GERBER CHILDRENSWEAR INC
LICENSE AGREEMENT
<DOCUMENT>
<TYPE>EX-10.29
<SEQUENCE>2
<FILENAME>g69101ex10-29.txt
<DESCRIPTION>LICENSE AGREEMENT
<TEXT>

<PAGE>   1
                                  EXHIBIT 10.29 - WARNER BROS. LICENSE AGREEMENT

                                 RETAIL LICENSE
                         WARNER BROS. CONSUMER PRODUCTS
                                #12953-BLT/WBLT

THIS AGREEMENT REPLACES THAT CERTAIN LICENSE AGREEMENT DATED MARCH 12, 1998,
(#8824-BLT) AND ANY AMENDMENTS THERETO BETWEEN LICENSOR AND LICENSEE

LICENSE AGREEMENT made April 25, 2001, by and between Warner Bros., a Division
of Time Warner Entertainment Company, L.P., c/o Warner Bros. Consumer Products
("WBCP"), a Division of Time Warner Entertainment Company, L.P., whose address
is 4000 Warner Blvd., Burbank, CA 91522 (hereinafter referred to as "LICENSOR")
and Gerber Childrenswear, Inc., whose address is 7005 Pelham Road, Suite D,
Greenville, SC 29615, Attention: Bobby J. Prochaska (hereinafter referred to as
"LICENSEE").

                                  WITNESSETH:

         The parties hereto mutually agree as follows:

1.       DEFINITIONS: As used in this Agreement, the following terms shall have
         the following respective meanings:

         (A)      "APPROVED CLOSEOUTS AND IRREGULARS OUTLETS": Licensee may
                  submit to Licensor a listing of proposed closeout and
                  irregular stores which Licensor will review and, if approved
                  in writing, will be considered approved outlets for any
                  future sale of Closeouts and/or Irregulars (as defined
                  below). Licensee will use its best efforts to prohibit the
                  advertising of Closeouts and/or Irregulars by the retailer or
                  outlet purchasing such products.

                  (I)      CLOSEOUTS: shall mean first quality Licensed
                  Products discounted by twenty percent (20%) or more off the
                  list price for such Licensed Products for purpose of
                  discounting sales of the Licensed Products. Sales of
                  Closeouts shall not exceed ten percent (10%) of all sales of
                  Licensed Products in any calendar quarter.

                  (II)     IRREGULARS: shall mean Licensed Products which
                  contain approved image and complete legal notices, but which
                  contain slight defects in the manufacture or printing of the
                  product. Irregulars shall not include any product which is
                  dangerous or hazardous, contains unapproved images or lacks a
                  complete legal notice. Sales of Irregulars shall not exceed
                  seven (7%) of all sales of Licensed Products in any calendar
                  quarter.

         (B)      "CHANNELS OF DISTRIBUTION": Licensee shall sell and
                  distribute the Licensed Products through the following
                  channels of distribution only (as such channels are defined
                  in Exhibit 1 attached hereto and incorporated herein by
                  reference).


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                  (I)      EXCLUSIVE CHANNELS: The sale of Licensed Products
                  shall be on an EXCLUSIVE basis in the following channels of
                  distribution, but only to the extent exclusivity is granted
                  in Schedule A attached hereto and incorporated herein by
                  reference:

<TABLE>
<CAPTION>

CHANNELS                                                       EXHIBIT 1 NUMBER
<S>                                                            <C>
Chain Drug Stores
  (limited to Bibs only, this channel
   is exclusive for Bibs sold individually
   only and is non-exclusive for Bibs
   sold in sets)                                                        14

 National Discount/Mass Retailers                                       51

 Regional Discount/Mass Retailers                                       65

Supermarket/Grocery Stores
  (limited to Bibs only, this channel is
   exclusive for Bibs sold individually
   only and is non-exclusive for Bibs
   sold in sets)                                                        73
</TABLE>

                  (II)     NON-EXCLUSIVE CHANNELS: Notwithstanding anything to
                  the contrary in Schedule A attached hereto, the sale of
                  Licensed Products shall be on a NON-EXCLUSIVE basis in the
                  following channels of distribution:


<TABLE>
<CAPTION>

CHANNELS                                                       EXHIBIT 1 NUMBER
<S>                                                            <C>
Baby Specialty Stores                                                   7

Chain Toy Stores                                                        16

Direct Mail Catalogs
   on a case-by-case basis only with
   Licensor's prior written approval                                    23

 Florists
   (limited to Gift Sets only)                                          32

Home Specialty Stores
   (limited to Gift Sets, Bibs and Infant
    Coordinated Bedding only)                                           43

Mid-Tier Department Stores                                              48

Military Exchange Services                                              49

Non-Chain Drug Stores
   (limited to Bibs only)                                               54

Non-Chain Toy Stores                                                    56

Non-Mall Clothing Specialty Stores                                      57

Off-Price/Closeout Stores                                               59

Television Home Shopping
   (limited to QVC)                                                     75

 Warehouse Clubs
   (limited to Licensed Products 26, 31, 32, and 37)                    83

WBSS International                                                      85
</TABLE>

                  ALL OTHER CHANNELS OF DISTRIBUTION DEFINED IN EXHIBIT 1,
                  WHICH ARE NOT SPECIFIED ABOVE IN THIS PARAGRAPH


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                  1(B), ARE SPECIFICALLY EXCLUDED FROM THIS AGREEMENT, PROVIDED
                  THAT IF, DURING THE TERM, LICENSOR SHALL BE WILLING TO
                  LICENSE ANY PARTIES FOR THE SALE OR DISTRIBUTION OF ANY
                  PRODUCTS IDENTICAL TO THOSE LICENSED HEREIN THROUGH THE
                  INTERNET CHANNEL OF DISTRIBUTION (EXHIBIT 1 REFERENCE NUMBER
                  46), LICENSOR SHALL SO NOTIFY LICENSEE, AND LICENSEE SHALL
                  HAVE THE OPTION, EXERCISABLE WITHIN SIXTY (60) DAYS OF SUCH
                  NOTIFICATION, TO RECEIVE AN EXCLUSIVE LICENSE FOR SUCH SALE
                  AND DISTRIBUTION WITH RESPECT TO THE LICENSED PRODUCTS, BUT
                  ONLY TO THE EXTENT EXCLUSIVITY HAS BEEN GRANTED IN SCHEDULE
                  A.

                  In-kind charitable donations are permitted pursuant to the
                  letter dated November 21, 2000, from Anne Lindsay at Gerber
                  Childrenswear, Inc. to Karen Weiss at Warner Bros. Consumer
                  Products.

         (C)      "GUARANTEED CONSIDERATION": The sum of $4,300,000 payable as
                  follows:

                  $860,000 payable simultaneously with the execution of this
                  Agreement (except to the extent offset by Royalties paid by
                  Licensee pursuant to this Agreement);

                  $860,000 payable on or before September 30, 2001 (except to
                  the extent offset by Royalties paid by Licensee pursuant to
                  this Agreement);

                  $860,000 payable on or before June 30, 2002 (except to the
                  extent offset by Royalties paid by Licensee pursuant to this
                  Agreement);

                  $860,000 payable on or before December 31, 2002 (except to the
                  extent offset by Royalties paid by Licensee pursuant to this
                  Agreement); and

                  $860,000 payable on or before June 30, 2003 (except to the
                  extent offset by Royalties paid by Licensee pursuant to this
                  Agreement).

         (D)      "LICENSED PRODUCT(S)": As set forth in Schedule A attached
                  hereto.

         (E)      "LICENSED PROPERTY":

                  (I)      CATEGORY I: The fictional cartoon characters BABY
                  BUGS BUNNY, BABY LOLA BUNNY, BABY DAFFY DUCK, BABY SYLVESTER,
                  BABY TWEETY, BABY TASMANIAN DEVIL, BABY WILE E. COYOTE, BABY
                  ROAD RUNNER and BABY MARVIN THE MARTIAN which constitute
                  "BABY LOONEY TUNES", including the names of said characters
                  and all trademarks, copyrights, environmental settings and
                  artwork associated therewith. The Licensed Property licensed
                  hereunder shall be identified with the "BABY LOONEY TUNES
                  Mass Market logo provided by Licensor. Unless otherwise set
                  forth below, specifically excluded herefrom are any other
                  properties, trademarks or copyrights of Licensor, including
                  but not limited to the "BABY LOONEY TUNES CLASSIC COLLECTION"
                  logo, BABY LOONEY TUNES CROSS-LICENSES (IE. NFL, NHL, ETC.)
                  and the cartoon characters referred to collectively as the
                  "LOONEY TUNES" characters, and Licensee acknowledges and
                  agrees that it shall enjoy no rights whatsoever hereunder
                  with respect to such properties, trademarks, and copyrights,
                  it being understood that such properties, trademarks, and
                  copyrights are and will continue to be the subject of
                  separate licensing agreements with licensees of Licensor's
                  choice.


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                  Without limiting the generality of the foregoing, Licensee is
                  obtaining no rights hereunder, unless otherwise specifically
                  set forth below, in or to the adult versions of BUGS BUNNY,
                  LOLA BUNNY, DAFFY DUCK, SYLVESTER, TWEETY, TASMANIAN DEVIL,
                  WILE E. COYOTE, ROAD RUNNER and MARVIN THE MARTIAN

                  (II)     CATEGORY II: The fictional cartoon characters BUGS
                  BUNNY, LOLA BUNNY, DAFFY DUCK, SYLVESTER, TWEETY, TASMANIAN
                  DEVIL, WILE E. COYOTE, ROAD RUNNER, and MARVIN THE MARTIAN
                  which constitute "LOONEY TUNES", including the names of said
                  characters and all trademarks, copyrights, environmental
                  settings and artwork associated therewith. Licensee
                  specifically understands and agrees that no rights are
                  granted herein with respect to the Warner Bros. "BABY LOONEY
                  TUNES" or "BABY LOONEY TUNES CLASSIC COLLECTION" properties,
                  it being understood that all rights in and to said property
                  are reserved exclusively to Licensor for use and/or licensing
                  as it deems appropriate to third parties of its choice.
                  Licensee further understands and agrees that the rights
                  granted herein are limited only to the cartoon characters set
                  forth above and that any and all rights in, to or associated
                  with any theatrical motion picture or direct to video
                  containing the "LOONEY TUNES" cartoon characters, whether
                  live action, animation or both, as well as with any sequels
                  thereto, are specifically excluded herefrom, it being
                  understood that all rights in and to said property are
                  reserved exclusively to Licensor for use and/or licensing as
                  it deems appropriate to third parties of its choice. Any and
                  all rights in any music or sound elements associates with the
                  "LOONEY TUNES" Characters are specifically excluded herefrom.

         (F)      "MARKETING DATE": January 1, 2001.

         (G)      "ROYALTY RATE": As set forth in Schedule A attached hereto.

         (H)      "STYLE GUIDE": Any materials provided by Licensor to Licensee
                  which sets forth the style, format, characterization and any
                  artwork depicting the Licensed Property which has been
                  approved by Licensor in writing.

         (I)      "TERM": January 1, 2001 through December 31, 2003.

         (J)      "TERRITORY": United States (fifty states), Puerto Rico and
                  United States Virgin Islands.

2.       GRANT OF LICENSE:

         (A)      Subject to the restrictions, limitations, reservations and
                  conditions and Licensor's approval rights set forth in this
                  Agreement, Licensor hereby grants to Licensee and Licensee
                  hereby accepts for the Term of this Agreement, a license to
                  utilize the Category I and Category II Licensed Property and
                  to create Artwork, subject to Licensor's approval, solely on
                  or in connection with the manufacture, distribution and sale
                  of the Licensed Products as specified above for the ultimate
                  retail sale to the public throughout the Territory on a
                  non-exclusive basis, except as set forth in Schedule A.


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         (B)      Without limiting any other approval rights of Licensor as
                  contained herein, no television commercials may be utilized
                  under this Agreement without the specific prior written
                  approval of Licensor.

         (C)      Subject to the Grant of License set forth in Paragraph 2(a)
                  above, it is specifically understood and agreed between the
                  parties hereto that those characters set forth in Paragraph
                  1(e)(i) Category I and 1(e)(ii) Category II above shall only
                  be utilized in connection with the respectively designated
                  Licensed Products set forth in Schedule A.

3.       RESERVATION OF RIGHTS; PREMIUMS:

         (A)      Licensor reserves all rights not expressly conveyed to
                  Licensee hereunder, and Licensor may grant licenses to others
                  to use the Licensed Property, artwork and textual matter in
                  connection with other uses, services and products without
                  limitation.

