Differential Brands Group Inc. (Form: 8-K, Received: 07/19/2016 17:16:59)

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 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): July 18, 2016

Differential Brands Group Inc.

(Exact name of registrant as specified in its charter)

Delaware	0-18926	11-2928178
(State or other jurisdiction	(Commission	(I.R.S. Employer
of incorporation)	File Number)	Identification No.)

1231 South Gerhart Avenue, Commerce, California		90022
(Address of principal executive offices)		(Zip Code)

Registrant’s telephone number, including area code: 323-890-1800

N/A

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:

o Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)

o Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)

o Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))

o 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 Material Definitive Agreement.

On July 18, 2016, Differential Brands Group Inc., a Delaware corporation (the “ Company ”), entered into a Purchase Agreement (as defined below). The description of the Purchase Agreement set forth below in Item 2.01 of this Current Report on Form 8-K is incorporated herein by reference.

On July 18, 2016, in connection with the financing of the transactions contemplated by the Purchase Agreement, the Company also completed the issuance and sale of a Convertible Note (as defined below) and a Tengram Warrant (as defined below). The descriptions of the Convertible Note set forth below in Item 2.03 and of the Tengram Warrant set forth below in Item 3.02, respectively, of this Current Report on Form 8-K are incorporated herein by reference.

Item 2.01 Completion of Acquisition or Disposition of Assets.

On July 18, 2016, the Company completed the acquisition (the “ Acquisition ”) of all of the outstanding share capital of SWIMS AS, a Norwegian private limited company ( aksjeselskap ) registered with the Norwegian Register of Business Enterprises under registration number 988 225 266 and with registered address at Holtegata 26, 0355 Oslo, Norway (“ SWIMS ”), as contemplated by the Purchase Agreement, dated as of the same date (the “ Purchase Agreement ”), by and among the Company, DFBG Swims LLC, a Delaware limited liability company and wholly-owned subsidiary of the Company (the “ Buyer ”), each shareholder of SWIMS signatory thereto and set forth in Exhibit A thereto (the “ Sellers ”), Øystein Alexander Eskeland and Atle Søvik, acting jointly as the representatives of the Sellers, and, for certain limited purposes, TCP Denim, LLC, a Delaware limited liability company, TCP RG, LLC, a Delaware limited liability company, and TCP RG II, LLC, a Delaware limited liability company, for aggregate consideration of approximately $12.3 million in cash, 702,943 shares of the Company’s common stock (the “ Consideration Shares ”), par value $0.10 per share (“ Common Stock ”), and warrants to purchase an aggregate of 150,000 shares of Common Stock with an exercise price of $5.47 per share (the “ SWIMS Seller Warrants ”). Of the cash consideration, pursuant to the terms of the Purchase Agreement, the Buyer deposited approximately $325,000 into an escrow account in connection with certain indemnification obligations of the Sellers pursuant to the Purchase Agreement.

The Purchase Agreement contains representations, warranties and covenants of the Sellers, the Buyer and the Company and indemnification rights of the Buyer after the closing of the transactions contemplated by the Purchase Agreement that are customary for transactions of this type.

The foregoing description of the Purchase Agreement does not purport to be complete and is qualified in its entirety by reference to the full text of the Purchase Agreement, which is filed as Exhibit 2.1 to this Current Report on Form 8-K and is incorporated by reference herein. The description of the SWIMS Seller Warrants set forth above does not purport to be complete and is qualified in its entirety by reference to the full text of the form of Seller Warrant filed herewith as Exhibit 4.1 and incorporated herein by reference.

The information set forth below in Items 2.03 and 3.02 to this Current Report on Form 8-K is incorporated by reference into this Item 2.01.

Item 2.03 Creation of a Direct Financial Obligation or an Obligation under an Off-Balance Sheet Arrangement of a Registrant.

Convertible Note.

To finance the Acquisition, the Company issued a convertible promissory note (the “ Convertible Note ”) in a principal amount of $13.0 million to Tengram Capital Partners Fund II, L.P., an affiliate of the Company (“ Tengram ”). The Convertible Note will convert, at Tengram’s option or on the maturity date of January 18, 2017 to the extent that the Convertible Note has not been repaid in cash on or prior to such date, into up to 4,500,000 newly issued shares of the Company’s Class A-1 Preferred Stock (“ Preferred Stock ”) at a conversion price of $3.00 per share. The Convertible Note accrues interest at the rate of 3.75% per annum, which shall compound and be added to the principal balance of the Convertible Note on the first day of each calendar month commencing August 1, 2016.

To the extent the Convertible Note converts into Preferred Stock, and subject to certain limitations, such Preferred Stock will be convertible into Common Stock at an initial conversion price of $3.00 per share of Common Stock (subject to adjustment), will be entitled to dividends at a rate of 10% per annum payable quarterly in arrears, will be senior to the Common Stock upon a liquidation and will have as-converted voting rights alongside the Common Stock. The Company will file a certificate of designation with respect to the Preferred Stock in connection with or prior to any conversion of Preferred Stock into Common Stock.

The description of the Convertible Note set forth above does not purport to be complete and is qualified in its entirety by reference to the full text of the Convertible Note filed herewith as Exhibit 4.3 and incorporated herein by reference.

Credit Facilities.

To permit the Acquisition, the issuance of the Convertible Note and the related transactions under its existing debt agreements, the Company entered into (i) a Consent and Amendment No. 1, dated July 18, 2016, to the Company’s Credit and Security Agreement, dated January 28, 2016, by and among the Company, the other borrowers party thereto, the guarantors party thereto and Wells Fargo Bank, National Association, as lender (the “ ABL Amendment ”), and (ii) a Consent and Amendment No. 1, dated July 18, 2016, to the Company’s Credit and Security Agreement, dated January 28, 2016, by and among the Company, the other borrowers party thereto, the guarantors party thereto, the lenders party thereto and TCW Asset Management Company, as agent for the lenders (the “ Term Loan Amendment ”).

The descriptions of the ABL Amendment and the Term Loan Amendment set forth above do not purport to be complete and are qualified in its entirety by reference to the full text of the ABL Amendment filed herewith as Exhibit 4.4 and the Term Loan Amendment filed herewith as Exhibit 4.5, in each case incorporated herein by reference.

Item 3.02 Unregistered Sales of Equity Securities.

In connection with the financing of the Acquisition, the Company has issued a warrant (the “ Tengram Warrant ”) to Tengram for the purchase of 500,000 shares of Common Stock at an exercise price of $3.00 per share. In addition, as described in Item 2.01 above, the Company issued the SWIMS Seller Warrants.

The issuance of the Consideration Shares, SWIMS Seller Warrants, the Convertible Note and Tengram Warrant were made in reliance on the exemption from the registration requirements of the Securities Act of 1933, as amended (the “ Securities Act ”) afforded by Section 4(a)(2) thereof because such issuance does not involve a public offering. The securities contain a restrictive legend advising that the securities may not be offered for sale, sold, transferred or assigned without having first been registered under the Securities Act or pursuant to an exemption from the Securities Act.

The disclosure under Items 2.01 and Item 2.03 of this Current Report on Form 8-K is incorporated herein by reference.

The description of the Tengram Warrant set forth above does not purport to be complete and is qualified in its entirety by reference to the full text of the form of Tengram Warrant filed herewith as Exhibit 4.2 and incorporated herein by reference.

Item 3.03 Material Modification to Rights of Security Holders.

The disclosure under Item 3.02 of this Current Report on Form 8-K is incorporated herein by reference.

Item 7.01 Regulation FD Disclosure.

On July 19, 2016, the Company issued a press release announcing completion of the acquisition of SWIMS, a copy of which is filed herewith as Exhibit 99.1 and is incorporated herein by reference.

Item 9.01 Financial Statements and Exhibits.

(a) Financial statements of business acquired.

The Company intends to file any financial statements that may be required by Item 9.01(a) of Form 8-K with respect to the Acquisition within 71 calendar days after the date that this Form 8-K was required to be filed pursuant to Item 9.01(a)(4) of Form 8-K.

(b) Pro Forma financial information.

The Company intends to file the pro forma financial information required by Item 9.01(b) of Form 8-K with respect to the Acquisition within 71 calendar days after the date that this Form 8-K was required to be filed pursuant to Item 9.01(b)(2) of Form 8-K.

(d) Exhibits

2.1		Purchase Agreement, dated as of July 18, 2016, by and among the Differential Brands Group Inc., DFBG Swims LLC, a Delaware limited liability company and wholly-owned subsidiary of the Company, each shareholder of SWIMS signatory thereto and set forth in Exhibit A thereto, Øystein Alexander Eskeland and Atle Søvik, acting jointly as the representatives of the Sellers named therein, and, for certain limited purposes, TCP Denim, LLC, a Delaware limited liability company, TCP RG, LLC, a Delaware limited liability company, and TCP RG II, LLC, a Delaware limited liability company.

4.1		Form of SWIMS Seller Warrant.

4.2		Form of Tengram Warrant.

4.3		Form of Convertible Note.

4.4		Consent and Amendment No. 1, dated July 18, 2016, to the Company’s Credit and Security Agreement, dated January 28, 2016, by and among the Company, the other borrowers party thereto, the guarantors party thereto and Wells Fargo Bank, National Association, as lender.

4.5		Consent and Amendment No. 1, dated July 18, 2016, to the Company’s Credit and Security Agreement, dated January 28, 2016, by and among the Company, the other borrowers party thereto, the guarantors party thereto, the lenders party thereto and TCW Asset Management Company, as agent for the lenders.

99.1		Press Release of Differential Brands Group Inc. dated July 19, 2016.

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 hereunto duly authorized.

	Differential Brands Group Inc.


July 19, 2016	By:	/s/ Hamish Sandhu
		Name:	Hamish Sandhu
		Title:	Chief Financial Officer

EXHIBIT INDEX

Exhibit No.		Description

2.1		Purchase Agreement, dated as of July 18, 2016, by and among the Differential Brands Group Inc., DFBG Swims LLC, a Delaware limited liability company and wholly-owned subsidiary of the Company, each shareholder of SWIMS signatory thereto and set forth in Exhibit A thereto, Øystein Alexander Eskeland and Atle Søvik, acting jointly as the representatives of the Sellers named therein, and, for certain limited purposes, TCP Denim, LLC, a Delaware limited liability company, TCP RG, LLC, a Delaware limited liability company, and TCP RG II, LLC, a Delaware limited liability company.

4.1		Form of SWIMS Seller Warrant.

4.2		Form of Tengram Warrant.

4.3		Form of Convertible Note.

4.4		Consent and Amendment No. 1, dated July 18, 2016, to the Company’s Credit and Security Agreement, dated January 28, 2016, by and among the Company, the other borrowers party thereto, the guarantors party thereto and Wells Fargo Bank, National Association, as lender.

4.5		Consent and Amendment No. 1, dated July 18, 2016, to the Company’s Credit and Security Agreement, dated January 28, 2016, by and among the Company, the other borrowers party thereto, the guarantors party thereto, the lenders party thereto and TCW Asset Management Company, as agent for the lenders.

99.1		Press Release of Differential Brands Group Inc. dated July 19, 2016.

Exhibit 2.1

EXECUTION VERSION

PURCHASE AGREEMENT

among

DIFFERENTIAL BRANDS GROUP INC. ,

as Parent,

DFBG SWIMS LLC ,

as the Buyer,

THE SHAREHOLDERS OF SWIMS AS ,

as the Sellers, and

ØYSTEIN ALEXANDER ESKELAND AND ATLE SØVIK ,

acting jointly as the Sellers’ Representative,

regarding the share capital of

SWIMS AS ,

as the Company

Dated as of July 18, 2016

TABLE OF CONTENTS

		Page

ARTICLE I DEFINITIONS		1

Section 1.1	Certain Defined Terms	1
Section 1.2	Table of Definitions	7

ARTICLE II PURCHASE AND SALE		9

Section 2.1	Purchase and Sale of the Shares	9
Section 2.2	Closing	9
Section 2.3	Closing Deliverables	9
Section 2.4	Determination of Cash Purchase Price; Allocation of Consideration	11
Section 2.5	Indemnity Escrow Fund	11

ARTICLE III REPRESENTATIONS AND WARRANTIES OF THE SELLERS		12

Section 3.1	Title to Shares	12
Section 3.2	Authority	12
Section 3.3	No Conflict; Required Filings and Consents	13
Section 3.4	Organization and Qualification	13
Section 3.5	Capitalization	14
Section 3.6	Equity Interests	14
Section 3.7	Financial Statements; No Undisclosed Liabilities	14
Section 3.8	Absence of Certain Changes or Events	15
Section 3.9	Compliance with Law; Permits	15
Section 3.10	Litigation	16
Section 3.11	Employee Benefit Plans	16
Section 3.12	Labor and Employment Matters	17
Section 3.13	Title to and Condition of Assets	18
Section 3.14	Real Property	18
Section 3.15	Intellectual Property	19
Section 3.16	Taxes	20
Section 3.17	Environmental Matters	21
Section 3.18	Material Contracts	22
Section 3.19	Affiliate Interests and Transactions	23
Section 3.20	Insurance	24
Section 3.21	Privacy and Security	24
Section 3.22	Customers and Suppliers	25
Section 3.23	Brokers	25
Section 3.24	Data Room Documents Referenced in Disclosure Schedules Correct Copies of Originals	25
Section 3.25	Securities Matters	26

TABLE OF CONTENTS
(Continued)

		Page

ARTICLE IV REPRESENTATIONS AND WARRANTIES OF PARENT AND THE BUYER		26

Section 4.1	Organization and Qualification	26
Section 4.2	Authority	27
Section 4.3	No Conflict; Required Filings and Consents	27
Section 4.4	Parent SEC Documents	27
Section 4.5	Financing	28
Section 4.6	Parent Issuance of Consideration Shares and Warrants	28
Section 4.7	Brokers	29
Section 4.8	Investment Intent	29
Section 4.9	No Other Representations or Warranties	29

ARTICLE V COVENANTS		29

Section 5.1	Public Announcements	29
Section 5.2	Further Assurances	30
Section 5.3	Confidentiality	30
Section 5.4	Documents and Information	30
Section 5.5	Listing	30
Section 5.6	Registration Rights	30
Section 5.7	Release of Pre-Closing Directors and Officers	31

ARTICLE VI INDEMNIFICATION		31

Section 6.1	Survival	31
Section 6.2	Indemnification by the Sellers	32
Section 6.3	Procedures	32
Section 6.4	Limits on Indemnification	34
Section 6.5	Remedies Not Affected by Investigation, Disclosure or Knowledge	35
Section 6.6	R&W Insurance Policy; Indemnity Escrow Fund	35
Section 6.7	Exclusive Remedy	36

ARTICLE VII GENERAL PROVISIONS		36

Section 7.1	Amendment and Modification	36
Section 7.2	Waiver	36
Section 7.3	Sellers’ Representative	36
Section 7.4	Costs and Expenses	37
Section 7.5	Notices	37
Section 7.6	Interpretation	39
Section 7.7	Entire Agreement	39

TABLE OF CONTENTS
(Continued)

		Page

Section 7.8	No Third-Party Beneficiaries	39
Section 7.9	Waiver of Claims; Release	39
Section 7.10	Governing Law	40
Section 7.11	Jurisdiction; Specific Performance	40
Section 7.12	Assignment; Successors	41
Section 7.13	Currency	41
Section 7.14	Severability	42
Section 7.15	Waiver of Jury Trial	42
Section 7.16	Counterparts	42
Section 7.17	Facsimile or .pdf Signature	42
Section 7.18	Time of Essence	42
Section 7.19	No Presumption Against Drafting Party	42
Section 7.20	Legal Conflict Waiver; Ownership of Privileged Materials	42

Exhibits

Exhibit A	Sellers and Allocation of the Consideration
Exhibit B	Form of Settlement Account Joint Instructions
Exhibit C	Forms of Restrictive Covenant Agreement
	Form 1: Escobar Invest AS, Albatross Investment AS, Oskar Investments AS and Syneco AS
	Form 2: Gandalf Invest AB
Exhibit D	Agreed Closing Statement
Exhibit E	Form of Minority Shareholder Release
Exhibit F	Escrow Agreement
Exhibit G	Form of Common Stock Purchase Warrant

iii

PURCHASE AGREEMENT

PURCHASE AGREEMENT, dated as of July 18, 2016 (this “ Agreement ”), regarding the share capital of SWIMS AS, a Norwegian private limited company ( aksjeselskap ) registered with the Norwegian Register of Business Enterprises under registration number 988 225 266 and with registered address at Holtegata 26, 0355 Oslo, Norway (the “ Company ”), entered into among Differential Brands Group Inc., a Delaware corporation (“ Parent ”), DFBG Swims LLC, a Delaware limited liability company (the “ Buyer ”), each shareholder of the Company signatory hereto and set forth in Exhibit A to this Agreement (the “ Sellers ”), Øystein Alexander Eskeland and Atle Søvik, acting jointly as the representatives of the Sellers (the “ Sellers’ Representative ”) and, solely for purposes of Section 5.6 , the TCP Parties (as defined herein).

RECITALS

WHEREAS, the respective boards of directors of Parent and the Buyer deem it advisable and in the best interests of each of Parent and the Buyer and their respective stockholders that Parent and the Buyer enter into this Agreement;

WHEREAS, as of the date of this Agreement, the share capital of the Company is NOK 1,186,050, consisting of 23,721 ordinary shares with a par value of NOK 50 each (the “ Shares ”), all of which will at Closing (after giving effect to the exercise of the option by the Sellers to acquire the 11,288 Shares which prior to such exercise were, in the aggregate, held by J.R. Produksjon AS, Johan Ringdal, Anders S. Dahl and Bakelittfabrikken Holding AS (the “ Minority Shareholders ”)), be owned by the Sellers in the amounts set forth in Exhibit A ;

WHEREAS, the Buyer desires to purchase from the Sellers, and the Sellers desire to sell to the Buyer, the Shares on the terms and subject to the conditions set forth herein; and

WHEREAS, the Sellers will receive a combination of cash, common stock, par value $0.10 per share, of Parent (the “ Parent Common Stock ”) and Warrants (as defined herein) as consideration for the Shares owned by the Sellers.

AGREEMENT

NOW THEREFORE, in consideration of the foregoing and the mutual covenants and agreements herein contained, the receipt and sufficiency of which are hereby acknowledged and agreed, and intending to be legally bound hereby, the parties agree as follows:

ARTICLE I
DEFINITIONS

Section 1.1 Certain Defined Terms . For purposes of this Agreement:

“ Accounting Principles ” means the Norwegian Generally Accepted Accounting Principles, as applied in the Financial Statements.

“ Action ” means any claim, action, suit, inquiry, proceeding, audit or investigation by or before any Governmental Authority, or any other arbitration, mediation or similar proceeding of which the Company has received or submitted notice.

“ Affiliate ” means, with respect to any Person, any other Person that directly, or indirectly through one or more intermediaries, controls, is controlled by, or is under common control with, such first Person.

“ Ancillary Agreements ” means the Escrow Agreement, the Restrictive Covenant Agreements and the Settlement Account Joint Instructions.

“ Business Day ” means any day that is not a Saturday, a Sunday or other day on which banks are required or authorized by Law to be closed in The City of New York or Oslo, Norway.

“ Cash ” means, as of the Closing, the aggregate amount of all cash and cash equivalents of the Company required to be reflected as cash and cash equivalents on a balance sheet of the Company as of such date prepared in accordance with the Accounting Principles, net of (i) any outstanding checks, wires and bank overdrafts of the Company, (ii) any amounts relating to credit card receivables or restricted cash and (iii) amounts held in escrow or any customer deposits or otherwise held on behalf of third parties, in each case, whether or not required to be reported as such under the Accounting Principles.

“ Cash Purchase Price ” means NOK 103,729,864, which amount equals the sum of (i) NOK 104,000,000, plus (ii) the Cash, minus (iii) the Indebtedness, minus (iv) the Working Capital Underage, in each case as set forth on the Agreed Closing Statement.

“ Code ” means the Internal Revenue Code of 1986, as amended.

“ Consideration ” means the Cash Purchase Price plus the Consideration Shares issued to the Sellers plus the Warrants issued to the Sellers.

“ Contract ” means any contract, agreement, arrangement or understanding, whether written or oral and whether express or implied.

“ control ,” including the terms “ controlled by ” and “ under common control with ,” means the possession, directly or indirectly, of the power to direct or cause the direction of the management and policies of a Person, whether through the ownership of voting securities, as trustee or executor, as general partner or managing member, by Contract or otherwise, including the ownership, directly or indirectly, of securities having the power to elect or remove a majority of the members of the board of directors or similar body governing the affairs of such Person.

“ Disclosure Schedule ” means the confidential schedules delivered by the Sellers to the Buyer concurrent with the execution hereof.

“ Encumbrance ” means any charge, claim, limitation, condition, equitable interest, mortgage, lien, option, pledge, security interest, easement, encroachment, right of first refusal, adverse claim or restriction of any kind, including any restriction on or transfer or other

assignment, as security or otherwise, of or relating to use, quiet enjoyment, voting, transfer, receipt of income or exercise of any other attribute of ownership.

“ Environmental Laws ” means any Laws of any Governmental Authority relating to (i) releases or threatened releases of Hazardous Substances or materials containing Hazardous Substances, (ii) the manufacture, handling, transport, use, treatment, storage or disposal of Hazardous Substances or materials containing Hazardous Substances or (iii) pollution or protection of the environment, health, safety or natural resources.

“ Escrow Agent ” means Citibank, N.A., or its successor under the Escrow Agreement.

“ Escrow Agreement ” means the Escrow Agreement to be entered into by the Buyer, the Sellers’ Representative and the Escrow Agent, substantially in the form attached hereto as Exhibit F .

“ Governmental Authority ” means any federal, national, supranational, state, provincial, local or similar government, governmental, regulatory or administrative authority, branch, agency or commission or any court, tribunal, or arbitral or judicial body (including any grand jury).

“ Hazardous Substances ” means (i) petroleum and petroleum products, including crude oil and any fractions thereof, (ii) natural gas, synthetic gas, and any mixtures thereof, (iii) lead, polychlorinated biphenyls, asbestos and radon, (iv) any other pollutant or contaminant and (v) any substance, material or waste regulated by any Governmental Authority pursuant to any Environmental Law.

“ Indebtedness ” means, without duplication, (i) the unpaid principal amount and accrued interest, premiums, penalties and other fees, expenses (if any), and other payment obligations and amounts due (including such amounts that would become due as a result of the consummation of the transactions contemplated by this Agreement) that would be required to be paid by a borrower to a lender pursuant to a customary payoff letter, in each case, in respect of (A) all indebtedness for borrowed money of the Company and (B) indebtedness evidenced by notes, debentures, bonds or other similar instruments; (ii) all obligations under capitalized leases with respect to which the Company is liable, determined on in accordance with the Accounting Principles; (iii) any amounts for the deferred purchase price of goods and services, including any earn out liabilities associated with past acquisitions; (iv) all liabilities with respect to any current or former employee, officer or director of the Company that arise before or on the Closing Date, including all liabilities with respect to any Plan, all accrued salary, deferred compensation and vacation obligations, all workers’ compensation claims, any liability in respect of accrued but unpaid bonuses for the prior fiscal year and for the period commencing on the first day of the fiscal year and ending on the Closing Date, and any employment Taxes payable by the Company with respect to the foregoing; (v) all obligations of the Company with respect to interest-rate hedging, swaps or similar financial arrangements; (vi) all deposits and monies received in advance; (vii) all indebtedness created or arising under any conditional sale or other title retention agreement with respect to property acquired by the Company; (viii) all liabilities under any reimbursement obligation relating to a letter of credit, bankers’ acceptance or note purchase

facility; (ix) all liabilities with respect to any current or former employee, officer or director of the Company that arise before or on the Closing Date, including all liabilities with respect to any accrued but unpaid bonuses; (x) all indebtedness or liabilities secured by any security interest on any property or assets of the Company; and (xi) all obligations of the type referred to in clauses (i) through (x) of other Persons for the payment of which the Company is responsible or liable, as obligor, guarantor, surety or otherwise, including any guarantee of such obligations.

“ Indemnity Escrow Amount ” means NOK 2,750,000.

“ Indemnity Escrow Fund ” means the Indemnity Escrow Amount to be deposited with the Escrow Agent to secure the Sellers’ indemnification obligations hereunder, as such sum may be (i) decreased by releases from the Indemnity Escrow Fund as provided in this Agreement and the Escrow Agreement and/or (ii) increased by any interest or other amounts earned thereon.

“ Intellectual Property ” means all intellectual property rights arising from or associated with the following, whether protected, created or arising under the laws of Norway, the United States or any other jurisdiction: (i) trade names, trademarks and service marks (registered and unregistered), domain names and other internet addresses or identifiers, trade dress and similar rights, and applications (including intent to use applications and similar reservations of marks and all goodwill associated therewith) to register any of the foregoing (collectively, “ Marks ”); (ii) designs and design applications (collectively, “ Designs ”), (iii) patents and patent applications (collectively, “ Patents ”); (iv) copyrights (registered and unregistered) and applications for registration (collectively, “ Copyrights ”); (v) trade secrets, know-how, inventions, methods, processes and processing instructions, technical data, specifications, research and development information, technology including rights and licenses, product roadmaps, customer lists and any other information, in each case to the extent any of the foregoing derives economic value (actual or potential) from not being generally known to other persons who can obtain economic value from its disclosure or use (collectively, “ Trade Secrets ”); and (vi) moral rights, publicity rights, data base rights and any other proprietary or intellectual property rights of any kind or nature that do not comprise or are not protected by Marks, Designs, Patents, Copyrights or Trade Secrets.

“ knowledge ,” with respect to the Company and the Sellers, means the actual knowledge of Peter Sjölander, Øystein Alexander Eskeland and Anders Dahl, after due inquiry, and with respect to any other party, means the actual knowledge of any officer or director of such party.

“ Law ” means any statute, law, ordinance, regulation, rule, code, executive order, injunction, judgment, decree or order of any Governmental Authority.

“ Leased Real Property ” means all real property leased, subleased or licensed to the Company or which the Company otherwise has a right or option to use or occupy, together with all structures, facilities, fixtures, systems, improvements and items of property previously or hereafter located thereon, or attached or appurtenant thereto, and all easements, rights and appurtenances relating to the foregoing.

“ Material Adverse Effect ” means, with respect to any Person, any event, change, circumstance, occurrence, effect, result or state of facts that, individually or in the aggregate, is or would reasonably be expected to be materially adverse to the business, financial condition or results of operations of such Person and its Subsidiaries, taken as a whole; provided , however , that Material Adverse Effect shall not include any event, change, circumstance, occurrence, effect, result or state of facts to the extent resulting from (A) changes generally affecting the economy or the financial or securities markets or (B) the outbreak of war or acts of terrorism; provided , that the impact of such event, change, circumstance, occurrence, effect or state of facts may be taken into account if it is disproportionately adverse to such Person and its Subsidiaries, taken as a whole, as compared to other similarly situated companies.

“ Minority Shareholder Release ” means releases to be entered into by the Buyer and each Minority Shareholder, substantially in the form attached hereto as Exhibit E .

“ NASDAQ ” means the Nasdaq Capital Market.

“ Net Working Capital ” means, as at a specified date and without duplication, an amount (which may be positive or negative) equal to (i) the current assets of the Company minus (ii) the current liabilities of the Company, in each case calculated in accordance with the Accounting Principles applied on a basis consistent with the preparation of the Balance Sheet; provided , however , for the avoidance of doubt, Net Working Capital shall exclude any amounts relating to or included in Cash, Indebtedness and Transaction Expenses to the extent such amounts are reflected in the calculation of the Cash Purchase Price (to avoid any double-counting with any other adjustments).

“ NOK ” means Norske kroner, the currency of the kingdom of Norway.

“ Non-Party Affiliate ” means an Affiliate or other related Person of a party hereto who is not a party hereto, including, but not limited to, any director, officer, employee, incorporator, member, partner, shareholder, Affiliate, agent, attorney or representative of any party hereto.

“ Option ” means the option to acquire the Shares of the Minority Shareholders as set forth in the agreement among the shareholders of the Company dated March 10, 2016, as amended.

“ Person ” means an individual, corporation, partnership, limited liability company, limited liability partnership, syndicate, person, trust, association, organization or other entity, including any Governmental Authority, and including any successor, by merger or otherwise, of any of the foregoing.

“ Pre-Closing Period ” means any Tax period ending on or before the Closing Date.

“ Pre-Closing Taxes ” means any and all Taxes imposed on the Company for any Pre-Closing Period and for the portion of any Straddle Period ending on the Closing Date except such Taxes which were taken into account in calculating the Cash Purchase Price, which are listed on the Agreed Closing Statement and except any Taxes on profits exceeding the profits

assumed in the determination of the Cash Purchase Price, as set forth on the Agreed Closing Statement.

“ Related Party ,” with respect to any specified Person, means: (i) any Affiliate of such specified Person, or any director, executive officer, general partner or managing member of such Affiliate; (ii) any Person who serves as a director, executive officer, partner, member or in a similar capacity of such specified Person; (iii) to the knowledge of such specified Person, any immediate family member of a Person described in clause (ii); or (iv) any other Person who holds, individually or together with any Affiliate of such other Person and any member(s) of such Person’s immediate family, more than 5% of the outstanding equity or ownership interests of such specified Person.

“ Remediation ” means any measures or actions required by applicable Law or undertaken to investigate, assess, evaluate, monitor, or otherwise delineate the presence or release of any Hazardous Substances in or into the environment or to prevent, clean up or minimize a release or threatened release of Hazardous Substances.

“ Representatives ” means, with respect to any Person, the officers, directors, principals, employees, agents, auditors, advisors, bankers and other representatives of such Person.

“ R&W Insurance Policy ” means the representation and warranty insurance policy issued by Beazley Group to the Buyer with respect to this Agreement in the form delivered to the Sellers’ Representative prior to the execution of this Agreement.

“ SEC ” means the U.S. Securities and Exchange Commission.

