EXECUTION
                                                                            COPY


FIFTH  AMENDMENT  dated as of August 25,  1999 (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 has requested  CIT's consent to a series of  transactions
pursuant  to which,  among  other  things,  the Parent  will  purchase or redeem
approximately one million shares of its capital stock; and

WHEREAS,  the Borrower has requested  CIT to consider  making a term loan to the
Borrower in the original  principal amount of $5 million,  the proceeds of which
would be  distributed  by the  Borrower  to the Parent and used by the Parent to
partially fund such purchase or redemption; and

WHEREAS,  the  Borrower  has further  requested  CIT to consider  extending  the
Original  Term and modifying  certain  financial  covenants and other  covenants
contained in the Credit Agreement; and

WHEREAS,  CIT has agreed to make such term loan to the  Borrower,  to extend the
Original  Term and to modify  such  covenants,  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  OF  CREDIT  AGREEMENT.  Upon the  fulfillment  of the
conditions  contained in Section Three hereof,  effective as of August 25, 1999,
the Credit Agreement is hereby amended to provide as follows:

         (A) SECTION 10.1.  CERTAIN  DEFINITIONS.  The  definitions of the terms
Borrowing Base,  Credit  Extension,  Loan,  Obligations and Related Documents or
Loan Documents are deleted in their  entirety,  the following are substituted in
lieu thereof, and the terms "Fifth Amendment Closing Date", "Inventory Subline",
"Redemption",  "Term Loan",  and "Term Note",  and the definition  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) the amount


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                  of the  Inventory  Subline   then in effect,  plus (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.

                  "Credit  Extension"  shall  mean (a) the making of any Loan by
                  CIT , (b)  the  making  of the  Term  Loan  by CIT or (c)  the
                  issuance,  or extension of the expiration  date of, any Letter
                  of  Credit  which CIT  assists  the  Borrower  in  opening  or
                  establishing.

                  "Fifth  Amendment  Closing  Date" shall mean the first date on
                  which each of the conditions set forth in Section Three of the
                  Fifth Amendment to the Revolving Credit Agreement, dated as of
                  August 25, 1999, shall have been satisfied.

                  "Inventory  Subline" shall mean the sum of $20,000,000,  which
                  amount shall increase  automatically by $1,000,000 each fiscal
                  year, effective on the last day of each such year,  commencing
                  with the fiscal year ending on January 1, 2000.

                  "Loan" or "Loans" shall mean any and all loan or loans made by
                  CIT to the Borrower under Section 2.01(a) of this Agreement.

                  "Obligations"  shall  mean all  obligations,  liabilities  and
                  indebtedness  of the Obligors to CIT incurred under or related
                  to this  Agreement,  the Note,  the Term Note,  the  Factoring
                  Agreement or any other Related Document,  the letter agreement
                  dated on or about the Closing  Date among Bank  Boston,  N.A.,
                  Bank America Business Credit,  Inc., Heller  Financial,  Inc.,
                  The Leslie Fay  Companies,  Inc.  and CIT and all Ledger Debt,
                  whether such  obligations,  liabilities  or  indebtedness  are
                  direct or indirect,  secured or  unsecured,  joint or several,
                  absolute  or  contingent,  due or to become  due,  whether for
                  payment or  performance,  now existing or  hereafter  arising,
                  including,  without  limitation,  those which are described in
                  either of the following clauses (i) or (ii):

                  (i) All  indebtedness,  obligations  (including  Reimbursement
                  Obligations)  and liabilities of any nature  whatsoever,  from
                  time to time arising under or in connection  with or evidenced
                  or secured by this  Agreement,  the Note,  the Term Note,  the
                  Letters of Credit or any other Related Document, including but
                  not limited to the  principal  amount of the Term Loan and the
                  Loans outstanding,  together with interest thereon, the amount
                  of the  Letter  of Credit  Exposure,  together  with  interest
                  thereon and all expenses,  fees and  indemnities  hereunder or
                  under any other Related  Document.  Without  limitation,  such
                  amounts include the Term Loan and interest thereon,  all Loans
                  and


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<PAGE>


                  interest  thereon  and the  amount  of all  Letter  of  Credit
                  Exposure  whether or not the Term Loan or such Loans were made
                  or any  Letters  of  Credit  to which  such  Letter  of Credit
                  Exposure  relates were issued in compliance with the terms and
                  conditions hereof or in excess of CIT's obligation to lend and
                  arrange  for the  issuance  of  Letters  of Credit  hereunder.
                  Except as otherwise  provided in the Factoring  Agreement with
                  respect to Factor Risk  Accounts (as defined in the  Factoring
                  Agreement),  if and to the extent any  amounts in any  account
                  (including  the  Loan  Account,  the  Depository  Accounts  or
                  otherwise)  constituting Collateral are applied to Obligations
                  hereunder,  and CIT is  subsequently  obligated  to  return or
                  repay any such  amounts to any Person  for any  reason,  other
                  than as a direct  result of CIT's gross  negligence or willful
                  misconduct  as  determined  by a final  judgment of a court of
                  competent jurisdiction, the amount so returned or repaid shall
                  be deemed a Loan hereunder and shall constitute an Obligation.

                  (ii) All  indebtedness,  obligations and liabilities from time
                  to time arising under or in  connection  with any account from
                  time to time  maintained by the Borrower  with CIT,  including
                  but not  limited  to all  Reimbursement  Obligations,  service
                  charges and  interest in  connection  with any  overdrafts  or
                  returned  items from time to time arising in  connection  with
                  any such account,  or arising under or in connection  with any
                  investment   services,   cash  management  services  or  other
                  services from time to time  performed by CIT pursuant to or in
                  connection with this Agreement or any other Related Document.

                  "Redemption"  shall mean the election of certain  shareholders
                  of the Parent to receive cash for some or all of the shares of
                  stock of the Parent held by such shareholders, pursuant to the
                  Agreement  and Plan of Merger  dated May 12,  1999 among Three
                  Cities  Offshore  II C.V.,  Three  Cities Fund II,  L.P.,  TCR
                  Acquisition Sub Co. and The Leslie Fay Company, Inc.

                  "Related  Documents" or "Loan Documents" means this Agreement,
                  the Customer  Terms  Agreement,  the Note,  the Term Note, the
                  Security Agreement,  the Trademark  Agreement,  each Guaranty,
                  the Stock Pledge Agreement, the Letters of Credit, each Letter
                  of Credit  Application,  the Confirmation Order, the Factoring
                  Agreement,  the  Factoring  Documents,  the  other  documents,
                  instruments and agreements referred to in Section 7.01 hereof,
                  and  all  other  instruments,  agreements  and  documents  now
                  existing  or  hereafter  entered  into  or in  effect  by  the
                  Obligors  or any  other  Person  from  time to time  creating,
                  evidencing,  directly or indirectly guaranteeing,  or granting
                  CIT a Lien to secure,  any obligations  under or in connection
                  with this  Agreement,  the Note,  the Term Note,  the Security
                  Agreement,  the Trademark Agreement,  each


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<PAGE>

                  Guaranty,  the Stock Pledge Agreement,  the Letters of Credit,
                  each Letter of Credit Application, the Confirmation Order, the
                  Factoring  Agreement,  the  Factoring  Documents  or any other
                  Related Document,  and all other  instruments,  agreements and
                  documents  from time to time  delivered in connection  with or
                  otherwise relating to any Related Document.

