<PAGE>   1
                                                                    Exhibit 10.7

                         execution copy printed 7/30/97

                                    AGREEMENT

            AGREEMENT dated as of July 30, 1997 between NAH NAH COLLECTIONS,
INC., also known as "Nahdree," a New York corporation (the "Producer"), C.A.S.
DESIGNS, INC., a New York corporation (the "Design Company"), and CONSTANCE
SAUNDERS ("Saunders," the Design Company and Saunders being herein sometimes
collectively referred to as the "Designers").

            WHEREAS, the Producer wishes to retain the Design Company to design
bridge lines for women's dresses and women's suits by the Designers ("Apparel")
for the Producer, the designing provided by the Designers to be performed
exclusively by Saunders; and

            WHEREAS, the Producer may, due to market conditions, wish to add
another line or lines in the future, the parties hereto agree to discuss the
substitution of a line or lines for the bridge lines, the consent thereto not to
be unreasonably withheld by the Designers; and

            WHEREAS, the parties hereto agree to discuss other design categories
as may be mutually agreeable to the parties; and

            WHEREAS, the Producer wishes to use the tradenames "Constance
Saunders," "Constance", "Saunders," and derivatives thereof (the "Trademarks");
and

            WHEREAS, the Designers are willing to provide the services, and to
grant the rights to the Trademarks, on the terms and conditions herein set
forth;

            NOW THEREFORE, the parties hereto, in consideration of the premises
hereof and other good and valuable consideration, hereby agree as follows:

            1. Term of Agreement. The Producer retains the Design Company, and
the Design Company hereby agrees, to provide the services herein during the
period (the "term hereof") commencing on July 30, 1997, and ending on July 29,
2002. Saunders hereby agrees for the benefit of the Producer to provide the
services required to be performed by her herein during the term hereof and, in
the event that the Design Company shall for any reason, except upon Saunders or
the Design Company's termination of this Agreement for cause pursuant to Section
14 of this Agreement, cease to provide the services required hereby, Saunders
agrees to become an employee of the Producer, if Producer so requests, providing
substantially the same services required to be provided by Saunders hereby
through the Design Company, on the same terms as those set forth herein.

            2. Duties of Designers. During the term hereof, the Design Company
shall be responsible for producing designs for Apparel (designs produced after
the date hereof herein called "Designs"), and Saunders shall serve as design
director for the Design Company and shall be personally responsible for the
performance by the Design Company of its obligations to the
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Producer hereunder. During the term of this Agreement, the Designers shall not
design any other Apparel in any category whatsoever without the prior written
consent of the Producer.

            3. Duties of Producer. At a reasonable time under the facts and
circumstances herein, the Producer shall provide Saunders a separate showroom
within the Producer's showroom all aspects of which shall be determined by the
Producer. Producer agrees to provide, as employees of Producer at Producer's
expense, a draper and an assistant exclusively for use by the Designers solely
for work performed by the Designers for the Producer. The hiring of the draper
and assistant shall be mutually agreed upon by the parties herein.

