Document:

www.eXFILE.com 888-775-4789 --- SIGNATURE EYEWEAR, INC. -- FORM 10Q

    EXHIBIT
10.1

     

    AMENDMENT NO.1 TO LOAN AND
SECURITY AGREEMENT

     

    This
Amendment No. 1 to Loan and Security Agreement (this “Amendment”) is made on
December 15, 2009 (“Effective Date”) by and among COMERICA BANK, a Texas banking
association (“Bank”), and SIGNATURE EYEWEAR, INC., a California corporation
(“Borrower”).

     

    Borrower
and Bank entered into a Loan and Security Agreement dated September 14, 2007
(“Loan Agreement”) providing terms and conditions governing certain loans and
other credit accommodations extended by Bank to Borrower
(“Indebtedness”).  Borrower and Bank have agreed to amend the terms of
the Loan Agreement, as provided in this Amendment.

     

    Accordingly,
Borrower and Bank agree as follows:

     

    1.  Capitalized
Terms.  In this Amendment, capitalized terms that are used
without separate definition shall have the meanings given to them in the Loan
Agreement.

     

    2.  Amendments.  The
Loan Agreement is amended as follows:

     

    (a) The
following terms, which are defined in the Loan Agreement, are given the
following amended definitions:

     

    “Advance”
shall mean a borrowing requested by Borrower and made by Bank under this
Agreement, including a LIBOR Option Advance and/or a Prime Referenced Rate
Option Advance.

     

    “Credit
Limit” shall mean Four Million Dollars ($4,000,000).

     

    “First
Amendment Effective Date” shall mean December 15, 2009.

     

    “Inventory
Advances” shall mean any Advances made by Bank which are thirty five percent
(35%) of the lower of cost or market value of Borrower’s Eligible Inventory, and
as may be adjusted by Bank, in Bank’s discretion, for age and seasonality or
other factors affecting the value of the Inventory, up to advances outstanding
at any one time of not greater than the Inventory Sublimit upon Borrower’s
concurrent execution and delivery to Bank of a Designation of Inventory, or
Certification of Borrowing Base, in form customarily used by
Bank.  “Eligible Inventory” shall mean Borrower’s Inventory that (a)
consists of finished goods (i.e., frames) or eyeglass cases, (b) is less than
(i) 730 days old from the First Amendment Effective Date until February 28,
2010, and (ii) 365 days old thereafter, and (c) is located in the United States
of America.

     

    “LIBOR”
shall mean the rate per annum (rounded upward if necessary, to the nearest whole
1/8 of 1%) and determined pursuant to the following formula:

     

    LIBOR
=                 LIBOR
Base

    100% - LIBOR Reserve
Percentage

    

    provided, however, in no event
and at no time shall LIBOR be less than one (1%) percent per annum.

     

    “LIBOR
Option” shall mean a rate equal to three (3.00%) percent above Bank’s
LIBOR.

     

    (b) As of
January 31, 2010, the following term which Is defined In the Loan Agreement, is
given the following amended definition:

     

    “Tangible
Effective Net Worth” shall mean, with respect to any Person and as of any
applicable date of determination, Tangible Wet Worth plus Subordinated Debt,
plus (or minus) the negative (or positive) change in deferred tax assets of such
Person.

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

    (c) On the
Debt Repayment Date (as defined in Section 3 of this Amendment), the following
term which is defined in the Loan Agreement, shall be given the following
amended definition:

     

    “Subordinated
Debt” shall mean indebtedness of the Borrower to any Person which has been
subordinated to the Indebtedness pursuant to a Subordination Agreement in form
and content satisfactory to Bank.

     

    (d) The
following terms and their respective definitions are hereby added to Section 1.1
of the Loan Agreement in their respective alphabetical order;

     

    “Business
Day” means any day, other than a Saturday, Sunday or any other day designated as
a holiday under Federal or applicable State statute or regulation, on which Bank
is open for all or substantially all of Its domestic and International business
(including dealings in foreign exchange) in San Jose, California, and, in
respect of notices and determinations relating to LIBOR, LIBOR Option Advances
and the Daily Adjusting LIBOR Rate, also a day on which dealings in dollar
deposits are also carried on in the London interbank market and on which banks
are open for business in London, England.

     

    “Daily
Adjusting LIBOR Rate” means, for any day, a per annum interest rate which is
equal to the quotient of the following;

     

    (a)           for
any day, the per annum rate of interest determined on the basis of the rate for
deposits in United States Dollars for a period equal to one (1) month appearing
on Page BBAM of the Bloomberg Financial Markets Information Service as of 8:00
a.m. (California time) (or as soon thereafter as practical) on such day, or if
such day is not a Business Day, on the immediately preceding Business
Day.  In the event that such rate does not appear on Page BBAM of the
Bloomberg Financial Markets Information Service (or otherwise on such Service)
on any day, the “Daily Adjusting LIBOR Rate” for such day shall be determined by
reference to such other publicly available service for displaying eurodollar
rates as may be reasonably selected by Bank, or, in the absence of such other
service, the “Daily Adjusting LIBOR Rate” for such day shall, instead, be
determined based upon the average of the rates at which Bank is offered dollar
deposits at or about 8:00 a.m. (California time) (or as soon thereafter as
practical), on such day, or if such day is not a Business Day, on the
immediately preceding Business Day, in the interbank eurodollar market in an
amount comparable to the applicable principal amount of Indebtedness hereunder
and for a period equal to one (1) month;

     

    divided
by

     

    (b)           1.00
minus the maximum rate (expressed as a decimal) on such day at which Bank is
required to maintain reserves on “Euro-currency Liabilities” as defined in and
pursuant to Regulation D of the Board of Governors of the Federal Reserve System
or, if such regulation or definition is modified, and as long as Bank is
required to maintain reserves against a category of liabilities which includes
eurodollar deposits or includes a category of assets which includes eurodollar
loans, the rate at which such reserves are required to be maintained on such
category.

     

    “Inventory
Sublimit” shall mean (i) One Million Dollars ($1,000,000) from the First
Amendment Effective Date until February 28, 2010, and (ii) Seven Hundred and
Fifty Thousand Dollars ($750,000) at all times thereafter.

     

    “Prime
Rate” shall mean the per annum interest rate established by Bank as its prime
rate for its borrowers, as such rate may vary from time to time, which rate is
not necessarily the lowest rate on loans made by Bank at any such
time.

     

    “Prime
Referenced Rate” means, for any day, a per annum interest rate which is equal to
the Prime Rate in effect on such day, but in no event and at no time shall the
Prime Referenced Rate be less than the sum of the Daily Adjusting LIBOR Rate for
such day plus two and one-half percent (2.50%) per annum.  If, at any
time, Bank 

     

    
      
        
        

      

      
        2

        
          

        

      

      
        
        

      

    

    determines
that it is unable to determine or ascertain the Daily Adjusting LIBOR Rate for
any day, the Prime Referenced Rate for each such day shall be the Prime Rate in
effect at such time, but not less than two and one-half percent (2.50%) per
annum.

     

    “Prime
Referenced Rate Option” shall mean a rate equal to one percent (1.00%) above the
Prime Referenced Rate.

     

    “Prime
Referenced Rate Option Advance” shall mean an Advance bearing interest at the
Prime Referenced Rate Option.

     

    (e) (i)           The
defined terms “Base Rate”, “Base Rate Option”, “Base Rate Option Advance” and
“LIBOR Business Day” in Sections 1.6, 1.7, 1.8 and 1.31 of the Loan Agreement
respectively, shall each be replaced with “Intentionally Omitted” in
substitution therefor.

     

    (ii)           All
other references in the Loan Agreement to “Base Rate”, ‘Base Rate Option”, “Base
Rate Option Advance” and “LIBOR Business Day” shall be deleted in their entirety
and replaced with “Prime Referenced Rate”, “Prime Referenced Rate Option”,
“Prime Referenced Rate Option Advance” and “Business Day”
respectively.

     

    (f) The third
sentence of Section 2.3 of the Loan Agreement is amended and restated in its
entirety as follows:

     

    “Borrower
shall pay to Bank (a) a letter of credit fee of 2.25% per annum on the stated
amount of any standby letter of credit (payable in advance and computed on a
basis of actual days to expiry over a year of 360 days) and (b) any standard
issuance and other fees that Bank notifies Borrower it will charge for issuing
and processing letters of credit.”

     

    (g) Section
2.4 of the Loan Agreement is amended and restated in its entirety as
follows:

     

    “Borrower
shall pay to Bank:

     

    (a)           a
non-refundable facility fee payable in equal quarterly installments of Two
Thousand Five Hundred Dollars ($2,500) on the last day of each of its fiscal
quarters and at maturity, commencing December 31, 2009; and

     

    (b)           a
non-refundable renewal fee in the amount of Fourteen Thousand Dollars ($14,000),
which renewal fee is payable in four equal quarterly installments of Three
Thousand Five Hundred Dollars ($3,500) on December 31, 2009, March 31, 2010,
June 30, 2010 and September 30, 2010.”

     

    (h) The first
sentence of Section 3.1 of the Loan Agreement is amended and restated in its
entirety as follows:

     

    “3.1           This
Agreement shall remain in full force and effect until December 1, 2011 unless
earlier terminated by notice by Borrower or by Bank pursuant to Section
8.1.”

     

    (i) The last
sentence of Section 6.6 of the Loan Agreement is amended and restated as
follows:

     

    “Notwithstanding
anything to the contrary in this Section 6.6, Borrower may make Capital
Expenditures in an aggregate amount that is not greater than One Hundred Forty
Thousand Dollars ($140,000) in any fiscal year.”

     

    (j) Section
6.16 c(6) of the Loan Agreement Is amended and restated as follows:

     

    
      
        
        

      

      
        3

        
          

        

      

      
        
        

      

    

    “(6)           Financial
projections for each fiscal year within sixty (60) days after the last day of
the prior fiscal year.”

     

    (k) Sections
6.17 b and c of the Loan Agreement are amended and restated in their entirety as
follows:

     

    b.           a
Quick Ratio of not less than 0.33:1.00 as of the last day of each fiscal
quarter; and

     

    c.           a
Leverage Ratio of not more than 5.00:1.00 as of the last day of each fiscal
quarter.

     

    (l) Exhibit A
to the Loan Agreement (Form of Compliance Certificate) shall be amended end
replaced with Exhibit A attached to this Amendment.

     

    3.  Consent to Debt Repayment
and Amendment to Subordinated Debt Definition.  Borrower has
requested Bank’s consent to the repayment of the loan from ASHFORD CAPITAL, LLC
(“Junior Creditor’) to Borrower evidenced by a promissory note in the original
principal amount of $125,000 by Borrower in favor of Junior Creditor dated April
23, 2007 (“Debt Repayment”).  Notwithstanding anything to the contrary
contained in the Loan Agreement or Loan Documents, Bank hereby grants its
consent to the Debt Repayment, subject to the following:

     

    (a) The
amount of the Debt Repayment shall not exceed $125,000 plus accrued interest
thereon and shall occur no later than December 31, 2010;

     

    (b) No
default or event of default under the Loan Agreement or any Loan Document shall
have occurred and be continuing at the time of the Debt Repayment nor shall any
such default or event of default result or reasonably be expected to result from
the Debt Repayment; and

     

    (c) Borrower
shall provide Bank with satisfactory evidence of the Debt Repayment (“Debt
Repayment Evidence”).

     

    Upon
receipt by Bank of the Debt Repayment Evidence (“Debt Repayment Date”), the term
“Subordinated Debt”, which is defined in Section 1 of the Lean Agreement, shall
be amended as set forth in Section 2 (c) of this Amendment

     

    4.  Representations.  Borrower
represents and agrees that

     

    (a) Except as
expressly modified in this Amendment, (a) the representations and warranties set
forth in the Loan Agreement and in each related document, agreement, and
instrument remain true and correct in all respects, except to the extent that
they expressly speak as of a specific prior date, and (b) the covenants set
forth in the Loan Agreement continue to be satisfied in all respects, and are
legal, valid and binding obligations with the same force and effect as If
entirely restated in this Amendment.

     

    (b) When
executed, this Amendment will be a duly authorized, legal, valid, and binding
obligation of Borrower enforceable in accordance with its terms.

     

    (c) the
Articles of Incorporation, Bylaws and Corporate Resolutions and Incumbency
Certificate delivered to Bank on or about September 14, 2007 remain in full
force and effect, have not been amended, repealed or rescinded in any respect
and may continue to be relied upon by Bank until written notice to the contrary
is received by Bank, and Borrower continues to he in good standing under the
laws of the State of California.

     

    (d) There is
no default continuing under the Loan Agreement, or any related document,
agreement, or instrument, and no event has occurred or condition exists that is
or, with the giving of notice or lapse of time or both, would be such a
default.

     

    
      
        
        

      

      
        4

        
          

        

      

      
        
        

      

    

    5.  Conditions
Precedent.  The effectiveness of this Amendment is subject to
Bank’s receipt of all of the following:

     

    (a) this
Amendment and such other agreements and instruments reasonably requested by Bank
pursuant hereto (including such documents as are necessary to create and perfect
Bank’s interest in the Collateral), each duly executed by Borrower;

     

    (b) payment
of all bank expenses Incurred through the date of this Amendment;
and

     

    (c) such
other documents and completion of such other matters as Bank may reasonably deem
necessary or appropriate.

     

    6.  No Other
Changes.  Except as specifically provided In this Amendment, It
does not vary the terms and provisions of any note, mortgage, security
agreement, or other document, instrument, or agreement evidencing, securing or
relating to the Indebtedness or the Loan Agreement (“Loan
Documents”).  This Amendment shall not impair the rights, remedies,
and security given in and by the Loan Documents.  The terms of this
Amendment shall control any conflict between its terms and those of the Loan
Agreement.

     

    7.  Ratification.  Except
for the modifications under this Agreement, the parties ratify and confirm the
Loan Agreement and the Loan Documents and agree that they remain in full force
and effect.

     

    8.  Further Modification; No
Reliance.  This Amendment may be altered or modified only by
written Instrument duly executed by Borrower and Bank.  In executing
this Amendment, Borrower Is not relying on any promise or commitment of Bank
that is not in writing signed by Bank.

     

    9.  Successors and
Assigns.  This Amendment shall inure to the benefit of and be
binding upon the parties and their respective successors and
assigns.

     

    10.  Governing
Law.  The parties agree that the terms and provisions of this
Amendment shall be governed by and construed in accordance with the internal
laws of the State of California, without regard to principles of conflicts of
law.

     

    11.  No
Defenses.  Borrower acknowledges, confirms, and warrants to
Bank that as of the date hereof Borrower has absolutely no defenses, claims,
rights of set-off, or counterclaims against Bank under, arising out of, or in
connection with, this Amendment, the Loan Agreement, the Loan Documents and/or
the individual advances under the Indebtedness, or against any of the
indebtedness evidenced or secured thereby.

