Document:

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                                                                   Exhibit 10.21

                                   ANNE KLEIN

11 WEST 42ND STREET  NEW YORK  NY  10036  212 626 6401  FAX 212 626 6014

Maxwell Shoe Company Inc.
P.O. Box 37
101 Sprague Street
Readville, Massachusetts 02137-0037

Gentlemen:

When signed below in the places provided, the following shall constitute the
agreement between and among ANNE KLEIN, a Division of Kasper A.S.L., Ltd.,
B.D.S., Inc. and Maxwell Shoe Company Inc. ("Licensee") with respect to the
subject matter hereof.

As of July 9, 1999, Kasper A.S.L., Ltd., through Lion Licensing, Ltd., a
Delaware corporation ("Lion") a wholly-owned affiliate, became the owner of the
ANNE KLEIN trademarks and the ANNE KLEIN license agreements, including the
agreement between B.D.S., Inc. (therein referred to as "Licensee" and
hereinafter referred to as "Licensor") and Anne Klein Company LLC (as successor
by merger with Anne Klein & Company) (referred to therein as "Licensor"),
effective as of January 1, 1997, as said agreement has been amended and is in
force and effect at the date hereof (the "License Agreement") pursuant to which
Licensor has been granted certain rights with respect to Company's Marks (as
defined below). For avoidance of doubt, for purposes of this Agreement, the ANNE
KLEIN Division of Kasper A.S.L., Ltd. and Lion shall collectively be referred to
as "Owner" and Maxwell Shoe Company Inc. shall be referred to as "Licensee".

1. DEFINITIONS. Each of the following terms shall have the meaning given it in
this section when used in this Agreement:

      1.01. (a) "Company's Marks" shall mean the trademarks "ANNE KLEIN", the
Lion Head Design, "ANNE KLEIN II" and "A LINE ANNE KLEIN".

            (b) "Licensed Marks" shall mean the trademarks "ANNE KLEIN II" and
"A LINE ANNE KLEIN" and the "A ANNE KLEIN" logo form of the Licensed Mark "A
LINE ANNE KLEIN" which is attached hereto as Schedule 1.01 and made a part
hereof. For

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clarification: the Licensed Mark "A LINE ANNE KLEIN" may be used in such logo
form, hut it may not be used as a wordmark except in the full "A LINE ANNE
KLEIN" form.

            (c) "Company's Tradename" shall mean the tradename "ANNE KLEIN" or,
as applicable in the context, the use of one or both of the Licensed Marks as a
tradename.

      1.02. (a) "Articles" shall mean all classifications of women's footwear.

            (b) "Licensed Articles" shall mean all Articles which are
manufactured or distributed by or for Licensee from designs delivered or
approved hereunder.

      1.03. (a) "Net Sales" shall mean the aggregate invoiced amount at the
prevailing wholesale price at which Licensee customarily sells such Licensed
Articles for all Licensed Articles shipped by Licensee or any of its affiliates
("gross sales"), less the following: (1) included taxes; (2) returns actually
received for damaged or defective merchandise or allowances in lieu of returns
granted to and actually taken by customers; (3) trade discounts customary in
Licensee's industry for prompt payment, but only to the extent such discounts
are actually granted by Licensee and taken by Licensee's customers; and (4)
markdowns and/or chargebacks, in the amount set forth below, which in accordance
with generally accepted accounting principles would normally be treated as
deductions from gross sales ("Markdowns"), but not including chargebacks for any
shipping errors or administrative charges, advertising, fixture or shop costs or
contributions, or for any other similar or dissimilar purpose. No other
deduction shall be made, including for any accruals or reserves for returns, or
for discounts or allowances, and no deduction shall be taken for uncollectible
accounts, bad debts or collection costs incurred by Licensee. No other costs
incurred in the manufacturing, advertising, promoting, distributing and selling
of Licensed Articles shall be deducted. Except with respect to sales to
Licensee's Outlets (as defined below), if a sale, transfer or other disposition
is made otherwise than at arm's length, the "Net Sales" of such Licensed
Articles shall be deemed to be the "Net Sales" of a corresponding sale at arm's
length at the prevailing wholesale price to accounts in Normal Retail Channels
(as hereinafter defined) in the

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United States. For clarification: On aggregate annual gross sales hereunder up
to [confidential portion of material has been so omitted and filed separately
with the Securities and Exchange Commission], Markdowns may be deducted in an
amount not to exceed [confidential portion of material has been so omitted and
filed separately with the Securities and Exchange Commission]; on aggregate
annual gross sales hereunder in excess of [confidential portion of material has
been so omitted and filed separately with the Securities and Exchange
Commission], Markdowns may be deducted in an amount not to exceed [confidential
portion of material has been so omitted and filed separately with the Securities
and Exchange Commission].

            (b) Without limiting the generality of the foregoing, with respect
to Discontinued Goods (as hereinafter defined), "Net Sales" shall mean the
aggregate invoiced amount for Discontinued Goods shipped by Licensee or any of
its affiliates, less included taxes and returns actually received for damaged or
defective merchandise or allowances in lieu of returns granted to and actually
taken by customers; provided, however, that for Discontinued Goods in excess of
the quantity permitted in Paragraph 2.03(b) below, the "Net Sales" of such
Discontinued Goods shall be deemed to be the "Net Sales" of a corresponding sale
at arm's length at the prevailing wholesale price to accounts in Normal Retail
Channels in the United States except as Owner may from time to time expressly
agree otherwise.

            (c) Notwithstanding the foregoing, if Licensee (or any parent,
subsidiary or affiliated company of Licensee) operates outlet stores
(hereinafter, "Licensee's Outlets") or sells Licensed Articles through
Alternative Distribution Channels (as defined below), then with respect to sales
of Licensed Articles by Licensee's Outlets or through said Alternative
Distribution Channels, "Net Sales" shall mean the actual aggregate amount
received by Licensee's Outlets on account of said sales or by Licensee for sales
made directly through Alternative Distribution Channels, as applicable.

      1.04. "Territory" shall mean the United States of America but not

including its territories and possessions. Upon Licensee's written request,
Owner shall grant Licensee permission to distribute Licensed Articles in a
particular country (or countries) of the world outside of the Territory,
including for this purposes territories and possessions of the United States,
(hereinafter referred to as the "Foreign Territory"), subject to the terms and
conditions set forth in section 18 below, For the avoidance of doubt,
distribution of Licensed Articles to "duty-free" shops for sale to international
travelers and to airlines and cruise ship lines for on-board sales shall be
deemed

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distribution in a Foreign Territory, also subject to the terms and conditions
set forth in Section 18 below. Notwithstanding the generality of the foregoing,
at the date of this Agreement, Owner hereby informs Licensee, and Licensee
acknowledges, that an agreement is in place between Owner and a third party
pursuant to which said third party has the exclusive rights to manufacture,
advertise, promote, distribute and sell products, including Articles, bearing
Company's Marks in Japan and, therefore, Owner shall not grant any rights
hereunder to Licensee with respect to Japan.

      1.05. (a) "Normal Retail Channels" shall mean those retail outlets in the
Territory, subject to Owner's reasonable approval, whose location, merchandising
and overall operations are consistent with the high quality of Licensed Articles
and the reputation, image and prestige of the Company's Marks. Without limiting
the generality of the foregoing, Owner hereby approves as Normal Retail Channels
those retail outlets (other than those identified on Schedule 2.03 to this
Agreement) named on Schedule 10.02 and on Schedule 18.06.

            (b) "Alternative Distribution Channels" shall mean direct mail or
television shopping networks or "on-line" or such other means of reaching the
ultimate consumer (other than through traditional retail outlets) as may now
exist or hereafter be devised. Owner's prior written reasonable approval to use
an Alternative Distribution Channel shall be obtained in each instance;
provided, however, that neither Licensor nor Licensee shall commence on-line
sales or sales via television shopping networks pending Owner's development of
an over-all plan with respect to such sales of all products bearing Company's
Trademarks. Sales by Licensee to direct mail catalog divisions of traditional
retailers shall not be deemed sales through Alternative Distribution Channels.
References in this Agreement to Normal Retail Channels shall, unless the context
indicates otherwise, also mean approved Alternative Distribution Channels.

      1.06. (a) "Contract Year" shall mean the twelve-month period commencing
January 1 and ending the next following December 31, provided, however, that the
"Initial Contract Year" shall commence on the Effective Date and shall terminate
on December 31, 2000.

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            (b) "Accounting Period" shall mean each three-month calendar period
ending March 31, June 30, September 30 and December 31, respectively, or such
shorter period in which Licensee has rights to distribute Licensed Articles
hereunder. Notwithstanding the foregoing, the "Initial Accounting Period" shall

mean the period beginning on the Effective Date and ending December 31, 1999.

            (c) "Effective Date" shall mean July 19, 1999.

      1.07. "Discontinued Goods" shall mean only those Licensed Articles which
are sold by Licensee at a wholesale price which is at least thirty three and
one-third percent (33-1/3%) less than the prevailing wholesale price at which
Licensee has customarily sold such Licensed Articles and which are shipped (a)
at the end-of-season as closeouts or (b) as damaged goods such as seconds or
irregulars labeled as seconds or irregulars.

      1.08. "Proprietary Rights" means asserted rights, groundless or not, based
upon the law of statutory or common law trademark infringement, dilution, unfair
competition, misappropriation, invasion of privary, or any related legal theory.

2. GRANT.

      2.01. (a) (i) Subject to the terms and conditions of this Agreement,
Licensor and Owner each hereby grants to Licensee during the Term (as
hereinafter defined) the exclusive right only in the Territory to use each
Licensed Mark as a trademark only on and in connection with the manufacture,
advertising, promotion, distribution and sale in Normal Retail Channels, except
as otherwise agreed in paragraph 2.03(b) below, of the Licensed Articles. It is
expressly understood and agreed that the manufacturing rights herein granted to
Licensee do not include the right to manufacture Licensed Articles for the sole
purpose of selling such Licensed Articles as Discontinued Goods: provided,
however, that Owner and Licensor acknowledge that Licensee shall not be deemed
in breach of this provision if it produces and sells "make-ups" in accordance
with paragraph 2.02(c) below.

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                  (ii) Licensee acknowledges that the Licensed Marks "ANNE KLEIN
II" and "A LINE ANNE KLEIN", which for the purposes of this sub-paragraph
2.01(a)(ii) includes the logo "A Anne Klein" in the form attached hereto as
Schedule 1.01, are separate and individual trademarks and that it is the intent
of the parties hereto that each Licensed Mark shall be exploited separately from
the other hereunder. References in this Agreement to "the Licensed Marks" shall
mean each of the Licensed Marks unless the context clearly implies otherwise.

            (b) Licensee acknowledges that, at the date hereof, Licensor sells
Articles bearing the Company's Mark "ANNE KLEIN" which are intended to be sold
at retail price points above $95 and, from time to time subject to Owner's
approval, Licensor may propose a so-called "fashion" style which by its design
and construction is intended to be sold in Licensor's segment of the women's
footwear market but at a price below $95 (but not below $80). For purposes of
retaining the distinct positions of the Company's Marks in the women's footwear
market, Licensee agrees that the Licensed Articles offered hereunder shall be
manufactured, advertised, promoted, distributed and sold in a manner appropriate
to those categories intended to be sold at retail price points of $45-$80 (to
$95 for boots and ankle boots) and the Licensed Articles shall address the
career and casual needs of Licensee's target customer. Without limiting the
generality of the foregoing, Licensor and Owner agree that if more than ten
percent (10%) of Licensor's styles (i.e., number of patterns not sales volume)
in any particular Contract Year are intended to be sold at retail price points

between $80 and $95, then Licensee's Guaranteed Minimum Royalty (as defined
below) for that particular Contract Year shall be reduced by twenty percent
(20%).

            (c) For avoidance of doubt: Owner reserves all rights to Company's
Marks, including the Licensed Marks, except those rights specifically granted to
Licensor pursuant to the License Agreement and those rights specifically granted
herein to Licensee, and Owner may exercise such rights at any time in a manner
not inconsistent with the terms of this Agreement. Without limiting the
generality of the immediately preceding sentence, Owner's reserved rights
include the right to use and to license any of said Marks as part of a new
trademark (the "New Trademark") to be used by Owner or its designee (which may
or may not be a related company)

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on or in connection with new product lines (which may include Articles)
introduced by Owner or its designee as part of a new business to be conducted by
Owner or said designee. Notwithstanding anything in this Agreement to the
contrary, during the term of this Agreement Owner shall not, and shall not have
any right to, use or license any New Trademark, to be used by Owner or its
designee, on or in connection with Articles (but not including athletic or
"sport specific" Articles) intended to be sold at retail price points of $45-$80
(to $95 for boots and ankle boots); provided, however, that such limitation is
expressly subject to the rights of Licensor pursuant to the License Agreement,
including Licensor's right of first refusal with respect to a New Trademark and
a New Line (as defined below), as such rights then exist. Accordingly, if,
during the Term (as hereinafter defined), Owner desires to market a line of
Articles bearing a New Trademark or a line of athletic or "sport specific"
Articles (each, a "New Line"), and if Licensor fails to timely exercise its
first right and option, Owner shall notify Licensee, in writing, thereof.
Licensee shall have the right and option, which option shall be exercised within
45 days after its receipt of Owner's notice, to manufacture, advertise, promote,
distribute and sell said New Line pursuant to an agreement, to be negotiated
between Owner and Licensee in good faith, in substantially the form of this
Agreement and including such additional or different commercially reasonable
terms and conditions as may then be agreed between Owner and Licensee (but which
shall be no more favorable to Licensee than terms proposed by Owner to
Licensor). If Licensee desires to exercise such right and option, Licensee shall
notify Owner in writing within forty-five (45) days after its receipt of said
notice from Owner. If Licensee fails to exercise its said right and option,
Owner may grant a license covering the New Line to any third party on
substantially the same material terms and conditions as set forth herein and in
Owner's notice free from any claim by Licensee under this Agreement. For
clarification: It is understood and agreed that Licensee may market canvas
casual woman's footwear under this Agreement so long as such footwear is not of
a style generally understood in the women's footwear industry as "athletic" or
"sport-specific" footwear. For purposes of this paragraph, without limiting
Licensor's rights pursuant to the License Agreement, if during the Term (as
defined below) Licensor's rights to utilize the Company's Mark "ANNE KLEIN"
expire or otherwise terminate without extension or renewal of such rights, for
purposes of this paragraph Company's Mark "ANNE

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KLEIN" shall be deemed a New Trademark and Licensor's right of first refusal
with respect to a New Trademark, as set forth in the License Agreement, shall
not apply.

            (d) Without otherwise limiting Licensor's rights pursuant to the
License Agreement or Licensee's rights pursuant to this Agreement, upon the
earlier of (i) the expiration or other termination of the License Agreement
pursuant to its terms, or (ii) January 1, 2003, Owner and Licensee agree they
shall immediately enter into a new direct license agreement regarding the
Licensed Marks and Licensed Articles on economic and other terms identical to
the terms set forth this Agreement; provided, however, that Licensor shall not
be a party to such new direct license agreement. Upon complete execution of such
new direct license agreement, said agreement shall be deemed to supersede and
replace this Agreement and Licensor acknowledges and agrees that Licensee shall
be entitled to the rights granted to Licensee thereunder. It is acknowledged and
agreed by all parties hereto that Licensor's rights and obligations under this
Agreement shall be deemed automatically (and without further action by any
person or party) assigned from Licensor to Owner upon the earlier of the
termination of the License Agreement or January 1, 2003.

      2.02. (a) All Licensed Articles shall bear the Licensed Marks, except as
hereinafter provided or otherwise approved by Owner, and no Licensed Articles
shall be sold or otherwise distributed by Licensee under any trademark other
than the Licensed Marks including, without limitation, under a private label of
Licensee or any customer of Licensee.

            (b) Licensee shall not use the Licensed Marks on or in connection
with Articles or any other product manufactured from designs neither provided
nor approved by Owner or on Articles or any other product distributed by any
person or entity, including Licensee, as premiums. promotions. give-aways or
fund-raisers except with Owner's prior approval as contemplated in paragraph
7.02 below.

            (c) Except as set forth herein, Licensee shall not manufacture, sell
or distribute, or cause the manufacture, sale or distribution of, any products
identical to Licensed Articles or of any products identical to Articles
manufactured, sold or distributed by Licensor. At Licensee's request to enable
it to maintain a steady flow of work for factories with which it does

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business, Owner and Licensor agree that, notwithstanding the foregoing, Licensee
shall be permitted to offer for sale and sell as "make-ups" certain Licensed
Articles, subject to the following terms and conditions:

                  (i) Owner shall review at the beginning of each selling season
and at such other times as Owner may reasonably request the quantity and styles
of Licensed Articles which may be manufactured, offered for sale and sold as
"make-ups".

                  (ii) All Licensed Articles sold as "make-ups" shall bear
royalties as provided in paragraph 9.01 below. Such royalties shall be computed,
accounted for and paid in accordance with this Agreement, provided, on

Licensee's statements, Net Sales of "make-ups" shall be shown separately from
other sales.

                  (iii) All Licensed Articles manufactured for sale as
"make-ups" shall bear the applicable Licensed Mark in the form approved by
Owner.

                  (iv) Notwithstanding the generality of the foregoing, Licensee
acknowledges that Owner may withdraw the permission to manufacture and sell
"make-ups" herein granted at any time; provided however, in such event the
Guaranteed Minimum Royalty for the applicable period shall be reduced by
[confidential portion of material has been so omitted and filed separately with
the Securities and Exchange Commission] for each year in which such permission
is so withdrawn.

            (d) (i) Except for its licensed use of the Licensed Marks hereunder,
Licensee shall not adopt or use any mark, logo, insignia or design that is
likely to be confusingly similar to or cause deception or mistake with respect
to any of the Licensed Marks. Licensee shall not join any name or logo with the
Licensed Marks so as to form a new mark, except with the prior written approval
of Owner, nor shall Licensee use any Licensed Marks as part of its corporate
name. However, subject to the terms and conditions of this Agreement, Owner
hereby grants Licensee the limited, non-exclusive right to use each of the
Licensed Marks as part of a name identifying a division of Licensee established
solely for the purpose of and in connection with the marketing, distributing,
advertising, promotion and sale of Licensed Articles under the terms and
conditions set forth in this Agreement and Owner and Licensor agree that
Licensee's employees may represent themselves as being representatives of or
being from "ANNE KLEIN II Footwear" or "A LINE ANNE KLEIN Footwear" and shall
not represent themselves as representing "Anne Klein". To

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avoid confusion in the retail footwear industry, Owner, Licensor and Licensee
shall cooperate to establish guidelines with respect to Licensee's use of the
Licensed Marks as a tradename.

                  (ii) For clarification: Licensee acknowledges that the rights
granted herein with respect to the Licensed Marks and Company's Tradename are
not intended and shall not be construed to grant any rights to use any of the
Licensed Marks and/or Company's Tradename as a domain name. In addition,
Licensee shall not use Company's Tradename or any Licensed Mark as a service
mark on and in connection with Licensee's Outlets or any other retail
establishment operated by Licensee directly or through an affiliate
(collectively, a "Licensee Store") except pursuant to a separate retail license
agreement between Owner and Licensee (a "Licensee retail license"), it being
understood that such Licensee retail license shall (A) not require Licensee to
pay Owner any separate royalty or other compensation for the right to use the
service mark; (B) shall give Owner the right to approve each location for a
Licensee Store bearing the service mark; and (C) shall be consistent with other
similar agreements Owner has entered with third parties, including Owner's right
to reasonably approve the design of such Licensee Store.

      2.03. (a) Licensee shall use its best efforts to exploit the rights herein
granted throughout the Territory consistent with the high standards and prestige
represented by the Licensed Marks. Notwithstanding the foregoing, Licensee shall
not sell Licensed Articles for resale except for resale to a consumer for

personal use and, except for sales made to or for resale in a Foreign Territory
in accordance with Section 18 below, Licensee shall not sell Licensed Articles
to any entity which it knows or has reason to believe intends to export Licensed
Articles from the Territory. Licensee acknowledges that the Licensed Articles
are intended to be of the highest quality in the applicable market segment and
marketed in a manner commensurate with Owner's and Licensor's standing and
reputation in the women's apparel and footwear industry. Accordingly, and in
order to maintain the reputation, image and prestige of Owner, Licensor and the
Licensed Marks, Licensee's primary distribution patterns shall consist of Normal
Retail Channels and, in the event Licensee sells to a customer not approved by
Owner, Owner shall have the right to object, by written notice, to such sales.
Upon receipt of such notice, Licensee shall not thereafter accept orders from

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such customer, but Licensee may fulfill orders accepted prior to Licensee's
receipt of Owner's notice. For clarification: Owner acknowledges that Licensee
has retained representatives who show the Licensed Articles to customers through
regional markets throughout the United States. Licensee hereby expressly agrees
to inform its representatives of the foregoing and acknowledges that the acts of
said representatives shall be deemed Licensee's acts for all purposes hereunder.
Within fifteen (15) business days after Owner's written notice to Licensee that
a Licensee's representative has acted in a manner which would constitute a
breach of this Agreement, Licensee shall take those steps reasonably necessary
to cure said breach.

