LICENSE AGREEMENT
                                     between
                   EVERLAST WORLD'S BOXING HEADQUARTERS CORP.
                                       and
                           ACTIVE APPAREL GROUP, INC.
                                    LICENSEE

                                 (Men's Apparel)
                                    (Canada)







                                Lesser & Harrison
                              Two West 45th Street
                            New York, New York 10036



<PAGE>

                                TABLE OF CONTENTS
                                -----------------

Section       Title                                                         Page

1.            Definitions                                                   1
2.            Grant of Rights                                               2
3.            Term                                                          4
4.            Royalties                                                     6
5.            Payments                                                     10
6.            Books and Records                                            11
7.            Manufacture of Licensed Products
                       Quality Control, Approvals                          12
8.            Samples for Everlast                                         14
9.            Sales Promotion                                              14
10.           Advertising                                                  16
11.           Default                                                      18
12.           Rights After Termination                                     19
13.           Inventory of Licensed Products
                On Termination                                             19
14.           Trademarks                                                   21
15.           Copyright Ownership                                          25
16.           Indemnity                                                    26
17.           Notices                                                      27
18.           Waiver                                                       28
19.           Bankruptcy                                                   28
20.           Assignment                                                   28
21.           Arbitration                                                  29
22.           Significance of Headings                                     30
23.           Entire Agreement                                             30
24.           Governing Law                                                31
25.           No Joint Venture                                             31
26.           Execution and Delivery Required                              31
27.           Force Majeure                                                31
28.           No Representations                                           32
              Licensed Marks                                           Exhibit A

<PAGE>


                                TABLE OF CONTENTS

   Paragraph                        Description                        Page


   1.       Definitions..............................
                     1.1      Licensed Products...................
                     1.2      Contract Territory..................
                     1.3      Net Sales...........................

            2.       Grant of Rights..........................
                     2.1      Scope of Rights.....................
                     2.2      Export from the Territory...........
                     2.3      Sale of Licensed Products by
                              Everlast ...........................
                     2.4      Resolution of Conflicts.............

            3.       Term.....................................
                     3.1      Contract Period.....................
                     3.2      Options to Renew....................

            4.       Royalties................................
                     4.1      Royalty Payments....................
                     4.2      Initial Minimum Royalty.............
                     4.3      Minimums during Option Periods......
                     4.4      Credits Against Royalty.............
                     4.5      Sales Requirement...................
                     4.6      Security Deposit....................
                     4.7      Accountant's Statements.............

            5.       Payments.................................
                     5.1      Interest............................
                     5.2      Payments Medium.....................
                     5.3      Withholding Taxes...................
                     5.4      Conversion of Foreign Currency......

            6.       Books and Records........................

            7.       Manufacture of Licensed Products;
                     Quality Control, Approvals................
                     7.1      Licensor Approval of Designs,
                              Products, Packaging; Delivery
                              of Approval Samples..................
                     7.2      Inspection of production
                              Facilities...........................
                     7.3      Use of Licensed marks; Approval
                              of All Printed Matter................

            8.       Samples for Everlast......................


<PAGE>


            9.       Sales Promotion...........................
                     9.1      Responsibility for Promotion.........
                     9.2      Sales Representatives and
                              Trade Shows..........................
                     9.3      Licensee's Marketing Programs........
                     9.4      Catalogs and Price Lists.............
                     9.5      Sale of Licensed products to
                              Everlast.............................

            10.      Advertising...............................
                     10.1     Minimum Advertising Expenditures.....
                     10.2     Verification of Advertising
                              Expenditures.........................
                     10.3     Approval of Advertising..............

            11.      Defaults..................................
                     11.1     Licensee Defaults in Payments........
                     11.2     Other Defaults.......................
                     11.3     Remedies Cumulative..................

            12.      Rights After Termination

            13.      Inventory of Licensed Products
                     on Termination............................
                     13.1     Disposal of Inventory................
                     13.2     Payment of Royalties.................
                     13.3     Everlast's Right to Purchase
                              Inventory............................

            14.      Trademarks................................
                     14.1     Ownership of Licensed Marks..........
                     14.2     Registration and Protection
                              of Licensed Marks....................
                     14.3     Reservation of All Rights to
                              Licensed Marks by Everlast...........
                     14.4     Notification of Third Party
                              Infringement.........................
                     14.5     Legal Actions........................
                     14.6     Defense of Adverse Claims............
                     14.7     Licensee Cooperation.................

            15.      Copyright Ownership.......................

            16.      Indemnity.................................
                     16.1     Licensee's Indemnity.................
                     16.2     Product Liability Insurance.........
                     16.3     Primary and Umbrella Coverage........

            17.      Notices...................................

            18.      Waiver....................................



<PAGE>


            19.      Bankruptcy................................

            20.      Assignment................................

            21.      Arbitration...............................
                     21.1     American Arbitration Association.
                     21.2     Arbitration in New York..........
                     21.3     Enforcement in New York..........
                     21.4     Service of Notice................

            22.      Significance of Headings..................

            23.      Entire Agreement..........................

            24.      Governing Law.............................

            25.      No Joint Venture..........................

            26.      Execution and Delivery Required...........

            27.      Force Majeure.............................

            28.      No Representations........................

                     Licensed Marks.......................Exhibit A



<PAGE>

                                LICENSE AGREEMENT

         THIS  AGREEMENT  made and  entered  into as of the 23rd day of October,
1998 by and between  Everlast  World's  Boxing  Headquarters  Corp.,  a New York
corporation of 750 East 132nd Street,  Bronx, New York 10454  ("Everlast"),  and
Active Apparel Group, Inc., a Delaware corporation having its principal place of
business at 1350 Broadway, Suite 2300, New York, New York ("Licensee").

                               W I T N E S S E T H

         WHEREAS,  Everlast is the sole owner of or has the right to license the
trademarks shown and described on Exhibit A hereto  (hereinafter  referred to as
"Licensed Marks"); and

         WHEREAS, Licensee desires to obtain the right to use the Licensed Marks
in conjunction with the advertisement, promotion and sale of various articles to
be manufactured by Licensee hereunder; and

         WHEREAS, Everlast is willing to grant such rights to Licensee.

