Document:

DISTRIBUTOR AGREEMENT

            THIS  DISTRIBUTOR  AGREEMENT is made and entered into as of the 19th
day of January,  2000  (hereinafter  referred to as the "Effective Date") by and
between  BARUDAN  CO.,  LTD.,  having  an  address  at 20  Tsukagoshi,  Josuiji,
Ichinomiya,  Aichi,  491-0004 Japan  (hereinafter  referred to as "Barudan") and
WILLCOX & GIBBS,  INC.  having an address  at 900 Milik  Street,  Carteret,  New
Jersey 07008 USA (hereinafter referred to as "Distributor").

                                    RECITALS:

      WHEREAS,  Barudan  manufactures  various machine products certain of which
are described in Exhibit A attached hereto (hereinafter the "Products"); and

      WHEREAS,  Distributor desires to act as Barudan's exclusive distributor in
the Territory (hereinafter defined) for the Products,

      NOW, THEREFORE, in consideration of the mutual covenants contained herein,
the parties hereto mutually agree as follows:

      1.    RELATIONSHIP OF PARTIES.

            A. APPOINTMENT AND ACCEPTANCE.  Subject to  the terms and conditions
hereinafter  set forth,  Barudan  hereby  appoints  Distributor as the exclusive
distributor  of the Products to third party  customers in the United  States and
Canada (the "Territory") and Distributor  hereby accepts such appointment.  This
exclusive  appointment  means that Barudan,  during the term of this  Agreement,
will not appoint any other  distributors  of the Products in the  Territory  nor
sell any of the Products  directly to customers  in the  Territory.  Distributor
shall only purchase the Products from Barudan.

            B. TERRITORY.  Distributor's  exclusive territory  of responsibility
is the  continental  United  States and Canada  (hereinafter  referred to as the
"Territory"),  Barudan may not enter into agreements with any other  Distributor
or  service  representative  for  distribution,  sale,  repair or service of the
Products within the Territory.

            C. NO AGENCY.  Distributor and Barudan are  independent  contractors
and nothing contained in this Agreement shall be construed to create any agency,
partnership,   joint  venture,   franchisor/franchisee,   or   employer/employee
relationship between the parties. Neither party is authorized to waive any right
to create or incur any  obligation on behalf of the other party or to release or
settle any claim or other legal right of the other party.

            D. NEW  PRODUCTS.  Barudan  shall advise  Distributor  in writing if
Barudan  intends to add new or modified  products to the scope of this Agreement
or remove older products from the scope of this Agreement. Barudan shall provide
Distributor  with all new or  modified  products  at prices to be set forth in a
revised  Exhibit A provided  to  Distributor  by  Barudan.  Such new or modified
products shall constitute  "Products"  covered by this Agreement.  Barudan shall
not sell any removed  Products  within the  Territory  directly  or  indirectly,
through  another  distributor or otherwise,  during the term of this  Agreement.
Subject to the  fulfillment of all  outstanding  orders received by Barudan from

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Distributor,  Barudan  has the  right,  at any time and  from  time to time,  to
discontinue  the  manufacture of all or some of the Products  including  related
parts and supplies at its sole discretion.

      2.    TERM.

            A. INITIAL  TERM.   This  Agreement  shall  have  an   initial  term
commencing on the Effective  Date until  December 31, 2003 (the "Initial  Term")
and will be  automatically  extended  for  successive  three  (3)  year  periods
thereafter on the same terms and  conditions as the original  terms,  so long as
the parties continue to perform under this Agreement until and unless terminated
as hereafter provided.

            B. TERMINATION.  In  the event either party wishes to terminate  the
Agreement  upon the  expiration  of the Initial  Term or  thereafter  during any
extension  of the Initial  Term,  such party must give at least nine (9) months'
prior  notice in writing  of its  desire to  terminate.  This  Agreement  may be
terminated  by either  party prior to the  expiration  of the Initial  Term upon
three (3) days notice in the event that the Chapter 11  Proceeding  is converted
to a Chapter 7 Bankruptcy  or the Chapter 11  Proceeding is concluded and either
party thereafter files a voluntary petition for bankruptcy.