            (b) Notwithstanding the foregoing, Licensee may sell Discontinued
Goods first, to Licensee's Outlets or, upon Owner's request, to those
end-destination outlet stores operated by Owner (directly or through an
affiliate) under the name "Anne Klein Outlet" ("Owner's Outlets") (collectively,
the "Outlets") to the extent of their requirements (subject to a reasonable
assortment being purchased) and, thereafter, to other appropriate retail outlets
for Discontinued Goods, subject to Owner's reasonable approval; provided,
however, that, in any Contract Year, Licensee's aggregate annual sales of
Licensed Articles sold as Discontinued Goods (including, for purposes of this
paragraph, Licensed Articles produced and sold as "make-ups") shall not exceed
[confidential portion of material has been so omitted and filed separately with
the Securities and Exchange Commission] of Licensee's aggregate Net Sales of
Licensed Articles (except as Owner may expressly agree). Seconds, irregulars and
damaged goods shall always be marked as such. Licensee shall advise its buyers
of Discontinued Goods (including the Outlets) that Licensee does not have the
right to use or to authorize others to use the Licensed Marks in advertising or
selling the Discontinued Goods. Attached hereto as Schedule 2.03 is a list of
those currently-approved retail outlets to which Licensee may sell Discontinued
Goods hereunder. Said Schedule is current as of the Effective Date and may be
modified or supplemented from time to time. Without otherwise limiting any
provision of this Agreement. Owner and Licensee agree that sales of Licensed
Articles to Owner's Outlets shall be at prices equal to twenty-eight percent
(28%) above Licensee's respective cost for such Licensed Articles, but not more
than the price at which Licensee offers to sell and/or sells the same or
similarly styled Licensed Articles to any other customer.

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      2.04. (a) Owner acknowledges that, at the date hereof, Licensee
manufactures and/or markets Articles bearing the trademarks listed on Schedule
2.04, attached hereto and made a part hereof. Licensee may, in its sole and
absolute discretion, continue to do so at any time.

            (b) Licensee acknowledges that Owner has expressed a concern that
entry by Licensee into a license with another designer, other than those set
forth on Schedule 2.04, of women's clothing items or fashion accessories to
manufacture, advertise, promote, distribute and sell Articles at price-points
which are equal to or higher than better price-points in the Territory may
adversely impact upon or affect the Licensed Marks or their use in connection
with the Licensed Articles or Licensee's ability to meet all of its obligations
under this Agreement (an "Affect"). Accordingly, in the event that Licensee
contemplates entering into such a license, Licensee shall, subject to limits of
confidentiality agreements then in effect, promptly consult with Owner and
provide Owner with sufficient information concerning the proposed transactions,
including the proposed staffing, the anticipated royalty rate and the
advertising/exploitation commitments under such license, to enable Owner to make
an informed decision whether, in its reasonable commercial judgment, the nature
of the proposed license or the parties participating therein would have an
Affect. Owner shall promptly inform Licensee if, in Owner's reasonable
commercial judgment, the proposed license may have an Affect, stating the
reasons for its conclusion, and Licensee shall take Owner's judgment into
consideration in deciding whether to proceed with the proposed license;
provided, however, that Owner's judgment shall not be binding and its consent or
its approval for Licensee to enter into such proposed license shall not in any
way be required.

      2.05. In the event of any dispute between Licensee and any other licensee
of Owner in the Territory with respect to the products covered by their
respective licenses, such dispute shall be resolved in good faith by Owner in
its reasonable commercial judgment. Without limiting the generality of the
foregoing, Licensee acknowledges that Owner may from time-to-time grant another
licensee a limited non-exclusive right to produce and distribute Articles
bearing the Licensed Marks as so-called "Related Items" (e.g., slippers
distributed to said other licensee's buyers of sleepwear) or as
"gifts-with-purchase" (e.g., a keychain or a cosmetics bag). In resolving a
dispute with respect

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to the products covered by particular licenses or in conjunction with a grant of
rights for Related Items, if appropriate, and without derogating from Licensor's
rights pursuant to the License Agreement, if Licensor fails to timely exercise
its first right and option, Owner shall notify Licensee and Licensee shall have
the right and option to manufacture such product/Related Items pursuant to an
agreement of the parties as to price, quality and timing of delivery. The
parties shall establish an appropriate procedure to effectuate the option herein
given, it being understood that notice and agreement, if oral, shall be promptly
confirmed in writing.

3. TERM.

      3.01. (a) The term of this Agreement (the "Term") shall commence on the
Effective Date and shall continue in full force and effect until December 31,

2002 unless earlier terminated pursuant to the terms and conditions of this
Agreement or upon the mutual agreement of Owner and Licensee in a writing signed
by both.

            (b) Licensee shall have the option to extend the Term for two (2)
separate five (5) year periods (collectively, the "Extended Term") each on the
same terms and conditions set forth herein and subject to the satisfaction of
the following conditions:

                  (i) Licensee must at the time of the giving of the notice as
provided in the following paragraph then be in compliance with the material
terms and conditions herein contained; and

                  (ii) Achievement of Qualifying Sales (as described below)
during the final Contract Year of the then concluding Term.

                        (A) With respect to the first Extended Term, Qualifying
Sales shall mean Net Sales of Licensed Articles during the third Contract Year
(i.e., calendar year ending December 31, 2002) under this Agreement aggregating
not less than [confidential portion of material has been so omitted and filed
separately with the Securities and Exchange Commission]. The first Extended
Term, if any, shall commence on January 1, 2003 and shall expire on December 31,
2007.

                        (B) With respect to the second Extended Term, Qualifying
Sales shall mean Net Sales (excluding sales to Outlets) of Licensed Articles
during the fifth Contract

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Year of the first Extended Term (i.e., calendar year ending December 31, 2007)
under this Agreement aggregating not less than [confidential portion of material
has been so omitted and filed separately with the Securities and Exchange
Commission]. The second Extended Term, if any, shall commence on January 1, 2008
and shall expire on December 31, 2012.

                        (C) Owner and Licensee may elect to adopt an alternative
Net Sales achievement keyed to a combination of Licensee's actual Net Sales in
the first nine months and Licensee's guaranty of Net Sales in the fourth quarter
of the applicable Contract Year. Each option granted to Licensee herein shall be
exercisable in writing not later than thirty (30) days after Licensee's delivery
of statements demonstrating that the Qualifying Sales have been achieved.

                        (D) During the first calendar quarter of the final year
of the second Extended Term, either Owner or Licensee may initiate negotiation
of the terms and conditions of an agreement to commence following the expiration
of said Term, it being acknowledged by each that no commitment is made by either
to guarantee that such negotiations shall result in a renewal of this Agreement;
provided, however, that the parties agree to conduct such negotiations in good
faith but if the parties are unable to reach agreement upon the terms and
conditions of a renewal agreement within a reasonable period of time (not to
exceed ninety (90) days), Owner may proceed to enter into negotiations with any
other party of the terms and conditions of an agreement with respect to the
Licensed Marks to commence following the expiration of this Agreement which
terms and conditions shall on the whole be no more favorable to said other party
than the terms and conditions last offered by Owner to Licensee.

                  (c) References in this Agreement to the Term shall, unless the

context indicates otherwise, also mean the Extended Term. In the event that
Licensee fails to exercise its option for the first Extended Term, or is not
qualified to exercise such option, this Agreement shall expire on December 31,
2002.

                  (d) Without otherwise limiting the generality of the
foregoing. Owner acknowledges that Licensee has expressed a concern that in the
event Owner acquires a controlling interest in the assets or capital stock of a
third party. or a controlling interest in the assets or capital stock of Owner
is acquired by a third party, which third party in the fiscal year immediately
preceding such acquisition derived revenues from its operation of a women's
footwear business in

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an amount greater than Licensee's revenues from the business conducted by
Licensee hereunder during the same period, such transaction may adversely impact
upon or affect the Licensee's rights and/or its ability to conduct its business
hereunder. Accordingly, in such event, Owner shall notify Licensee, in writing,
and provide Licensee with sufficient information concerning the proposed
transaction to enable Licensee to make an informed decision whether, in its
reasonable commercial judgment, the nature of the proposed transaction will
adversely impact Licensee. In such event, Licensee shall advise Owner within 15
days of being notified of such transaction if it chooses to terminate this
Agreement due to the proposed transaction and the reasons therefor, it being
understood that Licensee's rights to terminate this Agreement and to receive
payment hereunder shall not arise prior to closing of the proposed acquisition
transaction. If Licensee chooses to so terminate this Agreement, Owner and
Licensee shall negotiate in good faith to determine appropriate compensation to
be payable by Owner to License on account of such termination taking into
account the then current status of this Agreement and Licensee's business
hereunder and other similarly relevant matters.

      3.02. (a) Time is of the essence with respect to all payments hereunder.
If Licensee fails to make any payment in full due hereunder within ten (10)
business days of the date such payment becomes due (the "payment grace period"),
(i) Licensee shall pay interest on such unpaid sum from the business day
following the date of the expiration of the payment grace period until the date
of payment in full at a rate equal to the prime rate prevailing in New York, New
York at The Chase Manhattan Bank, from time to time during the period of such
delinquency, plus two percent (2%) and (ii) if such default continues uncured
for five (5) days after the later of 1) the expiration of the payment grace
period and 2) written notice from Owner, Owner shall have the right to terminate
this Agreement immediately upon further written notice to Licensee. If any
payment to be made hereunder shall be due on a day which is not a business day,
the due date of such payment shall be extended to the next succeeding business
day.

            (b) If Licensee otherwise fails to perform any other material term,
condition, agreement or covenant it is obligated to perform hereunder and (i)
such breach is curable

                                       15

<PAGE>

but continues uncured for a period of thirty (30) days after Owner gives
Licensee written notice thereof; or (ii) if said breach is curable but not
within thirty (30) days and all reasonable steps necessary to cure have not been
taken within thirty (30) days after Owner gives Licensee written notice of
breach, Owner may terminate the Term immediately upon giving notice at any time
after said thirtieth (30th) day, without prejudice to any other rights of Owner.

            (c) If Licensee otherwise fails to perform any other material term,
condition, agreement or covenant it is obligated to perform hereunder and such
breach is not curable, Owner may terminate this Agreement immediately upon
giving notice at any time, without prejudice to any other rights of Owner.

            (d) Without limiting the generality of the foregoing, if Licensee
conducts its business hereunder in a manner which requires Owner to give two (2)
or more notices in any consecutive twelve (12) month period pursuant to this
Section 3.02 to obtain Licensee's compliance with this Agreement, Owner may
elect to terminate this Agreement forthwith and such termination shall be
effective immediately upon Owner's giving notice.

            (e) Owner shall copy Licensor on any notice sent to Licensee
pursuant to paragraph 3.02(a) hereunder.

      3.03. (a) Owner shall have the right, without prejudice to any other
rights which it may have, to terminate the right of Licensee to manufacture,
advertise, promote, distribute or sell Licensed Articles bearing a particular
Licensed Mark, but only if (i) Owner has complied with its material obligations
hereunder; (ii) Licensee shall have failed for a period longer than two
consecutive selling seasons to continue the manufacture and sale in commercial
quantities of at least fifteen (15) styles of Licensed Articles bearing such
particular Licensed Mark; (iii) Owner shall have given written notice to
Licensee specifically identifying such failure; and (iv) Licensee shall have
failed to remedy such default with respect to such particular Licensed Mark
within one hundred twenty (120) days after Licensee's receipt of such written
notice, which remedy may be be accomplished by manufacturing and selling in
commercial quantities at least fifteen (15) styles of Licensed Articles bearing
such particular Licensed Mark during any selling season occurring in

                                       16

<PAGE>

whole or in pan during such one hundred twenty (120) day period. Thereafter,
notwithstanding any contrary provision hereof or implication contained herein,
Owner may grant a license covering Licensed Articles under such particular
Licensed Mark to Licensor or to any third party and such grant shall not be
deemed a violation of or infringement upon any of the rights of Licensee
pursuant to the terms of this Agreement. Notwithstanding the foregoing, this
Section 3.03(a) shall have no force or effect whatsoever with respect to the
Licensed Mark "ANNE KLEIN II" until Owner gives written notice to Licensee that
Owner is satisfied with respect to the logo and other matters necessary to
Licensee's exploitation of such Licensed Mark, and no selling season that
commences prior to or within one hundred twenty (120) days after Licensee's
receipt of such notice may be included among such two consecutive selling
seasons. Notwithstanding anything to the contrary contained in this Agreement,
Owner's right to terminate certain rights of Licensee pursuant to this Section
3.03 shall extend only to the particular Licensed Mark with respect to which a

failure shall have occurred pursuant to clause (ii) of the first sentence of
this Section 3.03.

            (b) Commencing January 1, 2003, Owner shall have the right, without
prejudice to any other rights which it may have, to terminate the Term of this
Agreement if thereafter Licensee shall fail, during any two (2) consecutive
Contract Years (a "Target Period") hereunder, to achieve Net Sales in an amount
sufficient to allow Licensee to recoup the aggregate Guaranteed Minimum Royalty
payable by Licensee during said Target Period.

      3.04. Either Licensee or Owner shall have the right to terminate the Term
effective immediately upon written notice to the other:

            (a) If the notified party commences or becomes the subject of any
case or proceeding under any applicable federal, state or foreign bankruptcy
laws or if a court appoints a receiver. liquidator, assignee, trustee,
custodian, sequestrator or other similar official for the notified party and any
such involuntary proceeding or appointment is not discharged within sixty (60)
days; or

                                       17

<PAGE>

            (b) if the notified party defaults on any material obligation which
is secured by a security interest in any Licensed Articles and the secured party
accelerates the notified party's obligations to such secured party.

4. DESIGN SERVICES/TECHNICAL ASSISTANCE.

      4.01. During each Contract Year, with respect to each Licensed Mark,
Licensee shall manufacture, distribute, and sell in each of the usual and
customary women's footwear markets (which, at the effective date of this
Agreement, are held in February, June, August and December) collections of
Licensed Articles in accordance with the designs and specifications delivered or
approved by Owner from time to time. The first collection (the "launch") shall
be the Spring 2000 collection.

      4.02. (a) Licensee, at its expense, shall employ an appropriate staff of
designers and merchandisers/product development employees, reasonably acceptable
to Owner, to assure that Licensed Articles are consistent in design and quality
with the highest quality Articles in the applicable market segment and with
Owner's and Licensor's standing and reputation in the women's apparel and
footwear industry and with the public. For purposes of retaining the distinct
positions of the Company's Marks in the women's footwear market, Owner, Licensor
and Licensee agree to establish schedules and procedures ("Licensee's Product
Development Calendar") to facilitate an appropriate working relationship with
respect to Licensed Articles, including direct interface among Owner and
Licensee's design and merchandising staff(s) throughout the product development
process with input from Licensor, as Owner deems reasonably necessary.

            (b) At the beginning of the design phase for each seasonal
collection, Licensee shall provide Owner with its merchandising plan for said
collection, including a review of the prior season performance, Licensee's
assessment of market needs and competitive positioning, including Licensee's
identification of prior season Licensor styles (other than carryovers (as
defined below)) appropriate for translation to Licensee's market in the upcoming

season. Licensee also shall provide Owner with access to its design
library/archives, if any, to assist Owner in connection with

                                       18

<PAGE>

development of ideas for Licensed Articles. Owner, with input from Licensor as
Owner deems reasonably necessary, shall furnish such general assistance,
including concept boards (showing trend, silhouettes, color and fabrication) and
specifics with respect to those prior season Licensor styles to be translated as
Owner, Licensor and Licensee deem reasonably necessary hereunder. Licensee shall
consult with Owner concerning materials and fabrications to be used in the
manufacture of the Licensed Articles.

            (c) For each collection of Licensed Articles, Licensee shall prepare
and deliver to Licensor and Owner for Owner's approval at such times as the
parties shall mutually agree designs for the styles of Licensed Articles
proposed to be included in such collection, it being understood and agreed that
Licensor's approval rights shall be limited in the manner set forth in paragraph
4.05(a)(ii) below. The various collections of Licensed Articles shall aggregate
such number of styles of Articles (which may include styles from prior
collections ("carryovers") as well as new styles) as Owner and Licensee shall
mutually agree, it being understood and agreed by Licensee that so long as a
particular style remains generally available as a Licensed Article (including
through EDI or "Quick Response" or other replenishment mechanism) that style
shall not be sold as Discontinued Goods (except for seconds/irregulars or
discontinued colors or fabrics). For purposes of this paragraph, the term
"design" means a designer's sketch showing the suggested style of a Licensed
Article and coloration and/or materials and fabrications. Designs submitted by
Licensee must be approved by Owner in accordance with paragraph 4.05 herein.

            (d) Licensee shall identify to Owner (in writing) its requirements
for tags, labels and packaging ("Packaging Materials") to be used in connection
with Licensed Articles and, at its option, Owner may provide designs and
specifications for said Packaging Materials. Whether designs and specifications
are provided by Owner or developed by Licensee, Licensee shall produce the
Packaging Materials in accordance with designs and specifications approved by
Owner, a copy of which will be furnished to Licensor, and such Packaging
Materials shall be clearly distinguishable from those used by Licensor.

            (e) Licensee shall identify to Owner (in writing) its requirements,
a copy of which will be furnished to Licensor, for specialized hardware and trim
bearing the Licensed

                                       19

<PAGE>

Marks or any approved logo ("Trim Materials") to be used in connection with
Licensed Articles. Uses of the Licensed Mark or any of Company's Marks as a
design element may be proposed by either Owner or Licensee, but all such uses
must have Owner's express prior approval, such approval not to be unreasonably
withheld. At Owner's option, Owner may provide designs and specifications for
said Trim Materials and, whether designs and specifications are provided by
Owner or Licensee, Licensee shall produce said Trim Materials in accordance with
the designs and specifications approved by Owner, a copy of which will be

furnished to Licensor.

            (f) Before Owner (whether directly or through the Agency (as defined
below)) incurs any costs in connection with the development of Packaging
Materials and/or Trim Materials exclusively for Licensee, Owner and Licensee
shall prepare a budget, pre-approved in writing by Licensee's divisional
President, Chief Financial Officer or Executive Vice President, for such
development and Licensee shall reimburse Owner in accordance with paragraph
7.02(c) below for its actual out-of-pocket costs incurred in accordance with
said budget promptly after receipt of Owner's invoice therefor. Without limiting
the generality of the foregoing, if Licensee so requests, Owner agrees that in
development of Packaging Materials and/or Trim Materials exclusively for
Licensee, Owner will work with Licensee's usual resources for such Materials, it
being the parties' intent to obtain the highest quality Materials at the most
favorable cost.

      4.03. (a) Owner and/or Licensor will not be responsible for making
samples. However, Licensee agrees that from time to time it may be appropriate
for Owner's representative to visit Licensee's factories or undertake other
travel with respect to the subject matter hereof, as agreed in writing by the
parties in advance and approved (which approval will not be unreasonably
withheld or delayed) by Licensee's divisional President, Maxwell Shoe Company's
Executive Vice President or Chief Financial Officer ("Reimbursable Travel"), and
Licensee agrees to reimburse Owner, up to a maximum of seven thousand five
hundred dollars ($7,500.00) per Contract Year, for Licensee's pro rata portion
of Owner's expenses incurred with respect to Reimbursable Travel within thirty
(30) days after receipt of Owner's invoice for such expenses.

                                       20

<PAGE>

            (b) All sample Licensed Articles, whether made by Owner, Licensee or
under their authority, will be Owner's property and Licensee will surrender
these samples to Owner immediately upon the expiration or termination of the
Term or sooner if Owner so requests.

      4.04. (a) Owner acknowledges that Licensee employs quality standards for
Articles manufactured by it and Owner agrees that, in connection with the design
and development of Articles, it shall take such standards into account;
provided, however, that Licensee shall manufacture Licensed Articles in
substantial compliance with Owner's design standards and requirements. In any
event, the quality of Licensed Articles shall equal or exceed the quality of
similar Articles previously manufactured and sold by Licensee under the "Jones
New York" brand.

            (b) Licensee expressly acknowledges that all Protectible Materials
(as defined below) and Trim Materials designed by Owner without material design
input from Licensee which are clearly unique or distinctive ("Unique Styles")
and all rights therein or thereto are and shall be the property of Owner, it
being understood and agreed that designs and Trim Materials which embody
Company's Marks or a Company logo shall be designated Unique Styles whether
designed by Owner, Licensee or both. All Unique Styles shall be used by Licensee
solely in connection with the manufacture, distribution and sale of Licensed
Articles in the Territory and pursuant to this Agreement. Owner may use and
permit others, including Licensor, to use the Unique Styles in any manner it
desires, provided that such use does not conflict with any rights granted to

Licensee hereunder and provided further that Owner does not sell or otherwise
give any Unique Styles to any other manufacturer of Articles unless the Articles
incorporating such Unique Styles are to be sold outside of the Territory.

