Document:

SUBORDINATED PROMISSORY NOTE

 

	$7,377,432.00	December 24, 2013

 

FOR VALUE RECEIVED, XCel Brands, Inc. and
its successors (the “Company”) hereby promise to pay to the order of IM Ready-Made, LLC, a New York limited
liability company, or its permitted assigns (“Holder”), the principal sum of Seven Million, Three Hundred Seventy-Seven
Thousand Four Hundred Thirty-Two and 00/100 Dollars ($7,377,432.00), in accordance with the provisions of this note (“Note”).

 

This Note amends, restates and supersedes
that certain promissory note issued on September 29, 2011 pursuant to that certain Asset Purchase Agreement, dated as of May 19,
2011, as amended, by and among the Company and IM Brands, LLC (collectively the “Buyers”) and Holder (the “Purchase
Agreement”), pursuant to which Buyers acquired certain assets and licensing operations of Holder (the “Business”)
and constitutes the “Promissory Note” as defined in the Purchase Agreement.  This Note replaces the Original
Note and evidences the absolute and unconditional obligation of the Company, subject only to the rights of off set as specified
in Section 7 hereof.

 

1.Scheduled Payments

 

(i)Principal. Subject to Section
7 of this Note, (i) $1,500,000 principal amount of this Note shall become due and payable on the date hereof (of which, the Holder
acknowledges that the Company advanced $500,000 of this payment to the Holder’s designee) and shall be due and payable in
Immediately Available Funds (as defined in Section 2(a)); (ii) $750,0000 principal amount of this Note (the “First Interim
Payment”) shall become due and payable on January 31, 2015 (the “First Interim Payment Date”); (iii)
$750,000 principal amount of this Note (the “Second Interim Payment” and, together with the First Interim Payment,
the “Interim Payments”) shall become due and payable on January 31, 2016 (the “Second Interim Payment
Date” and together with the First Interim Payment Date, the “Interim Payment Dates”); and (iv) the
remaining unpaid principal balance of this Note shall become due and payable in full on September 30, 2016, subject to any optional
prepayment under Section 1(c) and any Pending Indemnification Claims pursuant to Section 7 (the “Maturity Date”) unless
such Maturity Date is extended by Holder to the first Business Day following September 30, 2018 pursuant to Section 2(b) (the “Subsequent
Maturity Date”).  For the avoidance of doubt, the unpaid principal amount shall refer to the balance of
the Note after any reduction of the principal of this Note whether by optional prepayment, partial conversion or offset made in
accordance with Section 7 of this Note.

 

(b)Interest.  The
Note shall accrue interest, compounded semiannually, at a rate equal to the applicable Federal short-term rate under Section 1274(d)
of the Internal Revenue Code of 1986, as amended, and as in effect on the date the Note is issued.  Interest shall accrue
from the date of this Note to the date upon which the unpaid principal amount is paid in full, at which time such interest shall
become due and payable.  Upon the occurrence of an Event of Default, the Note shall accrue interest at the rate of fifteen
percent (15%) per annum above the current rate of interest.  Interest shall be calculated on the basis of the actual
number of days elapsed and a year of 365 days.  On September 29, 2011, the Company prepaid $122,568.00 in interest to
the Holder as satisfaction of all interest payable on the Note absent an Event of Default.  In no event shall the Holder
have any obligation to return any portion of such prepayment to the Company and in no event (other than upon an Event of Default),
shall any other interest become due or payable under this Note.

 

    	 

    	 

    

 

(c) Optional Prepayments.  The
Company may at any time prepay, without premium or penalty, all or any portion of the Company’s obligations under this Note
as provided for under Paragraph 2 herein.

 

2.Payment of Note

 

(a)Except to the extent permitted
in Section 2(b) and as provided in Section 2(c), all payments and prepayments of principal and interest on this Note shall be made
to the Holder in lawful money of the United States of America by wire transfer of immediately available funds (“Immediately
Available Funds”) to a United States bank account designated in writing by the Holder (or at such other place as the
holder hereof shall notify the Company in writing).

 

(b)Conversion; Prepayment

 

(i)Prior to the Maturity Date, subject
to the restrictions set forth in Section 2(a), the Company shall have the right, in its sole discretion, to prepay the principal
amount of the Note, in whole or in part, in shares of common stock of the Company (“Company Shares”) or cash;
provided, however, that, except to the extent otherwise permitted under Section 2(c), the Company shall make the Interim Payments
in cash. If the Company elects to make such payment in Company Shares, the number of Company Shares to be issued shall equal the
quotient  obtained by dividing (i) the prepaid principal amount of the Note by (ii) the average per share closing price
for the Company Shares as reported on the exchange or other interdealer quotation system on which the Company Shares are listed
or quoted for the twenty (20) consecutive trading days ending on the trading day immediately preceding the date of payment (the
“Average Trading Price”), provided that the Average Trading Price is at least $4.50 (as adjusted for a stock
split, stock dividend, reverse stock split, subdivision, combination, reclassification or similar change in the capital structure
of the Company, which are collectively referred to herein as “Adjustments”).

 

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(ii)Ten (10) Business Days prior to the
Maturity Date, the Company shall notify the Holder in writing (the “Notice Letter”) of the Company’s intention
to pay the outstanding principal amount of the Note in cash or in Company Shares.  If the Company elects to make such
payment in Company Shares, the number of Company Shares to be issued shall equal the quotient obtained by dividing (i) the principal
amount of this Note then outstanding by (ii) the greater of (x) the Average Trading Price and (y) $4.50 subject to any Adjustments
(the greater of the Average Trading Price and $4.50 (subject to any Adjustments) is referred to herein as the “Floor Conversion
Price”).  If the Average Trading Price in the Notice Letter is below $4.50 (subject to any Adjustments), then
the Holder may, in its sole discretion, notify the Company prior to the close of business on the day immediately prior to the Maturity
Date, of Holder’s intention to extend the Maturity Date to the Subsequent Maturity Date. If the Holder elects to extend the
Maturity Date to the Subsequent Maturity Date, the Company’s Notice Letter shall be void.

 

(iii) During the period from the Maturity
Date to the Subsequent Maturity Date (the “Extension Period”), the Holder may, at any time and from time to time, in
its discretion, convert all or a portion of the outstanding principal amount of the Note into a number of Company Shares obtained
by dividing the principal amount of the Floor Conversion Price.  Additionally, during the Extension Period, the Company,
in its sole discretion, may convert all or a portion of the outstanding principal amount of the Note into a number of Company Shares
obtained by dividing the principal amount of the Note to be converted by the Average Trading Price, provided that the Average Trading
Price is at least $4.50 (subject to any Adjustments).

 

(iv)Upon the Subsequent Maturity Date,
if any principal amount of the Note is outstanding, the Company shall pay the outstanding principal amount of the Note in Immediately
Available Funds or by issuing a number of Company Shares obtained by dividing (i) the outstanding principal amount of the Note
by (ii) the Average Trading Price, the method of payment being determined by the Company, in its sole discretion.

 

(c)Interim Payments

 

(i)The Company shall (i) pay $500,000
principal amount of the First Interim Payment on the First Interim Payment Date in Immediately Available Funds and, (ii) subject
to receipt of approval of the lenders under that certain secured loan facility with Bank Hapoalim B.H. dated as of July 31, 2013
(as such agreement may be amended from time to time, the “Senior Loan Agreement”), pay the remaining balance
of the First Interim Payment on the First Interim Payment Date in Immediately Available Funds. Subject to receipt of approval of
the lenders under the Senior Loan Agreement, pay the second Interim Payment on the Second Interim Payment Date in Immediately Available
Funds. To the extent Company has not received the approval to pay all or a portion of an Interim Payment in Immediately Available
Funds (in excess of such $500,000 payment on the First Interim Payment Date) of the lenders under the Senior Loan Agreement, the
Company shall, subject to Section 2(a), pay all or such portion of the principal amount of such Interim Payment in Company Shares.
If the Company elects to make such payment in Company Shares, the number of Company Shares to be issued shall equal the quotient
obtained by dividing (i) the principal amount of the Interim Payment to be paid in Company Shares by (ii) the Average Trading Price,
provided that the average trading Price is at least $4.50 (as adjusted for any Adjustments). The Company shall use commercially
reasonable efforts to obtain the approvals of the lenders under the Senior Loan Agreement as contemplated by this Section 2(c)(i).

 

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(ii)Ten (10) Business Days prior to the
respective Interim Payment Date, the Company shall notify the Holder in writing (the “Interim Payment Notice Letter”)
of the Company’s intention to pay an Interim Payment in cash and/or in Company Shares.  To the extent the Company
intends to make such payment in Company Shares, the number of Company Shares to be issued shall equal the quotient obtained by
dividing (i) the principal amount of the Interim Payment being paid in Company Shares by (ii) the greater of (x) the Average Trading
Price and (y) Floor Conversion Price.  If the average Trading Price in the Interim Payment Notice Letter is below $4.50
(subject to any Adjustments), then the Holder may, in its discretion, notify the Company prior to the close of business on the
day immediately prior to such Interim Payment Date, of Holder’s intention to extend such Interim Payment Date with respect
to the portion of the Interim Payment the Company intends to pay in Company Shares to the Maturity Date. If the Holder elects to
so extend such Interim Payment Date to the Maturity Date, the Company’s Interim Payment Notice Letter shall be void with
respect to the portion of the Interim Payment the Company intends to pay in Company Shares.

 

(iii)During the period from an Interim
Payment Date to the Maturity Date (the “Interim Extension Period”), the Holder may, at any time and from time
to time, in its discretion, convert all or a portion of the outstanding principal amount of the Interim Payment(s) that was so
extended into a number of Company Shares obtained by dividing the principal amount of the Interim Payment so extended by the Holder
and to be converted by the Floor Conversion Price.  Additionally, during the Interim Extension Period, the Company, in
its sole discretion, may convert all or a portion of the outstanding principal amount of the Interim Payment so extended by the
Holder into a number of Company Shares obtained by dividing the principal amount of the Interim Payment so extended by the Holder
and to be converted by the Average Trading Price, provided that the Average Trading Price is at least $4.50 (subject to any Adjustments).

 

(iv)Upon the Maturity Date, if any principal
amount of the Note is outstanding, the Company shall pay the outstanding principal amount of the Note in Immediately Available
Funds or by issuing a number of Company Shares obtained by dividing (i) the outstanding principal amount of the Note by (ii) the
Average Trading Price, the method of payment being determined by the Company, in its sole discretion.

 

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3.Event of Default; Consequences.  Upon
the occurrence of any one or more of the following events (each, an “Event of Default”), the Holder may, by
notice of default and acceleration given to the Company, accelerate the Maturity Date and declare the entire outstanding principal
amount of the Note, together with all accrued and unpaid interest thereon, immediately due and payable.

