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                                                                   Exhibit 10.15


                                 LOAN AGREEMENT


      This LOAN AGREEMENT (this "AGREEMENT") is entered into as of May 1,
2001 by and among: (i) L.S. Holding (USA), Inc., an Alaska corporation (the
"BORROWER"), Little Switzerland, Inc., a Delaware corporation (the "PARENT"
and a "GUARANTOR") and L.S. Wholesale, Inc., a Massachusetts corporation
(also a "GUARANTOR" and collectively with Parent, the "GUARANTORS"); and
collectively with the Borrower and the Parent, the "BORROWER PARTIES"), on
the one hand, and (ii) Tiffany and Company, a New York corporation (the
"LENDER"), on the other hand.

                                    RECITALS

      A.    The Borrower is an indirect wholly-owned subsidiary of the Parent.

      B.    L.S. Wholesale, Inc. is a direct wholly-owned subsidiary of the
Parent.

      C.    The Lender is willing to make Advances (as hereinafter defined),
and the Borrower wishes to receive and repay Advances, all as more fully set
forth herein.

      D. The Borrower Parties and the Lender will enter into a Security, Pledge
and Guaranty Agreement (the "SECURITY, PLEDGE AND GUARANTY AGREEMENT" and
collectively with this Agreement, the Subordination Agreement and the Note, the
"LOAN DOCUMENTS") with respect to the Advances.

      E. Certain affiliates of the Borrower Parties and the Lender are entering
into a Loan Agreement and a Security, Pledge and Guaranty Agreement of even date
herewith (collectively, the "AFFILIATE LOAN DOCUMENTS").

      NOW, THEREFORE, in consideration of these premises and the mutual
consideration set forth herein, the Lender and the Borrower Parties hereby agree
as follows:


                                   ARTICLE I

                        AMOUNTS AND TERMS OF THE ADVANCES

            SECTION 1.1 DEFINITIONS. The following terms have the following
meanings for purposes of this Agreement:


            "ADVANCES" has the meaning ascribed to that term in Section 1.2.

            "AFFILIATE" means, as to a Person, any other Person that, directly
      or indirectly, through one or more intermediaries controls, is controlled
      by or is under common control with the first-mentioned Person.
<PAGE>

            "AFFILIATE LOAN DOCUMENTS" has the meaning ascribed to that term in
      the Recitals.

            "AGREEMENT" has the meaning ascribed to that term in the Header.

            "APPLICABLE LAW" means with respect to any Person, any
      international, national, regional, federal, state or local treaty,
      statute, law, ordinance, rule, administrative action, regulation, order,
      writ, injunction, judgment, directive, decree or other requirement of any
      Governmental Authority, and any requirements imposed by common law or case
      law, applicable to such Person or any of its Affiliates or any of their
      respective properties, assets, officers, directors, employees, consultants
      or agents (in connection with their activities on behalf of such Person or
      one of its Affiliates).

            "BNS" means The Bank of Nova Scotia.

            "BORROWER" has the meaning ascribed to that term in the Header.

            "BORROWER PARTIES" has the meaning ascribed to that term in the
      Header.

            "BUSINESS DAY" means any day that is not a Saturday, Sunday or other
      day on which banks in New York, New York are authorized or obligated to
      close.

            "CHASE" means The Chase Manhattan Bank, N.A.

            "CHASE LOAN AGREEMENTS" means (i) the Loan Agreement,  dated
      May 1, 2001,  by and among L.S.  Wholesale,  Inc.,  the Parent and
      Chase,  providing for a revolving  credit facility in an aggregate
      principal amount of $700,000,  (ii) the Loan Agreement,  dated May
      1,  2001,  by and among  L.S.  Holding,  Inc.,  the  Parent,  L.S.
      Wholesale,  Inc.  and  Chase,  providing  for a  revolving  credit
      facility  in an  aggregate  principal  amount of  $2,950,000,  and
      (iii) the Loan  Agreement,  dated May 1,  2001,  by and among L.S.
      Holding (USA), Inc., the Parent, L.S.  Wholesale,  Inc. and Chase,
      providing  for  a  revolving   credit  facility  in  an  aggregate
      principal amount of $100,000.

            "COMMITMENT" means Seventy Five Thousand Dollars ($75,000.00).

            "DEBT" has the meaning ascribed to that term in Section 4.2(a).

            "ERISA" means the Employee Retirement Income Security Act of 1974,
      as amended.

            "EVENT OF DEFAULT" has the meaning ascribed to that term in Section
      5.1.

            "EXCHANGE ACT" means the Securities Exchange Act of 1934, as
      amended.

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<PAGE>

            "FINANCIAL STATEMENTS" has the meaning ascribed to that term in
      Section 3.1(d).

            "GAAP" means U.S. generally accepted accounting principles.

            "GOVERNMENTAL AUTHORITY" has the meaning ascribed to that term in
      Section 3.1(h).

            "GOVERNMENTAL CONSENT" has the meaning ascribed to that term in
      Section 3.1(h).

            "GUARANTORS" has the meaning ascribed to that term in the Header.

            "KNOWLEDGE" means actual knowledge after reasonable inquiry.

            "LENDER" has the meaning ascribed to that term in the Header.

            "LOAN DOCUMENTS" have the meaning ascribed to that term in the
      Recitals.

            "MATERIAL ADVERSE EFFECT" means a material adverse effect on the
      business, properties, prospects, financial condition or results of
      operations of the Borrower and the Subsidiaries, taken as a whole.

            "NOTE" has the meaning ascribed to that term in Section 1.4.

            "PARENT" means Little Switzerland, Inc., a Delaware corporation.

            "PARENT SECURITIES FILINGS" has the meaning ascribed to that term in
      Section 3.1(g).

            "PERSON" means an individual, corporation, partnership, limited
      liability company, association, trust, unincorporated organization or
      other legal entity.

            "SEC" means the U.S. Securities and Exchange Commission (or any
      successor thereto).

            "SECURITY, PLEDGE AND GUARANTY AGREEMENT" has the meaning ascribed
      to that term in the Recitals.

            "SUBSIDIARY" means each corporation, partnership, limited liability
      company and other entity with respect to which a Borrower Party (i)
      beneficially owns, directly or indirectly, 10% or more of the outstanding
      stock or other equity interests, (ii) otherwise controls, directly or
      indirectly, because of factors or relationships other than the percentage
      of equity interests owned or (iii) is required to account for its
      ownership under the equity method. For avoidance of doubt, "Subsidiary"
      shall include L.S. Holdings, Inc., a U.S. Virgin Islands corporation, and
      its respective Subsidiaries.

                                       3
<PAGE>

            "SUBORDINATION AGREEMENT" means the Subordination Agreement, dated
      May 1, 2001, by and among the Borrower, certain affiliates of the
      Borrower, the Lender and Chase.

            "TERMINATION DATE" has the meaning ascribed to that term in Section
      1.2.

            "TRANSACTIONS" has the meaning ascribed to that term in Section
      3.1(b).

            SECTION 1.2 THE ADVANCES. The Lender agrees, on the terms and
conditions hereinafter set forth, to make advances (the "ADVANCES") to the
Borrower from time to time on any Business Day during the period from the date
hereof until April 30, 2006 (such date, or the earlier date of termination of
the Commitment pursuant to Section 5.1, being the "TERMINATION DATE") in an
aggregate amount not to exceed at any time outstanding the Commitment. The
Advance shall be in an amount not less than $75,000. Within the limits of the
Commitment, the Borrower may borrow and prepay pursuant to Section 1.6, but may
not reborrow such prepaid amounts.

            SECTION 1.3 MAKING THE ADVANCES. (a) Each Advance shall be made on
notice, given not later than 11:00 A.M. (New York City time) on the third
Business Day prior to the date of the proposed Advance, by the Borrower to the
Lender, specifying the date and amount thereof and wire instructions for
delivery thereof. Not later than 11:00 A.M. (New York City time) on the date of
such Advance and upon fulfillment of the applicable conditions set forth in
Article II, the Lender will make such Advance available to the Borrower in same
day funds pursuant to the wire instructions so provided.

            (b) Each notice from the Borrower to the Lender requesting an
Advance shall be irrevocable and binding on the Borrower. The Borrower shall
indemnify the Lender against any loss, cost or expense incurred by the Lender as
a result of any failure to fulfill on or before the date specified in such
notice for such Advance the applicable conditions set forth in Article II,
including any loss (including loss of anticipated profits), cost or expense
incurred by reason of the liquidation or reemployment of deposits or other funds
by the Lender to fund the Advance when the Advance, as a result of such failure,
is not made on such date.

            SECTION 1.4 REPAYMENT. The Borrower shall repay the aggregate unpaid
principal amount of all Advances in accordance with a promissory note of the
Borrower, in the form of Exhibit A hereto (the "NOTE"), evidencing the
indebtedness resulting from such Advances and delivered to the Lender pursuant
to Article II.

            SECTION 1.5 INTEREST. The Borrower shall pay interest on the unpaid
principal amount of each Advance from the date of such Advance until such
principal amount shall be paid in full as set forth in the Note.

