-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, K6RH/ELLaJ58fNbbb2l5sGMd3LHbzm1aR70kP/Nh4KxwBZjtExaTi26fUHQXXY9L DM2Ci8fF3go2jq0DW5MIHw== 0000857737-05-000072.txt : 20050922 0000857737-05-000072.hdr.sgml : 20050922 20050922170920 ACCESSION NUMBER: 0000857737-05-000072 CONFORMED SUBMISSION TYPE: 8-K PUBLIC DOCUMENT COUNT: 4 CONFORMED PERIOD OF REPORT: 20050916 ITEM INFORMATION: Entry into a Material Definitive Agreement ITEM INFORMATION: Completion of Acquisition or Disposition of Assets ITEM INFORMATION: Creation of a Direct Financial Obligation or an Obligation under an Off-Balance Sheet Arrangement of a Registrant ITEM INFORMATION: Unregistered Sales of Equity Securities ITEM INFORMATION: Financial Statements and Exhibits FILED AS OF DATE: 20050922 DATE AS OF CHANGE: 20050922 FILER: COMPANY DATA: COMPANY CONFORMED NAME: ICONIX BRAND GROUP, INC. CENTRAL INDEX KEY: 0000857737 STANDARD INDUSTRIAL CLASSIFICATION: FOOTWEAR, (NO RUBBER) [3140] IRS NUMBER: 112481903 STATE OF INCORPORATION: DE FISCAL YEAR END: 0131 FILING VALUES: FORM TYPE: 8-K SEC ACT: 1934 Act SEC FILE NUMBER: 001-10593 FILM NUMBER: 051098624 BUSINESS ADDRESS: STREET 1: 215 W. 40TH STREET, 6TH FL. CITY: NEW YORK STATE: NY ZIP: 10018 BUSINESS PHONE: 212-730-0030 MAIL ADDRESS: STREET 1: 215 W. 40TH STREET, 6TH FL. CITY: NEW YORK STATE: NY ZIP: 10018 FORMER COMPANY: FORMER CONFORMED NAME: CANDIES INC DATE OF NAME CHANGE: 19930604 FORMER COMPANY: FORMER CONFORMED NAME: MILLFELD TRADING CO INC DATE OF NAME CHANGE: 19920703 8-K 1 icon_8k092205.txt ACQUISITION AND ASSET PURCHASE AGREEMENT UNITED STATES SECURITIES AND EXCHANGE COMMISSION WASHINGTON, DC 20549 FORM 8-K CURRENT REPORT Pursuant to Section 13 or 15 (d) of the Securities Exchange Act of 1934 Date of Report (Date of earliest event reported): September 16, 2005 ------------------ ICONIX BRAND GROUP, INC. - -------------------------------------------------------------------------------- (Exact name of registrant as specified in its charter) Delaware 0-10593 11-2481093 - -------------------------------------------------------------------------------- (State or Other (Commission (IRS Employer Jurisdiction of File Number) Identification No.) Incorporation) 215 West 40th Street, New York, NY 10018 - -------------------------------------------------------------------------------- (Address of Principal Executive Offices) (Zip Code) Registrant's telephone number, including area code (212) 730-0030 -------------- Not Applicable - -------------------------------------------------------------------------------- (Former Name or Former Address, if Changed Since Last Report) Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions (see General Instruction A.2. below): |_| Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425) |_| Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12) |_| Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b)) |_| Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c)) Item 1.01 Entry into a Definitive Material Agreement Item 2.01 Completion of Acquisition or Disposition of Assets Item 2.03 Creation of a Direct Financial Obligation or an Obligation under an Off-Balance Sheet Arrangement of a Registrant Item 3.02 Unregistered Sales of Equity Securities On September 16, 2005 (the "Closing Date"), Iconix Brand Group, Inc., a Delaware Corporation ("Registrant"), entered into an Asset Purchase Agreement (the "Purchase Agreement") by and among the Registrant, Rampage Licensing, LLC, a California limited liability company (the "Seller"), Rampage Clothing Company, a California corporation, Rampage.com, LLC, a Delaware limited liability company, Larry Hansel, Bridgette Hansel Andrews, Michelle Hansel, Paul Buxbaum and David Ellis. Pursuant to the terms of the Purchase Agreement, the Registrant purchased from the Seller substantially all of the Seller's assets (the "Assets"), including all of the trademarks and copyrights relating to the RAMPAGE(R) brand. The purchase price for the Assets was paid by the following consideration: (i) $25,750,000 in cash, which was funded from a portion of the proceeds of the Notes (as defined below) issued by IP Holdings (as defined below), and (ii) the issuance to the designees of the Seller of 2,171,336 restricted shares of the Registrant's common stock, $0.001 par value per share ("Common Stock") which was valued at approximately $20,150,000 (the "Shares"). The Shares were issued without registration under the Securities Act of 1933, as amended (the "Act"), in reliance upon the exemptions from registration provided under 4(2) of the Act and Regulation D promulgated thereunder. The issuance of the Shares did not involve any public offering; the Registrant made no solicitation in connection with the issuance of the Shares other than communications with the Seller; the Registrant obtained representations from the Seller's designees regarding their investment intent, experience and sophistication; the Seller's designees either received or had access to adequate information about the Registrant in order to make informed investment decisions; the Registrant reasonably believed that the Seller's designees were sophisticated within the meaning of Section 4(2) of the Act; and the certificates representing the Shares were issued with restricted securities legends. In addition, the Registrant agreed to file a registration statement (the "Registration Statement") within 30 days of the Closing Date covering the resale of the Shares, and to use its best efforts to cause the Registration Statement to be declared effective by the Securities and Exchange Commission as soon as practicable following the filing thereof. The financing for the purchase of the Assets was accomplished through the private placement by IP Holdings LLC ("IP Holdings"), a special purpose entity in which the Registrant owns directly a 36.5% membership interest and owns indirectly through subsidiaries the remaining membership interests, of $103,000,000 aggregate principal amount of IP Holdings Asset-Backed Notes (the "Notes"). The issuance of the Notes raised $40,000,000 in new financing for IP Holdings, and approximately $63,000,000 principal amount of the Notes was exchanged for notes previously issued by IP Holdings. Of the $40,000,000 in new financing, $12,000,000 was deposited in an escrow account for the benefit of the holders of the Notes, to be used by IP Holdings either for the purchase of additional intellectual property assets from the Registrant (or a subsidiary or affiliate of the Registrant), if and when such assets are purchased by the Registrant, its subsidiary or affiliate, or, to the extent such purchase does not occur prior to November 15, 2005, to redeem a portion of the Notes outstanding up to the amount on deposit in such escrow account. In consideration for the simultaneous purchase of the Assets, by IP Holdings from the Registrant, IP Holdings paid to the Registrant $25,750,000 and increased the Registrant's capital account in IP Holdings in an amount equal to the remaining value of the Assets. The Notes are secured by the Assets, as well as by other intellectual property assets owned by IP Holdings. The Notes were issued pursuant to a Third Amended and Restated Indenture, dated as of the Closing Date, between IP Holdings and Wilmington Trust Company, as trustee (the "Indenture"), and were purchased by Mica Funding, LLC pursuant to a Note Purchase Agreement dated as of the Closing Date among the Registrant, IP Holdings and Mica Funding, LLC (the "Note Purchase Agreement"). The payment of the principal of and interest on the Notes will be made from amounts received by IP Holdings under license agreements with various licensees of the Assets and IP Holdings' other intellectual property assets. The Registrant is not obligated, and the Registrant's assets are not available, to pay any amounts with respect to the Notes if amounts received under such license agreements are insufficient to make such payments. IP Holdings' assets are not available to pay any obligations of the Registrant. The description of the acquisition described in this report does not purport to be complete and is qualified in its entirety by reference to the Purchase Agreement, which is filed as Exhibit 2.1 to this report and incorporated herein by reference. The Purchase Agreement has been included to provide investors and security holders with information regarding its terms. It is not intended to provide any other factual information about the Registrant. The Purchase Agreement, the Indenture and Note Purchase Agreement each contain representations and warranties the parties thereto made to and solely for the benefit of the other parties thereto. Accordingly, investors and security holders should not rely on the representations and warranties as characterizations of the actual state of facts, since they were only made as of the date of such agreements. In addition, the Purchase Agreement is modified by the underlying disclosure schedules. Moreover, information concerning the subject matter of the representations and warranties may change after the date of such agreements, which subsequent information may or may not be fully reflected in the Registrant's public disclosures. Item 9.01 Financial Statements and Exhibits. (a) Financial Statements of the Business Acquired. It is impracticable to provide the required financial statements of the Seller at this time. The required financial statements will be filed under cover of Form 8-K/A within 71 calendar days of the date this Form 8-K was required to be filed. (b) Pro Forma Financial Information. It is impracticable to provide the required pro forma financial information as a result of the acquisition at this time. The required pro forma financial information will be filed under cover of Form 8-K/A within 71 calendar days of the date this Form 8-K was required to be filed. (c) Exhibits. Exhibit 2.1* - Asset Purchase Agreement dated September 16, 2005 by and among the Registrant, Rampage Licensing LLC, Rampage.com, LLC, Rampage Clothing Company, Larry Hansel, Bridgette Hansel Andrews, Michelle Hansel, Paul Buxbaum and David Ellis. Exhibit 4.1 - Third Amended and Restated Indenture dated as of September 1, 2005 by and among IP Holdings LLC, as issuer, and Wilmington Trust Company, as Trustee. Exhibit 99.1 - Note Purchase Agreement by and among IP Holdings LLC, Iconix Brand Group, Inc. and Mica Funding, LLC, dated September 16, 2005. *The Registrant has omitted certain schedules and exhibits in accordance with Item 601(b)(2) of Regulation S-K and shall furnish the omitted schedules and exhibits to the Commission upon request. SIGNATURES Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized. ICONIX BRAND GROUP, INC. (Registrant) By: /s/Deborah Sorell Stehr ----------------------------------------- Deborah Sorell Stehr Senior Vice President and General Counsel Date: September 22, 2005 EX-2.1 2 ex2_1.txt ASSET PURCHASE AGREEMENT Exhibit 2.1 ASSET PURCHASE AGREEMENT DATED AS OF SEPTEMBER 16, 2005 AMONG ICONIX BRAND GROUP, INC., (THE "BUYER"), RAMPAGE LICENSING, LLC (THE "SELLER"), RAMPAGE CLOTHING COMPANY ("RAMPAGE CLOTHING"), RAMPAGE.COM, LLC ("RAMPAGE.COM") AND EACH OF LARRY HANSEL BRIDGETTE HANSEL ANDREWS MICHELLE HANSEL PAUL BUXBAUM DAVID ELLIS (COLLECTIVELY, THE "PRINCIPALS"). TABLE OF CONTENTS
Page 1. Certain Definitions......................................................................................3 2. Sale and Purchase of Assets.............................................................................20 2.1 Assets.........................................................................................20 2.2 Excluded Assets................................................................................22 2.3 Assumption of Certain Liabilities..............................................................23 2.4 Non-Assumption of Liabilities..................................................................24 2.5 Delivery of Certain Assets.....................................................................24 3. Closing; Purchase Price.................................................................................25 3.1 Closing........................................................................................25 3.2 Purchase Price.................................................................................26 3.3 Purchase Price Allocation......................................................................27 3.4 Purchase Price Adjustment......................................................................27 4. Representations, Warranties and Covenants of Seller, Rampage Clothing, Rampage.com and Larry Hansel............................................................................28 4.1 Due Organization and Qualification; Subsidiaries...............................................29 4.2 Capitalization; Options........................................................................30 4.3 Authority to Execute and Perform Agreement.....................................................31 4.4 Financial Statements...........................................................................33 4.5 No Material Adverse Change.....................................................................35 4.6 Tax Matters....................................................................................35 4.7 Compliance with Laws...........................................................................35 4.8 Permits........................................................................................36 4.9 No Breach......................................................................................37 4.10 Consents and Approvals.........................................................................39 4.11 Judgments and Proceedings......................................................................39 4.12 Employee Relations.............................................................................41 4.13 Contracts......................................................................................41 4.14 Real Property..................................................................................43 4.15 Books of Account and Reports...................................................................43 4.16 Tangible Property..............................................................................43 4.17 Intangibles....................................................................................44 4.18 Title..........................................................................................47 4.19 Indebtedness...................................................................................48 4.20 Undisclosed Liabilities........................................................................48 4.21 Suppliers, Customers and Licensees.............................................................49 4.22 Employee Benefit Plans.........................................................................49 4.23 Insurance......................................................................................50 4.24 Software.......................................................................................51 4.25 Ownership of Assets............................................................................52 4.26 No Broker......................................................................................53 4.27 Full Disclosure................................................................................53 4.28 Related Party Transactions.....................................................................54 5. Representations and Warranties of Seller and Principals.................................................54 i 5.1 Enforceable Agreement..........................................................................54 5.2 Investment Matters.............................................................................55 6. Representations and Warranties of Buyer.................................................................57 6.1 Subsidiaries...................................................................................57 6.2 Due Incorporation and Qualification............................................................58 6.3 Authority to Execute and Perform Agreement.....................................................59 6.4 No Breach......................................................................................60 6.5 No Broker......................................................................................61 6.6 Capitalization.................................................................................62 6.7 Tax Matters....................................................................................62 6.8 Issuance of Buyer's Stock......................................................................63 6.9 Filings, Consents and Approvals................................................................64 6.10 Regulatory Compliance..........................................................................64 6.11 No Buyer Material Adverse Change...............................................................66 6.12 Internal Accounting Controls...................................................................67 6.13 Listing and Maintenance Requirements...........................................................67 6.14 Compliance with Laws...........................................................................68 6.15 Investment Company.............................................................................69 6.16 Application of Takeover Protections............................................................69 7. Deliveries by Seller, Rampage Clothing and Principals...................................................70 8. Deliveries by Buyer.....................................................................................74 9. Interpretation and Survival of Representations and Warranties...........................................75 10. Certain Post-Closing Obligations........................................................................78 10.1 Voting Restrictions............................................................................78 10.2 Restrictions on Sale of Shares.................................................................80 10.3 Automatic Registration.........................................................................82 10.4 Form D.........................................................................................97 10.5 Tax Returns....................................................................................97 10.6 Cooperation on Tax Matters.....................................................................97 10.7 Assistance with Audits.........................................................................98 10.8 Limited License................................................................................99 11. Indemnification.........................................................................................99 11.1 Obligation of Seller, Rampage Clothing and Principals to Indemnify.............................99 11.2 Limitation as to the Seller's, Rampage Clothing's, Rampage.com's and Principals' Indemnification Obligations...................................................101 11.3 Obligation of Buyer to Indemnify..............................................................104 11.4 Limitation as to the Buyer's Indemnification Obligations......................................106 11.5 Limitation as to Maximum Aggregate Claims.....................................................107 11.6 Third Party Claims............................................................................108 11.7 Sole and Exclusive Remedy.....................................................................110 12. Assistance.............................................................................................111 13. Expenses...............................................................................................112 14. Further Assurances.....................................................................................112 15. Non-compete............................................................................................113 ii 16. Miscellaneous..........................................................................................118 16.1 Publicity.....................................................................................118 16.2 Notices.......................................................................................119 16.3 Entire Agreement..............................................................................127 16.4 Waivers and Amendments........................................................................127 16.5 Binding Agreement.............................................................................129 16.6 Governing Law.................................................................................129 16.7 Assignment....................................................................................129 16.8 Variations in Pronouns........................................................................130 16.9 Severability..................................................................................130 16.10 Counterparts..................................................................................130 16.11 Exhibits and Schedules........................................................................130 16.12 Headings......................................................................................131 16.13 Consent to Jurisdiction and Service of Process................................................131
iii SCHEDULES AND EXHIBITS SCHEDULE DESCRIPTION 1.37 Specified Contracts 2.3(2) Additional Assumed Liabilities 3.3 Purchase Price Allocation 4.1 Due Incorporation and Qualification; Subsidiaries 4.2 Capitalization; Options 4.4 Financial Statements 4.5 No Material Adverse Change 4.7 Compliance with Laws 4.8 Permits 4.9 No Breach 4.10 Consents and Approvals 4.11 Judgments and Proceedings 4.13 Contracts 4.16 Tangible Property 4.17 Intangibles 4.18 Title 4.19 Indebtedness 4.21 Suppliers and Licensees 4.23 Insurance 4.24 Software 4.26 No Broker 4.28 Related Party Transactions 5.2 Investment Matters 6.1 Subsidiaries 6.5 No Broker 6.8 Registration Rights 6.9 Consents 6.10 Regulatory Compliance 6.14 Compliance with Laws EXHIBITS DESCRIPTION Exhibit A Master Trademark Assignment Agreement Exhibit B Security Release Exhibit C Assignment and Assumption Agreement Exhibit D Opinion of Buchalter Nemer Exhibit E Letter to Licensee Exhibit F Opinion of Blank Rome LLP iv 36 521949.00108/6418374v.21 ASSET PURCHASE AGREEMENT AGREEMENT, dated as of September 16, 2005, by and among Iconix Brand Group, Inc., a Delaware corporation ("Buyer"), Rampage Licensing, LLC, a California limited liability company ("Rampage Licensing"), Rampage.com, LLC, a Delaware limited liability company ("Rampage.com"), Rampage Clothing Company, a California corporation ("Rampage Clothing") and Larry Hansel, Bridgette Hansel Andrews, Michelle Hansel, Paul Buxbaum and David Ellis (collectively, the "Principals"). Background WHEREAS, Rampage Licensing is engaged in the business of marketing and licensing the RAMPAGE(R) family of marks and names for use in connection with a wide variety of goods and services and utilizes the RAMPAGE(R) mark and domain name in connection with the operation and administration of a web site located at the URLs http://www.rampage.com and http://www.rampageclothingcompany.com; and WHEREAS, Rampage Clothing is engaged in the business of designing, manufacturing, marketing, selling and distributing apparel products branded with one or more of the RAMPAGE(R) marks; and WHEREAS, the Principals indirectly own or control all of the outstanding equity, ownership and beneficial interests of each of Rampage Licensing, Rampage.com and Rampage Clothing; and WHEREAS, the Buyer desires to become engaged in the Business (as defined herein) and to acquire substantially all of the assets of Rampage Licensing (hereinafter, the "Seller") used in connection with the Business and to assume certain of Seller's liabilities, and Seller desires to sell such assets to Buyer, all upon the terms and subject to the conditions hereinafter set forth. NOW, THEREFORE, in consideration of the mutual agreements and covenants contained herein, and intending to be legally bound, the parties agree as follows: 1. Certain Definitions. For purposes of this Agreement, except as otherwise expressly provided or unless the context otherwise requires, (1) the terms defined in this Section have the meanings assigned to them in this Section, wherever they appear in this Agreement (2) all accounting terms not otherwise defined herein have the meanings assigned under generally accepted accounting principles consistently applied and as in effect on the date hereof ("GAAP") and (3) all words "herein," "hereof" and "hereunder" and other words of similar import refer to this Agreement as a whole and not to any particular Section or other subdivision. 1.1 "Acknowledged Encumbrances" means, collectively, (i) Encumbrances specifically disclosed or reserved against in the Financial Statements, (ii) Encumbrances for Taxes, fees, levies, duties or other governmental charges not yet past due; (iii) Encumbrances for mechanics, material, laborers, employees, suppliers or similar liens arising by operation of Law for sums which are not yet past due. 1.2 "Affiliate" means, with respect to a specified Person, any other Person that directly or indirectly through one or more intermediaries controls, is controlled by, or is under common control with, the specified Person. 1.3 "Asset Material Adverse Change" means any change in the Assets that, individually or in the aggregate, has an Asset Material Adverse Effect 1.4 "Asset Material Adverse Effect" means a material adverse effect on any of the Assets, taken as a whole, other than (i) effects resulting from the execution or announcement of this Agreement or any other Transaction Document or resulting from or relating to compliance with the terms of, or the taking of any action required by, this Agreement or any other Transaction Document, (ii) effects of any change arising in connection with acts of war, sabotage, terrorism, military actions or the escalation thereof, (iii) effects of any change in applicable Laws, regulations or accounting rules, (iv) changes in general economic, financial, regulatory, political or market conditions in the world and (v) changes in conditions or developments generally applicable to the industries in which the Assets are utilized and that do not affect the Assets in any manner materially disproportionate to other Persons in such industry. 1.5 "Business" means the business conducted by Rampage Licensing, Rampage.com and their respective operations, prospects and condition (financial and otherwise), including the marketing and licensing of the RAMPAGE(R) family of marks and names for use in connection with a wide variety of goods and services. 1.6 "Buyer's Stock" means shares of common stock, par value $0.001 per share, of Iconix Brand Group, Inc. 1.7 "Buyer Material Adverse Change" means any change in the business, properties, assets or financial condition of Buyer or any of its Subsidiaries that, individually or in the aggregate, has a Buyer Material Adverse Effect. 1.8 "Buyer Material Adverse Effect" means a material adverse effect on the business, properties, assets or financial condition of Buyer and its Subsidiaries, taken as a whole, other than (i) effects resulting from the execution or announcement of this Agreement or any other Transaction Document or resulting from or relating to compliance with the terms of, or the taking of any action required by, this Agreement or any other Transaction Document, (ii) effects of any change arising in connection with acts of war, sabotage, terrorism, military actions or the escalation thereof, (iii) effects of any change in applicable Laws, regulations or accounting rules, (iv) changes in general economic, financial, regulatory, political or market conditions in the world and (v) changes in conditions or developments generally applicable to the industries in which Buyer is involved and that do not affect Buyer in any manner materially disproportionate to other Persons in such industry. 1.9 "Closing" means the closing of the transactions contemplated by this Agreement. 2 1.10 "Closing Date" means the date on which the Closing occurs. 1.11 "Code" means the Internal Revenue Code of 1986, as amended. 1.12 "Consent" means any consent, approval, order or authorization of, or any declaration, filing or registration with, or any application or report to, or any waiver by, or any other action (whether similar or dissimilar to any of the foregoing) of, by or with, any Person, which is necessary in order to take a specified action or actions in a specified manner and/or to achieve a specified result or to avoid the occurrence of a default. 1.13 "Contract" means any written or oral contract, agreement, instrument, order, commitment or binding arrangement, express or implied, of any nature whatsoever. 1.14 "Contract Right" means any right, power or remedy under any Contract, including but not limited to rights to receive property or services or otherwise to derive benefits from the payment, satisfaction or performance of another party's obligations. 1.15 "Documents" means and includes any document, agreement, instrument, certificate, notice, Consent, affidavit, correspondence (by letter, electronic mail, telex or otherwise), written statement, schedule or exhibit whatsoever. 1.16 "Employee Benefit Plan" means (1) any employee benefit plan, as defined in Section 3(3) of ERISA, or (2) any other plan, trust agreement or arrangement for any bonus, severance, hospitalization, vacation, deferred compensation, pension or profit sharing, retirement, payroll savings, stock option, group insurance, death benefit, fringe benefit, welfare or any other employee benefit plan or fringe benefit arrangement of any nature whatsoever, including those benefiting former employees. 1.17 "Encumbrance" means any lien, security interest, pledge, mortgage, easement, leasehold, assessment, covenant, restriction, or any other encumbrance, claim, burden or charge of any kind or nature whatsoever. 1.18 "ERISA" means the Employee Retirement Income Security Act of 1974, as amended. 1.19 "Indebtedness" means all items which, in accordance with GAAP, would be included in determining total liabilities as shown on the liability side of a balance sheet as of the date Indebtedness is to be determined. 1.20 "Insurance Policies" means any policy or binder for fire, public liability, product liability, general liability, life, hospital, medical, disability, comprehensive, automobile, property damage, workmen's compensation, key man, fidelity bond, theft, forgery, vehicular, or errors and omissions insurance, or for any other insurance of any nature whatsoever. 3 1.21 "Intangible" means, throughout the world, the Marks, all trade secrets, patterns, designs, pressbooks, promotional material, artwork, vendor numbers, know-how, patents, patent applications, copyrights, copyright applications, copyright registrations; Web sites, including the content contained therein, domain names, domain name registrations, designs, formula, invention, technology, Software, database or other intangible asset of any nature (whether in use, operational, active, under development or design, non-operative, or inactive, owned, marketed, maintained, supported, used, licensed or otherwise held for use by, or licensed to or with respect to which rights are granted to a Person), and all good will, whether or not related to the foregoing, whether arising under statutory or common law in any jurisdiction or otherwise, and includes, without limitation, any and all Intellectual Property Rights in and to the foregoing. 1.22 "Intellectual Property Right(s)" means any and all proprietary rights (throughout the universe, in all media, now existing or created in the future, and for the entire duration of such rights) arising under statutory or common law, contract, or otherwise, and whether or not perfected, including without limitation, all (a) rights associated with patents, reissues and reexamined patents, and patent applications, whenever filed and wherever issued, and all priority rights resulting from such applications; (b) rights associated with works of authorship including, but not limited to, copyrights, moral rights, design rights, copyright applications, copyright registrations, and rights to prepare derivative works; (c) rights relating to the protection of trade secrets and confidential information; (d) rights in and to trademarks, service marks, trade names, logos, symbols, and the like; (e) product right; (f) rights analogous to those set forth in this definition and any and all other proprietary rights relating to Intangibles not already included herein; (g) rights associated with divisions, divisionals, continuations, continuations-in-part, substitutes, renewals, reissues and extensions of the foregoing (as and to the extent applicable) now existing, hereafter filed, issued, or acquired; and (h) the right to sue for past infringement of any Intangible and/or Intellectual Property Rights, provided any such Intellectual Property Right is related to the Business. 1.23 "Inventory" means any raw materials, supplies, work-in-progress, finished goods, parts or any other inventory of any nature whatsoever. 1.24 "Judgment" means any order, writ, injunction, fine, citation, award, decree or any other judgment of any kind whatsoever of any foreign, federal, state or local court, governmental body, administrative agency, regulatory authority or arbitration tribunal. 1.25 "Law" means any provision of any law, statute, ordinance, order, constitution, charter, treaty, rule or regulation enacted, approved or adopted by any governmental, administrative or regulatory authority, including common law. 1.26 "Liabilities" means any direct or indirect Indebtedness, liability, claim, loss, damage, Judgment, deficiency or obligation, known or unknown, fixed or inchoate, liquidated or unliquidated, secured or unsecured, accrued, absolute, contingent or otherwise whether or not of a kind required by GAAP to be set forth on financial statements. 1.27 "License Agreement" means that certain License Agreement dated as of the date hereof between Larry Hansel Clothing, LLC and IP Holdings LLC. 4 1.28 "Losses" means any and all Liabilities, Proceedings, causes of action, costs and expenses including, without limitation, costs of investigation, actual interest costs, penalties and attorneys' fees. 1.29 "Marks" means all names, corporate names, domain names, fictitious names, trademarks, trademark applications, trademark registrations, service marks, service mark applications, service mark registrations; trade names, brand names, product names, logos, trade dress, symbols, slogans or other designations used by Seller, Rampage Clothing or Rampage.com in commerce or in connection with the Business. 1.30 "Permit" means any license, permit, certificate, Consent, right or privilege of any kind or nature whatsoever granted, issued, approved or allowed by any foreign, federal, state or local governmental, administrative or regulatory authority including those relating to Real Property. 1.31 "Person" means any individual, sole proprietorship, joint venture, partnership, corporation, limited liability company, association, joint-stock company, unincorporated organization, cooperative, trust, estate, government entity or authority (including any branch, subdivision or agency thereof), administrative or regulatory authority, or any other entity of any kind or nature whatsoever. 1.32 "Principal Representative" means Paul Buxbaum. 1.33 "Proceeding" means any claim, suit, action, equitable action, litigation, investigation, arbitration, trademark opposition, cancellation action, administrative hearing or any other judicial or administrative proceeding of any kind or nature whatsoever, or any formal demand which might lead to any of the foregoing. 1.34 "Property" means real, personal or mixed property. 1.35 "Real Property" means any real estate, land, building, structure, improvement or other real property of any kind or nature whatsoever owned, leased or occupied by Seller, all shares of stock or other ownership interests through which interests in real estate may be held, and all appurtenant and ancillary rights thereto, including, without limitation, easements, covenants, water rights, sewer rights and utility rights. 1.36 "Seller's Actual Knowledge" means the actual knowledge of Larry Hansel, Paul Buxbaum or David Ellis after due inquiry of such persons with such individuals who are members, stockholders, directors or officers of or employed by Seller, Rampage Clothing and/or Rampage.com responsible for the matter being represented or warranted. 1.37 "Specified Contracts" means those Contracts set forth on Schedule 1.37. 1.38 "Software" means any computer program, operating system, applications system, firmware or software of any kind or nature whatsoever, including, without limitation, all object code, source code, technical manuals, user manuals and other documentation therefor, whether in machine-readable form, a programming language or any other language or symbols, and whether stored, encoded, recorded or written on disk, tape, film, memory device, paper or other media. 5 1.39 "Subsidiaries" with respect to any Person, means any other Person or business entity, with respect to whom 50% or more of the equity interest (or debt or other interest convertible into an equity interest) is owned directly or indirectly by such Person. 1.40 "Tangible Property" means any machinery, buildings, fixtures, equipment, parts, furniture, leasehold improvements, office equipment, vehicles, tools, forms, molds, supplies, archive garments or other tangible property of any kind or nature whatsoever. 1.41 "Tax" or "Taxes" means all taxes and governmental impositions of any kind in the nature of (or similar to) taxes, payable to any federal, state, local or foreign taxing authority or other governmental authority, including, but not limited to, those on or measured by or referred to as income, franchise, profits, gross receipts, capital, ad valorem, custom duties, alternative or add-on minimum taxes, estimated, environmental, disability, registration, value added, sales, use, service, real or personal property, capital stock, license, payroll, withholding, employment, social security, workers' compensation, unemployment compensation, utility, severance, production, excise, stamp, occupation, premiums, windfall profits, transfer and gains taxes, and interest, penalties and additions to tax imposed with respect thereto. 1.42 "Tax Return" shall mean any return (including any information return), report, statement, declaration, estimate, schedule, notice, notification, form, election, certificate or other document or information (including any amendments thereto) that is, has been or may in the future be filed with or submitted to, or required to be filed with or submitted to, any governmental authority in connection with the determination, assessment, collection or payment of any Tax or in connection with the administration, implementation or enforcement of or compliance with any Law relating to any Tax. 1.43 "Transaction Documents" means, collectively, this Agreement and each other Documents required to be executed in connection with the transactions contemplated hereby, provided, the License Agreement shall not be included in the definition of Transaction Documents. 2. Sale and Purchase of Assets. 2.1 Assets. Seller hereby sells, transfers, conveys, assigns and delivers to Buyer and Buyer hereby purchases and acquires from Seller, all right, title and interest in and to all of Seller's assets, business, and rights of every nature, kind and description wheresoever located and whether or not reflected on the books and records of Seller (excluding only those assets set forth in Section 2.2) including, without limitation, the following (all of which being hereinafter collectively referred to as the "Assets"): (1) All Intangibles owned by Seller and all Intellectual Property Rights associated therewith, all goodwill, licenses and sublicenses granted or obtained with respect thereto, and rights thereunder, remedies against infringements thereof, and rights to protection of interests therein under the laws of all jurisdictions; 6 (2) All of Seller's rights, powers and privileges in and to the Specified Contracts, together with all Contract Rights thereunder, including all rights to royalties earned or accruing on or after the Closing Date; (3) All designs, patterns, archive garments, press books, promotional materials and all other brand collateral materials and other Tangible Property used in or related to the Business; (4) All prepaid assets (including the pro rata portion of advances or guaranteed minimum royalty and advertising payments credited against royalties earned after the Closing Date or any liquidated damages, under the Specified Contracts) and expenses other than rent escrows and security deposits; and (5) All of Seller's claims, causes of action and other legal rights and remedies, whether or not known as of the Closing, relating to Seller's ownership of the Assets and/or the Business, but excluding claims against Buyer with respect to the transactions contemplated herein. 2.2 Excluded Assets. Notwithstanding anything to the contrary contained herein, there is excluded from the sale and purchase contemplated by this Agreement the following assets (the "Excluded Assets"): (1) All Contracts which are not listed on Schedule 1.37 whether or not relating to an Asset being purchased hereby and the Contract rights of Rampage Clothing Company under items (l), (m) and (n) listed on Schedule 1.37; (2) All cash in the bank or invested on the Closing Date, except for cash deposits from customers and the pro rata portion of advances, guaranteed minimum royalty or advertising payments credited against royalties earned prior to the Closing Date under the Specified Contracts and any sales royalty payments made after the Closing Date for periods ending prior to the Closing Date. 2.3 Assumption of Certain Liabilities. On the terms set forth herein, on and after the Closing Date, Buyer shall assume, perform and pay only the following Liabilities ("Specified Liabilities") but only to the extent the same are not incurred or resulting from (directly or indirectly) any breach or default by Seller under any Contract with any Person or any representation, warranty or covenant of Seller noted herein: (1) All Liabilities of Seller arising and relating to periods after the Closing in the nature of services to be performed, payments to be made or goods to be delivered under the Specified Contracts transferred pursuant to this Agreement, but not including any Liabilities of Seller under any Contract with any affiliate or Principal or other member of Seller; (2) All such other Liabilities specifically assumed by Buyer on Schedule 2.3(2) hereof. 2.4 Non-Assumption of Liabilities. Notwithstanding anything herein capable of interpretation to the contrary, except for the Specified Liabilities, Seller shall pay or otherwise fully discharge, as the same shall become due, all of their respective Liabilities existing as of the Closing Date or thereafter whether or not disclosed to Buyer on any Schedule hereto, and Buyer does not assume and shall in no event be liable therefor (collectively, the "Retained Liabilities"). 7 2.5 Delivery of Certain Assets. Concurrently herewith, Seller is delivering, on behalf of Buyer, all of the Assets which are comprised of Intangibles and Intellectual Property Rights directly to IP Holdings LLC, an indirect, wholly-owned Subsidiary of Buyer ("IP Holdings"). The parties hereto acknowledge and agree that, notwithstanding this Section 2.5, all of the Assets, including the Assets subject to this Section 2.5, are being acquired by Buyer hereunder and the delivery by Seller of the Assets subject to this Section 2.5 to IP Holdings shall be deemed to be a delivery of such Assets initially to Buyer followed by a contribution of such Assets by Buyer to the capital of IP Holdings. 3. Closing; Purchase Price 3.1 Closing. The Closing of the transactions contemplated by this Agreement shall take place concurrently herewith at the offices of Blank Rome LLP, 405 Lexington Avenue, New York, New York 10174. All transactions occurring at the Closing shall be deemed to occur concurrently. 3.2 Purchase Price. In consideration of the sale, transfer, conveyance and delivery of the Assets, and in reliance upon the representations and warranties made herein by Seller, Rampage Clothing, Rampage.com and Principals, Buyer shall, in full payment thereof, pay to Seller, or their respective designees, the following aggregate consideration: (i) Twenty-Five Million, Seven Hundred Fifty Thousand Dollars ($25,750,000) payable in immediately available funds at the Closing (the "Cash Consideration") and (ii) the issuance of such number of restricted shares of Buyer's Stock as are equal to Twenty Million, One Hundred Fifty Thousand Dollars ($20,150,000) divided by the average per share closing price reported on the Nasdaq National Market for the ten (10) consecutive trading days ending on the trading day immediately preceding the Closing Date (the "Shares") and (iii) the assumption of the Specified Liabilities (the "Shares" together with the Cash Consideration and the Specified Liabilities, collectively hereinafter referred to as the "Purchase Price"). 3.3 Purchase Price Allocation. The Purchase Price for the Assets shall be allocated in a manner set forth on Schedule 3.3 hereto. In connection with the determination of such schedule, the parties shall cooperate with each other and provide such information as any of them shall reasonably request. The parties shall (a) prepare and, where applicable, file each report relating to the federal, state, local, foreign and other Tax consequences of the purchase and sale contemplated hereby (including the filing of IRS Form 8594) in a manner consistent with such allocation schedule and (ii) take no position in any Tax Return or other Tax filing, proceeding, audit or otherwise which is inconsistent with such allocation. 3.4 Purchase Price Adjustment. The Seller and Buyer shall adjust the Purchase Price, as follows: (a) the Purchase Price will be decreased by an amount equal to the pro rata portion of advances on royalties paid to Seller under the Specified Contracts prior to the Closing for all periods after the Closing; and (b) the Purchase Price shall be increased by an amount equal to the pro rata 8 portion of royalties received by Buyer under the Specified Contracts for all periods prior to the Closing. The parties, upon their mutual consent, shall, as soon as practical but no later than ninety (90) days after the Closing Date, make any adjustments to the Purchase Price as necessary. The party owing an amount to the other party based on such post-Closing adjustments shall make payment via bank check or wire transfer to the other party within ten (10) business days after completion of the adjustments. 4. Representations, Warranties and Covenants of Seller, Rampage Clothing, Rampage.com and Larry Hansel. Knowing that Buyer relies thereon, Seller, Rampage Clothing, Rampage.com and Larry Hansel ("Hansel"), jointly and severally, represent, warrant and covenant to Buyer as of the Closing as follows: 4.1 Due Organization and Qualification; Subsidiaries. Each of Rampage Licensing and Rampage.com is a limited liability company, and Rampage Clothing is a corporation duly organized, validly existing and in good standing, under the laws of the jurisdiction of its respective organization. Seller has the full power and authority to own, lease and operate its Assets, Properties and Business, to carry on its Business as and where such Business is now conducted, except where such failure to have such power and authority would not have an Asset Material Adverse Effect. Each of Seller and Rampage Clothing has the full power and authority to enter into and perform this Agreement and to consummate the transactions contemplated hereby upon the terms and conditions herein provided. Seller is duly qualified as a foreign entity in good standing under the Laws of each jurisdiction set forth in Schedule 4.1. There is no other jurisdiction in which the nature of Seller's respective Business or location of its Properties requires such licensing or qualification, except where such failure to have such power and authority would not have an Asset Material Adverse Effect. Except as set forth in Schedule 4.1, Seller has no Subsidiaries, nor does Seller own, directly or indirectly any shares of stock or other equity interest in or control, alone or in combination with others, any Persons. Schedule 4.1 sets forth the names and titles of Seller's directors and officers. 