SUB-LICENSE AGREEMENT BETWEEN VCJS LLC AND PARLUX FRAGRANCES, INC

Throughout this agreement, where information has been replaced by an asterisk (*), that information has been omitted pursuant to a request for confidential treatment filed with the Securities and Exchange Commission pursuant to Rule 24b-2 promulgated under the Securities Exchange Act of 1934, as amended. The omitted information has been filed separately with the Securities and Exchange Commission.

Exhibit 10.85

SUB-LICENSE AGREEMENT

BETWEEN VCJS LLC

AND PARLUX FRAGRANCES, INC.

THIS AGREEMENT (“ Agreement ”) is made as of June 21, 2007 (“ Effective Date ”) between VCJS LLC, a limited liability company organized and existing under the laws of the State of Connecticut, with its principal place of business at 600 West Putnam Ave., Greenwich CT 06830 (“ VCJS ”) and Parlux Fragrances, Inc., a corporation organized and existing under the laws of Delaware, with its principal place of business at 3725 S.W. 30 ^th Avenue, Ft. Lauderdale, FL 33312 (" SUB-LICENSEE ”).

RECITALS

A.

With You, Inc. (“ WYI ”) owns and/or controls all of the trademark and merchandising rights relating to Jessica Simpson’s commercial persona and image, including the trademarks associated with her and identified in Schedule A attached hereto as the “ Licensed Trademarks .” Ms. Simpson is the owner of all of her rights of publicity in her name, likeness and image (together with the Licensed Trademarks, collectively, the “ Licensed Property ”).

B

As of July 28, 2005, VCJS acquired the master license for the right to exploit and commercialize the Licensed Property for certain merchandising categories, including the right to enter into sub-license agreements with third party sub-licensees (the “ Master License ”).

C.

SUB-LICENSEE desires to exploit the Licensed Property for the design, manufacture, sale, distribution and promotion of certain products bearing the Licensed Property as more specifically described in Schedule A attached hereto and collectively referred to as the “ Sub-Licensed Products. ”

D.

VCJS desires to grant to SUB-LICENSEE a sub-license under the Master License permitting SUB-LICENSEE to design, manufacture, sell, distribute, market, advertise and promote the Sub-Licensed Products subject to the terms and conditions contained in this Agreement.

Based upon the foregoing premises and in consideration of the mutual covenants herein contained, and for other good and valuable consideration, the receipt and legal sufficiency of which the parties hereby acknowledge, the parties hereto agree as follows.

1.

GRANT

1.1.

Grant of Sub-License . Subject to the terms and conditions contained herein, VCJS hereby grants to SUB-LICENSEE an exclusive, non-transferable right to use the Licensed Property to design, manufacture, sell, distribute, market, advertise and promote the Sub-Licensed Products only within the territory described in Schedule A hereto (the “ Territory ”) and only within the distribution channels described in Schedule A (the “ Distribution Channels ”) for the Term of this Agreement (as defined in Section 10 and Schedule A ).

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1.2.

Limitations of Sub-License .

(a)

Reservation of Rights . All rights other than those expressly granted to SUB-LICENSEE herein are reserved to VCJS, WYI or Ms. Simpson, as applicable . SUB-LICENSEE shall not use the Licensed Property for any purpose other than as expressly permitted herein.

(b)

No Conflict with Third Party Rights; Subordination . SUB-LICENSEE shall have no right to (i) use the Licensed Property in any manner that conflicts with the rights of any third party, provided that such rights have been granted by VCJS, WYI or Ms. Simpson, as applicable, and that such rights do not conflict with any rights granted to Sub-Licensee hereunder; or (ii) sub-license or transfer the rights granted hereunder other than as set forth in Section 15.3. A violation or attempted violation of these provisions shall constitute a material breach of this Agreement, for which SUB-LICENSEE will have thirty (30) days to cure such breach. SUB-LICENSEE acknowledges that this Agreement is a sub-license, and, therefore, the terms of this Agreement are subordinate in all respects to the Master License.

(c)

Celebrity Licenses . SUB-LICENSEE represents and warrants that neither it nor any controlled affiliate is presently a licensee for any female United States entertainment celebrity other than the one(s) specified in Schedule A . SUB-LICENSEE agrees that during the first twelve (12) months after the Effective Date it will not launch any new product line associated with any other young female celebrity without VCJS’s prior written consent. Notwithstanding the foregoing, SUB-LICENSEE shall be permitted to acquire an already existing license for another young female celebrity as a result of a merger, acquisition or purchase. For purposes of this provision, the term “young” shall mean under thirty (30) years of age at the time that SUB-LICENSEE would enter into or acquire any such license.

