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                                                                    EXHIBIT 10.5

                    PRODUCT DESIGN AND DEVELOPMENT AGREEMENT


     THIS PRODUCT DESIGN AND DEVELOPMENT AGREEMENT (this "Agreement") is entered
into effective the 5th day of August, 1997 among the following parties: ST. JOHN
KNITS, INC., a California corporation ("St. John"), AMEN WARDY, SR., an
individual ("Amen Wardy") and AMEN WARDY, JR., an individual (For purposes of
Sections 6.1, 6.2, 6.3, 6.4, 6.5, 7.1, 7.2, 7.3 and 7.4 hereof the term "Amen
Wardy" shall refer to Amen Wardy, Sr. and Amen Wardy, Jr. Amen Wardy, Jr. is a
party only to Sections 6.1, 6.2, 6.3, 6.4, 6.5, 7.1, 7.2, 7.3 and 7.4 hereof).

                                   RECITALS

     A.   St. John designs, manufactures and distributes a high fashion line of
women's clothing and accessories.

     B.   Amen Wardy is an individual who owns and operates a high-end home
furnishing retail store in Aspen, Colorado.

     C.   St. John desires to develop, market and distribute its own line of
home furnishing products and gifts as more fully defined in Schedule C attached
hereto ("Home Furnishing Products and Gifts") under the name "St. John Home by
Amen Wardy."

     D.   St. John and Amen Wardy each desire that Amen Wardy provide to St.
John certain design and development services relating to the development of a
line of Home Furnishing Products and Gifts and assign and consent to St. John
the right to use the name "Amen Wardy" on the terms and conditions set forth in
this Agreement.

     NOW, THEREFORE, with reference to the foregoing Recitals, and in exchange
for good and valuable consideration, the receipt and sufficiency of which is
hereby acknowledged, the parties hereto covenant and agree as follows:


1.   DESIGN AND DEVELOPMENT PROGRAM

     1.1  Amen Wardy's Responsibilities. During the term of this Agreement, Amen
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Wardy agrees to perform the functions necessary to design and develop a line of
Home Furnishing Products and Gifts (such Home Furnishing Products and Gifts
designed and/or developed by Amen Wardy or sold by St. John under the Product
Trademark (as defined in Section 6.1 hereof) pursuant to Section 8.5 hereof
shall be referred to in this Agreement as the "Products"), including, without
limitation, the activities set forth in the subparts of this Section 1.1 (the
"Work"):

          1.1.1  Prepare and recommend a schedule and plan for the development
of Products;
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          1.1.2  Obtain and/or design and/or develop samples of Products and
make presentations of such samples to St. John at its offices in Irvine,
California;

          1.1.3  Design and create packaging for the Products;

          1.1.4  If applicable, purchase Products from third parties;

          1.1.5  Make personal appearances on behalf of St. John and the
Products as St. John may reasonably request from time to time; and

          1.1.6  Perform any other services from time to time in connection with
the Products as St. John reasonably requests.

     1.2  St. John Approval.  All matters relating to the development of the
          -----------------                                                 
Products, including, but not limited to, the designs, samples, budgets, plans
and schedules prepared by Amen Wardy pursuant to this Agreement, are subject to
St. John's express written prior approval.  After any matter has been approved
by St. John, Amen Wardy shall not depart therefrom in any material respect
without the express prior approval of St. John.

     1.3  Negotiation of Contracts.  All contracts to be negotiated hereunder by
          ------------------------                                              
Amen Wardy on behalf of St. John are subject to St. John's prior written
approval and execution. Amen Wardy shall have no authority to enter into any
agreements on behalf of St. John nor shall Amen Wardy approve on behalf of St.
John plans and designs, change orders, budgets, revisions to budgets, or similar
matters contemplated hereby, except with St. John's prior authorization.  As
soon as practicable from the date of this Agreement, Amen Wardy shall submit his
initial purchasing request setting forth requested expenditures for his initial
purchasing trip.  Such expenditures shall be subject to the prior approval of
St. John.  Prior to any subsequent purchasing trips, Amen Wardy shall submit
similar purchasing requests for St. John's approval.

     1.4  Best Efforts.  Amen Wardy shall devote his best efforts and business
          ------------                                                        
judgment to serving St. John as the designer and developer of the Products, and
shall perform his duties hereunder in a diligent and careful manner so as to
develop the Products in accordance with the plans, schedules and budgets
approved by St. John.  St. John shall devote its best efforts to market and
distribute the Products.

     1.5  Exclusivity.  St. John agrees that Amen Wardy will be the exclusive
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designer and developer of the St. John line of Home Furnishing Products and
Gifts during the term of this Agreement.  Amen Wardy agrees that he shall design
and develop Home Furnishing Products and Gifts exclusively for St. John during
the term of this Agreement; provided, however that Amen Wardy may design and
develop Home Furnishing Products and Gifts (i) for Amen Wardy Home Stores, LLC,
a Delaware limited liability company ("Amen Wardy Home Stores"), and (ii) for
sale solely in Aspen, Colorado and then only in the Amen Wardy home furnishing
store as currently operated in all material respects in Aspen, Colorado (the
"Aspen Store").

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     1.6  Books and Records. Amen Wardy agrees to keep accurate books of account
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and records, covering all transactions relating to this Agreement, and St. John
and its duly authorized representatives shall have the right, upon five (5) days
prior written notice and during regular business hours, to examine the books of
account and records and all other documents and material in the possession or
under the control of Amen Wardy that relate to the design and development of the
Products.

2.   DESIGN FEE PROVISIONS.

     2.1  Design Fee Payable to Amen Wardy.  In consideration of Amen Wardy's
          --------------------------------                                   
design and development efforts in connection with this Agreement, St. John shall
pay to Amen Wardy a design fee of two percent (2%) of the Net Sales of the
Products sold by St. John.  The design fee shall commence on the first
commercial sale of the Products.  Except as set forth in Section 8.5 hereof, the
obligation to pay the design fee shall terminate for all purposes upon the
termination of this Agreement, except that St. John shall pay any unpaid design
fee on Products sold by St. John prior to the termination of this Agreement.
Net Sales means the price charged to its customers for the Products, less
customary trade discounts, return rebates and federal excise taxes.