         NOW, THEREFORE, for and in consideration of the premises and
of the mutual promises and conditions herein contained, the parties
do hereby agree as follows:

         1. DEFINITIONS.

         As used  herein,  the  following  terms  shall be  defined as set forth
below:


<PAGE>

         1.1   "Licensed   Products"   shall  mean  mens  (a)   outerwear,   (b)
activewear/swimwear,  and (c)  casualwear,  excluding  rainwear,  jeanswear  and
leather apparel, with or without genuine or simulated fur.

         1.2  "Contract   Territory"  shall  mean  Canada,   its  Provinces  and
possessions.

         1.3 "Net  Sales"  shall  mean the  gross  sales  price of all  Licensed
Products shipped and invoiced by Licensee pursuant to this Agreement, less trade
discounts,  shipping  charges,  returns and allowances,  and sales taxes (or any
use,  value-added  or similar  taxes,  but in no event to include  any income or
franchise  taxes)  included  therein  whether  or not  separately  stated on the
invoice.

         2. GRANT OF RIGHTS.
            ---------------

         2.1 Everlast  grants to Licensee the exclusive right and license to use
the Licensed Marks only within the Contract Territory during the Contract Period
as  defined  in  Paragraph  3.1  below  in  connection  with  the   manufacture,
advertisement, promotion, packaging, labeling, sale and distribution of Licensed
Products.  Everlast  represents  that it has the right to grant  said  right and
license and further there is no previous  license of similar import presently in
existence  covering the Contract  Territory.  It is understood that Everlast may
use the Licensed Marks on products other than the Licensed  Products  within the
Contract  Territory  and may also use the  Licensed  Marks  outside the Contract
Territory on the same classification of products as the Licensed Products.

                                        2

<PAGE>

         2.2  Licensee  shall not export  Licensed  Products  from the  Contract
Territory or sell Licensed Products to any distributor which it knows intends to
export Licensed Products from the Contract Territory.  In addition,  if Licensee
learns that any of its  customers or any  sub-contractor  has exported  Licensed
Products from the Contract  Territory,  it shall cease selling Licensed Products
to  such   customer,   or  buying   from  such   sub-contractor,   unless   such
customer/sub-contractor  agrees  not to  export  Licensed  Products  thereafter.
Nothing  herein  shall be deemed  to  preclude  Licensee  from  having  Licensed
Products   manufactured   for   Licensee   by   subsidiaries,    affiliates   or
sub-contractors  located  outside of the  Contract  Territory  for  distribution
solely within the Contract Territory.

         2.3   Notwithstanding  the  provisions  of  subparagraph  2.1  of  this
Agreement,  Everlast may sell and deliver to customers in the Contract Territory
any  Licensed  Products  from time to time listed or  portrayed  in any Everlast
Product Catalog or Everlast flyers. Everlast may fulfill any orders for any such
products  received from any customers  within the Contract  Territory,  provided
that the Licensed  Products  specified in such orders are listed or portrayed in
any such Everlast Product Catalog or flyer.

         2.4 Licensee  hereby  recognizes  and  acknowledges  that Everlast is a
party to  license  agreements  with  other  licensees  for the  manufacture  and
distribution of various products in numerous categories, product classifications
and territories of the world

                                        3

<PAGE>

and that evolving changes make it difficult to define with absolute  specificity
the various products covered by different licenses granted by Everlast. Everlast
and  Licensee  agree to use their best  efforts to avoid any  conflicts  between
Licensed Products and products covered by other licenses granted by Everlast. In
the event of conflict  between this  Agreement and other  license  agreements to
which  Everlast is or becomes a party,  Everlast  reserves  the right to resolve
such  conflicts  in its absolute  discretion,  taking into account the intent of
this  Agreement  with  respect to the license  granted to Licensee  for Licensed
Products and the protection of the Everlast trademarks.  Everlast's decisions in
resolving any conflicts shall be final and binding.

         2.5 In the performance of its obligations under this Agreement, and the
design, formulation,  marketing, advertising, labeling, sale and distribution of
the  Licensed  Products,  the  Licensee  shall at all times  observe and satisfy
completely the requirements of all statutes,  laws, ordinances,  regulations and
the  like of  every  national,  state,  provincial,  or  local  governmental  or
governmental agency having or claiming jurisdiction.

         3. TERM.
            ----

         3.1 The initial term  ("Contract  Period") of this  Agreement  shall be
three (3) years and commencing  January 1, 1999 and continuing  through December
31,  2001.  The  term  "Contract  Year"  shall  refer  initially  to the  period
commencing  January  1,  1999  and  continuing  through  December  31,  1999 and
thereafter to each twelve

                                        4

<PAGE>

(12)  month  period  commencing  on each  January  1st  during  the term of this
Agreement, whether the same shall occur during the Contract Period or during any
Option  Period as  defined  in  Paragraph  3.2 below.  The term  "Contract  Year
Quarter"  shall refer  initially  to the period  commencing  January 1, 1999 and
continuing  through March 31, 1999 and thereafter to each successive three month
period during each Contract Year commencing April 1, 1999 and thereafter.

         3.2 Provided Licensee is not in default hereunder,  Licensee shall have
the option to renew this  Agreement for two (2) successive  additional  terms of
five (5)  years  each  commencing  on  January  1,  2002  and  January  1,  2007
respectively (each an "Option Period") upon giving to Everlast written notice as
provided in Paragraph 17 of its  intention to do so at least one hundred  twenty
(120)  days  prior to the  expiration  of the then  existing  term  hereof.  The
exercise of each of said options shall be effective  only if: (i) this Agreement
shall be in full force and effect at the time of  exercise by Licensee of any of
said options; (ii) Licensee shall not be in default in the performance of any of
its  obligations  under this  Agreement  at the time of  exercise of any of said
options;  and (iii) during the twelve month period ending  September 30, 2001 in
the Third  Contract  Year  Licensee's  Net  Sales of  Licensed  Products  in the
Contract  Territory shall amount to at least  $3,300,000 for the exercise of the
first  option  granted  herein  and such Net Sales for the twelve  month  period
ending on September 30th in the last Contract Year of each Option Period after

                                        5

<PAGE>

the  Contract  Period  shall  amount to at least the annual  guaranteed  minimum
royalty for such  Contract  Year under  subparagraph  4.2 or  subparagraph  4.3,
whichever  shall be  applicable,  divided by .06 with respect to the exercise of
the option for each successive Option Period. During each Option Year the annual
guaranteed  minimum  royalty shall be calculated and paid in accordance with the
provisions of subparagraphs 4.2 and 4.3.