            SECTION 1.6 OPTIONAL PREPAYMENTS. The Borrower may, upon at least
two Business Days' notice to the Lender stating the proposed date and principal
amount of the prepayment, and if such notice is given the Borrower shall, prepay
the outstanding principal amount of the Advances in whole or in part, together
with accrued interest to the date of such prepayment on the principal amount
prepaid, PROVIDED, HOWEVER, that each partial prepayment

                                       4
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shall be in an aggregate principal amount not less than $25,000. There shall be
no prepayment penalty, fee or premium.

            SECTION 1.7 PAYMENTS AND COMPUTATIONS. (a) The Borrower shall make
each payment under any Loan Document not later than 2:00 p.m. (New York City
time) on the day when due in U.S. dollars to the Lender at its address referred
to in Section 7.1 in same day funds pursuant to wire instructions provided by
the Lender upon request.

            (b) All computations of interest shall be made by the Lender on the
basis of a year of 360 days for the actual number of days occurring in the
period for which such interest is payable. Determination by the Lender of an
interest rate hereunder shall be conclusive and binding for all purposes, absent
manifest error.

            (c) Whenever any payment under any Loan Document shall be stated to
be due on a day other than a Business Day, such payment shall be made on the
next succeeding Business Day, and such extension of time shall in such case be
included in the computation of payment of interest; provided, however, if such
extension would cause payment of interest on or principal to be made in the next
following calendar month, such payment shall be made on the Business Day next
preceding the due date.

            (d) All payments under any Loan Document shall be made without
withholding and, to the extent that Applicable Law requires such withholding,
such payment shall be increased in order that the net amount received by Lender
after making such withholding shall be equal to the amount otherwise required to
be paid to Lender under the applicable Loan Document.


                                   ARTICLE II

                              CONDITIONS OF LENDING

            SECTION 2.1 CONDITION PRECEDENT TO INITIAL ADVANCE. The obligation
of the Lender to make its initial Advance is subject to the condition precedent
that the Lender shall have received on or before the day of such Advance the
following, each dated such day, in form and substance satisfactory to the
Lender:

            (a) The Note.

            (b) The Security, Pledge and Guaranty Agreement.

            (c) Certified copies of the resolutions of the Board of Directors of
      each Borrower Party approving each Loan Document to which it is a party,
      and of all documents evidencing other necessary corporate action and
      governmental approvals, if any, with respect to each such Loan Document.

            (d) A certificate of the Secretary or an Assistant Secretary of each
      Borrower Party certifying the names and true signatures of the officers of
      such Borrower Party

                                       5
<PAGE>

      authorized to sign each Loan Document to which it is a party and the other
      documents to be delivered hereunder.

            (e) A favorable opinion of Proskauer Rose LLP, counsel for the
      Borrower Parties, as to such other matters as the Lender may reasonably
      request.

            (f) Evidence satisfactory to the Lender that there are no amounts
      owed by any of the Borrower Parties to BNS, or, if any amount is so owed,
      appropriate documentation (including pay-off letters, lien releases and
      receipts) to demonstrate that a sufficient portion of such initial Advance
      will be, contemporaneous with such Initial Advance, paid directly to BNS
      so that any such balance outstanding prior to the initial Advance is paid
      in full.

            (g) Evidence satisfactory to the Lender that there are no amounts
      owed by the Borrower Parties to Chase, other than a maximum aggregate
      principal amount of $3,750,000 pursuant to the Chase Loan Agreements
      (including pay-off letters, lien releases and receipts).

            (h) The Subordination Agreement.

            (i) Evidence of the completion of all recordings and filings of or
with respect to the Borrower that the Lender may deem necessary or desirable in
order to perfect the security interests created by the Security, Pledge and
Guaranty Agreement.

            (j) The Affiliate Loan Documents.

            (k) Such other approvals, opinions or documents as the Lender may
reasonably request.

            SECTION 2.2 CONDITIONS PRECEDENT TO ALL ADVANCES. The obligation of
the Lender to make each Advance (including the initial Advance) shall be subject
to the following further conditions precedent:

            (a) On the date of such Advance the following statements shall be
true and the Lender shall have received a certificate signed by a duly
authorized officer of each Borrower Party (as to each Loan Document to which it
is a party), dated the date of such Advance, stating that:

                  (i) The representations and warranties contained in Section
      3.1 of this Agreement and in Section 4.01 of the Security, Pledge and
      Guaranty Agreement are correct on and as of the date of such Advance,
      before and after giving effect to such Advance and to the application of
      the proceeds therefrom, as though made on and as of such date, and

                  (ii) No event has occurred and is continuing, or would result
      from such Advance or from the application of the proceeds therefrom, which
      constitutes an Event of Default (as defined in Section 5.1 hereof) or
      would constitute an Event of Default but for the requirement that notice
      be given or time elapse or both.

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<PAGE>

            (b) Receipt by the Lender of such other approvals, opinions or
documents as the Lender may reasonably request.


                                  ARTICLE III

                         REPRESENTATIONS AND WARRANTIES

            SECTION 3.1 REPRESENTATIONS AND WARRANTIES OF THE BORROWER PARTIES.
The Borrower Parties jointly and severally represent and warrant as follows:

            (a) ORGANIZATION AND GOOD STANDING. Each of the Borrower Parties and
its Subsidiaries is duly organized, validly existing and in good standing under
the laws of the jurisdiction of its incorporation. Each Borrower Party and its
Subsidiaries is qualified to do business and is in good standing in each
jurisdiction in which the ownership of property or the conduct of business
requires each to be so qualified, except where the lack of such qualification
would not reasonably be expected to have a Material Adverse Effect.

            (b) CONFLICTS, DEFAULTS. The execution and delivery of this
Agreement and the other agreements and instruments contemplated hereby by the
Borrower Parties do not, and the performance of the Borrower Parties'
obligations hereunder and thereunder and the consummation by the Borrower
Parties of the transactions contemplated hereby (the "TRANSACTIONS") will not:
(i) violate, conflict with or constitute a breach or default under the
certificate of incorporation or bylaws or equivalent organizational document of
any Borrower Party; (ii) require any authorization, approval, consent,
registration, declaration or filing with (other than a report on Form 8-K and a
filing of a Form D), from or to any Governmental Authority; (iii) violate any
Applicable Law; (iv) result in the creation of any lien, security interest,
charge or encumbrance upon any of the properties or assets of any Borrower Party
or their Subsidiaries (other than as contemplated hereby); or (v) after giving
effect to the satisfaction of the condition set forth in Section 2.1(f),
conflict with or result in a breach of, create an event of default (or event
that, with the giving of notice or lapse of time or both, would constitute an
event of default) under, or give any third party the right to terminate, cancel
or accelerate any obligation under, any contract, agreement, note, bond,
guarantee, deed of trust, loan agreement, mortgage, license, lease, indenture,
instrument, order, arbitration award, judgment or decree to which any Borrower
Party is a party or by which any Borrower Party is bound. There is no pending
or, to the Knowledge of the Borrower Parties, threatened action, suit, claim,
proceeding, inquiry or investigation before or by any Governmental Authority
against or affecting any Borrower Party or their Subsidiaries, involving or
seeking to restrain or prevent the consummation of the Transactions.

            (c) CORPORATE POWER AND AUTHORIZATION. The Borrower Parties have all
requisite and legal corporate power to execute and deliver this Agreement and to
carry out and perform their other obligations under this Agreement and the
Transactions. All corporate action on the part of the Borrower Parties and their
directors necessary for the performance of their obligations under this
Agreement have been taken. This Agreement is a legal, valid and binding
obligation of the Borrower Parties, enforceable in accordance with its terms.
The Transactions do not require the consent of the stockholders of the Borrower
Parties. The Borrower Parties

                                       7
<PAGE>

have provided their stockholders with any notice of the Transactions required by
Applicable Law. Each of the Borrower Parties has, independently and without
reliance upon the Lender and based on documents and information as it has deemed
appropriate, made its own credit analysis and decision to enter into this
Agreement.

            (d)   FINANCIAL STATEMENTS.

                  (i) The Borrower has provided the Lender with the following
      financial statements of the Parent and its Subsidiaries (collectively, the
      "FINANCIAL STATEMENTS"):

                  (A) the audited consolidated balance sheet of the Parent and
            its Subsidiaries as of May 27, 2000, and the related audited
            consolidated statements of income and cash flows of the Parent and
            its Subsidiaries for the fiscal year then ended, and

                  (B) the unaudited consolidated balance sheet of the Parent and
            its Subsidiaries as of February 27, 2001, and the related unaudited
            consolidated statements of income and cash flows of the Parent and
            its Subsidiaries for the 9-month period then ended.

                  (ii) The Financial Statements: (A) have been prepared in all
      material respects in accordance with the books and records of the Parent
      and its Subsidiaries; (B) have been prepared in accordance with GAAP; (C)
      reflect and provide adequate reserves and disclosures in respect of all
      liabilities of the Parent and its Subsidiaries, including all contingent
      liabilities; and (D) present fairly the consolidated financial position of
      the Parent and its Subsidiaries at such dates and the results of
      operations and cash flows of the Parent and its Subsidiaries for the
      periods then ended.