      4.05. Without limiting the generality of the foregoing. so that Owner
shall be satisfied that Licensee continuously will be able to meet and maintain
the standards and specifications established by Owner for the Licensed Articles:

            (a) (i) Owner and Licensee shall establish appropriate timetables
and procedures under which periodically throughout the development process of
Licensed Articles

                                       21

<PAGE>

Licensee shall make available to Owner, the styles, designs, materials,
fabrications, Trim Materials, Packaging Materials and contents of each
collection of all Licensed Articles for Owner's approval as to design
interpretation, workmanship and quality and to assure that all Licensed Articles
are reasonable facsimiles of designs approved by Owner. Owner shall, at such
times throughout the development process as Owner deems appropriate, furnish
Licensor with such portion of the items described in the preceding sentence as
Owner deems reasonably necessary to facilitate Licensor's participation in the
approval process pursuant to paragraph 4.05(a)(ii).

                  (ii) In advance of Licensee's Market opening of each
collection Licensee shall make available to Licensor and Owner for Owner's
approval samples of each complete collection of Licensed Articles intended to be
offered in that Market together with or including the Packaging Materials and
collateral selling materials such as photo line lists intended to be used with
them. All styles of Licensed Articles shall be subject to Licensor's and Owner's
prior review and, in the event of disagreement among Owner, Licensor and
Licensee as to inclusion of a particular style in a particular collection,
Owner's decision shall prevail. All styles of Licensed Articles shall be subject
to Owner's prior approval.

                  (iii) Licensee expressly acknowledges and agrees that if
samples are not made available to Licensor and Owner in sufficient time prior to
Market opening for Licensee to make changes requested by Owner in unapproved
Articles, Owner and Licensee shall agree upon changes to be made prior to
commercial production and Licensee shall submit production samples for Owner's
approval or Licensee shall remove said unapproved Articles from its collection
of Licensed Articles.

            (b) After Licensor's review and Owner's approval of a collection of
Licensed Articles is given, Licensee shall not make any material change in the
Licensed Articles or the Packaging Materials for Licensed Articles without
Owner's express prior approval, it being the intent of the parties that the
Licensed Articles offered for sale and sold in any collection shall be those
reviewed by Licensor and approved by Owner for inclusion in said collection. No
Licensed Articles shall be manufactured in commercial quantities, sold or
distributed by Licensee without Owner's express prior approval.

                                       22

<PAGE>

            (c) Licensee expressly agrees and acknowledges that Owner's decision
to give its approval pursuant to this paragraph 4.05 may be based solely on
Owner's subjective standards and may be withheld in its sole and absolute
discretion; provided, however, that nothing herein contained shall preclude
Licensee from presenting its reasonable business needs to support inclusion of
particular styles, it being understood and agreed, however, that Owner shall
make the final decision in accordance herewith. For other matters for which
Owner's approval is required under this Agreement, Owner's decision to give its
approval shall be based upon Owner's commercially reasonable judgment. For
purposes of this Agreement, only the President of Owner, or a designated
alternate, may give approval on behalf of Owner.

            (d) An approval given for Licensed Articles to be included in, or
Packaging Materials to be used by Licensee with, one collection shall not be
construed as approval to include or use said Licensed Articles or Packaging
Materials in or with any other collection except as Owner may expressly agree
with respect to carryovers. Owner expressly reserves the right to review
Licensee's entire line of Licensed Articles from time to time for the purpose of
deleting any previously-approved style which Owner deems, in its sole discretion
(which shall not be unreasonably applied), no longer appropriate for
distribution as a Licensed Article. Following such deletion, Licensee may, for a
reasonable period (which shall not exceed six (6) months) to be mutually agreed,
fill its existing orders for deleted styles and/or sell off its existing on-hand
inventory of deleted styles.

            (e) With respect to any matter hereunder for which Licensor's review
and Owner's approval is required, if Licensee timely submits Licensed Articles
and/or Packaging Materials or other materials for which Licensor's review and
Owner's approval is required and Owner fails to disapprove any of them within
fifteen (15) business days after Licensor's and Owner's receipt thereof (or such
longer period as Owner may reasonably request and with which Licensee reasonably
agrees), Owner's approval shall be deemed given solely for the use for which
approval was sought.

                                       23

<PAGE>

5. CONFIDENTIALITY / DISCLOSURE.

      5.01. Licensee, Licensor and Owner each acknowledges that all information
relating to the business and operations of the other(s) which it acquires,
learns or has learned during or prior to the Term from the other(s) which is not
commonly or currently known in the marketplace (the "Confidential Information")
is valuable property of the applicable party. Each of the parties acknowledges
the need to preserve the confidentiality of such Confidential Information and
agrees that, during the Term and after the expiration or other termination
thereof, it shall not use or disclose same, except to the extent expressly
provided herein or as may be required by law, regulation or judicial order. Each
shall take all necessary steps to ensure that use of Confidential Information by
it or by its contractors and suppliers (which use shall be solely as necessary
for, and in connection with, the manufacture, distribution, sale, advertising
and promotion of Licensed Articles) shall preserve such confidentiality in all
material respects. Without limiting or impairing any other indemnification
provision contained herein, each party hereby agrees to release, defend, hold
harmless and indemnify the others against any and all claims, damages, causes of

action, judgments, settlements, fines and other costs of any kind (including
reasonable attorneys' fees), which may be suffered by the indemnified party as a
result of any breach by the breaching party or any of its contractors of the
provisions of this paragraph. The provisions of this paragraph and the parties'
obligations hereunder shall survive the expiration or termination of the Term.

      5.02. Licensor and Licensee each agrees that its press releases and other
public announcements related to this Agreement shall, subject to applicable law
and applicable disclosure obligations thereunder, be subject to Owner's
reasonable prior approval. During the Term, and for three (3) years thereafter,
neither Licensor, Licensee nor Owner shall, directly or indirectly, make any
public statement that materially adversely affects, disparages or creates any
material negative inference as to the reputation, prestige, value, image or
impression of the Licensed Marks or the Licensed Articles or any other party's
respective officers, directors, affiliates, personnel, products or related
companies, by words, actions or other communications. The provisions of this
paragraph and the parties' obligations hereunder shall survive the expiration or
termination of the Term.

                                       24

<PAGE>

6. MANUFACTURE OF LICENSED ARTICLES; QUALITY CONTROL.

      6.01. Licensee agrees that the Licensed Marks have an established prestige
and good will and are well recognized by the trade and the public in the
Territory, and are of great importance and value to Owner and Licensor.
Accordingly, Licensee further agrees that the contents and workmanship of
Licensed Articles shall at all times be of the highest quality in the applicable
market segment and Licensed Articles shall be distributed, offered for sale and
sold with collateral materials, including but not limited to Packaging Materials
and Trade Materials (as defined below), appropriate for said highest quality
Articles in the applicable market segment and consistent with Owner's and
Licensor's standing and reputation in the apparel and footwear industries and
with the public as first rate firms.

      6.02. (a) In connection with its manufacture of Licensed Articles,
Licensee shall assure that, in addition to abiding by the terms of this
Agreement, the following conditions are met:

                  (i) Licensed Articles are produced under satisfactory working
conditions and in accordance with all applicable laws and regulations (including
those regarding wages and hours); and

                  (ii) Convict or forced or child labor shall not be used.

            (b) In the event Licensee engages a contractor, agent or supplier
(hereinafter, "Contractor"), including without limitation an affiliate of
Licensee, in connection with the manufacture of the Licensed Articles, of any
Protectible Materials (as defined below) and/or of a significant component of
the Licensed Articles themselves and/or of any component thereof bearing any of
the Licensed Marks, Licensee shall, immediately upon retention of such
Contractor, furnish Owner, in writing, with the name and address of the
Contractor and a description of the Licensed Articles or components involved.
Licensee shall specifically obtain and maintain in its files the Contractor's
written agreement (a) to abide by the provisions of this Agreement relating to

confidentiality, quality standards and trademark protection (including, without
limitation, a prohibition against distribution by the Contractor of any Licensed
Articles or Protectible Materials (if any)--including overruns or Articles which
are unacceptable because damaged or defective--to

                                       25

<PAGE>

any person other than Licensee), (b) to produce Licensed Articles under
satisfactory working conditions and in accordance with all applicable laws and
regulations (including those regarding wages and hours), (c) to refrain from
using convict or forced or child labor and (d) to permit Owner to exercise its
rights to obtain current production samples and of inspection set forth in
paragraph 6.03 below (together, the "Contract Conditions"). Notwithstanding any
contrary provision of paragraph 2.01 above, Owner acknowledges that, due to the
particular nature of manufacturing demands associated with Articles, Licensee
will utilize independent third parties to (i) serve as agent for Licensee and
(ii) manufacture Licensed Articles or Protectible Materials (if applicable)
outside of the Territory and Owner agrees that Licensee may do so, subject to
prior notice to Owner and to strict compliance with this paragraph 6.02.
Licensee shall take all steps necessary to ensure that any subcontractor of any
Contractor is subject to the Contract Conditions applicable to Contractors
hereunder to the same extent such Contract Conditions are applicable to
Contractors. The engagement of a Contractor by Licensee in compliance with the
terms of this paragraph 6.02 shall not be deemed a sublicense hereunder and no
such Contractor shall acquire any rights with respect to the Licensed Mark or
any of the Company's Marks. Attached hereto as Schedule 6.02 is a list of
Contractors or Agents (including for this purpose affiliates of Licensee)
engaged by Licensee, including the country of manufacture. Said Schedule is
current as of the Effective Date and may be modified or supplemented from time
to time.

      6.03. (a) During the Term, Licensee, periodically, but at least once for
each collection and at any other time as requested by Owner, shall submit, free
of any charge to Owner, randomly selected then current production samples of
each Licensed Article and Packaging Materials so that Owner may be assured of
the maintenance of the standards and specifications for each. Owner may, at its
election, retain any of such samples for its archival purposes. Owner also shall
have the right, upon reasonable advance notice to Licensee, to inspect the
manufacturing process for each Licensed Article produced under this Agreement,
at whatever place or places they may be manufactured.

                                       26

<PAGE>

            (b) Notwithstanding any contrary provision herein, if, at any time,
any production sample is disapproved by Owner on the grounds that such sample
does not materially conform to the approved pre-production sample, Owner shall
so advise Licensee and, upon Licensee's receipt of such advice by any means,
approval with respect to that Licensed Article shall be deemed revoked. If
advice is given orally, it shall be promptly confirmed in writing. Thereafter,
except for Licensed Articles previously produced and delivered to Licensee
(which may be sold as Discontinued Goods or otherwise as Owner and Licensee
shall mutually agree), Licensee shall not manufacture or release that Licensed
Article for public distribution until a new approval has been given for that

Licensed Article.

            (c) Prior to the initial production of any stationery, invoices and
other similar business papers (collectively, "business documents") bearing the
Licensed Marks or Company's Tradename and, thereafter, once during each Contract
Year and at any other time upon Owner's reasonable request, Licensee shall
furnish Owner with a reasonable number of samples of such business documents for
Licensor's review and approval by Owner and its legal counsel. Licensee shall
not modify approved business documents except upon approval by Owner and its
legal counsel of any such modification.

      6.04. (a) Each Licensed Article shall be manufactured, packaged, labeled,
sold and distributed in accordance with all applicable national, state,
provincial, local or other laws and regulations. Owner's approval of any sample
shall not be construed to mean that Owner has determined that the sample
conforms to the laws or regulations of any jurisdiction referred to above.

            (b) Licensee shall display, including, without limitation, on all
Packaging Materials for each Licensed Article and all business documents,
advertising, promotional, publicity and exploitation material relating to it,
each Licensed Mark only in such form and manner as is consistent with standards
promulgated by Owner from time to time and specifically approved by Owner.
Licensee also shall cause to appear on all such items, such legends, markings
and notices as either may be required by any law or regulation in the Territory
or as Owner reasonably may request. Licensee will acquire no proprietary rights
in the Licensed Marks by virtue of such use.

                                       27

<PAGE>

Without limiting the generality of the foregoing, Licensee shall not use any
tradename or other identifying marking owned by or associated with any
department store or other retail establishment, wholesale outlet or other
person, firm or corporation on Licensed Articles or containers therefor bearing
the Licensed Marks.

7. ADVERTISING; SHOWROOM; MARKETING.

      7.01. (a) Prior to the launch of the initial collection of Licensed
Articles, which shall be made for the Spring 2000 season, Licensee shall provide
for Owner's approval, an introductory marketing plan stating anticipated sales
volume, accounts, product positioning (viz. competition), advertising and
promotional support and such other relevant information as Owner may reasonably
request. Further, in addition to the advertising described below, Owner and
Licensee shall endeavor to agree upon the manner and media to be utilized in
advertising and promoting and staging the launch (including the portion of the
Minimum Advertising Obligation (as defined below) to be expended by Licensee in
connection therewith), provided, however, that Owner's decision shall be final.
Notwithstanding the generality of the forgoing, Owner and Licensee agree that
the initial collection of Licensed Articles shall be supported by a so-called
"soft opening" and co-op advertising and that they will seek mutually beneficial
ways to formally launch Licensee's Licensed Articles bearing the Licensed Mark
"ANNE KLEIN II" at the time Owner launches its apparel collection bearing the
Licensed Mark "ANNE KLEIN II" for Fall 2000, it being understood and agreed that
Licensee's Image Fund Payment (as defined below) may be used in connection
therewith.

            (b) (i) Licensee acknowledges that, in recognition of the importance
of advertising in developing and projecting the image of the Licensed Marks and
in enhancing the sales of Licensed Articles, Owner will conduct a program for
all products bearing the Company's Marks (the "Image Program"). Owner 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. Owner will determine the media to
be used for advertisements and the advertising agency(ies) to be used and all
national (including for purposes

                                       28

<PAGE>

of this paragraph Owner-placed regional and local) advertisements will be placed
by Owner. The Image Program shall include all of the activities undertaken by
Owner to develop and promote the Company's Marks.

                  (ii) In connection with the Image Program, Licensee shall pay
to Owner in each Contract Year an amount equal to [confidential portion of
material has been so omitted and filed separately with the Securities and
Exchange Commission] of Net Sales hereunder for said Contract Year (the "Image
Fund Payment"); provided, however, that, the Image Fund Payment for any Contract
Year shall be not less than the following amounts (the "Minimum IFP"): For the
Initial Contract Year and the second Contract Year (i.e., 2001), the Minimum IFP
shall be deemed to be the aggregate amount of [confidential portion of material
has been so omitted and filed separately with the Securities and Exchange
Commission]; and in each subsequent Contract Year, the Minimum IFP shall be that
amount which is [confidential portion of material has been so omitted and filed
separately with the Securities and Exchange Commission] of the Guaranteed
Minimum Royalty (as defined below) payable for said Contract Year.

                  (iii) The Image Fund Payment shall be used by Owner for
purposes of national advertising and promoting the Licensed Marks and the
Licensed Articles. However, if Owner elects to do brand advertising of a
Licensed Mark on television, Owner may apply up to one-half (1/2) of the Image
Fund Payment for such purpose. Notwithstanding the generality of the foregoing.
if, for a particular season or in a particular Contract Year, Owner elects not
to conduct national advertising of the Licensed Marks, in lieu of payment of the
Image Fund Payment to Owner, Licensee shall use the Image Fund monies otherwise
payable for that season or Contract Year for other advertising and promotion of
Licensed Articles, as mutually agreed by Owner and Licensee and which may
include costs of creating in-store shops for Licensed Articles.

                  (iv) The Image Fund Payment shall be computed and paid
quarterly at the time Licensee renders its statements in accordance with
Paragraph 10.01 hereunder. The Image Fund Payment shall be due and payable
whether or not a payment of Sales Royalty is due for any particular Accounting
Period. The Image Fund Payment shall be in addition to any other monies payable
hereunder and shall not be credited against and/or recoupable from Sales
Royalties otherwise payable to Owner hereunder. Without otherwise limiting
Licensee's obligations hereunder with respect to payment of the Image Fund
Payment, it is hereby acknowledged and agreed that there

                                       29

<PAGE>

shall be no Image Fund Payment due and payable with respect only to sales of
Licensed Articles by Licensee's Outlets.

                  (v) Without limiting the generality of the foregoing,
commencing in the first calendar quarter after recoupment/application of the
Additional Advance (as defined below), Licensee shall pay an amount equivalent
to [confidential portion of material has been so omitted and filed separately
with the Securities and Exchange Commission] of the Minimum IFP for the
particular Contract Year at the beginning of each calendar quarter. Each such
amount paid by Licensee shall be treated as an advance against and deductible
from Licensee's next-following Image Fund Payment when it comes due in the
ordinary course.

      7.02. (a) (i) In addition to its participation in the Image Program, in
each Contract Year, Licensee shall fund a budget in an amount not less than
[confidential portion of material has been so omitted and filed separately with
the Securities and Exchange Commission] of its projected Net Sales of Licensed
Articles to enable Licensee to conduct other advertising and promotion as it
deems appropriate for the successful implementation of its business plan for the
sale of Licensed Articles (the "Minimum Advertising Obligation"). Without
limiting the generality of the foregoing, co-op advertising by Licensee will
satisfy the Minimum Advertising Obligation for the Licensed Articles for each
Contract Year. Without otherwise limiting Licensee's obligations hereunder with
respect to the Minimum Advertising Obligation, it is hereby acknowledged and
agreed that there shall be no obligation to fund the Minimum Advertising
Obligation with respect only to sales of Licensed Articles by Licensee's
Outlets.

                  (ii) In addition to co-op advertising, if Licensee elects to
develop other advertising and marketing plans and programs for Licensed Articles
(including but not limited to such items as trade and consumer co-op
advertising) such advertising and all marketing plans and programs, including
without limitation the creative components of all advertising material
(advertising visuals and copy), media selection and schedules and sales
promotions (such as, but not limited to, "gifts with purchase") developed by
Licensee shall be subject to the prior express written approval of Owner.

                  (iii) With respect to co-op ads, Licensee shall obtain Owner's
prior approval of the creative components of any advertising materials Licensee
elects to provide to its

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<PAGE>

customers for use in co-op ads, store catalogs and the like. In addition, Owner
and Licensee shall jointly develop guidelines with respect to Licensed Articles
which Licensee shall furnish to its customers who wish to participate in
Licensee's co-op advertising program, but Licensee shall not be deemed to have
breached this Agreement if its customers fail to follow such guidelines.

            (b) The following items shall be considered expenditures which will
be included in determining whether Licensee has satisfied the Minimum
Advertising Obligation: cooperative advertising; trade advertising; additional
related materials, such as printed materials, brochures, post cards and product
guides; visual merchandise, such as display materials and point-of-purchase
materials; and consumer media/print advertising. For clarification: The cost of
printing and producing Packaging Materials and the like shall not be credited
against the Minimum Advertising Obligation nor shall any product design expenses
incurred by Licensee be credited against the Minimum Advertising Obligation.

            (c) In order to take advantage of certain expertise, experience and
success of the advertising agency or agencies which then are responsible for

handling advertisements for Owner in the various countries in the Territory
(collectively, including an "in-house" agency or marketing/creative services
department (if applicable), the "Agency") in projecting the image of the
Licensed Mark, Licensee shall utilize the Agency in connection with the creative
development of the creative portion of any consumer and trade advertisements of
Licensed Articles other than collateral materials such as trade sell-in
presentations and other trade materials and brochures ("Trade Materials"), it
being understood and agreed that where practicable commercial implementation of
such advertisements may, in Licensee's determination, be undertaken by Licensee,
subject to Owner's reasonable approval. Except in circumstances where pooling of
advertising buys, in Owner'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 shall be subject to the
prior approval of Owner. Prior to commencement of a project hereunder, Owner and
Licensee shall prepared a budget, which shall be approved on Licensee's behalf
in writing by Licensee's divisional President, Chief Financial Officer or
Executive Vice President in his

                                       31

<PAGE>

reasonable business judgment, and Licensee shall pay for any material and
services supplied by the Agency, in accordance with said pre-approved budget
which budget shall include a service fee, which shall not exceed [confidential
portion of material has been so omitted and filed separately with the Securities
and Exchange Commission] of the direct costs thereof, for materials and services
provided by or through an "in-house" agency or marketing/creative services
department. 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 Owner. Notwithstanding anything to
the contrary herein, payments made to the Agency for advertising materials and
advertising fees during a Contract Year shall be credited against the Minimum
Advertising Obligation for such Contract Year.

      7.03. Licensee agrees to create a separate division (the "Division") to
conduct its business in Licensed Articles pursuant to this Agreement, which
Division may share general administration, operations, warehousing and
manufacturing facilities and functions with Licensee's other divisions. Licensee
shall employ an executive, reasonably acceptable to Owner, to be in charge of
and work exclusively for the Division as Marketing and Sales Manager and devote
all of his time to the marketing and sale of the Licensed Articles. In addition,
Licensee shall maintain an adequate staff, including a sales force and, if
applicable, in-store consultants solely for the sale of Licensed Articles and
service to Licensee's customers for Licensed Articles.

      7.04. (a) During the Term, Licensee shall maintain a separate area of its
New York showroom exclusively for the display of Licensed Articles. Said
showroom shall be decorated in a manner approved by Owner to be consistent in
design and appearance with Owner's designated showroom concept limited to a
[confidential portion of material has been so omitted and filed separately with
the Securities and Exchange Commission] budget for showroom. Licensee's showroom
shall be staffed and maintained in a manner commensurate with the reputation and
prestige of the Licensed Marks as a designation for highest quality products. As
used in this paragraph 7.04, references to "showroom" shall be deemed to include
exhibit facilities maintained by Licensee or its representatives at trade shows
where Licensed Articles are shown and/or sold.