      3.    DISTRIBUTOR'S OBLIGATIONS.

            A. SALES EFFORTS.  Distributor shall use its best efforts to develop
business  in,  promote  the  use of and  the  sale of the  Products  within  the
Territory.  At its own  expense,  Distributor  shall  maintain an  adequate  and
efficient  staff of sales  personnel,  field  engineers  and  technical  support
suitable for the requirements set forth in this Agreement. Sales quotas shall be
established  annually  for the  Territory  by mutual  agreement  of Barudan  and
Distributor.  The initial annual sales quotas are to be set by December 31, 1999
for the year 2000.  Distributor  shall use its best efforts to attain the annual
sales quotas.

            B. FACILITIES.   Distributor  shall   maintain  adequate  facilities
including warehouse,  transportation,  and service vehicles as necessary to meet
its  obligations  hereunder.   Distributor  shall  maintain  a  toll-free  "800"
telephone number, Internet access and facsimile service.

            C. EXCLUSIVITY. During the term of this Agreement, Distributor shall
not represent, market, sell or otherwise deal with any products competitive with
the Products.

            D. INVENTORY.  Distributor shall maintain sufficient  inventories of
parts far the Products consistent with the needs of the market and service.

            E. PROMOTION.   Distributor   shall  display  notifications  of  its
authorized   distributor   relationship  with  Barudan  in  its  facilities  and
advertisements  including,  at a minimum,  trade  shows and trade  publications.
Distributor  shall  display  and  circulate   promotional  materials  and  sales
literature as reasonably approved by Barudan.

            F. SALES PROJECTIONS.  At the beginning of each calendar year during
the term hereof, Distributor shall provide Barudan with a reasonable estimate of
Distributor's  requirements  for all  Products  during  the  following  year and

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estimates for the following  three month period.  The three month estimate shall
be updated  and  amended as  necessary.  No order  that  Distributor  submits to
Barudan shall become effective unless and until it is formally acted by Barudan.
Payment for all orders shall be made by wire transfer. If Distributor shall fail
to pay for any Products or parts  shipped  hereunder,  Barudan may defer further
deliveries  until the overdue  amounts are paid and until  Barudan is  satisfied
that payment  will be made for further  deliveries.  Distributor  shall make all
reasonable  efforts to process  orders for parts received from customers as soon
as possible  subject to availability  of parts from Barudan.  Barudan shall make
all reasonable  efforts to process orders for Products received from Distributor
as soon as possible.  Neither  party shall be liable for delays which are caused
by events that are beyond its reasonable control  including,  but not limited to
acts of God, acts of civil or military authority, fires, casualties,  accidents,
strikes  or  labor  difficulties,  riots,  police  action,  civil  commotion  or
demonstrations.  In the event of a Product  shortage,  Barudan may  allocate its
available Products among its other customers in such a manner as it deems best.

            G. INSURANCE.  Distributor agrees to maintain  comprehensive general
liability,  property damage and products liability insurance against any and all
damage, claims and liabilities arising out of, connected with, or resulting from
the possession,  sale,  lease, use or operation of the Products.  Said insurance
policies  shall be in form  and  amount  with  insurance  carriers  who are duly
licensed and in good standing with governmental  authorities having jurisdiction
over them. In no case shall the limits of said  insurance  policies be less than
$2,000,000 per person, $4,000,000 per incident. The insurance policies described
above may not be altered or canceled except upon thirty days prior notice with a
copy of said notice to Barudan.  Distributor shall provide Barudan with evidence
of its  insurance  coverage.  Barudan may request that it, and Barudan  America,
Inc.  be listed as an  additional  insured  on any of said  insurance  policies.
Distributor  shall comply with all the terms and  conditions of said policies of
insurance  and give  Barudan  and the  insurance  company  within 24 hours of an
incident a written  report,  and further  agrees to cooperate with the insurance
company  and  Barudan in the  defense of any and all claims  arising  out of the
possession, sale, lease, use and operation of the Products.