 

(a)Subject to the Company’s
right of off set pursuant to Section 7 below, if the Company fails to pay when due any amount (whether interest, principal or other
amount) then payable under the Note;

 

(b)If, pursuant to or within the meaning
of the United States Bankruptcy Code or any other federal or state law relating to insolvency or relief of debtors (each, a “Bankruptcy
Law”), the Company shall: (i) commence a voluntary case or proceeding; (ii) consent to the entry of an order for relief
against it in an involuntary case; (iii) consent to the appointment of a trustee, receiver, assignee, liquidator or similar official;
(iv) make an assignment for the benefit of its creditors; (v) be unable to pay its debts as they become due; or (vi) be insolvent
by any other measure.

 

(c)If a court of competent jurisdiction
enters an order or decree under any Bankruptcy Law that: (i) is for relief against the Company in an involuntary case; (ii) appoints
a trustee, receiver, assignee, liquidator or similar official of the Company or substantially all of the Company’s properties;
or (iii) orders the liquidation of the Company, and in each case the order or decree is not dismissed within sixty (60) days;

 

(d)The liquidation, dissolution or
winding up of the Company; and

 

(e)Any of the following: (i) a merger
or consolidation to which the Company is a party (other than one in which the stockholders of the Company prior to the event own
a majority of the voting power of the surviving or resulting corporation), (ii) a sale, lease, transfer, exclusive license or other
disposition of all or substantially all of the assets of the Company, or (iii) a sale or transfer by the Company’s stockholders
of voting control, in a single transaction or a series of transactions.

 

4.Waiver.  The rights
and remedies of the Holder under the Note shall be cumulative and not alternative.  No waiver by the Holder of any right
or remedy under the Note shall be effective unless signed by the Holder.   No failure or delay of the Holder in
exercising any power or right hereunder shall operate as a waiver thereof, nor shall any single or partial exercise of any such
right or power, or any abandonment or discontinuance of steps to enforce such a right or power, preclude any other or further exercise
thereof or the exercise of any other right or power.  Except as provided herein, the Company hereby waives presentment
for payment, demand, protest, and notice of demand, protest and nonpayment, and any other notice that might be required by law,
and consents to any and all renewals or extensions that might be made by the Holder as to the time of payment of the Note from
time to time.

 

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5.Replacement and Cancellation.

 

(a)Replacement of Lost Note.  Upon
receipt of evidence reasonably satisfactory to the Company (an affidavit of the Holder shall be satisfactory) of the ownership
and the loss, theft, destruction or mutilation of the Note and, in the case of any such loss, theft or destruction, upon receipt
of an indemnity reasonably satisfactory to the Company (provided that, if the holder is a financial institution or other institutional
investor, its own agreement shall be satisfactory), or, in the case of any such mutilation, upon the surrender of such Note to
the Company at its principal office, the Company shall (at the Holder’s expense) execute and deliver, in lieu thereof, a
new Note of the same class and representing the same rights represented by such lost, stolen, destroyed or mutilated Note and dated
so that there will be no loss of interest on such Note.  Any Note in lieu of which any such new Note has been so executed
and delivered by the Company shall not be deemed to be an outstanding Note.

 

(b)Cancellation.  After
all principal, accrued interest and all other amounts at any time owed on the Note have been paid in full, the Note shall be surrendered
to the Company for cancellation.

 

6.Business Days. If any payment
is due, or any time period for giving notice or taking action expires, on a day which is not a business day in the State of New
York the payment shall be due and payable on, and the time period shall automatically be extended to, the next business day immediately
following, and interest shall continue to accrue at the required rate hereunder until any such payment is made.

 

7.Indemnification Claims.  In
the event that on or prior to the Maturity Date a Buyer Indemnified Party is entitled to indemnification from the Seller under
Article XI of the Purchase Agreement (a “Resolved Claim”), the Company shall have the right to off-set the amount of
the Resolved Claim against the principal balance of the Note, subject to the terms and conditions of Article XI of the Purchase
Agreement.  If on the Maturity Date, a Buyer Indemnified Party has asserted a claim for indemnification in accordance
with Article XI of the Purchase Agreement, but the Seller has not agreed to the validity or amount of the claim (a “Pending
Indemnification Claim”), then on the Maturity Date the Company shall: (i) pay all accrued and unpaid interest to the Holder
in accordance with Section 2(a) of the Note; (ii) make a principal payment to the Holder pursuant to Section 2 of the Note equal
to (x) the outstanding principal amount, less (y) the amount asserted as the Pending Indemnification Claim; and (iii) pay a cash
amount equal to the amount asserted as the Pending Indemnification Claim to an escrow agent reasonably acceptable to the Company
and the Holder.  Upon resolution of the Pending Indemnification Claim in accordance with the Purchase Agreement, the
Company and the Holder shall direct the escrow agent to disburse to the Company such amount (if any) to which the Company is entitled
to as a result of the Pending Indemnification Claim and to disburse the balance (if any) to the Holder.

 

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8.Purchase Agreement. The Note
amends, restates and supersedes the Original Note which was executed and delivered pursuant to and in accordance with the terms
and conditions of the Purchase Agreement (as defined herein).  Capitalized terms used in the Note without separate definition
shall have the respective meanings given to them in the Purchase Agreement.

 

9.Subordination. The Holder acknowledges
and agrees that the payment obligations under the Note shall unconditionally be subordinate to the obligations of the Company or
Buyers to its lenders under any loan, convertible debt, or other debt facility (the “Lenders”).  This Note
is subject to the terms of that certain Subordination Agreement dated July 31, 2013, between the parties hereto and Bank Hapoalim
B.M.  The Company agrees that it shall not enter into any agreement after the date this Note is issued that will prevent
the Company from paying all amounts owing under the Note in cash on the Maturity Date.

 

10.Governing Law. The Note shall
be governed by and construed in accordance with the internal laws of the State of New York, without giving effect to any choice
of law or conflict of law provision or rule (whether of the State of New York or any other jurisdiction) that would cause the application
of the laws of any jurisdiction other than the State of New York.

 

11.Successors and Assigns.  The
Note may not be assigned or transferred by the Company or the Holder except by operation of law or any assignment by the Holder
to its members.  The Note may not be pledged, hypothecated or otherwise encumbered by the Holder.  Any transfer
or assignment in violation of this Section 11 shall be void, and the Company shall not recognize such purported transferee as a
holder of the Note.

 

12.Amendments.   No
supplement, modification or amendment of any term, provision or condition of the Note shall be binding or enforceable unless executed
in writing by the Company and the Holder.

 

13.Costs and Expenses.  The
Company agrees to pay on demand any and all costs and expenses (including reasonable counsel fees and expenses) in connection with
the enforcement of the Note.

 

[SIGNATURE PAGE FOLLOWS]

   

 

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IN WITNESS WHEREOF, the undersigned has duly
executed and delivered this Promissory Note as of the date first written above.

 

	 	XCEL BRANDS, INC.
	 	 
	 	By:	/s/ Seth Burroughs	 
	 	Name: Seth Burroughs
	 	Title: Executive Vice President

 

	Accepted and agreed to by:
	 
	IM READY-MADE, LLC
	 
	By:	/s/ Marisa Gardini	 
	Name:  Marisa Gardini
	Title: PartnerEMPLOYMENT
AGREEMENT

 

THIS EMPLOYMENT AGREEMENT (this “Agreement”)
is made as of December 24, 2013 (the “Effective Date”) by and between Xcel Brands, Inc. a Delaware corporation
(the “Company”), and Isaac Mizrahi (the “Executive”), each a “Party” and collectively
the “Parties.”  Unless otherwise indicated, capitalized terms used herein are defined in Section 2.1.

 

WHEREAS, the Executive serves as the Company’s
Chief Design Officer of the Isaac Mizrahi Brand pursuant to an employment agreement dated as of May 19, 2011 (the “Original
Agreement”); and

 

WHEREAS, the Parties desire to amend the
terms of the Executive’s employment with the Company.

 

NOW, THEREFORE, in consideration of the
mutual covenants and agreements set forth herein, as defined below, it is agreed by and between the Executive and the Company as
follows:

 

ARTICLE
I

EMPLOYMENT TERMS

 

1.1.Employment.  The
Company will employ the Executive, and the Executive accepts employment with the Company, upon the terms and conditions set forth
in this Agreement for the period beginning on the Effective Date and ending as provided in Section 1.4(a) hereof (the “Employment
Period”). The Original Employment Agreement is hereby terminated, other than Sections 1.5, 1.6, 1.7, 1.8 and 1.10 thereof
which shall survive and continue full force and effect in accordance with their terms.

 

1.2.Position and Duties.

 

(a)Generally.  The Executive
shall:

 

(i) serve as the Chief Design Officer
of the “Isaac Mizrahi” brand, and in such capacity shall be responsible for providing input to the Company’s
President of the Isaac Mizrahi brand with respect to the creation of the Company’s design vision for the Isaac Mizrahi Brand,
shall perform such duties as are customarily performed by an officer with similar title and responsibilities of a company of a
similar size (including, without limitation, the performance of Executive’s duties and obligations under agreements with
the Company’s licensees or any other third-party pursuant to which Executive is obligated to perform personal services, but
not including Executive’s duties under agreements pursuant to the Retained Media Rights) and shall have such power and authority
as shall reasonably be required to enable him to perform his duties hereunder; provided, however, that in exercising such power
and authority and performing such duties, he shall (x) at all times be subject to the authority, control and direction of the Chairman
and CEO of the Company and (y) abide by Product Media and Press Guidelines attached hereto as Exhibit A;

 

(ii)Make such In-Store Appearances material
to the Company’s business as reasonably requested by the Company, provided that in no event shall Executive be required to
make more than twenty-four (24) In-Store Appearances in any calendar year (exclusive of any travel days), as pro-rated for partial
calendar years during the Term, and the Company shall use commercially reasonable efforts to accommodate Executive’s schedule
with respect to the Retained Media Rights, and provided, further that it is anticipated that the Company will request that the
Executive make between 12-24 appearances per year (as pro-rated for partial calendar years during the Term); and

 

    	 

    	 

    

 

(iii)Make appearances on direct-response
television limited to (A) appearances on QVC pursuant to the license agreement between IM Brands, LLC and QVC, Inc. such that the
Company will not be in a breach of Section 4 of the QVC Agreement, as in effect on the date hereof, (B) travel to Toronto, Canada
for four personal physical appearances per calendar year for The Shopping Channel, subject to the Company and Executive agreeing
on travel arrangements for such appearances, and (C) such other appearances as may be mutually agreed in writing by the Company
and the Executive. Notwithstanding anything herein to the contrary, Executive agrees that his appearances on QVC shall include
two (2) one-hour “static” shows per week (in addition to “hits” before and after, and on the same day as,
each such show), provided that after March 1, 2015, if Executive informs the Company in writing and demonstrates to the Company’s
reasonable satisfaction that he has obligations pertaining to Retained Media Rights that conflict with Executive’s schedule
on QVC, the Company shall use commercially reasonable efforts to accommodate Executive’s schedule with respect to the Retained
Media Rights, and Executive shall only be required to appear on QVC for one (1) one-hour show per week (in addition to“hits”
before and after, and on the same day as, such show) and “Today’s Special Value” programs consistent with past
practice and such other appearances consistent with past practices which do not conflict with Executive’s schedule with respect
to the Retained Media Rights.