1.3.

Failure to Exploit .

(a)

Sub-Licensed Products . Without limitation to any other rights or remedies of VCJS hereunder, failure by SUB-LICENSEE to meet either the Product Introduction Date (the date on which the first prototypes are presented to the department store customers for review prior to issuance of the first purchase order) or the First Sale Date (the date on which the first sale of Sub-Licensed Products that are not samples or prototypes is made to a customer of SUB-LICENSEE for the purposes of resale by such customer) for any Sub-Licensed Product, provided that such failure is not caused by events, acts or occurrences beyond the reasonable control of SUB-LICENSEE or by force majeure events (as defined in Section 15.8), shall constitute a material breach hereof, giving VCJS the right to terminate this Agreement if, with respect to the sale of Sub-Licensed Products in the United States, SUB-LICENSEE does not fully cure said breach by introducing and selling the Sub-Licensed product in commercially significant quantities by no later than November 1, 2008 and, with respect to countries other than the United States, no later than November 1, 2009.

(b)

Territory . Without limitation to any other rights or remedies of VCJS hereunder, VCJS shall also have the right to terminate this Agreement with respect to a country within the Territory for a Sub-Licensed Product if SUB-LICENSEE fails to commence sales in such country within the Territory in commercially significant quantities by the First Sale Date for such Sub-Licensed Product in such country, provided that such failure is not caused by events, acts or occurrences beyond the reasonable control of SUB-LICENSEE or by force majeure events (as defined in Section 15.8), and subject to SUB-LICENSEE’s right of first negotiation during the thirty (30) day period following VCJS’s written notice of its intention to market Sub-Licensed Products in such country to re-acquire such country for its Territory as set forth in paragraph 2 of Schedule A hereto or, if such right is not invoked by SUB-LICENSEE, then subject to SUB-LICENSEE’s right to exclusively manufacture and distribute to any sub-licensee appointed by VCJS to service such country. In the event that VCJS appoints such a sub-licensee in such country, VCJS acknowledges that such sub-licensee will be subject to anti-diversion restrictions preventing the re-

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distribution of Sub-Licensed Products outside such country. SUB-LICENSEE will sell the Sub-Licensed Products to such sub-licensee appointed by VCJS in such country at a price that is the lower of (i) the lowest price previously charged by SUB-LICENSEE to its own distributor/sub-sub-licensee in such country, or (ii) suggested retail list price less 75%. Notwithstanding the foregoing, in the event of any such failure, SUB-LICENSEE shall have six (6) months following written notice thereof to cure such failure before VCJS shall be entitled to terminate this Agreement with respect to the country as to which such failure has occurred.

SUB-LICENSEE will provide six (6) months written notice to VCJS before entering into a country within the Territory to allow VCJS the opportunity to ensure that the Licensed Property is properly trademarked and protected in said Territory.

(c)

Distribution Channel . Without limitation to any other rights or remedies of VCJS hereunder, VCJS shall also have the right to immediately terminate this Agreement with respect to any Distribution Channel (defined as an identifiable segment of the population of customers for the Sub-Licensed Products, the two principal channels being the department and specialty store channel and the non-department and specialty store channel) for a Sub-Licensed Product if SUB-LICENSEE fails to commence sales in such Distribution Channel within the Territory in commercially significant quantities by the First Sale Date for such Sub-Licensed Product for such Distribution Channel or, having commenced such sales, fails to sell a Sub-Licensed Product in such Distribution Channel in commercially significant quantities for three (3) consecutive Royalty Periods following the First Sale Date applicable to such Distribution Channel, unless any such failure is caused by events, acts or occurrences beyond the reasonable control of SUB-LICENSEE-Licensee or by force majeure events (as defined in Section 15.8).

1.4

TRADEMARKS.

