Exhibit 4.5


THIRD  AMENDMENT  dated as of October 27, 1998 (the  "Amendment")  to  REVOLVING
CREDIT  AGREEMENT  dated as of June 2, 1997  (the  "Credit  Agreement")  between
LESLIE  FAY  MARKETING,  INC.  (the  "Borrower")  and THE  CIT  GROUP/COMMERCIAL
SERVICES,  INC.  ("CIT").  Terms which are capitalized in this Amendment and not
otherwise  defined  shall  have  the  meanings  ascribed  to them in the  Credit
Agreement.

WHEREAS, the Borrower and The Warren Apparel Group, Ltd. ("Warren Apparel") have
entered  into an Asset  Purchase  Agreement  dated  as of  September  25,  1998,
pursuant to which (i) Warren Apparel has agreed to sell to the Borrower, and the
Borrower has agreed to purchase, substantially all of Warren Apparel's inventory
and related intangible assets and (ii) the Borrower has agreed to assume certain
of the  obligations  of Warren  Apparel,  all on the terms  and  subject  to the
conditions contained in the Purchase Agreement; and

WHEREAS, the Borrower has requested CIT's consent to the Borrower's consummation
of the transactions  hereinabove  described,  and to the modification of various
terms and provisions contained in the Credit Agreement, including certain of the
financial covenants contained therein; and

WHEREAS,  CIT has  agreed to  consent  to the  Borrower's  consummation  of such
transactions, and to such modification of the Credit Agreement, all on the terms
and subject to the fulfillment of the conditions contained in this Amendment;

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

Section  One -  Amendment.  Effective  upon the  fulfillment  of the  conditions
contained  in Section  Four hereof,  the Credit  Agreement is hereby  amended to
provided as follows:

       (a) Section  1.01.  Certain  Definitions.  The  definitions  of the terms
Borrowing  Base,  Maturity  Date,  Net Amount of Eligible  Accounts  Receivable,
Notice of  Termination,  and Revolving  Credit  Commitment  are deleted in their
entirety,  the following are  substituted  in lieu thereof,  and the terms "Loan
Gross-up  Method",   "Termination  Date",  "Warren  Apparel";   "Warren  Apparel
Acquisition"  and  "Warren  Apparel  Purchase  Agreement",  and the  definitions
thereof,  are added to Section 1.01 in the  appropriate  alphabetical  order, as
follows:

       "Borrowing  Base" shall mean, as of the Relevant Date, an amount equal to
the difference between:

         (i)      the sum of (A)  85% of the Net  Amount  of  Eligible  Accounts
                  Receivable,  plus (B) the  lesser of (1) the sum of (x) 50% of
                  the Book Value of Eligible Inventory and (y) 50% of the amount
                  of L/C  Inventory,  provided that the  Inventory  with respect
                  thereto is not otherwise  included in the  Borrowing  Base and
                  (2) $15,000,000, plus

<PAGE>


                  (C)  100%  of  the  excess,  if  any,  of the  balance  in the
                  Funds-in-Use  Account  over  the  debit  balance  in the  Loan
                  Account, as of the opening of business on such date; and

       (ii)       such  reserves  as  CIT,  in  its  sole  discretion  exercised
                  reasonably, may deem appropriate.

       "Loan Gross-up  Method" means CIT's current system of operations by which
       the calculation, as of any date of determination with respect to Eligible
       Accounts  Receivable,  of the aggregate amount,  expressed in dollars, of
       discounts  granted by the Borrower with respect to such Eligible Accounts
       Receivable, is reflected in the Borrower's Loan Account.

       "Maturity Date" shall mean, initially, the last day of the Original Term,
       and  thereafter,  the last day of the then current  Renewal  Term, if CIT
       shall have given the Borrower a Notice of Termination  prior to such date
       within  the  time  period  applicable  to CIT  required  pursuant  to the
       definition of the term Notice of Termination.