         (B)      Notwithstanding anything to the contrary stated herein,
                  Licensor, for itself and its affiliates, specifically reserves
                  the right, without limitation throughout the world, to use, or
                  license any third party(s) of its or their choice to use the
                  Licensed Property for the marketing, promotion, manufacture,
                  distribution and sale of products similar or identical to
                  those licensed herein in Paragraph 1(d) above for sale through
                  any catalogue(s) or online website produced or distributed by
                  or on behalf of Licensor or its Affiliated Companies (defined
                  below), or for sale or distribution in any theaters, arenas or
                  restaurants or for sale or distribution in connection with any
                  home video product, including DVD or other formats, or for
                  sale or distribution in any retail stores operated by or on
                  behalf of Licensor, its Affiliated Companies or franchisees,
                  or for sale or distribution in any theme/amusement parks
                  operated by or on behalf of Licensor or its licensees, Six
                  Flags, Movie World, or their affiliated companies. Licensor
                  shall use reasonable commercial efforts to cause its
                  Affiliated Companies to offer Licensee the opportunity to
                  submit a competitive bid for any goods that are similar or
                  identical to those licensed herein and to be procured through
                  third party suppliers. In addition, Licensor reserves the
                  right to allow Six Flags and Movie World to manufacture (or
                  have manufactured by a third party) products similar or
                  identical to those licensed herein for distribution or sale in
                  theme and/or amusement parks owned or operated by Six Flags
                  and/or Movie World. Affiliated Companies herein shall mean any
                  company owned either directly or indirectly by AOL Time
                  Warner, Inc. In addition, Licensor reserves the right to use,
                  or license others to use, and/or manufacture products similar
                  or identical to those licensed herein for use as premiums,
                  excluding premiums which would be distributed through
                  Licensee's Exclusive Channels of Distribution.

         (C)      Licensee specifically understands and agrees that no rights
                  are granted herein with respect to the Warner Bros. "shield"
                  logo or trademark, or any other trademark(s), logo(s) or
                  copyrights owned by Licensor other than those specifically set
                  forth above in the Licensed Property, it being understood that
                  all rights in and to said properties are reserved exclusively
                  to Licensor for use and/or licensing as it deems appropriate
                  to third party(s) of its choice.


<PAGE>   6


         (D)      Licensee agrees that it will not use, or knowingly permit the
                  use of, and will exercise due care that its customers likewise
                  will refrain from the use of, the Licensed Products as a
                  premium, except with the prior written consent of Licensor.
                  Subject to Licensor's prior written approval as aforesaid,
                  Licensee shall pay to Licensor a sum equal to TWELVE PERCENT
                  (12%) of all premium sales. Any such royalties on premium
                  sales shall not offset the Guaranteed Consideration hereunder.
                  For purposes of this paragraph, the term "premium" shall be
                  defined as including, but not necessarily limited to,
                  combination sales, free or self-liquidating items offered to
                  the public in conjunction with the sale or promotion of a
                  product or service, programs designed to build traffic or
                  continuity visits by the consumer/customer, or any similar
                  scheme or device, the prime intent of which is to use the
                  Licensed Products in such a way as to promote, publicize and
                  or sell the products, services or business image of the user
                  of such item. Premium shall not include (i) "value-added"
                  packaging of Licensed Products as extra items with other
                  Licensed Products hereunder or (ii) placement of discount
                  coupons or similar types of rebate or discount offers on other
                  Licensee's products ("Cross-couponing"). All instances of
                  Cross-couponing and all Artwork in relation thereto shall be
                  subject to Licensor's prior written approval.

4.       CONSIDERATION:

         (A)      The Guaranteed Consideration paid by Licensee as set forth
                  above shall be applied against such royalties as are, or have
                  become, due to Licensor. No part of such Guaranteed
                  Consideration shall be repayable to Licensee. Royalties earned
                  in excess of the Guaranteed Consideration applicable to the
                  Term hereof shall not offset any Guaranteed Consideration
                  required in respect of the succeeding renewal term (if any);
                  likewise, royalties earned in excess of the Guaranteed
                  Consideration applicable to the renewal term (if any) shall
                  not offset any Guaranteed Consideration applicable to any
                  prior term.

         (B)      Royalty Payments: Licensee shall pay to Licensor a sum equal
                  to the Royalty Rate as set forth above of all net sales by
                  Licensee of the Licensed Products covered by this Agreement.
                  The term "net sales" herein shall mean the gross invoice price
                  billed customers, less actual quantity, placement and volume
                  based discounts and actual returns, but no deductions shall be
                  made for uncollectible accounts and deductions for actual
                  returns may not exceed 5% of total sales. No costs incurred in
                  the manufacture, sale, distribution, advertisement, or
                  exploitation of the Licensed Products shall he deducted from
                  any royalties payable by Licensee.

         (C)      For sales of Closeouts and Irregulars at or below 2,500 units,
                  Licensee may directly sell such Closeouts and/or Irregulars to
                  Approved Closeouts and Irregulars Outlets. For sales of
                  Closeouts and/or Irregulars in excess of 2,500 units, prior to
                  offering such Closeouts and/or Irregulars, Licensee shall give
                  notice to Licensor or its intent to offer Closeouts and/or
                  Irregulars, the Licensed Products to be sold as Closeouts or
                  Irregulars, the quantity available, the nature of the
                  irregularity, a representative sample of the Closeouts and/or
                  Irregulars and the price they are to be offered at. Licensee
                  shall further notify


<PAGE>   7


                  Licensor of the retailer or other outlets which will be
                  offered the Closeouts and/or Irregulars. If, within five (5)
                  business days of such further notice, Licensor objects to any
                  particular retailer or outlet and provides a good faith basis
                  for such objection, Licensee shall not offer such Closeouts
                  and/or Irregulars to such retailer or outlet.

         (D)      Royalties shall be payable quarterly with the periodic
                  statements required in Paragraph 5 hereof, except to the
                  extent offset by Guaranteed Consideration theretofore
                  remitted. Further, it is expressly understood that royalties
                  paid by Licensee in connection with sales of Licensed
                  Product(s) to WBSS International shall be offset against the
                  Guaranteed Consideration, provided such sales are reported
                  separately as required herein. Royalties paid by Licensee in
                  excess of Guaranteed Consideration payments theretofor due and
                  paid shall be applied against Guaranteed Consideration
                  payments due thereafter.

5.       PERIODIC STATEMENTS:

         (A)      Within thirty (30) days after the end of the first fiscal
                  month after the date of execution of the License Agreement and
                  promptly on the 15th day after the end of each calendar month
                  thereafter, Licensee shall furnish to Licensor complete and
                  accurate statements certified to be accurate by Licensee, or
                  if a corporation, by an officer of Licensee, showing with
                  respect to all Licensed Products distributed and sold by
                  Licensee during the preceding fiscal month the (i) number by
                  SKU number; (ii) wholesale list price; (iii) quantity,
                  placement and volume discounts; and (iv) net sales price
                  together with any returns made during the preceding fiscal
                  month. Further upon Licensor's request, Licensee shall provide
                  to Licensor the Description (as such term is defined below) of
                  the Licensed Products utilizing the Looney Tunes Licensed
                  Property. Such statements shall be in such formats as Licensor
                  shall require (which formats may be amended upon reasonable
                  notice by Licensor from time to time) and shall be furnished
                  to Licensor whether or not any of the Licensed Products have
                  been sold during fiscal months to which such statements refer.
                  Receipt or acceptance by Licensor of any of the statements
                  furnished pursuant to this Agreement or of any sums paid
                  hereunder shall not preclude Licensor from questioning the
                  correctness thereof at any time, and in the event that any
                  inconsistencies or mistakes are discovered in such statements
                  or payments, they shall immediately be rectified and the
                  appropriate payments made by Licensee. Upon demand of
                  Licensor, Licensee shall at its own expense, but not more than
                  once in any twelve (12) period, furnish to Licensor a detailed
                  statement by an officer of Licensee showing the (i) number by
                  SKU number; (ii) wholesale list price; (iii) Description (as
                  such term is defined below) of the Licensed Products utilizing
                  the Looney Tunes Licensed Property; (iv) quantity, placement
                  and volume discounts; and (v) net sales price of the Licensed
                  Products covered by this Agreement distributed and/or sold by
                  Licensee up to and including the date upon which Licensor has
                  made such demand. For purposes of this Subparagraph, the term
                  "Description" shall mean a detailed description of the
                  Licensed Products including the nature of each of the Licensed
                  Products, any and all names and likenesses, whether live
                  actors or animated characters, from the Licensed Property
                  utilized on the Licensed Products and/or any related

<PAGE>   8


                  packaging and/or wrapping material; and any other components
                  of the Licensed Property utilized on the Licensed Products
                  and/or any related packaging and/or wrapping material. It is
                  understood and agreed that pursuant to Licensor's written
                  request, Licensee shall provide the names and likenesses
                  utilized on each Licensed Product. In the event Licensor is
                  responsible for the payment of any additional third party
                  participations based on Licensee not reporting by character
                  name and likeness as provided above, Licensee shall be
                  responsible for reimbursing Licensor for the full amount of
                  all such third party claims, including without limitation,
                  the participation itself, interest, audit and attorneys'
                  fees. Licensee understands and agrees that it is a material
                  term and condition of this Agreement that Licensee include
                  the Description on all statements on which it has been
                  requested commencing with statements rendered after December
                  31, 2001. In the event Licensee fails to do so, Licensor
                  shall have the right to terminate this Agreement, in
                  accordance with the provisions of Paragraph 14 herein.
                  Further, it is expressly understood that sales of Licensed
                  Products to WBSS International shall be reported separately
                  from the sales of all other Licensed Products.


<PAGE>   9


         (B)      For the statements and payments required hereunder (Licensee
                  shall reference the contract number(s) on all statements and
                  payments) if the United States Postal Service is used deliver
                  to the following:

                  WARNER BROS. CONSUMER PRODUCTS
                  21477 Network Place
                  Chicago, IL 60673-1214

                  For the statements and payments required hereunder (Licensee
                  shall reference the contract number(s) on all statements and
                  payments) if sent by Federal Express or any other Courier
                  Service deliver to the following:

                  BANK ONE
                  Attention WBCP lockbox #21477
                  525 West Monroe
                  8th Floor Mail Room
                  Chicago, IL 60661
                  Telephone Number 312-732-5500

         (C)      Any payments which are made to Licensor hereunder after the
                  due date required therefor, shall bear interest at the then
                  current prime rate, as published in The Wall Street Journal
                  (New York edition), plus four (4%) percent (or the maximum
                  rate permissible by law, if less) from the date such payments
                  are due to the date of payment. Licensor's right hereunder to
                  interest on late payments shall not preclude Licensor from
                  exercising any of its other rights or remedies pursuant to
                  this Agreement or otherwise with regard to Licensee's failure
                  to make timely remittances.

         (D)      If any required payment of Royalty or Guaranteed
                  Consideration shall be delinquent ten (10) days or more
                  beyond the due date, Licensee shall provide, at Licensor's
                  request, a standby letter of credit valid for one (1) year,
                  issued in favor of Licensor from a financial institution as
                  approved by Licensor in an amount up to the Guaranteed
                  Consideration due within the twelve (12) month period.


<PAGE>   10


6.       BOOKS AND RECORDS:

         (A)      Licensee shall keep, maintain and preserve (in Licensee's
                  principal place of business) for at least two (2) years
                  following termination or expiration of the Term of this
                  Agreement or any renewal(s) hereof (if applicable), complete
                  and accurate records of accounts including, without
                  limitation, purchase orders, inventory records, invoices,
                  correspondence, banking and financial and other records
                  pertaining to the various items required to be submitted by
                  Licensee as well as to ensure Licensee's compliance with
                  local laws as required pursuant to Paragraph 13(k) hereof.
                  However, in no event will the foregoing be interpreted to
                  require Licensee to keep any records for longer than its
                  normal retention period, which is four (4) years from the end
                  of the calendar year to which such records pertain. Such
                  records and accounts shall be available for inspection and
                  audit at any time or times during or after the Term of this
                  Agreement or any renewal(s) hereof (if applicable) during
                  reasonable business hours and upon reasonable notice by
                  Licensor or its nominees. Licensee agrees not to cause or
                  permit any interference with Licensor or nominees of Licensor
                  in the performance of their duties. During such inspections
                  and audits, Licensor shall have the right to take extracts
                  and/or make copies of Licensee's records relating to such
                  periodic statements or the Licensed Products as it reasonably
                  deems necessary.

         (B)      The exercise by Licensor in whole or in part, at any time of
                  the right to audit records and accounts or of any other right
                  herein granted, or the acceptance by Licensor of any
                  statement or statements or the receipt and/or deposit by
                  Licensor, of any payment tendered by or on behalf of Licensee
                  shall be without prejudice to any rights or remedies of
                  Licensor and such acceptance, receipt and/or deposit shall
                  not preclude or prevent Licensor from thereafter disputing
                  the accuracy of any such statement or payment, except that
                  any objection to the accuracy of any statement or payment
                  shall be made within two (2) years following termination or
                  expiration of the Term of this Agreement or any renewal(s)
                  hereof (if applicable).

         (C)      If pursuant to its right hereunder Licensor causes an audit
                  and inspection to be instituted which thereafter discloses a
                  deficiency between the amount found to be due to Licensor and
                  the amount actually received or credited to Licensor, then
                  Licensee shall, upon Licensor's demand, promptly pay the
                  deficiency, together with interest thereon at the then
                  current prime rate from the date such amount became due until
                  the date of payment, and, if the deficiency is more than 3%
                  of all royalties paid by Licensee during the period covered
                  by the audit, then Licensee shall pay the reasonable costs
                  and expenses of such audit and inspection. If an audit
                  discloses an overpayment to Licensor by Licensee, then
                  Licensor shall remit the amount of such overpayment to
                  Licensee within sixty (60) days of conclusive agreement that
                  such overpayment occurred.

