Document:

<PAGE>   1
                                                                    Exhibit 10.1

                          MCNAUGHTON APPAREL GROUP INC.

                             AUDIT COMMITTEE CHARTER

The Audit Committee is appointed by the Board to assist the Board in monitoring
(1) the integrity of the financial statements of the Company, (2) the compliance
by the Company with legal and regulatory requirements and (3) the independence
and performance of the Company's internal and external auditors.

The members of the Audit Committee shall meet the independence and experience
requirements of the Nasdaq Stock Market, Inc. The members of the Audit Committee
shall be appointed by the Board.

The Audit Committee shall have the authority to retain special legal, accounting
or other consultants to advise the Committee. The Audit Committee may request
any officer or employee of the Company or the Company's outside counsel or
independent auditor to attend a meeting of the Committee or to meet with any
members of, or consultants to, the Committee.

The Audit Committee shall make regular reports to the Board.

The Audit Committee shall:

     1.   Review and reassess the adequacy of this Charter annually and
          recommend any proposed changes to the Board for approval.

     2.   Review the annual audited financial statements with management,
          including major issues regarding accounting and auditing principles
          and practices, as well as the adequacy of internal controls that could
          significantly affect the Company's financial statements.

     3.   Review an analysis prepared by the independent auditor of significant
          financial reporting issues and judgments made in connection with the
          preparation of the Company's financial statements.

     4.   Review with management and the independent auditor the Company's
          quarterly financial statements prior to the filing of its Form 10-Q.

     5.   Meet periodically with management to review the Company's major
          financial risk exposures and the steps management has taken to monitor
          and control such exposures.

     6.   Review major changes to the Company's auditing and accounting
          principles and practices as suggested by the independent auditor, any
          internal auditors or management.

     7.   Recommend to the Board the appointment of the independent auditor,
          which firm is ultimately accountable to the Audit Committee and the
          Board.

<PAGE>   2

     8.   Approve the fees to be paid to the independent auditor.

     9.   Receive periodic reports from the independent auditor regarding the
          auditor's independence consistent with Independence Standards Board
          Standard 1, discuss such reports with the auditor, and if so
          determined by the Audit Committee, take or recommend that the full
          Board take appropriate action to oversee the independence of the
          auditor.

     10.  Evaluate together with the Board the performance of the independent
          auditor and, if so determined by the Audit Committee, recommend that
          the Board replace the independent auditor.

     11.  Review the appointment and replacement of any senior internal auditing
          executive.

     12.  Review the significant reports to management prepared by any internal
          auditing department and management's responses.

     13.  Meet with the independent auditor prior to the audit to review the
          scope and staffing of the audit.

     14.  Obtain from the independent auditor assurance that Section 10A of the
          Securities Exchange Act of 1934 has not been implicated.

     15.  Obtain reports from management, the Company's senior internal auditing
          executive and the independent auditor that the Company's
          subsidiary/foreign affiliated entities are in conformity with
          applicable legal requirements and the Company's code of conduct.

     16.  Discuss with the independent auditor the matters required to be
          discussed by Statement on Auditing Standards No. 61 relating to the
          conduct of the audit.

     17.  Review with the independent auditor any problems or difficulties the
          auditor may have encountered and any management letter provided by the
          auditor and the Company's response to that letter. Such review should
          include:

          a.   Any difficulties encountered in the course of the audit work,
               including any restrictions on the scope of activities or access
               to required information.

          b.   Any changes required in the planned scope of the internal audit.

     18.  Prepare the report required by the rules of the Securities and
          Exchange Commission to be included in the Company's annual proxy
          statement.

     19.  Advise the Board with respect to the Company's policies and procedures
          regarding compliance with applicable laws and regulations and with the
          Company's code of conduct.

     20.  Review with the Company's legal counsel legal matters that may have a
          material impact on the financial statements, the Company's compliance
          policies and any material reports or inquiries received from
          regulators or governmental agencies.

     21.  Meet at least annually with the chief financial officer, any senior
          internal auditing executive and the independent auditor in separate
          executive sessions.

<PAGE>   3

While the Audit Committee has the responsibilities and powers set forth in this
Charter, it is not the duty or responsibility of the Audit Committee to plan or
conduct audits or to determine that the Company's annual, quarterly and other
financial statements are complete and accurate and are in accordance with
generally accepted accounting principles. This is the responsibility of
management and the independent auditor. It is also not the duty or
responsibility of the Audit Committee to conduct investigations, to resolve
disagreements, if any, between management and the independent auditor or to
assure compliance with laws and regulations and the Company's code of conduct.<PAGE>   1
                                                                    EXHIBIT 10-2

                                [ESSENTUS LOGO]
                          creating value at web speed

                      ESSENTUS SOFTWARE LICENSE AGREEMENT

                     THIS AGREEMENT WILL ENTER INTO EFFECT
                         UPON SIGNATURE OF BOTH PARTIES

                         McNAUGHTON APPAREL GROUP INC.

<PAGE>   2

                           ESSENTUS INTERNATIONAL INC.

                           Software License Agreement
                                    Contents

       1.     Software License Agreement

       2.     Software License Terms And Conditions

       3.     Exhibit 1.3 - Software Applications

       4.     Exhibit 2.2 - Software Support Agreement

       5.     Exhibit 3.4 - Payment Schedule

<PAGE>   3

                           ESSENTUS INTERNATIONAL INC.

                            1430 Broadway, 14th Floor
                            New York, New York 10018

                       ESSENTUS SOFTWARE LICENSE AGREEMENT

The Licensee identified below ("Licensee") and Essentus International Inc.
("Essentus") have entered into this Software License Agreement (the "Agreement")
as of the Effective Date set forth below.

Licensee Name:                       McNaughton Apparel Group Inc.
                                     ------------------------------------------
Billing/Notice Address:              463 Seventh Avenue
                                     ------------------------------------------
                                     New York, NY  10018
                                     ------------------------------------------
                                     Attn:  Don George
                                     ------------------------------------------
Telephone/Fax:                       (212) 947-2960 ext.  350
                                     ------------------------------------------

Effective Date:
                                     ------------------------------------------

Agreement Reference Number :  L-
                             -------

This Cover Page and the attached Software License Terms and any duly initialled
Exhibits thereto (including without limitation Exhibit 1.3 - Licensed
Applications and Fees; Exhibit 2.2 - Software Support Agreement and Exhibit 3.4
- Payment Schedule) are incorporated into and made a part of this Agreement as
of the Effective Date set forth above. In the event the Effective Date is not
identified above, the Agreement shall be effective as of the last date of
signature of the parties hereto. Additional documents, schedules, exhibits and
addenda may be incorporated into and made a part of this Agreement upon the
written consent of the parties.

The parties hereby acknowledge that they have read and understand this Agreement
and all exhibits and addenda hereto, and agree to all terms and conditions
stated herein and attached hereto.

<TABLE>
<CAPTION>
ESSENTUS INTERNATIONAL INC.:                                     LICENSEE:
<S>                                                            <C>
By:              /s/ 'Scott Miller                               By:               /s/ Amanda Bokman
         ----------------------------------                              ------------------------------------
Name:                                                            Name:
         ----------------------------------                              ------------------------------------
Title:                                                           Title:
         ----------------------------------                              ------------------------------------
Date:                                                            Date:
         ----------------------------------                              ------------------------------------
</TABLE>

<PAGE>   4

                           ESSENTUS INTERNATIONAL INC.
                           SOFTWARE LICENSE AGREEMENT
                              TERMS AND CONDITIONS

1.       DEFINITIONS

         In this Agreement, unless there is something in the subject matter or
context inconsistent therewith, the expressions following shall have the
meanings indicated below:

         1.1      "AGREEMENT" means this Essentus Software License Agreement,
                  including all exhibits and schedules hereto, and which may
                  hereafter be added hereto with the consent of Licensee and
                  Essentus.

         1.2      "APPLICATION SPECIFIC THIRD PARTY SOFTWARE" means Third Party
                  Software license through Essentus which may solely be used by
                  Licensee in conjunction with the Essentus Software.

         1.3      "DOCUMENTATION" means technical manuals and other
                  documentation relating to the use of the Software delivered to
                  Licensee with the Essentus Software by Essentus upon or
                  following execution hereof.

         1.4      "EMPLOYEES" means employees, agents, subcontractors and
                  consultants of Essentus or Licensee, as the case may be.

         1.5      "GRACE PERIOD" means the thirty (30) days following delivery
                  of the Essentus Software to Licensee.

         1.6      "HARDWARE" means the computer hardware, peripherals and
                  operating system software provided by or for Licensee,
                  consisting of a single CPU or network of linked CPU's at a
                  single location.

         1.7      "LICENSE" means the rights and licenses granted by Essentus
                  under Section 3.2.1, or 4.3.2, subject to the license
                  exclusions as set forth in Section 3.5.

         1.8      "ESSENTUS SOFTWARE" means the software, that performs in
                  accordance with the Documentation and containing the Software
                  Applications listed on Exhibit 1.3. The Essentus Software
                  includes Documentation provided by Essentus.

         1.9      "ESSENTUS SOFTWARE SPECIFICATIONS" means the system design
                  specifications for the Essentus Software. Title to copyright
                  in and all other rights to the Essentus Software
                  specifications are and remain with Essentus.

         1.10     "SOFTWARE" means the Essentus Software and the Third Party
                  Software, collectively.

         1.11     "THIRD PARTY SOFTWARE" means the third party software programs
                  referred to in Section 4.3 and identified on Exhibit 1.3
                  hereof, in object code format only, including any accompanying
                  documentation.

         1.12     "WARRANTY PERIOD" means the sixty (60) day period commencing
                  after the Grace Period.

2.       DESCRIPTION OF SERVICES PROVIDED BY ESSENTUS

         2.1      Review of Essentus Software

                  2.1.1    System design review, training, installation
                  assistance, and software developments, if any, requested by
                  Licensee to the Essentus Software are not covered by this
                  Agreement and no obligations on the part of Essentus to do or
                  provide any of the foregoing by Essentus are to be implied by
                  this Agreement. In the event services are provided by a third
                  party, notwithstanding any Essentus recommendation, referral
                  or introduction, Essentus has no liability with respect to any
                  claims relating to or arising from any and all services
                  provided by a third party to Licensee.

                  2.1.2    While Essentus can deliver the Essentus International
                  Software prior to December 31, 1999, Essentus does not
                  represent or warrant that:

                           2.1.2.1  The Essentus Software remedies Year 2000
                           compliance issues that may otherwise affect
                           Licensee's computer or information systems; or

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                           2.1.2.2  Any of the services to the Essentus Software
                           described in 2.1.1 above can be provided in time to
                           resolve or remedy Year 2000 compliance issues that
                           may be affecting some of Licensee's current computer
                           or software information systems.

                  Licensee assumes the risks associated with 2.1.2.1 and 2.1.2.2
                  above and assumes full responsibility for ensuring that an
                  alternative plan is in place in the event that the Essentus
                  Software is not functional on Licensee's system in time for
                  potential Year 2000 related issues.

         2.2      Software Support Services

                  2.2.1    Essentus will provide and Licensee agrees to accept
                  software support services, as described in Exhibit 2.2, in
                  consideration of the annual maintenance fee set forth in
                  Exhibit 2.2. Licensee will be provided with object code only
                  for any updates delivered to Licensee as part of the software
                  support services.

3.       TITLE, LICENSE AND LICENSE FEES

         3.1      Title and Risk for Loss

                  3.1.1    All rights, title and interest in the Software (other
                  than the rights of Third Party Software suppliers), and in any
                  updates, modifications, enhancements, and software
                  developments and additions thereto, as may be provided from
                  time to time by Essentus, as well as all copyright, patents,
                  trade secrets and other intellectual property rights therein,
                  shall remain with Essentus and all risk for loss prior to
                  delivery shall be borne by Essentus. The Software is supplied
                  by Essentus F.O.B. Essentus premises. Upon the delivery of the
                  Software to a common carrier, Licensee shall have all
                  responsibility for all risk of loss of, or damage to the
                  Software and shall arrange for all policies of insurance in
                  respect thereof. Nothing in this Agreement shall be construed
                  as transferring to Licensee any rights, title or interest in
                  the Software other than pursuant to the License granted
                  herein.

         3.2      License

                  3.2.1    Provided Licensee is not in default, Essentus hereby
                  grants Licensee a perpetual, non-exclusive, irrevocable (save
                  in the case of default), non-transferable license, without
                  right to sublicense, to use the Software in object code
                  format, subject to the provisions of this Agreement.

                  3.2.2    Licensee may use the Software for as long as it
                  desires for its intended use within its own company on the
                  initial Hardware or, with the written consent of Essentus, on
                  any upgraded or replacement hardware. Licensee shall take all
                  reasonable steps to protect the proprietary nature of the
                  Software and shall not copy, disclose or allow use of the
                  Software or any part thereof for any purpose whatsoever other
                  than as is necessary in the performance of its normal
                  business. Licensee shall not:

                           3.2.2.1  permit any third party to use the Software;

                           3.2.2.2  use the Software in the operation of a
                                    service bureau or to assist any third party.

                           All applicable patents, copyrights, trademarks, trade
                  secrets and intellectual rights in the Software and any
                  updates, modifications or enhancements made by Licensee or
                  Essentus are and shall remain the property of Essentus.

