Execution Copy
 
EMPLOYMENT AGREEMENT
 
AGREEMENT, made and entered into as of December 19, 2007 (the “Effective Date”)
by and between THE WARNACO GROUP, INC., a Delaware corporation (together with
its successors and assigns, the “Company”), and JOSEPH R. GROMEK (the
“Executive”).

W I T N E S S E T H :
 
WHEREAS, the Company desires to continue to employ the Executive as its
President and Chief Executive Officer and to amend and restate the Executive’s
current employment agreement dated as of December 22, 2004 embodying the terms
of such continued employment and the Executive desires to enter into this
amended and restated agreement and to accept such continued employment, subject
to the terms and provisions of this Agreement;

NOW, THEREFORE, in consideration of the premises and mutual covenants contained
herein and for other good and valuable consideration, the receipt of which is
mutually acknowledged, the Company and the Executive (individually a “Party” and
together the “Parties”) agree as follows:

1.           Definitions.
 
(a)           “Affiliate” of a specified person or entity shall mean a person or
entity that directly or indirectly controls, is controlled by, or is under
common control with, the person or entity specified.
 
(b)           “Annual Bonus” shall have the meaning ascribed to such term in
Section 5 below.
 
(c)           “Base Salary” shall mean the annualized salary provided for in
Section 4 below.
 
(d)           “Board” shall mean the Board of Directors of the Company.
 
(e)           “Bonus Plan” shall have the meaning ascribed to such term in
Section 5 below.
 
(f)           “Cause” shall mean:
 
(i)           willful misconduct by the Executive which causes material harm to
the Company’s interests;
 
(ii)           willful and material breach of duty by the Executive in the
course of his employment, which, if curable, is not cured within 10 days after
Executive’s receipt of written notice from the Company;
 
 
1

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

 
 
(iii)           willful failure by the Executive, after having been given
written notice from the Company, to perform his duties other than a failure
resulting from Executive’s incapacity due to physical or mental illness; or
 
(iv)           indictment of the Executive for a felony, a crime involving moral
turpitude or any other crime involving the business of the Company which, in the
case of such crime involving the business of the Company, is injurious to the
business of the Company.
 
For purposes of this Cause definition, no act or failure to act, on the part of
the Executive, shall be considered willful unless it is done, or omitted to be
done, by him in bad faith and without reasonable belief that his action was in
the best interests of the Company.  The determination to terminate the
Executive’s employment for Cause shall be made by the Board and prior to such
determination the Executive shall have the right to appear before the Board or a
committee designated by the Board.

(g)           “Change in Control” shall mean any of the following:
 
(i)           any “person” (as such term is used in Sections 3(a)(9) and 13(d)
of the Securities Exchange Act of 1934) or group of persons acting jointly or in
concert, but excluding a person who owns more than 5% of the outstanding shares
of the Company as of the date of this Agreement, becomes a “beneficial owner”
(as such term is used in Rule 13d-3 promulgated under that Act), of 50% or more
of the Voting Stock of the Company;
 
(ii)           all or substantially all of the assets of the Company are
disposed of pursuant to a merger, consolidation or other transaction (unless the
shareholders of the Company immediately prior to such merger, consolidation or
other transaction beneficially own, directly or indirectly, in substantially the
same proportion as they owned the Voting Stock of the Company, all of the Voting
Stock or other ownership interests of the entity or entities, if any, that
succeed to the business of the Company); or
 
(iii)           approval by the shareholders of the Company of a complete
liquidation or dissolution of all or substantially all of the assets of the
Company.
 
For purposes of this Change in Control definition, “Voting Stock” shall mean the
capital stock of any class or classes having general voting power, in the
absence of specified contingencies, to elect the directors of the Company.

(h)           “Date of Termination” shall mean:
 
(i)           if the Executive’s employment is terminated by the Company, the
date specified in the notice by the Company to the Executive that his
 
 
2

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

 
 
employment is so terminated;
 
(ii)           if the Executive voluntarily resigns his employment (including
upon Retirement), 90 days after receipt by the Company of written notice that
the Executive is terminating his employment (provided, that in the case of a
voluntary resignation (other than a Retirement) the Company may accelerate the
Date of Termination to an earlier date by providing the Executive with written
notice of such action (which notice shall not affect the status of such
termination as a voluntary resignation by the Executive), or, alternatively, the
Company may place the Executive on paid leave (covering only Base Salary) during
such period);
 
(iii)           if the Executive’s employment is terminated by reason of death,
the date of death;
 
(iv)           if the Executive’s employment is terminated for Disability, 30
days after written notice is given as specified in Section 1(i) below; or
 
(v)           if the Executive resigns his employment for Good Reason, 30 days
after receipt by the Company of timely written notice from the Executive in
accordance with Section 1(j) below unless the Company cures the event or events
giving rise to Good Reason within 30 days after receipt of such written notice.
 
(i)           “Disability” shall mean the Executive’s inability, due to physical
or mental incapacity, to substantially perform his duties and responsibilities
for a period of 180 consecutive days as determined by a medical doctor selected
by the Company and reasonably acceptable to the Executive.  In no event shall
any termination of the Executive’s employment for Disability occur until the
Party terminating his employment gives written notice to the other Party in
accordance with Section 25 below.
 
(j)           “Good Reason” shall mean the occurrence of any of the following
without the Executive’s prior written consent:
 
(i)           a material diminution in the Executive’s authority, duties or
responsibilities as Chief Executive Officer of the Company or the assignment to
the Executive of any duties materially inconsistent with such position;
 
(ii)           a reduction in (A) Base Salary or (B) Target Bonus opportunity
(as a percentage of Base Salary) or the failure of the Company to grant (C) the
annual equity award in accordance with Section 6(a) below or (D) the
Supplemental Award as set forth in Section 6(b) below unless, in the case of
(C), the Company provides a similar target opportunity pursuant to a successor
plan or otherwise, and in the case of (D), the Company awards to the Executive
an annual award or awards of equivalent value (and
 
 
3

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

 
 
vesting provisions) to the award in respect of which there was failure to make a
grant, whether pursuant to a successor plan or otherwise;
 
(iii)           a change in reporting structure so that the Executive reports to
someone other than the Board, or the Chairman of the Board as the Board’s
designee;
 
(iv)           the failure by the Company to nominate or renominate the
Executive as a member of the Board, or the removal by the Company of the
Executive as President and Chief Executive Officer of the Company or the removal
of the Executive from the Board (other than due to a failure of shareholders of
the Company to elect him);
 
(v)           requiring the Executive to be principally based at any office or
location more than 50 miles from mid-town Manhattan; or
 
(vi)           the failure of a successor to all or substantially all of the
assets of the Company to assume the Company’s obligations under this Agreement
either as a matter of law or in writing within 15 days after a merger,
consolidation, sale or similar transaction.
 
Anything herein to the contrary notwithstanding, the Executive shall not be
entitled to resign for Good Reason (i) if the occurrence of the event otherwise
constituting Good Reason is the result of death, Disability, a termination by
the Company for which proper notification has been given (and, if for Cause,
opportunity to cure, if applicable) or a voluntary resignation (including a
Retirement) by the Executive other than for Good Reason and (ii) unless the
Executive gives the Company written notice of the event constituting “Good
Reason” within 90 days of the occurrence of such event and the Company fails to
cure such event within 30 days after receipt of such notice.

(k)           “Pro-rata Annual Bonus” shall mean the Annual Bonus the Executive
would have received had his employment continued through the end of the fiscal
year in which his termination of employment occurs multiplied by a fraction, the
numerator of which is the number of days during such fiscal year that the
Executive is employed by the Company and the denominator of which is 365.
 
(l)           “Pro-rata Supplemental Award” shall mean an amount equal to 30% of
the total cash compensation used to determine the amount of the Supplemental
Award granted immediately prior to the Date of Termination multiplied by a
fraction, the numerator of which is the number of days that the Executive is
employed by the Company during the year in which the Date of Termination occurs
and the denominator of which is 365.
 
