AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON          1997

REGISTRATION NO.
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SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

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

FORM 10-K

ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(D)
OF THE SECURITIES EXCHANGE ACT OF 1934

For the Fiscal Year Ended December 31, 1996
Commission File Number 1-11893

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GUESS ?, INC.

(Exact name of registrant as specified in its charter)

DELAWARE                      95-3679695
(State or other jurisdiction         (I.R.S. Employer
of incorporation or              Identification
organization)                    Number)

1444 SOUTH ALAMEDA STREET
LOS ANGELES, CALIFORNIA 90021
(213) 765-3100

(Address, including zip code, and telephone number, including area code)

Securities registered pursuant to Section 12(b) of the Act:

NAME OF EACH EXCHANGE ON
TITLE OF EACH CLASS               WHICH REGISTERED
Common Stock, par value $.01 per
share                   New York Stock Exchange

Securities registered pursuant to Section 12(g) of the Act: None

Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports) and (2) has been subject to such
filing requirements for the past 90 days. Yes /X/  No / /

Indicate by check mark if disclosure of delinquent filers pursuant to item
405 of Regulation S-K is not contained herein, and will not be contained, to the
best of registrant's knowledge, in definitive proxy or information statements
incorporated by reference in Part III of this Form 10-K or any amendment to this
Form 10-K.  /X/

As of March 21, 1997, the aggregate market value of the voting stock held by
non-affiliates of the registrant was $73,616,906.

As of March 21, 1997, the registrant had 42,898,035 shares of Common Stock
outstanding.

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TABLE OF CONTENTS

ITEM      DESCRIPTION                                                                                              PAGE
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PART I

1   Business............................................................................................           1

2   Properties..........................................................................................           8

3   Legal Proceedings...................................................................................           9

4   Submission of Matters to a Vote of Security Holders.................................................          10

PART II

5   Market for Registrant's Common Equity and Related Stockholder Matters...............................          10

6   Selected Financial Data.............................................................................          11

7   Management's Discussion and Analysis of Financial Condition and Results of Operations...............          12

8   Financial Statements and Supplementary Data.........................................................          19

9   Changes in and Disagreements with Accountants on Accounting and Financial Disclosure................          19

PART III

10   Directors and Executive Officers of the Registrant..................................................          19

11   Executive Compensation..............................................................................          19

12   Security Ownership of Certain Beneficial Owners and Management......................................          19

13   Certain Relationships and Related Transactions......................................................          19

PART IV

14   Exhibits, Consolidated Financial Statement Schedules and Reports on Form 8-K........................          19

PART I

ITEM 1.  BUSINESS

IMPORTANT FACTORS REGARDING FORWARD-LOOKING STATEMENTS

Various forward-looking statements have been made in this Form 10-K.
Forward-looking statements may also be in the registrant's other reports filed
under the Securities Exchange Act of 1934, in its press releases and in other
documents. In addition, from time to time, the registrant through its management
may make oral forward-looking statements.

Forward-looking statements generally refer to future plans and performance,
and are identified by the words "believe", "expect", "anticipate", "optimistic",
"intend", "aim", "will" or similar expressions. Readers are cautioned not to
place undue reliance on these forward-looking statements, which speak only as of
the date of which they are made. The registrant undertakes no obligation to
update publicly or revise any forward-looking statements.

For additional information regarding forward-looking statements, refer to
Item 7, Management's Discussion and Analysis of Financial Condition and Results
of Operations.

GENERAL

Guess ?, Inc. (the Company or "Guess"), founded in 1981 by the Marciano
brothers, designs, markets, distributes and licenses one of the world's leading
lifestyle collections of casual apparel, accessories and related consumer
products. The Company's apparel for men and women is marketed under numerous
trademarks Guess, Guess ?, Guess U.S.A., Guess Collection and Guess ? and
Triangle Design. The lines include full collections of denim and cotton
clothing, including jeans, pants, overalls, skirts, dresses, shorts, blouses,
shirts, jackets and knitwear. In addition, the Company has granted licenses to
manufacture and distribute a broad range of products that complement the
Company's apparel lines, including clothing for infants and children,
activewear, footwear, eyewear, watches, home products and other fashion
accessories. Revenue generated from wholesale and retail operations and from
licensing activities, were 52.2%, 38.1% and 9.7%, respectively, of net revenue
in 1996. The Company's total net revenue in 1996 was $551.2 million and pro
forma net earnings (as described under the Caption "Pro Forma Results of
Operations," contained in Item 7, Management's Discussion and Analysis of
Financial Condition and Results of Operations) were $52.3 million.

The Company derives its net revenue from the sale of Guess men's and women's
apparel worldwide to wholesale customers and distributors, from the sale of
Guess men's and women's apparel and its licensees' products through the
Company's network of retail and factory outlet stores primarily in the United
States and from net royalties from worldwide licensing activities. The following
table sets forth the net revenue of the Company through its channels of
distribution.

YEAR ENDED DECEMBER 31,
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1996                     1995                     1994
-----------------------  -----------------------  -----------------------
(IN THOUSANDS)

Net Revenue:
Wholesale operations........................  $  288,046       52.2%   $  270,931       55.7%   $  358,125       65.4%
Retail operations...........................     209,828       38.1       169,428       34.8       149,337       27.2
Net revenue from product sales............     497,874       90.3       440,359       90.5       507,462       92.6
Net royalties...............................      53,288        9.7        46,374        9.5        40,350        7.4
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Total net revenue.......................  $  551,162      100.0%   $  486,733      100.0%   $  547,812      100.0%
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1

PRODUCTS

COMPANY PRODUCTS.  The Company's apparel products are organized into two
primary categories: men's apparel and women's apparel (including Guess
Collection). A major portion of the Company's men's and women's apparel lines
consists of basic, recurring styles which the Company believes are less
susceptible to fashion obsolescence and are less seasonal in nature than fashion
product styles. Basic product styles provide the Company with a base of business
that usually carries over from season to season and year to year. Basic products
are primarily made of denim and include jeans, skirts, dresses, overalls and
shorts in a variety of fits, washes and styles. To take advantage of
contemporary trends, the Company complements its basic styles with more
fashion-oriented items. Fashion products range in style from contemporary
sportswear to casual apparel and include colored denim items, pants, shirts,
jackets and knitwear, made of a variety of materials including fine cotton,
man-made fabric and leather. A limited number of best-selling fashion items in a
collection may be included in one or more subsequent collections, and a select
few may be added to the Company's basic styles.

In 1993, the Company expanded its line of women's apparel to include the
Guess Collection, a collection of women's skirts, tops, jackets, blazers and
blouses incorporating a sophisticated combination of colors and styles. The
Guess Collection was introduced exclusively through Guess stores and, based upon
positive consumer reaction, the Company expanded distribution of the Guess
Collection to selected better department stores in the 1996 Fall season. The
Guess Collection appeals to the contemporary segment of the apparel market and
is generally sold in separate selling areas from other Guess denim and casual
apparel.

LICENSED PRODUCTS.  The high level of desirability of the Guess brand name
among consumers has allowed the Company to selectively expand its product
offerings through licensing arrangements. The Company currently has 29
licensees. Sales of licensed products (as reported to the Company by its
licensees) have grown from $451.7 million in 1993 to $741.4 million in 1996. The
Company's net royalties from such sales including fees from new licensees
increased from $28.8 million in 1993 to $53.3 million in 1996. Approximately 45%
of the Company's net royalties were derived from its top four licensed product
lines in 1996.

DESIGN

Under the direction of Maurice Marciano, Guess garments are designed by an
in-house staff of four design teams (men's, women's, Guess Collection and Guess
Europe) located in Los Angeles and Florence, Italy. Guess design teams travel
throughout the world in order to monitor fashion trends and discover new
fabrics. Fabric shows in Europe, Asia and the United States provide additional
opportunities to discover and sample new fabrics. These fabrics, together with
the trends uncovered by the Company's designers, serve as the primary source of
inspiration for the Company's lines and collections. The Company also maintains
a fashion library consisting of antique and contemporary garments as an
additional source of creative concepts. In addition, design teams regularly meet
with members of the sales, merchandising and retail operations to further refine
the Company's products in order to meet the particular needs of the Company's
markets.

DOMESTIC WHOLESALE CUSTOMERS

The Company's domestic wholesale customers consist primarily of better
department stores and select upscale specialty stores, which have the image and
merchandising expertise that Guess requires for the effective presentation of
its products. Leading wholesale customers include Federated Department Stores,
Inc., The May Department Stores Company, Dillard Department Stores, Inc. and
select upscale specialty stores. During 1996, the Company sold its products
directly to over 3,000 retail doors within the United States.

2

A key element of the Company's merchandising strategy is the shop-in-shop
merchandising format, an exclusive selling area within a department store that
presents a full array of Guess products using Guess signage and fixtures. As of
December 31, 1996, there were approximately 1,276 shop-in-shops (excluding
shop-in-shops installed by licensees) that feature Guess products (other than
the Guess Collection) and the Company intends to add approximately 140 and
remodel approximately 100 shop-in-shops by the end of 1997. Guess also intends
to establish Guess Collection shop-in-shops, in addition to existing
shop-in-shops, in selected better department stores beginning in the Spring of
1997.

Sales representatives are located in the Company's showrooms in New York,
Los Angeles, Dallas, Atlanta, Chicago, Hong Kong, Milan and Florence. They
coordinate with buyers for the Company's customers to determine the inventory
level and product mix that should be carried in each store to maximize retail
sell-through and enhance the customers' profit margins. Such inventory level and
product mix are then used as the basis for developing sales projections and
product needs for each wholesale customer and scheduling production. The
merchandisers work with the store to ensure that the Company's products are
appropriately displayed.

Certain of the Company's domestic wholesale customers, including some under
common ownership, have accounted for significant portions of the Company's net
revenue. During 1996, Bloomingdale's, Macy's and other affiliated stores owned
by Federated Department Stores, Inc. together accounted for approximately 8.6%
of the Company's net revenue. During the same period, The May Company and
Dillard's accounted for approximately 6.7% and 5.9% of the Company's net
revenue, respectively.

DOMESTIC RETAIL OPERATIONS

As of December 31, 1996, the Company's domestic retail operations consisted
of 69 retail and 46 factory outlet stores owned and operated directly by Guess
in the United States, which principally sell Guess label products. Guess retail
stores outside the United States, with the exception of the Company-owned and
operated store in Florence, Italy, are owned and operated by the Company's
distributors and licensees. See "International Business". Since the beginning of
1993 through December 31, 1996, the Company has opened a total of 41 retail and
31 factory outlet stores and has closed 11 retail and 7 factory outlet stores.
The percentage of net revenue generated by the retail network has increased from
29.0% to 42.1% of the Company's net revenue from product sales from 1993 through
1996.

RETAIL STORES.  The Company's 69 domestic retail stores typically range in
size from approximately 3,400 to 8,500 square feet. The Company's retail stores
carry a full assortment of men's and women's Guess merchandise, including most
of its licensed products. The Company intends to continue to locate its stores
in regional malls with a smaller number of flagship stores in major cities.
During 1996, the Company opened 7 retail stores and plans to open a net of
approximately 13 additional retail stores during 1997 (including two closures
and two store consolidations).

FACTORY OUTLET STORES.  The Company's 46 domestic factory outlet stores
typically range in size from approximately 2,100 to 7,500 square feet and are
located in outlet malls and strip centers outside the shopping radius of the
Company's wholesale customers and its retail stores. These stores sell selected
styles of Guess apparel and licensed products at a discount to value-conscious
customers, enabling the Company to effectively control the distribution of its
excess inventory, thereby protecting the Guess image. During 1996, the Company
opened one, closed one and consolidated one factory store. The Company plans to
open an additional three factory outlet stores in 1997.

INTERNATIONAL BUSINESS

Guess derives net revenue and earnings from outside the United States from
three principal sources: (i) sales of Guess brand apparel directly to 12 foreign
distributors who distribute such apparel to better department stores, upscale
specialty retail stores and Guess-licensed retail stores operated by Guess
distributors or licensees, (ii) royalties from licensees who manufacture and
distribute Guess brand products

3

outside the United States and (iii) sales of Guess brand apparel by Guess Europe
directly to upscale retail stores in Italy (See Licensing Agreements and Terms).

Since 1991, the Company has been selling its products through distributors
and licensees in Asia, the Middle East and Australia. In 1993, the Company
opened a design studio, sourcing office, sales office and warehouse in Italy and
in 1994 began sourcing, marketing and distributing products directly in Italy
and executed a distribution agreement for Spain. More recently, Guess has
entered into distribution arrangements in for Belgium, Germany, the Netherlands,
Peru, Turkey and the United Kingdom.

As of December 31, 1996, 234 Guess retail stores were operated
internationally, 149 of which were operated by licensees and 85 of which were
operated by distributors. The Company's retail store license agreements
generally provide detailed guidelines for store fixtures, merchandising and
marketing programs and the appearance, merchandising and service standards of
these stores are closely monitored to ensure the Guess image is maintained. The
Company has been advised by its distributors and licensees that they plan to
establish approximately 31 new distributor-operated stores and approximately 20
licensee-operated stores, respectively, in 1997. Guess also owns and operates a
flagship Guess retail store located in Florence, Italy.

LICENSING AGREEMENTS AND TERMS

The Company's manufacturing license agreements customarily provide for a
three to five year initial term with a possible option to renew prior to
expiration for an additional multi-year period. In addition to licensing
products which complement the Company's apparel products, Guess has granted
licenses for the manufacture and sale of Guess branded products similar to the
Company's, including men's and women's denim and knitwear, in markets such as
Canada, Argentina, Mexico, the Philippines, South Korea, Brazil and Japan.
Licenses granted to certain licensees which have produced high-quality products
and otherwise have demonstrated exceptional operating performance, such as Guess
Watches and Guess Eyewear, have been renewed and in some cases expanded to
include new products or markets. The typical license agreement requires that the
licensee pay the Company the greater of a royalty based on a percentage of the
licensee's net sales of licensed products or a guaranteed minimum royalty that
typically increases over the term of the license agreement. Generally, licensees
are required to spend a percentage of the net sales of licensed products for
advertising and promotion of the licensed products. In addition, certain
licensees are required to contribute toward the protection of the Company's
trademarks within the territories granted to such licensees, thereby assisting
Guess in its efforts to prevent counterfeiting and other trademark infringement
in such countries.

The Company's Licensing Department strictly monitors product design,
development, merchandising and marketing. All Guess brand products, advertising,
promotional and packaging materials must be approved in advance by Guess. The
Licensing Department meets regularly with licensees to ensure consistency with
Guess's overall marketing, merchandising and design strategies, and to ensure
uniformity and quality control.

In addition to the retail stores operated outside of the United States as
mentioned above in the section "International Business", Guess licensees operate
50 retail stores in the United States.

In March 1997, the Company signed a letter of intent to form a joint venture
in Europe with the Fingen Group, a leading European apparel manufacturer and
distributor owned by the Fratini family. The new joint venture, Maco Apparel
S.r.1., will enter into a licensing agreement with the Company for the
manufacture and sale of its jeanswear lines throughout Europe and will purchase
certain of the Company's operations in Italy. Maco Apparel S.r.1. will produce a
full collection of casual lifestyle jeanswear apparel, including men's and
women's jeans. The Company will continue to design the collections to be sold in
the European market. This transaction is expected to close during the summer of
1997.

4

ADVERTISING, PUBLIC RELATIONS AND MARKETING

The Company's advertising, public relations and marketing strategy is to
promote a consistent high impact image which endures regardless of changing
consumer trends. Since the Company's inception, Paul Marciano has had principal
responsibility for the Guess brand image and creative vision. All worldwide
advertising and promotional material is controlled through the Company's
Advertising Department based in Los Angeles, while Guess Public Relations and
Special Events are based in New York. Guess Jeans, Guess U.S.A. and Guess Inc.
images have been showcased in international print campaigns in dozens of major
magazines, on billboards, bus shelters and telephone kiosks, on television and
most recently in movie theaters throughout the United States.

ADVERTISING.  The Company's advertising strategy is designed to promote the
Guess image rather than focus on specific products. The Company's distinctive
black and white print advertisements have garnered prestigious awards, including
Clio, Belding and Mobius awards for creativity and excellence. Such awards,
which the Company has received on numerous occasions, are generally awarded on
the basis of the judgment of prominent members of the advertising industry.
Guess has maintained a high degree of consistency in its advertisements, using
similar themes and images. The Company requires its licensees and distributors
to invest a percentage of their net sales of licensed products and net purchases
of Guess products, respectively, in advertising, promotion and marketing. During
1996, the Company's advertising expenditures, together with amounts spent by its
licensees and distributors (as reported to the Company by such licensees and
distributors), exceeded $50 million.

The Company's in-house Advertising Department is responsible for media
placement of all advertising worldwide, including that of its licensees and
distributors. The Company uses a variety of media, primarily black and white
print and outdoor advertising, in various countries. The Company has focused
advertisement placement in national and international contemporary
fashion/beauty and lifestyle magazines including Vogue, Glamour, Vanity Fair,
Harpers Bazaar, Elle, W and Details. By retaining control over its advertising
programs, the Company is able to maintain the integrity of the Guess brand image
while realizing substantial cost savings compared to the use of outside
agencies.

PUBLIC RELATIONS.  The Company's Public Relations Department is responsible
for communicating the Guess image to the public and news media worldwide. The
Public Relations Department also coordinates local publicity and special events
programs for the Company and its licensees, including in-store Guess model and
celebrity appearances and fashion shows.

MARKETING.  The Company utilizes various additional marketing tools such as
corporate mailers, videos, newsletters, special events and a toll free Guess
number to assist customers worldwide in finding Guess retail locations. The
Company also produces 200,000 copies of the Guess Journal, a full color,
oversized semi-annual magazine available in retail stores worldwide or through
the Guess mailing list. The Guess Journal features trends in the arts, travel
destinations, candid celebrity profiles, philanthropic events and Guess product
information. Additionally, the Company recently completed a comprehensive market
research effort to better understand its various target consumer segments. Key
findings from this research effort are expected to help the Company develop more
strategically focused programs to effectively and efficiently reach target
consumers while strengthening the equity in the Guess brand name.

The Company further strengthens communications with customers through the
World of Guess, the Company's Internet site on the World Wide Web
(http://www.guess.com). This global medium enables the Company to provide timely
information in an entertaining fashion to consumers on the Company's history,
Guess products and store locations and allows the Company to receive and respond
directly to customer feedback.

5

SOURCING AND PRODUCT DEVELOPMENT

The Company sources products through numerous suppliers, many of whom have
established relationships with the Company. The Company seeks to achieve the
most efficient means for the timely delivery of its high quality products. The
Company's fabric specialists work with fabric mills in the United States, Europe
and Asia to develop woven and knitted fabrics that enhance the products'
comfort, design and appearance. For a substantial portion of the Company's
apparel products, fabric purchases take place generally four to five months
prior to the corresponding selling season. Apparel production (cut, manufacture
and trim) for fashion products generally begins after the Company has received
customer orders. Delivery of wholesale fashion products to customers occurs
approximately 90 to 120 days after receipt of customers' orders. Delivery of
certain basic products are generally done through the Company's Quick Response
EDI (Electronic Data Interchange) replenishment system which ensures shipment of
such products generally within 48 hours of receipt of customer orders.

The Company engages both domestic and foreign contractors for the production
of its products. During 1996, the Company purchased approximately 63% of its raw
materials, labor and finished goods in the United States, 20% in Hong Kong,
Taiwan, South Korea and other Asian countries and 17% elsewhere. In recent
years, Guess has been increasing its sourcing of fabrics and production outside
the United States. The production and sourcing staffs in Los Angeles and Italy
oversee all aspects of fabric acquisition, apparel manufacturing, quality
control and production, as well as researching and developing new sources of
supply. The Company operates product sourcing and quality control offices in Los
Angeles, Hong Kong and Florence.

The Company does not own any production equipment other than cutting,
silkscreen and embroidery machinery. The Company's apparel products are produced
for the Company by approximately 100 different contractors. None of the
contractors engaged by the Company has accounted for more than 15% of the
Company's total production. The Company has long-term relationships with many of
its contractors, although it does not have long-term written agreements with
them. The Company uses a variety of raw materials, principally consisting of
woven denim, woven cotton and knitted fabrics and yarns. The Company must make
commitments for a significant portion of its fabric purchases well in advance of
sales, although the Company's risk is reduced because a substantial portion of
the Company's products (approximately 40% in 1996) are sewn in basic denim.

QUALITY CONTROL

The Company's quality control program is designed to ensure that products
meet the Company's high quality standards. The Company monitors the quality of
its fabrics prior to the production of garments and inspects prototypes of each
product before production runs are commenced. The Company also performs random
in-line quality control checks during and after production before the garments
leave the contractor. Final random inspections occur when the garments are
received in the Company's distribution centers. The Company believes that its
policy of inspecting its products at its distribution centers and at the
contractors' facilities is important in maintaining the quality and reputation
of its products. The Company also conducts inspections on all licensed products.

WAREHOUSE AND DISTRIBUTION CENTERS

The Company utilizes distribution centers at three strategically located
sites. Two of the distribution centers are operated by the Company and one is
operated by an independent contractor. Distribution of the Company's products in
the United States is centralized in the Los Angeles facility operated by the
Company. The Company also operates a distribution center in Florence to service
Europe (See note 16 "Subsequent Event" to the Company's consolidated financial
statements). Additionally, the Company utilizes a contract warehouse in Hong
Kong that services the Pacific Rim.

6

In order to ensure that each of its retail customers receives merchandise in
satisfactory condition, substantially all Company products are processed through
one of the Company's distribution centers before delivery to the retail
customer. Each customer is assigned to one of the Company's distribution
centers, depending on the customer's location.

At its distribution center in Los Angeles, the Company has also developed a
fully integrated and automated distribution system. The bar code scanning of
merchandise, picking tickets and distribution cartons, together with radio
frequency communications, provide timely, controlled, accurate and instantaneous
updates to the distribution information systems.

COMPETITION

The apparel industry is highly competitive and fragmented, and is subject to
rapidly changing consumer demands and preferences. The Company believes that its
success depends in large part upon its ability to anticipate, gauge and respond
to changing consumer demands and fashion trends in a timely manner and upon the
continued appeal to consumers of the Guess image. Guess competes with numerous
apparel manufacturers and distributors and several well-known designers which
have recently entered or re-entered the designer denim market. The Company's
retail and factory outlet stores face competition from other retailers,
including some of the Company's major wholesale customers. The Company's
licensed apparel and accessories also compete with a substantial number of
designer and non-designer lines and various other well-known brands. Many of the
Company's competitors have greater financial resources than Guess. Although the
level and nature of competition differ among its product categories, Guess
believes that it competes on the basis of its brand image, quality of design,
workmanship and product assortment.

TRADEMARKS

The Company's owns numerous trademarks including Guess ?, Guess, Guess ? and
Triangle Design, Baby Guess, Guess Kids, Guess U.S.A. and Guess Collection. As
of December 31, 1996, the Company had more than 1,500 U.S. and international
registered trademarks or trademark applications pending with the trademark
offices of the United States and over 137 countries around the world. From time
to time, the Company adopts new trademarks in connection with the marketing of
new product lines. The Company considers its trademarks to have significant
value in the marketing of its products and has acts aggressively to register and
protect its trademarks worldwide.

Like many well-known brands, the Company's trademarks are subject to
infringement. Guess has a staff devoted to the monitoring and aggressive
protection of its trademarks worldwide.

WHOLESALE BACKLOG

The Company maintains a model stock program in its basic denim products
under which Guess can replenish a customer's inventory generally within 48
hours. Guess generally receives orders for its fashion apparel 90 to 120 days
prior to the time the products are delivered to stores. As of March 16, 1997,
the Company had unfilled wholesale orders, consisting primarily of orders for
fashion apparel, of approximately $83.0 million, compared to $64.0 million of
such orders as of March 17, 1996. Guess expects to fill substantially all of
these orders in 1997. The backlog of wholesale orders at any given time is
affected by a number of factors, including seasonality and the scheduling of
manufacturing and shipment of products. Accordingly, a comparison of backlogs of
wholesale orders from period to period is not necessarily meaningful and may not
be indicative of eventual actual shipments.

7

EMPLOYEES

Guess believes that its employees ("associates") are one of its most
valuable resources. As of December 31, 1996, there were approximately 3,000
associates. Total associates include approximately 1,200 in wholesale operations
and approximately 1,800 in retail operations.

Guess is not a party to any labor agreements and none of its associates is
represented by a labor union. The Company considers its relationship with its
associates to be good and has not experienced any interruption of its operations
due to labor disputes. In addition, the Company was among the first in the
apparel industry to implement a program to monitor the compliance of
subcontractors with Federal minimum wage and overtime pay requirements. See
"Item 3. Litigation".

ENVIRONMENTAL MATTERS

The Company is subject to federal, state and local laws, regulations and
ordinances that (i) govern activities or operations that may have adverse
environmental effects (such as emissions to air, discharges to water, and the
generation, handling, storage and disposal of solid and hazardous wastes) or
(ii) impose liability for the costs of clean up or other remediation of
contaminated property, including damages from spills, disposals or other
releases of hazardous substances or wastes, in certain circumstances without
regard to fault. Certain of the Company's operations routinely involve the
handling of chemicals and wastes, some of which are or may become regulated as
hazardous substances. The Company has not incurred, and does not expect to
incur, any significant expenditures or liabilities for environmental matters. As
a result, the Company believes that its environmental obligations will not have
a material adverse effect on its financial condition or results of operations.

ITEM 2.  PROPERTIES

Certain information concerning Guess's principal facilities, all of which
are leased, is set forth below:

APPROXIMATE
AREA IN
LOCATION                                              USE                                  SQUARE FEET
- -------------------------------  -------------------------------------------------------------------  ------------

1444 South Alameda Street        Principal executive and administrative offices, design facilities,       514,000
Los Angeles, California            sales offices, distribution and warehouse facilities, production
control, sourcing

1385 Broadway                    Administrative offices, public relations, showrooms                       47,700
119 W. 40th Street
New York, New York

Kowloon, Hong Kong               Distribution, showrooms, licensing coordination control                    3,000

Milan, Italy                     Showrooms                                                                  1,800

Florence, Italy                  Administrative offices, design facilities, production control,            17,200
sourcing, retail distribution and warehouse facility

The Company's corporate, wholesale and retail headquarters and its
production, warehousing and distribution facilities are located in Los Angeles,
California and consist of seven adjacent buildings totaling approximately
514,000 square feet. Certain of these facilities are leased from limited
partnerships in which the sole partners are trusts controlled by and for the
benefit of Maurice Marciano, Paul Marciano and Armand Marciano and their
families (the "Principal Stockholders") pursuant to leases that expire in July
2008. The total lease payments to these limited partnerships are $218,000 per
month with aggregate minimum lease commitments to these partnerships at December
31, 1996 totaling approximately $31.1 million. See "Item 13. Certain
Relationships and Related Transactions."

8

In addition, Guess leases its showrooms, advertising, licensing, sales and
merchandising offices, remote warehousing facility and retail and factory outlet
store locations under non-cancelable operating lease agreements expiring on
various dates through January 2012. These facilities are located principally in
the United States, with aggregate minimum lease commitments, at December 31,
1996, totaling approximately $169.7 million.

The current terms of the Company's store leases, including renewal options,
expire as follows:

YEARS LEASE TERMS EXPIRE                                                                  NUMBER OF STORES
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1996-1998.............................................................................                5
1999-2001.............................................................................                8
2002-2004.............................................................................               47
2005-2007.............................................................................               54
Thereafter............................................................................                2

Guess believes that its existing facilities are well maintained, in good
operating condition and are adequate to support its present level of operations.
See "Item 13. Certain Relationships and Related Transactions." See Notes 8 and 9
of Notes to Financial Statements for further information regarding current lease
obligations.

ITEM 3.  LEGAL PROCEEDINGS

LITIGATION

On August 7, 1996, a class action complaint naming the Company and certain
of its independent contractors was filed in the Superior Court of the State of
California for the County of Los Angeles, styled as Brenda Figueroa et. al. v.
Guess ?, Inc. et. al. (Dist. Ct. Case No. 96-5484HLH(JGx)) (the "Federal Case").
The complaint, which sought damages and injunctive relief, alleged, among other
things, that the defendants' practices with respect to the employees of such
independent contractors have violated various federal and state labor laws and
regulations. Certain components of the complaint have been remanded to state
court (LASC Case No. BC 155 165) (the "State Case"), resulting in two litigation
cases. In the Federal Case, plaintiffs claim that the Company's independent
contractors violated the Federal Fair Labor Standards Act ("FLSA") by failing to
pay minimum wage and overtime in accordance with the FLSA. In the State Case,
also a purported class action, plaintiffs assert claims for violation of state
wage and hour laws, wrongful discharge, breach of contract, and certain counts
of negligence arising out of the Company's relationship with its independent
contractors and actions taken by the Company's independent contractors with
respect to the employees of such independent contractors. In the State Action,
plaintiffs allege that the Company breached its agreement with the United States
Department of Labor regarding the monitoring of its independent contractors. In
both actions, plaintiffs contend that the Company is liable for its contractors'
violations because it is a "joint employer" with its independent contractors.
The trial in the Federal Case is currently set for December 1997.

The Union of Needletrades, Industrial & Textile Employees ("UNITE") has
filed with the National Labor Relations Board ("NLRB") several charges that the
Company has engaged and is engaging in unfair labor practices within the meaning
of the National Labor Relations Act. In cases No. 21-CA-31524, No. 21-CA-31565
and No. 21-CA-31648, UNITE has alleged that the senior management of the Company
unlawfully discharged certain employees because of certain union activities and
unlawfully threatened and coerced employees in the exercise of their rights
under Section 7 of the National Labor Relations Act. In an agreement with the
NLRB, the Company agreed to reinstate all of the employees allegedly unlawfully
discharged because of their union activities and agreed to pay them back pay
which aggregates appoximately $70,000. The settlement also provides for the
posting of a notice for 60 days at the Company stating that the matter has been
settled and that the Company agrees to comply with the National Labor Relations
Act. The notice has a non-admission clause concerning liability. Prior to the
payment of the back wages,

9

UNITE filed an additional unfair labor practice charge with the NLRB (No.
21-CA-31807). In this charge, the union alleges that the Company has unlawfully
threatend to move its production to Mexico and elsewhere outside the United
States thus unlawfully interfering with the organizing campaign at the Company's
headquarters, and has unlawfully ceased doing business with independent
contractors at which ongoing union organizing campaigns are being conducted.
This charge also alleges that the Company has violated the settlement agreement
in cases No. 21-CA-31524, No. 21-CA-31565 and No. 21-CA-31648 by making such
threats. Charge No. 21-CA-31807 is currently under investigation by the NLRB.
Pending a decision by the NLRB regarding the allegation that the Company
breached the settlement agreement reached in cases No. 21-CA-31524, No.
21-CA-31565 and No. 21-CA-31648, the Company has withheld paying the
approximately $70,000 in back wages agreed to in its above described settlement
with the NLRB and has not posted notice of the settlement agreement. The subject
employees, however, have been reinstated and continue to be employed by the
Company. In a separate action (No. 31-CA-22380), UNITE is seeking fees and costs
for having to defend certain causes of actions filed against UNITE by Guess. The
Company believes that the outcome of one or more of these cases could have a
material adverse effect on the Company's financial condition and results of
operations.

Guess is also a party to various other claims, complaints and other legal
actions that have arisen i n the ordinary course of business from time to time.
The Company believes that the outcome of such pending legal proceedings, in the
aggregate, will not have a material adverse effect on the Company's financial
condition or results of operations.

ITEM 4.  SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS

No matters were submitted to a vote of security holders during the fourth
quarter of 1996.

PART II

ITEM 5.  MARKET FOR REGISTRANT'S COMMON EQUITY AND RELATED STOCKHOLDER MATTERS

Since August 8, 1996, the Company's common stock has been listed on the New
York Stock Exchange under the symbol 'GES'. The following table sets forth, for
the periods indicated, the high and low sales prices of the Company's common
stock, as reported on the New York Stock Exchange Composite Tape.

YEAR ENDED DECEMBER 31, 1996                                                             HIGH        LOW
- -------------------------------------------------------------------------------------  ---------  ---------

Third Quarter (from August 8, 1996)..................................................     18 1/4     13 1/4
Fourth Quarter.......................................................................     14 3/8     11 5/8

YEAR ENDED DECEMBER 31, 1997                                                               HIGH         LOW
- ---------------------------------------------------------------------------------------  ---------     -----

First Quarter through March 21, 1997...................................................     14 5/8          10

On March 21, 1997, the closing sales price per share of the Company's common
stock as reported on the New York Stock Exchange Composite Tape was 10 5/8. On
March 19, 1997, there were 231 holders of record of the Company's common stock.

DIVIDEND POLICY

The Company intends to use its cash flow from operations in 1997 principally
to finance the expansion of its retail stores and operations. Any future
determination as to the payment of dividends will be at the discretion of the
Company's Board of Directors and will depend upon the Company's results of
operations, financial condition, contractual restrictions and other factors
deemed relevant by the Board of Directors. The agreement governing the Company's
revolving credit facility and the indenture pursuant to which the Senior
Subordinated Notes were issued restrict the payment of dividends by the Company.

Since its initial public offering on August 8, 1996, the Company has not
declared any dividends on its Common Stock.

10

ITEM 6.  SELECTED FINANCIAL DATA

The selected financial data set forth below have been derived from the
audited consolidated financial statements of the Company and the related notes
thereto. The following selected financial data should be read in conjunction
with the Company's consolidated financial statements and the related notes
included in Item 14 herein, and Item 7, "Management's Discussion and Analysis of
Financial Condition and Results of Operations."

YEAR ENDED DECEMBER 31,
----------------------------------------------------------
1996        1995        1994        1993        1992
----------  ----------  ----------  ----------  ----------
(IN THOUSANDS)

STATEMENT OF EARNINGS DATA:
Net revenue
Product sales(1)...................................  $  497,874  $  440,359  $  507,462  $  491,444  $  491,978
Net royalties......................................      53,288      46,374      40,350      28,780      20,788
Total net revenue................................     551,162     486,733     547,812     520,224     512,766
Cost of sales........................................     298,631     262,142     291,989     260,409     274,920
Gross profit(2)......................................     252,531     224,591     255,823     259,815     237,846
Selling, general and administrative expenses.........     150,877     141,663     138,016     145,351     127,873
Reorganization charge(3).............................       3,559      --          --          --          --
Earnings from operations.........................      98,095      82,928     117,807     114,464     109,973
Non-operating income (expense).......................        (989)       (157)        322       2,552       2,413
Interest, net........................................     (14,539)    (15,957)    (16,948)    (11,735)     (1,162)
----------  ----------  ----------  ----------  ----------
Earnings before income taxes.....................      82,567      66,814     101,181     105,281     111,224
Income taxes.........................................      15,826       2,895       3,540       1,810       2,856
----------  ----------  ----------  ----------  ----------
Net earnings.....................................  $   66,741  $   63,919  $   97,641  $  103,471  $  108,368
----------  ----------  ----------  ----------  ----------
----------  ----------  ----------  ----------  ----------
SUPPLEMENTAL STATEMENT OF EARNINGS DATA(4)
Earnings before income taxes.........................  $   82,567  $   66,814  $  101,181  $  105,281  $  111,224
Income taxes.........................................      33,241      26,726      40,472      42,112      44,490
----------  ----------  ----------  ----------  ----------
Net earnings.....................................  $   49,326  $   40,088  $   60,709  $   63,169  $   66,734
----------  ----------  ----------  ----------  ----------
----------  ----------  ----------  ----------  ----------

Net earnings per share(5)............................  $     1.18  $      .96
Weighted average common shares
outstanding(5).....................................      41,906      41,675

AS OF DECEMBER 31,
----------------------------------------------------------
1996        1995        1994        1993        1992
----------  ----------  ----------  ----------  ----------

BALANCE SHEET DATA:
Working capital......................................  $   76,821  $   57,572  $   83,127  $   74,094  $  114,732
Total assets.........................................     239,306     202,635     207,696     181,017     226,824
Notes payable and long-term debt.....................     127,316     123,335     156,495     189,414       8,548
Net stockholders' equity (deficiency)(6).............      34,928      10,997         373     (50,284)    167,390

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

(1) Includes net revenue from (i) sales to discontinued wholesale accounts that
did not meet the Company's merchandising standards of $.4 million, $3.8
million, $32.9 million, $51.1 million and $42.3 million for 1996, 1995,
1994, 1993 and 1992, respectively, and (ii) wholesale sales of discontinued
product lines of $.3 million, $1.7 million, $5.3 million, $31.7 million and
$82.6 million for 1996, 1995, 1994, 1993 and 1992, respectively.

(2) Certain reclassifications have been made for the periods 1992 through 1995
to conform to the 1996 presentation.

11

(3) In connection with the IPO, the Company recorded, during the second quarter
of 1996, a reorganization charge for certain non recurring charges related
to the write down of operating assets to be disposed of aggregating $3.6
million ($2.1 million on an after tax basis) relating to (i) the disposal of
two remote warehouse and production facilities, resulting in a net book loss
of $2.4 million and (ii) a net book loss of $1.2 million related to the
disposal of one of the Company's aircraft.

(4) Reflects adjustments for Federal and state income taxes as if the Company
had been taxed as a C corporation rather than an S corporation. Prior to the
Company's Initial Public Offering ("IPO") in August 1996, the Company had
elected to be taxed as an S corporation for Federal Income tax purposes. In
certain states, the Company was taxed as an S corporation; in other states,
the Company was taxed as a C corporation. Effective January 1, 1991, the
Company elected to be treated as an S corporation for California tax
purposes. As a result of the Company's IPO, all S corporation elections were
terminated.

(5) 1995 reflects 32,681,819 shares of Common Stock outstanding prior to the IPO
and the assumed issuance of 8,993,000 shares of Common Stock at the initial
public offering price ($18.00 per share) to generate sufficient cash to pay
a distribution of retained earnings to its then existing shareholders as
part of the termination of its S corporation status in an amount equal to
retained earnings as of December 31, 1995.

1996 reflects (i) 32,681,819 shares of Common Stock outstanding prior to the
IPO and the assumed issuance of 8,730,000 shares of Common Stock at the
initial public offering price ($18.00 per share) to generate sufficient cash
to pay a distribution of retained earnings to its then existing shareholders
as part of the termination of its S corporation status in an amount equal to
retained earnings as of the IPO date and (ii) an average of 42,682,000
shares outstanding subsequent to the IPO, representing the actual shares
outstanding.

(6) Stockholders' deficiency in 1993 resulted from the Company's repurchase of
certain of the common stock owned by a former stockholder for $203.5
million.

ITEM 7.  MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATION

GENERAL

The Company derives its net revenue from the sale of Guess men's and women's
apparel worldwide to wholesale customers and distributors, from the sale of
Guess men's and women's apparel and its licensees' products through the
Company's network of retail and factory outlet stores primarily in the United
States and from net royalties from worldwide licensing activities.

PRO FORMA RESULTS OF OPERATIONS

The following table sets forth pro forma operating results for the periods
indicated. Pro forma operating results reflect adjustments to historical
operating results for (i) the elimination of salaries and bonuses paid to
Maurice, Paul and Armand Marciano ("the Principal Executive Officers") in excess
of an aggregate of $4.9 million per year (the estimated aggregate salaries and
bonuses to be paid to the Principal Executive Officers under their respective
employment agreements which became effective concurrently with the consummation
of the IPO), resulting in a decrease in compensation expense of $3.5 million,
$2.4 million and $3.3 million for 1996, 1995 and 1994, respectively, (ii) the
decrease in depreciation and operating costs of $1.2 million, $2.6 million and
$3.0 million for 1996, 1995 and 1994, respectively, associated with an aircraft
owned by the Company, which aircraft was sold in contemplation of the IPO, (iii)
the elimination of the minority interest in Guess Europe, B.V. ("GEBV") and
Guess Italia, S.r.1. ("Guess Italia") through the merger of Marciano
International with and into the Company in connection with the IPO, resulting in
the inclusion in net earnings of $323,000, $274,000 and $280,000 for 1996, 1995

12

and 1994, respectively, which amounts had previously been recorded as minority
interest and (iv) adjustments for Federal and state income taxes as if the
Company had been taxed as a C corporation rather than an S corporation
throughout the periods presented.

YEAR ENDED DECEMBER 31,
----------------------------------
1996        1995        1994
----------  ----------  ----------
(IN THOUSANDS)

Net revenue:
Product sales....................................................  $  497,874  $  440,359  $  507,462
Net royalties....................................................      53,288      46,374      40,350
----------  ----------  ----------
Total net revenue..............................................     551,162     486,733     547,812
Cost of sales......................................................     298,631     262,142     291,989
----------  ----------  ----------
Gross profit.......................................................     252,531     224,591     255,823
Selling, general and administrative expenses.......................     146,186     136,606     131,711
----------  ----------  ----------
Earnings from operations before reorganization charge............     106,345      87,985     124,112
Reorganization charge..............................................       3,559      --          --
----------  ----------  ----------
Earnings from operations after reorganization charge.............     102,786      87,985     124,112
Interest expense, net..............................................     (14,539)    (15,957)    (16,948)
Non-operating income (expense), net................................        (666)        117          42
----------  ----------  ----------
Earnings before income taxes.....................................      87,581      72,145     107,206
Pro forma income taxes.............................................      35,257      28,858      42,882
Pro forma net earnings...........................................  $   52,324  $   43,287  $   64,324
----------  ----------  ----------
----------  ----------  ----------

The following table sets forth pro forma operating results as a percentage
of net revenue for the periods indicated.

YEAR ENDED DECEMBER 31,
-------------------------------
1996       1995       1994
---------  ---------  ---------

Net revenue:
Product sales................................................................       90.3%      90.5%      92.6%
Net royalties................................................................        9.7        9.5        7.4
---------  ---------  ---------
Total net revenue............................................................      100.0      100.0      100.0
Cost of sales..................................................................       54.2       53.9       53.3
---------  ---------  ---------
Gross profit...................................................................       45.8       46.1       46.7
Selling, general and administrative expenses...................................       26.5       28.0       24.0
---------  ---------  ---------
Earnings from operations before reorganization charge........................       19.3       18.1       22.7
Reorganization charge..........................................................        0.6     --         --
---------  ---------  ---------
Earnings from operations after reorganization charge.........................       18.6       18.1       22.7
Interest expense, net..........................................................       (2.6)      (3.3)      (3.1)
Non-operating income, net......................................................       (0.1)       0.0        0.0
---------  ---------  ---------
Earnings before income taxes.................................................       15.9       14.8       19.6
Pro forma income taxes.........................................................        6.4        5.9        7.9
---------  ---------  ---------
Pro forma net earnings.....................................................        9.5%       8.9%      11.7%
---------  ---------  ---------
---------  ---------  ---------

YEAR ENDED DECEMBER 31, 1996 COMPARED TO YEAR ENDED DECEMBER 31, 1995.

NET REVENUE.  Net revenue increased $64.5 million or 13.2% to $551.2 million
in the year ended December 31, 1996 from $486.7 million in the year ended
December 31, 1995. Net revenue from wholesale operations increased $17.2 million
or 6.3% to $288.1 million from $270.9 million, due principally to an

13

increase in sales outside the United States of $31.5 million, partially offset
by a $14.3 million decline in domestic wholesale sales. The Company's domestic
net sales declined primarily as a result of increased competition in branded
basic denim apparel. Net revenue from retail operations increased $40.4 million
or 23.8% to $209.8 million from $169.4 million, primarily attributable to an
increase of 9.3% in comparable store net revenue and from volume generated by
new store openings. The increase in comparable store net revenue was primarily
attributable to a more favorable merchandise mix and the implementation of
improved inventory management systems. Net royalties increased 14.9% in the year
ended December 31, 1996 to $53.3 million from $46.4 million in the year ended
December 31, 1995. Net revenue from international operations comprised 12.1% and
6.9% of the Company's net revenue during 1996 and 1995, respectively.

GROSS PROFIT.  Gross profit increased 12.4% to $252.5 million in the year
ended December 31, 1996 from $224.6 million in the year ended December 31, 1995.
The increase in gross profit resulted from increased net royalties, as well as
increased net revenue from product sales. Gross profit from product sales
increased 11.8% to $199.2 million in the year ended December 31, 1996 from
$178.2 million in the year ended December 31, 1995. Gross profit as a percentage
of net revenue decreased to 45.8% in the year ended December 31, 1996 as
compared to 46.1% in the year ended December 31, 1995. Gross profit from product
sales as a percentage of net revenue from product sales decreased to 40.0% in
the year ended December 31, 1996 as compared to 40.5% in the year ended December
31, 1995, which included a provision of $3.9 million for store closing expenses.
Without this provision, gross profit from product sales as a percentage of net
revenue from product sales would have decreased to 40.0% from 41.4%. The decline
was primarily the result of the growth in net revenue derived from international
operations which generally carry lower gross profit margins, increased occupancy
costs associated with stores opened in 1995 and lower gross margin rates
experienced in the Retail Division resulting from an increase of employee sales
at lower gross margins.

SG&A EXPENSES.  Selling, general and administrative ("SG&A") expenses
increased 6.5% in the year ended December 31, 1996 to $150.9 million, or 27.4%
of net revenue, from $141.7 million, or 29.1% of net revenue, in the year ended
December 31, 1995. On a pro forma basis, SG&A expenses would have increased 7.0%
in the year ended December 31, 1996 to $146.2 million, or 26.5% of net revenue,
from $136.6 million, or 28.1% of net revenue, in the year ended December 31,
1995. The increase in SG&A expense was primarily the result of increased store
expenses related to the expansion of the retail operation, increased
administrative expenses related to the expansion of the international operations
and a non-recurring executive bonus of $1.0 million. The decrease in SG&A
expenses as a percentage of net revenue was the result of fixed expenses being
spread over a larger revenue base in the 1996 period.

EARNINGS FROM OPERATIONS BEFORE REORGANIZATION CHARGE.  Earnings from
operations, before the Reorganization Charge described below, increased 22.6% to
$101.7 million, or 18.4% of net revenue in the year ended December 31, 1996,
from $82.9 million, or 17.0% of net revenue, in the year ended December 31,
1995. On a pro forma basis, earnings from operations before the Reorganization
Charge would have increased 20.9% in the year ended December 31, 1996 to $106.3
million, or 19.3% of net revenue, from $88.0 million, or 18.1% of net revenue,
in the year ended December 31, 1995. This increase resulted primarily from the
increase in net revenue.

REORGANIZATION CHARGE.  In anticipation of the IPO, in the second quarter of
1996, the Company recorded reserves for certain non-recurring charges related to
the write-downs of operating assets to be disposed of $3.6 million for: (i)
disposal of two remote warehouse and production facilities resulting in a net
book loss of $2.4 million, and (ii) the net book loss of $1.2 million incurred
by the Company in connection with the sale of one of its aircraft. The above
charges are based upon the book value of the related assets as of June 30, 1996.
The Company intends to relocate the warehouse and production operations located
at the remote facilities to its central facility in Los Angeles in an effort to
centralize its operations and improve operating efficiencies.

14

EARNINGS FROM OPERATIONS AFTER REORGANIZATION CHARGE.  Earnings from
operations, including the Reorganization Charge described above, increased 18.3%
to $98.1 million, or 17.8% of net revenue in the year ended December 31, 1996,
from $82.9 million, or 17.0% of net revenue, in the year ended December 31,
1995. On a pro forma basis, earnings from operations including the
Reorganization Charge would have increased 16.8% in the year ended December 31,
1996 to $102.8 million, or 18.6% of net revenue, from $88.0 million, or 18.1% of
net revenue, in the year ended December 31, 1995. This increase resulted
primarily from the increase in net revenue.

INTEREST EXPENSE, NET.  Net interest expense decreased 8.9% to $14.5 million
in the year ended December 31, 1996 from $16.0 million in the year ended
December 31, 1995. This decrease resulted primarily from lower outstanding debt,
as well as lower interest rates. For the year ended December 31, 1996, the
average debt balance was $144.4 million, with an average effective interest rate
of 9.4%. For the year ended December 31, 1995, the average debt balance was
$156.6 million, with an average effective interest rate of 9.6%.

INCOME TAXES.  Prior to the IPO, for Federal and certain state income tax
purposes, the Company elected to be treated as an S corporation and therefore
generally was not subject to income tax on its earnings. The Company's income
taxes, which represent state income taxes and foreign taxes, plus Federal taxes
after the IPO, were $15.8 million and $2.9 million in the years ended December
31, 1996 and December 31, 1995, respectively. The Company's S corporation status
was terminated in connection with the IPO and, therefore, the Company is now
fully subject to Federal, state and foreign income taxes. On a pro forma basis,
income taxes would have been $35.3 million and $28.9 million in the years ended
December 31, 1996 and December 31, 1995, respectively.

NET EARNINGS.  Net earnings increased to $66.7 million in the year ended
December 31, 1996, from $63.9 million in the year ended December 31, 1995. On a
pro forma basis, net earnings would have increased to $52.3 million in the year
ended December 31, 1996, from $43.3 million in the year ended December 31, 1995.
Excluding the Reorganization Charge, pro forma net earnings would have increased
by 25.8% to $54.4 million, or 9.9% of net revenue, in the year ended December
31, 1996 from $43.3 million, or 8.9% of net revenue, in the year ended December
31, 1995.

YEAR ENDED DECEMBER 31, 1995 COMPARED TO YEAR ENDED DECEMBER 31, 1994

NET REVENUE.  Net revenue decreased $61.1 million or 11.1% to $486.7 million
in 1995 from $547.8 million in 1994. Net revenue from wholesale operations
decreased $87.2 million to $270.9 million from $358.1 million, including a $29.1
million decline due to closing certain accounts, and a $3.6 million decline due
to the licensing out of certain apparel lines. Excluding these items, net
revenue from wholesale operations would have decreased $54.5 million. The
principal reasons for the decrease were a $49.3 million decline in domestic
sales of men's and women's apparel and a $15.5 million decrease in off-price
revenue (which represents net revenue from the liquidation of discontinued
merchandise which carries lower margins), partially offset by increased sales
outside the United States to international distributors of $10.3 million. The
Company's domestic net sales declined during this period as a result of
increased competition in branded denim apparel, the sluggish retail environment,
the consolidation taking place among department store retailers and financial
difficulties experienced by certain of the Company's wholesale customers. Net
revenue from retail operations increased $20.1 million to $169.4 million from
$149.3 million. This net increase reflects a 39.6% increase in Guess retail
store net revenue primarily resulting from new store openings, somewhat offset
by a 7.4% decline in comparable store net revenue, primarily attributable to the
continued sluggish market conditions affecting the factory outlet stores. Net
royalties increased 14.9% in 1995 to $46.4 million from $40.4 million in 1994.
This increase was attributable to the continued growth in existing licensees'
businesses as well as the addition of new licensees. Revenue from international
operations (including net royalties from international licensees) comprised 6.9%
and 3.7% of the Company's net revenue during 1995 and 1994, respectively.

15

GROSS PROFIT.  Gross profit decreased 12.2% to $224.6 million in 1995 from
$255.8 million in 1994. Gross profit as a percentage of net revenue decreased to
46.1% in 1995 from 46.7% in 1994. The decrease in gross profit was attributable
to a $67.1 million decrease in net revenue from product sales, partially offset
by a $6.0 million increase in net royalties. Gross profit from product sales
decreased 17.3% to $178.2 million in 1995 from $215.5 million in 1994. During
the second half of 1995, the Company recorded a provision of $3.9 million for
anticipated store closing expenses. Without the $3.9 million store closure
provision, gross margin would have been 46.9% of net revenue in 1995 as compared
with 46.7% of net revenue in 1994, respectively.

SG&A EXPENSES.  SG&A expenses increased 2.6% to $141.7 million, or 29.1% of
net revenue, in 1995, from $138.0 million, or 25.2% of net revenue, in 1994. On
a pro forma basis, SG&A expenses would have increased 3.7% in 1995 to $136.6
million, or 28.0% of net revenue, from $131.7 million, or 24.0% of net revenue,
in 1994. This increase was primarily the result of the continued expansion of
the retail division, an increase in advertising expenses and increased expenses
relating to the installation and remodeling of twice as many shop-in-shops as
were installed or remodeled in 1994. These increases were partially offset by
reduced expenses resulting from cost containment efforts. The increase in SG&A
expenses as a percentage of net revenue was the result of the above mentioned
advertising and shop-in-shop expenditures and fixed expenses being spread over a
smaller revenue base during the 1995 period.

EARNINGS FROM OPERATIONS.  Earnings from operations decreased 29.6% to $82.9
million, or 17.0% of net revenue in 1995, from $117.8 million, or 21.5% of net
revenue, in 1994. On a pro forma basis, earnings from operations would have
decreased 29.1% in 1995 to $88.0 million, or 18.1% of net revenue, from $124.1
million, or 22.7% of net revenue, in 1994. This decline primarily resulted from
a decrease in net revenue, which was partially offset by higher net royalty
income.

INTEREST EXPENSE, NET.  Net interest expense decreased 5.8% to $16.0 million
for 1995 from $16.9 million in 1994. This decrease resulted from lower debt in
1995 which more than offset the effect of higher interest rates. For 1995, the
average debt balance was $156.6 million, with an average effective interest rate
of 9.6%. For 1994, the average debt balance was $182.9 million, with an average
effective interest rate of 8.6%.

INCOME TAXES.  Income taxes were $2.9 million and $3.5 million in 1995 and
1994, respectively. On a pro forma basis, income taxes would have been $28.9
million and $42.9 million in 1995 and 1994, respectively.

NET EARNINGS.  Net earnings decreased 34.5% to $63.9 million, or 13.1% of
net revenue, in 1995, from $97.6 million, or 17.8% of net revenue, in 1994. On a
pro forma basis, net earnings would have decreased 32.7% to $43.3 million, or
8.9% of net revenue, in 1995, from $64.3 million, or 11.7% of net revenue, in
1994.

LIQUIDITY AND CAPITAL RESOURCES

The Company has relied primarily upon internally generated funds, trade
credit and bank borrowings to finance its operations and expansion and to make
periodic distributions to its stockholders. Since the Company has terminated its
S corporation status, it no longer intends to make periodic distributions to its
stockholders. As of December 31, 1996 the Company had working capital of $76.8
million, compared to $57.6 million at December 31, 1995. The $19.2 million
increase in working capital primarily resulted from a $9.9 million increase in
net receivables, a $6.6 million increase in inventories and a $6.6 million
increase in current deferred tax assets, partially offset by a $5.2 million
increase in payables and accrued liabilities. The increase in inventory and
receivables relates to new product lines being developed and stronger sales
recorded in the fourth quarter of 1996 compared to the prior year.

The Company's Credit Agreement provides for a $100.0 million revolving
credit facility which includes a $20.0 million sublimit for letters of credit.
As of December 31, 1996, the Company had $16.0 million in

16

outstanding borrowings under the revolving credit facility and outstanding
letters of credit of $8.6 million. As of December 31, 1996, the Company had
$75.4 million available for future borrowings under such facility. The revolving
credit facility will expire in December 1999. In addition to the revolving
credit facility, the Company also has a $25.0 million letter of credit facility.
As of December 31, 1996, the Company had $9.6 million outstanding under this
facility.

Capital expenditures, net of lease incentives granted, totaled $20.2 million
for 1996 and $21.7 million for 1995. The Company estimates that its capital
expenditures for 1997 will be approximately $38.0 million, primarily for the
expansion of its retail stores and operations.

The Company anticipates that it will be able to satisfy its ongoing cash
requirements through 1997, including retail and international expansion plans,
and interest payments on the Company's Senior Subordinated Notes, primarily with
cash flow from operations, supplemented, if necessary, by borrowings under its
revolving Credit Agreement.

IMPORTANT FACTORS REGARDING FORWARD-LOOKING STATEMENTS

Various forward-looking statements have been made in this Form 10-K.
Forward-looking statements may also be in the registrant's other reports filed
under the Securities Exchange Act of 1934, in its press releases and in other
documents. In addition, from time to time, the registrant through its management
may make oral forward-looking statements.

Forward-looking statements generally refer to future plans and performance,
and are identified by the words "believe", "expect", "anticipate", "optimistic",
"intend", "aim", "will" or similar expressions. Readers are cautioned not to
place undue reliance on these forward-looking statements, which speak only as of
the date of which they are made. The registrant undertakes no obligation to
update publicly or revise any forward-looking statements.

Important factors that could cause actual results to differ materially from
the registrant's forward-looking statements, as well as affect the registrant's
ability to achieve its financial and other goals, include, but are not limited
to, the following:

The Company's inability to identify and respond appropriately to changing
consumer demands and fashion trends could adversely affect consumer
acceptance of Guess products.

A decision by the controlling owner of a group of department stores or any
other significant customer to decrease the amount purchased from the Company
or to cease carrying Guess products could have a material adverse effect on
the Company's financial condition and results of operations.

The inability of the Company to control the quality, focus, image or
distribution of its licensed products could impact consumer receptivity to
the Company's products generally and, therefore, adversely affect the
Company's financial condition and results of operations.

The failure of the Company to continue to enhance operating control systems
or unexpected difficulties encountered during expansion could adversely
affect the Company's financial condition and results of operations.

Factors beyond the Company's control may affect the Company's ability to
expand its network of retail stores, including general economic and business
conditions affecting consumer spending.

A general failure by the Company to maintain and control its existing
distribution and licensing arrangements or to procure additional
distribution and licensing relationships could adversely affect the
Company's growth strategy, which could adversely affect the Company's
financial condition and results of operations.

The extended loss of the services of one or more of the Principal Executive
Officers could have a material adverse effect on the Company's operations.

17

The Company's operations may be affected adversely by political instability
resulting in the disruption of trade with the countries in which the
Company's contractors, suppliers or customers are located, the imposition of
additional regulations relating to imports, the imposition of additional
duties, taxes and other charges on imports, significant fluctuations in the
value of the dollar against foreign currencies or restrictions on the
transfer of funds. Also, a substantial increase in customs duties could have
an adverse effect on the Company's financial condition or results of
operations.

The inability of a manufacturer to ship the Company's products in a timely
manner or to meet the Company's quality standards could adversely affect the
Company's ability to deliver products to its customers in a timely manner.

No assurance can be given that others will not assert rights in, or
ownership of, trademarks and other proprietary rights of Guess. In addition,
the laws of certain foreign countries do not protect proprietary rights to
the same extent as do the laws of the United States.

SEASONALITY

The Company's business is impacted by the general seasonal trends that are
characteristic of the apparel and retail industries. The Company's wholesale
operations generally experience stronger performance in the first and third
quarters, while retail operations are generally stronger in the third and fourth
quarters. As the timing of the shipment of products may vary from year to year,
the result for any particular quarter may not be indicative of results for the
full year. The Company has not had significant overhead and other costs
generally associated with large seasonal variations.

INFLATION

The Company does not believe that the relatively moderate rates of inflation
experienced in the United States over the last three years have had a
significant effect on its net revenue or profitability. Although higher rates of
inflation have been experienced in a number of foreign countries in which the
Company's products are manufactured, the Company does not believe that they have
had a material effect on the Company's net revenue or profitability.

EXCHANGE RATES

The Company receives United States dollars for substantially all of its
product sales and its licensing revenues. Inventory purchases from offshore
contract manufacturers are primarily denominated in United States dollars;
however, purchase prices for the Company's products may be impacted by
fluctuations in the exchange rate between the United States dollar and the local
currencies of the contract manufacturers, which may have the effect of
increasing the Company's cost of goods in the future. In addition, royalties
received from the Company's international licensees are subject to foreign
currency translation fluctations as a result of the net sales of the licensee
being denominated in local currency and royalties being paid to the Company in
United States dollars. During the last three fiscal years, exchange rate
fluctuations have not had a material impact on the Company's inventory costs.
The Company currently does not engage in hedging activities with respect to such
exchange rate risk.

IMPACT OF RECENT ACCOUNTING PRONOUNCEMENTS

The Financial Accounting Standards Board (the "FASB") issued Statement of
Financial Accounting Standards No. 121 ("SFAS No. 121"), "Accounting for the
Impairment of Long-Lived Assets and for Long-Lived Assets to be disposed of," in
March 1995 which is effective for fiscal years beginning after December 15,
1995. SFAS No. 121 establishes accounting standards for the impairment of
Long-Lived assets, certain identifiable intangibles and goodwill related to
these assets and certain identifiable intangibles to be disposed of. The Company
adopted the provisions of SFAS No. 121 effective January 1, 1996 and has,
accordingly, recorded a write-down aggregating $2.4 million in the second
quarter of 1996

18

related to certain operating assets to be disposed of and is included as a
component of the $3.6 million Reorganization Charge in the Company's statement
of earnings. The Company does not anticipate that SFAS No. 121 will have a
material impact on its financial statements. See note 15 to the Company's
consolidated financial statements.

In October 1995, the FASB issued Statement of Financial Accounting Standards
No. 123, "Accounting for Stock-Based Compensation ("SFAS 123"). SFAS 123
established a fair value-based method of accounting for compensation cost
related to stock options and other forms of stock-based compensation plans.
However, SFAS 123 allows an entity to continue to measure compensation costs
using the principles of Accounting Principles Board Pronouncement 25 if certain
pro forma disclosures are made. SFAS 123 is effective for fiscal years beginning
after December 15, 1995. Effective January 1, 1996, the Company adopted the
provisions for pro forma disclosure requirements of SFAS 123 and anticipates
that SFAS 123 will not have a material impact upon its financial statements. See
note 13 to the Company's consolidated financial statements.

ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA

The information required by this Item is incorporated herein by reference to
the Financial Statements
and Supplementary Data listed in Item 14 of Part IV of this report.

ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND
FINANCIAL DISCLOSURE

None.

PART III

ITEM 10.  DIRECTORS AND EXECUTIVE OFFICERS

Information with respect to Directors may be found under the caption
"Directors and Executive Officers" on pages 6 and 7 of the Company's Proxy
Statement dated March 31, 1997, for the 1997 Annual Meeting of Shareholders to
be held May 28, 1997 (the "Proxy Statement"). Such information is incorporated
herein by reference.

ITEM 11.  EXECUTIVE COMPENSATION AND OTHER INFORMATION

The information in the Proxy Statement set forth under the caption
"Executive Compensation" on page 8 is incorporated herein by reference.

ITEM 12.  SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT

The information set forth under the caption "Security Ownership and Certain
Beneficial Owners and Management" on page 3 of the Proxy Statement is
incorporated herein by reference.

ITEM 13.  CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS

The information set forth under the caption "Certain Relationships and
Related Transactions" on page 4 of the Proxy Statement is incorporated herein by
reference.

PART IV

ITEM 14.  EXHIBITS, CONSOLIDATED FINANCIAL STATEMENT SCHEDULE, AND REPORTS ON
FORM 8-K

(a) Documents Filed with Report

(1) Consolidated Financial Statements

19

The financial statements listed on the accompanying Index to Consolidated
Financial Statements and Financial Statement Schedule are filed as part
of this report.

(2) Consolidated Financial Statement Schedule

The financial statement schedule listed on the accompanying Index to
Consolidated Financial Statements and Financial Statement Schedule are
filed as part of this report.

(3) Exhibits

The exhibits listed on the accompanying Index to Exhibits are filed as
part of this report.

(b) Reports on Form 8-K

No reports on Form 8-K were filed by the Company during the last quarter of
the fiscal year ended December 31, 1996.

20

GUESS ?, INC.

FORM 10-K

ITEMS 8, 14(A) AND 14 (D)

INDEX TO CONSOLIDATED FINANCIAL STATEMENTS AND FINANCIAL STATEMENT SCHEDULE

1          Consolidated Financial Statements

Independent Auditors' Report........................................................         22

Consolidated Balance Sheets at December 31, 1996 and 1995...........................         23

Consolidated Statements of Earnings for the Years Ended
December 31, 1996, 1995 and 1994..................................................         24

Consolidated Statements of Stockholders' Equity for the Years Ended
December 31, 1996, 1995 and 1994..................................................         25

Consolidated Statements of Cash Flows for the Years Ended
December 31, 1996, 1995 and 1994..................................................         26

Notes to Consolidated Financial Statements..........................................         27

2          Consolidated Financial Statement Schedule

II Valuation and Qualifying Accounts................................................         41

21

GUESS ?, INC.

FORM 10-K

ITEMS 8, 14(A) AND 14 (D)

INDEPENDENT AUDITORS' REPORT

The Board of Directors and Stockholders
Guess ?, Inc.:

We have audited the accompanying consolidated financial statements of Guess
?, Inc. and Subsidiaries as listed in the accompanying index. In connection with
our audits of the consolidated financial statements, we also have audited the
consolidated financial statement schedule, as listed in the accompanying index.
These consolidated financial statements and financial statement schedule are the
responsibility of the Company's management. Our responsibility is to express an
opinion on these consolidated financial statements and financial statement
schedule based on our audits.

We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the consolidated financial statements are
free of material misstatement. An audit includes examining, on a test basis,
evidence supporting the amounts and disclosures in the consolidated financial
statements. An audit also includes assessing the accounting principles used and
significant estimates made by management, as well as evaluating the overall
consolidated financial statement presentation. We believe that our audits
provide a reasonable basis for our opinion.

In our opinion, the consolidated financial statements referred to above
present fairly, in all material respects, the financial position of Guess ?,
Inc. and Subsidiaries as of December 31, 1996 and 1995 and the results of their
operations and their cash flows for each of the years in the three-year period
ended December 31, 1996 in conformity with generally accepted accounting
principles. Also in our opinion, the related consolidated financial statement
schedule, when considered in relation to the basic consolidated financial
statements taken as a whole, presents fairly, in all material respects, the
information set forth therein.

KPMG Peat Marwick LLP

Los Angeles, California
February 24, 1997

22

GUESS ?, INC. AND SUBSIDIARIES

CONSOLIDATED BALANCE SHEETS

DECEMBER 31, 1996 AND 1995
(IN THOUSANDS, EXCEPT SHARE DATA)

1996        1995
----------  ----------

ASSETS
Current assets:
Cash...................................................................................  $    8,800  $    6,417
Short-term investments.................................................................       4,401           0
Receivables:
Trade receivables, net of reserves aggregating $9,737 and $10,849 at December 31,
1996 and 1995, respectively........................................................      27,107      23,033
Royalties............................................................................      15,613       9,975
Other................................................................................       4,042       3,893
----------  ----------
46,762      36,901
Inventories (note 3).................................................................      79,489      72,889
Prepaid expenses.....................................................................       5,249       5,557
Deferred tax assets (note 6).........................................................       6,614           0
----------  ----------
Total current assets.............................................................     151,315     121,764

Property and equipment, at cost, net of accumulated depreciation and amortization (note
4).....................................................................................      64,302      68,199
Long-term investments (note 2)...........................................................       3,106       3,394
Other assets, at cost, net of accumulated amortization of $421 and $1,800 at December 31,
1996 and 1995, respectively (note 14)..................................................      20,583       9,278
----------  ----------
$  239,306  $  202,635
----------  ----------
----------  ----------
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Current installments of notes payable and long-term debt (note 5)......................  $    6,099  $    4,123
Accounts payable.......................................................................      39,285      40,701
Accrued expenses.......................................................................      24,935      18,332
Income taxes payable (note 6)..........................................................       4,175       1,036
----------  ----------
Total current liabilities........................................................      74,494      64,192

Notes payable and long-term debt, net of current installments (note 5)...................     121,217     119,212

Other liabilities........................................................................       8,667       8,234
204,378     191,638
Stockholders' equity (note 7):
Preferred stock, $.01 par value. Authorized 10,000,000 shares; no shares issued and
outstanding..........................................................................      --          --
Common stock, $.01 par value. Authorized 150,000,000 shares; issued 62,712,611 and
52,712,611 shares at 1996 and 1995, outstanding 42,681,819 and 32,681,819 shares
actual, respectively, 20,030,792 shares held in Treasury.............................         135          35
Paid-in capital........................................................................     155,591         181
Retained earnings......................................................................      29,921     161,567
Foreign currency translation adjustment................................................          57         (10)
Treasury stock, 20,030,792 shares repurchased..........................................    (150,776)   (150,776)
----------  ----------
Net stockholders' equity.............................................................      34,928      10,997
----------  ----------
$  239,306  $  202,635
----------  ----------
----------  ----------
Commitments and contingencies (note 9)

See accompanying notes to consolidated financial statements

23

GUESS ?, INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF EARNINGS

YEARS ENDED DECEMBER 31, 1996, 1995 AND 1994
(IN THOUSANDS, EXCEPT PER SHARE DATA)

1996        1995        1994
----------  ----------  ----------

Net revenue
Product sales..............................................................  $  497,874  $  440,359  $  507,462
Net royalties..............................................................      53,288      46,374      40,350
----------  ----------  ----------
551,162     486,733     547,812
Cost of sales................................................................     298,631     262,142     291,989
----------  ----------  ----------
Gross profit.................................................................     252,531     224,591     255,823
Selling, general and administrative expenses.................................     150,877     141,663     138,016
Reorganization charge (note 15)..............................................       3,559           0           0
----------  ----------  ----------
Earnings from operations...................................................      98,095      82,928     117,807
----------  ----------  ----------
Non-operating income (expense):
Interest, net..............................................................     (14,539)    (15,957)    (16,948)
Other, net.................................................................        (989)       (157)        322
----------  ----------  ----------
(15,528)    (16,114)    (16,626)
Earnings before income taxes.................................................      82,567      66,814     101,181
Income taxes (note 6)........................................................      15,826       2,895       3,540
----------  ----------  ----------
Net earnings.................................................................  $   66,741  $   63,919  $   97,641
----------  ----------  ----------
----------  ----------  ----------

SUPPLEMENTAL PRO FORMA FINANCIAL INFORMATION (NOTE 1):
- -----------------------------------------------------------------------------
Earnings before taxes, as presented..........................................  $   82,567  $   66,814  $  101,181
Pro forma provision for
income taxes (unaudited)(note 6)............................................      33,241      26,726      40,472
----------  ----------  ----------
Pro forma net earnings (unaudited)...........................................  $   49,326  $   40,088  $   60,709
----------  ----------  ----------
----------  ----------  ----------
Pro forma earnings per share.................................................  $     1.18  $     0.96
Weighted number of common shares outstanding.................................      41,906      41,675

See accompanying notes to consolidated financial statements

24

GUESS ?, INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY
YEARS ENDED DECEMBER 31, 1996, 1995 AND 1994
(IN THOUSANDS)

FOREIGN
COMMON      PAID-IN     RETAINED     CURRENCY     TREASURY
STOCK      CAPITAL     EARNINGS    TRANS. ADJ.     STOCK        TOTAL
-----------  ----------  -----------  -----------  -----------  -----------

Balance at December 31, 1993............   $      35   $      181  $   100,307   $     (31)  $  (150,776) $   (50,284)
Net earnings..........................           0            0       97,641           0             0       97,641
Stockholder distributions.............           0            0      (47,000)          0             0      (47,000)
Foreign currency translation
adjustment..........................           0            0            0          16             0           16
-----   ----------  -----------         ---   -----------  -----------
Balance at December 31, 1994............          35          181      150,948         (15)     (150,776)         373
Net earnings..........................           0            0       63,919           0             0       63,919
Stockholder distributions.............           0            0      (53,300)          0             0      (53,300)
Foreign currency translation
adjustment..........................           0            0            0           5             0            5
-----   ----------  -----------         ---   -----------  -----------
Balance at December 31, 1995............          35          181      161,567         (10)     (150,776)      10,997
Net earnings..........................           0            0       66,741           0             0       66,741
Stockholder distributions.............           0            0     (224,600)          0             0     (224,600)
Issuance of common stock..............         100      169,200            0           0             0      169,300
Establishment of deferred tax
assets..............................           0            0       10,961           0             0            0
Reclassification of stockholder
distributions in excess of retained
earnings............................           0      (15,252)      15,252           0             0       10,961
Net equity adjustments resulting from
Marciano International merger.......           0        1,462            0           0             0        1,462
Foreign currency
translation adjustment..............           0            0            0          67             0           67
-----   ----------  -----------         ---   -----------  -----------
Balance at December 31, 1996............   $     135   $  155,591  $    29,921   $      57   $  (150,776) $    34,928
-----   ----------  -----------         ---   -----------  -----------
-----   ----------  -----------         ---   -----------  -----------

See accompanying notes to consolidated financial statements

25

GUESS ?, INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CASH FLOWS

YEARS ENDED DECEMBER 31, 1996, 1995 AND 1994
(IN THOUSANDS)

1996        1995        1994
----------  ----------  ----------

Cash flows from operating activities
Net earnings................................................................  $   66,741  $   63,919  $   97,641
Adjustments to reconcile net earnings to net cash provided by operating
activities:
Depreciation and amortization of property and equipment...................      16,233      14,277      12,070
Amortization of deferred charges..........................................         804       1,373         515
Loss on disposition of property and equipment.............................       2,235         814         726
Foreign currency translation adjustment...................................          42         (14)         (5)
Contributions from minority interest......................................         336          22          24
Equity method losses (earnings)...........................................         666        (117)        (72)
(Increase) decrease in:
Receivables.............................................................      (8,811)      1,599     (14,628)
Inventories.............................................................      (6,529)     10,884      (3,353)
Prepaids and other current assets.......................................      (1,949)       (720)     (1,516)
Other assets............................................................        (411)      1,858         180
Increase (decrease) in:
Accounts payable........................................................      (1,447)     10,861       8,043
Accrued expenses........................................................       6,058       3,658      (1,337)
Income taxes payable....................................................       2,867          22         795
----------  ----------  ----------
Net cash provided by operating activities.............................      76,835     108,436      99,083

Cash flows from investing activities
Net (purchase of) proceeds from the sale of short-term investments..........      (4,401)          0       5,000
Purchases of property and equipment.........................................     (21,110)    (23,757)    (19,779)
Proceeds from the disposition of property and equipment.....................       6,640         192         172
Lease incentives granted....................................................         886       2,015       1,503
Acquisition of license......................................................      (5,000)          0           0
Purchase of long-term investments...........................................        (173)        (23)     (3,136)
----------  ----------  ----------
Net cash used by investing activities.................................     (23,158)    (21,573)    (16,240)

Cash flows from financing activities
Proceeds from notes payable and long-term debt..............................     176,289     131,193     222,040
Repayment of notes payable and long-term debt...............................    (174,308)   (164,353)   (254,959)
Proceeds from issuance of common stock......................................     115,300           0           0
Repayments of S distribution notes..........................................    (129,000)          0           0
Distributions to stockholders...............................................     (39,600)    (53,300)    (47,000)
----------  ----------  ----------
Net cash used by financing activities.................................     (51,319)    (86,460)    (79,919)

Effect of exchange rates on cash..............................................          25          20          20
Net increase in cash..........................................................       2,383         423       2,944
Cash at beginning of period...................................................       6,417       5,994       3,050
----------  ----------  ----------
Cash at end of period.........................................................  $    8,800  $    6,417  $    5,994
----------  ----------  ----------
----------  ----------  ----------
Supplemental disclosures
Cash paid during the period for:
Interest..................................................................  $   14,246  $   15,396  $   16,380
Income taxes..............................................................      14,703       1,925       2,879

During 1996, in connection with the S corporation distribution, the Company
issued 3,000,000 shares of Common Stock to the Principal Stockholders
aggregating $54.0 million.

