TRADEMARK LICENSE AGREEMENT

 

<PAGE>

                                                                    EXHIBIT 10.3

 

Confidential treatment has been requested for portions of this Exhibit. The copy

filed herewith omits the information subject to the confidentiality request.

Omissions are designated as (******). A complete version of this Exhibit has

been filed separately with the Securities and Exchange Commission.

 

                                   ----------

 

                           TRADEMARK LICENSE AGREEMENT

 

                                      BETWEEN

 

                            TOMMY BAHAMA GROUP, INC.

 

                                       AND

 

                       PHOENIX DELAWARE ACQUISITION, INC.

 

                                   ----------

 

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                                       INDEX

 

<TABLE>

<S>            <C>

Section 1.     Definitions

Section 2.     Grant of License

SECTION 3.     Sale of Licensed Products

Section 4.     Approval of Licensed Products

Section 5.     Licensor's Use of Licensed Product

Section 6.     Minimum Net Sales

Section 7.     Guaranteed Royalty & Earned Royalty

Section 8.     Sales & Royalty Reports

Section 9.     National Advertising & Marketing Support

Section 10.    Advertising, Marketing, Promotions & Packaging Approval

Section 11.    Media Approval

Section 12.    Duration of Approvals

Section 13.    Tommy Bahama Marks

Section 14.    Confidential & Proprietary Information

Section 15.    Payments

Section 16.    Notices & Other Communications

Section 17.    Records & Inspection

Section 18.    Manufacturing, Compliance & Code of Conduct

Section 19.    Assignment, Changes of Control

Section 20.    Termination

Section 21.    Indemnity & Disclaimer

Section 22.    Insurance & Loss

Section 23.    Joint Venture

Section 24.    Force Majeure

Section 25.    Choice of Law & Forum

Section 26.    Compliance With Laws

Section 27.    Waiver

Section 28.    Validity

Section 29.    Entire Agreement

Section 30.    Reservation of Rights

Section 31.    Exhibits

Section 32.    Survival

Section 33.    Interpretation

</TABLE>

 

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                                     EXHIBITS

 

A. Authorized Licensed Trademarks

B. Authorized Licensed Products And Territories

C. Contract Term

D. Sales of Licensed Products to TB Retail Stores

E. Minimum Net Sales

F. Guaranteed Royalty

G. Earned Royalty

H. Branded Marketing Materials

I. Approved Additional Licensors, Brands and Logos of Licensee

J. Approved Retailers

K. Quarterly Royalty Statements

L. Statement of Estimated Monthly Net Sales

M. Advertising Policy

N. Notice to Third Parties

O. Supplier Agreement and Certification

 

<PAGE>

 

                                LICENSE AGREEMENT

 

          This License Agreement ("Agreement") made and entered into this 3rd

day of August, 2005 ("Effective Date"), by and between the Tommy Bahama Group,

Inc., with its principal place of business at 1071 Avenue of the Americas, 11th

Floor, New York, New York 10018 ("Licensor"), and Phoenix Delaware Acquisition,

Inc., a Delaware corporation with its principal place of business at 5759 Fleet

Street, Suite 220, Carlsbad, California 92008 ("Licensee").

 

                                    RECITALS

 

          A. Licensor is the owner of the well-known TOMMY BAHAMA(R) trademark

and related intellectual-property rights which prior to the date hereof it

licensed to Paradise Shoe Company LLC ("Paradise") for the manufacture,

advertising, promotion, sale, offering for sale, and distribution of Licensed

Products (defined below) and related promotional and packaging which constituted

Paradise's sole business.

 

          B. Concurrently herewith Paradise, Paradise' members and Licensee have

executed and delivered to one another an Asset Purchase Agreement pursuant to

which Licensee has purchased from Paradise all of Paradise's assets and

business. Licensor is a 50% member of Paradise and is receiving a portion of the

proceeds from such sale.

 

          C. Pursuant to and as contemplated by the Asset Purchase Agreement,

concurrently herewith, Licensor and Paradise have terminated the license

agreement between them with respect to the TOMMY BAHAMA(R) trademark and related

intellectual-property rights and Licensor and Licensee have executed and

delivered this Agreement so that Licensee shall have the right to use the

trademark TOMMY BAHAMA, and other trademarks and service marks attached to this

Agreement as "Exhibit A" and related rights pertaining to each of them (the

"TOMMY BAHAMA Marks"), within the Territory (as defined in "Exhibit B") on the

terms and conditions herein.

