Document:

<PAGE>

                                                                    Exhibit 10.9

                               SECURITY AGREEMENT

         THIS SECURITY AGREEMENT (this "Agreement") is made as of the 1st day of
May, 2001, by and among L.S. HOLDING (USA), INC., an Alaska corporation, whose
mailing address and principal place of business is 236 and 238 South Franklin,
Juneau, Alaska 99801 ("L.S. USA"), LITTLE SWITZERLAND, INC., a Delaware
corporation, whose mailing address and principal place of business is 161-B
Crown Bay, St. Thomas, U.S. Virgin Islands 00802 ("Little Switzerland," and,
collectively, with L.S. USA, the "Debtors") and THE CHASE MANHATTAN BANK, a
commercial banking institution, whose mailing address is P.O. Box 309600, St.
Thomas, U.S. Virgin Islands 00803 (the "Secured Party").

         WHEREAS, a Security Agreement was executed on May 7, 1999 (the "1999
Security Agreement") by the Debtors and certain additional corporations and
foreign entities affiliated with the Debtors in favor of the Secured Party and
The Bank of Nova Scotia ("BNS"), pursuant to which UCC-1 Financing Statements
were filed with the Office of the Lt. Governor of the U.S. Virgin Islands for
the District of St. Thomas and St. John, the Office of the Lt. Governor of the
U.S. Virgin Islands for the District of St. Croix, the UCC Central Office of the
State of Alaska, the Skagway Recording District of the State of Alaska and the
Juneau Recording District of the State of Alaska, over the property described
therein;

         WHEREAS, the Debtors and their affiliates have paid to BNS all
indebtedness outstanding to BNS, including without limitation all principal,
interest, letters of credit, letters of guaranty, charges, attorneys' fees,
costs, and any other amounts outstanding to BNS;

         WHEREAS, BNS has executed a Partial Release evidencing its release of
the interest of BNS in the liens on the property pledged under the Security
Agreement;

         WHEREAS, BNS, the Secured Party, the Debtors and certain corporations
affiliated with the Debtors have executed UCC-3 Amendment Statements removing
BNS as a secured party thereunder with respect to all UCC-1 Financing Statements
filed to perfect the liens on the property pledged under the Security Agreement;

         WHEREAS, the Debtors and the Secured Party have agreed to modify
certain terms of the remaining outstanding indebtedness owed by L.S. Wholesale,
Inc., a Massachusetts corporation ("L.S. Wholesale"), to the Secured Party,
including the separation and assumption of portions of such indebtedness among
certain corporations affiliated with L.S. Wholesale, all as set forth in the

<PAGE>

SECURITY AGREEMENT
L.S. HOLDING (USA), INC. AND LITTLE SWITZERLAND, INC., DEBTOR
THE CHASE MANHATTAN BANK, SECURED PARTY
PAGE 2

following documents: (a) Loan Agreement of even date herewith by and among L.S.
Wholesale, as borrower, the Secured Party, and Little Switzerland (the "L.S.
Wholesale Loan Agreement"); (b) Loan Agreement of even date herewith by and
among L.S. Holding, Inc., a U.S. Virgin Islands corporation, as borrower,
Secured Party and Little Switzerland (the "L.S. Holding Loan Agreement"); and
(c) Loan Agreement of even date herewith by and among L.S. Holding (USA), Inc.,
an Alaska corporation, as borrower, the Secured Party and Little Switzerland
(the "L.S. USA Loan Agreement," and, collectively with the L.S. Wholesale Loan
Agreement and the L.S. Holding Loan Agreement, the "Loan Agreements");

         NOW, THEREFORE, in consideration of the premises and other good and
valuable consideration, the receipt and adequacy of which are hereby mutually
acknowledged, and to secure the payment and performance of the obligations of
the Debtors under the L.S. USA Loan Agreement and the Guaranty referenced
therein (the "Guaranty"), and further to secure the payment of the indebtedness
in the maximum principal amount of $100,000.00 evidenced by that certain
Revolving Credit Note executed by L.S. USA of even date herewith, as the same
may be hereafter amended, replaced, extended or otherwise modified
(collectively, the "Note"), together with interest, charges and other fees
thereon, and also to secure any future advances or loans which may be made at
the option of the Secured Party (collectively, the "Obligations"), Debtors
hereby grant and convey to the Secured Party a security interest in, and pledge
to the Secured Party the following assets of Debtors, wheresoever located,
whether now owned or hereafter acquired: all of the Debtors' right, title and
interest in and to all inventory, and all raw materials, work in process,
materials used or consumed in Debtors' business and finished goods, together
with all documents covering any such inventory and all general intangibles
arising therefrom, and together with all additions, accessions, products and
proceeds of any and all of the foregoing (collectively, the "Collateral").
Debtors will promptly deliver to the Secured Party, when so requested, duly
endorsed when necessary, all chattel paper, documents, instruments and related
guarantees constituting part of the Collateral, whether on hand or hereafter
received by Debtor. The parties further agree as follows:

         1. WARRANTIES AND COVENANTS OF DEBTORS. Debtors warrant, covenant and
agree as follows:

<PAGE>

SECURITY AGREEMENT
L.S. HOLDING (USA), INC. AND LITTLE SWITZERLAND, INC., DEBTOR
THE CHASE MANHATTAN BANK, SECURED PARTY
PAGE 3

         (a) To pay and perform all of the Obligations secured by this Agreement
according to their terms, specifically including, but not limited to, the Note,
the Guaranty and the L.S. USA Loan Agreement, and to comply with all terms and
conditions of the L.S. USA Loan Agreement and documents referenced therein or
executed in connection therewith.

         (b) To defend the title of the Collateral against all persons and
against all material claims and demands whatsoever, which Collateral, except for
the security interest granted hereby, is lawfully owned by the Debtors and is
now free and clear of any and all liens, security interests, claims, charges,
encumbrances, taxes and assessments except as may be set forth in SCHEDULE A
attached hereto made a part hereof or as may be otherwise approved in writing by
the Secured Party (the "Permitted Liens").

         (c) On demand from the Secured Party to do the following: furnish
further assurance of title, execute any written agreement, or do any other acts
as may be reasonable to effectuate the purposes and provisions of this
Agreement, execute any instrument or statement required by law or otherwise in
order to perfect, continue or terminate the security interest of the Secured
Party in the Collateral and pay all costs of filing in connection therewith.

         (d) To keep the Collateral free and clear of all liens, charges,
encumbrances, taxes and assessments other than the Permitted Liens.

         (e) To pay, when due, all taxes, assessments and license fees relating
to the Collateral; except where the Debtors are contesting in good faith any
such tax, assessment or fee so long as such contest does not expose the
Collateral to a material risk of seizure, forfeit or other material loss.

