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                     LICENSE AGREEMENT #96394-BLT/WBLT

LICENSE AGREEMENT made December 3, 1998, by and between Warner Bros., a Division
of Time Warner Entertainment Company L.P., c/o Warner Bros. Consumer Products, a
Division of Time Warner Entertainment Company L.P., whose address is 4000 Warner
Blvd., Burbank, CA 91522 (hereinafter referred to as "LICENSOR") and Gerber
Childrenswear, Inc., whose address is 7005 Pelham Road, Suite D, Greenville,
South Carolina 29615, Attention: Chris Lanigan (hereinafter referred to as
"LICENSEE").

                                   WITNESSETH:

        The parties hereto mutually agree as follows:


1. DEFINITIONS: As used in this Agreement, the following terms shall have the
following respective meanings:

        (a)     "CHANNELS OF DISTRIBUTION": Licensee may sell the Licensed
                Products through the following channels of distribution only (as
                such channels are defined in Exhibit 1 attached hereto and
                incorporated herein by reference): CANEX, Baby specialty Stores,
                Chain Drug Stores, Chain Toy Stores, Direct Nail Catalogs on a
                case by case basis only, Home Specialty Stores (Licensed
                Products (4) through (16) only), Mid-Tier Department Stores
                specifically Sears Canada (excluding Licensed Products (34),
                (35), (36), (38), (39) and (41)), National Discount/Mass
                Retailers, Non-Chain Drug Stores, Non-Chain Toy Stores, Non-Mall
                Clothing Specialty Stores, OffPrice/Closeout Stores, Outlet
                Stores, Supermarket/Grocery Stores, Regional Discount/Mass
                Retailers, Warehouse Clubs (Licensed Products (26), (31), (32),
                and (37) only).

                All other channels of distribution defined in Exhibit 1, which
                are not specified above in this Paragraph 1(a), are specifically
                excluded from this Agreement.

        (b)     "GUARANTEED CONSIDERATION": In full consideration for the
                rights, licenses and privileges granted to Licensee, Licensee
                shall pay to Licensor the following sums, ninety-eight Percent
                (98%) of which shall be deemed consideration in respect of the
                copyrights licensed hereunder, and Two Percent (2%) of which
                shall be deemed consideration in respect of the Trademarks
                licensed hereunder. For the rights herein granted to Licensee
                during the Term referred to in Paragraph 1(h) hereof, the sum of
                $80,000 U.S., payable as follows:

                    $30,000 U.S. payable simultaneously with the execution of
                    this Agreement;

                    $25,000 U.S. payable on or before December 1, 1998; and

                    $25,000 U.S. payable on or before December 1, 1999.

                ALL PAYMENTS AND ROYALTY REPORTING WITH RESPECT TO THIS
                AGREEMENT SHALL BE MADE PAYABLE IN U. S. FUNDS TO THE
                CANADIAN OFFICE OF WARNER BROS. CONSUMER PRODUCTS.





12/14/97

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        (c)     "LICENSED PRODUCT(S)":

        In respect of the Licensed Property set forth in CATEGORY I of paragraph
        1(d) below, the Licensed Products shall be as follows:

                        Bath Products
                        -------------

                       (1)      Hooded Towels *
                       (2)      Washcloths *
                       (3)      Washmitts

                        Infant Coordinated Bedding
                        --------------------------

                       (4)      Sheets *
                       (5)      Comforters *
                       (6)      Dust Ruffles *
                       (7)      Receiving Blankets *
                       (8)      Crib Blankets *
                       (9)      Diaper Stackers *
                       (10)     Birth Certificate Pillows *
                       (11)     Bumper Pads *
                       (12)     Bassinet Sheets *
                       (13)     Lap Pads
                       (14)     Wallpaper Room Borders and Window Treatments
                                to be supplied by Licenser's current wallpaper
                                licensee on a case by case basis only
                       (15)     Mat and Pillow Combinations
                       (16)     Changing Table Padcovers

                        Sleepwear
                        ---------

                       (17)     Sleep `n' Play *

                       (18)     Blanket Sleepers, Sizes 0-24 months and 2-5T *
                       (19)     Pajamas (Footed and Non-Footed), Sizes 0-24
                                months and 2-5T *
                       (20)     Gowns/Dorm Shirts, Sizes
                                0-24 months *
                       (21)     Prams, Sizes 0-24 months


                       (22)     One Piece for Infants, Sizes NB, S, M, L and XL
                                *
                       (23)     Two piece for Infants and Toddlers, Sizes NB, S,
                                M, L, XL and 2-5T *
                       (24)     Longmates for Infants, Sizes NB, S, M1 L and XL
                                *
                       (25)     Undershirts for Infants, Sizes NB, S, M, L and
                                XL *
                       (26)     Training Pants, Sizes 2-5T *

                        Footwear/Socks
                        --------------

                       (27)     Booties
                       (28)     Infant Socks

                        Layettes (Disposable Diapers and Vinyl Diaper Covers are
                        --------
                        specifically excluded)

                       (29)     Gowns *
                       (30)     Caps *
                       (31)     Gift Sets, to include Infant Gown, Shirt, Bib,
                                Washcloth, Booties, Towels, Comb (to be supplied
                                by Gerber Products), Teethers (to be supplied by
                                Gerber Products) and/or on a case by case basis
                                with Licensor's prior written


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                                approval, any Licensed Products licensed
                                hereunder and any products purchased by Licensee
                                from other authorized licensees of Licensor
                       (32)     Cloth Diapers/Burp Cloths *
                       (33)     Diaper Covers *

                        Infant and Toddler Playwear (Windwear, Outerwear,
                        ---------------------------
                        Sweaters, Leggings when sold as a set with Sweaters, and
                        T-Shirts when sold as coordinates with Swimwear are
                        specifically excluded)

                       (34)     Two Piece Set
                       (35)     Creepers
                       (36)     Overalls, Shortalls, Coveralls
                       (37)     Bibs sold individually *
                       (38)     Shirts
                       (39)     Coordinated Playwear Separates
                       (40)     Swim Diapers
                       (41)     Terry Rompers

                In respect of the Licensed Property set forth in Category II of
                Paragraph 1(d) below the Products shall be as follows:

                       (42)     Toddler Bedding

        Licensed Products denoted with "*" shall be sold on an exclusive basis.
        All other Licensed Products shall be sold on a non-exclusive basis.

        The use of direct embroidery is approved for Category I character only.

        (d) "LICENSED PROPERTY":

        (i) CATEGORY I: The fictional cartoon characters BABY BUGS BUNNY, BABY
        LOLA BUNNY, BABY DAFFY DUCK, BABY SYLVESTER, BABY TWEETY, BABY TASMANIAN
        DEVIL, BABY WILE E. COYOTE, BABY ROAD RUNNER AND BABY MARVIN THE MARTIAN
        which constitute "BABY LOONEY TUNES", including the names of said
        characters and all trademarks, copyrights, environmental settings and
        artwork associated therewith. The Licensed Property licensed hereunder
        shall be identified with Licensor's BABY LOONEY TUNES mass market logo
        only. Licensee is obtaining no rights hereunder in or to Licensor's
        upstairs market logo referred to as "BABY LOONEY TUNES CLASSIC
        COLLECTION". Furthermore, unless otherwise set forth below, specifically
        excluded herefrom are any other properties, trademarks or copyrights of
        Licensor, including but not limited, to the cartoon characters referred
        to collectively as the "LOONEY TUNES" characters, and Licensee
        acknowledges and agrees that it shall enjoy no rights whatsoever
        hereunder with respect to such properties, trademarks, and copyrights,
        it being understood that such properties, trademarks, and copyrights are
        and will continue to be the subject of separate licensing agreements
        with licensees of Licensor's choice. Without limiting the generality of,
        the foregoing, Licensee is obtaining no rights hereunder, unless
        otherwise specifically set forth below, in or to the adult versions of
        BUGS BUNNY, LOLA BUNNY, DAFFY DUCK, SYLVESTER, TWEETY, TASMANIAN DEVIL,
        WILE E. COYOTE, ROAD RUNEER, and MARVIN THE MARTIAN.

        TRADEMARKS: All registered and unregistered trademark rights of Licensor
        relating to the above copyrights.



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        Together the Copyrights and Trademarks: as set forth herein shall be
        known as "Category I Licensed Property".

        (ii) CATEGORY II: Notwithstanding the foregoing, the fictional cartoon
        characters BUGS BUNNY, LOLA BUNNY, DAFFY DUCK, SYLVESTER, TWEETY,
        TASMANIAN DEVIL, WILE B.COYOTE, ROAD RUNNER, and MARVIN THE MARTIAN
        only.

        TRADEMARKS: All registered and unregistered trademark rights of Licensor
        relating to the above copyrights.

        Together the Copyrights and Trademarks as set forth herein shall be
        known as "Category II Licensed property.

        (e) "MARKETING DATE": July 1, 1998.

        (f) "ROYALTY RATE":

                (i) Eight Percent (8%) for the calendar year 1998;

                (ii) Ten Percent (10%) for the calendar year 1999;

                (iii) Twelve Percent (12%) for the calendar year 2000;

                (iv) Four Percent (4%) on Closeouts (defined below) and on
                     Irregulars (defined below).

        (g) "TERM": July 1, 1998 through December 31, 2000.

        (H) "TERRITORY": CANADA.

        (i) "CLOSEOUTS": shall mean first quality Licensed Products
            discounted by twenty percent (20%) or more of f the list price for
            such Licensed Products for purpose of discontinuing sales of the
            Licensed Product. Sales of Closeouts shall not exceed ten percent
            (10%) of all sales of Licensed Products in any calendar quarter.

        (j) "IRREGULARS": shall mean Licensed Products which contain approved
            images and complete legal notices, but which contain slight defects
            in the manufacture or printing of the product. Irregulars shall not
            include any product which is dangerous or hazardous, contains
            unapproved images or lacks a complete legal notice. Sales of
            Irregulars shall not exceed five percent (5%) of all sales Licensed
            Products in any calendar quarter.

        (k) "APPROVED CLOSEOUTS AND IRREGULARS OUTLETS": Licensee may submit to
            Licensor a listing of proposed closeout and irregular outlets which
            Licensor will review and, if approved in writing, will be considered
            approved outlets for any future sale of Closeouts and/or Irregulars.
            Licensee will use its best efforts to prohibit the advertising of
            Closeouts and/or Irregulars by the retailer or outlet purchasing
            such products.

2. GRANT OF LICENSE:

        (a) Subject to the restrictions, limitations, reservations and
            conditions and Licensor's approval rights set forth in this
            Agreement, Licensor hereby grants to Licensee and Licensee hereby
            accepts for the Term of this Agreement1 a license to utilize the
            Category I and II Licensed Property and to create Artwork, subject
            to Licensor's approval, solely on or in connection with the
            manufacture, distribution and sale of the Licensed Products as
            specified above for the ultimate retail sale



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            to the public throughout the Territory on an exclusive basis for
            Licensed Products denoted with "*" and on a non-exclusive basis for
            Licensed Products (3), (13), (14), (15), (16), (21), (27), (28),
            (31), (34), (35), (36), (38), (39), (40), (41) and (42).

