Document:

AMENDED EMPLOYMENT CONTRACT

            AMENDED  EMPLOYMENT  CONTRACT  ("Contract") dated as of May 1, 2000,
among WILLCOX & GIBBS, INC. ("Willcox & Gibbs"), a Delaware corporation,  and WG
APPAREL,  INC. ("WG  Apparel"),  a Delaware  corporation  (collectively  "WG" or
"Employer"),  both of whose business address is 900 Milik Street,  Carteret, New
Jersey,  and JOHN K.  ZIEGLER,  JR.  ("Employee"),  whose  address is 619 Willow
Avenue, Apt. 4L, Hoboken, New Jersey 07030.

            WG desires to engage  Employee to perform  services as an  executive
officer of WG and Employee  desires to perform such  services,  on the terms and
conditions hereinafter set forth.

            Accordingly, WG and Employee agree as follows:

      1.    TERM.

            Subject  to the  terms  hereof,  the  term  of this  Contract  shall
commence as of the  Effective  Date (as defined in the "Plan") of the Joint Plan
of Reorganization of Willcox & Gibbs, Inc. and Certain  Subsidiaries dated as of
December 22, 1999,  as the same may be amended prior to  confirmation  ("Plan"),
and shall  continue for a term of one year,  and shall be renewed for successive
one-year  terms (all of which shall be referred to as the  "Employment  Period")
unless either party  provides  written notice of nonrenewal no less than 90 days
from the expiration of any term.  This Contract amends and restates in full that
certain  Employment  Contract between WG Apparel and John K. Ziegler,  Jr. dated
June 27, 1994 (the "Original  Contract") by replacing the Original Contract with
the Contract.

      2.    NATURE OF SERVICES.

            During the  Employment  Period,  Employee shall be employed by WG as
Vice  President  and Chief  Financial  Officer of Willcox & Gibbs and WG Apparel

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(the  "Position").  Employee  shall be subject to the  policy  direction  of the
Boards of Directors of Willcox & Gibbs and WG Apparel (the  "Boards").  He shall
oversee  all  aspects of the  operation  of WG's  business  consistent  with the
Position, and shall perform such responsibilities and duties consistent with the
Position  as may  reasonably  be  requested  of him,  from time to time,  by the
Boards.

      3.    EMPLOYEE OBLIGATIONS.

            Employee  shall  devote  substantially  all his  business  time  and
efforts to the  performance  of his duties under this Contract and shall observe
faithfully and carry out all of the duties and responsibilities customarily owed
by an employee to his employer.

      4.    SALARY.

            Employee's  salary during the Employment  Period shall be fixed from
time to time by the  Boards,  but  shall not be less than  $150,000  per  annum,
payable in equal installments no less frequently than monthly.

      5.    INCENTIVE COMPENSATION.

            Employee shall be entitled to receive Incentive  Compensation during
the  Employment  Period  pursuant to WG's  Incentive  Compensation  Plan for Key
Employees ("WG Plan").  In accordance  with the terms of the WG Plan,  incentive
compensation  awards will be paid,  if at all, no later than March 31  following
the end of each year,

      6.    EXPENSES; VACATIONS; FRINGE BENEFITS.

            During  the  Employment   Period,   Employee   shall  receive:   (i)
reimbursement  for  travel,  entertainment  and other  expenses  incurred in the
performance of his duties in accordance with WG's standard policies as in effect
from time to time;  (ii)  vacations  with pay in  accordance  with WG's  regular
procedures  governing  executives,  but no less than four weeks per year;  (iii)
participation in such employee compensation, pension, health, welfare and fringe
benefit plans and programs as from time to time may be extended  generally to WG
executives,  provided that the medical and hospital  insurance benefits extended

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to Employee shall be at least equal to those  benefits  provided to him prior to
the effective date of this Contract;  (iv)  participation  in WG's  Supplemental
Death and Retirement Plan; (v) use of an automobile comparable to that presently
being used by WG executives; and (vi) such additional compensation,  in the form
of incentive  compensation  or  otherwise,  and such  participation  in WG stock
option, stock award, stock purchase or other stock plans, as the Boards may from
time to time provide.