See accompanying notes to financial statements

26

GUESS ?, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

YEARS ENDED DECEMBER 31, 1996 AND 1995

(1) SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Guess ?, Inc. (the "Company" or "Guess") designs, develops, and markets
quality contemporary jeans and other casual wear for men and women. The Company
distributes its products through major department stores, specialty retailers,
foreign distributors and its network of Company-owned and-operated retail and
factory outlet stores.

BASIS OF PRESENTATION

The consolidated financial statements include the accounts of Guess ?, Inc.
and its wholly-owned foreign subsidiary, Guess Europe, B.V., a Netherlands
corporation ("GEBV"). GEBV holds two wholly-owned subsidiaries, Ranche, Limited,
a Hong Kong corporation ("Ranche") and Guess Italia, S.r.l., an Italian
corporation ("Guess Italia"). Accordingly, all references herein to "Guess ?,
Inc." include the consolidated results of the Company and its subsidiaries. All
intercompany accounts and transactions have been eliminated in consolidation.

INVENTORIES

Inventories are valued at the lower of cost (first-in, first-out) or market.

TRADE AND ROYALTY RECEIVABLES

The Company extends trade credit to its customers in the ordinary course of
business. None of the receivables due from customers at December 31, 1996 and
1995 involved factored accounts or other contingencies relating to third-party
risk, except to the extent that the Company has chosen to insure certain
accounts from risk of loss under a catastrophic loss policy.

REVENUE RECOGNITION

The Company recognizes revenue from the sale of merchandise upon shipment.
Royalty income is based upon a percentage, as defined in the underlying
agreement, of the licensees' net revenue. The Company accrues for estimated
sales returns and allowances in the period in which the related revenue is
recognized.

SIGNIFICANT CUSTOMER

An individual customer aggregating in excess of 10% of net revenue for the
years ended December 31, 1995 and 1994 is summarized as follows:

YEAR ENDED DECEMBER 31,
-------------------------------
1996       1995       1994
---------  ---------  ---------

Customer A.......................................................    8.6%       11.0%      10.3%

27

GUESS ?, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

YEARS ENDED DECEMBER 31, 1996 AND 1995

(1) SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
DEPRECIATION AND AMORTIZATION

Depreciation and amortization of property and equipment are provided using
the straight-line method over the following useful lives:

18 to 31
Building and building improvements...................................          years
Land improvements....................................................        5 years
Machinery and equipment..............................................   3 to 5 years
Corporate aircraft...................................................  5 to 10 years
Corporate vehicles...................................................        3 years

Leasehold improvements are amortized over the lesser of the estimated useful
life of the asset or the term of the lease. Construction in progress is not
depreciated until the related asset is completed.

Goodwill, which represents the excess of purchase price over fair value of
net assets acquired, is amortized on a straight line basis over the expected
periods to be benefited, generally 15 years.

FOREIGN CURRENCY TRANSLATION

In accordance with the Financial Accounting Standards Board (the "FASB")
Statement No. 52, balance sheet accounts of the Company's foreign operations are
translated from foreign currencies into U.S. dollars at year end or historical
rates while income and expenses are translated at the weighted average exchange
rates for the year. The related translation adjustments are reflected as a
foreign currency translation adjustment in the consolidated balance sheet.

INCOME TAXES

Prior to the Company's Initial Public Offering ("IPO")in August 1996, the
Company had elected to be taxed as an S corporation for Federal income tax
purposes. In certain states, the Company was taxed as an S corporation; in other
states, the Company was taxed as a C corporation. Effective January 1, 1991, the
Company elected to be treated as an S corporation for California tax purposes.
As a result of the Company's IPO, all S corporation elections were terminated.

In February, 1992, the FASB issued Statement No. 109, "Accounting for Income
Taxes." One of the provisions of Statement No. 109 enables companies to record
deferred tax assets for the future benefit to be derived from certain deductible
temporary differences. The Company has adopted the provisions of Statement No.
109 effective January 1, 1993; however, as differences giving rise to deferred
tax assets were immaterial due to the Company's S corporation election, the
Company did not record any deferred tax assets at December 31, 1994 or 1995. As
a result of the Company's IPO and subsequent S corporation election termination,
differences in the book and tax bases of certain assets and liabilities have
resulted in the recording of deferred tax assets aggregating and $13.2 million
at December 31, 1996.

RECENT ACCOUNTING PRONOUNCEMENTS

The FASB issued statements of Financial Accounting Standards No. 121 ("SFAS
121"), "Accounting for the Impairment of Long-Lived assets and for Long-Lived
Assets to be Disposed of," in March 1995 which is effective for fiscal years
beginning after December 15, 1995. SFAS 121 establishes accounting

28

GUESS ?, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

YEARS ENDED DECEMBER 31, 1996 AND 1995

(1) SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
standards for the impairment of long-lived assets, certain identifiable
intangibles and goodwill related to these assets and certain identifiable
intangibles to be disposed of. The Company adopted the provisions of SFAS 121 in
1996 and recorded a write-down of $2.4 million pursuant to certain buildings
being disposed of. See note 15.

In October 1995, the FASB issued statement of Financial Accounting Standards
No. 123, "Accounting for Stock-Based Compensation" ("SFAS 123"). SFAS 123
established a fair value-based method of accounting for compensation cost
related to stock options and other forms of stock-based compensation plans.
However, SFAS 123 allows an entity to continue to measure compensation costs
using the principles of Accounting Principles Board Pronouncement 25 ("APB
Opinion No. 25") if certain pro forma disclosures are made. SFAS 123 is
effective for years beginning after December 15, 1995. The Company has elected
to continue to apply the provisions of APB Opinion No. 25 and provide the pro
forma disclosure provisions of SFAS 123.

PRO FORMA NET EARNINGS

Pro forma net earnings represent the results of operations adjusted to
reflect a provision for income taxes on historical earnings before income taxes,
which gives effect to the change in the Company's income tax status to a C
corporation as a result of the public sale of its common stock. Following the
Company's IPO, and the subsequent termination of its S corporation status on
August 12, 1996, the Company recorded an increase to additional paid in capital
resulting from the establishment of net deferred tax assets aggregating $11.0
million, representing the difference between financial reporting and tax bases
of assets and liabilities, using the enacted tax rates and laws that will be in
effect when the differences are expected to reverse. The principal difference
between the pro forma income tax rate and the Federal statutory rate of 35%
relates primarily to state income taxes.

Pro forma net earnings per share has been computed by dividing pro forma net
earnings by the weighted average number of shares of common stock outstanding
during the period. Options to purchase common stock are included in the
calculation as common stock equivalents provided that their impact is not
anti-dilutive.

CREDIT RISK

The Company sells its merchandise principally to customers throughout the
United States and Europe. Management performs regular evaluations concerning the
ability of its customers to satisfy their obligations and records a provision
for doubtful accounts based upon these evaluations. The Company's credit losses
for the periods presented are insignificant and have not exceeded management's
estimates.

FAIR VALUE OF FINANCIAL INSTRUMENTS

The carrying amount of the Company's financial instruments, which
principally include cash, short and long-term investments, trade receivables,
accounts payable and accrued expenses, approximates fair value due to the
relatively short maturity of such instruments.

The fair value of the Company's debt instruments are based on the amount of
future cash flows associated with each instrument discounted using the Company's
borrowing rate. At December 31, 1996 and 1995, the carrying value of all
financial instruments was not materially different from fair value.

29

GUESS ?, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

YEARS ENDED DECEMBER 31, 1996 AND 1995

(1) SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
USE OF ESTIMATES

Management of the Company has made a number of estimates and assumptions
relating to the reporting of assets and liabilities and the disclosure of
contingent assets and liabilities to prepare these consolidated financial
statements in conformity with generally accepted accounting principles. Actual
results could differ from these estimates.

RECLASSIFICATIONS

Certain reclassifications have been made to the 1994 and 1995 financial
statements to conform to the 1996 presentation.

(2) INVESTMENTS

Long-term investments consist of certain debt and equity securities
aggregating $3,106,000 and $3,394,000 at December 31, 1996 and 1995,
respectively.

(3) INVENTORIES

Inventories are summarized as follows:

1996       1995
---------  ---------
(IN THOUSANDS)

Raw materials.....................................................................  $  12,563  $   9,788
Work in process...................................................................     12,576     11,264
Finished goods....................................................................     54,350     51,837
---------  ---------
$  79,489  $  72,889
---------  ---------
---------  ---------

(4) PROPERTY AND EQUIPMENT

Property and equipment is summarized as follows:

1996        1995
----------  ----------
(IN THOUSANDS)

Land and land improvements......................................................  $    5,729  $    5,729
Building and building improvements..............................................       8,462       8,446
Leasehold improvements..........................................................      42,646      36,059
Machinery and equipment.........................................................      58,477      48,279
Corporate aircraft..............................................................       5,160      19,138
Construction in progress........................................................         806       2,269
----------  ----------
121,280     119,920
Less accumulated depreciation and amortization..................................      56,978      51,721
----------  ----------
$   64,302  $   68,199
----------  ----------
----------  ----------

30

GUESS ?, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

YEARS ENDED DECEMBER 31, 1996 AND 1995

(4) PROPERTY AND EQUIPMENT (CONTINUED)
Construction in progress at December 31, 1996 and 1995 represents the costs
associated with the construction of buildings and improvements used in the
Company's operations and other capitalizable expenses in progress.

(5) NOTES PAYABLE AND LONG-TERM DEBT

Notes payable and long-term debt is summarized as follows:

1996        1995
----------  ----------
(IN THOUSANDS)

9 1/2% Senior Subordinated Notes due 2003.................................................  $  105,000  $  105,000
Advances under a secured $100,000,000 long-term line of credit with a syndicate of banks;
interest is variable, with average annual effective rate of 7.94% in 1996, and payable
monthly.................................................................................      16,000      13,000
Note payable, secured by corporate aircraft, bearing interest at 8.23% per year, payable
in quarterly installments of $221,003 through March 1998................................       1,040       1,799
Other, including capitalized leases.......................................................       5,276       3,536
----------  ----------
127,316     123,335
Less current installments.................................................................       6,099       4,123
----------  ----------
$  121,217  $  119,212
----------  ----------
----------  ----------

Aggregate maturities of notes payable and long-term debt are summarized as
follows:

YEAR ENDING DECEMBER 31, (IN THOUSANDS):
- -----------------------------------------------------------------------------

1996.........................................................................  $    6,099
1997.........................................................................         217
1998.........................................................................           0
1999.........................................................................      16,000
2000.........................................................................           0
Thereafter...................................................................     105,000
----------
$  127,316
----------
----------

During 1995, the Company repurchased $10.0 million of the Senior
Subordinated Notes. Additionally, the related deferred financing costs of
$281,000 were written off to interest expense during 1995.

The Senior Subordinated Notes are redeemable at the option of the Company,
in whole or in part, on or after August 15, 1998, at various redemption prices.

31

GUESS ?, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

YEARS ENDED DECEMBER 31, 1996 AND 1995

(6) INCOME TAXES

The provision for income taxes, including the pro forma provision for income
taxes giving effect as if the Company had been a C corporation throughout all of
1996, is summarized as follows:

YEAR ENDED DECEMBER
31,
1996        1995
----------  ----------
(IN THOUSANDS)

Federal:
Current.......................................................................  $   33,686  $   26,112
Deferred......................................................................      (7,449)     (4,572)

State:
Current.......................................................................       7,339       5,559
Deferred......................................................................        (693)       (373)

Foreign:
Current.......................................................................         358           0
----------  ----------
$   33,241  $   26,726
----------  ----------
----------  ----------

The Company's statement of earnings includes a provision for income taxes of
$15.8 million, which principally represents the Federal and state income taxes
recorded from the date of the S corporation election termination, August 12,
1996, through December 31, 1996.

The actual pro forma provision for income taxes differs from the expected
income taxes obtained by applying the statutory Federal income tax rate to
earnings before income taxes as follows:

YEAR ENDED
DECEMBER 31,
1996
-------------
(IN
THOUSANDS)

Computed "expected" tax expense..........................................................    $  28,924
State taxes, net of Federal benefit......................................................        4,109
Other....................................................................................          208
-------------
$  33,241
-------------
-------------

Deferred income tax benefit resulted from the following for the year ended
December 31, 1996:

1996
-------------
(IN
THOUSANDS)

Bad debt and other reserves..............................................................    $     981
Depreciation and gain on sale of fixed assets............................................        4,101
State taxes..............................................................................        2,569
Other....................................................................................          491
-------------
$   8,142
-------------
-------------

32

GUESS ?, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

YEARS ENDED DECEMBER 31, 1996 AND 1995

(6) INCOME TAXES (CONTINUED)
The tax effects of temporary differences that give rise to significant
portions of deferred tax assets and deferred tax liabilities at December 31,
1996 are presented below:

1996
-------------
(IN
THOUSANDS)

Deferred Tax Assets:
Depreciation...........................................................................    $   3,444
Deferred lease incentives..............................................................        1,462
Rent expense...........................................................................        1,251
Uniform capitalization adjustment......................................................        1,191
State income taxes.....................................................................        2,453
Bad debt and other reserves............................................................        1,625
Other..................................................................................        2,215
-------------
Total gross deferred assets..........................................................       13,641
Less: Valuation allowance                                                                       --
Less: Deferred tax liabilities...........................................................          419
-------------
Net deferred tax assets..................................................................    $  13,222
-------------
-------------

Management believes that it is more likely than not that the results of
operations will generate sufficient taxable earnings to realize net deferred tax
assets.

(7) STOCKHOLDERS' EQUITY

In connection with the Company's initial public offering of 7,000,000 shares
of common stock at $18.00 per share, which took place on August 7, 1996, (i)
Marciano International, which was owned by the Marciano Trusts and held an
interest in the subsidiaries of Guess, was merged with and into the Company,
(ii) all of the capital stock of Guess Italia was contributed to GEBV, (iii) the
Company effected a 32.66 to 1 split of the Common Stock and (iv) the Company
declared a distribution of $185.0 million to the Principal Stockholders,
representing the Company's previously taxed and undistributed S corporation
earnings which included a distribution of $54.0 million (3,000,000 shares at
$18.00 per share) of Common Stock, $129.0 million in cash generated primarily
from the initial public offering and $2.0 million in S Distribution Notes, (v)
the Company terminated its status as an S corporation, and (vi) the Company
granted options to purchase 1,225,673 shares pursuant to the Company's 1996
Equity Incentive Plan with an exercise price equal to the initial public
offering price of $18.00 per share.

(8) RELATED PARTY TRANSACTIONS

The Company is engaged in various transactions with entities affiliated with
trusts for the respective benefit of Maurice, Paul and Armand Marciano (the
"Marciano Trusts"). The Company believes that each of the companies, in which
the Marciano Trusts have an investment, and related party transactions discussed
below were entered into on terms no less favorable to the Company than could
have been obtained from an unaffiliated third party.

33

GUESS ?, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

YEARS ENDED DECEMBER 31, 1996 AND 1995

(8) RELATED PARTY TRANSACTIONS (CONTINUED)

MERGERS

On August 13, 1996, Marciano International, which was wholly owned by the
Marciano Trusts, was merged with and into the Company in connection with the
initial public offering. Consideration paid to the Marciano Trusts was $300,000.

LICENSE ARRANGEMENTS AND LICENSEE TRANSACTIONS

The Company has a licensing agreement with Charles David of California
("Charles David"). Charles David is controlled by the father-in-law of Maurice
Marciano. The Marciano Trusts and Nathalie Marciano (the spouse of Maurice
Marciano) together own 50% of Charles David, and the remaining 50% is owned by
the father-in-law of Maurice Marciano. The license agreement grants Charles
David the rights to manufacture worldwide and distribute worldwide (except Japan
and certain European countries) men's, women's and some children's leather and
rubber footwear, excluding athletic footwear, which bear the Guess trademark.
The license also includes related shoe care products and accessories. Gross
royalties earned by the Company under such license agreement for the fiscal year
ended December 31, 1996, 1995 and 1994 was $1.5 million, $1.9 million and $1.6
million, respectively. Additionally, the Company purchased $6.0 million, $6.4
million and $4.8 million of product from Charles David for resale in the
Company's retail stores during the same respective periods.

On September 1, 1994, the Company entered into a licensing agreement with
California Sunshine Activewear, Inc. ("California Sunshine"), granting it the
rights to manufacture and distribute men's and women's activewear, which bear
the Guess trademark, in the United States. The Marciano Trusts together own 51%
of California Sunshine. Gross royalties earned by the Company under such license
agreement for the fiscal year ended December 31, 1996, 1995 and 1994 was
$742,000, $343,000 and $0, respectively. Additionally, the Company purchased
$1.4 million, $254,000 and $0 of product from California Sunshine for resale in
the Company's retail stores during the same respective periods.

Effective January 1, 1995, the Company entered into a licensing agreement
with Guess ? Italia, S.r.1. ("Guess Italia"), granting it the exclusive right in
Italy and non-exclusive rights in certain other countries within Europe to
manufacture and distribute men's and women's apparel, which bear the Guess
trademark. The Company and Guess Italia also entered a retail store license
agreement as of January 1, 1995, whereby Guess Italia was granted the
non-exclusive right to operate Guess stores in Italy. Prior to the IPO, Guess
Italia was owned 79% by the Company and 21% by Marciano International, a company
wholly owned by the Marciano Trusts. As part of the reorganization in connection
with the IPO Guess Italia became a wholly-owned subsidiary of the Company when
Marciano International was merged with and into the Company. Gross royalties
earned by the Company under such license agreement for the fiscal year ended
December 31, 1996 and 1995 was $766,000 and $480,000, respectively.
Additionally, the Company purchased $327,000, $511,000 and $0 of product from
Guess ? Italia and sold $89,000, $399,000 and $1.1 million of product to Guess
Italia for resale in Guess ? Italia's retail store and to other wholesale
customers during the fiscal years ended December 31, 1996, 1995 and 1994,
respectively. All inter company transactions were eliminated during
consolidation.

Effective December 9, 1992, the Company entered into a licensing agreement
with Nantucket Industries ("Nantucket"), granting it the rights to manufacture
and distribute women's intimate apparel within the United States, which bear the
Guess trademark. Nantucket is owned 13.0% by the Company and

34

GUESS ?, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

YEARS ENDED DECEMBER 31, 1996 AND 1995

(8) RELATED PARTY TRANSACTIONS (CONTINUED)
7.6% by the Marciano Trusts. During the fiscal years ended December 31, 1996,
1995 and 1994, the Company 1) recorded gross royalty income of $327,000,
$264,000 and $214,000, respectively, 2) purchased $416,000, $505,000 and
$201,000, respectively, of product for resale in its retail stores, and 3)
recorded equity losses of $349,000, $98,000 and $19,000, respectively.

Effective December 1, 1989, the Company entered into a licensing agreement
with Strandel, Inc. ("Strandel"), granting it the rights to manufacture and
distribute Men's, Women's and Children's Knits and woven sportswear in Canada,
which bear the Guess trademark. Strandel is owned 20% by the Company. During the
fiscal years ended December 31, 1996, 1995 and 1994, the Company 1) recorded
gross royalty income of $1.8 million, $1.9 million and $1.6 million,
respectively, 2) purchased $0, $0 and $782,000, respectively, of product for
resale in its retail stores, and 3) recorded equity income (losses) of
($127,000), $215,000 and $62,000, respectively.

On January 1, 1997, the Company acquired from Pour Le Bebe, Inc., a
California Corporation, a 24.75% limited partnership interest in S.W.P.I., Ltd.,
a California Limited Partnership, as payment in lieu of unpaid license fees due
November 1, 1996. The Marciano Trusts have a 75.25% ownership interest in
S.W.P.I., Ltd.. The 24.75% limited partnership in S.W.P.I., Ltd. was valued at
$1.4 million by the Company, based upon the net asset value of the real estate
limited partnership.

PURCHASING AGENCY AGREEMENT

On May 3, 1994, the Company entered into an agreement with Ranche, Ltd.
("Ranche"), now a wholly owned subsidiary of Guess Europe, BV ("GEBV") to serve
as a non-exclusive buying agent for the Company in Hong Kong, which agreement
was terminated in the first quarter of 1996 when certain of Ranche's assets were
transferred to Newtimes Guess, Ltd, a Hong Kong corporation ("Newtimes") in
which the Company and the Marciano Trusts then held indirect ownership interests
of 25% and 25%, respectively. In connection with the IPO, the Marciano Trusts'
indirect interest in Newtimes was transferred to the Company. Ranche earned
commissions of $192,000 during the period in 1996 in which the agreement was
still active. In addition, Ranche operates under a licensing arrangement to
distribute product to authorized distributors. Gross royalties earned by the
Company under such license for the fiscal years ended December 31, 1996, 1995
and 1994 were $163,000, $240,000 and $0, respectively.

In February 1996, the Company entered into a buying agency agreement with
Newtimes. Pursuant to such agreement, the Company pays Newtimes a commission
based upon the cost of finished garments purchased for the Company by Newtimes.
Commissions earned by Newtimes during the fiscal year ended December 31, 1996
was $624,000. Additionally, the Company recorded $190,000 in equity losses
during 1996.

LEASES

The Company leases manufacturing, warehouse and administrative facilities
from partnerships affiliated with the Principal Stockholders. The leases in
effect at December 31, 1996 will expire through July 2008. Aggregate lease
payments under leases in effect for the fiscal year ended December 31, 1996,
1995 and 1994 were $2.9 million, $2.8 million and $2.6 million, respectively.

The Company currently subleases, on a month-to-month basis, a portion of a
remote Guess facility to Southwest Pacific Investment Company ("SWPI"), an
entity owned by the Marciano Trusts. Monthly rental

35

GUESS ?, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

YEARS ENDED DECEMBER 31, 1996 AND 1995

(8) RELATED PARTY TRANSACTIONS (CONTINUED)
charges are $12,000, effective August 1, 1996. An aggregate of $57,000 was paid
by SWPI to the Company during 1996.

(9) COMMITMENTS AND CONTINGENCIES

LEASES

The Company leases its showrooms and retail store locations under operating
lease agreements expiring on various dates through January 2012. Some of these
leases require the Company to make periodic payments for property taxes and
common area operating expenses. Certain leases include rent abatements and
scheduled rent escalations, for which the effects are being amortized and
recorded over the lease term. The Company also leases some of its equipment
under operating lease agreements expiring at various dates through July 1999.

Future minimum rental payments under noncancelable operating leases at
December 31, 1996 are as follows:

YEAR ENDING DECEMBER 31, (IN THOUSANDS):
- ----------------------------------------------------------------------------------

1997..............................................................................     $22,503
1998..............................................................................      21,026
1999..............................................................................      19,693
2000..............................................................................      18,923
2001..............................................................................      15,205
Thereafter........................................................................      72,349
----------
$169,699
----------
----------

Rental expense for all operating leases during the years ended December 31,
1996, 1995, and 1994 aggregated $26.4 million, $21.9 million, and $16.3 million,
respectively.

INCENTIVE BONUSES

Certain officers of the Company are entitled to incentive bonuses based on
the Company's profits.

LITIGATION

On August 7, 1996, a class action complaint naming the Company and certain
of its independent contractors was filed in the Superior Court of the State of
California for the County of Los Angeles, styled as Brenda Figueroa et. al. v.
Guess ?, Inc. et. al. (Dist. Ct. Case No. 96-5484HLH(JGx)) (the "Federal Case").
The complaint, which sought damages and injunctive relief, alleged, among other
things, that the defendants' practices with respect to the employees of such
independent contractors have violated various federal and state labor laws and
regulations. Certain components of the complaint have been remanded to state
court (LASC Case No. BC 155 165) (the "State Case"), resulting in two litigation
cases. In the Federal Case, plaintiffs claim that the Company's independent
contractors violated the Federal Fair Labor Standards Act ("FLSA") by failing to
pay minimum wage and overtime in accordance with the FLSA. In the State Case,
also a purported class action, plaintiffs assert claims for violation of state
wage and hour laws, wrongful discharge, breach of contract, and certain counts
of negligence arising out of the Company's

36

GUESS ?, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

YEARS ENDED DECEMBER 31, 1996 AND 1995

(9) COMMITMENTS AND CONTINGENCIES (CONTINUED)
relationship with its independent contractors and actions taken by the Company's
independent contractors with respect to the employees of such independent
contractors. In the State Action, plaintiffs allege that the Company breached
its agreement with the United States Department of Labor regarding the
monitoring of its independent contractors. In both actions, plaintiffs contend
that the Company is liable for its contractors' violations because it is a
"joint employer" with its independent contractors. The trial in the Federal Case
is currently set for December 1997.

The Union of Needletrades, Industrial & Textile Employees ("UNITE") has
filed with the National Labor Relations Board ("NLRB") several charges that the
Company has engaged and is engaging in unfair labor practices within the meaning
of the National Labor Relations Act. In cases No. 21-CA-31524, No. 21-CA-31565
and No. 21-CA-31648, UNITE has alleged that the senior management of the Company
unlawfully discharged certain employees because of certain union activities and
unlawfully threatened and coerced employees in the exercise of their rights
under Section 7 of the National Labor Relations Act. In an agreement with the
NLRB, the Company agreed to reinstate all of the employees allegedly unlawfully
discharged because of their union activities and agreed to pay them back pay
which aggregates appoximately $70,000. The settlement also provides for the
posting of a notice for 60 days at the Company stating that the matter has been
settled and that the Company agrees to comply with the National Labor Relations
Act. The notice has a non-admission clause concerning liability. Prior to the
payment of the back wages, UNITE filed an additional unfair labor practice
charge with the NLRB (No. 21-CA-31807). In this charge, the union alleges that
the Company has unlawfully threatend to move its production to Mexico and
elsewhere outside the United States thus unlawfully interfering with the
organizing campaign at the Company's headquarters, and has unlawfully ceased
doing business with independent contractors at which ongoing union organizing
campaigns are being conducted. This charge also alleges that the Company has
violated the settlement agreement in cases No. 21-CA-31524, No. 21-CA-31565 and
No. 21-CA-31648 by making such threats. Charge No. 21-CA-31807 is currently
under investigation by the NLRB. Pending a decision by the NLRB regarding the
allegation that the Company breached the settlement agreement reached in cases
No. 21-CA-31524, No. 21-CA-31565 and No. 21-CA-31648, the Company has withheld
paying the approximately $70,000 in back wages agreed to in its above described
settlement with the NLRB and has not posted notice of the settlement agreement.
The subject employees, however, have been reinstated and continue to be employed
by the Company. In a separate action (No. 31-CA-22380), UNITE is seeking fees
and costs for having to defend certain causes of actions filed against UNITE by
Guess. The Company believes that the outcome of one or more of these cases could
have a material adverse effect on the Company's financial condition and results
of operations.

The Company is also a party to various other claims, complaints and other
legal actions that have arisen in the ordinary course of business from time to
time. The Company believes that the outcome of such pending legal proceedings,
in the aggregate, will not have a material adverse effect on the Company's
financial condition or results of operations.

(10) SAVINGS PLAN

On January 1, 1992, the Company established the Guess ? Inc. Savings Plan
(the Plan) under Section 401(k) of the Internal Revenue Code. Under the Plan,
employees ("associates") may contribute up to 15% of their compensation per year
subject to the elective limits as defined by IRS guidelines and the Company may
make matching contributions in amounts not to exceed 1.5% of the associates'
annual

37

GUESS ?, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

YEARS ENDED DECEMBER 31, 1996 AND 1995

(10) SAVINGS PLAN (CONTINUED)
compensation. The Company's contributions to the Plan during the years ended
December 31, 1996, 1995 and 1994 aggregated $284,000, $261,000 and $213,000,
respectively.

(11) QUARTERLY INFORMATION (UNAUDITED)

The following is a summary of the unaudited quarterly financial information
for the years ended December 31, 1996 and 1995 (in thousands):

FIRST       SECOND      THIRD       FOURTH
YEAR ENDED DECEMBER 31, 1996                                        QUARTER     QUARTER     QUARTER     QUARTER
- -----------------------------------------------------------------  ----------  ----------  ----------  ----------

Net revenue......................................................  $  134,898  $  122,508  $  154,498  $  139,258
Gross profit.....................................................      64,419      55,874      70,214      62,024
Earnings before income taxes.....................................      25,318      11,149      26,263      19,837
Net earnings.....................................................      24,047      10,822      20,338      11,534

Supplemental pro forma earnings:
Earnings before income taxes...................................      25,318      11,149      26,263      19,837
Net earnings...................................................      15,267       6,723      15,626      11,710

YEAR ENDED DECEMBER 31, 1995
- -----------------------------------------------------------------

Net revenue......................................................  $  124,903  $  104,749  $  133,129  $  123,952
Gross profit.....................................................      59,636      49,207      59,148      56,600
Earnings before income taxes.....................................      21,271      12,998      17,322      15,223
Net earnings.....................................................      20,712      12,282      16,484      14,441

Supplemental pro forma earnings:
Earnings before income taxes...................................      21,271      12,998      17,322      15,223
Net earnings...................................................      12,763       7,798      10,395       9,132

The supplemental pro forma earnings presents net earnings, based on
historical earnings before income taxes, as if the Company was taxed as a C
corporation rather than an S corporation for all periods presented.

(12) SEGMENT INFORMATION

Net revenue is summarized as follows for the years ended December 31, 1996,
1995 and 1994:

1996        1995        1994
----------  ----------  ----------

Domestic.....................................................................  $  484,358  $  453,344  $  527,296
International................................................................      66,804      33,389      20,516
----------  ----------  ----------
$  551,162  $  486,733  $  547,812
----------  ----------  ----------
----------  ----------  ----------

(13) STOCK OPTION PLAN

On July 30, 1996, the Board of Directors adopted the Guess ?, Inc. 1996
Non-Employee Directors' Stock Option Plan pursuant to which the Board of
Directors may grant stock options to non-employee directors. The Plan authorizes
grants of options to purchase up to 500,000 shares of authorized but

38

GUESS ?, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

YEARS ENDED DECEMBER 31, 1996 AND 1995

(13) STOCK OPTION PLAN (CONTINUED)
unissued common stock. Stock options are granted with an exercise price equal to
the stock's fair market value at the date of grant. As of December 31, 1996,
there were no options issued under this plan.

On July 30, 1996, the Board of Directors adopted the Guess ?, Inc. 1996
Equity Incentive Plan (the "Plan") pursuant to which the Board of Directors may
grant stock options to officers, key associates and consultants. The Plan
authorizes grants of options to purchase up to 4,500,000 shares of authorized
but unissued common stock. Stock options are granted with an exercise price
equal to the stock's fair market value at the date of grant. Stock options have
ten year terms (five years in the case of an incentive stock option granted to a
ten percent shareholder) and vest and become fully exercisable after varying
time periods from the date of grant based on length of service or specified
performance goals.

At December 31, 1996, there were 3,248,895 additional shares available for
grant under the Plan. The per share weighted-average fair value of stock options
granted during 1996 was $5.50 on the date of grant using the Black Scholes
option-pricing model with the following weighted-average assumptions: 1996
expected dividend yield 0.0%, risk-free interest rate of 6.57%, and expected
life of four years.

The Company applies APB Opinion No. 25 in accounting for its Plan and,
accordingly, no compensation cost has been recognized for its stock options in
the financial statements. Had the Company determined compensation based on the
fair value at the grant date for its stock options under SFAS No. 123, the
Company's pro forma net earnings and net earnings per share for the year ended
December 31, 1996 would have been reduced to the pro forma amounts indicated
below (in thousands, except per share data):

Pro forma net earnings.............................................  $  48,287
Pro forma earnings per share.......................................  $    1.15

Pro forma net earnings reflects only options granted since the inception of
the Plan on July 30, 1996. The full impact of calculating compensation cost for
stock options under SFAS No. 123 is not reflected in the pro forma net earnings
amounts presented above because compensation cost is reflected over the options'
vesting period of four years.

Stock option activity during the period indicated is as follows:

NUMBER OF   WEIGHTED-AVERAGE
SHARES     EXERCISE PRICE
----------  -----------------

Balance at December 31, 1995...................................           0      $    0.00
Granted....................................................   1,287,105          17.74
Exercised..................................................           0           0.00
Forfeited..................................................     (36,000)         18.00
Expired....................................................           0           0.00
----------         ------
Balance at December 31, 1996...................................   1,251,105      $   17.73
----------         ------
----------         ------

At December 31, 1996, the weighted average exercise price and
weighted-average remaining contractual life of outstanding options was $17.73
and 9.63 years, respectively.

At December 31, 1996, the number of options exercisable was 35,568, and the
weighted-average exercise price of those options was $18.00.

39

GUESS ?, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

YEARS ENDED DECEMBER 31, 1996 AND 1995

(14) ACQUISITION

On December 4, 1996, the Company entered into an Asset Purchase Agreement in
which the Company purchased the rights, title and interest to the existing
License Agreement between the Company and Sweatshirt Apparel U.S.A., Inc.
("Sweatshirt Apparel"), for the manufacturing and distribution rights for Guess
Ladies Knitwear products. In connection with the Asset Purchase Agreement, the
existing License Agreement between the Company and Sweatshirt Apparel was
terminated on December 31, 1996. The aggregate purchase price was $10.0 million,
of which $5.0 million was paid in cash prior to December 31, 1996, and $2.0
million was paid in cash and $3.0 million was settled in the form of a stock
issuance made on January 2, 1997 (216,216 shares at $13.87 per share). In
addition, one of the Principal Stockholders of Sweatshirt Apparel will receive
an earnout of no less than $.5 million for each of five years, commencing in
1997.

(15) REORGANIZATION CHARGE

In the second quarter of 1996, the Company recorded a provision of $3.6
million for certain non-recurring charges relating to the write-down to net
realizable value of operating assets associated with the (i) disposal of two
currently active remote warehouse and production facilities, resulting in a net
book loss of $2.4 million, and (ii) the net book loss of $1.2 million incurred
by the Company in connection with the sale of one of its aircraft.

The write-down to net realizable value related to the disposal of the
warehouse and production facilities of $2.4 million is based upon the asset
carrying value of $5.7 million less its appraisal value of $3.9 million and
includes a provision of $600,000 for estimated disposal costs, comprised
primarily of commissions, title fees and other customary real estate closing
costs. The write-down related to the sale of the aircraft of $1.2 million is
based upon the asset carrying value of $7.2 million less the sale price of $6.0
million. The estimated costs of disposal of the aircraft were immaterial. The
above assets are included in property and equipment at December 31, 1996 and the
Company has not recorded any depreciation expense on these assets from the date
the dispositions were contemplated.

The Company has not recorded the Charge related to the warehouse and
production facilities to be disposed of as a cumulative effect from the
implementation of SFAS No. 121 recorded net of tax, because the effect of such
implementation is immaterial to the consolidated financial statements.

(16) SUBSEQUENT EVENT

In March 1997, the Company signed a letter of intent to form a joint venture
in Europe with the Fingen Group, a leading European apparel manufacturer and
distributor owned by the Fratini family. The new joint venture, Maco Apparel
S.r.1., will enter into a licensing agreement with the Company for the
manufacture and sale of its jeanswear lines throughout Europe and will purchase
certain of the Company's operations in Italy. Maco Apparel S.r.1. will produce a
full collection of casual lifestyle jeanswear apparel, including men's and
women's jeans. The Company will continue to design the collections to be sold in
the European market.

40

SCHEDULE II
GUESS ?, INC. & SUBSIDIARIES
VALUATION AND QUALIFYING ACCOUNTS
YEARS ENDED DECEMBER 31, 1996, 1995, AND 1994
(IN THOUSANDS)

BALANCE AT   CHARGED TO   DEDUCTIONS   BALANCE AT
BEGINNING    COSTS AND       AND        END OF
DESCRIPTION                                                          OF PERIOD    EXPENSES    WRITE-OFFS     PERIOD
- ------------------------------------------------------------------  -----------  -----------  -----------  -----------

As of December 31, 1994
Allowance for obsolescence......................................       1,000        1,400       --            2,400
Accounts receivable.............................................      15,906          758       (6,273)      10,391

As of December 31, 1995
Allowance for obsolescence......................................       2,400        2,352         (392)       4,360
Accounts receivable.............................................      10,391        5,147       (4,689)      10,849

As of December 31, 1996
Allowance for obsolescence......................................       4,360         (218)        (885)       3,257
Accounts receivable.............................................      10,849        4,280       (5,392)       9,737

41

SIGNATURES

Pursuant to the requirements of Section 13 or 15 (d) of the Securities Act
of 1934, the Registrant has duly caused this report to be signed on its behalf
by the undersigned, thereunto duly authorized, in the City of Los Angeles, State
of California, on March 24, 1997.

GUESS ?, INC.

By:        /s/ MAURICE MARCIANO

-----------------------------------
Maurice Marciano

Title: CHAIRMAN OF THE BOARD, CHIEF
EXECUTIVE
OFFICER AND DIRECTOR

Pursuant to the requirements of the Securities Act of 1934, this report has
been signed by the following persons in the capacities and on the dates
indicated.

Chairman of the Board, Chief
/s/ MAURICE MARCIANO                Executive Officer and
- -------------------------------------------     Director (Principal           March 24, 1997
Maurice Marciano                  Executive Officer)

/s/ PAUL MARCIANO
- -------------------------------------------   President, Chief Operating      March 24, 1997
Paul Marciano                    Officer and Director

/s/ ARMAND MARCIANO               Senior Executive Vice
- -------------------------------------------     President, Secretary and      March 24, 1997
Armand Marciano                   Director

Executive Vice President and
/s/ ROGER WILLIAMS                 Chief Financial Officer
- -------------------------------------------     (Principal Financial Officer  March 24, 1997
Roger Williams                   and Chief Accounting
Officer)

Aldo Papone                   Director

42

SUPPLEMENTAL INFORMATION TO BE FURNISHED WITH REPORTS FILED PURSUANT TO SECTION
15(d) OF THE ACT BY REGISTRANTS WHICH HAVE NOT REGISTERED SECURITIES PURSUANT TO
SECTION 12 OF THE ACT.

ITEM 16.  EXHIBITS AND FINANCIAL STATEMENT SCHEDULES

(A) EXHIBITS

EXHIBIT
NUMBER                                                  DESCRIPTION
- ---------  -------------------------------------------------------------------------------------------------------

3.1.  Restated Certificate of Incorporation of the Registrant.(5)
3.2.  Bylaws of the Registrant.(5)
4.1.  Indenture, dated August 23, 1993, between the Registrant and First Trust National Association, as
Trustee.(1)
4.2.  First Supplemental Indenture, dated August 23, 1993, between the Registrant and First Trust National
Association, as Trustee.(1)
4.3.  Specimen stock certificate.(5)
*10.1.  Amended and Restated Stockholders' Agreement.
10.2.  Letter Agreement, dated July 9, 1993, among the Registrant, Georges Marciano, Maurice Marciano, Paul
Marciano, Armand Marciano and trusts for their respective benefit.(1)
10.3.  Employment Agreement, dated March 1, 1994, between the Registrant and Roger A. Williams.(2)
10.4.  Letter Agreement, dated January 22, 1996, between the Registrant and Andrea Weiss.(5)
10.5.  Employment Agreement, dated as of May 14, 1996, between the Registrant and Francis K. Duane.(5)
10.6.  General Release and Indemnity Agreement, dated August 23, 1993, among Maurice, Paul and Armand
Marciano, their respective trusts, the Registrant, Georges Marciano and his trust.(1)
10.7.  General Release Agreement, dated August 23, 1993, among Maurice, Paul and Armand Marciano, their
respective trusts, the Registrant, and Georges Marciano and his trust.(1)
10.8.  Cancellation and Reassignment Agreement, dated August 23, 1993, among the Registrant, MSKMarciano,
Inc., Georges Marciano, Inc. and Georges Marciano.(1)
10.9.  Alameda Lease, dated July 29, 1992, among the Registrant and 1444 Partners, Ltd.(1)
10.10.  Revolving Credit Agreement, dated as of December 20, 1993, between the Registrant and The First
National Bank of Boston, as agent, and Sanwa Bank California, as co-agent, and the group of financial
institution party thereto (the "Revolving Credit Agreement").(2)
10.11.  Security Agreement, dated December 20, 1993, between the Registrant and the First National Bank of
Boston, as agent for itself and for certain lenders.(2)
10.12.  Amendment No. 1 to the Revolving Credit Agreement, dated January 20, 1994, among the parties
thereto.(3)
10.13.  Amendment No. 2 to the Revolving Credit Agreement, dated April 1, 1994, among the parties thereto.(3)
10.14.  Amendment No. 3 to the Revolving Credit Agreement, dated July 18, 1994, among the parties thereto.(3)
10.15.  Amendment No. 4 to the Revolving Credit Agreement, dated October 24, 1994, among the parties
thereto.(3)
10.16.  Amendment No. 5 to the Revolving Credit Agreement, dated February 13, 1995, among the parties
thereto.(4)

43

ITEM 16.  EXHIBITS AND FINANCIAL STATEMENT SCHEDULES (CONTINUED)

EXHIBIT
NUMBER                                                  DESCRIPTION
- ---------  -------------------------------------------------------------------------------------------------------

10.17.  Amendment No. 6 to the Revolving Credit Agreement, dated September 14, 1995, among the parties
thereto.(4)
10.18.  Amendment No. 7 to the Revolving Credit Agreement, dated December 22, 1995, among the parties
thereto.(4)
10.19.  Amendment No. 8 to the Revolving Credit Agreement, dated February 13, 1996, among the parties
thereto.(5)
*10.20.  Amended and Restated Revolving Credit Agreement, dated as of March 28, 1997 among the parties thereto.
(+ Exhibits A-K)
10.21.  Agreement as to Consignment of Documents and Related Matters, dated December 22, 1995, between the
Registrant and The First National Bank of Boston.(4)
10.22.  1996 Equity Incentive Plan.(5)
10.23.  1996 Non-Employee Directors' Stock Option Plan.(5)
10.24.  Annual Incentive Plan.(5)
*10.25.  Employment Agreement between the Regristrant and Maurice Marciano.
*10.26.  Employment Agreement between the Regristrant and Paul Marciano.
*10.27.  Employment Agreement between the Regristrant and Armand Marciano.
*10.28.  Registration Rights Agreement among the Registrant and certain stockholders of the Registrant.
*10.29.  Indemnification Agreement among the Registrant and certain stockholders of the Registrant.
*10.30.  Indemnification Agreements between the Registrant and certain executives and directors.
21.1.  List of Subsidiaries.(5)
*27.1.  Financial Data Schedule.

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

*  Filed herewith

(1) Incorporated by reference from the Registration Statement of Form S-1
(Registration No. 33-69236) originally filed by the Company on September 22,
1993.

(2) Incorporated by reference from the Company's Quarterly Report on Form 10-Q
for the quarter ended March 27, 1994.

(3) Incorporated by reference from the Company's Annual Report on Form 10-K for
the year ended December 31, 1994.

(4) Incorporated by reference from the Company's Annual Report on Form 10-K for
the year ended December 31, 1995.

(5) Incorporated by reference from the Registration Statement on Form S-1
(Registration No. 333-4419) filed by the Company on June 24, 1996, as
amended.

(B) FINANCIAL STATEMENT SCHEDULE:

DESCRIPTION
SCHEDULE II                 VALUATION AND QUALIFYING ACCOUNTANTS

44

*10.1.  Amended and Restated Stockholders' Agreement.
- -------------------------------------------------------------------------------
AMENDED AND RESTATED
SHAREHOLDERS' AGREEMENT

THIS AMENDED AND RESTATED SHAREHOLDERS' AGREEMENT is entered into as 
of August 8, 1996 (this "Restated Agreement"), by and among Maurice Marciano, 
as Trustee of the Maurice Marciano Trust (1995 Restatement), Paul Marciano, 
as Trustee of the Paul Marciano Trust dated February 20, 1986, and Armand 
Marciano, as Trustee of the Armand Marciano Trust dated February 20, 1986, 
(collectively, the "Initial Stockholders") and Guess ?, Inc., a Delaware 
corporation, having its principal office and place of business at 1444 South 
Alameda Street, Los Angeles, California 90021 (hereinafter referred to as the 
"Corporation").

WHEREAS, the Initial Stockholders are currently the owners of 
32,026,739 shares of the issued and outstanding shares (the "Shares") of the 
Corporation's common stock, par value $.01 per share (the "Common Stock"), 
and, after the proposed offering of 7,000,000 shares of Common Stock by the 
Corporation (the "Offering"), the Initial Stockholders will continue to own 
approximately 75% of the Corporation's issued and outstanding capital stock;

WHEREAS, the Initial Stockholders and the Corporation are parties to a 
Restated Shareholders' Agreement dated as of November 12, 1993, as amended to 
date (the "Shareholders' Agreement"), which governs, among other issues, the 
management and ownership of the shares of Common Stock owned by the 
Stockholders; 

WHEREAS, the Stockholders and the Corporation desire to further amend 
and restate the Shareholders' Agreement in its entirety and to add additional 
parties to this Restated Agreement as Stockholder; and

WHEREAS, the Maurice Marciano 1996 Grantor Retained Annuity Trust, the 
Paul Marciano 1996 Grantor Retained Annuity Trust and the Armand Marciano 
1996 Grantor Retained Annuity Trust (collectively, the "Transferee 
Stockholders" and, together with the Initial Stockholders, being referred to 
herein, collectively, as the "Stockholders") collectively hold the remaining 
3,655,080 shares or approximately 8.6% of the Common Stock outstanding after 
the Offering and desire to become parties to this Restated Agreement, and the 
Initial Stockholders and the Corporation are willing to add them as parties 
thereto.

1

NOW, THEREFORE, in consideration of the premises and the mutual 
covenants set forth herein, the parties hereto agree that the Shareholders' 
Agreement is hereby further amended and restated to read in its entirety as 
follows:

1.  TERM OF AGREEMENT

This Restated Agreement shall be effective from the date hereof until 
the earliest to occur of any of the following:

(i)  The cessation for a substantial period of time of the 
Corporation's business;

(ii)  The liquidation or dissolution of the Corporation;

(iii)  The entry of a decree or order by a court having jurisdiction 
adjudging the Corporation bankrupt or insolvent or seeking reorganization,
arrangement, adjustment or composition of or in respect of the 
Corporation, or appointing a custodian, receiver, liquidator, trustee (or 
other similar official) of the Corporation or ordering the winding up or 
the liquidation of its affairs and the continuance of such decree or order
unstayed and in effect for a period of 60 consecutive days;

(iv) A permitted transfer of all of the Shares by the Stockholders;

(v)  Only one Stockholder shall own shares of Common Stock or other 
voting securities of the Corporation; or

(vi) The aggregate amount of Common Stock held by the 
Stockholders shall constitute less than 10% of the issued and outstanding 
Common Stock.

2.  VOTING AGREEMENT

Each of the Stockholders hereby covenants and agrees that, so long as 
it is a stockholder of the Corporation, he will vote (or cause the voting of) 
the shares of Common Stock of the Corporation then owned by it (or any such 
shares which he has the right to vote, pursuant to any agreement or proxy), 
in favor of the election of each of Messrs. Maurice Marciano, Paul Marciano 
and Armand Marciano, in their individual capacities (collectively, the 
"Individuals") (or, if any of them shall decline to serve, the designee (if 
any) of such person, if such designee shall be reasonably acceptable to the 
other Individuals) to the Board of Directors of the Corporation (the 
"Board").  In the event of the death or disability of any of the Individuals, 
the executor, conservator or lawful heir of such person shall assume such 
person's right to designate a Director (including such executor, conservator 
or lawful heir) for election as aforesaid.  

2

3.   LEGENDS ON CERTIFICATES

The certificates evidencing the shares of Common Stock held by the 
Stockholders shall bear any legends required by federal or state securities 
law and the following legend required by Section 202(a) of the Delaware 
General Corporation Law (the "DGCL"):

"The shares represented by this Certificate may not be assigned, sold,
transferred, hypothecated, or otherwise disposed of, except in accordance
with the Amended and Restated Shareholders' Agreement dated as of August 
8, 1996, which is on file at the office of the issuer."

4.   RESTRICTIONS ON DISPOSITION

A.  Subject to Subsection E below, no Stockholder shall voluntarily 
transfer, sell, assign, pledge, encumber, grant any option with respect to, 
or otherwise create any legal or equitable interest in any shares of Common 
Stock owned by it except pursuant to a sale of all or any part of such shares 
of Common Stock for cash, notes or Public Equity Securities (as hereinafter 
defined), or a combination of the three, made in accordance with Subsection B 
below. As used herein, "Public Equity Securities" shall mean any securities 
which are either listed on a national securities exchange or are traded on 
the National Association of Securities Dealers Automated Quotation System and 
which, in the hands of the Stockholder or Stockholders receiving them in 
payment for any Shares, will be (i) freely transferable without registration 
under the Securities Act of 1933, as amended, or any applicable state 
securities law, and (ii) free and clear of any liens, claims, right to 
purchase or sell or other encumbrance of any kind.

B.  If any Stockholder shall receive a bona fide offer (an "Offer") to 
purchase any of the shares of Common Stock owned by it (the "Offered Shares") 
for cash, notes or Public Equity Securities, or a combination thereof, that 
Stockholder (the "Offering Stockholder") shall first offer in writing (a 
"Sale Notice") to sell the Offered Shares to those Initial Stockholders not 
selling Offered Shares and the Corporation (collectively, the "Offerees") on 
the same terms and conditions as are contained in the Offer; provided, 
however, that the date for consummation of such sale to the Offerees (the 
"Offeree Closing Date") shall be no less than 20 nor more than 30 days after 
the date of receipt of the Sale Notice by the Offerees; and provided further, 
that such Offeree shall be entitled to substitute any combination of cash and 
Public Equity Securities for the cash and Public Equity Securities components 
of the Offer so long as on the Offeree Closing Date the total consideration 
in the form of cash and Public Equity Securities offered by such Offerees is 
equal to the total consideration in the form of cash and Public Equity 
Securities in the Offer.  Each Offeree shall have the right to purchase all 
(but not less than all) of the Offered Shares and shall exercise such right 
by tendering written notice thereof to the Offering Stockholder within 

3

30 days of receipt of the Sale Notice.  If more than one Offeree exercises 
its right to purchase the Offered Shares (each, a "Purchaser"), each such 
Purchaser shall be entitled to purchase Offered Shares in the following 
priority:  (x) first, to the Offerees that are Initial Stockholders, each of 
whom shall be entitled to purchase the number of the Offered Shares which 
bears the same relationship to the total number of Offered Shares as the 
number of shares of Common Stock owned by such Initial Stockholder bears to 
the total number of shares of Common Stock owned by all of the Offerees that 
are Initial Stockholders, and (y) second, to the Corporation, to the extent 
that the Initial Stockholders do not elect to purchase all of the Offered 
Shares. 

To the extent that either the Initial Stockholders or the Corporation 
do not purchase the Offered Shares on or before the Offeree Closing Date, 
then the Offering Stockholder may sell such unpurchased Offered Shares as 
above provided to the third party pursuant to the Offer at any time within 
three months after the expiration of the 30 day period provided above, but 
only on terms and conditions no less favorable to the Offering Stockholder 
than those specified in the Offer.

C.  For purposes of Subsection B above, all offers to the Offerees by 
the Offering Stockholder shall state the entire terms of such offer, 
including, without limitation, purchase price, form of consideration and 
financing terms and shall include a copy of the Offer made by the third party.

D.  In the event that any shares of Common Stock owned by any 
Stockholder who is a party hereto shall be sold upon execution sale or shall 
otherwise be transferred pursuant to legal process or shall be transferred 
pursuant to an agreement entered into in connection with a divorce or 
separation between the beneficial owner of such shares and such person's 
spouse, or any arrangement with creditors of any Stockholder, the beneficial 
owner of shares of Common Stock held by such Stockholder or the Corporation 
or any other legal proceeding, the other Stockholders and the Corporation, in 
accordance with the procedures established in Section B above, shall have an 
option to purchase the shares so sold or transferred from the transferee at 
the same price paid by the transferee for such shares by written notice given 
to the transferee for such shares, by written notice given to such transferee 
within 30 days after the execution sale or such other transfer.  In the event 
that no price is paid by the transferee, the other Stockholders and the 
Corporation shall have the option to purchase such shares, in accordance with 
the procedures established in Section B above, at the appraised fair market 
value of such shares, as determined by an independent appraiser of recognized 
standing selected by the Corporation.  Until the expiration of the 30-day 
period referred to above, such transferee shall be obligated to vote the 
shares of Common Stock transferred to it in accordance with the terms of this 
Restated Agreement.

E.  Nothing in this Section shall prohibit the transfer of shares, (1) 
on the death of the settlor of any Stockholder, (a) by his will or 

4

other instrument disposing of his property on death (including an instrument 
creating any Stockholder), (b) pursuant to the laws of descent and 
distribution applicable to his estate, (2) by any Stockholder to its settlor 
(identified in the instrument creating the Stockholder, as in effect on the 
date hereof) or to any one or more of the lineal descendants of such settlor, 
or to any trust for the exclusive benefit of any such lineal descendants; 
provided, that any such transfer in trust shall not be prohibited solely 
because the terms of such trust provide a remainder interest to or for the 
benefit of one or more persons who is not a lineal descendant of the settlor, 
so long as such interest is payable only in the event that neither such 
settlor nor any such lineal descendant of the settlor is then living or (3) 
in connection with a registered offering of shares of Common Stock by any 
Stockholder pursuant to the Registration Rights Agreement dated August __, 
1996 among the Stockholders and the Corporation.  Any successor or transferee 
who receives shares pursuant to an event described in clause (1) or (2) above 
shall, as a condition of such transfer, enter into an agreement to be bound 
by the provisions of this Restated Agreement in its entirety, shall be deemed 
to be a "Stockholder" hereunder and, for purposes of this subsection, if an 
individual, shall be deemed to be the "settlor of a Stockholder."  

5.   ARBITRATION OF DISPUTES

Any controversy or claim arising out of or relating to this Restated 
Agreement or the breach thereof shall be settled by submission to binding 
arbitration at the request of any party to such controversy or claim.  In 
such event, arbitration shall be conducted before a single Primary Arbitrator 
in the State of California, County of Los Angeles.  Such Primary Arbitrator 
shall be selected by a panel of three arbitrators.  Each of the Initial 
Stockholders shall be entitled to select one member of such panel of 
arbitrators who is reasonably acceptable to the other Stockholders.  If the 
Stockholders are unable to agree on all the members of such panel of 
arbitrators, then the remaining arbitrators shall be selected by an 
administrator of the Judicial Arbitration and Mediation Services, Inc. from 
its panel of retired judges.  The Primary Arbitrator shall conduct such 
arbitration in accordance with the rules established by the panel of 
arbitrators.  Judgment may be entered on the arbitrator's award in any court 
having jurisdiction.  To the extent necessary to obtain any provisional 
relief of any dispute or controversy or clam arising under or in connection 
with this Restated Agreement, the parties hereto expressly consent to the 
jurisdiction of the state courts located in the State of California, County 
of Los Angeles, and consent that any service of process therefor may be made 
by personal service upon the parties hereto wherever each may be located, or 
by certified or registered mail directed to the parties hereto at each such 
party's respective address as set forth in Section 13 hereof. 

5

6.   BENEFIT

Except upon the occurrence of a termination event as provided in 
Section 1, this Restated Agreement shall be binding upon and shall operate 
for the benefit of the parties hereto, their respective successors and 
assigns. 

7.   INVALIDITY OF ANY PROVISION

The invalidity or unenforceability of any provision of this Restated 
Agreement shall not affect the other provisions hereof, and the Restated 
Agreement shall be construed in all respects as if such invalid or 
unenforceable provisions were omitted, provided that the parties shall 
negotiate in good faith to replace the invalid provision with a valid 
provision reflecting the same balance of economic interests.

8.   MODIFICATION OF AGREEMENT

No modification, amendment or waiver of any of the provisions of this 
Restated Agreement shall be valid unless made in writing and signed by the 
Corporation and each Stockholder or other party subject to this Restated 
Agreement from time to time.

9.   FURTHER ACTION

A.  The Corporation shall not register, and shall instruct any transfer 
agent for the Common Stock not to register, on the books of the Corporation 
any transfer, pledge or encumbrance of any shares of Common Stock subject to 
this Agreement, unless such transfer, pledge or encumbrance complies with 
terms of this Agreement and the Stockholders agree to provide the Corporation 
(or any such transfer agent) with such documents, including an opinion of 
counsel as to compliance with the terms of this Restated Agreement, as the 
Corporation (or any such transfer agent) may reasonably request.

B.  A copy of this Restated Agreement shall be made a part of the 
minutes of the Corporation.

10.   ATTORNEY'S FEES AND COSTS

If any action at law or in equity (including any arbitration proceeding 
under Section 5 above) is necessary to enforce or interpret the terms of this 
Restated Agreement, the prevailing party shall be entitled to reasonable 
attorneys' fees, costs, and necessary disbursements, in addition to any other 
relief to which he may be entitled.

6

11.   APPLICABLE LAW

This Restated Agreement shall be construed in accordance with the laws 
of the State of Delaware.

12.   ENTIRE AGREEMENT

This Restated Agreement supersedes all agreements as to the subject 
matter hereof among the Stockholders and the Corporation including in each 
case amendments thereto, previously executed by the Stockholders and the 
Corporation.  This Restated Agreement sets forth all of the provisions, 
covenants, agreements, conditions and undertakings between the parties hereto 
with respect to the subject matter hereof, and supersedes all prior and 
contemporaneous agreements and understandings express or implied, oral or 
written as to the subject matter hereof.  

13.   NOTICES

Unless otherwise specified herein, all notices, requests, demands and 
other communications to be given under this Restated Agreement shall be in 
writing and shall be deemed given if (i) delivered in person, or by United 
States mail, certified or registered, with return receipt requested, (ii) if 
sent by telex or facsimile transmission, with a copy mailed on the same day 
in the manner provided in (i) above, when transmitted and receipt is 
confirmed by telephone, or (iii) if otherwise actually delivered:

TO THE CORPORATION:      1444 South Alameda Street, Los Angeles, 
California 90021, with copies to each Director 
and each Stockholder as their names and
addresses appear on the records of the 
Corporation;

TO ANY STOCKHOLDER:      As the name and address of such Stockholder 
appears on the record of stockholders of the 
Corporation;

or at such other address as may have been furnished by such person in writing 
to the other parties.  Any such notice, demand or other communication shall 
be deemed to have been given on the date actually delivered or as of the date 
mailed, as the case may be.

[Signature pages follow]

7

IN WITNESS WHEREOF, the undersigned have caused this Restated Agreement 
to be executed as of the date first hereinabove written.

GUESS ?, INC.

By:   
Name:
Title:

STOCKHOLDERS

MAURICE MARCIANO TRUST
(1995 RESTATEMENT)

By:   
Maurice Marciano
Trustee

PAUL MARCIANO TRUST
DATED FEBRUARY 20, 1986

By:   
Paul Marciano
Trustee

ARMAND MARCIANO TRUST
DATED FEBRUARY 20, 1986

By:   
Armand Marciano
Trustee

MAURICE MARCIANO 1996 GRANTOR RETAINED 
ANNUITY TRUST

By:   
Paul Marciano
Co-Trustee

By:   

8

Gary W. Hamper
Co-Trustee

PAUL MARCIANO 1996 GRANTOR RETAINED 
ANNUITY TRUST

By:   
Maurice Marciano
Co-Trustee

By:   
Joseph H. Sugarman
Co-Trustee

ARMAND MARCIANO 1996 GRANTOR RETAINED 
ANNUITY TRUST

By:   
Maurice Marciano
Co-Trustee

By:   
Marc E. Petas
Co-Trustee

9

10.20.  Form of Amendment No. 9 to the Revolving Credit Agreement, among the 
parties thereto. 
- ------------------------------------------------------------------------------- 

AMENDED AND RESTATED

REVOLVING CREDIT AGREEMENT

GUESS ?, INC.

DATED AS OF MARCH 28, 1997

THE FIRST NATIONAL BANK OF BOSTON, AS AGENT

SANWA BANK CALIFORNIA, AS CO-AGENT

AND A GROUP OF FINANCIAL INSTITUTIONS PARTY  HERETO

TABLE OF CONTENTS

SECTION 1 - DEFINITIONS . . . . . . . . . . . . . . . . . . . . . . . . . . .  1
1.1.  Definitions . . . . . . . . . . . . . . . . . . . . . . . . . . .  1
1.2.  Accounting Terms. . . . . . . . . . . . . . . . . . . . . . . . . 13

SECTION 2 - DESCRIPTION OF CREDIT . . . . . . . . . . . . . . . . . . . . . . 13
2.1.  The Loans . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13
2.2.  Notice and Manner of Borrowing or Conversion of Loans . . . . . . 14
2.3.  Agent's Fee . . . . . . . . . . . . . . . . . . . . . . . . . . . 14
2.4.  Commitment Fee. . . . . . . . . . . . . . . . . . . . . . . . . . 14
2.5.  Reduction of Commitment Amount. . . . . . . . . . . . . . . . . . 15
2.6.  The Notes . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15
2.7.  Duration of Interest Periods. . . . . . . . . . . . . . . . . . . 15
2.8.  Interest Rates and Payments of Interest . . . . . . . . . . . . . 16
2.9.  Changed Circumstances . . . . . . . . . . . . . . . . . . . . . . 16
2.10. Increased Costs . . . . . . . . . . . . . . . . . . . . . . . . . 17
2.11. Capital Requirements. . . . . . . . . . . . . . . . . . . . . . . 18
2.12. Prepayments of the Loans. . . . . . . . . . . . . . . . . . . . . 18
2.13. Method of Payment . . . . . . . . . . . . . . . . . . . . . . . . 18
2.14. Overdue Payments and Default Rate . . . . . . . . . . . . . . . . 19
2.15. Payments Not at End of Interest Period. . . . . . . . . . . . . . 19
2.16. Issuance of Letters of Credit . . . . . . . . . . . . . . . . . . 20
2.17. Payments under Letters of Credit and Reimbursement by the 
Company . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20
2.18. Outstanding Letters of Credit and Event of Default. . . . . . . . 21
2.19. Computation of Interest and Fees. . . . . . . . . . . . . . . . . 21
2.20. Payment Free of Taxes . . . . . . . . . . . . . . . . . . . . . . 21
2.21. Provisions Applicable to Certain Payments . . . . . . . . . . . . 22

SECTION 3 - CONDITIONS OF LOANS . . . . . . . . . . . . . . . . . . . . . . . 23
3.1.  Conditions Precedent to Initial Loan. . . . . . . . . . . . . . . 23
3.2.  Conditions Precedent to all Loans . . . . . . . . . . . . . . . . 24

SECTION 4 - REPRESENTATIONS AND WARRANTIES. . . . . . . . . . . . . . . . . . 24
4.1.  Organization and Qualification. . . . . . . . . . . . . . . . . . 24
4.2.  Corporate Authority . . . . . . . . . . . . . . . . . . . . . . . 24
4.3.  Valid Obligations . . . . . . . . . . . . . . . . . . . . . . . . 25
4.4.  Consents or Approvals . . . . . . . . . . . . . . . . . . . . . . 25
4.5.  Title to Properties; Absence of Encumbrances. . . . . . . . . . . 25
4.6.  Changes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 25
4.7.  Defaults. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 25
4.8.  Taxes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 25
4.9.  Litigation. . . . . . . . . . . . . . . . . . . . . . . . . . . . 26
4.10. Use of Proceeds . . . . . . . . . . . . . . . . . . . . . . . . . 26
4.11. Subsidiaries. . . . . . . . . . . . . . . . . . . . . . . . . . . 26
4.12. Investment Company Act. . . . . . . . . . . . . . . . . . . . . . 26
4.13. Compliance with ERISA . . . . . . . . . . . . . . . . . . . . . . 26
4.14. Environmental Matters . . . . . . . . . . . . . . . . . . . . . . 26
4.15. Employee Matters. . . . . . . . . . . . . . . . . . . . . . . . . 28

SECTION 5 - AFFIRMATIVE COVENANTS . . . . . . . . . . . . . . . . . . . . . . 28
5.1.  Financial Statements and other Reporting Requirements . . . . . . 28
5.2.  Conduct of Business . . . . . . . . . . . . . . . . . . . . . . . 30
5.3.  Maintenance and Insurance . . . . . . . . . . . . . . . . . . . . 31
5.4.  Taxes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 31
5.5.  Inspection by the Agent and Lenders . . . . . . . . . . . . . . . 31
5.6.  Maintenance of Books and Records. . . . . . . . . . . . . . . . . 32
5.7.  Current  Ratio. . . . . . . . . . . . . . . . . . . . . . . . . . 32
5.8.  Leverage Ratio. . . . . . . . . . . . . . . . . . . . . . . . . . 32
5.9.  Total Interest Coverage . . . . . . . . . . . . . . . . . . . . . 32
5.10. Total Fixed Charge Coverage . . . . . . . . . . . . . . . . . . . 32
5.11. Profitability . . . . . . . . . . . . . . . . . . . . . . . . . . 32
5.12. Inventory Turnover. . . . . . . . . . . . . . . . . . . . . . . . 32
5.13. Use of Proceeds . . . . . . . . . . . . . . . . . . . . . . . . . 32
5.14. Further Assurances. . . . . . . . . . . . . . . . . . . . . . . . 33
5.15. Compliance with Law . . . . . . . . . . . . . . . . . . . . . . . 33

SECTION 6 - NEGATIVE COVENANTS. . . . . . . . . . . . . . . . . . . . . . . . 33
6.1.  Indebtedness. . . . . . . . . . . . . . . . . . . . . . . . . . . 33
6.2.  Guarantees. . . . . . . . . . . . . . . . . . . . . . . . . . . . 34
6.3.  Sale and Leaseback. . . . . . . . . . . . . . . . . . . . . . . . 35
6.4.  Encumbrances. . . . . . . . . . . . . . . . . . . . . . . . . . . 36
6.5.  Merger; Consolidation; Sale or Lease of Assets. . . . . . . . . . 38
6.6.  Additional Stock Issuance . . . . . . . . . . . . . . . . . . . . 38
6.8.  Investments . . . . . . . . . . . . . . . . . . . . . . . . . . . 39
6.9.  ERISA . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 40
6.10. Change in Terms and Prepayment of Subordinated INDEBTEDNESS . . . 40
6.11. Transactions with Affiliates. . . . . . . . . . . . . . . . . . . 40
6.12. Nature of Business. . . . . . . . . . . . . . . . . . . . . . . . 41

SECTION 7 - DEFAULTS. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 41
7.1.  Events of Default . . . . . . . . . . . . . . . . . . . . . . . . 41
7.2.  Remedies. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 43

SECTION 8 - CONCERNING THE AGENT AND THE LENDERS. . . . . . . . . . . . . . . 44
8.1.  Appointment and Authorization . . . . . . . . . . . . . . . . . . 44
8.2.  Agent and Affiliates. . . . . . . . . . . . . . . . . . . . . . . 44
8.3.  Loans . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 44
8.4.  Payments. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 46
8.5.  Interest, Fees and Other Payments . . . . . . . . . . . . . . . . 46
8.6.  Action by Agent . . . . . . . . . . . . . . . . . . . . . . . . . 46
8.7.  Consultation with Experts . . . . . . . . . . . . . . . . . . . . 47
8.8.  Liability of Agent. . . . . . . . . . . . . . . . . . . . . . . . 47
8.9.  Indemnification . . . . . . . . . . . . . . . . . . . . . . . . . 48
8.10. Independent Credit Decision . . . . . . . . . . . . . . . . . . . 48
8.11. Consents of Lenders . . . . . . . . . . . . . . . . . . . . . . . 48
8.12. Successor Agent . . . . . . . . . . . . . . . . . . . . . . . . . 48

SECTION 9 - MISCELLANEOUS . . . . . . . . . . . . . . . . . . . . . . . . . . 49
9.1.  Notices . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 49
9.2.  Expenses. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 50

9.3.  Set-Off . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 50
9.4.  Term of Agreement . . . . . . . . . . . . . . . . . . . . . . . . 51
9.5.  No Waivers. . . . . . . . . . . . . . . . . . . . . . . . . . . . 51
9.6.  Governing Law . . . . . . . . . . . . . . . . . . . . . . . . . . 51
9.7.  AMENDMENTS, WAIVERS, ETC. . . . . . . . . . . . . . . . . . . . . 51
9.8.  Assignment and Participation. . . . . . . . . . . . . . . . . . . 52
9.9.  Indemnity . . . . . . . . . . . . . . . . . . . . . . . . . . . . 53
9.10. Binding Effect of Agreement . . . . . . . . . . . . . . . . . . . 54
9.11. Counterparts. . . . . . . . . . . . . . . . . . . . . . . . . . . 54
9.12. Partial Invalidity. . . . . . . . . . . . . . . . . . . . . . . . 54
9.13. Captions. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 54
9.14. Nature of Lender's Obligations. . . . . . . . . . . . . . . . . . 54
9.15. Nonliability of Lenders . . . . . . . . . . . . . . . . . . . . . 54
9.16. Confidentiality . . . . . . . . . . . . . . . . . . . . . . . . . 55
9.17. Purported Oral Amendments . . . . . . . . . . . . . . . . . . . . 55
9.18. Waiver of Jury Trial. . . . . . . . . . . . . . . . . . . . . . . 56
9.19. Entire Agreement. . . . . . . . . . . . . . . . . . . . . . . . . 56

EXHIBITS

EXHIBIT A -    Form of Promissory Note

EXHIBIT B -    Form of Notice of Borrowing or Conversion

EXHIBIT C -    Indebtedness; Encumbrances

EXHIBIT D -    Litigation

EXHIBIT E -    Subsidiaries

EXHIBIT F -    Form of Report of Chief Financial Officer

EXHIBIT G -    Form of Opinion of Inside Counsel to Company

EXHIBIT H -    Standby Letter of Credit Agreement

EXHIBIT I -    Documentary Letter of Credit Agreement

EXHIBIT J -    Form of Lender's Percentages

EXHIBIT K -    Transactions with Affiliates

AMENDED AND RESTATED

REVOLVING CREDIT AGREEMENT

DATED AS OF MARCH ___, 1997

THIS AMENDED AND RESTATED REVOLVING CREDIT AGREEMENT is made as of March 
___, 1997, by and between GUESS ?, INC. (the "COMPANY"), a Delaware 
corporation having its chief executive office at 1444 S. Alameda Street, Los 
Angeles, California, 90021 and THE FIRST NATIONAL BANK OF BOSTON, AS AGENT 
(the "AGENT"), a bank with its head office at 100 Federal Street, Boston, 
Massachusetts 02110, SANWA BANK CALIFORNIA, a bank with its head offices at 
601 South Figueroa Street, Los Angeles, California 90017 (the "CO-AGENT") and 
the group of financial institutions party hereto (collectively, the 
"LENDERS").