            4. Ownership of Designs. Each of the Designers represents that (i)
in the first instance, Saunders shall own all the Designs free of all liens and
encumbrances and hereby assigns any and all right, title and interest therein to
the Producer, (ii) that Saunders shall produce the Designs as a work-for-hire
for the Design Company solely for the benefit of the Producer, and (iii) the
Design Company shall produce the Designs as a work-for-hire for the Producer,
thereby assigning any and all its right, title and interest in the Designs to
the Producer. Except as otherwise provided herein, during the development of the
Designs and at all times thereafter, as among the Producer, the Design Company
and Saunders, the Producer shall be the sole and exclusive owner of all right,
title and interest in the Designs and all proprietary and other rights
pertaining thereto. The Designers hereby assign and transfer to the Producer
irrevocably and absolutely and in perpetuity, all rights, title and interest in
the Designs and all proprietary rights and other rights pertaining thereto which
the Designers may now or hereafter acquire in and to the Designs. Without
limiting the generality of the foregoing, the Producer shall have the sole and
exclusive right to distribute, use, display, exhibit, advertise, publicize or
otherwise exploit the Designs by any and all means, whether now known or
hereafter devised, in perpetuity and in such a manner and to such extent, if at
all, as the Producer, in its sole discretion shall determine. The Design Company
and Saunders shall, at the request of the Producer, at any time and from time to
time, promptly execute and deliver, or cause to be executed and delivered, to
the Producer, all documents and instruments and promptly take all such action as
may be reasonably necessary or appropriate to protect the Producers rights to
the Designs and to carry out the purpose and intent of this Section 4. The
Designers hereby warrant and represent that the Designs have not previously been
sold by either of them and are being transferred to the Producer hereunder free
and clear of all liens, claims and encumbrances whatsoever. The Designers,
jointly and severally, agree to indemnify and hold harmless the Producer against
all claims, liabilities, demands, expenses and costs (including legal fees and
expenses) relating to or in connection with any third party claim or action
arising out of the infringement or copying of such third party's designs by any
Designs of the Designers. Upon the termination of this Agreement for any reason,
the Designers shall not utilize any designs identical to the Designs owned by
the Producer, but may utilize designs which are similar to, modifications of or
derivatives of the Designs or portions thereof. If the parties hereto enter into
a separate licensing agreement for matters not contained herein, the Producer
may utilize the designs under that licensing agreement which are similar to,
modifications of or derivatives of the new designs or portions thereof under the
such licensing agreement.


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            5. Use of Designs and Trademarks by the Producer. The Producer shall
determine in its sole discretion whether to use a Design, whether to use an
entire Design or a portion thereof, when to use a Design and in connection with
which Apparel to use a Design. The Designers specifically acknowledge herewith
that permission to use the Trademarks in the following manner has been granted:
"Constance Saunders for Nahdree," "Constance Saunders by Nahdree, "Constance
Saunders Suit by Nahdree," "Constance Saunders Dress by Nahdree" and "Constance
Saunders" "by" or "for" combined with the name or names of a division and/or
corporate name of the Producer. Permission to use the Trademarks in any other
combination shall not be unreasonably withheld by the Designers. Any item sold
by the Producer using all or a portion of a Design shall bear one of the
Trademarks, although it may also bear, together with one of the Trademarks, a
trademark, tradename or style owned by the Producer. As a material inducement on
the part of Saunders granting the exclusive right to Producer to use the
Trademark in accordance with this Agreement, Producer agrees that:

                  (a) It will cause to appear on the Apparel and on all
      packaging, hang tags and advertising and other printed materials on which
      the Trademarks appear, all legends, markings and notices as may be
      required by law or regulation;

                  (b) It shall not at any time intentionally do or suffer to be
      done a anything which may, in any way, adversely affect any rights of
      Saunders or the Design Company in and to the Trademarks which may reduce
      the value of the Trademarks;

                  (c) All right, title and interest in and to the Trademarks
      shall, at all times, be the sole and exclusive property of Saunders except
      as provided for herein;

                  (d) The Trademarks shall not be used by the Producer in
      connection with any merchandise other than as provided for in this
      Agreement;

                  (e) The Producer agrees that it will never challenge Saunders'
      ownership rights and the rights of Design Company therein or the validity
      of the Trademarks; and

                  (f) Producer's right to use the Trademarks shall, at all
      times, inure to the benefit of Saunders and the Design Company as provided
      for herein.

