This LICENSE  AGREEMENT  ("Agreement")  made as of the 15th day of May
     1997 ("Effective  Date"), by and between ST. JOHN KNITS, INC., a California
     corporation with offices at 17422 Derian Avenue,  Irvine,  California 94618
     ("St.  John"),  and  SWISS  ARMY  BRANDS,   INC.,  a  Delaware  corporation
     ("Licensee") with offices at One Research Drive, Shelton, Connecticut 06484
     ("Licensee Location").
                                   WITNESSETH:

          In consideration  of the mutual  covenants  hereinafter set forth, St.
     John and  Licensee  do hereby  respectively  grant,  covenant  and agree as
     follows:

1.       Grant of License
         ----------------

          1.1 Subject to the terms and conditions  set forth in this  Agreement,
     St.  John  hereby  grants to  Licensee,  and  Licensee  hereby  accepts,  a
     non-transferable  (except as set forth herein) exclusive  license,  for the
     Term (as defined below),  to use the  trademark(s)  set forth in Schedule A
     hereto   ("Licensed   Trademarks")  in  connection  with  the  manufacture,
     distribution and sale solely of the products described in Schedule A hereto
     ("Licensed  Products") within the territory  described in Schedule A hereto
     ("Territory")  and not elsewhere.  During the Term, St. John agrees that it
     shall not itself  (except as  specifically  provided  herein)  nor shall it
     license any party other than Licensee to sell Licensed Products bearing the
     Licensed  Trademarks  in the  Territory.  Nothing  herein  contained  shall
     prevent or restrict  St.John or Licensee or parties  licensed by either of
     them from manufacturing, marketing or selling products bearing or under any
     marks  other  than  Licensed   Trademarks  (or  marks  confusingly  similar
     thereto),  it being understood that the license herein granted extends only
     to the  Licensed  Trademarks  and no  other  marks  and  further  it  being
     understood  and agreed that  Licensee  does not have any right to grant any
     sublicense  relating  to the  Licensed  Trademarks  or  Licensed  Products.
     Licensee acknowledges and agrees St. John may enter into license agreements
     with others covering the Licensed Trademarks as applied to goods other than
     the Licensed Products. St. John shall, at St. John's expense,  register the
     Licensed  Trademarks  for use in connection  with the Licensed  Products in
     those  jurisdictions  included  within the Territory.  During the Term, St.
     John agrees that it shall not license any party other than Licensee to sell
     Licensed  Products  bearing  the  Licensed   Trademarks  in  any  territory
     throughout the world.

          1.2  Licensee  shall use all  reasonable  efforts to sell the Licensed
     Products and to exploit the rights herein granted  throughout the Territory
     consistent with the high standards and prestige represented by the Licensed
     Trademarks.

          1.3 Licensee shall not export Licensed  Products from the Territory or
     sell  Licensed  Products  to any  entity  which it knows or has  reason  to
     believe  intends to export Licensed  Products from the Territory.  Licensee
     acknowledges and agrees that the sale or marketing of the Licensed Products
     by it or by persons  authorized by it to manufacture the Licensed  Products
     for Licensee  outside of the Territory will materially  damage St. John and
     its relationships with other licensees,  and that, accordingly,  such sales
     shall be deemed a material breach of this Agreement.


          1.4 Any dispute  between  Licensee and any other  licensee of St. John
     with respect to the scope of the license rights covered by their respective
     license  agreements shall be resolved by St. John and St. John's resolution
     of such dispute  shall be final and binding;  provided that nothing in this
     Agreement shall detract from Licensee's exclusive rights granted hereunder.

          1.5  Licensee  shall not sell any  Licensed  Products to any person or
     company it knows or has reason to know will sell,  market or advertise  the
     Licensed  Products as part of or in  combination  with any items other than
     other Licensed Products.

2.       Term and Term Renewal
         ---------------------
          "Term"  means the  Initial  Term (as  defined  in  Schedule A hereto),
     subject to extensions as set forth herein. This Agreement shall continually
     renew for  additional  terms of such duration as is set forth in Schedule A
     hereto under the Duration of Additional Terms ("Additional Terms") provided
     that  (a)  Licensee  is in  compliance  with  all  material  terms  of this
     Agreement on the last day of the then  current  Annual  Period  (subject to
     Licensee's  right to notice of default and right to cure in accordance with
     Section 14 hereof and unless such failure is waived by St.  John),  and (b)
     Net Sales (as  hereinafter  defined) for the then current Annual Period are
     not less than as set forth in the Table of Minimum  Net Sales for  Licensed
     Products  as set forth in  Schedule A hereto  ("Minimum  Net Sales  Table")
     unless such  failure is waived by St. John.  The First Annual  Period shall
     commence on the Effective  Date and end on the date set forth on Schedule A
     hereto.  The  First  Annual  Period  and  each  twelve  (12)  month  period
     commencing  on the first day after the end of the First Annual Period shall
     constitute  and shall be  referred  to herein as an "Annual  Period." It is
     understood  and agreed that if in any Annual  Period  Licensee's  total Net
     Sales for the Licensed Product exceed the Minimum Net Sales for such Annual
     Period  ("Minimum Net Sales  Surplus")  then for purposes of this Section 2
     and  Section 14.3  hereof any  Minimum  Net Sales  Surplus  shall be offset
     against  the  Minimum  Net  Sales  for  the  next  two (2)  Annual  Periods
     immediately  following  the Annual  Period in which the  Minimum  Net Sales
     Surplus occurred.  In the event this Agreement is renewed beyond the number
     of years set forth in the  Minimum  Net Sales  Table,  then the Minimum Net
     Sales for each such succeeding year shall be equal to the Minimum Net Sales
     for  the  immediately  prior  Annual  Period.  In the  event  that  for two
     consecutive  years "Net  Sales" (as  defined in Section  4.2) shall be less
     than  Minimum Net Sales for the  respective  years and  Licensee  shall not
     otherwise be in material  default  hereunder,  Licensee may, at its option,
     terminate this  Agreement on 90 days written notice  effective on the later
     to occur of: (a) the  beginning of business on the last business day of the
     second of such years;  or (b) 90 days after the sending of such notice.  In
     the event of such  termination,  Licensee shall remain  responsible for all
     Sales Royalties and also for Guaranteed  Minimum  Royalties for all periods
     through the Quarterly  Period in which such  termination  is effective.  In
     such event,  the rights of the parties  shall be as set forth in Section 14
     hereof relating to the expiration of this Agreement.

3.       Guaranteed Minimum Royalty
         --------------------------

          3.1 (a) In consideration of the license granted by St. John hereunder,
     and as a condition to the use of the Licensed  Trademarks,  Licensee  shall
     pay to St. John a guaranteed minimum royalty ("Guaranteed Minimum Royalty")
     for each Annual Period as set forth in Schedule A hereto in the  Guaranteed
     Minimum Royalty Table.

          (b) In the event this  Agreement is renewed beyond the number of years
     set forth in the Guaranteed  Minimum  Royalty Table,  Licensee shall pay to
     St. John a  Guaranteed  Minimum  Royalty  equal to the  Guaranteed  Minimum
     Royalty for the immediately prior Annual Period.

          3.2 Unless  otherwise  provided in Schedule A hereto,  the  Guaranteed
     Minimum Royalty payable for each Annual Period shall be paid to St. John in
     four (4) equal  quarter-annual  installments  within thirty (30) days after
     the close of each three (3) month  period  during each such  Annual  Period
     ("Quarterly Period").

          3.3 All payments of the Guaranteed  Minimum Royalty are nonrefundable.
     Guaranteed  Minimum  Royalty  payments  actually  paid to St. John shall be
     credited  against the Sales  Royalty (as  hereinafter  defined)  payable on
     sales  made  during the Annual  Period  for which such  Guaranteed  Minimum
     Royalty  payments were due (and no other Annual Period) except as set forth
     in Section 4.1.

          3.4 Subject to Section 4.1 below,  in the event the Sales  Royalty (as
     defined  below)  paid by  Licensee  for any Annual  Period is less than the
     Guaranteed Minimum Royalty for such Annual Period,  Licensee shall pay such
     deficit  to St.  John  within  thirty  (30)  days  after  the close of each
     Quarterly Period.

4.       Sales Royalty
         -------------

          4.1 In consideration of the license granted by St. John hereunder, and
     as a condition to the use of the Licensed Trademarks, Licensee shall pay to
     St.  John an  amount  equal to ten  percent  (10%) of any and all Net Sales
     ("Sales Royalty"); provided that to the extent that Net Sales of Close-outs
     (as defined  below) do not exceed  fifteen  percent  (15%) of Licensee  Net
     Sales of Licensed  Products,  Sales Royalty with respect to such Close-outs
     shall be five percent (5%) of the  Close-out  Net Sales;  provided  further
     that for purposes of this section  Close-outs shall mean Licensed  Products
     sold at a discount greater than twenty-five percent (25%) off manufacturers
     initial list wholesale  price for such Licensed  Product.  It is understood
     and agreed that for purposes of calculating  the Sales  Royalty,  except as
     set forth herein each Annual Period shall be treated  separately  and sales
     made in one Annual  Period  shall not be added to or  included in Net Sales
     for any other  Annual  Period or credited  against the  Guaranteed  Minimum
     Royalty due for any other Annual Period.  It is also  understood and agreed
     that if in any Quarterly Period the total Sales Royalty paid by Licensee to
     St. John exceeds the Guaranteed  Minimum Royalty for such Quarterly  Period
     ("Minimum  Royalty  Surplus")  then the Minimum  Royalty  Surplus  shall be
     offset against the  Guaranteed  Minimum  Royalty for  subsequent  Quarterly
     Periods  within the same  Annual  Period and within the next two (2) Annual
     Periods  immediately  following  the  Annual  Period in which  the  Minimum
     Royalty Surplus occurred.