4.2 Capitalization; Options. Schedule 4.2 sets forth the capital structure of Seller, including the numbers and types of membership interests authorized and the number of each type of membership interests that are issued and outstanding. Schedule 4.2 contains an accurate and complete list of: (i) the full legal names of the members of Seller; (ii) the addresses of such members; (iii) the number of membership interests, warrants, options or other securities owned of record and beneficially by each such member and the certificate numbers of the certificates representing such equity interests. Except for the members listed on Schedule 4.2, there are no other record or beneficial owners of any membership interests of Seller or any other securities of Seller. Except for the membership interests listed on Schedule 4.2, there have been and currently are no other issued or outstanding equity interests. All of the issued and outstanding equity interests of Seller have been duly authorized and validly issued and are fully paid and non-assessable. Except as set forth on Schedule 4.2, there exists no right of first refusal or other preemptive right with respect to Seller or the equity interests, Business or Assets of Seller. In addition, Schedule 4.2 sets forth a list of all of the full legal names of each Principal together with such Principal's address. 9 4.3 Authority to Execute and Perform Agreement. Each of Seller, Rampage Clothing and Rampage.com has all requisite power and authority and approvals required to enter into, execute, deliver and perform this Agreement and its obligations hereunder and to consummate the transactions contemplated herein. The execution, delivery and performance of this Agreement and each other Transaction Document to which each of Seller, Rampage Clothing and Rampage.com is a party, the consummation of the transactions contemplated hereby and thereby have been duly authorized by all necessary action on the part of Seller, Rampage Clothing and Rampage.com. This Agreement and each other Transaction Document to which each of Seller, Rampage Clothing and Rampage.com is a party, has been duly executed and delivered by each of Seller, Rampage Clothing and Rampage.com, and constitutes Seller's, Rampage Clothing's, and Rampage.com's valid and legally binding obligation, enforceable against each of Seller, Rampage Clothing and Rampage.com in accordance with its terms and conditions, except as the same may be limited by bankruptcy, insolvency, reorganization, moratorium or other similar Laws, relating to or affecting creditors' rights generally or general principles of equity (regardless of whether enforcement is sought in a proceeding in equity or at law). 4.4 Financial Statements. Attached to Schedule 4.4 are true, complete and correct copies of the consolidating financial statements and notes thereof of each Seller and Rampage Clothing, as reviewed by independent certified public accountants for the year ended December 31, 2004 and December 31, 2003, the financial statements for Rampage Licensing which were separately audited for the year ended December 31, 2003, and consolidating financial statements for Seller and Rampage Clothing, as audited for the year end December 31, 2002. Schedule 4.4 also sets forth Seller's and Rampage Clothing's financial statements (including unaudited balance sheets and the related statements of income, retained earnings and cash flows) at and for the seven months ended July 31, 2005. The foregoing financial statements are hereinafter collectively referred to as the "Financial Statements". The Financial Statements have been prepared from the books and records of the Sellers and Rampage Clothing, and fairly present in all material respects the financial position of each Seller and Rampage Clothing as at such dates and the results of its operations and the changes in its retained earnings and its financial positions for the periods then ended in accordance with GAAP consistently applied throughout the periods indicated (except, in the case of the Financial Statements for the seven-month period ended July 31, 2005, for immaterial year-end adjustments, and the absence of footnotes, and certain reclassifications for management reporting purposes). The Financial Statements do not contain any material misstatements or omissions regarding the business, assets, condition (financial or otherwise) of Seller or Rampage Clothing. Since the most recent fiscal year end, there have been no material changes in the accounting policies of Seller or Rampage Clothing except for any such changes required pursuant to GAAP. The Financial Statements are not affected by transactions or accounts with affiliated companies, if any, other than as set forth in Schedule 4.4. 4.5 No Material Adverse Change. Except as set forth in Schedule 4.5, since December 31, 2004 there has been no Asset Material Adverse. 10 4.6 Tax Matters. Except to the extent that a failure to file a Tax Return, pay, collect or withhold Taxes, or any inaccuracy in a Tax Return would not result in Buyer being liable for such Taxes, (i) the Seller has timely filed all Tax Returns that are required to be filed before the Closing Date, (ii) the information provided on such Tax Returns is complete and accurate in all material respects and (iii) all Taxes due on such Tax Returns have been paid in full. No material claim has ever been made by any governmental authority in a jurisdiction where Seller does not file a Tax Return that it is or may be subject to taxation by that jurisdiction. None of the Assets is subject to any lien for Taxes, other than in respect of Taxes not yet past due. 4.7 Compliance with Laws. Except as set forth in Schedule 4.7, Seller has complied in all material respects with all Laws relating to its Business or operations or to the Assets. Except as set forth and specifically identified in Schedule 4.7, none of Seller, Rampage Clothing, Rampage.com or Hansel has received notice of any alleged material violation of or claim under any such Laws, and to Seller's Actual Knowledge, there is no basis for any material violation thereof which may occur in the future (either upon notice, lapse of time, or both), and no investigation, charge, claim or other action under any such Laws is pending or threatened. 4.8 Permits. Except as set forth in Schedule 4.8, no Permits are material to or necessary for the conduct of the Business of Seller or the use and operation of the Assets. At Closing, Seller holds all Permits which are material to or necessary for it to conduct its business as heretofore conducted ("Material Permits"). A true, correct and complete list of Seller's Permits is set forth in Schedule 4.8. All Material Permits are in full force and effect, no violations are or have been recorded in respect of any Material Permit and no Proceeding is pending or, to Seller's Actual Knowledge, threatened to revoke, terminate or limit any Material Permit. Except as set forth and specifically identified in Schedule 4.8, Seller is not in default, and has not received any notice of any claim of default, with respect to any Material Permit or of any notice of any other claim or Proceeding (or, to Seller's Actual Knowledge, threatened Proceeding) relating to any Material Permit. Except as set forth in Schedule 4.8, all Permits are assignable and transferable by Seller to Buyer without the Consent of any Person, except where such failure would not have an Asset Material Adverse Effect.. 4.9 No Breach. Except as set forth and specifically identified in Schedule 4.9, the consummation of the transactions herein contemplated including, without limitation, the execution, delivery and performance of this Agreement and the documents required to effect the transactions herein contemplated, do not and will not (1) constitute a violation of or default under (either immediately or upon notice, lapse of time or both), conflict with or result in a breach of (a) Seller's organizational documents, (b) the terms of any Specified Contract to which Seller is a party and to which the Assets are or may be bound, (c) any Judgment relating to the Assets and binding upon Seller, or (d) any Laws affecting the Assets; or (2) result in the creation or imposition of any Encumbrance on any of the Assets or give to any Person any interest or right in any of the Assets; or (3) accelerate the maturity of or otherwise modify any Liability or obligation of Seller relating to the Assets or the Specified Liabilities; or (4) result in the breach of any of the terms and conditions of, constitute a default under or otherwise cause any impairment of, any Specified Contract, or Permits which, if not cured, could have a material adverse effect in any one case or in the aggregate on Seller, the Assets or the Business. 4.10 Consents and Approvals. Except as set forth in Schedule 4.10, no Consent, waiver, authorization, order or notice is required in connection with the execution, delivery and performance by Seller, Rampage Clothing and Rampage.com of this Agreement or the consummation of the transactions contemplated hereby, including, but not limited to, the assignment of any and all of the Specified Contracts, except where such failure would not have an Asset Material Adverse Effect. 11 4.11 Judgments and Proceedings. Except as set forth in Schedule 4.11, there is no outstanding Judgment against or affecting the Assets or the assets of Rampage Clothing or Rampage.com. Except as set forth in Schedule 4.11, there is no Proceeding pending, or to Seller's Actual Knowledge, threatened, against or affecting any of Seller's, Rampage Clothing's or Rampage.com's properties, assets, business, operations or prospects. True and correct copies of all complaints, pleadings, petitions, notices, motions and other papers filed in connection with the Proceedings listed in Schedule 4.11 have been delivered to Buyer. Except as set forth and specifically identified in Schedule 4.11, there are no Proceedings pending or, to Seller's Actual Knowledge, threatened, or any contingent liability, which would give rise to any right of indemnification on the part of any officer, director, employee or agent of Seller, Rampage Clothing, Rampage.com or their heirs, executors or administrators thereof against Seller, Rampage Clothing, Rampage.com or any of their successors. Except as set forth and specifically identified in Schedule 4.11, to Seller's Actual Knowledge, no breach of contract, tort, or other claim (whether arising from Seller's, Rampage Clothing's or Rampage.com's business operations or otherwise) has been asserted or threatened, by or against Seller, Rampage Clothing or Rampage.com, and no breach of contract claim has been asserted or threatened by or against Seller, Rampage Clothing or Rampage.com against any Person with regard to the Specified Contracts. 4.12 Employee Relations. Seller does not have, nor at any time has had any employees. 4.13 Contracts. Schedule 4.13 sets forth a true and correct list of all Contracts to which Seller or the Assets is bound or subject with a value in excess of $5,000. True and correct copies of all Specified Contracts have been delivered to Buyer and Schedule 4.13 includes a complete and accurate description of all oral Specified Contracts. All of the Specified Contracts set forth on Schedule 4.13 and referred to in this Agreement or in the other Schedules hereto are valid and subsisting in full force and effect and binding on the parties thereto in accordance with their terms; Seller is not in default under any of them, nor to Seller's Actual Knowledge is any other party to any such Specified Contract in default thereunder, nor to Seller's Actual Knowledge is there any condition or basis for any claim of a default by any party thereto or event which, with notice, lapse of time or both, would constitute a default thereunder; and Seller has paid in full or accrued all amounts due thereunder for periods on or prior to the date hereof (whether or not currently payable) and has satisfied in full or provided in full for all of its Liabilities and obligations thereunder for periods on or prior to the date hereof. Except as disclosed in Schedule 4.13, all rights of Seller under the Specified Contracts extending beyond the Closing Date are assignable to Buyer and upon assignment shall continue unimpaired and unchanged in Buyer on and after the Closing Date without (a) the Consent (except for any Consent(s) which have been or will be obtained at or before the Closing) of any Person or (b) the payment of any penalty, the incurrence of any additional obligation or the change of any term. Except as set forth on Schedule 4.13, Seller has examined, monitored or otherwise policed, to the extent deemed prudent by Seller and in accordance with the customary practices in the industry in which Seller participates, the activities of all of the licensee counterparties under the Specified Contracts to verify that the products manufactured, sold or offered for sale under the Marks licensed to such licensees pursuant to the Specified Contracts meet, in all material respects, the quality control standards and requirements for use of the Marks set forth in such Specified Contracts. 12 4.14 Real Property. Seller does not own, lease or occupy, and has not at any time has owned, leased or occupied all or any portion of any Real Property. 4.15 Books of Account and Reports. Seller has delivered to Buyer true, correct and complete copies of its charter or other formation documents, and all amendments thereto. 4.16 Tangible Property. Schedule 4.16 sets forth a list and summary description of all interests owned, leased or subleased (as lessor or lessee) or claimed by each Seller (including, without limitation, options) in or to Tangible Property. Except as set forth on Schedule 4.16, all Specified Contracts pursuant to which Seller may hold or use any interest owned or claimed by Seller (including, without limitation, options) in or to Tangible Property are in full force and effect, Seller is not in default thereunder and to Seller's Actual Knowledge, no condition exists which, with notice, lapse of time or both, would constitute a default. 4.17 Intangibles. (1) All Intangibles to the Seller's Business, owned, used, applied for and/or registered in the name of or licensed to Seller, Rampage Clothing or Rampage.com are listed on Schedule 4.17. Except as specifically identified and disclosed in Schedule 4.17, all of Seller's rights in and to the Intangibles set forth in Schedule 4.17 are free and clear of any claims of infringement, invalidity or Encumbrance (other than any Acknowledged Encumbrances). None of the Seller, Rampage Clothing, Rampage.com or Hansel has notice of any adversely held Intangible of any other Person or notice of any claim of any other Person or notice of any claim of any other Person relating to any of the Intangibles set forth in Schedule 4.17 or any process or confidential information of Seller, and none of the Seller, Rampage Clothing, Rampage.com or Hansel knows of any basis for any such charge or claim. None of the Seller, Rampage Clothing or Rampage.com has infringed upon or misappropriated any Intellectual Property Rights of any Person and none of the Intangibles infringes upon or violates the Intellectual Property Rights or other proprietary rights of any Person. Except as set forth in Schedule 4.17, none of the Seller, Rampage Clothing, Rampage.com or Hansel has licensed any Person to use any Intangible or other Intellectual Property Rights of Seller, nor is Seller obligated to pay any royalties, licensing fees or similar payments to any Person. (2) Schedule 4.17 contains a complete and accurate list and summary description of all registrations and pending applications for the Marks. All registered and pending Marks have been registered or applied for and pending, respectively (as indicated on the schedule) with the United States Patent and Trademark Office or the trademark office of the jurisdiction to which the registration or application pertains, and are currently in compliance with all applicable Laws in all material respects. The Marks are valid, subsisting, and enforceable and are not subject to any maintenance fees or taxes or actions falling due within sixty (60) days after the date hereof. Except as set forth in Schedule 4.17, (i) no Mark is now involved in any opposition, invalidation or cancellation Proceeding or any other Proceeding relating to the validity or registrability thereof, and, to the Seller's Actual Knowledge, no such action is threatened with respect to any of the Marks; (ii) to the Seller's Actual Knowledge, there is no potentially interfering trademark or trademark application of any other Person with regard to the Marks anywhere in the world; (iii) none of the Marks has been challenged or threatened in any way; (iv) where applicable, the Assets bear Marks accompanied by the proper federal registration notice where permitted by law except for where such failure to comply with proper federal registration notice is not material to the operation of the Business. 13 (3) Except as set forth on Schedule 4.17, to the Seller's Actual Knowledge, none of Seller, Rampage Clothing or Rampage.com has received any form of notice advising it that any Intangible, including the Marks, could not be owned, used, applied for and/or registered in the name of or licensed to Seller, to Rampage Clothing or to Rampage.com in any jurisdiction throughout the world. 4.18 Title. Except as set forth on Schedule 4.18, Seller owns outright and has good, valid and marketable title to all of the Assets, free and clear of all Encumbrances (other than any Acknowledged Encumbrances). There are no outstanding options or commitments to which Seller, Rampage Clothing, Rampage.com or any Principal is a party which relate to the Assets or the sale by any of them of the Assets. At Closing, Buyer shall acquire all assets used by Seller in the Business, other than those assets set forth in Section 2.2. Within the past 10 years, Seller has not done business under or been known by any name other than its present corporate name, and Seller had not done business at any address other than the addresses set forth in Schedule 4.18. 4.19 Indebtedness. All Indebtedness of Seller as at the Closing Date is set forth on Schedule 4.19. Schedule 4.19 sets forth a true and correct aged list of Seller's accounts payable as of the Closing Date. 4.20 Undisclosed Liabilities. As of the Closing Date, Seller does not have any material Liabilities in respect of its businesses, other than (1) Liabilities reflected or reserved for on the Financial Statements or (2) Liabilities that have arisen or been incurred since the date of the latest Financial Statement in the ordinary course of business consistent with past practices. 4.21 Suppliers, Customers and Licensees. Except as set forth in Schedule 4.21, during the last 12 months, no single customer, supplier or licensee provided more than five percent of Seller's, Rampage Clothing's or Rampage.com's revenue. To Seller's Actual Knowledge, no supplier, customer or licensee of Seller, Rampage Clothing or Rampage.com intends to cancel or materially reduce its ongoing commercial relationship with the businesses of the Seller, Rampage Clothing or Rampage.com, as the case may be. 4.22 Employee Benefit Plans. Seller has not at any time established, maintained, participated in, or contributed to any Employee Benefit Plan. Seller has no Liabilities or obligations under any Employee Benefit Plan. Seller has not incurred any Liability to the Pension Benefit Guaranty Corporation (or any successor thereto), including any Liability under Sections 4063 or 4064 of ERISA. 14 4.23 Insurance. Schedule 4.23 sets forth all Insurance Policies held by or on behalf of Seller in respect of the Assets, specifying the insurer, the policy number (or covering note number with respect to binders), the risks covered, the premium, the deductibles and the amount of coverage provided and describing each pending claim thereunder of more than $10,000. Seller is not in default with respect to any provision contained in any such Insurance Policy nor, to the Seller's Actual Knowledge, has Seller failed to give any notice or present any claim under any such Insurance Policy in due and timely fashion. Seller has not received a written notice of cancellation, non-renewal or audit of any such Insurance Policy. 4.24 Software. Schedule 4.24 is an accurate and complete list and description of all Software (except for any standard or "off-the-shelf" computer software) owned, licensed, leased or otherwise used by Seller in connection with its businesses, and identifies which of such Software is owned, licensed, leased, or otherwise used, as the case may be. Except as set forth in Schedule 4.24, Seller owns, free and clear of any Encumbrances (other than Acknowledged Encumbrances), or has a valid right to use pursuant to lease, license, sublicense, agreement or permission, all of the Software currently used by Seller in connection with its business. With respect to all Software owned by a third party and used by Seller in connection with its business pursuant to a valid lease, license, sublicense, agreement or permission, (1) to the Seller's Actual Knowledge, the lease, license, sublicense, agreement or permission covering such Software is valid, legally binding, enforceable and in full force and effect and may be transferred pursuant to this Agreement; (2) to the Seller's Actual Knowledge, no party to any such lease, license, sublicense, agreement or permission is in breach thereof and no event has occurred which with notice or lapse of time would constitute a breach thereof, permitting termination or modification thereof; and (3) Seller has not granted any sublicense, sublease or similar right with respect to any such lease, license, sublicense, agreement or permission. 4.25 Ownership of Assets. All of the Assets are owned by Seller. Prior to the Closing Date, (i) Rampage Clothing has transferred to Seller any Assets owned by Rampage Clothing which are used, in whole or in part, in connection with the Business and (ii) Rampage.com has transferred to Seller any Assets owned by Rampage.com which are used, in whole or in part, in connection with the Business, including but not limited to all rights to the Rampage.com and Rampageclothingcompany.com domain names. The Assets constitute all of the assets, properties and rights used in and which are necessary for conducting the Business as heretofore conducted by Seller. 4.26 No Broker. Except as set forth in Schedule 4.26, no broker, finder, agent or similar intermediary has acted for or on behalf of Seller in connection with this Agreement or the transactions contemplated hereby, and no broker, finder, agent or similar intermediary is entitled to any broker's fee, finder's fee, or similar fee or commission in connection therewith based on any agreement, arrangement or understanding with Seller or any action taken by Seller. Any item disclosed in Schedule 4.26 will be paid by Seller, Rampage Clothing, and Principals. 4.27 Full Disclosure. All Transaction Documents delivered by or on behalf of the Seller, Rampage.com, Rampage Clothing and/or Principals in connection with this Agreement and the transactions contemplated hereby are true and complete; and all such Transaction Documents delivered by Seller, Rampage.com, Rampage Clothing and/or Principals are authentic. 15 4.28 Related Party Transactions. Except as described on Schedule 4.28 and except for any employment or consulting Contracts listed on Schedule 4.13, there are currently no Real Property leases, personal property leases, loans, guarantees, Contracts, transactions, understandings or other arrangements of any nature between or among any of the Seller and any current or former member, owner, shareholder, partner, director, officer or controlling Person of Seller (or any of their respective predecessors) or any other Person affiliated with the Seller (or any of its respective predecessors). 5. Representations and Warranties of Seller and Principals. Knowing that Buyer relies thereon, Seller and Principals, jointly and severally, represent, warrant and covenant to Buyer as of the Closing as follows: 5.1 Enforceable Agreement. This Agreement has been duly executed by each of the Principals and constitutes the legal, valid and binding obligation of each Principal and is enforceable against each Principal in accordance with its terms. 5.2 Investment Matters. The Shares to be issued hereunder are being acquired for each Principal's own account and not on behalf of any other Person, and all such Shares are being acquired for investment purposes only and not with a view to, or for sale in connection with, any resale or distribution of such Shares. Each of the Principal's has received or examined Buyer's Annual Report on Form 10-K for the transition period from February 1, 2004 through December 31, 2004, Buyer's Quarterly Report on Form 10-Q for the quarter ended June 30, 2005 and Buyer's July 26, 2005 Proxy Statement. Each of the Principal's has had the opportunity to ask questions and receive answers from Buyer concerning Buyer, and have been furnished with all other information about Buyer which it has requested. Each Principal is an "accredited investor" as defined in Rule 501(a) of the Securities Act of 1933, as amended. Each Principal believes that he has been fully apprised of all facts and circumstances necessary to permit him to make an informed decision about acquiring the Shares, that he has sufficient knowledge and experience in business and financial matters that he is capable of evaluating the merits and risks of an investment in the Shares, and that he has the capacity to protect its own interests in connection with the transactions contemplated hereby. Each of the Principals have been advised by Buyer and understand that, (1) the Shares to be issued hereunder will not be registered under any federal or state securities laws, (2) such shares must be held indefinitely unless and until they are subsequently registered or an exemption from registration becomes available, (3) the certificates representing such shares shall bear appropriate restrictive legends, and (4) Buyer shall have the right to direct the transfer agent of its common stock to place a stop transfer order against such certificates. Except as set forth on Schedule 5.2, none of the Principals has sold any shares of capital stock, membership interests or other securities of Seller or of Buyer at any time during the 30-day period ending on the Closing Date. 6. Representations and Warranties of Buyer. Knowing that Seller and Principals rely thereon, Buyer represents, warrants and covenants to Seller and Principals on the Closing Date as follows: 16 6.1 Subsidiaries. Buyer has no direct or indirect Subsidiaries, and does not own, directly or indirectly, any equity interest in or control, alone or in combination with others, any Persons, other than those listed in Schedule 6.1. Except as disclosed in Schedule 6.1, Buyer owns, directly or indirectly, all of the capital stock of each such Subsidiary free and clear of any and all Encumbrances, and all the issued and outstanding shares of capital stock of each such Subsidiary are validly issued and are fully paid, non-assessable and free of preemptive and similar rights. 6.2 Due Incorporation and Qualification. Each of Buyer and each of its Subsidiaries is an entity duly incorporated or otherwise organized, validly existing and in good standing under the laws of the jurisdiction of its incorporation, organization or formation (as applicable). Each of Buyer and its Subsidiaries has the corporate or other similar applicable power and authority necessary to own, lease and operate their respective assets and business, to carry on their respective businesses as and where such businesses are now conducted, except where such failure to have such power and authority would not have a Buyer Material Adverse Effect. Buyer has full power and authority to enter into and perform this Agreement and each of the other Transaction Documents to which it is a party and to consummate the transactions contemplated hereby and thereby upon the terms and conditions herein and therein provided. Each of Buyer and its Subsidiaries is duly qualified as a foreign corporation or other entity in good standing under the Laws of each jurisdiction in which the nature of their respective business or the location of any of their respective assets requires such licensing or qualification, except where the failure to be so qualified or licensed would not have a Buyer Material Adverse Effect. 6.3 Authority to Execute and Perform Agreement. Buyer has the requisite corporate power and authority to execute, deliver and perform this Agreement and each of the other Transaction Documents to which it is a party and to consummate the transactions contemplated hereby and thereby. The execution, delivery and performance of this Agreement and each other Transaction Document to which Buyer is a party and the consummation of the transactions contemplated hereby and thereby have been duly authorized by all necessary corporate action on the part of Buyer. This Agreement and each other Transaction Document to which Buyer is a party constitutes a valid and legally binding agreement of Buyer enforceable against Buyer in accordance with their respective terms and conditions, except that such enforceability may be limited by bankruptcy, insolvency, reorganization, moratorium or other similar Laws relating to or affecting creditors' rights generally or general principles of equity (regardless of whether enforcement is sought in a proceeding in equity or at law). 6.4 No Breach. The consummation of the transactions herein contemplated including, without limitation, the execution, delivery and performance by Buyer of this Agreement and each of the other Transaction Documents to which it is a party do not and will not constitute a violation of or default under (either immediately or upon notice, lapse of time or both) or result in a breach of (a) Buyer's certificate of incorporation, bylaws or other organic governing documents, (b) the terms of any Contract to which Buyer or any of its Subsidiaries or any of their respective assets are bound, (c) any Judgment binding upon Buyer or any of its Subsidiaries, (d) any Permit; or (e) any Law (including federal and state securities laws) applicable to Buyer or any of its Subsidiaries or any of their respective assets, except, in the cases of clause (b), (c), (d) or (e), any such violation, default or breach that would not have a Buyer Material Adverse Effect. 17 6.5 No Broker. Except as set forth in Schedule 6.5, no broker, finder, agent or similar intermediary has acted for or on behalf of Buyer in connection with this Agreement or the transactions contemplated hereby, and no broker, finder, agent or similar intermediary is entitled to any broker's fee, finder's fee, or similar fee or commission for which either Seller or any Principal will be liable in connection therewith based on any agreement, arrangement or understanding with Buyer or any action taken by Buyer. 6.6 Capitalization. The issue and sale of the Shares will not, immediately or with the passage of time, obligate Buyer to issue shares of Buyer's Stock or other securities to any Person (other than the Seller and Principals) and will not result in a right of any holder of Buyer securities to adjust the exercise, conversion, exchange or reset price under such securities. To the knowledge of Buyer, except as set forth in the SEC Reports (as hereinafter defined), no Person or group of related Persons beneficially owns (as determined pursuant to Rule 13d-3 under the Securities and Exchange Act of 1934), or has the right to acquire, by agreement with or by obligation binding upon Buyer, beneficial ownership of in excess of 5% of the outstanding Buyer's Stock, ignoring for such purposes any limitation on the number of shares of Buyer's Stock that may be owned at any single time. 6.7 Tax Matters. (i) The Buyer and its Subsidiaries have timely filed all Tax Returns (other than franchise Tax Returns) that are required to be filed before the Closing Date, (ii) the information provided on such Tax Returns is complete and accurate in all material respects and (iii) all Taxes shown to be due on such Tax Returns have been paid in full. 6.8 Issuance of Buyer's Stock. The shares of Buyer's Stock issued in connection with this Agreement are duly authorized and duly and validly issued, fully paid and nonassessable, free and clear of all Encumbrances and are not subject to preemptive or similar rights. No registration under the Securities Act is required for the offer and sale of the Shares to the Seller under this Agreement. Buyer is eligible to register the Shares for resale by the Seller and the Principals under Form S-3 promulgated under the Securities Act. Except as set forth in Schedule 6.8, Buyer has not granted or agreed to grant any Person any rights (including "piggy-back" registration rights) to have any securities of Buyer registered with the Securities and Exchange Commission (the "Commission") or any other governmental authority that have not been satisfied or waived. 6.9 Filings, Consents and Approvals. Except as set forth on Schedule 6.9, Buyer is not required to obtain any Consent, waiver, authorization or order of, give any notice to, or make any filing or registration with, any court or other federal, state, local or other governmental authority, The Nasdaq National Market or other Person in connection with the execution, delivery and performance by Buyer of this Agreement and the other Transaction Documents to which it is a party. 6.10 Regulatory Compliance. Since December 31, 2003, Buyer has duly and timely filed all reports, schedules, forms, statements and other documents required to be filed by it with the Commission pursuant to the reporting requirements of the 18 Securities Exchange Act of 1934, as amended (the "Exchange Act"), including material filed pursuant to Section 13(a) or 15(d) of the Exchange Act (the foregoing materials being collectively referred to herein as the "SEC Reports"). As of their respective dates, the SEC Reports complied in all material respects with the requirements of the Exchange Act and the rules and regulations of the Commission promulgated thereunder and other federal, state and local laws, rules and regulations applicable to such documents and did not contain any untrue statement of a material fact or omit to state any material fact required to be stated therein or necessary in order to make the statements therein, in light of the circumstances under which they were made, not misleading. To the knowledge of the Buyer, except as set forth in the SEC Reports or as set forth on Schedule 6.10, since December 31, 2004, the Buyer has not entered into any agreement or arrangement, taken any action or incurred any Liability, nor has any event occurred, which, pursuant to applicable Laws, would require Buyer to disclose such agreement, arrangement, action, Liability or event in its annual report on Form 10-K for Buyer's fiscal year ended December 31, 2005. The financial statements of Buyer included in the SEC Reports comply in all material respects with applicable accounting requirements and the rules and regulations of the Commission with respect thereto as in effect at the time of filing. Such financial statements have been prepared in accordance with GAAP, except as may be otherwise specified in such financial statements or the notes thereto, or, in the case of unaudited financial statements, as permitted by Rule 10-01 of Regulation S-X promulgated under the Securities Act and the Exchange Act, and fairly present in all material respects the financial position of Buyer and its consolidated Subsidiaries as of and for the dates thereof and the results of operations and cash flows for the periods then ended, subject, in the case of unaudited statements, to normal, immaterial, year-end audit adjustments. 6.11 No Buyer Material Adverse Change. Since December 31, 2004 there has not occurred a Buyer Material Adverse Change. 6.12 Internal Accounting Controls. Buyer and its Subsidiaries maintain a system of internal accounting controls sufficient to provide reasonable assurance in all material respects that (i) transactions are executed in accordance with management's general or specific authorizations, (ii) transactions are recorded as necessary to permit preparation of financial statements in conformity with generally accepted accounting principles and to maintain asset accountability, and (iii) access to assets is permitted only in accordance with management's general or specific authorization. 6.13 Listing and Maintenance Requirements. Buyer's Stock is registered pursuant to the Exchange Act and is listed on The Nasdaq National Market, and Buyer has taken no action designed to terminate the registration of Buyer's Stock or delisting Buyer's Stock from The Nasdaq National Market. Buyer has not, in the two years preceding the date hereof, received notice (written or oral) from The 19 Nasdaq National Market to the effect that Buyer is not in compliance with the listing or maintenance requirements thereof. Buyer is, and has no reason to believe that it will not in the foreseeable future continue to be, in compliance with the listing and maintenance requirements for continued listing of Buyer's Common Stock on The Nasdaq National Market. The issuance and sale of the Shares hereunder does not contravene the rules and regulations of The Nasdaq National Market and no approval of the shareholders of Buyer is required for Buyer to issue and deliver to the Seller the Shares as contemplated by this Agreement and the other Transaction Documents. 6.14 Compliance with Laws. Except as set forth in Schedule 6.14, since January 1, 2002, the business of the Buyer and its Subsidiaries has been conducted in compliance with all applicable Laws, except for any failure to be so conducted that would not have a Buyer Material Adverse Effect. 6.15 Investment Company. Buyer is not, and is not an Affiliate of, an "investment company" within the meaning of the Investment Company Act of 1940, as amended.. 6.16 Application of Takeover Protections. There are no control share acquisition, business combination, poison pill (including any distribution under a rights agreement) or other similar anti-takeover provision under Buyer's certificate of incorporation (or similar charter documents) or the laws of its state of incorporation that is or could become applicable to the Seller or the Principals as a result of the Seller and Buyer fulfilling their obligations or exercising their rights under this Agreement and the other Transaction Documents, including without limitation Buyer's issuance of the Shares. 7. Deliveries by Seller, Rampage Clothing and Principals. Concurrently herewith at the Closing, Seller and, where applicable, Rampage Clothing or the Principals, are delivering to Buyer or its designee, the following, which shall be in form and substance acceptable to Buyer and Buyer's counsel: 7.1 Documents and instruments of transfer for the Assets including, without limitation, bills of sale for all Tangible Property, assignments of all Intangibles (including all Intellectual Property Rights appurtenant thereto) and assignments of all assignable licenses and Permits relating to the Assets or the use, occupancy or operation thereof including, but not limited to, documents substantially in the form of Exhibit "A" (Master Trademark Assignment Agreement), Exhibit "B" (Security Release) and Exhibit "C" (Assumption and Assignment Agreement). 7.2 Copies of the minutes of the meetings of the managers and members of Rampage Licensing and Rampage.com and the board of directors and shareholders of Rampage Clothing authorizing the execution and performance of this Agreement and the amendment of Seller's and Rampage Clothing's charter or formation documents to change its name, certified by Seller's Secretary; 7.3 Documents sufficient to effect amendments of Seller's, Rampage Clothing's and Rampage.com's charter or other formation documents to change its name to one which is not similar to its present name, which documents shall be in proper form; 7.4 Copies or originals of all files, papers, books and records, licenses, permits, approvals, applications, correspondence, and other documents relative to the Assets; 7.5 Termination statements and any other termination documents terminating all Encumbrances in and to the Assets; 20 7.6 A certificate, dated no earlier than ten days prior to the Closing Date, that Seller, Rampage Clothing and Rampage.com is in good standing in its jurisdiction of formation; 7.7 Certificate of incumbency and specimen signatures of all signatory officers of Seller, certified by Seller's Secretary and or manager; 7.8 Certificate of incumbency and specimen signatures of all signatory officers of Rampage Clothing and Rampage.com, certified by the respective secretary of Rampage Clothing and the secretary or manager of Rampage.com; 7.9 The License Agreement; 7.10 The favorable opinion of Buchalter Nemer, a Professional Law Corporation, counsel to Seller, Rampage Clothing and Rampage.com, dated the Closing Date and addressed to Buyer substantially in the form attached hereto as Exhibit "D"; 7.11 Permits and Consents from any person required for consummation of the Closing in form and substance satisfactory to Buyer including, without limitation, all governmental and administrative Consents and approvals; 7.12 All such further Documents and Contracts which may be requested by Buyer or its counsel, in order to more effectively transfer title to the Assets to Buyer, or to effectuate and carry out any provision of this Agreement and the transaction provided herein; 7.13 Evidence of termination of arrangements relating to the payment of revenues of Rampage Licensing to Rampage Clothing, the Creditors' Trust and/or others and evidence of termination of the license agreement between Seller and Rampage Clothing. 7.14 Letters, in the form attached hereto as "Exhibit E," from Seller to each licensee under the Specified Contracts directing such licensee to make all payments due to Seller under such Specified Contracts, to Buyer, and setting forth the Buyer's address for such payments. 8. Deliveries by Buyer. Concurrently herewith at the Closing, Buyer is delivering to Seller, and, where applicable, Principals, the following, which shall be in form and substance acceptable to Seller and Principals and Seller's counsel and Principals' counsel: 8.1 Purchase Price; 8.2 The License Agreement signed by Buyer; and 8.3 The favorable opinion of Blank Rome LLP, counsel to Buyer, dated the Closing Date and addressed to Seller, substantially in the form of Exhibit "F". 9. Interpretation and Survival of Representations and Warranties. Notwithstanding any right of Buyer to fully investigate the affairs of Seller (and vice versa) and notwithstanding any knowledge of facts determined or determinable by Buyer pursuant to such investigation or right of investigation 21 (and vice versa), Buyer, Seller, Rampage Clothing and Principals, as the case may be, have the right to rely fully upon the representations, warranties, covenants and agreements contained in this Agreement or in any Transaction Document delivered to them or any representatives in connection with the transactions contemplated by this Agreement. Each warranty, representation and covenant contained herein is independent of all other warranties, representations and covenants contained herein (whether or not covering identical or related subject matter) and must be independently and separately complied with and satisfied. All representations, warranties, covenants and agreements shall survive the execution and delivery hereof and the Closing hereunder. Notwithstanding the foregoing: 9.1 the representations and warranties of the Seller and Principals contained in Sections 4.1, 4.2, 4.3, 4.17, 4.18, 4.22, 4.25 and 5.2 of this Agreement, the representations and warranties of Buyer contained in Sections 6.1, 6.2, 6.3, 6.5, 6.6, 6.8 and 6.10 of this Agreement and the respective covenants and agreements of the parties hereto contained in this Agreement, and the related agreements of the Seller, the Principals and Buyer to indemnify each other set forth in Section 11, shall survive the Closing and continue in full force and effect indefinitely and the parties hereto shall have the right to seek indemnification from the Seller, the Principals or Buyer, as the case may be, in respect thereof indefinitely; and 9.2 all other representations and warranties of the Seller and Buyer hereunder, and the related agreements of the Seller, the Principals and Buyer to indemnify each other set forth in Section 11, shall survive the Closing and continue in full force and effect until, and all indemnification claims with respect thereto shall be made prior to, the eighteenth (18th) month anniversary of the Closing Date, except for representations, warranties and related indemnities for which an indemnification claim shall be pending as of the end of the applicable period referred to above, in which event such indemnities shall survive with respect to such indemnification claim until the final disposition thereof. 9.3 With respect to any representation, warranty and related indemnity, the period commencing on the date hereof and terminating on the date that such representation, warranty and indemnity expires pursuant to clause 9.1 or 9.2 above shall be referred to herein as the "Applicable Survival Period". 10. Certain Post-Closing Obligations 10.1 Voting Restrictions. Each Seller and Principal hereby agrees to vote the Shares owned or held of record by each of them in favor of matters approved by the Board of Directors of Buyer (the "Board") or at the direction of the Board in connection with all matters seeking Buyer's stockholder approval, or to take all actions by written consent in lieu of any such meeting as directed by the Board, other than for Excluded Transactions (as hereinafter defined) until the Seller and Principals do not own, in the aggregate, more than 500,000 Shares (as such number shall be appropriately be adjusted for any stock split, stock combination or other similar event affecting the outstanding number of shares of Buyer's Stock occurring after the date hereof). It being understood that the provisions of this clause shall not apply to any Shares sold or otherwise transferred by any of the foregoing Persons to Persons other than the foregoing Persons. "Excluded Transactions" shall mean any transaction or series of 22 transactions that, directly or indirectly, (A) results in any holder of the Shares receiving proportionately less or different consideration for any Shares held by such holder or otherwise being treated disproportionately adversely than any other holder of Buyer's Stock or other interests convertible, exchangeable or exercisable into shares of Buyer's Stock; (B) has the effect of increasing the proportionate share of Buyer's outstanding Stock held by any affiliate of Buyer, except as a result of (y) the issuance to such affiliate for fair value of any such shares of Buyer's Stock, or (z) the issuance of equity securities of Buyer to Buyer's employees in the ordinary course of business pursuant to employee benefit plans or arrangements approved by the Board; (C) has an adverse effect on any existing employment, consulting or other arrangement between Buyer or any of its subsidiaries and any such holder or any affiliate of such holder of Buyer's Stock; or (D) would subject any holder of Buyer's Stock to liability under any applicable Law. 10.2 Restrictions on Sale of Shares. During the 24 month period following the Closing Date (such period herein referred to as the "Restricted Period"), no Seller or Principal shall, directly or indirectly, through an "affiliate" or "associate" (as such terms are defined in the General Rules and Regulations under the Securities Act of 1933, as amended), a family member or otherwise, offer, sell, pledge, hypothecate, grant an option for sale, or otherwise dispose of, or transfer or grant any rights with respect thereto in any manner either privately or publicly (each, a "Transfer") any of the Shares or shares of the Buyer's Stock acquired by any of the Seller or Principals pursuant to a stock split, stock dividend, reverse stock split, subdivision, combination, reclassification or similar change in the capital structure of Buyer (each an "Adjustment") affecting the Shares (together with the Shares, "Securities"), or enter into any agreement or any transaction that has the effect of transferring, in whole or in part, directly or indirectly, the economic consequence of ownership of the Securities, whether any such agreement or transaction is to be settled by delivery of the Securities, in cash or otherwise; except that, subject to the terms and conditions of this Agreement, (i) during the first 12 month period of the Restricted Period (the "Initial Period"), Seller and/or Principals may Transfer, in open market transactions, such number of Securities for which the gross proceeds of all such Transfers occurring during the Restricted Period equal no more than an aggregate of $10,150,000 and (ii) on the first day of each of the first four consecutive three-month periods following the expiration of the Initial Period, the restrictions on Transfer provided for in this Section 10.2 shall lapse, on a cumulative basis, with respect to 25% of the number of Shares owned by Seller and Principals at the end of the Initial Period (taking into account and proportionally adjusting for any Adjustments occurring during such period) and Seller and/or Principals may Transfer such Shares, in open market transactions without restriction. 