       "Net Amount of Eligible  Accounts  Receivable" means the aggregate unpaid
       invoice amount of Eligible Accounts  Receivable less (i) sales, excise or
       similar taxes,  returns,  discounts (but with respect to such  discounts,
       only on and after the date upon  which  the Loan  Gross-up  Method  shall
       cease to be used by CIT), chargebacks,  claims, advance payments, credits
       and  allowances  of  any  nature  at any  time  issued,  owing,  granted,
       outstanding, available or claimed, and (ii) in the case of sums due under
       the Factoring  Agreement,  deductions  for factoring  charges,  interest,
       discounts  ( but with  respect to such  discounts,  only on and after the
       date upon which the Loan Gross-up  Method shall cease to be used by CIT),
       estimated  anticipation,  chargebacks  based upon  disputes  and returns,
       chargebacks  of client risk accounts  purchased  with  recourse,  and all
       other charges, offsets and reserves under the Factoring Agreement.

       "Notice of  Termination"  shall  mean,  in the case of CIT,  the  written
       notice of CIT delivered to the Borrower at least sixty (60) days prior to
       the  relevant  Maturity  Date,  pursuant to which CIT shall  indicate its
       intention to terminate this Agreement effective as of such Maturity Date,
       and shall mean,  in the case of the Borrower,  the written  notice of the
       Borrower  delivered  to  CIT  at  least  sixty  (60)  days  prior  to the
       Termination Date stated in such Notice of Termination,  pursuant to which
       the Borrower  shall  indicate its  intention to terminate  the  Agreement
       effective as of such Termination Date.

       "Revolving  Credit  Commitment"  shall mean the commitment of CIT to make
       Loans to the Borrower  pursuant to Section 2.01(a) hereof in an aggregate
       principal  amount not to exceed (i)  $37,000,000 at all times through and
       including  December  31,  1998 and (ii)  $42,000,000  at all times  after
       December 31, 1998,  as such amounts may be reduced  pursuant to the terms
       of this Agreement.

                                        2

<PAGE>



       "Termination  Date"  shall mean the date  stated by the  Borrower  in its
       Notice of  Termination,  if the Borrower shall have given CIT a Notice of
       Termination  prior to such date within the time period  applicable to the
       Borrower pursuant to the definition of the term Notice of Termination.

       "Warren  Apparel"  shall mean The Warren  Apparel  Group Ltd., a New York
       corporation.


       "Warren Apparel  Acquisition"  shall mean the acquisition by the Borrower
       of  substantially  all of the  inventory of Warren  Apparel,  and certain
       intangible  assets  related  thereto,  all as more fully set forth in the
       Warren Apparel Purchase Agreement.

       "Warren  Apparel  Purchase  Agreement"  shall  mean  the  Asset  Purchase
       Agreement, dated as of September 25, 1998, between Warren Apparel and the
       Borrower, as the same may be amended, modified,  supplemented or restated
       from time to time.

       (b) Section 2.05. Interest Rate. Section 2.05 is deleted in its entirety,
and the following is substituted in lieu thereof:

       "2.05.  Interest  Rate.  Each Loan shall bear  interest on the  principal
       amount  thereof  from time to time  outstanding  for each day during each
       calendar  month,  until paid, at a rate per annum for each such day equal
       to the Prime  Rate in effect on the last day of the  previous  month (the
       "then  applicable  Prime  Rate"),   minus  an  interest  rate  margin  of
       one-quarter  of one percent (1/4 of 1%).  "Prime  Rate",  as used herein,
       shall mean the interest rate per annum  publicly  announced  from time to
       time by the Bank in New York, New York as its Prime Rate. In the event of
       any  change in the  Prime  Rate,  the rate of  interest  hereunder  shall
       change,  as of the first day of the month following any change,  so as to
       remain  one-quarter of one per cent (1/4 of 1%) below the then applicable
       Prime  Rate.  The Prime Rate is not  intended  to be the  lowest  rate of
       interest charged by the Bank to its borrowers."

       (c) Section 3.01.  Letters of Credit.  Section 3.01 (a) (i) is amended by
deleting the second sentence thereof,  and by substituting the following in lieu
thereof:

       "The aggregate Letter of Credit Exposure shall not exceed $25,000,000, of
       which not more than  $5,000,000  may be  Letter of Credit  Exposure  with
       respect  to  Standby  Letters  of  Credit;  provided,  however,  that the
       calculation of such  $5,000,000  limit shall exclude the Letter of Credit
       Exposure with respect to the "Warren Apparel  Stand-by L/C", as such term
       is defined in Section Three of the Third  Amendment,  dated as of October
       27, 1998 to this Credit Agreement."