“ Seller Taxes ” means the following: (a) any and all Pre-Closing Taxes; (b) all state and local transfer, sales, value added, use, stamp, registration or other similar Taxes, if any, resulting from the transactions contemplated by this Agreement or any other Ancillary Agreement; (c) all liability for Taxes of any member of an affiliated, consolidated, combined, or unitary group of which the Company (including any predecessor entities) is or was a member prior to the Closing Date; (d) all Taxes of any Person (other than the Company) imposed on the Company as a transferee or successor, by Contract, pursuant to any Law or otherwise, which Taxes relate to events or transactions occurring prior to the Closing Date; and (e) any costs and expenses incurred (and not otherwise indemnified pursuant to this definition of Seller Taxes) by the Company or its Affiliates with respect to the foregoing.

“ Settlement Account Joint Instructions ” means the agreement among the Buyer, the Sellers, the Company and Advokatfirmaet BA-HR DA in the form set forth on Exhibit B .

“ Straddle Period ” means any Tax period beginning on or before the Closing Date and ending after the Closing Date.

“ Subsidiary ” means, with respect to any Person, any other Person controlled by such first Person, directly or indirectly, through one or more intermediaries.

“ Target Net Working Capital ” means NOK 23,157,943.

“ Taxes ” means all taxes and duties of whatever nature, including without limitation: (i) all federal, national, supranational, state, provincial, local, foreign and other net income, gross income, gross receipts, sales, use, value added, ad valorem, transfer, franchise, profits, registration, license, lease, service, service use, withholding, payroll, employment, excise, severance, stamp, occupation, premium, property, windfall profits, customs, duties or other taxes, fees, assessments or charges of any kind whatsoever (including any amounts resulting from the failure to file any Tax Return), together with any interest and any penalties, additions to tax or additional amounts with respect thereto; (ii) any liability for payment of amounts described in clause (i) whether as a result of transferee liability, of being a member of an affiliated, consolidated, combined or unitary group for any period or otherwise through operation of law and (iii) any liability for the payment of amounts described in clauses (i) or (ii) as a result of any tax sharing, tax indemnity or tax allocation agreement or any other express or implied agreement to indemnify any other Person.

“ Tax Return ” means any return, claims for refund, report, information return or other document (including schedules or any related or supporting information), including any amendment thereto, filed or required to be filed with any Governmental Authority in connection with the determination, assessment or collection of any Tax or the administration of any Laws relating to any Tax.

“ TCP Parties ” means TCP Denim, LLC, a Delaware limited liability company, TCP RG, LLC, a Delaware limited liability company, and TCP RG II, LLC, a Delaware limited liability company.

“ Transaction Expenses ” means the aggregate amount of any and all fees and expenses incurred by or on behalf of, or paid or to be paid directly by, any of the Company or any Person that the Company pays or reimburses or is otherwise legally obligated to pay or reimburse (including any such fees and expenses incurred by or on behalf of the Company) in connection with the negotiation, preparation or execution of this Agreement or the Ancillary Agreements or the performance or consummation of the transactions contemplated hereby or thereby, including (i) all fees and expenses of counsel, advisors, consultants, investment bankers, accountants, auditors and any other experts in connection with the transactions contemplated hereby; (ii) any fees and expenses associated with obtaining necessary or appropriate waivers, consents, or approvals of any Governmental Authority or third parties on behalf of the Company in connection with the transactions contemplated hereby; (iii) any fees or expenses associated with obtaining the release and termination of any Encumbrances in connection with the transactions contemplated hereby; (iv) all brokers’, finders’ or similar fees in connection with the transactions contemplated hereby and (v) any change of control payments, bonuses, severance, termination, or retention obligations or similar amounts payable in the future or due by the Company in connection with the transactions contemplated hereby, including any Taxes payable in connection therewith.

“ Working Capital Underage ” shall exist when (and shall be equal to the amount by which) the Target Net Working Capital exceeds the Net Working Capital.

Section 1.2 Table of Definitions . The following terms have the meanings set forth in the Sections referenced below:

Definition		Location

Agreed Closing Statement		2.4(b)
Agreement		Preamble
Balance Sheet		3.7(b)
Buyer		Preamble
Claim Notice		6.3(a)
Closing		2.2(a)
Closing Date		2.2(a)
Company		Preamble
Company Registered IP		3.15(e)
Consideration Shares		2.2(b)(i)
Copyrights		1.1
Designs		1.1
Direct Claim		6.3(e)
Enforceability Exceptions		3.2
Financial Statements		3.7(a)
Fundamental Representations		6.1
ICC		7.11(a)
ICC Rules		7.11(a)
Indemnified Party		6.3(a)
Indemnifying Party		6.3(a)
Interim Financial Statements		3.7(a)
Losses		6.2
Marks		1.1
Material Contracts		3.18(a)
Minority Shareholders		Recitals
Parent		Preamble
Parent Common Stock		Recitals
Parent Preferred Stock		4.6(a)
Parent Reports		4.4
Patents		1.1
Permits		3.9(b)
Permitted Encumbrances		3.13(a)
Personal Information		3.21(a)
Plans		3.11(a)
Preliminary Closing Statement		2.4(a)
Privacy Laws		3.21(a)
Restrictive Covenant Agreements		2.3(b)(iii)
Seller Counsel		7.20
Sellers		Preamble
Sellers’ Representative		Preamble
Shares		Recitals
Third Party Claim		6.3(a)
Trade Secrets		1.1
Warrants		2.2(b)(i)

ARTICLE II
PURCHASE AND SALE

Section 2.1 Purchase and Sale of the Shares . Upon the terms and subject to the conditions of this Agreement, at the Closing, the Sellers shall sell, assign, transfer, convey and deliver the Shares to the Buyer, free and clear of all Encumbrances other than Encumbrances arising under securities Laws, and the Buyer shall purchase the Shares from the Sellers in exchange for the Consideration.

Section 2.2 Closing .

(a) The sale and purchase of the Shares shall take place at a closing (the “ Closing ”) to be held at the offices of Advokatfirmaet Thommessen AS, Haakon VIIs gate 10, 0116 Oslo, Norway, at 2:00 p.m. (CET) on the date hereof or at such other place or at such other time or on such other date as the Sellers’ Representative and the Buyer mutually may agree in writing. The date on which the Closing takes place is referred to as the “ Closing Date .”

(b) At or prior to the Closing:

(i) Parent shall issue 702,943 new shares of Parent Common Stock to the Sellers, in such numbers as set forth in Column 8 of Exhibit A (the “ Consideration Shares ”) and warrants to purchase 150,000 new shares of Parent Common Stock to the Sellers on the terms set forth in the form of Common Stock Purchase Warrant attached hereto as Exhibit G , in such numbers as set forth in Column 9 of Exhibit A (the “ Warrants ”);

(ii) the Buyer shall pay the Cash Purchase Price (NOK 103,729,864) less (i) the Indemnity Escrow Amount (NOK 2,750,000), (ii) the Transaction Expenses (NOK 6,055,000), (iii) the cost of the R&W Insurance Policy (NOK 2,413,950) and (iv) the cost of the Escrow Account (NOK 21,175), being an aggregate payment of NOK 92,489,739, to a client account of Advokatfirmaet BA-HR DA with irrevocable instructions to release the amount to the order of the Sellers’ Representative upon transfer of the Shares to the Buyer in accordance with Section 2.3 and the Settlement Account Joint Instructions, by wire transfer of immediately available funds, which amount shall be allocated amongst the Sellers as set forth in Column 6 of Exhibit A ;

(iii) the Buyer shall pay or cause to be paid to the recipients thereof, in the amounts set forth in the Agreed Closing Statement, the Transaction Expenses, all of which are unpaid; provided , however , that the payment to Kirkland & Ellis LLP shall be made without such Norway value added import tax, which shall be payable by the Company;

(iv) the parties shall deliver the documents set forth in Section 2.3 .

Section 2.3 Closing Deliverables .

(a) Buyer Closing Deliverables . At or prior to the Closing Date, the Buyer shall deliver or cause to be delivered:

(i) to each Seller, a stock certificate or evidence, in form and substance reasonably satisfactory to the Sellers, of the issuance of the Consideration Shares in book-entry form free and clear of Encumbrances other than Encumbrances arising under securities Laws;

(ii) to each Seller, evidence, in form and substance reasonably satisfactory to the Sellers, of the issuance of the Warrants;

(iii) to the Sellers’ Representative, receipt of confirmation that Nasdaq has no objection to the listing of the Consideration Shares and the Warrants; and

(iv) to the Sellers’ Representative, a duly executed counterpart signature page of the Buyer to the Settlement Account Joint Instructions.

(b) Sellers Closing Deliverables . At or prior to the Closing Date, the Sellers shall deliver or cause to be delivered to the Buyer:

(i) an updated shareholders register of the Company, evidencing the transfer of the Shares to the Buyer free and clear of Encumbrances other than Encumbrances arising under securities Laws, duly executed and completed in favor of the Buyer;

(ii) evidence that the board of directors of the Company has passed an unconditional resolution to approve the transfer of the Shares to the Buyer;

(iii) duly executed counterpart signature pages of the Sellers set forth in Section 2.3(b)(iv) of the Disclosure Schedule to restrictive covenant agreements, substantially in the form attached hereto as Exhibit C (the “ Restrictive Covenant Agreements ”);

(iv) a certificate that the Company is not, and has not been, a United States real property holding corporation, within the meaning of Section 897 of the Code, during the applicable period specified in Section 897(c)(1)(a)(ii) of the Code, which certificate complies with the requirements of Section 1445 of the Code;

(v) evidence that the Sellers shall have acquired the Shares of the Minority Shareholders pursuant to the Option on or prior to the Closing Date;

(vi) written resignations of the members of the boards of directors of the Company, which resignations shall include a confirmation from such directors that they do not have any claims against the Company;

(vii) duly executed counterpart signature pages of the Sellers’ Representative and the Escrow Agent to the Escrow Agreement;

(viii) a duly executed counterpart signature page of the Sellers to the Settlement Account Joint Instructions; and

(ix) a duly executed signature page from each of the Minority Shareholders to the Minority Shareholder Release.

Section 2.4 Determination of Cash Purchase Price; Allocation of Consideration .

(a) Prior to the date hereof, the Sellers’ Representative delivered to the Buyer a written statement (the “ Preliminary Closing Statement ”) that included (a) a balance sheet of the Company, (b) a good-faith estimate of (i) Cash, (ii) Net Working Capital, (iii) Indebtedness and (iv) all Transaction Expenses that are accrued or due and remain unpaid (with each of Cash, Net Working Capital, Indebtedness and Transaction Expenses estimated as of the Closing Date and, except for Transaction Expenses, without giving effect to the transactions contemplated hereby) and (c) on the basis of the foregoing, an estimate of the Cash Purchase Price.

(b) Following the delivery of the Preliminary Closing Statement and prior to the Closing, the Buyer and the Sellers’ Representative have, in cooperation with the Company’s management, reviewed the Preliminary Closing Statement and agreed upon a final written statement, which is attached hereto as Exhibit D (the “ Agreed Closing Statement ”) that includes and sets forth an agreed estimate of (i) Cash, (ii) Net Working Capital, (iii) Indebtedness and (iv) Transaction Expenses (in each case, estimated as of the Closing Date and, except for Transaction Expenses, without giving effect to the transactions contemplated hereby), and on the basis thereof a calculation of the Cash Purchase Price. Parent, the Buyer and the Sellers acknowledge and agree that the Agreed Closing Statement contains estimates of Cash, Net Working Capital, Indebtedness and Transaction Expenses as of the Closing Date, and that the actual amounts of Cash, Net Working Capital, Indebtedness and Transaction Expenses as of such date and as of the Closing Date may (and likely will) differ from the estimates contained in the Agreed Closing Statement. Notwithstanding anything to the contrary in this Agreement, the parties hereto agree that the Cash Purchase Price shall be the fixed amount set forth in the Agreed Closing Statement and shall not be subject to any adjustment following the Closing Date based on differences between the actual amounts of Cash, Net Working Capital, Indebtedness and Transaction Expenses as of the Closing Date and the estimates thereof in the Agreed Closing Statement, and no party hereto nor any of its Related Parties shall have any liability for any inaccuracies in the Agreed Closing Statement; provided , however , that nothing herein shall be deemed to limit the liability of any Person for such Person’s own fraud with respect to the estimates included in the Agreed Closing Statement.

(c) The Sellers’ Representative prepared and delivered to the Buyer Exhibit A hereto setting forth the final allocation of the Consideration among the Sellers. The proceeds paid to the Sellers’ Representative in respect of the transactions contemplated hereby shall be allocated by the Sellers’ Representative among the Sellers as set forth in Exhibit A . None of Parent, the Buyer, any of their respective Affiliates or Representatives shall have any obligation or responsibility to any Seller with respect to the portion of the Consideration to be received by such Seller; provided , that Parent and the Buyer cause the aggregate Consideration to be delivered to or as directed by the Sellers’ Representative in accordance with this Agreement.

Section 2.5 Indemnity Escrow Fund . No later than ten (10) Business Days following the date hereof (or, if later, on the date the Escrow Account is available to be funded), the Buyer and Sellers’ Representative shall enter into the Escrow Agreement, and the Buyer shall deposit or cause to be deposited the Indemnity Escrow Amount (plus the USD $2,500 fee due to the Escrow Agent) in an account with the Escrow Agent by wire transfer in immediately available funds to secure the Sellers’ obligations hereunder, of which (x) NOK 1,750,000 (less amounts

paid to satisfy indemnification claims pursuant to Section 6.2(a)-(d) and the aggregate amount of pending claims pursuant to Section 6.2(a)-(d) ) shall be released twelve (12) months after the date hereof and (y) NOK 1,000,000 (less amounts paid to satisfy indemnification claims pursuant to Section 6.2(e) and the aggregate amount of pending claims pursuant to Section 6.2(e) ) shall be released on December 31, 2021, with any such released funds to be distributed to the Sellers, to which each Seller’s entitlement is as set forth in Column 5 of Exhibit A .

ARTICLE III
REPRESENTATIONS AND WARRANTIES
OF THE SELLERS

Each of the Sellers hereby, severally and not jointly, represents and warrants to Parent and the Buyer as follows (it being understood and agreed that any representation relating to the Sellers is being made by each Seller solely as to itself and not with respect to any other Sellers):

Section 3.1 Title to Shares . Each Seller (i) is the sole legal, record and beneficial owner of the Shares owned by it before giving effect to the exercise of the Option (pursuant to which delivery of the Shares subject to the Option from the Minority Shareholders to the Sellers shall take place at a moment in time immediately preceding the delivery of the Shares by the Sellers to the Buyer) as set forth in Column 1 of Exhibit A , (ii) is, after giving effect to the exercise of the Option (pursuant to which delivery of the Shares subject to the Option from the Minority Shareholders to the Sellers shall take place at a moment in time immediately preceding the delivery of the Shares by the Sellers to the Buyer), the sole legal, record and beneficial owner of the Shares owned by it as set forth in Column 3 of Exhibit A and (iii) has good and valid title to such Shares free and clear of all Encumbrances other than Encumbrances arising under securities Laws. Such Seller is not a party to any agreement, written or oral, creating rights in respect of any of the Shares for any third Persons or relating to the voting or beneficial ownership of the Shares. Upon delivery to the Buyer of the documents referred to in Section 2.2 at the Closing, the Buyer’s payment of the Consideration, and the exercise of the Option (pursuant to which delivery of the Shares subject to the Option from the Minority Shareholders to the Sellers shall take place at a moment in time immediately preceding the delivery of the Shares by the Sellers to the Buyer), (x) each Seller will have acquired sole legal, record and beneficial ownership to the Shares set forth in Column 2 of Exhibit A , (y) each Seller will simultaneously have sold such Shares as are set forth in Column 3 of Exhibit A and (z) the Buyer will have acquired good, valid and marketable title to the Shares, free and clear of any Encumbrances other than Encumbrances arising under securities Laws.

Section 3.2 Authority . Each Seller and the Company has full power and authority to execute and deliver this Agreement and each of the Ancillary Agreements to which it will be a party, to perform its obligations hereunder and thereunder and to consummate the transactions contemplated hereby and thereby. The execution, delivery and performance by such Seller and the Company of this Agreement and each of the Ancillary Agreements to which it will be a party and the consummation by such Seller and the Company of the transactions contemplated hereby and thereby have been duly and validly authorized by all necessary action. This Agreement has been, and upon their execution each of the Ancillary Agreements to which such Seller and/or the Company will be a party will have been, duly executed and delivered by such Seller and/or the Company and, assuming due execution and delivery by each of the other parties hereto and

thereto, this Agreement constitutes, and upon their execution each of the Ancillary Agreements to which such Seller and/or the Company will be a party will constitute, the legal, valid and binding obligations of such Seller and the Company, enforceable against such Seller and the Company in accordance with their respective terms, except as enforcement may be limited by applicable bankruptcy, insolvency, reorganization, moratorium or similar laws affecting creditors’ rights generally and by general principles of equity (regardless of whether considered in a proceeding in equity or at law) (collectively, the “ Enforceability Exceptions ”).

Section 3.3 No Conflict; Required Filings and Consents .

(a) Except as set forth on Section 3.3(a) of the Disclosure Schedule, the execution, delivery and performance by each Seller and the Company of this Agreement and each of the Ancillary Agreements to which such Seller and/or the Company will be a party, and the consummation of the transactions contemplated hereby and thereby, do not and will not (i) conflict with or violate the organizational documents of such Seller, if applicable, or the Company, (ii) conflict with or violate any Law applicable to such Seller or the Company, or (iii) result in any breach of, constitute a default (or an event that, with notice or lapse of time or both, would become a default) under, require any consent of or notice to any Person pursuant to, give to others any right of termination, amendment, modification, acceleration or cancellation of, allow the imposition of any fees or penalties, require the offering or making of any payment or redemption, give rise to any increased, guaranteed, accelerated or additional rights or entitlements of any Person or otherwise adversely affect any rights of such Seller or the Company under, or result in the creation of any Encumbrance (other than Permitted Encumbrances) on any property, asset or right of the Company pursuant to, any note, bond, mortgage, indenture, agreement, lease, license, Permit, franchise, instrument, obligation or other Contract to which such Seller or the Company is a party or by which such Seller or the Company or any of their respective properties, assets or rights are bound or affected, except, in case of this clause (iii) for any such conflicts, violations, breaches, defaults or other occurrences that are not, individually or in the aggregate, material to the Company.

(b) Neither any Seller nor the Company is required to file, seek or obtain any notice, authorization, approval, order, permit or consent of or with any Governmental Authority in connection with the execution, delivery and performance by such Seller or the Company of this Agreement and each of the Ancillary Agreements to which it will be party or the consummation of the transactions contemplated hereby or thereby.

Section 3.4 Organization and Qualification .

(a) The Company is (i) a private limited company ( aksjeselskap ), duly organized and validly existing under the laws of Norway and has full corporate power and authority to own, lease and operate its properties and to carry on its business as it is now being conducted, and (ii) duly qualified or licensed as a foreign corporation to do business, in each jurisdiction where the character of the properties and assets occupied, owned, leased or operated by it or the nature of its business makes such qualification or licensing necessary, except for any such failures to be so qualified or licensed that, individually or in the aggregate, would not be material to the Company.

(b) The Sellers have heretofore furnished to the Buyer a complete and correct copy of the certificate of registration and articles of association, each as amended to date, of the Company. Such certificates of registration and articles of association are in full force and effect. The Company is not in violation of any of the provisions of its certificate of registration or articles of association. The shareholders’ register of the Company that has been made available for inspection by the Buyer prior to the date hereof is true and complete.

Section 3.5 Capitalization .

(a) The share capital of the Company is NOK 1,186,050, consisting of 23,721 Shares, each with a nominal value of NOK 50. The share capital of the Company immediately prior to the exercise of the Option was held beneficially and of record by the Sellers as set forth in Column 1 of Exhibit A and, subject to exercise of the Option, will be held beneficially and of record by the Sellers as set forth in Column 3 of Exhibit A .

(b) Except for the Shares, the Company has not issued or agreed to issue any (a) shares or other equity or ownership interest, (b) option, warrant or interest convertible into or exchangeable or exercisable for the purchase of shares or other equity or ownership interests, (c) share appreciation right, phantom share, interest in the ownership or earnings of the Company or other equity equivalent or equity-based award or right or (d) bond, debenture or other Indebtedness having the right to vote or convertible or exchangeable for securities having the right to vote. Each share or other equity or ownership interest of the Company is duly authorized, validly issued, fully paid and nonassessable. All of the aforesaid shares or other equity or ownership interests have been issued and delivered by the Company in compliance with all applicable Laws. There are no outstanding obligations of the Company to issue, sell or transfer or repurchase, redeem or otherwise acquire, or that relate to the holding, voting or disposition of or that restrict the transfer of, the issued or unissued shares or other equity or ownership interests of the Company. No shares or other equity or ownership interests of the Company have been issued in violation of any rights, agreements, arrangements or commitments under any provision of applicable Law, the certificate of registration or articles of association or equivalent organizational documents of the Company or any Contract to which the Company is a party or by which the Company is bound.

Section 3.6 Equity Interests . Other than as set forth in Section 3.6 of the Disclosure Schedule, the Company does not directly or indirectly own any equity, partnership, membership or similar interest in, or any interest convertible into, exercisable for the purchase of or exchangeable for any such equity, partnership, membership or similar interest, or is under any current or prospective obligation to form or participate in, provide funds to, make any loan, capital contribution or other investment in or assume any liability or obligation of, any Person.

Section 3.7 Financial Statements; No Undisclosed Liabilities .

(a) True and complete copies of the audited balance sheet of the Company as at December 31, 2015 and December 31, 2014, and the related audited statements of income, cash flow, retained earnings, shareholders’ equity and changes in financial position of the

Company, together with all related notes and schedules thereto, accompanied by the reports thereon of the Company’s independent auditor (collectively referred to as the “ Financial Statements ”) and the unaudited balance sheet of the Company as at May 31, 2016, and the related statements of income, retained earnings, shareholders’ equity and changes in financial position of the Company, together with all related notes and schedules thereto (collectively referred to as the “ Interim Financial Statements ”), are attached hereto as Section 3.7(a) of the Disclosure Schedule. Each of the Financial Statements and the Interim Financial Statements (i) are correct and complete in all material respects and have been prepared in accordance with the books and records of the Company, (ii) have been prepared in accordance with the Accounting Principles applied on a consistent basis throughout the periods indicated (except as may be indicated in the notes thereto, and further except for the Interim Financial Statements) and (iii) fairly present, in all material respects, the financial position, results of operations and cash flows of the Company as at the respective dates thereof and for the respective periods indicated therein, except as otherwise noted therein and subject, in the case of the Interim Financial Statements, to normal and recurring year-end adjustments that will not, individually or in the aggregate, be material.

(b) Except as and to the extent adequately accrued or reserved against in the audited balance sheet of the Company as at December 31, 2015 (such balance sheet, together with all related notes and schedules thereto, the “ Balance Sheet ”), the Company has no liability or obligation of any nature, whether accrued, absolute, contingent or otherwise, whether known or unknown and whether or not required by the Accounting Principles to be reflected in a balance sheet of the Company or disclosed in the notes thereto, except for liabilities and obligations (i) set forth in the Interim Financial Statements, (ii) incurred in the ordinary course of business consistent with past practice since the date of the Balance Sheet that are not, individually or in the aggregate, material to the Company or (iii) which individually do not exceed NOK 20,000 and, in the aggregate, do not exceed NOK 250,000.

Section 3.8 Absence of Certain Changes or Events . Since the date of the Balance Sheet and except as set forth in Section 3.8 of the Disclosure Schedule: (a) the Company has conducted its business only in the ordinary course consistent with past practice; (b) there has not been any change, event or development that, individually or in the aggregate, has had or is reasonably likely to have a Material Adverse Effect, and (c) the Company has not suffered any material loss, damage, destruction or other casualty affecting any of its material properties or assets, whether or not covered by insurance.

Section 3.9 Compliance with Law; Permits .

(a) Except as set forth on Section 3.9(a) of the Disclosure Schedules, the Company is and has been for the past five years in compliance in all material respects with all Laws applicable to it. None of the Company or any of its executive officers has received during the past five years, nor is there to the knowledge of the Sellers any basis for, any notice, order, complaint or other communication from any Governmental Authority or any other Person that the Company is not in compliance in any material respect with any Law applicable to it.

(b) The Company is in possession of all permits, licenses, franchises, approvals, certificates, consents, waivers, concessions, exemptions, orders, registrations, notices

or other authorizations of any Governmental Authority necessary for the Company to own, lease and operate its properties and to carry on its business in all material respects as currently conducted (the “ Permits ”). The Company is and has been in compliance in all material respects with all such Permits. No suspension, cancellation, modification, revocation or nonrenewal of any Permit is pending or, to the knowledge of the Company, threatened. No Permit is held in the name of any employee, officer, director, Seller or agent on behalf of the Company.

Section 3.10 Litigation . Except as set forth in Section 3.10 of the Disclosure Schedule, there is no Action pending or, to the knowledge of the Sellers, threatened against the Company, or any material property or asset of the Company, or any of the officers of the Company in regards to their actions as such, nor is there any basis for any such Action. There is no Action pending or, to the knowledge of the Sellers, threatened seeking to prevent, hinder, modify, delay or challenge the transactions contemplated by this Agreement or the Ancillary Agreements. There is no outstanding order, writ, judgment, injunction, decree, determination or award of any Governmental Authority relating to the Company, any of its properties or assets, any of its officers or directors or the transactions contemplated by this Agreement or the Ancillary Agreements. There is no Action by the Company pending, or which the Company has commenced preparations to initiate, against any other Person.

Section 3.11 Employee Benefit Plans .

(a) Section 3.11(a) of the Disclosure Schedule sets forth a true and complete list of (i) all employee benefit plans and all bonus, share option, share purchase, restricted share, incentive, deferred compensation, retiree medical or life insurance, supplemental retirement, severance or other benefit plans, programs or arrangements, and all employment, termination, severance or other contracts or agreements to which the Company is a party, with respect to which the Company has or could have any obligation or which are maintained, contributed to or sponsored by the Company for the benefit of any current or former employee, officer or director of the Company, and (ii) any Contracts between the Company and any employee, officer or director of the Company, including any Contracts relating in any way to a sale of the Company (collectively, the “ Plans ”).

(b) Each Plan referred to in Section 3.11(a) is in writing. The Sellers have caused the Company to furnish to the Buyer a true and complete copy of each such Plan and have delivered to the Buyer a true and complete copy of each material document, if any, prepared in connection with each such Plan, including (i) a copy of each trust or other funding arrangement, (ii) each summary plan description and summary of material modifications and (iii) the most recently prepared actuarial report and financial statement in connection with each such Plan. The Company has no express or implied commitment (A) to create, incur liability with respect to or cause to exist any other employee benefit plan, program or arrangement, (B) to enter into any Contract to provide compensation or benefits to any individual or (C) to modify, change or terminate any Plan, other than with respect to a modification, change or termination required by applicable Law.

(c) None of the Plans referred to in Section 3.11(a) (i) provides for the payment of separation, severance, termination or similar-type benefits to any person, (ii) obligates the Company to pay separation, severance, termination or similar-type benefits

solely or partially as a result of the transactions contemplated by this Agreement or the Ancillary Agreements or (iii) obligates the Company to make any payment or provide any benefit as a result of the transactions contemplated by this Agreement or the Ancillary Agreements. None of such Plans provides for or promises retiree medical, disability or life insurance benefits to any current or former employee, officer or director of the Company.

(d) Each Plan is now and for the past five years has been operated in all material respects in accordance with its terms and the requirements of all applicable Laws. The Company has performed in all material respects all obligations required to be performed by it and is not in any material respect in default under or in violation of any Plan, and to the knowledge of the Company, no other party is in default or violation of any Plan. No Action is pending or, to the knowledge of the Company, threatened with respect to any Plan, other than claims for benefits in the ordinary course, and no fact or event exists that would give rise to any such Action.

(e) There are no Actions or claims (other than routine claims for benefits) pending or, to the knowledge of the Company, threatened, anticipated or expected to be asserted with respect to any Plan or any related trust or other funding medium thereunder or with respect to the Company as the sponsor or fiduciary thereof or with respect to any other fiduciary thereof.

(f) No Plan or any related trust or other funding medium thereunder or any fiduciary thereof is, to the knowledge of the Company, the subject of an audit, investigation or examination by any Governmental Authority.

Section 3.12 Labor and Employment Matters .

(a) The Company is not a party to any labor or collective bargaining Contract that pertains to employees of the Company. There are no, and during the past five years have been no, organizing activities or collective bargaining arrangements involving employees of the Company pending or under discussion with any labor organization or similar group of employees. There is no, and during the past five years there has been no, labor dispute, strike, slowdown, work stoppage or lockout pending or, to the knowledge of the Company, threatened against or affecting the Company. The Company has not breached or otherwise failed to comply with the provisions of any collective bargaining or union Contract. There are no pending or, to the knowledge of the Company, threatened union grievances or union representation questions involving employees of the Company.

(b) Except as set forth on Section 3.12(b) of the Disclosure Schedules, the Company is and during the past five years has been in compliance in all material respects with all applicable Laws respecting employment, including discrimination or harassment in employment, terms and conditions of employment, termination of employment, wages, overtime classification, hours, occupational safety and health, employee whistle-blowing, immigration, employee privacy, employment practices and classification of employees, consultants and independent contractors. The Company is not engaged in any unfair labor practice as defined in any applicable Law. No unfair labor practice or labor charge or complaint of which the Company has received notice is pending or, to the knowledge of the Company, threatened with respect to the Company by any Governmental Authority.

(c) The Company has withheld and paid to the appropriate Governmental Authority or are holding for payment not yet due to such Governmental Authority all amounts required to be withheld from employees of the Company and are not liable for any arrears of wages, taxes, penalties or other sums for failure to comply with any applicable Laws relating to the employment of labor.

(d) The Company is not a party to, or otherwise bound by, any consent decree with, or citation by, any Governmental Authority relating to employees or employment practices. None of the Company or any of its executive officers has received within the past five years any written notice of intent by any Governmental Authority responsible for the enforcement of labor or employment Laws to conduct an investigation relating to the Company and, to the knowledge of the Company, no such investigation is in progress.

Section 3.13 Title to and Condition of Assets .

