estimates by Bank (in the case of quantitative determinations), and good faith beliefs by Bank (in the
case of qualitative determinations). The words hereof, herein, hereby, hereunder, and similar terms in this Agreement refer to
this Agreement as a whole and not to any particular provision of this Agreement. Article, section, subsection, clause, exhibit
and schedule references are to this Agreement, unless otherwise specified. Any reference in this Agreement or any of the Loan Documents
to this Agreement or any of the Loan Documents includes any and all permitted alterations, amendments, changes, extensions, modifications,
renewals, or supplements thereto or thereof, as applicable.

 

1.6           Exhibits
and Schedules. All of the exhibits and schedules attached hereto shall be deemed incorporated herein by reference.

 

1.7           No
Presumption Against Any Party. Neither this Agreement, any of the Loan Documents, any other document, agreement, or
instrument entered into in connection herewith, nor any uncertainty or ambiguity herein or therein shall be construed or resolved
using any presumption against any party hereto, whether under any rule of construction or otherwise. On the contrary, this Agreement,
the Loan Documents, and the other documents, instruments, and agreements entered into in connection herewith have been reviewed
by each of the parties and their counsel and shall be construed and interpreted according to the ordinary meanings of the words
used so as to accomplish fairly the purposes and intentions of all parties hereto.

 

1.8           Independence
of Provisions. All agreements and covenants hereunder, under the Loan Documents, and the other documents, instruments,
and agreements entered into in connection herewith shall be given independent effect such that if a particular action or condition
is prohibited by the terms of any such agreement or covenant, the fact that such action or condition would be permitted within
the limitations of another agreement or covenant shall not be construed as allowing such action to be taken or condition to exist.

 

    	33

    	 

    

 

ARTICLE
II

TERMS OF THE CREDIT

 

2.1           Revolving
Loans. Provided that no Event of Default or Default has occurred and is continuing, and subject to the other terms and
conditions hereof, Bank shall make revolving loans (“Revolving Loans”) to Borrowers, upon notice in accordance
with Section 2.5(b), from the Closing Date up to but not including the Revolving Loans Maturity Date, the proceeds of which
shall be used only for the purposes allowed in Section 7.1(a), subject to the following conditions and limitations:

 

(a)          the
aggregate principal amount of Revolving Loans outstanding after giving effect to any proposed Borrowing plus the Letter
of Credit Usage on such date shall not exceed the Borrowing Base;

 

(b)          the
aggregate principal amount of Revolving Loans outstanding after giving effect to any proposed Borrowing, in each case, made to
or for the benefit of Parent, plus the Letter of Credit Usage on such date with respect to Letters of Credit for which Parent
is the applicant, shall not exceed the Parent Sublimit;

 

(c)          the
aggregate principal amount of Revolving Loans outstanding after giving effect to any proposed Borrowing, in each case, made to
or for the benefit of any Subsidiary Borrower, plus the Letter of Credit Usage on such date with respect to Letters of Credit
for which such Subsidiary Borrower is the applicant, shall not exceed the Subsidiary Borrower Sublimit;

 

(d)          Borrowers
shall not be permitted to borrow, and Bank shall not be obligated to make, any Revolving Loans to Borrowers, unless and until all
of the conditions for a Borrowing set forth in Section 4.2 have been met to the satisfaction of Bank in its Permitted Discretion;
and

 

(e)          if,
at any time or for any reason, the amount of Borrowings outstanding plus the Letter of Credit Usage exceeds the Borrowing
Base (an “Overadvance”), Borrowers shall immediately pay to Bank, upon Bank’s election and demand, in
cash, the amount of such Overadvance to be used by Bank to repay outstanding Borrowings.

 

Borrowers may repay and, subject to the
terms and conditions hereof, reborrow Revolving Loans. All such repayments shall be without penalty or premium except as otherwise
required by Section 2.7(a) with respect to repayments of LIBOR Lending Rate Portions. Borrowers shall give Bank at least one
(1) Business Day’s prior written notice of any repayment of a Prime Lending Rate Portion and at least three (3) Business
Days’ prior written notice of any repayment of a LIBOR Lending Rate Portion. On the Revolving Loans Maturity Date, Borrowers
shall pay to Bank the entire unpaid principal balance of the Revolving Loans together with all accrued but unpaid interest thereon.

 

2.2           Reserved.

 

2.3           Reserved.

 

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2.4           Interest
Rates; Payments of Interest.

 

(a)          Interest
Rate Options. 

 

(i)          Revolving
Loans. Subject to the terms and conditions hereof, all Revolving Loans, or portions thereof, may be outstanding as either LIBOR
Lending Rate Portions or Prime Lending Rate Portions, by designating, in accordance with Sections 2.5(b) and 2.6(b), either the
LIBOR Lending Rate or the Prime Lending Rate to apply to all or any portion of the unpaid principal balance of the Revolving Loans.

 

(ii)         Limitations
on LIBOR Lending Rate Portions. LIBOR Lending Rate Portions shall be in minimum aggregate amounts each of $100,000, plus aggregate
increments of $100,000 in excess of such minimum amount.

 

(b)          Lending
Office. Each Type of Loan shall be made and maintained by Bank at Bank’s Lending Office for such Type of Loan.

 

(c)          Default
Rate. Upon the occurrence and during the continuance of an Event of Default, in addition to and not in substitution of any
of Bank’s other rights and remedies with respect to such Event of Default, at the option of Bank, the entire unpaid principal
balance of the Loans shall bear interest at the otherwise applicable rate(s) plus two hundred (200) basis points, subject to Section
2.4(e). In addition, at Bank’s option, Expenses, Fees, and other amounts due hereunder not paid when due shall bear interest
at the Prime Lending Rate plus two hundred (200) basis points until such overdue payment is paid in full, subject to Section 2.4(e).

 

(d)          Computation
of Interest. All computations of interest shall be calculated on the basis of a year of three hundred sixty (360) days for
the actual days elapsed. In the event that the Prime Rate announced is, from time to time, changed, adjustment in the rate of interest
payable hereunder on all Prime Lending Rate Portions shall be made as of 12:01 a.m. (Pacific time) on the effective
date of the change in the Prime Rate. Interest shall accrue from the date of a Borrowing of a Loan to the date of repayment of
such Loan in accordance with the provisions of this Agreement; provided, however, if a Loan is repaid on the same day on
which it is made, then one (1) day’s interest shall be paid on that Loan.

 

(e)          Maximum
Interest Rate. Under no circumstances shall the interest rate and other charges hereunder exceed the highest rate permissible
under any law which a court of competent jurisdiction shall, in a final determination, deem applicable hereto. In the event that
such a court determines that Bank has received interest and other charges hereunder in excess of the highest rate applicable hereto,
such excess shall be deemed received on account of, and shall automatically be applied to reduce, FIRST, the Obligations, other
than interest and Bank Product Obligations, in the inverse order of maturity, and SECOND, the Bank Product Obligations in inverse
order of maturity, and the provisions hereof shall be deemed amended to provide for the highest permissible rate. If there are
no Obligations or Bank Product Obligations outstanding, Bank shall refund to Borrowers such excess.

 

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(f)          Changes
in Applicable Margin and Applicable Percentage. For purposes of determining the Applicable Margin and the Applicable Percentage
from the Closing Date through and including delivery of the first Compliance Certificate due hereunder, the Funded Debt to Consolidated
EBITDA Ratio will be deemed to be greater than 2.50:1.0, notwithstanding anything to the contrary. Thereafter, changes in the Applicable
Margin and Applicable Percentage resulting from a change in the Funded Debt to Consolidated EBITDA Ratio, shall become effective
on the first day of the calendar month following Bank’s receipt of the latest Compliance Certificate, and shall be based
on the Funded Debt to Consolidated EBITDA Ratio disclosed in such Compliance Certificate; provided, however, for
purposes of determining the aforementioned margins, if Borrowers fail to deliver to Bank an accurate completed Compliance Certificate
when due hereunder, the Funded Debt to Consolidated EBITDA Ratio shall be conclusively presumed to be greater than 2.50:1.0 until
the applicable Compliance Certificate has been so completed and delivered to Bank.

 

If, as a result of any restatement of or
other adjustment to Parent’s Financial Statements or for any other reason, Bank determines that (i) the Funded Debt to Consolidated
EBITDA Ratio as calculated by Borrowers as of any applicable date was inaccurate and (ii) a proper calculation of the Funded Debt
to Consolidated EBITDA Ratio would have resulted in different pricing for any period, then (x) if the proper calculation of the
Funded Debt to Consolidated EBITDA Ratio would have resulted in higher pricing for such period, in addition to and not in substitution
of any of Bank’s other rights and remedies with respect thereto, Borrowers shall pay to Bank, promptly on demand by Bank,
an amount equal to the excess of the amount of interest and fees that should have been paid for such period over the amount of
interest and fees actually paid for such period; and (y) if the proper calculation of the Funded Debt to Consolidated EBITDA Ratio
would have resulted in lower pricing for such period, Bank shall pay to Borrowers, promptly on demand by Borrowers, an amount equal
to the excess of the amount of interest and fees actually paid for such period over the amount of interest and fees that should
have been paid for such period; provided that if, as a result of any restatement or other event a proper calculation of
the Funded Debt to Consolidated EBITDA Ratio would have resulted in higher pricing for one or more periods and lower pricing for
one or more other periods (due to the shifting of income or expenses from one period to another period or any similar reason),
then the amount payable by Borrowers pursuant to clause (x) above shall be based upon the excess, if any, of the amount of interest
and fees that should have been paid for all applicable periods over the amount of interest and fees paid for all such periods.

 

(g)          Payments
of Interest. All accrued but unpaid interest on the Loans, calculated in accordance with this Section 2.4, shall be due
and payable, in arrears, on each and every Interest Payment Date.

 

2.5           Notice
of Borrowing Requirements.

 

(a)          Each
Borrowing shall be made on a Business Day.

 

(b)          Each
Borrowing shall be made upon irrevocable telephonic notice given by an Authorized Officer of Administrative Borrower and, upon
Bank’s request, a Notice of Borrowing, given by email, facsimile or personal service, delivered to Bank at the address set
forth in the Notice of Borrowing. If for a Prime Lending Rate Portion, Bank shall be given such notice no later than 10:00 a.m.,
Pacific time, on the Business Day on which such Borrowing is to be made, and, if for a LIBOR Lending Rate Portion, Bank shall be
given notice no later than 2:00 p.m., Pacific time, three (3) Business Days prior to the day on which such Borrowing is to
be made, and such notice shall state the amount and purpose thereof (subject to the provisions of Section 2.1) and, in the
case of a Borrowing of a LIBOR Lending Rate Portion, the requested Interest Period.

 

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(c)          Bank
shall not incur any liability to Borrowers in acting upon any telephonic notice which Bank believes in good faith to have been
given by an Authorized Officer of Administrative Borrower, or for otherwise acting in good faith under this Section 2.5, and
in making any Loans pursuant to telephonic notice.

 

(d)          So
long as all of the conditions for a Borrowing of a Loan set forth herein have been satisfied, Bank shall credit the proceeds of
such Loan on the applicable Borrowing date into Borrowers’ Account.

 

2.6           Conversion
or Continuation Requirements.

 

(a)          Borrowers
shall have the option to: (i) convert, at any time, all or any portion of any of the outstanding Loans, subject to the requirements
of Section 2.4(a), from a portion bearing interest at one of the interest rate options available pursuant to Section 2.4(a)
to another; or (ii) upon the expiration of any Interest Period applicable to a LIBOR Lending Rate Portion, to continue all
or any portion of such LIBOR Lending Rate Portion as a LIBOR Lending Rate Portion with the succeeding Interest Period(s) of such
continued LIBOR Lending Rate Portion commencing on the expiration date of the Interest Period previously applicable thereto, subject
in the following limitations:

 

(i)          a
LIBOR Lending Rate Portion may only be converted to a Prime Lending Rate Portion, or continued as a LIBOR Lending Rate Portion,
on the expiration date of the Interest Period applicable thereto;

 

(ii)         no
outstanding Loan, or portion thereof, may be continued as, or be converted into, a LIBOR Lending Rate Portion in the event that,
on the earlier of the date of the delivery of the Notice of Conversion or Continuation or the telephonic notice in respect thereof,
any Event of Default or Default has occurred and is continuing; and

 

(iii)        if
Borrowers fail to deliver the appropriate Notice of Conversion or Continuation or the telephonic notice in respect thereof pursuant
to the required notice period before the expiration of the Interest Period of a LIBOR Lending Rate Portion, such LIBOR Lending
Rate Portion shall automatically be converted to a Prime Lending Rate Portion.

 

(b)          Borrowers
shall give telephonic notice of any proposed continuation or conversion pursuant to this Section 2.6 followed by, if Bank
requests, a Notice of Conversion or Continuation, given by email, facsimile or personal service, delivered to Bank at the address
set forth in the Notice of Conversion or Continuation. Such notice must be received no later than 11:00 a.m., Pacific time,
on the Business Day which is the proposed conversion date (in the case of a conversion to a Prime Lending Rate Portion) and no
later than 2:00 p.m., Pacific time, three (3) Business Days in advance of the proposed conversion or continuation date (in the
case of a conversion to, or a continuation of, a LIBOR Lending Rate Portion). If such Notice of Conversion or Continuation is received
by Bank not later than 2:00 p.m., Pacific time, on a Business Day, such day shall be treated as the first Business Day of
the required notice period. In any other event, such notice will be treated as having been received at the opening of business
of the next Business Day. A Notice of Conversion or Continuation shall specify: (1) the proposed conversion or continuation
date (which shall be a Business Day or a Business Day, as applicable); (2) the amount of the Revolving Loan to be converted
or continued; (3) the nature of the proposed conversion or continuation; and (4) in the case of a conversion to or continuation
of a LIBOR Lending Rate Portion, the requested Interest Period.

 

    	37

    	 

    

 

(c)          Bank
shall not incur any liability to Borrowers in acting upon any telephonic notice referred to above which Bank believes in good faith
to have been given by an Authorized Officer of Administrative Borrower or for otherwise acting in good faith under this Section 2.6.
Any Notice of Conversion or Continuation (or telephonic notice in respect thereof) shall be irrevocable and Borrowers shall be
bound to convert or continue in accordance therewith.

 

2.7           LIBOR
Costs.

 

(a)          Borrowers
shall reimburse Bank for any increase in Bank’s costs (which shall include, but not be limited to, taxes, other than Excluded
Taxes, or any loss or expense (including, without limitation, any loss or expense incurred by reason of the liquidation or re-employment
of deposits or other funds acquired by Bank to fund or maintain outstanding the principal amount of the Loans) incurred by it directly
or indirectly resulting from the making of any LIBOR Lending Rate Portion due to: (a) the modification, adoption, or enactment
of any law, rule, regulation or treaty or the interpretation thereof by any governmental or other authority (whether or not having
the force of law) which becomes effective after the date hereof; (b) the modification or new application of any law, regulation
or treaty or the interpretation thereof by any governmental or other authority (whether or not having the force of law) which becomes
effective after the date hereof; (c) compliance by Bank with any request or directive (whether or not having the force of
law) of any monetary or fiscal agency or authority which becomes effective after the date hereof; (d) violations by Borrowers
of the terms of this Agreement; or (e) any prepayment of a LIBOR Lending Rate Portion at any time prior to the end of the
applicable Interest Period, including pursuant to Section 8.2.

 

(b)          The
amount of such costs, losses, or expenses shall be determined solely by Bank based upon the assumption that Bank funded one hundred
percent (100%) of each LIBOR Lending Rate Portion in the LIBOR market. In attributing Bank’s general costs relating to its
eurocurrency operations to any transaction under this Agreement or averaging any costs over a period of time, Bank may use any
reasonable attribution or averaging methods which it deems appropriate and practical. Bank shall notify Borrowers of the amount
due Bank pursuant to this Section 2.7 in respect of any LIBOR Lending Rate Portion as soon as practicable but in any event
within forty-five (45) days after the last day of the Interest Period of such LIBOR Lending Rate Portion, and Borrowers shall pay
to Bank the amount due within fifteen (15) days of its receipt of such notice. A certificate as to the amounts payable pursuant
to the foregoing sentence together with whatever detail is reasonably available to Bank shall be submitted by Bank to Administrative
Borrower. Such determination shall, if not objected to within thirty (30) days, be conclusive and binding upon Borrowers in the
absence of manifest error. If Bank claims increased costs, loss, or expenses pursuant to this Section 2.7, then Bank, if requested
by Borrowers, shall use reasonable efforts to take such steps that Borrowers reasonably request, including designating different
Lending Offices, as would eliminate or reduce the amount of such increased costs, losses, or expenses, so long as taking such steps
would not, in the reasonable judgment of Bank, otherwise be disadvantageous to Bank. Any recovery by Bank or its Lending Office
of amounts previously borne by Borrowers pursuant to this Section 2.7 shall be promptly remitted, without interest (unless
Bank received interest on such recovered amounts), to Borrowers by Bank.

 

    	38

    	 

    

 

2.8           Illegality;
Impossibility. Notwithstanding anything herein to the contrary, if Bank determines (which determination shall be conclusive
absent manifest error) that any law, rule, regulation, treaty or directive, or any change therein, or any change in the interpretation
or administration thereof by any Governmental Authority, central bank or comparable agency charged with the interpretation or administration
thereof, or compliance by Bank (or its Lending Office) with any request or directive (whether or not having the force of law) of
any such authority, central bank or comparable agency shall make it unlawful or impossible for Bank (or its Lending Office) to
fund or maintain a LIBOR Lending Rate Portion in the LIBOR market or to continue such funding or maintaining, then Bank
shall give notice of such circumstances to Borrowers and (a) in the case of each and every LIBOR Lending Rate Portion which
is outstanding, Borrowers shall, if requested by Bank, prepay such LIBOR Lending Rate Portion(s) on or before the date specified
in such request, together with interest accrued thereon, and the date so specified shall be deemed to be the last day of the Interest
Period of that LIBOR Lending Rate Portion, and concurrent with any such prepayment, Bank shall make a Prime Lending Rate Portion
to Borrowers in the principal amount equal to the principal amount of the LIBOR Lending Rate Portions so prepaid, and (b) Bank
shall not be obligated to make any further LIBOR Lending Rate Portions until Bank determines that it would no longer be unlawful
or impossible to do so.