10.3 Automatic Registration. (1) Not later than thirty (30) days after the Closing Date, Buyer shall prepare and file with the Commission a Registration Statement covering the resale of all of the Shares. The Registration Statement shall be on Form S-3 (except if Buyer is not then eligible to register for resale the Shares on Form S-3, in which case such registration shall be on another appropriate form in accordance herewith) and shall contain a "Plan of Distribution" in form and substance agreed upon by the parties hereto and customary for transactions of this type. Buyer shall use its commercially reasonable efforts to cause the Registration Statement to be declared effective under the Securities Act as soon as possible but, in any event, no later than one hundred twenty (120) days after the Closing Date, and shall use its commercially reasonable efforts to keep the Registration Statement continuously effective under the Securities Act until the earlier of the date when (i) all the Shares covered by the Registration Statement have been 23 sold pursuant thereto or, so long as a Registration Statement covering all of the Shares is then effective, otherwise or (ii) the Shares may be publicly sold without volume restrictions under Rule 144(k) of the Securities Act as determined by the counsel to Buyer pursuant to a written opinion letter to such effect, addressed and acceptable to Buyer's transfer agent, the Seller and the Principals (the "Effectiveness Period"). Buyer's obligation under this Section is subject to the applicable seller of the Shares being registered providing Buyer with such information regarding such seller and its ownership of shares of Buyer Stock as Buyer determines necessary to include in the Registration Statement. (2) In connection with Buyer's registration obligations hereunder, Buyer shall: (a) Not less than two business days prior to the filing of the Registration Statement or any related Prospectus or any amendment or supplement thereto, furnish to Paul Buxbaum, who is hereby designated by the Seller and Principals as the representative of the Principals and Seller for the purposes of this Section 10.3 (in such capacity, the "Principal Representative") copies of all such documents proposed to be filed which documents will be subject to the review of the Principal Representative and one counsel to the Principal Representative. Buyer shall not file the Registration Statement or any such Prospectus or any amendments or supplements thereto to which the Principal Representative or counsel to the Principal Representative shall reasonably object in good faith. (b) (A) Prepare and file with the Commission such amendments, including post-effective amendments, to the Registration Statement and the Prospectus used in connection therewith as may be necessary to keep the Registration Statement continuously effective as to the applicable Shares for the Effectiveness Period; (B) cause the related Prospectus to be amended or supplemented by any required Prospectus supplement, and as so supplemented or amended to be filed pursuant to Rule 424 under the Securities Act; and (C) respond as promptly as practicable to any comments received from the Commission with respect to the Registration Statement or any amendment thereto and, as promptly as reasonably possible provide the Principal Representative true and complete copies of all correspondence from and to the Commission relating to the Registration Statement. (c) Notify the Principal Representative as promptly as practicable (and, in the case of (A)(1) below, not less than three business days prior to such filing) and (if requested by any such Person) confirm such notice in writing no later than two business days following the day (A)(1) when a Prospectus or any Prospectus supplement or post-effective amendment to the Registration Statement is proposed to be filed; (2) when the Commission notifies Buyer whether there will be a "review" of such Registration Statement and whenever the Commission comments in writing on such Registration Statement (Buyer shall provide true and complete copies thereof and all written responses thereto to the Principal Representative); and (3) with respect to the Registration Statement or any post-effective amendment, when the same has become effective; (B) of any request by the Commission or any other Federal or state governmental authority for amendments or supplements to the Registration Statement or Prospectus or for additional information; (C) of the issuance by the Commission of any stop order suspending the effectiveness of the Registration Statement covering any or all of the Shares or the initiation of any Proceedings for that purpose; (D) of the receipt by Buyer of any notification with respect to the suspension of the qualification or exemption from qualification of any of the Shares for sale in any jurisdiction, or the initiation or threatening of any Proceeding for such purpose; and (E) of the occurrence of any event or passage of time that makes the financial statements included in the Registration Statement ineligible for inclusion therein or any statement made in the Registration Statement or 24 Prospectus or any document incorporated or deemed to be incorporated therein by reference untrue in any material respect or that requires any revisions to the Registration Statement, Prospectus or other documents so that, in the case of the Registration Statement or the Prospectus, as the case may be, it will not contain any untrue statement of a material fact or omit to state any material fact required to be stated therein or necessary to make the statements therein, in light of the circumstances under which they were made, not misleading. (d) Use its commercially reasonable efforts to avoid the issuance of, or, if issued, obtain the withdrawal of (A) any order suspending the effectiveness of the Registration Statement, or (B) any suspension of the qualification (or exemption from qualification) of any of the Shares for sale in any jurisdiction, at the earliest practicable moment. (e) Furnish to Seller and each Principal, without charge, at least one conformed copy of the final Registration Statement and each amendment thereto, including financial statements and schedules, all documents incorporated or deemed to be incorporated therein by reference, and all exhibits to the extent requested by such Person (including those previously furnished or incorporated by reference) promptly after the filing of such documents with the Commission. (f) Promptly deliver to Seller and each Principal, without charge, as many copies of the Prospectus or Prospectuses (including each form of prospectus) and each amendment or supplement thereto as such Persons may reasonably request. Buyer hereby consents to the use of such Prospectus and each amendment or supplement thereto by each of the selling holders in connection with the offering and sale of the Shares covered by such Prospectus and any amendment or supplement thereto. (g) Prior to any public offering of Shares, use its commercially reasonable efforts to register or qualify or cooperate with the selling holders in connection with the registration or qualification (or exemption from such registration or qualification) of such Shares for offer and sale under the securities or Blue Sky laws of all jurisdictions within the United States reasonably requested by either Seller or any Principal, to keep each such registration or qualification (or exemption therefrom) effective during the Effectiveness Period and to do any and all other acts or things necessary or advisable to enable the disposition in such jurisdictions of the Shares covered by the Registration Statement; provided, that Buyer shall not be required to qualify generally to do business in any jurisdiction where it is not then so qualified or subject Buyer to any material tax in any such jurisdiction where it is not then so subject. (h) Cooperate with the Seller and the Principals to facilitate the timely preparation and delivery of certificates representing Shares to be delivered to a transferee pursuant to the Registration Statement, which certificates shall be free of all restrictive legends, and to enable such Shares to be in such denominations and registered in such names as any such Persons may request. 25 (i) Use commercially reasonable efforts to cause all Shares covered by a Registration Statement to be listed on each securities exchange, interdealer quotation system or other market on which similar securities issued by Buyer are then listed. (j) Upon the occurrence of any event contemplated by clause (c)(2) or (3), as promptly as practicable, take all such action as is necessary to cause the removal of any such stop order or any such suspension of the qualification or exemption from qualification. (k) Upon the occurrence of any event contemplated by clause (c)(5), as promptly as reasonably possible, prepare a supplement or amendment, including a post-effective amendment, to the Registration Statement or a supplement to the related Prospectus or any document incorporated or deemed to be incorporated therein by reference, and file any other required document so that, as thereafter delivered, neither the Registration Statement nor such Prospectus will contain an untrue statement of a material fact or omit to state a material fact required to be stated therein or necessary to make the statements therein, in light of the circumstances under which they were made, not misleading. (l) Comply with all applicable rules and regulations of the Commission, take such other actions as may be reasonably necessary to facilitate the registration of the Shares hereunder; and make available to its security holders, as soon as reasonably practicable, but not later than the Availability Date (as defined below), an earnings statement covering a period of at least twelve (12) months, beginning after the effective date of each Registration Statement, which earnings statement shall satisfy the provisions of Section 11(a) of the Securities Act, including Rule 158 promulgated thereunder (for the purpose of this clause (xii), "Availability Date" means the 45th day following the end of the fourth fiscal quarter that includes the effective date of such Registration Statement, except that, if such fourth fiscal quarter is the last quarter of Buyer's fiscal year, "Availability Date" means the 90th day after the end of such fourth fiscal quarter). (3) All fees and expenses incident to the performance of or compliance with the provisions of Section 10 of this Agreement by Buyer shall be borne by Buyer whether or not any Shares are sold pursuant to the Registration Statement. The fees and expenses referred to in the foregoing sentence shall include, without limitation, (i) all registration and filing fees (including, without limitation, fees and expenses (A) with respect to filings required to be made with The Nasdaq National Market or other applicable securities exchange, and (B) in compliance with applicable state securities or Blue Sky laws), (ii) printing expenses (including, without limitation, expenses of printing certificates for Shares and of printing prospectuses if the printing of prospectuses is reasonably requested by the holders of a majority of the Shares included in the Registration Statement), (iii) messenger, telephone and delivery expenses, (iv) fees and disbursements of counsel for Buyer, (v) Securities Act liability insurance, if Buyer so desires such insurance, and (vi) fees and expenses of all 26 other Persons retained by Buyer in connection with the consummation of the transactions contemplated by this Section 10. In addition, Buyer shall be responsible for all of its internal expenses incurred in connection with the consummation of the transactions contemplated by this Section 10 (including, without limitation, all salaries and expenses of its officers and employees performing legal or accounting duties), the expense of any annual audit and the fees and expenses incurred in connection with the listing of the Shares on any securities exchange as required hereunder. (4) With a view to making available to the holders of Shares the benefits of Rule 144 (or its successor rule) under the Securities Act and any other rule or regulation of the Commission that may at any time permit such holders to sell Shares to the public without registration, Buyer covenants and agrees to: (i) make and keep public information available, as those terms are understood and defined in Rule 144 under the Securities Act, until the earlier of (A) such date as all of the Shares may be resold to the public without volume restrictions pursuant to Rule 144(k) under the Securities Act or any other rule of similar effect or (B) such date as all of the Shares shall have been resold; (ii) file with the Commission in a timely manner all reports and other documents required to be so filed pursuant to Rule 144(c) under the Securities Act in order to permit the holders of the Shares to be entitled to transfer the Shares without registration pursuant to Rule 144 under the Securities Act; and (iii) furnish to each holder of Shares upon request (A) a written statement by Buyer that it has complied with the reporting requirements of the Exchange Act, (B) a copy of Buyer's most recent Annual Report on Form 10-K or Quarterly Report on Form 10-Q, and (C) such other information as may be reasonably requested in order to avail such holder of any rule or regulation of the Commission that permits the selling of any such Shares without registration. (5) It is acknowledged and agreed that any holder of the Shares (whether or not such holder is a Seller or a Principal) is an intended third party beneficiary of the provisions of this Section 10.3; provided that (i) such holder agrees in writing to be bound by the provisions of this Section 10.3 applicable to such holder, (ii) such holder shall become the beneficial owner of such Shares prior to the effectiveness of the Registration Statement and (iii) such holder shall have notified Buyer of its intention to be included as a selling stockholder under the Registration Statement prior to (x) in the event that the Registration Statement is declared effective without the filing with the Commission of any amendments to the initial filing of the Registration Statement, the date of the initial filing of the Registration Statement with the Commission or (y) in the event that any amendments to the Registration Statement are filed with the Commission prior to the effectiveness of the Registration Statement, the date of the last amendment to the Registration Statement so filed with the Commission prior to the effectiveness of the Registration Statement. 10.4 Form D. Buyer shall file on a timely basis a Notice of Sale of Securities on Form D with respect to the Shares and shall provide a copy thereof to the Principal Representative. 10.5 Tax Returns. The Seller shall file all Tax Returns required to be filed with respect to the Assets on or prior to October 31, 2005. 10.6 Cooperation on Tax Matters. Seller, Principals and Buyer shall cooperate fully, as and to the extent reasonably requested by the other party, in connection with the filing of Tax Returns pursuant to this Agreement and any audit, litigation or other proceeding with respect to Taxes. Such cooperation shall include the retention and (upon the other party's request) the provision of records and information which are reasonably relevant to any such audit, litigation or other proceeding and making employees available on a mutually 27 convenient basis to provide additional information and explanation of any material provided hereunder. Seller and Principals agree to retain all books and records with respect to Tax matters pertinent to the Seller relating to any Tax period beginning before the Closing Date until the expiration of the statute of limitations (including any applicable extensions) of the respective Tax periods, and to abide by all record retention agreements entered into with any governmental authority. 10.7 Assistance with Audits. On or before October 1, 2005, Seller shall deliver to Buyer financial statements of the Seller which have been audited by an independent certified public accountant for the year ended December 31, 2004. Seller shall, at Buyer's expense, use its commercially reasonable efforts to take all actions, including the making available of Seller's accountants and the granting of access to Buyer and its accountants to all Books and Records of the Seller, to assist Buyer in connection with Buyer's preparation of financial statements as required by Items 2.01 and 9.01 of Form 8-K in order for Buyer to meet its Form 8-K obligations within the applicable time period required by such form. 10.8 Limited License. In consideration of the transactions contemplated by this Agreement, Buyer grants Rampage Clothing, during the period beginning on the Closing Date and ending September 30, 2005, (i) a non-exclusive royalty-free worldwide license to sell and deliver any of the apparel or other products contemplated to be sold and/or delivered pursuant to purchase orders of Rampage Clothing existing at the Closing, provided that such orders are actually shipped to customers on or prior to September 30, 2005 and (ii) a non-exclusive royalty-free worldwide license to use the Intellectual Property Rights in connection with the activities described in clause (i) above. 11. Indemnification. 11.1 Obligation of Seller, Rampage Clothing and Principals to Indemnify. Seller, Rampage Clothing, Rampage.com and Principals shall, jointly and severally, indemnify, defend and hold harmless Buyer and its officers, directors, shareholders and affiliates (collectively, the "Buyer Indemnified Parties") from and against any and all Losses with respect to the following: (1) any misrepresentation or breach of any representation, warranty, covenant or agreement of Seller, Rampage Clothing, Rampage.com and Principals (or any of them) contained in this Agreement or in any Transaction Document delivered pursuant to this Agreement (a "Seller Failure of Representation"); (2) any and all Retained Liabilities (a "Retained Liability Loss"); (3) Any breach of or failure to perform any covenant, agreement or obligation of either Seller, Rampage Clothing or any Principal contained in this Agreement or in any other Transaction Document (a "Seller Failure of Covenant"); (4) Any Liability or obligation arising out of the Proceedings described in Section 4.11 (whether or not listed on Schedule 4.11); 28 (5) Any Liability or obligation resulting from any violations of WARN, committed by Seller, Rampage Clothing or Rampage.com, for a period of 90 days following Closing; and/or (6) Any actions, causes of action, claims, suits, Proceedings, demands, assessments, settlements, Judgments, damages, Losses, costs and legal and other expenses incident to any of the foregoing. 11.2 Limitation as to the Seller's, Rampage Clothing's, Rampage.com's and Principals' Indemnification Obligations. The following provisions of this Section 11.2 shall limit the respective indemnification obligations of the Seller, Rampage Clothing, Rampage.com and Principals hereunder. (1) Limitation as to Time. Notwithstanding anything set forth in this Agreement to the contrary, no Seller nor any Principal shall have any indemnification liability under clauses 11.1(1) and 11.1(2) to any Buyer Indemnified Party in respect of any Seller Failure of Representation from and after the Applicable Survival Period, unless such claim was brought in writing in accordance with the terms hereof, prior to the lapse of the Applicable Survival Period in which case it shall survive until such claim has been settled or resolved. (2) Limitation as to Minimum Aggregate Claims. Notwithstanding anything set forth in this Agreement to the contrary, neither Seller, Rampage Clothing, Rampage.com nor any Principal shall have any indemnification liability under this Section 11 to any Buyer Indemnified Party with respect to any Losses in connection with any Seller Failure of Representation or any Seller Failure of Covenant until the aggregate dollar amount of all such Losses indemnifiable hereunder exceeds $250,000 and then only to the extent such Losses exceed such $250,000 threshold. (3) Maximum Aggregate Limitation. The maximum aggregate collective indemnification liability of the Seller, Rampage Clothing, Rampage.com and the Principals under this Section 11 in respect of Seller Failure of Representatives and Seller Failure of Covenants shall in no event exceed the sum of $25,000,000. (4) Limitation as to Form of Indemnification Payment. In the event that Seller, Rampage Clothing, Rampage.com or any Principal shall, pursuant to the terms of this Agreement, be obligated to make any indemnification payment to Buyer under this Section 11, Seller, Rampage Clothing, Rampage.com or such Principal may at its election make such payment in cash, in the form of shares of Buyer's Stock or any combination thereof. For the purpose of the foregoing, in the event that any Seller, Rampage Clothing, Rampage.com or Principal shall elect to make any indemnification payment (or any portion thereof) in the form of shares of Buyer's Stock, each such share of Buyer's Stock shall be deemed to be valued at the closing sales price per share of Buyer's Stock on the The Nasdaq National Market on the trading date immediately preceding the date such payment is made. 11.3 Obligation of Buyer to Indemnify. Buyer shall indemnify, defend and hold harmless the Seller and the Principals and their respective officers, directors, shareholders and affiliates (collectively, the "Seller Indemnified Parties") from and against any and all Losses with respect to the following: 29 (1) any breach of any representation or warranty of Buyer contained in this Agreement or in any other Transaction Document (a "Buyer Failure of Representation"); (2) any breach of or failure to perform any covenant, agreement or obligation of Buyer contained in this Agreement or in any other Transaction Document (a "Buyer Failure of Covenant"); (3) all Specified Liabilities; (4) any claim or Proceeding brought by any Person against any Seller Indemnified Party after the Closing asserting any Liability of the business of the Buyer or any of its Subsidiaries or the Assets arising from any event, fact or circumstance arising out of or relating to the ownership or operation of the business of the Buyer or any of its Subsidiaries or the Assets by Buyer after the Closing (a "Post-Closing Activity Loss"); and/or (5) any untrue or alleged untrue statement of a material fact contained in the Registration Statement, any Prospectus or any form of prospectus or in any amendment or supplement thereto or in any preliminary prospectus, or arising out of or relating to any omission or alleged omission of a material fact required to be stated therein or necessary to make the statements therein (in the case of any Prospectus or form of prospectus or supplement thereto, in light of the circumstances under which they were made) not misleading, except to the extent that such untrue statements or omissions are based solely upon information regarding such Seller Indemnified Party or such Seller Indemnified Party's proposed method of distribution of Shares, in each case, furnished in writing to Buyer by such Seller Indemnified Party expressly for use therein. 11.4 Limitation as to the Buyer's Indemnification Obligations. The following provisions of this Section 11.4 shall limit the respective indemnification obligations of the Buyer hereunder: (1) Limitation as to Minimum Aggregate Claims. Notwithstanding anything set forth in this Agreement to the contrary, Buyer shall not have any indemnification liability under this Section 11 to any Seller Indemnified Party with respect to any Losses in connection with any Buyer Failure of Representation, any Buyer Failure of Covenant or any Post-Closing Activity Loss until the aggregate dollar amount of all such Losses indemnifiable hereunder exceeds $250,000 and then only to the extent such Losses exceed such $250,000 threshold. 11.5 Limitation as to Maximum Aggregate Claims. Notwithstanding anything set forth in this Agreement to the contrary, the maximum aggregate indemnification liability of Buyer under this Section 11 in connection with all Buyer Failure of Representations and all Buyer Failure of Covenants shall in no event exceed $25,000,000 in the aggregate. 30 11.6 Third Party Claims. If a claim by a third party is made against any party or parties hereto and the party or parties against whom said claim is made intends to seek indemnification with respect thereto under Sections 11.1 or 11.2, the party or parties seeking such indemnification shall promptly notify the indemnifying party or parties, in writing, of such claim; provided, however, that the failure to give such notice shall not affect the rights of the indemnified party or parties hereunder except to the extent that such failure materially and adversely affects the indemnifying party or parties due to the inability to timely defend such action. The indemnifying party or parties shall have 10 business days after said notice is given to elect, by written notice given to the indemnified party or parties, to undertake, conduct and control, through counsel of their own choosing (subject to the consent of the indemnified party or parties, such consent not to be unreasonably withheld) and at their sole risk and expense, the good faith settlement or defense of such claim, and the indemnified party or parties shall cooperate with the indemnifying parties in connection therewith; provided: (a) all settlements require the prior reasonable consultation with the indemnified party and the prior written consent of the indemnified party, which consent shall not be unreasonably withheld (provided, that no such consent will be required in the event that such settlement contains (i) no admission of liability and (ii) an unconditional release of the indemnified party from any and all Liability in respect thereof), and (b) the indemnified party or parties shall be entitled to participate in such settlement or defense through counsel chosen by the indemnified party or parties, provided that the fees and expenses of such counsel shall be borne by the indemnified party or parties. So long as the indemnifying party or parties are contesting any such claim in good faith, the indemnified party or parties shall not pay or settle any such claim; provided, however, that notwithstanding the foregoing, the indemnified party or parties shall have the right to pay or settle any such claim at any time, provided that in such event they shall waive any right of indemnification therefor by the indemnifying party or parties. If the indemnifying party or parties do not make a timely election to undertake the good faith defense or settlement of the claim as aforesaid, or if the indemnifying parties fail to proceed with the good faith defense or settlement of the matter after making such election, then, in either such event, the indemnified party or parties shall have the right to contest, settle or compromise (provided that all settlements or compromises require the prior reasonable consultation with the indemnifying party and the prior written consent of the indemnifying party, which consent shall not be unreasonably withheld) the claim at their exclusive discretion, at the risk and expense of the indemnifying parties. 11.7 Sole and Exclusive Remedy. Each of the parties hereto acknowledge and agree that, after the Closing Date, notwithstanding any other provision of this Agreement to the contrary, such party's sole and exclusive monetary remedy with respect to any of the matters described in this Section 11 and any and all other claims relating to the subject matter of this Agreement and the Transaction Documents and the transactions contemplated hereby and thereby shall be in accordance with, and limited by, the provisions set forth in this Section 11. Notwithstanding anything to the contrary contained in the foregoing, nothing contained in this Agreement shall relieve or limit the liability of any party or any officer or director of such party from any liability arising out of or resulting from actual fraud or intentional misrepresentation in connection with the transactions contemplated by this Agreement or the Transaction Documents. 31 12. Assistance. Regardless of which party is controlling the defense of any claim, each party shall act in good faith and shall provide reasonable documents and cooperation to the party handling the defense. 13. Expenses. Whether or not the transactions contemplated by this Agreement shall be consummated, each party shall pay its own expenses incident to preparing for, entering into and carrying into effect this Agreement and the transactions contemplated hereby. Seller shall each be responsible for and make arrangements to pay all sales, transfer, stamp, recording and similar Taxes, if any, incurred in connection with any Intangibles and Tangible Property conveyed to Buyer hereunder. 14. Further Assurances. 14.1 In addition to the actions specifically required to be taken or delivered by this Agreement, whether on or before or from time to time after the Closing, and without further consideration, each party hereto shall take such other actions, and execute and/or deliver such other documents and instruments, as the other party hereto or its counsel may reasonably request in order to effectuate and perfect the transactions contemplated by this Agreement. 14.2 After the Closing Date, Seller and Principals shall do the following: (1) Deliver to Buyer all notices, correspondence and other items relating to the Assets which are from time to time received by them or are in their possession. (2) File with the appropriate governmental body documents sufficient to effect a change of Seller's, Rampage Clothing's and Rampage.com's name to one not similar to its current name and send proof of such filing and proper advertising thereof to Buyer, and file with each jurisdiction listed in Schedule 4.1 such Documents as are necessary to effectuate such change of name in each such jurisdiction. 15. Non-compete. 15.1 Non-compete. (1) For a period of the longer of (i) the term of the License Agreement or two (2) years from the date hereof, Larry Hansel agrees that neither he, nor any entity in which he maintains a financial or ownership interest, will, either directly or indirectly, design, manufacture, license, purchase or sell to any department store junior collection (or young contemporary) or specialty store buyer, women's junior collection sportswear directly competitive with the Marks, or take any actions or sell any product that shall in any way reduce the availability of "open to buy" from Seller's or its Affiliate's customers, or undermine or interfere with the sale of Articles (as defined in the License Agreement) in any way. For purposes of this Section 15.1 "directly competitive" shall mean brands that have similar consumer base and price points as the Marks. By way of illustration, and not limitation, Buyer acknowledges and consents to a Principal's ownership, directly or indirectly, of "Love Tease" a juniors trademark targeted at lower price points than the Marks in primary markets and "Grass" a denim (jeans and tops) trademark targeted at upscale specialty retailers. Both "Love Tease" and "Grass" shall be excluded from the restrictions 32 of this Section 15.1 so long as the price points and consumer base of those brands, and the price points for Articles, remain substantially similar to the price points and consumer base that are currently in effect. Notwithstanding the foregoing, in the event that the License Agreement is terminated pursuant to Section 2.4 of the License Agreement, the restriction set forth in this Section 15.1 shall immediately terminate. (2) Each of Paul Buxbaum and David Ellis hereby agrees that for a period of two (2) years after the date hereof, neither of them shall, in any way, have any direct or indirect investment in, or active participation in the management of, any of the following brands or any licensees thereof: GUESS and XOXO. For purposes of clarification, nothing in the foregoing sentence shall prohibit each of Messrs. Buxbaum and Ellis from owning, directly or indirectly, for investment purposes only, not more than 5% of the publicly traded capital stock of GUESS. 15.2 The parties hereto hereby acknowledge and agree that (i) Buyer would be irreparably injured in the event of a breach by any of the Principals of any of their obligations under this Section 15, (ii) monetary damages would not be an adequate remedy for any such breach, and (iii) Buyer shall be entitled to injunctive relief, in addition to any other remedy which it may have, in the event of any such breach. It is hereby also agreed that the existence of any claims which Principals may have against Buyer, whether under this Agreement or otherwise, shall not be a defense to the enforcement by Buyer of any of the rights under this Section 15. 15.3 It is the intent of the parties hereto that the covenants contained in this Agreement shall be enforced to the fullest extent permissible under the laws of and public policies of each jurisdiction in which enforcement is sought (Principals hereby acknowledge that said restrictions are reasonably necessary for the protection of Buyer). Accordingly, it is hereby agreed that if any one or more of the provisions of this Section 15 shall be adjudicated to be invalid or unenforceable for any reason whatsoever, said provision shall be (only with respect to the operation thereof in the particular jurisdiction in which such adjudication is made) construed by limiting and reducing it so as to be enforceable to the extent permissible. 15.4 The provisions of this Section 15 shall be in addition to, and not in lieu of, any other obligations with respect to the subject matter hereof, whether arising as a matter of contract, by law or otherwise, including, but not limited to, any obligations which may be contained in any employment agreements between the Principals and Buyer entered into at or after the Closing. Notwithstanding the joint and several obligations of the Principals set forth in Section 11 hereof, in no event shall the breach by any Principal of the restrictive covenants set forth in Section 15.1 or 15.2 result in an indemnification obligation for the non-breaching Principals set forth in this Agreement. 16. Miscellaneous. 16.1 Publicity. The parties shall consult with each other before issuing any press release with respect to the Agreement or the transactions contemplated hereby and shall not issue any such press release or make any such public statement without the prior consent of the other parties, which shall not be 33 unreasonably withheld, conditioned or delayed; provided, however, that Buyer may, without the prior consent of the other parties (but after prior consultation, to the extent practicable in the circumstances) issue such press release or make such public statement as may upon the advice of outside counsel be required by law or the rules and regulations of the NASDAQ. 16.2 Notices. Any notice or other communication required or which may be given hereunder shall be in writing and either delivered personally to the addressee, or mailed, certified or registered mail or express mail, postage prepaid, or sent by a nationally recognized courier service, service charges prepaid, and shall be deemed given when so delivered personally, if by certified or registered mail, four days after the date of mailing or if express mailed or sent by a nationally recognized courier service, two days after the date of mailing, as follows: (1) If to Buyer: Iconix Brand Group, Inc. 215 West 40th Street, 6th Floor New York, New York 10008 Attn: Neil Cole, President With a required copy to: Blank Rome LLP 405 Lexington Avenue New York, New York 10174 Attention: Robert J. Mittman, Esq. (2) If to Seller: Rampage Licensing LLC c/o Buxbaum Company, LLC 26610 Agoura Boulevard, Suite 120 Calabasas, CA 91320 With a required copy to: Buchalter Nemer 1000 Wilshire Boulevard, 15th Floor Los Angeles, California 90017 Attn.: Jeffrey H. Kapor, Esq. (3) If to Principals: Mr. Paul Buxbaum c/o Buxbaum Company, LLC 26610 Agoura Boulevard, Suite 120 Calabasas, CA 91320 34 Mr. Larry Hansel 2300 S. Eastern Avenue Commerce, CA 90040 With a required copy to: Buchalter Nemer 1000 Wilshire Boulevard, 15th Floor Los Angeles, California 90017 Attn.: Jeffrey H. Kapor, Esq. and to such other address or addresses as Buyer, Seller or the Principals, as the case may be, may designate to the other by notice as set forth above. 16.3 Entire Agreement. This Agreement (including the Exhibits and Schedules hereto) contains the entire agreement among the parties with respect to the subject matter hereof and supersedes all prior or contemporaneous agreements, written or oral, with respect thereto. 16.4 Waivers and Amendments. This Agreement may be amended, modified, superseded or cancelled and the terms and conditions hereof may be waived, only by a written instrument signed by all the parties or, in the case of a waiver, by the party waiving compliance. No delay on the part of any party in exercising any right, power or privilege hereunder shall operate as a waiver thereof, nor shall any waiver on the part of any party of any right, power or privilege hereunder, nor shall any single or partial exercise of any right, power or privilege hereunder preclude any other or further exercise thereof or the exercise of any other right, power or privilege hereunder. The rights and remedies herein provided are cumulative and are not exclusive of any rights or remedies which any party may otherwise have at law or in equity. The rights and remedies of any party arising out of or otherwise in respect of any inaccuracy in or breach of any representation, warranty, covenant or agreement contained in this Agreement shall in no way be limited by the fact that the act, omission, occurrence, or other state of facts upon which any claim of any such inaccuracy or breach is based may also be the subject matter of any other representation, warranty, covenant or agreement contained in this Agreement (or in any other agreement between the parties) as to which there is no inaccuracy or breach. 16.5 Binding Agreement. All of the terms and provisions of this Agreement shall be binding upon, inure to the benefit of and be enforceable by each of the parties hereto and their respective heirs, legal representatives, executors, successors and assigns. 16.6 Governing Law. This Agreement shall be governed and construed in accordance with the laws of the State of New York applicable to agreements made, delivered and to be performed entirely within such State. 16.7 Assignment. This Agreement and the rights and obligations of the parties hereto shall not be assigned by any party to any Person without the prior written consent of the other party. Nothing in this Agreement, unless otherwise expressly provided, is intended to confer upon any Person, other than the parties hereto and their successors and assigns, any rights or remedies under or by reason of this Agreement. 35 16.8 Variations in Pronouns. All pronouns and any variations thereof refer to the masculine, feminine or neuter, singular or plural, as the identity of the person or persons may require. 16.9 Severability. If any provision of this Agreement shall be determined by a court of competent jurisdiction to be invalid or unenforceable, such determination shall not affect the remaining provisions of this Agreement, all of which shall remain in full force and effect. 16.10 Counterparts. This Agreement may be executed in two or more counterparts, each of which shall be deemed an original but all of which together shall constitute one and the same instrument. 16.11 Exhibits and Schedules. The Exhibits and Schedules to this Agreement are a part of this Agreement as if set forth in full herein. 16.12 Headings. The headings in this Agreement are for reference purposes only and shall not in any way affect the meaning or interpretation of this Agreement. 16.13 Consent to Jurisdiction and Service of Process. Any Proceeding arising out of or relating to this Agreement or the transactions contemplated hereby may be instituted in any state or federal court in the State of New York, and each party waives any objection which such party may now or hereafter have to the laying of the venue of any such Proceeding, and irrevocably submits to the jurisdiction of any such court in any such Proceeding. Any and all service of process and any other notice in any such Proceeding shall be effective against any party if given by registered or certified mail, return receipt requested, or by any other means of mail which requires a signed receipt, postage prepaid, mailed to such party as herein provided. Nothing herein contained shall be deemed to affect the right of any party to serve process in any manner permitted by law or to commence legal Proceedings or otherwise proceed. REMAINDER OF PAGE INTENTIONALLY LEFT BLANK 36 IN WITNESS WHEREOF, the parties have executed this Agreement as of the date first above written. BUYER: SELLER: ICONIX BRAND GROUP, INC. RAMPAGE LICENSING, LLC By: /s/ Neil Cole By: /s/ Larry Hansel - --------------------------------------------- -------------------------------- Name Neil Cole Name: Larry Hansel Title: President and Chief Executive Officer Title: Manager RAMPAGE.COM, LLC RAMPAGE.COM, LLC By: /s/ Larry Hansel -------------------------------- Name: Larry Hansel Title: Manager RAMPAGE CLOTHING: RAMPAGE CLOTHING COMPANY By: /s/ David Ellis -------------------------------- Name: David Ellis Title: Executive Vice President PRINCIPALS: /s/ Bridgette Hansel Andrews /s/ Larry Hansel - ------------------------------------ ------------------- BRIDGETTE HANSEL ANDREWS LARRY HANSEL /s/ Paul Buxbaum /s/ Michelle Hansel - ------------------------------------ ------------------- PAUL BUXBAUM MICHELLE HANSEL /s/ David Ellis - ------------------------------------ DAVID ELLIS 37 LIST OF OMITTED SCHEDULES AND EXHIBITS SCHEDULE DESCRIPTION 1.37 Specified Contracts 2.3(2) Additional Assumed Liabilities 3.3 Purchase Price Allocation 4.1 Due Incorporation and Qualification; Subsidiaries 4.2 Capitalization; Options 4.4 Financial Statements 4.5 No Material Adverse Change 4.7 Compliance with Laws 4.8 Permits 4.9 No Breach 4.10 Consents and Approvals 4.11 Judgments and Proceedings 4.13 Contracts 4.16 Tangible Property 4.17 Intangibles 4.18 Title 4.19 Indebtedness 4.21 Suppliers and Licensees 4.23 Insurance 4.24 Software 4.26 No Broker 4.28 Related Party Transactions 5.2 Investment Matters 6.1 Subsidiaries 6.5 No Broker 6.8 Registration Rights 6.9 Consents 6.10 Regulatory Compliance 6.14 Compliance with Laws EXHIBITS DESCRIPTION Exhibit A Master Trademark Assignment Agreement Exhibit B Security Release Exhibit C Assignment and Assumption Agreement Exhibit D Opinion of Buchalter Nemer Exhibit E Letter to Licensee Exhibit F Opinion of Blank Rome LLP 38 EX-4.1 3 ex4_1.txt THE THIRD AMENDED AND RESTATED INDENTURE Exhibit 4.1 ================================================================================ IP HOLDINGS LLC, as Issuer and WILMINGTON TRUST COMPANY, as Trustee THIRD AMENDED AND RESTATED INDENTURE Dated as of September 1, 2005 $103,000,000 IP HOLDINGS LLC ASSET-BACKED NOTES ================================================================================ TABLE OF CONTENTS