(a) Except as set forth on Section 3.13(a) of the Disclosure Schedules, the Company has good and valid title to or a valid leasehold interest in or other valid right to use all of its material assets, including all of the assets reflected on the Balance Sheet or acquired in the ordinary course of business since the date thereof, except those sold or otherwise disposed of for fair value in the ordinary course of business consistent with past practice. None of the assets owned or leased by the Company is subject to any Encumbrance, other than (i) liens for Taxes not yet past due or that are being contested in good faith and for which adequate reserves have been established in accordance with the Accounting Principles, (ii) mechanics’, workmen’s, repairmen’s, warehousemen’s and carriers’ liens arising in the ordinary course of business of the Company consistent with past practice, (iii) zoning, building codes and other land use Laws regulating the use or occupancy of real property or the activities conducted thereon, (iv) purchase money liens and liens securing rental payments under lease arrangements, (v) any such matters of record, Encumbrances and other imperfections of title that do not, individually or in the aggregate, impair in any material respect the continued ownership, use, operation or value of the assets to which they relate in the business of the Company as currently conducted and (vi) liens or encumbrances set forth in Section 3.13(a) of the Disclosure Schedule (collectively, “ Permitted Encumbrances ”).

(b) All tangible assets owned or leased by the Company have been maintained in all material respects in accordance with generally accepted industry practice, are in all material respects in good operating condition and repair, ordinary wear and tear excepted, and are adequate in all material respects for the uses to which they are being put.

Section 3.14 Real Property .

(a) Section 3.14(a) of the Disclosure Schedule sets forth a true and complete list of all Leased Real Property. The Company has good and marketable leasehold title to all Leased Real Property free and clear of all Encumbrances except Permitted Encumbrances. No parcel of Leased Real Property is subject to any governmental decree or order of which the Company has received written notice to be sold or is being condemned, expropriated, re-zoned or otherwise taken by any public authority with or without payment of compensation therefore, nor, to the knowledge of the Company, has any such condemnation, expropriation or taking been

proposed. All leases of Leased Real Property and all amendments and modifications thereto are in full force and effect, and there exists no default under any such lease by the Company or, to the knowledge of the Company, any other party thereto, nor any event which, with notice or lapse of time or both, would constitute a default thereunder by the Company or, to the knowledge of the Company, any other party thereto. All leases of Leased Real Property shall remain valid and binding in accordance with their terms following the Closing.

(b) There are no contractual or legal restrictions that preclude or materially restrict the ability to use any Leased Real Property by the Company for the current use of such Leased Real Property. There are no material latent defects or material adverse physical conditions affecting the Leased Real Property. All plants, warehouses, distribution centers, structures and other buildings on the Leased Real Property are adequately maintained in all material respects and are in good operating condition and repair, ordinary wear and tear excepted, and are adequate in all material respects for the requirements of the business of the Company as currently conducted.

Section 3.15 Intellectual Property .

(a) Section 3.15(a) of the Disclosure Schedule sets forth a true and complete list of all registered and material unregistered Marks and Designs including any pending applications to register any of the foregoing, owned (in whole or in part) by or exclusively licensed to the Company, identifying for each whether it is owned by or exclusively licensed to the Company.

(b) Except as set forth on Section 3.15(b) of the Disclosure Schedules, no registered Mark identified in Section 3.15(a) of the Disclosure Schedule has during the past five years been or is now involved in any opposition or cancellation proceeding and, to the knowledge of the Company, no such proceeding is or has been during the past five years threatened with respect to any of such Marks. No Design identified in Section 3.15(a) of the Disclosure Schedule has during the past five years been or is now involved in any interference, reissue or reexamination proceeding and, to the knowledge of the Company, no such proceeding is or has during the past five years been threatened with respect thereto any of such Designs.

(c) The Company exclusively owns, free and clear of any and all Encumbrances other than Permitted Encumbrances, all Intellectual Property identified in Section 3.15(a) of the Disclosure Schedule and all other material Intellectual Property used in the Company’s business other than Intellectual Property that is licensed to the Company by a third-party licensor pursuant to a written license agreement that remains in effect. The Company has not received any written notice or claim challenging the Company’s ownership of any of the Intellectual Property owned (in whole or in part) by the Company, nor to the knowledge of the Company is there a reasonable basis for any claim that the Company does not so own any of such Intellectual Property.

(d) The Company has taken all reasonable steps in accordance with standard industry practices to protect its rights in its Intellectual Property and at all times has maintained the confidentiality of all information that constitutes or constituted a Trade Secret of the Company. All current and former employees, consultants and contractors of the Company have executed and delivered proprietary information, confidentiality and assignment agreements substantially in the Company’s standard forms.

(e) All registered Marks and Designs identified in Section 3.15(a) of the Disclosure Schedule (“ Company Registered IP ”) are valid and subsisting and the Company has not, during the past five years, received any written notice or claim challenging the validity or enforceability of any Company Registered IP or alleging any misuse of such Company Registered IP. The Company has not taken any action or failed to take any action that would reasonably be expected to result in the abandonment, cancellation, forfeiture, relinquishment, invalidation or unenforceability of any of the Company Registered IP (including the failure to pay any filing, examination, issuance, post registration and maintenance fees, annuities and the like and the failure to disclose any known material prior art in connection with the prosecution of patent applications).

(f) Except as set forth on Section 3.15(f) of the Disclosure Schedules, the development, manufacture, sale, distribution or other commercial exploitation of products, and the provision of any services, by or on behalf of the Company, and all of the other activities or operations of the Company during the past five years have not infringed upon, misappropriated, violated, diluted or constituted the unauthorized use of, any Intellectual Property of any third party, and the Company nor has not received any written notice or claim during the past five years asserting or suggesting that any such infringement, misappropriation, violation, dilution or unauthorized use is or may be occurring or has or may have occurred, nor to the knowledge of the Company, is there a reasonable basis therefor. No Intellectual Property owned by or licensed to the Company is subject to any outstanding order, judgment, decree, stipulation or agreement restricting the use or licensing thereof by the Company. To the knowledge of the Company, no third party is misappropriating, infringing, diluting or violating any Intellectual Property owned by or exclusively licensed to the Company. The Company has not transferred ownership of, or granted any exclusive license with respect to, any material Intellectual Property.

Section 3.16 Taxes . Except as set forth on Section 3.16 of the Disclosure Schedules, the Company has filed, on a timely basis, all Tax Returns which are required to be filed by it. All Taxes due and owing by the Company, whether or not shown or required to be shown on any Tax Return, have been timely and fully paid or properly accrued. All Tax Returns that the Company has filed are true, complete and accurate in all material respects. All Taxes which the Company is obligated to withhold from amounts owing to any employee, creditor or other Person have been fully and timely paid or properly accrued, and the Company has complied with all reporting and recordkeeping requirements relating to such Taxes. The Company has complied with all applicable Laws pertaining to Taxes. No deficiency or proposed adjustment for any amount of Tax has been asserted or assessed by any taxing authority against the Company, other than any such deficiency or proposed adjustment which has been fully paid or otherwise completely resolved. The Company has not consented to extend the time in which any Tax may be assessed or collected by any taxing authority, which extension is still in effect. There are no ongoing or pending Tax audits or other Tax proceedings by any taxing authority

against the Company. The Company is not a party to or bound by, or has any obligation under any Tax allocation, sharing, indemnity or similar agreement or arrangement. No claim has been made during the past five years by an authority in a jurisdiction where the Company does not file Tax Returns that the Company is or may be subject to taxation by or required to file Tax Returns in that jurisdiction. There are no Encumbrances with respect to Taxes upon any asset of the Company other than statutory liens for current Taxes not yet due and payable or Taxes that are being contested in good faith and for which appropriate reserves have been established in accordance with the Accounting Principles. The Company has never made any election with any United States tax authority with respect to the classification of the Company as a corporation or partnership (or other tax classification) for United States federal income tax purposes.

Section 3.17 Environmental Matters .

(a) The Company is and has been for the past five years in compliance in all material respects with all applicable Environmental Laws. None of the Company or any of its executive officers has received during the past five years any notice, request for information, communication or complaint from a Governmental Authority or other Person alleging that the Company has any liability under any Environmental Law or is not in compliance with any Environmental Law.

(b) No Hazardous Substances are or have been present, and there is and has been no release or threatened release of Hazardous Substances nor any Remediation or corrective action of any kind relating thereto, on, in, at or under any properties (including any buildings, structures, improvements, soils or subsurface strata, surface water bodies or drainage ways, and ground waters thereof) (i) owned, leased or operated by or for the Company or any predecessor company at the time of such contamination, release or Remediation, (ii) to which the Company has sent any Hazardous Substances or (iii) with respect to which the Company may be liable. No underground improvement, including any treatment or storage tank or water, gas or oil well, is or has been located on any property owned, leased or operated by or for the Company or any predecessor company, or for which the Company is or may be liable.

(c) There is no pending investigation of which the Company has received written notice or, to the knowledge of the Company, threatened investigation by any Governmental Authority, nor any pending or, to the knowledge of the Company, threatened Action with respect to the Company relating to Hazardous Substances or otherwise under any Environmental Law.

(d) The Company holds all material Permits required under Environmental Law and is and has for the past five years been in compliance in all material respects with the terms thereof. The Company has provided to the Buyer all environmental audits and environmental reports in its possession, or to which it has reasonable access, addressing each parcel of real property owned, operated or leased by the Company during the past five years or at which, to the knowledge of the Company, the Company may have liability under any Environmental Law.

Section 3.18 Material Contracts .

(a) Except as set forth in Section 3.18(a) of the Disclosure Schedule, the Company is not a party to or is bound by any Contract of the following nature (such Contracts as are required to be set forth in Section 3.18(a) of the Disclosure Schedule being “ Material Contracts ”):

(i) any broker, distributor, dealer, manufacturer’s representative, franchise, agency, continuing sales or purchase, sales promotion, market research, marketing, consulting or advertising Contract other than purchase orders issued in the ordinary course of business consistent with past practice;

(ii) any Contract relating to or evidencing indebtedness for borrowed money;

(iii) any Contract pursuant to which the Company has made any loan, capital contribution or other investment in, or assumed any liability or obligation of, any Person, including take-or-pay contracts or keep-well agreements;

(iv) any Contract with any Governmental Authority;

(v) any Contract with any Related Party of the Company;

(vi) any employment or consulting Contract;

(vii) any Contract that limits, or purports to limit, the ability of the Company to compete in any line of business or with any Person or in any geographic area or during any period of time, or that restricts the right of the Company to sell to or purchase from any Person or to hire any Person, or that grants the other party or any third person “most favored nation” status or any type of special discount rights;

(viii) any Contract pursuant to which the Company is the lessee or lessor of, or holds, uses, or makes available for use to any Person (other than the Company), any real property or any tangible personal property and involving, in the case of tangible personal property, annual payments by or to the Company in excess of NOK 25,000;

(ix) any Contract for the license of Intellectual Property by the Company from a third party (other than “off-the-shelf” licenses) or for the license of Intellectual Property owned by the Company to any third party (other than implied licenses resulting from sales of products by the Company in the ordinary course of business);

(x) any joint venture or partnership, merger, asset or share purchase or divestiture Contract relating to the Company; and

(xi) any other Contract, whether or not made in the ordinary course of business that (A) involves a future or potential liability or receivable, as the case may be, in excess of NOK 100,000 on an annual basis or in excess of NOK 250,000 over the current Contract term, (B) has a term greater than one year and cannot be cancelled by the Company

without penalty or further payment and without more than 30 days’ notice or (C) is material to the business, operations, assets, financial condition, results of operations or prospects of the Company.

(b) Each Material Contract is a legal, valid, binding and enforceable agreement (subject to the Enforceability Exceptions) and is in full force and effect and will continue to be in full force and effect on identical terms immediately following the Closing Date. None of the Company or, to the knowledge of the Company, any other party is in breach or violation of, or (with or without notice or lapse of time or both) default under, any Material Contract, nor has the Company received any written claim of any such breach, violation or default that has not been resolved. The Sellers have caused the Company to deliver or make available to the Buyer true and complete copies of all Material Contracts, including any amendments thereto.

Section 3.19 Affiliate Interests and Transactions .

(a) Except as set forth in Section 3.19(a) of the Disclosure Schedule, no Related Party of the Company (i) owns or has owned, directly or indirectly, any equity or other financial or voting interest in any competitor, supplier, licensor, lessor, distributor, independent contractor or customer of the Company or its business, (ii) owns or has owned, directly or indirectly, or has or has had any interest in any property (real or personal, tangible or intangible) that the Company uses or has used in or pertaining to the business of the Company, or (iii) has or has had any business dealings or a financial interest in any transaction with the Company or involving any assets or property of the Company, other than (x) business dealings or transactions conducted in the ordinary course of business at prevailing market prices and on prevailing market terms, (y) employment relationships with any Related Parties who are also employees of the Company or (z) former business dealings, transactions or ownership interests with respect to which the Company does not have any continuing liabilities or obligations.

(b) Except as set forth in Section 3.19(b) of the Disclosure Schedule, there are no Contracts by and between the Company and any Related Party of the Company pursuant to which such Related Party provides or receives any information, assets, properties, support or other services to or from the Company (including Contracts relating to billing, financial, tax, accounting, data processing, human resources, administration, legal services, information technology and other corporate overhead matters).

(c) Except as set forth in Section 3.19(c) of the Disclosure Schedule, there are no outstanding notes payable to, accounts receivable from or advances by the Company to, and the Company is not otherwise a debtor or creditor of, or has any liability or other obligation of any nature to, any Related Party of the Company, other than liabilities or obligations arising out of or related to the employment of any Related Parties who are also employees of the Company. Since January 1, 2015, the Company has not incurred any obligation or liability to, or entered into or agreed to enter into any transaction with or for the benefit of, any Related Party of the Company, other than the transactions contemplated by this Agreement and the Ancillary Agreements.

(d) Since December 31, 2015, the Company has not resolved or made any distribution on the Shares.

Section 3.20 Insurance . Section 3.20 of the Disclosure Schedule sets forth a true and complete list of all casualty, directors and officers liability, general liability, product liability and all other types of insurance policies maintained with respect to the Company, together with the carriers and liability limits for each such policy. All such policies are in full force and effect and no application therefor included a material misstatement or omission. All premiums with respect thereto have been paid to the extent due. The Company has not received written notice of, nor to the knowledge of the Company is there threatened, any cancellation, termination, reduction of coverage or material premium increases with respect to any such policy. No claim currently is pending under any such policy involving an amount in excess of NOK 50,000.

Section 3.21 Privacy and Security .

(a) The Company complies (and requires and monitors the compliance of applicable third parties) in all material respects with all applicable Laws, reputable industry practice, standards, self-governing rules and policies and its own published, posted and internal agreements and policies (which are in conformance with reputable industry practice) (“ Privacy Laws ”) with respect to (i) personally identifiable information (including name, address, telephone number, electronic mail address, social security number, bank account number or credit card number), sensitive personal information and any special categories of personal information regulated thereunder or covered thereby (“ Personal Information ”) (including such Personal Information of visitors who use the Company’s websites, suppliers, clients and distributors), whether any of same is accessed or used by the Company or any of its business partners, (ii) non-personally identifiable information (including such Personal Information of visitors who use the Company’s websites, suppliers, clients and distributors), whether any of same is accessed or used by the Company or any of its business partners, (iii) spyware and adware, (iv) the procurement or placement of advertising from or with reputable Persons and websites, (v) the use of internet searches associated with or using particular words or terms, (vi) the sending of solicited or unsolicited electronic mail messages and (vii) privacy generally. The Company posts all policies with respect to the matters set forth in this Section 3.21(a) on its websites in conformance with Privacy Laws.

(b) (i) To the knowledge of the Company, the advertisers and other Persons with which the Company has contractual relationships have not materially breached any agreements or any Privacy Laws pertaining to Personal Information and to non-personally identifiable information (including Privacy Laws regarding spyware and adware), (ii) the Company does not serve advertisements into advertising inventory created by downloadable software that launches without a user’s express activation and (iii) the Company has not received (and does not have knowledge of) a material volume of consumer complaints relative to software downloads that resulted in the installation of any of the Company’s tracking technologies.

(c) Except as set forth on Section 3.21(c) of the Disclosure Schedules, the Company takes reasonable steps to protect the operation, confidentiality, integrity and security of its software, systems and websites and all information and transactions stored or contained therein or transmitted thereby against any unauthorized or improper use, access, transmittal,

interruption, modification or corruption, and there have been no breaches of same. Without limiting the generality of the foregoing, the Company (i) uses adequate-strength encryption technology of at least 128-bit and (ii) has implemented a comprehensive security plan that (A) identifies internal and external risks to the security of the Company’s confidential information and Personal Information and (B) implements, monitors and improves adequate and effective safeguards to control those risks.

Section 3.22 Customers and Suppliers .

(a) Section 3.22(a) of the Disclosure Schedule sets forth a true and complete list of (i) the top 10 customers of the Company during the 12 months ended December 31, 2015 and during the 5 months ended May 31, 2016, (ii) the amount for which each such customer was invoiced during such period, and (iii) the percentage of the total sales of the Company represented by sales to each such customer during such period. Except as set forth in Section 3.22(a) of the Disclosure Schedule, since January 1, 2015, the Company has not received any written notice nor have the Sellers otherwise acquired knowledge that any of such customer (A) has ceased or substantially reduced, or will cease or substantially reduce, use of the products of the Company (other than decreases reflected in the Financial Statements or the Interim Financial Statements) or (B) has sought, or is seeking, to reduce the price it will pay for the products of the Company (other than ordinary course of business pricing negotiations). None of such customers has otherwise threatened to take any action described in the preceding sentence as a result of the consummation of the transactions contemplated by this Agreement.

(b) Section 3.22(b) of the Disclosure Schedule sets forth a true and complete list of (i) the top 2 suppliers of the Company during the 12 months ended December 31, 2015 and during the 5 months ended May 31, 2016 and (ii) the amount for which each such supplier invoiced the Company during such period. Since January 1, 2015, the Company has not received any written notice nor has the Company otherwise acquired knowledge that there has been any material adverse change in the price of such supplies or services provided by any such supplier (other than price increases reflected in the Financial Statements or the Interim Financial Statements), or than any such supplier will not sell supplies or services to the Company at any time after the Closing Date on terms and conditions substantially the same as those used in its current sales to the Company, subject to general and customary price increases. No such supplier has otherwise threatened to take any action described in the preceding sentence as a result of the consummation of the transactions contemplated by this Agreement.

Section 3.23 Brokers . No broker, finder or investment banker is entitled to any brokerage, finder’s or other fee or commission in connection with the transactions contemplated hereby based upon arrangements made by or on behalf of the Sellers, the Sellers’ Representative, the Company or any of their respective Affiliates.

Section 3.24 Data Room Documents Referenced in Disclosure Schedules Correct Copies of Originals . The documents referred to in the Disclosure Schedules as contained in the data room made available by the Company to the Buyer, a machine-readable copy of which has been delivered by the Company to the Buyer along with a .pdf form copy of the index of the contents of the data room, are true copies of the originals.

Section 3.25 Securities Matters .

(a) Each Seller is financially able to hold the Consideration Shares received by such Seller for long-term investment and to suffer a complete loss of such Seller’s investment in that portion of the Consideration Shares received by such Seller hereunder. The Consideration Shares received by each such Seller hereunder are being obtained by each such respective Seller for his, her or its own account for investment purposes, and not with a view to any distribution thereof in violation of any applicable securities Laws. Each Seller has had the opportunity to ask questions of Parent and its officers and employees and to receive to such Seller’s satisfaction such information about the business and financial condition of Parent as such Seller considers necessary or appropriate for deciding whether to acquire the Consideration Shares, and such Seller is fully capable of understanding and evaluating the risks associated with the ownership of the Consideration Shares received by such Seller hereunder.

(b) Each Seller receiving any Consideration Shares hereunder has conducted his, her or its own diligence investigation with respect to the merits and risks associated with his, her or its investment in the Consideration Shares to be received by such Seller hereunder. Notwithstanding that representatives of Parent may have provided information to such Seller, such Seller is not relying on, and has not relied on, any representation by Parent or any Affiliate or Representative of Parent with respect to any aspect of the business or prospects of Parent or its Subsidiaries, other than the representations and warranties of Parent hereunder.

(c) Each Seller understands and acknowledges that the Consideration Shares received by such Seller hereunder are “restricted securities” under the United States federal securities Laws inasmuch as they are being acquired from Parent in a transaction not involving a public offering and that, under such Laws and applicable regulations, such securities may be resold without registration under the applicable United States securities Laws only in certain limited circumstances.

ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF PARENT AND
THE BUYER

Parent and the Buyer hereby, jointly and severally, represent and warrant to the Sellers as follows:

Section 4.1 Organization and Qualification . Parent is a corporation duly organized, validly existing and in good standing under the laws of Delaware. The Buyer is a limited liability company duly organized, validly existing and in good standing under the laws of Delaware. Each of Parent and the Buyer has full corporate power and authority to own, lease and operate its properties and to carry on its business as it is now being conducted and is duly qualified or licensed to do business, in each jurisdiction where the character of properties and assets occupied, owned or operated by it or the nature of its business makes such qualification nor licensing necessary, except for any failures to be so qualified or licensed that are not, individually or in the aggregate, material to Parent and its Subsidiaries taken as whole. The copies of Parent’s certificate of incorporation and bylaws, each as amended, that are incorporated

by reference into the Parent SEC Documents are complete and correct copies thereof as in effect on the date hereof.

Section 4.2 Authority . Each of Parent and the Buyer has full corporate or limited liability company power and authority to execute and deliver this Agreement and each of the Ancillary Agreements to which it will be a party, to perform its obligations hereunder and thereunder and to consummate the transactions contemplated hereby and thereby. The execution, delivery and performance by each of Parent and the Buyer of this Agreement and each of the Ancillary Agreements to which it will be a party and the consummation by each of Parent and the Buyer of the transactions contemplated hereby and thereby have been duly and validly authorized by all necessary corporate or limited liability company action, as applicable. This Agreement has been, and upon their execution each of the Ancillary Agreements to which each of Parent and the Buyer will be a party will have been, duly executed and delivered by Parent and, assuming due execution and delivery by each of the other parties hereto and thereto, this Agreement constitutes, and upon their execution each of the Ancillary Agreements to which each of Parent and the Buyer will be a party will constitute, the legal, valid and binding obligations of Parent or the Buyer, as applicable, enforceable against it in accordance with their respective terms, except as enforcement may be limited by applicable bankruptcy, insolvency, reorganization, moratorium or similar laws affecting creditors’ rights generally and by general principles of equity (regardless of whether considered in a proceeding in equity or at law).

Section 4.3 No Conflict; Required Filings and Consents .

(a) The execution, delivery and performance by each of Parent and the Buyer of this Agreement and each of the Ancillary Agreements to which it will be a party, and the consummation of the transactions contemplated hereby and thereby, do not and will not (i) conflict with or violate the certificate of incorporation or bylaws or other organization documents of Parent or the Buyer, (ii) conflict with or violate any Law applicable to Parent or the Buyer, or (iii) result in any breach of, constitute a default (or an event that, with notice or lapse of time or both, would become a default) under or require any consent of any Person pursuant to, any note, bond, mortgage, indenture, agreement, lease, license, permit, franchise, instrument, obligation or other Contract to which Parent or the Buyer is a party, except, in case of the foregoing clause (iii), for any such conflicts, violations, breaches, defaults or other occurrences that are not, individually or in the aggregate, material to Parent or Buyer and that do not, individually or in the aggregate, materially impair the ability of Parent or the Buyer to consummate, or prevent or materially delay, any of the transactions contemplated by this Agreement.

(b) Neither Parent nor the Buyer is required to file, seek or obtain any notice, authorization, approval, order, permit or consent of or with any Governmental Authority in connection with the execution, delivery and performance by Parent or the Buyer of this Agreement and each of the Ancillary Agreements to which it will be party or the consummation of the transactions contemplated hereby or thereby.

Section 4.4 Parent SEC Documents (a) . Parent has filed with and furnished to the SEC all Parent SEC Documents required to be filed by it since July 1, 2015 (collectively, the “ Parent Reports ”). As of the respective effective dates (in the case of Parent Reports that are registration statements filed pursuant to the requirements of applicable securities Laws) and as of their

respective SEC filing dates (in the case of all other Parent Reports), and, if amended, as of the date of the last such amendment, the Parent Reports complied as to form in all material respects with the requirements of the securities Laws applicable to such Parent Reports, and none of the Parent Reports as of such respective dates and, if amended, as of the date of the last such amendment, contained any untrue statement of a material fact or omitted to state a 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, except for any such non-compliance with the securities Laws, untrue statement of a material fact or omission of a statement of a material fact that would not have or reasonably be expected to have a Material Adverse Effect on Parent.

Section 4.5 Financing . Parent and the Buyer have sufficient funds to permit the Buyer to consummate the transactions contemplated by this Agreement and the Ancillary Agreements to which it will be a party.

Section 4.6 Parent Issuance of Consideration Shares and Warrants .

(a) The authorized capital stock of Parent consists of 100,000,000 shares of Parent Common Stock, and 5,000,000 shares of preferred stock, par value $0.10 per share, designated as “Series A Convertible Preferred Stock” (“ Parent Preferred Stock ”). Immediately preceding the Closing, (i) 12,379,716 shares of Parent Common Stock were issued and outstanding, (ii) 3,560 shares of Parent Common Stock were held in a segregated brokerage account and treated by the Company as treasury stock and (iii) 50,000 shares of Parent Preferred Stock were issued and outstanding.

(b) Except as set forth in Section 4.6(a) , as disclosed in the Parent SEC Documents or in connection with the grant of equity awards to employees, directors or other service providers of Parent, as of the date of this Agreement, neither Parent nor its Subsidiaries has issued or agreed to issue any (i) shares or other equity or ownership interest, (ii) option, warrant (other than (x) any warrants issued by Parent in connection with financing the transactions contemplated by this Agreement and (y) any Warrants issued pursuant to this Agreement) or interest convertible into or exchangeable or exercisable for the purchase of shares or other equity or ownership interests, (iii) share appreciation right, phantom share, interest in the ownership or earnings of the Company or other equity equivalent or equity based award or right or (iii) bond, debenture or other Indebtedness having the right to vote or convertible or exchangeable for securities having the right to vote.

(c) The Consideration Shares being delivered by Parent to the Sellers hereunder are and shall be duly authorized and validly issued, fully paid, nonassessable and owned of record and beneficially by such Sellers free of all Encumbrances, other than under applicable securities Laws and as created by such recipient Seller. The Warrants being delivered by Parent to the Sellers hereunder are duly authorized and validly issued and upon issuance to the Sellers shall be owned of record and beneficially by such Sellers free of all Encumbrances, other than under applicable securities Laws and as created by such recipient Seller, and all shares of Parent Common Stock that will be issued upon exercise of the Warrants shall be duly authorized and validly issued, fully paid, nonassessable and owned of record and beneficially by such Sellers free of all Encumbrances, other than under applicable securities Laws and as created

by such recipient Seller. Assuming the accuracy of the representations and warranties as set forth in Section 3.25 , the Consideration Shares and the Warrants will be issued in compliance with all applicable securities Laws and other applicable Laws and without contravention of any other Person’s rights therein or with respect thereto. Subject to restrictions provided under applicable Law and as created by such recipient Seller, each Seller will receive good and marketable title to that portion of the Consideration Shares and the Warrants to be received by such Seller hereunder.

Section 4.7 Brokers . No broker, finder or investment banker is entitled to any brokerage, finder’s or other fee or commission in connection with the transactions contemplated hereby based upon arrangements made by or on behalf of Parent, the Buyer or their Affiliates.

Section 4.8 Investment Intent . The Buyer is acquiring the Shares for its own account for investment purposes only and not with a view to any public distribution thereof or with any intention of selling, distributing or otherwise disposing of the Shares in a manner that would violate the registration requirements of applicable securities Laws. The Buyer understands and acknowledges that the Shares received by the Buyer hereunder have not been registered under the applicable securities Laws and that, under such Laws and applicable regulations, the Shares may be resold without registration under the applicable United States securities Laws only in certain limited circumstances.

Section 4.9 No Other Representations or Warranties . In entering this Agreement, Parent and the Buyer have relied upon the representations and warranties of the Sellers expressly set forth in this Agreement, and Parent and the Buyer acknowledge that, other than as set forth in this Agreement, neither the Company, nor any of its respective directors, officers, employees, Affiliates, equityholders, agents or representatives is making or has made, nor are Parent and the Buyer relying on, any representation or warranty, either express or implied, (x) as to the accuracy or completeness of any of the information provided or made available to Parent, the Buyer or any of their agents, representatives, lenders, or Affiliates prior to or in connection with the execution of this Agreement or (y) with respect to any projections, forecasts, estimates, plans or budgets of future revenues, expenses or expenditures, future results of operations (or any component thereof), future cash flow (or any component thereof) or future financial condition (or any component thereof) of the Company heretofore or hereafter delivered to or made available to Parent, the Buyer or any of their agents, representatives, lenders or Affiliates; provided , that nothing herein shall limit any claim against any Seller for fraud by such Seller.

ARTICLE V
COVENANTS

Section 5.1 Public Announcements . No press release or public announcement related to this Agreement, the Ancillary Agreements or the transactions contemplated hereby or thereby shall be issued or made by any party hereto or its Representatives without the prior written approval of Parent and the Sellers’ Representative; provided , however , that each party hereto may make any press release, announcement or publication which, in the reasonable opinion of counsel, is required by applicable Law or listing requirement, in which case each of Parent and the Sellers’ Representative shall use commercially reasonable efforts to the extent practicable to afford the Sellers’ Representative or Parent, as applicable, a reasonable opportunity to review

and comment on such press release, announcement or communication prior to its issuance, distribution or publication.

Section 5.2 Further Assurances . From time to time after the Closing, and for no further consideration, each of the parties shall, and shall cause their respective Affiliates to, execute, acknowledge and deliver such assignments, transfers, consents, assumptions and other documents and instruments and take such other actions as may be necessary or desirable to consummate and make effective the transactions contemplated by this Agreement and the Ancillary Agreements.

Section 5.3 Confidentiality . From and after the date hereof for a period of five years, the Sellers’ Representative and each Seller shall and shall cause their respective Affiliates and representatives to keep confidential all non-public information regarding Parent, the Buyer, the Company, and their respective Affiliates and the terms of this Agreement, except to the extent required by applicable Law or for financial reporting purposes and except that the Sellers may disclose such information to their respective shareholders, general and limited partners, accountants, advisors and other representatives as necessary in connection with the ordinary conduct of their respective businesses (so long as such Persons agree to or are bound by contract or duty to keep such information confidential).