 

          In consideration of the mutual promises and conditions contained in

this Agreement, and for other good and valuable consideration, the receipt and

sufficiency of which are hereby acknowledged, the parties agree as follows:

 

1.    DEFINITIONS

 

     1.1. "Affiliate" shall mean, for any party, its officers, directors,

           parents, corporations, subsidiary corporations, partnerships, joint

          ventures or other entities (whether incorporated or not) substantially

          under the control or direction of the party and with respect to

          Licensor only, its shareholders.

 

 

<PAGE>

 

     1.2. "Close-Outs" shall mean second quality, irregular, out of season or

          damaged Licensed Products that remain merchantable, or Licensed

          Products which are sold for more than ****** percent (******%)

           below the suggested wholesale price.

 

     1.3. "Code of Conduct" shall mean Licensor's written policy governing

          issues related to employment, working conditions, the environment and

          human dignity and other issues. The Code of Conduct is attached hereto

          as "Addendum 1 to Exhibit O" and by this reference incorporated

          herein.

 

     1.4. "Competing Event" shall mean any event by which Licensee shall become

          a competitor in the Normal Channels of Distribution with an "island

          lifestyle" product or category of products included in the Licensed

          Products, whether by acquisition, internal development or otherwise.

 

     1.5. "Confidential Information" shall mean secret or proprietary

           information of, or data maintained as confidential by either party. It

          shall include, without limitation, the terms and conditions of this

          Agreement (except to the extent that such terms and conditions must be

          disclosed pursuant to U.S. Securities and Exchange Commission

          requirements, and if so, the parties will use best efforts to forgo

          disclosing sensitive financial information), Licensor Designs,

          information concerning products, techniques, developments, product

          plans, equipment, inventions, patent applications, ideas, designs,

          processes, methods, research, sales, licensing, customers, operations

          and work product of Licensor or its Affiliates. Nothing shall be

           considered Confidential Information which (i) either party learns from

          other sources which have a right to that information free from

          confidentiality restrictions; (ii) is available to the public or

          readily discernible from information available to the public; (iii)

          enters the public domain other than through the actions or inactions

          of either party; or (iv) is independently developed by either party

          without reference to, or reliance on, the Confidential Information. In

          the event any item of Confidential Information is subject to required

          disclosure pursuant to any order, judgment, ruling or degree, despite

          the terms of this Agreement, the involved party shall immediately

          notify the other party, which shall have the right to seek a

          protective order or similar relief.

 

     1.6. "Contract Term" shall mean the term of this Agreement, as set forth on

          Exhibit C, unless sooner terminated in accordance with the terms of

          this Agreement. Any renewal or extension that may be granted in the

          future deemed included in the Contract Term.

 

     1.7. "Contract Year" shall mean a period of twelve (12) successive months

          commencing on any first day of June during the Contract Term, except

          that the first Contract Year shall commence on the Effective Date and

          shall continue until May 31, 2007.

 

     1.8. "Designated Agency" shall mean an advertising agency selected by

          Licensor for the creation and development of advertising and marketing

          themes, concepts and ideas,

 

****** Certain information on this page has been omitted and filed separately

     with the Securities and Exchange Commission. Confidential treatment has

     been requested with respect to the omitted portions.

 

<PAGE>

 

          including, without limitation, creative content for Licensed Product

          designs, color combinations and styles relating to the TOMMY BAHAMA

           Marks.

 

     1.9. "Design Documentation" shall mean color strike-offs, photographs or

          drawings of sample Licensed Products, together with line plans, all

          other artwork, specifications, sketches, renderings, samples,

          marketing and pricing information, cost analyses and similar materials

          relating to the proposed Licensed Products.

 

     1.10. "Design Rights" shall mean any Licensee-developed trademarks, logos,

          copyrights, sketches, schematics, technical drawings, or technical

          properties that are specifically developed for the Licensed Products

          and are incorporated into, or used in connection with, Licensed

          Products. Design Rights do not include Licensee-owned trademarks,

           technical or design patents, trade-names, service marks or logos

          existing as of the Effective Date and used in connection with Licensed

          Products in a manner permitted under the terms of this Agreement, nor

          do they include trademarks, logos, technical properties or patents

          that were developed for parties other than the Licensor but are still

          used in connection with the Licensed Products as permitted under the

          terms of this Agreement.