                  3.2.3    Licensee shall not sell, transfer, distribute,
                  market, rent, lease, publish, display or otherwise make
                  available the Software or Documentation to others. Licensee
                  agrees to secure and protect the Software and Documentation
                  and copies in a manner consistent with the maintenance and
                  protection of Essentus's rights therein and to take
                  appropriate action by instruction or agreement with its
                  Employees or others who are permitted access to the Software
                  and to each program or software application. All copies of the
                  Software made by Licensee and other programs developed,
                  including all corrections, modifications, improvements,
                  enhancements or derivatives of the Software made by or for
                  Licensee, translations, compilations and partial copies, as
                  well as all copyright, patents, trade secrets and other
                  intellectual property rights therein are the property of
                  Essentus. Licensee is permitted to make copies of the Software
                  for back-up and archival purposes only.

         3.3      No Rights Prior to Payment

                  3.3.1    Notwithstanding the foregoing, Licensee shall have
                  no right to use, other than for purposes of testing and

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Terms and Conditions V990105                                        Page 2 of 8

<PAGE>   6
                  training, any component of the Software until it has paid for
                  such component in accordance with the provisions of this
                  Agreement.

         3.4      License Fees and Limitations On Use

                  3.4.1    Licensee shall pay the License fees in the amounts
                  set forth in Exhibit 1.3, and at the times set forth in
                  Exhibit 3.4 hereto.

                  3.4.2    All amounts owed under this Agreement shall be due
                  and payable within thirty (30) days of the date of Essentus's
                  invoice other than the amounts stipulated in Exhibit 3.4,
                  Sections 1(a) and 2(a), which shall be due and payable upon
                  execution hereof. Overdue payments shall bear interest at the
                  lesser of one and one-half percent (1.5%) per month, or the
                  maximum rate allowed under applicable law.

                  3.4.3    Essentus reserves the right to include means within
                  the Software to limit Licensee's use of the Software to the
                  Licensed number of users. Licensee shall maintain records
                  regarding Licensee's use of the Software and shall make such
                  information available to Essentus upon request and such
                  records shall be subject to audit by Essentus on reasonable
                  notice to Licensee.

         3.5      License Exclusions

                  3.5.1    Except as expressly authorized herein, Licensee shall
                           not:

                           3.5.1.1  reverse compile, reverse assemble,
                           disassemble, translate or otherwise reverse engineer
                           all or any portion of the Software;

                           3.5.1.2  disclose the results of Software performance
                           benchmarks to any third party without Essentus's
                           prior written consent;

                           3.5.1.3  use or permit the use of the Software by
                           more than the maximum number of users in respect of
                           which Licensee is paying License fees contemplated by
                           Exhibit 1.3.

4.       GENERAL

         4.1      Parallel Run

                  4.1.1    The installation of a new data processing system
                           requires that for each new application being
                           implemented, the old system be run in parallel until
                           such time that Licensee's management is satisfied
                           with the accuracy of the new system. It is the
                           responsibility of Licensee's management to satisfy
                           itself that the Software is satisfactory and suitable
                           for its business purposes before the Software is run
                           in a live environment. The period during which the
                           parallel runs take place creates an extra work load
                           on Licensee's staff and could result in overtime and
                           extra staff costs.

         4.2      Internal Controls

                  4.2.1    It is Licensee's responsibility to exercise all the
                           internal control procedures required in a computer
                           environment. Internal control procedures must be
                           exercised over such areas as computer input, computer
                           output, segregation of duties, approval, etc.
                           Licensee acknowledges that internal control cannot
                           totally eliminate the possibility of fraud or
                           embezzlement.

         4.3      Third Party Software

                  4.3.1    Third Party Software products are software products
                           other than those elements of software developed by
                           Essentus. Notwithstanding any Essentus
                           recommendation, referral or introduction, Licensee
                           will have sole responsibility for determining
                           suitability for use and obtaining proper license
                           rights of Third Party Software products. Essentus has
                           no liability with respect to any claims relating to
                           or arising from the use by Licensee of Third Party
                           Software or any other third party products or
                           software.

                  4.3.2    For certain Third Party Software licensed through
                           Essentus, Essentus grants Licensee a limited use,
                           non-exclusive, non-transferable License without right
                           to sublicense to use the Third Party Software within
                           its
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<PAGE>   7
                           own company on the Hardware, which License licensee
                           hereby accepts. Essentus may, upon payment of
                           appropriate Third Party support fees as set forth in
                           Exhibit 1.3, billed on an annual basis, payable in
                           advance, provide first line technical support and
                           update services. This would include:

                           4.3.2.1 Distribution of software updates as may be
                           generally provided by the Third Party Software
                           supplier to supported licensees and, at an additional
                           fee, distribution of software upgrades available by
                           the Third Party Software supplier for its licensees.
                           Additional charges may be required for installation
                           of software or related services.

                           4.3.2.2 Assisting with problems with the Third Party
                           Software if they should occur and working with the
                           Third Party Software suppliers to attempt to obtain
                           corrections to these problems.

         4.4      Substitutions and Modifications

                  4.4.1    Essentus reserves the right to make substitutions and
                  modifications to the Software that do not materially adversely
                  affect the performance of the Software.

         4.5      Taxes

                  4.5.1    Licensee shall pay or reimburse Essentus upon demand
                  for any and all applicable state, federal, and/or local taxes
                  howsoever designated arising from or based upon the fees
                  charged by Essentus including any sales and/or use tax, value
                  added tax, property tax, (excluding only taxes based on
                  Essentus's taxable income) and related interest and penalties,
                  if any, imposed by any taxing authority at any time.

         4.6      Confidentiality

                  4.6.1    Essentus and Licensee agree to treat and to cause
                  Essentus Employees and auditors and Licensee's Employees and
                  auditors respectively to treat as confidential any and all
                  information which they may communicate to one another from
                  time to time during the term of this Agreement regarding the
                  conduct of their respective businesses including but not
                  limited to the terms and conditions of this Agreement and any
                  Addendum, Amendment, Exhibit, Schedule and documentation
                  thereto and each of Essentus and Licensee undertakes not to
                  use for itself or disclose any such information to any other
                  person, firm or corporation.

         4.7      Essentus Employees

                  4.7.1    Licensee agrees not to hire, directly or indirectly,
                  any Essentus Employees during the project or for a period of
                  one year after the last work is completed on the project. If
                  Licensee does employ, either directly or indirectly any such
                  individual, then in order to compensate Essentus for the costs
                  of training and acquiring such personnel, Licensee agrees to
                  pay to Essentus a fee equivalent to one year compensation of
                  the Essentus Employees so hired. Such sum will be by way of
                  liquidated damages and shall be due and payable upon the
                  termination of such person's employment or service with
                  Essentus.

         4.8      Binding Effect

                  4.8.1    This Agreement shall be binding upon and shall enure
                  to the benefit of the parties hereto and their respective
                  heirs, representatives, successors, executors, administrators
                  and permitted assigns.

5.       WARRANTIES AND LIMITATIONS OF ESSENTUS LIABILITY

         5.1      Specific Warranties and Limitation of Warranties

                  5.1.1    EXCEPT AS EXPRESSLY PROVIDED IN THIS SECTION 5,
                  ESSENTUS MAKES NO OTHER WARRANTY, EXPRESS OR IMPLIED,
                  INCLUDING BUT NOT LIMITED TO THE IMPLIED WARRANTY OF
                  MERCHANTABILITY OR FITNESS FOR A PARTICULAR PURPOSE. THE
                  FOLLOWING WARRANTIES ARE IN LIEU OF THOSE ARISING BY STATUTE
                  OR OTHERWISE IN LAW OR FROM A COURSE OF DEALING OR USAGE OF
                  TRADE.

                  5.1.2    Essentus cannot guarantee a specific result, an error
                  free system or a specific cost saving. Essentus does not
                  warrant that the operation of the Software will be
                  uninterrupted or error free or that all Software errors will
                  be corrected.

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<PAGE>   8

                  Licensee agrees to assume these risks as to the result
                  including the responsibility for testing and implementing the
                  Software.

                  5.1.3    In the event that, during the Warranty Period, any
                  Essentus Software errors shall appear, provided such errors
                  are a deficiency of the Essentus Software to perform
                  materially in accordance with the Documentation. Essentus will
                  use commercially reasonable efforts to correct any such
                  deficiencies.

                  5.1.4    Essentus does not warrant the Software against faulty
                  performance due to operator errors, power failures, file
                  overflows, equipment malfunctions, failure of operating
                  systems, failure of compilers or interpreters, failure of
                  utilities or of software not authored (written) by Essentus or
                  any other causes beyond the reasonable control of Essentus.
                  Licensee shall pay Essentus's standard rates for services
                  performed by Essentus to correct such data and/or program
                  defects.

                  5.1.5    The responsibility of Essentus under this Agreement
                  shall be limited to commercially reasonable efforts to correct
                  program defects in the Essentus Software if informed of
                  defects by Licensee during the Warranty Period. Any claim by
                  Licensee that a defect exists in the Software shall not excuse
                  Licensee from the performance of its obligations under this
                  Agreement.

                  5.1.6    ESSENTUS DISCLAIMS ANY AND ALL LIABILITY FOR
                  INDIRECT, INCIDENTAL OR CONSEQUENTIAL DAMAGES INCLUDING LOSS
                  OF PROFITS, REVENUE, DATA, OR USE INCURRED BY LICENSEE OR ANY
                  THIRD PARTY ARISING OUT OF THE USE OR OPERATION OF THE
                  SOFTWARE PROVIDED TO LICENSEE WHETHER IN AN ACTION FOUNDED IN
                  CONTRACT, TORT OR OTHERWISE, EVEN IF THE OTHER PARTY OR ANY
                  OTHER PERSON HAS ADVISED ESSENTUS OF THE POSSIBILITY OF SUCH
                  DAMAGES. ESSENTUS'S LIABILITY FOR DAMAGES HEREUNDER FOR ANY
                  CAUSE WHATSOEVER SHALL IN NO EVENT EXCEED THE AMOUNTS RECEIVED
                  FROM LICENSEE WITH RESPECT TO THE PARTICULAR SOFTWARE MODULE
                  WHICH GIVES RISE TO THE LIABILITY OR IN THE AGGREGATE, THE
                  AMOUNTS RECEIVED BY ESSENTUS FOR THE ESSENTUS SOFTWARE. THE
                  FEES PROVIDED FOR THIS AGREEMENT REFLECT THE ALLOCATION OF
                  RISKS AND THE LIMITATION OF LIABILITY SPECIFIED HEREIN WHICH
                  BOTH PARTIES HEREBY AGREE TO.

                  5.1.7    If Licensee without the written consent of Essentus
                  makes any modifications to the Software or any deviations from
                  the operating instructions, all warranties set forth herein
                  cease immediately. In addition, Essentus's support as set
                  forth in Exhibit 2.2 shall only apply to unaltered or original
                  Essentus Software as may be up dated, modified or altered only
                  by Essentus.

                  5.1.8    Essentus assumes no responsibility regarding the
                  purchase, configuration, operation, performance or maintenance
                  of the Hardware purchased or in use.

                  5.1.9    Essentus warrants that it is the owner of the
                  Essentus Software and has the right to License the Software to
                  Licensee (subject to the rights of Third Party Software
                  suppliers). Licensee shall give Essentus prompt notice of any
                  claims that the Software infringes any patent, copyright or
                  trade secret ("Infringement Claim"). If so notified, Essentus
                  shall, at its expense, defend any action brought against
                  Licensee to the extent that it is based on an Infringement
                  Claim arising from Licensee's use of the Software within the
                  scope of this Agreement. In the event that the Software
                  becomes, or in Essentus's opinion is likely to become, the
                  subject of an Infringement Claim, Essentus may either

                           5.1.9.1  procure for Licensee the right to continue
                           using the Software free from any such claims;

                           5.1.9.2  replace or modify the Software to make the
                           Software non-infringing, or

                           5.1.9.3  if neither 5.1.9.1 or 5.1.9.2 is
                           commercially reasonably available to Essentus,
                           require Licensee to discontinue using the infringing
                           Software upon thirty (30) days written notice
                           provided Essentus refunds to Licensee the then
                           present value of all amounts paid by Licensee with
                           respect to the infringing Software, as amortized over
                           a forty-eight (48) month life.

                  If the Infringement Claim relates to Third Party Software not
                  licensed through Essentus, Essentus shall have no liability
                  whatever as regards such Third Party Software.

                  The foregoing states Essentus's entire liability with respect
                  to any Infringement Claim.

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<PAGE>   9

6.       TERMINATION

         6.1      Events Giving Rise to Termination

                  6.1.1    Either party may immediately terminate this Agreement
                  and shall have no further obligations to the other party under
                  this Agreement other than the obligations of Licensee to make
                  all payments contemplated hereby to Essentus, if any one of
                  the following events shall have occurred and provided such
                  termination is permitted by law.