        (b) Without limiting any other approval rights of Licensor as
            contained herein, no television commercials may be utilized under
            this Agreement without the specific prior written approval of
            Licensor.

        (c) Subject to the Grant of License set forth in Paragraph 2(a), it
            is specifically agreed and understood between the parties hereto
            that those characters set forth in Paragraph 1(d) (i) Category I and
            1(d) (ii) Category II above shall only be utilized in connection
            with the respectively designated Licensed Products set forth above
            in Paragraph 1(c).

3. RESERVATION OF RIGHTS; PREMIUMS:

        (a) Licensor reserves all rights not expressly conveyed to Licensee
            hereunder, and Licensor may grant licenses to others to use the
            Licensed Property, artwork and textual matter in connection with
            other uses, services and products without limitation.

        (b) Notwithstanding  anything to the contrary stated herein,  Licensor
            specifically reserves the right, without limitation throughout the
            world, to itself use, or license any third party(s) of its choice to
            use the Licensed Property for the manufacture, distribution and sale
            of products similar or identical to those licensed herein in
            Paragraph 1(c) above for sale through any catalogue(s) produced or
            distributed by or on behalf of Licensor or Licenser's affiliated
            companies (Licensor's affiliated companies herein shall mean any
            company owned either directly or indirectly by Time Warner, Inc.),
            or for sale or distribution in any theaters or arenas, or for sale
            or distribution in any retail stores operated by or on behalf of
            Licensor, Licensor's affiliated companies or franchisees, or for
            sale or distribution in any theme/amusement parks operated by or on
            behalf of Licenser or its licensees, Six Flags, Premier Parks, Movie
            World, or their affiliated companies (affiliated companies of Six
            Flags, Premier Parks and Movie World herein shall mean any company
            owned either directly or indirectly by them, or by a company which
            owns them). In addition, Licensor reserves the right to a11ow Six
            Flags, Premier Parks and Movie World to manufacture (or have
            manufactured by a third party) products similar or identical to
            those licensed herein for distribution or sale in theme and/or
            amusement parks owned or operated by Six Flags, Premier Parks and/or
            Movie World. Further, Licensor reserves the right to use, or license
            others to use, and/or manufacture products similar or identical to
            those licensed herein for use as premiums, excluding premiums which
            would be distributed through Licensee's Channels of Distribution.

        (c) Licensee specifically understands and agrees that no rights are
            granted herein with respect to the Warner Bros. "shield" logo or
            trademark, or any other trademark(s), logo(s) or copyrights owned by
            Licensor other than these specifically set forth above in the
            Licensed Property, it being understood that all rights in and to
            said properties are reserved exclusively to Licensor for use and/or
            licensing as it deems appropriate to third party(s) of its choice.




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        (d) Licensee understands and agrees that the rights granted herein
            are limited only to the cartoon characters set forth above and that
            any and all rights in, to or associated with the theatrical motion
            picture entitled "SPACE JAM", as well as with any sequels thereto,
            are specifically excluded herefrom, it being understood that all
            rights in and to said property are reserved exclusively to Licensor
            for use and/or licensing as it deems appropriate to third parties of
            its choice.

       (e)  Licensee agrees that it will not use, or knowingly  permit the use
            of, and will exercise due care that its customers likewise will
            refrain from the use of, the Licensed Products as a premium, except
            with the prior written consent of Licensor. Subject to Licensor's
            prior written approval as aforesaid, Licensee shall pay to Licensor
            a sum equal to TWELVE PERCENT (12%) of all premium sales. For
            purposes of this paragraph, the term "premium" shall be defined as
            products offered to the public in conjunction with the sale or
            promotion of a product or service, including but not necessarily
            limited to, combination sales, free or self-liquidating items
            offered to the public in conjunction with the sale or promotion of a
            product or service, programs designed to build traffic or continuity
            visits by the consumer/customer, or any similar scheme or device,
            the prime intent of which is to use the Licensed products in such a
            way as to promote, publicize and or sell the products, services or
            business image of the user of such item. Premium shall not include
            placement of discount coupons or similar types of rebate or discount
            offers on other Licensee products ("cross-couponing"). All instances
            of Cross-couponing and all artwork in relation thereto shall be
            subject to Licensor's prior written approval.

4. CONSIDERATION:

       (a)      The Guaranteed Consideration paid by Licensee as set forth above
                shall be applied against such royalties as are, or have become,
                due to Licensor. No part of such Guaranteed Consideration shall
                be repayable to Licensee. Royalties earned in excess of the
                Guaranteed Consideration applicable to the Term hereof shall not
                offset any Guaranteed Consideration required in respect of the
                succeeding renewal term (if any); likewise, royalties earned in
                excess of the Guaranteed Consideration applicable to the renewal
                term (if any) shall not offset any Guaranteed Consideration
                applicable to any prior term.

        (b)     Royalty Payments: Licensee shall pay to Licensor a sum equal to
                the Royalty Rate as set forth above of all Net Sales by Licensee
                of the Licensed Product(s) covered by this Agreement. The term
                "Net Sales" herein shall mean the wholesale list price of the
                Licensed Product(s) billed customers, less the following:

                       (i)      actual quantity discounts and placement
                                discounts and actual returns, but no deductions
                                shall be made for uncollectible accounts and
                                deductions for actual returns may not exceed
                                five percent (5%) of total sales; and

                       (ii)     any sales, excise or value added taxes which are
                                separately stated and which are required to be
                                collected from customers and which are payable
                                to tax authorities. No deduction shall be taken
                                in computing Net Sales for




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                               taxes not described immediately above, including
                               but not limited to income withholding taxes or
                               remittance taxes.

                No costs incurred in the manufacture, sale, distribution,
                advertisement, or exploitation of the Licensed Products shall be
                deducted from any royalties payable by Licensee.

        (c)     Licensee will pay all taxes, customs, duties, assessments,
                excise except as provided in Subparagraph 4(b)(ii), and other
                charges levied upon the importation of or assessed against the
                Licensed Product under this Agreement, as well as all Licensee's
                costs of doing business and Licensor shall have no liability
                therefor.

        (d)     For sales of Closeouts and Irregulars at or below 2,500 units,
                Licensee may directly sell such Closeouts and/or Irregulars to
                Approved Closeouts and Irregulars Outlets. For sales of
                Closeouts and/or Irregulars in excess of 2,500 units, prior to
                offering such Closeouts and/or Irregulars, Licensee shall give
                notice to Licensor of its intent to offer Closeouts and/or
                Irregulars, the Licensed Products to be sold as Closeouts or
                Irregulars, the quantity available, the nature of the
                irregularity, a representative sample of the Cl6seouts and/or
                Irregulars and the price they are to be offered at. Licensor
                shall have ten (10) business days to give Licensee notice of its
                election to purchase some or all of the Closeouts and/or
                Irregulars. If Licensor does not purchase all of the Closeouts
                and/or Irregulars specified in the notice, Licensee shall
                further notify Licensor of the retailer or other outlets which
                will be offered the Closeouts and/or Irregulars. If, within five
                (5) business days of such further notice, Licensor objects to
                any particular retailer or outlet and provides a good faith
                basis for such objection, Licensee shall not offer such
                Closeouts and/or Irregulars to such retailer or outlet.

       (e)      Royalties shall be payable monthly with the periodic statements
                required in Paragraph 5 hereof, except to the extent offset by
                Guaranteed Consideration theretofore remitted.

5. PERIODIC STATEMENTS:

        (a)     Within thirty days after the initial shipment of the Licensed
                Products and promptly on the 15th day of every month thereafter
                commencing, Licensee shall furnish to Licensor complete and
                accurate statements certified to be accurate by Licensee showing
                with respect to all Licensed Product(s) distributed and sold by
                Licensee during the preceding calendar month the: (i) number by
                SKU number; (ii) wholesale list price; (iii) quantity and
                placement discounts and (iv) net sales price, together with any
                returns made during the preceding calendar month. Such
                statements shall be furnished to Licensor whether or not any of
                the Licensed Product(s) have been sold during calendar months to
                which such statements refer. Receipt or acceptance by Licensor
                of any of the statements furnished pursuant to this Agreement or
                of any sums paid hereunder shall not preclude Licensor from
                questioning the correctness thereof at any time, and in the
                event that any inconsistencies or mistakes are discovered in
                such statements or payments, they shall immediately be rectified
                and the appropriate payments made by Licensee. On a monthly
                basis, concurrent with the furnishing of the statements
                described above, Licensee shall make payment of royalties and
                provide such information on Licensed Product sales on a
                character by character basis as is




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                then readily available to Licensee in such form as Licensee
                compiles for its own use. Upon demand of Licensor, Licensee
                shall, but not more than once in any TWELVE (12) month period,
                furnish to Licensor a detailed statement by an officer of
                Licensee showing: (i) by SKU number; (ii) wholesale list price;
                (iii) quantity and placement discounts; and (iv) net sales price
                of the Licensed Product(s) covered by this Agreement distributed
                and/or sold by Licensee up to and including the date upon which
                Licensor has made such demand.

        (b)     The statements and payments required hereunder shall be
                delivered to:

                 WARNER BROS. CONSUMER PRODUCTS (CANADA)
                 4576 Yonge Street - 2nd Floor
                 North York, Ontario
                 CANADA M2N 6P1
                 Attn: Jeanne K. Danielson

        (c)     Any payments which are made to Licensor hereunder after the due
                date required therefore, shall bear interest at the then current
                prime rate plus four (4) percent (or the maximum rate
                permissible by law1 if less than the current prime rate) from
                the date such payments are due to the date of payment.
                Licensor's right hereunder to interest on late payments shall
                not preclude Licensor from exercising any of its other rights or
                remedies pursuant to this Agreement or otherwise with regard to
                Licensee's failure to make timely remittances.

        (d)     Licensee agrees to provide, at Licensor's request: (i) a letter
                of credit issued in favor of Licensor from a financial
                institution as approved by Licensor in an amount up to the
                Guaranteed Consideration; and/or (ii) such other form of
                security acceptable to Licensor. Licensee agrees to execute all
                documentation as Licensor may require in connection with
                perfecting such security interests.