 

     1.11. "Distributor" shall mean a party that may reasonably be expected to

          sell merchandise of the kind and character of the Licensed Products to

          persons or entities other than consumers.

 

     1.12. "Earned Royalty" shall mean, for each Contract Year, the amount of

          money Licensee shall pay to Licensor in consideration for the grant of

          this license. Such amount is calculated as a percentage of Net Sales,

          specified in "Exhibit G."

 

     1.13. "Expiration Date" shall mean the date upon which the Agreement ends

          because of the end of the Contract Term.

 

     1.14. "Guaranteed Royalty" shall mean, for each Contract Year, the minimum

          royalty payment to be made to Licensor by Licensee, as specified in

          "Exhibit F," regardless of actual Net Sales.

 

     1.15. "Licensed Product" shall mean any Product, as specified in "Exhibit

          B," for which rights are granted to Licensee under this Agreement, and

          bear the TOMMY BAHAMA Marks, or incorporate Licensor Designs or Design

          Rights. Regardless of the extent to which a Licensed Product

          incorporates any Licensor Design or Design Rights, it shall be a

          unique, exclusive design.

 

     1.16. "Licensor Designs" shall mean styles, designs, patterns, color

          combinations, design and marketing directions, and seasonal concepts,

          supplied by Licensor.

 

     1.17. "Marketing Support" shall mean costs of showroom displays and all

          other branded marketing and promotional materials created and

          developed by or on behalf of Licensee to be used to promote the

          distribution and sale of Licensed Products to the trade.

          Notwithstanding the foregoing, Marketing Support does not include

          costs associated with in-store seminars.

 

<PAGE>

 

     1.18. "Minimum Net Sales" shall mean, for any Contract Year, the amount of

          Net Sales which would produce the applicable Guaranteed Royalty for

          such Contract Year as a percentage of such amount.

 

     1.19. "National Advertising" shall mean advertisements, brochures, catalogs

          and similar marketing materials published and distributed to

          consumers; included in publications intended for consumers; or

          broadcast through television, the Internet, radio or other media; that

          are designed and intended to promote the sale of Licensed Products,

          including point-of-purchase displays for use by retailers and

          marketing and promotional pieces provided to retailers for use in

          sales promotions to consumers.

 

     1.20. "Net Sales" shall mean the invoiced billing price of all Licensed

          Products sold and shipped by Licensee to its customers, excluding only

          federal and state taxes, tariffs, freight, returns evidenced by credit

          memoranda, normal trade discounts, and sales allowances. For purposes

          of determining the Earned Royalty and meeting Minimum Nets Sales,

          regardless of how much the foregoing deductions amount to, Licensee

          shall not deduct from Net Sales an amount that would exceed ******

          percent (******%) of annual gross sales of Licensed Products.

          Notwithstanding the previous sentence, if the deduction percentage is

          materially skewed by a larger than average return volume by Licensor

          of Licensed Products in any given Contract Year, which is outside the

          normal course of business, a greater percentage of allowed deductions

          will be mutually agreed upon between the parties. No deduction may be

          made for early payments, bad debts, advertising allowances or special

          promotions of any kind or for costs incurred in manufacture, sales,

           advertising or promotion.

 

     1.21. "Prime Rate" shall mean the prime rate of interest charged by

          SunTrust Bank, Atlanta, Georgia or any successor institution, as

          published in the Wall Street Journal for the applicable period.

 

     1.22. "Monthly Statement" shall mean a combination sales and royalty

          statement issued by Licensee to Licensor with respect to each calendar

          month during the Contract Term. If the initial or last Monthly

          Statement shall be for a period less than a calendar month, it shall

          be issued with respect to that shorter period.

 

     1.23. "Regular Price" shall mean Licensed Products sold for the suggested

          wholesale price, or for a price which is no more than a ******

          percent (******%) discount from the suggested wholesale price.

 

     1.24. A "Sale" shall occur when Licensed Products are invoiced by Licensee

          to its customers.

 

     1.25. "Sell-Off Period" shall mean the first six (6) months following the

          expiration or termination of this Agreement.

 

****** Certain information on this page has been omitted and filed separately

     with the Securities and Exchange Commission. Confidential treatment has

     been requested with respect to the omitted portions.

 

<PAGE>

 

     1.26. "Termination Date" shall mean the date upon which the Agreement ends

          due to any other cause except expiration of the Term.

