Document:

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                                                                 EXHIBIT 10.37**

                                LICENSE AGREEMENT

                                 BY AND BETWEEN

                              L. C. LICENSING, INC.

                                       AND

                               MOVADO GROUP, INC.
                                       AND
                            SWISSAM PRODUCTS LIMITED

**CONFIDENTIAL PORTIONS OF THIS EXHIBIT HAVE BEEN OMITTED FROM PAGES 7, 13, 14,
34 AND SCHEDULES 1.1, 1.13, 3.1, 3.3(g), 4.1, 4.2, 6.2(a), 7.2, 7.3, 8.2, 9.1
AND 14.8 AND FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION
("SEC") PURSUANT TO RULE 24b-2 OF THE SECURITIES EXCHANGE ACT OF 1934, AS
AMENDED ("1934 ACT").

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                                TABLE OF CONTENTS

<TABLE>
<CAPTION>
SECTION                                                                     PAGE
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<S>                                                                         <C>
1.  Definitions .........................................................     1
2.  Grant of License ....................................................     4
3.  Term; Events of Default; Termination ................................     8
4.  Distribution ........................................................    12
5.  Organization ........................................................    15
6.  Standards and Quality; Merchandise Approvals ........................    15
7.  Advertising and Marketing; Showroom and Trade Shows .................    21
8.  Guaranteed Minimum Royalties ........................................    25
9.  Sales Royalty .......................................................    26
10. Sign on Fee .........................................................    26
11. Statements and Financial Information and Covenants ..................    27
12. Effect of Expiration or Termination .................................    30
13. Non-Compete .........................................................    34
14. Intellectual Property Matters .......................................    35
15. Confidentiality .....................................................    38
16. Equitable Relief ....................................................    39
17. Indemnity; Insurance ................................................    39
18. Representations and Warranties ......................................    41
19. Brokers .............................................................    43
20. Notices .............................................................    43
21. Miscellaneous .......................................................    43
22. Licensor's Approval or Consent ......................................    46
23. Taxes ...............................................................    46
24. Joint and Several Liability .........................................    46
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                                LICENSE AGREEMENT

     LICENSE AGREEMENT ("Agreement"), dated as of the Effective Date, by and
between L.C. LICENSING, INC., a Delaware corporation having an office at c/o Liz
Claiborne, Inc., 1441 Broadway, New York, NY 10018 ("Licensor"), and Movado
Group, Inc. a corporation organized and existing under the laws of the State of
New York, having an office at 650 From Road, Paramus, NJ 07652 ("Movado") and
Swissam Products Limited, a corporation organized and existing under the laws of
Hong Kong, having an office at 1406 World Finance Centre, North Tower, Harbour
City, Tsimshatsui, Kowloon, Hong Kong ("Swissam"). Movado and Swissam are
jointly and severally referred to herein as "Licensee".

     WHEREAS, Licensor holds exclusive rights to the use and exploitation of the
Licensed Mark(s) in connection with the manufacture and sale of Merchandise
within the Territory (as such terms are defined below).

     WHEREAS, Licensee has experience and expertise in developing,
manufacturing, promoting, selling and distributing Merchandise, and is desirous
of associating its products with the Licensed Mark(s) so as to obtain the
benefit of the goodwill associated therewith.

     WHEREAS, Licensee desires to have the exclusive right and license, and
Licensor desires to grant such right and license, to use the Licensed Mark(s) as
applied to the manufacture, promotion, sale and distribution of Merchandise
within the Territory, all on the terms and subject to the conditions hereinafter
set forth.

          NOW, THEREFORE, in consideration of the premises, the mutual
representations, warranties and promises set forth below, and for other good and
valuable consideration, the receipt and sufficiency of which is hereby
acknowledged, Licensor and Licensee agree as follows:

     1.   DEFINITIONS. The following definitions shall be applicable throughout
          this Agreement:

          1.1 The term "Territory" means the countries set forth in Schedule
1.1, excluding U.S. Military Bases but including duty-free shops.

          1.2 The term "Licensed Mark(s)" means the trademark(s) listed on
Schedule 1.2, together with any other trademarks which at any time during the
term of this Agreement are owned by Licensor and

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contain the word "JUICY".

          1.3 The term "Merchandise" means and is limited to those items listed
on Schedule 1.3, and does not include any other items whatsoever.

          1.4 The term "Licensed Merchandise" means Merchandise intended to be
sold or promoted in connection with a Licensed Mark; the term "Approved Licensed
Merchandise" means Licensed Merchandise approved by Licensor in accordance with
the provisions hereof. The term "Category" means each of the categories of
Approved License Merchandise set forth in Schedule 1.3.

          1.5 The term "Line Opening Date" is the date of the initial trade
introduction for each line of Licensed Merchandise for each major market. The
number and timing of seasonal Line Opening Dates for Licensed Merchandise are
listed on Schedule 1.5.

          1.6 The term "Sample" means any and all models, or actual samples or
prototypes, of Licensed Merchandise, except that the terms "Initial Sample",
"Final Sample" and "Production Sample" have the meanings set forth in Article 6
hereof.

          1.7 An "affiliate" of any Person means and includes any Person, who
controls, is controlled by or is under common control with such Person. The term
"control" (including the correlative meanings of "controlled by" and under
"common control with") means the power, directly or indirectly, to effectively
direct or cause the direction of the management and policies of any Person. The
term "Person" means any natural person, corporation, association, business,
government, governmental agency, firm, partnership or other entity, whether
acting in an individual, fiduciary or other capacity.

          1.8 The term "Effective Date" has the meaning set forth in Schedule
1.8; the term "First Contract Year" means the period commencing on the Effective
Date and terminating on the date set forth in Schedule 1.8.

          1.9 The term "Contract Year" means the First Contract Year, the period
of twelve (12) months commencing on the day following the end of the First
Contract Year, and the twelve (12) month period commencing on each January 1
thereafter for the Initial Term and any Renewal Term.

          1.10 The term "Business Plan" means such annual business plan(s)
relating to Licensee's business hereunder, prepared by Licensee in such format,
and containing such detailed data, information, sales and marketing plans,
budgets and projections, as Licensor may from time to time reasonably request,

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including the information set forth in Schedule 1.10.

          1.11 The term "Packaging" means all packaging and packaging materials
for Merchandise, including boxes, containers, wrappings, labels, tags and any
and all other receptacles and materials, including any artwork and/or graphics
embodied therein.

          1.12 As used in this Agreement, the term "Gross Sales" for any period
means the gross invoice price of all Licensed Merchandise sold or shipped by or
on behalf of Licensee (including Licensed Merchandise sold to distributors
provided that with respect to sales made to distributors who are affiliates of
Licensee the invoice price of such Licensed Merchandise shall be deemed to be no
less than that invoiced by Licensee to non-affiliated distributors) during such
period, not including taxes or freight charged to customers. The term "Net
Sales" for any period means Gross Sales for such period less (i) actual trade
discounts taken and noted on the face of the invoice and allowances with prior
written documentation given by Licensee to its customers, at the time product is
shipped; (ii) the amount of any: (a) refunds; (b) credits for returns of
Licensed Merchandise; (c) markdowns; and (d) chargebacks (other than operational
chargebacks), actually granted and paid or taken by customers at the time each
is authorized by Licensee; provided, however, that the amount of aggregate
deductions from Gross Sales under clauses (i) and (ii) above for any Contract
Year shall not exceed ten percent (10%) of Licensee's Gross Sales for any
Contract Year. No other deductions may be taken. For royalty computations Gross
Sales and Net Sales will be computed without regard to whether payment therefore
has been received by Licensee. If any sale or transfer of Licensed Merchandise
is made other than at "arms-length" (including but not limited to sales by
Licensee to its own or its affiliates' stores), then, subject to the first
sentence of this Section 1.12, the Net Sales of such Merchandise will be deemed
to be the Net Sales of a corresponding sale at arm's-length at the prevailing
U.S. list price or absent a list price, the highest price sold to a regular
account in the licensee's normal channel of distribution.

          1.13 The terms "Off-Price Sales" and "Off-Price Sales Cap" have the
meanings set forth in Schedule 1.13.

          1.14 The term "LCI Standards" means the standards, reputation and
established prestige and goodwill connected with the Licensed Mark(s) and the
names of Licensor, Juicy Couture, Inc. and their parent, Liz Claiborne, Inc.
(LCI), including the design content, spirit, quality, style, price point and
value which apparel products bearing the Licensed Marks(s)have come to represent
in the minds of the trade and the

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public, and Licensee shall reflect throughout its operations hereunder the
standards embodied in the businesses owned and operated by Licensor, Juicy
Couture, Inc. and LCI and the Standards of Engagement, a copy of the current
form of such standards is attached as Schedule 1.14 (such standards as they may
from time to time be amended or modified, the "Standards of Engagement").

          1.15 The term "Approved Customers" means Approved Full Price Customers
(as defined in Section 4.1) and Approved Off Price Customers (as defined in
Section 4.2).

     2.   GRANT OF LICENSE.

          2.1 (A) Subject to the terms and conditions of this Agreement,
Licensor hereby grants to Licensee, and Licensee hereby accepts, an exclusive
license solely to use the Licensed Mark(s) in the Territory as a trademark(s) in
connection with the manufacture, advertising, merchandising, promotion, sale and
distribution of Approved Licensed Merchandise to Approved Customers. Licensee
shall use the Licensed Mark(s) only in the form approved in advance in writing
by Licensor for use by Licensee and only in connection with the manufacture,
advertising, merchandising, promotion, sale and distribution to Approved
Customers of Approved Licensed Merchandise subject to the terms of this
Agreement; no Licensed Mark shall be accompanied by any word, mark or symbol, or
include a trademark in any type style or typeface other than that so set forth.
Licensor has the right to change the required typeface and type style of a
Licensed Mark in its discretion from time to time. No license is granted
hereunder for the use of the Licensed Mark(s) for any purpose other than as
specifically set forth in this Section 2.1.

               (B) Licensor retains and reserves any and all rights to use and
exploit, and to grant to any other Person the right to use and exploit, the
Licensed Mark(s), and any designs, names or other items supplied by Licensor
hereunder in connection with any and all products and services, other than
Merchandise bearing the Licensed Mark(s), and to use and exploit any other
trademarks in connection with Merchandise.

               (C) Licensee acknowledges that, at the date hereof, Licensor
sells products bearing the Licensed Mark(s) and such products have an
established reputation for high standards and quality. Licensee acknowledges
that, in order to preserve the goodwill attached to the Licensed Mark(s),
Approved Licensed Merchandise should be sold at prices and terms reflecting the
prestigious nature of the Licensed Mark(s) consistent with other products
bearing such Licensed Mark(s); it being understood, however, that

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Licensor is not empowered to fix or regulate the prices at which Licensed
Merchandise is to be sold, either at the wholesale or retail level.

          2.2 Licensee will not use the Licensed Mark(s) on or in connection
with Merchandise or any other product manufactured from designs neither provided
nor approved by Licensor or on Merchandise or any other product distributed by
any person or entity, including Licensee, as premiums, promotions, give-aways or
fund-raisers except with Licensor's express prior approval. Licensee will not
manufacture, or cause the manufacture of, any products bearing designs the same
as or substantially similar to the designs of any Licensed Merchandise.

          2.3 (A) The license granted herein is strictly personal to Licensee.
Neither this Agreement nor any of the rights granted to or obligations
undertaken by Licensee hereunder may be transferred, assigned, pledged, sold,
mortgaged, sublicensed or otherwise hypothecated or disposed of, either directly
or indirectly, in whole or in part, by operation of law or otherwise
(collectively, "transfer"), to any Person without Licensor's prior written
consent which may be withheld in its sole discretion; any attempted transfer to
which Licensor has not consented shall be null, void, and of no force or effect.
Notwithstanding the foregoing, Licensor will not unreasonably withhold its
consent to (i) a transfer of all of Swissam's rights and obligations hereunder
to any wholly owned subsidiary of Movado or (ii) the sale of all the outstanding
shares of or substantially all the assets of Movado or the merger or
consolidation of Movado where the acquirer or surviving entity has, or
immediately following such transaction will have, a financial condition which is
no worse than that of Movado prior to such acquisition, merger or consolidation
and provided that the acquirer or surviving entity is (A) neither a Person which
owns or is licensed to use a Competing Brand, nor an affiliate of such a Person
and (B) a Person, or an affiliate of such a Person, whose primary business
involves the sale of consumer goods sold under its owned or licensed brands
(other than primarily through Off Price Sales). If at any time Swissam ceases to
be a wholly owned subsidiary of Movado or, subsequent to a transaction, of a
permitted surviving entity or acquirer, then Swissam's rights and obligations
hereunder shall immediately terminate.

               (B) Notwithstanding the foregoing, Licensee may engage
subcontractors and suppliers to produce Approved Licensed Merchandise hereunder,
only with the express prior written consent of Licensor (which shall not be
unreasonably withheld or delayed); provided, however, that (i) prior to any

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subcontractor or supplier undertaking any work under this Agreement, Licensee
must notify such subcontractor or supplier in writing of the requirements and
standards set forth herein including the products, quality and trademark
protection standards, as well as the LCI Standards; and (ii) compliance with the
terms and conditions of this Agreement will remain the sole and exclusive
responsibility of Licensee, and Licensee will be responsible for the acts and
omissions of all subcontractors and suppliers, and such acts and omissions will
for purposes of this Agreement be deemed to be acts and omissions of Licensee,
such that the supervision of production of Approved Licensed Merchandise will
remain under the control and the responsibility of Licensee in accordance with
the terms of this Agreement. Licensee will supply Licensor within thirty (30)
days of the date this Agreement is executed, and at any time during the Term
upon the request of the Licensor, with a list of subcontractors and suppliers
employed by Licensee in connection with its operations hereunder, and Licensee
will complete the "Licensee/Factory Profile" attached as Schedule 2.3(b) for
each subcontractor and supplier. Licensee will promptly cease its relationship
with any subcontractor or supplier in connection with its operations hereunder
upon Licensor's reasonable request or if any such subcontractor or supplier
fails to comply with the terms and conditions contained herein to be complied
with by Licensee. Licensee will, within thirty (30) days after Licensor's
request, require subcontractors and suppliers to execute an agreement in form
acceptable to Licensor regarding quality control and any other matters as
Licensor reasonably deems appropriate.

               (C) Licensee will use commercially reasonable efforts to make the
personnel and facilities of its suppliers and contractors available to Licensor
for inspection and consultation during normal business hours.

          2.4 Licensee will devote sufficient financial resources to its
business and operations hereunder and will use its best efforts to develop and
maintain a substantial, permanent and expanding business under this Agreement,
and to sell a maximum quantity of Approved Licensed Merchandise consistent with
the high standards and prestige associated with the Licensed Mark(s) and the
terms of this Agreement.

          2.5 In the event of any dispute between Licensee and any other
licensee of Licensor in the Territory with respect to the products covered by
their respective licenses, such dispute will be resolved in good faith by
Licensor in its sole discretion.

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          2.6 (A) Notwithstanding anything to the contrary contained herein, the
Line Opening Date set forth on Schedule 1.5 shall apply only to the Category of
Women's Timepieces. Licensor shall have the right, upon notice to Licensee at
any time after such date, to require Licensee to submit to Licensor a proposed
Business Plan with respect to the Category of Men's Timepieces. Within thirty
(30) days after its receipt of any such notice ("Men's Category Notice"),
Licensee shall submit to Licensor such a Business Plan which shall include
proposed Net Sales minimums with respect to such Category for the duration of
the Term and the Renewal Term. Provided that such proposed annual Net Sales
minimums are at least the same percentage of the Net Sales minimums set forth on
Schedule 3.3(g) as  *  , then Licensor will approve the proposed Business Plan
and Schedule 3.3(g) shall be amended to increase the Minimum Net Sales amounts
by the proposed Net Sales amounts for the Men's Timepieces Category. In
addition, Schedule 8.2 shall automatically be amended so that the base amounts
set forth thereon shall equal  *  of the amended Minimum Net Sales amounts.

               (B) Provided that no event of default (as defined in Section 3.3)
on Licensee's part hereunder has occurred and is continuing, no default (as
defined in Section 3.3) hereunder then exists, and this Agreement is then in
full force and effect, Licensor agrees to give a first right of negotiation to
Licensee with respect to the proposed exclusive license for the Category of
Children's Watches bearing the Licensed Marks (the "New Opportunity") as set
forth in Schedule 1.3. Licensor shall notify Licensee of the potential New
Opportunity ("New Opportunity Notice"). In the event that Licensee desires to be
considered for the New Opportunity proposed by Licensor, it shall advise
Licensor within ten (10) days of receipt of Licensor's New Opportunity Notice.
Within thirty (30) days thereafter, Licensee shall submit to Licensor the
proposed Business Plan with respect to such New Opportunity, which Business Plan
shall include proposed sales minimums, guaranteed minimum royalties and
advertising obligations with respect to the New Opportunity and shall be subject
to the express written approval of Licensor, which shall not be unreasonably
withheld. Similarly, Licensee shall have the right to advise Licensor that
Licensee is interested in the New Opportunity ("Licensee's New Opportunity
Notice"). Within thirty (30) days after Licensor's receipt of Licensee's New
Opportunity Notice, Licensee shall submit to Licensor the proposed Business Plan
with respect to such New

* CONFIDENTIAL PORTION OF THIS EXHIBIT OMITTED AND FILED SEPARATELY WITH THE SEC
PURSUANT TO RULE 24b-2 OF THE 1934 ACT

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Opportunity which Business Plan shall include proposed Minimums Net Sales,
Guaranteed Minimum Royalties and advertising obligations with respect to the New
Opportunity and shall be subject to the express written consent of Licensor,
which shall not be unreasonably withheld. If (a) Licensee notifies Licensor at
any time that it is not interested in such New Opportunity; or (b) Licensee
fails to submit a Business Plan within the time period set forth in this section
2.6(b); or (c) Licensor does not approve Licensee's Business Plan, even after
Licensee has resubmitted such business plan to Licensor after Licensor's initial
rejection of same; then (1) Licensee shall not have any right, obligation,
license or privilege with respect to the proposed New Opportunity; and (2)
Licensor shall have the right to contract with any other entity for such New
Opportunity, except that Licensor shall not have the right to contract with such
other entity upon the substantially same business terms as proposed by the
Licensee and rejected by the Licensor.