        (e)     Any income taxes, withholding taxes, other taxes and/or fees
                which local law requires to be levied against Licensor's royalty
                and withheld by Licensee, shall be paid out of such royalties by
                Licensee on behalf of Licensor within the period of time
                required by local law, provided that Licensee shall not make
                such payment if Licensor has advised Licensee in writing not to
                do so, and has taken appropriate legal action to contest the
                propriety of such taxes and/or fees. In such event, Licensor
                shall indemnify Licensee against any principle, interest charges
                or penalties with respect to such taxes. Any such taxes or fees
                which Licensee pays on behalf of Licensor shall be deducted from
                the royalty otherwise payable to Licensor. The original receipt
                (or a bonafide copy thereof) for such taxes as may be deducted
                from royalties shall accompany the statements described in
                Paragraph 5(a) above for the accounting period in which such
                deduction is made. Licensee shall timely file all necessary tax
                returns or other government documents on Licensor's behalf, as
                required by local law, at Licensee's cost.






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6. BOOKS AND RECORDS:

        (a)     Licensee shall keep, maintain and preserve (in Licensee's
                principal place of business) for at least two (2) years
                following termination or expiration of the Term of this
                Agreement or any renewal(s) hereof (if applicable), complete and
                accurate records of accounts including, without limitation,
                purchase orders, inventory records, invoices, correspondence,
                banking and financial and other records pertaining to the
                various items required to be submitted by Licensee as well as to
                ensure Licensee's compliance with local laws as required
                pursuant to Paragraph 13(k) hereof. However in no event will the
                foregoing be interpreted to require Licensee to keep any records
                for longer than its normal retention period, which is four years
                from the end of the calendar year to which such records pertain.
                Such records and accounts shall be available for inspection and
                audit at any time or times during or after the Term of this
                Agreement or any renewal(s) hereof (if applicable) during
                reasonable business hours and upon reasonable notice by Licensor
                or its nominees and at Licensor's expense, subject to Paragraph
                6(c) hereof. Licensee agrees not to cause or permit any
                interference with Licensor or nominees of Licensor in the
                performance of their duties. During such inspections and audits,
                Licensor shall have the right to take extracts and/or make
                copies of Licensee's records which are related to the statements
                and/or Licensed Products, as it deems necessary.

        (b)     The exercise by Licensor in whole or in part, at any time of the
                right to audit records and accounts or of any other right herein
                granted, or the acceptance by Licensor of any statement or
                statements or the receipt and/or deposit by Licensor, of any
                payment tendered by or on behalf of Licensee shall be without
                prejudice to any rights or remedies of Licensor and such
                acceptance, receipt and/or deposit shall not preclude or prevent
                Licensor from thereafter disputing the accuracy of any such
                statement or payment, except that any objection to the accuracy
                of any statement or payment shall be made within two (2) years
                following termination or expiration of the Term of this
                Agreement or any renewal(s) hereof (if applicable).

        (c)     If pursuant to its right hereunder Licensor causes an audit and
                inspection to be instituted which, thereafter discl6s'es ~
                deficiency between the amount found to be due to Licensor and
                the amount actually received or credited to Licensor, then
                Licensee shall, upon Licensor's demand, promptly pay the
                deficiency, together with interest thereon at the then current
                prime rate from the date such amount became due until the date
                of payment, and, if the deficiency is more than 3% of all
                royalties paid by Licensee during the period covered by the
                audit, then Licensee shall pay the reasonable costs and expenses
                of such audit and inspection. If an audit discloses an
                overpayment to Licensor by Licensee, then Licensor shall remit
                the amount of such overpayment' to Licensee within sixty (60)
                days of conclusive agreement that such overpayment occurred.

        (d)     Licensee understands and agrees that Licensor shall have access
                to Licensee's sell-through information, with respect to the
                Licensed Products, pertaining to various retail customers (e.g.
                Wal-Mart, JC Penney) (the "Sell Through System"). Licensor
                agrees to keep confidential all information obtained by Licensor
                through the Sell Through Systems except: (i) to the extent
                necessary to




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                comply with a law or the valid order of a court of competent
                jurisdiction, in which event the party making such disclosure
                shall so notify the other and shall seek confidential treatment
                of such information; (ii) as part of normal reporting or review
                procedure to the respective parties' boards of directors, parent
                company, auditors and attorneys who agree to be bound by the
                provisions of this subparagraph; (iii) in order to enforce its
                rights or perform its obligations under this Agreement; or (iv)
                when discussing the sale of Licensed Products with the
                applicable retail customer in an effort to improve business
                results.

7. INDEMNIFICATIONS:

        (a)     During the Term, and continuing after the expiration or
                termination of this Agreement, Licensor shall indemnify Licensee
                and shall hold it harmless from any loss, liability, damage,
                cost or expense, arising out of any claims or suits which may be
                brought or made against Licensee by reason of the breach by
                Licensor of the warranties or representations as set forth in
                Paragraph 12 hereof, provided that Licensee shall give prompt
                written notice, and full cooperation and assistance to Licensor
                relative to any such claim or suit and provided, further, that
                Licensor shall have the option to undertake and conduct the
                defense of any suit so brought. Licensee shall not, however, be
                entitled to recover for lost profits. Licensee shall cooperate
                fully in all respects with Licensor in the conduct and defense
                of said suit and/or proceedings related thereto.

        (b)     During the Term, and continuing after the expiration or
                termination of this Agreement, Licensee shall indemnify Licensor
                and shall h6ld it harmless from any loss, liability, damage,
                cost or expense arising out of any claims or suits which may be
                brought or made against Licensor by reason of: (i) any breach of
                Licensee's covenants and undertakings hereunder; (ii) any
                unauthorized use by Licensee of the Licensed Property; (iii) any
                use of any trademark, copyright, design, patent, process, method
                or device, except for those uses of the Licensed Property that
                are specifically approved by Licensor pursuant to the terms of
                this Agreement; (iv) Licensee's non-compliance with any
                applicable federal, state or local laws or with any other
                applicable regulations; and (v) any alleged defects and/or
                inherent dangers (whether obvious or hidden) in the Licensed
                Products or the use thereof.

        (c)     With regard to 7(b) (v) above, Licensee agrees to obtain, at its
                own expense, product liability insurance providing adequate
                protection for Licensor and Licensee against any such claims or
                suits in amounts no less than three million dollars ($3,000,000)
                per occurrence, combined single limits. Simultaneously with the
                execution of this Agreement, Licensee undertakes to submit to
                Licensor a fully paid policy or certificate of insurance naming
                Licensor as an additional insured party and, requiring that the
                insurer shall not terminate or materially modify such policy or
                certificate of insurance without written notice to Licensor at
                least twenty (20) days in advance thereof. Such insurance and
                the delivery of the policy or certificate are material
                obligations of Licensee.

8. ARTWORK; COPYRIGHT AND TRADEMARK NOTICES:

        (a)     The Licensed Property shall be displayed or used only in such
                form and in such manner as has been specifically



                                       10
<PAGE>   11


                approved in writing by Licensor in advance and Licensee
                undertakes to assure usage of the trademark(s) and character(s)
                solely as approved hereunder. Licensee further agrees and
                acknowledges that any and all Artwork (defined below) created,
                utilized, approved and/or authorized for use hereunder by
                Licensor in connection with the Licensed Products or which
                otherwise features or includes the Licensed Property shall be
                owned in its entirety exclusively by Licensor. "Artwork" refers
                to incorporating Category I and Category II Licensed Property
                and shall include, without limitation, all pictorial, graphic,
                visual, audio, audio-visual, digital, literary, animated,
                artistic, dramatic, sculptural, musical or any other type of
                creations and applications, whether finished or not, including,
                but not limited to, animation, drawings, designs, sketches,
                images, illustrations, film, video, electronic, digitized or
                computerized information, software, object code, source code,
                on-line elements, music, text, dialogue, stories, visuals,
                effects, scripts, voiceovers, logos, one-sheets, promotional
                pieces, packaging, display materials, printed materials,
                photographs, interstitials, notes, shot logs, character profiles
                and translations, produced by Licensee or for Licensee, pursuant
                to this Agreement. Licensor reserves for itself or its designees
                all rights to use any and all Artwork created, utilized and/or
                approved hereunder without limitation.

        (b)     Licensee acknowledges that, as between Licensor and Licensee,
                the Licensed Property and Artwork and all other depictions
                expressions and derivations thereof, and all copyrights,
                trademarks and other proprietary rights therein are owned
                exclusively by Licensor and Licensee shall have no interest in
                or claim thereto, except for the limited right to use the same
                pursuant to this Agreement and subject to its terms and
                conditions.

                Licensee agrees and acknowledges that any Artwork created by
                Licensee or for Licensee hereunder is a "work made for hire" for
                Licensor under the U.S. copyright Act, and any and all similar
                provisions of law under other jurisdictions, and that Licensor
                is the author of such works for all purposes, and that Licensor
                is the exclusive owner of all the rights comprised in the
                undivided copyright and all renewals, extensions and reversions
                therein, in and to such works in perpetuity and throughout the
                universe. Licensee hereby waives and releases in favor of
                Licensor all rights (if any) of "droit moral," rental rights and
                similar rights in and to the Artwork (the "Intangible Rights")
                and agrees that Licensor shall have the right to revise,
                condense, abridge, expand, adapt, change, modify, add to,
                subtract from, re-title, re-draw, re-color, or otherwise modify
                the Artwork, without the consent of Licensee. Licensee hereby
                irrevocably grants, transfers and, assigns to Licensor all
                right, title and interest, including copyrights, trademark
                rights, patent right's and other proprietary rights, it may have
                in and to the Artwork, in perpetuity and throughout the
                universe, and to all proprietary depictions, expressions or
                derivations of the Licensed Property created by or for Licensee.
                Licensee acknowledges that Licensor shall have the right to
                terminate this Agreement in the event Licensee asserts any
                rights (other than those specifically granted pursuant to this
                Agreement) in or to the Licensed Property or Artwork.

                Licensee hereby warrants that any and all work created by
                Licensee under this Agreement apart from the materials




                                       11
<PAGE>   12


                provided to Licensee by Licensor is and shall be wholly original
                with or fully cleared by Licensee and shall not copy or
                otherwise infringe the rights of any third parties, and Licensee
                hereby indemnifies Licensor and will hold Licensor harmless from
                any such claim of infringement or otherwise involving Licensee's
                performance hereunder. At the request of Licensor, Licensee
                shall execute such form(s) of assignment of copyright or other
                papers as Licensor may reasonably request in order to confirm:
                and vest in Licensor the rights in the properties as provided
                for herein. In addition, Licensee hereby appoints Licensor as
                Licensee's Attorney-in-Fact to take such actions and to make,
                sign, execute, acknowledge and deliver all such documents as may
                from time to time be necessary to confirm in Licensor, its
                successors and assigns, all rights granted herein. If any third
                party makes or has made any contribution to the creation of
                Artwork authorized for use hereunder, Licensee agrees to obtain
                from such party a full confirmation and assignment of rights so
                that the foregoing rights shall vest fully in Licensor, in the
                form of the Contributor's Agreement attached hereto as Exhibit 2
                and by this reference made a part hereof, prior to commencing
                work, ensuring that all rights in the Artwork and Licensed
                Property arise in and are assigned to Licensor. Promptly upon
                entering into each such Contributor's Agreement, Licensee shall
                give Licensor a copy of such Contributor's Agreement. Licensee
                assumes all responsibility for such parties and agrees that
                Licensee shall bear any and all risks arising out of or relating
                to the performance of services by them and to the fulfillment of
                their obligations under the Contributor's Agreement.

