exv10w4



 







Exhibit 10.4



          AGREEMENT made as of November 2005, by and between BILL BLASS INTERNATIONAL, LLC, a Delaware
limited liability company with offices at 550 Seventh Avenue, New York, New York 10018 (hereinafter
referred to as the “Company”), and THE FASHION HOUSE, INC., a ___corporation with offices at 6310
San Vincente Boulevard, #330, Los Angeles, California 90048-5499 (hereinafter referred to as
“Licensee”).




W I T N E S S E T H :




          WHEREAS, the Company and Licensee have agreed to enter into an arrangement pursuant to which
Licensee, under a license from and subject to the approval of the Company, shall manufacture,
distribute and sell Products (as hereinafter defined) under the Licensed Mark (as hereinafter
defined) and potentially, the mark BLASSPORT, all in the Territory (as hereinafter defined); and




          WHEREAS, the Company and Licensee also have agreed to enter into an arrangement pursuant to
which Licensee, under a license from and subject to the approval of the Company, shall manufacture,
distribute and sell prestige or luxury Products under the mark BILL BLASS (such license, the
“Prestige Line Agreement”) and, potentially, the mark COLLECTION — BILL BLASS (such potential
license, the “Prestige 2 Agreement”), also in the Territory;




          WHEREAS, set forth on Annex I at the end of the Agreement is a schedule of the location, by
reference to paragraph, of the defined terms used in this Agreement;




 









 








          NOW, THEREFORE, in consideration of the mutual covenants hereinafter set forth, the Company
and Licensee do hereby respectively grant, covenant and agree as follows:




 









 








1. GRANT OF LICENSE




     1.1 Grant of License.



          (a) The Company hereby grants to Licensee, during the term of this Agreement, an exclusive
license (except as to the Company’s rights under Paragraph 1.1(c) and Paragraph 19.10) to use the
mark BLASS BY BILL BLASS, solely in forms to be agreed upon by the parties (the “Licensed Mark”),
throughout the world, other than Japan (the “Territory”), solely in connection with Licensee’s
manufacture, distribution and sale of women’s shoes, all such items of the types, qualities and
styles traditionally sold in the channels of distribution approved in Paragraph 5.7. Items
authorized for sale hereunder shall be referred to as “Products.” Items within the definition of
“Products” that are manufactured, distributed and sold by Licensee in accordance with this
Agreement shall be referred to collectively hereinafter as “Articles.” The foregoing and any other
provision to the contrary contained herein notwithstanding, Licensee acknowledges and agrees that:
(1) the Company reserves all rights to the Licensed Mark except those specifically granted herein
to Licensee, and (2) Licensee shall not use the Licensed Mark for any purpose whatsoever on the
Internet (including as a domain name or in metatags), microfilm, e-mail, electronic databases,
on-line services, CD-ROM or other similar media now existing or hereafter developed.




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          (b) Notwithstanding anything to the contrary contained herein, if at any time after the first
Annual Period (1) Licensee is not selling a commercially significant amount of Articles in any
country, and (2) the Company, directly or through a Licensee, has the opportunity to sell shoes
valued at one million dollars ($1,000,000) or more in such country under the Licensed Mark, then,
unless Licensee agrees in writing to match that opportunity, at the Company’s request all rights in
respect of such country shall revert to the Company and such country shall be deemed excluded from
the Territory.



          (c) Notwithstanding anything to the contrary contained herein, the license granted hereunder with
respect to the manufacture, distribution and sale of Products sold under the Licensed Mark is
non-exclusive in that the Company: (i) itself may, or may grant to third parties the right to,
manufacture women’s shoes (including Products) under the Licensed Mark, including within the
Territory, provided that such items are not sold within the Territory, and (ii) may exercise or
grant rights as specified in Paragraph 19.10 hereof.




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          (d) No provision contained herein is intended to grant to Licensee rights in any marks(s) owned by
the Company other than the Licensed Mark. The Company, itself and through licensees, freely may
manufacture, distribute and sell any products or services, including women’s shoes, under mark(s)
owned by the Company including, without limitation, variations of the mark BILL BLASS (other than
the Licensed Mark and any other mark licensed to Licensee under the Prestige Line Agreement, the
Prestige 2 Agreement (if executed) or any other any other agreements between the parties), except
that, during the first Annual Period (as hereinafter defined), the Company shall not, itself or
through licensees, manufacture, distribute or sell any women’s shoes under the mark BLASSPORT.
Moreover, as of the last day of the first Annual Period, provided that Licensee is in compliance
with its obligations hereunder and under the Prestige Line Agreement, the parties shall execute an
agreement, in the form annexed hereto as Exhibit 1, under which Company shall authorize Licensee to
sell women’s shoes under the BLASSPORT mark under the terms and conditions contained in Exhibit 1.
Such agreement shall be known as the “Moderate Line Agreement.”




     1.2 All Articles to Bear Licensed Mark. To the extent commercially practicable (or as
otherwise provided in Section 14.3 hereof), all Articles shall bear the Licensed Mark (it being
understood that the parties contemplate that the Licensed Mark shall be on the labels within
Products and the boxes therefor). No Articles (i.e., Products bearing or sold under the
Licensed Mark) shall be sold or otherwise distributed by Licensee under any mark other than the
Licensed Mark.



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     1.3 No Retail Sales. Licensee acknowledges that the rights granted to it hereunder do not
include the right to operate a boutique under the Licensed Mark (or any variation or simulation
thereof) or otherwise to itself sell Articles at retail (including, without limitation, through
catalog, mail or internet orders), except that Licensee may sell Articles through a factory outlet
operated by Licensee under Licensee’s name, provided that “Net Sales” (as hereinafter defined) of
Articles through such factory outlet during any Annual Period shall not constitute more than five
percent (5%) of Net Sales for such Annual Period.



     1.4 Exploitation. Licensee shall use its best efforts, but no less than the efforts
generally employed by shoe licensees of other fashion designers, to develop and promote all
Products and otherwise exploit the rights herein granted throughout the Territory (subject to the
restrictions contained herein) and to sell the maximum quantity of Articles therein consistent with
the high standards and prestige represented by the applicable Licensed Mark and the advertising and
marketing philosophies of the Company.



     1.5 Disputes Between Licensees. In the event of any dispute between Licensee and any other
licensee of the Company in the Territory with respect to the products covered by their respective
licenses, such dispute shall be mediated in good faith by the Company after hearing the position of
Licensee and each such other licensee. The Company’s determination shall be final and binding upon
Licensee.





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     1.6 Diversion. Licensee shall not (a) export Articles from the Territory, (b) divert (as
hereafter defined) Articles, or (c) contract for the manufacture of Articles with, or sell Articles
to, any person or entity which Licensee knows or has reason to believe (including, without
limitation, by reason of a previous history of exportation or diversion of Articles, other Products
or any other products which is known to Licensee) may export such Articles from the Territory or
divert Articles. To “divert” means, for Licensee or any other person/entity, to sell or otherwise
transfer Articles other than to appropriate retail locations (as specified in Paragraph 5.7)
located in the Territory for sale within the Territory, and, for retail locations, to resell or
otherwise transfer Articles other than to consumers from their retail premises in the Territory.
In order to monitor and control potential exportation/diversion problems, Licensee shall use
commercially reasonable efforts to ensure that the Company and Licensee be able to determine, with
respect to Articles which are found to have been exported/diverted, the entity which sold such
exported/diverted Articles or from which such Articles were exported/diverted. In addition,
Licensee shall cooperate with the Company in connection with anti-counterfeiting programs relating
to the Licensed Mark and/or Articles as well as other products sold under the Licensed Mark,
provided that Licensee shall not be required to incur any out-of-pocket expenses in connection with
such cooperation. In the event that, despite all of the foregoing or otherwise, Articles are
exported/diverted on more than one occasion, the Company on the second occasion and thereafter may
purchase the exported/diverted Articles at Licensee’s expense and, in the Company’s discretion,
destroy such or return such Articles to Licensee.




