CONFIDENTIAL TREATMENT REQUESTED


 


JCPENNEY / WILLIAM RAST LICENSE
AGREEMENT


 


THIS
LICENSE AGREEMENT (this “Agreement”), dated as of November 17, 2011 is entered into by and between J. C. PENNEY
CORPORATION, INC., a Delaware corporation (together with its subsidiaries and affiliates, “JCP”), and
William Rast Sourcing, LLC, a Delaware limited liability company (“WRS”)
and William Rast Licensing, LLC, a Delaware limited liability company (“WRL”). JCP, WRS and WRL are sometimes
referred to collectively as the “Parties” and each individually as a “Party.” 


 


RECITALS:


 


WHEREAS, WRL is the
owner of the Trademark (as defined below), together with the trade dress and the goodwill associated with the such Trademark in
the Territory (as defined below);


 


WHEREAS, WRL has granted
to WRS an exclusive license to use the Trademark in connection with the manufacture and sale of men’s apparel and accessories,
women’s apparel, and footwear within the Territory, and WRL has the right to license to third parties rights to the Trademark
in connection with the manufacture and sale of handbags, sunglasses, watches and luggage within the Territory;


 


WHEREAS, JCP owns and
operates retail stores, publishes and distributes merchandise catalogs, and owns and operates Internet web sites where apparel,
accessories, footwear and home goods are sold to consumers; and


 


WHEREAS, JCP desires
to obtain from WRS and WRL, and WRS and WRL desire to grant to JCP, on the terms and conditions set forth herein, an exclusive
license and sublicense, as the case may be, to use the Trademark in connection with the manufacture and sale of men’s apparel
and accessories (subject to the limitations herein), women’s apparel, handbags, footwear, sunglasses (subject to the limitations
herein), watches, and luggage within the Territory.


 


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


 


1.DEFINITIONS.
When used in this Agreement, the following terms will have the meanings set forth below:


 


(a)“Existing
Licenses” means the existing license agreement between WRL and WRS, on the one hand, and third party licensees, on the
other hand, which license agreements are identified on Appendix D attached hereto.


 


(b)“IP
Rights” means all intellectual property interests in or to the products now or hereafter owned and/or created by or
on behalf of WR, including, without limitation, by JCP pursuant to the terms and conditions of this Agreement, whether or not
copyrightable or patentable, including, without limitation, patterns, designs, and trade dress in and to any licensed apparel
products and to any prints, package designs, labels, advertising, and other promotional materials used on or in conjunction with
the Trademark or the Licensed Products.


 






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(c)“JCP-Branded”
means branded with the trademark JCPenney(R) or such other trademark
that JCP adopts after the date hereof and uses as the primary trademark to identify its retail stores that are currently branded
JCPenney(R).


 


(d)“Licensed
Products” means products in the Product Categories which (i) are authorized by WR, and (ii) bear the Trademark on the
product itself or on a hang-tag, label, and/or other means of packaging.


 


(e)“Men’s
Small Goods” means men’s wallets, small leather
goods, messenger bags, totes, belts, travel kits and electronics cases,which are subject to an Existing License
Agreement.


 


(f)“Net
Sales” means: (i) for retail store sales, the actual retail price paid to JCP
by JCP’s customers (not including any sales or other taxes) for all Licensed Products sold, less any discounts, refunds,
credits, or returns given by JCP to its customers; and (ii) for mail order and e-commerce sales, the gross sales price paid to
JCP by JCP’s customers (not including any sales or other taxes) for all Licensed Products sold, less any returns and customer
order adjustments (discounts, refunds, credits, or other allowances) given by JCP to its customers, less the amount, if any, of
JCP’s out-of-pocket third-party costs for free transportation and handling promotional programs for the Licensed Products.
For purposes of this agreement, no royalties will be payable on (and for purposes of calculating royalties, “Net Sales”
will not include) Licensed Products sold during any given fiscal year after being designated as permanent clearance merchandise
or sold through JCP-Branded internet outlet pages, so long as the amount of Net Sales of Licensed Products designated as permanent
clearance merchandise or sold through JCP-Branded internet outlet pages does not exceed ***1 percent (***%) of total
Net Sales in any given fiscal year. In addition, no royalties will be payable on (and for purposes of calculating royalties, “Net
Sales” will not include) Licensed Products liquidated through jobbers or third party liquidators.


 


(g)“Product
Categories” means Men’s Apparel and Accessories (excluding Men’s Small Goods), Women’s Apparel, Handbags,
Footwear, Watches, and Luggage. In addition, Product Categories will also include Sunglasses and Men’s Small Goods if and
when any such category is no longer subject to an Existing License Agreement.


 


(h)“Territory”
means (i) worldwide for the manufacture of Licensed Products, and (ii) for the sale, marketing, merchandising, advertising, and
promotion of Licensed Products, (A) JCP-Branded retail stores in
the United States (including the District of Columbia and Puerto Rico), and (B) the normal distribution for orders received
by JCP’s direct mail and JCP-Branded electronically enabled commerce, whether currently
known or hereafter coming into existence, targeted exclusively to consumers in the United States, Puerto Rico and United States
military installations throughout the world. WR acknowledges that JCP will not be in breach for sales of a de minimus amount,
as reasonably determined by WR, made through JCP’s United States-based direct mail and e-commerce platforms that may be
shipped to consumers outside of the United States.





 


 


 






1
Terms represented by this symbol are considered confidential. These confidential terms have been omitted pursuant to a Confidential
Treatment Request filed with the Securities and Exchange Commission (“SEC”) and have been filed separately with the
SEC.


 






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(i)“Trademark”
means (i) the trademark and logos included on Appendix A, and (ii) any other Trademark or service marks to be used in connection
with the Licensed Products, as hereinafter agreed to in writing by the Parties.