                Upon expiration or termination of this Agreement for any reason,
                or upon demand by Licensor at any time, Licensee shall promptly
                deliver to Licensor all Artwork or Licensed Property, whether
                finished or not, including drawings, drafts, sketches,
                illustrations, screens, data, digital files and information,
                copies or other items, information or things created in the
                course of preparing the Licensed Property and all materials
                provided to Licensee by Licensor hereunder, or, at Licensor's
                option and instruction, shall destroy some or all of the
                foregoing and shall confirm to Licensor in writing that Licensee
                has done so. Licensee shall not use such Artwork or Licensed
                Property, items, information or things, material, for any
                purpose other than is permitted under this Agreement.

        (c)     Licensee shall, within thirty (30) days of receiving an invoice
                for a charge that Licensee has previously approved in writing,
                pay Licensor for artwork executed for Licensee by Licensor (or
                by third parties under contract to Licensor) for use in the
                development of the Licensed Products and any related packaging,
                display and promotional materials at Licensor's prevailing
                commercial art rates. The foregoing shall include any artwork
                that, in Licensor's opinion and subject to Licensee's written
                approval, is, necessary to modify artwork initially prepared by
                Licensee and submitted for approval. Estimates of artwork
                charges are available upon request.

        (d)     Licensee shall cause to be imprinted, irremovably and legibly on
                each Licensed Products manufactured, distributed or sold under
                this Agreement, and all



                                       12
<PAGE>   13


                advertising, promotional, packaging and wrapping material
                wherein the Licensed Property appears, the following copyright
                and/or trademark notice(s):

                     CATEGORY I:

                     BABY LOONEY TUNES, CHARACTERS, NAMES, AND ALL RELATED
                     INDICIA ARE TRADEMARKS OF WARNER BROS. (C) 19___.

                     CATEGORY II:

                     LOONEY TUNES, CHARACTERS, NAMES, AND ALL RELATED INDICIA
                     ARE TRADEMARKS OF WARNER BROS.(C) 19___.

                     The year date shall be as instructed by Licensor.

        (e)     In no event shall Licensee use, in respect to the Licensed
                Products and/or in relation to any advertising, promotional,
                packaging or wrapping material, any copyright or trademark
                notices which shall conflict with, be confusing with, or negate,
                any notices required hereunder by Licensor in respect to the
                Licensed Property.

        (f)     Licensee agrees to deliver to Licensor free of cost six (6) of
                each of the Licensed Products together with their packaging and
                wrapping material for trademark registration purposes in
                compliance with applicable laws, simultaneously upon
                distribution to the public. Any copyrights or trademarks with
                respect to the Licensed Products shall be procured by and for
                the benefit of Licensor and at Licensor's expense. Licensee
                further agrees to provide Licensor with the date of the first
                use of the Licensed Products in interstate and intrastate
                commerce.

        (g)     Licensee shall assist Licensor, at Licensor's expense, in the
                procurement, protection, and maintenance of Licensor's rights to
                the Licensed Property. Licensor may, in its sole discretion,
                commence or prosecute and effect the disposition of any claims
                or suits relative to the imitation, infringement and/or
                unauthorized use of the Licensed Property either in its own
                name, or in the name of Licensee, or join Licensee as a party in
                the prosecution of such claims or suits. Licensee agrees to
                cooperate fully with Licensor in connection with any such claims
                or suits and undertakes to furnish full assistance to Licensor
                in the conduct of all proceedings in regard thereto. Licensee
                shall promptly notify Licensor in writing of any infringements
                or imitations or unauthorized uses by others of the Licensed
                Property, on or in relation to products identical to similar to
                or related to the Licensed Products. Licensor shall in its sole
                discretion have the right to settle or effect compromises in
                respect thereof. Licensee shall not institute any suit or take
                any action on account of such infringements, imitations or
                unauthorized uses.

9. APPROVALS AND QUALITY CONTROLS:

        (a)     Licensee agrees to comply and maintain compliance with the
                reasonable quality standards and specifications of Licensor as
                they are required of other licensees in respect to all usage of
                the Licensed Property on or in relation to the Licensed
                Product(s) throughout the Term of this Agreement and any
                renewals or extensions thereof. Licensee agrees to furnish to
                Licensor free of cost for its written approval as to aesthetic
                quality and style,



                                       13
<PAGE>   14


                samples of each of the Licensed Product(s), together with their
                packaging, hangtags, and wrapping material, as follows in the
                successive stages indicated (a) rough sketches/layout concepts;
                (b) finished artwork or final proofs; (c) pre-production samples
                or strike-offs; (d) finished products, including packaged
                samples. Finished Products will be deemed approved if they
                conform in all material respects to the approved pre-production
                sample or strike-off. Licensor will not withhold approval of a
                product ba5ed on its construction or materials unless the
                construction or materials impairs the aesthetic appearance of
                the product or is otherwise not in conformity with the general
                quality of Licensee's products.

        (b)     No Licensed Products and no material utilizing the Licensed
                Property shall be manufactured, sold, distributed or promoted by
                Licensee without prior written approval. Licensee may, subject
                to Licensor's prior written approval, use textual and/or
                pictorial matter pertaining to the Licensed Property on such
                promotional, display and advertising material as may, in its
                reasonable judgment, promote the sale of the Licensed Products.
                All advertising and promotional material relating to the
                Licensed Products must be submitted to the Licensor for its
                written approval at the following stages appropriate to the
                medium used: (i) rough concepts; (ii) layout, storyboard,
                script; and (iii) finished materials.

        (c)     Approval or disapproval shall lie in Licensor's sole discretion.
                If Licensee has not received a response on any submission within
                ten (10) business days, Licensee may notify Licensor by
                facsimile, receipt of which must be confirmed in writing, and
                Licensor will then have three (3) business days to approve,
                disapprove or otherwise comment upon the submission. Failure to
                respond within three (3) business days after acknowledging
                receipt of the facsimile notice shall deem the submission
                approved. Any Licensed Products not so approved shall be deemed
                unlicensed and shall not be manufactured or sold. If any
                unapproved Licensed Products are being sold, Licensor may,
                together with other remedies available to it including, but not
                limited to, immediate termination of this Agreement, require
                such Licensed Products to be immediately withdrawn from the
                market and to be destroyed, such destruction to be attested to
                in a certificate signed by an officer of Licensee.

        (d)     Any modification of a Licensed Product which relates to the
                Artwork applied to the Licensed Product or results in a material
                deviation in the standards or quality of a Licensed Product must
                be submitted in advance for Licensor's written approval as if it
                were a new Licensed Product. Approval of a Licensed Product
                which uses particular artwork does not imply approval of such
                artwork for use with a different Licensed Product.

        (e)     Licensed Products must conform in all material respects to the
                final production samples approved by Licensor. If in Licensor's
                reasonable judgement, the quality of a Licensed Product
                originally approved has deteriorated in later production runs,
                or if a Licensed Product has otherwise been altered, Licensor
                and Licensee agree to negotiate in good faith regarding the
                disposition of such Licensed Products, which disposition may, in
                addition to other remedies, require that such Licensed Product
                be immediately withdrawn from the market.





                                       14
<PAGE>   15


        (f)     Licensee shall permit Licensor to inspect Licensee's
                manufacturing operations, testing and payroll records (including
                those operations and records of any supplier or manufacturer
                approved pursuant to Paragraph 10(b) below) with respect to the
                Licensed Products.

        (g)     If any changes or modifications are required to be made to any
                material submitted to Licensor for its written approval in order
                to ensure compliance with Licensor's specifications or standards
                of quality, Licensee agrees promptly to make such changes or
                modifications.

        (h)     Subsequent to final approval, no fewer than twelve (12)
                production samples of Licensed Products will be sent to Licensor
                to ensure quality control simultaneously upon distribution to
                the public. In addition, Licensee shall provide Licensor with
                six (6) catalogs which display all of Licensee's products, not
                just the Licensed Products. Further, Licensor shall have the
                right to; purchase any and all Licensed Products in any quantity
                the maximum discount price Licensee charges its best customer in
                a similar circumstance.

        (i)     To avoid confusion of the public, Licensee agrees not to
                associate other characters or properties with the Licensed
                Property on the Licensed Products or in any packaging,
                promotional or display materials unless Licensee receives
                Licensor's prior written approval. Furthermore, Licensee agrees
                not to use the Licensed Property (or any component thereof) on
                any business sign, business cards, stationery or forms, nor as
                part of the name of Licensee's business or any division thereof.
                The following licensed properties are hereby deemed approved for
                use of Licensed Products for purposes of this paragraph: the
                Cotton seal; 3M - Scotchguard; Curity; Gerber.

        (j)     Licensee shall use its best efforts to notify its customers of
                the requirement that Licensor has the right to approve all
                promotional, display and advertising material pursuant to this
                Agreement. Notwithstanding the foregoing, Licensee shall not be
                responsible for any customer's failure to obtain any required
                approval.

        (k)     It is understood and agreed that any animation used in
                electronic media, including but not limited to animation for
                television commercials and character voices for radio
                commercials, shall be produced by Warner Bros. Animation
                pursuant to a separate agreement between Licensee and Warner
                Bros. Animation, subject to Warner Bros. Animation customary
                rates. It is understood and agreed that, in the event Licensee
                utilizes the services of WB Bros, Licensee shall reimburse WB
                Toys for all costs and expenses at WB Toys customary rates. Any
                payment made to Warner Bros. Animation and/or WB Toys for such
                animation and/or services shall be in addition to and shall not
                offset the Guaranteed Consideration set forth in Paragraph 1(b).

        (l)     Licensor's approval of Licensed Products (including without
                limitation, the Licensed Products themselves as well as
                promotional, display, and advertising materials) shall in no way
                constitute or be construed as an approval by Licensor of
                Licensee's use of any trademark, copyright and/or other
                proprietary materials, not owned by Licensor.

        (m)     Notwithstanding the foregoing, if any of the Licensed Product(s)
                have already received Licensor's written approval under separate
                license agreement #8824-BLT/WBLT



                                       15
<PAGE>   16


                between Licensor and Licensee, then Licensee shall not be
                required to resubmit such Licensed Product(s) for approval under
                this Agreement, except with respect to any modifications made to
                such Licensed Product, or to its packaging, hangtags and/or
                advertising materials, expressly for the Territory as defined
                under this Agreement.