     3.   TERM; EVENTS OF DEFAULT AND TERMINATION.

          3.1 (A) The term of this Agreement will commence as of the Effective
Date and will continue through the date set forth on Schedule 3.1(a) (the
"Initial Term"), unless renewed or sooner terminated as provided herein.

               (B) Subject to the provisions of this Article 3, provided that;
(1) no event of default (as defined below) under this Agreement has occurred and
is continuing; (2) no default (as defined below) under this Agreement then
exists; (3) the amount of aggregate Net Sales of Approved Licensed Merchandise
in the Contract Year immediately preceding the final Contract Year of the
Initial Term shall equal or exceed the amount listed on Schedule 3.1(b) as the
"Renewal Threshold", the term of this Agreement may be renewed by Licensee, at
its option, for an additional renewal term as set forth in Schedule 3.1(c) (the
"Renewal Term"); provided that Licensee must notify Licensor in writing of its
intention to renew by the date set forth in Schedule 3.1(d)

          3.2 The parties agree that any announcement to the public or trade of
the termination of this Agreement will be made only by a joint statement
mutually agreed upon by the parties.

          3.3 Each of the following constitutes, an event of default under this
Agreement:

               (A) If Licensee fails to pay any funds owing to Licensor pursuant
to this Agreement as and when due and such failure is not remedied within five
(5) business days after Licensee's receipt of notice from Licensor;

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               (B) If Licensee or Licensor institutes proceedings to be
adjudicated a voluntary bankrupt or insolvent, or consents to the filing of a
bankruptcy proceeding against it, or files a petition or answer seeking
reorganization or arrangement under any bankruptcy act or any other similar
applicable law of any country, or consents to the appointment of a receiver or
liquidator or trustee or assignee in bankruptcy or insolvency for itself, or any
of its property, or makes an assignment for the benefit of creditors, or is
unable to pay its debts generally as they become due, or shall cease doing
business as a going concern, or corporate action is taken by it in furtherance
of any of the foregoing purposes; or

               (C) If an order, judgment or decree of a court having
jurisdiction is entered adjudicating Licensee or Licensor, a bankrupt or
insolvent, or approving, as properly filed, a petition seeking reorganization of
Licensee or Licensor, or of all or a substantial part of its properties or
assets under any bankruptcy act or other similar applicable law, as from time to
time amended, or appointing a receiver, trustee or liquidator of Licensee or
Licensor, and such order, judgment or decree remains in force, undischarged and
unstayed for a period of thirty (30) days, or a judgment or lien for the payment
of money in excess of $250,000 is rendered or entered against it and the same
remains undischarged or unbonded for a period of thirty (30) days, or any writ
or warrant or attachment shall be issued or levied against a substantial part of
its property and the same is not released, vacated or bonded within thirty (30)
days after issue or levy; or

               (D) If Licensee defaults, subject to applicable cure or waiver
provisions, on any obligation in excess of $250,000 which is secured by a
security interest in Licensed Merchandise; or

               (E) If Licensee for any reason discontinues the sale of Approved
Licensed Merchandise or any substantial portion of its business operations
resulting in Licensed Merchandise representing more than twenty percent (20%) of
Licensee's total business, or shall liquidate or dissolve; or

               (F) If Licensee, except as otherwise permitted under Section
2.3(a) hereof, sells, without the prior written approval of Licensor (which
approval shall not be unreasonably withheld or delayed), (regardless of how
designated) all or substantially all of its assets, or merges or consolidates
with or into another corporation or entity, or if there is a change in control
of Licensee, in each case whether in a single transaction or as the aggregate
result of a series of transactions; or

               (G) If Licensee's Net Sales of Approved Licensed Merchandise fail
to equal or exceed in any two consecutive Contract Years the amount set forth in
Schedule 3.3(g) as the minimum sales

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amount for such Contract Year; or

               (H) If Licensee fails, in any Contract Year and within three (3)
months thereafter to pay or expend the amounts required to be paid or expended
under any provision of Article 7; or

               (I) If Off-Price Sales in any Contract Year during the Initial
Term or during any Renewal Term is equal to or greater than the Off-Price Sales
Cap set forth in Schedule 1.13; or

               (J) If Licensee fails in any Contract Year commencing with
Contract Year 4 to ship at least ninety percent (90%) of the orders received by
it for Licensed Merchandise; or

               (K) If Licensee fails to cure a failure to comply with any of the
quality requirements set forth herein within thirty (30) days after it has been
notified by Licensor in writing of such failure to comply; or

               (L) If Licensee conducts its business hereunder in a manner which
causes Licensor to send Licensee two or more notices of a default under this
Section 3.3 in any consecutive 12 month period; or

               (M) If Licensee has not begun the bona fide sale of Approved
Licensed Merchandise by the time indicated in the Initial Business Plan approved
by Licensor, unless a delay in such sales has been approved in advance in
writing by Licensor; or

               (N) If Licensee breaches section11.10 hereof; or

               (O) Intentionally omitted

               (P) If any representation or warranty of any party contained
herein is or becomes false or misleading in any material respect, or if any
party fails to perform or observe any term, condition, agreement or covenant in
this Agreement on its part to be performed or observed, other than as provided
in Paragraphs (a) through (o) of this Section 3.3, and such default is not
remedied within thirty (30) days after written notice thereof from the
non-defaulting party, unless such default is curable but is not capable of being
cured through the defaulting party's diligent and continuous effort within such
thirty (30) day period, and such party immediately commences to cure such
default, and thereafter applies its diligent and continuous best efforts to cure
such default, and does in fact cure such default within sixty (60) days of the
initial notice of default.

          3.4 As used in this Agreement, the term "default" shall mean any
condition, event or state

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of facts which, after notice or lapse of time, or both, would be an event of
default. A default by either Movado or Swissam shall be considered a default by
Licensee.

          3.5 If any event of default occurs and is continuing, the
non-defaulting party may, by written notice to the defaulting party, immediately
terminate this Agreement; provided that in the event of default under Sections
3.3(b), (c), (d), (e) or (f), this Agreement will terminate automatically.

          3.6 (A) Notwithstanding anything to the contrary herein, if Licensee
defaults, subject to applicable cure or waiver provisions, on any obligation
which is secured by a security interest in any Licensed Merchandise,
automatically and simultaneously therewith Licensee no longer shall have the
right to sell or otherwise transfer Licensed Merchandise or otherwise use the
Licensed Mark(s) until (i) it notifies Licensor of the occurrence of such
default on any such obligation; and (ii) Licensor notifies it that Licensor has
elected to waive its right under Section 3.3(d) to terminate this Agreement by
reason thereof.

               (B) No assignee for the benefit of creditors, custodian,
receiver, trustee in bankruptcy, sheriff or any other officer of the court or
official charged with taking over custody of Licensee's assets or business may
continue this Agreement or exploit or in any way use the Licensed Mark(s) if
this Agreement terminates as a result of as default under Sections 3.3(b) or
(c).

               (C) In the event that, pursuant to the Bankruptcy Code or any
amendment or successor thereto (the "Code"), a trustee in bankruptcy of Licensee
or Licensee, as debtor, is permitted to assume this Agreement and does so and,
thereafter, desires to assign this Agreement to a third party, which assignment
satisfies the requirements of the Code, then the trustee or Licensee, as the
case may be, must notify Licensor of same in writing. Said notice must set forth
the name and address of the proposed assignee, the proposed consideration for
the assignment and all other relevant details thereof. The giving of such notice
will be deemed to constitute the grant to Licensor of an option to have this
Agreement assigned to it or to its designee for such consideration, or its
equivalent in money, and upon such terms as are specified in the notice. The
aforesaid option may be exercised only by written notice given to the trustee or
Licensee, as the case may be, by Licensor within fifteen (15) days after
Licensor's receipt of the notice from such party, or within such shorter period
as may be deemed appropriate by the court in the bankruptcy proceeding. If
Licensor fails to give its notice to such party within the said exercise period,
such party may complete the assignment referred to in its notice, but only if
such assignment is to the entity named in such notice and for

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the consideration and upon the terms specified therein. Nothing contained herein
shall be deemed to preclude or impose any rights which Licensor may have as a
creditor in any bankruptcy proceeding.

     4.   DISTRIBUTION.

          4.1 The parties acknowledge and agree it is the intention that
Approved Licensed Merchandise be sold by Licensee and distributors approved in
writing in advance by Licensor in its sole discretion ("Approved Distributors")
(i) for resale to consumers only by retailers whose location, merchandising and
overall operations are consistent with the high quality of products sold under
the Licensed Mark(s) and the reputation, image and prestige of the Licensor,
Juicy Couture, Inc. and LCI's name and of the Licensed Mark(s) and (ii) to
corporate accounts for use as premium and incentive awards upon the prior
written approval of Licensor, which may be withheld in its sole discretion. All
affiliates of Licensee shall be deemed Approved Distributors. Licensee and
Approved Distributors may sell first quality, in-season items of Approved
Licensed Merchandise only to such retailers and corporate accounts operating in
the Territory approved in advance by Licensor (which approval shall not be
unreasonably withheld or delayed) or retailers to which Licensor or any of its
affiliates or licensees sells first quality, in-season product bearing the
Licensed Marks ("Approved Full Price Customers"). Licensor agrees that the
customers listed on Schedule 4.1 are deemed to be Approved Full Price Customers
as of the date hereof. Such Schedule may be modified or supplemented by Licensor
in its reasonable determination from time to time on no less than thirty (30)
days prior written notice to Licensee. Licensee must submit to Licensor a "new
account" application to obtain approval for new accounts. Except as explicitly
set forth above in this Section 4.1, Licensee shall not accept orders for first
quality, in-season Licensed Merchandise from any other customers without
Licensor's prior express written consent (which shall not be unreasonably
withheld or delayed), and Licensee shall consistently monitor its customers to
assure compliance with the terms of this Agreement.

          4.2 Licensee may sell seconds or end-of-season closeouts of Licensed
Merchandise through off-price customers operating in the Territory approved in
advance in writing by Licensor (which approval shall not be unreasonably
withheld or delayed) ("Approved Off-Price Customers"). Licensor agrees that the
off-price customers listed on Schedule 4.2 are Approved Off-Price Customers as
of the date hereof for sales of seconds and end-of-season close-outs of Approved
Licensed Merchandise; such Schedule may be modified or supplemented by Licensor
in its reasonable determination from time to time on no less than thirty

                                       12

<PAGE>

(30) days prior written notice to Licensee. All affiliates of Licensee operating
outlet stores shall be deemed Approved Off-Price Customers, provided that
Licensed Merchandise shall not represent  *  . Except as explicitly set forth
above in this Section 4.2, Licensee will not accept orders for seconds or
close-outs of Licensed Merchandise from any other customers without Licensor's
prior express written consent (which shall not be unreasonably withheld or
delayed), and Licensee shall consistently monitor the customers to assure
compliance with the terms of this Agreement. Licensor, Juicy Couture, Inc., and
their parent LCI and their respective affiliates and licensees have a right of
first refusal to purchase any or all of such seconds or end-of-season Licensed
Merchandise prior to it being offered for sale to Approved Off-Price Customers.
Licensee will provide Licensor with prompt written notice of the proposed terms
of any offer to sell to third parties such Approved Merchandise, and Licensor,
Juicy Couture, Inc. and LCI and their respective affiliates and licensees will
have ten (10) business days from its receipt of such notice to exercise its
right of first refusal by providing written notice to Licensee of its desire to
purchase such Approved Licensed Merchandise. Such right shall apply to each
price point at which Licensee offers such Licensed Merchandise. All seconds and
irregulars of Licensed Merchandise offered for sale shall be marked as such.

          4.3 Licensee will not make sales of Licensed Merchandise to any Person
(i) which it knows, or reasonably should have known, intends to sell such
Licensed Merchandise outside of the channels of distribution described in
Section 4.1 or 4.2 above or to a Person other than the ultimate customer, or
(ii) which is not an Approved Distributor, Approved Full-Price Customer or an
Approved Off-Price Customer. Licensee will take all reasonable efforts to
prevent any Licensed Merchandise from being distributed, either directly or
indirectly, to any Person located outside of, or who Licensee knows, or
reasonably should have known, intends to resell such Licensed Merchandise
outside of, the countries where Licensee is then authorized to distribute
Licensed Merchandise. Licensee will cease selling Licensed Merchandise to any
store, distributor or other customer, including previously approved customers,
upon the reasonable request of Licensor or in the event that any such store,
distributor or other customer is not selling Licensed Merchandise in accordance
with the terms of this Agreement; provided that Licensee shall not be required
to cease selling to any store, distributor or other Approved Customer if (i) it
is the first time such customer has failed to sell Licensed Merchandise in
accordance with the terms of this Agreement and (ii) such customer cures such

* CONFIDENTIAL PORTION OF THIS EXHIBIT OMITTED AND FILED SEPARATELY WITH THE SEC
PURSUANT TO RULE 24b-2 OF THE 1934 ACT

                                       13

<PAGE>

failure within thirty (30) days of notice thereof.

          4.4 (A) Licensee will sell to Licensor and its affiliates such items
of Licensed Merchandise as may be ordered by Licensor and its affiliates from
time to time solely for resale direct to consumers, including on the internet,
through catalogs and in retail and outlet stores wholly or partially owned and
operated by Licensor, Juicy Couture, Inc. or LCI or any of their affiliates, as
evidenced by timely placed, non cancelable purchase orders. All such purchases
shall be on terms no less favorable than those made available to Licensee's
comparable customers, including a high priority delivery schedule. The price to
be paid by Licensor and its affiliates for such orders of Licensed Merchandise
will be at an arm's length price to be agreed upon in good faith by the parties,
  *  There will be no minimum purchase or order requirements with respect to any
such orders, and orders submitted by Licensor's international retail licensees
are subject to Licensee's reasonable credit requirements and terms of sale to be
agreed upon in good faith at arms length by the parties. All products shipped to
such stores will be "floor ready" and include all hang tags (with UPC and
suggested retail price).

               (B) Licensee or its Approved Distributors, at Licensee's option,
shall sell Licensed Merchandise to international retail and distribution
partners of Licensor, Juicy Couture, Inc. and LCI solely for sale in retail
stores operating under the Licensed Marks at a price and upon terms to be agreed
upon in good faith at arm's length by the parties.

          4.5 Licensee will only offer for sale or sell Approved Licensed
Merchandise at wholesale to Approved Full Price Customers, Approved Off Price
Customers, and Approved Distributors as permitted under Sections 4.1 and 4.2,
and will not offer for sale or sell any Licensed Merchandise to or through any
other customers, channels or outlets, including the internet, television,
catalogs or specialty retail or outlet stores other than those operated by
Licensor, Juicy Couture, Inc. or LCI or their affiliates or international retail
licensees.

          4.6 Licensee is permitted to enter into arm's length agreements with
Juicy Couture, Inc.'s sales representatives to solicit orders of Licensed
Merchandise on behalf of Licensee.

          4.7 No Licensed Merchandise may be consigned to any retailer without
the prior written approval of Licensor.

* CONFIDENTIAL PORTION OF THIS EXHIBIT OMITTED AND FILED SEPARATELY WITH THE SEC
PURSUANT TO RULE 24b-2 OF THE 1934 ACT

                                       14

<PAGE>

     5. ORGANIZATION. Licensee will at all times employ such competent and
qualified personnel as are necessary to fulfill its obligations under this
Agreement. Without limiting the foregoing, Licensee will employ individual(s) in
the position(s) set forth in Schedule 5, each with an appropriate staff and each
of whom will work exclusively for the business licensed hereunder. The hiring of
the Brand President and the Director of Product Development is subject to the
prior approval of Licensor, which approval will not be unreasonably withheld or
delayed, and such persons will at all times be acceptable to Licensor in its
reasonable commercial judgment and will be located in the United States.
Licensee will make all of its personnel available by appointment during normal
business hours for consultation with representatives of Licensor.

     6. STANDARDS AND QUALITY; MERCHANDISE APPROVALS.

          6.1 (A) Licensee acknowledges that the Licensed Mark(s) and names of
Juicy Couture, Inc., Licensor and LCI have established prestige and goodwill,
are well recognized in the mind of the trade and the public, and have a
reputation for high standards and quality. Licensee will maintain the LCI
Standards in all of its operations under this Agreement. Licensee and its
affiliates, subcontractors, suppliers and distributors will comply with the
Standards of Engagement.

               (B) All items of Licensed Merchandise will reflect the LCI
Standards and the general lifestyle themes and concepts as expressed by Licensor
to Licensee from time to time. Included within each collection will be, at
minimum and as directed by Licensor (i) a number of items of Licensed
Merchandise which specifically coordinate and are capable of being
cross-merchandised with specific products bearing the Licensed Mark(s), and (ii)
an appropriate mix of fashion and basic items which will include a reasonable
number of styles, which styles will reflect diverse fabrications and styling,
all as mutually agreed upon by the parties in advance for the collection to be
competitive and complete.