         4. ROYALTIES.
            ---------

         4.1 Within thirty (30) days  following the  conclusion of each Contract
Year Quarter, Licensee shall deliver to Everlast, in the same manner as required
for notices under  Paragraph 17, an itemized  statement  setting forth the total
Net Sales of Licensed  Products  during said  Contract  Year Quarter and, at the
same time,  shall pay to  Everlast a royalty at the rate of six (6%)  percent of
Net Sales of all Licensed  Products.  The itemized  statement  referred to above
shall  contain two (2)  separate  tabulations  for each  Country in the Contract
Territory:  (i) a  listing  by style  number  of the  total  units and Net Sales
thereof for the Contract Year Quarter for which the statement is given; and (ii)
a listing by customer showing the customer's name, address and Net Sales for the
Contract Year Quarter for which the statement is submitted.

         4.2  Licensee  shall pay to Everlast a guaranteed  minimum  royalty for
each Contract Year as follows:


                                        6

<PAGE>


                                    Annual Guaranteed         Annual Minimum
         Contract Year               Minimum  Royalty          Net Sales
         -------------              -----------------         --------------

         First                       $72,000                    $1,200,000
         Second                      144,000                     2,400,000
         Third                       216,000                     3.600,000

The guaranteed  minimum royalty shall be paid in twelve (12) equal  installments
on the first day of each month during each  Contract  Year,  so that,  the first
payment of annual  guaranteed  minimum royalty amounting to $6,000 shall be paid
on January 1, 1999.

         4.3 If Licensee exercises the options granted to it in subparagraph 3.2
of this Agreement,  the annual guaranteed minimum royalty for each Contract Year
of each Option Period shall be the greater of (i) seventy-five  (75%) percent of
the actual royalties payable for the prior Contract Year (whether or not falling
within the Contract  Period or an Option  Period) or (ii) an amount equal to the
annual  guaranteed  minimum  royalty for the prior  Contract Year plus ten (10%)
percent thereof.  The annual guaranteed  minimum royalty shall be paid in twelve
(12) equal installments on the first day of each month during each Contract Year
of each Option Period.

         4.4 The foregoing  payments shall  constitute a  non-refundable  annual
guaranteed  minimum royalty for the then Contract Year and shall not be credited
towards royalties for succeeding Contract Years.  Notwithstanding the foregoing,
during any Contract  Year the total  amounts  actually paid during such Contract
Year to date (both

                                        7

<PAGE>

guaranteed  and overages) may be deducted  from all  installments  of the annual
minimum  guaranteed  royalty due to date, and if the difference is less than the
annual guaranteed  minimum royalty payment then becoming due, the amount payable
towards the annual guaranteed minimum royalty then due shall be such difference.

         4.5 In the event that the total  royalties  payable to  Everlast  based
upon Net Sales for any  Contract  Year  commencing  on or after  January 1, 2000
shall  be  less  than  the  annual  guaranteed  minimum  royalty  payable  under
subparagraph  4.2 or 4.3 above for such Contract  Year,  Everlast shall have the
right to terminate this Agreement by notice to Licensee given within one hundred
twenty  (120) days from the end of such  Contract  Year.  If  Licensee  fails to
submit its report of Net Sales for any Contract  Quarter when due,  Everlast may
terminate this  Agreement  within sixty (60) days after the end of such Contract
Year  Quarter as though  Licensee  had failed to achieve  the  required  royalty
volume for the  current  Contract  Year,  except  that  Licensee  shall have the
opportunity to cure such default within thirty (30) days after receipt of notice
from Everlast that such Report of Net Sales has not been received.

         4.6 In the event that the royalties actually earned with respect to Net
Sales  of (a)  men's  outerwear,  (b)  men's  activewear/swimwear  or (c)  men's
casualwear, each considered as a separate category, shall be equal to less than,
ten (10%)  percent  of the annual  guaranteed  minimum  royalty as  hereinbefore
provided during the second Contract Year, or twenty (20%) thereof during any

                                        8

<PAGE>

subsequent  Contract  Year,  then  Everlast may elect to terminate  this License
Agreement as to such category only, by written notice given no later than ninety
(90) days after  Everlast has actually  received from the Licensee the statement
referred to in subparagraph  4.1 for the final Contract Quarter of such Contract
Year. If Everlast shall make such an election, then for each subsequent Contract
Year the guaranteed annual minimum royalty provided in subparagraphs 4.2 and 4.3
as the case may be  shall  be  reduced  by  twenty  (20%)  thereof,  and (b) the
Licensee's  inventory  of Licensed  Products in the  category  which has been so
terminated shall be subject to the provisions of paragraph 13 hereof.

         4.7 Simultaneously  with the execution of this Agreement Licensee shall
pay to Everlast with respect to the First  Contract  Year,  and on or before the
first day of each  subsequent  Contract Year, an amount equal to three (3) times
the monthly  payment  with respect to the annual  guaranteed  royalty to be paid
pursuant to  subparagraphs  4.2 and 4.3 of this  Paragraph  during the  relevant
Contract Year. The amount to be paid upon the execution of this agreement  shall
be $18,000.  Such amount shall be held as security,  without  interest,  for the
faithful  performance  of the  obligations  on the  part of the  Licensee  to be
performed under this Agreement. The amount of the security then held by Everlast
and not otherwise  previously  applied will be carried over to the next Contract
Year and shall  serve to reduce the  payment  required to be made upon the first
day of the next Contract Year pursuant to this subparagraph

                                        9

<PAGE>

4.6. Upon the expiration or other  termination of this Agreement,  the remaining
balance  held by  Everlast  pursuant  to this  subparagraph  4.6 shall be repaid
without interest to the Licensee, provided that the Licensee has fully performed
each of the obligations on its part to be performed hereunder.

         4.8  Within  ninety  (90) days after the close of each  Contract  Year,
Licensee will deliver to Everlast a financial  statement of Licensee prepared by
a Certified Public Accountant or similar professional licensed under the laws of
the  jurisdiction  where its  prinicpal  office  shall be located,  containing a
balance  sheet as at the end of the fiscal year of Licensee  ending  during such
Contract  Year,  an  income  statement  for such  fiscal  year and a source  and
application  of  funds  analysis  for  such  fiscal  year,  together  with  such
explanatory  notes  as may be  appropriate,  all  prepared  in  accordance  with
Generally  Accepted  Accounting  Principles  consistently  applied.  Failure  to
provide such financial statement on a timely basis shall be a material breach of
this Agreement.