       (d)  Section  5.01.  Term of  Agreement.  Section  5.01 is deleted in its
entirety, and the following is substituted in lieu thereof:


                                        3

<PAGE>



       "5.01.  Term of  Agreement.  Subject  to CIT's  rights  under  Article XI
       hereof, this Agreement shall be in effect during the period commencing on
       the Closing Date and ending on June 2, 2001 (the  "Original  Term"),  and
       thereafter  shall  automatically  renew  itself for  successive  one-year
       periods (each a "Renewal Term"),  unless sooner terminated as provided in
       Section 5.02 hereof."

       (e)  Section  5.02.  Termination.  Section  5.02  (b) is  deleted  in its
entirety, and the following is substituted in lieu thereof:

       "(b) Termination by the Borrower. Upon delivery to CIT by the Borrower of
       a  Notice  of   Termination,   this  Agreement  shall  terminate  on  the
       Termination  Date  specified  in such  Notice of  Termination,  provided,
       however,  that on the Termination  Date so specified,  the Borrower shall
       satisfy in full all of its  obligations  under  Section  5.03  hereof and
       under any other Related  Document.  Any Notice of Termination so given by
       the  Borrower  shall  be  irrevocable  unless  CIT  otherwise  agrees  in
       writing."

       (f) Section 5.03.  Effect of Termination.  Section 5.03 (a) is amended by
(i) deleting the word "and" at the end of clause (iii)  thereof,  (ii)  deleting
the period at the end of clause (iv) thereof and  substituting in lieu thereof a
semi-colon  and the world "and" and (iii)  inserting  the  following  clause (v)
immediately after clause (iv) thereof:

       "(v) if such Notice of  Termination  is given by the Borrower to CIT, and
       the  Termination  Date specified  therein is a date which is (x) prior to
       June 2, 1999, the Borrower shall pay to CIT on such  Termination  Date an
       early  termination  fee in an  amount  equal to one per cent  (1%) of the
       "average  outstanding amount", as hereinafter defined, or (y) on or after
       June 2, 1999 but prior to June 2, 2000,  the Borrower shall pay to CIT on
       such  Termination  Date an early  termination  fee in an amount  equal to
       one-half of one per cent (1/2 of 1%) of the average  outstanding  amount.
       As used in this Section, the term "average outstanding amount" means, for
       the twelve month period ending with the month  preceding the  Termination
       Date specified by the Borrower in its Notice of  Termination,  the sum of
       (A) the average  amount of the Loans  outstanding  at the end of each day
       during  such  period  plus (B) the  average  amount  of  Letter of Credit
       Exposure outstanding at the end of each day during such period."

       (g) Section 10.06. Dividends and Related Distributions.  Section 10.06 is
deleted in its entirety and the following is substituted in lieu thereof:

       "10.06.  The Borrower  shall not declare,  make, pay or agree to pay, any
       dividend or other distribution of any nature (whether in cash,  property,
       securities  or  otherwise)  on  account of or in respect of shares of its
       capital  stock or on account of the purchase,  redemption,  retirement or
       acquisition  of any  shares of  capital  stock (or  warrants,  options or
       rights therefor), provided, however, that the Borrower shall be permitted
       to pay dividends or repurchase stock in an aggregate amount not to exceed


                                        4

<PAGE>



       $10,000,000  during the two year fiscal  period  ending on  December  31,
       1999,  so long as:  (a) at the time of, and after  giving  effect to, any
       such  payment of dividends or  repurchase  of stock,  no Event of Default
       shall have occurred and be continuing,  and (b) the undrawn  Availability
       before  and  after  the  making  of any such  dividend  payment  or stock
       repurchase shall be not less than $5,000,000.00."