            6. Compensation for Designs. The Producer agrees to pay to the
Design Company, as compensation ("Compensation") for its services hereunder, a
base amount ("Base Amount") and, beginning with the Contract Year ending July
29, 1999, a contingent amount ("Contingent Amount"), as set forth below. For the
purposes hereof, a Contract Year means a 12-month period (except in the case of
early termination of this Agreement) beginning on a July 30 nd ending on the
next succeeding July 30 or earlier termination hereof:

                  (a) The Base Amount shall be $210,000 for each Contract Year
      during the term hereof, payable in accordance with the Producer's regular
      pay intervals for its employees. The Producer, in its sole discretion, may
      from time to time increase the Base Amount or pay additional compensation
      to the Design Company.;


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                  (b) The Contingent Amount shall be 2% of the excess, if any,
      of the amount actually collected by the Producer with respect to Net Sales
      in each of the second through fifth Contract Years during the term hereof
      over $7,000,000. (No Contingent Amount shall be payable with respect to
      the first Contract Year.) For purposes hereof, "Net Sales" shall mean (i)
      the total of the gross invoice prices of all Apparel designed by the
      Designers and marketed by the Producer under any of the Trademarks, after
      deducting customary trade discounts, allowances and returns; provided,
      however, that the Producer shall not be obligated to pay any Contingent
      Amount hereunder with respect to sales made through factory outlets or
      other retail stores owned, leased or controlled by the Producer, its
      subsidiaries and affiliates. The Contingent Amount shall be payable (x)
      within 30 days after the end of each Contract Year for which a Contingent
      Amount is payable with respect to amounts actually collected during such
      Contract Year relating to Net Sales occurring therein, and (y) within 30
      days following the collection of amounts which are collected after the end
      of the Contract Year to which they relate. Written statements as normally
      rendered by the Producer to other designers shall accompany payments of
      the Contingent Amount; and

                  (c) The Design Company shall be an independent contractor and
      the Producer shall not be required to withhold any federal, state, local
      and other taxes from amounts paid to the Design Company hereunder, but
      shall report the amounts so paid to the Design Company on federal tax form
      1099, or other tax form which the Producer determines to be appropriate.
      Each of the Designers agrees to pay all federal, state, local and other
      taxes due with respect to the amounts paid to the Design Company by the
      Producer.

                  (d) Producer will maintain appropriate books of account
      concerning all transactions within the scope of this Agreement. Designers'
      representatives shall have the right, at reasonable times upon reasonable
      notice to Producer to inspect such records to verify the accuracy of
      Producer's reports to it. If upon audit it is revealed that there is owing
      the Designers Contingent Amounts in excess of 7% or more than that
      reported, the cost of the audit shall be borne by the Producer.

            7. Expenses. The Producer shall pay the reasonable travel expenses
incurred by Design Company or Saunders in connection with Saunders' two trips to
Europe during each 12 month period hereunder.

            8. Ownership of Trademarks. Saunders hereby warrants and represents
that the Trademarks are owned throughout the World by her free and clear of all
liens, claims and encumbrances whatsoever arising through her action or
acquiescence. Saunders hereby grants the Producer the exclusive right to use the
Trademarks in connection with the Designs anywhere in the World during the term
hereof and as otherwise provided herein. Without limiting the generality of the
foregoing, the Producer shall have the sole and exclusive right to use the
Trademarks in connection with the distribution, use, display, exhibiting,
advertising and/or publication of the Designs in such a manner and to such
extent as the Producer, in its sole discretion shall determine. The Producer
acknowledges that the Designers have previously granted a non-exclusive license
to certain third party to use the Trademarks in connection with (i) the
manufacture of a certain previously designed Fall collection through September
30, 1997


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and (ii) the marketing, distribution and sale of such previously designed Fall
collection through December 31, 1997. Each of the Designers shall, at the
request of the Producer, at any time and from time to time, promptly execute and
deliver, or cause to be executed and delivered, to the Producer, all documents
and instruments and promptly take all such action as may be reasonably necessary
or appropriate to protect the Producer's rights to the Trademarks as above
provided and to carry out the purpose and intent of this Section 8. Each of the
Designers agrees to indemnify and hold harmless the Producer against all claims,
liabilities, demands, expenses and costs (including legal fees and expenses)
relating to or in connection with any third party claim or action arising out of
the infringement or copying of such third party's trademarks by any Trademarks.