                  "Term Loan" shall mean the term loan in the original principal
                  amount of $5,000,000  made by CIT to the Borrower on the Fifth
                  Amendment Closing Date.

                  "Term Note" shall mean the  promissory  note of the  Borrower,
                  substantially  in the form  attached  hereto as  Exhibit  A-1,
                  executed  and  delivered  under this  Agreement,  as modified,
                  amended,  supplemented  or restated  from time to time and any
                  promissory  note or notes  issued in exchange  or  replacement
                  thereof, including all extensions,  renewals,  refinancings or
                  refundings thereof in whole or part.

         (B) SECTION 2.01.  REVOLVING CREDIT LOANS. Section 2.01 is re-captioned
"Revolving Credit Loans and Term Loan", and a new subsection (c) of Section 2.01
is added as follows:

                  "(c)  Term  Loan.  Subject  to the terms  and  conditions  and
                  relying upon the  representations  and  warranties  herein set
                  forth, on the Fifth Amendment Closing Date, CIT agrees to make
                  the Term Loan to the Borrower."

         (C) SECTION 2.02.  NOTE.  Section 2.02 is  re-captioned  "Note and Term
Note",  and the following  sentences are added to the end of Section 2.02:

                  "The obligation of the Borrower to repay the unpaid  principal
                  amount of the Term Loan made to it by CIT and to pay  interest
                  thereon shall be evidenced in part by the Term Note,  dated as
                  of  the  Fifth   Amendment   Closing   Date  with  the  blanks
                  appropriately  filled  in.  The  executed  Term Note  shall be
                  delivered  by the  Borrower  to CIT  on  the  Fifth  Amendment
                  Closing Date."

         (D) SECTION 2.03. MAKING OF LOANS. Section 2.03 is re-captioned "Making
of Loans  and Term  Loan",  and the  following  sentence  is added to the end of
subsection (a) of Section 2.03:

                  "On the Fifth Amendment  Closing Date, CIT shall make the full
                  amount  of  the  Term  Loan   available  to  the  Borrower  by
                  depositing the proceeds thereof in the  Disbursement  Account,
                  or at the Borrower's  request, by wire transfer of same to the
                  bank  accounts and in the amounts set forth in a duly executed
                  Notice of Borrowing."

         (E) SECTION 2.04. MANDATORY PREPAYMENT; OPTIONAL PREPAYMENT; COMMITMENT
REDUCTION. Section 2.04 is amended by (i) deleting clause (ii) of subsection (a)
of Section 2.04


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<PAGE>


in its entirety,  (ii) deleting  subsection (b) of Section 2.04 in its entirety,
(iii)  substituting the following clause (ii) and subsection (b),  respectively,
in lieu  thereof,  and (iv)  adding a new  subsection  (e) to Section  2.04,  as
follows:

                  "(ii)  Disposition of Assets,  etc. Without limiting any other
                  provision  of this  Agreement  or any other  Related  Document
                  permitting  or  requiring  prepayment  of the Term Loan or the
                  Loans in whole or part,  the  Borrower  shall  prepay the Term
                  Loan in  whole or in part,  until  paid in full,  and then the
                  Loans in whole or in part,  in each case  without  premium  or
                  penalty,  except as  otherwise  set forth in Section  5.03 (a)
                  (v),  in an  amount  equal  to 100% of the Net  Sale  Proceeds
                  constituting  cash  received  by any  Obligor  from any  sale,
                  lease,  transfer or other  disposition of any asset outside of
                  the  ordinary  course of the  business  of the  Obligors,  the
                  proceeds of any claim made under any insurance policy covering
                  any assets of any Obligor and the proceeds of any condemnation
                  or similar proceeding with respect to any real property of any
                  Obligor.  Any prepayment required under this clause (ii) shall
                  be made on the first  Business Day after the  consummation  of
                  such  transfer,  sale,  disposition,  settlement,  issuance or
                  other event triggering a prepayment."

                  "(b)  Optional  Prepayment.  Except as otherwise  set forth in
                  Section  5.03 (a) (v),  the  Borrower  may without  penalty or
                  premium at any time or from time to time  prepay,  in whole or
                  in part, the Term Loan and any or all Loans then outstanding."

                  "(e)  Application of Prepayments of Term Loan. All prepayments
                  of the  Term  Loan  shall be  applied  against  the  scheduled
                  installments  of  principal  thereof,   in  inverse  order  of
                  maturity."

         (F)  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. The Term Loan, and 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")  (i) in the  case of the Term
                  Loan,  plus an interest rate margin of two percent  (2%),  and
                  (ii) in the case of the Loans,  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 rates of interest  hereunder shall change, as of the
                  first day of the month  following any change,  so as to remain
                  (i) in the case of the Term Loan,  two per cent (2%) above the


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<PAGE>


                  then applicable Prime Rate, and (ii) in the case of the Loans,
                  one-quarter  of  one  percent  (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."

          (G)  SECTION  2.06.  INTEREST PAYMENT DATES.  Section 2.06 is  deleted
deleted in its entirety and the following is substituted in lieu thereof:

                  "2.06. Interest Payment Dates. The Borrower shall pay interest
                  on the unpaid principal amount of the Term Loan, from the date
                  the Term Loan is made until  such  principal  amount  shall be
                  paid in full, and on the unpaid principal amount of each Loan,
                  from the date of such Loan until such  principal  amount shall
                  be paid in full,  which interest  shall be payable  monthly in
                  arrears  on the first  day of each  month,  commencing  on the
                  first  day of the  month  following  the  month in  which  the
                  Closing Date occurs, in the case of the Loans, and in the case
                  of the  Term  Loan,  commencing  on  the  first  day of  month
                  following the Fifth Amendment  Closing Date. After maturity of
                  any  principal  amount  of  the  Term  Loan  or any  Loan  (by
                  acceleration, at scheduled maturity or otherwise), interest on
                  such amount shall be due and payable on demand."