(m)           “Retirement” shall have the meaning ascribed to such term in
Section 9(f) below.
 
(n)            “Separation From Service” shall mean a termination of the
Executive’s
 
 
4

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

 
 
employment in a manner consistent with Treasury Regulation Section 1.409A-1(h).
 
(o)           “Stock Incentive Plan” shall have the meaning ascribed to such
term in Section 6(a) below.
 

(p)           “Supplemental Award” shall have the meaning ascribed to such term
in Section 6(b).
 
(q)           “Target Bonus” shall have the meaning ascribed to such term in
Section 5 below.
 
(r)           “Term” shall have the meaning ascribed to such term in Section 2
below.
 
2.           Term of Employment.
 
The term of the Executive’s employment hereunder shall begin on the Effective
Date and end at the close of business on March 1, 2011; provided, however, that
the Term shall thereafter be automatically extended for additional one-year
periods, unless either the Company or the Executive gives the other written
notice at least 180 days prior to the then-scheduled expiration of the Term that
such Party is electing not to so extend the Term (the initial term plus any
extension thereof in accordance herewith being referred to herein as the
“Term”).  Notwithstanding the foregoing, the Term shall end on the date on which
the Executive’s employment is terminated by either Party in accordance with the
provisions herein.

3.           Position; Duties and Responsibilities.
 
During the Term, the Executive shall be employed as the President and Chief
Executive Officer of the Company and shall be responsible for the general
management of the affairs of the Company and shall perform such other duties and
responsibilities as determined by the Board.  It is also the intention of the
Parties that the Executive shall continue to be nominated as a member of the
Board.  The Executive, in carrying out his duties under this Agreement, shall
report to the Board or the Chairman of the Board as the Board’s designee.  The
Executive shall devote substantially all of his business time and attention to
the satisfactory performance of his duties.  Anything herein to the contrary
notwithstanding, nothing shall preclude the Executive from (i) subject to the
reasonable approval of the Board, serving on the boards of directors of trade
associations and/or charitable organizations or other business corporations
(provided such service is not prohibited under Section 11(a) below),
(ii) engaging in charitable activities and community affairs and (iii) managing
his personal investments and affairs, provided that the activities described in
the preceding clauses (i) through (iii) do not materially interfere with the
proper performance of his duties and responsibilities hereunder.

4.           Base Salary.
 
During the Term, the Executive shall be paid an annualized Base Salary of
$1,000,000, payable in accordance with the regular payroll practices of the
Company, subject to annual
 
 
5

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

 
 
review by the Board (or its designee, including the Compensation Committee of
the Board) in its (or its designee’s) sole discretion.  During the Term the Base
Salary may not be decreased without the Executive’s prior written
consent.  After any increase in base salary approved by the Board or its
designee, the term “Base Salary” as used in this Agreement shall thereafter
refer to such increased amount.  The Executive shall not be entitled to any
compensation for service as a member of the Board or for service as an officer
or member of any board of directors of any Affiliate.

5.           Annual Incentive Awards.
 
During the Term (including for fiscal year 2007), the Executive shall be
eligible to receive an annual incentive award (provided the Executive was
employed continuously during the applicable fiscal year) pursuant to the
Company’s Incentive Compensation Plan, as amended (or such other annual
incentive plan as may be approved by the Company’s shareholders), in effect for
the applicable fiscal year (“Bonus Plan”).  The Executive’s annual incentive
award for fiscal year 2007 and thereafter shall have a target of 125% of Base
Salary (“Target Bonus”) with a potential maximum award of up to two (2) times
the Target Bonus, in all events based on the Executive’s achievement of annual
performance and other targets approved by the committee administering the Bonus
Plan.  The amount and payment of any Annual Bonus shall be determined in
accordance with the Bonus Plan.  Any Annual Bonus shall be payable when bonuses
for the applicable performance period are paid to other senior executives of the
Company, but in all events no later than the 60th day following the end of the
applicable fiscal year for which the Annual Bonus has been earned.  As used in
this Agreement, “Annual Bonus” shall mean the annual incentive award earned by
the Executive pursuant to the Bonus Plan for the applicable completed
performance period.  After any increase in the Executive’s target annual bonus
opportunity as a percentage of Base Salary as approved by the Board or its
designee, the term “Target Bonus” as used in this Agreement shall thereafter
refer to the increased target opportunity.

6.           Long-Term Incentive Awards; Supplemental Award.
 
(a)           During the Term for fiscal year 2008 and thereafter, provided the
Executive is employed by the Company, the Executive shall be eligible to
participate in the Company’s 2003 and 2005 Stock Incentive Plans, as amended
from time to time, or such other long-term incentive plan(s) as may be approved
by the Company’s shareholders from time to time (“Stock Incentive Plan”), with
grants under such plan(s) having an annual grant date target value, in the
aggregate, equal to no less than 100% of total cash compensation (Base Salary
plus Target Bonus).  For this purpose, Base Salary shall be the annualized rate
of salary in effect on the date of the award and Target Bonus shall be the
Target Bonus for the year in which the award is made.  Awards under any Stock
Incentive Plan shall be made at such times as awards are generally made to the
Company’s senior executives.  The Board shall have the discretion to decide the
form of any equity award (whether it is awarded in restricted stock, stock
options, other type of equity or a combination thereof).  Any stock option award
shall be valued on the basis of Black-Scholes or the valuation formula used by
the Company in reporting such compensation in its filings with the Securities
and Exchange Commission.  Except as otherwise expressly provided herein, all
equity grants shall be governed by the applicable Stock Incentive
 
 
6

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

 
 
Plan and/or award agreement.  The Executive shall be subject to the equity
ownership, retention and other requirements applicable to senior executives of
the Company.
 
(b)           During the Term for fiscal year 2008 and thereafter, provided the
Executive is employed by the Company, the Executive shall be entitled to an
annual award with an aggregate grant date value equal to 30% of the total
current cash compensation (Base Salary plus Annual Bonus) (“Supplemental
Award”).  For this purpose, Base Salary shall be the Base Salary paid to the
Executive for the prior fiscal year and Annual Bonus shall be the annual bonus
awarded to the Executive by the Board for the prior fiscal year.  The
Supplemental Award shall not be awarded to the Executive until after the
determination by the Board of the Executive’s Annual Bonus for the prior fiscal
year (but in no event later than 30 days thereafter) and shall be awarded in the
form of restricted stock units (payable in shares of the Company’s common stock
(“Shares”)) pursuant to the Stock Incentive Plan (“Career Units”).  Any Career
Units shall be governed by the applicable Stock Incentive Plan and, if
applicable, any award agreement.  For purposes of this Section 6(b), each Career
Unit shall be (i) equal to one Share and (ii) valued at the closing price of
such Share on the date that the Supplemental Award is made.  Notwithstanding
anything herein to the contrary, the Executive shall have the right to elect to
receive up to 50% of any Supplemental Award in the form of a credit to a
bookkeeping account maintained by the Company for the Executive’s account (the
“Notional Account”) (and thus not have such amount awarded in the form of Career
Units), provided the Executive delivers to the Company before the close of his
taxable year preceding the year in which the Supplemental Award is earned a
written election stating the percentage of the Supplemental Award (up to 50%) to
be credited to the Notional Account.  If the Executive makes such an election,
at the time the Supplemental Award for the year is made by the Company, the
Company will credit the amount the Executive has elected to receive in
accordance herewith to the Notional Account, the balance of which account shall
periodically be credited (or debited) with the deemed positive (or negative)
return based on returns of the investment alternative or alternatives under the
Company’s 401(k) plan selected in advance (and in accordance with the applicable
rules of such plan or investment alternative) by the Executive to apply to such
Notional Account, with such deemed returns calculated in the same manner and at
the same times as the return on such investment alternative(s).  The Company’s
obligation to pay the amount credited to the Notional Account, including any
return thereon provided for in this Section 6(b), and to deliver Shares in
respect of the Career Units hereunder shall be an unfunded obligation to be
satisfied from the general funds of the Company.  Except as otherwise provided
in Section 9 below, any Supplemental Award (whether in the form of Career Units
or the Notional Account (as adjusted for any returns thereon) (“Adjusted
Notional Account”)) granted prior to April 14, 2008 shall cliff vest 50% on
April 14, 2008 and 50% on the date the Executive reaches age 65 and any
Supplemental Award (whether in the form of Career Units or the Adjusted Notional
Account) made on or after April 14, 2008 shall cliff vest 100% on the date the
Executive reaches age 65, provided that in both cases the Executive is employed
by the Company on such vesting date.  In addition, provided that the Executive
is employed by the Company on the relevant vesting date, any unvested Adjusted
Notional Account shall vest upon a Change in Control as defined in Section
1(g)(i) or (ii) and any unvested Career Units shall vest upon a “change in
control event” within the meaning of Section 409A of the Internal Revenue Code
of 1986, as amended from time to time (the “Code”) and the regulations
promulgated thereunder (“Section 409A”) if
 
