<PAGE>

                                                                   Exhibit 10.20


                                                                  EXECUTION COPY

                      AMENDED AND RESTATED SECOND AMENDMENT

                          Dated as of October 30, 1998

            This AMENDED AND RESTATED SECOND AMENDMENT (the "Second Amendment")
among The Donna Karan Company, a New York general partnership, The Donna Karan
Company Store, G.P., a New York general partnership, Donna Karan Studio, a New
York general partnership, and DK Footwear Partners, a New York general
partnership (collectively, the "Borrowers"), the financial institutions from
time to time parties thereto as lenders (the "Lenders"), the financial
institutions from time to time parties thereto as issuing banks (the "Issuing
Banks"), Citibank, N.A., in its capacity as administration agent for the Lenders
and the Issuing Banks (the "Administrative Agent"), The Chase Manhattan Bank and
Nationsbank, N.A., in their capacity as co-agents (the "Co-Agents"). This Second
Amendment amends and restates the Second Amendment dated as of April 30, 1998
among the Borrowers, the Lenders, the Issuing Banks, the Administrative Agent
and the Co-Agents.

                             PRELIMINARY STATEMENTS:

            (1) The Borrowers, the Lenders, the Issuing Banks, the Co-Agents and
the Administrative Agent have entered into a Second Amended and Restated Credit
Agreement dated as of January 29, 1998, as amended from time to time (as so
amended, the "Credit Agreement"). Unless otherwise defined herein, the terms
defined in the Credit Agreement shall be used herein as therein defined.

            (2) The Borrowers and the Lenders have agreed to amend the Credit
Agreement as hereinafter set forth.

            SECTION 1. Amendment to Credit Agreement. The Credit Agreement is,
effective as of the date hereof and subject to the satisfaction of the
conditions precedent set forth in Section 2 hereof, hereby amended as follows:

            (a) The definition of "Applicable Fixed Rate Margin" set forth in
      Section 1.01 of the Credit Agreement is amended by deleting such
      definition in its entirety and substituting therefor the following:

            "'Applicable Fixed Rate Margin' means a rate equal to 2.50% per
            annum until the day that the Borrowers deliver the EBITDA
            certificate pursuant to Section 7.01(f). Thereafter, such rate will
            fluctuate on such date and on the first day of each subsequent
            fiscal quarter based upon the Fixed Charge Coverage Ratio for the
            preceding twelve-month period, calculated as of the last day of such
            preceding twelve-month period, as set forth below:

            If the Fixed Charge                   Applicable Fixed
            Coverage Ratio is:                    Rate Margin
            ------------------                    -----------

            Less than 4.00                             2.50%

            Greater than or equal to
            4.00 but less than 5.00                    2.25%

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            Greater than or equal to 5.00              2.00%"

            (b) The definition of "Applicable Floating Rate Margin" set forth in
      Section 1.01 of the Credit Agreement is amended by deleting such
      definition in its entirety and substituting therefor the following:

            "'Applicable Floating Rate Margin' means a rate equal to 1.50% per
            annum until the day that the Borrowers deliver the EBITDA
            certificate pursuant to Section 7.01(f). Thereafter, such rate will
            fluctuate on such date and on the first day of each subsequent
            fiscal quarter based upon the Fixed Charge Coverage Ratio for the
            preceding twelve-month period, calculated as of the last day of such
            preceding twelve-month period, as set forth below:

            If the Fixed Charge                 Applicable Floating
            Coverage Ratio is:                  Rate Margin
            ------------------                  -----------

            Less than 4.00                             1.50%

            Greater than or equal to
            4.00 but less than 5.00                    1.25%

            Greater than or equal to 5.00              1.00%"

            (c) The definition of "Investment" in Section 1.01 of the Credit
      Agreement is amended by deleting the period at the end thereof and adding
      in substitution therefor the following:

            "; provided, however, that the subordinated indebtedness permitted
            under Section 9.01(x) issued in connection with the UK Acquisition
            shall be excluded from the calculation of Investments."

            (d) The definition of "Special Advance" set forth in Section 1.01 of
      the Credit Agreement is amended by deleting such definition in its
      entirety and substituting therefor the following:

            "'Special Advance Amount' means, at any time during July 1999 and
            August 1999, the lesser of (a) the amount which equals the product
            of ninety-five percent (95%) of Eligible Finished Goods Inventory
            and Eligible Raw Materials minus the Borrowing Base Inventory
            Availability and (b) $10,000,000 during July 1999 and $10,000,000
            during August 1999; provided, however, (i) upon receipt of Net Cash
            Proceeds from one or more Asset Sales in an amount of up to
            $10,000,000 in the aggregate or (ii) if the Commitments are
            permanently reduced pursuant to Section 3.01, each such Special
            Advance Amount shall be reduced, on a dollar for dollar basis, at
            such time and for all times thereafter, by the amount of such Net
            Cash Proceeds or such permanent reduction, as the case may be."