 

2.9           Inability
to Determine Rates. Notwithstanding anything herein to the contrary, if Bank determines (which determination shall be
conclusive absent manifest error) that (a) Bank is unable to determine the LIBOR Lending Rate with respect to any Notice of
Borrowing or Notice of Conversion or Continuation selecting the LIBOR Lending Rate because quotations of interest rates for the
relevant deposits are not being provided in the relevant amounts or for the relative maturities or (b) the LIBOR Lending Rate
will not adequately reflect the cost to Bank of making or funding LIBOR Lending Rate Portions, then (i) the right of
Borrowers to select the LIBOR Lending Rate shall be suspended until Bank notifies Borrowers that the circumstances causing such
suspension no longer exist, and (ii) Borrowers shall repay in full the then outstanding principal balance of all LIBOR Lending
Rate Portions, together with interest accrued thereon, on the last day of the Interest Period applicable to each such LIBOR Lending
Rate Portion, and concurrent with any such prepayment, Bank shall make a Prime Lending Rate Portion to Borrowers in the principal
amount equal to the principal amount of the LIBOR Lending Rate Portions so repaid.

 

2.10         Recovery
of Additional Costs. If the imposition of or any change in any law, rule, regulation or guideline, or the interpretation
or application thereof by any court or administrative or governmental authority (including any request or policy not having the
force of law) shall impose, modify or make applicable any taxes (except Excluded Taxes), reserve requirements, capital adequacy
requirements or other obligations which would (a) increase the cost to Bank for extending or maintaining the credit facilities
to which this Agreement relates, (b) reduce the amounts payable to Bank under this Agreement or any Loan Documents, or (c) reduce
the rate of return on Bank’s capital as a consequence of Bank’s obligations with respect the credit facilities to which
this Agreement relates, then Borrowers shall pay to Bank such additional amounts as will compensate Bank therefore, within fifteen
(15) days after Bank’s written demand for such payment, which demand shall be accompanied by an explanation of such imposition
or charge and a calculation in reasonable detail of the additional amounts payable by Borrowers, which explanation and calculations
shall be conclusive in the absence of manifest error.

 

    	39

    	 

    

 

2.11         Notes;
Statements of Obligations.

 

(a)          The
Revolving Loans and Borrowers’ obligation to repay the same shall be evidenced by the Revolving Loans Note, this Agreement
and the books and records of Bank.

 

(b)          Bank
shall render monthly statements of the Loans to Borrowers, including statements of all principal and interest owing on the Loans,
and all Fees and Expenses owing, and such statements shall be presumed to be correct and accurate and constitute an account stated
between Borrowers and Bank, absent manifest error, unless, within thirty (30) days after receipt thereof by Borrowers, Borrowers
deliver to Bank, at the address specified in Section 10.1, written objection thereof specifying the error or errors, if any,
contained in any such statement.

 

2.12         Holidays.
Any principal or interest in respect of the Loans (other than in respect of a LIBOR Lending Rate Portion) which would otherwise
become due on a day other than a Business Day, shall instead become due on the next succeeding Business Day and such adjustment
shall be reflected in the computation of interest; provided, however, that in the event that such due date shall, subsequent
to the specification thereof by Bank, for any reason no longer constitute a Business Day, Bank may change such specified due date
in accordance with this Section 2.12.

 

2.13         Time
and Place of Payments.

 

(a)          All
payments due hereunder shall be made available to Bank in immediately available Dollars, not later than 12:00 p.m., Pacific
time, on the day of payment, by wire transfer pursuant to the following wire transfer instructions, or such other instructions
as Bank may from time to time specify by notice to Administrative Borrower:

 

Bank Name: Wells Fargo Bank, N.A.

ABA Routing No.: 121000248

Account Name: Wells Fargo Global Banking

Account Number: 00152864050720

Reference Jakks Pacific, Inc.

Attn: Vessi Kapoulian

 

(b)          Borrowers
hereby authorize Bank to charge Borrowers’ Account, or any other demand deposit account maintained by Borrowers with Bank,
for the amount of any payment due or past due hereunder or under any Loan Document, for the full amount thereof. Should there be
insufficient funds in any such demand deposit account to pay all such sums when due, the full amount of such deficiency shall be
immediately due and payable in cash by Borrowers.

 

    	40

    	 

    

 

(c)          In
addition, Borrowers hereby authorize Bank at Bank’s option, without prior notice to Borrowers, to advance a Revolving Loan
as a Prime Lending Rate Portion for any payment due or past due hereunder, including principal and interest owing on the Loans,
the Fees and all Expenses, and to pay the proceeds of such Revolving Loan to Bank for application toward such due or past due payment.

 

2.14         Reserved.

 

2.15         Fees.

 

(a)          Borrowers
shall pay to Bank a fee (the “Commitment Fee”) in the amount of $187,500, which fee shall be non-refundable,
fully-earned and due and payable on the Closing Date. 

 

(b)          Borrowers
shall pay to Bank on a quarterly basis an unused revolving credit commitment fee (the “Unused Revolving Credit Commitment
Fee”) in an aggregate amount equal to the Applicable Percentage times the difference of the Revolving Credit Commitment
minus the sum of (i) the average daily outstanding Revolving Loans during the prior quarter plus (ii) the average
daily Letter of Credit Usage during the prior quarter. The Unused Revolving Credit Commitment Fee shall begin to accrue on the
Closing Date and shall be due and payable, in arrears, on the last Business Day of each and every December, March, June and September,
and the Revolving Loans Maturity Date. The Unused Revolving Credit Commitment Fee shall be calculated on the basis of a year of
three hundred sixty (360) days for the actual days elapsed.

 

ARTICLE
III

LETTERS OF CREDIT

 

3.1           Letters
of Credit.

 

(a)          Provided
that no Event of Default or Default is continuing and subject to the other terms and conditions hereof, Bank agrees to issue letters
of credit (“Letters of Credit”) for the account of Borrowers in such form as may be approved from time to time
by Bank, subject to the following limitations:

 

(i)          The
face amount of the Letter of Credit requested if and when issued must not cause the sum of the aggregate principal amount outstanding
of all Revolving Loans plus the Letter of Credit Usage to exceed the Borrowing Base;

 

(ii)         The
face amount of the Letter of Credit requested if and when issued must not cause the Letter of Credit Usage to exceed the Letter
of Credit Sublimit;

 

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(iii)        The
face amount of the Letter of Credit requested for which Parent is the applicant, if and when issued, must not cause the sum of
the aggregate principal amount outstanding of all Revolving Loans made to or for the benefit of Parent, plus the Letter
of Credit Usage with respect to Letters of Credit for which Parent is the applicant, to exceed the Parent Sublimit;

 

(iv)        The
face amount of the Letter of Credit requested for which any Subsidiary Borrower is the applicant, if and when issued, must not
cause the sum of the aggregate principal amount outstanding of all Revolving Loans made to or for the benefit of such Subsidiary
Borrower, plus the Letter of Credit Usage with respect to Letters of Credit for which such Subsidiary Borrower is the applicant,
to exceed the Subsidiary Borrower Sublimit;

 

(v)         the
Letter of Credit may not have an expiry date or draw period which extends beyond the earlier to occur of (x) ten (10) days prior
to the Revolving Loans Maturity Date, or (y) 365 days after the date of issuance for standby Letters of Credit, or (z) 180 days
for documentary Letters of Credit; and

 

(vi)        The
conditions specified in Section 4.2 shall have been satisfied on the date of issuance of such Letter of Credit.

 

(b)          Each
Letter of Credit shall (i) be denominated in Dollars, and (ii) be a standby or documentary letter of credit issued to support obligations
of a Borrower or any Subsidiary, contingent or otherwise, to finance the working capital and business needs of such Borrower or
such Subsidiary in the ordinary course of business.

 

(c)          Each
Letter of Credit shall be subject to the Uniform Customs or the ISP, as determined by Bank, in its Permitted Discretion, and, to
the extent not inconsistent therewith, the laws of the State of California.

 

(d)          Bank
shall not at any time be obligated to issue any Letter of Credit hereunder if such issuance would conflict with, or cause Bank
to exceed any limits imposed by its organizational or governing documents or by any applicable law, rule, regulation or treaty
or determination of an arbitrator or a court or other governmental authority to which Bank is subject.

 

(e)          Each
drawing under any Letter of Credit shall constitute a request by Borrowers to Bank for a Borrowing of a Revolving Loan as a Prime
Lending Rate Portion. The date of such drawing shall be deemed the date on which such Borrowing is made.

 

3.2           Procedure
for Issuance of Letters of Credit. Borrowers may request that Bank issue a Letter of Credit at any time prior to the
date that is thirty (30) days prior to the Revolving Loans Maturity Date by delivering to Bank a Letter of Credit Application at
its address for notices specified herein therefor, completed to the reasonable satisfaction of Bank, together with such other certificates,
documents and other papers and information as Bank may reasonably request. Upon receipt of any Letter of Credit Application, Bank
will process such Letter of Credit Application and the certificates, documents and other papers and information delivered to it
in connection therewith in accordance with its customary procedures and shall promptly issue the Letter of Credit requested thereby
(but in no event shall Bank be required to issue any Letter of Credit earlier than three (3) Business Days after its receipt of
the Letter of Credit Application therefor and all such other certificates, documents and other papers and information relating
thereto) by issuing the original of such Letter of Credit to the beneficiary thereof or as otherwise may be agreed by Bank and
Borrowers. Bank shall furnish a copy of such Letter of Credit to Borrowers promptly following the issuance thereof.

 

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3.3           Fees,
Commissions and Other Charges.

 

(a)          With
respect to each and every standby Letter of Credit, Borrowers shall pay to Bank a fee in an amount equal to the face amount of
such standby Letter of Credit times the Applicable Percentage per annum, pro-rated for the tenor of such standby Letter
of Credit on the basis of a year of 360 days (the “Standby Letter of Credit Fee”). The Standby Letter of Credit
Fee shall be due and payable upon issuance of the applicable standby Letter of Credit, and if applicable, upon each renewal thereof.

 

(b)          With
respect to each and every documentary Letter of Credit, Borrowers shall pay to Bank a fee in an amount equal to the greater of
(i) the product of (x) the face amount of such documentary Letter of Credit times (y) 0.125%, or (ii) $125, pro-rated for
the tenor of such documentary Letter of Credit on the basis of a year of 360 days (the “Documentary Letter of Credit Fee”).
The Documentary Letter of Credit Fee shall be due and payable upon issuance of the applicable documentary Letter of Credit, and
if applicable, upon each renewal thereof.

 

(c)          In
addition to the foregoing, Borrowers shall pay or reimburse Bank for such normal and customary costs and expenses as are reasonably
incurred or charged by Bank in issuing, effecting payment under, amending or otherwise administering any Letter of Credit.

 

3.4           Outstanding
Letters of Credit Following Event of Default; Outstanding Letters of Credit Following the Revolving Loans Maturity Date.

 

(a)          With
respect to all Letters of Credit outstanding upon the occurrence of an Default or Event of Default, Borrowers shall either replace
such Letters of Credit, whereupon such Letters of Credit shall be canceled, with letters of credit issued by another issuer acceptable
to the beneficiary of such Letter of Credit, or provide Bank, as security for such Letters of Credit, with (i) a cash collateral
deposit in an amount equal to one hundred and five percent (105%) of the Letter of Credit Usage, or (ii) an Acceptable Letter of
Credit, in either case for so long as such Letters of Credit remain outstanding during the continuance of such Default or Event
of Default.

 

(b)          With
respect to all Letters of Credit outstanding on the Revolving Loans Maturity Date, Borrowers shall either replace such Letters
of Credit, whereupon such Letters of Credit shall be canceled, with letters of credit issued by another issuer acceptable to the
beneficiary of such Letter of Credit, or provide Bank, as security for such Letters of Credit, with (i) a cash collateral deposit
maintained at Bank in an amount equal to one hundred and five percent (105%) of the Letter of Credit Usage, or (ii) an Acceptable
Letter of Credit, in either case until such time as no Letters of Credit remain outstanding, all draw periods with respect to all
Letters of Credit have expired, and all Reimbursement Obligations with respect thereto have been paid in full in cash.

 

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(c)          Borrowers
hereby grant to Bank a security interest in such cash collateral to secure all Obligations of Borrowers under this Agreement and
the other Loan Documents. Amounts held in such cash collateral account shall be applied by Bank to the payment of drafts drawn
under such Letters of Credit and the payment of customary costs and expenses charged or incurred by Bank in connection therewith,
and the unused portion thereof after all such Letters of Credit shall have expired or been fully drawn upon, if any, shall be applied
to repay other Obligations. After all such Letters of Credit shall have expired or been fully drawn upon, all Reimbursement Obligations
have been paid in full in cash and all other Obligations have been paid in full in cash, and the obligations of Bank hereunder
have terminated, the balance, if any, in such cash collateral account shall be returned to Borrowers. Borrowers shall execute and
deliver to Bank such further documents and instruments as Bank may request to evidence the creation and perfection of the within
security interest in such cash collateral account.

 

3.5           Conflicting
Terms. In the event of any conflict between the terms of this Article III, on the one hand, and the terms of the
Commercial Letter of Credit Agreement, the Standby Letter of Credit Agreement, or any Letter of Credit Application, on the other
hand, the terms of the Commercial Letter of Credit Agreement, the Standby Letter of Credit Agreement, or such Letter of Credit
Application, as applicable, shall govern and control any such conflict.

 

ARTICLE
IV

CONDITIONS PRECEDENT

 

4.1           Conditions
to Initial Loans or Letter of Credit. Bank’s obligation to make the initial Loans and Bank’s obligations
to issue the initial Letter of Credit is subject to and contingent upon the fulfillment of each of the following conditions to
the satisfaction of Bank and its counsel:

 

(a)          Receipt
by Bank of this Agreement and each of the Loan Documents, all duly executed by the Loan Parties and/or the other Persons party
thereto.

 

(b)          Receipt
by Bank of duly executed favorable opinions of Borrowers’ domestic and Canadian counsel, and Bank’s Canadian and Hong
Kong counsel;

 

(c)          With
respect to each Loan Party, receipt by Bank of a Certificate of the Secretary of such Loan Party, dated as of the Closing Date,
certifying (i) the By-Laws of such Loan Party and all amendments thereto as being true and correct and in full force and effect;
and (ii) the resolutions of the Board of Directors of such Loan Party as being true and correct and in full force and effect,
authorizing the execution and delivery of this Agreement and the Loan Documents, and authorizing the transactions contemplated
hereunder and thereunder, and authorizing the Authorized Officers of such Loan Party to execute the same on behalf of such Loan
Party;

 

(d)          With
respect to each Borrower, receipt by Bank of a certificate of status and good standing for such Borrower, dated a recent date prior
to the Closing Date, showing that such Borrower is in good standing under the laws of the state of its organization;

 

(e)          With
respect to each Borrower, receipt by Bank of certificates of foreign qualification and good standing for such Borrower, dated a
recent date prior to the Closing Date, showing that such Borrower is in good standing under the laws of each state where by the
nature of its business it is required to be so qualified;

 

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(f)          receipt
by Bank of a certificate signed by the Chief Executive Officer and Chief Financial Officer of each Borrower, dated as of the Closing
Date, certifying that (i) both immediately before and immediately after giving effect to the transactions contemplated by
this Agreement and the Loan Documents, such Borrower is and will be Solvent; (ii) the representations and warranties of such
Borrower contained in this Agreement and the Loan Documents are true and correct, and (iii)  both immediately before and immediately
after giving effect to the transactions contemplated by this Agreement and the Loan Documents, no Event of Default or Default is
continuing or shall occur;

 

(g)          completion
by Bank of its due diligence requirements with respect to Loan Parties, including audits, financial and legal survey, and Bank
shall be satisfied with the results thereof,

 

(h)          receipt
by Bank of UCC, PPSA and other public record searches with respect to Loan Parties, in each case satisfactory to Bank;

 

(i)          receipt
by Bank of the original certificates evidencing 65% of the issued and outstanding Capital Stock entitled to vote (within the meaning
of Treas. Reg. Section 1.956-2(c)(2) and 100% of the issued and outstanding Capital Stock not entitled to vote (within the meaning
of Treas. Reg. Section 1.956-2(c)(2)) of JAKKS Hong Kong;

 

(j)          receipt
by Bank of (i) the Commitment Fee, and (ii) all Expenses owing on the Closing Date;

 

(k)          no
Material Adverse Effect shall have occurred, as determined by Bank in its Permitted Discretion;

 

(l)          receipt
by Bank of such other documents, instruments and agreements as Bank may reasonably request in connection with the transactions
contemplated hereunder or to perfect or protect the liens and security interests granted to Bank in connection herewith; and

 

(m)          the
Closing Date shall have occurred on or before September 28, 2012.

 

4.2           Conditions
to all Loans and Letters of Credit. Bank’s obligation hereunder to make any Loans to Borrowers (including the
initial Loans), and Bank’s obligation to issue any Letters of Credit (including the initial Letter of Credit), is further
subject to and contingent upon the fulfillment of each of the following conditions to the satisfaction of Bank:

 

(a)          (i) in
the case of a Borrowing, receipt by Bank of a Notice of Borrowing as required by Section 2.5(b) and, in the case of the initial
Loans, written disbursement instructions to Bank consistent with Section 7.1, and (ii) in the case of a Letter of Credit,
receipt by Bank of a Letter of Credit Application and the other papers and information required under Section 3.2;

 

    	45

    	 

    

 

(b)          the
fact that, immediately before and after such Borrowing or issuance of Letter of Credit, as the case may be, no Event of Default
or Default shall have occurred or be continuing; and

 

(c)          the
fact that the representations and warranties of Loan Parties contained in this Agreement and the Loan Documents shall be true and
correct in all material respects on and as of the date of such Borrowing, or issuance of Letter of Credit, as the case may be,
except to the extent that any such representation or warranty expressly relates to an earlier date.