                  (iii) Each of the Parent and its Subsidiaries: (A) keeps
      books, records and accounts that, in reasonable detail, accurately and
      fairly reflect the transactions and dispositions of assets; and (B)
      maintains a system of internal accounting controls sufficient to provide
      reasonable assurance that (1) transactions are executed in accordance with
      management's general or specific authorization, (2) transactions are
      recorded as necessary to permit preparation of financial statements in
      accordance with GAAP to maintain accountability for assets, (3) access to
      assets is permitted only in accordance with management's general or
      specific authorizations and (4) the recorded accountability for assets and
      inventory is compared with existing assets and inventory at reasonable
      intervals and appropriate action is taken with respect to any differences.

            (e) COMPLIANCE WITH LAW. The Borrower Parties and their Subsidiaries
are in compliance in all material respects with all Applicable Law; PROVIDED,
HOWEVER, that this Section 3.1(e) does not apply to the requirements of the
Exchange Act to the extent that compliance with the Exchange Act is covered by
Section 3.1(g) hereof.

            (f) ABSENCE OF UNDISCLOSED LIABILITIES. None of the Borrower Parties
or their Subsidiaries has any indebtedness or liability, whether accrued, fixed
or contingent, whether or not required by GAAP to be disclosed on the Financial
Statements, other than (a) liabilities reflected in the Financial Statements,
(b) liabilities, none of which individually or in the

                                       8
<PAGE>

aggregate is material to the assets, properties, business or business prospects
any of the Borrower Parties or their Subsidiaries, and (c) liabilities incurred
in the ordinary course of business of each of the Borrower Parties or their
Subsidiaries (consistent with past practice in terms of both frequency and
amount) subsequent to February 24, 2001.

            (g) SECURITIES FILINGS. The Parent has made available to the Lender
true and complete copies of (a) its Annual Reports on Form 10-K, as amended for
each of the last three fiscal years as filed with the SEC, (b) its proxy
statements relating to all of the meetings of stockholders (whether annual or
special) of the Parent since January 1, 1998 as filed with the SEC, (c) its
Quarterly Report on Form 10-Q for the quarterly periods ended August 27, 2000,
November 29, 2000 and February 24, 2001 as filed with the SEC, and (d) all other
reports, statements and registration statements and amendments thereto filed by
the Parent with the SEC since May 27, 2000. The reports and statements set forth
in clauses (a) through (d) are collectively referred to herein as the "PARENT
SECURITIES FILINGS"). As of their respective dates, or as of the date of the
last amendment thereof, if amended after filing, each of the Parent Securities
Filings was prepared in all respects in accordance with the requirements of the
Exchange Act, as the case may be, and none of the Parent Securities Filings
contained any untrue statement of a material fact or omitted to state a material
fact required to be stated therein or necessary to make the statements contained
therein, in light of the circumstances under which they were made, not
misleading.

            (h) GOVERNMENTAL APPROVALS. No material consent, approval, waiver or
authorization of, notice to or declaration of filing with (each, a "GOVERNMENTAL
CONSENT") any nation or government, any state or other political subdivision
thereof or any entity, authority or body exercising executive, legislative,
judicial or regulatory functions of or pertaining to government, including any
governmental or regulatory authority, agency, department, board, commission or
instrumentality, any court or tribunal (each, a "GOVERNMENTAL AUTHORITY"), on
the part of the Borrower or any subsidiary is required in connection with the
execution of this Agreement and the consummation of the Transactions.

            (i) LITIGATION. Except as set forth on Schedule 3.1(i), there is no
pending or, to the Knowledge of the Borrower Parties, threatened litigation,
action, suit, proceeding, arbitration, claim, investigation or administrative
proceeding, by or before any Governmental Authority or dispute resolution panel,
involving or affecting any of the Borrower Parties or their Subsidiaries, or the
assets, properties or business of any of the Borrower Parties or their
Subsidiaries, or relating to or involving the transactions contemplated by the
Loan Documents. No litigation, action, suit, proceeding, arbitration, claim,
investigation or administrative proceeding, whether or not set forth on Schedule
3.1(i), reasonably could be expected to have a Material Adverse Effect or to
result in the imposition of a lien, security interest or other encumbrance on
any of the assets of any of the Borrower Parties or their Subsidiaries. None of
the Borrower Parties or their Subsidiaries has received any opinion or
memorandum or legal advice or notice from legal counsel to the effect that it is
exposed, from a legal standpoint, to any liability or disadvantage that may be
material to its assets, properties, business or business prospects. None of the
Borrower Parties or their Subsidiaries is in default with respect to any
material order, writ, injunction or decree known to or served upon any of the
Borrower Parties or their Subsidiaries. Except as set forth on Schedule 3.1(i),
there is no pending action or suit brought by any of the Borrower Parties or
their Subsidiaries against others.

                                       9
<PAGE>

            (j) USE OF PROCEEDS. No proceeds of any Advance will be used to
acquire any equity security of a class which is registered pursuant to Section
12 of the Exchange Act. The Borrower Parties and their Subsidiaries are not
engaged in the business of extending credit for the purpose of purchasing or
carrying margin stock (within the meaning of Regulations T, U and X of the
Federal Reserve Board, as amended from time to time), and no proceeds of any
Advance will be used to purchase or carry any margin stock or to extend credit
to others for the purpose of purchasing or carrying any margin stock.


                                   ARTICLE IV

                            COVENANTS OF THE BORROWER

SECTION 4.1 AFFIRMATIVE COVENANTS. So long as the Note shall remain unpaid or
the Lender shall have any Commitment hereunder, each of the Borrower Parties
will, unless the Lender shall otherwise consent in writing:

            (a) COMPLIANCE WITH LAWS, ETC. Comply, and cause each of its
Subsidiaries to comply, in all material respects with all Applicable Law, such
compliance to include, without limitation, paying before the same become
delinquent all taxes, assessments and governmental charges imposed upon it or
upon its property except to the extent contested in good faith.

            (b)   REPORTING REQUIREMENTS.  Furnish to the Lender:

                  (i) as soon as available and in any event within 45 days after
            the end of each of the first three quarters of each fiscal year of
            the Parent, the unaudited consolidated balance sheet of the Parent
            and its Subsidiaries and the related unaudited consolidated
            statements of income and cash flows of the Parent and its
            Subsidiaries for the 3-month period then ended for the period
            commencing at the end of the previous fiscal year and ending with
            the end of such quarter, certified by the chief financial officer of
            the Parent;

                  (ii) as soon as available and in any event within 90 days
            after the end of each fiscal year of the Parent, a copy of the
            annual report for such year for the Parent and its Subsidiaries,
            containing the audited consolidated balance sheet of the Parent and
            its Subsidiaries as of each fiscal year end, and the related audited
            consolidated statements of income and cash flows of the Parent and
            its Subsidiaries for the fiscal year then ended, certified by
            PricewaterhouseCoopers LLP or other independent public accountants
            reasonably acceptable to the Lender with no qualifications as to the
            scope of the audit;

                  (iii) as soon as possible and in any event within five days
            after the occurrence of each Event of Default known to a Borrower
            Party and each event which, with the giving of notice or lapse of
            time, or both, would constitute an Event of Default, continuing on
            the date of such statement, a statement of the chief financial
            officer or chief executive officer of such Borrower Party setting
            forth details of such Event of Default or event and the action which
            such Borrower Party has taken and proposes to take with respect
            thereto;

                                       10
<PAGE>

                  (iv) promptly after the sending or filing thereof, copies of
            all reports which any of the Borrower Parties sends to any of its
            security holders, and copies of all reports and registration
            statements which the Parent files with the SEC or any national
            securities exchange;

                  (v) promptly after the filing or receiving thereof, copies of
            all reports and notices which any of the Borrower Parties files
            under ERISA with the Internal Revenue Service or the Pension Benefit
            Guaranty Corporation or the U.S. Department of Labor or which any of
            the Borrower Parties receives from such entity;

                  (vi) promptly after the commencement thereof, notice of all
            actions, suits and proceedings before any Government Authority, or
            arbitrations affecting the Borrower Parties which, if determined
            adversely to the Borrower Parties and their Subsidiaries could
            reasonably be expected to have a Material Adverse Effect on the
            Borrower Parties or their Subsidiaries; and

                  (vii) such other information respecting the condition or
            operations, financial or otherwise, of any of the Borrower Parties
            as the Lender may from time to time reasonably request.

            (c) USE OF PROCEEDS. The proceeds of the Advances shall be used by
the Borrower Parties only for repayment of indebtedness for borrowed money and
for working capital purposes. No part of the proceeds of the Advances shall be
used directly or indirectly for the purpose, whether immediate, incidental or
ultimate, of purchasing or carrying any margin stock or maintaining or extending
credit to others for such purpose or for any other purpose that otherwise
violates Regulations T, U and X of the Federal Reserve Board, as amended from
time to time.