WHEREAS, the Company, the Agent, the Co-Agent and the Lenders are 
parties to a Revolving Credit Agreement dated as of December 20, 1993 as 
amended by a First Amendment to Revolving Credit Agreement dated as of 
January 20, 1994, by a Second Amendment and Waiver to Revolving Credit 
Agreement dated as of April 1, 1994, by a Third Amendment and Waiver to 
Revolving Credit Agreement dated as of July 18, 1994, by a Fourth Amendment 
and Waiver to Revolving Credit Agreement dated as of October 24, 1994, by a 
Fifth Amendment to Revolving Credit Agreement dated as of February 13, 1995, 
by a Sixth Amendment to Revolving Credit Agreement dated as of September 14, 
1995, by a Seventh Amendment to Revolving Credit Agreement dated as of 
December 22, 1995 and by an Eighth Amendment to Revolving Credit Agreement 
dated as of February 13, 1996. (collectively, the "EXISTING LOAN AGREEMENT"); 
and

WHEREAS, the Company, the Agent, the Co-Agent and the Lenders desire (i) 
to extend the maturity date under the Existing Loan Agreement, (ii) to make 
certain other changes under the Existing Loan Agreement, and (iii) to amend 
and restate the Existing Loan Agreement;

NOW THEREFORE, the parties hereto hereby agree as follows:

1                                  - DEFINITIONS

1.   DEFINITIONS.

All capitalized terms used in this Agreement or in the Notes or in any 
certificate, report or other document made or delivered pursuant to this 
Agreement (unless otherwise defined therein) shall have the meanings assigned 
to them below:

ADJUSTED EURODOLLAR RATE.  Applicable to any Interest Period, shall mean 
a rate per annum determined pursuant to the following formula:

AER =[    IOR    ]*
- -----------------
*  The amount in brackets shall be rounded upwards, if necessary,
to the next higher 1/100 of 1%.

1

[ 1.00 - RP ]

AER =Adjusted Eurodollar Rate
IOR =Interbank Offered Rate
RP  =Reserve Percentage

Where:

"Interbank Offered Rate" applicable to any Eurodollar Loan for any 
Interest Period means the rate of interest determined by the Agent 
to be the prevailing rate per annum at which deposits in U.S. 
dollars are offered to the Agent by first-class banks in the 
interbank Eurodollar market in which it regularly participates on 
or about 10:00 a.m. (Boston time) two Business Days before the 
first day of such Interest Period in an amount approximately equal 
to the principal amount of the Eurodollar Loan to which such 
Interest Period is to apply for a period of time approximately 
equal to such Interest Period.

"Reserve Percentage" applicable to any Interest Period means the 
rate (expressed as a decimal) applicable to the Agent during such 
Interest Period under regulations issued from time to time by the 
Board of Governors of the Federal Reserve System for determining 
the maximum reserve requirement (including, without limitation, any 
basic, supplemental, emergency or marginal reserve requirement) of 
the Agent with respect to "Eurocurrency Liabilities" as that term 
is defined under such regulations.

The Adjusted Eurodollar Rate shall be adjusted automatically as of the 
effective date of any change in the Reserve Percentage.

AFFECTED PARTY.  See SECTION 2.21.

AFFILIATE.  With reference to any Person, (i) any director, officer or 
employee of that Person, (ii) any other Person controlling, controlled by or 
under direct or indirect common control of that Person, (iii) any other 
Person directly of indirectly holding 5% or more of any class of the Capital 
Stock or other equity interests (including options, warrants, convertible 
securities and similar rights) of that Person, and (iv) any other Person 
holding 5% or more of any class of whose Capital Stock or other equity 
interests (including options, warrants, convertible securities and similar 
rights) is held directly or indirectly by that Person.

AGENT.  The Agent as defined in the preamble or any successor agent 
appointed under the terms hereof.

AGENT'S FEE.  The annual fee of $25,000 payable by the Company to the 
Agent at Closing and on every anniversary thereof as long as this Agreement 
is in effect.

AGREEMENT.  This Agreement, as the same may be supplemented or amended 
from time to time.

2

APPAREL BUSINESS.  Collectively, (a) the business of the manufacture, 
wholesale sale and/or retail sale of clothing garments and other wearing 
apparel or allied or complementary products for men, women or children, 
including accessories, fragrances, eyewear, watches and footwear, or of any 
component materials thereof, and (b) the business of granting licenses of the 
trademarks, tradenames and other similar property to other Persons for the 
manufacture and/or sale of such products of any nature by such persons.

BANKRUPTCY CODE.  Title 11 of the U.S. Code (11 U.S.C Section 101 et. 
seq.).

BASE RATE.  The rate of interest announced from time to time by the 
Agent at its head office as its Base Rate minus Fifty (50) basis points.

BASE RATE LOAN.  Any Revolving Loan bearing interest determined with 
reference to the Base Rate.

BUSINESS DAY.  (i) For all purposes other than as covered by clause (ii) 
below, any day other than a Saturday, Sunday or legal holiday on which banks 
in each of Boston, Massachusetts, Los Angeles, California and New York, New 
York are open for the conduct of their commercial banking business; and (ii) 
with respect to all notices and determinations in connection with, and 
payments of principal and interest on, Eurodollar Loans, any day that is a 
Business Day described in clause (i) that is also a day for trading by and 
between banks in U.S. Dollar deposits in the interbank Eurodollar market.

CAPITAL EXPENDITURE.  Any expenditure that is considered a capital 
expenditure under GAAP.

CAPITAL STOCK.  With respect to any Person, any and all shares, 
interests, participations, rights in or other equivalents (however 
designated) of such Person's capital stock or equity interests, and any 
rights (other than debt securities convertible into capital stock), warrants 
or options exchangeable for or convertible into such capital stock or equity 
interests.

CAPITAL LEASE.  Any lease of any property (whether real, personal or 
mixed) by any Person as lessee, which lease should, in accordance with GAAP, 
be accounted for as a capital lease on the balance sheet of such Person.

CO-AGENT.  As defined in the preamble.

COLLATERAL.  The meaning set forth in the Security Agreement.

CODE.  The Internal Revenue Code of 1986 and the rules and regulations 
thereunder, collectively, as the same may from time to time be supplemented 
or amended and remain in effect.

COMMITMENT AMOUNT.  $100,000,000 or any lesser amount, including zero, 
resulting from a termination or reduction of such amount in accordance with 
SECTION 2.5 or SECTION 7.2.

COMMITMENT FEE.  See SECTION 2.4.

3

COMPANY.  See Preamble.

CONSOLIDATED CASH FLOW.  For any fiscal period an amount equal to 
Consolidated EBITDA for such period, minus Capital Expenditures made during 
such period.

CONSOLIDATED CURRENT ASSETS.  Consolidated current assets as determined 
for the Company and its Subsidiaries, if any, in accordance with GAAP.

CONSOLIDATED CURRENT LIABILITIES.  At any date as of which the amount 
thereof shall be determined, all amounts that should, in accordance with 
GAAP, be included as current liabilities on the consolidated balance sheet of 
the Company and its Subsidiaries as at such date, plus, to the extent not 
already included therein, all Loans, and all Indebtedness that is payable 
upon demand or within one year from the date of determination thereof unless 
such Indebtedness is renewable or extendable at the option of the Company or 
any Subsidiary to a date more than one year from the date of determination.

CONSOLIDATED EBITDA.  For any period, an amount equal to Consolidated 
Net Income for such period plus, (a) to the extent deducted in computing such 
Consolidated Net Income, (i) Consolidated Total Interest Expense, (ii) taxes 
and (iii) all depreciation, amortization and other non-cash charges taken in 
accordance with GAAP and deducted in computing Consolidated Net Income for 
such period and minus (b) to the extent included in computing such Net 
Income, all extraordinary and unusual gains.

CONSOLIDATED NET INCOME.  The gross revenues of the Company (on a 
consolidated basis if and when the Company has any Subsidiaries) for the 
period in question, less all expenses and other proper charges (including 
taxes on income), all determined in accordance with GAAP, but in any event, 
excluding from Consolidated Net Income: (i) any gain or loss arising from any 
write-up of assets, except to the extent inclusion thereof shall be approved 
in writing by the Majority Lenders; (ii) earnings of any Subsidiary accrued 
prior to the date it became a Subsidiary; (iii) the net earnings of any 
business entity (other than a Subsidiary) in which the Company or any 
Subsidiary has an ownership interest, except to the extent such net earnings 
shall have actually been received by the Company or such Subsidiary in the 
form of cash or other marketable property distributions; (iv) the proceeds of 
any life insurance policy; (v) any deferred or other credit representing any 
excess of the equity of any Subsidiary at the date of acquisition thereof 
over the amount invested in such Subsidiary; and (vi) any reversal of any 
contingency reserve, except to the extent that provision for such contingency 
reserve shall be made from income arising during such period.

CONSOLIDATED TOTAL DEBT SERVICE.  For any period, all interest which has 
accrued (whether actually paid or not), for such period, and all scheduled 
payments of principal due during the one year period preceding the end of 
such period, on all obligations for borrowed money, capitalized leases or 
otherwise, except for the principal amounts outstanding under the Revolving 
Loans.

4

CONSOLIDATED TOTAL INTEREST EXPENSE.  For any period, all interest which 
has accrued (whether actually paid or not), for such period on all 
Indebtedness for Money Borrowed, Capitalized Leases or otherwise.

CONTROLLED GROUP.  All trades or businesses (whether or not 
incorporated) under common control that, together with the Company, are 
treated as a single employer under Section 414(b) or 414(c) of the Code or 
Section 4001 of ERISA.

DEFAULT.  An event or condition that, but for the requirement that time 
elapse or notice be given, or both, would constitute an Event of Default.

DOCUMENTARY LETTER OF CREDIT.  A Letter of Credit issued for the account 
of the Company for the purchase of goods and payable upon the presentation of 
documents.

ENCUMBRANCES.  See SECTION 6.4.

ERISA.  The Employee Retirement Income Security Act of 1974 and the 
rules and regulations thereunder, collectively, as the same may from time to 
time be supplemented or amended and remain in effect.

ENVIRONMENTAL LAWS.  Any and all applicable federal, state and local 
environmental, health or safety statutes, laws, regulations, rules, 
ordinances, policies and rules (whether now existing or hereafter enacted or 
promulgated), of all governmental agencies, bureaus or departments which may 
now or hereafter have jurisdiction over the Company or any of its 
Subsidiaries and all applicable judicial and administrative and regulatory 
decrees, judgments and orders, including common law rulings and 
determinations, relating to injury to, or the protection of, real or personal 
property or human health or the environment, including, without limitation, 
all requirements pertaining to reporting, licensing, permitting, 
investigation, remediation and removal of emissions, discharges, releases or 
threatened releases of Hazardous Materials into the environment or relating 
to the manufacture, processing, distribution, use, treatment, storage, 
disposal, transport or handling of such Hazardous Materials.

EURODOLLAR LOAN.  Any Revolving Loan bearing interest at a rate 
determined with reference to the Adjusted Eurodollar Rate.

EURODOLLAR SPREAD.  Equal to (a) until June 30, 1994, 1.50% per annum, 
and (b) after June 30, 1994, the following percentages for each and every 
quarter in which the Company falls within the following range of ratios for 
the fiscal quarter then most recently ended, as certified by the chief 
financial officer of the Company to the Agent pursuant to Section 5.1(c), of 
both Indebtedness for Money Borrowed less the Fair Market Value (as 
hereinafter defined) of the Senior Subordinated Notes held by the Company or 
any of its Wholly Owned Subsidiaries (to the extent such Senior Subordinated 
Notes are included in the calculation of Indebtedness for Money Borrowed; but 
only so long as the Fair Market Value of such Senior Subordinated Notes so 
held is not less than 80% of the principal amount of such Senior Subordinated 
Notes), as of the fiscal quarter then ended to Consolidated Cash Flow less 
Excess Dividends ("LEVERAGE") for the prior four fiscal quarters and 
Consolidated EBITDA less Capital Expenditures to Consolidated Total Interest 
Expense ("COVERAGE") for the prior four fiscal quarters:

5

PERCENTAGE         LEVERAGE                 COVERAGE

1.25%       greater than 2.25             greater than or equal to 
4.0 to 1

1.00%       greater than 1.75 to 1        greater than or equal to
less than or equal to 2.25
to 14.0 to 1

.75%       greater than 1.25 to 1        greater than or equal to
less than or equal to 1.75
to 14.5 to 1

.625%      greater than 1 to 1           greater than or equal to
less than or equal to 1.25
to 15.0 to 1

.50%       less than or equal to 1 to 1  greater than or equal to
5.0 to 1

PROVIDED, any such pricing shall be effective on and after receipt by the 
Agent of the financial statement showing such ratio.  If financial statements 
are not received as provided in Section 5.1, the Eurodollar spread shall be 
1.25% until such compliance statement is received.  The term "Fair Market 
Value" as used herein with respect to the Senior Subordinated Notes shall 
mean the price for such notes quoted by PaineWebber, Inc. on the date of such 
calculation of the Eurodollar Spread.

EVENT OF DEFAULT.  Any event described in SECTION 7.1.

EXCESS DIVIDENDS. For any fiscal period the amounts calculated under and 
defined in SECTION 6.7(a).

FOUR WALL CONTRIBUTION REPORT.  For any retail or outlet store of the 
Borrower, a report of results of operations for that store taking into 
account gross sales, cost of goods sold and overhead expenses including rent, 
payroll and tenant improvements, in each case related only that store and 
excluding charges relating to the other operations and store locations of the 
Borrower.

GAAP.  See SECTION 1.2.

GUARANTEES.  As applied to any Person, all guarantees, endorsements or 
other contingent or surety obligations with respect to obligations of others 
whether or not reflected on the consolidated balance sheet of such Person, 
including any obligation to furnish funds, directly or indirectly (whether by 
virtue of partnership arrangements, by agreement to keep-well or otherwise), 
through the purchase of goods, supplies or services, or by way of stock 
purchase, capital contribution, advance or loan, or to enter into a contract 
for any of the foregoing, for the purpose of payment of obligations of any 
other person or entity.

6

HAZARDOUS MATERIAL.  Any substance (i) the presence of which requires or 
may hereafter require notification, investigation or remediation under any 
Environmental Law, (ii) which is or becomes regulated as a "hazardous waste", 
"hazardous material," "hazardous substance," "pollutant" or "contaminant" 
under any present or future Environmental Law or amendments thereto 
including, without limitation, the Comprehensive Environmental Response, 
Compensation and Liability Act (42 U.S.C. Section 9601 ET SEQ.) and any 
applicable local statutes and the regulations promulgated thereunder, (iii) 
which is toxic, explosive, corrosive, flammable, infectious, radioactive or 
otherwise hazardous and is or becomes regulated by any governmental 
authority, agency, department, commission, board, agency or instrumentality 
of any foreign country, the United States, any state of the United States, or 
any political subdivision thereof to the extent any of the foregoing has or 
had jurisdiction over the Company, or (iv) without limitation, which contains 
gasoline, diesel fuel or other petroleum products, asbestos or 
polychlorinated biphenyls.

INDEBTEDNESS.  As applied to the Company and its Subsidiaries means 
without duplication, (i) all obligations for borrowed money or other 
extensions of credit whether or not secured or unsecured, absolute or 
contingent, including, without limitation, unmatured reimbursement 
obligations with respect to letters of credit or guarantees issued for the 
account of or on behalf of the Company and its Subsidiaries and all 
obligations representing the deferred purchase price of property, other than 
accounts payable and accrued expenses arising in the ordinary course of 
business, (ii) all obligations evidenced by bonds, notes, debentures or other 
similar instruments, (iii) all obligations secured by any mortgage, pledge, 
security interest or other lien on property owned or acquired by the Company 
or any of its Subsidiaries whether or not the obligations secured thereby 
shall have been assumed, PROVIDED, HOWEVER, that if the obligation secured 
thereby has not been assumed, the amount of such obligation deemed 
Indebtedness under this clause shall be equal to the lesser of the amount of 
such obligation and the value of the property of the Company or any of its 
Subsidiaries securing such obligation, (iv) that portion of all obligations 
arising under Capital Leases that is required to be capitalized on the 
consolidated balance sheet of the Company and its Subsidiaries, and (v) all 
Guarantees to the extent of unpaid obligations under such Guarantees.

INDEBTEDNESS FOR MONEY BORROWED.  As applied to the Company and its 
Subsidiaries, means without duplication all Indebtedness for borrowed money 
or other extensions of credit, whether or not secured or unsecured, absolute 
or contingent, other than (i) unmatured reimbursement obligations with 
respect to letters of credit or guarantees, (ii) Indebtedness owing to the 
Company or any of its Subsidiaries from the Company or any of its 
Subsidiaries which Subsidiaries may, in accordance with GAAP, be consolidated 
with the Company for financial reporting purposes, and (iii) accounts payable 
and accrued expenses arising in the ordinary course of business.

INDUSTRIAL.  The Industrial Bank of Japan, Limited, Los Angeles Agency.

INTEREST PERIOD.

7

(a)     With respect to each Eurodollar Loan, the period commencing on 
the date of the making or continuation of or conversion to such Eurodollar 
Loan and ending one, two, three or six months thereafter, as the Company may 
elect in the applicable Notice of Borrowing or Conversion; and

(b)     With respect to each Base Rate Loan, the period commencing on 
the date of the making of or conversion to such Base Rate Loan and ending on 
the date such Base Rate Loan is repaid or converted to a Eurodollar Loan;

PROVIDED that:

(ii)    Any Interest Period (other than an Interest Period determined 
pursuant to clause (iii) below) that would otherwise end on a day that is not 
a Business Day shall be extended to the next succeeding Business Day unless, 
in the case of Eurodollar Loans, such Business Day falls in the next calendar 
month, in which case such Interest Period shall end on the immediately 
preceding Business Day;

(iii)   Any Interest Period applicable to a Eurodollar Loan that 
begins on the last Business Day of a calendar month (or on a day for which 
there is no numerically corresponding day in the calendar month at the end of 
such Interest Period) shall, subject to clause (iii) below, end on the last 
Business Day of a calendar month; and

(iv)   Any Interest Period during the Revolving Credit Period that 
would otherwise end after the Revolving Credit Termination Date shall end on 
the Revolving Credit Termination Date (PROVIDED, HOWEVER, that this 
subsection (iii) shall not permit the Company to select an Interest Period 
applicable to a Eurodollar Loan which shall have an initial duration of less 
than one month).

INVENTORY TURNOVER.  As of the last day of each fiscal quarter, the 
result obtained (expressed as the number of turns) by dividing (i) the total 
cost of sales of the Company for the four fiscal quarters then ended, 
determined in accordance with GAAP, by (ii) the average inventory of the 
Company for the four fiscal quarters then ended (calculated by adding the 
book value of the inventory of the Company as of the end of the most recently 
ended fiscal quarter to the book value of the inventory of the Company at the 
beginning of the measurement period and dividing the result by 2) all as 
determined in accordance with GAAP. 

INVESTMENT.  As applied to the Company and its Subsidiaries, the 
purchase or acquisition of any share of capital stock, partnership interest, 
evidence of indebtedness or other equity security of any other Person or 
entity, any loan, advance or extension of credit to, or contribution to the 
capital of, any other Person or entity, any real estate held for sale or 
investment (other than real property used at some point in the operations of 
the Company or its Subsidiaries), any commodities futures contracts held 
other than in connection with bona fide hedging transactions, any other 
investment in any other person or entity.

LENDERS.  The Agent, the Co-Agent, Industrial, Lyonnais, Sumitomo and 
each other entity which acquires an interest pursuant to SECTION 9.8(i) of 
this Agreement.

8

LENDER'S PERCENTAGE.  The percentage of all Loans and Letter of Credit 
risk and income taken by each of the Lenders as set forth on EXHIBIT J hereto 
as it may be adjusted from time to time pursuant to the terms hereof.

LETTERS OF CREDIT.  Documentary Letters of Credit or Standby Letters of 
Credit issued by the Agent for the account of the Company, subject to the 
terms of SECTION 2.16 hereof.

LETTER OF CREDIT AGREEMENT.  Any of the one or more agreements by and 
between the Agent and the Company providing for the issuing and administering 
of Letters of Credit, together with any replacements, extensions, 
modifications or amendments thereto substantially in the forms appended 
hereto as EXHIBIT H and EXHIBIT I.

LETTER OF CREDIT SUBLIMIT.  The sum of the outstanding amount of all 
Letters of Credit, which shall not exceed $20,000,000 at any time.

LOAN.  A loan made to the Company by the Lenders pursuant to SECTION 2.1 
of this Agreement, and "Loans" means all of such loans, collectively.

LOAN DOCUMENTS.  Collectively, this Agreement, the Notes, the Security 
Agreement, any Letters of Credit, any Letter of Credit Agreement and any 
guaranties or other document required by any such Loan Document together with 
any amendments, modifications or replacements thereto.

LYONNAIS.  Credit Lyonnais Los Angeles Branch.

MAJORITY LENDERS.  Lenders representing, in the aggregate, not less than 
51% of the outstanding principal amount of the Loans and Letters of Credit, 
but in no event (other than if there is only one Lender) less than two 
Lenders.

NEWTIMES GUESS.  Newtimes Guess ?, Limited. a corporation owned 100% by 
the Newtimes Guess Parent.

NEWTIMES GUESS PARENT.  Newtimes Guess ?, Limited. a corporation owned 
50% by the Guess? Europe, B.V. and 50% by Indigo Consultants, Ltd.

NOTES.  Promissory notes issued to each of the Lenders in respect of 
their respective Lender's Percentage of the Commitment Amount, substantially 
in the form of EXHIBIT A hereto, evidencing the obligations of the Company to 
the Lenders to repay the Loans.

NOTICE OF BORROWING OR CONVERSION.  See SECTION 2.2.

OBLIGATIONS.  Any and all obligations of the Company to the Lenders of 
every kind and description arising under the Loan Documents, whether direct 
or indirect, absolute or contingent, primary or secondary, due or to become 
due, now existing or hereafter arising, and including obligations to perform 
acts and refrain from taking action as well as obligations to pay money.

9

OPERATING LEASE.  Any lease of property (whether real, personal or 
mixed) which should, in accordance with GAAP, be accounted for as an 
operating lease of the Company or any Subsidiary of the Company.

PBGC.  The Pension Benefit Guaranty Corporation or any entity succeeding 
to any or all of its functions under ERISA.

PERMITTED ENCUMBRANCES.  See SECTION 6.4.

PERSON.  Any entity, whether an individual, trustee, corporation, 
general partnership, limited partnership, limited liability company, limited 
liability partnership, joint stock company, trust, estate, unincorporated 
organization, business association, tribe, firm, joint venture, governmental 
agency or otherwise.

PLAN.  At any time, an employee pension or other benefit plan that is 
subject to Title IV of ERISA or subject to the minimum funding standards 
under Section 412 of the Code and is either (i) maintained by the Company or 
any member of the Controlled Group for employees of the Company or any member 
of the Controlled Group, or (ii) if such Plan is established, maintained 
pursuant to a collective bargaining agreement or any other arrangement under 
which more than one employer makes contributions and to which the Company or 
any member of the Controlled Group is then making or accruing an obligation 
to make contributions or has within the preceding five Plan years made 
contributions.

QUALIFIED INVESTMENTS.  As applied to the Company and its Subsidiaries, 
investments in (i) notes, bonds or other obligations of the United States of 
America or any agency thereof that as to principal and interest constitute 
direct obligations of or are guaranteed by the United States of America; (ii) 
certificates of deposit or other deposit instruments or accounts of banks or 
trust companies organized under the laws of the United States or any state 
thereof that have capital and surplus of at least $100,000,000, (iii) 
commercial paper that is rated not less than prime-one or A-1 or their 
equivalents by Moody's Investors Service, Inc. or Standard & Poor's 
Corporation, respectively, or their successors, and (iv) any repurchase 
agreement secured by any one or more of the foregoing.

REDEEMABLE CAPITAL STOCK.  Any Capital Stock that, either by its terms, 
by the terms of any security into which it is convertible or exchangeable or 
otherwise, is, or upon the happening of an event or passage of time would be, 
required to be redeemed prior to any stated maturity of the principal of such 
Capital Stock or is redeemable at the option of the holder thereof at any 
time prior to any such stated maturity, or is convertible into or 
exchangeable for debt securities at any time prior to any such stated 
maturity at the option of the holder thereof.

REVOLVING CREDIT PERIOD.  The period beginning on the date of this 
Agreement and extending through and including the Revolving Credit 
Termination Date or such earlier date on which the commitment to make 
Revolving Loans is terminated or the Commitment Amount is reduced to zero in 
accordance with the terms hereof.

10

REVOLVING CREDIT TERMINATION DATE.  December 31, 1999; PROVIDED, 
HOWEVER, that at the second anniversary of the Agreement and each anniversary 
thereafter, the Company may request that the Agent and the Lenders extend the 
Revolving Credit Termination Date of the facility hereunder by an additional 
year and if all of the Lenders hereto so agree, "Revolving Credit Termination 
Date" shall mean that date which is one year after the date which was the 
"Revolving Credit Termination Date" immediately prior to the parties' 
agreement to change such date.  The Agent and Lenders shall have the right in 
their sole discretion to grant such request and shall not receive a fee in 
connection with any such extension provided that there are no material 
modifications to the Loan Documents in connection with such extension. 

REVOLVING LOANS.  The Loans made to the Company pursuant to SECTION 
2.1(a) of this Agreement.

SECURITY AGREEMENT.  The security agreement dated as of the date hereof 
executed by the Company in favor of the Agent, as the same may be amended, 
supplemented or otherwise modified from time to time.

STANDBY LETTER OF CREDIT.  A Letter of Credit issued on behalf of the 
Company to secure payment of an obligation to any Person; PROVIDED such 
Letter of Credit is not generally drawable until such time as there is a 
failure to perform an obligation due the beneficiary of the Letter of Credit 
in accordance with the terms of the underlying agreement secured by such 
Letter of Credit.

SUBORDINATED INDEBTEDNESS.  Indebtedness, the payment of principal of 
and interest on which is expressly subordinated in right of payment of the 
Obligations, in form and on terms approved by the Majority Lenders in 
writing, and specifically including the 9 1/2% Senior Subordinated Notes due 
2003 and the 9 1/2% Series B Senior Subordinated Notes due 2003 (collectively 
the "SENIOR SUBORDINATED NOTES") issued by the Company pursuant to an 
indenture dated as of August 23, 1993 with First Trust National Association, 
as Trustee, PROVIDED that any Indebtedness which is subordinated to the 
Obligations in a manner which is substantially identical to the manner in 
which the Senior Subordinated Notes are subordinated to the Obligations shall 
be Subordinated Indebtedness hereunder without the prior written consent of 
the Majority Lenders.

SUBSIDIARY.  Any corporation, association, joint stock company, business 
trust or other similar organization of which 50% or more of the ordinary 
voting power for the election of a majority of the members of the board of 
directors or other governing body of such entity is held or controlled by the 
Company or a Subsidiary of the Company; or any other such organization the 
management of which is directly or indirectly controlled by the Company or a 
Subsidiary of the Company through the exercise of voting power or otherwise; 
or any joint venture, whether incorporated or not, in which the Company has a 
50% ownership interest.  Notwithstanding the forgoing, each of Newtimes Guess 
Parent and Newtimes Guess shall not be a Subsidiary unless Guess Europe, B.V. 
at anytime owns more than 50% of the shares or ownership interests in 
Newtimes Guess Parent.

SUMITOMO.  Sumitomo Bank of California.

11

SWAP AGREEMENT.  One or more written agreements between the Company and 
one or more financial institutions providing for "swap," "cap," "collar" or 
other interest rate protection with respect to any Indebtedness.

TAXES.  See SECTION 2.20.

WHOLLY-OWNED SUBSIDIARY.  Any Subsidiary of which 100% of the ordinary 
voting power (other than voting power held by a person holding only 
directors' qualifying shares) for the election of a majority of the members 
of the board of directors of or other governing body of such entity is held 
or controlled by the Company, or a joint venture, organization or other 
association, whether incorporated or not, in which the Company has a 100% 
ownership interest.

ACCOUNTING TERMS.  All terms of an accounting character shall have 
the meanings assigned thereto by generally accepted accounting principles in 
effect from time to time applied on a basis consistent with the financial 
statements referred to in SECTION 4.6 of this Agreement ("GAAP"), modified to 
the extent, but only to the extent, that such meanings are specifically 
modified herein. In the event that GAAP changes during the term of this 
Agreement such that the financial covenants contained herein would then be 
calculated in a different manner or with different components or would render 
the same not meaningful criteria for evaluating the Company's financial 
condition, (a) the Company and the Lenders agree to negotiate in good faith 
in order to amend this Agreement in such respects as are necessary to conform 
those covenants as criteria for evaluating the Company's financial condition 
to substantially the same criteria as were effective prior to such change in 
GAAP, and (b) during the period pending negotiation of such amendments, the 
Company shall be deemed to be in compliance with the financial covenants 
contained herein following any such change in GAAP if and to the extent that 
the Company would have been in compliance therewith under GAAP as in effect 
immediately prior to such change.

2                             - DESCRIPTION OF CREDIT

.1.   THE LOANS.

(a)  Subject to the terms and conditions hereof, the Lenders will 
make Revolving Loans to the Company, from time to time until the close 
of business on the Revolving Credit Termination Date, in such sums as 
the Company may request, PROVIDED that the aggregate principal amount of 
all Loans plus the outstanding amount of all Letters of Credit at any 
one time outstanding hereunder shall not exceed the Commitment Amount.  
The Company may borrow, prepay pursuant to SECTION 2.12 and reborrow, 
from the date of this Agreement until the Revolving Credit Termination 
Date, the full amount of the Commitment Amount or any lesser sum that is 
at least $500,000 and an integral multiple of $100,000.  Any Revolving 
Loan not repaid by the Revolving Credit Termination Date shall be due 
and payable on the Revolving Credit Termination Date.

(b)  The Company may convert all or any part (in integral multiples 
of $100,000) of any outstanding (i) Eurodollar Loan into a Base Rate 
Loan at any time, and (ii) a Base Rate Loan into a Eurodollar Loan, each 
in the same aggregate principal amount, on any Business Day (which, in 
the case of 

12

a conversion of a Eurodollar Loan, shall be the last day of the Interest 
Period applicable to such Eurodollar Loan).  The Company shall give the 
Agent prior notice of each such conversion (which notice shall be effective
upon receipt) in accordance with SECTION 2.2.

(c)  The proceeds of the Revolving Loans shall be used by the 
Company exclusively for working capital purposes, EXCEPT THAT, up to 
$75,000,000 (reduced as provided in SECTION 5.13) of the Commitment 
Amount may be used, in the aggregate, to repurchase some or all of the 
Senior Subordinated Notes, PROVIDED that the Company shall demonstrate 
that it will comply with provisions of SECTIONS 5.13 AND 6.8 (xiv) 
of this Agreement.

.2.   NOTICE AND MANNER OF BORROWING OR CONVERSION OF LOANS.  (a) 
Whenever the Company desires to obtain or continue a Loan hereunder or 
convert an outstanding Loan into a Loan of another type provided for in this 
Agreement, the Company shall notify the Agent (which notice shall be 
irrevocable) by facsimile, telex, telegraph or telephone received no later 
than 1:00 p.m. Boston time on the day on which the requested Loan is made or 
continued as or converted to a Base Rate Loan, and received no later than 
3:00 p.m. Boston time on the date three Business Days before the day on which 
the requested Loan is to be made or continued as or converted to a Eurodollar 
Loan.  Such notice shall specify (i) the effective date and amount of each 
Loan or portion thereof to be continued or converted, subject to the 
limitations set forth in SECTION 2.1, (ii) the interest rate option to be 
applicable thereto, and (iii) the duration of the applicable Interest Period, 
if any (subject to the provisions of the definition of Interest Period and 
SECTION 2.7).  Each such notification (a "NOTICE OF BORROWING OR CONVERSION") 
shall be immediately followed by a written confirmation thereof by the 
Company in substantially the form of EXHIBIT B hereto, PROVIDED that if such 
written confirmation differs in any material respect from the action taken by 
the Agent, the records of the Agent shall control absent manifest error.

(a)  Subject to the terms and conditions hereof, each of the Lenders 
shall make such Lender's Lender's Percentage of each Loan on the effective 
date specified therefor by delivering good funds to the Agent in the amount 
of such Lender's Percentage of such Loan in accordance with SECTION 8.3 
hereto.  The Agent shall then credit the amount of such Loan to the Company's 
designated demand deposit account in immediately available funds as provided 
in SECTION 8.3 hereof.  

13

.3.   AGENT'S FEE.  The Agent shall have received the Agent's Fee which 
is payable at closing from the Company.  The Company shall pay the Agent's 
Fee to the Agent on each anniversary of this Agreement as long as this 
Agreement is in effect.  The Agent's Fee is not refundable or subject to 
proration.

.4.   COMMITMENT FEE.  The Company shall pay to the Agent for the 
benefit of the Lenders during the Revolving Credit Period a commitment fee 
(the "COMMITMENT FEE") computed at the rate of 0.25% per annum on the average 
daily amount of the unborrowed portion of the Commitment Amount less the 
average daily amount of the outstanding amount of Standby Letters of Credit 
during each quarter or portion thereof.  Commitment fees shall be payable 
quarterly in arrears, on the last Business Day of each of March, June, 
September and December of each year and on the last day of the Revolving 
Credit Period.

.5.   REDUCTION OF COMMITMENT AMOUNT.  The Company may from time to time 
by written notice delivered to the Agent at least five Business Days prior to 
the date of the requested reduction, reduce by integral multiples of 
$1,000,000 any unborrowed portion of the Commitment Amount.  No reduction of 
the Commitment Amount shall be subject to reinstatement.

.6.   THE NOTES.

(a)   The Loans shall be evidenced by the Notes, payable to the 
order of each Lender in its Lender's Percentage and having a final 
maturity of December 31, 1999.  The Notes shall be dated on or before 
the date of the first Loan and shall have the blanks therein 
appropriately completed.

(b)   Each Lender shall, and is hereby irrevocably authorized by the 
Company to, enter on the schedule forming a part of each Note or 
otherwise in its records appropriate notations evidencing the date and 
the amount of each Loan, the interest rate applicable thereto and the 
date and amount of each payment of principal made by the Company with 
respect thereto; and in the absence of manifest error, such notations 
shall constitute conclusive evidence thereof.  Each Lender is hereby 
irrevocably authorized by the Company to attach to and make a part of 
each Note a continuation of any such schedule as and when required.  No 
failure on the part of any Lender to make any notation as provided in 
this subsection (b) shall in any way affect any Loan or the rights or 
obligations of the Lenders or the Company with respect thereto.

.7.  DURATION OF INTEREST PERIODS.

(a)   Subject to the provisions of the definition of Interest 
Period, the duration of each Interest Period applicable to a Loan shall 
be as specified in the applicable Notice of Borrowing or Conversion.  
The Company shall have the option to elect a subsequent Interest Period 
to be applicable to such Loan by giving notice of such election to the 
Agent received no later than 2:00 p.m. Boston time on the date one 
Business Day before the end of the then applicable Interest Period if 
such Loan is to be converted to a Base Rate Loan and three Business Days 
before the end of the then applicable Interest Period if such Loan is to 
be continued as or converted to a Eurodollar Loan.

14

(b)   If the Agent does not receive a notice of election of duration
of an Interest Period for a Eurodollar Loan pursuant to subsection (a) 
above within the applicable time limits specified therein, the Company 
shall be deemed to have elected to convert such Loan in whole into a Base 
Rate Loan on the last day of the then current Interest Period with respect
thereto.

(c)   Notwithstanding the foregoing, the Company may not select an 
Interest Period that would end, but for the provisions of the definition 
of Interest Period, after the Revolving Credit Termination Date.

.8.  INTEREST RATES AND PAYMENTS OF INTEREST.

(a)   Each Base Rate Loan shall bear interest on the outstanding 
principal amount thereof at a rate per annum equal to the Base Rate, 
which rate shall change contemporaneously with any change in the Base 
Rate.  Such interest shall be payable on the last day of each month, and 
when such Loan is due (whether at maturity, by reason of acceleration or 
otherwise).

(b)   Each Eurodollar Loan shall bear interest on the outstanding 
principal amount thereof, for each Interest Period applicable thereto, 
at a rate per annum equal to the Adjusted Eurodollar Rate plus the 
applicable Eurodollar Spread. Such interest shall be payable for such 
Interest Period on the last day thereof and when such Eurodollar Loan is 
due (whether at maturity, by reason of acceleration or otherwise) and, 
if such Interest Period is longer than three months, at intervals of 
three months after the first day thereof.

.9.  CHANGED CIRCUMSTANCES.

(a)   In the event that:

(ii)   on any date on which the Adjusted Eurodollar Rate would 
otherwise be set, the Agent shall have determined in good faith (which
determination shall be final and conclusive) that adequate and fair 
means do not exist for ascertaining the Interbank Offered Rate, or

(iii)   at any time the Agent shall have determined after 
consultation with the Lenders and in good faith (which determination 
shall be final and conclusive) that:

(A)  the making or continuation of or conversion of any Loan 
to a Eurodollar Loan has been made impracticable or unlawful by (l) 
the occurrence of a contingency that materially and adversely 
affects the interbank Eurodollar market, or (2) compliance by the 
Lenders or any of them in good faith with any applicable law or 
governmental regulation, guideline or order or interpretation or 
change thereof by any governmental authority charged with the 
interpretation or administration thereof or with any request or 
directive of any 

15

such governmental authority (whether or not having the force of law);
or

(B)  the Adjusted Eurodollar Rate shall no longer represent 
the effective cost to the Lenders or any of them for U.S. dollar 
deposits in the interbank market for deposits in which they 
regularly participate;

then, and in any such event, the Agent shall forthwith so notify the Company 
thereof.  Until the Agent notifies the Company that the circumstances giving 
rise to such notice no longer apply, the obligation of the Lenders to allow 
selection by the Company of Eurodollar Loans shall be suspended.  If at the 
time the Agent so notifies the Company and the Company has previously given 
the Agent a Notice of Borrowing or Conversion with respect to one or more 
Eurodollar Loans but such Loans have not yet gone into effect, such 
notification shall be deemed to be void and the Company may borrow Loans at 
the Base Rate pursuant to SECTION 2.2 hereof.

Upon such date as shall be specified in such notice (which shall not be 
earlier than the date such notice is given) the Company shall, with respect 
to the outstanding Eurodollar Loans, prepay the same, together with interest 
thereon and any amounts required to be paid pursuant to SECTION 2.15, and may 
borrow a Loan at the Base Rate in accordance with SECTION 2.1 hereof by 
giving a Notice of Borrowing or Conversion pursuant to SECTION 2.2 hereof.  

.10.  INCREASED COSTS.  Except in the case of any increased cost 
attributable to the imposition of taxes as to which the Company's liability 
therefor is governed by SECTION 2.20, if any change in any law, regulation, 
treaty or official directive or the interpretation or application thereof by 
any court or by any governmental authority charged with the administration 
thereof or the compliance with any guideline or request of any central bank 
or other governmental authority (whether or not having the force of law) 
which becomes effective after the date hereof and (i) which change did not 
occur prior to the date hereof (in the case of any law, regulation, treaty or 
official directive or interpretation or application thereof), or (ii) which 
guideline or request was not issued or published prior to the date hereof:

(a)     imposes, modifies or deems applicable any deposit insurance,
reserve, special deposit or similar requirement against assets held by, 
or deposits in or for the account of, or loans by, the Agent or any of 
the Lenders (other than such requirements as are already included in the 
determination of the Adjusted Eurodollar Rate), or

(b)     imposes upon the Agent or any of the Lenders any other 
condition with respect to its performance under this Agreement,

and the result of any of the foregoing is to increase the cost to the Agent 
or any of the Lenders, reduce the income receivable by the Agent or any of 
the Lenders or impose any expense upon the Agent or any of the Lenders with 
respect to any Loans, then the Company agrees to pay to the Agent on behalf 
of the Affected Party the amount of such increase in cost, reduction in 
income or additional expense as and when such cost, reduction or expense is 
incurred or determined, within five (5) Business Days of the presentation by 
the Lender of a 

16

statement of such amount and setting forth in reasonable detail the Affected 
Party's calculation thereof, which statement shall be deemed true and correct 
absent manifest error.

.11.   CAPITAL REQUIREMENTS.  Except in the case of any increased cost 
attributable to the imposition of taxes as to which the Company's liability 
therefor is governed by SECTION 2.20, if after the date hereof the Agent 
determines that (i) the adoption of or change in any law, rule, regulation or 
guideline regarding capital requirements for banks or bank holding companies, 
or any change in the interpretation or application thereof by any 
governmental authority charged with the administration thereof which becomes 
effective after the date hereof and which adoption or change did not occur 
prior to the date hereof as of the date hereof, or (ii) compliance by the 
Agent or any of the Lenders or their respective parent bank holding companies 
with any guideline, request or directive of any such governmental authority 
regarding capital adequacy (whether or not having the force of law) which 
becomes effective after the date hereof and which was not issued or published 
(in the case of any guideline or request) as of the date hereof, has the 
effect of reducing the return on any of the Lender's or such holding 
company's capital as a consequence of the Lender's respective commitment to 
make Loans hereunder to a level below that which such Lender or such holding 
company could have achieved but for such adoption, change or compliance 
(taking into consideration such Lender's or such holding company's then 
existing policies with respect to capital adequacy and assuming the full 
utilization of such entity's capital) by any amount deemed by such Lender to 
be material, then the Agent shall notify the Company thereof.  The Company 
agrees to pay to the affected Lender, as the case may be, the amount of such 
reduction of the return on capital as and when such reduction is determined, 
within five (5) Business Days of presentation by the Lender of a statement of 
such amount and setting forth in reasonable detail the affected Lender's 
calculation thereof, which statement shall be deemed true and correct absent 
manifest error.  In determining such amount, the affected Lender may use any 
reasonable averaging and attribution methods.

.12.   PREPAYMENTS OF THE LOANS.  Revolving Loans that are Eurodollar 
Loans may be prepaid at any time upon three Business Days' notice and the 
payment of any amount due pursuant to SECTION 2.15 as a result of such 
prepayment.  Revolving Loans that are Base Rate Loans may be prepaid at any 
time, without premium or penalty.  Any interest accrued on the amounts so 
prepaid to the date of such payment must be paid at the time of any such 
payment.  No prepayment of the Revolving Loans during the Revolving Credit 
Period shall affect the Commitment Amount or impair the Company's right to 
borrow as set forth in SECTION 2.1.

.13.   METHOD OF PAYMENT.  All payments and prepayments of principal and 
all payments of interest shall be made by the Company to the Agent, on behalf 
of the Lenders, at the Agent's address set forth above in immediately 
available funds, on or before 2:00 p.m. (Boston time) on the due date 
thereof, free and clear of, and without any deduction or withholding for, any 
taxes or other payments.  The Agent may, and the Company hereby authorizes 
the Agent to, debit the amount of any payment not made by such time to the 
demand deposit account of the Company with the Agent or any of the Lenders.

17

.14.   OVERDUE PAYMENTS AND DEFAULT RATE.  Overdue, and after the 
occurrence of and during the continuance of an Event of Default at the 
direction of the Majority Lenders all, principal (whether at maturity, by 
reason of acceleration or otherwise) and, to the extent permitted by 
applicable law, overdue, and after the occurrence of and during the 
continuance of an Event of Default at the direction of the Majority Lenders, 
interest and fees or any other amounts payable hereunder or under the Notes 
shall bear interest from and including the due date thereof until paid, 
compounded daily and payable on demand, at a rate per annum equal to (i) if 
such event occurs prior to the end of an Interest Period, 2% above the 
interest rate applicable to such Loan for such Interest Period until the 
expiration of such Interest Period, and thereafter, 2% above the Base Rate, 
and (ii) in all other cases, 2% above the rate then applicable to Base Rate 
Loans, which interest shall be compounded daily and payable on demand.

.15.   PAYMENTS NOT AT END OF INTEREST PERIOD.  If the Company makes any 
payment of principal with respect to any Eurodollar Loan pursuant to SECTION 
2.12 on any day other than the last day of an Interest Period applicable to 
such Eurodollar Loan, or fails to borrow or continue or convert to a 
Eurodollar Loan after giving a Notice of Borrowing or Conversion pursuant to 
SECTION 2.2, the Company shall pay to the Agent, for the benefit of the 
Lenders, an amount computed pursuant to the following formula:

L = (R - T) X P X D
360

L   =     amount payable to the Lenders
R    =    Adjusted Eurodollar Rate applicable to such Loan
T    =    effective interest rate per annum at which any readily marketable
bond or other obligation of the United States, selected at the 
Agent's sole discretion, maturing on or near the last day of the 
then applicable Interest Period of such Loan and in approximately
the same amount as such Loan can be purchased by the Agent on the
day of such payment of principal or failure to borrow or continue
or convert
P    =    the amount of principal prepaid or the amount of the requested 
Loan
D    =    the number of days remaining in the Interest Period as of the 
date of such payment or the number of days of the requested 
Interest Period

The Company shall pay such amount upon presentation by the Agent of a 
statement setting forth the amount and the Agent's calculation thereof 
pursuant hereto, which statement shall be deemed true and correct absent 
manifest error.

18

.16.   ISSUANCE OF LETTERS OF CREDIT.

(a)   At the request of the Company and provided no Event of Default 
or Default shall have occurred and is continuing, the Agent (from time 
to time prior to the Revolving Credit Termination Date) shall issue one 
or more Letters of Credit; PROVIDED, HOWEVER, (i) the outstanding and 
undrawn amount of all Letters of Credit, including the requested Letter 
of Credit, plus all outstanding Loans shall not exceed the Commitment 
Amount, (ii) the Company shall make application for issuance of any such 
Letters of Credit by execution of a Letter of Credit Agreement, (iii) 
the maturity date of any Letters of Credit shall not extend beyond the 
Revolving Credit Termination Date, and (iv) no Documentary Letter of 
Credit may have a term of greater than 180 days.

(b)  In connection with this Agreement, the fees due and payable to 
the Agent for (i) opening Documentary Letters of Credit shall be 0.125% 
of the face amount thereof, but in no event less than $60.00, and shall 
be payable upon such opening, (ii) negotiating Documentary Letters of 
Credit shall be an additional 0.125% of the face amount thereof, but in 
no event less than $60.00, and shall be payable upon such negotiation, 
and (iii) issuing Standby Letters of Credit shall be payable quarterly 
in arrears at the Eurodollar Spread then in effect as a percent per 
annum of the face amount thereof.  The foregoing fees shall also be 
payable in connection with any increase in the face amount of a Letter 
of Credit, in which case the respective percentages shall be applied 
only to the incremental increase in the face amount of such Letters of 
Credit.

(c)  After the issuance of each Letter of Credit pursuant to 
SECTION 2.16(a), the Agent shall notify each of the Lenders of the 
issuance of one or more Letters of Credit.  The Letters of Credit shall 
be shared ratably on a risk and income participation basis by each of 
the Lenders, except that (i) all application and processing fees payable 
in connection with any Letters of Credit shall be paid to and retained 
by the Agent, and (ii) the Agent shall retain (A) all fees paid under 
Documentary Letters of Credit as its fee for issuing such Documentary 
Letters of Credit and (B) one-quarter percent per annum of the face 
amount of all Standby Letters of Credit, but in no event less than 
$250.00, as its exclusive fee for issuing such Standby Letters of Credit.

(d)  The Agent shall not issue any Letter of Credit which would 
cause the outstanding amount of Letters of Credit to exceed the Letter 
of Credit Sublimit.

19

.17.   PAYMENTS UNDER LETTERS OF CREDIT AND REIMBURSEMENT BY THE 
COMPANY.  In the event of a drawing under any Letters of Credit and 
payment by the Agent therefor (as the case may be), the Agent shall 
promptly notify the Company of such drawing and the amount and date of 
such drawing and in the event that the Company has not either paid or 
caused to be paid the amount thereof to the Agent, the Company 
authorizes the Agent to make a Base Rate Loan in the amount of such 
drawing and all fees and charges related thereto to reimburse the Agent 
and the Lenders for such drawing.  If such drawing is made after an 
Event of Default has occurred and is continuing, the Company shall 
immediately reimburse the Agent for the amount of the drawing plus all 
fees and charges related thereto, together with interest on the amount 
of such payment from the date of such payment by the Agent through and 
including the date of such reimbursement at the rate as set forth in 
SECTION 2.14.  Notwithstanding the foregoing, the Company shall pay the 
Agent all fees as set forth in SECTION 2.16 due under any Letter of 
Credit when the same are payable.  Failure to make such payment shall be 
the failure to pay an Obligation hereunder.

.18.   OUTSTANDING LETTERS OF CREDIT AND EVENT OF DEFAULT.  Upon 
an Event of Default and a demand for payment of any Loan, any sum 
collected from the Company (including, without limitation, by setoff or 
banker's lien) or the Collateral over and above the Obligations for 
Loans, interest, fees, charges and drawings under Letters of Credit, up 
to the amount of any undrawn Letters of Credit and any related fees, 
shall be held by the Agent in an interest bearing account for the 
ratable benefit of the Lenders as collateral against the obligation to 
pay such Letters of Credit in the event of any draw with respect 
thereto.  The Agent shall return to the Company amounts deposited with 
it pursuant to this SECTION 2.18 (and any and all interest earned 
thereon) promptly upon the expiration or cancellation of any and all 
Letters of Credit in an amount equal to the amount of each such expired 
or cancelled Letter of Credit.

.19.    COMPUTATION OF INTEREST AND FEES.  Interest and all fees 
payable hereunder shall be computed daily on the basis of a year of 360 
days and paid for the actual number of days elapsed.  If the due date 
for any payment of principal is extended by operation of law, interest 
shall be payable for such extended time.  If any payment required by 
this Agreement becomes due on a day that is not a Business Day such 
payment may be made on the next succeeding Business Day (subject to 
clause (i) of the definition of Interest Period), and such extension 
shall be included in computing interest in connection with such payment.

.20.   PAYMENT FREE OF TAXES.  To the extent permitted by 
applicable law, any payments made by the Company under any of the Loan 
Documents shall be made free and clear of, and without reduction by 
reason of, any tax, assessment or other charge imposed by the United 
States of America or any political subdivision or taxing authority 
thereof or therein ("TAXES"), PROVIDED, HOWEVER, that Taxes shall not 
include taxes (whether imposed directly or by means of withholdings) 
imposed on or measured by (i) the overall net income of any Lender by 
the United States of America or any political subdivision or taxing 
authority thereof or therein, or (ii) gross receipts generally 
applicable to banks.   To the extent that the Company is obligated by 
applicable laws to make any deduction or withholding on account of Taxes 
from any amount payable to any Lender under this Agreement, the Company 
shall (a) make such deduction or withholding and pay the 

20

same to the relevant governmental agency, and (b) pay such additional 
amount to that Lender as is necessary to result in that Lender's 
receiving a net after-tax (or after-assessment or after-charge) amount 
equal to the amount to which that Lender would have been entitled under 
this Agreement absent such deduction or withholding.  If and when 
receipt of such payment results in an excess payment credit to that 
Lender on account of such Taxes, that Lender shall refund such excess to 
the Company.  Each Lender that is incorporated under the laws of a 
jurisdiction other than the United States of America or any state 
thereof shall deliver to the Company, with a copy to the Agent, within 
twenty days after such Lender becomes a Lender hereunder, a certificate 
signed by a duly authorized official of that Lender to the effect that 
such Lender is entitled to receive payments of interest and other 
amounts payable under this Agreement without deduction or withholding on 
account of United States of America federal income taxes, which 
certificate shall be accompanied by (x) two copies of Internal Revenue 
Service Form 1001 or Form 4224, as applicable, duly executed by a duly 
authorized official of that Lender accurate and complete in all material 
respects and indicating such Lender's complete exemption from United 
States withholding taxes, and (y) other appropriate evidence supporting 
such exemption from withholding taxes as the Company may reasonably 
request; PROVIDED that if any such Lender fails to so provide such a 
certificate with such accompanying Form or other reasonably requested 
evidence of exemption from withholding or if such certificate or such 
Form contains a material error or a materially false representation by 
such Lender, then such Lender shall not be entitled to the benefits of 
this SECTION 2.20 until such failure or misrepresentation or error is 
cured.  Each such Lender agrees (i) promptly to notify the Company if 
any fact set forth in such certificate ceases to be true and correct, 
(ii) to take such steps as may be reasonably necessary to (x) maintain 
all exemptions available to it from United States withholding taxes, and 
(y) avoid any requirement of applicable laws that the Company make any 
deduction or withholding for taxes from amounts payable to that Lender 
under this Agreement, and (iii) otherwise cooperate with the Company to 
minimize any amounts payable by the Company under this SECTION 2.20.

PROVISIONS APPLICABLE TO CERTAIN PAYMENTS.  Each Lender (an "AFFECTED 
PARTY") shall promptly notify the Company, with a copy to the Agent, 
upon becoming aware that the Company may be required to make any payment 
to such Affected Party pursuant to SECTIONS 2.10, 2.11 or 2.20.  Before 
the Affected Party gives any notice to the Company pursuant to this 
SECTION 2.21, the Affected Party shall, if possible, designate a 
different lending office if such designation will avoid the need for 
giving such notice and will not, in the reasonable judgment of such 
Affected Party, be otherwise materially disadvantageous to such Affected 
Party.  When requesting payment pursuant to SECTIONS 2.10, 2.11, or 
2.20, each Affected Party shall provide to the Company, with a copy to 
the Agent, a certificate, signed by an officer of such Affected Party, 
setting forth the amount required to be paid by the Company to such 
Affected Party and the computations made by such Affected Party to 
determine such amount.  Upon a request for any additional payment under 
SECTIONS 2.10, 2.11 or 2.20, the Affected Party requesting such payment 
shall certify to the Company that such requested payment represents a 
payment requested of all similarly situated borrowers from such Affected 
Party and that the Affected Party has taken reasonable steps to mitigate 
or avoid the condition requiring such additional payment.

21

3                 - CONDITIONS OF LOANS

.1.   CONDITIONS PRECEDENT TO INITIAL LOAN.  The obligation of the 
Lenders to make the initial Loan hereunder is subject to the condition 
precedent that the Agent shall have received, in form and substance 
satisfactory to the Agent and its counsel, the following:

(a)    this Agreement, the Security Agreement and the Notes, duly
executed by the Company;

(b)    a certificate of the Secretary or an Assistant Secretary of 
the Company with respect to resolutions of the Board of Directors 
authorizing the execution and delivery of this Agreement, the Security 
Agreement and the Notes and identifying the officer(s) authorized to 
execute, deliver and take all other actions required under this 
Agreement, and providing specimen signatures of such officers;

(c)   the certificate of incorporation of the Company and all 
amendments and supplements thereto, filed in the office of the Secretary 
of State of Delaware, each certified by said Secretary of State of 
Delaware as being a true and correct copy thereof;

(d)   the Bylaws of the Company and all amendments and supplements 
thereto, certified by the Secretary or an Assistant Secretary of the 
Company as being a true and correct copy thereof;

(e)   a certificate of the Secretary of State of Delaware, as to 
legal existence and good standing and tax good standing in such state 
and listing all documents on file in the office of said Secretary of 
State;

(f)   a legal opinion addressed to it from in-house counsel to the 
Company, substantially in the form of EXHIBIT G hereto;

(g)   certificates of foreign qualification and good standing, 
including tax good standing, from the State of California and such other 
states as are appropriate;

(h)   UCC Financing Statements, duly executed and in form and number 
sufficient to perfect the Agent's and Lender's security interest in the 
Collateral or evidence that such Financing Statements are already on 
file in each jurisdiction and office necessary to so perfect such 
security interests; and

(i)   such other documents, and completion of such other matters, as 
counsel for the Agent and Lenders may deem necessary or appropriate.

.2.   CONDITIONS PRECEDENT TO ALL LOANS.  The obligations of the Lenders 
to make each Loan, including the initial Loan, or convert Loans to Loans of 
another type, is further subject to the following conditions:

(a)   timely receipt by the Agent of the Notice of Borrowing or 
Conversion as provided in SECTION 2.2;

22

(b)   the representations and warranties contained in SECTION 
4 shall be true and accurate in all material respects on and as of the 
date of such Notice of Borrowing or Conversion and on the effective date 
of the making or conversion of each Loan as though made at and as of 
each such date (except to the extent that such representations and 
warranties expressly relate to an earlier date), and no Default or Event 
of Default shall have occurred and be continuing, or would result from 
such Loan;

(c)   the resolutions referred to in SECTION 3.1(B) shall remain
in full force and effect; and

(d)   no change shall have occurred in any law or regulation or 
interpretation thereof that, in the opinion of counsel for the Agent and 
Lenders, would make it illegal or against the policy of any governmental 
agency or authority with jurisdiction over the Agent or the Lenders to 
make Loans hereunder.

The making or conversion of each Loan shall be deemed to be a 
representation and warranty by the Company on the date of the making, 
continuation or conversion of such Loan as to the accuracy of the facts 
referred to in subsection (b) of this SECTION 3.2.

4                         - REPRESENTATIONS AND WARRANTIES

In order to induce the Agent and the Lenders to enter into this 
Agreement and to make Loans hereunder, the Company represents and warrants to 
the Agent and the Lenders that:

.1.    ORGANIZATION AND QUALIFICATION.  Each of the Company and its 
Subsidiaries, if any, (a) is a corporation duly organized, validly existing 
and in good standing and tax good standing under the laws of its jurisdiction 
of incorporation, (b) has all requisite corporate power and authority to own 
its property and to conduct its business as now conducted and as presently 
contemplated, and (c) is duly qualified and in good standing as a foreign 
corporation and is duly authorized to do business in each jurisdiction where 
the nature of its properties or business requires such qualification, except 
where the failure to be so qualified or in good standing would not have a 
material adverse effect on the business, financial condition, assets or 
properties of the Company or of the Company and its Subsidiaries, if any, 
taken as a whole.

.2.    CORPORATE AUTHORITY.  The execution, delivery and performance of 
the Loan Documents and the transactions contemplated hereby are within the 
corporate power and corporate authority of the Company and have been 
authorized by all necessary corporate proceedings, and do not and will not 
(a) require any consent or approval of the stockholders of the Company, (b) 
contravene any provision of the charter documents or by-laws of the Company 
or any material law, rule or regulation applicable to the Company, (c) 
contravene any provision of, or constitute an event of default or event that, 
but for the requirement that time elapse or notice be given, or both, would 
constitute an event of default under, any other material agreement, 
instrument, order or undertaking binding on the 

23

Company, or (d) result in or require the imposition of any Encumbrance on any 
of the material properties, assets or rights of the Company, other than the 
Encumbrances contemplated and created by the Security Agreement.

.3.    VALID OBLIGATIONS.  The Loan Documents and all of their 
respective terms and provisions are the legal, valid and binding obligations 
of the Company, enforceable in accordance with their respective terms except 
as limited by bankruptcy, insolvency, reorganization, moratorium or other 
laws affecting the enforcement of creditors' rights generally, and except as 
the remedy of specific performance or of injunctive relief is subject to the 
discretion of the court before which any proceeding therefor may be brought.

.4.    CONSENTS OR APPROVALS.  The execution, delivery and performance 
of the Loan Documents and the transactions contemplated therein do not 
require any approval or consent of, or filing or registration with, any 
governmental or other agency or authority, other than Uniform Commercial Code 
financing statements.

.5.    TITLE TO PROPERTIES; ABSENCE OF ENCUMBRANCES.  Each of the 
Company and its Subsidiaries, if any, has good title to all of the material 
properties, assets and rights of every name and nature now purported to be 
owned by it, including, without limitation, such properties, assets and 
rights as are reflected in the financial statements referred to in SECTION 
4.6 (except such properties, assets or rights as have been disposed of in the 
ordinary course of business since the date thereof), free from all 
Encumbrances except Permitted Encumbrances or those Encumbrances disclosed in 
EXHIBIT C hereto, and, except as so disclosed, free from all defects of title 
that are reasonably expected to have a material adverse effect on such 
properties, assets or rights, taken as a whole.

.6.    CHANGES.  Since the date of the most recent financial statements 
delivered in accordance with SECTION 5.1, there have been no changes in the 
assets, liabilities, financial condition or business of the Company or any of 
its Subsidiaries, if any, other than changes, the effect of which has not, in 
the aggregate, been materially adverse.

.7.    DEFAULTS.  As of the date of this Agreement, no Default exists.

.8.    TAXES.  The Company and each Subsidiary, if any, have filed all 
material federal, state and other tax returns required to be filed, and all 
material taxes, assessments and other governmental charges due from the 
Company and each Subsidiary, if any, have been fully paid, except for any 
such taxes, assessments, or other governmental charges being contested in 
good faith by appropriate proceedings.  The Company and each Subsidiary, if 
any, have established on their books reserves adequate for the payment of all 
federal, state and other tax liabilities.  

.9.    LITIGATION.  As of the date of this Agreement and except as set 
forth on EXHIBIT D hereto, there is no litigation, arbitration, proceeding or 
investigation pending, or, to the knowledge of the Company's or any 
Subsidiary's officers or directors, threatened, against the Company or any 
Subsidiary that could result in a material judgment not fully covered by 
insurance and which could reasonably be expected to have a material adverse 
effect on the assets or business of the Company and its Subsidiaries, taken 
as a whole.

24

.10.   USE OF PROCEEDS.  No portion of any Loan is to be used for the 
"purpose of purchasing or carrying" any "margin stock" as such terms are used 
in Regulations U and X of the Board of Governors of the Federal Reserve 
System, 12 C.F.R. 221 and 224, as amended.

.11.   SUBSIDIARIES.  As of the date of this Agreement, all the 
Subsidiaries of the Company are listed on EXHIBIT E hereto. The Company or a 
Subsidiary of the Company is the owner, free and clear of all liens and 
encumbrances, of all such stock of each Subsidiary owned by the Company or 
such Subsidiary.  All shares of such stock have been validly issued and are 
fully paid and nonassessable, and no rights to subscribe for any additional 
shares have been granted, and no options, warrants or similar rights are 
outstanding.

.12.   INVESTMENT COMPANY ACT.  Neither the Company nor any of its 
Subsidiaries, if any, is an "investment company" or a company "controlled" by 
an "investment company" (as each such term is defined or used in the 
Investment Company Act of 1940, as amended).

.13.   COMPLIANCE WITH ERISA.  The Company and each member of the 
Controlled Group have fulfilled their obligations, if any, under the minimum 
funding standards of ERISA and the Code with respect to each Plan and are in 
compliance in all material respects with the applicable provisions of ERISA 
and the Code, and have not incurred any liability to the PBGC or a Plan under 
Title IV of ERISA, and no "prohibited transaction" or "reportable event" (as 
such terms are defined in ERISA) has occurred with respect to any Plan.

.14.   ENVIRONMENTAL MATTERS.

(a)   To the best of the Company's knowledge, the Company and 
each of its Subsidiaries, if any, have obtained all permits, licenses 
and other authorizations which are required under all Environmental 
Laws, except to the extent failure to have any such permit, license or 
authorization could not reasonably be expected to have a material 
adverse effect on the business, financial condition or operations of the 
Company and its Subsidiaries, taken as a whole.  To the best of the 
Company's knowledge, the Company and each of its Subsidiaries, if any, 
are in compliance with the terms and conditions of all such permits, 
licenses and authorizations, and are also in compliance with all other 
limitations, restrictions, conditions, standards, prohibitions, 
requirements, obligations, schedules and timetables contained in any 
applicable Environmental Law or in any regulation, code, plan, order, 
decree, judgment, injunction, notice or demand letter issued, entered, 
promulgated or approved thereunder, except to the extent failure to 
comply could not reasonably be expected to have a material adverse 
effect on the business, financial condition or operations of the Company 
and its Subsidiaries, taken as a whole.

(b)   To the best of the Company's knowledge, no notice, 
notification, demand, request for information, citation, summons or 
order (together "notice") has been issued, no complaint has been filed 
and is still pending, no penalty has been assessed and is still pending 
and no investigation is pending or threatened by any governmental or 
other entity with respect to any alleged failure by the Company or any 
of its 

25

Subsidiaries to have any permit, license or authorization required in 
connection with the conduct of its business or with respect to any 
Environmental Laws, including, without limitation, Environmental Laws 
relating to the generation, treatment, storage, recycling, 
transportation, disposal or release of any Hazardous Materials, except 
to the extent that such notice, complaint, penalty or investigation 
could not reasonably be expected to have a material adverse effect on 
the business, financial condition or operations of the Company and its 
Subsidiaries, taken as a whole.

(c)   To the best of the Company's knowledge no material oral or 
written notification of a release of a Hazardous Material has been filed 
by or on behalf of the Company or any of its Subsidiaries and no 
property now or previously owned, leased or operated by the Company or 
any of its Subsidiaries is listed or proposed for listing on the 
National Priorities List under the Comprehensive Environmental Response, 
Compensation and Liability Act of 1980, as amended, or on any similar 
state list of sites requiring investigation or clean-up, except to the 
extent any such notification, listing or proposed listing could not be 
reasonably be expected to have a material adverse effect on the Company 
and its Subsidiaries, taken as a whole.

(d)   To the best of the Company's knowledge, there are no liens 
or encumbrances arising under or pursuant to any Environmental Laws on 
any of the real property or properties owned, leased or operated by the 
Company or any of its Subsidiaries and no governmental actions have been 
taken or are in process which could subject any of such properties to 
such liens or encumbrances or, as a result of which the Company or any 
of its Subsidiaries would be required to place any notice or restriction 
relating to the presence of Hazardous Materials at any property owned by 
it in any deed to such property, except to the extent any such liens, 
encumbrances or actions could not reasonably expected to have a material 
adverse effect on the Company and its Subsidiaries, taken as a whole.