 

4.3           Conditions
Subsequent to all Loans and Letters of Credit. Bank’s obligation hereunder to make any Loans to Borrowers, and
Bank’s obligation to issue any Letters of Credit, is further subject to and contingent upon the fulfillment of the following
conditions subsequent to the satisfaction of Bank:

 

(a)          On
or before November 27, 2012, Borrowers shall delivered to Bank a Collateral Access Agreement with respect to Borrowers’ location
at 21733-21749 Baker Parkway, City of Industry, CA, duly executed and in form and substance satisfactory to Bank; and

 

(b)          On
or before November 27, 2012, Bank shall have received satisfactory evidence that all security agreements filed against any of any
Borrower’s Intellectual Property in the United States Copyright Office and the United States Patent and Trademark Office
have been terminated, reconveyed and released, except with respect to Permitted Liens; and

 

(c)          On
or before November 27, 2012, Bank shall have received copies of insurance binders or insurance certificates evidencing Borrowers’
having caused to be obtained insurance in accordance with Section 6.5, including the lender’s loss payee endorsements required
by such Section.

 

(d)          On
or before October 7, 2012, Bank shall have received evidence that Jakks Canada has filed the necessary filings with the province
of Ontario, Canada to become registered to conduct business in such province.

 

In the event that Borrowers
shall fail to fulfill any or all of the conditions subsequent set forth in this Section 4.3 on or before the dates indicated above
to the satisfaction of Bank, in its sole and absolute discretion, each such failure shall constitute a separate and independent
Event of Default.

 

ARTICLE
V

REPRESENTATIONS AND WARRANTIES

 

In order to Bank to
enter into this Agreement and to make Loans and/or issue any Letters of Credit, each Borrower represents and warrants to Bank that
on the Closing Date and on the date of each Borrowing or issuance of a Letter of Credit:

 

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5.1           Legal
Status. Each Loan Party is a corporation, duly organized, validly existing and in good standing under the laws of its
jurisdiction of organization. Each Loan Party has the power and authority to own its own Assets and to transact the business in
which it is engaged, and is properly licensed, qualified to do business and in good standing in every jurisdiction in which it
is doing business where failure to so qualify could have a Material Adverse Effect.

 

5.2           No
Violation; Compliance. The execution, delivery and performance by each Loan Party of this Agreement and the Loan Documents
to which such Loan Party is a party, and the consummation of the transactions contemplated hereby and thereby, are within such
Loan Party’s powers, are not in conflict with the terms of the Governing Documents of such Loan Party, and do not result
in a breach of or constitute a default under any contract, obligation, indenture or other instrument to which such Loan Party is
a party or by which such Loan Party is bound or affected, which breach or default could reasonably be expected to have a Material
Adverse Effect. There is no law, rule or regulation (including Regulations T, U and X of the Federal Reserve Board), nor is there
any judgment, decree or order of any court or Governmental Authority binding on any Loan Party which would be contravened by the
execution, delivery, performance or enforcement of this Agreement and the Loan Documents to which such Loan Party is a party.

 

5.3           Authorization;
Enforceability. Each Loan Party has taken all corporate, partnership or limited liability company, as applicable, action
necessary to authorize the execution and delivery of this Agreement and the Loan Documents to which such Loan Party is a party,
and the consummation of the transactions contemplated hereby and thereby. Upon their execution and delivery in accordance with
the terms hereof by each Loan Party, this Agreement and the Loan Documents to which such Loan Party is a party will constitute
legal, valid and binding agreements and obligations of each such Loan Party, enforceable against such Loan Party in accordance
with their respective terms, except as enforceability may be limited by bankruptcy, insolvency, and similar laws and equitable
principles affecting the enforcement of creditors’ rights generally.

 

5.4           Approvals;
Consents. No approval, consent, exemption or other action by, or notice to or filing with, any Governmental Authority
is necessary in connection with the execution, delivery, performance or enforcement of this Agreement or the Loan Documents. All
requisite Governmental Authorities and third Persons have approved or consented to the transactions contemplated by this Agreement
and the Loan Documents to the extent the failure to obtain such approval or consent would reasonably be likely to have a Material
Adverse Effect, and all applicable waiting periods have expired and there is no governmental or judicial action, actual or threatened,
that has or could have a reasonable likelihood of restraining, preventing or imposing burdensome conditions on the transactions
contemplated by this Agreement and the Loan Documents.

 

5.5           Liens.
Each Loan Party has good and marketable title to, or valid leasehold interests in, all of its Assets, free and clear of all Liens
or rights of others, except for Permitted Liens.

 

5.6           Debt.
No Loan Party has any Debt other than Permitted Debt.

 

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5.7           Litigation.
Except as set forth in Schedule 5.7,and except for any suit, proceeding, claim or dispute where the amount in controversy
is equal to or less than $1,000,000 over the limit of Borrowers’ insurance coverage, there are no suits, proceedings, claims
or disputes pending or, to the Knowledge of Borrowers, threatened in writing, against or affecting any Loan Party or any of any
Loan Party’s Assets which are not fully covered by applicable insurance and as to which no reservation of rights has been
taken by the insurer thereunder.

 

5.8           No
Default. No Event of Default or Default has occurred and is continuing or would result from the incurring of obligations
by any Loan Party under this Agreement or the Loan Documents.

 

5.9           Ownership
of Parent; Subsidiaries.

 

(a)          Set
forth on Schedule 5.9(a) is a complete and accurate list showing the number of shares of each class of Capital Stock of
Parent authorized, the number outstanding on the Closing Date, the number and percentage of the outstanding shares of each such
class owned (directly or indirectly) by each Owner of Parent (except for any such Capital Stock that are publicly-traded). Except
as set forth on Schedule 5.9(a), all of the outstanding Capital Stock of Parent have been validly issued, are fully
paid and non-assessable, and are owned by the Owner indicated on Schedule 5.9(a), free and clear of all Liens, options,
warrants, rights of conversion or purchase or any similar rights. Except as set forth on Schedule 5.9(a), as of the Closing
Date neither Parent nor any Owner of Parent is a party to, or has Knowledge of, any agreement restricting the transfer or hypothecation
of any Capital Stock of Parent.

 

(b)          Set
forth on Schedule 5.9(b) is a complete and accurate list showing, as of the Closing Date, all Subsidiaries of Parent and,
as to each such Subsidiary, the jurisdiction of its organization, the number of shares of each class of Capital Stock authorized
(if applicable), the number outstanding on the Closing Date, and the number and percentage of the outstanding shares of each such
class owned (directly or indirectly) by its Owner(s). Except as set forth on Schedule 5.9(b), as of the Closing Date all
of the outstanding Capital Stock of each Subsidiary of Parent owned (directly or indirectly) by Parent have been validly issued,
are fully paid and non-assessable (to the extent applicable) and are owned by Parent or a Subsidiary of Parent, free and clear
of all Liens (other than Permitted Liens), options, warrants, rights of conversion or purchase or any similar rights. Except as
set forth on Schedule 5.9(b), as of the Closing Date neither Parent nor any such Subsidiary of Parent is a party to,
or has Knowledge of, any agreement restricting the transfer or hypothecation of any Capital Stock of any such Subsidiary, other
than the Loan Documents. Neither Parent nor any Subsidiary of Parent owns or holds, directly or indirectly, any Capital Stock of
any Person other than such Subsidiaries and Permitted Investments.

 

5.10         Taxes.
All tax returns required to be filed by each Loan Party in any jurisdiction have in fact been filed, except for such tax returns
where the failure to file would not reasonably be expected to have a Material Adverse Effect. All material taxes, assessments,
fees and other governmental charges upon each Loan Party or upon any of their Assets, income or franchises, which are due and payable
have been paid, other than such taxes, assessments, fees and other governmental charges being contested in good faith by appropriate
proceedings, and for which adequate reserves have been set aside with respect thereto as required by GAAP and, by reason of such
contest or nonpayment, no property is subject to a material risk of loss or forfeiture. The provisions for taxes on the books of
each Loan Party are adequate for all open years, and for each Loan Party’s current fiscal period.

 

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5.11         Correctness
of Financial Statements; No Material Adverse Change. Parent’s audited Consolidated and Consolidating Financial
Statement as of the Fiscal Year ended December 31, 2011, and Parent’s internally-prepared Consolidated Financial Statements
for the Fiscal Quarter ended June 30, 2012, and all other information and data furnished in writing by Parent to Bank in connection
therewith, taken as a whole, are complete and correct in all material respects, and accurately and fairly present in all material
respects the financial condition and results of operations of Parent and its Subsidiaries as of their respective dates. Any forecasts
of future financial performance delivered by Parent to Bank have been made in good faith and are based on reasonable assumptions
and investigations by Parent. Said Financial Statements have been prepared in accordance with GAAP, except as otherwise expressly
noted therein. Since the date of such Financial Statements, there has been no change in any Loan Party’s financial condition
or results of operations, individually or taken as a whole, sufficient to have a Material Adverse Effect. No Loan Party has any
contingent obligations, liabilities for taxes or other outstanding financial obligations which are material in the aggregate, except
as disclosed in such statements, information and data, other than contingent Debt owing by Parent to Licensors under all License
Agreement Guarantees, and other contingent liabilities disclosed in Parent’s Form 10-K or 10-Q, as applicable, filed with
the SEC.

 

5.12         ERISA.
Neither Parent nor any member of the ERISA Group maintains or contributes to any Plan or Multiemployer Plan, other than those listed
on Schedule 5.12. Parent and each member of the ERISA Group have satisfied the minimum funding standards of ERISA and
the Internal Revenue Code with respect to each Plan and Multiemployer Plan to which it is obligated to contribute. No ERISA Event
has occurred nor has any other event occurred that may result in an ERISA Event that reasonably could be expected to result in
a Material Adverse Effect. None of Parent, any member of the ERISA Group, or any fiduciary of any Plan is subject to any direct
or indirect liability with respect to any Plan (other than to make regularly scheduled required contributions and to pay Plan benefits
in the normal course) under any applicable law, treaty, rule, regulation, or agreement. Neither Parent nor any member of the ERISA
Group is required to provide security to any Plan under Section 401(a)(29) of the Internal Revenue Code. Each Plan will be
able to fulfill its benefit obligations as they come due in accordance with the Plan documents and under GAAP.

 

5.13         Full
Disclosure. All information furnished in writing by or on behalf of any Loan Party and delivered to Bank in connection
with this Agreement or the consummation of the transactions contemplated hereunder or thereunder (such information taken as a whole)
does not, as of the time of delivery of such information, contain any untrue statement of a material fact or omit to state a material
fact necessary to make the statements contained therein or herein not misleading.

 

5.14         Other
Obligations. No Loan Party is in default on any (i) material Debt or (ii) other lease, commitment, contract,
instrument or obligation which is material to the operation of its business, other than defaults which individually or in the aggregate,
would not reasonably be expected to have a Material Adverse Effect.

 

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5.15         Investment
Company Act. No Loan Party is an investment company, or a company controlled by an investment company, within the meaning
of the Investment Company Act of 1940, as amended.

 

5.16         Patents,
Trademarks, Copyrights, and Intellectual Property. Except as set forth in Schedule 5.7, each Loan Party
has all necessary patents, patent rights, licenses, trademarks, trademark rights, trade names, trade name rights, copyrights, permits,
and franchises in order for it to conduct its business and to operate its Assets, without known conflict with the rights of third
Persons, and all of same are valid and subsisting, other than patents, patent rights, licenses, trademarks, trademark rights, trade
names, trade name rights, copyrights, permits, and franchises, the absence of which, and conflicts and imperfections in validity
or subsistence, either individually or in the aggregate, would reasonably be expected to have a Material Adverse Effect. The consummation
of the transactions contemplated by this Agreement will not alter or impair any of such rights of any Loan Party. Except as set
forth in Schedule 5.7, no Loan Party has been charged or, to Borrowers’ Knowledge, threatened to be charged with
any infringement or, after due inquiry, infringed on any, unexpired trademark, trademark registration, trade name, patent, copyright,
copyright registration, or other proprietary right of any Person, which either individually or in the aggregate, would reasonably
be expected to have a Material Adverse Effect.

 

5.17         Environmental
Condition. Except as set forth in Schedule 5.17, to Borrowers’ Knowledge, (i) none of any Borrower’s
Assets has ever been used by such Borrower in the disposal of, or to produce, store, handle, treat, release, or transport, any
Hazardous Materials, except in compliance, in all material respects, with federal, state or local environmental codes, ordinances,
rules and regulations (the “Environmental Laws”); (ii) none of any Borrower’s Assets has ever been
designated or identified in any manner pursuant to any environmental protection statute as a Hazardous Materials disposal site,
or a candidate for closure pursuant to any environmental protection statute; (iii) no Lien arising under any environmental
protection statute has attached to any revenues or to any real or personal property owned or operated by any Borrower; and (iv) no
Borrower has received a summons, citation, notice, or directive from the Environmental Protection Agency or any other federal or
state governmental agency concerning any action or omission by any Borrower resulting in the releasing or disposing of Hazardous
Materials into the environment.

 

5.18         Solvency.
Each Loan Party is Solvent. No transfer of property is being made by any Loan Party and no obligation is being incurred by any
Loan Party in connection with the transactions contemplated by this Agreement or the Loan Documents with the intent to hinder,
delay, or defraud either present or future creditors of any Loan Party.

 

5.19         Disclosure.
Each Loan Party has disclosed to Bank all agreements, instruments and corporate or other restrictions to which it is subject, and
all other matters known to it, that, individually or in the aggregate, could reasonably be expected to result in a Material Adverse
Effect. No report, financial statement, certificate or other information furnished in writing by or on behalf of any Loan Party
to Bank in connection with the transactions contemplated hereby and the negotiation of this Agreement or delivered hereunder or
under any other Loan Document (in each case, as modified or supplemented by other information so furnished) taken as a whole contains
any material misstatement of fact or omits to state any material fact necessary to make the statements therein, in the light of
the circumstances under which they were made, not misleading.

 

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5.20         Labor
Matters. There are no strikes, lockouts, slowdowns or other material labor disputes against any Borrower pending or,
to the Knowledge of Borrowers, threatened. The hours worked by and payments made to employees of the Borrowers comply with the
Fair Labor Standards Act and any other applicable federal, state, local or foreign Law dealing with such matters. No Borrower has
incurred any liability or obligation under the Worker Adjustment and Retraining Act or similar state Law. All payments due from
any Borrower, or for which any claim may be made against any Borrower, on account of wages and employee health and welfare insurance
and other benefits, have been paid or properly accrued in accordance with GAAP as a liability on the books of such Borrower. Except
as set forth on Schedule 5.20, no Borrower is a party to or bound by any collective bargaining agreement. There are no representation
proceedings pending or, to Borrowers’ Knowledge, threatened to be filed with the National Labor Relations Board, and no labor
organization or group of employees of any Borrower has made a pending demand for recognition. There are no complaints, unfair labor
practice charges, grievances, arbitrations, unfair employment practices charges or any other claims or complaints against any Borrower
pending or, to the Knowledge of Borrowers, threatened to be filed with any Governmental Authority or arbitrator based on, arising
out of, in connection with, or otherwise relating to the employment or termination of employment of any employee of any Borrower,
which either individually or in the aggregate, would reasonably be expected to have a Material Adverse Effect. The consummation
of the transactions contemplated by this Agreement and the Loan Documents will not give rise to any right of termination or right
of renegotiation on the part of any union under any collective bargaining agreement to which any Borrower is bound.

 

5.21         Deposit
Accounts. Schedule 5.21 attached hereto is a list of all Deposit Accounts maintained by the Borrowers, which
Schedule includes, with respect to each Deposit Account (i) the name and address of the depository; and (ii) the account number(s)
maintained with such depository; (iii) a contact person at such depository.

 

5.22         Brokers.
No broker or finder brought about the obtaining, making or closing of the Loans or transactions contemplated by the Loan Documents,
and no Borrower or Affiliate thereof has any obligation to any Person in respect of any finder’s or brokerage fees in connection
therewith.

 

5.23         Customer
and Trade Relations. There exists no actual or, to the Knowledge of Borrowers, threatened, termination or cancellation
of, or any material adverse modification or change in the business relationship of any Borrower with any supplier material to its
operations which either individually or in the aggregate would reasonably be expected to have a Material Adverse Effect.

 

5.24         Material
Contracts. Schedule 5.24 attached hereto sets forth all Material Contracts to which any Borrower is a party or
is bound. The Borrowers are not in breach or in default in any material respect of or under any Material Contract and have not
received any notice of the intention of any other party thereto to terminate any Material Contract.

 

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5.25         Casualty.
Neither the businesses nor the Assets of any Borrower or any of its Subsidiaries are affected by any fire, explosion, accident,
strike, lockout or other labor dispute, drought, storm, hail, earthquake, embargo, act of God or of the public enemy or other casualty
(whether or not covered by insurance) that, either individually or in the aggregate, would reasonably be expected to have a Material
Adverse Effect.

 

5.26         Eligible
Accounts. Each Account included in the Borrowing Base is an “Eligible Account” or a “Credit
Enhanced Eligible Account”, as defined herein, and conforms to the definitions thereof.

 

5.27         Eligible
Inventory. All Inventory included in the Borrowing Base constitutes “Eligible Inventory” or “Eligible
In-Transit Inventory” as defined herein, and conforms to the definitions thereof.

 

5.28         OFAC.
No Borrower (i) is a Person whose property or interest in property is blocked or subject to blocking pursuant to Section 1 of Executive
Order 13224 of September 23, 2001 Blocking Property and Prohibiting Transactions With Persons Who Commit, Threaten to Commit, or
Support Terrorism (66 Fed. Reg. 49079 (2001)), (ii) engages in any dealings or transactions prohibited by Section 2 of such executive
order, or is otherwise, to the knowledge of the Borrowers, associated with any such Person in any manner violative of such Section
2 of such executive order, or (iii) is a Person on the list of Specially Designated Nationals and Blocked Persons or subject to
the limitations or prohibitions under any other OFAC regulation or executive order.

 

5.29         Patriot
Act. Each Borrower is in compliance with the Patriot Act. No part of the proceeds of the Loans or the Letters of Credit will
be used, directly or indirectly, for any payments to any governmental official or employee, political party, official of a political
party, candidate for political office, or anyone else acting in an official capacity, in order to obtain, retain or direct business
or obtain any improper advantage, in violation of the United States Foreign Corrupt Practices Act of 1977, as amended.

