[EXECUTION COPY]






                           SECOND AMENDED AND RESTATED
                     REVOLVING CREDIT AND SECURITY AGREEMENT

                                  by and among

                               SALANT CORPORATION
                                       and
                           SALANT HOLDING CORPORATION
                                  as Borrowers


                     THE FINANCIAL INSTITUTIONS NAMED HEREIN
                                   as Lenders

                                       and

                     THE CIT GROUP/COMMERCIAL SERVICES, INC.
                                    as Agent









                                              Dated: November 30, 2001


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                                                  TABLE OF CONTENTS
                                                                                                  Page

<S>                                                                                                  <C>
RECITALS............................................................................................ 1

SECTION 1.        DEFINITIONS........................................................................2

SECTION 2.        ACKNOWLEDGMENT AND RESTATEMENT....................................................20
         Section 2.1       Existing Obligations.....................................................20
         Section 2.2       Acknowledgment of Security Interests.....................................20
         Section 2.3       Acknowledgment of Existing Credit Agreement..............................20
         Section 2.4       Restatement..............................................................20

SECTION 3.        CREDIT FACILITY...................................................................21
         Section 3.1       Loans....................................................................21
         Section 3.2       Letter of Credit Accommodations..........................................22
         Section 3.3       Reserves.................................................................25
         Section 3.4       Commitments..............................................................25
         Section 3.5       Mandatory Prepayments....................................................25
         Section 3.6       Interest.................................................................26
         Section 3.7       Unused Line Fee..........................................................28
         Section 3.8       Collateral Management Fee................................................28
         Section 3.9       Agency Fee...............................................................28
         Section 3.10      Changes in Laws and Increased Costs of Revolving Loans...................28
         Section 3.11      Authorization to Make Loans and Provide Letter of Credit
                           Accommodations...........................................................29
         Section 3.12      Settlement Procedures....................................................29
         Section 3.13      Use of Proceeds..........................................................31

SECTION 4.        CONDITIONS PRECEDENT TO LOANS AND OTHER
                  FINANCIAL ACCOMMODATIONS..........................................................31
         Section 4.1       Conditions Precedent to Initial Loans and Letter of Credit
                           Accommodations...........................................................31
         Section 4.2       Conditions Precedent to All Loans and Letter of Credit
                           Accommodations...........................................................36

SECTION 5.        COLLATERAL........................................................................37
         Section 5.1       Security Interests in Borrowers' Assets..................................37
         Section 5.2       Security Interests in Guarantors' Assets.................................38
         Section 5.3       Perfection of Security Interests.........................................39

SECTION 6.        REPRESENTATIONS AND WARRANTIES....................................................40
         Section 6.1       Organization and Qualification...........................................40
         Section 6.2       Corporate Power and Authority............................................40
         Section 6.3       Capitalization...........................................................40
         Section 6.4       Compliance with Other Agreements and Applicable Law......................41
         Section 6.5       Governmental Approval....................................................42
         Section 6.6       Chief Executive Office; Collateral Locations.............................42
         Section 6.7       Priority of Liens; Title to Properties...................................42
         Section 6.8       Tax Returns..............................................................43
         Section 6.9       Litigation...............................................................43
         Section 6.10      Intellectual Property....................................................43
         Section 6.11      Accounts.................................................................43
         Section 6.12      Employee Benefits........................................................44
         Section 6.13      Environmental Compliance.................................................45
         Section 6.14      Bank Accounts............................................................46
         Section 6.15      Investment Company.......................................................46
         Section 6.16      Regulation G; Regulation U; Securities Exchange Act of 1934..............46
         Section 6.17      No Material Adverse Change...............................................46
         Section 6.18      Financial Statements.....................................................47
         Section 6.19      Disclosure...............................................................47
         Section 6.20      Labor Disputes...........................................................47
         Section 6.21      Corporate Name; Prior Transactions.......................................48
         Section 6.22      Material Contracts.......................................................48

SECTION 7.        ADDITIONAL COVENANTS..............................................................48
         Section 7.1       Tradenames...............................................................48
         Section 7.2       New Collateral Locations.................................................49
         Section 7.3       Subsidiaries.............................................................49
         Section 7.4       Indebtedness.............................................................49
         Section 7.5       Limitation on Liens......................................................51
         Section 7.6       Loans, Investments, Guaranties, Etc......................................52
         Section 7.7       Transactions with Affiliates.............................................53
         Section 7.8       Restricted Payments......................................................53
         Section 7.9       Maintenance of Existence.................................................54
         Section 7.10      Sale and Leasebacks......................................................54
         Section 7.11      Sale of Assets, Consolidation, Merger, Dissolution, Etc..................54
         Section 7.12      Compliance with Laws, Regulations, Etc...................................54
         Section 7.13      Payment of Taxes and Claims..............................................55
         Section 7.14      Properties in Good Condition; Covenants as to Inventory,
                           Real Property and Equipment..............................................55
         Section 7.15      Appraisals...............................................................56
         Section 7.16      Insurance................................................................57
         Section 7.17      Compliance with ERISA....................................................57
         Section 7.18      Additional Bank Accounts.................................................58
         Section 7.19      Notice of Default........................................................58
         Section 7.20      Financial Statements and Other Information...............................58
         Section 7.21      Consolidated Tangible Net Worth..........................................61
         Section 7.22      Minimum Pre-Tax Income...................................................61
         Section 7.23      Minimum Interest Coverage Ratio..........................................62
         Section 7.24      Capital Expenditures.....................................................62
         Section 7.25      After Acquired Real Property.............................................62
         Section 7.26      Further Assurances.......................................................62
         Section 7.27      Borrowers Jointly and Severally Liable...................................63

SECTION 8.        EVENTS OF DEFAULT AND REMEDIES....................................................63
         Section 8.1       Events of Default........................................................63
         Section 8.2       Remedies.................................................................65

SECTION 9.        COLLECTION AND ADMINISTRATION.....................................................68
         Section 9.1       Collections; Management of Collateral....................................68
         Section 9.2       Payments.................................................................69
         Section 9.3       Sharing of Payments, Etc.................................................70
         Section 9.4       Borrower's Loan Account..................................................71
         Section 9.5       [Intentionally Omitted]..................................................73
         Section 9.6       Right of Inspection; Access..............................................73
         Section 9.7       Accounts Documentation...................................................73
         Section 9.8       Specific Powers..........................................................74
         Section 9.9       Returns, Credits and Allowances..........................................74

SECTION 10        EFFECTIVE DATE; TERMINATION; COSTS................................................75
         Section 10.1      Term.....................................................................75
         Section 10.2      Expenses and Additional Fees.............................................76
         Section 10.3      Survival of Agreement....................................................77
         Section 10.4      No Waiver; Cumulative Remedies...........................................77
         Section 10.5      Notices..................................................................78
         Section 10.6      Entire Agreement.........................................................78
         Section 10.7      Confidentiality..........................................................78
         Section 10.8      Partial Invalidity.......................................................79
         Section 10.9      Headings.................................................................79
         Section 10.10     [Intentionally Omitted]..................................................79
         Section 10.11 Counterparts.................................................................79

SECTION 11.       JURY TRIAL WAIVER; OTHER WAIVERS
                  AND CONSENTS; GOVERNING LAW ......................................................79
         Section 11.1      Governing Law; Choice of Forum; Service of Process;
                           Jury Trial Waiver........................................................79
         Section 11.2      Waiver of Notices........................................................81
         Section 11.3      Amendments and Waivers...................................................81
         Section 11.4      Waiver of Counterclaims..................................................82
         Section 11.5      Indemnification..........................................................82
         Section 11.6      Assignments; Participations..............................................83
         Section 11.7      Successors and Assigns...................................................85

SECTION 12.  THE AGENT..............................................................................85
         Section 12.1      Appointment..............................................................85
         Section 12.2      Nature of Duties.........................................................86
         Section 12.3      Delegation of Duties.....................................................87
         Section 12.4      Rights, Exculpation, Etc.................................................87
         Section 12.5      Reliance.................................................................88
         Section 12.6      Notice of Event of Default...............................................88
         Section 12.7      Credit Decision..........................................................88
         Section 12.8      Indemnification..........................................................89
         Section 12.9      CIT in its Individual Capacity...........................................89
         Section 12.10     Successor Agent..........................................................89
         Section 12.11     Withholding Tax..........................................................90
         Section 12.12     Collateral Matters.......................................................91
         Section 12.13     Agency for Perfection....................................................92
         Section 12.14     [Intentionally Omitted.].................................................93
         Section 12.15     Concerning the Collateral and the Related Financing Agreements...........93
         Section 12.16     Field Audit and Examination Reports; Disclaimer by Lenders...............93
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================================================================================

     EXHIBITS

--------------------------------------------------------------------------------
===================== ==========================================================

Exhibit A             Form of Amended and Restated Assignment and Acceptance
--------------------- ----------------------------------------------------------
--------------------- ----------------------------------------------------------

Exhibit B             Form of Amended and Restated Revolving Credit Note
--------------------- ----------------------------------------------------------
--------------------- ----------------------------------------------------------

Exhibit C             Form of Second Amended and Restated Letter of Credit
                      Agreement
--------------------- ----------------------------------------------------------
--------------------- ----------------------------------------------------------

Exhibit D-1           Form of Second Amended and Restated Trademark Collateral
                      Assignment and Security Agreement [Salant]
--------------------- ----------------------------------------------------------
--------------------- ----------------------------------------------------------

Exhibit D-2           Form of Special Power of Attorney [Salant]
--------------------- ----------------------------------------------------------
--------------------- ----------------------------------------------------------

Exhibit E-1           Form of Trademark Collateral Assignment and Security
                      Agreement [Holding]
--------------------- ----------------------------------------------------------
--------------------- ----------------------------------------------------------

Exhibit E-2           Form of Special Power of Attorney [Holding]
--------------------- ----------------------------------------------------------
--------------------- ----------------------------------------------------------

Exhibit F-1           Form of Second Amended Restated Collateral Assignment of
                      Licenses [Salant]
--------------------- ----------------------------------------------------------
--------------------- ----------------------------------------------------------

Exhibit F-2           Form of Collateral Assignment of Licenses [Holding]
--------------------- ----------------------------------------------------------
--------------------- ----------------------------------------------------------

Exhibit G             Form of Inventory Confirmation
--------------------- ----------------------------------------------------------
--------------------- ----------------------------------------------------------

Exhibit H             Form of Second Amended and Restated Guarantee [Guarantor]
--------------------- ----------------------------------------------------------
--------------------- ----------------------------------------------------------

Exhibit I-(1)         Form of Second Amended and Restated General Security
                      Agreement [Guarantor]
--------------------- ----------------------------------------------------------
--------------------- ----------------------------------------------------------

Exhibit I-(2)         Form of Second Amended and Restated Hypothec [Guarantor]
--------------------- ----------------------------------------------------------
--------------------- ----------------------------------------------------------

Exhibit J             Form of Second Amended and Restated Trademark Collateral
                      Assignment and Security Agreement [Guarantor]
--------------------- ----------------------------------------------------------
--------------------- ----------------------------------------------------------

Exhibit K             Form of Special Power of Attorney [Guarantor]
--------------------- ----------------------------------------------------------
--------------------- ----------------------------------------------------------

Exhibit L             Form of Second Amended and Restated Collateral Assignment
                      of Licenses [Guarantor]
--------------------- ----------------------------------------------------------
--------------------- ----------------------------------------------------------

Exhibit M             Form of UCC-1 Financing Statement
--------------------- ----------------------------------------------------------
--------------------- ----------------------------------------------------------

Exhibit N             Consent of Guarantors
--------------------- ----------------------------------------------------------
--------------------- ----------------------------------------------------------

     SCHEDULES
--------------------------------------------------------------------------------
---------------------- ---------------------------------------------------------

Schedule 1.38                        List of Existing Letters of Credit
--------------------- ----------------------------------------------------------
--------------------- ----------------------------------------------------------

Schedule 1.64         List of Real Property Subject to Existing Mortgages
--------------------- ----------------------------------------------------------
--------------------- ----------------------------------------------------------

Schedule 1.76         Perry Ellis Licenses
--------------------- ----------------------------------------------------------
--------------------- ----------------------------------------------------------

Schedule 3.2(b)       Letter of Credit Fees
--------------------- ----------------------------------------------------------
--------------------- ----------------------------------------------------------

Schedule 6.1(a)       Jurisdictions of Qualification
--------------------- ----------------------------------------------------------
--------------------- ----------------------------------------------------------

Schedule 6.1(b)       Subsidiaries
--------------------- ----------------------------------------------------------
--------------------- ----------------------------------------------------------

Schedule 6.4(c)       Permits
--------------------- ----------------------------------------------------------
--------------------- ----------------------------------------------------------

Schedule 6.6          Chief Executive Office and Locations of Collateral
--------------------- ----------------------------------------------------------
--------------------- ----------------------------------------------------------

Schedule 6.7          Existing Liens
--------------------- ----------------------------------------------------------
--------------------- ----------------------------------------------------------

Schedule 6.8          Tax Returns
--------------------- ----------------------------------------------------------
--------------------- ----------------------------------------------------------

Schedule 6.9          Pending Litigation
--------------------- ----------------------------------------------------------
--------------------- ----------------------------------------------------------

Schedule 6.12         Employee Benefit Matters
--------------------- ----------------------------------------------------------
--------------------- ----------------------------------------------------------

Schedule 6.13         Environmental Claims and Proceedings
--------------------- ----------------------------------------------------------
--------------------- ----------------------------------------------------------

Schedule 6.14         Bank Accounts of Borrower and its Subsidiaries
--------------------- ----------------------------------------------------------
--------------------- ----------------------------------------------------------

Schedule 6.20         Collective Bargaining Agreements
--------------------- ----------------------------------------------------------
--------------------- ----------------------------------------------------------

Schedule 6.21         Corporate Name; Tradenames; Prior Transactions
--------------------- ----------------------------------------------------------
--------------------- ----------------------------------------------------------

Schedule 6.22         Material Contract Defaults
--------------------- ----------------------------------------------------------
--------------------- ----------------------------------------------------------

Schedule 7.4          Existing Indebtedness
--------------------- ----------------------------------------------------------
--------------------- ----------------------------------------------------------

Schedule 7.6          Loans, Investments and Guarantees
--------------------- ----------------------------------------------------------
--------------------- ----------------------------------------------------------

Schedule 7.20(a)(ix)  Collateral and Financial Reports
--------------------- ----------------------------------------------------------
--------------------- ----------------------------------------------------------

Schedule 8.1(g)       Certain Perry Ellis Licenses
--------------------- ----------------------------------------------------------
--------------------- ----------------------------------------------------------

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


<PAGE>




                           SECOND AMENDED AND RESTATED
                     REVOLVING CREDIT AND SECURITY AGREEMENT


         THIS SECOND AMENDED AND RESTATED REVOLVING CREDIT AND SECURITY
AGREEMENT dated November 30, 2001 is entered into by and among SALANT
CORPORATION, a Delaware corporation ("Salant") and its wholly owned subsidiary,
Salant Holding Corporation, a Delaware corporation ("Holding"; and together with
Salant, individually, a "Borrower" and collectively, "Borrowers", as hereinafter
further defined), the financial institutions from time to time parties hereto as
lenders, whether by execution of this Agreement or an Assignment and Acceptance
(individually, a "Lender" and collectively, the "Lenders" as hereinafter further
defined) and THE CIT GROUP/COMMERCIAL SERVICES, INC., a New York corporation
("CIT" as hereinafter further defined), in its capacity as administrative agent
and collateral agent for the Lenders (in such capacity, the "Agent") and as
Lender.


                              W I T N E S S E T H:

         WHEREAS, CIT and Salant entered into a Revolving Credit, Factoring and
Security Agreement dated September 20, 1993 (as amended, modified or
supplemented from time to time, the "Original Credit Agreement") pursuant to
which CIT made loans and provided other financial accommodations to Salant; and

         WHEREAS, on December 29, 1998 Salant filed a voluntary petition for
relief under chapter 11 of the Bankruptcy Code (as hereinafter defined) with the
United States Bankruptcy Court for the Southern District of New York (the
"Bankruptcy Court"); and

         WHEREAS, pursuant to an Interim Order and a Final Order of the
Bankruptcy Court, dated December 29, 1998 and January 19, 1999, respectively,
Authorizing Interim and Post-Petition Financing, Granting Senior Liens and
Priority Administrative Expense, Modifying the Automatic Stay, and Authorizing
Debtor to Enter into Agreements with The CIT Group/Commercial Services, Inc. and
Authorizing the Assumption of the Existing Financing Agreements with Debtor, CIT
and Salant entered into debtor-in-possession financing arrangements under the
Original Credit Agreement pursuant to which CIT continued to make loans and
provide financial accommodations to Salant as Debtor and Debtor-in-Possession;
and

         WHEREAS, Salant's First Amended Chapter 11 Plan of Reorganization dated
February 3, 1999 (the "Plan") was confirmed by order of the Bankruptcy Court
entered on April 16, 1999; and



<PAGE>



                                       96
66358-10
         WHEREAS, in connection with implementation of the Plan and the
satisfaction of Salant's working capital requirements, Salant requested CIT to
continue to make financial accommodations to Salant and to extend, amend and
restate the Original Credit Agreement pursuant to which Agent on behalf of
Lenders would make loans and provide other financial accommodations to Salant to
fund the Plan and for working capital; and

         WHEREAS, Agent, Lenders and Salant entered into the Amended and
Restated Credit and Security Agreement dated May 11, 1999 (as amended the
"Existing Credit Agreement") pursuant to which Agent on behalf of Lenders made
loans and provided other financial accommodations to Salant on the terms and
conditions set forth therein; and

         WHEREAS, Salant has requested that Agent and Lenders agree that Holding
become a Borrower under the Existing Credit Agreement; and.

         WHEREAS, Agent and Lenders are willing to make Holding a Borrower under
Existing Credit Agreement by amending and restating the Existing Credit
Agreement in its entirety as set forth in this Agreement and Lenders are willing
to make loans and provide other financial accommodations to Borrowers on the
terms and subject to the conditions set forth in this Agreement;

         NOW, THEREFORE, in consideration of the mutual conditions and
agreements set forth herein, and for other good and valuable consideration, the
receipt and sufficiency of which is hereby acknowledged, the parties hereto
agree as follows:

SECTION 1.        DEFINITIONS

         For the purposes of this Agreement and the other Financing Agreements,
the following terms shall have the respective meanings given to them below:

         1.1      "Account Debtor" shall mean each debtor or obligor in any way
obligated on or in connection with any Account.

         1.2 "Accounts" shall mean all present and future rights of a Borrower
to payment of a monetary obligation, whether or not earned by performance, which
is not evidenced by chattel paper or an instrument, (a) for property that has
been or is to be sold, leased, licensed, assigned, or otherwise disposed of, (b)
for services rendered or to be rendered, (c) for a secondary obligation incurred
or to be incurred, or (d) arising out of the use of a credit or charge card or
information contained on or for use with the card.



<PAGE>


         1.3 "Adjusted Eurodollar Rate" shall mean, with respect to each
Interest Period for any Eurodollar Rate Loan, the rate per annum (rounded
upwards, if necessary, to the next one-hundredth (1/100) of one (1%) percent)
determined by dividing (a) the Eurodollar Rate for such Interest Period by (b) a
percentage equal to: (i) one (1) minus (ii) the Reserve Percentage. For purposes
hereof, "Reserve Percentage" shall mean the reserve percentage, expressed as a
decimal, prescribed by any United States or foreign banking authority for
determining the reserve requirement which is or would be applicable to deposits
of United States dollars in a non-United States or an international banking
office of Reference Bank used to fund a Eurodollar Rate Loan or any Eurodollar
Rate Loan made with the proceeds of such deposit, whether or not the Reference
Bank actually holds or has made any such deposits or loans. The Adjusted
Eurodollar Rate shall be adjusted on and as of the effective day of any change
in the Reserve Percentage.