     2.2  Payments and Records. St. John shall keep complete and accurate
          --------------------                                      
records in accordance with generally accepted accounting principles on sales of
the Products by St. John. On or before the sixtieth (60th) day after the end of
each fiscal quarter of St. John in which a commercial sale of the Products by
St. John occurs, St. John shall furnish Amen Wardy with a written report setting
forth the Net Sales of the Products during such fiscal quarter, together with a
calculation of the design fee due on reported sales. Such report shall be
accompanied by any design fee payment shown thereon to be due. St. John shall
provide Amen Wardy such records as Amen Wardy shall reasonably request to enable
him to review the calculation of Net Sales.

     2.3  Right to Audit.  If Amen Wardy fails to notify St. John in writing,
          --------------                                                     
within thirty (30) business days following the delivery of the written report
setting forth the calculation of the design fee due, of any objections to such
calculation, Amen Wardy's failure to so object shall constitute approval of such
calculations.  If Amen Wardy timely objects, Amen Wardy and St. John shall use
their best efforts to resolve any differences with respect to such calculations.
In the event St. John and Amen Wardy are unable to reach an agreement, Amen
Wardy shall have the right to cause an independent accounting firm mutually
acceptable to both parties (the "Reviewer") to perform a review (the "Review")
of the calculations and resolve such dispute.  Amen Wardy may cause only one
Review in each of St. John's fiscal years during the term of this Agreement;
provided, however that any one such Review may address the calculations of the
design fee (i) which have been set forth in the written reports delivered by St.
John to Amen Wardy during the twelve months preceding the date of such Review
and (ii) which have not been subject to a prior Review.  Such firm shall act as
arbitrator, and its conclusions shall be conclusive hereunder, absent fraud or
manifest error.  Any upward adjustment to the design fee due pursuant to this
Section 2.3 shall be paid promptly by St. John to Amen Wardy and any downward
adjustment to such 

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design fee shall be paid promptly by Amen Wardy to St. John. Amen Wardy shall
pay all of the fees and expenses in connection with the Review, unless the
design fee due to Amen Wardy is adjusted upward by at least 5% as a result of
the Review, in which case St. John shall pay all such fees and expenses.

     2.4  Reimbursement of Reasonable Expenses.  St. John shall reimburse Amen
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Wardy for all reasonable out-of-pocket costs, charges, fees and expenses paid by
Amen Wardy in the performance of his duties hereunder.

3.   Indemnification

     Amen Wardy will defend, indemnify and hold St. John harmless from and
against all losses, damages, liabilities, expenses and costs, including
reasonable attorney's fees, rising out of:  (i) willful or intentional
misconduct, knowingly fraudulent or deliberately dishonest acts or omissions, or
the negligent acts or omissions of Amen Wardy, Amen Wardy's employees, agents or
independent contractors and (ii) any action or claim alleging infringement of
any third party rights including without limitation rights under copyright,
trademark, patent, trade secret or any other proprietary right. This
indemnification shall survive the expiration or termination of the Agreement.
Notwithstanding the foregoing, no payments pursuant to this Section 3 shall be
made by Amen Wardy to indemnify St. John for any losses, damages, liabilities,
expenses and costs, including reasonable attorney's fees, rising out of the
negligent acts or omissions of Amen Wardy, Amen Wardy's employees, agents or
independent contractors to the extent payment is actually made to and received
by St. John for such losses, damages, liabilities, expenses and costs under a
valid and collectible insurance policy and St. John hereby waives and
relinquishes any and all rights which it may have against Amen Wardy pursuant to
this Section 3 on account of such losses, damages, liabilities, expenses and
costs suffered by it rising out of the negligent acts or omissions of Amen
Wardy, Amen Wardy's employees, agents or independent contractors to the extent
such losses, damages, liabilities, expenses and costs are covered by a valid and
collectible insurance policy and as to which St. John is fully reimbursed by an
insurer.  St. John hereby agrees to maintain reasonable and customary liability
insurance coverage, as St. John shall determine in its sole discretion, during
the term of this Agreement.

4.   Confidentiality.

     4.1  Confidential Information. Amen Wardy acknowledges that Amen Wardy
          ------------------------              
shall have access to, and that there shall be disclosed to Amen Wardy,
information of a confidential nature that has value to St. John ("Confidential
Information"), including, without limitation, information, ideas, concepts, 
know-how, methods, techniques, material and data relating to the business, 
financial condition, work-in-progress, designs and artistic creations of St.
John, whether or not such information is patentable or copyrightable. St. John
acknowledges that, except for Amen Wardy's engagement by St. John, Amen Wardy
would not otherwise have access to such information. During the term of this
Agreement or any time thereafter, Amen Wardy shall keep all Confidential
Information in confidence and shall not directly disclose any Confidential
Information to any person, except (i) to Amen Wardy's

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employees who agree in writing to be bound by this Agreement (the "Permitted
Employees"), (ii) to St. John's personnel on a "need-to-know" basis and to other
persons as designated in writing by St. John, (iii) if and to the extent such
Confidential Information hereafter becomes lawfully and without breach of this
Agreement within the public domain, or (iv) to the extent such duty as to
confidentiality is waived in writing by St. John. Without the express consent of
St. John, Amen Wardy and his Permitted Employees shall not use or permit to be
used any Confidential Information for the gain or benefit of any party other
than St. John or for personal gain or benefit outside the scope of Amen Wardy's
engagement by St. John.

     4.2  Remedies. Amen Wardy acknowledges that such Confidential Information
          --------                                                            
constitutes trade secrets, disclosure of which would cause irreparable harm to
St. John; therefore,  St. John is entitled to injunctive relief in a court of
law to prevent the disclosure of any Confidential Information or trade secrets,
or to seek damages resulting therefrom, and shall not be required to resolve any
such dispute through arbitration.

5.   Right to Products, Designs, Ideas and Inventions.

     5.1  Products.  The Products, together with the combinations of designs,
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colors and ornamentations that make up the Products, shall be the sole property
of St. John and any use thereof shall be controlled by St. John in its sole
discretion.