 

ARTICLE
VI

AFFIRMATIVE COVENANTS

 

Each Borrower covenants
and agrees that from the Closing Date and thereafter until the payment, performance and satisfaction in full of the Obligations,
all of Bank’s obligations hereunder have been terminated and no Letters of Credit are outstanding (other than Letters of
Credit for which Borrowers have provided Bank with either (i) a cash collateral deposit in an amount equal to 105% of the Letter
of Credit Usage or (ii) an Acceptable Letter of Credit), Borrowers shall:

 

6.1           Punctual
Payments. Punctually pay the interest and principal on the Loans, the Fees and all Expenses and any other fees and liabilities
due under this Agreement and the Loan Documents at the times and place and in the manner specified in this Agreement or the Loan
Documents.

 

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6.2           Books
and Records; Collateral Audits; Appraisals.

 

(a)          Permit
any officer, employee or agent of Bank, at any time and from time to time, to inspect, audit and examine Borrowers’ and the
Subsidiaries’ books and records, and to make copies of the same. Bank (through any of its officers, employees, or agents)
shall have the right, from time to time hereafter to audit the Accounts and appraise the Inventory in order to verify Borrowers’
financial condition and/or the amount, quality, value, condition of, or any other matter relating to, the Accounts and the Inventory.
In connection therewith, Borrowers shall pay to Bank, for its own account, Bank’s usual and customary audit fee (“Audit
Fee”) for each audit and appraisal fee (“Appraisal Fee”) for each appraisal, plus all Expenses
in connection therewith, payable upon demand.

 

(b)          (i)
Maintain, and cause each of the Subsidiaries to maintain, adequate books and records in accordance with GAAP (or, with respect
to jurisdictions outside of the U.S., in accordance with the local generally accepted accounting practices and principles); (ii)
maintain, at all times, at a location in the United States that is subject to a Collateral Access Agreement, true, correct, and
current copies of the general ledger for the financial transactions of JAKKS Hong Kong, JAKKS Canada, and each other Foreign Subsidiary,
and (iii) upon the reasonable request of Bank, shall cause copies of the books and records of JAKKS Hong Kong and JAKKS Canada
that substantiate the transactions recorded in such general ledger to be located at a location in the United States that is subject
to a Collateral Access Agreement. 

 

6.3           Collateral
Reporting and Financial Statements. Deliver to Bank the following, all in form and detail reasonably satisfactory to Bank:

 

(a)          (1) as
soon as available but not later than 30 days after the end of each Fiscal Month (provided that none of the following reports will
be required with respect to August 2012), (i) a report of all sales, (ii)  an Inventory status report, (iii) a detailed
aging, by total, of the Accounts, together with a reconciliation to the detailed calculation of the Borrowing Base previously provided
to Bank, (iv) a listing of all Accounts that have been purchased by Parent under a Factoring Agreement, (v) a summary aging,
by vendor, of each Borrower’s accounts payable and any book overdraft, and (vi) a Borrowing Base Certificate, and
(2) 30 days after each June 30 and December 31, a detailed list of each Borrowers’ customers;

 

(b)          as
soon as available but not later than 45 days after the end of each Fiscal Quarter, (i) a Consolidated and consolidating internally
prepared Financial Statement for Parent and the Subsidiaries which shall include Parent’s and the Subsidiaries’ Consolidated
and consolidating balance sheet as of the close of such period, and Parent’s and the Subsidiaries’ Consolidated and
consolidating statement of income and retained earnings and statement of cash flow for such period and year to date, in each case
setting forth in comparative form, as applicable, the figures for the corresponding Fiscal Quarter of the previous Fiscal Year
and the corresponding portion of the previous Fiscal Year, all in reasonable detail, certified by the Chief Financial Officer of
Parent, to the best of his or her knowledge after due and diligent inquiry, as being complete and correct and fairly presenting
in all material respects Parent’s and its Subsidiaries’ financial condition and results of operations for such period
in accordance with GAAP, subject only to normal year-end audit adjustments and the absence of footnotes, (ii) a detailed listing
of all contingent Debt owing by Parent to Licensors under all License Agreement Guarantees, and any and all other contingent liabilities
incurred by any of the Loan Parties disclosed in Parent’s Form 10-K or 10-Q, as applicable, filed with the SEC, and (iii)
an updated listing of all rights each Borrower has obtained to any new patentable inventions, trademarks, servicemarks, copyrightable
works or other new Intellectual Property;

 

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(c)          as
soon as available but not later than 45 days after the end of each Fiscal Quarter, a Compliance Certificate from the Chief Financial
Officer of Parent, stating, among other things, that he or she has reviewed the provisions of this Agreement and the Loan Documents
and that, to the best of his or her Knowledge after due and diligent inquiry there exists no Event of Default or Default, and containing
the calculations and other details necessary to demonstrate compliance with Sections 7.12 and 7.15;

 

(d)          as
soon as available but not later than 90 days after the end of each Fiscal Year, a complete copy of Parent’s and the Subsidiaries’
Consolidated and consolidating audited Financial Statement, which shall include at least Parent’s and the Subsidiaries’
balance sheet as of the close of such Fiscal Year, and Parent’s and the Subsidiaries’ statement of income and retained
earnings and statement of cash flow for such Fiscal Year, setting forth in each case in comparative form the figures for the previous
Fiscal Year, all in reasonable detail and prepared in accordance with GAAP, accompanied by (i) a report and opinion of a Registered
Public Accounting Firm of nationally recognized standing, which report and opinion shall be prepared in accordance with generally
accepted auditing standards and shall not be subject to any “going concern” or like qualification or exception or any
qualifications or exceptions as to the scope of such audit, and (ii) a certificate of such Registered Public Accounting Firm certifying
such Financial Statements and stating that in making the examination necessary for their certification of such Financial Statements,
such Registered Public Accounting Firm has not obtained any knowledge of the existence of any Default or Event of Default or, if
any such Default or Event of Default shall exist, stating the nature and status of such event;

 

(e)          as
soon as available but not later than 90 days after the end of each Fiscal Year, a Compliance Certificate from the Chief Financial
Officer of Parent, stating, among other things, that he or she has reviewed the provisions of this Agreement and the Loan Documents
and that, to the best of his or her Knowledge after due and diligent inquiry there exists no Event of Default or Default, and containing
the calculations and other details necessary to demonstrate compliance with Sections 7.12 and 7.15;

 

(f)          as
soon as available but not later than 30 days after the end of each Fiscal Year, (i) Parent’s Consolidated and consolidating
quarterly projections, and (ii) an annual operating budget; in each case for such Fiscal Year;

 

(g)          promptly
upon receipt by Parent, copies of any and all reports and management letters submitted to Parent or any Subsidiary by any certified
public accountant in connection with any examination of Parent’s or any Subsidiary’s financial records made by such
accountant; and

 

(h)          from
time to time, operating statistics, operating plans and any other information as Bank may reasonably request, promptly upon such
request.

 

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Notwithstanding the
foregoing, the obligations in Sections 6.3(b) and 6.3(d) shall be deemed satisfied with respect to the Consolidated financial statements
of Borrower and the Subsidiaries by delivering Parent’s Form 10-K or 10-Q, as applicable, filed with the SEC; provided
that to the extent such information is in lieu of information required to be provided under Section 6.3(d), such materials are
accompanied by a report and opinion of a Registered Public Accounting Firm of nationally recognized standing, which report and
opinion shall be prepared in accordance with generally accepted auditing standards and shall not be subject to any “going
concern” or like qualification or exception or any qualifications or exceptions as to the scope of such audit. Bank agrees
that any Form 10-K or 10-Q filed with the SEC pursuant to its EDGAR system or any successor thereto shall constitute delivery of
such Form 10-K or 10-Q to Bank.

 

6.4           Existence;
Preservation of Licenses; Compliance with Law. Except as otherwise permitted by Section 7.4(a) or (b), preserve and maintain,
and cause each Subsidiary to preserve and maintain, its corporate existence and good standing in the state of its organization,
qualify and remain qualified, and cause each Subsidiary to qualify and remain qualified, as a foreign corporation in every jurisdiction
where the failure to be so qualified would not reasonably be expected to have a Material Adverse Effect; and preserve, and cause
each of the Subsidiaries to preserve, all of its governmental licenses, permits, governmental approvals, rights, privileges and
franchises required for its operations except where the failure to so preserve would not reasonably be expected to have a Material
Adverse Effect; and comply, and cause each of the Subsidiaries to comply, with the provisions of its Governing Documents; and comply,
and cause each of the Subsidiaries to comply, with the requirements of all Applicable Laws of any Governmental Authority having
authority or jurisdiction over it except where the failure to so comply would not reasonably be expected to have a Material Adverse
Effect; and comply, and cause each of the Subsidiaries to comply, with all requirements for the maintenance of its business,
insurance, governmental licenses, permits, governmental approvals, rights, privileges and franchises except where the failure to
so comply would not reasonably be expected to have a Material Adverse Effect.

 

6.5           Insurance.

 

(a)          Subject
to Section 4.3(c), maintain, at Borrowers’ expense, and cause each Subsidiary to maintain at its expense, insurance respecting
its Assets wherever located, covering loss or damage by fire, theft, explosion, and all other hazards and risks as ordinarily are
insured against by other Persons engaged in the same or similar businesses. Borrowers also shall maintain, and cause each Subsidiary
to maintain, business interruption, public liability, and product liability insurance, as well as insurance against larceny, embezzlement,
and criminal misappropriation. All such policies of insurance shall be in such amounts and with such insurance companies as are
reasonably satisfactory to Bank. Borrowers shall deliver copies of all such policies or certificates thereof to Bank with a satisfactory
lender’s loss payable endorsement naming Bank as sole loss payee or, in the case of equipment or real estate which is subject
to a Purchase Money Lien, an additional insured, and shall contain a waiver of warranties. Each policy of insurance or endorsement
shall contain a clause requiring the insurer to give not less than 30 days’ prior written notice to Bank in the event of
cancellation of the policy for any reason whatsoever, and the insurer’s agreement that any loss payable thereunder shall
be payable notwithstanding any act or negligence of the insured or Bank which might, absent such agreement, result in a forfeiture
of all or a part of such insurance payment.

 

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(b)          Original
policies or certificates thereof satisfactory to Bank evidencing such insurance shall be delivered to Bank at least 30 days prior
to the expiration of the existing or preceding policies. Borrowers shall give Bank prompt notice of any loss covered by such insurance.
Upon the occurrence and during the continuation of an Event of Default, Bank shall have the exclusive right to adjust any losses
payable under any such insurance policies, without any liability to Borrowers whatsoever in respect of such adjustments. Upon the
occurrence and during the continuation of an Event of Default, any monies received as payment for any loss under any insurance
policy mentioned above (other than liability insurance policies) or as payment of any award or compensation for condemnation or
taking by eminent domain, shall be paid over to Bank to be applied at the option of Bank either to the prepayment of the Obligations
or shall be disbursed to Borrowers under staged payment terms reasonably satisfactory to Bank for application to the cost of repairs,
replacements, or restorations. Any such repairs, replacements, or restorations shall be effected with reasonable promptness and
shall be of a value at least equal to the value of the items or property destroyed prior to such damage or destruction. Borrowers
shall, concurrently with the annual Financial Statements required to be delivered by Borrowers pursuant to Section 6.3(d),
deliver to Bank, as Bank may request, copies of certificates describing all insurance of Borrowers and the Subsidiaries then in
effect.

 

6.6         Assets.
Maintain, keep and preserve, and cause each Subsidiary to maintain, keep and preserve, all of its Assets (tangible or intangible)
which are necessary to its business in good repair and condition (normal wear and tear excepted), and from time to time make necessary
repairs, renewals and replacements thereto so that such Assets shall be fully and efficiently preserved and maintained in a manner
consistent with past practices and with Borrowers’ ordinary course of business.

 

6.7         Taxes
and Other Liabilities. Pay and discharge when due, and cause each Subsidiary to pay and discharge when due, (a) any and all
assessments and taxes, both real or personal and including federal and state income taxes, other than such taxes and assessments
being contested in good faith by appropriate proceedings, and for which adequate reserves have been set aside with respect thereto
as required by GAAP and, by reason of such contest or nonpayment, no property is subject to a material risk of loss or forfeiture,
and (b) any and all other Permitted Debt.

 

6.8         Notice
to Bank. Promptly, upon any Borrower acquiring Knowledge thereof, give written notice to Bank of:

 

(a)          all
litigation affecting any Loan Party where the amount in controversy is in excess of $1,000,000 over the limit of Borrowers’
insurance coverage;

 

(b)          any
dispute which may exist between any Loan Party, on the one hand, and any Governmental Authority, on the other, in respect of any
matter that might reasonably be expected to cause a liability to the Borrowers in excess of $1,000,000;

 

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(c)          any
labor controversy resulting in or threatening to result in a strike against any Loan Party;

 

(d)          any
proposal by any Governmental Authority to acquire the Assets or business of any Loan Party, or to compete with any Loan Party;

 

(e)          any
reportable event under Section 4043(c)(5), (6) or (13) of ERISA with respect to any Plan, any decision to terminate or withdraw
from a Plan, any finding made with respect to a Plan under Section 4041(c) or (e) of ERISA, the commencement of any proceeding
with respect to a Plan under Section 4042 of ERISA, or any material increase in the actuarial present value of unfunded vested
benefits under all Plans over the preceding year;

 

(f)          any
written notice of a discharge of Hazardous Materials or written environmental complaint received from any Governmental Authority
or any other Person;

 

(g)          any
material hazardous discharge from or affecting its premises not in compliance in all material respects with applicable Environmental
Laws;

 

(h)          any
Event of Default or Default; and

 

(i)          any
other matter which has resulted or would reasonably be expected to result in a Material Adverse Effect.

 

6.9         Employee
Benefits.

 

(a)          (i) Promptly,
and in any event within ten (10) Business Days after any Borrower obtains Knowledge that an ERISA Event has occurred that reasonably
could be expected to result in a Material Adverse Effect, deliver or cause to be delivered a written statement of the Chief Financial
Officer of Parent describing such ERISA Event and any action that is being taken with respect thereto by Parent or member of the
ERISA Group, and any action taken or threatened by the Internal Revenue Service, Department of Labor, or PBGC. Each Borrower shall
(i) be deemed to know all facts known by the administrator of any Plan of which it is the plan sponsor; (ii) promptly
and in any event within three (3) Business Days after the filing thereof with the Internal Revenue Service, deliver or cause to
be delivered a copy of each funding waiver request filed with respect to any Plan and all communications received by any Borrower,
or, to the Knowledge of such Borrower, any member of the ERISA Group with respect to such request; and (iii) promptly and
in any event within three (3) Business Days after receipt by any Borrower, or, to the Knowledge of Borrower, any member of the
ERISA Group, of the PBGC’s intention to terminate a Plan or to have a trustee appointed to administer a Plan, copies of each
such notice.

 

(b)          Cause
to be delivered to Bank with a copy for Bank, upon Bank’s reasonable request, each of the following: (i) a copy of each
Plan (or, where any such plan is not in writing, complete description thereof) (and if applicable, related trust agreements of
other funding instruments) and all amendments thereto, all written interpretations thereof and written descriptions thereof that
have been distributed to employees or former employees of Borrower or its Subsidiaries; (ii) the most recent determination
letter issued by the IRS with respect to each Plan; (iii) for the three (3) most recent Plan years, annual reports on Form 5500
Series required to be filed with any governmental agency for each Plan; (iv) all actuarial reports prepared for the last three
(3) Plan years for each Plan; (v) a listing of all Multiemployer Plans, with the aggregate amount of the most recent annual
contributions required to be made by any Borrower or any member of the ERISA Group to each such plan and copies of the collective
bargaining agreements requiring such contributions; (vi) any information that has been provided to any Borrower or any member
of the ERISA Group regarding withdrawal liability under any Multiemployer Plan; and (vii) the aggregate amount of the most
recent annual payments made to former employees of any Borrower under any Retiree Health Plan.

 

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6.10       Further
Assurances. Execute and deliver, or cause to be executed and delivered, upon the reasonable request of Bank and at Borrowers’
expense, such additional documents, instruments and agreements as Bank may reasonably determine to be necessary or advisable to
carry out the provisions of this Agreement and the Loan Documents, and the transactions and actions contemplated hereunder and
thereunder.

 

6.11       Bank
Accounts. Maintain, and cause each Subsidiary to maintain, a majority of its cash on hand and Cash Equivalent investments
in deposit accounts at Bank. Notwithstanding the foregoing, the Foreign Subsidiaries shall be permitted to maintain cash in deposit
accounts other than at Bank.

 

6.12       Environment.
Be and remain, and cause each Subsidiary and each operator of any of any Borrower’s or any Subsidiary’s Assets to
be and remain, in compliance in all material respects with the provisions of all applicable Environmental Laws; promptly contain
or remove any discharge of Hazardous Materials from or affecting its premises not in compliance in all material respects with
applicable Environmental Laws, to the extent required by applicable Environmental Laws; promptly pay any fine or penalty assessed
in connection therewith other than such fines or penalties being contested in good faith by appropriate proceedings, and for which
adequate reserves have been set aside with respect thereto as required by GAAP and, by reason of such contest or nonpayment, no
property is subject to a material risk of loss or forfeiture; permit Bank to inspect the premises and to inspect all books, correspondence,
and records pertaining thereto; and at Bank’s reasonable request (i.e., there is a reasonable, credible basis for believing
that there is a condition posing an environmental hazard), and at Borrowers’ expense, provide a report of a qualified environmental
engineer, reasonably satisfactory in scope, form and content to Bank, and such other and further assurances reasonably satisfactory
to Bank that the condition has been corrected.

 

6.13       Additional
Collateral. With respect to any Assets (or any interest therein) acquired after the Closing Date by any Borrower that are
of a type covered by the Lien created by any of the Loan Documents but which are not so subject, promptly (and in any event within
thirty (30) days after the acquisition thereof): (i) execute and deliver to Bank such amendments to the relevant Loan Documents
or such other documents as Bank shall deem necessary or advisable to grant to Bank a Lien on such Assets (or such interest therein),
(ii) take all actions necessary or advisable to cause such Lien to be duly perfected in accordance with all applicable law,
including, without limitation, the filing of financing statements in such jurisdictions as may be reasonably requested by Bank,
and (iii)  if reasonably requested by Bank, deliver to Bank evidence of insurance as required by Section 6.5.