 


(j)“WR”
means, collectively, WRL and WRS. Any grant of rights to the Trademark by “WR” pursuant to this Agreement shall mean
a grant of rights by WRL and/or WRS to the extent of such Party’s rights to the Trademark as the owner (in the case of WRL)
or licensee (in the case of WRS) thereof, and all rights and obligations of “WR” under this Agreement shall be for
the benefit of, received by, or performed by, as the case may be, WRS unless this Agreement specifically provides otherwise.


 


2.GRANT
OF LICENSE.


 


(a)Upon the terms
and conditions set forth in this Agreement, WR hereby grants to JCP, and JCP hereby accepts from WR, the right and license (the
“License”) to use, without the right to modify or create derivative works of, the Trademark in the Territory
during the Term provided in Section 7 below, in connection with or related to the manufacture, sale and marketing of the
Licensed Products through JCP-Branded retail stores, consumer-direct mail, and consumer-direct
ecommerce business only.


 


(b)The License shall
be non-exclusive in the Territory with respect to the right to manufacture Licensed Products, and WR retains the right to manufacture
directly and authorize third parties to manufacture Licensed Products in the Territory. Except as otherwise provided herein, the
License shall be exclusive to JCP with respect to all other rights granted to JCP hereunder (i.e., rights of sale, marketing, merchandising,
advertising, and promotion of Licensed Products in JCP-Branded retail stores and via consumer-direct
mail and consumer-direct ecommerce business).


 


(c)The License does
not include the right to grant sublicenses to third parties, except as necessary for JCP to advertise and manufacture the Licensed
Products. JCP will distribute and sell such quantities of Licensed Products as reasonable and customary quantities for a national
brand presence in a minimum of approximately 600 retail stores and otherwise as agreed upon with WR.. Any estimates, projections,
or future sales figures provided by JCP to WR, but excluding the GMR (as defined below), will be considered as non-binding estimates
only. JCP specifically acknowledges and agrees that its use of the Trademark will not create in JCP any right, title, or interest
in the Trademark.


 






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3.EXCLUSIVITY.


 


(a)Except as provided
in Section 3(b) below, during the term of this Agreement, WR agrees to refrain from selling or authorizing any other party
to sell any line of Licensed Products in the Territory bearing the Trademark, in any channels of distribution. By way of example
and without limiting the foregoing, products that bear the Trademark on the product itself or on a hang-tag, label, and/or other
means of packaging will not be sold or distributed by, or on behalf of, WR to the following retailers: Dillard’s, Macy’s,
Kohl’s, Kmart, Sears, Target, or Wal-Mart. Nothing herein will prohibit WR from using marks other than the Trademarks (the
“Halo Brand”) so that WR may continue to design, manufacture, distribute and sell the Halo Brand products in
the Territory through better department stores, including but not limited to Neiman Marcus, Nordstrom and Bloomingdales and premium
specialty jean stores.


 


(b)Notwithstanding
this Agreement to the contrary, WR shall have the right to continue to sell Licensed Products without restriction until May 15,
2012.


 


4.TREND
DIRECTION AND DESIGN.  WR will provide JCP with trend and design direction, including color palette, fabrication, basic
blocks, sketches and measurements, for the Licensed Products. WR will collaborate with JCP on all designs, designer partners,
advertising, image, and marketing campaigns for the Licensed Products.


 


(a)Men’s
Apparel and Accessories. JCP will design the Licensed Products in the Men’s Apparel and Accessories Product Categories.
WR will have approval rights at the concept stage.


 


(b)Women’s
Apparel. For Women’s Apparel, WR
will design the Licensed Products with a minimum 2:1 ratio to the number of styles in the conceptual merchandise plan. WR will
provide design sketches, measurements, fabric, trim and placement and specifications to JCP and JCP will create technical design
packs. WR will reasonably adhere to JCP’s design and sourcing calendar, which JCP will provide to WR. For Licensed Products
in the Women’s Apparel product category, JCP will have the right to take design responsibility for a given calendar year
by giving WR six months notice prior to the beginning of the applicable calendar year.


 


(c)Footwear,
Sunglasses, Watches and Luggage. Unless there is an existing third party license agreement with WR, JCP will design and source,
or cause one of its suppliers to design and source, footwear, sunglasses, watches and luggage. If there is an existing third party
licensee, JCP will purchase the products from that supplier. No royalties will be due on any products purchased from third party
licensees. 


 


5.PACKAGING.
WR will provide conceptual design for the product packaging in the form of digital camera ready artwork for the logos. WR will
create a packaging style guide to be reviewed and mutually agreed upon at annual strategy meetings. JCP will source the packaging.


 






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6.APPROVALS.


 


(a)Strategy
Meetings. The Parties will meet annually at a mutually convenient time and place to discuss strategy for the design and marketing
of the Licensed Products. 


 


(b)Timing/Approvals.
JCP will be responsible for final approval of color, production and fit, consistent with the design specifications. JCP will provide
a concept sample for approval to WR. WR will respond in writing to all requests for approvals under this Agreement as quickly as
possible, and, in all cases, within seven (7) business days. If a written approval has not been received within such period, then
the submission will be deemed approved. 


 


(c)Trademark
Use Materials. All Trademark Use Materials (as defined in Section 11(a) below), to the extent any include WR’s
IP Rights, will utilize WR’s IP Rights consistently with the trademark and copyright usage guidelines as are reasonably required
by WR. In addition, except as respects newspaper circulars, JCP will submit at concept stage representative samples of advertising
materials to WR for its prior review and approval. Upon WR’s request from time to time, JCP will submit packaging for the
Licensed Products and advertising materials utilized pursuant hereto so that WR may review JCP’s compliance with the foregoing.
To the extent any of such Trademark Use Material does not materially comply with the requirements of this Section, JCP will correct
such non-compliance with the next available production run of such materials.


 


7.TERM
AND RENEWALS.