            H. REPORTS.  Distributor  shall deliver to Barudan quarterly reports
concerning  Products purchased by Distributor's  customers and sales and service
visits with purchasers and potential purchasers.  Distributor shall keep Barudan
reasonably  informed of potential sales and problems pertaining to the Products.
Upon Barudan's request from time to time, Distributor shall furnish Barudan such
additional sales and inventory reports as Barudan shall reasonably require.

      4.    SERVICE OBLIGATIONS.

            A. SERVICE  EFFORTS.  Distributor  shall  use  its best  efforts  to
provide  exemplary and  outstanding  service for the Products in accordance with
this Agreement.

            B. WARRANTY  SERVICE.  Distributor shall provide warranty service in
the Territory for the Products in accordance  with Barudan's  existing  warranty
practices which are described on Exhibit C attached  hereto.  The parties hereby
agree and  acknowledge  that  Distributor  shall be paid by Barudan for all work
covered by the  warranty  (Exhibit C) at the rates and on the terms set forth on
the warranty  (Exhibit C). Any additional work performed by the Distributor with

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the specific  authorization of Barudan shall be paid for by Barudan on the terms
and at the rates agreed upon by the parties hereto.

            C. ORIGINAL PARTS. Distributor shall use only original Barudan parts
in providing  any service for the Products  unless  specifically  authorized  in
writing by Barudan.  Distributor is hereby  authorized to purchase all parts for
the Products directly from Barudan America,  Inc. under mutually agreeable terms
and conditions.

            D. COLLECTION.  Distributor  shall  be  responsible  for billing and
collecting from the customer for all charges for labor,  parts,  transportation,
or other  charges  relating to service  which is not  warranty  service or other
service which Barudan has specifically agreed to pay for in writing.

      5.    BARUDAN'S OBLIGATIONS.

            A. INVENTORY SALES.  Barudan shall sell to Distributor,  Products in
amounts  sufficient  to  permit  Distributor  to  meet  its  obligations  to its
customers  (subject  to the  provisions  of Section  3(f)  hereof) and at prices
established in Section 6(a).

            B. PROMOTION.  Barudan  shall identify  Distributor as an authorized
representative  in all  advertising  or  promotional  materials of Barudan which
identify authorized dealers, distributors, or representatives of the Products.

            C. REFERRALS.  Barudan  shall refer  inquiries  regarding  Products,
parts or service from customers within the Territory to Distributor.

            D. TECHNICAL  SUPPORT.  During the term of this  Agreement,  Barudan
will  supply  reasonable   on-going   technical  support  for  the  Products  to
Distributor.

      6.    PRICES; PAYMENT; TERMS.

            A. DISTRIBUTOR   PRICES.   Barudan  shall  sell   the   Products  to
Distributor at the prices shown on Exhibit A.

            B. PRICE INCREASES.  In the event Barudan increases the price of any
Product,  it shall provide thirty (30) days prior written  notification  of that
increase to Distributor.  Such increases shall not affect any orders received by
Barudan prior to the date of delivery of such notification to Distributor.

            C. PAYMENT.  During  the Chapter 11 Bankruptcy  proceeding  that the
Distributor  is  involved  in as of the  date of  this  Agreement  ("Chapter  11
Proceeding"),  all invoices issued by Barudan will be paid by Distributor within
ninety (90) days of  shipment.  Distributor  will provide a Letter of Credit for
all amounts due to Barudan hereunder during the Chapter 11 Proceeding. After the
Chapter  11  Proceeding  is  concluded,  payment  terms for any  order  shall be
according to one of the following as decided  solely by Barudan:  (1) Payment on
the invoice shall be paid by Distributor within sixty (60) days of shipment;  or
(2) Payment on the invoice shall be paid by Distributor  within ninety (90) days
of shipment and Distributor  shall provide a Letter of Credit,  from a financial
institution  acceptable to Barudan and confirmed by a financial  institution  in

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Japan of Barudan's choice,  providing for payment to be made to Barudan,  of one
half of the amount  due,  ninety  (90) days after the date of  shipment  of that
order and providing such other consistent terms as Barudan may agree.