 
7

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

 
 
unvested restricted stock awards granted under the Stock Incentive Plan also
vest on such event. Finally, in the Board’s sole discretion and upon its written
consent, previously granted Supplemental Awards that remain unvested after the
Executive reaches age 62 may also vest.  The vested Career Units and the vested
balance in the Adjusted Notional Account, if any, shall not be distributed to
the Executive until there has been a Separation From Service or, if earlier,
there has been a Change in Control as defined in Section 1(g)(i) or (ii)
hereof and, at such time, shall only be distributed at the earliest time that
satisfies the requirements of this Section 6(b).  Upon a Change in Control as
defined in Section 1(g)(i) or (ii), the vested Supplemental Award shall be
distributed in Shares for any vested Career Units and in a lump-sum cash payment
for any vested balance in the Adjusted Notional Account to the Executive.  In
addition, if the Executive’s employment is terminated for any reason, after
taking into account Section 9 hereof, any unvested Supplemental Awards (whether
in the form of Career Units or the Adjusted Notional Account) shall be forfeited
and the vested Supplemental Award shall be distributed in Shares for any vested
Career Units and in a lump-sum cash payment for any vested balance in the
Adjusted Notional Account to the Executive in January of the year following the
year in which the later of the Date of Termination or the Executive’s Separation
From Service occurs; provided, however, that if the Executive is a “specified
employee” as determined pursuant to Section 409A as of the date of the
Executive’s Separation From Service, such distribution shall not be made before
the first business day of the seventh calendar month following the month in
which the Executive’s Separation From Service occurs.  For purposes of Section
409A, the vested balance in the Adjusted Notional Account shall be deemed to be
a payment separate and distinct from the vested Career Units.  In addition, the
Executive can elect to delay the time of any payment under this Section 6(b), or
change the form of payment for the Adjusted Notional Account, provided such
election is delivered to the Company in writing at least 12 months before the
scheduled payment date for such payment and the new payment date for such
payment is not earlier than (i) the Executive’s death, (ii)  the Executive’s
“disability” which satisfies the requirements of Section 409A(a)(2)(C) of the
Code and its implementing regulations, or (iii) five (5) years from the
originally scheduled payment date.  The Parties acknowledge that pursuant to the
employment agreement between the Parties dated as of December 22, 2004 (the
“Prior Employment Agreement”), the Executive was awarded Supplemental Awards
pursuant to Section 6(b) of the Prior Employment Agreement and such Supplemental
Awards (including any Career Units or Adjusted Notional Account) shall be
treated in accordance with Section 6(b) and the applicable provisions of Section
9 of this Agreement as if they had been granted hereunder.  Upon the expiration
or termination of the Term, the vesting and payment dates in this Section 6(b)
(without regard to Section 9, except as otherwise expressly provided in Section
9(d) of this Agreement) and the election right in this Section 6(b) shall
continue to apply to any outstanding Supplemental Award.
 
7.           Employee Benefit Programs.
 
During the Term, subject to the Company’s right to amend, modify or terminate
any benefit plan or program, the Executive shall be entitled to participate in
all employee savings and welfare benefit plans and programs made available to
the Company’s senior-level executives on a basis no less favorable than provided
to other similarly-situated executives, as such plans or programs may be in
effect from time to time, including, without limitation, savings and other
retirement plans or programs, medical, dental, hospitalization, short-term and
long-term
 
 
8

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

 
 
disability and life insurance plans, accidental death and dismemberment
protection and travel accident insurance.  Notwithstanding the foregoing, the
Executive’s eligibility for and/or participation in any supplemental retirement
plan or program, including, but not limited to, any excess benefit plan, shall
be at the sole discretion of the Board.  During the Term, the Executive shall
also be entitled to an annual Company-paid physical medical exam and
Company-paid term life insurance with a benefit equal to $2 million, provided
the Company can obtain such insurance at commercially reasonable premium levels.

8.           Reimbursement of Business and Other Expenses; Perquisites;
Vacations.
 
(a)           During the Term, the Executive is authorized to incur reasonable
expenses in carrying out his duties and responsibilities under this Agreement
and the Company shall promptly reimburse him for all business and entertainment
expenses incurred in connection with carrying out the business of the Company,
subject to documentation in accordance with the Company’s policy.  The Executive
shall be entitled to first class air travel when traveling on Company business.
 
(b)           The Executive shall be entitled to perquisites provided to other
senior-level executives, including a monthly car allowance of up to a maximum of
$1,500.
 
(c)           The Executive shall be entitled to four weeks paid vacation per
calendar year.
 
Notwithstanding anything elsewhere to the contrary, except to the extent any
reimbursement, payment or entitlement pursuant to Section 7 or Section 8 hereof
does not constitute a “deferral of compensation” within the meaning of Section
409A, (i) the amount of expenses eligible for reimbursement or the provision of
any in-kind benefit (as defined in Section 409A) to the Executive during any
calendar year will not affect the amount of expenses eligible for reimbursement
or provided as in-kind benefits to the Executive in any other calendar year,
(ii) the reimbursements for expenses for which the Executive is entitled shall
be made on or before the last day of the calendar year following the calendar
year in which the applicable expense is incurred and (iii) the right to payment
or reimbursement or in-kind benefits may not be liquidated or exchanged for any
other benefit.

9.           Termination of Employment.
 
(a)           Termination Without Cause by the Company or Resignation for Good
Reason by the Executive.  In the event that during the Term the Executive’s
employment is terminated without Cause by the Company (other than upon death or
due to Disability) or the Executive resigns for Good Reason (which, for the
avoidance of doubt, shall not include a termination described in clause (i) of
the last sentence of Section 1(j) above) and Section 9(d) below does not apply,
the Executive shall be entitled to:
 
(i)           an amount equal to one and a half (1.5) times the sum of (a) Base
Salary plus (b) Target Bonus, payable in a cash lump sum as soon as practicable
following the Date of Termination (but in no event later than
 
 
9

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

 
 
60 days following such date);
 
(ii)           a Pro-rata Annual Bonus, payable in a cash lump sum as soon as
practicable following the Date of Termination but in no event earlier than
January 1st or later than March 15th of the Executive’s taxable year following
the taxable year in which the Date of Termination occurs;
 
(iii)           immediate vesting as of the Date of Termination of 50% of any
restricted stock that remains unvested as of the Date of Termination and
continued exercisability of any outstanding stock options that have vested as of
the Date of Termination for two years following the Date of Termination or the
remainder of the option term, if shorter;
 
(iv)           immediate vesting as of the Date of Termination of 50% of any
previously granted Career Units which would have vested on the next scheduled
vesting date (i.e., either on April 14, 2008 or when the Executive reaches age
65) if the Executive had remained employed by the Company through such vesting
date, with any vested Career Units payable in accordance with Section 6(b)
above;

(v)           if the Date of Termination is prior to April 14, 2008, immediate
vesting as of the Date of Termination of 25% of the account balance in the
Adjusted Notional Account, and if the Date of Termination is on or after April
14, 2008 but before the Executive’s 65th birthday, immediate vesting as of the
Date of Termination of a pro-rata portion of the unvested account balance in the
Adjusted Notional Account (determined by multiplying the unvested adjusted
balance by a fraction, the numerator of which is the number of days the
Executive was employed by the Company from April 14, 2008 to the Date of
Termination and the denominator of which is 1262), with any vested balance
payable in accordance with Section 6(b) above; and
 
(vi)           continued participation for the Executive and his eligible
dependents in the Company’s welfare benefit plans in which he and his eligible
dependents were participating immediately prior to the Date of Termination until
the earlier of (a) the 18th month anniversary of the Date of Termination or (b)
the date, or dates, the Executive receives equivalent coverage under the plans
and programs of a subsequent employer.
 