            (e) Section 1.01 of the Credit Agreement is amended by adding a new
      definition after the term "Type" and before the term "Uniform Commercial
      Code" to read as follows:

            "'UK Acquisition' means the acquisition by one of the Borrowers or
            one of its direct or indirect wholly-owned Subsidiaries of the Donna
            Karan and DKNY United Kingdom 


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            retail operations from affiliates of B.S. Ong/Club 21 for an upfront
            cash payment of up to $9,200,000 and the issuance of subordinated
            debt in the principal amount of up to $12,000,000, which
            subordinated debt shall be on terms and conditions satisfactory to
            the Administrative Agent."

            (f) Section 7.01 of the Credit Agreement is amended by adding a new
      subsection (f) at the end thereof to read as follows:

            "(f) EBITDA Report. On or prior to January 31, 2000, a certificate,
            signed by Donna Karan International's chief financial officer or
            controller, setting forth calculations (with such specificity as the
            Requisite Lenders may reasonably request) for the determination of
            EBITDA for the Fiscal Year 1999 and compliance with Section 10.06."

            (g) Section 9.01 of the Credit Agreement is amended by adding at the
      end thereof a new clause (x) to read as follows:

            "(x) subordinated indebtedness issued by one of the Borrowers or one
            of its direct or indirect wholly-owned Subsidiaries in connection
            with the UK Acquisition, which subordinated indebtedness shall be
            evidenced by a non-amortizing subordinated note in the principal
            amount of up to $12,000,000 with a maturity date no earlier than
            January 20, 2002 and have terms satisfactory to the Administrative
            Agent."

            (h) Section 9.03 of the Credit Agreement is amended by adding at the
      end thereof a new clause (viii) to read as follows:

            "(viii)Lien on the assets acquired in connection with the UK
            Acquisition or a Lien on a wholly-owned Subsidiary of a Borrower (so
            long as such Subsidiary holds nothing but the assets acquired in
            connection with the UK Acquisition), securing the subordinated
            indebtedness permitted under Section 9.01(x), provided that an
            intercreditor agreement, in form and substance satisfactory to the
            Administrative Agent, is entered into by the holder of such Lien and
            subordinated indebtedness."

            (i) Section 9.14 of the Credit Agreement is amended by deleting such
      Section in its entirety and substituting therefor the following:

            "9.14. Capital Expenditures. No member of the Donna Karan Group
            shall make or incur Capital Expenditures (a) during Fiscal Year 1998
            if the aggregate amount of Capital Expenditures for the Donna Karan
            Group plus the aggregate amount of the Investments made pursuant to
            Section 9.04(iv) plus the $9,200,000 for the UK Acquisition would
            exceed Twenty-Seven Million Dollars ($27,000,000) for such Fiscal
            Year, (b) during Fiscal Year 1999 if the aggregate amount of Capital
            Expenditures for the Donna Karan Group plus the aggregate amount of
            the Investments made pursuant to Section 9.04(iv) would exceed
            Seventeen Million Two Hundred Thousand Dollars ($17,200,000) for
            such Fiscal Year, and (c) during Fiscal Year 2000 if the aggregate
            amount of Capital Expenditures for the Donna Karan Group plus the
            aggregate amount of the Investments made pursuant to Section
            9.04(iv) would exceed Twenty Million Five Hundred Thousand Dollars
            ($20,500,000) for such Fiscal Year; provided, however, that the
            Donna Karan Group may carry forward from one Fiscal Year to another
            Fiscal Year any Capital Expenditures permitted hereunder, but not
            made or incurred in such Fiscal Year, in an amount of up to Five
            Million Dollars ($5,000,000); provided, further, that cost of


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            Equipment purchased to replace Equipment damaged or destroyed shall
            not be included in the calculations for Capital Expenditures under
            this Section 9.14 to the extent of the amount of insurance proceeds
            received and applied against the Obligations."