     5.2  Ideas and Inventions. Amen Wardy agrees to promptly disclose and
          --------------------                              
assign to St. John all of Amen Wardy's ideas, concepts, know-how, techniques,
processes, methods, inventions, discoveries, developments, innovations and
improvements ("Inventions") conceived or made by Amen Wardy, whether alone or
with others, during the term of this Agreement, and which either: (a) involve or
are reasonably related to St. John's actual or demonstrably anticipated research
or development; or (b) incorporate or are based on, in whole or in part, any of
the Confidential Information. Amen Wardy agrees to provide all assistance
reasonably requested by St. John in the preservation of its interests in the
Inventions, such as by executing documents, testifying, and all similar
activity, such assistance to be provided at St. John's expense but without any
additional compensation to Amen Wardy. Amen Wardy shall, at the expense of St.
John, assist St. John or its nominees to obtain patents for such Inventions in
any countries throughout the world. Such Inventions shall be the property of St.
John or its nominees, whether patented or not. Amen Wardy hereby irrevocably
appoints St. John, and its duly authorized officers and agents, as Amen Wardy's
agent and attorney-in-fact to act for and in behalf of Amen Wardy in filing all
patent applications, applications for copyright protection and registration
amendments, renewals, and all other appropriate documents in any way related to
the Inventions. For the purposes of this Agreement, an Invention is deemed to
have been made during the term of Amen Wardy's engagement to perform the Work if
the Invention was conceived or first actually reduced to practice during the
term of such engagement, and Amen Wardy agrees that any disclosures of an
Invention or any patent application made within one (1) year after termination
of Amen Wardy's engagement shall be presumed to relate to an Invention which 

                                       5
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was made during the term of Amen Wardy's engagement unless Amen Wardy provides
satisfactory and compelling evidence to the contrary.

     5.3  Copyrights. Amen Wardy agrees that any Work prepared by Amen Wardy for
          ----------                                                  
St. John which is eligible for copyright protection in the United States or
elsewhere shall be a work made for hire. If any such Work is deemed for any
reason not to be a work made for hire, Amen Wardy assigns all right, title and
interest in the copyright in such Work, and all extensions and renewals thereof,
to the St. John, and agrees to provide all assistance reasonably requested by
St. John in the establishment, preservation and enforcement of its copyright in
such Work, such assistance to be provided at St. John's expense but without any
additional compensation to Amen Wardy. Amen Wardy agrees to waive all moral
rights relating to the Work developed or produced, including, without
limitation, any and all rights of identification of authorship and any and all
rights of approval, restriction or limitation on use or subsequent
modifications.

     5.4  Conflicting Obligations And Rights. Prior to commencing any Work for
          ----------------------------------                   
St. John, Amen Wardy shall inform St. John in writing of any apparent or
potential conflict between Amen Wardy's Work for St. John and (a) any
obligations Amen Wardy may have to preserve the confidentiality of the
proprietary information or materials of any other party, or (b) any rights Amen
Wardy claims to any patents, copyrights, trade secrets, or other discoveries,
inventions, ideas, know-how, techniques, methods, processes or other proprietary
information or materials relating to Home Furnishing Products and Gifts.
Otherwise, St. John may conclude that no such conflict exists and Amen Wardy
agrees thereafter to make no such claim against St. John. St. John shall receive
such disclosures in confidence.

     5.5  Assistance of Amen Wardy. Amen Wardy agrees to provide all assistance
          ------------------------                                         
reasonably requested by St. John in the preservation of St. John's interests in
the Inventions, such assistance to be provided without any additional
compensation to Amen Wardy; provided, however that Amen Wardy shall not incur
any material cost in providing such assistance.

6.   PRODUCT TRADEMARK.

     6.1  Name of Products.  St. John shall market and distribute the Products
          ----------------                                                    
under the trademark "St. John Home by Amen Wardy," or such other trademarks that
include the words "Amen", "Wardy", both, or any combination of such names, with
or without initials, that also include the words "St. John" as St. John shall
determine in its sole discretion (the "Product Trademark").

     6.2  No Ownership Rights. Amen Wardy acknowledges and agrees that Amen
          -------------------                                    
Wardy shall acquire no ownership rights to the Product Trademark by virtue of
this Agreement or otherwise and that all uses by Amen Wardy of the Product
Trademark and any and all goodwill related thereto shall inure to the benefit of
St. John. Amen Wardy shall not, at any time, do or suffer to be done any act or
thing which may in any way adversely affect the

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validity of the Product Trademark, any rights of St. John in and to the Product
Trademark or any registrations thereof or which, directly or indirectly, may
reduce the value of the Product Trademark or detract from its reputation.

     6.3  Consent to Use Name. Subject to (i) the rights of Amen Wardy Home
          -------------------                                          
Stores pursuant to that certain Limited Liability Company Agreement, dated the
date hereof, by and among Amen Wardy, Amen Wardy Home Stores, St. John and
certain others and (ii) the provisions of Section 8.5 hereof, Amen Wardy hereby
(x) immediately and irrevocably sells, assigns, conveys and grants to St. John
all the right and title to the use of the name "Amen Wardy", "Amen", "A. Wardy",
"Wardy", "A. Wardy, Jr.", "A. Wardy, Sr." or any combination of such name and/or
initials (the "Amen Wardy Name") as part of the Product Trademark and (y)
consents to the registration of the Amen Wardy Name as part of the Product
Trademark in accordance with the Assignments and/or Consents attached hereto as
Exhibits A-1, A-2, B-1 and B-2. Amen Wardy agrees that Amen Wardy shall not use
the Amen Wardy Name for any purpose related to Home Furnishing Products and
Gifts; provided, however, that Amen Wardy may use the Amen Wardy Name only in
Aspen, Colorado and then only in connection with the Aspen Store as currently
operated in all material respects.

     6.4  Agreement to Cooperate.
          ---------------------- 

          6.4.1  Amen Wardy shall not, during the term of this Agreement or any
time thereafter, directly or indirectly, contest or aid others in contesting the
ownership of the Product Trademark. Amen Wardy shall not use the Product
Trademark, in whole or in part, as a corporate name or trade name. Amen Wardy
shall not join any name or names with the Product Trademark so as to form a new
mark or for any other purpose or use.

          6.4.2  At St. John's request, Amen Wardy shall execute any and all
documents reasonably required by St. John to confirm St. John's ownership of all
rights in and to the Product Trademark and the respective rights of St. John and
Amen Wardy pursuant to this Agreement. Amen Wardy shall cooperate with St. John
in connection with the filing and prosecution by St. John of applications in St.
John's name to register the Product Trademark for the Products and the
maintenance and renewal of such registrations as may issue.