(a)

VCJS, at its own expense, shall register and maintain in the United States all of the Licensed Trademarks and, upon written request by SUB-LICENSEE, will register and maintain such Licensed Trademarks in any foreign country in which SUB-LICENSEE intends to sell the Sub-Licensed Products as soon as practicable following such request from SUB LICENSEE. SUB-LICENSEE shall cooperate with VCJS in such efforts and shall execute any documents required by VCJS, supply VCJS with any samples or other materials or take any actions necessary for VCJS to register and maintain the Licensed Trademarks in the United States and such foreign countries in the Territory in which SUB-LICENSOR intends to sell the Sub-Licensed Products. SUB-LICENSEE shall not, directly or indirectly, use, register or cause to be used or registered, any word, symbol, character or set of words, symbols or characters, trademark, tradename, service mark or copyright consisting of, related to, similar to and/or confusingly similar to any of the Licensed Trademarks or Licensed Property.  A schedule of trademarks and countries in which such trademarks are registered or pending registration is set forth on Schedule A hereto.

2.

CERTAIN OBLIGATIONS OF SUB-LICENSEE

2.1.

General . SUB-LICENSEE shall use its best efforts to promote, advertise, market, sell and distribute the Sub-Licensed Products in the Territory, including, without limitation, selling commercial quantities on a timely basis and maintaining a sales force sufficient to provide effective distribution of the Sub-Licensed Products throughout the entire Territory and in all Distribution Channels, subject to the timetables by Distribution Channel set forth in Schedule A. Without limitation to the foregoing, SUB-LICENSEE agrees to meet the Minimum Net Sales obligations set forth in Schedule A .

2.2.

Specific Obligations .

(a)

Customers . SUB-LICENSEE shall sell and distribute the Sub-Licensed Products only to approved customers (including distributors) in the Distribution Channels as identified in Schedule A .

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Except for, during the Initial Launch Period as defined in paragraph 4 of ScheduleA, non-department store customers in foreign countries and duty free customers in foreign countries and at the United States borders, and after the Initial Launch Period non-department store customers in the United States, to the extent that such customers, if retailers, carry, or if wholesalers sell to retailers who carry, other celebrity prestige fragrance such as Paris Hilton, Sarah Jessica Parker, Britney Spears and/or Jennifer Lopez, any customer not appearing on Schedule A as of the date of this Agreement must be submitted for VCJS’s approval, which approval by VCJS will not be unreasonably withheld or delayed, using the Customer Approval Form  ( Exhibit A ) . SUB-LICENSEE’s sale to any unapproved customer will constitute a material breach of this Agreement, for which SUB-LICENSEE will have thirty (30) days to cure such breach. VCJS may, with reasonable cause and upon thirty (30) days prior written notice, withdraw approval of any customer at any time, whereupon SUB-LICENSEE shall cease all sales to such customer, except those sales that were already on open purchase orders at the time of receipt of such written notice. In the event that VCJS determines that a customer to whom SUB-LICENSEE has sold Licensed Products is unacceptable, VCJS, upon thirty (30) days prior written notice may disapprove such customer to the extent sales to such customer are causing material damage to the Licensed Property. If such customer carries other brands that are comparable in quality and prestige in quantities that are comparable to the quantities of Licensed Products that such customer carries, such customer shall not be deemed to be causing material damage to the Licensed Property unless such customer engages in conduct other than simply purchasing and selling the Licensed Property that causes material damage to the Licensed Property. Except as permitted by VCJS, SUB-LICENSEE shall not sell, distribute, market advertise or promote the Sub-Licensed Products to customers outside of the Distribution Channels. SUB-LICENSEE at all times will keep VCJS informed of where it maintains inventories of the Sub-Licensed Products.

(b)

Internet; Catalogue Sales . SUB- LICENSEE shall not, and shall not permit its distributors or customers to, advertise, promote or sell any Sub-Licensed Products on a direct basis, e.g., through catalogues or through the internet or any other electronic or computer-based system, without VCJS's prior written consent, which consent shall not be unreasonably withheld, except that website and catalogue sales by retail chain customers shall be permitted without prior consent from VCJS.

3.

APPROVAL OF PRODUCTS AND ANCILLARY MATERIALS

3.1.

Quality of the Sub-Licensed Products; Product Approval .