(e)   Neither the Company nor any of its Subsidiaries has (i) 
engaged in or permitted any operations or activities upon or any use or 
occupancy of property owned, leased or operated by the Company or any of 
its Subsidiaries, or any portion thereof, for the purpose of or in any 
way involving the handling, manufacture, treatment, storage, use, 
generation, release, discharge, refining, dumping or disposal of any 
Hazardous Materials on, under or in such property, except to the extent 
commonly used in day-to-day operations of any such property and in such 
case only in compliance with all Environmental Laws and except as could 
not reasonably be expected to have material adverse effect on the 
Company and its Subsidiaries taken as a whole, or (ii) transported any 
Hazardous Materials to, from or across such property, except to the 
extent commonly used in day-to-day operations of such property and, in 
such case, in compliance with, all Environmental Laws; nor to the best 
knowledge of the Company have any Hazardous Materials migrated from 
other properties upon, about or beneath such property, nor, to the best 
knowledge of the Company, are any Hazardous Materials currently 
deposited or otherwise located on, under, in or about such property 
except to the extent commonly used in day-to-day 

26

operations of such property and, in such case, in compliance with, all 
Environmental Laws and except as could not reasonably be expected to 
have material adverse effect on the Company and its Subsidiaries taken 
as a whole.

.15.    EMPLOYEE MATTERS.  There is no strike, work stoppage or labor 
dispute with any union or group of employees that would result in a 
materially adverse effect on the business or operations of the Company and 
its Subsidiaries, taken as a whole.  To the best of the Company's knowledge, 
the Company is in substantial compliance with all state or federal labor laws.

5                             - AFFIRMATIVE COVENANTS

Until such time as (i) no Lender has any commitment to make Loans or 
issue Letters of Credit hereunder, (ii) no Loan or Letter of Credit hereunder 
remains outstanding, and (iii) no Obligation is due hereunder, the Company 
covenants as follows:

.1.     FINANCIAL STATEMENTS AND OTHER REPORTING REQUIREMENTS.  The 
Company shall furnish to the Agent and each of the Lenders:

(a)    as soon as available to the Company, but in any event 
within 90 days after the end of each of its fiscal years, a consolidated 
and consolidating balance sheet as of the end of, and a related 
consolidated and consolidating statement of income, changes in 
stockholders' equity and cash flows for, such year, audited and 
certified by KPMG Peat Marwick (or other independent certified public 
accountants acceptable to the Agent) in the case of such consolidated 
statements, and certified by the chief financial officer in the case of 
such consolidating statements, and a report by such accountants stating 
whether, in connection with the completion of their audit, any matters 
that came to their attention that caused them to believe that the 
Company failed to comply with the terms, covenants, provisions or 
conditions of SECTIONS 5.7 through 5.12, inclusive, insofar as they 
relate to accounting matters; IN ADDITION, a breakdown of the Four Wall 
Contribution Report which shows sales and income before and after 
allocated expenses for each retail and outlet store that reported a loss 
during either (i) the immediately preceding fiscal quarter or (ii) the 
immediately preceding twelve month period, with a comparison against 
last year and the plan for the current year and on a consolidated basis;

(b)    as soon as available to the Company, but in any event 
within 45 days after the end of each of the first three fiscal quarters 
of each fiscal year, a consolidated and consolidating balance sheet as 
of the end of, and a related consolidated and consolidating statement of 
income and cash flows for, the period and year to date period then 
ended, certified by the principal financial officer of the Company but 
subject, however, to normal, recurring year-end adjustments that shall 
not in the aggregate be material in amount; IN ADDITION, a breakdown of 
the Four Wall Contribution Report which shows sales and income before 
and after allocated expenses for each retail and outlet store that 
reported a loss during either (i) the immediately preceding fiscal 
quarter or (ii) the immediately preceding 

27

twelve month period, with a comparison against last year and the plan for 
the current year and on a consolidated basis;

(c)    concurrently with the delivery of each financial 
statement pursuant to subsections (a) and (b) of this SECTION 5.l, a 
report in substantially the form of EXHIBIT F hereto signed on behalf of 
the Company by its chief financial officer; IN ADDITION, a report of the 
actual results of composite store sales on a consolidated basis for each 
retail and outlet store for the preceding twelve months;

(d)    any management letter issued by the Company's independent 
certified public accounting firm in conjunction with the audit of the 
year end financial statements of the Company;

(e)    promptly upon Agent's request and after the same are 
available, copies of all proxy statements, financial statements and 
reports as the Company shall send to its stockholders or as the Company 
may file with the Securities and Exchange Commission or any governmental 
authority at any time having jurisdiction over the Company or its 
Subsidiaries;

(f)    if and when the Company gives or is required to give 
notice to the PBGC of any "Reportable Event" (as defined in Section 4043 
of ERISA) with respect to any Plan that might constitute grounds for a 
termination of such Plan under Title IV of ERISA, or knows that any 
member of the Controlled Group or the plan administrator of any Plan has 
given or is required to give notice of any such Reportable Event, a copy 
of the notice of such Reportable Event given or required to be given to 
the PBGC;

(g)    promptly upon any executive officer of the Company 
obtaining knowledge of the existence of any condition or event that 
constitutes a Default, written notice thereof specifying the nature and 
duration thereof and the action being or proposed to be taken with 
respect thereto;

(h)    promptly upon becoming aware of any litigation or of any 
investigative proceedings by a governmental agency or authority 
commenced or threatened against the Company or any of its Subsidiaries 
of which it has notice, the outcome of which would reasonably be 
expected to have a materially adverse effect on the assets or business 
of the Company or the Company and its Subsidiaries on a consolidated 
basis, written notice thereof and the action being or proposed to be 
taken with respect thereto;

(i)    promptly after an executive officer of the Company or the 
designated compliance employee of the Company receives actual notice of 
any investigative proceedings by a governmental agency or authority 
commenced or threatened against the Company or any of its Subsidiaries 
regarding any actual or alleged violation of Environmental Laws or any 
spill, release, discharge or disposal of any Hazardous Material, written 
notice thereof and the action being or proposed to be taken with respect 
thereto;

(j)    annual financial forecasts and projections to be 
delivered no later than 120 days after the end of each fiscal year; and

28

(k)    from time to time, such other financial data and 
information about the Company or its Subsidiaries as the Agent may 
reasonably request.

.2.    CONDUCT OF BUSINESS.  Each of the Company and its Subsidiaries, if 
any, shall:

(a)    duly observe and comply in all material respects with all 
applicable laws and valid requirements of any governmental authorities 
relative to its corporate existence, rights and franchises, to the 
conduct of its business and to its property and assets (including 
without limitation all material Environmental Laws and ERISA), and shall 
maintain and keep in full force and effect all licenses and permits 
necessary in any material respect to the proper conduct of its business; 
and

(b)    other than in connection with a transaction not prohibited 
by SECTION 6.6 hereof, maintain its corporate existence; PROVIDED, that 
the Company may permit the dissolution or liquidation of any Subsidiary 
if such dissolution or liquidation is not reasonably likely to have a 
material adverse effect on the Company and its Subsidiaries taken as a 
whole.

.3.     MAINTENANCE AND INSURANCE.  Each of the Company and its 
Subsidiaries, if any, shall maintain its material properties in good repair, 
working order and condition as required for the normal conduct of its 
business.  As long as the Security Agreement is in full force, the Company 
and each of its Subsidiaries will keep the Collateral insured at all times by 
insurance with financially sound and reputable insurers and in such amounts 
and against such risks as are customarily insured by companies engaged in a 
similar business with respect to properties of a similar character.  Such 
insurance shall be payable to the Agent and the Lenders as an additional 
insured and the Company, as their respective interests may appear.  Such 
insurance shall provide for not less than 30 days' notice of cancellation, 
change in form or non-renewal to the Agent, and shall insure the interest of 
the Agent and the Lenders regardless of any breach or violation by the 
Company or any other person of the warranties, declarations or covenants 
contained in such policies.  Such insurance shall be primary and not 
contributory.  The Company shall evidence its compliance with the foregoing 
by delivering a certificate with respect to each policy concurrently with the 
execution hereof, and from time to time upon the request of the Agent (but 
not more frequently than annually).  If the Agent or the Lenders insure the 
Collateral or pay for the Company's insurance of the Collateral, because of 
the failure of the Company to obtain such insurance or make any such payment 
and to prevent the Collateral from being uninsured, any such cost by the 
Agent shall be an Obligation.  The Agent and the Lenders shall be under no 
obligation to obtain or pay for any such insurance and any such action shall 
not relieve the Company of its Obligation hereunder to obtain and pay for 
such insurance.  As to the Company at any time the Security Agreement is no 
longer in effect and at all times as to the Subsidiaries, each of the Company 
and its Subsidiaries, if any, shall at all times maintain liability and 
casualty insurance with financially sound and reputable insurers in such 
amounts as the officers of the Company in the exercise of their reasonable 
judgment deem to be adequate.  In the event of failure to provide and 
maintain insurance as herein provided, the Agent may, upon five days notice 
to the Company at its option, provide such insurance and charge 

29

the amount thereof to the account of the Company or any of its Subsidiaries 
with the Agent or any of the Lenders.  The Company shall furnish to the Agent 
certificates or other evidence reasonably satisfactory to the Agent of 
compliance with the foregoing insurance provisions.

.4.     TAXES.  The Company shall pay or cause to be paid all material 
taxes, assessments or governmental charges on or against it or any of its 
Subsidiaries or its or their material properties on or prior to the time when 
they become delinquent; PROVIDED that this covenant shall not apply to any 
tax, assessment or charge that is being contested in good faith by 
appropriate proceedings and with respect to which adequate reserves have been 
established and are being maintained in accordance with GAAP if no lien shall 
have been filed against any of the Collateral to secure such tax, assessment 
or charge.

.5.     INSPECTION BY THE AGENT AND LENDERS.  The Company shall permit 
the Agent accompanied by one or more of the Lenders or their designees, 
during the Company's normal business hours, and upon reasonable notice (or if 
an Event of Default shall have occurred and is continuing, at any time and 
without prior notice and at any reasonable time), for the purpose of 
ascertaining compliance with this Agreement, to (i) visit and inspect the 
properties of the Company and its Subsidiaries, if any, (ii) examine and make 
copies of and take abstracts from the books and records of the Company and 
its Subsidiaries, if any, and (iii) discuss the affairs, finances and 
accounts of the Company and its Subsidiaries, if any, with their appropriate 
officers, employees and accountants.  

.6.     MAINTENANCE OF BOOKS AND RECORDS.  Each of the Company and its 
Subsidiaries, if any, shall keep adequate books and records of account, in 
which true and complete entries will be made reflecting all of its business 
and financial transactions, and such entries will be made in accordance with 
GAAP.

.7.     CURRENT  RATIO.  The Company shall at all times maintain the 
ratio of Consolidated Current Assets to Consolidated Current Liabilities less 
the current portion of Indebtedness for Money Borrowed of the Company and its 
Subsidiaries on a consolidated basis to be at least 1.75:1.00 for each fiscal 
quarter of the Company.  For purposes of calculating the Current Ratio only, 
Indebtedness for Money Borrowed shall not include the principal amounts 
outstanding from time to time under the Loans.

.8.     LEVERAGE RATIO.  The Company shall maintain at the end of each 
fiscal quarter Indebtedness for Money Borrowed at the end of such fiscal 
quarter no greater than 2.75 times Consolidated Cash Flow less dividends 
permitted hereunder calculated for such four fiscal quarters then ended.

.9.     TOTAL INTEREST COVERAGE.  The Company shall maintain, at the end 
of each fiscal quarter for the four fiscal quarters then ended, a ratio of 
Consolidated EBITDA less Capital Expenditures for the period to Consolidated 
Total Interest Expense for the period of at least 3:1.

.10.    TOTAL FIXED CHARGE COVERAGE.  The Company shall maintain, at the 
end of each fiscal quarter for the four fiscal quarters then ended, a ratio 
of Consolidated Cash Flow plus payments on Operating Leases for the period to 

30

Consolidated Total Debt Service plus payments on Operating Leases for the 
period of not less than 2:1.  

.11.    PROFITABILITY.  The Company shall have Consolidated Net Income 
at the end of each fiscal quarter for the four fiscal quarters then ending on 
a cumulative basis of at least $1.00.

.12.    INVENTORY TURNOVER. For each fiscal quarter, the Inventory 
Turnover shall be at least 2.25 turns for the four fiscal quarters then ended.

.13.    USE OF PROCEEDS.  The Company will use the proceeds of the 
Revolving Loans for the ongoing working capital needs of the Company.  
Notwithstanding the foregoing, the Company may use up to $75,000,000, in the 
aggregate, of the Commitment Amount reduced by all purchases of Senior 
Subordinated Notes prior to the date of this Agreement as set forth on 
EXHIBIT C and further reduced by all purchases made on and after the date 
hereof to repurchase a portion of the Senior Subordinated Notes, PROVIDED, 
(i) that the Company shall satisfy on a pro forma basis, all of the covenants 
made herein for the next four (4) fiscal quarters from the date hereof, (ii) 
that the Company's repurchase of the Senior Subordinated Notes in any fiscal 
quarter shall be limited to the amount of the Company's positive net income 
based on the average of net income for the proceeding four fiscal quarters, 
as previously  reported to the Agent and using the current quarter as the 
fourth quarter for purposes of the calculation and (iii) that such repurchase 
complies with the provisions of SECTION 6.8(xiv) hereof.

.14.     FURTHER ASSURANCES.  At any time and from time to time the 
Company shall, and shall cause each of its Subsidiaries to, execute and 
deliver such further instruments and take such further action as may 
reasonably be requested by the Agent to effect the purposes of the Loan 
Documents.

.15.    COMPLIANCE WITH LAW.  The Company shall comply in all material 
respects with any applicable law, regulation, ordinance, statute or directive 
of any governmental body, the violation of which would have a material 
adverse effect on the Company and its Subsidiaries taken as a whole.

6                             - NEGATIVE COVENANTS

Until such time as (i) no Lender has any further commitment to make 
Loans or issue Letters of Credit hereunder, (ii) no Loan or Letter of Credit 
hereunder remains outstanding and (iii) no Obligation is then due hereunder, 
the Company covenants as follows:

.1.     INDEBTEDNESS.  Neither the Company nor any of its Subsidiaries 
shall create, incur, assume, guarantee or be or remain liable with respect to 
any Indebtedness other than the following:

(a)       Indebtedness of the Company or any of its Subsidiaries 
(i) to the Agent or any of its Affiliates or to the Lenders under the 
Loan Documents, or (ii) due from any Subsidiary of the Company to the 
Company as long as such Indebtedness was not, at the time it was 
incurred, prohibited under SECTION 6.8, or (iii) to any Subsidiary of 
the Company, unless such Subsidiary cannot, in accordance with GAAP, be 
consolidated with the Company for financial reporting purposes;

31

(b)       (i) Indebtedness existing as of March ___, 1997 and 
disclosed on EXHIBIT C hereto or in the financial statements referred to 
in SECTION 4.6, and (ii) Subordinated Indebtedness and any amendments, 
modifications, restatements, refundings, extensions, renewals, 
substitutions, refinancings or replacements of any or all of the 
foregoing, so long as such amendment, modification, restatement, 
refunding, extension, renewal, substitution, refinancing or replacement 
does not (i) result in an increase in the aggregate Indebtedness of the 
Company, (ii) result in the shortening of the aggregate weighted average 
maturity of such Indebtedness, (iii) impose new or additional material 
restrictions on the Company, (iv) grant any new or additional collateral 
rights or remedies to any lender of such Indebtedness, (v) change or add 
an obligor to such Indebtedness, or (vi) increase the rate of interest 
payable with respect to such Indebtedness;

(c)       Indebtedness under Swap Agreements;

(d)       Indebtedness incurred to finance the purchase of aircraft 
that replace aircraft then owned by the Company in an aggregate amount 
not to exceed $10,000,000 outstanding at any time;

(e)       Guarantees not prohibited by SECTION 6.2 hereof; 

(f)       Indebtedness of the Company to any or all shareholders of 
the Company to the extent that the distribution of such Indebtedness to 
shareholders of the Company was not, at the time such distribution was 
made, prohibited by SECTION 6.8 hereof; 

(g)       Other Indebtedness of the Company, including, without 
limitation, Capital Leases, Indebtedness for the purchase price of 
assets, Guarantees not specifically permitted by SECTION 6.2 not 
exceeding an aggregate outstanding principal amount of $15,000,000 less 
Indebtedness listed on Exhibit C other than Subordinated Indebtedness at 
any one time outstanding, exclusive of the Indebtedness already 
permitted under SECTION 6.1(a) through 6.1(f), 6.1(h) and 6.1(i) hereof; 

(h)  Indebtedness of Guess Italia or Traverso, provided such 
Indebtedness does not exceed $12,000,000 in the aggregate less the total 
face amount of all accounts receivable sold by Guess Italia or Traverso 
or pledged to lenders as permitted under SECTION 6.5(i); and

(i)   All Indebtedness of the Company to The First National Bank of 
Boston arising under a certain letter of credit facility made available 
to the Company by the First National Bank of Boston up to a maximum 
amount of $25,000,000 pursuant to a certain Continuing Commercial Letter 
of Credit Reimbursement Agreement dated as of December ___, 1995 (the 
"GUESS LETTER OF CREDIT AGREEMENT") shall be permitted hereunder, BUT 
ONLY to the extent that the sum of the letters of credit under the 
Ranche Letter of Credit Facility (as hereinafter defined) and the 
letters of credit under the Guess Letter of Credit Facility shall not 
exceed $25,000,000.  As used herein the term "Ranche Letter of Credit 
Facility" shall mean a certain letter of credit facility made available 
to Ranche Limited by The First National Bank of Boston up to a maximum 
amount of $25,000,000 pursuant to a certain 

32

Continuing Commercial Letter of Credit Reimbursement and Security Agreement
dated as of November 22, 1994.

.2.    GUARANTEES.  Neither the Company nor any of its Subsidiaries 
shall create, incur, assume, or remain liable with respect to any 
Guarantees other than the following:

(a)    Guarantees in favor of the Agent or any of its affiliates 
or the Lenders hereunder;

(b)    Guarantees existing on the date of this Agreement and 
disclosed on EXHIBIT C hereto or in the financial statements referred to 
in SECTION 4.6;

(c)    Guarantees resulting from the endorsement of negotiable 
instruments for collection in the ordinary course of business;

(d)    Guarantees with respect to surety, appeal performance and 
return-of-money and other similar obligations incurred in the ordinary 
course of business (exclusive of obligations for the payment of borrowed 
money) not exceeding in the aggregate at any time $2,000,000; 

(e)    Guarantees of normal trade debt relating to the acquisition 
of goods, services and supplies;

(f)    Guarantee of the obligations of Ranche Limited, doing 
business as Guess International pursuant to a certain Guarantee 
substantially in the form of EXHIBIT L hereto, but only to the extent of 
the aggregate face amount of outstanding letters of credit issued by The 
First National Bank of Boston for the benefit of Ranche Limited under 
the Ranche Limited Credit Facility as of November 22, 1994; and as the 
face amount of such outstanding letters of credit decrease, the 
obligations of the Company under such guarantee shall decrease by a 
corresponding amount; and such guarantee shall continue in effect only 
for so long as any such letters of credit and/or obligations with 
respect thereto remain outstanding, and when no such letters of credit 
remain outstanding and all obligations with respect thereto have been 
indefeasibly satisfied, such Guarantee shall no longer be permitted 
hereunder;

(g)    Guarantees of the obligations for loans, letters of credit 
and other extensions of credit of Guess Italia or Traverso permitted 
under SECTION 6.1(h) which do not exceed $12,000,000 in the aggregate, 
less the total face amount of all accounts receivable sold, factored or 
pledged by Guess Italia or Traverso to lenders to the extent permitted 
under SECTION 6.5(i); and

(h)    Guarantees of loans and other borrowings obtained by any of 
the Company's Subsidiaries not to exceed $40,000,000 in the aggregate 
less Guaranties under SECTION 6.2(g) and any other amount as listed on 
EXHIBIT C.

33

.3.     SALE AND LEASEBACK.  Neither the Company nor any of its 
Subsidiaries shall enter into any arrangement, directly or indirectly, 
whereby it shall sell or transfer any property owned by it in order to lease 
such property or lease other property that the Company or any such Subsidiary 
intends to use for substantially the same purpose as the property being sold 
or transferred; PROVIDED, HOWEVER, that the Company may enter into such sale 
and leaseback transactions, other than with respect to the Company's existing 
real property, automobiles and aircraft, that do not, in the aggregate exceed 
$5,000,000.

.4.     ENCUMBRANCES.  Neither the Company nor any of its Subsidiaries 
shall create, incur, assume or suffer to exist any mortgage, pledge, security 
interest, lien or other charge or encumbrance, including the lien or retained 
security title of a conditional vendor upon or with respect to any of its 
property or assets including without limitation any trademark, tradename or 
other intellectual property ("ENCUMBRANCES"), except the following 
("PERMITTED ENCUMBRANCES"):

(a)    Encumbrances in favor of the Agent or any of its affiliates 
or Lenders under the Security Agreement;

(b)    Encumbrances existing as of the date of this Agreement and 
disclosed in EXHIBIT C and renewals, extensions or replacements thereof 
reasonably acceptable to the Agent;

(c)    liens for taxes, fees, assessments and other governmental 
charges to the extent that payment of the same is not delinquent or is 
not required in accordance with the provisions of SECTION 5.4;

(d)    landlords' and lessors' liens in respect of rent not in 
default or which are being contested in good faith or liens in respect 
of pledges or deposits under workmen's compensation, unemployment 
insurance, social security laws, or similar legislation (other than 
ERISA) or in connection with appeal and similar bonds incidental to 
litigation; mechanics', carriers', warehousemans', laborers', and 
materialmen's and similar liens, if the obligations secured by such 
liens are not then delinquent or are being contested in good faith; 
liens securing the performance of bids, tenders, contracts (other than 
for the payment of money); and statutory obligations incidental to the 
conduct of its business and that do not in the aggregate materially 
detract from the value of its property or materially impair the use 
thereof in the operation of its business;

(e)    judgment liens not in excess of $ 2,000,000 that shall not 
have been in existence for a period longer than 30 days after the 
creation thereof or, if a stay of execution shall have been obtained, 
for a period longer than 30 days after the expiration of such stay;

(f)    rights of lessors under Capital Leases to the extent 
permitted under SECTION 6.1;

(g)    Encumbrances in respect of any purchase money obligations 
for tangible property used in its business to the extent permitted under 

34

SECTION 6.1, PROVIDED that any such Encumbrances shall not extend to 
property and assets of the Company or any such Subsidiary not financed 
by such a purchase money obligation;

(h)    easements, rights of way, restrictions and other similar 
charges or Encumbrances relating to real property and not interfering in 
a material way with the ordinary conduct of its business; 

(i)    Encumbrances on any property acquired after the date hereof 
by the Company or any of its Subsidiaries created contemporaneously with 
such acquisition to secure or provide for the payment or financing of 
all or any part of the purchase price thereof, or the assumption of any 
Encumbrance upon any property hereinafter acquired and existing at the 
time of such acquisition, or the acquisition of such property subject to 
an Encumbrance without the assumption thereof, and any refinancing 
thereof to the extent the related Indebtedness is permitted under 
SECTION 6.1;

(j)    Encumbrances securing Indebtedness not prohibited by SECTION 
6.1 hereto;

(k)    inchoate Encumbrances incident to construction or 
maintenance of real property, or Encumbrances incident to construction 
or maintenance of real property now or hereafter filed of record for 
which adequate reserves have been set aside and which are being 
contested in good faith by appropriate proceedings and have not 
proceeded to judgment;

(l)    minor defects and irregularities in title to any real 
property which in the aggregate do not materially impair the fair market 
value of such real property;

(m)    rights reserved to or vested in any governmental agency by 
law or regulation to control or regulate, or obligations or duties under 
law or regulation to any governmental agency with respect to, the use of 
any real property;

(n)    rights reserved to or vested in any governmental agency by 
law or regulation to control or regulate, or obligations or duties under 
law or regulation to any governmental agency with respect to any right, 
power, franchise, grant, license, or permit;

(o)    present or future zoning laws or regulations or other laws 
or regulations restricting the occupancy, use, or enjoyment of real 
property;

(p)    liens consisting of deposits of property to secure (or in 
lieu of) surety, appeal or customs bonds in proceedings to which the 
Company is a party; 

(q)    rights of licensees under license agreements entered into in 
the ordinary course of business; and

(r)    the sale or factoring (including any conditional sale) by 
Guess Italia or Traverso of accounts receivable and the granting of liens 
to 

35

secure Indebtedness referred to in SECTION 6.1(h), provided it does not 
violate SECTION 6.5(i) hereof.

.5.     MERGER; CONSOLIDATION; SALE OR LEASE OF ASSETS.  Neither the 
Company nor any of its Subsidiaries shall sell, lease or otherwise dispose of 
any assets or properties consisting of the trademarks "Guess," "Guess ?" or 
the inverted triangle design or dispose of other assets or properties (valued 
at the lower of cost or market), to the extent that the value of the assets 
or properties so disposed during the then current fiscal year would exceed 5% 
of the amounts shown as the total tangible assets of the Company on the then 
most recent financial statements of the Company submitted pursuant to SECTION 
5.1 hereof, other than (i) sales of inventory in the ordinary course of 
business and sales or pledges of accounts receivable by Guess Italia and 
Traverso, for an initial payment of not less than 80% (or such lesser amount 
as shall be agreed to by the Agent) of the outstanding unpaid amount of all 
of the specific accounts receivable so sold or pledged, provided such sales 
and pledges would not aggregate with the face amount of all other accounts 
receivables sold or pledged by Guess Italia and Traverso more than 
$12,000,000, less the amount of any outstanding Indebtedness of Guess Italia 
or Traverso permitted under SECTION 6.1(h) hereof, (ii) sales, leases and 
other dispositions of assets no longer useful in the conduct of the Company's 
or such Subsidiary's business and not material in amount, (iii) sales, 
leases, transfers and other dispositions of equipment so long as such 
equipment is replaced with other equipment to be used in the conduct of the 
Company's or such Subsidiary's business of comparable value, (iv) a 
disposition consisting of a distribution in respect of its capital stock not 
prohibited by SECTION 6.7 hereof and (v) licenses of trademark, tradenames 
and other similar property in the ordinary course of the Company's business; 
or liquidate, merge or consolidate into or with any other person or entity, 
PROVIDED that any Subsidiary of the Company may merge or consolidate into or 
with (i) the Company if no Default has occurred and is continuing or would 
result from such merger and if the Company is the surviving company, or (ii) 
any Wholly-Owned Subsidiary of the Company.  In addition, as long as no 
Default or Event of Default has occurred and is continuing, the Company may 
dispose of any aircraft or work of art now or hereafter owned by the Company.

.6.     ADDITIONAL STOCK ISSUANCE.  The Company shall not permit any of 
its Subsidiaries to issue any additional shares of its capital stock or other 
equity securities, any options therefor or any securities convertible thereto 
other than to the Company. Neither the Company nor any of its Subsidiaries 
shall sell, transfer or otherwise dispose of any of the capital stock or 
other equity securities of a Subsidiary, except (i) to the Company or any of 
its Wholly-Owned Subsidiaries, or (ii) in connection with a transaction 
permitted by SECTION 6.5.

.7.     EQUITY DISTRIBUTIONS.

The Company shall not pay any dividends on any class of its Capital 
Stock or make any other distribution or payment on account of or in 
redemption, retirement or purchase of such Capital Stock without the prior 
written consent of the Majority Lenders; PROVIDED that this Section shall not 
apply to (i) the issuance, delivery or distribution by the Company of shares 
of its common stock pro rata to its existing shareholders and (ii) the 
purchase or redemption by the Company of its Capital Stock with the proceeds 
of the issuance of additional 

36

shares of Capital Stock.  If an Event of Default or Default has occurred and 
is continuing, then the Company shall not pay any dividends on any class of 
its Capital Stock.

.8.      INVESTMENTS.  Neither the Company nor any of its Subsidiaries 
shall make or maintain any Investments other than (i) Investments in 
Subsidiaries and new Investments in Subsidiaries, Newtimes Guess Parent and 
Newtimes Guess not to exceed $15,000,000 in the aggregate at any one time, 
(ii) existing Investments as of the date hereof in The Leslie Fay Companies, 
Inc., G&C Entertainment, Inc. and Guess Italia S.r.l.; (iii) existing 
Investments in debt obligations of the State of Israel; (iv) Investments 
consisting of advances to employees, officers and consultants of the Company 
for travel, relocation or similar expenses in the ordinary course of business 
not in excess of $500,000 outstanding at any one time; (v) Investments 
consisting of loans to employees of the Company in the ordinary course of 
business that do not exceed in the aggregate $1,000,000 outstanding at any 
time; (vi) Investments consisting of advances to vendors of the Company and 
other loans to vendors of the Company in the ordinary course of business that 
do not exceed in the aggregate $1,000,000 outstanding at any time; (vii) if 
no Default or Event of Default then exists, acquisitions, that do not violate 
SECTION 6.1, of a Person engaged in the Apparel Business, PROVIDED that (a) 
giving effect thereto on a pro forma combined basis as of the last day of the 
most recently ended fiscal quarter, the Company would be in compliance with 
SECTIONS 5.7 through 5.11, (b) if such acquisition consists of the 
acquisition of capital stock or other equity ownership interests in a Person, 
such Person is promptly thereafter merged with and into the Company; PROVIDED 
that the Company may acquire capital stock of such Person, subject to the 
limitation set forth in (c) and not merge such Person into the Company, if 
such capital stock is held by the Company and is represented on the balance 
sheet of the Company and (d) the cash paid for such acquisition does not 
exceed $25,000,000 and when added to the cash paid for all other acquisitions 
during such fiscal year does not exceed $50,000,000; PROVIDED that up to 
$5,000,000 in the aggregate of such $50,000,000 may be used to acquire 
capital stock of Person or Persons which are not merged into the Company; 
(viii) Qualified Investments; (ix) in connection with purchases of inventory 
occurring in the ordinary course of business consistent with the Company's 
past practice; (x) lease, utility and other similar deposits to the extent 
otherwise permitted hereunder; (xi) stock, obligations or securities received 
in settlement of debts owing to the Company or a Subsidiary of the Company as 
a result of foreclosure, perfection or enforcement of any lien; (xii) 
negotiable instruments held for collection; (xiii) sales of goods or services 
on trade credit terms consistent with the Company's and its Subsidiaries' 
past practices or as otherwise consistent with trade credit terms in common 
use in the industry; (xiv) redemption, retirement or repurchase by the 
Company in the amount provided in SECTION 5.13 of this Agreement, but only on 
the condition that (a) no Default exists at the time of such redemption, 
retirement or repurchase or would be caused by any such redemption, 
retirement or repurchase, (b) such redemption, retirement or repurchase of 
Subordinated Indebtedness would not cause the representations in SECTIONS 4.10
and 4.12 to be untrue and (c) the Company is in compliance with SECTION 5.13 
of this Agreement; 

37

(xv) investments in licensees of the Company not to exceed $10,000,000 in the 
aggregate; and (xvi) other Investments not to exceed $5,000,000 in the 
aggregate.

.9.     ERISA.  Neither the Company nor any member of the Controlled 
Group shall permit any Plan maintained by it to (i) engage in any "prohibited 
transaction" (as defined in Section 4975 of the Code, (ii) incur any 
"accumulated funding deficiency" (as defined in Section 302 of ERISA) whether 
or not waived, or (iii) terminate any Plan in a manner that could result in 
the imposition of a lien or encumbrance on the assets of the Company or any 
of its Subsidiaries pursuant to Section 4068 of ERISA.

.10.    CHANGE IN TERMS AND PREPAYMENT OF SUBORDINATED INDEBTEDNESS.  
The Company shall not:

(a)     effect or permit any change in or amendment to (i) the 
terms by which any Subordinated Indebtedness purports to be subordinated 
to the payment and performance of the Obligations, or (ii) the terms 
relating to the repayment or interest rate of any Subordinated 
Indebtedness other than to extend the terms of repayment thereof; or

(b)     directly or indirectly, make any payment of any principal 
of or in redemption, retirement or repurchase of Subordinated 
Indebtedness except payments required by the instruments evidencing such 
Indebtedness other than (i) payment of the Subordinated Indebtedness 
from the proceeds of an initial public offering of the shares of the 
Company, and (ii) the redemption, retirement or repurchase of 
Subordinated Indebtedness as specifically permitted under SECTION 
6.8(xiv) hereof.

.11.    TRANSACTIONS WITH AFFILIATES.  The Company and its Subsidiaries, 
if any, shall not enter into any transaction of any kind with any Affiliate 
of the Company OTHER THAN (i) continuation, renewals or extensions of the 
transactions (a) described in the notes to the Company's audited financial 
statements as at December 31, 1995 and for the fiscal year then ended or (b) 
listed on EXHIBIT K hereto, (ii) distributions permitted under SECTION 6.7, 
(iii) the lease assignment or subleasing by the Company of certain facilities 
of the Company to one or more Affiliates of the Company, PROVIDED that such 
facilities are concurrently subleased back to the Company at rents not in 
excess of the rents reserved under the lease to the Company, and (iv) 
transactions on terms at least as favorable to the Company as would be the 
case in an arm's-length transaction between unrelated parties of equal 
knowledge respecting the subject matter thereof and equal bargaining power.

38

.12.    NATURE OF BUSINESS.  The Company and its Subsidiaries, if any, 
shall not engage in any business OTHER THAN the Apparel Business; PROVIDED 
that the foregoing shall not prohibit the Company or any Subsidiary from 
engaging in businesses OTHER THAN the Apparel Business so long as the 
aggregate gross revenues of all such businesses in any fiscal year do not 
exceed 10% of the consolidated gross revenues of the Company and its 
Subsidiaries for that fiscal year.

7                                  - DEFAULTS

.1.     EVENTS OF DEFAULT.  There shall be an Event of Default hereunder 
if any of the following events occurs:

(a)    the Company shall fail to pay (i) when due any amount of 
principal of any Obligations, or (ii) within four (4) days after the due 
date therefor, any amount of interest thereon or any fees or expenses 
payable hereunder or under the Notes; or

(b)    the Company shall fail to perform any term, covenant or 
agreement contained in SECTIONS 5.1(g), 5.5, 5.7 through 5.13 or 6.1 
through 6.12; or

(c)    the Company shall fail to perform any term, covenant or 
agreement (other than in respect of SECTIONS 7.1(a) and (b) hereof) 
contained in this Agreement and such Default shall continue for 30 days 
after notice thereof has been sent to the Company by the Agent; or

(d)    an event of default has occurred and is continuing under any 
Subordinated Indebtedness; or

(e)    any representation or warranty of the Company made in this 
Agreement or in the Notes or any other documents or agreements executed 
in connection with the transactions contemplated by this Agreement or in 
any certificate delivered hereunder shall prove to have been false in 
any material respect upon the date when made or deemed to have been 
made; or

(f)    the Company or any of its Subsidiaries shall fail to pay at 
maturity and after any applicable period of grace, any obligations in 
excess of $2,000,000 in the aggregate for borrowed monies or advances, 
or fail to observe or perform any term, covenant or agreement evidencing 
or securing such obligations for borrowed monies or advances, the result 
of which failure is that the holder or holders of such Indebtedness 
cause such Indebtedness to become due prior to its stated maturity upon 
delivery of required notice, if any; or

(g)    the Company or any of its Subsidiaries shall (i) apply for 
or consent to the appointment of, or the taking of possession by, a 
receiver, custodian, trustee, liquidator or similar official of itself 
or of all or a substantial part of its property, (ii) be generally not 
paying its debts as such debts become due, (iii) make a general 
assignment for the benefit of its creditors, (iv) commence a voluntary 
case under the Bankruptcy Code (as 

39

now or hereafter in effect), (v) commence any case or proceeding under 
any law relating to bankruptcy, insolvency, reorganization, winding-up 
or composition or adjustment of debts, or any other law providing for 
the relief of debtors, (vi) acquiesce in writing to, any petition filed 
against it in an involuntary case under the Bankruptcy Code or other 
law, or (vii) take any action under the laws of its jurisdiction of 
incorporation or organization similar to any of the foregoing; or

(h)    a proceeding or case shall be commenced, without the 
application or consent of the Company or any of its Subsidiaries in any 
court of competent jurisdiction, seeking (i) the liquidation, 
reorganization, dissolution, winding up, or composition or readjustment 
of its debts, (ii) the appointment of a trustee, receiver, custodian, 
liquidator or the like of it or of all or any substantial part of its 
assets, or (iii) similar relief in respect of it, under any law  
relating to bankruptcy, insolvency, reorganization, winding-up or 
composition or adjustment of debts or any other law providing for the 
relief of debtors, and such proceeding or case shall continue 
undismissed, or unstayed and in effect, for a period of 60 days; or an 
order for relief shall be entered in an involuntary case under the 
Bankruptcy Code, against the Company or such Subsidiary; or action under 
the laws of the jurisdiction of incorporation or organization of the 
Company or any of its Subsidiaries similar to any of the foregoing shall 
be taken with respect to the Company or such Subsidiary and shall 
continue unstayed and in effect for any period of 60 days; or

(i)    a judgment or order for the payment of money shall be 
entered against the Company or any of its Subsidiaries by any court, or 
a warrant of attachment or execution or similar process shall be issued 
or levied against property of the Company or such Subsidiary, that in 
the aggregate exceeds $2,000,000 in value and such judgment or order 
shall continue undischarged, unstayed, unsatisfied, undismissed or 
unbonded for 30 days; or

(j)    the Company or any member of the Controlled Group shall fail 
to pay when due an amount or amounts aggregating in excess of $100,000 
that it shall have become liable to pay to the PBGC or to a Plan under 
Title IV of ERISA; or notice of intent to terminate a Plan or Plans 
shall be filed under Title IV of ERISA by the Company, any member of the 
Controlled Group, any plan administrator or any combination of the 
foregoing; or the PBGC shall institute proceedings under Title IV of 
ERISA to terminate or to cause a trustee to be appointed to administer 
any such Plan or Plans or a proceeding shall be instituted by a 
fiduciary of any such Plan or Plans against the Company and such 
proceedings shall not have been dismissed within 30 days thereafter; or 
a condition shall exist by reason of which the PBGC would be entitled to 
obtain a decree adjudicating that any such Plan or Plans must be 
terminated; or

(k)    there are less than two (2) of the current executive 
management officers (Maurice, Paul and Armand Marciano) actively engaged 
in the management of the Company or the shareholders actively engaged in 
the management of the Company cease to own or control beneficially, in 
the aggregate, common stock entitled to exercise a majority of the 
voting power of the Company.

40

.2.     REMEDIES.  (a) Upon the occurrence of an Event of Default 
described in SECTIONS 7.1 (g) and (h), immediately and automatically, and (b) 
upon the occurrence of any other Event of Default, at any time thereafter 
while such Event of Default is continuing, at the option of the Majority 
Lenders and upon the Agent's declaration:

(a)    the Lenders' commitment to make any further Loans or issue 
Letters of Credit hereunder shall terminate;

(b)    the unpaid principal amount of the Loans together with 
accrued interest and all other Obligations shall become immediately due 
and payable without presentment, demand, protest or further notice of 
any kind, all of which are hereby expressly waived; and

(c)    the Agent and the Lenders may exercise any and all rights 
they have under this Agreement, the Notes or any other documents or 
agreements executed in connection herewith, or at law or in equity, and 
proceed to protect and enforce their rights by any action at law, in 
equity or other appropriate proceeding.

(d)    the order and manner in which the rights and remedies of the 
Agent and the Lenders under the Loan Documents and otherwise are to be 
exercised shall be determined by the Majority Lenders.  All payments 
received by the Agent and the Lenders, or any of them, shall be applied 
FIRST to the costs and expenses (including reasonable attorneys' fees 
and disbursements) of the Agent and of the Lenders, SECOND paid pro rata 
to the Lenders in the same proportion that the aggregate of the unpaid 
principal amount owing on the Obligations of the Company to each Lender, 
plus accrued and unpaid interest thereon, bears to the aggregate of the 
unpaid principal amount owing on all the Obligations, plus accrued and 
unpaid interest thereon, AND THEREAFTER to the Company or whomsoever may 
be lawfully entitled thereto.  Regardless of how each Lender may treat 
the payments for its own accounting purposes, for the purpose of 
computing the Obligations hereunder and under the Notes, payments shall 
be applied FIRST, to the costs and expenses of the Agent and the Lenders 
as set forth above, SECOND, to the payment of accrued and unpaid 
interest due under any Loan Documents, to and including the date of such 
application (ratably, and without duplication, according to the accrued 
and unpaid interest due under each of the Loan Documents), and THIRD, to 
the payment of all other amounts (including principal and fees) then 
owing to the Lenders under the Loan Documents. No such application of 
payments will cure any Event of Default or prevent acceleration, or 
continued acceleration, of amounts payable under the Loan Documents or 
prevent the exercise, or continued exercise, of rights or remedies of 
the Lenders hereunder or thereunder or at law or in equity.

41

8                      - CONCERNING THE AGENT AND THE LENDERS

.1.     APPOINTMENT AND AUTHORIZATION.  Each of the Lenders hereby 
appoints the Agent, acting through its head office, to serve as the Agent 
under this Agreement and the other Loan Documents and irrevocably authorizes 
the Agent to take such action as the Agent on such Lender's behalf under this 
Agreement and the other Loan Documents and to exercise such powers and to 
perform such duties under this Agreement, the Loan Documents and the other 
documents and instruments executed and delivered in connection with the 
consummation of the transactions contemplated hereby as are delegated to the 
Agent by the terms hereof or thereof, together with all such powers as are 
reasonably incidental thereto.

.2.     AGENT AND AFFILIATES.  The Agent and the Co-Agent shall have the 
same rights and powers under this Agreement and the Loan Documents as each 
other Lender and may exercise or refrain from exercising the same as though 
it were not the Agent or the Co-Agent, respectively, and the Agent and the 
Co-Agent and their respective Affiliates may accept deposits from, lend money 
to, and generally engage in any kind of business with the Company or any 
Affiliate of the Company as if it were not the Agent or Co-Agent hereunder 
and under the Loan Documents which would not cause the Company to violate 
SECTION 6.1 hereof.  Except as otherwise provided by the terms of this 
Agreement, nothing herein shall prohibit any of the Lenders from accepting 
deposits from, lending money to or generally engaging in any kind of business 
with the Company or any Affiliate of the Company.

.3.     LOANS.

(i)    If on any Business Day, the Agent receives notice, 
pursuant to SECTION 2.2 hereof, that the Company has requested a Loan, 
the Agent shall promptly notify each Lender by telephone of such request 
to be followed by a fax verifying such requested Loan.  Such notice from 
the Agent shall contain the amount of the requested Loan and the share 
that each Lender is requested to fund as part of such Loan.  Each Lender 
shall, prior to 2:00 p.m. Boston time of the date on which the Loan is 
requested, transfer to the Agent by wire through the Federal Reserve 
System in immediately available funds the respective amount set forth in 
the requested Loan for each such Lender.  The Company and the Lenders 
agree that if any of the Lenders fail to fund, the Agent and the Lenders 
shall not be required to fund that portion of the Loan represented by 
the amount due from any Lender who has not funded in accordance with 
this subsection.  Any Lender not funding a Loan shall not be permitted 
to make any further Loans until such time as it has funded the portion 
of any and all previous Loans which it failed to fund.  On any Business 
Day that the Agent receives a payment in immediately available funds 
from the Company with respect to the Obligations hereunder, the Agent 
shall, subject to the terms and conditions of this Agreement, notify 
each Lender that it has received such payment and, by wire transfer 
through the Federal Reserve System, wire each Lender's share of such 
funds, net of any amount which such Lender is required to fund for any 
Loan requested on the date of any such loan payment or any other sum due 
from such Lender to the Agent.  The Agent shall fax to each of the 
Lenders notice of any such payment, at the time such payment is wired.

42

(ii)   Funds provided by the Agent or the Co-Agent as payment 
upon a sight or time draft presented to the Agent or Co-Agent under a 
Letter of Credit issued pursuant to the terms of SECTION 2.16 hereof, 
and any payments made by the Agent or Co-Agent on behalf of the Company, 
shall constitute Loans made by the Lenders on a risk participation basis 
in accordance with each Lenders' Percentage at such time as such funds 
are actually provided, or such payments are made, by the Agent or 
Co-Agent; PROVIDED that the Co-Agent shall receive such payment as 
required from the other Lenders so that its percentage of the Loan so 
made does not exceed its respective Lender's Percentage.

(iii)  All Loans made by the Agent on behalf of any Lender shall 
be, for purposes of interest income and other charges, considered Loans 
from such Lender to the Company, at such time as the Agent receives from 
such Lender funds as provided in SECTION 8.3(i), and prior to such time 
such Loans shall be considered, for purposes of interest income and 
other charges, Loans from the Agent or the other Lenders to the extent 
reimbursed by such other Lenders as provided in SECTION 8.3(i) above.

(iv)   The proceeds of Collateral, including, but not limited 
to, any collections of accounts receivable, shall be applied first to 
pay the expenses of the Agent and Lenders as herein provided, then to 
equalize each Lender's share of the Loans so that each Lender's share of 
the Loans equals such Lender's respective Lender's Percentage.

(v)    The Agent may at any time refuse to make Loans on behalf 
of any Lender unless such Lender shall have provided to the Agent 
immediately available funds sufficient to cause such Lender's share of 
the Loans to equal and reflect such Lender's Percentage at the time and 
in the manner provided in SECTION 8.3(i).

(vi)   Notwithstanding the provisions hereof, the obligations to 
make Loans under the terms of this Agreement shall be the several and 
not a joint obligation of the Lenders, and any Loans made by the Agent 
on behalf of the Lenders are strictly for the administrative convenience 
of the parties and shall in no way diminish any Lender's liability to 
the Agent to repay the Agent for such Loans.

.4.     PAYMENTS.  All payments and prepayments of principal of Loans 
received by the Agent shall be paid to each of the Lender's PRO RATA in 
accordance with their respective Lender's Percentage.  All such payments from 
the Company or as proceeds of Collateral received by the Agent shall be held 
in trust for the benefit of the Lenders.  As each such payment is received by 
the Agent, the Agent shall promptly charge or credit each of the Lenders to 
the extent necessary to ensure that as between them, each of the Lenders 
holds its respective Lender's Percentage of outstanding Loans, based on the 
then unpaid aggregate principal amounts of the Loans outstanding.

.5.     INTEREST, FEES AND OTHER PAYMENTS. (a)  All payments of interest
received by the Agent in respect of Loans, except as otherwise provided by 
the terms of this Agreement, and all other fees and premiums received by the 
Agent 

43

hereunder or in respect of Loans (other than the Agent's Fee which shall be 
retained by the Agent) shall be shared by the Lenders pro rata in accordance 
with their respective Lender's Percentages.  (b) All payments received by the 
Agent pursuant to SECTION 9.2 of this Agreement shall be applied by the Agent 
to reimburse each Lender, as appropriate, on account of the tax, charge or 
expense incurred by such Lender, if any, in respect of which such payment is 
made.  (c) Each of the Lenders and the Agent agree that if it should receive 
any amount (whether by voluntary payment, by realization upon Collateral, by 
the exercise of the right of set-off or banker's lien, by counterclaim or 
cross action, by the enforcement of any right under the Loan Documents or 
otherwise) in respect of principal of or interest on, the Loans, or any fees 
which are to be shared PRO RATA among the Lenders, which, as compared to the 
amounts theretofore received by other Lenders in respect to such principal, 
interest or fees, is in excess of such Lender's Percentage of such principal, 
interest or fees, such Lender shall share such excess, less the cost and 
expenses (including, reasonable attorneys' fees and disbursements) incurred 
by such Lender in connection with such realization, exercise, claim or 
action, PRO RATA with all other Lenders in proportion to their respective 
Lender's Percentage and such sharing shall be deemed a purchase (without 
recourse) by such sharing party of a participation interest in the Loans or 
in such fees, as the case may be, owed to the recipients of such shared 
payments to the extent of such shared payments; PROVIDED, HOWEVER, that if 
all or any portion of such excess amount is thereafter recovered from such 
Lender, such purchase shall be rescinded and the purchase price restored to 
the extent of such recovery, but without interest. The Lenders agree that any 
payment obtained through the exercise of a right of set-off, bankers lien, 
counterclaim or otherwise as to the funds of the Company shall be applied 
first to Obligations owing to the Lenders under this Agreement.

.6.     ACTION BY AGENT.

(i)       The obligations of the Agent hereunder are only those 
expressly set forth herein.  The Agent shall have no duty to exercise 
any right or power or remedy hereunder, under any Loan Document, or 
under any other document or instrument executed and delivered in 
connection with or as contemplated by this Agreement or to take any 
affirmative action hereunder or thereunder.

(ii)      The Agent shall keep the other records of the Loans and 
payments hereunder, and shall give and receive notices and other 
communications to be given or received by the Agent hereunder on behalf 
of the Lenders.

(iii)     Upon the occurrence of an Event of Default, the Agent 
shall notify each of the Lenders and, upon the request of the Majority 
Lenders, the Agent shall, if such Event of Default is continuing declare 
all Obligations immediately due and payable and take such other action 
as may appear necessary or desirable to collect the Obligations and 
enforce the rights and remedies of the Agent or the Lenders with respect 
to the Collateral.

44

(iv)      Whether or not an Event of Default shall have occurred, 
the Agent may, and upon the request of the Majority Lenders, shall from 
time to time exercise the rights of the Agent and Lenders hereunder 
under the Loan Documents, or under the other documents or instruments 
executed or delivered in connection with or as contemplated by this 
Agreement as may be necessary or desirable to protect the Collateral and 
the interests of the Agent and the Lenders therein.

.7.     CONSULTATION WITH EXPERTS.  The Agent shall be entitled to 
retain and consult with legal counsel, independent public accountants and 
other experts selected by it and shall not be liable to the Lenders for any 
action taken, omitted to be taken or suffered in good faith by it in 
accordance with the advice of such counsel, accountants or experts.  The 
Agent may employ agents and attorneys-in-fact and shall not be liable to the 
Lenders for the default or misconduct of any such agents or attorneys.

.8.     LIABILITY OF AGENT.  The Agent shall exercise the same care to 
protect the interests of each of the Lenders as it does to protect its own 
interests, so that so long as the Agent exercises such care it shall not be 
under any liability to any of the Lenders, except for the Agent's gross 
negligence or willful misconduct with respect to anything it may do or 
refrain from doing. Subject to the immediately preceding sentence, neither 
the Agent nor any of its directors, officers, agents or employees shall be 
liable to any Lender for any action taken or not taken by it in connection 
herewith in its capacity as Agent.  Without limiting the generality of the 
foregoing, neither the Agent nor any of its directors, officers, agents or 
employees shall be responsible for or have any duty to ascertain, inquire 
into or verify: (i) any statement, warranty or representation made in 
connection with this Agreement, any Loan Document or any borrowing hereunder; 
(ii) the performance or observance of any of the covenants or agreements of 
the Company; (iii) the satisfaction of any condition specified in SECTION 3 
hereof, except receipt of items required to be delivered to the Agent; (iv) 
the validity, effectiveness, enforceability or genuineness of this Agreement, 
the Notes, the Loan Documents or any other document or instrument executed 
and delivered in connection with or as contemplated by this Agreement; (v) 
the existence, value, collectibility or adequacy of the Collateral or any 
part thereof or the validity, effectiveness, perfection or relative priority 
of the liens and security interests of the Lenders therein; or (vi) the 
filing, recording, refiling, continuing or re-recording of any financing 
statement or other document or instrument evidencing or relating to the 
security interests or liens of the Lenders in the Collateral. The Agent shall 
not incur any liability by acting in reliance upon any notice, consent, 
certificate, statement or other writing (which may be a bank wire, telex or 
similar writing) believed by it to be genuine or to be signed by the proper 
party or parties.

45

.9.     INDEMNIFICATION.  Each Lender agrees to indemnify the Agent (to 
the extent the Agent is not reimbursed by the Company), ratably in accordance 
with its Lender's Percentage, from and against any cost, expense (including 
attorneys' fees and disbursements), claim, demand, action, loss or liability 
which the Agent may suffer or incur in connection with this Agreement or any 
Loan Document, or any action taken or omitted by the Agent hereunder or 
thereunder, or the Agent's relationship with the Company hereunder, 
including, without limitation, the costs and expenses of defending itself 
against any claim or liability in connection with the exercise or performance 
of any of its powers and duties hereunder and of taking or refraining from 
taking any action hereunder; PROVIDED that the Lenders shall not reimburse 
the Agent for any such cost, expenses, claims or liability which arises from 
or is related to the gross negligence or willful misconduct of the Agent.  No 
payment by any Lender under this SECTION 8.9 shall in any way relieve the 
Company of its obligations under this Agreement with respect to the amounts 
so paid by any Lender, and the Lenders shall be subrogated to the rights of 
the Agent, if any, in respect thereto; PROVIDED such indemnification does not 
arise from the gross negligence or willful misconduct of the Agent.

.10.    INDEPENDENT CREDIT DECISION.  Each of the Lenders represents and 
warrants to the Agent that it has, independently and without reliance upon 
the Agent or any other Lender and based on the financial statements referred 
to in SECTION 4.6 and such other documents and information as it has deemed 
appropriate, made its own independent credit analysis and decision to enter 
into this Agreement.  Each of the Lenders acknowledges that it has not relied 
upon any representation by the Agent and that the Agent shall not be 
responsible for any statements in or omissions from any documents or 
information concerning the Company, this Agreement, the Notes, the Loan 
Documents or any other document or instrument executed and delivered in 
connection with or as contemplated by this Agreement. Each of the Lenders 
acknowledges that it will, independently and without reliance upon the Agent 
or any other Lender and based on such documents and information as it shall 
deem appropriate at the time, continue to make its own credit decision in 
taking or not taking action under this Agreement.

.11.    CONSENTS OF LENDERS.  Under any circumstances where the consent, 
waiver, approval or similar decision of the Lenders must be requested by the 
Company under the terms of this Agreement, each of the Lenders hereby agrees 
that any response to any such consent, waiver, approval or otherwise will not 
be unreasonably delayed by such Lender.

.12.    SUCCESSOR AGENT.  The Agent, or any successor Agent, may resign 
as Agent at any time by giving written notice thereof to the Lenders and the 
Company.  Upon any such resignation, the Majority Lenders shall have the 
right to appoint a successor Agent.  If no successor Agent shall have been so 
appointed by the Majority Lenders, then within 30 days after the retiring 
Agent's giving of notice of resignation, the retiring Agent may, on behalf of 
the Lenders, appoint a successor Agent, which shall be a commercial lender 
(or Affiliate thereof) or savings and loan association organized under the 
laws of the United States of America or any State thereof or under the laws 
of another country which is doing business in the United States of America or 
any State thereof and having a combined capital, surplus and undivided 
profits of at least $100,000,000.  Upon the acceptance of any appointment as 
Agent hereunder by a successor Agent, such 

46

successor Agent shall thereupon succeed to and become vested with all the 
rights, powers, privileges and duties of the retiring Agent, and the retiring 
Agent shall be discharged from all further duties and obligations under this 
Agreement.  After any retiring Agent's resignation or removal hereunder as 
Agent, the provisions of this Section 8 shall inure to its benefit as to any 
actions taken or omitted to be taken by it while it was Agent under this 
Agreement.

9                            - MISCELLANEOUS

.1.     NOTICES.  Unless otherwise specified herein, all notices 
hereunder to any party hereto shall be in writing and shall be deemed to have 
been given when delivered by hand, when properly deposited in the mail 
postage prepaid, or electronic facsimile transmission, or when delivered to 
the telegraph company or overnight courier, addressed to such party at its 
address indicated below:

If to the Company, at:

GUESS ?, INC.
1444 South Alameda Street
Los Angeles, California 90021 
Attention:  Maurice Marciano, Chairman or 
Roy Pierce, Chief Financial Officer
Telecopier: (213) 744-7817

If to the Agent, at:

The First National Bank of Boston
100 Federal Street
Mail Stop  01-22-05
Boston, Massachusetts 02110
Attention:  Christopher D. Francis, Vice President
Telecopier: (617) 434-2203

If to the Lenders, then to the addresses set forth on EXHIBIT J.

or at any other address specified by such party in writing.

.2.     EXPENSES.  The Company will pay (i) at closing all reasonable 
out of pocket expenses and agreed upon fees of the Agent related to the 
preparation of this Agreement and the Loan Documents and the syndication of 
the Loans hereunder, including, without limitation, the fees of counsel to 
the Agent (not to exceed $25,000.00 plus expenses of such counsel) and all 
other related fees and charges, (ii) within five days of demand, all 
reasonable out-of-pocket expenses of the Agent in connection with the waiver 
or amendment of this Agreement, the Notes or other Loan Documents and other 
documents executed in connection therewith and all reasonable out-of-pocket 
expenses of the Lenders in connection with any material waiver or amendment 
of this Agreement, the Notes or other Loan Documents, and (iii) on demand all 
reasonable out-of-pocket expenses of the Agent or any of the Lenders related 
to Default or collection of the Loans or other Obligations in connection with 
the Agent's or the Lenders' exercise, preservation or enforcement of any of 
its rights or remedies thereunder, including, without limitation, 

47

reasonable fees of outside legal counsel, accounting, consulting, brokerage 
or other similar professional fees or expenses, and any reasonable out of 
pocket fees or expenses associated with any travel or other costs relating to 
any appraisals or examinations conducted in connection with the Obligations 
or any Collateral therefor, and the amount of all such expenses shall, until 
paid, bear interest at the rate applicable to Base Rate Loans hereunder 
(including any rate of interest provided in SECTION 2.14).

.3.     SET-OFF.

(a)    Regardless of the adequacy of any Collateral or other means of 
obtaining repayment of the Obligations, any deposits, balances or other sums 
credited by or due from the head office of the Agent or any of the Lenders or 
any of their respective branch offices to the Company may, at any time and 
from time to time after the occurrence and during the continuation of an 
Event of Default hereunder, without notice to the Company or compliance with 
any other condition precedent now or hereafter imposed by statute, rule of 
law, or otherwise (all of which are hereby expressly waived) be set off, 
appropriated, and applied by the Agent or any Lender against any and all 
obligations of the Company to the Lenders in such manner as provided under 
the terms of this Agreement.  Nothing in this SECTION 9.3 shall limit or 
restrict the exercise by a Lender of any rights to setoff or banker's lien 
under applicable law. Promptly following each such setoff, appropriation and 
application, the Agent or the applicable Lender shall notify the Company of 
such setoff, appropriation or application (which notification shall contain a 
description of the applicable account and applicable amount).

(b)    Each Lender severally agrees that if it, through the exercise of 
the right of setoff, banker's lien, or counterclaim against the Company or 
otherwise, receives in payment of the Obligations due it hereunder and under 
the Notes ratably more than any other Lender receives in payment of 
Obligations held by that Lender, then:  (a) the Lender exercising the right 
of setoff, banker's lien, or counterclaim or otherwise receiving such payment 
shall purchase, and shall be deemed to have simultaneously purchased, from 
the other Lenders a participation in the Obligations held by the other 
Lenders and shall pay to the other Lenders a purchase price in an amount so 
that the share of the Obligations held by each Lender after the exercise of 
the right of setoff, banker's lien, or counterclaim or receipt of payment 
shall be in the same proportion that existed prior to the exercise of the 
right of setoff, banker's lien, or counterclaim or receipt of payment, and 
(b) such other adjustments and purchases of participations shall be made from 
time to time as shall be equitable to ensure that all of the Lenders share 
any payment obtained in respect of the Obligations ratably in accordance with 
each Lender's share of the Obligations immediately prior to, and without 
taking into account, the payment, PROVIDED that, if all or any portion of a 
disproportionate payment obtained as a result of the exercise of the right of 
setoff, banker's lien, counterclaim or otherwise is thereafter recovered from 
the purchasing Lender by the Company or any Person claiming through or 
succeeding to the rights of the Company, the purchase of a participation 
shall be rescinded the purchase price thereof shall be restored to the extent 
of the recovery, but without interest.  The Company expressly consents to the 
foregoing arrangements and agrees that any Lender holding a participation in 
an Obligation so purchased pursuant to this SECTION 9 may exercise any and 
all rights of setoff, banker's 

48

lien or counterclaim with respect to the participation as fully as if the 
Lender were the original owner of the Obligation purchased.

.4.     TERM OF AGREEMENT.  This Agreement shall terminate at such time 
as (i) the Lenders have no commitment to make Loans or issue Letters of 
Credit hereunder, (ii) no Loan or Letter of Credit shall be outstanding, and 
(iii) no Obligation shall be due.

.5.     NO WAIVERS.  No failure or delay by the Agent or the Lenders in 
exercising any right, power or privilege hereunder or under the Notes or 
under any other documents or agreements executed in connection herewith shall 
operate as a waiver thereof; nor shall any single or partial exercise thereof 
preclude any other or further exercise thereof or the exercise of any other 
right, power or privilege.  The rights and remedies herein and in the Loan 
Documents provided are cumulative and not exclusive of any rights or remedies 
otherwise provided by agreement or law.

.6.     GOVERNING LAW.  This Agreement and the Notes shall be deemed to 
be contracts made under seal and shall be construed in accordance with and 
governed by the laws the Commonwealth of Massachusetts (without giving effect 
to any conflicts of laws provisions contained therein).

.7.     AMENDMENTS, WAIVERS, ETC.  Except as otherwise expressly 
provided in this Agreement, or in any of the Loan Documents: (i) this 
Agreement and each of the other Loan Documents may be modified, amended or 
supplemented in any respect whatsoever only with the prior written consent or 
approval of the Majority Lenders and the Company; and (ii) the performance or 
observance by the Company of any of its covenants, agreements or obligations 
under any of the Loan Documents may be waived only with the written consent 
of the Majority Lenders; PROVIDED, HOWEVER, that the following changes shall 
require the written consent, agreement or approval of the all of the Lenders: 
(A) any change in the amount or the due date of the Loans; (B) any change in 
the interest rates prescribed herein or in any of the Loan Documents; (C) any 
change in the Commitment Amount or the Lender's Percentage of any of the 
Lenders; (D) any release of Collateral securing the Obligations; (E) any 
change in the terms of this SECTION 9.7 and (F) any change in the definition 
of Majority Lenders.  Neither this Agreement nor the Loan Documents nor any 
provision hereof or thereof may be amended, waived, discharged or terminated 
except by a written instrument signed by the Agent and, in the case of 
amendments, by the Company.

49

.8.  ASSIGNMENT AND PARTICIPATIONS.

(i)     ASSIGNMENTS BY THE LENDERS.  From and after the date 
hereof, any of the Lenders may at any time assign all, or a 
proportionate part of all, of its rights, interests and duties with 
respect to such Lender's commitment to make Loans hereunder and the 
Notes to one or more banks or other financial institutions (each, an 
"Assignee") on such terms, as between such Lender and each of its 
Assignees, as such Lender may think fit, and such Assignee shall assume 
such rights, interests and duties pursuant to an instrument executed by 
such Assignee and such Lender, and for this purpose such Lender may make 
available to each of its potential Assignees such information relating 
to the Company, this Agreement and the transactions contemplated hereby 
as such Lender may think necessary or desirable, which information shall 
be held by each potential Assignee strictly in confidence; PROVIDED, 
HOWEVER, that prior to assigning any interest to any Assignee hereunder 
such Lender (a) shall notify the Company and the Agent in writing 
identifying the proposed Assignee and stating the aggregate principal 
amount of the proposed interest to be assigned, (b) receive the prior 
written consent of the Company, which shall not be unreasonably 
withheld, and the Agent, which consent may not be unreasonably withheld 
(c) shall not assign to any Assignee less than $10,000,000 of such 
Lender's commitment to make Loans hereunder and interest in the Notes; 
and (d) shall pay to the Agent a nonrefundable fee of $2500.00 per 
assignment.  It is understood and agreed that the proviso contained in 
the immediately preceding sentence shall not be applicable in the case 
of, and this paragraph (i) shall not restrict (1) a collateral 
assignment or other similar transfer to any of the twelve Federal 
Reserve Banks organized under Section 4 of the Federal Reserve Act, 12 
U.S.C. Section 341 or (2) any assignment to any of a Lender's respective 
branch operations or affiliates.  Upon execution and delivery of such an 
instrument and payment by such Assignee to such Lender of an amount 
equal to the purchase price agreed between such Lender and such 
Assignee, such Assignee shall be a Lender party to this Agreement and 
shall have all the rights, interests and duties of a Lender with a 
commitment to make Loans hereunder as set forth in such instrument of 
assumption, and such Lender shall be released from its obligations 
hereunder to a corresponding extent, and no further consent or action by 
any party shall be required.  Upon the consummation of any assignment 
pursuant to this paragraph (i), such Lender, the Agent and the Company 
shall make appropriate arrangements so that, if required, a new Note is 
issued to the Assignee.

(ii)    PARTICIPATIONS BY THE LENDERS.  From and after the date 
hereof, any of the Lenders shall be at liberty to offer participations 
in its commitment to make Loans hereunder and the Notes to one or more 
banks or other financial institutions (each, a "PARTICIPANT") on such 
terms as such Lender may think fit, and for this purpose such Lender may 
make available to each of its potential Participants such information 
relating to the Company, this Agreement and the transactions 
contemplated hereby as such Lender may think necessary or desirable, 
which information shall be held by each potential Participant strictly 
in confidence; PROVIDED, HOWEVER, that (a) the amount of any 
participation in such Lender's 

50

commitment to make Loans hereunder and the Notes participated to each 
Participant shall be in an aggregate amount equal to not less than 
$5,000,000 of such commitment and the Notes, and (b) such Lender shall 
retain the sole right to consent to amendments to, or waivers of, the 
provisions of this Agreement and the Notes and the sole right and 
responsibility to enforce the obligations of the Company hereunder, 
under the Notes and the other Loan Documents; PROVIDED that such Lender 
may agree with each of its Participants that such Lender will not agree, 
without the consent of the Participant, to any amendment or waiver of 
any provision of this Agreement which would increase or otherwise change 
such Lender's  Percentage or reduce the principal of or rate of interest 
on the Loans subject to such participation, or postpone the date fixed 
for any payment of principal or of interest on any Loans or terminate 
its security interest with respect to or release of any Collateral 
hereunder held by such Lender.  Any Lender participating its commitment 
to make Loans and the Notes under this SECTION 9.8(ii) will promptly 
notify the Company of such participation and the name of any such 
participant.

(iii)   No Assignee, Participant or other transferee of any Lender's 
rights shall be entitled to receive any greater payment under this 
Agreement than the original Lender would have been entitled to receive 
with respect to the rights transferred.

.9.     INDEMNITY.  The Company shall absolutely and unconditionally 
indemnify and hold the Agent and each of the Lenders harmless against any and 
all claims, demands, suits, actions, causes of action, damages, losses, 
settlement payments, obligations, costs, expenses and all other liabilities 
whatsoever which shall at any time or times be incurred or sustained by the 
Lender or by any of its shareholders, directors, officers, employees, 
subsidiaries, affiliates or agents (each an "INDEMNIFIED PARTY") (except any 
of the foregoing incurred or sustained as a result of the gross negligence or 
willful misconduct of the Agent, any Lender or any other Indemnified Party) 
on account of, or in relation to, or in any way in connection with, any of 
the arrangements or transactions contemplated by, associated with or 
ancillary to either this Agreement or any of the other documents executed or 
delivered in connection herewith (including, without limitation, those 
arising as a violation by the Company of any Environmental Laws), whether or 
not all or any of the transactions contemplated by, associated with or 
ancillary to this Agreement or any of such documents are ultimately 
consummated.

.10.    BINDING EFFECT OF AGREEMENT.  This Agreement shall be binding 
upon and inure to the benefit of the Company, the Lenders and the Agent and 
their respective successors and assigns; PROVIDED that the Company may not 
assign or transfer its rights or obligations hereunder.

.11.    COUNTERPARTS.  This Agreement may be signed in any number of 
counterparts with the same effect as if the signatures hereto and thereto 
were upon the same instrument.

.12.    PARTIAL INVALIDITY.  The invalidity or unenforceability of any 
one or more phrases, clauses or sections of this Agreement shall not affect 
the validity or enforceability of the remaining portions of it.

51

.13.    CAPTIONS.  The captions and headings of the various sections and 
subsections of this Agreement are provided for convenience only and shall not 
be construed to modify the meaning of such sections or subsections.

.14.    NATURE OF LENDER'S OBLIGATIONS.  Each Lender's obligation to 
make any Loan pursuant hereto is several and not joint or joint and several.  
A default by any Lender will not increase the Lender's Percentage 
attributable to any other Lender.  Any Lender not in default may, if it 
desires, assume (in such proportion as the nondefaulting Lenders agree) the 
obligations of any Lender in default, but is not obligated to do so. The 
Agent agrees that it will use its best efforts either to induce the other 
Lenders to assume the obligations of a Lender in default or to obtain another 
Lender, reasonably satisfactory to the Company, to replace such a Lender in 
default.

.15.    NONLIABILITY OF LENDERS.  The Company acknowledges and agrees 
that:

(a)  Any inspections of any property of the Company made by or 
through the Agent or the Lenders are for purposes of administration of 
the Loan Documents only and the Company is not entitled to rely upon the 
same;

(b)  The relationship between the Company and the Lenders arising 
out of or related to this Agreement is, and shall at all times remain, 
solely that of a borrower and lender; neither the Agent nor any of the 
Lenders shall under any circumstance be construed to be a partner or a 
joint venturer of the Company or any of its Subsidiaries; neither the 
Agent nor any of the Lenders shall under any circumstance be deemed to 
be in a fiduciary relationship with the Company or any of its 
Subsidiaries in connection with this Agreement, or to owe any fiduciary 
duty to the Company or any of its Subsidiaries in connection with this 
Agreement; neither the Agent nor any of the Lenders undertakes or 
assumes any responsibility or duty to the Company or any of its 
Subsidiaries to select, review, inspect, supervise, pass judgment upon 
or inform the Company or any of its Subsidiaries of any matter in 
connection with their property or the operations of the Company or any 
of its Subsidiaries; the Company and its Subsidiaries shall rely 
entirely upon their own judgment with respect to such matters; and any 
review, inspection, supervision, exercise of judgment or supply of 
information undertaken or assumed by the Lenders or the Agent in 
connection with such matters is solely for the protection of the Agent 
and the Lenders and neither the Company nor any other Person is entitled 
to rely thereon; and

(c)  Neither the Agent nor any of the Lenders shall be responsible 
or liable to any Person for any loss, damage, liability or claim of any 
kind relating to injury or death to Persons or damage to property or 
other loss, damage, liability or claim caused by the actions, inaction 
or negligence of the Company and/or any of its Subsidiaries.

.16.    CONFIDENTIALITY.  Each Lender agrees to hold any confidential 
information which it may receive from the Company pursuant to or in 
connection with this Agreement or the exercise of any rights hereunder in 
confidence and to cause its officers, employees, agents and professional 
advisors to do likewise.  