          6.4.3  In the event that Amen Wardy learns of any infringement, act of
unfair competition by third parties or imitation of the Product Trademark or of
any use by any person of a trademark similar to any Product Trademark, he shall
promptly notify St. John thereof. St. John thereupon may take such action as it
deems advisable for the protection of its rights in and to the Product Trademark
and, if requested to do so by St. John, Amen Wardy shall cooperate with St. John
in all respects. In no event, however, shall St. John be required to take any
action if it deems it inadvisable to do so and Amen Wardy shall have no right to
take any action with respect to the Product Trademark without St. John's prior
written approval. St. John shall have full control over any action taken,
including without limitation, the right to select counsel, to settle on any
terms it deems advisable in its

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discretion, to appeal any adverse decision rendered in any court, to discontinue
any action taken by it, and otherwise to make any decision in respect thereto as
it in its discretion deems advisable. If Amen Wardy desires to retain his own
counsel, he shall do so at his own expense. Any recovery as a result of such
action shall belong solely to St. John.

          6.4.4  Subject to (i) the rights of Amen Wardy Home Stores pursuant to
that certain Limited Liability Company Agreement, dated the date hereof, by and
among Amen Wardy, Amen Wardy Home Stores, St. John and certain others and (ii)
the provisions of Section 8.5 hereof, Amen Wardy agrees that he shall not,
during the term of this Agreement or thereafter, use, register or apply to
register the Product Trademark or any trademarks or logos similar thereto or
using the words "Amen," "Wardy," or any permutation thereof in connection with
Home Furnishing Products and Gifts anywhere in the world. Without limiting the
foregoing, upon and after the expiration or termination of this Agreement, Amen
Wardy, upon St. John's request, shall execute such documents as may be necessary
to further confirm St. John's rights in the Product Trademark.

     6.5  Remedies.  St. John is entitled to injunctive relief in a court of law
          --------                                                              
to prevent, and to seek any damages that result from, any infringement or misuse
by Amen Wardy of any St. John trademark, including, but not limited to, the
Product Trademark, and shall not be required to resolve any such dispute through
arbitration.

7.   COVENANT NOT TO COMPETE.

     7.1  Non-Competition and Non-Solicitation. Except as St. John may otherwise
          ------------------------------------                         
consent in writing, during the term of this Agreement and for the period
immediately thereafter measured by the length of time of the actual term of the
Agreement, but which period shall in no event exceed three (3) years, Amen Wardy
shall not, directly or indirectly: (i) own, manage, operate, control or
otherwise be in any manner affiliated or connected with, or engage or
participate in the ownership, management, operation or control of (as principal,
agent, proprietor, partner, member, shareholder, trustee, administrator,
consultant, independent contractor, or otherwise), any business or entity which
as one of its business activities competes, directly or indirectly, with St.
John in the sale of Home Furnishing Products and Gifts within the general
geographic vicinity of any location from which St. John sells or distributes
Home Furnishing Products and Gifts, except that Amen Wardy may engage or
participate in the ownership, management or operation of (a) Amen Wardy Home
Stores and (b) the Aspen Store, but only as currently operated in all material
respects and then only in Aspen, Colorado; (ii) attempt to solicit, sell, offer,
or provide Home Furnishing Products and Gifts or related products to any person
or entity which is a customer of St. John except that Amen Wardy may attempt to
solicit, sell, offer or provide Home Furnishing Products and Gifts to customers
of St. John in connection with the Aspen Store, but only as currently operated
in all material respects and then only in Aspen, Colorado; (iii) lend money,
guarantee loans, make gifts of money or other property, or otherwise lend
financial or other assistance in any form to any person, firm, association,
partnership, venture, corporation, limited liability company or other business
entity who engaged in or will within the period described above engage in any of
the activities prohibited by (i) or (ii) of this

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Section 7.1; or (iv) solicit any of St. John's key employees, including, without
limitation, supervisory personnel, executives and senior management, for
employment or engagement with a person or entity involved in marketing products
or services competitive with St. John.

     7.2  Additional Restrictions on the Use of Confidential Information.  Amen
          --------------------------------------------------------------       
Wardy agrees and covenants that because of the confidential and sensitive nature
of the Confidential Information and because the use of, or even the appearance
of the use of, the Confidential Information in certain circumstances may cause
irreparable damage to St. John and its reputation, or to clients of St. John:

          7.2.1  Use of Information. Amen Wardy shall not at any time directly
                 ------------------                             
or indirectly, through any corporation or association in any business,
enterprise or employment, develop, apply, invent, or use the Confidential
Information in any research, commercial or other enterprises or manufacture or
otherwise derive or distribute from the Confidential Information a corresponding
product of any kind, including, without limitation, a corresponding product that
is in any way similar to the products described in the Confidential Information
or that could in any way compete with the products described in the Confidential
Information in the marketplace.

          7.2.2  Geographic Scope. St. John and Amen Wardy agree and acknowledge
                 ----------------                                 
that the marketplace for the products described in the Confidential Information
and the geographic scope of St. John's use of the Confidential Information are
and shall be nationwide and therefore the covenants restricting Amen Wardy's
activities as provided in this Section 7.2 shall apply to all cities and
counties in which St. John is doing business nationwide.

     7.3  Remedies for Violation of Covenant Not To Compete.  Amen Wardy
          -------------------------------------------------             
acknowledges that any violation by him of any provision of this Section 7 will
cause irreparable harm to St. John, that damages for such harm will be incapable
of precise measurement and that, as a result, St. John will not have an adequate
remedy at law to redress the harm caused by such violations.  Therefore, in the
event of Amen Wardy's violation of any provisions of Section 7, Amen Wardy
agrees that, in addition to its other remedies, St. John shall be entitled to
injunctive relief, including, but not limited to temporary restraining orders
and/or preliminary or permanent injunctions to restrain or enjoin any violation
of Section 7 by Amen Wardy.  In addition to other relief to which it shall be
entitled, St. John shall be entitled to recover from Amen Wardy the costs and
reasonable attorney's fees incurred by St. John in seeking (i) enforcement of
Section 7 and (ii) relief from Amen Wardy's violation of any restriction
contained in Section 7.

     7.4  Saving Provision. St. John and Amen Wardy agree and stipulate that the
          ----------------                                         
agreements and covenants contained in Section 7 are fair and reasonable in light
of all of the facts and circumstances of the relationship between St. John and
Amen Wardy; however, St. John and Amen Wardy are aware that in certain
circumstances courts have refused to enforce certain restrictions of this type.
Therefore, in furtherance of and not in derogation of the provisions of Section
7, St. John and Amen Wardy agree that in the event a court should

                                       9
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decline to enforce any of the provisions of Section 7, then that Section 7 shall
be deemed to be modified to restrict Amen Wardy's competition with St. John to
the maximum extent, in both time and geography, which the court shall find
enforceable.