(b)           Termination upon Death or due to Disability.  In the event that
during the Term the Executive’s employment is terminated upon death or due to
Disability, the Executive (or his estate or legal representative, as the case
may be) shall be entitled to:
 
(i)           a Pro-rata Annual Bonus, payable in a cash lump sum as soon as
practicable following the Date of Termination but in no event earlier than
January 1st or later than March 15th of the Executive’s taxable year
 
 
10

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

 
 
following the taxable year in which the Date of Termination occurs;
 
(ii)           a Pro-rata Supplemental Award, payable in a cash lump sum as soon
as practicable following the Date of Termination (but in no event later than 60
days following such date);
 
(iii)           immediate vesting as of the Date of Termination of all
outstanding equity awards (other than Career Units), with any vested stock
options remaining exercisable for two years following the Date of Termination or
the remainder of the option term, if shorter; and
 
(iv)           immediate vesting as of the Date of Termination of any previously
granted Supplemental Award, payable in accordance with Section 6(b) above.
 
(c)           Termination by the Company for Cause or a Voluntary Resignation by
the Executive.  In the event that during the Term the Company terminates the
Executive’s employment for Cause or the Executive voluntarily resigns other than
upon Retirement, the Executive shall be entitled to any vested Supplemental
Award, payable in accordance with Section 6(b) above.  Any restricted stock,
stock options, Career Units and other equity awards as well as any account
balance in the Adjusted Notional Account that remain unvested as of the Date of
Termination shall be forfeited.  A voluntary resignation by the Executive of his
employment shall be effective upon 90 days prior written notice by the Executive
to the Company, subject to earlier termination by the Company (without affecting
the status of such termination as a voluntary resignation) as provided in
Section 1(h)(ii) above, and, provided such notice is given by the Executive,
shall not be deemed a breach of this Agreement.
 
(d)           Termination without Cause by the Company or Resignation for Good
Reason by the Executive in Connection with a Change in Control.  In the event
that during the Term, (i) the Executive’s employment is terminated without Cause
by the Company (other than upon death or due to Disability) or the Executive
resigns for Good Reason (which, for the avoidance of doubt, shall not include a
termination described in clause (i) of the last sentence of Section 1(j) above),
in both cases upon or within one year following a Change in Control (provided
the Term is still in effect or has expired during this one-year period) or (ii)
the Executive’s employment is terminated without Cause by the Company within 90
days prior to a Change in Control (provided the Term is still in effect or has
expired during this 90-day period) and such termination is in connection with,
or in anticipation of, the Change in Control, the Executive shall be entitled
to:
 
(i)           an amount equal to three (3) times the sum of (a) Base Salary plus
(b) Target Bonus, payable in a cash lump sum as soon as practicable following
the Date of Termination (but in no event later than 60 days following such
date);
 
(ii)           a Pro-rata Annual Bonus, payable in a cash lump sum as soon as
practicable following the Date of Termination but in no event earlier than
 
 
11

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

 
 
January 1st or later than March 15th of the Executive’s taxable year following
the taxable year in which the Date of Termination occurs;
 
(iii)           an amount equal to 90% of the total cash compensation used to
determine the value of the Supplemental Award granted immediately prior to the
Date of Termination, payable in a lump sum as soon as practicable following the
Date of Termination (but in no event later than 60 days following such date);
 
(iv)           immediate vesting as of the Date of Termination of all
outstanding equity awards (other than Career Units), with vested stock options
remaining exercisable for the remainder of their original terms;
 
(v)           immediate vesting as of the Date of Termination of any previously
granted Supplemental Award, payable in accordance with Section 6(b) above; and
 
(vi)           continued participation for the Executive and his eligible
dependents in the Company’s welfare benefit plans in which he and his eligible
dependents were participating immediately prior to the Date of Termination until
the earlier of (a) 36 months following the Date of Termination, or (b) the date,
or dates, the Executive receives substantially equivalent coverage under the
plans and programs of a subsequent employer.
 
For purposes of the payment date in clause (iii), and the vesting dates in
clauses (iv) and (v), of this Section 9(d), the “Date of Termination” shall mean
the actual Date of Termination or the date of the Change in Control, whichever
is later.  In addition, if the Executive’s employment is terminated without
Cause by the Company within 90 days prior to a Change in Control (provided the
Term is still in effect or has expired during this 90-day period), such
termination is in connection with, or in anticipation of, the Change in Control
and the Date of Termination is prior to the date the Change in Control occurs,
then: (1) the payments under clause (i) of this Section 9(d) shall be paid to
the Executive as follows:  an amount equal to one and a half (1.5) times the sum
of (a) Base Salary plus (b) Target Bonus, payable in a cash lump sum as soon as
practicable following the Date of Termination (but in no event later than 60
days following such date) and an amount equal to one and a half (1.5) times the
sum of (a) Base Salary plus (b) Target Bonus, payable in a cash lump sum on the
later of the date the Change in Control occurs or the 60th day following the
Date of Termination; and (2) as of the Date of Termination, the Executive shall
also be entitled to the treatment of his equity and Supplemental Awards in
accordance with clauses (iii), (iv) and (v) of Section 9(a), with any additional
vesting under clauses (iv) and (v) of this Section 9(d) occurring on the date of
the Change in Control.
 
(e)           Termination of the Executive’s Employment by the Company Upon the
Expiration of the Term.  If the Company provides written notice to the Executive
in accordance with Section 2 above that the Term shall not renew and upon such
expiration of the Term the Company terminates the Executive’s employment under
circumstances that during the Term
 
 
12

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

 
 
would constitute a termination of employment without Cause, the Executive shall
be entitled to the same payments, benefits and entitlements as a Termination
without Cause under Section 9(a) hereof; provided if such termination occurs on
or within one year following a Change in Control, the Executive shall be
entitled to the payments, benefits and entitlements under Section 9(d) hereof.
 
(f)           Termination of the Executive’s Employment Upon Retirement.  In the
event that during the Term the Executive’s employment terminates by reason of
Retirement (as defined below), the Executive shall be entitled to:
 
(i)           continued vesting for stock options granted to the Executive on or
after the Effective Date as if the Executive had remained an active employee of
the Company through the applicable vesting date, with any stock options granted
after the Effective Date which are exercisable as of the Date of Termination
remaining exercisable until the earlier of the one year anniversary of the Date
of Termination or the original expiration date for such options and any stock
options vesting pursuant to this clause (i) remaining exercisable until the
earlier of the one year anniversary of the date such stock options vest or the
original expiration date for such options;
 
(ii)           in the event that on the Date of Termination less than a majority
of the members of the Board are members who were members of the Board on the
Effective Date and provided that the Board has not already exercised its
discretion to accelerate vesting of such Supplemental Awards and/or restricted
stock, (1) the account balance in the Adjusted Notional Account shall
immediately vest and be paid out in accordance with Section 6(b) above and (2)
any outstanding restricted stock and any Career Units granted to the Executive
on or after the Effective Date will immediately vest as of the Date of
Termination, with the Career Units payable in accordance with Section 6(b)
above, provided that except to the extent necessary to pay any taxes on the
vesting of such shares or Career Units, the Executive shall be restricted from
selling such shares until the date such restricted stock or Career Units would
have vested absent the application of this Section 9(f)(ii); and
 
(iii)           any Supplemental Award vested as of the Date of Termination,
payable in accordance with Section 6(b) above.
 