      7.    NON-COMPETITION.

            During the Employment  Period and for a period of one year after the
end  of  the  Employment  Period,  Employee  shall  not  personally  conduct  or
participate in any activity which is directly  competitive  with the business of
WG or any subsidiary or other affiliate thereof or any successor to or assign of
the rights of WG or any  subsidiary or affiliate  thereof,  either in the United
States or in any area outside the United  States where such  businesses  are now
conducted.  Notwithstanding the foregoing, Employee shall be permitted to own an
interest  in any public  company  which is engaged  in such  activity,  provided
Employee  is not  part of any  control  group  of such  company  and  Employee's
ownership  interest in such  company is less than five  percent  (5%).  Employee
acknowledges  that the  restrictions,  prohibitions and other provisions of this
Section 7 are reasonable,  fair and equitable in scope, terms and duration,  are
necessary to protect the legitimate  business interests of WG and are a material
inducement to WG to enter into this Contract. It is the intention of the parties
hereto that the  restrictions  contained in this paragraph be enforceable to the
fullest extent permitted by applicable law.  Therefore,  to the extent any court
of competent  jurisdiction  shall  determine  that any portion of the  foregoing
restrictions is excessive, such provision shall not be entirely void, but rather
shall be limited or revised only to the extent necessary to make it enforceable.

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      8.    PATENTS; INVENTIONS.

            All  of  Employee's  interest  in  patents,   patent   applications,
inventions,  technological innovations,  copyrights,  developments and processes
now or  hereafter  during the  Employment  Period owned or developed by Employee
relating to the business of WG or any subsidiary or other affiliate shall belong
to WG; and without  further  compensation,  but at WG's expense,  forthwith upon
request of WG,  Employee  shall execute any and all such  assignments  and other
documents and take any and all such other action as WG may reasonably request in
order to vest in WG all  Employee's  right,  title and  interest  in and to such
patents, patent applications, inventions, technological innovations, copyrights,
developments or processes, free and clear of liens, charges and encumbrances.

      9.    CONFIDENTIAL INFORMATION.

            All  confidential  information  which  Employee  may now have or may
obtain  during the  Employment  Period  relating  to the  business  of WG or any
subsidiary or other  affiliate of WG shall not be disclosed to any other persons
either during or after the  termination  of the  Employment  Period  without the
prior written  permission of WG, and Employee shall return all tangible evidence
of such  confidential  information  to WG prior to or at the  termination of the
Employment Period. Such information shall not include any information  otherwise
publicly known.

      10.   TERMINATION.

            (a)  VOLUNTARY  TERMINATION.  Employee may leave the employ of WG at
any time during the Employment Period for any reason;  provided,  however,  that
Employee  shall  provide WG with at least 30 days prior  written  notice of such
voluntary  termination  and  continue  to perform  his duties  during the 30-day
notice period. If Employee voluntarily terminates his employment, Employer shall
pay Employee's  salary until the end of the 30-day notice period and shall pay a

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portion of the Incentive Compensation to which Employee would have been entitled
for the calendar year in which such  termination is effective,  pro-rated to the
effective date of such termination. Employer shall have no further obligation to
pay any other  compensation  or provide any other  benefits  other than those to
which Employee may be entitled  pursuant to WG's plans and programs in effect at
that time; provided,  however,  that any medical and hospital insurance benefits
to which  Employee  may be  entitled  shall  be at  least  at the same  level as
required under clause (iii) of Section 6 hereof.

