exv10w2



 







Exhibit 10.2




     AGREEMENT made as of February ___, 2006, by and between IM Ready-Made, LLC, a New York limited
liability company with offices at 347 West 36th Street, New York, New York, 10018
(hereinafter referred to as the “Company”), and THE FASHION HOUSE, INC., a Colorado 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 in the Territory under the Licensed Marks (each as hereinafter
defined), which Products shall consist of three lines, as follows:



     (i) under the mark “Isaac”, with a suggested retail price of $150-400 (such license, the
“Isaac Shoe Line”);



     (ii) under the mark “Isaac Mizrahi – New York” with a suggested retail price of $400 and up
(such license, the “Couture Shoe Line”); and



     (iii) under the mark [mark], with a suggested retail price of $80-140 (such, license, the
“Diffusion Line”; each such line, a “Shoe Line” and, collectively, the “Shoe Lines”);



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     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.



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          (a) The Company hereby grants to Licensee, during the term of this Agreement, an exclusive
license to use the marks “Isaac”, “Isaac Mizrahi-New York”, and [mark], solely in forms to be
agreed upon by the parties (each, a “Licensed Mark” and collectively the “Licensed Marks”),
throughout the United States (the “Territory”), solely in connection with Licensee’s manufacture,
distribution and sale of women’s shoes for the Isaac Shoe Line, the Isaac Mizrahi-New York Shoe
Line and the [X] Shoe Line, respectively, all such items of the types, qualities and styles
traditionally sold in the channels of distribution approved in Paragraph 5.7 and with a suggested
retail price of $150 to $400, $400 and up, and $80-$140, respectively. 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 Marks except those specifically granted herein to Licensee, and (2)
Licensee shall not use the Licensed Marks 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, except that, 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, Licensee may
utilize the Licensed Marks on the Internet to advertise (but not sell) Articles on Licensee’s
website at http://www.fashionhouseinc.com, and other




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sites, each of which are approved by the Company, and (y) in emails with Licensee’s customers
located within the Territory (but not in unsolicited emails).




     1.1(b) Right of First Refusal . In the event the Company desires to use
or license any mark related to “Isaac Mizrahi” (including, without limitation, any Licensed Mark)
on or in connection with Products outside of the United States, Licensee shall have a right of
first refusal to match the material terms of any such use or licensing opportunity.



     1.2 All Articles to Bear Licensed Marks. All Articles shall bear the applicable
Licensed Mark (it being understood that the parties contemplate that the applicable Licensed Mark
shall be on the labels within Products and the respective boxes or other packaging therefor). No
Articles (i.e., Products bearing or sold under a Licensed Mark) shall be sold or otherwise
distributed by Licensee under any mark other than the applicable Licensed Mark.



     1.3 No Retail Sales. Licensee acknowledges that the rights granted to it hereunder do
not include the right to operate a boutique under any of the Licensed Marks (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 in Paragraph 2.1) of Articles through such factory outlet during any Annual Period shall
not constitute more than twenty five percent (25%) of Net Sales for such Annual Period.



     1.4 Exploitation. Licensee shall use its best efforts to develop and promote all
Products and otherwise exploit the rights herein granted throughout the Territory



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(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 by the Company, in its sole discretion, 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 permitted retail locations (as set forth in Paragraph 5.7) located
in the Territory for sale within 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 Marks and/or Articles as well
as other products sold under the Licensed Marks. 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 Articles or return such Articles to Licensee.



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



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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
herein) during the fifth “Annual Period” (as defined below in this Paragraph 2.1) of the initial
term are at least Fifteen Million Dollars for all the Shoe Lines (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. “Net Sales” are defined as the gross invoice price for the
Products shipped by Licensee less (a) returns accepted for credit or exchange, (b) normal and
customary trade discounts but not advertising allowances, (c) freight charges (if
separately invoiced) and amounts disbursable, (d) uncollectible accounts, and (e) year-end
allowances of up to a maximum of five (5%) percent of gross invoices, but not including any
other deduction for advertising, warehouse and distribution costs and expenses.




     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.



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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 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 in the event that (i) “Net Sales” 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” (as set forth in Paragraph 8) 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 was 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.



     3.2 Development. (a) Licensee shall employ one full time designer who shall be
exclusively dedicated to the production of the Articles, and who shall be approved by the Company.



          (b) 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.




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          (c) The Company, in its sole discretion, shall approve or disapprove the materials, designs,
sketches, colors, tags, labels and packaging submitted as aforesaid, and shall discuss with
Licensee any modifications or alterations thereof. Only those materials, designs, sketches,
colors, tags, labels and packaging which are so approved shall be used in the production of the
Articles.




     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.



     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



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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.
Further, Licensee agrees to reimburse Licensor for payment of any reasonable ordinary out-of-pocket
expenses (such as expenses for designer samples) up to $500 incurred by the Company in connection
with this Agreement.