               (C) Licensee will use all technology and techniques available to
Licensee for embodiment within Licensed Merchandise to the extent such use is
commercially reasonable. Licensee will provide Licensor with a description of
Licensee's research and development capacities, processes, new product
constructions, designs and materials and the most up-to-date information
(whether or not proprietary). Such description must be of sufficient detail to
allow Licensor to make an informed decision about viability for use in
connection with Licensed Merchandise and must be provided to Licensor as soon as
reasonably practical in the course of development, but in any event, in
sufficient time for Licensor and Licensee to be able

                                       15

<PAGE>

to incorporate at least simultaneously with any commercial use in the Territory
by Licensee or any affiliate for itself or any third party, such research and
development into Approved Licensed Merchandise in a manner consistent with high
quality products, so that Licensor is assured of having the option of having any
new or improved product, technology or technique available to Licensee embodied
in Licensed Merchandise. Such information will be deemed to be confidential
information under Section 14. Upon termination of this Agreement, Licensee will
provide Licensor access to, and the right to use, any technical information
necessary for Licensor to continue the manufacture of any item of Licensed
Merchandise.

          6.2 (A) By written notice to Licensor (a "Product Proposal Notice"),
Licensee will propose to Licensor a line of Merchandise for each selling season
to be manufactured and sold as Approved Licensed Merchandise hereunder. Each
Product Proposal Notice will set forth a proposed Line Opening Date which will
not be less than twelve (12) months after the date of the applicable Product
Proposal Notice. Licensee will provide Licensor with such additional information
with respect to the matters referred to in any Product Proposal Notice
(including marketing studies and the like) promptly upon Licensor's request. Not
less than twelve (12) months prior to the Line Opening Date proposed in a
Product Proposal Notice, Licensee will provide Licensor with the following: (i)
a program of suggested, broad design themes and concepts ("Merchandise
Concepts"), which will include such items as coloration, materials, sketches,
hardware, trim and other Specifications (as defined below), for items of
Merchandise proposed for inclusion within the relevant seasonal collection which
Licensee believes may be appropriate for manufacture and sale as Licensed
Merchandise hereunder; (ii) a program of suggested design themes and concepts
with respect to Packaging (as defined below) for items of Merchandise for which
Merchandise Concepts are being supplied ("Design Concepts"); and (iii) a
production calendar setting forth the timing for approval of Merchandise
Concepts, Design Concepts, Initial Samples and Final Samples, assuming completed
production by the Line Opening Date, and providing Licensor sufficient time to
provide comments thereon and which shall be consistent with the product calendar
attached hereto as Schedule 6.2(a). Each such presentation of Merchandise
Concepts will include concepts and related materials for a complete lifestyle
range of Merchandise reflecting the Licensor's brand lifestyles and shall
include concepts and related materials sufficient in number to enable Licensee
to produce sufficient styles and SKUs of Approved Licensed Merchandise to meet
the sales volume projections contained in its then current Business Plan, and
the applicable Sales Minimum (as hereinafter

                                       16

<PAGE>

defined). The Merchandise Concepts and Design Concepts will be embodied in
verbal, written and pictorial descriptions and presentation materials, including
storyboards, together with any other sketches and materials as Licensee deems
appropriate and shall be subject to Licensor's approval.

               (B) At any time or from time to time, Licensor may, in its sole
discretion by notice to Licensee, advise Licensee that Licensor desires a
particular item or items of Merchandise to be manufactured and sold as Approved
Licensed Merchandise hereunder, and Licensee will use all commercially
reasonable efforts to incorporate any such item into the line of Licensed
Merchandise.

               (C) Promptly after Licensor's receipt of Merchandise Concepts and
Design Concepts, appropriate representatives of Licensor and Licensee shall meet
at such place in the Los Angeles metropolitan area as the parties designate, to
confer thereon and on any of Licensor's proposed designs. The parties will make
such modifications thereon as may be required to meet Licensor's initial
approval with respect thereto.

               (D) Licensee will, as soon as is practicable but in no event less
than one (1) month prior to the appropriate Line Opening Date, prepare and
present to Licensor, or its designee, at such place as Licensor may in its
discretion designate, at Licensee's sole cost and expense, an initial sample
("Initial Sample") in respect of each Design Concept and Merchandise Concept
approved by Licensor under Section 6.2(a). All Initial Samples are subject to
Licensor's approval. Licensor and Licensee will make their appropriate
representatives available to meet, at such place in the Los Angeles metropolitan
area as the parties designate, promptly after Licensor's receipt of Initial
Samples, to confer with respect to Licensee's presentation of Initial Samples,
and Licensee will make such modifications therein as may be required to meet
Licensor's initial approval with respect thereto. Revised Samples will be
submitted for Licensor's approval at least one (1) week prior to the Line
Opening Date.

               (E) As used herein "Final Sample" means and includes a Sample of
an item of Licensed Merchandise for which an Initial Sample or Revised Sample
has been approved by Licensor (or a Sample provided by Licensor to Licensee
under the provisions of Section 6.3 hereof), which shall embody all of the
specifications (the "Specifications"), including the workmanship, quality,
design, dimensions, styling, detail, material, colors and the like, as are to be
used in the actual commercial production of each item of Approved Licensed
Merchandise to be based on said Final Sample.

                                       17

<PAGE>

               (F) Licensor's approval of the Final Samples for all items of
Licensed Merchandise will be evidenced by a written list, duly signed by a
representative of Licensor, setting forth those Samples which have been approved
for production. Samples so approved will be deemed "Final Samples" in respect of
such collection. Approval of any and all Samples as Final Samples is in the sole
discretion of Licensor. Licensor will respond as promptly as reasonably
practicable (and in any case within twenty (20) days from submission) to any
written request from Licensee for approval of a Sample; any such request must be
addressed to the attention of such person and at such address as Licensor may,
from time to time, designate (any change thereon to be effective only in
accordance with Section 20 hereof). Any such approval will continue in effect
indefinitely thereafter, provided that any such approval may be withdrawn by
Licensor upon not less than six (6) months prior written notice to Licensee, and
any inventory of Licensed Merchandise manufactured prior to the effective date
of the withdrawal of approval may be sold as closeouts as set forth in Section
4.2 hereof.

               (G) In the event that Licensor rejects a particular Sample or
Samples, Licensor will notify Licensee of its reasons for rejection and provide
Licensee with suggestions for modifying the rejected Sample(s). Licensee will,
as promptly as practicable, correct said Sample(s), resubmit said Sample(s) to
Licensor and seek Licensor's approval under the same terms and conditions as set
forth with respect to the first submission of such Samples.

          6.3 Licensor may provide Licensee with a Sample in respect of any item
or items of Licensed Merchandise. Such Sample will, for all purposes, be deemed
a Final Sample hereunder unless Licensee and Licensor mutually agree to the
contrary within twenty (20) days after the date of Licensee's receipt thereof.

          6.4 Licensee will use its best efforts, through the submission of a
sufficient number of Merchandise Concepts, Design Concepts and Initial Samples,
and otherwise, to assure that the offering of Licensed Merchandise is at all
times substantially competitive with the Merchandise offerings of other fashion
brands.

          6.5 Licensee will present for sale, through showings of each
collection to the trade and otherwise, all items of Licensed Merchandise in
respect of which Final Samples have been approved by Licensor, in accordance
with the terms hereof. Licensee will use all commercially reasonable efforts to

                                       18

<PAGE>

promote the sale and distribution of all items of Licensed Merchandise in
respect of which Final Samples have been approved by Licensor, in accordance
with the terms hereof.

          6.6 The Approved Licensed Merchandise manufactured and sold by
Licensee will strictly adhere, in all respects, including with respect to the
Specifications therefore, to the Final Samples therefore approved by Licensor.

          6.7 All Licensed Merchandise manufactured by or on behalf of Licensee
will be suitable for its intended use and will not be designed or produced so as
to be inherently dangerous. Without limiting the foregoing, (i) no Licensed
Merchandise shall contain or be packaged in any injurious, poisonous,
deleterious or toxic substance or material, (ii) no Licensed Merchandise will be
adulterated or mislabeled, and (iii) all Licensed Merchandise and all
manufacturing methods used to produce the same will meet or exceed all
applicable industry and governmental standards established in respect of safety.
Licensee will assure that all laws, statutes, rules, regulations, and industrial
or governmental standards and requirements, now in force or hereafter adopted,
which may be applicable to the manufacture, advertising, merchandising,
promotion, importation, sale and distribution of Licensed Merchandise, will be
strictly observed and complied with, notwithstanding the fact that Licensor may
have expressly or implicitly approved any item or conduct with respect thereto.
Licensee will at its own cost do such testing of Licensed Merchandise as may be
required under applicable law or as is customary and standard in the industry,
including quality testing. Licensee will supply Licensor, promptly after request
from time to time, with (i) results of any testing of Licensed Merchandise
performed by Licensee, (ii) copies of all certifications, if any, provided by
all manufacturers and importers of Merchandise, and (iii) a copy of Licensee's
warranty with respect to the Licensed Merchandise. Costs and expenses relating
to any testing expressly required by Licensor will be shared equally by Licensor
and Licensee; provided, however, that if any such test results or if the results
of any other testing performed by Licensee indicates that any tested Merchandise
does not comply with the provisions of this paragraph, Licensee will (A)
forthwith pay all costs and expenses incurred in connection with such testing,
and (B) pay all expenses of any additional testing which Licensor reasonably
requests during the two (2) year period following the date on which Licensor
received the results of the test indicating said sub-standard performance.
Without limiting the foregoing, all Licensed Merchandise produced hereunder must
comply with all reasonable standard of quality guidelines formulated by Licensor
from time to time and with all applicable statutes, rules and

                                       19

<PAGE>

regulations. Without limiting the foregoing, Licensee must complete and submit
to Licensor the Licensee Procedures Checklist attached as Schedule 6.7 within
thirty (30) days of the end of each Contract Year.

          6.8 Licensee will furnish Licensor, free of charge, with the following
for each of the five (5) lines developed each year hereunder: (i) two (2)
complete sets of production samples (which may be without moving parts) for
Licensor's London and New York showrooms; (ii) five (5) timepieces of their
choice for each of the co-presidents of Juicy Couture, Inc. (ten (10) timepieces
total); and (iii) a reasonable number of timepieces for celebrity placement.

          6.9 Licensor has, subject to the notice provision set forth in Section
6.2(f), the continuing right of approval of all items of Licensed Merchandise,
including the Specifications therefor, to ensure that all Licensed Merchandise
manufactured, sold or distributed is (i) in compliance with the Final Samples
therefore; (ii) of the highest quality at its price points; (iii) consistent
with the LCI Standards, and (iv) otherwise in accordance with the terms of this
Agreement. In connection with the production of Licensed Merchandise, Licensee
will use only such materials as Licensor will have previously approved. Licensed
Merchandise manufactured and sold by Licensee shall strictly adhere in all
respects to the Specifications, the LCI Standards and the production standards
approved by Licensor.

          6.10 In the event that any Licensed Merchandise is not being
manufactured or sold in accordance with the provisions hereof, Licensor may
notify Licensee thereof in writing, and Licensee will, as promptly as
practicable, take such action with respect thereto as Licensor deems appropriate
including, if reasonably requested, the immediate recall of such items of
Merchandise from Licensee's customers and ultimate consumers for inspection
and/or destruction.

          6.11 Licensor and its representatives have the right, upon reasonable
advance notice to Licensee and during normal business hours, to inspect at
Licensor's expense all facilities utilized by Licensee, its distributors,
subcontractors, suppliers, agents and representatives in connection with the
manufacture, sale, storage or distribution of Licensed Merchandise pursuant
hereto and to examine Licensed Merchandise in process of manufacture or storage
and when offered for sale within Licensee's operations. Licensee hereby consents
to Licensor's examination of Licensed Merchandise held by its customers for
resale. To the extent such manufacturing and selling facilities are not owned or
controlled by Licensee, Licensee will use all commercially reasonable efforts to
permit the representatives of Licensor to make such inspections. Licensee

                                       20

<PAGE>

will use its best efforts and will take all steps reasonably requested by
Licensor to prevent or avoid any misuse of the Licensed Mark(s) by any of its
distributors, contractors, suppliers or customers.

          6.12 Licensee agrees that, from time to time, it may be appropriate
for Licensor's representatives to visit Licensee's facilities or factories or to
attend one or more appropriate major trade shows or retail events, and Licensee
agrees to reimburse Licensor for Licensor's expenses incurred with respect to
such travel which are approved in advance by Licensee or which are at the
request of Licensee.

          6.13 All Samples whether made by Licensee or under its authority, will
be Licensor's property, and Licensee will surrender all Samples to Licensor
immediately upon the expiration or termination of this Agreement or sooner if
Licensor requests.

          6.14 Licensor acknowledges that Licensee employs quality standards for
Licensed Merchandise manufactured by it and Licensor agrees that in designing
and developing Licensed Merchandise, it will take such standards into account.
However, in the event of a conflict between Licensor's design standards and
requirements as embodied in the Specifications and Licensee's normal quality
standards, Licensor's design standards and requirements will prevail to the
extent such standards and requirements are not contrary to any applicable law,
code, rule or regulation.

          6.15 Licensee will reimburse Licensor for all costs associated with
design/product development, including, but not limited to, purchase of
designs/timepieces from third parties and travel and hotel expenses associated
therewith which are pre-approved by Licensee or which purchases are made at the
request of Licensee and only to the extent that the purchases are not returned
to Licensor.

          6.16 It is specifically understood and agreed that all approvals under
this Agreement by Licensor will be made only by one of the co-presidents of
Juicy Couture, Inc. or a designated alternate.

     7.   ADVERTISING AND MARKETING; SHOWROOM AND TRADE SHOWS

          7.1 (A) Prior to the "launch" of the initial collection of Licensed
Merchandise, and as soon as practical after the execution of this Agreement,
Licensee will submit for Licensor's approval an introductory marketing plan
stating anticipated sales volume, accounts, product positioning, advertising and
promotional support and such other relevant information as Licensor may
reasonably request. Further, in addition to the advertising described below,
Licensor and Licensee will endeavor to agree upon the manner and media to be
utilized in advertising and promoting and staging the launch; provided, however,
that

                                       21

<PAGE>

Licensor's decision is final.

          7.2 Licensee will spend at least the amounts set forth in Schedule 7.2
on national advertising, marketing and cooperative advertising.

          7.3 (A) In recognition of the importance of advertising in developing
and projecting the image of the Licensed Mark(s) and in enhancing the sales of
Approved Licensed Merchandise, Licensor will conduct a program for all products
bearing the Licensed Mark(s) (the "Image Program"). Licensor will develop and
control the creative components of all advertising and related promotional
material (including all publicity, whether through media placement or "events")
to be used in the Image Program. Licensor will determine the media to be used
for advertisements and the advertising agency(ies) to be used and all national
(including for purposes of this paragraph Licensor-placed regional and local)
advertisements will be placed by Licensor. The Image Program will include all of
the activities undertaken by Licensor to develop and promote the Licensed
Mark(s).

               (B) In connection with the Image Program for the Licensed
Mark(s), in each Contract Year, Licensee will pay to Licensor the amount set
forth on Schedule 7.3 (the "Image Fund Payment") as a contribution towards the
program.

               (C) The Image Fund Payment will be used by Licensor for purposes
of advertising and promoting the Licensed Mark(s) and Approved Licensed
Merchandise. However, if Licensor elects to do brand advertising on television,
Licensor may apply up to one-half (1/2) of the Image Fund Payment for such
purpose.

               (D) The Image Fund Payment will be computed and invoiced
quarterly at the beginning of each of Licensor's fiscal quarters, and will be
payable within twenty (20) days of the date of such invoice. The Image Fund
Payment is in addition to any other monies payable hereunder and will not be
credited against and/or recoupable from any amounts otherwise payable to
Licensor hereunder.

          7.4 Licensee will prepare and present to Licensor an annual marketing
program with respect to Licensed Merchandise for each Contract Year no later
than December 1 of the preceding Contract Year. Such program will be subject to
the approval of Licensor. Appropriate representatives of Licensor and Licensee
will meet, at such place in the Los Angeles metropolitan area as the Licensor
designates, to confer on such marketing program, and Licensee will make such
changes therein as are necessary to obtain

                                       22

<PAGE>

Licensor's approval thereof.

          7.5 (A) Licensee's marketing program for Licensed Merchandise will at
all times adhere to the philosophy of Licensor, as from time to time expressed
to Licensee. Licensee will at all times maintain the prestige and goodwill of
the Licensed Mark(s) and the names of Licensor, Juicy Couture, Inc. and LCI.
Without limiting the foregoing, Licensee will not, without the express prior
written consent of Licensor, sell or distribute any Licensed Merchandise in
combination sales, as premiums or "give-aways", or pursuant to other similar
methods of merchandising (including "gift-with-purchase" and
"purchase-with-purchase" programs), and will not sell or distribute any other
item or product in connection with Licensed Merchandise (any such other items or
products being herein referred to as "Promotion Products"). In the event that
Licensor consents to the sale or distribution of Promotion Products, such
consent may provide that for purposes of determining Gross Sales (as defined
below) hereunder for purposes of royalty calculations only, Promotion Products
will be deemed Licensed Merchandise hereunder.

               (B) Licensee will adhere to the LCI Standards in all of its trade
advertising, promotional and business materials (including signs, phone
listings, order forms, labels, boxes, receptacles, business cards, adornments,
tags and letterhead), all collateral and promotional products and material, all
visual merchandising materials of any kind, including in-store fixtures, and all
Packaging for all items of Licensed Merchandise, and will not employ or
otherwise release any of same, including any advertisement or collateral support
materials relating to any Licensed Merchandise (such as, by way of example but
not by way of limitation, standard types of advertisements in the form of
"slicks" or otherwise), unless and until Licensee has made a request for
approval in writing, and Licensor has consented to same in writing, such
approval to not be unreasonably withheld or delayed. Licensee will cause to
appear on all advertising and business materials and Packaging used in
connection therewith, such legends, markings and notices as Licensor may from
time to time require. Approval or disapproval of any proposed use of a Licensed
Mark(s) shall be given by Licensor as promptly as reasonably practicable after
receipt of Licensee's written request in connection therewith, but in all cases
within twenty (20) business days after actual receipt by Licensor of Licensee's
request; if neither approval nor disapproval has been given within such time,
approval will be deemed to have not been given. Any such approval will continue
in effect indefinitely thereafter, provided that any such approval may be
withdrawn by Licensor upon not less than three (3) months' prior written notice
to Licensee.