 

(b)Duties and Responsibilities.  The
Executive shall report to the Chairman and CEO of the Company and shall devote his full business time and attention to the business
and affairs of the Company and its Subsidiaries.  The Company acknowledges that the Executive has a commitment with respect
to the St. Louis Opera and that Executive will be in St. Louis from approximately May 4, 2014 to May 24, 2014 in connection with
such commitment. Notwithstanding anything to the contrary herein, the Company acknowledges and agrees that the performance by Executive
of such commitment shall not be in breach of any of the terms herein and that Executive shall not be available for appearances
as contemplated under Section 1.2(a)(ii) and (iii) during such time period. The Executive shall perform his duties and responsibilities
in a diligent, trustworthy, businesslike and efficient manner.  The Executive shall not engage in any other business
activities that conflict with the Executive’s duties, responsibilities and obligations hereunder.  During the Employment
Period, the Executive shall promptly bring to the Company all investment or business opportunities and creative design ideas relating
to the Business, of which the Executive becomes aware.

 

(c)Notwithstanding anything to the contrary
in this Section 1.2, Executive may engage in the Retained Media Rights, in each case so long as such activity does not have
a materially negative impact upon or materially conflict with the Executive’s duties hereunder.

 

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(d)Principal Office.  The
principal place of performance by the Executive of his duties hereunder shall be at the Company's principal executive offices in
Manhattan, New York, although, subject to the terms hereof, the Executive may be required to travel, upon reasonable advance notice,
outside of the area where the Company's principal executive offices are located in connection with the business of the Company.  Except
as set forth herein, all required travel shall be in accordance with the Company’s travel policy.

 

1.3.Compensation.

 

(a)Base Salary.  The
Executive’s base salary shall be $1,000,000 per annum (the “Base Salary”).  The Base Salary
will be payable to the Executive by the Company in regular installments in accordance with the Company’s general payroll
practices.  The Executive shall receive such increases (but not decreases) in his Base Salary as the Board of Directors
of the Company (the “Board”), or the compensation committee of the Board, may approve in its sole discretion
from time to time. The Executive’s Base Salary will be reviewed for potential upwards adjustments at such times, after September
30, 2016, as annual salary reviews are conducted for executives of the Company.

 

(b)Bonus. The Executive shall be
eligible to receive an annual cash bonus (the “Bonus”) of up to $1,000,000 (the “Maximum Bonus”)
for each calendar year commencing in 2014 (subject to Section 1.4 hereof) during the Term (or any partial calendar year during
the Term) in accordance with this Section 1.3(b). The Bonus, if any, shall consist of the DRT Revenue Bonus, if any, and the Collaboration
Bonus, if any, as determined in accordance with the below:

 

		(1)	DRT Revenue Bonus

 

The DRT Revenue Bonus (the “DRT Revenue Bonus”)
for any calendar year shall be equal to (i) 10% of the aggregate of DRT Revenue, until the Bonus payable for such calendar year
equals $500,000 and (ii) thereafter, 5% of DRT Revenue, until the Bonus payable for such calendar year equals the Maximum Bonus.

 

		(2)	Collaboration Bonus

 

The Collaboration Bonus (the “Collaboration
Bonus”) for any calendar year shall be equal to 5% of IM Collaboration Revenue. As soon as practicable after the end
of after the applicable calendar year, but in no event later than sixty (60) days following the end of such calendar year, the
Company shall deliver to the Executive (i) a statement prepared by the Company of the calculation of the amount of the DRT Revenue
Bonus and Collaboration Bonus; and (ii) supporting documentation of such calculations for the applicable period (collectively,
(i) and (ii), the “Reconciliation”).   The Bonus, if any, shall be paid to the Executive not later
than thirty (30) days after delivery of the Reconciliation to the Executive.  In addition to, and not in lieu of, the
foregoing, the Executive shall have the right to participate in all employee bonus plans offered to other employees, and such other
bonus payments as the Board, or the compensation committee of the Board, may approve in its sole discretion.  Such bonus
payments, if any, shall be paid at the same time paid to other recipients but in no event later than sixty (60) days after the
end of the applicable calendar year or fiscal period.  All bonuses payable under this Section 1.3(b) shall be,
collectively, referred to herein as “Bonus.”

 

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(c)Withholding.  All
payments made under this Agreement (including Base Salary, Bonus payments, and other amounts) shall be subject to withholding for
income taxes, payroll taxes and other legally required deductions.

 

(d)Automobile Allowance. The Company
will reimburse the Executive an amount up to $750.00 per month relating to the use of an automobile, plus gas and tolls for travel
between the Executive’s home and the QVC studio for appearances pursuant to Section 1(a)(iii).

 

(e)Expenses.  The Company
will reimburse the Executive for all reasonable expenses incurred by him in the course of performing his duties under this Agreement
that are consistent with the Company’s policies in effect at that time with respect to travel, entertainment and other business
expenses, subject to the Company’s requirements with respect to reporting and documentation of such expenses.  All
expense reimbursement payments for documented expenses shall be made in accordance with the Company expense reimbursement policy.  In
addition, the Company shall reimburse the Executive for up to $110,000 of non-accountable expenses each calendar year (pro-rated
for any partial calendar year during the Employment Period), without regard to whether such expenses would be reimbursable under
the Company’s expense reimbursement policy.  All expense reimbursement payments for non-accountable expenses shall
be made within thirty (30) days after the date that the Executive notifies the Company of such expense; provided, however,
that the Executive shall notify the Company of such expenses no later than six (6) months after the end of the calendar year in
which such expenses were incurred.

 

(f)Vacation; Holiday Pay and Sick Leave.  The
Executive shall be entitled to four (4) weeks’ paid vacation in each calendar year, which if and to the extent not taken
during any year may be carried forward to any subsequent year.  Executive shall receive holiday pay and paid sick leave
as provided to other executive employees of the Company.

 

(g)Additional Benefits.  During
the Employment Period, the Executive shall be entitled to participate (for himself and, as applicable, his dependents) in the group
medical, life, 401(k) and other insurance programs, equity and equity-based incentive plans, employee benefit plans and perquisites
which may be adopted by the Board, or the compensation committee of the Board, from time to time, for participation by the Company’s
senior management or executives, as well as dental, life and disability insurance coverage, with payment of, or reimbursement for,
such insurance premiums by the Company, subject to, in all cases, the terms and conditions established by the Board with respect
to such plans (collectively, the “Benefits”); provided, however, that the Board, in its reasonable
discretion, may revise the terms of any Benefits so long as such revision does not have a disproportionately negative impact on
the Executive vis-à-vis other Company employees to the extent applicable.

 

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(h)Indemnification.  The
Executive shall be entitled to indemnification by the Company in the same circumstances and to the same extent as the other executive
officers and directors of the Company, which indemnification shall in no event be less favorable to the Executive than the fullest
scope of indemnification permitted by applicable Delaware law (or any such greater scope of indemnification provided by agreement
or by the terms of the Company’s Certificate of Incorporation or By-Laws to any executive officer or director of the Company).

 

(i)D&O Insurance.  The
Company shall acquire and maintain Directors’ and Officers’ insurance for the Company’s directors and officers
(including the Executive), with coverage in amounts reasonably sufficient to protect the Company’s directors and officers,
but in all events with coverage in amounts no less than such amounts customarily maintained by similarly situated companies.  Upon
a Change of Control, the Company shall purchase, or cause to be purchased, a tail policy for the period of one year in an amount
reasonably sufficient to protect the Company’s former directors and officers, but in all events with coverage in amounts
no less than such amounts obtained by similarly situated companies in similar events.

 

(j)Other Benefits.  During
the Employment Period, the Company shall: (i) employ a full-time executive assistant for the Executive (whose salary shall be consistent
with other staff of the Company at similar levels); (ii) reimburse Executive for up to Five Thousand Dollars ($5,000) per year
for Executive to acquire and maintain a life insurance policy on the Executive; (iii) allow the Executive to participate in the
Company’s disability insurance policy (the “Disability Policy”, which shall name the Executive as loss
payee; (iv) pay for directly, or reimburse the Executive, for the Executive’s cell phone and internet expenses, home office
supplies and computer maintenance; and (v) provide for first class airfare for the Executive and economy (or coach) class airfare
for a “show stylist” and luxury accommodations for the Executive and accommodations pursuant to the Company’s
travel policy for such “show stylist”, or such other travel arrangements with respect to appearances made by Executive
pursuant to Section 1.2(a)(iii)(B).

 

1.4.Term and Termination.

 

(a)Duration.  This Agreement
shall be effective upon the Closing (as defined in the Purchase Agreement).  The Employment Period shall commence on
the Effective Date and the initial term shall terminate on September 30, 2016 (the “Initial Term”), unless earlier
terminated by the Company or the Executive as set forth in this Section 1.4.  After the Initial Term, the Company
shall have the option to renew this Agreement for two successive one-year periods (each a “Renewal Period”)
on the same terms and conditions as those in effect during the third year of the Initial Term.  The Initial Term plus
any Renewal Period exercised by the Company is referred to herein as the “Term”.  Thereafter, the
Term shall renew automatically for one-year periods, unless either party gives the other party written notice of its intention
not to renew the Agreement no later than 30 days prior to the expiration of the then current Term. The Employment Period
shall be terminated prior to the then-applicable expiration of the Term upon the first to occur of (i) termination of the Executive’s
employment by the Company for Cause, (ii) termination of the Executive’s employment by the Company without Cause, (iii) the
Executive’s resignation with Good Reason, (iv) the Executive’s resignation other than for Good Reason, or (v) the Executive’s
death or Disability.  The Executive shall not terminate the Employment Period, with or without Good Reason, unless he
gives the Company written notice that he intends to terminate the Employment Period at least 30 days prior to the Executive’s
proposed Termination Date.  As a condition to Executive receiving any payments or benefits under Section 1.4(b)(2)
and (3) or Section 1.4(c) (except amounts payable pursuant to Section 1.4(b)(1)), the Executive shall execute
and deliver to the Company the General Release of claims relating solely to the Executive’s employment with the Company within
60 days after the Termination Date in the form attached hereto as Exhibit B.  If the Executive does not execute
and deliver the General Release within that time period then the amounts otherwise payable pursuant to Section 1.4(b)(2)
shall be forfeited.  The first payment under this Section 1.4 shall include any amounts payable under this Section
1.4 for periods prior to execution of such General Release.