Page PRELIMINARY STATEMENT............................................................................................2 GRANTING CLAUSES.................................................................................................2 ARTICLE I. DEFINITIONS AND OTHER PROVISIONS OF GENERAL APPLICATION...............................................2 Section 1.1. Definitions................................................................................2 Section 1.2. Acts of Noteholders........................................................................2 Section 1.3. Notices, etc. to Trustee, Issuer and IPHM..................................................2 Section 1.4. Notices to Noteholders; Waiver.............................................................2 Section 1.5. Effect of Headings and Table of Contents...................................................2 Section 1.6. Successors and Assigns.....................................................................2 Section 1.7. Severability...............................................................................2 Section 1.8. Benefits of Indenture......................................................................2 Section 1.9. Governing Law..............................................................................2 Section 1.10. Counterparts..............................................................................2 Section 1.11. Consents..................................................................................2 Section 1.12. Effective Date............................................................................2 ARTICLE II. NOTE FORM............................................................................................2 Section 2.1. Form Generally.............................................................................2 Section 2.2. Form of Note...............................................................................2 ARTICLE III. THE NOTES...........................................................................................2 Section 3.1. Designation of Notes; Certain Related Provisions...........................................2 Section 3.2. Denominations..............................................................................2 Section 3.3. Execution, Authentication, Delivery and Dating.............................................2 Section 3.4. Registration, Registration of Transfer and Exchange........................................2 Section 3.5. Limitation on Transfer and Exchange........................................................2 Section 3.6. Mutilated, Destroyed, Lost or Stolen Notes.................................................2 Section 3.7. Payment of Principal and Interest..........................................................2 Section 3.8. Persons Deemed Owners......................................................................2 Section 3.9. Cancellation...............................................................................2 i ARTICLE IV. DELIVERY OF THE NOTES................................................................................2 ARTICLE V. SATISFACTION AND DISCHARGE............................................................................2 Section 5.1. Satisfaction and Discharge of Indenture....................................................2 Section 5.2. Application of Trust Money.................................................................2 Section 5.3. Discharge of Security Interest.............................................................2 ARTICLE VI. EVENTS OF DEFAULT AND REMEDIES.......................................................................2 Section 6.1. Events of Default..........................................................................2 Section 6.2. Acceleration of Maturity, Rescission and Annulment.........................................2 Section 6.3. Remedies...................................................................................2 Section 6.4. Trustee May File Claim.....................................................................2 Section 6.5. Trustee May Enforce Claims Without Possession of Notes.....................................2 Section 6.6. Allocation of Money Collected..............................................................2 Section 6.7. Limitation on Suits........................................................................2 Section 6.8. Unconditional Right of Noteholders to Receive Principal and Interest.......................2 Section 6.9. Restoration of Rights and Remedies.........................................................2 Section 6.10. Rights and Remedies Cumulative............................................................2 Section 6.11. Delay or Omission Not Waiver..............................................................2 Section 6.12. Control by Noteholders....................................................................2 Section 6.13. Waiver of Past Defaults...................................................................2 Section 6.14. Undertaking for Costs.....................................................................2 Section 6.15. Waiver of Stay or Extension Laws..........................................................2 Section 6.16. Sale of Collateral........................................................................2 Section 6.17. Action on Notes...........................................................................2 ARTICLE VII. THE TRUSTEE; RESIGNATION OF TRUSTEE AND SUCCESSOR TRUSTEE...........................................2 Section 7.1. Certain Duties and Responsibilities of Trustee.............................................2 Section 7.2. Notice of Default, Cure or Waiver..........................................................2 Section 7.3. Certain Rights of Trustee..................................................................2 Section 7.4. Not Responsible for Recitals or Issuance of Notes..........................................2 Section 7.5. May Hold Notes.............................................................................2 Section 7.6. Money Held in Trust........................................................................2 Section 7.7. Compensation and Reimbursement.............................................................2 Section 7.8. Corporate Trustee Requirement Eligibility..................................................2 Section 7.9. Resignation and Removal; Appointment of Successor..........................................2 ii Section 7.10. Acceptance of Appointment by Successor....................................................2 Section 7.11. Merger, Conversion, Consolidation or Succession to Business of Trustee....................2 Section 7.12. Co-trustees and Separate Trustees.........................................................2 Section 7.13. Rights of Trustee in Capacity of Payment Agent, Transfer Agent or Registrar...............2 ARTICLE VIII. CONSOLIDATION AND MERGER...........................................................................2 ARTICLE IX. SUPPLEMENTAL INDENTURES..............................................................................2 Section 9.1. Supplemental Indentures Only with Consent of Noteholders...................................2 Section 9.2. Execution of Supplemental Indentures.......................................................2 Section 9.3. Effect of Supplemental Indentures..........................................................2 Section 9.4. Reference in Notes to Supplemental Indenture...............................................2 Section 9.5. Solicitation of Holders of Notes...........................................................2 ARTICLE X. REDEMPTION OF NOTES...................................................................................2 Section 10.1. Redemption at the Option of the Issuer....................................................2 Section 10.2. Notice of Redemption by the Issuer........................................................2 Section 10.3. Deposit of the Redemption Price...........................................................2 Section 10.4. Notes Payable on Redemption Date; Less than All Notes to be Redeemed......................2 Section 10.5. Defeasance................................................................................2 ARTICLE XI. REPRESENTATIONS, WARRANTIES AND COVENANTS............................................................2 Section 11.1. Payment of Principal and Interest.........................................................2 Section 11.2. Maintenance of Office or Agency...........................................................2 Section 11.3. Money for Note Payments to Be Held in Trust...............................................2 Section 11.4. Continued Existence; Observance of Organizational Documents...............................2 Section 11.5. Protection of Collateral..................................................................2 Section 11.6. Biennial Opinion as to Collateral.........................................................2 Section 11.7. Negative Covenants........................................................................2 Section 11.8. Statement as to Compliance................................................................2 Section 11.9. Inspection................................................................................2 Section 11.10. Limited Purpose..........................................................................2 Section 11.11. Issuer Ownership.........................................................................2 Section 11.12. Enforcement of Transaction Documents.....................................................2 Section 11.13. Representations and Warranties...........................................................2 Section 11.14. Certain Covenants........................................................................2 iii Section 11.15. Submission to Jurisdiction...............................................................2 Section 11.16. Representations with Respect to Assets...................................................2 Section 11.17. Survival of Indenture Representations and Warranties.....................................2 ARTICLE XII. ACCOUNTS, ACCOUNTINGS AND RELEASES..................................................................2 Section 12.1. Collection of Money.......................................................................2 Section 12.2. Accounts..................................................................................2 Section 12.3. Release of Assets.........................................................................2 Section 12.4. Accounting by Trustee to Issuer and the Noteholders.......................................2 Section 12.5. Collateral................................................................................2 Section 12.6. Opinion of Counsel........................................................................2 ARTICLE XIII. APPLICATION OF MONIES..............................................................................2 Section 13.1. Disbursements of Monies out of Collection Account.........................................2 Section 13.2. Disbursement of Monies out of the Liquidity Reserve Account...............................2 Section 13.3. Advertising Reserve Account...............................................................2 Section 13.4. Disbursements of Monies out of the Lockbox Account........................................2 Section 13.5. Disbursement of Monies out of the Renewal Reserve Account.................................2 Section 13.6. Disbursement of Monies out of Prepaid Fee and Royalty Account.............................2 Section 13.7. Eligible Investments......................................................................2 ARTICLE XIV. COVENANTS OF IP HOLDINGS AND MANAGEMENT CORPORATION.................................................2 Section 14.1. Continued Existence; Organizational Documents.............................................2 Section 14.2. Negative Covenant.........................................................................2 Section 14.3. No Bankruptcy Petition....................................................................2
APPENDIX A Standard Definitions EXHIBIT A Form of Assignment of Note EXHIBIT B Form of Servicer's Report EXHIBIT C Form of Investment Letter EXHIBIT D Substitute Form W-9 iv EXHIBIT E Assets EXHIBIT E-1: Trademarks EXHIBIT E-1A: Registered Trademarks EXHIBIT E-1B: Unregistered Trademarks EXHIBIT E-1C: Additional Registrations and Pending Applications EXHIBIT E-2: Licenses EXHIBIT E-3: Copyrights EXHIBIT E-4: Patents EXHIBIT E-5: Pending Intent-to-Use Applications EXHIBIT F Claims v ...................This THIRD AMENDED AND RESTATED INDENTURE (as amended from time to time as permitted hereby, this "Indenture") is dated as of September 1, 2005, is by and between IP HOLDINGS LLC, a Delaware limited liability company (together with its permitted successors and assigns, the "Issuer"), and WILMINGTON TRUST COMPANY, a Delaware banking corporation (together with its permitted successors and assigns, the "Trustee") and amends and restates in its entirety the Second Amended and Restated Indenture, dated as of July 1, 2005 (the "Second Amended and Restated Indenture"), by the parties hereto, which amended and restated in its entirety the Amended and Restated Indenture, dated as of April 1, 2004 (the "First Amended and Restated Indenture"), by the parties hereto, which amended and restated in its entirety, the Indenture, dated as of August 20, 2002 (the "Original Indenture"), by the parties hereto. PRELIMINARY STATEMENT ...................The Issuer duly authorized the execution and delivery of the Original Indenture to provide for the issuance of a single class of 7.93% IP Holdings LLC Asset-Backed Notes (as the same may be amended pursuant to the terms hereof, the "Original Notes"). ...................The Issuer duly authorized the execution and delivery of the First Amended and Restated Indenture to provide for the issuance of a subordinate class of Floating Rate IP Holdings LLC Subordinate Asset-Backed Notes (as the same may be amended pursuant to the terms hereof, the "Subordinate Notes"). ...................The Issuer duly authorized the execution and delivery of the Second Amended and Restated Indenture to provide for the issuance of a single class of 8.45% IP Holdings LLC Asset-Backed Notes (the "July Notes"), and for the exchange of the Original Notes and the Subordinate Notes for the July Notes. The Issuer now has duly authorized the execution and delivery of this Indenture to provide for the issuance of a single class of IP Holdings, LLC Asset-Backed Notes (the "Notes") and for the exchange of the July Notes for the Notes. ...................All covenants and agreements made by the Issuer herein are for the benefit and security of the Noteholders. The Issuer is entering into this Indenture, and the Trustee is accepting the trust created hereby, for good and valuable consideration, the receipt and sufficiency of which is hereby acknowledged. GRANTING CLAUSES ...................The Issuer hereby Grants to the Trustee for the exclusive benefit of the Holders of the Notes a Lien upon and a security interest in all of the Issuer's right, title and interest, whether now owned or hereafter acquired, (but none of the obligations) in and to the following (collectively, the "Collateral"), subject, however, in each case, to any applicable Lien: (a) the Assets; (b) all cash, securities, instruments and other property held from time to time in the Collection Account, the Liquidity Reserve Account, the Revenue Reduction Account, the JNCO Escrow Account, the Prepaid Fee and Royalty Account and the Renewal Reserve Account or otherwise transferred to the Trustee hereunder (but excluding any amounts payable to or deposited in the Advertising Reserve Account); (c) the Contribution Agreement, the Joe Boxer Contribution Agreement, the Rampage Contribution Agreement, the JNCO Contribution Agreement (to the extent the JNCO Acquisition occurs), the Management Agreement, the Back-Up Management Agreement and the Servicing Agreement, in each case as the same may be modified, amended, supplemented or restated from time to time; (d) all books and records concerning the foregoing property (including without limitation all tapes, disks and related items containing any such information); (e) all after acquired property of the Issuer, including, if the JNCO Acquisition occurs, any assets acquired by the Issuer pursuant to the JNCO Contribution Agreement; and (f) all proceeds of the foregoing of any nature whatsoever, including without limitation proceeds and the conversion, voluntary or involuntary, of any thereof. ...................Such Grants are only made, however, in trust, solely to secure (i) the Notes equally and ratably, except as otherwise may be provided in this Indenture, without prejudice, priority or distinction among the Notes by reason of differences in time of authentication or delivery or otherwise, (ii) the payment of all other sums payable under this Indenture, and (iii) compliance with the provisions of this Indenture, all as provided in this Indenture. ...................It is expressly agreed that anything herein contained to the contrary notwithstanding, the Issuer shall not, other than as required by applicable law, be released from any of its obligations under any of the Collateral, and the Trustee and the Holders shall have no obligation or liability under any Collateral by reason of or arising out of the assignment hereunder, nor shall the Trustee or the Holders be required or obligated in any manner to perform or fulfill any obligations of the Issuer under or pursuant to any of the Collateral or such other documents or to make any payment, subject, however, to any applicable Liens, or to make any inquiry as to the nature or sufficiency of any payment received by them, or present or file any claim, or take any action to collect or enforce the payment of any amounts which may have been assigned to them or to which they may be entitled at any time or times. ...................The Issuer does hereby warrant and represent that (i) except for Liens described in Exhibit B to each of the Contribution Agreement, the Joe Boxer Contribution Agreement, the Rampage Contribution Agreement, and, to the extent the JNCO Acquisition occurs, the JNCO Contribution Agreement, it has not permitted and hereby covenants that it will not permit, the creation of any Lien other than the Lien of this Indenture with respect to any part of the Collateral, so long as this Indenture shall remain in effect, to anyone other than the Trustee, and (ii) the representations and warranties of the Issuer contained in this Indenture are true and correct. - 2 - ...................The Trustee acknowledges such Grant, accepts the trusts hereunder in accordance with the provisions of this Indenture and agrees to perform the duties herein required. So long as any Note remains Outstanding, the Trustee shall act for the benefit of the Noteholders as their interests may appear to the extent provided herein. ...................The Trustee agrees to maintain in its possession each item of Collateral constituting a contract or chattel paper under the UCC delivered to it unless and until such item of Collateral is released from the lien hereof pursuant to Article V or Section 12.3 hereof. ...................All things necessary to make this Indenture a valid agreement of the Issuer in accordance with its terms have been done. The Trustee hereby acknowledges receipt of the July Note in connection with the authentication and delivery of the Note. ARTICLE I. DEFINITIONS AND OTHER PROVISIONS OF GENERAL APPLICATION Section 1.1 Definitions (a) Except as otherwise expressly provided herein or unless the context otherwise requires, the capitalized terms used in this Indenture shall have the respective meanings specified in the Third Amended and Restated Standard Definitions set forth as Appendix A hereto, which is incorporated herein by reference. The definitions of such terms are equally applicable both to the singular and plural forms of such terms. (b) All references in this instrument to designated "Articles," "Sections," "Subsections" and other subdivisions are to the designated Articles, Sections, Subsections and other subdivisions of this instrument as originally executed or if amended or supplemented, as so amended and supplemented. The words "herein," "hereof," "hereunder" and other words of similar import refer to this Indenture as a whole and not to any particular Article, Section, Subsection or other subdivision. Section 1.2 Acts of Noteholders (a) If, at any time, there is more than one Holder of the Notes, any request, demand, authorization, direction, notice, consent, waiver or other action provided by this Indenture to be given or taken by the Noteholders shall, unless otherwise expressly provided herein, be taken by the Holders of 51% of the aggregate Note Principal Balance of Notes Outstanding (the "Majority Holders") and, whether to be taken by all or less than all of the Holders, may be embodied in and evidenced by one or more instruments of substantially similar tenor signed by such Noteholders in person or by an agent duly appointed in writing; and, except as herein otherwise expressly provided, such action shall become effective when such instrument or instruments are delivered to the Trustee, and, where it is herein expressly required, to the Issuer. Such instrument or instruments (and the action embodied therein and evidenced thereby) are herein sometimes referred to as the "Act" of the Noteholders signing such instrument or instruments. Proof of execution of any such instrument or of a writing appointing any such agent shall be sufficient for any purpose of this Indenture and (subject to Section 7.1) conclusive in favor of the Trustee and the Issuer, if made in the manner provided in this Section 1.2. - 3 - (b) The fact and date of the execution by any Person of any such instrument or writing may be proved in any manner which the Trustee reasonably deems sufficient. (c) The ownership of Notes shall be proved by the Note Register. (d) Any request, demand, authorization, direction, notice, consent, waiver or other action by the Holder of any Note shall bind the Holder of every Note issued upon the registration of transfer thereof or in exchange therefor or in lieu thereof, in respect of anything done, omitted or suffered to be done by the Trustee or the Issuer in reliance thereon, whether or not notation of such action is made upon such Note. Section 1.3. Notices, etc. to Trustee, Issuer and IPHM ----------------------------------------- (a) Except as otherwise provided, any request, demand, authorization, direction, notice, consent, waiver or Act of Noteholders or other document provided or permitted by this Indenture to be made upon, given or furnished to, or filed with (1) the Trustee by any Noteholder, by the Issuer or by IPHM shall be sufficient for every purpose hereunder if made, given, furnished or filed in writing to or with the Trustee at its Corporate Trust Office; or (2) the Issuer or IPHM by the Trustee or by any Noteholder shall be sufficient for every purpose hereunder if in writing and mailed, registered mail return receipt requested or by overnight courier or hand delivery, to the Issuer addressed to it at 103 Foulk Road, Wilmington, Delaware 19803, and the Manager at the same address or at any other address previously furnished in writing to the Trustee by the Issuer. (b) Without duplication, a party to this Indenture sending or delivering a notice of any kind hereunder shall also provide a copy of the notice in any manner authorized herein to each Noteholder at the Noteholder's address as it appears on the Note Register upon receiving such address from the Trustee or the Noteholder and, in any event, each such party shall also in similar fashion send a copy of such notice to PartnerRe New Solutions Inc., at One Greenwich Plaza, Greenwich, Connecticut 06830-6352. Section 1.4. Notices to Noteholders; Waiver ...................Where this Indenture provides for notice to Noteholders of any event, such notice shall be sufficiently given (unless otherwise herein expressly provided) if in writing and mailed by registered mail return receipt requested or by overnight courier or hand delivery, to each Noteholder, at its address as it appears on the Note Register, not later than the latest date, and not earlier than the earliest date, prescribed for the giving of such notice. Any notice which is mailed in the manner herein provided shall be deemed effective upon receipt or refusal. - 4 - ...................Where this Indenture provides for notice in any manner, such notice may be waived in writing by any Person entitled to receive such notice, either before or after the event, and such waiver shall be the equivalent of such notice. Waivers of notice by the Noteholders shall be filed with the Trustee, but such filing shall not be a condition precedent to the validity of any action taken in reliance upon such waiver. ...................In case, by reason of the suspension of regular mail service as a result of a strike, work stoppage or similar activity, it shall be impractical to mail notice of any event to the Noteholders when such notice is required to be given pursuant to any provision of this Indenture, then any manner of giving such notice as shall be reasonably satisfactory to the Trustee shall be deemed to be a sufficient giving of such notice. Section 1.5. Effect of Headings and Table of Contents ...................The Article and Section headings herein and the Table of Contents are for convenience only and shall not affect the construction hereof. Section 1.6. Successors and Assigns ...................All covenants and agreements in this Indenture by the Issuer shall bind its successors and assigns, whether so expressed or not. Section 1.7. Severability ...................In case any provision in this Indenture or in the Notes shall be invalid, illegal or unenforceable, the validity, legality and enforceability of the remaining provisions shall not in any way be affected or impaired thereby. Section 1.8. Benefits of Indenture ...................Nothing in this Indenture or in the Notes, expressed or implied, shall give to any Person, other than the parties hereto, and any of their successors hereunder and the Noteholders, any benefit or any legal or equitable right, remedy or claim under this Indenture. Section 1.9. Governing Law ...................This Indenture and each Note shall be construed in accordance with and governed by the laws of the State of New York applicable to agreements made and to be performed therein without reference to its conflicts of laws rules. Section 1.10. Counterparts ...................This Indenture may be executed in any number of counterparts, each of which so executed shall be deemed to be an original, but all such counterparts shall together constitute but one and the same instrument. - 5 - Section 1.11 Consents ...................Any consent of any of the parties hereto required pursuant to this Indenture shall not be unreasonably withheld or delayed. Section 1.12. Effective Date This Indenture shall not be effective until the Closing Date of the Notes. ARTICLE II. NOTE FORM Section 2.1. Form Generally ...................The Notes and the certificate of authentication shall be in substantially the form set forth in Section 2.2 with such appropriate insertions, omissions, substitutions and other variations as are required or permitted by this Indenture, and may have such letters, numbers or other marks of identification and such legends or endorsements placed thereon, as may be required to comply with the rules of any securities exchange on which the Notes may be listed, or as may, consistently herewith, be determined by the officers executing such Notes, as evidenced by their execution of the Notes. Any portion of the text of any Note may be set forth on the reverse thereof, with an appropriate reference thereto on the face of the Note. Section 2.2. Form of Note THIS NOTE HAS NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE "SECURITIES ACT"), OR UNDER ANY STATE SECURITIES LAWS AND THE ISSUER HAS NOT BEEN REGISTERED UNDER THE INVESTMENT COMPANY ACT OF 1940, AS AMENDED (THE "INVESTMENT COMPANY ACT"), AND THIS NOTE MAY NOT BE SOLD, OFFERED FOR SALE OR OTHERWISE TRANSFERRED WITHOUT REGISTRATION UNDER THE SECURITIES ACT AND APPLICABLE STATE SECURITIES LAWS EXCEPT IN A TRANSACTION THAT IS EXEMPTED UNDER THE SECURITIES ACT (INCLUDING TRANSFER MADE PURSUANT TO RULE 144A UNDER THE SECURITIES ACT ("RULE 144A")) AND APPLICABLE STATE SECURITIES LAWS. EACH HOLDER OF THIS NOTE MUST BE, AND BY VIRTUE OF HOLDING THIS NOTE SHALL BE DEEMED TO HAVE REPRESENTED THAT IT IS, AN INSTITUTIONAL ACCREDITED INVESTOR WITHIN THE MEANING OF RULE 501(a)(1), (2), (3) and (7) UNDER THE SECURITIES ACT AND THAT IS WAS NOT FORMED TO PURCHASE NOTES. THE PRINCIPAL OF THIS NOTE IS PAYABLE ON THE PAYMENT DATES AND IN THE AMOUNTS DESCRIBED HEREIN. ACCORDINGLY, THE OUTSTANDING NOTE PRINCIPAL BALANCE OF THIS NOTE AT ANY TIME MAY BE LESS THAN THE AMOUNT SHOWN ON THE FACE HEREOF AND MAY BE ASCERTAINED ONLY BY OBTAINING A CONFIRMATION THEREOF FROM THE TRUSTEE NAMED HEREIN OR ITS SUCCESSOR. - 6 - ...................The Notes may not be acquired or transferred to an employee benefit plan subject to the Employee Retirement Income Security Act of 1974, as amended ("ERISA"), a plan described in Section 4975(e)(1) of the Code, or any entity deemed to hold plan assets of a benefit plan or plan unless the acquiror or the transferee represents that its acquisition and holding of the Notes will at all times be exempt from the prohibited transaction provisions of ERISA and Section 4975 of the Code under PTE 84-14, PTE 90-1, PTE 91-38, PTE 95-60 or PTE 96-23 or a similar exemption. ...................The Trustee and the Note Registrar shall not permit a transfer of a Note if such transfer would result in the Issuer having more than eight (8) registered Noteholders as shown in the Note Register or five (5) registered Noteholders excluding the initial Noteholder and its direct transferees. ...................The Holder of this Note is not a partnership, grantor trust or S corporation of which (i) substantially all of the value of the interest of a person owning an interest in such entity is attributable to the entity's (direct or indirect) interest in the Note, and (ii) a principal purpose of the use of the tiered arrangement is to permit the Issuer to satisfy the 100-person limitation in paragraph (h)(1)(ii) of Section 1.7704-1 of the Treasury Regulations. No.[___] Initial Note Principal Balance of the Notes: $[ ] Initial Note Principal Balance of this Note: $[ ] - 7 - IP HOLDINGS LLC ASSET-BACKED NOTES ISSUE DATE: September 16, 2005 LEGAL MATURITY DATE: November 22, 2015 ...................IP HOLDINGS LLC, a limited liability company duly organized and existing under the laws of the State of Delaware (the "Issuer," which term includes any successor entity under the Indenture referred to below), for value received, hereby promises to pay to [PAYEE], or registered assigns (the "Payee"), the principal sum of [ Dollars ($ )] payable on each Payment Date in distributions of principal and interest as set forth in the Indenture, but in no event less than the amounts set forth in the amortization schedule attached hereto on each Payment Date (which, in connection with an Unscheduled Amortization Events, shall be amended and restated by the Servicer such that the Notes will continue to amortize on a level debt service basis from the date of such Unscheduled Amortization Event to the Legal Maturity Date (with the concurrence of the Noteholders that the revised schedule has been properly determined)); provided, however, that the Issuer shall only be required to make the principal payment under the heading "Reserve Payments" on the amortization schedule attached hereto to the extent of funds on deposit in the Liquidity Reserve Account and in accordance with the provisions of Sections 13.1(a)(vi) and 13.2(b) of the Indenture. This Note shall be a limited obligation of the Issuer, payable solely from and to the extent of the Collateral subject to the Lien of the Indenture (defined below). This Note shall bear interest on the outstanding unpaid principal balance at a rate equal to the Note Interest Rate; provided, however, that interest on any amount of principal or interest that is not timely paid when due shall accrue interest until paid at a rate per annum equal to 2% per annum in excess of the Note Interest Rate then in effect to the extent allowed by law (the "Default Rate"); and, provided, further, that if a Default shall have occurred under, and as defined in, the Indenture, interest shall accrue from that time forward at the Default Rate, to the extent allowed by law, until such Default is cured. All unpaid principal of and accrued interest on the Notes shall be due and payable on November 22, 2015. The interest and principal so payable on any Payment Date shall, as provided in the Indenture, be paid to the Person in whose name this Note is registered in the Note Register on the Record Date for such Payment Date which shall be the close of business on the last day of the month prior to such Payment Date (whether or not a Business Day). All terms used in this Note which are defined in the Indenture shall have the meanings assigned to them in the Indenture. Certain provisions of the Indenture are described in this Note. ...................The principal of and interest on this Note are payable solely by wire transfer to the Person whose name appears as the Registered Holder of this Note on the Note Register on the Record Date for the Payment Date, in such coin or currency of the United States of America as at the time of payment is legal tender for payment of public and private debts. ...................Unless the certificate of authentication hereon has been executed by the Trustee whose name appears below by manual signature, this Note shall not be entitled to any benefit under the Indenture, or be valid or obligatory for any purpose. - 8 - ...................This Note is one of a duly authorized issue of Notes of the Issuer designated as its IP Holdings LLC Asset-Backed Notes (the "Notes") issued under a Third Amended and Restated Indenture, dated as of September 1, 2005 (herein, called the "Indenture"), by and between the Issuer and Wilmington Trust Company, as trustee (the "Trustee"), which term includes any successor Trustee under the Indenture, to which Indenture reference is hereby made for a statement of the respective rights thereunder of the Issuer, the Trustee and the Holders of the Notes, and the terms upon which the Notes are, and are to be, authenticated and delivered. ...................As provided in the Indenture, the Notes are secured by and payable solely from Assets (the "Assets") conveyed to the Issuer by its present and former members, proceeds thereof and other amounts, if any, held by the Trustee as security for the Notes, (the "Collateral") described in the Indenture. The Notes are equally and ratably secured by the Collateral pledged therefor to the extent provided by the Indenture. ...................Unless earlier declared due and payable by reason of an Event of Default, the Notes are payable at the time and in the manner provided in the Indenture and are redeemable at the option of the Issuer before such time in whole or in part, on either a Payment Date or on the first Business Day of any calendar month if there is no Payment Date occurring in such calendar month. The Notes shall be redeemed at a Redemption Price equal to the Note Principal Balance or portion thereof to be redeemed, plus accrued interest thereon to the Redemption Date, plus the Redemption Premium in the amount established under the Indenture (unless the redemption is an Extraordinary Optional Redemption, a JNCO Redemption or a Liquidity Reserve Fund Redemption, in which case no Redemption Premium shall be payable). If an Event of Default (as defined in the Indenture) shall occur and be continuing, the principal of all the Notes may become or be declared due and payable in the manner and with the effect provided in the Indenture. ...................The Issuer may remove all or a portion of the Assets relating to any or all Primary Marks from the Lien of the Indenture in accordance with Section 12.3 of the Indenture upon giving notice to the Trustee and delivering the Release Price of the Assets to be removed to the Trustee. Any such election to remove Assets shall be deemed to be an exercise of the option to redeem Notes as provided in the Indenture. ...................As provided in the Indenture and subject to certain limitations therein set forth, the transfer of this Note may be registered on the Note Register of the Issuer, upon surrender of this Note for registration of transfer at the office or agency of the Trustee in the United States of America, duly endorsed by, or accompanied by a written instrument of transfer in form and content satisfactory to the Issuer and the Trustee duly executed by, the Holder hereof or its attorney duly authorized in writing, and thereupon one or more new Notes, of authorized denominations and for the same aggregate Initial Note Principal Balance, shall be issued to the designated transferee or transferees. ...................Prior to due presentment for registration of transfer of this Note, the Issuer, the Trustee and any agent of the Issuer or the Trustee may treat the Person in whose name this Note is registered as the owner hereof for the purpose of receiving payment as herein provided and for all other purposes whether or not this Note be overdue, and neither the Issuer, the Trustee, nor any such agent shall be affected by notice to the contrary. - 9 - ...................The Indenture permits, with certain exceptions as therein provided, the amendment thereof and the modification of the rights and obligations of the Issuer and the rights of the Holders of the Notes under the Indenture at any time by the Issuer subject to procedures and approvals set forth in the Indenture. The Indenture also contains provisions permitting the Noteholders to waive compliance by the Issuer with certain provisions of the Indenture and certain past defaults and their consequences under the Indenture. Any such consent or waiver shall be conclusive and binding upon the Noteholder and upon all future Holders of this Note and of any Note issued upon the registration of transfer hereof or in exchange therefor or in lieu hereof whether or not notation of such consent or waiver is made upon this Note. ...................The Notes are issuable only in registered form without coupons in such authorized denominations as provided in Section 3.2 of the Indenture and subject to certain limitations therein set forth. The Notes are exchangeable for Notes of a like Initial Note Principal Balance of a different authorized denomination, as requested by the Holder surrendering same. ...................This Note and the Indenture shall be governed by and construed in accordance with the laws of the State of New York without reference to its conflicts of laws rules. ...................No reference herein to the Indenture and no provision of this Note or of the Indenture shall alter or impair the obligation of the Issuer, which is absolute and unconditional, to pay the principal of and interest on this Note in accordance with the Indenture at the times, place and rate, and in the coin or currency, herein prescribed. ...................IN WITNESS WHEREOF, the Issuer has caused this instrument to be signed, manually or in facsimile, by its President or a Vice President. IP HOLDINGS LLC By: IP Holdings and Management Corporation, its Manager By: ________________________ Name: Title: - 10 - [FORM OF TRUSTEE'S CERTIFICATE OF AUTHENTICATION] This is one of the Notes referred to in the within mentioned Indenture. Dated: [TRUSTEE], not in its individual capacity, but solely as Trustee By ________________________ Authorized Signatory - 11 - ARTICLE III. THE NOTES Section 3.1. Designation of Notes; Certain Related Provisions The Notes shall be designated generally as the "IP Holdings LLC Asset-Backed Notes" of the Issuer. The Notes and all accrued interest thereon shall be due and payable on the Legal Maturity Date to the extent not paid before such date. All calculations of interest on the Notes are to be determined as set forth in the definitions of the Candie's/Joe Boxer Note Interest Rate, the JNCO Note Interest Rate and the Rampage Note Interest Rate. The aggregate Initial Note Principal Balance of the Notes that may be authenticated and delivered hereunder is limited to $103,000,000, except for Notes issued and delivered upon registration of transfer of, or in exchange for, or in lieu of, other Notes, pursuant to Sections 3.4, 3.6 or 10.4 hereof. The Notes are limited obligations of the Issuer, payable solely from and to the extent of the Collateral subject to the Lien of the Indenture. Section 3.2 Denominations The Notes are available in a minimum denomination of $2,500,000 and integral multiples of $1,000 in excess thereof. Section 3.3. Execution, Authentication, Delivery and Dating The July Notes are hereby exchanged for Notes issued pursuant to this Indenture. For the avoidance of doubt, the indebtedness evidenced by the July Notes remains outstanding and is consolidated with the indebtedness evidenced by the Notes issued hereunder. The Notes shall be executed on behalf of the Issuer by the President or one of its Vice Presidents which may be in facsimile form or otherwise reproduced thereon. The signature of any of these officers on the Notes may be manual or facsimile. The Notes may be printed, lithographed, typewritten, mimeographed or otherwise produced. The Notes need not be sealed. Notes bearing the manual or facsimile signatures of individuals who were at any time the proper officers of the Issuer shall bind the Issuer, notwithstanding that such individuals or any of them have ceased to hold such offices prior to the authentication or delivery of such Notes or did not hold such offices at the date of authentication or delivery of such Notes. - 12 - At any time and from time to time after the execution and delivery of this Indenture, the Issuer may deliver Notes executed by the Issuer together with an Issuer Order authorizing authentication thereof to the Trustee for authentication; and the Trustee shall authenticate and deliver such Notes as in this Indenture, provided, having an aggregate Initial Note Principal Balance not in excess of the amount stated in Section 3.1, and not otherwise. Each Note shall bear on its face the Issue Date and the Legal Maturity Date and be dated as of the date of its authentication. No Note shall be entitled to any benefit under this Indenture or be valid or obligatory for any purpose, unless there appears on such Note a certificate of authentication substantially in the form provided for herein, executed by the Trustee by the manual signature of one of its authorized officers, and such certificate upon any Note shall be conclusive evidence, and the only evidence, that such Note has been duly authenticated and delivered hereunder. Each Holder shall provide the Trustee for recordation in the Note Register its mailing address for notices under the Indenture. Section 3.4. Registration, Registration of Transfer and Exchange The Trustee is hereby appointed as registrar of the Notes (the "Note Registrar"), as agent of the Issuer for transfer of the Notes (the "Transfer Agent") and as the agent of the Issuer for the payment of the Notes (the "Paying Agent") and the Trustee accepts such appointments. The Trustee in its capacity as the Note Registrar shall cause to be kept a register (the "Note Register") in which, subject to such reasonable regulations as it may prescribe, the Trustee shall provide for the registration of Notes and the registration of transfers of Notes. Upon surrender for registration of transfer of any Note at the office or agency of the Trustee to be maintained as provided in Section 11.2, the Issuer shall execute, and the Trustee shall authenticate and deliver, in the name of the designated transferee or transferees, one or more new Notes of any authorized denominations and of a like principal amount. At the option of the Holder, Notes may be exchanged for other Notes of any authorized denominations and of a like principal amount, upon surrender of the Notes to be exchanged at such office or agency. Whenever any Notes are so surrendered for exchange, the Issuer shall execute, and the Trustee shall authenticate and deliver the Notes which the Noteholder making the exchange is entitled to receive. All Notes issued upon any registration of transfer or exchange of Notes shall be the valid obligations of the Issuer, evidencing the same debt, entitled to the same benefits and subject to all the terms and conditions of this Indenture, as the Notes surrendered upon such registration of such transfer or exchange. Every Note presented or surrendered for registration of transfer or exchange shall (if so required by the Issuer or the Trustee) be duly endorsed, or be accompanied by a written instrument of transfer in form and content satisfactory to the Issuer and the Trustee duly executed, by the Holder thereof or his attorney duly authorized in writing. The form of assignment set forth at Exhibit A hereof shall be deemed to be satisfactory for purposes of the last preceding sentence. Concurrently with any transfer, the transferring Holder shall provide the Trustee for recordation in the Note Register the mailing address of such transferee for service of any notices to be delivered pursuant to this Indenture and the payment of amounts due to such transferee. - 13 - No service charge shall be made to a Holder for any registration of transfer or exchange of Notes, but the Issuer or the Trustee may require payment of a sum sufficient to cover any expense, tax or other governmental charge that may be imposed in connection with any registration of transfer or exchange of Notes, other than exchanges pursuant to Section 10.4 not involving any registration of transfer. Prior to any sale or other disposition of any Note the Holder transferring such Note will, at its election, either endorse thereon the amount of principal paid thereon and the last date to which interest has been paid thereon or surrender such Note to the Trustee in exchange for a new Note or Notes pursuant to this Section. Section 3.5. Limitation on Transfer and Exchange The Notes have not been registered or qualified under the Securities Act or the securities laws of any state. No transfer of any Note shall be made unless such transfer is made pursuant to an effective registration statement under the Securities Act and registration or qualification under applicable state securities laws or is exempt from such registration or qualification. In the event that a transfer is to be made in reliance upon an exemption from the Securities Act and applicable state securities laws, the Issuer shall require, in order to assure compliance with the Securities Act, that the prospective transferee certify to the Issuer and the Trustee in writing the facts surrounding the transfer in the form of the investment letter described in Exhibit C hereto or such other form as the Issuer may agree to accept, in its sole discretion (each such letter, an "Investment Letter"). Neither the Issuer nor the Trustee is obligated to register or qualify the Issuer or Notes (or any offering or sale thereof) under the Securities Act or any other securities law. While not conceding that the Issuer is an investment company within the meaning of the Investment Company Act, in no event shall the transfer of a Note be permitted if the transfer would cause the loss to the Issuer of a necessary exemption under the Investment Company Act of 1940, as amended. The Notes may not be acquired or transferred to an employee benefit plan subject to the Employee Retirement Income Security Act of 1974, as amended ("ERISA"), a plan described in Section 4975(e)(1) of the Code, or any entity deemed to hold plan assets of a benefit plan or plan unless the acquiror or the transferee represents that its acquisition and holding of the Notes will at all times be exempt from the prohibited transaction provisions of ERISA and Section 4975 of the Code under PTE 84-14, PTE 90-1, PTE 91-38, PTE 95-60 or PTE 96-23 or a similar exemption. The Trustee and the Note Registrar shall not permit a transfer of a Note if such transfer would result in the Issuer having more than eight (8) registered Noteholders as shown in the Note Register or five (5) registered Noteholders excluding the initial Noteholder and its direct transferees. - 14 - Further, if its absence will be deemed adverse to the Issuer pursuant to an opinion of counsel to that effect, each Purchaser of a Note other than the initial purchaser of the Notes will be required to represent that it is not a partnership, grantor trust or S corporation of which (i) substantially all of the value of the interest of a person owning an interest in such entity is attributable to the entity's (direct or indirect) interest in a Note, and (ii) a principal purpose of the use of the tiered arrangement is to permit the Issuer to satisfy the 100-person limitation in paragraph (h)(1)(ii) of Section 1.7704-1 of the Treasury Regulations. The Issuer and the Trustee shall have no liability to the Noteholders or otherwise arising from a transfer of any such Note in reliance upon the Investment Letter delivered in connection therewith. Section 3.6. Mutilated, Destroyed, Lost or Stolen Notes If (i) any mutilated Note is surrendered to the Trustee, or the Trustee receives evidence to its satisfaction of the destruction, loss or theft of any Note, and (ii) there is delivered to the Trustee such security or indemnity as may be required by the Trustee to indemnify and hold the Issuer and the Trustee harmless (which in the case of any Holder that is, or is a subsidiary of, a bank or other institutional buyer with a net worth of at least $50,000,000, and whose claims paying ability or long-term debt is rated at least investment grade or better by a Rating Agency, need only be such bank's or institutional buyer's unsecured written promise of indemnity), then, in the absence of notice to the Issuer or the Note Registrar that such Note has been acquired by a bona fide purchaser, the Issuer shall execute and upon its request the Trustee shall authenticate and deliver, in exchange for or in lieu of any such mutilated, destroyed, lost or stolen Note, a new Note of the same tenor and principal amount, bearing a number not contemporaneously outstanding; provided, however, that if any such mutilated, destroyed, lost or stolen Note shall have become or shall be about to become due and payable the Issuer in its discretion may, instead of issuing a new Note, pay such Note. Upon the issuance of any new Note under this Section, the Issuer or the Trustee may require the payment of a sum sufficient to cover any tax or other governmental charge that may be imposed in relation thereto, but no service charge may be imposed in connection therewith. Every new Note issued pursuant to this Section in lieu of any destroyed, lost or stolen Note shall constitute an original additional contractual obligation of the Issuer, whether or not the destroyed, lost or stolen Note shall be at any time enforceable by anyone, and shall be entitled to all the benefits of this Indenture equally and proportionately with any and all other Notes duly issued hereunder. The provisions of this Section are exclusive and shall preclude (to the extent lawful) all other rights and remedies with