         (f) Except in the regular and ordinary course of the Debtors' business
or as specifically otherwise provided in the L.S. USA Loan Agreement, to retain
possession of the Collateral during the existence of this Agreement and, not to
sell, exchange, assign, loan, deliver, lease, mortgage or otherwise dispose of
same without the written consent of the Secured Party.

         (g) To keep the Collateral at the Debtors' business addresses shown on
SCHEDULE B attached hereto and made a part hereof and not to remove same (except
in the usual course of business or as specifically provided in the L.S. USA Loan
Agreement) without the prior written consent of the Secured Party.

<PAGE>

SECURITY AGREEMENT
L.S. HOLDING (USA), INC. AND LITTLE SWITZERLAND, INC., DEBTOR
THE CHASE MANHATTAN BANK, SECURED PARTY
PAGE 4

         (h) To keep the Collateral, at Debtors' own cost and expense, in good
repair and condition and not to misuse, abuse, waste or allow to deteriorate
except for normal wear and tear and to allow the Secured Party access at any
reasonable time upon reasonable notice to inspect the Collateral and the
Debtors' books and records pertaining thereto.

         (i) To keep the Collateral insured against loss by fire, theft and
other hazards (including extended coverage) consistent with Sections 4.12 and
7.8 of the L.S. USA Loan Agreement. Policies shall be in such form and amounts
and with such companies as are consistent with Sections 4.12 and 7.8 of the L.S.
USA Loan Agreement and shall name the Secured Party as additional loss payee.
Policies shall be obtained from responsible insurers consistent with Sections
4.12 and 7.8 of the L.S. USA Loan Agreement and authorized to do business in the
jurisdiction(s) in which the Collateral is located. Certificates of insurance or
policies shall be deposited with the Secured Party, who is authorized upon
reasonable notice to L.S. USA, but under no duty, to obtain such insurance upon
failure of any of the Debtors to do so. Each of the Debtors shall give immediate
written notice to the Secured Party and to insurers of material loss or damage
to the Collateral and shall promptly file proof of loss with insurers. Upon the
occurrence and continuation of an Event of Default (as defined in the L.S. USA
Loan Agreement), each of the Debtors hereby appoints the Secured Party the
attorney in fact for each Debtor in obtaining, adjusting and canceling any such
insurance and endorsing settlement drafts and hereby assigns to the Secured
Party all sums which may become payable under such insurance, including return
premiums and dividends, as additional security for the Obligations.

         (j) To immediately notify the Secured Party in writing of any change in
or discontinuance of any of Debtors' places of business.

         2. SEPARATE INSTRUMENTS; CONTINUATION OF LIEN. Each of the L.S. USA
Loan Agreement and the Note is a separate instrument and may be negotiated by
the Secured Party pursuant to the terms thereof without releasing the Debtors,
the Collateral, or any guarantor or co-maker. Debtors consent to any extension
of time of payment or other modification. With respect to the Debtors and their
Collateral, this Agreement constitutes a continuation of the security interest
granted to the Secured Party in the Collateral by the 1999 Security Agreement.
All rights,

<PAGE>

SECURITY AGREEMENT
L.S. HOLDING (USA), INC. AND LITTLE SWITZERLAND, INC., DEBTOR
THE CHASE MANHATTAN BANK, SECURED PARTY
PAGE 5

remedies, titles, liens and equities evidenced by the 1999 Security Agreement
with respect to the Collateral, as the same are perfected, are hereby
acknowledged by the Debtors to be valid and subsisting and are hereby
recognized, reaffirmed and continued in full force and effect to secure the
payment of the Note and the performance and discharge of the obligations of the
Debtors to the Secured Party under the L.S. USA Loan Agreement and the Security
Instruments referenced therein.

         3. AUTHORITY. Each of the Debtors has the requisite corporate power and
authority, and has completed all proceedings and obtained all approvals and
consents necessary to execute, deliver, and perform this Agreement and the
transactions contemplated hereby. Each of the Debtors has provided such
certified copies and original documents as the Secured Party has reasonably
required as evidence of the Debtor's organizational structure and existence,
good standing, registered trade names, ownership, powers and authorization of
signatories and other officers and agents.

         4. NO WAIVER. Waiver of or acquiescence in any default by any of the
Debtors, or failure of the Secured Party to insist upon strict performance by
any of the Debtors of any warranties or agreements in this Agreement, the Note,
the Guaranty or the L.S. USA Loan Agreement, shall not constitute a waiver of
any subsequent or other default or failure.

         5. ENTIRE AGREEMENT; SEVERABILITY. This Agreement, together with the
L.S. USA Loan Agreement and the documents referenced therein, constitute the
entire security agreement between the Secured Party and the Debtors. If any of
the provisions of this Agreement shall be held invalid or unenforceable, this
Agreement shall be construed as if not containing those provisions and the
rights and obligations of the parties hereto shall be construed and enforced
accordingly.

         6. DEFAULT. The following shall constitute a default by Debtors:

            (a) The occurrence of an Event of Default under any of the Loan
Agreements;

            (b) Subjection of any part of the Collateral to levy of execution or
other judicial process, which is not released or discharged within thirty (30)
days; or

            (c) Failure by the Debtor to comply with any term or condition of
this Agreement, which failure shall continue for thirty (30) days after notice
thereof from the Secured Party to L.S. USA.

<PAGE>

SECURITY AGREEMENT
L.S. HOLDING (USA), INC. AND LITTLE SWITZERLAND, INC., DEBTOR
THE CHASE MANHATTAN BANK, SECURED PARTY
PAGE 6

         7. REMEDIES. Upon any Event of Default, and at the option of the
Secured Party, the Obligations shall become due and payable in full in
accordance with the terms and provisions of the L.S. USA Loan Agreement and the
Note, and the Secured Party shall have all the rights, remedies and privileges
with respect to retention and sale of the Collateral and disposition of the
proceeds as are accorded to a secured party by the applicable sections of the
Virgin Islands Uniform Commercial Code respecting "Default." At such time, any
proceeds of the Collateral, when collected by the Debtors, whether consisting of
cash, checks, notes, drafts, money orders, commercial paper of any kind
whatsoever, or other documents received in payment of the Collateral shall be
promptly remitted by the Debtors to the Secured Party, in precisely the form
received, except for endorsement by the Debtors when required. Such proceeds
until remitted to the Secured Party as aforesaid, shall be held in trust by the
Debtors for, and as the property of, the Secured Party and shall not be
commingled with other funds, money or property; the Secured Party shall apply in
the Secured Party's absolute discretion all collections received by it on the
Collateral toward the payment of any of the Obligations.

