“Bilateral Counterparties” means any party to a Bilateral Agreement that is not theBorrower or an Affiliate thereof.          “Bilateral Indebtedness” means any Indebtedness of the Borrower under or in respect ofa Bilateral Agreement.          “Borrower Obligations” means the unpaid principal of and interest on the Loans,Reimbursement Obligations and Bilateral Indebtedness and all other obligations and liabilities ofthe Borrower (including, without limitation, interest thereon accruing at the then agreed rateafter the maturity thereof and interest accruing at the then agreed rate after the filing of anypetition in bankruptcy, or the commencement of any insolvency, reorganization or like proceeding,relating to the Borrower, whether or not a claim for post-filing or post-petition interest isallowed in such proceeding) to the Administrative Agent, any Issuing Lender, any BilateralCounterparty or any Lender (or, in the case of any Hedging Agreement or Specified Cash ManagementAgreement, any Affiliate of any Lender), whether direct or indirect, absolute or contingent, due orto become due, or now existing or hereafter incurred, which may arise under, out of, or inconnection with, this Agreement, the other Loan Documents, any Letter of Credit, any HedgingAgreement, any Specified Cash Management Agreement or any Bilateral Agreement or any other documentmade, delivered or given in connection with any of the foregoing, in each case whether on accountof principal, interest, reimbursement obligations, fees, indemnities, costs, expenses or otherwise(including, without limitation, all fees and disbursements of counsel to the Administrative Agent,to the Issuing Lenders, to the Lenders (or, in the case of any Hedging Agreement or Specified CashManagement Agreement, to any Affiliate of any Lender) or to the Bilateral Counterparties that arerequired to be paid by the Borrower pursuant to the terms of any of the foregoing agreements).          “Collateral” means all property of the Loan Parties, now owned or hereafter acquired,upon which a Lien is purported to be created by any Security Document.          “Commercial Letters of Credit” has the meaning set forth in Section 3.01.          “Commercial L/C Commitment” means $250,000,000.          “Commercial L/C Obligations” means at any time, an amount equal to the sum of (a) theaggregate then undrawn and unexpired amount of the then outstanding Commercial Letters of Creditand (b) the aggregate amount of drawings under Commercial Letters of Credit that have not then beenreimbursed pursuant to Section 3.05.          “Guarantor Obligations” means, with respect to any Subsidiary Guarantor, allobligations and liabilities of such Subsidiary Guarantor to the Administrative Agent, any IssuingLender, any Lender (or, in the case of any Hedging Agreement or Specified Cash ManagementAgreement, any Affiliate of any Lender) or any Bilateral Counterparty which may arise under or inconnection with any Loan Document, any Hedging Agreement, any Specified Cash Management Agreementor any Bilateral Agreement to which such Subsidiary Guarantor is a party, in each case whether onaccount of guarantee obligations, reimbursement obligations, fees, indemnities, costs, expenses orotherwise (including, without limitation, all fees and disbursements of counsel to theAdministrative Agent, to the Issuing Lenders, to the Lenders (or, in the case of any HedgingAgreement or Specified Cash Management Agreement, to any Affiliate of any Lender) or to theBilateral Counterparties that are required to be paid by such
 

 
Subsidiary Guarantor pursuant to the terms of any other Loan Document, any Hedging Agreement,any Specified Cash Management Agreement or any Bilateral Agreement).          “Principal Offices” means the principal offices of the Borrower, located at OneClaiborne Avenue, North Bergen, NJ 07047.          “Second Amendment” means the Second Amendment, dated as of August 12, 2008, to thisAgreement.          “Second Amendment Effective Date” has the meaning set forth in the Second Amendment.          “Security Documents” has the meaning set forth in Section 6.12(a).          “Specified Cash Management Agreement” means any agreement providing for treasury,depositary or cash management services, including in connection with any automated clearing housetransfers of funds or any similar transactions between the Borrower or any Subsidiary Guarantor andany Lender or Affiliate thereof, which has been designated by such Lender and the Borrower, bynotice to the Administrative Agent not later than 90 days after the execution and delivery by theBorrower or such Subsidiary Guarantor, as a “Specified Cash Management Agreement”.          “Springing Lien” has the meaning set forth in Section 6.12(a).          “Springing Lien Event” means the event that the Leverage Ratio as at the last day ofany fiscal quarter set forth below exceeds the ratio set forth below opposite such fiscal quarter:   Fiscal Quarter Leverage Ratio6/30/08 3.00:1.009/30/08 3.25:1.0012/31/08 2.50:1.003/31/09 2.50:1.006/30/09 2.25:1.009/30/09 2.25:1.00          “Standby L/C Commitment” means $40,000,000.          “Standby L/C Obligations” means at any time, an amount equal to the sum of (a) theaggregate then undrawn and unexpired amount of the then outstanding Standby Letters of Credit and(b) the aggregate amount of drawings under Standby Letters of Credit that have not then beenreimbursed pursuant to Section 3.05.          “Standby Letters of Credit” has the meaning set forth in Section 3.01(a).          (b) By amending the definition of “Applicable Rate” by (i) deleting the first paragraph ofand table therein and inserting the following in lieu thereof:          “Applicable Rate” means, for any day, with respect to any Eurocurrency Revolving Loan,Euro Reference Rate Revolving Loan, ABR Revolving Loan, Commercial
 