For purposes of this Agreement, Retirement shall be any voluntary termination of
the Executive’s employment on or after he reaches age 63 (other than on account
of Good Reason, death or Disability).  A Retirement by the Executive shall be
effective upon 90 days prior written notice by the Executive to the Company.
 
(g)           Other Entitlements Upon Termination of Employment.  In the event
of any termination of the Executive’s employment, the Executive (or his estate
or legal representative,
 
 
13

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

 
 
as the case may be) shall be entitled to:
 
(i)           Base Salary through the Date of Termination, payable on the first
regularly scheduled payroll date following the Date of Termination;
 
(ii)           except for a termination of employment pursuant to Section 9(c)
above, payment of any unpaid Annual Bonus for any fiscal year preceding the Date
of Termination, payable when bonuses for such fiscal year are paid to other
Company executives;
 
(iii)           any amounts earned or owing to the Executive but not yet paid
under Section 8 above, payable in accordance with such section; and
 
(iv)           except as otherwise provided in Section 9(h) below, additional
entitlements, if any, in accordance with applicable plans and programs of the
Company (provided that in no event shall the Executive be entitled to
duplication of any payments or benefits).
 
(h)           Exclusivity of Benefits; Releases of Claims.  Any payments
provided pursuant to Section 9(a), Section 9(d) or Section 9(e) above shall be
in lieu of any salary continuation arrangements under any other severance
program of the Company.  In order to be entitled to the payments, rights and
other entitlements in Section 9(a), Section 9(b) (but only in the event of a
termination for Disability and, in this event, only as a condition for the
Pro-rata Supplemental Award in Section 9(b)(ii) and the vesting of the
Supplemental Award in Section 9(b)(iv)), Section 9(d), Section 9(e) or Section
9(f) (but only in the case of clauses (i) and (ii) of such Section 9(f)) above,
the Executive shall be required to execute and deliver a release of claims
against the Company in the form of Exhibit A attached hereto no later than 45
days following the Date of Termination and not revoke such release within the
applicable revocation period.  Upon the execution by the Executive and delivery
to the Company of such release of claims (provided the Executive does not revoke
such release within the applicable revocation period), the Company agrees to
execute a release of claims against the Executive in the form of Exhibit B
attached hereto and to deliver such release to the Executive. 
 
(i)           Nature of Payments.  Any amounts due under this Section 9 are in
the nature of severance payments considered to be reasonable by the Company and
are not in the nature of a penalty.
 
(j)           No Mitigation; No Offset.  In the event of termination of his
employment for any reason, the Executive shall be under no obligation to seek
other employment and, except as specifically provided for in this Section 9,
there shall be no offset against amounts due to him on account of any
remuneration or benefits provided by any subsequent employment he may obtain.
 
(k)           Resignation.  Notwithstanding any other provision of this
Agreement, upon the termination of the Executive’s employment for any reason,
unless otherwise requested by the Board, he shall immediately resign from the
Board, from all boards of directors of any
 
 
14

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

 
 
Affiliate of the Company of which he may be a member, and as a trustee of, or
fiduciary to, any employee benefit plans of the Company or any Affiliate.  The
Executive hereby agrees to execute any and all documentation of such
resignations upon request by the Company, but he shall be treated for all
purposes as having so resigned upon termination of his employment, regardless of
when or whether he executes any such documentation.
 
(l)           Section 409A.  Notwithstanding anything to the contrary in this
Agreement or elsewhere (except for Section 6(b) of this Agreement), if the
Executive is a “specified employee” as determined pursuant to Section 409A as of
the date of the Separation From Service and if any payment, benefit or
entitlement provided for in this Agreement or otherwise both (x) constitutes a
“deferral of compensation” within the meaning of Section 409A and (y) cannot be
paid or provided in a manner otherwise provided herein or otherwise without
subjecting the Executive to additional tax, interest or penalties under Section
409A, then any such payment, benefit or entitlement that is payable during the
first six months following the Executive’s Separation From Service shall be paid
or provided to the Executive in a cash lump-sum on the earlier of the
Executive’s death or the first business day of the seventh calendar month
following the month in which the Executive’s Separation From Service occurs.  In
addition, any payment, benefit or entitlement due upon a termination of the
Executive’s employment that represents a “deferral of compensation” within the
meaning of Section 409A (other than any payments due pursuant to Section 6(b) of
this Agreement) shall only be paid or provided to Executive upon a Separation
From Service, in which case any reference to “Date of Termination” in connection
with such payment, benefit or entitlement shall be deemed to be a reference to
“Separation From Service”, and the actual payment date within the time specified
in the applicable provision of Section 9 shall be within the Company’s sole
discretion.  Notwithstanding anything to the contrary in this Section 9 or
otherwise, any payment or benefit under this Section 9 or otherwise which is
exempt from Section 409A pursuant to Treasury Regulation Section
1.409A-1(b)(9)(v)(A) or (C) shall be paid or provided to the Executive only to
the extent the expenses are not incurred or the benefits are not provided beyond
the last day of the second taxable year of the Executive following the taxable
year of the Executive in which the Separation From Service occurs; and provided
further that the Company reimburses such expenses no later than the last day of
the third taxable year following the taxable year of the Executive in which the
Separation From Service occurs. Finally, to the extent that the provision of any
benefit pursuant to Section 9(a)(vi) or Section 9(d)(vi) hereof is taxable to
the Executive, any such reimbursement shall be paid to the Executive on or
before the last day of the Executive’s taxable year following the taxable year
in which the expense is incurred and such reimbursement shall not be subject to
liquidation or exchange for any other benefit.
 
10.           Confidentiality; Assignment of Rights; Return of Company Property.
 
(a)           During the Term and thereafter, other than in the ordinary course
of performing his duties for the Company or as required in connection with
providing any cooperation to the Company pursuant to Section 13 below, the
Executive agrees that he shall not disclose to anyone or make use of any trade
secret or proprietary or confidential information of the Company or any
Affiliate of the Company, including such trade secret or proprietary or
confidential information of any customer or other entity to which the Company
owes an obligation not to disclose such information, which he acquires during
the course of his
 
 
15

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

 
 
employment (“Confidential Information”), including, but not limited to, records
kept in the ordinary course of business, except when required to do so by a
court of law, by any governmental agency having supervisory authority over the
business of the Company or by any administrative or legislative body (including
a committee thereof) with apparent or actual jurisdiction to order him to
divulge, disclose or make accessible such information.  “Confidential
Information” shall not include information that (i) was known to the public
prior to its disclosure by the Executive; or (ii) becomes known to the public
through no wrongful disclosure by or act of the Executive or any representative
of the Executive.  In the event the Executive is requested by subpoena, court
order, investigative demand, search warrant or other legal process to disclose
any Confidential Information, the Executive agrees, unless prohibited by law or
Securities and Exchange Commission regulation, to give the Company’s General
Counsel prompt written notice of any request for disclosure in advance of the
Executive’s making such disclosure and the Executive agrees not to disclose such
information unless and until the Company has expressly authorized the Executive
to do so in writing or the Company has had a reasonable opportunity to object to
such request or to litigate the matter (of which the Company agrees to keep the
Executive reasonably informed) and has failed to do so.
 
(b)           The Executive hereby sells, assigns and transfers to the Company
all of his right, title and interest in and to all inventions, discoveries,
improvements and copyrightable subject matter (the “Rights”) which during the
period of his employment are made or conceived by him, alone or with others, and
which are within or arise out of any general field of the Company’s business or
arise out of any work he performs, or information he receives regarding the
business of the Company, while employed by the Company.  The Executive shall
fully disclose to the Company as promptly as available all information known or
possessed by him concerning any Rights, and upon request by the Company and
without any further remuneration in any form to him by the Company, but at the
expense of the Company, execute all applications for patents and for copyright
registration, assignments thereof and other instruments and do all things which
the Company may deem necessary to vest and maintain in it the entire right,
title and interest in and to all such Rights.
 