            9. Indemnification. The Producer hereby indemnifies and agrees to
defend and hold Design Company and Saunders harmless from and against any
claims, suits, losses, damages, demands, injuries and expenses (including
reasonable attorneys, fees and expenses of attorneys as provided herein) arising
out of any alleged defects in the material or workmanship of any Apparel in
connection with the labeling, distribution or advertisement of any Apparel by
the Producer in violation of any national, state or local law or regulation,
whether or not the Apparel was approved by the Design Company pursuant to this
Agreement. The Producer shall designate the attorneys to defend the Designers
pursuant to this Section 9.

            10. Insurance. The Producer shall procure and maintain at all times
during which Apparel is being sold in full force and effect at its own expense
with responsible insurance carrier (s), at least $1,000,000 per occurrence of
products liability insurance coverage with respect to the Apparel. Such
insurance shall name the Design Company and Saunders as additional insureds and
shall provide for at least ten days prior written notice to the Design Company
and Saunders of the cancellation or substantial modification thereof. Such
insurance may be obtained by the Producer in conjunction with a policy of
product liability insurance which. covers products other than the Apparel. If
requested, the Producer shall furnish or cause to be furnished to Design Company
evidence of the maintenance of the insurance.

            11. Right of First Refusal. In the event that the Designers, or
either of them, shall receive a bona fide offer to license any of the Trademarks
for use on products other than women's ready-to-wear apparel, the Producer shall
have the right, at its sole election exercised during a period of 30 days
following receipt of notice thereof, either (i) to match such offer and produce
such product under a license which is substantially similar to the license
contemplated by such offer, or (ii) to consent to such license in consideration
of the right to receive from such Designer an amount equal to 20% of all amounts
received by such Designer as a result of such use of the Trademarks. In the
latter case, such Designer shall pay to the Producer the amounts due under
clause (ii) above within 15 days of the receipt by such Designer of any amount
received by such Designer as a result of such use of the Trademarks.

            12. Death. In the event of Saunders death, (i) the Compensation
shall be paid to the Design Company through the end of the month in which her
death occurs, and (ii) the Contingent Amount shall be paid to the Design Company
for a period of six months following the month in which such death occurs.


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            13. Disability. If, during the term hereof, Saunders shall, because
of physical or mental illness or incapacity, become unable adequately to perform
the duties and services required of her pursuant to this Agreement for a period
of 20 consecutive days or for a period of 60 days in any 180-day period, the
Producer may, upon prior written notice given at any time after the expiration
of such 20-day period or 60-day period, as the case may be, to the Design
Company of its intention to do so, terminate its obligation to pay Compensation
hereunder, in which case the Design Company shall be entitled to receive (i) the
Compensation through the end of the month in which such termination occurs, and
(ii) the Contingent Amount for a period of six months following the month in
which such termination occurs.

            14. Termination for cause. The Producer may terminate this Agreement
"for cause", without liability other than for payment of accrued but unpaid
Compensation through the date of termination, in the event of (i) any act of
Saunders which has the effect of materially injuring the reputation, business or
business relationships of the Producer; (ii) conviction of Saunders (including a
conviction on a nolo contenders plea) for any crime or offense which involves
property or money of the Producer; (iii) conviction of Saunders for a felony; or
Saunders, incarceration following any conviction which restricts or limits her
ability to perform her duties hereunder, (iv) Saunders, failure, neglect or
refusal to perform her duties as set forth herein, or (v) a material breach of
any representation, warranty or covenant contained in this Agreement by either
of the Designers. The Designers may terminate this Agreement "for cause",
without liability, in the event of a material breach of any representation,
warranty or covenant contained in this Agreement by the Producer. The Producer's
failure to pay the Designers under any of the obligations of the Producer herein
shall constitute a material breach under this Agreement. In either case, the
party whose act shall have given rise to the right to terminate this Agreement
shall have 20 days after receipt of written notice by the party seeking to
terminate to cure the breach or nullify the act which is the cause of such
termination, if such cure or nullification is possible.