 
Letter of Credit or Standby Letter of Credit, as the case may be, or with respect to thefacility fees payable hereunder, the applicable rate per annum set forth below under the caption“Eurocurrency Spread,” “ABR/Euro Reference Rate Spread,” “Facility Fee Rate,” “Commercial Letter ofCredit Fee,” or “Standby Letter of Credit Fee,” based upon the ratings by Moody’s and S&P,respectively, applicable on such date to the Index Debt:                               **Euro-** **ABR/Euro** **Facility** **Commercial** **Standby**      **currency** **Reference** **Fee** **Letter of** **Letter of****Level** **Rating** **Spread** **Spread** **Rate** **Credit Fee** **Credit Fee** **I**  BBB+/Baa1  1.500%  0.750%  0.250%  0.875%  1.750%**II** BBB/Baa2  1.700%  1.000%  0.300%  1.000%  2.000%**III** BBB-/Baa3  1.900%  1.250%  0.350%  1.125%  2.250%**IV** BB+/Ba1  2.100%  1.500%  0.400%  1.250%  2.500% **V**  BB/Ba2  2.300%  1.750%  0.450%  1.375%  2.750%**VI** < BB/Ba2  2.500%  2.000%  0.500%  1.500%  3.000%and (ii) by deleting the last sentence of the definition of “Applicable Rate.”          (c) By deleting the definition of “Consolidated EBITDA” and inserting in lieu thereof thefollowing:          “Consolidated EBITDA” means, for any period, Consolidated Net Income for such periodplus, without duplication and to the extent reflected as a charge in the statement ofConsolidated Net Income for such period, the sum of (a) income or franchise tax expense, (b)interest expense, both expensed and capitalized, amortization or writeoff of debt discount and debtissuance costs and commissions, discounts and other fees and charges associated with Indebtedness(including the Loans), (c) depreciation and amortization expense, (d) amortization of intangibles(including, but not limited to, goodwill) and organization costs, (e) any extraordinary, unusual ornon-recurring non-cash expenses or losses (including, whether or not otherwise includable as aseparate item in the statement of such Consolidated Net Income for such period, non-cash losses onsales of assets outside of the ordinary course of business), (f) any other non-cash charges, and(g) cash restructuring charges, store closures and other non-recurring cash and non-cash charges,in each case, related to streamlining and brand exiting related activities, provided thatthe amounts referred to in this clause (g) shall not, in the aggregate, exceed (i) for fiscal year2008, $110,000,000 and (ii) for fiscal year 2009, $10,000,000 and minus, to the extentincluded in the statement of Consolidated Net Income for such period, the sum of (a) interestincome, (b) any extraordinary, unusual or non-recurring income or gains (including, whether or nototherwise includable as a separate item in the statement of Consolidated Net Income for suchperiod, gains on the sales of assets outside of the ordinary course of business) and (c) any othernon-cash income, all as determined on a consolidated basis.          (c) By deleting the definition of “L/C Obligations” and inserting in lieu thereof:          “L/C Obligations” means at any time, the sum of the Standby L/C Obligations and theCommercial L/C Obligations.          (d) By deleting the definitions of “Augmenting Lender”, “L/C Commitment” and “IncreasingLender.”
 