52

The foregoing shall not, however, restrict disclosure of any such 
confidential information by any Lender (a) to other Lenders; (b) to legal 
counsel, accountants and other professional advisors to the Company or that 
Lender retained in connection with this Agreement; (c) to regulatory 
officials having jurisdiction over that Lender; (d) as required by law or 
legal process or in connection with any legal proceeding to which that Lender 
and the Company are adverse parties; or (e) to another financial institution 
in connection with a disposition or proposed disposition to that financial 
institution of an assignment of or a participation interest in its Note in 
accordance with the terms of this Agreement, PROVIDED that such disclosure is 
made subject to an appropriate written confidentiality agreement on terms 
substantially similar to this Section and PROVIDED FURTHER that the Company 
is advised substantially concurrently with such disclosure of the identity of 
such financial institution.  For purposes of the foregoing, "confidential 
information" shall mean any information respecting the Company reasonably 
considered by the Company to be confidential, OTHER THAN (i) information 
previously filed with any governmental agency and available to the public 
without filing a request under the Freedom of Information Act, (ii) 
information previously published in any public medium not furnished directly 
or indirectly, by that Lender and (iii) information previously disclosed by 
the Company to any Person not associated or affiliated with the Company or 
any of its officers, directors, agents, attorneys or employees without an 
appropriate confidentiality agreement and subsequently disclosed by that 
Person to a significant number of other Persons.  Notwithstanding the 
foregoing, in the event that any information respecting the Company is 
published or disclosed to other Persons as described in clauses (ii) or (iii) 
of the preceding sentence, each Lender agrees that it will not without the 
Company's consent make any statement to a representative of a public medium 
or to any such Person (EXCEPT as may be described in the second sentence of 
this Section) which confirms or denies the accuracy of such information.  
Nothing in this Section shall be construed to create or give rise to any 
fiduciary duty on the part of the Agent or the Lenders to the Company.

.17.    PURPORTED ORAL AMENDMENTS.  THE AGENT, EACH OF THE LENDERS AND 
THE COMPANY EXPRESSLY ACKNOWLEDGES THAT THIS AGREEMENT AND THE OTHER LOAN 
DOCUMENTS MAY ONLY BE AMENDED OR MODIFIED, OR THE PROVISIONS HEREOF OR 
THEREOF WAIVED OR SUPPLEMENTED, BY AN INSTRUMENT IN WRITING THAT COMPLIES 
WITH SECTION 9.7.  THE AGENT, EACH OF THE LENDERS AND THE COMPANY AGREES THAT 
IT WILL NOT RELY ON ANY COURSE OF DEALING, COURSE OF PERFORMANCE, OR ORAL OR 
WRITTEN STATEMENTS BY ANY REPRESENTATIVE OF THE AGENT, THE COMPANY OR ANY 
LENDER THAT DOES NOT COMPLY WITH SECTION 9.7.

.18.     WAIVER OF JURY TRIAL.  THE AGENT, THE LENDERS AND THE COMPANY 
AGREE THAT NEITHER OF THEM NOR ANY ASSIGNEE OR SUCCESSOR SHALL (A) SEEK A 
JURY TRIAL IN ANY LAWSUIT, PROCEEDING, COUNTERCLAIM OR ANY OTHER ACTION BASED 
UPON, OR ARISING OUT OF, THIS AGREEMENT, ANY RELATED INSTRUMENTS, ANY 
COLLATERAL OR THE DEALINGS OR THE RELATIONSHIP BETWEEN OR AMONG ANY OF THEM, 
OR (B) SEEK TO CONSOLIDATE ANY SUCH ACTION WITH ANY OTHER ACTION IN WHICH A 
JURY TRIAL CANNOT BE OR HAS NOT BEEN WAIVED.  THE PROVISIONS OF THIS 
PARAGRAPH HAVE BEEN FULLY DISCUSSED BY THE AGENT, THE LENDERS AND THE 
COMPANY, AND THESE PROVISIONS SHALL BE SUBJECT TO NO EXCEPTIONS.  NEITHER THE 
AGENT, THE LENDERS NOR THE COMPANY HAS AGREED WITH OR REPRESENTED TO THE 
OTHER THAT THE PROVISIONS OF THIS PARAGRAPH WILL NOT BE FULLY ENFORCED IN ALL 
INSTANCES.

53

.19.    ENTIRE AGREEMENT.  This Agreement, the Notes and the documents 
and agreements executed in connection herewith constitute the final agreement 
of the parties hereto and supersede any prior agreement or understanding, 
written or oral, with respect to the matters contained herein and therein.

54

IN WITNESS WHEREOF, the parties have caused this Agreement to be 
executed by their duly authorized officers as of the day and year first above 
written.

GUESS ?, INC.

By:                                

Title:                             

THE FIRST NATIONAL BANK OF BOSTON
AS AGENT AND LENDER

By:                                

Title:                             

SANWA BANK CALIFORNIA,
AS CO-AGENT AND LENDER

By:                                

Title:                             

THE INDUSTRIAL BANK OF JAPAN, LIMITED, 
LOS ANGELES AGENCY, AS LENDER

By:                                

Title:                             

CREDIT LYONNAIS LOS ANGELES BRANCH AS LENDER

By:                                       

Title:                             

SUMITOMO BANK OF CALIFORNIA, AS LENDER

By:                                       

Title:                                  

55

EXHIBIT A

GUESS ?, INC.

PROMISSORY NOTE

$                                                                 March __, 1997

For value received, the undersigned hereby promises to pay to (the 
"Lender"), or order, at the head office of the First National Bank of Boston 
(the "Agent") at 100 Federal Street, Boston, Massachusetts 02110, the 
principal amount of                   Dollars ($           ) or such lesser 
amount as shall equal the principal amount outstanding hereunder on the 
Revolving Credit Termination Date (as defined in the Agreement) in lawful 
money of the United States of America and in immediately available funds, and 
to pay interest on the unpaid principal balance hereof from time to time 
outstanding, at said office and in like money and funds, for the period 
commencing on the date hereof until paid in full, at the rates per annum and 
on the dates provided in the Agreement (as defined below) including 
additional interest due upon non-payment of principal or interest.  Any 
accrued but unpaid interest shall be due and payable on the Revolving Credit 
Termination Date.

Nothing in the preceding sentence shall affect the Lender's rights to 
exercise any of its rights and remedies provided in the Agreement if an Event 
of Default (as defined in the Agreement) has occurred and is continuing.

This Note is issued pursuant to, and entitled to the benefits of, and is 
subject to, the provisions of a certain Amended Restated Revolving Credit 
Agreement dated as of March 28, 1997 by and between the undersigned, the 
Agent, Sanwa Bank California as Co-Agent and the other financial institutions 
party thereto, (herein, as the same may from time to time be amended or 
extended, referred to as the "Agreement"), but neither this reference to the 
Agreement nor any provision thereof shall affect or impair the absolute and 
unconditional obligation of the undersigned maker of this Note to pay the 
principal of and interest on this Note as herein provided.

As provided in the Agreement, this Note is secured by certain personal 
property of the undersigned.

In case an Event of Default shall occur, the aggregate unpaid principal 
of and accrued interest on this Note shall become or may be declared to be 
due and payable in the manner and with the effect provided in the Agreement.

The undersigned may at its option prepay all or any part of the 
principal of this Note before maturity upon the terms provided in the 
Agreement.

Except as set forth in any Loan Document (as defined in the Agreement), 
the undersigned maker hereby waives presentment, demand, notice of dishonor, 
protest and all other demands and notices in connection with the delivery, 
acceptance, performance and enforcement of this Note.

This promissory note shall have the effect of an instrument executed 
under seal and shall be governed by and construed in accordance with the laws 
of the Commonwealth of Massachusetts (without giving effect to any conflicts 
of laws provisions contained therein).

GUESS ?, INC.,

By:                                

Title:                             

SCHEDULE I TO PROMISSORY NOTE

Type of Loan
Amount of     (Eurodollar    Interest    Interest    Amount   Notation
DATE      Loan          or Base        Rate        Period*     Paid     Made By
Rate,       

*    For Eurodollar Loans only

EXHIBIT B

GUESS ?, INC.

Re:  Amended and Restated Revolving Credit Agreement 
Dated as of March ___, 1997 (the "Agreement")

Gentlemen:

Pursuant to Section 2.2 of the Agreement, the undersigned hereby 
confirms its request made on             , 19   for a [Base Rate] [Eurodollar]
Loan in the amount of $                 on             , 199 .

[The Interest Period applicable to said Loan will be [one] [two] [three] 
[six] months [30] [60] [90] days.]*

[Said Loan represents a conversion/continuation of the [Base Rate] 
[Eurodollar] Loan in the same amount made on          .]**

[The representations and warranties contained or referred to in Section 4 of 
the Agreement are true and accurate on and as of the effective date of the Loan
as though made at and as of such date (except to the extent that such 
representations and warranties expressly relate to an earlier date); and no 
Default has occurred and is continuing or will result from the Loan.]***

GUESS ?, INC.

By:                           

Title:                        

Date:               

*   To be inserted in any request for a Eurodollar Loan.
[**  To be inserted in any request for a conversion or continuation.]
[*** To be inserted on any request other than for a continuation.]

EXHIBIT C

INDEBTEDNESS; ENCUMBRANCES

A.   INDEBTEDNESS

1.   $130,000,000 aggregate principal amount of 9-1/2% Senior 
Subordinated Notes due 2003 and 9-1/2% Series B Senior Subordinated 
Notes due 2003 issued pursuant to an Indenture with First Trust 
National Association.  Principal balance outstanding as of December 
31, 1996, was $105,000,000.

2.   A secured revolving credit facility in the aggregate principal 
amount of up to $100,000,000 with The First National Bank of 
Boston, as Agent, and certain commercial banks party thereto.  As 
of December 31, 1996, there was $16,000,000 principal balance 
outstanding under such facility.

3.   A loan in the original principal amount of $3,593,750 from Clayton 
Brown Capital Corporation (assigned from Sentry Financial 
Corporation) relating to the financing of a Gulfstream Aerospace 
G-II (serial number 167 and FAA registration N120GS) and two (2) 
installed Rolls Royce Model Spey 511-8 jet engines (serial numbers 
8854 and 8855). Principal balance outstanding as of December 31, 
1996, was $1,039,954.

4.   Guess Italia, S.r.l., a subsidiary of Guess?, Inc., has an 
unsecured revolving credit facility in the aggregate principal 
amount of up to $6,300,000 with Credito Bergamasco, as Agent.  As 
of December 31, 1996, there was $3,119,972 principal balance 
outstanding under such facility.

5.   Estimated $2,000,000 principal balance outstanding of S 
Distribution Notes due January 1, 1997, issued in conjunction with 
the Company's IPO. On December 31, 1996 the due date was extended 
to April 1, 1997.

EXHIBIT D

LITIGATION

Brenda Figueroa et al. v. Guess ?, Inc. et al. (Dist. Ct. Case No. 96-5484HLH 
(Jgx)).

Figueroa, et al. v. Guess ?, Inc., et al., LASC Case No. BC 165 (State 
Action).

NLRB Case No. 21-CA-31817.

NLRB Case No. 21-CA-31859.

NLRB Case No. 31-CA-22380.

NLRB Case No. 21-CA-31524.

NLRB Case No. 21-CA-31565.

NLRB Case No. 21-CA-31648.

NLRB Case No. 21-CA-31561.

NLRB Case No. 21-CA-31807.

EXHIBIT E

SUBSIDIARIES

Guess Europe, B.V.

Guess Italia, S.r.l.

Ranche, Limited

EXHIBIT F
GUESS ?, INC.

REPORT OF CHIEF FINANCIAL OFFICER

GUESS ?, INC. (the "Company") HEREBY CERTIFIES that:

This Report is furnished pursuant to Section 5.1(c) of the Amended and 
Restated Revolving Credit Agreement dated as of March 28, 1997 by and 
between the Company and The First National Bank of Boston (the "Bank of 
Boston"), as Agent, Sanwa Bank California, as Co-Agent, and the other Lenders 
party thereto (the "Agreement").  Unless otherwise defined herein, the terms 
used in this Report have the meanings given to them in the Agreement.

As required by Section 5.1(a) and (b) of the Agreement, consolidated 
financial statements of the Company and its Subsidiaries for the 
[year/month/quarter] ended           , 19   (the "Financial Statements") 
prepared in accordance with GAAP consistently applied accompany this Report.  
The Financial Statements present fairly the consolidated financial position 
of the Company and its Subsidiaries as at the date thereof and the 
consolidated results of operations of the Company and its Subsidiaries for 
the period covered thereby (subject only to normal recurring year-end 
adjustments).

The figures set forth in Schedule A for determining compliance by the 
Company with the financial covenants contained in the Agreement are true and 
complete as of the date hereof.

The activities of the Company and its Subsidiaries during the period 
covered by the Financial Statements have been reviewed by the Chief Financial 
Officer or by employees or agents under his immediate supervision.  Based on 
such review, to the best knowledge and belief of the Chief Financial Officer, 
and as of the date of this Report, no Default has occurred and is 
continuing.**

- ---------------
**    If a Default has occurred, this paragraph is to be modified with 
an appropriate statement as to the nature thereof, the period of 
existence thereof and what action the Company has taken, is taking, or 
proposes to take with respect thereto.

WITNESS my hand this             day of          , 19  .

GUESS ?, INC.

By:                           

Title:                             

SCHEDULE A
to
EXHIBIT F

FINANCIAL COVENANTS

CURRENT RATIO (SECTION 5.7) 

REQUIRED: 
1.75:1.00 
ACTUAL: 

(i)    Consolidated Current Assets                             $ 

(ii)   Consolidated Current Liabilities 

(iii)  Current portion of                                      $
Indebtedness for Money Borrowed 

(iv)   Line (ii) less line (iii)                               $ 

(v)    Line (i) divided by line (iv)                             :1.00 

LEVERAGE RATIO (SECTION 5.8) 

MAXIMUM:                                                              
2.75:1.00 
ACTUAL: 

(i)    Indebtedness for Money Borrowed                         $ 

(ii)   Consolidated Cash Flow                                  $ 

(iii)  Excess Dividends                                        $ 

(iv)   Line (ii) less line (iii)              $ 

(vi)   Line (i) divided by line (iv)                             :1.00 

TOTAL INTEREST COVERAGE (SECTION 5.9) 

REQUIRED:                                                             
3.00:1.00 
ACTUAL:                                                             $ 

(i)    Consolidated EBITDA 

(ii)   Capital Expenditures                                    $ 

(iii)  Line (i) less Line (ii)                $ 

(iv)   Consolidated Total Interest                             $ 

Expense 

(v)    Line (iii) divided by line (iv)                         :1.00 

TOTAL FIXED CHARGE COVERAGE (SECTION 5.10) 

REQUIRED:                                                             
2.00:1.00 
ACTUAL: 

(i)    Consolidated Cash Flow                                  $ 

(ii)   Payments on Operating Leases                            $ 

(iii)  Sum Total of Line (i) plus             $ 
Line (ii) 

(iv)   Consolidated Total Debt Service                         $ 

(v)    Payments on Operating Leases 

(vi)   Sum Total of Line (iv) plus Line 
(v) 

(vii)  Line (iii) divided by Line                               :1.00 
(iv) 

PROFITABILITY (SECTION 5.11) 

REQUIRED:                                                           $   1.00 

ACTUAL: 

Consolidated net income                                        $ 

INVENTORY TURNOVER (SECTION 5.12) 

MINIMUM:                                           2.25 Turns 

ACTUAL: 

(i)    Total cost of sales for the                             $ 
Company for the four fiscal 
quarters ended 

(ii)   Book Value of inventory at end of                       $ 
current fiscal quarter 

(iii)  Book value of inventory at                              $ 
beginning of measurement period 

(iv)   Line (ii) plus line (iii)                               $ 

(v)    Line (iv) divided by 2                                  $ 

(vi)   Line (i) divided by line (v)           ____ Turns 

WITNESS my hand this ______ day of ____________, 19__.

GUESS ?, INC.

By:                           

Title:                             

EXHIBIT G

FORM OF OPINION OF INSIDE COUNSEL TO COMPANY

March 28, 1997

FORM OF INSIDE COUNSEL OPINION

The First National Bank of Boston,
as Agent
100 Federal Street
Boston, Massachusetts  02110

The Lenders listed on Schedule I hereto

Re:  GUESS ?, INC. REVOLVING CREDIT AGREEMENT

____________________:

I am the General Counsel of Guess ?, Inc., a Delaware corporation (the
"Company"), and in such capacity I have served as counsel for the Company with
respect to that certain Amended and Restated Revolving Credit Agreement (the
"Credit Agreement") dated as of ______________, 1997 by and between the Company,
The First National Bank of Boston ("BKB"), as Agent (as defined therein), Sanwa
Bank California, as Co-Agent (as defined therein), and the financial
institutions party thereto (the "Lenders").  Capitalized terms used herein and
not otherwise defined herein shall have the same meanings herein ascribed
thereto in the Credit Agreement.  This opinion is being delivered pursuant to
Section 3.1( ) of the Credit Agreement.

In my examination I have assumed the completeness and accuracy of the
Company's corporate records, the genuineness of all signatures (other than those
of officers of the Company), including endorsements, the legal capacity of
natural persons, the authenticity of all documents submitted to me as originals,
the conformity to original documents of all documents submitted to me as
certified or photostatic copies, and the authenticity of the originals of such
copies.  As to any facts material to this opinion which I did not independently
establish or verify, with your permission, I have relied upon statements and
representations of the Company and its officers and other representatives and of
public officials, including, without limitation, the statements and
representations set forth in the Company's Certificate described below in clause
(d).

In regarding the opinions set forth herein, I have examined and relied on
originals or copies of the following:

(a)  an executed copy of the Credit Agreement;

(b)  an executed copy of the Amended and Restated Security Agreement;

(c)  the Amended and Restated Notes;

(d)  a certificate of the Company executed by Roger A. Williams, Executive
Vice President and Chief Financial Officer, dated the date hereof, a
copy of which is attached hereto as Exhibit A (the "Company's
Certificate");

(e)  a certificate from the Secretary of State of Delaware as to the good
standing of the Company in the State of Delaware;

(f)  copies of the Restated Certificate of Incorporation and the Amended
and Restated Bylaws of the Company, in each case, as amended to date;

(g)  a certified copy of certain resolutions of the Board of Directors of
the Company adopted as of ____________, 1997; and

(h)  such other documents as I have deemed necessary or appropriate as a
basis for the opinions set forth below.

Whenever a statement herein is qualified by the phrase "to the best of my
knowledge, after due inquiry", it is intended to indicate that (a) no
information that would give me current actual conscious knowledge of the
inaccuracy of such statement has come to my attention, and (b) my inquiry has
been limited to officers of the Company.

The Credit Agreement, the Amended and Restated Notes and the Amended and
Restated Security Agreement shall hereinafter be referred to as the "Loan
Documents."

I am admitted to the Bar of State of California and I express no opinion as
to the laws of any jurisdiction other than the laws of the United States of
America to the extent specifically referred to herein.

My opinions are subject to the assumption and qualification that I have
assumed that no other agreements exist between or among the various parties that
would materially alter the terms or agreements set forth in any of the Loan
Documents.

Based upon the foregoing and subject to the limitations, qualifications,
exceptions and assumptions set forth herein, I am of the opinion that:

1.   The Company is a corporation duly incorporated, validly existing and
in good standing under the laws of the State of Delaware.

2.   The Company is duly qualified as a foreign corporation and is in good
standing in each jurisdiction (other than the State of Delaware) in which the
conduct of its business or the ownership or leasing of its properties makes such
qualification necessary, EXCEPT where the failure so to qualify or to be in good
standing would not reasonably be likely to have a material 

adverse effect on the business, financial condition, assets or 
properties of the Company and its Subsidiaries, taken as a whole.

3.   The Company has the requisite corporate power and authority to conduct
its business as now being conducted and to own its property.

4.   The execution, delivery and performance by the Company of each of the
Loan Documents does not:

(a)  require any consent or approval not heretofore obtained of any
partner, stockholder, security holder or to the best of my
knowledge, after due inquiry, any creditor of the Company; and

(b)  to the best of my knowledge, after due inquiry, result in a
breach or default under, or would with the giving of notice or
the lapse of time or both constitute a breach of or default
under, any indenture or loan or credit agreement or any other
agreement to which the Company is a party or by which the Company
or any of its material property is bound or affected.

5.   The execution and delivery by the Company of each of the Credit
Documents and the performance by the Company of its obligations under each of
the Credit Documents does not conflict with the Certificate of Incorporation or
Bylaws of the Company.

6.   Neither the execution, delivery or performance by the Company of the
Credit Documents nor the compliance by the Company with the terms and provisions
thereof will contravene any provision of any Applicable Law.  For purposes of
this paragraph 6 and paragraph 7 below, "Applicable Laws" shall mean those laws,
rules and regulations of the State of California and the United States of
America (including, without limitation, Regulations G and U of the Federal
Reserve Board) which, in our experience, are normally applicable to transactions
of the type contemplated by the Loan Documents and are not otherwise the subject
of a specific opinion herein that expressly refers to a particular law or laws.

7.   No Governmental Approval, which has not been obtained or taken and is
not in full force and effect, is required to authorize or is required in
connection with the execution, delivery or performance of any of the Loan
Documents by the Company.  For the purposes of this paragraph 7, the term
"Governmental Authority" means any federal or California legislative, judicial,
administrative or regulatory body and the term "Governmental Approval" means any
consent, approval, license, authorization or validation of, or filing, recording
or registration with, any Governmental Authority pursuant to Applicable Laws.

8.   The Company is not required to be registered as an "investment
company" within the meaning of the Investment Company Act of 1940, as amended.

9.   To the best of my knowledge, after due inquiry, EXCEPT for matters set
forth in Exhibit E to the Credit Agreement, there is no action, proceeding or
investigation pending as to which the Company has been served or 

has received notice, affecting the Company or any of its property before 
any governmental agency, governmental authority, court or administrative 
tribunal which is reasonably likely to have a material adverse effect on 
the business, financial condition, assets or properties of the Company 
and its Subsidiaries, taken as a whole.

This opinion is rendered to you in connection with the transactions
referred to herein and may not be used, circulated, quoted, relied upon or
otherwise referred to by any other person without my prior written consent.  All
statements herein are based upon information known to the undersigned as of the
date hereof and I do not undertake to make further inquiry nor to take further
steps or otherwise advise or update this opinion.  I express no opinion
regarding the effects of agreements entered into or events occurring after the
date hereof, and I disclaim any responsibility to advise you of changes of facts
or law occurring after this date.

Very truly yours,

Glenn A. Weinman

Attachment

Schedule I

LENDERS

EXHIBIT "A"

GUESS ?, INC.

OFFICER'S CERTIFICATE

Reference is made to that certain Amended and Restated Revolving Credit
Agreement, (the "Credit Agreement") dated as of ____________, 1997 between Guess
?, Inc. (the "Company"), The First National Bank of Boston ("BKB") as Agent (as
defined therein), Sanwa Bank California, as Co-Agent (as defined therein), and
the financial institutions party thereto.

Terms defined in the Credit Agreement and not otherwise defined herein are
used herein with the meanings so defined therein.

The undersigned officer of the Company, for purposes of the opinion to be
delivered by Glenn Weinman, Esq., General Counsel of the Company, pursuant to
Section 3.1 (f) of the Credit Agreement, and recognizing that Mr. Weinman will
rely on this Certificate in delivering said opinion, hereby certifies to the
best of his knowledge and belief that:

1.   The Company is engaged primarily in the business of designing,
manufacturing and the wholesale and retail sale of clothing and accessories and
licensing the use of its name and trademark for the manufacture and distribution
of merchandise; and the Company is not engaged primarily nor does it propose to
engage primarily in the business of investing, reinvesting, or trading in
securities.

2.   The Company does not own nor does it propose to acquire investment
securities having a value exceeding forty percent (40%) of the value of the
Company's total assets (exclusive of government securities and cash items) on an
unconsolidated basis.

3.   The Company is not engaged nor does it propose to engage in the
business of issuing face-amount certificates of the installment type, nor has it
been engaged in such business nor does it have any certificate outstanding.

4.   The Company does not own or operate facilities used for the
generation, transmission, or distribution of electric energy for sale ("electric
utility facilities").

5.   The Company does not own or operate facilities used for the
distribution at retail of natural or manufactured gas for heat, light, or power
("gas utility facilities").

6.   The Company does not directly or indirectly, or through one or more
intermediary companies, own, control, or hold with power to vote (a) ten percent
(10%) or more of the outstanding securities, such as notes, drafts, stock
treasury stock, bonds, debentures, certificates of interest or participations in
any profit sharing agreements or in oil, gas, other mineral 

royalties or leases, collateral-trust certificates, preorganization 
certificates or subscriptions, transferable shares, investment 
contracts, voting-trust certificates, certificates of deposit for a 
security, receiver's or trustee's certificates, or any other instrument 
commonly known as a "security" (including certificates of interest or 
participation in, temporary or interim certificates, for receipt for, 
guaranty of, assumption of liability on, or warrants or rights to 
subscribe to or purchase any of the foregoing) presently entitling it to 
vote in the direction or management of, or any such instrument issued 
under or pursuant to any trust, agreement, or arrangement whereby a 
trustee or trustees or agents or agents for the owner or holder of such 
instrument is presently entitled to vote in the direction or management 
of, any corporation, partnership, association, joint-stock company, 
joint venture or trust that owns or operates any electric utility 
facilities or gas utility facilities, or (b) any other interest, 
directly or indirectly, or through one or more intermediary entities, in 
(i) any corporation, partnership, association, joint-stock company, 
joint venture or trust that owns or operates any electric utility 
facilities or gas utility facilities, or in (ii) any of the foregoing 
types of entities which have received notice of the sort described in 
Paragraph 7 below.

7.   The Company has not received notice that the Securities and Exchange
Commission has determined, or may determine, that the Company exercises a
controlling influence over the management or direction of the policies of a gas
utility company or an electric utility company as to make it subject to the
obligations, duties and liabilities imposed on holding companies by the Public
Utility Holding Company Act of 1935, as amended.

8.   Except for matters set forth in Exhibit D to the Credit Agreement,
there are no actions, proceedings or investigations pending as to which the
Company has been served or has received notice or affecting the Company or any
of its property before any which is reasonably likely to have a material adverse
effect on the business, financial, condition, assets or properties of the
Company and its Subsidiaries, taken as a whole.

IN WITNESS WHEREOF, I have signed this Certificate on behalf of the Company
as of the 28th day of March, 1997.

GUESS ?, INC.

By:  ______________________
Roger A. Williams
Executive Vice President and
Chief Financial Officer

EXHIBIT H

STANDBY LETTER OF CREDIT AGREEMENT

"Application" means the written application by the Customer to the Bank for 
the issuance of a letter of credit and includes all modifications made with 
the Customer's written or oral agreement or consent.

"Bank" means the First National Bank of Boston and includes its overseas 
branches.

"Collateral" includes all property in which the Bank at any particular time 
has a security interest and the proceeds thereof.

"Credit" means a letter of credit issued pursuant to the Application, 
including any amendments or modifications to such Credit.

"Customer" means the party or parties signing the Application jointly and 
severally if more than one.

"Uniform Customs and Practice" means the "Uniform Customs and Practice for 
Documentary Credits (1983 Revision), International Chamber of Commerce, 
Publication No. 400, and any subsequent revisions thereof approved by the 
International Chamber of Commerce.

__________________

In consideration of the Bank opening at the Customer's request, a Credit, the
Customer hereby agrees with the Bank as follows:

1.  The Customer will pay the Bank, in United States currency, the amount of 
each drawing under the Credit, together with interest, commissions, all 
customary charges, and all other disbursements or payments by the Bank demand 
with interest from the date of payment under the Credit to the date of 
payment by the Customer to the Bank.  If a drawing is payable in foreign 
currency, the Customer will pay the Bank the equivalent of the amount of such 
drawing in United States currency, at the Bank's then selling rate for cable 
transfers to take the place of payment or to the place of the Bank's 
settlement of its obligation, as the Bank may require.  If there is no rate 
of exchange for effecting such cable transfer, the Customer will pay the Bank 
on demand the amount in United States currency equivalent to the Bank's 
actual cost of settlement, with interest on the amount in United States 
currency payable by the Customer from the date of settlement to the date of 
payment by the Customer. Unless otherwise agreed, interest and commission 
payable hereunder shall be at such rate as the Bank may deem appropriate: 
provided however, that the rate of interest on default on any of the 
Customer's obligations hereunder will be 125 percent of the Base Rate.  The 
Base Rate is the rate of interest announced from time to time by the Bank at 
its head office as its Base Rate.  Any amount which at any time may be owing 
by the Customer to the Bank pursuant to this Agreement may be charged against 
any funds held by the Bank for the account of the Customer.

2.   The Customer will promptly examine (a) the copy of the Credit (and any 
amendments thereof) sent to it by the Bank and (b) all instruments and 
documents delivered to it from time to time by the bank, and the Customer 
will within twenty-four (24) hours or receipt thereof, notify the bank of any 
irregularity or claim of non-compliance with the Customer's instructions.  
The Customer is conclusively deemed to have waived any such claim against the 
Bank and its correspondents unless such notice is given as aforesaid.

3.   The Customer agrees to indemnify the Bank and its correspondents for and
hold them harmless against any and all claims, loss, liability, or damage,
including reasonable attorney fees, howsoever arising from or in connection with
the Credit.  The agreements in this paragraph will survive any payment under or
termination of this Agreement.

4.   The Customer will pay the Bank on demand all charges, costs, and expenses
including reasonable attorney fees, incurred by paid by the Bank in connection
with the exercise of any right, power, or remedy hereunder, or in the
enforcement thereof.

5.   Any deposits or other sums at any time credited by or due from the Bank to
the Customer and any securities or other property of the Customer in the
possession of the Bank or any of its correspondents may at all times be held and
treated as collateral for the payment of any obligations of the Customer to the
Bank hereunder, whether direct or indirect, absolute or contingent, due or to
become due, now existing of hereafter arising.  Regardless of the adequacy of
any Collateral, any deposits or other sums credited by or due from the Bank to
the Customer may, at any time, be applied to or set off against such liabilities
and obligations without notice.

6.  If the bank shall in good faith deem itself insecure at any time, or upon 
(1) failure of the Customer to perform any of its obligations under this 
Agreement, or any of its obligations for borrowed money or in respect of any 
extension of credit or accommodation under any lease, (2) the death, 
insolvency, dissolution, termination of existence, suspension of business, 
appointment of a receiver of any part of the property of, assignment for the 
benefit of creditors by, or the commencement of any proceeding under any law 
relating to Bankruptcy or insolvency by or against the Customer, (3) the 
issuance of or application for a writ or order of attachment or garnishment 
against any Collateral or a substantial part of the property or assets of the 
Customer, or (4) any governmental authority, or any court at the instance of 
any governmental authority, taking possession of any substantial part of the 
property of the Customer or assuming control over the affairs or operations 
of the Customer, thereupon, the Bank may, (a) without notice or demand, 
declare any and all of the obligations and liabilities, direct or indirect, 
absolute or contingent, due or to become due, now existing or hereafter 
arising, of the Customer to the Bank under this Agreement, to be immediately 
due and payable, and the Bank will have all of the rights and remedies 
provided hereunder and by law and/or (b) require the Customers to deliver to 
the Bank to be held and treated as Collateral such other property of the 
Customer equal in amount or value to 125% of the Credit, and the Customer 
shall promptly deliver the same upon request.

7.  Neither the Bank nor its correspondents shall be in any way responsible for
performance by any Beneficiary of its obligations to the Customer, nor for the
form, sufficiency, correctness, genuineness, authority of person signing,
falsification or legal effect of any documents called for under the Credit if
such documents on their face appear to be in order.

8.  The Bank may honor, as complying with the terms of the Credit and of the
Application therefor, any drafts or other documents otherwise in order signed or
issued by an administrator, executor, conservator, trustee in Bankruptcy, debtor
in possession, assignee for benefit of creditors, liquidator, receiver, or other
legal representative of the party authorized under the Credit to draw or issue
such drafts or other documents.

9.  Unless otherwise expressly agreed to, the Customer hereby authorizes the
Bank to (a) select an advising bank, if any, (b) authorize or restrict
negotiation under the Credit, and (c) waive any such restriction  on
negotiation.

10.  This Agreement and request or consent to any modification, change,
amendment, waiver, or any other action pursuant to the Agreement, will be
binding upon the Customer and its respective heirs, executors, administrators,
successors, and assigns and will inure to the benefit of and be enforceable by
the Bank, its successors, and assigns.  In the event that any provision hereof
is determined by a court of competent jurisdiction to be invalid, such
invalidity will not affect any other provision of this Agreement,  The Customer
represent and warrants that the execution, delivery, and performance by the
Customer hereof has been duly authorized by all necessary corporate and/or other
action and that the making and performance hereof by the Customer does not and
will not contravene the terms of any existing law, agreement, or instrument by
which t he Customer is bound or to which the Customer is subject.

11.  The failure of the Bank to enforce at any time any provision hereof will
not be construed to be a waiver of such provision or of the right of the Bank
thereafter to enforce any such provision.

12.  The credit will be subject to, and performance by the Bank, its
correspondents and Beneficiary thereunder will be governed by, the Uniform
Customs and Practice, except to the extent it is otherwise expressly agreed.  In
the event the credit is subject to laws other than the Uniform Customs and
Practice, any action , inaction, or omission on the part  of the Bank or its
correspondents in connection with the Credit, and in good faith reliance on such
laws, will be deemed to be in compliance with the credit and this Agreement and
Customer hereby indemnifies the Bank and its correspondents from and holds them
harmless against any and all loss, liability, damage, cost, or expense
(including reasonable attorney fees) incurred thereby.

13.  It is agreed that all directions and correspondence relating to the Credit
are to be sent at the Customer's risk and that the Bank does not assume any
responsibility for any inaccuracy, interruption, error, or

delay in transmission or delivery by post, telegraph, cable, or courier for 
any inaccuracy of translation.

14.  This Agreement is made in the Commonwealth of Massachusetts and shall be
deemed to be a contract under seal to be governed by and construed in accordance
with the laws of said Commonwealth.  The Bank's rights, powers, and remedies
specified herein are cumulative and are in addition to those otherwise created
or existing by law or agreement.

EXHIBIT I

DOCUMENTARY LETTER OF CREDIT AGREEMENT

This Agreement is made as of December 22, 1995 ("Effective Date") by and
between:

(1)  THE FIRST NATIONAL BANK OF BOSTON,  a national banking association with its
main offices located at 100 Federal Street Boston, Massachusetts, including its
overseas branches, affiliates, and subsidiaries ("Bank"): and

(2)  GUESS?, INC., a Delaware corporation, having offices at 1444 So. Alameda
Street, Los Angeles, California 90021 ("Customer").

"Application" means the written application by the Customer to the Bank for the
issuance of a letter of credit and includes all modifications made with the
Customer's written agreement or consent.

"Bank" means The First National Bank of Boston and includes its overseas
branches.

"Business Day" means any day in which banks located in Boston, Massachusetts,
Hong Kong and Los Angeles, California are generally transacting banking
business.

"Credit" means a commercial letter of credit issued pursuant to an Application,
including any amendments or modifications of such Credit.

"Customer" shall have the meaning set forth above.

"Designated Senior Indebtedness" means at any time (i) all Senior Indebtedness
under the Loan Agreement, and (ii) any other Senior Indebtedness which, at the
time of determination, has an aggregate principal amount outstanding of at least
$25,000,000 and is specifically designated in the instrument evidencing such
Senior Indebtedness as "Designated Senior Indebtedness."

"Indebtedness" means, with respect to any person, without duplication (a) all
indebtedness of such person (1) for borrowed money or for the deferred purchase
price of property of services (other than trade payables or current liabilities
arising in the ordinary course of business), (b) all obligations, contingent or
otherwise, of such person in connection with any letters of credit or
acceptances issued under letter of credit facilities, acceptance facilities or
other similar facilities, (c) all indebtedness created or arising under any
conditional sale or other title retention agreements with respect to property
acquired by such person (even if the rights and remedies of the seller or lender
under such agreement in the event of default are limited to repossession or sale
of such property), but excluding trade payables and other accrued current
liabilities of such person arising in the ordinary course of business, (d) all
obligations under interest rate contracts of such person, (e) all redeemable
capital stock of such person valued at the greater of its voluntary of
involuntary liquidation preference plus accrued and unpaid dividends, (f) any
liability of others described in the preceding clauses (a), (b), (c), (d) and
(e) that such person has guaranteed or that is otherwise its legal liability and
(g) any amendment, supplement, modification,

deferral, renewal, extension or refunding of any liability of the types 
referred to in clauses (a), (b), (c), (d), (e) and (f) above.

"Indenture" means the Indenture dated as of August 23, 1993, between the
Customer and First Trust National Association, as trustee, pursuant to which
$130,000,000 aggregate principal amount of 92% Series B Senior Subordinated
Notes due 2003 of the Customer have been and/or will be issued.

"Non-payment Default" means any event (other than a Payment Default) the
occurrence of which entitles one or more persons to accelerate the maturity of
any Designated Senior Indebtedness.

"Payment Default" means any default in the payment or required prepayment of
principal of, premium, if any, or interest, on any Designated Senior
Indebtedness when due (whether at final maturity, upon scheduled installment,
mandatory prepayment, acceleration or otherwise).

"Ranche" means Ranche Limited, doing business as Guess International, a Hong
Kong corporation.

"Ranche Reimbursement Agreement" means the Continuing commercial Letter of
Credit Reimbursement and Security Agreement between Ranche and the Bank dated as
of November 22, 1994, and all amendments thereto.

"Securities" shall mean any of the $130,000,000 aggregate principal amount of
the Customer's 92% Senior Subordinated Notes due 2003 and 92% Series B Senior
Subordinated Notes due 2003 issuable as provided in the Indenture.

"Senior Indebtedness" means (i) the principal of, premium, if any, and interest
(including interest, to the extent allowable, accruing after the filing of a
petition initiating any proceeding under any state or federal bankruptcy law)
on, and other amounts due in connection with the Revolving Credit Agreement
dated as of December 20, 1993, among the Customer, The First National Bank of
Boston, as Agent, and the group of financial institutions party thereto, as
amended by the first Amendment to revolving Credit Agreement dated as of January
20, 1994, as further amended by the Second Amendment and Waiver to Revolving
Credit Agreement dated as of April 1, 1994, as further amended by the Third
Amendment and Waiver to Revolving Credit Agreement dated July 18, 1994, as
further amended by the Fourth Amendment and Waiver to Revolving Credit Agreement
dated as of February 13, 1995, as further amended by the Sixth Amendment to
Revolving Credit Agreement dated as of September 14, 1995, and as further
amended by the Seventh Amendment to Revolving Credit Agreement dated of even
date herewith, and as the same may be supplemented or amended from time to time
(collectively, the "loan Agreement") (including, without limitation, contingent
obligations with respect to undrawn letters of credit issued thereunder and
commitment fees, agency fees, costs and expense reimbursements and
indemnifications payable thereunder) (provided, however, that any Indebtedness
under any refinancing, refunding or replacement of the Loan Agreement shall not
constitute Senior Indebtedness to the extent that such Indebtedness is by its
terms subordinate to any other Indebtedness of the customer)and (ii) the
principal of, premium, if any, and interest (including interest, to the
Customer) and (ii) the principal of, premium, if any, and interest (including
interest, to the extent allowable, accruing after the filing of a petition
initiating any proceeding under any state of federal

bankruptcy law) on any Indebtedness of the Customer (other than as otherwise 
provided in this definition), whether outstanding on the date of the 
Indenture or thereafter created, incurred or assumed, unless, in the case of 
any particular Indebtedness, the instrument creating or evidencing, or the 
agreement governing, such Indebtedness or pursuant to which such Indebtedness 
is outstanding expressly provides that such Indebtedness shall not be senior 
in right of payment to the Securities.  Notwithstanding the foregoing, 
"Senior Indebtedness" shall not include (A) Indebtedness evidenced by the 
Securities, (B) Indebtedness that is by its terms subordinate or junior in 
right of payment to any Indebtedness of the Customer, (C) Indebtedness which, 
when incurred and without respect to any election under Section 1111(b) of 
Title 11, United States Code, as amended, is without recourse to the 
Customer, (D) that portion of any Indebtedness which at the time of issuance 
is issued in violation of the Indenture, (E) Indebtedness of the Customer to 
a subsidiary of the Customer or any other affiliate of the Customer or any of 
such affiliate's subsidiaries, (F) Indebtedness of the Customer which is 
represented by redeemable capital stock, (G) any liability for federal, 
state, local or other taxes owed or owing by the Customer, (H) Indebtedness 
of the Customer for goods, materials or services purchased in the ordinary 
course of business or Indebtedness of the Customer consisting of trade 
payables or other current liabilities, (I) Indebtedness of or amounts owning 
by the Customer for compensation to employees or for services and (J) amounts 
owing by the Customer under leases (other than capital lease obligations).

"Subordinated Indebtedness" means any Indebtedness of the Customer subordinated
in right of payment of the Securities.

"Uniform Customs and Practices" means the "Uniform Customs and Practice for
Documentary credits" (1993 Revision), International Chamber of Commerce,
Publication No. 500, and any subsequent revisions thereof approved by the
International Chamber of Commerce.

In consideration of the Bank opening at the Customer's request, from time to
time, a Credit the Customer hereby agrees with the Bank as follows:

1.   AGREEMENT TO PAY.  The Customer will pay the Bank, in United States 
currency, the amount of each drawing under any Credit, together with 
commissions, all customary charges and all other payments by the Bank 
pursuant to the Credit or this Agreement, such payment to be made (a) within 
one Business Day of demand thereof in the case of each drawing at sight, with 
interest, as provided below, from the date one Business Day after such 
payment is due under the Credit to the date of payment by the Customer to the 
Bank, and (b) in time for cover to reach the place of payment I the course of 
ordinary mail no later than one Business Day prior to maturity in the case of 
each acceptance.  If a drawing is payable in foreign currency, the Customer 
shall pay the Bank the equivalent of the amount of such drawing in United 
States currency, at the Bank's then selling rate for cable transfers to the 
place of payment or to the place of the Bank's settlement of its obligation, 
as the Bank may require.  If there is no rate of exchange for effecting such 
cable transfer, the Customer will pay the Bank within one Business Day of 
demand thereof the amount in United States currency equivalent to the Bank's 
actual cost of settlement, with interest, as provided below, on the amount in 
United States currency payable by the Customer from the date one Business Day 
after the due date of such payment to the date of payment by the Customer.  
If payment is not made within the time period provided in this paragraph, the

rate of interest on default on any of the Customer's obligations hereunder 
will be the Base Rate.  The Base Rate is the rate of interest announced from 
time to time by the Bank at its head office as its Base Rate.  Any amount 
which at any time any be due and owing by the Customer to the Bank pursuant 
to this Agreement may be charged against any funds held by the Bank for the 
account of the Customer.

2.   MAXIMUM AMOUNT OF CREDITS.  The maximum aggregate face amount of Credits 
outstanding hereunder shall not at anytime exceed $25,000,000.  Notwithstanding
the foregoing, maximum aggregate face amount of Credits outstanding hereunder
shall not at any time exceed the difference between (i) $25,000,000 and (ii) the
aggregate face amount of Credits outstanding under the Ranche Reimbursement
Agreement at such time.

3.   OBLIGATIONS PARI PASSU WITH SECURITIES.  The obligations and liabilities of
the Customer hereunder and with respect to all Credits issued hereunder shall be
PARI PASSU with the Securities issued by the Customer pursuant to the Indenture.

4.   APPROVAL OF CREDIT BY CUSTOMER.  The Customer will promptly examine (a) the
copy of the Credit (and any amendments thereof) sent to it by the Bank and (b)
all instruments and documents delivered to it from time to time by the Bank, and
the Customer will, within one Business Day of receipt thereof, notify the Bank
of any irregularity or claim of noncompliance with the Customer's instructions. 
The Customer is conclusively deemed to have waived any such claim against the
Bank and its correspondents unless such notice is given as aforesaid.

5.   DOCUMENTATION.  The Customer will procure promptly any necessary
documentation, permits or licenses for the import, export or shipping of the
property in connection with which the Credit is issued; will comply with all
foreign and domestic governmental requirements relating to the shipment or
financing of such property; and will furnish such evidence that the above
requirements have been fulfilled as the Bank may reasonably require.  The
Customer will keep such property insured in amounts, against risks and with
companies reasonably satisfactory to the Bank; will name the Bank as loss payee
and additional insured under standard loss payable endorsements under all
policies insurance applicable to the Credits in the amount of the Credits and
will furnish the Bank on demand with evidence of endorsement.  Should the
insurance upon such property for any reason be unsatisfactory to the Bank, the
Bank may, at the Customer's expense, upon five (5) days prior notice to the
customer, obtain insurance reasonably satisfactory to the Bank.

6.   INDEMNITY.  The Customer agrees to indemnify the Bank and its
correspondents for and hold them harmless against any and all claims, loss,
liability or damage, including reasonable attorney fees, howsoever arising from
or in connection with the Credit , including any such claim or loss in
connection with the surrender or endorsement of any bill of lading, warehouse
receipt or other document at any time held by the Bank or any of its
correspondents in connection with the Credit, other than as a result of the
gross negligence or willful misconduct of the Bank.  The agreements in this
paragraph shall survive any payment under or termination of the Agreement, up to
the applicable statute of limitations.

7.   COSTS AND EXPENSES.  The Customer shall pay the Bank within one Business
Day of demand thereof all reasonable out-of-pocket expense, including reasonable
attorney fees, incurred or paid by the Bank in connection with the exercise of
any right, power or remedy hereunder, or in the enforcement thereof.

8.   SET-OFF RIGHTS.  Any deposits or other sums at any time credited by or due
from the Bank to the Customer and any securities or other property of the
Customer and any securities or other property of the Customer in the possession
of the Bank or any of its correspondents shall at all times be subject to the
rights of the Bank to set-off against such sums for the payment of any
obligations of the Customer to the Bank hereunder, if direct, absolute and due,
whether now existing or hereafter arising.  Regardless of any other means of
obtaining repayment of the obligations hereunder, any deposits or other sums
redited by or due from the Bank of the Customer may, at any time and from time
to time after the occurrence and during the continuation of a Payment Default or
Non-payment Default hereunder, be applied to or set off against liabilities and
obligations of the Customer which are then due and payable, without notice or
compliance with any other condition precedent now or hereafter imposed by
statute rule of law or otherwise (all of which are hereby expressly waived). 
Promptly following each setoff, appropriation or application, the Bank shall
notify the Customer of such setoff, appropriation or application (which
notification shall contain a description of the applicable account and
applicable amount).  Notwithstanding anything to the contrary contained herein,
the Bank's set-off rights provided herein shall be fully subordinate in right of
payment and priority to the set-off rights granted to the holders of the Senior
Indebtedness.

9.   OBLIGATIONS SUBORDINATE TO SENIOR INDEBTEDNESS.

9.1. The Customer covenants and agrees, and the Bank as evidenced by its
acceptance and execution of this Agreement likewise covenants and agrees, that,
to the extent and in the manner hereinafter set forth in THIS Agreement, the
Obligations and the payment and performance of the obligations of the Customer
to the Bank hereunder is hereby expressly made subordinate and subject in right
of payment, as provided in this Agreement, to the prior payment in full of all
Senior Indebtedness in cash or, as acceptable to the holders of Senior
Indebtedness, in any other manner; PROVIDED, HOWEVER, that the obligations of
the Customer and the payment of the Obligations hereunder in all respects shall
rank PARI PASSU with the Securities and all other existing and future senior
subordinated indebtedness of the Customer.  The provisions of this Agreement are
for the express benefit of the holders from time to time of Senior Indebtedness,
each of which is entitled to enforce such holder's rights hereunder, without any
act or notice of acceptance hereof or reliance hereon.  No amendment,
modification or discharge of any provision of this Agreement (or, to the extent
that any such amendment, modification or discharge thereof would change the
effect of this Agreement, or any of the definitions set forth herein) shall be
effective against any holder of Designated Senior Indebtedness who would be
materially adversely affected thereby unless expressly consented to in writing
by such holder.

9.2. Payment Over Of Proceeds Upon Dissolutions, Etc.

In the event of (a) any insolvency or bankruptcy case or proceeding, or any
receivership, liquidation, reorganization or there similar case or

proceeding in connection therewith, relative to the Customer or to its 
assets, or (b) any liquidation, dissolution or other winding up of the 
Customer, whether voluntary or involuntary and whether or not involving 
insolvency or bankruptcy, or (c) any assignment for the benefit of creditors 
or any other marshaling of assets or liabilities of the Customer, then and in 
any such event:

(1)  the holders of the Senior Indebtedness shall be entitled to
receive payment in full in cash or cash equivalents, or provision shall be
made for such payments, of all amounts due on or in respect of all Senior
Indebtedness before the Bank is entitled to receive any payment or
distribution of any assets of the Customer of any kind or character
(excluding securities of the Customer or any other corporation that are
equity securities or are subordinated in right of payment to all Senior
Indebtedness, that may at the time be outstanding, to substantially the
same extent as, or to a greater extent that, the Obligations are so
subordinated as provided in this Agreement (such securities being
hereinafter collectively referred to as "Permitted Junior Securities") on
account of any amounts payable with respect to the obligations of the
Customer hereunder;

(2)  any payment or distribution of assets of the Customer of any kind
or character, whether in cash, property or securities (excluding Permitted
Junior Securities) by set-off or otherwise, to which the Bank, in its
capacity hereunder, would be entitled but for the provisions of this
Section 9 (including any such payment or other distribution which may be
received by the holders of Subordinated Indebtedness as a result of any
payment on such Subordinated Indebtedness) shall be paid by the liquidating
trustee or agent or other person making such payment or distribution,
whether a trustee in bankruptcy, a receiver or liquidating trustee or
otherwise, directly to the holders of Senior Indebtedness or their
representatives or to the trustee or trustees under any indenture under
which any instruments evidencing any of such Senior Indebtedness may have
been issued, ratably according to the aggregate amounts remaining unpaid on
account of the Senior Indebtedness held by each such holder or
representative, to the extent necessary to make payment in full of all
Senior Indebtedness remaining unpaid, after giving effect to any concurrent
payment or distribution to the holders of such Senior Indebtedness; and

(3)  in the event that, notwithstanding the foregoing provisions of
this Section 9, the Bank, in its capacity hereunder, shall have received
any payment or distribution of assets of the Customer of any kind or
character, whether in cash, property or securities, under this Agreement in
respect of the obligations arising hereunder before all Senior Indebtedness
is paid in full, then and in such event such payment or distribution
(excluding Permitted Junior Securities, but including any payment or
distribution which may be received by the holders of the Securities or
Subordinated Indebtedness as a result of any payment on such Subordinated
Indebtedness), shall be paid over or delivered forthwith to the trustee in
bankruptcy, receiver, liquidation trustee, custodian, assignee, agent or
other person making payment or distribution of assets of the Customer for
application to the payment of all senior Indebtedness in full, after giving
effect to any concurrent payment or distribution to or for the holders of
Senior Indebtedness.

The consolidation of the Customer with, or the merger of the Customer 
into, another person or entity or the liquidation or dissolution of the 
Customer following the conveyance, transfer or lease of its properties and 
assets substantially as an entirety to another person or entity upon the 
terms and conditions set forth in Article Six of the Indenture shall not be 
deemed a dissolution, winding up, liquidation, reorganization, assignment for 
the benefit of creditors or marshalling of assets and liabilities of the 
Customer of the purposes of this Section if the person or entity formed by 
such consolidation into which the Customer is merged or the person or entity 
which acquired by conveyance, transfer or lease such properties and assets 
substantially as an entirety, as the case may be, shall, as a part of such 
consolidation, merger, conveyance, transfer or lease, comply with the 
conditions set forth in Article Six of the Indenture.

9.3  Suspension Of Payment When Senior Indebtedness In Default.

(a)  Unless clause 9.2 shall be applicable, upon (1) the occurrence of a
Payment Default and (2) the giving of a written notice by the representative or
holder of Designated Senior Indebtedness of such occurrence under the Indenture,
then no payment or distribution of any assets of the Customer of any kind or
character (excluding payments in Permitted Junior Securities) shall be made by
the Customer hereunder on account of the obligations hereunder unless and until
such Payment Default shall have been cured, waived in writing or shall have
ceased to exist or such Designated Senior Indebtedness shall have been
discharged or paid in full in cash, or in any other manner as acceptable to the
holders of such Designated Senior Indebtedness, after which the Customer shall
resume making any and all required payments hereunder in respect of the
obligations arising hereunder.

(b)  Unless clause 9.2 shall be applicable, upon (1) the occurrence of a
Non-payment Default and (2) and the giving of a written notice by the
representative or holder of Designated Senior Indebtedness of such occurrence
under the Indenture, then no payment or distribution of any assets of the
Customer of any kind or character (excluding payments in Permitted Junior
Securities) shall be made by the Customer hereunder for the period specified
below ("Payment Blockage Period").

The Payment Blockage Period shall commence upon the receipt by the Customer
or the Trustee under the Indenture from a representative or the holder of any
Designated Senior Indebtedness of notice of the Non-payment Default by the
Customer and shall end on the earliest of (x) 179 days after receipt of such
notice by the Trustee under the Indenture (provided any Designated Senior
Indebtedness as to which notice was given shall not theretofore have been
accelerated), (y) the date on which the Non-payment Default shall have been
cured or waived in writing or shall have ceased to exist or the Designated
Senior Indebtedness related hereto shall have been discharged or paid in full or
(z) the date such Payment Blockage Period shall have been terminated by written
notice to the Customer at or after the initiation of such Payment.

Blockage Period, from the representative or the holder of Designated Senior
Indebtedness that gave notice of a Non-payment Default, after which, in the case
of any of clauses (x), (y), or (z), the Customer shall resume making any and all
required payments hereunder in respect of the obligations arising hereunder. 
Notwithstanding any other provision of this Agreement, in no event

shall a Payment Blockage Period extend beyond 179 days from the date of 
notice by or to the Bank of the Non-payment Default initiating such Payment 
Blockage Period (such 179-day period referred to as the "Initial Blockage 
Period").  Any number of notices of Non-payment Defaults may be given during 
the Initial Blockage Period; provided that during any 365-day consecutive 
period, only one such period during which payment on the obligations arising 
hereunder may not be made, may commence and the duration of such period may 
not exceed 179 days.  No Non-payment Default with respect to Designated 
Senior Indebtedness which existed or was continuing on the date of the 
commencement of any Payment Blockage Period will be, or can be, made the 
basis for the commencement of a second Payment Blockage Period (whether or 
not within a period of 365 consecutive days) unless such default has been 
cured or waived for a period of not less than 90 consecutive days.

(c)  In the event that, notwithstanding the foregoing, the Customer shall
make any payment or distribution to the Bank, it its capacity hereunder,
prohibited by the foregoing provision of this Agreement, then and in such event
such payment shall be received and held in trust for the holders of the Senior
Indebtedness and shall be paid over and delivered forthwith by the Bank, it its
capacity hereunder, to the holders of the Senior Indebtedness.

9.4  Payment Permitted If No Default.

Nothing contained in this Agreement shall prevent the Customer, at any 
time except as and to the extent during the pendency of any case, proceeding, 
dissolution, liquidation or other winding up, assignment for the benefit of 
creditors or other marshalling of assets and liabilities of the Customer 
referred to in clauses 9.2 or under conditions described in clause 9.3, from 
making payments hereunder at any time with respect to the obligations arising 
hereunder.

9.5  Subrogation To Rights Of Holders Of Senior Indebtedness.

Subject to the payment in full in cash or cash equivalent of all Senior
Indebtedness, the Bank, in its capacity hereunder, and not as a holder of Senior
Indebtedness, shall be subrogated (I) to the rights of the holders of such
Senior Indebtedness to receive payments and distributions of cash, property and
securities applicable to the Senior Indebtedness and (ii) to the security
interests which have been or may hereafter be granted by the Customer to the
holders of Senior Indebtedness. until the obligations arising hereunder shall be
paid in full.  For purposes of such subrogation, no payment or distributions to
the holders of Senior Indebtedness of any cash, property or securities to which
Bank, it its capacity hereunder, would be entitled except for the provisions of
this Agreement and no payments over pursuant to the provision of this Agreement
to the holders of Senior Indebtedness, and the Bank, in its capacity hereunder,
be deemed to be a payment or distribution by the Customer to or on account of
the Senior Indebtedness, thereto.

9.6  Provisions Solely To Define Relative Rights.

The provisions of this Agreement are intended solely for the purpose of
defining the relative rights of the bank, in its capacity hereunder, on the one
hand and the holders of Senior Indebtedness on the other hand.  Nothing
contained in this Agreement is intended to or shall (a) impair, as among the
Customer, its creditors other than holders of Senior Indebtedness and the

Bank, in its capacity hereunder, the obligation of the Customer, which is 
absolute and unconditional, to pay the obligations arising hereunder as and 
when the same shall become due and payable in accordance with the terms of 
this Agreement; or (b) affect the relative rights against the Customer of the 
Bank, it its capacity hereunder, and creditors of the Customer other than the 
holders of Senior Indebtedness; or (c) prevent the Bank, in its capacity 
hereunder, from exercising all remedies otherwise permitted by applicable law 
upon an Event of Default under this Agreement, subject to the rights under 
this Agreement of the holders of Senior Indebtedness in the circumstances 
specified in this Agreement,

9.7  No waiver Of Subordination Provisions.

(a)  No right of any present or future holder of any Senior Indebtedness to
enforce subordination as herein provided shall at any time in any way be
prejudiced or impaired by any act or failure to act on the part of the Customer
or by any act or failure to act, in good faith, by any such holder, or by any
non-compliance by the Customer with the terms, provisions and covenants of this
Agreement, regardless of any knowledge thereof any such holder hay have or be
otherwise charged with.

(b)  Without in any way limiting the generality of subclause (a) of this
clause 9.7, the holders of senior Indebtedness may, at any time and from time to
time, without the consent of or notice to the Bank, in its capacity hereunder,
without incurring responsibility to the Bank, in its capacity hereunder, and
without impairing or releasing the subordination provided in this Agreement or
the obligations hereunder of the Bank, in its capacity hereunder, to the holders
of senior Indebtedness, do any one or more of the following;

(1)  change the manner, place or terms of payment or extend the time
of payment of, or renew or alter, Senior Indebtedness or any instrument
evidencing the same or any agreement under which Senior Indebtedness is
outstanding;

(2)  sell, exchange, release or otherwise deal with in any lawful
manner and in any order any property pledged, mortgaged or otherwise securing
any Senior Indebtedness;

(3)  settle or compromise any Senior Indebtedness or any security
therefor or any guaranty thereof and apply any sums by whomever paid and however
lawfully realized to any Senior Indebtedness in any manner or order; and

(4)  fail to take or to record or otherwise perfect, for any reason or
for no reason, any lien or security interest securing Senior Indebtedness by
whomever granted, exercise or delay in or refrain from exercising any right or
remedy against the Customer or any security or any guarantor of any other
person, elect any remedy and otherwise deal lawfully with the Customer and any
security for an any guarantor of Senior Indebtedness;

provided, however, that in no event shall any such actions limit the right of
the Bank, in its capacity hereunder, to pursue any rights or remedies hereunder
or under applicable laws if the taking of such action does not

otherwise violate the terms of this Agreement of the holders, from time to 
time, or Senior Indebtedness to receive the cash, property of securities 
receivable upon the exercise of such rights and remedies.

9.8  Notice to the Bank.

The Customer shall give prompt written notice to the Bank of any fact known to
the Customer that would prohibit the making of any payment to the Bank in
respect of the obligations arising hereunder pursuant to the provisions hereof.

10.  Events of Default.  The following shall be "Events of Default" 
hereunder: (1)  failure by the Customer to make payment as provided in 
paragraph 1 hereof, or (2) failure by the Customer to pay at maturity and 
after any applicable period of grace, any obligations in excess of $500,000 
in the aggregate for borrowed monies or advances, or failure to observe or 
perform any term, covenant or agreement evidencing  or securing such 
obligations for borrowed monies or advances, the result of which failure is 
that the holder or holders of such obligations have the right to cause such 
obligations to become due prior to their stated maturity upon delivery of 
required notice, if any, or (3) the Customer's (I) application for or consent 
to the appointment of, or the taking of possession by, a receiver, custodian, 
trustee, liquidator or similar official of itself or of all or a substantial 
part of the Customer's property, (ii) generally not paying its debts as such 
debts become due, (iii) making a general assignment for the benefit of its 
creditors, (iv) commencing a voluntary case under the Bankruptcy Code or 
equivalent statute (as now or hereafter in effect), (v) commencing any case 
or proceeding under any law relating to bankruptcy, insolvency, 
reorganization, winding-up or composition or adjustment of debts, or any 
other law providing for the relief of debtors, (vi) acquiescing in writing to 
any petition filed against it in an involuntary case under the Bankruptcy 
Code or other law, or (vii) taking any action under the laws of its 
jurisdiction of incorporation or organization similar to any of the 
foregoing, or (4) commencement of a proceeding or case, without the 
application or consent of the Customer in any court of competent 
jurisdiction, seeking (I) the liquidation, reorganization, dissolution, 
winding up, or composition or readjustment of its debts, (ii) the appointment 
of a trustee, receiver, custodian, liquidator or the like of it or of  all or 
any substantial part of its assets, or (iii) similar relief in respect of it, 
under any law relating to bankruptcy, insolvency, reorganization, winding-up 
or composition or adjustment of debts or any other law providing for the 
relief of debtors, and such proceeding or case shall continue undismissed, or 
unstayed and in effect, for  a period of 60 days; or the entry of an order 
for relief or equivalent order in an involuntary case under the Bankruptcy  
Code or equivalent act against the Customer; or action under the laws of the 
jurisdiction of incorporation or organization of the Customer similar to any 
of the foregoing shall be taken with respect to the Customer and shall 
continue undismissed or unstayed and in effect for any period of 60 days, or 
(5) entry against Customer of a judgement or order for the payment of money 
by any court, or issuance or levy against the property of the Customer of a 
warrant of attachment or execution or similar process, that in the aggregate 
exceeds $500,000 in value and such judgement or order shall continue 
undischarged, unstayed, unsatisfied, undismissed or unbonded for 30 days of 
the issuance of or application for a writ or order of attachment or 
garnishment against any document of title or other similar document relating 
to Credit's issued pursuant hereto or a substantial part of the property or

assets of the Customer, or (6) any governmental authority, or any court of at 
the request of any governmental authority, taking possession of all or 
substantially all of the property of the Customer or assuming control over 
all of the material affairs or operations of the Customer, thereupon, the  
Bank may, without notice or demand, declare any and all of the obligations 
and liabilities, direct or indirect, absolute or  contingent, due or to 
become due, now existing or hereafter arising, of the Customer to the Bank 
under this Agreement, to be immediately due and payable, and the Bank shall 
have all of the rights and remedies provided hereunder and by law subject, 
however, to the provisions of Section 9 hereof.

11.  Documents, etc.  The Customer will, at its expense, promptly execute and
deliver to the Bank such trust receipts, documents of title and other documents
as the Bank may at any time reasonably request in order to carry out the intent
and purpose hereof and will promptly reimburse the Bank for the amount of any
filing or recording fees with respect thereto.

12.  Power of Attorney.  After the occurrence and during the continuance of an
Event of Default or unless otherwise consented to by the Customer, the Bank may,
with power of substitution and revocation, sign in the Customer's name as agent
on any document called for from the Customer and/or endorse in the Customer's
name any and all notes checks, drafts, documents of title or other instruments
documents in which the Bank may at any time have any  interest; and may perform
any obligation or agreement in connection with the Credit or this Agreement
which the Customer has failed to perform and take any other action with the Bank
deems necessary or desirable to protect its rights, powers and remedies under
this Agreement.

13.  Performance by Beneficiary.  Neither the Bank nor its correspondents shall
be in any way responsible for performance by any beneficiary of its obligations
to the Customer, nor for the form, sufficiency, correctness, genuineness,
authority of persons, signing, falsification or legal effect of any documents
called for under the Credit if such documents on their face appear to be in
order.

14.  Shipments in Excess of Quantity.  Notwithstanding anything to the contrary
contained herein or in any Credit, although shipment(s) in excess of the
quantity called for under the Credit are made, the Bank may make payment under
the Credit in an amount or amounts not exceeding the amount of the Credit
(provided that such excess does not exceed by five percent (5%) the quantity
called for under the documents to be presented under the credit unless other
provided in the Application); and the Bank may honor, as complying with the
terms of the Credit and of the Application therefore, any drafts or other
documents otherwise in order signed or issued by an administrator, executor,
conservator, trustee in bankruptcy, debtor in possession, assignee for benefit
of creditors, liquidator, receiver or other legal representative of the party
authorized under the Credit to draw or issue such drafts or other documents.  

15.  While the Bank shall use best effort to comply with the request of the
Customer as to each of the following, the Customer authorizes the Bank to use
its reasonable discretion to (a) select, after due consultation with the
Customer, an advising bank if any, (b) select a paying bank, if any, (c)
authorize or restrict negotiation under the Credit, and (d) waive any such
restriction on negotiation.

16.  Amendment.  This Amendment and a request or consent to any modification, 
change, amendment, waiver or any other action pursuant to this Agreement, 
shall be binding upon the Customer and its respective heirs, executors, 
administrators, successors and assigns and shall insure the benefit of and be 
enforceable by the Bank, its successors and assigns.  All modifications or 
amendments of or to this Agreement must be in writing and signed by each of 
the parties hereto.  In the event that any position hereof is determined by a 
court of competent jurisdiction to be invalid, such invalidity shall not 
affect any other provision of this Agreement.  The Customer represents and 
warrants that the execution, deliver and performance by the Customer hereof 
has been duly authorized by all necessary corporate and/or other action and 
that the making and performance hereof by the Customer does not and will not 
contravene the terms of any existing law, agreement or instrument by which 
the Customer is bound or to which the Customer is subject.

17.  Miscellaneous.

a.   The failure of the Bank to enforce at any time any of the provisions
hereof shall not be construed to be a waiver of such provisions or of the right
of the Bank thereafter to enforce any such provisions.

b.   Each Credit shall be subject to, and performance by the Bank, its
correspondent and the beneficiary thereunder shall be governed by, the Uniform
Customs and Practice, except to the extent it is otherwise expressly agreed.

c.   It is agreed that all directions and correspondence relating to the
Credit are to be sent at the Customer's risk and that the Bank does not assume
any responsibility for any inaccuracy, interruption, error or delay in
transmission or delivery by post, telegraph or cable, or for any inaccuracy of
translation.

d.   This Agreement is made in the Commonwealth of Massachusetts and shall
be deemed to be a contract under seal to be governed by and construed in
accordance with the laws of said Commonwealth.  The Bank's rights, powers, and
remedies specified herein are cumulative and are in addition to those otherwise
created or existing by law or agreement.

e.   The Customer hereby certifies, to the best of the customer's
knowledge, that transactions in the goods or services covered by any application
for a Credit are not prohibited under the Foreign Assets Control Regulations of
the United States Treasury Department or the Anti-Boycott Regulations of the
United States Department of Commerce, and that any United States inportation or
exportation of such goods and services conforms in every respect with all
existing United States Government regulations.

Executed under seal as of the date first written.

GUESS ?, INC.                    THE FIRST NATIONAL BANK OF BOSTON

By:/s/ ROGER WILLIAMS            By:  /s/ DEBRA ZURKA
- -------------------------        ------------------------------------
Roger Williams                   Debra Zurka
Executive Vice President and     Vice President
Chief Financial Officer

EXHIBIT J
LENDER'S PERCENTAGES

Lender                                              Maximum
Total            Lender's
Commitment       Percentages

The First National Bank of Boston                
100 Federal Street
Mail Stop 01-22-05
Boston, Massachusetts 02110
Attention: David T. Clark, Assistant Vice President
Telecopier: (617)434-8964

Sanwa Bank California                        
Sanwa Bank Plaza
601 South Figueroa Street
10th Floor
Los Angeles, California 90017
Attention: Mary King, Vice President
Telecopier: (213)896-7090

The Industrial Bank of Japan, Limited
Los Angeles Agency            
350 South Grand Avenue
Suite 1500
Los Angeles, California 90071
Attention: Mark Moss, Vice President
Telecopier: (213)488-9840

Credit Lyonnais                              
Los Angeles Branch
515 South Flower Street
Suite 2200
Los Angeles, CA 90071
Attention: Steven Yoon, Vice President
Telecopier: (213) 623-3437

Sumitomo Bank of California                  
611 West 6th Street
Suite 3900
Los Angeles, California 90017
Attention: Matthew R. Van Steenhuyse
Telecopier: (213) 622-1385

EXHIBIT K

TRANSACTIONS WITH AFFILIATES

TRANSACTIONS WITH AFFILIATES

The Company is engaged in various transactions with entities affiliated with
trusts for the respective benefit of Maurice, Paul and Armand Marciano (the
"Marciano Trusts").  The Company believes that each of the companies, in which
the Marciano Trusts have an investment, and related party transactions discussed
below were entered into on terms no less favorable to the Company than could
have been obtained from an unaffiliated third party.

Mergers

On August 13, 1996, Marciano International, which was wholly owned by the
Marciano Trusts, was merged with and into the Company in connection with the
initial public offering.  Consideration paid to the Marciano Trusts was
$300,000.

License Arrangements and Licensee Transactions 

The Company has a licensing agreement with Charles David of California ("Charles
David").  Charles David is controlled by the father-in-law of Maurice Marciano. 
The Marciano Trusts and Nathalie Marciano (the spouse of Maurice Marciano)
together own 50% of Charles David, and the remaining 50% is owned by the father-
in-law of Maurice Marciano.  The license agreement grants Charles David the
rights to manufacture worldwide and distribute worldwide (except Japan) men's,
women's and some children's leather and rubber footwear, excluding athletic
footwear, which bear the Guess'r' logo and trademark.  The license also includes
related shoe care products and accessories.  Gross royalties earned by the
Company under such license agreement for the fiscal year ended December 31, 1996
was $1.5 million.  Additionally, the Company purchased $6.0 million of product
from Charles David for resale in the Company's retail stores during the same
period.

On September 1, 1994, the Company entered into a licensing agreement with
California Sunshine Active Wear, Inc. ("California Sunshine"), granting it the
rights to manufacture and distribute men's and women's activewear, which bear
the Guess'r' logo and trademark, in the United States.  The Marciano Trusts
together own 51% of California Sunshine.  Gross royalties earned by the Company
under such license agreement for the fiscal year ended December 31, 1996 was
$742,000.  Additionally, the Company purchased $1.4 million of product from
California Sunshine for resale in the Company's retail stores during the same
period.