            15. Rights of Producer on Termination. Upon termination of this
Agreement for any reason, including the expiration hereof, the Producer shall
have the right to use the Trademarks and Designers shall not take any action
which may impede the orderly sale of Apparel in connection herewith for the
periods set forth below:

                  (a) upon the expiration hereof, the Producer shall have the
      non-exclusive right to use the Trademarks for six months after such
      expiration to sell, in the ordinary course of business, Apparel utilizing
      Designs of the Designers under any of the Trademarks;

                  (b) upon the termination hereof by the Designers for cause,
      the Producer shall have the non-exclusive right to use the Trademarks for
      six months after such termination to sell, in the ordinary course of
      business, Apparel utilizing Designs of the Designers under any of the
      Trademarks; and

                  (c) upon the termination hereof by the Producer for cause, the
      Producer shall have the exclusive right to use the Trademarks to sell
      Apparel utilizing Designs under any of the Trademarks for the shorter of
      (i) one year after such termination, or (ii) the period between such
      terminate and July 29, 2002; and


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                  (d) upon the failure of Saunders to continue to serve as the
      design director for the Design Company and, thereafter refuses to act as
      design director for the Producer, as set forth in this Agreement, the
      Producer shall have the exclusive right to use the Trademarks to sell
      Apparel utilizing Designs under any of the Trademarks for the shorter of
      (i) two years after such termination, or (ii) the period between such
      termination and July 29, 2002.

            16. Confidentiality. Each of the Designers acknowledges that each of
them, by virtue hereof, shall have a confidential relationship with the Producer
with access to confidential information and trade secrets of the Producer
(collectively, the "Confidential Information"), including customer and client
lists, financial information, price lists, marketing and sales strategies and
procedures, computer programs, databases and software, supplier, vendor and
service information, personnel information, operating procedures and techniques,
business plans and systems, and all other records, files, and information in
respect of the Producer. Information with regard to customers, clients and
vendors which Designers have had business dealings with prior to the
commencement of this Agreement shall be excluded from the provisions of this
Section. For the term of this Agreement and for a period of one year thereafter,
each of the Designers shall maintain the strictest confidentiality of all
Confidential Information and shall not use or permit the use of, or disclose,
discuss, communicate or transmit or permit the disclosure, discussion,
communication or transmission of, any Confidential Information, provided that
this Section shall not apply to information (i) that, by means other than either
of the Designers, deliberate or inadvertent disclosure, becomes generally known
to the public, or ii) the disclosure of which is compelled by law (including
judicial or administrative proceedings and legal process), provided in the
latter case that the Producer shall have promptly been given written notice of
any request or requirement for any such Confidential Information.

            17. Injunctive Relief of Producer. Each of the Designers
acknowledges that in the event of a breach or threatened breach of any of the
provisions herein by either of the Designers, the Producer may suffer
irreparable damage and will not have an adequate remedy at law. Accordingly, in
the event of such a breach or threatened breach, the Producer shall be entitled,
in addition to any other remedies which it may have at law or in equity, to an
injunction issued by a court or tribunal or competent jurisdiction to restrain
the Designers from committing or continuing any such breach. This Section shall
be construed as an agreement independent of the balance of this Agreement and
shall survive the termination of this Agreement.

            18. Injunctive Relief of Designers. Producer acknowledges that in
the event of a breach or threatened breach of any of the provisions herein by
the Producer, each of the Designers may suffer irreparable damage and will not
have an adequate remedy at law. Accordingly, in the event of such breach or
threatened breach, either or the Designers shall be entitled, in addition to any
other remedies which it may have at law or in equity, to an injunction issued by
a court or tribunal or competent jurisdiction to restrain the Producer from
committing or continuing any such breach. This Section shall be construed as an
agreement independent of the balance of this Agreement and shall survive the
termination of this Agreement.

            19. Good Faith. Notwithstanding anything contained in this Agreement
to the contrary, each of the parties hereto covenants and agrees that in all
dealings between the parties,


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including, without limitation, the granting or withholding of any approval or
consent in connection with any transactions contemplated hereunder, each such
party shall act at all times in good faith and in a commercially reasonable
manner.