         1.4 "Affiliate" shall mean, with respect to a specified Person, a
partnership, corporation or any other person which directly or indirectly,
through one or more intermediaries, controls or is controlled by or is under
common control with such Person, and without limiting the generality of the
foregoing, includes (a) any Person which beneficially owns or holds ten (10%)
percent or more of any class of voting securities of such Person or other equity
interests in such Person and (b) any Person of which such Person beneficially
owns or holds ten (10%) percent or more of any class of voting securities or in
which such Person beneficially owns or holds ten (10%) percent or more of the
equity interests. For the purposes of this definition, the term "control"
(including with correlative meanings, the terms "controlled by" and "under
common control with"), as used with respect to any Person, means the possession,
directly or indirectly, of the power to direct or cause the direction of the
management and policies of such Person, whether through the ownership of voting
securities or by contract or otherwise.

         1.5 "Agent Advances" shall have the meaning set forth in Section 12.12
hereof.

         1.6 "Amended and Restated Revolving Credit Notes" shall mean the
promissory notes issued by Borrowers jointly and severally in favor of each
Lender evidencing the joint and several Obligations of Borrowers to each Lender
with respect to the Loans made by or on behalf of Lenders with each such note
being in a principal amount of up to the respective Lender's Commitment.

         1.7 "Amended and Restated Assignment and Acceptance" shall mean an
Assignment and Acceptance substantially in the form of Exhibit A attached hereto
(with blanks appropriately completed) delivered to the Agent in connection with
an assignment of a Lender's interest hereunder in accordance with the provisions
of Section 11.6 below.

         1.8 "Bankruptcy Code" shall mean title 11 of the United States Code as
enacted in 1978, as the same may have heretofore been or may hereafter be
amended, recodified, modified or supplemented, together with all rules,
regulations and interpretations thereunder or related thereto.

         1.9 "Bankruptcy Court" shall have the meaning set forth in the recitals
 hereto.

         1.10 "Blocked Accounts" shall have the meaning set forth in Section 9.1
 hereof.

<PAGE>
         1.11  "Board" shall mean the Board of Governors of the Federal Reserve
System or any successor thereto.

         1.12  "Borrower" shall mean each of Salant and Holding.

         1.13  "Borrowers" shall mean Salant and Holding, collectively.

         1.14 "Business Day" shall mean any day other than a Saturday, Sunday,
or other day on which commercial banks are authorized or required to close under
the laws of the State of New York, and a day on which the Lenders and Agent are
open for the transaction of business.

         1.15 Capital Expenditures" shall mean, for any Person, all expenditures
for any fixed assets or improvements, or for replacements, substitutions or
additions thereto, of such Person that under GAAP are capitalized and not
expenses in the year in which they are incurred.

         1.16 "Capitalized Lease Obligations" shall mean any obligation to pay
rent or other amounts under a lease of (or other agreement conveying the right
to use) any property (whether real, personal or mixed) that is required to be
classified and accounted for as a capital lease obligation under GAAP, and, for
the purposes of this Agreement, the amount of such obligation at any date shall
be the capitalized amount thereof at such date, determined in accordance with
GAAP.

         1.17 "Capital Stock" shall mean any and all shares, interests,
participations, or other equivalents (however designated) of corporate stock,
partnership interests or limited liability company interests and any options or
warrants with respect to any of the foregoing.

<PAGE>

         1.18 "Cash Equivalents" shall mean (a) marketable direct obligations
issued by, or unconditionally guaranteed by, the United States Government or
issued by any agency thereof and backed by the full faith and credit of the
United States, in each case maturing within two (2) years from the date of
acquisition thereof; (b) marketable direct obligations issued by any State of
the United States of America or any political subdivision of any such State or
any public instrumentality thereof maturing within two (2) years from the date
of acquisition thereof and, at the time of acquisition, having one of the two
highest ratings obtainable from either Standard & Poor's Ratings Services, a
division of The McGraw Hill Companies, Inc. ("S&P") or Moody's Investors
Service, Inc. ("Moody's"); (c) commercial paper maturing no more than two (2)
years from the date of creation thereof and, at the time of acquisition, having
a rating of at least A-1 from S&P or at least P-1 from Moody's; (d) certificates
of deposit or bankers' acceptances maturing within two (2) years from the date
of acquisition thereof issued by any commercial bank organized under the laws of
the United States of America or any State thereof or the District of Columbia or
any U.S. branch of a foreign bank having at the date of acquisition thereof
combined capital and surplus of not less than $500,000,000; (e) repurchase
obligations with a term of not more than seven (7) days for underlying
securities of the types described in clause (a) above entered into with any bank
meeting the qualifications specified in clause (d) above; and (f) investments in
money market funds which invest substantially all their assets in securities of
the types described in clauses (a) through (e) above.

         1.19 "CIT" shall mean The CIT Group/Commercial Services, Inc., a New
York corporation, in its individual capacity, and its successors and assigns.

         1.20 "Code" shall mean the Internal Revenue Code of 1986, as the same
now exists or may from time to time hereafter be amended, modified, recodified
or supplemented, together with all rules, regulations and interpretations
thereunder or related thereto.

         1.21 "Collateral" shall have the meaning set forth in Section 5 hereof.

         1.22 "Collateral Access Agreement" shall mean an agreement in writing,
in form and substance satisfactory to Agent, from any lessor of premises to a
Borrower, or any other person to whom any Inventory is consigned or who has
custody, control or possession of any Inventory or Equipment or is otherwise the
owner or operator of any premises on which any Inventory or Equipment is
located, pursuant to which such lessor, consignee or other person, inter alia,
acknowledges the first priority security interest of Agent (for itself and the
ratable benefit of Lenders) in such Inventory or Equipment, agrees to waive any
and all claims such lessor, consignee or other person may, at any time, have
against such Inventory or Equipment, whether for processing, storage or
otherwise, and agrees to permit Agent access to, and the right to remain on, the
premises of such lessor, consignee or other person so as to exercise Agent's
rights and remedies and otherwise deal with the Collateral.

         1.23 "Commitment" shall have the meaning set forth in Section 3.4
hereof.

         1.24 "Commitment Percentage" shall mean, as to each Lender, the
percentage of the Maximum Credit provided for hereunder represented by such
Lender's Commitment. The Commitment Percentage of each Lender signing this
Agreement is set forth on the signature pages hereto below each Lender's
respective signature.

         1.25 "Consolidated Tangible Net Worth" shall mean, as of any date,
stockholders' equity less the aggregate book value of intangible assets, all
determined on a consolidated basis for Salant and its Subsidiaries in accordance
with GAAP.

         1.26 "Credit Facility" shall mean, collectively, the secured Loans and
Letter of Credit Accommodations provided for hereunder and under the other
Financing Agreements.

         1.27     "Effective Date" shall have the meaning set forth in the Plan.

<PAGE>
         1.28 "Eligible Accounts" shall mean each of those Accounts that, at any
time when eligibility is to be determined, meet all of the following
requirements:

                  (a) The Account complies in all material respects with all
representations, warranties, covenants and other applicable provisions of this
Agreement and the other Financing Agreements;

                  (b) The Account is due and payable not more than sixty (60)
days from the date of the invoice evidencing such Account and is not more than
sixty (60) days past due, or the Account is due and payable not more than ninety
(90) days from the date of the invoices evidencing such Account and is not more
than thirty (30) days past due;

                  (c) In the case of an Account with respect to which a Borrower
has given terms of sale beyond 90 days from the date of the invoice, such
Borrower has obtained the prior written consent of Agent to such terms of sale
and such Account is not more than 30 days past due;

                  (d) The Account is subject to the first perfected  security
interest of Agent and is not subject to any lien or security interest except as
permitted by this Agreement;

                  (e) The goods,  the sale of which gave rise to the  Account,
were at the time of sale not  subject to any lien, except as permitted by this
Agreement;

                  (f) The Account does not arise out of a guaranteed sale, sale
or return, sale on approval, consignment sale or other kind of sale under which
payment by the Account Debtor may be conditional or contingent;

                  (g) The Account does not arise from the sale to an Affiliate
of a Borrower;

                  (h) The Account arises out of a sale to an Account Debtor
whose chief executive office or principal  place of business is located in the
United States;

                  (i) The Account Debtor obligated on the Account is not the
United States, a state or a political subdivision thereof or any department,
agency or instrumentality of the United States, any state or political
subdivision thereof, unless there has been compliance with the Assignment of
Claims Act of 1940, as amended (31 U.S.C. ss. 3727, et seq.) or any similar
state or local law, if applicable;

                  (j) There is no contra relationship, setoff, counterclaim or
dispute existing with respect to the invoice evidencing such Account and there
are no other facts existing which would reasonably be expected to materially
impair or delay the collectibility of all or any portion thereof;


<PAGE>


                  (k) The Borrower has delivered to Agent such documents as
Agent may have requested pursuant to Section 9.7 hereof in connection with the
Account and Agent shall have received verification of such Account, reasonably
satisfactory to it, if sent to the Account Debtor obligated on such Account
pursuant to Section 9.8 hereof;

                  (l) Except for Accounts arising from post-petition shipments
to debtors-in-possession for which CIT is generally approving credit, the
Account Debtor obligated on the Account has not filed a petition for relief
under the Bankruptcy Code or any other bankruptcy or insolvency law and has not
made an assignment for the benefit of creditors, no petition or other
application for relief under the Bankruptcy Code or any other bankruptcy or
insolvency law has been filed against the Account Debtor, the Account Debtor has
not terminated or suspended its business operations in whole or material part,
the Account Debtor has not suspended payment of its debts generally, has not
become insolvent, and has not suffered a receiver or a trustee to be appointed
for any of its assets or affairs;

                  (m) The Account is owing by a single Account Debtor (or a
single group of affiliated Account Debtors) and less than fifty (50%) percent of
the balance of all Accounts then owing by such Account Debtor (or affiliated
Account Debtors) remains unpaid sixty (60) or more days after the due date
thereof;

                  (n) The Account is not evidenced by chattel paper or
instruments;

                  (o) The Account, together with all other Accounts owing from
the same Account Debtor does not represent more than twenty-five (25%) percent
of all otherwise Eligible Accounts except that Accounts owing from each of
Federated Department Stores, Inc., May Department Stores, Inc., The Marmaxx
Group or Dillard Department Stores, Inc., respectively, (or any of their
respective Affiliates) do not each represent more than fifty percent (50%) of
all otherwise Eligible Accounts. (Accounts excluded from Eligible Account solely
by reason of this Section shall nevertheless be considered Eligible Accounts to
the extent of the amount of such Accounts which does not exceed fifty percent
(50%) of all otherwise Eligible Accounts owing from each of Federated Department
Stores, Inc., May Department Stores, Inc., The Marmaxx Group or Dillard
Department Stores, Inc. (or any of their respective Affiliates) or from any
other Account Debtors twenty-five (25%) percent of all otherwise Eligible
Accounts); and

<PAGE>
                  (p) If the Account is an Account with respect to which payment
is due more than ninety (90) days from the date of the invoice evidencing such
Account, such Account together with all other Accounts with respect to which
payment is due more than ninety (90) days from the date of the invoices
evidencing such Accounts, does not represent more than twenty-five (25%) percent
of all otherwise Eligible Accounts. (Accounts excluded from Eligible Accounts
solely by reason of this Section shall nevertheless be considered Eligible
Accounts to the extent of the amount of such Accounts which does not exceed
twenty-five (25%) percent of all such Accounts.)

         Any account that is not an Eligible Account at any time shall
nevertheless remain at all times part of the Collateral.

         1.29 "Eligible Inventory" shall mean that Inventory of a Borrower
consisting of first quality finished goods held for resale in the ordinary
course of business of a Borrower, domestic raw materials (including linings) and
work-in-process (excluding such raw materials (including linings) and
work-in-process held for more than six (6) months and excluding trim, resin,
supplies and samples) that, at any time when eligibility is to be determined,
meets all of the following requirements:

                  (a) Inventory that complies in all material respects with all
representations, warranties, covenants and other applicable provisions of this
Agreement and the other Financing Agreements;

                  (b) Inventory that is subject to the first perfected  security
interest of Agent and no other liens or security interests except as permitted
by this Agreement;

                  (c) Inventory that is merchantable and fit for sale;

                  (d) Inventory that is not consigned to a Borrower;

                  (e) Inventory that meets the following criteria (and all other
requirements for Eligible Inventory):

                  Made for Sale
                  In Season Indicated.......         Eligibility

                  Spring            ........         Eligible  through the last
                                                     day of the September fiscal
                                                     month of the year for which
                                                     it was produced;
                                                     ineligible thereafter.

                  Transition/Summer ........         Eligible through
                                                     the last day of the
                                                     December fiscal month of
                                                     the year for which it was
                                                     produced; ineligible
                                                     thereafter.

                  Fall              ........         Eligible  through the last
                                                     day of the March  fiscal
                                                     month of the year
                                                     subsequent to the year for
                                                     which produced;
                                                     ineligible thereafter.

<PAGE>

                  Holiday           ........         Eligible  through the last
                                                     day of the June fiscal
                                                     month of the year
                                                     subsequent to the year for
                                                     which produced;
                                                     ineligible thereafter.

                  (f) Inventory that does not consist of packaging or shipping
materials, except to the extent that packaging is included in finished goods;

                  (g)  Inventory  that  meets  all  standards  imposed  by any
Governmental Authority having regulatory authority over such Inventory,  its use
or sale;

                  (h)  Inventory  that does not consist of bill and hold goods
and/or defective goods; and

                  (i) Inventory located at premises in the United States that
are owned or leased and operated by a Borrower; provided; however, any Inventory
which would otherwise be Eligible Inventory but for its failure to meet the
requirements of clause (i) of this Section, as a result of its failure to be
located at premises owned or leased and operated by a Borrower, shall
nevertheless be considered Eligible Inventory if Agent shall have received a
Collateral Access Agreement from the holder of such Inventory or the owner
and/or operator of such location, as the case may be.

     Any Inventory  that is not Eligible  Inventory  shall  nevertheless  be and
remain at all times part of the Collateral.



<PAGE>


         1.30 "Environmental Laws" shall mean all Federal, State and local laws,
rules, regulations, ordinances, and consent decrees relating to health, safety,
hazardous substances, pollution and environmental matters, as now or at any time
hereafter in effect, applicable to the business and facilities of a Borrower and
its Subsidiaries (whether or not owned by it or any of them), including laws
relating to emissions, discharges, releases or threatened releases of
pollutants, contamination, chemicals, or hazardous, toxic or dangerous
substances, materials or wastes into the environment (including, without
limitation, ambient air, surface water, ground water, land surface or subsurface
strata) or otherwise relating to the generation, manufacture, processing,
distribution, use, treatment, storage, disposal, transport or handling of
pollutants, contaminants, chemicals, or hazardous or toxic substances, materials
or wastes. Such laws and regulations include, but are not limited to, the
Resource Conservation and Recovery Act of 1976, as amended; the Comprehensive
Environmental Response, Compensation and Liability Act of 1980, as amended; the
Superfund Amendments and Reauthorization Act; the Water Pollution Control Act of
1972; the Solid Waste Disposal Act; the Insecticide, Fungicide and Rodenticide
Act; the Safe Drinking Water Act of 1974; the Toxic Substances Control Act, as
amended; the Clean Water Act, as amended; the Clean Air Act, as amended; the
Hazardous Materials Transportation Act, as amended; U.S. Department of
Transportation and Environmental Protection Agency regulations; and applicable
state counterparts to any of such laws and any common law or equitable doctrine
that may impose liability or obligations for injuries or damages due to the
presence of or exposure to any Hazardous Materials.

         1.31 "Equipment" shall mean all of each Borrower's now owned and
hereafter acquired equipment and fixtures, of every kind and description,
wherever located, including, without limitation, any and all machinery used in
connection with the manufacture, sale, exchange or lease of goods or rendition
of services, machinery, tooling, tools, telephone equipment, computers, computer
hardware and related computer equipment and accessories (including software and
records), vehicles, furniture, trade fixtures and fixtures, all attachments,
components, parts, accessions and property now or hereafter affixed thereto,
installed thereon or used in connection therewith, and all additions to and
substitutions and replacements thereof and all existing and future leasehold
interests in equipment and fixtures, wherever located, whether now owned or
hereafter acquired and all licenses and other rights of such Borrower relating
thereto, whether in the possession and control of such Borrower or in the
possession and control of a third person for the account of such Borrower and
all claims to the proceeds of insurance thereon and all maintenance and warranty
records relating thereto.

         1.32 "ERISA" shall mean the United States Employee Retirement Income
Security Act of 1974, as the same now exists or may hereafter from time to time
be amended, modified, recodified or supplemented, together with all rules,
regulations and interpretations thereunder or related thereto.

         1.33 "ERISA Affiliate" shall mean any person required to be aggregated
with a Borrower or any of its subsidiaries under Sections 414(b), 414(c), 414(m)
or 414(o) of the Code.

         1.34 "Eurodollar Rate" shall mean with respect to each day during each
Interest Period pertaining to a Eurodollar Rate Loan, the rate of interest
published in The Wall Street Journal, Eastern Edition, two business days prior
to the first day of such Interest Period as the highest rate in the range of
rates quoted for one, two or three month "London Late Eurodollars". In the event
that The Wall Street Journal, Eastern Edition, is not published or such rate
does not appear in The Wall Street Journal, Eastern Edition, the "Eurodollar
Rate" shall be the rate determined by Agent to be the rate at which deposits in
United States dollars are offered by the Reference Bank to first class banks in
the interbank eurodollar market where the eurodollar and foreign currency and
exchange operations in respect of its eurodollar loans are then being conducted
at approximately 11:00 a.m., New York City time, two Business Days prior to the
beginning of such Interest Period, in an amount approximately equal to the
principal amount of the Eurodollar Rate Loan to which such Interest Period is to
apply and for a period of time comparable to such Interest Period.

         1.35 "Eurodollar Rate Loans" shall mean any Loans or portion thereof on
which interest is payable based on the Adjusted Eurodollar Rate in accordance
with the terms hereof.

<PAGE>

         1.36 "Event of Default" shall have the meaning set forth in Section 8.1
 hereof.

         1.37 "Existing Credit Agreement" shall have the meaning set forth in
the recitals hereto.

         1.38 "Existing Letters of Credit" shall mean, collectively, Letter of
Credit Accommodations arranged for by Agent for the benefit of Salant or its
Subsidiaries under the Existing Credit Agreement set forth on Schedule 1.38
hereto.

         1.39 "Financing Agreements" shall mean, collectively, this Agreement,
together with all other agreements (including, without limitation, security
agreements and mortgages), documents and instruments now or at any time
hereafter executed and/or delivered by one or more Borrowers or any other
person, with, to or in favor of Agent or any Lender in connection herewith or
related hereto, as this Agreement and such other agreements, documents or
instruments now exist or may hereafter be amended, modified, supplemented,
extended, renewed, restated or replaced in accordance with the terms and
conditions set forth herein and therein.

         1.40 "GAAP" shall mean generally accepted accounting principles in the
United States of America as in effect from time to time as set forth in the
opinions and pronouncements of the Accounting Principles Board and the American
Institute of Certified Public Accountants and the statements and pronouncements
of the Financial Accounting Standards Board which are applicable to the
circumstances as of the date of determination.

         1.41 "General Intangibles" shall mean all of each Borrower's general
intangibles, rights, interests, choses in action, causes of action and all other
intangible personal property of every kind and nature (other than Accounts) now
owned or licensed or hereafter acquired or licensed, including, without
limitation, corporate or other business records, loans and other obligations
receivable, inventions, designs, patents, patent applications, service marks,
trademarks, trademark applications, trade names, trade secrets, goodwill,
registrations, copyrights, licenses, royalties, leasehold interests in real and
personal property, rights under any future contracts, customer lists, supplier
contracts, firm sale orders, partnerships and joint ventures, other contracts
and contract rights, federal, state and local tax refund claims of all kinds,
duty refund claims of all kinds, rights to indemnification, reversionary,
beneficial, and residual interests in trusts.

         1.42 "Governmental Authority" shall mean any nation or government, any
state, province, or other political subdivision thereof, any central bank (or
similar monetary or regulatory authority) thereof, any entity exercising
executive, legislative, judicial, regulatory or administrative functions of or
pertaining to government, and any corporation or other entity owned or
controlled, through stock or capital ownership or otherwise, by any of the
foregoing.

         1.43 "Guarantees" shall have the meaning set forth in Section 5.2(a)
 hereof.