10. DISTRIBUTION; SUB-LICENSE MANUFACTURE:

        (a)     Within the Channels of Distribution set forth in Paragraph 1(a)
                hereof, Licensee shall sell the Licensed Products either to
                jobbers, wholesalers, distributors or retailers for sale or
                resale and distribution directly to the public. Unless
                explicitly set forth in Paragraph 1(a) hereof, Licensee shall
                not sell the Licensed Products through any cable home shopping
                service or through electronic media, including on any on-line
                network or service. If Licensee sells or distributes the
                Licensed Products at a special price, directly or indirectly, to
                itself, including without limitation, any subsidiary of Licensee
                or to any other person, firm, or corporation affiliated with
                Licensee or its officers, directors or major stockholders, for
                ultimate, sale to unrelated third parties, Licensee shall pay
                royalties upon the actual sale of the Licensed Product to an
                unrelated third party.

        (b)     Licensee shall not be entitled to sub-license any of its rights
                under this Agreement. In the event Licensee is not the
                manufacturer of the Licensed Products, Licensee shall, subject
                to the prior written approval of Licensor, which approval shall
                not be unreasonably withheld, be entitled to utilize a third
                party manufacturer in connection with the manufacture and
                production of the Licensed Products, provided that such
                manufacturer shall execute a letter in the form of Exhibit 3
                attached hereto and by this reference made a part hereof. In
                such event, Licensee shall remain primarily obligated under all
                of the provisions of this Agreement and any default of this
                Agreement by such manufacturer shall be deemed a default by
                Licensee hereunder. In no event shall any such third party
                manufacturer agreement include the right to grant any rights to
                subcontractors.

11.     GOOD WILL: Licensee recognizes the great value of the publicity and good
        will associated with the Licensed Property and acknowledges: (i) such
        good will is exclusively that of Licensor; and (ii) that the Licensed
        Property has acquired a secondary meaning as Licensor's trademarks
        and/or identifications in the mind of the purchasing public. Licensee
        further recognizes and acknowledges that a breach by Licensee of any of
        its covenants, agreements or undertakings hereunder will cause Licensor
        irreparable damage, which cannot be readily remedied in damages in an
        action at law, and may, in addition thereto, constitute an infringement
        of Licensor's copyrights, trademarks and/other proprietary rights in,
        and to the Licensed Property, thereby entitling Licensor to equitable
        remedies, and costs.

12.     LICENSOR'S WARRANTIES AND REPRESENTATIONS: Licensor represents and
        warrants to Licensee that:

        (a)     It has, and will have throughout the Term of this Agreement, the
                right to license the Licensed Property to Licensee in accordance
                with the terms and provisions of this Agreement; and



                                       16
<PAGE>   17


        (b)     The making of this Agreement by Licensor does not violate any
                agreements, rights or obligations of any person, firm or
                corporation.

13.     LICENSEE'S WARRANTIES AND REPRESENTATIONS: Licensee represents and
        warrants to Licensor that, during the Term and thereafter:

        (a)     It will not attack the title of Licensor (or third parties that
                have granted rights to Licensor) in and to the Licensed Property
                or any copyright or trademarks pertaining thereto nor will it
                attack the validity of the license granted hereunder;

        (b)     It will not harm, misuse or bring into disrepute the Licensed
                Property, but on the contrary, will maintain the value and
                reputation thereof to the best of its ability;

        (a)     It will manufacture, sell, promote and distribute the Licensed
                Products in an ethical manner and in accordance with the terms
                and intent of this Agreement, and in compliance with all
                applicable government regulations and industry standards;

        (4)     It will not create any expenses chargeable to Licensor without
                the prior written approval of Licensor in each and every
                instance. It will not cause or allow any liens or encumbrances
                to be placed against the Licensed Property;

        (C)     It will protect to the best of its ability its right to
                manufacture, sell, promote, and distribute the Licensed Products
                hereunder;

        (f)     It will at all times comply with all government laws and
                regulations, including but not limited to product safety, food,
                health, drug, cosmetic, sanitary or other similar laws, and all
                voluntary industry standards relating or pertaining to the
                manufacture, sale, advertising or use of the Licensed Products,
                and shall maintain its appropriate customary high quality
                standards during the Term hereof. It shall comply with any laws
                or regulations of regulatory agencies which shall have
                jurisdiction over the Licensed Products and shall procure and
                maintain in force any and all permissions, certifications and/or
                other authorizations from governmental and/or other official
                authorities that may be required in response thereto. Each
                Licensed Product and component thereof distributed hereunder
                shall comply with all applicable laws, regulations and voluntary
                industry standards. Licensee shall follow reasonable and proper
                procedures for testing that all Licensed Products comply with
                such laws, regulations and standards. Licensee shall permit
                Licensor or its designees to inspect testing records and
                procedures with respect to the Licensed Products for compliance.
                Licensed Products that do not comply with all applicable laws,
                regulations and standards shall automatically be deemed
                unapproved and immediately taken off the market;

        (g)     It shall, upon Licensor's request, provide credit information to
                Licensor including, but not limited to, fiscal year-end
                financial statements (profit-and-loss statement and balance
                sheet) and operating statements, all of which will be satisfied
                by submission to Licensor of Licensee's annual report;



                                       17
<PAGE>   18


        (h)     It will provide Licensor with the date(s) of first use of the
                Licensed Products in interstate and intrastate commerce, where
                appropriate;

        (i)     It will, pursuant to Licensor's instructions and at Licensor's
                expense, duly take any and all necessary steps to secure
                execution of all necessary documentation for the recordation of
                itself as user of the Licensed Property in any jurisdiction
                where this is required or where Licensor reasonably requests
                that such recordation shall be effected. Licensee further agrees
                that it will at its own expense cooperate with Licensor in
                cancellation of any such recordation at the expiration of this
                Agreement or upon termination of Licensee's right to use the
                Licensed Property. Licensee hereby appoints Licensor its
                Attorney-in-Fact for such purpose;

        (j)     It will not deliver or sell Licensed Products outside the
                Territory or knowingly sell Licensed Products to a third party
                for delivery outside the Territory;

        (k)     It will not use any labor that violates any local labor laws,
                including all wage and hour laws, laws against discrimination
                and that it will not use prison, slave or child labor in
                connection with the manufacture of the Licensed Products;

        (1)     It shall at all times comply with all manufacturing, sales,
                distribution, retail and marketing policies and strategies
                promulgated by Licensor from time-to-time; and

        (m)     It will utilize specific design elements of the Licensed
                Property provided to Licensee by Licensor on hangtags, labels,
                and other materials.

14. TERMINATION:

        (a)     By Licensor: Licensor shall have the right to terminate this
                Agreement without prejudice to any rights which it may have,
                whether pursuant to the provisions of this Agreement, or
                otherwise in law, or in equity, or otherwise, upon the
                occurrence of any one or more of the following events (herein
                called "defaults"):

                (i)     Licensee materially defaults in the performance of any
                        of its obligations provided for in this Agreement; or

                (ii)    Licensee shall have failed to deliver to Licensor or to
                        maintain in full force and effect the insurance referred
                        to in Paragraph 7(c) hereof; or

                (iii)   Licensee shall fail to make any payments due hereunder
                        on the date due; or

                (iv)    Licensee shall fail to deliver any of the statements
                        required herein or to give access to the premises and/or
                        license records pursuant to the provisions hereof to
                        Licensor's authorized representatives for the purposes
                        permitted hereunder; or

                (v)     Licensee shall fail to comply with any laws, regulations
                        or voluntary industry standards as provided in Paragraph
                        13(f) or if any governmental agency or other body,
                        office or official vested with appropriate authority
                        finds that the Licensed Products are harmful or
                        defective in any way, manner or form, or are being
                        manufactured, sold or




                                       18
<PAGE>   19


                        distributed in contravention of applicable laws,
                        regulations or standards, or in a manner likely to cause
                        harm; or

                (vi)    Licensee shall be unable to pay its debts when due, or
                        shall make any assignment for the benefit of creditors,
                        or shall file any petition under the bankruptcy or
                        county or place, or shall have or suffer a receiver or
                        trustee to be appointed for its business or property, or
                        be adjudicated a bankrupt or an insolvent; or

                (vii)   Licensee does not commence in good faith to manufacture,
                        distribute and sell each of the Licensed Products and
                        utilize each character set forth in the Licensed
                        Property ("Character") throughout the Territory on or
                        before the Marketing Date and thereafter fails to
                        diligently and continuously manufacture, distribute and
                        sell each of the Licensed Products and utilize each
                        Character throughout the Territory. Such default and
                        Licensor's resultant right of termination (or recapture)
                        shall only apply to the specific Character(s) and/or the
                        specific Licensed Products, which or wherein Licensee
                        fails to meet said Marketing Date requirement. However,
                        License may cure such default as follows: upon receipt
                        of notice from Licensor that Licensee has failed to
                        manufacture, distribute and sell any Licensed Product,
                        within thirty days, Licensee shall submit to Licensor a
                        marketing plan for the manufacture, distribution and
                        sale of such product which shall provide for the product
                        to be manufactured, distributed and sold in a timely
                        fashion in accord with industry norms. If Licensee fails
                        to provide such marketing plan or thereafter fails to
                        materially meet the provisions of such plan, Licensor
                        shall recapture all rights to the specific Licensed
                        Product(s), which or wherein Licensee failed to meet the
                        requirements of this paragraph; or

                (viii)  Licensee shall manufacture, sell or distribute,
                        whichever first occurs, any of the Licensed Products
                        without the prior written approval of Licensor as
                        provided in Paragraph 9 hereof; or

                (ix)    Licensee undergoes a substantial change of management or
                        control. A substantial change of control is a nonpublic
                        offering sale of over 50% of the stock or assets of
                        Licensee to a person(s) not a member of the current
                        senior management or an entity(s) not controlled by
                        either Citicorp Venture Capital or its affiliates or by
                        one or more members of the current senior management of
                        Gerber Childrenswear, Inc. The sale of stock through a
                        public offering will not be considered a "substantial
                        change of control"; or

                (x)     A manufacturer approved pursuant to Paragraph 10(b)
                        hereof shall sell Licensed Products to parties other
                        than Licensee or engage in conduct, which conduct if
                        engaged in by Licensee would entitle Licensor to
                        terminate this Agreement; or

                (xi)    Licensee delivers or sells Licensed Products outside the
                        Territory or knowingly sells Licensed Products to a
                        third party who Licensee knows



                                       19
<PAGE>   20


                        intends to, or who Licensee reasonably should suspect
                        intends to, sell or deliver such Licensed Products
                        outside the Territory; or

                (xii)   Licensee uses any labor that violates any local labor
                        laws and/or it uses prison, slave or child labor in
                        connection with the manufacture of the Licensed
                        Products; or

                (xiii)  Licensee has made a material misrepresentation or has
                        omitted to state a material fact necessary to make the
                        statements not misleading; or

                (xiv)   Licensee shall breach any other agreement in effect
                        between Licensee on the one hand and Licensor on the
                        other.

