Management Agreement

MANAGEMENT AGREEMENT


AGREEMENT made as of December 16, 1996, between Scholastic Brands, Inc., a Delaware corporation (the "Company"), and Castle Harlan, Inc., a Delaware corporation (the "Manager").


WHEREAS, the Company and its subsidiaries are engaged in the manufacture and marketing of class rings, scholastic fine paper products and recognition and affinity jewelry, and the Manager is experienced in business and organizational strategy, financial and investment management and merchant and investment banking;


WHEREAS, the Company desires to retain the Manager to provide business and organizational strategy, financial and investment management and merchant and investment banking services to the Company upon the terms and conditions hereinafter set forth, and the Manager is willing to undertake such obligations; and


WHEREAS, pursuant to the Subscription Agreement, dated the date hereof, each Stockholder of the Company has agreed that the Company shall enter into a management agreement with the Manager.


NOW, THEREFORE, in consideration of the mutual covenants hereinafter set forth, the parties hereto agree as follows:


1. APPOINTMENT.


The Company hereby engages the Manager and the Manager hereby agrees under the terms and conditions set forth herein to provide certain services to the Company as described in Section 2 hereof.


2. DUTIES OF MANAGER.


The Manager shall provide the Company with consulting services (collectively, the "Consulting Services") related to the following:


(i) business and organizational strategy, including strategy relating to


(a) development of new products and new markets, and analysis and
research related thereto;
(b) new product implementation;
(c) development of broad business growth strategies; and


(ii) human resource management, including


(a) design and development of incentive and bonus programs for
management team;
(b) assistance with senior executive hiring decisions;
(c) coordination of activities of compensation committee of the Board
of Directors of the Company;
(d) design and development of employee stock ownership programs;
and

(iii) public relations and related matters, including


(a) assistance in developing an enhanced public relations program
designed to broaden name recognition of the Company in the
business community;
(b) advice on general labor matters; and


(iv) financial and investment management and merchant and investment
banking and corporate finance, including


(a) identification and implementation of merger and acquisition
opportunities for the Company, for which the Manager may
receive additional consideration;
(b) assistance with negotiation of loan documentation (including
amendments thereto) and lender relationships on an ongoing basis;
(c) advice regarding acquisition strategies and responses to external
proposals; and
(d) advice regarding additional capital requirements.


Without limiting any of the foregoing, representatives of the Manager may participate, without additional compensation, on the Company's and certain of its affiliates' Boards of Directors and Board Committees.

2.1 EXCLUSIONS FROM "CONSULTING SERVICES". Notwithstanding anything in the foregoing to the contrary, the following services are specifically excluded from the definition of "Consulting Services":


(i) INDEPENDENT ACCOUNTING SERVICES. Accounting services rendered to
the Company or the Manager with prior notice and consultation with the
Company's management, by an independent accounting firm or accountant
(I.E., an accountant who is not an employee of the Manager);


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(ii) INDEPENDENT ACTUARIAL SERVICES. Actuarial services rendered to
the Company or the Manager with prior notice and consultation with the
Company's management, by an independent actuarial firm or actuary (I.E., an
actuary who is not an employee of the Manager);


(iii) LEGAL SERVICES. Legal services rendered to the Com ...