 

2.    GRANT OF LICENSE

 

     2.1. Licensor hereby grants to Licensee a nontransferable, non-assignable

          (except as permitted hereby), non-divisible, and exclusive (as limited

          by Section 2.2) license, without the right to grant sublicenses, to

          use the TOMMY BAHAMA Marks, solely in the Territory and solely on or

          in connection with the manufacture, advertising, promotion, sale,

          offering for sale, and distribution of Licensed Products and related

          promotional and packaging material during the Contract Term of this

          Agreement or until this Agreement is sooner terminated as hereinafter

          set forth. Notwithstanding the previous sentence, the license shall be

          non-exclusive for the last one hundred and twenty (120) days of the

          Contract Term for which no extension is available under the terms of

          this Agreement. Nothing in the foregoing shall limit the rights of

          Licensor or Licensor's Affiliates with respect to the TOMMY BAHAMA

          Marks outside of the Territory.

 

     2.2. Notwithstanding Section 2.1, Licensor shall have the right to

          manufacture and sell Licensed Products ("Special Make-Up Products")

          and other products containing the TOMMY BAHAMA Marks in the Territory,

          through stores and websites owned, controlled, or operated by Licensor

          ("TB Store(s)"). The foregoing is subject to Licensee's first right of

          refusal to present a proposal to manufacture and sell Special Make-Up

          Products to Licensor. Such proposal must be submitted within twenty

          (20) days of request from Licensor, and shall include a general

          business plan, manufacturing minimums and pricing. Licensor has five

          (5) days to review such proposal and notify Licensee of its decision.

          If Licensor elects to source the Special Make-Up Products itself,

          Licensor agrees to give Licensee the reasonable right to "match" a

          proposal made by another potential manufacturer of the Special Make-Up

          Products, and if Licensee matches the proposal, then Licensor shall

          purchase the Special Make-Up Products from Licensee, pursuant to the

          terms of the matched proposal. The parties acknowledge that the

          production of Special Make-Up Products is an activity that is

          anticipated to occur on an occasional basis, and not with great

          frequency throughout the Term of the Agreement. The parties agree that

          all TB Store Licensed Products sold Licensor shall be non-returnable.

          For avoidance of doubt, neither the foregoing nor anything else

          permits Licensor nor any Licensor Affiliate to manufacture or sell

          Licensed Product to Distributors or the wholesale market within the

          Territory.

 

     2.3. All Licensed Products shall bear at least one of the TOMMY BAHAMA

          Marks and no Licensed Products shall be sold or otherwise distributed

          under any marks other than the TOMMY BAHAMA Marks. Licensor reserves

          all rights to the TOMMY BAHAMA Marks except as specifically granted

          herein to Licensee, and Licensor may exercise such reserved rights at

          any time.

 

     2.4. Licensee shall use reasonable efforts to sell and promote the Licensed

          Products in the Territory while maintaining the high standard,

          quality, image and prestige represented by the TOMMY BAHAMA Marks and

          consistent with the channels of distribution specified in "Exhibit J."

 

<PAGE>

 

     2.5. Licensee agrees to exercise reasonable efforts to present the Licensed

          Products Territory-wide to the trade in the number of styles or

          designs reasonably anticipated under this Agreement.

 

     2.6. The parties acknowledge that it is in their mutual best interest to

          maintain inventory and periodically refresh attractive displays of

          Licensed Products at each of the TB Stores. The terms and conditions

          for sales of Licensed Products to TB Stores are set forth on Exhibit

           D.

 

     2.7. Licensee shall also make available to Licensor and its retail accounts

          (other than TB Stores), the opportunity to purchase reasonable

          quantities of Licensed Products for ultimate retail sale to consumers

          and for marketing, promotional, and sales-incentive purposes. Licensee

          agrees that such Licensed Products will be made available throughout

          the Contract Term and the Sell-Off Period for purchase by Licensor and

          its retail accounts at Licensee's lowest then-applicable wholesale

          sales price, in accordance with Licensee's standard dealer terms and

          conditions, the terms of which shall not be inconsistent with this

          Agreement.