            (d) MAINTENANCE OF CORPORATION AND PROPERTIES. The Borrower Parties
shall, and shall cause their Subsidiaries, to preserve and maintain their
respective corporate existence and good standing in their respective
jurisdiction of incorporation and in every other jurisdiction in which such
qualification is required, unless the failure to qualify would not have a
Material Adverse Effect on such respective corporation, and maintain all of
their respective properties and assets in good working order and condition,
ordinary wear excepted.
SECTION 4.2 NEGATIVE COVENANTS. So long as the Note shall remain unpaid or the
Lender shall have any Commitment hereunder, each of the Borrower Parties will
not, and shall cause their Subsidiaries to not, without the written consent of
the Lender:

            (a) LIENS. Create or suffer to exist, or permit any of its
Subsidiaries to create or suffer to exist, any lien, security interest or other
charge or encumbrance, or any other type of preferential arrangement, upon or
with respect to any of its properties, whether now owned or hereafter acquired,
or assign, or permit any of its Subsidiaries to assign, any right to receive
income, in each case to secure or provide for the payment of any Debt of any
Person or entity, other than (i) liens securing the Advances; (ii) liens
securing the credit facilities provided by Chase pursuant to the Chase Loan
Agreements; (iii) liens existing on the date hereof as described

                                       11
<PAGE>

on Schedule 4.2(a) hereto; (iv) purchase money liens or purchase money security
interests upon or in any property acquired or held by any of the Borrower
Parties and their Subsidiaries in the ordinary course of business to secure the
purchase price of such property or to secure indebtedness incurred solely for
the purpose of financing the acquisition of such property, (v) liens or security
interests existing on such property at the time of its acquisition (other than
any such lien or security interest created in contemplation of such
acquisition), PROVIDED that the aggregate principal amount of the indebtedness
secured by the liens or security interests referred to in clauses (iii), (iv)
and (v) above shall not exceed an amount not inconsistent with the Company's
business plan as approved by its Board of Directors from time to time. "DEBT"
means (i) indebtedness for borrowed money, (ii) obligations evidenced by bonds,
debentures, notes or other similar instruments, (iii) obligations to pay the
deferred purchase price of property or services, (iv) obligations as lessee
under leases which shall have been or should be, in accordance with generally
accepted accounting principles, recorded as capital leases, (v) obligations
under direct or indirect guaranties in respect of, and obligations (contingent
or otherwise) to purchase or otherwise acquire, or otherwise to assure a
creditor against loss in respect of, indebtedness or obligations of others of
the kinds referred to in clause (i) through (iv) above, and (vi) liabilities in
respect of unfunded vested benefits under plans covered by Title IV of ERISA.

            (b) INDEBTEDNESS. (i) Directly or indirectly create, incur, assume,
guarantee, or otherwise become or remain liable with respect to any Debt except:

                  (A) the Advances, indebtedness existing as of the date hereof
      as described on Schedule 4.2(b) hereto and capitalized leases obligations
      in an amount not to exceed $250,000 per annum at any time outstanding; and

                   (B) indebtedness in an aggregate principal amount not to
      exceed $3,750,000 pursuant to the Chase Loan Agreements.

            (c) GUARANTY. Assume, guaranty, endorse or otherwise be or become
directly or contingently responsible or liable to assure the creditors of any
third party against loss, for the obligations of any Person (other than (i) one
or more of the Borrower's Subsidiaries or (ii) endorsements of instruments for
collection in the ordinary course of business), including an agreement to
purchase any obligation, stock, assets, goods or services or to supply or
advance any funds, assets, goods or services or an agreement to maintain or
cause any such person to maintain a minimum working capital or net worth.

            (d) SALES OF ASSETS. Sell, lease, assign, transfer, abandon, or
otherwise dispose of, directly or indirectly, whether voluntary or involuntary,
any of its now owned or hereafter acquired assets, including without limitation
inventory, capital stock and receivables, except (i) inventory disposed of in
the ordinary course of business consistent with past practice, (ii) obsolete,
outmoded or worn-out machinery, equipment, furniture or fixtures or (iii) leases
or subleases granted by the Borrower Parties to third persons which such leases
or subleases do not interfere in any material respect with the business of the
Borrower Parties and their Subsidiaries.

            (e) MERGERS. Merge or consolidate with, or sell, assign, lease or
otherwise dispose of (in one transaction or in a series of related transactions)
all or substantially all of its

                                       12
<PAGE>

assets (whether now owned or hereafter acquired) to any Person (other than
another Borrower Party), or acquire all or substantially all of the assets of
the business of any Person (other than another Borrower Party), or enter into
any agreement to do any of the foregoing.

            (f) OFFICER/EMPLOYEE DISTRIBUTIONS. Except as occurs in the ordinary
course of business consistent with past practice, grant or pay any extraordinary
distributions, including bonuses or extraordinary salary increases; or make
loans or other forms of cash payments to employees or officers or directors; or,
make any payments of principal or interest on any shareholder loans existing on
its books (except as set forth on Schedule 4.2(f)); or give any preferential
treatment, directly or indirectly, to any officer, director or employee.

            (g) DIVIDENDS. Declare or pay any dividend or make any distribution
upon its capital stock (preferred or common), or purchase or retire, or
otherwise acquire for value any of its capital stock now or hereafter
outstanding, or make any distribution of assets or loans to its stockholders,
whether in cash, assets or obligations, or allocate or otherwise set aside any
sum for the payment of any dividend or distribution by reduction of capital or
otherwise in respect of any shares of its capital stock.

            (h) CAPITAL EXPENDITURES. Purchase any assets, vehicles or equipment
or make any other capital expenditures in excess of $75,000 per annum, except in
the ordinary course of business consistent with past practice.

            (i) TRANSACTIONS WITH AFFILIATES. Enter into any transaction,
including, without limitation, the purchase, sale or exchange of property or the
rendering of any service, with any Affiliate (other than another Borrower
Party), except in the ordinary course of and pursuant to the reasonable
requirements of its business and upon fair and reasonable terms.

            (j) STOCK. Change the number of authorized shares, voting rights of
shares, class of shares, engage in any "split-ups", revisions, reclassifications
or other like change of its stock.

            (k) CHANGE IN OWNERSHIP. Cause, permit or suffer the transfer of its
shares to an entity which, following such transfer, then holds a majority of its
shares or cause, permit or suffer any change of control whatsoever, without the
prior written consent of the Lender. The term "control" means the possession,
directly or indirectly, of the power to direct or cause the direction of the
management policies of a Person, whether through the ownership of voting
securities, by contract, or otherwise.

            (l) BUSINESS. Change the general character of its business as
conducted as of the date hereof or engage in any type of business not reasonably
related to its business as normally conducted, or change its corporate name.


                                       13
<PAGE>

                                   ARTICLE V

                                EVENTS OF DEFAULT

            SECTION 5.1 EVENTS OF DEFAULT. If any of the following events
("EVENTS OF DEFAULT") shall occur and be continuing:

            (a) The Borrower shall fail to pay any principal of, or interest on,
      the Note when the same becomes due and payable (after giving effect to
      applicable grace periods, if any); or

            (b) Any representation or warranty made by any Borrower Party (or
      any of its officers) under or in connection with any Loan Document shall
      prove to have been incorrect in any material respect when made; or

            (c) Any Borrower Party shall fail to perform or observe any term,
      covenant or agreement contained in any Loan Document on its part to be
      performed or observed if such failure shall remain unremedied for 10 days
      after written notice thereof shall have been given to such Borrower Party
      by the Lender; or

            (d) Any Borrower Party or any of its Affiliates shall fail to pay
      any principal of or premium or interest on any Debt (including the
      indebtedness to Chase pursuant to the Chase Loan Agreements and
      indebtedness to the Lender pursuant to the Affiliate Loan Documents, but
      excluding Debt hereunder as evidenced by the Note) of such Borrower Party
      or such subsidiary (as the case may be), when the same becomes due and
      payable (whether by scheduled maturity, required prepayment, acceleration,
      demand or otherwise), and such failure shall continue after the applicable
      grace period, if any, specified in the agreement or instrument relating to
      such Debt; or any other event shall occur or condition shall exist under
      any agreement or instrument relating to any such Debt and shall continue
      after the applicable grace period, if any, specified in such agreement or
      instrument, if the effect of such event or condition is to accelerate, or
      to permit the acceleration of, the maturity of such Debt; or any such Debt
      shall be declared to be due and payable, or required to be prepaid (other
      than by a regularly scheduled required prepayment), prior to the stated
      maturity thereof; or

            (e) Any Borrower Party or any of its Subsidiaries shall generally
      not pay its debts as such debts become due, or shall admit in writing its
      inability to pay its debts generally, or shall make a general assignment
      for the benefit of creditors; or any proceeding shall be instituted by or
      against any Borrower Party or any of its Subsidiaries seeking to
      adjudicate it a bankrupt or insolvent, or seeking liquidation, winding up,
      reorganization, arrangement, adjustment, protection, relief, or
      composition of it or its debts under any law relating to bankruptcy,
      insolvency or reorganization or relief of debtors, or seeking the entry of
      an order for relief or the appointment of a receiver, trustee, custodian
      or other similar official for it or for any substantial part of its
      property and, in the case of any such proceeding instituted against it
      (but not instituted by it), either such proceeding shall remain
      undismissed or unstayed for a period of 30 days, or any of the actions
      sought in such proceeding (including, without limitation, the entry of