<PAGE>

         1.44   "Guarantors"   shall  mean  Salant   Corporation,   a  Delaware
corporation,  Salant Holding Corporation,  a Delaware  corporation,  Clantexport
Inc., a New York corporation,  Denton Mills, Inc., a Delaware corporation, Frost
Bros.  Enterprises,  Inc., a Texas corporation,  SLT Sourcing,  Inc., a New York
corporation,   Vera   Licensing,   Inc.,  a  Nevada   corporation,   Vera  Linen
Manufacturing,  Inc., a Delaware corporation, and Salant Canada Inc., a Canadian
corporation, and each of their respective successors and assigns.

         1.45  "Guarantor  Collateral"  shall  have the  meaning  set  forth in
Section 5.2 (c) hereof.

         1.46 "Hazardous Materials" shall mean any hazardous or toxic substances
or materials and wastes, including, without limitation, hydrocarbons (including
naturally occurring or man-made petroleum and hydrocarbons), flammable
explosives, asbestos, urea formaldehyde insulation, radioactive materials,
biological substances, polychlorinated biphenyls, pesticides, herbicides and any
other kind and/or type of pollutants or contaminants (including, without
limitation, materials which include hazardous constituents), sewage, sludge,
industrial slag, solvents and/or other substances, materials, or wastes that are
or became regulated under any Environmental Laws (including, without limitation,
any that are or become classified as hazardous or toxic under any Environmental
Laws.)

         1.47  "Holding"  shall mean  Salant  Holding  Corporation,  a Delaware
corporation and its successors and assigns.

         1.48 "Holding Eligible Inventory" shall mean Eligible Inventory sold by
Holding under (i) the TALLIA License, (ii) the "Tricots San Rafael" name, (iii)
any Holding Private Line or (iv) any name purchased or licensed by Holding from
a business engaged in the import and manufacture of men's apparel and
accessories.



<PAGE>


         1.49 "Indebtedness" shall mean, as to any Person, without duplication,
any liability in respect of (a) all indebtedness of such Person for money
borrowed (including all indebtedness evidenced by notes, bonds, debentures or
other securities); (b) reimbursement obligations relating to letters of credit
or similar documents or instruments issued for the account of such Person and
drawn upon; (c) the balance deferred and unpaid of the purchase price of any
property or services (except accounts payable to trade creditors created,
assumed or guaranteed by such Person in the ordinary course of business in
connection with obtaining materials or services); (d) all indebtedness incurred
by such Person in the acquisition (whether by way of purchase, merger,
consolidation or otherwise) of any business, real property or other assets
(except assets, other than capital assets, acquired in the ordinary course of
the conduct of the acquirer's business); (e) Capitalized Lease Obligations of
such Person (f) all obligations with respect to redeemable stock and redemption
or repurchase obligations under any Capital Stock or other equity securities
issued by such Person; (g) guarantees by such Person of indebtedness or
obligations described in clauses (a), (b), (c), (d), (e), or (f) of any Person
and (h) renewals, extensions, refundings, deferrals, restructurings, amendments
and modifications of any such indebtedness, obligations or guarantees.
Indebtedness shall not include (i) any liability for accounts payable or accrued
expenses incurred in the ordinary course of business and owed or owing by the
Person; (ii) any liability for state, local or other taxes owed or owing by the
Person; or (iii) obligations of the Person to employees in respect of stock
appreciation rights or (iv) obligations of Salant under its employment agreement
with Mr. Michael Setola in effect on the Effective Date.

         1.50 "Interest Period" shall mean, for any Eurodollar Rate Loan, a
period of approximately one (1), two (2), or three (3) months duration as a
Borrower may elect, the exact duration to be determined in accordance with the
customary practice in the applicable Eurodollar Rate market; provided, that,
such Borrower may not elect an Interest Period which will end after the last day
of the then-current term of this Agreement.

         1.51 "Interest Rate" shall mean as to Prime Rate Loans, a rate of one
quarter (.25%) percent per annum in excess of the Prime Rate and, as to
Eurodollar Rate Loans, a rate of two and one-quarter (2.25%) percent per annum
in excess of the Adjusted Eurodollar Rate (based on the Eurodollar Rate
applicable for the Interest Period selected by a Borrower as in effect three (3)
Business Days after the date of receipt by Agent of the request of such Borrower
for such Eurodollar Rate Loans in accordance with the terms hereof, whether such
rate is higher or lower than any rate previously quoted to such Borrower);
provided, that the Interest Rate shall be increased by one and one-half (1.50%)
in excess of the Interest Rate otherwise payable, at Agent's option, without
notice, (ai for the period on and after (i) the date of termination or
non-renewal hereof and until such time as all Obligations are indefeasibly paid
in full (notwithstanding entry of any judgment against any Borrower), or (ii)
the date of the occurrence of any Event of Default and for so long as such Event
of Default is continuing and (b) on the Loans at any time outstanding in excess
of the amounts available to any Borrower under Section 3 (whether or not such
excess(es) arise or are made with or without Agent's knowledge or consent and
whether made before or after an Event of Default).

         1.52 "Interest Rate Protection Obligations" shall mean the obligations
of any Person pursuant to any arrangement with any other Person whereby,
directly or indirectly, such Person is entitled to receive from time to time
periodic payments calculated by applying either a floating or a fixed rate of
interest on a stated notional amount in exchange for periodic payments made by
such Person calculated by applying a fixed or a floating rate of interest on the
same notional amount and shall include, without limitation, interest rate swaps,
caps, floors, collars and similar agreements.

<PAGE>
         1.53 "Inventory" shall mean all of each Borrower's inventory, of every
kind and description, now or hereafter owned or acquired by or in the custody or
possession, actual or constructive, of, such Borrower, wherever located,
including, without limitation, all raw materials, work-in-process, and finished
inventory of any kind, nature or description, including, without limitation,
men's, women's and children's apparel and accessories and any other personal
property held for sale, exchange or lease or furnished or to be furnished under
a contract of service or an exchange arrangement or used or consumed in the
business or in connection with the manufacturing, packing, shipping,
advertising, selling or finishing of such goods, inventory, merchandise and
other personal property, and all names or marks affixed to or to be affixed
thereto for purposes of selling the same by the seller, manufacturer, lessor or
licensor thereof and all right, title and interest therein and thereto, wherever
located, whether now owned or hereafter acquired.

         1.54 "Lenders" shall mean the financial institutions who are
signatories hereto as lenders and other persons made a party to this Agreement
as lenders in accordance with Section 11.6 hereof, and their respective
successors and assigns.

         1.55 "Lending Formulas" shall mean with respect to Borrowers, the
percentages set forth in Section 3.1 (a) hereof, in each case subject to the
limits set forth in Section 3.1, with respect to Eligible Accounts and Eligible
Inventory.

         1.56 "Letter of Credit Accommodations" shall mean with respect to the
Credit Facility, the letters of credit or other guaranties which are from time
to time either (a) issued or opened by Agent for the account of a Borrower or
any Obligor or (b) with respect to which Agent or any Lender has agreed to
indemnify the issuer or guaranteed to the issuer the performance by a Borrower
of its obligations to such issuer (including, without limitation, the Existing
Letters of Credit).

         1.57 "Letter of Credit  Facility Limit" shall mean  $45,000,000,  plus
$2,250,000 for the PBGC L/C.

         1.58 "Loans" shall mean the loans made to or for the benefit of any
Borrower by Lenders or, at Agent's option, by Agent for the ratable account of
Lenders, on a revolving basis (involving advances, repayments and readvances) as
set forth in Section 3.1 hereof.

         1.59 "Lock Box Agreement"  shall have the meaning set forth in Section
9.1(a) hereof.

         1.60 "Majority Lenders" shall mean, as of any date of determination
thereof, Lenders holding more than fifty (50%) percent of the aggregate
outstanding principal amount of Loans and outstanding Letter of Credit
Accommodations, or, if there are no Loans or Letter of Credit Accommodations
outstanding, then such term shall mean Lenders having aggregate Commitment
Percentages of more than fifty (50%) percent.

<PAGE>

         1.61 "Material Adverse Effect" shall mean a material adverse effect on
(a) the condition (financial or otherwise), business, performance, operations or
properties of Borrowers, taken as a whole; (b) the legality, validity or
enforceability of this Agreement or any of the other Financing Agreements; (c)
the legality, validity, enforceability, perfection or priority of the security
interests and liens of Agent or any Lender upon the Collateral or any other
property which is security for the Obligations; (d) the Collateral or any other
property which is security for the Obligations taken in their entirety, or the
value of the Collateral or such other property taken in their entirety; (e) the
ability of Borrowers to repay the Obligations or of Borrowers to perform their
obligations under this Agreement or any of the other Financing Agreements; or
(f) the ability of Agent or any Lender to enforce the Obligations or realize
upon the Collateral solely with respect to the rights and remedies of Agent or
any Lender under this Agreement or any of the other Financing Agreements.

         1.62 "Material Contract" shall mean any contract or other arrangements
(other than the Financing Agreements), whether written or oral, to which any
Borrower or its Subsidiaries is a party as to which the breach, nonperformance,
cancellation or failure to renew by any party thereto could be reasonably
expected to have a Material Adverse Effect.

         1.63 "Maximum Credit" shall mean $85,000,000.

         1.64 "Mortgages" shall mean, individually and collectively, the deeds
of trust, mortgages and other security agreements with respect to the Real
Property listed on Schedule 1.64 hereto, as the same now exist or may
hereinafter be amended, modified, supplemented, extended, renewed, restated or
replaced.

         1.65 "Net Amount of Eligible Accounts" shall mean the gross amount of
Eligible Accounts less (a) sales, excise or similar taxes included in the amount
thereof and (b) rebates, discounts, claims, credits and allowances of any nature
at any time issued, owing, granted, outstanding, available or claimed with
respect thereto.

<PAGE>

         1.66 "Net Cash Proceeds" shall mean (a) proceeds received by a Borrower
in cash or Cash Equivalents from the sale, assignment or other disposition of
any of its assets or property (other than sales of Inventory in the ordinary
course of business), net of payments of Indebtedness secured by such assets or
properties (including any fees or prepayment penalties required to be paid as a
result of such sale, assignment or other disposition) and the reasonable cash
costs of sale, assignment or other disposition, provided, that, evidence of such
costs reasonably satisfactory to Agent is provided to Agent upon Agent's
request; (b) proceeds of insurance in cash or Cash Equivalents on account of the
loss of or damage to any such assets or property, and payments of compensation
in cash or Cash Equivalents for any such assets or property taken by
condemnation or eminent domain; and (c) proceeds received after the date hereof
by a Borrower or any of its Subsidiaries in cash or Cash Equivalents from (i)
the issuance of any Capital Stock by such Borrower or any other additions to the
equity of such Borrower (other than retained earnings) or any contributions to
capital of such Borrower or (ii) issuance of any Indebtedness by such Borrower,
in each case net of reasonable underwriting discounts and commissions and
reasonable costs incurred in connection with such transaction; provided, that,
evidence of such costs reasonably satisfactory to Agent is provided to Agent
upon Agent's request.

         1.67 "Obligations" shall mean any and all Loans, Letter of Credit
Accommodations and all other obligations, liabilities and indebtedness of every
kind, nature and description owing by any Borrower and/or any Obligor to Agent
or any Lender, including principal, interest, charges, fees, costs and expenses,
including, but not limited to, reasonable attorney's fees and disbursements,
however evidenced, whether as principal, surety, endorser, guarantor or
otherwise, arising under or in connection with the Existing Agreement or this
Agreement, any of the other Financing Agreements or by operation of law in
connection therewith, whether now existing or hereafter arising, whether arising
before, during or after the initial or any renewal term of this Agreement, after
the commencement of any case with respect to any Borrower or any Obligor under
the Bankruptcy Code or any similar statute (including the payment of interest
and other amounts which would accrue and become due but for the commencement of
such case, whether or not such amounts are allowed or allowable in whole or in
part in such case), whether direct or indirect, absolute or contingent, joint or
several, due or not due, primary or secondary, liquidated or unliquidated or
secured and expressly including all indebtedness of any Borrower to CIT as a
Lender on accounts arising from the sale of goods or services purchased by such
Borrower from any Person whose accounts are factored or financed by CIT and all
indebtedness of any Borrower under any of the Financing Agreements or any other
agreement now or hereafter entered into between Borrower and any Lender arising
from or relating to any instrument, document or agreement to which such Borrower
is a party, or by which its property is bound, and which is designed to hedge or
protect against foreign currency fluctuations.

         1.68 "Obligor" shall mean any guarantor, endorser, acceptor, surety, or
other person liable on or with respect to the Obligations or who is the owner of
any property which is security for the Obligations, other than Borrower.

         1.69 "Original  Credit  Agreement" shall have the meaning set forth in
the recitals hereto.

         1.70 "Participant" shall mean any financial institution that acquires
and holds participation in the interest of any Lender in any of the Loans and
Letter of Credit Accommodations in conformity with the provisions of Section
11.6 of this Agreement governing participations.

         1.71 "Payment Account" shall have the meaning set forth in Section 9.1
hereof.

         1.72 "PBGC L/C" shall mean the letter of credit issued in accordance
with Section 3(a) of that certain agreement between Salant and the Pension
Benefit Guaranty Corporation entered into in connection with the Plan.

<PAGE>

         1.73 "Permits" shall have the meaning set forth in Section 6.4 hereof.

         1.74 "Perry Ellis Inventory" shall mean Inventory subject to any
license agreement between Perry Ellis International Inc. and Salant, including,
without limitation, Inventory bearing any trademark licensed to Salant by Perry
Ellis International Inc.

         1.75 "Perry Ellis Eligible Inventory" shall mean (i) Eligible Inventory
subject to any license agreement between Perry Ellis International Inc. and
Salant including, without limitation, Eligible Inventory bearing any trademark
licensed to Salant by Perry Ellis International Inc. and Eligible Inventory
consisting of domestic raw materials and work-in-process for Perry Ellis
Inventory and (ii) Eligible Inventory consisting of neckwear and private label
belts not sold under the Perry Ellis name.

         1.76 "Perry Ellis Licenses" shall mean the licensing agreements and the
settlement agreements relating thereto between Salant and Perry Ellis
International, Inc. as set forth on Schedule 1.76 hereto and any such license
agreements or settlement agreements entered into after the date of this
Agreement as the same may from time to time be amended, restated, modified,
supplemented, renewed, extended or replaced in accordance with the terms
thereof.

         1.77 "Person" or "person" shall mean any individual, sole
proprietorship, partnership, corporation (including, without limitation, any
corporation which elects subchapter S status under the Code), limited liability
company, limited liability partnership, business trust, unincorporated
association, joint stock corporation, trust, joint venture or other entity or
any government or any agency or instrumentality or political subdivision
thereof.

         1.78 "Plan" shall have the meaning set forth in the recitals hereto.

         1.79 "Prime Rate" shall mean the rate from time to time publicly
announced by The Chase Manhattan Bank, or its successors as its prime rate,
whether or not such announced rate is the best rate available at such bank,
calculated on the basis of a three hundred sixty (360) day year and actual days
elapsed, which rate shall increase or decrease by an amount equal to each
increase or decrease effective on the date of the change in such prime rate. The
Prime Rate is one of several base rates that serve as a basis upon which
effective rates of interest are calculated for loans making reference thereto
and may not be the lowest of The Chase Manhattan Bank's rates.

         1.80 "Private Line" and "Private Line Inventory" shall mean Inventory
made and held for any of (i) Salant's private line or non-Perry Ellis designer
programs or (ii) Holding's private line programs.

<PAGE>

         1.81 "Private Line Eligible  Inventory" shall mean Eligible  Inventory
that is Private Line Inventory..

         1.82 "Pro Rata Share" shall mean, with respect to any Lender, a
fraction (expressed as a percentage), the numerator of which shall be the amount
of such Lender's Commitment and the denominator of which shall be the aggregate
amount of all of the Lenders' Commitments, as adjusted from time to time in
accordance with the provisions of Section 11.6 hereof, provided, that, if the
Commitments have been terminated, the numerator shall be the unpaid amount of
such Lender's Loans and its interest in the Letter of Credit Accommodations and
the denominator shall be the aggregate amount of all unpaid Loans and Letter of
Credit Accommodations.

         1.83 "Provision for Taxes" shall mean an amount equal to all taxes
imposed on or measured by net income, whether federal, state or local, and
whether foreign or domestic, that are paid or payable by any Person and its
Subsidiaries in respect of such fiscal year on a consolidated basis in
accordance with GAAP.

         1.84 "Real Property" shall mean all now owned real property of Salant
and, to the extent Salant or any of its Subsidiaries is required to grant Agent
a mortgage, for the ratable benefit of Lenders, on hereafter acquired real
property pursuant to Section 7.25 hereof, hereafter acquired real property of
Salant or any of its Subsidiaries, including, leasehold interests, together with
all buildings, structures, fixtures and other improvements relating thereto, and
all licenses, easements and appurtenances relating thereto, wherever located,
including, without limitation, the real property and related assets of Salant
more particularly described in the Mortgages.

         1.85 "Records" shall mean all of each Borrower's present and future
books of account of every kind or nature, purchase and sale agreements,
invoices, ledger cards, bills of lading and other shipping evidence, statements,
correspondence, memoranda, credit files and other data relating to the
Collateral or any account debtor, together with the tapes, disks, diskettes and
other data and software storage media and devices, file cabinets or containers
in or on which the foregoing are stored (including any rights of such Borrower
with respect to the foregoing maintained with or by any other person).

         1.86  "Reference  Bank"  shall mean The Chase  Manhattan  Bank or such
other bank as Agent may designate from time to time.

         1.87  "Register"  shall have the  meaning  set forth in  Section  11.6
hereof.

         1.88  "Renewal  Date" shall have the meaning set forth in Section 10.1
hereof.

         1.89  "Report"  shall  have the  meaning  set forth in  Section  12.16
hereof.

<PAGE>

         1.90 "Salant" shall mean Salant Corporation,  a Delaware  corporation,
and its successors and assigns.

         1.91 "Subsidiary" or "subsidiary" shall mean any corporation,
association or organization, active or inactive, as to which more than fifty
(50%) percent of the outstanding voting stock or shares or interests shall now
or hereafter be owned or controlled, directly or indirectly, by Salant, any
subsidiary of Salant, or any subsidiary of such subsidiary.

         1.92 "TALLIA License" shall mean the license agreement between Hartz &
Company, Inc. and Holding relating to the trademark TALLIA as the same may from
time to time be amended, restated, modified, supplemented, renewed, renewed
extended or replaced in accordance with the terms thereof.

         1.93  "Termination  Date"  shall have the meaning set forth in Section
10.1 hereof.

         1.94  "Tradename"  shall have the  meaning  set forth in  Section  7.1
hereof.

         1.95 "Value" or "value" shall mean, as determined by Agent, with
respect to the Inventory, the lower of (a) cost computed on a first-in-first-out
basis in accordance with GAAP or (b) market value, as determined in good faith
by Agent.

         1.96 "Wholly-Owned Subsidiary" shall mean any Subsidiary of such Person
to the extent all of the Capital Stock or other ownership interests in such
Subsidiary (other than (a) directors' qualifying shares and (b) an immaterial
interest owned by other Persons solely to comply with applicable law) is owned
directly or indirectly by such Person or a Wholly-Owned Subsidiary of such
Person.

<PAGE>

         All accounting terms used in this Agreement which are not specifically
defined herein shall be construed in accordance with GAAP consistently applied,
except as otherwise stated herein. The words "hereof", "herein", "hereunder",
"this Agreement" and words of similar import when used in this Agreement shall
refer to this Agreement as a whole and not to any particular provision of this
Agreement, as the same now exists or may hereafter be amended, modified,
supplemented, extended, renewed, restated or replaced. All terms used herein
which are not specifically defined herein which are defined or used in the
Uniform Commercial Code as in effect as of the date hereof in the State of New
York (the "UCC") shall have the meanings as defined or used in the UCC. For
purposes of this Agreement, unless the context otherwise requires, all other
terms hereinbefore or hereinafter defined, including but not limited to those
terms defined in the recitals hereto, shall have the meanings herein assigned to
such terms. All references to Borrower and other Persons pursuant to the
definitions set forth in the recitals hereto or otherwise herein shall include
their respective successors and assigns. All references to any term in the
plural shall include the singular and all references to any term in the singular
shall include the plural. The words "ratable" or "ratably" or words of similar
import when used in this agreement shall refer to a sharing or allocation based
on the respective Pro Rata Shares of Lenders.