                                       32

<PAGE>

            (b) (i) It is the parties' intent and Licensee agrees that an
appropriate element of marketing Licensed Articles shall be the development and
installation of in-store shops to house only Licensed Articles ("Shops"). Owner
and Licensee shall mutually agree as to those accounts where a Shop will be
established (each, a "Key Account"). In those accounts which are not Key
Accounts, Licensee will seek a so-called "soft shop" to house the Licensed
Articles. As used herein, a "soft shop" means a separate area for Licensed
Articles within a larger department for Articles generally, which shall be
appropriate in size to carry a representative assortment of Licensed Articles
and which shall feature signage and other fixtures or icons bearing the Licensed
Marks.

                  (ii) With respect to all material aspects of the design and
construction of Shops, including fixtures, furnishings and signage, Licensee
shall consult with Owner, it being understood and agreed that signage and any
fixtures or icons bearing the Licensed Marks must be approved by Owner in
advance of installation. Licensee shall not modify Owner's direction except with
Owner's express prior approval which shall not be unreasonably withheld or
delayed. Licensee shall, at all times, use diligent efforts to cause each Key
Account to maintain its Shops in a clean and attractive condition equal to the
standard of competitors' in-store shops, provided, that the failure by a Key
Account so to maintain one or more of its Shops shall not constitute a breach of
or default under this Agreement by Licensee if, within ten (10) business days
after Owner's written notice to Licensee that a Key Account has failed to
maintain one or more of its Shops, Licensee has taken those steps reasonably
necessary to place pressure on such Key Account to cure said failure.

                  (iii) Licensee shall be responsible for all expenses incurred
in carrying out its obligations under this paragraph 7.04(b). If Owner incurs
any costs primarily in connection with the foregoing, Licensee shall reimburse
Owner for direct expenses, which had been pre-approved in writing by Licensee,
promptly after receipt of Owner's invoice therefor. Licensee may, at its
election, credit direct costs incurred in carrying out its obligations under
this paragraph 7.04(h) against the Minimum Advertising Obligation for the
Contract Year in which such costs are incurred.

                                       33

<PAGE>

                  (iv) Licensee acknowledges that Owner may, in its discretion,
elect to consult with Licensor concerning matters described in this paragraph
7.04(b); provided, however, that Owner's decision shall prevail.

      7.05. (a) Licensee acknowledges the importance to the development of the
image and reputation of the Licensed Marks of displaying the full range of
products bearing the Licensed Marks. Accordingly, in each season Licensee shall
provide representative samples, limited to five (5) units per apparel season, of
Licensed Articles to Owner, without charge, for display in the New York showroom
maintained by Owner for its apparel bearing the Licensed Marks. Such samples
shall be made available to Owner upon Owner's reasonable request, so that the
Licensed Articles may be merchandised and shown with the applicable clothing
line and with other products bearing the Licensed Marks. Licensee shall also

provide to Owner, at Licensee's landed, duty-paid ("LDP") cost, additional
samples as may be required for advertising and publicity needs.

            (b) Upon Owner's request, Licensee shall provide Owner with a
reasonable number of Licensed Articles as requested by Owner, for use in
connection with its fashion shows, which Licensed Articles shall be from the
current collection in process. Licensee acknowledges that some of such shows may
take place prior to the commencement of production of such Licensed Articles and
that Licensee shall be required to provide pre-production samples.

            (c) With respect to the samples to be provided hereunder, Licensee
has informed Owner that pre-production samples are available only in sample size
6. Accordingly, to the extent that pre-production samples are required in sizes
other than size 6 and must be specially manufactured for Owner. Owner shall
reimburse Licensee for its direct costs, to a maximum of $100 per pair, for said
pre-production samples, it being understood and agreed that samples requested by
Owner hereunder and taken from Licensee's production stock shall he provided at
Licensee's LDP cost.

                                       34

<PAGE>

8. GUARANTEED MINIMUM ROYALTY/ADDITIONAL ADVANCE.

      8.01. In consideration of the license granted hereunder, Licensee shall
pay Owner a Guaranteed Minimum Royalty for the Initial and Second Contract Years
(i.e., from the Effective Date through 12/31/01) in the aggregate amount of
[confidential portion of material has been so omitted and filed separately with
the Securities and Exchange Commission], payable by Licensee as follows:
[confidential portion of material has been so omitted and filed separately with
the Securities and Exchange Commission] upon complete execution of the Letter of
Intent (as defined below) and the balance upon complete execution of this
Agreement. With respect to each Contract Year thereafter (i.e., commencing in
the Third Contract Year (2002)), Licensee shall pay Owner a Guaranteed Minimum
Royalty in an amount equal to [confidential portion of material has been so
omitted and filed separately with the Securities and Exchange Commission] of the
Sales Royalty (as hereinafter defined) earned hereunder for the preceding
Contract Year, but not less than [confidential portion of material has been so
omitted and filed separately with the Securities and Exchange Commission] (the
"Base Amount").

      8.02. (a) The Guaranteed Minimum Royalty payable for each Contract Year,
commencing in the Third Contract Year (i.e., starting January 1, 2002), shall,
after taking into account all then-available credits for the Additional Advance
paid by Licensee in accordance with paragraph 8.04, be paid to Owner in equal
quarterly installments on the first business day of each quarter during each
such Contract Year.

      (b) If [confidential portion of material has been so omitted and filed
separately with the Securities and Exchange Commission] of the applicable Sales
Royalty exceeds the Base Amount, the increase in the amount of the Guaranteed
Minimum Royalty to be paid over the Base Amount will be determined at the time
Licensee renders its accounting for the just-concluded Contract Year and
appropriate adjustments to the amount of the quarterly installments will be
made.

            (c) Payments may be made by check to Owner at 77 Metro Way, Secaucus
New Jersey 07094, to the attention of the Chief Financial Officer, or by wire
transfer in accordance with the instructions set forth on Schedule 8.02 as said
Schedule may be amended in writing by Owner from time to time.

      8.03 The Guaranteed Minimum Royalty paid for each Contract Year is
nonrefundable but shall be credited against and recouped from the Sales Royalty
otherwise payable for that Contract Year, as provided in Section 9 below.

                                       35

<PAGE>

      8.04. Upon complete execution of this Agreement, Licensee will pay to
Owner for its account an additional payment [of confidential portion of material
has been so omitted and filed separately with the Securities and Exchange
Commission] (the "Additional Advance"), which sum shall be applied against Sales
Royalties and Image Fund Payments otherwise payable to Owner under this
Agreement in such amounts and at such times as Owner and Licensee shall mutually
agree. At the expiration or other termination (for reason other than material
breach by Licensee) of this Agreement, a portion of the Additional Advance
(pro-rated against the Guaranteed Minimum Royalty otherwise payable for the year
in which termination occurs) which has not been applied against Sales Royalties
and Image Fund Payments otherwise payable (or as Owner and Licensee may
otherwise agree) shall be promptly returned to Licensee.

      8.05. The provisions of Section 8.01 through and including Section 8.04
shall each be subject to the provisions of Section 2.02(c)(iv).

9. SALES ROYALTY.

      9.01. In consideration of the license granted hereunder, in each Contract
Year, Owner shall earn a Sales Royalty (the "Sales Royalty Earned") equal to the
following percentages of Net Sales hereunder:

            (a) For Net Sales to and including [Confidential portion of material
has been so omitted and filed separately with the Securities and Exchange
Commission] [Confidential portion of material has been so omitted and filed
separately with the Securities and Exchange Commission]

            (b) For Net Sales in excess of [Confidential portion of material has
been so omitted and filed separately with the Securities and Exchange
Commission] [Confidential portion of material has been so omitted and filed
separately with the Securities and Exchange Commission]

            (c) Notwithstanding any contrary provision hereof, with respect only
to Net Sales (as defined in paragraph 1.03(c) above) by Licensee's Outlets, the
royalty rate shall be [confidential portion of material has been so omitted and
filed separately with the Securities and Exchange Commission] in lieu of any
other royalty rate hereunder, it being understood and Licensee acknowledges
that, at Licensee's request, Owner has agreed to this reduced royalty to an
effective Sales Royalty Earned on Net Sales by Licensee's Outlets approximately
equivalent to the Sales Royalty Earned on Net Sales of Discontinued Goods to
third parties.

      9.02. The Sales Royalty hereunder shall be accounted for and paid
quarterly within thirty (30) days after the last business day of each Accounting
Period during the Term. The Sales

                                       36

<PAGE>

Royalty payable (the "Sales Royalty Payable") for each Accounting Period shall
be calculated in accordance with paragraph 10.01 below.

      9.03. No payment of Sales Royalty for any Accounting Period shall reduce
the Guaranteed Minimum Royalty due to Owner for said Contract Year; provided,
however, that if the sum of the Guaranteed Minimum Royalty and any Sales Royalty
actually paid to Owner for a particular Contract Year (the "Total Paid Royalty")
exceeds the greater of the aggregate Guaranteed Minimum Royalty paid to Owner
for said Contract Year and the aggregate Sales Royalty Earned for said Contract
Year, then the amount by which the Total Paid Royalty exceeds the greater of the
aggregate Guaranteed Minimum Royalty or the aggregate Sales Royalty Earned for

said Contract year shall be deemed "Excess Royalty" and Licensee may recoup the
amount of the Excess Royalty from the Sales Royalty Payable for any Reporting
Period (as defined in Section 10.01) in the next or subsequent Contract Years,
notwithstanding any contrary provision of this Agreement. For purposes of this
paragraph 9.03, the Initial Contract Year and the second Contract Year shall be
treated as a single Contract Year. Except as expressly provided in the
immediately preceding sentence, no payment of Sales Royalty for any Contract
Year shall reduce the Guaranteed Minimum Royalty or the Sales Royalty due to
Owner for any other Contract Year.

      9.04. The parties hereto agree that Licensor shall have no right to
receive from Licensee any payment of Sales Royalty, except pursuant to a final
order of a court of competent jurisdiction; provided, however, in no event
(whether pursuant to such court order or otherwise) shall Licensee he obligated
to pay in excess of the Sales Royalty Payable for any Accounting Period.

10. ACCOUNTING STATEMENTS AND OPERATING REPORTS.

      10.01. Licensee shall deliver to Owner at the time each Sales Royalty
payment is due, a statement in the form set forth in Schedule 10.01 attached
hereto and made a part hereof, signed and certified as accurate by the Chief
Financial Officer, Controller or Executive Vice President of Licensee. With
respect to each Licensed Mark, the statement shall provide the

                                       37

<PAGE>

following information concerning the calculation of the amount payable for the
period covered by the statement (the "Reporting Period"):

            (a) the gross sales of all Licensed Articles shipped during the
Reporting Period;

            (b) the amount of any approved deductions from gross sales including
for allowable returns actually received during the Reporting Period, trade
discounts actually taken or allowable markdowns and/or chargebacks actually
taken during the Reporting Period;

            (c) the Net Sales for the Reporting Period;

            (d) the Sales Royalty Earned on said Net Sales for the Reporting
Period; and

            (e) the Sales Royalty Payable for the Reporting Period, which shall
be defined to equal the amount, if any, by which the amount calculated pursuant
to sub-paragraph (d) of this Section 10.01 exceeds the sum of (x) the Guaranteed
Minimum Royalty paid at the commencement of the Reporting Period, (y) any unused
portion of the Additional Advance to be applied to the Reporting Period and (z)
any unused portion of any Excess Royalty to be applied to the Reporting Period.

            The amount payable for the Reporting Period shall be the sum of the
Sales Royalty Payable and the amount of the Image Fund Payment due hereunder for
the Reporting Period. The Image Fund Payment shall be in addition to any other
monies payable hereunder and shall not be credited against and/or recoupable
from Sales Royalties otherwise payable to Owner hereunder but the Image Fund
Payment shall be credited against and recoupable from amounts paid pursuant to

Section 8.04. In a supplemental statement for the Reporting Period, Licensee
shall show the amount of Net Sales through Normal Retail Channels, the amount of
Net Sales of Discontinued Goods, and, by country, the Net Sales made pursuant to
a distribution right granted under Section 18 below. The supplemental statement
shall also show the calculation of the Sales Royalty on "make-ups". Such
statement shall be furnished to Owner irrespective of the quantity of Licensed
Articles that have been sold during the Reporting Period. Accounting statements
and payments shall be sent to Owner at 77 Metro Way, Secaucus, New Jersey 07094,
to the attention of the Chief

                                       38

<PAGE>

Financial Officer, with a copy to the President of Owner's Licensing Division at
the address set forth in paragraph 17.01 below. Alternatively, payments may be
made by wire transfer in accordance with the instructions set forth on Schedule
8.02 as said Schedule may be amended in writing by Owner from time to time.
Owner shall promptly provide a copy of each such statement to Licensor.

      10.02. During each Contract Year, Licensee shall provide Owner with
additional information concerning its business hereunder. Owner intends that
this information shall be the basis for its periodic business-review meetings
with Licensee.

            (a) Within forty-five (45) days after the last business day of the
second and fourth Accounting Periods of each Contract Year during the Term,
Licensee shall deliver to Owner an Operating Report setting forth the following:
(i) the total amount spent or committed by Licensee, in addition to the Image
Fund Payments, for the advertising and promotion of Licensed Articles during the
particular Contract Year through the end of the most recently completed two (2)
Accounting Periods indicating the amounts paid for cooperative advertisements
separately from other advertising and promotion; (ii) stated separately, by
account, those amounts paid for promotions and/or cooperative advertisements;
(iii) separately for each Licensed Mark, by account (if available), including
accounts in any Foreign Territory where sale of Licensed Articles is permitted
in accordance with Section 18 below, Net Sales (in dollars and units), and (iv)
separately for each Licensed Mark, Net Sales by style (in dollars, units and
average price and accompanied by a photo or line drawing), for the top 20
styles. The Operating Report shall be in the form set forth in Schedule 10.02
attached hereto and made a part hereof, signed and certified as accurate by a
duly authorized officer of Licensee. Upon Owner's reasonable request, Licensee
shall deliver to Owner, or make available to Owner at Licensee's executive
offices, together with the Operating Report, copies (such as tear sheets) of all
advertisements relating to the Licensed Marks and Licensed Articles placed by
Licensee or on its behalf during the Accounting Periods covered by the report.

            (b) Not later than October 15th of each Contract Year. Licensee
shall furnish Owner its quarterly sales projections for the Licensed Articles
for the next Contract Year. Not later than June 15th of each Contract Year,
Licensee shall furnish Owner with any revision of

                                       39

<PAGE>

its sales projections by quarter, for the current Contract Year. Sales

projections shall be accompanied by the assumptions on which such projection is
based.

            (c) Operating Reports and projections shall be sent to Owner to the
attention of the President of Owner's Licensing Division, with a copy to Owner's
Chief Financial Officer. Owner shall promptly provide a copy of Licensee's
projections to Licensor.

      10.03. Licensee shall each year provide Owner and Licensor with a copy of
its Annual Report as soon as it is available to Licensee's shareholders.

      10.04. (a) Receipt by Owner of any of the statements furnished, or of any
sums paid, pursuant to this Agreement shall not preclude Owner from questioning
their correctness at any time.

            (b) Licensee shall maintain appropriate books of account in which
accurate entries shall be made concerning all transactions within the scope of
this Agreement. Licensee acknowledges that it is Owner's policy to conduct
audits of its licensees periodically, whether or not Owner has any concern that
an audit is necessary. Therefore, during the Term, and for a period of twelve
(12) calendar months thereafter, Owner shall have the right, through any of its
employees or other authorized representative of its choice, upon reasonable
advance notice to Licensee, to examine and copy all or part of these books of
account and all other records, documents and material in the possession or under
the control of Licensee with respect to the subject matter of this Agreement.
Without limiting the generality of the foregoing, Licensee shall maintain
supporting customer invoices and such other documents as may be reasonably
required to substantiate royalty statements rendered hereunder and to enable
Owner to confirm that all Licensed Articles are accounted for, including without
limitation for each style of Licensed Article, the quantity of each such style
manufactured and sales information indicating by customer and the style number,
quantity and invoice price of all Licensed Articles shipped.

            (c) If Owner and Licensee agree that Licensee's aggregate of
payments for any period covered by an audit of Licensee's books and records (the
"Audit Period") was less

                                       40

<PAGE>

than the amount which should have been paid by a sum equal to or greater than
two percent (2%) of the aggregate royalty reported to Owner during the Audit
Period or $10,000 per 12-month period encompassed by the Audit Period (whichever
is less), Licensee shall reimburse Owner for the cost of such audit. All
payments required to be made to eliminate any discrepancy revealed by said audit
must be paid within thirty (30) days after Owner's demand therefor, plus
interest at the prime rate prevailing from time to time in New York, New York at
The Chase Manhattan Bank, plus two percent (2%), on such unpaid royalties from
the date(s) said royalties were originally due and payable. Owner shall promptly
provide a copy of each such audit report to Licensee and to Licensor.

            (d) All books of account and records shall be kept available by
Licensee for at least four (4) full calendar years after the end of each
calendar year of the Term.

11. INTELLECTUAL PROPERTY.

      11.01. (a) (i) Licensee shall not question or otherwise challenge, either
directly or indirectly, during the Term or after the termination or expiration
of the Term, Owner's ownership of the entire right, title and interest
(including any and all accompanying goodwill) in and to the Licensed Marks or
Company's Tradename, the validity of the License Agreement, the validity of this
Agreement or the validity of any registration or application for registration by
Owner of the Licensed Marks. Licensee acknowledges and agrees that, to the
extent that any goodwill and other rights attach to or arise in connection with
the use of the Licensed Marks by Licensee, Licensee hereby assigns any and all
such goodwill and rights, at such time as they may be deemed to accrue, to
Owner.

                  (ii) Licensee agrees that it will not make application in its
own name for registration of the Licensed Marks but Licensee shall promptly
supply Owner with all material it may request for such purposes and give Owner
its full cooperation in connection therewith. Licensee shall at any time,
whether during or after the Term, execute any documents reasonably requested by
Owner to confirm Owner's ownership of the Licensed Marks or to record Licensee
as a licensee or registered user of the Licensed Marks; provided, however, that
in the event of any ambiguity or conflict between any provision of any such
document and any provision of this

                                       41

<PAGE>

Agreement, this Agreement shall prevail. Without limiting the generality of the
foregoing, Licensee shall provide Owner with a duplicate original of each of the
first three (3) invoices for shipments for bona fide commercial sale of the
Licensed Articles in interstate commerce in the United States.

            (b) (i) Licensee shall use Licensed Marks strictly in compliance
with all applicable legal requirements. Licensee shall not, at any time, do or
suffer to be done any act or thing which may in any way adversely affect any
rights in and to the Licensed Marks or any registrations thereof or which,
directly or indirectly, may reduce the value of the Licensed Marks or detract
from their reputation. Licensee shall not, and shall use its best efforts to
cause its customers not to, sell, advertise, promote or exploit Licensed
Articles in a manner that may reduce the value of Company's Tradename and
Company's Marks, including the Licensed Marks or detract from their reputations.

                  (ii) With reference to the Licensed Mark A LINE ANNE KLEIN and
the A ANNE KLEIN logo, Licensee may use either Licensed Mark or logo on and in
connection with Licensed Articles, but Licensee may not use the abbreviation A
LINE alone. With either Licensed Mark, Licensee may use the designation "TM" to
indicate that these are trademarks, however, except as Owner may expressly
approve in writing, Licensee may not use the trademark registration symbol (R).

            (c) In the event Owner and Licensee decide to use one or more
newly-created names to designate particular styles or attributes unique to
Licensed Articles or some of them (hereinafter referred to as "Created Marks").
Owner shall be the owner of all rights in said Created Marks; trademark
registrations therefor (if any) shall be in Owner's name; and references in this
Agreement to Licensed Marks, including in this Section 11, shall be deemed to
include all or any Created Marks, except as expressly stated herein.

                  (i) The decision to adopt a Created Mark and the form of each
such Created Mark shall be determined by mutual agreement of Owner and Licensee,
but if the parties are unable to agree, Owner's decision shall prevail.

                  (ii) During the Term, before a trademark previously registered
to Licensee but not otherwise identified with a Licensee product which is not a
Licensed Article is

                                       42

<PAGE>

adopted and used as a Created Mark on or with Licensed Articles, Owner and
Licensee shall enter into an appropriate agreement confirming that Owner may
continue to use and grant others (including a successor licensee) the right to
use said proposed Created Mark as a trademark on (or designation for) Licensed
Articles following the termination or other expiration of the Term. Such
agreement shall contain such terms and conditions as are usual and customary in
other similar agreements and appropriate to the circumstances as they then
appear.