         5. PAYMENTS.
            --------

         5.1 Past due payments  hereunder shall bear interest at the rate of one
and one-half  (1-1/2%) percent per month commencing  fifteen (15) days after the
same shall fall due.

         5.2 All payments by Licensee to Everlast under this Agreement  shall be
made in Canadian  Dollars by (a) check drawn on a Canadian  bank to the order of
Everlast Sports  International,  Inc.and  delivered to Everlast at P.O.Box 3343,
Commerce Court Postal

                                       10

<PAGE>

Station, Toronto, Ontario M5L 1K1 in the manner set forth in Paragraph 17 hereof
or (b) wire  transfer  to  Canadian  Imperial  Bank of  Commerce,  Main  Branch,
Commerce Court, Toronto,  Ontario M5L 1G9, ABA No. 00002010,  for the account of
Everlast Sports International Inc.., a/c no. 30-57313,  or to such other address
or account as Everlast may designate from time to time.

         5.3 Any withholding tax levied by any government or governmental agency
in connection with the payment of sales royalties or annual  guaranteed  minimum
royalty to be paid to Everlast under this  Agreement  shall be borne by Everlast
but only if  actually  paid by  Licensee to the  appropriate  taxing  authority.
Licensee  shall  deduct  any  required  withholding  tax from the amount of such
payments,  and shall send to Everlast  without delay an appropriate  certificate
showing the payment of such withholding tax. Failure to make such payment as due
and to send such certificate  shall require  immediate  repayment to Everlast of
any amounts so deducted.

         5.4 All references to currency throughout this Agreement shall refer to
Canadian dollars, except as otherwise specifically provided herein.

         6. BOOKS AND RECORDS.
            -----------------

         Licensee  agrees that it will keep  accurate and  complete  records and
books of  account  showing  all  Licensed  Products  shipped by it and the price
thereof in accordance with Generally Accepted Accounting Principles. Everlast or
its independent Certified

                                       11

<PAGE>

Public  Accountant  shall have the right at all  reasonable  times during normal
business hours and on reasonable  notice to Licensee (prior to the expiration of
two (2) years after the  termination  of the Contract  Year) to inspect and make
copies  of the books and  records  of  Licensee  insofar  as they  relate to the
computation  of royalties to be paid to Everlast  hereunder  and the shipment of
Licensed Products pursuant to this Agreement.  If, upon any such inspection,  it
shall appear that the royalty previously  reported for any Contract Year Quarter
has been understated by five (5%) percent or more, the expense of any such audit
shall be borne by the Licensee.

         7. MANUFACTURE OF LICENSED PRODUCTS; QUALITY CONTROL, APPROVALS.
            ------------------------------------------------------------

         7.1 Licensee recognizes that Everlast has a reputation for high quality
and that  Licensee  must,  therefore,  maintain  such  quality  on all  Licensed
Products.  Licensee  agrees  that  Everlast  shall  have the right to approve or
disapprove:  (i)  the  quality,  style  and  design  of  all  Licensed  Products
(including packaging); (ii) the presentation or style of the Licensed Marks used
in connection  therewith;  and (iii) production samples of all Licensed Products
(all such samples being  required to be submitted to Everlast,  duly  documented
with duty and freight prepaid, prior to sale). In connection with the foregoing,
Licensee shall submit to Everlast  "story  boards",  fabric samples and sketches
for initial approval and, when prepared, prototype samples and not less than

                                       12

<PAGE>
one (1) production  sample of each style (together with all fabric  swatches) of
each of the Licensed Products (as provided in Paragraph 8).

         7.2 Everlast  shall have the right to inspect at all  reasonable  times
the production  facilities of Licensee or its subcontractors and to receive from
Licensee  production  samples of Licensed Products without charge and make tests
thereof so as to  reasonably  assure  Everlast  that the  nature and  quality of
Licensed Products are in accordance with the requirements of this Agreement. Any
items  submitted for approval  hereunder at Everlast's  address set forth herein
shall be deemed to have been approved if same are not  disapproved  by notice to
Licensee in writing within twenty (20) days after receipt of shipment thereof by
Everlast.  Everlast  agrees  that any item  submitted  will not be  unreasonably
disapproved and, if it is disapproved,  that Licensee will be advised in writing
of the specific grounds therefor.  Licensee further agrees to: (i) sell Licensed
Products  bearing the Licensed Marks only to retail stores of the type generally
offering  products  bearing the "Everlast"  label in the U.S.A.,  or products of
comparable quality,  and (ii) remove the Licensed Marks from "irregulars" to the
extent  practicable  or, where not  practicable,  to affix with a stamp the word
"Irregular" on the label.

         7.3 Licensee will cause to appear on the Licensed Products and on their
containers  and  labels  and the like,  and on all  advertising  or  promotional
material used in connection therewith, such legends,

                                       13

<PAGE>

markings  and notices as Everlast  may  reasonably  request,  including  without
limitation the legend "MADE UNDER LICENSE FROM TRADEMARK OWNER EVERLAST  WORLD'S
BOXING  HEADQUARTERS  CORP." Such legend shall also appear on any other  printed
matter in which the Everlast name or logo is used.  Printed matter shall include
but not be limited  to  stationery,  letterheads,  invoices,  envelopes,  credit
memos,  shipping  labels and business cards.  Before use,  Licensee shall submit
copies  thereof to Everlast for its approval.  Everlast  shall have the absolute
right to edit, alter or amend such material and the form and manner in which the
Licensed Marks are displayed.

         8. SAMPLES FOR EVERLAST.
            --------------------

         During the Contract  Period,  Licensee shall supply to Everlast,  at no
charge,   duly   documented   with  duty  and  freight   prepaid,   two  samples
representative  of  each  style  of  Licensed  Products  for  Everlast's  use in
connection with Everlast's museum  collection.  Each sample shall be tagged with
the style number and wholesale  selling  price.  During the first  Contract Year
Quarter of each Contract Year Licensee shall furnish to Everlast  without charge
two production  samples of each style of Licensed  Product then offered for sale
by Licensee.  Each sample  shall be tagged with the style  number and  wholesale
selling price.