     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.



          (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), as well as all concepts,
sketches, plans and designs used or proposed for use in connection with Articles (by whomever used
or proposed) (collectively




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“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.




          (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 or 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




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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, provided that no Article may retail for less than $400, $100.00 and $80, with
respect to the Isaac Mizrahi-New York Shoe Line, the Isaac Shoe Line and the [X] Shoe Line,
respectively.



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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 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 a
reasonable 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. 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. In addition and in accordance with Section 5.6, before Licensee begins selling or
distributing any Article, Licensee shall submit to the Company a then-current production sample of
each Article for its written approval in accordance with Section 6.1.



     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
and/or in any territory in which Articles are so manufactured, sold, labeled, packaged, distributed
and/or advertised, 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



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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.




     5.5 Form and Manner of Use of Licensed Marks. Licensee shall use and display the
Licensed Marks 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 Marks 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 and, in any case, only as has been
approved by the Company in accordance with Paragraph 6.1 hereof. 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



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of any kind on which the Licensed Marks 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.



     5.7 Distribution.




          (a) In order to maintain the reputation, image and prestige of the Licensed Marks and the
Company, 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 Marks,
and in accordance with the limitations set forth herein. Such retail distribution channels shall
be (1) “better department” retail and specialty stores such as Saks Fifth Avenue, Bergdorf Goodman,
Neiman Marcus, Barneys, Nordstrom and other stores 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




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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 with respect to each
Shoe Line during any Annual Period. 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, or any
other similar such mass merchandisers or club stores or any other discounter or retail location not
meeting the standard set forth in the previous sentences of this subparagraph, and (ii) it shall
not accept production orders from any discounter, club store, mass merchandiser, or similar such
discounter, without the Company’s prior written approval, which may be given or withheld in its
sole discretion.




          (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.




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          (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.




          (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 applicable laws or
standards adopted by the United Nations or the applicable jurisdiction with respect to fair
remuneration for word, health and safety conditions in the work environment and social protection
of workers 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 otherwise constitute a material violation of this Agreement shall
constitute a material violation of this Agreement by Licensee. Licensee shall be solely
responsible for insuring that any Article produced by any Contractor shall comply with the quality
standards set forth in this Agreement.




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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.



7. ADVERTISING; SHOWROOM




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     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
Marks on the Internet to advertise (but not sell) Articles on Licensee’s website at
http://www.fashionhouseinc.com, and other sites approved by the Company, and (y) in emails with
Licensee’s customers located within the Territory (but not in unsolicited emails)



     7.2 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, promotion and sale of
finished Articles, for which showroom the Company shall be consulted as to design and general
appearance. Said showroom shall be staffed and maintained in a manner commensurate with the
reputation and prestige of the Licensed Marks as designations for products of the highest quality.



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8. GUARANTEED MINIMUM ROYALTY




     8.1 Calculation of Guaranteed Minimum Royalty. In consideration for the use of the
Licensed Marks hereunder, Licensee shall pay to the Company a guaranteed minimum royalty for each
Annual Period (each, the “Guaranteed Minimum Royalty” (8%) for such Annual Period) as follows:



ANNUAL PERIOD GUARANTEED MINIMUM ROYALTY




	 	 	 	 	 
	First
	 	 	$	170,000,00
	Second
	 	 	$	225,000.00
	Third
	 	 	$	275,000.00
	Fourth
	 	 	$	     350,000
	Fifth
	 	 	$	     400,000
	Sixth through Tenth
	 	 	$	     450,000 (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.



9. SALES STATEMENT




     9.1 Statement. Licensee shall deliver to the Company, at the time each payment of a
Sales Royalty or 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



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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.




     9.2 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 9.1 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.




10. BOOKS AND RECORDS; AUDITS




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     10.1 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.



     10.2 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.



11. THE LICENSED MARKS





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     11.1 Limitations on Use. Licensee shall not use any 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 any Licensed Mark so as to form a new mark. Licensee shall
not use any name or names in connection with any 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.



     11.2 Company as Owner. Licensee acknowledges that the Company is the owner of all
right, title and interest in and to each 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. All uses of the Licensed Marks 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 any 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 any Licensed Mark or
the Other Intellectual Property.



     11.3 First Quality. Licensee shall ensure that all Articles sold under Licensed Marks
sold or otherwise distributed hereunder are of first quality only and



24









 




shall remove any Licensed Mark from any Articles to be sold as “seconds” or as “irregulars.”




     11.4 Registration. The Licensed Marks 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 Marks, 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 Marks, Other Intellectual Property or any variation or simulation of the
foregoing shall constitute a material and incurable default of this Agreement by Licensee.