         Upon any default, the Secured Party's reasonable attorneys' fees and
the legal and other expenses for pursuing, searching for, receiving, taking,
keeping, storing, advertising, and selling the Collateral shall be chargeable to
the Debtors.

         L.S. USA and any other obligors under the Note or the Guaranty shall
remain liable for any deficiency resulting from a sale of the Collateral and
shall pay any such deficiency forthwith on demand.

         If any of the Debtors shall default in the performance of any of the
provisions of this Agreement on such Debtor's part to be performed, the Secured
Party may perform same for such Debtor's account and any moneys expended in so
doing shall be chargeable with interest to the Debtors and added to and made a
part of the Obligations.

         In conjunction with, addition to or substitution for those rights, the
Secured Party, at its discretion, may: (1) enter upon Debtors' premises
peaceably by the Secured Party's own means or with legal process and take
possession of the Collateral, or render it unusable, or dispose of the
Collateral on the Debtors' premises and the Debtors agree not to resist or
interfere; (2) require

<PAGE>

SECURITY AGREEMENT
L.S. HOLDING (USA), INC. AND LITTLE SWITZERLAND, INC., DEBTOR
THE CHASE MANHATTAN BANK, SECURED PARTY
PAGE 7

Debtors to assemble the Collateral and make it available to the Secured Party at
a place to be designated by the Secured Party, reasonably convenient to both
parties; (3) unless the Collateral is perishable or threatens to decline
speedily in value or is of a type customarily sold on the recognized market, the
Secured Party will give Debtors reasonable notice of the time and place of any
public sale thereof or of the time after which any private sale or any other
intended disposition thereof is to be made. The requirements of reasonable
notice will be met if such notice is given, as provided in Section 13 hereof, at
least ten (10) business days before the time of sale or disposition.

         8. ASSIGNMENT. The Secured Party may assign its interest under this
Agreement and if assigned the assignee shall be entitled, upon notifying the
Debtors and subject to the terms of the L.S. USA Loan Agreement, to performance
of all of Debtors' agreements hereunder and the assignee shall be entitled to
all of the rights and remedies of a Secured Party hereunder and shall be subject
to the terms of the L.S. USA Loan Agreement.

         9. CUMULATIVE RIGHTS. The rights, powers and remedies of the Secured
Party under this Agreement shall be in addition to all rights, powers and
remedies given to the Secured Party by virtue of any statute or rule of law, the
Note, the Guaranty, the L.S. USA Loan Agreement or any other instrument, all of
which rights, powers and remedies shall be cumulative and may be exercised
successively or concurrently without impairing the Secured Party's security
interest in the Collateral.

         10. FINANCING STATEMENTS. Upon notice to L.S. USA, the Secured Party is
hereby authorized to file Financing Statements or amendments thereto without the
signature of the Debtors with respect to any of the Collateral in any
jurisdiction in which such Collateral is regularly located and the expense of
any such filing shall be the responsibility of, and immediately reimbursed by,
the Debtors; provided, however, that the failure of the Secured Party to provide
notice to L.S. USA or any alleged deficiency of such notice shall not affect the
validity or enforceability of the Secured Party's security interest in the
Collateral or the perfection of such security interest.

         11. OBLIGATIONS OF DEBTORS. The term "Debtors" shall mean all and each
and any of them, and their obligations and agreements hereunder shall be joint
and several except that the obligations concerning such part of the Collateral
in the possession or control of each Debtor or

<PAGE>

SECURITY AGREEMENT
L.S. HOLDING (USA), INC. AND LITTLE SWITZERLAND, INC., DEBTOR
THE CHASE MANHATTAN BANK, SECURED PARTY
PAGE 8

in which such Debtor otherwise has an interest are specific to such Debtor and
are independent of the obligations of any other Debtor, and this Agreement may
be enforced against any Debtor and any remedy hereunder at law or at equity may
be exercised against any Debtor, without joining any other Debtor in such
enforcement action or proceeding or exercise of remedy.

         12. COUNTERPARTS. This Agreement may be signed in one or more
counterparts by the parties hereto and upon the execution of this Agreement by
all parties in any one or more counterparts and, upon attachment of all
necessary signature pages to a copy of this instrument, it shall be deemed to be
one instrument for all purposes. This Agreement may be executed by facsimile
signature, which shall be deemed an original.

         13. NOTICE. All notices and other communications required under this
Agreement shall be in writing and hand delivered or mailed by first class
registered mail or certified mail, postage prepaid, return receipt requested, or
delivered by overnight courier, addressed as set forth above in this Agreement
(or at such other address as such party shall have furnished to the other party
in writing); provided, however, that notices or other communications to all or
any of the Debtors shall be sent to said Debtor(s) addressed in care of L.S.
USA.

         14. CHOICE OF LAW; VENUE. In all respects, including without
limitation, matters of construction and performance of this Agreement and the
obligations arising hereunder, this Agreement shall be governed by, and
construed in accordance with, the laws of the U.S. Virgin Islands. Any legal
action or proceeding with respect to this Agreement, the Note, the Guaranty, the
L.S. USA Loan Agreement or any other agreement executed in connection therewith
may be brought in the courts of the U.S. Virgin Islands (including, without
limitation, the Federal District Court for the District of the U.S. Virgin
Islands), and by execution and delivery of this Agreement, the Debtors consent,
for themselves and in respect of their respective property, to the non-exclusive
jurisdiction of those courts. Each of the Debtors irrevocably waives any
objection, including any objection to the laying of venue and any objection
based on the grounds of FORUM NON CONVENIENS, which it may now or hereafter have
to the bringing of any action or proceeding in such jurisdiction in respect of
this Agreement or any other agreement executed in connection therewith. Each of
the Debtors waives personal service of any summons, complaint or other process,
which may be made by any

<PAGE>

SECURITY AGREEMENT
L.S. HOLDING (USA), INC. AND LITTLE SWITZERLAND, INC., DEBTOR
THE CHASE MANHATTAN BANK, SECURED PARTY
PAGE 9

other means permitted by U.S. Virgin Islands law.

         This Section shall not be deemed to preclude any party from filing any
such action, suit or proceeding in any other appropriate forum if the courts of
the U.S. Virgin Islands decline jurisdiction.