       (h) Section 10.15. Minimum Consolidated Tangible Net Worth. Section 10.15
is deleted in its entirety and the following is substituted in lieu thereof:

       "10.15  Minimum  Consolidated  Tangible Net Worth.  The Borrower will not
       permit the Parent's  Consolidated  Tangible Net Worth to be less than the
       following  amounts during and at the end of each of the following  fiscal
       months:  (a) $34  million  for each of the fiscal  months of April,  May,
       June,  July and August of 1997,  (b) $35  million  for each of the fiscal
       months of  September,  October and November of 1997,  (c) $35 million for
       each of the fiscal  months of  December  of 1997 and  January,  February,
       March, April, May, June, July and August of 1998, and (d) $37 million for
       each fiscal month thereafter, provided, however, that at all times on and
       after the effective date of the Warren Apparel Acquisition, the amount of
       $37 million set forth in this clause (d) shall  automatically  be reduced
       to, and at all times thereafter shall be deemed to be, $35 million."

       (i) Section 10.16. Minimum Consolidated Working Capital. Section 10.16 is
deleted in its entirety and the following is substituted in lieu thereof:

       "10.16 Minimum Consolidated Working Capital. The Borrower will not permit
       the Parent's  Consolidated  Working Capital to be less than the following
       amounts during and at the end of each of the following fiscal months: (a)
       $33 million for each of the fiscal months of April,  May, June,  July and
       August 1997,  (b) $35 million for each of the fiscal months of September,
       October, November and December 1997, and January, February, March, April,
       May,  June and July 1998,  (c) $36 million for the fiscal month of August
       1998,  and (d) $37 million for the fiscal month of September 1998 and for
       each fiscal month thereafter, provided, however, that at all times on and
       after the effective date of the Warren Apparel Acquisition, the amount of
       $37 million set forth in this clause (d) shall  automatically  be reduced
       to, and at all times thereafter  shall be deemed to be, $35 million,  and
       provided  further that solely for purposes of determining  the Borrower's
       compliance  with this  covenant,  the  calculation  of such  Consolidated
       Working  Capital  as of any  date  of  determination  shall  exclude  the
       aggregate  principal  amount of any Loans and  Letter of Credit  Exposure
       outstanding as of such date."

       (j)  Section  10.17.  Minimum  Ratio of  Consolidated  Current  Assets to
Consolidated Current  Liabilities.  Section 10.17 is deleted in its entirety and
the following is substituted in lieu thereof:

                                        5

<PAGE>



       "10.17  Minimum  Ratio of  Consolidated  Current  Assets to  Consolidated
       Current  Liabilities.  The  Borrower  will not  permit  the  ratio of the
       Parent's Consolidated Current Assets to the Parent's Consolidated Current
       Liabilities  to be less than (a) 2.60 to 1.00 as of the end of the second
       fiscal  quarter  of  1997,  (b)  2.60 to 1.00 as of the end of the  third
       fiscal  quarter  of 1997,  (c)  2.60 to 1.00 as of the end of the  fourth
       fiscal  quarter  of  1997,  (d)  3.00 to 1.00 as of the end of the  first
       fiscal  quarter  of 1998,  (e) 3.10 to 1.00 as of the end of the  second,
       third and fourth  fiscal  quarters of 1998 and (f) 3.30 to 1.00 as of the
       end of each fiscal quarter thereafter, provided, however, that solely for
       purposes of determining the Borrower's compliance with this covenant, the
       calculation of the Parent's  Consolidated Current Liabilities,  as of any
       date of  determination,  shall exclude the aggregate  principal amount of
       any Loans and Letter of Credit Exposure outstanding as of such date."