respect to the replacement or payment of mutilated, destroyed, lost or stolen Notes. - 15 - Section 3.7. Payment of Principal and Interest The principal of and interest on the Notes are payable by wire transfer in immediately available funds to the account specified in directions delivered at least five (5) Business Days prior to such Payment Date by a Registered Holder to the Person whose name appears as the Registered Holder of such Note on the Record Date on the Note Register. Such payment shall be in such coin or currency of the United States of America as at the time of tender is legal tender for the payment of public and private debts. Payments pursuant to Section 13.1 shall be made to each Noteholder based on the Percentage Interests represented by Notes held by such Noteholder. Upon the final payment in full of any Note, the Holder shall promptly surrender such Note at the Corporate Trust Office of the Trustee. To prevent backup withholding on payments made with respect to the Notes, each Noteholder is required to provide the Trustee with (i) the Noteholder's correct TIN by completing the form at Exhibit D (Substitute Form W-9), certifying that the TIN provided on the Substitute Form W-9 is correct (or that such Noteholder is awaiting a TIN) and that (A) such Noteholder is exempt from backup withholding, (B) the Noteholder has not been notified by the IRS that the Noteholder is subject to backup withholding as a result of failure to report all interest or dividends or (C) the IRS has notified the Noteholder that the Noteholder is no longer subject to backup withholding, or (ii) if applicable, an adequate basis for exemption. A Foreign Noteholder may qualify as an exempt recipient by submitting to the Trustee a properly completed IRS Form W-8BEN or W-8ECI, as applicable, signed under penalties of perjury, attesting to that Noteholder's exempt status. Section 3.8. Persons Deemed Owners Prior to due presentment for registration of transfer of any Note, the Issuer, the Trustee and any agent of the Issuer or the Trustee may treat the Person in whose name any Note is registered as the owner of such Note for the purpose of receiving payments of principal of and interest on such Note (subject to Section 3.7) and for all other purposes whatsoever, whether or not such Note be overdue, and neither the Issuer, the Trustee nor any agent of the Issuer or the Trustee shall be affected by notice to the contrary. Section 3.9. Cancellation All Notes surrendered to the Trustee following payment or for registration of transfer or exchange (including Notes surrendered to any Person other than the Trustee which shall be delivered to the Trustee) shall be promptly canceled and destroyed by the Trustee in accordance with its customary procedures. ARTICLE IV. DELIVERY OF THE NOTES The Notes shall be executed by the Issuer and delivered to the Trustee for authentication and thereupon the same shall be authenticated and delivered by the Trustee upon Issuer Order, and upon delivery to the Trustee of the following: - 16 - (a) a certificate, certified by the Issuer, authorizing the execution and delivery of this Indenture and the Notes; (b) either (i) a certificate or other official document evidencing the due authorization, approval or consent of any government body or bodies, at the time having jurisdiction in the premises, and that the authorization, approval or consent of no other governmental body is required for valid issuance of the Notes, or (ii) an Opinion of Counsel that no such authorization, approval or consent of any governmental body is required; (c) an Officer's Certificate from the Issuer stating that the Issuer is not, as of the Issue Date, in Default under this Indenture and that the issuance of the Notes will not result in any breach of any of the terms, conditions or provisions of, or constitute a default under, the Issuer's organizational documents or any indenture, mortgage, deed of trust or other agreement or instrument to which the Issuer is a party or by which it is bound, or any order of any court or administrative agency entered in any proceeding to which the Issuer is a party or by which it may be bound or to which it may be subject; and that all conditions precedent provided in this Indenture relating to the authentication and delivery of the Notes have been complied with; (d) duly executed copies of all Transaction Documents; and (e) such other documents as the Trustee may reasonably require. ARTICLE V. SATISFACTION AND DISCHARGE Section 5.1. Satisfaction and Discharge of Indenture This Indenture shall cease to be of further effect (except as to any surviving rights of indemnification, payment of fees and registration of transfer and exchange or payment) with respect to the Notes and the Trustee, on demand of and at the expense of the Issuer, shall execute proper instruments acknowledging satisfaction and discharge of this Indenture with respect to the Notes and shall pay, assign, transfer and deliver to the Issuer upon Issuer Order all cash, securities and all other property held by it as part of the Collateral (except for amounts required to pay and discharge the entire indebtedness of the Notes), when (a) either: (i) all Notes theretofore authenticated and delivered (other than (i) Notes which have been destroyed, lost or stolen and which have been replaced or paid as provided in Section 3.6, and (ii) Notes for whose payment money has theretofore been deposited in trust or segregated and held in trust by the Issuer and thereafter repaid to the Issuer or discharged from such trust, as provided in Section 11.3) have been delivered to the Trustee for cancellation; or - 17 - (ii) all Notes not theretofore delivered to the Trustee for cancellation have become due and payable and the Issuer has irrevocably deposited or caused to be deposited with the Trustee, in trust for the purpose, an amount sufficient to pay and discharge the entire indebtedness on such Notes together with all accrued interest thereon not theretofore delivered to the Trustee for cancellation; (b) the Issuer has paid or caused to be paid all other sums payable hereunder by the Issuer; and (c) the Issuer has delivered to the Trustee an Officer's Certificate stating that all conditions precedent herein provided for relating to the satisfaction and discharge of this Indenture with respect to the Notes have been complied with. Notwithstanding the satisfaction and discharge of this Indenture, the Issuer's obligations in Sections 3.4, 3.6, 7.7, 11.2 and 11.3, the Trustee's obligations hereunder and the Paying Agent's obligations in Section 5.2 and the rights and immunities of the Trustee under this Indenture shall survive until the Notes are no longer Outstanding. Thereafter, the obligations of the Issuer in Section 7.7 and the Trustee in Section 5.2 and the rights and immunities of the Trustee under this Indenture shall survive the discharge of this Indenture or the earlier resignation or removal of the Trustee. Section 5.2. Application of Trust Money All monies deposited with the Paying Agent pursuant to Section 12.1 shall be held in trust and applied by it, in accordance with the provisions of the Notes and this Indenture, to the payment, to the Persons entitled thereto, of the principal and interest for whose payment such money has been deposited with the Paying Agent and such money shall be segregated from all other funds as required herein or required by law. Section 5.3. Discharge of Security Interest Upon satisfaction and discharge of the Indenture as specified in Section 5.1, the Trustee shall execute a release of the Collateral provided by and at the expense of the Issuer. Further, on demand of and at the expense of the Issuer and upon being supplied with instruments appropriate for the purpose, the Trustee shall execute and the Issuer shall file all documents (including without limitation UCC Form 3) necessary to discharge all liens, mortgages, chattel mortgages and other security interests filed with any governmental board or body with respect to the Collateral, and the Trustee shall otherwise cooperate in any way reasonably necessary to restore full unencumbered title in the Collateral to the Issuer or its designee. - 18 - ARTICLE VI. EVENTS OF DEFAULT AND REMEDIES Section 6.1. Events of Default "Event of Default" wherever used herein means any one of the following events (whatever the reason for such Event of Default and without regard to whether it shall be voluntary or involuntary or be effected by operation of law or pursuant to any judgment, decree or order of any court or any order, rule or regulation of any administrative or governmental body) and when used with respect to the Notes shall mean the same occurring at any time while there are Notes Outstanding (except that no event of default under the Management Agreement or the Back-Up Management Agreement shall, in and of itself, constitute an Event of Default): (1) the Issuer shall fail to comply with Section 11.7(iii)(a) of this Indenture or IPHM shall fail to comply with Section 14.2 of this Indenture; (2) failure by the Issuer to make payments of principal of and interest on the Notes as and when due pursuant to the terms and provisions of the Notes and this Indenture; (3) default in the performance by, or breach of any covenant of, the Issuer in any Transaction Document to which it is a party (not referenced in clause (1) or clause (2) above) and continuance of such default or breach for a period of thirty (30) days after the earlier of (A) the date on which an officer of the Managing Member of the Issuer first has actual, personal knowledge (or, in the exercise of reasonable care, should have known) of such default or breach and (B) the date on which written notice, specifying in reasonable detail, such default or breach and requiring it to be remedied and stating that such notice is a "Notice of Default" hereunder shall have been given to the Issuer; (4) a failure of any representation or warranty of the Issuer in this Indenture to be true and correct as and when made, which failure has a material adverse effect on the interests of the Noteholders and which, if susceptible of being cured, remains uncured after the earlier of (A) thirty (30) days after the date on which an officer of the Managing Member of the Issuer first has actual, personal knowledge (or, in the exercise of reasonable care, should have known) of such failure and (B) the date which is thirty (30) days after written notice, specifying in reasonable detail, such breach and requiring it to be remedied and stating that such notice is a "Notice of Default" hereunder shall have been given to the Issuer; provided, however, any such failure of a representation or warranty as to an Asset that is set forth in Section 11.16 hereof shall not result in an Event of Default unless the cure or payment of the Release Price for such Asset by the Issuer is required in accordance with Section 12.3 of this Indenture and is not achieved or paid as and when required; - 19 - (5) the entry of a decree or order for relief by a court having jurisdiction in respect of the Issuer in an involuntary case under the federal bankruptcy laws, as now or hereafter in effect, or any other present or future federal or state bankruptcy, insolvency or similar law, or appointing a receiver, liquidator, assignee, trustee, custodian, sequestrator or other similar official of the Issuer or of any substantial part of its property, or ordering the winding up or liquidation of the affairs of the Issuer and the continuance of any such decree or order unstayed and in effect for a period of 90 consecutive days; (6) the commencement by the Issuer of a voluntary case under the federal bankruptcy laws, as now or hereafter in effect, or any other present or future federal or state bankruptcy, insolvency or similar law, or the consent by the Issuer to the appointment of or taking possession by a receiver, liquidator, assignee, trustee, custodian, sequestrator or other similar official of the Issuer or any substantial part of its property or the making by the Issuer of an assignment for the benefit of creditors or the failure by the Issuer generally to pay its debts as such debts become due or the taking of partnership action by the Issuer in furtherance of any of the foregoing; or (7) any Note remains Outstanding on the first Payment Date following the Payment Date on which the DSCR is 1.0 or less (as set forth in the related Servicer Report). Section 6.2. Acceleration of Maturity, Rescission and Annulment If an Event of Default of the kind specified in clauses (5), (6) and (7) of Section 6.1 occurs, the unpaid principal amount of all of the Notes shall automatically become immediately due and payable without notice, presentment or demand of any kind. If an Event of Default (other than an Event of Default of the kind specified in clauses (5), (6) and (7) of Section 6.1) occurs and is continuing of which a Responsible Officer of the Trustee has actual knowledge, then and in every such case the Trustee or Majority Holders pursuant to an Act may declare the principal of all of the Notes to be immediately due and payable, by a notice in writing to the Issuer (and to the Trustee if given by Noteholders and upon any such declaration (in accordance with this sentence or the preceding sentence)) that the Notes shall become immediately due and payable together with accrued and unpaid interest and a Redemption Premium. At any time after such a declaration of acceleration has been made, but before any Sale of the Collateral has been made or a judgment or decree for payment of the money due has been obtained by the Trustee as hereinafter in this Article provided, the Majority Holders by an Act and evidenced by a written notice delivered to the Issuer and the Trustee, may rescind and annul such declaration and its consequence if: - 20 - (i) the Issuer has paid or deposited with the Trustee a sum sufficient to pay: (1) all overdue installments of interest on all Notes; (2) the principal of any of the Notes which has become due other than by such declaration of acceleration and interest thereon at the Default Rate (to the extent permitted by applicable law); (3) to the extent that payment of such interest is lawful, interest upon overdue installments of interest on the Notes at the rate specified therefor in the Notes; (4) in connection with the preservation of the Collateral and enforcement of its rights all sums paid or advanced by the Noteholders hereunder and the reasonable compensation, expenses, disbursements and advances of the Trustee, its agents and counsel; and (5) all Events of Default, other than the nonpayment of the principal of the Notes which have become due solely by such acceleration, have been cured or waived as provided in Section 6.13. No such rescission shall affect any subsequent default or impair any right consequent thereon. Subsequent to any such declaration of acceleration and so long as such declaration and its consequences has not been rescinded and annulled, prior to the exercise by the Trustee of the remedies set forth in Section 6.3 the Trustee shall give the Issuer and the Noteholders ten (10) days notice of its intention to take such actions. Section 6.3. Remedies If an Event of Default shall have occurred and be continuing, the Trustee may, and by an Act of the Majority Holders and subject to Article VII herein pursuant to specific instruction shall, do one or more of the following: (a) institute Proceedings for the collection of all amounts then payable on the Notes or under this Indenture, whether by declaration or otherwise, enforce any judgment obtained, and collect from the Collateral securing the Notes (including any amounts in the Liquidity Reserve Account, the Renewal Reserve Account, the JNCO Escrow Account and the Prepaid Fee and Royalty Account) the monies adjudged due; (b) sell the Collateral or any portion thereof or rights or interest therein, at one or more Sales called and conducted in any manner permitted by law; - 21 - (c) institute Proceedings from time to time for the complete or partial foreclosure of this Indenture with respect to any portion of the Collateral securing the Notes; and (d) exercise any remedies of a secured party under the Uniform Commercial Code or other applicable law and take any other appropriate action to protect and enforce the rights and remedies of the Trustee or the Holders of the Notes hereunder; provided, however, that if there is more than one Holder of Outstanding Notes and if less than all of the Holders of Outstanding Notes have approved a Sale of the Collateral and if the proceeds of any such Sale will be less than the amount required to retire all of the Outstanding Notes in full, then, in any such event, the Trustee may not sell or otherwise liquidate any of the Collateral unless after consultation with an independent accounting firm or another Person approved by Act of the Majority Holders of national reputation in the field of appraisal of assets of the type constituting the Collateral, such Person provides the Trustee with a written report that the proceeds of such Sale reflect a reasonable approximation of the fair market value of the Collateral. The Trustee shall have no liability for any public Sale or private Sale conducted in reliance upon the advice, with respect to the commercial reasonableness of the sale, of a Person of national reputation in the field of appraisal. In the event that the Trustee does not sell or otherwise liquidate the Collateral, it shall continue to hold such Collateral and make distributions therefrom pursuant to Article XIII hereof. Section 6.4. Trustee May File Claim In case of the pendency of any receivership, insolvency, liquidation, bankruptcy, reorganization, arrangement, adjustment, composition or other judicial Proceeding, relating to the Issuer or any other obligor upon the Notes or the property of the Issuer or of such other obligor or their creditors, the Trustee (irrespective of whether the principal of the Notes shall then be due and payable as therein expressed or by declaration or otherwise and irrespective of whether the Trustee shall have made any demand on the Issuer for the payment of overdue principal or interest) shall be entitled and empowered, to intervene in such proceeding or otherwise: (i) to file and prove a claim for all amounts owing and unpaid in respect of the Notes and to file such other papers or documents and take such other action including participating as a member, voting or otherwise, in any committee of creditors appointed in the matter, as may be necessary or advisable in order to have the claims of the Trustee (including any claim for the reasonable compensation, expenses, disbursements and advances of the Trustee, its agents and counsel) and of the Noteholders allowed in such judicial Proceeding; (ii) to petition for lifting of the automatic stay and thereupon to foreclose upon the Collateral as elsewhere provided herein; and (iii) to collect and receive any monies or other property payable or deliverable on any such claims and to distribute the same; - 22 - and any receiver, assignee, trustee, liquidator, or sequestrator (or other similar official) in any such judicial Proceeding is hereby authorized by each Noteholder to make such payments to the Trustee, and in the event that the Trustee shall consent to the making of such payments directly to the Noteholders, to pay to the Trustee any amount due to it for the reasonable compensation, expenses, disbursements and advances of the Trustee, its agents and counsel, and any other amounts due the Trustee under Section 7.7. Nothing herein contained shall be deemed to authorize the Trustee to authorize or consent to or accept or adopt on behalf of any Noteholder any plan of reorganization, arrangement, adjustment or composition affecting the Notes or the rights of any Holder thereof, or to authorize the Trustee to vote in respect of the claim of any Noteholder in any such Proceeding. Section 6.5. Trustee May Enforce Claims Without Possession of Notes All rights of actions and claims under this Indenture or the Notes may be prosecuted and enforced by the Trustee without the possession of any of the Notes or the production thereof in any Proceeding relating thereto, and any such Proceedings instituted by the Trustee shall be brought in its own name as trustee of an express trust, and any recovery of judgment shall, after provision for the payment of the reasonable compensation, expenses, disbursements and advances of the Trustee, its agents and counsel, be for the benefit of the Holders of the Notes in respect of which such judgment has been recovered applied to payments on the Notes in the order set forth in Section 6.6. Section 6.6. Allocation of Money Collected If the Notes have been declared due and payable following an Event of Default and such declaration and its consequences have not been rescinded and annulled, any money collected by the Trustee with respect to the Notes pursuant to this Article (and any funds then held or thereafter received by the Paying Agent) shall be applied in the following order, at the date or dates fixed by the Paying Agent: FIRST: To the payment of all amounts due the Trustee; SECOND: To the payment of all amounts due the Servicer under the Servicing Agreement, including all earned and due but unpaid Senior Servicing Fees and Servicer Costs; THIRD: To the payment of all reasonable costs and expenses incurred by any Noteholder in connection with the enforcement of its rights hereunder or under the Notes, ratably, without preference or priority of any kind; FOURTH: To the payment of accrued interest on and the Note Principal Balance of the Notes, including interest at the Default Rate (to the extent such interest has been collected by the Paying Agent or a sum sufficient therefor has been so collected and payment thereof is legally enforceable at the rate prescribed therefor in the Notes or in this Indenture) on overdue installments of principal and interest, ratably, without preference or priority of any kind, according to the amounts due and payable on the Notes; - 23 - FIFTH: To the payment of all earned and due but unpaid fees and expenses of the Manager and the Back-Up Manager, if any; SIXTH: To the payment of all earned and due but unpaid Junior Servicing Fee; SEVENTH: To the payment of all earned and due but unpaid Structuring Fee amounts. EIGHTH: To the payment of any surplus to or at the written direction of the Issuer or any other person legally entitled thereto. Section 6.7. Limitation on Suits No Holder shall have any right to institute any Proceeding, judicial or otherwise, with respect to this Indenture, or for the appointment of a receiver or trustee, or for any other remedy hereunder, unless: (1) such Holder has previously given written notice to the Trustee of a continuing Event of Default; (2) the Holders of 25% or more of the aggregate Note Principal Balance of the Outstanding Notes shall have made written request to the Trustee to institute Proceedings in respect of such Event of Default in its own name as Trustee hereunder; (3) such Holder or Holders have offered to the Trustee indemnity satisfactory to it (which, in the case of a holder that is, or is a subsidiary of, a bank or other institutional buyer with a net worth of at least $50,000,000 and whose claims paying ability or long-term debt is rated at least investment grade or better by a Rating Agency need only be such bank's or institutional buyer's unsecured written promise of indemnity) against the costs, expenses and liabilities to be incurred in compliance with such request; (4) the Trustee for 60 days after its receipt of such notice, request and offer of indemnity has failed to institute any such Proceeding; and (5) no direction inconsistent with such written request has been given to the Trustee during such 60 day period by the Majority Holders; it being understood and intended that no one or more Holders shall have any right in any manner whatever by virtue of, or by availing of, any provision of this Indenture to affect, disturb or prejudice the rights of any other Holders or to enforce any right under this Indenture, except in the manner herein provided. - 24 - Section 6.8. Unconditional Right of Noteholders to Receive Principal and Interest Notwithstanding any other provision in this Indenture, the Holder of any Note shall have the right, which is absolute and unconditional, to receive payment of the principal of and interest on such Note as such principal and interest becomes due and payable and to institute suit for the enforcement of any such payment, and such right shall not be impaired without the consent of such Holder; provided, however, that neither the Holder of any Note nor the Trustee shall, if requested by the Noteholders, petition or otherwise invoke the process of any court or government authority for the purpose of commencing or sustaining a case against the Issuer under any federal or state bankruptcy, insolvency or similar law or appointing a receiver, liquidator, assignee, trustee, custodian, sequestrator or other similar official of the Issuer or any substantial part of its property, or ordering the winding up or liquidation of the affairs of the Issuer. Section 6.9. Restoration of Rights and Remedies If the Trustee or any Noteholder has instituted any Proceeding to enforce any right or remedy under this Indenture and such Proceeding has been discontinued or abandoned for any reason, or has been determined adversely to the Person who instituted the Proceeding, then and in every such case the Issuer, the Trustee and the Noteholders shall, subject to any determination in such Proceeding, be restored severally and respectively to their former positions hereunder, and thereafter all rights and remedies of the Trustee and the Noteholders shall continue as though no such Proceeding has been instituted. Section 6.10. Rights and Remedies Cumulative No right or remedy herein conferred upon or reserved to the Trustee or to the Noteholders is intended to be exclusive of any other right or remedy, and every right and remedy shall, to the extent permitted by law, be cumulative and in addition to every other right and remedy given hereunder or now or hereafter existing at law or in equity or otherwise. The assertion or employment of any right or remedy hereunder, or otherwise, shall not prevent the concurrent assertion or employment of any other appropriate right or remedy. Section 6.11. Delay or Omission Not Waiver No delay or omission of the Trustee or of any Noteholder to exercise any right or remedy accruing upon any Event of Default shall impair any such right or remedy or constitute a waiver of any such Event of Default or an acquiescence therein. Every right and remedy given by this Article or by law to the Trustee or to the Noteholders, or any of them, may be exercised from time to time, and as often as may be deemed expedient, by the Trustee or by the Noteholder or Noteholders, as the case may be. Section 6.12. Control by Noteholders The Majority Holders shall have the right to direct the decision whether to conduct, and the time, method and place of conducting, any Proceeding for any remedy available to the Trustee with respect to the Notes or exercising any trust or power conferred on the Trustee with respect to the Notes; provided that: - 25 - (1) such direction shall not be in conflict with any rule of law or with this Indenture; and (2) the Trustee may take any other action deemed proper by the Trustee which is not inconsistent with such direction; provided, however, that, subject to Section 7.1, the Trustee need not take any action which it determines might involve it in liability or be unjustly prejudicial to the Noteholders not consenting. Section 6.13. Waiver of Past Defaults The Noteholders may waive any past Default with respect to the Notes hereunder and its consequences, except a Default (1) described in Sections 6.1(5) and (6), or (2) in respect of a covenant or provision hereof which under Article IX cannot be modified or amended without the consent of the Holder of each Outstanding Note affected thereby. Upon any such waiver, such Default shall cease to exist, and any Event of Default arising therefrom shall be deemed to have been cured for every purpose of this Indenture. Upon receipt of notice of such waiver, the Trustee shall transmit by mail to the Issuer and the Servicer notice of such waiver specifying the date on which the Default was waived promptly after the occurrence of such waiver. Section 6.14. Undertaking for Costs All parties to the Indenture and each Noteholder by its acceptance of a Note shall be deemed to have agreed that any court may in its discretion require, in any suit for the enforcement of any right or remedy under this Indenture, or in any suit against the Trustee for any action taken, suffered or omitted by it as Trustee, the filing by any party litigant in such suit of an undertaking to pay the costs of such suit, and that such court may in its discretion assess reasonable costs, including reasonable attorney's fees against any party litigant in such suit, having due regard to the merits and good faith of the claims or defenses made by such party litigant; but the provisions of this Section 6.14 shall not apply to any suit instituted by the Trustee, to any suit instituted by any Noteholder, or the Majority Holders or to any suit instituted by any Noteholder for the enforcement of the payment of principal of or interest on any Notes on or after the Legal Maturity Date (or, in the case of redemption of Notes, on or after the applicable Redemption Date). - 26 - Section 6.15. Waiver of Stay or Extension Laws The Issuer covenants (to the extent that it may lawfully do so) that it will not at any time insist upon, or plead, or in any manner whatsoever claim or take the benefit or advantage of, any stay or extension law wherever enacted, now or at any time hereafter in force, which may affect the covenants or the performance by the Issuer under this Indenture; and the Issuer (to the extent that it may lawfully do so) hereby expressly waives all benefit or advantage of any such law, and covenants that it will not hinder, delay or impede the execution of any power herein granted to the Trustee, but will suffer and permit the execution of every such power as though no such law had been enacted. Section 6.16. Sale of Collateral (a) The power to effect any sale (a "Sale") of any portion of the Collateral pursuant to Section 6.3 shall not be exhausted by any one or more Sales as to any portion of the Collateral remaining unsold, but shall continue unimpaired until the entire Collateral securing the Notes shall have been sold or all amounts payable under this Indenture with respect thereto shall have been paid. Any Sale conducted hereunder shall be completed in accordance with the applicable terms and provisions of the New York State Uniform Commercial Code. The Trustee may from time to time postpone any Sale by public announcement made at the time and place of such Sale. It is hereby expressly agreed that the Trustee is not limited to any amount fixed by law as compensation for any Sale, so long as the same shall be reasonable. (b) Any Noteholder may bid for and acquire any portion of the Collateral securing the Notes in connection with any Sale thereof. In lieu of paying cash for the entire purchase price therefor, such Noteholder, after deducting the costs, charges and expenses (including reasonable attorney's fees and expenses) incurred by the Trustee in connection with such Sale may make settlement for any portion of the purchase price remaining by crediting against amounts owing on the Notes held by it or other amounts owing to such Noteholder secured by this Indenture, the portion of the net proceeds of such Sale to which such Noteholder would be entitled hereunder. (c) The Issuer covenants and agrees that ten (10) Business Days prior notice of a Sale of the entirety of the Collateral by a public Sale is a commercially reasonable notice. (d) The Trustee shall execute and deliver an appropriate instrument of conveyance transferring its interest in any portion of the Collateral in connection with a Sale thereof, which Sale shall be at the expense of the Issuer. In addition, the Servicer is hereby irrevocably appointed the agent and attorney-in-fact of the Issuer to cause the transfer and conveyance of the Issuer's interest in any portion of the Collateral in connection with a Sale thereof pursuant to the terms of this Indenture, and to take all action necessary to effect such Sale. No purchaser or transferee at such a sale shall be bound to ascertain the Servicer's or the Trustee's authority, inquire into the satisfaction of any conditions precedent or see to the application of any monies. - 27 - (e) Any amounts received by the Noteholders in connection with a public or private sale pursuant this Section shall be deemed to be conclusive and binding upon the parties hereto and the Noteholders shall have no liability in respect hereto. Section 6.17. Action on Notes The Noteholder's right to seek and recover judgment on the Notes or under this Indenture shall not be affected by the seeking, obtaining or application of any other relief under or with respect to this Indenture. Neither the lien of this Indenture nor any rights or remedies of the Noteholders shall be impaired by the recovery of any judgment by the Noteholders against the Issuer or by the levy of any execution under such judgment upon any portion of the Collateral or upon any of the assets of the Issuer. ARTICLE VII. THE TRUSTEE; RESIGNATION OF TRUSTEE AND SUCCESSOR TRUSTEE Section 7.1. Certain Duties and Responsibilities of Trustee (a) Except during the continuance of an Event of Default, the Trustee undertakes to perform such duties and only such duties as are specifically set forth in this Indenture, and no implied covenants or obligations shall be read into this Indenture against the Trustee. (b) In case an Event of Default has occurred and is continuing and is actually known to a Responsible Officer of the Trustee, the Trustee shall exercise such of the rights and powers vested in it by this Indenture, and use the same degree of care and skill in their exercise, as a prudent person would exercise or use under the circumstances in the conduct of his own affairs. (c) No provision of this Indenture shall be construed to relieve the Trustee from liability for its own negligent action, its own negligent failure to act, or its own willful misconduct, except that: (1) this Subsection shall not be construed to limit the effect of Subsection (a) of this Section; (2) the Trustee shall not be liable for any error of judgment made in good faith by a Responsible Officer, unless it shall be proved that the Trustee was negligent in ascertaining the pertinent facts; (3) the Trustee shall not be liable with respect to any action taken or omitted to be taken by it in good faith in accordance with the direction of the Holders of a majority of aggregate Note Principal Balance of Outstanding Notes relating to the time, method and place of conducting any Proceeding for any remedy available to the Trustee, or exercising any trust or power conferred upon the Trustee, under this Indenture with respect to the Notes; - 28 - (4) no provision of this Indenture shall require the Trustee to expend or risk its own funds or otherwise incur any financial liability in the performance of any of its duties hereunder, or in the exercise of any of its rights or powers, if it shall have reasonable grounds for believing that repayment of such funds or indemnity satisfactory to it against such risk or liability is not reasonably assured to it (which, in the case of a Holder that is, or is a subsidiary of, a bank or other institutional buyer with a net worth of at least $50,000,000 and whose long-term debt or claims paying ability is rated at least investment grade by a Rating Agency need only be such bank's or institutional buyer's unsecured written promise of indemnity), provided, that nothing herein contained shall excuse the Trustee for failure to perform its duties as Trustee under this Indenture; (5) the Trustee shall not be charged with knowledge of any default hereunder or unless one of its Responsible Officers has actual knowledge thereof; (6) the Trustee shall have no obligation to ascertain whether any payment of interest on an overdue installment of interest is legally enforceable; and (7) in the absence of bad faith on its part, the Trustee may conclusively rely, as to the truth of the statements and the correctness of the opinions expressed therein, upon certificates or opinions furnished to the Trustee and conforming to the requirements of this Indenture; but in the case of any such certificates or opinions which by any provision hereof are specifically required to be furnished to the Trustee, the Trustee shall be under a duty to examine the same to determine whether or not they conform to the requirements of this Indenture. (d) Whether or not therein expressly so provided, every provision of this Indenture relating to the conduct or affecting the liability of or affording protection to the Trustee shall be subject to the provisions of this Section. (e) The Trustee is hereby authorized to execute the Servicing Agreement and the Security Agreements. - 29 - Section 7.2. Notice of Default, Cure or Waiver Promptly after the occurrence of any Default actually known to a Responsible Officer of Trustee, the Trustee shall transmit to all Holders, as their names and addresses appear on the Note Register, notice of such Default hereunder known to the Trustee. Section 7.3. Certain Rights of Trustee Subject to Section 7.1: (a) the Trustee may conclusively rely and shall be fully protected in acting or refraining from acting upon any resolution, certificate, statement, instrument, opinion, report, notice, request, direction, consent, order, bond, note or other obligation, paper or document believed by it to be genuine and to have been signed or presented by the proper party or parties; (b) any request or direction of the Issuer mentioned herein shall be sufficiently evidenced by an Issuer Request or Issuer Order; (c) whenever in the administration of this Indenture the Trustee shall deem it desirable that a matter be proved or established prior to taking, suffering or omitting any action hereunder, the Trustee (unless other evidence be herein specifically prescribed) may, in the absence of bad faith on its part, rely upon an Officers' Certificate of the Issuer; (d) the Trustee may consult with counsel and the advice of such counsel or any Opinion of Counsel shall be full and complete authorization and protection in respect of any action taken, suffered or omitted by it hereunder in good faith and in reliance thereon; (e) the Trustee shall be under no obligation to exercise any of the rights or powers vested in it by this Indenture at the written request or direction of any of the Noteholders pursuant to this Indenture, unless such Noteholders shall have offered to the Trustee security or indemnity satisfactory to it (which, in the case of a holder that is, or is a subsidiary of, a bank or other institutional buyer with a net worth of at least $50,000,000 and whose claims paying ability or long-term debt is rated at least investment grade or better by a Rating Agency need only be such bank's or institutional buyer's unsecured written promise of indemnity) against the costs, expenses and liabilities which might be incurred by it in compliance with such request or direction; (f) the Trustee shall not be bound to make any investigation into the facts or matters stated in any resolution, certificate, statement, instrument, opinion, report, notice, request, direction, consent, order, bond, note or other paper or document, but the Trustee, in its discretion, may make such further inquiry or investigation into such facts or matters as it may see fit, and, if the Trustee shall determine to make such further inquiry or investigation, it shall be entitled to examine the books, records and premises of the Issuer, personally or by agent, attorney, custodian or nominee; and (g) the Trustee may execute any of the trusts or powers hereunder or perform any duties hereunder either directly or by or through agents, attorneys, custodians or nominees and the Trustee shall not be responsible for any misconduct or negligence on the part of any agent, attorney, custodian or nominee appointed with due care by it hereunder. - 30 - Except as otherwise agreed in writing, the Trustee shall not be responsible for the payment of any interest on amounts deposited with it hereunder. Section 7.4. Not Responsible for Recitals or Issuance of Notes (a) The recitals contained herein and in the Notes, except the certificates of authentication on the Notes, shall be taken as the statements of the Issuer, and the Trustee assumes no responsibility for their correctness. The Trustee makes no representations as to the validity, adequacy or condition of the Collateral or any part thereof, or as to the title of the Issuer thereto or as to the security afforded thereby or hereby, or as to the validity or genuineness of any securities at any time pledged and deposited with the Trustee hereunder or as to the validity or sufficiency of this Indenture or of the Notes. The Trustee shall not be accountable for the use or application by the Issuer of the Notes or the proceeds thereof or of any money paid to the Issuer upon Issuer Order. (b) Except as otherwise expressly provided herein and without limiting the generality of the foregoing, the Trustee shall have no responsibility or liability for or with respect to the existence or validity of any Collateral or validity of the assignment of any portion of the Collateral to the Trustee or of any intervening assignment. (c) The Trustee shall not have any obligation or liability under any Collateral by reason of or arising out of this Indenture or the granting of a security interest in such Collateral hereunder or the receipt by the Trustee of any payment relating to any Collateral pursuant thereto, nor shall the Trustee be required or obligated in any manner to perform or fulfill any of the obligations of the Issuer under or pursuant to any Collateral, or to make any payment, or to make any inquiry as to the nature or the sufficiency of any payment received by it, or the sufficiency of any performance by any party, under any Collateral. Section 7.5. May Hold Notes The Trustee, Note Registrar or any other agent of the Issuer, in its individual or any other capacity, may become the owner or pledgee of Notes and if operative, may otherwise deal with the Issuer with the same rights it would have if it were not Trustee, Note Registrar or such other agent. Section 7.6. Money Held in Trust Money held by the Trustee in trust hereunder shall be segregated from other funds held by the Trustee. The Trustee shall be under no liability for interest on any money received by it hereunder except as otherwise agreed in writing with the Issuer. Section 7.7. Compensation and Reimbursement The Issuer agrees: - 31 - (1) to pay the Trustee in accordance with a separate fee agreement and such fees in accordance with Section 13.1 hereof, as reasonable compensation for all services rendered by it hereunder (which Trustee Fee shall not be limited by any provision of law in regard to the compensation of a trustee of an express trust); (2) except as otherwise expressly provided herein, to reimburse the Trustee upon its written request for all reasonable expenses, disbursements and advances incurred or made by the Trustee in accordance with any provision of this Indenture (including the reasonable compensation and the expenses and disbursements of the Trustee's agents and counsel), except any such expense, disbursement or advance as may be attributable to its negligence or bad faith; and (3) to indemnify the Trustee its officers, directors, employees and agents for, and to hold them harmless against, any loss, liability, obligation, damage, penalty, tax, claim, action, investigation, proceeding, cost, disbursement or expense incurred without negligence or bad faith on their part, arising out of or in connection with the acceptance or administration of this trust and performance hereunder, including the reasonable costs and expenses of defending itself against any claim or liability in connection with the exercise or performance of any of its powers or duties hereunder. The provisions of this Section 7.7 shall survive any expiration or termination of this Indenture. Section 7.8. Corporate Trustee Requirement Eligibility There shall at all times be a Trustee hereunder which shall (a) be a depository institution, banking corporation or trust company organized and doing business under the laws of the United States of America or of any state, authorized under such laws to exercise corporate trust powers and (b) meet the requirements of an Eligible Financial Institution. If at any time the Trustee shall cease to be eligible in accordance with the provisions of this Section, it shall resign immediately in the manner and with the effect hereinafter specified in this Article. Section 7.9. Resignation and Removal; Appointment of Successor (a) No resignation or removal of the Trustee and no appointment of a successor Trustee pursuant to this Article shall become effective until the acceptance of appointment by the successor Trustee under Section 7.10. (b) The Trustee may resign at any time by giving written notice thereof to the Issuer and the Noteholders. If an instrument of acceptance by a successor Trustee shall not have been delivered to the Trustee within 30 days after the giving of such notice of resignation, the resigning Trustee may petition any court of competent jurisdiction for the appointment of a successor Trustee. - 32 - (c) The Trustee may be removed at any time by Act of the Majority Holders, delivered to the Trustee and to the Issuer. (d) If at any time: (1) the Trustee shall cease to be eligible under Section 7.8 and shall fail to resign after written request therefor by the Issuer or by the Majority Holders; or (2) the Trustee shall become incapable of acting or shall be adjudged a bankrupt or insolvent or a receiver of the Trustee or of its property shall be appointed or any public officer shall take charge or control of the Trustee or of its property or affairs for the purpose of rehabilitation, conservation or liquidation; then, in any such case, (i) the Issuer by a Board Resolution may remove the Trustee, or (ii) subject to Section 6.14, any Noteholder who has been a bona fide Holder of a Note for at least two months may, on behalf of himself and all others similarly situated, petition any court of competent jurisdiction for the removal of the Trustee and the appointment of a successor Trustee. (e) If the Trustee shall resign, be removed or become incapable of acting, or if a vacancy shall occur in the office of the Trustee for any cause, the Issuer, by a Board Resolution, shall promptly appoint a successor Trustee that meets the requirements set forth in Section 7.8 and is approved by an Act of the Majority Holders. If no successor Trustee shall have been so appointed by the Issuer within 30 days after such resignation or removal, any Noteholder who has been a bona fide Holder of Notes for at least two months may, on behalf of himself and all others similarly situated, petition any court of competent jurisdiction for the appointment of a successor Trustee. (f) The Issuer shall give notice of each resignation and each removal of the Trustee and each appointment of a successor Trustee by mailing written notice of such event by first-class mail, postage prepaid, to the Holders of Notes as their names and addresses appear in the Note Register. Each notice shall include the name of the successor Trustee and the address of its corporate trust office. Section 7.10. Acceptance of Appointment by Successor Every successor Trustee appointed hereunder shall execute, acknowledge and deliver to the Issuer and the retiring Trustee an instrument accepting such appointment, and thereupon the resignation or removal of the retiring Trustee shall become effective and such successor Trustee, without any further act, deed or conveyance, shall become vested with all the rights, powers, trusts and duties of the retiring Trustee; but, on request of the Issuer or the successor Trustee, such retiring Trustee shall, execute and deliver an instrument transferring to such successor Trustee all the rights, powers and trusts of the retiring Trustee, and