 

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6.14       Additional
Borrowers or Guarantors. Cause each and every now existing and hereafter acquired or formed Domestic Subsidiary that is a
Material Subsidiary, promptly and in any event no later than five (5) Business Days following such acquisition or formation, to
become either a Borrower or a Guarantor, and execute and deliver to Bank (a) an Addendum if such Domestic Subsidiary will be a
Borrower, or a Facility Guaranty in all other cases, and (b) a joinder to the Security Agreement.

 

6.15       Factoring
Agreements. At all times maintain, and cause JAKKS Canada, JAKKS Hong Kong, and the JAKKS Hong Kong Subsidiaries to maintain,
their respective Factoring Agreement in full force and effect, and purchase, and cause JAKKS Canada, JAKKS Hong Kong, and the
JAKKS Hong Kong Subsidiaries to sell, all Accounts owing to each of them pursuant to the terms and conditions of their respective
Factoring Agreement.

 

6.16       Customs
Broker/Carrier Agreements; Collateral Access Agreements. Upon the request of Bank, deliver to Bank (a) if and to the extent
that Borrowers include Eligible In-Transit Inventory in the Borrowing Base, a duly-executed Customs Broker/Carrier Agreement from
each of its customs brokers, freight forwarders, consolidators and/or carriers in possession of a material portion of its Eligible
In-Transit Inventory; and (b) a duly executed a Collateral Access Agreement with respect to each leased location or public warehouse
of any Loan Party where any Inventory (other than immaterial Inventory) is stored or any books and records are kept.

 

ARTICLE
VII

NEGATIVE COVENANTS

 

Each Borrower further
covenants and agrees that from the Closing Date and thereafter until the payment, performance and satisfaction in full of the Obligations,
all of Bank’s obligations hereunder have been terminated and no Letters of Credit are outstanding (other than Letters of
Credit for which Borrowers have provided Bank with either (i) a cash collateral deposit in an amount equal to 105% of the Letter
of Credit Usage or (ii) an Acceptable Letter of Credit), Borrowers shall not:

 

7.1         Use
of Funds; Margin Regulation.

 

(a)          Use
any proceeds of the Revolving Loans for any purpose other than (i) for working capital and general corporate purposes; (ii) to
finance Permitted Acquisitions; and (iii) to repay certain inter-company loans in connection with any self-tender; or

 

(b)          Use
any portion of the proceeds of the Loans in any manner which might cause the Loans, the application of the proceeds thereof, or
the transactions contemplated by this Agreement to violate Regulation T, U, or X of the Board of Governors of the Federal
Reserve System, or any other regulation of such board, or to violate the Securities and Exchange Act of 1934, as amended or supplemented.

 

7.2         Debt.
Create, incur, assume or suffer to exist, or permit any Subsidiary to create, incur, assume or suffer to exist, any Debt except
Permitted Debt.

 

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7.3         Liens.
Create, incur, assume or suffer to exist, or permit any Subsidiary to create, incur, assume or suffer to exist, any Lien (including
the lien of an attachment, judgment or execution) on any of its Assets, whether now owned or hereafter acquired, except Permitted
Liens; or sign or file, or permit any Subsidiary to sign or file, under the UCC as adopted in any jurisdiction, a financing statement
which names Borrower or any Subsidiary as a debtor, except with respect to Permitted Liens, or sign, or permit any Subsidiary
to sign, any security agreement authorizing any secured party thereunder to file such a financing statement, except with respect
to Permitted Liens.

 

7.4         Merger,
Consolidation, Transfer of Assets. Wind up, liquidate or dissolve, reorganize, reincorporate, merge or consolidate with or
into any other Person, or acquire all or substantially all of the Assets or the business of any other Person, or permit any Subsidiary
to do so (other than any Permitted Acquisition); provided, however, so long as no Default or Event of Default shall have
occurred and be continuing prior to or immediately after giving effect to any action described below or would result therefrom,
upon prior written notice to Bank,

 

(a)          any
Subsidiary that is not a Loan Party may merge with (i) a Loan Party, provided that the Loan Party shall be the continuing
or surviving Person, or (ii) any one or more other Subsidiaries that are not Loan Parties, provided that when any wholly-owned
Subsidiary is merging with another Subsidiary, the wholly-owned Subsidiary shall be the continuing or surviving Person; and

 

(b)          any
Subsidiary that is a Loan Party may merge into any Subsidiary that is a Loan Party or into a Borrower, provided that in
any merger involving a Borrower, such Borrower shall be the continuing or surviving Person.

 

7.5         Reserved.

 

7.6         Sales
and Leasebacks. Sell, transfer, or otherwise dispose of, or permit any Subsidiary to sell, transfer, or otherwise dispose
of, any real or personal property to any Person, and thereafter directly or indirectly leaseback the same or similar property.

 

7.7         Dispositions.
Conduct any Disposition, or permit any Subsidiary to do so, other than Permitted Dispositions.

 

7.8         Investments.Make,
or permit any Subsidiary to make, directly or indirectly, any Investment or incur any liabilities (including contingent obligations)
for or in connection with any Investment, other than Permitted Investments.

 

7.9         Character
of Business. Engage in any business activities or operations other than sales of consumer products, or permit any Subsidiary
to do so.

 

7.10       Restricted
Payments. Declare or pay any Distributions, or pay any other Restricted Payments, other than Permitted Restricted Payments,
or permit any Subsidiary to do so.

 

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7.11       Guarantee.

 

(a)          Except
for Permitted Debt or any Guarantee of Permitted Debt, assume, Guarantee, endorse (other than checks and drafts received by Borrower
in the ordinary course of business), or otherwise be or become directly or contingently responsible or liable, or permit any Subsidiary
to assume, Guarantee, endorse, or otherwise be or become directly or contingently responsible or liable (including, any agreement
to purchase any obligation, stock, Assets, goods, or services or to supply or advance any funds, Assets, goods, or services, or
any agreement to maintain or cause such Person to maintain, a minimum working capital or net worth, or otherwise to assure the
creditors of any Person against loss) for the obligations of any other Person; or pledge or hypothecate, or permit any Subsidiary
to pledge or hypothecate, any of its Assets as security for any liabilities or obligations of any other Person.

 

(b)          Make
any payment under any Guarantee by Parent of the obligations of any of its Subsidiaries under any Permitted Acquisition unless
both immediately before and immediately after giving effect thereto, on a Pro Forma Basis, no Default or Event of Default shall
have occurred and be continuing, or shall result therefrom.

 

7.12       Capital
Expenditures. Make, or permit any Subsidiary to make, any Capital Expenditures in excess of $25,000,000, in the aggregate,
on a Consolidated basis, in any Fiscal Year.

 

7.13       Transactions
with Affiliates. Enter into any transaction, including borrowing or lending and the purchase, sale, or exchange of property
or the rendering of any service (including management services), with any Affiliate, or permit any Subsidiary to enter into any
transaction, including borrowing or lending and the purchase, sale, or exchange of property or the rendering of any service (including
management services), with any Affiliate, other than (a) in the ordinary course of and pursuant to the reasonable requirements
of such Borrower’s or such Subsidiary’s business and upon fair and reasonable terms no less favorable to such Borrower
or such Subsidiary than would obtain in a comparable arm’s length transaction with a Person not an Affiliate, (b) transactions
between or among the Loan Parties not otherwise prohibited hereunder or under any Loan Document, (c) the Factoring Agreements,
(d) advances for commissions, travel and other similar purposes in the ordinary course of business to directors, officers and
employees, (e) the issuance of Capital Stock in Parent to any officer, director, employee or consultant of Parent or any of its
Subsidiaries, (f) the payment of (x) reasonable fees and out-of-pocket costs to directors, and (y) compensation and employee benefit
arrangements paid to, and indemnities provided for the benefit of, directors, officers or employees of Parent or any of its Subsidiaries,
(g) any issuances of securities of Parent (other than Disqualified Stock and other Capital Stock not permitted hereunder) or other
payments, awards or grants in cash, securities or otherwise pursuant to, or the funding of, severance agreements, retention plans,
employment agreements, deferred compensation agreements, stock options, restricted stock agreements and stock ownership plans
(in each case in respect of Capital Stock in Parent) of Parent or any of its Subsidiaries, (h) current compensation arrangements
with officers, directors and employees of any Borrower, (i) any transactions with any Affiliate (including intercompany borrowings
and property transfers) in the ordinary course of business and consistent with past practice, not otherwise prohibited hereunder
or by any Loan Document, and (j) Borrowers’ respective obligations and duties (including the provision of services) to DreamPlay
Toys LLC, Dream Play LLC and Pacific Animation Partners LLC. not otherwise prohibited hereunder or by any Loan Document.

 

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7.14       Stock
Issuance. Issue any Disqualified Stock, or permit any Pledged Loan Party to issue any additional Capital Stock (including
Disqualified Stock).

 

7.15       Financial
Condition. Permit or suffer:

 

(a)          Liquidity,
measured as of the end of each Fiscal Quarter, at any time to be less than $100,000,000.

 

(b)          the
Funded Debt to Consolidated EBITDA Ratio, measured as of the end of each Fiscal Quarter, to exceed the ratio set forth in the table
below opposite the applicable Fiscal Quarter end:

 

	Fiscal Quarter Ending	 	
        Maximum Funded Debt to Consolidated

        EBITDA Ratio

	 	 	 
	September 30, 2012	 	4.00:1.0
	 	 	 
	December 31, 2012 and each Fiscal Quarter ending thereafter	 	3.00:1.0

 

(c)          Consolidated
Net Profit, measured as of the end of each Fiscal Quarter for the rolling four Fiscal Quarter period ending on such date (calculated
on a cumulative basis for the four Fiscal Quarter Period most recently completed), at any time to be less than $1.

 

7.16       Transactions
Under ERISA. Directly or indirectly:

 

(a)          engage,
or permit any member of the ERISA Group to engage, in any prohibited transaction which is reasonably likely to result in a civil
penalty or excise tax described in Sections 406 of ERISA or 4975 of the Internal Revenue Code for which a statutory or
class exemption is not available or a private exemption has not been previously obtained from the Department of Labor;

 

(b)          permit
to exist with respect to any Plan any deficiency in the funding standard account (as defined in Sections 302 of ERISA and 412
of the Internal Revenue Code), whether or not waived;

 

(c)          fail,
or permit any member of the ERISA Group to fail, to pay timely required contributions or installments due with respect to any waived
funding deficiency to any Plan;

 

(d)          terminate,
or permit any member of the ERISA Group to terminate, any Plan where such event would result in any liability of Borrower or any
member of ERISA Group under Title IV of ERISA;

 

(e)          fail,
or permit any member of the ERISA Group to fail, to make any required contribution or payment to any Multiemployer Plan;

 

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(f)          fail,
or permit any member of the ERISA Group to fail, to pay to a Plan or Multiemployer Plan any required installment or any other payment
required under Section 412 of the Internal Revenue Code on or before the due date for such installment or other payment;

 

(g)          amend,
or permit any member of the ERISA Group to amend, a Plan resulting in an increase in current liability for the plan year such that
a lien in favor of a Plan is imposed against Parent or any the member of the ERISA Group or Parent or a member of the ERISA Group
is required to provide security to such Plan under Section 436 of the Internal Revenue Code; or

 

(h)          withdraw,
or permit any member of the ERISA Group to withdraw, from any Multiemployer Plan where such withdrawal is reasonably likely to
result in any liability of any such entity under Title IV of ERISA;

 

which, individually or in the aggregate,
results in or reasonably would be expected to result in a claim against or liability of Parent, any of the Subsidiaries or any
member of the ERISA Group in excess of $500,000.

 

7.17       OFAC.
Permit or cause any of its Subsidiaries to, (i) become a Person whose property or interests in property are blocked or subject
to blocking pursuant to Section 1 of Executive Order 13224 of September 23, 2001 Blocking Property and Prohibiting Transactions
With Persons Who Commit, Threaten to Commit or Support Terrorism (66 Fed. Reg. 49079(2001), (ii) engage in any dealings or transactions
prohibited by Section 2 of such executive order, or be otherwise, to the Knowledge of Parent, associated with any such person
in any manner violative of such Section 2 of such executive order, or (iii) otherwise become a Person on the list of Specially
Designated Nationals and Blocked Persons or subject to the limitations or prohibitions under any other OFAC regulation or executive
order.

 

7.18       Fiscal
Year. Change its Fiscal Year.

 

7.19       Burdensome
Agreements. Enter into or permit to exist any contractual obligation (other than this Agreement or any other Loan Document)
that: (a) limits the ability (i) of any Subsidiary to make Restricted Payments or other Distributions to any Loan Party or to
otherwise transfer property to or invest in a Loan Party, (ii) of any Subsidiary to Guarantee the Obligations, (iii) of any Subsidiary
to make or repay loans to a Loan Party, or (iv) of the Loan Parties or any Subsidiary to create, incur, assume or suffer to exist
Liens on property of such Person in favor of Bank; or (b) requires the grant of a Lien (other than a Permitted Lien) to secure
an obligation of such Person if a Lien is granted to secure another obligation of such Person.

 

ARTICLE
VIII

EVENTS OF DEFAULT AND REMEDIES

 

8.1         Events
of Default. The occurrence of any one or more of the following events, acts or occurrences shall constitute an event of default
(an “Event of Default”) hereunder:

 

(a)          Borrowers
fail to pay (i) any payment of principal when due hereunder or under any Loan Document, or (ii) any interest due on the Loans,
the Fees, any Expenses, or any other amount payable hereunder or under any Loan Document, within five (5) Business Days of the
due date;

 

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(b)          Borrowers
fail to observe or perform any of the covenants and agreements set forth in Section 6.2(a) or 6.3, or any Section within Article
VII; or Borrowers fail to observe or perform any of the covenants and agreements set forth in Section 6.2(b) and such failure continues
for fifteen (15) days after the earlier to occur of (i) Parent obtaining Knowledge of such failure or (ii) Bank’s
dispatch of notice to Borrowers of such failure;

 

(c)          Any
Loan Party fails to observe or perform any covenant or agreement set forth in this Agreement or the Loan Documents (other than
those covenants and agreements described in Sections 8.1(a) and 8.1(b)), and such failure continues for thirty (30) days after
the earlier to occur of (i) Parent obtaining Knowledge of such failure or (ii) Bank’s dispatch of notice to Borrowers
of such failure;

 

(d)          Any
representation, warranty or certification made by any Loan Party or any officer or employee of any Loan Party in this Agreement
or any Loan Document, in any certificate, financial statement or other document delivered pursuant to this Agreement or any Loan
Document proves to have been misleading or untrue in any material respect when made or if any such representation, warranty or
certification is withdrawn;

 

(e)          Any
Loan Party fails to pay when due (or beyond any applicable cure period) any payment in respect of its Debt in excess of $1,000,000,
other than (i) under this Agreement, and (ii) Debt being contested in good faith by appropriate proceedings, and for which adequate
reserves have been set aside with respect thereto as required by GAAP and, by reason of such contest or nonpayment, no property
is subject to a material risk of loss or forfeiture;

 

(f)          Any
event or condition occurs that: (i) results in the acceleration of the maturity of any of any Loan Party’s Debt described
in Section 8.1(e); or (ii) permits (or, with the giving of notice or lapse of time or both, would permit) the holder or holders
of such Debt or any Person acting on behalf of such holder or holders to accelerate the maturity thereof;

 

(g)          Any
Loan Party commences a voluntary Insolvency Proceeding seeking liquidation, reorganization or other relief with respect to itself
or its Debt or seeking the appointment of a trustee, receiver, liquidator, custodian or other similar official over it or any substantial
part of its property, or consents to any such relief or to the appointment of or taking possession by any such official in an involuntary
Insolvency Proceeding or fails generally to pay its Debt as it becomes due, or takes any action to authorize any of the foregoing;

 

(h)          An
involuntary Insolvency Proceeding is commenced against any Loan Party seeking liquidation, reorganization or other relief with
respect to it or its Debt or seeking the appointment of a trustee, receiver, liquidator, custodian or other similar official of
it or any substantial part of its property and any of the following events occur: (i) the petition commencing the Insolvency
Proceeding is not timely controverted; (ii) the petition commencing the Insolvency Proceeding is not dismissed within 60 calendar
days of the date of the filing thereof; (iii) an interim trustee is appointed to take possession of all or a substantial portion
of the Assets of, or to operate all or any substantial portion of the business of, such Loan Party; or (iv) an order for relief
shall have been issued or entered therein;

 

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(i)          Any
Loan Party suffers (i) one or more money judgments in the aggregate, in excess of $1,000,000 over applicable insurance coverage
or (ii) one or more writs, warrants of attachment, or similar process involving Assets valued, in the aggregate, in excess of $1,000,000,
and any of the foregoing shall continue in effect for a period of 30 days without being vacated, discharged, satisfied, stayed
or bonded pending appeal;

 

(j)          A
judgment creditor obtains possession of any of the Assets of any Loan Party, valued, in the aggregate, in excess of $1,000,000,
by any means, including levy, distraint, replevin, or self-help;

 

(k)          Any
order, judgment or decree is entered decreeing the dissolution of any Loan Party, or any individual Guarantor dies or becomes incompetent,
or any Guarantor revokes or disputes the validity of, or liability under, his, her or its Facility Guaranty;

 

(l)          Any
Loan Party is enjoined, restrained or in any way prevented by court order from continuing to conduct business affairs that constitute
a material portion of the Consolidated business of the Loan Parties;

 

(m)          A
notice of lien, levy or assessment is filed of record with respect to any or all of any Loan Party’s Assets valued in the
aggregate in excess of $1,000,000 by any Governmental Authority, or any taxes or debts owing at any time hereafter to any Governmental
Authority becomes a Lien, whether inchoate or otherwise, upon any or all of any Loan Party’s Assets valued in the aggregate
in excess of $1,000,000 and the same is not paid on the payment date thereof;

 

(n)          Any
Loan Party makes any payment on account of any Subordinate Debt except as otherwise permitted under the terms of any applicable
subordination agreement;

 

(o)          Any
reportable event, which Bank reasonably determines constitutes grounds for the termination of any Plan by the PBGC or for the appointment
by the appropriate United States District Court of a trustee to administer any such Plan, shall have occurred and be continuing
thirty (30) days after written notice of such determination shall have been given to Borrower by Bank, or any such Plan shall be
terminated within the meaning of Title IV of ERISA, or a trustee shall be appointed by the appropriate United States District Court
to administer any such Plan, or the PBGC shall institute proceedings to terminate any Plan and in case of any event described in
this Section 8.1(o), the aggregate amount of liability to the PBGC under Sections 4062, 4063 or 4064 of ERISA shall exceed $1,000,000;

 

(p)          Any
Change of Control occurs;

 

(q)          Any
of the Loan Documents fails to be in full force and effect for any reason, or Bank, fails to have a perfected, first priority Lien
in and upon all of the Collateral (and such failure remains uncured five (5) Business Days after Parent’s receipt from Bank
of notice of such failure; provided that no Event of Default will be deemed to have occurred if the failure to perfect such
Lien is due to any act or omission on the party of Bank), or a breach, default or an event of default occurs under any Loan Document,
or a breach, default or an event of default occurs under any Hedge Agreement, and any such failure, breach, default or event of
default remains uncured beyond any applicable cure period; or

 

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(r)          Any
other Material Adverse Effect occurs.