Section 5.4 Documents and Information . After the Closing Date, Parent and the Buyer shall, and shall cause the Company to, until the seventh anniversary of the Closing Date or otherwise in accordance with Parent’s document retention policies, retain all books, records and other documents pertaining to the business of the Company in existence on the Closing Date and make the same available for inspection and copying by each Seller (at such Seller’s expense) during normal business hours, upon reasonable request and upon reasonable notice.

Section 5.5 Listing . Parent shall (a) prepare and file as soon as reasonably practicable with NASDAQ a listing of additional shares form covering all of the Consideration Shares and Warrants and (b) use commercially reasonable efforts to obtain the listing of the Consideration Shares and Warrants on NASDAQ. As promptly as practicable following any exercise of the Warrants, Parent shall prepare and file with NASDAQ any requisite listing of additional shares form covering all of the shares of Parent Common Stock issued upon the exercise of such Warrants and use commercially reasonable efforts to obtain the listing of such shares of Parent Common Stock on NASDAQ.

Section 5.6 Registration Rights . If, at any time following the date of this Agreement, Parent proposes or is required to register any of its equity securities under the Securities Act of 1933, as amended on a registration statement on Form S-1 or Form S-3 (other than pursuant to registrations on such form or similar form(s) solely for registration of securities in connection with an employee benefit plan or dividend reinvestment plan) or an equivalent general registration form then in effect, whether or not for its own account, Parent shall give prompt written notice of its intention to do so to the Sellers. Upon the written request of the Sellers, made within 15 days following the receipt of any such written notice (which request shall specify the maximum amount of Parent Common Stock intended to be disposed of by the Sellers and the intended method of distribution thereof), Parent shall use commercially reasonable efforts to cause all such Parent Common Stock (including, for the avoidance of doubt, any Parent Common

Stock issued upon exercise of the Warrants) to be included in the registration statement with the securities that Parent at the time proposes to register to permit the sale or other disposition by the Sellers in accordance with the intended method of distribution thereof of the Parent Common Stock to be so registered. Parent shall have the right to withdraw any proposed registration at any time and for any reason. The Sellers shall reimburse Parent for any portion of any underwriting or other fees attributable to the registration of its Parent Common Stock and shall indemnify Parent for any costs, expenses, or liabilities associated with any registration under this Section 5.6 of such Parent Common Stock. The registration rights provided pursuant to this Section 5.6 shall be assignable to any Minority Shareholder who acquires Consideration Shares and/or Warrants directly from one or more Sellers. Each of the TCP Parties agrees that it will take such actions as are reasonably necessary to give effect to the registration rights of the Sellers provided in this Section 5.6 , including by agreeing to cutbacks with respect to its registration rights pursuant to that certain Registration Rights Agreement, dated as of January 28, 2016, by and among Parent, the TCP Parties and the other shareholders of Parent party thereto as necessary to allow Sellers to participate in any registered offering in which any of the TCP Parties are selling shares in proportion (as nearly as practicable) to the number of shares sought to be registered by Sellers relative to the TCP Parties.

Section 5.7 Release of Pre-Closing Directors and Officers . Parent and the Buyer acknowledge that the shareholders’ meeting of the Company has adopted a resolution to release of claims for the benefit of each individual who served as a director or officer of the Company prior to Closing in the form attached to the Disclosure Schedule.

ARTICLE VI
INDEMNIFICATION

Section 6.1 Survival . The representations and warranties of the Sellers, Parent and the Buyer contained in this Agreement shall survive the Closing until the 12 month anniversary of the Closing Date; provided , however , that (i) the representations and warranties set forth in Section 3.1 relating to title to Shares, Section 3.2 and Section 4.2 relating to authority, Section 3.4 and Section 4.1 relating to organization and existence, Section 3.5 relating to capitalization and Section 3.23 and Section 4.6 relating to broker’s fees and finder’s fees (the Sections named in this Section 7.1 are collectively referred to herein as the “ Fundamental Representations ”) shall survive (subject to the limitations set forth in Section 6.4 ) until the sixth anniversary of Closing, (ii) the representations and warranties set forth in Section 3.16 relating to Taxes and claims for indemnification with respect to Seller Taxes pursuant to Section 6.2(c) shall survive (subject to the limitations set forth in Section 6.4 ) until the close of business on the 60th day following the expiration of the applicable statute of limitations (giving effect to any waiver, mitigation or extension thereof) and (iii) claims for indemnification pursuant to Section 6.2(e) shall survive until December 31, 2021; provided , that nothing herein shall limit any claim for fraud against a party hereto. The respective covenants and agreements of the Sellers, Parent and the Buyer contained in this Agreement and any Ancillary Agreement shall survive the Closing until fully performed in accordance with the terms thereof. No party shall be entitled to indemnification under this Agreement with respect to any matter unless a Claim Notice is validly delivered in accordance with Section 6.3 prior to expiration of the applicable survival period set forth in this Section 6.1 . The parties hereto agree that the time periods set forth in this Section 6.1 are, to the

extent provided herein, in lieu of the statute of limitations otherwise applicable to claims under this Agreement pursuant to applicable Law.

Section 6.2 Indemnification by the Sellers . From and after the Closing Date, each of the Sellers shall, subject to the limitations set forth in Section 6.4 , severally and not jointly, save, defend, indemnify and hold harmless the Buyer and its Affiliates (including the Company) and the respective Representatives, successors and assigns of each of the foregoing from and against, and shall compensate and reimburse each of the foregoing for, any and all losses, damages, liabilities, deficiencies, claims, interest, awards, judgments, penalties, costs and expenses (including reasonable and documented attorneys’ fees, costs and other out-of-pocket expenses incurred in investigating, preparing or defending the foregoing) (hereinafter collectively, “ Losses ”), incurred, sustained or suffered by any of the foregoing as a result of, arising out of or relating to:

(a) any breach of any representation or warranty made by the Sellers contained in this Agreement;

(b) any breach of any covenant or agreement by the Sellers contained in this Agreement;

(d) any claim or amounts due to any Person in connection with the Closing pursuant to any written or oral agreement with the Company, any Law or otherwise based upon any allocation of payments made by the Sellers’ Representative to the Sellers of the amounts to be paid under this Agreement, including pursuant to Section 2.2 or out of the Indemnity Escrow Fund; and

(e) any amounts payable by the Company pursuant to that certain agreement between the Company and Anders Sverdrup Dahl, dated as of July 15, 2016, net of any Tax benefit to the Company resulting from such payment, up to a maximum aggregate amount of NOK 1,000,000.

Section 6.3 Procedures .

(a) A party seeking indemnification (the “ Indemnified Party ”) in respect of, arising out of or involving a Loss or a claim or demand made by any person against the Indemnified Party (a “ Third Party Claim ”) shall deliver notice (a “ Claim Notice ”) in respect thereof to the party against whom indemnity is sought (the “ Indemnifying Party ”) with reasonable promptness after receipt by such Indemnified Party of notice of the Third Party Claim, and shall provide the Indemnifying Party with such information with respect thereto as the Indemnifying Party may reasonably request. The failure to deliver a Claim Notice, however, shall not release the Indemnifying Party from any of its obligations under this Article VI except to the extent that the Indemnifying Party is materially prejudiced by such failure.

(b) The Indemnifying Party shall have the right, upon written notice to the Indemnified Party within 15 days of receipt of a Claim Notice from the Indemnified Party in respect of such Third Party Claim, to assume the defense thereof at the expense of the

Indemnifying Party (which expenses shall not be applied against any indemnity limitation herein) with counsel selected by the Indemnifying Party and reasonably satisfactory to the Indemnified Party. The Indemnifying Party shall be liable for the fees and expenses of counsel employed by the Indemnified Party for any period during which the Indemnifying Party has failed to assume the defense thereof. If the Indemnifying Party does not expressly elect to assume the defense of and to settle such Third Party Claim, the Indemnified Party shall have the sole right to assume the defense of such Third Party Claim. If the Indemnifying Party assumes the defense of such Third Party Claim, the Indemnified Party shall have the right to employ separate counsel and to participate in the defense thereof, but the fees and expenses of such counsel shall be at the expense of the Indemnified Party unless (i) the employment of such counsel shall have been specifically authorized by the Indemnifying Party or (ii) the named parties to the Third Party Claim (including any impleaded parties) include both the Indemnified Party and the Indemnifying Party, and the Indemnified Party reasonably determines that representation by counsel to the Indemnifying Party of both the Indemnifying Party and such Indemnified Party may present such counsel with a conflict of interest.

(c) If the Indemnifying Party assumes the defense of any Third Party Claim, the Indemnified Party shall, at the Indemnifying Party’s expense, cooperate with the Indemnifying Party in such defense and make available to the Indemnifying Party all witnesses, pertinent records, materials and information in the Indemnified Party’s possession or under the Indemnified Party’s control relating thereto as is reasonably required by the Indemnifying Party. If the Indemnifying Party assumes the defense of any Third Party Claim, the Indemnifying Party shall not, without the prior written consent of the Indemnified Party, enter into any settlement or compromise or consent to the entry of any judgment with respect to such Third Party Claim if such settlement, compromise or judgment (i) involves a finding or admission of wrongdoing, (ii) does not include an unconditional written release by the claimant or plaintiff of the Indemnified Party from all liability in respect of such Third Party Claim or (iii) imposes equitable remedies or any obligation on the Indemnified Party other than solely the payment of money damages for which the Indemnified Party will be fully indemnified hereunder.

(d) If the Indemnifying Party does not assume the defense of any Third Party Claim, the Indemnifying Party shall, at the Indemnifying Party’s expense, be entitled to participate with the Indemnified Party in the defense the Third Party Claim, and the Indemnified Party shall use commercially reasonable efforts make available to the Indemnifying Party all witnesses, pertinent records, materials and information in the Indemnified Party’s possession or under the Indemnified Party’s control relating thereto as is reasonably requested by the Indemnifying Party. If the Indemnifying Party does not assume the defense of any Third Party Claim, the Indemnified Party shall not, without the prior written consent of the Indemnifying Party (such consent not to be unreasonably withheld, conditioned or delayed), enter into any settlement or compromise or consent to the entry of any judgment with respect to such Third Party Claim.

(e) An Indemnified Party seeking indemnification in respect of, arising out of or involving a Loss or a claim or demand hereunder that does not involve a Third Party Claim being asserted against or sought to be collected from such Indemnified Party (a “ Direct Claim ”) shall deliver a Claim Notice in respect thereof to the Indemnifying Party with reasonable promptness after becoming aware of facts supporting such Direct Claim, and shall provide the

Indemnifying Party with such information with respect thereto as the Indemnifying Party may reasonably request. The failure to deliver a Claim Notice, however, shall not release the Indemnifying Party from any of its obligations under this Article VI except to the extent that the Indemnifying Party is materially prejudiced by such failure.

(f) An indemnifying Party shall have a period of 45 Business Days from the date such Indemnifying Party received written notice of a Direct Claim to dispute the Direct Claim or seek to remedy the basis for the Direct Claim. If a Direct Claim is subject to indemnification pursuant to the terms of this Agreement and the Indemnifying Party is unable to remedy the Direct Claim to the reasonable satisfaction of the Indemnifying Party, the indemnification required hereunder, subject to the express limitations of this Article VI , shall be made by release of funds from the Indemnity Escrow Fund (to the extent of any amounts then held in the Indemnity Escrow Fund, if applicable, that are available for satisfaction of such Direct Claim) or the Indemnifying Party (to the extent of any amounts not then held in the Indemnity Escrow Fund, if applicable, that are available for satisfaction of such Direct Claim) of the amount of actual Losses in connection therewith, within five Business Days of the date when the remedy period set forth in this Section 6.3(f) has expired or, if later, the date on which a disputed Direct Claim is finally resolved.

Section 6.4 Limits on Indemnification .

(a) Notwithstanding anything to the contrary contained in this Agreement: (i) the Sellers shall not be liable (including, for the avoidance of doubt, through release to Buyer of all or any part of the Indemnity Escrow Amount) for any claim for indemnification pursuant to Section 6.2(a) unless and until the aggregate amount of indemnifiable Losses which may be recovered from the Sellers equals or exceeds USD $100,000, in which case the Sellers shall be liable only for the amount of Losses in excess thereof; provided , that this clause (i) shall not apply to Losses arising out of or relating to the inaccuracy or breach of Section 3.16 relating to Taxes, any Fundamental Representation or in the event of fraud by a Seller (which claim may be brought solely against the Seller who committed such fraud); (ii) the maximum aggregate amount of indemnifiable Losses which may be recovered from the Sellers (including, for the avoidance of doubt, through release to Buyer of all or any part of the Indemnity Escrow Amount) for Losses arising out of or relating to indemnification claims (x) under Section 6.2(a) or Section 6.2(c) shall be NOK 1,750,000 and (y) under Section 6.2(e) shall be NOK 1,000,000; provided , that this clause (ii) shall not limit any claim for fraud by a Seller (which claim may be brought solely against the Seller who committed such fraud); and (iii) any claim for indemnification pursuant to Section 6.2(b) shall be brought solely against the Seller or Sellers who breached the applicable covenant or agreement giving rise to such indemnification claim.

(b) The Sellers’ liability for an indemnifiable Loss shall be several and not joint. Each Seller shall only be liable for a fraction of the total Loss for which the Sellers are liable to compensate the Buyer under the terms of this Agreement where the numerator of such fraction shall be equal to the portion of the Consideration received by such Seller and the denominator shall be equal to the total Consideration. Notwithstanding the foregoing, in the event an indemnifiable Loss hereunder is the result of a breach of any representation that is made by or relates to an individual Seller (and not to all Sellers generally or to the Company), the recourse of the applicable Indemnified Party under this Agreement shall be limited to the then-

remaining portion of the Indemnity Escrow Fund that is distributable to such breaching Seller and, if applicable, recourse directly against such breaching Seller, and no other Sellers shall be subject to any liability (whether directly or against their respective portions of the Indemnity Escrow Fund) with respect to such Loss.

(c) The Sellers total liability under this Agreement in the aggregate shall in no event exceed an amount equal to the Consideration, and each individual Seller’s respective liability under this Agreement shall in no event exceed an amount equal to the portion of the Consideration received by such Seller.

(d) For the avoidance of doubt, the Sellers shall not be liable for any Loss if and to the extent that such Loss results solely from Parent being a publicly-listed company (such as, but not limited to, in relation to claims by the investors or shareholders of Parent).

(e) None of the parties hereto shall be liable for any special or punitive damages, except to the extent actually paid to a third party.

(f) The amount of any and all Losses under this Article VI shall be determined net of (i) any Tax benefit actually received by the applicable Indemnified Party in connection with the accrual, incurrence or payment of any such Losses (limited to any Tax benefit arising in the year of the Loss and determined after taking into account the Tax effect of receiving an indemnity payment for such Loss hereunder) and (ii) any insurance or other third party recoveries actually received by the Indemnified Party in connection with the facts giving rise to the right of indemnification.

(g) No Loss shall be deemed to have been suffered by reason of a breach of Section 3.16 (Taxes) for incremental taxes (excluding penalties and interest for late payment) caused by incremental profits made by the Company compared to those assumed in the Agreed Closing Statement.

(h) No party shall be entitled to any payment, adjustment or indemnification more than once with respect to the same matter.

Section 6.5 Remedies Not Affected by Investigation, Disclosure or Knowledge . The Buyer expressly reserves the right to seek indemnity or other remedy for any Losses arising out of or relating to any breach of any representation, warranty or covenant contained herein, notwithstanding any investigation by, disclosure to, knowledge or imputed knowledge of the Buyer or any of its Representatives in respect of any fact or circumstance that reveals the occurrence of any such breach, whether before or after the execution and delivery hereof.

Section 6.6 R&W Insurance Policy; Indemnity Escrow Fund . All claims against the Sellers pursuant to this Agreement shall first be paid and satisfied from the cash recovered by the Buyer under the R&W Insurance Policy and/or the Indemnity Escrow Fund, and only secondarily from the Sellers if permitted pursuant to Section 6.7 . The Buyer hereby agrees that it shall first seek a remedy from the R&W Insurance Policy and/or the Indemnity Escrow Fund, to the extent of the amount then held in the Indemnity Escrow Fund, with respect to any indemnification claim asserted hereunder before seeking to recover any Losses directly from the Sellers if permitted pursuant to Section 6.7 . In addition, it is the intention of the Buyer and the

Sellers that, except in the case of (x) fraud by a Seller (which will give rise to a claim solely against the Seller who committed such fraud) or (y) any breach of a post-Closing covenant or agreement contained in this Agreement by a Seller (which will give rise to a claim solely against such breaching Seller), the Indemnity Escrow Fund and the R&W Insurance Policy shall serve as the sole source of recovery in respect of the Buyer’s rights to indemnification.

Section 6.7 Exclusive Remedy . Except for (i) claims for specific performance under Section 7.11(e) to enforce post-Closing covenants of the Sellers and claims for any breach of a post-Closing covenant by a Seller (which may be brought only against such breaching Seller), (ii) claims for fraud by a Seller (which may be brought solely against the Seller who committed such fraud) and (iii) claims pursuant to the terms of any Ancillary Agreement, each of Parent and the Buyer agrees, for and on behalf of itself and its respective Affiliates, Representatives, direct and indirect equityholders and any other Persons claiming by or through any of the foregoing, that the sole recourse against Sellers and their Affiliates, Representatives and direct and indirect equityholders for any breach of this Agreement is the right to indemnification in accordance with (and subject to the limitations set forth in) this Article VI , and each of Parent and the Buyer hereby expressly waives, disclaims and releases all other rights, claims and remedies (whether arising in contract, tort, law or equity) against Sellers arising out of or related to any breach or alleged breach of this Agreement or any representation or warranty made or alleged to have been made in connection with the transactions contemplated by this Agreement, or as an inducement to enter into this Agreement.

ARTICLE VII
GENERAL PROVISIONS

Section 7.1 Amendment and Modification . This Agreement may not be amended, modified or supplemented in any manner, whether by course of conduct or otherwise, except by an instrument in writing specifically designated as an amendment hereto, signed by the Sellers’ Representative, on behalf of the Sellers, and the Buyer.

Section 7.2 Waiver . No failure or delay of either party in exercising any right or remedy hereunder shall operate as a waiver thereof, nor shall any single or partial exercise of any such right or power, or any abandonment or discontinuance of steps to enforce such right or power, or any course of conduct, preclude any other or further exercise thereof or the exercise of any other right or power. The rights and remedies of the parties hereunder are cumulative and are not exclusive of any rights or remedies which they would otherwise have hereunder. Any agreement on the part of either party to any such waiver shall be valid only if set forth in a written instrument executed and delivered by a duly authorized officer on behalf of such party.

Section 7.3 Sellers’ Representative .

(a) Each of the Sellers hereby appoints and constitutes the Sellers’ Representative as such person’s true and lawful attorney with full power and authority in each Seller’s name and on each Seller’s behalf to do, execute and perform any and all of the following acts, deeds and things:

(i) to negotiate, agree, sign, execute and deliver any amendments or supplements to and to grant any waivers and consents under this Agreement and any Ancillary Agreements;

(ii) to receive and submit all notices, instructions and other communications required or permitted to be given to or by such Person under this Agreement and any Ancillary Agreements, including without limitation all notices under Section 7.5;

(iii) to give any confirmations and certificates required or permitted to be given by the Sellers under this Agreement;

(iv) to defend, compromise or settle any claims made by Parent or the Buyer under this Agreement and any other claims made against the Sellers pursuant to this Agreement (including claims by an Indemnified Party pursuant to Section 6.2 );

(v) to engage legal counsel to represent such person in connection with any matter arising under this Agreement and any Ancillary Agreements; and

(vi) to take any other action required or permitted to be taken by any of the Sellers under this Agreement or any Ancillary Agreement.

(b) Each Seller shall be bound by all actions taken and documents executed by the Sellers’ Representative pursuant to this Section 7.3 , and the Buyer shall be entitled to conclusively rely on any action or decision of the Sellers’ Representative without further actions or consulting the Sellers.

(c) The Sellers’ Representative shall incur no liability towards the Sellers for any action taken by it, or any omission to take action, in good faith and in accordance with this Section 7.3 , and shall be indemnified by the Sellers from and against any losses incurred by it in the performance of its duties as such in the absence of gross negligence or willful misconduct on the part of the Sellers’ Representative.

(d) In the event the Sellers’ Representative is unable or unwilling to act as the Sellers’ Representative, then the Sellers shall jointly appoint another person to act as the Sellers’ Representative, and notify the Buyer in writing of such appointment. Any change of the Sellers’ Representative shall be effective from the time when the Buyer receives written notice of such change from the Sellers’ Representative or the Sellers (as the case may be).

Section 7.4 Costs and Expenses . Except for the Transaction Expenses, the parties shall cover their respective costs and expenses in connection with this Agreement and the completion of the transactions contemplated hereby, including professional fees and costs of legal and financial advisors, accountants and other advisers.

Section 7.5 Notices . All notices and other communications hereunder shall be in writing and shall be deemed duly given (i) on the date of delivery if delivered personally or by e-mail (with an electronic record of e-mail transmission), (ii) on the date that is one Business Day after the date of dispatch if delivered utilizing a next-day service by a recognized next-day courier or (iii) on the earlier of confirmed receipt or the date that is five Business Days after the

date of mailing if delivered by registered or certified mail, return receipt requested, postage prepaid. All notices hereunder shall be delivered to the addresses set forth below, or pursuant to such other instructions as may be designated in writing by the party to receive such notice:

(a) if to the Sellers’ Representative, to:

Øystein Alexander Eskeland
c/o Escobar Invest AS
Tennisveien 22, N-0777
Oslo, Norway
E-mail: alex@swims.com

and

Atle Søvik
c/o Verdane Capital AS
Hieronymus Heyerdahls gate 1, N-0160
Oslo, Norway
E-mail: atle.sovik@verdanecapital.com

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

Kirkland & Ellis LLP
601 Lexington Avenue
New York, New York 10022
Attention: Michael Weisser, P.C. and Sarah Stasny
E-mail: michael.weisser@kirkland.com

sarah.stasny@kirkland.com

(b) if to Parent or the Buyer, to:

Differential Brands Group Inc.
1231 South Gerhart Avenue
Commerce, California 90022
Attention: Andrew R. Tarshis
E-mail: atarshis@tengramcapital.com

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

Gibson, Dunn & Crutcher LLP
200 Park Avenue
New York, New York 10166-0193
Attention: Barbara L. Becker
E-mail: bbecker@gibsondunn.com

Section 7.6 Interpretation . When a reference is made in this Agreement to a Section, Article, Exhibit or Schedule such reference shall be to a Section, Article, Exhibit or Schedule of this Agreement unless otherwise indicated. The table of contents and headings contained in this Agreement or in any Exhibit or Schedule are for convenience of reference purposes only and shall not affect in any way the meaning or interpretation of this Agreement. All words used in this Agreement will be construed to be of such gender or number as the circumstances require. Any capitalized terms used in any Exhibit or Schedule but not otherwise defined therein shall have the meaning as defined in this Agreement. All Exhibits and Schedules annexed hereto or referred to herein are hereby incorporated in and made a part of this Agreement as if set forth herein. The word “including” and words of similar import when used in this Agreement will mean “including, without limitation,” unless otherwise specified. The words “hereof,” “herein” and “hereunder” and words of similar import when used in this Agreement shall refer to the Agreement as a whole and not to any particular provision in this Agreement. The term “or” is not exclusive. The word “will” shall be construed to have the same meaning and effect as the word “shall.” References to days mean calendar days unless otherwise specified.

Section 7.7 Entire Agreement . This Agreement (including the Exhibits and Disclosure Schedules hereto) and the Ancillary Agreements constitute the entire agreement, and supersede all prior written agreements, arrangements, communications and understandings and all prior and contemporaneous oral agreements, arrangements, communications and understandings between the parties with respect to the subject matter hereof and thereof. Notwithstanding any oral agreement or course of conduct of the parties or their Representatives to the contrary, no party to this Agreement shall be under any legal obligation to enter into or complete the transactions contemplated hereby unless and until this Agreement shall have been executed and delivered by each of the parties.

Section 7.8 No Third-Party Beneficiaries . Except as provided in Article VI , nothing in this Agreement, express or implied, is intended to or shall confer upon any Person other than the parties and their respective successors and permitted assigns any legal or equitable right, benefit or remedy of any nature under or by reason of this Agreement.

Section 7.9 Waiver of Claims; Release .

(a) Without limiting the applicability or scope of Article VI , Parent, the Buyer and the Sellers shall not make, and they shall procure that none of their respective successors or assigns, if any, or the Company make, any claim against any current or former director of the board of the Company or any other employees, advisors or other representatives of any of the Company relating to such Person’s actions or omissions before Closing.

(b) All claims or causes of action (whether in contract, tort, law or equity) that may be based upon, arise out of or relate to this Agreement, or the negotiation, execution or performance of this Agreement (including any representation or warranty made in or in connection with this Agreement or as an inducement to enter into this Agreement), may be made only against the Persons that are expressly identified as parties hereto. No Non-Party Affiliate shall have any liability (whether in contract, tort, law or equity, or based upon any theory that seeks to impose liability of a party hereto against its owners or Affiliates) for any obligations or liabilities arising under, in connection with or related to this Agreement or for any claim based

on, in respect of, or by reason of this Agreement or its negotiation or execution, and each party hereto for itself and for and on behalf of all its Non-Party Affiliates, waives and releases all such liabilities, claims and obligations against any such Non-Party Affiliates of the other parties hereto.

(c) As a material inducement to Parent and the Buyer to enter into this Agreement, effective as of the Closing, each Seller fully releases and discharges the Company and its current and former direct and indirect equityholders, directors, managers, officers, employees, assigns, successors and Affiliates of and funds associated with each of the foregoing, with respect to and from any and all Losses, claims, demands, rights, Encumbrances, contracts, covenants or proceedings in their capacity as a stockholder of the Company, of whatever kind or nature in law, equity or otherwise, whether now known or unknown, and whether or not concealed or hidden, all of which such Seller now owns or holds or has at any time owned or held against such Persons at any time, or related to any matter, prior to the Closing, and covenants not to sue with respect to any of the foregoing. It is the intention of each Seller that such release be effective as a bar to each and every claim, demand and cause of action hereinabove specified. In furtherance of this intention, each Seller hereby expressly waives, effective as of the Closing, any and all rights and benefits conferred upon it by the provisions of any Law and expressly consent that this release will be given full force and effect according to each and all of its express terms and provisions, including those related to unknown and unsuspected claims, demands and causes of action, if any, as those relating to any other claims, demands and causes of action hereinabove specified.

Section 7.10 Governing Law . This Agreement and all disputes or controversies arising out of or relating to this Agreement or the transactions contemplated hereby shall be governed by, and construed in accordance with, the internal laws of the State of New York, without regard to the laws of any other jurisdiction that might be applied because of the conflicts of laws principles of the State of New York (other than Section 5-1401 of the New York General Obligations Law).

Section 7.11 Jurisdiction; Specific Performance .

(a) Any controversy, claim or dispute between the parties arising from or in connection with this Agreement or any Ancillary Agreement, including but not limited to the existence, validity, intent, interpretation, performance, enforcement or arbitrability of any of the terms contained herein or therein shall be submitted for final resolution to arbitration under the Rules of Arbitration of the International Chamber of Commerce (“ ICC ” and “ ICC Rules ”) before an arbitration tribunal consisting of three arbitrators. The Buyer, on the one hand, and the Sellers’ Representative, on the other hand, shall each appoint one arbitrator pursuant to the ICC Rules, and the third arbitrator, who shall serve as chairman of the arbitration tribunal, shall be appointed by the two arbitrators so chosen within 30 days of confirmation of their appointment. The place of arbitration shall be in London, England, and all arbitration proceedings shall be conducted in the English language. The costs of arbitration shall be apportioned by the tribunal in the arbitration award.

(b) By agreeing to ICC arbitration, the parties do not intend to deprive any court of competent jurisdiction of its ability to issue any form of provisional remedy, including

but not limited to a preliminary injunction or attachment in aid of the arbitration, or order any interim or conservatory measure or from enforcing the terms of any legal or equitable arbitration award, including any award for specific performance. A request for such provisional remedy or interim or conservatory measure by a party to a court shall not be deemed a waiver of the agreement to ICC arbitration. A request for such provisional remedy or interim or conservatory measure by a party to an Emergency Arbitrator procedure pursuant to the Rules shall not be deemed a waiver of the agreement to allow a court of competent jurisdiction to issue provisional remedies or interim or conservatory measures.

(c) A party may request consolidation of two or more arbitrations pending under the ICC Rules into a single arbitration pursuant to Article 10 of the ICC Rules. The parties agree that two or more arbitration proceedings may be consolidated in accordance with this Section 7.11(c) and subject to Article 10 of the ICC Rules, even if the parties to such arbitration proceedings are not identical.

(d) In addition to any discovery permitted under the ICC Rules, each party shall produce relevant, non-privileged documents or copies thereof requested by another party within the time limits set by the arbitration tribunal. With respect to such document discovery, the arbitration tribunal shall be guided by the IBA Rules on the Taking of Evidence in International Commercial Arbitration.

(e) The parties agree that irreparable damage would occur in the event that any of the provisions of this Agreement were not performed in accordance with their specific terms or were otherwise breached. Accordingly, each of the parties shall be entitled to specific performance of the terms hereof, including an injunction or injunctions to prevent breaches of this Agreement and to enforce specifically the terms and provisions of this Agreement in any arbitral proceeding or other Action to enforce the terms of this Agreement.

Section 7.12 Assignment; Successors . Except as expressly provided in Section 5.6 with respect to the right of Sellers to assign the registration rights to the Minority Shareholders, neither this Agreement nor any of the rights, interests or obligations under this Agreement may be assigned or delegated, in whole or in part, by operation of law or otherwise, by any party without the prior written consent of the Buyer (in the case of any Seller or the Sellers’ Representative) or the Sellers’ Representative (in the case of Parent or the Buyer), and any such assignment without such prior written consent shall be null and void; provided , however , that Parent or the Buyer may assign its rights under this Agreement to any Affiliate of Parent without the prior consent of the Sellers’ Representative but no such assignment by Parent or the Buyer shall relieve Parent or the Buyer, as applicable, of its obligations hereunder. Subject to the preceding sentence, this Agreement will be binding upon, inure to the benefit of, and be enforceable by, the parties and their respective successors and assigns.