(a)

Designs . For each new product introduction, prior to the commencement of manufacture of the Sub-Licensed Products, SUB-LICENSEE shall submit, at its sole expense (including without limitation, all expenses relating to freight, applicable duties and similar costs), to VCJS for prior written approval, at such location or locations indicated by VCJS, concepts, scents, sketches, renderings or boards and bottle and packaging designs for all proposed Sub-Licensed Products (collectively, the “Designs”) using the Licensed Product Approval Form  ( Exhibit B ). Within fourteen (14) calendar days after such presentation, VCJS shall provide written notice of design approval or disapproval. Failure by VCJS to give written approval or disapproval within such fourteen (14) day period shall be deemed disapproval by VCJS, in which event SUB-LICENSEE shall have the right to provide written notice to VCJS of its failure to communicate its approval or disapproval to SUB-LICENSEE. If VCJS, within three (3) business days following such written notice shall still fail to communicate its approval or disapproval, VCJS shall thereupon be deemed to have approved such Designs. If VCJS disapproves any Designs, it shall accompany its disapproval with a written explanation of the reasons for such disapproval. Notwithstanding the time periods set forth above, VCJS will endeavor to provide written approval or disapproval as soon as practicable during the time prior to the initial Product Introduction Date. VCJS’s approval shall not be unreasonably withheld.

(b)

Prototypes . Upon written approval of the Designs, and prior to the commencement of manufacture, presentation to the trade, sale or distribution of the Sub-Licensed Products, SUB-LICENSEE

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shall submit, at its sole expense (including without limitation, all expenses relating to freight, applicable duties and similar costs), to VCJS for prior written approval, at such location or locations indicated by VCJS, three (3) full set(s) of prototype samples one of the sample sets will be used for public relations or prototypes of the Sub-Licensed Products (the “Prototypes”) that SUB-LICENSEE intends to manufacture and distribute, created from the approved Designs using the Licensed Product Approval Form  ( Exhibit B). Within fourteen (14) calendar days after such presentation, VCJS shall provide written notice of approval or disapproval to SUB-LICENSEE. Failure by VCJS to give written approval within such fourteen (14) day period shall be deemed disapproval, in which event SUB-LICENSEE shall have the right to provide written notice to VCJS of its failure to communicate its approval or disapproval to SUB-LICENSEE. If VCJS, within three (3) business days following such written notice shall still fail to communicate its approval or disapproval, VCJS shall thereupon be deemed to have approved such Prototypes. VCJS’s approval shall not be unreasonably withheld.

(c)

Compliance. Once such Designs and Prototypes have been approved, the materials, standards, specifications, designs and processes used to manufacture the Sub-Licensed Products shall not depart from the approved Designs and Prototypes without the express written consent of VCJS. If Sub-Licensed Products (including any components or packaging) found in the marketplace are different from the Prototypes previously approved, VCJS shall give SUB-LICENSEE written notice of any such non compliance, which notice shall specify the details thereof. SUB-LICENSEE shall as soon as practicable following receipt of such notice suspend sales of all such non-compliant Sub-Licensed Products. Within thirty (30) calendar days after its receipt of such notice, SUB-LICENSEE shall correct any problem specified by VCJS. If such Sub-Licensed Product, as corrected by SUB-LICENSEE, is still not approved by VCJS (which approval shall not be unreasonably withheld), or if SUB-LICENSEE fails to correct any such problem, SUB-LICENSEE shall be deemed to be in material breach of this Agreement. VCJS may order SUB-LICENSEE to recall any non-compliant Sub-Licensed Products at SUB-LICENSEE’s sole expense. If SUB-LICENSEE fails to promptly recall such non-compliant Sub-Licensed Products, VCJS may purchase such Sub-Licensed Products at SUB-LICENSEE's expense, and SUB-LICENSEE will be deemed to have materially breached this Agreement. SUB-LICENSEE will immediately pay VCJS all reasonable costs incurred in connection with VCJS's purchase of such non-compliant Sub-Licensed Products.

(d)

Production Samples . Within seven (7) calendar days after each style is first manufactured as a finished Sub-Licensed Product, SUB-LICENSEE shall submit at its sole expense (including without limitation, all expenses relating to freight, applicable duties and similar costs) to each of VCJS and WYI, at such location or locations indicated by them, two (2) complete set(s) of production samples of each Sub-Licensed Product that SUB-LICENSEE is manufacturing and intending to sell or distribute and two (2) complete sets of all Ancillary Material (defined below) associated therewith. The production samples of each Sub-Licensed Product shall be from the initial production run of Sub-Licensed Products and dispatched to VCJS by express courier. At least once during each season (for each Sub-Licensed Product), VCJS may require that SUB-LICENSEE submit to VCJS and to WYI (each) one (1) set of production samples of each Sub-Licensed Product, at no cost to VCJS or to WYI.