         9. SALES PROMOTION.
            ---------------

         9.1 Licensee agrees that it will, during the Contract Period:  (i) make
diligent effort to promote, develop,  manufacture,  advertise, sell and ship the
Licensed Products; (ii) continuously

                                       14

<PAGE>

and diligently fill all accepted purchase orders for Licensed Products (Licensee
not being required to fill such orders received from customers lacking financial
capacity  therefor);  and (iii)  procure  and  maintain  facilities  and trained
personnel  sufficient and adequate to accomplish  the foregoing.  A cessation of
the above with  respect to any  category  listed in the  definition  of Licensed
Products  for a  continuous  period of ninety  (90) days  shall be  grounds  for
immediate  termination  of such  category at any time  thereafter  at Everlast's
option.

         9.2 In fulfilling its obligations hereunder, Licensee shall engage such
sales  representatives  and other  personnel  and  shall  display  the  Licensed
Products  at  merchandise  markets  and trade  shows  (which  can take  place at
Licensee's showroom) as will maximize sales of Licensed Products.

         9.3 Licensee  agrees to provide  Everlast with written  descriptions of
its  marketing  and  distribution  programs in such detail as may be  reasonably
requested  from time to time by Everlast  prior to their  implementation  and as
they may be modified  from time to time.  Licensee  shall not  proceed  with its
initial  marketing and distribution  programs without the prior written approval
of Everlast.  Licensee shall not proceed with any  modification of its marketing
and distribution programs if Everlast notifies Licensee in writing that Everlast
disapproves of such  modification.  The marketing and  distribution  plan or any
modifications  thereof  shall be deemed to have  been  approved  if same are not
disapproved by

                                       15

<PAGE>

notice to Licensee in writing  within  twenty (20)  working  days after  receipt
thereof  by  Everlast.  Everlast  agrees  that  any plan  submitted  will not be
unreasonably  disapproved  and,  if it is  disapproved,  that  licensee  will be
advised in writing of the specific grounds therefor.

         9.4 On February 1st and August 1st of each Contract Year Licensee shall
promptly submit to Everlast a catalog of all current  Licensed  Products showing
an  illustration  of each Licensed  Product  being sold by Licensee,  the style,
number  and a sales  description  thereof  together  with  Licensee's  wholesale
selling price therefor.

         9.5 Licensee  agrees to sell to Everlast  such  quantities  of Licensed
Products as Everlast may order for its own account for resale or distribution by
Everlast and the price of such  Licensed  Products  shall be no greater than the
lowest  price  offered by  Licensee  to any person,  firm or  corporation,  less
twenty-five  (25%) percent of the selling  price of such Licensed  Products with
sales  terms net 10 EOM.  Such  purchases  shall not be  subject  to  royalty or
advertising  requirements.  Everlast will not sell Licensed  Products  below the
lowest price offered by Licensee to any person, firm or corporation as reflected
in Licensee's quarterly reports.

         10. ADVERTISING.
             -----------

         10.1 Licensee agrees to expend on advertising in each Contract Year, an
amount equal to not less than two and one-half (2.5%) percent of Net Sales. Such
advertising  expenditures  shall be exclusive of advertising  production  costs,
tags, packaging, point

                                       16

<PAGE>

of sale displays,  compensation to Licensee's employees, or travel expenses. The
minimum  advertising  expenditure  for this  Agreement  shall  be not less  than
$30,000 during the First Contract Year, $60,000 during the Second Contract Year,
and $90,000 during the Third Contract Year.  During each Option Year such amount
shall be equal to  41.67%  of the  annual  guaranteed  minimum  royalty  payable
pursuant to subparagraph 4.3. Together with each quarterly  statement  submitted
pursuant to Paragraph 4, Licensee  shall submit to Everlast a detailed  schedule
of such  expenditures  made  during the said  quarter  together  with  copies of
invoices, tear sheets, and all other substantiating documents.

         10.2 Licensee shall certify the amount actually  expended for the above
advertising  by a written  statement  certified to be correct by the  President,
Chief Operating Officer, or Chief Financial Officer of Licensee. If the required
amount has not been spent, the unspent balance shall be spent within ninety (90)
days  after  the  close of such  Contract  Year and  shall  be  deemed  to be an
advertising expenditure for such Contract Year. This expenditure shall in no way
affect or be  credited  to the  required  amount to be spent for any  subsequent
Contract Year. If the required expenditures shall not have been spent by the end
of such  ninety  (90) day period,  the  deficiency  shall be paid to Everlast as
additional royalties hereunder.

         10.3 Licensee  agrees that no use of the Licensed  Marks or of any item
used in connection therewith will be made unless and until

                                       17

<PAGE>

the same has been  approved by  Everlast.  Everlast  agrees  that any  material,
advertising or otherwise, submitted for approval hereunder at Everlast's address
set  forth  herein  shall be deemed  to have  been  approved  if the same is not
disapproved  by notice to Licensee in writing  given within  twenty (20) working
days after receipt thereof by Everlast.  Everlast agrees that any item submitted
will not be unreasonably disapproved,  and, if it is disapproved,  that Licensee
will be advised in writing of the specific grounds therefor.

         11. DEFAULT.
             -------

         11.1 If  Licensee  at any time  shall be in default of payment of sales
royalties or any  guaranteed  minimum  royalty  payments and such default is not
cured  within  ten (10) days  after  receipt of  written  notice  from  Everlast
specifying  such default and Licensee has failed to cure the default  within ten
(10) days after receipt of such notice,  Everlast may terminate this  Agreement,
notice of which shall specify a  termination  date not sooner than ten (10) days
after the date such default should have been cured.

         11.2 If Licensee  at any time shall fail to perform any other  material
undertaking  or  obligation  hereunder  and if such  default is not cured within
thirty  (30) days  after  Everlast  shall  have given  Licensee  written  notice
specifying  such  default  (provided,  however,  that in the event such  default
cannot reasonably be cured within such thirty (30) days, and Licensee  commences
to cure the default and  continues  diligently  therewith  until the default has
been

                                       18

<PAGE>

cured, Licensee shall not be deemed during such period to be in default) then in
such event, Everlast may terminate this Agreement, notice of which shall specify
a  termination  date not  earlier  than  thirty  (30) days after the date of the
notice of termination.