8.   TERM AND TERMINATION RIGHTS

     8.1  Term.  The term of this Agreement shall be five years from the date
          ----                                                               
first noted above, unless terminated prior to that time in accordance with the
terms hereof.

     8.2  Termination Upon Death or Disability.  This Agreement shall
          ------------------------------------                       
automatically terminate (i) upon the death of Amen Wardy or (ii) if, in St.
John's discretion, St. John determines Amen Wardy is no longer able to perform
his duties under this Agreement as a result of a disability.  In such event, St.
John shall be obligated to pay Amen Wardy's estate or Amen Wardy, as the case
may be, only the accrued but unpaid fees and expenses (including any unpaid
design fee on Products sold prior to such termination) due under this Agreement
as of the date of termination.

     8.3  Termination by Notice.  This Agreement is terminable by either of the
          ---------------------                                                
parties in their sole discretion upon six (6) months written notice. If St. John
exercises its right to terminate the Agreement, any obligation it may otherwise
have under this Agreement shall cease immediately upon termination of the
Agreement, except that St. John shall be obligated to pay the accrued but unpaid
fees and expenses due under this Agreement as of the date of termination.

     8.4  Events of Default.  Either party ("Terminating Party") may terminate
          -----------------                                                   
this Agreement with the other party ("Non-Terminating Party") upon the
occurrence of any of the following:

          8.4.1  Breach of Agreement. If the Non-Terminating party breaches any
                 -------------------                           
term or condition of this Agreement and after receiving written notice of such
breach from the Terminating Party, fails to cure such breach within ten (10)
days' after receipt of such notice. Should the breaching party cure such breach
and perform its obligation during the notice period, the Agreement shall
continue in full force and effect.

          8.4.2  Insolvency/Dissolution. If at any time the Non-Terminating
                 ----------------------                              
Party shall generally not pay the Non-Terminating Party's debts as they become
due or shall admit in writing the Non-Terminating Party's inability to pay the
Non-Terminating Party's debts, or shall make a general assignment for the
benefit of creditors; or if the Non-Terminating Party shall commence any case,
proceeding or other actions seeking to have an order for relief entered on the
Non-Terminating Party's behalf as debtor or to adjudicate the Non-Terminating
Party as bankrupt or insolvent, or seeking the reorganization, arrangement,
adjustment, liquidation, dissolution or composition of the Non-Terminating Party
or the Non-Terminating Party's debts under any law relating to bankruptcy,
insolvency, reorganization or relief of debtors or seeking appointment of a
receiver, trustee, custodian or other similar official for the Non-Terminating
Party or for all or a substantial part of the Non-Terminating 

                                       10
<PAGE>
 
Party's assets; or if any such case, proceeding, or other action shall be
commenced against the Non-Terminating Party, and such case, proceeding or other
action (i) results in the entry of an order for relief against the Non-
Terminating Party which is not fully stayed within thirty (30) business days
after entry thereof, or (ii) shall remain undismissed for a period of ninety
(90) calendar days.


     8.5  Extension Fee.
          ------------- 

          (a)  Upon the expiration of the term of this Agreement or its earlier
termination as provided herein, St. John shall have the right to continue to use
the Amen Wardy Name and the Product Trademark pursuant to the provisions of
Sections 6.1, 6.2, 6.3, 6.4, and 6.5 herein, provided that such rights shall
continue only if St. John elects to pay a fee (the "Extension Fee") of one
percent (1%) of Net Sales (as defined in Section 2.1 hereof) of Products sold by
St. John from and after the termination or expiration of this Agreement and such
Extension Fee is not less than $50,000 for any fiscal year.  If St. John wishes
to exercise its right to continue to use the Amen Wardy Name and the rights to
the Product Trademark as provided herein, St. John shall notify Amen Wardy or
his successors or heirs in writing within sixty (60) days from the date of the
termination or expiration of this Agreement (the "Extension Notice Period") that
St. John has elected, in its sole discretion, to continue its use of the Amen
Wardy Name and Product Trademark in exchange for payment of the Extension Fee.
If St. John fails to deliver notice of its exercise of its rights within the
Extension Notice Period, then St. John (i) shall be under no obligation to pay
the Extension Fee and the provisions of Section 6 of this Agreement shall
immediately terminate and (ii) shall thereafter have no rights to:  (x) use, and
shall desist from using, the Amen Wardy Name or (y) sell, market, license or
distribute any Home Furnishing Products or Gifts under the Product Trademark.
St. John acknowledges that if it has not elected to exercise its right to use
the Amen Wardy Name and the Product Trademark pursuant to this Section 8.5(a),
its use of the Amen Wardy Name or the Product Trademark after the expiration of
the Extension Notice Period in violation of Section 8.5(a) will cause
irreparable harm to Amen Wardy, that damages for such harm will be incapable of
precise measurement and that, as a result, Amen Wardy will not have an adequate
remedy at law to redress the harm caused by such violation.  Therefore, in the
event St. John has not elected to use the Amen Wardy Name and the Product
Trademark and St. John uses the Amen Wardy Name or Product Trademark after the
expiration of the Extension Notice Period in violation of this Section 8.5(a),
St. John agrees that, in addition to his other remedies, Amen Wardy shall be
entitled to injunctive relief, including, but not limited to temporary
restraining orders and/or preliminary or permanent injunctions to restrain or
enjoin such violation by St. John.

          (b)  If St. John elects to continue its use of the Amen Wardy Name and
Product Trademark in exchange for payment of the Extension Fee, the Extension
Fee shall be paid as provided in Section 2.2 and 2.3 hereof.  Thereafter, St.
John may elect at any time, in its sole discretion, to terminate payment of the
Extension Fee upon sixty (60) days prior written notice to Amen Wardy (the
"Termination Notice Period").  Upon the expiration of the Termination Notice
Period, any obligation St. John may have under this Agreement 

                                       11
<PAGE>
 
shall cease immediately, except that St. John shall pay any accrued but unpaid
Extension Fee due prior to the expiration of the Termination Notice Period. Upon
the expiration of the Termination Notice Period, St. John (i) shall be under no
obligation to pay the Extension Fee and the provisions of Section 6 of this
Agreement shall immediately terminate and (ii) shall thereafter have no rights
to: (x) use, and shall desist from using, the Amen Wardy Name or, (y) to sell,
market, license or distribute Home Furnishing Products and Gifts under the
Product Trademark. St. John acknowledges that its use of the Amen Wardy Name or
the Product Trademark after the expiration of the Termination Notice Period in
violation of this Section 8.5(b) will cause irreparable harm to Amen Wardy, that
damages for such harm will be incapable of precise measurement and that, as a
result, Amen Wardy will not have an adequate remedy at law to redress the harm
caused by such violation. Therefore, in the event of St. John's use of the Amen
Wardy Name or Product Trademark after the expiration of the Termination Notice
Period in violation of this Section 8.5(b), St. John agrees that, in addition to
his other remedies, Amen Wardy shall be entitled to injunctive relief,
including, but not limited to temporary restraining orders and/or preliminary or
permanent injunctions to restrain or enjoin such violation by St. John.