            D. TERMS.  Distributor  acknowledges and agrees that its purchase of
Products from Barudan  shall be subject and according to the standard  terms and
conditions of sale set forth on Exhibit D attached hereto; provided however that
the terms of this Agreement  shall take precedence over and control in the event
of any inconsistency between the terms of this Agreement and Exhibit D.

      7.    PROPRIETARY AND CONFIDENTIAL INFORMATION.

            A. PROPRIETARY MARKS. Barudan hereby grants to Distributor the right
to use and display the trade names,  trademarks,  service marks, logos, designs,
and symbols of Barudan and Barudan  applicable to the Products (the "Proprietary
Marks") in fulfilling its obligations under this Agreement. Such use shall be in
accordance  with  procedures  communicated  in writing by Barudan to Distributor
regarding the preservation of the  distinctiveness  of any Proprietary Mark. All
Proprietary  Marks shall remain the property of Barudan,  Barudan Company,  Ltd.
(Japan) and Barudan  America,  Inc,  as the case may be.  Distributor  shall not
remove,  replace, or modify any Proprietary Marks applied to the Products or the
packing for the  Products by Barudan.  Distributor  shall  provide  Barudan with
notice  of  any  misuse  or  infringement  of  any  Proprietary  Mark  of  which
Distributor may become aware.  Distributor  may indicate in signs,  advertising,
publicity  or  other  sales  or  marketing  media  or  material,  that  it is an
authorized distributor of Barudan's Products.

The parties hereby agree and acknowledge that Barudan Company,  Ltd. (Japan) and
Barudan  America,  Inc. are and shall remain the exclusive owners of the various
patents,  and all  scientific  or  technical  information,  designs,  processes,
invention,   procedures,  formulae  and  improvements,   whether  patentable  or
unpatentable,  conceived,  invented,  or  originated  by Barudan  Company,  Ltd.
(Japan) and Barudan  America,  Inc. as well as all  Proprietary  Marks and other
patented or unpatented  knowledge or  information  used in  connection  with the
Products (the "Proprietary Property").  Distributor has and shall have no right,
title or interest in the Proprietary  Property, or any goodwill related thereto,
during  or after the term of this  Agreement  except  to the  extent  and in the
manner,  time and places  Distributor is authorized to use the Proprietary Marks
and designs, subject to the provisions of this Agreement.

            B. INDEMNITY.  Barudan shall indemnify and hold  Distributor and its
directors,  officers,  employees and agents  harmless from any costs,  expenses,
losses,   judgments,  or  awards,  including  legal  fees  and  expenses,  which
Distributor  may incur by reason of any claim that the  Distributor's  use of or
possession of the Products or Proprietary Marks infringe any patent,  trademark,
service  mark,  trade name, or other  intellectual  property of any third party;
Barudan shall assume, at its sole expense,  the defense and/or settlement of any
suit or  proceeding  naming  Distributor  as a party  based on any  such  claim.
Distributor  shall give  prompt  notice of any such claim to Barudan and provide
Barudan full opportunity to conduct the defense of any claim and shall cooperate
with Barudan in the defense of such claim. In all events, Distributor shall have
the right to participate  in the defense of any such suit or proceeding  through
counsel of its own  choosing and at its own expense.  This  indemnity  shall not

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apply to the extent any claim relates to  Distributor's  use of any  Proprietary
Mark in a manner not permitted or authorized under this Agreement.