Effective January 1, 1995, the Company entered into a licensing agreement with
Guess? Italia, S.r.l. ("Guess Italia"), granting it the exclusive right in Italy
and non-exclusive rights in other parts of Europe to manufacture and distribute
men's and women's apparel and accessories, which bear the Guess'r' logo and
trademark.  Prior to the IPO, Guess Italia was owned 79% by the Company and 21%
by Marciano International, a company wholly owned by the Marciano Trusts.  As
part of the reorganization, in connection with the IPO, 

Guess Italia became a wholly-owned subsidiary of the Company when Marciano 
International was merged with and into the Company.  Gross royalties earned 
by the Company under such license agreement for the fiscal year ended 
December 31, 1996 was $766,000. Additionally, the Company purchased $327,000, 
of product from Guess? Italia and sold $89,000, of product for resale in 
Guess? Italia's retail store and to other wholesale customers during the 
fiscal year ended December 31, 1996.  All inter company transactions were 
eliminated during consolidation.

Effective December 9, 1992, the Company entered into a licensing agreement with
Nantucket Industries ("Nantucket"), granting it the rights to manufacture and
distribute women's intimate apparel within the United States, which bear the
Guess'r' logo and trademark.  Nantucket is owned 13.0% by the Company and 7.6%
by the Marciano Trusts.  During the fiscal year ended December 31, 1996, the
Company recorded gross royalty income of $327,000, purchased $416,000 of product
for resale in its retail stores, and recorded an equity loss of $349,000.

Effective December 1, 1989, the Company entered into a licensing agreement with
Strandel, Inc. ("Strandel"), granting it the rights to manufacture and
distribute Men's, Women's and Children's Knits and woven sportswear in Canada,
which bear the Guess'r' logo and trademark.  Strandel is owned 20% by the
Company.  During the fiscal year ended December 31, 1996, the Company recorded
gross royalty income of $1.8 million and recorded an equity loss of $127,000.

On January 1, 1997, the Company acquired a Limited Partnership interest of
24.75% in S.W.P.I., Ltd., a California Limited Partnership in which the Marciano
Trusts have a 76.25% interest, from Pour Le Bebe, Inc., a California
Corporation, as payment in lieu of unpaid license fees due November 1, 1996. 
The Limited Partnership interest of 24.75% in S.W.P.I., Ltd. was valued at $1.4
million by the Company.

Purchasing Agency Agreement

On May 3, 1994, the Company entered into an agreement with Ranche, Ltd.
("Ranche"), a wholly owned subsidiary of Guess Europe, BV ("GEBV") to serve as a
non-exclusive buying agent for the Company in Hong Kong, which agreement was
terminated in the first quarter of 1996 when certain of Ranche's assets were
transferred to Newtimes Guess, Ltd, a Hong Kong corporation ("Newtimes") in
which the Company and the Marciano Trusts then held indirect ownership interests
of 25% and 25%, respectively.  In connection with the IPO, the Marciano Trusts'
indirect interest in Newtimes was transferred to the Company.  Ranche earned
commissions of $192,000 during the period in 1996 in which the agreement was
still active. In addition, Ranche operates under a licensing arrangement to
distribute product to authorized distributors.  Gross royalties earned by the
Company under such license for the fiscal year ended December 31, 1996 was
$383,000.

In February 1996, the Company entered into a buying agency agreement with
Newtimes.  Pursuant to such agreement, the Company pays Newtimes a commission
based upon the cost of finished garments purchased for the Company by Newtimes. 
Commissions earned by Newtimes during the fiscal year ended December 31, 1996
was $624,000.  Additionally, the Company recorded $190,000 in equity losses
during 1996.

Leases

The Company leases manufacturing, warehouse and administrative facilities and
one retail administrative facility from partnerships affiliated with the
Principal Stockholders. The leases in effect at December 31, 1996 will expire
through July 2008. Aggregate lease payments under leases in effect for the
fiscal year ended December 31, 1996 were $2.9 million.

The Company currently rents, on a month-to-month basis, a portion of a remote
Guess facility to Southwest Pacific Investment Company ("SWPI"), an entity owned
by the Marciano Trusts.  Monthly rental charges are $11,000, effective August 1,
1996.  An aggregate of $57,000 was paid by SWPI to the Company during 1996.

THE FIRST NATIONAL BANK OF BOSTON

AMENDED AND RESTATED SECURITY AGREEMENT

THIS AMENDED AND RESTATED SECURITY AGREEMENT (the "Agreement") made this
28th day of March, 1997 by GUESS ?, INC., a Delaware corporation with its chief
executive offices at 1444 South Alameda St., Los Angeles CA 90021 (the "DEBTOR")
in favor of THE FIRST NATIONAL BANK OF BOSTON, a national banking association
with its head office at 100 Federal Street, Boston, Massachusetts 02110
(sometimes referred to as the "AGENT") as agent for itself and for the lenders
parties to the Loan Agreement referred to below (the "LENDERS") (the "SECURED
PARTY").

WHEREAS, the Company, the Agent, and the Lenders are parties to a Revolving
Credit Agreement dated as of December 20, 1993 as amended by a First Amendment
to Revolving Credit Agreement dated as of January 20, 1994, by a Second
Amendment and Waiver to Revolving Credit Agreement dated as of April 1, 1994, by
a Third Amendment and Waiver to Revolving Credit Agreement dated as of July 18,
1994, by a Fourth Amendment and Waiver to Revolving Credit Agreement dated as of
October 24, 1994, by a Fifth Amendment to Revolving Credit Agreement dated as of
February 13, 1995, by a Sixth Amendment to Revolving Credit Agreement dated as
of September 14, 1995, by a Seventh Amendment to Revolving Credit Agreement
dated as of December 22, 1995 and by an Eight Amendment to Revolving Credit
Agreement dated as of February 13, 1996. (collectively, the "EXISTING LOAN
AGREEMENT"); and

WHEREAS, as a condition to the Existing Loan Agreement, the Company, the
Agent, and the Lenders entered into a Security Agreement, dated as of December
20, 1993, as amended (the "EXISTING SECURITY AGREEMENT"), pursuant to which the
Company granted to the Agent a continuing security interest in all of its right,
title and interest in all Inventory and Accounts (as defined herein) and all
proceeds and products thereof; and 

WHEREAS, In connection with the execution of the Existing Security
Agreement, the Company caused Uniform Commercial Code Financing Statements to be
filed in all locations required to perfect the security agreements granted under
the Existing Security Agreement; and

WHEREAS, on the date hereof the parties are entering into an Amended and
Restated Revolving Credit Agreement (the "LOAN AGREEMENT") and, in connection
therewith are required to enter into this Agreement;

NOW THEREFORE, for value received, the receipt and legal sufficiency of
which is hereby acknowledged, including, without limitation, enabling the Debtor
to obtain credit or other financial accommodations from the Lenders under the
Loan Agreement and those certain Notes executed and delivered by the Debtor to
the Lenders (the "NOTES"), the Debtor hereby agrees as follows:

10          DEFINITIONS.  All capitalized terms used herein or in any
certificate, report or other document delivered pursuant to this Agreement shall
have the meanings assigned to them below or in the Loan Agreement (unless
otherwise defined).  Except as otherwise defined, terms defined in the Uniform
Commercial Code shall have the meanings set forth therein.

1

ACCOUNTS.  All rights of the Debtor to payment for goods sold or leased or
for services rendered, all sums of money or other proceeds due or becoming due
thereon, all instruments  evidencing any such right, all guarantees of and
security for any such right, and the Debtor's rights pertaining to and interest
in such goods, including the right of stoppage in transit, replevin or
reclamation, all chattel paper evidencing any such right and all other property
constituting "accounts" as such term is defined in the Uniform Commercial Code.

COLLATERAL.  See Section 2.

GENERAL INTANGIBLES.  All "general intangibles" as such term is defined in
the Uniform Commercial Code, but specifically excluding any trademarks, trade
names, patents, copyrights and any other intellectual property, other than an
Account arising from the licensing of any of the foregoing.

INVENTORY.  All goods, merchandise and other personal property of the
Debtor that are held for sale, lease or other disposition, or for display or
demonstration, or leased or consigned, or that are raw materials, piece goods,
work-in-process or materials used or consumed or to be used or consumed in the
Debtor's business, whether in transit or in the possession of the Debtor or
another, including without limitation all goods covered by purchase orders and
contracts with suppliers and all goods billed and held by suppliers and goods
located on the premises of any carriers, forwarding agents, truckers,
warehousemen, vendors, selling agents or other third parties; all display
materials relating to any of the foregoing; all warehouse receipts and other
negotiable and non-negotiable documents of title covering any of the foregoing;
and all other property constituting "inventory" as such term is defined in the
Uniform Commercial Code.

OFFICER'S CERTIFICATE.  A certificate signed by an officer of the Debtor
authorized in the resolution delivered herewith in the form attached hereto and
delivered concurrently herewith.

UNIFORM COMMERCIAL CODE.  The Uniform Commercial Code as in effect in the
Commonwealth of Massachusetts.

11          GRANT.  To secure the payment and performance of the Obligations,
the Debtor hereby assigns and pledges to the Secured Party and grants to the
Secured Party a continuing security interest in all of its rights, title and
interest in, whether now owned or existing or hereafter arising or acquired, all
Inventory and Accounts, and any and all additions, substitutions, replacements
and accessions to any of the foregoing; and all proceeds and products of any of
the foregoing (including, without limitation, proceeds which constitute
Accounts, Inventory or General Intangibles) (collectively, the "COLLATERAL").

12          REPRESENTATIONS, WARRANTIES AND COVENANTS.  The Debtor makes the
following representations and warranties, and agrees to the following covenants,
each of which representations, warranties and covenants shall be continuing and
in force so long as this Agreement is in effect:

.1.    NAME; DEBTOR/COLLATERAL LOCATION; CHANGES.

(a)  The name of the Debtor set forth on the first page hereof is the true
and correct legal name of the Debtor, and except as otherwise disclosed to the

2

Secured Party in the Officer's Certificate, the Debtor has not done business as
or used any other name.

(b)  The address of the Debtor set forth on the first page hereof is the
Debtor's chief executive office (the "CHIEF EXECUTIVE OFFICE") and the place
where its business records are kept.  Except (i) as disclosed on the Officer's
Certificate, (ii) Collateral in transit between locations disclosed on the
Officers Certificate and the Chief Executive Office, (iii) Inventory in the
temporary possession of independent sewing, laundering and finishing contractors
(provided that the total amount due to such contractors for work on such
Inventory shall not exceed $8,000,000  in the aggregate outstanding at any one
time), and (iv) Collateral in transit between any foreign manufacturer and the
Debtor, all tangible Collateral is located at the Chief Executive Office.

(c)  The Debtor will not change its name, identity or organizational
structure or the Chief Executive Office or place where its business records are
kept, or move any tangible Collateral to a location other than (i) those set
forth in the Officer's Certificate, (ii) Collateral in transit between locations
disclosed on the Officers Certificate and the Chief Executive Office, (iii)
Inventory in the temporary possession of independent sewing, laundering and
finishing contractors (provided that the total amount due to such contractors
for work on such Inventory shall not exceed $8,000,000 in the aggregate
outstanding at any one time) and (iv) Collateral in transit between any foreign
manufacturer and the Debtor, unless the Debtor shall have given the Secured
Party at least 30 days' prior written notice thereof and shall have delivered to
the Secured Party such new Uniform Commercial Code financing statements or other
documentation as may be necessary or required by the Secured Party to ensure the
continued perfection and priority of the security interests granted by this
Agreement.

.2.    OWNERSHIP OF COLLATERAL; ABSENCE OF LIENS AND RESTRICTIONS.  The
Debtor is, and in the case of property acquired after the date hereof, will be,
the sole legal and equitable owner of the Collateral, holding good and
marketable title to the same free and clear of all Encumbrances except Permitted
Encumbrances, and has good right and legal authority to assign, deliver, and
create a security interest in the Collateral in the manner herein contemplated. 
The Collateral is not subject to any restriction that would prohibit or restrict
the assignment, delivery or creation of the security interests contemplated
hereunder.

.3.    FIRST PRIORITY SECURITY INTEREST.  This Agreement, together with the
filing of Uniform Commercial Code financing statements in the appropriate
offices for the locations of Collateral listed in the Officer's Certificate,
create a valid and continuing first lien on and perfected security interest in
the Collateral (except for property not located in the United States or property
in which a security interest may not be perfected by filing of a financing
statement under the Uniform Commercial Code), prior to all other Encumbrances
other than Permitted Encumbrances, and is enforceable as such against creditors
of the Debtor.

.4.    SALES AND FURTHER ENCUMBRANCES.  The Debtor shall defend its title
to, and the Secured Party's interest in, the Collateral against all claims and
take any action necessary to remove any Encumbrances other than Permitted
Encumbrances and defend the right, title and interest of the Secured Party in
and to any of the Secured Party's rights in the Collateral.

3

.5.    ACCOUNTS: COLLECTION AND DELIVERY OF PROCEEDS.  The Debtor will
collect all of its Accounts constituting Collateral in the ordinary course of
its business consistent with past practices unless and until the Secured Party
exercises its rights to collect the Accounts pursuant to this Agreement.  After
the occurrence and during the continuation of an Event of Default, the Debtor
shall, at the request of the Secured Party, notify account debtors of the
security interest of the Secured Party in any Account and that payment thereof
is to be made directly to the Secured Party.  After the occurrence and during
the continuance of an Event of Default and upon request of the Secured Party,
any proceeds of Accounts or Inventory constituting Collateral received by the
Debtor, whether in the form of cash, checks, notes or other instruments, shall
be held in trust for the Secured Party and the Debtor shall deliver said
proceeds daily to the Secured Party, without commingling, in the identical form
received (properly endorsed or assigned where required to enable the Secured
Party to collect same).

.6.    RECORDS OF ACCOUNTS.  The Debtor will, at the request of the Secured
Party, retain off-site current copies of all materials created by or furnished
to the Debtor on which is recorded then-current information about any computer
programs or data bases that the Debtor has developed or otherwise has the right
to use from time to time as it relates to Accounts and Inventory only.  The
Debtor will, after the occurrence and during the continuance of an Event of
Default, at the request of the Secured Party, deliver a set of such copies to
the Secured Party for safekeeping and retention or transfer in the event of
foreclosure.

.7.    FURTHER ASSURANCES.  Upon the written request of the Secured Party,
and at the sole expense of the Debtor, the Debtor will promptly execute and
deliver such further instruments and documents and take such further actions as
the Secured Party may reasonably deem desirable to obtain the full benefits of
this Agreement and of the rights and powers herein granted, including, without
limitation, filing of any financing statement under the Uniform Commercial Code.
The Debtor authorizes the Secured Party to file any such financing statement
without the signature of the Debtor to the extent permitted by applicable law,
and to file a copy of this Agreement in lieu of a financing statement.  If any
amount payable under or in connection with any of the Collateral shall be or
become evidenced by any promissory note or other instrument, such note or
instrument shall be immediately delivered to the Secured Party, duly endorsed in
a manner satisfactory to it.

.8.    INSURANCE PROCEEDS.  Other than after the occurrence and during the
continuance of an Event of Default, the Debtor shall retain all proceeds of any
insurance on the Collateral.

13     NOTICES AND REPORTS PERTAINING TO COLLATERAL.  The Debtor will, with
respect to the Collateral:

(a)  promptly furnish to the Secured Party, from time to time upon
written request, reports in form and detail reasonably satisfactory to the
Secured Party setting forth an aging of Accounts and location of all
Inventory and after an Default a copy of the names and addresses of all
account debtors of the Company with information as to the outstanding
balance due from each such account debtor; and 

4

(b)  promptly notify the Secured Party of any Encumbrance asserted
against the Collateral other than a Permitted Encumbrance, including any
attachment, levy, execution or other legal process levied against any of
the Collateral;

The Debtor authorizes the Secured Party to, and the Secured Party agrees to,
destroy all invoices, delivery receipts, reports and other types of documents
and records submitted to the Secured Party in connection with the transactions
contemplated herein at any time subsequent to 12 months from the time such items
are delivered to the Secured Party.

14     SECURED PARTY'S RIGHTS WITH RESPECT TO COLLATERAL.  The Secured Party
may, at its option and at any time, after the occurrence and during the
continuance of an Event of Default and after the Obligations have been
accelerated in accordance with the terms of the Loan Agreement, without notice
or demand on the Debtor, take the following actions with respect to the
Collateral:

(a)  with respect to any Accounts (i) notify account debtors of the
security interest of the Secured Party in such Accounts and that payment
thereof is to be made directly to the Secured Party; (ii) demand, collect,
and receipt for any amounts relating thereto, as the Secured Party may
determine; (iii) commence and prosecute any actions in any court for the
purposes of collecting any such Accounts and enforcing any other rights in
respect thereof; (iv) defend, settle or compromise any action brought and,
in connection therewith, give such discharges or releases as the Secured
Party may deem appropriate; (v) endorse checks, notes, drafts, acceptances,
money orders, bills of lading, warehouse receipts or other instruments or
documents evidencing payment, shipment or storage of the goods giving rise
to such Accounts or securing or relating to such Accounts, on behalf of and
in the name of the Debtor; and (vi) sell, assign, transfer, make any
agreement in respect of, or otherwise deal with or exercise rights in
respect of, any such Accounts or the goods or services which have given
rise thereto, as fully and completely as though the Secured Party were the
absolute owner thereof for all purposes; and 

(b)  with respect to any Inventory make, adjust and settle claims
under any insurance policy related thereto.

Except as otherwise provided herein or by law and except for accounting for
moneys actually received by it in good funds hereunder, the Secured Party shall
have no duty as to the collection or protection of the Collateral nor as to the
preservation of any rights pertaining thereto, beyond the safe custody and
reasonable care of any Collateral in its possession.

15     SET-OFF RIGHTS.  Regardless of the adequacy of any Collateral or any
other means of obtaining repayment for any Obligations, the Lenders shall have
the right to set off under Section 9.3 of the Loan Agreement.

16     DEFAULTS.  An event of default ("Event of Default") shall exist as
provided in Section 7.1 of the Loan Agreement.

17     SECURED PARTY'S RIGHTS AND REMEDIES.

(a)  So long as any Event of Default shall have occurred and is continuing:

5

(i) the Secured Party may take immediate possession of the
Collateral, and for that purpose the Secured Party may, so far as the
Debtor can give authority therefor, enter upon any premises on which
any of the Collateral is situated and remove the same therefrom or
remain on such premises and in possession of such Collateral for a
reasonable period for purposes of conducting a sale or enforcing the
rights of the Secured Party;

(ii) the Debtor will, upon demand, assemble the Collateral and
make it available to the Secured Party at a place and time designated
by the Secured Party that is reasonably convenient to both parties;

(iii) the Secured Party may sell or otherwise dispose of the
Collateral at a public or private sale, with or without having the
Collateral at the place of sale, and upon such terms and in such
manner as the Secured Party may reasonably determine, and the Secured
Party may purchase any Collateral at any such sale.  Unless the
Collateral threatens to decline rapidly in value or is of the type
customarily sold on a recognized market, the Secured Party shall send
to the Debtor prior written notice (which, if given within ten days of
any sale, shall be deemed to be reasonable) of the time and place of
any public sale of the Collateral or of the time after which any
private sale or other disposition thereof is to be made.  The Debtor
agrees that upon any such sale the Collateral shall be held by the
purchaser free from all claims or rights of every kind and nature,
including any equity of redemption or similar rights, and all such
equity of redemption and similar rights are hereby expressly waived
and released by the Debtor.  In the event any consent, approval or
authorization of any governmental agency is necessary to effectuate
any such sale, the Debtor shall execute all applications or other
instruments as may be reasonably required; and

(iv) in any jurisdiction where the enforcement of its rights
hereunder is sought, the Secured Party shall have, in addition to all
other rights and remedies, the rights and remedies of a secured party
under the Uniform Commercial Code.

(b)  Prior to any disposition of Collateral pursuant to this Agreement the
Secured Party may, at its option, cause any of the Collateral to be repaired or
reconditioned (but not upgraded unless mutually agreed) in such manner and to
such extent as to make it saleable.

(c)  To the extent necessary in connection with the exercise of remedies
hereunder, the Secured Party is hereby granted a license or other right to use,
upon the occurrence and during the continuance of an Event of Default, without
charge, the Debtor's labels, patents, copyrights, rights of use of any name,
trade secrets, trade names, trademarks and advertising matter, or any property
of a similar nature, relating to the Collateral, in completing production of,
advertising for sale and selling any Collateral.

(d)  The Secured Party shall be entitled to apply the proceeds of any
disposition of the Collateral, first, to its reasonable expenses of retaking,

6

holding, protecting and maintaining, and preparing for disposition and disposing
of, the Collateral, including reasonably attorneys' fees and other reasonable
legal expenses incurred by it in connection therewith; and second, to the
payment of the Obligations in accordance with the Loan Agreement.  Any surplus
remaining after such application shall be paid to the Debtor or to whomever may
be legally entitled thereto, provided that in no event shall the Debtor be
credited with any part of the proceeds of the disposition of the Collateral
until such proceeds shall have been received in good funds (or the equivalent
value if any Collateral is retained) by the Secured Party.  The Debtor shall
remain liable for any deficiency.

18     WAIVERS.  The Debtor waives presentment, demand, notice, protest,
notice of acceptance of this Agreement, notice of any loans made, credit or
other extensions granted, Collateral received or delivered or any other action
taken in reliance hereon and all other demands and notices of any description,
except for such demands and notices as are expressly required to be provided to
the Debtor under this Agreement, any other Loan Document or any other document
evidencing the Obligations.  With respect to both the Obligations and the
Collateral, the Debtor assents to any extension or postponement of the time of
payment or any other forgiveness or indulgence, to any substitution, exchange or
release of Collateral, to the addition or release of any party or person
primarily or secondarily liable, to the acceptance of partial payment thereon
and the settlement, compromise or adjustment of any thereof, all in such manner
and at such time or times as the Secured Party may deem advisable.  The Secured
Party may exercise its rights with respect to the Collateral without resorting,
or regard, to other collateral or sources of reimbursement for Obligations.  The
Secured Party shall not be deemed to have waived any of its rights with respect
to the Obligations or the Collateral unless such waiver is in writing and signed
by the Secured Party.  No delay or omission on the part of the Secured Party in
exercising any right shall operate as a waiver of such right or any other right.
A waiver on any one occasion shall not bar or waive the exercise of any right on
any future occasion.  All rights and remedies of the Secured Party in the
Obligations or the Collateral, whether evidenced hereby or by any other
instrument or papers, are cumulative and not exclusive of any remedies provided
by law or any other agreement, and may be exercised separately or concurrently.

19     EXPENSES.  The Debtor shall pay all expenses as provided in Section
9.2 of the Loan Agreement.

20     NOTICES.  Any demand upon or notice to the Debtor or the Secured
Party shall be effective when delivered as provided in Section 9.1 of the Loan
Agreement.

21     SUCCESSORS AND ASSIGNS.  This Agreement shall be binding upon the
Debtor, the Secured Party, the Lenders, their respective successors and assigns,
and shall inure to the benefit of and be enforceable by the Debtor, the Secured
Party or any of the Lenders and their respective successors and assigns. 
Without limiting the generality of the foregoing sentence, the Secured Party and
the Lenders may assign or otherwise transfer any agreement or any note held by
it evidencing, securing or otherwise executed in connection with the Obligations
as provided in the Loan Agreement, or sell participation in any interest therein
as provided in the Loan Agreement, to any other person or entity, and such other
person or entity shall thereupon become vested, to the extent set forth in the

7

agreement evidencing such assignment, transfer or participation, with all the
rights in respect thereof granted to the Secured Party and the Lenders herein.

22     GENERAL.  This Agreement may not be amended or modified except by a
writing signed by the Debtor and the Secured Party (subject to the provisions of
Section 9.7 of the Loan Agreement), nor may the Debtor assign any of its rights
hereunder.  This Agreement and the terms, covenants and conditions hereof shall
be construed in accordance with, and governed by, the laws of The Commonwealth
of Massachusetts (without giving effect to any conflicts of law provisions
contained therein).

23     SECTION HEADINGS.  Section headings are for convenience of reference
only and are not a part of this Agreement.

24     JURY WAIVER.  THE SECURED PARTY (BY ITS ACCEPTANCE HEREOF) AND THE
DEBTOR AGREE THAT NEITHER OF THEM, NOR ANY ASSIGNEE OR SUCCESSOR SHALL (A) SEEK
A JURY TRIAL IN ANY LAWSUIT, PROCEEDING, COUNTERCLAIM, OR ANY OTHER ACTION BASED
UPON, OR ARISING OUT OF, THIS AGREEMENT, ANY RELATED INSTRUMENTS, ANY COLLATERAL
OR THE DEALINGS OR THE RELATIONSHIP BETWEEN OR AMONG ANY OF THEM, OR (B) SEEK TO
CONSOLIDATE ANY SUCH ACTION WITH ANY OTHER ACTION IN WHICH A JURY TRIAL CANNOT
BE OR HAS NOT BEEN WAIVED.  THE PROVISIONS OF THIS PARAGRAPH HAVE BEEN FULLY
DISCUSSED BY THE SECURED PARTY AND THE DEBTOR, AND THESE PROVISIONS SHALL BE
SUBJECT TO NO EXCEPTIONS.  NEITHER THE SECURED PARTY NOR THE DEBTOR HAS AGREED
WITH OR REPRESENTED TO THE OTHER THAT THE PROVISIONS OF THIS PARAGRAPH WILL NOT
BE FULLY ENFORCED IN ALL INSTANCES.

IN WITNESS WHEREOF, the Debtor has caused this Agreement to be duly
executed as an instrument under seal as of the date first written above.

WITNESS:                 DEBTOR:  GUESS?, INC.

By:                                     

Title:                             

Accepted and Agreed to:

The First National Bank of Boston, as Agent for the Lenders

By:_______________________________________________
Title:

OFFICER'S CERTIFICATE

to

AMENDED AND RESTATED SECURITY AGREEMENT

Dated March 28, 1997

GUESS ?, Inc. (the "DEBTOR"), hereby certifies, with reference to a certain
Amended and Restated Security Agreement dated March __, 1997 (terms defined in
such Security Agreement having the same meanings herein as specified therein),
between the Debtor and The First National Bank of Boston (the "Agent"), to the
Agent and the Lenders as follows:

1.   Names.

(a)  The exact corporate name of the Debtor and its taxpayer identification
number is as follows:

Guess ?, Inc.; 95-3679695

(b)  The following is a list of all other names (including trade names or
similar appellations) used by the Debtor, or any other business or organization
to which the Debtor became the successor by merger, consolidation, acquisition,
change in form, nature or jurisdiction of organization or otherwise, now or at
any previous time: 

None.

2.   Locations.

(a)  The chief executive office of the Debtor is located at the following
address:

1444 South Alameda Street
Los Angeles, California  90021

(b)  The following are is a list of all other locations in the United
States of America in which the Debtor maintains any books or records relating to
any of the Collateral:

Same as 2(b)

Within the last four months, if different:

(c)  Set forth on Schedule 2 (c) hereto are all the other places of
business of the Debtor in the United States of America where Collateral is
located.

9

(d)  The following are the names and addresses of all persons or entities
other than the Debtor (and other than independent sewing, laundering and
finishing contractors), such as lessees, consignees or warehousemen that have
possession or are intended to have possession of any of the Collateral
consisting of Inventory:

Currently:

Street and Number       County         State          Zip Code

None.

Within the last four months, if different:

Street and Number       County         State          Zip Code

None.

IN WITNESS WHEREOF, this Certificate has been executed on behalf of the
Debtor by its duly authorized officer on this __th day March, 1997.

GUESS ?, Inc.

By:                           

Title:                             

*10.25.   Employment Agreement between the Registrant and Maurice Marciano.
- -------------------------------------------------------------------------------
EMPLOYMENT AGREEMENT

EMPLOYMENT AGREEMENT, made as of August 13, 1996, by and between Guess ?,
Inc., a Delaware corporation (herein referred to as the "COMPANY"), and Maurice
Marciano (herein referred to as the "EXECUTIVE").

W I T N E S S E T H:

WHEREAS, the Company intends to make an underwritten initial public
offering of its common stock (the "PUBLIC OFFERING"); and

WHEREAS, in connection with the Public Offering, the Company and
Executive deem it to be in their respective best interests to enter into an
agreement providing for the Company's employment of Executive pursuant to the
terms herein stated; 

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

1.  EMPLOYMENT; POSITION AND DUTIES; EXCLUSIVE SERVICES.

(a)      EMPLOYMENT.  The Company agrees to employ the Executive, and the
Executive agrees to be employed by the Company, for the Term provided in Section
2 below and upon the other terms and conditions hereinafter provided.  

(b)      POSITION AND DUTIES.  During the Term, the Executive (i) agrees
to serve as the Chairman of the Board and Chief Executive Officer of the Company
and to perform such reasonable duties as may be delineated in the By-Laws of the
Company and as may be assigned to him from time to time by the Board of
Directors of the Company (the "BOARD"), including, without limitation, primary
responsibility for all design and finance functions of the Company,  (ii) shall
report, as Chief Executive Officer of the Company, only to the Board,
(iii) shall be given such authority as is appropriate to carry out the duties
described above, it being understood that, in his capacities as Chairman of the
Board and Chief Executive Officer of the Company, his duties will be consistent
in scope, prestige and authority with the duties of Chairman of the Board and
Chief Executive Officer of the Company as demonstrated by the Company's existing
practices as of the effective date of this Agreement, and (v) agrees to serve,
if elected, at no additional compensation (if the other officers or directors
(other than non-employee directors) of the Company also serve at no additional
compensation) in the position of officer or director of any subsidiary or
affiliate of the Company; PROVIDED, HOWEVER, that such position shall be of no
less status relative to such subsidiary or affiliate as the position that the
Executive holds pursuant to clause (i) of this Section 1(b) is relative to the
Company.

(c)      EXCLUSIVE SERVICES.  During the Term, the Executive agrees to
devote substantially all of his business time, attention, skill and efforts
exclusively to the business and affairs of the Company and its subsidiaries and
affiliates, and shall perform and discharge the duties which may be assigned to
him from time to time by the Board.

1

(d)      RELOCATION.  The Company shall not relocate the Executive's
principal place of business outside of the Los Angeles metropolitan area without
the written consent of the Executive.

2.  TERM OF AGREEMENT.  The term of employment under this Agreement shall
initially be the three-year period commencing on the date of the Public Offering
(the "EFFECTIVE DATE") and ending on the third anniversary of the Effective
Date, and shall be automatically extended without further action by either party
for a successive or successive one-year period or periods, unless written notice
of either party's intention to terminate this Agreement has been given to the
other party at least 90 days prior to the expiration of the Term (including any
one-year extension thereof).  As used in this Agreement, the "TERM" shall mean
the initial three-year term plus any extensions thereof as provided in this
Section 2.

3.  SALARY AND ANNUAL BONUS.  The Executive's cash compensation for all
services to be rendered by him in any capacity hereunder shall consist of base
salary as provided in Section 3(a) and bonus compensation as provided in Section
3(b).

(a)      SALARY.  The Executive shall be paid a minimum base salary (the
"SALARY") at the rate of  $900,000 per annum.  The Salary shall be payable in
accordance with the customary payroll practices for executives of the Company. 
The amount of Executive's Salary will be reviewed not less often than annually
by the Compensation Committee of the Board (the "COMPENSATION COMMITTEE") and
may be increased, but not decreased below such amount, on the basis of such
review.

(b)      ANNUAL BONUS.  

(i)      GENERAL TERMS.  For each calendar year included in whole or in
part within the Term, the Executive shall be eligible to earn an annual cash
bonus (a "BONUS") based upon the achievement by the Company and its subsidiaries
of performance targets established by the Compensation Committee in accordance
with the terms of the Company's Annual Incentive Bonus Plan and any successor
plan thereto (collectively, the "BONUS PLAN").  The performance goals on the
basis of which the Executive's bonus shall be determined shall be no less
favorable to the Executive than the goals used to determine the bonus of any
other executive of the Company whose annual bonus is based in whole or in part
on corporate performance and who participates in the Bonus Plan, and the
Compensation Committee shall establish objective criteria to be used to
determine the extent to which such performance goals have been met.  The Bonus,
if any, payable to the Executive in respect of each calendar year will be paid
at the same time that bonuses are paid to other participants in the Bonus Plan.

(ii)     AMOUNT OF TARGET BONUS.  For each calendar year included in whole
or in part within the Term, there shall be a target Bonus (a "TARGET BONUS") for
the Executive equal to at least 100% of Executive's Salary, at the annual rate
in effect at the beginning of such calendar year (pro rated, if less than an
entire year). 

2

(iii)    Determination of the Bonus Amount.  The amount of the actual
Bonus for any calendar year to be paid to the Executive will be determined, in
the sole discretion of the Compensation Committee, based upon the performance of
the Company and its subsidiaries against the goals established by the
Compensation Committee pursuant to the Bonus Plan.
4.  STOCK OPTIONS.   Commencing as of the Effective Date, Executive shall
be eligible for option grants under the Company's 1996 Equity Incentive Plan and
any successor plan thereto for the Company's executive officers, in accordance
with the terms and conditions thereof.  

5.   PENSION AND WELFARE BENEFITS.  During the Term, the Executive will
participate in all pension and welfare plans, programs and benefits that are
applicable to executives of the Company.  The benefits provided to the Executive
during the Term, when taken as a whole, shall be no less favorable than the
benefits which, when taken as a whole, are provided to any other executive of
the Company; PROVIDED that Executive shall continue to receive life insurance
coverage in an amount equal to at least one (1) times his then Salary.   During
the Term, the Executive shall also be entitled to all additional perquisites
which the Company provides to its executives.  Subject to subsection 7(a)(i)
hereof, from and after the expiration of the Term or, if earlier, the date of
termination of Executive's employment hereunder, Executive shall be entitled,
during his lifetime, to full Company-paid health and life insurance for himself
and his immediate family, at a level no less favorable than that in effect from
time to time for the benefit of the Company's senior executive officers.

6.  OTHER BENEFITS.

(a)      TRAVEL AND BUSINESS-RELATED EXPENSES.  During the Term, the
Executive shall be reimbursed in accordance with the policies of the Company for
traveling and other  expenses incurred in the performance of the business of the
Company.

(b)      AUTOMOBILE.  During the Term, the Executive shall be furnished
with an automobile either owned or leased by the Company or an automobile
allowance, at the discretion of the Company.  The Company shall pay or reimburse
the Executive for all reasonable expenses associated with the operation of such
automobile, including, without limitation, all reasonable maintenance and
insurance expenses.

(c)      AIRCRAFT.  The Executive shall be provided with reasonable access
to any aircraft leased or owned by the Company.

(d)      COUNTRY CLUB MEMBERSHIP.  During the Term, the Company shall pay
the Executive's reasonable membership expenses (including fees, dues and related
expenses) at such country club or clubs as approved by the Board.

(e)      CONSULTING AGREEMENT.  Commencing on the expiration of the Term
of this Agreement or, if earlier, the date of termination of Executive's
employment hereunder for any reason other than death or for Cause (as defined
below), and subject to the provisions of Sections 8 and 9 hereof, the Company
and Executive shall enter into a two (2) year consulting agreement pursuant to
which Executive shall render consulting services to the Company as Executive and
the Company shall agree, for which the Company shall pay Executive a 

3

consulting fee at an annual rate equal to 50% of Executive's Salary, at the 
rate in effect immediately prior to the commencement of the consulting 
period, payable in accordance with the customary payroll practices for 
executives of the Company or at such other time or times as Executive and the 
Company shall agree.  It is expressly understood that Executive's reporting 
obligations pursuant to such consulting agreement shall be limited to the 
Board, or such other person as Executive and the Company shall agree.

7.  TERMINATION OF EMPLOYMENT.

(a)      TERMINATION FOR CAUSE, RESIGNATION WITHOUT GOOD REASON.

(i)     If the Executive's employment is terminated by the Company for
Cause (as defined below) or if the Executive resigns from his employment without
Good Reason (as defined below), prior to the expiration of the Term, the
Executive shall be entitled to receive:  (A) the Salary provided for in Section
3(a) as accrued through the date of such resignation or termination; (B) any
Bonus earned but not yet paid in respect of any calendar year preceding the year
in which such termination or resignation occurs; and (C) any unreimbursed
expenses.  The Executive shall not accrue or otherwise be eligible to receive
Salary payments or to participate in any plans, programs or benefits described
in Section 5 hereof with respect to periods after the date of such termination
or resignation, and shall not be eligible to receive any Bonus in respect of the
year of such termination or resignation or any calendar year following the year
in which such termination or resignation occurs.  Any Bonus in respect of a year
prior to the year in which such termination or resignation occurs shall be
payable at such time and in such manner as provided for in Section 3(b) hereof.

(ii)     Termination for "CAUSE" shall mean termination by action of the
Board because of:  (A) Executive's willful and continued failure (other than by
reason of the incapacity of Executive due to physical or mental illness)
substantially to perform his duties hereunder; (B) a felony conviction of the
Executive or the perpetration by the Executive of a serious dishonest act
against the Company or any of its affiliates or subsidiaries; (C) any willful
misconduct by the Executive that is materially injurious to the financial
condition or business reputation of the Company or any of its affiliates or
subsidiaries; or (D) chronic alcoholism or drug abuse which materially affects
Executive's performance hereunder, PROVIDED, HOWEVER, that no event or
circumstance shall be considered to constitute Cause within the meaning of this
clause (ii) unless the Executive has been given written notice of the events or
circumstances constituting Cause and has failed to effect a cure thereof within
60 calendar days following the receipt of such notice.

(iii)    Resignation for "GOOD REASON" shall mean the resignation of the
Executive because of (A) a material reduction in Executive's responsibilities,
duties, authority, status or titles as described in Section 1 above; or (B)
failure by the Company to pay or provide Executive when due any compensation,
benefits or perquisites to which Executive is entitled pursuant to this
Agreement or any other plan, contract or arrangement in which Executive
participates or is entitled to participate; PROVIDED, HOWEVER, that no event or
circumstance shall be considered to constitute Good Reason within the meaning of
this clause (iii) unless the Company has been given written notice of the events
or circumstances constituting Good Reason and has failed 

4

to effect a cure thereof within 60 calendar days following the receipt of 
such notice.

(iv)     The date of termination of employment by the Company pursuant to
this Section 7(a) shall be the date specified in a written notice of termination
from the Company to the Executive, which, in the case of a proposed termination
to which the 60-day cure period provided for in subsection (ii) above applies
shall be no less than 61 days after the delivery of such notice to the
Executive.  The date of a resignation by the Executive pursuant to this Section
7(a) shall be the date specified in the written notice of resignation from the
Executive to the Company, which, in the case of a proposed resignation to which
the 60-day cure period provided for in subsection (iii) above applies shall be
no less than 61 days after the delivery of such notice to the Company, or, if no
date is specified therein, 61 days after receipt by the Company of the written
notice of resignation from the Executive.

(b)      TERMINATION WITHOUT CAUSE, RESIGNATION FOR GOOD REASON.

(i)      If the Executive's employment is terminated by the Company
without Cause or if the Executive should resign for Good Reason, prior to the
expiration of the Term, he shall be entitled to receive:  (A) the Salary
provided for in Section 3(a) as accrued through the date of such resignation or
termination and continuing for the remainder of the then-effective Term (the
"CONTINUATION PERIOD"); (B) any Bonus earned but not yet paid in respect of any
calendar year preceding the year in which such termination or resignation
occurs; (C) any unreimbursed expenses and (D) a Bonus for the calendar year in
which such termination or resignation occurs equal to the Executive's Target
Bonus for such year and a Bonus for each subsequent year included in whole or in
part within the Continuation Period equal to the Target Bonus for the calendar
year in which such termination or resignation occurs, PROVIDED, HOWEVER, that
the amount of such Bonus payable in respect of any partial calendar year at the
conclusion of the Continuation Period shall be prorated and shall equal the
Executive's Bonus for such year multiplied by a fraction, the numerator of which
shall equal the number of days in such calendar year up to and including the
last day of the Continuation Period and the denominator of which shall equal the
lesser of 365 or the number of days in such final calendar year up to and
including the last day of the Term. 

During the Continuation Period, (X) Salary payments to the Executive
shall be payable in accordance with the payroll practices of the Company, and
(Y) Bonus payments shall be made in respect of each calendar year at the same
time that bonuses are paid to participants in the Bonus Plan.   

The Executive shall also be entitled to continued participation in the
medical, dental and insurance plans and arrangements described in Section 5, on
the same terms and conditions as are in effect immediately prior to such
termination or resignation, until the earlier to occur of (i) the last day of
the Continuation Period and (ii) such time as Executive is entitled to
comparable benefits provided by a subsequent employer.  Anything herein to the
contrary notwithstanding, the Company shall have no obligation to continue to
maintain during the Continuation Period any plan or program solely as a result
of the provisions of this Agreement.  If, during the Continuation Period,
Executive is precluded from participating in a plan or program by its terms or

5

applicable law or if the Company for any reason ceases to maintain such plan or
program, the Company shall provide Executive with compensation or benefits the
aggregate value of which, in the reasonable judgement of the Company, is no less
than the aggregate value of the compensation or benefits that Executive would
have received under such plan or program had he been eligible to participate
therein or had such plan or program continued to be maintained by the Company.

(ii)     Except as may be provided under the terms of any applicable
grants to the Executive, under any plan or arrangement in which the Executive
participates under Section 5 or except as may be otherwise required by
applicable law, including, without limitation, the provisions of Section
4980B(f) of the Internal Revenue Code of 1986, as amended (the "CODE"), the
Executive shall have no right under this Agreement or any other agreement to
receive any other compensation, or to participate in any other plan, arrangement
or benefit, with respect to future periods after such termination or resignation
of employment.  Except as otherwise provided in Section 9(d), in the event of a
termination or resignation pursuant to this Section 7(b), the Executive shall
have no duty of mitigation with respect to amounts payable to him pursuant to
this Section 7(b) or other benefits to which he is entitled pursuant hereto;
PROVIDED, HOWEVER, that, in the event the Executive breaches any of the
provisions of Sections 8 or 9 hereof, the amounts payable to the Executive
pursuant to this Section 7(b), or other benefits to which he is entitled
pursuant hereto, will be offset or reduced by any compensation, payments or
benefits he may receive from a subsequent employer.

(iii)    The date of termination of employment by the Company pursuant to
this Section 7(b) shall be the date specified in the written notice of
termination from the Company to the Executive or, if no date is specified
therein, ten business days after receipt by the Executive of the written notice
of termination from the Company.  The date of a resignation by the Executive
pursuant to this Section 7(b) shall be the date specified in the written notice
of resignation from the Executive to the Company or, if no date is specified
therein, ten business days after receipt by the Company of the written notice of
resignation from the Executive.

(c)      DEATH OR PERMANENT DISABILITY.  If the Executive's employment
hereunder terminates by reason of Executive's death or Permanent Disability
prior to expiration of the Term, the Executive (or his beneficiary (or if no
such beneficiary is designated, his estate), conservator or guardian, as the
case may be) shall be entitled to receive: (i) the Salary provided for in
Section 3(a) as accrued through the date of the Executive's death or Permanent
Disability; (ii) any Bonus earned but not yet paid in respect of any calendar
year preceding the year in which the Executive's death or Permanent Disability
occurs; (iii) a Bonus for the calendar year in which the Executive's death or
Permanent Disability occurs equal to a pro rata portion of the Executive's
Target Bonus for such year, determined on the basis of the number of days in
such year through the date of Executive's death or Permanent Disability; and
(iv) any unreimbursed expenses.  Bonus payments provided for in this Section
7(c) shall be made at such time and in such manner as is provided in Section
3(b).  As used in this Section, the term "BENEFICIARY" includes both the
singular and the plural of such term, as may be appropriate.  For purposes of
this Agreement, "PERMANENT DISABILITY" shall be defined in the same manner as
such term or a similar term is defined in any 

6

long-term disability policy maintained by the Company for the Executive and 
in effect on the date of the Executive's termination of employment with the 
Company, PROVIDED that, in the event that the Company does not maintain a 
long-term disability policy for the Executive, Permanent Disability shall 
mean a physical or mental incapacity that substantially prevents him from 
performing his duties hereunder for a period of 6 consecutive months and that 
can reasonably be expected to continue indefinitely.  Any dispute as to 
whether or not Executive is disabled within the meaning of the preceding 
sentence shall be resolved by a physician reasonably satisfactory to 
Executive and the Company, and the determination of such physician shall be 
final and binding upon both Executive and the Company.

8.  ASSIGNMENT OF INTELLECTUAL PROPERTY RIGHTS.

(a)  DEFINITION OF "INVENTIONS".  As used herein, the term "INVENTIONS"
shall mean all inventions, discoveries, improvements, trade secrets, formulas,
techniques, data, programs, systems, specifications, documentations, algorithms,
flow charts, logic diagrams, source codes, processes, and other information,
including works-in-progress, whether or not subject to patent, trademark,
copyright, trade secret, or mask work protection, and whether or not reduced to
practice, which are made, created, authored, conceived, or reduced to practice
by Executive, either alone or jointly with others, during the period of
employment with the Company (including, without limitation, all periods of
employment with the Company prior to the Effective Date), whether or not
performed on the Company's premises or property, which (A) relate to the actual
or anticipated business, activities, research, or investigations of the Company
or (B) result from or is suggested by work performed by Executive for the
Company (whether or not made or conceived during normal working hours or on the
premises of the Company), or (C) which result, to any extent, from use of the
Company's premises or property.

(b)      WORK FOR HIRE.  Executive expressly acknowledges that all
copyrightable aspects of the Inventions (as defined above) are to be considered
"works made for hire" within the meaning of the Copyright Act of 1976, as
amended (the "ACT"), and that the Company is to be the "author" within the
meaning of such Act for all purposes.  All such copyrightable works, as well as
all copies of such works in whatever medium, fixed or embodied, shall be owned
exclusively by the Company as of the date of creation, and Executive hereby
expressly disclaims any and all interest in any of such copyrightable works and
waives any right of DROIT MORALE or similar rights.

(c)      ASSIGNMENT.  Executive acknowledges and agrees that all
Inventions constitute trade secrets of the Company and shall be the sole
property of the Company or any other entity designated by the Company.  In the
event that title to any or all of the Inventions, or any part or element
thereof, may not, by operation of law, vest in the Company, or such Inventions
may be found as a matter of law not to be "works made for hire" within the
meaning of the Act, Executive hereby conveys and irrevocably assigns to the
Company, without further consideration, all his right, title and interest,
throughout the universe and in perpetuity, in all Inventions and all copies of
them, in whatever medium, fixed or embodied, and in all written or computer
records, graphics, diagrams, notes, or reports relating thereto in Executive's

7

possession or under his control, including, with respect to any of the
foregoing, all rights of copyright, patent, trademark, trade secret, mask work,
and any and all other proprietary rights therein, the right to modify and create
derivative works, the right to invoke the benefit of any priority under any
international convention, and all rights to register and renew the same. 
Anything to the contrary notwithstanding, this subsection (c) shall not require
Executive to assign any Invention that would cause this Section 8, or any
portion thereof, to be void or unenforceable under Section 2870 of the
California Labor Code, and Executive acknowledges receipt of the notification
required by Section 2872 of the California Labor Code.

(d)      PROPRIETARY NOTICES; NO FILINGS; WAIVER OF MORAL RIGHTS. 
Executive acknowledges that all Inventions shall, at the sole option of the
Company, bear the Company's patent, copyright, trademark, trade secret and mask
work notices.

Executive agrees not to file any patent, copyright or trademark
applications relating to any Invention except with prior written consent of an
authorized representative of the Company (other than Executive).

Executive hereby expressly disclaims any and all interest in any
Inventions and waives any right of DROIT MORALE or similar rights, such as
rights of integrity or the right to be attributed as the creator of the
Invention.

(e)      FURTHER ASSURANCES.  Executive agrees to assist the Company, or
any party designated by the Company, promptly on the Company's request, whether
before or after the termination of employment, however such termination may
occur, in perfecting, registering, maintaining, and enforcing, in all
jurisdictions, the Company's rights in the Inventions by performing all acts and
executing all documents and instruments deemed necessary or convenient by the
Company, including, by way of illustration and not limitation:

(i)      Executing assignments, applications, and other documents and
instruments in connection with (A) obtaining patents, copyrights, trademarks,
mask works, or other proprietary protections for the Inventions and (B)
confirming the assignment to the Company of all right, title and interest in
the Inventions or otherwise establishing the Company's exclusive ownership
rights therein.

(ii)     Cooperating in the prosecution of patent, copyright, trademark
and mask work applications, as well as in the enforcement of the Company's
rights in the Inventions, including, but not limited to, testifying in court
or before any patent, copyright, trademark or mask work registry office or
any other administrative body.

Executive will be reimbursed for all out-of-pocket costs reasonably
incurred in connection with the foregoing, if such assistance is requested by
the Company after the termination of Executive's employment.  In addition, to
the extent that, after the termination of employment for whatever reason,
Executive's technical expertise shall be required in connection with the
fulfillment of the aforementioned obligations, the Company will compensate

8

Executive at a reasonable rate for the time actually spent by Executive at the
Company's request rendering such assistance.

(f)      POWER OF ATTORNEY.  Executive hereby irrevocably appoints the
Company to be his Attorney-in-Fact to execute any document and to take any
action in his name and on his behalf and to generally use his name for the
purpose of giving to the Company the full benefit of the assignment provisions
set forth above.

(g)      DISCLOSURE OF INVENTIONS.  Executive will make full and prompt
disclosure to the Company of all Inventions subject to assignment to the
Company, and all information relating thereto in Executive's possession or under
his control as to possible applications and use thereof.

9.  NO COMPETING EMPLOYMENT; NO INTERFERENCE; CONFIDENTIALITY; REMEDIES.

(a)      NO COMPETING EMPLOYMENT.  For so long as the Executive is
employed by the Company or any of its affiliates and subsidiaries and continuing
for the two-year period commencing at the expiration of the Term hereof or the
earlier termination of Executive's employment for any reason other than death
(such period being referred to hereinafter as the "RESTRICTED PERIOD"), the
Executive shall not, unless he receives after the Effective Date the prior
written consent of the Board, directly or indirectly, whether as owner,
consultant, employee, partner, venturer, agent, through stock ownership,
investment of capital, lending of money or property, rendering of services, or
otherwise, compete with the Company or any of its affiliates or subsidiaries in
any business in which any of them is engaged during the Term hereunder or at the
time of the termination of the Executive's employment hereunder, including
without limitation the design, manufacture and/or distribution of men's or
women's sportswear or accessories (such businesses are hereinafter referred to
as the "BUSINESS"), or assist, become interested in or be connected with any
corporation, firm, partnership, joint venture, sole proprietorship or other
entity which so competes with the Business, except that the provisions of this
Section 9(a) will not be deemed breached merely because Executive owns equity in
(i) Charles David of California, (ii) California Sunshine Active Wear, Inc.; or
(iii) Nantucket Industries, Inc. or because Executive "beneficially owns",
either individually or as a member of a "group" (as such terms are used in Rule
13d-3 under the Securities Exchange Act of 1934, as amended (the "Exchange
Act")), not more than five percent (5%) of the voting securities of any one or
more companies that file reports pursuant to the Exchange Act.  After the
expiration of the Term hereof and during the two-year period referenced above,
the restrictions imposed by this paragraph shall not apply to any business in
which the Company or its affiliates and subsidiaries were not engaged at the
time of termination of the Executive's employment hereunder or to any geographic
area in which the Company or its affiliates and subsidiaries were not engaged in
the Business at the time of termination.  

(b)      NO INTERFERENCE.  During the Restricted Period, the Executive
shall not, for the purpose of competing with the Business, directly or
indirectly, whether for his own account or for the account of any other
individual, partnership, firm, corporation or other business organization or
entity (other than the Company), intentionally solicit, endeavor to entice 

9

away from the Company or any of its affiliates or subsidiaries, or otherwise
intentionally interfere with the relationship of the Company or any of its
affiliates or subsidiaries with any person who is employed by or otherwise
engaged to perform services for the Company or any of its affiliates or
subsidiaries or influence, or seek to influence, any person or entity who is a
customer, client or supplier of the Company or any of its affiliates or
subsidiaries to divert their business to any person or entity that competes with
the Company or any of its affiliates or subsidiaries, nor shall the Executive
participate in the efforts of any individual, partnership, firm, corporation or
other business corporation or entity for which he provides services, by which he
is employed, or in which he invests, to do so, except that the provisions of
this Section 9(b) will not be deemed breached merely because Executive owns
equity in (i) Charles David of California, (ii) California Sunshine Active Wear,
Inc.; or (iii) Nantucket Industries, Inc. or because Executive "beneficially
owns", either individually or as a member of a "group" (as such terms are used
in Rule 13d-3 under the Exchange Act), not more than five percent (5%) of the
voting securities of any one or more companies that file reports pursuant to the
Exchange Act.  After the expiration of the Term hereof and during the two-year
period referenced in subsection 9(a), the restrictions imposed by this paragraph
shall not apply to any business in which the Company or its affiliates and
subsidiaries were not engaged at the time of termination of the Executive's
employment hereunder or to any geographic area in which the Company or its
affiliates and subsidiaries were not engaged in the Business at the time of
termination.  

(c)      CONFIDENTIAL INFORMATION.  The Executive recognizes that the
services to be performed by him hereunder, and the services performed by him
during prior periods of employment with the Company, are special, unique and
extraordinary and that, by reason of such employment, he has acquired and will
continue to acquire confidential information and trade secrets concerning the
operations of the Company and its affiliates and subsidiaries.  Accordingly, the
Executive agrees that he will not, except with the prior written consent of the
Board or as may be required by law, directly or indirectly, disclose during the
Term or any time thereafter any secret or confidential information that he has
learned by reason of his association with the Company or any of its affiliates
or subsidiaries or use any such information to the detriment of the Company or
its affiliates or subsidiaries so long as such confidential information or trade
secrets have not been disclosed or are not otherwise in the public domain.  The
term "CONFIDENTIAL INFORMATION" means any information about the Company, its
subsidiaries and affiliates, and their respective clients and customers, not
previously disclosed to the public or to the trade by the Company's management,
including, without limitation, any products, data, formulae, facilities and
methods, trade secrets and other intellectual property, systems, records
(including computer records), procedures, manuals, confidential reports, product
price lists, client and customer lists, financial information (including the
revenues, costs or profits associated with any of the Company's products),
business plans, prospects or opportunities.

(d)      REMEDIES; SURVIVAL OF AGREEMENT.  In the event that the Executive
materially breaches any of the covenants set forth in this Section 9 and fails
to cure such breach to the reasonable satisfaction of the Company within 10
business days after receipt of written notice thereof to the Executive, any
obligation of the Company to make any payment to the Executive 

10

pursuant to this Agreement, including without limitation any payments 
pursuant to Section 7(b) (other than payments of Salary or Bonus earned prior 
to the date of such breach and unreimbursed expenses), shall be cancelled.  
In addition, the Executive acknowledges that a breach of any of the covenants 
contained in this Section 9 may result in material irreparable injury to the 
Company or its affiliates or subsidiaries for which there is no adequate 
remedy at law, that it will not be possible to measure damages for such 
injuries precisely and that, in the event of such a breach or threat thereof, 
the Company shall be entitled, in addition to any other rights or remedies it 
may have, to seek an injunction enjoining or restraining the Executive from 
any violation or threatened violation of this Section 9.  The Executive's 
agreement as set forth in this Section shall survive the termination of the 
Executive's employment under this Agreement.

10.      SOURCE OF PAYMENTS.  All payments provided under this Agreement,
other than payments made pursuant to a benefit plan which may provide otherwise,
shall be paid in cash from the general funds of the Company, and no special or
separate fund shall be established, and no other segregation of assets made, to
assure payment.  The Executive shall have no right, title, or interest whatever
in or to any investments which the Company may make to aid the Company in
meeting its obligations hereunder.  Nothing contained in this Agreement, and no
action taken pursuant to its provisions, shall create or be construed to create
a trust of any kind, or a fiduciary relationship, between the Company and the
Executive or any other person.  To the extent that any person acquires a right
to receive payments from the Company hereunder, such right shall be no greater
than the right of an unsecured creditor of the Company.

11.      TAX WITHHOLDING.  Payments to the Executive of all compensation
contemplated under this Agreement shall be subject to all applicable legal
requirements with respect to the withholding of taxes.

12.      NONASSIGNABILITY; BINDING AGREEMENT.  Neither this Agreement nor
any right, duty, obligation or interest hereunder shall be assignable or
delegable by the Executive without the Company's prior written consent;
PROVIDED, HOWEVER, that nothing in this Section shall preclude the Executive
from designating any of his beneficiaries to receive any benefits payable
hereunder upon his death or disability, or his executors, administrators, or
other legal representatives, from assigning any rights hereunder to the person
or persons entitled thereto.  This Agreement shall be binding upon, and inure to
the benefit of, the parties hereto, any successors to or assigns of the Company
and the Executive's heirs and the personal representatives of the Executive's
estate.  

13.      AMENDMENT; WAIVER.  This Agreement may not be modified, amended
or waived in any manner except by an instrument in writing signed by the parties
hereto.  The waiver by either party of compliance with any provision of this
Agreement by the other party shall not operate or be construed as a waiver of
any provision of this Agreement, or of any subsequent breach by such party of a
provision of this Agreement.

11

14.      NOTICES.   Any notice hereunder by either party to the other
shall be given in writing by personal delivery, telex, telecopy or certified
mail, return receipt requested, to the applicable address set forth below:

(i)   To the Company:    Guess ?, Inc.
1444 South Alameda Street
Los Angeles, California 90021
Attention: General Counsel
Telecopier: (213) 765-3100

(ii)  To the Executive:  Mr. Maurice Marciano
Guess ?, Inc.
1444 South Alameda Street
Los Angeles, California 90021
Telecopier: (213) 744-7825

(or such other address as may from time to time be designated by notice by any
party hereto for such purpose).  Notice shall be deemed given, if by personal
delivery, on the date of such delivery or, if by telex or telecopy, on the
business day following receipt of answerback or telecopy confirmation or, if by
certified mail, on the date shown on the applicable return receipt.

15.      CALIFORNIA LAW.  This Agreement is to be governed by and
interpreted in accordance with the laws of the State of California, without
giving effect to the choice-of-law provisions thereof.  If, under such law, any
portion of this Agreement is at any time deemed to be in conflict with any
applicable statute, rule, regulation or ordinance, such portion shall be deemed
to be modified or altered to conform thereto or, if that is not possible, to be
omitted from this Agreement, and the invalidity of any such portion shall not
affect the force, effect and validity of the remaining portion hereof.

16.      ARBITRATION.  Any controversy or claim arising out of or relating
to this Agreement, including, but not limited to, any claim relating to its
validity, interpretation, enforceability or breach, or any other claim or
controversy arising out of the employment relationship or the commencement or
termination of that relationship, including, but not limited to, claims for
breach of covenant, breach of implied covenant or intentional infliction of
emotional distress, which are not settled by agreement between the parties,
shall be settled by arbitration in Los Angeles, California before a board of
three arbitrators, one to be selected by the Company, one by Executive and the
other by the two persons so selected, all in accordance with the labor
arbitration rules of the American Arbitration Association then in effect;
PROVIDED, HOWEVER, that the Company shall nevertheless be entitled to seek
relief under Section 9 in accordance with Section 9(d).  In consideration of the
parties' agreement to submit to arbitration disputes with regard to this
Agreement and with regard to any alleged contract or tort or other claim arising
out of the employment relationship, and in consideration of the anticipated
expedition and minimization of expense of this arbitration remedy, each party
agrees that the arbitration provisions of this Agreement shall provide it with
exclusive remedy, except as provided in the preceding sentence, and each party
expressly waives any right it might have to seek redress in any other forum
except as provided herein.  The parties further agree that the arbitrators
acting hereunder shall be empowered to assess no remedy other than the payment
of compensatory damages or an order (including 

12

temporary, preliminary and permanent injunctive relief) enforcing the 
provisions of Section 9.  Executive acknowledges that the Company would be 
irreparably injured by Executive's breach of his obligations under Section 9 
and that monetary damages would be inadequate.  Subject to the provisions of 
Section 17(b) hereof, the expenses of the third arbitrator and of a 
transcript of any arbitration proceeding shall be divided equally between the 
Company and Executive and each party shall bear the expense of the arbitrator 
selected by it and of any witnesses it calls.  Any decision and award or 
order of the majority of the arbitrators shall be binding upon the parties 
hereto and judgment thereon may be entered in any court having jurisdiction 
thereof.

17.      INDEMNITY AND REIMBURSEMENT OF LEGAL EXPENSES.  

(a)      INDEMNITY.  The Company will indemnify the Executive (and his
legal representatives or other successors) to the fullest extent permitted
(including payment of expenses in advance of final disposition of a proceeding)
by the laws of the State of California, as in effect at the time of the subject
act or omission, or by the Certificate of Incorporation and By-Laws of the
Company, as in effect at such time, or by the terms of any indemnification
agreement between the Company and the Executive, whichever affords greatest
protection to the Executive, and the Executive shall be entitled to the
protection of any insurance policies the Company may elect to maintain generally
for the benefit of its directors and officers (and to the extent the Company
maintains such an insurance policy or policies, the Executive shall be covered
by such policy or policies, in accordance with its or their terms, to the
maximum extent of the coverage available for any Company officer or director),
against all costs, charges and expenses whatsoever incurred or sustained by him
or his legal representatives at the time such costs, charges and expenses are
incurred or sustained, in connection with any action, suit or proceeding to
which he (or his legal representatives or other successors) may be made a party
by reason of his being or having been a director, officer or employee of the
Company or any subsidiary thereof, or his serving or having served any other
enterprises as a director, officer or employee at the request of the Company.

(b)      LEGAL FEES AND EXPENSES.  In the event of a dispute between the
Executive and the Company with respect to any of the Executive's rights under
this Agreement, the Company shall reimburse the Executive for any and all legal
fees and related expenses reasonably incurred by him in connection with
enforcing such rights if the Executive is successful in obtaining a money
judgment against the Company in a final arbitration proceeding.  In addition,
the Company shall reimburse Executive for all reasonable legal expenses in
connection with the negotiation and review of this Agreement and any amendments
thereto.

18.      COUNTERPARTS.  This Agreement may be executed by either of the
parties hereto in counterparts, each of which shall be deemed  to be an
original, but all such counterparts shall together constitute one and the same
instrument.

13

IN WITNESS WHEREOF, the parties hereto have executed this Agreement this
13th day of August, 1996, effective as of the Effective Date.

GUESS ?, INC.

By:

Title:    

Maurice Marciano

14

*10.26.    Employment Agreement between the Registrant and Paul Marciano.
- --------------------------------------------------------------------------------
EMPLOYMENT AGREEMENT

EMPLOYMENT AGREEMENT, made as of August 13, 1996, by and between Guess ?,
Inc., a Delaware corporation (herein referred to as the "COMPANY"), and Paul
Marciano (herein referred to as the "EXECUTIVE").

W I T N E S S E T H:

WHEREAS, the Company intends to make an underwritten initial public
offering of its common stock (the "PUBLIC OFFERING"); and

WHEREAS, in connection with the Public Offering, the Company and
Executive deem it to be in their respective best interests to enter into an
agreement providing for the Company's employment of Executive pursuant to the
terms herein stated; 

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

1.  EMPLOYMENT; POSITION AND DUTIES; EXCLUSIVE SERVICES.

(a)      EMPLOYMENT.  The Company agrees to employ the Executive, and the
Executive agrees to be employed by the Company, for the Term provided in Section
2 below and upon the other terms and conditions hereinafter provided.  

(b)      POSITION AND DUTIES.  During the Term, the Executive (i) agrees
to serve as the President and Chief Operating Officer of the Company and to
perform such reasonable duties as may be delineated in the By-Laws of the
Company and as may be assigned to him from time to time by the Board of
Directors of the Company (the "BOARD"), including, without limitation, primary
responsibility for all advertising, management information systems and legal
functions of the Company,  (ii) shall report, as President and Chief Operating
Officer of the Company, only to the Board or to the Chairman of the Board and to
the Chief Executive Officer of the Company, (iii) shall be given such authority
as is appropriate to carry out the duties described above, it being understood
that, in his capacities as President and Chief Operating Officer of the Company,
his duties will be consistent in scope, prestige and authority with the duties
of President and Chief Operating Officer of the Company as demonstrated by the
Company's existing practices as of the effective date of this Agreement, and
(v) agrees to serve, if elected, at no additional compensation (if the other
officers or directors (other than non-employee directors) of the Company also
serve at no additional compensation) in the position of officer or director of
any subsidiary or affiliate of the Company; PROVIDED, HOWEVER, that such
position shall be of no less status relative to such subsidiary or affiliate as
the position that the Executive holds pursuant to clause (i) of this Section
1(b) is relative to the Company.

(c)      EXCLUSIVE SERVICES.  During the Term, the Executive agrees to
devote substantially all of his business time, attention, skill and efforts
exclusively to the business and affairs of the Company and its subsidiaries 

1

and affiliates, and shall perform and discharge the duties which may be 
assigned to him from time to time by the Board or the Chief Executive Officer.

(d)      RELOCATION.  The Company shall not relocate the Executive's
principal place of business outside of the Los Angeles metropolitan area without
the written consent of the Executive.

2.  TERM OF AGREEMENT.  The term of employment under this Agreement shall
initially be the three-year period commencing on the date of the Public Offering
(the "EFFECTIVE DATE") and ending on the third anniversary of the Effective
Date, and shall be automatically extended without further action by either party
for a successive or successive one-year period or periods, unless written notice
of either party's intention to terminate this Agreement has been given to the
other party at least 90 days prior to the expiration of the Term (including any
one-year extension thereof).  As used in this Agreement, the "TERM" shall mean
the initial three-year term plus any extensions thereof as provided in this
Section 2.

3.  SALARY AND ANNUAL BONUS.  The Executive's cash compensation for all
services to be rendered by him in any capacity hereunder shall consist of base
salary as provided in Section 3(a) and bonus compensation as provided in Section
3(b).

(a)      SALARY.  The Executive shall be paid a minimum base salary (the
"SALARY") at the rate of  $900,000 per annum.  The Salary shall be payable in
accordance with the customary payroll practices for executives of the Company. 
The amount of Executive's Salary will be reviewed not less often than annually
by the Compensation Committee of the Board (the "COMPENSATION COMMITTEE") and
may be increased, but not decreased below such amount, on the basis of such
review.

(b)      ANNUAL BONUS.  

(i)      GENERAL TERMS.  For each calendar year included in whole or in
part within the Term, the Executive shall be eligible to earn an annual cash
bonus (a "BONUS") based upon the achievement by the Company and its subsidiaries
of performance targets established by the Compensation Committee in accordance
with the terms of the Company's Annual Incentive Bonus Plan and any successor
plan thereto (collectively, the "BONUS PLAN").  The performance goals on the
basis of which the Executive's bonus shall be determined shall be no less
favorable to the Executive than the goals used to determine the bonus of any
other executive of the Company whose annual bonus is based in whole or in part
on corporate performance and who participates in the Bonus Plan, and the
Compensation Committee shall establish objective criteria to be used to
determine the extent to which such performance goals have been met.  The Bonus,
if any, payable to the Executive in respect of each calendar year will be paid
at the same time that bonuses are paid to other participants in the Bonus Plan.

(ii)     AMOUNT OF TARGET BONUS.  For each calendar year included in whole
or in part within the Term, there shall be a target Bonus (a "TARGET BONUS") for
the Executive equal to at least 100% of Executive's Salary, at the annual rate
in effect at the beginning of such calendar year (pro rated, if less than an
entire year). 

2

(iii)    DETERMINATION OF THE BONUS AMOUNT.  The amount of the actual
Bonus for any calendar year to be paid to the Executive will be determined, in
the sole discretion of the Compensation Committee, based upon the performance of
the Company and its subsidiaries against the goals established by the
Compensation Committee pursuant to the Bonus Plan.
4.  STOCK OPTIONS.   Commencing as of the Effective Date, Executive shall
be eligible for option grants under the Company's 1996 Equity Incentive Plan and
any successor plan thereto for the Company's executive officers, in accordance
with the terms and conditions thereof.  

5.   PENSION AND WELFARE BENEFITS.  During the Term, the Executive will
participate in all pension and welfare plans, programs and benefits that are
applicable to executives of the Company.  The benefits provided to the Executive
during the Term, when taken as a whole, shall be no less favorable than the
benefits which, when taken as a whole, are provided to any other executive of
the Company; PROVIDED that Executive shall continue to receive life insurance
coverage in an amount equal to at least one (1) times his then Salary.   During
the Term, the Executive shall also be entitled to all additional perquisites
which the Company provides to its executives.  Subject to subsection 7(a)(i)
hereof, from and after the expiration of the Term or, if earlier, the date of
termination of Executive's employment hereunder, Executive shall be entitled,
during his lifetime, to full Company-paid health and life insurance for himself
and his immediate family, at a level no less favorable than that in effect from
time to time for the benefit of the Company's senior executive officers.

6.  OTHER BENEFITS.

(a)      TRAVEL AND BUSINESS-RELATED EXPENSES.  During the Term, the
Executive shall be reimbursed in accordance with the policies of the Company for
traveling and other  expenses incurred in the performance of the business of the
Company.

(b)      AUTOMOBILE.  During the Term, the Executive shall be furnished
with an automobile either owned or leased by the Company or an automobile
allowance, at the discretion of the Company.  The Company shall pay or reimburse
the Executive for all reasonable expenses associated with the operation of such
automobile, including, without limitation, all reasonable maintenance and
insurance expenses.

(c)      AIRCRAFT.  The Executive shall be provided with reasonable access
to any aircraft leased or owned by the Company.

(d)      COUNTRY CLUB MEMBERSHIP.  During the Term, the Company shall pay
the Executive's reasonable membership expenses (including fees, dues and related
expenses) at such country club or clubs as approved by the Board.

(e)      CONSULTING AGREEMENT.  Commencing on the expiration of the Term
of this Agreement or, if earlier, the date of termination of Executive's
employment hereunder for any reason other than death or for Cause (as defined
below), and subject to the provisions of Sections 8 and 9 hereof, the Company
and Executive shall enter into a two (2) year consulting agreement pursuant to
which Executive shall render consulting services to the Company as Executive 

3

and the Company shall agree, for which the Company shall pay Executive a 
consulting fee at an annual rate equal to 50% of Executive's Salary, at the 
rate in effect immediately prior to the commencement of the consulting 
period, payable in accordance with the customary payroll practices for 
executives of the Company or at such other time or times as Executive and the 
Company shall agree.  It is expressly understood that Executive's reporting 
obligations pursuant to such consulting agreement shall be limited to the 
Board and the Chief Executive Officer of the Company, or such other person as 
Executive and the Company shall agree.