        (b)     In the event any of these defaults occur, Licensor shall give
                notice of termination in writing to Licensee by facsimile and
                certified mail. Licensee shall have twenty (20) days from the
                date of giving notice, in which to correct any of these defaults
                (except any defaults based on non-payment of monies to Licensor,
                which must be cured within ten (10) days and defaults base on
                subdivisions (vii), (viii), (xi) and (xiii) above which are not
                curable), and failing such, this Agreement shall thereupon
                immediately terminate, and any and all payments then or later
                due from Licensee hereunder (including Guaranteed Consideration)
                shall then be promptly due and payable in full and no portion of
                those prior payments shall be repayable to Licensee.

        (c)      By Licensee: Licensee shall have the same right(s) to
                 termination of this Agreement as provided to Licensor under
                 this paragraph 14, upon the occurrence of any one or more of
                 the following events (herein called "defaults"):

                      i)     If Licensor materially defaults in the performance
                             of any of its obligations provided for in this
                             Agreement; or

                      ii)    If Licensor shall be unable to pay its debts when
                             due, or shall make any assignment for the benefit
                             of creditors, or shall file any petition under the
                             bankruptcy or insolvency laws of any jurisdiction,
                             county or place, or shall have or suffer a receiver
                             or trustee to be appointed for its business or
                             property, or be adjudicated a bankrupt or an
                             insolvent; or

                      iii)   If WBCP shall breach any other agreement in effect
                             between it and Licensee.

        (d)      In the event any of these defaults occur, Licensee shall give
                 notice of termination in writing to Licensor by certified mail.
                 The Licensor shall have twenty (20) days from the date of
                 giving notice in which to correct any of these defaults, and
                 failing such, Licensee shall have the option to immediately
                 terminate this Agreement, in which event, Licensee's obligation
                 to make any further payments of Guaranteed Consideration
                 provided for in this Agreement shall also terminate and,
                 Licensee's rights shall thereafter be as set forth in Paragraph
                 15 hereof.

15.     FINAL STATEMENT UPON TERMINATION OR EXPIRATION: Licensee shall deliver,
        as soon as practicable, but not later than thirty (30) days following
        expiration or termination of this Agreement, a statement indicating the
        number and description



                                       20
<PAGE>   21


        of Licensed Products on hand together with a description of all
        advertising and promotional materials relating thereto. Following
        expiration or termination of this Agreement, Licensee shall immediately
        cease any and all manufacturing of the Licensed Product. However, if
        Licensee has complied with all the terms of this Agreement, including,
        but not limited to, complete and timely payment of the Guaranteed
        Consideration and Royalty Payments, then Licensee may continue to
        distribute and sell its remaining inventory on anon-exclusive basis for
        a period not to exceed one hundred eighty (180) days following such
        termination or expiration (the "Sell-Off Period"), subject to payment of
        applicable royalties thereto. In no event, however, may Licensee
        distribute and sell during the Sell-Off Period an amount of Licensed
        Products that exceeds the average amount of Licensed Products sold
        during any consecutive one hundred eighty (180) day period during the
        Term. In the event this Agreement is terminated by Licensor for any
        reason under this Agreement, Licensee shall be deemed to have forfeited
        its Sell-Off Period. If Licensee has any remaining inventory of the
        Licensed Products following the Sell-Off Period, Licensee shall, at
        Licensor's option, make available such inventory to Licensor for
        purchase at or below cost, deliver up to Licensor for destruction said
        remaining inventory or furnish to Licensor an affidavit attesting to the
        destruction of said remaining inventory. Licensee shall, at Licensor's
        option, deliver to Licensor at no charge all tooling, tooling aids and
        other Artwork related to the Licensed Products, deliver up to Licensor
        for destruction said tooling, tooling aids and other Artwork or furnish
        to Licensor an affidavit attesting to the destruction of said tooling,
        tooling aids and other Artwork. Licensor shall have the right to conduct
        a physical inventory in order to ascertain or verify such inventory
        and/or statement. In the event that Licensee refuses to permit Licensor
        to conduct such physical inventory, Licensee shall forfeit its right to
        the Sell-Off Period hereunder or any other rights to dispose of such
        inventory. In addition to the forfeiture, Licensor shall have recourse
        to all other legal remedies available to it.

16.     NOTICES: Except as otherwise specifically provided herein, all notices
        which either party hereto is required or may desire to give to the other
        shall be given by addressing the same to the other at the address set
        forth above, or at such other address as may be designated in writing by
        any such party in a notice to the other given in the manner prescribed
        in this paragraph. All such notices shall be sufficiently given when the
        same shall be deposited so addressed, postage prepaid, in the United
        States mail and/or transmitted via facsimile with receipt of a
        confirming copy and/or when the same shall have been delivered, so
        addressed, to, a. telegraph or cable company toll prepaid and the date
        of said mailing or telegraphing shall be the date of the giving of such
        notice.

17.     NO PARTNERSHIP, ETC.: This Agreement does not constitute and shall not
        be construed as constitution of a partnership or joint venture between
        Licensor and Licensee. Neither party shall have any right to obligate or
        bind the other party in any manner whatsoever, and nothing herein
        contained shall give, or is intended to give, any rights of any kind to
        any third persons.

18.     NO SUBLICENSING/NON-ASSIGNABILITY: This Agreement shall bind and inure
        to the benefit of Licensor, its successors and assigns. This Agreement
        is personal to Licensee. Licensee shall not sublicense, franchise or
        delegate to third parties its rights hereunder (except as set forth in
        Paragraph 10(b) hereof). Neither this Agreement nor any of the rights of
        Licensee hereunder shall be sold, transferred or assigned by


                                       21
<PAGE>   22

        Licensee and no rights hereunder shall devolve by operation of law or
        otherwise upon any receiver, liquidator, trustee or other party.
        Notwithstanding the foregoing, Licensee shall be permitted to assign its
        rights and obligations under this Agreement for collateral security
        purposes to any lender providing financing to Licensee that is secured
        by Licensee's inventory solely for purposes of permitting such lender to
        dispose of such inventory in accordance with the terms hereof upon a
        default by Licensee under any such financing.

19.     CONSTRUCTION: This Agreement shall be construed in accordance with the
        laws of the State of California of the united States of America without
        regard to its conflicts of laws provisions.

20.     WAIVER, MODIFICATION, ETC.: No waiver, modification or cancellation of
        any term or condition of this Agreement shall be effective unless
        executed in writing by the party charged therewith. No written waiver
        shall excuse the performance of any acts other than those specifically
        referred to therein. The fact that one party has not previously insisted
        upon the other party expressly complying with any provision of this
        Agreement shall not be deemed to be a waiver of the party's future right
        to require compliance in respect thereof and each party specifically
        acknowledges and agrees that the prior forbearance in respect of any
        act, term or condition shall not prevent the other party from
        subsequently requiring full and complete compliance thereafter. If any
        term or provision of this Agreement is held to be invalid or
        unenforceable by any court of competent jurisdiction or any other
        authority vested with jurisdiction, such holding shall not affect the
        validity or enforceability of any other term or provision hereto and
        this Agreement shall be interpreted and construed as if such term or
        provision, to the extent the same shall have been held to be invalid,
        illegal or unenforceable, had never been contained herein. Headings of
        paragraphs herein are for convenience only and are without substantive
        significance.

21.     ACCEPTANCE BY LICENSOR: This instrument, when signed by Licensee, shall
        be deemed an application for license and not a binding agreement unless
        and until accepted by Warner Bros. Consumer Products by signature of a
        duly authorized officer and the delivery of such a signed copy to
        Licensee. The receipt and/or deposit by Warner. Bros. Consumer Products
        of any check or other consideration given by Licensee and/or delivery of
        any material by Warner Bros. Consumer Products to Licensee shall not be
        deemed an acceptance by Warner Bros. Consumer Products of this
        application. The foregoing shall apply to any documents relating to
        renewals or modifications hereof.

        This Agreement shall be of no force or effect unless and until it is
        signed by all of the parties listed below:

         AGREED AND ACCEPTED:                        AGREED AND ACCEPTED
         LICENSOR:                                            LICENSEE:

         WARNER BROS. CONSUMER PRODUCTS,             GERBER CHILDRENSWEAR, INC.
         a Division of Time Warner
         Entertainment Company L.P. on
         behalf of itself and as Agent for
         Warner Bros., a Division of Time
         Warner Entertainment Company L.P.

         By:/S/ Gary R. Simon                         By:/S/ Edward Kittredge
            -----------------------                      ---------------------
                Gary R. Simon                                Edward Kittredge
               Vice President, Legal Affairs
         Date: 12/3/98                                Date: 11/18/98


                                       22
<PAGE>   23


                            EXHIBIT 1 #96394-BLT/WBLT

                            CHANNELS OF DISTRIBUTION
                                   DEFINITIONS


LICENSEE MAY SELL THE LICENSED PRODUCTS ONLY THROUGH THE CHANNELS OF
DISTRIBUTION AS SPECIFIED ABOVE IN PARAGRAPH 1(a) OF THIS LICENSE AGREEMENT AND
AS SUCH CHANNELS ARE DEFINED IN THIS EXHIBIT 1. ALL OTHER CHANNELS OF
DISTRIBUTION DEFINED IN THIS EXHIBIT 1, WHICH ARE NOT SPECIFIED IN PARAGRAPH
1(A) ABOVE, ARE SPECIFICALLY EXCLUDED FROM THIS LICENSE AGREEMENT.


1.      "AAFES" shall mean the U.S. Army and Airforce Exchange Service
        headquarters as well as individual bases.

2.      "Airport Gift Stores" shall mean gift stores located within airports,
        excluding Duty-Free Stores. Examples of Airport Gift Stores include,
        without limitation, Paradies and W.H. Smith.

3.      "Amusement Game Redemption" shall mean distribution of products as
        prizes awarded in amusement games.

4.      "Amusement Park Gift Stores" shall mean gift stores located within
        amusement parks, such as Six Flags, Paramount Parks, Universal Theme
        Parks, Dollywood, Walt Disney World and Walt Disney Land.

5.      "Art & Craft Stores" shall mean stores that offer for sale primarily art
        and craft supplies. Examples of Art & Craft St6res include, without
        limitation, AARON BROTHERS, LAST FRAME, MICHAELS and MICHAELS MJ
        DESIGNS.

6.      "Athletic Apparel & Footwear Stores" shall means stores that offer for
        sale primarily athletic apparel and footwear. Examples of Athletic
        Apparel & Footwear Stores include, without limitation, FOOTLOCKER,
        ATHLETE'S FOOT and CHAMPS.