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2. TERM




     2.1 Term. The initial term of this Agreement shall commence as of the date hereof and
continue through March 31, 2011. Thereafter, this Agreement automatically shall renew for an
additional term of five (5) years, provided that, with respect to such renewal, (a) Licensee
delivers to the Company a written notice of its election to renew this Agreement at least six
months prior to the end of the initial term, (b) “Net Sales” (as defined in Paragraph 9.1(c))
during the fifth “Annual Period” (as defined below in this Paragraph 2.1) of the initial term are
at least Five Million Dollars (the “Renewal Threshold”), and (c) Licensee has performed all of its
obligations under this Agreement at the time the option to renew is exercised and at the end of the
initial term. Each twelve (12) month period commencing on each April 1st during the term of this
Agreement shall constitute and shall be referred to hereinafter as an “Annual Period,” except that
the first Annual Period shall commence as of the date hereof and continue through March 31, 2007.



     2.2 Limitations on Renewal. If Licensee otherwise effectively renews this Agreement
but Net Sales during the last Annual Period of the initial term are less than the Renewal
Threshold, unless the Company waives the shortfall, the renewal shall be ineffective and this
Agreement forthwith shall terminate. If, however, at the time it is determined that there was such
a shortfall, Licensee already in good faith had commenced the development of the next collection of
Articles, termination shall be effective upon the end of the sell off of such collection in
accordance herewith, but in no event later than June 31, 2011 (unless the Agreement otherwise is
terminated in accordance herewith).



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     2.3 Termination Due To Insufficient Net Sales. Notwithstanding the provisions of
Paragraphs 2.1 and 2.2 above and in addition to the termination provisions provided in Paragraph 17
below, the Company may terminate this Agreement within thirty (30) days after its receipt of any of
the annual statements to be delivered to the Company pursuant to Paragraph 12.2 below in the event
that (i) “Net Sales” (as hereinafter defined) for the second or any subsequent Annual Period
covered by any such annual statement are less than the amount necessary to generate the “Guaranteed
Minimum Royalty” and “Guaranteed Minimum Fee” (both as hereinafter defined) for such Annual Period.
Any such termination shall be effective as of the end of the sell off of the collections then in
process, but in no event later than the June 30th following the Annual Period for which required
level of Net Sales were not reached.




3. DESIGN SERVICES




     3.1 Collections. During each Annual Period, Licensee shall manufacture, distribute
and sell Spring and Fall collections of Articles. The first collection shall be the Spring 2007
collection.



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     3.2 Development. During each Annual Period, Licensee shall submit to the Company
materials, designs, sketches, colors, tags, labels and packaging for each of its lines of Articles
from which the Company may select those, if any, which the Company approves for use in connection
with Articles. The Company shall approve or disapprove the materials, designs, sketches, colors,
tags, labels and packaging submitted as aforesaid, for the line for which it is submitted, and
shall discuss with Licensee any modifications or alterations thereof. Any such approval by the
Company shall be given prior to use of such materials, designs, sketches, colors, tags, labels or
packaging by Licensee in accordance with Section 6.1 hereof. Once any item is approved by the
Company hereunder, Licensee shall commence diligently to produce and show such item.


     3.3 Regular Meetings. The Company and Licensee shall meet regularly to discuss and agree
upon concepts for new Articles and materials relating thereto as well as marketing plans and
strategies.




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     3.4 Sketches and Other Materials are Property of Company. All sketches and other materials
(a) provided by the Company, or (b) provided by Licensee and approved by the Company, shall be, as
between the Company and Licensee, the exclusive property of the Company, and shall be used by
Licensee solely in connection with the manufacture, distribution and sale of Articles in the
Territory and pursuant to this Agreement. If Licensee chooses not to use such sketches or other
material, Licensee shall deliver them to the Company, at Licensee’s expense, and Licensee may not
use them or permit their use thereafter. Whether or not Licensee chooses to use any such sketches
and other material, the Company may use and permit others to use them in any manner it desires,
provided that, to the extent of the Company’s other shoe licensees, if any, such use does not
conflict with any rights granted to Licensee hereunder. All sketches and materials created by
Licensee but not approved by the Company shall be, as between the Company and Licensee, the
exclusive property of Licensee and the Company shall have no rights in respect thereof.




     3.5 Costs of Production. Licensee shall be responsible for making all samples as well as
for the production of Articles, and Licensee shall bear all costs in connection therewith.




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     3.6 Protection of Innovation. Neither Licensee nor its affiliates shall: (a) manufacture
(or cause to be manufactured), market, distribute or sell any Products with a distinctive or unique
design first developed for or used with Articles, or (b) distribute or sell any Products with or
using labeling, advertising or promotional material that is the same or confusingly similar to
labeling, advertising or promotional material then or ever used by Licensee in connection with
Articles, nor shall any of them authorize, assist, engage or permit any third party to do any of
the foregoing.





4. CONFIDENTIALITY




     4.1 Confidentiality.



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          (a) Each party acknowledges that all information relating to the business and operations of
the other party that such other party discloses during or prior to the term of this Agreement
(including, without limitation, all financial information related to the business and operations
and all information regarding its officers, directors and employees, including Bill Blass), as well
as all concepts, sketches, plans and designs used or proposed for use in connection with Articles
(by whomever used or proposed) (collectively “Confidential Information”), is the valuable property
of the party disclosing the same (except that all concepts, sketches, plans, features,
manufacturing specifications and designs shall be the property of the Company as and to the extent
provided in Section 3.4). Each party acknowledges the need to preserve the confidentiality and
secrecy of the Confidential Information and agrees that, both during the term of this Agreement and
after the termination hereof, it shall not use or disclose the same, except as provided below, and
it shall take all necessary steps to ensure that use by it or by its contractors, suppliers,
distributors, agents and employees (which use shall be solely as necessary for, and in connection
with, the manufacture, distribution, sale, advertising or promotion of Articles) shall preserve in
all respects such confidentiality and secrecy. Each party hereby the other and its officers,
directors and employees against any damage of any kind (including attorneys’ fees and expenses)
which may be suffered by any of them as a result of any breach by such party or its contractors,
suppliers, agents or employees of the provisions of this paragraph.




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          (b) The parties herein further acknowledge and agree that a party’s remedies at law for a breach or
threatened breach of this Paragraph 4.1 would be inadequate and, in recognition of this fact, in
the event of a breach or threatened breach by a recipient of this Paragraph 4.1, the recipient
agrees that, in addition to any remedies at law, at the other party’s option, it shall be entitled,
without posting bond, to obtain equitable relief in the form of specific performance, restraining
order, preliminary or permanent injunction or any other equitable remedy which then may be
available. Nothing contained herein shall be construed as prohibiting the parties from pursuing
any other remedies available to it for such breach or threatened breach. Pursuit of any remedy at
law or in equity shall not be deemed an election of remedies.



          (c) The provisions of this paragraph and the parties’ obligations hereunder shall survive the
expiration or termination of this Agreement.




5. MANUFACTURE OF ARTICLES; QUALITY CONTROL




     5.1 General Quality. The contents and workmanship of Articles shall be at all times
of the highest quality appropriate for the line in which it is sold. In addition, Articles shall
be distributed and sold only with packaging, presentation and sales promotion materials appropriate
for line and consistent with the Company’s standards therefor. It is anticipated that Licensee
shall set its wholesale prices of Articles at a level to encourage the development of sales of
Articles. However, it is acknowledged that Licensee will set its wholesale prices for Articles in
its discretion.



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     5.2 Quality Approval. The styles, designs, packaging, contents, workmanship and
quality of all Articles, as well as all advertising and promotional materials relating thereto, and
the specific media in which they shall be disseminated, must be approved by the Company in
accordance with Section 6.1 hereof prior to any distribution, sale or other use thereof. Any other
provision of this Agreement notwithstanding, the Company at all times shall have the right to take
all actions which it reasonably deems necessary to ensure that: (a) Articles manufactured or sold
hereunder, and the advertising and promotion of such Articles, are consistent with the reputation
and prestige of the applicable Licensed Mark and (b) Articles are manufactured, distributed, sold
and promoted by the Licensee in accordance with this Agreement, provided that, to the extent
commercially practicable, prior to taking such action, the Company shall provide Licensee with an
opportunity to take corrective action.



