August 23, 2000 Little Switzerland, Inc. 161-B Crown Bay P.O. Box 930 St. Thomas, U.S. Virgin Islands 00804 Attn: Robert L. Baumgardner, President Re: Extension to Standstill for Completion of Almod Transactions Dear Mr. Baumgardner: We have...

                                                  Xxxxxx 00, 0000


Xxxxxx Xxxxxxxxxxx, Inc.
161-B Crown Bay
X.X. Xxx 000
Xx. Xxxxxx, X.X. Xxxxxx Xxxxxxx  00000

Attn:    Xxxxxx X. Xxxxxxxxxxx, President

         Re:  Extension to Standstill for Completion of Almod Transactions

Dear Xx. Xxxxxxxxxxx:

         We have considered your request for an amendment to our July 28, 2000
letter agreement (the "July 28 Agreement") by and between the Chase Manhattan
Bank and the Bank of Nova Scotia (the "Lenders") and Little Switzerland, Inc.
(the "Company") regarding the proposed transactions of the Company and its
related entities with Almod Diamonds Limited ("ADL"), and, in our mutual
interest of the completion of such proposed transactions and in consideration of
the premises, the Lenders are willing to amend the July 28 Agreement as follows
and subject to the following terms and conditions:

         1.       The Lenders agree to extend the standstill until December 31,
                  2000 (the "Extended Standstill Period") with respect to the
                  outstanding indebtedness to the Lenders subject to the terms
                  and conditions of this letter agreement and the July 28
                  Agreement as amended hereby.

         2.       The terms, conditions and agreements of the July 28 Agreement
                  shall remain binding and in full force and effect, except as
                  specifically modified by this letter agreement, throughout the
                  term of the Extended Standstill Period. All capitalized terms
                  used by not defined herein shall have the meaning given in the
                  July 28 Agreement. This letter agreement may be signed in
                  counterparts. A signed facsimile copy shall be binding upon
                  and acceptable to all parties.

         3.       On or before October 15, 2000, the Company shall deliver to
                  the Lenders a copy of a binding commitment letter, accepted by
                  the Company, from a financial institution or other lender,
                  which commitment letter shall provide for the extension to the
                  Company of fully underwritten credit facilities to close on or
                  before December 31, 2000 pursuant to commercially reasonable
                  terms and conditions, including the payoff in full of the
                  outstanding indebtedness of the Company and its subsidiaries
                  to the Lenders.

         4.       On or before September 30, 2000, in lieu of the payment
                  required under paragraph 5 of the July 28 Agreement (50% of
                  the proceeds of realized by the Company from




Letter dated August 23, 2000
Page 2

                  the proposed sale to ADL of the newly issued shares of stock
                  of the Company), the Company shall deliver to the Lenders the
                  amount of $3,500,000 for application to amounts due the
                  Lenders by the Company or its subsidiaries.

         5.       During the Extended Standstill Period, the Company shall have
                  no obligation to make payments to the Lenders, other than (a)
                  regularly scheduled interest payments; (b) such payments
                  required under this letter agreement and under the July 28
                  Agreement, as modified by this letter agreement; and (c)
                  payments of all reasonable costs and expenses of the Lenders
                  incurred in connection with this letter agreement and all
                  costs and expenses of the Lenders as provided in the July 28
                  Agreement.

         6.       Notwithstanding the foregoing, the Extended Standstill Period
                  shall terminate prior to December 31, 2000, in the event of an
                  earlier Termination Event. Each of the following shall
                  constitute a Termination Event:

                  a.       The Company shall fail to make any regularly
                           scheduled interest payment when due (subject to any
                           applicable notice and cure periods in the loan
                           documents evidencing and governing the indebtedness
                           of the Company and its subsidiaries to the Lenders),
                           time being of the essence with respect to any and all
                           of such payments.

                  b.       The Company or any subsidiary otherwise shall fail to
                           comply with any term of this letter agreement, the
                           July 28 Agreement, the Security Agreement, the
                           mortgage over the St. Xxxxxx leasehold property or
                           any other document executed in connection with the
                           indebtedness of the Company or a related entity to
                           the Lenders or either of them (subject to any
                           applicable notice and cure periods therein).



                  c.       The rendition by any court of a final judgment
                           against the Company or any subsidiary in a stated
                           amount in excess of $250,000.00 (or more than one
                           such judgment shall be entered against any one or
                           more of them in an aggregate stated amount in excess
                           of $250,000.00); or the attachment of any property of
                           the Company or any subsidiary not bonded or insured
                           against or remedied within sixty (60) days.



                  d.       The filing of a tax lien against the Company or any
                           subsidiary by the Internal Revenue Service or the
                           taxing authority having authority over the
                           jurisdiction in which any such entity is located not
                           remedied within thirty (30) days.



                  e.       The commencement of any action or proceeding against
                           any one or both of the Lenders by the Company or any
                           subsidiary or other entity affiliated with,
                           controlled by or under common control with the
                           Company.