3.2

Approval of Ancillary Materials . Notwithstanding the submission requirement set forth in Section 3.1 above, SUB-LICENSEE shall not produce, use or disseminate any advertising or packaging or other business materials bearing the logo, signature or likeness of Ms. Simpson, including, without limitation, invoices, business cards, labels, advertising, promotions, packaging, shopping bags, press releases and announcements to the trade or media regarding Ms. Simpson’s involvement with the Sub-Licensed Products, etc. “Ancillary Material”) that has not been previously approved in writing by VCJS. Any submission not approved in writing by VCJS within fourteen (14) calendar days shall be deemed disapproved, in which event SUB-LICENSEE shall have the right to provide written notice to VCJS of its failure to communicate its approval or disapproval to SUB-LICENSEE. If VCJS, within three (3) business days following such written notice, shall still fail to communicate its approval or disapproval,

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VCJS shall thereupon be deemed to have approved such Ancillary Materials. VCJS’s approval shall not be unreasonably withheld. No Ancillary Material shall include or otherwise refer to SUB-LICENSEE’s name except as required by law. Ancillary Materials shall not include ordinary business documentation such as stationary, business cards, invoices, labels and other day to day transactional documentation unless any such materials bear the logo, signature or likeness of Ms. Simpson.

3.3

Ancillary Material: Special Requirement for Media Advertising. Ancillary Materials bearing the Licensed Property consisting of media advertising such as packaging, point of sale posters, etc. shall be submitted for approval using the Licensed Property Use Approval Form  ( Exhibit C ). Ancillary Materials bearing the Licensed Property consisting of media advertising such as magazine insertions, advertorials, billboards, press releases, trade advertising, etc. shall be submitted using the Advertising Approval Form  ( Exhibit D ). The right of approval shall also encompass creative execution and media placement to the extent that such placement is reasonably likely to cause material damage to the Licensed Property. SUB-LICENSEE further agrees that it shall maintain the high standards and consistency of the Licensed Trademarks and the Sub-Licensed Products associated therewith in all advertising, packaging and promotion of the Sub-Licensed Products.  

3.4

Intellectual Property Notices; Tags. Each Sub-Licensed Product and Ancillary Material shall bear the Licensed Trademarks in the form approved by VCJS in accordance with this Agreement, with all legally required legends, markings and notices. In addition, SUB-LICENSEE shall affix permanently to each Sub-Licensed Product a style, item or UPC number that shall be identical to the style, item or UPC number used to identify the respective Sub-Licensed Product in all of SUB-LICENSEE's books and records. If SUB-LICENSEE purchases labels, tags or other materials bearing the Licensed Trademarks from third parties, or produces any such materials itself or through an affiliate, SUB-LICENSEE shall provide to VCJS, together with the quarterly Statement of Royalties (as defined below in Section 4.5), copies of invoices for all such materials purchased and/or equivalent detailed information if any such materials are produced by SUB-LICENSEE or an affiliate, and shall obligate all providers of such materials to comply with all applicable provisions of this Agreement relating to the use and misuse of the Licensed Trademarks.

3.5

Manufacturers and Compliance with Labor Compliance Rules; Access to Premises .

(a)

Approval of Manufacturing Facilities . The manufacture of the Sub-Licensed Products shall be carried out only at premises reasonably approved by the VCJS in writing from time to time. Upon execution of this Agreement, and at such other times as VCJS reasonably requests, SUB-LICENSEE shall provide VCJS a list of all its manufacturing facilities along with contact information and addresses, and shall promptly notify VCJS of any changes thereto. SUB-LICENSEE shall supply such other information as VCJS may reasonably request with respect to its manufacturers, subcontractors and suppliers. SUB-LICENSEE and its manufacturers shall comply in all material respects with the LIMA Code of Business Practices ( Schedule B ) .

(b)

Access by VCJS . SUB-LICENSEE shall ensure that VCJS shall be able at any time, upon at least ten (10) days prior notice, to enter any premises used by SUB-LICENSEE or its manufacturers, sub-contractors, sub-subcontractors and suppliers in connection with the manufacture, storage or distribution of the Sub-Licensed Products, to inspect such premises, all plant, workforce and machinery used for manufacture, packaging or storage of Sub-Licensed Products and all other aspects of the manufacture of Sub-Licensed Products.