Section 7.13 Currency . All references to “dollars” or “$” or “US$” in this Agreement or any Ancillary Agreement refer to United States dollars. The conversion of any amounts expressed in Norwegian krone to United States dollars with respect to the calculation of the amount of Closing Net Working Capital, Closing Indebtedness and Closing Transaction Expenses pursuant to Section 2.4 , shall be calculated based on the exchange rate set forth in the

Agreed Closing Statement and for any other amounts shall be as reported by Bloomberg, L.P. as of the close of business in New York on the relevant date.

Section 7.14 Severability . Whenever possible, each provision or portion of any provision of this Agreement shall be interpreted in such manner as to be effective and valid under applicable Law, but if any provision or portion of any provision of this Agreement is held to be invalid, illegal or unenforceable in any respect under any applicable Law or rule in any jurisdiction, such invalidity, illegality or unenforceability shall not affect any other provision or portion of any provision in such jurisdiction, and this Agreement shall be reformed, construed and enforced in such jurisdiction as if such invalid, illegal or unenforceable provision or portion of any provision had never been contained herein. Upon such determination that any term or other provision of this Agreement is invalid, illegal or unenforceable under applicable Law, the parties hereto shall negotiate in good faith to modify this Agreement so as to effect the original intent of the parties as closely as possible in an acceptable manner in order that the transactions contemplated hereby are consummated as originally contemplated to the greatest extent possible.

Section 7.15 Waiver of Jury Trial . EACH OF THE PARTIES TO THIS AGREEMENT HEREBY IRREVOCABLY WAIVES ALL RIGHT TO A TRIAL BY JURY IN ANY ACTION, PROCEEDING OR COUNTERCLAIM ARISING OUT OF OR RELATING TO THIS AGREEMENT OR THE TRANSACTIONS CONTEMPLATED HEREBY.

Section 7.16 Counterparts . This Agreement may be executed in two or more counterparts, all of which shall be considered one and the same instrument and shall become effective when one or more counterparts have been signed by each of the parties and delivered to the other party.

Section 7.17 Facsimile or .pdf Signature . This Agreement may be executed by facsimile or .pdf signature and a facsimile or .pdf signature shall constitute an original for all purposes.

Section 7.18 Time of Essence . Time is of the essence with regard to all dates and time periods set forth or referred to in this Agreement.

Section 7.19 No Presumption Against Drafting Party . Each of the Buyer and the Sellers acknowledges that each party to this Agreement has been represented by counsel in connection with this Agreement and the transactions contemplated by this Agreement. Accordingly, any rule of law or any legal decision that would require interpretation of any claimed ambiguities in this Agreement against the drafting party has no application and is expressly waived.

Section 7.20 Legal Conflict Waiver; Ownership of Privileged Materials . Recognizing that Advokatfirmaet BA-HR DA and Kirkland & Ellis LLP (the “ Seller Counsel ”) have acted as legal counsel to the Sellers, certain of their Affiliates, and the Company and its Affiliates prior to the Closing, and that the Seller Counsel intend to act as legal counsel to the Sellers and certain of their Affiliates after the Closing, Parent and the Buyer hereby waive, on their own behalf, and agree to cause the Company, to waive, any conflicts that may arise in connection with the Seller Counsel representing the Sellers and/or their Affiliates after the Closing as such representation

may relate to Parent, Buyer, the Company or the transactions contemplated herein (including in respect of litigation or arbitration) and agree that they shall not seek to disqualify Seller Counsel from acting as legal counsel to the Sellers and/or their Affiliates following Closing in a dispute (including any litigation or arbitration) arising under this Agreement or the transactions contemplated herein. In addition, all communications involving attorney-client confidences between the Sellers, their Affiliates, the Company and Seller Counsel related exclusively to the negotiation, documentation and consummation of the transactions contemplated hereby shall be deemed to be attorney-client confidences that belong solely to the Sellers and their Affiliates (and not the Company). Accordingly, Parent and the Buyer agree that following the Closing neither they nor the Company shall have access to any such communications or to the files of Seller Counsel relating to their engagement with the Sellers, certain of their Affiliates and/or the Company, except that Parent, Buyer and the Company may assert legal privilege in connection with any dispute with a party other than the Sellers or the Sellers’ Representative. Without limiting the generality of the foregoing, upon and after the Closing, (i) the Sellers and their Affiliates (and not the Company) shall be the sole holders of the attorney-client privilege with respect to such engagement, and the Company shall not be a holder thereof, (ii) to the extent that files of Seller Counsel in respect of such engagement constitute property of the client, only the Sellers and their Affiliates (and not the Company) shall hold such property rights and (iii) Seller Counsel shall have no duty whatsoever to reveal or disclose any such attorney-client communications or files to the Company except that Parent, Buyer and the Company may assert legal privilege in connection with a dispute with a party other than the Sellers or the Sellers’ Representative.

[ The remainder of this page is intentionally left blank. ]

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

	DIFFERENTIAL BRANDS GROUP INC.


	By:	/s/ Michael Buckley
	Name:	Michael Buckley
	Title:	CEO

	DFBG SWIMS LLC


	By:	/s/ William Sweedler
	Name:	William Sweedler
	Title:	Manager

	SWIMS AS


	By:	/s/ Øystein Alexander Eskeland
	Name:	Øystein Alexander Eskeland
	Title:	CEO

[ Signature Page to Purchase Agreement ]

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

	ØYSTEIN ALEXANDER ESKELAND,
	as Sellers’ Representative

	/s/ Øystein Alexander Eskeland
	Name:	Øystein Alexander Eskeland


	ATLE SØVIK,
	as Sellers’ Representative

	/s/ Atle Søvik
	Name:	Atle Søvik


	ESCOBAR INVEST AS


	By:	/s/ Svein Simonaes, by special authorization
	Name:	Svein Simonaes
	Title:	Authorized Signatory


	VERDANE CAPITAL VI K/S


	By:	/s/ Svein Simonaes, by special authorization
	Name:	Svein Simonaes
	Title:	Authorized Signatory


	VERDANE CAPITAL VII K/S


	By:	/s/ Svein Simonaes, by special authorization
	Name:	Svein Simonaes
	Title:	Authorized Signatory

[ Signature Page to Purchase Agreement ]

	GANDALF INVEST AB


	By:	/s/ Peter Sjölander
	Name:	Peter Sjölander
	Title:	Chairman

	SYNECO AS


	By:	/s/ Svein Simonaes, by special authorization
	Name:	Svein Simonaes
	Title:	Authorized Signatory

	ALBATROSS INVESTMENT AS


	By:	/s/ Svein Simonaes, by special authorization
	Name:	Svein Simonaes
	Title:	Authorized Signatory

	OSKAR INVESTMENTS AS


	By:	/s/ Svein Simonaes, by special authorization
	Name:	Svein Simonaes
	Title:	Authorized Signatory

[ Signature Page to Purchase Agreement ]

IN WITNESS WHEREOF, solely for purposes of Section 5.6 , the undersigned parties have caused this Agreement to be executed as of the date first written above by their respective officers thereunto duly authorized.

	TCP DENIM, LLC


	By:	/s/ William Sweedler
		Name: William Sweedler
		Title: Managing Member

	TCP RG, LLC


	By:	/s/ William Sweedler
		Name: William Sweedler
		Title: Managing Member

	TCP RG II, LLC


	By:	/s/ William Sweedler
		Name: William Sweedler
		Title: Managing Member

[ Signature Page to Purchase Agreement ]

Exhibit 4.1

FINAL FORM

NEITHER THIS WARRANT NOR THE SHARES OF COMMON STOCK ISSUABLE UPON ITS EXERCISE HAVE BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE “ SECURITIES ACT ”), OR ANY APPLICABLE STATE SECURITIES LAWS, AND MAY NOT BE OFFERED, SOLD, OR OTHERWISE TRANSFERRED, PLEDGED, OR HYPOTHECATED UNLESS (I) PURSUANT TO REGISTRATION UNDER THE SECURITIES ACT OR (II) IN COMPLIANCE WITH AN EXEMPTION THEREFROM AND ACCOMPANIED, IF REQUESTED BY THE ISSUER, WITH AN OPINION OF COUNSEL REASONABLY SATISFACTORY TO THE COMPANY THAT SUCH TRANSFER IS IN COMPLIANCE WITH AN EXEMPTION THEREFROM.

THIS WARRANT AND THE SHARES OF COMMON STOCK ISSUED
UPON ITS EXERCISE ARE SUBJECT TO THE RESTRICTIONS ON
TRANSFER SET FORTH IN ARTICLE II OF THIS WARRANT

Warrant No. [ ]	Number of Shares: [ ]
Date of Issuance July 18, 2016	(subject to adjustment)
Void after July 18, 2019

DIFFERENTIAL BRANDS GROUP INC.

Common Stock Purchase Warrant

THIS IS TO CERTIFY THAT, for value received, [ ] or its permitted assigns (collectively, the “ Registered Holder ”) is entitled to purchase from Differential Brands Group Inc., a Delaware corporation (the “ Company ”), at the place where the Warrant Office designated pursuant to Section 2.1 is located, at a purchase price per share of $5.47 (as adjusted pursuant to the terms of this Warrant, the “ Exercise Price ”), [ insert pro rata portion of 150,000 ] shares (the “ Warrant Shares ”) of duly authorized, validly issued, fully paid and nonassessable shares of Common Stock, $0.10 par value per share, of the Company (the “ Common Stock ”), and is entitled also to exercise the other appurtenant rights, powers and privileges hereinafter set forth. The number of shares of the Common Stock purchasable hereunder and the Exercise Price are subject to adjustment in accordance with Article III hereof. This Warrant shall expire at 5:00 p.m., New York time, on July 18, 2019 (the “ Expiration Date ”). Receipt of this Warrant by the Registered Holder shall constitute acceptance of and agreement to the terms and conditions set forth herein.

This Warrant is issued in connection with that certain Purchase Agreement, regarding the share capital of SWIMS AS, a Norwegian private limited company ( aksjeselskap ) registered with the Norwegian Register of Business Enterprises under registration number 988 225 266 and with registered address at Holtegata 26, 0355 Oslo, Norway, dated as of the date hereof, by and among the Company, DFBG Swims LLC, a Delaware limited liability company, each shareholder of the Company signatory thereto, and Øystein Alexander Eskeland and Atle Søvik, acting jointly as the representatives of the sellers.

ARTICLE I

Exercise of Warrant

1.1 Method of Exercise . The Warrant Shares pursuant to this Warrant may be exercised by the Registered Holder as a whole or in part at any time and from time to time subsequent to the date hereof and until the Expiration Date at which time this Warrant shall expire and be of no further force or effect; provided , however , that the minimum number of Warrant Shares that may be purchased on a single exercise shall be 1,000 or the entire number of shares remaining available for exercise hereunder, whichever is less. To exercise this Warrant, the Registered Holder shall deliver to the Company, at the Warrant Office designated in Section 2.1 , a written notice in the form of the Purchase Form attached as Exhibit A hereto, stating therein the election of the Registered Holder to exercise this Warrant in the manner provided in the Purchase Form, along with payment in full of the Exercise Price (in the manner described below) for all Warrant Shares purchased hereunder. This Warrant shall be deemed to be exercised on the date of receipt by the Company of the Purchase Form, accompanied by payment for the Warrant Shares to be purchased and surrender of this Warrant, as aforesaid, and such date is referred to herein as the “ Exercise Date .” Upon such exercise, the Company shall promptly (and in any event within three business days following the Exercise Date) issue and deliver to the Registered Holder a certificate or statement evidencing ownership in book-entry form for the full number of the Warrant Shares purchasable by the Registered Holder hereunder, against the receipt by the Company of the total Exercise Price payable hereunder for all such Warrant Shares, (a) in cash or by certified or cashier’s check or (b) pursuant to the Net Exercise provisions of Section 1.2 . The Person in whose name the certificate(s) or book-entry statements for Common Stock is to be issued shall be deemed to have become a holder of record of such Common Stock on the Exercise Date. If the Company fails to deliver such certificate or statement during the time period specified above, then the Registered Holder will have the right to rescind such exercise; provided, that nothing herein shall limit a Registered Holder’s right to pursue any other remedies available to it hereunder, at law or in equity including, without limitation, a decree of specific performance or injunctive relief with respect to the Company’s failure to deliver such certificate or statement in accordance with the terms of this Warrant.

1.2 Net Exercise . In lieu of exercising the Warrant Shares by delivering payment of the Exercise Price to the Company in cash, if the fair market value of one share of Common Stock is greater than the Exercise Price (at the date of calculation as set forth below), the Registered Holder of this Warrant may elect to receive a number of shares of Common Stock equal to the value of this Warrant (or of any portion of this Warrant being canceled) by surrender of this Warrant at the Warrant Office together with a properly completed and executed Purchase Form, in which event the Company shall issue the Registered Holder a number of shares of Common Stock computed as follows

X	=	Y (A – B)
		A

Where:

X	=	the number of shares of Common Stock to be issued to the Registered Holder.

Y	=	the number of shares of Common Stock purchasable under the Warrant or, if only a portion of the Warrant is being exercised, the portion of the Warrant being canceled (at the date of such calculation).

A	=	the Current Market Price of one share of Common Stock (at the date of such calculation). For purposes of this Section 1 , “ Current Market Price ” means, the volume-weighted average, rounded to the nearest cent, of the closing sales price of shares of Common Stock on the NASDAQ Stock Market, as reported by The Wall Street Journal for the immediately preceding ten (10) trading days.

B	=	Exercise Price (as adjusted to the date of such calculation).

1.3 Fractional Shares . No fractional shares of Common Stock shall be issued in connection with any exercise of this Warrant. In lieu of any fractional shares that would otherwise be issuable, the Company shall pay cash equal to the product of such fraction multiplied by the Current Market Price of one share of Common Stock at the date of exercise.

1.4 Termination . Notwithstanding any other provision of this Warrant, the right to exercise this Warrant shall terminate upon the Expiration Date; provided, however, if this Warrant shall not have been exercised in full prior to a Change of Control of any kind described in clause (i) of the definition thereof, the right to exercise this Warrant shall be automatically converted into the right to receive from the Company (or any successor entity thereto) an amount calculated as follows: (x) the maximum number of Warrant Shares for which this Warrant shall be exercised at the time of the closing of such Change of Control, calculated pursuant to the Net Exercise provisions of Section 1.2 , multiplied by (y) the amount of consideration per share of Common Stock received by a holder thereof in such Change of Control.

For purposes of this Warrant:

the ownership, directly or indirectly, of securities having the power to elect a majority of the board of directors or similar body governing the affairs of such Person.

“ Change of Control ” means the occurrence of any of the following at any time after the date hereof: (i) any Person or group of Persons that does not, together with their Affiliates, as of the date hereof, own beneficially more than 50% of outstanding voting securities of the Company, shall have become the beneficial owner of more than 50% of then outstanding voting securities of the Company, or (ii) the board of directors (or similar governing body), or if applicable the stockholders, of the Company, as the case may be, shall have approved the transfer, sale, assignment, or other disposition of all or substantially all the assets of the Company in one transaction or a series of related transactions.

“ Person ” means, an individual, corporation, partnership, limited liability company, limited liability partnership, joint venture, syndicate, person, trust, association, organization or other entity, including any governmental authority, and including any successor, by merger or otherwise, of any of the foregoing.

1.5 Delivery of New Warrants Upon Exercise . If this Warrant shall have been exercised in part, the Company shall, at the request of the Registered Holder and upon surrender of this Warrant, at the time of delivery of the certificate or statement evidencing ownership in book-entry form for the Warrant Shares purchased by the Registered Holder hereunder, deliver to the Registered Holder a new Warrant evidencing the rights of the Registered Holder to purchase the unpurchased Warrant Shares pursuant to this Warrant, which new Warrant shall in all other respects be identical to this Warrant.

1.6 Withholding . Solely to the extent required by applicable law and upon prior notice, Parent shall be entitled to deduct and withhold from any amounts or Warrant Shares to be delivered hereunder to a Registered Holder which constitute compensation, any amounts required to be deducted and withheld with respect to the making of such payment. Any amounts so deducted and withheld shall be timely paid over to the appropriate governmental authority and shall be treated for all purposes of this Warrant as having been paid to the Registered Holder in respect of which such deduction and withholding was made.

ARTICLE II

Warrant Office; Transfer

2.1 Warrant Office . The Company shall maintain an office for certain purposes specified herein (the “ Warrant Office ”), which office shall initially be the Company’s principal office, and may subsequently be such other office of the Company or of any transfer agent of the Common Stock in the continental United States of which written notice has previously been given to the Registered Holder. The Company shall maintain, at the Warrant Office, a register for the Warrant in which the Company shall record the name and address of the Registered Holder, as well as the name and address of each permitted assignee of the rights of the Registered Holder.

2.2 Ownership of Warrant . The Company may deem and treat the Registered Holder as the holder and owner hereof (notwithstanding any notations of ownership or writing hereon made by anyone other than the Company) for all purposes and shall not be affected by any notice to the contrary, until presentation of this Warrant for registration of transfer as provided in this Article II .

2.3 Transfer of Warrants . The Company agrees to maintain at the Warrant Office books for the registration and transfer of this Warrant. Unless otherwise consented to in writing by the Company (which consent may be granted or withheld in its sole discretion), this Warrant may be transferred by any Registered Holder (including, for the avoidance of doubt, any subsequent transferee) in whole or in part only in compliance with applicable law and only to his, her or its Permitted Transferees. The Company, from time to time, shall register the transfer in whole or in part of this Warrant in such books upon surrender of this Warrant at the Warrant Office, properly endorsed, together with a written assignment of this Warrant, substantially in the form of the Assignment attached as Exhibit B hereto. Upon any such transfer, a new Warrant shall be issued to the transferee, and the Company shall cancel the surrendered Warrant. The Registered Holder shall pay all taxes and all other expenses and charges payable in connection with the transfer of Warrants pursuant to this Section 2.3 . For purposes of this Warrant, “ Permitted Transferees ” shall mean (a) in the case of an individual, the individual’s spouse, child, estate, personal representative, heir or successor, a trust for the benefit of any of the foregoing persons, or a partnership or limited liability company the partners or members of which consist solely of any of the foregoing persons and (b) in the case of any Registered Holder that is not an individual (other than a trust as described in clause (a) of this sentence, for whom transfers may be made to the persons described in such clause (a)), to a Person that is an affiliate, direct partner, member or stockholder of such Registered Holder.

2.4 No Rights as Stockholder Until Exercise . No holder of this Warrant, as such, shall be entitled to vote or receive dividends or be deemed to be a stockholder of the Company for any purpose, nor shall anything contained in this Warrant be construed to confer upon the Registered Holder of this Warrant, as such, any rights of a stockholder of the Company or any right to vote, give or withhold consent to any corporate action, receive notice of meetings, receive dividends or subscription rights, or otherwise. Upon the surrender of this Warrant and the payment of the aggregate Exercise Price, the Warrant Shares so purchased shall be and be deemed to be issued to the Registered Holder as the record owner of such shares as of the close of business on the later of the date of such surrender or payment.

2.5 Expenses of Delivery of Warrants . Except as provided in Section 2.3 , the Company shall pay all reasonable expenses, taxes and other charges payable in connection with the preparation, issuance and delivery of Warrants and related Warrant Shares hereunder.

in the form of the assignment attached hereto as Exhibit B , accompanied, if requested by the Company, by an opinion of counsel reasonably satisfactory to the Company that an exemption from registration of such Warrant or Warrant Shares under the Securities Act is available for such transfer, except that no such opinion shall be required after a registration for resale of the Warrant Shares has become effective. Upon any exercise of the Warrants prior to effective registration for resale or except as in accordance with Rule 144 under the Securities Act, certificates representing the Warrant Shares shall bear a restrictive legend substantially identical to that set forth as follows:

“The securities represented by this certificate have not been registered under the Securities Act of 1933, as amended, or the securities laws of any state (collectively, the “ Acts ”). Neither the shares nor any interest therein may be offered, sold, transferred, pledged, or otherwise disposed of in the absence of an effective registration statement with respect to the shares under all of the applicable Acts, or an opinion of counsel reasonably satisfactory to the Company to the effect that such registrations are not required.”

Any purported transfer of the Warrant or Warrant Shares not in compliance with the provisions of this section shall be null and void. Stop transfer instructions have been or will be imposed with respect to the Warrant Shares so as to restrict resale or other transfer thereof, subject to this Section 2.6 .

2.7 Reservations of Shares . The Company shall reserve at all times so long as this Warrant remains outstanding, free from preemptive rights, out of its treasury Common Stock or its authorized but unissued shares of Common Stock, or both, solely for the purpose of effecting the exercise of this Warrant, sufficient shares of Common Stock to provide for the exercise hereof. The Company shall cause to be executed and issued the necessary certificate or statement evidencing ownership in book-entry form for the Warrant Shares upon the exercise of the purchase rights under this Warrant.

2.8 Valid Issuance . All shares of Common Stock which may be issued upon exercise of this Warrant will, upon issuance by the Company, be duly and validly issued, fully paid and nonassessable and free from all taxes, liens and charges with respect to the issuance thereof attributable to any act or omission by the Company, and the Company shall take no action which will cause a contrary result (including without limitation, any action which would cause the Exercise Price to be less than the par value, if any, of the Common Stock).

2.9 Exercise in Connection with Registered Offering . Notwithstanding any other provision hereof, if an exercise of any portion of this Warrant is to be made in connection with a registered public offering, the exercise of any portion of this Warrant may, at the election of the Registered Holder, be conditioned upon the consummation of such public offering, in which case such exercise shall not be deemed to be effective until the consummation of such offering.

ARTICLE III

Adjustments

3.1 Adjustment of Exercise Price and Number of Shares . In order to prevent dilution of the rights granted under this Warrant in the circumstances provided herein, the Exercise Price shall be subject to adjustment from time to time as provided in this Article III , and the number of Warrant Shares obtainable upon exercise of this Warrant shall be subject to adjustment from time to time as provided in this Article III .

3.2 Subdivision or Combination of Common Stock . If the Company at any time on or prior to the Expiration Date subdivides (by any stock split, stock dividend, recapitalization or otherwise) its outstanding shares of Common Stock into a greater number of shares, the Exercise Price in effect immediately prior to such subdivision shall be proportionately reduced and the number of Warrant Shares obtainable upon exercise of this Warrant shall be proportionately increased. If the Company at any time combines (by reverse stock split or otherwise) its outstanding shares of Common Stock into a smaller number of shares, the Exercise Price in effect immediately prior to such combination shall be proportionately increased and the number of Warrant Shares obtainable upon exercise of this Warrant shall be proportionately decreased. Any adjustment under this Section 3.2 shall become effective at the close of business on the date the subdivision or combination becomes effective.

3.3 Reorganization, Reclassification, Consolidation, Merger or Sale . Other than as a result of any subdivision or combination provided for in Section 3.2 above or a Change of Control transaction covered in Section 1.4 above, any recapitalization, reorganization, reclassification, consolidation, merger, sale of all or substantially all of the Company’s assets or other transaction, which in each case is effected in such a way that the holders of Common Stock are entitled to receive (either directly or upon subsequent liquidation) stock, securities or assets with respect to or in exchange for Common Stock is referred to herein as “ Organic Change .” Prior to the consummation of any Organic Change, the Company shall make appropriate provision to insure that the Registered Holder shall thereafter have the right to acquire and receive, in lieu of or addition to (as the case may be) the Warrant Shares immediately theretofore acquirable and receivable upon the exercise of this Warrant, such shares of stock, securities or assets as would have been issued or payable in such Organic Change (if the Registered Holder had exercised this Warrant immediately prior to such Organic Change) with respect to or in exchange for the number of Warrant Shares immediately theretofore acquirable and receivable upon exercise of this Warrant had such Organic Change not taken place. In any such case, the Company shall make appropriate provision with respect to the Registered Holder’s rights and interests to insure that the provisions substantially similar to this Article III shall thereafter be applicable to the Warrants (including, in the case of any such consolidation, merger or sale in which the successor entity or purchasing entity is other than the Company, an immediate adjustment in the number of shares of Common Stock acquirable and receivable upon exercise of the Warrant based on the relative value of the Common Stock and the common stock of the successor entity or purchasing entity).

3.4 Dividends . In case at any time or from time to time the Company shall take a record of the holders of its Common Stock for the purpose of entitling them to receive a dividend

or distribution (collectively, a “ Distribution ”), then the Exercise Price in effect immediately prior to such Distribution shall be reduced by the amount of cash or the fair market value of other property to which the Registered Holder would have been entitled by way of such Distribution with respect to each Warrant Share if such Registered Holder had exercised this Warrant immediately prior to such Distribution.

3.5 Adjustment Notices . Promptly upon any adjustment of the Exercise Price or the number of Warrant Shares, the Company shall give written notice thereof to the Registered Holder, setting forth in reasonable detail and confirming the calculation of such adjustment. The Registered Holder and its accountants and other professional representatives may make reasonable inquiries of the Company regarding questions or disagreements concerning the adjustment calculation set forth in the notice delivered by the Company pursuant to this paragraph, and the Company shall use its commercially reasonable efforts to cooperate with and respond to such inquiries.

ARTICLE IV

Miscellaneous

4.1 Entire Agreement . This Warrant contains the entire agreement between the Registered Holder and the Company with respect to the Warrant Shares that it can purchase upon exercise hereof and the related transactions and supersedes all prior arrangements or understanding with respect thereto.

4.2 Governing Law . This Warrant shall be governed by and construed in accordance with the internal laws of the State of Delaware, without regard to its conflict of law provisions.

4.3 Submission to Jurisdiction . Each of the parties hereto hereby irrevocably and unconditionally submits in any suit, action or proceeding arising out of or related to this Agreement or any of the transactions contemplated hereby to the jurisdiction of the courts of the State of Delaware, the courts of the United States of America for the District of Delaware (each, a “ Delaware Court ”) and any appellate courts from any thereof and irrevocably waives any immunity from the jurisdiction of such courts and any claim of improper venue, forum non conveniens or any similar objection which it might otherwise be entitled to raise in any such suit, action or proceeding. Each of the parties hereto irrevocably agrees that service of process upon such party by first-class mail to the address of such party pursuant to Section 4.7 shall be deemed, in every respect, effective service of process upon such party. The parties further agree that any suit, action or proceeding instituted by a party to this Warrant against another party to this Warrant shall be initially instituted exclusively in a Delaware Court, and each of the parties hereby voluntarily and irrevocably waives all its rights, whether granted by statutory, constitutional or common law, to seek a trial before a jury with respect to such claim.

default, misrepresentation, or breach of warranty or covenant hereunder or affect in any way any rights arising because of any prior or subsequent such occurrence.

4.5 Illegality . In the event that any one or more of the provisions contained in this Warrant shall be determined to be invalid, illegal or unenforceable in any respect for any reason, the validity, legality and enforceability of any such provision in any other respect and the remaining provisions of this Warrant shall not, at the election of the party for whom the benefit of the provision exists, be in any way impaired.

4.6 Copy of Warrant . A copy of this Warrant shall be filed among the records of the Company.

4.7 Notice . Any notice or other document required or permitted to be given or delivered to the Registered Holder shall be delivered at, or sent by certified or registered mail to such Registered Holder at, the last address shown on the books of the Company maintained at the Warrant Office for the registration of this Warrant or at any more recent address of which the Registered Holder shall have notified the Company in writing. Any notice or other document required or permitted to be given or delivered to the Company, other than such notice or documents required to be delivered to the Warrant Office, shall be delivered at, or sent by certified or registered mail to, the principal office of the Company, or any other address within the continental United States of America as shall have been designated in writing by the Company delivered to the Registered Holder.

4.8 Limitation of Liability; Not Stockholders . Until the exercise of this Warrant, the Registered Holder shall not have or exercise any rights by virtue hereof as a stockholder of the Company, including, without limitation, the right to vote, to receive dividends and other distributions, or to receive notice of, or attend meetings of stockholders or any other proceedings of the Company. Until the exercise of this Warrant, no provision hereof, and no mere enumeration herein of the rights or privileges of the Registered Holder, shall give rise to any liability of such Registered Holder for the purchase price of any shares of Common Stock or as a stockholder of the Company, whether such liability is asserted by the Company or by creditors of the Company.

4.9 Exchange, Loss, Destruction, etc. of Warrant . Upon receipt of evidence reasonably satisfactory to the Company (provided, that an affidavit of the Registered Holder shall be deemed reasonably satisfactory evidence) of the loss, theft, mutilation or destruction of this Warrant or any certificate relating to the Warrant Shares, and, in the case of any such loss, theft or destruction, upon delivery of indemnity or security in such form and amount as shall be reasonably satisfactory to the Company, or, in the event of such mutilation upon surrender and cancellation of this Warrant, the Company will make and deliver a new Warrant of like tenor, in lieu of such lost, stolen, destroyed or mutilated Warrant; provided , however , that the original Registered Holder of this Warrant shall not be required to provide any bond of indemnity and may in lieu thereof provide their agreement of indemnity. Any Warrant issued under the provisions of this Section 4.9 in lieu of any Warrant alleged to be lost, destroyed or stolen, or in lieu of any mutilated Warrant, shall constitute an original contractual obligation on the part of the Company. This Warrant shall be promptly canceled by the Company upon the surrender hereof in connection with any exchange or replacement. The Registered Holder of this Warrant shall

pay all taxes (including securities transfer taxes) and all other reasonable expenses and charges payable in connection with the preparation, execution and delivery of replacement Warrant(s) pursuant to this Section 4.9 .

4.10 Headings . The Article and Section and other headings herein are for convenience only and are not a part of this Warrant and shall not affect the interpretation thereof.

4.11 Successors and Assigns . Subject to applicable securities laws, this Warrant and the rights and obligations evidenced hereby shall inure to the benefit of and be binding upon the successors of the Company and the successors and permitted assigns of Registered Holder. The provisions of this Warrant are intended to be for the benefit of all Registered Holders from time to time of this Warrant and shall be enforceable by any such Registered Holder.