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     5.3 Prototypes and Samples. Before selling or distributing any Article, Licensee shall
submit to the Company, free of charge, for its approval in accordance with Section 6.1 hereof, one
(1) sketch of each such Article together with (i) samples of all materials of which such Articles
shall be comprised and (ii) the tags, labels and packaging to be used in connection therewith. In
addition, after Licensee begins selling or distributing any Article, upon the Company’s request,
Licensee shall submit to the Company then-current production samples of each Article produced
hereunder so that the Company may assure itself of the maintenance of the quality standards set
forth herein. All Articles to be sold hereunder shall be at least equal in quality to the sketches
and samples approved by the Company. The Company and its duly authorized representatives shall
have the right, upon reasonable advance notice and during normal business hours, to examine
Articles in the process of being manufactured and to inspect all facilities utilized by or on
behalf of Licensee in connection therewith.




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     5.4 Compliance with Law and Company Requirements. All Articles shall be manufactured,
sold, labeled, packaged, distributed and advertised in accordance with all applicable laws and
regulations, whether foreign or domestic, national, regional or local, throughout the Territory,
including all child and other labor laws, customs requirements and advertising and consumer
protection laws. Licensee shall monitor the performance of its retail location purchasers and of
Contractors (as hereinafter defined) in this regard and shall (a) notify Company of any instances
of noncompliance, (b) endeavor to take any corrective action as may be reasonably requested by
Company to remedy the same and (c) terminate agreements with persons that repeatedly fail to so
comply. No proposal or approval by Company of any Articles, or portion thereof, or any other
materials, designs, tags, labeling, packaging or other advertising or promotional materials, shall
be deemed to limit or modify Licensee’s obligations under this paragraph. If Licensee determines
that any otherwise approved Articles or portion thereof, or any other materials, designs, tags,
labeling, packaging or other advertising or promotional materials, are not in compliance with any
applicable law, Licensee shall notify Company and the parties shall seek to rectify the problem.
Any proposed modification to rectify the problem shall be subject to Company’s prior approval and
the modified item also shall be subject to Company’s final approval.




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     5.5 Form and Manner of Use of Licensed Mark. Licensee shall use and display the Licensed
Mark and Other Intellectual Property (as hereinafter defined) only in such form and manner as are
specifically approved in writing by the Company in accordance with Paragraph 6.1 hereof. Licensee
shall cause to appear on all Articles produced hereunder, and on their tags, packaging and the
like, and on all advertising, promotional and publicity material used in connection therewith,
including, without limitation, point-of-sale displays and similar materials, and on any printed
matter of any kind on which the Licensed Mark and/or Other Intellectual Property appear, including
but not limited to business cards, invoices, order forms and stationery, such legends, markings and
notices as the Company may request. Before using or releasing any such material, Licensee shall
submit to the Company, for its approval, proposed advertising (including a description of the
proposed placement thereof), promotional and publicity copy, tags, labels, packaging and the like
and all printed matter of any kind on which the Licensed Mark and/or Other Intellectual Property
appear. The same shall not be used or released prior to Licensee’s receipt of such approval and
Licensee shall provide the Company with finished versions thereof, free of charge, upon the
Company’s reasonable request.



     5.6 Departure from Approved Sample. After any sample, copy, artwork or other material has
been approved, Licensee shall not depart therefrom in any respect without the prior written
approval of the Company. If the Company should disapprove any sample Article or any sample tag,
label, packaging or the like, or any advertising, promotional or publicity material, Licensee shall
neither use nor permit the same to be used in any manner.




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     5.7 Distribution.




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          (a) In order to maintain the reputation, image and prestige of the Licensed Mark, Licensee’s
distribution patterns in respect of Articles shall consist solely of retail locations whose
location, merchandising and overall operations are consistent with the high quality and prestige
level of the Articles and the reputation, image and prestige of the Licensed Mark. Such retail
distribution channels shall be (1) better retail department and specialty stores such as Nordstrom,
Bloomingdale’s, Victoria’s Secret, Steinmart, Federated Stores such as Macy’s, Belk, Saks, Inc, May
Co. and other locations of equal or higher caliber, (2) catalogues associated with the retail
stores identified in subsection (1), (3) the Internet websites, Zappos.com, Shoes.com and other
Internet portals approved by the Company in writing from time to time, (4) to the extent provided
in Paragraph 1.3, a factory store operated by Licensee under Licensee’s name, and (5) only for
Articles sold by Licensee at more than twenty five percent (25%) off the full published wholesale
price of Articles (such sales, “Close-Out Sales”), Shoe Pavilion, DSW and Lohmans, provided that
sales to said three entities shall not, in the aggregate, exceed twenty five percent (25%) of Net
Sales during any Annual Period. Without derogating the foregoing, it is agreed that distribution
to retail locations such as Bergdorf Goodman, Neiman Marcus and other locations of such caliber
(other than Nordstrom) shall be under the Prestige Line Agreement. Without limiting the generality
of the foregoing, Licensee acknowledges and agrees that: (i) it shall not sell or distribute, or
sell to persons who may sell or distribute, Articles to K-Mart, Wal-Mart, Target, Mervyn’s, J.C.
Penney, Sears, Kohl’s, club stores or any other discounter or retail location not meeting the
standard set forth in the previous




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sentences of this subparagraph, and (ii) it shall not accept production orders from any
discounter without the Company’s prior written approval.



          (b) If the Company objects in writing to the continued sale of Articles to any retail location and
provides bona fide reasons for such objection, Licensee shall use commercially
reasonable efforts to correct the problem, if possible, and, if the problem cannot be corrected or
is not corrected within a commercially reasonable period of time, Licensee shall terminate sales to
such retail location.



          (c) Licensee shall not enter into any agreement with a distributor or sublicensee related to the
Articles without the Company’s prior written consent.




     5.8 Contractors.



          (a) Licensee may use contractors for the manufacture or assembly of Articles (“Contractors”).
The Company’s prior approval of a prospective Contractor shall not be required. However, if the
Company objects to the continued engagement of any Contractor as not being in compliance with the
requirements of this Agreement, Licensee shall use commercially reasonable efforts to correct the
problem, if possible, and, if the problem cannot be corrected or is not corrected within a
commercially reasonable period of time, Licensee shall terminate its engagement of such Contractor.





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(b) Each Contractor must agree (i) not to use, except in connection with the manufacture of
Articles for Licensee, or disclose to any third party any proprietary information regarding
Articles, (ii) to permit the Company to exercise its rights hereunder to inspect the Contractor’s
facilities, (iii) not to use any child labor or violate any labor or other laws in connection with
the manufacture of Articles, and (iv) to sell Articles manufactured by it for Licensee only to
Licensee and to no other person or entity.



(c) Neither the engagement of a Contractor by Licensee nor the Company’s failure to object to a
Contractor shall limit Licensee’s obligations hereunder, i.e., any act or omission by a
Contractor which would constitute a material violation of this Agreement also shall constitute a
material violation of this Agreement by Licensee.




6. APPROVALS




     6.1 Subjective Approvals; Approvals in Writing. It is specifically understood and
agreed that the Company’s approval pursuant to this Agreement may be based solely on the Company’s
subjective standards and may be withheld in the Company’s sole and absolute discretion. No
approval shall be deemed given by the Company hereunder unless it is in writing signed by the
Company.



     6.2 Limitations on Approvals. Notwithstanding anything to the contrary herein, the
Company’s approval of any Articles for inclusion in, or of materials of any kind for use in
connection with the manufacture, distribution, sale, advertising and/or promotion of, any
particular collection of Articles shall constitute approval only for inclusion or for such use in
connection with such collection and shall not be deemed to constitute approval of such Articles or
of any such materials with respect to any other collection of Articles.



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7. ADVERTISING; SHOWROOM




     7.1 Advertising/General. Licensee shall exercise its best efforts to promote and
advertise Articles in the various appropriate media throughout the Territory. Any advertisements
or promotions related to Articles shall be subject to the Company’s prior approval (or deemed
approval) in accordance with Section 6.1 hereof. In addition, the specific media or publications
by or in which such advertisements and promotions shall be distributed also shall be subject to the
Company’s prior approval (or deemed approval) in accordance with Section 6.1 hereof. Without
limiting the generality of the foregoing, Licensee shall not place any material in any medium or
publication which is not compatible with the reputation, image and prestige of the Company. The
foregoing notwithstanding, subject to the Company’s approval of uses in accordance herewith and
provided that Licensee uses all commercially reasonable efforts to prevent solicitation of and
sales to customers outside the Territory, the Company agrees that Licensee may utilize the Licensed
Mark on the Internet (x) to advertise (but not sell) Articles on Licensee’s website at
http://___, and other sites approved by the Company, and (y) in emails with Licensee’s
customers located within the Territory (but not in unsolicited emails).