         (H)  SECTION 2.07.  AMORTIZATION.  Section  2.07  is  deleted  in   its
 entirety and the following is substituted in lieu thereof:

                  "2.07 Amortization.  To the extent not due and payable earlier
                  pursuant to the terms of this Agreement, (a) the entire unpaid
                  principal amount of each of the Loans shall be due and payable
                  in full on the Maturity Date and (b) the principal  balance of
                  the Term Loan  shall be paid in equal and  successive  monthly
                  installments,  based on an amortization schedule consisting of
                  sixty (60) months, each of which installments shall be due and
                  payable  on the  first  day of the  month,  commencing  on the
                  earlier to occur of (i) January 1, 2000 and (ii) the first day
                  of the sixth  month  after the  month  during  which the Fifth
                  Amendment Closing Date shall occur,  provided,  however,  that
                  the outstanding and unpaid principal balance of the Term Loan,
                  and all accrued and unpaid interest thereon,  shall be due and
                  payable in full on the Maturity Date."

         (I)  SECTION  2.08.  PAYMENTS.  Section  2.08 is  amended  by  deleting
subsections (a) and (b) thereof in their entirety, substituting the following in
lieu thereof,  re-lettering  subsection  (e) thereof as  subsection  (f), and by
adding a new subsection (e) thereof as follows:

                  "2.08.   Payments.

                  (a) Time,  Place and Manner.  Except with  respect to optional
                  prepayments  as  provided  in  Section  2.04(b)  hereof,   all
                  payments and  prepayments  to be made in respect of principal,
                  interest,   fees  or  other  amounts  due  from  the  Borrower
                  hereunder,  under the Note,


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<PAGE>


                  the Term Note or any other Related  Document  shall be payable
                  at or before 12:00 Noon,  New York City time,  on the day when
                  due  without  presentment,  demand,  protest  or notice of any
                  kind, all of which are hereby expressly waived.  Such payments
                  shall be made to CIT in Dollars in funds immediately available
                  at its Office without setoff,  counterclaim or other deduction
                  of any nature.  The Borrower hereby authorizes CIT to, and CIT
                  may, from time to time, when due and payable,  charge the Loan
                  Account with any  interest,  fees or expenses that are due and
                  payable  under this  Agreement  or any Related  Document.  The
                  Borrower  confirms  that any charges  which CIT may so make to
                  the  Loan  Account  as  herein  provided  will  be  made as an
                  accommodation  to the Borrower and solely at CIT's  discretion
                  and shall  constitute a Loan to the Borrower.  On the last day
                  of each  month,  CIT  shall  transfer  and  credit to the Loan
                  Account the amount  reflected in the  Funds-in-Use  Account on
                  such  day.   Credit  balances  in  the  Loan  Account  may  be
                  transferred to the Borrower at any time and from time to time.
                  CIT shall use reasonable  efforts to provide the Borrower with
                  copies or other  evidence of all  charges to the Loan  Account
                  promptly  and  within  five  Business  Days of the  date  such
                  charges are made,  provided  that the failure to provide  such
                  copies  or such  other  evidence  to the  Borrower  shall  not
                  relieve  the  Borrower  of any of its  obligations  under this
                  Agreement. Interest on the Term Loan, and on all Loans and all
                  fees that  accrue on a per annum  basis,  shall be computed on
                  the basis of the actual  number of days  elapsed in the period
                  during  which   interest  or  such  fee  accrues  and  a  year
                  consisting of 360 days. In computing interest on the Term Loan
                  and on any Loan,  the date of the  making of the Term Loan and
                  such Loan shall be included  and the date of payment  shall be
                  excluded."

                  (b) Interest Upon Events of Default.  To the extent  permitted
                  by law,  after there shall have  occurred and so long as there
                  is continuing an Event of Default pursuant to Section 11.01 of
                  this Agreement, all principal,  interest, fees, indemnities or
                  any other  obligations  for the  payment  of money  under this
                  Agreement,  the  Note,  the  Term  Note or any  other  Related
                  Document (and  including  interest  accrued under this Section
                  2.08(b))  shall bear  interest for each day until paid (before
                  and after judgment), payable on demand, at two percent (2%) in
                  excess of the rate of interest  otherwise in effect under this
                  Agreement and, if no interest rate is otherwise in effect,  at
                  a rate per annum of three  percent (3%), or five percent (5%),
                  in the case of the Term  Note,  above the Prime  Rate for such
                  day   (collectively,   the  "Default  Rate").  CIT  shall  use
                  reasonable  efforts to  promptly  provide  the  Borrower  with
                  notice that  interest  is accruing at the Default  Rate and of
                  the Event of Default  giving rise  thereto,  provided that the
                  failure of CIT to provide  such notice to the  Borrower  shall
                  not limit the  rights of


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<PAGE>


                  CIT under this Section  2.08(b) or relieve the Borrower of its
                  obligations under this Section 2.08(b) or the Agreement."

                  "(e)  Unused  Line  Fee.  The  Borrower  shall  pay  to CIT in
                  arrears,  on the first day of each  month,  commencing  on the
                  first day of the month following the Fifth  Amendment  Closing
                  Date,  and on the Maturity Date, a fee (the "unused line fee")
                  of .25% per annum on the average  daily  unused  amount of the
                  Revolving Credit Commitment.  For purposes of calculating such
                  average daily unused amount on any date of determination, each
                  Loan made on such date, and each Letter of Credit  outstanding
                  on such  date,  shall  be  considered  a use of the  Revolving
                  Credit Commitment."

         (J)  SECTION  2.09.  USE OF  PROCEEDS.  Section  2.09 is deleted in its
entirety,  and the following is  substituted  in lieu thereof:

                  "2.09  Use  of  Proceeds.   The  Borrower  hereby   covenants,
                  represents and warrants that (a) except as otherwise set forth
                  in clause (b)  hereof,  the  proceeds  of the Loans made to it
                  will be used solely to fund  working  capital in the  ordinary
                  course  of the  Borrower's  business  and  for  other  general
                  corporate purposes of the Borrower and (b) the proceeds of the
                  Term Loan and of the Loans  made to it on the Fifth  Amendment
                  Closing Date will be used to fund the  declaration and payment
                  of a distribution to the Parent, the proceeds of which will be
                  used to fund the Redemption."

         (K) SECTION 2.10.  INCREASED COSTS AND REDUCED RETURN.  Subsections (a)
and (b) of Section 2.10 are deleted in their  entirety,  and the  following  are
substituted in lieu thereof:

                  "2.10.   Increased   Costs  and  Reduced Return.