         11.3 The termination  rights set forth in  subparagraphs  11.1 and 11.2
shall not constitute the exclusive  remedy of Everlast  hereunder.  Everlast may
resort to such other  cumulative  remedies as it would have been  entitled to if
this Paragraph had been omitted from this Agreement, including the right to seek
damages.

         12. RIGHTS AFTER TERMINATION.
             ------------------------

         From and after the termination of this Agreement,  all of the rights of
Licensee  to the use of the  Licensed  Marks,  except as  hereinafter  expressly
provided in the Paragraph next  following,  shall cease  absolutely and Licensee
shall not thereafter advertise,  promote, distribute or sell any item whatsoever
bearing  any  Licensed  Mark.  As used in this  Agreement,  "termination"  shall
include  "expiration"  of  this  Agreement.   Before  the  termination  of  this
Agreement,  licenses for the Licensed Marks may be granted by Everlast to others
in  connection  with  the  advertisement,  promotion  and  sale of the  Licensed
Products, the shipment of which is made after the termination of this Agreement.

         13. INVENTORY OF LICENSED PRODUCTS ON TERMINATION. 
             --------------------------------------------- 

         13.1  Within ten (10) days after the  notice of  termination,  Licensee
shall  submit to  Everlast  a written  statement  (as of the  termination  date)
indicating:

                                       19

<PAGE>

         (i) the  quantity  and  description  of each  model or style  number of
Licensed Products in inventory or on hand;

         (ii) the  quantity  and  description  of each model or style  number of
merchandise on order, incoming or in the process of being manufactured;

         (iii) the quantity and  description  of all open orders from  customers
together with the name of each such customer(s); and

         (iv) within ten (10) days after the  termination  date,  Licensee shall
meet with a  representative  of Everlast to work out a full payment  schedule of
royalties payable to the date of termination which is acceptable to Everlast.

         Only after all of the terms and  conditions of this  subparagraph  13.1
have been  satisfied  will  Everlast  grant to  Licensee  the right to sell such
inventory of Licensed  Products  within  one-hundred and twenty (120) days after
the termination date.

         13.2 Such sales are to be  reported  by  Licensee in the same manner as
set forth in  subparagraph  4, but  within  ten (10) days  after the end of each
calendar month and such statement  shall be accompanied by a check in payment of
royalties for such sales.

         13.3  In  addition  to  Licensee's  obligations  in  the  event  of the
expiration of this Agreement or the  termination of this Agreement  prior to the
expiration date of the Contract Period or any Option Period Everlast may, at its
option,  purchase  from  Licensee  any  part of such  inventory  on hand on such
termination date for a purchase

                                       20

<PAGE>

price  of  sixty  (60%)  percent  of  Licensee's  lowest  actual  selling  price
(excluding  "seconds"  or  "irregulars"),  and the amount due to Licensee on any
such purchase by Everlast may be applied  against any sum then owing to Everlast
by Licensee.  Such purchase  shall be packed and shipped  pursuant to Everlast's
instructions, F.O.B. shipping point within the United States.

         14. TRADEMARKS.
             ----------

         14.1 Licensee  recognizes the  proprietary  interest of Everlast in the
names  "Everlast"  and "Choice of Champions"  and in the logo style in which the
names are registered as a trademark in the United States and elsewhere. Licensee
will not make any use  thereof  nor  authorize  anyone  else to do so  within or
outside  the  Contract  Territory  except  as  specifically  permitted  by  this
Agreement.  Everlast  represents that it is the sole owner of the Licensed Marks
and has full power and authority to grant the license covered by this Agreement.

         14.2 Should Everlast,  at any time or times during the Contract Period,
desire to register  an  additional  trademark  or  trademarks  which would cover
Licensed Products and/or to register Licensee as a user thereof,  Licensee shall
without charge execute any and all documents which Everlast  reasonably believes
to be necessary or desirable for registration or protection of such trademark or
trademarks in the name of Everlast. Upon registration of any such trademark: (i)
Everlast  shall  grant to  Licensee  a  license  for the use of such  registered
trademark on or in connection with the

                                       21

<PAGE>

advertisement,  promotion and sale of Licensed Products,  which license shall be
coextensive  and  coterminous  with the rights  granted  hereunder  with respect
thereto and shall require no increase in the payments set forth herein; and (ii)
Licensee  shall  thereafter  include on subsequent  printing or  manufacture  of
materials bearing the Licensed Marks the appropriate trademark notice.

         14.3 All use of any such  trademark or  trademarks by Licensee on or in
connection with Licensed Products produced  hereunder shall inure to the benefit
of  Everlast.  All  rights to such  trademark  or  trademarks  other  than those
specifically  granted  hereunder  are  reserved by Everlast  for its own use and
benefit.  Upon the  expiration or other  termination  of this  Agreement for any
reason whatsoever,  all rights in the Licensed Marks shall automatically  revert
to Everlast  and Licensee  shall not  thereafter  use the Licensed  Marks or any
similar mark or name except as specifically  permitted by Paragraph 13. Licensee
shall at any time whether during or after the term of this Agreement execute any
documents reasonably required by Everlast to confirm Everlast's ownership of all
such rights.

         14.4 In the event that either  party to this  Agreement  shall learn of
any use by any person of a trademark or  trademarks  confusingly  similar to the
Licensed Marks in the Contract  Territory,  such party shall promptly notify the
other in writing of such use. In such event, if requested by Everlast,  Licensee
shall

                                       22

<PAGE>

join with  Everlast,  at Everlast's  expense,  in such action as Everlast in its
reasonable discretion may deem advisable for the protection of its rights in and
to the Licensed Marks.

         14.5 In the event that any person  other  than  Licensee  or a customer
shall use the  Licensed  Mark in a manner  which  infringes  upon the  exclusive
license hereby granted,  Everlast shall,  following  written notice thereof from
Licensee,  initiate  any action  which it deems  appropriate  to  restrain  such
infringement with respect to the Licensed Products.  In such event, if requested
by Everlast,  Licensee shall join with Everlast,  at Everlast's  expense in such
action as Everlast  in its  reasonable  discretion  may deem  advisable  for the
protection of the respective  rights in the Licensed Marks. If Everlast  decides
to take no action to protect the Licensed  Marks in a  particular  case of a use
thereof by a third party in any part of the Contract  Territory and disapproving
of any such action by Licensee, Everlast shall so advise Licensee in writing. If
there should be a disagreement  between the parties as to the  reasonableness of
such  decision by Everlast to withhold  its  approval of any action by Licensee,
then no such action  shall be taken by Licensee and  Everlast  shall  compensate
Licensee  for losses  actually  sustained as a result of the failure to take any
such action if it is held that the  withholding  of approval by Everlast  was in
fact  unreasonable  or, in the  alternative,  Licensee  shall  have the right to
terminate  this  Agreement  on thirty (30) days  notice to Everlast  without any
liability on the part of Everlast.