     

    12.  Expenses.  Borrower
shall promptly pay all out-of-pocket fees, costs, charges, expenses, and
disbursements of Bank incurred in connection with the preparation, execution,
and delivery of this Amendment, and the other documents contemplated by this
Amendment.

     

    13.  Counterparts.  This
Amendment may be executed in one or more counterparts, and by separate parties
on separate counterparts, all of which shall constitute one and the same
agreement.

     

     

    
      [end of
amendment — signature page follows]

    

    
      
        
        

      

      
        5

        
          

        

      

      
        
        

      

    

     

    This
Amendment No. 1 to Loan and Security Agreement is executed and delivered as of
the Effective Date.

     

    

    
      	 
      	
              SIGNATURE
      EYEWEAR, INC.

               

               

            
	 
      	
              By:
         /s/ M. Prince
      (CEO)                              

              Michael Prince

              Its:             
        Chief Executive Officer

               

            
	 
      	
              COMERICA
      BANK

               

               

            
	 
      	
              By:
         /s/ Bianca
      Barredo                                

              Bianca Barredo

              Its:               
      Assistant Vice President

               

            

    

     

     

     

     

     

     

     

     

    
      
        
        

      

      
        6

        
          

        

      

      
        
        

      

    

    EXHIBIT
A

    COMPLIANCE
CERTIFICATE

     

    Please
send all Required Reporting
to:                                                                             Comerica
Bank

    301 E. Ocean Blvd.

    Ste. 1800 MC 4444

    Long Beach, CA 90802

    Attn.: ______________

    

    FROM:   SIGNATURE
EYEWEAR, INC.

     

    The
undersigned authorized Officer of SIGNATURE EVEWEAR, INC. (“Borrower’), hereby
certifies that in accordance with the terms and conditions of the Loan and
Security Agreement between Borrower and Bank (the Agreement), (i) Borrower is in
complete compliance for the period ending 7/31/2001 with all required covenants,
except as noted below, and (ii) all representations and warranties of Borrower
stated in the Agreement are true end correct in all material respects as of the
date hereof.  Attached herewith are the required documents supporting
the above certification.  The Officer further certifies that these are
prepared in accordance with Generally Accepted Accounting Principles (GAAP) and
are consistently applied from one period to the next except as explained in an
accompanying letter or footnotes.

     

    Please
indicate compliance status by circling Yes/No under “Complies”
column.

     

    
      	
              REPORTING COVENANTS

            	
              REQUIRED

            	
              COMPLIES

            
	
              Consolidated
      Financial Statements

            	
              Monthly,
      within 35 days

            	
              YES

            	
              NO

            
	
              Consolidated
      Financial Statements

            	
              Quarterly,
      within 45 days

            	
              YES

            	
              NO

            
	
              Audited
      Consolidated Financial Statements

            	
              Annually,
      within 120 days

            	
              YES

            	
              NO

            
	
              A/R
      Aging

            	
              20th
      day of each calendar month

            	
              YES

            	
              NO

            
	
              A/R
      Aging

            	
              20th
      day of each calendar month

            	
              YES

            	
              NO

            
	
              Inventory
      Report

            	
              20th
      day of each calendar month

            	
              YES

            	
              NO

            
	
              Borrowing
      Base Certificate

            	
              20th
      day of each calendar month

            	
              YES

            	
              NO

            
	
              Financial
      Projections

            	
              Annually,
      within 60 days after FYE

            	
              YES

            	
              NO

            

    

    

    
      	
              FINANCIAL COVENANTS

            	
              REQUIRED

            	
              ACTUAL

            	
              COMPLIES

            
	
              TO
      BE TESTED QUARTERLY

            	 
      	 
      	 
      	 
      
	
              Minimum
      2 Qrt. Pre-Tax Income

            	
              $200,000

            	
              $_______

            	
              YES

            	
              NO

            
	
              Maximum
      Leverage Ratio

            	
              5.00:1.00

            	
              _____:1.00

            	
              YES

            	
              NO

            
	
              Minimum
      Quick Ratio

            	
              0.33:1.00

            	
              _____:1.00

            	
              YES

            	
              NO

            
	
              YTD
      Capital Expenditures

            	
              $140,000
      annually

            	
              $________

            	
              YES

            	
              NO

            

    

    

    Please
Enter Below Comments Regarding Covenant Violations:

     

    The
Officer further acknowledges that at any time Borrower is not in compliance with
all the terms set forth in the Agreement, including, without limitation, the
financial covenants, no credit extensions will be made.

     

    Very
truly yours,

     

    
      	
              SIGNATURE
      EYEWEAR, INC.

               

            	 	
              BANK
      USE ONLY

            
	
               

              
                
      

              Authorized
      Signer

               

              
                Name:          

                  
      

              

              Title:              

              

                
      

            	 	
              Rec’d
      by:          

              

                
      Date:                                                                    

              
                
      

              Reviewed
      by:                                                                    

              
                
      Date:                                                                    
      

                
      

              Financial
      Compliance
  Status:     YES/NO

            

    

    

    
      
        
        

      

      
        7www.eXFILE.com 888-775-4789 --- SIGNATURE EYEWEAR, INC. -- FORM 10Q

     

    EXHIBIT
10.2

    
 

    Text
marked by [ * * *] has been omitted pursuant to a Request for Confidential
Treatment and was filed separately with the Securities and Exchange
Commission.

    

    

    

     

    

     

    

     

    LICENSE
AGREEMENT

     

    between

     

    LAURA
ASHLEY, INC.

     

    and

     

    SIGNATURE
EYEWEAR, INC.

     

    

     

    Dated as
of January 19, 2010

    
 

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

    TABLE
OF CONTENTS

     

    
      	
              Section
      1

            	
              Definitions

            	
              1

            
	
              Section
      2

            	
              Grant
      of License Rights

            	
              4

            
	
              Section
      3

            	
              Contract
      Term and Extension of Contract Term

            	
              5

            
	
              Section
      4

            	
              Payments

            	
              6

            
	
              Section
      5

            	
              Marketing
      and Promotional Activities

            	
              8

            
	
              Section
      6

            	
              Marking
      Licensed Articles; Advertising and Promotional Materials

            	
              8

            
	
              Section
      7

            	
              Undertakings,
      Representations and Warranties of the Parties

            	
              9

            
	
              Section
      8

            	
              Books
      and Records; Audits; Financial Statements

            	
              11

            
	
              Section
      9

            	
              Quality
      Standards; Compliance with Applicable Laws; Close-Out Sales, New
      Marks

            	
              12

            
	
              Section
      10

            	
              Insurance

            	
              14

            
	
              Section
      11

            	
              Indemnification

            	
              15

            
	
              Section
      12

            	
              Events
      of Default; Termination

            	
              16

            
	
              Section
      13

            	
              Inventory
      at License Termination or Expiration

            	
              19

            
	
              Section
      14

            	
              Ownership
      of Licensed Property

            	
              20

            
	
              Section
      15

            	
              Licensor’s
      Other Business

            	
              21

            
	
              Section
      16

            	
              Non-Agency

            	
              21

            
	
              Section
      17

            	
              Notices
      and Payments

            	
              21

            
	
              Section
      18

            	
              No
      Assignment; No Sublicense; Binding Effect

            	
              23

            
	
              Section
      19

            	
              Arbitration

            	
              23

            
	
              Section
      20

            	
              Contract
      Manufacturers

            	
              24

            
	
              Section
      21

            	
              Protection
      of Licensed Property

            	
              25

            
	
              Section
      22

            	
              Miscellaneous

            	
              26

            
	
              Section
      23

            	
              Limitation
      on Damages

            	
              28

            

       

      
        
          
          

        

        
          
          

          
            

          

        

        
          
          

        

      

      	
              Section
      24

            	
              Force
      Majeure

            	
              28

            
	
              Section
      25

            	
              No
      Franchise Relationship

            	
              29

            
	
              Section
      26

            	
              Confidentiality

            	
              29

            
	
              Section
      27

            	
              Licensee’s
      Performance After Effective Date

            	
              30

            

    

    

     

    

     

    APPENDICES
AND EXHIBITS

     

    
      	
              Licensed
      Marks and Licensed Designs

            	
              Appendix
      A

            
	
              Distribution
      Channels

            	
              Appendix
      B

            
	
              Licensed
      Articles

            	
              Appendix
      C

            
	
              Corporate
      Standards Guide

            	
              Appendix
      D

            
	
              Contract
      Manufacturing Agreement

            	
              Appendix
      E

            
	
              Implementation
      Schedule

            	
              Exhibit
      1

            
	
              Licensed
      Product Final Approval Form

            	
              Exhibit
      2

            
	
              Territory

            	
              Exhibit
      3

            

    

    

     

    
 

     

     

     

    
 

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

    LAURA
ASHLEY, INC.

     

    LICENSE
AGREEMENT

     

    

     

    THIS AGREEMENT (this “Agreement”) is made and entered into
this 19th day of January, 2010, by and between LAURA ASHLEY, INC., a corporation
organized under the laws of the Commonwealth of Massachusetts and having its
principal office at 7000 Regent Parkway, Fort Mill, South Carolina 29715 (the
“Licensor”); and
SIGNATURE EYEWEAR, INC., a corporation organized under the laws of the State of
California and having its principal office at 498 North Oak Street, Inglewood,
CA 90302 (the “Licensee”).

     

    WHEREAS, Licensor has the
exclusive right in various countries around the world to use and sub-license the
use of the LAURA ASHLEY® brand
name and distinctive logo as well as particular trademarks and distinctive
graphic designs on or in connection with the manufacture, importation,
distribution, marketing and sale of certain products;

     

    WHEREAS, Licensee wishes to
license from Licensor the right to use certain trademarks (the “Licensed Marks”) and certain
distinctive graphic designs and patterns (the “Licensed Designs”) identified
on Appendix A attached
hereto for the purposes and subject to the terms and conditions set forth
herein;

     

    WHEREAS, Licensor is willing
to grant to Licensee a limited right and license to use the Licensed Marks and
Licensed Designs for the purposes and subject to the terms and conditions set
forth herein; and

     

    WHEREAS, with the concurrence
of Laura Ashley Limited, an Affiliate of Licensor, it is the intention of the
parties that this Agreement shall replace that certain License Agreement by and
between Laura Ashley Manufacturing B.V. and USA Optical Distributions, Inc.
dated May 29, 1991, as subsequently amended and assigned (the “Original
Agreement”).

     

    NOW, THEREFORE, in
consideration of the mutual promises and covenants expressed herein, the parties
hereto, intending to be legally bound, agree as follows:

     

    1.  
Definitions.   As
used herein, the following terms shall be defined as set forth
below:

     

    (a) “Affiliate” shall mean any
Company that directly or indirectly owns or controls, that is directly or
indirectly owned or controlled by, or that is under common ownership or control
with the referenced Company, including without limitation all parents and
subsidiaries.

     

    (b) “AMR Period” shall mean a
twelve (12) month period commencing January 1. 

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

    (c) “Articles” shall mean
ophthalmic frames for prescription eyeglasses, sunglasses, eyeglass cases and
other accessories and related items.

     

    (d) “Calendar Quarter(s)”, “Quarter(s)”
or “Quarterly” shall mean the three month periods of time consisting of
January through March; April through June; July through September; and October
through December.

     

    (e) “Close-Out Sales” shall mean
sales of Licensed Articles which Licensee has determined to be “close-out goods”
(as defined in Section 9(j) of this Agreement) at prices less than Licensee’s
cost of such Licensed Articles plus twenty percent (20%).  For
purposes of this definition, “cost” of the Licensed Articles means the direct
manufacturing cost of goods paid by Licensee, including the costs of eyeglass
cases, plus freight, transit insurance and delivery charges of the Licensed
Articles to Licensee’s executive offices or a designated warehouse.

     

    (f) “Company” shall mean an
individual, a partnership, a corporation, a limited liability company, a trust,
an estate, a joint venture, an unincorporated association or a government
entity.

     

    (g) “Competitor” shall mean any
Company which sells or has an Affiliate which sells women’s and children’s apparel
and related items under a recognized lifestyle brand name in the same
competitive price range as the Licensor’s apparel.

     

    (h) “Confidential Information”
shall mean any information known to or used by a party (whether or not owned or
developed by the party) that is not generally known to persons in the trade or
business or industry of the party possessing such information, but excluding
Confidential Agreement Information.  Confidential Information
includes, but is not limited to, the following: all trade secrets of a party;
all information that prior to disclosure a party has marked as “confidential” or
has characterized otherwise (either in writing or orally) as confidential; all
nonpublic information concerning the party’s products
or services, prospective products or services, research, prices, discounts,
costs, marketing plans, marketing techniques, market studies, test data, client
identities, client lists and records, suppliers and contracts; a party’s
business records and plans; a party’s personnel files; all financial information
of or concerning the party; and all information relating to operating system
software, application software, software and system methodology, hardware
platforms, technical information, inventions, computer programs, source codes,
technical specifications, computer hardware or software manuals, all training or
instruction manuals, all data on all computer systems, passwords, and user
codes.  For purposes hereof, Confidential Information shall not
include information (i) which becomes or at the time of disclosure to a party
already is known to the public through no fault of the party receiving such
information; (ii) which is disclosed to a party by a third party entitled to
disclose it; (iii) which already is known to a party prior to receipt from the
other; (iv) which a party has divulged to third parties on an unrestricted
basis; or (v) which is developed by a party independently of the information
furnished to that party by the other.

     

    
      
        
        

      

      
        2

        
          

        

      

      
        
        

      

    

    (i) “Confidential Agreement Information”
shall mean the terms and conditions of this Agreement (but not the
existence of this Agreement or the license hereunder), including financial and
other information concerning the marketing, distribution, sales and advertising
of Licensed Articles and royalties under this Agreement except to the extent
publicly disclosed in accordance with Section 26 of this Agreement.

     

    (j) “Contract Term” shall mean
the time periods set forth in this Agreement and designated as the “Initial
Term” and the “Extension Term” during which Licensee shall have the right and
license to use the Licensed Property as provided herein.

     

    (k) “Customer” or “Customers”
shall mean those Companies comprising the Distribution
Channels.  Unless otherwise approved in writing by Licensor, no retail
store(s) which is (are) owned or operated by an Affiliate of Licensee shall be a
Customer hereunder.

     

    (l) “Distribution Channels” shall
mean those retail channels of distribution described on Appendix B attached hereto as
may be amended from time to time with the written consent of Licensee and
Licensor.

     

    (m) “Effective
Date” shall mean January
1, 2009.

     

    (n) “Implementation Schedule”
shall mean the schedule set forth on Exhibit 1 attached hereto,
which schedule provides the timetable for the implementation of the terms of
this Agreement.

     

    (o) “Licensed Articles” shall
mean those particular products listed on Appendix C attached hereto and
on or in connection with which the Licensed Property is displayed.

     

    (p) “Licensed Property” shall
mean the Licensed Marks and the Licensed Designs.