                                       14
<PAGE>

      an order for relief against, or the appointment of a receiver, trustee,
      custodian or other similar official for, it or for any substantial part of
      its property) shall occur; or any Borrower Party or any of its
      Subsidiaries shall take any corporate action to authorize any of the
      actions set forth above in this subsection (e); or

            (f) Any judgment or order for the payment of money in excess of
      $75,000 shall be rendered against any Borrower Party or any of its
      Subsidiaries and either (i) enforcement proceedings shall have been
      commenced by any creditor upon such judgment or order or (ii) there shall
      be any period of 10 consecutive days during which a stay of enforcement of
      such judgment or order, by reason of a pending appeal or otherwise, shall
      not be in effect; or

            (g) Any provision of the Security, Pledge and Guaranty Agreement
      after delivery thereof pursuant to Section 2.01 shall for any reason cease
      to be valid and binding on any Borrower Party, or a Borrower Party shall
      so state in writing; or

            (h) The Security, Pledge and Guaranty Agreement after delivery
      thereof pursuant to Section 2.01 shall for any reason (other than pursuant
      to the terms thereof) cease to create a valid and perfected security
      interest in any of the collateral purported to be covered thereby;

then, and in any such event, the Lender (1) may, by notice to the Borrower,
declare its obligation to make Advances to be terminated, whereupon the same
shall forthwith terminate, and (2) may, by notice to the Borrower, declare the
Note, all interest thereon and all other amounts payable under this Agreement to
be forthwith due and payable, whereupon the Note, all such interest and all such
amounts shall become and be forthwith due and payable, without presentment,
demand, protest, or further notice of any kind, all of which are hereby
expressly waived by the Borrower Parties; provided, however, that in the event
of an actual or deemed entry of an order for relief with respect to any of the
Borrower Parties under the Federal Bankruptcy Code, (A) the obligation of the
Lender to make Advances shall automatically be terminated and (B) the Advances,
the Note, all such interest and all such amounts shall automatically become and
be due and payable, without presentment, demand, protest or any notice of any
kind, all of which are hereby expressly waived by the Borrower.


                                   ARTICLE VI

                                  SUBORDINATION

            SECTION 6.1 SUBORDINATION OF ADVANCES. The Advances are subordinated
to the credit facilities provided by Chase pursuant to the Chase Loan Agreements
as set forth herein, in the Security, Pledge and Guarantee Agreement and in the
Subordination Agreement. Except as set forth in the Subordination Agreement, no
payment of principal or interest will be made with respect to the Advances.

            SECTION 6.2 SECURITY FOR THE ADVANCES. As set forth in the Security,
Pledge and Guaranty Agreement, the Advances are secured, subject to the rights
of Chase pursuant to the Subordination Agreement, by a security interest in the
Collateral (as defined in the Security, Pledge and Guaranty Agreement) in favor
of the Lender.

                                       15
<PAGE>

            SECTION 6.3 APPLICATION OF COLLATERAL PROCEEDS. All proceeds from
the sale of other disposition of Collateral shall be applied as provided by the
terms of the Security, Pledge and Guaranty Agreement, the Subordination
Agreement and Section 4.1(c) above.


                                  ARTICLE VII

                                  MISCELLANEOUS

SECTION 7.1 NOTICES. All notices, requests and other communications under this
Agreement will be in writing and will be deemed to have been duly given if
delivered personally, or sent by either certified or registered mail, return
receipt requested, postage prepaid, by overnight courier guaranteeing next day
delivery or by telecopier (with telephonic or machine confirmation by the
sender), addressed as follows:

            (a)   If to the Borrower Parties:

                  Little Switzerland, Inc.
                  161-B Crown Bay
                  P.O. Box 930
                  St. Thomas, U.S. Virgin Islands 00804
                  Attention:  Robert L. Baumgardner
                  Tel: (340) 776-2010
                  Fax: (340) 779-9900
                  email: rbaumgardner@littleswitzerland.com

                  With a copy to:

                  Jack P. Jackson, Esq.
                  Proskauer Rose LLP
                  1585 Broadway
                  New York, NY  10036-8299
                  Tel:  (212) 969-3140
                  Fax:  (212) 969-2900
                  email: jjackson@proskauer.com

or at such other  address or telecopy  number as the Borrower may have advised
the Lender in writing; and

                                       16
<PAGE>

            (b)   If to the Lender:

                  Tiffany & Co.
                  600 Madison Avenue, Eighth Floor
                  New York, NY  10022
                  Attention:  Patrick B. Dorsey, Esq.
                  Tel:  (212) 230-5320
                  Fax:  (212) 230-5324
                  email:      pdorsey@tiffany.com

                  With a copy to:

                  Steven R. Finley, Esq.
                  Gibson, Dunn & Crutcher LLP
                  200 Park Avenue
                  New York, NY  10166-0193
                  Tel:  (212) 351-4000
                  Fax:  (212) 351-4035
                  email:      sfinley@gibsondunn.com

or at such other address or telecopy number as the Lender may have advised the
Borrower in writing. All such notices, requests and other communications shall
be deemed to have been received on the date of delivery thereof (if delivered by
hand), on the third day after the mailing thereof (if mailed), on the next day
after the sending thereof (if by overnight courier) and when receipt is
confirmed as provided above (if telecopied).

            SECTION 7.2 WAIVERS AND AMENDMENTS. No amendment or waiver of any
provision of this Agreement, nor consent to any departure therefrom, will be
effective unless the same shall be in writing and signed by an officer of each
party hereto, and then such waiver or consent will be effective only in the
specific instance and for the specific purpose for which given. No failure on
the part of a party hereto to exercise, and no delay in exercising, any right
hereunder will operate as a waiver thereof; nor will any single or partial
exercise of any right hereunder preclude any other or further exercise thereof
or the exercise of any other right. The remedies provided in this Agreement are
cumulative and, unless otherwise expressly provided herein, not exclusive of any
remedies provided by law.

            SECTION 7.3 BINDING EFFECT. This Agreement will be binding upon and
inure to the benefit of the parties and their respective heirs, executors,
administrators, personal representatives, successors and permitted assigns. No
party may assign his or its rights hereunder or any interest herein without the
prior written consent of the other parties and such attempted assignment shall
be void and without effect, provided however, that the Lender may assign, to one
or more of its Affiliates, all or any part of, or any interest in, the Lender's
rights and benefits hereunder. To the extent of such assignment, such assignee
will have the same rights and benefits against the other parties as it would
have had if it were a named party hereunder. No party will be released of any of
its obligations under this Agreement by virtue of such assignment.

                                       17
<PAGE>

            SECTION 7.4 EXHIBITS AND SCHEDULES. The Exhibits and Schedules
attached hereto or referred to herein are incorporated herein and made a part
hereof for all purposes. As used herein, the expression "this Agreement"
includes such Exhibits and Schedules.

            SECTION 7.5 GOVERNING LAW. THIS AGREEMENT, THE TRANSACTIONS
CONTEMPLATED HEREBY THE RIGHTS AND OBLIGATIONS OF THE PARTIES HERETO, AND ANY
DISPUTES OR CONTROVERSIES ARISING THEREFROM SHALL BE GOVERNED BY AND CONSTRUED
AND ENFORCED IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK, WITHOUT
REGARD TO ITS PRINCIPLES OF CONFLICT OF LAWS THAT WOULD PROVIDE FOR THE
APPLICATION OF ANY OTHER LAW.

            SECTION 7.6 CAPTIONS. The captions, headings and arrangements used
in this Agreement are for convenience only and do not in any way affect, limit
or amplify the provisions hereof.

            SECTION 7.7 ENTIRETY. This Agreement contains the entire agreement
and understanding between the parties with respect to the matters addressed
herein and supersedes all prior representations, inducements, promises or
agreements, oral or otherwise, which are not embodied herein.

            SECTION 7.8 COUNTERPARTS. This Agreement may be executed in multiple
counterparts, each of which will be deemed an original for all purposes and all
of which will be deemed collectively to be one agreement. Execution may be
effected by delivery of facsimiles of signature pages, followed by delivery of
originals of such pages.

            SECTION 7.9 THIRD PARTY BENEFICIARIES. Nothing contained herein,
express or implied, is intended to confer upon any Person or entity other than
the parties and their heirs, executors, administrators, personal
representatives, successors and permitted assigns any rights or remedies under
or by reason of this Agreement, except as otherwise expressly provided in this
Agreement.

            SECTION 7.10 ACCOUNTING TERMS. All accounting terms not specifically
defined herein shall be construed in accordance with generally accepted
accounting principles consistent with those applied in the preparation of the
financial statements referred to in Section 3.1(d).

            SECTION 7.11 COSTS, EXPENSES AND TAXES. The Borrower agrees to pay
on demand all costs and expenses, if any (including reasonable counsel fees and
expenses), in connection with the enforcement (whether through negotiations,
legal proceedings or otherwise) of the Loan Documents and the other documents to
be delivered under the Loan Documents, including, without limitation, reasonable
counsel fees and expenses in connection with the enforcement of rights under
this Section 7.11.


                                       18
<PAGE>


            IN WITNESS WHEREOF, the parties hereto have caused this Agreement to
be executed by their respective officers thereunto duly authorized, as of the
date first above written.