            (b) TERMINATION WITH CAUSE. WG may terminate  Employee's  employment
for Cause at any time. "Cause" shall mean any one or more of the following:  (i)
Employee's  conviction  of any  Crime  (as that term is  defined  herein),  or a
pleading of "no contest" or guilty to such a Crime;  (ii)  Employee  engaging in
intentional  fraud or  embezzlement  against  WG; or (iii)  Employee's  material
breach of any provision of this Contract,  provided that if the act constituting
Cause is a material  breach of any  provision of this  Contract (and is not also
described in clause (i) or (ii) of this sentence),  then no such breach shall be
considered  to be "Cause" if Employee  cures such breach within thirty days from
the  time  Employee  is  given  notice  thereof.  If  Employee's  employment  is
terminated for Cause,  Employer shall pay Employee's  salary until the effective
date of termination of employment.  Employer shall have no further obligation to
pay any other  compensation  or provide any other  benefits  other than those to
which Employee may be entitled  pursuant to WG's plans and programs in effect at
that time; provided,  however,  that any medical and hospital insurance benefits
to which  Employee  may be  entitled  shall  be at  least  at the same  level as
required under clause (iii) of Section 6 hereof.  For purposes of this Contract,
"Crime" shall mean: (i) any first,  second or third degree offense under the New
Jersey Code of Criminal Justice (the "NJCCJ"); or (ii) any felony under Title 18

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of United States Code; or (iii) an offense against a jurisdiction other than New
Jersey  or the  United  States  equivalent  in  kind  and  punishment  to  those
identified in clauses (i) or (ii) of this sentence.

            (c)  TERMINATION   WITHOUT  CAUSE.   WG  may  terminate   Employee's
employment  without  Cause at any time with 90 days' prior written  notice.  Any
Termination  without Cause shall be effective only upon expiration of the 90-day
notice period.  During the 90-day notice period,  Employer shall continue paying
Employee's  salary,  and at the sole  discretion of WG, Employee may continue to
perform the duties of the Position or he may cease  performing  such duties.  At
the end of such  90-day  notice  period,  Employer  shall pay a  portion  of the
Incentive  Compensation  to which  Employee  would  have been  entitled  for the
calendar year in which such termination is effective, pro-rated to the effective
date of such Termination without Cause. No later than 30 days from the effective
date of any such  Termination  without Cause,  WG shall provide  Employee with a
lump sum severance payment equal to one year's salary at the rate then in effect
minus any applicable  withholding  taxes. In addition,  for a period of one year
after the effective date of such Termination without Cause, WG shall continue to
provide or pay: (a) the applicable premiums for all employee health, welfare and
fringe  benefits  provided to Employee  under  clause  (iii) of Section 6 hereof
prior to the effective date of such  Termination  without Cause, and (b) the use
of an  automobile  pursuant  to clause  (v) of  Section 6 hereof.  The  benefits
provided under clauses (a) and (b) of the previous sentence shall be at the same
level of coverage in effect on the  Effective  Date and in  accordance  with the
same terms as those that would have  applied  but for such  Termination  without
Cause.  Upon the expiration of such one-year period,  Employee shall be entitled
to elect  continuation  health insurance  coverage  pursuant to the Consolidated
Omnibus  Budget  Reconciliation  Act  ("COBRA").  Employer shall have no further

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obligation  to pay any other  compensation  or provide any  benefits  other than
those to which  Employee may be entitled  pursuant to WG's plans and programs in
effect  on the  effective  date  of any  Termination  without  Cause;  provided,
however,  that any medical and hospital insurance benefits to which Employee may
be entitled, during both the one-year period after Termination without Cause and
during the COBRA period,  shall be at least at the same level as required  under
clause (iii) of Section 6 hereof.

            (d) DEATH OR  DISABILITY.  In the event of  Employee's  death,  this
Contract and all of WG's  obligations  pursuant hereto shall  terminate  without
notice.  In the event of Employee's  disability that prevents his performance of
the duties and obligations set forth in this Contract with or without reasonable
accommodation  for a period of 180  consecutive  or  nonconsecutive  days in any
12-month  period,  WG may terminate his  employment  upon 30 days' prior written
notice.  In the event of termination due to death or disability,  Employer shall
pay Employee's  salary until the date of  termination,  and Employer shall pay a
portion of the Incentive Compensation to which Employee would have been entitled
for the calendar year in which such  termination is effective,  pro-rated to the
effective date of such termination. Employer shall have no further obligation to
pay any other  compensation  or provide any other  benefits  other than those to
which Employee may be entitled  pursuant to WG's plans and programs in effect at
that time; provided,  however,  that any medical and hospital insurance benefits
to which  Employee  may be  entitled  shall  be at  least  at the same  level as
required under clause (iii) of Section 6 hereof.