         (D)      Licensee understands and agrees that Licensor shall have
                  access to Licensee's sell-through information, with respect
                  to the Licensed Products, pertaining to various retail
                  customers (e.g. Wal*Mart, JC Penney) (the "Sell Through
                  System"). Licensor agrees to keep confidential all
                  information obtained by Licensor through the Sell Through
                  Systems except: (i) to the


<PAGE>   11


                  extent necessary to comply with a law or the valid order of a
                  court of competent jurisdiction, in which event the party
                  making such disclosure shall so notify the other and shall
                  seek confidential treatment of such information; (ii) as part
                  of normal reporting or review procedure to the respective
                  parties' boards of directors, parent company, auditors and
                  attorneys who agree to be bound by the provisions of this
                  subparagraph; (iii) in order to enforce its rights or perform
                  its obligations under this Agreement; or (iv) when discussing
                  the sale of Licensed Products with the applicable retail
                  customer in an effort to improve business results.

7.       INDEMNIFICATIONS:

         (A)      During the Term, and continuing after the expiration or
                  termination of this Agreement, Licensor shall indemnify
                  Licensee and shall hold it harmless from any loss, liability,
                  damage, cost or expense, arising out of any claims or suits
                  which may be brought or made against Licensee by reason of
                  the breach by Licensor of the warranties or representations
                  as set forth in Paragraph 12 hereof, provided that Licensee
                  shall give prompt written notice, and full cooperation and
                  assistance to Licensor relative to any such claim or suit and
                  provided, further, that Licensor shall have the option to
                  undertake and conduct the defense of any suit so brought.
                  Licensee shall not, however, be entitled to recover for lost
                  profits. Licensee shall cooperate fully in all respects with
                  Licensor in the conduct and defense of said suit and/or
                  proceedings related thereto.

         (B)      During the Term, and continuing after the expiration or
                  termination of this Agreement, Licensee shall indemnify
                  Licensor, Time Warner Entertainment Company, L.P. ("TWE") and
                  each of its affiliates and shall hold them harmless from any
                  loss, liability, damage, cost or expense arising out of any
                  claims or suits which may be brought or made against Licensor,
                  TWE or any of its affiliates, by reason of: (i) any breach of
                  Licensee's covenants and undertakings hereunder; (ii) any
                  unauthorized use by Licensee of the Licensed Property; (iii)
                  any use of any trademark or copyright (except trademarks or
                  copyrights in the Licensed Property used in accordance with
                  the terms of this Agreement), design, patent, process, method
                  or device; (iv) Licensee's non-compliance with any applicable
                  federal, state or local laws or with any other applicable
                  regulations; and (v) any alleged defects and/or inherent
                  dangers (whether obvious or hidden) in the Licensed Products
                  or the use thereof.

         (C)      With regard to Paragraph 7(b) above, Licensee agrees to
                  obtain, at its own expense, Commercial General Liability
                  Insurance, including product liability and contractual
                  liability coverage providing adequate protection for Licensor
                  and Licensee against any such claims or suits in amounts no
                  less than three million dollars ($3,000,000) per occurrence,
                  combined single limits. Simultaneously with the execution of
                  this Agreement, Licensee undertakes to submit to Licensor a
                  fully paid policy or certificate of insurance naming
                  Licensor, TWE and each of its affiliates as additional
                  insured parties and, requiring that the insurer shall not
                  terminate or materially modify such policy or certificate of
                  insurance without written notice to Licensor at least twenty
                  (20) days in advance thereof. Such insurance shall at all
                  times be primary and not


<PAGE>   12


                  contributory with any insurance carried by Licensor, TWE or
                  any of their affiliates. Further the delivery of the policy
                  or certificate, as provided in this Paragraph 7(c) are
                  material obligations of Licensee.

8.       ARTWORK; COPYRIGHT AND TRADEMARK NOTICES:

         (A)      The Licensed Property shall be displayed or used only in such
                  form and in such manner as has been specifically approved in
                  writing by Licensor in advance and Licensee undertakes to
                  assure usage of the trademark(s) and character(s) solely as
                  approved hereunder. Licensee further agrees and acknowledges
                  that any and all Artwork (defined below) created, utilized,
                  approved and/or authorized for use hereunder by Licensor in
                  connection with the Licensed Products or which otherwise
                  features or includes the Licensed Property shall be owned in
                  its entirety exclusively by Licensor. "Artwork" refers to
                  incorporating Category I and Category II Licensed Property
                  and shall include, without limitation, all pictorial,
                  graphic, visual, audio, audio-visual, digital, literary,
                  animated, artistic, dramatic, sculptural, musical or any other
                  type of creations and applications, whether finished or not,
                  including, but not limited to, animation, drawings, designs,
                  sketches, images, tooling and tooling aids, illustrations,
                  film, video, electronic, digitized or computerized
                  information, software, object code, source code, on-line
                  elements, music, text, dialogue, stories, visuals, effects,
                  scripts, voiceovers, logos, one-sheets, promotional pieces,
                  packaging, display materials, printed materials, photographs,
                  interstitials, notes, shot logs, character profiles and
                  translations, produced by Licensee or for Licensee, pursuant
                  to this Agreement. Licensor reserves for itself or its
                  designees all rights to use any and all Artwork created,
                  utilized and/or approved hereunder without limitation.

         (B)      Licensee acknowledges that, as between Licensor and Licensee,
                  the Licensed Property and Artwork and all other depictions,
                  expressions and derivations thereof, and all copyrights,
                  trademarks and other proprietary rights therein are owned
                  exclusively by Licensor and Licensee shall have no interest
                  in or claim thereto, except for the limited right to use the
                  same pursuant to this Agreement and subject to its terms and
                  conditions.

                  Licensee agrees and acknowledges that any Artwork created by
                  Licensee or for Licensee hereunder is a "work made for hire"
                  for Licensor under the U.S. Copyright Act, and any and all
                  similar provisions of law under other jurisdictions, and that
                  Licensor is the author of such works for all purposes, and
                  that Licensor is the exclusive owner of all the rights
                  comprised in the undivided copyright and all renewals,
                  extensions and reversions therein, in and to such works in
                  perpetuity and throughout the universe. Licensee hereby
                  waives and releases in favor of Licensor all rights (if any)
                  of "droit moral," rental rights and similar rights in and to
                  the Artwork (the "Intangible Rights") and agrees that
                  Licensor shall have the right to revise, condense, abridge,
                  expand, adapt, change, modify, add to, subtract from,
                  re-title, re-draw, recolor, or otherwise modify the Artwork,
                  without the consent of Licensee. Licensee hereby irrevocably
                  grants, transfers and assigns to Licensor all right, title
                  and interest, including copyrights, trademark rights, patent
                  rights and other proprietary rights, it


<PAGE>   13


                  may have in and to the Artwork, in perpetuity and throughout
                  the universe, and to all proprietary depictions, expressions
                  or derivations of the Licensed Property created by or for
                  Licensee. Licensee acknowledges that Licensor shall have the
                  right to terminate this Agreement in the event Licensee
                  asserts any rights (other than those specifically granted
                  pursuant to this Agreement) in or to the Licensed Property or
                  Artwork.

                  Licensee hereby warrants that any and all work created by
                  Licensee under this Agreement apart from the materials
                  provided to Licensee by Licensor is and shall be wholly
                  original with or fully cleared by Licensee and shall not copy
                  or otherwise infringe the rights of any third parties, and
                  Licensee hereby indemnifies Licensor and will hold Licensor
                  harmless from any such claim of infringement or otherwise
                  involving Licensee's performance hereunder. At the request of
                  Licensor, Licensee shall execute such form(s) of assignment
                  of copyright or other papers as Licensor may reasonably
                  request in order to confirm and vest in Licensor the rights
                  in the properties as provided for herein. In addition,
                  Licensee hereby appoints Licensor as Licensee's
                  Attorney-in-Fact to take such actions and to make, sign,
                  execute, acknowledge and deliver all such documents as may
                  from time to time be necessary to confirm in Licensor, its
                  successors and assigns, all rights granted herein. If any
                  third party makes or has made any contribution to the
                  creation of Artwork authorized for use hereunder, Licensee
                  agrees to obtain from such party a full confirmation and
                  assignment of rights so that the foregoing rights shall vest
                  fully in Licensor, in the form of the Contributor's Agreement
                  attached hereto as Exhibit 2 and by this reference made a
                  part hereof, prior to commencing work, and subject to the
                  prior written approval of Licensor ensuring that all rights
                  in the Artwork and Licensed Property arise in and are
                  assigned to Licensor. Promptly upon entering into each such
                  Contributor's Agreement, Licensee shall give Licensor a copy
                  of such Contributor's Agreement. Licensee assumes all
                  responsibility for such parties and agrees that Licensee
                  shall bear any and all risks arising out of or relating to
                  the performance of services by them and to the fulfillment of
                  their obligations under the Contributor's Agreement.

                  Upon expiration or termination of this Agreement for any
                  reason, or upon demand by Licensor at any time, Licensee
                  shall promptly deliver to Licensor all Artwork or Licensed
                  Property, whether finished or not, including drawings,
                  drafts, sketches, illustrations, screens, data, digital files
                  and information, copies or other items, information or things
                  created in the course of preparing the Licensed Property and
                  all materials provided to Licensee by Licensor hereunder, or,
                  at Licensor's option and instruction, shall destroy some or
                  all of the foregoing and shall confirm to Licensor in writing
                  that Licensee has done so. Licensee shall not use such
                  Artwork or Licensed Property, items, information or things,
                  or materials, for any purpose other than as permitted under
                  this Agreement.

         (C)      Licensee shall, within thirty (30) days of receiving an
                  invoice for a charge that Licensee has previously approved in
                  writing, pay Licensor for artwork executed for Licensee by
                  Licensor (or by third parties under contract to Licensor) for
                  use in the development of the


<PAGE>   14


                  Licensed Products and any related packaging, display and
                  promotional materials at Licensor's prevailing commercial art
                  rates. The foregoing shall include any artwork that, in
                  Licensor's opinion and subject to Licensee's written
                  approval, is necessary to modify artwork initially prepared
                  by Licensee and submitted for approval. Estimates of artwork
                  charges are available upon request.

         (D)      Licensee shall cause to be imprinted, irremovably and legibly
                  on each Licensed Products manufactured, distributed or sold
                  under this Agreement, and all advertising, promotional,
                  packaging and wrapping material wherein the Licensed Property
                  appears, the following copyright and/or trademark notice(s)
                  (or such other notice as may be approved by Licensor):

                  CATEGORY I:

                  BABY LOONEY TUNES, CHARACTERS, NAMES, AND ALL RELATED INDICIA
                  ARE TRADEMARKS OF WARNER BROS.(C) 20___.

                  CATEGORY II:

                  LOONEY TUNES, CHARACTERS, NAMES, AND ALL RELATED INDICIA ARE
                  TRADEMARKS OF WARNER BROS.(C) 20___.

                  (The year date shall be as instructed by Licensor)

         (E)      In no event shall Licensee use, in respect to the Licensed
                  Products and/or in relation to any advertising, promotional,
                  packaging or wrapping material, any copyright or trademark
                  notices which shall conflict with, be confusing with, or
                  negate, any notices required hereunder by Licensor in respect
                  to the Licensed Property.

         (F)      Licensee agrees to deliver to Licensor free of cost six (6)
                  of each of the Licensed Products together with their
                  packaging and wrapping material for trademark registration
                  purposes in compliance with applicable laws, simultaneously
                  upon distribution to the public. Any copyrights or trademarks
                  with respect to the Licensed Products shall be procured by
                  and for the benefit of Licensor and at Licensor's expense.
                  Licensee further agrees to provide Licensor with the date of
                  the first use of the Licensed Products in interstate and
                  intrastate commerce.

         (G)      Licensee shall assist Licensor, at Licensor's expense, in the
                  procurement, protection, and maintenance of Licensor's rights
                  to the Licensed Property. Licensor may, in its sole
                  discretion, commence or prosecute and effect the disposition
                  of any claims or suits relative to the imitation, infringement
                  and/or unauthorized use of the Licensed Property either in its
                  own name, or in the name of Licensee, or join Licensee as a
                  party in the prosecution of such claims or suits. Licensee
                  agrees to cooperate fully with Licensor in connection with any
                  such claims or suits and undertakes to furnish full assistance
                  to Licensor in the conduct of all proceedings in regard
                  thereto. Licensee shall promptly notify Licensor in writing of
                  any infringements or imitations or unauthorized uses by others
                  of the Licensed Property, on or in relation to products
                  identical to, similar to, or related to the Licensed Products.
                  Licensor shall in its sole discretion have the right to settle
                  or effect compromises in respect


<PAGE>   15


         (H)      Licensee acknowledges receipt of Licensor's Style Guide and
                  undertakes to utilize the depictions of the characters
                  contained within the Licensed Property (and, if authorized by
                  Licensor, any emblems and/or devices associated therewith) in
                  the form as set forth therein on all Licensed Products as
                  well as advertising, promotional, packaging or wrapping
                  materials. In the event that Licensee desires to utilize
                  character renditions which vary from those as set forth in
                  the Style Guide, Licensee shall make a request to Licensor in
                  that connection, and if the request is approved, Licensor
                  shall prepare appropriate artwork and deliver same to
                  Licensee. Licensee shall utilize and shall pay a reasonable
                  fee to Licensor in respect thereof not later than one month
                  after delivery thereof by Licensor to Licensee, and such fee
                  shall be additional to and not offset by any Guaranteed
                  Consideration referred to in Paragraph 1(c) hereinabove.