          4.2 For purposes hereof,  the term "Net Sales" shall mean the invoiced
     amount of Licensed Products sold by Licensee or any of its affiliates, less
     returns and allowances  evidenced by credit  memoranda,  and, if separately
     stated on sales invoices to Licensee's customers, customary trade discounts
     actually  earned and taken by customers,  shipping  charges,  insurance and
     sales taxes (or any use,  value-added or similar taxes,  but in no event to
     include  any income or  franchise  taxes).  In  determining  Net Sales,  no
     deduction may be made for early payments, bad debts, advertising allowances
     or special  promotions  of any kind or for costs  incurred in  manufacture,
     sale, advertising or promotion.  For purposes of calculating Net Sales, the
     price of Licensed Products sold by Licensee to persons or companies related
     to Licensee by ownership,  control,  or  affiliation  shall be deemed to be
     Licensee's then current list price for such Licensed  Products or the price
     then  charged to  unrelated  parties in arms length  transactions  for such
     products in similar  quantities and under similar terms of sale,  whichever
     is lower. Net Sales shall not include sales to St. John, St. John boutiques
     or St. John outlets  pursuant to Section 10.7 and no Sales Royalty shall be
     paid in respect of such sales. A sale of Licensed  Products shall be deemed
     made  when  the  Licensed  Products  are  invoiced,  shipped  or paid  for,
     whichever is first to occur.

          4.3  Except  as  provided  in  Schedule  A hereto,  the Sales  Royalty
     hereunder shall be due and paid quarterly within thirty (30) days after the
     last day of each  Quarterly  Period  during the term of this  Agreement (or
     portion thereof in the event of prior  termination for any reason) in which
     the sales on which they are based are made.  The Sales Royalty  payable for
     each  Quarterly  Period  during  each shall be computed on the basis of Net
     Sales  during  such  Quarterly  Period,  with a credit  for any  Guaranteed
     Minimum Royalty and any Sales Royalty payments theretofore made to St. John
     for said Quarterly Period.

          4.4 Except as  specifically  set forth in Section  4.1,  no payment of
     Sales Royalty or Guaranteed  Minimum Royalty for any Annual Period shall be
     credited against the Sales Royalty or Guaranteed Minimum Royalty due to St.
     John for any other Annual Period.

          4.5 If Licensee  shall fail to make any of the  payments  due St. John
     hereunder  as and when due, in addition to any other rights or remedies St.
     John may have under this  Agreement or  otherwise at law or in equity,  St.
     John shall have the right to give Licensee  written  notice  specifying the
     default,  and if Licensee  shall fail to make the  overdue  payments to St.
     John within ten (10) days after the giving of such notice,  unless Licensee
     shall  contest  such  payments in good faith in which  event such  disputed
     amount  shall be placed  in an  interest  bearing  escrow  account  pending
     resolution of such  disputes and such ten day period shall  commence at the
     conclusion of such contest, then (a) all payments of the Guaranteed Minimum
     Royalty for the entire then  current  Quarterly  Period,  to the extent not
     theretofore paid, shall immediately  become due and payable to St. John and
     (b)  the  Licensee's  right  to  use  the  Licensed   Trademarks  shall  be
     immediately terminated.

          4.6 In  addition  to any other  rights or  remedies  St. John may have
     under this Agreement or otherwise at law or in equity, if Licensee fails to
     make any payment due  hereunder,  Licensee shall pay interest on the unpaid
     balance  thereof from and including the date such payment becomes due until
     the date the  entire  amount is paid in full at a rate  equal to the lesser
     of: (i) the per annum  rate  equal to the prime  rate being  charged in Los
     Angeles,  California  by Union Bank as of the close of business on the date
     the payment  first becomes due plus three percent (3%), or (ii) the maximum
     rate permitted by applicable law.

    
5.       Sales Statement
         ---------------

          5.1 Licensee  shall deliver to St. John at the time each Sales Royalty
     payment is due,  a  statement  certified  by a duly  authorized  officer of
     Licensee as accurate,  indicating,  by month and by outlet or customer, the
     number  and  invoice  price  of  all  Licensed  Products  shipped  or  sold
     (whichever  occurs first)  during the period  covered by such Sales Royalty
     payment,  the amount of discounts and credits from gross sales which may be
     deducted  therefrom,  a computation of the amount of Sales Royalty  payable
     hereunder  for said  period,  and such other  information  as St.  John may
     reasonably  request from time to time. Such statement shall be furnished to
     St. John  whether or not any  Licensed  Products  have been sold during the
     period for which such statement is due.  Together with each such statement,
     Licensee  shall  deliver  to St.  John a copy of  Licensee's  then  current
     customer list for Licensed Products.

          5.2 Licensee shall deliver to St. John, not later than forty-five (45)
     days after the close of each Annual Period (or portion thereof in the event
     of prior  termination for any reason),  a statement  certified by its chief
     executive  or  financial  officer  relating to said entire  Annual  Period,
     setting forth the same information  required to be submitted by Licensee in
     accordance  with Section 5.1 above and also setting forth,  with respect to
     the  advertising  and  promotion  of Licensed  Products,  the total  amount
     expended by Licensee  therefor  during such Annual  Period,  including  and
     stating  separately those amounts paid for cooperative,  trade and national
     consumer media  advertisements.  Receipt,  negotiation or acceptance by St.
     John of any of the statements  furnished,  or of any sums paid to St. John,
     pursuant to this  Agreement  will not  preclude  St. John from  questioning
     their correctness.

6.       Books and Records; Audits; Financial Statements
         -----------------------------------------------

          6.1 Licensee shall prepare and maintain,  in accordance with generally
     accepted accounting practices consistently applied,  separate complete true
     and accurate books of account and records (specifically including,  without
     limitation,  the originals or copies of documents supporting entries in the
     books of account)  covering all  transactions  relating to this  Agreement,
     which books and records  shall be kept and  maintained  so as to enable and
     facilitate  verification  of the payments due St. John under this Agreement
     and shall  reflect  all sales  and  shipments  of  Licensed  Products,  all
     deducted amounts that are authorized hereunder,  all advertising related to
     the Licensed  Products,  and the amount of the Sales Royalty payable to St.
     John hereunder ("Licensee Records").

          6.2 St. John and its duly  authorized  representatives  shall have the
     right,  during regular  business hours,  for the duration of this Agreement
     and for three (3) years  thereafter,  to audit  the  Licensee  Records  and
     examine all other  documents  and material in the  possession  or under the
     control of Licensee  with  respect to the  subject  matter and the terms of
     this  Agreement,  including,  without  limitation,  invoices,  credits  and
     shipping documents.  All such books of account, records and documents shall
     be kept available by Licensee for at least three (3) years after the end of
     the  Annual  Period to which they  relate.  If, as a result of any audit of
     Licensee's books and records,  it is shown that Licensee's  payments to St.
     John were less than the amount which should have been paid  pursuant to the
     terms of this Agreement ("Discrepancy"),  then Licensee shall pay St. John,
     within five (5) days of St. John's notice to Licensee of such  Discrepancy,
     any and all  payments  required  to be made to  eliminate  any  Discrepancy
     revealed  by said audit.  If the  Discrepancy  is in an amount  equal to or
     greater than seven and one-half  percent (7.5%) of the amount actually paid
     with respect to sales  occurring  during the quarterly  period in question,
     Licensee shall promptly  reimburse St. John for the reasonable cost of such
     audit.  Except as  reasonably  required to enforce its rights and  remedies
     under this  Agreement,  St.  John will not  disclose  to a third  party the
     Licensee Records obtained by St. John pursuant hereto;  provided,  however,
     that St.  John will have no such  obligation  with  respect to  information
     which:  (i) is in the public  domain or  otherwise  publicly  disclosed  by
     Licensee,  (ii)  St.  John  obtained  from a  third  party  that  St.  John
     reasonably  believed was not under an  obligation of  confidentiality  with
     respect to such  information,  (iii) is  disclosed  by  Licensee to a third
     party   without   confidentiality   obligations,   or  (iv)  is   otherwise
     independently derived by St. John.

          6.3 Provided that an audited financial statements are prepared for any
     fiscal year of Licensee  during the Term hereof,  Licensee shall deliver to
     St. John such audited  financial  statements of Licensee within 12 weeks of
     the end of each fiscal year of Licensee,  otherwise  Licensee shall deliver
     to St. John un-audited  financial statements of Licensee within 12 weeks of
     the end of each fiscal year of Licensee.

7.       Design Services
         ---------------
          7.1 From time to time during each Annual Period,  St. John may prepare
     and deliver to Licensee  ideas,  sketches and other  materials for Licensed
     Products  ("St.  John  Product  Ideas").  St.  John  Product  Ideas may, in
     Licensee's sole discretion,  be used by Licensee on a non-exclusive  basis,
     solely  in  connection  with  the  manufacture,  distribution  and  sale of
     Licensed  Products in the  Territory  and  pursuant to this  Agreement.  If
     Licensee does not notify St. John of Licensee's intent to use such St. John
     Product Ideas within  forty-five (45) days of Licensee's  receipt  thereof,
     thereafter   immediately   commence  and  continue  to  take   commercially
     reasonable steps toward the manufacture of Licensed  Products based on such
     St. John Product  Ideas and actually  commence use of such St. John Product
     Ideas (by  manufacturing  Licensed  Products based thereon) within eighteen
     (18) months of Licensee's  receipt thereof,  then Licensee shall return the
     St. John Product Ideas to St. John, at Licensee's expense,  and may not use
     them or permit their use thereafter. Whether or not Licensee chooses to use
     any St. John Product Ideas,  subject to the rights of Licensee as set forth
     in this  Agreement,  St. John may use and permit  others to use them in any
     manner it desires.  St. John shall at all times retain ownership of any and
     all  intellectual  property  rights  related to St. John Product  Ideas and
     Licensee shall keep all  information  related to the St. John Product Ideas
     confidential  and shall not disclose such  information to any party without
     the prior written consent of St. John in each instance;  provided, however,
     that Licensee  shall have no such  obligation  with respect to  information
     which (i) is in the public  domain or otherwise  publicly  disclosed by St.
     John,  (ii)  Licensee  obtained  from a third  party  that was not under an
     obligation of  confidentiality  with respect to such information,  (iii) is
     disclosed by St. John to a third party without confidentiality obligations,
     or (iv) is otherwise independently derived by Licensee and provided further
     that Licensee may disclose to the  manufacturer of Licensed  Products based
     upon the St. John Product Ideas ("SJI Licensed Product  Manufacturer") that
     portion of the  information  related to the St. John Product Ideas that the
     SJI Licensed  Product  Manufacturer  has a need to know in connection  with
     such  manufacture,  provided that such manufacturer is obligated in writing
     to keep such information confidential.