     

    (q) “Net Sales” shall mean gross
sales of Licensed Articles sold by Licensee to the Customers, less customary
trade discounts, shipping and freight charges paid by Licensee and not billed
separately to Customers, transit insurance charges, merchandise returns and
allowances, cooperative advertising allowances given to Customers and any sales,
excise or use taxes paid (but in no event shall any income taxes be deducted
from gross sales of Licensed Articles for the purpose of calculating Net
Sales).  No sales of Licensed Articles to Licensor or any Affiliate of
Licensor shall be included in Licensee’s gross sales of Licensed Articles for
purposes of calculating Net Sales.

     

    (r) “Product Approval Form” shall
mean one or more forms signed by Licensor authorizing the commencement of
marketing and distribution of Licensed Articles by Licensee, samples of which
are attached hereto as Exhibit
2.

     

    (s) “Territory” shall mean those
jurisdictions listed on Exhibit
3 attached hereto.

     

    
      
        
        

      

      
        3

        
          

        

      

      
        
        

      

    

    2.  
Grant of License
Rights.

     

    (a) During
the Contract Term set forth in Section 3 of this Agreement, Licensor, subject to
the terms and conditions herein, hereby grants to Licensee, without the right to
grant sublicenses except as may be otherwise provided herein, (i) a limited,
nontransferable, exclusive right and license to manufacture, have manufactured
on its behalf and market, sell and distribute Licensed Articles in the Territory
to the Customers; and (ii) a limited, nontransferable, nonexclusive right and
license to use and permit the Customers to use the Licensed Property in
connection with the advertising and promotion of all Licensed Articles in the
Territory.  The Licensed Property may not be used by Licensee, or
anyone acting for Licensee, on any products other than the Licensed Articles or
on or in connection with any other goods or services.

     

    (b) Nothing
contained herein shall prohibit Licensor from manufacturing, marketing and
distributing products, other than the Licensed Articles (except as allowed
below), on or in connection with which the Licensed Property is used or
displayed, whether such products are of the type currently being manufactured by
Licensor, or of a new type or variation of products not being manufactured by
Licensor on the date hereof.  Further, Licensor shall have the right
to purchase the Licensed Articles from Licensee at Licensee’s then current
standard wholesale price less thirty-five percent (35%), for sale through stores
or other outlets owned or franchised by Licensor.  Specifically
nothing contained herein shall prohibit Licensor or be deemed to prohibit
Licensor from entering into franchise arrangements for the operation of stores
in the Territory known generally as “Laura Ashley” stores, or some variation
thereof (the “LA
Stores”); and in such event Licensor and/or the franchisee shall have the
right to use the Licensed Property and to manufacture, have manufactured on its
behalf and sell products displaying the Licensed Property which would otherwise
be considered “Licensed Articles” under this Agreement without such manufacture
or sale of the products or use of the Licensed Property constituting a violation
or breach of this Agreement, provided such products are sold only in the LA
Stores.  Licensor and/or a franchisee of Licensor operating an LA
Store or multiple LA Stores first shall offer to purchase the Licensed Articles
from Licensee at Licensee’s then current standard wholesale price less
thirty-five percent (35%).  Licensee in its sole discretion may agree
either to sell or not to sell the Licensed Articles to Licensor and/or a
franchisee; but in the event Licensee declines to sell the Licensed Articles to
Licensor and/or a franchisee, Licensor and/or a franchisee shall be free to
obtain the Licensed Articles from another source.

     

    (c) During
the Contract Term, Licensee shall not engage in any activities which might
adversely affect Licensor’s rights in the Licensed Property or could be
reasonably foreseen to diminish materially Licensee’s ability to meet its
obligations under this Agreement.  Further, Licensee expressly agrees
that as a condition to Licensor’s grant of the right and license described
herein, Licensee shall not make, advertise, promote, distribute or sell any
products or offer or perform any service which in Licensor’s sole discretion,
demeans, damages or in any way adversely affects the “Laura Ashley image” or
Licensor’s goodwill and reputation symbolized by the Licensed Property; and in
the event Licensor objects to any product, service, action or activity of
Licensee on the grounds that it violates this provision of this Agreement,
Licensee immediately shall discontinue such offensive action following its
receipt of notice from Licensor; and if Licensee refuses to do so, Licensor may
terminate immediately this Agreement and the right and license granted
hereunder.

     

    
      
        
        

      

      
        4

        
          

        

      

      
        
        

      

    

    (d) By
separate agreement between Licensee and Laura Ashley Limited (“LA Ltd.”) the parties have
agreed that LA Ltd. shall not grant a license to a third party to use the
Licensed Property on or in connection with the Licensed Articles in any country
not included on the list of countries attached hereto as Exhibit 3 (an “Excluded Country”) until LA
Ltd. first has offered a license in that Excluded Country to
Licensee.  In the event of Licensee desires to extend the right and
license granted hereunder to an Excluded Country, Licensee shall give Licensor
notice of this desire and if LA Ltd. concurs Licensor and LA Ltd. shall take the
appropriate steps to amend Exhibit 3 accordingly.

     

    3.  
Contract Term and Extension
of Contract Term.  The Contract Term shall commence on the
Effective Date and it shall, subject to possible early termination in accordance
with Section 12 hereof, continue in full force and effect until December 31,
2011 (the “Expiration
Date”), which period of time shall be referred to herein as the “Initial
Term.”  Provided (i) the Initial Term has not been terminated
early; (ii) Licensee has performed in all material respects all its obligations
under this Agreement and is not in default with respect to any obligation
hereunder, including in particular but not limited to the timely payment of
royalties due and the timely delivery of accurate reports to Licensor as
required hereunder; (iii) Licensee has satisfied any increased insurance
coverage requirements set forth in Section 10 of this Agreement; and (iv) at
least nine (9) months prior to the Expiration Date, Licensor shall have received
from Licensee a written notice requesting an extension of the Initial Term, the
Contract Term shall be extended to December 31, 2014 (which period of time shall
be referred to herein as the “Extension Term”); provided
not later than six (6) months prior to the Expiration Date the parties shall
have negotiated and executed a written term extension agreement containing any
and all changes to this Agreement which the parties have agreed to modify.  Except with respect to
the amounts of Annual Minimum Royalty (as hereinafter defined) due during the
Extension Term, and any other terms and conditions of this Agreement which the
parties agree should be modified with respect to the Extension Term, all the
other terms and conditions set forth in this Agreement shall remain in full
force and effect during the Extension Term, including in particular but not
limited to Licensor’s right to terminate this Agreement and the right and
license granted hereunder in accordance with Section 12 hereof.  In
the event the Initial Term will not be extended as provided herein, Licensee
acknowledges that during the remainder of the Initial Term, or during the
remainder of the Extension Term if the Initial Term has been extended, Licensor
in its sole discretion may contact and negotiate with parties interested in
becoming licensees for products identical to the Licensed Articles following the
expiration of the Initial Term or the Extension Term, as the case may
be.

     

    4.  
Payments.

     

    (a) Annual Minimum
Royalty.  In consideration of the right and license granted by
Licensor to Licensee hereunder, during the Initial Term of this Agreement
Licensee shall pay to Licensor an annual minimum royalty, which shall be
non-refundable in whole or in part in the event of the early termination of the
Contract Term (the “Annual
Minimum Royalty”), in the following amounts:

     

    
      
        
        

      

      
        5

        
          

        

      

      
        
        

      

    

    (i) with
respect to the AMR Period during the Initial Term commencing on the Effective
Date and concluding December 31, 2009, the sum of $[***];

     

    (ii) with
respect to the AMR Period during the Initial Term  commencing January
1, 2010, and concluding December 31, 2010, the sum of $[***];

     

    (iii) with
respect to the AMR Period during the Initial Term  commencing on
January 1, 2011 and concluding December 31, 2011, the sum of $[***];
and

     

    (iv) with
respect to each AMR Period comprising the Extension Term, a reasonable amount to
be established by Licensor and Licensee at the time the decision to extend the
Initial Term is made, but not less than an amount equal to the amount of Annual
Minimum Royalty paid during the immediately preceding AMR Period increased by
[***].  Thus, the Annual Minimum Royalty due with respect to the first
AMR Period of the Extension Term would be $[***].

     

    (b) Earned Royalty.

     

    (i) In
consideration of the right and license granted by Licensor to Licensee
hereunder, during the Initial Term and the Extension Term if any, except with
respect to Close-Out Sales, Licensee shall pay to Licensor an earned royalty
(the “Earned Royalty”)
in the amount of [***] of the Net Sales of Licensed Articles sold in the
Territory to the Customers.  The Licensed Articles will be deemed sold
when shipped or billed (whichever event occurs first) by Licensee to the
Customers.

     

    (ii) With
respect to all Close-Out Sales of Licensed Articles, Licensee shall pay to
Licensor an earned royalty (the “Close-Out Sales Royalty”) in
the amount of [***] of Close-Out Sales of Licensed Articles sold in the
Territory to the Customers.  The Licensed Articles sold as Close-Out
Sales shall be deemed sold when shipped or billed (whichever occurs first) by
Licensee to Customers.  Close-Out Sales may not exceed [***] of
Licensee’s total gross sales of Licensed Articles during any AMR
Period.  Further, Close-Out Sales may occur only for the purpose of
liquidating Licensee’s inventory of certain Licensed Articles and shall not
include promotional sales or giveaways of Licensed Articles.

     

    (c) Schedule of Payments.  The
Earned Royalty shall be accounted for and paid to Licensor quarterly within
thirty (30) days after the last day of each Calendar Quarter (i.e., by April 30, July 30,
October 30 or January 30, as applicable); or upon early termination or
expiration of the Contract Term, within ten (10) days following the conclusion
of the Sell-Off Period (as hereinafter defined) or any earlier effective date of
termination as may be established 

     

    
      
        
        

      

      
        6

        
          

        

      

      
        
        

      

    

    by the
parties hereto.  Following the conclusion of each AMR Period, an
accounting shall be conducted to ensure that with respect to that AMR Period
Licensee shall have paid to Licensor the greater of (i) the amount of the Annual
Minimum Royalty due with respect to that AMR Period, or (ii) the Earned Royalty
due with respect to Net Sales of Licensed Articles which occurred during that
AMR Period.  To the extent the Earned Royalty paid with respect to
that just concluded AMR Period is less than the Annual Minimum Royalty due for
that AMR Period, Licensee shall pay that shortfall amount to Licensor no later
than January 30 following the end of that AMR Period.  There shall
be no carryover of Earned Royalty from one AMR Period to another.  All
payments due Licensor hereunder shall be made in United States currency and
delivered to Licensor at the address set forth herein at Section 17, or at such
other address as Licensor may specify by notice to Licensee.

     

    (d) Quarterly
Reports.  Licensee shall deliver to Licensor, together with
each payment of Earned Royalty, a statement (the “Quarterly Report”) certified
by a duly authorized officer of Licensee as accurate in a form substantially as
shown on Exhibit 4
attached hereto, including a computation of the amount of Earned Royalty payable
for the Calendar Quarter (or shorter period, if applicable) then
concluded.  With respect to the fourth Calendar Quarter of each AMR
Period, the Quarterly Report also shall contain a calculation of the amount of
any Annual Minimum Royalty which is due Licensor with respect to the just
concluded AMR Period.

     

    (e) Late Charges and
Interest.  For each payment of Earned Royalty and Annual
Minimum Royalty which Licensor receives more than five (5) business days
following the due date for such payment, in addition to any other rights and
remedies which Licensor may have under this Agreement, Licensor shall be
entitled to receive a late charge equal to five percent (5%) of the overdue
payment; and in addition, Licensor shall be entitled to receive interest on the
amount of the overdue payment accrued from the date such payment was due until
paid in full at a rate equal to the lesser of eighteen percent (18%) per annum
or the maximum rate then allowable under applicable state
law.  Licensor shall invoice Licensee for the late charge(s) and
interest due; and within five (5) days of its receipt of such invoice, Licensee
shall pay Licensor the invoiced amount in full.  If Licensee fails to
pay any such invoice for the late charge(s) and interest due within the
prescribed time, such failure shall constitute an event of default under this
Agreement and Licensor then may pursue such rights and remedies as are provided
under this Agreement, including the right to terminate this Agreement and the
right and license granted herein in accordance with Section 12(a) of this
Agreement.

     

    (f) Taxes.  Licensee
shall withhold from all payments of Earned Royalty and Annual Minimum Royalty
due Licensor pursuant to this Agreement any sums required to be withheld for the
account of Licensor under the applicable tax laws of any jurisdiction comprising
the Territory.  Licensee shall pay such sums to the appropriate tax
authorities and shall furnish Licensor with the official tax receipt or other
appropriate evidence of payment issued by such tax authorities.

     

    
      
        
        

      

      
        7

        
          

        

      

      
        
        

      

    

    5.  
Marketing and Promotional
Activities.

     

    (a) Annual Sales
Plan.  No later
than January 15, 2010, Licensee shall submit to Licensor for Licensor’s approval
a written sales plan (the “Annual Sales
Plan”) describing the
sales and marketing plan for Licensed Articles for the 2010 AMR
Period.  The Annual Sales Plan, which shall be in the same format and
contain substantially the same information (including an estimate of the total
Net Sales of all Licensed Articles during the upcoming AMR Period), as the
sample Annual Sales Plan previously submitted to and approved by Licensor shall
be updated and resubmitted annually to Licensor for Licensor’s approval on or
before January 15 (or if such date is not a business day, the following business
day) of each AMR Period comprising the Contract Term. 

     

    (b) Marketing and Promotional
Expenditures.  In implementing the Annual Sales Plan, Licensee
hereby agrees to spend for advertising and promoting the Licensed Articles
during each AMR Period during the Contract Term, commencing with the AMR Period
starting January 1, 2010, at least an amount equal to [***] of Net Sales of
Licensed Articles occurring during the preceding AMR Period (the “Minimum Advertising
Expenditure”); provided however, that during any AMR Period at least
[***] of the Minimum Advertising Expenditure shall be spent for print
advertising in suitable trade and consumer publications and/or for co-operative
advertising with the Customers.  In the discretion of Licensor, the
failure by Licensee to spend the Minimum Advertising Expenditure set forth
herein during any AMR Period, shall be deemed either an event of default under
Section 12(a) hereof, or the amount of any deficiency shall be added to the
Minimum Advertising Expenditure for the following AMR
Period.  Licensee understands and acknowledges that, in addition to
the Minimum Advertising Expenditure which Licensee is required to make
hereunder, and any additional expenses incurred by Licensee for the advertising
and promotion of the Licensed Articles, Licensor in its sole discretion may
elect to conduct its own advertising campaign(s) designed to increase the public
awareness of the LAURA ASHLEY® brand
generally, the cost of which shall be paid solely by Licensor.

     

    6.  
Marking Licensed Articles;
Advertising and Promotional Materials.

     

    (a) The
Licensed Property shall be displayed by Licensee only in strict conformity with
the written display standards and specifications (the “Corporate Standards Guide”)
attached hereto as Appendix
D, and the Corporate Standards Guide as it may be amended from time to
time by Licensor after giving at least ninety (90) days prior notice of any such
modification to Licensee.  Failure to display the Licensed Property in
strict conformity with the Corporate Standards Guide shall be an event of
default under this Agreement as described in Section 12 hereof.