         15. WAIVER OF RIGHT TO TRIAL BY JURY. EACH DEBTOR HEREBY KNOWINGLY,
VOLUNTARILY AND INTENTIONALLY WAIVES THE RIGHT ANY OF THEM MAY HAVE TO A TRIAL
BY JURY WITH RESPECT OF ANY LITIGATION BASED ON, ARISING OUT OF, UNDER OR IN
CONNECTION WITH THIS AGREEMENT, THE NOTE, THE GUARANTY, THE L.S. USA LOAN
AGREEMENT AND ANY AGREEMENT EXECUTED IN CONJUNCTION THEREWITH, OR ANY COURSE OF
CONDUCT, COURSE OF DEALING, STATEMENTS (WHETHER VERBAL OR WRITTEN) OR ACTIONS BY
ANY PARTY. THIS PROVISION IS A MATERIAL INDUCEMENT FOR THE SECURED PARTY'S
ACCEPTANCE OF THIS AGREEMENT AND THE L.S. USA LOAN AGREEMENT. FURTHER, THE
DEBTORS HEREBY CERTIFY THAT NO REPRESENTATIVE OR AGENT OF THE SECURED PARTY, NOR
THE COUNSEL OF THE SECURED PARTY, HAS REPRESENTED, EXPRESSLY OR OTHERWISE, THAT
THE SECURED PARTY WOULD NOT, IN THE EVENT OF SUCH LITIGATION, SEEK TO ENFORCE
THIS WAIVER OF RIGHT TO JURY TRIAL PROVISION. NO REPRESENTATIVE OR AGENT OF THE
SECURED PARTY NOR THE COUNSEL OF THE SECURED PARTY HAS THE AUTHORITY TO WAIVE,
CONDITION, OR MODIFY THIS PROVISION.

         16. EXPENSES. The Debtors, jointly and severally, agree to pay all
reasonable expenses (including legal expenses and attorneys' fees) payable in
connection with the execution and delivery of this Agreement and the L.S. USA
Loan Agreement, as well as all reasonable expenses (including legal expenses and
attorneys' fees) of every kind incidental to the collection or enforcement of
this Agreement and the L.S. USA Loan Agreement; and the Debtors, jointly and
severally, shall indemnify the Secured Party against all reasonable claims for
such fees, charges and commissions arising in connection with the transaction
contemplated by this Agreement and the L.S. USA Loan

<PAGE>

SECURITY AGREEMENT
L.S. HOLDING (USA), INC. AND LITTLE SWITZERLAND, INC., DEBTOR
THE CHASE MANHATTAN BANK, SECURED PARTY
PAGE 10

Agreement, excluding any gross negligence or willful misconduct by the Secured
Party or its representatives or agents acting in the course and scope of this
Agreement or the L.S. USA Loan Agreement.

         17. TRADE NAMES; PLACES OF BUSINESS; COLLATERAL; RECORDS. Each Debtor
represents that its principal place of business is set forth on SCHEDULE B
hereto; that the additional business location(s) and trade name(s) set forth
next to each Debtor on SCHEDULE B hereto constitute the only additional business
location(s) and trade name(s) used by Debtors; and that, except as otherwise
disclosed to the Secured Party in writing prior to the date hereof, the
Collateral of each Debtor is located at each Debtor's principal place of
business or at its additional business locations(s), if any, and each Debtor's
records concerning the Collateral are located at each Debtor's principal place
of business or at the principal place of business of L.S. USA.

         18. MISCELLANEOUS. All rights of the Secured Party hereunder shall
inure to the benefit of its successors and assigns, and all obligations of the
Debtors hereunder shall be binding upon their successors and assigns. The gender
and number used in this Agreement are used as a reference term only and shall
apply with the same effect whether the parties are of the masculine or feminine
gender, corporate or other form, and the singular shall likewise include the
plural. This Agreement may not be amended or modified except by a writing signed
by each of the parties hereto.

<PAGE>

SECURITY AGREEMENT
L.S. HOLDING (USA), INC. AND LITTLE SWITZERLAND, INC., DEBTOR
THE CHASE MANHATTAN BANK, SECURED PARTY
PAGE 11

         IN WITNESS WHEREOF, the parties have respectively signed these presents
the day and year first above written.

                           DEBTORS:

                                       L.S. HOLDING (USA), INC., Borrower

                                  By:  /s/ Charles M. Pepper
                                       ------------------------------
                                       Charles M. Pepper, Senior Vice President
                                                                      (SEAL)

                              Attest:  /s/ Cloretta Bostic Holland
                                       -----------------------------------
                                       Cloretta Bostic Holland, Secretary

                                       LITTLE SWITZERLAND, INC., Guarantor

                                  By:  /s/ Charles M. Pepper
                                       ---------------------------------------
                                       Charles M. Pepper, Senior Vice President
                                                                      (SEAL)

                              Attest:  /s/ Patrick J. Hopper, Secretary
                                       ------------------------------
                                       Patrick J. Hopper, Secretary

                              SECURED PARTY:

                                       THE CHASE MANHATTAN BANK

                                   By: /s/ Roger Odell
                                       ------------------------------------
                                       Roger Odell, Managing Director

<PAGE>

                                   SCHEDULE A

                                 PERMITTED LIENS

(a)      liens, mortgages or encumbrances in favor of Tiffany and Company and
         subordinate to the liens, mortgages and encumbrances of the Lender;

(b)      liens for taxes, assessments and other governmental charges or levies
         not yet due or as to which the period of grace (not to exceed thirty
         (30) days), if any, related thereto has not expired or which are being
         contested diligently and in good faith by appropriate proceedings;

(c)      the claims of materialmen, mechanics, carriers, warehousemen,
         processors or landlords for labor, materials, supplies or rentals
         incurred in the ordinary course of business, (i) which are not overdue
         for a period of more than ninety (90) days or (ii) which are being
         contested diligently and in good faith by appropriate proceedings;

(d)      liens consisting of deposits or pledges made in the ordinary course of
         business in connection with, or to secure payment of, obligations under
         workers' compensation, unemployment insurance or similar legislation;
         and

(e)      liens constituting encumbrances in the nature of zoning restrictions,
         easements and rights or restrictions of record on the use of real
         property, which in the aggregate are not substantial in amount and
         which do not, in any case, detract from the value of such property or
         impair the use thereof in the ordinary conduct of business.

<PAGE>

                                   SCHEDULE B

                   DEBTORS' PLACES OF BUSINESS AND TRADENAMES

<TABLE>
<S>                                       <C>
L.S. HOLDING (USA), INC.

           PRINCIPAL PACE OF BUSINESS:    236 and 238 South Franklin Street
                                          Juneau, Alaska

           OTHER BUSINESS LOCATIONS:      Fifth & Broadway
                                          Skagway, Alaska

                                          2 1/2 Broadway
                                          Skagway, Alaska

                                          315 Mill Street
                                          Ketchikan, Alaska

           TRADENAMES:                    Little Switzerland

LITTLE SWITZERLAND, INC.