7.  TERMINATION OF EMPLOYMENT.

(a)      TERMINATION FOR CAUSE, RESIGNATION WITHOUT GOOD REASON.

(i)     If the Executive's employment is terminated by the Company for
Cause (as defined below) or if the Executive resigns from his employment without
Good Reason (as defined below), prior to the expiration of the Term, the
Executive shall be entitled to receive:  (A) the Salary provided for in Section
3(a) as accrued through the date of such resignation or termination; (B) any
Bonus earned but not yet paid in respect of any calendar year preceding the year
in which such termination or resignation occurs; and (C) any unreimbursed
expenses.  The Executive shall not accrue or otherwise be eligible to receive
Salary payments or to participate in any plans, programs or benefits described
in Section 5 hereof with respect to periods after the date of such termination
or resignation, and shall not be eligible to receive any Bonus in respect of the
year of such termination or resignation or any calendar year following the year
in which such termination or resignation occurs.  Any Bonus in respect of a year
prior to the year in which such termination or resignation occurs shall be
payable at such time and in such manner as provided for in Section 3(b) hereof.

(ii)     Termination for "CAUSE" shall mean termination by action of the
Board because of:  (A) Executive's willful and continued failure (other than by
reason of the incapacity of Executive due to physical or mental illness)
substantially to perform his duties hereunder; (B) a felony conviction of the
Executive or the perpetration by the Executive of a serious dishonest act
against the Company or any of its affiliates or subsidiaries; (C) any willful
misconduct by the Executive that is materially injurious to the financial
condition or business reputation of the Company or any of its affiliates or
subsidiaries; or (D) chronic alcoholism or drug abuse which materially affects
Executive's performance hereunder, PROVIDED, HOWEVER, that no event or
circumstance shall be considered to constitute Cause within the meaning of this
clause (ii) unless the Executive has been given written notice of the events or
circumstances constituting Cause and has failed to effect a cure thereof within
60 calendar days following the receipt of such notice.

(iii)    Resignation for "GOOD REASON" shall mean the resignation of the
Executive because of (A) a material reduction in Executive's responsibilities,
duties, authority, status or titles as described in Section 1 above; or (B)
failure by the Company to pay or provide Executive when due any compensation,
benefits or perquisites to which Executive is entitled pursuant to this
Agreement or any other plan, contract or arrangement in which Executive
participates or is entitled to participate; PROVIDED, HOWEVER, that no event or
circumstance shall be considered to constitute Good Reason within 

4

the meaning of this clause (iii) unless the Company has been given written 
notice of the events or circumstances constituting Good Reason and has failed 
to effect a cure thereof within 60 calendar days following the receipt of 
such notice.

(iv)     The date of termination of employment by the Company pursuant to
this Section 7(a) shall be the date specified in a written notice of termination
from the Company to the Executive, which, in the case of a proposed termination
to which the 60-day cure period provided for in subsection (ii) above applies
shall be no less than 61 days after the delivery of such notice to the
Executive.  The date of a resignation by the Executive pursuant to this Section
7(a) shall be the date specified in the written notice of resignation from the
Executive to the Company, which, in the case of a proposed resignation to which
the 60-day cure period provided for in subsection (iii) above applies shall be
no less than 61 days after the delivery of such notice to the Company, or, if no
date is specified therein, 61 days after receipt by the Company of the written
notice of resignation from the Executive.

(b)      TERMINATION WITHOUT CAUSE, RESIGNATION FOR GOOD REASON.

(i)      If the Executive's employment is terminated by the Company
without Cause or if the Executive should resign for Good Reason, prior to the
expiration of the Term, he shall be entitled to receive:  (A) the Salary
provided for in Section 3(a) as accrued through the date of such resignation or
termination and continuing for the remainder of the then-effective Term (the
"CONTINUATION PERIOD"); (B) any Bonus earned but not yet paid in respect of any
calendar year preceding the year in which such termination or resignation
occurs; (C) any unreimbursed expenses and (D) a Bonus for the calendar year in
which such termination or resignation occurs equal to the Executive's Target
Bonus for such year and a Bonus for each subsequent year included in whole or in
part within the Continuation Period equal to the Target Bonus for the calendar
year in which such termination or resignation occurs, PROVIDED, HOWEVER, that
the amount of such Bonus payable in respect of any partial calendar year at the
conclusion of the Continuation Period shall be prorated and shall equal the
Executive's Bonus for such year multiplied by a fraction, the numerator of which
shall equal the number of days in such calendar year up to and including the
last day of the Continuation Period and the denominator of which shall equal the
lesser of 365 or the number of days in such final calendar year up to and
including the last day of the Term. 

During the Continuation Period, (X) Salary payments to the Executive
shall be payable in accordance with the payroll practices of the Company, and
(Y) Bonus payments shall be made in respect of each calendar year at the same
time that bonuses are paid to participants in the Bonus Plan.   

The Executive shall also be entitled to continued participation in the
medical, dental and insurance plans and arrangements described in Section 5, on
the same terms and conditions as are in effect immediately prior to such
termination or resignation, until the earlier to occur of (i) the last day of
the Continuation Period and (ii) such time as Executive is entitled to
comparable benefits provided by a subsequent employer.  Anything herein to the
contrary notwithstanding, the Company shall have no obligation to continue to
maintain during the Continuation Period any plan or program solely as a result

5

of the provisions of this Agreement.  If, during the Continuation Period,
Executive is precluded from participating in a plan or program by its terms or
applicable law or if the Company for any reason ceases to maintain such plan or
program, the Company shall provide Executive with compensation or benefits the
aggregate value of which, in the reasonable judgement of the Company, is no less
than the aggregate value of the compensation or benefits that Executive would
have received under such plan or program had he been eligible to participate
therein or had such plan or program continued to be maintained by the Company.

(ii)     Except as may be provided under the terms of any applicable
grants to the Executive, under any plan or arrangement in which the Executive
participates under Section 5 or except as may be otherwise required by
applicable law, including, without limitation, the provisions of Section
4980B(f) of the Internal Revenue Code of 1986, as amended (the "CODE"), the
Executive shall have no right under this Agreement or any other agreement to
receive any other compensation, or to participate in any other plan, arrangement
or benefit, with respect to future periods after such termination or resignation
of employment.  Except as otherwise provided in Section 9(d), in the event of a
termination or resignation pursuant to this Section 7(b), the Executive shall
have no duty of mitigation with respect to amounts payable to him pursuant to
this Section 7(b) or other benefits to which he is entitled pursuant hereto;
PROVIDED, HOWEVER, that, in the event the Executive breaches any of the
provisions of Sections 8 or 9 hereof, the amounts payable to the Executive
pursuant to this Section 7(b), or other benefits to which he is entitled
pursuant hereto, will be offset or reduced by any compensation, payments or
benefits he may receive from a subsequent employer.

(iii)    The date of termination of employment by the Company pursuant to
this Section 7(b) shall be the date specified in the written notice of
termination from the Company to the Executive or, if no date is specified
therein, ten business days after receipt by the Executive of the written notice
of termination from the Company.  The date of a resignation by the Executive
pursuant to this Section 7(b) shall be the date specified in the written notice
of resignation from the Executive to the Company or, if no date is specified
therein, ten business days after receipt by the Company of the written notice of
resignation from the Executive.

(c)      DEATH OR PERMANENT DISABILITY.  If the Executive's employment
hereunder terminates by reason of Executive's death or Permanent Disability
prior to expiration of the Term, the Executive (or his beneficiary (or if no
such beneficiary is designated, his estate), conservator or guardian, as the
case may be) shall be entitled to receive: (i) the Salary provided for in
Section 3(a) as accrued through the date of the Executive's death or Permanent
Disability; (ii) any Bonus earned but not yet paid in respect of any calendar
year preceding the year in which the Executive's death or Permanent Disability
occurs; (iii) a Bonus for the calendar year in which the Executive's death or
Permanent Disability occurs equal to a pro rata portion of the Executive's
Target Bonus for such year, determined on the basis of the number of days in
such year through the date of Executive's death or Permanent Disability; and
(iv) any unreimbursed expenses.  Bonus payments provided for in this Section
7(c) shall be made at such time and in such manner as is provided in Section
3(b).  As used in this Section, the term "BENEFICIARY" includes both the
singular and the plural of such term, as may 

6

be appropriate.  For purposes of this Agreement, "PERMANENT DISABILITY" shall 
be defined in the same manner as such term or a similar term is defined in 
any long-term disability policy maintained by the Company for the Executive 
and in effect on the date of the Executive's termination of employment with 
the Company, PROVIDED that, in the event that the Company does not maintain a 
long-term disability policy for the Executive, Permanent Disability shall 
mean a physical or mental incapacity that substantially prevents him from 
performing his duties hereunder for a period of 6 consecutive months and that 
can reasonably be expected to continue indefinitely.  Any dispute as to 
whether or not Executive is disabled within the meaning of the preceding 
sentence shall be resolved by a physician reasonably satisfactory to 
Executive and the Company, and the determination of such physician shall be 
final and binding upon both Executive and the Company.

8.  ASSIGNMENT OF INTELLECTUAL PROPERTY RIGHTS.

(a)  DEFINITION OF "INVENTIONS".  As used herein, the term "INVENTIONS"
shall mean all inventions, discoveries, improvements, trade secrets, formulas,
techniques, data, programs, systems, specifications, documentations, algorithms,
flow charts, logic diagrams, source codes, processes, and other information,
including works-in-progress, whether or not subject to patent, trademark,
copyright, trade secret, or mask work protection, and whether or not reduced to
practice, which are made, created, authored, conceived, or reduced to practice
by Executive, either alone or jointly with others, during the period of
employment with the Company (including, without limitation, all periods of
employment with the Company prior to the Effective Date), whether or not
performed on the Company's premises or property, which (A) relate to the actual
or anticipated business, activities, research, or investigations of the Company
or (B) result from or is suggested by work performed by Executive for the
Company (whether or not made or conceived during normal working hours or on the
premises of the Company), or (C) which result, to any extent, from use of the
Company's premises or property.

(b)      WORK FOR HIRE.  Executive expressly acknowledges that all
copyrightable aspects of the Inventions (as defined above) are to be considered
"works made for hire" within the meaning of the Copyright Act of 1976, as
amended (the "ACT"), and that the Company is to be the "author" within the
meaning of such Act for all purposes.  All such copyrightable works, as well as
all copies of such works in whatever medium, fixed or embodied, shall be owned
exclusively by the Company as of the date of creation, and Executive hereby
expressly disclaims any and all interest in any of such copyrightable works and
waives any right of DROIT MORALE or similar rights.

(c)      ASSIGNMENT.  Executive acknowledges and agrees that all
Inventions constitute trade secrets of the Company and shall be the sole
property of the Company or any other entity designated by the Company.  In the
event that title to any or all of the Inventions, or any part or element
thereof, may not, by operation of law, vest in the Company, or such Inventions
may be found as a matter of law not to be "works made for hire" within the
meaning of the Act, Executive hereby conveys and irrevocably assigns to the
Company, without further consideration, all his right, title and interest,
throughout the universe and in perpetuity, in all Inventions and all copies of

7

them, in whatever medium, fixed or embodied, and in all written or computer
records, graphics, diagrams, notes, or reports relating thereto in Executive's
possession or under his control, including, with respect to any of the
foregoing, all rights of copyright, patent, trademark, trade secret, mask work,
and any and all other proprietary rights therein, the right to modify and create
derivative works, the right to invoke the benefit of any priority under any
international convention, and all rights to register and renew the same. 
Anything to the contrary notwithstanding, this subsection (c) shall not require
Executive to assign any Invention that would cause this Section 8, or any
portion thereof, to be void or unenforceable under Section 2870 of the
California Labor Code, and Executive acknowledges receipt of the notification
required by Section 2872 of the California Labor Code.

(d)      PROPRIETARY NOTICES; NO FILINGS; WAIVER OF MORAL RIGHTS. 
Executive acknowledges that all Inventions shall, at the sole option of the
Company, bear the Company's patent, copyright, trademark, trade secret and mask
work notices.

Executive agrees not to file any patent, copyright or trademark
applications relating to any Invention except with prior written consent of an
authorized representative of the Company (other than Executive).

Executive hereby expressly disclaims any and all interest in any
Inventions and waives any right of DROIT MORALE or similar rights, such as
rights of integrity or the right to be attributed as the creator of the
Invention.

(e)      FURTHER ASSURANCES.  Executive agrees to assist the Company, or
any party designated by the Company, promptly on the Company's request, whether
before or after the termination of employment, however such termination may
occur, in perfecting, registering, maintaining, and enforcing, in all
jurisdictions, the Company's rights in the Inventions by performing all acts and
executing all documents and instruments deemed necessary or convenient by the
Company, including, by way of illustration and not limitation:

(i)      Executing assignments, applications, and other documents and
instruments in connection with (A) obtaining patents, copyrights, trademarks,
mask works, or other proprietary protections for the Inventions and (B)
confirming the assignment to the Company of all right, title and interest in
the Inventions or otherwise establishing the Company's exclusive ownership
rights therein.

(ii)     Cooperating in the prosecution of patent, copyright, trademark
and mask work applications, as well as in the enforcement of the Company's
rights in the Inventions, including, but not limited to, testifying in court
or before any patent, copyright, trademark or mask work registry office or
any other administrative body.

Executive will be reimbursed for all out-of-pocket costs reasonably
incurred in connection with the foregoing, if such assistance is requested by
the Company after the termination of Executive's employment.  In addition, to
the extent that, after the termination of employment for whatever reason,
Executive's technical expertise shall be required in connection with 

8

the fulfillment of the aforementioned obligations, the Company will 
compensate Executive at a reasonable rate for the time actually spent by 
Executive at the Company's request rendering such assistance.

(f)      POWER OF ATTORNEY.  Executive hereby irrevocably appoints the
Company to be his Attorney-in-Fact to execute any document and to take any
action in his name and on his behalf and to generally use his name for the
purpose of giving to the Company the full benefit of the assignment provisions
set forth above.

(g)      DISCLOSURE OF INVENTIONS.  Executive will make full and prompt
disclosure to the Company of all Inventions subject to assignment to the
Company, and all information relating thereto in Executive's possession or under
his control as to possible applications and use thereof.

9.  NO COMPETING EMPLOYMENT; NO INTERFERENCE; CONFIDENTIALITY; REMEDIES.

(a)      NO COMPETING EMPLOYMENT.  For so long as the Executive is
employed by the Company or any of its affiliates and subsidiaries and continuing
for the two-year period commencing at the expiration of the Term hereof or the
earlier termination of Executive's employment for any reason other than death
(such period being referred to hereinafter as the "RESTRICTED PERIOD"), the
Executive shall not, unless he receives after the Effective Date the prior
written consent of the Board, directly or indirectly, whether as owner,
consultant, employee, partner, venturer, agent, through stock ownership,
investment of capital, lending of money or property, rendering of services, or
otherwise, compete with the Company or any of its affiliates or subsidiaries in
any business in which any of them is engaged during the Term hereunder or at the
time of the termination of the Executive's employment hereunder, including
without limitation the design, manufacture and/or distribution of men's or
women's sportswear or accessories (such businesses are hereinafter referred to
as the "BUSINESS"), or assist, become interested in or be connected with any
corporation, firm, partnership, joint venture, sole proprietorship or other
entity which so competes with the Business, except that the provisions of this
Section 9(a) will not be deemed breached merely because Executive owns equity in
(i) Charles David of California, (ii) California Sunshine Active Wear, Inc.; or
(iii) Nantucket Industries, Inc. or because Executive "beneficially owns",
either individually or as a member of a "group" (as such terms are used in Rule
13d-3 under the Securities Exchange Act of 1934, as amended (the "Exchange
Act")), not more than five percent (5%) of the voting securities of any one or
more companies that file reports pursuant to the Exchange Act.  After the
expiration of the Term hereof and during the two-year period referenced above,
the restrictions imposed by this paragraph shall not apply to any business in
which the Company or its affiliates and subsidiaries were not engaged at the
time of termination of the Executive's employment hereunder or to any geographic
area in which the Company or its affiliates and subsidiaries were not engaged in
the Business at the time of termination.  

(b)      NO INTERFERENCE.  During the Restricted Period, the Executive
shall not, for the purpose of competing with the Business, directly or
indirectly, whether for his own account or for the account of any other
individual, partnership, firm, corporation or other business organization or

9

entity (other than the Company), intentionally solicit, endeavor to entice away
from the Company or any of its affiliates or subsidiaries, or otherwise
intentionally interfere with the relationship of the Company or any of its
affiliates or subsidiaries with any person who is employed by or otherwise
engaged to perform services for the Company or any of its affiliates or
subsidiaries or influence, or seek to influence, any person or entity who is a
customer, client or supplier of the Company or any of its affiliates or
subsidiaries to divert their business to any person or entity that competes with
the Company or any of its affiliates or subsidiaries, nor shall the Executive
participate in the efforts of any individual, partnership, firm, corporation or
other business corporation or entity for which he provides services, by which he
is employed, or in which he invests, to do so, except that the provisions of
this Section 9(b) will not be deemed breached merely because Executive owns
equity in (i) Charles David of California, (ii) California Sunshine Active Wear,
Inc.; or (iii) Nantucket Industries, Inc. or because Executive "beneficially
owns", either individually or as a member of a "group" (as such terms are used
in Rule 13d-3 under the Exchange Act), not more than five percent (5%) of the
voting securities of any one or more companies that file reports pursuant to the
Exchange Act.  After the expiration of the Term hereof and during the two-year
period referenced in subsection 9(a), the restrictions imposed by this paragraph
shall not apply to any business in which the Company or its affiliates and
subsidiaries were not engaged at the time of termination of the Executive's
employment hereunder or to any geographic area in which the Company or its
affiliates and subsidiaries were not engaged in the Business at the time of
termination.  

(c)      CONFIDENTIAL INFORMATION.  The Executive recognizes that the
services to be performed by him hereunder, and the services performed by him
during prior periods of employment with the Company, are special, unique and
extraordinary and that, by reason of such employment, he has acquired and will
continue to acquire confidential information and trade secrets concerning the
operations of the Company and its affiliates and subsidiaries.  Accordingly, the
Executive agrees that he will not, except with the prior written consent of the
Board or as may be required by law, directly or indirectly, disclose during the
Term or any time thereafter any secret or confidential information that he has
learned by reason of his association with the Company or any of its affiliates
or subsidiaries or use any such information to the detriment of the Company or
its affiliates or subsidiaries so long as such confidential information or trade
secrets have not been disclosed or are not otherwise in the public domain.  The
term "CONFIDENTIAL INFORMATION" means any information about the Company, its
subsidiaries and affiliates, and their respective clients and customers, not
previously disclosed to the public or to the trade by the Company's management,
including, without limitation, any products, data, formulae, facilities and
methods, trade secrets and other intellectual property, systems, records
(including computer records), procedures, manuals, confidential reports, product
price lists, client and customer lists, financial information (including the
revenues, costs or profits associated with any of the Company's products),
business plans, prospects or opportunities.

(d)      REMEDIES; SURVIVAL OF AGREEMENT.  In the event that the Executive
materially breaches any of the covenants set forth in this Section 9 and fails
to cure such breach to the reasonable satisfaction of the Company within 10
business days after receipt of written notice thereof to the 

10

Executive, any obligation of the Company to make any payment to the Executive 
pursuant to this Agreement, including without limitation any payments 
pursuant to Section 7(b) (other than payments of Salary or Bonus earned prior 
to the date of such breach and unreimbursed expenses), shall be cancelled.  
In addition, the Executive acknowledges that a breach of any of the covenants 
contained in this Section 9 may result in material irreparable injury to the 
Company or its affiliates or subsidiaries for which there is no adequate 
remedy at law, that it will not be possible to measure damages for such 
injuries precisely and that, in the event of such a breach or threat thereof, 
the Company shall be entitled, in addition to any other rights or remedies it 
may have, to seek an injunction enjoining or restraining the Executive from 
any violation or threatened violation of this Section 9.  The Executive's 
agreement as set forth in this Section shall survive the termination of the 
Executive's employment under this Agreement.

10.      SOURCE OF PAYMENTS.  All payments provided under this Agreement,
other than payments made pursuant to a benefit plan which may provide otherwise,
shall be paid in cash from the general funds of the Company, and no special or
separate fund shall be established, and no other segregation of assets made, to
assure payment.  The Executive shall have no right, title, or interest whatever
in or to any investments which the Company may make to aid the Company in
meeting its obligations hereunder.  Nothing contained in this Agreement, and no
action taken pursuant to its provisions, shall create or be construed to create
a trust of any kind, or a fiduciary relationship, between the Company and the
Executive or any other person.  To the extent that any person acquires a right
to receive payments from the Company hereunder, such right shall be no greater
than the right of an unsecured creditor of the Company.

11.      TAX WITHHOLDING.  Payments to the Executive of all compensation
contemplated under this Agreement shall be subject to all applicable legal
requirements with respect to the withholding of taxes.

12.      NONASSIGNABILITY; BINDING AGREEMENT.  Neither this Agreement nor
any right, duty, obligation or interest hereunder shall be assignable or
delegable by the Executive without the Company's prior written consent;
PROVIDED, HOWEVER, that nothing in this Section shall preclude the Executive
from designating any of his beneficiaries to receive any benefits payable
hereunder upon his death or disability, or his executors, administrators, or
other legal representatives, from assigning any rights hereunder to the person
or persons entitled thereto.  This Agreement shall be binding upon, and inure to
the benefit of, the parties hereto, any successors to or assigns of the Company
and the Executive's heirs and the personal representatives of the Executive's
estate.  

13.      AMENDMENT; WAIVER.  This Agreement may not be modified, amended
or waived in any manner except by an instrument in writing signed by the parties
hereto.  The waiver by either party of compliance with any provision of this
Agreement by the other party shall not operate or be construed as a waiver of
any provision of this Agreement, or of any subsequent breach by such party of a
provision of this Agreement.

11

14.      NOTICES.   Any notice hereunder by either party to the other
shall be given in writing by personal delivery, telex, telecopy or certified
mail, return receipt requested, to the applicable address set forth below:

(i)   To the Company:    Guess ?, Inc.
1444 South Alameda Street
Los Angeles, California 90021
Attention: General Counsel
Telecopier: (213) 765-3100              

(ii)  To the Executive:  Mr. Paul Marciano
Guess ?, Inc.
1444 South Alameda Street
Los Angeles, California 90021
Telecopier: (213) 744-7825

(or such other address as may from time to time be designated by notice by any
party hereto for such purpose).  Notice shall be deemed given, if by personal
delivery, on the date of such delivery or, if by telex or telecopy, on the
business day following receipt of answerback or telecopy confirmation or, if by
certified mail, on the date shown on the applicable return receipt.
15.      CALIFORNIA LAW.  This Agreement is to be governed by and
interpreted in accordance with the laws of the State of California, without
giving effect to the choice-of-law provisions thereof.  If, under such law, any
portion of this Agreement is at any time deemed to be in conflict with any
applicable statute, rule, regulation or ordinance, such portion shall be deemed
to be modified or altered to conform thereto or, if that is not possible, to be
omitted from this Agreement, and the invalidity of any such portion shall not
affect the force, effect and validity of the remaining portion hereof.

16.      ARBITRATION.  Any controversy or claim arising out of or relating
to this Agreement, including, but not limited to, any claim relating to its
validity, interpretation, enforceability or breach, or any other claim or
controversy arising out of the employment relationship or the commencement or
termination of that relationship, including, but not limited to, claims for
breach of covenant, breach of implied covenant or intentional infliction of
emotional distress, which are not settled by agreement between the parties,
shall be settled by arbitration in Los Angeles, California before a board of
three arbitrators, one to be selected by the Company, one by Executive and the
other by the two persons so selected, all in accordance with the labor
arbitration rules of the American Arbitration Association then in effect;
PROVIDED, HOWEVER, that the Company shall nevertheless be entitled to seek
relief under Section 9 in accordance with Section 9(d).  In consideration of the
parties' agreement to submit to arbitration disputes with regard to this
Agreement and with regard to any alleged contract or tort or other claim arising
out of the employment relationship, and in consideration of the anticipated
expedition and minimization of expense of this arbitration remedy, each party
agrees that the arbitration provisions of this Agreement shall provide it with
exclusive remedy, except as provided in the preceding sentence, and each party
expressly waives any right it might have to seek redress in any other forum
except as provided herein.  The parties further agree that the arbitrators
acting hereunder shall be empowered to assess no remedy other than the payment
of compensatory damages or an order (including 

12

temporary, preliminary and permanent injunctive relief) enforcing the 
provisions of Section 9.  Executive acknowledges that the Company would be 
irreparably injured by Executive's breach of his obligations under Section 9 
and that monetary damages would be inadequate.  Subject to the provisions of 
Section 17(b) hereof, the expenses of the third arbitrator and of a 
transcript of any arbitration proceeding shall be divided equally between the 
Company and Executive and each party shall bear the expense of the arbitrator 
selected by it and of any witnesses it calls.  Any decision and award or 
order of the majority of the arbitrators shall be binding upon the parties 
hereto and judgment thereon may be entered in any court having jurisdiction 
thereof.

17.      INDEMNITY AND REIMBURSEMENT OF LEGAL EXPENSES.  

(a)      INDEMNITY.  The Company will indemnify the Executive (and his
legal representatives or other successors) to the fullest extent permitted
(including payment of expenses in advance of final disposition of a proceeding)
by the laws of the State of California, as in effect at the time of the subject
act or omission, or by the Certificate of Incorporation and By-Laws of the
Company, as in effect at such time, or by the terms of any indemnification
agreement between the Company and the Executive, whichever affords greatest
protection to the Executive, and the Executive shall be entitled to the
protection of any insurance policies the Company may elect to maintain generally
for the benefit of its directors and officers (and to the extent the Company
maintains such an insurance policy or policies, the Executive shall be covered
by such policy or policies, in accordance with its or their terms, to the
maximum extent of the coverage available for any Company officer or director),
against all costs, charges and expenses whatsoever incurred or sustained by him
or his legal representatives at the time such costs, charges and expenses are
incurred or sustained, in connection with any action, suit or proceeding to
which he (or his legal representatives or other successors) may be made a party
by reason of his being or having been a director, officer or employee of the
Company or any subsidiary thereof, or his serving or having served any other
enterprises as a director, officer or employee at the request of the Company.

(b)      LEGAL FEES AND EXPENSES.  In the event of a dispute between the
Executive and the Company with respect to any of the Executive's rights under
this Agreement, the Company shall reimburse the Executive for any and all legal
fees and related expenses reasonably incurred by him in connection with
enforcing such rights if the Executive is successful in obtaining a money
judgment against the Company in a final arbitration proceeding.  In addition,
the Company shall reimburse Executive for all reasonable legal expenses in
connection with the negotiation and review of this Agreement and any amendments
thereto.

18.      COUNTERPARTS.  This Agreement may be executed by either of the
parties hereto in counterparts, each of which shall be deemed  to be an
original, but all such counterparts shall together constitute one and the same
instrument.

13

IN WITNESS WHEREOF, the parties hereto have executed this Agreement this
13th day of August, 1996, effective as of the Effective Date.

GUESS ?, INC.

By:

Title:

Paul Marciano
- -------------------------------------------------------------------------------

14

*10.27.   Employment Agreement between the Registrant and Armand Marciano.
- -------------------------------------------------------------------------------
EMPLOYMENT AGREEMENT

EMPLOYMENT AGREEMENT, made as of August 13, 1996, by and between Guess ?,
Inc., a Delaware corporation (herein referred to as the "COMPANY"), and Armand
Marciano (herein referred to as the "EXECUTIVE").

W I T N E S S E T H:

WHEREAS, the Company intends to make an underwritten initial public
offering of its common stock (the "PUBLIC OFFERING"); and

WHEREAS, in connection with the Public Offering, the Company and
Executive deem it to be in their respective best interests to enter into an
agreement providing for the Company's employment of Executive pursuant to the
terms herein stated; 

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

1.  EMPLOYMENT; POSITION AND DUTIES; EXCLUSIVE SERVICES.

(a)      EMPLOYMENT.  The Company agrees to employ the Executive, and the
Executive agrees to be employed by the Company, for the Term provided in Section
2 below and upon the other terms and conditions hereinafter provided.  

(b)      POSITION AND DUTIES.  During the Term, the Executive (i) agrees
to serve as the Senior Executive Vice President and Secretary of the Company and
to perform such reasonable duties as may be delineated in the By-Laws of the
Company and as may be assigned to him from time to time by the Board of
Directors of the Company (the "BOARD"), including, without limitation, primary
responsibility for all production functions of the Company,  (ii) shall report,
as Senior Executive Vice President and Secretary of the Company, only to the
Board or to the Chairman of the Board and to the Chief Executive Officer of the
Company, (iii) shall be given such authority as is appropriate to carry out the
duties described above, it being understood that, in his capacities as Senior
Executive Vice President and Secretary of the Company, his duties will be
consistent in scope, prestige and authority with the duties of Senior Executive
Vice President and Secretary of the Company as demonstrated by the Company's
existing practices as of the effective date of this Agreement, and (v) agrees to
serve, if elected, at no additional compensation (if the other officers or
directors (other than non-employee directors) of the Company also serve at no
additional compensation) in the position of officer or director of any
subsidiary or affiliate of the Company; PROVIDED, HOWEVER, that such position
shall be of no less status relative to such subsidiary or affiliate as the
position that the Executive holds pursuant to clause (i) of this Section 1(b) is
relative to the Company.

1

(c)      EXCLUSIVE SERVICES.  During the Term, the Executive agrees to
devote substantially all of his business time, attention, skill and efforts
exclusively to the business and affairs of the Company and its subsidiaries and
affiliates, and shall perform and discharge the duties which may be assigned to
him from time to time by the Board or the Chief Executive Officer.

(d)      RELOCATION.  The Company shall not relocate the Executive's
principal place of business outside of the Los Angeles metropolitan area without
the written consent of the Executive.

2.  TERM OF AGREEMENT.  The term of employment under this Agreement shall
initially be the three-year period commencing on the date of the Public Offering
(the "EFFECTIVE DATE") and ending on the third anniversary of the Effective
Date, and shall be automatically extended without further action by either party
for a successive or successive one-year period or periods, unless written notice
of either party's intention to terminate this Agreement has been given to the
other party at least 90 days prior to the expiration of the Term (including any
one-year extension thereof).  As used in this Agreement, the "TERM" shall mean
the initial three-year term plus any extensions thereof as provided in this
Section 2.

3.  SALARY AND ANNUAL BONUS.  The Executive's cash compensation for all
services to be rendered by him in any capacity hereunder shall consist of base
salary as provided in Section 3(a) and bonus compensation as provided in Section
3(b).

(a)      SALARY.  The Executive shall be paid a minimum base salary (the
"SALARY") at the rate of  $650,000 per annum.  The Salary shall be payable in
accordance with the customary payroll practices for executives of the Company. 
The amount of Executive's Salary will be reviewed not less often than annually
by the Compensation Committee of the Board (the "COMPENSATION COMMITTEE") and
may be increased, but not decreased below such amount, on the basis of such
review.

(b)      ANNUAL BONUS.  

(i)      GENERAL TERMS.  For each calendar year included in whole or in
part within the Term, the Executive shall be eligible to earn an annual cash
bonus (a "BONUS") based upon the achievement by the Company and its subsidiaries
of performance targets established by the Compensation Committee in accordance
with the terms of the Company's Annual Incentive Bonus Plan and any successor
plan thereto (collectively, the "BONUS PLAN").  The performance goals on the
basis of which the Executive's bonus shall be determined shall be no less
favorable to the Executive than the goals used to determine the bonus of any
other executive of the Company whose annual bonus is based in whole or in part
on corporate performance and who participates in the Bonus Plan, and the
Compensation Committee shall establish objective criteria to be used to
determine the extent to which such performance goals have been met.  The Bonus,
if any, payable to the Executive in respect of each calendar year will be paid
at the same time that bonuses are paid to other participants in the Bonus Plan.

2

(ii)     AMOUNT OF TARGET BONUS.  For each calendar year included in whole
or in part within the Term, there shall be a target Bonus (a "TARGET BONUS") for
the Executive equal to at least 100% of Executive's Salary, at the annual rate
in effect at the beginning of such calendar year (pro rated, if less than an
entire year). 

(iii)    DETERMINATION OF THE BONUS AMOUNT.  The amount of the actual
Bonus for any calendar year to be paid to the Executive will be determined, in
the sole discretion of the Compensation Committee, based upon the performance of
the Company and its subsidiaries against the goals established by the
Compensation Committee pursuant to the Bonus Plan.
4.  STOCK OPTIONS.   Commencing as of the Effective Date, Executive shall
be eligible for option grants under the Company's 1996 Equity Incentive Plan and
any successor plan thereto for the Company's executive officers, in accordance
with the terms and conditions thereof.  

5.   PENSION AND WELFARE BENEFITS.  During the Term, the Executive will
participate in all pension and welfare plans, programs and benefits that are
applicable to executives of the Company.  The benefits provided to the Executive
during the Term, when taken as a whole, shall be no less favorable than the
benefits which, when taken as a whole, are provided to any other executive of
the Company; PROVIDED that Executive shall continue to receive life insurance
coverage in an amount equal to at least one (1) times his then Salary.   During
the Term, the Executive shall also be entitled to all additional perquisites
which the Company provides to its executives.  Subject to subsection 7(a)(i)
hereof, from and after the expiration of the Term or, if earlier, the date of
termination of Executive's employment hereunder, Executive shall be entitled,
during his lifetime, to full Company-paid health and life insurance for himself
and his immediate family, at a level no less favorable than that in effect from
time to time for the benefit of the Company's senior executive officers.

6.  OTHER BENEFITS.

(a)      TRAVEL AND BUSINESS-RELATED EXPENSES.  During the Term, the
Executive shall be reimbursed in accordance with the policies of the Company for
traveling and other  expenses incurred in the performance of the business of the
Company.

(b)      AUTOMOBILE.  During the Term, the Executive shall be furnished
with an automobile either owned or leased by the Company or an automobile
allowance, at the discretion of the Company.  The Company shall pay or reimburse
the Executive for all reasonable expenses associated with the operation of such
automobile, including, without limitation, all reasonable maintenance and
insurance expenses.

(c)      AIRCRAFT.  The Executive shall be provided with reasonable access
to any aircraft leased or owned by the Company.

(d)      COUNTRY CLUB MEMBERSHIP.  During the Term, the Company shall pay
the Executive's reasonable membership expenses (including fees, dues and related
expenses) at such country club or clubs as approved by the Board.

3

(e)      CONSULTING AGREEMENT.  Commencing on the expiration of the Term
of this Agreement or, if earlier, the date of termination of Executive's
employment hereunder for any reason other than death or for Cause (as defined
below), and subject to the provisions of Sections 8 and 9 hereof, the Company
and Executive shall enter into a two (2) year consulting agreement pursuant to
which Executive shall render consulting services to the Company as Executive and
the Company shall agree, for which the Company shall pay Executive a consulting
fee at an annual rate equal to 50% of Executive's Salary, at the rate in effect
immediately prior to the commencement of the consulting period, payable in
accordance with the customary payroll practices for executives of the Company or
at such other time or times as Executive and the Company shall agree.  It is
expressly understood that Executive's reporting obligations pursuant to such
consulting agreement shall be limited to the Board and the Chief Executive
Officer of the Company, or such other person as Executive and the Company shall
agree.

7.  TERMINATION OF EMPLOYMENT.

(a)      TERMINATION FOR CAUSE, RESIGNATION WITHOUT GOOD REASON.

(i)     If the Executive's employment is terminated by the Company for
Cause (as defined below) or if the Executive resigns from his employment without
Good Reason (as defined below), prior to the expiration of the Term, the
Executive shall be entitled to receive:  (A) the Salary provided for in Section
3(a) as accrued through the date of such resignation or termination; (B) any
Bonus earned but not yet paid in respect of any calendar year preceding the year
in which such termination or resignation occurs; and (C) any unreimbursed
expenses.  The Executive shall not accrue or otherwise be eligible to receive
Salary payments or to participate in any plans, programs or benefits described
in Section 5 hereof with respect to periods after the date of such termination
or resignation, and shall not be eligible to receive any Bonus in respect of the
year of such termination or resignation or any calendar year following the year
in which such termination or resignation occurs.  Any Bonus in respect of a year
prior to the year in which such termination or resignation occurs shall be
payable at such time and in such manner as provided for in Section 3(b) hereof.

(ii)     Termination for "CAUSE" shall mean termination by action of the
Board because of:  (A) Executive's willful and continued failure (other than by
reason of the incapacity of Executive due to physical or mental illness)
substantially to perform his duties hereunder; (B) a felony conviction of the
Executive or the perpetration by the Executive of a serious dishonest act
against the Company or any of its affiliates or subsidiaries; (C) any willful
misconduct by the Executive that is materially injurious to the financial
condition or business reputation of the Company or any of its affiliates or
subsidiaries; or (D) chronic alcoholism or drug abuse which materially affects
Executive's performance hereunder, PROVIDED, HOWEVER, that no event or
circumstance shall be considered to constitute Cause within the meaning of this
clause (ii) unless the Executive has been given written notice of the events or
circumstances constituting Cause and has failed to effect a cure thereof within
60 calendar days following the receipt of such notice.

4

(iii)    Resignation for "GOOD REASON" shall mean the resignation of the
Executive because of (A) a material reduction in Executive's responsibilities,
duties, authority, status or titles as described in Section 1 above; or (B)
failure by the Company to pay or provide Executive when due any compensation,
benefits or perquisites to which Executive is entitled pursuant to this
Agreement or any other plan, contract or arrangement in which Executive
participates or is entitled to participate; PROVIDED, HOWEVER, that no event or
circumstance shall be considered to constitute Good Reason within the meaning of
this clause (iii) unless the Company has been given written notice of the events
or circumstances constituting Good Reason and has failed to effect a cure
thereof within 60 calendar days following the receipt of such notice.

(iv)     The date of termination of employment by the Company pursuant to
this Section 7(a) shall be the date specified in a written notice of termination
from the Company to the Executive, which, in the case of a proposed termination
to which the 60-day cure period provided for in subsection (ii) above applies
shall be no less than 61 days after the delivery of such notice to the
Executive.  The date of a resignation by the Executive pursuant to this Section
7(a) shall be the date specified in the written notice of resignation from the
Executive to the Company, which, in the case of a proposed resignation to which
the 60-day cure period provided for in subsection (iii) above applies shall be
no less than 61 days after the delivery of such notice to the Company, or, if no
date is specified therein, 61 days after receipt by the Company of the written
notice of resignation from the Executive.

(b)      TERMINATION WITHOUT CAUSE, RESIGNATION FOR GOOD REASON.

(i)      If the Executive's employment is terminated by the Company
without Cause or if the Executive should resign for Good Reason, prior to the
expiration of the Term, he shall be entitled to receive:  (A) the Salary
provided for in Section 3(a) as accrued through the date of such resignation or
termination and continuing for the remainder of the then-effective Term (the
"CONTINUATION PERIOD"); (B) any Bonus earned but not yet paid in respect of any
calendar year preceding the year in which such termination or resignation
occurs; (C) any unreimbursed expenses and (D) a Bonus for the calendar year in
which such termination or resignation occurs equal to the Executive's Target
Bonus for such year and a Bonus for each subsequent year included in whole or in
part within the Continuation Period equal to the Target Bonus for the calendar
year in which such termination or resignation occurs, PROVIDED, HOWEVER, that
the amount of such Bonus payable in respect of any partial calendar year at the
conclusion of the Continuation Period shall be prorated and shall equal the
Executive's Bonus for such year multiplied by a fraction, the numerator of which
shall equal the number of days in such calendar year up to and including the
last day of the Continuation Period and the denominator of which shall equal the
lesser of 365 or the number of days in such final calendar year up to and
including the last day of the Term. 

During the Continuation Period, (X) Salary payments to the Executive
shall be payable in accordance with the payroll practices of the 

5

Company, and (Y) Bonus payments shall be made in respect of each calendar 
year at the same time that bonuses are paid to participants in the Bonus 
Plan.   

The Executive shall also be entitled to continued participation in the
medical, dental and insurance plans and arrangements described in Section 5, on
the same terms and conditions as are in effect immediately prior to such
termination or resignation, until the earlier to occur of (i) the last day of
the Continuation Period and (ii) such time as Executive is entitled to
comparable benefits provided by a subsequent employer.  Anything herein to the
contrary notwithstanding, the Company shall have no obligation to continue to
maintain during the Continuation Period any plan or program solely as a result
of the provisions of this Agreement.  If, during the Continuation Period,
Executive is precluded from participating in a plan or program by its terms or
applicable law or if the Company for any reason ceases to maintain such plan or
program, the Company shall provide Executive with compensation or benefits the
aggregate value of which, in the reasonable judgement of the Company, is no less
than the aggregate value of the compensation or benefits that Executive would
have received under such plan or program had he been eligible to participate
therein or had such plan or program continued to be maintained by the Company.

(ii)     Except as may be provided under the terms of any applicable
grants to the Executive, under any plan or arrangement in which the Executive
participates under Section 5 or except as may be otherwise required by
applicable law, including, without limitation, the provisions of Section
4980B(f) of the Internal Revenue Code of 1986, as amended (the "CODE"), the
Executive shall have no right under this Agreement or any other agreement to
receive any other compensation, or to participate in any other plan, arrangement
or benefit, with respect to future periods after such termination or resignation
of employment.  Except as otherwise provided in Section 9(d), in the event of a
termination or resignation pursuant to this Section 7(b), the Executive shall
have no duty of mitigation with respect to amounts payable to him pursuant to
this Section 7(b) or other benefits to which he is entitled pursuant hereto;
PROVIDED, HOWEVER, that, in the event the Executive breaches any of the
provisions of Sections 8 or 9 hereof, the amounts payable to the Executive
pursuant to this Section 7(b), or other benefits to which he is entitled
pursuant hereto, will be offset or reduced by any compensation, payments or
benefits he may receive from a subsequent employer.

(iii)    The date of termination of employment by the Company pursuant to
this Section 7(b) shall be the date specified in the written notice of
termination from the Company to the Executive or, if no date is specified
therein, ten business days after receipt by the Executive of the written notice
of termination from the Company.  The date of a resignation by the Executive
pursuant to this Section 7(b) shall be the date specified in the written notice
of resignation from the Executive to the Company or, if no date is specified
therein, ten business days after receipt by the Company of the written notice of
resignation from the Executive.

(c)      DEATH OR PERMANENT DISABILITY.  If the Executive's employment
hereunder terminates by reason of Executive's death or Permanent Disability
prior to expiration of the Term, the Executive (or his beneficiary 

6

(or if no such beneficiary is designated, his estate), conservator or 
guardian, as the case may be) shall be entitled to receive: (i) the Salary 
provided for in Section 3(a) as accrued through the date of the Executive's 
death or Permanent Disability; (ii) any Bonus earned but not yet paid in 
respect of any calendar year preceding the year in which the Executive's 
death or Permanent Disability occurs; (iii) a Bonus for the calendar year in 
which the Executive's death or Permanent Disability occurs equal to a pro 
rata portion of the Executive's Target Bonus for such year, determined on the 
basis of the number of days in such year through the date of Executive's 
death or Permanent Disability; and (iv) any unreimbursed expenses.  Bonus 
payments provided for in this Section 7(c) shall be made at such time and in 
such manner as is provided in Section 3(b).  As used in this Section, the 
term "BENEFICIARY" includes both the singular and the plural of such term, as 
may be appropriate.  For purposes of this Agreement, "PERMANENT DISABILITY" 
shall be defined in the same manner as such term or a similar term is defined 
in any long-term disability policy maintained by the Company for the 
Executive and in effect on the date of the Executive's termination of 
employment with the Company, PROVIDED that, in the event that the Company 
does not maintain a long-term disability policy for the Executive, Permanent 
Disability shall mean a physical or mental incapacity that substantially 
prevents him from performing his duties hereunder for a period of 6 
consecutive months and that can reasonably be expected to continue 
indefinitely.  Any dispute as to whether or not Executive is disabled within 
the meaning of the preceding sentence shall be resolved by a physician 
reasonably satisfactory to Executive and the Company, and the determination 
of such physician shall be final and binding upon both Executive and the 
Company.

8.  ASSIGNMENT OF INTELLECTUAL PROPERTY RIGHTS.

(a)  DEFINITION OF "INVENTIONS".  As used herein, the term "INVENTIONS"
shall mean all inventions, discoveries, improvements, trade secrets, formulas,
techniques, data, programs, systems, specifications, documentations, algorithms,
flow charts, logic diagrams, source codes, processes, and other information,
including works-in-progress, whether or not subject to patent, trademark,
copyright, trade secret, or mask work protection, and whether or not reduced to
practice, which are made, created, authored, conceived, or reduced to practice
by Executive, either alone or jointly with others, during the period of
employment with the Company (including, without limitation, all periods of
employment with the Company prior to the Effective Date), whether or not
performed on the Company's premises or property, which (A) relate to the actual
or anticipated business, activities, research, or investigations of the Company
or (B) result from or is suggested by work performed by Executive for the
Company (whether or not made or conceived during normal working hours or on the
premises of the Company), or (C) which result, to any extent, from use of the
Company's premises or property.

(b)      WORK FOR HIRE.  Executive expressly acknowledges that all
copyrightable aspects of the Inventions (as defined above) are to be considered
"works made for hire" within the meaning of the Copyright Act of 1976, as
amended (the "ACT"), and that the Company is to be the "author" within the
meaning of such Act for all purposes.  All such copyrightable 

7

works, as well as all copies of such works in whatever medium, fixed or 
embodied, shall be owned exclusively by the Company as of the date of 
creation, and Executive hereby expressly disclaims any and all interest in 
any of such copyrightable works and waives any right of DROIT MORALE or 
similar rights.

(c)      ASSIGNMENT.  Executive acknowledges and agrees that all
Inventions constitute trade secrets of the Company and shall be the sole
property of the Company or any other entity designated by the Company.  In the
event that title to any or all of the Inventions, or any part or element
thereof, may not, by operation of law, vest in the Company, or such Inventions
may be found as a matter of law not to be "works made for hire" within the
meaning of the Act, Executive hereby conveys and irrevocably assigns to the
Company, without further consideration, all his right, title and interest,
throughout the universe and in perpetuity, in all Inventions and all copies of
them, in whatever medium, fixed or embodied, and in all written or computer
records, graphics, diagrams, notes, or reports relating thereto in Executive's
possession or under his control, including, with respect to any of the
foregoing, all rights of copyright, patent, trademark, trade secret, mask work,
and any and all other proprietary rights therein, the right to modify and create
derivative works, the right to invoke the benefit of any priority under any
international convention, and all rights to register and renew the same. 
Anything to the contrary notwithstanding, this subsection (c) shall not require
Executive to assign any Invention that would cause this Section 8, or any
portion thereof, to be void or unenforceable under Section 2870 of the
California Labor Code, and Executive acknowledges receipt of the notification
required by Section 2872 of the California Labor Code.

(d)      PROPRIETARY NOTICES; NO FILINGS; WAIVER OF MORAL RIGHTS. 
Executive acknowledges that all Inventions shall, at the sole option of the
Company, bear the Company's patent, copyright, trademark, trade secret and mask
work notices.

Executive agrees not to file any patent, copyright or trademark
applications relating to any Invention except with prior written consent of an
authorized representative of the Company (other than Executive).

Executive hereby expressly disclaims any and all interest in any
Inventions and waives any right of DROIT MORALE or similar rights, such as
rights of integrity or the right to be attributed as the creator of the
Invention.

(e)      FURTHER ASSURANCES.  Executive agrees to assist the Company, or
any party designated by the Company, promptly on the Company's request, whether
before or after the termination of employment, however such termination may
occur, in perfecting, registering, maintaining, and enforcing, in all
jurisdictions, the Company's rights in the Inventions by performing all acts and
executing all documents and instruments deemed necessary or convenient by the
Company, including, by way of illustration and not limitation:

8

(i)      Executing assignments, applications, and other documents and
instruments in connection with (A) obtaining patents, copyrights, trademarks,
mask works, or other proprietary protections for the Inventions and (B)
confirming the assignment to the Company of all right, title and interest in
the Inventions or otherwise establishing the Company's exclusive ownership
rights therein.

(ii)     Cooperating in the prosecution of patent, copyright, trademark
and mask work applications, as well as in the enforcement of the Company's
rights in the Inventions, including, but not limited to, testifying in court
or before any patent, copyright, trademark or mask work registry office or
any other administrative body.

Executive will be reimbursed for all out-of-pocket costs reasonably
incurred in connection with the foregoing, if such assistance is requested by
the Company after the termination of Executive's employment.  In addition, to
the extent that, after the termination of employment for whatever reason,
Executive's technical expertise shall be required in connection with the
fulfillment of the aforementioned obligations, the Company will compensate
Executive at a reasonable rate for the time actually spent by Executive at the
Company's request rendering such assistance.

(f)      POWER OF ATTORNEY.  Executive hereby irrevocably appoints the
Company to be his Attorney-in-Fact to execute any document and to take any
action in his name and on his behalf and to generally use his name for the
purpose of giving to the Company the full benefit of the assignment provisions
set forth above.

(g)      DISCLOSURE OF INVENTIONS.  Executive will make full and prompt
disclosure to the Company of all Inventions subject to assignment to the
Company, and all information relating thereto in Executive's possession or under
his control as to possible applications and use thereof.

9

9.  NO COMPETING EMPLOYMENT; NO INTERFERENCE; CONFIDENTIALITY; REMEDIES.

(a)      NO COMPETING EMPLOYMENT.  For so long as the Executive is
employed by the Company or any of its affiliates and subsidiaries and continuing
for the two-year period commencing at the expiration of the Term hereof or the
earlier termination of Executive's employment for any reason other than death
(such period being referred to hereinafter as the "RESTRICTED PERIOD"), the
Executive shall not, unless he receives after the Effective Date the prior
written consent of the Board, directly or indirectly, whether as owner,
consultant, employee, partner, venturer, agent, through stock ownership,
investment of capital, lending of money or property, rendering of services, or
otherwise, compete with the Company or any of its affiliates or subsidiaries in
any business in which any of them is engaged during the Term hereunder or at the
time of the termination of the Executive's employment hereunder, including
without limitation the design, manufacture and/or distribution of men's or
women's sportswear or accessories (such businesses are hereinafter referred to
as the "BUSINESS"), or assist, become interested in or be connected with any
corporation, firm, partnership, joint venture, sole proprietorship or other
entity which so competes with the Business, except that the provisions of this
Section 9(a) will not be deemed breached merely because Executive owns equity in
(i) Charles David of California, (ii) California Sunshine Active Wear, Inc.; or
(iii) Nantucket Industries, Inc. or because Executive "beneficially owns",
either individually or as a member of a "group" (as such terms are used in Rule
13d-3 under the Securities Exchange Act of 1934, as amended (the "Exchange
Act")), not more than five percent (5%) of the voting securities of any one or
more companies that file reports pursuant to the Exchange Act.  After the
expiration of the Term hereof and during the two-year period referenced above,
the restrictions imposed by this paragraph shall not apply to any business in
which the Company or its affiliates and subsidiaries were not engaged at the
time of termination of the Executive's employment hereunder or to any geographic
area in which the Company or its affiliates and subsidiaries were not engaged in
the Business at the time of termination.  

(b)      NO INTERFERENCE.  During the Restricted Period, the Executive
shall not, for the purpose of competing with the Business, directly or
indirectly, whether for his own account or for the account of any other
individual, partnership, firm, corporation or other business organization or
entity (other than the Company), intentionally solicit, endeavor to entice away
from the Company or any of its affiliates or subsidiaries, or otherwise
intentionally interfere with the relationship of the Company or any of its
affiliates or subsidiaries with any person who is employed by or otherwise
engaged to perform services for the Company or any of its affiliates or
subsidiaries or influence, or seek to influence, any person or entity who is a
customer, client or supplier of the Company or any of its affiliates or
subsidiaries to divert their business to any person or entity that competes with
the Company or any of its affiliates or subsidiaries, nor shall the Executive
participate in the efforts of any individual, partnership, firm, corporation or
other business corporation or entity for which he provides services, by which he
is employed, or in which he invests, to do so, except that the provisions of
this Section 9(b) will not be deemed breached merely 

10

because Executive owns equity in (i) Charles David of California, (ii) 
California Sunshine Active Wear, Inc.; or (iii) Nantucket Industries, Inc. or 
because Executive "beneficially owns", either individually or as a member of 
a "group" (as such terms are used in Rule 13d-3 under the Exchange Act), not 
more than five percent (5%) of the voting securities of any one or more 
companies that file reports pursuant to the Exchange Act.  After the 
expiration of the Term hereof and during the two-year period referenced in 
subsection 9(a), the restrictions imposed by this paragraph shall not apply 
to any business in which the Company or its affiliates and subsidiaries were 
not engaged at the time of termination of the Executive's employment 
hereunder or to any geographic area in which the Company or its affiliates 
and subsidiaries were not engaged in the Business at the time of termination. 

(c)      CONFIDENTIAL INFORMATION.  The Executive recognizes that the
services to be performed by him hereunder, and the services performed by him
during prior periods of employment with the Company, are special, unique and
extraordinary and that, by reason of such employment, he has acquired and will
continue to acquire confidential information and trade secrets concerning the
operations of the Company and its affiliates and subsidiaries.  Accordingly, the
Executive agrees that he will not, except with the prior written consent of the
Board or as may be required by law, directly or indirectly, disclose during the
Term or any time thereafter any secret or confidential information that he has
learned by reason of his association with the Company or any of its affiliates
or subsidiaries or use any such information to the detriment of the Company or
its affiliates or subsidiaries so long as such confidential information or trade
secrets have not been disclosed or are not otherwise in the public domain.  The
term "CONFIDENTIAL INFORMATION" means any information about the Company, its
subsidiaries and affiliates, and their respective clients and customers, not
previously disclosed to the public or to the trade by the Company's management,
including, without limitation, any products, data, formulae, facilities and
methods, trade secrets and other intellectual property, systems, records
(including computer records), procedures, manuals, confidential reports, product
price lists, client and customer lists, financial information (including the
revenues, costs or profits associated with any of the Company's products),
business plans, prospects or opportunities.

(d)      REMEDIES; SURVIVAL OF AGREEMENT.  In the event that the Executive
materially breaches any of the covenants set forth in this Section 9 and fails
to cure such breach to the reasonable satisfaction of the Company within 10
business days after receipt of written notice thereof to the Executive, any
obligation of the Company to make any payment to the Executive pursuant to this
Agreement, including without limitation any payments pursuant to Section 7(b)
(other than payments of Salary or Bonus earned prior to the date of such breach
and unreimbursed expenses), shall be cancelled.  In addition, the Executive
acknowledges that a breach of any of the covenants contained in this Section 9
may result in material irreparable injury to the Company or its affiliates or
subsidiaries for which there is no adequate remedy at law, that it will not be
possible to measure damages for such injuries precisely and that, in the event
of such a breach or threat thereof, the Company shall be entitled, in addition
to any other rights or remedies it may have, to seek an injunction enjoining or
restraining the Executive from 

11

any violation or threatened violation of this Section 9.  The Executive's 
agreement as set forth in this Section shall survive the termination of the 
Executive's employment under this Agreement.

10.      SOURCE OF PAYMENTS.  All payments provided under this Agreement,
other than payments made pursuant to a benefit plan which may provide otherwise,
shall be paid in cash from the general funds of the Company, and no special or
separate fund shall be established, and no other segregation of assets made, to
assure payment.  The Executive shall have no right, title, or interest whatever
in or to any investments which the Company may make to aid the Company in
meeting its obligations hereunder.  Nothing contained in this Agreement, and no
action taken pursuant to its provisions, shall create or be construed to create
a trust of any kind, or a fiduciary relationship, between the Company and the
Executive or any other person.  To the extent that any person acquires a right
to receive payments from the Company hereunder, such right shall be no greater
than the right of an unsecured creditor of the Company.

11.      TAX WITHHOLDING.  Payments to the Executive of all compensation
contemplated under this Agreement shall be subject to all applicable legal
requirements with respect to the withholding of taxes.

12.      NONASSIGNABILITY; BINDING AGREEMENT.  Neither this Agreement nor
any right, duty, obligation or interest hereunder shall be assignable or
delegable by the Executive without the Company's prior written consent;
PROVIDED, HOWEVER, that nothing in this Section shall preclude the Executive
from designating any of his beneficiaries to receive any benefits payable
hereunder upon his death or disability, or his executors, administrators, or
other legal representatives, from assigning any rights hereunder to the person
or persons entitled thereto.  This Agreement shall be binding upon, and inure to
the benefit of, the parties hereto, any successors to or assigns of the Company
and the Executive's heirs and the personal representatives of the Executive's
estate.  

13.      AMENDMENT; WAIVER.  This Agreement may not be modified, amended
or waived in any manner except by an instrument in writing signed by the parties
hereto.  The waiver by either party of compliance with any provision of this
Agreement by the other party shall not operate or be construed as a waiver of
any provision of this Agreement, or of any subsequent breach by such party of a
provision of this Agreement.

12

14.      NOTICES.   Any notice hereunder by either party to the other
shall be given in writing by personal delivery, telex, telecopy or certified
mail, return receipt requested, to the applicable address set forth below:

(i)   To the Company:    Guess ?, Inc.
1444 South Alameda Street
Los Angeles, California 90021
Attention: General Counsel
Telecopier: (213) 765-3100

(ii)  To the Executive:  Mr. Armand Marciano
Guess ?, Inc.
1444 South Alameda Street
Los Angeles, California 90021
Telecopier: (213) 744-7840

(or such other address as may from time to time be designated by notice by any
party hereto for such purpose).  Notice shall be deemed given, if by personal
delivery, on the date of such delivery or, if by telex or telecopy, on the
business day following receipt of answerback or telecopy confirmation or, if by
certified mail, on the date shown on the applicable return receipt.
15.      CALIFORNIA LAW.  This Agreement is to be governed by and
interpreted in accordance with the laws of the State of California, without
giving effect to the choice-of-law provisions thereof.  If, under such law, any
portion of this Agreement is at any time deemed to be in conflict with any
applicable statute, rule, regulation or ordinance, such portion shall be deemed
to be modified or altered to conform thereto or, if that is not possible, to be
omitted from this Agreement, and the invalidity of any such portion shall not
affect the force, effect and validity of the remaining portion hereof.

16.      ARBITRATION.  Any controversy or claim arising out of or relating
to this Agreement, including, but not limited to, any claim relating to its
validity, interpretation, enforceability or breach, or any other claim or
controversy arising out of the employment relationship or the commencement or
termination of that relationship, including, but not limited to, claims for
breach of covenant, breach of implied covenant or intentional infliction of
emotional distress, which are not settled by agreement between the parties,
shall be settled by arbitration in Los Angeles, California before a board of
three arbitrators, one to be selected by the Company, one by Executive and the
other by the two persons so selected, all in accordance with the labor
arbitration rules of the American Arbitration Association then in effect;
PROVIDED, HOWEVER, that the Company shall nevertheless be entitled to seek
relief under Section 9 in accordance with Section 9(d).  In consideration of the
parties' agreement to submit to arbitration disputes with regard to this
Agreement and with regard to any alleged contract or tort or other claim arising
out of the employment relationship, and in consideration of the anticipated
expedition and minimization of expense of this arbitration remedy, each party
agrees that the arbitration provisions of this Agreement shall provide it with
exclusive remedy, except as provided in the preceding sentence, and each party
expressly waives any right it might have to seek redress in any other forum
except as provided herein.  The parties further 

13

agree that the arbitrators acting hereunder shall be empowered to assess no 
remedy other than the payment of compensatory damages or an order (including 
temporary, preliminary and permanent injunctive relief) enforcing the 
provisions of Section 9.  Executive acknowledges that the Company would be 
irreparably injured by Executive's breach of his obligations under Section 9 
and that monetary damages would be inadequate.  Subject to the provisions of 
Section 17(b) hereof, the expenses of the third arbitrator and of a 
transcript of any arbitration proceeding shall be divided equally between the 
Company and Executive and each party shall bear the expense of the arbitrator 
selected by it and of any witnesses it calls.  Any decision and award or 
order of the majority of the arbitrators shall be binding upon the parties 
hereto and judgment thereon may be entered in any court having jurisdiction 
thereof.

17.      INDEMNITY AND REIMBURSEMENT OF LEGAL EXPENSES.  

(a)      INDEMNITY.  The Company will indemnify the Executive (and his
legal representatives or other successors) to the fullest extent permitted
(including payment of expenses in advance of final disposition of a proceeding)
by the laws of the State of California, as in effect at the time of the subject
act or omission, or by the Certificate of Incorporation and By-Laws of the
Company, as in effect at such time, or by the terms of any indemnification
agreement between the Company and the Executive, whichever affords greatest
protection to the Executive, and the Executive shall be entitled to the
protection of any insurance policies the Company may elect to maintain generally
for the benefit of its directors and officers (and to the extent the Company
maintains such an insurance policy or policies, the Executive shall be covered
by such policy or policies, in accordance with its or their terms, to the
maximum extent of the coverage available for any Company officer or director),
against all costs, charges and expenses whatsoever incurred or sustained by him
or his legal representatives at the time such costs, charges and expenses are
incurred or sustained, in connection with any action, suit or proceeding to
which he (or his legal representatives or other successors) may be made a party
by reason of his being or having been a director, officer or employee of the
Company or any subsidiary thereof, or his serving or having served any other
enterprises as a director, officer or employee at the request of the Company.

(b)      LEGAL FEES AND EXPENSES.  In the event of a dispute between the
Executive and the Company with respect to any of the Executive's rights under
this Agreement, the Company shall reimburse the Executive for any and all legal
fees and related expenses reasonably incurred by him in connection with
enforcing such rights if the Executive is successful in obtaining a money
judgment against the Company in a final arbitration proceeding.  In addition,
the Company shall reimburse Executive for all reasonable legal expenses in
connection with the negotiation and review of this Agreement and any amendments
thereto.

18.      COUNTERPARTS.  This Agreement may be executed by either of the
parties hereto in counterparts, each of which shall be deemed  to be an
original, but all such counterparts shall together constitute one and the same
instrument.

14

IN WITNESS WHEREOF, the parties hereto have executed this Agreement this
13th day of August, 1996, effective as of the Effective Date.

GUESS ?, INC.

By:

Title:

Armand Marciano

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

15

*10.28.   Registration Rights Agreement among the Registrant and certain      
stockholders of the Registrant. 
- ------------------------------------------------------------------------------- 
REGISTRATION RIGHTS AGREEMENT

THIS REGISTRATION RIGHTS AGREEMENT is made and entered into as of 
August 1, 1996, between Guess ?, Inc., a Delaware corporation (the 
"Company"), and the stockholders of the Company indicated on the signature 
pages hereto (being referred to herein from time to time, collectively, as 
the "Trusts", and each individually, as a "Trust").

R E C I T A L S

WHEREAS, on the date hereof, each Trust is the owner of the 
respective number of shares of the Company's Common Stock, par value $.01 per 
share (the "Common Stock"), set forth opposite the name of such Trust on the 
signature pages hereto;

WHEREAS, the Trusts have approved various actions in connection 
with a proposed initial public offering of up to 10,580,000 shares of the 
Common Stock, including the approval of a Restated Certificate of 
Incorporation;

WHEREAS, the parties hereto desire to provide for the registration 
under the Securities Act of 1933, as amended (the "Securities Act"), of the 
shares of Common Stock owned by the Trusts as of the date hereof, on the 
terms and conditions set forth herein; and

WHEREAS, the Board of Directors of the Company has authorized the 
officers of the Company to execute and deliver this Agreement in the name of 
and on behalf of the Company.

NOW, THEREFORE, in consideration of the mutual covenants, promises, 
representations, warranties and conditions set forth in this Agreement, the 
parties hereto, intending to be legally bound, hereby agree as follows:

1.   Definitions.

For purposes of this Agreement, in addition to the definitions set 
forth above and elsewhere herein, the following terms shall have the 
following respective meanings:

"Affiliate" of a Holder shall mean a person who controls, is 
controlled by or is under common control with such Holder or,
the spouse or children (or a trust exclusively for the benefit of
a spouse and/or children) of such Holder or, in the case of a Holder
which is a trust, the trustee and the beneficiaries of such trust.

"Clearance Notice" shall have the meaning specified in the last 
paragraph of Section 5.

1

"Commission" shall mean the United States Securities and Exchange 
Commission and any successor agency thereto.

"Common Stock" shall have the meaning specified in the first 
Recital.

"Company" shall have the meaning specified in the Preamble.

"Demand Notice" shall have the meaning specified in Section 2(a).

"Demand Registration" shall have the meaning specified in Section 
2(a).

"Exchange Act" shall mean the Securities Exchange Act of 1934, as 
amended, or any similar federal statute, and the rules and regulations 
of the Commission thereunder, all as the same shall be in effect at the 
time.

"Holder" shall mean a Trust or any transferee or assignee to whom 
the rights under this Agreement are assigned in accordance with the 
provisions of Section 10 hereof.

"Maximum Offering Size" shall have the meaning specified in Section 
3(b)(ii).

"Occurrence Notice" shall have the meaning specified in the last 
paragraph of Section 5.

"Person" shall mean an individual, partnership, corporation, limited
liability company, joint venture, association, joint-stock company, trust,
unincorporated organization, government or agency or political subdivision
thereof, or other entity.

"Registrable Stock" shall mean: (i) the Common Stock beneficially
owned by the Trusts on the date hereof; (ii) any Common Stock issued as 
(or issuable upon the conversion or exercise of any warrant, right, option
or other convertible security which is issued as) a dividend or other
distribution with respect to, or in exchange for, or in replacement of, the
Common Stock owned by the Trusts on the date hereof and (iii) any Common
Stock issued by way of a stock split of the Common Stock referred to in
clauses (i) or (ii) above.  For purposes of this Agreement, any
Registrable Stock shall cease to be Registrable Stock when (x) a
registration statement covering such Registrable Stock has been declared
effective and such Registrable Stock has been disposed of pursuant to such
effective registration statement or (y) such Registrable Stock is sold or
distributed pursuant to Rule 144 (or any similar or successor provision
(but not Rule 144A)) under the Securities Act.

"Requesting Holders" shall have the meaning specified in Section 
2(a).

2

"Securities Act" shall have the meaning specified in the third 
Recital.

"Shelf Registration" shall have the meaning specified in Section 
2(b)(i).

"Shelf Registration Statement" shall have the meaning specified in 
Section 2(b)(ii).

"Trust" or "Trusts"shall have the meaning specified in the Preamble.

"Underwritten Offering" or "Underwritten Registration" shall mean a 
registration in which securities of the Company are sold to an underwriter
or underwriters for reoffering to the public.

2.   Demand Registration.

(a)  At any time commencing 180 days after the date of this 
Agreement, the Holders of at least [10%] of the then outstanding Registrable 
Stock (the "Requesting Holders") may request, in a written notice to the 
Company (a "Demand Notice"), that the Company file a registration statement 
under the Securities Act covering the registration of at least [10%] of the 
Registrable Stock then outstanding in the manner specified in such notice (a 
"Demand Registration").   Promptly following receipt of a Demand Notice (such 
request to state the number of shares of Registrable Stock to be so included 
and the intended method of distribution), the Company shall (x) within twenty 
(20) days notify all other Holders of such request in writing and (y) use its 
best efforts to cause to be registered under the Securities Act all 
Registrable Stock that the Requesting Holders and such other Holders have, 
within ten (10) days after the Company has given such notice, requested be 
registered in accordance with the manner of distribution specified in the 
Demand Notice by the Requesting Holders.

(b)  (i)  If any Demand Registration is requested to be a "shelf" 
registration by the Requesting Holders of the Registrable Stock to be 
included in such Demand Registration, the Company shall cause to be filed 
pursuant to Rule 415 under the Securities Act a shelf Registration Statement 
(a "Shelf Registration Statement") with respect to the number of shares of 
Registrable Stock requested to be so registered (a "Shelf Registration").  
The Company shall keep such Shelf Registration Statement continuously 
effective for a period of at least one year following the date on which the 
Commission declares such Shelf Registration Statement effective under the 
Securities Act (subject to extension pursuant to Section 4(a) and the last 
paragraph of Section 5 hereof), or such shorter period ending when all of the 
shares of Registrable Stock covered by such Shelf Registration Statement have 
been sold.

(ii) Upon the occurrence of any event that would cause the 
Shelf Registration Statement (A) to contain a material misstatement or 
omission or (B) to be not effective and usable for resale of Registrable 
Securities during the period that such Shelf Registration Statement is

3

required to be effective and usable, the Company shall promptly file an 
amendment to the Shelf Registration Statement, in the case of clause (A), 
correcting any such misstatement or omission and, in the case of either 
clause (A) or (B), use its best efforts to cause such amendment to be 
declared effective and such Shelf Registration Statement to become usable as 
soon as practicable thereafter.

(c)  If the Requesting Holders intend to have the Registrable Stock 
distributed by means of an Underwritten Offering, the Company shall include 
such information in the written notice referred to in clause (x) of Section 
2(a) above.  In such event, the right of any Holder to include its 
Registrable Stock in such registration shall be conditioned upon such 
Holder's participation in such Underwritten Offering and the inclusion of 
such Holder's Registrable Stock in the Underwritten Offering (unless 
otherwise mutually agreed by a majority in interest of the Requesting Holders 
and such Holder) to the extent provided below.  All Holders proposing to 
distribute Registrable Stock through such Underwritten Offering shall enter 
into an underwriting agreement in customary form with the underwriter or 
underwriters.  Such underwriter or underwriters shall be selected by a 
majority in interest of the Requesting Holders and shall be approved by the 
Company, which approval shall not be unreasonably withheld; PROVIDED, that 
(i) all of the representations and warranties by, and the other agreements on 
the part of, the Company to and for the benefit of such underwriters shall 
also be made to and for the benefit of such Holders of Registrable Stock, 
(ii) any or all of the conditions precedent to the obligations of such 
underwriters under such underwriting agreement shall be conditions precedent 
to the obligations of such Holders of Registrable Stock, and (iii) no Holder 
shall be required to make any representations or warranties to or agreements 
with the Company or the underwriters other than representations, warranties 
or agreements regarding such Holder, the Registrable Stock of such Holder and 
such Holder's intended method of distribution and any other representations 
required by law or reasonably required by the underwriter.  If any Holder of 
Registrable Stock disapproves of the terms of the underwriting, such Holder 
may elect to withdraw all its Registrable Stock by written notice to the 
Company, the managing underwriter and the Initiating Holders.  The securities 
so withdrawn shall also be withdrawn from registration and shall remain 
Registrable Stock.