 

8.2         Remedies.
Upon the occurrence of any Event of Default described in Section 8.1(g) or 8.1(h), the Commitments shall immediately terminate,
Bank’s obligation hereunder to make Loans to Borrowers and Bank’s obligation to issue Letters of Credit shall immediately
terminate, the Obligations (other than Hedge Obligations) shall become immediately due and payable without any election or action
on the part of Bank without presentment, demand, protest or notice of any kind, all of which Borrowers hereby expressly waive,
and Borrowers shall be required, in accordance with Section 3.7, to provide Bank with either (a) a cash collateral deposit in
an amount equal to 105% of the Letter of Credit Usage, or (b) an Acceptable Letter of Credit. Upon the occurrence and continuance
of any other Event of Default, either or both of the following actions may be taken: (i)  Bank may, without notice of its
election and without demand, immediately terminate the Commitments, whereupon Bank’s obligation to make Loans to Borrowers
and Bank’s obligation to issue Letters of Credit shall immediately terminate; (ii) Bank may, without notice of its
election and without demand, declare the Obligations (other than Hedge Obligations) to be due and payable, whereupon the Obligations
(other than Hedge Obligations) shall become immediately due and payable, without presentment, demand, protest or notice of any
kind, all of which Borrowers hereby expressly waive; and (iii) in accordance with Section 3.7, Bank may require Borrowers to provide
Bank with either (x) a cash collateral deposit in an amount equal to 105% of the Letter of Credit Usage, or (y) an Acceptable
Letter of Credit. Any demand in respect of any Hedge Obligation shall be made in accordance with the terms of the Hedge Agreement
relating thereto.

 

8.3         Appointment
of Receiver or Trustee. Each Borrower hereby irrevocably agrees that Bank, has the right under this Agreement, upon the occurrence
of an Event of Default, to seek the appointment of a receiver, trustee or similar official over each Borrower to effect the transactions
contemplated by this Agreement, and that Bank is entitled to seek such relief. Each Borrower hereby irrevocably agrees not to
object to such appointment on any grounds.

 

8.4         Remedies
Cumulative. The rights and remedies of Bank herein and in the Loan Documents are cumulative, and are not exclusive of any
other rights, powers, privileges, or remedies, now or hereafter existing, at law, in equity or otherwise.

 

8.5         Application
of Proceeds. After the exercise of remedies provided for in Section 8.2 (or after the Obligations have automatically
become immediately due and payable as set forth in Section 8.2 ), any amounts received from the Loan Parties or from the Collateral
on account of the Obligations shall be applied by Bank in the following order:

 

First, to payment
of that portion of the Obligations (excluding Obligations on account of Cash Management Services and Bank Product Obligations)
constituting Fees, indemnities, Expenses and other amounts (including fees, charges and disbursements of counsel to Bank) payable
to Bank;

 

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Second, to payment
of that portion of the Obligations constituting accrued and unpaid interest on the Loans;

 

Third, to payment
of that portion of the Obligations constituting unpaid principal of the Loans;

 

Fourth, to Bank
to cash collateralize the outstanding Letters of Credit in accordance with Section 3.7;

 

Fifth, to payment
of all other Obligations (excluding Obligations on account of Cash Management Services and Bank Product Obligations);

 

Sixth, to payment
of that portion of the Obligations arising from Cash Management Services;

 

Seventh, to
payment of all Bank Product Obligations; and

 

Last, the balance,
if any, after all of the Obligations have been indefeasibly paid in full, to the Loan Parties or as otherwise required by Law.

 

ARTICLE
IX

TAXES

 

9.1         Taxes
on Payments. All payments in respect of the Obligations shall be made free and clear of and without any deduction or withholding
for or on account of any present and future taxes, levies, imposts, deductions, charges, withholdings, assessments or governmental
charges, and all liabilities with respect thereto, imposed by the United States of America, any foreign government, or any political
subdivision or taxing authority thereof or therein, excluding any Excluded Taxes (all such non-excluded taxes, levies, imposts,
deductions, charges, withholdings, assessments, charges and liabilities being hereinafter referred to as “Taxes”).
If any Taxes are imposed and required by law to be deducted or withheld from any amount payable to Bank or its Lending Office,
then Borrowers shall (i) increase the amount of such payment so that Bank will receive a net amount (after deduction of all
Taxes) equal to the amount due hereunder, and (ii) pay such Taxes to the appropriate taxing authority for the account of
Bank prior to the date on which penalties attach thereto or interest accrues thereon; provided, however, if any such penalties
or interest shall become due, Borrowers shall make prompt payment thereof to the appropriate taxing authority.

 

9.2         Indemnification
For Taxes. Borrowers shall indemnify Bank for the full amount of Taxes (including penalties, interest, expenses and Taxes
arising from or with respect to any indemnification payment) arising therefrom or with respect thereto, whether or not the Taxes
were correctly or legally asserted. This indemnification shall be made on demand. If any Borrower makes a payment under Section
9.1 or this Section 9.2 for account of Bank and Bank reasonably determines that it has received or been granted a credit against
or relief or remission for, or repayment of, any Tax paid or payable by it in respect of or calculated with reference to the deduction
or withholding giving rise to such payment, Bank shall, to the extent that it can do so without prejudice to the retention of
the amount of such credit, relief, remission or repayment, pay to Borrowers such amount as Bank shall have reasonably determined
to be attributable to such deduction or withholding. The amount paid by Bank to Borrowers pursuant to the immediately preceding
sentence shall not exceed: (x) in the case of a refund of cash, the amount of cash refunded to Bank with respect to such
Tax; or (y) in the case of a refund taking the form of a credit against Tax, the economic benefit to Bank with respect to
the amount received as credit with respect to such Tax. Each Borrower further agrees promptly to return to Bank the amount of
any credit or refund actually paid to such Borrower by Bank if Bank is required to repay it.

 

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9.3         Evidence
of Payment. Within thirty (30) days after the date of payment of any Taxes in excess of $50,000, Borrowers shall furnish to
Bank the original or a certified copy of a receipt evidencing payment thereof.

 

ARTICLE
X

MISCELLANEOUS

 

10.1       Notices.
All notices, requests and other communications to any party hereunder shall be in writing (including facsimile transmission) and
shall be given to such party at its address or facsimile number set forth on the signature pages hereof (or on any applicable
Addendum) or such other address or facsimile number as such party may hereafter specify by notice to the other party in accordance
with this Section 10.1. Each such notice, request or other communication shall be effective (a) if delivered in person, when delivered,
(b) if delivered by facsimile transmission, on the date of transmission if transmitted on a Business Day before 4:00 p.m., Pacific
time, otherwise on the next Business Day (provided that a copy of such notice is mailed to the intended addressee by U.S. Mail,
certified or registered), (c) if delivered by overnight courier, one (1) Business Day after delivery to the courier properly addressed
and (d) if mailed, upon the third (3rd) Business Day after the date deposited into the U.S. Mail, certified or registered; provided
that actual notice, however given or received, shall always be effective on receipt; provided further that notices to Bank
pursuant to Article II and notices to Bank pursuant to Article III shall not be effective until received by an authorized
officer of Bank. A copy of any notice sent to any Borrower will be sent to Feder Kaszovitz LLP, 845 Third Avenue, New York, New
York 10022, Fax: (212) 888-7776 Attention: Geoffrey A. Bass, Esq.

 

10.2       No
Waivers. No failure or delay by any party hereto in exercising any right, power or privilege hereunder or under any Loan Document
shall operate as a waiver thereof nor shall any single or partial exercise thereof preclude any other or further exercise thereof
or the exercise of any other right, power or privilege.

 

10.3       Expenses;
Documentary Taxes; Indemnification.

 

(a)          Borrowers
shall pay all Expenses on demand.

 

(b)          Borrower
shall pay all and indemnify Bank against any and all transfer taxes, documentary taxes, assessments, or charges made by any Governmental
Authority and imposed by reason of the execution and delivery of this Agreement, any of the Loan Documents, or any other document,
instrument or agreement entered into in connection herewith.

 

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(c)          Borrowers
shall and hereby agrees to indemnify, protect, defend and hold harmless Bank and its directors, officers, agents, employees and
attorneys (collectively, the “Indemnified Persons” and individually, an “Indemnified Person”)
from and against (i) any and all losses, claims, damages, liabilities, deficiencies, judgments, costs and expenses (including
reasonable attorneys’ fees and reasonable attorneys’ fees incurred pursuant to proceedings arising under the Bankruptcy
Code) incurred by any Indemnified Person (except to the extent that it is finally judicially determined to have resulted from the
gross negligence or willful misconduct of any Indemnified Person) arising out of or by reason of any litigations, investigations,
claims or proceedings (whether administrative, judicial or otherwise), including discovery, whether or not Bank is designated a
party thereto, which arise out of or are in any way related to (1) this Agreement, the Loan Documents or the transactions
contemplated hereby or thereby, (2) any actual or proposed use by Borrowers of the proceeds of the Loans, or (3) Bank’s
entering into this Agreement, the Loan Documents or any other agreements and documents relating hereto; (ii) any such losses,
claims, damages, liabilities, deficiencies, judgments, costs and expenses arising out of or by reason of the use, generation, manufacture,
production, storage, release, threatened release, discharge, disposal or presence on, under or about any Loan Party’s operations
or property or property leased by any Loan Party of any material, substance or waste which is or becomes designated as Hazardous
Materials; (iii) any such losses, claims, damages, liabilities, deficiencies, judgments, costs and expenses incurred in connection
with any remedial or other action taken by any Loan Party or Bank in connection with compliance by such Loan Party with any federal,
state or local environmental laws, acts, rules, regulations, orders, directions, ordinances, criteria or guidelines (except to
the extent that it is finally judicially determined to have resulted from the gross negligence or willful misconduct of any Indemnified
Person). If and to the extent that the obligations of Borrowers hereunder are unenforceable for any reason, Borrowers hereby agree
to make the maximum contribution to the payment and satisfaction of such obligations to Bank which is permissible under applicable
law.

 

(d)          To
the fullest extent permitted by Law, Loan Parties shall not assert, and hereby waive, any claim against any Indemnified Person,
on any theory of liability, for special, indirect, consequential or punitive damages (as opposed to direct or actual damages) arising
out of, in connection with, or as a result of, this Agreement, any other Loan Document or any agreement or instrument contemplated
hereby, the transactions contemplated hereby or thereby, any Loan or Letter of Credit or the use of the proceeds thereof. No Indemnified
Person shall be liable for any damages arising from the use by unintended recipients of any information or other materials distributed
to such unintended recipients by such Indemnified Person through telecommunications, electronic or other information transmission
systems in connection with this Agreement or the other Loan Documents or the transactions contemplated hereby or thereby other
than for direct or actual damages resulting from the gross negligence or willful misconduct of such Indemnified Person as determined
by a final and nonappealable judgment of a court of competent jurisdiction.

 

(e)          Borrowers’
obligations under this Section 10.3 and under Section 9.2 shall survive any termination of this Agreement and the Loan Documents
and the payment in full of the Obligations, and are in addition to, and not in substitution of, any other of its obligations set
forth in this Agreement.

 

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10.4       Amendments
and Waivers. Neither this Agreement nor any Loan Document, nor any terms hereof or thereof may be amended, supplemented or
modified except in accordance with the provisions of this Section 10.4. Bank may from time to time, (a) enter into with Loan Parties
or any other Person written amendments, supplements or modifications hereto and to the this Agreement or the Loan Documents or
(b) waive, on such terms and conditions as Bank may specify in such instrument, any of the requirements of this Agreement or the
Loan Documents or any Event Default or Default and its consequences, if, but only if, such amendment, supplement, modification
or waiver is in writing and is signed by the party asserted to be bound thereby, and then such amendment, supplement, modification
or waiver shall be effective only in the specific instance and specific purpose for which given. Any such waiver and any such
amendment, supplement or modification shall be binding upon Loan Parties, Bank and all future holders of the Loans. In the case
of any waiver, Loan Parties and Bank shall be restored to their former positions and rights hereunder and under the Loan Documents,
and any Event of Default or Default waived shall be deemed to be cured and not continuing; no such waiver shall extend to any
subsequent or other Event of Default or Default or impair any right consequent thereon.

 

10.5       Successors
and Assigns; Participations; Disclosure; Register.

 

(a)          This
Agreement shall be binding upon and inure to the benefit of the parties hereto and their respective successors and assigns, except
that Borrowers may not assign or transfer any of its rights or obligations under this Agreement without the prior written consent
of Bank and any such prohibited assignment or transfer by any Borrower shall be void.

 

(b)          Bank
may make, carry or transfer the Loans at, to or for the account of, any of its branch offices or the office of an Affiliate of
Bank or to any Federal Reserve Bank, all without Borrowers’ consent.

 

(c)          Bank
may, at its own expense, assign to one or more Eligible Assignees all or a portion of its rights (including voting rights) and
obligations under this Agreement and the Loan Documents. In the event of any such assignment by Bank pursuant to this Section 10.5(c),
Bank’s obligations under this Agreement arising after the effective date of such assignment shall be released and concurrently
therewith, transferred to and assumed by Bank’s assignee to the extent provided for in the document evidencing such assignment,
and Bank shall give prompt notice of such assignment to Parent. For avoidance of doubt, the parties to this Agreement acknowledge
that the provisions of this Section 10.5(c) concerning assignments of Loans and Notes relate only to absolute assignments (whether
or not arising as the result of foreclosure of a security interest) and that such provisions do not prohibit assignments creating
security interests, including, without limitation, any pledge or assignment by Bank of any Loan or Note to any Federal Reserve
Bank in accordance with applicable law.

 

(d)          Bank
may at any time sell to one or more banks or other financial institutions (each a “Participant”) participating
interests in the Loans, the Letters of Credit and in any other interest of Bank hereunder. In the event of any such sale by Bank
of a participating interest to a Participant, Bank’s obligations under this Agreement shall remain unchanged, Bank shall
remain solely responsible for the performance thereof, and Borrowers shall continue to deal solely and directly with Bank in connection
with Bank’s rights and obligations under this Agreement. Each Borrower agrees that each Participant shall, to the extent
provided in its participation agreement, be entitled to the benefits of Article IX with respect to its participating interest.

 

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(e)          Each
Borrower authorizes Bank to disclose to any assignee under Section 10.5(c) or any Participant (either, a “Transferee”)
and any prospective Transferee any and all financial information in Bank’s possession concerning Borrowers that has been
delivered to Bank by any Borrower pursuant to this Agreement or which has been delivered to Bank by any Borrower in connection
with Bank’s credit evaluation prior to entering into this Agreement, subject to Section 10.6.

 

(f)          Bank,
acting solely for this purpose as an agent of Borrowers, shall maintain at its office in Los Angeles, California, a register for
the recordation of the names and addresses of the lenders, and the commitments of, and principal amounts of the loans owing to,
each lender pursuant to the terms hereof from time to time (the “Register”). The entries in the Register shall
be conclusive and binding for all purposes, absent manifest error, and Borrowers and Bank shall treat the Person whose name is
recorded in the Register pursuant to the terms hereof as a lender hereunder for all purposes of this Agreement. The Register shall
be available for inspection by Borrowers and lenders at any reasonable time and from time to time upon reasonable prior notice.
The obligations of Borrowers under this Agreement and the Loan Documents are registered obligations and the right, title and interest
of Bank and its assignees in and to such obligations shall be transferable only upon notation of such transfer in the Register.
This Section 10.5(f) shall be construed so that such obligations are at all times maintained in “registered from” within
the meaning of Section 163(f), 871(h)(2) and 881(c)(2) of the IRC and any related regulations (and any other relevant or successor
provisions of the IRC or such regulations).

 

10.6       Confidentiality.
Bank agrees that material, non-public information regarding Borrowers, their operations, Assets, and existing and contemplated
business plans shall be treated by Bank in a confidential manner, and shall not be disclosed by Bank to Persons who are not parties
to this Agreement or used for any purpose other than as contemplated by this Agreement, except: (a) to attorneys for and other
advisors, accountants, auditors, and consultants to Bank for use by them for a purpose as contemplated by this Agreement, provided
that any such Persons shall have agreed to receive such information hereunder subject to the terms of this Section 10.6, (b) to
Subsidiaries and Affiliates of Bank (including the Bank Product Providers), provided that any such Subsidiary or Affiliate shall
have agreed to receive such information hereunder subject to the terms of this Section 10.6, (c) as may be required by statute,
decision, or judicial or administrative order, rule, or regulation, (d) as may be agreed to in advance by Parent, or as requested
or required by any Governmental Authority pursuant to any subpoena or other legal process, (e) as to any such information that
is or becomes generally available to the public (other than as a result of prohibited disclosure by Bank), (f) in connection with
any assignment, prospective assignment, sale, prospective sale, participation or prospective participations, or pledge or prospective
pledge of Bank’s interest under this Agreement in accordance with Section 10.5, provided that any assignee, prospective
assignee, purchaser, prospective purchaser, participant or prospective participant shall have agreed to receive such information
hereunder subject to the terms of this Section 10.6, and (g) in connection with any litigation or other adversary proceeding involving
parties hereto which such litigation or adversary proceeding involves claims related to the rights or duties of such parties under
this Agreement or the other Loan Documents.