           PRINCIPAL PLACE OF BUSINESS:   161-B Crown Bay
                                          P.O. Box 930
                                          St. Thomas, USVI   00804

           OTHER BUSINESS LOCATIONS:      none

           TRADENAMES:                    L.S. Holding, Inc.
                                          L.S. USA, Inc.
</TABLE><PAGE>

                                                                   Exhibit 10.10

                               SECURITY AGREEMENT

      THIS SECURITY AGREEMENT (this "Agreement") is made as of the 1st day of
May, 2001, by and among L.S. HOLDING, INC., a U.S. Virgin Islands corporation,
whose mailing address and principal place of business is 161-B Crown Bay, St.
Thomas, U.S. Virgin Islands 00802 ("L.S. Holding"), LITTLE SWITZERLAND, INC., a
Delaware corporation, whose mailing address and principal place of business is
161-B Crown Bay, St. Thomas, U.S. Virgin Islands 00802 ("Little Switzerland,"
and, collectively, with L.S. Holding, the "Debtors") and THE CHASE MANHATTAN
BANK, a commercial banking institution, whose mailing address is P.O. Box
309600, St. Thomas, U.S. Virgin Islands 00803 (the "Secured Party").

      WHEREAS, a Security Agreement was executed on May 7, 1999 (the "1999
Security Agreement") by the Debtors and certain additional corporations and
foreign entities affiliated with the Debtors in favor of the Secured Party and
The Bank of Nova Scotia ("BNS"), pursuant to which UCC-1 Financing Statements
were filed with the Office of the Lt. Governor of the U.S. Virgin Islands for
the District of St. Thomas and St. John, the Office of the Lt. Governor of the
U.S. Virgin Islands for the District of St. Croix, the UCC Central Office of the
State of Alaska, the Skagway Recording District of the State of Alaska and the
Juneau Recording District of the State of Alaska, over the property described
therein;

      WHEREAS, the Debtors and their affiliates has paid to BNS all indebtedness
outstanding to BNS, including without limitation all principal, interest,
letters of credit, letters of guaranty, charges, attorneys' fees, costs, and any
other amounts outstanding to BNS;

      WHEREAS, BNS has executed a Partial Release evidencing its release of the
interest of BNS in the liens on the property pledged under the Security
Agreement;

      WHEREAS, BNS, the Secured Party, the Debtors and certain corporations
affiliated with the Debtors have executed UCC-3 Amendment Statements removing
BNS as a secured party thereunder with respect to all UCC-1 Financing Statements
filed to perfect the liens on the property pledged under the Security Agreement;

      WHEREAS, the Debtors and the Secured Party have agreed to modify certain
terms of the remaining outstanding indebtedness owed by L.S. Wholesale Inc., a
Massachusetts corporation ("L.S. Wholesale") to the Secured Party, including the
separation and assumption of portions of such indebtedness among certain
corporations affiliated with L.S. Wholesale, all as set forth in the

<PAGE>

SECURITY AGREEMENT
L.S. HOLDING, INC. AND LITTLE SWITZERLAND, INC., DEBTOR
THE CHASE MANHATTAN BANK, SECURED PARTY
PAGE 2

following documents: (a) Loan Agreement of even date herewith by and among L.S.
Wholesale, as borrower, the Secured Party, and Little Switzerland (the "L.S.
Wholesale Loan Agreement"); (b) Loan Agreement of even date herewith by and
among L.S. Holding, Inc., a U.S. Virgin Islands corporation, as borrower,
Secured Party and Little Switzerland (the "L.S. Holding Loan Agreement"); and
(c) Loan Agreement of even date herewith by and among L.S. Holding (USA), Inc.,
an Alaska corporation, as borrower, the Secured Party and Little Switzerland
(the "L.S. USA Loan Agreement," and, collectively with the L.S. Wholesale Loan
Agreement and the L.S. Holding Loan Agreement, the "Loan Agreements");

      NOW, THEREFORE, in consideration of the premises and other good and
valuable consideration, the receipt and adequacy of which are hereby mutually
acknowledged, and to secure the payment and performance of the obligations of
the Debtors under the L.S. Holding Loan Agreement and the Guaranty referenced
therein (the "Guaranty"), and further to secure the payment of the indebtedness
in the maximum principal amount of $2,950,000.00 evidenced by that certain
Revolving Credit Note executed by L.S. Holding of even date herewith, as the
same may be hereafter amended, replaced, extended or otherwise modified
(collectively, the "Note"), together with interest, charges and other fees
thereon, and also to secure any future advances or loans which may be made at
the option of the Secured Party (collectively, the "Obligations"), Debtors
hereby grant and convey to the Secured Party a security interest in, and pledge
to the Secured Party the following assets of Debtors, wheresoever located,
whether now owned or hereafter acquired: all of the Debtors' right, title and
interest in and to all inventory, and all raw materials, work in process,
materials used or consumed in Debtors' business and finished goods, together
with all documents covering any such inventory and all general intangibles
arising therefrom, and together with all additions, accessions, products and
proceeds of any and all of the foregoing (collectively, the "Collateral").
Debtors will promptly deliver to the Secured Party, when so requested, duly
endorsed when necessary, all chattel paper, documents, instruments and related
guarantees constituting part of the Collateral, whether on hand or hereafter
received by Debtor. The parties further agree as follows:

      1. WARRANTIES AND COVENANTS OF DEBTORS. Debtors warrant, covenant and
agree as follows:

<PAGE>

SECURITY AGREEMENT
L.S. HOLDING, INC. AND LITTLE SWITZERLAND, INC., DEBTOR
THE CHASE MANHATTAN BANK, SECURED PARTY
PAGE 3

      (a) To pay and perform all of the Obligations secured by this Agreement
according to their terms, specifically including, but not limited to, the Note,
the Guaranty and the L.S. Holding Loan Agreement, and to comply with all terms
and conditions of the L.S. Holding Loan Agreement and documents referenced
therein or executed in connection therewith.

      (b) To defend the title of the Collateral against all persons and against
all material claims and demands whatsoever, which Collateral, except for the
security interest granted hereby, is lawfully owned by the Debtors and is now
free and clear of any and all liens, security interests, claims, charges,
encumbrances, taxes and assessments except as may be set forth in SCHEDULE A
attached hereto made a part hereof or as may be otherwise approved in writing by
the Secured Party (the "Permitted Liens").

      (c) On demand from the Secured Party to do the following: furnish further
assurance of title, execute any written agreement, or do any other acts as may
be reasonable to effectuate the purposes and provisions of this Agreement,
execute any instrument or statement required by law or otherwise in order to
perfect, continue or terminate the security interest of the Secured Party in the
Collateral and pay all costs of filing in connection therewith.

      (d) To keep the Collateral free and clear of all liens, charges,
encumbrances, taxes and assessments other than the Permitted Liens.