4.12 Remedies . The parties hereto, in addition to being entitled to exercise all rights granted by law, including recovery of damages, will be entitled to specific performance of their respective rights under this Warrant. Each party agrees that monetary damages would not be adequate compensation for any loss incurred by reason of a breach by it of the provisions of this Warrant and hereby agrees to waive and not to assert the defense in any action for specific performance that a remedy at law would be adequate. The rights and remedies provided in this Warrant are cumulative and are not exclusive of, and are in addition to and not in substitution for, any other rights or remedies available at law, in equity or otherwise.

4.13 Counterparts . This Warrant may be executed in counterparts, each of which shall be deemed an original, but all of which together shall be deemed to be one and the same agreement. A signed copy of this Warrant delivered by facsimile, e-mail or other means of electronic transmission shall be deemed to have the same legal effect as delivery of an original signed copy of this Warrant.

4.14 Further Assurances . The Company and the Registered Holder will take such actions as may be reasonably required or desirable to carry out the provisions of this Warrant.

[Remainder of Page Intentionally Left Blank; Signature Page Follows]

IN WITNESS WHEREOF , the Company has executed this Warrant as of the date first written above.

	DIFFERENTIAL BRANDS GROUP INC.


	By
	Name:
	Title:

[SIGNATURE PAGE TO WARRANT]

Accepted and Agreed,

[HOLDER]



Name of Holder



Signature



Street Address



City	State

[SIGNATURE PAGE TO WARRANT]

EXHIBIT A

PURCHASE FORM

TO: Differential Brands Group Inc. (the “ Company ”)

1. The undersigned hereby elects to purchase shares of the Common Stock of the Company pursuant to the terms of the attached Warrant by:

o A cash payment or cancellation of indebtedness, and tenders herewith payment of the purchase price for such shares in full, together with all applicable transfer taxes, if any.

o The net exercise provisions of the attached warrant.

2. Please issue a certificate(s) or statement evidencing ownership in book-entry form representing said shares of Common Stock in the name of the undersigned.

	Signature of Holder


	By:
	Name:
	Title:

EXHIBIT B

ASSIGNMENT

For value received, , hereby sells, assigns and transfers unto [all of][ shares of] the within Warrant, together with all right, title and interest therein and does hereby irrevocably constitute and appoint , attorney, to transfer said Warrant on the books of the Company, with full power of substitution.



Dated: , 201

Exhibit 4.2

FINAL FORM

NEITHER THIS WARRANT NOR THE SHARES OF COMMON STOCK ISSUABLE UPON ITS EXERCISE HAVE BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE “SECURITIES ACT”), OR ANY APPLICABLE STATE SECURITIES LAWS, AND MAY NOT BE OFFERED, SOLD, OR OTHERWISE TRANSFERRED, PLEDGED, OR HYPOTHECATED UNLESS (I) PURSUANT TO REGISTRATION UNDER THE SECURITIES ACT OR (II) IN COMPLIANCE WITH AN EXEMPTION THEREFROM AND ACCOMPANIED, IF REQUESTED BY THE ISSUER, WITH AN OPINION OF COUNSEL REASONABLY SATISFACTORY TO THE COMPANY THAT SUCH TRANSFER IS IN COMPLIANCE WITH AN EXEMPTION THEREFROM.

THIS WARRANT AND THE SHARES OF COMMON STOCK ISSUED UPON ITS EXERCISE ARE SUBJECT TO THE RESTRICTIONS ON TRANSFER SET FORTH IN ARTICLE II OF THIS WARRANT

Warrant No. 8	Number of Shares: 500,000
Date of Issuance July 18, 2016	(subject to adjustment)
Void after July 18, 2021

DIFFERENTIAL BRANDS GROUP INC.

Common Stock Purchase Warrant

THIS IS TO CERTIFY THAT, for value received, Tengram Capital Partners Fund II, L.P. or its permitted assigns (collectively, the “ Registered Holder ”) is entitled to purchase from Differential Brands Group Inc., a Delaware corporation (the “ Company ”), at the place where the Warrant Office designated pursuant to Section 2.1 is located, at a purchase price per share of $3.00 (as adjusted pursuant to the terms of this Warrant, the “ Exercise Price ”), Five Hundred Thousand (500,000) shares (the “ Warrant Shares ”) of duly authorized, validly issued, fully paid and nonassessable shares of Common Stock, $0.10 par value per share, of the Company (the “ Common Stock ”), and is entitled also to exercise the other appurtenant rights, powers and privileges hereinafter set forth. The number of shares of the Common Stock purchasable hereunder and the Exercise Price are subject to adjustment in accordance with Article III hereof. This Warrant shall expire at 5:00 p.m., New York time, on July 18, 2021 (the “ Expiration Date ”). Receipt of this Warrant by the Registered Holder shall constitute acceptance of and agreement to the terms and conditions set forth herein.

This Warrant is issued in connection with that certain Convertible Promissory Note, dated as of the date hereof, by and among the Company and Tengram Capital Partners Fund II, L.P. (the “ Promissory Note ”).

ARTICLE I

Exercise of Warrant

1.1 Method of Exercise . The Warrant Shares pursuant to this Warrant may be exercised by the Registered Holder as a whole or in part at any time and from time to time subsequent to the date hereof and until the Expiration Date at which time this Warrant shall expire and be of no further force or effect; provided , however , that the minimum number of Warrant Shares that may be purchased on a single exercise shall be 1,000 or the entire number of shares remaining available for exercise hereunder, whichever is less. To exercise this Warrant, the Registered Holder shall deliver to the Company, at the Warrant Office designated in Section 2.1(a) , a written notice in the form of the Purchase Form attached as Exhibit A hereto, stating therein the election of the Registered Holder to exercise this Warrant in the manner provided in the Purchase Form, along with payment in full of the Exercise Price (in the manner described below) for all Warrant Shares purchased hereunder. Subject to compliance with Section 3.1(a)(vi) , this Warrant shall be deemed to be exercised on the date of receipt by the Company of the Purchase Form, accompanied by payment for the Warrant Shares to be purchased and surrender of this Warrant, as aforesaid, and such date is referred to herein as the “ Exercise Date .” Upon such exercise (subject as aforesaid), the Company shall promptly (and in any event within three business days following the Exercise Date) issue and deliver to the Registered Holder a certificate or statement evidencing ownership either by delivery of a certificate or in book-entry form for the full number of the Warrant Shares purchasable by the Registered Holder hereunder, against the receipt by the Company of the total Exercise Price payable hereunder for all such Warrant Shares, (a) in cash or by certified or cashier’s check or (b) pursuant to the Net Exercise provisions of Section 1.2 . The Person in whose name the certificate(s) or book-entry statements for Common Stock is to be issued shall be deemed to have become a holder of record of such Common Stock on the Exercise Date. If the Company fails to deliver such certificate or statement during the time period specified above, then the Registered Holder will have the right to rescind such exercise; provided, that nothing herein shall limit a Registered Holder’s right to pursue any other remedies available to it hereunder, at law or in equity including, without limitation, a decree of specific performance or injunctive relief with respect to the Company’s failure to deliver such certificate or statement in accordance with the terms of this Warrant.

X	=	Y (A – B)
		A

Where:

X	=	the number of shares of Common Stock to be issued to the Registered Holder.

Y	=	the number of shares of Common Stock purchasable under the Warrant or, if only a portion of the Warrant is being exercised, the portion of the Warrant being canceled (at the date of such calculation).

A	=	the Current Market Price of one share of Common Stock (at the date of such calculation). For purposes of this Section 1 , “ Current Market Price ” means, the volume-weighted average, rounded to the nearest cent, of the closing sales price of shares of Common Stock on the NASDAQ Stock Market, as reported by The Wall Street Journal for the immediately preceding ten (10) trading days.

B	=	Exercise Price (as adjusted to the date of such calculation).

1.4 Termination . Notwithstanding any other provision of this Warrant, the right to exercise this Warrant shall terminate upon the Expiration Date; provided, however, if this Warrant shall not have been exercised in full prior to a Change of Control of any kind, the right to exercise this Warrant shall be automatically converted into the right to receive from the Company (or any successor entity thereto) an amount calculated as follows: (x) the maximum number of Warrant Shares for which this Warrant shall be exercised at the time of the closing of such Change of Control, calculated pursuant to the Net Exercise provisions of Section 1.2 , multiplied by (y) the amount of consideration per share of Common Stock received by a holder thereof in such Change of Control.

For purposes of this Warrant:

“ Affiliate ” means, with respect to any Person, (i) any Person directly or indirectly controlling, controlled by or under common control with such Person, (ii) any Person directly or indirectly owning or controlling 10% or more of any class of outstanding equity securities of such Person or (iii) any officer, director, general partner, managing member or trustee of any such Person described in clause (i) or (ii). “control,” including the terms “controlled by” and “under common control with,” means the possession, directly or indirectly, of the power to direct or cause the direction of the management and policies of a Person, whether through the ownership of voting securities, as trustee or executor, as general partner or managing member, by contract or otherwise, including the ownership, directly or indirectly, of securities having the

power to elect a majority of the board of directors or similar body governing the affairs of such Person.

“ Change of Control ” means the occurrence of any of the following at any time after the date hereof: (i) any Person (within the meaning of Rule 13d-1 under the Securities Exchange Act of 1934, as amended) of Person (other than any Person that is an Affiliate of such Person) that is not, as of the date hereof, the beneficial owner of more than 50% of outstanding voting securities of the Company, shall have become the beneficial owner of more than 50% of then outstanding voting securities of the Company, or (ii) the board of directors (or similar governing body), or if applicable the stockholders, of the Company, as the case may be, shall have approved the transfer, sale, assignment, or other disposition of all or substantially all the assets of the Company in one transaction or a series of related transactions.

ARTICLE II

Warrant Office; Transfer

2.3 Transfer of Warrants . The Company agrees to maintain at the Warrant Office books for the registration and transfer of this Warrant. This Warrant may be transferred by any Registered Holder (including, for the avoidance of doubt, any subsequent transferee) in whole or

in part only in compliance with applicable law and only to his, her or its Permitted Transferees. The Company, from time to time, shall register the transfer in whole or in part of this Warrant in such books upon surrender of this Warrant at the Warrant Office, properly endorsed, together with a written assignment of this Warrant, substantially in the form of the Assignment attached as Exhibit B hereto. Upon any such transfer, a new Warrant shall be issued to the transferee, and the Company shall cancel the surrendered Warrant. For purposes of this Warrant, “ Permitted Transferees ” shall mean (a) in the case of an individual, the individual’s spouse, child, estate, personal representative, heir or successor, a trust for the benefit of any of the foregoing persons, or a partnership or limited liability company the partners or members of which consist solely of any of the foregoing persons and (b) in the case of any Registered Holder that is not an individual (other than a trust as described in clause (a) of this sentence, for whom transfers may be made to the persons described in such clause (a)), to a Person that is an affiliate, direct partner, member or stockholder of such Registered Holder.

2.5 Expenses of Delivery of Warrants . The Company shall pay all reasonable expenses, taxes and other charges payable in connection with the preparation, issuance and delivery of Warrants and related Warrant Shares hereunder.

2.6 Compliance with Securities Laws . The Registered Holder (and its transferees and assigns), by acceptance of this Warrant, covenants and agrees that such Registered Holder is acquiring the Warrants evidenced hereby, and, upon exercise hereof, the Warrant Shares, for its own account as an investment and not with a view to distribution thereof in violation of applicable law. Neither this Warrant nor the Warrant Shares issuable hereunder have been registered under the Securities Act or any state securities laws and no transfer of this Warrant or any Warrant Shares shall be permitted unless the Company has received notice of such transfer in the form of the assignment attached hereto as Exhibit B , accompanied, if requested by the Company, by an opinion of counsel reasonably satisfactory to the Company that an exemption from registration of such Warrant or Warrant Shares under the Securities Act is available for such transfer, except that no such opinion shall be required after a registration for resale of the Warrant Shares has become effective. Upon any exercise of the Warrants prior to effective registration for resale or except as in accordance with Rule 144 under the Securities Act, certificates representing the Warrant Shares shall bear a restrictive legend substantially identical to that set forth as follows:

offered, sold, transferred, pledged, or otherwise disposed of in the absence of an effective registration statement with respect to the shares under all of the applicable Acts, or an opinion of counsel reasonably satisfactory to the Company to the effect that such registrations are not required.”

ARTICLE III

Anti-Dilution Provisions

3.1 Adjustment of Exercise Price and Number of Warrant Shares . The number of shares of Common Stock for which this Warrant is exercisable and/or the Exercise Price shall be subject to adjustment from time to time upon the occurrence of certain events as follows:

a) Subdivision or Combination of Common Stock . If at any time on or after the date of this Warrant the Company shall (i) subdivide its outstanding shares of Common Stock into a greater number of shares, or (ii) shall pay a dividend with respect to its outstanding shares of Common Stock in shares of Common Stock or any other equity or equity-equivalent securities, the Exercise Price in effect immediately prior to such subdivision shall be proportionately reduced and the number of Warrant Shares receivable shall be proportionately increased so that Registered Holder after such date shall be entitled to receive, upon payment of the same aggregate Exercise Price as would have been payable before such date, the aggregate number of shares of Common Stock that, if this Warrant had been exercised immediately prior to such date, the Registered Holder would have owned upon such exercise and been entitled to receive by virtue of such dividend or subdivision; and, conversely, if at any time on or after the date of this Warrant the outstanding number of shares of Common Stock shall be combined into a smaller number of shares, the Exercise Price in effect immediately prior to such combination shall be proportionately increased and the number of shares receivable upon exercise of the Warrant shall be proportionately decreased so that the Registered Holder after such date shall be entitled to receive, upon payment of the same aggregate Exercise Price as would have been payable before such date, the aggregate number of shares of Common Stock that, if this Warrant had been exercised immediately prior to such date, the Registered Holder would have owned upon such exercise and been entitled to receive by virtue of such combination. Any adjustment under this subsection (a) shall become effective when the applicable dividend, subdivision or combination becomes effective.

b) Reclassification, Reorganization, Consolidation or Merger . In case of any reclassification or change of outstanding securities of the class issuable upon exercise of this Warrant (other than as a result of a subdivision or combination pursuant to Section 3.1(a) ), or in case of any reorganization, consolidation or

merger of the Company with or into another entity, the Company, or such successor entity, as the case may be, shall execute a new Warrant, providing that the holder of this Warrant shall have the right to exercise such new Warrant and procure upon such exercise in lieu of each Warrant Share theretofore issuable upon exercise of this Warrant, the kind and amount of shares of stock, other securities, money and property receivable upon such reclassification, change, reorganization, consolidation or merger by a holder of one share of Common Stock. Such new Warrant shall provide for adjustments which shall be as nearly equivalent as may be practicable to the adjustments provided for in this Section 3 . The provisions of this subsection shall similarly apply to successive reclassifications, changes, reorganizations, consolidations and mergers.

c) Pro Rata Distributions . Except to the extent that Sections 3.1(a) or 3.1(b) would otherwise apply, during such time as this Warrant is outstanding, if the Company shall declare or make any dividend or other distribution of its assets (or rights to acquire its assets) to holders of shares of Common Stock, by way of return of capital or otherwise (including, without limitation, any distribution of cash, stock or other securities, property or options by way of a dividend, spin off, reclassification, corporate rearrangement, scheme of arrangement or other similar transaction) (a “ Distribution ”), at any time after the issuance of this Warrant, then, in each such case, the Registered Holder shall be entitled to participate in such Distribution to the same extent that the Registered Holder would have participated therein if the Holder had held the Warrant Shares immediately before the date of which a record is taken for such Distribution, or, if no such record is taken, the date as of which the record holders of shares of Common Stock are to be determined for the participation in such Distribution.

d) Adjustment of Number of Shares . Upon each adjustment in the Exercise Price, the number of shares of Common Stock purchasable hereunder shall be adjusted, to the nearest whole share, to the product obtained by multiplying the number of shares of Common Stock purchasable immediately prior to such adjustment in the Exercise Price by a fraction, the numerator of which shall be the Exercise Price immediately prior to such adjustment and the denominator of which shall be the Exercise Price immediately thereafter.

e) Rounding of Calculations; Minimum Adjustment . All calculations under this Section 3.1 shall be made to the nearest cent. Any provision of this Section 3.1 to the contrary notwithstanding, no adjustment in the Exercise Price shall be made if the amount of such adjustment would be less than one percent, or would reduce the Exercise Price below the state par value of the Common Stock, but any such amount shall be carried forward and an adjustment with respect thereto shall be made at the time of and together with any subsequent adjustment which, together with such amount and any other amount or amounts so carried forward, shall aggregate one percent or more.

3.2 Statement Regarding Adjustments . Whenever the Exercise Price shall be adjusted as provided in Section 3.1 , and upon each change in the number of shares of the Common Stock

issuable upon exercise of this Warrant, the Company shall forthwith file, at the office of any transfer agent for this Warrant and at the principal office of the Company, a statement showing in detail the facts requiring such adjustment and the Exercise Price and new number of shares issuable that shall be in effect after such adjustment, and the Company shall also cause a copy of such statement to be given to the Registered Holder. Each such statement shall be signed by the Company’s chief financial or accounting officer.

3.3 Costs . The Company shall pay all documentary, stamp, transfer or other transactional taxes attributable to the issuance or delivery of the Warrant Shares or any certificate or other document evidencing such Warrant Shares upon exercise of this Warrant. The Company shall, upon request, reimburse the Registered Holder for any such documented taxes assessed against the Registered Holder.

3.4 Reservations of Shares . The Company shall reserve at all times so long as this Warrant remains outstanding, free from preemptive rights, out of its treasury Common Stock or its authorized but unissued shares of Common Stock, or both, solely for the purpose of effecting the exercise of this Warrant, sufficient shares of Common Stock to provide for the exercise hereof. The Company shall cause to be executed and issued the necessary certificate or statement evidencing ownership in book-entry form for the Warrant Shares upon the exercise of the purchase rights under this Warrant. The Company shall not by any action, including, without limitation, amending its certificate of incorporation or through any reorganization, transfer of assets, consolidation, merger, dissolution, issue or sale of securities or any other voluntary action, avoid or seek to avoid the observance or performance of any of the terms of this Warrant, but will at all times in good faith assist in the carrying out of all such terms and in the taking of all such actions as may be necessary or appropriate to protect the rights of Registered Holder as set forth in this Warrant against impairment. Without limiting the generality of the foregoing, the Company will (a) not increase the par value of any Warrant Shares above the amount payable therefor upon such exercise immediately prior to such increase in par value, (b) take all such action as may be necessary or appropriate in order that the Company may validly and legally issue fully paid and nonassessable Warrant Shares upon the exercise of this Warrant and (c) use commercially reasonable efforts to obtain all such authorizations, exemptions or consents from any public regulatory body having jurisdiction thereof, as may be, necessary to enable the Company to perform its obligations under this Warrant.

3.5 Valid Issuance . All shares of Common Stock which may be issued upon exercise of this Warrant will, upon issuance by the Company, be duly and validly issued, fully paid and nonassessable and free from all taxes, liens and charges with respect to the issuance thereof attributable to any act or omission by the Company, and the Company shall take no action which will cause a contrary result (including without limitation, any action which would cause the Exercise Price to be less than the par value, if any, of the Common Stock).

3.6 NASDAQ . Notwithstanding the foregoing, in the event that the Warrant Shares to be issued upon the exercise of the purchase rights under this Warrant would, when aggregated with any other issuances of the Company to the extent required pursuant to applicable NASDAQ listing rules, be greater than or equal to 1,610,620 shares of Common Stock (subject to adjustment for stock splits and combinations), the portion of the Warrant Shares in excess of such threshold shall not include voting rights and shall not be issuable upon the exercise of the

purchase rights under this Warrant until such time as the Company is permitted to do so in compliance with applicable NASDAQ listing rules. To the extent any portion of the Warrant Shares do not have voting rights, the Company shall take all action necessary to promptly seek the required approval of its stockholders under Nasdaq Stock Market Rule 5635 (and its successor) so as to permit such Warrant Shares to have voting rights and to be issuable upon the exercise of the purchase rights under this Warrant. Further, notwithstanding anything to the contrary in this Warrant, the Registered Holder shall have no right to, and shall not, exercise any of the purchase rights under this Warrant unless and until any shareholder approval of the Company required under applicable NASDAQ listing rules has been obtained.

ARTICLE IV

Miscellaneous

4.2 Governing Law . This Warrant shall be governed by and construed in accordance with the internal laws of the State of Delaware, without regard to its conflict of law provisions.

4.4 Waiver and Amendment . Any term or provision of this Warrant may be waived at any time by the party which is entitled to the benefits thereof, and any term or provision of this Warrant may be amended or supplemented at any time by the written consent of the parties (it being agreed that an amendment to or waiver under any of the provisions of Article III of this Warrant shall not be considered an amendment of the number of Warrant Shares or the Exercise Price). No waiver by any party of any default, misrepresentation, or breach of warranty or covenant hereunder, whether intentional or not, shall be deemed to extend to any prior or subsequent default, misrepresentation, or breach of warranty or covenant hereunder or affect in any way any rights arising because of any prior or subsequent such occurrence.

4.6 Copy of Warrant . A copy of this Warrant shall be filed among the records of the Company.

4.10 Headings . The Article and Section and other headings herein are for convenience only and are not a part of this Warrant and shall not affect the interpretation thereof.

4.11 Successors and Assigns. Subject to applicable securities laws, this Warrant and the rights and obligations evidenced hereby shall inure to the benefit of and be binding upon the successors of the Company and the successors and permitted assigns of Registered Holder. The provisions of this Warrant are intended to be for the benefit of all Registered Holders from time to time of this Warrant and shall be enforceable by any such Registered Holder.

4.14 Further Assurances . The Company and the Registered Holder will take such actions as may be reasonably required or desirable to carry out the provisions of this Warrant.

[Remainder of Page Intentionally Left Blank; Signature Page Follows]

IN WITNESS WHEREOF , the Company has executed this Warrant as of the date first written above.

	DIFFERENTIAL BRANDS GROUP INC.


	By	/s/ Michael Buckley
	Name: Michael Buckley
	Title: CEO

[SIGNATURE PAGE TO WARRANT]

Accepted and Agreed,

TENGRAM CAPITAL PARTNERS FUND II, L.P.


By:	/s/ William Sweedler
Name: William Sweedler
Title: Managing Member

15 Riverside Avenue
Street Address

Westport		Connecticut
City		State

[SIGNATURE PAGE TO WARRANT]

EXHIBIT A

PURCHASE FORM

TO: Differential Brands Group Inc. (the “ Company ”)

1. The undersigned hereby elects to purchase shares of the Common Stock of the Company pursuant to the terms of the attached Warrant by:

o A cash payment or cancellation of indebtedness, and tenders herewith payment of the purchase price for such shares in full, together with all applicable transfer taxes, if any.

o The net exercise provisions of the attached warrant.

2. Please issue a certificate(s) or statement evidencing ownership in book-entry form representing said shares of Common Stock in the name of the undersigned.

	Signature of Holder


	By:
	Name:
	Title:

EXHIBIT B

ASSIGNMENT



Dated: , 201

Exhibit 4.3

EXECUTION VERSION

CONVERTIBLE PROMISSORY NOTE

NOTWITHSTANDING ANYTHING TO THE CONTRARY CONTAINED HEREIN, HOLDER ACKNOWLEDGES THAT THIS CONVERTIBLE PROMISSORY NOTE, THE INDEBTEDNESS EVIDENCED BY THIS NOTE AND THE EXERCISE OF ANY RIGHT OR REMEDY BY HOLDER ARE SUBORDINATE TO THE SENIOR DEBT (AS DEFINED BELOW) IN THE MANNER AND TO THE EXTENT SET FORTH IN SECTION 7 AND THE OTHER PROVISIONS OF THIS NOTE.

THIS NOTE HAS NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED, AND MAY NOT BE SOLD, TRANSFERRED, ASSIGNED, PLEDGED, OR HYPOTHECATED UNTIL REGISTERED UNDER SUCH ACT, OR UNLESS THE COMPANY HAS RECEIVED AN OPINION OF COUNSEL OR OTHER EVIDENCE, REASONABLY SATISFACTORY TO THE COMPANY AND ITS COUNSEL, THAT SUCH REGISTRATION IS NOT REQUIRED.

CONVERTIBLE PROMISSORY NOTE

$13,000,000.00

July 18, 2016

FOR VALUE RECEIVED, Differential Brands Group Inc., a Delaware corporation (the “ Company ”), hereby unconditionally promises to pay to Tengram Capital Fund II, L.P., a Delaware limited partnership, or its registered assigns (the “ Holder ”), in dollars in lawful currency of the United States and in immediately available funds, the principal amount of (a) THIRTEEN MILLION AND 00/100 ($13,000,000.00), or, if less, (b) the unpaid principal amount of this Convertible Promissory Note (as amended, restated, supplemented or otherwise modified, this “ Note ”), in either case, together with all interest thereon.

1. Maturity . To the extent not previously converted into newly issued shares of the Company’s Class A-1 Preferred Stock (“ Class A-1 Preferred Shares ”) in accordance with Section 3 below, subject to the provisions of Section 7 below, the Company shall repay the entire unpaid principal outstanding balance together with all accrued and unpaid interest thereon on January 18, 2017 (the “ Maturity Date ”).

2. Interest . Interest shall begin to accrue on the unpaid principal balance of this Note commencing on the date hereof and continuing until repayment of this Note in full at the rate of 3.75% per annum payment-in-kind interest, which shall compound and be added to the principal balance of this Note on the first day of each calendar month commencing August 1, 2016 and, subject to the provisions of Section 7, be payable in full in cash on the Maturity Date, in each case, calculated on the basis of a 360 day year and actual days elapsed. Subject to the terms of Section 7 below, all such interest, to the extent not previously paid, shall be payable (whether in cash, in kind or pursuant to a conversion into Class A-1 Preferred Shares in

accordance with Section 3 below), upon the Maturity Date, or upon any voluntary prepayment of this Note prior to the Maturity Date.

3. Conversion . The outstanding principal balance under this Note plus accrued interest thereon is convertible on the following basis:

(a) Upon the earlier to occur of (i) the election of the Holder or (ii) if this Note has not been repaid in full in cash on such date, the Maturity Date, all of the outstanding principal balance of this Note, together with any accrued and unpaid interest thereon, shall be converted into Class A-1 Preferred Shares at a price per share equal to $3.00 per share (as it may be adjusted from time to time, the “ Conversion Price ”), as calculated by the Holder. Upon each such conversion, the Holder shall be entitled to the rights and privileges, including, without limitation, voting rights, registration rights, liquidation preferences and other rights, with respect to such Class A-1 Preferred Shares as set forth in the Company’s certificate of incorporation.

(b) In the event of any recapitalization, stock split, stock dividend, reverse stock split, issuance of capital stock of the Company after the date hereof, distribution by the Company upon its capital stock or similar event, the Company and the Holder shall negotiate in good faith to adjust the Conversion Price to equitably preserve the value of the Note after giving effect to such issuance or distribution.

(c) The Company shall reserve, until this Note has been fully repaid or converted into securities in accordance herewith, such Class A-1 Preferred Shares as the Holder is entitled to receive upon conversion of this Note in accordance with this Section 3. Prior to the issuance of any Class A-1 Preferred Shares (or any instrument exercisable for or converted into equity securities) and whenever otherwise required, the Company will amend its certificate of incorporation to ensure that there is a sufficient quantity of such securities into which this Note can be converted.

(d) The Class A-1 Preferred Shares shall have substantially all of the same rights, properties and privileges of the Class A Preferred Stock, except that such Class A-1 Preferred Shares shall (i) contain only standard anti-dilution adjustments, (ii) contain no conversion price adjustment set forth in Section 6(e) of the Class A Preferred Stock, (iii) not in the aggregate be convertible (when aggregated with any other issuances of the Company’s to the extent required pursuant to applicable NASDAQ listing rules) into more than 1,610,620 shares of the common stock of the Company (subject to adjustment for stock splits and combinations), and (iv) have as-converted voting rights only to the extent such shares are convertible into common stock, unless permitted to do so in compliance with applicable NASDAQ listing rules. Such Class A-1 Preferred Shares will contain covenants obligating the company to obtain shareholder approval to the extent required to allow full conversion and voting rights of all Class A-1 Preferred Shares.

4. Representations and Warranties of the Company . The Company hereby represents and warrants to the Holder as follows:

(a) The Company is a corporation duly incorporated, validly existing and in good standing under, and by virtue of, the laws of the State of Delaware and has all requisite

corporate power and authority to own its properties and assets and to carry on its business as now conducted and as presently proposed to be conducted.

(b) The Company has reserved 4,500,000 Class A-1 Preferred Shares for possible issuance upon the conversion of this Note (the “ Conversion Shares ”). There are no options, warrants, conversion privileges or other rights, or agreements with respect to the issuance thereof, presently outstanding to purchase any of the Conversion Shares.

(c) All corporate action on the part of the Company and its officers, directors and stockholders necessary for (a) the authorization, execution and delivery of, and the performance of all obligations of the Company under this Note, (b) the authorization, issuance, execution and delivery of this Note by the Company and (c) the authorization, issuance, reservation for issuance and delivery by the Company of all of the Conversion Shares has been taken. This Note constitutes a valid and binding obligation of the Company, enforceable in accordance with its terms, subject, as to enforcement of remedies, to applicable bankruptcy, insolvency, moratorium, reorganization and similar laws affecting creditors’ rights generally and to general equitable principles. All consents, approvals and authorizations of, and registrations, qualifications and filings with, any federal or state governmental agency, authority or body, or any third party, required in connection with the execution, delivery and performance of this Note and the consummation of the transactions contemplated hereby have been obtained.

(d) The outstanding shares of the capital stock of the Company are duly and validly issued, fully paid and non-assessable, and such shares of such capital stock, and all outstanding options and other securities of the Company have been issued in full compliance with the registration and prospectus delivery requirements of the Securities Act of 1933, as amended (the “ Act ”), and the registration and qualification requirements of all applicable state securities laws, or in compliance with applicable exemptions therefrom, and all other provisions of applicable federal and state securities laws, including, without limitation, anti-fraud provisions.

(e) As of the date hereof, the Company has duly authorized, executed and issued to the Holder valid and legally binding warrants convertible, at the option of the Holder, into 500,000 shares of the common stock of the Company, at a price of $3.00 per share. Such warrants have been issued in full compliance with the registration and prospectus delivery requirements of the Act and the registration and qualification requirements of all applicable state securities laws, or in compliance with applicable exemptions therefrom, and all other provisions of applicable federal and state securities laws, including, without limitation, anti-fraud provisions.