SECTION 2.        ACKNOWLEDGMENT AND RESTATEMENT

         Section 2.1 Existing Obligations. Borrowers hereby acknowledge, confirm
and agree that Borrowers are indebted to CIT for loans to Salant under the
Existing Credit Agreement, as of the close of business on November 27, 2001, in
the approximate aggregate principal amount of ($931,637.49), together with all
interest accrued and accruing thereon, plus the approximate aggregate amount of
$20,018,521.79 in respect of Existing Letters of Credit, and all fees, costs,
expenses and other charges payable thereunder, all of which are unconditionally
owing by Borrowers to CIT, without defense, offset or counterclaim of any kind,
nature or description whatsoever.

         Section 2.2       Acknowledgment of Security Interests.

                  (ai Borrowers hereby acknowledge, confirm and agree that
Agent, for the ratable benefit of CIT and the other Lenders, has and shall
continue to have, a security interest in and lien upon the Collateral (as
defined in the Existing Credit Agreement) heretofore granted to the Agent, for
the ratable benefit of the Lenders, pursuant to the Existing Credit Agreement to
secure the Obligations, as well as any Collateral granted to or held by Agent or
any Lender under this Agreement or any of the other Financing Agreements.

                  (bi The liens and security interests of Agent, for itself and
the ratable benefit of Lenders, in the Collateral shall be deemed continuously
granted and perfected from the earliest date of the granting and perfection of
such liens and security interests, whether under the Original Credit Agreement,
the Existing Credit Agreement, this Agreement or any of the other Financing
Agreements.

         Section 2.3 Acknowledgment of Existing Credit Agreement. Borrowers
hereby acknowledge, confirm and agree that: (a) the Existing Credit Agreement
was duly executed and delivered by Salant and is in full force and effect as of
the date hereof and (b) the agreements and obligations of Salant contained in
the Existing Agreement constitute the legal, valid and binding obligations of
Salant enforceable against it in accordance with their respective terms and
Salant has no valid defense to the enforcement of such obligations.

<PAGE>

         Section 2.4 Restatement. Except as otherwise stated in Section 2.2
hereof and this Section 2.4, as of the date hereof, the terms, conditions,
agreements, covenants, representations and warranties set forth in the Existing
Credit Agreement are hereby amended and restated in their entirety, and as so
amended and restated are replaced and superseded by the terms, conditions,
agreements, covenants, representations and warranties set forth in this
Agreement and the other Financing Agreements, except that nothing herein or in
the other Financing Agreements shall (a) impair or adversely affect the
continuation of the liability of Salant for its Obligations heretofore incurred
to Agent or any Lender, or (b) adversely affect or terminate Section 2.5 of the
Existing Credit Agreement, all of the provisions of which shall continue to
remain in full force and effect. The amendment and restatement contained herein
shall not, in any manner, be construed to constitute the payment of, or impair,
limit, cancel or extinguish, or constitute a novation in respect of, the
Indebtedness or any other obligations or liabilities of Salant evidenced by or
arising under the Existing Credit Agreement, and the liens and security
interests securing such Indebtedness and such other obligations and liabilities
shall not in any manner be impaired, limited, terminated, waived or released.

SECTION 3.        CREDIT FACILITY

         Section 3.1       Loans.

                  (ai Subject to and upon the terms and conditions contained
herein, each of the Lenders severally (and not jointly) agrees to fund its Pro
Rata Share of the Loans from time to time requested by Salant up to an amount at
any one time outstanding equal to the sum of:

          (i0 eighty-five  percent (85%) of the Net Amount of Eligible Accounts,
plus

          (ii0 the lesser of:

          A. the sum of: (1) sixty percent (60%) of the Value of Salant's  Perry
Ellis Eligible  Inventory,  plus (2) sixty percent (60%) of the Value of Holding
Eligible Inventory,  plus (3) the lesser of (x) sixty percent (60%) of the Value
of Borrowers'  Private Line Eligible  Inventory and (y)  $5,000,000,  and not to
exceed  $1,500,000  in the  aggregate  at any time  outstanding  with respect to
domestic raw materials and  work-in-process  attributable to Eligible  Inventory
described in this clause (A), or

          B.......$50,000,000, or

<PAGE>

          C.  for  each of the  calendar  months  of  February  through  May and
September through November only, an amount equal to eighty-five percent (85%) of
the Net  Amount  of  Eligible  Accounts  in each such  month,  but not less than
$30,250,000 in each such month.

Borrowers may from time to time borrow, repay and reborrow Loans in accordance
with the terms hereof.

                  (bi The Loans shall be (i) evidenced by Amended and Restated
Revolving Credit Notes duly executed and delivered by Borrowers to each Lender,
(ii) repaid, together with interest and other amounts, in accordance with this
Agreement, the Amended and Restated Revolving Credit Notes and the other
Financing Agreements and (iii) secured by the Collateral. An Amended and
Restated Revolving Credit Note for each Lender, duly authorized, executed and
delivered by Borrowers, shall be delivered by Borrowers to Agent on the date of
the execution and delivery of this Agreement.

                  (ci Except in Agent's discretion with the consent of all of
the Lenders, notwithstanding anything to the contrary contained in Section
3.1(a) above, but subject to Section 3.5(a) below, the aggregate principal
amount of the Loans and the Letter of Credit Accommodations shall not exceed the
Maximum Credit.

                  (di Notwithstanding anything to the contrary contained in this
Agreement or any of the other Financing Agreements, at the request of Salant or
Holding, as the case may be, , Agent may, as it may deem necessary or advisable
in its discretion, subject to the Maximum Credit, from time to time make Loans
to Salant and Letter of Credit Accommodations to Salant or Holding on behalf of
Lenders in excess of the aggregate amount available to Salant under the Lending
Formulas ("Overadvance"), which Overadvance shall be repayable to Agent on
demand, provided, that: (a) the aggregate amount of any such Overadvance which
Agent may make without the consent of all of the Lenders shall not exceed the
lesser of (x) ten (10%) percent of the aggregate amount available to Salant and
Holding at the time under the Lending Formulas without reduction for Loans and
Letter of Credit Accommodations then outstanding, or (y) $2,500,000 in the
aggregate outstanding at any time, and (b) without the consent of all of the
Lenders, Agent shall not make any such additional Loans or Letter of Credit
Accommodations for more than sixty (60) days from the date of the first such
additional Loans or Letter of Credit Accommodations in respect of such
Overadvance. Each Lender shall be obligated to pay Agent the amount of its Pro
Rata Share of any such additional Loans or Letter of Credit Accommodations
provided that Agent is acting in accordance with the terms of this Section
3.1(d).

          Section 3.2      Letter of Credit Accommodations.

<PAGE>

                  (ai Subject to and upon the terms and conditions contained
herein, at the request of a Borrower, Agent agrees, for the ratable risk of each
Lender according to its Pro Rata Share, to provide or arrange for Letter of
Credit Accommodations for the account of such Borrower containing terms and
conditions acceptable to Agent and the issuer thereof. Letter of Credit
Accommodations for the purchase of Inventory shall be made only for the purchase
of Eligible Inventory. Any payments made by Agent, for the ratable risk of each
Lender according to its Pro Rata Share, to any issuer thereof and/or related
parties in connection with the Letter of Credit Accommodations shall constitute
additional Loans to such Borrower pursuant to this Section 3.2(a).

                  (bi In addition to any customary charges, fees or expenses
charged by any bank or issuer in connection with the Letter of Credit
Accommodations, such Borrower shall pay to Agent, for the ratable benefit of
Lenders, letter of credit fees as set forth on Schedule 3.2(b) hereto. All
letter of credit fees shall be calculated on the basis of a three hundred sixty
(360) day year and actual days elapsed and the obligation of such Borrower to
pay such fees shall survive termination or non-renewal of this Agreement.

                  (ci No Letter of Credit Accommodations shall be available
unless on the date of the proposed issuance of any Letter of Credit
Accommodations the amount of the Loans available to such Borrower (subject to
the Maximum Credit) are equal to or greater than (i) if the proposed Letter of
Credit Accommodation is for the purpose of purchasing Eligible Inventory
consisting of finished goods, an amount equal to the percentage equal to one
hundred percent (100%) minus (w) with respect to Salant, the then applicable
percentage set forth in Section 3.1(a)(ii)A(1) above and (x) with respect to
Holdings, the then applicable percentage set forth in Section 3.1(a)(ii)(A)(2)
above, in each case multiplied by the face amount of such Letter of Credit
Accommodation; and (ii) if the proposed Letter of Credit Accommodation is for
any other purpose, an amount equal to one hundred percent (100%) of the face
amount thereof. Effective on the issuance of each Letter of Credit
Accommodation, a reserve shall be established in the applicable amount set forth
in, and computed in accordance with, Section 3.2(c)(i) or Section 3.2(c)(ii).

                  (di Except in Agent's discretion, the amount of all
outstanding Letter of Credit Accommodations and all other commitments and
obligations made or incurred by Agent or any Lender in connection therewith
shall not at any time exceed $45,000,000, plus $2,250,000 for the PBGC L/C. At
any time an Event of Default exists or has occurred and is continuing, upon
Agent's request, Borrowers shall either furnish cash collateral to secure the
reimbursement obligations to the issuer in connection with any Letter of Credit
Accommodations or furnish cash collateral to Agent, for the ratable benefit of
Lenders, for the Letter of Credit Accommodations, and in either case, the Loans
otherwise available to Borrowers shall not be reduced as provided in Section
3.2(c) to the extent of such cash collateral.

<PAGE>

                  (ei Borrowers shall jointly and severally indemnify and hold
Agent and Lenders harmless from and against any and all losses, claims, damages,
liabilities, costs and expenses which Agent or any Lender may suffer or incur in
connection with any Letter of Credit Accommodations and any documents, drafts or
acceptances relating thereto, including, but not limited to, any losses, claims,
damages, liabilities, costs and expenses due to any action taken by or an error
or omission by any issuer or correspondent with respect to any Letter of Credit
Accommodation, except resulting from the gross negligence or wilful misconduct
of Agent or any Lender as determined pursuant to a final non-appealable order of
a court of competent jurisdiction. Each Borrower assumes all risks with respect
to the acts or omissions of the drawer under or beneficiary of any Letter of
Credit Accommodation and for such purposes the drawer or beneficiary shall be
deemed such Borrower's agent. Borrowers jointly and severally assume all risks
for, and agree to pay, all foreign, Federal, State and local taxes, duties and
levies relating to any goods subject to any Letter of Credit Accommodations or
any documents, drafts or acceptances thereunder, except resulting from the gross
negligence or wilful misconduct of Agent or any Lender as determined pursuant to
a final non-appealable order of a court of competent jurisdiction. Borrowers
hereby release and jointly and severally hold Agent and Lenders harmless from
and against any acts, waivers, errors, delays or omissions, whether caused by
Borrower, by any issuer or correspondent or otherwise with respect to or
relating to any Letter of Credit Accommodation, except resulting from the gross
negligence or wilful misconduct of Agent or any Lender as determined pursuant to
a final non-appealable order of a court of competent jurisdiction. The
provisions of this Section 3.2(e) shall survive the payment of Obligations and
the termination or non-renewal of this Agreement.

<PAGE>

                  (fi Nothing contained herein shall be deemed or construed to
grant any Borrower any right or authority to pledge the credit of Agent or any
Lender in any manner. Agent and Lenders shall have no liability of any kind with
respect to any Letter of Credit Accommodation provided by an issuer other than
Agent, unless Agent has duly executed and delivered to such issuer the
application or a guarantee or indemnification in writing with respect to such
Letter of Credit Accommodation. Borrowers shall be bound by any interpretation
made in good faith by Agent, or any other issuer or correspondent under or in
connection with any Letter of Credit Accommodation or any documents, drafts or
acceptances thereunder, notwithstanding that such interpretation may be
inconsistent with any instructions of any Borrower. Agent shall have the sole
and exclusive right and authority to, for the ratable benefit of Lenders, and no
Borrower shall, at any time an Event of Default exists or has occurred and is
continuing, (i) approve or resolve any questions of non-compliance of documents,
(ii) give any instructions as to acceptance or rejection of any documents or
goods or (iii) execute any and all applications for steamship or airway
guaranties, indemnities or delivery orders. At all times, no Borrower shall,
without the prior written consent of Agent, grant any extensions of the maturity
of, time of payment for, or time of presentation of, any drafts, acceptances, or
documents or agree to any amendments, renewals, extensions, modifications,
changes or cancellations of any of the terms or conditions of any of the
applications, Letter of Credit Accommodations, or documents, drafts or
acceptances thereunder or any letters of credit included in the Collateral.
Agent may take such actions either in its own name or in a Borrower's name.

                  (gi Any rights, remedies, duties or obligations granted or
undertaken by any Borrower to any issuer or correspondent in any application for
any Letter of Credit Accommodation, or any other agreement in favor of any
issuer or correspondent relating to any Letter of Credit Accommodation, shall be
deemed to have been granted or undertaken by such Borrower to Agent, for the
ratable benefit of Lenders. Any rights, remedies duties or obligations
undertaken by Agent to any issuer or correspondent in any application for any
Letter of Credit Accommodation, or any other agreement by Agent in favor of any
issuer or correspondent relating to any Letter of Credit Accommodation, shall be
deemed to have been undertaken by such Borrower to Agent, for the ratable
benefit of Lenders, and to apply in all respects to such Borrower.

         Section 3.3 Reserves. Agent may, in its discretion, from time to time,
establish a reserve reducing the amount of Loans and Letter of Credit
Accommodations otherwise available to a Borrower under the Lending Formulas if
Agent determines in good faith that the dilution with respect to Accounts of
such Borrower for any twelve month period immediately preceding or at any time
from and after the date hereof (based on the ratio of (a) the aggregate amount
of chargebacks, returns, allowances, credits issued by such Borrower against
such Accounts (excluding credits evidencing inter-company transfers) and
write-offs which reduce the amount of such Accounts to (bi the aggregate amounts
of such Accounts) exceeds 15%. In the event that said dilution exceeds 15% (such
excess, the "Excess Dilution Percentage"), Agent may establish a reserve in an
amount equal to the Excess Dilution Percentage but in no event to exceed 15%, of
the amount of such Accounts from time to time outstanding.

          Section 3.4 Commitments. The aggregate amount of each Lender's share
of the Loans and Letter of Credit Accommodations shall not exceed the amount set
forth below such Lender's signature on the signature pages hereto, as the same
may from time to time be amended with the written acknowledgment of Agent in
connection with the Assignment and Acceptance executed and delivered to evidence
permitted assignments by any Lender as provided in Section 11.6 hereof. Such
amount for each Lender is referred to herein as such Lender's "Commitment".

         Section 3.5       Mandatory Prepayments.

<PAGE>

                  (ai In the event that the outstanding amount of any component
of the Loans or the outstanding aggregate amount of the Loans and Letter of
Credit Accommodations exceeds the amounts available under the Lending Formulas,
the sublimit for Letter of Credit Accommodations set forth in Section 3.2(d) or
the Maximum Credit, as applicable, such event shall not limit, waive or
otherwise affect any rights of Agent and Lenders in that circumstance or on any
future occasions and Borrowers shall, upon demand by Agent, which may be made at
any time or from time to time, immediately repay to Agent, for the ratable
benefit of Lenders, the entire amount of any such excess(es) for which payment
is demanded, or in the case of Letter of Credit Accommodations, provide cash
collateral to Agent (for itself and the ratable benefit of Lenders) in such
amount.

                  (bi Immediately after the receipt by a Borrower or any of its
Subsidiaries of any Net Cash Proceeds on account of (i) the sale, assignment or
other disposition of assets of such Borrower or any of its Subsidiaries (other
than (A) sales of Inventory in the ordinary course of such Borrower's and its
Subsidiaries' business, or (B) so long as no Event of Default exists or has
occurred, sales of worn-out or obsolete Equipment to the extent permitted under
Section 7.14 in the aggregate amount of up to $750,000 for all such sales by
Borrowers of such Equipment), or (ii) the loss of or damage to all or any
portion of the assets of a Borrower or any of its Subsidiaries, such Borrower
shall absolutely and unconditionally, without notice or demand, make a payment
to Agent, for the ratable benefit of Lenders, as a mandatory prepayment of the
then outstanding principal amount of the Loans, in an amount equal to one
hundred (100%) percent of all such Net Cash Proceeds, provided, that, such
Borrower or such Subsidiary shall not be required to make such mandatory
prepayment with the proceeds of sales of worn-out or obsolete Equipment as
provided in clause (i) above prior to an Event of Default, so long as all of
such proceeds are used within one hundred twenty (120) days after the date of
receipt thereof to purchase new Equipment free and clear of any security
interest, lien, claim or other encumbrance.

                  (ci All such payments in respect of the Loans pursuant to this
Section 3.5 shall be without premium or penalty. All interest accrued on the
principal amount of the Loans paid pursuant to this Section 3.5 shall be paid,
or may be charged by Agent to the loan account(s) of any Borrower, at Agent's
option, on the date of such payment.

          Section 3.6      Interest.

                  (ai Borrowers shall pay to Agent, for the ratable benefit of
Lenders, interest on the outstanding principal amount of the Loans and other
non-contingent Obligations at the Interest Rate. All interest accruing hereunder
on and after the date of any Event of Default or termination or non-renewal
hereof shall be payable on demand.

<PAGE>

                  (bi A Borrower may from time to time request that Prime Rate
Loans be converted to Eurodollar Rate Loans or that any existing Eurodollar Rate
Loans continue for an additional Interest Period. Such request from a Borrower
shall specify the amount of the Prime Rate Loans which will constitute
Eurodollar Rate Loans (subject to the limits set forth below) and the Interest
Period to be applicable to such Eurodollar Rate Loans. Subject to the terms and
conditions contained herein, three (3) Business Days after receipt by Agent of
such a request from a Borrower, such Prime Rate Loans shall be converted to
Eurodollar Rate Loans or such Eurodollar Rate Loans shall continue, as the case
may be, provided, that, as of such date each of the following conditions is
satisfied as determined by Agent: (i) no Event of Default has occurred and is
continuing, (ii) no party hereto shall have sent any notice of termination or
non-renewal of this Agreement, (iii) the Borrower involved shall have complied
with such customary procedures as are established by Agent and specified by
Agent to such Borrower in writing from time to time for requests by such
Borrower for Eurodollar Rate Loans, (iv) no more than three (3) Interest Periods
may be in effect at any one time, (v) the aggregate amount of the Eurodollar
Rate Loans must be in an amount not less than $5,000,000 or an integral multiple
of $1,000,000 in excess thereof and (vi) Agent shall have determined that the
Interest Period or Adjusted Eurodollar Rate is available to Agent through the
Reference Bank and can be readily determined as of the date of the request for
such Eurodollar Rate Loan by such Borrower. Any request by a Borrower to convert
Prime Rate Loans to Eurodollar Rate Loans or to continue any existing Eurodollar
Rate Loans shall be irrevocable. Notwithstanding anything to the contrary
contained herein, Agent, Lenders and Reference Bank shall not be required to
purchase United States Dollar deposits in the London interbank market or other
applicable Eurodollar Rate market to fund any Eurodollar Rate Loans, but the
provisions hereof shall be deemed to apply as if Agent, Lenders and Reference
Bank had purchased such deposits to fund the Eurodollar Rate Loans.

                  (ci Any Eurodollar Rate Loans shall automatically convert to
Prime Rate Loans upon the last day of the applicable Interest Period, unless
Agent has received and approved a request to continue such Eurodollar Rate Loan
at least three (3) Business Days prior to such last day in accordance with the
terms hereof. Any Eurodollar Rate Loans shall, at Agent's option, upon notice by
Agent to the Borrowers involved, convert to Prime Rate Loans in the event that
(i) an Event of Default has occurred and is continuing, (ii) this Agreement
shall terminate or not be renewed, or (iii) the aggregate principal amount of
the Prime Rate Loans which have previously been converted to Eurodollar Rate
Loans or existing Eurodollar Rate Loans continued, as the case may be, at the
beginning of an Interest Period shall at any time during such Interest Period
exceed either (A) the aggregate principal amount of Loans then outstanding, or
(B) Loans then available to Borrower under this Section 3 hereof. Borrower shall
pay to Agent, for the ratable benefit of Lenders, upon demand by Agent (or Agent
may, at its option, charge any loan account of Borrowers) any amounts required
to compensate Agent, Lenders, the Reference Bank or any Participant for any loss
(including loss of anticipated profits), cost or expense incurred by such
person, as a result of the conversion of Eurodollar Rate Loans to Prime Rate
Loans pursuant to any of the foregoing.