(d)  Notwithstanding any provision of this Agreement to the 
contrary,

(i)  the Company shall not be required to effect a Demand 
Registration during the period starting 30 days prior to the estimated 
date of filing by the Company of, and ending on a date 180 days following
the effective date of, a registration statement pertaining to a public
offering of equity securities of the Company;

(ii) the Company shall not be required to effect more than one 
Demand Registration in any six-month period;

(iii) if, in the written opinion of the managing underwriter of
any Underwritten Offering, the total amount of Registrable Stock to be 
registered in connection with a Demand Registration will exceed the

4

maximum amount of the Company's securities that can be marketed (1) at a
price reasonably related to the then current market value of such
securities or (2) without otherwise materially and adversely affecting the
entire offering, then the Company shall include in such Demand Registration
the number of shares of Registrable Stock that in the opinion of such
managing underwriter can be sold within a price range acceptable to the
Holders of a majority of the Registrable Stock requested to be included in
such Demand Registration by the Requesting Holders pursuant to Section
2(a), allocated pro rata among the Requesting Holders on the basis of the
relative number of shares of Registrable Stock each such Holder has
requested to be included in such registration; and

(iv) if the Company shall furnish to the Requesting Holders a 
certificate signed by the president of the Company stating that in the 
good faith opinion of a majority of the Board of Directors of the 
Company such registration would interfere with any material transaction 
then being pursued by the Company, then the Company's obligation to use 
its best efforts to file a registration statement shall be deferred for a 
period not to exceed 60 days.

(e)  The Company shall not be obligated to effect more than three 
Demand Registrations; PROVIDED, HOWEVER, that a Demand Registration shall not 
be deemed to have been effected for purposes of this Section 2(e) unless: (i) 
it has been declared effective by the Commission; (ii) it has remained 
effective for the period set forth in Section 5(a) and (iii) the offering of 
Registrable Stock pursuant to such registration is not subject to any stop 
order, injunction or other order or requirement of the Commission (other than 
any such stop order, injunction or other requirement of the Commission 
prompted by any act or omission of a Requesting Holder).

3.   Incidental Registration.

(a)  Subject to Section 8 and the other terms and conditions set 
forth in this Section 3, if at any time the Company determines that it shall 
file a registration statement under the Securities Act (other than a 
registration statement on Form S-4 or S-8 or filed in connection with an 
exchange offer or an offering of securities solely to the Company's existing 
stockholders) on any form that would also permit the registration of the 
Registrable Stock and such filing is to be on the Company's behalf and/or on 
behalf of selling holders (including Requesting Holders) of its securities 
for the sale of shares of Common Stock, the Company shall each such time 
promptly give each Holder written notice of such determination setting forth 
the date on which the Company proposes to file such registration statement, 
which date shall be no earlier than 30 days from the date of such notice, and 
advising such Holders of their right to have Registrable Stock included in 
such registration.  Upon the written request of any Holder received by the 
Company no later than 30 days after the date of the Company's notice, the 
Company shall use its best efforts to cause to be registered under the 
Securities Act all of the Registrable Stock that each such Holder has so 
requested to be registered.

5

(b)  The Company's obligation to include Registrable Stock in a 
registration statement pursuant to Section 3(a) above is subject to the 
following limitations, conditions and qualifications:

(i)  If, at any time after giving written notice of its 
determination to register its securities and prior to the effective date
of any registration statement filed in connection with such registration,
the Company shall determine for any reason not to register such securities,
the Company may, at its election, give written notice of such determination
to the Holders and thereupon the Company shall be relieved of its
obligation to use any efforts to register any Registrable Stock in
connection with such aborted registration; provided, that the provisions of
this clause (i) shall not affect the obligations of the Company with
respect to a Demand Registration.

(ii) If, in the written opinion of the managing underwriter 
(or, in the case of a non-Underwritten Offering, in the opinion of a 
majority of the directors of the Company), the total amount of such 
securities to be so registered, including such Registrable Stock, will 
exceed the maximum amount (the "Maximum Offering Size") of the Company's 
securities that can be marketed (1) at a price reasonably related to the
then current market value of such securities or (2) without otherwise 
materially and adversely affecting the entire offering, then the Company 
shall include in such registration, in the following priority up to the 
Maximum Offering Size: (x) first, all of the securities proposed to be 
registered for offer and sale by the Company, (y) second, all of the
Registrable Stock requested to be included in such registration by the
Holders pursuant to this Section, allocated, if necessary for such 
offering not to exceed the Maximum Offering Size, pro rata among the 
Holders requesting registration of such Registrable Stock on the basis of
the relative number of shares of Registrable Stock each such Holder has 
requested to be included in such registration, and (z) third, any other 
securities of the Company requested to be registered by any other parties.

4.   Holdback Agreements.

(a)  Each Holder of Registrable Stock agrees, if so required 
(pursuant to a timely notice) by the Company or the managing underwriter in 
any Underwritten Offering, not to effect any public sale of distribution of 
securities of the Company of the same class as the securities included in 
such Underwritten Registration, or any securities convertible into or 
exchangeable to exercisable therefor, during the 30 days prior to and the 180 
days after any Underwritten Registration pursuant to Section 2 or Section 3 
has become effective, except as part of such Underwritten Registration.  
Notwithstanding the foregoing sentence, each Holder of Registrable Stock 
subject to the foregoing sentence shall be entitled to sell securities during 
the foregoing period in a private sale.  If a request is made pursuant to 
this Section 4(a), then the time period during which a Shelf Registration is 
required to remain continuously effective for such Holders of Registrable 
Stock pursuant to the terms of this Agreement shall be extended 210 days.

6

None of the foregoing provisions of this Section 4(a) shall apply 
to any Holder of Registrable Stock if such Holder is prevented by applicable 
statute or regulation from entering into any such agreement; PROVIDED, that 
any such Holder shall undertake not to effect any public sale or distribution 
of the Registrable Stock unless such Holder has provided 45 days' prior 
written notice of such sale or distribution to the underwriter or 
underwriters.

(b)  The Company agrees (i) if so required by the managing 
underwriter of any Underwritten Offering, not to effect any public sale or 
distribution of securities of the same class as the securities included in 
such Underwritten Registration or securities convertible into or exchangeable 
or exercisable therefor during the 30 days prior to and the 90 days after any 
Underwritten Registration pursuant to Section 2 or Section 3 has become 
effective, except as part of such Underwritten Registration and except 
pursuant to registrations on Form S-4 or S-8 or any successor form to such 
Forms, and (ii) to use its best efforts to cause each holder of equity 
securities included in any Underwritten Registration or any securities 
convertible into or exchangeable or exercisable therefor, in each case 
purchased from the Company at any time after the date of this Agreement 
(other than in a public offering) to agree not to effect any public sale or 
distribution of or otherwise dispose of shares of equity securities (or such 
other securities) during such period except as part of such Underwritten 
Registration.

5.   Registration Procedures.  Whenever required under Section 2 or 
Section 3 of this Agreement to use its best efforts to effect the 
registration of any Registrable Stock, the Company shall, as expeditiously as 
possible:

(a)  prepare and file with the Commission a registration statement 
with respect to such Registrable Stock and use its best efforts to cause 
such registration statement to become and remain effective for the period
of the distribution contemplated thereby;

(b)  prepare and file with the Commission such amendments and
supplements to such registration statement and the prospectus used in 
connection therewith as may be necessary to comply with the provisions of
the Securities Act with respect to the disposition of all Registrable Stock
covered by such registration statement;

(c)  furnish to each Holder such numbers of copies of the registration
statement and each prospectus included therein (including each preliminary
prospectus and any amendments or supplements thereto) in conformity with
the requirements of the Securities Act and such other documents and
information as they may reasonably request;

(d)  use its best efforts to register or qualify the Registrable Stock
covered by such registration statement under the securities or blue sky
laws of such jurisdictions as shall be reasonably appropriate for the
distribution of the Registrable Stock covered by the registration
statement; PROVIDED, HOWEVER, that the Company shall not be

7

required in connection therewith or as a condition thereto to qualify to do
business in or to file a general consent to service of process in any
jurisdiction wherein it would not but for the requirements of this
paragraph (d) be obligated to do so;

(e)  promptly notify (but in any event within five business days) 
the selling Holders of Registrable Stock, their counsel and the managing 
underwriters, if any, and confirm such notice in writing, (i) when a 
prospectus or any prospectus supplement has been filed and, with respect 
to a registration statement or any post-effective amendment, when the 
same has become effective, (ii) of any request by the Commission or any
other Federal or state governmental authority for amendments or supplements
to a registration  statement or related prospectus or for additional 
information, (iii) of the issuance by the Commission of any stop order 
suspending the effectiveness of a registration statement or of any order 
preventing or suspending the use of any prospectus or the initiation of 
any proceedings by an Person for that purpose, (iv) if at any time the 
representations and warranties of the Company contained in any agreement 
(including any underwriting agreement) contemplated by Section 6(l) below
ease to be true and correct, (v) of the receipt by the Company of 
any notification with respect to the suspension of the qualification of 
exempting from qualification of a registration statement or any of the
Registrable Stock for offer or sale under the securities or blue sky laws
of any jurisdiction, or the contemplation, initiation or threatening of any
proceeding for such purpose, (vi) of the happening of any event that 
makes any statement made in such registration statement or related 
prospectus or any document incorporated or deemed to be incorporated 
therein by reference untrue in any material respect or that requires the
making of any changes in such registration statement, prospectus or
documents so that it will not contain any untrue statement of a material
fact or omit to state any material fact required to be stated therein or 
necessary to make the statements therein, in light of the circumstances 
under which they were made (in the case of the prospectus only) not
misleading, and (vii) of the Company's reasonable determination that a 
post-effective amendment to a registration statement would be appropriate;

(f)  furnish, at the request of any Holder requesting registration 
of Registrable Stock pursuant to Section 2, if the method of distribution
is by means of an Underwritten Offering, on the date that the shares of
Registrable Stock are delivered to the underwriters for sale pursuant to
such registration, or if such Registrable Stock is not being sold through
underwriters, on the date that the registration statement with respect to
such shares of Registrable Stock becomes effective: (i) a signed opinion,
dated such date, of the independent legal counsel representing the Company
for the purpose of such registration, addressed to the underwriters, if
any, and if such Registrable Stock is not being sold through underwriters,
then to the Holders making such request, as to such matters as such
underwriters or the Holders holding a majority of the Registrable Stock
included in such registration, as the case may be, may reasonably request
and as would be customary in such a transaction and (ii) letters dated such
date and the

8

date the offering is priced from the independent certified public
accountants of the Company, addressed to the underwriters, if any, and if
such Registrable Stock is not being sold through underwriters, then to the
Holders making such request (1) stating that they are independent certified
public accountants within the meaning of the Securities Act and that, in
the opinion of such accountants, the financial statements and other
financial data of the Company included in the registration statement or the
prospectus, or any amendment or supplement thereto, comply as to form in
all material respects with the applicable accounting requirements of the
Securities Act and (2) covering such other financial matters (including
information as to the period ending not more than five business days prior
to the date of such letters) as such underwriters or the Holders holding a
majority of the Registrable Stock included in such registration, as the
case may be, may reasonably request and as would be customary in such a
transaction;

(g)  enter into customary agreements (including, if the method of 
distribution is by means of an Underwritten Offering an underwriting 
agreement in customary form) and take such other actions as are reasonably
required in order to expedite or facilitate the disposition of the
Registrable Stock to be so included in the registration statement; 

(h)  As promptly as practicable upon the occurrence of any event 
contemplated by paragraph (e)(vi) above, prepare a supplement or
post-effective amendment to the registration statement or a supplement 
to the related prospectus or any documents incorporated or deemed to be 
incorporated therein by reference, or file any other required document 
so that, as thereafter delivered to the purchasers of the Registrable
Stock being sold thereunder, such prospectus will not contain an untrue 
statement of a material fact or omit to state a material fact required 
to be stated therein or necessary to make the statements therein, in 
light of the circumstances;

(i)  otherwise use its best efforts to comply with all applicable 
rules and regulations of the Commission; and

(j)  use its best efforts to list the Registrable Stock covered by 
such registration statement with any securities exchange on which the 
Common Stock of the  Company is then listed.

For purposes of Sections 5(a) and 5(b), the period of distribution of 
Registrable Stock in a firm commitment Underwritten Offering shall be deemed 
to extend until each underwriter has completed the distribution of all 
securities purchased by it, and the period of distribution of Registrable 
Stock in any other registration shall be deemed to extend until the earlier 
of the sale of all Registrable Stock covered thereby and three months after 
the effective date thereof.

Each Holder of Registrable Stock agrees that, upon receipt of 
written notice from the Company of the happening of any event of the kind 
described in Section 5(e)(ii), 5(e)(iii), 5(e)(v), 5(e)(vi) or 5(e)(vii) (an

9

"Occurrence Notice"), such Holder will forthwith discontinue disposition of 
such Registrable Stock covered by such registration statement or prospectus 
until such Holder's receipt of the copies of the supplemented or amended 
registration statement or prospectus contemplated by Section 5(h), or until 
it receives notice in writing (a "Clearance Notice") from the Company that 
the use of the applicable prospectus may be resumed, and has received copies 
of any additional or supplemental filings that are incorporated or deemed to 
be incorporated by reference in such prospectus, and, if so directed by the 
Company, such Holder will deliver to the Company (at the Company's expense) 
all copies, other than permanent file copies then in such Holder's 
possession, of the prospectus covering such Registrable Stock current at the 
time of receipt of such notice.  If the Company shall deliver an Occurrence 
Notice in connection with any registered sale of Registered Stock, the time 
periods mentioned in Section 2 hereof shall be extended by the number of days 
during such periods from and including the date of delivery of such 
Occurrence Notice to and including the date when each seller of Registrable 
Stock covered by such registration statement receives (x) the copies of the 
supplemented or amended prospectus contemplated by Section 5(h) hereof or (y) 
a Clearance Notice, as the case may be.

6.   Furnish Information.  It shall be a condition precedent to the 
obligations of the Company to take any action pursuant to this Agreement that 
the Holders shall furnish to the Company such information regarding 
themselves, the Registrable Stock held by them, and the intended method of 
disposition of such securities as the Company shall reasonably request and as 
shall be required in connection with the action to be taken by the Company.

7.   Expenses of Registration.  All expenses incurred in connection 
with each registration pursuant to Section 2 and Section 3 of this Agreement, 
excluding underwriters' discounts and commissions, but including without 
limitation all registration, filing and qualification fees, word processing, 
duplicating, printers' and accounting fees (including the expenses of any 
special audits or "cold comfort" letters required by or incident to such 
performance and compliance), fees of the National Association of Securities 
Dealers, Inc. or listing fees, messenger and delivery expenses, all fees and 
expenses of complying with state securities or blue sky laws, fees and 
disbursements of counsel for the Company, and the fees and disbursements of 
one counsel for the selling Holders (which counsel shall be selected by the 
Holders holding a majority in interest of the Registrable Stock being 
registered), shall be paid by the Company; PROVIDED, HOWEVER, that if a 
registration request pursuant to Section 2 of this Agreement is subsequently 
withdrawn at the request of the Holders of a number of shares of Registrable 
Stock such that the remaining Holders requesting registration would not have 
been able to request registration under the provisions of Section 2 of this 
Agreement, such withdrawing Holders shall bear such expenses unless such 
withdrawing Holders shall forfeit their right to one Demand Registration 
pursuant to Section 2 of this Agreement.  The Holders shall bear and pay the 
underwriting commissions and discounts applicable to securities offered for 
their account in connection with any registrations, filings and 
qualifications made pursuant to this Agreement.

10

8.   Underwriting Requirements.  In connection with any 
Underwritten Offering, the Company shall not be required under Section 3 to 
include shares of Registrable Stock in such Underwritten Offering unless the 
Holders of such Registrable Stock accept the terms of the underwriting of 
such offering that have been reasonably agreed upon between the Company and 
the underwriters selected by the Company.

9.   Rule 144 and Rule 144A Information.  With a view to making 
available the benefits of certain rules and regulations of the Commission 
which may at any time permit the sale of the Registrable Stock to the public 
without registration, 

(a) at all times after ninety (90) days after any registration 
statement covering a public offering of securities of the Company under
the Securities Act shall have become effective, the Company agrees to:

(i)   make and keep public information available, as those 
terms are understood and defined in Rule 144 under the Securities Act;

(ii)  use its best efforts to file with the Commission in a 
timely manner all reports and other documents required of the Company 
under the Securities Act and the Exchange Act; and

(iii) furnish to each Holder of Registrable Stock promptly upon 
request a written statement by the Company as to its compliance with the 
reporting requirements of such Rule 144 and of the Securities Act and the
Exchange Act, a copy of the most recent annual or quarterly report of the
Company, and such other reports and documents so filed by the Company as
such Holder may reasonably request in availing itself of any rule or
regulation of the Commission allowing such Holder to sell any Registrable
Stock without registration; and

(b) at all times during which the Company is neither subject to the 
reporting requirements of Section 13 or 15(d) of the Exchange Act, nor 
exempt from reporting pursuant to Rule 12g3-2(b) under the Exchange Act, it
will provide, upon the written request of any Holder of Registrable Stock
in written form (as promptly as practicable and in any event within 15
business days), to any prospective buyer of such stock designated by such
Holder, all information required by Rule 144A(d)(4)(i) of the General
Regulations promulgated by the Commission under the Securities Act.

10.  Indemnification.  In the event any Registrable Stock is 
included in a registration statement under this Agreement:

(a)  The Company shall indemnify and hold harmless each Holder and 
its directors and officers, each person who participates in the 
offering of such Registrable Stock, including underwriters (as 
defined in the Securities Act), and each person, if any, who 
controls such Holder or participating person within the meaning of the 
Securities Act, against any losses, claims, damages or liabilities, 
joint or several, as incurred, to  which they may become subject 
under the Securities Act or

11

otherwise, insofar as such losses, claims, damages or liabilities (or
proceedings in respect thereof) arise out of or are based on any untrue
or alleged untrue statement of  any material fact contained in such
registration statement on the effective date thereof (including any
prospectus filed under  Rule 424 under the Securities Act or any
amendments or supplements thereto) or arise out of or are based upon the
omission or alleged omission to state therein a material fact  required
to be stated therein or necessary to make the statements therein not
misleading, and shall reimburse each such Holder and its directors and
officers, such participating person or controlling person for any legal
or other expenses as reasonably incurred by them (but not in excess of
expenses incurred in respect of one counsel for all of them unless there
is an actual conflict of interest between any indemnified parties, which
indemnified parties may be represented by separate counsel) in connection
with investigating or defending any such loss, claim, damage, liability or
action; PROVIDED, HOWEVER, that the indemnity agreement contained in this
Section 10(a) shall not apply to amounts paid in settlement of any such
loss, claim, damage, liability or action if such settlement is effected
without the consent of the Company; PROVIDED, FURTHER, that the Company
shall not be liable to any Holder or its directors and officers,
participating person or controlling person in any such case for any such
loss, claim, damage, liability or action to the extent that it arises
out of or is based upon an untrue statement or alleged untrue statement
or omission or alleged omission in reliance upon and in conformity with 
written information furnished expressly for use in connection with such
registration by any such Holder, its directors and officers, participating
person or controlling person. Such indemnity shall remain in full force and
effect regardless of any investigation made by or on behalf of any such
Holder, its directors and officers, participating person or controlling
person, and shall survive the transfer of such securities by such Holder.

(b)  Each Holder requesting or joining in a registration shall, 
severally and not jointly, indemnify and hold harmless the Company, each 
of its directors and officers, each person, if any, who controls the 
Company within the meaning of the Securities Act, and any underwriter 
against any losses, claims, damages or liabilities, joint or several, to 
which the Company or any such director, officer, controlling person or 
underwriter may become subject, under the Securities Act or otherwise, 
insofar as such losses, claims, damages or liabilities (or proceedings 
in respect thereof) arise out of or are based upon any untrue statement 
or alleged untrue statement of any material fact contained in such 
registration statement on the effective date thereof (including any 
prospectus filed under Rule 424 under the Securities Act or any 
amendments or supplements thereto) or arise out of or are based upon the 
omission or alleged omission to state therein a material fact required 
to be stated therein or necessary to make the statements therein 
not misleading, in each case to the extent, but only to the extent, that 
such untrue statement or alleged untrue statement or omission or alleged 
omission was made in reliance upon and in conformity with information 
furnished by or on behalf of such Holder expressly for use in connection 
with such registration; and each such Holder shall reimburse any legal

12

or other expenses reasonably incurred by the Company or any such 
director, officer, controlling person or underwriter (but not in excess 
of expenses incurred in respect of one counsel for all of them unless 
there is an actual conflict of interest between any indemnified parties, 
which indemnified parties may be represented by separate counsel) 
in connection with investigating or defending any such loss, claim, 
damage, liability or action; PROVIDED, HOWEVER, that the indemnity 
agreement contained in this Section 10(b) shall not apply to amounts 
paid in settlement of any such loss, claim, damage, liability or action 
if such settlement is effected without the consent of such Holder, and 
PROVIDED, FURTHER, that the  liability of each Holder hereunder shall be 
limited to the proportion of any such loss, claim, damage, liability or 
expense which is equal to the proportion that the net proceeds from the 
sale of the Registrable Stock sold by such Holder under such 
registration statement bears to the total net proceeds from the sale of 
all securities sold thereunder, but not in any event to exceed the net 
proceeds received by such Holder from the sale of Registrable Stock 
covered by such registration statement.

(c)  Promptly after receipt by an indemnified party under this 
Section 10 of notice of the commencement of any action, such indemnified 
party shall, if a claim in respect thereof is to be made against any 
indemnifying party under this Section 10, notify the indemnifying party 
in writing of the commencement thereof and the indemnifying party shall 
have the right to participate in and assume the defense thereof with 
counsel selected by the indemnifying party and reasonably satisfactory 
to the indemnified party; PROVIDED, HOWEVER, that an indemnified party 
shall have the right to retain its own counsel, with all fees and 
expenses thereof to be paid by such indemnified party, and to be 
apprised of all progress in any proceeding the defense of which has been 
assumed by the indemnifying party.  The failure to notify an 
indemnifying party promptly of the commencement of any such action, if 
and to the extent prejudicial to its ability to defend such action, 
shall relieve such indemnifying party of any liability to the 
indemnified party under this Section, but the omission so to notify the 
indemnifying party will not relieve it of any liability that it may have 
to any indemnified party otherwise than under this Section.

(d)  To the extent any indemnification by an indemnifying party is 
prohibited or limited by law, the indemnifying party, in lieu of 
indemnifying such indemnified party, shall contribute to the amount paid 
or payable by such indemnified party as a result of such losses, claims, 
damages or liabilities in such proportion as is appropriate to reflect 
the relative fault of the indemnifying party and indemnified party in 
connection with the actions which resulted in such losses, claims, 
damages or liabilities, as well as any other relevant equitable 
considerations.  The relative fault of such indemnifying party and 
indemnified party shall be determined by reference to, among other 
things, whether any action in question, including any untrue or alleged 
untrue statement of material fact or omission or alleged omission to 
state a material fact, has been made by, or relates to information 
supplied by, such indemnifying party or indemnified party, and the

13

parties' relative intent, knowledge, access to information and 
opportunity to correct or prevent such action.  The amount paid or 
payable by a party as a result of the losses, claims, damages or 
liabilities referred to above shall be deemed to include any legal or 
other fees or expenses reasonably incurred by such party in connection 
with any investigation or proceeding.

The parties hereto agree that it would not be just and 
equitable if contribution pursuant to this Section 10(d) were determined 
by pro rata allocation or by any other method of allocation which does 
not take account of the equitable considerations referred to in the 
immediately preceding paragraph.  No person guilty of fraudulent 
misrepresentation (within the meaning of Section 11(f) of the Securities 
Act) shall be entitled to contribution from any person who was not 
guilty of such fraudulent misrepresentation.

11.  Transfer of Registration Rights.  The registration rights of 
any Holder under this Agreement with respect to any Registrable Stock may be 
transferred to (a) any transferee of such Registrable Stock who at any time 
acquires at least twenty per cent (20%) of such Holder's shares of 
Registrable Stock (adjusted for stock splits and stock consolidations after 
the effective date of this Agreement) or (b) any Affiliate of such Holder; 
PROVIDED, HOWEVER, that (i) the transferring Holder shall give the Company 
written notice at or prior to the time of such transfer stating the name and 
address of the transferee and identifying the securities with respect to 
which the rights under this Agreement are being transferred; (ii) such 
transferee shall agree in writing, in form and substance reasonably 
satisfactory to the Company, to be bound as a Holder by the provisions of 
this Agreement; and (iii) immediately following such transfer the further 
disposition of such securities by such transferee is restricted under the 
Securities Act.  Except as set forth in this Section 11, no transfer of 
Registrable Stock shall cause such Registrable Stock to lose such status.

12.  Securities Held by the Company or its Affiliates.  Whenever 
the consent or approval of Holders of a specified percentage of Registrable 
Stock is required hereunder, Registrable Stock held by the Company or its 
affiliates (as such term is defined in Rule 405 under the Securities Act) 
(other than the Trusts) shall not be counted in determining whether such 
consent or approval was given by the Holders of such required percentage.

13.  Successors and Assigns.  Subject to Section 11, the terms and 
conditions of this Agreement shall inure to the benefit of and be binding 
upon the respective successors and assigns of the parties hereto.  Except as 
expressly provided in this Agreement, nothing in this Agreement, express or 
implied, is intended to confer upon any person other than the parties hereto 
or their respective successors and assigns any rights, remedies, obligations, 
or liabilities under or by reason of this Agreement.

14.  Governing Law.  This Agreement shall be governed by and 
construed in accordance with the laws of the State of New York.

14

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

16.  Titles.  The titles of the Sections of this Agreement are used 
for convenience only and are not to be considered in construing or 
interpreting this Agreement.

17.  Notices.  Any notice required or permitted under this 
Agreement shall be in writing and shall be delivered in person or mailed by 
certified or registered mail, return receipt requested, or faxed to (a) the 
Company at the address set forth below its signature hereof, (b) to each 
Holder at the address set forth below its signature hereof or (c) to a Holder 
at the address therefor as set forth in the Company's records or, in any such 
case, at such other address or addresses as shall have been furnished in 
writing by such party to the others.  The giving of any notice required 
hereunder may be waived in writing by the parties hereto.  Every notice or 
other communication hereunder shall be deemed to have been duly given or 
served on the date on which personally delivered, or on the date actually 
received, if sent by mail or fax, with receipt acknowledged.

18.  Amendments and Waivers.  Any provision of this Agreement may 
be amended and the observance of any provision of this Agreement may be 
waived (either generally or in a particular instance and either retroactively 
or prospectively), only with the written consent of the Company and each 
Holder of Registrable Stock.  Any amendment or waiver effected in accordance 
with this Section 17 shall be binding upon each Holder of Registrable 
Securities, each future Holder and the Company.

19.  Severability.  If one or more provisions of this Agreement are 
held to be unenforceable under applicable law, such provisions shall be 
excluded from this Agreement and the balance of this Agreement shall be 
interpreted as if such provisions were so excluded and shall be enforceable 
in accordance with its terms.

20.  Entire Agreement.  All prior agreements of the parties 
concerning the subject matter of this Agreement are expressly superseded by 
this Agreement.  This Agreement contains the entire Agreement of the parties 
concerning the subject matter hereof.  Any oral representations or 
modifications of this Agreement shall be of no effect.

[Signature pages follow]

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

GUESS ?, INC.

By:   /s/ ROGER A. WILLIAMS
Name: Roger A. Williams

15

Title:   Executive Vice President and
Chief Financial Officer

1444 South Alameda Street
Los Angeles, California  90021

14,480,153 shares of Common Stock    MAURICE MARCIANO TRUST
(1995 RESTATEMENT)

By:   /s/ MAURICE MARCIANO
Maurice Marciano
Trustee

c/o Guess ?, Inc.
1444 South Alameda Street
Los Angeles, California  90021

11,633,149 shares of Common Stock    PAUL MARCIANO TRUST
DATED FEBRUARY 20, 1986

By:   /s/ PAUL MARCIANO
Paul Marciano
Trustee

c/o Guess ?, Inc.
1444 South Alameda Street
Los Angeles, California  90021

16

5,913,437 shares of Common Stock     ARMAND MARCIANO TRUST
DATED FEBRUARY 20, 1986

By:   /s/ ARMAND MARCIANO
Armand Marciano
Trustee

c/o Guess ?, Inc.
1444 South Alameda Street
Los Angeles, California  90021

1,728,276 shares of Common Stock     MAURICE MARCIANO 1996 GRANTOR
RETAINED ANNUITY TRUST

By:   /s/ PAUL MARCIANO
Paul Marciano
Co-Trustee

By:   /s/ GARY W. HAMPAR
Gary W. Hampar
Co-Trustee

c/o Guess ?, Inc.
1444 South Alameda Street
Los Angeles, California  90021

1,212,149 shares of Common Stock     PAUL MARCIANO 1996 GRANTOR
RETAINED ANNUITY TRUST

By:   /s/ MAURICE MARCIANO
Maurice Marciano
Co-Trustee

By:   /s/ JOSEPH H. SUGERMAN
Joseph H. Sugerman
Co-Trustee

c/o Guess ?, Inc.
1444 South Alameda Street
Los Angeles, California  90021

714,655 shares of Common Stock       ARMAND MARCIANO 1996 GRANTOR
RETAINED ANNUITY TRUST

By:   /s/ MAURICE MARCIANO
Maurice Marciano
Co-Trustee

By:   /s/ MARC E. PETAS

17

Marc E. Petas
Co-Trustee

c/o Guess ?, Inc.
1444 South Alameda Street
Los Angeles, California  90021

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18

*10.29.   Indemnification Agreement among the Registrant and certain 
stockholders of the Registrant.
- -------------------------------------------------------------------------------
INDEMNIFICATION AGREEMENT

INDEMNIFICATION AGREEMENT (the "Agreement"), dated as of August 7, 
1996, among the following parties (the "Parties"):  Guess ?, Inc., a Delaware 
corporation (the "Company"), the stockholders of the Company indicated on the 
signature pages hereto (such stockholders being referred to herein, 
collectively, as the "Principal Stockholders").

R E C I T A L S

WHEREAS, the Parties, together with Merrill Lynch, Pierce, Fenner & 
Smith Incorporated and Morgan Stanley & Co. Incorporated, as representatives 
of the U.S. Underwriters named therein (the "U.S. Underwriters"), are parties 
to a U.S. Purchase Agreement of even date herewith (the "U.S. Purchase 
Agreement") and, together with Merrill Lynch International and Morgan Stanley 
& Co. International Limited, as representatives of the Managers named therein 
(the "Managers"), are parties to an International Purchase Agreement of even 
date herewith (the "International Purchase Agreement," and, together with the 
U.S. Purchase Agreement, being referred to herein, collectively, as the 
"Purchase Agreements");

WHEREAS, pursuant to the terms of the Purchase Agreements, the 
Principal Stockholders may be required to indemnify the U.S. Underwriters or 
the Managers (as the case may be) with respect to, or contribute to, certain 
liabilities arising out of the offering of the common stock of the Company, 
par value $.01 per share, contemplated by the Purchase Agreements;

WHEREAS, the Company wishes to indemnify and advance expenses to the 
Principal Stockholders in connection with any proceedings and liabilities 
arising from the obligation of the Principal Stockholders under the Purchase 
Agreements in the manner provided for herein.

NOW, THEREFORE, in consideration of the foregoing recitals, the 
agreements contained herein and other good and valuable consideration, the 
sufficiency and receipt of which are hereby acknowledged, the Parties hereby 
agree as follows:

Section 1.    Indemnification and Advancement of Expenses.  In respect 
of any proceeding by any Indemnified Party (as defined in the U.S. Purchase 
Agreement or the International Purchase Agreement, as the case may be) 
against a Principal Stockholder in respect of (i) any breach of a 
representation or warranty contained in Section 1 of each of the Purchase 
Agreements and (ii) indemnification under Section 6 or contribution under 
Section 7 of each of the Purchase Agreements:

1

(a) Subject to the provisions of paragraph (b) of this Section 1,

(i)  the Company agrees to advance the reasonable expenses 
incurred by such Principal Stockholder in respect of such proceeding 
including those incurred by such Principal Stockholder for separate 
counsel and to reimburse any such reasonable expenses not advanced by 
the Company in the first instance;

(ii) the Company agrees to indemnify such Principal Stockholder 
in respect of any liability incurred in or as a result of such 
proceeding; and

(iii) the authorization by the Company's stockholders of the 
agreement to indemnify contained herein and the execution of this 
Agreement constitute a conclusive determination that indemnification is 
due to such Principal Stockholder in such circumstances and the specific 
stockholder authorization for such indemnification.

(b) The Company shall not indemnify such Principal Stockholder from or 
on account of:

(i) such stockholder's acts or omissions finally adjudged to 
be intentional misconduct or a knowing violation of law;

(ii) such stockholder's conduct finally adjudged to be in 
violation of Section 174 of the General Corporation Law of the State of 
Delaware; or

(iii) any transaction with respect to which it was finally 
adjudged that such stockholder personally received a benefit in money, 
property, or services to which such stockholder was not legally entitled.

Section 2.    Successors and Assigns.  This Agreement and all 
obligations, rights and remedies of the Parties hereunder shall be binding 
upon and inure to the benefit of their respective legal representatives, 
successors and assigns.

Section 3.    Entire Agreement.  Each of the Parties acknowledge that 
there are no other agreements or representations, either oral or written, 
express or implied, not embodied or referenced in this Agreement, which 
represents a complete integration of all prior and contemporaneous agreements 
and understandings of the parties hereto with respect to the subject matter 
hereof.

Section 4.    Governing Law.  This agreement shall be construed in 
accordance with the laws of the State of New York, without regard to the 
choice of law rules thereof, and the obligations, rights and remedies of the 
parties hereunder shall be determined in accordance with such laws.

2

Section 5.    Counterparts.  This Agreement may be executed in one or 
more counterparts, each of which shall be deemed to be an original, and all 
of which together shall constitute one and the same instrument.

[Signature pages follow]

3

IN WITNESS WHEREOF, the Parties hereto have executed this Agreement as 
of the date first above written.

GUESS ?, INC.

By:   /s/ ROGER A. WILLIAMS
Name:  Roger A. Williams
Title:   Executive Vice President and Chief
Financial Officer

MAURICE MARCIANO TRUST
(1995 RESTATEMENT)

By:   /s/ MAURICE MARCIANO
Maurice Marciano
Trustee

PAUL MARCIANO TRUST
UNDER TRUST DATED FEBRUARY 20, 1986

By:   /s/ PAUL MARCIANO
Paul Marciano
Trustee

ARMAND MARCIANO TRUST
UNDER TRUST DATED FEBRUARY 20, 1986

By:   /s/ ARMAND MARCIANO
Armand Marciano
Trustee

4

10.30. Indemnification Agreement between the Registrant and certain executives
and directors.
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INDEMNIFICATION AGREEMENT

INDEMNIFICATION AGREEMENT, dated as of March 3, 1997 (this
"Agreement"), by and between Guess ?, Inc., a Delaware corporation (the
"Company"), and Aldo Papone ("Indemnitee").

W I T N E S S E T H:

WHEREAS, the Company desires to attract and retain the services of
able persons to serve as officers and directors of the Company and to indemnify
certain of its officers, and its directors, except as otherwise provided in
Section 3 of this Agreement, to the fullest extent of the law; 

WHEREAS, the Company and Indemnitee recognize the increasing
difficulty in obtaining officers' and directors' liability insurance, the
significant increase in the cost of such insurance and the general reduction in
the coverage of such insurance; 

WHEREAS, the Company and Indemnitee further recognize the substantial
increase in corporate litigation in general, subjecting officers and directors
to expensive litigation risks at the same time that liability insurance has been
severely limited; and

WHEREAS, neither Indemnitee nor the Company regards statutory
indemnification protection as adequate given the present circumstances;

NOW, THEREFORE, the Company and Indemnitee hereby agree as follows:

1.   (a)  Third-Party Proceedings.  The Company shall indemnify Indemnitee
to the full extent of Delaware law, except as otherwise provided in Section 3 of
this Agreement, if Indemnitee is or was a party or is threatened to be made a
party to any threatened, pending or completed suit, action, proceeding,
arbitration or alternative dispute resolution mechanism, investigation,
administrative hearing, whether civil, criminal, administrative or 
investigative (any such suit, action, proceeding, arbitration or alternative
dispute resolution mechanism, investigation, administrative hearing being
referred to herein as a "Proceeding") (other than an action by or in the right
of the Company) by reason of the fact that Indemnitee is or was a director,
officer, employee or agent of the Company or any subsidiary of the Company, by
reason of any action or inaction on the part of Indemnitee while an officer or
director of the Company or any subsidiary of the Company or by reason of the
fact that Indemnitee is or was serving at the request of the Company as a
director, officer, employee or agent of another Person (as defined in Section
6(d)), against expenses (including attorneys' fees), judgments, fines and
amounts paid in settlement (if such settlement is approved in advance by the
Company, which approval shall not be unreasonably withheld) actually and
reasonably incurred by Indemnitee in connection with such action or proceeding
if Indemnitee acted in good faith and in a manner

1

Indemnitee reasonably believed to be in or not opposed to the best interests 
of the Company and its stockholders, and, with respect to any criminal action 
or proceeding, had no reasonable cause to believe his conduct was unlawful. 

(b)  Proceedings By or in the Right of the Company.  The Company 
shall indemnify Indemnitee to the full extent of Delaware law, except as 
otherwise provided in Section 3 of this Agreement, if Indemnitee is or was a 
party or is threatened to be made a party to any threatened, pending or 
completed Proceeding by or in the right of the Company or any subsidiary of 
the Company to procure a judgment in its favor by reason of the fact that 
Indemnitee is or was a director, officer, employee or agent of the Company or 
any subsidiary of the Company, by reason of any action or inaction on the 
part of Indemnitee while an officer or director of the Company or any 
subsidiary of the Company or by reason of the fact that Indemnitee is or was 
serving at the request of the Company as a director, officer, employee or 
agent of another Person, against expenses (including attorneys' fees) and, to 
the fullest extent permitted by Delaware law, amounts paid in settlement (if 
such settlement is approved by the Company, which approval shall not be 
unreasonably withheld), in each case to the extent actually and reasonably 
incurred by Indemnitee in connection with the defense or settlement of such 
Proceeding if Indemnitee acted in good faith and in a manner Indemnitee 
reasonably believed to be in or not opposed to the best interests of the 
Company and its stockholders, except that no indemnification shall be made in 
respect of any claim, issue or matter as to which Indemnitee shall have been 
adjudged to be liable to the Company and its stockholders in the performance 
of Indemnitee's duty to the Company and its stockholders unless and only to 
the extent that the Court of Chancery of the State of Delaware, or the court 
in which such action or proceeding shall have been brought or is pending, 
shall determine that in view of all the circumstances of the case, Indemnitee 
is fairly and reasonably entitled to indemnity for expenses, and then only to 
the extent that the court shall determine.

(c)  Selection of Counsel.  In the event the Company shall be
obligated under Section 1(a) or (b) hereof to pay the expenses of any Proceeding
against Indemnitee, the Company shall be entitled to assume the defense of such
Proceeding, with counsel approved by Indemnitee (who shall not unreasonably
withhold such approval), upon the delivery to Indemnitee of written notice of
its election so to do.  After delivery of such notice, approval of such counsel
by Indemnitee and the retention of such counsel by the Company, the Company will
not be liable to Indemnitee under this Agreement for any fees of counsel
subsequently incurred by Indemnitee with respect to the same Proceeding,
provided, that, (i) Indemnitee shall have the right to employ his counsel in any
such proceeding at Indemnitee's expense; and (ii) if (A) the employment of
counsel by Indemnitee has been previously authorized in writing by the Company,
(B) Indemnitee shall have reasonably concluded that there may be a conflict of
interest between the Company and Indemnitee in the conduct of any such defense
and shall have notified the Company in writing thereof, (C) Indemnitee shall
have reasonably concluded that there may be a conflict of interest between
Indemnitee and other indemnitees of the Company being represented by counsel
retained by the Company in the same proceeding and shall have notified the
Company in writing thereof or (D) the Company shall not, in fact, have employed
counsel to assume the defense of such proceeding, then the fees and expenses of
Indemnitee's counsel shall be at the expense of the Company.

2

2.   Contribution.  If, when Indemnitee has met the applicable standard 
of conduct, the indemnification provisions set forth in Section 1 should, 
under applicable law, be to any extent unenforceable, then the Company agrees 
that it shall be treated as though it is or was a party to the threatened, 
pending or completed Proceeding in which Indemnitee is or was involved and 
that the Company shall contribute to the amounts paid or payable by 
Indemnitee as a result of such expenses (including attorneys' fees), 
judgments in third-party Proceedings, fines and amounts paid in settlement 
actually and reasonably incurred by Indemnitee in such proportion as is 
appropriate to reflect the relative fault of the Company on the one hand and 
Indemnitee on the other in connection with such action or inaction, or 
alleged action or inaction, as well as any other relevant equitable 
considerations.

For purposes of this Section 2, the relative benefit to the Company 
shall be deemed to be the benefits accruing to it and to all of its 
directors, officers, employees and agents (other than Indemnitee), as a group 
and treated as one entity, and the relative benefit to Indemnitee shall be 
deemed to be an amount not greater than Indemnitee's yearly base salary or 
director's compensation, as the case may be, from the Company during the 
first year in which the action or inaction, or alleged action or inaction, 
forming the basis for the threatened, pending or contemplated Proceeding was 
alleged to have occurred plus the amount, if any, of monetary benefit and 
other consideration received by Indemnitee in the transaction(s) that gave 
rise to such Proceeding. The relative fault shall be determined by reference 
to, among other things, the fault of the Company and all of its directors, 
officers, employees and agents (other than Indemnitee), as a group and 
treated as one entity, and such group's relative intent, knowledge, access to 
information and opportunity to have altered or prevented the action or 
inaction, or alleged action or inaction, forming the basis for the 
threatened, pending or contemplated Proceeding, and Indemnitee's relative 
fault in light of such factors on the other hand.

3.   Limitations to Rights of Indemnification and Advancement of 
Expenses. Except as otherwise provided in Sections 9 and 12 of this 
Agreement, Indemnitee shall not be entitled to indemnification or advancement 
of expenses under this Agreement:

(a)  with respect to any Proceeding initiated, brought or made by
Indemnitee (i) against the Company, unless a Change in Control (as defined
in Section 5(b) of this Agreement) shall have occurred, or (ii) against any
person other than the Company, unless approved in advance by the board of
directors of the Company (the "Board");

(b)  on account of any suit in which it shall be determined by final
judgment by a court having jurisdiction in the matter that Indemnitee
intentionally caused or intentionally contributed to the injury complained
of with the knowledge that such injury would occur;

(c)  on account of Indemnitee's conduct which shall be determined by
final judgment by a court having jurisdiction in the matter that Indemnitee
was knowingly fraudulent, deliberately dishonest, engaged in willful
misconduct or that Indemnitee received an improper personal benefit;

3

(d)  for any expenses incurred by Indemnitee with respect to any
proceeding instituted by Indemnitee to enforce or interpret this Agreement,
to the extent that a court of competent jurisdiction determines that any of
the material assertions made by Indemnitee in such proceeding was not made
in good faith or was frivolous;

(e)  for expenses or liabilities of any type whatsoever (including,
but not limited to, judgments, fines, ERISA excise taxes or penalties and
amounts paid in settlement) which have been paid directly to Indemnitee by
an insurance carrier under a policy of officers' and directors' liability
insurance maintained by the Company;

(f)  for expenses or the payment of profits arising from the purchase
and sale by Indemnitee of securities in violation of Section 16(b) of the
Securities Exchange Act of 1934, as amended (the "Exchange Act"), or any
similar successor statute; or

(g)  if it shall be determined by final judgment by a court having
jurisdiction in the matter that such indemnification is not lawful.

4.   Procedure for Determination of Entitlement to Indemnification.  (a) 
To obtain indemnification under this Agreement, Indemnitee shall submit to 
the Company a written request, including such documentation and information 
as is reasonably available to Indemnitee and is reasonably necessary to 
determine whether and to what extent Indemnitee is entitled to 
indemnification.  The Secretary of the Company shall, promptly upon receipt 
of such a request for indemnification, advise the Board in writing that 
Indemnitee has requested indemnification.

(b)  Upon written request by Indemnitee for indemnification, a
determination with respect to Indemnitee's entitlement thereto shall be made in
the specific case as follows:

(i)  if a Change in Control (as defined in Section 5(b) of this
Agreement) shall have occurred, by Independent Counsel (as defined in
Section 5(a) of this Agreement) in a written opinion to the Board, a copy
of which shall be delivered to Indemnitee (unless Indemnitee shall request
that such determination be made by the Board or the Stockholders, in which
case the determination shall be made in the manner provided below in clause
(ii)); or

(ii) if a Change in Control shall not have occurred, (A) by the
Board by a majority vote of a quorum consisting of disinterested directors,
(B) if a quorum of the Board consisting of disinterested directors is not
obtainable or, even if obtainable, such quorum of disinterested directors
so directs, by Independent Counsel in a written opinion to the Board, a
copy of which shall be delivered to Indemnitee or (C) by the stockholders
of the Company. 

(c)  If it is so determined that Indemnitee is entitled to
indemnification, payment to Indemnitee shall be made within ten (10) days after
such determination. Indemnitee shall cooperate with the person, persons

4

or entity making such determination with respect to Indemnitee's entitlement 
to indemnification, including providing to such person, persons or entity 
upon reasonable advance request any documentation or information that is not 
privileged or otherwise protected from disclosure and that is reasonably 
available to Indemnitee and reasonably necessary to such determination.  Any 
costs or expenses (including attorneys' fees and disbursements) incurred by 
Indemnitee in so cooperating shall be borne by the Company (irrespective of 
the determination as to Indemnitee's entitlement to indemnification) and the 
Company hereby indemnifies and agrees to hold Indemnitee harmless therefrom.

(d)  If a Change in Control shall not have occurred, the 
Independent Counsel shall be selected by the Board, and the Company shall 
give written notice to Indemnitee advising him of the identity of the 
Independent Counsel so selected.  If a Change in Control shall have occurred, 
the Independent Counsel shall be selected by Indemnitee (unless Indemnitee 
shall request that such selection be made by the Board), and Indemnitee shall 
give written notice to the Company advising it of the identity of the 
Independent Counsel so selected.  In either event, Indemnitee or the Company, 
as the case may be, may, within 7 days after such written notice of selection 
shall have been given, deliver to the Company or to Indemnitee, as the case 
may be, a written objection to such selection.  Such objection may be 
asserted only on the ground that the Independent Counsel so selected does not 
meet the requirements of "Independent Counsel" as defined in Section 5(a) of 
this Agreement, and the objection shall set forth with particularity the 
factual basis of such assertion.  If such written objection is made, the 
Independent Counsel so selected may not serve as Independent Counsel unless 
and until a court has determined that such objection is without merit.  If, 
twenty (20) days after submission by Indemnitee of a written request for 
indemnification pursuant to Section 4 hereof, no Independent Counsel shall 
have been selected or if selected, shall have been objected to, in accordance 
with this Section 4(d), either the Company or Indemnitee may petition the 
Court of Chancery of the State of Delaware or other court of competent 
jurisdiction for resolution of any objection which shall have been made by 
the Company or Indemnitee to the other's selection of Independent Counsel 
and/or for the appointment as Independent Counsel of a person selected by the 
court or by such other person as the court shall designate.  The person with 
respect to whom an objection is favorably resolved or the person so appointed 
shall act as Independent Counsel under Section 4 hereof.  The Company shall 
pay any and all reasonable fees and expenses incident to the procedures of 
this Section 4, including reasonable fees and expenses incurred by such 
Independent Counsel regardless of the manner in which such Independent 
Counsel was selected or appointed.  Upon the due commencement of any judicial 
proceeding or arbitration pursuant to Section 12 of this Agreement, 
Independent Counsel shall be discharged and relieved of any further 
responsibility in such capacity (subject to the applicable standards of 
professional conduct then prevailing).

5.   (a)  "Independent Counsel" means a law firm or a member of a law firm
that neither at the time in question, nor in the five years immediately
preceding such time has been retained to represent (i) the Company or Indemnitee
in any matter material to either such party or (ii) any other party to the
proceeding giving rise to a claim for indemnification under this Agreement. 
Notwithstanding the foregoing, the term "Independent Counsel" shall not include
any person who, under the applicable standards of professional conduct then
prevailing under the law of the State of Delaware,

5

would be precluded from representing either the Company or Indemnitee in an 
action to determine Indemnitee's rights under this Agreement.

(b)  "Change in Control" means the occurrence of any of the following
events:

(i)  the Company is merged, consolidated or reorganized into or
with another corporation or other  entity, and as a result of such merger,
consolidation or reorganization less than a majority of the combined voting
power of the then-outstanding securities of such corporation or entity
immediately after such transaction are held in the aggregate by the holders
of voting stock immediately prior to such transaction;

(ii) the Company sells or otherwise transfers all or
substantially all of its assets to another corporation or other entity in
which, after giving effect to such sale or transfer, the holders of voting
stock of the Company immediately prior to such sale or transfer hold in the
aggregate less than a majority of the combined voting power of the
then-outstanding securities of such other corporation;

(iii)     there is a report filed on Schedule 13D or Schedule
14D-l (or any successor schedule, form or report or item therein), each as
promulgated pursuant to the Exchange Act, disclosing that any person or
entity, other than any shareholder of the Company (and its affiliates)
owning 10% or more of the Company's voting stock on the date hereof, has
become the beneficial owner (as the term "beneficial owner" is defined
under Rule 13d-3 or any successor rule or regulation promulgated under the
Exchange Act) of securities representing 50% or more of the combined voting
power of the Company's voting stock; or

(iv) if during any period of two consecutive years individuals
who at the beginning of any such period constitute the Board cease for any
reason to constitute at least a majority thereof; provided, however, that
for purposes of this clause (iv) each director of the Company who is first
elected, or first nominated for election by the Company's stockholders, by
a vote of at least majority of the directors of the Company (or a committee
of the Board) then still in office who were directors of the Company at the
beginning of any such period shall be deemed to have been a director of the
Company at the beginning of such period.

Notwithstanding the provisions of clause (iii) above, unless otherwise 
determined in the specific case by majority vote of the Board, a "Change in 
Control" shall not be deemed to have occurred solely because the Company, any 
subsidiary or any employee stock ownership plan or any other employee benefit 
plan of the Company or any subsidiary either files or becomes obligated to 
file a report or a proxy statement under or in response to Schedule 13D, 
Schedule 14D-l or Schedule 14A (or any successor schedule, form or report or 
item therein) under the Exchange Act disclosing beneficial ownership by it of 
shares of voting stock of the Company, whether in excess of 50% or otherwise, 
or because the Company reports that a change in control of the Company has 
occurred or will occur in the future by reason of such beneficial ownership.

6

6.   Presumptions and Effect of Certain Proceedings.  (a)  In making a 
determination with respect to entitlement to indemnification hereunder, the 
person, persons or entity making such determination shall presume that 
Indemnitee is entitled to indemnification under this Agreement if Indemnitee 
has submitted a request for indemnification in accordance with Section 4 of 
this Agreement, and the Company shall bear the burden of proof to rebut that 
presumption in connection with the making by any person, persons or entity of 
any determination contrary to that presumption.

(b)  The termination of any Proceeding or of any claim, issue or 
matter therein by judgment, order, settlement or conviction, or upon a plea 
of nolo contendere or its equivalent, shall not (except as otherwise 
expressly provided in this Agreement) of itself adversely affect the right of 
Indemnitee to indemnification or create a presumption that Indemnitee did not 
act in good faith and in a manner which he reasonably believed to be in or 
not opposed to the best interests of the Company or, with respect to any 
criminal action or proceeding, that Indemnitee had reasonable cause to 
believe that his conduct was unlawful.

(c)  Indemnitee's conduct with respect to an employee benefit plan for
a purpose he reasonably believed to be in the interests of the participants in
and beneficiaries of the plan shall be deemed to be conduct that Indemnitee
reasonably believed to be in or not opposed to the best interests of the
Company.

(d)  For purposes of any determination hereunder, Indemnitee shall 
be deemed to have acted in good faith and in a manner he reasonably believed 
to be in or not opposed to the best interests of the Company, or, with 
respect to any criminal action or proceeding, to have had no reasonable cause 
to believe his conduct was unlawful, if his action was based on (i) the 
records or books of account of the Company or another Person, including 
financial statements, (ii) information supplied to him by the officers of the 
Company or another Person in the course of their duties, (iii) the advice of 
legal counsel for the Company or another Person, or (iv) information or 
records given or reports made to the Company or another Person by an 
independent certified public accountant or by an appraiser or other expert 
selected with reasonable care by the Company or another Person.  The term 
"another Person" as used in this Agreement shall mean any other corporation 
or any partnership, joint venture, trust, employee benefit plan or other 
enterprise of which Indemnitee is or was serving at the request of the 
Company as an officer, director, partner, trustee, employee or agent.  The 
provisions of this Section 6(d) shall not be deemed to limit in any way the 
other circumstances in which Indemnitee may be deemed to have met the 
applicable standard of conduct set forth in Section 1.

7.   Success on Merits or Otherwise.  Notwithstanding any other provision
of this Agreement, to the extent that Indemnitee has been successful on the
merits or otherwise in defense of any action, suit or proceeding described in
Section 1 hereof, or in defense of any claim, issue or matter therein, he shall
be indemnified against expenses (including attorneys' fees) actually and
reasonably incurred by him in connection with the investigation, defense,
settlement or appeal thereof.  For purposes of this Section 7, the term
"successful on the merits or otherwise" shall include, but not be limited to,
(i) any termination, withdrawal or dismissal (with or without prejudice)

7

of any Proceeding against Indemnitee without any express finding of liability 
or guilt against him, (ii) the expiration of 180 days after the making of any 
claim or threat of a Proceeding without the institution of the same and 
without any promise of payment or payment made to induce a settlement or 
(iii) the settlement of any Proceeding under Section 1, pursuant to which 
Indemnitee pays less than $25,000.

8.   Partial Indemnification.  If Indemnitee is entitled under any
provision of this Agreement to indemnification by the Company for some or a
portion of the claims, damages, expenses (including attorneys' fees), judgments,
fines or amounts paid in settlement by Indemnitee in connection with the
investigation, defense, settlement or appeal of any Proceeding specified in
Section 1, but not, however, for the total amount thereof, the Company shall
nevertheless indemnify Indemnitee for the portion thereof to which Indemnitee is
entitled.  The party or parties making the determination shall determine the
portion (if less than all) of such claims, damages, expenses (including
attorneys' fees), judgments, fines or amounts paid in settlement for which
Indemnitee is entitled to indemnification under this Agreement.

9.   Costs.  All the costs of making the determination required by Section
4 hereof shall be borne solely by the Company, including, but not limited to,
the costs of legal counsel, proxy solicitations and judicial determinations. 
The Company shall also be solely responsible for paying (i) all reasonable
expenses incurred by Indemnitee to enforce this Agreement, including, but not
limited to, the costs incurred by Indemnitee to obtain court-ordered
indemnification pursuant to Section 12, regardless of the outcome of any such
application or proceeding, and (ii) all costs of defending any Proceedings
challenging payments to Indemnitee under this Agreement.

10.  Advance of Expenses.  The Company shall advance all expenses incurred
by or on behalf of Indemnitee in connection with any Proceeding within twenty
(20) days after the receipt by the Company of a statement or statements from
Indemnitee requesting such advance or advances from time to time, whether prior
to or after final disposition of such Proceeding.  Such statement or statements
shall reasonably evidence the expenses incurred by Indemnitee and shall include
or be preceded or accompanied by an undertaking by or on behalf of Indemnitee to
repay any expenses advanced if it shall ultimately be determined that Indemnitee
is not entitled to be indemnified against such expenses, which undertaking shall
be accepted by or on behalf of the Company without reference to the financial
ability of Indemnitee to make repayment, and without the pledging of any
security by Indemnitee.  Notwithstanding Indemnitee's above-described rights to
advancement of expenses, no advance of expenses shall be made in the
circumstances proscribed by Section 3(a).  Notwithstanding any other provision
of this Agreement, if Indemnitee requests an adjudication or an award in
arbitration pursuant to the provisions of Section 12 below in order to establish
an entitlement to indemnification or advancement of expenses, any determination
made pursuant to Section 4 of this Agreement that Indemnitee is not entitled to
indemnification or to receive advancement of expenses shall not be binding and
Indemnitee shall not be required to reimburse the Company for any expense
advance unless and until a final judicial determination or award in arbitration
is made with respect thereto as to which all rights of appeal therefrom have
been exhausted or lapsed.

8

11.  Indemnification for Expenses of a Witness.  Notwithstanding any 
other provision of this Agreement, to the extent that Indemnitee is, by 
reason of any event or occurrence related to the fact that Indemnitee is or 
was a director, officer, employee or agent of the Company or any subsidiary 
of the Company, or is or was serving at the request of the Company as a 
director, officer, employee or agent of another Person, a witness in any 
Proceeding, whether instituted by the Company or any other party, and to 
which Indemnitee is not a party, he shall be indemnified against all expenses 
actually and reasonably incurred by him or on his behalf in connection 
therewith.

12.  Enforcement.  (a)  If a claim for indemnification or advancement of 
expenses made to the Company pursuant to Section 3 or 10 is not timely paid 
in full to Indemnitee by the Company as required by Section 3 or 10, 
respectively, Indemnitee shall be entitled to seek judicial enforcement of 
the Company's obligations to make such payment in an appropriate court of the 
state of Delaware or any other court of competent jurisdiction.  In the event 
that a determination is made that Indemnitee is not entitled to 
indemnification or advancement of expenses hereunder, (i) Indemnitee may seek 
a de novo adjudication of Indemnitee's entitlement to such indemnification or 
advancement either, at Indemnitee's sole option, in (A) an appropriate court 
of the state of Delaware or any other court of competent jurisdiction or (B) 
an arbitration to be conducted by a single arbitrator pursuant to the rules 
of the American Arbitration Association; (ii) any such judicial proceeding or 
arbitration shall not in any way be prejudiced by, and Indemnitee shall not 
be prejudiced in any way by such adverse determination; and (iii) in any such 
judicial proceeding or arbitration the Company shall have the burden of 
proving that Indemnitee is not entitled to indemnification or advancement of 
expenses under this Agreement. Indemnitee shall commence a proceeding seeking 
an adjudication of Indemnitee's right to indemnification or advancement of 
expenses pursuant to the preceding sentence within one year following the 
date on which Indemnitee first has the right to commence such proceeding 
pursuant to this Section 12(a); provided, however, that the foregoing time 
limitation shall not apply in respect of a proceeding brought by Indemnitee 
to enforce Indemnitee's rights under Section 7 hereof.

(b)  The Company shall be precluded from asserting in any judicial
proceeding or arbitration commenced pursuant to the provisions of Section 12(a)
that the procedures and presumptions of this Agreement are not valid, binding
and enforceable and shall stipulate in any such court or before any such
arbitrator that the Company is bound by all the provisions of this Agreement.

(c)  In any action brought under this Section 12, it shall be a
defense to a claim for indemnification (other than an action brought to enforce
a claim for advancement of expenses) that Indemnitee has not met the standards
of conduct which make it permissible under Delaware law for the Company to
indemnify Indemnitee for the amount claimed.  The burden of proving such defense
shall be on the Company.

(d)  It is the intent of the Company that Indemnitee not be 
required to incur the expenses associated with the enforcement of his rights 
under this Agreement by litigation or other legal action because the cost and 
expense thereof would substantially detract from the benefits intended to be

9

extended to Indemnitee hereunder.  Accordingly, if it should appear to 
Indemnitee that the Company has failed to comply with any of its obligations 
under this Agreement or in the event that the Company or any other person 
takes any action to declare this Agreement void or unenforceable, or 
institutes any Proceeding designed (or having the effect of being designed) 
to deny, or to recover from, Indemnitee the benefits intended to be provided 
to Indemnitee hereunder, the Company irrevocably authorizes Indemnitee from 
time to time to retain counsel of his choice, at the expense of the Company 
as hereafter provided, to represent Indemnitee in connection with the 
initiation or defense of any litigation or other legal action, whether by or 
against the Company or any director, officer, stockholder or other person 
affiliated with the Company, in any jurisdiction. Regardless of the outcome 
thereof, but subject to Indemnitee having acted in good faith, the Company 
shall pay and be solely responsible for any and all costs, charges and 
expenses, including attorneys' and others' fees and expenses, incurred by 
Indemnitee (i) as a result of the Company's failure to perform this Agreement 
or any provision thereof or (ii) as a result of the Company's or any person's 
contesting the validity or enforceability of this Agreement or any provision 
thereof as aforesaid.

13.  Liability Insurance and Funding.  To the extent the Company 
maintains an insurance policy or policies providing directors' and officers' 
liability insurance, Indemnitee shall be covered by such policy or policies, 
in accordance with its or their terms, to the maximum extent of the coverage 
available for any director or officer of the Company.  If, at the time of the 
receipt of a notice of a claim pursuant to Section 4 hereof, the Company has 
directors' and officers' liability insurance in effect, the Company shall 
give prompt notice of the commencement of such proceeding to the insurers in 
accordance with the procedures set forth in the respective policies.  The 
Company shall thereafter take all necessary or desirable action to cause such 
insurers to pay, on behalf of Indemnitee, all amounts payable as a result of 
such proceeding in accordance with the terms of such policies.  The Company 
shall have no obligation to obtain or maintain such insurance.  

14.  Merger or Consolidation.  In the event that the Company shall be a 
constituent corporation in a merger, consolidation or other reorganization, 
the Company shall require as a condition thereto, (a) if it shall not be the 
surviving, resulting or other corporation therein, the surviving, resulting 
or acquiring corporation to agree to indemnify Indemnitee to the full extent 
provided herein, and (b) whether or not the Company is the surviving, 
resulting or acquiring corporation therein, Indemnitee shall also stand in 
the same position under this Agreement with respect to the surviving, 
resulting or acquiring corporation as Indemnitee would have with respect to 
the Company if the Company's separate existence had continued.

15.  Nondisclosure of Payments.  Except as expressly required by federal 
securities laws or other applicable laws, Indemnitee shall not disclose any 
payments made under this Agreement, whether indemnification or advancement of 
expenses, unless prior written approval of the Company is obtained.  Any 
payments to Indemnitee that must be disclosed shall, unless otherwise 
required by law, be described only in the Company proxy or information 
statements relating to special and/or annual meetings of the Company's 
stockholders, and the Company shall afford Indemnitee the reasonable

10

opportunity to review all such disclosures and, if requested, to explain in 
such statement any mitigating circumstances regarding the events reported.

16.  Nonexclusivity and Severability; Subrogation.  (a) The right to 
indemnification and advancement of expenses provided by this Agreement shall 
not be exclusive of any other rights to which Indemnitee may be entitled 
under the Restated Certificate of Incorporation or Bylaws of the Company, 
Delaware law, any other statute, insurance policy, agreement, vote of 
stockholders of the Company or of the Board (or otherwise), both as to 
actions in his official capacity and as to actions in another capacity while 
holding such office, and shall continue after Indemnitee has ceased to be a 
director or officer of the Company and shall inure to the benefit of his 
heirs, executors and administrators; provided, however, that to the extent 
Indemnitee otherwise would have any greater right to indemnification and/or 
advancement of expenses under any provision of the Restated Certificate of 
Incorporation or the Bylaws of the Company, Indemnitee shall be deemed to 
have such greater right pursuant to this Agreement; and, provided, further, 
that to the extent that any change is made to the Delaware law (whether by 
legislative action or judicial decision), the Restated Certificate of 
Incorporation and/or the Bylaws that permits any greater right to 
indemnification and/or advancement of expenses than that provided under this 
Agreement as of the date hereof, Indemnitee shall be deemed to have such 
greater right pursuant to this Agreement.  No amendment, alteration, or 
repeal of this Agreement or of any provision hereof shall limit or restrict 
any right of Indemnitee under this Agreement in respect of any action taken 
or omitted by such Indemnitee prior to such amendment, alteration, or repeal.

(b)  If any provision or provisions of this Agreement are held to be
invalid, illegal or unenforceable for any reason whatsoever: (i) the validity,
legality and enforceability of the remaining provisions of this Agreement
(including, without limitation, all portions of any provisions of this Agreement
containing any such provision held to be invalid, illegal or unenforceable, that
are not themselves invalid, illegal or unenforceable) shall not in any way be
affected or impaired thereby and (ii) to the fullest extent possible, the
provisions of this Agreement (including, without limitation, all portions of any
provisions of this Agreement containing any such provision held to be invalid,
illegal or unenforceable, that are not themselves invalid, illegal or
unenforceable) shall be construed so as to give effect to the intent manifested
by the provision held invalid, illegal or unenforceable.

(c)  In the event of any payment under this Agreement, the Company
shall be subrogated to the extent of such payment to all of the rights of
recovery of Indemnitee, who shall execute all papers required and take all
actions necessary to secure such rights, including execution of such documents
as are necessary to enable the Company to bring suit to enforce such rights.

17.  Notices.  All notices, requests, demands and other communications
under this Agreement shall be in writing and shall be deemed duly given (i) if
delivered by hand and receipted for by the party addressed, on the date of such
receipt, or (ii) if mailed by domestic certified or registered mail with postage
prepaid, on the third business day after the date postmarked.  Addresses for
notice to either party are as shown on the signature page of this Agreement, or
as subsequently modified by written notice.

11

18.  Mutual Acknowledgment.  Both the Company and Indemnitee acknowledge 
that in certain instances federal law or public policy may override 
applicable state law and prohibit the Company from indemnifying its directors 
and officers under this Agreement or otherwise.  For example, the Company and 
Indemnitee acknowledge that the Securities and Exchange Commission (the 
"Commission") has taken the position that indemnification is not permissible 
for liabilities arising under certain federal securities laws, and federal 
legislation prohibits indemnification for certain ERISA violations.  
Indemnitee understands and acknowledges that the Company has undertaken or 
may be required in the future to undertake with the Commission to submit the 
question of indemnification to a court in certain circumstances for a 
determination of the Company's right under public policy to indemnify 
Indemnitee.

19.  Governing Law.  This Agreement shall be governed by and construed in
accordance with the laws of the state of Delaware, without giving effect to
principles of conflict of laws.

20.  Consent to Jurisdiction.  The Company and Indemnitee each hereby
irrevocably consent to the jurisdiction of the courts of the state of Delaware
for all purposes in connection with any action, suit or proceeding which arises
out of or relates to this Agreement.

21.  Identical Counterparts.  This Agreement may be executed in one or more
counterparts, each of which shall for all purposes be deemed to be an original
but all of which together shall constitute one and the same Agreement.  Only one
such counterpart signed by the party against whom enforcement is sought needs to
be produced to evidence the existence of this Agreement.

22.  Modification; Survival.  This Agreement may be modified only by an
instrument in writing signed by both parties hereto.  The provisions of this
Agreement shall survive the death, disability or incapacity of Indemnitee or the
termination of Indemnitee's service as a director or officer of the Company and
shall inure to the benefit of Indemnitee's heirs, executors and administrators.

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

INDEMNITEE               Guess ?, Inc.

By:

Eleven additional identical Indemnification Agreements in the form above, 
dated August 13, 1996, were entered into between the Company and each of the 
following persons:  Maurice Marciano, Paul Marciano, Armand Marciano, Francis 
K. Duane, Edward Loseman, Nancy Shachtman, Terence Tsang, Michael Wallen, 
Glenn Weinman, Andrea Weiss, Roger Williams.

12

<ARTICLE> 5
<MULTIPLIER> 1,000

<PERIOD-TYPE>                   12-MOS
<FISCAL-YEAR-END>                          DEC-31-1996
<PERIOD-START>                             JAN-01-1996
<PERIOD-END>                               DEC-31-1996
<CASH>                                          13,201
<SECURITIES>                                         0
<RECEIVABLES>                                   36,844
<ALLOWANCES>                                     9,737
<INVENTORY>                                     79,489
<CURRENT-ASSETS>                               151,315
<PP                                         121,280
<DEPRECIATION>                                  56,978
<TOTAL-ASSETS>                                 239,306
<CURRENT-LIABILITIES>                           74,494
<BONDS>                                        121,217
<PREFERRED-MANDATORY>                                0
<PREFERRED>                                          0
<COMMON>                                           135
<OTHER-SE>                                      34,793
<TOTAL-LIABILITY-AND-EQUITY>                   239,306
<SALES>                                        497,874
<TOTAL-REVENUES>                               551,162<F1>
<CGS>                                          298,631
<TOTAL-COSTS>                                  453,067<F2>
<OTHER-EXPENSES>                                   989
<LOSS-PROVISION>                                   323
<INTEREST-EXPENSE>                              14,539
<INCOME-PRETAX>                                 82,567
<INCOME-TAX>                                    33,241<F3>
<INCOME-CONTINUING>                             49,326<F3>
<DISCONTINUED>                                       0
<EXTRAORDINARY>                                      0
<CHANGES>                                            0
<NET-INCOME>                                    49,326<F3>
<EPS-PRIMARY>                                     1.18<F4>
<EPS-DILUTED>                                        0
<FN>
<F1>INCLUDES NET ROYALTIES OF $53.3 MILLION
<F2>INCLUDES NON-RECURRING CHARGES RELATED TO THE WRITEDOWN OF OPERATING ASSETS TO
BE DISPOSED OF IN CONTEMPLATION OF THE OFFERINGS AGGREGATING $3.6 MILLION
RELATING TO (A) DISPOSAL OF TWO CURRENTLY ACTIVE REMOVE WAREHOUSE AND
PRODUCTION FACILITIES, WHICH ARE NOT EXPECTED TO BE USED IN THE COMPANY'S
OPERATIONS AFTER THE OFFERINGS, RESULTING IN A NET BOOK LOSS OF $2.4 MILLION,
AND (B) THE NET BOOK LOSS OF $1.2 MILLION INCURRED BY THE COMPANY IN CONNECTION
WITH THE SALE OF ONE OF ITS AIRCRAFT TO AN UNAFFILIATED THIRD PARTY FOR $6.0
MILLION IN CONTEMPLATION OF THE OFFERINGS.
<F3>THE COMPANY'S INITIAL PUBLIC OFFERING WAS IN AUGUST 1996, AT WHICH POINT THE S
ELECTION TERMINATED.  NET EARNINGS AND INCOME TAXES REFLECTS PRO FORMA
ADJUSTMENTS FOR FEDERAL AND STATE INCOME TAXES AS IF THE COMPANY HAD BEEN TAXED
AS A C CORPORATION RATHER THAN AN S CORPORATION FOR THE FULL YEAR.
<F4>REFLECTS PRO FORMA EARNINGS PER SHARE.
</FN>