 

     2.8. During the Contract Term, Licensee or any Licensee Affiliate may not

          engage in any Competing Event without the prior written approval of

          Licensor. Attached to this Agreement as "Exhibit I" is a list of

          current licensors, brands and logos, of Licensee or its Affiliates;

          each of those licensors is deemed approved by Licensor regardless of

          any existing Competing Event. During the Contract Term, however,

          Licensee shall provide notice, pursuant to the notice provisions in

          this Agreement, to Licensor seeking written approval of any proposed

          Competing Event. If Licensor should fail to respond, in writing,

          within the first fifteen (15) business days after Licensee's notice,

          Licensee shall provide a second notice of the proposed Competing

          Event, pursuant to the notice provisions in this Agreement. Licensor

          shall then have five (5) additional business days to approve or

          disapprove, in writing, the potential Competing Event. Failure of the

          Licensor to respond to a request for approval under this Section 2.8

          within the combined thirty (30) business day period shall be deemed

          approval by Licensor of the request. Licensor may require that

          Licensee provide Licensor with such additional documentation as shall

          be reasonably necessary to facilitate Licensor's analysis of the

          proposed Competing Event. Delay by Licensee in providing the

          additional documentation shall toll the time for Licensor to respond

          to the notice.

 

     2.9. Licensee shall at all times employ one full-time National Sales/Brand

          Manager who shall be dedicated to the sale of Type C (specified on

          "Exhibit B") Licensed Product. Said National Sales/Brand Manager must

          be approved by Licensor and have significant experience in selling

          products similar to the Licensed Products. Additionally, Licensee

          shall at all times employ at least one full-time Designer/Merchandiser

          (plus as many other designers / merchandisers as needed) who is

          dedicated to the design and merchandising of Type C Licensed Product.

          Said Designer/Merchandiser must be approved by Licensor and have

          significant experience in designing and merchandising products similar

          to the Licensed Products. Licensee shall at all times employ one

          full-time National Sales/Brand Manager who shall be dedicated to the

          sale of Type D (specified on "Exhibit B") Licensed Product, and who

          has significant experience in

 

<PAGE>

 

          selling products similar to the Licensed Products. Said National

          Sales/Brand Manager must be approved by Licensor, which approval may

          be granted upon request pursuant to the notice provisions in this

          Agreement. In the process of reviewing such a request, Licensee shall

          allow Licensor the opportunity to meet with the candidate and review

           credentials. If Licensor should fail to respond in writing to a

          request for any such approval within the first five (5) business days

          after the request is first submitted, Licensee shall provide a second

          notice of the request, pursuant to the notice provisions in this

          Agreement and Licensor shall have ten (10) additional business days to

          approve or disapprove, of the candidate in writing. Additionally,

          Licensee shall at all times employ at least one full-time

          Designer/Merchandiser (plus as many other designers / merchandisers as

          needed) who is dedicated to the design and merchandising of Type D

          Licensed Products, and has significant experience in designing and

           merchandising products similar to the Licensed Products. Said

          Designer/Merchandiser must be approved by Licensor in accordance with

          the same request, notice and approval procedures set forth above for

          the National Sales / Brand Manager. If at any time Licensee decides to

          appoint a "President" (or similar responsibility level) of its "Tommy

          Bahama" division (overseeing all of the Licensed Products), such

          individual must be approved by Licensor in accordance with the same

          request, notice and approval procedures set forth above for the

          National Sales / Brand Manager and Designer / Merchandiser.

 

     2.10. Licensor and its Affiliates may, but shall not be obligated to,

           supply Licensee with Licensor Designs. Licensee agrees that Licensor

          Designs shall be utilized by Licensee only in the production,

          advertisement, marketing, promotion, distribution and sale of Licensed

          Products. If Licensee shall retain or employ any subcontract

          manufacturer other than an Affiliate of Licensee, each such

          manufacturer shall be provided with a written notice in the form set

          forth in "Exhibit N," notifying that manufacturer that Licensor

          Designs may be used only in compliance with the requirements of this

          agreement, and that any violation by the manufacturer of these

          restrictions shall be grounds for immediate termination of the

          manufacturer's services for Licensee relating to Licensed Products, in

          addition to Licensor's right to seek damages from each subcontract

          manufacturer for the use of Licensor's Designs not in conformance with

          the terms of this agreement. Licensee shall monitor the completion of,

          and be accountable to Licensor for, the subcontract manufacturers'

          notices; copies of each shall be supplied to Licensor within ten (10)

          days of its receipt by Licensee.

 

3.    SALE OF LICENSED PRODUCTS

 

     3.1. Licensee agrees that Licensed Products, including Close-outs, shall be

          distributed for retail sale only through better specialty stores,

          national buying groups, department stores and mail-order catalogs

           which are appropriate for the superior reputation, quality-control

          standards and public image of the TOMMY BAHAMA Marks ("Normal Channels

          of Distribution"). Licensee agrees to distribute Licensed Products,

          including Close-Outs, only to those retailers that are listed on

          "Exhibit J" and any other customer approved hereafter by Licensor.