         (I)      If Licensee is unable or unwilling to use character artwork
                  from the Licensor's Style Guide and if Licensor is unable or
                  unwilling to provide Licensee with artwork as described in
                  subparagraph (h) above and if Licensor expressly consents in
                  writing, which consent shall not be unreasonably withheld,
                  but may be subject to such conditions as Licensor may elect
                  in its sole discretion, then and only then may the Licensee
                  create or procure the creation of character artwork. In any
                  event, Licensee shall assign or procure the assignment in
                  writing of all rights, copyright and otherwise, in and
                  pertaining, or otherwise relating to the Licensed Property,
                  including any and all newly created characters, ideas,
                  stories, scenes and scenarios which may be marketed in
                  connection with the Licensed Property and the Licensed
                  Products, and it is intended that this provision shall take
                  effect as an assignment of prospective copyrights in works
                  yet to be created by or for Licensee referring to, displaying
                  or otherwise relating to the Licensed Property. The Licensee
                  further undertakes to take all and any steps necessary for
                  the recordal or registration of the assignment(s) referred to
                  hereinabove.


<PAGE>   16
                  thereof. Licensee shall not institute any suit or take any
                  action on account of such infringements, imitations or
                  unauthorized uses.

9.       APPROVALS AND QUALITY CONTROLS:

         (A)      Licensee agrees to comply and maintain compliance with the
                  reasonable quality standards and specifications of Licensor
                  as they are required of other licenses in respect to all
                  usage of the Licensed Property on or in relation to the
                  Licensed Products throughout the Term of this Agreement and
                  any renewals or extensions thereof (if applicable). Licensee
                  agrees to furnish to Licensor free of cost for its written
                  approval as to aesthetic quality and style, samples of each
                  of the Licensed Products, together with their packaging,
                  hangtags, and wrapping material, as follows in the successive
                  stages indicated: (i) rough sketches/layout concepts; (ii)
                  finished artwork or final proofs; (iii) pre-production samples
                  or strike-offs; and (iv) finished products, including
                  packaged samples. Finished Products will be deemed approved
                  if they conform in all material respects to the approved
                  pre-production sample or strike-off. Licensor will not
                  withhold approval of a product based on its construction or
                  materials unless
<PAGE>   17
                  the construction or materials impairs the aesthetic
                  appearance of the product or is otherwise not in conformity
                  with the general quality of Licensee's products.

         (B)      No Licensed Products and no material utilizing the Licensed
                  Property shall be manufactured, sold, distributed or promoted
                  by Licensee without prior written approval. Licensee may,
                  subject to Licensor's prior written approval, use textual
                  and/or pictorial matter pertaining to the Licensed Property on
                  such promotional, display and advertising material as may, in
                  its reasonable judgment, promote the sale of the Licensed
                  Products. All advertising and promotional material relating to
                  the Licensed Products must be submitted to the Licensor for
                  its written approval at the following stages appropriate to
                  the medium used: (i) rough concepts; (ii) layout, storyboard,
                  script; and (iii) finished materials.

         (C)      Approval or disapproval shall lie in Licensor's sole
                  discretion. Licensee shall submit all materials for approval
                  to Karen Weiss or such other person Licensor shall use its
                  best efforts to approve, disapprove or otherwise comment upon
                  any items submitted to it for approval as may be required
                  hereunder within ten (10) business days after receipt by it of
                  such item(s). In the event that Licensor fails to approve,
                  disapprove or otherwise comment upon the item(s) so submitted
                  within said ten (10) business days, then Licensee shall have
                  the right to notify Licensor of such failure by facsimile
                  (evidenced by written confirmation of facsimile transmittal)
                  and Licensor shall thereafter be required to approve,
                  disapprove or otherwise comment upon the item(s) so submitted
                  within three (3) business days after receipt by it of said
                  facsimile and failure to do so shall be deemed approval of any
                  item(s) so submitted. Any Licensed Products not so approved
                  shall be deemed unlicensed and shall not be manufactured or
                  sold. If any unapproved Licensed Products are being sold,
                  Licensor may, together with other remedies available to it
                  including, but not limited to, immediate termination of this
                  Agreement, require such Licensed Products to be immediately
                  withdrawn from the market and to be destroyed, such
                  destruction to be attested to in a certificate signed by an
                  officer of Licensee.

         (D)      Any modification of a Licensed Product which relates to the
                  Artwork applied to the Licensed Product or results in a
                  material deviation in the standards of quality of a Licensed
                  Product must be submitted in advance for Licensor's written
                  approval as if it were a new Licensed Product. Approval of a
                  Licensed Product which uses particular artwork does not imply
                  approval of such artwork for use with a different Licensed
                  Product.

         (E)      Licensed Products must conform in all material respects to the
                  final production samples approved by Licensor. If in
                  Licensor's reasonable judgement, the quality of a Licensed
                  Product originally approved has deteriorated in later
                  production runs, or if a Licensed Product has otherwise been
                  altered, Licensor may, in addition to other remedies available
                  to it, require that such Licensed Product be immediately
                  withdrawn from the market.

         (F)      Licensee shall permit Licensor to inspect Licensee's
                  manufacturing operations, testing and payroll records
                  (including those operations and records of any supplier


<PAGE>   18

                  or manufacturer approved pursuant to Paragraph 10(b) below)
                  with respect to the Licensed Products.

         (G)      If any changes or modifications are required to be made to any
                  material submitted to Licensor for its written approval in
                  order to ensure compliance with Licensor's specifications or
                  standards of quality, Licensee agrees promptly to make such
                  changes or modifications.

         (H)      Subsequent to final approval, no fewer than twelve (12)
                  production samples of Licensed Products will be sent to
                  Licensor to ensure quality control simultaneously upon
                  distribution to the public. In addition, Licensee shall
                  provide Licensor with six (6) catalogs or available style
                  listings which display all of Licensee's products, not just
                  the Licensed Products. Further, Licensor shall have the right
                  to purchase any and all Licensed Products in any commercially
                  reasonable quantity at the maximum discount price Licensee
                  charges its best customer.

         (I)      To avoid confusion of the public, Licensee agrees not to
                  associate other characters or properties with the Licensed
                  Property on the Licensed Products or in any packaging,
                  promotional or display materials unless Licensee receives
                  Licensor's prior written approval. Furthermore, Licensee
                  agrees not to use the Licensed Property (or any component
                  thereof) on any business sign, business cards, stationery or
                  forms, nor as part of the name of Licensee's business or any
                  division thereof. The following licensed properties are hereby
                  deemed approved for use on the Licensed Products for purposes
                  of this paragraph: the Cotton seal; 3-M-Scotchguard; Curity
                  and Gerber.

         (J)      Licensee shall use its best efforts to notify its customers of
                  the requirement that Licensor has the right to approve all
                  promotional, display and advertising material pursuant to this
                  Agreement. Notwithstanding the foregoing, Licensee shall not
                  be responsible for any customers failure to obtain any
                  required approval.

         (K)      It is understood and agreed that any animation used in
                  electronic media, including but not limited to animation for
                  television commercials and character voices for radio
                  commercials, shall be produced by Warner Bros. Animation
                  pursuant to a separate agreement between Licensee and Warner
                  Bros. Animation, subject to Warner Bros. Animation's customary
                  rates. Any payment made to Warner Bros. Animation for such
                  animation and/or services shall be in addition to and shall
                  not offset the Guaranteed Consideration set forth in Paragraph
                  1(c).

         (L)      Licensor's approval of Licensed Products (including without
                  limitation, the Licensed Products themselves as well as
                  promotional, display, and advertising materials) shall in no
                  way constitute or be construed as an approval by Licensor of
                  Licensee's use of any trademark, copyright and/or other
                  proprietary materials, not owned by Licensor.

10.      DISTRIBUTION; SUB-LICENSE MANUFACTURE:

         (A)      Within the Channels of Distribution set forth in Paragraph
                  1(b) hereof, Licensee shall sell the Licensed Products to
                  wholesalers, distributors or retailers for sale or resale and
                  distribution directly to the public.


<PAGE>   19

                  If Licensee sells or distributes the Licensed Products at a
                  special price, directly or indirectly, to itself, including
                  without limitation, any subsidiary of Licensee or to any other
                  person, firm, or corporation affiliated with Licensee
                  (including any affiliated distributors) or its officers,
                  directors or major stockholders, for ultimate sale to
                  unrelated third parties, Licensee shall pay royalties upon the
                  actual sale of the Licensed Product to an unrelated third
                  party.

         (B)      Licensee shall not be entitled to sub-license any of its
                  rights under this Agreement. In the event Licensee is not the
                  manufacturer of the Licensed Products, Licensee shall, subject
                  to the prior written approval of Licensor, which approval
                  shall not be unreasonably withheld, be entitled to utilize a
                  third party manufacturer in connection with the manufacture
                  and production of the Licensed Products, provided that such
                  manufacturer shall execute a letter in the form of Exhibit 3
                  attached hereto and by this reference made a part hereof. In
                  such event, Licensee shall remain primarily obligated under
                  all of the provisions of this Agreement and any default of
                  this Agreement by such manufacturer shall be deemed a default
                  by Licensee hereunder. In no event shall any such third party
                  manufacturer agreement include the right of a manufacturer to
                  grant any rights to subcontractors.

11.      GOODWILL: Licensee recognizes the great value of the publicity and
         goodwill associated with the Licensed Property and acknowledges: (i)
         such goodwill is exclusively that of Licensor; and (ii) that the
         Licensed Property has acquired a secondary meaning as Licensor's
         trademarks and/or identifications in the mind of the purchasing public.
         Licensee further recognizes and acknowledges that a breach by Licensee
         of any of its covenants, agreements or undertakings hereunder will
         cause Licensor irreparable damage, which cannot be readily remedied in
         damages in an action at law, and may, in addition thereto, constitute
         an infringement of Licensor's copyrights, trademarks and/other
         proprietary rights in, and to the Licensed Property, thereby entitling
         Licensor to equitable remedies, and costs.

12.      LICENSOR'S WARRANTIES AND REPRESENTATIONS: Licensor represents and
         warrants to Licensee that:

         (A)      It has, and will have throughout the Term of this Agreement,
                  the right to license the Licensed Property to Licensee in
                  accordance with the terms and provisions of this Agreement;
                  and

         (B)      The making of this Agreement by Licensor does not violate any
                  agreements, rights or obligations of any person, firm or
                  corporation.

13.      LICENSEE'S WARRANTIES AND REPRESENTATIONS: Licensee represents and
         warrants to Licensor that, during the Term and thereafter:

         (A)      It will not attack the title of Licensor (or third parties
                  that have granted rights to Licensor) in and to the Licensed
                  Property or any copyright or trademarks pertaining thereto,
                  nor will it attack the validity of the license granted
                  hereunder;


<PAGE>   20

         (B)      It will not harm, misuse or bring into disrepute the Licensed
                  Property, but on the contrary, will maintain the value and
                  reputation thereof to the best of its ability;

         (C)      It will manufacture, sell, promote and distribute the Licensed
                  Products in an ethical manner and in accordance with the terms
                  and intent of this Agreement, and in compliance with all
                  applicable government regulations and industry standards;

         (D)      It will not create any expenses chargeable to Licensor without
                  the prior written approval of Licensor in each and every
                  instance. It will not cause or allow any liens or encumbrances
                  to be placed against, or grant any security interest in, the
                  Licensed Property without Licensor's prior written consent;

         (E)      It will protect to the best of its ability its right to
                  manufacture, sell, promote, and distribute the Licensed
                  Products hereunder;

         (F)      It will at all times comply with all government laws and
                  regulations, including but not limited to product safety,
                  food, health, drug, cosmetic, sanitary or other similar laws,
                  and all voluntary industry standards relating or pertaining to
                  the manufacture, sale, advertising or use of the Licensed
                  Products, and shall maintain its appropriate customary high
                  quality standards during the Term hereof. It shall comply with
                  any laws or regulations of regulatory agencies which shall
                  have jurisdiction over the Licensed Products and shall procure
                  and maintain in force any and all permissions, certifications
                  and/or other authorizations from governmental and/or other
                  official authorities that may be required in response thereto.
                  Each Licensed Product and component thereof distributed
                  hereunder shall comply with all applicable laws, regulations
                  and voluntary industry standards. Licensee shall follow
                  reasonable and proper procedures for testing that all Licensed
                  Products comply with such laws, regulations and standards.
                  Licensee shall permit Licensor or its designees to inspect
                  testing records and procedures with respect to the Licensed
                  Products for compliance. Licensed Products that do not comply
                  with all applicable laws, regulations and standards shall
                  automatically be deemed unapproved and immediately taken off
                  the market;

         (G)      It shall, upon Licensor's request, provide credit information
                  to Licensor including, but not limited to, fiscal year-end
                  financial statements (profit-and-loss statement and balance
                  sheet) and operating statements, all of which will be
                  satisfied by submission to Licensor of Licensee's annual
                  report;

         (H)      It will provide Licensor with the date(s) of first use of the
                  Licensed Products in interstate and intrastate commerce, where
                  appropriate;

         (I)      It will, pursuant to Licensor's instructions and at Licensor's
                  expense, duly take any and all necessary steps to secure
                  execution of all necessary documentation for the recordation
                  of itself as user of the Licensed Property in any jurisdiction
                  where this is required or where Licensor reasonably requests
                  that such recordation shall be effected. Licensee further
                  agrees that it will at its own expense cooperate with


<PAGE>   21

                  Licensor in cancellation of any such recordation at the
                  expiration of this Agreement or upon termination of Licensee's
                  right to use the Licensed Property. Licensee hereby appoints
                  Licensor its Attorney-in-Fact for such purpose;

         (J)      It will not deliver or sell Licensed Products outside the
                  Territory or knowingly sell Licensed Products to a third party
                  for delivery outside the Territory;

         (K)      It will not use any labor that violates any local labor laws,
                  including all wage and hour laws, laws against discrimination
                  and that it will not use prison, slave or child labor in
                  connection with the manufacture of the Licensed Products;

         (L)      It shall not send, share with or otherwise disclose any
                  Artwork to any third party, including licensees of Licensor,
                  but with the exception of approved third party manufacturers
                  hereunder, without the prior written consent of Licensor;

         (M)      It shall at all times comply with all manufacturing, sales,
                  distribution, retail and marketing policies and strategies
                  promulgated by Licensor from time-to-time; and

         (N)      It will utilize specific design elements of the Licensed
                  Property provided to Licensee by Licensor on hangtags, labels,
                  and other materials.