<PAGE>

                  (di All interest shall be payable by Borrowers to Agent, for
the ratable benefit of Lenders, monthly in arrears not later than the first day
of each calendar month and shall be calculated on the basis of a three hundred
sixty (360) day year and actual days elapsed. The interest rate on
non-contingent Obligations (other than Eurodollar Rate Loans) shall increase or
decrease by an amount equal to each increase or decrease in the Prime Rate
effective on the first day of the month after any change in such Prime Rate is
announced based on the Prime Rate in effect on the last day of the month in
which any such change occurs. In no event shall charges constituting interest
payable by Borrowers to Agent exceed the maximum amount or the rate permitted
under any applicable law or regulation, and if any such part or provision of
this Agreement is in contravention of any such law or regulation, such part or
provision shall be deemed amended to conform thereto.

          Section 3.7 Unused Line Fee. Borrowers shall pay to Agent, for the
ratable benefit of Lenders, monthly an unused line fee at a rate equal to
one-quarter of one percent (.25%) per annum calculated upon the amount by which
the Maximum Credit exceeds the average daily principal balance of the
outstanding Loans and Letter of Credit Accommodations during the immediately
preceding month (or part thereof) while this Agreement is in effect, which fee
shall be payable on the first day of each month in arrears.

         Section 3.8 Collateral Management Fee. Borrowers shall pay to Agent
monthly, for its own account, a collateral management fee in an amount equal to
$8,333 for each month (or part thereof) while this Agreement is in effect and
for so long thereafter as any of the Obligations are outstanding, which fee
shall be fully earned as of and payable in advance on the date hereof and on the
first day of each month hereafter.

         Section 3.9 Agency Fee. Borrowers shall pay to Agent, for its own
account, an agency fee in an amount equal to $100,000 on each of the first and
second anniversary of the dates of this Agreement for acting as Agent and
administering the Credit Facility for the benefit of Borrowers and Lenders.

         Section 3.10  Changes in Laws and Increased Costs of Revolving Loans.

<PAGE>

                  (ai Notwithstanding anything to the contrary contained herein,
all Eurodollar Rate Loans shall, upon notice by Agent to Borrowers, convert to
Prime Rate Loans in the event that (i) any change in applicable law or
regulation (or the interpretation or administration thereof) shall either (A)
make it unlawful for Agent, any Lender, Reference Bank or any Participant to
make or maintain Eurodollar Rate Loans or to comply with the terms hereof in
connection with the Eurodollar Rate Loans, or (B) shall result in the increase
in the costs to Agent, Lenders, Reference Bank or any Participant of making or
maintaining any Eurodollar Rate Loans by an amount reasonably deemed by Agent to
be material, or (C) reduce the amounts received or receivable by Agent, for the
ratable benefit of Lenders, in respect thereof, by an amount reasonably deemed
by Agent to be material or (ii) the cost to Agent, Lenders, Reference Bank or
any Participant of making or maintaining any Eurodollar Rate Loans shall
otherwise increase by an amount reasonably deemed by Agent to be material.
Borrowers shall pay to Agent, for the ratable benefit of Lenders, upon demand by
Agent (or Agent may, at its option, charge any loan account of Borrowers) any
amounts required to compensate Agent, Lenders, the Reference Bank or any
Participant for any loss (including loss of anticipated profits), cost or
expense incurred by such person as a result of the foregoing, including, without
limitation, any such loss, cost or expense incurred by reason of the liquidation
or reemployment of deposits or other funds acquired by such person to make or
maintain the Eurodollar Rate Loans or any portion thereof. A certificate of
Agent setting forth the basis for the determination of such amount necessary to
compensate Agent as aforesaid shall be delivered to Borrowers and shall be
conclusive, absent manifest error.

                  (bi If any payments or prepayments in respect of the
Eurodollar Rate Loans are received by Agent other than on the last day of the
applicable Interest Period (whether pursuant to acceleration, upon maturity or
otherwise), including any payments pursuant to the application of collections
under Section 9.1 or any other payments made with the proceeds of Collateral,
Borrowers shall pay to Agent upon demand by Agent (or Agent may, at its option,
charge any loan account of Borrowers) any amounts required to compensate Agent,
Lenders, the Reference Bank or any Participant for any additional loss
(including loss of anticipated profits), cost or expense incurred by such person
as a result of such prepayment or payment, including, without limitation, any
loss, cost or expense incurred by reason of the liquidation or reemployment of
deposits or other funds acquired by such person to make or maintain such
Eurodollar Rate Loans or any portion thereof.

         Section 3.11 Authorization to Make Loans and Provide Letter of Credit
Accommodations. Agent, for the ratable benefit of Lenders, is authorized to make
the Loans and provide the Letter of Credit Accommodations for the account and
risk of Lenders based upon telephonic or other instructions received from anyone
purporting to be an officer of a Borrower or other authorized person or, at the
discretion of Agent, if such Loans are necessary to satisfy any Obligations. All
requests for Loans or Letter of Credit Accommodations hereunder shall specify
the date on which the requested Loan is to be made or Letter of Credit
Accommodation established (which day shall be a Business Day) and the amount of
the requested Loan and Letter of Credit Accommodation. Requests received after
11:00 a.m. New York City time on any day shall be deemed to have been made as of
the opening of business on the immediately following Business Day. All Loans and
Letter of Credit Accommodations under this Agreement shall be conclusively
presumed to have been made to, and at the request of and for the benefit of, a
Borrower when deposited to the credit of such Borrower or otherwise disbursed or
established in accordance with the instructions of such Borrower or in
accordance with the terms and conditions of this Agreement.

         Section 3.12      Settlement Procedures.

<PAGE>

                  (ai Notwithstanding any other provision of this Agreement, and
in order to administer the Credit Facility in an efficient manner and to reduce
the number of fund transfers between Lenders and Agent, Borrowers, Lenders and
Agent agree that Agent may (but shall not be obligated to), and Borrowers and
Lenders hereby irrevocably authorize the Agent to, fund, on behalf of the
Lenders, Loans pursuant to Section 3.1 and Letter of Credit Accommodations
pursuant to Section 3.2, subject to the procedures for settlement set forth in
this Section 3.12; provided, that, (i) other than to fund Revolving Loans to
make payments to the issuer of any of the Letter of Credit Accommodations or for
costs and expenses as provided for herein, Agent shall in no event fund such
Loans if the Agent shall have received written notice from the Majority Lenders
on the Business Day prior to the day of the proposed Loan that one or more of
the conditions precedent contained in Section 4.2 will not be satisfied on the
day of the proposed Loan, and (ii) Agent shall not otherwise be required to
determine that the conditions precedent in Section 4.2 have been satisfied.

                  (bi With respect to all periods for which the Agent has funded
Loans pursuant to Section 3.12(a) above, the amount of each Lender's Pro Rata
Share in the outstanding Loans and Letter of Credit Accommodations shall be
computed weekly, and shall be adjusted upward or downward on the basis of the
average amount of the outstanding Loans for the Business Days of the week
immediately preceding the date of each settlement computation; provided, that,
Agent retains the absolute right at any time or from time to time to make the
above described adjustments at intervals more frequent than weekly. Agent shall
deliver to each of Lenders after the end of each week, or such lesser period or
periods as Agent shall determine, a summary statement of the amount of
outstanding Loans for such period (such week or lesser period or periods being
hereinafter referred to as a "Settlement Period"). If the summary statement is
sent by Agent and received by a Lender prior to 12:00 noon (New York City time)
then such Lender shall make the settlement transfer described in this Section by
no later than 2:00 p.m. (New York City time) on the day such summary statement
was sent, and if such summary statement is sent by Agent and received by a
Lender after 12:00 noon (New York City time), such Lender shall make such
settlement transfer by no later than 2:00 p.m. (New York City time) on the next
Business Day following the date of the receipt of such summary statement. If, as
of the end of any Settlement Period, the amount of a Lender's Pro Rata Share of
the outstanding Loans is more than such Lender's Pro Rata Share of the
outstanding Loans as of the end of the previous Settlement Period, then such
Lender shall forthwith (but in no event later than the time set forth in the
preceding sentence) transfer to Agent by wire transfer in immediately available
funds the amount of the increase. If the amount of a Lender's Pro Rata Share of
the outstanding Loans in any Settlement Period is less than the amount of such
Lender's Pro Rata Share of the outstanding Loans for the previous Settlement
Period, Agent shall forthwith transfer to such Lender by wire transfer in
immediately available funds the amount of the decrease. The obligation of each
of the Lenders to transfer such funds and effect such settlement shall be
irrevocable and unconditional and without recourse to or warranty by Agent. Each
of Agent and Lenders agrees to mark its books and records at the end of each
Settlement Period to show at all times the dollar amount of its Pro Rata Share
of the outstanding Loans and Letter of Credit Accommodations. Each Lender shall
only be entitled to receive interest on its Pro Rata Share of the Loans which
have been funded by such Lender.

<PAGE>

                  (c) To the extent that Agent has made any such amounts
available and the settlement described above shall not yet have occurred, upon
repayment of any Loans by Borrowers, Agent may apply such amounts repaid
directly to any amounts made available by Agent pursuant to this Section 3.12.
In lieu of weekly or more frequent settlements, Agent may at any time require
each Lender to provide Agent with immediately available funds representing its
Pro Rata Share of each Loan, prior to Agent's disbursement of such Loan to or
for the benefit of Borrowers. In such event, all Loans under this Agreement
shall be made by the Lenders simultaneously and proportionately to their Pro
Rata Shares. No Lender shall be responsible for any default by any other Lender
in the other Lender's obligation to make a Loan requested hereunder nor shall
the Commitment of any Lender be increased or decreased as a result of the
default by any other Lender in the other Lender's obligation to make a Loan
requested hereunder.

                  (d) If Agent is not funding a particular Loan pursuant to
Section 3.12(a) above on any day, Agent may assume that each Lender will make
available to Agent such Lender's Pro Rata Share of the Loan requested or
otherwise made on such day and Agent may, in its discretion, but shall not be
obligated to, cause a corresponding amount to be made available to Borrowers on
such day. If Agent makes such corresponding amount available to Borrowers and
such corresponding amount is not in fact made available to Agent by such Lender,
Agent shall be entitled to recover such corresponding amount on demand from such
Lender together with interest thereon for each day from the date such payment
was due until the date such amount is paid to Agent at the Interest Rate. During
the period in which such Lender has not paid such corresponding amount to Agent,
notwithstanding anything to the contrary contained in this Agreement or any of
the other Financing Agreements, the amount so advanced by Agent to Borrowers
shall, for all purposes hereof, be a Loan made by Agent for its own account.

                  (e) Nothing in this Section 3.12 or otherwise in this
Agreement or the other Financing Agreements shall be deemed to require Agent to
advance funds on behalf of any Lender or to relieve any Lender from its
obligation to fulfill its Commitment hereunder or to prejudice any rights that
Agent or any Borrower may have against any Lender as a result of any default by
such Lender hereunder.

         Section 3.13 Use of Proceeds. All Loans and Letter of Credit
Accommodations made or provided by Agent on behalf of Lenders or made or
provided by Lenders to or for the account of Borrowers pursuant to this
Agreement and the other Financing Agreements shall be used by Borrowers for
general operating and working capital purposes of Borrowers and such other
purposes as permitted by the terms hereof.

SECTION 4.        CONDITIONS PRECEDENT TO LOANS AND OTHER
                  FINANCIAL ACCOMMODATIONS

<PAGE>


         Section 4.1 Conditions Precedent to Initial Loans and Letter of Credit
Accommodations. Each of the following is a condition precedent to the initial
Loans and Letter of Credit Accommodations pursuant to this Agreement and the
other Financing Agreements which shall be satisfied in a manner acceptable to
Agent (any of which may be waived, in whole or in part, only by Agent and all of
Lenders in writing):

     (a)      Agent shall have received executed copies of the following:

          (i) The Information Certificate of Holding;

          (ii) This Agreement;

          (iii)  An  Amended  and  Restated  Revolving  Credit  Note in the form
attached  hereto as  Exhibit B for each  Lender in the  principal  amount of its
Commitment;

          (iv) A Second Amended and Restated Letter of Credit  Agreement of even
date herewith between Agent and Borrowers in the form attached hereto as Exhibit
C;

          (v) A Second Amended and Restated Trademark Collateral  Assignment and
Security  Agreement of even date  herewith  between Agent and Salant in the form
attached hereto as Exhibit D-1;

          (vi) A Trademark Collateral  Assignment and Security Agreement of even
date herewith  between Agent and Holding in the form attached  hereto as Exhibit
D-2.

          (vii) A Special  Power of  Attorney  (in  quintuplicate)  of even date
herewith  executed  by Salant  pursuant  to said  Second  Amended  and  Restated
Trademark  Collateral  Agreement  and Security  Agreement  in the form  attached
hereto as Exhibit E-1;

          (viii) A Special  Power of Attorney  (in  quintuplicate)  of even date
herewith  executed  by Holding  pursuant to said  Second  Amended  and  Restated
Trademark  Collateral  Agreement  and Security  Agreement  in the form  attached
hereto as Exhibit E-2;

          (ix) A Second Amended and Restated  Collateral  Assignment of Licenses
of even date herewith  between  Agent and Salant in the form attached  hereto as
Exhibit F;


          (x) A Second  Amended and  Restated  Guarantee  of even date  herewith
executed by each of the Guarantors in the form attached hereto as Exhibit H;


<PAGE>

          (xi) A Second Amended and Restated General Security  Agreement of even
date herewith  executed by each of the Guarantors  other than Salant Canada Inc.
and J.J. Farmer Clothing Inc. in the form attached hereto as Exhibit I-(1) and a
Amended and Restated  Hypothec of even date  herewith  executed by Salant Canada
Inc. in the form attached hereto as Exhibit I-(2);

          (xii) A Second Amended and Restated  Trademark  Collateral  Assignment
and  Security  Agreement  of even date  herewith  between  Agent and each of the
Guarantors in the form attached hereto as Exhibit J;

          (xiii) A Special  Power of Attorney  (in  quintuplicate)  of even date
herewith  executed  by each of the  Guarantors  in the form  attached  hereto as
Exhibit K;

          (xiv) A Second Amended and Restated Collateral  Assignment of Licenses
of even  date  herewith  between  Agent and each of the  Guarantors  in the form
attached hereto as Exhibit L;

          (xv)  Stamped   acknowledgment  copies  of  UCC  financing  statements
executed by each of the Borrowers and each of the  Guarantors and filed in those
jurisdictions  necessary  to perfect  Agent's  security  interest  in all of the
Collateral and the Guarantor  Collateral  which can be perfected by filing under
the UCC in the form attached hereto as Exhibit M, it being understood and agreed
that neither  Borrower nor any Guarantor shall be required to take any action to
perfect  Agent's  security  interest  in any of  their  respective  licensed  or
registered vehicles;

          (xvi) a Consent of Guarantors  in the form attached  hereto as Exhibit
H; and

          (xvii) an Agreement  modifying,  in accordance  with the terms of this
Agreement,  each  Mortgage  covering the Real  Property  listed on Schedule 1.61
hereto in a form reasonably  satisfactory to Agent,  together with all documents
reasonably requested to be delivered to Agent in connection therewith.


<PAGE>

                  Notwithstanding anything to the contrary set forth in this
Section 4.1, a Guarantor who does not own as of the date hereof any Guarantor
Collateral consisting of "Trademarks" (as defined in the Second Amended and
Restated Trademark Collateral Assignment and Security Agreement attached hereto
as Exhibit J) or constituting "Licenses" (as defined in the Second Amended and
Restated Collateral Assignment of Licenses attached hereto as Exhibit M) shall
not be obligated to execute and deliver to Agent as of the date hereof a Second
Trademark Collateral Assignment and Security Agreement or a Second Amended and
Restated Collateral Assignment of Licenses (as the case may be), it being
understood and agreed that if subsequent to the date hereof, such Guarantor
becomes the owner of any Guarantor Collateral consisting of Trademarks or
Licenses, such Guarantor shall be obligated to execute and deliver to Agent a
Second Amended and Restated Trademark Collateral Assignment and Security
Agreement or a Second Amended and Restated Collateral Assignment and Security
Agreement or a Second Amended and Restated Collateral Assignment of Licenses, as
the case may be.

                  (b) Agent shall have received, in form and substance
reasonably satisfactory to Agent, all consents, waivers, acknowledgments and
other agreements from third persons which Lender may deem necessary in order to
permit, protect and perfect its security interests in and liens upon the
Collateral and the Guarantor Collateral or to effectuate the provisions or
purposes of this Agreement and the other Financing Agreements, including,
without limitation, (i) acknowledgments by lessors, mortgagees and warehousemen
of Agent's security interests in the Collateral and the Guarantor Collateral,
waivers by such persons of any security interest, liens or other claims by such
persons to the Collateral or Guarantor Collateral, and agreements permitting
Agent access to, and the right to remain on, the premises to exercise its rights
and remedies and otherwise deal with the Collateral or Guarantor Collateral,
(ii) acknowledgments by processors and consignees at any time in possession of
Collateral or Guarantor Collateral of Agent's security interests and liens
therein, waivers by such persons of any security interests, liens or other
claims by such persons in and to the Collateral or Guarantor Collateral, and
agreements by such persons to follow Agent's directions with respect to the
release and delivery of any Collateral or Guarantor Collateral at any time in
their possession and (iii) agreements from licensors of trademarks and other
intellectual property to Salant or any of its Subsidiaries, including, but not
limited to, Perry Ellis International Inc., permitting Agent to use, in a manner
and for a period satisfactory to Agent, the marks, logos or other intellectual
property licensed by such parties to Salant or any of its Subsidiaries to
exercise Agent's rights and remedies and otherwise deal with the Collateral and
Guarantor Collateral.

                  (c) Agent shall have received, in form and substance
reasonably satisfactory to Agent and its counsel, title insurance policies or,
if feasible, endorsements to the existing title insurance policies issued to CIT
pursuant to the Original Credit Agreement (i) insuring the priority, amount and
sufficiency of the Mortgages, in each case as modified as required by the terms
hereof, in favor of Agent with respect to the Real Property, (ii) insuring
against matters that would be disclosed by surveys and (iii) containing any
endorsements, assurances or affirmative coverage reasonably requested by Agent
for protection of its interests.

                  (d) Agent shall have received evidence of insurance and loss
payee endorsements required hereunder and under the other Financing Agreements,
in form and substance reasonably satisfactory to Agent, and certificates of
insurance policies and endorsements naming Agent, for the ratable benefit of
Lenders, as loss payee as its interest may appear.

                  (e) Borrowers shall have established one or more lockboxes and
Blocked Accounts for their collections and the transfer thereof to Agent, which
shall be in form and substance reasonably satisfactory to Agent, in accordance
with Section 9.1 hereof.


<PAGE>

                  (f) Agent shall have received evidence, in form and substance
reasonably satisfactory to Agent, that Borrowers have (i) directed the banks at
which Borrowers maintains deposit accounts for the initial receipt of cash,
checks and other items from Borrowers to transfer all immediately available
funds deposited in such bank only to the Blocked Accounts as required pursuant
to Section 9.1 hereof or as otherwise directed by Agent and (ii) notified such
banks of the security interests of Agent in such funds and the other Collateral

                  (g) Agent shall have received evidence, in form and substance
reasonably satisfactory to Agent, that Agent has valid perfected and first
priority security interests in and liens upon the Collateral and the Guarantor
Collateral and any other property which is intended to be security for the
Obligations or the liability of any Obligor in respect thereof, subject only to
the security interests and liens permitted herein or in the other Financing
Agreements.