          Before any order from any other prospective customer is accepted,

          including, but not limited to, internet retailers, Licensee shall

          submit an Additional Authorized Retailer Request Form (set forth on

          Addendum 1 to Exhibit J), to

 

<PAGE>

 

          notify Licensor of the identity of the customer and provide sufficient

          information to enable Licensor to determine whether it is acceptable.

          Approval or disapproval of additional authorized retailers shall be

          determined on a case-by-case basis and provided by Licensor in

          writing. Approval of any retail account may be withdrawn by Licensor,

          on sixty (60) days advance written notice to Licensee pursuant to the

          notice requirements set forth in this Agreement, at any time if

          Licensor determines that advertising, marketing, promotion or sales by

          that retail account shall have been, or shall have become,

          inconsistent with the reputation, quality-control standards and public

          image of the TOMMY BAHAMA Marks. In the event that Licensor withdraws

          any such approval, Licensee may continue to sell to such customer

          until all pending orders have been filled. However, Licensee may not

          accept any new orders from the customer whose approval has been

          withdrawn after written notice of the withdrawal has been provided by

          Licensor in accordance with the foregoing.

 

     3.2. Licensee expressly agrees that Licensee shall not distribute or sell

          Licensed Products, including Close-Outs, to any Distributor (other

          than its own contract sales affiliates), and Licensee shall distribute

          and sell Licensed Products, including Close-Outs, only through its

          Normal Channels of Distribution and only for accounts directly

          reselling to consumers.

 

      3.3. Except with Licensor's prior written approval, all Close-Outs may be

          disposed of by Licensee through its Normal Channels of Distribution

          for Close-Outs, as described in "Exhibit J" and hereafter approved in

          accordance with Section 3.1. However, damaged and / or irregular

          Close-outs must be clearly marked as such, and remain of a quality not

          inconsistent with the quality-control standards of Licensor. All

          royalties due with respect to Close-outs shall be paid as required

          under this Agreement.

 

     3.4. Licensor shall use commercially reasonable efforts to provide to

          Licensee contacts, make introductions and provide addresses of anyone

          who is selling TOMMY BAHAMA apparel or other products.

 

4.    APPROVAL OF LICENSED PRODUCTS

 

     4.1. Licensor shall have the right to approve or disapprove in advance of

          sale the general design, quality, style, colors, appearance, material

          and workmanship of all Licensed Products, and to approve or disapprove

          in advance any brands, endorsements, trademarks, service marks, trade

          names, designs and logotypes, (whether included in the TOMMY BAHAMA

          Marks or not) used in connection with Licensed Products. Licensee

          shall not show, distribute or sell any Licensed Product which has not

          been approved in advance by Licensor in accordance with the terms of

          this Agreement. Licensor reserves the right to revoke approval of

          Licensed Products that were approved in previous seasons, however,

          Licensor agrees to that it will not do so unless Licensor reasonably

          concludes that such Licensed Products no longer reflect the taste,

          style, or quality associated with the TOMMY BAHAMA Marks. If Licensor

          revokes approval in accordance with the previous sentence, Licensee

          shall still be allowed to close out open

 

<PAGE>

 

          orders of such Licensed Products, and to sell them off for a period of

          one (1) year from the date which such approval was revoked.

 

     4.2. The parties acknowledge that it may not be practical for Licensee to

          submit actual samples of Licensed Products to Licensor for Licensor's

           examination and approval or disapproval. Licensee shall submit Design

          Documentation to Licensor at its New York address set forth below, at

          no cost or expense to Licensor. Licensee's submissions shall include,

          in addition, evidence or notations of the use of labels, tags or other

          form of identification proposed to be used on Licensed Products.

          Licensee shall submit Design Documentation to Licensor at least ninety

          (90) days prior to production of the applicable Licensed Products. If

          Licensor should fail to respond, in writing, within the first twenty

          (20) business days after Licensee's submission of the Design

          Documentation, Licensee shall resubmit the Design Documentation

          pursuant to the notice provisions in this Agreement. Licensor shall

          then have ten (10) additional business days to approve or disapprove,

          in writing, the Design Documentation. Failure of the Licensor to

          respond to a request for approval, in writing, under Section 4.2

          within the combined thirty (30) business day period shall be deemed

          approval by Licensor of the Design Documentation. If Licensor

          reasonably desires additional information with respect to the design,

          fabrication or manufacture of any affected Licensed Product, Licensee

          agrees to provide that additional information. Delay by Licensee in

          providing the additional information shall toll the period for

          Licensor to provide a written response to the request to approve the

          Design Documentation. If any item is disapproved, in each case,

          Licensee will be advised of the specific reasons. Upon request,

          Licensee shall reimburse Licensor for any import duties, shipping

          charges or other costs or expenses incurred by Licensor in connection

          with delivery of samples to Licensor.

