License Agreement - Tommy Hilfiger Licensing Inc. and Pepe Jeans USA Inc.


                      SECOND AMENDMENT TO LICENSE AGREEMENT
                          DATED AUGUST 28, 1995 BETWEEN
                         TOMMY HILFIGER LICENSING, INC.
                            AND PEPE JEANS USA, INC.

      AGREEMENT entered into as of the 1st day of October 1997, by and between
TOMMY HILFIGER LICENSING, INC., having an address at 913 N. Market Street,
Wilmington, Delaware 19801 (hereinafter referred to as 'Licensor') and, by
assignment, PEPE JEANS USA, INC., having an address at 5428 East Slauson Avenue,
Commerce, California 90040 (hereinafter referred to as 'Licensee').
 
                              W I T N E S S E T H :

      WHEREAS, Licensor and Licensee entered into a License Agreement dated
August 28, 1995, by way of an assignment from SEL International Investments
Corp. to Pepe Jeans London Corporation, and from Pepe Jeans London Corporation
to Pepe Jeans USA, Inc. on October 1, 1995.

      WHEREAS, the parties have agreed to the amendments to said agreement
contained herein.

      NOW, THEREFORE, the parties hereto, in consideration of the mutual
agreements herein contained and promises herein expressed, and for other good
consideration acknowledged by each of them to be satisfactory and adequate, do
hereby agree as follows:

      1. Article 8.9 of the License Agreement shall be deleted in its entirety
and replaced with the following:

      '8.9 (a) Licensee shall promptly and thereafter annually execute the
Certification attached hereto as Exhibit H;

           (b) Licensee represents that all Licensed Products to be manufactured
hereunder (whether by Licensee, Licensee's third party manufacturers or by such
third party manufacturers' contract sewing shops or other designated contract
facilities) will be manufactured in compliance with the wage and hour laws of
the country of manufacture and without the use of child (under the age of 14),
prison or slave labor. All manufacturing facilities producing Licensed Products
that are located in the United States will be in strict compliance with the
minimum wage, overtime and child labor provisions of the Fair Labor Standards
Act and applicable state and local laws;

           (c) Licensee shall not utilize any factory in the manufacture of
Licensed Products unless it has been inspected and approved, in writing, by an
authorized employee or agent of Licensee;

           (d) Licensee shall provide to Licensor the name, address, telephone
number and facsimile number for each third party manufacturer utilized in the
production of Licensed Product;

           (e) Licensee represents that it has in effect (or will promptly
develop) a program of monitoring all third party manufacturers and such third
party manufacturers' contract sewing shops and other designated contract
facilities for compliance with the requirements of Article 8.9(b) above;



           (f) Licensee shall require that all shipping documents which
accompany Licensed Products manufactured on Licensee's behalf include the
following language (either pre-printed or 'stamped'):

          'We hereby certify that the merchandise (including components thereof)
          covered by this shipment was  manufactured  in compliance with (1) all
          applicable  requirements  of the wage and hour laws of the  country of
          manufacture and without the use of child (under the age of 14), prison
          or slave labor,  and if  manufactured  in the United  States,  (2) all
          applicable  requirements  of  Sections  6,7,  and 12 of the Fair Labor
          Standards Act, as amended and all regulations and orders of the United
          States  Department of Labor under Section 14 thereof,  and  applicable
          state and local  laws  pertaining  to child  labor,  minimum  wage and
          overtime  compensation.  We further  certify  that we have in effect a
          program of monitoring  any  manufacturers  and their  contract  sewing
          shops and other  designated  contract  facilities which performed work
          for us in connection  with the  manufacture  of such  merchandise  for
          compliance  with the Fair Labor  Standards Act and  comparable  state,
          local and foreign  laws.  We also  certify that upon  importation  (if
          applicable) this shipment is in compliance with all laws applicable to
          the  designation  of  country  of origin  and is being  shipped  under
          legally issued and valid export license or visa.'

      and;

      2. Article 13 of the License Agreement shall be deleted in its entirety.

      3. The Third Party Manufacturing Agreement incorporated into the Agreement
as Exhibit E is hereby substituted with the Third Party Manufacturing Agreement
attached hereto.

      4. Exhibit H is hereby incorporated into the Agreement and is attached
hereto.

      5. Except as modified hereby, all other paragraphs contained therein shall
remain in full force and effect and nothing contained herein shall alter them in
any way and are hereby in all respects ratified and confirmed.


      IN WITNESS WHEREOF, the parties have executed this Amendment as of the
date first written above.

TOMMY HILFIGER LICENSING, INC.      PEPE JEANS USA, INC.


BY: /s/ Virginia M. Cleary          BY: /s/ Arthur Bargonetti

NAME: Virginia M. Cleary            NAME:  Arthur Bargonetti

TITLE: Assistant Secretary          TITLE: Executive Vice President