Exhibit
10.78


SECOND
AMENDMENT 


TO
CANADIAN LOAN AND SECURITY AGREEMENT


This Second Amendment To Canadian Loan And Security
Agreement (the “Amendment”)
dated as of July 17, 2006, is entered into by and among WACHOVIA CAPITAL
FINANCE CORPORATION (CANADA), an Ontario corporation formerly known as Congress
Financial Corporation (Canada) (“Lender”),
and GUESS? CANADA CORPORATION, a Canadian corporation, which, effective August
1, 2005, amalgamated with its wholly-owned subsidiary, GUESS? CANADA RETAIL,
INC., a Canadian corporation (the “Borrower”),
as confirmed and acknowledged by Lender on July 27, 2005,with reference to the
following facts:


RECITALS


A.                                   Lender
is extending various secured financial accommodations to the Borrower upon the
terms of that certain Canadian Loan and Security Agreement dated as of December
20, 2002, as amended by that certain First Amendment to Canadian Loan and
Security Agreement dated as of December 30, 2004 (as the same now exists or may
hereafter be amended, modified, supplement, extended, renewed or replaced, the “Loan Agreement”).


B.                                     Each
of the Borrower and the Lender desires to amend the Loan Agreement upon the
terms and conditions set forth herein.


C.                                     The
Borrower is entering into this Amendment with the understanding and agreement
that, except as specifically provided herein, none of the rights or remedies of
the  Lender as set forth in the Loan Agreement are being waived or
modified by the terms of this Amendment.


AMENDMENT


NOW THEREFORE, in consideration of the foregoing and for
other good and valuable consideration, the receipt and adequacy of which are
hereby acknowledged by each party hereto, the parties hereto hereby agree as
follows:


SECTION 1.  Amendment. 
Clause (e) of Section 1.31 (“Change of Control”) of the Loan Agreement is
hereby amended and restated to read in its entirety as follows:  “(e) the failure of the Permitted Holders to
hold at least thirty percent (30%) of the voting power of the total outstanding
Voting Stock of Parent, and the failure of Parent to own one hundred percent
(100%) of the voting power of the total outstanding Voting Stock of the other
Borrowers.”


SECTION 2.  Conditions
to Effectiveness.  The effectiveness of this Amendment is subject to
the receipt by Lender of the following:


(a)                                  Counterparts
of this Amendment, duly executed and delivered by each of the parties hereto.


(b)                                 Such
other documents related hereto or in furtherance hereof as Lender may
reasonably require.









 



SECTION 3.  No
Other Changes.  Except as explicitly amended by this Amendment, all of
the terms and conditions of the Loan Agreement shall remain in full force and
effect and shall apply to any Loan or Letter of Credit Accommodation
thereunder.


SECTION 4.  Defined
Terms.  Unless otherwise defined herein, terms used in this Amendment
that are defined in the Loan Agreement shall have the same meanings herein as
in the Loan Agreement.  In addition, it is expressly understood that the
term Financing Agreements as used herein or in any other Financing Agreement
includes this Amendment for all purposes, including for the purposes of Section
5 hereof.


SECTION 5.  Representations
and Warranties.  The Borrower reaffirms that the representations and
warranties made to Lender in the Loan Agreement and other Financing Agreements
are true and correct in all material respects as of the date of this Amendment
as though made as of such date and after giving effect to this Amendment. 
In addition, the Borrower makes the following representations and warranties to
Lender, which shall survive the execution of this Amendment.


(a)                                  The
execution, delivery and performance of this Amendment are within the Borrower’s
powers, have been duly authorized by all necessary actions, have received all
necessary governmental approvals, if any, and do not (i) contravene any other
contractual restriction, law or governmental regulation or court decree or
order binding on or affecting the Borrower or its assets, (ii) violate the
Borrower’s organizational documents or instruments, or (iii) result in, or
require the creation or imposition of, any security interest, mortgage, pledge,
lien, charge or other encumbrance of any nature whatsoever on any of any
Obligor’s assets or properties, including the Collateral, except for liens,
security interests and other encumbrances granted under the Financing
Agreements.


(b)                                 This
Amendment is the legal, valid and binding obligation of the Borrower
enforceable against the Borrower in accordance with its terms, except as
enforcement may be limited by bankruptcy, insolvency, moratorium and other
similar laws affecting the rights of creditors generally.