 

    	5

    	 

    

 

(b)Severance Upon Termination Without
Cause, Upon Resignation by the Executive For Good Reason or Failure to Renew Term.  If the Employment Period is terminated
by the Company without Cause or if the Executive resigns for Good Reason, or if the Company fails to renew the Term (in which case
termination of the Executive’s employment shall be effective at the expiration of the then-current Term), then the Executive
will be entitled to receive (1) any unpaid Base Salary through and including the date of termination or resignation and any other
amounts, including any amounts due for Bonus, or other entitlements then due and owing to the Executive as of the Termination Date;
(2) an amount equal to the Executive’s Base Salary (at the rate that would have been effect pursuant to Section 1.3(a)
had such employment not been terminated) for the longer of (x) six (6) months from the Termination Date, and (y) the remainder
of the then-current Term, but in no event exceeding eighteen (18) months (as the case may be, the “Severance Period”),
payable in substantially equal installments over the Severance Period in accordance with the Company’s normal payroll practices;
provided, however, that prior to the date that is six months and one day after the Termination Date, no payments
would be made that exceed the lesser of two times: (i) the sum of (A) the Executive’s Base Salary (at the rate
in effect on the date of termination), (B) the Bonus paid to Executive  pursuant to Section 1.3(b) in the prior calendar year,
and (C) any other taxable compensation paid to the Executive in the prior calendar year; or (ii) the maximum amount that may be
taken into account under a qualified plan pursuant to section 401(a)(17) for the year in which the Executive has a termination
of employment; and any amount in excess of the applicable limits shall be paid on the date that is six months and one
day after the Termination Date; and (3) continue to participate in the Company’s group medical plan on the same basis as
he previously participated or, if such participation would violate the provisions of Section 409A of the Code or applicable
nondiscrimination regulations under the Patient Protection and Affordable Care Act (PPACA), receive reimbursement for, COBRA premiums
(or, if COBRA coverage is not available, reimbursement of premiums paid for other medical insurance in an amount not to exceed
the COBRA premium) for the Severance Period; provided that if the Executive is provided with health insurance coverage by
a successor employer, any such coverage by the Company under subclause (3) shall cease (each of (1), (2) and (3) referred to as
the “Severance Payment”).  The Executive also shall be entitled to receive payment for (i) all reimbursable
expenses or other entitlements then due and owing to the Executive as of the Termination Date under Section 1.3(d) (other
than non-accountable expenses which shall be reimbursed pursuant to clause (ii) below), which payments shall be made in accordance
with the Company expense reimbursement policy; provided, however, in no event shall any expense reimbursements by
the Company be made later than the last day of the calendar year after the calendar year in which the expense was incurred, and
(ii) all non-accountable expenses incurred prior to the Termination Date that are reimbursable under Section 1.3(d), which
payments shall be made in accordance with the terms of Section 1.3(d).  If the Executive breaches his obligations
under Section 1.6, 1.7, 1.8 or 1.9 of this Agreement, the Company’s obligation to make any Severance
Payments and provide any Benefits shall cease as of the date of such breach; provided, that if the Executive cures such
breach within 10 days of receiving written notice from the Company of such breach (which notice the Company shall provide promptly
to the Executive after learning of such breach), the Company shall promptly pay all Severance Payments not made during such period
of dispute and resume making Severance Payments and providing Benefits promptly following such cure.

 

    	6

    	 

    

 

(c)Severance upon a Change of Control.  Anything
contained herein to the contrary notwithstanding, in the event the Executive's employment hereunder is terminated within six (6)
months following a Change of Control by the Company without Cause or by the Executive with Good Reason, the Executive shall be
entitled to receive the Severance Payment as described in sub-section (b) above; provided, however, that in lieu
of the calculation contained in Section 1.4(b)(2), Executive shall be entitled to receive a lump sum amount within 60 days
after the Termination Date equal to two times the sum of (i) the Executive's Base Salary (at the average rate that would have been
effect pursuant to Section 1.3(a) during the two years following the Termination Date) and (ii) the Bonus paid or due to
the Executive pursuant to Section 1.3(b) in the year prior to such Change of Control, if any; provided,
however, that prior to the date that is six months and one day after the Termination Date, no payment would be made that
exceeds the lesser of two times: (i) the sum of (A) the Executive’s Base Salary (at the rate in effect on the
date of termination), (B) the Bonus paid to Executive  pursuant to Section 1.3(b) in the prior calendar year, and (C) any
other taxable compensation paid to the Executive in the prior calendar year, or (ii) the maximum amount that may be taken into
account under a qualified plan pursuant to Section 401(a)(17) of the Code for the year in which the Executive has a termination
of employment, and any amount in excess of such limits shall be paid on the date that is six months and one day after the Termination
Date; and further provided, however, that if such lump sum severance payment, either alone or together with
other payments or benefits, either cash or non-cash, that the Executive has the right to receive from the Company, including, but
not limited to, accelerated vesting or payment of any deferred compensation, options, stock appreciation rights or any benefits
payable to the Executive under any plan for the benefit of employees, would constitute an "excess parachute payment"
(as defined in Section 280G of the Code), then such lump sum severance payment or other benefit shall be reduced to the largest
amount that will not result in receipt by the Executive of an “excess parachute payment.” The determination of the
amount of the payment described in this subsection shall be made by the Company's independent auditors at the sole expense of the
Company.  For purposes of clarification the value of any options described above will be determined by the Company's
independent auditors using a Black-Scholes valuation methodology.

 

    	7

    	 

    

 

(d)Death and Disability.  In
the event of the Company terminates this Agreement due to the death of the Executive, the Company shall pay the Executive his Base
Salary through the date of termination, at the rate then in effect, and all expenses or accrued Benefits arising prior to such
termination which are payable to the Executive pursuant to this Agreement through the date of termination.  Any other
rights and benefits the Executive may have under employee benefit plans and programs of the Company generally in the event of the
Executive’s Disability shall be determined in accordance with the terms of such plans and programs.  In the event
of Executive’s death, any rights and benefits that the Executive’s estate or any other person may have under employee
benefit plans and programs of the Company generally in the event of the Executive’s death shall be determined in accordance
with the terms of such plans and programs.

 

(e)Salary and Other Payments Through
Termination.  If the Executive’s employment with the Company is terminated during the Term (i) by the Company
for Cause or (ii) by the Executive other than for Good Reason, the Executive will be entitled to receive his Base Salary through
the Termination Date, but will not be entitled to receive any Severance Payments or Benefits after the Termination Date.  The
Executive shall also be entitled to receive payment for (i) all reimbursable expenses or other entitlements then due and owing
to the Executive as of the Termination Date under Section 1.3(d) (other than non-accountable expenses which shall be reimbursed
pursuant to clause (ii) below), which payments shall be made in accordance with the Company expense reimbursement policy; provided,
however, in no event shall any expense reimbursements by the Company be made later than the last day of the calendar year
after the calendar year in which the expense was incurred, and (ii) all non-accountable expenses incurred prior to the Termination
Date that are reimbursable under Section 1.3(d), which payments shall be made in accordance with the terms of Section
1.3(d).

 

(f)Other Rights.  Except
as set forth in this Section 1.4, all of the Executive’s rights to receive Base Salary, Benefits and annual bonuses
hereunder (if any) which accrue or become payable after the termination of the Employment Period shall cease upon such termination.

 

(g)Continuing Benefits. Notwithstanding
Section 1.4(f), termination pursuant to this Section 1.4 shall not modify or affect in any way whatsoever any vested
right of the Executive to benefits payable under any retirement or pension plan or under any other employee benefit plan of the
Company, and all such benefits shall continue, in accordance with, and subject to, the terms and conditions of such plans, to be
payable in full to, or on account of, the Executive after such termination.

 

(h)No Duty of Mitigation.  The
Executive shall not be required to mitigate the amount of any payment provided for in this Article I by seeking other employment
or otherwise,  nor shall the amount of any payment or benefit provided for under Article I be reduced by any compensation
earned by Executive after the Termination Date.

 

    	8

    	 

    

 

(i)Acceleration of Vesting.  If
the Company shall terminate the Executive's employment without Cause or the Executive terminates his employment with Good Reason,
then notwithstanding the vesting and exercisability schedule in any stock option or other grant agreement between the Company and
the Executive, all unvested stock options, shares of restricted stock and other equity awards granted by the Company to the Executive
pursuant to any such agreement shall immediately vest, and all such stock options shall become exercisable and shall remain exercisable
for the remaining term of the applicable option.  In the event of conflict between any stock option or other grant agreement
between the Company and the Executive and this Agreement, the stock option or other grant agreement shall control.

 

1.5.Confidential Information.

 

(a)The Executive shall not disclose or,
directly or indirectly, use at any time, during the Employment Period or thereafter, any Confidential Information (as defined below)
of which the Executive is or becomes aware, whether or not such information is developed by him, alone or with others, except to
the extent that (i) such disclosure or use is required by the Executive’s performance of the duties assigned to the Executive
by the Board, (ii) the Executive is required by subpoena or similar process to disclose or discuss any Confidential Information,
provided, that in such case, the Executive shall promptly inform the Company in writing of such event, shall reasonably cooperate
with the Company in attempting to obtain a protective order or to otherwise limit or restrict such disclosure to the greatest extent
possible, and shall disclose only that portion of the Confidential Information as is strictly required, or (iii) such Confidential
Information is or becomes generally known to and available for use by the public, other than as a result of any action or inaction
directly or indirectly by the Executive.  At the Company’s expense, the Executive shall take all reasonable steps
to safeguard Confidential Information in his possession and to protect it against disclosure, misuse, espionage, loss and theft.  The
Executive acknowledges that the Confidential Information obtained by him during the course of his employment with the Company is
the sole and exclusive property of the Company and its Subsidiaries, as applicable.

 

(b)The Executive understands that the
Company and its Subsidiaries will receive from third parties confidential or proprietary information (“Third Party Information”)
subject to a duty on the part of the Company and its Subsidiaries to maintain the confidentiality of such information and to use
it only for certain limited purposes.  During the Employment Period and in the period specified in such confidentiality
agreements, and without in any way limiting the provisions of Section 1.5(a) above, the Executive will hold Third Party
Information in confidence, consistent with the obligations applicable to Confidential Information of the Company generally, and
will not disclose to anyone (other than personnel and agents of the Company or its Subsidiaries who need to know such information
in connection with their work for the Company or its Subsidiaries) or use, except in connection with his work for the Company or
its Subsidiaries, Third Party Information unless expressly authorized by the Board in writing.

 

(c)As used in this Agreement, the term
“Confidential Information” means information that is not generally known to the public and that is related in
any way to the actual or anticipated business of the Company, its Subsidiaries, its Affiliates or any of their respective predecessors
in interest, including but not limited to (i) business development, growth and other strategic business plans, (ii) properties
available for acquisition, financing development or sale, (iii) accounting and business methods, (iv) services or products and
the marketing of such services and products, (v) fees, costs and pricing structures, (vi) designs, (vii) analysis, (viii) drawings,
photographs and reports, (ix) computer software, including operating systems, applications and program listings, (x) flow charts,
manuals and documentation, (xi) data bases, (xii) inventions, devices, new developments, methods and processes, whether patentable
or unpatentable and whether or not reduced to practice, (xiii) copyrightable works, (xiv) all technology and trade secrets, (xv)
confidential terms of material agreements and customer relationships, and (xvi) all similar and related information in whatever
form or medium.  Confidential Information shall not include any information that has become generally available to the
public prior to the date the Executive proposes to disclose or use such information or general know-how of the Executive.