     

    (b) No
container, package, carton, wrapper, advertising or promotional piece (in
whatever medium), or any other material used in connection with the Licensed
Articles shall be published or otherwise distributed to the public or to the
Customers by Licensee without the prior written approval of
Licensor.  Once Licensor has approved an item, Licensee shall not make
any change to the item, other than a non-material change to an advertising or
promotional piece, without Licensor’s prior written
approval.  Licensor and Licensee may agree on the placement of an
appropriate copyright notice on graphic materials used by Licensee in connection
with the Licensed Articles.

     

    
      
        
        

      

      
        8

        
          

        

      

      
        
        

      

    

    (c) Licensee
shall bear the cost of producing all advertising, promotional, packaging and
other materials on which Licensee displays the Licensed Property.

     

    (d) In the
event that Licensee permits a Customer to use the Licensed Property in
connection with the advertising and promotion of the Licensed Articles
hereunder, Licensee shall ensure that the Customer complies in all respects with
the requirements imposed on Licensee by this Section 6, including in particular
the obligation to obtain the prior written approval of Licensor with respect to
any advertising or promotional piece (in whatever medium) that displays the
Licensed Property which the Customer intends to use.

     

    (e) Licensor
shall not unreasonably withhold or delay giving any approval or consent required
or requested of it under this Section 6 or elsewhere under this Agreement; and
wherever possible Licensor will give Licensee a written explanation of its
reasons for denying such approval or consent in order to allow Licensee to make
such modifications as may be necessary to deal satisfactorily with such
objections as Licensor may have.

     

    7.  
Undertakings,
Representations and Warranties of the Parties.

     

    (a) Licensee
agrees that the right and license granted under this Agreement are conditioned
upon Licensee’s using commercially reasonable efforts and undertaking all
reasonable actions at Licensee’s sole expense to maximize sales of the Licensed
Articles to the Customers.  Licensee shall not in any way use the
Licensed Property except as specifically authorized by this
Agreement.

     

    (b) With
respect to each AMR Period during the Contract Term commencing with the AMR
Period beginning January 1, 2010, at its sole expense Licensee shall provide to
Licensor at least four (4) new model images showing the Licensed Articles which
Licensor can use for its own marketing purposes.  Licensee shall take
all necessary actions to ensure that during the Contract Term Licensor has the
rights to use all such images in the United States, Canada and
Mexico.

     

    (c) Licensee
agrees that it will fulfill its obligations under this Agreement in accordance
with the Implementation Schedule set forth on Exhibit 1 attached
hereto.

     

    (d) Licensee
shall not sell the Licensed Articles to any person who is not a Customer or to
any Customer which Licensee knows or has reason to suspect to be reselling or
shipping the Licensed Articles outside the Territory or participating in any
arrangement the result of which is the resale or shipment of the Licensed
Articles outside the Territory.

     

    (e) Licensee
represents and warrants as follows:

     

    (i) Licensee
is a corporation duly formed and existing under the laws of the jurisdiction of
its formation, and is properly qualified to conduct business in that
jurisdiction and in all other places where qualification to conduct business is
required;

     

    
      
        
        

      

      
        9

        
          

        

      

      
        
        

      

    

    (ii) Licensee
has the requisite corporate power and authority to enter into this Agreement and
the execution and delivery of this Agreement and Licensee’s performance of its
duties and obligations hereunder have been authorized by appropriate corporate
action;

     

    (iii) Licensee’s
execution and delivery of this Agreement and Licensee’s performance of its
duties and obligations hereunder will not violate or constitute a default under
any other agreement to which Licensee is a party;

     

    (iv) the
Licensed Articles will  be of a quality substantially consistent with
the standards specified in the “Product Specifications” (as hereinafter defined)
and will be sold subject to Licensee’s standard product warranty which protects
buyers from defects or error in design or workmanship;

     

    (v) the
Licensed Articles will be of merchantable quality and shall be fit for the
purposes for which they are intended and shall be sold subject to Licensee’s
standard product warranty; and

     

    (vi) Licensee
shall not violate the rights of any third party in the advertising, manufacture
or distribution of the Licensed Articles, provided however, it shall not be a
breach of this representation and warranty if the violation of a third party’s
rights is due to Licensee’s use of the Licensed Property pursuant to this
Agreement.

     

    (f) Licensor
represents and warrants as follows:

     

    (i) Licensor
is a corporation duly formed and existing under the law of the jurisdiction of
its incorporation, and is properly qualified to conduct business in that
jurisdiction and in all other places where it conducts business;

     

    (ii) Licensor
has the requisite corporate power and authority to enter into this Agreement and
the execution and delivery of this Agreement and Licensor’s performance of its
duties and obligations hereunder have been authorized by appropriate corporate
action;

     

    (iii) Licensor’s
execution and delivery of this Agreement and Licensor’s performance of its
duties and obligations hereunder will not violate or constitute a default under
any other agreement to which Licensor is a party;

     

    (iv) Licensor
has the right and authority to license the Licensed Property as set forth
herein; and

     

    (v) there are
no claims, actions, lawsuits or proceedings commenced, pending or threatened
against Licensor which will or might adversely 

     

    
      
        
        

      

      
        10

        
          

        

      

      
        
        

      

    

    affect
the grant of the license, rights, and benefits to Licensee hereunder; and, to
the best of its knowledge, Licensor knows of no grounds existing on the
Effective Date on which claims, actions, lawsuits or proceedings might be
commenced against Licensor with respect to the Licensed Property.

     

    8.  
Books and Records; Audits;
Financial Statements.

     

    (a) Licensee
shall prepare and maintain complete and accurate books of account and records
(specifically including without limitation the originals or copies of documents
supporting entries in the books of account and records) covering all
transactions arising out of or relating to this Agreement.  Licensor
and its duly authorized representatives, upon appropriate advance notice to
Licensee, shall have the right, during regular business hours, for the duration
of this Agreement, and for a term of three (3) years following the early
termination or the expiration of this Agreement, to audit said books of account
and records and examine all other documents and materials in the possession of,
or under the control of, Licensee with respect to the subject matter of this
Agreement.  All such books of account, records and documents shall be
kept available by Licensee for at least three (3) years after the early
termination or expiration of this Agreement.

     

    (b) If, as a
result of any audit of Licensee’s books and records, it is shown that with
respect to any Calendar Quarter during the Contract Term, payments made to
Licensor pursuant to Section 4 above were less than the amount which actually
should have been paid, Licensee immediately shall pay such shortfall to
Licensor; and if the amount of this shortfall is equal to five percent (5%) or
more of the payment actually due Licensor, Licensee shall reimburse Licensor for
the cost to Licensor of such audit.  Such payments shall be made
within ten (10) business days following delivery to Licensee of a written demand
for payment by Licensor.

     

    9.  
Quality Standards;
Compliance with Applicable Laws; Close-Out Sales; New Marks.

     

    (a) Licensee
acknowledges that the sale of Licensed Articles of poor quality to the Customers
and/or the failure of Licensee to deliver the Licensed Articles to the Customers
in a timely manner will have an adverse effect on Licensor’s name, business
reputation, business and business prospects and will cause Licensor irreparable
harm.  Licensee therefore covenants and agrees that (i) all Licensed
Articles shall be manufactured in a manner consistent with the standards
specified in the “Product Specifications” as hereinafter defined and will
consist of a quality of materials which is equal to or better than the quality
of materials set forth in the Product Specifications; (ii) the Licensed Property
will be used and displayed at all times in strict conformity with the Corporate
Standards Guide; (iii) Licensee shall comply with the additional terms and
conditions set forth in the Product Approval Form; and (iv) the Licensed
Articles shall be delivered to the Customers in a timely manner according to the
timetables agreed to by the Customers and Licensee.

     

    
      
        
        

      

      
        11

        
          

        

      

      
        
        

      

    

    (b) Upon
written request of Licensor, Licensee shall provide Licensor with a copy of
Licensee’s written product specifications and tolerances (the “Product
Specifications”) regarding the manufacture of the Licensed
Articles.

     

    (c) At least
thirty (30) days prior to the scheduled date for commencing distribution of any
product comprising the Licensed Articles, Licensee shall submit to Licensor for
its approval, sufficient samples of each item comprising the Licensed Articles
to be manufactured and sold by Licensee, together with the containers, packages,
cartons and the like therefor, so that Licensor, in its sole discretion, shall
be satisfied that Licensee will be able to meet and maintain the quality
standards established hereunder for the Licensed Articles.  Licensee
must submit samples from each and every location which will manufacture and ship
the Licensed Articles hereunder.

     

    (d) Upon
being satisfied with the quality of the samples of the Licensed Articles and the
Annual Sales Plan submitted, Licensor shall deliver a Product Approval Form to
Licensee with respect to all or particular items comprising the Licensed
Articles.  No item comprising the Licensed Articles shall be
manufactured, sold or distributed by Licensee until Licensor has delivered a
Product Approval Form covering that item.

     

    (e) Subsequent
to the issuance of a Product Approval Form, Licensee shall not make any change
in the Licensed Articles or the containers, packages, cartons or the like
without Licensor’s prior written approval, which may be withheld in Licensor’s
reasonable discretion.

     

    (f) During
the Contract Term, upon request of Licensor, Licensee shall submit, at no cost
to Licensor, randomly selected then current production samples of each item of
the Licensed Articles from each facility manufacturing the Licensed Articles so
that Licensor may assure itself of the maintenance of the quality standards set
forth in the Product Specifications.  Licensor also shall have the
right, upon reasonable advance notice to Licensee, to (i) inspect the
manufacturing process for each item comprising the Licensed Articles produced
under this Agreement at whatever place or places they may be manufactured; (ii)
inspect any warehouses or distribution facilities being used by Licensee to
distribute the Licensed Articles; and (iii) randomly collect samples of the
Licensed Articles and any advertising, promotional, packaging and other
materials on or in connection with which the Licensed Property is
displayed.

     

    (g) If, at
any time, any item comprising the Licensed Articles or any advertising,
promotional item, packaging or other materials on or in connection with which
the Licensed Property is displayed is disapproved by Licensor, Licensor shall so
advise Licensee and, upon Licensee’s receipt of such advice, Licensee shall
immediately cease production and/or distribution of the defective item and
further shall undertake immediate steps to correct the defect.  If the
defect is not immediately corrected, or steps satisfactory to Licensor are not
initiated which will correct the defect, the Product Approval Form with respect
to that defective item shall be deemed revoked. Thereafter, Licensee shall not
manufacture or ship that item until a new Product Approval Form has been issued
for that item.

     

    (h) Each item
comprising the Licensed Articles shall be manufactured, packaged, labeled, sold
and distributed in accordance with all applicable national, state, territorial,

     

    
      
        
        

      

      
        12

        
          

        

      

      
        
        

      

    

    local or
other laws and regulations.  Licensor’s approval of any sample or any
advertising, promotional item, packaging or other materials shall not be
construed to mean that Licensor has determined that the sample or any
advertising, promotional item, packaging or other materials is free of any
defects or errors in design, workmanship, content or otherwise conforms to the
laws or regulations of any jurisdiction.

     

    (i) Licensee
shall display the Licensed Property only in such form and manner as is
specifically approved by Licensor.  Licensee also shall cause to
appear on each item comprising the Licensed Articles, and the containers,
packages, cartons and the like for the Licensed Articles, such legends, markings
and notices as may be required by any law or regulation of the jurisdictions
comprising the Territory, required pursuant to the Corporate Standards Guide or
as Licensor reasonably may request.  Upon receiving notice from
Licensor that Licensee’s use of a legend, registration notice or a
trademark/service mark symbol is incorrect or otherwise deemed unacceptable,
Licensee promptly shall modify such legend, notice or symbol as required by
Licensor.

     

    (j) Licensee
may sell close-out goods (as hereinafter defined) comprising the Licensed
Articles provided that  (i) the total amount of
Close-Out Sales in any AMR Period does not exceed an amount equal to [***] of
Licensee’s total annual gross sales of the Licensed Articles during such AMR
Period; and (ii) such close-out goods are sold only to Customers. The Quarterly Report
shall include an itemized statement identifying all Close-Out Sales and
quantities sold and showing how the royalty payments were
calculated.  For purposes of this Agreement, “close-out goods” shall mean
items comprising the Licensed Articles which Licensee reasonably and in good
faith has determined are unsaleable at original prices due to style or customer
preference changes or are unsaleable at original prices due to season
change.

     

    (k) Except as
may be approved by Licensor in advance, Licensee shall not permit any close-out
goods to be disposed of within or outside the Territory in any manner except by
sale by Licensee as prescribed herein.  In the event a contract
manufacturer has in its inventory Licensed Articles which have become close-out
goods, Licensee shall instruct that contract manufacturer to destroy those
Licensed Articles.

     

    (l) If
Licensor adopts or otherwise becomes entitled to license a new trademark or a
variation of a Licensed Mark for use on or in connection with the Licensed
Articles (a “New
Mark”), Licensor, in its sole discretion, may designate such New Mark as
one of the Licensed Marks hereunder.  Licensee shall use such New Mark
on or in connection with the Licensed Articles in accordance with the provisions
of this Agreement.  Licensee hereby acknowledges and agrees that in
the event Licensee in any manner participates in or contributes to the creation,
development and selection of a New Mark, Licensor or Licensor’s designee, shall
be the sole owner of that New Mark and any applications to register a trademark
and registrations thereof in all jurisdictions throughout the world; and to the
extent Licensee has or acquires any property rights in said New Mark, Licensee
hereby assigns to Licensor for no additional consideration all its right, title
and interest in said New Mark and any applications to register a trademark and
registrations thereof throughout the world. Licensor, or its designee, shall
bear the entire cost of registering or otherwise protecting and enforcing its
rights in a New Mark.

     

    
      
        
        

      

      
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    10.  
Insurance.

     

    (a) At its
expense, Licensee shall procure and maintain in full force and effect at all
times during which the Licensed Articles are being sold, and for a period of
three (3) years thereafter, with commercial insurance carriers acceptable to
Licensor, at least Five Million Dollars ($5,000,000) of primary products
liability insurance coverage with respect to its manufacture and sale of the
Licensed Articles.  Such insurance coverage shall name Licensor as an
additional insured and shall provide for a minimum of twenty (20) days’ prior
written notice to Licensor in the event of an intent by Licensee or the
insurance carriers to cancel or substantially modify the insurance
coverage.  Such insurance coverage may be obtained in conjunction with
a policy of product liability insurance which covers other products manufactured
and/or sold by Licensee.

     

    (b) Licensee
represents and warrants to Licensor that it has obtained and will maintain
during the Contract Term adequate business insurance coverages in such amounts
so that in the event of a loss or claim Licensee will be able to fulfill its
obligations under this Agreement and/or that are required by the laws and
regulations of any jurisdiction in which Licensee manufacturers, distributes or
sells the Licensed Articles.