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7.2 Advertising Payments. In addition to sums that may be expended by Licensee for
cooperative and other advertising of Articles, Licensee shall pay to the Company for each Annual
Period an amount equal to two percent (2%) of “Net Sales” (as hereinafter defined) of Articles for
such Annual Period (each, the “Advertising Minimum” for such Annual Period). The Company shall
spend the amount so paid by Licensee to advertise the name and/or mark “BILL BLASS” (or variations
thereof) in such manners as the Company determines are appropriate in its sole discretion. The
Advertising Minimum hereunder shall be accounted for and paid quarterly within thirty (30) days
after close of each calendar quarter during the term of this Agreement (or portion thereof in the
event of prior termination for any reason).



7.3 Showroom. During the term of this Agreement, Licensee shall maintain a separate area
in its showroom in New York, New York, exclusively for the display of finished Articles. Said
showroom shall be staffed and maintained in a manner commensurate with the reputation and prestige
of the Licensed Mark as designations for products of the highest quality.




8. GUARANTEED MINIMUM ROYALTY




     8.1 Calculation of Guaranteed Minimum Royalty. In consideration for the use of
the Licensed Mark hereunder, Licensee shall pay to the Company a guaranteed minimum royalty for
each Annual Period (each, the “Guaranteed Minimum Royalty” for such Annual Period) as follows:



	 	 	 
	 ANNUAL PERIOD	 	GUARANTEED MINIMUM ROYALTY
	First
	 	$52,500

	Second
	 	$70,000

	Third
	 	$87,500







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	 ANNUAL PERIOD	 	GUARANTEED MINIMUM ROYALTY
	Fourth
	 	$112,500		 
	Fifth
	 	$140,000		 
	Sixth through Tenth
	 	$175,000 	(each)	 






     8.2 Payment of Guaranteed Minimum Royalty. The Guaranteed Minimum Royalty payable for
each Annual Period shall be paid to the Company in four (4) equal quarterly installments on April
1, July 1, October 1 and January 1 of such Annual Period, except that the Guaranteed Minimum
Royalty for the first Annual Period shall be paid as follows: twenty five percent (25%) on each of
execution of this Agreement, July 1, 2006, October 1, 2006 and January 1, 2007.



     8.3 Credit Against Sales Royalty. The Guaranteed Minimum Royalty for each Annual Period
shall be credited against the Sales Royalty for only the same Annual Period as provided in
Paragraph 9 below.



9. SALES ROYALTY




     9.1 Calculation of Sales Royalty. In consideration for the use of the Licensed Mark
hereunder, Licensee shall pay to the Company for each Annual Period a sales royalty equal to three
and one half percent (31/2%) of Net Sales for such Annual Period (each, the “Sales Royalty” for such
Annual Period).



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     9.2 Definition of Net Sales. For purposes of this Agreement, “Net Sales” shall be
deemed to mean the aggregate invoiced amounts of Articles (and Products to which the Licensed Mark
is not affixed and Articles from which the Licensed Mark has been removed in accordance with the
provisions of Paragraph 14.3 below) sold or shipped by Licensee or any of its affiliates, less (i)
customary trade discounts and markdown allowances actually earned and taken by customers (but
expressly excluding discounts for prompt payment, such as “anticipation” discounts, and co-op
advertising allowances) and (ii) amounts of returns or credits actually taken or granted by
Licensee in accordance with its ordinary return policy. No deduction shall be made for other
discounts or allowances of any kind or for any purpose, or for uncollectible accounts, accruals or
reserves for returns, or costs incurred by Licensee. Sales or transfers of Articles made other
than in arm’s length transactions and/or at less than the regular wholesale price shall be deemed
to have been made at the regular wholesale price thereof.



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     9.3 Payment of Sales Royalty. The Sales Royalty hereunder shall be accounted for and paid
quarterly within thirty (30) days after close of each calendar quarter during the term of this
Agreement (or portion thereof in the event of prior termination for any reason). The Sales Royalty
payable for each accounting and payment period during each Annual Period shall be computed on the
basis of Net Sales during such Annual Period, with a credit for any Guaranteed Minimum Royalty and
Sales Royalty payments theretofore made to the Company for said Annual Period. Deductions for
returns or other authorized credits shall be made in the accounting and payment period in which the
exchange is given (and no adjustment shall be made in the period in which the original sale was
accounted for).



     9.4 Credit Against Guaranteed Minimum Royalty. No payment of Sales Royalty for any Annual
Period in excess of payments of Guaranteed Minimum Royalty for the same Annual Period shall be
credited against the Guaranteed Minimum Royalty due to the Company for any other Annual Period.




10. GUARANTEED MINIMUM FEE




     10.1 Calculation of Guaranteed Minimum Fee. In consideration for services to be
performed by the Company hereunder, Licensee shall pay to the Company a guaranteed minimum fee for
each Annual Period (each, the “Guaranteed Minimum Fee” for such Annual Period), as follows:



	 	 	 	 
	ANNUAL PERIOD	 	GUARANTEED MINIMUM FEE
	First
	 	$  52,500	 
	Second
	 	$  70,000	 
	Third
	 	$  87,500	 
	Fourth
	 	$112,500	 






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	ANNUAL PERIOD	 	GUARANTEED MINIMUM FEE
	Fifth
	 	$140,000		 
	Sixth through Tenth
	 	$175,000 	(each)	 






     10.2 Payment of Guaranteed Minimum Fee. The Guaranteed Minimum Fee payable for each
Annual Period shall be paid to the Company in four (4) equal quarterly installments on April 1,
July 1, October 1 and January 1 of such Annual Period, except that the Guaranteed Minimum Fee for
the first Annual Period shall be paid as follows: twenty five percent (25%) on each of execution
of this Agreement, July 1, 2006, October 1, 2006 and January 1, 2007.



     10.3 Credit Against Sales Fee. The Guaranteed Minimum Fee for each Annual Period
shall be credited against the Sales Fee for only the same Annual Period as provided in Paragraph 11
below.



11. SALES FEE




     11.1 Calculation of Sales Fee. In consideration for the services to be performed by
the Company hereunder, Licensee shall pay to the Company for each Annual Period a sales fee equal
to 


three and one half percent (31/2%) of Net Sales for such Annual Period (each, the “Sales Fee”
for such Annual Period).




28









 








     11.2 Payment of Sales Fee. The Sales Fee hereunder shall be accounted for and paid
quarterly, within thirty (30) days after close of each calendar quarter during the term of this
Agreement (or portion thereof in the event of prior termination for any reason). The Sales Fee
payable for each accounting and payment period during each Annual Period shall be computed on the
basis of Net Sales during such Annual Period, with a credit for any Guaranteed Minimum Fee and
Sales Fee payments theretofore made to the Company for said Annual Period. Deductions for returns
or other authorized credits shall be made in the accounting and payment period in which the
exchange is given (and no adjustment shall be made in the period in which the original sale was
accounted for).


     11.3 Credit Against Guaranteed Minimum Fee. No payment of Sales Fee for any Annual Period
in excess of payments of Guaranteed Minimum Fee for the same Annual Period shall be credited
against the Guaranteed Minimum Fee due to the Company for any other Annual Period.





12. SALES STATEMENT




29









 








     12.1 Statement. Licensee shall deliver to the Company, at the time each payment of a
Sales Royalty or a Sales Fee is due, a statement signed by a duly authorized officer of Licensee
and certified by him or her as accurate indicating, by month and by outlet, the number and invoice
price of all Articles shipped during the period covered by such Sales Royalty and Sales Fee
payment, the amount of discounts and credits from gross sales which may be deducted therefrom and a
computation of the amount of Sales Royalty and Sales Fee payable hereunder for said period. Such
statement shall be furnished to the Company whether or not any Articles have been sold or exchanged
during the period for which such statement is due. Together with each such statement, Licensee
shall deliver to the Company a copy of Licensee’s then current customer list. In addition, at the
Company’s request, Licensee promptly shall make available a copy of each invoice for Articles
shipped during the period covered by each such statement.