 

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1.6.Inventions and Patents.  Executive
acknowledges that all discoveries, concepts, ideas, inventions, innovations, improvements, developments, products, methods, processes,
techniques, programs, designs, analyses, drawings, reports, patents, copyrightable works and mask works (whether or not including
any Confidential Information) and all issuances, registrations or applications related thereto, all other proprietary information
or intellectual property and all similar or related information (whether or not patentable)(collectively, “Intellectual
Property”) conceived, developed, contributed to, made, or reduced to practice by Executive (either alone or with others)
while employed by Company or any of its Subsidiaries or Affiliates or using the materials, facilities or resources of the Company
or any of its Subsidiaries or Affiliates (collectively, “Company Works”) is the sole and exclusive property
of the Company and its Subsidiaries; provided, however, that the term Company Works shall not include, and the Executive
shall exclusively own, (i) all Intellectual Property conceived, developed, contributed to, made, or reduced to practice by Executive
in connection with the performance of the Retained Media Rights, and (ii) the Original Physical Sketch Rights, provided that, with
respect to any original physical sketch retained by the Executive, the Executive delivers a high resolution copy thereof to the
Company; and provided, further, that, notwithstanding the foregoing, no present or future Intellectual Property Rights
purchased by the Buyer under the Purchase Agreement shall be owned by Executive pursuant to this Section 1.6. Executive
hereby assigns all right, title and interest in and to all Company Works to the Company and its Subsidiaries and waives any moral
rights he may have therein, without further obligation or consideration.  Any copyrightable work constituting Company
Works prepared in whole or in part by the Executive will be deemed “a work made for hire” under Section 201(b) of the
1976 Copyright Act, and the Company and its Subsidiaries shall own all of the rights comprised in the copyright therein.  The
Executive shall promptly and fully disclose in writing all Company Works to the Company and shall cooperate with the Company and
its Subsidiaries to protect, maintain and enforce the Company’s and its Subsidiaries’ interests in and rights to such
Company Works (including, without limitation, providing reasonable assistance in securing patent protection and copyright registrations
and executing all affidavits, assignments, powers-of-attorney and other documents as reasonably requested by the Company, whether
such requests occur prior to or after termination of the Executive’s employment with the Company).

 

1.7.Delivery of Materials Upon Termination
of Employment.  As requested by the Company from time to time and in any event upon the termination of the Executive’s
employment with the Company, the Executive shall promptly deliver to the Company, or at the Company’s election destroy, all
copies and embodiments, in whatever form or medium, of all Confidential Information, Company Works and other property and assets
of the Company and its Subsidiaries in the Executive’s possession or within his control (including, but not limited to, office
keys, access cards, written records, notes, photographs, manuals, notebooks, documentation, program listings, flow charts, magnetic
media, disks, diskettes, tapes, computers and handheld devices (including all software, files and documents thereon) and any other
materials containing any Confidential Information or Company Works) irrespective of the location or form of such material and,
if requested by the Company, shall provide the Company with written confirmation that all such materials have been delivered to
the Company or destroyed, as applicable.

 

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1.8.Non-Compete and Non-Solicitation
Covenants.

 

(a)The Executive acknowledges and agrees
that the Executive’s services to the Company and its Subsidiaries are unique in nature and that the Company and its Subsidiaries
would be irreparably damaged if the Executive were to violate his obligations under this Section 1.8.  The Executive
further acknowledges that, in the course of his employment with the Company, he will become familiar with the Company’s and
its Subsidiaries’ trade secrets and with other Confidential Information.  During the Employment Period, he shall
not, directly or indirectly, whether for himself or for any other Person, permit his name to be used by or participate in any business
or enterprise (including, without limitation, any division, group or franchise of a larger organization) that engages or proposes
to engage in the Business in the Restricted Territories, other than the Company and its Subsidiaries or except as otherwise directed
or authorized by the Board.  During the one year period following the Termination Date, unless the Executive’s
employment hereunder was terminated without Cause or was terminated by the Executive for Good Reason, the Executive shall not,
directly or indirectly, whether for himself or for any other Person, permit his name to be used by or participate in any business
or enterprise (including, without limitation, any division, group or franchise of a larger organization) that engages or proposes
to engage in the IM Business in the Restricted Territories, other than the Company and its Subsidiaries or except as otherwise
directed or authorized by the Board.  For purposes of this Agreement, the term “participate in” shall include,
without limitation, having any direct or indirect interest in any Person, whether as a sole proprietor, owner, stockholder, partner,
member, joint venturer, creditor or otherwise, or rendering any direct or indirect service or assistance to any Person (whether
as a director, officer, supervisor, employee, agent, consultant or otherwise).  Nothing herein will prohibit the Executive
from (i) mere passive ownership of not more than three percent (3%) of the outstanding stock of any class of a publicly held corporation
whose stock is traded on a national securities exchange or in the over-the-counter market, and (ii) engaging in the exploitation
of the Retained Media Rights, subject, during the Employment Period, to the restrictions in Section 1.2(c) hereof.  As
used herein, the phrase “mere passive ownership” shall include voting or otherwise granting any consents or approvals
required to be obtained from such Person as an owner of stock or other ownership interests in any entity pursuant to the charter
or other organizational documents of such entity, but shall not include, without limitation, any involvement in the day-to-day
operations of such entity.

 

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(b)During the Nonsolicitation Period,
the Executive will not directly, or indirectly through another Person, solicit, induce or attempt to induce any customer, supplier,
licensee, or other business relation of the Company or any of its Subsidiaries to cease doing business with the Company or any
of its Subsidiaries, or solicit, induce or attempt to induce any person who is, or was during the then-most recent 12-month period,
a corporate officer, general manager or other employee of the Company or any of its Subsidiaries to terminate such employee’s
employment with the Company or any of its Subsidiaries, or hire any such person unless such person’s employment was terminated
by the Company or any of its Subsidiaries, or in any way interfere with the relationship between any such customer, supplier, licensee,
employee or business relation and the Company or any of its Subsidiaries.  The Executive acknowledges and agrees that
the Company and its Subsidiaries would be irreparably damaged if the Executive were to breach any of the provisions contained in
this Section 1.8(b).

 

(c)Executive acknowledges that this Agreement,
and specifically, this Section 1.8, does not preclude Executive from earning a livelihood, nor does it unreasonably impose
limitations on Executive’s ability to earn a living.  In addition, Executive agrees and acknowledges that the potential
harm to the Company of its non-enforcement outweighs any harm to Executive of its enforcement by injunction or otherwise.

 

1.9.Enforcement.  If,
at the time of enforcement of Section 1.5, 1.6, 1.7, 1.8 or 1.10, a court holds that the restrictions
stated herein are unreasonable under circumstances then existing, the Parties agree that, to the extent permitted by applicable
law, the maximum period, scope or geographical area reasonable under such circumstances will be substituted for the period, scope
or area.  Because the Executive’s services are unique and because the Executive has access to Confidential Information
and Company Works, the Parties agree that money damages would be an inadequate remedy for any breach of Section 1.5, 1.6,
1.7, 1.8 or 1.10.  Therefore, in the event of a breach or threatened breach of Section 1.5,
1.6, 1.7, 1.8 or 1.10, the Company or any of its Subsidiaries or any of their respective successors
or assigns may, in addition to other rights and remedies existing in their favor, apply to any court of competent jurisdiction
for specific performance and/or injunctive or other relief in order to enforce, or prevent any violations of, the provisions hereof
(without posting a bond or other security).  The Parties hereby acknowledge and agree that (a) performance of the services
of the Executive hereunder may occur in jurisdictions other than the jurisdiction whose law the Parties have agreed shall govern
the construction, validity and interpretation of this Agreement, (b) the law of the  State of New York shall govern construction,
validity and interpretation of this Agreement to the fullest extent possible, and (c) Section 1.5, 1.6, 1.7,
1.8 or 1.10 shall restrict the Executive only to the extent permitted by applicable law.

 

1.10.Survival.  Sections
1.4, 1.5, 1.6, 1.7, 1.8 and 1.10 will survive and continue in full force in accordance
with their terms notwithstanding any termination of the Employment Period.

 

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ARTICLE
II

DEFINED TERMS

 

2.1.Definitions.  All
capitalized terms used but not defined herein shall have the meanings given to such terms in the Purchase Agreement.  For
purposes of this Agreement, the following terms will have the following meanings:

 

“Business” means the business
of acquiring and licensing consumer brands worldwide.

 

“Cause” means with respect
to the Executive, the occurrence of one or more of the following:  (i) conviction of, or entry of a plea of guilty or
nolo contendere to, a felony involving moral turpitude, misappropriation of Company property, embezzlement of Company funds, violation
of the securities laws or material dishonesty with respect to the Company; (ii) persistent and repeated refusal to comply with
no less than three written lawful directives of the Chairman and CEO or Board with respect to an item material to the business
prospects and/or operations of the Company, other than such directives requiring the Executive in his reasonable judgment after
consultation with counsel, to act in a manner inconsistent with his fiduciary obligations or those inconsistent with the Executive’s
position as Chief Design Officer; (iii) reporting to work under the influence of alcohol or illegal drugs, or the use of illegal
drugs (whether or not at the workplace), or (iv) any willful breach of Section 1.6, 1.7, 1.8 or 1.9 of this Agreement.  Notwithstanding
the foregoing, termination by the Company for Cause (other than pursuant to clause (i) above) shall not be effective until and
unless (i) Executive fails to cure such alleged act or circumstance within 30 days of receipt of notice thereof, to the satisfaction
of the Board in the exercise of its reasonable judgment (or, if within such 30-day period the Executive commences and proceeds
to take all reasonable actions to effect such cure, within such reasonable additional time period (no longer than 60 days) as may
be necessary), and (ii) notice of intention to terminate for Cause has been given by the Company within forty-five (45) days after
the Board learns of the act, failure or event constituting “Cause,” and (iii) the Board has voted (at a meeting of
the Board duly called and held as to which termination of Executive is an agenda item) by a vote of at least a two-thirds of the
members of the Board (other than Executive) to terminate Executive for Cause after Executive has been given notice of the particular
acts or circumstances which are the basis for the termination for Cause and has been afforded an opportunity to appear with counsel
and present his positions at such meeting and to present his case thereat, and (iv) the Board has given notice of termination to
Executive within five days after such meeting voting in favor of termination.

 

“Change of Control” means
the occurrence of any of the following (i) a merger or consolidation to which the Company is a party (other than one in which the
stockholders of the Company prior to the event own a majority of the voting power of the surviving or resulting corporation) (ii)
a sale, lease, transfer, exclusive license or other disposition of all or substantially all of the assets of the Company, or (iii)
a sale or transfer by the Company’s stockholders of voting control, in a single transaction or a series of transactions.