                  (a)  If  CIT  or  the  Letter  of  Credit  Issuer  shall  have
                  determined  that the  adoption  or  implementation  of, or any
                  change in, any law, rule, treaty or regulation, or any policy,
                  guideline or directive of, or any change in the interpretation
                  or administration thereof by, any court, central bank or other
                  administrative or Governmental Authority, or compliance by the
                  Letter of Credit Issuer or CIT or any Person  controlling  CIT
                  or the  Letter  of  Credit  Issuer  with any  directive  of or
                  guideline   from  any  central  bank  or  other   Governmental
                  Authority or the  introduction  of or change in any accounting
                  principles  applicable to the Letter of Credit Issuer,  CIT or
                  any Person  controlling CIT or the Letter of Credit Issuer (in
                  each case,  whether or not having the force of law), shall (i)
                  change  the basis of  taxation  of  payments  to the Letter of
                  Credit Issuer, CIT or any Person controlling CIT or the Letter
                  of Credit Issuer of any amounts payable  hereunder (except for
                  taxes on the  overall  net  income  of the  Letter  of  Credit
                  Issuer,  CIT or any  Person  controlling  CIT or the Letter of
                  Credit  Issuer),  (ii) impose,  modify or deem


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<PAGE>


                  applicable any reserve, special deposit or similar requirement
                  against the Term Loan,  any Loan,  Letter of Credit or against
                  assets of or held by, or deposits  with or for the account of,
                  or credit  extended by, the Letter of Credit  Issuer,  CIT, or
                  any Person  controlling  CIT or the Letter of Credit Issuer or
                  (iii) impose on the Letter of Credit Issuer, CIT or any Person
                  controlling  CIT or the  Letter  of  Credit  Issuer  any other
                  condition regarding this Agreement, the Term Loan, any Loan or
                  Letter of Credit,  and the result of any event  referred to in
                  clauses (i), (ii) or (iii) above shall be to increase the cost
                  to the Letter of Credit Issuer or CIT of making the Term Loan,
                  any Loan,  issuing or  guaranteeing  any Letter of Credit,  or
                  agreeing to make the Term Loan,  any Loan or issue or guaranty
                  any Letter of Credit,  or to reduce  any  amount  received  or
                  receivable  by the Letter of Credit  Issuer or CIT  hereunder,
                  then,  upon demand by the Letter of Credit  Issuer or CIT, the
                  Borrower  shall pay to the Letter of Credit Issuer or CIT such
                  additional  amounts  as will  compensate  the Letter of Credit
                  Issuer  or CIT for  such  increased  costs  or  reductions  in
                  amount.

                  (b)  If  CIT  or  the  Letter  of  Credit  Issuer  shall  have
                  determined   that  any  Capital   Guideline   or  adoption  or
                  implementation  of, or any change in, any Capital Guideline by
                  the Governmental  Authority charged with the interpretation or
                  administration  thereof, or compliance by the Letter of Credit
                  Issuer,  CIT or any Person  controlling  such Letter of Credit
                  Issuer or CIT with any Capital  Guideline  or with any request
                  or directive of any such  Governmental  Authority with respect
                  to any Capital  Guideline,  or the  implementation  of, or any
                  change in, any applicable accounting principles (in each case,
                  whether or not having the force of law), either (i) affects or
                  would affect the amount of capital  required or expected to be
                  maintained by the Letter of Credit  Issuer,  CIT or any Person
                  controlling the Letter of Credit Issuer or CIT, and the Letter
                  of Credit  Issuer or CIT  determines  that the  amount of such
                  capital is  increased as a direct or indirect  consequence  of
                  the Term  Loan or any Loans  made or  maintained,  Letters  of
                  Credit  issued or any guaranty  with respect  thereto,  or the
                  Letter  of  Credit   Issuer's  or  CIT's   other   obligations
                  hereunder,  or (ii) has or would have the  effect of  reducing
                  the rate of return on the Letter of Credit Issuer's,  CIT's or
                  any such other  controlling  Person's capital to a level below
                  that  which  the  Letter  of  Credit   Issuer,   CIT  or  such
                  controlling   Person   could  have   achieved   but  for  such
                  circumstances  as a consequence  of the Term Loan or any Loans
                  made or maintained,  Letters of Credit issued, or any guaranty
                  with respect thereto or any agreement to make the Term Loan or
                  Loans,  to issue  Letters  of Credit  or the  Letter of Credit
                  Issuer's or CIT's other  obligations  hereunder (in each case,
                  taking into consideration the Letter of Credit Issuer's, CIT's
                  or such other  controlling  Person's  policies with respect to
                  capital  adequacy),  then, upon demand by the Letter of Credit
                  Issuer or CIT, the Borrower  shall pay to the Letter of


                                      -9-
<PAGE>


                  Credit Issuer or CIT from time to time such additional amounts
                  as will compensate the Letter of Credit Issuer or CIT for such
                  cost of maintaining  such increased  capital or such reduction
                  in the rate of return on the Letter of Credit Issuer's,  CIT's
                  or such other controlling Person's capital."

          (L)  SECTION 5.01.  TERMINATION.  Section  5.01  is  deleted  in   its
entirety, and the following is substituted in lieu thereof:

                  "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,  2004  (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."

         (M)  SECTION  5.03.  EFFECT OF  TERMINATION.  Clause (v) of  subsection
(a) of Section 5.03 is deleted in its entirety, and the following is substituted
in lieu 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, 2000,  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, (y) on or after June 2, 2000
                  but prior to June 2, 2001,  the  Borrower  shall pay to CIT on
                  such  Termination  Date an early  termination fee in an amount
                  equal to  three-quarters  of one per  cent  (3/4 of 1%) of the
                  average  outstanding  amount,  or (z) on or after June 2, 2001
                  but prior to June 2, 2004,  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."

         (N)  SECTION 10.05.  LOANS,  ADVANCES AND  INVESTMENTS.  Section  10.05
is deleted in its entirety, and the following is substituted in lieu thereof:

                  "10.05. Loans,  Advances and Investments.  Except as otherwise
                  expressly  permitted by this Section 10.05, the Borrower shall
                  not at any time make or suffer to remain  outstanding any loan
                  or advance to, or purchase,  acquire or own any stock,  bonds,
                  notes or securities of, or any partnership  interest  (whether
                  general or limited) in, or any other  interest in, or make any
                  capital   contribution  to,  any  other  Person.   By  way  of
                  illustration,  and without limitation


                                      -10-
<PAGE>


                  of the foregoing,  it is understood  that the Borrower will be
                  deemed to have made an advance to a Person:  (x) to the extent
                  that  the  Borrower  performs  any  service  for  such  Person
                  (including  but  not  limited  to  management  services),   or
                  transfers any property to such Person,  and is not  reimbursed
                  for such  service or  property  and (y) to the extent that the
                  Borrower  pays any  obligation  on behalf of such Person.  The
                  amount of such advance shall be deemed to be the fair value of
                  the services so performed or property so  transferred  (in the
                  case of clause (x)) or the amount so paid by the  Borrower (in
                  the case of clause (y)).