------------------------------------------
LENDER:

Tiffany and Company, a New York
corporation


By: /s/ Patrick B. Dorsey
   ----------------------------------------
Name: Patrick B. Dorsey
Title: Senior Vice President General Counsel and Secretary
------------------------------------------
BORROWER:

L.S. Holding (USA), Inc., an Alaska
corporation


By: /s/ Robert L. Baungardner
   -----------------------------------------
Name: Robert L. Baungardner
Title: President
------------------------------------------
GUARANTORS:

Little Switzerland, Inc., a Delaware
corporation


By: /s/ Robert L. Baungardner
   -----------------------------------------
Name: Robert L. Baungardner
Title: President
--------------------------------------------

L.S. Wholesale, Inc., a Massachusetts
corporation


By: /s/ Robert L. Baungardner
   -----------------------------------------
Name: Robert L. Baungardner
Title: President
------------------------------------------



                                       19
<PAGE>

                                                                       EXHIBIT A


                                 PROMISSORY NOTE

$------------                                               Dated: May 1, 2001
                                                              New York, New York


            FOR VALUE RECEIVED, the undersigned, ----------------- (the
"BORROWER"), hereby unconditionally promises to pay to the order of Tiffany and
Company, a New York corporation (the "LENDER"), the principal amount of
----------------- Dollars ($----------) (or, if less, the aggregate principal
amount of all Advances made by the Lender to the Borrower pursuant to the Loan
Agreement (the "LOAN AGREEMENT") among the Borrower, certain of its affiliates
and the Lender), in lawful money of the United States of America in immediately
available funds on April 30, 2006 (or, if earlier, the Termination Date as
defined in the Loan Agreement).

            The Borrower promises to pay interest on the principal amount hereof
from time to time outstanding, in like funds, at a rate per annum compounded
annually during the time that this Promissory Note is outstanding until such
principal is paid in full equal to a fluctuating interest rate determined in
advance of each interest payment period as hereinafter provided and equal at all
times to three percent (3%) per annum above LIBOR (the "INTEREST RATE"). "LIBOR"
means the rate per annum (rounded upwards if necessary to the nearest 1/16 of
1%) quoted by the British Bankers' Association for the offering to leading banks
in the London Interbank market of Dollar deposits in immediately available funds
and in an amount comparable to the principal amount outstanding hereunder. LIBOR
shall be determined in advance of each interest payment period as of
approximately 11:00 A.M. London time on each date which is two Business Days
prior to the start of such interest payment period and such determination shall
govern throughout such interest payment period. LIBOR shall be determined by
reference to Bloomberg LP on page BBAM. Interest payment periods shall commence
on February 1 and August 1 of each calendar year. All accrued and unpaid
interest hereunder shall be due and payable as of January 31st and July 31st of
each calendar year until the principal and all accrued interest are paid in
full. All computations of interest based on the Interest Rate shall be made by
the Lender on the basis of a year of 360 days for the actual number of days
occurring in the period for which such interest is payable. Determination by the
Lender of an interest rate hereunder shall be conclusive and binding for all
purposes, absent manifest error.

            Both principal and interest are payable in lawful money of the
United States of America to the Lender at 600 Madison Avenue, Eighth Floor, New
York, New York 10022 in same day funds on the Termination Date. Each Advance
made by the Lender to the Borrower and the maturity thereof, and all payments
made on account of the principal amount thereof, shall be recorded by the Lender
and, prior to any transfer hereof, endorsed on the grid attached hereto which is
a part of this Promissory Note.

            The Borrower promises to pay interest, on demand, on any overdue
principal and, to the fullest extent permitted by law, on any overdue interest
and on any overdue amount under
<PAGE>

any instrument now or hereinafter evidencing or securing the indebtedness
evidenced hereby, at a rate equal to the Interest Rate plus 3% per annum, from
the date such principal or interest was due to the date or payment in full.

            If any payment under this Promissory Note is not made when due,
whether at maturity or by acceleration, the Borrower shall pay all costs of
collection (including reasonable attorneys' fees) whether or not suit is filed
hereon, on the Loan Documents (as defined in the Loan Agreement) or otherwise,
and all expenses incurred in connection with the protection or realization of
any collateral.

            This Promissory Note is the Note referred to in, and is entitled to
the benefits of, the Loan Agreement and Security, Pledge and Guaranty Agreement
referred to therein and entered into pursuant thereto. The Loan Agreement, among
other things, (i) provides for the making of Advances by the Lender to the
Borrower from time to time in an aggregate amount not to exceed at any time
outstanding the U.S. dollar amount first above mentioned, the indebtedness of
the Borrower resulting from each such Advance being evidenced by this Promissory
Note, and (ii) contains provisions for acceleration of the maturity hereof upon
the happening of certain stated events and also for prepayments on account of
principal hereof prior to the maturity hereof upon the terms and conditions
therein specified.

            The Borrower hereby waives (to the extent permitted by law)
diligence, presentment, demand, protest and notice of any kind whatsoever except
as expressly required herein. The non-exercise by the Lender of any of its
rights hereunder or under the Security, Pledge and Guaranty Agreement in any
particular instance shall not constitute a waiver thereof in that or any
subsequent instance. The Borrower shall at all times have the right to proceed
against any portion of the security held therefor in such order and in such
manner as the Borrower may select, without waiving any rights with respect to
any other security. No delay or omission on the part of the Borrower in
exercising any right hereunder or under the Security, Pledge and Guaranty
Agreement or other agreement shall operate as a waiver of such right or of any
other right under this Promissory Note.

            This Promissory Note, the transactions contemplated hereby the
rights and obligations of the parties hereto, and any disputes or controversies
arising therefrom shall be governed by and construed and enforced in accordance
with the laws of the State of New York, without regard to its principles of
conflict of laws that would provide for the application of any other law.


                                       BORROWER:

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


                                       By:
                                          -----------------------------------
                                          Name:
                                          Title:


                                       2
<PAGE>

                       ADVANCES AND PAYMENTS OF PRINCIPAL


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                                   Amount of        Unpaid
                    Amount         Principal       Principal       Notation
     Date         of Advance    Paid or Prepaid     Balance         Made By

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<PAGE>

Reference is made to that certain Loan Agreement dated as of May 1, 2001 by
and among (i) L.S. Holding (USA), Inc., Little Switzerland, Inc. and L.S.
Wholesale, Inc.,  on the one hand and (ii) Tiffany and Company, on the other
hand (the "Agreement").  Capitalized terms used herein shall have the meaning
ascribed thereto in the Agreement.





<PAGE>



                                 SCHEDULE 3.1(i)

                                   LITIGATION



1.    CLASS ACTION LAWSUIT

      On March 22, 1999, a class action complaint was filed in the United States
      District Court for the District of Delaware (Civil Action No. 99-176)
      against Little Switzerland, Inc. ("Little Switzerland") certain of its
      former officers and directors, DRHC and Stephen G.E. Crane. The complaint
      alleges that such defendants violated federal securities laws by failing
      to disclose that DRHC's financing commitment to purchase Little
      Switzerland's shares expired on April 30, 1998 before Little Switzerland's
      stockholders were scheduled to vote to approve the proposed merger between
      Little Switzerland and DRHC at the May 8, 1998 special meeting of
      stockholders (the "Financing Disclosure Allegations"). The plaintiffs are
      seeking monetary damages, including, without limitation, reasonable
      expenses in connection with this action. The plaintiffs amended their
      complaint on November 10, 1999 and Little Switzerland filed a motion to
      dismiss the plaintiff's amended complaint on December 7, 1999. On January
      28, 2000, the plaintiffs filed their opposition to the motion to dismiss.
      In March 2001, the District Court, among other things, granted Little
      Switzerland's motion to dismiss with respect to certain allegations in the
      amended complaint that the defendants violated federal securities laws by
      failing to disclose the status of Little Switzerland's relationship with a
      particular watch vendor; however, the District Court denied the motion to
      dismiss with respect to the Financing Disclosure Allegations. In addition,
      the District Court dismissed the claims against defendants DRHC and
      Stephen G.E. Crane. Little Switzerland has entered into discussions to
      settle this action. However, there can be no assurance that these
      discussions will result in a settlement of this action, or that any
      settlement will be on terms favorable to Little Switzerland.

2.    NXP

      On February 16, 2001, Little Switzerland and NXP-Jewels Corporation
      ("NXP") entered into a settlement agreement and mutual general release
      from the litigation arising between Little Switzerland and NXP with
      respect to their general obligations under a letter of intent to sell
      Little Switzerland's Barbados operations to NXP. Little Switzerland, as
      part of the settlement, agreed to refund a $100,000 deposit currently held
      in escrow and make a $5,000 settlement payment. Both the $100,000 escrow
      deposit and the $5,000 settlement payment by Little Switzerland were paid
      to NXP in March 2001.