 

“Code” means the
Internal Revenue Code of 1986 and the Treasury regulations thereunder, each as amended from time to time.

 

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“Collaboration” shall mean
a project undertaken by the Company with one or more third-parties to co-market the third-party’s products and any of the
Isaac Mizrahi brands but excluding other agreements relating to the design and licensing of “IsaacMizrahiLIVE!” brand
and/or IML Products with respect to projects in which the Executive is not directly involved in such design services.

 

“Disability” shall have
the meaning set forth in a policy or policies of long term disability insurance, if any, the Company obtains for the benefit of
itself and/or its employees.  If there is no definition of “disability” applicable under any such policy
or policies, if any, then the Executive shall be considered disabled due to mental or physical impairment or disability despite
reasonable accommodations by the Company and its Subsidiaries, to perform his customary or other comparable duties with the Company
or its Subsidiaries immediately prior to such disability for a period of at least 120 consecutive days or for at least 180 non-consecutive
days in any 12 month period.

 

“DRT Revenue” means Excess
QVC DRT Revenue and TSC DRT Revenue.

 

“Effective Date” means
the Closing Date (as defined in the Purchase Agreement).

 

“Excess QVC DRT Revenue”
for a calendar year means (i) Gross Royalty Revenue in excess of $8,000,000 from Net Retail Sales (as each term is defined in the
QVC Agreement) under the QVC Agreement for such calendar year, as determined in accordance with U.S. generally accepted accounting
principles multiplied by (ii) a fraction, (a) the numerator of which is the number of hours during which the Executive appears
on QVC Shows during such calendar year divided by (b) the total hours of QVC Shows during such calendar year.

 

“Fiscal Year” means the
fiscal year of the Company and its Subsidiaries.

 

“Good Reason” means the
occurrence, without the Executive’s written consent, of one or more of the following events:  (i) the Company reduces
the amount of Executive’s Base Salary, (ii) the Company requires that the Executive relocate his principal place of employment
to a site that is more than 15 miles from the Company’s offices in Manhattan, New York, or if the Company changes the location
of its headquarters with the consent of Executive to a location that is more than 15 miles from such location, (iii) the Company
materially reduces the Executive’s responsibilities or removes the Executive from the position of Chief Design Officer –
Isaac Mizrahi Brand other than pursuant to a termination of his employment for Cause, or upon the Executive’s death or Disability,
(iv) the failure or unreasonable delay of the Company to provide the Executive any of the payments contemplated hereby, or (v)
the Company otherwise materially breaches the terms of this Agreement; provided that no such event shall constitute Good
Reason hereunder unless (a) the Executive shall have given written notice to the Company of the Executive’s intent to resign
for Good Reason within 30 days after the Executive becomes aware of the occurrence of any such event, which notice shall describe
in reasonable detail the event or events constitution the basis for the Executive’s intention to resign for Good Reason and
(b) such event or occurrence, if a breach susceptible to cure, shall not have been cured or otherwise shall not have been resolved
to the Executive’s reasonable satisfaction, in each case within 30 days of the Company’s receipt of such notice; provided,
however, except in the case of a failure to make a timely payment that is caused by a third party payroll service provider,
in which case the Company shall have ten (10) Business Days to cure, as to any breach by the Company of its obligation to make
any payment to Executive when due, the Executive shall have no notice obligation and the Company shall have no right to cure.  In
such case the Executive’s resignation shall become effective on the 31st day after the Company’s receipt of the aforementioned
notice.

 

    	14

    	 

    

 

“IM Business” means the
licensing, promotion via any form of media, and marketing of the IM Brands or the Isaac Mizrahi image and likeness for any commercial
use relating to the manufacture, sale and/or distribution of clothing, related accessories, home goods (i.e., home furnishings,
home décor, tabletop, cookware and kitchen prep items), food products and any and all other goods and services; provided,
however, notwithstanding anything to the contrary herein, the Business shall not include the Retained Media Rights.

 

“IM Collaboration Revenue”
shall mean revenue derived from fees relating to Material Services performed by the Executive from Collaborations, net of payments
to licensing agents, and calculated in accordance with GAAP, but excluding fees paid to the Company related to licensing its trademarks
or providing design services related to such Collaborations. In the event any Collaboration includes (i) licensing or design services
provided by the Company and (ii) Material Services performed by the Executive on behalf of the Company, then the Collaboration
Revenue shall equal fifty percent (50%) of the revenues from such Collaboration, or such other allocation as the parties may agree
in writing.

 

“IML Products” means any
products under the “IsaacMizrahiLIVE!” brand or a sub-brand that are sold through direct-response television networks.

 

“In-store Appearances”
means the Executive’s personal physical presence at department stores and/or other retail stores to promote Isaac Mizrahi
branded products on behalf of the Company and/or its licensees as requested by the Company, but does not include any such appearances
relating to Collaborations for which the Executive is eligible to receive a Collaboration Bonus pursuant to Section 1.3(b)(2) or
non-physical presence participation, such as appearances through web casting, social media, video conferencing or conference calls.

 

“Material Services” means
services of Executive that require one or more service days of Executive including photography, filming of videos, appearances,
design work by Executive, or other services but excluding social media efforts and In-store Appearances by or on behalf of Executive.

 

“Nonsolicitation Period”
means the Employment Period and 12 months thereafter.

 

“Original Physical Sketch Rights”
means the right of the Executive to retain any physical original sketches created by the Executive (alone or with others), and
the right to display them from time  to time in museums, exhibits and other non-retail forums, provided that, except
for the foregoing rights, such term does not include any rights to Intellectual Property associated with such sketches, nor does
it include the right to exploit, present or publicly display such sketches in connection with the sale or promotion of goods and
services or to otherwise use them for the purpose of developing competing goods, products or services.

 

    	15

    	 

    

 

“Person” means an individual,
a partnership, a corporation, a limited liability company, an association, a joint stock company, a trust, a joint venture, an
unincorporated organization, or the United States of America any other nation, any state or other political subdivision thereof,
or any entity exercising executive, legislative, judicial, regulatory or administrative functions of government.

 

“Purchase Agreement” means
the Asset Purchase Agreement, dated May 19, 2011, by and among the Company, IM Ready-Made, LLC and certain other parties thereto.

 

“QVC Agreement” means the
Second Amended and Restated Agreement and Consent to Assignment by and among QVC, Inc., IM Brands, LLC, IM Ready Made, LLC, XCel
Brands, Inc. and the Executive dated September 28, 2011, as amended to date and from time to time.

 

“QVC Shows” means direct-response
television shows airing on the QVC, Inc. shopping channel on which IML Products are featured and sold.

 

“Restricted Territories”
means the United States and the rest of the world.

 

“Retained Media Rights”
shall have the meaning ascribed to such term in the Purchase Agreement.

 

“Subsidiary” means, with
respect to any Person, any corporation, limited liability company, partnership, association, or business entity of which (i) if
a corporation, a majority of the total voting power of shares of stock entitled (without regard to the occurrence of any contingency)
to vote in the election of directors, managers, or trustees thereof is at the time owned or controlled, directly or indirectly,
by that Person or one or more of the other Subsidiaries of that Person or a combination thereof, or (ii) if a limited liability
company, partnership, association, or other business entity (other than a corporation), a majority of  partnership or
other similar ownership interest thereof is at the time owned or controlled, directly or indirectly, by that Person or one or more
Subsidiaries of that Person or a combination thereof.  For purposes hereof, a Person or Persons shall be deemed to have
a majority ownership interest in a limited liability company, partnership, association, or other business entity (other than a
corporation) if such Person or Persons shall be allocated a majority of limited liability company, partnership, association, or
other business entity gains or losses or shall be or control any managing director or general partner of such limited liability
company, partnership, association, or other business entity.  For purposes hereof, references to a “Subsidiary”
of any Person shall be given effect only at such times that such Person has one or more Subsidiaries, and, unless otherwise indicated,
the term “Subsidiary” refers to a Subsidiary of the Company.

 

“Termination Date” means
the effective date of the Executive’s termination of employment with the Company.

 

“TSC DRT Revenue” for a
calendar year means net royalty revenue for such calendar year, as determined in accordance with U.S. generally accepted accounting
principles, received by the Company from The Shopping Channel from sales of IML Products directly related to direct response television
shows airing on The Shopping Channel on which the Executive appeared during such calendar year.

 

    	16

    	 

    

 

2.2.Other Definitional Provisions.

 

(a)Section references contained in this
Agreement are references to sections in this Agreement, unless otherwise specified.  Each defined term used in this Agreement
has a comparable meaning when used in its plural or singular form.  Each gender-specific term used in this Agreement
has a comparable meaning whether used in a masculine, feminine or gender-neutral form.

 

(b)Whenever the term “including”
(whether or not that term is followed by the phrase “but not limited to” or “without limitation” or words
of similar effect) is used in this Agreement in connection with a listing of items within a particular classification, that listing
will be interpreted to be illustrative only and will not be interpreted as a limitation on, or an exclusive listing of, the items
within that classification.

 

ARTICLE
III

MISCELLANEOUS TERMS

 

3.1.Defense of Claims.  The
Executive agrees that, during the Employment Period, and for a period of six months after termination of the Executive’s
employment, upon request by the Company, the Executive shall reasonably cooperate with the Company in connection with any matters
the Executive worked on during his employment with the Company and any related transitional matters.  In addition, during
the Employment Period and thereafter, the Executive agrees to reasonably cooperate with the Company in the defense of any claims
or actions that may be made by or against the Company that affect the Executive’s prior areas of responsibility or involve
matters about which the Executive has knowledge, except if the Executive’s reasonable interests are adverse to the Company
in such claim or action and provided that after the Employment Period such level of cooperation shall be reasonable and shall take
due account of the Executive’s work and personal commitments. The Company agrees to promptly reimburse the Executive for
all of the Executive’s reasonable travel and other direct expenses incurred, or to be reasonably incurred, to comply with
the Executive’s obligations under this Section 3.1.

 

3.2.Nondisparagement.  The
Executive agrees to refrain from making any false or disparaging statements, in public or private, which is reasonably likely to
materially impair the reputation, goodwill or commercial interest of the Company.  The Company agrees to refrain from
making any false or disparaging statements, in public or private, which is reasonably likely to materially impair the reputation,
goodwill or commercial interest of the Executive.  Notwithstanding anything to the contrary contained herein, nothing
in this Agreement shall prohibit or restrict either party from, truthfully and in good faith: (i) making any disclosure of information
required by law; (ii) providing information to, or testifying or otherwise assisting in any investigation or proceeding brought
by, any federal regulatory or law enforcement agency or legislative body, any self-regulatory organization, or the Company’s
or the Executive’s designated legal, compliance or human resources officers; or (iii) filing, testifying, participating in
or otherwise assisting in a proceeding relating to an alleged violation of any federal, state or municipal law relating to fraud,
or any rule or regulation of the Securities and Exchange Commission or any self-regulatory organization.