 

     4.3. In the event any Licensed Product is disapproved, Licensee agrees to

          consult with Licensor regarding Licensor's objections and any changes

          or modifications proposed by Licensor, and will, within thirty (30)

          days following receipt of Licensor's disapproval, use good-faith

          efforts to make mutually agreeable modifications or adjustments. In

          the event of a dispute between Licensor and Licensee regarding any

          Licensed Product, Licensor will have final control and approval with

          respect to the style, overall design, decorative details, engineering,

          structural integrity, production capabilities, manufacturing

          efficiencies, materials sourcing, product safety and similar matters.

 

     4.4. Licensee assigns to Licensor all of Licensee's right, title, and

          interest in each design developed and used by Licensee (excluding such

          design elements that are excluded by the definition of Design Rights)

          in connection with any of the Licensed Products, and all rights

           associated with them, including, without limitation, all Design

          Rights. Licensee shall promptly execute and deliver all forms of

          assignment and other documents as may be reasonably required to

          transfer to Licensor any of Licensee's rights of ownership in the

          Design Rights.

 

     4.5. Licensor shall not unreasonably withhold or delay any approval

          required hereunder and all requests by Licensee shall be considered by

          Licensor in good faith.

 

5.    LICENSOR'S USE OF LICENSED PRODUCT

 

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          For each style, model or variation of each Licensed Product, during

          the Contract Term, Licensee shall supply Licensor, at no charge and at

          no cost or expense, with up to five (5) Licensed Products per Contract

          Year, as Licensor may reasonably request for the marketing or

          promotional use of Licensor (not for resale), including, but not

          limited to, use in Licensor's showrooms and trade-show exhibits. In

          addition, Licensor may purchase Licensed Products from Licensee (at

          Licensee's manufacturer's cost) for the marketing or promotional use

          of Licensor (not for resale), including, but not limited to, use in

          Licensor's showrooms and trade-show exhibits. Upon request by

          Licensor, Licensee shall promptly provide one sample of all finished

          products, including hangtags using the TOMMY BAHAMA Marks for

          intellectual property purposes.

 

6.    MINIMUM NET SALES

 

     6.1. With respect to each Contract Year during the Contract Term, Licensee

          must generate the Minimum Net Sales as set forth on "Exhibit E."

 

7.    GUARANTEED ROYALTY AND EARNED ROYALTY

 

     7.1. In consideration for the license granted by the Licensor hereunder,

          Licensee shall pay to Licensor the Guaranteed Royalty set forth on

          "Exhibit F" hereto if and to the extent that the Earned Royalty during

          any calendar quarter (starting June 1 of each Calendar Year) is less

          than one quarter (1/4th) of the Guaranteed Royalty for the applicable

          Calendar Year. To the extent that a Guaranteed Royalty payment is due

          for any calendar quarter, such amount shall be paid following the

           thirtieth day after the end of such calendar quarter (September 30,

          December 30, March 30 and June 30). And to the extent that the Earned

          Royalty exceeds the Guaranteed Royalty for other quarters (before or

          after) a quarter in which a Guaranteed Royalty payment is due, such

          Earned Royalty may be applied toward the calculation of Guaranteed

          Royalty for such quarter.

 

     7.2. Licensee shall pay to Licensor an Earned Royalty on Net Sales for all

           Sales of all Licensed Products by Licensee during each Contract Year

          based on the rates set forth on "Exhibit G" hereto. Earned Royalty

          payments shall be payable within thirty (30) days following the

          conclusion of each calendar month. Within each Contract Year, the

          Earned Royalty is paid as a non-refundable advance towards amount due

          as Guaranteed Royalty for Licensed Products. No part of any Earned

          Royalty may be carried forward or backward as a credit from one

          Contract Year to any other (though it may be carried forward or

          backward as a credit from one quarter to another within a specific

          Contract Year, as set forth in Section 7.1), or to any applicable

          Sell-Off Period. Past-due payments shall bear interest at a per annum

          rate of interest equal to (a) the Prime Rate plus ****** percent

          (******%) per annum, or (b) the maximum interest rate permissible

          under law, whichever is less.