(c)           The Executive agrees that at the time of the termination of his
employment (whether during or after the expiration of the Term), whether at the
instance of the Executive or the Company, and regardless of the reasons
therefor, he will promptly deliver to the Company’s General Counsel, and not
keep or deliver to anyone else, any and all of the following which is in his
possession or control: (i) Company property (including, without limitation,
credit cards, computers, communication devices, home office equipment and other
Company tangible property) and (ii) notes, files, memoranda, papers and, in
general, any and all physical matter and computer files containing confidential
or proprietary information of the Company or any of its Affiliates, including
any and all documents relating to the conduct of the business of the Company or
any of its Affiliates and any and all documents containing confidential or
proprietary information of the customers of the Company or any of its
Affiliates, except for (x) any documents for which the Company’s General Counsel
has given written consent to removal at the time of termination of the
Executive’s employment and (y) any information necessary for the Executive to
retain for his tax purposes (provided the Executive maintains the
confidentiality of such information in accordance with Section 10(a) above).
 
 
16

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

 
 
11.           Non-Competition; Non-Solicitation; Non-Disparagement.
 
(a)           The Executive acknowledges that in his capacity in management the
Executive has had or will have a great deal of exposure and access to the
Company’s trade secrets and confidential and proprietary
information.  Therefore, during the Term and thereafter (provided the Executive
is employed by the Company) and for 12 months (24 months in the case of the
Executive’s Retirement) following the Executive’s termination of employment
(whether during or after the expiration of the Term) to protect the Company’s
trade secrets and other confidential and proprietary information, the Executive
agrees that he shall not, other than in the ordinary course of performing his
duties hereunder or as agreed by the Company in writing, engage in a
“Competitive Business,” directly or indirectly, as an individual, partner,
shareholder, director, officer, principal, agent, employee, trustee, consultant,
or in any relationship or capacity, in any geographic location in which the
Company or any of its Affiliates is engaged in business.  The Executive shall
not be deemed to be in violation of this Section 11(a) by reason of the fact
that he owns or acquires, solely as an investment, up to two percent (2%) of the
outstanding equity securities (measured by value) of any entity.  “Competitive
Business” shall mean a business engaged in (x) apparel design and/or apparel
wholesaling or (y) retailing in competition with any business that the Company
is conducting at the time of the alleged violation.
 
(b)           The Executive agrees that for a period of 18 months (24 months in
the case of the Executive’s Retirement) following the Executive’s termination of
employment (whether during or after the expiration of the Term), he will not,
without the prior written consent of the Company, directly or indirectly, hire
any employee of the Company or any of its Affiliates, or solicit or encourage
any such employee to leave the employ of the Company or its Affiliates, as the
case may be.
 
(c)           The Executive agrees that for a period of 18 months (24 months in
the case of the Executive’s Retirement) following the Executive’s termination of
employment (whether during or after the expiration of the Term), he will not,
without the prior written consent of the Company, directly or indirectly,
solicit or encourage any customer of the Company or any of its Affiliates to
reduce or cease its business with the Company or any such Affiliate or otherwise
interfere with the relationship of the Company or any Affiliate with its
customers.
 
(d)           The Executive and the Company each agree to refrain from making
any statements or comments, whether oral or written, of a defamatory or
disparaging nature to third parties regarding each other (and, in the case of
the Executive’s commitment hereunder, the “Company” shall include an Affiliate
of the Company and the Company’s officers, directors, personnel and
products).  The Executive and the Company each understand that either party
should be entitled to respond truthfully and accurately to statements about such
party made publicly by the Executive or the Company, as the case may be,
provided that such response is consistent with the responding party’s
obligations not to make any statements or comments of a defamatory or
disparaging nature as set forth herein.
 
12.           Injunctive and Other Relief.
 
The Executive expressly agrees and acknowledges any breach or threatened breach
of any
 
 
17

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

 
 
obligation under Section 10 or Section 11 above will cause the Company
immeasurable and irreparable harm for which there is no adequate remedy at law,
and as a result of this the Company shall be entitled to seek the issuance by a
court of competent jurisdiction of an injunction, restraining order or other
equitable relief in favor of itself, without the necessity of posting a bond,
restraining the Executive from committing or continuing to commit any such
violation.  Any payment, benefit of entitlement due to the Executive under this
Agreement shall be subject to forfeiture if the Executive materially breaches
any provision of Section 10, Section 11 or Section 13 of this Agreement.

13.           Cooperation.
 
Following the Executive’s termination of employment (whether during or after the
expiration of the Term), upon reasonable request by the Company, the Executive
shall cooperate with the Company or any of its Affiliates with respect to any
legal or investigatory proceeding, including any government or regulatory
investigation, or any litigation or other dispute relating to any matter in
which he was involved or had knowledge during his employment with the Company,
subject to his reasonable personal and business schedules.  The Company shall
reimburse the Executive for all reasonable out-of-pocket costs, such as travel,
hotel and meal expenses and reasonable attorneys’ fees, incurred by the
Executive in providing any cooperation pursuant to this Section 13; provided
such expenses shall be paid to the Executive as soon as practicable but in no
event later than the end of the calendar year following the calendar year in
which the expenses are incurred, subject in all cases to the Executive providing
appropriate documentation to the Company.  The Company shall also pay the
Executive a reasonable per diem amount for the Executive’s time (other than for
time spent preparing for or providing testimony) which shall be based upon the
Executive’s Base Salary at the Date of Termination, with such per diem paid to
the Executive in the calendar month following the month in which he provides
such assistance.  Any reimbursement or payment under this Section 13 shall not
affect the amount of the reimbursement or payment to the Executive in any other
taxable year.  The right to payment or reimbursement pursuant to this Section 13
shall not be liquidated or exchanged for any other benefit.

14.           Tax Matters.
 
(a)           If any amount, entitlement, or benefit paid or payable to the
Executive or provided for his benefit under this Agreement and under any other
agreement, plan or program of the Company (such payments, entitlements and
benefits referred to as a “Payment”) is subject to the excise tax imposed under
Section 4999 of the Code or any similar federal or state law (an “Excise Tax”),
then notwithstanding anything contained in this Agreement to the contrary, to
the extent that any or all Payments would be subject to the imposition of an
Excise Tax, the Payments shall be reduced (but not below zero) if and to the
extent that such reduction would result in the Executive retaining a larger
amount, on an after-tax basis (taking into account federal, state and local
income taxes and the imposition of the Excise Tax), than if the Executive
received all of the Payments (such reduced amount is hereinafter referred to as
the “Limited Payment Amount”).  The Company shall reduce or eliminate the
Payments, by first reducing or eliminating those payments or benefits which are
payable in cash and then by reducing or eliminating non-cash payments, in each
case in reverse order beginning with payments or
 
 
18

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

 
 
benefits which are to be paid the farthest in time from the Determination (as
defined below).  Any notice given by the Executive pursuant to the preceding
sentence shall take precedence over the provisions of any other plan,
arrangement or agreement, including, but not limited to, the other provisions of
this Agreement, governing the Executive’s rights and entitlements to any
compensation, entitlement or benefit.
 
(b)           All calculations under this Section 14 shall be made by a
nationally recognized accounting firm designated by the Company and reasonably
acceptable to the Executive (other than the accounting firm that is regularly
engaged by any party who has effectuated a Change in Control) (the “Accounting
Firm”).  The Company shall pay all fees and expenses of such Accounting
Firm.  The Accounting Firm shall provide its calculations, together with
detailed supporting documentation, both to the Company and the Executive within
45 days after the Change in Control or the Date of Termination, whichever is
later (or such earlier time as is requested by the Company) and, with respect to
the Limited Payment Amount, shall deliver its opinion to the Executive that he
is not required to report any Excise Tax on his federal income tax return with
respect to the Limited Payment Amount (collectively, the
“Determination”).  Within 5 days of the Executive’s receipt of the
Determination, the Executive shall have the right to dispute the Determination
(the “Dispute”).  The existence of the Dispute shall not in any way affect the
right of the Executive to receive the Payments in accordance with the
Determination.  If there is no Dispute, the Determination by the Accounting Firm
shall be final binding and conclusive upon the Company and the Executive (except
as provided in subsection (c) below).
 