shall duly assign, transfer and deliver to such successor Trustee all property and money held by such retiring Trustee hereunder. Upon request of any such successor Trustee, the Issuer shall execute - 33 - any and all instruments for more fully and certainly vesting in and confirming to such successor Trustee all such rights, powers and trusts. The predecessor Trustee shall not be liable for the actions or the failure to act of any successor Trustee hereunder, but each retiring Trustee shall remain liable for its actions or failure to act during its tenure as Trustee hereunder. No successor Trustee shall accept its appointment unless at the time of such acceptance, such successor Trustee shall be qualified and eligible under this Article. Section 7.11. Merger, Conversion, Consolidation or Succession to Business of Trustee Any corporation into which the Trustee may be merged or converted or with which it may be consolidated, or any corporation resulting from any merger, conversion or consolidation to which the Trustee shall be a party, or any corporation succeeding to all or substantially all of the corporate trust business of the Trustee, shall be the successor of the Trustee hereunder, provided, such corporation shall be otherwise qualified and eligible under this Article, without the execution or filing of any paper or any further act on the part of any of the parties hereto. Section 7.12. Co-trustees and Separate Trustees At any time or times, for the purpose of meeting the legal requirements of any jurisdiction in which any portion of the Collateral may at the time be located, the Issuer and the Trustee shall have power to appoint, and, upon the written request of the Trustee or of the Holders of Notes representing at least 25% of the aggregate Note Principal Balance of Outstanding Notes, the Issuer shall for such purpose join with the Trustee in the execution, delivery and performance of all instruments and agreements necessary or proper to appoint, one or more Persons approved by the Trustee either to act as co-trustee, jointly with the Trustee, of all or any part of such Collateral, or to act as separate trustee of any such property, in either case with such powers as may be provided in the instrument of appointment, and to vest in such Person or Persons in the capacity aforesaid, any property, title, right or power deemed necessary or desirable, subject to the other provisions of this Section. If the Issuer does not join in such appointment within 15 days after the receipt by it of a request to do so, or in case an Event of Default has occurred and is continuing, the Trustee alone shall have power to make such appointment. Should any written instrument from the Issuer be required by any co-trustee or separate trustee so appointed for more fully confirming to such co-trustee or separate trustee such property, title, right or power, any and all such instruments shall, on request, be executed, acknowledged and delivered by the Issuer. Every co-trustee or separate trustee shall, to the extent permitted by law, but to such extent only, be appointed subject to the following terms, namely: (1) The Notes shall be authenticated and delivered and all rights, powers, duties and obligations hereunder in respect of the custody of securities, cash and other personal property held by, or required to be deposited or pledged with, the Trustee hereunder, shall be exercised solely by the Trustee. - 34 - (2) The rights, powers, duties and obligations hereby conferred or imposed upon the Trustee in respect of any property covered by such appointment shall be conferred or imposed upon and exercised or performed by the Trustee or by the Trustee and such co-trustee or separate trustee jointly, as shall be provided in the instrument appointing such co-trustee or separate trustee, except to the extent that under any law of any jurisdiction in which any particular act is to be performed, the Trustee shall be incompetent or unqualified to perform such act, in which event such rights, powers, duties and obligations shall be exercised and performed by such co-trustee or separate trustee. (3) The Trustee at any time, by an instrument in writing executed by it, with the concurrence of the Issuer evidenced by a Board Resolution, may accept the resignation of or remove any co-trustee or separate trustee appointed under this Section, and, in case an Event of Default has occurred and is continuing, the Trustee shall have power to accept the resignation of, or remove, any such co-trustee or separate trustee without the concurrence of the Issuer. Upon the written request of the Trustee, the Issuer shall join with the Trustee in the execution, delivery and performance of all instruments and agreements necessary or proper to effectuate such resignation or removal. A successor to any co-trustee or separate trustee that has so resigned or been removed may be appointed in the manner provided in this Section. (4) No co-trustee or separate trustee hereunder shall be personally liable by reason of any act or omission of the Trustee or any other such trustee hereunder nor shall the Trustee be liable by reason of any act or omission of any co-trustee or separate trustee hereunder, so long as such co-trustee or separate trustee has been appointed by the Trustee with due care. (5) Any Act of Noteholders delivered to the Trustee shall be deemed to have been delivered to each such co-trustee and separate trustee. Section 7.13. Rights of Trustee in Capacity of Payment Agent, Transfer Agent or Registrar - 35 - In the event that the Trustee is also acting as Paying Agent or Transfer Agent or Registrar hereunder, the rights and protections afforded to the Trustee pursuant to this Article VII shall also be afforded to the Paying Agent, Transfer Agent and Registrar and to any successor serving in any such capacity. ARTICLE VIII CONSOLIDATION AND MERGER The Issuer shall not consolidate or merge with or into any other Person or convey or transfer its properties and assets substantially as an entirety to any Person. ARTICLE IX. SUPPLEMENTAL INDENTURES Section 9.1. Supplemental Indentures Only with Consent of Noteholders With the written consent of the Noteholders by Act of the Noteholders delivered to the Issuer and the Trustee, the Issuer, when authorized by a Board Resolution, and the Trustee may enter into one or more supplemental indentures for the purpose of adding any provisions to, or changing in any manner or eliminating any of the provisions of, this Indenture or modifying in any manner the rights of the Holders of the Notes under this Indenture; provided, however, no such supplemental indenture shall, without the consent of all of the Noteholders: (1) reduce the Note Principal Balance of any Note or the Note Interest Rate thereon or change the amount or priority or time of any payment on any Note or any place of payment where, or the coin or currency in which, any Note or the interest thereon is payable, or impair the right to institute suit for the enforcement of any such payment; or (2) modify or release the Collateral in any material respect except as otherwise permitted herein; or (3) modify or alter the definition of the term "Outstanding"; or (4) modify or alter the provisions of the proviso to Section 6.3; or (5) modify any of the provisions of this Section 9.1, except to increase any such percentage or to provide that certain other provisions of this Indenture cannot be modified or waived without the consent of the Holder of each Outstanding Note; or (6) permit the creation of any Lien ranking prior to or on a parity with the Lien of this Indenture with respect to any part of the Collateral, or, except as permitted under this Indenture, terminate the Lien of this Indenture on any property at any time subject hereto or, except as permitted under this Indenture, deprive the Holder of any Note of the security afforded by the Lien of this Indenture. - 36 - Promptly after the execution by the Issuer and the Trustee of any supplemental indenture pursuant to this Section, the Issuer shall, if requested by any Noteholder, mail to the each of the Holders of the Notes, a notice setting forth in general terms the substance of such supplemental indenture together with a copy of such supplemental indenture. Any failure of the Issuer to mail such notice and copy, or any defect therein, shall not, however, in any way impair or affect the validity of any such supplemental indenture. Section 9.2. Execution of Supplemental Indentures In executing or accepting the additional trusts created by any supplemental indenture permitted by this Article or the modifications thereby of the trusts created by this Indenture, the Trustee shall be entitled to be supplied with, and prior to executing any supplemental indenture pursuant to Section 9.1, the Trustee shall require an Opinion of Counsel stating that the execution of such supplemental indenture is authorized or permitted by this Indenture. The Trustee may, but shall not be obligated to, enter into any such supplemental indenture which affects the Trustee's own duties, immunities, rights or indemnities under this Indenture or otherwise. Section 9.3. Effect of Supplemental Indentures Upon the execution of any supplemental indenture under this Article, this Indenture shall be modified in accordance therewith, and such supplemental indenture shall form a part of this Indenture for all purposes; and every Holder of Notes theretofore or thereafter authenticated and delivered hereunder shall be bound thereby. Section 9.4. Reference in Notes to Supplemental Indenture Notes issued and delivered after the execution of any supplemental indenture pursuant to this Article may, and if required by the Issuer shall, bear a notation in form approved by the Trustee as to any matter provided for in such supplemental indenture. If the Issuer shall so determine, new Notes so modified as to conform, in the opinion of the Issuer, to any such supplemental indenture may be prepared and executed by the Issuer and authenticated and delivered by the Trustee in exchange for Outstanding Notes. Section 9.5. Solicitation of Holders of Notes (a) Solicitation. The Issuer shall provide each Noteholder (irrespective of the amount of Notes then owned by it) with sufficient information, at least five (5) Business Days in advance of the date a decision is required, to enable such Holder to make an informed and considered decision with respect to any proposed amendment, waiver or consent in respect of any of the provisions hereof or of the Notes. The Issuer shall deliver to the Servicer executed or true and correct copies of each amendment, waiver or consent effected pursuant to the provisions of this Indenture and the Servicer shall deliver copies of the same to each Noteholder promptly following the date on which it is executed and delivered by the Issuer; provided, however, nothing in this Section 9.5(a) shall, in the absence of affirmative consent of a Noteholder, be construed as deemed consent. - 37 - (b) Payment. The Issuer will not directly or indirectly pay or cause to be paid any remuneration, whether by way of supplemental or additional interest, fee or otherwise, or grant any security, to any Noteholder as consideration for or as an inducement to the entering into by any Noteholder of any waiver or amendment of any of the terms and provisions hereof or of the Notes unless such remuneration is concurrently paid, or security is concurrently granted, on the same terms, ratably to each Noteholder then Outstanding even if such Noteholder did not consent to such waiver or amendment. ARTICLE X. REDEMPTION OF NOTES Section 10.1. Redemption at the Option of the Issuer -------------------------------------- The Notes are redeemable (1) at the option of the Issuer or (2) pursuant to the provisions of Section 12.3(d), in whole, or in part at only one time during the term hereof, at the Redemption Price on any Redemption Date with such option, unless deemed exercised hereunder, to be exercised by delivery of an Issuer Order to the Trustee; provided, that (i) no Event of Default has occurred and remains uncured and (ii) except in the case of an Extraordinary Optional Redemption, the Redemption Date must be the first available Redemption Date for which the Trustee can give a proper Redemption Notice after receipt of such Issuer Order by the Trustee; provided, further, that any redemption in part pursuant to clause (1) above is in an amount equal to 50% of the Note Principal Balance outstanding on the Redemption Date and shall be applied pro rata among each of the Candie's/Joe Boxer Note Principal Balance, the Rampage Note Principal Balance and the JNCO Note Principal Balance of each Note; and provided, further, that any redemption pursuant to clause (2) above with respect to any Asset relating to (i) the Primary Mark CANDIES or JOE BOXER, (ii) the Primary Mark RAMPAGE, or (iii) the Primary Mark JNCO shall be applied in reduction of the Candie's/Joe Boxer Note Principal Balance, the Rampage Note Principal Balance or the JNCO Note Principal Balance, respectively, of each Note. Note Principal Payments shall not constitute payments to redeem Notes and the reduction in the Note Principal Balance of any Note with any such payment shall not be a redemption of such Note within the meaning and for any purposes of this Indenture. Section 10.2. Mandatory Redemption (a) In the event that there is to be a payment of the Release Price for an Asset as described in Section 12.3(c) of this Indenture, upon such payment, the affected Asset shall be released from the Lien of this Indenture. The Release Price of the affected Asset shall be deposited in the Collection Account by the Trustee upon receipt and shall be applied to the redemption of Notes on the next ensuing Redemption Date for which a proper Redemption Notice can be given in a principal amount equal to the excess, if any, of (i) the total of Initial Asset Values of all affected Assets over (ii) the total of the Amortization Amounts of the affected Assets, which principal amount shall be - 38 - applied to the reduction of the Candie's/Joe Boxer Note Principal Balance, the Rampage Note Principal Balance or the JNCO Note Principal Balance of each Note, depending on whether the affected Asset relates to the (i) Primary Mark CANDIES or JOE BOXER, (ii) Primary Mark RAMPAGE or (iii) Primary Mark JNCO, respectively. Deposit of such Release Price in the Collection Account shall be deemed to be an exercise of the option to redeem Notes on such Redemption Date in such principal amount and at the Redemption Price. (b) In accordance with Section 13.2(b) of this Indenture, specified funds are to be withdrawn from the Liquidity Reserve Account and applied to the redemption of Notes. Such funds shall be set aside by the Trustee in the Collection Account and applied to the redemption of Notes on the next ensuing Redemption Date for which a proper Redemption Notice can be given in a principal amount equal, as nearly as practicable, to the amount of the funds available after withdrawing therefrom all funds needed to pay accrued interest on the Notes to be redeemed to the applicable Redemption Date plus the related Redemption Premium, if applicable. The Issuer shall be deemed to have elected any such redemption. (c) If, pursuant to the provisions of Section 13.7(b) of this Indenture, specified funds are to be withdrawn from the JNCO Escrow Account and applied to the redemption of the Notes, such funds shall be withdrawn from the JNCO Escrow Account and deposited in the Collection Account on the Business Day immediately preceding the next ensuing Redemption Date for which a proper Redemption Notice can be given. The Redemption Price for the Notes redeemed pursuant to this Section 10.2(c) shall be an amount equal, as nearly as practicable, to the amount of funds available after withdrawing therefrom all funds needed to pay interest on the JNCO Note Principal Balance of the Notes being redeemed to the applicable Redemption Date. No Redemption Premium shall be payable in connection with the redemption described in this clause. Section 10.3 Notice of Redemption by the Issuer Notice of redemption pursuant to Section 10.1 or Section 10.2 if not waived in writing by a Noteholder delivered to the Trustee, shall be given by U.S. registered mail, return receipt requested, or by nationally recognized overnight private mail delivery service, postage prepaid, mailed not less than 30 days or more than 60 days prior to the applicable Redemption Date to each Holder of Notes whose Notes are to be redeemed, at its address in the Note Register. It shall be assumed for purposes of this Indenture that the Trustee can and will mail a notice of redemption 5 days after receipt of an Issuer Order to redeem Notes or a deemed election by the Issuer to redeem Notes. All notices of redemption shall state: (1) the Redemption Date; (2) the principal amount of Notes to be redeemed and the allocation of such principal amount among the Candie's/Joe Boxer Note Principal Balance, the Rampage Note Principal Balance and the JNCO Note Principal Balance; - 39 - (3) a pro forma Redemption Price for each Note redeemed, calculated as of the date of the notice of redemption; (4) that on the Redemption Date, the Redemption Price shall become due and payable upon each Note called for redemption, and that interest thereon shall cease to accrue on such date; and (5) the place where such Notes to be redeemed are to be surrendered on or within 30 days after the Redemption Date, which shall be the office or agency of the Issuer to be maintained as provided in Section 11.2. Notice of redemption of Notes shall be given by the Issuer or, at the Issuer's request, by the Trustee in the name and at the expense of the Issuer. Failure to give notice of redemption, or any defect therein, to any Holder of any Note selected for redemption shall not impair or affect the validity of the redemption of any other Note. Section 10.4 Deposit of the Redemption Price On or before 1:00 P.M. (New York City time) on the Business Day immediately preceding any Redemption Date, the Issuer shall remit to the Trustee for deposit into the Collection Account an amount of monies sufficient to pay the Redemption Price of all Notes which are to be redeemed on such Redemption Date (less any portion of such payment set aside from monies in the Collection Account or the Liquidity Reserve Account for the Notes to be redeemed). Section 10.5 Notes Payable on Redemption Date; Less than All Notes to be Redeemed (a) Notice of redemption having been given as provided in Section 10.3, the Notes to be redeemed shall, on the applicable Redemption Date, become due and payable at the Redemption Price and on such Redemption Date such Notes shall cease to bear interest on the portion of the Notes actually redeemed. On the Redemption Date, the Holders of such Notes shall be paid the Redemption Price by the Trustee from funds available to the Trustee pursuant to Section 10.4, Section 13.2 or otherwise; provided, however, that installments of principal and interest which are due on or prior to the Redemption Date shall be payable to the Holders of such Notes registered as such on the relevant Record Dates according to their terms and the provisions of Section 3.7. (b) If a Holder of any Note called in whole or in part for redemption shall not be so paid due to a failure of the Trustee to remit funds timely deposited by the Issuer, the Issuer shall have no liability as a result of such failure and the principal amount thereof shall, until paid, continue to bear interest from the Redemption Date at the related Note Interest Rate until payment of principal is made. (c) If less than the principal amount of all Notes Outstanding are to be redeemed on any Redemption Date, such Notes shall be redeemed pro rata from available funds as nearly as practicable in the judgment of the Trustee, observing in the process authorized denominations in accordance with Section 3.2 of this Indenture and shall be applied in installments of principal payable on the affected Note in the reverse order of maturity in accordance with the schedule attached to such Note. - 40 - (d) Installments of interest and principal due on or prior to a Redemption Date shall continue to be payable to the Holders of Notes called for redemption as of the relevant Record Dates according to their terms and the provisions of Section 3.7. Except as otherwise specifically provided herein, the election of the Issuer to redeem any Notes pursuant to this Section shall be evidenced by an Issuer Order directing the Trustee to make the payment of the Redemption Price on all of the Notes to be redeemed from monies deposited with the Trustee pursuant to Section 10.4 or otherwise available to the Trustee in accordance with this Indenture for the purpose of redeeming Notes. Section 10.6 Defeasance (a) If, on any Payment Date, there is held by the Trustee Defeasance Collateral (which may include the balance on deposit in the Liquidity Reserve Account, to the extent it is invested in cash and Defeasance Collateral, if so elected by the Issuer), and in such principal amounts bearing interest at such rates and with such maturities as will provide, according to verification by a nationally recognized firm of independent certified public accountants, sufficient funds to pay (1) all scheduled principal of and interest (if Notes are to be redeemed before the Maturity Date), on the Notes to the Redemption Date or the Maturity Date as shall be elected by the Issuer, and (2) all Defeasance Expenses (in cash) due to the Noteholders, the Trustee and the Servicer, then upon written notice from the Issuer to the Trustee and to the Noteholders, the Trustee and the Noteholders shall cease to be entitled to any benefit or security under this Indenture except for the right to receive payment of the funds so held and other rights which by their nature cannot be satisfied prior to or simultaneously with termination of the lien hereof, the security interests created by this Indenture (except in such funds and investments) shall terminate, and the Issuer and the Trustee shall execute and deliver such instruments as may be necessary to discharge the Trustee's lien and security interests created hereunder for the benefit of the Trustee and the Noteholders. Upon such defeasance, the funds and investments required to pay the Notes and to pay the Defeasance Expenses shall be irrevocably set aside for that purpose, and money held for defeasance shall be invested only as provided above in this section and applied by the Trustee to the retirement of the Notes and payment of the Defeasance Expenses. Any funds or property held by the Trustee and not required for payment or redemption of Notes and payment of Defeasance Expenses shall be distributed to the order of the Issuer upon such indemnification, if any, as the Trustee may reasonably require. If any Notes are to be defeased to a Redemption Date before the Maturity Date, the Notes to be defeased shall be subject to redemption on such Redemption Date at the Redemption Price, and the Trustee shall be deemed to have been instructed to distribute and shall distribute a notice of redemption of such Notes as and when required hereunder. (b) Upon defeasance of all of the Notes Outstanding, the Issuer shall pay to the Servicer, a fee in the amount of 0.25% per annum of the aggregate Note Principal Balance of Outstanding Notes. - 41 - ARTICLE XI. REPRESENTATIONS, WARRANTIES AND COVENANTS Section 11.1 Payment of Principal and Interest The Issuer shall duly and punctually pay the principal of and interest on the Notes, subject to and in accordance with the terms of the Notes and this Indenture. Section 11.2 Maintenance of Office or Agency The Issuer shall maintain an office or agency within the United States of America where Notes may be presented or surrendered for payment, where Notes may be surrendered for registration of transfer or exchange and where notices in respect of the Notes and this Indenture may be served. The Issuer hereby initially appoints the Trustee its office or agency for each of said purposes. The Issuer shall give prompt written notice to the Trustee of the location, and of any change in the location, of any such office or agency. If at any time the Issuer shall fail to maintain any such office or agency or shall fail to furnish the Trustee with the address thereof, such presentations, surrenders or exchanges may be made or served at the Corporate Trust Office. As of the date hereof, on the Issue Date, and at all times since its formation, the chief executive office and place of business of the Issuer is and has been located at 103 Foulk Road, Wilmington, Delaware 19803. Section 11.3 Money for Note Payments to Be Held in Trust Subject to any applicable escheat law, any money deposited with the Trustee in trust for payment to the Noteholders on any Payment Date and remaining unclaimed for three years after such payment has become due and payable shall be paid to the Issuer on Issuer Request; and any Noteholder with a right to or interest in such money shall thereafter, as an unsecured general creditor, look only to the Issuer for payment thereof, and all liability of the Trustee with respect to such trust money, shall thereupon cease; provided, however, that the Trustee, before being required to make any such repayment, shall at the expense of the Issuer send by first class mail to each Noteholder with a right to or interest in monies due and payable but not claimed, at the last address as shown on the Note Register for such Noteholders, and cause to be published once, in a newspaper published in the English language, customarily published on each Business Day and of general circulation in the city in which the Trustee's Office is located, notice that such money remains unclaimed and that, after a date specified therein, which shall not be less than 60 days from the date of such publication, any unclaimed balance of such money then remaining shall be repaid to the Issuer. The Trustee may also adopt and employ, at the expense of the Issuer, any other reasonable means of notification of such repayment (including, but not limited to, mailing notice of such repayment to each Noteholder whose right to or interest in monies due and payable but not claimed is determinable from the records of the Trustee, at the last address as shown on the Note Register for such Noteholder). - 42 - Section 11.4. Continued Existence; Observance of Organizational Documents The Issuer shall keep in full effect its existence, rights and franchises as a limited liability company under the laws of the State of Delaware, shall operate in accordance with, and subject to the limitations set forth in, its Organizational Documents and shall obtain and preserve its qualification to do business as a foreign corporation in each jurisdiction in which the failure to be so qualified shall have a material adverse effect on the validity and enforceability of this Indenture or the Notes. Section 11.5. Protection of Collateral (a) The Issuer covenants to file or cause to be filed all UCC Financing Statements and any related forms necessary or desirable to be filed with respect to the Collateral in the United States Patent and Trademark Office within ten (10) Business Days of the applicable Closing Date and in the United States Copyright Office within thirty (30) days of the applicable Closing Date. (b) The Issuer shall from time to time execute and deliver to the Trustee, the Servicer and such other parties as the Issuer shall deem appropriate all such supplements and amendments hereto and all such financing statements, continuation statements, instruments of further assurance and other instruments, and shall take such other action as is necessary or advisable to: (i) ensure a first priority, perfected security interest in all or any portion of the Collateral; (ii) maintain or preserve the lien of this Indenture or carry out the purposes hereof; (iii) protect the validity of any Grant made by this Indenture; (iv) enforce any of the Collateral or, where appropriate, any security interest in the Collateral and the proceeds thereof; (v) preserve and defend the Issuer's title to the Collateral and the rights of the Noteholders therein against the claims of all persons and parties subject to the rights of licensees under the Licenses; or (vi) record or register the Issuer's ownership of all of the Trademarks of record in the Territory; but in the foregoing cases of items (i) through (v), only to the extent the same can be achieved by recordation or filing under the laws of the Covered Jurisdictions, and in the foregoing case of item (vi), only to the extent the same can be achieved by recordation or filing under the laws of the Territory. (c) For avoidance of doubt, the Issuer agrees that: - 43 - (i) In the event that, on any Payment Date following any Closing Date, the DSCR is less than 1.6 to 1.0 (i.e., 160%), it shall, promptly, but in no event more than 180 days, (i) cause the recordation of its title to the Primary Marks BONGO, JOE BOXER, RAMPAGE and, if and when acquired by the Issuer, JNCO, in all jurisdictions in which such title has not previously been recorded and (ii) file in all jurisdictions in which a filing can be made to perfect the lien of the Indenture on the Primary Marks BONGO, CANDIE'S, JOE BOXER, RAMPAGE and, if and when acquired by the Issuer, JNCO; (ii) In the event that the aggregate Individual Asset Earned Income for Assets related to any one of the Primary Marks BONGO, JOE BOXER, RAMPAGE or, if and when acquired by the Issuer, JNCO in a single jurisdiction exceeds $10,000 in any single fiscal year of the Issuer, the Issuer shall, on or before the first Payment Date following such fiscal year, cause the recordation of its title to such Primary Mark in such jurisdiction unless such title has been previously been recorded therein; and (iii) In the event that the aggregate Individual Asset Earned Income for Assets related to any of the Primary Marks BONGO, CANDIE'S, JOE BOXER RAMPAGE or, if and when acquired by the Issuer, JNCO (but, for the avoidance of doubt, not in the case where such income is taken in the aggregate for all Primary Marks) in a single jurisdiction exceeds $250,000 in any single fiscal year of the Issuer, the Issuer shall, on or before the first Payment Date following such fiscal year, cause a filing to be made in such jurisdiction, to the extent legally possible, to perfect the lien of the Indenture on such Primary Mark and, if it is customary practice in such jurisdiction, deliver to the Trustee and Noteholders a customary opinion of counsel in such jurisdiction confirming that such filing was sufficient to perfect such lien to the extent the same can be accomplished by filing. Section 11.6. Biennial Opinion as to Collateral On or before November 22nd in each second succeeding calendar year, commencing in 2007, the Issuer shall furnish to the Trustee, and to the Noteholders an Opinion of Counsel (which shall be independent counsel) either (i) stating that, in the opinion of such counsel, such action has been taken with respect to the recording, filing, re-recording and refiling of any requisite documents as is necessary to maintain the lien and security interest created by this Indenture and the perfection and priority thereof as the same originally existed under and in accordance with this Indenture and reciting the details of such action or (ii) stating that in the opinion of such counsel no such action is necessary to maintain such lien and security interest; but in each of the foregoing cases, only to the extent the same can be achieved under the law of the United States or any state within the United States or the law of Canada or (if and to the extent such opinions are customarily given in Material Jurisdictions other than the United States and Canada) any other Material Jurisdiction, as applicable. Such Opinion of Counsel shall also describe the recording, filing, re-recording and refiling of such requisite documents that shall, in the opinion of such counsel, be required to maintain the lien and security interest of this Indenture and the perfection and priority thereof until November 22, 2015 in the second succeeding calendar year, based upon the state of the law and facts in existence at the time of delivering the opinion. - 44 - Section 11.7. Negative Covenants The Issuer shall not: (i) sell, transfer, exchange or otherwise dispose of any of the Collateral (except as expressly permitted by the Management Agreement or this Indenture); or (ii) claim any credit on, or make any deduction from, the principal or interest payable in respect of the Notes by reason of the payment of any taxes levied or assessed upon any of the Collateral; or (iii) amend (a) either Section 7, Section 8(g) or Section 25 of its Limited Liability Company Agreement or (b) any Transaction Document without receiving approval thereof by Act of the Noteholders (which may not be unreasonably withheld); or (iv) (a) permit the validity or effectiveness of this Indenture to be impaired, or permit this Indenture to be amended, hypothecated, subordinated, terminated or discharged, or permit any Person to be released from any covenants or obligations of this Indenture, except as may be expressly permitted hereby and thereby, (b) permit any lien, charge, security interest, mortgage or other encumbrances, other than the Lien of this Indenture and Licenses, to be created on or extended to or otherwise arise upon or burden the Collateral or any part thereof or any interest therein or the proceeds thereof or incur any indebtedness other than the Notes, or (c) permit this Indenture not to constitute a valid first priority security interest in the Collateral to the extent the same can be achieved by filing under the laws of the Covered Jurisdictions, as applicable; or (v) change the state of its organization without thirty days' prior written notice to the Trustee, accompanied by such evidence of actions to be taken as shall be necessary to continue the perfection of the lien on the Collateral to the extent the same can be achieved by filing under the laws of the Covered Jurisdictions, as applicable; or (vi) (i) institute, or consent to the institution of, bankruptcy or insolvency proceedings in respect to the Issuer, or file a petition seeking or consenting to reorganization or relief under any applicable federal or state law relating to bankruptcy, or seek or consent to the appointment of a receiver, liquidator, assignee, trustee, sequestrator (or other similar official) of the Issuer or any substantial part of its assets, or make any assignment for the benefit of creditors, or admit in writing its inability to pay its debts generally as they become due, or take any corporate action in furtherance of any such action; or (ii) consolidate, merge, dissolve or liquidate, in whole or in part; or - 45 - (vii) except for Indebtedness as may be expressly permitted under this Indenture, incur, assume or guaranty any Indebtedness except for such Indebtedness as has been approved by the Noteholders; or (viii) except as contemplated in the Management Agreement, enter into any material amendment or supplement to or modification of the Assets or grant any material waiver or consent under the Assets; or (ix) issue any bonds, notes or other obligations other than the Notes. Section 11.8. Statement as to Compliance The Issuer shall deliver to the Trustee, the Noteholders and the Servicer, on or before each January 31 (commencing January 31, 2006), a written statement signed by the President or a Vice President and by the Treasurer or an Assistant Treasurer or the Secretary or an Assistant Secretary of the Issuer stating, as to each signer thereof, that (1) a review of the activities of the Issuer during the preceding calendar year (or such lesser period in the case of the first such statement) and of performance under this Indenture has been made under his supervision; and (2) the Issuer has fulfilled all its obligations in all material respects under this Indenture throughout such period, or, if there has been a default in the fulfillment of any such obligation, specifying each such Default known to him and the nature and status thereof. Section 11.9. Inspection At any time and from time to time, the Issuer shall permit the Trustee, the Servicer and the Noteholders, or their respective agents or representatives, during regular business hours and without charge: (i) to examine and make copies of and abstracts from the books and records (financial and corporate) of the Issuer, and (ii) to visit the offices and properties of the Issuer for the purpose of reviewing and examining such books and records and discussing matters relating thereto and to the performance of the Issuer under this Indenture with any of the officers or employees of the Issuer having knowledge of such matters or with the Issuer's outside auditors. - 46 - Section 11.10. Limited Purpose The Issuer shall not engage in any business other than the transactions permitted by its Organizational Documents. Section 11.11. Issuer Ownership The Issuer agrees that its books and records will reflect its ownership of the Collateral, subject to the liens and security interests created by this Indenture. Section 11.12. Enforcement of Transaction Documents The Issuer shall take all actions necessary, and diligently pursue all remedies available to it, to enforce the obligations of each other party to a Transaction Document to secure its and the Noteholders' rights thereunder, provided, that prior to taking any action in the name of the Noteholders, it shall receive the written consent of the Noteholders. Section 11.13. Representations and Warranties The Issuer, as of the date hereof and as of each Closing Date, hereby represents and warrants the following: (a) Except for the interests created by Licenses, the Issuer is the owner of all of the Collateral free of liens and encumbrances, the Issuer has not assigned any interest or participation in any Collateral, and the Issuer has full right to Grant such Collateral to the Trustee for the benefit of the Noteholders. (b) The Issuer has Granted a security interest in all of its right, title, and interest in the Collateral to the Noteholders. (c) The Notes have not been registered under the Securities Act nor pursuant to the securities or blue sky laws of any State. (d) The Trustee will, upon proper filing and/or recording of UCC financing statements, copyright documents and trademark documents, as applicable, in the Covered Jurisdictions by the Issuer or the Servicer on the Issuer's behalf, have a perfected first priority security interest in each item of Collateral, free from any lien, security interest encumbrance or other right, title or interest of any Person, except for any Lien created by this Indenture and the Licenses, but in all cases only to the extent the same can be achieved by filing under the laws of the Covered Jurisdictions, as applicable. (e) The Issuer has its chief executive office at 103 Foulk Road, Wilmington, Delaware 19803. (f) The Issuer, (i) is a limited liability company, duly organized, validly existing in good standing under the laws of Delaware; (ii) has requisite power and authority and all licenses and permits to own and operate its properties to carry on its business as now conducted, and to enter into and perform its obligations under each Transaction Document to which it is - 47 - a party and the transactions contemplated thereby, including, the issuance and sale of the Notes and the performance of its obligations thereunder; and (iii) has been duly qualified and is authorized to do business and, if applicable, is in good standing as a foreign corporation (or is exempt from such requirements) and has obtained all necessary licenses and approvals in each jurisdiction where the failure to be so qualified would have a material adverse effect on its ability to conduct its business. (g) Each Transaction Document (other than the Notes) to which the Issuer is a party has been duly authorized and, when executed and delivered by the Issuer will constitute valid, binding and enforceable obligations of the Issuer in accordance with its terms, subject, as to the enforcement of remedies, to bankruptcy, insolvency, reorganization, moratorium and other similar laws affecting the enforceability of creditors' rights generally applicable in the event of the bankruptcy, insolvency or reorganization of the Issuer and to general principles of equity. (h) No event has occurred and is continuing that constitutes a Default or an Event of Default under, and as defined in, this Indenture, the Servicing Agreement or any other Transaction Document. Neither the execution and delivery of any Transaction Document by the Issuer, the consummation of the transactions contemplated thereby nor the satisfaction of the terms and conditions of the Transaction Documents (i) conflicts with or results in any breach or violation of any provision of the Organizational Documents of the Issuer, or any law, rule, regulation, order, writ, judgment, injunction, decree, determination or award currently in effect having applicability to the Issuer, or any of its properties, including regulations issued by an administrative agency or other governmental authority having supervisory powers over the Issuer; or (ii) constitutes a default by the Issuer under or a breach of any provision of this Indenture or any contract, agreement, mortgage or other instrument to which it is a party or by which it or any of its properties are or may be bound or affected or (iii) results in the creation or imposition of any lien upon any of the properties or assets of the Issuer pursuant to the terms of any mortgage, deed of trust, contract, agreement, charter instrument, by-law or other instrument. (i) The Notes have been duly and validly authorized by the Issuer and, when duly and validly executed in accordance with this Indenture, will be validly issued and outstanding and entitled to the benefits of this Indenture and will constitute valid and legally binding obligations of the Issuer, enforceable against the Issuer in accordance with their terms, subject, as to the enforcement of remedies, to bankruptcy, insolvency, reorganization, moratorium and other similar laws affecting the enforceability of creditors' rights generally applicable in the event of the bankruptcy, insolvency or reorganization of the Issuer and to general principles of equity. (j) The Issuer had at all relevant times and now has full power and authority to originate, own and, has full power and authority to Grant the Collateral, has duly authorized such Grant by all necessary action, and does not require any member approval, or approval or consent of any trustee or holders of any indebtedness or obligations of the Issuer other than such as have been obtained. - 48 - (k) There is no pending action, suit, proceeding or investigation, including, but not limited to, any such proceeding or investigation resulting from the ownership or use of any of the Collateral, against or affecting the Issuer before any administrative agency, arbitrator or governmental body or, to the best knowledge of the Issuer, any threatened action or proceeding, including but not limited to any such proceeding or investigation resulting from the ownership or use of any of the Collateral, against or affecting the Issuer before any of the foregoing which, if decided adversely to the Issuer, would materially affect (i) the condition (financial or otherwise), business, properties, prospects, profits or operations of the Issuer, (ii) the ability of the Issuer to perform its obligations under, or the validity or enforceability of, any Transaction Document to which it is a party or (iii) the Noteholders' ability to foreclose or otherwise enforce their interest in the Collateral as contemplated under this Indenture and the Servicing Agreement. This Issuer is not subject to any order of any court, governmental authority or agency or arbitration board of tribunal. (l) No consent, approval, authorization, order of, or filing, registration, application with any court or other governmental authority in respect of the Issuer is necessary or required under the law of the United States or any state within the United States (or other Covered Jurisdictions in the case of filings to perfect the Lien of the Indenture) in connection with the authorization, execution, delivery or performance by the Issuer of this Indenture or any other Transaction Document to which it is a party or any of the other documents or transactions contemplated thereby, including without limitation, the pledge of the Collateral to the Noteholders, the servicing of the Collateral, or the offer, issue, sale, delivery or performance of the Notes, other than that consent, approval, authorization, order, filing, registration or qualification which has been, or will be promptly, made or obtained in the United States (or the other Covered Jurisdictions in the case of filings to perfect the Lien of the Indenture); provided that no representation is made with respect to filings of qualifications under the "Blue Sky" laws of the various states within the United States. (m) None of the transactions contemplated herein (including, without limitation thereof, the use of the proceeds from the sale of the Notes) will result in a violation of Section 7 of the Securities Exchange Act, or any regulations thereto, including, without limitation, Regulations T, U and X of the Board of Governors of the Federal Reserve System, 12 C.F.R., Chapter II; provided that the Issuer is not responsible for any such violation that results from the status of a Noteholder. The Issuer does not own or intend to carry or purchase, and no proceeds from the sale of the Notes will be used by the Issuer to purchase, any "margin stock" within the meaning of said Regulation U. (n) The representations and warranties of the Issuer in each of the Servicing Agreement, the Note Purchase Agreement, the 2005 Note Purchase Agreement, the 2005-B Note Purchase Agreement, this Indenture and the other Transaction Documents to which it is a party are true and correct and are hereby incorporated by reference as if each such representation and warranty were specifically made herein. (o) The Issuer is not a party to any contract or agreement, or subject to any charter or other legal restriction, which materially and adversely affects its business as contemplated in the Transaction Documents. The Issuer has not agreed to cause or permit in the future (upon the happening of a contingency or otherwise) any of its properties or any of the Collateral, other than as otherwise set forth in this Indenture, whether now owned or hereafter acquired, to be subject to a lien not permitted by this Indenture. - 49 - (p) For so long as any of the Notes are Outstanding and are "restricted securities" within the meaning of Rule 144(a)(3) under the Securities Act, the Issuer will cause to be provided to the Noteholders and any prospective purchaser of Notes designated by a Holder of such Notes, upon the request of such Holder or prospective purchaser, the information required to be provided to such Holder or prospective purchaser by Rule 144A(d)(4) under the Securities Act. (q) The Issuer does not intend to treat the Notes and related transactions as being a "reportable transaction" (within the meaning of Treasury Regulation Section 1.6011-4). In the event the Issuer determines to take any action inconsistent with such intention, it will promptly notify the Noteholders hereof. If the Issuer so notifies the Noteholders, the Issuer acknowledges that one or more of the Noteholders may treat its Notes as part of a transaction that is subject to Treasury Regulations 301.6112-1, and that such Noteholder or Noteholders, as applicable, will maintain the lists and other records required by such Treasury Regulation. (r) The Issuer is not (i) a country, territory, organization, person or entity name on an OFAC list; (ii) a Person that resides or has a place of business in a country or territory named on such lists or which is designated as a Non-Cooperative Jurisdiction by the Financial Action Task Force on Money Laundering ("FATF"), or whose subscription funds are transferred from or through such a jurisdiction; (iii) a "Foreign Shell Lender" within the meaning of the USA PATRIOT Act, i.e., a foreign bank that does not have a physical presence in any country and that is not affiliated with a bank that has a physical presence and an acceptable level of regulation and supervision; or (iv) a