      11.02. It is understood and agreed that nothing in this Agreement will be
deemed in any way to constitute an assignment by Owner of Company's Tradename or
the Licensed Marks or of any rights therein, or to give Licensee any right,
title or interest in or to Company's Tradename or the Licensed Marks (except the
right to make use thereof as herein provided). It is further understood and
agreed, that, except as expressly stated herein, nothing in this Agreement shall
be deemed to derogate from Licensor's rights to use the Company's Tradename
"ANNE KLEIN" or the Licensed Marks "ANNE KLEIN" and the Lion Head Design
pursuant to and in accordance with the License Agreement; provided that neither
Owner nor Licensor shall amend the License Agreement in any manner that would
impair any of Licensee's rights hereunder without Licensee's prior consent,
which consent may be withheld for any reason.

      11.03. Each party to this Agreement, shall promptly notify each other
party hereto, in writing, of any actual, suspected or apparent infringement or
counterfeit of any of the Licensed Marks or any unfair competition, "passing
off' or other violation (collectively "Infringement") of the Licensed Marks that
comes to the attention of such party. Licensee will cooperate with Licensor and
Owner and, if requested, shall join with Licensor and Owner, in such action as
Owner in its discretion may deem advisable, it being understood and agreed that
Owner may elect, in its sole discretion, to refrain from taking any action. The
proceeds of any settlement of or recovery from any such action after recovery by
Owner, Licensor and Licensee of the costs and expenses incurred by each in
connection with such action shall be shared by Owner, Licensor (if applicable)
and Licensee pro-rata in proportion to the damages suffered by such parties as a
result of such violations, it being

                                       43

<PAGE>

understood that, in the first instance, Owner shall be responsible for any and
all costs and expenses incurred in connection with such action. Any non-monetary
rights obtained as a result of any such action shall belong entirely to Owner.
Licensee shall have no right to take any action with respect to any Licensed
Mark without Owner's prior written approval.

      11.04. Any copyright, industrial design right, or design patent which may
be created in any sketch, design, advertising, Packaging Materials or the like
(hereinafter, collectively, "Protectible Materials") designed or approved by
Owner in connection with Licensed Articles shall be the property of Owner. To
the extent that any Protectible Material is or contains any content that is
eligible for copyright protection pursuant to the Copyright Act of 1976, such
Protectible Material or content thereof shall be considered a "work made for
hire" (as such term is defined in the Copyright Act of 1976), and all rights
with respect thereto shall be automatically assigned to Owner. Licensee shall
not, at any time, do or suffer to be done any act or thing which may adversely
affect any rights of Owner in the Protectible Materials, including, without
limitation, filing any application in its name to record any claims to
copyrights or design patents in Licensed Articles, and upon Owner's request.
shall do all things reasonably required by Owner to preserve and protect said
rights, including, without limitation, placing an appropriate copyright or
industrial design right notice on all Licensed Articles and the Protectible
Materials therefor. Licensee shall at any time, whether during or after the
Term, execute any documents requested by Owner to confirm Owner's ownership of
the Protectible Materials; provided, however, that in the event of any ambiguity
or conflict between any provision of any such document and any provision of this
Agreement, this Agreement shall prevail.

      11.05. With respect to the trademark applications referred to in paragraph
14.01(c)(ii), Owner agrees to file an Allegation of Use (including an Amendment
to Allege Use or a Statement of Use, as applicable) within 15 business days of
being provided by Licensee with appropriate specimens showing use of the
applicable Licensed Mark in commerce on or in connection with footwear and being
provided with the dates of first use and first use in commerce.

                                       44

<PAGE>

Owner agrees to use commercially reasonable efforts to secure the registration
on the Principal Register of the applications referred to in paragraph
14.01(c)(ii). Owner shall promptly provide to Licensee notice of and copies of
all documents filed with the Patent and Trademark Office and received from the
United States Patent and Trademark Office related to the applications referred
to in paragraph 14.01(c)(ii). Owner shall promptly provide to Licensee notice of
and copies of all documents (if any) sent to or received from third parties
opposing the applications referred to in paragraph 14.01(c)(ii).

12. INDEMNIFICATION; INSURANCE.

      12.01. (a) Except for any claim, suit, loss, damage, injuries or expense
(including reasonable attorneys' fees) based upon the Proprietary Rights of a
third party related to the Licensed Marks, Licensee will indemnify and hold
Owner and Licensor as applicable and their respective officers, directors,
employers and agents harmless from and against any claim, suit, loss, damage,
injuries or expense (including reasonable attorneys' fees) which Owner and/or
Licensor may incur or be obligated to pay or for which either may become liable
or be compelled to pay in any action, claim or proceeding against it arising out
of or in connection with Licensee's performance of this Agreement, including
without limitation on account of any alleged defect in any Licensed Article
produced by or for Licensee under this Agreement or the manufacture, labeling,

sale, distribution or advertisement of any Licensed Article by Licensee in
violation of any national, state, provincial, local or other law or regulation.
Owner and/or Licensor shall give Licensee prompt notice of any such claim or
suit. Licensee shall have the right to undertake and conduct the defense of any
suit so brought through counsel of Licensee's choice reasonably acceptable to
Owner. Notwithstanding the foregoing, prior to entering into settlement of any
such claim or suit which would be reasonably likely to adversely affect the
Licensed Marks and/or would be reasonably likely to irreparably damage Owner's
goodwill, Licensee shall obtain Owner's written consent to such settlement
(which consent shall not be unreasonably withheld or delayed). The provisions of
this paragraph and Licensee's obligations hereunder shall survive the expiration
or termination of this Agreement. This paragraph 12.01(a) shall apply whether
the asserted claims are groundless or otherwise.

                                       45

<PAGE>

            (b) Except for any claim, suit, loss, damage, injuries or expense
(including reasonable attorneys' fees) based upon the Proprietary Rights of a
third party related to the Licensed Marks, Licensor will indemnify and hold
Owner and Licensee (as applicable) and their respective officers, directors,
employees and agents harmless from and against any claim, suit, loss, damage,
injuries or expense (including reasonable attorneys' fees) which Owner and/or
Licensee may incur or be obligated to pay or for which either may become liable
or be compelled to pay in any action, claim or proceeding against it arising out
of or in connection with Licensor's performance of the License Agreement,
including without limitation on account of any alleged defect in any licensed
Article produced by or for Licensor thereunder or the manufacture, labeling,
sale, distribution or advertisement of any licensed Article by Licensor in
violation of any national, state, provincial, local or other law or regulation.
Owner and/or Licensee shall give Licensor prompt notice of any such claim or
suit. Licensor shall have the right to undertake and conduct the defense of any
suit so brought through counsel of Licensor's choice reasonably acceptable to
Owner. Notwithstanding the foregoing, prior to entering into settlement of any
such claim or suit which would be reasonably likely to adversely affect the
Company's Marks and/or would be reasonably likely to irreparably damage Owner's
goodwill, Licensor shall obtain Owner's written consent to such settlement
(which consent shall not be unreasonably withheld or delayed). The provisions of
this paragraph and Licensor's obligations hereunder shall survive the expiration
or termination of this Agreement. This paragraph 12.01(b) shall apply whether
the asserted claims are groundless or otherwise.

      12.02. Owner shall release, defend, hold harmless and indemnify Licensor
and/or Licensee (as applicable) and their respective officers, directors,
employees and agents from any claims, suits, losses, damages, injuries,
expenses, demands, causes of action, judgments, settlements, fines or other
costs, including reasonable attorneys' fees) arising out of or related to an
assertion of Proprietary Rights by a third party related to Licensee's use of
the Licensed Marks as authorized in this Agreement. Licensor and/or Licensee (as
applicable) shall give Owner prompt notice of any such claim or suit. Owner
shall have the right to undertake and conduct the defense of any suit so brought
through counsel of Owner's choice. The provisions of this paragraph and Owner's

                                       46

<PAGE>

obligations hereunder shall survive the expiration or termination of this
Agreement. This paragraph 12.02 shall apply whether such asserted rights are
groundless or otherwise and shall specifically include, without limitation, any
costs of defense related to any assertion of Proprietary Rights.

      12.03. Each party to this Agreement shall release, defend, hold harmless
and indemnify each other party to this Agreement (as applicable) and the
respective officers, directors, employees and agents of such party from any
claims, suits, losses, damages, injuries, expenses, demands, causes of action,
judgments, settlements, fines or other costs (including reasonable attorneys'
fees) arising out of or related to any breach by such party of the
representations, warranties, and covenants contained in this Agreement. This
Section 12.03 shall not be construed to require indemnification from a
non-breaching party.

      12.04. (a) At all times during which Licensed Articles are being sold,
Licensee shall, at its own expense, procure and maintain in full force and
effect with a responsible insurance carrier reasonably acceptable to Owner a
public liability insurance policy including products liability coverage with
respect to Licensed Articles, as well as contractual liability coverage with
respect to this Agreement, with a limit of liability of not less than $3,000,000
per occurrence and $10,000,000 in the aggregate. Said insurance policy shall
include Licensor and Owner as additional insureds and shall provide for at least
sixty (60) days prior written notice to Owner of the cancellation or substantial
modification thereof. Such insurance may be obtained by Licensee in conjunction
with a policy of liability insurance which covers products other than Licensed
Articles, including any such policies currently owned by Licensee. Without
limiting the generality of the foregoing, Licensee's policies of casualty
insurance shall provide that the insurance carrier may take no action with
respect to Licensed Articles or the Licensed Marks if such action would
constitute a breach by Licensee of any of the provisions of this Agreement.
Licensee shall deliver a certificate of such insurance to each of Owner and
Licensor promptly following complete execution of this Agreement and annually
thereafter shall furnish to each of Owner and Licensor evidence of the
maintenance of said insurance

                                       47

<PAGE>

policy. Nothing contained in this paragraph 12.04 shall be deemed to limit,
circumscribe or affect in any way the indemnification provisions of paragraph
12.01 above.

            (b) In connection with the License Agreement, Licensor has, at its
own expense, procured and maintains in full force and effect with a responsible
insurance carrier reasonably acceptable to Owner a public liability insurance
policy including products liability coverage with respect to Licensor's licensed
Articles, as well as contractual liability coverage with respect to the License
Agreement. Said insurance policy shall have a limit of liability of not less
than $3,000,000, and shall include Licensee, as it does Owner, as an additional
insured and provides for at least sixty (60) days prior written notice to Owner
of the cancellation or substantial modification thereof. Such insurance may be
obtained by Licensor in conjunction with a policy of liability insurance which
covers products other than Licensor's licensed Articles, including any such
policies currently owned by Licensor. Licensor shall deliver a certificate of

such insurance to each of Owner and Licensee promptly following complete
execution of this Agreement and annually thereafter shall furnish to each of
Owner and Licensee evidence of the maintenance of said insurance policy. Nothing
contained in this paragraph 12.04 shall be deemed to limit, circumscribe or
affect in any way the indemnification provisions of paragraph 12.01 above.

13. EFFECT OF EXPIRATION OR TERMINATION.

      13.01. The termination of this Agreement, for any reason, shall be without
prejudice to any other right or remedy Licensor. Owner or Licensee may have --
including without limitation, all rights and remedies which such parties have,
or which are granted to them by operation of law, to enjoin the unlawful or
unauthorized use of the Licensed Marks, to collect monies payable hereunder and
to be compensated for damages for breach of this Agreement -- and such rights
and remedies are hereby expressly reserved. The parties acknowledge that they
have no adequate remedy hereunder or at law for violation of this Agreement by
the other parties and Owner, Licensor or Licensee shall be entitled to
injunctive relief or other equitable remedies therefor.

                                       48

<PAGE>

      13.02. (a) If either party serves upon the other pursuant to an express
provision of this Agreement a notice (the "Termination Notice") that it desires
to terminate this Agreement in accordance with the terms hereof or that it
desires that the Term shall not be extended, Owner's obligation to submit and/or
approve designs pursuant to paragraph 4.02 shall immediately terminate and
Licensee shall, within twenty (20) days after month-end after the date of the
Termination Notice, deliver to Owner the following: (i) a complete list of
Licensee's then-current accounts for Licensed Articles and, for each account,
Net Sales for the last-completed Contract Year, (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 of the Licensed Marks.

            (b) Contemporaneously with the delivery of the information requested
in paragraph 13.02(a), Licensee shall also deliver a complete and accurate
schedule of Licensee's inventory of Licensed Articles 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
Licensed Articles and/or bearing the Licensed Marks (hereinafter referred to as
"Inventory"). The Inventory schedule shall be prepared as of the close of
business on the date of such Termination Notice or as near thereto as reasonably
possible. Except as Owner may otherwise agree, all cancelable orders for
Licensed Articles and/or related materials shall promptly be canceled. Owner
shall promptly provide a copy of such Inventory Schedule to Licensor.

            (c) (i) If the date of termination stated in the Termination Notice
is not the expiration date contemplated in paragraph 3.01 above, Licensee's
rights to manufacture Licensed Articles hereunder shall terminate as of the date
of the Termination Notice and, except as Owner may otherwise expressly agree in
writing, all cancelable orders for Licensed Articles and/or related materials
used to produce Licensed Articles shall promptly be cancelled and no new
production shall be started. However, early termination as a result of the

Termination Notice shall not preclude Licensee from exercising its right, if
any, to continue to sell its remaining Inventory

                                       49

<PAGE>

pursuant to paragraph 13.05 below, if the reason for the early termination would
not otherwise bar such sell-off.

                  (ii) If the date of termination stated in the Termination
Notice is the expiration date contemplated in paragraph 3.01 above, Licensee's
rights to manufacture Licensed Articles hereunder shall terminate as of the
expiration date. To facilitate the orderly disposition of Licensee's Inventory
of Licensed Articles, during the final six (6) months of the Term, Licensee's
Inventory of Licensed Articles shall not exceed its Inventory on-hand during the
immediately-preceding six (6) months and Licensee shall manufacture and take
delivery of only such additional quantity of Licensed Articles as are reasonably
necessary to enable Licensee to fill orders from its customers on-hand at the
commencement of said six-month period or reasonably expected, based upon
Licensee's prior experience.

            (d) Neither Owner, Licensor nor Licensee shall make any announcement
concerning the expiration or termination of this Agreement except as the parties
shall mutually agree, except as otherwise required by law.

      13.03. Notwithstanding the expiration or other termination of the Term,
the parties shall not be released from any obligation that accrued prior to the
date of expiration or termination and each party shall remain bound by the
provisions of this Agreement which by their terms impose upon each party
obligations extending beyond the date of expiration or other termination.

      13.04. (a) Except as otherwise specifically provided in this section 13,
on the expiration or termination of the Term or this Agreement, all of the
rights of Licensee under this Agreement to use the Licensed Marks as provided
herein shall immediately terminate and shall revert automatically to Owner; all
Sales Royalties on sales theretofore made shall become immediately due and they
shall be accounted for and paid not later than thirty days after the date of
expiration or termination; and Licensee shall discontinue forthwith all use of
the Licensed Marks, shall no longer have the right to use the Licensed Marks or
any variation or simulation thereof and shall, promptly upon Owner's written
request, free of charge, execute any and all documents Owner

                                       50

<PAGE>

may deem necessary or desirable to the effect that Licensee no longer has the
right to manufacture, advertise, promote and sell Licensed Articles hereunder or
to use the Licensed Marks (and if Licensee fails to do so promptly, Owner shall
have the right to sign such documents as it deems reasonably necessary on
Licensee's behalf). In addition, Licensee shall thereupon destroy, or, if
requested by Owner, shall deliver to Owner all samples in its possession and, to
the extent not required to sell Licensed Articles in accordance with this
Section 13, all labels, tags, packages, advertisements, advertising materials of
all kinds and other material in its possession with the Licensed Marks thereon.
In addition, an updated Inventory schedule, including the direct cost of each

item as shown on Licensee's books, shall be prepared as of the close of business
on the date of such expiration or termination and delivered to Owner within
twenty (20) days after the end of the month of the date of such expiration or
termination. Owner shall promptly provide a copy of such updated Inventory
schedule to Licensor.

            (b) Licensor and/or Owner shall have the option, exercisable by
notice in writing delivered to Licensee within thirty (30) days after its
receipt of the complete updated Inventory schedule in written form, to purchase
all, but only all, of the Inventory not otherwise subject to an open sales order
for an amount equal to the cost of the Inventory being purchased if from the
current season or its fair market value if from a prior season. In the event
such purchase option is exercised, Licensee shall deliver to the purchaser or
its designee all of the Inventory referred to therein within fifteen (15) days
after the purchaser's said notice of exercise of its option. The purchaser shall
pay Licensee for such Inventory at the time of receipt thereof. Licensee's
rights with respect to disposal of the Inventory shall not be altered in the
event neither Licensor nor Owner exercises its purchase option hereunder.

      13.05. (a) In the event neither Licensor nor Owner exercises its purchase
option pursuant to paragraph 13.04(b) and if the Term expires or is terminated
by Owner other than for any breach arising from material misuse of the Licensed
Marks or any failure to make any payment when due hereunder (whether or not
subsequently paid) or pursuant to paragraph 3.04(a) and 3.04(b) above, Licensee
(but no other person, including for this purpose any person having a security
interest

                                       51

<PAGE>

in the Inventory) shall be entitled, for an additional period of six (6) months
only (the "sell-off period") on a non-exclusive basis to sell and dispose of its
remaining Inventory of Licensed Articles on hand at the expiration or other
termination of the Term from, but only from, the final seasonal collection sold
hereunder. All sales pursuant to this paragraph shall be made subject to all of
the provisions of this Agreement and to an accounting for and the payment of
Sales Royalty thereon. Such accounting and payment shall be due in accordance
with sections 9 and 10 above, except that accounting and payment shall be made
monthly within thirty (30) days after the last business day of each calendar
month in the sell-off period, and a final accounting and payment shall be due
within thirty (30) days after the close of the said six (6) month period.

            (b) If, during the sell-off period, Licensee wishes to sell any of
its Inventory other than in Normal Retail Channels and Schedule 2.03 stores
(including the Outlets), or if Licensee wishes to sell all or substantially all
of the Inventory to a single purchaser or group of related purchasers, Licensor
and/or Owner shall, in such event, have a right of first refusal with respect to
any such sale at a price equal to the price to be paid to Licensee by the
proposed purchaser, which right shall be exercisable only by notice in writing
delivered to Licensee within seven (7) business days after Licensor and/or Owner
receives written notice from Licensee setting forth the cost of the Inventory
covered by the proposed sale and all of the pertinent details thereof,
including, without limitation, the name of the proposed purchaser and the
proposed purchase price. If Licensor and/or Owner does not exercise its rights
to purchase hereunder, Licensee may proceed with the proposed sale with the
purchaser and at the price offered to Licensor and/or Owner. All sales other

than in Normal Retail Channels shall be deemed sales of Discontinued Goods for
all purposes hereunder.

      13.06. (a) No receiver, liquidator, assignee, trustee or custodian
appointed to administer the affairs of Licensee, sheriff or any other officer of
the court or official charged with taking custody of Licensee's assets or
business shall have the right to continue the performance of this agreement on
behalf of Licensee or to exploit or use Company's Tradename and/or the Licensed
Marks in any way.

                                       52

<PAGE>

            (b) Notwithstanding the provisions of paragraph 13.06(a) above, if
the Bankruptcy Code or any amendment, supplement or successor thereto (the
"Code") permits a trustee in bankruptcy of Licensee (or Licensee, as
Debtor-in-Possession) to assume this Agreement and either does so and,
thereafter, desires to assign this Agreement to a third person in compliance
with the requirements of the Code, the trustee or Licensee as the case may be,
shall notify Owner of same in writing. Said notice shall set forth the name and
address of the proposed assignee, the proposed consideration for the assignment
and all other relevant details thereof. The giving of such notice shall be
deemed to constitute the grant to Licensor and/or Owner of an option to have
this Agreement assigned to it or to Owner's designee for such consideration, or
its equivalent in money, and upon such terms as are specified in the notice.
Said option may be exercised only by written notice given to the trustee or
Licensee, as the case may be, by Licensor and/or Owner within fifteen (15) days
after it either receives the aforesaid notice from such party, or within such
shorter period as may be deemed appropriate by the court in the bankruptcy
proceeding. If Licensor and/or Owner fails to exercise its said option within
the aforestated exercise period, the trustee or Licensee, as the case may be,
may complete the assignment referred to in its notice, but only if such
assignment is to the entity named in said notice and for consideration and upon
the terms specified therein. Nothing contained herein shall be deemed to
preclude or impair any rights which Licensor and/or Owner may have as a creditor
in any such bankruptcy proceeding.

14. REPRESENTATIONS AND WARRANTIES,

      14.01. (a) Owner represents and warrants that (i) it is a corporation
incorporated in Delaware and in good standing under the laws of said State and
(ii) its wholly-owned affiliate, Lion Licensing, Ltd., a Delaware corporation in
good standing under the laws of said State, ("Trademark Owner") is the sole and
exclusive owner of the entire right, title and interest in and to the Company's
Marks, including the Licensed Marks, and Company's Tradename.

            (b) Pursuant to an agreement, dated as of July 9, 1999. Trademark
Owner has granted to Owner an exclusive license throughout the world to use and
to sublicense the use of Company's Marks, including the Licensed Marks, and
Company's Tradename (the "Master

                                       53

<PAGE>

License"). Accordingly, Owner represents and warrants that it has full right,

power and authority to enter into this Agreement and to license the Licensed
Marks and Company's Tradename hereunder.