Letter dated August 23, 2000
Page 3

                  f.       The commencement of any bankruptcy or insolvency
                           proceeding by or against the Company or any
                           subsidiary.

                  At any time five (5) days after either of the Lenders shall
                  have made written demand on the Company following the
                  occurrence of a Termination Event described in subparagraph a,
                  b, c or d above, and immediately upon the occurrence of a
                  Termination Event described in subparagraphs e or f above,
                  each Lender may, at its option, acting alone or together with
                  the other Lender: (i) terminate the Standstill Period
                  described above; (ii) declare all amounts outstanding to be
                  due and payable forthwith, whereupon the same shall be
                  immediately due and payable; and (iii) take any other action
                  which the Lenders or either of them deems necessary or
                  appropriate to collect the outstanding obligations and to
                  enforce the rights and remedies under the documents
                  evidencing, governing and/or securing the indebtedness of the
                  Company and its subsidiaries to the Lenders, the Security
                  Agreement, any document executed or filed in connection with
                  or pursuant to the Security Agreement, and under applicable
                  law.

         If the Company and its subsidiaries are in agreement with the
foregoing, please sign as indicated below and return a signed original of this
letter to the Lenders.

                            THE CHASE MANHATTAN BANK

                            By: /s/ X. Xxxxx
                                ---------------------------------------

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

                            THE BANK OF NOVA SCOTIA

                            By: /s/ X. Xxxxxxx
                                ---------------------------------------

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

The foregoing is acknowledged and agreed to by:

LITTLE SWITZERLAND, INC., a Delaware corporation

By:   /s/ Xxxxxx X. Xxxxxxxxxxx,
      ----------------------------------------
      Xxxxxx X. Xxxxxxxxxxx, President

L.S. WHOLESALE, INC., a Massachusetts corporation

By:   /s/ Xxxxxx X. Xxxxxxxxxxx,
      ----------------------------------------
      Xxxxxx X. Xxxxxxxxxxx, President







Letter dated August 23, 2000
Page 4

L.S. HOLDING, INC., a U.S. Virgin Islands corporation

By:  /s/ Xxxxxx X. Xxxxxxxxxxx,
      ----------------------------------------
     Xxxxxx X. Xxxxxxxxxxx, President


WORLD GIFT IMPORTS (BARBADOS) LIMITED, a Barbados company

By:    /s/ X.X. Xxxxxx
     -------------------------------------------------
         Xxxxxxx X. Xxxxxx, Director


WORLD GIFT IMPORTS, N.V., a St. Maarten Netherlands Antilles limited liability
company

By:    /s/ X.X. Xxxxxx
     -------------------------------------------------
         Xxxxx X. Xxxxxx, Managing Director


S.A.R.L. MONTRES ET BIJOUX, a St. Xxxxxx company

By:    /s/ X.X. Xxxxxx
     -------------------------------------------------

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


LITTLE SWITZERLAND, N.V., an Aruba limited liability company
By:  L.S. HOLDING (ARUBA), N.V., Managing Director

By:    /s/ Xxxxxx X. Xxxxxxxxxxx
     -------------------------------------------------
         Xxxxxx Xxx Xxxxxxxxxxx, President of the Managing Board


L.S. HOLDING (ARUBA), N.V., an Aruba limited liability company

By:    /s/ Xxxxxx X. Xxxxxxxxxxx
     -------------------------------------------------
         Xxxxxx Xxx Xxxxxxxxxxx, President of the Managing Board


L.S. HOLDING CURACAO, N.V., a Curacao limited liability company

By:    /s/ Xxxxxx X. Xxxxxxxxxxx
     -------------------------------------------------
         Xxxxxx X. Xxxxxxxxxxx, President and Managing Director


L.S. HOLDING (USA), INC., an Alaska corporation

By:    /s/ Xxxxxx X. Xxxxxxxxxxx
     -------------------------------------------------
         Xxxxxx X. Xxxxxxxxxxx, President