License Agreement

Exhibit 10.21


LICENSE AGREEMENT


THIS LICENSE AGREEMENT is entered into this 16th day of June 1997, by Michael Caruso & Co., lnc., a California corporation, ("Licensor"), whose address is 4560 Loma Vista Avenue, Vernon, California 90058 and Candie's, Inc. ("Licensee"), a Delaware corporation, whose address is 2975 Westchester Avenue, Purchase, New York 10577, with reference to the following:


A. Licensor is the owner of Trademarks and Trade Names which include "BONGO" and "B BONGO" (collectively, the "Trademarks");


B. Licensee wishes to manufacture and market mens', womens' and childrens' footwear (collectively "Footwear") and handbags, backpacks and sport bags (collectively "Handbags") under and in connection with the Trademarks (the "Licensed Items");


C. The parties entered into a License Agreement on January 13, 1995 whereby Licensor granted Licensee the license to manufacture and market footwear under and in connection with the Trademarks (the "1995 License Agreement").


D. The parties desire to provide for the early termination of the 1995 License Agreement and to replace the 1995 License Agreement with this Agreement.


THE AGREEMENT:


1. 1995 LICENSE AGREEMENT


1


1.1 Ratification and Validity. Licensor and Licensee each expressly
acknowledge that the 1995 License Agreement is valid and binding and,
subject to the provisions of paragraph 1.2, in addition to the rights and
obligations created hereunder, that the mutual waiver and release of each
party's respective obligations owing to the other under the 1995 License
Agreement is good and valuable consideration supporting the parties'
agreement to terminate the 1995 License Agreement as hereinafter provided.


1.2 Early Termination of the 1995 License Agreement. The parties agree
to terminate the 1995 License Agreement as of 11:59 p.m. PST January 31,
1998; provided, however, that Licensee shall not thereby be relieved of its
obligations under Paragraphs 6 and/or 7 of the 1995 License Agreement to
render to Licensor its report(s) of sales of the Licensed Items or to remit
to Licensor any and all royalties due Licensor for sales of the Licensed
Items made through January 31, 1998.


2. LICENSE


2


2.1 Grant of License and Designation of Licensed Items. Effective
February 1, 1998, Licensor grants to Licensee the exclusive license to use
the Trademarks within the geographic area described in Paragraph 5 hereof,
in the manufacture and marketing of the Licensed Items. Questions regarding
the definition of the Licensed Items shall be decided by the Licensor. The
rights granted to Licensee are limited to use in connection with the
Licensed Items. Licensee agrees not to use the Trademarks or give consent
to their use except as allowed in this Agreement, without written consent
of Licensor.


2.2 Right to Sublicense. Licensee shall have the right, exercisable in
its sole discretion, to sublicense its rights and obligations under this
Agreement to its wholly owned subsidiary, to wit, INTERNATIONAL TRADING
GROUP, INC., a New York corporation; provided, however, that a grant of
such sublicense shall not in any way relieve Licensee of any obligations
owing to Licensor hereunder.


3. TERM


3.1 Initial Term. The initial term of this Agreement (the "Initial
Term") shall commence on February 1, 1998, and shall end on January 31,
2002, unless sooner terminated in accordance with the terms of this
Agreement. The period beginning February 1, 1998 and ending January 31,
1999, and each subsequent twelve (12) month period ending on January 31
during the Initial Term and the First Extended Term (as hereinafter
defined) is herein referred to as a "Contract Year."


3.2 First Extended Term. Provided that the aggregate Minimum Net


3


Sales (as hereinafter defined) required to be achieved for the first three
(3) Contract Years of the Initial Term ending January 31, 2001 are met, and
as of the last day of the Initial Term, Licensee is not in default under
this Agreement nor has there occurred any event that, with the passage of
time or the giving of notice, or both, would constitute a default under
this Agreement by Licensee, the term of this Agreement may be extended by
Licensee for the period (the "First Extended Term") beginning on February
1, 2002 and ending on January 31, 2006, unless sooner terminated in
accordance with this Agreement, provided notice of such extension is given
in writing to Licensor at least six (6) months prior to the end of the
Initial Term. The amount of Minimum Net Sales (as hereinafter defined) to
be achieved by Licensee during the First Extended Term is set forth in
Paragraph 4.2.


4. PAYMENTS.


4.1 Net Sales. For purposes of this Agreement the term "Net Sales"
shall mean and refer to the aggregate gross invoice price for all Licensed
Items sold by Licensee in any Contract Year, less any refunds, allowances,
deductions and credits for returns actually made by Licensee's retail
customers. For purposes of this Agreement, Licensed Items shall be
considered sold upon the date of invoicing, shipment or payment, whichever
event first occurs.


4.2 Minimum Net Sales. During each contract year, Licensee shall
achieve the following minimum Net Sales ("Minimum Net Sales") of the
Licensed Items within the Territory:


4


First Contract Year:
Footwear: $ 8,000,000; and
Handbags: $ 1,000,000.


Second Contract Year:
Footwear: $11,000,000; and
Handbags: $ 2,000,000.


Third Contract Year:
Footwear: $12,000,000; and
Handbags: $ 3,000,000.


Fourth Contract Year:
Footwear: $13,000,000; and
Handbags: $ 4,000,000.


First Extended Term (each contract year):
Footwear: $15,000,000; and
Handbags: $ 5,000,000.


4.2.1 Option to Exclude Handbags. If in any Contract Year,
whether during the Initial Term or Extended Term of this Agreement,
Licensee fails to achieve the Minimum Net Sales of handbags required
to be achieved for such Contract Year, Licensor at its sole option may
elect to terminate Licensee's license hereunder with respect to
handbags. Licensor shall notify Licensee of its election to exercise
the option in writing within thirty (30) days of Licensor's receipt
from Licensee of the annual report required under Paragraph 8, in
which event Licensee shall be entitled to dispose of its remaining
inventory of handbags in accordance with the provisions of Paragraph
19.


4.3 Royalty. During the term of this Agreement, Licensee shall pay to
Licensor a royalty (the "Royalty") equal to (i) five percent (5%) of the
Minimum Net Sales


5


for the Contract Year (the "Minimum Guaranteed Royalty"), or (ii) five
percent (5%) of the actual net sales for the Contract Year, whichever is
greater.


4.4 Advertising Royalty. In addition to the Royalty to be paid under
Paragraph 4.3 hereof, for purposes of Licensor advertising the Licensed
Items and the Trademarks in the Territory, Licensee shall pay to Licensor a
royalty (the "Advertising Royalty") for each Contract Year during the term
of such Contract Year an amount equal to the greater of (i) two percent
(2%) of the combined Minimum Net Sales for such Contract Year, or (ii) two
percent (2%) of the actual combined Net Sales of Licensed Items for such
Contract Year. The Advertising Royalty shall be applied by Licensor to the
production and placement of print, radio and television advertising for the
Licensed Items, utilizing creative, graphics and other material of
Licensor. Licensor shall use its best efforts to utilize Licensee's
products in all Licensor advertising.


5. GEOGRAPHIC AREA. The rights granted to Licensee hereunder shall be exclusively exercised by Licensee within the United States and its territories, and all foreign countries and jurisdictions worldwide in which Licensor owns the Trademarks or the rights to use the Trademarks (the "Territory").


6. LICENSEE'S RECORDS. Licensee shall maintain at its regular place of business complete records of al ...