            20. Notices. Any notice to be given hereunder shall be in writing
and may be delivered personally or sent by overnight courier (such a Federal
Express), all costs and fees prepaid, facsimile transmission, with a
confirmation copy to be sent by mail the day of transmission, or certified or
registered mail postage prepaid, return receipt requested. Any such notice shall
be deemed to have been given (i) when delivered personally, (ii) the day after
having been sent by overnight courier, (iii) upon facsimile transmission, or
(iv) five days after the date of mailing, if sent by certified or registered,
addressed as follows:

            If to the Producer, addressed to:

                  Nah Nah Collections, Inc.
                  213 West 35th Street
                  New York, New York  10001

                  Attention: Mr. Hong J. Han, President

            With a copy to:

                  Ballon Stoll Bader & Nadler, P.C.
                  1450 Broadway
                  New York, New York  10018
                  Attention: Howard D. Bader, Esq.

            And if to either of the Designers, addressed to:
                  C.A.S. Designs, Inc.
                  25 East 9th Street, #5B
                  New York, new York  10003

                  Attention: Ms. Constance Saunders

            With a copy to:

                  Levy Sonet & Siegel
                  630 Third Avenue
                  New York, New York  10017

                  Attention: Alan M. Siegel, Esq.

or to such other address as any party hereto shall designate in writing to the
other such parties.

            21. Prior Agreements. This Agreement shall constitute the entire
agreement among the parties concerning the subject matter hereof and shall
supersede any prior agreements, documents or other instruments with respect to
the matters covered hereby.


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            22. Amendments. This Agreement may be amended, or its terms waived,
only by a writing executed by each of the parties hereto or, in the case of a
waiver, by the party waiving compliance. No delay on the part of any party in
exercising any right hereunder shall operate as a waiver of such right. A waiver
of any right will not preclude any further exercise of such right or of any
other right.

            23. Assignment. This Agreement, and each party's rights and
obligations hereunder, may not be assigned, except as otherwise specifically
provided herein.

            24. Successors. This Agreement shall be binding upon, and shall
inure to the benefit of, the parties hereto and their respective legal
representatives, successors and permitted assigns.

            25. Severability. In the event that any provision of this Agreement
shall be held invalid or unenforceable, or if the scope of any such provision
shall be held to be overly broad, such holding shall not invalidate or render
unenforceable any other provision hereof or such provision in any other
circumstances or jurisdiction, and any such provision held to be overly broad in
scope shall be deemed to have been automatically revised to narrow its scope to
give it the greatest effect consistent with such holding, and such holding shall
not invalidate or render unenforceable any other provision hereof, the same
provision in any other instance or jurisdiction, or the same provision as so
deemed amended in the current instance or jurisdiction.

            26. Governing Law. This Agreement shall be governed by and construed
in accordance with the laws of the State of New York applicable to agreements
made and to be performed wholly within such state.

            27. Litigation Expenses. In the event that either the Producer or
the Designers (or either of them) seeks to resolve a dispute regarding whether
cause to terminate this Agreement has occurred, as contemplated by Section 14
hereof, the losing such party in such litigation shall be responsible for paying
the costs of such litigation (including attorney's fees) incurred by both such
parties.

            28. Headings. All headings used in this Agreement are for reference
purposes only and shall not be deemed to have any substantive effect.


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            IN WITNESS WHEREOF, each of the parties hereto has executed this
Agreement or caused this Agreement to be executed in its corporate name and
under its corporate seal by one of its officers thereunto duly authorized, as of
the day and year set forth above.

                              NAH NAH COLLECTIONS, INC.


                              By: /s/ Hong J. Han
                                 -------------------------------------
                                    Hong Han, President

                              C.A.S. DESIGNS, INC.


                              By: /s/ Constance Saunders
                                 -------------------------------------
                                  Constance Saunders, President

                              /s/ Constance Saunders
                              ----------------------------------------
                              Constance Saunders, Individually

1994B


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