            (e)  COMPENSATION  UPON  NONRENEWAL.  In the event Employer does not
renew this Contract pursuant to Section 1 hereof, Employer shall continue paying
Employee's  salary until the end of the term and  Employer  shall pay Employee a
portion of the Incentive Compensation to which Employee would have been entitled

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for the calendar year in which such  termination is effective,  pro-rated to the
effective date of such termination. No later than 30 days from the expiration of
the term without  renewal,  WG shall provide  Employee with a lump sum severance
payment  equal to one year's salary at the rate then in effect.  Employer  shall
have no further  obligation to pay any other  compensation  or provide any other
benefits  other than those to which  Employee  may be entitled  pursuant to WG's
plans and programs in effect at that time  provided,  however,  that any medical
and hospital  insurance  benefits to which  Employee may be entitled shall be at
least at the same level as required under clause (iii) of Section 6 hereof.

      11.   ENTIRE AGREEMENT; SEVERABILITY.

            This  Contract  sets forth the entire  understanding  of the parties
with respect to the subject  matter herein and may be modified only by a written
instrument duly executed by each party.  The invalidity or  unenforceability  of
any provision of this Contract  shall not affect the validity or  enforceability
of any other provision.

      12.   NOTICES.

            Any notice or other communication  required or permitted to be given
hereunder  shall be in writing and mailed by  registered  mail,  return  receipt
requested,  or delivered against receipt to the party to which it is to be given
at the address of such party  first above set forth or to such other  address as
the party shall have  furnished in writing in accordance  with the provisions of
this Section 12. Any notice or other  communication  mailed by  registered  mail
shall be deemed received three days after mailing.

      13.   ASSIGNMENT.

            In  the  event  of a  future  disposition  or  transfer  of  all  or
substantially all of the properties or business of WG, by merger, consolidation,
sale of stock or  assets  or  otherwise,  a  condition  of such  disposition  or
transfer  shall be the  assignment  of this  Contract  and all of its rights and

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obligations  hereunder to the transferee or surviving entity.  Such entity shall
assume in writing all of the  obligations  of WG hereunder;  provided,  however,
that WG shall remain liable for the performance of its obligations  hereunder in
the event of any failure by the  transferee  or surviving  entity to perform its
obligations.  Employee's rights under this Contract shall not be transferable by
assignment or otherwise,  shall not be subject to commutation or encumbrance and
shall not be subject to the claims of Employee's creditors.

      14.   BINDING EFFECT; INUREMENT.

            This  Contract  shall be binding upon and inure to the benefit of WG
and its successors and those who are its assigns under Section 13.

      15.   GOVERNING LAW.

            This Contract shall be governed by and construed in accordance  with
the laws of the State of New Jersey,  without giving effect to conflict of laws.
Any action to enforce the terms of this  Contract  shall be brought in the state
or federal courts in the State of New Jersey.

                           - SIGNATURE PAGE FOLLOWS -

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

                                    WILLCOX & GIBBS, INC.

                                    By:______________________________

                                    WG APPAREL, INC.

                                    By:______________________________

                                    JOHN K. ZIEGLER, SR.

                                    _________________________________

                                    JOHN K. ZIEGLER, JR.DISTRIBUTION AGREEMENT

            This AGREEMENT is made as of January 1, 1995, between Pegasus Sewing
Machine Mfg. Co. Ltd., a Japanese corporation ("Pegasus"), and WG, Inc., a
Delaware (U.S.A.) corporation ("WG").

            The parties desire to continue their existing business relationship
under amended contractual arrangements. To accomplish this, it is agreed that
(i) all existing contracts between the parties are hereby terminated, as
provided in Section 7.1 of this Agreement; and (ii) the following new contract
terms shall take effect as of this date to govern the distribution by WG in the
United States of America and Puerto Rico (the "Territory") of all spare or
replacement parts ("Parts") for industrial sewing machines (i.e., equipment for
industrial use which either is a sewing machine or incorporates a sewing machine
as a part thereof) and related accessories and attachments manufactured or sold
by Pegasus and its Affiliates ("Products").