            C. CONFIDENTIAL  INFORMATION.  Each  party  acknowledges that it may
receive  confidential  information  of the other  party in  connection  with the
performance of this Agreement. Such confidential information, whether in written
or oral form, may include, but is not limited to formulas,  patterns,  programs,
devices,  compilations of information,  methods,  techniques,  processes, plans,
designs,  drawings,  specifications,  customer  fists,  supplier lists, or other
materials which derive independent actual or potential commercial value from not
being generally known or readily ascertainable  through independent  development
or reverse  engineering  by persons  who can  obtain  economic  value from their
disclosure or use. Each party agrees to hold any  information of the other party
marked as "confidential," similarly identified as confidential, or provided in a
manner indicating the confidential nature of the information,  in confidence and
agrees not to  disclose  such  information  to third  parties  without the prior
written consent of the owner of such information. Each party agrees that it will
not use the  confidential  information  of the other party for any purpose other
than fulfilling its obligations of performance under this Agreement.

      8.    WARRANTIES.

            A. WARRANTIES OF DISTRIBUTOR.

               (1) Distributor shall  not  be obligated to make  any warranty to
customers  regarding the Products sold in their original packaging and may fully
disclaim  any  express or  implied  warranties  and  exclude  consequential  and
incidental damages with customers in accordance with the warranty (Exhibit C).

               (2)  Distributor  hereby  warrants to Barudan and for the benefit
of Barudan Company,  Ltd.  (Japan) and Barudan America,  Inc., for a period of a
minimum of thirty (30) days following the completion of any warranty service, or
other  service  performed by  Distributor  hereunder  at  Barudan's  request and
expense,  that  such  service  will be free  from  defect  and  that  all  parts
incorporated  into the Product serviced by Distributor are original parts unless
the specific  written  authorization  of Barudan for use of other parts has been
received by Distributor.

            B. LIMITED WARRANTIES.  Barudan assigns and transfers to Distributor
the Limited  Warranty issued by Barudan America,  Inc.  covering the Products as
set forth in Exhibit B. The express  warranties  set forth in this Section 8 and
Exhibit B  constitute  the only  warranties  of Barudan and  Distributor  to the
customer regarding the transactions described in this Agreement.

      9.    EVENTS OF DEFAULT AND TERMINATION.

            A. EVENTS OF DEFAULT.  Upon  the occurrence of  any of the following
events  (which are deemed to be Events of  Default),  Barudan may (i)  terminate
this Agreement,  effective  immediately and without notice to Distributor,  (ii)
declare all of Distributor's indebtedness to Barudan immediately due and payable
and/or  invoice  customers  directly  pursuant to Paragraph 10, (iii) cancel the
exclusivity  provision  contained in  Paragraph  1(b) and have the right to sell

<PAGE>

directly  into  and to  enter  into  additional  Distributor  or  representative
agreements  in the  Territory  and/or (iv)  exercise  all other  legal  remedies
available to Barudan:

               (1) Distributor's  failure  to pay, within thirty (30) days after
the same shall become due and payable, any monetary obligation owed Barudan.

               (2) Except  as   otherwise    provided    herein,   Distributor's
assignment  or  attempted  assignment  of this  Agreement,  or of any  right  or
interest herein, without Barudan's prior written consent.

               (3) Distributor's  sale,  mortgage,  or  other disposition of any
Products that are not in the regular  course of business,  and are for less than
full or adequate consideration.

               (4)  Distributor's  failure or  refusal  to  perform  any  of its
non-monetary  obligations  hereunder,  for a period of sixty  (60)  days,  after
written notice is given to Distributor to perform such obligations.

               (5) Any  change in  the  control of  Distributor,  except for any
change of  control  resulting  from the  Chapter 11  Proceedings  which does not
result in a competitor of Barudan having control, which, in Barudan's reasonable
opinion, would adversely affect the representation of Barudan's interests in the
Territory.

               (6) In  the event that (i) Distributor's Chapter 11 Proceeding is
converted  to a Chapter 7  Bankruptcy;  or (ii) the  Chapter  11  proceeding  is
concluded  and  Distributor  thereafter  becomes  insolvent,  files or has filed
against it a case in  bankruptcy  which remains open after thirty days from date
of filing makes a general assignment for the benefit of its creditors,  or has a
receiver or trustee appointed for its business or properties.