                           6.1.1.1  A party shall fail to observe or perform any
                           material covenant or agreement contained in this
                           Agreement and such party does not cure such failure
                           within the one hundred and twenty (120) day period
                           after written notice thereof has been given to that
                           party by the other party;

                           6.1.1.2  The other party:

                                    6.1.1.2.1 is dissolved;

                                    6.1.1.2.2 becomes insolvent or fails or is
                                    unable or admits in writing its inability
                                    generally to pay its debts as they become
                                    due;

                                    6.1.1.2.3 makes a general assignment,
                                    arrangement or composition with or for the
                                    benefit of its creditors;

                                    6.1.1.2.4 institutes or has instituted
                                    against it a proceeding seeking a judgement
                                    of insolvency or bankruptcy or any other
                                    relief under any bankruptcy or insolvency
                                    law or other similar law affecting
                                    creditors' rights, or a petition is
                                    presented for the winding-up or liquidation
                                    of such other party and, in the case of any
                                    such proceedings or petition instituted or
                                    presented against it, such proceeding or
                                    petition

                                              a)   results in a judgement of
                                              insolvency or bankruptcy or the
                                              entry of an order for relief or
                                              the marking of an order for the
                                              winding-up or liquidation of such
                                              other party, or

                                              b)   is not dismissed, discharged,
                                              stayed or restrained in each case
                                              within thirty (30) days of the
                                              institution or presentation
                                              thereof;

                                    6.1.1.2.5 has a resolution passed for its
                                    winding-up or liquidation;

                                    6.1.1.2.6 seeks or becomes subject to the
                                    appointment of an administrator, receiver,
                                    trustee, custodian or other similar official
                                    for it or for all or substantially all its
                                    assets (regardless of how brief such
                                    appointment may be, or whether any other
                                    event described in this Section 6.1.1.2.6
                                    has occurred and is continuing;)

                                    6.1.1.2.7 has any event occur to it with
                                    respect to such other party which, under the
                                    applicable laws of any jurisdiction, has an
                                    analogous effect to any of the events
                                    specified in Sections 6.1.1.2.1 to 6.1.1.2.6
                                    (inclusive); or

                                    6.1.1.2.8 takes any action in furtherance
                                    of, or indicating its consent to, approval
                                    of, or acquiescence in, any of the foregoing
                                    acts.

                  6.1.2    Upon termination of this Agreement by Essentus
                  pursuant to Article 6, Licensee shall discontinue all use of,
                  and promptly return all copies of the Software and
                  Documentation in Licensee's possession.

                  6.1.3    Notwithstanding any termination of this Agreement,
                  the following Sections shall continue to apply: Sections
                  3.1.1, 3.2.3, 4.5.1, 4.6.1, 4.7.1, 4.8.1 and Article 5.

7.       MISCELLANEOUS

         7.1      Notices

-------------------------------------------------------------------------------
Software License Agreement
Terms and Conditions V990105                                        Page 6 of 8

<PAGE>   10

                  7.1.1    Any notice or other communication required or
                  permitted in this Agreement shall be in writing and shall be
                  given by certified mail, or in person to the address set forth
                  on the cover page of this Agreement.

                  Such notice shall be deemed effective on the day of delivery
                  if delivered in person, or on the third day after being placed
                  into the mails if given by certified mail.

         7.2      Integration

                  7.2.1    This Agreement, including the Exhibits and any
                  Schedules hereto, constitutes the entire Agreement between the
                  parties with respect to the subject matter hereof and
                  supersedes all prior proposals, negotiations, conversations,
                  discussions, and agreements between the parties concerning the
                  subject matter hereof.

         7.3      Conflict and Exhibits

                  7.3.1    Except as otherwise provided, in the event of a
                  conflict between the provisions of any Exhibit and the
                  provisions set forth in the body of this Agreement, the
                  provisions of the body of this Agreement shall prevail unless
                  the Exhibit specifically indicates that the provision in the
                  Exhibit should control and such Exhibit is signed by both
                  parties.

         7.4      Amendments

                  7.4.1    No amendment, modification, termination or waiver of
                  any provision of this Agreement, nor consent to any departure
                  therefrom, shall be effective unless the same shall be set
                  forth on a separate document in writing, executed by
                  authorized representatives of both parties, and then such
                  waiver or consent shall be effect only in the specific
                  instance and for the specific purpose for which given.

         7.5      Applicable Law

                  7.5.1    This Agreement shall not be governed by the
                  provisions of the 1980 United Nations Convention on Contracts
                  for the International Sale of Goods. Rather this Agreement
                  shall be governed by the laws of the State of New York.
                  Subject to Section 7.6. Any legal proceedings arising out of
                  or relating to this Agreement shall be brought in the state
                  courts located in Manhattan County or in the federal district
                  courts for the Southern District of New York.

         7.6      Arbitration

                  7.6.1    Any controversy or claim arising out of or relating
                  to this Agreement shall be submitted to arbitration before an
                  arbitrator agreed upon by the parties, or if the parties
                  cannot agree upon an arbitrator within thirty (30) days, to
                  three arbitrators selected by the American Arbitration
                  Association. Notwithstanding the foregoing, however, the
                  parties agree that either party may seek injunctive or similar
                  indirect relief pending such arbitration from any court of
                  competent jurisdiction as may be appropriate. The site of the
                  arbitration shall be New York, New York, and the arbitration
                  shall be conducted under the rules then prevailing of the
                  American Arbitration Association. The arbitrators may award
                  attorney's fees and costs as part of the award. The award of
                  the arbitrators shall be binding and may be entered as a
                  judgement in any court of competent jurisdiction.

         7.7      Invalidity

                  7.7.1    If any provision or portion of this Agreement is held
                  to be invalid under any applicable statute or rule of law it
                  is to that extent to be deemed to be severable and omitted and
                  the remainder of this Agreement shall continue in full force
                  and effect.

         7.8      Waiver

                  7.8.1    No waiver of any breach of this Agreement shall
                  operate as a waiver of any similar subsequent breach or any
                  breach of any other provision of this Agreement.

         7.9      Force Majeure

                  7.9.1    Neither party shall be liable or deemed to be in
                  default for any delay or failure in performance under this
                  Agree-

-------------------------------------------------------------------------------
Software License Agreement
Terms and Conditions V990105                                        Page 7 of 8

<PAGE>   11

                  ment or interruption of service resulting directly or
                  indirectly from Acts of God, civil or military authority, acts
                  of public enemy, war, riots, civil disturbances, accidents,
                  fire, explosions, earthquakes, floods, the elements, strikes,
                  lockouts, labor disturbances, shortages of suitable parts,
                  labor or transportation, delays caused by suppliers,
                  telecommunications, courier or postal failure or interruption
                  or any other cause beyond the reasonable control of such
                  party.

         7.10     Export

                  Licensee shall not export or re-export the Software or
                  Documentation except in compliance with United States export
                  laws and regulations.

         7.11     Reference

                  Licensee agrees upon signing of this Agreement to assist
                  Essentus in marketing events such as site visits, reference
                  calls and customer testimonials and hereby authorizes Essentus
                  to identify Licensee by its corporate name, verbally or in
                  written material, as a client of Essentus.

-------------------------------------------------------------------------------
Software License Agreement
Terms and Conditions V990105                                        Page 8 of 8

<PAGE>   12

                                                                     EXHIBIT 1.3

                         ESSENTUS SOFTWARE APPLICATIONS
                             TO BE LICENSED AND FEES

LICENSEE     McNaughton Apparel Group Inc.

APPLICATION LICENSE FEES (as per Application Features of "Proposal")

<TABLE>
<CAPTION>
     APPLICATION LICENSE FEES                                                                           250 Named Users
                                                                                                        ---------------
<S>                                                                                                     <C>
     A)     SUCCESS SOURCING

            1)  Purchase Order Control and Reporting, In-Transit Processing - Receiving
            2)  Source Order Module
            3)  Planning
            4)  Contract Order Processing and Reporting

            Initial Sourcing License Fee                                                                       $200,000

            SUB-TOTAL SOURCING                                                                                 $200,000

     B)        SUCCESS DEMAND MANAGEMENT

            4)  Sales Order Processing
            5)  Sales Order Allocation
            6)  Return Merchandise Authorization (RMA)

            Initial Demand Management License Fee                                                              $200,000

            SUB-TOTAL DEMAND MANAGEMENT                                                                        $200,000

            PER NAMED USER FEE:  250 USERS @ $2,400                                                            $600,000

            GRAND TOTAL SOURCING/DEMAND MANAGEMENT                                                           $1,000,000
            LESS TRADE-IN ALLOWANCE                                                                            $300,000
                                                                                                             ===========
            NET TOTAL SOURCING & DEMAND MANAGEMENT                                                             $700,000

     C)     INTERFACE LINKS                                                                                  PER MODULE
                                                                                                             ----------

            14)  Financial Systems                                                                              $30,000
            15)  Warehouse Management Systems                                                                   $30,000

            GRAND TOTAL INTERFACE LINKS                                                                         $60,000
            LESS TRADE IN ALLOWANCE                                                                             $60,000
                                                                                                             ===========

            NET TOTAL INTERFACE LINKS                                                                                $0
            NOTE: The links are generic interfaces providing staging table
            capability. A complete integrated system requires additional
            services from Essentus and possibly third parties that must be
            evaluated on a case-by-case basis.
</TABLE>

--------------------------------------------------------------------------------
                                                                    Page 1 of 4

<PAGE>   13

D)     EDI (ELECTRONIC DATE INTERCHANGE)

<TABLE>
<S>                                                                                                    <C>
       Demand Management Transactions
       ------------------------------

       25)  Purchase Orders (850)                                                                          $15,000
            -  Inbound interface module required for first trading partner
       26)  Invoice (810)                                                                                  $15,000
            -  Outbound interface module required for first trading partner
       27)  Advance Ship Notice (856)                                                                      $15,000
            -  Outbound host integration module (pick/pack and manifest)
       28)  Price/Sales Catalog (832)                                                                      $15,000
            -  Outbound catalog service
       29)  Organizational Relationship (816)                                                              $15,000
            -  Inbound interface module required for first trading partner
       30)  Purchase Order Change (860)                                                                    $15,000
            -  Inbound validation and listing (no automated interface)
       31)  Product Activity Data (852)                                                                    $15,000
       32)  Order Inquiry (869)                                                                            $15,000
       33)  Order Status (870)                                                                             $15,000
       34)  EDI Text Transaction (864)                                                                     $15,000

Configuration to connect with each third party network or direct connection is
done on a time and material basis.

GRAND TOTAL EDI                                                                                           $150,000
LESS TRADE-IN ALLOWANCE                                                                                   $150,000
                                                                                                          ========

NET TOTAL EDI                                                                                                   $0
TOTAL A-D                                                                                                 $700,000

E)    THIRD PARTY SOFTWARE LICENSES

      Oracle and optionally Business Intelligence would have to be purchased for
      each computer utilising the Essentus software. Business Objects is a
      decision support Ad Hoc query application. The license fees vary depending
      on number of PC's or Oracle on the number of named users and could be as
      follows:

      ORACLE SOFTWARE LICENSES

      Oracle licenses would have to be purchased for each "server" and "client"
      utilizing the Essentus Software. The license fees vary depending on the
      number of named users and the model of the hardware.

      Single Server Application Specific Enterprise Licenses for 250 Named                                $100,000
      Users at $400 per user (165 of these licenses will be delivered and
      paid for following Licensee's payment of the amount due on the Balance
      Date referred to in Exhibit 3.4 to the License Agreement, subject to
      price adjustment by Oracle). Single Server Application Specific Standard
      Edition Licenses for 15 Named Users at $110 per user.                                                 $1,650

      TOTAL ORACLE LICENSES                                                                               $101,650
</TABLE>

--------------------------------------------------------------------------------
                                                                    Page 2 of 4

<PAGE>   14

      Front line Oracle support is provided through Essentus on an annual basis,
      at 16% of the list price per year, subject to price adjustments by Oracle.

      FINAL ORACLE PRICING TO BE CONFIRMED AFTER HARDWARE PURCHASE

<TABLE>
<S>                                                                                                  <C>
      SUCCESS BUSINESS INTELLIGENCE

       35)  Standard with Essentus SUCCESS                                                                Included
            - Essentus' Predefined Reports
            - Driller capability to view standard reports and drill down with
              multiple views (named users)
            - 1 BO Supervisor to manage security
            - 1 BO Document Agent Server (Windows NT)
            - 1 BO Designer
            - Essentus Universe(s)
            (5 bundles to be delivered following Licensee's payment of the
            amount due on the earlier of 45 days after the Miss Erika
            implementation or December 31, 2000.)

       36)  Standard BI Advisor Module - Full Use License
            - 10 BO End User Bundles (Reporter plus Explorer) @ $5,925 ea.
              (5 of these bundles will be delivered following Licensee's
              payment of the amount due on the earlier of 45 days after the
              Miss Erika implementation or December 31, 2000.)                                            $59,250
            Annual support will be 20% of the list price per year, subject to
            adjustments by the third party licensor

SUBTOTAL BUSINESS INTELLIGENCE                                                                            $59,250

SUB-TOTAL THIRD PARTY SOFTWARE                                                                           $160,900

GRAND TOTAL ALL LICENSES                                                                                 $860,900

F)    ESSENTUS BI ADVISOR
                OPTIONAL BI  ADVISOR ENHANCEMENTS
                      -     Additional copies of BO Reporter
                      -     Additional copies of BO Explorer                                                 $595
                      -     Additional copies of End User Bundles (5 User Increments)                        $695
                      -     Additional copies of BO Supervisor                                             $5,950
                      -     Additional copies of BO Designer                                               $1,995
                      -     Additional copies of IS Bundle (Supervisor plus Designer)                      $1,995
                      -     Additional copies of BO Document Agent Server for Unix                         $3,495
                      -     Additional copies of BO Document Agent Server for NT                           $7,995
                      -     BusinessMiner                                                                  $4,995
                      -     BusinessQuery                                                                  $4,995
                      -     Additional copies of BO Driller                                                  $150
                           (Annual Support 20% of list price per annum)                                      $350
</TABLE>

G)    ESSENTUS SERVICES

      Essentus Services for Systems Design Review, Training, Conversion and
      Other Implementation Support Services.