(c)           If, after the Payments have been made to the Executive, it is
established that the Payments made to, or provided for the benefit of, the
Executive exceed the limitations provided in subsection (a) above (an “Excess
Payment”) or are less than such limitations (an “Underpayment”), as the case may
be, then the provisions of this subsection (c) shall apply.  If it is
established pursuant to a final determination of a court or an Internal Revenue
Service (the “IRS”) proceeding which has been finally and conclusively resolved,
that an Excess Payment has been made, the Executive shall repay the Excess
Payment to the Company within 20 days following the determination of such Excess
Payment.  In the event that it is determined by (i) the Accounting Firm, the
Company (which shall include the position taken by the Company, or together with
its consolidated group, on its federal income tax return) or the IRS, (ii)
pursuant to a determination by a court, or (iii) upon the resolution to the
satisfaction of the Executive of the Dispute, that an Underpayment has occurred,
the Company shall pay an amount equal to the Underpayment to the Executive
within 10 days of such determination or resolution together with interest on
such amount at the applicable federal short-term rate, as defined under Section
1274(d) of the Code and as in effect on the first date that such amount should
have been paid to the Executive under this Agreement, from such date until the
date that such Underpayment is made to the Executive.
 
15.           Representations and Covenants.
 
(a)           The Executive represents and warrants that he has the free and
unfettered right to enter into this Agreement and to perform his obligations
under it and that he knows of no agreement between him and any other person,
firm or organization, or any law or regulation, that would be violated by the
performance of his obligations under this Agreement.  The Executive
 
 
19

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

 
 
agrees that he will not use or disclose any confidential or proprietary
information of any prior employer in the course of performing his duties for the
Company or any of its Affiliates.
 
(b)           The Company represents that (i) the execution of this Agreement
and the granting of the benefits and awards hereunder have been authorized by
the Company, including, where necessary, by the Board, (ii) the execution,
delivery and performance of this Agreement does not violate any law, regulation,
order, decree, agreement, plan or corporate governance document of the Company
and (iii) upon the execution and delivery of this Agreement by the Parties, it
shall be the valid and binding obligation of the Company enforceable against it
in accordance with its terms, except to the extent that enforceability may be
limited by applicable bankruptcy, insolvency or similar laws affecting the
enforcement of creditors’ rights generally.
 
16.           Assignability; Binding Nature.
 
This Agreement shall be binding upon and inure to the benefit of the Parties and
their respective successors, heirs (in the case of the Executive) and
assigns.  For purposes of this Section 16, a successor to the Company shall be
limited to an entity which shall have acquired all or substantially all of the
business and/or assets of the Company and shall have assumed (whether by
agreement or operation of law) the Company’s rights and obligations under this
Agreement.  No rights or obligations of the Executive under this Agreement may
be assigned or transferred by the Executive other than his rights to
compensation and benefits, which may be transferred only by will, operation of
law or in accordance with Section 22 below.

17.           Entire Agreement.
 
This Agreement contains the entire understanding and agreement between the
Parties concerning the subject matter hereof and, as of the Effective Date,
shall supersede all prior agreements, understandings, discussions, negotiations
and undertakings, whether written or oral, between the Parties with respect
thereto (including the Prior Employment Agreement as well as the employment
agreement between the Parties dated as of April 14, 2003 but not including any
equity awards or related equity agreements which remain outstanding as of the
Effective Date).

18.           Amendment or Waiver.
 
No provision of this Agreement may be amended unless such amendment is agreed to
in writing and signed by the Executive and an authorized officer of the
Company.  Notwithstanding the foregoing, the Company agrees to cooperate and
work in good faith to amend this Agreement prior to January 1, 2009 to comply
with Section 409A if such amendment is in the reasonable opinion of the
Executive’s counsel required to prevent the Executive from incurring any
additional tax, interest or penalties under Section 409A.  No waiver by either
Party of any breach by the other Party of any condition or provision contained
in this Agreement to be performed by such other Party shall be deemed a waiver
of a similar or dissimilar condition or provision at the same or any prior or
subsequent time.  Any waiver must be in writing and signed by the Party against
whom it is being enforced (either the Executive or an authorized officer of the
Company, as the case may be).

 
20

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

 
 
19.           Severability.
 
In the event that any provision or portion of this Agreement shall be determined
to be invalid or unenforceable by an arbitrator or court of competent
jurisdiction for any reason, in whole or in part, the remaining provisions of
this Agreement shall be unaffected thereby and shall remain in full force and
effect to the fullest extent permitted by law.

 
21

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

 
 
20.           Survivorship.
 
The respective rights and obligations of the Parties hereunder, including,
without limitation, Section 6(b), Section 9 (termination of employment), Section
10 (confidentiality; assignment of rights; return of Company property), Section
11 (non-competition; non-solicitation; non-disparagement), Section 12
(injunctive and other relief), Section 13 (cooperation), Section 14 (tax
matters), Section 21 (indemnification and liability insurance) and Section 24
(resolution of disputes), shall survive any expiration of the Term, including
expiration thereof upon the Executive’s termination of employment for whatever
reason, to the extent necessary to the intended preservation of such rights and
obligations.

21.           Indemnification and Liability Insurance.
 
The Company hereby agrees during, and after termination of, his employment to
indemnify the Executive and hold him harmless, both during the Term and
thereafter, to the fullest extent permitted by law and under the certificate of
incorporation and by-laws of the Company against and in respect of any and all
actions, suits, proceedings, claims, demands, judgments, costs, expenses
(including reasonable attorneys’ fees), losses, amounts paid in settlement to
the extent approved by the Company, and damages resulting from the Executive’s
good faith performance of his duties as an officer or director of the Company or
any Affiliate of the Company.  The Company shall reimburse the Executive for
expenses incurred by him in connection with any proceeding hereunder upon
written request from the Executive for such reimbursement and the submission by
the Executive of the appropriate documentation associated with these
expenses.  Such request shall include an undertaking by the Executive to repay
the amount of such advance or reimbursement if it shall ultimately be determined
that he is not entitled to be indemnified hereunder against such costs and
expenses.  The Company shall use commercially reasonable efforts to obtain and
maintain directors’ and officers’ liability insurance covering the Executive to
the same extent as the Company covers its other officers and directors.

22.           Beneficiaries/References.
 
The Executive shall be entitled, to the extent permitted under applicable plans,
agreements or law, to select and change a beneficiary or beneficiaries to
receive any compensation or benefit payable hereunder following the Executive’s
death by giving the Company written notice thereof.  In the event of the
Executive’s death or a judicial determination of his incompetence, reference in
this Agreement to the Executive shall be deemed, where appropriate, to refer to
his beneficiary, estate or other legal representative.

23.           Governing Law.
 
This Agreement shall be governed by and construed and interpreted in accordance
with the laws of New York without reference to principles of conflicts of law,
provided, however, that Federal law shall apply to the interpretation or
enforcement of Section 24 below.

24.           Resolution of Disputes.
 
 
22

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

 
 
Except as otherwise provided in Section 12 above, any controversy, dispute or
claim arising under or relating to this Agreement, the Executive’s employment
with the Company or any Affiliate or the termination thereof shall, at the
election of the Executive or the Company (unless otherwise provided in an
applicable Company plan, program or agreement), be resolved by confidential,
binding and final arbitration, to be held in the borough of Manhattan in New
York City in accordance with the rules and procedures of the Commercial
Arbitration Rules of the American Arbitration Association.  Judgment upon the
award rendered by the arbitrator may be entered in any court having jurisdiction
thereof and shall be binding upon the Parties.  The Executive consents to the
personal jurisdiction of the Courts of the State of New York (including the
United States District Court for the Southern District of New York) in any
proceedings for equitable relief.  The Executive further agrees not to interpose
any objection for improper venue in any such proceeding.  Each Party shall be
responsible for its own costs and expenses, including attorneys’ fees, and
neither Party shall be liable for punitive or exemplary damages, provided that
if the Executive substantially prevails with respect to all claims that are the
subject matter of the dispute, his costs, including reasonable attorneys’ fees,
shall be borne by the Company; provided that if such costs are not reimbursed in
connection with a dispute exempt from Section 409A pursuant to Treasury
Regulation Section 1.409A-1(b)(11) then such payment shall be made by the
Company to the Executive in the year following the year in which the dispute is
resolved.

