CANADIAN LOAN AND SECURITY AGREEMENT

by and among

CONGRESS FINANCIAL CORPORATION (CANADA)

as Lender

and

GUESS? CANADA CORPORATION

and

GUESS? CANADA RETAIL INC.

as Borrowers

with

WACHOVIA SECURITIES, INC.

acting as Global Arranger

Dated: December 20, 2002

TABLE OF CONTENTS

ii

INDEX TO
EXHIBITS AND SCHEDULES

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CANADIAN LOAN AND SECURITY AGREEMENT

        This Canadian Loan and Security Agreement dated December 20, 2002 is entered into by and among CONGRESS FINANCIAL CORPORATION (CANADA), an Ontario corporation ("Lender") and GUESS? CANADA CORPORATION, a Canadian corporation and GUESS? CANADA RETAIL INC., a Canadian corporation, jointly and severally as co-borrowers (each a "Borrower" and collectively, the "Borrowers").

W I T N E S S E T H:

        WHEREAS, Guess ?, Inc. owns, directly or indirectly, all of the issued and outstanding capital stock of the Borrowers and U.S. Borrowers (as defined below); and

        WHEREAS U.S. Lender (as defined below) has previously entered into certain financing arrangements with Guess ? Inc. and the other U.S. Borrowers (as defined below) pursuant to the U.S. Agreement; and

        WHEREAS, Borrowers have requested that Lender enter into certain financing arrangements in Canada with Borrowers as an integrated business unit pursuant to which Lender may make loans and provide other financial accommodations to Borrowers as an integrated business unit; and

        WHEREAS, Lender is willing to make such loans and provide such financial accommodations on the terms and conditions set forth herein;

        NOW, THEREFORE, in consideration of the mutual conditions and agreements set forth herein, and for other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the parties hereto agree as follows:

SECTION 1    DEFINITIONS    

        For purposes of this Agreement, the following terms shall have the respective meanings given to them below:

        1.1    "Accounts"  shall mean all present and future rights of Borrowers to payment of a monetary obligation, whether or not earned by performance, which is not evidenced by chattel paper or an instrument, (a) for property that has been or is to be sold, leased, assigned, or otherwise disposed of, (b) for services rendered or to be rendered, (c) for a secondary obligation incurred or to be incurred, or (d) arising out of the use of a credit, charge or debit card along with all information contained on or for use with such card.

        1.2    "Adjusted Eurodollar Rate"  shall mean, with respect to each Interest Period for any Eurodollar Rate Loan, the rate per annum (rounded upwards, if necessary, to the next one-sixteenth (¹/16) of one percent (1%)) determined by dividing (a) the Eurodollar Rate for such Interest Period by (b) a percentage equal to: (i) one (1) minus (ii) the Reserve Percentage. For purposes hereof, "Reserve Percentage" shall mean the reserve percentage, expressed as a decimal, prescribed by any United States or foreign banking authority for determining the reserve requirement which is or would be applicable to deposits of United States dollars in a non-United States or an international banking office of Reference Bank used to fund a Eurodollar Rate Loan or any Eurodollar Rate Loan made with the proceeds of such deposit, whether or not the Reference Bank actually holds or has made any such deposits or loans. The Adjusted Eurodollar Rate shall be adjusted on and as of the effective day of any change in the Reserve Percentage.

        1.3    "Adjusted Tangible Net Worth"  shall mean as to any Person, at any time, in accordance with GAAP (except as otherwise specifically set forth below), on a consolidated basis for such Person and its Subsidiaries (if any), the amount equal to the difference between: (a) the aggregate net book value of all assets of such Person and its Subsidiaries (excluding the value of patents, trademarks, tradenames, copyrights, licenses, goodwill, prepaid assets and other intangible assets), calculating the book value of inventory for this purpose on a first-in-first-out basis, after deducting from such book values all appropriate reserves in accordance with GAAP (including all reserves for doubtful receivables,

obsolescence, depreciation and amortization) and (b) the aggregate amount of the Indebtedness and other liabilities of such Person and its Subsidiaries (including tax and other proper accruals).

        1.4    "Affiliate"  shall mean, with respect to a specified Person, any other Person which directly or indirectly through one or more intermediaries controls, or is controlled by, or is under common control with such Person, and without limiting the generality of the foregoing, includes (a) any Person which beneficially owns or holds five percent (5%) or more of any class of Voting Stock of such Person or other equity interests in such Person, (b) any Person of which such Person beneficially owns or holds five percent (5%) or more of any class of Voting Stock or in which such Person beneficially owns or holds five percent (5%) or more of the equity interests and (c) any director or executive officer of such Person. For purposes of this definition, the term "control" (including, with correlative meanings, the terms "controlled by" and "under common control with"), as used with respect to any Person, means the possession, directly or indirectly, of the power to direct or cause the direction of the management and policies of such Person, whether through the ownership of Voting Stock, by agreement or otherwise.

        1.5    "Availability Compliance Period"    shall mean the period of time beginning upon an Availability Triggering Event or a Compliance Triggering Event, as applicable from time to time under this Agreement, and continuing through the Availability Compliance Reinstatement Date.

        1.6    "Availability Compliance Reinstatement Date"  shall mean the 180^thconsecutive day on which the corresponding calculation of U.S. Excess Availability or Compliance Excess Availability is equal to at least the U.S. Dollar Equivalent of Twenty Million Dollars ($20,000,000) and the Canadian Compliance Excess Availability is equal to at least the U.S. Dollar Equivalent of One Million Dollars ($1,000,000).

        1.7    "Availability Compliance Report"  shall mean a compliance report delivered by Borrowers to Lender on a monthly basis during the Availability Compliance Period, in form and substance satisfactory to Lender.

        1.8    "Availability Triggering Event"  shall mean the occurrence of any event or events or the existence of any circumstance or circumstances that cause (a) the aggregate of U.S. Excess Availability and Canadian Compliance Excess Availability to be less than the U.S. Dollar Equivalent of Twenty Million Dollars ($20,000,000) or (b) Canadian Compliance Excess Availability to be less than the U.S. Dollar Equivalent of One Million Dollars ($1,000,000).

        1.9    "Average Excess Availability"  shall mean the sum of the U.S. Average Excess Availability and the Canadian Average Excess Availability.

        1.10    "Blocked Accounts"  shall have the meaning set forth in Section 6.3 hereof.

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