CONFORMED COPY


                     FIRST AMENDMENT TO REVOLVING CREDIT AND
                               GUARANTY AGREEMENT

                     FIRST AMENDMENT, dated as of July 12, 2002 (the "First
Amendment"), to the REVOLVING CREDIT AND GUARANTY AGREEMENT, dated as of
February 5, 2002, among KASPER A.S.L., LTD., a Delaware corporation (the
"Borrower"), a debtor and debtor-in-possession in a case pending under Chapter
11 of the Bankruptcy Code, and certain of the direct or indirect subsidiaries of
the Borrower signatory hereto (each a "Guarantor" and collectively, the
"Guarantors"), each of which Guarantors referred to in this paragraph is a
debtor and debtor-in-possession in a case pending under Chapter 11 of the
Bankruptcy Code (the cases of the Borrower and the Guarantors, each a "Case" and
collectively, the "Cases"), JPMORGAN CHASE BANK, a New York banking corporation
("JPMorgan Chase"), each of the other financial institutions from time to time
party hereto (together with JPMorgan Chase, the "Banks") and JPMORGAN CHASE
BANK, as agent (in such capacity, the "Agent") for the Banks and The CIT
Group/Commercial Services, Inc. ("CIT") as collateral monitor (in such capacity,
the "Collateral Monitor"):

                              W I T N E S S E T H:

                     WHEREAS, the Borrower, the Guarantors, the Banks and the
Agent are parties to that certain Revolving Credit and Guaranty Agreement, dated
as of February 5, 2002 (as the same may be amended, modified or supplemented
from time to time, the "Credit Agreement"); and

                     WHEREAS, the Borrower and the Guarantors have requested
that from and after the Effective Date (as hereinafter defined) of this First
Amendment, the Credit Agreement be amended subject to and upon the terms and
conditions set forth herein.

                     NOW, THEREFORE, the parties hereto hereby agree as follows:

                     1. As used herein, all terms that are defined in the Credit
Agreement (in effect immediately prior to the Effective Date of this First
Amendment) shall have the same meanings herein.

                     2. The Credit Agreement is hereby amended by inserting each
of the provisions which appear with computerized underscoring and by deleting
each of the provisions which appear with computerized strike-through in the
document annexed hereto as Exhibit A.

                     3. Annex A to the Credit Agreement is hereby replaced in
its entirety by Annex A hereto.


<PAGE>
                     4. The signature pages of the Credit Agreement are hereby
amended to conform to the signature pages hereto.

                     5. This First Amendment shall not become effective (the
"Effective Date") until (a) the later to occur of (i) the date on which this
First Amendment shall have been executed by the Borrower, the Guarantors, the
Banks and the Agent, and the Agent shall have received evidence satisfactory to
it of such execution, and (ii) the date on which the Agent shall have received
the Amendment Approval Order (as defined in Exhibit A); and (b) the Agent shall
have received a fee for the benefit of each Bank in the amount of $100,000,
which fee shall be paid pro rata to each Bank in accordance with each Bank's
Tranche A Commitment plus Tranche B Commitment.

                     6. Except to the extent hereby amended, the Credit
Agreement and each of the Loan Documents remain in full force and effect and are
hereby ratified and affirmed.

                     7. The Borrower agrees that its obligations set forth in
Section 10.05 of the Credit Agreement shall extend to the preparation, execution
and delivery of this First Amendment, including the reasonable fees and
disbursements of special counsel to the Agent.

                     8. This First Amendment shall be limited precisely as
written and shall not be deemed (a) to be a consent granted pursuant to, or a
waiver or modification of, any other term or condition of the Credit Agreement
or any of the instruments or agreements referred to therein or (b) to prejudice
any right or rights which the Agent or the Banks may now have or have in the
future under or in connection with the Credit Agreement or any of the
instruments or agreements referred to therein. Whenever the Credit Agreement is
referred to in the Credit Agreement or any of the instruments, agreements or
other documents or papers executed or delivered in connection therewith, such
reference shall be deemed to mean the Credit Agreement as modified by this First
Amendment.

                     9. This First Amendment may be executed in any number of
counterparts and by the different parties hereto in separate counterparts, each
of which when so executed and delivered shall be deemed to be an original and
all of which taken together shall constitute but one and the same instrument.

                     10. This First Amendment shall be governed by, and
construed in accordance with, the laws of the State of New York.



                                       2
<PAGE>
                       Signature Pages to First Amendment

                     IN WITNESS WHEREOF, the parties hereto have caused this
First Amendment to be duly executed as of the day and the year first written.


                             BORROWER:

                             KASPER A.S.L., LTD.

                             By:   /s/ Joseph B. Parsons
                                   -------------------------------------------
                             Name: Joseph B. Parsons
                             Title: EVP, CFO & Treasurer


                             GUARANTORS:

                             A.S.L. RETAIL OUTLETS, INC.

                             By:   /s/ Joseph B. Parsons
                                   -------------------------------------------
                             Name: Joseph B. Parsons
                             Title: EVP & Treasurer


                             ASL/K LICENSING CORP.