14.      TERMINATION BY LICENSOR:

         (A)      BY LICENSOR: Licensor shall have the right to terminate this
                  Agreement without prejudice to any rights which it may have,
                  whether pursuant to the provisions of this Agreement, or
                  otherwise in law, or in equity, or otherwise, upon the
                  occurrence of any one or more of the following events (herein
                  called "defaults"):

                  (I)      Licensee defaults in the performance of any of its
                           obligations provided for in this Agreement; or

                  (II)     Licensee shall have failed to deliver to Licensor or
                           to maintain in full force and effect the insurance
                           referred to in Paragraph 7(c) hereof; or

                  (III)    Licensee shall fail to make any payments due
                           hereunder on the date due; or

                  (IV)     Licensee shall fail to deliver any of the statements
                           required herein or to give access to the premises
                           and/or license records pursuant to the provisions
                           hereof to Licensor's authorized representatives for
                           the purposes permitted hereunder; or

                  (V)      Licensee shall fail to comply with any laws,
                           regulations or voluntary industry standards as
                           provided in Paragraph 13(f), or if any governmental
                           agency or other body, office or official vested with
                           appropriate authority makes a final determination
                           that the Licensed Products are harmful or defective
                           in any way, manner or form, or are being
                           manufactured, sold or distributed in contravention of
                           applicable laws, regulations or standards, or in a
                           manner likely to cause harm; or


<PAGE>   22

                  (VI)     Licensee shall be unable to pay its debts when due,
                           or shall make any assignment for the benefit of
                           creditors, or shall file any petition under the
                           bankruptcy or insolvency laws of any jurisdiction,
                           county or place, or shall have or suffer a receiver
                           or trustee to be appointed for its business or
                           property, or be adjudicated a bankrupt or an
                           insolvent; or

                  (VII)    Licensee does not commence in good faith to
                           manufacture, distribute and sell each of the Licensed
                           Products and utilize each character set forth in the
                           Licensed Property ("Character") throughout the
                           Territory on or before the Marketing Date and
                           thereafter fails to diligently and continuously
                           manufacture, distribute and sell each of the Licensed
                           Products and utilize each Character throughout the
                           Territory. Such default and Licensor's resultant
                           right of termination (or recapture) shall only apply
                           to the specific Character(s) and/or the specific
                           Licensed Products, which or wherein Licensee fails to
                           meet said Marketing Date requirement. Licensor shall
                           also have the right to recapture rights hereunder
                           with respect to any Channel of Distribution which
                           Licensee fails to exploit on or before the Marketing
                           Date. However, Licensee may cure such default as
                           follows: upon receipt of notice from Licensor that
                           Licensee has failed to manufacture, distribute and
                           sell any Licensed Product, within thirty (30) days,
                           Licensee shall submit to Licensor a marketing plan
                           for the manufacture, distribution and sale of such
                           product which shall provide for the product to be
                           manufactured, distributed and sold in a timely
                           fashion in accord with industry norms. If Licensee
                           fails to provide such marketing plan or thereafter
                           fails to materially meet the provisions of such plan,
                           Licensor shall recapture all rights to the specific
                           Licensed Product(s), which or wherein Licensee failed
                           to meet the requirements of this paragraph; or

                  (VIII)   Licensee shall manufacture, sell or distribute,
                           whichever first occurs, any of the Licensed Products
                           without the prior written approval of Licensor as
                           provided in Paragraph 9 hereof; or

                  (IX)     Licensee undergoes a substantial change of management
                           or control. A substantial change of control is a
                           nonpublic offering sale of over fifty (50%) of the
                           stock or assets of Licensee to a person(s) not a
                           member of the current senior management or an
                           entity(s) not (A) controlled by either Citicorp
                           Venture Capital or its affiliates or by one or more
                           members of the current senior management of Gerber
                           Childrenswear, Inc. or (B) approved in writing by
                           Licensor in the exercise of its sole discretion after
                           due disclosure of relevant facts concerning such
                           entity(s). The sale of stock through a public
                           offering will not be considered a "substantial change
                           of control"; or

                  (X)      Licensee uses Artwork which has not been approved by
                           Licensor in compliance with the provisions of
                           Paragraph 8(h) or (i) hereof; or

                  (XI)     A manufacturer approved pursuant to Paragraph 10(b)
                           hereof shall sell Licensed Products to parties other
                           than Licensee or engage in conduct,


<PAGE>   23

                           which conduct if engaged in by Licensee would entitle
                           Licensor to terminate this Agreement; or

                  (XII)    Licensee delivers or sells Licensed Products outside
                           the Territory or knowingly sells Licensed Products to
                           a third party who Licensee knows intends to, or who
                           Licensee reasonably should suspect intends to, sell
                           or deliver such Licensed Products outside the
                           Territory; or

                  (XIII)   Licensee uses any labor that violates any local labor
                           laws and/or it uses prison, slave or child labor in
                           connection with the manufacture of the Licensed
                           Products; or

                  (XIV)    Licensee has made a material misrepresentation or has
                           omitted to state a material fact necessary to make
                           the statements not misleading; or

                  (XV)     Licensee shall breach any other agreement in effect
                           between Licensee on the one hand and Licensor on the
                           other.

         (B)      In the event any of these defaults occur, Licensor shall give
                  notice of termination in writing to Licensee in the manner
                  prescribed in Paragraph 16 below. Licensee shall have twenty
                  (20) days from the date of giving notice in which to correct
                  any of these defaults (except (A) defaults based on
                  non-payment of monies which must be cured within ten (10) days
                  and (B) defaults based on subdivisions (vii), (viii) (x) and
                  (xii) above which are not curable), and failing such, this
                  Agreement shall thereupon immediately terminate, and any and
                  all payments then or later due from Licensee hereunder
                  (including Guaranteed Consideration) shall then be promptly
                  due and payable in full and no portion of those prior payments
                  shall be repayable to Licensee.

         (C)      BY LICENSEE: Licensee shall have the same right(s) to
                  termination of this Agreement as provided to Licensor under
                  this paragraph 14, upon the occurrence of any one or more of
                  the following events (herein called "defaults"):

                  (I)      If Licensor materially defaults in the performance of
                           any of its obligations provided for in this
                           Agreement; or

                  (II)     If Licensor shall be unable to pay its debts when
                           due, or shall make any assignment for the benefit of
                           creditors, or shall file any petition under the
                           bankruptcy or insolvency laws of any jurisdiction,
                           county or place, or shall have or suffer a receiver
                           or trustee to be appointed for its business or
                           property, or be adjudicated a bankrupt or an
                           insolvent; or

                  (III)    If WBCP shall breach any other agreement in effect
                           between it and Licensee.

         (D)      In the event any of these defaults occur, Licensee shall give
                  notice of termination in writing to Licensor by certified
                  mail. The Licensor shall have twenty (20) days from the date
                  of giving notice in which to correct any of these defaults,
                  and failing such, Licensee shall have the option to
                  immediately terminate this Agreement, in which event
                  Licensee's obligation to make any further payments of
                  Guaranteed Consideration


<PAGE>   24

                  provided for in this Agreement shall also terminate and
                  Licensee's rights shall thereafter be as set forth in
                  Paragraph 15 hereof,

15.      FINAL STATEMENT UPON TERMINATION OR EXPIRATION: Licensee shall deliver,
         as soon as practicable, but not later than thirty (30) days following
         expiration or termination of this Agreement, a statement indicating the
         number and description of Licensed Products on hand together with a
         description of all advertising and promotional materials relating
         thereto. Following expiration or termination of this Agreement,
         Licensee shall immediately cease any and all manufacturing of the
         Licensed Product. However, if Licensee has complied with all the terms
         of this Agreement, including, but not limited to, complete and timely
         payment of the Guaranteed Consideration and Royalty Payments, then
         Licensee may continue to distribute and sell its remaining inventory,
         on a non-exclusive basis only, for a period not to exceed one hundred
         eighty (180) days following such termination or expiration (the
         "Sell-Off Period"), subject to payment of applicable royalties thereto.
         In no event, however, may Licensee distribute and sell during the
         Sell-off Period an amount of Licensed Products that exceeds the average
         amount of Licensed Products sold during any consecutive one hundred
         eighty (180) day period during the Term. In the event this Agreement is
         terminated by Licensor for any reason under this Agreement, Licensee
         shall be deemed to have forfeited its Sell-Off Period. If Licensee has
         any remaining inventory of the Licensed Products following the Sell-Off
         Period, Licensee shall, at Licensor's option, make available such
         inventory to Licensor for purchase at or below cost, deliver up to
         Licensor for destruction said remaining inventory or furnish to
         Licensor an affidavit attesting to the destruction of said remaining
         inventory. Licensee shall, at Licensor's option, deliver to Licensor at
         no charge all tooling, tooling aids and other Artwork related to the
         Licensed Products, deliver up to Licensor for destruction said tooling,
         tooling aids and other Artwork or furnish to Licensor an affidavit
         attesting to the destruction of said tooling, tooling aids and other
         Artwork. Licensor shall have the right to conduct a physical inventory
         in order to ascertain or verify such inventory and/or statement. In the
         event that Licensee refuses to permit Licensor to conduct such physical
         inventory, Licensee shall forfeit its right to the Sell-off Period
         hereunder or any other rights to dispose of such inventory. In addition
         to the forfeiture, Licensor shall have recourse to all other legal
         remedies available to it.

16.      NOTICES: Except as otherwise specifically provided herein, all notices
         which either party hereto are required or may desire to give to the
         other shall be given by addressing the same to the other at the address
         set forth above, or at such other address as may be designated in
         writing by any such party in a notice to the other given in the manner
         prescribed in this paragraph. All such notices shall be sufficiently
         given when the same shall be deposited so addressed, postage prepaid,
         in the United States mail and/or when the same shall have been
         delivered, so addressed, by facsimile or by overnight delivery service,
         and the date of transmission by facsimile, receipt of overnight
         delivery service or two business days after mailing shall for the
         purposes of this Agreement be deemed the date of the giving of such
         notice.

17.      NO PARTNERSHIP, ETC.: This Agreement does not constitute and shall not
         be construed as constitution of a partnership or joint venture between
         Licensor and Licensee. Neither party shall have any right to obligate
         or bind the other party in any manner whatsoever, and nothing herein
         contained shall give, or is intended to give, any rights of any kind to
         any third persons.


<PAGE>   25

18.      NO SUBLICENSING/NON-ASSIGNABILITY: This Agreement shall bind and inure
         to the benefit of Licensor, its successors and assigns. This Agreement
         is personal to Licensee. Licensee shall not sublicense, franchise or
         delegate to third parties its rights hereunder (except as set forth in
         Paragraph 10(b) hereof). Neither this Agreement nor any of the rights
         of Licensee hereunder shall be sold, transferred or assigned by
         Licensee and no rights hereunder shall devolve by operation of law or
         otherwise upon any receiver, liquidator, trustee or other party.

19.      BANKRUPTCY RELATED PROVISIONS:

         (A)      The parties hereby agree and intend that this Agreement is an
                  executory contract within the meaning of Section 365 of the
                  Bankruptcy Code.

         (B)      In the event of Licensee's bankruptcy, the parties intend that
                  any royalties payable under this Agreement during the
                  bankruptcy period be deemed administrative claims under the
                  Bankruptcy Code to the extent that the bankruptcy estate's
                  enjoyment of this Agreement provides a material benefit to the
                  bankruptcy estate during its reorganization.