            1. APPOINTMENT

            1.1 Subject to the terms and conditions of this Agreement, Pegasus
grants to WG the right to import, promote and sell Parts in the Territory. Such
right shall be exclusive except for:

                  (i) Sales or deliveries of Parts to Pegasus Corporation of
            America ("PCA") or any Affiliate of Pegasus but only to the extent
            that such Parts are conversion Parts (designed to convert industrial
            sewing machines from one design-dependent or special design
            sub-class to another). Conversion Parts may be acquired from WG or
            from any other source. If acquired from WG, conversion Parts shall
            be sold as provided in Section 4.3.

                  (ii) Parts sales by PCA in accordance with Section 4.2.

                  (iii) Sales or deliveries of Parts for automatic machines to
            PCA or any Affiliate of Pegasus.

For purposes of this Agreement, an "Affiliate" of a person shall mean any person
who owns, is owned by or is owned by any owner of such person. For purposes of
this definition, a person owns: (i) a corporation when more than 50 % of the
outstanding voting shares or total outstanding shares is owned directly or
indirectly by the person; or (ii) a partnership, trust or other entity when the
person controls such entity or has any equity interest therein greater than 50%.

            1.2 Except for used machines, during the exclusive term of this
Agreement WG and its Affiliates shall not engage in the distribution in the
Territory (or any area outside the Territory where WG has rights to sell the
Products) of industrial sewing equipment that competes with Products.

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            1.3 During the exclusive term of this Agreement the Sunbrand
Division of WG will not sell parts in the Territory for the Products other than
Parts manufactured by Pegasus.

            2. TERMS OF SALE

            2.1 Pegasus shall provide WG such technical assistance and such
printed material (including operating and service manuals and sales literature)
as may be reasonably required by WG in the promotion, sale and servicing of
Parts. The cost of such technical assistance and printed material shall be borne
by WG.

            2.2 WG shall purchase Parts at prices set by Pegasus F.O.B. Osaka or
Kobe. Prices are subject to change from time to time by Pegasus on 60 days'
written notice prior to the effective date of any such change. Price changes
shall apply to orders submitted before the expiration of the 60-day period, if
delivery is scheduled to take place after such period expires. In any event,
however, during the non-exclusive term hereof, Pegasus shall afford to WG prices
and other terms which are no less favorable to WG than those afforded by Pegasus
or any Affiliate to any other purchaser (including any Pegasus Affiliate) of
Parts intended for the Territory. All sales by Pegasus to WG shall be delivered
against sight irrevocable letters of credit unless the parties shall agree in
writing to such other payment terms.

            2.3 Pegasus hereby extends to WG Pegasus' standard warranty with
respect to Parts. PEGASUS DISCLAIMS, BOTH UNDER THIS AGREEMENT AND IN CONNECTION
WITH ANY SALES PURSUANT HERETO, ALL EXPRESS AND IMPLIED WARRANTIES, INCLUDING
ANY WARRANTIES OF MERCHANTABILITY AND FITNESS FOR PURPOSE, OTHER THAN THOSE
EXPRESS WARRANTIES SPECIFICALLY STATED IN PEGASUS' THEN CURRENT STANDARD
WARRANTY, AND PEGASUS FURTHER EXCLUDES ALL REMEDIES OTHER THAN THOSE
SPECIFICALLY SET FORTH IN SUCH STANDARD WARRANTY. UNDER ALL CIRCUMSTANCES
SPECIAL CONSEQUENTIAL, PUNITIVE, AND ALL OTHER SIMILAR DAMAGES ARE EXCLUDED.
Pegasus' standard warranty shall incorporate the substance of the preceding two
sentences. WG agrees that it shall not give any warranty or remedy in regard to
Parts that is any longer in duration or broader in scope than such Pegasus'
warranty without the prior written approval of Pegasus.

            3. TRADEMARKS, TRADENAMES AND PATENTS

            3.1 Pegasus grants to WG the right and license to use in the
Territory without right of sublicense, all of the following now or hereafter
during the term of this Agreement owned or possessed by Pegasus and its
Affiliates:

                  (i) all trademarks that are used in the manufacture, promotion
            or sale of Parts ("Trademarks");

                  (ii) the tradenames that are used in the manufacture,
            promotion or sale of Parts ("Tradenames"); and

                  (iii) all patents and patent applications relating to the
            manufacture, use or sale of Parts ("Patents");

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but only for the purpose of importing, promoting and selling Parts in the
Territory and for no other purpose. The foregoing shall not constitute an
assignment of the Trademarks, Tradenames or Patents.