         The following are excepted from the operation of this Section 10.05:

                  (a) loans or  advances  to  Dominick  Felicetti  or any of the
                  Designated  Officers (each,  including Dominick  Felicetti,  a
                  "senior  manager"),  provided  that (i) the  proceeds  of such
                  loans or advances are used to fund the  acquisition  of shares
                  of capital  stock of the  Parent,  (ii) such  shares  shall be
                  owned or controlled, beneficially and of record, by the senior
                  manager to whom such loan or advance shall be made,  (iii) the
                  principal  amount of such loan or advance,  together  with the
                  unpaid  principal  amount of all  previous  loans and advances
                  made to such  senior  manager  for  such  purpose,  shall  not
                  exceed, in the aggregate, the amount of the annual base salary
                  of such senior manager,  as in effect on the date of such loan
                  or advance,  and (iv) such  senior  manager  shall  pledge and
                  collaterally  assign  to  CIT,  or  cause  to be  pledged  and
                  collaterally  assigned  to CIT,  pursuant  to a duly  executed
                  Stock Pledge Agreement,  and shall deliver to CIT, or cause to
                  be delivered to CIT, all of the shares of capital stock of the
                  Parent  so   acquired,   as   collateral   security   for  all
                  Obligations;

                  (b) in addition to loans and advances to  employees  permitted
                  under  clause (a) above,  (i)  advances to  employees  to meet
                  expenses incurred or to be incurred by such employees,  salary
                  advances  and other  similar  advances to  employees  and (ii)
                  advances to Persons  performing  contracting  services for the
                  Borrower,  so long as  such  advances  are  made  against  the
                  amounts to be paid by the Borrower for such services,  in each
                  case  to  non-Affiliates  and in the  ordinary  course  of the
                  Borrower's business, provided that all advances in the case of
                  clause (i) may not exceed $200,000 in the aggregate at any one
                  time  outstanding,  and in the  case of  clause  (ii)  may not
                  exceed  $300,000 in the aggregate at any one time  outstanding
                  (exclusive  of that  certain  loan in the  original  principal
                  amount of $220,000 made, or which may be made, by the Borrower
                  to Metrix Computer Cutting, Inc.);

                  (c) ownership of any capital stock, bonds, notes,  securities,
                  partnership or joint venture interests on the Closing Date;


                                      -11-
<PAGE>


                  (d)  the  Cash  Collateral  Account  and  the  other  accounts
                  permitted or required to be maintained  pursuant  hereto,  any
                  investment  of funds on deposit in the foregoing to the extent
                  expressly permitted hereunder; and

                  (e) (i) direct obligations of the United States of America, or
                  any  agency  or   instrumentality   thereof,   or  obligations
                  guaranteed by the United States of America;  (ii) certificates
                  of  deposit   maturing  within  one  year  from  the  date  of
                  acquisition,  bankers acceptances, or overnight bank deposits,
                  in each case issued by,  created by, or with, a United  States
                  bank  whose   long-term   certificates   of  deposit  have  an
                  investment  grade rating by S&P or Moody's;  (iii)  commercial
                  paper  given a rating of A-1 or higher by S&P or P-1 or higher
                  by Moody's and  maturing  not more than 270 days from the date
                  of creation thereof; (iv) tender bonds, with a maturity day or
                  tender  option of not in excess of one year,  with  ratings of
                  A-1 or AA or higher  by S&P or P-1 or Aa or higher by  Moody's
                  or the payment of the  principal  of and  interest on which is
                  fully  supported  by a letter  of  credit  issued  by a United
                  States bank whose long-term  certificates of deposit are rated
                  at least  AA or the  equivalent  thereof  by S&P and Aa or the
                  equivalent thereof by Moody's;  and (v) repurchase  agreements
                  pertaining to  investments  of the types  described in clauses
                  (i) (ii), (iii) and (iv) hereof."

         (O)    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,  in addition to amounts paid by the
                  Borrower on or prior to the Fifth  Amendment  Closing  Date as
                  dividends  or to  repurchase  stock,  the  Borrower  shall  be
                  permitted to declare and pay dividends or repurchase  stock so
                  long as the amount to be  declared  and paid as a dividend  or
                  the amount to be paid to repurchase stock, as the case may be,
                  together  with all such  amounts  theretofore  paid  after the
                  Fifth  Amendment  Closing  Date,  shall  not  exceed,  in  the
                  aggregate,  the sum of  $2,000,000  plus, if and to the extent
                  that the Net Income of the Parent,  calculated on a cumulative
                  basis for the period commencing with the fiscal quarter during
                  which the Fifth Amendment  Closing Date occurs and ending with
                  the  fiscal  quarter  preceding  any  date  of  determination,
                  exceeds  $1,000,000,  an amount  equal to (x) one-half of such
                  cumulative  Net Income in excess of  $1,000,000  minus (y) all
                  amounts  after the Fifth  Amendment  Closing Date and prior to
                  such date of determination distributed as dividends or paid to
                  repurchase  stock  (including




                                      -12-
<PAGE>


                  amounts so  distributed  or paid  pursuant  to the  $2,000,000
                  basket hereinabove provided), provided further that (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,  (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 and (c)
                  solely for purposes of determining  the Borrower's  compliance
                  with this covenant,  the  calculation of such Net Income shall
                  exclude negative goodwill."

         (P)  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,
                  as of any date of  determination,  to be less  than an  amount
                  equal to $35,000,000  minus the aggregate  amount of dividends
                  and  repurchases of stock paid in cash, in accordance with the
                  terms of Section  10.06,  during the period  commencing on the
                  Fifth  Amendment  Closing  Date  and  ending  on such  date of
                  determination,  provided, however, that solely for purposes of
                  determining the Borrower's compliance with this covenant,  the
                  calculation  of such  Consolidated  Tangible  Net Worth  shall
                  include the value of goodwill,  determined in accordance  with
                  GAAP, created from the acquisition, directly or indirectly, by
                  the Parent,  after the Fifth Amendment  Closing Date, of stock
                  or  assets,  so long  as  such  acquisition  shall  have  been
                  consented to in advance, in writing, by CIT."

         (Q)  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,  as of
                  any date of determination,  to be less than an amount equal to
                  $30,000,000  minus  the  aggregate  amount  of  dividends  and
                  repurchases  of stock  paid in cash,  in  accordance  with the
                  terms of Section  10.06,  during the period  commencing on the
                  Fifth  Amendment  Closing  Date  and  ending  on such  date of
                  determination,  provided, however, that solely for purposes of
                  determining the Borrower's compliance with this covenant,  the
                  calculation of such Consolidated Working Capital shall include
                  the value of goodwill,  determined  in  accordance  with GAAP,
                  created from the acquisition,  directly or indirectly,  by the
                  Parent,  after the Fifth  Amendment  Closing Date, of stock or
                  assets,  so long as such acquisition shall have been consented
                  to in advance, in writing, by CIT."