(c)

Supervision by SUB-LICENSEE . SUB-LICENSEE shall be responsible for supervising and controlling the acts of its own factory(ies) and of its manufacturing subcontractors and sub-subcontractors to prevent the manufacturing or sale of Sub-Licensed Products and components thereof that is not expressly authorized by VCJS.  VCJS shall have the right to require that SUB-LICENSEE

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terminate its relationship with any subcontractor or sub-subcontractor or supplier who is behaving or operating in a manner that is causing material damage to VCJS or to the Licensed Property. Upon expiration or termination of the relevant manufacturing or supply contract, SUB-LICENSEE shall cause the subcontractor or supplier thereof to cease manufacture of the Products and/or components thereof and to immediately cease using the Licensed Property in any manner.

3.6

Non-Conforming Products and Distribution Channels . SUB-LICENSEE shall not, under any circumstances, sell or distribute forms of a Sub-Licensed Product that do not comply with the requirements of this Section, or have otherwise been disapproved by VCJS, nor shall SUB-LICENSEE sell or distribute Sub-Licensed Products to any customer that is not in one of the permitted Distribution Channels as set forth in Schedule A .

4.

PAYMENT

4.1

Trademark Royalty . In partial consideration for the rights being conveyed herein, each calendar quarter (the “ Royalty Period ”) on the dates specified in Schedule A , SUB-LICENSEE shall account for and pay to VCJS the Trademark Royalty or the Guaranteed Minimum Trademark Royalty (as such terms are defined and in the amounts identified in Schedule A ) for the applicable Royalty Period, whichever of said amounts is greater. Such accounting and payments are due within thirty (30) days following the end of each applicable Royalty Period. The obligation of SUB-LICENSEE to pay the Trademark Royalty and/or the Guaranteed Minimum Trademark Royalty, as the case may be, is absolute, notwithstanding any claim that SUB-LICENSEE may assert against VCJS. SUB-LICENSEE shall not have the right to set off, compensate or make any deduction from payments of the Trademark Royalty or the Guaranteed Minimum Trademark Royalty for any reason whatsoever.

4.2

Marketing Fee . As partial consideration for the license granted hereunder, SUB-LICENSEE shall be obligated to expend a certain sum to cover marketing and advertising (the “Marketing Fee”), which sum shall be a percentage of Net Sales or a Guaranteed Minimum Marketing Fee, whichever is greater. The Marketing Fee shall include two components: one component that SUB-LICENSEE shall pay to VCJS for VCJS to expend on promotion of all licensed products sub-licensed to bear the Licensed Property, in its own discretion (the “Pooled Marketing Fee Component”), and the other component to be expended directly by SUB-LICENSEE, subject to the approval procedures set forth in Section 6 (the “Direct Payment Marketing Fee Component”). The relative percentages of Net Sales for each of the two components is also set forth in Schedule A . During each year of the Term, as specified in Schedule A , SUB-LICENSEE shall expend through a combination of the Pooled Marketing Fee Component and the Direct Payment Marketing Fee Component, a Marketing Fee or Guaranteed Minimum Marketing Fee in the amount recited in Schedule A , whichever of said amounts is greater. All marketing or advertising conducted with respect to the Direct Payment Marketing Fee Component is subject to the approval process under Sections 3.2 and 3.3 above. SUB-LICENSEE shall provide proof of expenditure for the Direct Payment Marketing Fee Component by using the Marketing Expenditure Form  ( Exhibit G ). The obligation of SUB-LICENSEE to pay the Marketing Fee or the Guaranteed Minimum Marketing Fee, as the case may be, is absolute and independent of the Trademark Royalty, notwithstanding any claim that SUB-LICENSEE may assert against VCJS. SUB-LICENSEE shall not have the right to set off, compensate or make any deduction from payments of the Marketing Fee or the Guaranteed Minimum Marketing Fee for any reason whatsoever. Any amount that SUB-LICENSEE may directly spend on marketing and advertising in excess of the amount required herein shall be used to offset the required Guaranteed Minimum Marketing Fee for the subsequent year.