7.      "Automotive/Carwash Stores" shall mean (a) stores that offer for sale
        primarily automotive supplies, or (b) stores located at carwash or
        gasoline station premises.

8.      "Baby Specialty Stores" shall mean stores that offer for sale primarily
        infant apparel, furniture, accessories and other products designed
        specifically for babies. Examples of Baby Specialty Stores include,
        without limitation, BABIES R US.

9.      "Candy/Confectionery Specialty Stores" shall mean stores that offer for
        sale primarily candy and confectionery products. Examples of
        Candy/Confectionery specialty Stores include, without limitation, FAO
        SCHWEETS, and THE SWEET FACTORY.

10.     "CANEX" shall mean the Canadian Forces Exchange Service headquarters as
        well as individual bases.

11.     "Catalog Showrooms" shall mean stores that offer a broad assortment of
        products for sale primarily through a catalog along with display of
        samples of products in a showroom. Examples of Catalog Showrooms
        include, without limitation, SERVICE MERCHANDISE.

12.     "Chain Book Stores" shall mean chain stores (containing twenty (20)or
        more individual stores) that offer for sale primarily books. Examples of
        Chain Book Stores include, without limitation, B. DALTON, SUPERCROWN,
        WALDEN BOOKS, AND BRENTANO'S.



                                       23
<PAGE>   24


13.     "Chain Comic Book Stores" shall mean chain stores (containing twenty
        (20) or more individual stores) that offer for sale primarily comic
        books.

14.     "Chain Drug Stores" shall mean chain stores (containing twenty
        (20) or more individual stores) that offer for sale primarily
        prescription and over-the-counter drugs, personal care products and
        household products. Examples of Chain Drug Stores include, without
        limitation, WALGREENS, RITE-AIDE, THRIFTY/PAYLESS, C.V.S./REVCO, THRIFT
        DRUG, PHAR MOR, and LONGS DRUGS.

15.     "Chain Jewelry Stores" shall mean chain stores (containing twenty (20)
        or more individual stores) that offer for sale primarily jewelry. Chain
        Jewelry Stores shall specifically exclude Guild Jewelers (as defined
        below). Examples of Chain Jewelry Stores include, without limitation,
        STERLING, BARRY'S, LIPMAN'S and HELLSBURG.

16.     "Chain Toy Stores" shall mean chain stores (containing twenty (20) or
        more individual stores) that offer for sale primarily toys. In order to
        be considered a "Toy Store" hereunder, the total number of toy-type
        SKU's (stock-keeping units) must represent eighty percent (80%) or more
        of such store's total SKU's.
        Examples of Chain Toy Stores include, without limitation, TOYS R US.

17.     "Coffee Specialty Stores" shall mean stores that offer for sale
        primarily specialty coffee and related products, such as coffee mugs.
        Examples of Coffee Specialty Stores include, without limitation,
        STARBUCKS, BUZZ COFFEE, GLORIA JEANS and THE COFFEE BEANERY.

18.     "College/University Stores" shall mean stores located on the campuses of
        colleges or universities.

19.     "Computer Specialty Stores" shall mean stores that offer for sale
        primarily computer equipment and supplies. Examples of Computer
        Specialty Stores include, without limitation, COUP USA.


20.     "Convenience Stores" shall mean stores that offer for sale primarily
        packaged and "quick service" food products, are generally open 24 hours
        a day, and are designed to offer greater convenience than larger
        Supermarket/Grocery Stores. Examples of Convenience Stores include,
        without limitation, 7-11, AM/PM, DAIRY MART and CIRCLE K.

21.     "Dental/Medical Profession" shall mean institutions or offices that
        provide dental or medical services, such as hospitals or doctors
        offices.

22.     "Direct Mail Catalogs" shall mean catalogs that offer. products for sale
        and are mailed directly to consumers homes. The "Direct Mail Catalogs"
        channel shall specifically exclude catalogs for fundraising purposes
        which shall be included in the "Fundraising" channel defined below.
        Examples of Direct Mail Catalogs include, without limitation, SPEIGEL,
        HEARTH & HOME, DOMESTICATIONS, TAPESTRY, COMPANY STORE, HAMMACHER
        SCHLEMMER, FINGERHUT, AMWAY, AND LILLIAN VERNON.

        If Licensor grants to Licensee the right to distribute Licensed Products
        through any Direct Mail Catalogs: (a) each such catalog shall be
        specified in the Channels of Distribution set forth in the License
        Agreement or otherwise expressly approved in writing by Licensor, and
        (b) each such catalog depicting or referring to the Licensed Products or
        the Licensed Property must be submitted to Licensor for prior written
        approval in accordance with Licensor's Brand Assurance




                                       24
<PAGE>   25


        policies and procedures.

23.     "Door-to-Door Solicitation" shall mean offering products for sale
        through personal visits by salespersons to consumers' homes.

24.     "Duty-Free Stores" shall mean stores usually located in airports, which
        offer products for sale to international travelers free of taxes and
        duties. If Licensor grants to Licensee the right to distribute products
        through Duty-Free Stores, such channels of distribution (like all other
        channels of distribution granted) shall be limited to those stores
        located within the Territory.

25.     "Educational Institutions" shall mean offering products (generally
        books) for sale to public or private schools or other educational
        institutions. Examples of Educational Institutions include, without
        limitation, the Los Angeles County School District.

26.     "Educational Specialty Stores" shall mean stores that offer for sale
        primarily educational products. Examples of Educational Specialty Stores
        include, without limitation, IMAGINARIUM and NATURE COMPANY.

27.     "Electronics Stores" shall mean stores that offer for sale primarily
        electronic products. Examples of Electronics Stores include, without
        limitation, CIRCUIT CITY, FRY'S, and BEST BUY.

28.     "Fashion Accessory Stores" shall mean stores that offer for sale
        primarily costume jewelry, hair accessories and other fashion
        accessories. Examples of Fashion Accessory Stores include, without
        limitation, CLAIRE'S BOUTIQUE, AFTERTHOUGHTS, IT'S ABOUT TIME AND
        PIERCING PAGODA.

29.     "Florists" shall mean stores or companies that offer for sale primarily
        flowers. Examples of Florists include, without limitation, CONROY'S,
        FTD, AND 1-8OO-FLOWERS.

30.     "Fundraising" shall mean offering products for sale through
        catalogs, direct mail brochures, prize programs and in-school sales,
        which are used by schools and charitable, religious or other
        organizations to raise funds. Examples of Fundraising companies include,
        without limitation, GIFTCO, SPRINGWATER, and DARLINGTON FARMS.

31.     "Garden Specialty Stores" shall mean stores that offer for sale
        primarily garden supplies and plants. Examples of Garden Specialty
        Stores include, without limitation, ARMSTRONG'S, CALLAWAY'S, AND WOLF
        NURSERIES.

32.     "Gift Retailers" shall mean stores that (a) offer products for sale that
        are in somewhat related product categories and are known as "gifts" in
        the trade, which products generally are classified in the trade as
        "better" quality and are higher priced (as compared to National and
        Regional Discount/Mass Retailers' products), (b) do not usually discount
        merchandise or sell it at greatly reduced prices, (c) usually focus more
        on aesthetics in merchandise displays than on price, and (d) generally
        require individual store servicing by suppliers in merchandise set-up,
        display, SKU maintenance and reordering. Suppliers to Gift Retailers
        typically advertise in trade publications, such as "Gift & Stationery
        Business", "Giftware News" and "Gifts & Decorative Accessories".
        Suppliers to Gift Retailers usually include companies such as Enesco,
        Midwest of Cannon Falls, New Creative Enterprises, Dale Tiffany, Pacific
        Rim, Ande Rooney, Waterford, GiftCraft, Carson Industries, Possible
        Dreams, Lenox, Department 56, Lefton, Swarovski and Flambro.



                                       25
<PAGE>   26


        Gift Retailers shall specifically exclude Novelty Gift Stores (as
        defined below).

33.     "Gourmet Food Specialtv Stores" shall mean stores that offer for sale
        primarily gourmet and specialty food products. Examples of Gourmet Food
        Specialty Stores include, without limitation, BRISTOL FARMS, WHOLE Foods
        and GELSONS.

34.     "Greeting Card Stores" shall mean stores that offer for sale primarily
        greeting cards. Examples of Greeting Card Stores include, without
        limitation, HALLMARK.

35.     "Guild Jewelers" shall mean stores that offer for sale primarily fine
        jewelry which is generally classified in the trade as "best" or
        "highest" quality. Examples of Guild Jewelers include, without
        limitation, MAYERS, ROGERS, and BIALY BANKS & BIDE.

36.     "Hobby & Model Stores" shall mean stores that offer for sale primarily
        hobby and model supplies.

37.     "Home Improvement Stores" shall mean stores that offer for sale
        primarily hardware and home improvement supplies. Examples of Home
        Improvement Stores include, without limitation, HOME DEPOT, OSH, HOME
        BASE, and LOVES.

38.     "Home Specialty Stores" shall mean stores that offer for sale primarily
        bedding, towels and other bathroom products, kitchen merchandise and
        housewares. Examples of Home Specialty Stores include, without
        limitation, STROUDS, LINENS 'N' THINGS, 3D BED & BATH, BED/BATH/BEYOND,
        AND LUXURY LINENS.

39.     "Internet" shall mean offering products for sale through the electronic
        network known as the Internet.

40.     "Mall Clothing Specialty Stores" shall mean stores that offer for sale
        primarily clothing and are located within a mall. Examples of Mall
        Clothing Specialty Stores include, without limitation, MILLERS OUTPOST
        and WET SEAL.

41      "Mid-Tier Department Stores" shall mean stores that offer products for
        sale in a broad assortment of unrelated product categories, which
        products are generally classified in the trade as "better" (but not
        "best") quality products. Examples of Mid-Tier Department Stores
        include, without limitation, J.C. PENNEY, SEARS, MERVYN'S, STEINMART,
        KOHLS, FRED MEYER AND MONTGOMERY WARDS.

42.     "Music/Video Stores" shall mean stores that offer for sale primarily
        musical recordings, on compact discs, cassettes or other media, and/or
        movie recordings on videos, laser disks or other media for home use by
        consumers. Examples of Music/Video Stores include, without limitation,
        BLOCKBUSTER, MUSICLAND, TOWER RECORDS, VIRGIN RECORDS, WAREHOUSE
        RECORDS, SAM GOODY'S, AND SUNCOAST.

43.     "National Discount/Mass Retailers" shall mean stores that (a) have
        nation-wide distribution, (b) offer products for sale in a broad
        assortment of unrelated product categories, which products generally are
        not classified in the trade as "better/best" quality products, (c) are
        usually "self-service" with more of an emphasis on price than
        aesthetics, and (d) generally do not require individual store servicing
        by suppliers. Suppliers to National Discount/Mass Retailers typically
        advertise in trade publications, such as "Discount Store News" and
        "Discount Merchandiser", and usually attend the IMRA (International Mass
        Retailer Association) trade show. Examples of National Discount/Mass
        Retailers include, without limitation, WAL-MART, K-MART, TARGET, AND
        ZELLERS.