     11.5 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 Marks 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 Marks 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



25









 




agreed that Licensee shall not use any
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 a Licensed Mark but that there is no material impediment to the use of such Licensed Mark.
If the Company in good faith and after consultation with trademark counsel should determine that
the use of a Licensed Mark and/or Other Intellectual Property on any or 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 such Licensed Mark and/or Other Intellectual Property to such area.




     11.6 Legal and Other Requirements. Licensee shall use the Licensed Marks 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
Marks and/or Other Intellectual Property are used, such legends, markings and notices as may be
reasonably necessary in



26









 




order to give appropriate notice of any trademark, trade name, copyright or
other rights therein or pertaining thereto.




     11.7 No Challenge. Licensee never shall challenge the Company’s ownership of or the
validity of the Licensed Marks or any 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.



     11.8 Infringement. In the event that Licensee learns of any infringement or imitation
of a Licensed Mark or Other Intellectual Property or of any use by any person of a trademark or
other intellectual property similar to such 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



27









 




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.




12. INTELLECTUAL PROPERTY




     12.1 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.



13. INDEMNITY; INSURANCE




     13.1 Indemnity.



28









 





          (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.




          (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 arise out of any material 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





29









 







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.




     13.2 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 product 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 One Million Dollars ($1,000,000). Such
insurance policy shall be written for the benefit of Licensee and the Company and shall provide for
at least twenty (20) 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, provided that the foregoing
minimum coverage is met with respect to the 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 13.2 shall be deemed to
limit in any way the indemnification provisions of Paragraph 13.1(a) above.



14. DEFAULTS




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



30









 





          (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 an adverse material change in the business or financial condition of Licensee
which adversely affects the Company, the Company shall have the right to terminate this Agreement
forthwith by written notice thereof to Licensee.




          (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




31









 







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.




     14.2 Bankruptcy.



          (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 Marks or Other Intellectual Property if this Agreement terminates pursuant
to Paragraph 14.2(a) above.




          (c) Notwithstanding the provisions of Paragraph 14.2(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





32









 







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.




15. RIGHTS ON EXPIRATION OR TERMINATION




33









 








     15.1 Licensee Payments. In the event of termination in accordance with Article 14
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.



     15.2 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 any 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 14 above.




          (b) Notwithstanding any termination in accordance herewith, Licensee shall have and hereby
reserves all rights and remedies which it has, or which are granted




34









 







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.




     15.3 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.



     15.4 Sale of Inventory. If this Agreement expires or is terminated other than
pursuant to Paragraph 14.2(a) above and other than by the Company pursuant to



35









 





Paragraph 14.1 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.




     15.5 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 Marks and the Other Intellectual Property, no longer shall have the right
to use any 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 each 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 Marks or Other Intellectual Property thereon. After



36









 





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.




16. MISCELLANEOUS




     16.1 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.



     16.2 No Representations By The Company. No representation or warranty has been or is
being made that the Company owns the Licensed Marks 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 “A.”
If the Company reasonably should determine that the use of any 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 bearing such
Licensed Mark 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 that 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 Marks in any significant portion of the Territory (it being
understood that such termination shall be considered a normal termination (and not a default)
hereunder).




37










 







     16.3 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.



     16.4 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
Craig Kinosian, Esq., at Pryor Cashman Sherman & Flynn, LLP, 410 Park Avenue, New York, New York,
10022, 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.



     16.5 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.



38









 





     16.6 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 each Licensed Mark, would frustrate the purpose of this Agreement and
adversely affect the marketing and sale of other items of marked under the Licensed Marks; 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,
which consent may be withheld in its sole discretion, except that Licensee may



39









 







assign this Agreement, in its entirety, to a company wholly owned and controlled by John Hanna
for such time such company is wholly owned and controlled by John Hanna, with the prior written
consent by the Company, which consent may not be unreasonably withheld. 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 16.6 (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 16.6 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.



     16.7 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.



     16.8 Court Actions. Any judicial proceeding relating to this Agreement shall be
brought only in the courts of the State of New York or the United States District Court



40









 







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.



     16.9 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 Marks), 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 Marks) without the prior written consent of the Company.



     16.10 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 Marks 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).



     16.11 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



41









 







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.



     16.12 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.



     16.13 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.



     16.14 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.



     16.15 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.



     16.16 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.



42









 





     16.17 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.



     16.18 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.




          (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.




43









 








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



	 	 	 	 	 	 	 	 	 	 	 
	IM READY-MADE, LLC	 	 	 	 	 	 	 	 
	 
	 	 	 	 	 	 	 	 	 	 
	By:

	 	 	 	 	 	By:	 	 	 	 
	 

	 	 

Name:
	 	 	 	 	 	 

THE FASHION HOUSE, INC.
	 	 
	 

	 	Title:	 	 	 	 	 	 	 	 






44









 






SCHEDULE A




“Isaac Mizrahi”





45