 


(a)Term. Unless
otherwise stated herein, all periods referred to in this agreement will be based on JCP’s fiscal calendar. This Agreement
will be effective as of December 1, 2011 (the “Effective Date”) and will continue through January 30, 2016 (the
“Initial Term”), unless terminated sooner as provided herein.


 


(b)Royalty Periods:
“Royalty Period” will mean a period of twelve of JCP’s fiscal months during which this Agreement is in
effect, except that the first Royalty Period will be as provided below. The Royalty Periods and Guaranteed Minimum Royalties will
be as follows:


 






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	Royalty Period	Dates	Guaranteed Minimum Royalty
	Royalty Period 1	Effective Date to February 3, 2013	$***2
	Royalty Period 2	February 4, 2013 to February 1, 2014	$***
	Royalty Period 3	February 2, 2014 to January 31, 2015	$***
	Royalty Period 4	February 1, 2015 to January 30, 2016	$***


  


(c)Renewal Option.
On or before twelve (12) months before the expiration of the Initial Term, JCP may elect to extend the Initial Term of this License
Agreement for a five (5) year renewal period (the “Renewal Term”). The Renewal Term will be JCP fiscal years
2016 through 2020. The Guaranteed Minimum Royalty for the Royalty Period for the first fiscal year during the Renewal Term will
be equal to the greater of Royalty Period 3’s Actual Royalty or ***% of Royalty Period 4’s Actual Royalty, but in no
event less than Royalty Period 4’s GMR. Following JCP’s election to extend the Initial Term for the Renewal Term, the
Parties will negotiate in good faith to establish GMRs for the remaining Royalty Periods in the Renewal Term, but in no event shall
such GMRs be less than the GMR for the Royalty Period for the first fiscal year during the Renewal Term.


 


(d)References
to “Term” will hereinafter include the Initial Term and the Renewal Term, as applicable.


 


8.PAYMENTS.


 


(a)Royalty.
All Royalty payments will be made within 45 days following the end of each quarter in each Royalty Period during both the Initial
Term and the Renewal Term, if applicable, as indicated on the Payment Schedule in Appendix C (the “Payment Schedule”)


 


(b)Percentage
Royalty Rate. During each of the Royalty Periods during the Term, JCP will pay the following royalties to WR (“Royalty”):
***% of Net Sales of Licensed Product.


 


(c)Guaranteed
Minimum Royalty. In addition, JCP will guarantee the minimum Royalty amounts specified in Section 7(b) hereinabove to
WR (the “Guaranteed Minimum Royalty” or “GMR”) for each Royalty Period. The GMR will be payable
in accordance with the Payment Schedule.


 


 


 


 






2
Terms represented by this symbol are considered confidential. These confidential terms have been omitted pursuant to a Confidential
Treatment Request filed with the SEC and have been filed separately with the SEC.


 






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(e)Design Fee.
JCP will pay to WR a design fee of $***3 per Royalty Period in accordance with the Payment Schedule.


 


(f)Advance. Within 20 days of signing,
JCP will advance WR 50% of Royalty Period 1’s GMR. The Advance will be credited against any Royalties due in the Royalty
Period 1.


 


(e)Payment Due
Dates. JCP will remit all payments in accordance with the Payment Schedule. Any payment due dates that fall on a weekend or
national holiday will be due on or before the next business day.


 


9.MARKETING
AND LAUNCH: JCP will build and invest in a comprehensive campaign concept as well as media outreach plan, with creative
collaboration from WR and Justin Timberlake. Justin Timberlake will participate in the launch event and organic marketing initiatives
conceptualized by WR and JCP. JCP will prominently make an introduction of the Licensed Products by offering a collection at a
prominent number of A, B and C doors of JCP-Branded retail stores in the United States (including the
District of Columbia and Puerto Rico) and on JCP-Branded electronically enabled commerce.


 


10.REPORTS,
RECORDKEEPING, AND AUDITS.


 


(a)Maintenance
of Records. JCP will maintain true and accurate books of account and records in accordance with generally accepted
accounting principles, consistently applied, covering all transactions relating to this Agreement and the License hereby granted.
Such records will be maintained both during the Term and for a period of two (2) years thereafter for WR to perform any audits
authorized by this Agreement.


 


(b)Quarterly
Reports. Every Royalty payment will be accompanied by a report substantially in the format set forth on Appendix
B (individually, a “Quarterly Report,” and collectively, the “Quarterly Reports”) providing
details on: (i) the quarter and year-to-date gross sales and Net Sales and quantity, by department or subdivision, as applicable
of all Licensed Products sold by JCP during the months to which such Quarterly Report relates (including Licensed Products designated
as permanent clearance merchandise, sold through JCP-Branded internet outlet pages, which sales
shall be identified separately by category); (ii) the calculation of the amount of Royalty payment during the applicable reporting
period; and (iii) any other information that may be mutually agreed to by the Parties. JCP will also provide WR with remote access
to sales data regarding the Licensed Products on its supplier website, including sales by store for each Licensed Product and each
Product Category.





 


 


 






3
Terms represented by this symbol are considered confidential. These confidential terms have been omitted pursuant to a Confidential
Treatment Request filed with the SEC and have been filed separately with the SEC.


 






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(c)Audit.
WR and its duly authorized representatives will have the right no more than once in any twelve (12) month period during the Term
and for a period of two (2) years following expiration of the Term, upon reasonable notice and at all reasonable hours during normal
business days, to examine such books of account and records and all other documents and materials in the possession or under the
control of JCP that are reasonably related to JCP’s payment of Royalties under this Agreement. The
cost of such audit will be borne by WR, except that if the audit reveals a discrepancy in favor of WR of greater than five (5%)
between the Royalties paid and those actually owed, then JCP will be responsible for such costs. In the event of a discrepancy
regarding Royalties paid and those actually owed, the applicable party will promptly pay the amount of such overpayment or underpayment,
as the case may be, to the other. 