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<PAGE>

Licensee must obtain prior express written approval for any use of the Licensed
Mark(s) not expressly approved in advance by Licensor. Licensee will, at the
commercially reasonable request of Licensor, include in its business materials
an indication of the relationship of the parties hereto in a form approved by
Licensor. All right, title and interest in and to all advertising and
promotional programs and material with respect to Licensed Merchandise is and
will remain the sole and exclusive property of Licensor, regardless of the
origin of such programs and materials.

               (C) All cooperative advertising whereby Licensee provides a
retailer a contribution toward the cost of an advertisement for Approved
Licensed Merchandise, whether Licensee's contribution be in the form of an
actual monetary contribution, credit or otherwise, will be subject to the prior
approval of Licensor under the same terms and conditions as apply to advertising
and promotional materials prepared by or to be used by Licensee pursuant to
Section 7.5(b); provided, however, that in the event that Licensee is not as a
matter of practice given an opportunity to review the cooperative advertising
copy or format prior to publication due to time constraints, then Licensee will
notify Licensor, in advance, of those retailers with whom it does cooperative
Licensed Merchandise advertising and/or promotion, and Licensee or Licensor, at
Licensor's sole election, shall notify the named retailer of the terms of this
Agreement which pertain to the said advertising or promotional materials and
advise that any cooperative Licensed Merchandise advertising or promotion must
comply herewith. Licensee will suspend its cooperative advertising of Licensed
Merchandise with any retailer to which Licensor objects or any retailer who
fails to comply with the provisions of this Section 7.5.

               (D) Licensee will furnish Licensor with an accounting on an
annual basis on December 31 of each Contract Year, reconciling the amount
actually spent by Licensee on all advertising and marketing, including
cooperative advertising (broken down by customer), in-store fixturing and other
marketing collateral compared with the budgeted amounts, which accounting shall
be delivered to Licensor within forty-five (45) days of the relevant date.

          7.6 Licensee may use its own in-house or any third party agency or
agencies in connection with the development of the creative portion of any
consumer and trade advertisements of Licensed Merchandise ("Trade Materials")
which agency is subject to the prior written approval of Licensor, which will
not be unreasonably withheld. Notwithstanding the foregoing, in the event that
Licensor determines

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<PAGE>

in its reasonable discretion that Licensee's use of its own or any third party
advertising agency is no longer acceptable, then Licensee will use Licensor's
in-house creative team to work on marketing and collateral. Except in
circumstances where pooling of advertising buys, in Licensor's determination, is
practicable, the placement of such advertising will be the responsibility of
Licensee, need not be committed through the Agency and may be placed through any
other advertising agencies chosen by Licensee, but the schedule for such
placement is subject to the prior approval of Licensor. Licensee will pay for
any material and services supplied by the Agency, in amounts mutually determined
by Licensee and the Agency and approved by Licensee, in its reasonable business
judgment, prior to commencement of the project. With respect to all financial
arrangements between Licensee and any outside Agency, Licensee will deal
directly with the Agency, without any involvement or responsibility on the part
of Licensor. Notwithstanding anything to the contrary herein, payment made to
the Agency for advertising materials and advertising fees during a Contract Year
will be credited against the expenditures required under Section 7.2 or 7.3 (as
appropriate) for such Contract Year. No other in-store fixturing, visual
merchandising, collateral or marketing support material may be used by Licensee
in connection with Licensed Merchandise without Licensor's express prior written
consent, which shall not be unreasonably withheld or delayed.

          7.7 Licensee and Juicy Couture, Inc. shall negotiate in good faith an
arm's length agreement with respect to Licensee's use of showroom space at Juicy
Couture, Inc.'s showrooms during market.

          7.8 Licensee will arrange for a dedicated space in Licensee's booth or
a booth (if such dedicated space in the Licensee's booth is not available) at
such national and regional trade shows as Licensee and Licensor, from time to
time, shall mutually deem appropriate, at which booth (or space within
Licensee's booth) Approved Licensed Merchandise (and no other Merchandise) will
be displayed as set forth herein, such booth to be staffed with at least one (1)
sales person who shall have responsibility solely for the promotion and sale of
Approved Licensed Merchandise The location and design of any such booth (or
space within Licensee's booth) is subject to Licensor's prior written approval.

     8.   GUARANTEED MINIMUM ROYALTIES.

          8.1 Licensee will pay to Licensor for each Contract Year a guaranteed
minimum royalty as provided in Section 8.2 below as a non-refundable advance
against Sales Royalties (defined below)

                                       25

<PAGE>

payable to Licensor hereunder in respect of Net Sales made in the Territory for
each Contract Year during the Initial Term and any Renewal Term. No credit shall
be permitted against the Guaranteed Minimum Royalties paid or payable in respect
of any Contract Year on account of Guaranteed Minimum Royalties paid or Sales
Royalties paid or payable in respect of any other Contract Year. If the
aggregate of all Guaranteed Minimum Royalties and Sales Royalties paid by
Licensee to Licensor hereunder in respect of sales of Licensed Merchandise in
respect of a Contract Year shall equal or exceed the Guaranteed Minimum Royalty
for such Contract Year, then and in such event Licensee will not be obligated to
make payment of any further installment of Guaranteed Minimum Royalty otherwise
payable hereunder in respect of such Contract Year.

          8.2 (A) The Guaranteed Minimum Royalty payable for each Contract Year
will be as listed on Schedule 8.2.

               (B) The Guaranteed Minimum Royalties for the First Contract Year
will be paid as provided for on Schedule 8.2. Guaranteed Minimum Royalties
payable for each subsequent Contract Year will be invoiced quarterly in advance
in four (4) equal installments, which invoice will be due on the first day of
each of Licensor's fiscal quarters during each Contract Year.

     9.   SALES ROYALTY.

          9.1 (A) In consideration of the license granted hereunder the Licensee
will pay to Licensor a sales royalty on all of Licensee's Net Sales of Licensed
Merchandise for each Contract Year as set forth in Schedule 9.1 (the "Sales
Royalty").

               (B) The gross invoice price of any Licensed Merchandise sold by
Licensee to any affiliate of Licensee is deemed, for the purposes of this
Agreement, to be the higher of (i) the actual gross invoice price therefore; or
(ii) Licensee's regular selling price for such Licensed Merchandise sold to
unaffiliated parties similarly situation in the distribution chain, and will be
deemed sold at the earlier of the invoice date or delivery date.

          9.2 The Sales Royalty shall be accounted for and paid quarterly within
twenty (20) days after the last business day of each fiscal quarter. The Sales
Royalty payable for any quarter will be less any amounts paid at the beginning
of such quarter pursuant to Section 8.2(a).

     10. SIGN-ON FEE: Licensee shall pay the sign on fee set forth in Schedule
10, on the date set forth in Schedule 10.

                                       26

<PAGE>

     11. STATEMENTS AND FINANCIAL INFORMATION.

          11.1 (A) Licensee will prepare, and at all times maintain at its
principal executive offices, true, correct and complete separate books of
account and records reflecting all transactions and operations within the scope
of this Agreement, in accordance with generally accepted accounting principles.

               (B) Licensee will prepare and furnish to Licensor a financial
statement of operations with respect to the Licensed business, in form and scope
satisfactory to Licensor and certified as accurate by a senior financial officer
of Licensee, for each quarterly period ended the last day of March, June,
September and December in each Contract Year, which will be furnished to
Licensor within twenty (20) days after the end of each such period. With respect
to each Licensed Mark, the statement will provide the following information by
month concerning the calculation of the amount payable for the period covered by
the statement (the "Reporting Period"): (a) the Gross Sales of all Licensed
Merchandise shipped during the Reporting Period by Category and SKU; (b) the
amount of any approved deductions from Gross Sales by Category and SKU; (c) the
Net Sales by Category and SKU for such period; (d) the amount of Sales Royalty
earned hereunder on said Net Sales for the Reporting Period; (e) the total
amount of the Sales Royalty earned in the current Contract Year (including Sales
Royalty earned in the Reporting Period); and (f) the amount of Sales Royalty
payable this Reporting Period after deduction from the amount shown in (e) of
the amount of the Guaranteed Minimum Royalty and Sales Royalty actually paid in
the current Contract Year. The amount payable for the Reporting Period will be
the aggregate of the amount calculated in accordance with the preceding sentence
and the amount of the Image Fund Payment due hereunder for the Reporting Period.
In addition, each such statement will include Off-Price Sales by Category and
SKU, export sales and sales by style, customer, door, and country and such other
information as Licensor may reasonably request. In addition, by February 15th of
each Contract Year, Licensee will submit to Licensor a similar statement with
respect to the preceding Contract Year.

               (C) Licensee will submit to Licensor within fifteen (15) days
after the end of each month a report setting forth Gross Sales of Licensed
Merchandise for such month by Category, store, door and SKU.

          11.2 If the payment of any Guaranteed Minimum Royalties or Sales
Royalties hereunder is delayed for any reason, interest will accrue on the
unpaid principal amount of such payment at the prime rate

                                       27

<PAGE>

(as defined) plus five (5%) percent (the "Default Rate"). The "prime rate" shall
be as published from time to time by The Chase Manhattan Bank, N.A. in New York
City, adjusted each January 1 and July 1, to reflect the prime rate in effect at
each such date, each such adjusted rate to apply for the six (6) months
immediately following such adjustment.

          11.3 Licensee's books and records of account, together with any
relevant supporting materials relating to the Licensed Merchandise or Licensee's
obligations hereunder, will be available for inspection and copying (at
Licensor's expense) and audit by Licensor or its agents at all reasonable times,
upon reasonable prior notice, for the duration of this Agreement and for four
(4) years thereafter. Any audit by Licensor will be made by Licensor at its own
expense; provided, however, that if any examination by Licensor reveals an
underpayment by Licensee in Sales Royalties payable to Licensor for any
quarterly period, Licensee will forthwith pay any such deficiency, together with
interest thereon from the original due date at the Default Rate; provided,
further, that if such underpayment is in an amount equal to or greater than two
(2%) percent of the amount originally paid by Licensee in respect of such
period, Licensee will also pay all costs and expenses incurred by Licensor in
connection with such examination; and if such underpayment is five (5%) percent
or more of the amount originally paid by Licensee with respect of such period,
such underpayment will constitute an event of default under Section 3.3(a) of
this Agreement; and if two (2) such underpayments of Sales Royalties occur, the
second of such underpayments will be an event of default under Section 3.3(a)
without any opportunity to cure such default.

          11.4 All payments required hereunder will be made in United States
dollars by check or in immediately available funds by wire transfer to the
account of Licensor in accordance with such instructions as Licensor may, from
time to time, provide Licensee. In the event that any sale of Licensed
Merchandise is paid in a foreign currency, then, for the purpose of computing
Net Sales, the amount of any such sale will be converted to United States
dollars at the buying site rate for United States dollars published by The Chase
Manhattan Bank, N.A. in New York City as in effect on the last business day of
the period in respect of which the payment of Sales Royalties in respect of such
sale is to be calculated.

          11.5 Licensee will deliver to Licensor (i) within ninety (90) days
after the end of each fiscal year of Licensee, an audited consolidated balance
sheet of Licensee as at the end of such fiscal year, together with an audited
consolidated statement of the results of operations and cash flows of Licensee
during such

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<PAGE>

fiscal year, all of which financial statements will be externally prepared and
reviewed in accordance with generally accepted accounting principles and
certified by a nationally recognized and certified accounting firm in good
standing; and (ii) within forty-five (45) days after the end of each fiscal
quarter of Licensee, other than the fourth fiscal quarter, unaudited
consolidated balance sheets as at the last day of such quarter, together with an
unaudited consolidated statement of its results of operations for such period,
all of such financial statements will be prepared in accordance with generally
accepted accounting principles. Each such delivery of financial statements will
be accompanied by a certificate of the senior financial officer of Licensee
certifying that no default on the part of Licensee under this Agreement has
occurred, and certifying that all such statements have been prepared in
accordance with generally accepted accounting principles and fairly present the
financial position of Licensee at the end of such period reported therein and
the results of operations and cash flows for the periods covered thereby.
Licensor will have the opportunity to discuss all such financial statements and
accompanying materials with Licensee, and Licensee and its accountants will
provide Licensor with any such information Licensor reasonably requests in
connection with this paragraph. So long as Licensee or its ultimate parent is a
publicly traded, SEC reporting company, the foregoing obligations in this
Section 11.5 shall not apply.

          11.6 Licensee will make available to Licensor, upon request, any
marketing plans, reports and information which Licensee may have from time to
time with respect to Licensed Merchandise.

          11.7 Licensee will pay punctually and discharge when due, or renew or
extend prior to default, in the ordinary course of business, any indebtedness
heretofore or hereafter incurred by Licensee and discharge, perform and observe
any covenants, provisions and conditions required to be discharged, performed
and observed in connection therewith or in connection with any agreement
relating thereto except (i) when such indebtedness is subject to a bona fide
dispute; or (ii) with respect to indebtedness constituting in aggregate, less
than Two Hundred Fifty Thousand Dollars and 00/100 ($250,000.00).

          11.8 (A) Licensor hereby covenants and agrees that it will, at all
times during the Initial Term and any Renewal Term, be capitalized in such a
manner sufficient to satisfy all of its obligations (financial and otherwise)
under this Agreement.

               (B) Notwithstanding the foregoing, and without in any way
limiting or restricting Licensor's right to terminate this Agreement upon
default as hereinabove provided, which rights shall remain

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<PAGE>

absolute, if Licensee's financial covenant set out in paragraph 11.9(a) hereof
shall fail to be maintained, performed or observed, then and in such event the
then current term of this Agreement will be deemed to terminate, without further
notice or action on the part of any person, on the date which is four (4) months
after the first date on which such failure occurred, provided that any such
failure (is then continuing, unless Licensor shall, in its discretion, waive
such termination, in writing, specifically referring to this paragraph.

          11.9 Licensee covenants and agrees it will not default on any of its
significant loan agreements. Licensee will notify Licensor in writing
immediately upon the earlier of (i) its receipt of any notice of default
received from any significant lender or creditor of Licensee; or (ii) when it
becomes aware that it is in default. Licensee will provide Licensor with
authorization, on a quarterly basis, to communicate with Licensee's significant
lenders and creditors regarding Licensee.

          11.10 Licensee agrees that any loans by the principals or shareholders
of Licensee to Licensee will be subordinated to Licensee's financial obligations
under this agreement. So long as Licensee or its ultimate parent is a publicly
traded, SEC reporting company, the foregoing obligations in this Section 11.10
shall not apply.

     12. EFFECT OF EXPIRATION OR TERMINATION.

          12.1 (A) Upon the expiration or termination of this Agreement (whether
by reason of the expiration of the term of this Agreement, by earlier
termination of this Agreement pursuant to Article 3 hereof or otherwise), except
to the extent specifically otherwise provided in this Article 12, all rights of
Licensee hereunder will terminate and revert automatically to Licensor, and
neither Licensee nor any of its receivers, representatives, trustees, agents,
successors or assigns (by operation of law or otherwise) will have any right to
manufacture, exploit, advertise, merchandise, promote, sell, distribute or deal
in or with Licensed Merchandise, and Licensee and all of its assignees,
successors or assigns (by operation of law or otherwise) will forthwith
discontinue all use of the Licensed Mark(s) and any derivation, component,
variation or simulation thereof, or any mark confusingly similar therewith, and
all references thereto or hereto, and all Merchandise Concepts, Design Concepts,
Packaging, Merchandise, Intellectual Property, sketches, designs, colorways,
Samples and labels provided or employed hereunder, including any modifications
or improvements thereof, and any patents, trademarks, copyrights, trade names
and other proprietary rights in connection therewith, all of which will revert
to Licensor without any action by any Person and without any payment of
consideration of

                                       30

<PAGE>

any kind to Licensee, and Licensee hereby irrevocably releases and disclaims any
right or interest in or to any and all of the foregoing.

               (B) Licensee will, within twenty (20) days after the date any
party notifies the other of its desire to terminate or not extend the Agreement
(the "Termination Notice") deliver to Licensor, separately for each Licensed
Mark the following: (i) a complete list of Licensee's then current accounts for
Licensed Merchandise and, for each account, Net Sales by Category for the
last-completed Contract Year, indicating regular price and off-price sales; (ii)
a list of each style, indicating total Net Sales dollars and units for the
last-completed Contract Year, as well as Licensee's published list price and
suggested retail price, if any; (iii) a list of the "top 20" selling styles for
the last completed Contract Year, and two (2) samples of each. All information
shall be stated separately with respect to each Licensed Mark and Category.
Contemporaneously with the delivery of such information Licensee will also
deliver a complete and accurate schedule of Licensee's inventory of Licensed
Merchandise and, to the extent available, related work in process and materials
then on hand, in the possession of contractors and in transit including
non-cancelable orders identifiable to Merchandise bearing the Licensed Mark(s)
(hereinafter referred to as "Inventory"). The Inventory schedule shall be
prepared as of the close of business on the date of such Termination Notice.
Except as Licensor may otherwise agree, all cancelable orders for Licensed
Merchandise and/or related materials shall promptly be canceled.

               (C) The provisions of this Section12.1 shall take precedence over
any conflicting provision of this Agreement. In addition, Licensee will execute
any instruments requested by Licensor which Licensor, in its sole discretion,
deems necessary, proper or appropriate to accomplish or confirm the foregoing.
Any such assignment, transfer or conveyance shall be without consideration other
than the mutual agreements contained herein.