     12.2 Statement by Accountants. Licensee shall deliver to the Company, not later than
forty-five (45) days after the close of each Annual Period (or portion thereof in the event of
prior termination for any reason), a statement signed and certified by its regular certified public
accountants relating to said entire Annual Period, setting forth the same information required to
be submitted by Licensee in accordance with Paragraph 12.1 above and also setting forth, with
respect to the advertising and promotion of Articles, the total amount, if any, expended by
Licensee therefor during such Annual Period, including and stating separately those amounts paid
for cooperative, trade and national consumer media advertisements, together with media invoice
copies and tearsheets, station/network logs or other evidence of publication.



30









 





13. BOOKS AND RECORDS; AUDITS




     13.1 Books and Records; Audits. Licensee shall prepare and maintain, in such manner
as shall allow its accountants to audit same in accordance with generally accepted accounting
principles, complete and accurate books of account and records (specifically including without
limitation the originals or copies of documents supporting entries in the books of account)
covering all transactions arising out of or relating to this Agreement. The Company and its duly
authorized representatives have the right, during regular business hours, for the duration of this
Agreement and for two (2) years thereafter, to audit said books of account and records and examine
all other documents and material in the possession or under the control of Licensee with respect to
the subject matter and the terms of this Agreement, including, without limitation, invoices,
credits and shipping documents. All such books of account, records and documents shall be kept
available by Licensee for at least two (2) years after the end of the Annual Period to which they
relate.



     13.2 Discrepancies. If, as a result of any audit of Licensee’s books and records, it
is shown that Licensee’s payments were less than the amount which should have been paid, all
payments required to be made to eliminate any discrepancy revealed by said audit shall be made
promptly upon the Company’s demand therefor, and, if the discrepancy is in an amount equal to two
percent (2%) or more of the amount actually paid with respect to sales occurring during the period
in question, Licensee promptly shall reimburse the Company for the cost of such audit.



14. THE LICENSED MARK




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     14.1 Limitations on Use. Licensee shall not use the Licensed Mark, in whole or in
part, as a corporate name or trade name or otherwise except as expressly provided herein. Licensee
shall not join any name or names with the Licensed Mark so as to form a new mark. Licensee shall
not use any name or names in connection with the Licensed Mark in any advertising, publicity,
labeling, packaging or printed matter of any kind utilized by Licensee in connection with Articles,
unless and until the Company consents thereto in writing.



     14.2 Company as Owner. Licensee acknowledges that the Company is the owner of all
right, title and interest in and to the Licensed Mark and the Other Intellectual Property (as
hereinafter defined) in any form or embodiment thereof and is also the owner of the goodwill
attached or which shall become attached to any such items in connection with the business and goods
in relation to which the same has been, is or shall be used. Sales by Licensee shall be deemed to
have been made by the Company for purposes of trademark registration and all uses of the Licensed
Mark by Licensee shall inure to the benefit of the Company. Licensee shall not, at any time, do or
suffer to be done any act or thing which may in any way adversely affect any rights of the Company
in and to the Licensed Mark, the Other Intellectual Property or any registrations therefor, or
which, directly or indirectly, may reduce the value or detract from the reputation of the Licensed
Mark or the Other Intellectual Property.


     14.3 First Quality. Licensee shall ensure that all Articles sold under the Licensed Mark
sold or otherwise distributed hereunder are of first quality only and shall remove the Licensed
Mark from any Articles to be sold as “seconds” or as “irregulars.”




32









 







     14.4 Registration. The Licensed Mark and Other Intellectual Property shall at all times be
owned by the Company, and all registrations thereof in the United States and elsewhere shall be in
the name of the Company. Licensee shall not seek to register the Licensed Mark, Other Intellectual
Property or any variation or simulation of the foregoing in any country for any products in its
name or in any other name other than the Company’s. Any attempt by Licensee to register the
Licensed Mark, Other Intellectual Property or any variation or simulation of the foregoing shall
constitute a material and incurable default of this Agreement by Licensee.




33









 







     14.5 Cooperation. At the Company’s request, Licensee shall execute any documents
reasonably required by the Company to confirm the Company’s ownership of all rights in and to the
Licensed Mark and/or the Other Intellectual Property and the respective rights of the Company and
Licensee pursuant to this Agreement. Licensee shall cooperate with the Company in connection with
(a) the filing and prosecution by the Company of applications in the Company’s name to register the
Licensed Mark for Products in the Territory and/or to register the Other Intellectual Property in
the Territory and (b) the maintenance and renewal of such registrations as may issue. The Company
shall bear the costs of the foregoing, except that, if the Company files, prosecutes, maintains or
renews applications or registrations in any country at Licensee’s request and Licensee does not
within six (6) months thereafter sell commercially significant amounts of Articles in such country,
Licensee shall reimburse the Company for its costs. It is agreed that Licensee shall not use the
Licensed Mark, nor may any particular Articles be marketed, advertised, promoted, publicized or
otherwise exploited or distributed, offered for sale or sold, in any country until (1) an
appropriate trademark search has been conducted, an application to register the particular Licensed
Mark for Products in the relevant trademark class(es) has been filed and/or any other legally
required or desirable document in respect thereof has been filed or executed (as appropriate), or
(2) the Company determines in good faith that it would be legally preferable not to seek to
register the Licensed Mark but that there is no material impediment to the use of the Licensed
Mark. If the Company in good faith and after consultation with trademark counsel should determine
that the use of the Licensed Mark and/or Other Intellectual Property on any or




34









 







all Products violates or may violate the trademark or other rights of another in any area, upon
receipt of notice from the Company, Licensee shall discontinue its sale and distribution (and cause
any retail locations and approved distributors/sublicensees (if any) to discontinue the sale and
distribution) of the affected Articles sold under the Licensed Mark and/or Other Intellectual
Property to such area.



     14.6 Legal and Other Requirements. Licensee shall use the Licensed Mark and the Other
Intellectual Property in the Territory strictly in compliance with the legal requirements obtaining
therein and shall use such markings in connection therewith as may be required by any applicable
legal provisions. In addition, to the extent commercially reasonable, Licensee shall cause to
appear on all Articles and on all materials on or in connection with which the Licensed Mark and/or
Other Intellectual Property are used, such legends, markings and notices as may be reasonably
necessary in order to give appropriate notice of any trademark, trade name, copyright or other
rights therein or pertaining thereto.



     14.7 No Challenge. Licensee never shall challenge the Company’s ownership of or the
validity of the Licensed Mark or any other Other Intellectual Property, any application for
registration therefor, any registration thereof or any rights of the Company therein. Any such
challenge shall constitute an incurable default of this Agreement.




35









 







     14.8 Infringement. In the event that Licensee learns of any infringement or imitation of
the Licensed Mark or Other Intellectual Property or of any use by any person of a trademark or
other intellectual property similar to the Licensed Mark and/or the Other Intellectual Property, it
promptly shall notify the Company thereof. The Company thereupon shall take such action as it
deems advisable for the protection of its rights in and to the Licensed Mark and/or Other
Intellectual Property and, if requested to do so by the Company, Licensee shall cooperate with the
Company in all respects including, without limitation, by (a) being a plaintiff or co-plaintiff in
an infringement action, and (b) causing its officers to execute pleadings and other necessary
documents. It is understood that, if Licensee becomes a plaintiff or co-plaintiff at the Company’s
request, the Company and its counsel shall bear primary responsibility for the action. If,
however, Licensee engages counsel in connection therewith and such counsel is required in any such
action to engage in conduct beyond the review of court documents prepared by other counsel, all
reasonable legal fees attendant upon Licensee at the Company’s behest shall be reimbursed by the
Company. All actions conducted hereunder shall be managed and controlled by the Company, with the
assistance of the Licensee as requested by the Company. In no event, however, shall the Company be
required to take any action if it deems it inadvisable to do so and Licensee shall have no right to
take any action with respect to the Licensed Mark and/or the Other Intellectual Property without
the Company’s prior written approval.




