NOTE AND LOAN AND SECURITY AGREEMENT
                           MODIFICATION AGREEMENT
                     ------------------------------------

     THIS NOTE AND LOAN AND SECURITY AGREEMENT MODIFICATION AGREEMENT (the 
"Agreement") made as of this 27th day of June, 1997, by and between BLUE 
FISH CLOTHING, INC., a Pennsylvania corporation, having an address located 
at P.O. Box 36, #3 Sixth Street, Frenchtown, New Jersey 08825 (hereinafter 
"Borrower"), and CARNEGIE BANK, N.A., having an address at 619 Alexander 
Road, Princeton, New Jersey 08543 (the "Bank").

                                 WITNESSETH:
                                 -----------

     WHEREAS, the Bank is the holder of a certain Revolving Note (the 
"Note") dated February 9, 1996, made by the Borrower to the Bank in the 
principal amount of up to One Million and 00/100 ($1,000,000.00) DOLLARS 
(the "Loan"); and

     WHEREAS, the Note is secured by a Loan and Security Agreement (the 
"Security Agreement") dated February 9, 1996, which Security Agreement 
grants a lien on all inventory and receivables more accurately described in 
the Schedule "A" attached thereto (the "Collateral") (the Note, the 
Security Agreement, and all other documents executed or delivered in 
connection with the Loan, henceforth collectively referred to as the "Loan 
Documents"); and

     WHEREAS, the Borrower and the Bank extended the term of the Note and 
the Loan and Security Agreement pursuant to a certain Note and Loan and 
Security Agreement Extension Agreement dated as of February 9, 1997; and

     WHEREAS, the Borrower has requested that the Bank decrease the 
principal loan amount which may be outstanding under the Note and the 
Security Agreement; and

     WHEREAS, the Bank is willing to decrease the principal loan amount 
which may be outstanding under the Note and the Security Agreement, on 
certain terms and conditions as hereinafter provided.

     NOW, THEREFORE, for and in consideration of the premises (which are 
deemed herein contained) and other good and valuable consideration, the 
receipt and adequacy of which are hereby acknowledged, the parties agree as 
follows:

     1.   PRINCIPAL AMOUNT OF LOAN.

     The Borrower acknowledges that the outstanding principal balance due 
by the Borrower under the Note is, as of June 27, 1997, equal to the sum of 
One Million and 00/100 ($1,000,000.00) Dollars.  The Borrower is hereby 
making on this date and the Bank hereby acknowledges receipt of payment of 
principal in the amount of Five Hundred Thousand ($500,000.00) Dollars 
thereby reducing the outstanding principal balance due by the Borrower 
under the Note to Five Hundred Thousand ($500,000.00) Dollars.  From and 
after the date hereof in no event shall the outstanding principal balance 
due under the Note exceed the present balance of Five Hundred Thousand 
($500,000.00) Dollars.  Borrower hereby represents, warrants and confirms 
that there are no set-offs, rights, claims or causes of action of any 
nature whatsoever which the Borrower has or may assert against the Bank 
with respect to the Note, the Security Agreement or the other Loan 
Documents.

     2.   REQUEST FOR MODIFICATION.

     The Borrower has requested and the Bank has agreed to a decrease in 
the principal loan amount which may be outstanding under the Note and the 
Security Agreement and the other Loan Documents to Five Hundred Thousand 
($500,000.00) Dollars.  This Agreement provides for that decrease in the 
principal loan amount.

     3.   MODIFICATION OF NOTE AND SECURITY AGREEMENT.

     The Note and Security Agreement are hereby modified as follows:

     (a)   Interest Rate.
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     Interest shall be charged on the outstanding principal balance of the 
Loan from June 27, 1997, until the full amount of principal due hereunder 
has been paid at a rate equal at all times to the Prime Rate plus three 
quarters percent ( 3/4 %) per annum.  Interest shall be calculated daily on 
the basis of the actual number of days elapsed over a 360 day year.  "Prime 
Rate" means the rate of interest published by the Wall Street Journal.  The 
rate of interest shall change automatically and immediately as of the date 
of any change in the Prime Rate, without notice to Borrower or any 
endorser, surety or guarantor.  Any such change shall not affect or alter 
any of the other terms and conditions of the Note.

     (b)   Repayment.
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           (1)  Borrower shall pay Bank the total amount of all unpaid 
principal balance, interest accrued to the date such payment is received by 
Bank, and other costs, expenses and charges of any nature whatsoever due or 
assessable hereunder, on or before April 30, 1998, (the "Maturity Date"), 
unless earlier accelerated pursuant to the terms of the Loan Agreement.

           (2)  Interest on the unpaid principal balance shall be due and 
payable on the first business day of each month, commencing on the first 
(1st) day of March, 1997, and on the first (1st) day of each month 
thereafter.

           (3)  Upon the occurrence of Borrower's failure to make any 
payments required hereunder within ten (10) days of the date when due, 
Borrower shall pay a late payment charge on all amounts overdue equal to 
six (6%) percent of the overdue amount for each thirty (30) day period, or 
part thereof, that such amount is overdue, computed from the date when such 
amount should have been paid.