9.   Miscellaneous

     9.1  Meaning of Certain Terms.  The phrase "as currently operated in all
          ------------------------                                           
material respects" as used in this Agreement to describe the Aspen Store is
intended by the parties to prohibit the Aspen Store from competing (to the
extent provided herein) with St. John through the marketing, sale, exchange or
distribution of Home Furnishing Products and Gifts in any location in the world,
and to third parties located anywhere in the world, other than in Aspen,
Colorado; provided, however, that the Aspen Store may ship goods to customers
outside Aspen, Colorado provided such customers purchased such goods in the
Aspen Store in Aspen, Colorado.   The parties do not intend that such phrase
restrict Amen Wardy in the day-to-day operations of the Aspen Store, including
the determination of the products sold in the Aspen Store, the location of the
Aspen Store in Aspen, Colorado, the artistic design of the Aspen Store, the
business hours of the Aspen Store and the persons employed by the Aspen Store,
unless such day-to-day operations allow the Aspen Store to compete with St.
John's Home Furnishing Products and Gifts business anywhere in the world other
than in Aspen, Colorado.

     9.2  No Waiver. No failure or delay on the part of St. John to exercise any
          ---------                                         
right, power or privilege under this Agreement and no course of dealing between
Amen Wardy and St. John shall impair such right, power or privilege or operate
as a waiver of any default or an acquiescence therein, nor shall any single or
partial exercise of any such right, power or privilege preclude any other or
further exercise thereof or the exercise of any other right, power or privilege.
The rights and remedies expressly provided in this Agreement are cumulative to,
and not exclusive of, any rights or remedies that St. John would otherwise have.
No notice to or demand on Amen Wardy in any case shall entitle Amen Wardy to any
other or further notice or demand in similar or other circumstances or
constitute a waiver of

                                       12
<PAGE>
 
the right of St. John to any other or further action in any circumstances
without notice or demand.

     9.3  No Agency. This Agreement does not constitute an agency, partnership
          ---------                                                
or joint venture between the parties, and any action by Amen Wardy pursuant to
this Agreement shall be in Amen Wardy's capacity as an independent contractor.

     9.4  Notices.  Any notice or other communication hereunder must be given in
          -------                                                               
writing and (a) delivered in person, (b) transmitted by telex, telefax or
telecommunications mechanism, provided that any notice so given is also mailed
as provided in clause (c), or (c) mailed by certified or registered mail,
postage prepaid, receipt requested as follows:

     IF TO ST. JOHN, ADDRESSED TO:

     St. John Knits, Inc.
     17422 Derian Avenue
     Irvine, California  92713
     Telecopy:  (714) 223-3272
     Attn:  Mr. Robert Gray

     WITH A COPY TO:

     O'Melveny & Myers LLP
     610 Newport Center Drive, Suite 1700
     Newport Beach, California  92660-6429
     Telecopy:  (714) 669-6994
     Attn:  David A. Krinsky, Esq.

     IF TO AMEN WARDY, ADDRESSED TO:

     Amen Wardy Home, Inc.
     210 South Galena
     Aspen, Colorado  81611
     Telecopy:  (970) 920-9163
     Attn:  Amen Wardy, Sr.

     WITH COPIES TO:

     The Busch Firm
     2532 Dupont Drive
     Irvine, California  92612-1254
     Telecopy:  (714) 474-7732
     Attn:  George Mulcaire, Esq.

                                       13
<PAGE>
 
or to such other address or to such other person as either party shall have last
designated by such notice to the other party.  Each such notice or other
communication shall be effective (i) if given by telecommunication, when
transmitted to the applicable number so specified in (or pursuant to) this
Section 9.3 and an appropriate answerback is received or, if transmitted after
4:00 p.m. local time on a business day in the jurisdiction to which such notice
is sent or at any time on a day that is not a business day in the jurisdiction
to which such notice is sent, then on the immediately following business day,
(ii) if given by mail, on the first business day in the jurisdiction to which
such notice is sent following the date three days after such communication is
deposited in the mails with first class postage prepaid, addressed as aforesaid
or (iii) if given by any other means, on the business day when actually received
at such address or, if not received on a business day, on the business day
immediately following such actual receipt.

     9.5  Headings.  Section and paragraph headings contained in this Agreement
          --------                                                             
are for convenience and shall not be considered for any purpose in construing
this Agreement.

     9.6  Assignment. The parties acknowledge that (i) St. John is relying on
          ----------                                                   
the skill and reputation of Amen Wardy in the design and development of the
Products in entering into this Agreement, and (ii) this Agreement constitutes an
Agreement for personal services under Section 365 of the Bankruptcy Code.
Neither party may assign or transfer this Agreement or any interest therein,
except St. John may assign all rights and obligations to a wholly-owned
subsidiary or other affiliate after written notice to Amen Wardy.

     9.7  Successors and Assigns.  All of the terms and provisions of this
          ----------------------                                          
Agreement shall be binding upon the parties and their respective successors and
assigns, but shall inure to the benefit of and be enforceable by the successors
and assigns of any party only to the extent that they are permitted successors
and assigns pursuant to the terms hereof.  No party may assign its rights
hereunder except as herein expressly permitted.

     9.8  Amendments.  This Agreement may be amended, modified, canceled, or
          ----------                                                        
waived only by written instrument executed by each of the parties.

     9.9  Neutral Construction. The parties acknowledge that each party has been
          --------------------                                       
represented by counsel in connection with this Agreement and the transactions
contemplated by this Agreement. Accordingly, any rule of law, including but not
limited to Section 1654 of the California Civil Code, or any legal decision that
would require interpretation of any claimed ambiguities in this Agreement
against the party that drafted it has no application and is expressly waived.