                                      -13-
<PAGE>


         (R) 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:

                  "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,  as of any date of
                  determination,  to  be  less  than  2.50  to  1.00,  provided,
                  however,   that  solely  for  purposes  of   determining   the
                  Borrower's  compliance with this covenant,  the calculation of
                  such  Consolidated  Current  Assets  shall  be  deemed  to  be
                  increased  by  (i)  the  aggregate  amount  of  dividends  and
                  repurchases  of stock  paid in cash,  in  accordance  with the
                  terms of Section  10.06,  during the period  commencing on the
                  Fifth  Amendment  Closing  Date  and  ending  on such  date of
                  determination,  and (ii) the value of goodwill,  determined in
                  accordance with GAAP,  created from the acquisition,  directly
                  or  indirectly,  by the  Parent,  after  the  Fifth  Amendment
                  Closing Date, of stock or assets,  so long as such acquisition
                  shall have been consented to in advance, in writing, by CIT."

         (S) SECTION 10.18. MINIMUM RATIO OF CONSOLIDATED EBITDA TO CONSOLIDATED
INTEREST EXPENSE. Section 10.18 is deleted in its entirety, and the following is
substituted in lieu thereof:

                  "10.18 Minimum Ratio of  Consolidated  EBITDA to  Consolidated
                  Interest  Expense.  The Borrower  will not permit the ratio of
                  the Parent's  Consolidated EBITDA to the Parent's Consolidated
                  Interest  Expense  as at  the  end  of  each  fiscal  quarter,
                  commencing  with the fiscal  quarter ended on January 2, 1999,
                  on a cumulative  basis with the preceding  fiscal  quarters of
                  the then current fiscal year, to be less than 3.00 to 1.00."

         (T)  A  new  Exhibit  A-1,  in the  form of Exhibit A-1 annexed to this
Amendment, is hereby added to the Credit Agreement.

         (U)  In each instance in which the phrase "the Loan",  "the Loans",  or
"any Loan" appears in Sections 10.21,  12.06, 12.11 and 12.14, each such Section
shall be deemed amended by the insertion  immediately  before such phrase of the
phrase  "the Term Loan and" or "the Term Loan or",  as  applicable,  and in each
instance in which the phrase "the Note"  appears in Section 5.03,  7.27,  11.02,
12.01 through 12.05,  12.11,  12.12 and 12.15, each such Section shall be deemed
amended by the insertion  immediately before such phrase of the phrase "the Term
Note and" or "the Term Note or", as applicable.

         SECTION TWO - CONSENT. Based on the representations and warranties made
by the Borrower  pursuant to Section Four hereof,  upon the  fulfillment  of the
conditions  contained in Section Three hereof,  effective as of August 25, 1999,
CIT  hereby  consents  to the  distribution  by  the  Borrower  to  the  Parent,
concurrent with and pursuant to the  consummation of the Redemption,  of cash in
an  aggregate  amount  not to  exceed  $7,087,640,  of  which  $5,000,000  shall
constitute  proceeds  of the Term  Loan  and up to  $2,087,640  of  which  shall


                                      -14-
<PAGE>


constitute  proceeds of Loans,  in each case made by CIT to the  Borrower on the
Fifth  Amendment  Closing Date. CIT has been advised by the Borrower that during
the month of December,  1998, the Paymaster  Affiliate  merged with and into the
Borrower.  The Borrower hereby represents and warrants that immediately prior to
the  effectiveness of such merger,  the Paymaster  Affiliate had no obligations,
liabilities or indebtedness of any kind, whether absolute or contingent, whether
disclosable on a balance sheet  prepared in accordance  with GAAP, or otherwise,
except for (i) the contingent liability of the Paymaster Affiliate arising under
the Guaranty  dated as of June 2, 1997  executed by the  Paymaster  Affiliate in
favor of CIT and (ii) as set forth on the Schedule annexed hereto. Based on such
representation  and  warranty,  CIT  hereby  consents  to such  merger as of the
effective  date  thereof,  and CIT  hereby  waives  as an Event of  Default  the
Borrower's  violation of Section 10.07 of the Credit Agreement,  which prohibits
such merger.

         SECTION  THREE-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 the  Term  Note,  together  with a First  Amendment  to the
Factoring Agreement,  in substantially the form annexed hereto as Exhibit B, and
a letter  agreement  executed in favor of CIT by each of the Guarantors,  by the
Parent,  as  pledgor  under the Stock  Pledge  Agreement,  and by the  Trademark
Affiliate,  as party  to the  Trademark  Agreement,  in  substantially  the form
annexed hereto as Exhibit C.

         (B) CIT shall  have  received a  Certificate  of the  Secretary  of the
Borrower  relating to the adoption of the  resolutions of the Board of Directors
of the Borrower,  approving this Amendment,  and a Solvency Certificate from the
chief financial officer of the Parent and the Borrower;

         (C) 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;

         (D) 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;

         (E)  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;

         (F) CIT shall have  received  payment  for its own account of a closing
fee in the amount of  $250,000,  which shall be payable in cash and which,  when
paid, shall be deemed to be fully earned and non-refundable;

         (G) The Redemption  shall have been  consummated in accordance with the
terms of the  agreement  described in the  definition  of such term,  all of the
conditions  precedent to


                                      -15-
<PAGE>


its  effectiveness  shall  have  occurred,  and CIT and its  counsel  shall have
received  and  reviewed to their  satisfaction  true and  correct  copies all of
material  documents and agreements  executed or delivered in connection with the
Redemption;

         (H) CIT  shall  have  received  and  reviewed  to its  satisfaction  an
appraisal of the  trademarks  and other  intellectual  property of the Trademark
Affiliate;  and (I) CIT shall  have  received a legal  opinion  from the firm of
Parker Chapin Flattau & Klimpl,  LLP, in form and substance  satisfactory to CIT
and  its  counsel,  and  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  FOUR-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;

         (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 for the annual
period ending on January 2,


                                      -16-
<PAGE>


1999, no change or event has occurred  which has had or is reasonably  likely to
have a Material Adverse Effect.

         SECTION FIVE-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) 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.

         (C) 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.

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


         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.


                                              /s/
                                     By:________________________________________
                                        Name:
                                        Title:


                                     THE CIT GROUP/COMMERCIAL SERVICES, INC.