         (C)      Licensor, in its interest to safeguard its valuable interests
                  (including, without limitation, its intellectual property
                  rights in the Licensed Property), has relied on the
                  particular skill and knowledge base of Licensee. Therefore,
                  the parties acknowledge and agree that in a bankruptcy context
                  this Agreement is a contract of the type described by Section
                  365(c)(1) of the Bankruptcy Code and may not be assigned
                  without the prior written consent of the Licensor.

20.      CONSTRUCTION: This Agreement shall be construed in accordance with the
         laws of the State of California of the United States of America without
         regard to its conflicts of laws provisions.

21.      WAIVER, MODIFICATION, ETC.: No waiver, modification or cancellation of
         any term or condition of this Agreement shall be effective unless
         executed in writing by the party charged therewith. No written waiver
         shall excuse the performance of any acts other than those specifically
         referred to therein. The fact that the Licensor has not previously
         insisted upon Licensee expressly complying with any provision of this
         Agreement shall not be deemed to be a waiver of Licensor's future right
         to require compliance in respect thereof and Licensee specifically
         acknowledges and agrees that the prior forbearance in respect of any
         act, term or condition shall not prevent Licensor from subsequently
         requiring full and complete compliance thereafter. If any term or
         provision of this Agreement is held to be invalid or unenforceable by
         any court of competent jurisdiction or any other authority vested with
         jurisdiction, such holding shall not affect the validity or
         enforceability of any other term or provision hereto and this Agreement
         shall be interpreted and construed as if such term or provision, to the
         extent the same shall have been held to be invalid, illegal or
         unenforceable, had never been contained herein. Headings of paragraphs
         herein are for convenience only and are without substantive
         significance.

22.      CONFIDENTIALITY: The Artwork and the materials and information supplied
         to Licensee hereunder constitute, relate to, contain and form a part of
         confidential and proprietary information of Licensor, including, but
         not limited to, Style Guides, design elements, character profiles,
         unpublished


<PAGE>   26

         copyrighted material, release dates, marketing and promotional
         strategies, information about new products, properties and characters,
         the terms and conditions of this Agreement, and other information which
         is proprietary in nature or is a trade secret (collectively, the
         "Proprietary Information"). Licensee acknowledges and agrees that the
         Proprietary Information is highly confidential and that disclosure of
         the Proprietary Information will result in serious harm to Licensor.
         Among other damage, unauthorized disclosure of the Proprietary
         Information will (i) damage Licensor's carefully planned marketing
         strategies, (ii) reduce interest in the Licensed Property, (iii) make
         unique or novel elements of the Licensed Property susceptible to
         imitation or copying by competitors, infringers or third parties prior
         to Licensor's release of the information or materials, (iv) damage
         Licensor's proprietary protection in undisclosed or unpublished
         information or materials, and (v) provide unauthorized third parties
         with materials capable of being used to create counterfeit and
         unauthorized merchandise, audio-visual products or other products, all
         of which will seriously damage Licensor's rights and business. Except
         as expressly approved in writing by Licensor, Licensee shall not
         reproduce or use the Proprietary Information and shall not discuss,
         distribute, disseminate or otherwise disclose the Proprietary
         Information or the substance or contents thereof, in whole or in part,
         in its original form or in any other form, with or to any other person
         or entity other than Licensee's employees and third parties who have
         executed a Contributor's Agreement (as provided in Paragraph 8(b)) or
         third party manufacturer's agreement (as provided in paragraph 10(b))
         and been approved by Licensor as provided hereunder, and such employees
         and third parties shall be given access to the Proprietary Information
         only on a "need-to-know" basis.

23.      ENTIRE AGREEMENT: This Agreement constitutes the entire Agreement
         between the parties concerning the subject matter hereof and cancels
         and supersedes any prior understandings and agreements between the
         parties hereto with respect thereto. There are no representations,
         warranties, terms, conditions, undertakings or collateral agreements,
         expressed, implied or statutory, between the parties other than as
         expressly set forth in this Agreement.

24.      ACCEPTANCE BY LICENSOR: This instrument, when signed by Licensee, shall
         be deemed an application for license and not a binding agreement unless
         and until accepted by Warner Bros. Consumer Products by signature of a
         duly authorized officer and the delivery of such a signed copy to
         Licensee. The receipt and/or deposit by Warner Bros. Consumer Products
         of any check or other consideration given by Licensee and/or delivery
         of any material by Warner Bros. Consumer Products to Licensee shall not
         be deemed an acceptance by Warner Bros. Consumer Products of this
         application. The foregoing shall apply to any documents relating to
         renewals or modifications hereof.


<PAGE>   27

         This Agreement shall be of no force or effect unless and until it is
         signed by all of the parties listed below:

AGREED AND ACCEPTED:                         AGREED AND ACCEPTED:

LICENSOR:                                    LICENSEE:

WARNER BROS. CONSUMER PRODUCTS,              GERBER CHILDRENSWEAR, INC.
a Division of Time Warner
Entertainment Company, L.P. on
behalf of itself and as Agent for
Warner Bros., a Division of Time
Warner Entertainment Company, L.P.


By:      /s/ Gary R. Simon                   By: /s/ Bobby J. Prochaska
   -----------------------------------          --------------------------------
   Gary R. Simon                                President, Apparel Division
   Senior Vice President,
   Business and Legal Affairs

Date: April 25, 2001                         Date: April 19, 2001
     ---------------------------------            ------------------------------


<PAGE>   28

                           EXHIBIT 1 #12953-BLT/WBLT

                            CHANNELS OF DISTRIBUTION
                                  DEFINITIONS

LICENSEE MAY SELL THE LICENSED PRODUCTS ONLY THROUGH THE CHANNELS OF
DISTRIBUTION AS SPECIFIED ABOVE IN PARAGRAPH 1(B) OF THIS LICENSE AGREEMENT AND
AS SUCH CHANNELS ARE DEFINED IN THIS EXHIBIT 1. ALL OTHER CHANNELS OF
DISTRIBUTION DEFINED IN THIS EXHIBIT 1, WHICH ARE NOT SPECIFIED IN PARAGRAPH
1(B) ABOVE, ARE SPECIFICALLY EXCLUDED FROM THIS LICENSE AGREEMENT.

1.       "Airport Gift and Other Airport Stores" shall mean gift and other
         stores located within airports, excluding Duty-Free Store Operators (as
         defined below). Examples of Airport Gift and Other Stores include,
         without limitation, PARADIES and W.H. SMITH.

2.       "Amusement Game Redemption" shall mean distribution of products as
         prizes awarded in amusement games.

3.       "Amusement Park Gift Stores" shall mean gift stores located within
         amusement parks, such as Six Flags, Paramount Parks, Universal Theme
         Parks, Dollywood, Walt Disney World and Walt Disney Land.

4.       "Art & Craft Stores" shall mean stores that offer for sale primarily
         art and craft supplies. Examples of Art & Craft Stores include,
         without limitation, AARON BROTHERS, FAST FRAME, MICHAELS and MICHAELS
         MJ DESIGNS.

5.       "Athletic Apparel & Footwear Stores" shall means stores that offer for
         sale primarily athletic apparel and footwear. Examples of Athletic
         Apparel & Footwear Stores include, without limitation, FOOTLOCKER,
         ATHLETE'S FOOT and CHAMPS.

6.       "Automotive/Carwash Stores" shall mean (a) stores that offer for sale
         primarily automotive supplies, or (b) stores located at carwash or
         gasoline station premises.

7.       "Baby Specialty Stores" shall mean stores that offer for sale primarily
         infant apparel, furniture, accessories and other products designed
         specifically for babies. Examples of Baby Specialty Stores include,
         without limitation, BABIES R US.

8.       "Beauty Supply Stores" shall mean stores that offer for sale primarily
         cosmetics, haircare products, beauty accessories and personal grooming
         related items.

9.       "Camera/Photo Specialty Stores" shall mean stores that offer for sale
         primarily camera equipment and supplies.

10.      "Candy/Confectionery Specialty Stores" shall mean stores that offer for
         sale primarily candy and confectionery products. Examples of
         Candy/Confectionery Specialty Stores include, without limitation, FAO
         SCHWEETZ and THE SWEET FACTORY.

11.      "Catalog Showrooms" shall mean stores that offer a broad assortment of
         products for sale primarily through a catalog along with display of
         samples of products in a showroom. Examples of Catalog Showrooms
         include, without limitation, SERVICE MERCHANDISE.

12.      "Chain Book Stores" shall mean chain stores (containing twenty (20) or
         more individual stores) that offer for sale primarily books. Examples
         of Chain Book Stores include,


<PAGE>   29

         without limitation, B. DALTON, SUPERCROWN, WALDEN BOOKS and BRENTANO'S.

13.      "Chain Comic Book Stores" shall mean chain stores (containing twenty
         (20) or more individual stores) that offer for sale primarily comic
         books.

14.      "Chain Drug Stores" shall mean chain stores (containing twenty (20) or
         more individual stores) that offer for sale primarily prescription and
         over-the-counter drugs, personal care products and household products.
         Examples of Chain Drug Stores include, without limitation, WALGREENS,
         RITE-AIDE, THRIFTY/PAYLESS, C.V.S./REVCO, THRIFT DRUG, PHAR MOR, LONGS
         DRUGS, JEAN COUTU, LONDON DRUGS and SHOPPER'S DRUG MART.

15.      "Chain Jewelry Stores" shall mean chain stores (containing twenty (20)
         or more individual stores) that offer for sale primarily jewelry. The
         "Chain Jewelry Stores" channel shall specifically exclude Guild
         Jewelers (as defined below). Examples of Chain Jewelry Stores include,
         without limitation, STERLING, BARRY'S, LIPMAN'S and HELLSBURG.

16.      "Chain Toy Stores" shall mean chain stores (containing twenty (20) or
         more individual stores) that offer for sale primarily toys. In order to
         be considered a "Toy Store" hereunder, the total number of toy-type
         SKU's (stock-keeping units) must represent eighty percent (80%) or more
         of such store's total SKU's. Examples of Chain Toy Stores include,
         without limitation, TOYS R US.

17.      "Coffee Specialty Stores" shall mean stores that offer for sale
         primarily specialty coffee and related products, such as coffee mugs.
         Examples of Coffee Specialty Stores include, without limitation,
         STARBUCKS, BUZZ COFFEE, GLORIA JEANS and THE COFFEE BEANERY.

18.      "College/University Stores" shall mean stores located on the campuses
         of colleges or universities.

19.      "Commercial Facilities" shall mean offering products for sale to
         architectural firms or interior designers working with commercial
         facilities, such as hotels and daycare facilities.

20.      "Computer Specialty Stores" shall mean stores that offer for sale
         primarily computer equipment and supplies. Examples of Computer
         Specialty Stores include, without limitation, COMP USA.

21.      "Convenience Stores" shall mean stores that offer for sale primarily
         packaged and "quick service" food products, are generally open 24 hours
         a day, and are designed to offer greater convenience than larger
         Supermarket/Grocery Stores. Examples of Convenience Stores include,
         without limitation, 7-11, AM/PM, DAIRY MART and CIRCLE K.

22.      "Dental/Medical Profession" shall mean institutions or offices that
         provide dental or medical services, such as hospitals, laboratories or
         doctors' offices.

23.      "Direct Mail Catalogs" shall mean catalogs that offer products for sale
         and are mailed directly to consumers' homes. The "Direct Mail Catalogs"
         channel shall specifically exclude catalogs for fundraising purposes
         which shall be included in the "Fundraising" channel defined below.
         Examples of Direct Mail Catalogs include, without limitation, SPEIGEL,
         HEARTH & HOME, DOMESTICATIONS, TAPESTRY, COMPANY STORE, HAMMACHER
         SCHLEMMER, FINGERHUT, AMWAY, LILLIAN VERNON, REGAL, AVON and SEARS
         CATALOG.


<PAGE>   30

         If Licensor grants to Licensee the right to distribute Licensed
         Products through any Direct Mail Catalogs: (a) each such catalog shall
         be specified in the Channels of Distribution set forth in paragraph
         1(a) of the License Agreement or otherwise expressly approved in
         writing by Licensor on a case-by-case basis, and (b) each such catalog
         depicting or referring to the Licensed Products or the Licensed
         Property must be submitted to Licensor for prior written approval in
         accordance with Licensor's Brand Assurance policies and procedures.

24.      "Direct Response" shall mean print advertisement, free standing inserts
         ("FSI's") and other promotional material (except catalogs) that are
         mailed directly to consumers' homes for the purpose of soliciting
         product sales directly from consumers. The "Direct Response" channel
         shall specifically exclude direct mail catalogs which shall be included
         in the "Direct Mail Catalog" channel defined above.

         If Licensor grants to Licensee the right to distribute Licensed
         Products through Direct Response, each print advertisement, FSI and
         other promotional material depicting or referring to the Licensed
         Products or the Licensed Property must be submitted to Licensor for
         prior written approval in accordance with Licensor's Brand Assurance
         policies and procedures.

25.      "Door-to-Door Solicitation" shall mean offering products for sale
         through personal visits by salespersons to consumers' homes.

26.      "Duty-Free Operators" shall mean (a) stores usually located in transit
         locations (i.e. airports, in-flight, train, ferry stations, cruise
         lines and ports) which offer products for sale to international
         travelers free of taxes and duties and (b) sales offered to diplomat
         shops, diplomat suppliers and individual diplomats free of taxes and/or
         duties. If Licensor grants to Licensee the right to distribute products
         through Duty-Free Operators, such channels of distribution (like all
         other channels of distribution granted) shall be limited to those
         stores located within the Territory.