          7.2 During  each  Annual  Period,  Licensee  shall  submit to St. John
     materials, designs, sketches, colors, tags, labels and packaging from which
     St.  John may select  those,  if any,  which St. John  approves  for use in
     connection with Licensed  Products.  St. John may, in its sole  discretion,
     approve or disapprove  the  materials,  designs,  sketches,  colors,  tags,
     labels and packaging submitted as aforesaid and shall discuss with Licensee
     any modifications or alterations  thereof.  Licensee shall not use any such
     materials,   designs,  sketches,  colors,  tags,  labels  or  packaging  in
     connection with Licensed Products without first obtaining the prior express
     written consent of St. John. Licensee shall, at all times, retain ownership
     of any  intellectual  property  to its ideas  and  designs  (excluding  the
     Licensed  Trademarks)  provided  that such ideas and designs  have not been
     embodied in a Licensed Product sold in commercial quantities.

          7.3 Licensee shall be responsible  for making all samples,  as well as
     for the production of Licensed Products,  and Licensee shall bear all costs
     in connection therewith.

8.       Manufacture of Licensed Products; Quality Control
         -------------------------------------------------

          In order to protect the goodwill and  reputation  associated  with the
     Licensed Trademarks, Licensee covenants and agrees as follows:

          8.1  Subject  to the  other  provisions  of this  Agreement  including
     Section 14.1, the contents and workmanship of Licensed Products shall be at
     all times of quality subject to St. John's approval as set forth herein and
     the Licensed  Products  shall be  distributed  and sold with  packaging and
     sales promotion materials  appropriate for Licensed Products and subject to
     St.  John's  approval  and shall  meet all  reasonable  specifications  and
     standards  therefor which St. John may provide  Licensee from time to time.
     The Licensed  Products  shall conform to samples  submitted by Licensee and
     approved by St.  John's.  The  Licensee  shall use all  reasonable  efforts
     expeditiously  to submit such samples and St. John shall use all reasonable
     efforts  expeditiously  to approve or disapprove  such  samples.  Until the
     submission  and approval of such samples,  the contents and  workmanship of
     Licensed  Products shall be commensurate with the quality of other products
     being sold under the Licensed Trademark. In the event Licensee and St. John
     do not  agree  on  Design  Samples  for the  initial  collection  within  a
     reasonable period following the Effective Date, either party shall have the
     option of terminating this Agreement.

          8.2 The styles, designs, packaging,  contents, workmanship and quality
     of all Licensed  Products  must be approved by St. John in writing prior to
     the distribution or sale thereof.

          8.3 Prior to any commercial production, sale or distribution, Licensee
     shall submit to St. John Design Samples of the proposed  Licensed  Products
     and obtain St. John's  written  approval  therefor in accordance  herewith.
     "Design Samples" shall mean either a sample of a proposed  Licensed Product
     or a drawing thereof together with manufacturing specifications.  "Approved
     Design  Samples" shall mean Design  Samples for which written  approval has
     been given by a duly  authorized  officer or employee of St. John,  setting
     forth  those  Design  Samples  approved by St.  John for  inclusion  in the
     collection  as Licensed  Products.  In the event that St. John  rejects any
     particular Design Sample,  Licensee shall either modify the rejected Design
     Sample  and obtain St.  John's  written  approval  therefor  in  accordance
     herewith, or abandon commercial production,  sale or distribution,  of such
     Design Sample as Licensed Product hereunder  ("Abandoned  Design Samples").
     St. John will not disclose to a third party any  information  identified in
     writing by Licensee as confidential trade secret information related to the
     Abandoned Design Samples  obtained by St. John pursuant  hereto;  provided,
     however,  that St. John will have no such  obligation  with  respect to any
     such information  which: (i) is in the public domain or otherwise  publicly
     disclosed by Licensee,  (ii) St. John  obtained from a third party that was
     not  under  an   obligation  of   confidentiality   with  respect  to  such
     information,  (iii) is  disclosed  by  Licensee  to a third  party  without
     confidentiality  obligations, or (iv) is otherwise independently derived by
     St. John.

          8.4 Before  selling or  distributing  any Licensed  Product,  Licensee
     shall promptly submit to St. John, without cost to St. John, for St. John's
     inspection,  samples  of each  of the  Licensed  Products  from  the  first
     production  run which  shall  conform  in all  material  respects  with the
     Approved Design Samples previously  approved  (including all color samples,
     tags, labeling and packaging  therefor)  ("Production  Sample(s)").  If St.
     John notifies Licensee that such Production Sample(s) do not conform in all
     material respects to the Approved Design Sample(s),  Licensee will cease to
     sell, offer to sell, use or show the Licensed Products  represented by such
     sample(s) to the trade or public.

          8.5 In addition,  upon St. John's  request,  Licensee shall furnish to
     St. John, without cost to St. John, samples of Licensed Products (including
     all tags,  labeling and packaging  therefor) from  Licensee's  then current
     regular  production  runs of Licensed  Products so that St. John may assure
     itself of the maintenance of the quality standards set forth herein.

          8.6 The  Licensed  Products  manufactured  and sold  pursuant  to this
     Agreement  shall  adhere  strictly to the  Approved  Design  Samples in all
     material  respects,   including  without  limitation,   materials,   color,
     workmanship,  designs, dimensions, styling, detail and quality. In no event
     shall any change  thereto be made without the prior written  consent of St.
     John, subject to the constraints of normal manufacturing processes.

          8.7 Subject to the  provisions  of this  Agreement  including  Section
     14.1, the quality, construction,  workmanship, styling and materials of the
     Licensed  Products  shown,  offered for sale or sold to the trade or public
     shall  conform  in all  material  respects  to the  quality,  construction,
     workmanship, styling and materials of Production Sample(s) thereof approved
     by St. John, and in no event may such quality,  construction,  workmanship,
     styling or materials be  materially  inferior to the  originally  submitted
     samples of the Licensed Products.

          8.8  Without  limiting  any other  provision  of this  Agreement,  all
     Licensed  Products shall comply with and be  manufactured,  sold,  labeled,
     packaged,  distributed  and  advertised in accordance  with, all applicable
     laws and  regulations and shall be at least equal in quality to the samples
     approved by St. John.

          8.9 St. John and its duly  authorized  representatives  shall have the
     right,  at St. John's expense,  upon  reasonable  advance notice and during
     normal business hours, to examine Licensed Products in the process of being
     manufactured  and  to  inspect  all  facilities  utilized  by  Licensee  in
     connection therewith.

          8.10 In order to maintain  the  reputation,  image and prestige of the
     Licensed  Trademarks,  Licensee's  distribution  patterns  shall consist of
     those retail outlets whose location,  merchandising and overall  operations
     are  consistent  with  the  high  quality  of  Licensed  Products  and  the
     reputation, image and prestige of the Licensed Trademarks.

          8.11  Licensee  may not use a  personality  or celebrity to endorse or
     promote any Licensed  Products unless and until St. John has given Licensee
     its specific  written approval for such personality or celebrity to endorse
     or promote Licensed Products.

          8.12 Licensee's  policy of sale,  distribution and exploitation of the
     Licensed  Products shall be of high standard and shall in no manner reflect
     adversely upon the good name of St. John or its other licensees or upon the
     goodwill and reputation associated with the Licensed Trademarks.

 
9.       Approvals
         ---------

          It is  specifically  understood  and agreed that St.  John=s  approval
     pursuant to Sections 7 and 8 of this  Agreement  shall not be  unreasonably
     withheld.  Any sample Licensed  Product or other material  submitted to St.
     John for its approval which is not disapproved  within twenty (20) business
     days after St.  John's  receipt  thereof  shall be deemed  approved for use
     hereunder, but only for the use for which approval was sought.

10.      Marketing; Promotion; Advertising; Trade shows
         ----------------------------------------------

          10.1  Licensee  shall  exercise  all  reasonable  efforts to  promote,
     develop,  manufacture,  advertise,  sell and ship the Licensed  Products in
     appropriate  media  throughout the Territory as may be approved by St. John
     and shall  continuously  and diligently seek to fill all accepted  purchase
     orders for  Licensed  Products  and procure  and  maintain  facilities  and
     trained  personnel  sufficient and adequate to accomplish the foregoing.  A
     cessation of the foregoing  efforts for a continuous  period of ninety (90)
     days shall be grounds for immediate  termination  of this  Agreement at St.
     John's option effective upon written notice to Licensee.