            (c) In addition, Owner further represents and warrants that:

                  (i) other than those rights reserved by Owner pursuant to
paragraph 2.01 and the License Agreement, it has granted no other existing
license to use the Licensed Marks on Articles for manufacture, advertising,
promotion, distribution or sale in the Territory;

                  (ii) the Licensed Mark "Anne Klein II" has been duly
registered under the laws of the United States on the Principal Register with
respect to footwear, such registration remains valid and in effect and Trademark
Owner is the registrant. To the best of Owner's knowledge, the Licensed Marks "A
LINE ANNE KLEIN" and the "A ANNE KLEIN" logo form which is attached hereto as
Schedule 1.01 are registrable under the laws of the United States with respect
to footwear, and Owner has filed an application to register the Licensed Marks
"A LINE ANNE KLEIN" and the "A ANNE KLEIN" logo form on the Principal Register
on an intent to use basis with respect to women's footwear;

                  (iii) it has no knowledge or information of any infringement
or other violation of its Proprietary Rights in the Licensed Marks;

                  (iv) Licensee's use of the Licensed Marks pursuant to and in
accordance with this Agreement will not violate or in any way infringe upon the
rights of any third party;

                  (v) the parties signing on Owner's and on Trademark Owner's
behalf are each duly authorized to do so;

                  (vi) this Agreement is fully enforceable against Owner and
Trademark Owner in accordance with its terms; and

                  (vii) this Agreement will not contravene any other agreement
to which Owner or Trademark Owner are parties.

                                       54

<PAGE>

            (d) Without limiting any provision of this Agreement, Licensee
hereby acknowledges and agrees that, where applicable in the context, references
in this Agreement to "Owner" shall be deemed to include and/or refer to
Trademark Owner. In addition, in the event the Master License is terminated for
any reason during the Term, this Agreement nevertheless shall remain in full
force and effect and without modification, except that Trademark Owner shall be
substituted automatically for Owner for all purposes hereunder, and thereupon,
any reference in this Agreement to "Owner" shall be and mean Trademark Owner;
provided, however, that Trademark Owner and Owner remain under common ownership,
that Trademark Owner remains the owner of Company's Marks and Owner remains
liable for its obligations hereunder.

      14.02. Licensor represents and warrants: that it is a corporation
incorporated in Delaware and in good standing under the laws of said State; that
it has full right, power and authority to enter into this Agreement and to
perform all of its obligations hereunder; that the party signing on its behalf
is duly authorized to do so; that this Agreement is fully enforceable against

Licensor in accordance with its terms and does not contravene any other
agreement to which it is a party; that Licensor has no knowledge or information
of any infringing use of the Licensed Marks; that Licensee's use of the Licensed
Marks pursuant to and in accordance with this Agreement will not violate or in
any way infringe upon the rights of any third party. Licensor further represents
and warrants that Daniel L. Schwartz is its sole shareholder.

      14.03. Licensee represents and warrants that it is a corporation
incorporated in Delaware and in good standing under the laws of said State, that
it has full right, power and authority to enter into this Agreement and to
perform all of its obligations hereunder and that the party signing on its
behalf is duly authorized to do so. This Agreement is frilly enforceable against
Licensee in accordance with its terms and does not contravene any other
agreement to which it is a party.

      14.04. Each of Licensee and Licensor and Owner represents and warrants
that it did not engage any broker in connection with this Agreement or the
transactions contemplated hereby.

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<PAGE>

15. FORCE MAJEURE.

      15.01. No party hereto shall be under any liability hereunder to another
on account of any loss, damage or delay occasioned or caused by lockouts,
strikes, riots, fires, explosions, blockade, civil commotion, epidemic,
insurrection, war or warlike condition, the elements, embargoes, failure or
inability to obtain material or transportation facilities, acts of God or the
public enemy, compliance with any law, regulation or other governmental order,
whether or not valid, or other causes beyond the control of the party affected,
whether or not similar to the foregoing; provided, however, that if such
condition continues for three (3) months and is not industry-wide but applies
only to Licensee and such condition materially impairs Licensee's ability to
perform its obligations hereunder in all materials respects, then Owner may
terminate the Term on thirty (30) days' written notice which may be given at any
time after said three (3) month period; and provided, further, that nothing
herein shall at any time excuse any accrued obligation for the payment of money.

16. ASSIGNABILITY.

      16.01. (a) The rights granted herein are personal to Licensee, and
Licensee may not assign or sublicense any or all of its right or delegate any of
its duties under this Agreement to any person other than a wholly-owned
affiliate of Licensee (in which case, subject to Licensee guaranteeing such
affiliate's obligations hereunder in a writing reasonably satisfactory to
Owner), without Owner's express prior approval. Any deliberately attempted
assignment, sublicense, or delegation or any one of these purportedly occurring
by virtue of the operation of law shall be void and shall constitute grounds for
termination of this Agreement which termination shall be effective on the
fifteenth (15th) day following the date of Owner's notice.

            (b) Without limiting the generality of the foregoing, if Licensee
contemplates the sale or other disposition of a controlling share of its
business or assets related to the subject matter of this Agreement, including
without limitation through a sale of stock (but not including (i) a sale or

disposition in which Licensee's management is an equity participant in the
acquiring party, (ii) such sales as occur in the ordinary course of public
trading or (iii) sales to or

                                       56

<PAGE>

other stock distribution through Licensee's employee benefit plans), Licensee
shall inform Owner as promptly as permitted under applicable securities laws and
request Owner's approval to proceed. With its approval request, Licensee shall
provide Owner with sufficient information concerning the proposed transaction
and/or transferee to enable Owner to make an informed decision whether in its
discretion, the nature of the proposed transaction, the parties participating
therein or the resulting ownership of Licensee would adversely impact upon or
affect the Licensed Marks or their use in connection with the Licensed Articles
or Licensee's ability to meet all of its material obligations under this
Agreement. Owner shall notify Licensee of its decision within ten (10) business
days after it receives all of the information referred to in the preceding
sentence or such other additional information as Owner may reasonably request.
If Owner approves the proposed transaction, which approval must be in writing,
Owner's right to terminate this Agreement pursuant to this paragraph shall not
arise. For avoidance of doubt: If Owner fails to approve the proposed
transaction and Licensee elects to transfer ownership or control of its business
or assets related to the subject matter of this Agreement in the absence of such
approval, Owner may elect to terminate this Agreement in accordance with
paragraph 16.01(a). Upon such termination, Owner and Licensee shall negotiate in
good faith to determine the timing of such termination, taking into account the
then current status of this Agreement and Owner's reasonably anticipated royalty
income hereunder and other similarly relevant matters, it being understood and
agreed by Licensee that Owner may in such case, in its discretion, elect
thereafter to offer employment to and employ those persons employed by Licensee
in the conduct of its business hereunder as may be reasonably appropriate to
enable Owner to continue the conduct of the business conducted by Licensee
hereunder prior to such termination. Notwithstanding the foregoing, Owner's
right to terminate this Agreement shall not arise if the business or assets sold
by Licensee do not relate to this Agreement and if such sale does not, directly
or indirectly, constitute a sale or transfer of this Agreement or Licensee's
rights hereunder or interfere with Licensee's ability to carry out its material
obligations hereunder.

      16.02. This Agreement shall inure to the benefit of and shall be binding
upon the parties, subject to Licensee's rights pursuant to Section 3.01(e),
Owner's successors, transferees and

                                       57

<PAGE>

assigns, Licensor's permitted successors, transferees and assigns and Licensee's
permitted successors, transferees and assigns.

17. NOTICES.

      17.01. Any notice or other communication under this Agreement will be in
writing and will be considered given when delivered personally, sent by
confirmed telefax or delivered by an overnight courier service (such as Federal

Express or DHL) which requires the addressee to acknowledge receipt thereof or
by certified mail, return receipt requested, to the parties at the following
addresses, or at such other address as a party may specify by notice to the
other:

            TO OWNER:         Anne Klein

                              a Division of Kasper A.S.L., Ltd.
                               11 West 42nd Street

                            New York, New York 10036

                              Attention: President,

                              Anne Klein Licensing Division

                              (Fax Number: (212) 626-6014)

with a copy to the Senior Vice President and General Counsel of Owner at the
same address (Fax number: (212) 626-6354).

            TO LICENSOR:      B.D.S., Inc.
                                1370 Sixth Avenue

                            New York, New York 10019

                              Attention: Daniel L. Schwartz

            with a copy to:   Donald J. Bezahler, Esq.
                               Baer Marks & Upham

                                805 Third Avenue

                            New York, New York 10022

            TO LICENSEE:      Maxwell Shoe Company. Inc.
                              P.O. Box 37
                               101 Sprague Street

                              Readville, Massachusetts 02137-0037
                              Attention: President

            with a copy to:   Jonathan K. Layne, Esq.

                                       58

<PAGE>

                              Gibson, Dunn & Crutcher LLP
                              333 South Grand Avenue
                              Los Angeles, California 90071

18. INTERNATIONAL. Upon Licensee's written request, which must be accompanied by
a marketing plan stating, inter alia, anticipated sales volume and accounts
(initial and projected) (a "Country Plan"), Owner may elect in its discretion to
grant Licensee permission to distribute Licensed Articles in a particular
country (or countries) of the world outside of the Territory or to "duty-free"
shops for sale to international travelers and to airlines and cruise ship lines
for on-board sales (hereinafter referred to as the "Foreign Territory"), subject
to the terms and conditions set forth in this section 18. Licensee acknowledges
that under the applicable trademark laws of many countries of the world the
filing of statutorily-mandated documents is a prerequisite to use of a trademark
by any party other than the registered owner. Accordingly, Licensee shall not
offer for sale or sell Licensed Articles for resale in any country which
requires a document filing until an appropriate document has been filed. With
respect to each particular Foreign Territory, if Owner approves Licensee's

request to distribute in a said Foreign Territory (an "Approved Foreign
Territory"), Licensee shall pay to Owner a fee (the "Foreign Territory Fee") to
offset Owner's costs associated with obtaining or maintaining trademark
protection for the Licensed Marks in said Approved Foreign Territory or
otherwise enabling Licensee to use the Licensed Marks in such country; the
Foreign Territory Fee shall initially be Owner's actual costs not to exceed the
sum of $2000. The amount of the Foreign Territory Fee paid shall be deemed an
advance against royalties otherwise payable by Licensee only with respect to
sales of Licensed Articles in or to said Approved Foreign Territory.

      18.01. Licensee's right to distribute Licensed Articles in any particular
Approved Foreign Territory shall continue only during the Term of this
Agreement; provided, however, that Owner reserves the right to and may terminate
the distribution permission granted herein with respect to any particular
Approved Foreign Territory on ninety (90) days prior written notice which may be
given at any time and for any reason, including without limitation, if Licensee
shall have failed to continue the sale and/or distribution of Licensed Articles
to said particular Approved

                                       59

<PAGE>

Foreign Territory in reasonable commercial quantities for a period longer than
one selling season. Owner's election to grant permission to distribute in a
Foreign Territory shall not be construed to convey any rights in the Licensed
Marks in said Approved Foreign Territory, except as expressly set forth in this
Section 18.

      18.02. (a) Licensee shall account for and pay royalties on Net Sales of
Licensed Articles in or to each Approved Foreign Territory in accordance with
this Agreement; provided, however, that (i) for purposes of computing the Sales
Royalty payable, such Net Sales shall be deemed to be not less than the "Net
Sales" of a corresponding sale at the prevailing price as if such sales had been
made in Normal Retail Channels in the Territory after deduction of twenty
percent (20%) representing import costs not incurred by Licensee and (ii) on
Licensee's statements, Net Sales made pursuant to a distribution right granted
hereunder shall be shown separately for each Approved Foreign Territory.
Notwithstanding the generality of the foregoing, if Licensee's sales to a
Foreign Territory are made on an "ex-factory" price basis, then for purposes of
royalty reporting said "ex-factory" price shall be deemed "Net Sales" with
respect to such Foreign Territory and the Sales Royalty applicable to said sales
shall be computed at the rate of six percent (6%) in lieu of the rate provided
in paragraph 9.01 above.

            (b) If Net Sales are stated in a currency other than U.S. Dollars,
they shall also be reported to Owner, and the Sales Royalty payable thereon
shall be calculated, in the U.S. Dollar equivalent at the selling price of such
other currency as reported by The Wall Street Journal at the last business day
of the Accounting Period for which such Royalty is payable. In addition, upon
Owner's reasonable request, Licensee shall furnish copies of its invoices
showing sales in or to any particular Approved Foreign Territory. Without
limiting the generality of the foregoing, Licensee shall provide Owner with a
duplicate original of each of the first three (3) invoices for bona fide
commercial sale of Licensed Articles in or to each Approved Foreign Territory.

      18.03. In any particular season, Licensee shall distribute for sale in or

to each Approved Foreign Territory, only those Licensed Articles approved by
Owner in each case for sale

                                       60

<PAGE>

in such season in accordance with this Agreement. All marketing plans and
programs, including sales promotions and any advertising use of the Licensed
Marks, in connection with Licensed Articles in any Approved Foreign Territory
shall comply with the applicable provisions of this Agreement; Licensee will use
its reasonable efforts to make copies (such as tear sheets) of any such
advertisements available to Owner. If Licensee elects to distribute through a
Distributor (as defined below), Distributor's minimum advertising expenditure
requirements (to be used for co-op advertising) in a particular Approved Foreign
Territory shall be not less than two percent (2%) of wholesale sales, based
initially upon the Country Plan for each such country, or such greater
percentage as the parties shall agree in the circumstances.

      18.04. Owner and Licensee acknowledge that the Licensed Articles are
intended to be of the highest quality and marketed in a manner commensurate with
Owner's standing and reputation in the apparel industry in the United States.
Accordingly, and in order to maintain the reputation, image and prestige of the
Licensed Marks, Licensee's primary distribution patterns shall consist of (a)
those retail outlets in the particular Approved Foreign Territory previously
approved by Owner for the sale of products bearing the Licensed Marks and (b)
subject to Owner's reasonable approval, such other retail outlets in the
particular Approved Foreign Territory whose location, merchandising and overall
operations are consistent with the high quality of Licensed Articles and the
reputation, image and prestige of the Licensed Marks. Except as expressly
provided in this section 18, Licensee shall not sell Licensed Articles to anyone
in an Approved Foreign Territory for resale except resale to a consumer for
personal use nor shall Licensee make such sales to any entity which it knows or
has reason to believe intends to export such Licensed Articles outside an
Approved Foreign Territory.

      18.05. If Licensee plans to effect its right to distribute in a particular
Approved Foreign Territory through the use of a third party distributor or
through an affiliated company (the "Distributor"), Owner's permission (if
granted) will be subject to agreement by the Distributor (in writing) to the
foregoing and to the following additional terms and conditions:

                                       61

<PAGE>

            (a) The Distributor's rights will cease immediately upon the
expiration or other termination of this Agreement (if not sooner).

            (b) The Distributor will not manufacture Licensed Articles or affix
any markings on the Licensed Articles (including on the packaging therefor,
unless such markings are required by law in the particular Approved Foreign
Territory and Owner's prior approval has been sought and given).

            (c) The Distributor acknowledges that Distributor will not acquire
any rights in the Licensed Marks as a result of such distribution and that any
and all good will and other rights which attach to or arise in connection with

the use of the Licensed Marks by the Distributor shall inure to the sole benefit
of Owner and shall remain vested therein.

            (d) The Distributor shall furnish Licensee with sales information
sufficient to enable Licensee to comply on a timely basis with its reporting
obligations hereunder, including without limitation those reporting obligations
described in paragraph 10.01 and 10.02 above.

            (e) Licensee shall retain the right to sell directly to an Approved
Foreign Account (as defined below).

            (f) Distributor's minimum advertising expenditure requirements (to
be used for co-op advertising) shall be not less than two percent (2%) of
wholesale sales based initially upon the Country Plan for each particular
country of the Distributor's Approved Foreign Territory.

      18.06. Without limiting the generality of the foregoing, Owner hereby
gives permission to Licensee to distribute Licensed Articles to accounts in
Normal Retail Channels in Puerto Rico and in the Dominion of Canada and to those
accounts in each Foreign Territory to which Owner has approved the sale of
products bearing the Licensed Mark "A LINE ANNE KLEIN" (and the "A ANNE KLEIN
logo) (each, an "Approved Foreign Account") as set forth on Schedule 18.06
attached hereto, as it may be modified and supplemented from time to time.
Licensee hereby agrees to notify Owner prior to selling any Licensed Articles to
an Approved Foreign Account or in or to an Approved Foreign Territory so that
proper trademark protection may be timely arranged and to pay the applicable
Foreign Territory Fee(s) in accordance with paragraph 18.01 above. For

                                       62

<PAGE>

clarification: At the date of this Agreement, Owner has not commenced the sale
of products bearing the Licensed Mark "ANNE KLEIN II" and there are no Approved
Foreign Accounts with respect thereto.

19. MISCELLANEOUS.

      19.01. Nothing herein contained shall be construed to constitute Licensee
a partner, franchisee, joint venturer, or agent of Owner or Licensor, and
Licensee shall have no power to obligate or bind Owner or Licensor in any manner
whatsoever, it being intended by the parties hereto that Licensee's relationship
hereunder shall be as an independent contractor responsible for its own actions.
No supervision given by or assistance from Owner or Licensor shall be deemed to
negate the foregoing.

      19.02. No waiver by either party, whether express or implied, of any
provision of this Agreement, or of any breach or default thereof, shall
constitute a continuing waiver of such provision or of any other provision of
this Agreement.

      19.03. If any provision or any portion of any provision of this Agreement
shall be held to be void or unenforceable, the remaining provisions of this
Agreement and the remaining portion of any provision held void or unenforceable
in part shall continue in full force and effect.

      19.04. This Agreement shall be construed without regard to any presumption

or other rule requiring construction against the party causing this Agreement to
be drafted. If any words or phrases in this Agreement shall have been stricken
out or otherwise eliminated, whether or not any other words or phrases have been
added, this Agreement shall be construed as if those words or phrases were never
included in this Agreement, and no implication or inference shall be drawn from
the fact that the words or phrases were so stricken out or otherwise eliminated.

                                       63

<PAGE>

      19.05. Notwithstanding anything to the contrary contained in this
Agreement, Owner shall have the right, exercisable at any time, to negotiate and
enter into agreements with third parties located either within or outside of the
Territory pursuant to which it may grant a license to use the Licensed Marks in
connection with the manufacture, distribution and sale of Articles outside the
Territory at any time, or, subject to paragraph 3.01 above, in the Territory,
but only if, pursuant to such third party agreements in the Territory, either
the Articles are manufactured in the Territory solely for export outside the
Territory or the collections of such Articles are not shown for sale in the
Territory prior to the expiration or termination date of the Term and the first
collection of Articles to be sold thereunder is the collection following the
last seasonal collection sold hereunder. Owner shall immediately notify Licensee
in writing of its intention to terminate the Term due to Licensee's default
and/or the execution of any agreement granting a license to use the Licensed
Marks in connection with the sale or manufacture of Articles in the Territory as
described in this paragraph 19.05. Without otherwise limiting the foregoing, if,
during the Term, Owner desires to grant a license to use the Licensed Marks in
connection with the manufacture, distribution and sale of Articles in any
country or countries (excluding Japan and Korea) outside the Territory, Owner
shall notify Licensee, in writing, thereof, which notice shall include a copy of
the license agreement, if any, Owner is prepared to execute and deliver.
Licensee shall have the right and option, which option shall be exercised within
45 days after its receipt of Owner's notice, to enter into such an agreement, to
be reasonably negotiated between Owner and Licensee in good faith, in
substantially the form of this Agreement and including such additional or
different commercially reasonable terms and conditions set forth in Owner's
notice as are contained in such license agreement, if any. If Licensee desires
to exercise such right and option, Licensee shall notify Owner in writing within
forty-five (45) days after its receipt of said notice from Owner. If Licensee
fails to exercise its said right and option, Licensor may grant a license with
respect to the country or countries outside of the Territory identified in
Owner's notice to any third party on substantially the same material terms and
conditions as set forth herein and in Owner's notice free from any claim by
Licensee under this Agreement.

                                       64

<PAGE>

      19.06. (a) This agreement shall be deemed entered into in the State of New
York and shall be construed in accordance with the internal substantive laws of
New York applicable to contracts to be wholly performed therein, and, to the
extent applicable, the federal laws of the United States.

            (b) The parties agree that any action, suit or proceeding based upon
any matter, claim or controversy arising hereunder or relating hereto shall be

brought solely in the State Courts of or the Federal Court in the State and
County of New York; except that in the event any party is sued by a third party
or joined in any other Court or in any forum by a third party in respect of any
matter which may give rise to a claim hereunder, the parties consent to the
jurisdiction of such court or forum over any claim which may be asserted therein
between the parties hereto.

                  (i) The parties hereto irrevocably waive any objection to the
venue of the above-mentioned courts, including any claim that such action, suit
or proceeding has been brought in an inconvenient forum.