     9.10 Integration.  This Agreement constitutes the complete agreement of the
          -----------                                                           
parties hereto with respect to the subject matter hereof and supersedes all
prior or contemporaneous negotiations, promises, covenants, agreements, or
representations.

     9.11 Counterparts.  This Agreement may be executed in counterparts, each of
          ------------                                                          
which shall be an original, but all of which shall constitute one and the same
agreement.

                                       14
<PAGE>
 
     9.12 Governing Law.  This Agreement, and the legal relations between the
          -------------                                                      
parties, shall be governed by and construed in accordance with the laws of the
State of California and any court action arising out of this Agreement shall be
brought in any court of competent jurisdiction within the State of California,
County of Orange.

                                       15
<PAGE>
 
     IN WITNESS WHEREOF, the parties have caused this Agreement to be executed
and delivered by its authorized officer as of the day and year first written
above.

                              ST. JOHN KNITS, INC.,
                              a California corporation


                              By:     /s/ Robert E. Gray
                                   --------------------------------------------
                                    Robert E. Gray
                                    Chairman of the Board and Chief Executive
                                    Officer



                                /s/ Amen Wardy, Sr.
                              -------------------------------------------------
                              Amen Wardy, Sr.


                                /s/   Amen Wardy, Jr.
                              -------------------------------------------------
                              Amen Wardy, Jr.

                                       16
<PAGE>
 
                                  Exhibit A-1
                                  -----------

                TRADEMARK ASSIGNMENT AND CONSENT TO REGISTRATION


     WHEREAS, Amen Wardy, Sr. ("Assignor") has the authority to grant the
worldwide right to use and register Assignor's name, likeness, and endorsement
to Assignee in connection with the advertisement, promotion and sale of all
products and services generally described in Attachment A hereto (the "Products
and Services");

     WHEREAS, St. John Knits, a California corporation ("Assignee") desires to
obtain the worldwide right to use and register the name and likeness of Assignor
in connection with the advertisement, promotion and sale of the Products and
Services and desires to do so; and

     NOW, THEREFORE, for good and valuable consideration, the receipt and
sufficiency of which is hereby acknowledged and in consideration of the premises
and of the mutual promises and conditions herein contained, the parties do
hereby agree as follows:

     Assignor hereby grants to Assignee, its successors and assigns, absolutely
and forever, the worldwide right to use Assignor's name, in whole or in part, in
connection with the advertisement, promotion and sale of the Products and
Services in the United States of America, its territories and possessions and
all other countries in which the trademarks may be used so long as Assignor's
name is combined with the words "St. John" in connection with any such use.

     Assignor shall execute any further documents and do such other acts as may
be necessary and proper to give effect to the foregoing.

     Assignor hereby consents to the use and registration by Assignee of
Assignor's name, in whole or in part, as a trademark or service mark for the
Products and Services.

     Assignor shall execute, without any material cost to such Assignor, any
further documents and do such other acts as may be reasonably necessary and
proper to: (i) register Assignor's name, in whole or in part, as a trademark or
service mark for the Products and Services in any jurisdiction Assignee may
desire as set forth herein ("Name Marks"), and (ii) vest full title in and to
the Name Marks in Assignee.

                                     A-1-1
<PAGE>
 
     IN WITNESS WHEREOF, Assignor has caused this assignment, consent and grant
to be duly executed in a manner appropriate thereto as of the ____ day of
__________, 1997.

                              ________________________________
                              Name:
                              ________________________________
                              Title:
                              ________________________________



STATE OF TEXAS            )

COUNTY OF ______________  )



      Before me, _______________________, a Notary Public, on this day
personally appeared _______________, known to me (or proved to me on the oath of
____________) to be the person whose name is subscribed to the foregoing
instrument and acknowledged to me that he/she executed the same for the purposes
and consideration therein expressed.

      Given under my hand and seal of office this ___ day of ____________, 1997.

_______________________________ (Seal)
(Notary Public Signature)

                                     A-1-2
<PAGE>
 
             ATTACHMENT A TO TRADEMARK ASSIGNMENT AND CONSENT TO 
                                 REGISTRATION

                             PRODUCTS AND SERVICES



      Any and all home furnishing products and services, including, without
limitation, all types of window coverings, wall coverings, paints, floor
coverings, furniture, linens, art objects, accent pieces, architectural
treatments, china, dishware, flatware, stemware, cookware, bed and bath items
and home accessories.

                                     A-1-3
<PAGE>
 
                                  Exhibit A-2
                                  -----------

                          GRANT OF RIGHT OF PUBLICITY


      WHEREAS, Amen Wardy, Sr., ("Assignor") has the authority to grant the
worldwide right to use Assignor's name, likeness, and endorsement to Assignee in
connection with the advertisement, promotion and sale of all products and
services generally described in Attachment A hereto (the "Products and
Services") and desires to do so;

      WHEREAS, St. John Knits, Inc., a California corporation ("Assignee")
desires to obtain the worldwide right to use the name, likeness and endorsement
of Assignor in connection with the advertisement, promotion and sale of the
Products and Services; and

      NOW, THEREFORE, for good and valuable consideration, the receipt and
sufficiency of which is hereby acknowledged and in consideration of the premises
and of the mutual promises and conditions herein contained, the parties do
hereby agree as follows:

      Assignor, hereby grants to Assignee the exclusive, worldwide and perpetual
right to use Assignor's name, likeness, and endorsements on and in connection
with the distribution, advertisement, promotion and sale of the Products and
Services in any marketing area in which Assignee now and hereafter does business
so long as Assignor's name is combined with the words "St. John" in connection
with any such use.

      IN WITNESS WHEREOF, Assignor has caused this assignment, consent and grant
to be duly executed in a manner appropriate thereto as of the ____ day of
__________, 1997.


                                ________________________________
                                Name:
                                ________________________________
                                Title:
                                ________________________________

                                     A-2-1
<PAGE>
 
STATE OF TEXAS            )

COUNTY OF _______________ )



      Before me, _______________________, a Notary Public, on this day
personally appeared _______________, known to me (or proved to me on the oath of
____________) to be the person whose name is subscribed to the foregoing
instrument and acknowledged to me that he/she executed the same for the purposes
and consideration therein expressed.

      Given under my hand and seal of office this ___ day of ____________, 1997.

_______________________________ (Seal)
(Notary Public Signature)

                                     A-2-2
<PAGE>
 
                  ATTACHMENT A TO GRANT OF RIGHT OF PUBLICITY

                             PRODUCTS AND SERVICES



      Any and all home furnishing products and services, including, without
limitation, all types of window coverings, wall coverings, paints, floor
coverings, furniture, linens, art objects, accent pieces, architectural
treatments, china, dishware, flatware, stemware, cookware, bed and bath items
and home accessories.