            3.2 WG may place the Trademarks and Tradenames on its stationery,
catalogues, promotional literature, advertising material and signs, but only in
connection with the promotion, sale and servicing of Parts in the Territory.

            4. COMPENSATION AND SALES TO PEGASUS

            4.1 WG shall pay to PCA with respect to any calendar year during the
exclusive term of this Agreement a commission equal to 10 % of WG's total net
sales of Parts to end-users and 2.5 % of WG's total net sales to dealers
(excluding sales of Conversion Parts to PCA and sales of Parts in accordance
with Section 4.2) under this Agreement. Payment of commissions shall be a
minimum of $ 125,000 per calendar quarter commencing January 1, 1995. If
commissions for the calendar year exceed $ 125,000 per quarter, such excess
commissions will be paid by WG no later than February 15 of the following
calendar year. If commissions for the calendar year are less than $ 125,000 per
quarter, such deficiency shall be carried forward and applied as a credit
against excess commissions for subsequent calendar years. Any deficiency still
outstanding at the time the exclusive term of this Agreement expires or is
terminated for any reason will not be refunded to WG but rather will be deemed
earned by PCA as a minimum commission.

                  (i) Payments shall be made quarterly within 20 days after the
            end of each calendar quarter. Such commission shall be subject to
            reduction pursuant to Section 4.2.

                  (ii) For purposes of this Section 4.1, net sales shall be
            computed net of discounts to be deducted (other than discounts to be
            deducted from commissions pursuant to Section 4.2), allowances,
            credits and returns and without consideration of any charges for
            taxes, freight, shipping costs, import duties or the like.

            4.2 At PCA's request, WG shall sell Parts to PCA at WG's cost plus
40 %. PCA shall pay WG the cost plus 40 % within 45 days. WG shall ship and bill
such Parts directly to the end-user or dealer under PCA's name. The receivable
thereby created and all credit risk and collection responsibility with respect
thereto shall be PCAs'. The amount of any discount from WG's list price shall be
deducted from the commission payable under Section 4.1 except to the extent PCA
and WG shall agree to a dealer discount schedule (where PCA sells to dealers).
The parties shall discuss WG's list prices twice a year (and in special
circumstances on request); but such prices shall be WG's sole prerogative.

            4.3 Conversion Parts (as described in clause (i) of Section 1.1)
shall be sold by WG at WG's cost plus an amount equal to 2 % of such cost, on
the 45-day terms referred to in Section 4.2. Customer-rejected Conversion Parts
returned to WG shall be repurchased by WG at WG's cost less an amount equal to
2% of such cost, on such 45-day terms, provided such Conversion Parts are not
obsolete and provided that, to the extent WG's inventory supply of any Part,

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based upon average monthly sales of such Parts over the preceding 18 months,
exceeds 36 months, than the aggregate amount WG shall be required to pay in any
calendar year upon repurchases of such excess supply (and such excess supply of
any other Part) shall not exceed $15,000 (which $15,000 limit shall be increased
for any calendar year by an amount which is in the same ratio to $15,000 as the
ratio of the number of Pegasus Machines sold during the year in excess of 11,000
to 11,000).

            4.4 WG will agree at Pegasus' request to supply end-users with up to
a total for all customers of $100,000 of consignment inventory. Consignment
inventory requested by Pegasus over $100,000 will be financed by Pegasus by
extending credit terms to WG in excess of normal terms to the extent of 50 % of
the amount over $100,000.

            4.5 At the end of each calendar quarter Pegasus will supply to WG
and WG will supply to Pegasus written reports of sales of Parts and Products in
the territory.

            5. TERMINATION

            5.1 This Agreement shall continue in full force and effect on an
exclusive basis until December 31, 1996. It shall automatically be renewed on
such exclusive basis for successive periods of two years each, unless one of the
parties to this Agreement gives written notice of termination to the other at
least one year prior to the expiration of said initial period or any successive
two-year period, whichever is applicable.