 

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10.7       Counterparts;
Integration. This Agreement may be signed in any number of counterparts, each of which shall be an original, with the same
effect as if the signatures thereto and hereto were upon the same instrument. Delivery of an executed counterpart of a signature
page to this Agreement by facsimile or other electronic transmission shall be effective as delivery of an original counterpart
of this Agreement. This Agreement shall be effective when executed by each of the parties hereto. This Agreement constitutes the
entire agreement and understanding among the parties hereto and supersedes any and all prior agreements and understandings, oral
or written, relating to the subject matter hereof.

 

10.8       Severability.
The provisions of this Agreement are severable. The invalidity, in whole or in part, of any provision of this Agreement shall
not affect the validity or enforceability of any other of its provisions. If one or more provisions hereof shall be declared invalid
or unenforceable, the remaining provisions shall remain in full force and effect and shall be construed in the broadest possible
manner to effectuate the purposes hereof.

 

10.9       Knowledge.
For purposes of this Agreement, an individual will be deemed to have knowledge of a particular fact or other matter if such
individual is actually aware of such fact or other matter. Each Loan Party will be deemed to have knowledge of a particular fact
or other matter if any Authorized Officer of such Loan Party has, or at any time had, knowledge of such fact or other matter.
Parent will be deemed to have knowledge of a particular fact or other matter if any other Loan Party has knowledge of such fact
or other matter.

 

10.10     Bank
Product Providers. Each Bank Product Provider shall be deemed a third party beneficiary hereof and of the provisions of the
other Loan Documents for purposes of any reference in a Loan Document to the parties for whom Bank is acting. Bank hereby agrees
to act as agent for such Bank Product Providers and, by virtue of entering into a Bank Product Agreement, the applicable Bank
Product Provider shall be automatically deemed to have appointed Bank as its agent and to have accepted the benefits of the Loan
Documents; it being understood and agreed that the rights and benefits of each Bank Product Provider under the Loan Documents
consist exclusively of such Bank Product Provider’s being a beneficiary of the Liens and security interests (and, if applicable,
guarantees) granted to Bank and the right to share in payments and collections out of the Collateral as more fully set forth herein.
In addition, each Bank Product Provider, by virtue of entering into a Bank Product Agreement, shall be automatically deemed to
have agreed that Bank shall have the right, but shall have no obligation, to establish, maintain, relax, or release reserves in
respect of the Bank Product Obligations and that if reserves are established there is no obligation on the part of Bank to determine
or insure whether the amount of any such reserve is appropriate or not. In connection with any such distribution of payments or
proceeds of Collateral, Bank shall be entitled to assume no amounts are due or owing to any Bank Product Provider unless such
Bank Product Provider has provided a written certification (setting forth a reasonably detailed calculation) to Bank as to the
amounts that are due and owing to it and such written certification is received by Bank a reasonable period of time prior to the
making of such distribution. Bank shall have no obligation to calculate the amount due and payable with respect to any Bank Products,
but may rely upon the written certification of the amount due and payable from the relevant Bank Product Provider. In the absence
of an updated certification, Bank shall be entitled to assume that the amount due and payable to the relevant Bank Product Provider
is the amount last certified to Bank by such Bank Product Provider as being due and payable (less any distributions made to such
Bank Product Provider on account thereof). Borrowers may obtain Bank Products from any Bank Product Provider, although Borrowers
are not required to do so. Each Borrower acknowledges and agrees that no Bank Product Provider has committed to provide any Bank
Products and that the providing of Bank Products by any Bank Product Provider is in the sole and absolute discretion of such Bank
Product Provider. Notwithstanding anything to the contrary in this Agreement or any other Loan Document, no provider or holder
of any Bank Product shall have any voting or approval rights hereunder (or be deemed a Bank) solely by virtue of its status as
the provider or holder of such agreements or products or the Obligations owing thereunder, nor shall the consent of any such provider
or holder be required (other than in its capacity as Bank, to the extent applicable) for any matter hereunder or under any of
the other Loan Documents, including as to any matter relating to the Collateral or the release of Collateral or Guarantors.

 

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10.11     Additional
Waivers.

 

(a)          Each
Borrower agrees that checks and other instruments received by Bank in payment or on account of the Obligations constitute only
conditional payment until such items are actually paid to Bank and each Borrower waives the right to direct the application of
any and all payments at any time or times hereafter received by Bank on account of the Obligations. Each Borrower agrees that Bank
shall have the continuing exclusive right to apply and reapply such payments in any manner as Bank may deem advisable, notwithstanding
any entry by Bank upon its books.

 

(b)          Each
Borrower waives demand, protest, notice of protest, notice of default or dishonor, notice of payment and nonpayment, notice of
any default, nonpayment at maturity, release, compromise, settlement, extension or renewal of any or all commercial paper, accounts,
documents, instruments, chattel paper, and guarantees at any time held by Bank on which any Borrower may in any way be liable.

 

(c)          Bank
shall not in any way or manner be liable or responsible for (a) the safekeeping of the Inventory or any other Collateral; (b) any
loss or damage thereto occurring or arising in any manner or fashion from any cause; (c) any diminution in the value thereof; or
(d) any act or default of any carrier, warehouseman, bailee, forwarding agency or other person whomsoever. All risk of loss, damage
or destruction of Inventory shall be borne by Borrowers.

 

(d)          Each
Borrower waives the right and the right to assert a confidential relationship, if any, it may have with any accountant, accounting
firm and/or service bureau or consultant in connection with any information requested by Bank pursuant to or in accordance with
this Agreement, and agrees that Bank may contact directly any such accountants, accounting firm and/or service bureau or consultant
in order to obtain such information.

 

10.12     Destruction
of Borrowers’ Documents. Any documents, schedules, invoices or other papers delivered to Bank may be destroyed or otherwise
disposed of by Bank six (6) months after they are delivered to or received by Bank, unless Parent requests, in writing, the return
of the said documents, schedules, invoices or other papers and makes arrangements, at Borrowers’ expense, for their return.

 

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10.13    Revival
and Reinstatement of Obligations. If the incurrence or payment of the Obligations by any Loan Party or the transfer to Bank
or any Bank Product Provider of any property should for any reason subsequently be asserted, or declared, to be void or voidable
under any state or federal law relating to creditors’ rights, including provisions of the Bankruptcy Code relating to fraudulent
conveyances, preferences, or other voidable or recoverable payments of money or transfers of property (each, a “Voidable
Transfer”), and if Bank or such Bank Product Provider is required to repay or restore, in whole or in part, any such
Voidable Transfer, or elects to do so upon the reasonable advice of its counsel, then, as to any such Voidable Transfer, or the
amount thereof that Bank or such Bank Product Provider is required or elects to repay or restore, and as to all reasonable costs,
Expenses, and reasonable attorneys’ fees of Bank and such Bank Product Provider related thereto, the liability of each Loan
Party automatically shall be revived, reinstated, and restored and shall exist as though such Voidable Transfer had never been
made.

 

10.14     CHOICE
OF LAW AND VENUE; JURY TRIAL WAIVER.

 

 

(a)          THE
VALIDITY OF THIS AGREEMENT AND THE OTHER LOAN DOCUMENTS (UNLESS EXPRESSLY PROVIDED TO THE CONTRARY IN ANOTHER LOAN DOCUMENT IN
RESPECT OF SUCH OTHER LOAN DOCUMENT), THE CONSTRUCTION, INTERPRETATION, AND ENFORCEMENT HEREOF AND THEREOF, AND THE RIGHTS OF THE
PARTIES HERETO AND THERETO WITH RESPECT TO ALL MATTERS ARISING HEREUNDER OR THEREUNDER OR RELATED HERETO OR THERETO SHALL BE DETERMINED
UNDER, GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH THE INTERNAL LAWS OF THE STATE OF CALIFORNIA, WITHOUT REGARD FOR PRINCIPLES
OF CONFLICTS OF LAWS.

 

(b)          THE
PARTIES AGREE THAT ALL ACTIONS OR PROCEEDINGS ARISING IN CONNECTION WITH THIS AGREEMENT AND THE OTHER LOAN DOCUMENTS SHALL BE TRIED
AND LITIGATED ONLY IN THE STATE AND FEDERAL COURTS LOCATED IN THE COUNTY OF LOS ANGELES, STATE OF CALIFORNIA, PROVIDED,
HOWEVER, THAT ANY SUIT SEEKING ENFORCEMENT AGAINST ANY COLLATERAL OR OTHER PROPERTY MAY BE BROUGHT, AT BANK’S OPTION,
IN THE COURTS OF ANY JURISDICTION WHERE BANK ELECTS TO BRING SUCH ACTION OR WHERE SUCH COLLATERAL OR OTHER PROPERTY MAY BE FOUND.
BORROWER AND BANK WAIVE, TO THE EXTENT PERMITTED UNDER APPLICABLE LAW, ANY RIGHT EACH MAY HAVE TO ASSERT THE DOCTRINE OF FORUM
NON CONVENIENS OR TO OBJECT TO VENUE TO THE EXTENT ANY PROCEEDING IS BROUGHT IN ACCORDANCE WITH THIS SECTION 10.14.

 

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(c)          EACH
BORROWER AND BANK HEREBY WAIVE THEIR RESPECTIVE RIGHTS TO A JURY TRIAL OF ANY CLAIM OR CAUSE OF ACTION BASED UPON OR ARISING OUT
OF THIS AGREEMENT OR ANY OF THE LOAN DOCUMENTS OR ANY OF THE TRANSACTIONS CONTEMPLATED HEREIN OR THEREIN, INCLUDING CONTRACT CLAIMS,
TORT CLAIMS, BREACH OF DUTY CLAIMS, AND ALL OTHER COMMON LAW OR STATUTORY CLAIMS. EACH BORROWER AND BANK REPRESENT THAT EACH HAS
REVIEWED THIS WAIVER AND EACH KNOWINGLY AND VOLUNTARILY WAIVES ITS JURY TRIAL RIGHTS FOLLOWING CONSULTATION WITH LEGAL COUNSEL.
IN THE EVENT OF LITIGATION, A COPY OF THIS AGREEMENT MAY BE FILED AS A WRITTEN CONSENT TO A TRIAL BY THE COURT.

 

10.15     ARBITRATION.

 

(a)          Arbitration.
The parties hereto agree, upon demand by any party, to submit to binding arbitration all claims, disputes and controversies between
or among them (and their respective employees, officers, directors, attorneys, and other agents), whether in tort, contract or
otherwise in any way arising out of or relating to (i) any credit subject hereto, or any of the Loan Documents, and their negotiation,
execution, collateralization, administration, repayment, modification, extension, substitution, formation, inducement, enforcement,
default or termination; or (ii) requests for additional credit.

 

(b)          Governing
Rules. Any arbitration proceeding will (i) proceed in a location in California selected by the American Arbitration Association
(“AAA”); (ii) be governed by the Federal Arbitration Act (Title 9 of the United States Code), notwithstanding any conflicting
choice of law provision in any of the documents between the parties; and (iii) be conducted by the AAA, or such other administrator
as the parties shall mutually agree upon, in accordance with the AAA's commercial dispute resolution procedures, unless the claim
or counterclaim is at least $1,000,000.00 exclusive of claimed interest, arbitration fees and costs in which case the arbitration
shall be conducted in accordance with the AAA's optional procedures for large, complex commercial disputes (the commercial dispute
resolution procedures or the optional procedures for large, complex commercial disputes to be referred to herein, as applicable,
as the “Rules”). If there is any inconsistency between the terms hereof and the Rules, the terms and procedures set
forth herein shall control. Any party who fails or refuses to submit to arbitration following a demand by any other party shall
bear all costs and expenses incurred by such other party in compelling arbitration of any dispute. Nothing contained herein shall
be deemed to be a waiver by any party that is a bank of the protections afforded to it under 12 U.S.C. §91 or any similar
applicable state law.

 

(c)          No
Waiver of Provisional Remedies, Self-Help and Foreclosure. The arbitration requirement does not limit the right of any party
to (i) foreclose against real or personal property collateral; (ii) exercise self-help remedies relating to collateral or proceeds
of collateral such as setoff or repossession; or (iii) obtain provisional or ancillary remedies such as replevin, injunctive relief,
attachment or the appointment of a receiver, before during or after the pendency of any arbitration proceeding. This exclusion
does not constitute a waiver of the right or obligation of any party to submit any dispute to arbitration or reference hereunder,
including those arising from the exercise of the actions detailed in sections (i), (ii) and (iii) of this paragraph.

 

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(d)          Arbitrator
Qualifications and Powers. Any arbitration proceeding in which the amount in controversy is $5,000,000.00 or less will be decided
by a single arbitrator selected according to the Rules, and who shall not render an award of greater than $5,000,000.00. Any dispute
in which the amount in controversy exceeds $5,000,000.00 shall be decided by majority vote of a panel of three arbitrators; provided
however, that all three arbitrators must actively participate in all hearings and deliberations. The arbitrator will be a neutral
attorney licensed in the State of California or a neutral retired judge of the state or federal judiciary of California, in either
case with a minimum of ten years’ experience in the substantive law applicable to the subject matter of the dispute to be
arbitrated. The arbitrator will determine whether or not an issue is arbitratable and will give effect to the statutes of limitation
in determining any claim. In any arbitration proceeding the arbitrator will decide (by documents only or with a hearing at the
arbitrator's discretion) any pre-hearing motions which are similar to motions to dismiss for failure to state a claim or motions
for summary adjudication. The arbitrator shall resolve all disputes in accordance with the substantive law of California and may
grant any remedy or relief that a court of such state could order or grant within the scope hereof and such ancillary relief as
is necessary to make effective any award. The arbitrator shall also have the power to award recovery of all costs and fees, to
impose sanctions and to take such other action as the arbitrator deems necessary to the same extent a judge could pursuant to the
Federal Rules of Civil Procedure, the California Rules of Civil Procedure or other applicable law. Judgment upon the award rendered
by the arbitrator may be entered in any court having jurisdiction. The institution and maintenance of an action for judicial relief
or pursuit of a provisional or ancillary remedy shall not constitute a waiver of the right of any party, including the plaintiff,
to submit the controversy or claim to arbitration if any other party contests such action for judicial relief.

 

(e)          Discovery.
In any arbitration proceeding, discovery will be permitted in accordance with the Rules. All discovery shall be expressly limited
to matters directly relevant to the dispute being arbitrated and must be completed no later than 20 days before the hearing date.
Any requests for an extension of the discovery periods, or any discovery disputes, will be subject to final determination by the
arbitrator upon a showing that the request for discovery is essential for the party's presentation and that no alternative means
for obtaining information is available.

 

(f)          Class
Proceedings and Consolidations. No party hereto shall be entitled to join or consolidate disputes by or against others in any
arbitration, except parties who have executed any Loan Document, or to include in any arbitration any dispute as a representative
or member of a class, or to act in any arbitration in the interest of the general public or in a private attorney general capacity.

 

(g)          Payment
of Arbitration Costs and Fees. The arbitrator shall award all costs and expenses of the arbitration proceeding.

 

(h)          Real
Property Collateral; Judicial Reference. Notwithstanding anything herein to the contrary, no dispute shall be submitted to
arbitration if the dispute concerns indebtedness secured directly or indirectly, in whole or in part, by any real property unless
(i) the holder of the mortgage, lien or security interest specifically elects in writing to proceed with the arbitration, or (ii)
all parties to the arbitration waive any rights or benefits that might accrue to them by virtue of the single action rule statute
of California, thereby agreeing that all indebtedness and obligations of the parties, and all mortgages, liens and security interests
securing such indebtedness and obligations, shall remain fully valid and enforceable. If any such dispute is not submitted to arbitration,
the dispute shall be referred to a referee in accordance with California Code of Civil Procedure Section 638 et seq., and this
general reference agreement is intended to be specifically enforceable in accordance with said Section 638. A referee with the
qualifications required herein for arbitrators shall be selected pursuant to the AAA's selection procedures. Judgment upon the
decision rendered by a referee shall be entered in the court in which such proceeding was commenced in accordance with California
Code of Civil Procedure Sections 644 and 645.

 

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(i)          Miscellaneous.
To the maximum extent practicable, the AAA, the arbitrators and the parties shall take all action required to conclude any arbitration
proceeding within 180 days of the filing of the dispute with the AAA. No arbitrator or other party to an arbitration proceeding
may disclose the existence, content or results thereof, except for disclosures of information by a party required in the ordinary
course of its business or by applicable law or regulation. If more than one agreement for arbitration by or between the parties
potentially applies to a dispute, the arbitration provision most directly related to the Loan Documents or the subject matter of
the dispute shall control. This arbitration provision shall survive termination, amendment or expiration of any of the Loan Documents
or any relationship between the parties.

 

(j)          Small
Claims Court. Notwithstanding anything herein to the contrary, each party retains the right to pursue in Small Claims Court
any dispute within that court's jurisdiction. Further, this arbitration provision shall apply only to disputes in which either
party seeks to recover an amount of money (excluding attorneys' fees and costs) that exceeds the jurisdictional limit of the Small
Claims Court.

 

10.16       Updating
Disclosure Schedules. To the extent necessary to cause the representations and warranties set forth in Article V to remain
true, complete and accurate as of the Closing Date, the date of each and every Borrowing and the date of each issuance of a Letter
of Credit, Borrowers shall update in writing any Schedules provided for in Article V to the extent they have Knowledge of any
circumstance which may have the effect of making any representation or warranty contained in Article V untrue or incomplete in
any material respect. The requirement of Borrowers to update the Schedules provided for herein shall not have the effect of a
cure of any Event of Default occurring prior to any such update or existing at the time of any such update without the written
waiver of such Event of Default by Bank.

 

10.17     Patriot
Act Notification. Bank is subject to the USA Patriot Act, Title III of Pub. L. 107-56, signed into law October 26, 2001 (the
“Patriot Act”) and hereby notifies Borrowers that pursuant to the requirements of the Patriot Act, Bank is
required to obtain, verify and record information that identifies each Borrower, which information includes the names and addresses
of each Borrower and other information that will allow Bank to identify Borrowers in accordance with the Patriot Act.