3.    LABOR MATTERS

      Name:        Conlon, Cathleen
      Position:    Former DVP Human Resources - St. Thomas
      Action:      Charge of defamation relating to e-mail messages that
                   she alleges originated from Little Switzerland
                   employees.
<PAGE>

      Name:        Loopstock, Enriqueta
      Position:    Service Clerk/Admin. Clerk - Aruba
      Action:      Improper Re-alignment of functions.
      Name:        Poole, Michael
      Position:    Former Vice President Merchandising - St Thomas
      Action:      Mr. Poole claims Wrongful Discharge.
                   Mr. Poole was terminated for cause pursuant to Section
                   5(b)(iv) of his employment contract as a result of conduct
                   that was considered to be either gross negligence or willful
                   misconduct on his part.

      Name:        Punjabi, Gobind Watumal
      Position:    Sales Associate - Philipsburg, St. Maarten
      Action:      Mr. Punjabi brought charges against Little
                   Switzerland in regards to the calculation of his vacation
                   pay. He had been paid based on his base salary, not on his
                   base salary plus commission.
      Status:      On March 20, 2001, a court ruled in Mr. Punjabi's
                   favor ordering a payment of Nafl 25,072.00 (approx.
                   $14,000 US), plus interest and legal fees.  Little
                   Switzerland is considering appealing this decision.

      Name:        Wever, Judith
      Position:    Operations Manager - Curacao
      Action:      Wrongful Discharge.
      Status:      The court ruled that her responsibilities were not
                   made clear to her prior to the new manager being
                   hired.  Ms. Wever had until March 23, 2001 to decide
                   between a monetary award of Afl's $10,000.00
                   ($5,555.55 US) or returning to work.  Ms. Wever has
                   some physical ailments that prevent her from climbing
                   stairs and feels that Little Switzerland should make
                   accommodations for her prior to returning (an
                   elevator and a bathroom on the street level).   The
                   court has yet to make a ruling in this regard.

      Name:        Alejandro, Lisa
      Position:    Former Assistant Watch Buyer
      Action:      On or about April 5, 2001, Little Switzerland
                   received a letter from the Virgin Islands Department
                   of Labor notifying Little Switzerland that a Charge
                   of Discrimination has been filed by Lisa Alejandro, a
                   former employee of Little Switzerland.  The letter
                   states that an officer of the Virgin Islands
                   Department of Labor will contact Little Switzerland
                   for more information and requests that Little
                   Switzerland respond in writing to the charges within
                   15 days.
<PAGE>

4.    AMERICANS WITH DISABILITIES ACT

The Americans with Disabilities Act Ad Hoc Advocacy Committee filed an action
against several retail entities including L.S. Holding, Inc. relating to
reconstruction of entrances and restroom facilities and construction of access
ramps to make them suitable for the physically disabled. A proposed program of
construction was initially reviewed and agreed by all parties; however,
plaintiffs now insist that ramps be built at Little Switzerland's Emancipation
Garden location.

5.    EMPLOYEE DEFALCATION

On March 11, 1998, the Company filed a civil action in the Territorial Court of
the Virgin Islands (Civil Action No. 98-229) against Lorraine Quetel, a former
employee of the Company, Lydia Magras and Bon Voyage Travel, Inc. The Company
alleges that such parties were involved in the employee defalcation that
management believes occurred during the Company's fiscal year ended May 31,
1997. The Company is seeking a preliminary injunction and damages against the
former employee and the other parties allegedly involved in the theft against
the Company. On January 19, 1999, the defendant, Lydia Magras, filed a petition
for Bankruptcy (Chapter 7) in the United States Bankruptcy Court, District of
St. Thomas. A Notice of Appearance was filed on February 2, 1999 on behalf of
the Company. A trustee was appointed, but due to a conflict of interest, he has
withdrawn from the case. Anna Paieonsky was appointed as trustee in this matter
at the meeting of the creditors held on May 20, 1999.





<PAGE>

                                 SCHEDULE 4.2(a)

                                      LIENS

All assets are subject to liens in favor of The Chase Manhattan Bank
("Chase") and The Bank of Novia Scotia ("BNS"); provided, however, that the
liens of Chase will be released as provided in (i) Section 6 of that certain
Loan Agreement by and among L.S. Wholesale, Inc., as Borrower, Little
Switzerland, as Guarantor, and Chase, (ii) Section 6 of that certain Loan
Agreement by and among L.S. Holding, Inc., as Borrower, Little Switzerland,
as Guarantor, and Chase and (iii) Section 6 of that certain Loan Agreement by
and among L.S. Holding (USA), Inc., as Borrower, Little Switzerland, as
Guarantor, and Chase, when payment is made to Chase pursuant to Section 2.02
of the Stock Purchase Agreement dated as of May 1, 2001 by and between Little
Switzerland and Tiffany & Co. International (the "Purchase Agreement"), and
the liens of BNS will be released in full when payment is made to BNS
pursuant to Section 2.02 of the Purchase Agreement. (The existing liens in
favor of Chase and BNS and the provisions setting forth the terms under which
such liens will be released, and the extent of such releases, are hereinafter
referred to as the "Existing Secured Liens and Partial Release Thereof.")

The St. Thomas Crown Bay Facility is subject to a ground lease between L.S.
Wholesale. Inc.  and the Port Authority dated 7/17/89, extended by agreement
dated 12/2/99 and 3/25/99.

The St. Thomas Crown Bay Facility is subject to the Existing Secured Liens
and Partial Release Thereof.

                             BARBADOS RESTRUCTURING

Little Switzerland completed restructuring its business in Barbados in March
2001.

In November 2000, World Gift Imports (Barbados) LTD. entered into the
following agreements in restructuring its Barbados business.

 1.     Agreement:        Share Purchase Agreement ("SPA")
        Parties:          World Gift Imports (Barbados) LTD.
                          Diamonds International Limited ("DI")
                          L.S. Holdings, Inc. ("LSH")
        Date:             November 14, 2000
        Remaining
        Conditions:       Foreign Exchange Control Permission
                          Amendment of Articles of Incorporation
                          Re-classification of 52,916 LSH shares to Class A
                          Common
        Terms:            Sale to DI of 23,774 Common Shares at a price of
                          $300,000
                          Sale to DI of 31,302 Preferred Shares at a price of
                          $300,000

 2.     Agreement:        Sale of Debt and Security Agreement ("SDSA")
        Parties:          L.S. Wholesale, Inc. ("LSW")
                          Almod Diamonds Ltd. ("Almod")
                          World Gift Imports (Barbados) LTD.
        Date:             November 14, 2000
<PAGE>

        Remaining
        Conditions:       All remaining conditions in SPA
                          Subscription of shares by DI
        Terms:            Sale, assignment and transfer of $2.0 million in LSW
                          debt,
                          payable, without interest, on or before 12/31/03;
                          first priority lien on $2.0 million of inventory;
                          any cash sent to LSW requires equivalent pay-down on
                          loan;
                          can operate only under name Little Switzerland in
                          Barbados

 3.     Agreement:        Unanimous Shareholder Agreement
        Parties:          LSH
                          DI
                          World Gift Imports (Barbados) LTD.
        Date:             November 7, 2000
        Remaining
        Conditions:       All remaining conditions in SPA
        Terms:            Same terms in SPA
                              Same terms as in SDSA
                          Profit sharing of 50% of EBITDA of $1.5 million by
                          12/31/05
                                a.  Can include tax loss benefits in excess of
                          $.7m
                                b.  Limits on head office allocations
                          Preferred convertible to Common if:
                                a.  Subscription of shares by DI not completed
                          by 12/31/03
                                b.  Profit sharing is not paid by 12/31/05
                          Preferred shares are redeemable along with all Common
                          upon:
                                a.  Subscription of shares by DI being fully
                          paid.
                                b.  Profit sharing being fully paid.
                          DI to provide the Company with a customs bond

 4.     Agreement:        Management Agreement (For Bridgetown Port Store)
                          ("MA")
        Parties:          World Gift Imports (Barbados) LTD.
                          DI
        Date:             November 7, 2000
        Remaining
        Conditions:       None
        Terms:            Little Switzerland has given full right of operation
                          indefinitely to DI of its Port store, and all profits
                          associated with this store.

 5.     Agreement:        Trademark License Agreement
        Parties:          L.S. Wholesale, Inc.
                          DI
        Date:             November 14, 2000

 6.     Agreement:        Authority to Hold Funds on Deposit
        Parties:          Little Switzerland, Inc.
                          Bank of Nova Scotia
        Date:             April 19, 2001
<PAGE>

        Terms:            Agreement to hold the equivalent of US $150,000 as
                          security until release of the bond in the amount of
                          BBD $500,000 by the Barbados Customs Department

Such restructuring contemplated by the above-referenced agreements is
hereinafter referred to as the Barbados Restructuring. The brief summary
descriptions of the terms of the above-referenced agreements are qualified in
their entirety by reference to the above-referenced agreements.



<PAGE>



                                 SCHEDULE 4.2(b)

                                  INDEBTEDNESS

See the Barbados Restructuring on Schedule 4.2(a).