            5.2 Pegasus shall have the right to declare this Agreement
non-exclusive (if not then non-exclusive) upon 30 days prior written notice
given within 120 days after the end of any calendar year ending after January 1,
1994, if in the calendar year in question WG failed to purchase Parts having an
aggregate purchase price (computed in yen), based upon the invoice price set
forth on the invoice from Pegasus to WG (without consideration of any charges
for taxes, freight, shipping costs, import duties; or the like), equal to at
least 20% of the average annual amount of purchases of Products (excluding
automatic machines) by PCA or predecessor company (computed in yen) based upon
the invoice price of such Products (without consideration of any charges for
taxes, freight, shipping cost, import duties, or the like, and using the same
concept of invoice price as used in determining the aggregate purchase price of
Parts) as invoiced by Pegasus or any Affiliate of Pegasus to PCA for sale or use
in the Territory, for the seven full calendar years ended immediately preceding
the calendar year in question. For purposes of this Section 5.2:

                  (i) Parts purchased during a calendar year shall mean Parts
            actually invoiced by Pegasus and its Affiliates during such year
            plus Parts on order as of October 1 of such year but not delivered
            during the year, provided, however, that such ordered but not
            delivered Parts shall not be included in the calculation of
            purchases the following year.

                  (ii) If purchases of Parts by WG during the calendar year
            immediately preceding the calendar year in question exceeded the
            amount of purchases required for such year in order to meet the
            aforesaid 20 % minimum of average purchases of Products, the amount
            of such excess may be carried forward and applied as a credit

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            against the purchase requirement for the calendar year in question
            but no subsequent calendar year.

                  (iii) Parts purchased or ordered prior to January 1, 1995
            under this Agreement as previously in effect shall be counted for
            purposes of meeting the minimum aggregate purchase provisions of
            this Section 5.2

            5.3 Upon expiration or termination of the exclusive term of this
Agreement pursuant to Section 5.1 or Section 5.2, however, this Agreement shall
continue thereafter on a non-exclusive basis until the later of the following
dates: (i) the third anniversary of the date of termination of such exclusive
terms; or (ii) until December 31, 2000.

            5.4 This Agreement may be terminated by the aggrieved party
immediately upon written notice to the other ("Defaulting Party") in the event
that after the date hereof:

                  (i) The Defaulting Party commits a material breach or default
            under this Agreement, which breach or default shall not be remedied
            within 30 days after giving of notice thereof to the Defaulting
            Party; or

                  (ii) The Defaulting Party is unable to meet its debts as they
            fall due or enters into liquidation or dissolution or becomes
            bankrupt or insolvent, or if a trustee or receiver is appointed for
            such party, whether by voluntary act or otherwise, or if any
            preceding is instituted by or against such party under the
            provisions of any bankruptcy act or amendment thereto which results
            in the entry of an order for relief against it which is not stayed
            or remains undismissed for a period of 60 days, or if it enters into
            a voluntary arrangement with its creditors.

            5.5 Upon termination of both the exclusive and non-exclusive terms
of this Agreement, Pegasus is entitled to restrict or even stop entirely
deliveries of Parts to WG, including deliveries on orders already received at
the time of notice of termination. However, Pegasus is required to make Parts
available to WG in order to enable WG to maintain its own delivery commitments
existing before termination becomes effective subject to proof being given by WG
to Pegasus.

            5.6 Upon termination of both the exclusive and non-exclusive terms
of this Agreement, all of WG's rights with respect to the Trademarks shall
immediately cease, and Pegasus shall repurchase all useable advertising and
printed matter made available by it to WG. WG shall have no further right to use
the designation "Pegasus" in any manner.

            5.7 Neither party hereto is under any obligation to continue this
Agreement in effect, nor to continue the legal and contractual arrangement
established hereunder, after termination of this Agreement in accordance with
this Article 5. Both parties recognize the necessity of making expenditures in
performing and in preparing to perform this Agreement. The parties nevertheless
agree that neither party shall be liable to the other for termination of this
Agreement in accordance with this Article 5, including, but not limited to, for
loss or damage due to investments, leases and sales, and advertising and
promotional activities, whether incurred in connection with the preparation to
perform or the performance of this Agreement or in the expectation of its
renewal or extension.