 


11.SOURCING/STANDARDS
OF QUALITY/QUALITY CONTROL.


 


(a)Standards of
Quality. The Licensed Products and any expression by JCP, directly or indirectly, which by its nature conveys to others the
existence of a relationship between JCP and the Trademark or the Licensed Products (including, without limitation, all packaging,
labeling, fixtures, advertising, point of sale and sales promotion materials, and product literature (collectively, the “Trademark
Use Materials”), will be of high quality, style, appearance, and distinctiveness and generally be consistent with the
high quality standards established by WR, and will in all respects (including, without limitation, the manufacture, sale, marketing,
and advertising) be in accordance with all of the terms and provisions of this Agreement, with all applicable laws, rules, and
regulations, and with any approval decision made by WR.


 


(d)Manufacturing/Sourcing.
In all cases, the Licensed Product will be sourced by JCP or by a supplier designated by JCP. JCP will ensure that each of its
suppliers of Licensed Products agrees to the standards set forth in JCP’s standard purchase contract, and JCP will enforce
such standards in the usual manner in which such standards are enforced in regard to other suppliers of JCP’s private brand
merchandise. Such standards are currently in and will remain in compliance with all laws applicable to the manufacturing of
Licensed Products, including labor and employment, health and safety, customs and country of origin regulations, together with
appropriate human rights standards and consideration as JC Penney may require from time to time.


 





(e)Property Retention.
All intellectual property, including product designs, concepts, patterns, names (other than the Trademark), copyrights, patents,
trademark, trade dress, and service marks (collectively, “Intellectual Property”) developed by JCP and JCP’s
suppliers before or during the Term and which are incorporated into the Licensed Products will, be owned by JCP to the extent such
Intellectual Property does not incorporate any Intellectual Property of WR. All Intellectual Property of WRS and WRL and their
respective suppliers before or during the Term and which are incorporated into the Licensed Products (including the Trademark)
will, be owned solely by WRS or WRL, as the case may be. All Intellectual Property developed jointly by WR and JCP during the Term
(other than derivative works of the Trademark, including stylized versions thereof, which shall be owned exclusively by WRS or
WRL, as the case may be) will be jointly owned by WR and JCP and neither Party may use such Intellectual Property after the Term
without the prior written consent of the other.


 






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(f)Store Environment.
The Licensed Product will be displayed in a prominent manner in keeping with the high quality of the Trademark. JCP will be responsible
for the expenses incurred in connection with the development and implementation of the plans for the sales environments.


 


(g)Designated
Representatives. Both JCP and WR will provide each other with the name, e-mail address, mailing address, and phone number of
each Party’s designated contact(s) for all approvals required under this Agreement, and each Party will update the other
of any changes to such information.


 


12.PROTECTION
AND ENFORCEMENT OF TRADEMARK. As a material inducement to WR to enter into this Agreement, and as a material part of the
consideration to WR hereunder, JCP hereby agrees to the following: 


 


(a)JCP will not use
or permit the use of the Trademark for any purpose or use other than the uses expressly licensed under this Agreement.


 


(b)JCP will cooperate
fully and in good faith with WR for the purpose of securing and preserving WR’s rights in and to the Trademark. JCP will
cause to appear on and in connection with the Licensed Products and the stores and advertising such reasonable statutory trademark
notices and other notices proclaiming and identifying the Trademark as property of WR and/or WR’s licensor as WR may deem
appropriate from time to time.


 


(c)JCP will, upon
reasonable request, supply to WR enough specimens of advertisements, tags, labels, and other use of the Trademark as may be required
in connection with any of WR’s Trademark applications or registrations in the Territory. JCP will execute any instrument
WR will reasonably deem necessary or desirable to record or cancel JCP as a registered user of the Trademark.


 


(d)JCP will, in connection
with its duty to use the Trademark so as to promote the continuing goodwill thereof, give immediate attention and take any reasonably
necessary action, consistent with its customer relations and other policies, to satisfy all legitimate customer complaints brought
against JCP in connection with the Licensed Products.


 


(e)JCP agrees that
it will not, directly or indirectly, dispute, challenge, contest, or otherwise impair the rights or interests of WR in the Trademark,
nor directly or indirectly assist any other person in contesting the same. The expiration or termination of this Agreement will
in no way affect the operation of this subparagraph, or release or discharge JCP from the provisions of this subparagraph.


 






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(f)JCP will notify
WR of any infringement or imitation by others of the Trademark, copyrights or WR’s IP Rights if and when such become known
to JCP. WR will have the sole right to determine whether or not any action will be taken on account of such infringement or imitations
and will bear any cost or expense, and be entitled to all damages and other recovery, related to such action.


 


(g)For the purposes
of liquidation, JCP agrees that it will not knowingly authorize the resale or transfer of any Licensed Products to any other retailer,
wholesaler, intermediary, or agent of any other person or entity, foreign or domestic, that JCP knew or should have known had the
intent to resell the Licensed Products, without WR’s consent, unless all tags, labels, or other references to the Licensed
Marks have been, or will be before resale, marked through, removed, or otherwise made illegible with the Licensed Marks.


 


(h)JCP will display
the Trademark in the logo forms shown in Appendix A to this Agreement, or in such other form as WR may reasonably request,
on all product packaging, hangtags, point of sale signage, displays and materials, and in advertising and promotions for the Licensed
Products. JCP will also display such statutory trademark notices in connection with the Trademark as WR may reasonably require.


 


13.TERMINATION.


 


(a)Material Default.
Either Party will have the right to terminate this Agreement upon a material breach by the other Party of this Agreement (other
than a breach caused by an Act of God or force majeure), which material breach continues and/or is not cured within a period of
thirty (30) days after the non-defaulting Party will have given written notice thereof to the defaulting Party.