          10.2 During each Annual Period  throughout the Term of this Agreement,
     Licensee  shall,  at such trade shows  related to  products  similar to the
     Licensed  Products  (as  reasonably  determined  by  Licensee),  maintain a
     separate section in Licensee's trade show booth exclusively for the display
     of finished Licensed  Products.  Said trade show booth shall be staffed and
     maintained in a manner commensurate with the reputation and prestige of the
     Licensed Trademarks as a designation for highest quality Licensed Products.
     In fulfilling its obligations  hereunder,  Licensee shall engage such sales
     representatives  and other personnel as will, in a commercially  reasonable
     manner,  maximize sales of Licensed  Products and where  appropriate  shall
     display the Licensed Products at merchandise marts and trade shows.

          10.3 During each Annual Period during the Term,  Licensee shall expend
     (including   expenditures  in  connection  with   cooperative   advertising
     programs),  for advertising of the Licensed Products featuring the Licensed
     Trademarks,  a sum equal to or greater  than ten  percent  (10%) of the Net
     Sales  of  all  Licensed   Products  during  that  Annual  Period  ("Annual
     Advertising  Minimum");  provided,  however,  that if Licensee expends less
     than the Annual  Advertising  Minimum in any given Annual Period,  Licensee
     may must make up such shortfall in the immediately following Annual Period.
     The  advertising  may be in the  form of  consumer,  cooperative  or  trade
     advertising.  St. John has the right to pre-approve  all of the advertising
     materials  in order to verify  proper  use and  attribution  regarding  the
     Licensed Trademarks. Licensee will submit to St. John a quarterly statement
     of advertising  expenditures  together with the quarterly  sales  statement
     required  by  Section  5.1  hereof.  St.  John has the  right to audit  all
     advertising expenditure records.

          10.4 Licensee agrees to provide St. John with written  descriptions of
     its marketing and distribution programs in such detail as may be reasonably
     requested from time to time by St. John prior to their  implementation  and
     as they may be modified from time to time.  Licensee shall not proceed with
     such marketing and distribution programs without the prior written approval
     of St. John, which approval shall not be unreasonably withheld.

          10.5 Nothing in this Agreement shall be deemed to obligate Licensee to
     control the price at which its customers may sell the Licensed Products.

          10.6 Subject to the following  terms and  conditions,  Licensee  shall
     have the right, in its sole discretion, to utilize the modeling services of
     Ms.Kelly Gray in  advertising of the Licensed  Products up to a maximum of
     two (2) days per Annual  Period at such  times and  places as are  mutually
     agreeable to Licensee and Ms.Gray. Licensee shall pay to St. John a fee of
     $12,500  for each day it  utilizes  Ms. Gray's  services  pursuant  hereto.
     Licensee shall have the right to utilize the modeling services of Ms. Gray,
     her name and likeness and the materials related thereto,  including without
     limitation  the  photographs  and  related   advertising  copy  ("Ms.  Gray
     Campaign") only if:  (a) Licensee  uses the advertising  agency selected by
     St. John, in its sole discretion, including, without limitation, St. John's
     own in-house advertising agency ("Designated  Agency"),  (b)  Licensee uses
     the  Designated  Agency for any and all  services  related to the Ms.  Gray
     Campaign  including,  without  limitation,  selection  and  control of, the
     photographer,  staff, photographs used (and the manner of such use) and the
     associated advertising copy, and (c) Ms. Gray is given complete control and
     discretion  with regard to all aspects of the use of her name and  likeness
     including, without limitation, with regard to selection and control of, the
     photographer, staff, photographs used (and the manner of such use), and the
     associated  advertising  copy.  Any use of the name or likeness of Ms. Gray
     other than as specifically  set forth in this Section 10.6 shall constitute
     a material  breach of this Agreement and, in addition to any other remedies
     available to St. John or Ms. Gray at law or in equity, this Agreement shall
     be subject to  immediate  termination  by St. John in its sole  discretion,
     effective upon written notice to Licensee of such termination.

          10.7 Licensee agrees to sell to St. John such  reasonable  quantity of
     Licensed  Products as St. John  shall  request at such prices and upon such
     terms as are mutually agreed between the parties.

11.      The Licensed Trademarks
         -----------------------

          11.1 Licensee  acknowledges  and agrees that Licensee shall acquire no
     ownership  rights  to any of the  Licensed  Trademarks  by  virtue  of this
     Agreement  or  otherwise  and  that all uses by  Licensee  of the  Licensed
     Trademarks  and any and all  goodwill  related  thereto  shall inure to the
     benefit of St. John.  Licensee  shall not, at any time,  do or suffer to be
     done any act or thing which may in any way adversely affect the validity of
     any  Licensed  Trademark,  any  rights of St.  John in and to any  Licensed
     Trademark or any  registrations  thereof or which,  directly or indirectly,
     may  reduce  the  value  of the  Licensed  Trademark  or  detract  from its
     reputation.

          11.2 Licensee  shall not use the Licensed  Trademarks,  in whole or in
     part, as a corporate  name or trade name.  Licensee shall not join any name
     or names with the Licensed  Trademarks  so as to form a new mark or for any
     other  purpose  or  use.  Licensee  shall  not use any  name  or  names  in
     connection  with  the  Licensed   Trademarks  in  advertising,   publicity,
     labeling,  packaging or printed  matter of any kind utilized by Licensee in
     connection  with  Licensed  Products,  unless and until St.  John  consents
     thereto in writing.

          11.3  At St.  John's  request,  Licensee  shall  execute  any  and all
     documents  reasonably  required by St. John to confirm St. John's ownership
     of all rights in and to the Licensed  Trademarks and the respective  rights
     of St.  John  and  Licensee  pursuant  to this  Agreement.  Licensee  shall
     cooperate  with St. John in connection  with the filing and  prosecution by
     St.  John of  applications  in St.  John's name to  register  the  Licensed
     Trademarks for Licensed  Products and the  maintenance  and renewal of such
     registrations as may issue.

          11.4  Licensee  shall use the  Licensed  Trademarks  in the  Territory
     strictly in compliance with the legal  requirements  obtaining  therein and
     shall use such  markings  in  connection  therewith  as may be  required by
     applicable  legal  provisions.  Licensee shall use and display the Licensed
     Trademarks  only in such form and manner as are  specifically  approved  in
     writing by St. John. Licensee shall cause to appear such legends,  markings
     and notices as St. John may request,  including,  without  limitation,  the
     appropriate  trademark or service mark notice, either "TM", "SM", or (R) as
     may be  reasonably  necessary  in order to give  appropriate  notice of any
     trademark,  service mark or other rights therein or pertaining  thereto, on
     all Licensed Products produced hereunder,  and on their tags, packaging and
     the like, and on all advertising,  promotional and publicity  material used
     by  Licensee  in  connection  therewith   including,   without  limitation,
     point-of-sale displays and similar materials,  and on any printed matter of
     any kind on which Licensee elects to have the Licensed  Trademarks  appear,
     including,  but not limited to, business cards,  invoices,  order forms and
     stationery.  Before using or releasing any such  material,  Licensee  shall
     submit to St. John,  and obtain St. John's prior written  approval for, any
     and all proposed  advertising,  promotional  and publicity  copy,  finished
     artwork  for tags,  labels,  packaging  and the like and all  materials  or
     formats  of any kind on which the  Licensed  Trademarks  appear.  After any
     sample,  copy, artwork or other material has been approved,  Licensee shall
     not depart  therefrom in any substantial  respect without the prior written
     approval of St. John.  If St. John should  disapprove  any sample  Licensed
     Product  or  any  sample  tag,  label,   packaging  or  the  like,  or  any
     advertising,  promotional or publicity material, Licensee shall neither use
     nor permit the same to be used in any manner in  connection  with  Licensed
     Products.

          11.5 Licensee  shall not,  during the Term or at any time  thereafter,
     directly or  indirectly,  contest or aid others in contesting the ownership
     of the Licensed Trademarks or the validity of said trademarks.

          11.6 In the event that  Licensee  learns of any  infringement,  act of
     unfair competition by third parties or imitation of the Licensed Trademarks
     or of  any  use  by any  person  of a  trademark  similar  to any  Licensed
     Trademark,  it shall promptly  notify St. John thereof.  St. John thereupon
     may take such action as it deems advisable for the protection of its rights
     in and to the Licensed  Trademarks  and, if requested to do so by St. John,
     Licensee  shall  cooperate with St. John in all respects at St. John's sole
     expense,  including without limitation by being a plaintiff or co-plaintiff
     and by causing  its  officers  to  execute  pleadings  and other  necessary
     documents and to causing its officers and  employees to devote  appropriate
     time to litigation and/or  disposition of all matters within the purview of
     this Section 11.6; it is understood that Licensee's  officers and employees
     will not be compensated for their time and effort. St. John shall take such
     action but only such action as is  commercially  reasonable  to protect its
     and  Licensee's  rights in and to the Licensed  Trademarks.  Licensee shall
     have no right to take any action with  respect to the  Licensed  Trademarks
     without St. John's prior written approval. St. John shall have full control
     over any action taken,  including without  limitation,  the right to select
     counsel,  to settle on any terms it deems advisable in its  discretion,  to
     appeal any adverse  decision  rendered  in any court,  to  discontinue  any
     action taken by it, and  otherwise to make any decision in respect  thereto
     as it in its discretion deems advisable.  If Licensee desires to retain its
     own counsel, it shall do so at its own expense. Any recovery as a result of
     such action shall belong solely to St. John.

          11.7 Licensee agrees that it shall not, during the Term or thereafter,
     register  or  apply  to  register  any of the  Licensed  Trademarks  or any
     trademarks or logos similar thereto anywhere in the world. Without limiting
     the  foregoing,  upon and  after  the  expiration  or  termination  of this
     Agreement,  Licensee, upon St. John's request, shall execute such documents
     as may be necessary to further  confirm St.  John's  rights in the Licensed
     Trademarks.