4.3

Royalty Basis, Net Sales, Foreign Withholding . The Trademark Royalty and, if applicable, the Marketing Fee shall be calculated on the basis of SUB-LICENSEE’s Net Sales (defined below). The term “Net Sales” shall mean the total of gross sales of Sub-Licensed Products less only credits to, or deductions taken by, customers for returns, trade discounts, rebates, markdowns, payment terms discounts, closeouts

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and, allowances actually stated on the invoice or granted to the customer by agreement with SUB-LICENSEE or its distributor, taxes directly applicable to the sale of such Sub-Licensed Products, and as otherwise specifically permitted hereunder. The combined total of allowances, trade discounts and payment discounts shall not exceed twenty percent (20%) of the total gross sales on a calendar year basis during the Term of this Agreement and any shortfalls in any annual period shall be usable to offset any overages in subsequent periods. Notwithstanding the foregoing, the combination of any dollar shortfall of allowances, trade discounts and payment discounts in any previous year with any allowances, trade discounts and payment discounts given in any subsequent year shall not exceed thirty (30%) of total gross sales in such subsequent year. Net Sales shall only include sales by SUB-LICENSEE and its Affiliates to non-Affiliates. For purposes hereof, “Affiliate” shall mean any business entity controlled by, controlling or under common control with SUB-LICENSEE with “control” meaning the right or power to vote a majority of the outstanding stock, membership interests or equity interests of the entity being controlled. Net Sales of Sub-Licensed Products to wholesaler Affiliates shall not exceed 40% of total Net Sales of Sub-Licensed Products for any Contract Year during the Term of this Agreement. Prices charged by SUB-LICENSEE to wholesaler Affiliates shall be at arms length and competitive with pricing charged by SUB-LICENSEE to non-Affiliate wholesalers. If the Affiliate is a retailer, then the Trademark Royalty shall be computed based on the sale by SUB-LICENSEE to such Affiliate, which sale shall be deemed to be at suggested retail list price less 75% without taking into account allowances, trade discounts, payment discounts or returns. Returned units of Sub-Licensed Products shall not exceed seven and a half percent (7.5%) of the total gross sales per calendar year during the Term of this Agreement and any shortfalls in any calendar year period shall be usable to offset any overages in subsequent periods. . Notwithstanding the foregoing, the combination of any dollar shortfall of returns in any previous year with any returns in any subsequent year shall not exceed fifteen (15%) of total gross sales in such subsequent year. Any deduction claimed by SUB-LICENSEE must be verifiable and actual. If any amount payable to VCJS is subject to any non-US tax, charge or duty, SUB-LICENSEE shall furnish to VCJS proof of such payment, including official proof of receipt of SUB-LICENSEE’s payment to the government entity imposing such tax, charge or duty. If VCJS does not receive full and complete U.S. tax credit for any such tax, charge or duty, then the amount payable by SUB-LICENSEE shall be increased to provide to VCJS such amount as would be payable to VCJS in the absence of any such tax, charge, duty or impost.

4.4

Trademark Royalty Advance / Marketing Fee Advance. Upon its execution of this Agreement SUB-LICENSEE shall pay VCJS (a) a non-refundable advance (the “ Royalty Advance ”) creditable against the SUB-LICENSEE’s earned Trademark Royalty obligation hereunder, including the Guaranteed Minimum Trademark Royalty, in the amount as specified in Schedule A.

4.5

Statements and Reports . Together with the payments required by Sections 4.1 and 4.2, SUB-LICENSEE shall furnish to VCJS, in hard copy and electronic copy, a complete and accurate statement on the Statement of Royalties Form  ( Exhibit E ) as modified by VCJS from time to time, showing, for the relevant Royalty Period (a) gross sales of all Sub-Licensed Products for the applicable Royalty Period, itemized by SKU (b) Net Sales on which the royalties are based; (c) all related party sales and employee sales, parking lot, warehouse or similar sales, and any other unusual sales transactions; (d) allowed deductions or credits taken against gross sales; and (e) quantity and dollar amount of Sub-Licensed Products sold to each customer, broken down by quarter and each country within the Territory. In addition, not later than thirty (30) calendar days after the end of each Royalty Period, SUB-LICENSEE shall send to VCJS a report containing all of the information required by the Quarterly Sales Report Form  ( Exhibit F) modified by VCJS from time to time. Failure to deliver statements and reports in a timely manner as provided by this Section 4.5 shall constitute a material breach of this Agreement, for which SUB-LICENSEE will have ten (10) calendar days to cure such breach.

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4.6

Invoices . Upon the request of VCJS, SUB-LICENSEE shall submit to VCJS copies, which can be electronic or physical, of invoices, credit memoranda, price lists, line sheets and customer lists related to the sale of Sub-Licensed Products.