                             By:   /s/ Joseph B. Parsons
                                   -------------------------------------------
                             Name: Joseph B. Parsons
                             Title: EVP & Treasurer


                             KASPER HOLDINGS INC.

                             By:   /s/ Joseph B. Parsons
                                   -------------------------------------------
                             Name: Joseph B. Parsons
                             Title: EVP & Treasurer


                             AKC ACQUISITION, LTD.

                             By:   /s/ Joseph B. Parsons
                                   -------------------------------------------
                             Name: Joseph B. Parsons
                             Title: EVP & Treasurer


                             LION LICENSING LTD.

                             By:   /s/ Lee S. Sporn
                                   -------------------------------------------
                             Name: Lee S. Sporn
                             Title: Vice President


<PAGE>
                             JPMORGAN CHASE BANK,
                               Individually and as Agent

                             By:   /s/ Robert Kuhn
                                   -------------------------------------------
                             Name: Robert Kuhn
                             Title: Managing Director

















                       Signature Pages to First Amendment
<PAGE>
                             THE CIT GROUP/COMMERCIAL SERVICES, INC.,
                               Individually and as Collateral Monitor

                             By:   /s/ Frank A. Grimaldi
                                   -------------------------------------------
                             Name: Frank A. Grimaldi
                             Title: Vice President













                       Signature Pages to First Amendment
<PAGE>
                             LASALLE BANK, NATIONAL ASSOCIATION

                             By:   /s/ Margaret P. Heger
                                   -------------------------------------------
                             Name: Margaret P. Heger
                             Title: First Vice President
















                       Signature Pages to First Amendment
<PAGE>
                             FLEET CAPITAL CORPORATION

                             By:   /s/ David Fiorito
                                   -------------------------------------------
                             Name: David Fiorito
                             Title: Senior Vice President



















                       Signature Pages to First Amendment
<PAGE>
                             ISRAEL DISCOUNT BANK OF NEW YORK

                             By:   /s/ Howard Weinberg
                                   -----------------------------------
                             Name: Howard Weinberg
                             Title: Senior Vice President


                             By:   /s/ Tim McCurry
                                   -------------------------------------------
                             Name: Tim McCurry
                             Title: Assistant Vice President















                       Signature Pages to First Amendment
<PAGE>
                             PNC BANK, NATIONAL ASSOCIATION

                             By:   /s/ Daniel J. Paull
                                   -------------------------------------------
                             Name: Daniel J. Paull
                             Title: Vice President















                       Signature Pages to First Amendment
<PAGE>
                             GENERAL ELECTRIC CAPITAL CORPORATION

                             By:   /s/ Fridolf A. Hanson
                                   -------------------------------------------
                             Name: Fridolf A. Hanson
                             Title: Its Duly Authorized Signatory


















                       Signature Pages to First Amendment
<PAGE>
                             BANK LEUMI USA

                             By:   /s/ Steven Farron
                                   -------------------------------------------
                             Name: Steven Farron
                             Title: Vice President

















                       Signature Pages to First Amendment
<PAGE>
                             ALPINE ASSOCIATES, L.P.

                             By:   /s/ Kenneth S. Grossman
                                   -------------------------------------------
                             Name: Kenneth S. Grossman
                             Title: Managing Director

















                       Signature Pages to First Amendment
<PAGE>
                                     ANNEX A
                                       to
                     REVOLVING CREDIT AND GUARANTY AGREEMENT

                          Dated as of February 5, 2002
                        (as amended as of July 12, 2002)


<TABLE>
<CAPTION>
                                      TRANCHE A COMMITMENT      TRANCHE A COMMITMENT    TRANCHE B COMMITMENT   TRANCHE B COMMITMENT
                BANK                        AMOUNT                   PERCENTAGE                AMOUNT               PERCENTAGE
                ----                        ------                   ----------                ------               ----------
<S>                                   <C>                       <C>                     <C>                    <C>
JPMorgan Chase Bank                       $5,635,595.00               16.10170%          $13,599,797.72              14.84375%

The CIT Group/Commercial Services,        $5,635,595.00               16.10170%          $13,599,797.72              14.84375%
Inc.

LaSalle Bank, National Association        $3,559,325.00               10.16950%           $8,589,345.93               9.37500%

Alpine Associates, L.P.                        --                         --              $7,157,788.28               7.81250%

Fleet Capital Corporation                 $9,491,510.00               27.11860%          $22,904,922.49              25.00000%

Israel Discount Bank of New York          $2,372,895.00                6.77970%           $5,726,230.62               6.25000%

PNC Bank, National Association            $3,559,325.00               10.16950%           $8,589,345.93               9.37500%

General Electric Capital Corporation      $3,559,325.00               10.16950%           $8,589,345.93               9.37500%

Bank Leumi USA                            $1,186,430.00                3.38980%           $2,863,115.31               3.12500%

               Total                        $35,000,000               100.0000%          $91,619,689.93               100.000%

                                     ==================                              ==================

</TABLE>


<PAGE>
                                                                     EXHIBIT A

                          [BLACKLINE OF DIP AGREEMENT]