15. INTELLECTUAL PROPERTY




36









 








     15.1 Ownership of Other Intellectual Property. Any copyright and or other
intellectual property rights, including new trademarks developed in connection herewith
(collectively, the “Other Intellectual Property”), which may be created in any sketch, design,
packaging, label, tag or the like designed or approved by the Company shall be the property of the
Company. Licensee shall not, at any time, do or suffer to be done any act or thing which may
adversely affect any rights of the Company in such sketches, designs, packaging, labels, tags and
the like, including, without limitation, filing any application in its name to record any claims to
copyrights, trademark or trade dress rights, design patents or patents in Articles or any packaging
or exploitation materials related thereto, and shall do all things reasonably required by the
Company to preserve and protect said rights, including, without limitation, placing any notices
(including the copyright notice specified by the Universal Copyright Convention and appropriate
trademark notices) on all Articles and the packaging, labels and tags therefor.



16. INDEMNITY; INSURANCE




     16.1 Indemnity.



37









 





          (a) Licensee hereby saves and holds the Company harmless of and from and indemnifies it
against any and all losses, liability, damages and expenses (including reasonable attorneys’ fees
and expenses) which (i) the Company may incur or be obligated to pay, or (ii) for which the Company
may become liable or be compelled to pay, in either case in connection with any action, claim or
proceeding against it, or against any other party and in which Company is required to testify, for
or by reason of any acts, whether of omission or commission, that may be committed or suffered by
Licensee or any of its officers, directors, employees, agents, Contractors, distributors (if any)
or servants in connection with Licensee’s performance of or relating to this Agreement. In
addition, in the event that a court determines that Licensee breached this Agreement or Licensee so
admits in writing, Licensee shall reimburse the Company for any and all court costs and/or
attorneys’ fees incurred by the Company in connection with its enforcement of its rights hereunder
including, without limitation, its right to obtain damages in respect of such default. The
provisions of this paragraph and Licensee’s obligations hereunder shall survive the expiration or
termination of this Agreement.



38









 




          (b) The Company hereby saves and holds Licensee harmless of and from and indemnifies it against any
and all losses, liability, damages and expenses (including reasonable attorneys’ fees and expenses)
which (i) Licensee may incur or be obligated to pay, or (ii) for which Licensee may become liable
or be compelled to pay, in either case in connection with any action, claim or proceeding against
it, or against any other party and in which Licensee is required to testify, for or by reason of
any breach by the Company of this Agreement. In addition, in the event that a court determines
that the Company breached this Agreement or the Company so admits in writing, the Company shall
reimburse Licensee for any and all court costs and/or attorneys’ fees incurred by Licensee in
connection with its enforcement of its rights hereunder including, without limitation, its right to
obtain damages in respect of such default. The provisions of this paragraph and the Company’s
obligations hereunder shall survive the expiration or termination of this Agreement.




39









 








     16.2 Insurance. Licensee at its own expense shall procure and maintain in full force
and effect at all times during which Articles are being sold, with a responsible insurance carrier
acceptable to the Company, a public liability insurance policy including products liability
coverage with respect to Articles, as well as contractual liability coverage with respect to this
Agreement, with a limit of liability of not less than Three Million Dollars ($3,000,000). Such
insurance policy shall be written for the benefit of Licensee and the Company and shall provide for
at least thirty (30) days prior written notice to said parties of the cancellation or substantial
modification thereof. Such insurance may be obtained by Licensee in conjunction with a policy of
products liability insurance which covers products other than Articles. Licensee shall deliver a
certificate of such insurance to the Company promptly upon issuance of said insurance policy and,
from time to time upon reasonable request by the Company, promptly shall furnish to the Company
evidence of the maintenance of said insurance policy. Nothing contained in this Paragraph 16.2
shall be deemed to limit in any way the indemnification provisions of Paragraph 16.1(a) above.



17. DEFAULTS




     17.1 Defaults. In addition to the termination rights of the Company provided above,



40









 





          (a) If Licensee fails to make any payment due hereunder, (i) Licensee shall pay interest on
the unpaid balance thereof from and including the date such payment is past due until the date the
entire amount is paid in full at a rate equal to the prime rate being charged in New York, New York
by Citibank, N.A. as of the close of business on the date the payment first becomes due plus two
percent (2%), and (ii) if such default shall continue uncured for a period of ten (10) days after
the Company notifies Licensee thereof, the Company shall have the right to terminate this Agreement
forthwith by written notice thereof to Licensee.


          (b) If Licensee (i) after December 31, 2006, discontinues the sale of commercially significant
quantities of Articles for a period of sixty (60) or more days, (ii) violates its obligations under
Paragraph 1.6, or (iii) defaults on any obligation which is secured by a security interest in any
Articles and the secured party takes, or reasonably may be expected to take, action to foreclose on
Articles, the Company shall have the right to terminate this Agreement forthwith by written notice
thereof to Licensee.




          (c) If there is a material adverse change in the business or financial condition of Licensee, the
Company shall have the right to terminate this Agreement forthwith by written notice thereof to
Licensee.





41









 






          (d) If the Company fails or if Licensee otherwise fails to perform any of the terms,
conditions, agreements or covenants in this Agreement on its part to be performed and (i) such
default is not curable, (ii) such default is curable but continues uncured for a period of thirty
(30) days after notice thereof has been given to the defaulting party in writing by the other
party, or (iii) such default is curable, but not within thirty (30) days, and the defaulting party
is not diligently taking all steps necessary to cure the default as promptly as practicable, the
other party, at its sole election, may terminate this Agreement forthwith by written notice thereof
to the defaulting party.



          (e) If Licensee fails to commence the sale of Articles hereunder on or before December 31, 2006,
the Company, at its sole election, may terminate this Agreement on thirty days’ written notice
thereof to Licensee.



          (f) If the Prestige Line Agreement or, after execution, the Moderate Line Agreement, Prestige 2
Agreement or any other agreement between the parties terminates other than as a result of the
Company’s default thereunder, the Company, at its sole election, may terminate this Agreement
effective upon termination of the Prestige Line Agreement, the Moderate Line Agreement, the
Prestige 2 Agreement or such other agreement.




     17.2 Bankruptcy.



42









 





          (a) In the event that Licensee files a petition in bankruptcy, is adjudicated a bankrupt or
files a petition or otherwise seeks relief under or pursuant to any bankruptcy, insolvency or
reorganization statute or proceeding, or if a petition in bankruptcy is filed against it or it
becomes insolvent or makes an assignment for the benefit of its creditors or a custodian, receiver
or trustee is appointed for it or a substantial portion of its business or assets, this Agreement
shall terminate automatically and forthwith.



          (b) No assignee for the benefit of creditors, custodian, receiver, trustee in bankruptcy, sheriff
or any other officer of the court or official charged with taking over custody of Licensee’s assets
or business shall have any right to continue this Agreement or to exploit or in any way use the
Licensed Mark or Other Intellectual Property if this Agreement terminates pursuant to Paragraph
17.2(a) above.




43









 







          (c) Notwithstanding the provisions of Paragraph 17.2(b) above, in the event that, pursuant to the
Bankruptcy Code or any amendment or successor to the foregoing (the “Code”), a trustee in
bankruptcy of Licensee or Licensee, as debtor, is permitted to assume this Agreement and does so
and, thereafter, desires to assign this Agreement to a third party, which assignment satisfies the
requirements of the Code, the trustee or Licensee, as the case may be, shall notify the Company of
same in writing. Said notice shall set forth the name and address of the proposed assignee, the
proposed consideration for the assignment and all other relevant details thereof. The giving of
such notice shall be deemed to constitute the grant to the Company of an option to have this
Agreement assigned to it or to its designee for such consideration, or its equivalent in money, and
upon such terms as are specified in the notice. The aforesaid option may be exercised only by
written notice given to the trustee or Licensee, as the case may be, by the Company within fifteen
(15) days after the Company’s receipt of the notice from such party, or within such shorter period
as may be deemed appropriate by the court in the bankruptcy proceeding. If the Company fails to
give its notice to such party within the said exercise period, such party may complete the
assignment referred to in its notice, but only if such assignment is to the entity named in said
notice and for the consideration and upon the terms specified therein. Nothing contained herein
shall be deemed to preclude or impair any rights that the Company may have as a creditor in any
bankruptcy proceeding.