      During the initial phase of the project, we will work with your project
      team to develop a specific project plan defining the training,
      implementation, conversion plan and the estimated cost associated with
      each phase of the plan.

--------------------------------------------------------------------------------
                                                                    Page 3 of 4

<PAGE>   15

<TABLE>
<S>                                                                                <C>
H)    ESSENTUS MAINTENANCE

      FIVE YEAR MAINTENANCE -
      ---------------------
      BASED ON LICENSE FEES OF $1,210,00 @ 16% PER ANNUM  ($193,600 PER YEAR)         $968,000
      PAYABLE ANNUALLY.

I)    FEE SCHEDULE
</TABLE>

      Time spent will be charged at our current prevailing per diem rates.

      Effective to December 31, Hourly 2000, based on an 8 hour day, they are as
      follows:

<TABLE>
<CAPTION>
                                                             Reg. Hourly        Disc. Hourly
                                                             -----------        ------------
                <S>                                        <C>                  <C>

                -          Project Manager                      $350                 $295
                -          Lead Business Analyst                $300                 $275
                -          Intermediate Business Analyst        $225                 $175
                -          Senior Technical Analyst             $225                 $225
                -          Data Base Administrator              $225                 $225
                -          Training                             $300                 $250
                -          Senior Business Analyst              $275                 $275
                -          Business Analyst                     $150                 $150
                -          Technical Analyst                    $200                 $200
                -          Software Development Manager         $225                 $225
                -          Senior Software Developer            $200                 $200
                -          Intermediate Software Developer      $175                 $175
                -          Software Developer                   $150                 $150
                -          Technical Installation Analyst       $200                 $200
                -          Executive                            $350                 $350
</TABLE>

J)    TRAINING SERVICES

Essentus offers education classes per the Essentus Course Catalog.

<TABLE>
<S>                                                                                           <C>
      a)    Training conducted at a Essentus site                                                          $350 per student day

                                                                                                                 $2,400 per day
                                                                                                             (First 8 students)
      b)    Training conducted at a client site                                                             $250 per additional
                                                                                                              student (max. 12)

K)     RECOMMENDED STAFF REQUIREMENTS

       1)    Database Administrator (in-house or out-sourced)
       2)    MIS Administrator
                                                                                                           Initials

                                                                                               ----------------------------------

                                                                                               ----------------------------------
</TABLE>

--------------------------------------------------------------------------------
                                                                    Page 4 of 4

<PAGE>   16

                                                                     EXHIBIT 2.2

                                [ESSENTUS LOGO]
                          creating value at web speed

                      ESSENTUS SOFTWARE SUPPORT AGREEMENT

                         McNAUGHTON APPAREL GROUP INC.

<PAGE>   17

                          ESSENTUS INTERNATIONAL INC.
                           Software Support Agreement
                                    Contents

1. Essentus Software Support Agreeement

2. Terms and Conditions

3. Schedule "A" - Software Included In Support Agreement

4. Schedule "B" - Standard Per Diem Rates

--------------------------------------------------------------------------------
                                                                    Page 1 of 1

<PAGE>   18

                           ESSENTUS INTERNATIONAL INC.
                            1430 Broadway, 14th Floor
                            New York, New York 10018

                       ESSENTUS SOFTWARE SUPPORT AGREEMENT

The Licensee identified below ("Licensee") and Essentus International Inc.
("Essentus") have entered into this Software Support Agreement (the "Agreement")
as of the Effective Date set forth below.

Licensee Name:                       McNaughton Apparel Group Inc.
                                     ------------------------------------------
Billing/Notice Address:              463 Seventh Avenue
                                     ------------------------------------------
                                     New York, NY  10018
                                     ------------------------------------------
                                     Attn:  Don George
                                     ------------------------------------------
Telephone/Fax:                       (212) 947-2960 ext. 350
                                     ------------------------------------------
Effective Date:
                                     ------------------------------------------

Agreement Reference Number:  M-
                            -------

This Cover Page and the attached Software Support Agreement Terms and Conditions
are incorporated into and made a part of the Essentus Software License Agreement
as of the Effective Date set forth above. In the event the Effective Date is not
identified above, this Agreement shall be effective upon expiration of the Grace
Period identified in the License Agreement.

The parties hereby acknowledge that they have read and understand this
Agreement, and agree to all terms and conditions stated herein and attached
hereto.

<TABLE>
<S>                                                    <C>
ESSENTUS INTERNATIONAL INC.:                                      LICENSEE:

By:                /s/ Scott D. Miller         /s/ Amanda Bokman
       --------------------------------------------           -----------------------------------------
Name:                                                   Name:
       --------------------------------------------           -----------------------------------------
Title:                                                  Title:
       --------------------------------------------           -----------------------------------------
Date:                                                   Date:
       --------------------------------------------           -----------------------------------------
</TABLE>

--------------------------------------------------------------------------------
                                                                    Page 1 of 1

<PAGE>   19

                          ESSENTUS INTERNATIONAL INC.
                           SOFTWARE SUPPORT AGREEMENT
                              TERMS AND CONDITIONS

1.       DEFINITIONS:

         1.1      "Current Release" means the then-current release of Software
                  for use in a particular Operating Environment.

         1.2      "Error" means an error in the Software that significantly
                  degrades the use of the Software.

         1.3      "First Line Support" means assisting Licensee in determining
                  whether the Error resides in the Licensed Software (including
                  corrections done by Essentus).

         1.4      "Fix" means the repair or replacement of object or executable
                  code versions of the Software to remedy an error.

         1.5      "Hours of Operation" means Monday through Friday (excluding
                  Essentus holidays), 8:00 AM to 9:00 PM (EST).

         1.6      "Previous Releases" means the release of Software for use in a
                  particular Operating Environment which have been replaced by
                  the Current Release in the same Operating Environment.

         1.7      "Software" means the Essentus Software described in Schedule
                  "A".

         1.8      "Telephone Support" means Software technical support telephone
                  assistance provided by Essentus to the primary technical
                  support contact during Essentus' Hours of Operation concerning
                  the use of the Current Release and the Previous Releases (as
                  applicable).

         1.9      "Updates" means one (1) copy of all published revisions and
                  corrections to the printed System Design Specifications and
                  one (1) copy of corrections and new releases of the Software
                  which are generally made available to Essentus' supported
                  licensees at no additional cost. Updates shall not include any
                  options or future products which Essentus licenses separately.

         1.10     "Workaround" means a change in the procedures followed or data
                  supplied by Licensee to avoid an Error without significantly
                  impairing performance of the Software.

2.       STANDARD MAINTENANCE SERVICES FOR ESSENTUS SOFTWARE

         2.1      In consideration for the annual maintenance fee Essentus will
                  provide, during its Hours of Operation, First Line Support and
                  Telephone Support (which may be provided via email or FAX at
                  Essentus' option) for the software described in the attached
                  schedules. Essentus shall not be required to provide support
                  for use of Third Party Software covered by this Agreement
                  except so far as the Third Party Software is used with the
                  Software.

         2.2      Essentus will answer reasonable questions relating to the use
                  of the Software, providing that such can reasonably be replied
                  to by telephone and that such are not in lieu of appropriate
                  training.

--------------------------------------------------------------------------------
                                                                     Page 1 of 4
<PAGE>   20

2.3      In consideration for the Annual Maintenance fee listed below, Essentus
         will provide Updates upon their general availability.

3.       ERROR CORRECTIONS

         During the term of this Agreement, Essentus shall use its commercially
         reasonable efforts to correct or provide a Workaround for any
         reproducible programming Error in the Essentus Software attributable
         to Essentus with a level of effort commensurate with the severity of
         the Error, provided that Essentus shall have no obligation to correct
         all Errors in the Essentus Software. Upon identification of any
         programming Error, Licensee shall notify Essentus support of such
         Error and shall provide Essentus with enough information to locate the
         Error.  Essentus shall not be responsible for correcting any Errors
         not attributable to Essentus. Errors attributable to Essentus shall be
         those that are reproducible by Essentus on unmodified Essentus
         Software.  Errors attributable to modifications made to the Software
         (whether or not made by Essentus) or Third Party Software not
         expressly covered by this Agreement or misuse of the Essentus Software
         will be billed at Essentus' standard support rates then in effect.

4.       SOFTWARE SUPPORTED VERSIONS

         Essentus will provide support for both the Current Release and the
         immediately Previous Release of the Software. Essentus will also
         provide Licensee with  one year's notice of its intention to
         discontinue support for a particular release.

5.       EXTENDED MAINTENANCE SERVICES

         "Extended 724 Maintenance" consists of Telephone support provided
         seven (7) days a week on a 24 hour basis.   Fees for this additional
         service shall be as described in a Schedule to this Agreement.

6.       LICENSEE RESPONSIBILITIES

         6.1     Licensee Assistance.  Licensee agrees to provide Essentus
                 reasonable access to all necessary personnel to answer
                 questions about any problems reported by Licensee regarding
                 the Software. Licensee also agrees to promptly implement all
                 Error corrections provided by Essentus under this Agreement.

         6.2     Remote Access.   Licensee shall provide Essentus with the
                 necessary remote access as stipulated by Essentus to
                 Licensee's designated CPU so that Essentus may provide
                 maintenance services. Essentus cannot provide or guarantee
                 performance of the maintenance services described herein
                 unless such remote access is provided by Licensee.

         6.3     Contact People.   Licensee shall appoint two (2) individuals
                 within Licensee's organisation who are knowledgeable in the
                 operation of the Software to serve as primary contacts between
                 Licensee and Essentus and to receive support through Essentus'
                 telephone support center. All of Licensee's support inquiries
                 shall be initiated through these contacts.

--------------------------------------------------------------------------------
                                                                     Page 2 of 4

<PAGE>   21

7.       EXCLUSIONS

         Essentus is not required to provide support under this Agreement for
         problems arising out of (i) Licensee's failure to implement all Fixes
         to the Software which are issued under the Agreement; (ii) any
         alterations or additions to the Software performed by parties other
         than Essentus; (iii) interconnection of the Software with other
         software products not supplied by Essentus.

8.       OTHER SERVICES

         In the event that Licensee requires or requests other services
         including additional user education and training,  implementation
         assistance, installation training or hardware reconfiguration not
         covered by the original license agreement, such services will be
         provided in accordance with Essentus' then prevailing standard per
         diem rates.

9.       OTHER CONDITIONS

         9.1     Maintenance does not include the following items listed below.
                 Fees for these services will either be charged on a time and
                 material basis or on an agreed fixed fee basis per item.

                 9.1.1    Modifications required by governments, such as tax
                          changes to reflect tax changes by any government
                          authority.
                 9.1.2    Errors caused by hardware malfunctions, data
                          corruption and operating system related errors and
                          problems, unless such can be reasonably handled by a
                          single telephone call.
                 9.1.3    Errors and problems resulting from not maintaining
                          adequate back-up, unless such can be reasonably
                          handled by a single telephone call.
                 9.1.4.   User education and training unless such can be
                          reasonably enabled by a single telephone call.
                 9.1.5.   Consultation over hardware and for new programs or
                          modifications to existing programs.
                 9.1.6.   Site visits.

         9.2     It will be Licensee's responsibility to verify the result of
                 all program corrections made by Essentus to assure that all
                 calculations and data resulting from these corrections are
                 correct.

         9.3     Essentus will not be liable or responsible for any losses or
                 damages whatsoever which might at any time result from or
                 arise from the use or operation of the programs covered under
                 the Agreement, or the services provided herein.

         9.4     The system as well as the corrections made under this
                 Agreement shall at all times remain the property of Essentus.
                 It is understood and acknowledged that the systems,
                 specifications and any corrections contain information and
                 programming techniques developed by Essentus which Licensee,
                 by its acceptance shall agree not to divulge or in any other
                 way grant to a third party, without the express prior written
                 consent of Essentus.

--------------------------------------------------------------------------------
                                                                     Page 3 of 4

<PAGE>   22

10.      TERM AND TERMINATION

         Support shall be provided for five (5) years from the Effective Date
         ("Initial Term") and shall be automatically extended further to the
         Initial Term for additional one (1) year terms unless terminated by
         either party by giving at least 60 days notice prior to the end of the
         Initial Term or renewal terms.

         Either party may terminate this Software Support Agreement at the end
         of the Initial Term or at the end of any renewal term by giving the
         other party written notice at least sixty (60) days prior to the end of
         any such term. In the event Licensee fails to make payment pursuant to
         the Agreement or Section 11 below, or in the event Licensee materially
         breaches any of the provisions herein described and such breach has not
         been cured within thirty (30) days of receipt of notice of breach,
         Essentus may suspend or cancel support services.

11.      FEES AND PAYMENTS

                  11.1     For each designated site utilizing Essentus Software,
                           Licensee shall pay Essentus the support fee for the
                           designated term as described in the attached
                           schedule. Support fees are billed on an annual basis,
                           payable in advance.

                  11.2     Should Licensee purchase additional Essentus Software
                           or additional concurrent user licences then the
                           additional support fees will be as per additional
                           schedules.