 
          3. Amendment to Section 2.02. Section 2.02 of the Credit Agreement is hereby amendedby deleting clause (e) thereof.          4. Amendment to Section 3.01. Section 3.01 of the Credit Agreement is hereby amendedby deleting clause (a) thereof and inserting in lieu thereof the following:          (a) Subject to the terms and conditions hereof, each Issuing Lender, in reliance on theagreements of the other Lenders set forth in Section 3.04(a), agrees to issue letters of credit forthe account of the Borrower on any Business Day during the Availability Period as follows:A. standby letters of credit (collectively, the “Standby Letters ofCredit”) in a form reasonably satisfactory to the Issuing Lender and in favor ofsuch beneficiaries as the Borrower shall specify from time to time (which shall bereasonably satisfactory to the Issuing Lender); andB. commercial letters of credit in the form of the Issuing Lender’s standardcommercial letters of credit (“Commercial Letters of Credit”) in favor ofsellers of goods or services to the Borrower or its Subsidiaries (the StandbyLetters of Credit and Commercial Letters of Credit being referred to collectively asthe “Letters of Credit”);provided that no Issuing Lender shall have an obligation to issue any Letter of Credit if,after giving effect to such issuance, (i) (A) the Standby L/C Obligations would exceed the StandbyL/C Commitment or (B) the Commercial L/C Obligations would exceed the Commercial L/C Commitment or(ii) the sum of the Revolving Credit Exposures would exceed the total Commitments. Each Letter ofCredit shall be issued under the Dollar Tranche Commitments or the Multi-Currency Commitments or acombination thereof, as determined by the Borrower in its request for the issuance of such Letterof Credit pursuant to Section 3.02; provided no Issuing Lender shall have an obligation toissue any Letter of Credit if, after giving effect to such issuance, (i) the sum of the DollarTranche Revolving Credit Exposures would exceed the total Dollar Tranche Commitments or (ii) thesum of the Multi-Currency Tranche Revolving Credit Exposures would exceed the total Multi-CurrencyTranche Commitments. Each Letter of Credit shall (i) be denominated in dollars and (ii) expire nolater than the earlier of (x) (A) in the case of Standby Letters of Credit 365 days after the dateof issuance and (B) in the case of Commercial Letters of Credit 180 days after the date of issuanceand (y) the date that is five Business Days prior to the Maturity Date; provided that anyLetter of Credit with a one-year tenor may provide for the renewal thereof for additional one-yearperiods (which shall in no event extend beyond the date referenced in clause (y) above).          5. Amendment to Article VI. Article VI of the Credit Agreement is hereby amended byinserting the following as Section 6.12:          SECTION 6.12. Grant of Security Interest.          (a) The Borrower will, and will cause each of the Subsidiary Guarantors to, no later than 15Business Days after the occurrence of a Springing Lien Event, grant to the Administrative Agent,for the benefit of the Lenders, Affiliates of Lenders (in the case of Borrower Obligations and/orGuarantor Obligations under or in respect of Hedging Agreements and/or Specified Cash ManagementAgreements) and the Bilateral Counterparties, and take all
 

 
actions necessary or advisable to perfect, a first priority (subject to customary exceptions)security interest securing the Borrower Obligations or Guarantor Obligations, as applicable (the“Springing Lien”), in all of the Borrower’s and the Subsidiary Guarantors’ tangible andintangible assets (including, without limitation, intellectual property, real property and all ofthe capital stock of each of its material direct and indirect subsidiaries (limited, in the case offoreign subsidiaries, to 65% of the capital stock of first tier foreign subsidiaries to the extenta pledge of a greater percentage could reasonably be expected to result in adverse taxconsequences)), except for those assets as to which the Administrative Agent shall determine in itssole reasonable discretion that the costs of obtaining such a security interest are excessive inrelation to the value of the security to be afforded thereby; provided that (A) theSpringing Lien shall be granted and perfected pursuant to documentation (including legal opinionsof counsel to the Borrower) substantially in the form that shall be approved by the AdministrativeAgent (the “Security Documents”) in its sole discretion, (B) with respect to real property,the Borrower will, and will cause each of the Subsidiary Guarantors to, grant and perfect theSpringing Lien in accordance with this Section 6.12(a) no later than 30 Business Days after theoccurrence of a Springing Lien Event, (C) to the extent that other existing Indebtedness of theBorrower is required to be equally and ratably secured with the Indebtedness incurred under thisAgreement, such Indebtedness shall be so secured and (C) the Administrative Agent, on behalf of theLenders and the Bilateral Counterparties, shall have the authority to release the Springing Lien onany assets sold, transferred, leased or otherwise disposed of in a transaction permitted under thisAgreement (including inventory sold in the ordinary course of business). Notwithstanding Section10.02, the Administrative Agent shall be permitted to make technical changes to the affectedprovisions of this Agreement to the extent necessary to implement the provisions of this Section,without the consent of any other Person.          (b) With respect to any tangible or intangible assets (including, without limitation,intellectual property, real property and all of the capital stock of each of its material directand indirect subsidiaries (limited, in the case of foreign subsidiaries, to 65% of the capitalstock of first tier foreign subsidiaries to the extent a pledge of a greater percentage couldreasonably be expected to result in adverse tax consequences)) acquired after the Springing LienEvent by the Borrower or any Subsidiary Guarantor or owned by a Subsidiary that becomes aSubsidiary Guarantor after the Springing Lien Event, in either case as to which the AdministrativeAgent, for the benefit of the Lenders, Affiliates of Lenders (in the case of Borrower Obligationsand/or Guarantor Obligations under or in respect of Hedging Agreements and/or Specified CashManagement Agreements) and the Bilateral Counterparties, does not have a perfected Lien, theBorrower will, and will cause each of the Subsidiary Guarantors, to promptly (i) execute anddeliver to the Administrative Agent such amendments to the Security Documents as the AdministrativeAgent deems necessary or advisable to grant to the Administrative Agent, for the benefit of theLenders, Affiliates of Lenders (in the case of Borrower Obligations and/or Guarantor Obligationsunder or in respect of Hedging Agreements and/or Specified Cash Management Agreements) and theBilateral Counterparties, a security interest in such property, except for those assets as to whichthe Administrative Agent shall determine in its sole reasonable discretion that the costs ofobtaining such a security interest are excessive in relation to the value of the security to beafforded thereby, and (ii) take all actions necessary or advisable to grant to the AdministrativeAgent, for the benefit of the Lenders, Affiliates of Lenders (in the case of Borrower Obligationsand/or Guarantor Obligations under or in respect of Hedging Agreements and/or Specified CashManagement Agreements) and the Bilateral Counterparties, a perfected first priority securityinterest in such property.
 