            (j) Section 10.01 of the Credit Agreement is amended by deleting
      such Section in its entirety and substituting therefor the following:

            "10.01. Minimum Adjusted Net Worth. The Adjusted Net Worth of Donna
            Karan International and its Subsidiaries on a consolidated basis at
            the end of each fiscal quarter set forth below shall not be less
            than the amount set forth opposite such quarter:

            Fiscal Quarter                                        Minimum Amount
            --------------                                        --------------

            First Fiscal Quarter 1998                             $100,000,000
            Second Fiscal Quarter 1998                            $ 95,000,000
            Third Fiscal Quarter 1998                             $100,000,000
            Fourth Fiscal Quarter 1998                            $115,000,000
            First Fiscal Quarter 1999                             $115,000,000
            Second Fiscal Quarter 1999                            $115,000,000
            Third Fiscal Quarter 1999                             $120,000,000
            Fourth Fiscal Quarter 1999                            $120,000,000
            First Fiscal Quarter 2000                             $120,000,000
            Second Fiscal Quarter 2000                            $120,000,000
            Third Fiscal Quarter 2000                             $125,000,000
            Fourth Fiscal Quarter 2000                            $125,000,000

            (k) Section 10.02 of the Credit Agreement is amended by deleting
      such Section in its entirety and substituting therefor the following:

            "10.02. Minimum Interest Coverage Ratio. The Interest Coverage Ratio
            of Donna Karan International and its Subsidiaries on a consolidated
            basis at the end of each fiscal quarter set forth below shall not be
            less than the ratio set forth opposite such quarter:

            Fiscal Quarter                                 Ratio
            --------------                                 -----

            Fourth Fiscal Quarter 1998                  3.00  to 1.0
            First Fiscal Quarter 1999                   3.00  to 1.0
            Second Fiscal Quarter 1999                  3.00  to 1.0
            Third Fiscal Quarter 1999                   3.00  to 1.0
            Fourth Fiscal Quarter 1999                  4.50  to 1.0
            First Fiscal Quarter 2000                   4.50  to 1.0
            Second Fiscal Quarter 2000                  5.00  to 1.0
            Third Fiscal Quarter 2000                   5.00  to 1.0
            Fourth Fiscal Quarter 2000                  5.00  to 1.0"

            (l) Section 10.03 of the Credit Agreement is amended by deleting
      such Section in its entirety and substituting therefor the following:


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            "10.03. Minimum Fixed Charge Coverage Ratio. The Fixed Charge
            Coverage Ratio of Donna Karan International and its Subsidiaries on
            a consolidated basis at the end of each fiscal quarter set forth
            below shall not be less than the ratio set forth opposite such
            quarter:

            Fiscal Quarter                                 Ratio
            --------------                                 -----

            Fourth Fiscal Quarter 1998                 10.50 to 1.0
            Fourth Fiscal Quarter 1999                  2.50 to 1.0
            First Fiscal Quarter 2000                   3.00 to 1.0
            Second Fiscal Quarter 2000                  3.00 to 1.0
            Third Fiscal Quarter 2000                   3.00 to 1.0
            Fourth Fiscal Quarter 2000                  3.00 to 1.0"

            (m) Section 10.04 of the Credit Agreement is amended by deleting
      such Section in its entirety and substituting therefor the following:

            "10.04. Minimum Working Capital Ratio. The Working Capital Ratio of
            Donna Karan International and its Subsidiaries on a consolidated
            basis at the end of each fiscal quarter set forth below shall not be
            less than the ratio set forth opposite such quarter:

            Fiscal Quarter                         Ratio
            --------------                         -----

            Fourth Fiscal Quarter 1999          1.40 to 1.0
            First Fiscal Quarter 2000           1.40 to 1.0
            Second Fiscal Quarter 2000          1.40 to 1.0
            Third Fiscal Quarter 2000           1.40 to 1.0
            Fourth Fiscal Quarter 2000          1.40 to 1.0"

            (n) Section 10.05 of the Credit Agreement is amended by deleting
      such Section in its entirety and substituting therefor the following:

            "10.05. Maximum Leverage Ratio. The Leverage Ratio of Donna Karan
            International and its Subsidiaries on a consolidated basis at the
            end of each fiscal quarter set forth below shall not be greater than
            the ratio set forth opposite such quarter:

            Fiscal Quarter                         Ratio
            --------------                         -----

            Fourth Fiscal Quarter 1998          2.00 to 1.0
            First Fiscal Quarter 1999           2.00 to 1.0
            Second Fiscal Quarter 1999          2.00 to 1.0
            Third Fiscal Quarter 1999           3.00 to 1.0
            Fourth Fiscal Quarter 1999          2.00 to 1.0
            First Fiscal Quarter 2000           2.00 to 1.0
            Second Fiscal Quarter 2000          2.00 to 1.0
            Third Fiscal Quarter 2000           2.00 to 1.0
            Fourth Fiscal Quarter 2000          2.00 to 1.0"

            (o) Article X of the Credit Agreement is amended by adding a new
      Section at the end thereof to read as follows:


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            "10.06. EBITDA. The EBITDA for Donna Karan International and its
            Subsidiaries on a consolidated basis at the end of the fourth fiscal
            quarter of 1999 shall be at least $30,000,000."