                  11.3     Support for modifications and customizations to the
                           Essentus Software (including those made by Essentus)
                           shall be in addition to the support under this
                           Agreement and billed at Essentus' standard support
                           rates then in effect.

12.      GENERAL

                  12.1     The terms and conditions of all subsections set forth
                           under the section heading miscellaneous in the
                           License Agreement are herein incorporated by
                           reference and apply this agreement as if recited at
                           length.

12.2     These terms and conditions state the entire agreement regarding
         Essentus' provision of support services to Licensee and may be amended
         only by a written amendment set forth on a separate document executed
         by authorised representatives of both parties.

--------------------------------------------------------------------------------
                                                                     Page 4 of 4

<PAGE>   23

                                                                    SCHEDULE "A"

                          ESSENTUS INTERNATIONAL INC.
                      ESSENTUS SOFTWARE SUPPORT AGREEMENT
                     SOFTWARE INCLUDED IN SUPPORT AGREEMENT

<TABLE>
<S>                                               <C>
Licensee: McNaughton Apparel Group                 Agreement Reference Number:
          ------------------------                                            -------------------------
</TABLE>

Licensed Software

1.  The Essentus Software listed in Exhibit 1.3 to the License Agreement.
2.
3.
4.
5.
6.
7.
8.
9.
10.

The above software is licensed for a maximum of 85  named users, subject to
increase to a maximum of 250 named users upon payment of the amount due on the
Balance Date referred to in Exhibit 3.4 to the Licence Agreement.

Support Option (Hours of Support):

         Standard 513                             [X]

         Extended 724                             [ ]

TERM

This Agreement shall be for a Initial Term of five (5) years.  The annual
support charge payable in advance shall be for each period of one year.

<TABLE>
<S>                                                             <C>
Rate:                                                                  16%
-----                                                                  ---

Annual Maintenance Fee payable during the Initial Term:          $193,600*
-------------------------------------------------------          ---------

FIVE YEAR MAINTENANCE FEE:                                       $968,000*
--------------------------                                       ---------
</TABLE>

1.1.1.1 * Licensee shall pay $126,400 on account of the first year's Annual
Maintenance Fee upon execution of the License Agreement. If Essentus does not
receive the Abatement Notice on or before the Notification Date in accordance
with Exhibit 3.4 of the License Agreement, then a balance of $67,200 multiplied
by the number obtained by dividing (i) the number of days remaining in the first
year of the Initial Term on the Balance Date by (ii) 365, payable on account of
the first year Maintenance Fee, shall be due and payable to Essentus on the
Balance Date mentioned in Exhibit 3.4 of the Licence Agreement.. If Essentus
receives the Abatement Notice in accordance with the said Exhibit 3.4, then the
Annual Maintenance Fee payable by Licensee during the Initial Term shall be
$126,400 ($632,000 for the entire Initial Term) notwithstanding any other
provision of the Support Agreement or this Schedule "A".

                                                         Initials

--------------------------------------------------------------------------------
                                                                     Page 1 of 1

<PAGE>   24

                                                                    SCHEDULE "B"

                          ESSENTUS INTERNATIONAL INC.
                            STANDARD PER DIEM RATES

Essentus fees for services will be on a time and material basis at the
following daily rates based on an eight hour day.

<TABLE>
         <S>                                          <C>
         Project Manager                              $2,400
         Lead Analyst                                 $2,400
         Senior Business Analyst                      $2,200
         Intermediate Business Analyst                $1,800
         Business Analyst                             $1,200
         Senior Technical Analyst                     $1,800
         Technical Analyst                            $1,600
         Software Development Manager                 $1,800
         Senior Software Developer                    $1,600
         Intermediate Software Developer              $1,400
         Software Developer                           $1,200
         Technical Installation Analyst               $1,600
         Installation Consultant                      $1,200
         Data Base Administrator                      $1,800
         Executive                                    $2,800
</TABLE>

These rates are valid through December 31, 2000, and are subject to change on
an annual basis.

Out-of-pocket travel and other disbursements will be charged monthly as
incurred.

All time and material charges and disbursements are payable monthly upon
receipt of invoice.

Applicable taxes will be added to above amounts.

                                                              Initials
                                                       ------------------------

                                                       ------------------------

--------------------------------------------------------------------------------
                                                                     Page 1 of 1

<PAGE>   25

                                                                     EXHIBIT 3.4

                                PAYMENT SCHEDULE

LICENSEE:  McNaughton Apparel Group Inc.
         -------------------------------------------------------

<TABLE>
<S>                                                                                      <C>
1)       Essentus License fees are payable as follows:

         a)      Upon contract signing                                                       $200,000
         b)      90 Days from the Effective Date                                             $200,000
         c)      Balance due on the Balance Date (as defined below)                          $300,000

2)       Third Party Software License charges are payable as follows:
         a)      Upon contract signing                                                        $94,900
         b)      Balance due on the Balance Date (as defined below)                           $66,000
</TABLE>

3)       All applicable taxes will be added to the above amounts. For purposes
         of this Exhibit 3.4, "Balance Date" means (i) the day which is 45 days
         following implementation of the Software for Licensee's Miss Erika
         division; or (ii) December 31, 2000, whichever is earlier.

Notwithstanding Exhibit 1.3 or this Payment Schedule, Licensee shall be excused
from paying the installments mentioned in 1) b) and 2) b) above if Essentus
receives written notice (the "Abatement Notice") not less than three (3) days
prior to the Balance Date (the "Notification Date") from a senior officer
certifying that Licensee shall not at any time implement or use the Software or
any part thereof for any division other than its Miss Erika division (the
"Licensed Division") without the prior written consent of Essentus and on such
terms as Essentus in its sole discretion may determine. In such case, (i) the
total License fee for the Essentus Software shall be deemed to be $400,000; (ii)
Licensee shall not pay for and Essentus shall not be required to deliver the
additional 165 Named User licenses for Third Party Software; (iii) the number of
Named Users for the Essentus Software shall be 85; and (iv) Licensee shall limit
its use of the Software exclusively to the Licensed Division: Any other use of
the Software shall be cause for immediate termination of the License Agreement
by Essentus without regard to Section 6.1.1.1 thereof but subject to Essentus'
right to claim damages. Licensee's right pursuant to this clause shall
automatically lapse and this clause shall cease to have any effect if Essentus
does not receive the Abatement Notice prior to 5:00 p.m. (EST) on the
Notification Date. For convenience, allocation of the License fees is set out in
the table below:

<TABLE>
<CAPTION>
----------------------------------------------------------------------------------------------------------------------------------
FEE DESCRIPTION                              DUE ON CONTRACT SIGNING        DUE 90 DAYS FROM THE     DUE ON THE BALANCE DATE
                                                                            EFFECTIVE DATE
----------------------------------------------------------------------------------------------------------------------------------
<S>                                          <C>                        <C>                          <C>
Essentus Software                            $       200,000            $         200,000            $           300,000
----------------------------------------------------------------------------------------------------------------------------------
Number of Named Users                                  85                           0                              165
----------------------------------------------------------------------------------------------------------------------------------
Third Party Software
----------------------------------------------------------------------------------------------------------------------------------
Business Intelligence Bundled w/ S&D         $             -            $              -             $                -
----------------------------------------------------------------------------------------------------------------------------------
Business Intelligence Bundles ($5925 ea)     $         59,250           $              -             $                -
----------------------------------------------------------------------------------------------------------------------------------
Oracle Licenses*                             $         35,650           $              -             $            66,000
----------------------------------------------------------------------------------------------------------------------------------
Subtotal Third Party Licenses                $         94,900           $              -             $            66,000
----------------------------------------------------------------------------------------------------------------------------------
2.          Total Licenses                   $        294,900           $         200,000            $           366,000
----------------------------------------------------------------------------------------------------------------------------------
</TABLE>

Note: Annual maintenance for Third Party Licenses (subject to adjustment by
third party licensors):
 Business Objects: 20%
 Oracle: 16%

* Note: Oracle pricing is dependent on hardware related minimums. This number
must be finalized after hardware is selected. Oracle pricing is to the best
knowledge of Essentus on the date hereof and is subject to adjustment by Oracle,
and Licensee agrees to pay any difference from the pricing set out in this
License Agreement.

                                                          Initials
                                             ----------------------------------

                                             ----------------------------------

--------------------------------------------------------------------------------
                                                                     Page 1 of 1

<PAGE>   26

                                [ESSENTUS LOGO]
                          creating value at web speed

                           ESSENTUS SERVICES AGREEMENT

                      THIS AGREEMENT WILL ENTER INTO EFFECT
                         UPON SIGNATURE OF BOTH PARTIES

                          MCNAUGHTON APPAREL GROUP INC.

<PAGE>   27

                           ESSENTUS INTERNATIONAL INC.
                               Services Agreement
                                    Contents

           1.  Services Agreement

           2.  Terms And Conditions

           3.  Exhibit 1.10 - Specifications Of Additions To Essentus Software

           4.  Exhibit 2.3.1 - Software Specifications Approval Letter

           5.  Exhibit 4.4.1 - Payment Schedule

--------------------------------------------------------------------------------
                                                                     Page 1 of 1

<PAGE>   28

                           ESSENTUS INTERNATIONAL INC.
                            1430 Broadway, 14th Floor
                            New York, New York 10018

                           ESSENTUS SERVICES AGREEMENT

The Licensee identified below ("Licensee") and Essentus International Inc.
("Essentus") have entered into this Services Agreement (the "Agreement") as of
the Effective Date set forth below.

Licensee Name:               McNaughton Apparel Group Inc.
                             ---------------------------------------------------
Billing/Notice Address:      463 Seventh Avenue
                             ---------------------------------------------------
                             New York, NY  10018
                             ---------------------------------------------------
                             Attn:  Don George
                             ---------------------------------------------------
Telephone/Fax:               (212) 947-2960 ext. 350
                             ---------------------------------------------------
Effective Date:
                             ---------------------------------------------------

Agreement Reference Number:  S-
                             --------

This Cover Page and the attached Services Terms and any duly initialled Exhibits
thereto (including without limitation Exhibit 1.10 - Modified Software
Specifications; Exhibit 2.3.1 - Software Specifications Approval Letter; Exhibit
4.4.1 - Payment Schedule) are incorporated into and made a part of this
Agreement as of the Effective Date set forth above. In the event the Effective
Date is not identified above, the Agreement shall be effective as of the last
date of signature of the parties hereto. Additional documents, schedules,
exhibits and addenda may be incorporated into and made a part of this Agreement
upon the written consent of the parties.

The parties hereby acknowledge that they have read and understand this Agreement
and all exhibits and addenda hereto, and agree to all terms and conditions
stated herein and attached hereto.

<TABLE>
<S>                                                    <C>
ESSENTUS INTERNATIONAL INC.:                              LICENSEE:

By:            /s/ Scott D. Miller                        By:   /s / Amanda Bokman
        -----------------------------------------               --------------------------------------
Name:                                                     Name:
        -----------------------------------------               --------------------------------------
Title:                                                    Title:
        -----------------------------------------               --------------------------------------
Date:                                                     Date:
        -----------------------------------------               --------------------------------------
</TABLE>

--------------------------------------------------------------------------------
                                                                     Page 1 of 1

<PAGE>   29

                           ESSENTUS INTERNATIONAL INC.
                           ESSENTUS SERVICES AGREEMENT
                              TERMS AND CONDITIONS

1.       DEFINITIONS

         In this Agreement, unless there is something in the subject matter or
context inconsistent therewith, the expressions following shall have the
meanings indicated below.

         1.1      "ACCEPTANCE" as defined in section 2.3.1.

         1.2      "AGREEMENT" means this Services Agreement, including all
                  exhibits hereto and which may hereafter be added hereto with
                  the consent of Licensee and Essentus.

         1.3      "APPLICATION SPECIFIC THIRD PARTY SOFTWARE" means Third Party
                  Software license through Essentus which may solely be used by
                  Licensee in conjunction with the Essentus Software.

         1.4      "DOCUMENTATION" means the documentation for the Essentus
                  Software and the Modified Software to be provided by Essentus
                  to Licensee with the Essentus Software and Modified Software
                  under this Services Agreement.

         1.5      "EMPLOYEES" means employees, agents, subcontractors and
                  consultants of Essentus or Licensee, as the case may be.

         1.6      "GRACE PERIOD" means the thirty (30) days following delivery
                  of the Essentus Software to Licensee.

         1.7      "HARDWARE" means the computer hardware, peripherals and
                  operating system software provided by or for Licensee,
                  consisting of a single C.P.U. or network of united C.P.U.'s at
                  a single location.

         1.8      "LICENSE" means the rights and licenses granted by Essentus
                  under Section 4.2.1, subject to the license exclusions as set
                  forth in Section 4.5.

         1.9      "MODIFIED SOFTWARE" means any additions, changes,
                  modifications or enhancements made by Essentus to the Essentus
                  Software to perform in accordance with the Modified Software
                  Specifications. The Modified Software includes Documentation
                  provided by Essentus.

         1.10     "MODIFIED SOFTWARE SPECIFICATIONS" means the system design
                  specifications for the Modified Software as agreed upon by
                  Essentus and Licensee and which shall, upon completion, be
                  appended to this Agreement as Exhibit 1.10.

         1.11     "ESSENTUS SOFTWARE" means the software licensed under the
                  Essentus Software License Agreement.

         1.12     "ESSENTUS SOFTWARE SPECIFICATIONS" means the system design
                  specifications for the Essentus Software. Title to copyright
                  in and all other rights to the Essentus Software
                  specifications are and remain with Essentus.