5. Representations and Warranties of the Holder . The Holder represents and warrants to the Company as follows:

(a) The Holder acknowledges that it has had an opportunity to discuss the business, affairs and current prospects of the Company with its officers. The Holder further acknowledges having had access to information about the Company that it has requested. The Holder acknowledges that it is able to fend for itself in the transactions contemplated by this Note and has the ability to bear the economic risks of its investment pursuant to this Note.

(b) This Note and the securities issuable upon exercise or conversion thereof will be acquired by the Holder for its own account, not as a nominee or agent, and not with a view to or in connection with the sale or distribution of any part thereof.

(c) The Holder understands that the issuance of this Note will not be registered under the Act on the grounds that the issuance provided for in this Note is exempt from registration under of the Act, and that the reliance of the Company on such exemption is predicated in part on the Holder’s representations set forth in this Note. The Holder understands that this Note and the securities issuable upon exercise or conversion thereof are restricted securities within the meaning of Rule 144 under the Act, and must be held indefinitely unless they are subsequently registered or an exemption from such registration is available.

6. Default . For purposes of this Note, the term “ Event of Default ” shall include any of the following:

(a) the Company shall fail to pay any principal of any Note, any interest or any other amounts payable hereunder when the same shall become due and payable;

(b) any representation or warranty made by the Company under or in connection with this Note shall prove to have been incorrect when made; or

(c) the filing of a petition in bankruptcy or under any similar insolvency law by the Company, the making of an assignment for the benefit of creditors, or if any involuntary petition in bankruptcy or under any similar insolvency law is filed against the Company and such petition is not dismissed within sixty (60) days after the filing thereof.

After the occurrence of an Event of Default, the Holder may, at its option, (or in the case of an Event of Default under clause (c) above, will automatically) accelerate repayment of the outstanding principal balance, together with interest thereon in which case, subject to the provisions of Section 7 below, all such amounts due hereunder shall be due and payable immediately (whether in cash, in kind or pursuant to a conversion into Class A Preferred Shares in accordance with Section 3 below).

7. Subordination .

(a) Definitions. For purposes of this Section 7, the following terms shall have the meanings set forth below:

“ Enforcement Action ” shall mean (a) to take from or for the account of the Company or any other person or entity, by set-off or in any other manner, the whole or any part of any moneys which may now or hereafter be owing with respect to all or any portion of the Subordinated Obligations, (b) to initiate or participate with others in any suit, action or proceeding against the Company or any other person or entity to (i) to sue for or enforce payment of the whole or any portion of the Subordinated Obligations, (ii) commence or join with other persons or entities to commence a Proceeding, or (iii) commence judicial enforcement of any of the rights and remedies under this Agreement, any other applicable document or agreement, or applicable law with respect to all or any portion of the Subordinated Obligations, (c) to accelerate all or any portion of the Subordinated Obligations, (d) to take any action to

enforce any rights or remedies with respect to all or any portion of the Subordinated Obligations, (e) to exercise any put option or to cause the Company or any other person or entity to honor any redemption or mandatory prepayment of all or any portion of the Subordinated Obligations, or (f) to take any action with respect to all or any portion of the Subordinated Obligations under the provisions of any state, federal or other law, including, without limitation, the Uniform Commercial Code, or under any contract or agreement, to enforce, foreclose upon, take possession of or sell any property or assets of the Company or any other person or entity. For the avoidance of doubt, the conversion of the Subordinated Obligations, in whole or in part, into Class A-1 Preferred Shares in accordance with Section 3 and the receipt of payments permitted under clause (c) of this Section 7 shall not constitute an Enforcement Action.

“ Payment in Full ” or “ Paid in Full ” means all of the Senior Debt (other than unasserted contingent indemnification obligations) has been indefeasibly paid in full in cash and all of the commitments to lend under each of the Senior Debt Agreements have been terminated

“ Proceeding ” shall mean any voluntary or involuntary insolvency, bankruptcy, receivership, custodianship, liquidation, dissolution, reorganization, assignment for the benefit of creditors, appointment of a custodian, receiver, trustee or other officer with similar powers or any other proceeding for the liquidation, dissolution or other winding up thereof.

“ Refinancing Senior Debt Agreements ” shall mean any agreements, instruments and documents which evidence the refinancing or replacement, in whole or in part, of any of the Senior Debt.

“ Senior Creditors ” shall mean the Senior Term Agent, the Senior Lenders and any other holder of all or any portion of the Senior Debt.

“ Senior Debt ” shall mean all Senior Term Debt and all Senior Revolving Debt.

“ Senior Debt Agreements ” shall mean (i) the Senior Term Debt Agreements and (ii) the Senior Revolving Debt Agreements.

“ Senior Intercreditor Agreement ” shall mean that certain Intercreditor Agreement, dated as of January 28, 2016, by and between Senior Term Agent and Senior Revolving Lender, as amended, restated, amended and restated, supplemented or otherwise modified from time to time in accordance with the terms thereof.

“ Senior Lenders ” shall mean the Senior Term Lenders and the Senior Revolving Lender

“ Senior Revolving Credit Agreement ” shall mean that certain Credit and Security Agreement, dated as of January 28, 2016, as amended, restated, supplemented, replaced, refinanced or otherwise modified from time to time, among the Company, as a “Borrower”, the other parties thereto as “Borrowers” and “Guarantors”, and Wells Fargo Bank, National Association, as “Lender”.

“ Senior Revolving Debt ” shall mean all “Obligations” (as defined in the Senior Revolving Credit Agreement), together with all other obligations, liabilities and indebtedness of every nature of the Company or any other Loan Party (as defined in the Senior Revolving Credit

Agreement) from time to time owing under any and all of the Senior Revolving Debt Agreements, in each case, including, without limitation, the principal amount of all debts, claims and indebtedness, accrued and unpaid interest and all fees, costs and expenses, whether primary, secondary, direct, contingent, fixed or otherwise, heretofore, now and from time to time hereafter owing, due or payable, whether before or after the filing of a Proceeding under Title 11 of the United States Code, as amended from time to time and any successor statute and all rules and regulations promulgated thereunder, in each case together with any interest, fees, expenses or other amounts accruing thereon after the commencement of a Proceeding, without regard to whether or not such interest, fees, expenses or other amounts are an allowed claim.

“ Senior Revolving Debt Agreements ” shall mean (i) the Senior Revolving Credit Agreement, together with any agreements, instruments and documents related thereto and executed in connection therewith, and (ii) any applicable Refinancing Senior Debt Agreements, in each case as such agreements, instruments and documents may be amended, restated, supplemented, replaced, refinanced or otherwise modified from time to time.

“ Senior Revolving Lender ” shall mean Wells Fargo Bank, National Association, as the lender under the Senior Revolving Credit Agreement, together with its successors and assigns in such capacity.

“ Senior Term Agent ” shall mean TCW Asset Management Company, as administrative agent for the Term Lenders under the Senior Term Credit Agreement (or any other applicable Senior Debt Agreement), together with its successors and assigns in such capacity.

“ Senior Term Credit Agreement ” shall mean that certain Credit and Security Agreement, dated as of January 28, 2016 and as amended, restated, supplemented, replaced, refinanced or otherwise modified from time to time, among the Company, as a “Borrower”, the other parties thereto as “Borrowers” and “Guarantors”, the Senior Term Lenders and the Senior Term Agent.

“ Senior Term Debt ” shall mean all “Obligations” (as defined in the Senior Term Credit Agreement), together with all other obligations, liabilities and indebtedness of every nature of the Company or any other Loan Party (as defined in the Senior Term Credit Agreement) from time to time owing under any and all of the Senior Term Debt Agreements, in each case, including, without limitation, the principal amount of all debts, claims and indebtedness, accrued and unpaid interest and all fees, costs and expenses, whether primary, secondary, direct, contingent, fixed or otherwise, heretofore, now and from time to time hereafter owing, due or payable, whether before or after the filing of a Proceeding under Title 11 of the United States Code, as amended from time to time and any successor statute and all rules and regulations promulgated thereunder, in each case together with any interest, fees, expenses or other amounts accruing thereon after the commencement of a Proceeding, without regard to whether or not such interest, fees, expenses or other amounts are an allowed claim.

“ Senior Term Debt Agreements ” shall mean (i) the Senior Term Credit Agreement, together with any agreements, instruments and documents related thereto and executed in connection therewith, and (ii) any applicable Refinancing Senior Debt Agreements, in each case as such agreements, instruments and documents may be amended, restated, supplemented, replaced, refinanced or otherwise modified from time to time.

“ Senior Term Lenders ” means the lenders from time to time party to the Senior Term Credit Agreement.

“ Subordinated Creditors ” shall mean the Holder and any other holder of all or any portion of the Subordinated Obligations.

“ Subordinated Obligations ” shall mean all amounts (including, without limitation, all principal, interest, premiums, indemnities, reimbursements and other payments) payable by the Company or any other person or entity with respect to this Note, together with all other obligations, liabilities and indebtedness of every nature of the Company or any other person or entity from time to time owing in connection with this Note, in each case, including, without limitation, the principal amount of all debts, claims and indebtedness, accrued and unpaid interest and all fees, costs and expenses, whether primary, secondary, direct, contingent, fixed or otherwise, heretofore, now and from time to time hereafter owing, due or payable, whether before or after the filing of a Proceeding under Title 11 of the United States Code, as amended from time to time and any successor statute and all rules and regulations promulgated thereunder, in each case together with any interest, fees, expenses or other amounts accruing thereon after the commencement of a Proceeding, without regard to whether or not such interest, fees, expenses or other amounts are an allowed claim.

“ Subordination Provisions ” shall mean each of the terns, conditions and other provisions set forth in this Section 7.

(b) Company covenants and agrees, and each Subordinated Creditor likewise covenants and agrees, notwithstanding anything to the contrary contained in this Note, that the payment of all of the Subordinated Obligations shall be subordinate and subject in right and time of payment, to the extent and in the manner set forth in the Subordination Provisions, to the prior Payment in Full of all of the Senior Debt. Each holder of Senior Debt, whether now outstanding or hereafter created, incurred, assumed or guaranteed, shall be deemed to have acquired Senior Debt in reliance upon the Subordination Provisions.

(c) No payments of any or all of the Subordinated Obligations, including, without limitation, principal, interest, fees or other amounts, whether mandatory or voluntary, whether by setoff or otherwise, shall be made by the Company or any other person or entity, or accepted by any Subordinated Creditor, unless and until all of the Senior Debt has been Paid in Full; provided , that the foregoing restrictions shall not prohibit (i) the payment of accrued interest in kind (but not in cash) in accordance with Section 2, (ii) the repayment of the Subordinated Obligations, in whole or in part, in cash, solely from the proceeds of a substantially concurrent Excluded Equity Issuance (as defined in the Senior Term Credit Agreement) prior to the Maturity Date or (iii) conversion of the Subordinated Obligations, in whole or in part, into Class A-1 Preferred Shares in accordance with Section 3.

(d) If any payment or distribution of assets on account of all or any portion of the Subordinated Obligations not permitted to be made or accepted pursuant to the Subordination Provisions is made and received by or on behalf of any Subordinated Creditor, such payment or distribution of assets shall not be commingled with any of the assets of any Subordinated Creditor, shall be held in trust by the applicable Subordinated Creditor for the benefit of the

Senior Creditors and shall be promptly paid over to the Senior Term Agent (or if the Senior Term Debt has been Paid in Full, to the Senior Revolving Lender) for application (in accordance with the Senior Debt Agreements and the Senior Intercreditor Agreement) to the payment of the Senior Debt then remaining unpaid, until all of the Senior Debt has been Paid in Full.

(e) Until all of the Senior Debt has been Paid in Full, no Subordinated Creditor shall, without the prior written consent of Senior Term Agent and Senior Revolving Lender, take any Enforcement Action. Any payments or distributions of assets or other proceeds of any Enforcement Action obtained by any Subordinated Creditor in violation of the foregoing prohibition shall in any event be held in trust by the applicable Subordinated Creditor for the benefit of the Senior Creditors and shall be promptly paid over to the Senior Term Agent (or if the Senior Term Debt has been Paid in Full, to the Senior Revolving Lender) for application (in accordance with the Senior Debt Agreements and the Senior Intercreditor Agreement) to the payment of the Senior Debt then remaining unpaid, until all of the until all of the Senior Debt has been Paid in Full. Without limiting the foregoing, no Subordinated Creditor shall offset against, or otherwise deduct from, any amount owing by any Subordinated Creditor to Company or any other person or entity, any amount owing with respect to the Subordinated Obligations.

(f) In the event of any Proceeding involving the Company or any other obligor of all or any portion of the Subordinated Obligations: (i) all Senior Debt shall first be Paid in Full before any payment or distribution of assets, whether in cash, securities or other property, shall be made to any Subordinated Creditor with respect to all or any portion of the Subordinated Obligations; and (ii) any payment or distribution of assets of the Company or any other obligor of all or any portion of the Subordinated Obligations, whether in cash, securities or other property which would otherwise, but for the terms of the Subordination Provisions, be payable or deliverable in respect of Subordinated Obligations shall be paid or delivered directly to the Senior Term Agent (or if the Senior Term Debt has been Paid in Full, to the Senior Revolving Lender) for application (in accordance with the Senior Debt Agreements and the Senior Intercreditor Agreement) to the Senior Debt until all of the Senior Debt has been Paid in Full; each Subordinated Creditor hereby irrevocably authorizes, empowers and directs any debtor, debtor in possession, receiver, trustee, liquidator, custodian, conservator or other person or entity having authority, to pay or otherwise deliver all such payments and distributions to the Senior Term Agent (or if the Senior Term Debt has been Paid in Full, to the Senior Revolving Lender).

(g) All rights and interest of the Senior Creditors, and all agreements and obligations of the Company and the Subordinated Creditors under each of the Subordination Provisions, shall remain in full force and effect irrespective of: (i) any lack of validity or enforceability of any Senior Debt Agreements; (ii) any change in the time, manner or place of payment of, or any other term of, all or any of the Senior Debt, or any other amendment or waiver of or any release or consent to departure from any of the Senior Debt Agreements; (iii) any exchange, release or non-perfection of any collateral for all or any of the Senior Debt; (iv) any failure of any Senior Creditor to assert any claim or to enforce any right or remedy against any other party hereto under the provisions of any Senior Debt Agreement; (v) any reduction, limitation, impairment or termination of any Senior Debt for any reason, including any claim of waiver, release, surrender, alteration or compromise, and shall not be subject to (and the Company and each Subordinated Creditor hereby waive any right to or claim of) any defense or

setoff, counterclaim, recoupment or termination whatsoever by reason of invalidity, illegality, nongenuiness, irregularity, compromise, unenforceability of, or any other event or occurrence affecting, any Senior Debt; and (vi) any other circumstance which might otherwise constitute a defense available to, or a discharge of, the Company or any other person or entity in respect of any Senior Debt or any Subordinated Creditor of any of the Subordination Provisions.

(h) Each Subordinated Creditor acknowledges and agrees that the Senior Creditors may in accordance with the terms of the Senior Debt Agreements, without notice or demand and without negatively affecting or impairing any rights or remedies of any Senior Creditor under the Subordination Provisions and without limiting any obligations of any Subordinated Creditor under the Subordination Provisions: (i) amend, restate, supplement, replace, refinance or otherwise modify any or all of the Senior Debt Agreements; (ii) take or hold security for the payment of any or all of the Senior Debt and exchange, enforce, foreclose upon, waive and release any such security; (iii) apply such security and direct the order or manner of sale thereof as Senior Creditors, in their sole discretion, may determine; (iv) release and substitute one or more endorsers, warrantors, borrowers or other obligors with respect to all or any portion of the Senior Debt; and (v) exercise or refrain from exercising any rights against the Company or any other person or entity with respect to all or any portion of the Senior Debt. All of the Senior Debt shall continue to be treated as Senior Debt and all of the Subordination Provisions shall continue to govern the relative rights and priorities of the Senior Creditors, on the one hand, and the Subordinated Creditors, on the other, even if all or part of the Senior Debt or the security interests securing the Senior Debt are subordinated, set aside, avoided, invalidated or disallowed for any reason whatsoever.

(i) Each Subordinated Creditor agrees not to initiate, prosecute or participate in any claim, action or other proceeding challenging the enforceability, validity, perfection or priority of all or any portion of the Senior Debt or any liens and security interests securing all or any portion of the Senior Debt. Each Subordinated Creditor agrees not to initiate or commence any Proceeding involving the Company or any other obligor of all or any portion of the Subordinated Obligations.

(j) Each Subordinated Creditor agrees that, until all of the Senior Debt has been Paid in Full, all of the Subordinated Obligations shall be unsecured obligations and no person or entity, other than the Company, shall guaranty or otherwise be obligated with respect to all or any portion of the Subordinated Obligations. Any liens and security interests of any Subordinated Creditor securing all or any portion of the Subordinated Obligations, and/or any such guaranties of all or any portion of the Subordinated Obligations, which may exist in breach of the immediately preceding sentence shall be and hereby are subordinated for all purposes and in all respects to all of the liens and security interests of the Senior Creditors and to all of the Senior Debt, regardless of the time, manner or order of perfection of any such liens and security interests, guaranties and/or the Senior Debt. In the event that any Subordinated Creditor shall at any time have any liens or security interests in respect of all or any portion of the Subordinated Obligations, Senior Term Agent and Senior Revolving Lender shall each be deemed irrevocably authorized by each Subordinated Creditor to file UCC termination statements sufficient to terminate any and all such liens and security interests in favor of any and all Subordinated Creditors, and each Subordinated Creditor shall promptly execute and deliver to each of Senior Term Agent and Senior Revolving Lender, upon its request therefore, such releases and

terminations as Senior Term Agent or Senior Revolving Lender shall request to effect the release of such liens and security interests and/or of such guaranties of such Subordinated Creditor. In furtherance of the foregoing and the other Subordination Provisions, each Subordinated Creditor hereby irrevocably appoints each of Senior Term Agent and Senior Revolving Lender its attorney-in-fact, with full authority in the place and stead of such Subordinated Creditor and in the name of such Subordinated Creditor or otherwise, to execute and deliver any document or instrument which such Subordinated Creditor may be required to deliver pursuant to this paragraph or any of the other Subordination Provisions.

(k) If, at any time, all or part of any payment with respect to Senior Debt theretofore made by the Company or any other person or entity is rescinded or must otherwise be returned by any Senior Creditor for any reason whatsoever (including, without limitation, the insolvency, bankruptcy or reorganization of the Company or any other person or entity), the Subordination Provisions shall continue to be effective or be reinstated, as the case may be, all as though such payment had not been made and such rescinded or returned payment shall continue to be treated as Senior Debt for all purposes of the Subordination Provisions.

(l) Until all of the Senior Debt has been Paid in Full, without the prior written consent of each of Senior Term Agent and Senior Revolving Lender, none of the Subordination Provisions may be amended, modified, supplemented or waived. Each Senior Creditor is an intended third party beneficiary of all of the terms of the Subordination Provisions and each Senior Creditor may directly enforce each of the Subordination Provisions against each Subordinated Creditor and each other applicable person or entity. Each Subordinated Creditor (including, without limitation, any assignee of any or all or the Subordinated Obligations) shall at all times be bound by all of the Subordination Provisions as a Subordinated Creditor.

8. Miscellaneous .

(a) The Company hereby waives presentment, demand, protest, notice of dishonor, diligence and all other notices, any release or discharge arising from any extension of time, discharge of a prior party, release of any or all of any security given from time to time for this Note, or other cause of release or discharge other than actual payment in full hereof.

(b) The Holder shall not be deemed, by any act or omission, to have waived any of its rights or remedies hereunder unless such waiver is in writing and signed by the Holder and then only to the extent specifically set forth in such writing. A waiver with reference to one event shall not be construed as continuing or as a bar to or waiver of any right or remedy as to a subsequent event. No delay or omission of the Holder to exercise any right, whether before or after a default hereunder, shall impair any such right or shall be construed to be a waiver of any right or default, and the acceptance at any time by the Holder of any past-due amount shall not be deemed to be a waiver of the right to require prompt payment when due of any other amounts then or thereafter due and payable.

(c) Time is of the essence hereof. Upon any Event of Default, subject to the provisions of Section 7, the Holder may exercise all rights and remedies provided for herein and by law or equity, including, but not limited to, the right to immediate payment in full of this Note.

(d) The remedies of the Holder as provided herein, or any one or more of them, or in law or in equity, shall be cumulative and concurrent, and may be pursued singularly, successively or together at the Holder’s sole and absolute discretion, and may be exercised as often as occasion therefor shall occur.

(e) The Company shall, subject to the provisions of Section 7, pay all costs, including attorneys’ fees, incurred by the Holder in the preparation and administration of this Note and in connection with the transactions contemplated hereby, including any amendments or other modifications of this Note and including any such costs incurred in collecting any amounts, interpreting, enforcing or protecting the Holder’s rights under this Note.

(f) If any provisions of this Note would require the Company to pay interest hereon at a rate exceeding the highest rate allowed by applicable law, the Company shall instead pay interest under this Note at the highest rate permitted by applicable law.

(g) This Note shall be governed by and construed in accordance with and the laws of the State of New York applicable to contracts wholly made and performed in the State of New York.

[Signature page follows].

IN WITNESS WHEREOF, each of the undersigned has caused this Note to be executed by its duly authorized officer as of the day and year first above written.

	DIFFERENTIAL BRANDS GROUP INC.


	By:	/s/ Michael Buckley
		Name: Michael Buckley
		Title: CEO

[Signature Page to Convertible Promissory Note]

Accepted and Agreed:

TENGRAM CAPITAL FUND II, L.P.


By:	/s/ William Sweedler
	Name: William Sweedler
	Title: Managing Member

[Signature Page to Convertible Promissory Note]

PAYMENTS OF PRINCIPAL

Date	Amount of Note	Amount of Principal Paid or Prepaid	Unpaid Principal Balance	Notation Made By

Exhibit 4.4

CONSENT AND AMENDMENT NO. 1 TO
CREDIT AND SECURITY AGREEMENT

THIS CONSENT AND AMENDMENT NO. 1 TO CREDIT AND SECURITY AGREEMENT (this “ Amendment ”) is entered into as of July 18, 2016, by and among WELLS FARGO BANK, NATIONAL ASSOCIATION (“ Lender ”), DIFFERENTIAL BRANDS GROUP INC. , a Delaware corporation (“ Parent ”), DBG SUBSIDIARY INC. , a Delaware corporation (“ DBG ”), HUDSON CLOTHING, LLC , a California limited liability company (“ Hudson ”), RG PARENT LLC , a Delaware limited liability company (the “ RG Parent ”), ROBERT GRAHAM HOLDINGS, LLC , a New York limited liability company (“ RG Holding ”), ROBERT GRAHAM DESIGNS, LLC , a New York limited liability company (“ RG Designs ”), ROBERT GRAHAM RETAIL LLC , a Delaware limited liability company (“ RG Retail ” and together with Parent, DBG, Hudson, RG Parent, RG Holding, and RG Designs, collectively, the “ Borrowers ”, and each a “ Borrower ”), and the Guarantors party hereto.

WHEREAS , Borrowers, Parent, Guarantors, and Lender are party to that certain Credit and Security Agreement, dated as of January 28, 2016 (as amended, supplemented or otherwise modified from time to time, the “ Credit Agreement ”);

WHEREAS , Borrowers and Parent have notified Lender that Parent (i) has formed a new subsidiary, DFBG SWIMS, LLC, a Delaware limited liability company (“ DFBG Swims ”), (ii) desires to cause DFBG Swims to acquire (the “ SWIMS Acquisition ”) all of the outstanding capital stock of SWIMS AS, a Norwegian private limited company (“ Target ”) pursuant to a certain Purchase Agreement (the “ SWIMS Purchase Agreement ”) by and among Parent, DFBG Swims, Target, the shareholders of Target as the “Sellers” and Øystein Alexander Eskeland and Atle Søvik, acting jointly as the representatives of the Sellers, and (iii) desires to incur the Indebtedness evidenced by and perform the other transactions contemplated by the SWIMS Subordinated Note (as defined below) for the purpose of consummating the SWIMS Acquisition;

WHEREAS , without the consent of Lender, the consummation of the SWIMS Acquisition and the incurrence of the Indebtedness evidenced by and performance of the other transactions contemplated by the SWIMS Subordinated Note would be prohibited by the Credit Agreement; and

WHEREAS , the parties hereto have agreed to make certain modifications to the Credit Agreement, as more fully set forth herein;

NOW THEREFORE , in consideration of the premises and other good and valuable consideration, and subject to the satisfaction of the conditions precedent set forth in herein, Parent, Borrowers, Guarantors, and Lender hereby agree as follows:

1. Definitions . All terms used herein that are defined in the Credit Agreement and not otherwise defined herein shall have the meanings assigned to them in the Credit Agreement, as amended hereby.

2. Consent . In reliance upon the representations and warranties of the Loan Parties herein, and subject to the satisfaction of the conditions to effectiveness herein, notwithstanding

anything in the Credit Agreement or any other Loan Document to the contrary, Lender hereby consents to (i) DFBG Swims and Parent entering into the SWIMS Acquisition pursuant to and on the terms set forth in the SWIMS Purchase Agreement in the form attached hereto as Exhibit A and (ii) the transactions between Parent and Tengram Capital Partners Fund II, L.P. contemplated by the SWIMS Subordinated Note, to the extent that such transactions would be restricted by Section 7.12 of the Credit Agreement ( Transactions with Affiliates ). The foregoing consent is a limited consent and, except as expressly set forth herein, shall not constitute (i) a modification or alteration of the terms, conditions or covenants of the Credit Agreement or any other Loan Document or (ii) a waiver, release or limitation upon the exercise by Lender of any of its rights, legal or equitable thereunder.

3. Amendment . In reliance upon the representations and warranties of Borrowers herein, and subject to the satisfaction of the conditions to effectiveness herein, the Credit Agreement is hereby amended as follows:

(a) Schedule 1.1 to the Credit Agreement is hereby amended by adding the following definitions thereto:

““ DFBG Swims ” means DFBG SWIMS, LLC, a Delaware limited liability company.”

““ First Amendment ” means that certain Consent and Amendment No. 1 to Credit and Security Agreement, dated as of the First Amendment Date, by and among Parent, Borrowers, the Guarantors party thereto, and Lender.”

““ First Amendment Date ” means July 18, 2016.”

““ SWIMS ” means SWIMS AS, a Norwegian private limited company.”

““ SWIMS Acquisition ” means the Acquisition by DFBG Swims of all of the outstanding capital stock of SWIMS pursuant to the SWIMS Purchase Agreement.”

““ SWIMS Purchase Agreement ” means that certain Purchase Agreement, dated as of the First Amendment Date, by and among Parent, DFBG Swims, SWIMS, the shareholders of SWIMS as the “Sellers” and Øystein Alexander Eskeland and Atle Søvik, acting jointly as the representatives of the Sellers.”

““ SWIMS Subordinated Note ” means that certain Convertible Promissory Note dated as of the First Amendment Date and made by Parent in favor of Tengram Capital Partners Fund II, L.P., a Delaware limited partnership in the amount of $13,000,000.”

(b) the definition of “Permitted Indebtedness” set forth in Schedule 1.1 to the Credit Agreement is hereby amended by (i) deleting the word “and” from the end of clause (s) thereof and (ii) replacing the existing clause (t) thereof with the following:

“(t) Indebtedness of Parent evidenced by the SWIMS Subordinated Note as in effect on the First Amendment Date, in a maximum aggregate outstanding principal amount not exceeding $13,000,000, and so long as the “Subordination Provisions” (as defined in the SWIMS Subordinated Note) remain in effect, which “Subordination Provisions” shall reflect that such SWIMS Subordinated Note is subordinated in right of payment to Lender’s rights under this Agreement and the other Loan Documents;

(u) Indebtedness of SWIMS outstanding on the First Amendment Date and described on Schedule I to the First Amendment, provided , that , in no event shall any Loan Party guaranty or have any obligations with respect to any such Indebtedness; and

(v) all premiums (if any), interest (including post-petition interest), fees, expenses, charges and additional or contingent interest on obligations described in clauses (a) through (u) above.”

(c) the definition of “Permitted Liens” set forth in Schedule 1.1 to the Credit Agreement is hereby amended by (i) deleting the word “and” from the end of clause (r) thereof, (ii) replacing the “.” at the end of clause (r) thereof with “; and”, and (iii) adding a new clause (s) thereto as follows:

“(s) Liens on the assets of SWIMS existing on the First Amendment Date which secure Indebtedness described in clause (u) of the definition of Permitted Indebtedness, provided , that , such Liens shall not attach to any assets of any Loan Parties;”

4. Reaffirmation and Confirmation . Each of Parent, each Borrower and each Guarantor hereby (a) ratifies, affirms, acknowledges and agrees that the Credit Agreement and the other Loan Documents represent the valid and binding obligations of such Loan Party, enforceable against such Loan Party in accordance with its respective terms, except as enforcement may be limited by equitable principles or by bankruptcy, insolvency, reorganization, moratorium, or similar laws relating to or limiting creditors’ rights generally, (b) agrees that this Amendment in no way acts as a release or relinquishment of the Liens and rights securing payments of the Obligations and (c) ratifies, affirms, acknowledges and agrees to the Liens and rights securing payment of the Obligations in all respects.