          11.8 Licensee shall use in connection with the Licensed Trademarks and
     their  packaging and  advertising  such trademark and copyright  notices as
     shall be required by St. John.  Insofar as any  packaging  and  advertising
     material  is  not  created  by  Licensee,   Licensee   shall  execute  such
     assignments   of   copyright   as  St.  John  shall   reasonably   require.
     Notwithstanding  the foregoing sentence,  Licensee's  existing  copyrights,
     trademarks  and other  proprietary  rights  incorporated  into such artwork
     shall remain the property of Licensee and shall not be assigned to St. John
     and shall not be  subject  to St.  John's  use,  without  Licensee's  prior
     written consent.

          11.9 Other than the Licensed Products,  Licensee shall not, during the
     Term or at any time thereafter,  directly or indirectly, market or sell any
     product which is of such a design as to be associated by consumers with St.
     John.

12.      Copyright  
         ---------

          Any copyright  which may be created in any  materials  provided by St.
     John  hereunder  including,   without  limitation,   any  sketch,   design,
     packaging, label, tag or the like designed or approved by St. John shall be
     the property of St. John.  Licensee shall not, at any time, do or suffer to
     be done any act or thing which may adversely  affect any rights of St. John
     in such sketches, designs, packaging, labels, tags and the like, including,
     without  limitation,  disclosing such information or filing any application
     in Licensee's name to record any claims to copyrights in Licensed Products,
     and  Licensee  shall  do all  things  reasonably  required  by St.  John to
     preserve and protect said rights,  including,  without limitation,  placing
     the copyright notice on all Licensed Products and the packaging, labels and
     tags therefor.

13.      Indemnity; Insurance
         --------------------

          13.1 Licensee  hereby  indemnifies,  saves and holds St. John harmless
     from and  against any and all  liabilities,  losses,  damages and  expenses
     (including  reasonable  attorneys'  fees and  expenses)  arising  out of or
     resulting  from:  (i) any act or omission that may be committed or suffered
     by Licensee or any of its servants,  agents or employees in connection with
     Licensee's  performance  of this  Agreement,  (ii) any  actual  or  alleged
     defects in any of the  Licensed  Products or other claim  related to any of
     the  Licensed  Products,  (iii)  any  actual  or  alleged  infringement  or
     violation of any patents, copyrights,  trademarks (other than those arising
     from the use of the Licensed  Trademarks  as permitted  hereunder) or other
     rights,  including  trade secrets and rights of privacy and  publicity,  in
     connection with the manufacture,  distribution, sale, use, advertisement or
     promotion  of  any of the  Licensed  Products,  (iv)  Licensee's  false  or
     misleading advertising in connection with any of the Licensed Products, (v)
     any violation of any  applicable  law or regulation in connection  with the
     manufacture,  marketing,  distribution, sale, advertisement or promotion of
     any  of the  Licensed  Products,  (vi)  any  use  of  any  of the  Licensed
     Trademarks  in a manner  not  authorized  by this  Agreement,  or (vii) any
     breach of this  Agreement by Licensee.  Subject to the  provisions  of this
     Agreement,  St. John will promptly  notify Licensee of any claim covered by
     indemnification  contained  in this  Section  13.1.  Upon  receipt  of such
     notification,  Licensee  shall notify St. John whether  Licensee deems such
     claim to be within the ambit of this Section 13.1.  If Licensee  replies in
     the affirmative, Licensee shall defend such claim at its expense by counsel
     reasonably selected by Licensee.  If Licensee shall fail to respond to such
     notice  within  10 days or if  Licensee  shall  respond  to such  notice by
     denying that such claim is within the ambit of this Section 13.1,  St. John
     may defend such claim by counsel  reasonably  selected by St. John  without
     waiving St.  John's  rights to  indemnification,  if any,  pursuant to this
     Section 13.1.  Notwithstanding  anything to the contrary herein  contained,
     the indemnification provided by this Section 13.1 shall not apply to claims
     related to the use of Licensed  Trademarks  as permitted  hereunder  nor to
     claims by St.  John  against  Licensee  for  violation  of this  Agreement.
     Notwithstanding  any  provision  hereof,  Licensee  shall not be liable for
     damages to St. John  hereunder to the extent that such damages  result from
     St.  John's  failure to  promptly  notify  Licensee  of claims or  actions.
     Notwithstanding  any  provision  hereof,  regarding any claim under Section
     13.1(iii)  involving  actual or alleged  infringement  or  violation of the
     Licensed  Trademarks  (other than claims between the parties  hereto),  the
     parties shall jointly control the defense of such claim, both parties shall
     cooperate  in good faith in  connection  with such defense and each pay one
     half of the legal fees  incurred  in  connection  with the  defense of such
     claims;  provided,  however,  that at any time St. John may take control of
     the  defense  of  such  claim  provided  that  St.  John  waives  Licensees
     obligation  to indemnify it under  Section  13.1(iii).  In the event that a
     recall of any Licensed Products is required,  ordered or recommended by any
     court or government  agency or any applicable  law or  regulation,  for any
     reason,   Licensee   shall   comply   with  such   requirement,   order  or
     recommendation  and shall bear all the  expenses  thereof.  Licensee  shall
     promptly  notify St. John of any claim which may be made  against  Licensee
     arising out of Licensee's use of the Licensed Trademarks. The provisions of
     this  Section  and  Licensee's  obligations  hereunder  shall  survive  the
     expiration or termination of this Agreement.

          13.2 Before selling or shipping any Licensed Products,  Licensee shall
     procure  and  maintain  at its own  expense in full force and effect at all
     times  during  which  Licensed  Products  are being sold,  with a reputable
     insurance  carrier  reasonably  acceptable to St. John, a public  liability
     insurance  policy to protect and insure St. John and  Licensee  against any
     claims or  liabilities  with  which it or they may be  charged  because  of
     personal or property  damage or injuries  suffered by any person or entity,
     resulting  from  the  Licensed  Products  or the  manufacture,  use or sale
     thereof,   whether  during  the  Term  or  thereafter  including,   without
     limitation,  product liability  coverage with respect to Licensed Products,
     as well as contractual  liability  coverage with respect to this Agreement,
     with a limit of  liability  of not less than  $2,000,000  (U.S.)  (combined
     single limit) ("Insurance Minimum"); provided, however, that such Insurance
     Minimum shall be increased at the end of each Annual Period  throughout the
     Term to an  amount  equal  to the  Insurance  Minimum  for the  immediately
     preceding Annual Period ("Previous Year Insurance  Minimum") plus an amount
     equal to the CPI Index Factor (as defined  below)  times the Previous  Year
     Insurance  Minimum.  For purposes of this  Agreement the "CPI Index Factor"
     shall be equal to the percentage  difference between and the Consumer Price
     Index for All Urban  Consumers -- All Items for the  immediately  preceding
     Annual Period and the Consumer  Price Index for All Urban  Consumers -- All
     Items for the next most recent Annual Period.  Such insurance  policy shall
     be written for the benefit of both Licensee and St. John (St. John shall be
     named in the  policy as a named  insured)  and shall  provide  for at least
     thirty (30) days prior written  notice to said parties of the  cancellation
     or  substantial  modification  thereof.  Such  insurance may be obtained by
     Licensee in conjunction with a policy of product liability  insurance which
     covers products other than Licensed Products.  Licensee shall maintain such
     insurance in full force and effect throughout the Term and for at least two
     (2) years  after the latter  of,  the  termination  of this  Agreement,  or
     Licensee's last sale of product bearing the Licensed Trademark.  Within ten
     (10) days after the date this Agreement is executed and on the first day of
     each  Annual  Period  thereafter,  Licensee  shall  deliver  to St.  John a
     certificate  of insurance  evidencing  that such insurance is in full force
     and effect and that it cannot be canceled or substantially modified without
     the insurer  giving St. John  written  notice  thereof at least thirty (30)
     days prior to the effective date of the cancellation or  modification.  The
     insurance described in this Section 13.2 is understood to be primary and is
     not subject to  contribution  by any other insurance which may be available
     to St.  John.  Nothing  contained in this  Section 13.2  shall be deemed to
     limit in any way the indemnification provisions of Section 13.1 above.

          13.3  Subject  to any  other  provision  of this  Agreement  including
     Sections  20.10 and 20.11,  St.  John hereby  indemnifies,  saves and holds
     Licensee harmless from and against any and all liabilities, losses, damages
     and expenses  (including  reasonable  attorneys' fees and expenses) arising
     out of or resulting from any actual or alleged infringement or violation of
     any trademarks or any patents or copyrights provided by St. John under this
     Agreement  arising out of  Licensee's  use of the  Licensed  Trademarks  as
     permitted  hereunder.  Licensee will promptly  notify St. John of any claim
     covered by indemnification  contained in this Section 13.3. Upon receipt of
     such  notification,  St. John shall notify Licensee  whether St. John deems
     such claim to be within the ambit of this Section 13.3. If St. John replies
     in the  affirmative,  St.  John shall  defend  such claim at its expense by
     counsel reasonably  selected by St. John. If St. John shall fail to respond
     to such notice  within 10 days or if St. John shall  respond to such notice
     by  denying  that such  claim is within  the  ambit of this  Section  13.3,
     Licensee may defend such claim by counsel  reasonably  selected by Licensee
     without waiving Licensee's rights to  indemnification,  if any, pursuant to
     this Section 13.3. Notwithstanding any provision hereof, St. John shall not
     be liable for damages to Licensee hereunder to the extent that such damages
     result from  Licensee's  failure to  promptly  notify St. John of claims or
     actions.  Should the Licensed  Trademarks become the subject of a trademark
     infringement claim or action ("Trademark Infringement Claim") then St. John
     may, at St. John's option,  terminate  Licensee's right to use the Licensed
     Trademarks  in the manner  alleged  in the  Trademark  Infringement  Claim;
     provided,  however,  that only if (i) Licensee no longer has the  exclusive
     right to use the Licensed  Trademarks or the Licensed  Products  within the
     United States, (ii) Licensee is enjoined from using the Licensed Trademarks
     or the Licensed Products in the United States, or (iii) St. John terminates
     Licensee's  right  to use the  Licensed  Trademarks  in the  United  States
     pursuant to this section,  Licensee shall have the option to terminate this
     Agreement  by written  notice to St. John,  effective  upon receipt and St.
     John will purchase  inventory of Licensed Products allocated to such market
     at Licensee's cost ("Market Inventory  Purchase") and such Market Inventory
     Purchase  constitutes  the parties  best  estimate of the total  damages to
     Licensee and shall  constitute  liquidated  damages and Licensee waives any
     other  claim  at law or in  equity  related  thereto.  In the  event of the
     purchase of  inventory  by St. John from  Licensee  pursuant to this or any
     other  section  of  this   Agreement,   Licensee  hereby  consents  to  the
     advertising, distribution and sale of such inventory by St. John.