      (e) To pay, when due, all taxes, assessments and license fees relating to
the Collateral; except where the Debtors are contesting in good faith any such
tax, assessment or fee so long as such contest does not expose the Collateral to
a material risk of seizure, forfeit or other material loss.

      (f) Except in the regular and ordinary course of the Debtors' business or
as specifically otherwise provided in the L.S. Holding Loan Agreement, to retain
possession of the Collateral during the existence of this Agreement and, not to
sell, exchange, assign, loan, deliver, lease, mortgage or otherwise dispose of
same without the written consent of the Secured Party.

      (g) To keep the Collateral at the Debtors' business addresses shown on
SCHEDULE B attached hereto and made a part hereof and not to remove same (except
in the usual course of business or as specifically provided in the L.S. Holding
Loan Agreement) without the prior written consent of the Secured Party.

<PAGE>

SECURITY AGREEMENT
L.S. HOLDING, INC. AND LITTLE SWITZERLAND, INC., DEBTOR
THE CHASE MANHATTAN BANK, SECURED PARTY
PAGE 4

      (h) To keep the Collateral, at Debtors' own cost and expense, in good
repair and condition and not to misuse, abuse, waste or allow to deteriorate
except for normal wear and tear and to allow the Secured Party access at any
reasonable time upon reasonable notice to inspect the Collateral and the
Debtors' books and records pertaining thereto.

      (i) To keep the Collateral insured against loss by fire, theft and other
hazards (including extended coverage) consistent with Sections 4.12 and 7.8 of
the L.S. Holding Loan Agreement. Policies shall be in such form and amounts and
with such companies as are consistent with Sections 4.12 and 7.8 of the L.S.
Holding Loan Agreement and shall name the Secured Party as additional loss
payee. Policies shall be obtained from responsible insurers consistent with
Sections 4.12 and 7.8 of the L.S. Holding Loan Agreement and authorized to do
business in the jurisdiction(s) in which the Collateral is located. Certificates
of insurance or policies shall be deposited with the Secured Party, who is
authorized upon reasonable notice to L.S. Holding, but under no duty, to obtain
such insurance upon failure of any of the Debtors to do so. Each of the Debtors
shall give immediate written notice to the Secured Party and to insurers of
material loss or damage to the Collateral and shall promptly file proof of loss
with insurers. Upon the occurrence and continuation of an Event of Default (as
defined in the L.S. Holding Loan Agreement), each of the Debtors hereby appoints
the Secured Party the attorney in fact for each Debtor in obtaining, adjusting
and canceling any such insurance and endorsing settlement drafts and hereby
assigns to the Secured Party all sums which may become payable under such
insurance, including return premiums and dividends, as additional security for
the Obligations.

      (j) To immediately notify the Secured Party in writing of any change in or
discontinuance of any of Debtors' places of business.

      2. SEPARATE INSTRUMENTS; CONTINUATION OF LIEN. Each of the L.S. Holding
Loan Agreement and the Note is a separate instrument and may be negotiated by
the Secured Party pursuant to the terms thereof without releasing the Debtors,
the Collateral, or any guarantor or co-maker. Debtors consent to any extension
of time of payment or other modification. With respect to the Debtors and their
Collateral, this Agreement constitutes a continuation of the security interest
granted to the Secured Party in the Collateral by the 1999 Security Agreement.
All

<PAGE>

SECURITY AGREEMENT
L.S. HOLDING, INC. AND LITTLE SWITZERLAND, INC., DEBTOR
THE CHASE MANHATTAN BANK, SECURED PARTY
PAGE 5

rights, remedies, titles, liens and equities evidenced by the 1999 Security
Agreement with respect to the Collateral, as the same are perfected, are hereby
acknowledged by the Debtors to be valid and subsisting and are hereby
recognized, reaffirmed and continued in full force and effect to secure the
payment of the Note and the performance and discharge of the obligations of the
Debtors to the Secured Party under the L.S. Holding Loan Agreement and the
Security Instruments referenced therein.

      3. AUTHORITY. Each of the Debtors has the requisite corporate power and
authority, and has completed all proceedings and obtained all approvals and
consents necessary to execute, deliver, and perform this Agreement and the
transactions contemplated hereby. Each of the Debtors has provided such
certified copies and original documents as the Secured Party has reasonably
required as evidence of the Debtor's organizational structure and existence,
good standing, registered trade names, ownership, powers and authorization of
signatories and other officers and agents.

      4. NO WAIVER. Waiver of or acquiescence in any default by any of the
Debtors, or failure of the Secured Party to insist upon strict performance by
any of the Debtors of any warranties or agreements in this Agreement, the Note,
the Guaranty or the L.S. Holding Loan Agreement, shall not constitute a waiver
of any subsequent or other default or failure.

      5. ENTIRE AGREEMENT; SEVERABILITY. This Agreement, together with the L.S.
Holding Loan Agreement and the documents referenced therein, constitute the
entire security agreement between the Secured Party and the Debtors. If any of
the provisions of this Agreement shall be held invalid or unenforceable, this
Agreement shall be construed as if not containing those provisions and the
rights and obligations of the parties hereto shall be construed and enforced
accordingly.

      6. DEFAULT. The following shall constitute a default by Debtors:

         (a) The occurrence of an Event of Default under any of the Loan
Agreements;

         (b) Subjection of any part of the Collateral to levy of execution or
other judicial process, which is not released or discharged within thirty (30)
days; or
         (c) Failure by the Debtor to comply with any term or condition of this
Agreement, which failure shall continue for thirty (30) days after notice
thereof from the Secured Party to L.S.

<PAGE>

SECURITY AGREEMENT
L.S. HOLDING, INC. AND LITTLE SWITZERLAND, INC., DEBTOR
THE CHASE MANHATTAN BANK, SECURED PARTY
PAGE 6

Holding.

      7. REMEDIES. Upon any Event of Default, and at the option of the Secured
Party, the Obligations shall become due and payable in full in accordance with
the terms and provisions of the L.S. Holding Loan Agreement and the Note, and
the Secured Party shall have all the rights, remedies and privileges with
respect to retention and sale of the Collateral and disposition of the proceeds
as are accorded to a secured party by the applicable sections of the Virgin
Islands Uniform Commercial Code respecting "Default." At such time, any proceeds
of the Collateral, when collected by the Debtors, whether consisting of cash,
checks, notes, drafts, money orders, commercial paper of any kind whatsoever, or
other documents received in payment of the Collateral shall be promptly remitted
by the Debtors to the Secured Party, in precisely the form received, except for
endorsement by the Debtors when required. Such proceeds until remitted to the
Secured Party as aforesaid, shall be held in trust by the Debtors for, and as
the property of, the Secured Party and shall not be commingled with other funds,
money or property; the Secured Party shall apply in the Secured Party's absolute
discretion all collections received by it on the Collateral toward the payment
of any of the Obligations.