          12.2 If, upon the expiration or termination of this Agreement (whether
by reason of the expiration of the stated term of this Agreement, by earlier
termination of this Agreement pursuant to Article 3 hereof, or otherwise),
Licensee (or any subcontractor, supplier or distributor of Licensee) has on hand
any finished inventory of Licensed Merchandise (or components thereof), Licensor
will have the option (herein called the "Inventory Purchase Option") to purchase
all or any part of Licensee's (or any such subcontractor's, supplier's or
distributor's) inventory (and any components thereof) of Approved Licensed
Merchandise which is

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<PAGE>

completed and which remains on hand at such expiration or termination date and
which is not subject to written orders received from customers on the date of
termination or expiration of this Agreement, for an aggregate purchase price
equal to the lower of wholesale cost or market. Any Licensed Merchandise on hand
which at no time constituted Approved Licensed Merchandise will be destroyed or
the Licensed Marks obliterated therefrom. Such purchase will be f.o.b. point of
shipment. The Inventory Purchase Option may be exercised, in whole or in part,
by Licensor within twenty (20) days after receipt by Licensor of Licensee's
written statement referred to in Section 12.1 ("Purchase Option Period"), and
the purchase price will be paid and inventory delivered within thirty (30) days
after such exercise. Licensor may offset the purchase price against any payment
due from Licensee. Upon termination of this Agreement, at the request of
Licensor, Licensee will assign to Licensor any options it has under any then
existing distributorship agreements to purchase inventory of Licensed
Merchandise then held by any such distributor.

          12.3 Licensee may complete (but only in accordance with the terms and
conditions of this Agreement) production of Approved Licensed Merchandise which
is in process, or for which written orders have been received from customers,
all as of the date of termination or expiration of this Agreement (whether by
reason of the expiration of the stated term of this Agreement, by earlier
termination of this Agreement pursuant to Article 3 hereof or otherwise).
Notwithstanding anything to the contrary contained herein, upon completion of
the production of any Licensed Merchandise in accordance with the provisions of
this Article12, such Approved Licensed Merchandise will be deemed subject to an
Inventory Purchase Option, to the extent and as set forth in Section12.2 hereof,
except that (a) Licensee will present Licensor with a written list on the last
day of each week during which it is completing such production, setting forth
the Licensed Merchandise completed during such week; and (b) each applicable
Purchase Option Period will commence upon Licensor's receipt of each such list.

          12.4 If and to the extent that the Inventory Purchase Option is not
exercised in full with respect to all Licensed Merchandise subject thereto, and
if Licensee is not in default under this Agreement, Licensee may use the
Licensed Mark(s) ("Royalty Option") in connection with the sale of Approved
Licensed Merchandise as to which an Inventory Purchase Option was not exercised
for the six (6) month period immediately following the expiration of the
applicable Purchase Option Period, provided Licensee fully complies with the
provisions of this Agreement in connection with such disposal. Licensee will be
obligated to

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<PAGE>

continue to pay Licensor the Sales Royalty in respect of all of its sales of
Licensed Merchandise made pursuant to the Royalty Option. The existence of the
Royalty Option shall not affect any of the rights of Licensor hereunder. Upon
the expiration of all Purchase Option Periods, or, if Licensee then has the
Royalty Option, upon the expiration of the Royalty Option, Licensee will sell to
Licensor at the lower of Licensee's cost or market, or, at Licensor's option,
destroy, all material and other products in its possession or under its control
incorporating the Licensed Mark(s), including all labels, tags, Packaging,
containers, advertising and promotional material (but not including Approved
Licensed Merchandise, labels, tags, Packaging, containers, advertising and
promotional material, if any, in inventory at any of Licensee's outlet stores).

          12.5 Notwithstanding any termination or expiration of this Agreement
(whether by reason of the expiration of the stated term of this Agreement, by
earlier termination of this Agreement pursuant to Article 3 hereof or
otherwise), Licensor will have, and hereby reserves, all the rights and remedies
which it may have, at law or in equity, including with respect to (a) the
collection of royalties or other funds payable by Licensee pursuant to this
Agreement; (b) the enforcement of all rights relating to the establishment,
maintenance and protection of the Licensed Mark(s); and (c) damages for breach
of this Agreement on the part of Licensee.

          12.6 Notwithstanding anything to the contrary contained in this
Agreement, Licensor will have the right, exercisable at any time commencing at
such time as Licensee fails to renew this agreement in accordance with the terms
hereof or notifies Licensor of its intention to not renew this Agreement or at
any time commencing twelve (12) months prior to the termination (pursuant to
Article 3 or otherwise) or the expiration of the then current term of this
Agreement, to itself manufacture, advertise and promote Licensed Merchandise,
and to negotiate and enter into agreements with third parties pursuant to which
it may grant a license to use the Licensed Mark(s) in connection with the
manufacture, advertising, promotion, distribution and sale of Merchandise, but
only if the collections of such Merchandise are not shipped for sale prior to
the expiration or termination date of the then current Term and the first
collection of Merchandise to be sold thereunder is the collection following the
last seasonal collection sold hereunder. Nothing herein contained will be
construed to prevent Licensor or any such third party licensee from showing such
Licensed Merchandise and accepting orders therefore prior to the termination
hereof. Licensor will notify Licensee in writing of its intention to terminate
the Agreement due to Licensee's default and/or the execution of any agreement
granting

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<PAGE>

a license to use the Licensed Mark(s) in connection with the sale and
manufacture of Articles in the Territory as described in this Section12.6.

     13. NON-COMPETE.

          13.1 (A) Licensee acknowledges that, in order to induce Licensor to
enter into this Agreement and to grant Licensee the exclusive right, license and
privilege to use the Licensed Mark(s) in connection with Approved Licensed
Merchandise (all in accordance with the terms and subject to the conditions set
forth in this Agreement), Licensee, among other things, has represented and
warranted to Licensor that Licensee will devote a substantial portion of its
time and energy and use all commercially reasonable efforts, through the
adequate financing of Licensee's operations and business, in order that Licensee
shall develop and maintain a substantial, permanent and expanding business in
Approved Licensed Merchandise. Licensee further acknowledges that Licensor is
expressly relying on the representations and warranties of Licensee herein in
entering into this Agreement and thereby granting to Licensee the exclusive
license herein granted. In order to confirm the scope and application of such
representations and warranties, Licensee hereby covenants to and agrees with
Licensor that, during the term of this Agreement, Licensee, its affiliates or
subsidiaries, will not enter into, any business transaction or arrangement with
respect to the manufacture, advertising, merchandising, promotion, sale or
distribution of any Merchandise bearing or sold under or in association with the
following brands(each a "Competing Brand"):  *

               (B) If Licensee contemplates entering into a license with a
Competing Brand, Licensee will promptly inform Licensor and shall provide
Licensor with sufficient information concerning the proposed transaction to
enable Licensor to make an informed decision whether in its discretion, the
nature of the proposed license or the parties participating therein would
materially adversely impact upon or affect the Licensed Mark(s) or their use in
connection with Licensed Merchandise or Licensee's ability to meet all of its
obligations under this Agreement. Licensor will notify Licensee of its decision
within twenty (20) business days after it receives all of the information
referred to in the preceding sentence or such other additional information as
Licensor may reasonably request. If Licensor approves the proposed license,
which approval must be in writing, and the advertising/exploitation commitments
under such license are greater than that provided for

* CONFIDENTIAL PORTION OF THIS EXHIBIT OMITTED AND FILED SEPARATELY WITH THE SEC
PURSUANT TO RULE 24b-2 OF THE 1934 ACT

                                       34

<PAGE>

hereunder, this Agreement will automatically be deemed to increase
the aggregate of the Image Fund Payment and the minimum advertising obligations
(as set forth in Section 7) and the Sales Royalty to the amounts provided in
such license for comparable periods of time. Licensee will notify Licensor
promptly upon making any such other designer license agreement, including in
such notice the identity of the designer and the advertising/exploitation
commitment contained in said agreement.

     14. INTELLECTUAL PROPERTY MATTERS.

          14.1 (A) Licensor must approve in advance in writing all uses of the
Licensed Mark(s). Licensee will not use a Licensed Mark(s) as part of a
corporate name or as a trademark, servicemark or other commercial mark, in whole
or in part, or in such a way so as to give the impression that the name of
Licensor or LCI or the Licensed Mark(s), or any component, modification or
variation of any of the foregoing, is the property of Licensee. No name, names,
word or words will be conjoined or used by Licensee in connection with the
Licensed Mark(s) without the prior written consent of Licensor, including in any
Packaging, advertising, promotional or business materials or the like utilized
by Licensee in connection with Licensed Merchandise.

               (B) Licensor may from time to time promulgate written uniform
rules and regulations relating to the manner of use of a Licensed Mark(s), which
Licensee will, as promptly as practicable, adhere to in its operations
hereunder.

          14.2 Licensee acknowledges that each Licensed Mark has acquired a
valuable secondary meaning and goodwill in the minds of the trade and the
public, and that all Merchandise bearing a Licensed Mark has acquired a
reputation of the highest quality and style. Licensee acknowledges that Licensor
is the owner of all right, title and interest in and to each Licensed Mark in
any and all forms or embodiments thereof, and is the owner of the goodwill
attached to each Licensed Mark in connection with the business and goods in
relation to which the same has been and may in the future be used. For the
purposes of trademark registration, sales by Licensee of Licensed Merchandise
shall be deemed to have been made by and for the benefit of Licensor. Licensee
will exercise its best efforts throughout its operations under this Agreement to
safeguard the prestige and goodwill of the Licensed Mark(s). Licensee will not,
at any time, do or permit any third party with whom it has a contractual
relationship with respect to the Licensed Merchandise, to do, or permit any of
its affiliate to do, any act or thing which may, in any way, impair the rights
of Licensor in and, or

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<PAGE>

which may affect the validity or depreciate the value of, the Licensed Mark(s)
or their respective prestige or goodwill.

          14.3 Licensee acknowledges that only Licensor may, at its own expense,
file and prosecute a trademark application or applications to register a
Licensed Mark or any component, derivation or variation thereof, for any items
or services, including Licensed Merchandise or to file or protect any patent or
copyright application with regard to any item of Licensed Merchandise. All such
filings and prosecution must be done by Licensor only in its discretion.

          14.4 Licensee will use the Licensed Mark(s) strictly in compliance
with and observance of any and all applicable laws, rules, regulations, and
ordinances and will use such markings in connection therewith as may be
reasonably requested by Licensor. To the extent any rights in and to a Licensed
Mark are deemed to accrue to Licensee pursuant to this Agreement or otherwise,
Licensee hereby assigns any and all such rights, at such time as they may be
deemed to accrue, to Licensor. Licensee will execute any and all documents and
instruments reasonably requested by Licensor which Licensor may deem necessary,
proper or appropriate to accomplish or confirm the foregoing. Any such
assignment, transfer or conveyance will be without consideration other than the
mutual agreements contained herein. Upon expiration or termination of this
Agreement for any reason whatsoever, Licensee will forthwith execute and file
any and all documents reasonably requested by Licensor terminating any and all
trademark registrations, registered user agreements and other documents
regarding the Licensed Mark(s). Licensor shall bear all expenses reasonably
incurred in preparing and recording any and all such documents.

          14.5 Licensee agrees, on behalf of itself, its affiliates and owners,
never (i) to challenge the validity or ownership of any Licensed Mark or any
application for registration thereof, or the trademark registrations thereof, in
any jurisdiction; nor (ii) to contest the fact that Licensee's rights under this
Agreement are (a) solely those of a manufacturer and distributor; and (b)
subject only to the applicable provisions of Sections 12.2 and 12.3 hereof,
terminate upon termination of this Agreement. The provisions of this Section
14.5 will survive any termination or expiration of the term of this Agreement.

          14.6 In the event that any of Licensee's designs for Licensed
Merchandise, or any advertising, Packaging or promotional material, may be made
the subject of patent, trademark or copyright protection, Licensor will have the
right, at its own expense, to file applications therefore and will be the

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<PAGE>

exclusive owner of such rights. Licensee will fully cooperate with Licensor in
connection with any such activities.

          14.7 Licensee will promptly notify Licensor of any infringement of the
Licensed Mark(s), or any act of unfair competition by third parties relating to
a Licensed Mark, whenever such infringement or act comes to Licensee's
attention. After receipt of such notice from Licensee, Licensor may, in
Licensor's discretion, take such action to stop such infringement or act as
Licensor may deem necessary to protect the Licensed Mark(s). Licensee will
cooperate fully with Licensor to stop any such infringement or act and, if so
requested by Licensor, will join with Licensor as a party to any action brought
by Licensor for such purpose. Licensor will have full control over any action
taken, including the right to select counsel, to settle on any terms it deems
advisable in its discretion, to appeal any adverse decision rendered in any
court, to discontinue any action taken by it, and otherwise to make any decision
in respect thereto as it in its discretion deems advisable. Licensor will bear
all expenses connected with the foregoing, except that if Licensee desires to
retain its own counsel, it may do so at its own expense. Any recovery as a
result of such action will belong solely to Licensor. Licensee agrees that
Licensor will have the sole power to take or omit to take legal or other action,
before any court or governmental authority or otherwise, with respect to the
protection of the Licensed Mark(s) against infringement or otherwise, and that
if Licensor determines, in its discretion, that it would not be in the best
interests of Licensor's business, viewed as a whole, to take any such action,
Licensor may determine to omit from taking any such action, and Licensee hereby
agrees to abide by any such decision.

          14.8 ANTI-COUNTERFEITING CONTRIBUTION. Licensee shall contribute the
amount set forth in Schedule 14.8 towards Licensor's anti-counterfeiting
activities relating to the Licensed Merchandise (the "Anti-Counterfeiting
Contribution"). Upon the request of Licensee, Licensor will provide reasonable
documentation of its expenses for anti-counterfeiting activities related to the
Licensed Merchandise. The Anti-Counterfeiting Contribution will be invoiced
annually during the term, as set forth in Schedule 14.8.

          14.9 Licensee hereby represents, warrants and covenants that Licensee
will own or obtain, for the sole benefit of Licensor, prior to any use thereof,
all rights (if any) in or to any designs sketches or components thereof,
Packaging, advertising and artwork (such concepts and materials are collectively
referred to as the "Merchandise IP") necessary or appropriate to enable Licensee
to (a) manufacture and sell Approved Licensed Merchandise based on or embodying
such Merchandise IP; and (b) prevent others from

                                       37

<PAGE>

manufacturing and selling Merchandise based on or embodying such Merchandise IP
or any element confusingly similar thereto. All right, title and interest in and
to all Samples (including Final Samples), and all Merchandise IP used in
connection with all Samples and Merchandise derived therefrom, including any
modifications to or improvements of any of the foregoing, to the extent the same
may for any reason be deemed to be other than the sole and exclusive property of
Licensor, are hereby assigned to, and will be the sole and exclusive property
of, Licensor, and will not be used by Licensee other than in strict accordance
with this Agreement. All Merchandise manufactured by Licensee, Samples
(including Final Samples), Merchandise Concepts, Design Concepts, sketches,
product designs and colorways provided hereunder will be used by Licensee only
in accordance with this Agreement, and none of the foregoing which are
distinctive to Licensed Merchandise will be used or adapted by or through
Licensee, through any affiliate of Licensee or otherwise, to produce any items
or products other than Approved Licensed Merchandise hereunder. Notwithstanding
the foregoing, nothing contained herein shall be deemed to effect an assignment
to Licensor of any designs or intellectual property rights owned or used by
Licensee or its affiliates prior to the date of this Agreement; provided however
that Licensee shall notify Licensor in advance, and Licensor shall have the
right to approve, in writing, any use in the Licensed Merchandise of designs or
intellectual property rights owned or used by Licensee or its affiliates prior
to the date of this Agreement.

     15. CONFIDENTIALITY.

          15.1 Each party acknowledges that all information of a business or
technical nature imparted to the other party during the course of this Agreement
with respect to the business of the disclosing party and its affiliates,
including business plans, designs, sketches, materials, colors, costs, pricing,
customers, production techniques, sources of supply and other documents,
non-public information and trade secrets, were acquired, designed and/or
developed by them at great expense, are secret, confidential and unique, and
constitute the trade secrets and exclusive property of the disclosing party and
its affiliates, and that any use by the other party of any such trade secrets
and property, other than for the sole purpose of manufacturing, advertising,
merchandising, promoting, selling and distributing Approved Licensed Merchandise
in accordance with the terms of this Agreement, would be wrongful and would
cause irreparable injury to the disclosing party and its affiliates.

                                       38

<PAGE>

          15.2 Neither party will at any time disclose or divulge to any Person,
or use or suffer the use by any other Person, for any purpose other than solely
as required for the manufacturing, advertising, merchandising, promoting,
selling and distributing of Approved Licensed Merchandise in accordance with the
terms of this Agreement, directly or indirectly, for its own or the benefit of
any Person, any property, trade secrets or confidential information of the other
party or any of its affiliates obtained from or through them.

          15.3 Licensor may use and authorize its affiliates and others to use,
in any manner Licensor desires, any design components provided or approved by
Licensor for use by Licensee hereunder, whether or not distinctive and whether
or not they are actually used by Licensee hereunder, provided that such use does
not conflict with any rights granted to Licensee hereunder. No such use by
Licensor, its affiliates or others outside the Territory or in connection with
products other than Merchandise will be deemed in conflict with any rights
granted to Licensee hereunder.

     16. EQUITABLE RELIEF. Each party acknowledges that the other will suffer
great and irreparable harm as a result of the breach of any covenant or
agreement to be performed or observed under this Agreement other than the
covenants to make monetary payments, and, whether such breach occurs before or
after the termination of this Agreement, each party acknowledges that the
non-breaching party will be entitled to apply for and receive from any court of
competent jurisdiction a temporary restraining order, preliminary injunction and
permanent injunction, without any necessity of proving damages or any
requirement for the posting of a bond or other security, enjoining the breaching
party from further breach of this Agreement or further infringement or
impairment of Licensor's rights in and to the Licensed Mark(s). Such relief will
be in addition to and not in substitution of any other remedies available to the
non-breaching party pursuant to this Agreement or otherwise.