 

    	17

    	 

    

 

3.3.Morals Clause.  Executive
shall not commit any act or do anything which might reasonably be considered: (i) to be immoral, deceptive, scandalous or obscene;
or (ii) to injure, tarnish, damage or otherwise negatively affect the reputation and goodwill associated with the Company or the
IM Brands.

 

3.4.Source of Payments.  All
payments provided under this Agreement, other than payments made pursuant to a plan which provides otherwise and except as otherwise
provided herein, shall be paid in cash from the general funds of the Company, and no special or separate fund shall be established,
and no other segregation of assets shall be made, to assure payment. The Executive shall have no right, title or interest whatsoever
in or to any investments which the Company or its Subsidiaries may make to aid the Company in meeting its obligations hereunder.
To the extent that any person acquires a right to receive payments from the Company hereunder, such right shall be no greater than
the right of an unsecured creditor of the Company.

 

3.5.Notices. Any notice provided
for in this Agreement must be in writing and must be either personally delivered, mailed by first class mail (postage prepaid and
return receipt requested), sent by reputable overnight courier service (charges prepaid) or sent by facsimile (with receipt confirmed)
to the recipient at the address or facsimile number indicated below:

 

To the Company:

 

475 Tenth Avenue

4th Floor

New York, New York 10018

 

With a copy (which shall not constitute notice) to:

 

Blank Rome

The Chrysler Building

405 Lexington Avenue

New York, NY 10174-0208

Attn:  Robert Mittman, Esquire

Facsimile: (212) 885-5557

 

To the Executive:

 

Isaac Mizrahi

475 Tenth Avenue, 4th Floor

New York, NY  10018

 

With a copy (which shall not constitute notice) to:

 

Robinson & Cole LLP

666 Third Avenue, 20th Floor

New York, NY  10017

Attention:  Eric J. Dale, Esq.

Facsimile: 212-451-2999

 

    	18

    	 

    

 

or such other address or to the attention of such other Person
as the recipient Party will have specified by prior written notice to the sending Party.  Any notice under this Agreement
will be deemed to have been given when so delivered or sent or, if mailed, five days after deposit in the U.S. mail.

 

3.6.Severability.  Subject
to the express provisions of Section 1.10 relating to certain specified changes, whenever possible, each provision of this
Agreement will be interpreted in such manner as to be effective and valid under applicable law, but if any provision of this Agreement
is held to be invalid, illegal or unenforceable in any respect under any applicable law or rule in any jurisdiction, such invalidity,
illegality or unenforceability will not affect any other provision or any other jurisdiction, but this Agreement will be reformed,
construed and enforced in such jurisdiction as if such invalid, illegal or unenforceable provision had never been contained herein.

 

3.7.Complete Agreement.  This
Agreement embodies the complete agreement and understanding among the Parties with regard to the subject matter hereof and supersedes
and preempts any prior understandings, agreements or representations by or among the Parties, written or oral, which may have related
to the subject matter hereof in any way.  To the extent that this Agreement provides greater benefits to the Executive
than available under the Company’s employee handbook or other corporate policies, then this Agreement shall prevail.

 

3.8.Counterparts.  This
Agreement may be executed in separate counterparts, each of which is deemed to be an original and all of which taken together constitute
one and the same agreement.

 

3.9.Assignment.  Without
the Executive’s consent, the Company may not assign its rights and obligations under this Agreement except (i) to a “Successor”
(as defined below) or (ii) to an entity that is formed and controlled by the Company or any of its Subsidiaries, provided that
in the case of (ii) the Company shall remain liable for all of its obligations hereunder.  This Agreement is personal
to the Executive, and the Executive shall not have the right to assign the Executive’s interest in this Agreement, any rights
under this Agreement or any duties imposed under this Agreement, nor shall the Executive have the right to pledge, hypothecate,
transfer, assign or otherwise encumber the Executive’s right to receive any form of compensation hereunder without the prior
written consent of the Board.  As used in this Section 3.9, “Successor” shall include any Person
that at any time, whether by purchase, merger or otherwise, directly or indirectly acquires all or substantially all of the assets
of, or ownership interests in, the Company and its Subsidiaries.

 

3.10.Successors and Assigns.  This
Agreement is intended to bind and inure to the benefit of and be enforceable by the Company, the Executive, and their respective
heirs, successors and permitted assigns.

 

3.11.Choice of Law.  This
Agreement and the performance of the parties hereunder shall be governed by the internal laws (and not the law of conflicts) of
the State of New York. Any claim or controversy arising out of or in connection with this Agreement, or the breach thereof, shall
be adjudicated exclusively by the Supreme Court, New York County, State of New York, or by a federal court sitting in Manhattan
in New York City, State of New York. The parties hereto agree to the personal jurisdiction of such courts and agree to accept process
by regular mail in connection with any such dispute.

 

    	19

    	 

    

 

3.12.Waiver of Jury Trial.  AS
A SPECIFICALLY BARGAINED FOR INDUCEMENT FOR EACH OF THE PARTIES HERETO TO ENTER INTO THIS AGREEMENT (AFTER HAVING THE OPPORTUNITY
TO CONSULT WITH COUNSEL), EACH PARTY HERETO EXPRESSLY WAIVES THE RIGHT TO TRIAL BY JURY IN ANY LAWSUIT OR PROCEEDING RELATING TO
OR ARISING IN ANY WAY FROM THIS AGREEMENT OR THE MATTERS CONTEMPLATED HEREBY.

 

3.13.Legal Fees and Court Costs.  In
the event that any action, suit or other proceeding in law or in equity is brought to enforce the provisions of this Agreement,
and such action results in the award of a judgment for money damages or in the granting of any injunction in favor of the Company,
all expenses (including reasonable attorneys' fees) of the Company in such action, suit or other proceeding shall be paid by the
Executive. In the event that any action, suit or other proceeding in law or in equity is brought to enforce the provisions of this
Agreement, and such action results in the award of a judgment for money damages or in the granting of any injunction in favor of
the Executive, all expenses (including reasonable attorneys' fees and travel expenses) of the Executive in such action, suit or
other proceeding shall be paid by the Company.

 

3.14.Remedies.  Subject
to the provisions of Section 3.1, each Party will be entitled to enforce its rights under this Agreement specifically, to
recover damages and costs caused by any breach of any provision of this Agreement and to exercise all other rights existing in
its favor.  Nothing herein shall prohibit any arbitrator or judicial authority from awarding attorneys’ fees or
costs to a prevailing Party in any arbitration or other proceeding to the extent that such arbitrator or authority may lawfully
do so.

 

3.15.Amendment and Waiver.  The
provisions of this Agreement may be amended or waived only with the prior written consent of the Company and the Executive, and
no course of conduct or failure or delay in enforcing the provisions of this Agreement will affect the validity, binding effect
or enforceability of this Agreement.

 

3.16.Third Party Beneficiaries.  This
Agreement will not confer any rights or remedies upon any Person other than the Parties and their respective successors and permitted
assigns and other than, in the event of the Executive’s death, his estate, to which all of Executive’s rights and remedies
set forth herein shall accrue

 

3.17.The Executive’s Representations.  The
Executive hereby represents and warrants to the Company that (a) the execution, delivery and performance of this Agreement by the
Executive do not and shall not conflict with, breach, violate or cause a default under any contract, agreement, instrument, order,
judgment or decree to which the Executive is a party or by which he is bound, (b) the Executive is not a party to or bound by any
employment agreement, noncompete agreement or confidentiality agreement with any other Person (or other agreement with any other
person containing a restriction on the Executive’s right to do business or obligating him to do business with any other Person
on a priority or preferential basis), (c) upon the execution and delivery of this Agreement by the Company, this Agreement shall
be the valid and binding obligation of the Executive, enforceable in accordance with its terms and (d) upon the execution and delivery
of this Agreement by the Company, Executive shall not be in violation of clause (i) set forth in the definition of Cause and shall
not be disabled.

 

    	20

    	 

    

 

3.18.Amendment to Comply with Section
409A of the Code.  To the extent that this Agreement or any part thereof is deemed to be a nonqualified deferred
compensation plan subject to Section 409A of the Code and the Treasury Regulations (including proposed regulations) and guidance
promulgated thereunder, (a) the provisions of this Agreement shall be interpreted in a manner to the maximum extent possible to
comply in good faith with Code Section 409A and (b) the parties hereto agree to amend this Agreement for purposes of complying
with Code Section 409A promptly upon issuance of any Treasury regulations or guidance thereunder, provided, that any such
amendment shall not materially change the present value of the benefits payable to the Executive hereunder or otherwise materially
adversely affect the Executive, the Company, or any affiliate of the Company, without the consent of such party.

 

[SIGNATURE PAGE FOLLOWS]

 

 

    	21

    	 

    

 

IN WITNESS WHEREOF, the Parties have executed
this Employment Agreement as of the date first written above.

 

	 	XCEL BRANDS, INC.
	 	 	 
	 	By:	/s/ Seth Burroughs
	 	Name:	Seth Burroughs
	 	Title:	Executive Vice President
	 	 	
         
	 	/s/ Isaac Mizrahi
	 	Isaac Mizrahi

 

 

 

[Signature Page to Employment Agreement]

    	22

    	 

    

 

EXHIBIT
A

 

IML
PRODUCT MEDIA AND PRESS GUIDELINES

 

 

 

Guidelines

 

During Executive’s employment with the Company, responses
to all media inquiries by Executive will be limited to statements regarding the fact of his employment by the Company and the title
of his position, and the Talking Points below. Any other questions will be directed to the Company to address. Executive shall
not make any statements to the Media and Press that (i) disparage the Company, the Isaac Mizrahi Business (including products sold
as part of the Isaac Mizrahi Business) or licensees and other partners of the Company, or (ii) substantially deviate from the Talking
Points herein.

 

Talking Points

 

		·	Xcel acquired the Isaac Mizrahi brand in September 2011.

 

		·	Per company policy, all requests for comments or statements should be made to Xcel’s public relations department.

 

		·	No comment.

 

 

    	 

    	 

    

 

EXHIBIT
B

 

FORM
OF RELEASE

 

I, Isaac Mizrahi, on behalf of myself and
my heirs, successors and assigns, in consideration of the performance by Xcel Brands, Inc., a Delaware Corporation (together with
its Subsidiaries, the “Company”), of its material obligations under the Employment Agreement, dated as of May
19, 2011 (the “Agreement”), do hereby release and forever discharge as of the date hereof the Company, its Affiliates,
each such Person’s respective successors and assigns and each of the foregoing Persons’ respective present and former
directors, officers, partners, stockholders, members, managers, agents, representatives, employees (and each such Person’s
respective successors and assigns) (collectively, the “Released Parties”) to the extent provided below.

