Amendment No. 3 to Loan and Security Agreement, dated November 15, 2021

Exhibit 10.1

AMENDMENT NO. 3
to
LOAN AND SECURITY AGREEMENT

THIS AMENDMENT NO. 3 TO LOAN AND SECURITY AGREEMENT (this “Amendment”) is entered into as of November 15, 2021, by and among XCEL BRANDS, INC., a Delaware corporation (“Borrower”), each other signatory hereto that is a Credit Party under the Loan Agreement (as hereinafter defined), the financial institutions from time to time party to the Loan Agreement (collectively, “Lenders” and individually, each a “Lender”), BANK HAPOALIM B.M., (“BHI”) as administrative agent and collateral agent for Lenders (BHI in such capacity together with its successors and assigns in such capacity, “Administrative Agent”) and FEAC AGENT, LLC (“FEAC”), as co-collateral agent (FEAC in such capacity together with its successors and assigns in such capacity, “Co-Collateral Agent”).

BACKGROUND

Borrower, IM Brands, LLC (“IM Brands”), JR Licensing, LLC, H Licensing, LLC, C Wonder Licensing, LLC, Xcel Design Group, LLC, Judith Ripka Fine Jewelry, LLC, H Heritage Licensing, LLC, Xcel-CT MFG, LLC and Gold Licensing, LLC (other than Borrower, collectively, “Guarantors”), Lenders and Agents are parties to a Loan and Security Agreement dated as of April 12, 2021 (as amended, restated, supplemented or otherwise modified from time to time, the “Loan Agreement”) pursuant to which Lenders made term loans to Borrower secured by a Lien on substantially all of the assets of Borrower.  Guarantors have guaranteed the payment and performance of Borrower’s obligations to Lenders and Agents under the Loan Agreement which guarantee obligations are secured by a Lien on substantially all of the assets of Guarantors.

Borrower has requested that Lenders waive compliance with certain financial covenants, and make certain amendments to the Loan Agreement.  Lenders and Agents have agreed to provide such waiver and amend the Loan Agreement on the terms and conditions set forth herein.

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

1.Definitions.  All capitalized terms not otherwise defined herein shall have the meanings given to them in the Loan Agreement.

2.Amendment to Loan Agreement.  Subject to the satisfaction of the conditions set forth in Section 3 below, the Loan Agreement is hereby amended replacing Schedule II (Financial Covenants) with Schedule II attached to this Amendment.

3.Conditions of Effectiveness.  This Amendment shall become effective upon Agents’ receipt of this Amendment duly executed by each Credit Party and each Lender.

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4.Representations and Warranties.  Each Credit Party hereby represents and warrants as follows:

(a)This Amendment constitutes the legal, valid and binding obligation of such Credit Party and is enforceable against such Credit Party in accordance with its terms, except to the extent that such enforceability may be limited by applicable bankruptcy, insolvency, reorganization, moratorium or other similar laws affecting the enforcement of creditors’ rights generally or limiting the right of specific performance.

(b)Upon the effectiveness of this Amendment, all representations and warranties of such Credit Party contained in the Loan Documents to which it is a party continue to be true and correct in all material respects as of the date hereof, as if repeated as of the date hereof, except for such representations and warranties which, by their terms, are expressly made only as of a previous date.

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

(d)No Credit Party has any defense, counterclaim or offset with respect to any of the Loan Documents.

5.Effect on the Loan Documents.

(a)Except as specifically set forth herein, the Loan Documents shall remain in full force and effect, and are hereby ratified and confirmed by each Credit Party a party thereto.

(b)Except  as specifically set forth herein, the execution, delivery and effectiveness of this Amendment shall not operate as a waiver of any right, power or remedy of Agents or any Lender nor constitute a waiver of any provision of any Loan Document.

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

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

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

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

XCEL BRANDS, INC.

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

IM BRANDS, LLC
JR LICENSING, LLC
H LICENSING, LLC
C WONDER LICENSING, LLC
XCEL DESIGN GROUP, LLC
JUDITH RIPKA FINE JEWELRY, LLC
H HERITAGE LICENSING, LLC
XCEL-CT MFG, LLC
GOLD LICENSING, LLC

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

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BANK HAPOALIM B.M., as Administrative Agent

By:​ ​ /s/ Barry S. Renow​ ​
Name: Barry S. Renow
Title: FVP

By:​ ​ /s/ Carl Giordano​ ​
Name: Carl Giordano
Title: SVP

[additional signature pages follow]

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FEAC AGENT, LLC, as Co-Collateral Agent.

By:​ ​ /s/ Michelle Handy​ ​
Name: Michelle Handy
Title: Managing Director

[additional signature pages follow]

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BANK HAPOALIM B.M., as a Lender

By:​ ​ /s/ Carl Giordano​ ​
Name: Carl Giordano
Title: SVP

By:​ ​ /s/ Barry S. Renow​ ​
Name: Barry S. Renow
Title: FVP

[additional signature pages follow]

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FIRST EAGLE ALTERNATIVE CAPITAL BDC, INC., as a Lender

By:​ ​ /s/ Michelle Handy​ ​
Name: Michelle Handy
Title: Managing Director

FIRST EAGLE DIRECT LENDING FUND IV, LLC, as a Lender

By: /s/ Michelle Handy​ ​
Name: Michelle Handy
Title: Managing Director

FIRST EAGLE DIRECT LENDING IV CO-INVEST, LLC, as a Lender

By: /s/ Michelle Handy​ ​
Name: Michelle Handy
Title: Managing Director

FIRST EAGLE DIRECT LENDING LEVERED FUND IV SPV, LLC, as a Lender

By:​ ​ /s/ Michelle Handy​ ​
Name: Michelle Handy
Title: Managing Director

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SCHEDULE II

FINANCIAL COVENANTS

1.Minimum EBITDA.  EBITDA of Borrower and the Included Subsidiaries on a consolidated basis shall not be less than the amounts set forth below at the end of the applicable fiscal period set forth below:

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2.Minimum Liquid Assets.  Liquid Assets of Borrower and the Included Subsidiaries on a consolidated basis shall be at least $4,000,000 at all times.

3.Fixed Charge Coverage Ratio.  The Fixed Charge Coverage Ratio of Borrower and the Included Subsidiaries on a consolidated basis for (a) the nine month period ending on December 31, 2021 shall not be less than 1.00 to 1.00, (b) the twelve Fiscal Month period ending March 31, 2022 shall not be less than 1.00 to 1.00 and (c) the twelve Fiscal Month period ending at the end of each Fiscal Quarter commencing with the Fiscal Quarter ending June 30, 2022 shall not be less than 1.25 to 1.00.

4.Maximum Leverage Ratio.  The Leverage Ratio of Borrower and the Included Subsidiaries on a consolidated basis for (a) the twelve Fiscal Month period ending at the end of each Fiscal Quarter shall not exceed (a) 6.75 to 1.00 for the Fiscal Quarter ending December 31, 2021, (b) 5.30 to 1.00 for each Fiscal Quarter ending March 31, 2022 and (c) 4.00 to 1.00 for each Fiscal Quarter ending on and after June 30, 2022.

5.Loan To Value Ratio.  At no time shall the Loan to Value Ratio exceed 50%.

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