 
          (c) For the avoidance of doubt, in the event that, subsequent to the occurrence of aSpringing Lien Event, the Leverage Ratio as at the last day of any fiscal quarter does not exceedthe applicable Leverage Ratio for such fiscal quarter in the definition of “Springing Lien Event”,the obligations of the Borrower and the Subsidiary Guarantors pursuant to this Section 6.12 willcontinue in effect, and the Administrative Agent will not be under any obligation to release theCollateral from the Liens created pursuant to this Section 6.12.          6. Amendment to Article VII. Article VII of the Credit Agreement is hereby amendedby deleting it in its entirety and inserting in lieu thereof the provisions in Annex I hereto.          7. Additional Schedules. The Credit Agreement is hereby amended by adding theretoSchedule 1.01(a) and Schedule 7.05(iii) in the form, respectively, of Schedule 1.01(a) and Schedule7.05(iii) hereto.          8. Conditions to Effectiveness of this Amendment. This Second Amendment shall becomeeffective on and as of the date (such date the “Second Amendment Effective Date”) on whicheach of the following conditions are met:          (a) this Second Amendment shall have been executed and delivered by the Borrower, theAdministrative Agent and the Required Lenders; and          (b) The Administrative Agent shall have received favorable written opinions (addressed to theAdministrative Agent and the Lenders and dated the Second Amendment Effective Date) of (i) KramerLevin Naftalis & Frankel LLP, counsel for the Borrower, and (ii) Nicholas J. Rubino, GeneralCounsel of the Borrower, in each case in form and substance reasonably satisfactory to theAdministrative Agent. The Borrower hereby requests such counsel to deliver such opinion.          9. Miscellaneous.          (a) Representation and Warranties. The Borrower hereby represents that as of theSecond Amendment Effective Date each of the representations and warranties made by any Loan Partyin or pursuant to the Loan Documents is true and correct in all material respects as if made on andas of such date (it being understood and agreed that any representation or warranty that by itsterms is made as of a specific date shall be required to be true and correct in all materialrespects only as of such specified date), and no Default or Event of Default has occurred and iscontinuing after giving effect to the amendments contemplated herein.          (b) Effect. Except as expressly amended hereby, all of the representations,warranties, terms, covenants and conditions of the Loan Documents shall remain unamended and notwaived and shall continue to be in full force and effect.          (c) Counterparts. This Second Amendment may be executed by one or more of theparties to this Second Amendment on any number of separate counterparts, and all of saidcounterparts taken together shall be deemed to constitute one and the same instrument. A set ofthe copies of this Second Amendment signed by all the parties shall be lodged with the Borrower andthe Administrative Agent.
 

 
          (d) Severability. Any provision of this Second Amendment which is prohibited orunenforceable in any jurisdiction shall, as to such jurisdiction, be ineffective to the extent ofsuch prohibition or unenforceability without invalidating the remaining provisions hereof, and anysuch prohibition or unenforceability in any jurisdiction shall not invalidate or renderunenforceable such provision in any other jurisdiction.          (e) Integration. This Second Amendment and the other Loan Documents represent theagreement of the Loan Parties, the Administrative Agent and the Lenders with respect to the subjectmatter hereof and thereof, and there are no promises, undertakings, representations or warrantiesby the Administrative Agent or any Lender relative to the subject matter hereof or thereof notexpressly set forth or referred to herein or in the other Loan Documents.          **(f)****GOVERNING LAW****. THIS SECOND AMENDMENT AND THE RIGHTS AND OBLIGATIONS OF THEPARTIES UNDER THIS SECOND AMENDMENT SHALL BE GOVERNED BY, AND CONSTRUED AND INTERPRETED INACCORDANCE WITH, THE LAW OF THE STATE OF NEW YORK.**
 

 
          IN WITNESS WHEREOF, the parties hereto have caused this Second Amendment to be duly executedand delivered by their proper and duly authorized officers as of the day and year first abovewritten.      LIZ CLAIBORNE, INC.