                  (h) Agent shall have completed a field review of the Records
and such other information with respect to the Collateral as Agent may require
to determine the amount of Loans available to Borrowers including, without
limitation, current agings of receivables, current perpetual inventory records
and/or roll-forwards of Accounts and Inventory through the date of closing,
together with such supporting documentation as may be necessary or appropriate,
and other documents and information that will enable Agent to accurately
identify and verify the Collateral, the results of which shall be satisfactory
to Agent, not more than three (3) Business Days prior to the date hereof.

                  (i) Agent shall have received, in form and substance
reasonably satisfactory to Agent and its counsel, Pryor Cashman Sherman & Flynn
LLP, counsel to Borrowers and Guarantors, with respect to the Financing
Agreements and such other matters as Agent may request.

                  (j) Agent shall have received, in form and substance
reasonably satisfactory to Agent and its counsel, certified copies of the
certificate of incorporation of each Borrower as amended, resolutions, good
standing certificates, incumbency certificates and other documents evidencing
the due organization and good standing of such Borrower and each of the
Guarantors to execute each of the Financing Agreements to which they are a party
and the due authorization and execution of this Agreement and such other
Financing Agreements.

                  (k) Agent shall have received, in form and substance
reasonably satisfactory to Agent, all of the other Financing Agreements required
to be delivered to Lender in accordance with the terms of this Agreement or the
other Financing Agreements as a condition precedent to Agent making the Loans
and the Letter of Credit Accommodations.

<PAGE>

                  (l) Agent shall have received, in form and substance
reasonably satisfactory to Agent, such other Financing Agreements as Agent shall
reasonably request to further evidence or secure the Obligations or otherwise
effectuate the purpose and intent of this Agreement.

                  (m) All representations and warranties contained herein and in
the other Financing Agreements shall be true and correct in all material
respects as of the date made.

                  (n) No Event of Default shall have occurred hereunder and no
event or condition shall have occurred or shall exist, which, with notice or
passage of time or both, would constitute an Event of Default hereunder.

                  (o) No material adverse change shall have occurred in the
assets, business or prospects of Borrowers since the date of Agent's latest
field examination and no change or event shall have occurred which would
materially impair the ability of any Borrower or any Obligor to perform its
obligations hereunder or under any of the other Financing Agreements to which it
is a party or of Agent to enforce the Obligations or realize upon the
Collateral.

         Section 4.2 Conditions Precedent to All Loans and Letter of Credit
Accommodations. Each of the following is an additional condition precedent to
the Loans and Letter of Credit Accommodations to Borrowers, including the
initial Loans and Letter of Credit Accommodations and any future Loans and
Letter of Credit Accommodations:

                  (a) all representations and warranties contained herein and in
the other Financing Agreements shall be true and correct in all respects with
the same effect as though such representations and warranties had been made on
and as of the date of the making of each such Loan or providing each such Letter
of Credit Accommodation and after giving effect thereto, except to the extent
that such representation and warranties expressly relate solely to an earlier
date (in which case such representations and warranties shall have been true and
accurate on and as of such earlier date);

                  (b) no law, regulation, order, judgment or decree of any
Governmental Authority shall, and Agent shall not have received any notice that
any action, suit, investigation, litigation or proceeding is pending or
threatened in any court or before any arbitrator or Governmental Authority which
(i) purports to enjoin, prohibit, restrain or otherwise materially and adversely
affect (A) the making of the Loans or (B) the consummation of the transactions
contemplated pursuant to the terms hereof or the other Financing Agreements or
(ii) has or could reasonably be expected to have a Material Adverse Effect; and

<PAGE>

                  (c) no Event of Default and no act, condition or event which,
with notice or passage of time or both, would constitute an Event of Default,
shall exist or have occurred and be continuing on and as of the date of the
making of such Loan or providing each such Letter of Credit Accommodation and
after giving effect thereto.

SECTION 5.        COLLATERAL

         Section 5.1       Security Interests in Borrowers' Assets.

                  (a) As collateral security for the prompt performance,
observance and payment in full of all of the Obligations, each Borrower hereby
grants, pledges and assigns to Agent, for itself and the ratable benefit of
Lenders continuing security interests in, liens upon, and rights of setoff
against, all of the following assets and properties of each Borrower, now owned
and hereafter acquired and arising, except as otherwise provided in Section
5.1(b) hereof (which assets and properties, together with all other collateral
security for the Obligations heretofore, now or hereafter granted to or
otherwise held or acquired by Agent or any Lender are referred to herein as the
"Collateral"):

          (i) (A) all Accounts;  (B) all right, title and interest in, to and in
respect of all goods relating to Accounts,  including,  without limitation,  all
goods described in invoices,  documents,  contracts or instruments  with respect
to, or otherwise  representing or evidencing,  any Account or other  Collateral,
including, without limitation, all returned, reclaimed or repossessed goods; (C)
all right, title and interest,  and all enforcement and other rights,  remedies,
and  security  and  liens,  in,  to and in  respect  of the  Accounts  and other
Collateral,  including,  without  limitation,  rights of  stoppage  in  transit,
replevin,  repossession  and  reclamation  and other  rights and  remedies of an
unpaid  vendor,  lienor or  secured  party,  guaranties  or other  contracts  of
suretyship  with  respect to the  Accounts,  deposits or other  security for the
obligation of any Account Debtor and credit and other  insurance with respect to
Accounts;  (D) all deposit  accounts;  (E) all securities  and other  investment
property;  (F) all  monies,  securities  and  other  property  and the  proceeds
thereof,  now or  hereafter  held or received by, or in transit to, Agent or any
Lender or any  Participant  from or for any Borrower,  whether for  safekeeping,
pledge,  custody,  transmission,  collection  or  otherwise,  and  all  of  each
Borrower's deposits (general or special),  balance,  reserves,  sums and credits
with Agent or any Lender or Participant at any time existing;

          (ii) all of each  Borrower's now owned or hereafter  acquired  Chattel
Paper, Instruments and Documents;

          (iii) all General Intangibles;

          (iv) all Inventory;

          (v) all Equipment located in the United States;


<PAGE>


          (vi) all Real Property located in the United States;

          (vii) all present and future books and records  relating to any of the
above, including,  without limitation,  all ledgers, books of account,  records,
tapes,  cards,  computer  programs,  computer  disks  or  tape  files,  computer
printouts,  computer runs, computer data and other computer prepared information
in possession or control of any Borrower,  any computer  service bureau or other
third person; and

          (viii)  all  products  and  proceeds  of the  foregoing,  in any form,
including,  without  limitation,  any insurance  proceeds and any claims against
third  persons  for  loss  or  damage  to or  destruction  of  any or all of the
foregoing.

          (b)  Notwithstanding  anything to the contrary set forth in Subsection
5.1(a)(i)  above or in the  other  Financing  Agreements,  the types or items of
Collateral  described in such subsection  shall not include any rights under any
contract,  lease or license  agreement  covering personal property in respect of
which the valid grant of a security  interest  requires the consent of the other
party to the contract,  lease or license  agreement which has not been or is not
obtained,  provided,  that, the foregoing exclusion shall in no way be construed
so as to limit or impair Agent's unconditional  continuing security interests in
and liens  upon any  rights or  interests  of any  Borrower  to monies due or to
become due under any such contract, lease or license agreement.

         Section 5.2       Security Interests in Guarantors' Assets

          (a)  Concurrently  herewith,  in order to induce  Agent and Lenders to
enter into this Agreement and the other Financing  Agreements and make the Loans
and provide the Letter of Credit Accommodations as set forth herein, each of the
Guarantors  shall  execute  and  deliver to Agent,  for  itself and the  ratable
benefit of Lenders,  an absolute and  unconditional  Second Amended and Restated
Guarantee of payment of the Obligations in the form attached as Exhibit H hereto
(as  from  time to time  amended,  modified,  supplemented,  extended,  renewed,
restated or replaced, collectively, the "Guarantees").

<PAGE>

          (b)  Concurrently  herewith,  each  of  the  Guarantors,   other  than
Borrowers,  is granting to Agent, for itself and the ratable benefit of Lenders,
security  interests in and liens upon certain now owned and  hereafter  acquired
properties  and assets of such  Guarantor  as more fully set forth in the Second
Amended and Restated General Security  Agreement in the form attached as Exhibit
I(1) or I(2) hereto, as applicable,  executed and delivered by such Guarantor to
Agent concurrently herewith, which security interests and liens shall secure all
existing and hereafter arising obligations, liabilities and indebtedness of such
Guarantor to Agent and Lenders pursuant to such Guarantor's Guarantee.

          (c) The Guarantees and the  collateral  security  described in Section
5.2(b) and any other collateral  security now or hereafter pledged or granted to
Lender by any of the Guarantors,  other than Borrowers,  or any third person are
collectively sometimes referred to herein as the "Guarantor Collateral".

         Section 5.3       Perfection of Security Interests

          (a) Each Borrower irrevocably and unconditionally  authorizes Agent to
file at any time and from time to time such financing statements with respect to
the Collateral naming Agent as the secured party and such Borrower as debtor, as
Agent may require,  and  including  any other  information  with respect to such
Borrower or otherwise  required by part 5 of Article 9 of the Uniform Commercial
Code of such  jurisdiction  as Agent may determine,  together with any amendment
and continuations with respect thereto,  which  authorization shall apply to all
financing  statements filed on, prior to or after the date hereof. Each Borrower
hereby  ratifies and approves all financing  statements  naming Agent as secured
party and such  Borrower  as debtor  with  respect  to the  Collateral  (and any
amendments with respect to such financing  statements)  filed by or on behalf of
Agent prior to the date hereof and ratifies and  confirms the  authorization  of
Agent to file such financing statements (and amendments,  if any). Each Borrower
hereby  authorizes Agent to adopt on behalf of such Borrower any symbol required
for authenticating any electronic filing. No Borrower shall at any time file, or
permit or cause to be filed, any correction  statement or termination  statement
with respect to any  financing  statement  (or  amendment or  continuation  with
respect thereto) naming Agent as secured party and such Borrower as debtor.

          (b) Each Borrower shall take any other actions reasonably requested by
Agent from time to time to cause the  attachment,  perfection and first priority
of, and the ability of Agent to enforce,  the security  interest of Agent in any
and  all  of the  Collateral,  including,  without  limitation,  (i)  executing,
delivering and, where  appropriate,  filing financing  statements and amendments
relating thereto under the UCC or other  applicable law, to the extent,  if any,
that such  Borrower's  signature  thereon is  required  therefor,  (ii)  causing
Agent's  name to be noted as  secured  party on any  certificate  of title for a
titled  good if such  notation  is a  condition  to  attachment,  perfection  or
priority of, or ability of Agent to enforce,  the security  interest of Agent in
such Collateral,  (iii) complying with any provision of any statute,  regulation
or treaty of the United  States as to any  Collateral  if  compliance  with such
provision is a condition to attachment, perfection or priority of, or ability of
Agent to  enforce,  the  security  interest  of Agent in such  Collateral,  (iv)
obtaining  the consents and  approvals  of any  Governmental  Authority or third
party,  including,  without limitation,  any consent of any licensor,  lessor or
other person  obligated on  Collateral,  and taking all actions  required by any
earlier  versions  of the UCC or by other law,  as  applicable  in any  relevant
jurisdiction.

<PAGE>


SECTION 6.        REPRESENTATIONS AND WARRANTIES.

         Each Borrower hereby represents and warrants to Agent and Lenders as
follows, which representations and warranties are continuing and shall survive
the execution and delivery hereof, and the truth and accuracy of each, together
with the representations and warranties in the other Financing Agreements, being
a continuing condition of each Loan and Letter of Credit Accommodation:

         Section 6.1       Organization and Qualification.

          (a) Each of Borrowers and  Guarantors is a duly  organized and validly
existing   corporation  in  good  standing  under  the  laws  of  its  state  or
jurisdiction of incorporation,  and has the corporate power and authority to own
its  properties and to transact the business in which it is engaged or presently
proposes to engage.  Each  Borrower  has  qualified  to do business as a foreign
corporation  in the states and other  jurisdictions  listed on  Schedule  6.1(a)
hereto,  which constitute all states or other  jurisdictions in which failure to
so qualify  could have a Material  Adverse  Effect.  No Guarantor  has failed to
qualify  to  do  business  as a  foreign  corporation  in  any  state  or  other
jurisdiction in which the failure to so qualify has a Material Adverse Affect.

          (b) Borrowers and  Guarantors do not have any  Subsidiaries  as of the
date hereof, except as set forth on Schedule 6.1(b) hereto.

         Section 6.2 Corporate Power and Authority. Each Borrower has the
corporate power and authority to borrow and each of Borrowers and Guarantors has
the corporate power and authority to execute, deliver and carry out the terms
and provisions of this Agreement and the other Financing Agreements and all
other agreements, instruments and documents delivered by Borrowers and
Guarantors pursuant hereto and thereto applicable to it, and each of Borrowers
and Guarantors has taken or caused to be taken all necessary corporate action to
authorize the execution, delivery and performance of this Agreement, the other
Financing Agreements and the other agreements relating hereto or thereto to
which it is a party, the present and future borrowings by Borrowers hereunder
and thereunder and the execution, delivery and performance of the instruments
and documents delivered and to be delivered by it pursuant hereto and thereto.
This Agreement and the other Financing Agreements to which each is a party
constitute and will constitute legal, valid and binding obligations of each of
Borrowers and Guarantors, enforceable in accordance with their respective terms.

         Section 6.3       Capitalization.



<PAGE>


          (a) All of the issued and outstanding  shares of Capital Stock of each
Borrower hereto have been duly authorized and are fully paid and  nonassessable,
free and clear of all claims,  liens,  pledges and encumbrances of any kind. All
of the issued and outstanding  shares of Capital Stock of each of the Guarantors
are  directly  and  beneficially  owned  and held by  Salant  and have been duly
authorized and are fully paid and non-assessable,  free and clear of all claims,
liens, pledges and encumbrances of any kind.

          (b) After the creation of the Obligations  and the security  interests
of Agent, for itself and the ratable benefit of Lenders, and consummation of the
transactions contemplated under the Plan, each Borrower will continue to be able
to pay its  debts as they  mature  and has (and has  reason to  believe  it will
continue to have)  sufficient  capital (and not  unreasonably  small capital) to
carry on its business and all  businesses in which it now engages or proposes to
engage.  The assets and  properties of each Borrower at a fair  valuation and at
their present fair salable value are, and will be, greater than the Indebtedness
and other  liabilities of such Borrower,  and including  contingent  liabilities
computed  in the  amount  which,  to the  best  of  such  Borrower's  knowledge,
represents  an amount  which can  reasonably  be expected to become an actual or
matured  liability.  Each  Borrower  has  sufficient  capital  to  carry  on all
businesses and transactions in which it now engages or proposes to engage in, is
solvent and will, in the reasonable,  good faith  determination of such Borrower
as of the  date  hereof,  continue  to be  solvent  after  the  creation  of the
Obligations  and the security  interests  in favor of Agent,  for itself and the
ratable benefit of Lenders, and is able to pay its debts as they mature.

         Section 6.4       Compliance with Other Agreements and Applicable Law.

          (a) Each of  Borrowers  and  Guarantors  is not in default  under,  in
violation of or in contravention  of, in any respect,  any indenture,  mortgage,
deed of trust, deed to secure debt, material agreement or instrument to which it
is a party or by  which  it or any of its  assets  or  properties  may be or are
bound.

          (b) Neither the  execution and delivery of this  Agreement,  the other
Financing  Agreements,  or any of the  instruments and documents to be delivered
pursuant hereto or thereto,  nor the consummation of the transactions  herein or
therein contemplated,  nor compliance with the provisions hereof or thereof, has
violated  any  law or  regulation  or any  order  or  decree  of  any  court  or
Governmental Authority in any respect or does or will conflict with or result in
the breach of, or  constitute  a default in any respect  under,  any  indenture,
mortgage,  deed of trust, material agreement or instrument to which any Borrower
or any  Guarantor  is a party or may be  bound,  or result  in the  creation  or
imposition of any lien,  charge or  encumbrance  upon any of the property of any
Borrower or any  Guarantor  (except as  specifically  contemplated  hereunder or
under  the  other  Financing   Agreements)  or  violate  any  provision  of  the
Certificate of Incorporation or By-Laws of any Borrower or any Guarantor.


<PAGE>


          (c) Each of the Borrower and each of the  Guarantors  has obtained all
material  permits,  licenses,  approvals,  consents,  certificates,   orders  or
authorizations of any Governmental  Authority required for the lawful conduct of
its business and is in compliance in all material respects with the requirements
of all  applicable  laws,  rules,  regulations  and  orders of any  Governmental
Authority relating to such Borrower's or such Guarantor's  business, as the case
may be,  (including,  but not  limited  to,  those set  forth in or  promulgated
pursuant to ERISA, the  Occupational  Safety and Health Act of 1970, as amended,
the  Fair  Labor  Standards  Act  of  1938,  as  amended,   the  Code,  and  the
Environmental  Laws).  Schedule  6.4(c) hereto sets forth all material  permits,
licenses,   approvals,   consents,   certificates,   orders  or   authorizations
(collectively,  "Permits")  issued  to or held by each  Borrower  as of the date
hereof  by any  Federal,  State or local  Governmental  Authority.  The  Permits
constitute all permits, licenses, approvals, consents,  certificates,  orders or
authorizations  necessary for Borrowers and  Guarantors to own and operate their
respective  businesses as presently  conducted or proposed to be conducted where
the failure to have such Permits would have a Material Adverse Effect. Except as
described on Schedule 6.4(c) hereto, all of the Permits are valid and subsisting
and in full  force and effect and there are no  actions,  claims or  proceedings
pending or  threatened  that seek the  revocation,  cancellation,  suspension or
modification of any of the Permits.

         Section 6.5 Governmental Approval. No consent, approval or other action
of, or filing with, or notice to any Governmental Authority is required in
connection with the execution, delivery and performance of this Agreement, the
other Financing Agreements or any of the instruments or documents to be
delivered pursuant hereto or thereto, except for the filing of UCC financing
statements and the recording of other instruments required to perfect security
interests or liens in certain of the Collateral, including, but not limited to,
the recording of the modification agreements with respect to the existing
Mortgages.

         Section 6.6 Chief Executive Office; Collateral Locations. The address
of the principal place of business, the chief executive office and the location
of books and records relating to the Accounts of each Borrower is as set forth
on Schedule 6.6 hereto, which address is the mailing address for such principal
place of business and chief executive office. Subject to Section 7.2 below, as
of the date hereof, the Collateral is located only at the locations set forth on
Schedule 6.6.

         Section 6.7       Priority of Liens; Title to Properties.

          (a) The security  interests  and liens granted to Agent for itself and
the ratable  benefit of Lenders  under this  Agreement  and the other  Financing
Agreements  constitute  valid and perfected liens and security  interests in and
upon the Collateral  subject only to the liens  indicated on Schedule 6.7 hereto
and the liens permitted under Section 7.5 hereof.

<PAGE>

          (b) Each of Borrowers and Guarantors has good and marketable  title to
all of its  properties  and  assets,  subject to no liens,  mortgages,  pledges,
security  interests,  encumbrances or charges of any kind, except those directly
in favor of or assigned to Agent and such others as are  specifically  permitted
under the provisions of this Agreement as listed on Schedule 6.7 hereto or under
Section 7.5 hereof and the other  Financing  Agreements.  Each of Borrowers  and
Guarantors  has peaceful and  undisturbed  possession  of all Real  Property and
Equipment  and  such  other  assets  as may be  necessary  for its  business  as
presently  conducted or proposed to be conducted and under all leases,  licenses
and  easements  necessary for the  operation of its  properties  and business as
presently conducted or proposed to be conducted.

         Section 6.8 Tax Returns. Except as set forth on Schedule 6.8, each of
Borrowers and Guarantors has filed, or caused to be filed all Federal, State,
county, local, foreign and other tax returns, reports and declarations which are
required to be filed by it and as to which an extension has not been granted and
has paid or caused to be paid all taxes shown to be due and payable on said
returns and reports or in any assessment received by it, to the extent that such
taxes have become due and payable, except taxes the validity of which are being
contested in good faith by appropriate proceedings diligently pursued and
available to such Borrower or such Guarantor and with respect to which adequate
reserves have been set aside on its books in accordance with GAAP. Adequate
provision has been made in accordance with GAAP for the payment of all material
accrued and unpaid Federal, State, county, local, foreign and other taxes
whether or not yet due and payable and whether or not disputed.