                                       26
<PAGE>   27


44.     "Non-Chain Book Stores" shall mean stores or groups of stores
        (containing fewer than twenty (20) individual stores) that offer for
        sale primarily books.

45.     "Non-Chain Comic Book Stores" shall mean stores or groups of stores
        (containing fewer than twenty (20) individual stores) that offer for
        sale primarily comic books.

46.     "Non-Chain Drug Stores" shall mean stores or groups of stores
        (containing fewer than twenty (20) individual stores) that offer for
        sale primarily prescription and over-the-counter drugs, personal care
        products and household products.

47.     "Non-Chain Jewelry Stores" shall mean stores or groups of stores
        (containing fewer than twenty (20) individual stores) that offer for
        sale primarily jewelry. Non-Chain Jewelry Stores shall specifically
        exclude Guild Jewelers (as defined above).

48.     "Non-Chain Toy Stores" shall mean stores or groups of stores (containing
        fewer than twenty ~20) individual stores) that offer for sale primarily
        toys. In order to be considered a "Toy Store" hereunder, the total
        number of toy-type SKU's must represent eighty percent (80%) or more of
        such store's total SKU's. Examples of Non-Chain Toy Stores include,
        without limitation, Talbot's Toyland and Tons of Toys, Inc.

49.     "Non-Mall Clothing Specialty Stores" shall mean stores that offer for
        sale primarily clothing and are not located within a mall. Examples of
        Non-Mall Clothing Specialty Stores include, without limitation, KIDS
        MART, KID. R US, CLOTHESTIME AND FASHION BUG.

50.     "Novelty Gift Stores" shall mean stores that offer for sale primarily
        novelty gift items. Examples of Novelty Gift Stores include, without
        limitation, SPENCER'S.

51.     "Off-Price/Closeout Stores" shall mean stores that offer for sale
        primarily discounted apparel and other merchandise. Examples of
        Off-Price/Closeout Stores include, without limitation, MARSHALL'S, T.J.
        MAXX, ROSS FOR LESS, HIT OR MISS and TUESDAY MORNING.

52.     "Office Specialty Stores" shall mean stores that offer for sale
        primarily office supplies. Examples of Office Specialty Stores include,
        without limitation, OFFICE DEPOT, STAPLES, and OFFICE MAX.

53      "Outlet Stores" shall mean stores that offer for sale primarily
        discounted merchandise of a particular manufacturer or retailer.

54.     "Party Stores" shall mean stores that offer for sale primarily party
        supplies. Examples of Party Stores include, without limitation, PARTY
        CITY and PARTY WORLD.

55.     "Pet Stores" shall mean stores that offer for sale primarily pet
        supplies. Examples of Pet Stores include, without limitation, PETCO and
        PetSmart.

56.     "Regional Discount/Mass Retailers" shall mean stores that (a) have
        regional distribution, (b) generally offer products for sale in a broad
        assortment of unrelated product categories, which products generally are
        not classified in the trade as "better/best" quality products, (c) are
        usually "self-service" with more of an emphasis on price than
        aesthetics1 and (d) generally do not require individual store servicing
        by suppliers. Suppliers to Regional Discount/Mass Retailers typically
        advertise in trade publications, such as "Discount



                                       27
<PAGE>   28


        Store News" and "Discount Merchandiser", and usually attend the IMRA
        (International Mass Retailer Association) trade show. Examples of
        Regional Discount/Mass Retailers include, without limitation, MEIJERS,
        CALDOR, AMES, BRADLEES, HILL'S, ROSE'S, VENTURE, AND SHOPKO.

57.     School Book Clubs/Fairs" shall mean offering products for sale through
        book catalogs distributed to teachers and students at public or private
        schools (usually elementary or high school) or through book fairs
        conducted on the premises of such schools. Examples of School Book
        Clubs/Fairs include, without limitation, TROLL BOOK CLUB and SCHOLASTIC
        BOOK FAIR.

58.     "Souvenir Stores" shall mean stores that offer for sale primarily
        souvenirs.

59.     "Sporting Good Stores" shall mean stores that offer for sale primarily
        sporting goods, equipment, athletic apparel, and other merchandise that
        reflects a sports theme. Examples of sporting Good Stores include,
        without limitation, BIG 5 and SPORTS CHALET.

60.     "Sports Stadium Shops" shall mean concessionaire shops located within
        stadiums or arenas where sporting events are held.

61.     "Stationery Stores" shall mean stores that offer for sale primarily
        stationery. Examples of Stationery Stores include, without limitation,
        Farr's Stationaires.

62.     "Street Peddlers" shall mean individual merchants who offer products for
        sale in stands, booths or other non-permanent structures usually located
        on the sidewalk and designed to attract passing pedestrians.

63.     "Supermarket/Grocery Stores" shall mean stores that offer for sale
        primarily packaged food products. Supermarket/Grocery Stores shall
        specifically exclude Gourmet Food specialty Stores (as defined above)
        and Convenience Stores (as defined above). Examples of
        Supermarket/Grocery Stores include, without limitation, KROGER, SAFEWAY,
        AMERICAN STORES, ALBERTSON'S, WINN DIXIE, FOOD LION, VON'S, FINAST,
        RALPHS and MARSH.

64.     "Swap Meets/Flea Markets" shall mean offering products for sale through
        organized events known as swap meets or flea markets, which involve a
        group of vendors offering for sale a variety of products, often
        collectibles or antiques.

65.     "Television Home Shopping" shall mean offering products for sale through
        cable and broadcast television, including infomercials, QVC and Home
        Shopping Network. Television Home Shopping shall specifically exclude
        sales through the Internet, CD-Interactive and other electronic media.

66.     "Toy Wholesalers" shall mean companies that offer for sale primarily
        toys to retail stores. In order to be considered a "Toy Wholesaler"
        hereunder, the total number of toy-type SKU's must represent eighty
        percent (80%) or more of such wholesaler's total SKU's.

67.     "Trackside - CART" shall mean offering products for sale at races
        organized and sponsored by Championship Auto Racing Teams.

68.     "Trackside - NASCAR" shall mean offering products for sale at races
        organized and sponsored by the National Association for Stock Car
        Racing.



                                       28
<PAGE>   29


69.     "Trackside - NHRA" shall mean offering products for sale at races
        organized and sponsored by the National Hot Rod Association.

70.     "Upstairs Department Stores" shall mean stores that (a) offer products
        for sale in a broad assortment of unrelated product categories, which
        products are generally classified in the trade as "best" quality
        products, and (b) offer a high level of customer service with a strong
        emphasis on store aesthetics. Examples of Upstairs Department Stores
        include, without limitation, BLOOMINGDALE'S, MACY'S, NORDSTROM'S, MAY
        DEPARTMENT STORES, SAKS FIFTH AVENUE, NEIMAN MARCUS, and DILLARDS

71.     "Warehouse Clubs" shall mean stores that offer for sale products in
        large sizes and quantities with more of an emphasis on price than
        service or store aesthetics. Examples of Warehouse Clubs include,
        without limitation, Sam's Club and Price Costco.




                                       29
<PAGE>   30


                            EXHIBIT 2 #96394-BLT/WBLT


                             CONTRIBUTOR'S AGREEMENT


I, _________________________the undersigned ("Contributor"), have been engaged
by Gerber Childrenswear, Inc. ("Licensee") to work on or contribute to the
creation of Licensed Products, described as ____________________by Licensee
under an agreement between Licensee and Warner Bros., a division of Time Warner
Entertainment Company L.P., c/o Warner Bros. Consumer Products, a division of
Time Warner Entertainment Company L.P. ("Warner") dated ________________.



I understand and agree that all artwork which includes any Licensed Property of
Warner Bros. ("Work") and which results from my services for Licensee in
connection with such Licensed Products is a "work made for hire" for Licensor
and that all right, title and interest in and to the Work shall vest and remain
with Licensor. I reserve no rights therein. Without limiting the foregoing, I
hereby assign and transfer to Licensor all other rights whatsoever, in
perpetuity throughout the universe which I may have or which may arise in me or
in connection with the Work. I hereby waive all moral rights in connection with
such Work together with any other rights which are not capable of assignment. I
further agree to execute any further documentation relating to such transfer or
waiver or relating to such Work at the request of Licensor or Licensee, failing
which Licensor is authorized to execute same as my Attorney-in-Fact.

Contributor:

By:_____________________________

Date:___________________________


Warner Bros. Consumer Products:


By:_____________________________

Date:___________________________




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                            EXHIBIT 3 #96394-BLT/WBLT

Warner Bros. Consumer Products
4000 Warner Boulevard
Burbank, CA  91522

Re: Approval of Third Party Manufacturer

Gentlemen:

        This letter will serve as notice to you that pursuant to Paragraph 10(b)
of the License Agreement dated ________ 199_ between WARNER BROS., A DIVISION OF
TIME WARNER ENTERTAINMENT COMPANY L.P. and GERBER CHILDRENSWEAR, INC.
("Licensee), we have been engaged as the manufacturer for Licensee in connection
with the manufacture of the Licensed Products as defined in the aforesaid
License Agreement. We hereby acknowledge that we may not manufacture Licensed
Products for, or sell or distribute Licensed Products to, anyone other than
Licensee. We hereby further acknowledge that we have received a copy and are
cognizant of the terms and conditions set forth in said License Agreement and
hereby agree to observe those provisions of said License Agreement which are
applicable to our function as manufacturer of the Licensed Products. It is
expressly understood that we are obligated to comply with all local laws,
including without limitation, labor laws, wage and hour laws and
anti-discrimination laws and that you or your representatives shall, at anytime,
have the right to inspect our facilities and review our records to ensure
compliance therewith. It is understood that this engagement is on a royalty free
basis and that we may not subcontract any of our work without your prior written
approval.

        We understand that our engagement as the manufacturer for Licensee is
subject to your written approval. We request, therefore, that you sign in the
space below, thereby showing your acceptance of our engagement as aforesaid.

                                            Very truly yours,

                                                ----------------------------
                                                manufacturer/company name

                                            By: /s/Edward Kittredge
                                                ----------------------------
                                                signature

                                                  Edward Kittredge
                                                ----------------------------
                                                print name

                                                ----------------------------
                                                address
                                                ----------------------------

                                                ----------------------------
                                                country

                                                ----------------------------
                                                date


                                                ----------------------------
                                                product(s) manufacturing

AGREED TO AND ACCEPTED:
WARNER BROS. CONSUMER PRODUCTS,
A Division of Time Warner
Entertainment Company L.P.

By:  _____________________________
     Gary R. Simon
     Vice President, Legal Affairs
Date:_____________________________


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