            SECTION 2. Conditions of Effectiveness. This Second Amendment shall
become effective when the Administrative Agent shall have received (i)
counterparts of this Second Amendment executed by the Borrowers and the
Requisite Lenders and (ii) the documents set forth on Schedule I attached
hereto.

            SECTION 3. Representations and Warranties of the Borrowers. Each
Borrower represents and warrants as follows:

            (a) After giving effect to this Second Amendment, all of the
      representations and warranties contained in Section 6.01 of the Credit
      Agreement and in the other Loan Documents shall be true in all material
      respects.

            (b) After giving effect to this Second Amendment, no Default or
      Event of Default shall have occurred and be continuing.

            (c) As of the date hereof, no material adverse change shall have
      occurred in the condition (financial or otherwise), performance,
      properties, operations or prospects of the Borrowers or Donna Karan
      International and its Subsidiaries, taken as a whole, since December 29,
      1996 except as publicly disclosed prior to the date hereof.

            SECTION 4. Reference to and Effect on the Loan Documents. (a) Upon
the effectiveness of this Second Amendment, on and after the date hereof each
reference in the Credit Agreement to "this Agreement", "hereunder", "hereof" or
words of like import referring to the Credit Agreement, and each reference in
the other Loan Documents to "the Credit Agreement", "thereunder", "thereof" or
words of like import referring to the Credit Agreement, shall mean and be a
reference to the Credit Agreement as amended hereby.

            (b) Except as specifically amended above, the Credit Agreement and
all other Loan Documents, are and shall continue to be in full force and effect
and are hereby in all respects ratified and confirmed. Without limiting the
generality of the foregoing, the Loan Documents and all of the Collateral
described therein do and shall continue to secure the payment of all obligations
of the Borrowers under the Credit Agreement, the Notes and the other Loan
Documents, in each case as amended hereby.

            (c) The execution, delivery and effectiveness of this Second
Amendment shall not, except as expressly provided herein, operate as a waiver of
any right, power or remedy of any Lender or the Agent under any of the Loan
Documents, nor constitute a waiver of any provision of any of the Loan
Documents.

            SECTION 5. Execution in Counterparts. This Second Amendment may be
executed in any number of counterparts and by different parties hereto in
separate counterparts, each of which when so executed and delivered shall be
deemed to be an original and all of which taken together shall constitute but
one and the same agreement.

            SECTION 6. Governing Law. This Second Amendment shall be governed
by, and construed in accordance with, the laws of the State of New York.


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            IN WITNESS WHEREOF, the parties hereto have caused this Second
Amendment to be executed as of the date first above written.

                           THE DONNA KARAN COMPANY

                           By: Donna Karan International Inc., a general partner

                               By:         /s/ JOSEPH PARSONS
                                   ---------------------------------------------
                                   Title:  Executive Vice President
                                          --------------------------------------


                           DONNA KARAN STUDIO

                           By: Donna Karan International Inc., a general partner

                               By:         /s/ JOSEPH PARSONS
                                   ---------------------------------------------
                                   Title:  Executive Vice President
                                          --------------------------------------


                           THE DONNA KARAN COMPANY STORE, G.P.

                           By: Donna Karan International Inc., a general partner

                               By:         /s/ JOSEPH PARSONS
                                   ---------------------------------------------
                                   Title:  Executive Vice President
                                          --------------------------------------


                           DK FOOTWEAR PARTNERS

                           By: Donna Karan International Inc., a general partner

                               By:         /s/ JOSEPH PARSONS
                                   ---------------------------------------------
                                   Title:  Executive Vice President
                                          --------------------------------------


                           CITIBANK, N.A., as Administrative Agent and Lender

                               By:   /s/ 
                                   ---------------------------------------------
                                   Vice President


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                           THE CHASE MANHATTAN BANK, as Co-Agent and Lender

                           By:   /s/ 
                               -------------------------------------------------
                               Title:


                           NATIONSBANK N.A., as Co-Agent and Lender

                           By:   /s/ 
                               -------------------------------------------------
                               Title:


                           PNC BANK NATIONAL ASSOCIATION

                           By:   /s/ 
                               -------------------------------------------------
                               Title:


                           THE CIT GROUP/COMMERCIAL SERVICES, INC.

                           By:   /s/ 
                               -------------------------------------------------
                               Title:


                           NATIONAL CITY COMMERCIAL FINANCE, INC.

                           By:   /s/ 
                               -------------------------------------------------
                               Title:


                           PPM AMERICA, INC.

                           By:   /s/ 
                               -------------------------------------------------
                               Title:


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