(c)                                  Since
the dates of the financial statements most recently provided by Borrower to
Lender pursuant to Sections 9.6(a)(i) and 9.6(a)(iii) of the Loan Agreement,
there has been no Material Adverse Change.


(d)                                 No
event has occurred and is continuing, after giving effect to this Amendment,
which constitutes a Default or an Event of Default under the Loan Agreement or
any other of the Financing Agreements, or would constitute an Event of Default
but for the requirement that notice be given or time elapse or both.


SECTION 6.  Continuing
Effect of Financing Agreements.  To the extent of any inconsistencies
between the terms of this Amendment and the Loan Agreement, this Amendment
shall govern.  In all other respects, the Loan Agreement and other
Financing Agreements shall remain in full force and effect and are hereby
ratified and confirmed.


SECTION 7.  Governing Laws.  This
Amendment, upon becoming effective, shall be deemed to be a contract made under,
governed by, and subject to, and shall be construed in









 



accordance with, the internal laws of the Province of
Ontario or the laws of Canada applicable therein.


SECTION 8.  No
Waiver.  The execution of this Amendment and acceptance of any other
documents related hereto shall not be deemed to be a waiver of any Event of
Default under the Loan Agreement or breach, default or event of default under
any other Financing Agreement, whether or not known to Lender and whether or
not existing on the date of this Amendment.


SECTION 9.  Integration. 
The Loan Agreement as amended by this Amendment, together with the other
Financing Agreements, incorporates all negotiations of the parties hereto with
respect to the subject matter hereof and is the final expression and agreement
of the parties hereto with respect to the subject matter hereof and may not be
contradicted by evidence of prior, contemporaneous or subsequent oral
agreements of the parties; there are no oral agreements between the
parties.  Without limiting the foregoing, in the event this Amendment
conflicts with the terms of any letter agreement between Borrower and Lender,
the terms of this Amendment shall control.


SECTION
10.  Reference to and Effect on the Financing
Agreements.


(a)                                  Upon
and after the effectiveness of this Amendment, each reference in the Loan
Agreement to “this Agreement”, “hereunder”, “herein”, “hereof” or words of like
import referring to the Loan Agreement, and each reference in all other
documents or agreements related thereto, including the other Financing
Agreements, to “the Loan Agreement”, “thereof” or words of like import
referring to the Loan Agreement, shall mean and be a reference to the Loan
Agreement as modified and amended hereby.


(b)                                 To
the extent that any terms and conditions in any of the Financing Agreements or
any documents or agreements related thereto shall contradict or be in conflict
with any terms or conditions of the Loan Agreement, after giving effect to this
Amendment, such terms and conditions are hereby deemed modified or amended
accordingly to reflect the terms and conditions of the Loan Agreement as
modified or amended hereby.


SECTION 11.  Severability. 
Any provision of this Amendment which is prohibited or unenforceable in any
jurisdiction shall, as to such provision and such jurisdiction, be ineffective
to the extent of such prohibition or unenforceability without invalidating the
remaining provisions of this Amendment affecting the validity or enforceability
of such provision in any other jurisdiction.


SECTION 12.  Execution
in Counterparts.  This Amendment may be executed by facsimile and in
any number of counterparts, each of which when so executed and delivered shall
be deemed an original and all of which counterparts, taken together, shall
constitute one and the same instrument.


SECTION 13.  Section
Captions.  The various headings of this Amendment are inserted for
convenience only and shall not affect the meaning or interpretation of this
Amendment or any provisions hereof.









 



SECTION 14.  Successors
and Assigns.  This Amendment shall be binding upon and shall inure to
the benefit of the parties hereto and their respective successors and assigns.


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IN WITNESS
WHEREOF, the parties hereto, intending to be legally bound hereby, have
executed this Amendment as of the date first set forth above, to become
effective in the manner set forth above.


	
  

  	
  GUESS? CANADA CORPORATION,

  
	
   

  	
  as Borrower

  
	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
  /s/

  	
  Deborah Siegel

  	
   

  
	
   

  	
  Name:

  	
  Deborah Siegel

  
	
   

  	
  Title:

  	
  Secretary

  
						



 









 



 


	
  

  	
  WACHOVIA CAPITAL FINANCE

  CORPORATION

  
	
   

  	
  (CANADA), as Lender

  
	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
  /s/

  	
  Gary Whitaker

  	
   

  
	
   

  	
  Name:

  	
  Gary Whitaker

  
	
   

  	
  Title:

  	
  Director