 

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ARTICLE
XI

JOINT AND SEVERAL LIABILITY; SINGLE LOAN ACCOUNT

 

11.1       Joint
and Several Liability. Each Borrower agrees that it is jointly and severally, directly and primarily liable to Bank for payment,
performance and satisfaction in full of the Obligations and that such liability is independent of the duties, obligations, and
liabilities of the other Borrowers. Bank may bring a separate action or actions on each, any, or all of the Obligations against
any Borrower, whether action is brought against the other Borrowers or whether the other Borrowers are joined in such action.
In the event that any Borrower fails to make any payment of any Obligations on or before the due date thereof, the other Borrowers
immediately shall cause such payment to be made or each of such Obligations to be performed, kept, observed, or fulfilled.

 

11.2       Primary
Obligation; Waiver of Marshaling. This Agreement and the Loan Documents to which Borrowers are a party are a primary and original
obligation of each Borrower, are not the creation of a surety relationship, and are an absolute, unconditional, and continuing
promise of payment and performance which shall remain in full force and effect without respect to future changes in conditions,
including any change of law or any invalidity or irregularity with respect to this Agreement or the Loan Documents to which Borrowers
are a party. Each Borrower agrees that its liability under this Agreement and the Loan Documents which Borrowers are a party shall
be immediate and shall not be contingent upon the exercise or enforcement by Bank of whatever remedies they may have against the
other Borrowers, or the enforcement of any lien or realization upon any security Bank may at any time possess. Each Borrower consents
and agrees that Bank shall be under no obligation to marshal any assets of any Borrower against or in payment of any or all of
the Obligations.

 

11.3       Financial
Condition of Borrowers. Each Borrower acknowledges that it is presently informed as to the financial condition of the other
Borrowers and of all other circumstances which a diligent inquiry would reveal and which bear upon the risk of nonpayment of the
Obligations. Each Borrower hereby covenants that it will continue to keep informed as to the financial condition of the other
Borrowers, the status of the other Borrowers and of all circumstances which bear upon the risk of nonpayment. Absent a written
request from any Borrower to Bank for information, each Borrower hereby waives any and all rights it may have to require Bank
to disclose to such Borrower any information which Bank may now or hereafter acquire concerning the condition or circumstances
of the other Borrowers.

 

11.4       Continuing
Liability. The liability of each Borrower under this Agreement and the Loan Documents to which Borrowers are a party includes
Obligations arising under successive transactions continuing, compromising, extending, increasing, modifying, releasing, or renewing
the Obligations, changing the interest rate, payment terms, or other terms and conditions thereof, or creating new or additional
Obligations after prior Obligations have been satisfied in whole or in part. To the maximum extent permitted by law, each Borrower
hereby waives any right to revoke its liability under this Agreement and Loan Documents as to future indebtedness, and in connection
therewith, each Borrower hereby waives any rights it may have under Section 2815 of the California Civil Code.

 

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11.5       Additional
Waivers. Each Borrower absolutely, unconditionally, knowingly, and expressly waives:

 

(a)          (1)
notice of acceptance hereof; (2) notice of any Loans or other financial accommodations made or extended under this Agreement and
the Loan Documents to which Borrowers are a party or the creation or existence of any Obligations; (3) notice of the amount of
the Obligations, subject, however, to each Borrower’s right to make inquiry of Bank to ascertain the amount of the Obligations
at any reasonable time; (4) notice of any adverse change in the financial condition of the other Borrowers or of any other fact
that might increase such Borrower’s risk hereunder; (5) notice of presentment for payment, demand, protest, and notice thereof
as to any instruments among the Loan Documents to which Borrowers are a party; and (6) all other notices (except if such notice
is specifically required to be given to Borrowers hereunder or under the Loan Documents to which Borrowers are a party) and demands
to which such Borrower might otherwise be entitled.

 

(b)          its
right, under Sections 2845 or 2850 of the California Civil Code, or otherwise, to require Bank to institute suit against, or to
exhaust any rights and remedies which Bank has or may have against, the other Borrowers or any third party, or against any collateral
for the Obligations provided by the other Borrowers, or any third party. Each Borrower further waives any defense arising by reason
of any disability or other defense (other than the defense that the Obligations shall have been fully and finally performed and
indefeasibly paid) of the other Borrowers or by reason of the cessation from any cause whatsoever of the liability of the other
Borrowers in respect thereof.

 

(c)          (1)
any rights to assert against Bank any defense (legal or equitable), set-off, counterclaim, or claim which such Borrower may now
or at any time hereafter have against the other Borrowers or any other party liable to Bank; (2) any defense, set-off, counterclaim,
or claim, of any kind or nature, arising directly or indirectly from the present or future lack of perfection, sufficiency, validity,
or enforceability of the Obligations or any security therefor; (3) any defense such Borrower has to performance hereunder, and
any right such Borrower has to be exonerated, provided by Sections 2819, 2822, or 2825 of the California Civil Code, or otherwise,
arising by reason of: the impairment or suspension of Bank’ rights or remedies against the other Borrowers; the alteration
by Bank of the Obligations; any discharge of the other Borrowers’ obligations to Bank by operation of law as a result of
Bank’ intervention or omission; or the acceptance by Bank of anything in partial satisfaction of the Obligations; and (4)
the benefit of any statute of limitations affecting such Borrower’s liability hereunder or the enforcement thereof, and any
act which shall defer or delay the operation of any statute of limitations applicable to the Obligations shall similarly operate
to defer or delay the operation of such statute of limitations applicable to such Borrower’s liability hereunder.

 

(d)          Each
Borrower absolutely, unconditionally, knowingly, and expressly waives any defense arising by reason of or deriving from (i) any
claim or defense based upon an election of remedies by Bank including any defense based upon an election of remedies by Bank under
the provisions of Sections 580a, 580b, 580d, and 726 of the California Code of Civil Procedure or any similar law of California
or any other jurisdiction; or (ii) any election by Bank under Section 1111(b) of the Bankruptcy Code to limit the amount of, or
any collateral securing, its claim against Borrowers. Pursuant to California Civil Code Section 2856(b):

 

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(i)          Each
Borrower waives all rights and defenses arising out of an election of remedies by the creditor, even though that election of remedies,
such as a nonjudicial foreclosure with respect to security for a guaranteed obligation, has destroyed such Borrower’s rights
of subrogation and reimbursement against the other Borrowers by the operation of Section 580(d) of the California Code of Civil
Procedure or otherwise.

 

(ii)         Each
Borrower waives all rights and defenses that such Borrower may have because the Obligations are secured by real property. This
means, among other things: (1) Bank may collect from such Borrower without first foreclosing on any real or personal property collateral
pledged by the other Borrowers; and (2) if Bank forecloses on any real property collateral pledged by the other Borrowers: (A)
the amount of the Obligations may be reduced only by the price for which that collateral is sold at the foreclosure sale, even
if the collateral is worth more than the sale price; and (B) Bank may collect from such Borrower even if Bank, by foreclosing on
the real property collateral, has destroyed any right such Borrower may have to collect from the other Borrowers. This is an unconditional
and irrevocable waiver of any rights and defenses each Borrower may have because the Obligations are secured by real property.
These rights and defenses include, but are not limited to, any rights or defenses based upon Section 580a, 580b, 580d, or 726 of
the California Code of Civil Procedure.

 

(e)          Each
Borrower hereby absolutely, unconditionally, knowingly, and expressly waives, for as long as any Obligations remain outstanding:
(i) any right of subrogation such Borrower has or may have as against the other Borrowers with respect to the Obligations; (ii)
any right to proceed against the other Borrowers or any other Person, now or hereafter, for contribution, indemnity, reimbursement,
or any other suretyship rights and claims, whether direct or indirect, liquidated or contingent, whether arising under express
or implied contract or by operation of law, which such Borrower may now have or hereafter have as against the other Borrowers with
respect to the Obligations; and (iii) any right to proceed or seek recourse against or with respect to any property or asset of
the other Borrowers.

 

(f)          WITHOUT
LIMITING THE GENERALITY OF ANY OTHER WAIVER OR OTHER PROVISION SET FORTH IN THIS AGREEMENT, EACH BORROWER HEREBY ABSOLUTELY, KNOWINGLY,
UNCONDITIONALLY, AND EXPRESSLY WAIVES AND AGREES NOT TO ASSERT ANY AND ALL BENEFITS OR DEFENSES ARISING DIRECTLY OR INDIRECTLY
UNDER ANY ONE OR MORE OF CALIFORNIA CIVIL CODE SECTIONS 2799, 2808, 2809, 2810, 2815, 2819, 2820, 2821, 2822, 2825, 2839, 2845,
2848, 2849, AND 2850, CALIFORNIA CODE OF CIVIL PROCEDURE SECTIONS 580a, 580b, 580c, 580d, AND 726, CALIFORNIA UNIFORM COMMERCIAL
CODE SECTIONS 3116, 3118, 3119, 3419, 3605, 9504, 9505, AND 9507, AND CHAPTER 2 OF TITLE 14 OF PART 4 OF DIVISION 3 OF THE CALIFORNIA
CIVIL CODE.

 

11.6       Settlements
or Releases. Each Borrower consents and agrees that, without notice to or by such Borrower, and without affecting or impairing
the liability of such Borrower hereunder, Bank may, by action or inaction:

 

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(a)          compromise,
settle, extend the duration or the time for the payment of, or discharge the performance of, or may refuse to or otherwise not
enforce this Agreement and the Loan Documents, or any part thereof, with respect to the other Borrowers or any Guarantor;

 

(b)          release
the other Borrowers or any Guarantor or grant other indulgences to the other Borrowers or any Guarantor in respect thereof; or

 

(c)          release
or substitute any Guarantor, if any, of the Obligations, or enforce, exchange, release, or waive any security for the Obligations
or any other guaranty of the Obligations, or any portion thereof.

 

11.7       No
Election. Bank shall have the right to seek recourse against each Borrower to the fullest extent provided for herein, and
no election by Bank to proceed in one form of action or proceeding, or against any party, or on any obligation, shall constitute
a waiver of Bank’ right to proceed in any other form of action or proceeding or against other parties unless Bank has expressly
waived such right in writing. Specifically, but without limiting the generality of the foregoing, no action or proceeding by Bank
under this Agreement and the Loan Documents shall serve to diminish the liability of any Borrower under this Agreement and the
Loan Documents to which Borrowers are a party except to the extent that Bank finally and unconditionally shall have realized indefeasible
payment by such action or proceeding.

 

11.8       Indefeasible
Payment. The Obligations shall not be considered indefeasibly paid unless and until all payments to Bank are no longer subject
to any right on the part of any Person, including any Borrower, any Borrower as a debtor in possession, or any trustee (whether
appointed pursuant to the Bankruptcy Code, or otherwise) of any Borrower’s Assets to invalidate or set aside such payments
or to seek to recoup the amount of such payments or any portion thereof, or to declare same to be fraudulent or preferential.
Upon such full and final performance and indefeasible payment of the Obligations, Bank shall have no obligation whatsoever to
transfer or assign its interest in this Agreement and the Loan Documents to any Borrower. In the event that, for any reason, any
portion of such payments to Bank is set aside or restored, whether voluntarily or involuntarily, after the making thereof, then
the obligation intended to be satisfied thereby shall be revived and continued in full force and effect as if said payment or
payments had not been made, and any Borrower shall be liable for the full amount Bank is required to repay plus any and all costs
and expenses (including reasonable attorneys’ fees and attorneys’ fees incurred in proceedings brought under the Bankruptcy
Code) paid by Bank in connection therewith.

 

11.9       Single
Loan Account. At the request of Borrowers to facilitate and expedite the administration and accounting processes and procedures
of the Loans and Borrowings, Bank has agreed, in lieu of maintaining separate loan accounts on Bank’s books in the name
of each of the Borrowers, that Bank may maintain a single loan account under the name of all Borrowers (the “Loan Account”).
All Loans shall be made jointly and severally to Borrowers and shall be charged to the Loan Account, together with all interest
and other charges as permitted under and pursuant to this Agreement. The Loan Account shall be credited with all repayments of
Obligations received by Bank, on behalf of Borrowers, from any Borrower pursuant to the terms of this Agreement.

 

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11.10    Apportionment
of Proceeds of Loans. Each Borrower expressly agrees and acknowledges that Bank shall have no responsibility to inquire into
the correctness of the apportionment or allocation of or any disposition by any of Borrowers of (a) the Loans or any Borrowings,
or (b) any of the expenses and other items charged to the Loan Account pursuant to this Agreement. The Loans and all such Borrowings
and such expenses and other items shall be made for the collective, joint, and several account of Borrowers and shall be charged
to the Loan Account.

 

11.11     Parent
as Agent for Borrowers. Each Borrower hereby irrevocably appoints Parent as the borrowing agent and attorney-in-fact for all
Borrowers (the “Administrative Borrower”) which appointment shall remain in full force and effect unless and
until Bank shall have received prior written notice signed by each Borrower that such appointment has been revoked and that another
Borrower has been appointed Administrative Borrower. Each Borrower hereby irrevocably appoints and authorizes the Administrative
Borrower (i) to provide Bank with all notices with respect to Loans and Letters of Credit obtained for the benefit of any Borrower
and all other notices and instructions under this Agreement and (ii) to take such action as the Administrative Borrower deems
appropriate on its behalf to obtain Loans and Letters of Credit and to exercise such other powers as are reasonably incidental
thereto to carry out the purposes of this Agreement. It is understood that the handling of the Loans and Collateral of Borrowers
in a combined fashion, as more fully set forth herein, is done solely as an accommodation to Borrowers in order to utilize the
collective borrowing powers of Borrowers in the most efficient and economical manner and at their request, and that Bank shall
not incur liability to any Borrower as a result hereof. Each Borrower expects to derive benefit, directly or indirectly, from
the handling of the Loans and the Collateral in a combined fashion since the successful operation of each Borrower is dependent
on the continued successful performance of the integrated group. To induce Bank to do so, and in consideration thereof, each Borrower
hereby jointly and severally agrees to indemnify Bank, and hold Bank harmless against, any and all liability, expense, loss or
claim of damage, or injury, made against Bank by any Borrower or by any third Person whosoever, arising from or incurred by reason
of (a) the handling of the Loans and Collateral of Borrowers as herein provided, (b) Bank’s relying on any instructions
of the Administrative Borrower, or (c) any other action taken by Bank hereunder or under the other Loan Documents, except that
Borrowers will have no liability to Bank under this Section 11.11 with respect to any liability that has been finally determined
by a court of competent jurisdiction to have resulted solely from the gross negligence or willful misconduct of Bank.

 

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IN WITNESS WHEREOF,
the parties hereto have caused this Agreement to be duly executed by their respective authorized officers as of the day and year
first above written.

 

	Address for notices:	JAKKS PACIFIC, INC.,
	JAKKS Pacific, Inc.	a Delaware corporation
	22619 Pacific Coast Highway	 
	Malibu, CA 90265	By	 
	Attn:  Chief Financial Officer	Name:
	Telephone:  (310) 455-6210	Title:
	Facsimile:  (310) 455-6352	 
	 	 
	Address for notices:	CREATIVE DESIGNS INTERNATIONAL, LTD.,
	c/o JAKKS Pacific, Inc.	a Delaware corporation
	22619 Pacific Coast Highway	 
	Malibu, CA 90265	 
	Attn:  Chief Financial Officer	By	 
	Telephone:  (310) 455-6210	Name:
	Facsimile:  (310) 455-6352	Title:
	 	 
	Address for notices:	DISGUISE, INC.,
	c/o JAKKS Pacific, Inc.	a Delaware corporation
	22619 Pacific Coast Highway	 
	Malibu, CA 90265	By	 
	Attn:  Chief Financial Officer	Name:
	Telephone:  (310) 455-6210	Title:
	Facsimile:  (310) 455-6352	 
	 	 
	Address for notices:	JAKKS SALES CORPORATION,
	c/o JAKKS Pacific, Inc.	a Delaware corporation
	22619 Pacific Coast Highway	 
	Malibu, CA 90265	By	 
	Attn:  Chief Financial Officer	Name:
	Telephone:  (310) 455-6210	Title:
	Facsimile:  (310) 455-6352	 

  

    	 

    	 

    

 

	Address for notices:	MAUI, INC.,
	c/o JAKKS Pacific, Inc.	an Ohio corporation
	22619 Pacific Coast Highway	 
	Malibu, CA 90265	By	 
	Attn:  Chief Financial Officer	Name:
	Telephone:  (310) 455-6210	Title:
	Facsimile:  (310) 455-6352	 
	 	 
	Address for notices:	KESSLER SERVICES, INC.,
	c/o JAKKS Pacific, Inc.	a Nevada corporation
	22619 Pacific Coast Highway	 
	Malibu, CA 90265	By	 
	Attn:  Chief Financial Officer	Name:
	Telephone:  (310) 455-6210	Title:
	Facsimile:  (310) 455-6352	 
	 	 
	Address for notices:	MOOSE MOUNTAIN MARKETING, INC.,
	c/o JAKKS Pacific, Inc.	a New Jersey corporation
	22619 Pacific Coast Highway	 
	Malibu, CA 90265	By	 
	Attn:  Chief Financial Officer	Name:
	Telephone:  (310) 455-6210	Title:
	Facsimile:  (310) 455-6352	 
	 	 
	Address for notices:	KIDS ONLY, INC.,
	c/o JAKKS Pacific, Inc.	a Massachusetts corporation
	22619 Pacific Coast Highway	 
	Malibu, CA 90265	By	 
	Attn:  Chief Financial Officer	Name:
	Telephone:  (310) 455-6210	Title:
	Facsimile:  (310) 455-6352	 

 

    	2

    	 

    

 

	Address for notices and Lending Office:	WELLS FARGO BANK, NATIONAL ASSOCIATION
	Wells Fargo Bank, National Association	 
	Wells Fargo International Group	 
	333 S. Grand Avenue, Suite 800	By	 
	MAC E2064-089	Name: 
	Los Angeles, CA 90071	Title:
	Attn:  Vessela A. Kapoulian	 
	Telephone:  (213) 253-3518	 
	Facsimile:  (213) 625-1055	 

 

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