     17. INDEMNITY; INSURANCE.

          17.1 (A) It is understood and agreed that as between Licensor, on the
one hand, and Licensee, on the other hand, Licensor assumes no liability to
Licensee or any third party with respect to the performance characteristics of
Licensed Merchandise, all of which liabilities will be borne by Licensee.

               (B) Licensee agrees to indemnify and hold Licensor, Juicy
Couture, Inc., LCI and their respective officers, directors, agents,
representatives and controlling persons (collectively, for purposes of this
Section 16(b), "Licensor"), individually, harmless from any and all liability,
claims, causes of action, suits,

                                       39

<PAGE>

damages and expenses (including reasonable attorneys' fees and expenses)
(collectively, "Indemnified Losses"), which Licensor may become liable for, or
may incur, or be compelled to pay, directly as a result of any acts, whether of
omission or commission, that may arise under or in connection with this
Agreement, in connection with Licensed Merchandise manufactured by or on behalf
of Licensee or otherwise in connection with Licensee's business or by virtue of
any misrepresentation or breach of warranty or failure to perform or observe any
covenant on its part to be performed or observed hereunder.

          17.2 Licensor agrees to indemnify and hold Licensee and its officers,
directors, agents, representatives and controlling persons (collectively, for
purposes of this Section 17.2, "Licensee") harmless from any and all Indemnified
Losses, which Licensee may become liable for, or may incur, or be compelled to
pay directly as a result of the infringement of the trademark rights of a third
party unaffiliated with Licensee solely by reason of Licensee's use of the
Licensed Mark(s) within the Territory, in accordance with the terms and
conditions of this Agreement.

          17.3 An indemnified party will immediately give notice to the
indemnifying party of any claim, action or suit that may give rise to liability
under this Article 17, provided that the failure of any indemnified party to
provide such notice will not relieve the indemnifying party of its obligations
hereunder. The indemnifying party will have the option to defend any such claim,
action or suit, including the right to select counsel, control the defense,
assert counterclaims and crossclaims, bond any lien or judgment, take any appeal
and to settle on such terms as it, in its discretion, reasonably deems
advisable, provided prior notice of any settlement is given to the indemnified
party and such party provides its express prior consent thereto. No settlement
of any claim may be effected without the prior written consent of the
indemnifying party.

          17.4 Licensee will maintain in full force and effect at all times
during which Licensed Merchandise is being sold and used, with an insurance
carrier that has at least an A.M. Best Rating of A- VII, a liability insurance
policy with limits of liability of at least the following amounts: Comprehensive
General Liability including premises operations, products and completed
operations, and personal/advertising injury - $2,000,000 aggregate; employer's
liability - $1,000,000 per occurrence; worker's compensation - statutory
required medical and indemnity; and umbrella/excess liability - $25,000,000
aggregate. Liability coverage under such insurance policy will include bodily
injury and property damage claims resulting from accidents or occurrences
arising out of any alleged defect in Licensed Merchandise, whether such defect
be patent or

                                       40

<PAGE>

latent in nature and whether such defect is alleged to be a manufacturing or
design defect. Such insurance will insure against all accidents or occurrences
occurring at all times during which Licensed Merchandise is being sold and used,
regardless of when the claim is made. and the General Liability and
Umbrella/Excess Liability policy will name as additional insureds Licensor, LCI
and their respective officers, directors, agents, representatives and
controlling persons, and shall endeavor to provide for at least thirty (30)
days' prior written notice by the carrier thereof to Licensor and Licensee of
the cancellation or modification thereof. Licensee will as promptly as
practicable, after the date hereof and from time to time thereafter upon
Licensor's written request, deliver to Licensor a certificate of such insurance
from the insurance carrier which sets forth the scope of coverage and the limits
of liability. Licensee will provide Licensor as promptly as practicable with a
true, correct and complete copy of any Insurance Notice received by Licensee
hereunder. In the event that the insurance coverage to be provided under the
policy as proposed to be modified by any Insurance Notice shall be unacceptable
to Licensor, Licensee will thereupon use all commercially reasonable efforts
either to retain the coverage then provided for in the said policy or to obtain
other insurance coverage which is acceptable to Licensor. In the event that,
within fifteen (15) days prior to the effective date of any change set out in
any Insurance Notice, Licensee will not have provided or arranged for insurance
coverage (substitute or otherwise) acceptable to Licensor, Licensor may itself
arrange to obtain insurance coverage complying with the terms hereof. Licensee
will reimburse Licensor, immediately upon Licensor's request, for all expenses
and premium payments associated with Licensor's seeking and obtaining such
coverage. Licensee's maintenance of the insurance coverage as provided herein
will not limit, excuse or replace any of Licensee's obligations under the
provisions of Section 17.1 hereof, which will remain absolute. Any such
insurance may be obtained by Licensee in conjunction with a currently existing
policy covering other products.

          17.5 The provisions of this Article 17 will survive any termination or
expiration of this Agreement.

     18. REPRESENTATIONS AND WARRANTIES.

          18.1 Licensee hereby represents and warrants to Licensor as follows:

               (A) Licensee is a corporation duly organized, validly existing
and in good standing under the laws of the state of incorporation as set forth
on page 1 of this Agreement, and is duly qualified and authorized to do business
and in good standing in all jurisdictions in which the nature of its

                                       41

<PAGE>

business requires such qualifications.

               (B) Neither the execution, delivery nor performance of this
Agreement by Licensee will, with or without the giving of notice or passage of
time, or both, conflict with, or result in a default or loss of rights under,
any provision of any other agreement or understanding to which Licensee is a
party or by which it or any of its properties may be bound.

               (C) Licensee has full power and authority to enter into this
Agreement and to carry out the transactions contemplated thereby in accordance
with its terms; the execution, delivery, and performance of this Agreement by
Licensee have been duly and properly authorized by all necessary actions; and
this Agreement constitutes the valid and binding obligation of Licensee
enforceable in accordance with its terms.

          18.2 Licensor hereby represents and warrants to Licensee as follows:

               (A) Licensor is a corporation duly organized, validly existing
and in good standing under the laws of Delaware, and is duly qualified and
authorized to do business as a foreign corporation in good standing in all
jurisdictions in which the nature of its business requires such qualification.

               (B) Neither the execution, delivery nor performance of this
Agreement by Licensor will, with or without the giving of notice or passage of
time, or both, conflict with, or result in a default or loss of rights under,
any provision of the Certificate of Incorporation or By-Laws of Licensor or any
other agreement or understanding to which Licensor is a party or by which it or
any of its properties may be bound.

               (C) Licensor has full power and authority to enter into this
Agreement and to carry out the transactions contemplated thereby in accordance
with its terms; the execution, delivery, and performance of this Agreement by
Licensor have been duly and properly authorized by all necessary corporate
actions; and this Agreement constitutes the valid and binding obligation of
Licensor enforceable in accordance with its terms.

               (D) Licensor has the right to grant the license to use the
Licensed Mark(s) as trademarks in connection with the manufacturing,
advertising, promotions, sales and distribution of Approved Licensed Merchandise
by Licensee, as contemplated by and under the terms and conditions set forth in
this Agreement.

                                       42

<PAGE>

     19. BROKERS. Each of Licensor and Licensee hereby represents and warrants
to the other that neither it nor any of its affiliates (including its officers,
directors or employees) has employed or dealt with any broker or finder in
connection with this Agreement or the transactions contemplated hereby, and
agrees to indemnify and hold the other party and its affiliates harmless from
any and all liabilities (including, without limitation, reasonable attorneys'
fees and disbursements paid or incurred in connection with any such liabilities)
for any brokerage commissions or finders' fees in connection with this Agreement
or the transactions contemplated hereby insofar as such liabilities shall be
based on the arrangements or agreements made by it or on its behalf.

     20. NOTICES. All reports, communications, requests, demands or notices
required by or permitted under this Agreement will be in writing and will be
deemed to be duly given on the date same is sent and acknowledged via hand
delivery, facsimile or reputable overnight delivery service (with a copy
simultaneously sent by registered mail), or, if mailed, five (5) days after
mailing by certified or registered mail, return receipt requested, to the party
concerned at the following address:

               IF TO LICENSOR: L. C. LICENSING, INC.
                               c/o Liz Claiborne, Inc.
                               1441 Broadway
                               New York, NY 10018
                               Attention: President - Licensing
                               Fax No.: (212) 626-1807

               WITH COPY TO:   LIZ CLAIBORNE, INC.
                               One Claiborne Avenue
                               North Bergen, NJ 07047
                               Attention: Legal Department
                               Fax No.: (201) 295-7851

               IF TO LICENSEE, AS SET FORTH IN SCHEDULE 20.

Any party may change the address to which such notices and communications shall
be sent by written notice to the other parties, provided that any notice of
change of address shall be effective only upon receipt.

     21. MISCELLANEOUS.

          21.1 (A) INTEGRATION; AMENDMENTS. This Agreement (including the
schedules annexed hereto) sets forth the entire agreement and understanding
between the parties relating in any way to

                                       43

<PAGE>

the use of the Licensed Mark(s), or to the subject matter hereof and supersedes
and merges all prior discussions, arrangements and agreements between them. This
Agreement may not be amended or modified except by written instrument signed by
each of the parties hereto.

               (B) RELATIONSHIP OF PARTIES. Nothing herein contained will be
construed to constitute the parties hereto as partners or as joint venturers, or
as franchisor/franchisee, or either as agent of the other. Neither party hereto
by virtue hereof has the right nor authority to act for or to bind the other in
any way or to sign the name of the other or to represent that the other is in
any way responsible for the acts or omissions of the other.

               (C) GOVERNING LAW; JURISDICTION. This Agreement has been entered
into in the State of New York and will be construed by and interpreted in
accordance with the laws of that State without regard to principles of conflict
of laws. The headings given to the paragraphs of this Agreement are for the
convenience of the parties only and are not to be used in any interpretation of
this Agreement. Licensor and Licensee hereby (i) agree that the State and
Federal courts sitting in the State and City of New York have exclusive
jurisdiction in any action arising out of or connected in any way with this
Agreement; (ii) each consent to personal jurisdiction of and venue in such
courts in any such matter; and (iii) further agree that the service of process
or of any other papers with respect to such proceedings upon them by mail in
accordance with the provisions set out herein will be deemed to have been duly
given to and received by them five (5) days after the date of certified mailing
and shall constitute good, proper and effective service.

               (D) SEVERABILITY. In the event that any one or more provisions of
this Agreement is held invalid, illegal or unenforceable in any respect, the
validity, legality or enforceability of the remaining provisions contained
herein will not in any way be affected or impaired thereby.

               (E) WAIVER. No failure or delay on the part of any party in
exercising any power or right under this Agreement will operate as a waiver
thereof, nor will any single or partial exercise of any such power or right
preclude any other or further exercise thereof or the exercise of any other
power or right. No waiver by any party of any provision of this Agreement, or of
any breach or default, will be effective unless in writing and signed by the
party against whom such waiver is to be enforced. All rights and remedies
provided for herein will be cumulative and in addition to any other rights or
remedies such parties may have at law or in equity.

                                       44

<PAGE>

               (F) FURTHER ASSURANCES. Each party hereto will be cooperative and
will take such further action and shall execute and deliver such further
documents as may be reasonable requested by the other party hereto in order to
effectuate or facilitate the purpose and intents of this Agreement.

               (G) DELEGATION BY LICENSOR. Notwithstanding any provision to the
contrary herein contained, Licensor's rights and obligations in connection with
the review and approval of Licensed Merchandise hereunder (thereby rendering the
same Approved Licensed Merchandise), may be delegated by Licensor to any
affiliate of Licensor, and Licensee will accept the performance of such
designee, for all purposes hereunder, as the performance of Licensor hereunder.

               (H) COUNTERPARTS. This Agreement may be executed in one or more
counterparts, all of which taken together shall be deemed an original.

               (I) THIRD PARTY BENEFICIARIES. Notwithstanding anything to the
contrary in this Agreement, this Agreement does not and will not be construed to
itself confer any rights whatsoever upon any Person or entity whatsoever except
Licensor and Licensee and their respective affiliates, whether upon a theory of
third party beneficiary or otherwise, and Licensee and Licensor agree on behalf
of themselves and their respective affiliates to neither cause nor permit any of
their respective affiliates, including their respective officers, directors and
employees, to take any action inconsistent with the provisions of this Section.
Only the parties to this Agreement will have any rights under or be entitled to
enforce this Agreement.

               (J) TERMS AND USAGE GENERALLY. The definitions contained in this
Agreement apply equally to both the singular and plural forms of the terms
defined. Whenever the context may require, any pronoun includes the
corresponding masculine, feminine and neuter forms. All references herein to
Articles, Sections, Annexes, Exhibits and Schedules are deemed to be references
to Articles and Sections of, and Annexes, Exhibits and Schedules to, this
Agreement unless the context otherwise requires. All Annexes, Exhibits and
Schedules attached hereto are deemed incorporated herein, as if set forth in
full herein. The words "include", "includes" and "including" are deemed to be
followed by the phrase "without limitation"". All accounting terms not defined
in this Agreement have the meanings determined by United States generally
accepted accounting principles as in effect from time to time. The words
"hereof", "herein" and "hereunder" and words of similar import when used in this
Agreement refer to this Agreement as a whole and not to any particular provision
of this Agreement. References to a Person or entity are also to its permitted
successors

                                       45

<PAGE>

and permitted assigns. Unless otherwise expressly provided herein, any
agreement, instrument or statute defined or referred to herein or in any
agreement or instrument that is referred to herein means such agreement,
instrument or statute as from time to time amended, modified or supplemented,
including (in the case of agreements or instruments) by waiver or consent and
(in the case of statutes) by succession of comparable successor statutes and
references to all attachments thereto and instruments incorporated therein.

     22. LICENSOR'S APPROVAL OR CONSENT. The parties hereby agree and
acknowledge that the highest standards and reputation and established image,
prestige and goodwill are associated with the name of Licensor, LCI, Juicy
Couture, Inc., the Licensed Mark(s) and with the businesses and products of
Licensor, Juicy Couture, Inc. and LCI and their respective affiliates and
licensees, and that the operations of the license granted hereunder and the
Person(s) who own the license or any equity interest in Licensee will reflect
upon and affect such standards, reputation, image, prestige and goodwill.
Accordingly, Licensee agrees and acknowledges that any approval or consent of
Licensor required hereunder, including any approval or consent that by the terms
of this Agreement may not be unreasonably withheld, may be based upon subjective
standards intended to maintain such standards, reputation, image, prestige and
goodwill, and the quality and reputation of Licensed Merchandise.

     23. TAXES. If applicable, Licensee will pay withholding tax on royalties
and all other payments made to Licensor pursuant to this Agreement. An amount
equal to the withholding tax paid by Licensee will be deducted by Licensee from
the royalty and other payments made to Licensor. Licensee will furnish Licensor
with all certificates or other administrative documents issue by a local tax
authority on the withholding taxes paid.

     24. JOINT AND SEVERAL LIABILITY. It is understood and agreed by the parties
that Movado and Swissam have joint and several liability with respect to all of
the obligations under this Agreement.

             THE REMAINDER OF THIS PAGE IS INTENTIONALLY LEFT BLANK.

                                       46

<PAGE>

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

                                        L. C. LICENSING, INC.

                                        by: /S/ Barbara J. Friedman
                                            ------------------------------------
                                            AUTHORIZED SIGNATURE

                                        NAME:  BARBARA J. FRIEDMAN
                                        TITLE: PRESIDENT-LICENSING

                                        MOVADO GROUP, INC.

                                        BY: /S/ Richard Cote
                                            ------------------------------------
                                            AUTHORIZED SIGNATURE

                                        NAME:   Richard Cote
                                              ----------------------------------
                                        TITLE:  Executive Vice President/COO
                                               ---------------------------------
                                        DATE SIGNED:  November 21, 2005
                                                     ---------------------------

                                        SWISSAM PRODUCTS LIMITED

                                        BY: /s/ Timothy F. Michno
                                            ------------------------------------
                                            AUTHORIZED SIGNATURE

                                        NAME:  Timothy F. Michno
                                              ---------------------------------
                                        TITLE:  General Counsel/Director
                                               ---------------------------------
                                        DATE SIGNED: November 21, 2005
                                                     ---------------------------

                                       47

<PAGE>

                             SCHEDULE 1.1 TERRITORY

The Territory shall be the world; provided that rights to sell and distribute in
any country other than the countries listed below are subject to (i) Licensor's
reasonable determination that the sale of Licensed Merchandise in such country
will not infringe on the intellectual property rights of any third party; and,
(ii) the commencement by Licensor, LCI, their affiliates or authorized
distributors of the sale of apparel or handbags in such country; provided that
Licensor will use commercially reasonable efforts to provide advance notice of
the anticipated commencement of the sale of apparel or handbags in any such
country in order that Licensee may develop a business plan, which shall be
subject to the reasonable approval of Licensor.

                                        *

<PAGE>

* CONFIDENTIAL PORTION OF THIS EXHIBIT OMITTED AND FILED SEPARATELY WITH THE SEC
PURSUANT TO RULE 24b-2 OF THE 1934 ACT

<PAGE>

                          SCHEDULE 1.2 LICENSED MARK(S)

Juicy Couture

Couture Couture Los Angeles

<PAGE>

                            SCHEDULE 1.3 MERCHANDISE

Women's timepieces and the component parts thereof including, without
limitation, watch bands ("Women's Timepieces"); subject to Section 2.6(a)
hereof, men's timepieces and the component parts thereof including, without
limitation, watch bands ("Men's Timepieces"); subject to Section 2.6(b),
children's timepieces and the component parts thereof including, without
limitation, watch bands ("Children's Timepieces"). Each of Women's Timepieces,
Men's Timepieces, and Children's Timepieces is a "Category" of Licensed
Merchandise.

<PAGE>

                         SCHEDULE 1.5 LINE OPENING DATES

Licensed Merchandise will be introduced to the trade no later than November
2006.