         Section 6.9 Litigation. Except as set forth on Schedule 6.9 hereto,
there is no present investigation by any Governmental Authority pending or, to
the best of the knowledge of any Borrower or Guarantor, threatened against or
affecting any Borrower or any Guarantor or their respective properties or
business and there is no present action, suit, proceeding or claim by any Person
pending or, to the best of the knowledge of any Borrower or any Guarantor,
threatened against any Borrower or any Guarantor or its assets or goodwill, or
affecting any transactions contemplated by this Agreement, the other Financing
Agreements, or other instruments, agreements or documents delivered in
connection herewith or therewith, which if adversely determined with respect to
it, would have a Material Adverse Effect.

         Section 6.10 Intellectual Property. Each of Borrowers and Guarantors
owns or licenses all patents, trademarks, servicemarks, logos, tradenames, trade
secrets, know-how, copyrights, or licenses and other rights with respect to any
of foregoing, which are necessary for the operation of its business as presently
conducted or proposed to be conducted. No claim or litigation is pending or
threatened against or affecting any Borrower or any Guarantor contesting its
right to sell or use any product, process, method, substance, part or other
material.

<PAGE>

         Section 6.11 Accounts. Each Account represents a valid and legally
enforceable indebtedness based upon an actual and bona fide sale and delivery,
lease, license, assignment or other disposition of goods or rendition of
services in the ordinary course of the business of the respective Borrowers
which has been finally accepted by the Account Debtor and for which the Account
Debtor is unconditionally liable to make payment of the amount stated in each
invoice, document or instrument evidencing the Account in accordance with the
terms thereof, without offset, defense or counterclaim, except where such
offset, defense of counterclaim would not have a Material Adverse Effect. All
statements made and all unpaid balances appearing in the invoices, documents and
instruments evidencing each Account, in each case made by the Borrowers, are
true and correct in all material respects and are in all material respects what
they purport to be and all signatures and endorsements that appear thereon that
have been made by the Borrowers are genuine and all signatories and endorsers
have full capacity to contract. None of the transactions underlying or giving
rise to any Account violates any Federal, State or foreign laws or regulations
applicable to any Borrower where any such violation would have a Material
Adverse Effect, and all documents relating to the Accounts are legally
sufficient under such laws or regulations and shall be legally enforceable in
accordance with their terms and all recording, filing and other requirements of
giving public notice under any applicable law have been duly complied with in
all material respects.

         Section 6.12      Employee Benefits.

          (a)  Each of  Salant  and its  Subsidiaries  has  not  engaged  in any
transaction in connection  with which Salant and its  Subsidiaries or any of its
or their ERISA  Affiliates,  could be subject to either a civil penalty assessed
pursuant  to Section  502(i) of ERISA or a tax  imposed  by Section  4975 of the
Code.

          (b) No liability to the Pension Benefit  Guaranty  Corporation  (other
than  liability  for premiums in the ordinary  course of the business of Salant)
has been or is expected by Salant or any  Subsidiary to be incurred with respect
to any employee pension benefit plan of Salant or its Subsidiaries or any of its
or their  ERISA  Affiliates.  There has been no  reportable  event  (within  the
meaning  of  Section  4043(b)  of ERISA) or any other  event or  condition  with
respect  to  any  employee  pension  benefit  plan  of  Salant  or  any  of  its
Subsidiaries  or any of its or their ERISA  Affiliates  which presents a risk of
termination of any such plan by the Pension Benefit Guaranty  Corporation except
as set forth on Schedule 6.12 hereto.

          (c) Full  payment  has been made of all amounts  which  Salant and its
Subsidiaries  or any of its or their ERISA  Affiliates is required under Section
302 of ERISA and  Section  412 of the Code to have paid  under the terms of each
employee  pension benefit plan as  contributions to such plan as of the last day
of the most  recent  fiscal  year of such plan ended  prior to the date  hereof,
except  as set  forth  on  Schedule  6.12  hereto,  and no  accumulated  funding
deficiency  (as  defined in Section  302 of ERISA and  Section 412 of the Code),
whether or not waived,  exists with respect to any employee pension benefit plan
except as set forth on Schedule 6.12 hereto.

<PAGE>

          (d) The  current  value  of all  vested  accrued  benefits  under  all
employee pension benefit plans maintained by Salant or its Subsidiaries that are
subject to Title IV of ERISA does not exceed the current  value of the assets of
such plans  allocable to such vested  accrued  benefits,  except as set forth on
Schedule 6.12 hereto.  The terms "current value" and "accrued  benefit" have the
meanings   specified   in  Section   4062(b)(1)(A)   and  Section  3  of  ERISA,
respectively.

          (e) Neither Salant nor any of its Subsidiaries nor any of its or their
ERISA   Affiliates  is  or  has  ever  been   obligated  to  contribute  to  any
"multi-employer  plan" (as such term is defined in Section  4001(a)(3) of ERISA)
that is  subject  to Title IV of ERISA,  except as set  forth on  Schedule  6.12
hereto.

         Section 6.13      Environmental Compliance.

          (a) Except as set forth on Schedule  6.13 hereto,  neither  Salant nor
any of its Subsidiaries  have generated,  used,  stored,  treated,  transported,
manufactured,  handled,  produced or disposed of any Hazardous Materials,  on or
off its  premises  (whether or not owned by it) in any manner  which at any time
materially  violates any applicable  Environmental  Law or any license,  permit,
certificate,  approval  or  similar  authorization  thereunder  in any  material
respect and the operations of Salant and its Subsidiaries comply in all material
respects with all Environmental  Laws and all licenses,  permits,  certificates,
approvals and similar authorizations thereunder.

          (b) Except as set forth on  Schedule  6.13  hereto,  there has been no
investigation,  proceeding,  complaint,  order,  directive,  claim,  citation or
notice by any Governmental  Authority or any other person nor is any pending or,
to the best of Salant's  knowledge,  threatened,  with  respect to any  material
noncompliance  with or violation of the requirements of any Environmental Law by
Salant or any of its Subsidiaries in any material respect or the release,  spill
or discharge, threatened or actual, of any Hazardous Material or the generation,
use, storage, treatment,  transportation,  manufacture,  handling, production or
disposal of any Hazardous Materials or any other environmental, health or safety
matter, which materially affects Salant or its Subsidiaries or their businesses,
operations  or  assets or any  properties  at which  Salant or its  Subsidiaries
transported, stored or disposed of any Hazardous Materials.

          (c) Except as set forth on Schedule  6.13 hereto,  neither  Salant nor
any of its Subsidiaries have any material liability (contingent or otherwise) in
connection  with a release,  spill or discharge,  threatened  or actual,  of any
Hazardous Materials or the generation, use, storage, treatment,  transportation,
manufacture, handling, production or disposal of any Hazardous Materials.

<PAGE>

          (d)  Salant  and  its   Subsidiaries   have  all  material   licenses,
certificates,  approvals and other  Permits  required to be obtained or filed in
connection  with  the  operations  of  Salant  and its  Subsidiaries  under  any
Environmental Law and all of such licenses, permits, certificates, approvals and
other Permits are valid and in full force and effect.

         Section 6.14 Bank Accounts. All of the deposit accounts, investment
accounts or other accounts in the name of or used by Salant or its Subsidiaries
maintained at any bank or other financial institution are set forth on Schedule
6.14 hereto, subject to the right of each to establish new accounts in
accordance with Section 7.18 below.

         Section 6.15 Investment Company. Salant and its Subsidiaries are not an
"investment company", or an "affiliated person" or "promoter" or "principal
underwriter", as such terms are defined in the Investment Company Act of 1940,
as amended. The making of the Loans by Agent on behalf of Lenders, the
application of the proceeds and the repayment thereof by Borrowers and the
performance of the transactions contemplated herein will not violate any
provision of the Investment Company Act of 1940, as amended, or any rule,
regulation or order issued pursuant thereto.

         Section 6.16 Regulation G; Regulation U; Securities Exchange Act of
1934. No Borrower owns any "margin security" or "margin stock" as such term is
defined in Regulation G and Regulation U, respectively, each as amended by the
Board. The proceeds of the borrowings made pursuant to this Agreement and the
other Financing Agreements will be used by Borrowers only for the purposes
contemplated hereunder. None of the proceeds will be used, directly or
indirectly, for the purpose of purchasing or carrying any margin security or
margin stock or for the purpose of reducing or retiring any Indebtedness which
was originally incurred to purchase or carry any margin security or margin stock
or for any other purpose which might cause any of the Loans to be considered a
"purpose credit" within the meaning of Regulation G or U of the Board, each as
amended. Borrowers will not take, nor will Borrowers permit any agent acting in
its behalf to take, any action which might cause this Agreement or the other
Financing Agreements, or instruments delivered pursuant hereto or thereto, to
violate any regulation of the Board or to violate the Securities Exchange Act of
1934 or any state or other securities laws, in each case as in effect on the
date hereof or as amended hereafter.

         Section 6.17 No Material Adverse Change. There has been no material
adverse change in the business, assets, condition (financial or otherwise) or
results of operations of Salant and its Subsidiaries (taken as a whole) since
the date of the most recent financial statements with respect thereto submitted
to Agent or the date of the most recent field examination with respect thereto
conducted by Agent.


<PAGE>

         Section 6.18      Financial Statements.

                  (a) None of the financial statements, reports and other
information furnished or to be furnished by Salant to Agent or any Lender with
respect to Salant and its Subsidiaries contain, as of their respective dates,
any untrue statement of material fact or (taken as a whole) omit to state any
material fact necessary to make the information therein not misleading. Such
financial statements and reports were and will be prepared in accordance with
GAAP consistently applied, and shall fairly present the consolidated and
consolidating financial condition and results of operations of the applicable
Persons, as of the dates and for the periods indicated thereon.

                  (b) Consolidated cash flow projections for Salant and its
Subsidiaries (together with summaries of assumptions and projected assumptions,
based on historical performance with respect thereto) furnished by Salant to
Agent represent the reasonable good faith opinion of Salant and its management
as to the subject matter thereof and based on assumptions which Salant has
determined to be fair and reasonable in view of current and reasonably
foreseeable business conditions.

         Section 6.19      Disclosure.

                  (a) The information contained in the representations and
warranties of Borrowers and Guarantors set forth in this Agreement, the other
Financing Agreements, or in any other instrument, document, list, certificate,
statement, schedule or exhibit heretofore delivered or to be delivered to Agent
or any Lender, as contemplated in this Agreement or in the other Financing
Agreements, does not contain and will not contain any untrue statement of a
material fact and (taken as a whole) does not omit and will not omit to state a
material fact necessary in order to make the information contained herein or
therein not misleading.

                  (b) After giving effect to the transactions contemplated by
this Agreement, the other Financing Agreements, and the other instruments or
documents delivered in connection herewith and therewith, there does not exist
and there has not occurred any act, condition or event which constitutes an
Event of Default or which, with notice or passage of time or both would
constitute an Event of Default.

         Section 6.20 Labor Disputes. There is no collective bargaining
agreement or other labor contract covering employees of Salant or its
Subsidiaries, except as set forth on Schedule 6.20 hereto. To the best of
Salant's knowledge, no union or other labor organization is seeking to organize,
or to be recognized as, a collective bargaining unit of employees of Salant or
any of its Subsidiaries. There is no pending or threatened strike, work
stoppage, material unfair labor practice claim, or other material labor dispute
against or affecting Borrower or its Subsidiaries or their respective employees,
except as set forth on Schedule 6.20 hereto.


<PAGE>


         Section 6.21 Corporate Name; Prior Transactions. No Borrower has,
during the past five years, been known by or used any other corporate or
fictitious name or been a party to any merger or consolidation, or acquired all
or substantially all of the assets of any Person, or acquired any of its
property or assets out of the ordinary course of business, except as set forth
on Schedule 6.21 hereto.

          Section  6.22  Material  Contracts.  No Borrower is in breach of or in
default  under any  Material  Contract,  except as set  forth on  Schedule  6.22
hereto.

SECTION 7.  ADDITIONAL COVENANTS.

         In addition to the covenants set forth in the other Financing
Agreements, each Borrower hereby covenants to and agrees with Agent and Lenders
that Borrower shall comply with the following covenants or cause the same to be
complied with, unless Agent shall otherwise consent in writing:

         Section 7.1 Tradenames. Each invoice issued by a Borrower shall bear
the name of such Borrower in such manner so as to indicate that such Borrower is
the issuer thereof. Some of a Borrower's invoices may from time to time be
rendered to customers under the tradenames listed on Schedule 6.21 hereto
(which, together with any new tradenames used after the date hereof are referred
to collectively as the "Tradenames" and individually, as a "Tradename"). As to
the Tradenames used by it, and the related Accounts, each Borrower hereby agrees
that:

                  (a) Each Tradename is a tradename (and not an independent
corporation or other legal entity) by which such Borrower may identify and sell
or lease certain of its goods or services and conduct a portion of its business.

                  (b) All Accounts and proceeds thereof (including any returned
merchandise) which arise from the sale or lease of goods or rendition of
services invoiced under the Tradename shall be owned solely by such Borrower and
shall be subject to the security interests of Agent and other terms of this
Agreement and the other Financing Agreements.

                  (c) All assignments or confirmatory schedules of Accounts
delivered to Agent by such Borrower, whether in the name of any of the
Tradenames or of such Borrower, shall be executed by such Borrower as owner of
such assigned Accounts.

<PAGE>

                  (d) New Tradenames may be used by a Borrower, but only if (i)
Agent is given at least thirty (30) days prior written notice of the intended
use of any new Tradename and (ii) such supplemental financing statements or
similar instruments as Agent may request shall be executed and delivered to
Agent by such Borrower for filing or recording by Agent, prior to the use of
such new Tradename.

         Section 7.2 New Collateral Locations. A Borrower may open any new
location within the continental United States provided it (i) gives Agent thirty
(30) days prior written notice of the intended opening of any such new location
and (ii) executes and delivers, or causes to be executed and delivered, to Agent
such agreements, documents, and instruments consistent with the other then
existing Financing Agreements to the extent applicable or otherwise as Agent may
deem reasonably necessary or desirable to protect its interests in the
Collateral to be located in such location, including, without limitation, UCC
financing statements and Collateral Access Agreements from appropriate Persons.

         Section 7.3 Subsidiaries. No Borrower shall form or acquire, or shall
permit any Subsidiary to form or acquire, any Subsidiary without the prior
written consent of Agent. In the event Agent so consents, promptly upon such
formation or acquisition, (a) such Subsidiary shall be subject to the terms of
this Agreement and bound by the terms and conditions hereof applicable to the
Subsidiaries of such Borrower; (b) such Borrower shall cause any such Subsidiary
to execute and deliver to Agent, in form and substance satisfactory to Agent and
its counsel: (i) an absolute and unconditional guarantee of payment of any and
all present and future Obligations of Borrowers to Agent and Lenders containing
terms substantially similar to those guarantees entered into by the existing
Subsidiaries of such Borrower in favor of Agent and Lenders as of the date
hereof, (ii) a security agreement granting to Agent for itself and the ratable
benefit of Lenders a first security interest and lien (except as otherwise
consented to in writing by Agent) upon all of the assets of such Subsidiary
containing terms substantially similar to the security agreements entered into
by the existing Subsidiaries of such Borrower in favor of Agent and Lenders as
of the date hereof, (iii) related Uniform Commercial Code Financing Statements,
and (iv) such other agreements, documents and instruments as Agent may require,
including, but not limited to, supplements and amendments hereto and other loan
agreements or instruments evidencing Indebtedness of such new Subsidiary to
Agent and Lenders.

         Section 7.4 Indebtedness. No Borrower shall, or shall permit any
Subsidiary to, create, incur, assume or permit to exist, contingently or
otherwise, any Indebtedness, except:

          (a) the Obligations;

          (b) Indebtedness  consisting of trade  obligations and normal accruals
in the ordinary  course of business not yet due and payable,  or with respect to
which such Borrower is  contesting in good faith the amount or validity  thereof
by appropriate proceedings diligently pursued and available to such Borrower and
with respect to which adequate reserves have been set aside on its books;


<PAGE>


          (c)  Indebtedness  incurred  in the  ordinary  course of its  business
secured only by liens permitted under Section 7.5(b) hereof;

          (d) Indebtedness of Salant or its Subsidiaries to the extent permitted
under Section 7.5(d) hereof;

          (e) contingent Indebtedness permitted under Section 7.6 hereof;

          (f)   Indebtedness   incurred  in  the  ordinary  course  of  business
consisting of unsecured  non-current  accruals and deferred liabilities relating
to deferred compensation and taxes, environmental  liabilities,  post-employment
benefits for health care,  pensions,  life  insurance  and long term  disability
benefits and similar items;

          (g)  Indebtedness of a Borrower in respect of Interest Rate Protection
Obligations incurred in the ordinary course of business;

          (h) unsecured  Indebtedness of a Borrower to any Subsidiaries  arising
after the date hereof  pursuant to loans by such  Subsidiaries to such Borrower,
provided, that, (i) such Indebtedness is subject to, and subordinate in right of
payment  to, the right of Agent and  Lenders to receive  the prior  indefeasible
payment  and  satisfaction  in  full  of all of the  Obligations  on  terms  and
conditions  acceptable  to Agent,  (ii) Agent shall have  received,  in form and
substance satisfactory to Agent, a subordination  agreement providing for, inter
alia, the terms of the subordination in right of payment of such Indebtedness of
such Borrower to the prior indefeasible  payment and satisfaction in full of all
of the Obligations, duly authorized, executed and delivered by such Subsidiaries
and such Borrower,  (iii) such Borrower shall not,  directly or indirectly make,
or be required to make, any payments in respect of such  Indebtedness so long as
any of the  Obligations  are  outstanding  and unpaid and this Agreement has not
been  terminated,  (iv) such Borrower  shall not,  directly or  indirectly,  (A)
amend,  modify, alter or change any terms of such Indebtedness or any agreement,
document or instrument related thereto, or (B) redeem, retire, defease, purchase
or otherwise  acquire such  Indebtedness,  or set aside or otherwise  deposit or
invest any sums for such purpose,  and (v) such Borrower  shall furnish to Agent
all notices,  demands or other  materials in connection  with such  Indebtedness
either  received  by such  Borrower  or on its behalf,  promptly  after  receipt
thereof,  or sent by such  Borrower  or on its  behalf,  concurrently  with  the
sending thereof, as the case may be;

          (i) unsecured  Indebtedness  of  Subsidiaries  of Salant to a Borrower
arising  after  the date  hereof  pursuant  to loans  by such  Borrower  to such
Subsidiaries  to the extent  such loans by such  Borrower  are  permitted  under
Section 7.6 below,  provided,  that, such Indebtedness shall not be evidenced by
any  promissory  note or other  instrument,  unless the original of such note or
other  instrument  is pledged  and  delivered  to Agent  (with such  endorsement
thereof as Agent may require);

<PAGE>

          (j)  Indebtedness,  the  proceeds of which are used to  refinance  (or
which represents an amendment,  renewal,  extension or refunding of) outstanding
Indebtedness  of  a  Borrower  or  any  of  its  Subsidiaries   other  than  the
Obligations,  which is subordinated to the Obligations to the same extent as the
Indebtedness  so  refinanced   and,  in  the  case  of  Indebtedness   which  is
subordinated  to the  Obligations,  with an average life to maturity equal to or
greater than the remaining term of this Agreement;  provided, that to the extent
the principal amount of the new Indebtedness exceeds the principal amount of the
Indebtedness  to  be  refinanced,  such  excess  must  be  used  to  reduce  the
outstanding Obligations.