         1.13     "SERVICES" means either fixed price or time and material
                  services (or both), as described in this Agreement and to be
                  paid for as described in Exhibit 4.4.1.

         1.14     "SOFTWARE" means the Essentus Software, together with any
                  Third Party Software, and the Modified Software, collectively.

         1.15     "SYSTEM DESIGN SPECIFICATIONS" means the Modified Software
                  Specifications and the Essentus Software Specifications,
                  collectively.

         1.16     "THIRD PARTY SOFTWARE" means the third party software programs
                  in object code format only, including any accompanying
                  documentation, utilized in conjunction with the Software.

         1.17     "WARRANTY PERIOD" means the sixty (60) day period commencing
                  after the Grace Period.

--------------------------------------------------------------------------------
                                                                    Page 1 of 10

<PAGE>   30

2.       DESCRIPTION OF SERVICES PROVIDED BY ESSENTUS

         2.1      Additions to Essentus Software

                  2.1.1    The consulting, design, additions, modifications
                  and/or implementation services to the Essentus Software are to
                  be considered to be an extension, enhancement of the Essentus
                  Software and, therefore, both the Essentus Software as
                  separately licensed to Licensee and the Modified Software are
                  owned by Essentus and licensed on a non-exclusive basis to
                  Licensee.

                  2.1.2    Essentus may provide assistance to Licensee to review
                  the System Design Specifications of the Essentus Software with
                  Licensee's management and staff assigned to the project.
                  Software additions requested by Licensee to the Essentus
                  Software will be specified in detail by Essentus.

         2.2      Development of System Design Specifications

                  2.2.1    Essentus may provide Modified Software Specifications
                           which will include the following elements:

                           2.2.1.1     Automated procedures to be followed in
                                       each application area.
                           2.2.1.2     Specifications of all data input
                                       required for the system.
                           2.2.1.3     The design of the output records
                                       and reports pertaining to the
                                       system. This would include the
                                       design of the layouts required
                                       for inquiry purposes.
                           2.2.1.4     Design of the data base.
                           2.2.1.5     The computer logic for the customized
                                       systems to be automated including details
                                       of any special calculations required.

         2.3      System Development Services

                  2.3.1    As required to meet the needs of Licensee following
                  the review contemplated by Section 2.1, Essentus may provide
                  programming services in accordance with the Modified Software
                  Specifications following the written approval by Licensee of
                  the Modified Software Specifications in the form attached as
                  Exhibit 2.3.1, which approval shall constitute Acceptance of
                  the Modified Software Specifications.

                           2.3.1.1  Programming of additional software would be
                                    done in accordance with the approved
                                    Modified Software Specifications. All
                                    programming services to the Essentus
                                    Software would have been requested in
                                    advance by Licensee, and incorporated in the
                                    Modified Software Specifications. Any
                                    programming services requested by Licensee
                                    thereafter will be subject to agreement
                                    between Essentus and Licensee as to price,
                                    terms of payment and schedule of
                                    modifications if applicable.

                           2.3.1.2  All programs will be tested and debugged to
                                    the extent possible in a test environment.
                                    This would entail the establishment of
                                    suitable test data by the Licensee which
                                    would test for all reasonably possible
                                    conditions and for the detection of all
                                    reasonably possible errors.

                           2.3.1.3  If requested by Licensee, a programming
                                    demonstration will be conducted for
                                    Licensee's personnel. Utilizing test data,
                                    the programs will be run in a manner to
                                    simulate actual live operations. This will
                                    enable Licensee's staff to verify the
                                    accuracy of the programming and will provide
                                    initial training on the operation of the
                                    system prior to the parallel run and live
                                    operations.

         2.4      Implementation Services

                  2.4.1    Essentus may assist Licensee in implementation, as
                           requested by Licensee, as follows:

                           2.4.1.1  Data Conversion

                                    Essentus may assist Licensee to the extent
                                    commercially reasonable in the conversion of
                                    data to the

--------------------------------------------------------------------------------
                                                                    Page 2 of 10

<PAGE>   31

                                    new system. It will be the responsibility of
                                    Licensee to verify the accuracy of all
                                    converted data.

                           2.4.1.2  Computer Print Forms

                                    Essentus will, together with Licensee's
                                    forms printer, determine the content of
                                    computer forms required for input and
                                    output. Cost of documents and forms will be
                                    borne by Licensee and ordered directly from
                                    Licensee's printer. Licensee will
                                    pre-approve all forms.

                           2.4.1.3  Application Training

                                    Licensee will designate personnel who will
                                    receive direct instructions from Essentus on
                                    use of each program, including daily,
                                    weekly, monthly and yearly procedures, so as
                                    to become internal trainers for Licensee's
                                    employees.

                           2.4.1.4  Parallel Run

                                    Licensee shall continue its existing systems
                                    for a sufficient period of time after
                                    implementation of the new system, so that
                                    Licensee's management will have a basis of
                                    comparison to verify results and assure
                                    integrity of the new system. Should any
                                    problems arise, Essentus, if requested, will
                                    cooperate with Licensee's management and
                                    staff to assist in the resolution of
                                    problems.

3.       PARTICIPATION BY LICENSEE

         3.1      Licensee acknowledges that joint participation of both
         Essentus and Licensee is critical to the success of the project and
         that Licensee's cooperation is essential to such success. Specific
         areas of responsibility of Licensee shall include:

                  3.1.1    Making available to Essentus, knowledgeable employees
                  and staff of Licensee as well as management personnel to
                  discuss the concepts of the Software and its design, and to
                  grant necessary approvals of all new procedures, forms and
                  reports prior to programming.

                  3.1.2    Providing representative transactions to be used as
                  test data.

                  3.1.3    Balancing and verification of input to and from the
                  computer.

                  3.1.4    The establishment of a Systems and Procedures
                  Committee consisting of members of Licensee's management team
                  and staff assigned to the project. Responsibilities of the
                  Committee would include

                           3.1.4.1  discussion of system concepts and design
                                    including procedures, forms and reports
                                    prior to implementation by Essentus.

                           3.1.4.2  review of problems which may arise prior and
                                    subsequent to implementation.

                           3.1.4.3  approval of revisions to the system should
                                    they be required subsequent to
                                    implementation.

                  3.1.5    Granting of approvals to Essentus at each stage of
                  development and implementation of Modified Software, in a
                  timely manner.

                  3.1.6    Verification of all calculations, and accuracy of all
                  reports.

                  3.1.7    Following and abiding by Licensee's established and
                  to be established internal controls and procedures required
                  for an automated systems environment.

                  3.1.8    Providing a proper physical environment for the
                  Hardware in accordance with the manufacturer's recommendation.

                  3.1.9    Designating a specific representative of Licensee
                  with responsibility to coordinate internal activities prior to
                  delivery of Hardware and during the implementation stages of
                  the Software. Such responsibilities shall include

--------------------------------------------------------------------------------
                                                                    Page 3 of 10
<PAGE>   32

                           3.1.9.1     supervision of the gathering of test data
                                       for program testing.
                           3.1.9.2     preparation of site for Hardware.
                           3.1.9.3     approving, ordering and providing
                                       preprinted computer forms.
                           3.1.9.4     supervision of gathering of data in
                                       preparation for data conversion.
                           3.1.9.5     supervision of loading of data and
                                       verification of information during data
                                       conversion.
                           3.1.9.6     scheduling of personnel for training.
                           3.1.9.7     supervision of parallel runs and data
                                       verification.

                  3.1.10   Training of responsible individuals and designating
                  them for assumption of the following responsibilities:

                           3.1.10.1    control of all input and output
                                       transactions to the system.
                           3.1.10.2    enforcing all manual and operating
                                       procedures and disciplines required to
                                       operate each system. 3.1.10.3 scheduling
                                       all work for the computer system.
                           3.1.10.4    supervision of data input clerks and
                                       operators.
                           3.1.10.5    daily back-up of the system.
                           3.1.10.6    following appropriate procedures
                                       should problems arise relating to the
                                       system.
                           3.1.10.7    verifying the accuracy of all
                                       calculations, data and reports.

4.       TITLE, LICENSE AND FEES

         4.1      Title

                  4.1.1    All rights, title and interest in the Software,
                  (other than title and interest in the rights of Third Party
                  Software suppliers), and in any updates, modifications,
                  enhancements, and additions thereto, as may be provided from
                  time to time by Essentus, without obligation, as well as all
                  copyright, patents, trade secrets and other intellectual
                  property rights therein, shall belong to Essentus. All risk
                  for loss prior to delivery of Software prior to installation
                  shall be borne by Essentus. The Software is supplied by
                  Essentus F.O.B. Essentus premises. Upon delivery of the
                  Software to a common carrier, Licensee shall have all
                  responsibility for all risk of loss of, or damage to the
                  Software and shall arrange for all policies of insurance in
                  respect thereof. Nothing in this Agreement shall be construed
                  as transferring to Licensee any rights, title or interest in
                  the Software or any right other than pursuant to the License
                  herein granted.

         4.2      License

                  4.2.1    As long as Licensee is not in default, Essentus shall
                  grant to Licensee a perpetual, non-exclusive, non-revocable
                  (save in the case of default), non-transferable license
                  without right of sublicense to use the Modified Software in
                  object code format, subject to the provisions of this
                  Agreement.

                  4.2.2    Licensee may use the Modified Software for as long as
                  it desires for its intended use within its own company on the
                  initial Hardware or, with the written consent of Essentus, on
                  any upgraded or replacement hardware. Licensee shall take all
                  reasonable steps to protect the proprietary nature of the
                  Modified Software and shall not copy, disclose or allow use of
                  the Modified Software or any part thereof for any purpose
                  whatsoever other than as is necessary in the performance of
                  its normal business. Licensee shall not:

                           4.2.2.1  permit any third party to use the Modified
                                    Software;

                           4.2.2.2  use the Modified Software in the operation
                                    of a service bureau or to assist any third
                                    party.

                           All applicable patents, copyrights, trademarks, trade
                  secrets and intellectual rights in the Software and any
                  updates, modifications or enhancements made by Licensee or
                  Essentus are and shall remain the property of Essentus.

                  4.2.3    Licensee shall not sell, transfer, distribute,
                  market, rent, lease, publish, display or otherwise make
                  available the Software or Documentation to others. Licensee
                  agrees to secure and protect the Modified Software and
                  Documentation and copies in a manner consistent with the
                  maintenance and protection of Essentus's rights therein and to
                  take appropriate action by instruction or agreement with its
                  Employees or others who are permitted access to the Modified
                  Software and to each program or software application. All
                  copies of the Modified Software made by Licensee and other
                  programs developed, including all corrections, modifications,
                  improvements, enhancements or derivatives of the Software made
                  by or for Licensee, translations, compilations and partial
                  copies, as well as all copyright, patents, trade secrets and
                  other

--------------------------------------------------------------------------------
                                                                    Page 1 of 10

<PAGE>   33

                  intellectual property rights therein are the property of
                  Essentus. Licensee is permitted to make copies of the Modified
                  Software for back-up and archival purposes only.

         4.3      No Rights Prior to Payment

                  4.3.1    Notwithstanding the foregoing Licensee shall have no
                  right to use, other than for purposes of testing and training,
                  any component of the Software until it has paid for each such
                  component in accordance with the provisions of this Agreement.

         4.4      Fees and Limitations on Use

                  4.4.1    In consideration for Essentus undertaking to perform
                  the services contemplated hereby, Licensee shall pay the fees
                  and amounts at the times set forth in Exhibit 4.4.1 hereto.

                  4.4.2    All amounts owed under this Agreement shall be due
                  and payable within thirty (30) days of the date of Essentus's
                  invoice. Overdue payments shall bear interest at the lesser of
                  one and one half percent (1.5%) per month, or the maximum rate
                  allowed under applicable law.

                  4.4.3    Essentus reserves the right to include means within
                  the Software to limit Licensee's use of the Software to the
                  Licensed number of simultaneous users. Licensee shall maintain
                  records regarding Licensee's use of the Software and shall
                  make such information available to Essentus upon request and
                  such records shall be subject to audit by Essentus on
                  reasonable notice to Licensee.

         4.5      License Exclusions

                  4.5.1    Except as expressly authorized herein, Licensee shall
                           not:

                           4.5.1.1  reverse compile, reverse assemble,
                           disassemble, translate or otherwise reverse engineer
                           all or any portion of the Software;

                           4.5.1.2  disclose the results of Software performance
                           benchmarks to any third party without Essentus's
                           prior written consent;

                           4.5.1.3  use or permit the use of the Software by
                           more than the maximum number of simultaneous users in
                           respect of which Licensee is paying License fees.

5.       GENERAL

         5.1      Implementation

                  5.1.1    The successful implementation of a data processing
                  system requires discipline within Licensee's organization.
                  Turnover of key staff prior to and during the initial
                  installation may cause the transition period from the old to
                  the new system to be more difficult and costly. It could also
                  result in additional fees should it become necessary for
                  Essentus to familiarize the new individuals with the system.

         5.2      Parallel Run

                  5.2.1    The installation of a new data processing system
                  requires that for each new application being implemented, the
                  old system be run in parallel until such time that Licensee's
                  management is satisfied with the accuracy of the new system.
                  It is the responsibility of Licensee's management to satisfy
                  itself that the Software is satisfactory and suitable for its
                  business purposes before the Software is run in a live
                  environment. Licensee acknowledges that the period during
                  which the parallel runs take place creates an extra work load
                  on Licensee's staff and could result in overtime and extra
                  staff costs.