25.           Notices.
 
Any notice given to a Party shall be in writing and shall be deemed to have been
given (i) when delivered personally (provided that a written acknowledgement of
receipt is obtained), (ii) three days after being sent by certified or
registered mail, postage prepaid, return receipt requested or (iii) two days
after being sent by overnight courier (provided that a written acknowledgement
of receipt is obtained by the overnight courier), with any such notice duly
addressed to the Party concerned at the address indicated below or to such other
address as such Party may subsequently designate by written notice in accordance
with this Section 25:

 
If to the Company:
The Warnaco Group, Inc.
   
501 Seventh Avenue
   
New York, New York 10018
   
Attention:  General Counsel
       
If to the Executive:
The most recent address in the Company’s records.

26.           Withholdings.
 
The Company may withhold from any amounts payable under this Agreement such
Federal, state, local or other taxes as shall be required to be withheld
pursuant to any applicable law or regulation.

 
23

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

 

27.           Headings.
 
The headings of the sections contained in this Agreement are for convenience
only and shall not be deemed to control or affect the meaning or construction of
any provision of this Agreement.

28.           Counterparts.
 
This Agreement may be executed in two or more counterparts.
 
 
24

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

 
 
IN WITNESS WHEREOF, the undersigned have executed this Agreement as of the date
first written above.

 
THE WARNACO GROUP, INC.
                           
By:
   /s/ Jay A. Galluzzo
   
Name:
Jay A. Galluzzo
   
Title:
Senior Vice President – Corporate Development,
   
General Counsel and Secretary
                           
THE EXECUTIVE
                           
/s/ Joseph R. Gromek
   
Joseph R. Gromek
 

 
25

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

 

Exhibit A
AGREEMENT AND RELEASE OF CLAIMS

 
THIS AGREEMENT AND RELEASE is executed by JOSEPH R. GROMEK (the “Executive”) as
of the date of this Agreement and Release.

WHEREAS, the Executive and The Warnaco Group, Inc. (the “Company”) entered into
an employment agreement dated December 19, 2007, as amended from time to time
(the “Employment Agreement”);

WHEREAS, the Executive has certain entitlements pursuant to the Employment
Agreement subject to the Executive’s executing this Agreement and Release.

NOW, THEREFORE, in consideration of the ­payments set forth in Section 9 of the
Employment Agreement and other good and valuable consideration, the Executive
agrees as follows:
The Executive, on behalf of himself and his dependents, heirs, administrators,
agents, executors, successors and assigns (the “Executive Releasors”), hereby
releases and forever discharges the Company and its affiliated companies and
their past and present parents, subsidiaries, successors and assigns and all of
the aforesaid companies’ past and present officers, directors, employees,
trustees, shareholders, representatives and agents (the “Company Releasees”),
from any and all claims, demands, obligations, liabilities and causes of action
of any kind or description whatsoever, in law, equity or otherwise, whether
known or unknown, that any Executive Releasor had, may have had or now has
against the Company or any other Company Releasee as of the date of execution of
this Agreement and Release arising out of or relating to the Executive’s
employment relationship, or the termination of that relationship, with the
Company (or any affiliate), including, but not limited to, any claim, demand,
obligation, liability or cause of action arising under any Federal, state, or
local employment law or ordinance (including, but not limited to, Title VII of
the Civil Rights Act of 1964, the Civil Rights Act of 1991, the Equal Pay Act,
the Americans With Disabilities Act of 1991, the Workers Adjustment and
Retraining Notification Act, the Employee Retirement Income Security Act (other
than any claim for vested benefits), the Family and Medical Leave Act, and the
Age Discrimination in Employment Act, as amended by the Older Workers’ Benefit
Protection Act), tort, contract, or alleged violation of any other legal
obligation (collectively “Released Executive Claims”).  Anything to the contrary
notwithstanding in this Agreement and Release or the Employment Agreement,
nothing herein shall release any Company Releasee from any claims or damages
based on (i) any right the Executive may have to enforce this Agreement and
Release or any right provided pursuant to Section 9 or Section 20 of the
Employment Agreement, or (ii) any right or claim that arises after the date of
this Agreement and Release.

The Executive acknowledges that he has been provided a period of at least 21
calendar days in which to consider and execute this Agreement and Release.  The
Executive further acknowledges and understands that he has seven calendar days
from the date on which he executes this Agreement and Release to revoke his
acceptance by delivering to the Company
 
 
26

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

 
 
written notification of his intention to revoke this Agreement and
Release.  This Agreement and Release becomes effective when signed unless
revoked in writing and in accordance with this seven-day provision.  To the
extent that the Executive has not otherwise done so, the Executive is advised to
consult with an attorney prior to executing this Agreement and Release.

This Agreement and Release shall be governed by and construed and interpreted in
accordance with the laws of New York without reference to principles of
conflicts of law.

IN WITNESS WHEREOF, the Executive has executed this Agreement and Release as of
the date written below.

       
Joseph R. Gromek
                     
Date:____________________________
 

 

 
 
27

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

 
 
Exhibit B
AGREEMENT AND RELEASE OF CLAIMS

 
THIS AGREEMENT AND RELEASE is executed by THE WARNACO GROUP, INC. (the
“Company”) as of the date of this Agreement and Release.

WHEREAS, the Company and Joseph R. Gromek (the “Executive”) entered into an
employment agreement dated December 19, 2007, as amended from time to time (the
“Employment Agreement”);

WHEREAS, the Executive has certain entitlements pursuant to the Employment
Agreement subject to the Executive’s executing a release of claims against the
Company in the form of Exhibit A to the Employment Agreement (“Executive
Release”);

WHEREAS, the Executive has executed and delivered the Executive Release to the
Company and has not revoked such release within the applicable revocation
period;

NOW, THEREFORE, in consideration of the mutual promises contained in the
Employment Agreement and other good and valuable consideration, the Company
agrees as follows:
The Company, on behalf of itself and its affiliated companies and their past and
present parents, subsidiaries, officers, directors and successors and assigns
but excluding the Executive (the “Company Releasors”), hereby releases and
forever discharges the Executive from any and all claims, demands, obligations,
liabilities and causes of action of any kind or description whatsoever, in law,
equity or otherwise, that any Company Releasor has, may have had or now has
against the Executive as of the date of execution of this Agreement and Release
arising out of or relating to the Executive’s employment relationship, or the
termination of that relationship, with the Company (or any affiliate),
including, but not limited to, any claim, demand, obligation, liability or cause
of action arising under any Federal, state, or local statute, regulation,
ordinance or order or any claim based on tort or contract law, other than any
claim, demand, obligation, liability or cause of action that is based on any
fraudulent act or on facts unknown to the Company or any Company Releasor on or
prior to the date of this Agreement and Release.  Anything to the contrary
notwithstanding in this Agreement and Release or the Employment Agreement,
nothing herein shall release the Executive or any other person released herein
from any claims or damages based on (i) any right the Company or any of its
affiliates may have to enforce this Agreement and Release or any right as
provided pursuant to Section 20 of the Employment Agreement or (ii) any right or
claim that arises after the date of this Agreement and Release.

This Agreement and Release shall be governed by and construed and interpreted in
accordance with the laws of New York without reference to principles of
conflicts of law.
 
 
28

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

 
 
IN WITNESS WHEREOF, the Company has executed this Agreement and Release as of
the date written below.

 
THE WARNACO GROUP, INC.
           
By:
             
Name:
             
Title:
             
Date:
   

 
 
29