14.      Default and Termination
         -----------------------

          14.1 If  Licensee  shall at any time breach or be in default of any of
     the   assignment   provisions,   insurance   provisions,    indemnification
     provisions,  royalty payment provisions or the royalty reporting provisions
     of this Agreement and such breach or default is not remedied within fifteen
     (15) days after St. John has given  Licensee  written notice of such breach
     or  default,  St.  John may,  at its sole  election  and in addition to and
     without  prejudice to any other rights or remedies it may have at law or in
     equity, terminate this Agreement by giving written notice of termination to
     Licensee,  and such  termination  shall be  effective  upon  giving of such
     notice of termination.  If Licensee shall at any time materially  breach or
     be in material default of any other provision of this Agreement  (including
     the quality control provisions), and such breach or default is not remedied
     by Licensee to St.  John's  satisfaction  within thirty (30) days after St.
     John has given  Licensee  written  notice of such  breach  or  default  or,
     Licensee has not taken commercially  reasonable steps to remedy such breach
     or  default  within  twenty  (20) days  after St.  John has given  Licensee
     written  notice of such breach or default  and such  efforts to remedy such
     breach or default to St. John's satisfaction are not completed within forty
     (40) days of the commencement of such  commercially  reasonable steps then,
     St. John may, at its sole election and in addition to and without prejudice
     to any rights or remedies it may have at law or in equity,  terminate  this
     Agreement by giving written  notice of  termination  to Licensee,  and such
     termination  shall be  effective  upon giving  such notice of  termination;
     provided,  however,  that  Licensee  shall  not be deemed in breach of this
     Agreement if the majority of a particular Licensed Product model ("Epidemic
     Product") experiences an identical defect ("Epidemic Defect") provided that
     Licensee:  (i)  immediately  notifies St. John of such  Epidemic  Defect in
     writing  ("Epidemic  Defect Notice"),  (ii) immediately stops shipping such
     Epidemic  Product,  (iii) within  three (3) months of the  Epidemic  Defect
     Notice,  institutes a recall program  covering all Epidemic Product wherein
     Licensee  offers  to  Defective  Product  purchasers  at  least  one of the
     following  (at  Licensee's  option) to repair  the  Defective  Product,  to
     replace the Defective  Product or to provide a refund of the purchase price
     of the  Defective  Product,  and  provided  further  that no more  than one
     Epidemic Defect occurs within any five (5) year period during the Term.

          14.2 (a) In the event that Licensee files a petition in bankruptcy, is
     adjudicated a bankrupt or files a petition or otherwise  seeks relief under
     or pursuant to any  bankruptcy,  insolvency  or  reorganization  statute or
     proceeding,  or if a  petition  in  bankruptcy  is filed  against  it or it
     becomes  insolvent or makes an assignment  for the benefit of its creditors
     or a custodian,  receiver or trustee is appointed  for it or a  substantial
     portion of its business or assets and such petition is not dismissed within
     forty-five  (45) days of the filing of such petition,  this Agreement shall
     terminate automatically and forthwith.

          (b) No assignee  for the benefit of  creditors,  custodian,  receiver,
     trustee  in  bankruptcy,  sheriff  or any  other  officer  of the  court or
     official charged with taking over custody of Licensee's  assets or business
     shall have any right to continue this Agreement or to exploit or in any way
     use the Licensed Trademarks.

          (c) As provided in Section 18 hereof, the Licensee's performance under
     this contract is personal in nature and St. John is excused from  accepting
     the performance of a party other than the Licensee.  The parties agree that
     this  Agreement is a  nonassignable  contract  under section  365(c) of the
     Bankruptcy  Code,  or any amendment or successor  thereto (the  "Bankruptcy
     Code"). Further, in the event the Licensee is a debtor under the Bankruptcy
     Code and this  Agreement  has not been  terminated,  the parties agree that
     adequate protection of St. John's interest in this Agreement and any use of
     the Licensed  Trademarks by Licensee requires that Licensee comply with all
     of the  terms of this  Agreement,  including,  without  limitation,  timely
     making the royalty  payments under Section 4 and maintaining the quality of
     the Licensed Products as required under Section 8.

          14.3 If Net Sales  for any  Annual  Period do not equal or exceed  the
     Minimum Net Sales specified for such Annual Period in the Minimum Net Sales
     Table (or as otherwise  determined pursuant to Section 2 hereof),  St. John
     may, at its option,  terminate  this Agreement by giving  Licensee  written
     notice  and such  termination  shall be  effective  upon the giving of such
     notice of termination.

          14.4 No failure or delay on the part of either  party to exercise  its
     right  of  termination  hereunder  for  any  one or more  causes  shall  be
     considered to prejudice its rights of termination for such or for any other
     or subsequent  cause.  Termination  or expiration of this Agreement for any
     reason  whatsoever  shall not  relieve the  parties  from their  respective
     obligations arising hereunder prior to such termination or expiration.  The
     termination  rights  set forth in this  Section 14 are in  addition  to and
     without  prejudice to any other rights or remedies St. John may have at law
     or in equity.

          14.5 In the event the  representation  and  warranty of  St. John  set
     forth in Section 17.1 hereof shall be in any material respect untrue in the
     Territory,  Licensee shall have the right and option upon written notice to
     St. John to terminate this Agreement.

15.      Rights on Expiration or Termination
         -----------------------------------

          15.1 In the event of termination in accordance  with Section 14 above,
     in  addition to any other  rights or remedies  St. John may have under this
     Agreement or otherwise at law or in equity, Licensee shall pay to St. John:
     (i) any  Sales  Royalty  then  owed to it  pursuant  to  Section 4 above or
     otherwise,  (ii) any Guaranteed Minimum Royalty then owed to it pursuant to
     Section 3 above,  and (iii) an amount equal to any other actual damages St.
     John  may have  suffered  on  account  of such  termination  or the acts or
     omissions from which it resulted.
 
          15.2  Notwithstanding  any  termination in accordance  with Section 14
     above,  St.  John shall have and hereby  reserves  all rights and  remedies
     which it has, or which are granted to it by  operation of law or in equity,
     to enjoin the unlawful or unauthorized use of the Licensed  Trademarks (any
     of which  injunctive  relief may be sought in the  courts,  and also may be
     sought,  prior to or in lieu of termination),  to collect royalties payable
     by Licensee  pursuant to this Agreement and to be  compensated  for damages
     for breach of this Agreement.  In addition,  nothing herein shall be deemed
     to prevent a party from  bringing an action for damages  either prior to or
     in lieu of  termination  if a default  in  performance  by the other  party
     occurs and is not cured timely in accordance with the provisions of Section
     14 above. The parties  acknowledge that Licensee's  unauthorized use of the
     Licensed  Trademarks  will give  rise to  irreparable  injury to St.  John,
     inadequately compensable in damages.  Accordingly, in addition to any other
     remedies  which may be available to St. John at law or in equity,  St. John
     shall be entitled to preliminary  and permanent  injunctive  relief against
     such breach or threatened  breach  without the necessity of proving  actual
     damages or that monetary damages would be inadequate.

          15.3 Upon the expiration or termination  of this  Agreement,  Licensee
     shall  immediately  deliver to St. John a complete and accurate schedule of
     Licensee's  inventory  of Licensed  Products and of related work in process
     then on hand ("Inventory"). Such schedule shall be prepared as of the close
     of business on the date of such expiration or termination and shall reflect
     Licensee's  cost of each such  item.  St.  John  thereupon  shall  have the
     option,  exercisable  by notice in writing  delivered  to  Licensee  within
     thirty (30) days after its receipt of the complete Inventory  schedule,  to
     purchase  any or all of the  Inventory  for an amount  equal to the cost to
     Licensee of the Inventory (less any discounts, rebates or other incentives)
     being  purchased.  In the event such notice is sent by St.  John,  Licensee
     shall deliver to St. John or its designee all of the Inventory  referred to
     therein within ten (10) days after St. John's said notice  against  payment
     of the  purchase  price  therefore.  St. John shall pay  Licensee  for such
     Inventory as is in  marketable  condition  within sixty (60) days after its
     receipt thereof.  Notwithstanding  anything to the contrary herein,  in the
     event that St. John  notifies Licensee of its desire to purchase any of the
     Inventory  pursuant to this  Section,  such notice shall apply only to that
     portion of the  Inventory  remaining on the date said notice is received by
     Licensee.

          15.4 If this Agreement expires or is terminated other than pursuant to
     Section  14.2(a) then,  subject to Section 13.3 hereof,  (except in case of
     termination   resulting  from  Licensed  Products  or  related  promotional
     materials in violation of Section 8 or Section 11.4) to the extent St. John
     has not  exercised  its option to  purchase  Inventory  pursuant to Section
     15.3,  License shall be entitled,  for an additional  period of twelve (12)
     months  only,  on a  non-exclusive  basis,  to  sell  and  dispose  of  its
     Inventory.  Such sales shall be made  subject to all of the  provisions  of
     this  Agreement  (which shall  survive the  termination  of the  Agreement)
     including,  without  limitation,  the provisions  related to the payment of
     Sales  Royalty  and to an  accounting  for the  payment  of  Sales  Royalty
     thereon.  Such final  accounting shall be due within thirty (30) days after
     the close of the said twelve (12) month period.