                                       23

<PAGE>

Neither party shall,  without the consent of the other,  voluntarily  settle any
claim or suit of the kind referred to in this Article 14 in a manner which might
in any way adversely affect or be in derogation of any rights of the other under
this Agreement.  In the event of disagreement between the parties as to any such
settlement,  the party thus denied the right to make such settlement  shall have
the right, within thirty (30) days after receipt of notice of refusal to consent
by the other party,  to terminate this Agreement and upon any such  termination,
all rights and obligations of both parties  hereunder shall terminate except for
any monies due from either party to the other.

         14.6 Everlast shall, at its own cost and expense,  defend and indemnify
Licensee, any third party claiming under it, and any direct or indirect customer
of  Licensee,  from and  against  any and all  claims,  loss,  damage,  expense,
liability,  suits,  actions,  proceedings  and judgments and any cost whatsoever
including reasonable attorneys fees arising, sustained, rendered or incurred, by
reason of use of the Licensed  Marks,  or the exercise of any other rights under
this  Agreement,  whether based upon a claim of  infringement or any facts which
constitute a breach or violation of any of  Everlast's  representations  in this
Agreement,  and  whether  such  claims,  suits,  actions  or  proceedings,   are
rightfully or wrongfully  made,  brought or filed;  provided that Licensee shall
promptly  advise  Everlast of any such claim,  suit,  action or  proceeding  and
afford Everlast the opportunity to defend any such

                                       24

<PAGE>

claim or action through  counsel of its own choosing and at its own expense.  If
requested by Everlast, Licensee shall join with Everlast, at Everlast's expense,
in such defense.  Licensee  shall  execute any papers  necessary or desirable in
connection  with any such  suit and  shall  testify  in any such  suit  whenever
required to do so by Everlast,  all,  however,  at the expense of Everlast  with
respect to travel expenses and similar out-of-pocket disbursements.

         14.7 Licensee agrees to execute,  acknowledge and deliver, without cost
to  Everlast,  such  additional  documents as may be necessary in the opinion of
counsel for  Everlast  under the laws of each  jurisdiction  within the Contract
Territory to protect the Trademark rights of Everlast including, but not limited
to, Registered User Agreements.

         15. COPYRIGHT OWNERSHIP.
             -------------------

         Any and all copyrights which may exist, or come into being with respect
to any and all  designs of or with the  Licensed  Marks for any of the  Licensed
Products,  labels, hang tags, advertising or promotional materials used pursuant
to this Agreement  shall be the property of Everlast.  However,  notwithstanding
the foregoing  exclusive designs and the like (and their respective  copyrights)
created by and for Licensee which do not include or refer to the Licensed Marks,
are and shall remain the property of Licensee.  Licensee shall place appropriate
copyright  notices  thereon.  Licensee shall furnish Everlast with copies of all
copyright filings.

                                       25

<PAGE>

         16. INDEMNITY.
             ---------

         16.1 Licensee shall, at its own cost and expense, defend, indemnify and
save harmless Everlast from and against;  (i) any and all claims,  loss, damage,
expense,  liability,  suits, actions,  proceedings and judgments,  and any costs
whatsoever,  including reasonable  attorneys' fees, arising out of or in any way
connected  with or  sustained,  rendered  or  incurred by reason of any claim or
action for property damage,  personal injury,  death or otherwise,  involving or
related  to  alleged  defects  in  Licensed  Products  or  based  on  Licensee's
performance  under this  Agreement or that of  Licensee's  customers and whether
such claims,  suits,  actions or proceedings are rightfully or wrongfully  made,
brought or filed;  and (ii) the  production,  manufacture,  sale,  distribution,
promotion or  advertisement  of any Licensed  Products by or for  Licensee,  its
agents or  employees in violation of any  applicable  law or  regulation  or the
rights of third  parties,  provided  in each case that  Licensee  shall be given
prompt notice of any such action or claim. Licensee shall not voluntarily settle
any such claim or action in a manner which might in any way adversely  affect or
be in  derogation  of any rights of  Everlast  in and to any  Licensed  Marks or
Licensed  Products  or which may  constitute  any adverse  admission  in respect
thereof.

         16.2 Licensee agrees to provide, at its own expense,  Product Liability
Insurance written by insurance carriers reasonably  satisfactory to Licensee, in
amounts no less than two and one half

                                       26

<PAGE>

million  ($2,500,000) United States Dollars and within thirty (30) days from the
date  hereof,   Licensee  shall  submit  to  Everlast  fully  paid  policies  or
certificates  of insurance  naming  Everlast as an insured party,  and requiring
that the insurer shall not terminate or materially modify such insurance without
written  notice to Everlast at least twenty (20) days in advance  thereof.  Such
insurance (which may be included as part of Licensee's  blanket insurance policy
covering  other  divisions  of  Licensee)  shall remain in full force and effect
during the entire Contract Period and any renewal or extension thereof.

         16.3 The insurance  coverage required by Paragraph 16.2 may be provided
by one or more Product Liability Insurance  Policies,  provided that all primary
and  umbrella   coverage  shall  aggregate  not  less  than  two  and  one  half
($2,500,000) United States Dollars.

         17. NOTICES.
             -------

         All  reports,  approvals,  requests,  demands and  notices  required or
permitted by this Agreement to be given to a party shall be in writing and shall
be deemed to be duly given on the date: (i) personally delivered; (ii) mailed by
certified or registered  mail,  return  receipt  requested;  (iii)  delivered by
Express Mail or courier  service (such as Federal  Express)  which  requires the
addressee  to  acknowledge,  in writing,  the receipt  thereof;  or (iv) sent by
telefax and  confirmed  by hard copy mailed by  certified  or  registered  mail,
return  receipt  requested  or  acknowledged  by  return  telefax  to the  party
concerned at its address set forth on Page 1

                                       27

<PAGE>

above  (or at such  other  address  as the party  may  specify  by notice to the
other).  Copies of all notices to  Everlast  shall be sent to Lesser & Harrison,
Two West 45th Street, New York, New York 10036.