person or entity that resides in or is organized under the laws of a jurisdiction designated by the United States Secretary of this Treasury under Section 311 or 312 of the USA PATRIOT Act as warranting special measures due to money laundering. Section 11.14. Certain Covenants (a) The Issuer agrees that any Person, designated in writing by a Noteholder may, upon reasonable prior written notice, consult with proper officials of the Issuer and (subject to consent by the Servicer under the Servicing Agreement) the Servicer at such times during normal business hours and as often as such Person may reasonably request regarding the information required to be furnished pursuant to the Servicing Agreement or regarding the performance of the Issuer's covenants and agreements contained in this Indenture or any of the Transaction Documents to which it is a party. (b) The Issuer will comply in all material respects with all requirements of law applicable to the Issuer relating to the performance of its obligations under this Indenture and the Notes. (c) The Issuer agrees to furnish the Noteholders copies of each of the Transaction Documents and any documents to be furnished pursuant to the terms of the Transaction Documents and such other information and documents relating to the Notes and the Collateral any Noteholder may reasonably request. - 50 - (d) The Issuer will pay or cause to be paid all present and future recording and filing fees, and all legal, financial and miscellaneous out-of-pocket expenses and costs incurred by the Issuer in connection with the negotiation of and consummation of the transactions contemplated by this Indenture and the issuance and sale of the Notes. The Issuer further agrees that it will pay or cause to be paid, promptly upon demand, any reasonable out of pocket expense incurred by the Noteholders in connection with the making of amendment to, or the giving of any release, consent or waiver in respect of, this Indenture and any document executed pursuant hereto or thereto, whether or not consummated, including the reasonable fees and disbursements of counsel for the Noteholders in connection therewith. The obligations of the Issuer under the preceding sentences shall be subject to the priority of distributions set forth in Section 13.1 hereof and shall survive the termination of this Indenture, the transfer of any Note or portion thereof or interest therein by a Noteholder and the payment of any Note. (e) The Issuer will add to Schedule 1 to the Second Amended and Restated Standard Definitions, included herein as Appendix A, a description of and required information pertaining to: (i) each separate and identifiable Asset in which it has ownership rights but which was not listed thereon at a Closing Date (whether or not it was in existence on a Closing Date) promptly after the jurisdiction in which it generates income for the Issuer becomes a Material Jurisdiction and (ii) without duplication, each separate and identifiable Asset not listed on such Schedule 1 at a Closing Date promptly after the same is conveyed to the Issuer pursuant to Section 2.2(b) of the Contribution Agreement or Section 2.2(b) of the Joe Boxer Contribution Agreement. (f) The Issuer will promptly following the conveyance of an Asset to the Issuer (or Release of an Asset) or upon the loss, sale or defeasance of an Asset from the Issuer, update the schedules and exhibits attached to the Transaction Documents, with copies to the Servicer, Trustee and Noteholders. (g) The Issuer will comply with, and obey the terms and provisions of, its Organizational Documents and will not take any action which it is prohibited from taking under its Organizational Documents. (h) The Issuer will maintain, or be a subject insured party under, insurance of the type that is customarily maintained by business entities of the same type and scale as the Issuer. (i) For so long as any of the Notes remain Outstanding, the Issuer will not (x) merge or consolidate with or into any other entity or engage in any other business combination with any other entity or (y) sell or transfer all or substantially all of its assets other than in conformity with the Transaction Documents. (j) The Issuer shall seek to enter into Licenses in the future that permit the Obligors thereunder to be audited with respect to performance under such Licenses. - 51 - (k) The Issuer shall notify the Noteholders of any litigation in which the Issuer is a party, promptly upon the Issuer's receipt of notice of the filing of such litigation, in writing by delivery by a reputable courier service or by registered mail (return receipt requested), all charges prepaid. Section 11.15. Submission to Jurisdiction THIS INDENTURE SHALL BE DEEMED TO HAVE BEEN MADE IN THE STATE OF NEW YORK AND ITS VALIDITY, CONSTRUCTION AND EFFECT SHALL BE GOVERNED BY THE INTERNAL LAWS OF THE STATE OF NEW YORK APPLICABLE TO AGREEMENTS WHOLLY PERFORMED THEREIN. THE VENUE FOR ANY AMOUNT, SUIT OR PROCEEDING ARISING FROM OR BASED UPON THIS INDENTURE SHALL BE THE APPROPRIATE STATE AND FEDERAL COURTS LOCATED IN THE COUNTY OF NEW YORK IN THE STATE OF NEW YORK. ACCORDINGLY, THE ISSUER AGREES THAT ANY ACTION, SUIT OR PROCEEDING ARISING FROM OR BASED ON THIS INDENTURE SHALL BE COMMENCED IN AND DETERMINED BY THOSE APPROPRIATE STATE AND FEDERAL COURTS LOCATED IN THE COUNTY OF NEW YORK IN THE STATE OF NEW YORK; THE PARTIES HEREBY WAIVE ANY OBJECTION TO THE PROPRIETY OR CONVENIENCE OF VENUE IN SUCH COURTS OR TO THE JURISDICTION OF THE COURTS OVER EITHER PARTY AND AGREE THAT ANY JUDGMENT ENTERED THEREIN MAY BE ENFORCED WITH NO FURTHER DEFENSE OR OFFSET IN ANY JURISDICTION IN WHICH THE DEFENDANT IS A CITIZEN, RESIDES OR OWNS PROPERTY. Section 11.16. Representations with Respect to Assets. On and as of the date of this Indenture, and on and as of each date on which an Asset becomes subject to the Lien of this Indenture, the Issuer represents with respect to such Asset which the Issuer pledges to the Trustee hereunder, that: (a) Payments After a Closing Date. No monies or other contingent compensation shall be payable after a Closing Date to any person, firm or corporation with respect to any exploitation of the Assets which occurred prior to a Closing Date. (b) No Defaults. The execution and implementation of this Indenture shall not result in the breach of any conditions or constitute a default (with or without notice or the lapse of time, or both) under any license or agreement constituting a portion of the Assets pledged hereunder or to which any of the Assets pledged hereunder is subject. Neither the Issuer nor, to the Issuer's knowledge, any person, firm or corporation associated with or deriving rights through or from the Issuer, is in breach or is in default of any applicable agreement constituting a portion of the Assets which the Issuer pledges to the Trustee or to which any of such Assets are subject on the date of execution of this Indenture. (c) Advances. No advances or other charges heretofore received by the Issuer in connection with the Assets which the Issuer pledges to the Trustee remain recoupable at any time from and after a Closing Date from any License Income earned at any time either before or after the date of this Indenture, except as listed on Exhibit C to each of the Contribution Agreement, the Joe Boxer Contribution Agreement, the Rampage Contribution Agreement and, to the extent the JNCO Acquisition occurs, the JNCO Contribution Agreement. - 52 - (d) Non-Contravention. Neither the Issuer's exercise of any of the rights, licenses, privileges and properties regarding the Assets pledged hereunder nor the Issuer's right, title and interest in and to the Assets pledged hereunder will violate or infringe on any common law or statutory rights of any person, firm or corporation, except such violations or infringements outside the First Stage Covered Jurisdictions as would not have a material adverse effect on the business of the Issuer. (e) [RESERVED]. (f) Exhibits and Schedules Accurate. All of the information set forth in the exhibits and schedules attached hereto and the Third Amended and Restated Standard Definitions is complete and accurate in all material respects. No information supplied in writing by, or on behalf of, the Issuer in connection with the transactions contemplated by this Indenture, in each case as of each Closing Date or on a future date on which an Asset becomes subject to the Lien of this Indenture, as the case may be, contains any untrue statement of a material fact or omits a material fact necessary to make the statements contained therein or herein, in light of the circumstances under which they were made, not misleading. (g) Ownership of the Trademarks. (i) Exhibit E-1A contains a true and complete list of all registrations and pending applications for the Trademarks in the First Stage Territory owned by the Issuer, with the exception of intent-to-use applications filed within the United States, all of which registrations exist, are subsisting and are validly registered except as provided therein and all of which applications are validly pending. Exhibit E-1B contains a true and complete list of all registrations and pending applications in the Second Stage Territory. Exhibit E-1C contains a true and complete list of additional registrations and pending applications owned by Caruso and not in the First Stage Territory. All of the Trademarks set forth in Exhibit E-1A, except to the extent otherwise provided therein, are currently in use on the goods set forth in the registrations for Trademarks in the First Stage Covered Jurisdictions. (ii) Notwithstanding anything contained in Exhibit F, (i) the Issuer owns all right, title and interest in and to the Trademarks related to and including the Primary Marks CANDIE'S, BONGO, JOE BOXER and RAMPAGE for use in the First Stage Territory; (ii) the Issuer has the full and exclusive right, subject to the related Licenses, to use and to license the use of the Trademarks related to and including the Primary Marks CANDIE'S, BONGO, JOE BOXER in the First Stage Territory; and (iii) the consummation of the transactions contemplated by the Transaction Documents will not alter or impair any of the foregoing such rights. The - 53 - use by the Issuer in the First Stage Territory of the Trademarks related to and including the Primary Marks CANDIE'S, BONGO, JOE BOXER and RAMPAGE will not infringe on the rights of any Person, except such infringements outside the First Stage Covered Jurisdictions as would not have a material adverse effect on the business of the Issuer. (iii) Except as provided in Exhibit F, no claim has been asserted against the Issuer or any Affiliate thereof by any Person to the use of, and the Issuer has no knowledge of the use by any person (other than the licensees under the Licenses) of, any of the Trademarks related to and including the Primary Marks CANDIE'S, BONGO, JOE BOXER and RAMPAGE in the First Stage Territory, and there is no valid basis for such claim with respect to the Trademarks or for any person (other than the licensees under the Licenses) to use any of the Trademarks related to and including the Primary Marks CANDIE'S, BONGO, JOE BOXER and RAMPAGE in the First Stage Territory, except such claims or uses outside the First Stage Covered Jurisdictions as would not have a material adverse effect on the business of the Issuer. (iv) Each of the Trademarks related to and including the Primary Marks CANDIE'S, BONGO, JOE BOXER and RAMPAGE is valid, subsisting and enforceable in the First Stage Territory, with the exception of such Trademarks the lack of enforceability of which outside the First Stage Covered Jurisdictions would not have a material adverse effect on the business of the Company. There is vested in the Issuer title to the Trademarks related to and including the Primary Marks CANDIE'S, BONGO, JOE BOXER and RAMPAGE and related Trademarks for use in the First Stage Territory, free and clear of all Liens (other than such Liens with respect to the Licenses and such Liens as may arise from actions or inactions of the Issuer). (h) Additional Representations with Respect to the Licenses. (i) Exhibit E-2 lists all licenses and other agreements relating to the use of any of the Trademarks, respectively, in the Territory. All of the Licenses are valid and in full force and effect, except as set forth in Exhibit E-2, there are no existing defaults (or events that, with notice or lapse of time or both, would constitute a default) by any party thereunder. No claim has been asserted by any Person challenging or questioning the validity or effectiveness of any of the Licenses and there is no valid basis for any such claim. The Issuer has not, other than pursuant to the Licenses, licensed or authorized any other Person to use the Primary Marks CANDIE'S, BONGO, JOE BOXER or RAMPAGE, or any related Trademarks, respectively, in the First Stage Territory, or granted to any other Person any other right with respect thereto. Except for the Licenses, no agreement to which the Issuer is a party or by which its assets are bound restricts or in any way affects the Primary Marks CANDIE'S, BONGO, JOE BOXER or RAMPAGE, or any related - 54 - Trademarks, respectively, or the right to use thereof in the First Stage Territory. There is vested in the Issuer title to all of the Licenses free and clear of all Liens (other than such liens with respect to the Licenses and such Liens as may arise from actions or inactions of the Issuer). (ii) The Issuer has considered the activities of all of the licensees under the Licenses and has verified that the products manufactured, sold or offered for sale under the Trademarks by such licensees meet the quality control standards set forth in such Licenses and all other such standards promulgated by the Issuer. (iii) No License is a Defaulted Contract Asset. (iv) All required consents, assignment and/or assumption agreements or notices, if any, have been obtained or delivered in the manner required by each License. (v) To the Issuer's best knowledge, the Obligors under Canadian Licenses have not sold products bearing the trademarks covered by such Licenses in the United States. Section 11.17. Survival of Indenture Representations and Warranties The Issuer hereby agrees that each representation and warranty made by it in the Original Indenture, the First Amended and Restated Indenture and the Second Amended and Restated Indenture shall survive notwithstanding the exchange and cancellation of the Original Notes and the Subordinate Notes and the issuance of the July Notes or the exchange and cancellation of the July Notes and the issuance of the Notes. Each of the representations and warranties of the Issuer in the Original Indenture, the First Amended and Restated Indenture and the Second Amended and Restated Indenture are true and correct as of the date thereof and are hereby incorporated by reference. ARTICLE XII. ACCOUNTS, ACCOUNTINGS AND RELEASES Section 12.1. Collection of Money Except as otherwise expressly provided herein, the Trustee shall be forwarded all money and other property payable to or receivable by the Issuer pursuant to the Collateral from the Servicer as provided in Section 2.2(c) of the Servicing Agreement and as otherwise provided in this Indenture. The Trustee shall hold all such money and property so received by it as part of the Collateral, shall deposit the same into the Collection Account, and shall apply it as provided in this Indenture. - 55 - Section 12.2. Accounts (a) Liquidity Reserve Account. The Issuer shall establish with the Trustee and the Trustee shall maintain a segregated trust account (the "Liquidity Reserve Account"), which shall be in the name of the Trustee "as trustee on behalf of the Holders of the IP Holdings LLC Asset-Backed Notes," and which shall be in an Eligible Financial Institution, for the receipt of funds deposited into the Liquidity Reserve Account. On or before the applicable Closing Date, the Issuer shall deposit or cause to be deposited into the Liquidity Reserve Account an amount equal to the related Initial Liquidity Reserve Deposit Amount, such that the total amount on deposit therein shall equal $4,610,000. Thereafter, the Trustee shall deposit to the Liquidity Reserve Account the amounts referred to in Section 13.1. If the bank with which the Liquidity Reserve Account is held ceases to be an Eligible Financial Institution, the Trustee shall within five (5) days of obtaining actual knowledge of such cessation and the identity of the replacement Eligible Financial Institution selected by the Issuer, transfer the Liquidity Reserve Account to an account maintained with a replacement Eligible Financial Institution selected by the Issuer (unless an Event of Default shall have occurred and not been waived, in which case, such Eligible Financial Institution shall be selected by the Trustee). The Issuer shall promptly (within two Business Days) notify the Trustee of any such selection. Funds in the Liquidity Reserve Account shall not be commingled with any other monies. All payments to be made from time to time by the Trustee to the Noteholders out of funds in the Liquidity Reserve Account pursuant to this Indenture shall be made by the Trustee as Paying Agent. Funds on deposit in the Liquidity Reserve Account shall be invested in Eligible Investments at the written direction of the Issuer. On the day preceding each Payment Date, any interest or other earnings realized on funds on deposit in the Liquidity Reserve Account shall be transferred and credited to the Collection Account. The maximum permissible maturity or, if applicable, the latest redemption date of any Eligible Investments made with amounts on deposit in the Liquidity Reserve Account shall be not later than the Business Day preceding the next succeeding Payment Date or Redemption Date. All monies deposited from time to time in the Liquidity Reserve Account pursuant to this Indenture shall be held by the Trustee as part of the Collateral for the exclusive benefit of the Holders as herein provided. Monies in the Liquidity Reserve Account shall be subject to withdrawal pursuant to this Indenture, including Section 13.2 of this Indenture. (b) Collection Account. The Issuer shall establish with the Trustee and the Trustee shall maintain a segregated trust account (the "Collection Account") which shall be in the name of the Trustee "as trustee on behalf of the Holders of the IP Holdings LLC Asset-Backed Notes," and which shall be in an Eligible Financial Institution, for the receipt of, and there shall be deposited into the Collection Account, payments to be deposited therein as provided herein. If the bank with which the Collection Account is maintained ceases to be an Eligible Financial Institution, the Trustee shall transfer the Collection Account to an account maintained with an Eligible Financial Institution selected by the Issuer (unless an Event of Default shall have occurred and not been waived, in which case, such Eligible Financial Institution shall be selected by the Trustee). The Collection Account shall relate solely to the transactions contemplated in this Indenture, and funds in such account shall not be commingled with any other monies. All payments to be made from time to time by the Trustee to the Noteholders out of funds in the Collection Account pursuant to this Indenture shall be made by the Trustee as Paying Agent. Funds on deposit in the Collection Account shall be invested in Eligible Investments at the written direction of the Issuer. The maximum permissible maturity or, if applicable, the latest redemption date of any Eligible Investments made with amounts on deposit in the Collection Account shall be not later than the Business Day preceding the next succeeding Payment Date or a Redemption Date, as - 56 - applicable. All monies deposited from time to time in the Collection Account pursuant to this Indenture shall be held by the Trustee as part of the related Collateral as herein provided. Monies in the Collection Account shall be subject to withdrawals pursuant to this Indenture, including Section 13.1 and Section 10.3 of this Indenture. The Paying Agent agrees to make withdrawals from the Collection Account upon direction from the Servicer as set forth in Section 2.2(d) of the Servicing Agreement. (c) Lockbox Account The Trustee is hereby authorized to establish and maintain with an Eligible Financial Institution in Delaware, which may be the Wilmington Trust Company, in the name of the Trustee "as trustee for benefit of the Holders of the IP Holdings LLC Asset-Backed Notes", from time to time, such sub-accounts, sub-ledger accounts and lockbox accounts (collectively, the "Lockbox Account") as part of, for the purposes of administering the payments to, the Collection Account, remitted by the obligated parties under the Collateral. All of the Trustee's rights, powers, immunities, indemnities and protections afforded herein shall also be afforded to it with respect to its administration of the Lockbox Account. The Eligible Financial Institution at which the Lockbox Account is established shall be under standing instructions from the Trustee to the effect that funds on deposit in the Lockbox Account if any, shall be deposited into the Collection Account pursuant to Section 13.4 of this Indenture. (d) Revenue Reduction Account. The Issuer shall establish with the Trustee and the Trustee shall maintain a segregated trust account (the "Revenue Reduction Account") which shall be in the name of the Trustee "as trustee on behalf of the Holders of the IP Holdings LLC Asset-Backed Notes," and which shall be in an Eligible Financial Institution. All payments relating to the Issuer Revenue Reduction Cure shall be deposited by the Issuer into the Revenue Reduction Account. If the bank with which the Revenue Reduction Account is held ceases to be an Eligible Financial Institution, the Trustee shall within five (5) days of obtaining actual knowledge of such cessation and the identity of the replacement Eligible Financial Institution selected by the Issuer, transfer the Revenue Reduction Account to an account maintained with a replacement Eligible Financial Institution selected by the Issuer (unless an Event of Default shall have occurred and not been waived, in which case, such Eligible Financial Institution shall be selected by the Trustee). The Issuer shall promptly (within two Business Days) notify the Trustee of any such selection. Funds in the Revenue Reduction Account shall not be commingled with any other monies. All moneys deposited from time to time in the Revenue Reduction Account pursuant to this Indenture shall be held by the Trustee as part of the related Collateral as herein provided. Any interest or other earnings realized on funds on deposit in the Revenue Reduction Account shall be transferred and credited to the Collection Account within one Business Day of receipt by the Trustee. Investments on deposit in the Revenue Reduction Account, which were specifically intended by the Issuer to be liquidated in order to effect an Issuer Revenue Reduction Cure, shall be liquidated and transferred pursuant to a direction of the Servicer by the Trustee to the Collection Account on each Payment Date as may be necessary to pay the Issuer's obligations in connection with an Issuer Revenue Reduction. - 57 - (e) Renewal Reserve Account. The Issuer shall establish with the Trustee and the Trustee shall maintain a segregated trust account (the "Renewal Reserve Account"), which shall be in the name of the Trustee "as trustee on behalf of the Holders of the IP Holdings LLC Asset-Backed Notes," and which shall be in an Eligible Financial Institution, for the receipt of funds deposited into the Renewal Reserve Account. The Trustee shall deposit to the Renewal Reserve Account the amounts referred to in Section 13.1(a)(xi). If the bank with which the Renewal Reserve Account is held ceases to be an Eligible Financial Institution, the Trustee shall within five (5) days of obtaining actual knowledge of such cessation and the identity of the replacement Eligible Financial Institution selected by the Issuer, transfer the Renewal Reserve Account to an account maintained with a replacement Eligible Financial Institution selected by the Issuer (unless an Event of Default shall have occurred and not been waived, in which case, such Eligible Financial Institution shall be selected by the Trustee). The Issuer shall promptly (within two Business Days) notify the Trustee of any such selection. Funds in the Renewal Reserve Account shall not be commingled with any other monies. All payments to be made from time to time by the Trustee to the Noteholders out of funds in the Renewal Reserve Account pursuant to this Indenture shall be made by the Trustee as Paying Agent. Funds on deposit in the Renewal Reserve Account shall be invested in Eligible Investments at the written direction of the Issuer. On the day preceding each Payment Date, any interest or other earnings realized on funds on deposit in the Renewal Reserve Account shall be transferred and credited to the Collection Account. The maximum permissible maturity or, if applicable, the latest redemption date of any Eligible Investments made with amounts on deposit in the Renewal Reserve Account shall be not later than the Business Day preceding the next succeeding Payment Date or Redemption Date. All monies deposited from time to time in the Renewal Reserve Account pursuant to this Indenture shall be held by the Trustee as part of the Collateral for the exclusive benefit of the Holders as herein provided. Monies in the Renewal Reserve Account shall be subject to withdrawal pursuant to this Indenture. (f) Prepaid Fee and Royalty Account. The Issuer shall establish with the Trustee and the Trustee shall maintain a segregated trust account (the "Prepaid Fee and Royalty Account"), which shall be in the name of the Trustee "as trustee on behalf of the Holders of the IP Holdings LLC Asset-Backed Notes," and which shall be in an Eligible Financial Institution, for the receipt of funds deposited into the Prepaid Fee and Royalty Account. The Trustee shall deposit to the Prepaid Fee and Royalty Account the amounts referred to in Section 13.1(a). If the bank with which the Prepaid Fee and Royalty Account is held ceases to be an Eligible Financial Institution, the Trustee shall within five (5) days of obtaining actual knowledge of such cessation and the identity of the replacement Eligible Financial Institution selected by the Issuer, transfer the Prepaid Fee and Royalty Account to an account maintained with a replacement Eligible Financial Institution selected by the Issuer (unless an Event of Default shall have occurred and not been waived, in which case, such Eligible Financial Institution shall be selected by the Trustee). The Issuer shall promptly (within two Business Days) notify the Trustee of any such selection. Funds in the Prepaid Fee and Royalty Account shall not be commingled with any other monies. All payments to be made from time to time by the Trustee to the Noteholders out of funds in the Prepaid Fee and Royalty Account pursuant to this Indenture shall be made by the Trustee as Paying Agent. Funds on deposit in the Prepaid Fee and Royalty Account shall be invested in Eligible Investments at the written direction of the Issuer. On the day preceding each Payment Date, any interest or other earnings realized on funds on deposit in the Prepaid Fee and Royalty Account shall be transferred and credited to the Collection Account. The maximum permissible maturity or, if - 58 - applicable, the latest redemption date of any Eligible Investments made with amounts on deposit in the Prepaid Fee and Royalty Account shall be not later than the Business Day preceding the next succeeding Payment Date or Redemption Date. All monies deposited from time to time in the Prepaid Fee and Royalty Account pursuant to this Indenture shall be held by the Trustee as part of the Collateral for the exclusive benefit of the Holders as herein provided. Monies in the Prepaid Fee and Royalty Account shall be subject to withdrawal pursuant to this Indenture. (g) JNCO Escrow Account. The Issuer shall establish with the Trustee and the Trustee shall maintain a segregated trust account (the "JNCO Escrow Account"), which shall be in the name of the Trustee "as trustee on behalf of the Holders of the IP Holdings LLC Asset-Backed Notes," and which shall be in an Eligible Financial Institution, for the receipt of funds deposited into the JNCO Escrow Account. On the Closing Date, using proceeds received from the issuance of the Notes, the Issuer shall deposit or cause to be deposited into the JNCO Escrow Account an amount equal to $12,000,000. If the bank with which the JNCO Escrow Account is held ceases to be an Eligible Financial Institution, the Trustee shall within five (5) days of obtaining actual knowledge of such cessation and the identity of the replacement Eligible Financial Institution selected by the Issuer, transfer the JNCO Escrow Account to an account maintained with a replacement Eligible Financial Institution selected by the Issuer (unless an Event of Default shall have occurred and not been waived, in which case, such Eligible Financial Institution shall be selected by the Trustee). The Issuer shall promptly (within two Business Days) notify the Trustee of any such selection. Funds in the JNCO Escrow Account shall not be commingled with any other monies. All payments to be made by the Trustee to the Noteholders out of funds in the JNCO Escrow Account pursuant to this Indenture shall be made by the Trustee as Paying Agent. Funds on deposit in the JNCO Escrow Account shall be invested in Eligible Investments at the written direction of the Issuer. On the day preceding each Payment Date, any interest or other earnings realized on funds on deposit in the JNCO Escrow Account shall be transferred and credited to the Collection Account. The maximum permissible maturity or, if applicable, the latest redemption date of any Eligible Investments made with amounts on deposit in the JNCO Escrow Account shall be not later than the Business Day preceding the next succeeding Payment Date or Redemption Date. All monies deposited from time to time in the JNCO Escrow Account pursuant to this Indenture shall be held by the Trustee as part of the Collateral for the exclusive benefit of the Holders as herein provided. Monies in the JNCO Escrow Account shall be subject to withdrawal pursuant to this Indenture Section 12.3. Release of Assets (a) If at any time the Issuer, the Servicer or any Noteholder has actual knowledge (or if the Trustee has received notice) that a Release Event with respect to any particular Asset has occurred, the party discovering such event shall notify the other parties. (b) Upon receipt of notification or upon actual knowledge of a Release Event described in clause (a) of this Section 12.3, and if the Asset DSCR Test is not met, the Issuer shall exercise commercially reasonable efforts to eliminate or otherwise cure such Release Event. - 59 - (c) If the Issuer fails or is unable to eliminate or cure the Release Event within 60 days of actual knowledge thereof, then the Issuer shall pay the Release Price of the affected Asset on the Business Day next preceding the Redemption Date next following the expiration of such 60 day period. Upon payment of the Release Price of such Asset (as determined by the Servicer, which shall also be the Redemption Price of the Notes) to the Collection Account, the Asset shall be released from the Lien of this Indenture. The Release Price for the release of the affected Asset shall be deposited in the Collection Account and shall be applied to the redemption of Notes on such Redemption Date in accordance with Section 10.1 of this Indenture. The Issuer's obligation to pay any Release Price shall be limited to funds available therefor under the Contribution Agreement, the Joe Boxer Contribution Agreement, the Rampage Contribution Agreement or, to the extent the JNCO Acquisition occurs, the JNCO Contribution Agreement, as applicable, or this Indenture. (d) The Issuer, may, with the prior written consent of the Noteholders, such consent to be given in the Noteholders' sole discretion, obtain a release of Asset(s) from the Lien of this Indenture by providing at least 45 days' prior written notice (the "Issuer's Notice") to the Trustee and the Noteholders setting forth (i) the Asset(s) to be released, (ii) the Redemption Date on which such Asset(s) will be released and (iii) an estimate of the Release Price to be deposited on the Redemption Date specified in such notice. Upon payment to the Collection Account of the Release Price of such Asset(s) (which shall also be the Redemption Price for the Notes), the Asset(s) specified in the Issuer's Notice shall be released from the Lien of this Indenture. The Release Price for the release of such Asset(s) shall be applied to the redemption of Notes on such Redemption Date in accordance with Section 10.1 of this Indenture. Section 12.4. Accounting by Trustee to Issuer and the Noteholders --------------------------------------------------- Within five (5) Business Days following each Payment Date and Redemption Date, the Trustee shall render to the Issuer and the Servicer an accounting (the "Trustee Report"), certified by an authorized officer of the Trustee, of: (i) the aggregate funds deposited in the Collection Account, the Liquidity Reserve Account, the Revenue Reduction Account, the Renewal Reserve Account, the JNCO Escrow Account and the Prepaid Fee and Royalty Account subsequent to the immediately preceding Payment Date or Redemption Date, as applicable; (ii) the amount of principal (the total amount of principal and each amount allocable to the Candie's/Joe Boxer Principal Component, the Rampage Principal Component and the JNCO Principal Component) and the amount of interest paid to the Holders of the Notes; (iii) any funds remaining in the Collection Account, the Liquidity Reserve Account, the Revenue Reduction Account, the Renewal Reserve Account, the JNCO Escrow Account and the Prepaid Fee and Royalty Account after payments of interest and principal as set forth pursuant to clause (ii) above; and - 60 - (iv) any discrepancy between the aggregate amount of principal remaining on the Notes after giving effect to the principal payment on the Notes on such Payment Date and the aggregate amount of principal remaining on the Notes as set forth on the Servicer's Report. Section 12.5. Collateral (a) The Trustee may, and when required by the provisions of Articles V, X and XII of this Indenture or otherwise hereunder shall, execute instruments to release property from the Lien of this Indenture, or convey the Trustee's interest in the same, in a manner and under circumstances which are not in violation of the provisions of this Indenture. No party relying upon an instrument executed by the Trustee as provided in this Article XII shall be bound to ascertain the Trustee's authority, inquire into the satisfaction of any conditions precedent or see to the application of any monies. (b) At the written request and expense of the Issuer and upon being supplied by the Issuer with appropriate forms therefor, the Trustee shall, at such time as there are no Notes Outstanding and all amounts due under this Indenture have been paid and the Lien of the Indenture has been discharged in accordance with Section 5.1 hereof, release the Collateral from the Lien of this Indenture and promptly deliver all Collateral held by it to the Issuer. Section 12.6. Opinion of Counsel The Trustee shall be entitled to receive at least ten (10) days' notice of any action to be taken pursuant to Section 12.5(a), accompanied by copies of any instruments involved, and the Servicer and the Noteholders shall also be entitled to receive, upon request, an Opinion of Counsel, in form and substance satisfactory to the Trustee, outlining the steps required to complete such action and stating that such action is permitted hereunder. The Trustee shall be entitled to rely conclusively on any such Opinion of Counsel as to the opinions expressed therein. ARTICLE XIII APPLICATION OF MONIES Section 13.1. Disbursements of Monies out of Collection Account (a) On each Payment Date, the Trustee, shall, first, upon direction of the Manager withdraw funds from the Collection Account and transfer such funds to the Advertising Reserve Account in accordance with Section 13.3 hereof, shall, second, in accordance with the Servicer's Report, withdraw any Nonrecurring Fees or Prepaid Royalty Amounts from the Collection Account and transfer the same to the Prepaid Fee and Royalty Account, and shall, third, pursuant to the Servicer's Report, withdraw funds from the Collection Account, and pay the following amounts from such funds in the following order of priority in all cases to the extent of the remaining Available Funds (except in the case of 13.1(a)(xi)) in the Collection Account on such Payment Date: - 61 - (i) to the Trustee, the Trustee Fee and all Trustee Costs up to $1,000 (the "Capped Trustee Costs"); (ii) to the Back-Up Manager, if then engaged, (A) the Back-Up Management Fee and, to the extent not previously distributed, the Back-Up Management Fee due on each prior Payment Date and (B) the Back-Up Manager Costs up to $1,000 (the "Capped Back-Up Manager Costs") and, to the extent not previously distributed, the amount of Back-Up Manager Costs outstanding on each prior Payment Date; (iii) to the Manager, (A) the Management Fee and, to the extent not previously distributed, the Management Fee due on each prior Payment Date and (B) the Manager Costs up to $1,000 (the "Capped Manager Costs") and, to the extent not previously distributed, the Manager Costs outstanding on each prior Payment Date; (iv) to the Servicer, (A) the Senior Servicing Fee and to the extent not previously distributed, the Senior Servicing Fee due on each prior Payment Date and (B) to the Servicer, the Servicer Costs up to $1,000 (the "Capped Services Costs") and to the extent not previously distributed, the amount of Servicer Costs outstanding on each prior Payment Date; (v) to the Noteholders, interest accrued on the Notes for the related Interest Period plus any accrued interest thereon remaining unpaid from any previous Interest Period, and interest on such overdue interest to the date such payment is made, at the Note Interest Rate, but only to the extent that payment of such interest on interest shall be legally enforceable; (vi) (A) prior to the Payment Date occurring in August 2012, to the Noteholders, the amount referred to in clause (i) of the definition of the term "Note Principal Payment" for such Payment Date in reduction of the Note Principal Balance of the Notes and (B) on and after the Payment Date occurring in August 2012 after giving effect to payments in respect of principal from the Liquidity Reserve Account pursuant to Section 13.2(b), all Available Funds until the Note Principal Balance of the Notes is reduced to zero; (vii) to the Manager for application in accordance with Licenses all Advertising Royalties received and on deposit in the Collection Account; (viii) to the Trustee, the Back-Up Manager, the Manager and the Servicer, in that order of priority, the positive difference, if any, for such Payment Date, between the Trustee Costs and the Capped Trustee Costs, the Bank-Up Manager Costs and the Capped Back-Up Manager Costs, the Manager Costs and the Capped Manager Costs and the Servicer Costs and the Capped Servicer Costs, respectively; - 62 - (ix) to the Liquidity Reserve Account, the Liquidity Reserve Deposit Amount, if any; (x) upon the occurrence of the Renewal Trigger Event until the earliest to occur of (A) the date the Renewal Trigger Event has been cured and is no longer continuing, (B) the receipt by the Trustee and the Noteholders of a Non-Cure Notice or (C) the expiration of the Renewal Cure Period, to the Renewal Reserve Account, the Renewal Reserve Deposit Amount; (xi) if amounts on deposit in the Renewal Reserve Account are withdrawn therefrom in accordance with the provisions of Section 13.5(a), such amounts shall be applied in reduction of the Candie's/Joe Boxer Note Principal Balance; (xii) on each Payment Date after the Payment Date disbursement made pursuant to clause (xi) above, and prior to the date the Noteholders deliver a written notice to the Trustee stating that the Issuer has cured the Renewal Trigger Event, an amount equal to the applicable Quarterly Reserve Cap Amount shall be applied to reduce the Candie's/Joe Boxer Note Principal Balance of the Notes; provided, however, that the sum of the amounts disbursed pursuant to clause (xi) above and this clause (xii) shall not exceed $26,250,000; (xiii) to the Servicer, the Junior Servicing Fee and to the extent not previously distributed, the Junior Servicing Fee due on each prior Payment Date; (xiv) to the Structuring Agent, the Structuring Fee; and (xv) to the Issuer or such party as the Issuer may direct, all remaining Available Funds. (b) The foregoing provisions of this Section 13.1 notwithstanding, any monies deposited in the Collection Account for purposes of redeeming Notes pursuant to Article X shall, subject to Section 11.3, remain in the Collection Account until paid for the purpose of such redemption. Section 13.2. Disbursement of Monies out of the Liquidity Reserve Account (a) (i) In the event that on any Payment Date Available Funds in the Collection Account are not sufficient to make the payments specified in clauses (i) through (vi) of Section 13.1(a), the Paying Agent, shall, on such Payment Date, (x) withdraw funds from the Liquidity Reserve Account, to the extent funds are available therein and (y) apply the funds so withdrawn to such payments due on such Payment Date pursuant to and in the order of clauses (i) through (vi) of Section 13.1(a). - 63 - (ii) On each Payment Date on which the Notes are being amortized in connection with Section 13.1(a)(xi) or (xii), the Trustee shall withdraw the Liquidity Reserve Withdrawal Amount from the Liquidity Reserve Account and deposit such amount into the Collection Account. (iii) In connection with a Management Transition, the Trustee shall withdraw amounts from the Liquidity Reserve Account to pay related Management Transition Expenses up to but not in excess of the Management Transition Expense Cap Amount. The Trustee shall thereupon disburse such amounts in payment of such Management Transition Expenses in accordance with a written direction of the Issuer that is approved in writing by an Act of Noteholders. (b) On the Payment Date on or after which (i) the amount on deposit in the Liquidity Reserve Account, together with all other funds available to the Trustee is equal to or greater than the sum of (x) the Redemption Price of all Notes Outstanding on the next Redemption Date for which a proper Redemption Notice can be given plus (y) all other obligations of the Company under this Indenture that will be due and owing from such Payment Date through such Redemption Date, and (ii) all payments to be made on such date pursuant to Section 13.1(a) hereof have been paid or funds for their payment have been reserved and are on deposit with the Trustee, the Trustee shall, on such date, withdraw funds from the Liquidity Reserve Account and transfer them to the Collection Account to redeem all of the Notes then Outstanding pursuant to Section 10.2(b) of this Indenture. If all of the Notes have not been redeemed pursuant to the immediately preceeding sentence on or prior to the Payment Date occurring in August 2012, the Trustee shall, on such date, withdraw funds on deposit in the Liquidity Reserve Account and transfer them to the Collection Account to be allocated to the payment of the Note Principal Balance in accordance with Section 13.2(a)(vi). (c) At such time as no Notes remain Outstanding and the Lien of this Indenture has been discharged in accordance with Section 5.1 hereof, upon the request of the Issuer, the Trustee shall withdraw from the Liquidity Reserve Account any excess funds remaining after payment of all other amounts required under this Indenture and remit any such excess to or at the direction of the Issuer. Section 13.3. Advertising Reserve Account (a) Prior to any other disbursements from the Collection Account, the Trustee shall withdraw from the Collection Account and set aside in a separate trust account which the Issuer hereby establishes with the Trustee, the "Advertising Reserve Account," the advertising and marketing expenses for advertising contributions collected from the Issuer's Licensees that, pursuant to the provisions of the applicable contract, require mandatory expense of their advertising contribution (the "Advertising Cost Reimbursement"). Any such deposit shall be based upon a written instruction from the Manager and confirmed by the Servicer in the Servicer Report. Amounts on deposit in the Advertising Reserve Account shall be paid out by the Trustee on each Payment Date as directed by the Manager in a writing that also certifies that all such amounts paid out to the Manager on the immediately preceding Payment Date have been fully applied as required. - 64 - (b) At such time as no Notes remain Outstanding and the Lien of this Indenture has been discharged in accordance with Section 5.1 hereof, upon the request of the Issuer, the Trustee shall withdraw from the Advertising Reserve Account any excess funds remaining after payment of all other amounts required under this Indenture and remit any such excess to or at the direction of the Issuer. Section 13.4. Disbursements of Monies out of the Lockbox Account -------------------------------------------------- Collateral funds on deposit in the Lockbox Account which are collected funds at the end of each Business Day shall be swept to and deposited in the Collection Account at such time. Section 13.5. Disbursement of Monies out of the Renewal Reserve Account --------------------------------------------------------- (a) Upon the earlier to occur of (i) receipt by the Trustee and the Noteholders of a Non-Cure Notice from the Issuer or (ii) the failure of the Issuer to have cured the Renewal Trigger Event on or before the expiration of the Renewal Cure Period, then all amounts on deposit in the Renewal Reserve Account shall be withdrawn therefrom and deposited into the Collection Account for application in accordance with Section 13.1(a)(xi). (b) If the Issuer cures the Renewal Trigger Event, upon receipt by the Trustee of written notice from the Noteholders stating that such cure has been effected, provided no Event of Default shall have occurred and has not been waived, the Trustee shall withdraw funds on deposit in the Renewal Reserve Account and deposit the same in the Collection Account. Section 13.6. Disbursement of Monies out of Prepaid Fee and Royalty Account (a) On each Payment Date, the Trustee, shall (x) withdraw any Nonrecurring Release Amounts and the Prepaid Release Amounts from the Prepaid Fee and Royalty Account, as set forth in the Servicer's report, to the extent funds are available therein, and (y) deposit such funds in the Collection Account for application to payments due on such Payment Date in accordance with Section 13.1(a). (b) At such time as no Notes remain Outstanding, all amounts due under this Indenture have been paid and the Lien of this Indenture has been discharged in accordance with Section 5.1 hereof, upon the request of the Issuer, the Trustee shall withdraw from the Prepaid Fee and Royalty Account any excess funds remaining after payment of all other amounts required under this Indenture and remit any such excess to or at the direction of the Issuer. - 65 - Section 13.7 Disbursement of Monies out of the JNCO Escrow Account ----------------------------------------------------- (a) Provided that no Event of Default has occurred and is continuing and if the JNCO Acquisition Date occurs on or before November 15, 2005, the Trustee upon notice from the Issuer setting forth the JNCO Escrow Withdrawal Amount shall withdraw such amount from the JNCO Escrow Account and remit such amount to Iconix on the JNCO Acquisition Date. (b) If, (i) there are funds remaining on the JNCO Escrow Account after the withdrawal has been made pursuant to clause (a) above, (ii) the JNCO Acquisition Date does not occur on or prior to November 15, 2005 or (iii) the Issuer advises the Trustee and the Noteholders that such transactions are no longer contemplated by the Issuer, then, in any such event, the Trustee shall withdraw the remaining funds on deposit in the JNCO Escrow Account