           (4)  Borrower shall have the right and option of prepaying all 
or part of the principal or interest due on the Note at any time before 
maturity and without penalty, in accordance with the terms of the Loan 
Agreement.

     (c)   Change of Interest Rate After Maturity or Acceleration.
           ------------------------------------------------------

           From and after the Maturity Date or from and after the 
occurrence of an Event of Default, irrespective of any declaration of 
maturity, all amounts remaining unpaid or thereafter accruing under the 
Note or the Security Agreement shall, at Bank's option, bear interest at a 
default rate of one half of one percent (.5 %) per annum above the interest 
rate then in effect under the Note, for the first thirty (30) days of said 
default, and an additional increase of one half of one percent (.5%) during 
each thirty (30) day period thereafter during which the default continues. 
Upon curing the default, the interest rate shall revert to the initially 
agreed upon interest rate effective on the date on which the default is 
cured.

     (d)  Security for the Note.
          ---------------------

          The Security Agreement shall continue to be a first lien on the 
Collateral and shall secure the Note as extended hereby.

     (e)  Right of Setoff by the Bank.
          ---------------------------

          Upon the occurrence of an Event of Default, to the extent 
permitted by and in addition to any other remedy provided by law, and 
regardless of the adequacy of any collateral or other means of obtaining 
repayment of the obligations evidenced hereby, Bank shall have the right 
immediately and without notice or other acts, and is specifically 
authorized hereby, to setoff against any of the Borrower' obligations under 
the Note or the Security Agreement any sum owed by the Bank or any of 
Bank's affiliates in any capacity to the Borrower whether due or not, or 
any property of the Borrower in the possession of the Bank or any of Bank's 
affiliates, even if effecting such setoff results in a loss or reduction of 
interest to Borrower or the imposition of a penalty applicable to the early 
withdrawal of time deposits.  Bank shall be deemed to have exercised such 
right of setoff and to have made a charge against any such sum or property 
immediately upon the occurrence of the Event of Default, even though the 
actual book entries may be made at some time subsequent.

     (f)  Waiver of Jury Trial.
          --------------------

          BORROWER AND BANK AGREE THAT ANY SUIT, ACTION OR PROCEEDING, 
WHETHER CLAIM OR COUNTERCLAIM, BROUGHT BY BANK OR BORROWER ON OR WITH 
RESPECT TO THE NOTE, THE SECURITY AGREEMENT OR ANY OTHER LOAN DOCUMENT OR 
THE DEALINGS OF THE PARTIES WITH RESPECT HERETO OR THERETO, SHALL BE TRIED 
ONLY BY A COURT AND NOT BY A JURY.  BANK AND BORROWER EACH HEREBY 
KNOWINGLY, VOLUNTARILY AND INTENTIONALLY WAIVE ANY RIGHT TO A TRIAL BY JURY 
IN ANY SUCH SUIT, ACTION OR PROCEEDING.  FURTHER, BORROWER WAIVES ANY RIGHT 
IT MAY HAVE TO CLAIM OR RECOVER, IN ANY SUCH SUIT, ACTION OR PROCEEDING, 
ANY SPECIAL, EXEMPLARY, PUNITIVE, CONSEQUENTIAL OR OTHER DAMAGES OTHER 
THAN, OR IN ADDITION TO, ACTUAL DAMAGES.  BORROWER ACKNOWLEDGES AND AGREES 
THAT THIS SECTION IS A SPECIFIC AND MATERIAL ASPECT OF THIS MORTGAGE AND 
THAT BANK WOULD NOT EXTEND CREDIT TO BORROWER IF THE WAIVERS SET FORTH IN 
THIS SECTION WERE NOT A PART HEREOF.

     4.   CONTINUED VALIDITY OF ORIGINAL LOAN DOCUMENTATION.

     Except as otherwise provided herein, the Note, the Security Agreement, 
and the other Loan Documents shall continue in full force and effect, in 
accordance with their respective terms, and the parties hereto hereby 
expressly ratify, confirm and reaffirm all of their respective liabilities, 
obligations, duties and responsibilities under and pursuant to the Loan 
Documents, as modified by this Agreement, and Borrower agrees that the same 
shall constitute valid and binding agreements of Borrower, enforceable in 
accordance with their respective terms.

     5.   MODIFICATION AGREEMENT CONTROLS.

     In the event of a conflict between the terms and conditions of this 
Agreement and the terms and conditions of the Note, or Security Agreement 
or the Extension Agreement, the terms and conditions of this Agreement 
shall control.

     6.   NO NOVATION.

     This Agreement does not represent in any way new indebtedness 
evidenced by the Note.  It is the intention of the parties hereto that this 
Agreement shall not constitute a novation and shall in no way adversely 
affect or impair the lien priority of the Security Agreement, or any other 
instrument securing the Loan.

     IN WITNESS WHEREOF, the parties have executed this Note and Loan and 
Security Agreement Modification Agreement as of the date first above 
written.

ATTEST:                              Borrower:

                                     Blue Fish Clothing, Inc.
                                       a Pennsylvania corporation


___________________________________  By: _____________________________
                                         Jennifer Barclay

ATTEST:                              CARNEGIE BANK, N.A.


___________________________________  By: _____________________________