         5.3      Internal Controls

                  5.3.1    It is Licensee's responsibility to exercise all the
                  internal control procedures required in a computer
                  environment. Internal control procedures must be exercised
                  over such areas as computer input, computer output,
                  segregation of duties, approval, etc. Licensee acknowledges
                  that internal control cannot totally eliminate the possibility
                  of fraud or embezzlement.

--------------------------------------------------------------------------------
                                                                    Page 2 of 10

<PAGE>   34

         5.4      Substitutions and Modifications

                  5.4.1    Essentus reserves the right to make substitutions and
                  modifications to the Software that do not materially adversely
                  affect the performance of the Software.

         5.5      Taxes

                  5.5.1    Licensee shall pay or reimburse Essentus upon demand
                  for any and all applicable state, federal, and/or local taxes
                  howsoever designated arising from or based upon the fees
                  charged by Essentus including any sales and/or use tax, value
                  added tax, property tax, (excluding only taxes based on
                  Essentus's taxable income) and related interest and penalties,
                  if any, imposed by any taxing authority at any time.

         5.6      Confidentiality

                  5.6.1    Essentus and Licensee agree to treat and to cause
                  Essentus Employees and auditors and Licensee's Employees and
                  auditors respectively to treat as confidential any and all
                  information which they may communicate to one another from
                  time to time during the term of this Agreement regarding the
                  conduct of their respective businesses including but not
                  limited to the terms and conditions of this Agreement and any
                  Addendum, Amendment, Exhibit, Schedule and documentation
                  thereto and each of Essentus and Licensee undertakes not to
                  use for itself or disclose any such information to any other
                  person, firm or corporation.

         5.7      Essentus Employees

                  5.7.1    Licensee agrees not to hire, directly or indirectly,
                  any Essentus Employees during the term of this Services
                  Agreement or for a period of one year after the last work is
                  completed under this Agreement. If Licensee does employ,
                  either directly or indirectly any such individual, then in
                  order to compensate Essentus for the costs of training and
                  acquiring such personnel, Licensee agrees to pay to Essentus a
                  fee equivalent to one year compensation of the Essentus
                  Employees so hired. Such sum will be by way of liquidated
                  damages and shall be due and payable upon the termination of
                  such person's employment or service with Essentus.

         5.8      Binding Effect

                  5.8.1    This Agreement shall be binding upon and shall enure
                  to the benefit of the parties hereto and their respective
                  heirs, representatives, successors, executors, administrators
                  and permitted assigns.

6.       WARRANTIES AND LIMITATIONS OF ESSENTUS LIABILITY

         6.1      Specific Warranties and Limitation of Warranties

                  6.1.1    EXCEPT AS EXPRESSLY PROVIDED IN THIS SECTION 6,
                  ESSENTUS MAKES NO OTHER WARRANTY, EXPRESS OR IMPLIED,
                  INCLUDING BUT NOT LIMITED TO THE IMPLIED WARRANTY OF
                  MERCHANTABILITY OR FITNESS FOR A PARTICULAR PURPOSE. THE
                  FOLLOWING WARRANTIES ARE IN LIEU OF THOSE ARISING BY STATUTE
                  OR OTHERWISE IN LAW OR FROM A COURSE OF DEALING OR USAGE OF
                  TRADE.

                  6.1.2    Essentus cannot guarantee a specific result, an error
                  free system or a specific cost saving. Essentus does not
                  warrant that the operation of the Software will be
                  uninterrupted or error free or that all software errors will
                  be corrected. Licensee agrees to assume these risks as to the
                  result including the responsibility for testing and
                  implementing the Software.

                  6.1.3    In the event that during the Warranty Period any
                  Modified Software errors shall appear, provided such program
                  errors are a deficiency of the Modified Software to perform
                  materially in accordance with the Modified Software
                  Specifications, Essentus will use commercially reasonable
                  efforts to correct any such deficiencies in the Modified
                  Software.

                  6.1.4    Essentus does not warrant the Software against faulty
                  performance due to operator errors, power failures, file
                  overflows, equipment malfunctions, failure of operating
                  systems, failure of compilers or interpreters, failure of
                  utilities or of software not authored (written) by Essentus or
                  any other causes beyond the reasonable control of Essentus.
                  Licensee shall pay Essentus's standard rates for services
                  performed by Essentus to correct such data and/or program
                  defects.

--------------------------------------------------------------------------------
                                                                    Page 3 of 10

<PAGE>   35

                  6.1.5    The responsibility of Essentus under this Agreement
                  shall be limited to commercially reasonable efforts to correct
                  defects in the Modified Software if informed of defects by
                  Licensee during the Warranty Period. Any claim by Licensee
                  that a defect exists in the Modified Software shall not excuse
                  Licensee from the performance of its obligations under this
                  Agreement.

                  6.1.6    ESSENTUS DISCLAIMS ANY AND ALL LIABILITY FOR
                  INDIRECT, INCIDENTAL OR CONSEQUENTIAL DAMAGES INCLUDING LOSS
                  OF PROFITS, REVENUE, DATA, OR USE INCURRED BY LICENSEE OR ANY
                  THIRD PARTY ARISING OUT OF THE USE OR OPERATION OF THE
                  SOFTWARE PROVIDED TO LICENSEE WHETHER IN AN ACTION FOUNDED IN
                  CONTRACT, TORT OR OTHERWISE, EVEN IF THE OTHER PARTY OR ANY
                  OTHER PERSON HAS ADVISED ESSENTUS OF THE POSSIBILITY OF SUCH
                  DAMAGES. ESSENTUS'S LIABILITY FOR DAMAGES HEREUNDER FOR ANY
                  CAUSE WHATSOEVER SHALL IN NO EVENT EXCEED THE AMOUNTS RECEIVED
                  FROM LICENSEE WITH RESPECT TO THE PARTICULAR SOFTWARE MODULE
                  WHICH GIVES RISE TO THE LIABILITY OR IN THE AGGREGATE, THE
                  AMOUNTS RECEIVED BY ESSENTUS FOR THE MODIFIED SOFTWARE. THE
                  FEES PROVIDED FOR THIS AGREEMENT REFLECT THE ALLOCATION OF
                  RISKS AND THE LIMITATION OF LIABILITY SPECIFIED HEREIN WHICH
                  BOTH PARTIES HEREBY AGREE TO.

                  6.1.7    If Licensee without the consent of Essentus makes any
                  modifications to the Software or any deviations from the
                  operating instructions, all warranties set forth herein cease
                  immediately. In addition, Essentus's support as contracted for
                  separately shall only apply to unaltered or original Software
                  as may be modified or altered only by Essentus.

                  6.1.8    Essentus warrants that it is the owner of the
                  Software and has the right to License the Software to Licensee
                  (subject to the rights of Third Party Software suppliers).
                  Licensee shall give Essentus prompt notice of any claims that
                  the Software infringes any patent, copyright or trade secret
                  ("Infringement Claim"). If so notified, Essentus shall, at its
                  expense, defend any action brought against Licensee to the
                  extent that it is based on an Infringement Claim arising from
                  Licensee's use of the Software within the scope of this
                  Agreement. In the event that the Software becomes, or in
                  Essentus's opinion is likely to become, the subject of an
                  Infringement Claim, Essentus may either

                           6.1.8.1  procure for Licensee the right to continue
                           using the Software free from any such claims;

                           6.1.8.2  replace or modify the Software to make the
                           Software non-infringing, or

                           6.1.8.3  if neither 6.1.8.1 or 6.1.8.2 is
                           commercially reasonably available to Essentus,
                           require Licensee to discontinue using the infringing
                           Software upon thirty (30) days written notice
                           provided Essentus refunds to Licensee the then
                           present value of all amounts paid by Licensee with
                           respect to the infringing Software, as amortized over
                           a forty-eight (48) month life.

                  If the Infringement Claim relates only to Third Party Software
                  not licensed through Essentus, Essentus shall have no
                  liability whatever as regards such Third Party Software.

                  The foregoing states Essentus's entire liability with respect
                  to any Infringement Claim.

                  6.1.9    Essentus does not represent or warrant that:

                           6.1.9.1  The Essentus Software remedies Year 2000
                           compliance issues that may otherwise affect
                           Licensee's computer or information systems; or

                           6.1.9.2  The services described in the Agreement can
                           be provided in time to resolve or remedy Year 2000
                           compliance issues that may currently be affecting
                           some of Licensee's computer or information systems.

                  Licensee assumes this risk associated with 6.1.9.1 and 6.1.9.2
                  above and full responsibility for ensuring that an alternative
                  plan is in place in the event that the Essentus Software is
                  not functional on Licensee's system in time for potential Year
                  2000 related issues.

7.       TERMINATION

         7.1      Events Giving Rise to Termination

--------------------------------------------------------------------------------
                                                                    Page 4 of 10

<PAGE>   36

         7.1.1    Either party may immediately terminate this Agreement and
         shall have no further obligations to the other party under this
         Agreement other than the obligations of Licensee to make all payments
         contemplated hereby to Essentus, if any one of the following events
         shall have occurred and provided such termination is permitted by law.

                  7.1.1.1  A party shall fail to observe or perform any material
                  covenant or agreement contained in this Agreement and such
                  party does not cure such failure within the one hundred and
                  twenty (120) day period after written notice thereof has been
                  given to that party by the other party;

                  7.1.1.2  The other party:

                           7.1.1.2.1 is dissolved;

                           7.1.1.2.2 becomes insolvent or fails or is unable or
                           admits in  writing its inability generally to pay its
                           debts as they become due;

                           7.1.1.2.3 makes a general assignment, arrangement or
                           composition with or for the benefit of its creditors;

                           7.1.1.2.4 institutes or has instituted against it a
                           proceeding seeking a judgement of insolvency or
                           bankruptcy or any other relief under any bankruptcy
                           or insolvency law or other similar law affecting
                           creditors' rights, or a petition is presented
                           for the winding-up or liquidation of such other party
                           and, in the case of any such proceedings or petition
                           instituted or  presented against it, such proceeding
                           or petition

                                    a)  results in a judgement of insolvency or
                                    bankruptcy or the entry of an  order for
                                    relief or the marking of an order
                                    for the winding-up or liquidation of such
                                    other party, or

                                    b)  is not dismissed, discharged, stayed or
                                    restrained in each case within thirty (30)
                                    days of the institution or  presentation
                                    thereof;

                           7.1.1.2.5 has a resolution passed for its winding-up
                           or liquidation;

                           7.1.1.2.6 seeks or becomes subject to the appointment
                           of an administrator, receiver, trustee, custodian or
                           other similar official for it or for all or
                           substantially all its assets (regardless of how brief
                           such appointment may be, or whether any other event
                           described in this Section 7.1.1.2.6 has occurred and
                           is continuing;

                           7.1.1.2.7 has any event occur to it with respect to
                           such other party which, under the applicable laws of
                           any jurisdiction, has an analogous effect to any of
                           the events specified in Sections 7.1.1.2.1 to
                           7.1.1.2.6. (inclusive); or

                           7.1.1.2.8 takes any action in furtherance of, or
                           indicating its consent to, approval of, or
                           acquiescence in, any of the foregoing acts.

         7.2      In the event Licensee fails to make any payment pursuant to
         the Agreement, Essentus may suspend or terminate this Agreement.

         7.3      Upon termination of this Agreement by Essentus pursuant to
         Article 7, Licensee shall discontinue all use of, and promptly return
         all copies of the Software and Documentation in Licensee's possession.

         7.4      Notwithstanding any termination of this Agreement, the
         following Sections shall continue to apply: Sections 4.1.1, 5.7.1,
         5.8.1 and Article 6.

8.       MISCELLANEOUS

         8.1      Notice

                  8.1.1    Any notice or other communication required or
                  permitted in this Agreement shall be in writing and shall be
                  given by certified mail or in person to the address set forth
                  on the cover page of this Agreement.

--------------------------------------------------------------------------------
                                                                    Page 5 of 10

<PAGE>   37

         Such notice shall be deemed effective on the day of delivery, if
         delivered in person, or on the third day after being placed into the
         mails if given by certified mail.

         8.2      Integration

                  8.2.1    This Agreement, including the Exhibits and schedules
                  hereto, constitutes the entire Agreement between the parties
                  with respect to the subject matter hereof and supersedes all
                  prior proposals, negotiations, conversations, discussions, and
                  agreements between the parties concerning the subject matter
                  hereof. Nothing herein shall be deemed to contradict or modify
                  the Essentus Software License Agreement previously executed
                  between the parties.

         8.3      Conflict and Exhibits

                  8.3.1    Except as otherwise provided, in the event of a
                  conflict between the provisions of any Exhibit or schedule and
                  the provisions set forth in the body of this Agreement, the
                  provisions of the body of this Agreement shall prevail, unless
                  the Exhibit specifically indicates that the provision in the
                  Exhibit should control and such Exhibit is signed by both
                  parties.

         8.4      Amendments

                  8.4.1    No amendment, modification, termination or waiver of
                  any provision of this Agreement, nor consent to any departure
                  therefrom, shall be effective unless the same shall be set
                  forth on a separate document in writing, executed by
                  authorized representatives of both parties, and then such
                  waiver or consent shall be effect only in the specific
                  instance and for the specific purpose for which given.