and apply the same in redemption of the Notes as provided in Section 10.2(c). Section 13.8. Eligible Investments Upon an Issuer Order, the Trustee shall invest the funds in the Collection Account, the Lockbox Account, the Revenue Reduction Account, the Liquidity Reserve Account, the Renewal Reserve Account, the JNCO Escrow Account and the Prepaid Fee and Royalty Account and in Eligible Investments; provided, however, that, unless the Issuer and the Trustee shall receive an opinion of counsel selected by the Issuer to the effect that the limitation is not necessary for the Issuer to avoid registration under the Investment Company Act, at no time may the Issuer allow the total aggregate principal amount of the Tested Securities to exceed the Investment Company Act Limit. In the event, at the close of each Business Day, the Trustee has not received an Issuer Order, or is not in possession of a standing Issuer Order, the Trustee may invest such funds in the type of Eligible Investment specified in clause (i) or clause (v) of the definition of Eligible Investments. No Eligible Investment shall mature later than the Business Day preceding the next following Payment Date. Any income or other realized gain from Eligible Investments in the Collection Account, the Liquidity Reserve Account, the Revenue Reduction Account, the Renewal Reserve Account, the JNCO Escrow Account or the Prepaid Fee and Royalty Account shall be transferred and credited to the Collection Account. The Trustee shall not be liable for any loss incurred on any funds invested in Eligible Investments pursuant to the provisions of this Section 13.8. The Trustee shall have no liability in respect of losses incurred as a result of the liquidation of any Eligible Investment prior to its stated maturity or the failure of the Issuer to provide timely written investment direction. - 66 - ARTICLE XIV COVENANTS OF IP HOLDINGS AND MANAGEMENT CORPORATION Section 14.1. Continued Existence; Organizational Documents IP Holdings and Management Corporation ("IPHM") shall keep in full effect its existence, rights and franchises as a special purpose corporation under the laws of the State of Delaware, shall operate in accordance with, and subject to the limitations set forth in, its Organizational Documents and shall obtain and preserve its qualification to do business as a foreign corporation in each jurisdiction in which the failure to be so qualified shall have a material adverse effect on IPHM. Section 14.2. Negative Covenant IPHM shall not amend its Organizational Documents without receiving approval thereof by Act of the Noteholders (which may not be unreasonably withheld). Section 14.3. No Bankruptcy Petition. The Trustee and the Noteholders by entering into this Agreement covenants and agrees that, prior to the date which is one year and one day after the payment in full of the Notes, it will not institute against, or join any other Person in instituting, against IPHM, any bankruptcy, reorganization, arrangement, insolvency or liquidation proceedings, or other proceedings under any federal or state bankruptcy or similar law. - 67 - IN WITNESS WHEREOF, the Issuer and Trustee have caused this Indenture to be duly executed by their respective officers thereunto duly authorized and their respective seals, duly attested, to be hereunto affixed, all as of the day and year first above written. IP HOLDINGS LLC, as Issuer By: IP Holdings and Management Corporation, as Manager By: /s/ Warren Clamen Name: Warren Clamen Title: President ILMINGTON TRUST COMPANY, not in its individual capacity, but solely as Trustee By: /s/ Charlesse L. Rodgers ------------------------- Name: Charlsse L. Rodgers Title: Vice Presiden IN WITNESS WHEREOF, IP Holdings and Management Corporation hereby joined this Indenture but solely for purposes of Article XIV of this Indenture in consideration of the benefit to be derived by the Issuer and therefore IP Holdings and Management Corporation, which is the Manager of the Issuer, from this Indenture and the issuance and sale of the Notes. IP HOLDINGS AND MANAGEMENT CORPORATION By:/s/ Warren Clamen ------------------ Name: Warren Clamen Title: President LIST OF OMITTED APPENDICES AND EXHIBITS 1. APPENDIX A - DEFINITIONS 2. EXHIBIT A - FORM OF ASSIGNMENT OF NOTE 3. EXHIBIT B - FORM OF SERVICER'S REPORT 4. EXHIBIT C - FORM OF INVESTMENT LETTER 5. EXHIBIT D - SUBSTITUTE FORM W-9 6. EXHIBIT E - ASSETS EXHIBIT E-1: Trademarks EXHIBIT E-1A: Registered Trademarks EXHIBIT E-1B: Unregistered Trademarks EXHIBIT E-1C: Additional Registrations and Pending Applications EXHIBIT E-2: Licenses EXHIBIT E-3: Copyrights EXHIBIT E-4: Patents EXHIBIT E-5: Pending Intent-to-Use Applications 7. EXHIBIT F - CLAIMS EX-99.1 4 ex991.txt THE NOTE PURCHASE AGREEMENT Exhibit 99.1 NOTE PURCHASE AGREEMENT by and among IP HOLDINGS LLC AND ICONIX BRAND GROUP, INC. (f/k/a CANDIE'S, INC.) AND MICA FUNDING, LLC Dated September 16, 2005 NOTE PURCHASE AGREEMENT THIS NOTE PURCHASE AGREEMENT (this "Agreement") is dated September 16, 2005 and is by and among IP Holdings LLC, a Delaware limited liability company (the "Issuer"), Iconix Brand Group, Inc., (f/k/a Candie's, Inc.), a Delaware corporation ("Iconix"), and Mica Funding, LLC, a Delaware limited liability company (the "Purchaser"). W I T N E S S E T H WHEREAS, Iconix, pursuant to that certain Rampage Contribution Agreement, dated the date hereof, by and between Iconix and the Issuer (the "Rampage Contribution Agreement"), is contributing certain Assets to the Issuer; WHEREAS, Iconix presently intends to acquire certain assets related to the name "JNCO" and to contribute such assets to the Issuer pursuant to the JNCO Contribution Agreement, which is expected to be substantially similar to the Rampage Contribution Agreement; WHEREAS, the Issuer (a) has pledged to Wilmington Trust Company (the "Trustee") for the benefit of the Noteholders, all of the right, title and interest (but none of the obligations) in and to the Collateral pursuant to that certain Third Amended and Restated Indenture, dated as of September , 2005, by and between the Issuer and the Trustee (the "Third Amended and Restated Indenture") and (b) contemporaneously herewith has issued its $103,000,000 IP Holdings LLC Asset-Backed Notes (the "Notes") pursuant to terms of the Third Amended and Restated Indenture; WHEREAS, the Issuer desires to sell the Notes to the Purchaser, and the Purchaser desires to purchase the Notes. NOW, THEREFORE, the parties hereto agree as follows: Section 1. Definitions. All capitalized terms used and not otherwise defined herein shall have the meanings set forth in the Third Amended and Restated Standard Definitions attached hereto as Appendix A. The Third Amended and Restated Indenture, the Security Agreements, the Rampage Contribution Agreement, that certain Amendment No. 2 to Management Agreement, dated the date hereof, by and among the Manager, the Issuer, IPHM and the Servicer and that certain Amendment No. 3 to Servicing Agreement, dated the date hereof, by and among the Issuer, the Servicer and Trustee are collectively referred to herein as the "Operative Documents". Section 2. Terms of Issuance of the Notes. The Issuer agrees to sell the Notes, and subject to the terms and obligations of this Agreement, the Purchaser agrees to purchase the Notes on the Closing Date for the cash amount of $40,000,000 and the exchange of the July Notes for the Notes (the "Purchase Price"). The Notes shall be registered in such names (which may be, if so indicated, a nominee name) as the Purchaser may direct. The Notes shall include the legend regarding restrictions on transfer set forth in Section 2.2 of the Third Amended and Restated Indenture. 2 The closing of the sale of the Notes (the "Closing") shall be held at the office of Baker & McKenzie LLP, 805 Third Avenue, New York, New York 10022, 10:00 AM New York City time, on September 16, 2005, (the "Closing Date") or at such other date and time as may be acceptable to the parties hereto. The cash portion of the Purchase Price shall be paid to the Issuer or its designee on the Closing Date by wire transfer of federal funds or other immediately available funds in accordance with written instructions furnished by the Issuer not later than two Business Days preceding the Closing Date. The July Notes shall be delivered to the Trustee, and the Trustee shall acknowledge receipt thereof, on the Closing Date. In addition to the delivery of the Notes, the Issuer shall execute and deliver on the Closing Date (a) each of the Operative Agreements and (b) an appropriate receipt acknowledging receipt of the Purchase Price for its Notes. Section 3. Representations and Warranties of Iconix and the Issuer. Except as provided in paragraph (b) below, Iconix, for itself, the Manager and IPHM, and the Issuer, for itself and only itself, severally represent and warrant to the Purchaser, as of the Closing Date as follows (but (I) in each case only with respect to the portions of the representations and warranties that specifically refer to Iconix (and the Manager and IPHM), in the case of Iconix, or the Issuer, in the case of the Issuer and (II) in the case of information and documents supplied after the Closing Date, only with respect to such information and documents supplied by Iconix (or the Manager and IPHM), in the case of Iconix, or the Issuer, in the case of the Issuer): (a) Each of the Issuer and the Manager is a limited liability company duly formed, validly existing and in good standing under the laws of the State of Delaware, with power and authority to own its properties and conduct its business as now being and hereafter proposed to be conducted; and each of the Issuer and the Manager is duly qualified to do business as a foreign entity in good standing in all other jurisdictions in which its ownership or lease of property or the conduct of its business requires such qualification, except in such jurisdictions where the failure to be so qualified could not reasonably be expected to have a materal adverse effect on its ability to perform its obligations under the Operative Documents to which it is a party. (b) (i) Iconix is a corporation duly formed, validly existing and in good standing under the laws of the State of Delaware, with power and authority (corporate and other) to own its properties and conduct its business as now being and hereafter proposed to be conducted; (ii) Iconix is duly qualified to do business as a foreign corporation in good standing in all other jurisdictions in which its ownership or lease of property or the conduct of its business requires such qualification, except in such jurisdictions where the failure to be so qualified could not reasonably be expected to have a materal adverse effect on the ability of Iconix to perform its obligations under the Rampage Contribution Agreement; and (iii) IPHM is duly qualified to do business as a foreign entity in good standing in all other jurisdictions in which its ownership or lease of property or the 3 conduct of its business requires such qualification, except in such jurisdictions where the failure to be so qualified could not reasonably be expected to have a material adverse effect on the ability of IPHM to perform its obligations under the Operative Documents to which it is a party. (c) Each of the Operative Documents, the Notes and this Agreement to which Iconix, IPHM, the Manager or the Issuer are parties has been duly authorized and on the Closing Date, each of such documents will have been duly executed and delivered by the parties thereto. (d) Assuming the due authorization, execution and delivery thereof by the other parties thereto, each Operative Document to which the Issuer, IPHM, Iconix or the Manager is a party will constitute a valid and legally binding obligation of such party, enforceable in accordance with its respective terms, subject to bankruptcy, insolvency, fraudulent transfer, reorganization, moratorium and similar laws of general applicability relating to or affecting creditors' rights and to general equity principles. (e) No consent, approval, authorization, or order of, or filing with any governmental agency or body or any court is required for the consummation of the transactions contemplated by the Operative Documents or in connection with the issuance and sale of the Notes by the Issuer. (f) The consummation of the transactions contemplated by the Operative Documents to which Iconix, IPHM the Issuer or the Manager, as the case may be, is a party, and the fulfillment of the terms thereof will not (i) conflict with or result in a breach of, or constitute a default under, any of the provisions of any indenture, mortgage, deed of trust, contract, or other instrument to which any of the Issuer, IPHM, Iconix or the Manager is a party or by which any of them is bound or (ii) result in a creation or imposition of any lien (other than the Lien of the Third Amended and Restated Indenture) upon any of the properties or assets of any of the Issuer, IPHM, Iconix or the Manager pursuant to the terms of any such indenture, mortgage, deed of trust, contract or other instrument. (g) The execution, delivery and performance of each of the Operative Documents to which any of Iconix, IPHM, the Issuer or the Manager, as the case may be, is a party, and the issuance and sale of the Notes by the Issuer and compliance with the terms and provisions thereof will not result in a breach or violation of any of the terms and provisions of, or constitute a default under, any statute, rule, regulation or order of any governmental agency or body or any court, domestic or foreign, having jurisdiction over the Issuer, IPHM, Iconix, the Manager or any of their properties, or any agreement or instrument to which the Issuer, IPHM, Iconix or the Manager is a party or by which the Issuer, IPHM, Iconix or the Manager is bound or to which any of the properties of the Issuer, IPHM, Iconix or the Manager is subject, or the organizational documents of the Issuer, IPHM, Iconix or the Manager and the Issuer has full power and authority to authorize, issue and sell the Notes as contemplated by this Agreement. 4 (h) Each of the Issuer, IPHM, Iconix and the Manager possesses all necessary certificates, authorities or permits issued by appropriate governmental agencies or bodies necessary to conduct the business now operated by such party and has not received any notice of proceedings relating to the revocation or modification of any such certificate, authority or permit that, if determined adversely to the Issuer, IPHM, Iconix or the Manager, as the case may be, would individually or in the aggregate have a material adverse effect on such party. (i) Iconix has (i) acquired good and indefeasable title to the Rampage Assets (as defined in the Rampage Contribution Agreement) (ii) acquired such assets for fair value, and (iii) consummated such acquisition substantially in accordance with that certain Asset Purchase Agreement, dated as of September 16, 2005, by and among Iconix, Rampage Licensing, LLC, a California limited liability company, Rampage.com, LLC, a Delaware limited liability company, and Rampage Closing Company, a California corporation, Larry Hansel, Bridgette Hansel Andrews, Michelle Hansel, Paul Buxbaum and David Ellis. If the JNCO Acquisition occurs, Iconix will promptly contribute the stock or assets acquired in connection with the JNCO Acquisition to the Issuer pursuant to the JNCO Contribution Agreement. (j) The Licenses include all licenses which relate to any trademark to which the Issuer shall be a party as licensor. (k) There are (i) no claims of infringement in connection with use of the Trademarks, (ii) no proceedings or circumstances which would materially adversely affect the value of the applications and registrations listed in Exhibit A-1A to the Rampage Contribution Agreement, and (iii) no facts or claims that would prevent Iconix from having unrestricted use of the applications and registrations listed in Exhibit A-1A to the Rampage Contribution Agreement in connection with the corresponding goods and/or services. (l) There are no pending actions, suits or proceedings against or affecting the Issuer, IPHM, Iconix, the Manager or any of their respective properties that, if determined adversely to the such party, would individually or in the aggregate have a material adverse effect on the such party, or would materially and adversely affect the ability of the Issuer, IPHM, Iconix or the Manager, as the case may be, to perform its respective obligations under any of the Operative Documents to which it is a party, or which are otherwise material in the context of the sale of the Notes; and, to each of the Issuer's, IPHM's, Iconix's and the Manager's knowledge, no such actions, suits or proceedings are threatened or contemplated. (m) Assuming that the Notes are offered in the manner contemplated by this Agreement, that the Purchaser's representations and warranties in the investor letter, substantially in the form attached hereto as Exhibit A, are true and correct in all material respects and that any subsequent holder of a Note complies with Section 3.5 of the Third Amended and Restated Indenture, the Issuer is not an open-end investment company, unit investment trust or face-amount certificate company that is or is required to be registered under Section 8 of the United States Investment Company Act of 1940, as amended, (the "Investment Company Act"); and the Issuer is not and, after giving effect to the offering and sale of the Notes and the application of the proceeds thereof, will not be an "investment company" as defined in the Investment Company Act. 5 (n) No form of general solicitation or general advertising was used by Iconix, IPHM or the Issuer or its representatives in connection with the offer and sale of the Notes. No investors were solicited or otherwise approached by Iconix, IPHM or the Issuer or any representative of any of them for the purpose of offering the Notes for sale who were not institutional investors. The Issuer has not issued or sold any Notes within the six-month period immediately preceding the date hereof or securities that could be integrated with the Notes. Neither the Issuer nor any representative on its behalf has offered or sold, nor will any of them offer or sell, any Notes in any manner that would render the issuance and sale of the Notes a violation of the Securities Act or any state securities or "Blue Sky" laws, or require registration pursuant thereto, nor has any of them authorized, nor will any authorize, any Person to act in such manner. (o) Neither this Agreement nor any other document, certificate or statement furnished to the Purchaser by or on behalf of the Issuer in connection herewith contains any untrue statement of a material fact or omits to state a material fact necessary in order to make the statements contained herein and therein, in light of the circumstance in which they were made, not misleading. There is no fact or facts peculiar to Iconix or any of its Affiliates which materially adversely affects or in the future may (so far as the Issuer can now reasonably foresee), individually or in the aggregate, reasonably be expected to materially adversely affect the business, property or assets, or financial condition of Iconix or any of its Affiliates and which has not been set forth in this Agreement or in the other documents, certificates and statements furnished to the Purchaser by or on behalf of the Issuer prior to the date hereof in connection with the transactions contemplated hereby. (p) Assuming that the Purchaser's representations and warranties in the investor letter, substantially in the form attached hereto as Exhibit A, are true and correct in all material respects, the offer and sale of the Notes to the Purchaser in the manner contemplated by this Agreement will be exempt from the registration requirements of the Securities Act and it is not necessary to qualify an indenture in respect of the Notes under the United States Trust Indenture Act of 1939, as amended (the "Trust Indenture Act"). (q) Each of the representations and warranties of the Issuer, IPHM, Iconix and the Manager set forth in each of the Operative Documents to which they are a party is true and correct in all material respects. (r) No Transaction Document has been terminated or amended, except as pursuant to the consummation of the transactions contemplated by the Operative Documents or in connection with the issuance and sale of the Notes by the Issuer. (s) Any taxes, fees and other governmental charges in connection with the execution and delivery of the Operative Documents or the execution, delivery and sale of the Notes have been or will be paid prior to the Closing Date. 6 Section 4. Representations and Warranties of the Issuer. -------------------------------------------- (a) The Notes have been duly authorized; and when the Notes are authenticated, delivered and paid for pursuant to this Agreement on the Closing Date, such Notes will have been duly executed, authenticated, issued and delivered and will constitute valid and legally binding obligations of the Issuer, enforceable against the Issuer in accordance with its terms, subject to bankruptcy, insolvency, fraudulent transfer, reorganization, moratorium and similar laws of general applicability relating to or affecting creditors' rights and to general equity principles. (b) The Issuer has not entered and will not enter into any contractual arrangement with respect to the distribution of the Notes except for this Agreement. (c) If the Issuer enters into the JNCO Contribution Agreement, it will promptly take all such action requested by the Purchaser to subject the assets described therein to Lien of the Third Amended and Restated Indenture. Section 5. Covenants of Iconix and the Issuer. ---------------------------------- (a) Iconix will pay all present and future recording and filing fees, and all legal, financial and miscellaneous out-of-pocket expenses and costs incurred in connection with the negotiation and consummation of this Agreement and closing the transactions hereby contemplated, including, but not limited to (i) all expenses incidental to the performance of its or the Manager's obligations under the Operative Documents including all expenses in connection with the execution, issue, authentication, packaging and initial delivery of the Notes, the preparation of the Operative Documents and any other document relating to the issuance, offer, sale and delivery of the Notes; (ii) the fees and expenses of Standard & Poor's Corporation CUSIP Service Bureau in connection with obtaining a private placement number with respect to the Notes; and (iii) the agreed upon fees, expenses and disbursements of Baker & McKenzie LLP. Without limiting any provisions of the Operative Documents, the Issuer further agrees that it will pay or cause to be paid, promptly upon demand, all reasonable expenses incurred by the Purchaser in connection with the making of any amendments, supplements or modifications to, or the giving of any release, consent or waiver in respect of, this Agreement and any Operative Document executed pursuant hereto or thereto, including the fees and disbursements of counsel for the Purchaser in connection therewith, in each case that are related to or arising out of a request of, or an action taken by or that are otherwise required or caused by, directly or indirectly, the Issuer, IPHM, Iconix or the Manager, whether or not such modifications or amendments are consummated or all consents are obtained. Without limiting the any provisions of the Operative Documents, the Issuer further agrees that it will pay, or reimburse the Purchaser for, promptly upon demand, all costs and expenses (including reasonable legal fees and disbursements) incident to or in connection with (i) any action taken by the Purchaser, in good faith, to enforce its rights and remedies under this Agreement or any other Operative Document and (ii) any bankruptcy or insolvency proceedings involving Iconix or IPHM or any of their Affiliates. 7 (b) The Issuer shall use its reasonable efforts to ensure that it will not be or become, a management company, unit investment trust or face-amount certificate company that is or is required to be registered under Section 8 of the Investment Company Act, although it may rely on the investor letter delivered by the Purchaser and assume compliance with the provisions of Section 3.5 of the Third Amended and Restated Indenture. The Issuer further agrees to comply with the undertaking stated to be made by it in the final sentence of paragraph 5 of the investor letter delivered by the Purchaser. Section 6. Conditions of the Purchaser's Obligations. The obligations of the Purchaser to purchase and pay for the Notes on the Closing Date will be subject to the accuracy of the representations and warranties on the part of the Issuer and Iconix herein, the accuracy of the statements of officers of the Issuer made pursuant to the provisions hereof, to the performance by the Issuer of its obligations hereunder and to the following additional conditions precedent: (a) There shall not have occurred (i) any change, or any development or event involving a prospective change, in the condition (financial or other), business, properties or results of operations of the Issuer, IPHM, Iconix, the Manager or any of their respective Affiliates which, in the judgment of the Purchaser, is material and adverse and makes it impractical or inadvisable to proceed with completion of the purchase of the Notes; (ii) any downgrading in the rating of any debt securities of Iconix or any of its Affiliates by any "nationally recognized statistical rating organization" (as defined for purposes of Rule 436(g) under the Securities Act), or any public announcement that any such organization has under surveillance or review its rating of any debt securities of Iconix or any of its Affiliates (other than an announcement with positive implications of a possible upgrading, and no implication of a possible downgrading, of such rating); (iii) any suspension or limitation of trading in securities generally on the New York Stock Exchange or any setting of minimum prices for trading on such exchange, or any suspension of trading of any securities of Iconix or any of its Affiliates on any exchange or in the over-the-counter market; (iv) any banking moratorium declared by U.S. Federal or New York authorities; or (v) any outbreak or escalation of major hostilities in which the United States is involved, any declaration of war by Congress, any financial market disruption or any other substantial national or international calamity or emergency if, in the judgment of the Purchaser, the effect of any such outbreak, escalation, declaration, calamity or emergency makes it impractical or inadvisable to proceed with completion of the purchase of the Notes. (b) The Notes shall have been duly authorized, executed, authenticated, delivered and issued and shall be entitled to the benefits of the Third Amended and Restated Indenture. Each of the Operative Documents and this Agreement shall have been duly authorized, executed and delivered by the respective parties thereto and shall be in full force and effect, and all conditions precedent contained in the Operative Documents shall have been satisfied. 8 (c) The Purchaser and the Trustee shall have each received a counterpart original, together with any required conformed copies of the Operative Documents and all closing documents delivered at or prior to the Closing. (d) The Purchaser and the Trustee shall have each received signature and incumbency certificates executed by the authorized officers or manager of each of the Issuer, IPHM, Iconix and the Manager, to enable each of them to enter in to the Operative Documents to which such entity is a party. (e) All corporate, limited liability company and other proceedings in connection with the transactions contemplated hereby and the other Operative Documents and all documents, opinions and certificates incident thereto shall be satisfactory in form and in substance to the Purchaser, and the Purchaser shall have received such other documents and certificates incident to such transaction as the Purchaser shall reasonably request. (f) The Purchaser shall have received from counsel to each party to the Operative Documents (including the Servicer, the Manager and the Trustee), written opinions dated the Closing Date and in form and substance satisfactory to the Purchaser, covering such matters as the Purchaser may reasonably request, including but not limited to the following: (i) Corporate Opinions. An opinion in respect of each party to the Operative Documents that such party has been duly formed and is existing and in good standing under the laws of its State of formation, with all requisite power and authority to own its properties and conduct its business; and such party is duly qualified to do business as a foreign entity in good standing in all other jurisdictions in which its ownership or lease of property or the conduct of its business requires such qualification, except where the failure to be so qualified, individually or in the aggregate, would not reasonably be expected to have a material adverse effect on the financial position of such party. (ii) Legal, Valid, Binding and Enforceable. An opinion in respect of each party to the Operative Documents and this Agreement that each such document to which it is a party has been duly authorized, executed and delivered and constitutes the valid and legally binding obligation of each party, enforceable in accordance with its terms, subject to bankruptcy, insolvency, fraudulent transfer, reorganization, moratorium and similar laws of general applicability relating to or affecting creditors' rights and to general equity principles. (iii) Notes. An opinion that the Notes have been duly authorized, executed, authenticated, issued and delivered; and constitute valid and legally binding obligations of the Issuer, enforceable in accordance with their terms, subject to bankruptcy, insolvency, fraudulent transfer, reorganization, moratorium and similar laws of general applicability relating to or affecting creditors' rights and to general equity principles. 9 (iv) No Consents Required. An opinion in respect of each party to the Operative Documents that in respect of such party, no consent, approval, authorization or order of, or filing with, any governmental agency or body or any court is required for the consummation of the transactions contemplated by the Operative Documents, except as set forth or contemplated therein. (v) Litigation. An opinion (which may be from the General Counsel of Iconix) in respect of each party to the Operative Documents that in respect of such party, to such counsel's knowledge (after due inquiry) there are no pending actions, suits or proceedings against or affecting such party, any of its subsidiaries or any of their respective properties that, if determined adversely to such party or any of its subsidiaries, would individually or in the aggregate have a material adverse effect, or would materially and adversely affect the ability of such party to perform its obligations under the Operative Documents; and to such counsel's knowledge, no such actions, suits or proceedings are threatened or contemplated. (vi) Non-Contravention. An opinion (which in the case of clause (a)(ii) and (b) may be from the General Counsel of Iconix) in respect of each party to the Operative Documents that, in respect of such party, the execution, delivery and performance of the Operative Documents to which it is a party will not result in a breach or violation (a)(i) of any of the terms and provisions of, or constitute a default under, any statute, any rule, regulation or, (ii) to such counsel's knowledge, order of any governmental agency or body or any court having jurisdiction over such party or any subsidiary of such party or any of their properties, or (b) to such counsel's knowledge, any agreement or instrument to which such party or any such subsidiary is a party or, to such counsel's knowledge, by which such party or any such subsidiary is bound or to which any of the properties of such party or any such subsidiary is subject, or the organizational documents of such party or any such subsidiary. (vii) Securities Laws. An opinion that it is not necessary in connection with the offer, sale and delivery of Notes by the Issuer to the Purchaser pursuant to this Agreement to register the Notes under the Securities Act or to qualify the Third Amended and Restated Indenture under the Trust Indenture Act. (viii) Investment Company Act. An opinion that the Issuer is not and, after giving effect to the offering and sale of the Notes and the application of the proceeds thereof, will not be an "investment company" as defined in the Investment Company Act. (ix) Federal Income Tax. An opinion that for U.S. federal income tax purposes, the Notes will be treated as indebtedness of the Issuer. (x) Contribution. An opinion to the effect that in the event that Iconix were to become a debtor in a case under the Bankruptcy Code, a court of competent jurisdiction would hold that the Assets would not constitute property of Iconix's bankruptcy estate. 10 (xi) Non-Consolidation. An opinion to the effect that in the event that Iconix was to become a debtor in a case under the Bankruptcy Code, a court of competent jurisdiction would not disregard the separate existence of Iconix, on the one hand, and the Issuer, on the other hand, so as to order the substantive consolidation of the assets and liabilities of (a) the Issuer, on the one hand, and (b) Iconix, on the other hand. (xii) Security Interests. An opinion to the effect that (i) in the event that the transfer of the Assets from Iconix to the Issuer shall be considered a loan secured by the Assets, upon execution of the Rampage Contribution Agreement and upon the filing of financing statements, assignments and patent and trademark filings with the Patent and Trademark Office and copyright filings in the Copyright Office related thereto (collectively, the "Filing Statements"), the Issuer will have a perfected first priority security interest in the Assets which may be perfected by filing in the United States, and (ii) upon execution of the Third Amended and Restated Indenture, and upon the filing of the Filing Statements related thereto, the Trustee will have a perfected first priority security interest in the Collateral which may be perfected by filing in the United States. (xiii) Intellectual Property Title Opinion. An opinion to the effect that (A) the Issuer owns the Assets contributed pursuant to the Rampage Contribution Agreement, (B) each application and registration with respect to an Asset owned by the Issuer is owned by the Issuer and will, upon proper filing or recording, stand in the name thereof on the records of all relevant office registries, free and clear of any liens, (C) each Asset relating to a trademark or copyright contributed by Iconix is a valid trademark or copyright, as the case may be and (D) to the knowledge of such counsel, there are no claims or proceedings regarding infringement in connection with the use of, or threaten the validity or value of the Assets. (g) The Purchaser shall have received from each party to the Operative Documents such information, certificates and documents as the Purchaser may reasonably have requested and all proceedings in connection with the transactions contemplated by this Agreement and all documents incident hereto shall be in all material respects reasonably satisfactory in form and substance to the Purchaser. (h) The CUSIP Service Bureau of Standard & Poor's shall have assigned a private placement number for the Notes and the Purchaser shall have received evidence reasonably satisfactory to the Purchaser of such number. (i) The Purchaser shall have received evidence satisfactory to it from the Trustee, confirming receipt by the Trustee of the deposit of funds into the Liquidity Reserve Account pursuant to Section 12.1 of the Third Amended and Restated Indenture in the amount of $[_______] on the Closing Date. 11 (j) The Purchaser shall have received evidence reasonably satisfactory to it and its special counsel that UCC-1 financing statements and any other similar statements or documentation with respect to perfection of security interests in the Assets for the benefit of the Issuer and the Trustee have been, or will be, filed in the appropriate filing offices in the Covered Jurisdictions, and all other actions have been taken reflecting the assignment of the interests of Iconix in the Assets to the Issuer, as required pursuant to the provisions of the Rampage Contribution Agreement. (k) The fees and expenses identified in Section 5(a) shall have been paid or provided for to the satisfaction of the Purchaser. (l) The Issuer's acceptance of the proceeds of the Notes shall be deemed its acknowledgement that the conditions to Closing set forth herein have been complied with as of the Closing Date. The Purchaser may in its sole discretion waive compliance with any conditions to the obligations of the Purchaser hereunder. Section 7. Indemnification. (a) Each of the Issuer and Iconix jointly and severally agrees (i) to indemnify and hold harmless the Purchaser, its members, employees, managers, directors and officers and each person, if any, who controls such Purchaser within the meaning of Section 15 of the Securities Act, against any losses, claims, damages or liabilities, joint or several, to which such Purchaser may become subject, under the Securities Act or the Securities Exchange Act of 1934, as amended (the "Exchange Act") or otherwise, insofar as such losses, claims, damages or liabilities (or actions in respect thereof) arise out of or are based upon any breach of any of the representations and warranties of, or with respect to, the Issuer, IPHM or Iconix contained herein, provided, however, that (i) the Issuer shall only indemnify the indemnified parties with respect to breaches of the Issuer's representations and warranties and not with respect to a breach by any other party and (ii) Iconix shall not indemnify the indemnified parties with respect to any breach of an Issuer representation and warranty pertaining to the Assets or any Issuer continuing representations or warranties made herein that relate to, or require, action to be taken by the Issuer after the Closing Date, including the payment of the Notes. (b) The obligations of the Issuer and Iconix under this Section shall be in addition to any liability which the Issuer or Iconix may otherwise have and shall extend, upon the same terms and conditions, to each person, if any, who controls any Purchaser within the meaning of Section 15 of the Securities Act or the Exchange Act. Section 8. Failure to Deliver. If, after 3:00 p.m. on the Closing Date, the Closing has not yet been consummated and the Issuer has requested the Purchaser to continue to make the Purchase Price available later that day, and if, by 5:00 p.m. New York City time on such day, the Issuer fails to tender to the Purchaser the Notes or if the conditions specified in Section 6 hereof have not been fulfilled or waived by the Purchaser, the Purchaser may thereupon elect to be relieved of all further obligations under this Agreement. In addition, Iconix shall pay to the Purchaser interest on the Purchase Price of its Notes at a 12 variable per annum rate specified by the Purchaser, from such date until the next succeeding Business Day on which it is feasible for the Purchaser to invest such moneys in overnight funds. Nothing in this Section shall relieve the Issuer or Iconix from any of its obligations hereunder or otherwise or waive any of the Purchaser's rights against the Issuer or Iconix. Section 9. Survival of Certain Representations and Obligations. The respective indemnities, agreements, representations, warranties and other statements of the Issuer, Iconix and of the Purchaser or its officers set forth in or made pursuant to this Agreement will remain in full force and effect, regardless of any investigation, or statement as to the results thereof, made by or on behalf of the Purchaser, Iconix, the Issuer or any of their respective representatives, officers or directors or any controlling person, and will survive delivery of and payment for the Notes. If for any reason the purchase of the Notes by the Purchaser is not consummated, other than as a result of a breach by the Purchaser, Iconix shall remain responsible for the expenses to be paid or reimbursed by it pursuant to Section 5 and the obligation of the Issuer and Iconix pursuant to Section 7 shall remain in effect. If the purchase of the Notes is not consummated for any reason other than because of either (i) a failure of the Purchaser to fund after all conditions to Closing have been met or (ii) the occurrence of any event specified in clause (iii), (iv) or (v) of Section 6(a), Iconix will reimburse the Purchaser for all out-of-pocket expenses (including fees and disbursements of counsel) reasonably incurred by it in connection with the offering of the Notes. Section 10. Severability Clause. Any part, provision, representation, or warranty of this Agreement which is prohibited or is held to be void or unenforceable in any jurisdiction shall, as to such jurisdiction, be ineffective to the extent of such prohibition or unenforceability without invalidating the remaining provisions hereof. Section 11. Notices. All communications hereunder will be in writing and, (A) if sent to the Purchaser will be mailed, delivered or telegraphed and confirmed to the Purchaser, at Mica Funding, LLC, c/o Stanfield Global Strategies, 330 Madison Avenue, 9th Floor, New York, NY 10017, with a copy to PartnerRe New Solutions Inc., One Greenwich Plaza, Greenwich, CT 06830-6342, Attention: Chief Counsel, (B) if sent to the Issuer, will be mailed, delivered or telegraphed and confirmed to it at IP Holdings LLC, 103 Foulk Road, Suite 200, Wilmington, DE 19803, Attention: General Counsel, or (C) if sent to Iconix, will be mailed, delivered or telegraphed and confirmed to it at Iconix Brand Group, Inc., 215 West 40th Street, New York, NY 10018, Attention: General Counsel; provided, however, that any notice to the Purchaser pursuant to Section 7 will be mailed, delivered or telegraphed and confirmed to such Purchaser. Section 12. Successors and Third-Party Beneficiaries. This Agreement will inure to the benefit of and be binding upon the parties hereto and their respective successors and the controlling persons referred to in Section 7 and no other person, other than as expressly provided in this paragraph, will have any right or obligation hereunder. It is agreed by the parties hereto that PartnerRe shall be a third-party beneficiary of the obligations of the Issuer, IPHM and Iconix hereunder. 13 Section 13. Applicable Law. THIS AGREEMENT WILL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK, WITHOUT REGARD TO ITS CONFLICT OF LAW PROVISIONS. The Issuer, the Purchaser and Iconix hereby submit to the non-exclusive jurisdiction of the Federal and state courts in the Borough of Manhattan in The City of New York in any suit or proceeding arising out of or relating to this Agreement or the transactions contemplated hereby. Section 14. Counterparts, etc. This Agreement supersedes all prior or contemporaneous agreements and understandings relating to the subject matter hereof between the Purchaser, Iconix and the Issuer. Neither this Agreement nor any term hereof may be changed, waived, discharged or terminated except by a writing signed by the party against whom enforcement of such change, waiver, discharge or termination is sought. This Agreement may be signed in any number of counterparts each of which shall be deemed an original, which taken together shall constitute one and the same instrument. Section 15. No Petition. (a) During the term of this Agreement and for one year and one day after the retirement of the Notes, none of the parties hereto or any affiliate thereof will file any involuntary petition or otherwise institute any bankruptcy, reorganization, arrangement, insolvency or liquidation proceeding or other proceeding under any federal or state bankruptcy or similar law against the Issuer. The obligations of such parties under this Section 15(a) shall survive any termination of this Agreement. (b) Each of the parties hereto (other than the Purchaser) agrees that it will not institute against, or join any other person in instituting against, the Purchaser any bankruptcy, reorganization, arrangement, insolvency or liquidation proceeding, or other similar proceeding under the laws of any jurisdiction, for one year and one day after the latest maturing commercial paper note of the Purchaser is paid in full. The obligations of such parties under this Section 15(b) shall survive any termination of this Agreement. Section 16. Limited Recourse. The obligations of the Purchaser under this Agreement are solely the obligations of the Purchaser. No recourse shall be had for the payment of the Purchase Price or any other obligation or claim of or against the Purchaser arising out of or based upon this Agreement, against any employee, officer, director, affiliate, member or manager of the Purchaser or any affiliate of such person (other than with respect to Section 17 below); provided, however, that the foregoing shall not relieve any such person of any liability it might otherwise have as a result of fraudulent actions or omissions taken by it. Each party to this Agreement (other than the Purchaser) agrees that the Purchaser shall be liable for any claims that such party may have against the Purchaser only to the extent the Purchaser has funds in excess of those needed by it to pay amounts due from it on matured or maturing commercial paper notes or due from it to hedge counterparties in connection with its commercial paper program. Any and all claims by any such party against the Purchaser shall be unsecured and subordinate to the claims of the holders of the Purchaser's commercial paper notes and of all other secured parties under the Purchaser's commercial paper program. Section 17. Confidentiality. Neither Iconix, the Purchaser nor any of their respective Affiliates shall make any announcement or disclosure regarding the participation of PartnerRe or any of its Affiliates in connection with the transactions contemplated in the Operative Documents, without the prior written consent of PartnerRe, except that Iconix or the Purchaser may disclose such information to such Person's external accountants and attorneys and as required 14 by any supervisory regulatory authority to which the disclosing party is subject or under applicable law or order in connection with any judicial proceeding. If, for any other reason than a breach of this Section 17 by Iconix and the Purchaser or a breach of any another confidentiality agreement between PartnerRe and the parties hereto, the confidential information herein otherwise becomes public, then Iconix and the Purchaser shall be permitted to disclose such public information. Section 18. Survival of Note Purchase Agreement Representations and Warranties. Each of the Issuer and Iconix agree that each representation and warranty made by it in the Note Purchase Agreement shall survive notwithstanding the exchange of the Original Notes and the Subordinate Notes for the July Notes or the exchange of the July Notes for the Notes. Each of the representations and warranties of the Issuer and Iconix in the Note Purchase Agreement and the 2005 Note Purchase Agreement are true and correct as of the date thereof and are hereby incorporated by reference. [REMAINDER OF THIS PAGE INTENTIONALLY LEFT BLANK] 15 IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be executed by their respective officers thereunto duly authorized as of the day and year above first written. ICONIX BRAND GROUP, INC. By: /s/ Neil Cole ------------------------------------ Name: Neil Cole Title: Chief Executive Officer IP HOLDINGS LLC by: IP Holdings and Management Corporation its Manager by: /s/ Warren Clamen ------------------------------------ Name: Warren Clamen Title: President MICA FUNDING, LLC by: Stanfield Global Strategies LLC its Investment Advisor by: /s/ Wilson Pringle ------------------------------------- Name: Wilson Pringle Title: Managing Director, Stanfield Global Strategies, LLC 16 LIST OMITTED APPENDICES AND EXHIBITS 1. APPENDIX A - DEFINITIONS 2. EXHIBIT A - FORM OF INVESTOR LETTER -----END PRIVACY-ENHANCED MESSAGE-----