     

    (c) Licensee
shall, on an annual basis within thirty (30) days after the beginning of each
AMR Period commencing with the 2010 AMR Period, furnish or cause to be furnished
to Licensor a certificate(s) of insurance, or upon Licensor’s request, a
certified copy of said insurance policy(ies), evidencing the maintenance of the
insurance coverages required by Section 10(a).

     

    (d) Prior to
the expiration of the Initial Term, Licensor shall have the right to review the
insurance requirements set forth in this Section 10, and if Licensor, in its
good faith business judgment believes that such requirements do not adequately
protect Licensor, and Licensee has had any claim against its primary product
liability insurance in excess of $ 250,000, Licensor and Licensee jointly shall
determine an appropriate increase in the insurance coverages to be maintained by
Licensee.  If after good faith efforts Licensor and Licensee cannot
agree on the amount of the increased insurance coverages, Licensor may elect not
to extend the Term of this Agreement notwithstanding the provisions set forth in
Section 3 of this Agreement.

     

    11.  
Indemnification.

     

    (a) Except
with respect to a matter for which Licensor is obligated to indemnify Licensee
under this Agreement, Licensee hereby agrees to indemnify and hold harmless
Licensor, its officers, directors, employees and agents from and against any and
all claims, suits, losses, damages and/or expenses (including reasonable
attorneys’ fees) which Licensor may incur or be obligated to pay, or for which
Licensor may become liable or be compelled to pay for or by reason of any acts,
whether of omission or commission, that may be committed or permitted by
Licensee, or by any of Licensee’s contractors, agents or employees, in
connection with or related to Licensee’s performance or non-performance under
this Agreement or the manufacture, sale and/or distribution of the Licensed
Articles.  Licensor promptly shall give Licensee written notice of any
such action, claim or proceeding following its receipt of notice 

     

    
      
        
        

      

      
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    thereof.  Licensee
shall have the opportunity to undertake and to control the defense and
settlement thereof through attorneys selected and paid by Licensee after notice
to and consultation with Licensor and good faith negotiations relating to
alternative counsel if Licensor has reasonable objections to Licensee’s choice
of counsel.  Notwithstanding the foregoing, Licensee shall not,
without the prior consent of Licensor, (which consent shall not be unreasonably
withheld, qualified or conditioned) settle or compromise any claim or consent to
the entry of any judgment which would affect Licensor or the value, reputation
or prestige of the Licensed Property.  Licensor shall cooperate with
Licensee in the investigation, defense and settlement of any such action, claim
or proceeding and shall have the right to participate in (but not to control)
any such defense through counsel of its own choice paid by
Licensor.  If Licensee elects not to undertake the defense of any such
claim, it shall reimburse Licensor for any expenses reasonably incurred by
Licensor, including but not limited to reasonable attorneys, accountants, and
other experts’ fees and expenses, in the investigation, defense and settlement
of such claim and in enforcing its rights pursuant to this Section 11(a), in
addition to any damages ultimately incurred by Licensor.  The
foregoing obligation of Licensee to indemnify and hold harmless Licensor shall
include any claims, causes of action, fines, damages, awards and/or expenses
resulting from an alleged or established defect in an item comprising the
Licensed Articles and a violation of any statute, rule, regulation or ordinance
in any jurisdiction within or outside the Territory regarding the employment or
contracting of minors or children in a manufacturing facility.

     

    (b) Licensor
hereby agrees to indemnify and hold harmless Licensee, its officers, directors,
employees and agents from and against any and all claims, suits, losses, damages
and/or expenses (including reasonable attorneys’ fees) which Licensee incurs, or
for which Licensee may become liable or be compelled to pay in any action,
claim, or proceeding against Licensee for infringement of trademark, copyright
or other intellectual property rights (other than infringement of patent rights)
or unfair competition occurring as a result of Licensee’s use of the Licensed
Property hereunder; provided (i) Licensor is given prompt notice of any such
action, claim or proceeding; (ii) Licensee has complied strictly in all respects
relevant to the claim with the terms and conditions of this Agreement pursuant
to which the Licensed Property is to be used and the Licensed Articles are to be
manufactured, marketed and sold; and (iii) if Licensor elects to defend against
such an action, claim or proceeding, Licensee has cooperated fully with Licensor
in the defense of any such action, claim or proceeding.  If Licensor
elects to defend any such action, claim or proceeding in connection with which
Licensor shall be obligated to indemnify Licensee hereunder, Licensor shall
engage legal counsel to represent both Licensee and
Licensor.  Licensor shall manage and control the defense of such
action, claim or proceeding, and shall keep Licensee fully informed of all
developments in the matter, including the details of any settlement negotiations
and agreement; but Licensee shall have the right to participate in (but not to
control) any such defense through counsel of its own choice paid by
Licensee.

     

    (c) The
provisions of this Section 11 and Licensee’s obligations hereunder shall survive
the early termination or expiration of the Contract Term.

     

    12.  
Events of Default;
Termination.

     

    
      
        
        

      

      
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    (a) Licensor
and Licensee agree that the following shall constitute events of default by
Licensee:

     

    (i) if
Licensee shall fail to make any payment due Licensor or Licensor’s Affiliate
hereunder within the time periods provided in this Agreement, and if such
failure shall continue for a period of fifteen (15) business days following
written notice of non-payment; or

     

    (ii) if
Licensee shall fail to deliver to Licensor an updated Annual Sales Plan on or
before the date required by Section 5 hereof; or

     

    (iii) if
Licensee shall fail to submit, by the date specified in Section 9(c) hereof, to
Licensor for Licensor’s approval samples of each item comprising the Licensed
Articles to be sold by Licensee, together with samples of the containers,
packages, cartons and the like therefor; or

     

    (iv) if, as
required by Section 6(b), Licensee shall fail to submit to Licensor for its
approval prior to placement thereof copies of all proposed advertising and
promotional materials to be used in connection with the Licensed Articles;
or

     

    (v) if a
secured party accelerates an obligation of Licensee and notifies Licensee of its
intent to foreclose a security interest in the Licensed Articles;
or

     

    (vi) if
Licensee fails to manufacture, market, distribute and sell the Licensed Articles
in strict conformity with the Product Specifications and the Corporate Standards
Guide; or

     

    (vii) if due to
a defect or an error in design, workmanship, labeling or advertising any item or
items comprising the Licensed Articles is or are recalled or the distribution
and sales of such Licensed Articles are prohibited pursuant to any court order
or pursuant to any government issued order, mandate or doctrine such that in
Licensor’s sole judgment the ability of Licensee to perform fully its
obligations under this Agreement has been materially impaired; or

     

    (viii) if
Licensee fails to manufacturer, market, distribute and sell the Licensed
Articles substantially in accordance with the terms of the Annual Sales Plan
(recognizing that the Annual Sales Plan is a projection and not a commitment to
achieve specific levels of sales of Licensed Articles); or

     

    (ix) Licensee
discontinues the distribution of the Licensed Articles for a period of thirty
(30) consecutive days, or sixty (60) days in the aggregate during any AMR Period
during the Contract Term; or

     

    (x) if
Licensee fails to sell the Licensed Articles only to Customers; or

     

    
      
        
        

      

      
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    (xi) if
Licensee breaches in any material respect any representation or warranty made
under this Agreement or fails to satisfy or fully perform in any material
respect any of the other terms, conditions, agreements, covenants or obligations
under this Agreement; or

     

    (xii) if
Licensee fails to fulfill its obligations under Section 20 of this Agreement
regarding the termination of a contract manufacturer; or

     

    (xiii) without
the prior written approval of Licensor, if at least fifty-one percent (51%) of
the voting control of Licensee vests in a person or a Company which itself is
reasonably deemed to be a Competitor of Licensor or which is under the control
of a person or Company which is reasonably deemed to be a Competitor of
Licensor;

     

    then,
upon the occurrence of any of the foregoing events of default, Licensee shall
have committed a material breach of this Agreement and Licensee shall be in
default hereunder.

     

    (b) With
respect to the events of default other than the events of default in Sections
12(a)(i), 12(a)(v), 12(a)(vii) and 12(a)(xiii), if after having given Licensee
written notice of such an event of default and Licensee’s having failed to
correct or cure such event of default or take steps reasonably acceptable to
Licensor to cure or correct such event of default within thirty (30) days after
receipt of the notice of default, Licensor, in its sole discretion shall have
the right to pursue any right or remedy it may have at law or equity or
otherwise under this Agreement, and in addition thereto, may terminate the
Contract Term effective upon the date specified in such notice.

     

    (c) With
respect to the events of default described in Sections 12(a)(i), 12(a)(v),
12(a)(vii) and 12(a)(xiii), Licensor shall not be required either to provide
Licensee with any notice of default or to permit Licensee an opportunity to
correct or cure an event of default, and Licensor may pursue any rights or
remedies it may have at law or equity or under this Agreement including the
termination of the Contract Term; and if Licensor elects to terminate the
Contract Term, Licensor shall give Licensee written notice of termination, and
the Contract Term shall terminate upon the date specified in such
notice.

     

    (d) Licensor
and Licensee agree that, in the event of a default, the damages that Licensor
would sustain as a result thereof would be difficult to ascertain; and
therefore, Licensor and Licensee agree that Licensor in its sole discretion may
elect to receive the total amount of the Annual Minimum Royalty due during the
balance of the Contract Term and retain the right to enforce the indemnities and
other provisions of this Agreement which expressly survive a termination of this
Agreement, as full and complete liquidated damages.  Notwithstanding
the foregoing, in no event shall the foregoing “liquidated damages” provision
apply to or limit the damages recoverable by Licensor with respect to (w)
Licensee’s obligation to indemnify Licensor in accordance with this Agreement;
(x) third-party claims; (y) Licensee’s failure to perform any obligations which,
by the express terms of this Agreement, survive the termination of this
Agreement; or (z) the obligations of the parties pursuant to any other
instrument or agreement executed by the parties in connection with this
Agreement.

     

    
      
        
        

      

      
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    (e) Licensee
may terminate this Agreement upon thirty (30) days’ advance written notice to
Licensor in the event that Licensor breaches any material representation,
warranty, condition, covenant or obligation made under this Agreement (a
“Licensor Event of Default”), and fails to cure such breach during such thirty
(30) day period.  In the event that Licensee terminates this Agreement
due to a Licensor Event of Default, Licensee shall not be required to pay to
Licensor any additional installment of Annual Minimum Royalty, but shall remain
obligated to pay Licensor (i) all Earned Royalty due with respect to Net Sales
as of the effective date of termination of the Contract Term; (ii) all royalty
due with respect to Net Sales occurring during the Sell-Off Period (as
hereinafter defined); and (iii) all other amounts due Licensor as of the
effective date of termination of the Contract Term.

     

    (f) Upon the
expiration or early termination of the Contract Term for any reason whatsoever,
and except as provided in Section 13 hereof, all rights in the Licensed Property
automatically shall revert to Licensor, and Licensee immediately shall cease
and, thereafter, refrain from all use of (i) the Licensed Property (by
destroying or returning to Licensor at no cost to Licensor all materials
displaying the Licensed Property, excluding finished goods comprising the
Licensed Articles which shall be handled in accordance with Section 13 hereof);
(ii) any trademarks, designs and patterns which are similar to the Licensed
Marks and the Licensed Designs; and (iii) any containers, packages, cartons,
wrappers, advertising and promotional pieces (in whatever medium) and all
similar materials displaying the Licensed Property.

     

    (g) Notwithstanding
the early termination or expiration of the Contract Term, neither Licensor nor
Licensee shall be released from any obligation that accrued prior to the date of
expiration or early termination; and Licensor and Licensee shall remain bound by
the provisions of this Agreement which by their terms impose upon Licensee
obligations extending beyond the effective date of early termination or
expiration of the Contract Term.

     

    (h) Upon the
occurrence of an event of default described in Section 12(a), Licensor, in its
sole discretion and in addition to any other right or remedy it may have at law
or in equity or otherwise under this Agreement, may elect to suspend rather than
terminate the right and license granted hereunder by giving written notice of
such suspension to Licensee, and the right and license granted hereunder shall
be suspended until such time as pursuant to written notice Licensor reinstates
said Licensee rights under this Agreement.  During any such period of
suspension of the licensed rights granted under this Agreement, Licensee shall
cease all advertising, promotion, manufacture and distribution of the Licensed
Articles in the Territory; but Licensee’s obligations to Licensor under this
Agreement shall remain unaffected, including but not limited to Licensee’s
obligations to pay the Annual Minimum Royalty.

     

    (i) Within
thirty (30) days following the early termination or expiration of the Contract
Term, Licensee shall return to Licensor, and Licensor shall return to Licensee,
all Confidential Information of the other party.

     

    (j) Within
thirty (30) days following the early termination or expiration of the Contract
Term, upon Licensor’s written request, Licensee shall return to Licensor all
original catalogs, brochures, photographs, computer assisted designs, “chromes,”
digital electronic images 

     

    
      
        
        

      

      
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    and files
and any other materials fixed or embodied in any form or medium whatsoever, and
all copies, abstracts, summaries, derivations or compilations thereof, which
were furnished to Licensee or which were created or developed by Licensee during
the Contract Term using materials supplied by Licensor and with respect to which
Licensor owns, controls or claims exclusive proprietary rights
therein.

     

    13.  
Inventory at License
Termination or Expiration.

     

    (a) At least
sixty (60) days prior to the expiration of the Contract Term, or within fifteen
(15) days following the effective date of any early termination of the Contract
Term, Licensee shall provide to Licensor a detailed written report describing
the type, quantity and location of each product comprising the Licensed Articles
(the “Inventory
Report”).  Specifically, the Inventory Report shall identify
which Licensed Articles are finished goods ready to be shipped to Customers;
which are sold goods shipped to Customers but for which Licensee has not
received payment; which are work-in-progress goods subject to non-cancellable
manufacturing orders which at some future date will be delivered to Licensee,
and which are subject to binding purchase orders from customers (collectively,
“Termination
Inventory”).

     

    (b) All sales
of Licensed Articles pursuant to Customer orders received by Licensee before the
effective date of the early termination or expiration of the Contract Term, but
with respect to which the Licensed Articles have not been shipped or billed
prior to the effective date of early termination or expiration, nevertheless
shall be deemed Net Sales occurring prior to the effective date of early
termination or expiration of the Contract Term.  Thus, Licensee shall
pay Earned Royalty with respect to all such Net Sales.