      Upon any default, the Secured Party's reasonable attorneys' fees and the
legal and other expenses for pursuing, searching for, receiving, taking,
keeping, storing, advertising, and selling the Collateral shall be chargeable to
the Debtors.

      L.S. Holding and any other obligors under the Note or the Guaranty shall
remain liable for any deficiency resulting from a sale of the Collateral and
shall pay any such deficiency forthwith on demand.

      If any of the Debtors shall default in the performance of any of the
provisions of this Agreement on such Debtor's part to be performed, the Secured
Party may perform same for such Debtor's account and any moneys expended in so
doing shall be chargeable with interest to the Debtors and added to and made a
part of the Obligations.

      In conjunction with, addition to or substitution for those rights, the
Secured Party, at its discretion, may: (1) enter upon Debtors' premises
peaceably by the Secured Party's own means or with legal process and take
possession of the Collateral, or render it unusable, or dispose of the

<PAGE>

SECURITY AGREEMENT
L.S. HOLDING, INC. AND LITTLE SWITZERLAND, INC., DEBTOR
THE CHASE MANHATTAN BANK, SECURED PARTY
PAGE 7

Collateral on the Debtors' premises and the Debtors agree not to resist or
interfere; (2) require Debtors to assemble the Collateral and make it available
to the Secured Party at a place to be designated by the Secured Party,
reasonably convenient to both parties; (3) unless the Collateral is perishable
or threatens to decline speedily in value or is of a type customarily sold on
the recognized market, the Secured Party will give Debtors reasonable notice of
the time and place of any public sale thereof or of the time after which any
private sale or any other intended disposition thereof is to be made. The
requirements of reasonable notice will be met if such notice is given, as
provided in Section 13 hereof, at least ten (10) business days before the time
of sale or disposition.

      8. ASSIGNMENT. The Secured Party may assign its interest under this
Agreement and if assigned the assignee shall be entitled, upon notifying the
Debtors and subject to the terms of the L.S. Holding Loan Agreement, to
performance of all of Debtors' agreements hereunder and the assignee shall be
entitled to all of the rights and remedies of a Secured Party hereunder and
shall be subject to the terms of the L.S. Holding Loan Agreement.

      9. CUMULATIVE RIGHTS. The rights, powers and remedies of the Secured Party
under this Agreement shall be in addition to all rights, powers and remedies
given to the Secured Party by virtue of any statute or rule of law, the Note,
the Guaranty, the L.S. Holding Loan Agreement or any other instrument, all of
which rights, powers and remedies shall be cumulative and may be exercised
successively or concurrently without impairing the Secured Party's security
interest in the Collateral.

      10. FINANCING STATEMENTS. Upon notice to L.S. Holding, the Secured Party
is hereby authorized to file Financing Statements or amendments thereto without
the signature of the Debtors with respect to any of the Collateral in any
jurisdiction in which such Collateral is regularly located and the expense of
any such filing shall be the responsibility of, and immediately reimbursed by,
the Debtors; provided, however, that the failure of the Secured Party to provide
notice to L.S. Holding or any alleged deficiency of such notice shall not affect
the validity or enforceability of the Secured Party's security interest in the
Collateral or the perfection of such security interest.

      11. OBLIGATIONS OF DEBTORS. The term "Debtors" shall mean all and each and
any of them, and their obligations and agreements hereunder shall be joint and
several except that

<PAGE>

SECURITY AGREEMENT
L.S. HOLDING, INC. AND LITTLE SWITZERLAND, INC., DEBTOR
THE CHASE MANHATTAN BANK, SECURED PARTY
PAGE 8

the obligations concerning such part of the Collateral in the possession or
control of each Debtor or in which such Debtor otherwise has an interest are
specific to such Debtor and are independent of the obligations of any other
Debtor, and this Agreement may be enforced against any Debtor and any remedy
hereunder at law or at equity may be exercised against any Debtor, without
joining any other Debtor in such enforcement action or proceeding or exercise of
remedy.

      12. COUNTERPARTS. This Agreement may be signed in one or more counterparts
by the parties hereto and upon the execution of this Agreement by all parties in
any one or more counterparts and, upon attachment of all necessary signature
pages to a copy of this instrument, it shall be deemed to be one instrument for
all purposes. This Agreement may be executed by facsimile signature, which shall
be deemed an original.

      13. NOTICE. All notices and other communications required under this
Agreement shall be in writing and hand delivered or mailed by first class
registered mail or certified mail, postage prepaid, return receipt requested, or
delivered by overnight courier, addressed as set forth above in this Agreement
(or at such other address as such party shall have furnished to the other party
in writing); provided, however, that notices or other communications to all or
any of the Debtors shall be sent to said Debtor(s) addressed in care of L.S.
Holding.

      14. CHOICE OF LAW; VENUE. In all respects, including without limitation,
matters of construction and performance of this Agreement and the obligations
arising hereunder, this Agreement shall be governed by, and construed in
accordance with, the laws of the U.S. Virgin Islands. Any legal action or
proceeding with respect to this Agreement, the Note, the Guaranty, the L.S.
Holding Loan Agreement or any other agreement executed in connection therewith
may be brought in the courts of the U.S. Virgin Islands (including, without
limitation, the Federal District Court for the District of the U.S. Virgin
Islands), and by execution and delivery of this Agreement, the Debtors consent,
for themselves and in respect of their respective property, to the non-exclusive
jurisdiction of those courts. Each of the Debtors irrevocably waives any
objection, including any objection to the laying of venue and any objection
based on the grounds of FORUM NON CONVENIENS, which it may now or hereafter have
to the bringing of any action or proceeding in such jurisdiction in respect of
this Agreement or any other agreement executed in connection therewith. Each of
the

<PAGE>

SECURITY AGREEMENT
L.S. HOLDING, INC. AND LITTLE SWITZERLAND, INC., DEBTOR
THE CHASE MANHATTAN BANK, SECURED PARTY
PAGE 9

Debtors waives personal service of any summons, complaint or other process,
which may be made by any other means permitted by U.S. Virgin Islands law.

      This Section shall not be deemed to preclude any party from filing any
such action, suit or proceeding in any other appropriate forum if the courts of
the U.S. Virgin Islands decline jurisdiction.