               (7) If  Distributor  fails  to use its best  efforts to set sales
quotas or to fulfill its sales and marketing  obligations set forth in Paragraph
3 (a).

            B. RIGHTS UPON TERMINATION. Upon  termination  of  this Agreement in
accordance with this Section 9 (b):

               (1) All  unfilled  orders  which  have been  accepted  by Barudan
shall be  fulfilled;  provided,  however,  that Barudan may request such payment
terms and  conditions,  including  direct payment from the customer,  as Barudan
deems reasonable;

               (2) Each party shall return  the confidential  information of the
other party in their  possession  and control to the owner of that  confidential
information and shall cease using or distributing the  confidential  information
of  the  other  parry  for  any  purpose;  Distributor  shall  cease  using  any
Proprietary Marks or promotional  materials of Barudan Japan, Barudan America or
Barudan and shall return all materials bearing Proprietary Marks to Barudan; all
restrictions  regarding  use  and  disclosure  of  confidential  information  or
Proprietary Marks set forth herein shall continue after termination;

               (3) Each  party   shall  cease  referring  to  Distributor as  an
authorized dealer, representative, or distributor of Barudan; and

<PAGE>

               (4) Barudan  may, within thirty (30) days following the effective
date of  termination,  request  that  Distributor  return to Barudan  all or any
portion of Distributor's inventory of the Products which are in original cartons
and are in merchantable condition for credit or reimbursement. Distributor shall
provide all reasonably necessary supporting  documentation for returned goods to
Barudan.  Distributor shall prepay all freight for the return of such inventory.
All amounts due  Distributor  for such  returned  inventory  shall be due within
thirty (30) days after delivery to Barudan.

      10.   MISCELLANEOUS PROVISIONS.

            A. ENTIRE AGREEMENT. This Agreement and the exhibits attached hereto
embody the entire  understanding  between the parties and  supersedes  all prior
understandings  and agreements  related to the subject matter  including but not
limited to the Prior Agreements described on Exhibit C attached hereto. If there
is a conflict as between any term of this Agreement and any term of the Standard
Terms and  Conditions of Sale attached  hereto as Exhibit C, the term(s) of this
Agreement shall govern and control.

            B. SUCCESSORS AND ASSIGNS.  This Agreement shall be binding upon and
inure to the benefit of the parties  hereto and their  assigns,  or  successors;
provided, however, that no party shall assign any right or obligation hereunder,
in whole or in part,  without  the prior  written  consent of the other  parties
herein,  and any  attempt to do so shall be void;  except that it is agreed that
Barudan may assign its rights and  obligations  under this  Agreement to Barudan
America, Inc. without the consent of any other party. Barudan hereby consents to
Distributor using the subdistributors listed on Exhibit D attached hereto.

            C. AMENDMENT,  MODIFICATION, OR WAIVER. No amendment,  modification,
settlement,  compromise, release, or waiver of any condition, provision, or term
of this Agreement shall be valid or of any effect unless made in writing, signed
by the party or parties to be bound, or its duly authorized  representative  and
specifying  with   particularity  the  nature  and  extent  of  such  amendment,
modification,  or waiver. Any waiver by any part of any default of another party
shall not affect or impair any right arising from any subsequent default. Except
as expressly provided in this Agreement, nothing herein shall limit the remedies
and rights of the parties hereto under and pursuant to this Agreement.

            D.  NOTICES.  Except as otherwise  provided in this  Agreement,  all
notices to be given under this Agreement shall be in writing and shall be deemed
to have been duly delivered if delivered in person or if mailed, certified mail,
postage  prepaid,  United  States  mail,  to the  party  to be  notified  at its
principal place of business.  Notice given by fax or email shall be confirmed by
written copy thereof sent according to the prior sentence.  Any party may change
its address by giving notice in the aforesaid manner to the other party, and ten
(10) days after giving such notice, such party's address shall be deemed to have
been changed.