     

    (c) Upon the
early termination or expiration of the Contract Term, Licensee shall have two
hundred and seventy (270) days from the date on which termination or expiration
becomes effective (the “Sell-Off Period”) to sell
within the Distribution Channels all Termination Inventory provided in the case
of early termination, the termination has not been caused by Licensee’s failure
to manufacture and sell the Licensed Articles in strict compliance with the
Product Specifications, the Corporate Standards Guide and/or the Product
Approval Form and provided further that the selling prices for such Licensed
Articles are at least equal to sixty percent (60%) of the established selling
prices for the Licensed Articles prior to the date of termination or
expiration.  At the conclusion of the Sell-Off Period, a duly
authorized officer of Licensee shall certify in writing to Licensor that all the
Licensed Articles either have been sold in compliance with the provisions of
this Section 13 or destroyed.  With this certification, Licensee shall
pay Licensor a royalty of [***] of the sales price of the Termination Inventory
sold during the Sell-Off Period.

     

    (d) Notwithstanding
the early termination or expiration of the Contract Term, during the Sell-Off
Period all the terms and conditions set forth in this Agreement shall remain in
full force and effect.

     

    14.  
Ownership of Licensed
Property.

     

    
      
        
        

      

      
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    (a) Licensee acknowledges that, as between
Licensee and Licensor, Licensor shall be deemed to be the owner of all right,
title and interest in and to the Licensed Property in any and all forms or
embodiments thereof; the owner of all right, title and interest in and to the
trademark and copyright registrations of the Licensed Property existing in the
jurisdictions comprising the Territory as well as any pending applications to
register the Licensed Property; and the owner of the goodwill attached or which
shall become attached to the Licensed Property in connection with the business
and goods in relation to which the Licensed Property has been, is and shall be
used.  Sales of the Licensed Articles by Licensee shall be deemed to
have been sales made by Licensor for purposes of trademark rights and
registration, and all uses of the Licensed Marks by Licensee shall inure to the
benefit of Licensor.  Licensee shall not, at any time, do or permit to
be done any act or thing which may in any way adversely affect any rights of
Licensor in and to the Licensed Property or any registrations thereof or which,
directly or indirectly, may reduce the value of the Licensed Property or detract
from its reputation.

     

    (b) At
Licensor’s request, Licensee shall execute any documents reasonably required by
Licensor to confirm Licensor’s ownership of all rights in and to the Licensed
Property, any registrations thereof and the respective rights of Licensor and
Licensee pursuant to this Agreement.

     

    (c) Licensee
never shall challenge Licensor’s deemed ownership of, or the validity of, the
Licensed Property or any applications for registrations thereof, or any
trademark or copyright registrations thereof, or any rights of Licensor
therein.

     

    (d) It is
understood and agreed that nothing in this Agreement will be deemed in any way
to constitute an assignment by Licensor of the Licensed Property or of any
rights therein, or to give Licensee any right, title or interest in and to the
Licensed Marks and the Licensed Designs (except the right to make use thereof as
herein provided), or to lessen or affect the rights of Licensor to enjoin or
obtain any other relief against any acts of trademark or copyright infringement,
misuse of the Licensed Property or unfair competition committed by a third party
or by Licensee.  The parties hereto agree to do all that is necessary
to insure the continued and future validity of all trademark and copyright
registrations of the Licensed Property, and it is understood and agreed that all
proprietary rights therein shall remain in Licensor.

     

    15.  
Licensor’s Other
Business.  It is understood that Licensor is using and may
hereafter use, or license others to use, the Licensed Property, or any other
trademarks, designs or trade names associated with the Licensed Property in
connection with the manufacture, marketing, sale and distribution of products
other than Articles to any customer or customers, including the Customers,
within or outside the Territory.

     

    16.  
Non-Agency.  It
is understood that Licensee is only a licensee of Licensor and that neither
Licensee nor Licensor will act as the agent or representative of the
other.  Neither Licensee nor Licensor will enter into any agreement or
incur any obligation on behalf of the other or commit the other to any third
party in any other manner without the other’s prior written
consent.  The relationship between Licensor and Licensee is that of
independent contractors.  No fiduciary or quasi-fiduciary relationship
does or shall exist between the parties by reason of or in 

     

    
      
        
        

      

      
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    connection
with this Agreement and each of the parties hereby irrevocably waives any and
all claims and causes of action against the other for the breach of any
fiduciary or quasi-fiduciary duty arising out of or in connection with this
Agreement or any performance or non-performance by the parties
hereunder.

     

    17.  
Notices and
Payments.

     

    (a) All
notices, demands and requests which may be given or which are required to be
given by either party to the other shall be in writing unless otherwise
specified herein.  Except with respect to a notice of default, any
legal notice or other communication required or permitted under this Agreement
shall be considered given when delivered (or when delivery thereof is refused)
via certified mail, return receipt requested, by overnight courier next business
day delivery signed receipt requested, or by facsimile transmission provided the
facsimile transmission is sent during regular business hours on a business day,
written confirmation of successful transmission and receipt is received by the
sender, and a copy of the facsimile transmission is also sent via overnight
courier as set forth above, addressed to the parties at the following addresses
(or at such other address as a party may specify by notice to the
other):

     

    To
Licensor at:

    

    Laura
Ashley, Inc.

    7000
Regent Parkway

    Fort
Mill, South Carolina 29715

    Attn:
Penne Cairoli, General Manager

    Telephone
No. (803) 396-7702

    Facsimile
No. (803) 396-7791

    

    With a
copy to:

    

    George T.
Mann, Esq.

    Allman
Spry Leggett & Crumpler, P.A.

    380
Knollwood Street, Suite 700

    Post
Office Drawer 4129

    Winston-Salem,
North Carolina 27113-5129

    Telephone
No. (336) 722-2300

    Facsimile
No. (336) 722-8720

    

    To
Licensee at:

    

    Signature
Eyewear, Inc.

    498 North
Oak Street

    Inglewood,
CA 90302

    Attn:
Michael Prince, Chief Executive Officer

    Telephone
No. (310) 330-2733

    Facsimile
No. (310) 330-2770

    

    
      
        
        

      

      
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    Any
notice under this Agreement, other than a notice of default, may be given by a
party’s legal counsel, and such notice shall have the same effect hereunder as
if given by that party.

     

    (b) A notice
of default may be given only by overnight courier, next business day delivery,
signed receipt required, to a party at the address specified
herein.

     

    18.  
No Assignment; No
Sublicense; Binding Effect.

     

    (a) Licensor
in its sole discretion may assign this Agreement and Licensor’s rights and
duties hereunder to any entity, including Laura Ashley Limited, and Licensee
hereby consents to such an assignment and agrees to execute any and all
documents necessary to complete such an assignment; provided any such assignment
shall not impair Licensee’s ability to exercise the rights granted under this
Agreement.

     

    (b) Except
with respect to independent contractors engaged by Licensee in accordance with
Section 20 of this Agreement, and as otherwise permitted hereunder, Licensee
shall have no right to assign, sell, transfer, sublicense, delegate or otherwise
dispose of, whether voluntarily or involuntarily, by operation of law or
otherwise, this Agreement or any of Licensee’s rights, duties or obligations
under this Agreement (a “Transfer”) without the prior
written consent of Licensor, which may be withheld in Licensor’s sole
discretion.  Any attempted or purported Transfer other than in strict
compliance with the foregoing shall be a material breach of this Agreement and
shall be null and void and of no legal effect.  Notwithstanding the
foregoing: (i) Licensee may merge or consolidate with a Company provided,
however, that the foregoing shall not abrogate or impair Licensor’s rights under
Section 12 of this Agreement if a result of such merger or consolidation an
event of default would be deemed to have occurred under Section 12(a)(xiii) of
this Agreement; and (ii) after giving Licensor at least thirty (30) days prior
written notice of its intention, Licensee may effect a Transfer to a third party
which purchases or otherwise acquires all or substantially all Licensee’s
business or assets, provided that following such a Transfer the transferee or an
Affiliate will not in Licensor’s sole judgment be deemed to be a Competitor and
provided further that the third party transferee has the capability, in
Licensor’s reasonable judgment, to fulfill Licensee’s obligations under this
Agreement.

     

    (c) This
Agreement shall inure to the benefit of and shall be binding upon the parties,
Licensee’s permitted successors and assigns, and Licensor’s successors,
transferees and assigns.

     

    19.  
Arbitration.  Except as otherwise
specifically set forth in this Agreement, any and all disputes, controversies
and claims arising out of or relating to this Agreement or concerning the
respective rights or obligations hereunder of the parties hereto, except
disputes, controversies and claims relating to or affecting in any way (a) the
ownership of or the validity of the Licensed Property or any registrations
thereof, or any applications for registrations thereof (hereinafter referred to
as “Licensed Property
Disputes”); or (b) the
amount or payment of any sums due Licensor under this Agreement, including but
not limited to Annual Minimum Royalty, Earned Royalty and any liquidated damages
due Licensor as a result of a breach of the terms of this 

     

    
      
        
        

      

      
        22

        
          

        

      

      
        
        

      

    

    Agreement by Licensee; (c) a claim by
Licensor that Licensee’s use of the Licensed Property exceeds the grant of the
right and license set forth in this Agreement; or (d) a claim by either party
that a breach has or is about to occur of a party’s obligation of
confidentiality under this Agreement, shall be settled and determined by final
and binding  arbitration by a single arbitrator selected in accordance
with and subject to the Commercial Arbitration Rules of the American Arbitration
Association (“AAA”) then in effect.  The
location for such arbitration shall be Charlotte, North
Carolina.  Discovery as permitted by the Federal Rules of Civil
Procedure then in effect will be allowed in connection with the arbitration but
limited to the production of such documents and the taking of such depositions
as the arbitrator determines are reasonably necessary to the resolution of the
controversy, claim or dispute.  The arbitrator shall be instructed to
render a decision within thirty (30) calendar days of the close of the
arbitration hearing.  The arbitrator shall have the power to award
specific performance or injunctive relief and reasonable attorneys’ fees and
expenses to any party in any such arbitration.  The arbitrator also
shall have the power to award to a party to this Agreement (the “Claiming
Party”) which successfully
prosecutes a claim against the other party hereto (the “Defaulting
Party”) for failing to
perform its obligations under this Agreement (a “Default”) actual damages incurred by the
Claiming Party as the result of the Default, specifically including a Default by
the Licensee under Section 9 of this Agreement.  However, in any
arbitration proceeding arising under this Agreement, the arbitrator shall not
have the power to change, modify or alter any express condition, term or
provision of this Agreement, and to that extent the scope of their authority is
limited.  The arbitration award shall be final and binding upon the
parties and judgment thereon may be entered in any court having jurisdiction
thereof.  The service of any notice, process, motion or other document
in connection with an arbitration under this Agreement or for the enforcement of
any arbitration award hereunder may be effectuated in the manner in which
notices are to be given to a party pursuant to Section 17
above.  During any arbitration proceedings, the parties shall continue
to fulfill their respective obligations under this Agreement, including in
particular Licensee’s obligation to make payments to Licensor in accordance with
this Agreement.  The fact that arbitration is commenced and underway
will not impair the exercise of any termination rights under this
Agreement.  Since this Agreement deals with a transaction involving
commerce as defined in the Federal Arbitration Act, 9 U.S.C. §1, et. seq., the provisions of that statute apply
to this Agreement.  The obligations of the parties to arbitrate
certain disputes, controversies and claims pursuant to this Section 19 shall
survive the early termination or expiration of the Contract
Term.

     

    20.  
Contract
Manufacturers.

     

    (a) Licensee
shall have the right, but only with the prior written approval of Licensor on a
case-by-case basis, to arrange with another party to manufacture the Licensed
Articles or components of the Licensed Articles for the exclusive sale, use and
distribution by Licensee.  Following approval by Licensor, Licensee
shall enter into a written agreement with each such manufacturer using the form
agreement attached hereto as Appendix E, or a comparable form agreement which
incorporates all the provisions for the protection of the rights of Licensor set
forth in the form agreement attached hereto as Appendix E.  Licensee
shall furnish Licensor within thirty (30) days of its execution a copy of each
agreement with such manufacturers.

     

    
      
        
        

      

      
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    (b) Licensee
agrees strictly to enforce against its contract manufacturers all the provisions
which are required to be included in the contract manufacturing agreements for
the protection of Licensor; to advise Licensor of any material violations
thereof by the contract manufacturers and of corrective actions taken by
Licensee and the results thereof; and at the request of Licensor, to terminate
such an agreement with any manufacturer which violates any of such provisions
for the protection of Licensor.  If Licensee fails to exercise such
termination rights by giving written notice to the manufacturer in question
within twenty (20) days after being requested to do so in writing by Licensor,
Licensee shall have committed an event of default as contemplated by Section
12(a)(x) hereof.

     

    (c) Licensee
covenants on its own behalf (and will use commercially reasonable efforts to
ensure that its contract manufacturers comply with the following):

     

    (i) Licensee
will not use child labor in manufacturing, packaging or distributing the
Licensed Articles.  The term “child” refers to any individual younger
than the age for completing compulsory education, but in no case shall any child
younger than 15 years of age be employed in the manufacturing, packaging or
distribution of the Licensed Articles.

     

    (ii) Licensee
will provide its employees with a safe and healthy workplace in compliance with
all applicable laws.  Licensee will provide Licensor with all
information Licensor may request about manufacturing, packaging or distribution
facilities for the Licensed Articles.

     

    (iii) Licensee
only will employ individuals whose presence is voluntary. Licensee will not use
prison labor, and will not utilize corporal punishment or other forms of mental
or physical coercion as a form of discipline of employees.

     

    (iv) Licensee
will comply with all applicable wage and hour laws, including minimum wage,
overtime and maximum work hours.  Licensee will utilize fair
employment practices as defined by applicable laws.

     

    (v) Licensee
will not discriminate in hiring and employment practices on grounds of race,
religion, national origin, political affiliation, sexual preference or
gender.

     

    (vi) Licensee
will comply in all material respects with all applicable environmental
laws.

     

    21.  
Protection of Licensed
Property.

     

    (a) A party
promptly shall notify the other of any assertion that the manufacture and sale
in the Territory of one or more items comprising the Licensed Articles or use of
the Licensed Property hereunder allegedly infringes the rights of a third party
and will consult to determine the course of action to be followed in response to
said assertion.  Licensor does not undertake and shall have no
obligation, but nevertheless shall be entitled, to defend any 

     

    
      
        
        

      

      
        24

        
          

        

      

      
        
        

      

    

    lawsuit
brought for alleged infringement of trademarks or copyrights owned by a third
party or unfair competition with a third party when the basis of the claim is
related to Licensee’s use of the Licensed Property provided that this shall not
abrogate or impair Licensor’s obligation to indemnify Licensee in accordance
with Section 11(b) hereof.  In the event Licensor elects to defend
such a lawsuit, at Licensor’s expense Licensee shall cooperate in the defense of
any third party claim based upon infringement or other violation of that third
party’s intellectual property rights to the extent that such a claim asserts
that activities under this Agreement violated that third party’s
rights.  Without limiting the foregoing, Licensee’s cooperation shall
include (i) making available to Licensor such documents and/or witnesses as may
be within the control of Licensee; (ii) making available to Licensor at
reasonable times and for reasonable periods such of Licensee’s personnel as may
be helpful in identifying defenses and counterclaims in any such action; (iii)
through Licensee’s counsel, aiding Licensor and its counsel in identifying,
developing and presenting all such defenses and counterclaims; and (iv) if
requested by Licensor, joining with Licensor as a party in the lawsuit. Licensor
in its sole discretion shall be entitled to settle any such lawsuit in any
manner which, in Licensor’s sole judgment, is appropriate provided that the
costs associated with any such settlement shall be paid solely by Licensor; and
Licensee reasonably shall cooperate and comply with such acts as shall be
required of Licensee to accomplish settlement.  In the event that in
Licensee’s reasonable judgment the proposed settlement materially shall impair
Licensee’s performance under this Agreement, or impose such additional royalty
or capital or operational costs or expenses that Licensee shall determine that
performance under this Agreement shall no longer be commercially practical,
Licensee may condition its participation in the settlement upon Licensor’s
agreeing to terminate this Agreement and the right and license granted hereunder
with respect to all or some of the Licensed Articles.