      15. WAIVER OF RIGHT TO TRIAL BY JURY. EACH DEBTOR HEREBY KNOWINGLY,
VOLUNTARILY AND INTENTIONALLY WAIVES THE RIGHT ANY OF THEM MAY HAVE TO A TRIAL
BY JURY WITH RESPECT OF ANY LITIGATION BASED ON, ARISING OUT OF, UNDER OR IN
CONNECTION WITH THIS AGREEMENT, THE NOTE, THE GUARANTY, THE L.S. HOLDING LOAN
AGREEMENT AND ANY AGREEMENT EXECUTED IN CONJUNCTION THEREWITH, OR ANY COURSE OF
CONDUCT, COURSE OF DEALING, STATEMENTS (WHETHER VERBAL OR WRITTEN) OR ACTIONS BY
ANY PARTY. THIS PROVISION IS A MATERIAL INDUCEMENT FOR THE SECURED PARTY'S
ACCEPTANCE OF THIS AGREEMENT AND THE L.S. HOLDING LOAN AGREEMENT. FURTHER, THE
DEBTORS HEREBY CERTIFY THAT NO REPRESENTATIVE OR AGENT OF THE SECURED PARTY, NOR
THE COUNSEL OF THE SECURED PARTY, HAS REPRESENTED, EXPRESSLY OR OTHERWISE, THAT
THE SECURED PARTY WOULD NOT, IN THE EVENT OF SUCH LITIGATION, SEEK TO ENFORCE
THIS WAIVER OF RIGHT TO JURY TRIAL PROVISION. NO REPRESENTATIVE OR AGENT OF THE
SECURED PARTY NOR THE COUNSEL OF THE SECURED PARTY HAS THE AUTHORITY TO WAIVE,
CONDITION, OR MODIFY THIS PROVISION.

      16. EXPENSES. The Debtors, jointly and severally, agree to pay all
reasonable expenses (including legal expenses and attorneys' fees) payable in
connection with the execution and delivery of this Agreement and the L.S.
Holding Loan Agreement, as well as all reasonable expenses (including legal
expenses and attorneys' fees) of every kind incidental to the collection or
enforcement of this Agreement and the L.S. Holding Loan Agreement; and the
Debtors, jointly and severally, shall indemnify the Secured Party against all
reasonable claims for such fees, charges and

<PAGE>

SECURITY AGREEMENT
L.S. HOLDING, INC. AND LITTLE SWITZERLAND, INC., DEBTOR
THE CHASE MANHATTAN BANK, SECURED PARTY
PAGE 10

commissions arising in connection with the transaction contemplated by this
Agreement and the L.S. Holding Loan Agreement, excluding any gross negligence or
willful misconduct by the Secured Party or its representatives or agents acting
in the course and scope of this Agreement or the L.S. Holding Loan Agreement.

      17. TRADE NAMES; PLACES OF BUSINESS; COLLATERAL; RECORDS. Each Debtor
represents that its principal place of business is set forth on SCHEDULE B
hereto; that the additional business location(s) and trade name(s) set forth
next to each Debtor on SCHEDULE B hereto constitute the only additional business
location(s) and trade name(s) used by Debtors; and that, except as otherwise
disclosed to the Secured Party in writing prior to the date hereof, the
Collateral of each Debtor is located at each Debtor's principal place of
business or at its additional business locations(s), if any, and each Debtor's
records concerning the Collateral are located at each Debtor's principal place
of business or at the principal place of business of L.S. Holding.

      18. MISCELLANEOUS. All rights of the Secured Party hereunder shall inure
to the benefit of its successors and assigns, and all obligations of the Debtors
hereunder shall be binding upon their successors and assigns. The gender and
number used in this Agreement are used as a reference term only and shall apply
with the same effect whether the parties are of the masculine or feminine
gender, corporate or other form, and the singular shall likewise include the
plural. This Agreement may not be amended or modified except by a writing signed
by each of the parties hereto.

<PAGE>

SECURITY AGREEMENT
L.S. HOLDING, INC. AND LITTLE SWITZERLAND, INC., DEBTOR
THE CHASE MANHATTAN BANK, SECURED PARTY
PAGE 11

      IN WITNESS WHEREOF, the parties have respectively signed these presents
the day and year first above written.

                            DEBTORS:

                                     L.S. HOLDING, INC.

                                 By:
                                     -------------------------------------
                                     ------------------------, -----------
                                                                          (SEAL)

                             Attest:
                                     -------------------------------------
                                     ------------------------, Secretary

                                     LITTLE SWITZERLAND, INC.

                                 By:
                                     -------------------------------------
                                     ------------------------, -----------
                                                                          (SEAL)

                             Attest:
                                     -------------------------------------
                                     ------------------------, Secretary

                      SECURED PARTY:

                                     THE CHASE MANHATTAN BANK

                                 By:
                                     -------------------------------------
                                     ------------------------, -----------

<PAGE>

                                   SCHEDULE A

                                 PERMITTED LIENS

(a)   liens, mortgages or encumbrances in favor of Tiffany and Company and
      subordinate to the liens, mortgages and encumbrances of the Lender;

(b)   liens for taxes, assessments and other governmental charges or levies not
      yet due or as to which the period of grace (not to exceed thirty (30)
      days), if any, related thereto has not expired or which are being
      contested diligently and in good faith by appropriate proceedings;

(c)   the claims of materialmen, mechanics, carriers, warehousemen, processors
      or landlords for labor, materials, supplies or rentals incurred in the
      ordinary course of business, (i) which are not overdue for a period of
      more than ninety (90) days or (ii) which are being contested diligently
      and in good faith by appropriate proceedings;

(d)   liens consisting of deposits or pledges made in the ordinary course of
      business in connection with, or to secure payment of, obligations under
      workers' compensation, unemployment insurance or similar legislation; and

(e)   liens constituting encumbrances in the nature of zoning restrictions,
      easements and rights or restrictions of record on the use of real
      property, which in the aggregate are not substantial in amount and which
      do not, in any case, detract from the value of such property or impair the
      use thereof in the ordinary conduct of business.

<PAGE>

                                   SCHEDULE B

                   DEBTORS' PLACES OF BUSINESS AND TRADENAMES

<TABLE>
<S>                                                          <C>
L.S. HOLDING, INC.

                  PRINCIPAL PLACE OF BUSINESS:                161-B Crown Bay
                                                              P.O. Box 930
                                                              St. Thomas, U.S. Virgin Islands 00804

                  OTHER BUSINESS LOCATIONS:                   none

                  TRADENAMES:                                 Little Switzerland

LITTLE SWITZERLAND, INC.

                  PRINCIPAL PLACE OF BUSINESS:                161-B Crown Bay
                                                              P.O. Box 930
                                                              St. Thomas, USVI   00804

                  OTHER BUSINESS LOCATIONS:                   none

                  TRADENAMES:                                 L.S. Holding, Inc.
                                                              L.S. Wholesale, Inc.
</TABLE>

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