         8.5      Applicable Law

                  8.5.1    This Agreement shall not be governed by the
                  provisions of the 1980 United Nations Convention on Contracts
                  for the International Sale of Goods. Rather this Agreement
                  shall be governed by the laws of the State of New York.
                  Subject to Section 7.6. Any legal proceedings arising out of
                  or relating to this Agreement shall be brought in the state
                  courts located in Manhattan County or in the federal district
                  courts for the Southern District of New York.

         8.6      Arbitration

                  8.6.1    Any controversy or claim arising out of or relating
                  to this Agreement shall be submitted to arbitration before an
                  arbitrator agreed upon by the parties, or if the parties
                  cannot agree upon an arbitrator within thirty (30) days, to
                  three arbitrators selected by the American Arbitration
                  Association. Notwithstanding the foregoing, however, the
                  parties agree that either party may seek injunctive or similar
                  indirect relief pending such arbitration from any court of
                  competent jurisdiction as may be appropriate. The site of the
                  arbitration shall be New York, New York, and the arbitration
                  shall be conducted under the rules then prevailing of the
                  American Arbitration Association. The arbitrators may award
                  attorney's fees and costs as part of the award. The award of
                  the arbitrators shall be binding and may be entered as a
                  judgement in any court of competent jurisdiction.

         8.7      Invalidity

                  8.7.1    If any provision or portion of this Agreement is held
                  to be invalid under any applicable statute or rule of law it
                  is to that extent to be deemed to be severable and omitted and
                  the remainder of this Agreement shall continue in full force
                  and effect.

         8.8      Waiver

                  8.8.1    No waiver of any breach of this Agreement shall
                  operate as a waiver of any similar subsequent breach or any
                  breach of any other provision of this Agreement.

         8.9      Force Majeure

--------------------------------------------------------------------------------
                                                                    Page 6 of 10

<PAGE>   38

                  8.9.1    Neither party shall be liable or deemed to be in
                  default for any delay or failure in performance under this
                  Agreement or interruption of service resulting directly or
                  indirectly from Acts of God, civil or military authority, acts
                  of public enemy, war, riots, civil disturbances, accidents,
                  fire, explosions, earthquakes, floods, the elements, strikes,
                  lockouts, labor disturbances, shortages of suitable parts,
                  labor or transportation, delays caused by suppliers,
                  telecommunications, courier or postal failure or interruption
                  or any other cause beyond the reasonable control of such party

         8.10     Export

                  Licensee shall not export or re-export the Software or
                  Documentation except in compliance with United States export
                  laws and regulations.

--------------------------------------------------------------------------------
                                                                    Page 7 of 10

<PAGE>   39

                                                                    EXHIBIT 1.10

                        MODIFIED SOFTWARE SPECIFICATIONS

LICENSEE:   McNaughton Apparel Group Inc.

                                                        Initials
                                             -----------------------------------

                                             -----------------------------------

--------------------------------------------------------------------------------
                                                                    Page 1 of 1

<PAGE>   40

                                                                   EXHIBIT 2.3.1

                     SOFTWARE SPECIFICATIONS APPROVAL LETTER

Dear

We have examined the System Design Specifications dated _______________________
and hereby confirm that all the specifications meet the requirements of
____________________________________ . It is understood that changes to the
specifications could result in additional systems design and programming
charges.

SIGNED:
       ------------------------------------
         McNaugton Apparel Group Inc.

DATE:
            -----------------------------

                                                         Initials
                                               ------------------------------

                                               ------------------------------

--------------------------------------------------------------------------------
                                                                    Page 1 of 1

<PAGE>   41

                                   SCHEDULE 1
                                  PAYMENT TERMS

1)       Essentus charges for Services described herein will be on a time and
         material basis at the following daily rates based on an eight hour day:

<TABLE>
<CAPTION>
                                                                  Regular Per Diem                 Discount Per Diem
                                                                  ----------------                 -----------------
<S>                                                               <C>                                <C>
            Project Manager                                          $2,400                             $2,360
            Lead Analyst                                             $2,400                             $2,200
            Intermediate Business Analyst                            $1,800                             $1,400
            Senior Technical Analyst                                 $1,800                             $1,800
            Data Base Administrator                                  $2,200                             $2,200
            Training                                                 $2,400                             $2,000
            Lead Business Analyst                                    $2,400                             $2,400
            Senior Business Analyst                                  $2,200                             $2,200
            Business Analyst                                         $1,200                             $1,200
            Technical Analyst                                        $1,600                             $1,600
            Software Development Manager                             $1,800                             $1,800
            Senior Software Developer                                $1,600                             $1,600
            Intermediate Software Developer                          $1,400                             $1,400
            Software Developer                                       $1,200                             $1,200
            Technical Installation Analyst                           $1,600                             $1,600
            Executive                                                $2,800                             $2,800
</TABLE>

         These rates are valid through December 31, 2000, and are subject to
         change on an annual basis.

2)       Training Services

         Essentus offers education classes per the Essentus Course Catalog.

<TABLE>
<S>                                                                                           <C>
         a)  Training conducted at a Essentus site                                            $350 per student per day

         b)  Training conducted at client site                                                          $2,400 per day
                                                                                                 (for first 8 students)
                                                                                               $250 per each additional
                                                                                                    student (maximum 12)

         c)  Special Training
</TABLE>

<TABLE>
<CAPTION>
                        Audience                                 Days Needed        Full Rate         Discount Rate
                        --------                                 -----------        ---------         -------------
<S>                                                                 <C>         <C>                <C>
                        Technical Staff - Data Model                    2           $ 4,800            $ 4,000  (REQUIRED TRAINING)
                        Technical Staff - SQL                           4           $ 9,600            $ 8,000  (Optional Training)
                        Technical Staff - PL/SQL                        3           $ 7,200            $ 6,000  (Optional Training)
                        All - Oracle Overview                           2           $ 4,800            $ 4,000  (Optional Training)
                        Management - Team Building,
                        Customer Service                                5           $12,000            $10,000  (Optional Training)
</TABLE>

3)       The rates herein are valid through December 31, 2000, and are subject
         to change on an annual basis.

4)       Any specific additional requests of McNaughton Apparel Group Inc. for
         other Essentus Services will be set out in a separate schedule to this
         Schedule 1 and will be detailed thereon as to cost and payment terms.

<PAGE>   42

5)       Out-of-pocket travel and other disbursements will be charged monthly as
         incurred and are payable monthly upon receipt of invoice.

6)       All applicable taxes will be added to the above amounts.

                                                           Initials
                                                -------------------------------

                                                -------------------------------
<PAGE>   43

                                    ADDENDUM

ADDENDUM TO THE SOFTWARE LICENSE AGREEMENT (THE "LICENSE AGREEMENT") AND TO THE
ESSENTUS SERVICES AGREEMENT (THE "SERVICES AGREEMENT") BETWEEN ESSENTUS
INTERNATIONAL INC. ("ESSENTUS") AND MCNAUGHTON APPAREL GROUP INC. ("LICENSEE"),
HAVING THE EFFECTIVE DATE OF MAY 24, 2000. THIS ADDENDUM IS INCORPORATED INTO
AND MADE PART OF THE LICENSE AGREEMENT AND SERVICES AGREEMENT AS OF THE SAID
EFFECTIVE DATE.

License Agreement
-----------------

The License Agreement is hereby amended as follows:

1)  Section 1 is hereby amended as follows:

    i)      In subsection 1.5, in the definition of "Grace Period", replace the
            reference to "thirty (30) days" with a reference to "sixty (60)
            days".
    ii)     In subsection 1.10, add the following words at the end of the
            definition of "Software": ",as updated and corrected from time to
            time."

2) Section 2.1.2 is hereby deleted and replaced with the following:

     "2.1.2 Essentus does not represent or warrant that:

           2.1.2.1 The Essentus Software remedies Year 2000 compliance issues
                   that, independent of the Essentus Software, may otherwise
                   affect Licensee's computer or information systems; or
           2.1.2.2 Any of the services to the Essentus Software described in
                   2.1.1 above can be provided to resolve or remedy Year 2000
                   compliance issues that may be affecting some of Licensee's
                   current computer or software information systems.

           Licensee assumes the entire risk associated with 2.1.2.1 and 2.1.2.2
           above and assumes full responsibility for ensuring that an
           alternative plan is in place in the event that the Essentus Software
           is not functional on Licensee's system due to Year 2000 related
           issues.

      2.1.3  Subject to Section 2.1.2, Essentus represents that the Essentus
             Software will accurately process 4 digit date information,
             excluding any data which is produced independent of the Essentus
             Software, whether by any other software, firmware or hardware."

3) In Section 3.1.1, second sentence, delete and replace the words "Upon
   delivery of the Software to common," with the words "Upon delivery of
   the Software to Licensee,".

4) In Section 3.4.3, delete and replace the second sentence with the following:
   "Licensee's use of the Software shall be subject to audit by Essentus on
   reasonable notice to Licensee and Licensee shall provide to Essentus such
   assistance and records as Essentus" may reasonably request to conduct such
   audit."

                                                             Initials
                                                            [SIG][SIG]
<PAGE>   44

                                      -2-

5) In Section 4.1.1, delete and replace the first sentence with the following:
   "Essentus recommends and Licensee acknowledges that for each new application
   of the Software being implemented, Licensee's existing system should be run
   in parallel until such time that Licensee's management is satisfied with the
   accuracy of the new system, and that it is Licensee's entire responsibility
   to conduct and manage such parallel run(s)."

6) In Section 5.1.3, second sentence, add the following words after the words
   "commercially reasonable efforts":"as soon as is practicable".

7) In Section 5.1.9.2, add the following closing words: "provided that the
   replaced or modified software shall have functionality which is substantially
   similar to the infringing Software."

8) In Section 5.1.9.3, replace the word "present" with the word "unamortized",
   and the reference to "forty-eight (48) month" with a reference to "sixty (60)
   month".

9) In Section 6.1.1.1, add the following words: "provided that following any
   such termination by Licensee, Licensee shall not be required to make any
   further payments on account of the License fees contemplated hereby."

10) The following is added as new Section 7.12:

          "7.12 Source Code Escrow
                ------------------

          Essentus agrees to deposit in escrow the source code for the Essentus
          Software delivered under this Agreement pursuant to a Software Escrow
          Agreement acceptable to the parties to be concluded forthwith. All
          costs and expenses of maintaining the source code escrow shall be
          borne by Licensee. The Escrow Agreement shall provide that Licensee
          shall be entitled to access the escrowed source code for its own
          internal use only following termination of the License Agreement by
          Licensee pursuant to Sections 6.1.1.2.1, 6.1.1.2.4 or 6.1.1.2.5, as a
          result of the business failure of Essentus. In the event that either
          party terminates the License Agreement for any reason other than
          pursuant to any of the aforesaid Sections, the Software Escrow
          Agreement shall immediately terminate and the escrowed source code
          shall be immediately returned to Essentus."

11) Without limiting the generality of Section 7.11 of the License Agreement,
    Licensee agrees that Essentus may issue a press release announcing the
    Software License Agreement made between Licensee and Essentus and selected
    particulars (excluding financial terms). Furthermore, Licensee agrees to
    host up to 5 site visits by Essentus and prospective licensees from time to
    time following implementation of the Essentus Software, it being understood
    that each such visit would occur during Licensee's regular business hours
    following prior notice from Essentus of not less than 2 business days.

                                                                     Initials
                                                                    [SIG][SIG]
<PAGE>   45

                                      -3-

Services Agreement
------------------

The Services Agreement is hereby amended as follows:

12) The following paragraph is added to Section 2.3.1:

"Essentus agrees that the Modified Software Specifications shall include its
estimate of the labour cost of providing the related services. Essentus
undertakes to advise Licensee as soon as it becomes aware that it has reached
75% of such estimate. In the event that Essentus exceeds such estimate by more
than 20%, any services thereafter provided by Essentus to complete the project
in accordance with the unmodified Modified Software Specifications shall be
invoiced to Licensee at Essentus' direct labour cost.

13) Section 4.4.1, together with the related Schedule, are hereby deleted.

14) Sections 1.6, 1.14, 6.1.9, 4.1.1, 4.4.3, 5.2.1, 6.1.3, 6.1.8.2, 6.1.8.3 and
    7.1.1.1 of the Services Agreement be and they are hereby amended such that
    the said sections contain amendments which are identical to those made by
    this Addendum to corresponding Sections 1.5, 1.10, 2.1, 3.1.1, 3.4.3, 4.1.1,
    5.1.3, 5.1.9.2, 5.1.9.3 and 6.1.1.1 of the License Agreement.

General
-------

15) Where not otherwise in this Addendum, capitalized terms used herein shall
    have the meaning set forth in the License Agreement or the Services
    Agreement, as the case may be.

16) All other terms and conditions of the License Agreement and the Services
    Agreement shall be and remain in full force and effect.

ESSENTUS INTERNATIONAL INC.                   McNAUGHTON APPAREL GROUP INC.

By: /s/ [SIG]                                 By: /s/ [SIG]
   -------------------------                     ---------------------------

Name: /s/ SCOTT D. MILLER                     Name:    [SIG]
     -----------------------                       -------------------------
          GENERAL COUNSEL

Title:                                        Title:  VP, CFO, SEC'Y & TREAS.
      ----------------------                        ------------------------

Date: May 24, 2000                            Date: 5/24/00
     -----------------------                       -------------------------

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