There will be five (5) major markets for Licensed Merchandise each year in
January, March, May, August and November.

<PAGE>

                        SCHEDULE 1.8 FIRST CONTRACT YEAR

Effective Date: November 18, 2005

The First Contract Year commences on the Effective Date and ends on December 31,
2005.

<PAGE>

                           SCHEDULE 1.10 BUSINESS PLAN

I.   BUSINESS PLAN

     A.   Sales Objective - All By Brand

          1.   Projected Volumes

          2.   Projected Doors

          3.   Distribution Strategies

          4.   Analysis Of Past Season Volumes

     B.   Advertising, Marketing, Promotion And
          Public Relations Objectives By Brand

     C.   Shop-In-Shops By Brand

          1.   Strategies

          2.   Projected Expenditures, Customer, Door

     D.   Organization Structure

     E.   Launches Of New Categories

     F.   Analysis Of Competition Including Pricing

     G.   Quality, Sourcing And Operational Issues

II.  MARKETING PLAN

     A.   Strategy, Including Expenditures, By Brand And Type Of Advertising
          Vehicles, Marketing And Public Relations

     B.   Launch Activities By Brand

     C.   Collateral Support By Brand

     D.   Media Plan

          1.   Advertising Schedule By Brand For All Print Media

          2.   Radio And Television, If Applicable, By Brand

<PAGE>

                                  SCHEDULE 1.13

                                        *

* CONFIDENTIAL PORTION OF THIS EXHIBIT OMITTED AND FILED SEPARATELY WITH THE SEC
PURSUANT TO RULE 24b-2 OF THE 1934 ACT

<PAGE>

                      SCHEDULE 1.14 STANDARDS OF ENGAGEMENT

                    LIZ CLAIBORNE, INC. AND ITS SUBSIDIARIES
                             STANDARDS OF ENGAGEMENT

1.   LEGAL REQUIREMENTS. Licensees must observe all applicable laws of their
     country, including laws relating to employment, discrimination, the
     environment, safety and the apparel and related fields. If local or
     industry practices exceed local legal requirements, this higher standard
     should be met.

2.   HEALTH AND SAFETY. Conditions must be safe, clean and acceptable throughout
     all work and residential facilities.

3.   EMPLOYMENT PRACTICES. We will only support businesses that are fair to
     their employees:

          -    Licensees must pay wages and benefits and provide compensation
               for overtime consistent with local laws.

          -    Licensees must adopt working hours that do not exceed prevailing
               local law. One day in seven should be regularly encouraged as a
               day off.

          -    Licensees must not use child labor as defined by local law
               (however, workers must be at least 15 years of age), forced labor
               or prison labor.

          -    Licensees must not use corporal punishment or other mental or
               physical disciplinary actions or engage in sexual harassment.

          -    We favor Licensees who do not discriminate based upon race,
               religion, national origin, political affiliation or sex, and who
               encourage free association and freedom of expression.

4.   ENVIRONMENTAL PRACTICE. We favor licensees who practice environmental
     protection.

5.   ETHICAL CONDUCT. We will encourage our Licensees to embrace ethical
     standards in the conduct of their businesses. We will not support or
     participate in any way in any local, regional or national war or armed
     conflict in any country in which we do business and will seek to minimize
     our business risk where conflict exists, emphasizing the safety of our
     employees and representatives.

IF YOU BELIEVE THAT THESE STANDARDS OF ENGAGEMENT ARE NOT BEING UPHELD OR IF YOU
HAVE ANY QUESTIONS REGARDING THESE STANDARDS OF ENGAGEMENT, PLEASE CONTACT LIZ
CLAIBORNE. YOUR IDENTITY WILL BE KEPT IN CONFIDENCE.

<PAGE>

                    SCHEDULE 2.3 (B) LICENSEE/FACTORY PROFILE

SEE ATTACHED

<PAGE>

                               LIZ CLAIBORNE, INC.
                            LICENSEE/FACTORY PROFILE

                        PLEASE COMPLETE FOR EACH FACTORY

<TABLE>
<S>                                                      <C>
LICENSEE INFORMATION

Legal Name                ____________________________   Owner(s)                 ____________________________
Main Office Address       ____________________________   Contact Person / Title   ____________________________
                          ____________________________   Telephone Number         ____________________________
State / Province          ____________________________   Fax / E-mail Address     ____________________________
Postal Code               ____________________________
Country                   ____________________________

FACTORY INFORMATION

Facility (Factory) Name   ____________________________   Owner(s)                 ____________________________
Main Office Address       ____________________________   Contact Person / Title   ____________________________
                          ____________________________   Telephone Number         ____________________________
State / Province          ____________________________   Fax / E-mail Address     ____________________________
Postal Code               ____________________________
Country                   ____________________________

FACTORY BACKGROUND INFORMATION

Years in Operation        ____________________________   Other Current Buyers     ____________________________
Type of Product           ____________________________                            ____________________________
Monthly Production                                                                ____________________________
(in units per month)      ____________________________
Number of Workers         ____________________________
Number of Machines        ____________________________
Other Current Buyers      ____________________________
                          ____________________________
                          ____________________________

Please circle Y (Yes) or N (No)

Have you ever been visited by U.S. Customs?                         Y   N
Has this factory ever been named on U.S. Customs 592 List?          Y   N
Has this factory ever been cited violations by local authorities?   Y   N
Are there ANY workers in this facility under the age of 15?         Y   N
Are there migrant workers employed at this facility?                Y   N
Does the factory provide housing for workers?                       Y   N
</TABLE>

<PAGE>

                           SCHEDULE 3.1 TERM; RENEWAL

a) Term: Effective Date - December 31, 2011.

b) Renewal Threshold:  *  .

c) Renewal Term: January 1, 2012 - December 31, 2016.

d) Notice must be provided by March 31, 2011.

* CONFIDENTIAL PORTION OF THIS EXHIBIT OMITTED AND FILED SEPARATELY WITH THE SEC
PURSUANT TO RULE 24b-2 OF THE 1934 ACT

<PAGE>

                        SCHEDULE 3.3(G) MINIMUM NET SALES

Licensee shall achieve Net Sales of Licensed Merchandise in the U.S. of $0 in
Year 1 (2005) and  *  in Year 2 (2006). In each year thereafter, Licensee shall
achieve Net Sales equal  *

Initial Term:

<TABLE>
<CAPTION>
YEAR            SALES
----            -----
<S>             <C>
Year 3 (2007)
Year 4 (2008)
Year 5 (2009)     *
Year 6 (2010)
Year 7 (2011)
</TABLE>

Renewal Term, if any:

<TABLE>
<CAPTION>
YEAR             SALES
----             -----
<S>              <C>
Year 8 (2012)
Year 9 (2013)      *
Year 10 (2014)
Year 11 (2015)
Year 12 (2016)
</TABLE>

* CONFIDENTIAL PORTION OF THIS EXHIBIT OMITTED AND FILED SEPARATELY WITH THE SEC
PURSUANT TO RULE 24b-2 OF THE 1934 ACT

<PAGE>

                   SCHEDULE 4.1 APPROVED FULL PRICE CUSTOMERS

                                        *

* CONFIDENTIAL PORTION OF THIS EXHIBIT OMITTED AND FILED SEPARATELY WITH THE SEC
PURSUANT TO RULE 24b-2 OF THE 1934 ACT

<PAGE>

                    SCHEDULE 4.2 APPROVED OFF-PRICE CUSTOMERS

                                        *

* CONFIDENTIAL PORTION OF THIS EXHIBIT OMITTED AND FILED SEPARATELY WITH THE SEC
PURSUANT TO RULE 24b-2 OF THE 1934 ACT

<PAGE>

                             SCHEDULE 5 ORGANIZATION

Brand President

Director of Sales

Vice President of Product Development

Director of Marketing

<PAGE>

                        SCHEDULE 6.2(A) PRODUCT CALENDAR

                                        *

* CONFIDENTIAL PORTION OF THIS EXHIBIT OMITTED AND FILED SEPARATELY WITH THE SEC
PURSUANT TO RULE 24b-2 OF THE 1934 ACT

<PAGE>

                   SCHEDULE 6.7 LICENSEE PROCEDURES CHECKLIST

                          LICENSEE PROCEDURES CHECKLIST

Licensee name: ___________________________________________________

Date: ____________________________________________________________

Contact: _________________________________________________________

Please provide a description of the procedure currently in place for each of the
following areas of compliance and testing. Kindly attach copies of existing
documented programs and requirements if available:

Human Rights Compliance

Quality Systems Compliance

Supplier Certification

Country of Origin Verification

Raw Materials Testing

Product Care Labeling and Testing

<PAGE>

             SCHEDULE 7.2 NATIONAL ADVERTISING, MARKETING AND COOP.

<TABLE>
<S>             <C>
Year 1 (2005)   0

                *
</TABLE>

* CONFIDENTIAL PORTION OF THIS EXHIBIT OMITTED AND FILED SEPARATELY WITH THE SEC
PURSUANT TO RULE 24b-2 OF THE 1934 ACT

<PAGE>

                         SCHEDULE 7.3 IMAGE FUND PAYMENT

<TABLE>
<S>             <C>
Year 1 (2005)   $0

                 *
</TABLE>

* CONFIDENTIAL PORTION OF THIS EXHIBIT OMITTED AND FILED SEPARATELY WITH THE SEC
PURSUANT TO RULE 24b-2 OF THE 1934 ACT

<PAGE>

                 SCHEDULE 8.2 GUARANTEED MINIMUM ROYALTIES (GMR)

The minimum royalty shall be $0 in Year 1 (2005) and  *  in Year 2 (2006). In
each subsequent year, the minimum shall be  *  and the following base amount for
such year:

Initial Term:

<TABLE>
<CAPTION>
YEAR            MINIMUM ROYALTY
----            ---------------
<S>             <C>
Year 3 (2007)
Year 4 (2008)
Year 5 (2009)          *
Year 6 (2010)
Year 7 (2011)
</TABLE>

Renewal Term, if any:

<TABLE>
<CAPTION>
YEAR             MINIMUM ROYALTY
----             ---------------
<S>              <C>
Year 8 (2012)
Year 9 (2013)           *
Year 10 (2014)
Year 11 (2015)
Year 12 (2016)
</TABLE>

For the Second Contract Year, royalties in excess of the GMR will only be
payable on sales that generate royalty revenue in excess of  *  .

Payment of Guaranteed Minimum Royalties: The minimum royalty for each Contract
Year shall be paid in advance in four (4) equal quarterly installments, on the
first day of Licensor's fiscal quarters commencing January 1, 2006.

* CONFIDENTIAL PORTION OF THIS EXHIBIT OMITTED AND FILED SEPARATELY WITH THE SEC
PURSUANT TO RULE 24b-2 OF THE 1934 ACT

<PAGE>

                           SCHEDULE 9.1 SALES ROYALTY

Regular Royalty Rate:  *

For the Second Contract Year, royalties in excess of the GMR will only be
payable on sales that generate royalty revenue in excess of  *  .

* CONFIDENTIAL PORTION OF THIS EXHIBIT OMITTED AND FILED SEPARATELY WITH THE SEC
PURSUANT TO RULE 24b-2 OF THE 1934 ACT

<PAGE>

                                   SCHEDULE 10

$80,000, to be paid immediately upon execution of the License Agreement.

<PAGE>

                 SCHEDULE 14.8 ANTI-COUNTERFEITING CONTRIBUTION

*  per Contract Year, commencing Contract Year 2.

This amount shall be invoiced on an annual basis, at the end of Licensor's first
fiscal quarter each Contract Year.

* CONFIDENTIAL PORTION OF THIS EXHIBIT OMITTED AND FILED SEPARATELY WITH THE SEC
PURSUANT TO RULE 24b-2 OF THE 1934 ACT

<PAGE>

                         SCHEDULE 20 NOTICES TO LICENSEE

Jon Step
President - Licensed Brands
Movado Group, Inc.
650 From Road
Paramus, NJ 07652
Phone: 201 267 8076
Fax: 201 267 8081
Email: jstep@movadogroup.com

Copy to:
General Counsel
Movado Group, Inc.
650 From Road
Paramus, NJ 07652
Phone: 201 267 8105
Fax: 201 267 8050
Email: tmichno@movadogroup.com<PAGE>

                                                                   Exhibit 10.39

(JPMORGAN CHASE BANK LOGO)

                                 PROMISSORY NOTE

$37,000,000                                                    December 13, 2005

     For value received, the undersigned unconditionally promises to pay to the
order of JPMORGAN CHASE BANK, N.A. (hereinafter the "Bank") at its offices at
695 Route 46 West, Fairfield, New Jersey 07004, or to such other address as the
Bank may notify the undersigned in writing, the principal sum of Thirty-Seven
Million Dollars ($37,000,000) (the "Note Amount") or, if less, such unpaid
principal amount of each loan (a "Loan") (as recorded on the grid attached
hereto or on any additional pages thereof) made by the Bank to the undersigned
and outstanding under this note on July 31, 2006 (the "Maturity Date"). The
aggregate principal amount of all Loans made by the Bank to the undersigned and
outstanding on this note (the "Outstanding Loans") shall not exceed at any time
the Note Amount; provided, however, during the period commencing on January 31,
2006 and ending on the Maturity Date (the "Post Season Period"), the maximum
principal amount of Outstanding Loans hereunder shall not exceed Two Million
Dollars ($2,000,000) (the "Reduced Note Amount"). In the event that the
aggregate amount of Outstanding Loans exceeds the Reduced Note Amount during the
Post Season Period (the "Post Season Excess"), the undersigned shall immediately
pay to the Bank, without notice or demand, the amount of the Post Season Excess,
plus accrued interest on such Post Season Excess and any other amounts due to
the Bank in accordance with the terms of this note, including any prepayment
pursuant to Paragraph 2 hereof. Failure to pay the Post Season Excess shall be
an Event of Default under this note.

     The undersigned promises to pay interest on the unpaid balance of the
principal amount of each such Loan from and including the date of such Loan to
the last day of the Interest Period thereof at either (i) a floating rate per
annum equal to the Prime Rate (a "Prime Loan"); (ii) a fixed rate per annum
equal to the Adjusted LIBO Rate applicable to such Loan plus 0.625% (a
"Eurodollar Loan"); or (iii) a fixed rate per annum equal to the Money Market
Rate applicable to such Loan (a "Money Market Loan"). Any principal not paid
when due shall bear interest from and including the date due until paid in full
at a rate per annum equal to the Default Rate. Interest shall be payable on the
relevant Interest Payment Date and shall be calculated on the basis of a year of
360 days for the actual number of days elapsed. Any extension of time for the
payment of the principal of this note resulting from the due date falling on a
non-Banking Day shall be included in the computation of interest.

     Anything in this note to the contrary notwithstanding, no Loans shall be
made hereunder, no letters of credit shall be issued by the Bank for the account
of the undersigned ("Letters of Credit") and no drafts shall be drawn by the
undersigned and accepted by the Bank ("Acceptances") if, as a result thereof,
the aggregate unpaid principal balance of all Loans made by the Bank to the
undersigned hereunder plus the aggregate undrawn face amount of all Letters of
Credit, the aggregate unreimbursed amount of all drafts drawn under Letters of
Credit and the aggregate outstanding face amount of Acceptances would exceed the
Note Amount or Reduced Note Amount as applicable for the relevant period.

     The date, amount, rate of interest and maturity date of each Loan and
payment(s) (if any) of principal, the Loan(s) to which such payment(s) will be
applied (which shall be at the discretion of the Bank) and the outstanding
principal balance of Loans shall be recorded by the Bank on its books and

<PAGE>

records (which may be electronic in nature) and at any time and from time to
time may be, and shall be prior to any transfer and delivery of this note,
entered by the Bank on the schedule attached or any continuation of the schedule
attached hereto by the Bank (at the discretion of the Bank, any such entries may
aggregate Loans (and payments thereon) with the same interest rate and tenor
and, if made on a given date, may show only the Loans outstanding on such date).
Any such entries shall be conclusive in the absence of manifest error. The
failure by the Bank to make any or all such entries shall not relieve the
undersigned from its obligation to pay any and all amounts due hereunder.

     1. DEFINITIONS. The terms listed below shall be defined as follows:

     "Adjusted LIBO Rate" means the LIBO Rate for such Loan divided by one minus
the Reserve Requirement.

     "Banking Day" means any day on which commercial banks are not authorized or
required to close in New York City and whenever such day relates to a Eurodollar
Loan or notice with respect to any Eurodollar Loan, a day on which dealings in
U.S. dollar deposits are also carried out in the London interbank market.

     "Code" means the Uniform Commercial Code of the State of New York.

     "Default Rate" means, in respect of any amount not paid when demanded, a
rate per annum during the period commencing on the date of demand until such
amount is paid in full equal to: (a) if a Prime Loan, a floating rate of 2%
above the rate of interest thereon; (b) if a Eurodollar Loan or Money Market
Loan, a fixed rate of 2% above the rate of interest in effect thereon at the
time of demand until the last day of the Interest Period thereof and,
thereafter, a floating rate of 2% above the rate of interest for a Prime Loan.

     "Event of Default" means each of the events stated in Section 7.

     "Facility Documents" means this note or any document executed by the
undersigned or by any Third Party granting support for this note and all other
agreements, instruments or other documents executed by the undersigned or a
Third Party or otherwise executed in connection with this note, whether by
guaranty, subordination or any other credit support, or which is contained in
any certificate, document, opinion, financial or other statement furnished at
the time under or in connection with any Facility Document.

     "Interest Payment Date" means (a) with respect to any Prime Loan, the last
day of each month, or (b) with respect to any Eurodollar Loan or Money Market
Loan, the last day of the Interest Period applicable to which such Loan is a
part and, in the case of a Eurodollar Loan or a Money Market Loan with an
Interest Period of more than three months' duration, each day prior to the last
day of such Interest Period that occurs at intervals of three months' duration
after the first day of such Interest Period.