27.      "Educational Institutions" shall mean offering products (generally
         books) for sale to public or private schools or other educational
         institutions. Examples of Educational Institutions include, without
         limitation, the Los Angeles Unified School District.

28.      "Educational Specialty Stores" shall mean stores that offer for sale
         primarily educational products. Examples of Educational Specialty
         Stores include, without limitation, IMAGINARIUM and NATURE COMPANY.

29.      "Electronics Stores" shall mean stores that offer for sale primarily
         electronic products. Examples of Electronics Stores include, without
         limitation, CIRCUIT CITY, FRY'S and BEST BUY.

30.      "Family Restaurants" shall mean a food service establishment or group
         of food service establishments that offer a sit down meal menu
         conducive to all members of the family and generally offers table
         service to customers. Examples of Family Restaurants include, without
         limitation, DENNY'S and FRIENDLY'S.

31.      "Fashion Accessory Stores" shall mean stores that offer for sale
         primarily costume jewelry, hair accessories and other fashion
         accessories. Examples of Fashion Accessory Stores


<PAGE>   31

         include, without limitation, CLAIRE'S BOUTIQUE, AFTERTHOUGHTS, IT'S
         ABOUT TIME, PIERCING PAGODA, ARDENE and BENTLEY'S.

32.      "Florists" shall mean stores or companies that offer for sale
         primarily flowers. Examples of Florists include, without limitation,
         CONROY'S, FTD and 1-800-FLOWERS.

33.      "Food Service" shall mean locations that provide food service to
         consumers in cafeterias, hospital food services, school lunch programs,
         and similar institutional food service locations.

34.      "Fundraising" shall mean offering products for sale through catalogs,
         direct mail brochures, prize programs and in-school sales, which are
         used by schools and charitable, religious or other organizations to
         raise funds. Examples of Fundraising companies include, without
         limitation, GIFTCO, SPRINGWATER and DARLINGTON FARMS.

35.      "Furniture Stores" shall mean stores that offer for sale primarily
         furniture. Examples of Furniture Stores include, without limitation,
         WICKES, HOMEMAKERS, KIDDLES and LEVITZ.

36.      "Garden Specialty Stores" shall mean stores that offer for sale
         primarily garden supplies and plants. Examples of Garden Specialty
         Stores include, without limitation, ARMSTRONG'S, CALLAWAY'S and WOLF
         NURSERIES.

37.      "Gift Retailers" shall mean stores that (a) offer products for sale
         that are in somewhat related product categories and are known as
         "gifts" in the trade, which products generally are classified in the
         trade as "better" quality and are higher priced (as compared to
         National and Regional Discount/Mass Retailers' products), (b) do not
         usually discount merchandise or sell it at greatly reduced prices, (c)
         usually focus more on aesthetics in merchandise displays than on price,
         and (d) generally require individual store servicing by suppliers in
         merchandise set-up, display, SKU maintenance and reordering. Suppliers
         to Gift Retailers typically advertise in trade publications, such as
         "Gift & Stationery Business", "Giftware News" and "Gifts & Decorative
         Accessories". Suppliers to Gift Retailers usually include companies
         such as Enesco, Midwest of Cannon Falls, New Creative Enterprises, Dale
         Tiffany, Pacific Rim, Ande Rooney, Waterford, GiftCraft, Carson
         Industries, Possible Dreams, Lenox, Department 56, Lefton, Swarovski
         and Flambro. The "Gift Retailers" channel shall specifically exclude
         Novelty Gift Stores (as defined below), Duty-Free Store Operators (as
         defined above), and Airport Gift and Other Airport Stores (as defined
         above).

38.      "Gourmet Food Specialty Stores" shall mean stores that offer for sale
         primarily gourmet and specialty food products. Examples of Gourmet Food
         Specialty Stores include, without limitation, BRISTOL FARMS, WHOLE
         FOODS and GELSONS.

39.      "Greeting Card Stores" shall mean stores that offer for sale primarily
         greeting cards. Examples of Greeting Card Stores include, without
         limitation, HALLMARK.

40.      "Guild Jewelers" shall mean stores that offer for sale primarily fine
         jewelry which is generally classified in the trade as "best" or
         "highest" quality. Examples of Guild Jewelers include, without
         limitation, MAYERS, ROGERS and BAILY BANKS & BIDDLE.

41.      "Hobby & Model Stores" shall mean stores that offer for sale primarily
         hobby and model supplies.


<PAGE>   32

42.      "Home Improvement Stores" shall mean stores that offer for sale
         primarily hardware and home improvement supplies. Examples of Home
         Improvement Stores include, without limitation, HOME DEPOT, OSH, HOME
         BASE, LOWES and HOME HARDWARE.

43.      "Home Specialty Stores" shall mean stores that offer for sale primarily
         bedding, towels and other bathroom products, kitchen merchandise and
         housewares. Examples of Home Specialty Stores include, without
         limitation, STROUDS, LINENS 'N' THINGS, 3D BED & BATH, BED/BATH/BEYOND
         and LUXURY LINENS.

44.      "Ice Cream Shops" shall mean stores that offer for sale primarily ice
         cream, ice cream cakes and similar frozen dessert products. Examples of
         Ice Cream Shops include, without limitation, BASKIN-ROBBINS, DAIRY
         QUEEN and BEN AND JERRY'S SHOPS.

45.      "In-Store Bakeries" shall mean the in-store bakery departments within
         Supermarket/Grocery Stores, National and Regional Discount/Mass
         Retailers and Warehouse Clubs. Such departments offer for sale
         primarily freshly baked breads, cakes, cookies and similar bakery
         items.

46.      "Internet" shall mean offering products for sale through the electronic
         network known as the Internet.

47.      "Mall Clothing Specialty Stores" shall mean stores that offer for sale
         primarily clothing and are located within a mall. Examples of Mall
         Clothing Specialty Stores include, without limitation, MILLERS OUTPOST,
         WET SEAL, AU COIN DES PETITES, LA SENZA, SUZIE SHIER and REITMANS.

48.      "Mid-Tier Department Stores" shall mean stores that offer products for
         sale in a broad assortment of unrelated product categories, which
         products are generally classified in the trade as "better" (but not
         "best") quality products. Examples of Mid-Tier Department Stores
         include, without limitation, JC PENNEY, SEARS, MERVYN'S, STEINMART,
         KOHLS, FRED MEYER, MONTGOMERY WARDS, THE BAY, CLEMONT and SIMON'S.

49.      "Military Exchange Services" shall mean military headquarters as well
         as individual bases of armies and/or airforces of each country within
         the Territory. Examples of Military Exchange Services include, without
         limitation, U.S. ARMY AND AIRFORCE EXCHANGE SERVICE ("AAFES") and THE
         CANADIAN FORCES EXCHANGE SERVICE ("CANEX"). If Licensor grants to
         Licensee the right to distribute products through Military Exchange
         Services, such channel of distribution shall be limited to the Military
         Exchange Services of the countries within the Territory, but shall
         include all of such Military Exchange Services' stores located anywhere
         in the world, excluding Guam and Saipan.

50.      "Music/Video Stores" shall mean stores that offer for sale primarily
         musical recordings, on compact discs, cassettes or other media, and/or
         movie recordings on videos, laser disks or other media for home use by
         consumers. Examples of Music/Video Stores include, without limitation,
         BLOCKBUSTER, MUSICLAND, TOWER RECORDS, VIRGIN RECORDS, WAREHOUSE
         RECORDS, SAM GOODY'S and SUNCOAST.

51.      "National Discount/Mass Retailers" shall mean stores that (a) have
         nation-wide distribution, (b) offer products for sale in


<PAGE>   33

         a broad assortment of unrelated product categories, which products
         generally are not classified in the trade as "better/best" quality
         products, (c) are usually "self-service" with more of an emphasis on
         price than aesthetics, and (d) generally do not require individual
         store servicing by suppliers. Suppliers to National Discount/Mass
         Retailers typically advertise in trade publications, such as "Discount
         Store News" and "Discount Merchandiser", and usually attend the IMRA
         (International Mass Retailer Association) trade show. The "National
         Discount/Mass Retailers" channel shall specifically exclude the
         in-store bakery departments of such stores, which shall be included in
         the "In-Store Bakeries" channel defined above. Examples of National
         Discount/Mass Retailers include, without limitation, WALMART, K-MART,
         TARGET, ZELLERS, BIWAY and CANADIAN TIRE.

52.      "Non-Chain Book Stores" shall mean stores or groups of stores
         (containing fewer than twenty (20) individual stores) that offer for
         sale primarily books.

53.      "Non-Chain Comic Book Stores" shall mean stores or groups of stores
         (containing fewer than twenty (20) individual stores) that offer for
         sale primarily comic books.

54.      "Non-Chain Drug Stores" shall mean stores or groups of stores
         (containing fewer than twenty (20) individual stores) that offer for
         sale primarily prescription and over-the-counter drugs, personal care
         products and household products.

55.      "Non-Chain Jewelry Stores" shall mean stores or groups of stores
         (containing fewer than twenty (20) individual stores) that offer for
         sale primarily jewelry. The "Non-Chain Jewelry Stores" channel shall
         specifically exclude Guild Jewelers (as defined above).

56.      "Non-Chain Toy Stores" shall mean stores or groups of stores
         (containing fewer than twenty (20) individual stores) that offer for
         sale primarily toys. In order to be considered a "Toy Store" hereunder,
         the total number of toy-type SKU's must represent eighty percent (80%)
         or more of such store's total SKU's. Examples of Non-Chain Toy Stores
         include, without limitation, TALBOT'S TOYLAND and TONS OF TOYS, INC.

57.      "Non-Mall Clothing Specialty Stores" shall mean stores that offer for
         sale primarily clothing and are not located within a mall. Examples of
         Non-Mall Clothing Specialty Stores include, without limitation, KIDS
         MART, KIDS R US, CLOTHESTIME and FASHION BUG.

58.      "Novelty Gift Stores" shall mean stores that offer for sale primarily
         novelty gift items. The "Novelty Gift Stores" channel shall
         specifically exclude Airport Gift and Other Airport Stores and
         Duty-Free Operators (as such terms are defined above) . Examples of
         Novelty Gift Stores include, without limitation, SPENCER'S and IT
         STORES.

59.      "Off-Price/Closeout Stores" shall mean stores that offer for sale
         primarily discounted apparel and other merchandise. Examples of
         Off-Price/Closeout Stores include, without limitation, MARSHALL'S, T.J.
         MAXX, ROSS FOR LESS, HIT OR MISS, TUESDAY MORNING and WINNERS.

60.      "Office Specialty Stores" shall mean stores that offer for sale
         primarily office supplies. Examples of Office Specialty Stores include,
         without limitation, OFFICE DEPOT, STAPLES and OFFICE MAX.


<PAGE>   34

61.      "Outlet Stores" shall mean stores that offer for sale primarily
         discounted merchandise of a particular manufacturer or retailer.

62.      "Party Stores" shall mean stores that offer for sale primarily party
         supplies. Examples of Party Stores include, without limitation, PARTY
         CITY and PARTY WORLD.

63.      "Pet Stores" shall mean stores that offer for sale primarily pet
         supplies. Examples of Pet Stores include, without limitation, PETCO and
         PETSMART.

64.      "Quick Service Restaurants" shall mean a food service establishment or
         group of food service establishments that offer rapid meal menus to
         consumers and generally do not offer table service to customers.
         Examples of Quick Service Restaurants include, without limitation,
         SUBWAY and BURGER KING.

65.      "Regional Discount/Mass Retailers" shall mean stores that (a) have
         regional distribution, (b) generally offer products for sale in a broad
         assortment of unrelated product categories, which products generally
         are not classified in the trade as "better/best" quality products, (c)
         are usually "selfservice" with more of an emphasis on price than
         aesthetics, and (d) generally do not require individual store servicing
         by suppliers. Suppliers to Regional Discount/Mass Retailers typically
         advertise in trade publications, such as "Discount Store News" and
         "Discount Merchandiser", and usually attend the IMRA (International
         Mass Retailer Association) trade show. The "Regional Discount/Mass
         Retailers" channel shall specifically exclude the in-store bakery
         departments of such stores, which shall be included in the "In-Store
         Bakeries" channel defined above. Examples of Regional Discount/Mass
         Retailers include, without limitation, MEIJERS, CALDOR, AMES, BRADLEES,
         HILL'S, ROSE'S, VENTURE, SHOPKO, COTTER, FIELDS, GIANT TIGER, HARTS,
         NORTHWEST and SAAN STORES.

66.      "Retail Bakeries" shall mean stores that offer for sale primarily
         freshly baked breads, cakes, cookies and similar bakery items. The
         "Retail Bakeries" channel shall specifically exclude In-Store Bakeries
         (as defined above).

67.      "School Book Clubs/Fairs" shall mean offering products for sale through
         book catalogs distributed to teachers and students at public or private
         schools (usually elementary or high school) or through book fairs
         conducted on the premises of such schools. Examples of School Book
         Clubs/Fairs include, without limitation, Troll Book Club and Scholastic
         Book Fair.