<PAGE>

            6. NON-COMPETITION

            Subject to the exceptions contained in Section 1, during the
exclusive term of this Agreement Pegasus and its Affiliates shall not directly
or indirectly (by equity or management participation, beneficial ownership,
contract arrangement or otherwise) contribute to, participate in or furnish
material goods or information for the selling, offering for sale or distribution
of Parts in the Territory, and shall each use its best efforts to prevent any
such sale, offer or distribution, other than by WG. Without limitation, Pegasus
and its Affiliates shall not so contribute to, participate in, or furnish
material goods or information for the selling, offering for sale or distribution
of Parts for industrial sewing machines in the Territory other than under one of
the Trademarks

            7. MISCELLANEOUS PROVISIONS

            7.1 In addition to termination of existing contracts between Pegasus
and WG all existing contracts between Pegasus or any Pegasus Affiliate (on the
one hand) and WG or any WG Affiliate (on the other hand) are hereby terminated.
Such terminations shall be without liability of any party to any other party.
Notwithstanding the foregoing, ordinary commercial dealings such as those
involving the sale, purchase or delivery of Parts or payment therefor,
uncompleted at the date hereof, shall be completed in accordance with the
parties' regular trade practices.

            7.2 Neither of the parties hereto shall be responsible for or liable
to the other party for any damages or loss of any kind, directly or indirectly
resulting from fire, flood, explosion, riot, rebellion, revolution, war, labor
trouble (whether or not due to the fault of either party), requirements or acts
of any government or subdivision thereof, mechanical breakdown or any other
cause beyond the reasonable control of the party. The occurrence and the
termination of such force majeure shall be promptly communicated to the other
party.

            7.3 All notices, request, demands and other communications hereunder
shall be in writing and shall be given by delivery against receipt, by facsimile
transmission, by telex or by registered or certified airmail, postage prepaid,
addressed as follows, or to such other address or person as a party may
designate by notice to the other party hereunder:

(i)     If to WG to:                 (ii)  If to Pegasus, to:

        WG, Inc.                           Pegasus Sewing Machine Mfg. Co., Ltd.
        900 Miik Avenue                    7-2 Sagisu 5-chome
        Carteret                           Fukushima-ku
        New Jersey  07008                  Osaka 553, Japan

Communications hereunder by facsimile transmission or telex shall be deemed
given at the time of transmission and communications hereunder by airmail shall
be deemed given ten days after the date of registration or certification.

<PAGE>

            7.4 This Agreement shall be governed by the laws of the State of New
York.

            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/ DAIDO MIMA
                                              ------------------------------

                                          WG, Inc.

                                          By: /S/ JOHN K. ZIEGLER
                                              ------------------------------

<PAGE>

                                          June 8, 1995

Mr. Daido Mima
President
Pegasus Sewing Machine Mfg. Co., Ltd.
7-2 Sagisu 5-chome
Fukushima-ku
Osaka 553, Japan

Dear Mr. Mima:

            I refer to Section 2.2 of the Distribution Agreement made as of
January 1, 1995 between Pegasus Sewing Machine Mfg. Co., Ltd. ("Pegasus") and
WG, Inc. ("WG").

            This will confirm our agreement that Pegasus will make sales and
shipments of Parts to WG upon payment by WG to Pegasus of cash by wire transfer
to a bank designated by Pegasus. It is further agreed that Pegasus is not
obligated to make any shipments of Parts until Pegasus confirms or Pegasus's
bank confirms that the payment has been received.

            If you are in agreement with the above payment terms, please
indicate by signing below.

                                          Very truly yours,

                                          /S/ JOHN K. ZIEGLER
                                          ------------------------------
                                          John K. Ziegler

Agreed to:                                 Agreed to:

Pegasus Sewing Machine Mfg. Co., Ltd.      WG, Inc.

By: /S/ DAIDO MIMA                         By: /S/ JOHN K. ZIEGLER
    ------------------------------             -------------------------

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