                                              /s/
                                     By:________________________________________
                                        Name:
                                        Title:


                                      -17-
<PAGE>


                                   EXHIBIT A-1

                                    TERM NOTE


$5,000,000                                                    New York, New York
                                                           as of August 25, 1999


         FOR VALUE RECEIVED, LESLIE FAY MARKETING,  INC., a Delaware corporation
("Borrower"), promises to pay to the order of THE CIT GROUP/COMMERCIAL SERVICES,
INC.  ("CIT")  on or before  the  Maturity  Date (as  defined  in the  Agreement
referred to below), the principal sum of FIVE MILLION DOLLARS ($5,000,000) or so
much of such  principal sum as shall be  outstanding  and unpaid on the Maturity
Date. The Borrower further promises to pay to the order of CIT (a) the principal
amount of this Term Note in  installments  as set forth in  Section  2.07 of the
Agreement, (b) mandatory prepayments of principal of this Term Note as set forth
in Section 2.04 of the Agreement and (c) interest on the unpaid principal amount
hereof from time to time  outstanding at the rate per annum set forth in Section
2.05 to the Agreement, payable on the dates set forth in the Agreement.

         This Note is the "Term  Note"  referred  to in, and is  entitled to the
benefits  of, the  Revolving  Credit  Agreement  dated as of June 2, 1997 by and
between  the  Borrower  and  CIT  (as  the  same  may be  amended,  modified  or
supplemented  from time to time,  the  "Agreement")  which,  among other things,
provides for the  acceleration  of the maturity  hereof upon the  occurrence  of
certain  events and for  prepayments in certain  circumstances  and upon certain
terms and  conditions.  Terms  defined in the  Agreement  have the same meanings
herein.

         This Term Note is secured by and is  entitled  to the  benefits  of the
liens and security  interests  granted by the  Agreement  and the other  Related
Documents referred to in the Agreement,  and is further entitled to the benefits
of the security  agreements,  guarantees and other Related Documents referred to
in the Agreement.

         The Borrower  hereby  expressly  waives  presentment,  demand,  notice,
protest  and all other  demands  and notices in  connection  with the  delivery,
acceptance,  performance,  default  or  enforcement  of this  Term  Note and the
Agreement,  and  an  action  for  amounts  due  hereunder  or  thereunder  shall
immediately accrue.

         This  Term  Note  shall be  governed  by,  construed  and  enforced  in
accordance  with the laws of the State of New York,  without regard to choice of
law principles.

                                  LESLIE FAY MARKETING, INC.


                                  ______________________________________________
                                  By:  Warren Wishart
                                  Title:  Senior Vice President
                                          Chief Financial Officer and Treasurer



<PAGE>

                                                                    Exhibit 10.1


                        AMENDMENT TO EMPLOYMENT AGREEMENT


          AMENDMENT No. 1 dated as of January __, 1999 (this "Amendment") to the
EMPLOYMENT   AGREEMENT  between  THE  LESLIE  FAY  COMPANY,   INC.,  a  Delaware
corporation  (the  "Corporation"),  and JOHN J.  POMERANTZ,  residing  at Hidden
Spring Farm, 19 Winfield Avenue, Harrison, New York 10528 (the "Executive").

                              W I T N E S S E T H:

          WHEREAS,  the  Corporation  and the  Executive  have  entered  into an
Employment  Agreement dated as of January 4, 1998 (the "Employment  Agreement");
and

          WHEREAS,  the  Corporation  and the  Executive  desire  to  amend  the
Employment Agreement with respect to the terms set forth below.

          NOW,  THEREFORE,  in  consideration of the foregoing and of the mutual
covenants  and promises  contained  herein,  the parties  hereto hereby agree as
follows:

             1.  Capitalized  terms not defined herein shall have the respective
meanings  ascribed  to them  in the  Employment  Agreement.  In the  event  of a
conflict  between the terms of this  Amendment  and the terms of the  Employment
Agreement, the terms of this Amendment shall govern.

             2. Section 7(e) of the  Employment  Agreement is hereby  amended in
its entirety to read as follows:

               "(e)  The Executive  shall be awarded, as of January 4, 1998, ten
year options to acquire  58,521 shares of the  Corporation's  common stock,  par
value $.01 per share, under the Corporation's 1997 Management Stock Option Plan,
at an  exercise  price  of  $6.18  per  share  which  will  vest in  four  equal
installments  beginning January 4, 1998,  subject to acceleration and expiration
as provided in the aforesaid  plan.  On June 4, 1997,  the Executive was awarded
ten year options to acquire  131,878 shares of the  Corporation's  common stock,
par value $.01 per share,  under the Corporation's  1997 Management Stock Option
Plan,  at an  exercise  price of $6.18 per share  which will vest in three equal
installments beginning June 4, 1998, which options remain in effect."

             4. Except as expressly  amended by this  Amendment,  the Employment
Agreement shall continue in full force and effect.


<PAGE>


          IN  WITNESS  WHEREOF,  the  parties  hereto  have duly  executed  this
Amendment as of the date first above written.

                                     THE LESLIE FAY COMPANY, INC.

                                               /s/ John A. Ward
                                     By:_______________________________________
                                          John A. Ward
                                          President


                                     /s/ John J. Pomerantz
                                     __________________________________________
                                     JOHN J. POMERANTZ


                                       -2-

<PAGE>


                                                                    Exhibit 10.2


                        AMENDMENT TO EMPLOYMENT AGREEMENT


         AMENDMENT No. 1 dated as of January __, 1999 (this  "Amendment") to the
EMPLOYMENT   AGREEMENT  between  THE  LESLIE  FAY  COMPANY,   INC.,  a  Delaware
corporation  (the  "Corporation"),  and JOHN A. WARD,  residing at 80  Glenville
Road, Greenwich, Connecticut 06831 (the "Executive").

                              W I T N E S S E T H:

         WHEREAS,  the  Corporation  and  the  Executive  have  entered  into an
Employment  Agreement dated as of January 4, 1998 (the "Employment  Agreement");
and

         WHEREAS,  the  Corporation  and  the  Executive  desire  to  amend  the
Employment Agreement with respect to the terms set forth below.

         NOW,  THEREFORE,  in  consideration  of the foregoing and of the mutual
covenants  and promises  contained  herein,  the parties  hereto hereby agree as
follows:

         1.  Capitalized  terms not  defined  herein  shall have the  respective
meanings  ascribed  to them  in the  Employment  Agreement.  In the  event  of a
conflict  between the terms of this  Amendment  and the terms of the  Employment
Agreement, the terms of this Amendment shall govern.

         2. Section 7(e) of the  Employment  Agreement is hereby  amended in its
entirety to read as follows:

              "(e) The Executive  shall be awarded,  as of January 4, 1998,  ten
year options to acquire  45,720 shares of the  Corporation's  common stock,  par
value $.01 per share, under the Corporation's 1997 Management Stock Option Plan,
at an  exercise  price  of  $6.18  per  share  which  will  vest in  four  equal
installments  beginning January 4, 1998,  subject to acceleration and expiration
as provided in the aforesaid  plan.  On June 4, 1997,  the Executive was awarded
ten year options to acquire 70,060 shares of the Corporation's common stock, par
value $.01 per share, under the Corporation's 1997 Management Stock Option Plan,
at an  exercise  price  of $6.18  per  share  which  will  vest in  three  equal
installments beginning June 4, 1998, which options remain in effect."