68.      "Souvenir Stores" shall mean stores that offer for sale primarily
         souvenirs.

69.      "Sporting Good Stores" shall mean stores that offer for sale primarily
         sporting goods, equipment, athletic apparel, and other merchandise that
         reflects a sports theme. Examples of Sporting Good Stores include,
         without limitation, BIG 5 and SPORTS CHALET.

70.      "Sports Stadium Shops" shall mean concessionaire shops located within
         stadiums or arenas where sporting events are held.

71.      "Stationery Stores" shall mean stores that offer for sale primarily
         stationery. Examples of Stationery Stores include, without limitation,
         FARR'S STATIONAIRES.

72.      "Street Peddlers" shall mean individual merchants who offer


<PAGE>   35

         products for sale in stands, booths or other non-permanent structures
         usually located on the sidewalk and designed to attract passing
         pedestrians.

73.      "Supermarket/Grocery Stores" shall mean stores that offer for sale
         primarily packaged food products. The "Supermarket/Grocery Stores"
         channel shall specifically exclude the in-store bakery departments of
         such stores, which shall be included in the "In-Store Bakeries" channel
         defined above. The "Supermarket/Grocery Stores" channel shall
         specifically exclude Gourmet Food Specialty Stores (as defined above)
         and Convenience Stores (as defined above). Examples of
         Supermarket/Grocery Stores include, without limitation, KROGER,
         SAFEWAY, AMERICAN STORES, ALBERTSON'S, WINN DIXIE, FOOD LION, VON'S,
         FINAST, RALPHS, MARSH and SUPERSTORES.

74.      "Swap Meets/Flea Markets" shall mean offering products for sale through
         organized events known as swap meets or flea markets, which involve a
         group of vendors offering for sale a variety of products, often
         collectibles or antiques.

75.      "Television Home Shopping" shall mean offering products for sale
         through cable and broadcast television, including infomercials, QVC and
         Home Shopping Network. The "Television Home Shopping" channel shall
         specifically exclude sales through the Internet, CD-Interactive and
         other electronic media.

76.      "Theatrical Concessions" shall mean the retail section that sells such
         items as popcorn, soda and candy within chain and non-chain movie
         theater locations such as Cineplex Odeon, Loews and Cinemark.

77.      "Toy Wholesalers" shall mean companies that offer for sale primarily
         toys to retail stores. In order to be considered a "Toy Wholesaler"
         hereunder, the total number of toy-type SKU's must represent eighty
         percent (80%) or more of such wholesaler's total SKU's.

78.      "Trackside - CART" shall mean offering products for sale at races
         organized and sponsored by Championship Auto Racing Teams.

79.      "Trackside - NASCAR" shall mean offering products for sale at races
         organized and sponsored by the National Association for Stock Car
         Racing.

80.      "Trackside - NHRA" shall mean offering products for sale at races
         organized and sponsored by the National Hot Rod Association.

81.      "Upstairs Department Stores" shall mean stores that (a) offer products
         for sale in a broad assortment of unrelated product categories, which
         products are generally classified in the trade as "best" quality
         products, and (b) offer a high level of customer service with a strong
         emphasis on store aesthetics. Examples of Upstairs Department Stores
         include, without limitation, BLOOMINGDALE'S, MACY'S, NORDSTROM'S, MAY
         DEPARTMENT STORES, SAKS FIFTH AVENUE, NEIMAN MARCUS and DILLARDS.

82.      "Vending Machines" shall mean self-contained automated dispensing
         equipment operated by insertion of coin or paper currency or the
         equivalent thereof (i.e. debit cards, credit cards, etc.).

83.      "Warehouse Clubs" shall mean stores that offer for sale products in
         large sizes and quantities with more of an emphasis on price than
         service or store aesthetics. The "Warehouse Clubs" channel shall
         specifically exclude the in-


<PAGE>   36

         store bakery departments of such stores, which shall be included in the
         "In-Store Bakeries" channel defined above. Examples of Warehouse Clubs
         include, without limitation, SAM'S CLUB and PRICE COSTCO.

84.      "WBSS Domestic" shall mean the retail stores known as Warner Bros.
         Studio Stores, which are operated by or on behalf of Licensor, its
         affiliated companies or its franchisees, including the Warner Bros.
         Studio Store catalogs, inside the United States.

         If Licensor grants to Licensee the right to sell Licensed Products to
         WBSS Domestic, such rights shall be nonexclusive, notwithstanding any
         exclusivity provisions contained in the Agreement.

85.      "WBSS International" shall mean the retail stores known as Warner Bros.
         Studio Stores, which are operated by or on behalf of Licensor, its
         affiliated companies or its franchisees, outside the United States.

         If Licensor grants to Licensee the right to sell Licensed Products to
         WBSS International: (a) such rights shall be worldwide, notwithstanding
         any restrictions as to "Territory" contained in the Agreement, and (b)
         such rights shall be nonexclusive, notwithstanding any exclusivity
         provisions contained in the Agreement.


<PAGE>   37

                           EXHIBIT 2 #12953-BLT/WBLT

                            CONTRIBUTOR'S AGREEMENT

I, _____________ the undersigned ("Contributor"), have been engaged by GERBER
CHILDRENSWEAR, INC. ("Licensee") to work on or contribute to the creation of
Licensed Products, described as _______________________, by Licensee under an
agreement between Licensee and Warner Bros., a division of Time Warner
Entertainment Company, L.P., c/o Warner Bros. Consumer Products, a division of
Time Warner Entertainment Company, L.P. ("Warner") dated _____________________.

I understand and agree that the Licensed Products, and all artwork or other
results of my services for Licensee in connection with such Licensed Products
("Work") is a "work made for hire" for Warner and that all right, title and
interest in and to the Work shall vest and remain with Warner. I reserve no
rights therein. Without limiting the foregoing, I hereby assign and transfer to
Warner all other rights whatsoever, in perpetuity throughout the universe which
I may have or which may arise in me or in connection with the Work. I hereby
waive all moral rights in connection with such Work together with any other
rights which are not capable of assignment. I further agree to execute any
further documentation relating to such transfer or waiver or relating to such
Work at the request of Warner or Licensee, failing which Warner is authorized to
execute same as my Attorney-in-Fact.

                                             Contributor:


                                             By:
                                                --------------------------------
                                                Signature

                                                --------------------------------
                                                print name

                                                --------------------------------
                                                address

                                                --------------------------------

                                                --------------------------------
                                                country

                                                --------------------------------
                                                date

Warner Bros. Consumer Products:


By:
   ---------------------------------
Date:
     -------------------------------


<PAGE>   38

                           EXHIBIT 3 #12953-BLT/WBLT

WARNER BROS. CONSUMER PRODUCTS
4000 Warner Boulevard
Bridge Building 156 South - 4th Floor
Burbank, CA 91522

RE: APPROVAL OF THIRD PARTY MANUFACTURER

Gentlemen:

         This letter will serve as notice to you that pursuant to Paragraph
10(b) of the License Agreement dated ______________ 200_ between WARNER BROS., A
DIVISION OF TIME WARNER ENTERTAINMENT COMPANY, L.P. and GERBER CHILDRENSWEAR,
INC. ("Licensee"), we have been engaged as the manufacturer for Licensee in
connection with the manufacture of the Licensed Products as defined in the
aforesaid License Agreement. We hereby acknowledge that we may not manufacture
Licensed Products for, or sell or distribute Licensed Products to, anyone other
than Licensee. We hereby further acknowledge that we have received a copy and
are cognizant of the terms and conditions set forth in said License Agreement
and hereby agree to observe those provisions of said License Agreement which are
applicable to our function as manufacturer of the Licensed Products. It is
expressly understood that we are obligated to comply with all local laws,
including without limitation, labor laws, wage and hour laws and
anti-discrimination laws and that you or your representatives shall, at anytime,
have the right to inspect our facilities and review our records to ensure
compliance therewith. It is understood that this engagement is on a royalty free
basis and that we may not subcontract any of our work without your prior written
approval.

         We understand that our engagement as the manufacturer for Licensee is
subject to your written approval. We request, therefore, that you sign in the
space below, thereby showing your acceptance of our engagement as aforesaid.

                                             Very truly yours,

                                             -----------------------------------
                                             manufacturer/company name


                                         By:
                                             -----------------------------------
                                             signature

                                             -----------------------------------
                                             print name

                                             -----------------------------------
                                             address

                                             -----------------------------------

                                             -----------------------------------
                                             country

                                             -----------------------------------
                                             date

                                             -----------------------------------
                                             product(s) manufacturing

AGREED TO AND ACCEPTED:
WARNER BROS. CONSUMER PRODUCTS,
a Division of Time Warner
Entertainment Company, L.P.


By:
   -----------------------------------
   Gary R. Simon
   Senior Vice President,
   Business and Legal Affairs

Date:
     ---------------------------------

<PAGE>   39

                           SCHEDULE A #12953-BLT/WBLT

Exclusive Licensed Products are only exclusive when sold through Exclusive
Channels of Distribution as set forth in Paragraph 1(b)

<TABLE>
<CAPTION>
LICENSED PRODUCT DESCRIPTION                 EXCLUSIVE           NON-EXCLUSIVE            ROYALTY RATE
<S>  <C>                                     <C>                 <C>                      <C>
With respect to the Licensed
Property set forth in CATEGORY I of
Paragraph 1(d), the Licensed
Products shall be as follows:

BATH PRODUCTS:
1.   Hooded Towels                                X                                           12%
2.   Washcloths                                   X                                           12%
3.   Washmitts                                                         X                      12%

INFANT COORDINATED BEDDING:
4.   Sheets                                       X                                           12%
5.   Comforters                                   X                                           12%
6.   Dust Ruffles                                 X                                           12%
7.   Receiving Blankets                           X                                           12%
8.   Crib Blankets                                X                                           12%
9.   Diaper Stackers                              X                                           12%
10.  Birth Certificate Pillows                    X                                           12%
11.  Bumper Pads                                  X                                           12%
12.  Bassinet Sheets                              X                                           12%
13.  Lap Pads                                                          X                      12%
14.  Wall Paper Room Borders and
     Window Treatments to be supplied by
     Licensor's current wallpaper licensee on
     a case-by-case basis                                              X                      12%
15.  Mat and Pillow Combinations                                       X                      12%
16.  Changing Table Padcovers                                          X                      12%

SLEEPWEAR:
17.  Sleep 'n' Play                               X                                           10%
18.  Blanket Sleepers, sizes 0-24 months
     and 2-5T                                                          X                      10%
19.  Pajamas (footed and non-footed),
     sizes 0-24 months and 2-5T                   X                                           10%
20.  Gowns/Dorm Shirts, sizes 0-24
     months                                       X                                           10%
21.  Prams, sizes 0-24 months                                          X                      10%

UNDERWEAR:
22.  One-Piece for Infants, sizes NB, S,
     M, L, XL                                     X                                           10%
23.  Two-Piece for Infants, sizes NB, S,
     M, L, XL and 2T-5T                           X                                           10%
24.  Longmates for Infants, sizes NB, S,
     M, L, XL                                     X                                           10%
25.  Undershirts for Infants, sizes NB, S,
     M, L, XL                                     X                                           10%
26.  Training Pants (excludes
     disposable), sizes 2T-5T                     X                                           10%

FOOTWEAR/SOCKS:
27.  Booties                                                           X                      10%
28.  Infant Socks                                                      X                      10%

LAYETTES:
29.  Gowns                                        X                                           10%
30.  Caps                                         X                                           10%
31.  Gift Sets to include Infant Gown,
     Shirt, Bib, Washcloth, Booties, Towel,
     Comb, Teether (to be supplied by
     Gerber Products), and/or on a case-by-
     case basis with Licensor's prior written
     approval, an Licensed Products
     licensed hereunder and any products
     purchased by Licensee from authorized
     licensees of Licensor                                             X                      10%
32.  Cloth Diapers/Burp Cloths (excludes
     disposable)                                  X                                           10%
</TABLE>


<PAGE>   40

                           SCHEDULE A #12953-BLT/WBLT

Exclusive Licensed Products are only exclusive when sold through Exclusive
Channels of Distribution as set forth in Paragraph 1(b)

<TABLE>
<S>  <C>                                          <C>                  <C>                    <C>
33.  Diaper Covers (may include cloth
     covered diaper covers with vinyl lining
     but excludes all other vinyl diaper
     covers)                                      X                                           10%

INFANT AND TODDLER PLAYWEAR:
(windwear, outwear, sweaters,
leggings when sold as a set with
sweaters, and t-shirts when sold as
coordinates with swimwear are
specifically excluded):

34.  Two-Piece Playwear Sets                                           X                      12%
35.  Creepers                                                          X                      12%
36.  Overalls, Shortalls, and Coveralls                                X                      12%
37.  Bibs (exclusive when sold
     individually only)                           X                                           10%
38.  Shirts                                                            X                      12%
39.  Coordinated Playwear Separates                                    X                      12%
40.  Swim Diapers                                                      X                      12%
41.  Terry Rompers                                                     X                      12%

With respect to the Licensed
Property set forth in CATEGORY II of
Paragraph 1(d), the Licensed
Products shall be as follows:
42.  Toddler Bedding                                                   X                      12%
</TABLE>

</TEXT>
</DOCUMENT>