 


(b)Termination
by JCP. If Justin Timberlake is charged with the commission of a felony involving an act of moral turpitude, and JCP reasonably
concludes that Justin Timberlake’s continued association with the Licensed Products would cause damage to JCP’s goodwill
and reputation, then JCP will have the right to terminate this Agreement upon written notice to WR delivered at any time within
ninety (90) days of the date of such charge.


 


(c)Effect of Termination.
Upon the expiration or termination of this Agreement, the License will terminate and JCP will cease to use the Trademark and other
IP Rights of WR in any way and will not manufacture or sell any additional units of the Licensed Products except in accordance
with Section 13(d) below. WR and JCP will each remain liable for their respective obligations that accrued prior to the
date of expiration or termination; provided, however that JCP will remain liable for all remaining Guaranteed Minimum
Royalties for the balance of the Term in the event the Agreement is terminated as a result of JCP’s breach.


 


(d)Sell-Off Period.
JCP agrees that from the date of expiration or termination of this Agreement, JCP will not place new orders for Licensed Products
to be manufactured; provided, however, that, unless the Agreement is terminated as a result of JCP’s breach then JCP will
have a period not to exceed six (6) months following the expiration or termination of this Agreement (the “Sell-Off Period”)
to sell off Licensed Products which are on hand, in transit, in production, or which JCP is contractually obligated to purchase,
provided that JCP will pay WR the applicable Royalties specified in Section 8(b) hereto and provide reporting with respect
thereto on such liquidation sales. Any Licensed Products remaining after the Sell-Off Period will be destroyed.


 






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15.ASSIGNMENTS
AND SUBCONTRACTS. Except as provided herein, neither this Agreement nor any of the rights or duties hereunder nor the License
may be assigned, sub-licensed, encumbered, or otherwise transferred in any way by either Party, without the prior written consent
and agreement of the other Party, such consent not to be unreasonably withheld.


 


16.INDEMNIFICATION.


 


(a)Indemnification
of WR. JCP will indemnify and hold harmless WR and its licensors, affiliates, directors, officers, employees, and agents (collectively,
the “WR Parties”) from and against all claims, damages, liabilities, losses, and other expenses, including,
without limitation, reasonable attorneys’ fees and costs, whether or not a lawsuit or other proceeding is filed (“Claims”),
that arise out of or relate to: (i) the design, manufacture, packaging, distribution, promotion, sale, marketing, advertising,
or other use of the Trademark or the Licensed Products, except to the extent such liability results from a breach of this Agreement
by WR; (ii) JCP’s breach of any provision of this Agreement; (iii) JCP’s business activities; (iv) JCP’s transactions
with third parties and/or the operation of its business; (v) any third party product liability claims which result from any defect,
alleged or real, in products manufactured by JCP or on behalf of JCP pursuant to the License; and/or (vi) JCP’s negligent
or willful acts or omissions. WR will promptly notify JCP in writing of any such actual or threatened Claims; provided, however,
that any failure or delay of WR to do so will excuse JCP of its indemnification obligations hereunder only to the extent JCP is
materially prejudiced by such failure or delay. No settlement or attempt at settlement of any such Claims will be made without
the prior written consent of JCP, which will not be unreasonably delayed or withheld.


 


(b)Indemnification
of JCP. WR will indemnify and hold harmless JCP and its affiliates, directors, officers, employees, and agents (collectively,
the “JCP Parties”) from and against all Claims that arise out of or relate to: (i) any third party claims relating
to JCP’s use of the Trademark as set forth in this Agreement, including claims that such use violates or infringes any trademark,
copyright, right of publicity or other Intellectual Property Right of any third party; or; (ii) WR’s breach of any provision
of this Agreement. JCP will promptly notify WR in writing of any such actual or threatened Claims; provided, however, that any
failure or delay of JCP to do so will excuse WR of its indemnification obligations hereunder only to the extent WR is materially
prejudiced by such failure or delay. No settlement or attempt at settlement of any such claims or suits will be made without the
prior written consent of WR, which will not be unreasonably delayed or withheld.


 






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(c)Limitations.
Neither Party will be obligated to the other Party for indemnification under this Section 16 to the extent that a Claim
is primarily the result of any acts of negligence, fraud, or misconduct on the part of the other Party or its employees, agents,
or servants. The Parties agree to cooperate with each other, at the other’s expense, in any regard in the investigation and
defense of any Claim covered by this Section 16.


 


17.INSURANCE.


 


(a)Insurance Coverage.
Both WRS and JCP will maintain, during the Term, insurance policies of the following kinds and amounts, or in the amounts required
by law, whichever is greater:


 


(i)Worker’s
Compensation and Employer’s Liability Insurance affording (A) protection under the Worker’s Compensation Law of the
state in which work is to be performed, or containing an all-states endorsement; and (B) Employer’s Liability protection
subject to a limit of not less than $500,000; and


 


(ii)Commercial
General and Product Liability Insurance, written on an occurrence basis, in amounts not less than (A) two million dollars ($2,000,000)
per person and in the annual aggregate for bodily injury, and (B) two million dollars ($2,000,000) per person per occurrence and
in the annual aggregate for property damage.


 


(b)Insurers.
All insurance policies required to be maintained by the Parties will be procured from insurance companies rated at least A-VIII
or better by the then-current edition of Best’s Insurance Reports published by A.M. Best Co.


 


(c)Limited Effect.
This Section 17 will in no way affect the indemnification, remedy, or warranty provisions set forth in this Agreement or
a Party's rights or obligations thereunder.


 


(d)Self Insurance.
So long as JCP maintains a net worth in excess of One Hundred Million Dollars ($100,000,000.00), JCP may self-insure with respect
to the insurance coverage described herein as long as JCP has adopted a bona fide and legally qualified plan of self insurance
with respects to such coverage that is sufficient to provide for any losses that occur in connection with JCP’s obligations
covered by this Agreement.