         18. WAIVER.
             ------

         The  failure  of  either  party at any time or times to  demand  strict
performance by the other of any of the terms,  covenants or conditions set forth
herein shall not be construed as a continuing waiver or  relinquishment  thereof
and each may at any time demand strict and complete  performance by the other of
said terms, covenants and conditions.

         19. BANKRUPTCY.
             ----------

         If Licensee is  adjudicated  bankrupt or insolvent,  or if its business
shall be placed in the hands of a  Receiver,  Assignee  or  Trustee,  whether by
voluntary  act or otherwise or if a committee  (formal or informal) of creditors
shall be formed for the purpose of arranging settlement or payment of Licensee's
debts and such  condition  (except  where  voluntary) is not  terminated  within
ninety (90) days,  Everlast may terminate  this  Agreement by written  notice as
provided in Paragraph 11.

         20. ASSIGNMENT.
             ----------

         This Agreement shall bind and inure to the benefit of Everlast, and the
successors  and assigns of Everlast.  The rights  granted to Licensee  hereunder
shall be exclusive  to it and shall not,  without the prior  written  consent of
Everlast,  be  transferred,  sub-licensed or assigned by it to any other person,
firm or

                                       28

<PAGE>

corporation.  Notwithstanding  any such assignment,  Licensee shall remain fully
liable  hereunder,  and shall be  responsible  for the payment of all royalties,
advertising,  and any other amounts which shall become due from the assignee. In
addition,  the  provisions  hereof  shall be deemed to  preclude  assignment  by
operation  of law and shall be deemed to  restrict  the  hypothecation,  pledge,
granting of a security  interest or in any manner taking steps or permitting the
integrity of this Agreement  between the parties to be affected in any manner or
form. Any  assignment,  transfer,  or sublicense of any of the rights granted to
Licensee  hereunder which does not conform to the requirements of this Agreement
shall be null and void.

         21. ARBITRATION.
             -----------

         21.1 Except as specifically  set forth in this  Agreement,  any and all
disputes,  controversies and claims arising out of or relating to this Agreement
or concerning  the  respective  rights or  obligations  hereunder of the parties
hereto,  shall be settled and  determined by  arbitration in New York, New York,
before the American Arbitration Association in accordance with, and pursuant to,
its then obtaining Rules for Commercial Arbitration.  The arbitrators shall have
the power to award  specific  performance  or injunctive  relief and  reasonable
attorneys' fees and expenses to any party in such arbitration.  However,  in any
arbitration  proceeding arising under this Agreement,  the arbitrators shall not
have the power to change, modify or alter any express condition,

                                       29

<PAGE>

term or  provision  of this  Agreement,  and to that  extent  the scope of their
authority is limited.  The arbitration award shall be final and binding upon the
parties.

         21.2 The parties  shall have such right to interim  relief in any Court
sitting in the City of New York as may be provided by law.

         21.3 Any action to enforce an  arbitration  award or for interim relief
hereunder  may be  brought  only in a Court  of  general  original  jurisdiction
sitting  in the  City of New  York  and the  parties  do  hereby  submit  to the
jurisdiction of each such Court.

         21.4 The service of any notice,  process,  motion or other  document in
connection  with any  arbitration  under this Agreement or for interim relief or
the  enforcement of any  arbitration  award  hereunder may be effectuated in the
manner in which  notices  are to be given to a party  pursuant to  Paragraph  17
above.

         22. SIGNIFICANCE OF HEADINGS.
             ------------------------

         Paragraph  headings  contained  herein are  solely  for the  purpose of
aiding in speedy location of subject matter and are not in any sense to be given
weight  in the  construction  of  this  Agreement.  Accordingly,  in case of any
question  with  respect  to the  construction  of  this  Agreement,  it is to be
construed as though such Paragraph headings had been omitted.

         23. ENTIRE AGREEMENT.
             ----------------

         This writing constitutes the entire agreement between the
parties hereto and may not be changed or modified except by a

                                       30

<PAGE>

writing signed by the party or parties to be charged thereby.

         24. GOVERNING LAW.
             -------------

         This Agreement shall be governed and construed according to
the laws of the State of New York,  and Licensee shall in all cases be deemed to
have agreed to submit to the jurisdiction thereof and to venue therein.

         25. NO JOINT VENTURE.
             ----------------

         This  Agreement  does not  constitute  and  shall not be  construed  as
constituting  a  partnership,  joint  venture  or agency  between  Everlast  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 party.

         26. EXECUTION AND DELIVERY REQUIRED.
             -------------------------------

         This instrument  shall not be considered to be an agreement or contract
nor  shall it create  any  obligation  whatsoever  on the part of  Everlast  and
Licensee,  or either of them,  unless and until it has been  signed on behalf of
both  Everlast  and  Licensee  and  delivery  has  been  made of a fully  signed
original.

         27. FORCE MAJEURE.
              ------------

         Neither  party shall be in default  hereunder by reason of its delay in
the  performance  of or  failure to perform  any of its  obligations  under this
Agreement  if such  delay or  failure  is caused by  strikes,  act of God or the
public  enemy,   riots,   incendiaries,   interference   by  civil  or  military
authorities, compliance with

                                       31

<PAGE>


governmental  law, rules and  regulations,  delays in transit or delivery or any
default beyond its control or without its fault or negligence.

         28. NO REPRESENTATIONS.
             ------------------

         The Licensee  represents and acknowledges that neither Everlast nor any
of its representatives have made any warranties or representations of any nature
whatsoever to induce the Licensee to enter into this License  Agreement,  except
as  expressly  set forth  herein.  All  prior  discussions,  understandings  and
agreements between the parties have been merged into this License Agreement,  it
being  intended that this shall  constitute the complete  agreement  between the
parties.  This License Agreement may be modified or amended only by writing duly
executed by both parties hereto.

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

                  EVERLAST WORLD'S BOXING HEADQUARTERS CORP,


                  By: /s/ Ben Nadorf, President
                      ----------------------------------------
                              Ben Nadorf, President


                  ACTIVE APPAREL GROUP, INC,
                           Licensee


                  By: /s/ George Q. Horowitz, President
                      ----------------------------------------
                              George Q. Horowitz, President


                                       32