          15.5 Except as  specifically  provided in Section  15.4 above,  on the
     expiration or termination of this Agreement,  all of the rights of Licensee
     under this Agreement shall terminate forthwith and shall revert immediately
     to St. John,  all Sales  Royalties on sales  theretofore  made shall become
     immediately  due and payable and Licensee shall  discontinue  forthwith all
     use of the Licensed  Trademarks,  no longer shall have the right to use the
     Licensed  Trademarks or any  variation or  simulation  thereof and promptly
     shall transfer to St. John, free of charge, all registrations,  filings and
     rights with regard to the Licensed  Trademarks  which it may have possessed
     at any time.  In addition,  Licensee  thereupon  shall deliver to St. John,
     free of charge, all samples of Licensed Products and all sketches and other
     material in its possession  which were designed or approved by St. John and
     all labels,  tags and other  material in its  possession  with any Licensed
     Trademark  thereon.  After the expiration or termination of this Agreement,
     Licensee  shall not use, or permit  others to use, any of said sketches and
     other material used in connection with the Licensed  Products without first
     obtaining the express written consent of St. John in each instance.

16.      Brokerage Indemnity
         -------------------

          Each party hereby  indemnifies the other against and holds it harmless
     from any and all liabilities  (including,  without  limitation,  reasonable
     attorneys' fees and  disbursements  paid or incurred in connection with any
     such  liabilities)  for  any  brokerage  commissions  or  finders'  fees in
     connection with this Agreement or the transactions contemplated hereby with
     respect to any broker retained or allegedly retained by such party.

17.      Representations and Warranties
         ------------------------------

          17.1 St. John  represents  and warrants that it has full right,  power
     and authority to enter into this Agreement and to the best of its knowledge
     it has full right,  power and  authority to perform all of its  obligations
     hereunder.  St. John further represents and warrants that it has granted no
     other existing license to use any Licensed  Trademark on Licensed  Products
     in the  Territory  and to the best of its knowledge no other party is using
     the Licensed  Trademark on products  substantially  similar to the Licensed
     Products.  St.  John  represents  and  warrants  that  to the  best  of its
     knowledge,  no third party has the right to use the Licensed  Trademarks on
     the Licensed  Products in the Territory.  St. John  represents and warrants
     that to the best of its knowledge no proceedings  have been  instituted are
     pending or threatened  which challenge St. John's right to grant Licensee's
     the right to use the Licensed  Trademarks  or the Licensed  Products in the
     Territory.  The foregoing  warranties are the entire warranties of St. John
     and St.  John  makes no other  warranty  of any  kind,  either  express  or
     implied.

          17.2 Licensee  represents  and warrants that it has full right,  power
     and  authority  to enter  into this  Agreement  and to  perform  all of its
     obligations hereunder.

18.      Assignability; Binding Effect
         -----------------------------

          18.1 (a) The parties hereto  recognize that (i) this Agreement and the
     performance  of the  Licensee  hereunder is personal in nature and (ii) St.
     John is relying on the Licensee's  reputation and standards for quality and
     workmanship and Licensee's creative and design skills in entering into this
     Agreement.  Therefore,  neither  this  Agreement  nor the  license or other
     rights  granted  hereunder may be assigned,  sublicensed  or transferred by
     Licensee or by operation of law without the express  written consent of St.
     John (which consent may be withheld in the sole and absolute  discretion of
     St.  John),  and any such  attempted  assignment,  sublicense  or transfer,
     whether by Licensee or by operation of law,  directly or indirectly,  shall
     be void and of no force or effect and shall constitute a material breach of
     this  Agreement.  A "Change in Control" (as defined below) of Licensee is a
     prohibited  assignment and material breach of this Agreement and all rights
     granted  hereunder  except as  otherwise  expressly  stated in this Section
     18.1.

          In  the  event  of  a  "Change  in  Control"   as  defined   below  in
     Section 18(b),  Licensee shall give St. John written notice of such "Change
     in Control" in accordance with the notice  provisions of this Agreement and
     addressed  to the Chief  Executive  Officer  of  St. John  (the  "Change in
     Control  Request").  Within 20 business days of the receipt of such notice,
     St. John shall do one of the following:

          (i) Notify  Licensee that  St. John  consents to the Change in Control
          Request;

          (ii) Notify  Licensee  that St. John does not consent to the Change in
          Control   Request,   provided,   however,   that  St. John  shall  not
          unreasonably  withhold its consent under this  Section 18(a)(ii).  Any
          Change in Control of  Licensee  without  consent  under this  Section 
          18(a)(ii) shall be deemed a violative assignment in material breach of
          this Agreement; or

          (iii)Notify  Licensee that St. John  consents to the Change in Control
          Request provided, however, that for a period of one year following the
          effective  date of the Control in Control,  St. John  may, at its sole
          and absolute discretion,  terminate this Agreement by giving notice in
          accordance   with  the  notice   provisions  of  this  Agreement  (the
          "Termination  Notice").  The  effective  date of any such  termination
          shall be one year from the date of the Termination Notice.

                  (b)      A "Change in Control" means any of the following:

          (i) The acquisition,  after the date hereof, by any person, entity, or
          group,  within the  meaning of Section  13(d) or Section  14(d) of the
          Securities Exchange Act of 1934 and the rules promulgated  thereunder,
          of beneficial  ownership of 25% or more of the  outstanding  shares of
          the Licensee's common stock or other voting stock; or

          (ii)  A  merger,  reorganization,   consolidation  or  other  business
          combination or similar  transaction  whereby the  stockholders  of the
          Licensee  immediately prior to such approval do not, immediately after
          consummation of such merger,  reorganization,  consolidation  or other
          business combination or similar transactions own more than 50% percent
          of the voting stock of the surviving entity; or

          (iii) A liquidation  or dissolution of the Licensee or the sale of all
          or  substantially  all of the  assets of the  Licensee  related to its
          timepiece business.

               (c)  Notwithstanding  any  other  provision  of this  Section 18,
               St. John may, at its sole and absolute discretion, terminate this
               Agreement in the event that a Change in Control  results in a new
               licensee under this Agreement which is a competitor of St. John.

          18.2 Except as otherwise  provided herein,  this Agreement shall inure
     to the benefit of and shall be binding upon the parties,  their  respective
     successors,  St. John's  transferees  and assigns and Licensee's  permitted
     transferees and assigns.

19.      Jurisdiction; Attorney's Fees
         -----------------------------

          19.1 (a) The sole  jurisdiction and venue for any Court Action arising
     out of this  Agreement  shall be an  appropriate  federal or state court in
     Orange County, California. Each of St. John and Licensee hereby irrevocably
     submits to the  jurisdiction  of any of said courts in any Court Action and
     hereby waives any claim or defense of inconvenient forum.

          (b) Each of St. John and Licensee  represents  and warrants that it is
     not entitled to immunity from judicial  proceedings and agrees that, should
     the other bring any Court Action,  it will not claim any immunity from such
     proceedings for itself or with respect to its property.

          19.2 In the event of any action for the  breach of this  Agreement  by
     any party, the prevailing party shall be entitled to reasonable  attorney's
     fees, costs and expenses incurred in such action.

20.      Miscellaneous
         -------------

          20.1 Licensee  shall not give away Licensed  Products or sell Licensed
     Products in connection  with any tie-in or promotional  campaign  primarily
     relating to products other than Licensed Products without the prior written
     consent of St. John.

          20.2  Notwithstanding  anything  to the  contrary  contained  in  this
     Agreement,  St.  John  shall have the right,  exercisable  at any time,  to
     negotiate and enter into agreements with third parties pursuant to which it
     may grant a license to use the Licensed  Trademarks in connection  with the
     manufacture, distribution and sale of Licensed Products in the Territory or
     provide  consultation and design services with respect to Licensed Products
     in the Territory, but only if, pursuant to such third party agreements, the
     Licensed  Products  are  not  shipped  prior  to the  termination  of  this
     Agreement.  St. John shall take reasonable  steps to keep  confidential any
     discussions  with third  parties  pursuant  to this  section  and to obtain
     similar agreements from such third parties.

          20.3 This Agreement  shall be construed and  interpreted in accordance
     with the laws of the  State of  California,  excluding  its  choice  of law
     provisions.

          20.4 This Agreement along with all Schedules  attached  hereto,  which
     are incorporated herein by this reference, contain the entire understanding
     and agreement between the parties hereto with respect to the subject matter
     hereof  and  supersedes  all  prior  oral  or  written  understandings  and
     agreements  relating  thereto  and  no  provision  hereof  may  be  waived,
     modified,  discharged or terminated, except in a writing executed by a duly
     authorized officer of both parties.

          20.5 Nothing  herein  contained  shall be construed to constitute  the
     parties hereto as partners or as joint venturers, or either as agent of the
     other, and neither party shall have the power to obligate or bind the other
     party in any manner whatsoever.

          20.6 A failure of either  party to  exercise  any right  provided  for
     herein shall not be deemed to be a waiver of any right hereunder. No waiver
     by either  party,  whether  express or implied,  of any  provision  of this
     Agreement,  or of  any  breach  or  default  thereof,  shall  constitute  a
     continuing  waiver  of such  provision  or of any other  provision  of this
     Agreement.  Acceptance of payments by St. John shall not be deemed a waiver
     by St. John of any violation of or default  under any of the  provisions of
     this Agreement by Licensee.