     

    (b) If
Licensee learns of any use by any person of a trademark similar to the Licensed
Marks, or of a design similar to the Licensed Designs, it promptly shall notify
Licensor and, if requested by Licensor, shall join with Licensor at Licensor’s
expense in such action as Licensor in its discretion may deem advisable for the
protection of Licensor’s rights.  The proceeds of any settlement of or
recovery from any such action shall belong entirely to Licensor. Licensee shall
have no right to take any action with respect to the Licensed Property without
Licensor’s prior written approval.

     

    22.  
Miscellaneous.

     

    (a) Licensee
shall not give away or sell Licensed Articles in connection with any tie-in or
promotional campaign relating to products other than the Licensed Articles
without the prior written consent of Licensor.

     

    (b) This
Agreement shall be construed and interpreted in accordance with the laws of the
State of South Carolina applicable to agreements made and to be performed in
said state, except that the federal laws of the United States shall apply with
respect to disputes involving Licensor’s rights in the Licensed
Property.  Notwithstanding anything to the contrary herein, Licensed
Property Disputes shall be brought and determined only in the federal courts,
and each party hereto consents to the jurisdiction of such courts with respect
to all Licensed Property Disputes.

     

    
      
        
        

      

      
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    (c) In any
judicial or arbitration proceeding between the parties hereto regarding the
terms or performance of this Agreement, including but not limited to any action
to collect money owed pursuant to this Agreement, the prevailing party shall be
entitled to receive its costs and expenses incurred in connection with such
proceeding, including reasonable attorneys’ fees.

     

    (d) The
language of this Agreement shall be construed according to its fair meaning and
not more strictly against any one party than the other.  The
appendices, exhibits, addenda and riders (if any) attached to this Agreement are
a part of this Agreement, which together with the terms of this Agreement
constitute the entire agreement of the parties with respect to the subject
matter hereof.  Except as otherwise expressly provided herein, there
are no other oral or written agreements, understandings, representations or
statements relating to the subject matter of this Agreement that either party
may or does rely on or that will have any force or effect.  Nothing in
this Agreement shall be deemed to confer any rights or remedies on any person or
legal entity not a party hereto.  This Agreement shall not be modified
or amended, or any obligation of a party hereunder waived or modified in any
way, except by written agreement signed by both parties.

     

    (e) 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.  Acceptance of payments by Licensor shall not be deemed a
waiver by Licensor of any violation of or default under any of the provisions of
this Agreement by Licensee.

     

    (f) 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.

     

    (g) Section
headings contained in this Agreement are for convenience only and shall not be
considered or used in construing the meaning of the terms hereof.  The
word “including” shall be construed to include the words “without
limitation.”

     

    (h) Appendices
A through E and Exhibits 1, 2, 3 and 4 attached hereto are intended by the
parties to be a part of this Agreement and therefore are incorporated herein by
reference.

     

    (i) Notwithstanding
the parties’ obligations hereunder with respect to Confidential Information,
Licensee acknowledges that it may be necessary to file or record a copy or a
summary of this Agreement with governmental authorities in certain jurisdictions
comprising the Territory, and Licensee hereby consents to such filing and
authorizes Licensor to take all actions Licensor deems necessary to comply with
such filing or recordation requirements.

     

    (j) Each
party to this Agreement expressly recognizes that this Agreement results from a
negotiation process in which each party had the opportunity to be and/or was
represented by counsel and contributed to the drafting of this
Agreement.  Given this fact, no legal or other presumptions against
the party drafting this Agreement concerning its construction, 

     

    
      
        
        

      

      
        26

        
          

        

      

      
        
        

      

    

    interpretation
or otherwise, shall accrue to the benefit of any party to this Agreement, and
each party expressly waives the right to assert such a presumption in any
proceedings or disputes connected with, arising out of or involving this
Agreement and the right and license granted hereunder.

     

    (k) By
separate agreement between Laura Ashley Limited, assignee of Laura Ashley
Manufacturing B.V., and Signature Eyewear, Inc., fka USA Optical Distributors,
Inc., the Original Agreement is being terminated as of the Effective
Date.  It is the intention of the parties hereto that this Agreement
shall replace the Original Agreement; provided however that all obligations of
the parties under the Original Agreement which were intended to survive the
termination or expiration of the Original Agreement shall remain in full force
and effect.

     

    23.  
Limitation on
Damages.  Except as provided otherwise in this section, neither
party to this Agreement shall be liable to the other, including pursuant to a
party’s indemnification obligation hereunder, for any indirect, incidental,
consequential, exemplary, punitive or special damages or for a loss of income,
profit or savings of any party, including third parties.  The
foregoing limitation on damages shall apply regardless of whether the claim
resulting in damages due is based upon contract, equity, negligence, intended
conduct, tort or otherwise (including as a result of breach of warranty,
negligence and strict liability in tort).  The foregoing limitation on
damages shall not apply with respect to (a) any indemnification which may become
due Licensee under this Agreement regarding a third party claim for trademark
infringement or other violation of third party intellectual property rights for
which pursuant to statute lost profits and indirect, consequential or incidental
damages are awarded; (b) any damages sustained by Licensor as a result of
Licensee’s sale of defective Licensed Articles which cause bodily injury to
third parties; and (c) any damages sustained by either party as a result of a
party’s breach of its confidentiality obligations hereunder.  Each
party has a duty to mitigate the damages that would otherwise be recoverable
from the other pursuant to this Agreement by taking appropriate and reasonable
actions to reduce or limit the amount of such damages.

     

    24.  
Force Majeure. Except
for the payment of money, neither party will be liable to the other for any
failure or delay in performance under this Agreement which is due, in whole or
in part, directly or indirectly, to any contingency, delay, failure, or cause of
any nature beyond the reasonable control of such party, including, without in
any way limiting the generality of the foregoing, fire; explosion; earthquake,
storm, flood or other weather related event; unavailability of necessary
utilities, components, or raw materials; strike, lockout or activities of a
combination of workmen or other labor difficulties; war, act of terrorism,
insurrection or  riot; act of God; application of any law, act, order,
export control regulation, proclamation, decree, regulation, ordinance, or
instructions of government or other public authorities; or judgment or decree of
a court of competent jurisdiction (not arising out of breach of this
Agreement).  In the event of the happening of such a cause, the party
whose performance is so affected shall give prompt, written notice to the other
party, stating the period of time the failure to perform is expected to
continue.  Such delay will not be excused under this section for more
than ninety (90) days.

     

    25.  
No Franchise
Relationship. Each of the parties agrees that by entering into this
Agreement it is not their intention to create a franchise relationship between
them, and this 

     

    
      
        
        

      

      
        27

        
          

        

      

      
        
        

      

    

    Agreement
and the right and license granted hereunder should not be interpreted as
creating a franchise, business opportunity, dealership or similar relationship
under any state or federal statute.  To the extent the circumstances
of the licensing relationship between the parties hereto may be characterized as
a franchise, business opportunity, dealership or similar relationship, that
result is unintended and disavowed by the parties
hereto.  Accordingly, each party hereby waives any defense and
releases any claim it may have against the other arising under any state or
federal franchise, business opportunity, dealership, or similar relationship law
or regulation.

     

    26.  
Confidentiality.

     

    (a) In
connection with this Agreement, each party will be provided, and will have
access to, certain Confidential Information of the other party.  Each
party acknowledges and understands that the other party's Confidential
Information is a valuable asset and property of such other party, and that such
other party could suffer irreparable harm from the disclosure of all or any of
such Confidential Information to other persons.  Accordingly, each
party agrees, on behalf of itself and its directors, officers, employees, agents
and advisors (collectively, “Representatives”), during the
Contract Term and for a period of five (5) years following its early termination
or expiration, (i) to hold all of such other party's Confidential Information in
strict confidence, (ii) not to disclose any of such Confidential Information to
third parties without the specific prior written consent of such other party,
and (iii) not to use any such Confidential Information except for purposes
reasonably related to the performance of its obligations and the protection of
its rights under this Agreement.  Each party shall be responsible for,
and shall indemnify and hold the other party harmless from, any losses and costs
incurred or suffered by such other party arising or resulting from the breach of
these covenants by such party or any of its
Representatives.  Furthermore, each party hereto acknowledges that in
the event of a breach by one of them of the confidentiality obligations set
forth herein the other party will suffer irreparable harm and therefore each
party hereto now consents to the immediate issuance of an order in a court
having jurisdiction over the parties and the subject matter of this Agreement
prohibiting the breaching party from any further disclosures of Confidential
Information.

     

    (b) If a
party or any of its Representatives is legally required (by oral questions,
interrogatories, requests for information or documents, subpoena, civil
investigative demand or similar process) to disclose any Confidential
Information of the other party, such party shall promptly notify the other party
of such requirements so that the other party may seek an appropriate protective
order or other appropriate remedy and/or waive compliance with the provisions of
this Agreement.  If such protective order or other remedy is not
obtained, or that party grants a waiver hereunder, such other party or its
Representative may furnish that portion (and only that portion) of the
Confidential Information which such party or its Representative is legally
compelled to disclose, and such party shall use its best efforts to obtain
reliable assurance that confidential treatment will be accorded any Confidential
Information so furnished.  In no event shall a party or any of its
Representatives oppose any action by the other party to obtain an appropriate
protective order or other reliable assurance that confidential treatment will be
accorded the Confidential Information.

     

    (c) Each
party agrees, on behalf of itself and its Representatives, and except as
provided in Sections 26(d) and 26(e), (i) to hold all Confidential Agreement
Information in strict 

     

    
      
        
        

      

      
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    confidence,
(ii) not to disclose any Confidential Agreement Information to third parties
without the specific prior written consent of such other party, and (iii) not to
use any Confidential Agreement Information except for purposes reasonably
related to the performance of its obligations and the protection of its rights
under this Agreement.  Each party shall be responsible for, and shall
indemnify and hold the other party harmless from, any losses and costs incurred
or suffered by such other party arising or resulting from the breach of these
covenants by such party or any of its Representatives.  Furthermore,
each party hereto acknowledges that in the event of a breach by one of them of
the confidentiality obligations set forth herein the other party will suffer
irreparable harm and therefore each party hereto now consents to the immediate
issuance of an order in a court having jurisdiction over the parties and the
subject matter of this Agreement prohibiting the breaching party from any
further disclosures of Confidential Agreement Information.

     

    (d) Licensor
understands that Licensee is a “reporting company” under the Securities Exchange
Act of 1934, as amended, and that as a reporting company, Licensee has certain
public disclosure obligations with respect to its business and operations that
may include disclosure of the terms and conditions of this Agreement (including
filing a copy of this Agreement with the Securities and Exchange Commission or
other regulatory authority), and matters pertaining to this Agreement, such as
revenues from the sale of Licensed Articles.  Notwithstanding anything
in this Agreement to the contrary, Licensee may make such disclosures of
Confidential Agreement Information if and to the extent Licensee believes
necessary or appropriate to satisfy its public disclosure obligations and/or
satisfy the needs of the investment community.  Notwithstanding the
foregoing, Licensee and Licensor shall maintain the royalty rate, the annual
minimum royalty and the advertising expenditure minimum confidential (unless
such disclose is compelled by the SEC or other regulatory authority), and if
Licensee determines that it should file a copy of this Agreement with the
Securities and Exchange Commission or other regulatory authority, it will
endeavor to seek confidentiality of such terms and such other terms and
provisions as Licensee desires to protect as confidential consistent with the
rules and regulations of the Securities and Exchange Commission or other
regulatory authority.  Any information regarding the terms and
conditions of this Agreement and matters pertaining to this Agreement shall not
be considered “Confidential Agreement Information” following the public
disclosure of such information in the manner contemplated by this Section
26(d).

     

    (e) Notwithstanding
the provisions of this Section 26, either party may disclose Confidential
Agreement Information to any of the following Companies provided that they are
bound by written agreement or are otherwise obligated to maintain such
information as confidential:  (i) Companies who have provided or
propose to provide equity or debt financing to such party or its affiliates;
(ii) potential acquirers of such party (by merger, purchase of assets, purchase
of securities or otherwise) and their attorneys, auditors and consultants; (iii)
parties with whom such party proposes to merge or consolidate; (iv) such party’s
auditors, attorneys and financial advisors; and (v) underwriters and brokers and
financial advisors engaged, or proposed to be engaged, by such party in
connection with a financing, acquisition, sale, merger, reorganization or other
material corporate transaction.

     

    
      
        
        

      

      
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      27.  
Licensee’s Performance
After Effective Date.  Licensor and Licensee agree that
subsequent to the Effective Date Licensee substantially has complied with the
terms and conditions of this Agreement, including in particular all payment
obligations; and as of the date of this Agreement, Licensee is not in default
under this Agreement..

       

      [SIGNATURES
APPEAR ON THE FOLLOWING PAGE]

    

    
 

     

     

     

     

     

     

     

     

     

     

     

     

     

     

    
      
        
        

      

      
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[SIGNATURE
PAGE TO LICENSE AGREEMENT]

    

     

    

     

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

    
    

     

    
      	 	

              LICENSOR:

              

              LAURA
      ASHLEY, INC.

              

               

              By: 
      /s/ Paul Ng

              

                
      

              Paul
      Ng, Chief Operating Officer

              

              

              By: 
      /s/ Penne Cairoli

              

                
      

              Penne
      Cairoli, General Manager

              

               

              

              

              LICENSEE:

              

              SIGNATURE
      EYEWEAR, INC.

              

               

              By: 
      /s/ Michael Prince

              

                
      

              Michael
      Prince, Chief Executive Officer

            

    

     

     

    
      
        
        

      

      
        31

        
          

        

      

      
        
        

      

    

    Appendix
A

     

    LICENSED MARKS AND LICENSED
DESIGNS

     

    

     

    I.           
LICENSED MARKS

     

    
      A.

    

     

    

     

    B.

     

    LAURA
ASHLEY AND SPRIG OVAL DEVICE

     

    

     

    II.           LICENSED
DESIGNS

     

    All original decorative graphic designs
(both two and three dimensional), surface prints, shapes and patterns, embodied
in any form whatsoever, owned or available for licensing by Laura Ashley, Inc.
in various jurisdictions around the world whether or not protected and/or
registered under applicable intellectual property laws.