                  (ii) Each party hereto hereby waives, to the fullest extent
permitted by applicable law, any right it may have to a trial by jury in respect
of any matter directly or indirectly arising out of, under or in connection with
this Agreement.

                  (iii) Each party hereto hereby waives, to the fullest extent
permitted by applicable law, any right it may have to seek punitive damages in
respect of any matter directly or indirectly arising out of, under or in
connection with this Agreement.

            (c) Any process in any action, suit or proceeding arising out of or
relating to this Agreement may, among other methods permitted by law, be served
upon any party hereto by delivering or mailing the same in accordance with
paragraph 17.01 hereof.

      19.07. Except as set forth below, this writing sets forth the entire
understanding between the parties with respect to the subject matter hereof and
supersedes all prior or contemporaneous understandings, arrangements or
agreements, including without limitation the binding letter of intent, dated as
of July 19, 1999 and executed July 30 and July 31, 1999, between the parties
hereto (the "Letter of Intent"). No modification, amendment, waiver, termination
or

                                       65

<PAGE>

discharge of this Agreement shall be binding upon the parties unless confirmed
by a written instrument signed by the duly authorized signatory of each.

      19.08. The parties agree to implement this Agreement by executing or
causing to be executed such additional and subsidiary agreements and other
documents as may be necessary or desirable fully to protect the Licensed Marks
and effectively to carry out the terms of this Agreement in accordance with
applicable laws and regulations.

      19.09. This Agreement may be executed in one or more counterparts and in
separate counterparts, each of which shall be deemed to be an original copy of
this Agreement, and all of which, when taken together shall be deemed to
constitute one and the same agreement. The Agreement shall be deemed executed by
a party if signed by facsimile signature, provided that an original signature
copy shall be promptly provided.

                               [END OF AGREEMENT]

                                       66

<PAGE>

Kindly indicate your acceptance of this agreement, intending to be legally bound
thereby, by signing below in the place provided.

                                        Very truly yours,

                                        B.D.S., INC.

                                        By:   /s/ Daniel L. Schwartz
                                              ----------------------------------
                                        Date: 11/1//99
                                              ----------------------------------

                                        ANNE KLEIN
                                        A Division of
                                        KASPER A.S.L., LTD.

                                       By:     [ILLEGIBLE]

                                              ----------------------------------
                                      Date:    11/1/99

                                              ----------------------------------

                                        LION LICENSING, LTD.

                                       By:    [ILLEGIBLE]

                                              ----------------------------------
                                      Date:    11/1/99

                                              ----------------------------------

ACCEPTED AND AGREED:

MAXWELL SHOE COMPANY INC.

By:    [ILLEGIBLE]
      ----------------------------------
Date:  11/1/99
      ----------------------------------

Kindly indicate your acceptance of this agreement, intending to be legally bound
thereby, by signing below in the place provided.

                                        Very truly yours,

                                        B.D.S., INC.

                                       By:     [ILLEGIBLE]

                                              ----------------------------------
                                      Date:    11/1/99

                                              ----------------------------------

                                        ANNE KLEIN
                                        A Division of
                                        KASPER A.S.L., LTD.

                                        By:   [ILLEGIBLE]
                                              ----------------------------------
                                        Date: 11/1/99
                                              ----------------------------------

                                        LION LICENSING, LTD.

                                        By:   [ILLEGIBLE]
                                              ----------------------------------
                                        Date: 11/1/99
                                              ----------------------------------

ACCEPTED AND AGREED:

MAXWELL SHOE COMPANY INC.

By:    [ILLEGIBLE]
      ----------------------------------
Date:  11/1/99
      ----------------------------------

Kindly indicate your acceptance of this agreement, intending to be legally bound
thereby, by signing below in the place provided.

                                        Very truly yours,

                                        B.D.S., INC.

                                       By:    [ILLEGIBLE]

                                              ----------------------------------
                                      Date:    11/1/99

                                              ----------------------------------

                                        ANNE KLEIN
                                        A Division of
                                        KASPER A.S.L., LTD.

                                       By:   [ILLEGIBLE]

                                              ----------------------------------
                                      Date:   11/1/99

                                              ----------------------------------

                                        LION LICENSING, LTD.

                                       By:    [ILLEGIBLE]

                                              ----------------------------------
                                      Date:    11/1/99

                                              ----------------------------------

ACCEPTED AND AGREED:

MAXWELL SHOE COMPANY INC.

By:   [ILLEGIBLE]
      ------------------------------
Date: 11/1/99
      ------------------------------

                                       67

<PAGE>

                                  SCHEDULE 1.01

                                   ANNE KLEIN

                                    [GRAPHIC]

                                       68

<PAGE>

                                  SCHEDULE 2.03

                                OFF-PRICE STORES

ANNE KLEIN OUTLETS
ANNIE SEZ
BURLINGTON COAT FACTORY
CENTURY 21
COHOES FASHIONS
DAFFY'S

FAMOUS FOOTWEAR
FILENE's BASEMENT

LOEHMANNS
MANDEE

MAR MAX - NEWTONS, TJ MAXX, MARSHALLS
ROSS STORES
S&W LADIES WEAR
SAKS OFF 5TH
SHOE CARNIVAL
STEINMART
SYMS

                                       69

<PAGE>

                                  SCHEDULE 2.04

A LINE ANNE KLEIN
ANNE KLEIN II
DOCKERS FOOTWEAR FOR WOMEN
MOOTSIES TOOTSIES
MOOTSIES TOOTSIES KIDS
SAM & LIBBY
SAM & LIBBY KIDS
JUST LIBBY
J. G. HOOK

                                      70

<PAGE>

                                  SCHEDULE 6.02

                                   MSC Agents

Adventure Footwear
Jose Maria Peman 23-2 B
03600 Elda, (Alicante) Spain

Adventure -- USA
4995 Northwest 72nd Avenue
Miami, Florida 33166

BJ Cal
26400 George Zeiger Drive

Suite 104
Beechwood, Ohio 44122

Marlboro Footworks -- China
10F NO. 21
Cheng Men Tou West Road
Foshan
Guang Dong
China

Marlboro Footworks -- Taiwan

5F NO. 497,
Chung Ming South Road
Taichung, Taiwan ROC

Marlboro Footworks -- USA
60 Austin Street
Newton, Massachusetts 02160

Max Trading Company -- China
Chia Ken Village
Hon Li Town
Dong Guan City
Kwang Tung, China

Max Trading Company -- Taiwan
6th Floor #186 Ta-Tun 19th Street

Taichung, Taiwan ROC

Panter SRL
Via Campo d'Arrigo 78\88
50131 Firenze, Italy

Piessea
Via Terere 80/4 Osmannoro
S0019 Sest Fiorentino, Italy

                                       71

<PAGE>

                                  SCHEDULE 8.02

WIRE TRANSFER INSTRUCTIONS

Kasper ASL Ltd Cash Concentration Account for the
Benefit of The Chase Manhattan Bank, as Agent

Account #020922124
ABA# 021000021
Chase Manhattan Bank New York
1 New York Plaza

New York, NY

                                       72

<PAGE>

                                 Schedule 10.01

                              (Company Letter Head)

               Contract Year: _____________________

[Licensed Mark]               Sales Report         Quarter Ended: ______________

--------------------------------------------------------------------------------
                                                    -------------   ------------
                                                    Total Quarter   Year to Date

                                                    -------------   ------------

Gross Sales Subject to Royalty
Less:

   Returns
   Markdowns

   Trade Discount Taken

                                                    ----------------------------
Net Sales Subject to Royalty                                 -              -
                                                    ============================

Royalty Percentage

Sales Royalty Earned                                         -              -
                                                    ============================

Less: Minimums and Additional Royalties Paid
  to Date this Year

                                                                    ------------
Sales Royalty Payable                                                       -
                                                                    ============
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
Image Fund Percentage
Net Sales Subject to Royalty

                                                    ----------------------------
Image Fund Earned                                            -              -
                                                    ============================

Less: Image Fund Payments to Date

                                                                    ------------
Net Image Fund Due                                                          -
                                                                    ============
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
                                                    This Quarter

Normal Retail Channels                                       -
                                                    =============
Discontinued Goods                                           -
                                                    =============
"Make-ups"                                                   -
                                                    =============

Foreign (By Country):
  ----------------------
  ----------------------                                     -
                                                    -------------
                                                             -
                                                    =============
--------------------------------------------------------------------------------

                                                    Signature: _________________

                                                    Name:      _________________

                                                    Title:     _________________

                                       73

<PAGE>

                              ANNE KLEIN LICENSING

                                 Schedule 10.02

PLEASE USE WHOLESALE FIGURES                            ---------      ---------
THAT MATCH YOUR END                                       Total          Total
OF YEAR FINANCIAL STATEMENTS                            Wholesale      Co-op $$$
Store Name                                               Volume        Provided
--------------------------------------------------------------------------------

Independent Department Stores

--------------------------------------------------------------------------------
Belk

--------------------------------------------------------------------------------

Bergdorf Goodman

--------------------------------------------------------------------------------
Boscov's

--------------------------------------------------------------------------------
Dayton-Hudsons/MF

--------------------------------------------------------------------------------
Dillards/Mercantile Stores

--------------------------------------------------------------------------------
Elder Beerman

--------------------------------------------------------------------------------
Halls Merchandising

--------------------------------------------------------------------------------
Neiman Marcus

--------------------------------------------------------------------------------
Nordstrom

--------------------------------------------------------------------------------
Rack Room

--------------------------------------------------------------------------------
Shoe Show

--------------------------------------------------------------------------------
Von Maur

--------------------------------------------------------------------------------
Total Independent Department Stores

--------------------------------------------------------------------------------

Specialty Stores*
--------------------------------------------------------------------------------
Aaron's

--------------------------------------------------------------------------------
Bellaqin

--------------------------------------------------------------------------------
CWT

--------------------------------------------------------------------------------
Daltaro

--------------------------------------------------------------------------------
Designer Shoe Warehouse

--------------------------------------------------------------------------------
Foxwood Casinos

--------------------------------------------------------------------------------
Octavia

--------------------------------------------------------------------------------
Shoe Corp. of America

--------------------------------------------------------------------------------
Weiss & Newman

--------------------------------------------------------------------------------
Total Specialty Stores

--------------------------------------------------------------------------------
*Indicate at specialty accounts by name with sales above $50,000.

Federated Department Stores

--------------------------------------------------------------------------------
Bloomingdales

--------------------------------------------------------------------------------
Bon Marche

--------------------------------------------------------------------------------
Burdines

--------------------------------------------------------------------------------

Macy's East

--------------------------------------------------------------------------------
Macy's West

--------------------------------------------------------------------------------
Rich's/Lazarus

--------------------------------------------------------------------------------
Stern

--------------------------------------------------------------------------------
Total Federated

--------------------------------------------------------------------------------

May Co.
--------------------------------------------------------------------------------
Famous Barr

--------------------------------------------------------------------------------
Filene's

--------------------------------------------------------------------------------
Foley's

--------------------------------------------------------------------------------
Hecht

--------------------------------------------------------------------------------
Kaufmann's

--------------------------------------------------------------------------------
Lord & Taylor

--------------------------------------------------------------------------------
Meier & Frank

--------------------------------------------------------------------------------
Robinsons

--------------------------------------------------------------------------------
Total May Co.
--------------------------------------------------------------------------------

Saks, Inc./Proffit's

--------------------------------------------------------------------------------
Carson Pirie Scott

--------------------------------------------------------------------------------
Herberger's

--------------------------------------------------------------------------------
Mc Raes

--------------------------------------------------------------------------------
Parisan

--------------------------------------------------------------------------------
Proffits

--------------------------------------------------------------------------------
Saks Fifth Avenue

--------------------------------------------------------------------------------
Total Proffit's

--------------------------------------------------------------------------------

                                       74

<PAGE>

                              ANNE KLEIN LICENSING

                                 Schedule 10.02

PLEASE USE WHOLESALE FIGURES                            ---------      ---------

THAT MATCH YOUR END                                       Total          Total
OF YEAR FINANCIAL STATEMENTS                            Wholesale      Co-op $$$
Store Name                                               Volume        Provided
--------------------------------------------------------------------------------

Frederick Atkins

--------------------------------------------------------------------------------
Bon Ton

--------------------------------------------------------------------------------
Elder Beerman

--------------------------------------------------------------------------------
Gottschalks

--------------------------------------------------------------------------------
Harris

--------------------------------------------------------------------------------
Jacobsons

--------------------------------------------------------------------------------
Liberty House

--------------------------------------------------------------------------------
M. Epstein

--------------------------------------------------------------------------------
Mc Clures

--------------------------------------------------------------------------------
Younkers

--------------------------------------------------------------------------------
ZCMI

--------------------------------------------------------------------------------
Total Atkins

--------------------------------------------------------------------------------

Catalogs

--------------------------------------------------------------------------------
Bloomingdale's by Mail

--------------------------------------------------------------------------------
Boston Proper

--------------------------------------------------------------------------------
Coldwater Creek

--------------------------------------------------------------------------------
DM Management

--------------------------------------------------------------------------------
Macy's By Mail

--------------------------------------------------------------------------------
Mark Fore & Strike

--------------------------------------------------------------------------------
Neiman Marcus by Mail

--------------------------------------------------------------------------------
Nordstrom.com

--------------------------------------------------------------------------------
Norm Thompson

--------------------------------------------------------------------------------
Saks Folio

--------------------------------------------------------------------------------
Spiegel

--------------------------------------------------------------------------------
Total Catalogs

--------------------------------------------------------------------------------

Off Price

--------------------------------------------------------------------------------
Anne Klein Outlets

--------------------------------------------------------------------------------
Annie Sez

--------------------------------------------------------------------------------
Burlington Coat Factory

--------------------------------------------------------------------------------
Century 21
--------------------------------------------------------------------------------
Cohoes Fashions

--------------------------------------------------------------------------------
Daffy's

--------------------------------------------------------------------------------
Famous Footwear

--------------------------------------------------------------------------------
Filene's Basement

--------------------------------------------------------------------------------
Loehmanns

--------------------------------------------------------------------------------
Mandy

--------------------------------------------------------------------------------
Marmax -- Newtons, TJ Max, Marshalls

--------------------------------------------------------------------------------
Ross Stores

--------------------------------------------------------------------------------
S & W Ladies Wear

--------------------------------------------------------------------------------
Saks Off 5th

--------------------------------------------------------------------------------
Shoe Carnival

--------------------------------------------------------------------------------
Steinmart

--------------------------------------------------------------------------------
Syms

--------------------------------------------------------------------------------
Total Off-Price

--------------------------------------------------------------------------------

Duty Free

--------------------------------------------------------------------------------
DFS Australia

--------------------------------------------------------------------------------
DFS Canada

--------------------------------------------------------------------------------
DFS Guam

--------------------------------------------------------------------------------
DFS Hong Kong

--------------------------------------------------------------------------------
DFS New Zealand

--------------------------------------------------------------------------------
DFS Singapore

--------------------------------------------------------------------------------
DFS Taiwan

--------------------------------------------------------------------------------
Airlines -- In-Flight Sales

--------------------------------------------------------------------------------

Total Duty Free

--------------------------------------------------------------------------------

                                       75

<PAGE>

                              ANNE KLEIN LICENSING

                                 Schedule 10.02

PLEASE USE WHOLESALE FIGURES                            ---------      ---------
THAT MATCH YOUR END                                       Total          Total
OF YEAR FINANCIAL STATEMENTS                            Wholesale      Co-op $$$
Store Name                                               Volume        Provided
--------------------------------------------------------------------------------

Duty Paid Stores

--------------------------------------------------------------------------------
DFS Hawaii

--------------------------------------------------------------------------------
DFS Los Angeles

--------------------------------------------------------------------------------
DFS San Francisco

--------------------------------------------------------------------------------
Airlines -- In Flight Sales

--------------------------------------------------------------------------------
Total Duty Paid

--------------------------------------------------------------------------------

International

--------------------------------------------------------------------------------
Dianen Tabah Boutique -- Switzerland

--------------------------------------------------------------------------------
English Sport Shop -- Bermuda

--------------------------------------------------------------------------------
Falabella -- Chile

--------------------------------------------------------------------------------
Harrods -- United Klngdom

--------------------------------------------------------------------------------
Myur Grace -- Australia

--------------------------------------------------------------------------------
Palaccio de Hierro -- Mexico

--------------------------------------------------------------------------------
Perl Modos -- South Africa

--------------------------------------------------------------------------------
Saga -- Peru

--------------------------------------------------------------------------------
SD International -- Kuwai, Saudi Arabia & Jordan

--------------------------------------------------------------------------------
Simms Sigal - Canada

--------------------------------------------------------------------------------
Sonuta -- Lebanon

--------------------------------------------------------------------------------
Takihyo Co. -- Japan

--------------------------------------------------------------------------------
Tomen Corp. -- Japan

--------------------------------------------------------------------------------

Tyrell Ltd. -- Philippines

--------------------------------------------------------------------------------
Total International

--------------------------------------------------------------------------------
*     In addition to accounts with sales $50,000+, please list all international
      distributors by name.

Military

--------------------------------------------------------------------------------
U.S. Army & Air Force

--------------------------------------------------------------------------------
U.S. Marine Corps.
--------------------------------------------------------------------------------
U.S. Navy

--------------------------------------------------------------------------------
Total Military

--------------------------------------------------------------------------------

--------------------------------------------------------------------------------
GRANT TOTALS
--------------------------------------------------------------------------------

                                       76

<PAGE>

                                 SCHEDULE 18.06

AUSTRALIA:
      MYER GRACE

BERMUDA:

      ENGLISH SPORTS

CANADA:

      SIMMS SIGAL
            HOLT RENFREW
            EASTONS

            HUDSON BAYS
            LES AILES DE LA MODES
            OGILVY'S
            O'BRIENS
            BROWNS
            FASHION 8
            MUSKAT & BROWN
            FOREIGN AFFAIR
            JUST ELAINES
            APPANAGE
            PETITE COLLECTION
            ANIK

            JACKIES FINE LINES
            FILLY & COLT
            PAVERA
            TOFANO'S
            COLLECTION 24
            MIJO
            MARIE & CO.

            JUNE'S
            MAGIQUE
            BLU'S
            MUNROE'S
            BUCKLANDS
            OYSTER
            TOWNE SHOPPE
            MAXI'S
            FISCHER & CO.
            ANDREW'S
            ELLA'S
            FASHION SHOPPE
            NUSHIN
            TOCCA FINITA
            WEAR ELSE
            TONY PLUS
            GIGI

CHILE:

      FALABELLA-SANTIAGO

ECUADOR:

      SANTA GEMA

ENGLAND:
      HARRODS

JAPAN:
      TOMEN

LEBANON:
      SONATA

MIDDLE EAST
      S.D. INTERNATIONAL
            BUGSHAN - SAUDI ARABIA
            ZERBAFT - KUWAIT

MEXICO:

      PALACIO DE HIERRO

PERU:
      SAGA

PHILIPPINES:
      RUSTAN'S

SINGAPORE:
      ISETAN

SOUTH AFRICA:
      PERL MODES

SWITZERLAND:
      BIANCA TABBAR

                                       77<PAGE>

                                                                  Exhibit 4.14.2

                                                                  EXECUTION COPY

                          SECOND SUPPLEMENTAL INDENTURE

                      TO INDENTURE DATED AS OF MAY 18, 2001

         SECOND SUPPLEMENTAL INDENTURE (this "Supplemental Indenture"), dated as
of December 31, 2001, among (i) Radio One of Texas I, LLC, a Delaware limited
liability company ("ROTEX1LLC"), Radio One of Texas II, LLC, a Delaware limited
liability company ("ROTEXI1LLC"), Radio One of Texas, L.P., a Delaware limited
partnership ("ROTEXLP"), Radio One of Indiana, L.P., a Delaware limited
partnership ("ROINDLP"), Radio One of Indiana, LLC, a Delaware limited liability
company ("ROINDLLC"), and Satellite One, L.L.C., a Delaware limited liability
company ("SATONELLC," and together with ROTEX1LLC, ROTEXI1LLC, ROTEXLP, ROINDLP
and ROINDLLC, the "Guaranteeing Subsidiaries", and each a "Guaranteeing
Subsidiary"), each of which Guaranteeing Subsidiaries is either a direct or
indirect subsidiary of Radio One, Inc. (the "Company"), (ii) the Company, (iii)
the other Guarantors (as defined in the Indenture referred to herein) (the
"Existing Guarantors"), and (iv) The Bank of New York (as successor to United
States Trust Company of New York), as trustee under the Indenture referred to
below (the "Trustee").

                               W I T N E S S E T H

         WHEREAS, the Company and the Existing Guarantors have heretofore
executed and delivered to the Trustee an indenture, dated as of May 18, 2001,
providing for the issuance of an aggregate principal amount of up to $500.0
million of 8 7/8% Senior Subordinated Notes due 2011 (the "Notes"), and a first
supplemental indenture, dated as of August 10, 2001 (the "First Supplemental
Indenture") (such indenture, as supplemented by the First Supplemental
Indenture, shall hereinafter be referred to as the "Indenture");

         WHEREAS, in an effort to optimize its organizational structure, the
Company has caused the following actions to be taken (collectively, the
"Restructuring"):

          (i)   effective as of December 17, 2001, three of the five recently
                formed Guaranteeing Subsidiaries, ROTEXILLC, ROTEXIILLC and
                ROTEXLP (collectively, the "New Texas Guaranteeing
                Subsidiaries"), issued equity interests to the Company
                and/or other New Texas Guaranteeing Subsidiaries as set
                forth in Part I of Schedule A attached hereto (the "Texas
                Formations").