          20.7  If  any  provision  or any  portion  of any  provision  of  this
     Agreement  shall  be  held  to be  void  or  unenforceable,  the  remaining
     provisions of this  Agreement  and the  remaining  portion of any provision
     held void or unenforceable in part shall continue in full force and effect.

          20.8 All reports, approvals, requests, demands and notices required or
     permitted by this  Agreement to be given to a party shall be in writing and
     shall be deemed to be duly  given if  personally  delivered,  if mailed (by
     certified or  registered  mail,  return  receipt  requested)  or if sent by
     overnight mail or courier service, such as Express Mail or Federal Express,
     which requires the addressee to acknowledge  receipt thereof,  to the party
     concerned  at its  address  set  forth  on page 1 above  (or at such  other
     address as a party may  specify by notice to the other) and shall be deemed
     given (i) if by hand or overnight  delivery,  upon receipt thereof; or (ii)
     if mailed,  three (3) days after deposit in the U.S. mail, postage prepaid,
     certified mail, return receipt requested.

          20.9  This  Agreement  shall  be  construed   without  regard  to  any
     presumption or other rule requiring  construction against the party causing
     this  Agreement  to be drafted.  If any words or phrases in this  Agreement
     shall have been  stricken out or otherwise  eliminated,  whether or not any
     other words or phrases have been added,  this Agreement  shall be construed
     as if those words or phrases were never included in this Agreement,  and no
     implication  or  inference  shall be drawn  from the fact that the words or
     phrases were so stricken out or otherwise eliminated.

          20.10 EXCEPT FOR THOSE CLAIMS SET FORTH IN SECTION 13.3 HEREOF,  UNDER
     NO  CIRCUMSTANCES  SHALL ST. JOHN, ITS  EMPLOYEES,  AFFILIATES OR AGENTS BE
     LIABLE FOR ANY DAMAGES,  INCLUDING  ANY  INDIRECT,  INCIDENTAL,  SPECIAL OR
     CONSEQUENTIAL  DAMAGES THAT RESULT FROM  LICENSEE'S  USE OF OR INABILITY TO
     USE THE LICENSED  TRADEMARKS,  AND LICENSEE  HEREBY  WAIVES ANY CLAIMS WITH
     RESPECT THERETO,  WHETHER BASED ON CONTRACT, TORT OR OTHER GROUNDS, EVEN IF
     ST. JOHN HAS BEEN ADVISED OF THE POSSIBILITY OF DAMAGES.

          20.11   NOTWITHSTANDING   THE   FOREGOING,   EXCEPT  FOR  ST.   JOHN'S
     REIMBURSEMENT  OBLIGATION AS SET FORTH IN SECTION 13.3 HEREOF,  IN NO EVENT
     SHALL THE TOTAL AGGREGATE LIABILITY OF ST. JOHN, ITS EMPLOYEES,  AFFILIATES
     AND  AGENTS  FOR ALL  DAMAGES,  LOSSES  AND  CAUSES  OF ACTION  WHETHER  IN
     CONTRACT,  TORT,  INCLUDING  NEGLIGENCE,  OR OTHERWISE,  EITHER  JOINTLY OR
     SEVERALLY,  EXCEED THE AGGREGATE DOLLAR AMOUNT PAID BY LICENSEE TO ST. JOHN
     FOR THE  LICENSED  PRODUCTS AT ISSUE IN THE TWELVE (12) MONTHS PRIOR TO THE
     CLAIMED INJURY OR DAMAGE.  LICENSEE  HEREBY  RELEASES ST. JOHN FROM ANY AND
     ALL OBLIGATIONS, LIABILITIES AND CLAIMS IN EXCESS OF THIS LIMITATION.

          20.12 This  Agreement  may be executed in any number of  counterparts,
     each of which shall be an original  and all of which shall  constitute  one
     and the same  instrument.  This Agreement may be executed and delivered via
     facsimile and such execution and delivery by facsimile  shall have the same
     force and effect as a hand delivered executed original.


          IN WITNESS  WHEREOF,  the parties  hereto  each  acting  under due and
     proper authority,  have duly executed this Agreement as of the day and year
     first above written.

ST. JOHN KNITS, INC.                              SWISS ARMY BRANDS, INC.

                                                              
By: BOB GRAY                                          By: J. Merrick Taggart  
Its:C.E.O.                                            Its:President 


                                   Schedule A


1.   Licensed Trademark: "St. John", a trademark of St. John Knits, Inc. Current
     Applications:  

2.   Licensed Products: Wrist watches, travel alarm clocks and
     watches that bear the Licensed  Trademark. 

3.   Territory:  Throughout the following jurisdictions provided that additional
     jurisdictions  may be added from time to time by mutual written  consent of
     the parties:

                  United States                 Australia
                  Canada                        United Kingdom
                  Japan                         Germany
                  Hong Kong                     BENELUX
                  Korea                         Switzerland
                  Indonesia                     Any Caribbean nations requested
                                                by Licensee
                    Any other  country  requested  by Licensee in which St. John
                    sells in commercial  quantities,  goods bearing the Licensed
                    Trademark provided that the  representations  and warranties
                    contained  in  this  Agreement   shall  apply  only  to  the
                    jurisdictions   where  St.  John   registers   the  Licensed
                    Trademark

4.   Initial Term: The period commencing on the earlier of (a) the date on which
     Licensee first delivers Licensed  Products in commercial  quantities or (b)
     September 1, 1998, and expiring December 31, 1999.

5.   Duration of Additional Terms: 2 years

6.   Guaranteed Minimum Royalty Table:

         Annual Period                             Guaranteed Minimum Royalty

         First Annual Period (Initial Term)             $  154,000 (U.S.)
         Second Annual Period                           $  284,000 (U.S.)

                                  (IF THE TERM IS EXTENDED)

         Third Annual Period                            $  419,000 (U.S.)
         Fourth Annual Period                           $  575,000 (U.S.)

                                  (IF THE TERM IS EXTENDED)

         Fifth Annual Period                            $  603,000 (U.S.)
         Sixth Annual Period                            $  634,000 (U.S.)

                                  (IF THE TERM IS EXTENDED)

         Seventh Annual Period                          $  665,000 (U.S.)
         Eighth Annual Period                           $  699,000 (U.S.)

                                  (IF THE TERM IS EXTENDED)

         Ninth Annual Period                            $  734,000 (U.S.)
         Tenth Annual Period                            $  770,000 (U.S.)

                                  (IF THE TERM IS EXTENDED)

         Eleventh Annual Period                         $  809,000 (U.S.)
         Twelfth Annual Period                          $  849,000 (U.S.)

                                  (IF THE TERM IS EXTENDED)

         Thirteenth Annual Period                       $  892,000 (U.S.)
         Fourteenth Annual Period                       $  936,000 (U.S.)

          The Term shall be extended indefinitely subject to the requirements of
     Section 2, Section 18 and the termination provisions of the Agreement.

7.       Guaranteed Minimum Royalty Payment Schedule:
         --------------------------------------------

          The  Guaranteed  Minimum  Royalty  shall  be paid in  accordance  with
     Section 3.2 of the Agreement.

8.       Sales Royalty Payment Schedule:
         -------------------------------

          The Sales Royalty shall be paid in accordance with  Section 4.3 of the
     Agreement.

10.      Minimum Net Sales for Licensed Products:
         ----------------------------------------

         Annual Period                                    Minimum Net Sales

         First Annual Period                               $  617,000 (U.S.)
         Second Annual Period                              $1,535,000 (U.S.)

                                (IF THE TERM IS EXTENDED)

         Third Annual Period                               $2,264,000 (U.S.)
         Fourth Annual Period                              $3,107,000 (U.S.)

                                (IF THE TERM IS EXTENDED)

         Fifth Annual Period                               $3,262,000 (U.S.)
         Sixth Annual Period                               $3,425,000 (U.S.)

                                (IF THE TERM IS EXTENDED)

         Seventh Annual Period                             $3,596,000 (U.S.)
         Eighth Annual Period                              $3,776,000 (U.S.)

                                (IF THE TERM IS EXTENDED)

         Ninth Annual Period                               $3,965,000 (U.S.)
         Tenth Annual Period                               $4,163,000 (U.S.)

                                (IF THE TERM IS EXTENDED)

         Eleventh Annual Period                            $4,372,000 (U.S.)
         Twelfth Annual Period                             $4,590,000 (U.S.)

                                (IF THE TERM IS EXTENDED)

         Thirteenth Annual Period                          $4,820,000 (U.S.)
         Fourteenth Annual Period                          $5,061,000 (U.S.)



                             
<PAGE>

                                LICENSE AGREEMENT

                                     between

                              St. John Knits, Inc.

                                       and

                             Swiss Army Brands, Inc.
                                   (Licensee)
                                LICENSE AGREEMENT

                                TABLE OF CONTENTS

Section                                                                Page No

1.       Grant of License..................................................  1

2.       Term and Term Renewal.............................................  2

3.       Guaranteed Minimum Royalty........................................  2

4.       Sales Royalty.....................................................  3

5.       Sales Statement...................................................  5

6.       Books and Records; Audits; Financial Statements...................  5

7.       Design Services...................................................  6

8.       Manufacture of Licensed Products; Quality Control.................  7

9.       Approvals.........................................................  9

10.      Marketing; Promotion; Advertising; Trade shows....................  9

11.      The Licensed Trademark............................................ 11

12.      Copyright......................................................... 13

13.      Indemnity; Insurance.............................................. 13

14.      Default and Termination........................................... 15

15.      Rights on Expiration or Termination............................... 17

16.      Brokerage Indemnity............................................... 18

17.      Representations and Warranties.................................... 19

18.      Assignability; Binding Effect..................................... 19

19.      Jurisdiction; Attorney's Fees..................................... 20

20.      Miscellaneous..................................................... 21