AMENDMENT
                                       TO
                             DISTRIBUTION AGREEMENT


            This  AGREEMENT is made this 1st day of June,  2000 between  PEGASUS
SEWING MACHINE MFG. CO., LTD., a Japanese corporation  ("Pegasus") and WILLCOX &
GIBBS, INC., a Delaware (U.S.A.) Corporation ("WG").

            Pegasus and WG, Inc.  (the prior name of Willcox & Gibbs,  Inc.) are
parties  to  a  certain  Distribution  Agreement  dated  January  1,  1995  (the
"Distribution Agreement") which the parties desire to amend by the terms of this
Agreement (the "Amendment to Distribution Agreement").

            1.   COMPENSATION   AND  SALES  TO  PEGASUS.   Section  4.1  of  the
Distribution Agreement is amended as follows:

                  (a) The commission  percentage  amount to be paid by WG to PCA
            for total net sales of Parts in the  Territory  shall  increase from
            10% to 15% (as to sales to end-users)  and shall  increase form 2.5%
            to 7.5% (as to sales to dealers); and

                  (b) The commission  percentage  amount to be paid by WG to PCA
            for total net sales of Parts outside of the Territory shall increase
            from 5% to 10% (as to sales to  end-users)  and shall  increase from
            1.5% to 6.5% (as to sales to dealers)  (Pegasus  and WG  acknowledge
            that the commission percentage amounts for the sale of Parts outside
            of the  Territory  is not  specifically  set forth in Section 4.1 or
            elsewhere in the Distribution Agreement but rather same has been the
            agreed upon practice between the parties, which agreed upon practice
            is  hereby  amended,  as  above  provided).   WG  and  Pegasus  also
            acknowledge  and agree that for  purposes  of the  aforesaid,  sales
            outside of the  Territory  shall  include  all sales  outside of the
            United States of America and Puerto Rico and shall include,  without
            limitation, sales in Mexico and all other countries.

                  (c) The  existing  minimum  quarterly  commission  payments of
            $125,000  shall  be  replaced  with  the  following  minimum  annual
            commission payments:

                  FOR CALENDAR YEAR            DOLLAR AMOUNT

                  2000                              $900,000

                  2001 and thereafter             $1,000,000

                  (d) Section 4.1(i) of the Distribution Agreement is amended to
            provide that all payments due by WG to PCA under  Section 4.1 of the

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            Distribution Agreement, as amended, shall be paid on the 20th day of
            the  month  following  the  month  in which  the  sale  for  which a
            commission is due was made,  instead of within 20 days after the end
            of each quarter.

            2. TERMINATION. The date of "December 31, 1996" set forth in Section
5.1 of the Distribution Agreement is replaced with the date "December 31, 2002".
All other  provisions  of said  Section  5.1 shall  continue as set forth in the
Distribution Agreement.

            3. EFFECTIVE DATE OF AMENDMENT. WG and Pegasus acknowledge and agree
that  all  amendments  to the  Distribution  Agreement  incorporated  into  this
Amendment  to   Distribution   Agreement  shall  be  deemed  to  be  in  effect,
retroactive, as of January 1, 2000.

            4. MISCELLANEOUS.

                  (a) Except as otherwise specifically amended by this Amendment
            to Distribution  Agreement,  the Distribution Agreement shall remain
            in full force and effect. In the event of any inconsistency  between
            the terms and  provisions  of the  Distribution  Agreement  and this
            Amendment to  Distribution  Agreement,  the terms and  provisions of
            this Amendment to Distribution Agreement shall prevail and control.

                  (b)  Capitalized  terms  not  defined  herein  shall  have the
            meaning ascribed to such terms in the Distribution Agreement.

            IN WITNESS WHEREOF, the parties have duly executed this Agreement as
of the day first above written.

                                       PEGASUS SEWING MACHINE MFG. CO., LTD.


                                       BY: /S/
                                          --------------------------------------



                                       WILLCOX & GIBBS, INC.


                                       BY: /S/
                                          --------------------------------------
                                          JOHN K. ZIEGLER, CHAIRMAN