       (k) Section 10.20. Capital Expenditures.  Section 10.20 is deleted in its
entirety, and the following is substituted in lieu thereof:

       "10.20  Capital  Expenditures.   The  Borrower  shall  not  make  Capital
       Expenditures  in an amount greater than (a) $1.5 million in the aggregate
       for the period from the Closing  Date through  January 3, 1998,  (b) $3.0
       million in the aggregate for the 1998 fiscal year and (c) $2.5 million in
       the  aggregate  for the  1999  fiscal  year,  and for  each  fiscal  year
       thereafter,  provided,  however,  that if the aggregate amount of Capital
       Expenditures actually made during any such fiscal year (or lesser period,
       if  applicable)  shall be less than the limit with  respect  thereto  set
       forth above (such limit,  without  giving effort to any increase  therein
       pursuant to this  proviso,  the "base  amount"),  then the amount of such
       short fall (the "rollover  amount") may be added to the amount of Capital
       Expenditures  permitted to be made for the immediately  succeeding fiscal
       year,  provided  further  that any Capital  Expenditures  made during any
       fiscal year for which any rollover  amount shall have been so added shall
       be applied  first,  to the base amount for such year and  second,  to the
       rollover amount added to such fiscal year."

       (l) Exhibit A to the Credit  Agreement  is  replaced  in its  entirety by
Exhibit A annexed to this Amendment.

       (m) Schedule 1.01A to the Credit Agreement is replaced in its entirety by
Schedule 1.01A annexed to this Amendment.

       (n) Schedule 1.01B to the Credit Agreement is replaced in its entirety by
Schedule 1.01B annexed to this Amendment.

       (o)  Schedule  7.25 to the  Credit  Agreement  is  amended  by adding the
following trademark information thereto:

                                        6

<PAGE>




    Trademark              Appln. */Reg. No.               Class
    ------------------------------------------------------------

DAVID WARREN                1202108                          25
DW3                         1842411                          25
RICHARD WARREN              1417515                          25
RIMINI                      1424026                          25
REGGIO                      75/139829                        25


Section Two - Consent. Subject to the fulfillment of the conditions contained in
Section Four of this  Amendment,  CIT hereby  consents to (i) the  execution and
delivery by the Borrower of the Warren Apparel Purchase  Agreement and the other
documents,  instruments and agreements  executed or delivered by the Borrower in
connection  therewith,  (ii) the  consummation  by the  Borrower  of the  Warren
Apparel  Acquisition  and  the  other  transactions  contemplated  to  occur  in
connection  therewith,  and (iii) the  delivery to CIT no later than January 15,
1999 of the estimated  operating  budget and related  projections for the Parent
and its consolidated  Subsidiaries for the fiscal year ending December 31, 1999,
notwithstanding the terms of Section 9.01(g)(i),  and agrees that the Borrower's
failure to deliver such items to CIT no later than December 1, 1998 shall not be
deemed to be a breach or violation of such Section or an Event of Default.

Section Three - Stand-by Letter of Credit. The Borrower hereby confirms that, in
conjunction with the Warren Apparel Acquisition,  pursuant to the Warren Apparel
Purchase  Agreement,  the  Borrower has agreed to obtain for the benefit of CIT,
and to deliver to CIT, a  stand-by  letter of credit  issued for the  Borrower's
account (the "Warren Apparel Stand-by L/C"), which letter of credit shall secure
(i) the payment or  reimbursement  of all  documentary  Letters of Credit issued
with CIT's  assistance  for the account of Warren  Apparel,  outstanding  on the
effective date of the Warren Apparel Acquisition, as more particularly described
on the Schedule of  Outstanding  Warren  Apparel L/C's annexed to this Amendment
and (ii) all other  obligations,  liabilities and indebtedness  arising under or
relating to such documentary Letters of Credit.

Section Four - Conditions  Precedent.  This Amendment shall become  effective on
the date when all of the following conditions,  the fulfillment of each of which
is a condition  precedent to the  effectiveness  of this  Amendment,  shall have
occurred.

       (a) CIT shall have received a fully  executed  counterpart or original of
this Amendment,  and each of the following  agreements,  instruments,  opinions,
certificates and documents:

       (i) an Amended  and  Restated  Note,  substantially  in the form  annexed
hereto as Exhibit A;

                                      

                                        7

<PAGE>




       (ii)  the  Warren   Apparel   Stand-by  L/C,  on  terms  and   conditions
satisfactory to CIT;

       (iii) a Note Pledge and Security  Agreement,  executed in favor of CIT by
Warren Apparel, as assignor, and confirmed by the Borrower, substantially in the
form annexed hereto as Exhibit B;

       (iv) a Confirmation of Continuing Secured Guaranty,  executed in favor of
CIT by each Guarantor, substantially in the form annexed hereto as Exhibit C;

       (v) financing statements on forms UCC-1 and UCC-3, as applicable,  naming
the Borrower as debtor, to be filed in all requisite jurisdictions; and

       (vi) a legal opinion, in form and substance satisfactory to CIT, from the
Borrower's counsel.