     

    

     

    
 

    
 

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

    Appendix
B

     

     DISTRIBUTION
CHANNELS

     

    
      	
            	
              1.  

            	
              Specialty
      stores, department stores and other middle and high end retailers which
      Licensor in its sole discretion approves as being consistent with the
      “Laura Ashley image, excluding specifically (a) E-commerce (provided,
      however, Licensee may promote, offer and sell the Licensed Articles using
      Internet web sites which (i) specifically have been approved in advance in
      writing by Licensor, and (ii) are operated by or on behalf of and in the
      name of Licensee and/or a Customer); and (b) mass merchants, discount
      stores and warehouse clubs, as those latter three categories of stores are
      commonly categorized in the industry.  Licensor reserves the
      right to disapprove any retailer which Licensor in its sole discretion
      reasonably determines to be unsuitable for the sale or distribution of
      Licensed Articles for any reason, including but not limited to because it
      projects an image inconsistent with the “Laura Ashley
      image.”  In the event Licensor disapproves a retailer, Licensee
      immediately shall discontinue selling Licensed Articles to that retailer
      (except pursuant to binding non-cancelable obligations), and the failure
      of Licensee to do so within ten (10) days following receipt of written
      notice of such disapproval from Licensor shall constitute an event of
      default under Section 12(a) of this
Agreement.

            

    

    
      	
            	
              2.  

            	
              Opticians,
      optometrists, ophthalmologists, and optical
  laboratories

            

    

    
      	
            	
              3.  

            	
              Optical
      chains (e.g.
      Pearle Vision, Lenscrafters, Eye Care Centers of America,
      Inc.)

            

    

    
      	
            	
              4.  

            	
              Distributors
      who sell to the channels described in 1 and 2
  above.

            

    

    
      	
            	
              5.  

            	
              Licensor’s
      owned stores and franchisees

            

    

    

     

    

     

    
 

    
 

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

      Appendix C

     

    LICENSED
ARTICLES

     

    Ophthalmic
frames for prescription eyeglasses, sunglasses, non-prescription readers,
eyeglass cases and other accessories and related items.

     

    
 

     

     

     

     

     

     

     

     

     

     

     

     

     

    
 

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

    Appendix
D

     

    CORPORATE STANDARDS
GUIDE

     

    Provided separately to
Licensee

     

    

     

    
 

     

     

     

     

     

     

    
 

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

    Appendix
E

     

    CONTRACT MANUFACTURING
AGREEMENT

     

    AN AGREEMENT by and between SIGNATURE
EYEWEAR, INC. (the “Licensee”) and _________________ (the “Manufacturer”) dated
this the ____ day of ______, 2_____ (the “Effective Date”).

     

    WHEREAS,
the Licensee has entered into a license agreement with Laura Ashley, Inc. (the
“Licensor”) dated ___________, 2____, pursuant to which the Licensee has been
authorized to have certain products displaying the Licensor’s trademarks
manufactured by the Licensee (the “License Agreement”).  Unless
otherwise defined herein, all capitalized terms herein shall have the meanings
set forth in the License Agreement.

     

    1.           
In order to induce the Licensor to consent to the manufacture of the Licensed
Articles by the Manufacturer, and in consideration of Licensee’s appointment of
the Manufacturer as a contract manufacturer of Licensed Articles under the
License Agreement, the Manufacturer agrees as follows:

     

    
      	 	
               (a)
      Manufacturer will manufacture the Licensed Articles in strict compliance
      with the Product Specifications.

            

    

     

    
      	 	
              (b)
      Manufacturer will not manufacture the Licensed Articles for anyone but the
      Licensee, will invoice only the Licensee and will not ship to anyone other
      than the Licensee or the Customers.

            

    

     

    
      	 	
               (c)
      Manufacturer will not subcontract production of the Licensed Articles
      without the prior written consent of the
  Licensee.

            

    

     

    
      	 	
               (d)
      Manufacturer will not manufacture merchandise utilizing any of the
      Licensed Property other than the Licensed
  Articles.

            

    

     

    
      	 	
              (e)
      After receiving reasonable prior notice from the Licensee,
      the  Manufacturer will permit an authorized representative of
      the Licensor to inspect its activities and premises and take samples of
      the Licensed Articles.

            

    

     

    
      	
               
      

            	
              (f)
      Manufacturer will not use child labor in the manufacturing, packaging or
      distribution of Licensed Articles.  The term “child” refers to a
      person younger than the age for completing compulsory education, but in no
      case shall any child younger than 15 years of age be employed in the
      manufacturing, packaging, or distribution of the Licensed
      Articles.

            

    

     

    
      	 	
              (g)
      Manufacturer will provide employees with a safe and healthy workplace in
      compliance with all applicable
laws.

            

    

     

    
      	 	
              (h)
      Manufacturer will provide Licensee with all information Licensee may
      request about manufacturing, packaging or distribution facilities for the
      Licensed Articles.

            

    

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

    
      	 	
              (i)
      Manufacturer will only employ persons whose presence is
      voluntary.

            

    

     

    
      	
               
      

            	
              (j)
      Manufacturer will not use prison labor, or corporal punishment or other
      forms of mental or physical coercion as a form of discipline of
      employees.

            

    

     

    
      	 	
              (k)
      Manufacturer will comply with all applicable wage and hour or similar
      laws, including minimum wage, overtime and maximum work
    hours.

            

    

     

    
      	
               
      

            	
              (l)
      Manufacturer will utilize fair employment practices as defined by
      applicable laws.

            

    

     

    
      	
               
      

            	
              (m)
      Manufacturer will not discriminate in hiring and employment practices on
      grounds of race, religion, national origin, political affiliation, sexual
      preference or gender.

            

    

     

    
      	
               
      

            	
              (n)
      Manufacturer will comply with all applicable environmental
      laws.

            

    

     

    2.            During
the term of the License Agreement and for a period of two (2) years thereafter,
the Manufacturer will not publish or cause the publication of pictures or
representations of the Licensed Articles in any publication or promotional
material, advertise the fact that it is or was permitted to manufacture the
Licensed Articles or refer to the Licensee or the Customers by name in any
publication or promotional material.

     

    3.            
Upon expiration or early termination of the License Agreement, or upon
notification by the Licensor of a breach of this Agreement or the License
Agreement by the Licensee, the Manufacturer, the Manufacturer will immediately
cease all manufacturing, shipment and sales of the Licensed Articles and
discontinue its use of any copyrighted materials associated with the Licensed
Articles or other materials displaying the Licensed Property, including but not
limited to, packaging, shipping containers and advertisements.  The
Manufacturer shall dispose of all Licensed Articles and copyrighted materials
associated with the Licensed Articles or other materials displaying the Licensed
Property in such manner as the Licensor shall instruct.

     

    4.            
As between the Licensor, the Licensee and the Manufacturer, the Licensor is the
owner of the Licensed Property, and all registrations thereof and applications
to register the Licensed Property in the Territory as well as in Manufacturer’s
country; and the Licensor also owns the goodwill attached or which shall become
attached to the Licensed Property in connection with the business and goods in
relation to which the Licensed Property has been, is and shall be
used.  Sales by the Manufacturer shall be deemed to have been made by
the Licensor for purposes of trademark registration and all uses of the Licensed
Property by the Manufacturer shall inure to the benefit of the
Licensor.  The Manufacturer shall not, at any time, do or permit to be
done any act or thing which may in any way adversely affect any rights of the
Licensor in and to the Licensed Property or any registrations thereof or which,
directly or indirectly, may reduce the value of the Licensed Property or detract
from its reputation.

     

    5.            
At the Licensor’s request and expense, the Manufacturer shall execute any
documents reasonably required by the Licensor to confirm the Licensor’s
ownership of all rights 

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

    in and to
the Licensed Property, any registrations thereof and the respective rights of
the Licensor and the Licensee pursuant to the License Agreement.

     

    6.            
The Manufacturer never shall challenge the Licensor’s ownership of, or the
validity of, the Licensed Property or any application for registration thereof
or any trademark registration thereof, or any rights of the Licensor
therein.

     

    7.            
The Manufacturer understands and acknowledges that no provision set forth here
or in the License Agreement shall be deemed to restrict any right of the
Licensor to seek recovery of and receive from the Manufacturer, damages
including actual, incidental and consequential, and such other legal remedies as
the court may deem appropriate for the action or inaction of the Manufacturer
which adversely affects the Licensor’s rights in the Licensed Property, any
registrations thereof or any applications to register the Licensed Property or
any variations thereof.

     

    
      8.            
Manufacturer
acknowledges and agrees that the Licensor is an intended third party beneficiary
of this Agreement between the Licensee and the Manufacturer; and the Licensor,
acting alone or with the full cooperation of the Licensee, may enforce the
requirements set forth in this Agreement to the full extent permitted by law or
in equity.

    

     

    9.           
This Agreement shall be construed and interpreted in accordance with the laws of
the State of South Carolina, United States of America, applicable to agreements
made and to be performed in said state, except that the federal laws of the
United States of America shall apply with respect to disputes involving
Licensor’s rights in the Licensed Property.  Notwithstanding anything
to the contrary herein, Licensed Property Disputes shall be brought and
determined only in the federal courts in the United States of America, and each
party hereto consents to the jurisdiction of such courts with respect to all
Licensed Property Disputes.  With respect to all other disputes under
this Agreement, the parties consent to the jurisdiction of the courts
of  South Carolina.

     

    10.           In
any judicial proceeding between the parties hereto regarding the terms or
performance of this Agreement, including but not limited to any action to
collect money owed pursuant to this Agreement, the prevailing party shall be
entitled to receive its costs and expenses incurred in connection with such
proceeding, including reasonable attorneys’ fees.

     

    11.           This
Agreement contains the entire understanding and agreement between the parties
hereto with respect to the subject matter hereof, supersedes all prior oral or
written understandings and agreements relating thereto and may not be modified,
discharged or terminated, nor may any of the provisions hereof be waived, except
by written agreement signed by the parties hereto.

     

    
      12.          
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.

    

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

     

    
    

     

    
      	 	

              
                LICENSEE:

              

               

              
                SIGNATURE
      EYEWEAR, INC.

              

               

              
                By:
      _______________________

              

               

              
                Title:
      ______________________

              

               

              

               

              
                MANUFACTURER:

              

               

              
                _____________________________

              

               

              
                By:
      __________________________

              

               

              
                Title:
      _________________________

              

            

    

     

    
       

    

     

    

     

    
 

    
 

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

    EXHIBIT
1

     

    IMPLEMENTATION
SCHEDULE

    
    

     

    
      	

              License
      Effective Date:

               

              Initial
      Term:

               

              Extension
      Term:

               

              Initial
      Annual Sales Plan Due:

               

              Samples
      of Licensed Articles for Approval Due:

               

              Product
      Approval Form:

               

              Royalty
      Payment and Quarterly Report Due:

            	
              January
      1, 2010

               

              December 31, 2011

               

              December 31, 2014

               

              January 15, 2010 

               

              _________________________

               

              _________________________

               

              April 30

               

              July 30

               

              October 30

               

              January 30

            

    

     

     

     

     

     

     

     

     

    
 

    
 

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

    EXHIBIT
2

     

    LAURA
ASHLEY, INC.

     

    SAMPLE OF A LICENSED PRODUCT
APPROVAL FORM

     

    
      	
              CONCEPT:

            	
              PRE-PRODUCTION:

            	
              FINAL:

            

    

    Select
approval type: Mark with X

     

    REF#:

     

    
      	
              Licensee:

            
	
               

              Date:                                Ref
      No:                                            Ref
      Name:

            
	
              Product
      Description:

               

            
	
              Product
      Launch Date:

               

            
	
              Estimated
      Launch Quantity:

               

            
	
              Markets/Distribution:

               

            
	
              Wholesale
      & Retail Price:

               

            
	
              Composition/Fabrication:

               

            
	
              Proposed
      Colours:

               

            
	
              Comments:

              ____________________________________________________________________________________

              LAURA
      ASHLEY INC.

              APPROVED
      BY:                                                                                                    DATE:

            
	 
      
	
              PLEASE
      FILL IN THE INFORMATION BELOW:

            
	
              LICENSEE:

              SUBMITTED
      BY:                                                                                                   DATE:

            

    

    

    *THIS FORM, FULLY COMPLETED,
IS REQUIRED FOR FINAL APPROVAL. WITH SIGNATURE THIS FORM AUTHORISES DISTRIBUTION
OF LICENSED PRODUCT.

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

    EXHIBIT
2

     

    LAURA
ASHLEY, INC.

     

    SAMPLE OF A MARKETING
APPROVAL FORM

     

    

     

    
      	
              Licensee:

            
	
              Date:                                Program
      Name:                                            Ref
      Name:

            
	
              Product
      Description:

               

               

            
	
              Approval
      request for:

               

              q Label/Packaging

              Product
      Launch Date:

               

              q Advertising/Collateral

              Publication
      Date:

              Media
      (i.e. magazine ad, flyer, etc.)

            
	
              Markets:

               

               

            
	
              Proposed
      Colours:

               

            
	
              Comments:

              _______________________________________________________

              LICENSOR:
      LAURA ASHLEY INC.

               

              NAME
      :                                                                                                                  DATE:

            
	 
      
	
              PLEASE
      COMPLETE, SIGN AND DATE AS INDICATED BELOW:

            
	
              LICENSEE:

                   NAME  :                                                                                                                 DATE:

            

    

    
 

    
 

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

    EXHIBIT
3

     

    Laura
Ashley, Inc./Signature Eyewear, Inc.

     

    Territory

     

    

     

    
      	
              Argentina

            	
              France

            	
              Poland

            
	
              Aruba

            	
              Germany

            	
              Portugal

            
	
              Austria

            	
              Greece

            	
              Russia

            
	
              Bahamas

            	
              Guatemala

            	
              South
      Africa

            
	
              Barbados

            	
              Hungary

            	
              Spain

            
	
              Belgium

            	
              India

            	
              Sweden

            
	
              Bolivia

            	
              Indonesia

            	
              Switzerland

            
	
              Brazil

            	
              Ireland

            	
              Thailand

            
	
              Canada

            	
              Israel

            	
              Turkey

            
	
              Cayman
      Islands

            	
              Italy

            	
              United
      Kingdom

            
	
              Chile

            	
              Luxembourg

            	
              United
      States

            
	
              Colombia

            	
              Malaysia

            	
               Venezula

            
	
              Costa
      Rica

            	
              Mexico

            	
              Virgin
      Islands

              (U.S.
      and British)

            
	
              Denmark

            	
              Netherlands

            	 
      
	
              Dominican
      Republic

            	
              Norway

            	 
      
	
              Ecuador

            	
              Panama

            	 
      
	
              Egypt

            	
              Peru

            	 
      
	
              El
      Salvador

            	
              Philippines

            	 
      
	
              Finland

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