 


18.WARRANTIES.
Each Party represents and warrants to the other that:


 


(a)It is authorized
to enter into this Agreement; that this Agreement has been duly executed by an authorized signatory and constitutes the valid and
binding obligation of such Party, enforceable in accordance with its terms; that at all times during the Term, it will have the
power and authority to perform all of its obligations under this Agreement; and that the execution, delivery, and performance of
this Agreement will not violate any agreement or instrument to which it is a party.


 






    	12



    	 



    
 


(b)This Agreement
has been duly executed and delivered and constitutes a legal, valid, and binding obligation enforceable on such Party in accordance
with its terms.


 


(c)Neither the execution
and delivery of this Agreement or any of the instruments or agreements referred to herein, nor the consummation of any of the transactions
contemplated hereby or thereby, nor the performance of this Agreement or any of the instruments or agreements referred to herein
(i) requires the consent, approval, order, or authorization of, or registration with, or the giving of notice to, any third party
or any governmental agency, public body, or authority, or (ii) will contravene any existing federal, state, or local law, rule,
or regulation or any judgment, decree, or order or will contravene or result in any breach of, or constitute any default under,
any agreement or instrument.


 


19.GENERAL
PROVISIONS.


 


(a)Notices.
All notices and other communications required or permitted to be given under this Agreement will be in writing and will be delivered
either by (i) personal delivery, (ii) registered or certified first-class mail, postage prepaid and return receipt requested,
(iii) national commercial courier service, (iv) facsimile, or (v) electronic mail, in each case addressed as follows:


 


If to WRS or WRL:


 


William Rast Sourcing, LLC

1212 S. Flower St., 5th Floor


Los Angeles, CA 90015


Attn:Colin Dyne, Manager


 


Facsimile:


E-mail: cdyne@pplbusa.com


 


With a copy to:


 


Stubbs Alderton & Markiles, LLP

15260 Ventura Boulevard, 20th Floor


Sherman Oaks, CA 91403

Attn: John J. McIlvery, Esq.


 


Facsimile:
(818) 444-6302


E-mail: jmcilvery@stubbsalderton.com


 






    	13



    	 



    
 


If to JCP:


 


J. C. Penney
Corporation, Inc.


6501 Legacy
Drive


Plano, Texas
75024


Attn: GMM Men’s
Apparel Division


 


Facsimile:
(972) ___________


E-mail:_________@jcpenney.com


 


With a copy to:


 


J.C. Penney
Corporation, Inc.


6501 Legacy
Drive


Plano, Texas
75024


Attn: Legal
Department


 


Facsimile:
972-431-1133


E-mail: trademarks@jcpenney.com


 


 


Notices or other communications will be
deemed to have been delivered: (A) if personally, upon delivery; (B) if by mail, five (5) days after deposit in the United States
mail in the manner specified herein; (C) if by courier, the first business day after delivery to such courier; (D) if by facsimile,
upon transmission and appropriate confirmation of transmittal; and (E) if by electronic mail, upon transmission. Either Party may
change its address at any time by written notice to the other Party as set forth above.


 


(b)Entire Agreement.
This Agreement sets forth the entire agreement and understanding between the Parties with respect to the subject matter hereof
and supersedes any and all prior negotiations, discussions, and agreements relating to the subject matter hereof. This Agreement
may not be orally changed, altered, modified, or amended in any respect.


 


(c)Successors
and Assigns. This Agreement will be binding upon and will inure to the benefit of the successors and permitted assigns of the
Parties.


 


(d)Choice of Law;
Forum; Jurisdiction. THIS AGREEMENT WILL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF TEXAS, WITHOUT
GIVING EFFECT TO PRINCIPLES OF CONFLICTS OF LAW THEREOF. THE PARTIES HEREBY AGREE THAT ANY ACTION OR PROCEEDING BETWEEN THE PARTIES
OR THEIR SUCCESSORS ARISING OUT OF, CONCERNING, OR RELATED TO THIS AGREEMENT, ANY ANCILLARY AGREEMENT, OR ANY OTHER AGREEMENT,
TRANSACTION, OR DEALING BETWEEN THE PARTIES WILL BE HEARD BY A JUDGE. ACCORDINGLY, THE PARTIES HEREBY IRREVOCABLY WAIVE THEIR RIGHT
TO A TRIAL BY JURY IN ANY SUCH ACTION OR PROCEEDING.


 






    	14



    	 



    
 


(e)No Waiver.
No waiver by either Party, whether express or implied, of any provision of this Agreement or of any breach or default of any Party,
will constitute a continuing waiver of such provision or any other provisions of this Agreement, and no such waiver by any Party
will prevent such Party from acting upon the same or any subsequent breach or default of the other Party of the same or any other
provision of this Agreement.


 


(f)Disclaimer
of Agency. Nothing in this Agreement will create a partnership or joint venture or establish the relationship of principal
and agent or any other relationship of a similar nature between the Parties, and neither JCP nor WR will have the power to obligate
or bind the other in any manner whatsoever.


 


(g)Counterparts;
Signatures. This Agreement may be executed in any number of counterparts, each of which will be deemed an original, but all
of which together will constitute one and the same instrument. Facsimile, .PDF, or other electronically transmitted signature pages
will be deemed the same as originals.