4 .7

Time of the Essence . Time is of the essence with respect to timely delivery of statements and payments as herein provided and SUB-LICENSEE’s failure to comply shall constitute a material breach of this Agreement. If such breach is not cured within ten (10) business days, such breach shall be grounds for immediate termination of this Agreement by VCJS without further opportunity to cure.

4.8

Interest. Without prejudice to any other rights of VCJS, SUB-LICENSEE shall pay VCJS interest on all late payments at the annualized rate of prime as reported in the Wall Street Journal plus 2% payable on a monthly basis accruing from the date that is ten (10) days following written notice that such payment was past due, reduced to the extent required by any applicable usury laws. Such interest shall accrue from such due date until the date VCJS receives such late payment, and shall be a non-recoupable expense.

4.9

Foreign Exchange Rate . All amounts due under this Agreement shall be payable in U.S. currency by check or wire transfer drawn on a U.S. bank or in such other manner as VCJS shall specify. If any sale included in Net Sales was transacted in any currency other than U.S. currency, the U.S. currency equivalent of such sale, for all purposes under this Agreement, including the reporting and payment of the Trademark Royalty hereunder, shall be calculated using the average rate of exchange in effect during the entire month in which such sale was transacted, as reported in The Wall Street Journal.

4.10

Acceptance of Payment Not a Waiver; Manner of Payment Required. Acceptance by VCJS of any payments under this Agreement shall not prevent VCJS at any later date from disputing the amount owed or from demanding more information from SUB-LICENSEE regarding payments finally due, and shall not constitute a waiver of any breach of this Agreement by SUB-LICENSEE if any such breach shall have occurred.

4.11

VCJS Purchases of Sub-Licensed Products . VCJS and WYI shall have the right to purchase from SUB-LICENSEE a reasonable number of Sub-Licensed Products for a seventy-five (75%) percent discount from the Suggested Retail Price in the United States or SUB-LICENSEE’s lowest wholesale price, whichever is lower, up to a maximum dollar amount that is no greater than 1% of SUB-LICENSEE’s Net Sales in any twelve-month period.

5.

BOOKS AND RECORDS; AUDITS

5.1

Duty to Maintain . At all times while this Agreement in effect, and thereafter until the later to occur of (a) the completion of three (3) years after the expiration or termination of this Agreement; and (b) the resolution of any dispute arising out of or otherwise related to the transactions contemplated hereby, SUB-LICENSEE shall keep and maintain accurate detailed books and records to account for all operations within the scope of this Agreement, including the quarterly production or manufacture, sale and inventory on hand of the Sub-Licensed Products separately for each SKU covering all transactions arising out of or otherwise relating to this Agreement including, without limitation, separate and appropriate books of account and records sufficient to reconcile the number of Sub-Licensed Product units manufactured with the number of Sub-Licensed Product units sold. SUB-LICENSEE shall maintain its books and records at a location in the United States of America.

5.2

Periodic Financial Statements . Within one hundred twenty (120) calendar days after the end of each of its fiscal years SUB-LICENSEE shall provide VCJS (all in English) with (a) an annual composite statement , certified by its chief financial officer, showing the aggregate gross sales, trade discounts, returns, allowances, payment term discounts and closeout discounts and any other deduction taken to

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arrive at the Net Sales price of all Sub-Licensed Products sold by SUB-LICENSEE; and (b) an annual inventory report , certified by its chief financial officer, including computer reports summarizing inventory by SKU.

5.3

Access. At all times during the Term and within three (3) years following its termination or expiration, VCJS shall have the right, from time to time, time, upon not less than five (5) business days advance notice and during regular business hours, to examine and/or audit, and make copies and extracts from the books of account and records, and all other documents, materials and inventories in the possession of or under the control of SUB-LICENSEE with respect to the Sub-Licensed Products, including, but not limited to, manufacturing, inventory and sales records relating to the Sub-Licensed Products. VCJS shall have reasonable access for such purposes and for the purpose of making copies and extracts therefrom and SUB-LICENSEE shall fully cooperate with VCJS in connection therewith including providing advance copies and electronic files of information and materials reasonably requested by VCJS. Any audit hereunder shall be made by VCJS at its own expense, except as provided below.

5.4

Audit and Results of Examination. If the audit reveals that SUB-LICENSEE's reporting and/or record keeping are not in accord