       (b) CIT  shall  have  received  a  Certificate  of the  Secretary  of the
Borrower  (l)  relating  to the  adoption  of the  resolutions  of the  Board of
Directors  of the  Borrower,  approving  this  Amendment,  the  other  documents
executed  or to be  executed  by the  Borrower  in  connection  herewith  and in
connection  with the  Warren  Apparel  Acquisition  and (2)  certifying  that no
amendments have been made to the Certificate of Incorporation and by-laws of the
Borrower  since June 2, 1997 and further  certifying the names and incumbency of
officers and the names and validity of signatures of such officers.

       (c) CIT and its  counsel  shall  have  received  and  reviewed  to  their
satisfaction the definitive Warren Apparel Purchase  Agreement and all ancillary
documents  relating  thereto,  the Warren  Apparel  Acquisition  shall have been
consummated  and  all  conditions  precedent  to its  effectiveness  shall  have
occurred  or, if any such  condition  shall  have been  waived,  CIT shall  have
determined that such waiver is acceptable.

       (d) Upon the  effectiveness of this Amendment,  all  representations  and
warranties  set  forth  in  the  Credit  Agreement  (except  for  such  inducing
representations and warranties that were only required to be true and correct as
of a prior date) shall be true and correct in all material respects on and as of
the  effective  date hereof,  and no Event of Default shall have occurred and be
continuing.

       (e) No  event  or  development  shall  have  occurred  since  the date of
delivery to CIT of the most recent  financial  statements  of the Parent and its
Subsidiaries  which event or development has had or is reasonably likely to have
a Material Adverse Effect.

       (f) All corporate and legal proceedings and all documents and instruments
executed or delivered in connection with this Amendment shall be satisfactory in
form and substance to CIT and its counsel.


                                        8

<PAGE>



       (g) There shall be no action,  suit or  proceeding  pending or threatened
against  the  Borrower  before  any  court  (including  any  bankruptcy  court),
arbitrator or governmental or administrative  body or agency which challenges or
relates to the consummation of the Warren Apparel Acquisition, this Amendment or
the other transactions contemplated herein.

       (h)  CIT  shall  have   received  such  further   agreements,   consents,
instruments  and  documents  as may be  necessary  or proper  in the  reasonable
opinion of CIT and its counsel to carry out the  provisions and purposes of this
Amendment.

          Section Five.  Representations and Warranties. The Borrower represents
and warrants (which  representations  and warranties shall survive the execution
and delivery hereof) to CIT that:

       (a) The Borrower has the  corporate  power,  authority and legal right to
execute,  deliver and perform this Amendment,  and the instruments,  agreements,
documents  and  transactions  contemplated  hereby,  and has taken  all  actions
necessary  to  authorize  the  execution,   delivery  and  performance  of  this
Amendment,   and  the  instruments,   agreements,   documents  and  transactions
contemplated hereby;

       (b) No consent of any Person (including, without limitation, stockholders
or creditors  of the  Borrower or  creditors of the Parent,  as the case may be)
other than CIT, and no consent,  permit, approval or authorization of, exemption
by,  notice  or  report  to,  or   registration,   filing  or  declaration  with
(collectively a "Consent") any governmental authority, is required in connection
with the execution,  delivery,  performance,  validity or enforceability of this
Amendment,   and  the  instruments,   agreements,   documents  and  transactions
contemplated hereby;

       (c) This  Amendment has been duly executed and delivered on behalf of the
Borrower by its duly authorized  officer,  and constitutes the legal,  valid and
binding obligation of the Borrower, enforceable in accordance with its terms;