            E. CAPTIONS,  HEADINGS OR TITLES. All captions,  headings, or titles
in the paragraphs or sections of this Agreement are inserted for  convenience of
reference  only and shall not  constitute a part of this  Agreement nor act as a
limitation of the scope of the  particular  paragraphs or sections to which they
apply.

<PAGE>

            F. SEVERABILITY. Whenever possible, each provision of this Agreement
shall  be  interpreted  in  such  manner  as to be  effective  and  valid  under
applicable  law, but if any  provision of this  Agreement is held to be invalid,
illegal,  or unenforceable under any applicable law or rule in any jurisdiction,
such  provision  will be  ineffective  only to the  extent  of such  invalidity,
illegality,  or unenforceability in such jurisdiction  without  invalidating the
remainder of this Agreement in such  jurisdiction or any provision hereof in any
other jurisdiction.

            G. SPECIFIC  PERFORMANCE.  The parties hereto agree that the failure
of any party to perform any  obligation or duty which each has agreed to perform
shall cause  irreparable  harm to the parties willing to perform the obligations
and duties  herein,  which harm cannot be  adequately  compensated  for by money
damages.  It is further  agreed by the parties  hereto that an order of specific
performance  against  a party or  parties  in  default  under  the terms of this
Agreement  would be  equitable  and would not work a hardship on the  defaulting
party or parties.  Accordingly, in the event of a default by any party hereto, a
non-defaulting  party,  in addition to whatever  other remedies are available at
law or in equity,  shall have the right to compel  specific  performance  by the
defaulting party or parties of any obligation or duty herein.

            H. CONDITION.  This Agreement is conditioned upon Distributor,  John
K.  Ziegler,  Sr., and John K.  Ziegler,  Jr.  having  executed and delivered to
Barudan a Non-Compete  Agreement  substantially  in the form attached  hereto as
Exhibit E.

            I. EXHIBITS.  The following  Exhibits in  their complete text are by
this reference incorporated herein and made a part of this Agreement:

               Exhibit A  Products
               Exhibit B  Barudan's Warranty Practices
               Exhibit C  Standard Terms and Conditions of Sale
               Exhibit D  Subdistributors
               Exhibit E  Non-Compete Agreement

            J. COUNTERPARTS.  This  Agreement  may  be  executed  in two or more
counterparts,  each of  which  shall be  deemed  an  original,  but all of which
together shall constitute one and the same document.

            K. GOVERNING  LAW. This  Agreement  shall be construed in accordance
with and governed by the laws of the State of North Carolina.

            L. CUMULATIVE RIGHTS. Except as expressly stated herein, no right or
remedy herein  conferred  upon or reserved to any party hereto is intended to be
exclusive of any other right or remedy herein or by law provided, but each shall
be cumulative and in addition to every other right or remedy given herein or now
or hereafter existing at law or in equity or by statute.

<PAGE>

      IN WITNESS  WHEREOF,  the  parties  have set their  hands the day and year
first above written.

                                          BARUDAN:

Attest:                                   BARUDAN COMPANY, LTD.

________________________________          By: ________________________________
                                                      Yoshio Shibata
                                                      President

                                          DISTRIBUTOR:

Attest:                                   WILLCOX & GIBBS, INC.

________________________________          By: ________________________________
                                                      John K. Ziegler
                                                      Vice PresidentAMENDMENT
                                       TO
                             DISTRIBUTION AGREEMENT

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

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

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

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

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

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

                  FOR CALENDAR YEAR            DOLLAR AMOUNT

                  2000                              $900,000

                  2001 and thereafter             $1,000,000

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

<PAGE>

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

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

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

            4. MISCELLANEOUS.

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

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

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

                                       PEGASUS SEWING MACHINE MFG. CO., LTD.

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

                                       WILLCOX & GIBBS, INC.

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

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