18. RIGHTS ON EXPIRATION OR TERMINATION




44









 








     18.1 Licensee Payments. In the event of termination in accordance with Article 17
above, Licensee shall pay to the Company (a) any Sales Royalty and Sales Fee then owed to it
hereunder, (b) all Guaranteed Minimum Royalty and Guaranteed Minimum Fee due and payable and unpaid
as of the date of termination, (c) the total Guaranteed Minimum Royalty and Guarantee Minimum Fee
remaining unpaid for the balance of the term of this Agreement, and (d) an amount equal to any
other actual damages the Company may have suffered on account of such termination or the acts or
omissions from which it resulted.



     18.2 Reservation of Rights.



          (a) Notwithstanding any termination in accordance herewith, the Company shall have and hereby
reserves all rights and remedies which it has, or which are granted to it by operation of law (a)
to enjoin the unlawful or unauthorized use of the Licensed Mark or Other Intellectual Property or
any violation by Licensee of the confidentiality obligations under Article 4 above (any of which
injunctive relief may be sought prior to or in lieu of termination), (b) to collect royalties and
fees payable by Licensee pursuant to this Agreement, and (c) to be compensated for damages for
breach of this Agreement. In addition, nothing herein shall be deemed to prevent the Company from
bringing an action for damages prior to or in lieu of termination if a default in performance by
Licensee occurs and is not cured timely in accordance with the provisions of Article 17 above.




45









 







          (b) Notwithstanding any termination in accordance herewith, Licensee shall have and hereby reserves
all rights and remedies which it has, or which are granted to it by operation of law (a) to enjoin
any violation by the Company of the confidentiality obligations under Article 4 above (which
injunctive relief may be sought prior to or in lieu of termination), and (b) to be compensated for
damages for breach of this Agreement. In addition, nothing herein shall be deemed to prevent
Licensee from bringing an action for damages prior to or in lieu of termination if a default in
performance by the Company occurs and is not cured timely in accordance with the provisions of
Article 17 above




     18.3 Inventory. Upon the expiration or termination of this Agreement, Licensee
immediately shall deliver to the Company a complete and accurate schedule of Licensee’s inventory
of Articles and of related work in process then on hand (hereinafter referred to as “Inventory”).
Such schedule shall be prepared as of the close of business on the date of such expiration or
termination and shall reflect Licensee’s cost of each such item. The Company thereupon shall have
the option, exercisable by notice in writing delivered to Licensee within ten (10) days after its
receipt of the complete Inventory schedule, to purchase any or all of the Inventory for an amount
equal to seventy-five percent (75%) of the cost of the Inventory being purchased. In the event
such notice is sent by the Company, Licensee shall deliver to the Company or its designee all of
the Inventory referred to therein with all due speed but in all events within thirty (30) days
after the Company’s said notice. The Company shall pay Licensee for such Inventory as is in
marketable condition within thirty (30) days after its receipt thereof.



46









 




     18.4 Sale of Inventory. If this Agreement expires or is terminated other than pursuant to
Paragraph 17.2(a) above and other than by the Company pursuant to Paragraph 17.1 above, Licensee
shall be entitled, for an additional period of three (3) months only, on a non-exclusive basis, to
sell and dispose of its Inventory. Such sales shall be made subject to all of the provisions of
this Agreement and to an accounting for and the payment of Sales Royalty thereon. Such accounting
and payment shall be due within thirty (30) days after the close of the said three (3) month
period. Notwithstanding anything to the contrary herein, in the event that the Company notifies
Licensee of its desire to purchase any of the Inventory pursuant hereto, such notice shall apply
only to that portion of the Inventory remaining on the date said notice is received by Licensee.




47









 







     18.5 Reversion of Rights. Except as specifically provided above, on the expiration or
termination of this Agreement, all of the rights of Licensee under this Agreement shall terminate
forthwith and shall revert immediately to the Company, all benefits which have accrued under this
Agreement shall automatically be transferred to the Company, all Sales Royalties on sales
theretofore made shall become immediately due and payable and Licensee shall discontinue forthwith
all use of the Licensed Mark and the Other Intellectual Property, no longer shall have the right to
use the Licensed Mark or any variation or simulation thereof or to use any Other Intellectual
Property and promptly shall transfer to the Company, free of charge, all registrations, filings and
rights with regard to the Licensed Mark and the Other Intellectual Property which it may have
possessed at any time. In addition, Licensee thereupon shall deliver to the Company, free of
charge, all samples of Articles and all sketches and other material in its possession which were
designed or approved by the Company and all labels, tags and other material in its possession with
the Licensed Mark or Other Intellectual Property thereon. After the expiration or termination of
this Agreement, Licensee shall not use or permit others to use any of said sketches and other
material, or any variations or simulations thereof, in connection with Products or any other
merchandise.




19. MISCELLANEOUS




     19.1 General Representation. Each party represents and warrants that it has full
right, power and authority to enter into this Agreement and to perform all of its obligations
hereunder.



48









 






     19.2 No Representations By The Company. No representation or warranty has been or is
being made that the Company owns the Licensed Mark for Products or any particular Product in the
Territory or any portion of the Territory, except that the Company represents and warrants that, as
of the date hereof, the Company owns the registrations and applications identified on Schedule 19.2
hereto. [TO BE PROVIDED]. If the Company reasonably should determine that the use of the Licensed
Mark on any or all of the Products in the Territory or any portion of the Territory violates the
trademark or other rights of another, Licensee shall not distribute, or authorize the sale of, such
Products in or to such area and shall require retail locations to cease such sales. It will not be
a breach of the Agreement, and the Company shall have no liability in connection with, any
inability of Licensee to sell any Articles sold under the Licensed Mark in the Territory or any
portion of the Territory, except that Licensee may terminate this Agreement if it is unable to sell
Articles sold under the Licensed Mark in any significant portion of the Territory (it being
understood that such termination shall be considered a normal termination (and not a default)
hereunder).


     19.3 Brokerage Indemnity. Each party hereby indemnifies the other against and holds it
harmless from any and all liabilities (including, without limitation, reasonable attorneys’ fees
and disbursements paid or incurred in connection with any such liabilities) for any brokerage
commissions or finders’ fees in connection with this Agreement or the transactions contemplated
hereby insofar as such arrangements or agreements were made by it or on its behalf.




49









 







     19.4 Notice. All reports, approvals, requests, demands and notices required or permitted
by this Agreement to be given to a party shall be in writing and shall be deemed to be duly given
if personally delivered, or if sent by overnight mail or courier service, such as Express Mail or
Federal Express, which requires the addressee to acknowledge receipt thereof, to the party
concerned at its address set forth on page 1 above (or at such other address as a party may specify
by notice to the other). Copies of all notices to the Company also shall be sent to Weil, Gotshal
& Manges LLP, 767 Fifth Avenue, New York, New York 10153, Attn: Jeffrey J. Weinberg, Esq. , and
copies of all notices to Licensee also shall be sent to Law Offices of Rafael Bernardino, Jr., 445
South Figueroa Street, Suite 2700, Los Angeles, California 90071, Attn: Rafael Bernardino, Jr.,
Esq.



     19.5 Travel Expenses. Licensee shall reimburse the Company for the travel expenses
(i.e., business class airfare, lodgings, meals and local transportation) incurred by the
Company’s personnel in connection with trips undertaken at Licensee’s request or for purposes of
meetings with Licensee.