5. Conditions to Effectiveness . This Amendment shall become effective only upon the satisfaction in full of the following conditions precedent:

(a) Lender shall have received counterparts hereof, duly executed and delivered by all the parties hereto;

(b) Lender shall have received a fully executed copy of each of the SWIMS Purchase Agreement and the SWIMS Subordinated Note, each of which shall be in full force and effect substantially concurrently with the effectiveness of this Amendment, and the SWIMS Acquisition shall be consummated in accordance with the SWIMS Purchase Agreement substantially concurrently with the effectiveness of this Amendment;

(d) Borrowers have provided Lender with a due diligence package relative to the SWIMS Acquisition, including an acquisition overview, investment highlights, sources and uses for the SWIMS acquisition, and SWIMS’ historical and forecasted profit and loss statements, in form and substance reasonably satisfactory to Lender;

(e) Parent shall have received (or shall, substantially concurrently with the effectiveness hereof receive) the proceeds of the issuance of the SWIMS Subordinated Note in the amount of $13,000,000, all of the proceeds of which shall have been (or, substantially concurrently with the effectiveness hereof, shall be) used to finance the purchase price and related transaction expenses paid by DFBG SWIMS to consummate the SWIMS Acquisition;

(f) each of the representations and warranties made by the Loan Parties in this Amendment and/or in any other Loan Document shall be true and correct in all material respects on and as of the date hereof except (i) to the extent that any such representation or warranty relates to a specific date, in which case such representation and warranty shall be true and correct in all material respects as of such earlier date and (ii) that such materiality qualifier shall not be applicable to any representations and warranties that are already qualified or modified by materiality in the text thereof;

(g) all reasonable and documented fees and out-of-pocket expenses under the Credit Agreement and this Amendment (including the outstanding fees and expenses of Lender, including without limitation, legal fees and expenses) have been paid by the Loan Parties to the extent such fees and expenses have been invoiced to Borrowers; and

(h) Lender shall have received a fully executed copy of an amendment to the Term Loan Agreement, dated the date hereof, among the Borrowers, the Guarantors, the Parent, the parties signatory thereto as lenders (“ Lenders ”), and TCW Asset Management Company, as agent for the Lenders (the “ Term Loan Amendment ”), which shall be in form and substance reasonably satisfactory to Lender, the conditions to effectiveness of the Term Loan Amendment shall have been satisfied and the Term Loan Amendment shall be in full force and effect.

6. Representations and Warranties . Each of Parent and each Borrower represents, warrants and covenants to Lender as of the date hereof (and after giving effect to the consent contained herein):

(a) attached hereto as Exhibit A is a true and correct copy of the SWIMS Purchase Agreement;

(b) attached hereto as Exhibit B is a true and correct copy of the SWIMS Subordinated Note;

(d) the execution, delivery and performance of this Amendment, the issuance of the SWIMS Subordinated Note and the consummation of the SWIMS Acquisition pursuant to the SWIMS Purchase Agreement (i) have been duly authorized by all necessary action on the part of each Loan Party party or any of its Subsidiaries party thereto, (ii) do not violate the Governing Documents of any Loan Party or any of its Subsidiaries, (iii) do not and will not require any registration with, consent, or approval of, or notice to, or other action with or by, any Governmental Authority, other than registrations, consents, approvals, notices or actions that have been obtained and that are in force and effect, (iv) do not violate any provision of federal, state, provincial, foreign or local law or regulation applicable to any Loan Party or any of its Subsidiaries or any order, judgment, or decree of any court or other Governmental Authority binding on any Loan Party or any of its Subsidiaries, and (v) do not conflict with, result in a breach of, or constitute (with due notice or lapse of time or both) a default under any material agreement of any Loan Party or any of its Subsidiaries;

(e) DFBG Swims is a Domestic Foreign Holding Company with no material assets other than 65% or more of the voting Equity Interests (including, for this purpose, any debt or other instrument treated as equity for U.S. federal income tax purposes) in Target and cash and Cash Equivalents incidental thereto and held on a temporary basis;

(f) Target is a CFC; and

(g) no Default or Event of Default has occurred and is continuing on the date hereof.

7. Miscellaneous .

(a) Costs and Expenses . Each of Parent and each Borrower agrees to pay on demand all reasonable and documented fees and out-of-pocket expenses of designated counsel to Lender in connection with this Amendment in accordance with the Credit Agreement.

(b) Loan Document . Each of Parent and each Borrower hereby acknowledges and agrees that this Amendment constitutes a “Loan Document” under the Credit Agreement.

(c) No Waiver; Full Force and Effect . Except as expressly stated herein, nothing contained herein shall be deemed to (i) constitute a modification or alteration of the terms, conditions or covenants of the Credit Agreement or any other Loan Document or a waiver of compliance with any term or condition contained in the Credit Agreement or any of the other Loan Documents or (ii) prejudice any right or rights which Lender may now have or may have in the future under or in connection with any Loan Documents or any of the instruments or agreements referred to therein, as the same may be amended from time to time. Nothing contained herein shall constitute a course of conduct or dealing among the parties. Except as expressly stated herein, Lender reserves all rights, privileges and remedies under the Loan Documents. Except as amended hereby, the Credit Agreement and other Loan Documents shall remain unchanged and shall continue in full force and effect. All references in the Loan Documents to the Credit Agreement shall be deemed to be references to the Credit Agreement as amended or modified hereby.

(d) Counterparts . This Amendment may be executed in any number of counterparts, and by the parties hereto on the same or separate counterparts, and each such counterpart, when executed and delivered, shall be deemed to be an original, but all such counterparts shall together constitute one and the same Amendment. Delivery of an executed counterpart of this Amendment by facsimile or other electronic delivery (including “.pdf”) shall be equally effective as delivery of an original executed counterpart of this Amendment.

(e) Governing Law . This Amendment shall be a contract made under and governed by the internal laws of the State of New York. The choice of law and venue, jury trial waiver and judicial reference provisions set forth in Section 13 of the Credit Agreement are incorporated herein by reference and shall apply in all respects to this Amendment.

(f) No Third Party Beneficiaries . This Amendment shall be binding upon and inure to the benefit of the respective successors and permitted assignees of the parties hereto. The terms and provisions of this Amendment are for the purpose of defining the relative rights and obligations of the parties hereto with respect to the transactions contemplated hereby and no Person shall be a third party beneficiary of any of the terms and provisions of this Amendment.

(g) Headings . Section and paragraph headings herein are included for convenience of reference only and shall not constitute a part of this Amendment for any other purpose.

(h) Severability . Any provision of this Amendment that is prohibited or unenforceable in any jurisdiction shall, as to such jurisdiction, be ineffective to the extent of such prohibition or unenforceability without invalidating the remaining portions hereof or affecting the validity or enforceability of such provision in any other jurisdiction.

[ Remainder of page intentionally left blank. ]

IN WITNESS WHEREOF , the parties hereto have caused this Amendment to be executed by their respective officers thereunto duly authorized, as of the date first above written.

	BORROWERS :

	DIFFERENTIAL BRANDS GROUP INC. , a Delaware corporation

	By:	/s/ Michael Buckley
	Name:	Michael Buckley
	Title:	CEO


	DBG SUBSIDIARY INC. , a Delaware corporation

	By:	/s/ Michael Buckley
	Name:	Michael Buckley
	Title:	CEO


	HUDSON CLOTHING, LLC , a California limited liability company

	By:	/s/ Michael Buckley
	Name:	Michael Buckley
	Title:	CEO

Signature Page to Consent and Amendment No. 1 to Credit and Security Agreement

	RG PARENT LLC , a Delaware limited liability company

	By:	/s/ Michael Buckley
	Name:	Michael Buckley
	Title:	CEO


	ROBERT GRAHAM RETAIL LLC a Delaware limited liability company

	By:	/s/ Michael Buckley
	Name:	Michael Buckley
	Title:	CEO


	ROBERT GRAHAM DESIGNS, LLC, a New York limited liability company

	By:	/s/ Michael Buckley
	Name:	Michael Buckley
	Title:	CEO


	ROBERT GRAHAM HOLDINGS, LLC, a New York limited liability company

	By:	/s/ Michael Buckley
	Name:	Michael Buckley
	Title:	CEO

Signature Page to Consent and Amendment No. 1 to Credit and Security Agreement

	GUARANTORS:

	INNOVO WEST SALES, INC. , a Texas corporation


	By:	/s/ Hamish Sandhu
	Name:	Hamish Sandhu
	Title:	CFO


	DBG HOLDINGS SUBSIDIARY INC. , a California corporation


	By:	/s/ Hamish Sandhu
	Name:	Hamish Sandhu
	Title:	CFO


	HUDSON CLOTHING HOLDINGS, INC. , a Delaware corporation


	By:	/s/ Michael Buckley
	Name:	Michael Buckley
	Title:	Chairman


	HC ACQUISITION HOLDINGS, INC. , a Delaware corporation


	By:	/s/ Michael Buckley
	Name:	Michael Buckley
	Title:	Chairman

Signature Page to Consent and Amendment No. 1 to Credit and Security Agreement

	RGH GROUP LLC , a Delaware limited liability company


	By:	/s/ Michael Buckley
	Name:	Michael Buckley
	Title:	CEO


	MARCO BRUNELLI IP, LLC , a Delaware limited liability company


	By:	/s/ Michael Buckley
	Name:	Michael Buckley
	Title:	CEO

Signature Page to Consent and Amendment No. 1 to Credit and Security Agreement

	LENDER:

	WELLS FARGO BANK, NATIONAL ASSOCIATION


	By:	/s/ Christopher Roger
	Name:	Christopher Roger
	Title:	SVP

Signature Page to Consent and Amendment No. 1 to Credit and Security Agreement

EXHIBIT A

SWIMS Purchase Agreement

See attached.

EXHIBIT B

SWIMS Subordinated Note

See attached.

Schedule I
to
Consent and Amendment No. 1 to Credit and Security Agreement

SWIMS Permitted Indebtedness

1. An overdraft facility of NOK 11,000,000 with DNB Bank ASA.

2. A combined credit assurance and factoring arrangement, for up to 90% of SWIMS’ preapproved outstanding invoiced receivables, with DNB Bank ASA.

Exhibit 4.5

EXECUTION VERSION

CONSENT AND AMENDMENT NO. 1 TO
CREDIT AND SECURITY AGREEMENT

THIS CONSENT AND AMENDMENT NO. 1 TO CREDIT AND SECURITY AGREEMENT (this “ Amendment ”) is entered into as of July 18, 2016, by and among the lenders identified on the signature pages hereto (each of such lenders, together with its successors and permitted assigns, is referred to hereinafter as a “ Lender ”, and collectively, “ Lenders ”), TCW ASSET MANAGEMENT COMPANY , as Agent for each of the Lenders (in such capacity, together with its successors and assigns in such capacity, “ Agent ”), DIFFERENTIAL BRANDS GROUP INC. , a Delaware corporation (“ Parent ”), DBG SUBSIDIARY INC. , a Delaware corporation (“ DBG ”), HUDSON CLOTHING, LLC , a California limited liability company (“ Hudson ”), RG PARENT LLC , a Delaware limited liability company (the “ RG Parent ”), ROBERT GRAHAM HOLDINGS, LLC , a New York limited liability company (“ RG Holding ”), ROBERT GRAHAM DESIGNS, LLC , a New York limited liability company (“ RG Designs ”), ROBERT GRAHAM RETAIL LLC , a Delaware limited liability company (“ RG Retail ” and together with Parent, DBG, Hudson, RG Parent, RG Holding, and RG Designs, collectively, the “ Borrowers ”, and each a “ Borrower ”), and the Guarantors party hereto.

WHEREAS , Borrowers, Parent, Guarantors, Agent and Lenders are party to that certain Credit and Security Agreement, dated as of January 28, 2016 (as amended, supplemented or otherwise modified from time to time, the “ Credit Agreement ”);

WHEREAS , Borrowers and Parent have notified Agent and Lenders that Parent (i) has formed a new subsidiary, DFBG SWIMS LLC, a Delaware limited liability company (“ DFBG Swims ”), (ii) desires to cause DFBG Swims to acquire (the “ SWIMS Acquisition ”) all of the outstanding capital stock of SWIMS AS, a Norwegian private limited company (“ Target ”) pursuant to a certain Purchase Agreement (the “ SWIMS Purchase Agreement ”) by and among Parent, DFBG Swims, Target, the shareholders of Target as the “Sellers” and Øystein Alexander Eskeland and Atle Søvik, acting jointly as the representatives of the Sellers, and (iii) desires to incur the Indebtedness evidenced by and perform the other transactions contemplated by the SWIMS Subordinated Note (as defined below) for the purpose of consummating the SWIMS Acquisition;

WHEREAS , without the consent of Agent and Required Lenders, the consummation of the SWIMS Acquisition and the incurrence of the Indebtedness evidenced by and performance of the other transactions contemplated by the SWIMS Subordinated Note would be prohibited by the Credit Agreement; and

WHEREAS , the parties hereto have agreed to make certain modifications to the Credit Agreement, as more fully set forth herein;

1. Definitions . All terms used herein that are defined in the Credit Agreement and not otherwise defined herein shall have the meanings assigned to them in the Credit Agreement, as amended hereby.

2. Consent . In reliance upon the representations and warranties of the Loan Parties herein, and subject to the satisfaction of the conditions to effectiveness herein, notwithstanding anything in the Credit Agreement or any other Loan Document to the contrary, Agent and the undersigned Lenders hereby consent to (i) DFBG Swims and Parent entering into the SWIMS Acquisition pursuant to and on the terms set forth in the SWIMS Purchase Agreement in the form attached hereto as Exhibit A and (ii) the transactions between Parent and Tengram Capital Partners Fund II, L.P. contemplated by the SWIMS Subordinated Note, to the extent that such transactions would be restricted by Section 7.12 of the Credit Agreement ( Transactions with Affiliates ). The foregoing consent is a limited consent and, except as expressly set forth herein, shall not constitute (i) a modification or alteration of the terms, conditions or covenants of the Credit Agreement or any other Loan Document or (ii) a waiver, release or limitation upon the exercise by Agent and/or Lenders of any of their respective rights, legal or equitable thereunder.

(a) Schedule 1.1 to the Credit Agreement is hereby amended by adding the following definitions thereto:

“ DFBG Swims ” means DFBG SWIMS LLC, a Delaware limited liability company.

“ First Amendment ” means that certain Consent and Amendment No. 1 to Credit and Security Agreement, dated as of the First Amendment Date, by and among Parent, Borrowers, the Guarantors party thereto, Agent and the Lenders party thereto.

“ First Amendment Date ” means July 18, 2016.

“ SWIMS ” means SWIMS AS, a Norwegian private limited company.

“ SWIMS Acquisition ” means the Acquisition by DFBG Swims of all of the outstanding capital stock of SWIMS pursuant to the SWIMS Purchase Agreement.

“ SWIMS Purchase Agreement ” means that certain Purchase Agreement, dated as of the First Amendment Date, by and among Parent, DFBG Swims, SWIMS, the shareholders of SWIMS as the “Sellers” and Øystein Alexander Eskeland and Atle Søvik, acting jointly as the representatives of the Sellers.

“ SWIMS Subordinated Note ” means that certain Convertible Promissory Note dated as of the First Amendment Date and made by Parent in favor of Tengram Capital Partners Fund II, L.P., a Delaware limited partnership in the amount of $13,000,000.

(b) clause (c) of the definition of “ Excluded Equity Issuance ” set forth in Schedule 1.1 to the Credit Agreement is hereby amended and restated in its entirety as follows:

(c) the issuance of Equity Interests of Parent in order to finance (i) capital expenditures and permitted Acquisitions which are actually consummated within 180 days of the receipt of proceeds of such issuance and (ii) the repayment of Indebtedness evidenced by the SWIMS Subordinated Note made substantially concurrently with such Equity Issuance.

(c) the definition of “Permitted Indebtedness” set forth in Schedule 1.1 to the Credit Agreement is hereby amended by (i) deleting the word “and” from the end of clause (s) thereof and (ii) replacing the existing clause (t) thereof with the following:

(t) Indebtedness of Parent evidenced by the SWIMS Subordinated Note as in effect on the First Amendment Date, in a maximum aggregate outstanding principal amount not exceeding $13,000,000, and so long as the “Subordination Provisions” (as defined in the SWIMS Subordinated Note) remain in effect, which “Subordination Provisions” shall reflect that such SWIMS Subordinated Note is subordinated in right of payment to Lender’s rights under this Agreement and the other Loan Documents;

(u) Indebtedness of SWIMS outstanding on the First Amendment Date and described on Schedule I to the First Amendment, provided, that , in no event shall any Loan Party guaranty or have any obligations with respect to any such Indebtedness; and

(v) all premiums (if any), interest (including post-petition interest), fees, expenses, charges and additional or contingent interest on obligations described in clauses (a) through (u) above.

(d) the definition of “Permitted Liens” set forth in Schedule 1.1 to the Credit Agreement is hereby amended by (i) deleting the word “and” from the end of clause (r) thereof, (ii) replacing the “.” at the end of clause (r) thereof with “; and”, and (iii) adding a new clause (s) thereto as follows:

(s) Liens on the assets of SWIMS existing on the First Amendment Date which secure Indebtedness described in clause (u) of the definition of Permitted Indebtedness, provided, that , such Liens shall not attach to any assets of any Loan Parties;

5. Conditions to Effectiveness . This Amendment shall become effective only upon the satisfaction in full of the following conditions precedent:

(a) Agent shall have received counterparts hereof, duly executed and delivered by all the parties hereto;

(b) Agent shall have received a fully executed copy of each of the SWIMS Purchase Agreement and the SWIMS Subordinated Note, each of which shall be in full force and effect substantially concurrently with the effectiveness of this Amendment, and the SWIMS Acquisition shall be consummated in accordance with the SWIMS Purchase Agreement substantially concurrently with the effectiveness of this Amendment;

(d) Borrowers have provided Agent with a due diligence package relative to the SWIMS Acquisition, including an acquisition overview, investment highlights, sources and uses for the SWIMS acquisition, and SWIMS’ historical and forecasted profit and loss statements, in form and substance reasonably satisfactory to Agent;

(g) all reasonable and documented fees and out-of-pocket expenses under the Credit Agreement and this Amendment (including the outstanding fees and expenses of Agent, including without limitation, legal fees and expenses) have been paid by the Loan Parties to the extent such fees and expenses have been invoiced to Borrowers; and

(h) Agent shall have received a fully executed copy of an amendment to the ABL Credit Agreement, dated the date hereof, among the Borrowers, the Guarantors, the Parent and Wells Fargo Bank, National Association as the sole lenders party thereto (the “ ABL Amendment ”), which shall be in form and substance reasonably satisfactory to the Agent, the conditions to effectiveness of the ABL Amendment shall have been satisfied and the ABL Amendment shall be in full force and effect.

6. Representations and Warranties . Each of Parent and each Borrower represents, warrants and covenants to Agent and the Lenders as of the date hereof (and after giving effect to the consent contained herein):

(a) attached hereto as Exhibit A is a true and correct copy of the SWIMS Purchase Agreement;

(b) attached hereto as Exhibit B is a true and correct copy of the SWIMS Subordinated Note;

(c) each of Parent, each Borrower and each Guarantor is duly authorized to execute and deliver this Amendment to the Lenders and Agent;

(f) Target is a CFC; and

(g) no Default or Event of Default has occurred and is continuing on the date hereof.

7. Miscellaneous .

(a) Costs and Expenses . Each of Parent and each Borrower agrees to pay on demand all reasonable and documented fees and out-of-pocket expenses of designated

counsel to Lenders and Agent in connection with this Amendment in accordance with the Credit Agreement.

(b) Loan Document . Each of Parent and each Borrower hereby acknowledges and agrees that this Amendment constitutes a “Loan Document” under the Credit Agreement.

(c) No Waiver; Full Force and Effect . Except as expressly stated herein, nothing contained herein shall be deemed to (i) constitute a modification or alteration of the terms, conditions or covenants of the Credit Agreement or any other Loan Document or a waiver of compliance with any term or condition contained in the Credit Agreement or any of the other Loan Documents or (ii) prejudice any right or rights which the Lenders may now have or may have in the future under or in connection with any Loan Documents or any of the instruments or agreements referred to therein, as the same may be amended from time to time. Nothing contained herein shall constitute a course of conduct or dealing among the parties. Except as expressly stated herein, Agent and the Lenders reserve all rights, privileges and remedies under the Loan Documents. Except as amended hereby, the Credit Agreement and other Loan Documents shall remain unchanged and shall continue in full force and effect. All references in the Loan Documents to the Credit Agreement shall be deemed to be references to the Credit Agreement as amended or modified hereby.

(g) Headings . Section and paragraph headings herein are included for convenience of reference only and shall not constitute a part of this Amendment for any other purpose.

(h) Severability . Any provision of this Amendment that is prohibited or unenforceable in any jurisdiction shall, as to such jurisdiction, be ineffective to the extent of

such prohibition or unenforceability without invalidating the remaining portions hereof or affecting the validity or enforceability of such provision in any other jurisdiction.

[ Remainder of page intentionally left blank. ]

IN WITNESS WHEREOF , the parties hereto have caused this Amendment to be executed by their respective officers thereunto duly authorized, as of the date first above written.

	BORROWERS :

	DIFFERENTIAL BRANDS GROUP INC. , a Delaware corporation

	By:	/s/ Michael Buckley
	Name:	Michael Buckley
	Title:	CEO


	DBG SUBSIDIARY INC. , a Delaware corporation

	By:	/s/ Michael Buckley
	Name:	Michael Buckley
	Title:	CEO


	HUDSON CLOTHING, LLC , a California limited liability company

	By:	/s/ Michael Buckley
	Name:	Michael Buckley
	Title:	CEO

Signature Page to Consent and Amendment No. 1 to Credit and Security Agreement

	RG PARENT LLC , a Delaware limited liability company

	By:	/s/ Michael Buckley
	Name:	Michael Buckley
	Title:	CEO

	ROBERT GRAHAM RETAIL LLC a Delaware limited liability company

	By:	/s/ Michael Buckley
	Name:	Michael Buckley
	Title:	CEO

	ROBERT GRAHAM DESIGNS, LLC, a New York limited liability company

	By:	/s/ Michael Buckley
	Name:	Michael Buckley
	Title:	CEO

	ROBERT GRAHAM HOLDINGS, LLC, a New York limited liability company

	By:	/s/ Michael Buckley
	Name:	Michael Buckley
	Title:	CEO

Signature Page to Consent and Amendment No. 1 to Credit and Security Agreement

	GUARANTORS:

	INNOVO WEST SALES, INC. , a Texas corporation


	By:	/s/ Hamish Sandhu
	Name:	Hamish Sandhu
	Title:	CFO


	DBG HOLDINGS SUBSIDIARY INC. , a California corporation


	By:	/s/ Hamish Sandhu
	Name:	Hamish Sandhu
	Title:	CFO


	HUDSON CLOTHING HOLDINGS, INC. , a Delaware corporation


	By:	/s/ Michael Buckley
	Name:	Michael Buckley
	Title:	Chairman


	HC ACQUISITION HOLDINGS, INC. , a Delaware corporation


	By:	/s/ Michael Buckley
	Name:	Michael Buckley
	Title:	Chairman

Signature Page to Consent and Amendment No. 1 to Credit and Security Agreement

	RGH GROUP LLC , a Delaware limited liability company


	By:	/s/ Michael Buckley
	Name:	Michael Buckley
	Title:	CEO


	MARCO BRUNELLI IP, LLC , a Delaware limited liability company


	By:	/s/ Michael Buckley
	Name:	Michael Buckley
	Title:	CEO

Signature Page to Consent and Amendment No. 1 to Credit and Security Agreement

	AGENT:

	TCW ASSET MANAGEMENT COMPANY


	By:	/s/ Suzanne Grosso
	Name: Suzanne Grosso
	Title: Managing Director

Signature Page to Consent and Amendment No. 1 to Credit and Security Agreement

	LENDERS:

	TCW DIRECT LENDING LLC
	By TCW Asset Management Company LLC
	Its Investment Advisor,
	as a Lender


	By:	/s/ Suzanne Grosso
	Name: Suzanne Grosso
	Title: Managing Director

	TCW DIRECT LENDING STRATEGIC VENTURES LLC,
	as a Lender


	By:	/s/ Suzanne Grosso
	Name: Suzanne Grosso
	Title: Managing Director

	WEST VIRGINIA DIRECT LENDING LLC
	By TCW Asset Management Company LLC
	Its Investment Advisor,
	as a Lender


	By:	/s/ Suzanne Grosso
	Name: Suzanne Grosso
	Title: Managing Director

Signature Page to Consent and Amendment No. 1 to Credit and Security Agreement

EXHIBIT A

SWIMS Purchase Agreement

See attached.

EXHIBIT B

SWIMS Subordinated Note

See attached.

Schedule I
to
Consent and Amendment No. 1 to Credit and Security Agreement

SWIMS Permitted Indebtedness

1. An overdraft facility of NOK 11,000,000 with DNB Bank ASA.

2. A combined credit assurance and factoring arrangement, for up to 90% of SWIMS’ preapproved outstanding invoiced receivables, with DNB Bank ASA.

Exhibit 99.1

Differential Brands Group Announces Acquisition of SWIMS Brand

Company Expands Portfolio of Premium Consumer Brands with the Addition of Fast-Growing Scandinavian Leader in Contemporary Footwear & Apparel

· First Acquisition for Differential Brands’ Omni-Channel, Premium-Plus Platform

· The Unique Brand Positioning for SWIMS Complements Differential’s Platform Offerings

· SWIMS’ International Networks Create Cross-Pollination Opportunities for Differential’s Existing Brands

· The Transaction Is Expected to be Immediately Accretive

LOS ANGELES, July 19, 2016 — Differential Brands Group Inc. (Nasdaq:DFBG) (“Differential Brands” or the “Company”) announced today that it has completed the acquisition of SWIMS AS (“SWIMS”), a Scandinavian lifestyle brand best known for its range of fashion-forward, water-resistant footwear and sportswear that artfully balances performance, comfort and style. SWIMS distributes its full range of footwear, swimwear, outerwear, ready-to-wear and accessories worldwide through high-end department stores, independent specialty stores, and luxury resorts. The Company also sells product through its own website and through ten licensed SWIMS-branded stores.

The transaction is expected to be immediately accretive for Differential Brands. The acquisition and related expenses were financed through a combination of Differential’s common stock totaling approximately 700,000 shares, certain warrants and cash. Differential is also pleased to acquire such a high-quality brand at an attractive contribution multiple below 6.5 times. The Company obtained a $13.0 million bridge financing facility in order to facilitate the closing of the transaction.

Michael Buckley, Chief Executive Officer of Differential Brands, commented, “This marks the first acquisition for Differential Brands, and we are thrilled to be adding SWIMS, a sought-after lifestyle brand, to our portfolio. SWIMS’ unique, global footprint in the water-resistant footwear and apparel category aligns well with our strategy to build a portfolio of complementary, premium brands that consumers are passionate about. We believe that SWIMS offers significant growth opportunity through increased brand awareness and continued expansion in both the U.S. and international markets. The transaction also adds a strong sales network around the world to build our existing Robert Graham and Hudson businesses.”

Alex Eskeland, President and Co-Founder of SWIMS, commented, “We are excited to partner with the Differential Brands team to capitalize on their expertise and infrastructure, as well as leverage their omni-channel distribution strategy to expand SWIMS’ presence, including in the U.S. We’re also looking forward to helping diversify the geographic presence of Robert Graham and Hudson through our well-developed international network.”

About Differential Brands Group

Differential Brands Group Inc. (Nasdaq: DFBG) is a platform that focuses on branded operating companies in the premium apparel, footwear and accessories sectors. Our focus is on organically growing our brands through a global, omni-channel distribution strategy while continuing to seek opportunities to acquire accretive, complementary, premium brands.

Our current brands are Hudson®, a designer and marketer of women’s and men’s premium, branded denim and apparel, Robert Graham®, a sophisticated, eclectic apparel and accessories brand seeking to inspire a global movement, and SWIMS AS, a Scandinavian lifestyle brand best known for its range of fashion-forward, water-resistant footwear, apparel and accessories. For more information, please visit Differential’s website at: www.differentialbrandsgroup.com

About SWIMS AS

SWIMS was initially established to transform the traditional, utilitarian galosh into a tasteful lifestyle item with bold personality. While Scandinavia is famous for clean and minimalistic design, Norwegian brands are particularly functional and have to adapt to the highly contrasting seasons they face at home. Norwegians, famous for fearlessly and happily adapting between the heaviest winter months to the ‘warm’ summer months on the fjord, therefore require ultimate versatility and functionality. SWIMS enables the typical urban Scandinavian to look sleek with a touch of cheekiness, comfort and ultimate functionality fit for both slushy winter days in the city and warm days out on the boat during the summer season.

This release contains forward-looking statements within the meaning of the safe harbor provisions of the Private Securities Litigation Reform Act of 1995, as amended. The matters discussed in this news release involve estimates, projections, goals, forecasts, assumptions, risks and uncertainties that could cause actual results or outcomes to differ materially from those expressed in the forward-looking statements. All statements in this news release that are not purely historical facts are forward-looking statements, including statements containing the words “may,” “will,” “expect,” “anticipate,” “intend,” “estimate,” “continue,” “believe,” “plan,” “project,” “will be,” “will continue,” “will likely result” or similar expressions. Any forward-looking statement inherently involves risks and uncertainties that could cause actual results to differ materially from the forward-looking statements. Factors that would cause or contribute to such differences include, but are not limited to: the anticipated benefits of the merger on its financial results, business performance and product offerings, the Company’s ability to successfully integrate the SWIMS business and realize cost savings and any other synergies, the risk that the credit ratings of the company or its subsidiaries may be different from what the Company expects, continued acceptance of our product, product demand, competition, capital adequacy, general economic conditions and the potential inability to raise additional capital if required; the risk that the Company will be unsuccessful in gauging fashion trends and changing customer preferences; the risk that changes in general economic conditions, consumer confidence, or consumer spending patterns will have a negative impact on the Company’s financial performance; the highly competitive nature of the Company’s business in the United States and internationally and its dependence on consumer spending patterns, which are influenced by numerous other factors; the Company’s ability to respond to the business

environment and fashion trends; continued acceptance of the Company’s brands in the marketplace; and other risks. The Company discusses certain of these factors more fully in its additional filings with the SEC, including its last annual report on Form 10-K and quarterly report on Form 10-Q filed with the SEC, and this release should be read in conjunction with those reports, together with all of the Company’s other filings, including current reports on Form 8-K, through the date of this release. The Company urges you to consider all of these risks, uncertainties and other factors carefully in evaluating the forward-looking statements contained in this release.

Any forward-looking statement is based on information current as of the date of this document and speaks only as of the date on which such statement is made, and the Company undertakes no obligation to update these statements to reflect events or circumstances after the date on which such statement is made. Readers are cautioned not to place undue reliance on forward-looking statements.

Contacts:

Investor Relations:

Hamish Sandhu

Differential Brands Group Inc.
323.558.5188

Media Inquiries:

Sophia Manata

Robert Graham

smanata@robertgraham.us

646.625.5123