          (ii)  effective as of December 31, 2001:

                (A) the three remaining recently formed Guaranteeing
                    Subsidiaries, ROINDLP, ROINLLC and SATONELLC (collectively,
                    the "Other New Guaranteeing Subsidiaries"), issued equity
                    interests to the Company, an Existing Guarantor and/or other
                    Guaranteeing Subsidiaries as set forth in Part II of
                    Schedule A attached hereto (the "Other Formations," and
                    together with the Texas Formations, the "Formations");

                (B) certain of the Existing Guarantors have merged into the
                    Company or other Existing Guarantors as set forth on
                    Schedule B attached hereto (the "Mergers"); and

<PAGE>

                (C) certain of the Existing Guarantors converted from
                    corporate form into limited liability company
                    form as set forth on Schedule C attached hereto
                    (the "Conversions").

         WHEREAS, the Board of Directors of the Company has deemed the
Restructuring to be advisable and in the best interest of the Company, and in
accordance with Section 4.13 of the Indenture, has determined that the
preservation of any right, license or franchise, or the corporate or partnership
existence of any of the Subsidiaries, lost as a result of the Mergers or the
Conversions is no longer desirable in the conduct of the business of the Company
and Subsidiaries, taken as a whole, and that the loss thereof is not adverse in
any material respect to the Holders of the Notes;

         WHEREAS, the Indenture provides that under certain circumstances,
including circumstances such as the Formations, each Guaranteeing Subsidiary
shall execute and deliver to the Trustee a supplemental indenture pursuant to
which such Guaranteeing Subsidiary shall unconditionally guarantee all of the
Company's Obligations under the Notes and the Indenture on the terms and
conditions set forth herein (the "Subsidiary Guarantee"); and

         WHEREAS, pursuant to Section 9.01 of the Indenture, the Trustee is
authorized to execute and deliver this Supplemental Indenture.

         NOW THEREFORE, in consideration of the foregoing and for other good and
valuable consideration, the receipt of which is hereby acknowledged, each
Guaranteeing Subsidiary and the Trustee mutually covenant and agree for the
equal and ratable benefit of the Holders of the Notes as follows:

         1.       CAPITALIZED  TERMS.  Capitalized terms used herein without
definition shall have the meanings assigned to them in the Indenture.

         2.       AGREEMENT TO GUARANTEE.  Each  Guaranteeing  Subsidiary  (and,
for purposes of subsection (i) of the Section, each Guaranteeing Subsidiary and
each Existing Guarantor party to the First Supplemental Indenture) hereby agrees
as follows:

                  (a) Along with all Guarantors named in the Indenture, to
         jointly and severally Guarantee to each Holder of a Note authenticated
         and delivered by the Trustee and to the Trustee and its successors and
         assigns, the Notes or the obligations of the Company hereunder or
         thereunder, that:

                           (i) the principal of and interest, and premium, if
                 any, on the Notes will be promptly paid in full when due,
                 whether at maturity, by acceleration, redemption or otherwise,
                 and interest on the overdue principal of and interest on the
                 Notes, if any, if lawful, and all other obligations of the
                 Company to the Holders or the Trustee hereunder or thereunder
                 will be promptly paid in full or performed, all in accordance
                 with the terms hereof and thereof; and

                           (ii) in case of any extension of time of payment or
                 renewal of any Notes or any of such other obligations, that
                 same will be promptly paid in full when due or performed in
                 accordance with the terms of the extension or renewal, whether
                 at Stated Maturity, by acceleration or otherwise. Failing
                 payment when due of any amount so guaranteed or any performance
                 so guaranteed for whatever reason, the Guarantors shall be
                 jointly and severally obligated to pay the same immediately.

                                       2

<PAGE>

                  (b) The obligations hereunder shall be unconditional,
         irrespective of the validity, regularity or enforceability of the Notes
         or the Indenture, the absence of any action to enforce the same, any
         waiver or consent by any Holder of the Notes with respect to any
         provisions hereof or thereof, the recovery of any judgment against the
         Company, any action to enforce the same or any other circumstance which
         might otherwise constitute a legal or equitable discharge or defense of
         a guarantor.

                  (c) The following is hereby waived: diligence presentment,
         demand of payment, filing of claims with a court in the event of
         insolvency or bankruptcy of the Company, any right to require a
         proceeding first against the Company, protest, notice and all demands
         whatsoever.

                  (d) This Subsidiary Guarantee shall not be discharged except
         by complete performance of the obligations contained in the Notes and
         the Indenture, and the Guaranteeing Subsidiary accepts all obligations
         of a Guarantor under the Indenture.

                  (e) If any Holder or the Trustee is required by any court or
         otherwise to return to the Company, the Guarantors, or any Custodian,
         Trustee, liquidator or other similar official acting in relation to
         either the Company or the Guarantors, any amount paid by either to the
         Trustee or such Holder, this Subsidiary Guarantee, to the extent
         theretofore discharged, shall be reinstated in full force and effect.

                  (f) The Guaranteeing Subsidiary shall not be entitled to any
         right of subrogation in relation to the Holders in respect of any
         obligations guaranteed hereby until payment in full of all obligations
         guaranteed hereby.

                  (g) As between the Guarantors, on the one hand, and the
         Holders and the Trustee, on the other hand, (x) the maturity of the
         obligations guaranteed hereby may be accelerated as provided in Article
         6 of the Indenture for the purposes of this Subsidiary Guarantee,
         notwithstanding any stay, injunction or other prohibition preventing
         such acceleration in respect of the obligations guaranteed hereby, and
         (y) in the event of any declaration of acceleration of such obligations
         as provided in Article 6 of the Indenture, such obligations (whether or
         not due and payable) shall forthwith become due and payable by the
         Guarantors for the purpose of this Subsidiary Guarantee.

                  (h) The Guarantors shall have the right to seek contribution
         from any non-paying Guarantor so long as the exercise of such right
         does not impair the rights of the Holders under the Guarantee.

                  (i) Notwithstanding anything to the contrary contained herein,
         pursuant to Section 11.02 of the Indenture, the Obligations of each
         Guaranteeing Subsidiary created hereunder (and the Obligations of each
         Existing Guarantor under the First Supplemental Indenture created
         thereunder) shall be junior and subordinate to the Senior Guarantee of
         such Guarantor on the same basis as the Notes are junior and
         subordinate to Senior Debt of the Company.

                  (j) Pursuant to Section 11.03 of the Indenture, after giving
         effect to any maximum amount and any other contingent and fixed
         liabilities that are relevant under any applicable Bankruptcy or
         fraudulent conveyance laws, and after giving effect to any collections
         from, rights to receive contribution from or payments made by or on
         behalf of any other Guarantor in respect of the obligations of such
         other Guarantor under Article 11 of the Indenture, this new Subsidiary
         Guarantee shall be limited to the maximum amount permissible such that
         the obligations of such

                                       3

<PAGE>

         Guarantor under this Subsidiary Guarantee will not constitute a
fraudulent transfer or conveyance.

         3.      EXECUTION AND DELIVERY. Each Guaranteeing Subsidiary agrees to
execute the Subsidiary Guarantee as provided by Section 11.04 of the Indenture
and Exhibit E thereto and to recognize that the Subsidiary Guarantees shall
remain in full force and effect notwithstanding any failure to endorse on each
Note a notation of such Subsidiary Guarantee.

         4.      GUARANTEEING SUBSIDIARY mAY CONSOLIDATE, eTC. ON CERTAIN TERMS.

                 (a) The Guaranteeing Subsidiary may not consolidate with or
         merge with or into (whether or not such Guarantor is the surviving
         Person) another corporation, Person or entity whether or not affiliated
         with such Guarantor unless:

                           (i) subject to Sections 11.05 and 11.06 of the
                 Indenture, the Person formed by or surviving any such
                 consolidation or merger (if other than a Guarantor or the
                 Company) unconditionally assumes all the obligations of such
                 Guarantor, pursuant to a supplemental indenture in form and
                 substance reasonably satisfactory to the Trustee, under the
                 Notes, the Indenture and the Subsidiary Guarantee on the terms
                 set forth herein or therein; and

                           (ii) immediately after giving effect to such
                 transaction, no Default or Event of Default exists.

                 (b) In case of any such consolidation, merger, sale or
         conveyance and upon the assumption by the successor corporation, by
         supplemental indenture, executed and delivered to the Trustee and
         satisfactory in form to the Trustee, of the Subsidiary Guarantee
         endorsed upon the Notes and the due and punctual performance of all of
         the covenants and conditions of the Indenture to be performed by the
         Guarantor, such successor corporation shall succeed to and be
         substituted for the Guarantor with the same effect as if it had been
         named herein as a Guarantor. Such successor corporation thereupon may
         cause to be signed any or all of the Subsidiary Guarantees to be
         endorsed upon all of the Notes issuable hereunder which theretofore
         shall not have been signed by the Company and delivered to the Trustee.
         All the Subsidiary Guarantees so issued shall in all respects have the
         same legal rank and benefit under the Indenture as the Subsidiary
         Guarantees theretofore and thereafter issued in accordance with the
         terms of the Indenture as though all of such Subsidiary Guarantees had
         been issued at the date of the execution hereof.

                 (c) Except as set forth in Articles 4 and 5 and Section 11.06
         of Article 11 of the Indenture, and notwithstanding clauses (a) and (b)
         above, nothing contained in the Indenture or in any of the Notes shall
         prevent any consolidation or merger of a Guarantor with or into the
         Company or another Guarantor, or shall prevent any sale or conveyance
         of the property of a Guarantor as an entirety or substantially as an
         entirety to the Company or another Guarantor.

         5.      RELEASES.

                 (a) In the event of a sale or other disposition of all of the
         assets of any Guarantor, by way of merger, consolidation or otherwise,
         or a sale or other disposition of all to the capital stock of any
         Guarantor, in each case to a Person that is not (either before or after
         giving effect to such transaction) a Restricted Subsidiary of the
         Company, then such Guarantor (in the event of a sale or other
         disposition, by way of merger, consolidation or otherwise, of all of
         the capital stock of

                                       4

<PAGE>

         such Guarantor) or the corporation acquiring the property (in the event
         of a sale or other disposition of all or substantially all of the
         assets of such Guarantor) will be released and relieved of any
         obligations under its Subsidiary Guarantee; provided that the Net
         Proceeds of such sale or other disposition are applied in accordance
         with the applicable provisions of the Indenture, including without
         limitation Section 4.10 of the Indenture. Upon delivery by the Company
         to the Trustee of an Officers' Certificate and an Opinion of Counsel to
         the effect that such sale or other disposition was made by the Company
         in accordance with the provisions of the Indenture, including without
         limitation Section 4.10 of the Indenture, the Trustee shall execute any
         documents reasonably required in order to evidence the release of any
         Guarantor from its obligations under its Subsidiary Guarantee.

                  (b) Any Guarantor not released from its obligations under its
         Subsidiary Guarantee shall remain liable for the full amount of
         principal of and interest on the Notes and for the other obligations of
         any Guarantor under the Indenture as provided in Article 10 of the
         Indenture.

         6. NO RECOURSE AGAINST OTHERS. No past, present or future director,
officer, employee, incorporator, stockholder or agent of the Guaranteeing
Subsidiary, as such, shall have any liability for any obligations of the Company
or any Guaranteeing Subsidiary under the Notes, any Subsidiary Guarantees, the
Indenture or this Supplemental Indenture or for any claim based on, in respect
of, or by reason of, such obligations or their creation. Each Holder of the
Notes by accepting a Note waives and releases all such liability. The waiver and
release are part of the consideration for issuance of the Notes. Such waiver may
not be effective to waive liabilities under the federal securities laws and it
is the view of the SEC that such a waiver is against public policy.

         7. GOVERNING LAW. THE INTERNAL LAW OF THE STATE OF NEW YORK SHALL
GOVERN AND BE USED TO CONSTRUE THIS SUPPLEMENTAL INDENTURE WITHOUT GIVING EFFECT
TO APPLICABLE PRINCIPLES OF CONFLICTS OF LAW TO THE EXTENT THAT THE APPLICATION
OF THE LAWS OF ANOTHER JURISDICTION WOULD BE REQUIRED THEREBY.

8. SUBMISSION TO JURISDICTION; SERVICE OF PROCESS; WAIVER OF JURY TRIAL. Each
party hereto hereby submits to the nonexclusive jurisdiction of the United
States District Court for the Southern District of New York and of any New York
State Court sitting in New York City for purposes of all legal proceedings
arising out of or relating to this Supplemental Indenture, the Notes, the
Subsidiary Guarantees or the transactions contemplated hereby and thereby. Each
party hereto irrevocably waives, to the fullest extent permitted by law, any
objection which it may now or hereafter have to the laying of the venue of any
such proceeding brought in such a court and any claim that any such proceeding
brought in such a court has been brought in an inconvenient forum. Process in
any such suit, action or proceeding may be served on any party anywhere in the
world, whether within or without the State of New York. Without limiting the
foregoing, the parties agree that service of process upon such party at the
address referred to in Section 13.02 of the Indenture, together with written
notice of such service to such party, shall be deemed effective service of
process upon such party. Each of the parties hereto irrevocably waives any and
all rights to trial by jury in any legal proceeding arising out of or relating
to this Supplemental Indenture, the Notes, the Subsidiary Guarantees or the
transactions contemplated hereby and thereby.

         9.       COUNTERPARTS.  The parties may sign any number of copies of
this Supplemental Indenture. Each signed copy shall be an original, but all of
them together represent the same agreement.

         10.      EFFECT OF  HEADINGS.  The Section  headings  herein are for
convenience  only and shall not affect the  construction hereof.

                                       5

<PAGE>

         11.      THE TRUSTEE.  The Trustee  shall not be  responsible in any
manner whatsoever for or in respect of the validity or sufficiency of this
Supplemental Indenture or for or in respect of the recitals contained herein,
all of which recitals are made solely by the Guaranteeing Subsidiary and the
Company.

                                       6

<PAGE>

         IN WITNESS WHEREOF, the parties hereto have caused this Supplemental
Indenture to be duly executed and attested, all as of the date first above
written.

                            RADIO ONE OF TEXAS, LP

                            By:  RADIO ONE OF TEXAS I, LLC,
                                    ITS GENERAL PARTNER

                            By:     /s/ Alfred C. Liggins, III
                                 ---------------------------------------
                            Name:  Alfred C. Liggins, III
                            Title: President and Chief Executive Officer

                            RADIO ONE OF INDIANA, LP

                            By:  RADIO ONE, INC.
                                    ITS GENERAL PARTNER

                            By:     /s/ Alfred C. Liggins, III
                                 ---------------------------------------
                            Name:  Alfred C. Liggins, III
                            Title: President and Chief Executive Officer

                            RADIO ONE OF TEXAS I, LLC
                            RADIO ONE OF TEXAS II, LLC
                            RADIO ONE OF INDIANA, LLC
                            SATELLITE ONE, L.L.C.

                            By:     /s/ Alfred C. Liggins, III
                                 ---------------------------------------
                            Name:  Alfred C. Liggins, III
                            Title: President and Chief Executive Officer

                            RADIO ONE, INC.

                            By:     /s/ Alfred C. Liggins, III
                                 ---------------------------------------
                            Name:  Alfred C. Liggins, III
                            Title: President and Chief Executive Officer

                                       7

<PAGE>

                         RADIO ONE LICENSES, LLC
                               (FORMERLY RADIO ONE LICENSES, INC.)
                         BELL BROADCASTING COMPANY
                         RADIO ONE OF DETROIT, LLC
                               (FORMERLY RADIO ONE OF DETROIT, INC.)
                         RADIO ONE OF ATLANTA, LLC
                               (FORMERLY RADIO ONE OF ATLANTA, INC.)
                         ROA LICENSES, LLC
                               (FORMERLY ROA LICENSES, INC.)
                         RADIO ONE OF CHARLOTTE, LLC,
                         RADIO ONE OF AUGUSTA, LLC
                               (FORMERLY RADIO ONE OF AUGUSTA, INC.)
                         CHARLOTTE BROADCASTING, LLC
                               (FORMERLY DAVIS BROADCASTING OF CHARLOTTE, INC.)

                         RADIO ONE OF NORTH CAROLINA, LLC
                               (FORMERLY RADIO ONE OF NORTH CAROLINA, INC.)
                         RADIO ONE OF BOSTON, INC.
                         RADIO ONE OF BOSTON LICENSES, LLC
                               (FORMERLY RADIO ONE OF BOSTON LICENSES, INC.)
                         BLUE CHIP MERGER SUBSIDIARY, INC.
                         BLUE CHIP BROADCAST COMPANY
                         BLUE CHIP BROADCASTING, LTD.
                         BLUE CHIP BROADCASTING LICENSES, LTD.
                         BLUE CHIP BROADCASTING LICENSES II, LTD.

                         By:     /s/ Alfred C. Liggins, III
                              ---------------------------------------
                         Name:   Alfred C. Liggins, III
                         Title:  President and Chief Executive Officer

                         THE BANK OF NEW YORK
                           as Trustee

                         By:     /s/ Authorized Signer
                              ---------------------------------------
                                 Authorized Signer

                                       8

<PAGE>

                                                                      Schedule A
                                                                      ----------

                             SCHEDULE OF FORMATIONS
                             ----------------------

                          PART I: The Texas Formations

         The recently formed New Texas Guaranteeing Subsidiaries have had the
below-listed equity ownership at all times since December 17, 2001.

<TABLE>
<CAPTION>

Guaranteeing Subsidiary                                       Ownership Interest

----------------------------------------------------------    --------------------------------------------------------
<S>                                                          <C>
Radio One of Texas I, LLC                                     100% of Units held by Radio One, Inc.

Radio One of Texas II, LLC                                    100% of Units held by Radio One, Inc.

Radio One of Texas, LP                                        1% of  partnership  interest held by Radio One of Texas
                                                              I, LLC, its general partner

                                                              99% of partnership  interest held by Radio One of Texas
                                                              II, LLC, its limited partner

<CAPTION>

                          PART II: The Other Formations

         The recently formed Other New Guaranteeing Subsidiaries have the
below-listed equity ownership effective as of December 31, 2001.

Guaranteeing Subsidiary                                       Ownership Interest

----------------------------------------------------------    --------------------------------------------------------
<S>                                                           <C>
Radio One of Indiana, LLC                                     100% of Units held by Radio One of Indiana, L.P.

Radio One of Indiana, L.P.                                    99% of  partnership  interest held by Radio One,  Inc.,
                                                              its general partner

                                                              1% of  partnership  held by Radio One of Texas II, LLC,
                                                              its limited partner

Satellite One, L.L.C.                                         100% of Units held by Radio One, Inc.

</TABLE>

                                       9

<PAGE>

                                                                      Schedule B
                                                                      ----------

                               SCHEDULE OF MERGERS
                               -------------------

         The below-listed Existing Guarantors were merged into the Company or
other Existing Guarantors effective as of December 31, 2001.

<TABLE>
<CAPTION>
Merged Existing Guarantor                                  Entity into which Existing Guarantor was Merged

------------------------------------------------------     -----------------------------------------------------------
<S>                                                        <C>
WYCB Acquisition Corporation                               Radio One, Inc.

Broadcast Holdings, Inc.                                   Radio One Licenses, Inc. (*)

Allur-Detroit, Inc.                                        Bell Broadcasting Company

Allur Licenses, Inc.                                       Radio One of Detroit, Inc. (*)

Dogwood Communications, Inc.                               Radio One of Atlanta, Inc. (*)

Dogwood Licenses, Inc.                                     ROA Licenses, Inc. (*)
</TABLE>

         * Entity to be converted into a limited liability company immediately
following the merger (see Schedule C - Schedule of Conversions)

                                       10

<PAGE>

                                                                      Schedule C
                                                                      ----------

                             SCHEDULE OF CONVERSIONS
                             -----------------------

         The below-listed entities converted from corporate form to limited
liability company effective as of December 31, 2001.

<TABLE>
<CAPTION>
Pre-conversion Entity                                         Post-Conversion Entity

----------------------------------------------------------    -------------------------------------------------------
<S>                                                           <C>
Radio One Licenses, Inc.                                      Radio One Licenses, LLC

Radio One of Detroit, Inc.                                    Radio One of Detroit, LLC

Radio One of Atlanta, Inc.                                    Radio One of Atlanta, LLC

ROA Licenses, Inc.                                            ROA Licenses, LLC

Radio One of Augusta, Inc.                                    Radio One of Augusta, LLC

Davis Broadcasting of Charlotte, Inc.                         Charlotte Broadcasting, LLC

Radio One of North Carolina, Inc.                             Radio One of North Carolina, LLC

Radio One of Boston Licenses, Inc.                            Radio One of Boston Licenses, LLC
</TABLE>

                                       11

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