 

1.I understand that any payments or benefits paid or granted
to me under Section 1.4(b) of the Agreement represent, in part, consideration for signing this General Release and are not
salary, wages or benefits to which I was already entitled.  I understand and agree that I will not receive the payments
and benefits specified in Section 1.4(b) of the Agreement unless I execute this General Release and do not revoke this General
Release within the time period permitted hereafter or breach this General Release.  This General Release shall be deemed
rescinded in the event that the Company does not make such payments and make available such benefits in accordance with Section
1.4(b) of the Agreement.

 

2.I knowingly and voluntarily release and forever discharge
the Company and the other Released Parties from any and all claims, controversies, actions, causes of action, cross-claims, counter-claims,
demands, debts, compensatory damages, liquidated damages, punitive or exemplary damages, other damages, claims for costs and attorneys’
fees, or liabilities whatsoever in law and in equity, both past and present (through the date of this General Release), whether
under the laws of the United States or another jurisdiction and whether known or unknown, suspected or claimed against the Company
or any of the Released Parties which I, my spouse, or any of my heirs, executors, administrators or assigns, have or may have,
solely to the extent that such claims, controversies, actions, causes of action, cross-claims, counter-claims, demands, debts,
compensatory damages, liquidated damages, punitive or exemplary damages, other damages, claims for costs and attorneys’ fees,
or liabilities arise out of or are connected with my employment with, or my separation from, the Company (including, but not limited
to, any allegation, claim or violation, arising under:  Title VII of the Civil Rights Act of 1964, as amended; the Civil
Rights Act of 1991; the Age Discrimination in Employment Act of 1967, as amended (including the Older Workers Benefit Protection
Act); the Equal Pay Act of 1963, as amended; the Americans with Disabilities Act of 1990; the Family and Medical Leave Act of 1993;
the Civil Rights Act of 1866, as amended; the Worker Adjustment Retraining and Notification Act; the Employee Retirement Income
Security Act of 1974; any applicable Executive Order Programs; the Fair Labor Standards Act; or their state or local counterparts;
or under any other federal, state or local civil or human rights law, or under any other local, state, or federal law, regulation
or ordinance; or under any public policy, contract or tort, or under common law; or arising under any policies, practices or procedures
of the Company; or any claim for wrongful discharge, breach of contract, infliction of emotional distress, or defamation; or any
claim for costs, fees, or other expenses, including attorneys’ fees incurred in these matters) (all of the foregoing collectively
referred to herein as the “Claims”); provided, however, that nothing contained in this General
Release shall apply to, or release the Company from, (i) any obligation of the Company contained in the Agreement to be performed
after the date hereof and amounts claimed under the Agreement pursuant to a good faith and pending dispute as of the date hereof,
(ii) any vested or accrued benefits pursuant to any employee benefit plan, program or policy of the Company, (iii) any rights to
indemnification from the Company under the Company’s Certificate of Incorporation, Bylaws, any indemnification agreement
and/or applicable law; and (iv) any right to insurance proceeds related to my position as an officer and/or director of the Company
or any of its Affiliates; (v) any rights as a stockholder of the Company of any Affiliates of, or successor to, the Company; (vi)
any rights under the Asset Purchase Agreement dated May 19, 2011, by and among the Company, IM Ready-Made, LLC and certain other
parties thereto (as amended, the “Purchase Agreement”) and any Related Agreement (as defined in the Purchase
Agreement).

 

    	 

    	 

    

 

3.I represent that I have made no assignment or transfer
of any right, claim, demand, cause of action, or other matter covered by paragraph 2 above.

 

4.I agree that this General Release does not waive or release
any rights or claims that I may have under the Age Discrimination in Employment Act of 1967 which arise after the date I execute
this General Release.  I acknowledge and agree that my separation from employment with the Company in compliance with
the terms of the Agreement shall not serve as the basis for any claim or action (including, without limitation, any claim under
the Age Discrimination in Employment Act of 1967).

 

5.In signing this General Release, I acknowledge and intend
that it shall be effective as a bar to each and every one of the Claims hereinabove mentioned or implied. I expressly consent that
this General Release shall be given full force and effect according to each and all of its express terms and provisions, including
those relating to unknown and unsuspected Claims (notwithstanding any state statute that expressly limits the effectiveness of
a general release of unknown, unsuspected and unanticipated Claims), if any, as well as those relating to any other Claims hereinabove
mentioned or implied. I acknowledge and agree that this waiver is an essential and material term of this General Release and that
without such waiver the Company would not have agreed to the terms of the Agreement.  I covenant that I shall not directly
or indirectly, commence, maintain or prosecute or sue any of the Released Persons either affirmatively or by way of cross-complaint,
indemnity claim, defense or counterclaim or in any other manner or at all on any Claim covered by this General Release.  I
further agree that in the event I should bring a Claim seeking damages against the Company, or in the event I should seek to recover
against the Company in any Claim brought by a governmental agency on my behalf, this General Release shall serve as a complete
defense to such Claims. I further agree that I am not aware of any pending charge or complaint of the type described in paragraph
2 as of the execution of this General Release.

 

6.I agree that neither this General Release, nor the furnishing
of the consideration for this General Release, shall be deemed or construed at any time to be an admission by the Company, any
Released Party or myself of any improper or unlawful conduct.

 

    	 

    	 

    

 

7.I agree that this General Release is confidential and
agree not to disclose any information regarding the terms of this General Release, except to my immediate family and any tax, legal
or other counsel I have consulted regarding the meaning or effect hereof or as required by law, and I will instruct each of the
foregoing not to disclose the same to anyone.

 

8.Any non-disclosure provision in this General Release does
not prohibit or restrict me (or my attorney) from responding to any inquiry about this General Release or its underlying facts
and circumstances by the Securities and Exchange Commission, the National Association of Securities Dealers, Inc. or any other
self-regulatory organization or governmental entity.

 

9.Without limitation of any provision of the Agreement,
I hereby expressly re-affirm my obligations under Sections 1.5, 1.6, 1.8, 1.10 and 3.1.

 

10.Whenever possible, each provision of this General Release
shall be interpreted in such manner as to be effective and valid under applicable law, but if any provision of this General Release
is held to be invalid, illegal or unenforceable in any respect under any applicable law or rule in any jurisdiction, such invalidity,
illegality or unenforceability shall not affect any other provision or any other jurisdiction, but this General Release shall be
reformed, construed and enforced in such jurisdiction as if such invalid, illegal or unenforceable provision had never been contained
herein.

 

“Affiliate” means, with
respect to any Person, any Person that controls, is controlled by or is under common control with such Person or an Affiliate of
such Person.

 

“Person” means an individual,
a partnership, a limited liability company, a corporation, an association, a joint stock company, a trust, a joint venture, an
unincorporated organization, investment fund, any other business entity and a governmental entity or any department, agency or
political subdivision thereof.

 

“Subsidiary” means, with
respect to any Person, any corporation, limited liability company, partnership, association, or business entity of which (i) if
a corporation, a majority of the total voting power of shares of stock entitled (without regard to the occurrence of any contingency)
to vote in the election of directors, managers, or trustees thereof is at the time owned or controlled, directly or indirectly,
by that Person or one or more of the other Subsidiaries of that Person or a combination thereof, or (ii) if a limited liability
company, partnership, association, or other business entity (other than a corporation), a majority of  partnership or
other similar ownership interest thereof is at the time owned or controlled, directly or indirectly, by that Person or one or more
Subsidiaries of that Person or a combination thereof.  For purposes hereof, a Person or Persons shall be deemed to have
a majority ownership interest in a limited liability company, partnership, association, or other business entity (other than a
corporation) if such Person or Persons shall be allocated a majority of limited liability company, partnership, association, or
other business entity gains or losses or shall be or control any managing director or general partner of such limited liability
company, partnership, association, or other business entity.

 

    	 

    	 

    

 

BY SIGNING THIS GENERAL RELEASE, I REPRESENT AND AGREE THAT:

 

(a)I HAVE READ IT
CAREFULLY;

 

(b)I UNDERSTAND
ALL OF ITS TERMS AND KNOW THAT I AM GIVING UP IMPORTANT RIGHTS, INCLUDING BUT NOT LIMITED TO, RIGHTS UNDER THE AGE DISCRIMINATION
IN EMPLOYMENT ACT OF 1967, AS AMENDED, TITLE VII OF THE CIVIL RIGHTS ACT OF 1964, AS AMENDED; THE EQUAL PAY ACT OF 1963, THE AMERICANS
WITH DISABILITIES ACT OF 1990; AND THE EMPLOYEE RETIREMENT INCOME SECURITY ACT OF 1974, AS AMENDED;

 

(c)I VOLUNTARILY
CONSENT TO EVERYTHING IN IT;

 

(d)I HAVE BEEN ADVISED
TO CONSULT WITH AN ATTORNEY (VIA THE AGREEMENT AND THIS RELEASE) BEFORE EXECUTING IT AND I HAVE DONE SO OR, AFTER CAREFUL READING
AND CONSIDERATION, I HAVE CHOSEN NOT TO DO SO OF MY OWN VOLITION;

 

(e)I HAVE HAD AT
LEAST 21 DAYS FROM THE DATE OF MY RECEIPT OF THIS RELEASE SUBSTANTIALLY IN ITS FINAL FORM ON _______________ __, _____ TO CONSIDER
IT AND THE CHANGES MADE SINCE THE _______________ __, _____ VERSION OF THIS RELEASE ARE NOT MATERIAL AND WILL NOT RESTART THE REQUIRED
21-DAY PERIOD;

 

(f)THE CHANGES TO
THE AGREEMENT SINCE _______________ ___, _____ EITHER ARE NOT MATERIAL OR WERE MADE AT MY REQUEST.

 

(g)I UNDERSTAND
THAT I HAVE SEVEN DAYS AFTER THE EXECUTION OF THIS RELEASE TO REVOKE IT AND THAT THIS RELEASE SHALL NOT BECOME EFFECTIVE OR ENFORCEABLE
UNTIL THE EIGHTH DAY FOLLOWING EXECUTION OF THE AGREEMENT;

 

(h)I HAVE SIGNED
THIS GENERAL RELEASE KNOWINGLY AND VOLUNTARILY AND WITH THE ADVICE OF ANY COUNSEL RETAINED TO ADVISE ME WITH RESPECT TO IT; AND

 

(i)I AGREE THAT
THE PROVISIONS OF THIS GENERAL RELEASE MAY NOT BE AMENDED, WAIVED, CHANGED OR MODIFIED EXCEPT BY AN INSTRUMENT IN WRITING SIGNED
BY AN AUTHORIZED REPRESENTATIVE OF THE COMPANY AND BY ME.

 

	DATE: ___________ __, ______	/s/ Isaac Mizrahi       
	 	Isaac Mizrahi

 

Acknowledged and agreed as of the date first written above:

 

	Xcel Brands, Inc.	 
	 	 	 
	By:	/s/ Seth Burroughs 	 
	 	Name:	Seth Burroughs	 
	 	Title:	Executive Vice President

Source: [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00224-of-00352.parquet"}, [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00224-of-00352.parquet"}]]