         4.  Except as  expressly  amended  by this  Amendment,  the  Employment
Agreement shall continue in full force and effect.



<PAGE>


         IN  WITNESS  WHEREOF,  the  parties  hereto  have  duly  executed  this
Amendment as of the date first above written.

                                     THE LESLIE FAY COMPANY, INC.


                                               /s/ John J. Pomerantz
                                     By:________________________________________
                                              John J. Pomerantz
                                          Chief Executive Officer and
                                          Chairman of the Board


                                               /s/ John A. Ward
                                        ________________________________________
                                              JOHN A. WARD
                                              Executive


                                      -2-

<PAGE>
                                                                    Exhibit 10.3


                        AMENDMENT TO EMPLOYMENT AGREEMENT


         AMENDMENT No. 1 dated as of January __, 1999 (this  "Amendment") to the
EMPLOYMENT   AGREEMENT  between  THE  LESLIE  FAY  COMPANY,   INC.,  a  Delaware
corporation (the  "Corporation"),  and DOMINICK FELICETTI,  residing at 221 Penn
Estates, East Stroudsburg, Pennsylvania 18301 (the "Executive").

                              W I T N E S S E T H:

         WHEREAS,  the  Corporation  and  the  Executive  have  entered  into an
Employment  Agreement dated as of January 4, 1998 (the "Employment  Agreement");
and

         WHEREAS,  the  Corporation  and  the  Executive  desire  to  amend  the
Employment Agreement with respect to the terms set forth below.

         NOW,  THEREFORE,  in  consideration  of the foregoing and of the mutual
covenants  and promises  contained  herein,  the parties  hereto hereby agree as
follows:

         1.  Capitalized  terms not  defined  herein  shall have the  respective
meanings  ascribed  to them  in the  Employment  Agreement.  In the  event  of a
conflict  between the terms of this  Amendment  and the terms of the  Employment
Agreement, the terms of this Amendment shall govern.

         2. Section 7(e) of the  Employment  Agreement is hereby  amended in its
entirety to read as follows:

              "(e) The Executive  shall be awarded,  as of January 4, 1998,  ten
year options to acquire  39,319 shares of the  Corporation's  common stock,  par
value $.01 per share, under the Corporation's 1997 Management Stock Option Plan,
at an  exercise  price  of  $6.18  per  share  which  will  vest in  four  equal
installments  beginning January 4, 1998,  subject to acceleration and expiration
as provided in the aforesaid  plan.  On June 4, 1997,  the Executive was awarded
ten year options to acquire 70,060 shares of the Corporation's common stock, par
value $.01 per share, under the Corporation's 1997 Management Stock Option Plan,
at an  exercise  price  of $6.18  per  share  which  will  vest in  three  equal
installments beginning June 4, 1998, which options remain in effect."

         4.  Except as  expressly  amended  by this  Amendment,  the  Employment
Agreement shall continue in full force and effect.


<PAGE>


         IN  WITNESS  WHEREOF,  the  parties  hereto  have  duly  executed  this
Amendment as of the date first above written.

                                      THE LESLIE FAY COMPANY, INC.

                                              /s/ John J. Pomerantz
                                      By:_______________________________________
                                                  John J. Pomerantz
                                         Chief Executive Officer and
                                         Chairman of the Board


                                      /s/ Dominick Felicetti
                                      __________________________________________
                                      DOMINCICK FELICETTI
                                      Executive


                                      -2-
<PAGE>

                                                                    Exhibit 10.4


                        AMENDMENT TO EMPLOYMENT AGREEMENT

         AMENDMENT No. 1 dated as of January __, 1999 (this  "Amendment") to the
EMPLOYMENT   AGREEMENT  between  THE  LESLIE  FAY  COMPANY,   INC.,  a  Delaware
corporation (the "Corporation"),  and WARREN T. WISHART, residing at 5 Crestview
Road, Mountain Lakes, New Jersey 07046 (the "Executive").

                              W I T N E S S E T H:

         WHEREAS,  the  Corporation  and  the  Executive  have  entered  into an
Employment  Agreement dated as of January 1, 1998 (the "Employment  Agreement");
and

         WHEREAS,  the  Corporation  and  the  Executive  desire  to  amend  the
Employment Agreement with respect to the terms set forth below.

         NOW,  THEREFORE,  in  consideration  of the foregoing and of the mutual
covenants  and promises  contained  herein,  the parties  hereto hereby agree as
follows:

         1.  Capitalized  terms not  defined  herein  shall have the  respective
meanings  ascribed  to them  in the  Employment  Agreement.  In the  event  of a
conflict  between the terms of this  Amendment  and the terms of the  Employment
Agreement, the terms of this Amendment shall govern.

         2. The first sentence of the Employment  Agreement is hereby amended in
its entirety to read as follows:

                      "AGREEMENT,  dated as of  January  4,  1998,  between  the
                      Leslie Fay Company, Inc., a Delaware corporation, with its
                      principal office at 1412 Broadway, New York, New York (the
                      "Corporation"),  and  Warren  T.  Wishart,  residing  at 5
                      Crestview  Road,  Mountain  Lakes,  New Jersey  07046 (the
                      "Executive")."

         3. Section 7(e) of the  Employment  Agreement is hereby  amended in its
entirety to read as follows:

              "(e) The Executive  shall be awarded,  as of January 4, 1998,  ten
year options to acquire  39,319 shares of the  Corporation's  common stock,  par
value $.01 per share, under the Corporation's 1997 Management Stock Option Plan,
at an  exercise  price  of  $6.18  per  share  which  will  vest in  four  equal
installments  beginning January 4, 1998,  subject to acceleration and expiration
as provided in the aforesaid  plan.  On June 4, 1997,  the Executive was awarded
ten year options to acquire 70,060 shares of the Corporation's common stock, par
value $.01 per share, under the Corporation's 1997 Management Stock Option Plan,
at an  exercise  price  of $6.18  per  share  which  will  vest in  three  equal
installments beginning June 4, 1998, which options remain in effect."


<PAGE>


             4. Except as expressly  amended by this  Amendment,  the Employment
Agreement shall continue in full force and effect.


         IN  WITNESS  WHEREOF,  the  parties  hereto  have  duly  executed  this
Amendment as of the date first above written.

                                        THE LESLIE FAY COMPANY, INC.

                                                  /s/ John J. Pomerantz
                                        By:_____________________________________
                                                      John J. Pomerantz
                                           Chief Executive Officer and
                                           Chairman of the Board


                                                  /s/ Warren T. Wishart
                                        ________________________________________
                                                      WARREN T. WISHART
                                                      Executive


                                      -2-