 

     7.3. All royalties due Licensor shall accrue upon the Sale of the Licensed

          Products regardless of time of collection by Licensee (subject to

          credits for returned Licensed Products).

 

8.    SALES & ROYALTY REPORTS

 

****** Certain information on this page has been omitted and filed separately

     with the Securities and Exchange Commission. Confidential treatment has

     been requested with respect to the omitted portions.

 

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     8.1. Promptly following the execution of this Agreement and within twelve

          (12) months prior to the beginning of every subsequent Contract Year

          during the Contract Term, Licensee will send Licensor its sales

          projection for that next Contract Year, broken out by month, along

          with a detailed list of all media placements for Marketing Support.

 

     8.2. Licensee shall supply Licensor with a Monthly Statement, as shown on

          "Exhibit K," with respect to all sales of Licensed Products sold

          during each calendar month. Each Monthly Statement shall be delivered

          to Licensor within thirty (30) days following the conclusion of the

          applicable month.

 

     8.3. In addition, Monthly Statements for the final month of each Contract

           Year shall include, without limitation, an annual report of the

          foregoing for the entire Contract Year. The Licensee's Chief Financial

          Officer shall indicate by signature that s/he has reviewed and agrees

          with such annual report. On request by Licensor, Licensee shall

          provide backup and support materials with respect to any item

          contained in any Quarterly Statement so that Licensor shall have

          sufficient information to evaluate the sources for any item contained

          in the Quarterly Statement and to track Licensee's performance under

          this Agreement.

 

     8.4. Within thirty (30) days following the end of each calendar quarter,

          Licensee shall fax to Licensor an Estimated Net Sales Report as

          detailed on "Exhibit L". This report is:

 

          A)    A re-forecasted estimate of the monthly Net Sales of Regular

               Price Licensed Products for the remainder of the Licensor's

               "Fiscal Year" (currently June 1 through May 31).

 

          B)    A re-forecasted estimate of the monthly Net Sales of Close-Out

               Licensed Products for the remainder of the Licensor's Fiscal Year

 

     8.5. It is the responsibility of the Licensee to submit the information

          required by this Agreement on a timely basis as required herein, and

          in a businesslike manner. It shall not be the responsibility of the

          Licensor to call, fax, write or otherwise attempt to obtain the

          required information from Licensee.

 

9.    NATIONAL ADVERTISING AND MARKETING SUPPORT

 

     9.1. Licensee shall use good-faith reasonable efforts to provide National

          Advertising to promote the sale of Licensed Products to consumers

          throughout the Territory in a manner consistent with the goals and

          aspirations of the Tommy Bahama brand, and the terms set forth on

          Exhibits H and M. During each Contract Year, Licensee shall spend no

          less than ****** percent (******%) of Net Sales of Type C and Type D

          Licensed Products toward such National Advertising, and must comply

          with the Marketing Materials approval standards provided in Sections

          10, 11 and 12 of this Agreement.

 

****** Certain information on this page has been omitted and filed separately

     with the Securities and Exchange Commission. Confidential treatment has

     been requested with respect to the omitted portions.

 

<PAGE>

 

     9.2. Licensee shall use good-faith reasonable efforts to provide Marketing

          Support for the Licensed Products throughout the Territory and conform

          to the Branded Marketing Materials as set forth on "Exhibit H."

          Licensee may use a portion of the Licensor's New York showroom (at

          Licensee's expense to be determined based on a percentage of space

          required and the current rent paid by Licensor) to display and market

          the Licensed Products, such displays having been approved in advance,

          in writing by Licensor. During the Contract Term, if Licensee

          participates in the M.A.G.I.C. Trade Show in connection with the

          Licensed Products, Licensee agrees to do so only in conjunction with

          the Tommy Bahama Booth, and to reimburse Licensor for Licensee's

          pro-rata share of trade show expenses based upon Licensee's square

          foot usage of the Tommy Bahama Booth, as allocated by Licensor in its

          sole discretion. The invoice setting forth such expenses shall be paid

          within thirty (30) days of the date of receipt. Licensee may show

          Licensed Products at the FFANY and WSA trade shows (and any successor

          trade shows) and, subject to Licensor's prior written approval, any