 


(h)Confidential
Information. Each Party (a “Disclosing Party”), acting in any capacity, may provide the other (the “Receiving
Party”) with, or allow access to, certain proprietary information not generally known to the public. Such information,
whether or not marked as “confidential” or “proprietary,” which is disclosed (orally or otherwise) to or
obtained by the Receiving Party, will be known as “Confidential Information.” The Receiving Party will not,
at any time, disclose, permit the disclosure of, release, disseminate, or transfer, whether orally or by any other means, any part
of the Disclosing Party's Confidential Information to any other person or entity, whether corporate, governmental, or individual,
without the express written consent of the Disclosing Party, except as required by applicable law or in connection with legal process,
in which case the Receiving Party will provide the Disclosing Party with reasonable opportunity to seek a protective order preventing
such disclosure. Notwithstanding the foregoing, disclosure is permitted to those persons who are involved in the final contract
negotiations between the Parties. The provisions of this Section 19(h) will not apply to any Confidential Information which:
(i) at the time disclosed or obtained by the Receiving Party is in the public domain; (ii) after being disclosed or obtained
by the Receiving Party becomes part of the public domain through no act, omission, or fault of either Party; (iii) was in
the Receiving Party's possession at the time of disclosure or receipt and was not acquired, directly or indirectly, under an obligation
of confidence; or (iv) is received by the Receiving Party from a third party after the time it was disclosed or obtained hereunder
and was not acquired by the third party, directly or indirectly, from the Disclosing Party or from a director, officer, employee,
or agent of the Disclosing Party under an obligation of confidence to the Disclosing Party. This Section 19(h) will continue
in full force and effect for a period of three (3) years following the expiration or termination of this Agreement. Each Party
agrees and acknowledges that the other Party will be irreparably harmed in the event of a breach by such Party of any provision
of this Section 19(h), and that, in the event of such breach, monetary damages would be inadequate compensation for such
harm.


 






    	15



    	 



    
 


(i)Non-Disclosure.
Neither Party will publicly disclose the existence of this Agreement or its terms without the prior written consent of the other
Party.


 


(j)U.S. Bankruptcy
Code. The License granted hereunder is and will be deemed to be, for purposes of Section 365(n) of the U.S. Bankruptcy Code,
a license of rights to “intellectual property” as defined under Section 101 of the U.S. Bankruptcy Code. The Parties
agree that a reasonable amount of time within which to accept or reject this Agreement is within ninety (90) days after the filing
date of any bankruptcy petition.


 


[SIGNATURE PAGE FOLLOWS]


 






    	16



    	 



    



 


IN WITNESS WHEREOF,
the Parties have executed this Agreement as of the Effective Date.


 


 


JCP:


 


J. C. PENNEY CORPORATION, INC.


 


 


By:_______________________________________


Name:_____________________________________


Title:______________________________________


 


 


WRS:


 


WILLIAM RAST SOURCING,
LLC


 


By:_______________________________________


Name:_____________________________________


Title:______________________________________





 


 


WRL:


 


WILLIAM RAST LICENSING,
LLC


 


By:_______________________________________


Name:_____________________________________


Title:______________________________________





 


 



    	 



    	 



    








 


Appendix A 


 


Trademark


 


 


 


(See Attached)


 






    	 



    	 



    
 


 


 


 





 






    	 



    	 



    
 


APPENDIX B


 


Sample Royalty Quarterly Payment Report 


 


 


 


(See Attached) 


 



    	 



    	 



    



 


	 	William Rast Royalty Report Summary - Example	 	 	 
	 	Date prepared: 09/20/2011	 	 	 	 
	1	Royalty Period	 	Date	Date	 
	2	Quarterly
    Reporting Period	 	Date	Date	 
	 	Column B	Column C	Column D	Column E	 
	3	Advance
    amount	 	 	                    
    - 	
	 	 	 	 	 	 
	 	SUMMARY
    OF ALL APPLICABLE ROYALTIES	 	 	Royalty
    Calc	 
	4	Current Quarter Total Net Sales	 	0.00	 	 
	5	Current Quarter Net Sales 	 	0.00	0.00	 
	6	Prior Royalties Adjustment 	 	 	0.00	 
	7	Current Quarter Period Royalties for A	(Line 5 + Line 6 + Line 6a)	 	0.00	 
	8	Prior Royalties Reported this Royalty Period
    (Column D)	Current payment (Column E)	 	 	 
	9	Total 
    Royalties	(Line 8 Column D + Column E)	 	0.00	 
	 	 	 	 	 	 
	 	DETERMINATION
    OF SHORTFALL STATUS	 	 	Shortfall
    Calc	 
	10	Guarantee Amount 	 	 	 	 
	11	Advance Payment for Contract Term	(Line 3)	 	0.00	 
	12	Prior Royalties	 	 	0.00	 
	13	Current Royalties (higher of 13D or 13E)	 	0.00	0.00	 
	14	Total Calculated Royalties	(Line 12 + Line 13)	 	0.00	 
	15	Royalties
    Needed to Meet Guarantee	(Line 10 less Line 14) (Exceeds
    minimum if less than 0)	0.00	 
	 	 	 	 	 	 
	 	CALCULATION
    OF PAYMENT DUE	 	 	Payment
    Calc	 
	16	Total Royalties Paid	(Line 14)	0.00	 	 
	17	Total Royalties Due	(Line 14 less Line 11) 	 	0.00	 
	18	Total Previous Payments	(exclude advance)	 	0.00	 
	19	Net Due
    based on applicable sales	(Line 17 less Line 18)	 	0.00	 
	20	Net Due based on contract 	 	 	 	 
	21	Actual
    Payment 	 	 	0.00	 
	 	 	 	 	 	 
	22	**Total
    Payment	(Line
    15 + Line 18+ Line (19 or 20 whichever is higher))	0.00	 
	 	 	 	 	 	 







 






    	 



    	 



    
 





William Rast Royalty Sales
Report - Example










Date prepared: 9/20/2011







 


1st Quarter Current Reporting







 