       (d) The Borrower is not in default under any indenture, mortgage, deed of
trust, or other material agreement or material instrument to which it is a party
or by  which  it may be  bound.  Neither  the  execution  and  delivery  of this
Amendment,  nor the consummation of the transactions  herein  contemplated,  nor
compliance  with the  provisions  hereof will (i) violate any law or  regulation
applicable  to it, or (ii) cause a violation  by the  Borrower,  of any order or
decree of any court or  government  instrumentality  applicable  to it, or (iii)
conflict  with, or result in the breach of, or constitute a default  under,  any
indenture,  mortgage,  deed of trust,  or other  material  agreement or material
instrument to which the Borrower is a party or by which it may be bound, or (iv)
result in the creation or imposition of any lien,  charge,  or encumbrance  upon
any of the  property  of the  Borrower,  except in favor of CIT,  to secure  the
Obligations,  or (v) violate any provision of the Certificate of  Incorporation,
By-Laws or any capital stock provisions of the Borrower;

                                        9

<PAGE>



       (e) No Event of Default has occurred and is continuing; and

       (f) Since the date of CIT's  receipt of the  financial  statements of the
Parent and Subsidiaries on a consolidated and  consolidating  basis as of August
28, 1998, for the eight month period ending on such date, no change or event has
occurred  which  has had or is  reasonably  likely  to have a  Material  Adverse
Effect.

       Section Six.  General Provisions.

       (a) Except as herein  expressly  amended,  the Credit  Agreement  and all
other agreements, documents, instruments and certificates executed in connection
therewith,  are ratified and  confirmed in all respects and shall remain in full
force and effect in accordance with their respective terms.

       (b) The Borrower hereby  acknowledges  and confirms its  understanding of
the Loan Gross-up  Method,  and agrees that (i) CIT's method of calculating  the
aggregate  amount of the  discounts  granted by the Borrower with respect to any
referenced  Eligible Accounts  Receivable,  and reflecting such calculation as a
charge to the  Borrower's  Loan Account  rather than as a reduction to the gross
amount of such Eligible  Accounts  Receivable,  is an  appropriate  and accurate
method  of  making  such  calculation  and  (ii)  CIT may  continue  in its sole
discretion to employ such  methodology  with respect to the  calculation  of and
accounting for discounts granted by the Borrower.

       (c) The Borrower  hereby  covenants  and agrees that it shall execute and
deliver to CIT as soon as possible,  and in any event not later than thirty (30)
days from the date hereof, a trademark security agreement, in form and substance
satisfactory to CIT, suitable for recordation with the U.S. Patent and Trademark
Office, covering the trademarks described in Section One (o) of this Amendment.

       (d) All  references in the Related  Documents  and Loan  Documents to the
Credit  Agreement shall mean the Credit Agreement as amended as of the effective
date hereof,  and as amended hereby and as hereafter  amended,  supplemented  or
modified from time to time.  From and after the date hereof,  all  references in
the Credit Agreement to "this Agreement,"  "hereof," "herein," or similar terms,
shall mean and refer to the Credit Agreement as amended by this Amendment.

       (e) This Amendment may be executed by the parties hereto  individually or
in combination, in one or more counterparts,  each of which shall be an original
and all of which shall constitute one and the same agreement.

       (f) This  Amendment  shall be governed and  controlled by the laws of the
State of New York without reference to its choice of law principles.

                                       10

<PAGE>





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

                                             LESLIE FAY MARKETING, INC.

                                             By: /s/ Warren Wishart
                                                 -------------------------------
                                                  Name: Warren Wishart
                                                  Title: Chief Financial Officer
                                                         Secretary


                                             THE CIT GROUP/COMMERCIAL SERVICES,
                                             INC.

                                             By: /s/ Kelly Colleran
                                                 -------------------------------
                                                  Name: Kelly Colleran
                                                  Title: AVP

                                       11

<PAGE>



                                 SCHEDULE 1.01A
                           Leslie Fay Marketing, Inc.
                          Domestic Inventory Locations


Location Name          Address            County          Inventory Description








                          [to be completed by Borrower]

                                       12

<PAGE>


                                 SCHEDULE 1.01B
                               License Agreements



                          [to be completed by Borrower]

                                       13