50









 







     19.6 Assignability. The parties recognize and acknowledge that: (i) Licensee’s performance
hereunder will require, and the Company will rely upon, the exercise of the special creative
skills, taste, personalities, industry standing and business acumen of the present management and
of those presently in control of Licensee; (ii) the Company’s positive assessment, after extensive
review, inquiry and investigation, of the creative skill, taste, personalities, industry standing
and business acumen of Licensee’s present management and those presently in control of Licensee,
specifically, John Hanna, has been a major factor in inducing the Company to enter into this
Agreement, but for which assessment the Company could not have done so; (iii) the Company’s right
to withhold approval of any and all Articles is an insufficient remedy to protect the Company from
injury in the event performance hereunder were delegated to a third party who, in the Company’s
judgment, did not possess all of the personal attributes described in subparagraphs (i) and (ii) of
this paragraph, because the extensive exercise of such right, if necessary to protect the prestige
of the Licensed Mark, would frustrate the purpose of this Agreement and adversely affect the
marketing and sale of other items of marked under the Licensed Mark; and (iii) the understanding
and intent of the parties are that, under applicable law, this Agreement constitutes a personal
service contract and that Licensee’s performance hereunder is non-delegable as a matter of law. In
light of the foregoing and of the personal nature of Licensee’s performance hereunder, this
Agreement shall not be assigned by Licensee nor shall Licensee have the right to sublicense its
rights hereunder, without, in either case, the prior written consent of the Company, except that
Licensee may assign this Agreement, in its entirety, to a company wholly owned and controlled by
John





51









 







Hanna, for such time such company is wholly owned and controlled by John Hanna. The Company agrees
to consider, in good faith, a request by Licensee for such consent; provided, however, that in
light of, inter alia, the subjective nature of Licensee’s personal attributes upon
which the Company will rely hereunder as described above, the Company shall have the sole
discretion to refuse such request. For the purpose of this Paragraph 19.6 (and in addition to any
direct assignment), any direct or indirect sale or transfer, or successive sales or transfers in
the aggregate, of that portion of the capital stock (or interests therein) of Licensee or the
voting rights of such capital stock, or any merger, consolidation or similar combination entered
into by Licensee or any parent corporation that limits or reduces the rights or abilities of
current owners of Licensee to control the business and affairs of Licensee shall constitute an
assignment of Licensee’s rights under this Agreement which requires the prior written consent of
the Company. Any purported assignment, sublicense or transfer in violation of this Paragraph 19.6
shall be void and of no effect, shall be an event of default under this Agreement and shall give
the Company the right to terminate this Agreement.



     19.7 Binding Effect. This Agreement shall inure to the benefit of and shall be binding
upon the parties, their respective successors, the Company’s transferees and assigns and Licensee’s
permitted transferees and assigns.




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     19.8 Court Actions. Any judicial proceeding relating to this Agreement shall be brought
only in the Supreme Court of the State of New York, County of New York or the United States
District Court for the Southern District of New York. Licensee hereby consents to the jurisdiction
of said courts and waives as defenses any claims of improper venue or inconvenient forum. Each of
the Company and Licensee represents and warrants that it is not entitled to immunity from judicial
proceedings and agrees that it shall not claim any immunity from such proceedings for itself or
with respect to its property.



     19.9 Promotional Items. Licensee shall not give away Articles or sell Articles in
connection with any tie-in or promotional campaign involving products other than Articles
(including products bearing the Licensed Mark), or include Articles as part of any gift sets,
gift-with-purchase or purchase-with-purchase involving products other than Articles (including
products bearing the Licensed Mark) without the prior written consent of the Company.



     19.10 Company Agreements with Third Parties. Notwithstanding anything to the contrary
contained in this Agreement, the Company shall have the right, exercisable at any time, to
negotiate and enter into agreements with third parties pursuant to which it may grant a license to
use the Licensed Mark in connection with the manufacture, distribution and sale of Products in the
Territory or provide consultation and design services with respect to Products in the Territory,
but only if, pursuant to such third party agreements, such Products are not shipped prior to the
termination of this Agreement. Nothing herein contained shall be construed to prevent the exercise
of the rights retained in Paragraph 1.1(b).




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     19.11 Governing Law. This Agreement shall be construed and interpreted in accordance with
the laws of the State of New York applicable to agreements made and to be performed in said State,
contains the entire understanding and agreement between the parties hereto with respect to the
subject matter hereof, supersedes all prior oral or written understandings and agreements relating
thereto and may not be modified, discharged or terminated, nor may any of the provisions hereof be
waived, orally.



     19.12 Independence. Nothing herein contained shall be construed to constitute the parties
hereto as partners or as joint venturers, or either as agent of the other, and Licensee shall have
no power to obligate or bind the Company in any manner whatsoever.



     19.13 Waiver. No waiver by either party, whether express or implied, of any provision of
this Agreement, or of any breach or default thereof, shall constitute a continuing waiver of such
provision or of any other provision of this Agreement. Acceptance of payments by the Company shall
not be deemed a waiver by the Company of any violation of or default under any of the provisions of
this Agreement by Licensee.



     19.14 Severability. If any provision or any portion of any provision of this Agreement
shall be held to be void or unenforceable, the remaining provisions of this Agreement and the
remaining portion of any provision held void or unenforceable in part shall continue in full force
and effect.



     19.15 Captions. The captions contained in this Agreement are for convenience of reference
only and are not intended to qualify the meaning of any paragraph hereof.




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     19.16 Counterparts. This Agreement may be executed in one or more counterparts, each of
which shall constitute an original, but all of which together shall constitute one and the same
instrument.



     19.17 No Presumptions. This Agreement shall be construed without regard to any presumption
or other rule requiring construction against the party causing this Agreement to be drafted. If
any words or phrases in this Agreement shall have been stricken out or otherwise eliminated,
whether or not any other words or phrases have been added, this Agreement shall be construed as if
those stricken or eliminated words or phrases were never included in this Agreement, and no
implication or inference shall be drawn from the fact that the words or phrases were so stricken or
eliminated.



     19.18 Payments; Currency Conversions.




          (a) All references to dollar amounts contained herein are to, and all payments made by
Licensee hereunder shall be made in, United States Dollars.



          (b) For purposes of calculating the Sales Royalty, Sales Fee and Advertising Minimum for any Annual
Period, all invoiced amounts and discount and return amounts included in Net Sales for such Annual
Period that are invoiced or credited in currencies other than United States Dollars shall be
converted to United States Dollars using, in respect of each such invoice/credit, the currency
conversion rate posted by Chase Manhattan Bank on the last day of the calendar quarter in which
such invoice/credit was issued.




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          (c) On the date that any payment hereunder is due, Licensee shall wire such payments to such
account(s) as may be designated by the Company in writing from time to time.




          IN WITNESS WHEREOF, the parties hereto have duly executed this Agreement as of the day and
year first above written.




	 	 	 	 	 
	 	 	BILL BLASS INTERNATIONAL, LLC
	 
	 	 	 	 
	 

	 	By:	 	 
	 

	 	 	 	 
	 
	 	 	 	 
	 	 	THE FASHION HOUSE, INC.
	 
	 	 	 	 
	 

	 	By:	 	 
	 

	 	 	 	 






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Annex I



“Advertising Minimum” shall have the meaning assigned to such term in Paragraph 7.2 hereof.



“Annual Period” shall have the meaning assigned to such term in Paragraph 2.1 hereof.



“Articles” shall have the meaning assigned to such term in Paragraph 1.1(a) hereof.



“Close-Out Sales” shall have the meaning assigned to such term in Paragraph 5.7(a) hereof.



“Code” shall have the meaning assigned to such term in Paragraph 17.2(c) hereof.



“Company” shall have the meaning assigned to such term in the introductory paragraph hereto.



“Confidential Information” shall have the meaning assigned to such term in Paragraph 4.1 hereof.



“Contractors” shall have the meaning assigned to such term in Paragraph 5.8(a) hereof.



“Divert” shall have the meaning assigned to such term in Paragraph 1.6 hereof.



“Guaranteed Minimum Fee” shall have the meaning assigned to such term in Paragraph 10.1 hereof.



“Guaranteed Minimum Royalty” shall have the meaning assigned to such term in Paragraph 8.1 hereof.



“Inventory” shall have the meaning assigned to such term in Paragraph 18.4 hereof.



“License” shall have the meaning assigned to such term in the introductory paragraph hereto.



“Licensed Mark” shall have the meaning assigned to such term in Paragraph 1.1(a) hereof.



“Moderate Line Agreement” shall have the meaning assigned to such term in Paragraph 1.1(d) hereof.



“Net Sales” shall have the meaning assigned to such term in Paragraph 9.2 hereof.




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“Prestige Line Agreement” shall have the meaning assigned to such term in the second recital
hereto.



“Prestige 2 Agreement” shall have the meaning assigned to such term in the second recital hereto.



“Products” shall have the meaning assigned to such term in Paragraph 1.1(a) hereof.



“Renewal Threshold” shall have the meaning assigned to such term in Paragraph 2.1 hereof.



“Sales Fee” shall have the meaning assigned to such term in Paragraph 11.1 hereof.



“Sales Royalty” shall have the meaning assigned to such term in Paragraph 9.1 hereof.



“Territory” shall have the meaning assigned to such term in Paragraph 1.1(a) hereof.




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EXHIBIT 1

Form of Moderate Line License



[See Attached.]




 









 








SCHEDULE 19.2

Trademark Registrations and Application