                                     A-2-3
<PAGE>
 
                                  Exhibit B-1
                                  -----------

               TRADEMARK ASSIGNMENT AND CONSENT TO REGISTRATION


      WHEREAS, Amen Wardy, Jr. ("Assignor") has the authority to grant the
worldwide right to use and register Assignor's name, likeness, and endorsement
to Assignee in connection with the advertisement, promotion and sale of all
products and services generally described in Attachment A hereto (the "Products
and Services");

      WHEREAS, St. John Knits, a California corporation ("Assignee") desires to
obtain the worldwide right to use and register the name and likeness of Assignor
in connection with the advertisement, promotion and sale of the Products and
Services and desires to do so; and

      NOW, THEREFORE, for good and valuable consideration, the receipt and
sufficiency of which is hereby acknowledged and in consideration of the premises
and of the mutual promises and conditions herein contained, the parties do
hereby agree as follows:

      Assignor hereby grants to Assignee, its successors and assigns, absolutely
and forever, the worldwide right to use Assignor's name, in whole or in part, in
connection with the advertisement, promotion and sale of the Products and
Services in the United States of America, its territories and possessions and
all other countries in which the trademarks may be used so long as Assignor's
name is combined with the words "St. John" in connection with any such use.

      Assignor shall execute any further documents and do such other acts as may
be necessary and proper to give effect to the foregoing.

      Assignor hereby consents to the use and registration by Assignee of
Assignor's name, in whole or in part, as a trademark or service mark for the
Products and Services.

      Assignor shall execute, without any material cost to such Assignor, any
further documents and do such other acts as may be reasonably necessary and
proper to: (i) register Assignor's name, in whole or in part, as a trademark or
service mark for the Products and Services in any jurisdiction Assignee may
desire as set forth herein ("Name Marks"), and (ii) vest full title in and to
the Name Marks in Assignee.

                                     B-1-1
<PAGE>
 
      IN WITNESS WHEREOF, Assignor has caused this assignment, consent and grant
to be duly executed in a manner appropriate thereto as of the ____ day of
__________, 1997.

                                 ________________________________
                                 Name:
                                 ________________________________
                                 Title:
                                 ________________________________



STATE OF CALIFORNIA           )

COUNTY OF __________________  )



      On ___________, 19___, before me, ____________________, a Notary Public in
and for said State, personally appeared
___________________________________________________, personally known to me (or
proved to me on the basis of satisfactory evidence) to be the person(s) whose
name(s) is/are subscribed to the within instrument and acknowledged to me that
he/she/they executed the same in his/her/their authorized capacity(ies), and
that by his/her/their signature(s) on the instrument the person(s), or the
entity upon behalf of which the person(s) acted, executed the instrument.

      WITNESS my hand and official seal.

Signature  ________________________________ (Seal)

                                     B-1-2
<PAGE>
 
             ATTACHMENT A TO TRADEMARK ASSIGNMENT AND CONSENT TO 
                                 REGISTRATION

                             PRODUCTS AND SERVICES



      Any and all home furnishing products and services, including, without
limitation, all types of window coverings, wall coverings, paints, floor
coverings, furniture, linens, art objects, accent pieces, architectural
treatments, china, dishware, flatware, stemware, cookware, bed and bath items
and home accessories.

                                     B-1-3
<PAGE>
 
                                  Exhibit B-2
                                  -----------

                          GRANT OF RIGHT OF PUBLICITY


      WHEREAS, Amen Wardy, Jr., ("Assignor") has the authority to grant the
worldwide right to use Assignor's name, likeness, and endorsement to Assignee in
connection with the advertisement, promotion and sale of all products and
services generally described in Attachment A hereto (the "Products and
Services") and desires to do so;

      WHEREAS, St. John Knits, Inc., a California corporation ("Assignee")
desires to obtain the worldwide right to use the name, likeness and endorsement
of Assignor in connection with the advertisement, promotion and sale of the
Products and Services; and

      NOW, THEREFORE, for good and valuable consideration, the receipt and
sufficiency of which is hereby acknowledged and in consideration of the premises
and of the mutual promises and conditions herein contained, the parties do
hereby agree as follows:

      Assignor, hereby grants to Assignee the exclusive, worldwide and perpetual
right to use Assignor's name, likeness, and endorsements on and in connection
with the distribution, advertisement, promotion and sale of the Products and
Services in any marketing area in which Assignee now and hereafter does business
so long as Assignor's name is combined with the words "St. John" in connection
with any such use.

      IN WITNESS WHEREOF, Assignor has caused this assignment, consent and grant
to be duly executed in a manner appropriate thereto as of the ____ day of
__________, 1997.


                              ________________________________
                              Name:
                              ________________________________
                              Title:
                              ________________________________

                                     B-2-1
<PAGE>
 
STATE OF CALIFORNIA           )

COUNTY OF __________________  )



      On ___________, 19___, before me, ____________________, a Notary Public in
and for said State, personally appeared
___________________________________________________, personally known to me (or
proved to me on the basis of satisfactory evidence) to be the person(s) whose
name(s) is/are subscribed to the within instrument and acknowledged to me that
he/she/they executed the same in his/her/their authorized capacity(ies), and
that by his/her/their signature(s) on the instrument the person(s), or the
entity upon behalf of which the person(s) acted, executed the instrument.

      WITNESS my hand and official seal.

Signature  ________________________________ (Seal)

                                     B-2-2
<PAGE>
 
                  ATTACHMENT A TO GRANT OF RIGHT OF PUBLICITY

                             PRODUCTS AND SERVICES



      Any and all home furnishing products and services, including, without
limitation, all types of window coverings, wall coverings, paints, floor
coverings, furniture, linens, art objects, accent pieces, architectural
treatments, china, dishware, flatware, stemware, cookware, bed and bath items
and home accessories.

                                     B-2-3
<PAGE>
 
                                  Schedule C
                                  ----------

                      HOME FURNISHING PRODUCTS AND GIFTS
                      ----------------------------------


      Any and all home furnishing products and services, including, without
limitation, all types of window coverings, wall coverings, paints, floor
coverings, furniture, linens, art objects, accent pieces, architectural
treatments, china, dishware, flatware, stemware, cookware, bed and bath items
and home accessories.