<PAGE>

                                 SCHEDULE 4.2(f)

                         OFFICER/EMPLOYEE DISTRIBUTIONS

1. Outstanding Option Agreements

<TABLE>
<CAPTION>

                                                                 EXPIRES
         NAME            PLAN     GRANT        DATE      PRICE   IN 2001
         ----            ----     -----        ----      -----   -------
<S>                      <C>      <C>       <C>    <C>   <C>    <C>
Maren Torneo             1991     2,000     03-Jun-91    $10.00 03-Jun-01
Annelise Pedersen        1991     2,000     03-Jun-91    $10.00 03-Jun-01
Liesbeth Van Gent        1991     1,500     03-Jun-91    $10.00 03-Jun-01
Luisa Beers              1991     1,500     03-Jun-91    $10.00 03-Jun-01
Bill Bottke              1991     1,500     03-Jun-91    $10.00 03-Jun-01
Philip Wagenaar          1991     1,500     03-Jun-91    $10.00 03-Jun-01
Grace Hodge              1991       500     03-Jun-91    $10.00 03-Jun-01
Veronica Gumbs           1991       500     03-Jun-91    $10.00 03-Jun-01
Nina Tackling            1991       500     03-Jun-91    $10.00 03-Jun-01
Moses Allen              1991       500     03-Jun-91    $10.00 03-Jun-01
Claretta B. Holland      1991       500     03-Jun-91    $10.00 03-Jun-01
Agnes Victor             1991       500     03-Jun-91    $10.00 03-Jun-01
Arlette Gibbes           1991       500     03-Jun-91    $10.00 03-Jun-01
Kenneth W. Watson        1991    10,000     25-Jul-91    $12.00 25-Jul-01
Marcel Stetter           1991     1,500     15-Jan-92    $15.63     -
Maren Torneo             1991     2,000     06-Nov-92    $12.75     -
Annelise Pedersen        1991     2,000     06-Nov-92    $12.75     -
Jim Branson              1991    15,000     Dec-00        $0.75     -
Julie LeCuyer            1991    15,000     Dec-00        $0.75     -
Ozzie Clausel            1991    10,000     Oct-00        $0.78     -
Cherise Hodge            1991     5,000     Dec-00        $0.76     -
William Tarsky           1991    15,000     Nov-00        $0.78     -
Patrick Hopper           1991    50,000     03-Jun-99     $0.66     -
Patrick Heron            1991    16,000     20-Sep-99     $0.56     -
Patrick Hopper           1991    50,000     21-Dec-99     $0.66     -
Robert Baumgardner       1991   150,000     17-Jan-00     $0.78     -
Patrick Hopper           1991   150,000     17-Jan-00     $0.78     -
Robert Baumgardner       1991    50,000     21-Dec-99     $0.66     -

Kenneth W. Watson        1992     5,000     13-Oct-92    $12.75     -
Kenneth W. Watson        1992     3,000     31-May-93    $10.00     -
Kenneth W. Watson        1992     3,000     31-May-95     $4.75     -
Kenneth W. Watson        1992     3,000     31-May-96     $5.88     -
Kenneth W. Watson        1992     3,000     31-May-97     $5.75     -
Kenneth W. Watson        1992     3,000     31-May-98     $5.56     -
Peter McMullin           1992     3,000     29-May-99     $0.84     -
</TABLE>

<PAGE>

<TABLE>
<CAPTION>

                                                                 EXPIRES
         NAME            PLAN     GRANT        DATE      PRICE   IN 2001
         ----            ----     -----        ----      -----   -------
<S>                      <C>      <C>       <C>    <C>   <C>    <C>

Alex Nobile              1992     3,000     27-May-00     $0.53     -
Seymour Holtzman         1992     3,000     27-May-00     $0.53     -
Peter McMullin           1992     3,000     27-May-00     $0.53     -
Kenneth W. Watson        1992     3,000     27-May-00     $0.53     -

C. William Carey           *    150,000     01-Sep-98     $2.25 07-Apr-01
Robert Baumgardner         *    350,000     01-Jun-99     $0.44     -
Michael Pepper             *     50,000     14-Feb-00     $0.97     -
Brenda Pepper              *     25,000     14-Feb-00     $0.97     -
Zona Corbin                *     25,000     14-Feb-00     $0.97     -
Darr Conradson             *     25,000     03-Apr-00     $1.12     -

Robert Baumgardner       2000   100,000     17-Jul-00     $0.59     -
JEWELCOR                 2000   100,000     17-Jul-00     $0.59     -
Patrick Hopper           2000   100,000     17-Jul-00     $0.59     -
Patrick Heron            2000    34,000     17-Jul-00     $0.59     -
Craig Marek              2000    25,000     17-Jul-00     $0.59     -
Seymour Holtzman         2000    25,000     17-Jul-00     $0.59     -
Michael Pepper           2000    25,000     17-Jul-00     $0.59     -
Kenneth W. Watson        2000    25,000     17-Jul-00     $0.59     -
Peter McMullin           2000    25,000     17-Jul-00     $0.59     -
Alex Nobile              2000    25,000     17-Jul-00     $0.59     -
Claretta Bostic Holland  2000    10,000     17-Jul-00     $0.59     -
Patrick Bailey           2000    10,000     17-Jul-00     $0.59     -
Seymour Holtzman         2000   100,000     15-Feb-01     $1.00     -
Kenneth W. Watson        2000    25,000     15-Feb-01     $1.00     -
Peter McMullin           2000    25,000     15-Feb-01     $1.00     -
Alex Nobile              2000    25,000     15-Feb-01     $1.00     -
                                1,894,000                       173,500
</TABLE>

<PAGE>



            2.  Base changes in excess of $25,000 since Annual Balance Sheet
                  Date:

            1.    Name: Robert Baumgardner
                  Position: CEO
                  Change in Base: $100,000
                  Other: Final payment towards $125,000 signing fee

            2.    Name: Patrick Hopper
                  Position: CFO
                  Change in Base: $50,000
                  Change in Bonus percentage: 12.5%

            3.    Name: STORE MANAGERS
                  Change in Bonus Structure:
                  o     New plan implemented February 2001. A corporate, monthly
                        and individual performance component with a special
                        discretionary bonus. The Company is managing to a
                        minimum of 1999 performance.
                  o     Plan monitored and increased monthly to maintain morale
                        and cover shortfalls.
                  o     See Exhibit 4.2(f).


<PAGE>

                                   EXHIBIT 4.2(f)


CUMULATIVE SUMMARY
PERFORMANCE AND STAY BONUSES

<TABLE>
<CAPTION>

                      1998           1999                         2000             2,001
                    Fiscal 98   Pmnt 1   Pmnt 2                                 Fiscal 2001
                                                                                     BONUS
                     BONUS     NOV. 1999  MAY 2000 TOTAL  SWISS BUCKS  AUG. 2000   POTENTIAL
                     -----     ---------  --------------  -----------  ---------   ---------

<S>                   <C>         <C>     <C>     <C>         <C>     <C>          <C>
Allen, Moses          3,060       1,500   1,500   3,000          750        -        3,800
Bailey, Alfred       14,400       5,000   5,000  10,000        1,750   10,000       19,200
Bailey, Lori              0           -       -       -          500        -        4,350
Baumgardner, Robert       0           -       -       -            -  150,000      225,000
Bostic-Holland,
Claretta              5,652       5,000   5,000  10,000            -   15,000       15,000
Cintron, Soraya           0                                      750
Clausdel, Ozzie           0           -       -       -            -        -       18,750
Conradson, Darr           0           -       -       -        1,250        -       13,200
Corbin, Zona              0                           -        1,000        -       10,000
DeFreitas, Mourine    2,363       1,500   1,500   3,000          700        -        5,460
DesChenes, Cherie     1,387       1,500   1,500   3,000          750        -        7,500
Greaux, Edna              0           -       -       -            -        -        4,000
Heron, Patrick            0           -       -       -            -   20,000       31,250
Hodge, Cherise            0           -       -       -        1,000                 6,750
Hopper, Patrick           0           -       -       -            -   50,000       75,000
LeCuyer, Julie            0           -       -       -            -        -       11,250
Lewis, Gary               0           -       -       -            -        -        6,250
Marek, Craig              0       2,000   2,000   4,000            -   15,000       21,000
Pedersen, Annelise    6,431       2,500   2,500   5,000        1,000        -        8,625
Pepper, Brenda            0           -       -       -        1,500        -       15,000
Pepper, Charles           0           -       -       -            -   20,000       31,250
Plunket, April            0           -       -       -            -        -        3,300
Robbs, Kayla              0           -       -   Store        1,250    Store        9,750
Simon, Monique            0                                      750                 Store
Tanis, Jacqueline     8,775       2,500   2,500   5,000        1,500        -       10,500
Thomas, Willy         1,460       1,500   1,500   3,000          750        -        3,800
Williams-Reed,
Louise                    0           -       -       -            -                 6,750

                     43,528      23,000  23,000  46,000       15,200  280,000      566,735

<CAPTION>

    NO LONGER WITH COMPANY OR CONSULTANT

<S>                   <C>         <C>     <C>    <C>         <C>      <C>          <C>
Canfield, William    25,950       5,000   5,000  10,000            0        0            0
Mills Raoul          11,250       5,000   5,000  10,000            0        0            0
Poole, Michael                    5,000   5,000  10,000            0        0            0

                     37,200      15,000  15,000  30,000            0        0            0
</TABLE>