     "Interest Period" means (a) with respect to any Eurodollar Loan, the period
commencing on the date of such Loan and ending on the numerically corresponding
day in the calendar month that is one, two, three or six months thereafter, as
the undersigned may elect or (b) with respect to any Money Market Loan, the
period commencing on the date of such Loan and ending on the last day of the
period for which such Loan is offered, as recorded by the Bank on the grid
hereto; provided, that (i) if any Interest Period would end on a day other than
a Business Day, such Interest Period shall be extended to the next succeeding
Business Day unless, in the case of a Eurodollar Loan only, such next succeeding
Business Day would fall in the next calendar month, in which case such Interest
Period shall end on the next preceding Business Day and (ii) any Interest Period
pertaining to a Eurodollar Loan that commences on the last Business Day of a
calendar

                                       2

<PAGE>

month (or on a day for which there is no numerically corresponding day in the
last calendar month of such Interest Period) shall end on the last Business Day
of the last calendar month of such Interest Period. For purposes hereof, the
date of a Loan initially shall be the date on which such Loan is made and, in
the case of the continuation of a Loan, thereafter shall be the effective date
of the most recent conversion or continuation of such Loan.

     "Liabilities" means all obligations and liabilities of the undersigned to
the Bank or its affiliates of whatever nature, including payment of this note,
whether now existing or hereafter incurred or acquired, whether matured or
unmatured, liquidated or unliquidated, direct or indirect, absolute or
contingent, primary or secondary, sole, joint, several or joint and several,
secured or unsecured.

     "LIBO Rate" means, with respect to any Eurodollar Loan for any Interest
Period, the rate quoted by the principal London branch of the Bank at
approximately 11:00 a.m. London time two (2) Business Days' prior to the first
day of such Interest Period for the offering to leading banks in the London
interbank market of dollar deposits in immediately available funds, for a period
and in an amount, comparable to such Interest Period and the principal amount of
such Eurodollar Loan, as it appears on Page 3756 of the Moneyline Telerate
Markets.

     "Money Market Rate" means, if offered, a rate of interest per year as
offered by the Bank from time to time on any single commercial borrowing during
the period offered on such Loan. The Money Market Rate of interest available for
any subsequent borrowings may differ since Money Market Rates may fluctuate on a
daily basis.

     "Prime Rate" means that floating rate of interest from time to time
announced publicly by the Bank in New York, New York as its prime rate. The
Prime Rate shall be automatically adjusted on the date of any change thereto.

     "Regulation D" means Regulation D of the Board of Governors of the Federal
Reserve System.

     "Regulatory Change" means any change after the date of this note in United
States federal, state or municipal laws or any foreign laws or regulations
(including Regulation D) or the adoption or making after such date of any
interpretations, directives or requests applying to a class of banks, including
the Bank, of or under any United States federal, state or municipal laws or any
foreign laws or regulations (whether or not having the force of law) by any
court or governmental or monetary authority charged with the interpretation or
administration thereof.

     "Reserve Requirement" means, for any Eurodollar Loan, the average maximum
rate at which reserves (including any marginal, supplemental or emergency
reserves) are required to be maintained during the term of such Loan under
Regulation D by member banks of the Federal Reserve System in New York City with
deposits exceeding one billion U.S. dollars, or as otherwise established by the
Board of Governors of the Federal Reserve System and any other banking authority
to which the Bank is subject, against "Eurocurrency liabilities" (as such term
is used in Regulation D). Without limiting the effect of the foregoing, the
Reserve Requirement shall reflect any other reserves required to be maintained
by such member banks by reason of any Regulatory Change against (x) any category
of liabilities which includes deposits by reference to which the LIBO Rate is to
be determined or (y) any category of extensions of credit or other assets which
include Eurodollar Loans. The Reserve Requirement shall be adjusted
automatically on and as of the effective date of any change in any reserve
percentage.

                                       3

<PAGE>

     "Third Party" means any third party who supports or is liable with respect
to this note due to the execution of any document granting support or security
for this note, whether by guaranty, subordination or any other credit support.

     2. BORROWINGS AND PREPAYMENTS. The undersigned shall give the Bank notice
of each borrowing request by 12:00 noon, New York City time three (3) Banking
Days prior to each requested borrowing of a Eurodollar Loan and by 12:00 noon
New York City time on the date of each requested borrowing of a Prime Loan or a
Money Market Loan; provided that no Eurodollar Loan shall be in a minimum amount
equal to less than $100,000. The undersigned shall have the right to make
prepayments of principal at any time or from time to time; provided that: (a)
the undersigned shall give the Bank irrevocable notice of each prepayment by
12:00 noon New York City time three (3) Banking Days prior to prepayment of a
Eurodollar Loan, one (1) Banking Day prior to prepayment of a Money Market Loan
and by 12:00 noon New York City time on the date of prepayment of a Prime Loan;
(b) Eurodollar Loans and Money Market Loans may be prepaid prior to the last day
of the Interest Period thereof only if accompanied by payment of the additional
payments calculated in accordance with paragraph 5 below; and (c) all
prepayments shall be in a minimum amount equal to the lesser of $100,000 or the
unpaid principal amount of this note. If the undersigned fails to notify the
Bank, in accordance with the terms hereof, prior to the maturity date of any
Eurodollar Loan or Money Market Loan to continue such Loan as a Eurodollar Loan
or Money Market Loan, such Loan shall be converted to a Prime Loan on its
maturity date.

     3. ADDITIONAL COSTS. (a) If as a result of any Regulatory Change which (i)
changes the basis of taxation of any amounts payable to the Bank under this note
(other than taxes imposed on the overall net income of the Bank or the lending
office by the jurisdictions in which the principal office of the Bank or the
lending office are located) or (ii) imposes or modifies any reserve, special
deposit, deposit insurance or assessments, minimum capital, capital ratios or
similar requirements relating to any extension of credit or other assets of, or
any deposits with or other liabilities of the Bank, or (iii) imposes any other
condition affecting this note, the Bank determines (which determination shall be
conclusive absent manifest error) that the cost to it of making or maintaining a
Eurodollar Loan or a Money Market Loan is increased or any amount received or
receivable by the Bank under this note is reduced, then the undersigned will pay
to the Bank on demand an additional amount that the Bank determines will
compensate it for the increased cost or reduction in amount.

     (b) Without limiting the effect of the foregoing provisions of this Section
3 (but without duplication), the undersigned shall pay to the Bank from time to
time on request such amounts as the Bank may determine to be necessary to
compensate the Bank for any costs which it determines are attributable to the
maintenance by it or any of its affiliates pursuant to any law or regulation of
any jurisdiction or any interpretation, directive or request (whether or not
having the force of law and whether in effect on the date of this note or
thereafter) of any court or governmental or monetary authority of capital in
respect of the Loans hereunder (such compensation to include, without
limitation, an amount equal to any reduction in return on assets or equity of
the Bank to a level below that which it could have achieved but for such law,
regulation, interpretation, directive or request).

     4. UNAVAILABILITY, INADEQUACY OR ILLEGALITY OF LIBO RATE. Anything herein
to the contrary notwithstanding, if the Bank reasonably determines (which
determination shall be conclusive) that:

     (a) quotations of interest rates for the relevant deposits referred to in
the definition of LIBO Rate are not being provided in the relevant amounts or
for the relevant maturities for purposes of determining the rate of interest for
a Eurodollar Loan; or

                                       4

<PAGE>

     (b) the definition of LIBO Rate does not adequately cover the cost to the
Bank of making or maintaining a Eurodollar Loan; or

     (c) as a result of any Regulatory Change (or any change in the
interpretation thereof) adopted after the date hereof, the principal office of
the Bank or the lending office is subject to any taxes, reserves, limitations,
or other charges, requirements or restrictions on any claims of such office on
non-United States residents (including, without limitation, claims on non-United
States offices or affiliates of the Bank) or in respect of the excess above a
specified level of such claims; or

     (d) it is unlawful for the Bank or the lending office to maintain any
Eurodollar Loan at the LIBO Rate;

THEN, the Bank shall give the undersigned prompt notice thereof, and so long as
such condition remains in effect, any existing Eurodollar Loan shall bear
interest as a Prime Loan and the Bank shall make no Eurodollar Loans.

     5. BREAK FUNDING PAYMENTS. In the event of (a) the payment of any principal
of any Eurodollar Loan or Money Market Loan other than on the last day of an
Interest Period applicable thereto (including as a result of an Event of
Default), (b) the conversion of any Eurodollar Loan or Money Market Loan other
than on the last day of the Interest Period applicable thereto, or (c) the
failure to borrow, convert, continue on the date specified in any notice
delivered pursuant hereto, then, in any such event, the undersigned shall
compensate the Bank for the loss, cost and expense attributable to such event.
In the case of a Eurodollar Loan or Money Market Loan, such loss, cost or
expense to the Bank shall be deemed to include an amount determined by the Bank
to be the excess, if any, of (i) the amount of interest which would have accrued
on the principal amount of such Eurodollar Loan or Money Market Loan had such
event not occurred, at the Adjusted LIBO Rate that would have been applicable to
such Eurodollar Loan or the Money Market Rate that would have been applicable to
such Money Market Loan, as the case may be, for the period from the date of such
event to the last day of the then current Interest Period therefor (or, in the
case of a failure to borrow, convert or continue, for the period that would have
been the Interest Period for such Eurodollar Loan or Money Market Loan), over
(ii) the amount of interest which would accrue on such principal amount for such
period at the interest rate which the Bank would bid were it to bid, at the
commencement of such period, for dollar deposits of a comparable amount and
period from other banks in the eurodollar market. A certificate of the Bank
setting forth any amount or amounts that the Bank is entitled to receive
pursuant to this Section shall be delivered to the Bank and shall be conclusive
absent manifest error. The undersigned shall pay the Bank the amount shown as
due on any such certificate within 10 days after receipt thereof.

     6. BANK'S RIGHT OF SETOFF. The Bank retains all rights of setoff that it
may have under applicable law or contract, including, without limitation, at its
option, to setoff balances (general or special, time or demand, provisional or
final) held by it for the account of the undersigned at any of Bank's offices,
in dollars or in any other currency, against any amount payable under this Note
which is not paid when due (regardless of whether such balances are then due to
the undersigned).

     7. EVENTS OF DEFAULT. If any of the following events of default shall occur
with respect to any of the undersigned or any Third Party:

     (a) the undersigned shall fail to pay any principal, interest or any other
amount payable under this note, or any other Liability, as and when due and
payable; or

                                       5

<PAGE>

     (b) the undersigned or any Third Party shall fail to perform or observe any
covenant or agreement contained in any Facility Document, and such failure shall
continue for 30 consecutive days; or

     (c) the undersigned or any Third Party shall fail to pay when due any
indebtedness in excess of $5,000,000 or more (including but not limited to
indebtedness for borrowed money) or if any such indebtedness shall become due
and payable, or be capable of being due and payable at the option of the holder
thereof, prior to the scheduled maturity thereof; or

     (d) the undersigned or any Third Party: (i) shall generally not, or be
unable to, or shall admit in writing its inability to, pay its debts as such
debts become due; (ii) shall make an assignment for the benefit of creditors;
(iii) shall commence any proceeding or file a petition seeking relief under any
bankruptcy, insolvency, reorganization, receivership, dissolution, liquidation
or other similar Federal, state or foreign law or seeking the appointment of a
receiver, trustee, custodian, conservator or similar official for all or a
substantial part of its property or (iv) shall have any such proceeding
commenced or petition filed against it and the same shall remain undismissed for
a period of 30 days or shall consent or acquiesce thereto; or

     (e) the undersigned or any Third Party shall merge or consolidate with or
into, or convert into, any other legal entity; or

     (f) any Facility Document shall at any time and for any reason cease to be
in full force and effect or shall be declared null and void, or the undersigned
or any relevant Third Party shall deny or contest any further liability or
obligation thereunder or the validity or enforceability thereof or of any lien
or security interest created thereby; or

     (g) any lien, mortgage, pledge, security interest or other encumbrance of
any kind shall be created or imposed upon any property or asset of the
undersigned or any Third Party without the Bank's written consent thereto,
except as permitted pursuant to Section 8.3 of the Credit Agreement dated as of
December 15, 2005 among the undersigned (as Borrower), the Lenders signatory
thereto and the Bank (as Administrative Agent, Swingline Bank and Issuing
Agent); or

     (h) any action or proceeding before any court or governmental agency or
authority which involves forfeiture of any property or assets of the undersigned
or a Third Party shall have been commenced or if any such forfeiture or other
seizure or assumption of custody or control over such assets by any court or
governmental agency or authority shall occur; or

     (i) one or more verdicts, judgments, decrees or orders for the payment of
money in excess of $5,000,000 in the aggregate shall be rendered against the
undersigned and shall continue in effect for a period of 60 consecutive days
without being vacated, or stayed pending appeal (or the satisfaction or bonding
of any such verdict, judgment, decree or order shall, in the Bank's reasonable
judgment, constitute a material adverse change), any proceedings to execute any
such verdict, judgment, decree or order shall be commenced, or if any
attachment, distraint, levy or other restraint shall be placed upon any property
or assets of the undersigned or any Third Party;

THEN, in any such case, the unpaid principal amount of this note, together with
accrued interest and all other Liabilities, shall immediately become due and
payable without any notice or other action by the Bank. The undersigned waive(s)
presentment, notice of dishonor, protest and any other notice or formality with
respect to this note. All rights and remedies provided in this note or otherwise
available to the Bank shall be cumulative and not exclusive and each may be
exercised by the Bank from time to time and as often as may be necessary.

                                       6

<PAGE>

     8. ENFORCEMENT. The Bank may, upon the occurrence and continuation of an
Event of Default, proceed to enforce payment of the same and exercise any of or
all the rights and remedies afforded the Bank by the Code or otherwise possessed
by the Bank. Any requirement of the Code for reasonable notice to the
undersigned shall be deemed to have been complied with if such notice is mailed,
postage prepaid, to the undersigned and such other persons entitled to notice,
at the addresses shown on the records of the Bank at least four (4) Business
Days prior to the time of sale, disposition or other event requiring notice
under the Code.

     9. TRANSFER. Upon any transfer of this note, the undersigned hereby waiving
notice of any such transfer, the Bank may deliver the Assets With Bank or any
part thereof to the transferee who shall thereupon become vested with all the
rights herein or under applicable law given to the Bank with respect thereto and
the Bank shall thereafter forever be relieved and fully discharged from any
liability or responsibility in the matter; but the Bank shall retain all rights
hereby given to it with respect to any Liabilities and Assets With Bank not so
transferred. No modification or waiver of any of the provisions of this note
shall be effective unless in writing, signed by the Bank, and only to the extent
therein set forth; nor shall any such waiver be applicable except in the
specific instance for which given. This agreement sets forth the entire
understanding of the parties, and the undersigned acknowledges that no oral or
other agreements, conditions, promises, understandings, representations or
warranties exist in regard to the obligations hereunder, except those
specifically set forth herein.

     10. JURISDICTION AND WAIVER. The undersigned hereby irrevocably consents to
the in personam jurisdiction of the federal and/or state courts located within
the State of New York over controversies arising from or relating to this note
or the Liabilities AND IRREVOCABLY WAIVES TRIAL BY JURY AND the right to
interpose any counterclaim or offset of any nature in any such litigation. The
undersigned further irrevocably waives presentment, demand, protest, notice of
dishonor and all other notices or demands of any kind in connection with this
note or any Liabilities.

     11. MISCELLANEOUS. Each reference herein to the Bank shall be deemed to
include its successors, endorsees, and assigns, in whose favor the provisions
hereof shall also inure. Each reference herein to the undersigned shall be
deemed to include the successors and assigns of the undersigned, all of whom
shall be bound by the provisions hereof.

     The undersigned agrees to pay to the Bank, as soon as incurred, all costs
and reasonable and documented expenses incidental to the care, preservation,
processing, sale or collection of or realization upon any of or all the Assets
With Bank or incurred in connection with the enforcement or collection of this
note, or in any way relating to the rights of the Bank hereunder, including
reasonable outside counsel fees and expenses. Each and every right and remedy
hereby granted to the Bank or allowed to it by law shall be cumulative and not
exclusive and each may be exercised by the Bank from time to time and as often
as may be necessary. The undersigned shall have the sole responsibility for
notifying the Bank in writing that the undersigned wishes to take advantage of
any redemption, conversion or other similar right with respect to any of the
Assets With Bank. The Bank may release any party (including any partner of any
undersigned) without notice to any of the undersigned, whether as co-makers,
endorsers, guarantors, sureties, assigns or otherwise, without affecting the
liability of any of the undersigned hereof or any partner of any undersigned
hereof.

                                       7

<PAGE>

     12. GOVERNING LAW. This note shall be governed by and construed in
accordance with the laws of the State of New York and, as to interest rates,
applicable Federal law.

                                        MOVADO GROUP, INC.

                                        By: /s/ Eugene Karpovich
                                            ------------------------------------
                                        Name: Eugene Karpovich
                                              ----------------------------------
                                        Title: SVP & CFO
                                               ---------------------------------

                                        Address
                                        for
                                        notices: 650 From Road
                                                 Paramus, New Jersey 07652
                                                 Attn: Eugene J. Karpovich,
                                                       Senior Vice President &
                                                       Chief Financial Officer
                                                       Telecopier: 201-267-8240
                                                                   -------------
                                                       Telephone: 201-267-8004
                                                                  --------------

                                       8

<PAGE>

                                      GRID

<TABLE>
<CAPTION>
             LOANS                            PAYMENTS
-------------------------------   --------------------------------
Date                   Maturity                                       Balance Due   LN Clerk
Made   Amount   Rate     Date     Date Made   Principal   Interest   On Principal   Initials
----   ------   ----   --------   ---------   ---------   --------   ------------   --------
<S>    <C>      <C>    <C>        <C>         <C>         <C>        <C>            <C>

</TABLE>

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