	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	 	Sub	Description	Store
    Sales Qty	.com
    Sales Qty	Store
    Gross Sales	.com
    Gross Sales	Store
    Returns	.com
    Returns	Store
    Net Sales	.com
    Net Sales	Total
    Net Sales	Royalty	 
	 	xxx	Merchandise
    Category	 	 	 	 	 	 	 	 	 	 	 
	 	xxx	Merchandise
    Category	 	 	 	 	 	 	 	 	 	 	 
	 	xxx	Merchandise
    Category	 	 	 	 	 	 	 	 	 	 	 
	 	xxx	Merchandise
    Category	 	 	 	 	 	 	 	 	 	 	 
	 	xxx	Merchandise
    Category	 	 	 	 	 	 	 	 	 	 	 
	 	xxx	Merchandise
    Category	 	 	 	 	 	 	 	 	 	 	 
	 	xxx	Merchandise
    Category	 	 	 	 	 	 	 	 	 	 	 
	 	xxx	Merchandise
    Category	 	 	 	 	 	 	 	 	 	 	 
	 	xxx	Merchandise
    Category	 	 	 	 	 	 	 	 	 	 	 
	 	xxx	Merchandise
    Category	 	 	 	 	 	 	 	 	 	 	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	 	 	 	 	 	 	 	Subtotal	 	 $                 
    -  	 $               
    -  	 $                 
    -  	 $                 
    -  	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	 	 	 	Total
    Royalty Quarterly Payment	 	 	 $                 
    -  	 







 






    	 



    	 



    
 


APPENDIX C


 


Payment Schedule


 


 


 


(See Attached)


 






    	 



    	 



    
 





Appendix


 


Payment Schedule – William Rast


 


	Royalty Period	Fiscal Qtr	Type of Payment	Due Date	Amount Due
	 	 	 	 	 
	1	Q1	GMR	6/12/2012	***4
	Fiscal 2012	 	Royalty Reconciliation	6/12/2012	***
	 	 	Design Fee	6/12/2012	***
	 	 	 	 	 
	 	Q2	GMR	9/11/2012	***
	 	 	Royalty Reconciliation	9/11/2012	***
	 	 	Design Fee	9/11/2012	***
	 	 	 	 	 
	 	Q3	GMR	12/11/2012	***
	 	 	Royalty Reconciliation	12/11/2012	***
	 	 	Design Fee	12/11/2012	***
	 	 	 	 	 
	 	Q4	GMR	3/19/13	***
	 	 	Royalty Reconciliation	3/19/13	***
	 	 	Design Fee	3/19/13	***


 


 


	Royalty Period	Fiscal Qtr	Type of Payment	Due Date	Amount Due
	 	 	 	 	 
	2	Q1	GMR	6/18/2013	***
	Fiscal 2013	 	Royalty Reconciliation	6/18/2013	***
	 	 	Design Fee	6/18/2013	***
	 	 	 	 	 
	 	Q2	GMR	9/17/2013	***
	 	 	Royalty Reconciliation	9/17/2013	***
	 	 	Design Fee	9/17/2013	***
	 	 	 	 	 
	 	Q3	GMR	12/17/2013	***
	 	 	Royalty Reconciliation	12/17/2013	***
	 	 	Design Fee	12/17/2013	***
	 	 	 	 	 
	 	Q4	GMR	3/18/14	***
	 	 	Royalty Reconciliation	3/18/14	***
	 	 	Design Fee	3/18/14	***


 






    	 



    	 



    
 










	Royalty Period	Fiscal Qtr	Type of Payment	Due Date	Amount Due
	 	 	 	 	 
	3	Q1	GMR	6/17/2014	***
	Fiscal 2014	 	Royalty Reconciliation	6/17/2014	***
	 	 	Design Fee	6/17/2014	***
	 	 	 	 	 
	 	Q2	GMR	9/16/2014	***
	 	 	Royalty Reconciliation	9/16/2014	***
	 	 	Design Fee	9/16/2014	***
	 	 	 	 	 
	 	Q3	GMR	12/16/2014	***
	 	 	Royalty Reconciliation	12/16/2014	***
	 	 	Design Fee	12/16/2014	***
	 	 	 	 	 
	 	Q4	GMR	3/17/15	***
	 	 	Royalty Reconciliation	3/17/15	***
	 	 	Design Fee	3/17/15	***


 


 


	Royalty Period	Fiscal Qtr	Type of Payment	Due Date	Amount Due
	 	 	 	 	 
	4	Q1	GMR	6/16/2015	***
	Fiscal 2015	 	Royalty Reconciliation	6/16/2015	***
	 	 	Design Fee	6/16/2015	***
	 	 	 	 	 
	 	Q2	GMR	9/15/2015	***
	 	 	Royalty Reconciliation	9/15/2015	***
	 	 	Design Fee	9/15/2015	***
	 	 	 	 	 
	 	Q3	GMR	12/15/2015	***
	 	 	Royalty Reconciliation	12/15/2015	***
	 	 	Design Fee	12/15/2015	***
	 	 	 	 	 
	 	Q4	GMR	3/15/16	***
	 	 	Royalty Reconciliation	3/15/16	***
	 	 	Design Fee	3/15/16	***


 


 


 


4 Terms represented by this symbol are considered
confidential. These confidential terms have been omitted pursuant to a Confidential Treatment Request filed with the Securities
and Exchange Commission (“SEC”) and have been filed separately with the SEC.







 






    	 



    	 



    



  


APPENDIX D


 


Existing License Agreements


  


 


		1.	Binding Term Sheet, effective as of December 9, 2009, by and between the WRL and Viva Optique, Inc., which provides for the
license of the Trademark for men’s and women’s eyewear, including sun wear and ophthalmic wear and eyewear cases throughout
the world, for an initial term expiring on December 31, 2013, which term may be extended at the option of the licensee through
December 31, 2016.



 


		2.	Binding Term Sheet, effective as of April 14, 2011, by and between the WRL and RGA Leatherworks, which provides for the license
of the Trademark for Men’s Small Goods throughout the Unites States of America and Canada, for an initial term expiring on
December 31, 2014. WR is in the process of terminating this license due to the licensee’s failure to perform in accordance
with the terms of the license.