          (k) Indebtedness of any Borrower or any Guarantor existing on the date
hereof which is described on Schedule  7.4 hereto,  provided,  that,  except for
prepayments incident to refinancings permitted under Section 7.4 hereof: (i) any
Borrower  may,  and  shall  cause any such  Guarantor  to,  only make  regularly
scheduled  payments of principal  and interest as set forth in Schedule 7.4, and
(ii) each  Borrower  shall  not,  and shall  cause  any such  Guarantor  not to,
directly or indirectly, (A) make any prepayments or other non-mandatory payments
in respect of such  Indebtedness  or (B) redeem,  retire,  defease,  purchase or
otherwise acquire such Indebtedness, or set aside or otherwise deposit or invest
any sums for such purpose or (C) amend, modify, alter or change the terms of the
arrangements  related  thereto,  or any agreement or instrument  evidencing such
Indebtedness,  and (iii) each  Borrower  shall  furnish to Lender all notices or
demands received concerning such Indebtedness  promptly after receipt thereof or
sent by such Borrower,  concurrently  with the sending thereof,  as the case may
be.

          (l) Any other  Indebtedness  in an amount not to exceed  $1,000,000 in
the aggregate at any one time.

         Section 7.5 Limitation on Liens. Each Borrower will not, and will not
permit any Guarantor to, create, incur, assume, or permit to exist any mortgage,
pledge, security interest, lien, encumbrance of any nature whatsoever on any of
its respective assets or properties (including, without limitation, the
Collateral), whether now owned or hereafter acquired, except:

          (a) the  security  interests  and liens  upon the  Collateral  and the
Guarantor Collateral in favor of Agent and Lenders;

          (b) tax, mechanics and other non-consensual statutory liens arising in
the ordinary course of a Borrower's or any  Guarantors'  business to the extent:
(i)  such  liens  secure  Indebtedness  which  is  not  overdue  or  (ii)  until
foreclosure or similar proceedings shall have been commenced,  such liens secure
Indebtedness  relating to claims or liabilities  which are (A) fully insured and
being  defended at the sole cost and expense and at the sole risk of the insurer
or (B) being  contested in good faith by  appropriate  proceedings  available to
such Borrower or any such Guarantor prior to the  commencement of foreclosure or
other similar proceedings and are adequately escrowed for or reserved against in
the reasonable judgment of Agent;

<PAGE>

          (c)  liens   arising  in  connection   with   worker's   compensation,
unemployment insurance,  surety, insurance or financial  responsibility,  appeal
and  release  bonds  upon  securities  pledged  as  collateral  for  any  of the
foregoing;

          (d) purchase money mortgages or other purchase money liens or security
interests  upon any specific  fixed assets  hereafter  acquired,  or  mortgages,
liens,  or security  interests  existing on any such future  fixed assets at the
time of acquisition  thereof (including,  without limitation,  Capitalized Lease
Obligations)  or in  connection  with the  refinancing  of existing  capitalized
leases with respect to specific fixed assets,  provided,  that (i) the aggregate
amount of all  Indebtedness  secured by such purchase  money  mortgages or other
purchase  money  liens  or  security  interests  shall  not  exceed  $10,000,000
outstanding at any time, (ii) no such purchase money mortgage,  lien or security
interest (or  capitalized or finance lease,  as the case may be) with respect to
specific future fixed assets or as refinanced shall extend to or cover any other
property,  other than the  specific  fixed  assets so  acquired,  or acquired or
refinanced  subject to such mortgage,  lien or security  interest (or lease) and
the proceeds thereof, (iii) such mortgage, lien or security interest secures the
obligation to pay the purchase  price of such specific fixed assets only (or the
Capitalized  Lease  Obligations),  or existed on such assets at the time of such
Borrower's  acquisition  thereof,  and (iv)  except  for  mortgages,  liens  and
security  interests  which  existed  on  assets  at the time of such  Borrower's
acquisition  thereof,  the principal amount secured thereby shall not exceed one
hundred  (100%)  percent of the cost of the fixed  assets so acquired  (it being
agreed that for purposes of this Section  7.5(d),  purchase money financing of a
fixed  asset  shall  include  such  financing  (including,  without  limitation,
sale-leaseback  financing)  that is  consummated  with respect to any such fixed
asset within ninety (90) days after such  Borrower's  acquisition  of such fixed
asset) and (v) at the time of the  granting of such  mortgage,  lien or security
interest,  no Event of Default or act  condition,  or event which with notice or
passage of time or both would  constitute  and Event of Default,  shall exist or
have occurred and be continuing.

          (e) the liens,  encumbrances or security  interests listed on Schedule
6.7 hereto, permitted under the other Financing Agreements, if any, or set forth
on the title  insurance  policy(ies)  issued to Lender with  respect to the Real
Property,  provided,  that, such liens,  encumbrances or security interests with
respect to the Real Property:  (i) do not  materially  interfere with the use of
the Real  Property  or the  ordinary  conduct  of such  Borrower's  business  as
presently  conducted  or  proposed  to be  conducted  thereon  and  (ii)  do not
materially impair the value of the affected Real Property.

         Section 7.6 Loans, Investments, Guaranties, Etc. Each Borrower will
not, and will not permit any Guarantor to, directly or indirectly, make any
loans or advance money or property to any Person, or invest in (by capital
contribution, dividend or otherwise) or purchase or repurchase the Capital Stock
or Indebtedness or all or a substantial part of the assets or property of any
Person, or guarantee, assume, endorse, or otherwise become responsible (directly
or indirectly) for the Indebtedness, performance, obligations or dividends of
any Person or agree to do any of the foregoing, except:



<PAGE>


          (a) the  Guarantee by each of the  Guarantors  of the  Obligations  in
favor of Lender or by any other Subsidiary of a Borrower in favor of Lender;

          (b) the  endorsement of  instruments  for collection or deposit in the
ordinary course of business;

          (c) loans by Salant to,  guarantees  by Salant of the  obligations  of
and/or investments by Salant in (i) Holding,  (ii) Birdhill Limited, a Hong Kong
corporation and Manhattan Industries (Far East) Limited, a Hong Kong corporation
not to exceed $3,000,000 in the aggregate at any time outstanding,  (iii) Salant
Caribbean, a Guatemalan  corporation,  not to exceed $1,000,000 in the aggregate
at any time outstanding;

          (d)  investments in the stock of any  guaranteeing  Subsidiary,  which
Subsidiary is permitted in accordance with Section 7.3 hereof, and Guarantees by
such  Subsidiary in favor of Agent of the  Obligations of Borrowers to Agent and
Lenders;

          (e)  advances to officers  and  employees  in the  ordinary  course of
business not to exceed, in the aggregate for the Borrowers and the Guarantors at
any  one  time  outstanding,  the  sum  of  (i)  $1,000,000  plus  (ii)  amounts
outstanding as of the Effective Date;

          (f)  investments  in Cash  Equivalents,  which  shall be  pledged  and
delivered to Agent upon Agent's request;

          (g) the additional  capital  investments (which for this purpose shall
not include Capital Expenditures),  guarantees,  insurance bonds, performance or
surety  bonds  described on Schedule  7.6 annexed  hereto,  which sets forth the
parties, amounts, time periods and key terms with respect thereto.

         Section 7.7 Transactions with Affiliates. Each Borrower will not, and
will not permit any Guarantor to, directly or indirectly purchase, acquire or
lease any property from, or sell, transfer or lease any property to, any
shareholder, officer, director, agent, employee or Affiliate, except on prices
or terms no less favorable than would have been obtained in an arm's length
transaction with a non-affiliated Person.

<PAGE>

         Section 7.8 Restricted Payments. Each Borrower shall not, directly or
indirectly, (i) declare or pay any cash dividends or dividends payable in
property other than stock on account of any shares of any class of Capital Stock
of such Borrower now or hereafter outstanding, or set apart any sums for such
purpose, or redeem, retire, defease, purchase or otherwise acquire any shares of
any class of Capital Stock of such Borrower (or set aside or otherwise deposit
or invest any sums for such purpose) for any consideration other than stock or
apply or set apart any sums, or make any other distribution (by reduction of
capital or otherwise) in respect of any such shares or agree to do any of the
foregoing, (ii) pay to any shareholder, officer, director, agent, employee or
other Affiliate of such Borrower any management, consulting or other fees or any
amount for any management assistance or services rendered by such persons to
such Borrower or (iii) make any payments in respect of Indebtedness owing to any
shareholder, officer, director or other Affiliate of such Borrower.

         Section 7.9 Maintenance of Existence. Each Borrower will, and will
cause each Guarantor to, at all times preserve, renew and keep in full force and
effect its corporate existence and rights and franchises with respect thereto
and maintain in full force and effect all material Permits, licenses,
trademarks, tradenames, approvals, authorizations, leases and contracts
necessary to carry on its business as presently or proposed to be conducted;
provided, however, that this Section 7.9 shall not prohibit the merger or
consolidation of any Guarantor into (i) a Borrower or (ii) another Subsidiary of
Salant that is or becomes a Guarantor.

         Section 7.10 Sale and Leasebacks. Except as permitted in Section
7.5(d), such Borrower will not and will not permit any Guarantor to enter into
any arrangement, directly or indirectly, with any Person whereby such Borrower
or any Guarantor shall sell or transfer any property, real or personal, used or
useful in its business, whether now owned or hereafter acquired, and thereafter
rent or lease such property which it intends to use for substantially the same
purpose or purposes as the property being sold or transferred.

         Section 7.11 Sale of Assets, Consolidation, Merger, Dissolution, Etc.
Each Borrower will not, and will not permit any Guarantor to, directly or
indirectly, merge into or with or consolidate with any other Person or permit
any other Person to merge into or with or consolidate with such Borrower or any
Guarantor, or sell, assign, lease, transfer, abandon or otherwise dispose of any
Capital Stock or Indebtedness to any other Person or any of its property or
assets to any other Person (other than (i) sales of Inventory in the ordinary
course of business, and (ii) Equipment as permitted under Section 7.14) or wind
up, liquidate or dissolve or agree to do any of the foregoing.

         Section 7.12      Compliance with Laws, Regulations, Etc.

                  (a) Each Borrower shall, and shall cause each Guarantor to, at
all times comply in all material respects with all applicable provisions of
laws, rules, regulations, licenses, Permits, approvals and orders and duly
observe all requirements, of any foreign, Federal, State or local Governmental
Authority, including, without limitation, ERISA, the Code, the Occupational
Safety and Health Act of 1970, as amended, the Fair Labor Standards Act of 1938,
as amended and the rules and regulations thereunder and all other statutes,
rules, regulations, orders, permits and stipulations relating to environmental
matters and employee health and safety, including, without limitation, all of
the Environmental Laws, except for such noncompliance that would not result in
fines, penalties, injunctive relief or other liabilities which, in the
aggregate, would result in a Material Adverse Effect with respect to Borrowers
and the Guarantors.

<PAGE>
                  (b) Borrowers shall take prompt and appropriate action to
respond to any material non-compliance with any of the Environmental Laws and
shall regularly report to Agent on such response. If a Borrower receives any
notice of (i) the happening of any event involving the use, spill, discharge or
clean-up of any Hazardous Material or (ii) any complaint, order, citation or
notice with regard to air emissions, water discharges, noise emissions or any
other environmental, health or safety matter affecting such Borrower from any
Person, including, but not limited to, the United States Environmental
Protection Agency or any state or local environmental agency or authority, then
such Borrower shall within five (5) business days of such receipt give written
notice of same to Agent and Lenders. Without limiting the generality of the
foregoing, whenever there is material non-compliance, or any condition which
requires any action by or on behalf of any Borrower in order to avoid any such
non-compliance, with any Environmental Law, and such non-compliance could result
in fines, penalties, injunctive relief or other liabilities, which, in the
aggregate, would result in a Material Adverse Effect, such Borrower shall, at
Lender's request and such Borrower's expense: (i) cause an independent
environmental engineer acceptable to Agent to conduct an assessment of the site
where such Borrower's noncompliance or alleged non-compliance with Environmental
Laws has occurred and prepare and deliver to Agent and Lenders a report setting
forth the results of such assessment, a proposed plan for responding to any
environmental problems described therein, and an estimate of the costs thereof;
and (ii) provide to Agent and Lenders a supplemental report of such engineer
whenever the scope of the environmental problems, or such Borrower's response
thereto or the estimated costs thereof, shall materially change.

         Section 7.13 Payment of Taxes and Claims. Borrowers shall, and shall
cause Guarantors to, duly pay and discharge all taxes, assessments,
contributions and governmental charges upon or against them or their properties
or assets, except for taxes which are being contested in good faith and by
appropriate proceedings and which are adequately reserved against in accordance
with GAAP, prior to the date on which penalties attach thereto. Borrowers shall
be liable for any sales, transfer, documentary, stamp or similar tax or penalty
imposed upon any transaction under this Agreement or any of the other Financing
Agreements or giving rise to the Accounts or any other Collateral, provided,
that, nothing contained herein shall be construed to require Borrowers to pay or
indemnify Lenders and Agent from and against any income or withholding tax
attributable to the income of Agent, any Lender or Participant from any amounts
charged or paid hereunder to Agent, any Lender or Participant.

         Section 7.14 Properties in Good Condition; Covenants as to Inventory,
Real Property and Equipment

                  (a) Each Borrower shall keep its properties, and shall cause
each Guarantor to keep its properties, in good repair, working order and
condition (reasonable wear and tear excepted) and, from time to time, make and
cause each Guarantor to make all necessary and proper repairs, renewals,
replacements, additions and improvements thereto, so that the business carried
on may be properly conducted at all times in accordance with prudent business
management.

<PAGE>

                  (b) All of the Inventory is and will be held for sale or
lease, or to be furnished in connection with the rendition of services, in the
ordinary course of each Borrower's business, and is and will be fit for such
purposes. Each Borrower will keep the Inventory in good and marketable
condition, at its own expense. Each Borrower will not, without prior written
notice to Lender, acquire or accept any Inventory on consignment or approval and
any such Inventory shall at all times be clearly identified on the books and
records of such Borrower as Inventory held on consignment or approval and such
Inventory shall be separately reported to Agent and not included in the
Inventory of such Borrower as reported to Agent. Each Borrower agrees that all
Inventory will be produced in accordance with the Federal Fair Labor Standards
Act of 1938, as amended, and all rules, regulations, and orders thereunder. Each
Borrower will conduct a physical count of the Inventory at least once per fiscal
year, and at such other times as Agent reasonably requests, but not to exceed,
prior to the occurrence and continuance of an Event of Default, two (2) times
during any calendar year, and shall promptly supply Lender with a copy of such
count accompanied by a report of the Value of such Inventory. Each Borrower will
not, without Agent's written consent, sell any material portions of such
Borrower's Inventory on a bill-and-hold, sale and return, sale on approval, or
other repurchase or return basis.

                  (c) The Equipment, other than any Equipment constituting
fixtures as of the date hereof, is now and shall remain personal property and
each Borrower shall not permit any of such Equipment to be or become a part of
or affixed to real property without (i) prior written notice to Lender and (ii)
using such Borrower's best efforts to deliver or cause to be delivered to Agent
such agreements and other documentation as are reasonably requested by Lender
for the protection and preservation of its security interests and liens, in form
and substance reasonably satisfactory to Lender, including, without limitation,
waivers and subordination agreements by any landlords or mortgagees of statutory
and non-statutory liens and rights of distraint.

                  (d) Each Borrower will not, without Lender's prior written
consent, alter or remove any identifying symbol or number on the Equipment. Each
Borrower shall not, without Agent's prior written consent, sell, lease as a
lessor, or otherwise dispose of any of the Real Property or Equipment; provided,
however, that, without Agent's consent, subject to the conditions set forth
below, (i) Salant may dispose of obsolete or unusable Equipment used in Salant's
Perry Ellis or Private Line business having a book value no greater than
$250,000 individually, and $750,000 in the aggregate in any fiscal year, and
(ii) upon at least five (5) Business Days prior written notice to Agent, any
Borrower may dispose of Real Property and/or Equipment not used in Salant's
Perry Ellis and/or Private Line business, provided that each sale transaction
pursuant to which any such property is sold is arms-length, such Borrower
receives fair market value for such property. In the event any of the Real
Property and/or Equipment is sold, transferred or otherwise disposed of with the
Lender's prior written consent or as otherwise permitted hereby, such Borrower
shall deliver all of the Net Cash Proceeds of any such sale, transfer or
disposition to Agent, which proceeds shall be applied to the repayment of the
Obligations in such order and manner as Agent shall determine,

                  (e) Borrowers assume all responsibility and liability arising
from or relating to the use, sale or other disposition of the Inventory and the
Equipment except to the extent of any sale or other disposition thereof by Agent
in the exercise of its remedies after an Event of Default as set forth in
Section 8.2 hereof.

<PAGE>
         Section 7.15 Appraisals. Upon the request of Agent or the Majority
Lenders, Borrowers shall, at Borrowers' expense, no more than once in any twelve
(12) month period, but at any time or times as Agent or the Majority Lenders may
request on or after an Event of Default, deliver, or cause to be delivered, to
Agent and Lenders written reports or appraisals of Borrowers' Inventory in form,
scope and methodology, and by an appraiser acceptable to Agent. Such reports or
appraisals shall list all items and categories thereof, describing the condition
of same and setting forth the lower of cost (calculated on a first-in-first-out
basis) or fair market value, in such form as is satisfactory to Agent.

         Section 7.16 Insurance. Borrowers shall, and shall cause Guarantors to,
at all times maintain with financially sound and reputable insurers, insurance
with respect to the Collateral and Guarantor Collateral against loss or damage
of a kind and in the amounts customarily insured against by corporations of
established reputation engaged in the same or similar business and similarly
situated as Borrowers and Borrowers shall, and shall cause Guarantors to,
maintain public liability insurance against claims for personal injury, death or
property damage occurring upon, in, about or in connection with the use of any
properties owned, occupied or controlled by it and occurring in connection with
the use (or otherwise) of any products manufactured or sold by it, workmen's
compensation insurance, and business interruption insurance. Borrowers shall,
and shall cause Guarantors to, furnish copies of certificates, policies or
endorsements to Agent as proof of such insurance, and, if it fails to do so,
Agent is authorized, but not required, to obtain such insurance at the expense
of Borrowers. All policies shall provide for at least thirty (30) days' prior
written notice to Agent of any cancellation or reduction of coverage and that
Agent may act as attorney for any Borrower or Guarantor, as the case may be, in
obtaining, and at any time following, and during the continuance of an Event of
Default, adjusting, settling, amending and canceling such insurance. Borrowers
will, and will cause Guarantors to, obtain non-contributory lender's loss
payable endorsements to all property and casualty insurance policies in form and
substance satisfactory to Agent specifying that the proceeds of such insurance
shall be payable to Agent as its interests may appear and further specifying
that Agent shall be paid regardless of any act or omission by any Borrower or
Guarantor, as the case may be. At its option, Agent may, with the consent of the
Majority Lenders, and upon the direction of the Majority Lenders shall, apply
any insurance proceeds received by Agent at any time to the cost of repairs or
replacement of Collateral or Guarantor Collateral and/or after the occurrence
and during the continuance of an Event of Default to payment of the Obligations,
whether or not then due, in any order and in such manner as Agent, in its
discretion, may determine, or as directed by the Majority Lender or Agent may
hold such insurance proceeds as cash collateral for the Obligations as Agent may
determine or as directed by the Majority Lenders, except as otherwise
specifically provided in any mortgage or deed of trust executed and delivered by
any Borrower in favor of Agent.

         Section 7.17 Compliance with ERISA. Salant shall not, with respect to
all employee pension benefit plans maintained by Salant or any Subsidiary:

<PAGE>
                  (a) (i) terminate any of such employee pension benefit plans
so as to incur any liability to the Pension Benefit Guaranty Corporation
established pursuant to ERISA, (ii) allow or suffer to exist any prohibited
transaction involving any of such employee pension benefit plans or any trust
created thereunder that would subject Salant or any Subsidiary to a tax or
penalty or other liability on prohibited transactions imposed under section 4975
of the Code or ERISA, (iii) fail to pay to any such employee pension benefit
plan any contribution that it is required to pay to such plan, (iv) allow or
suffer to exist any accumulated funding deficiency, whether or not waived, with
respect to any such employee pension benefit plan, (v) allow or suffer to exist
any occurrence of a reportable event or any other event or condition that
presents a material risk of termination by the Pension Benefit Guaranty
Corporation of any such employee pension benefit plan that is a single employer
plan, which termination could result in any liability to the Pension Benefit
Guaranty Corporation or (vi) incur any withdrawal liability with respect to any
multi-employer pension plan which is not fully bonded if, in each case, such
action or inaction would materially and adversely affect the business,
properties, operations or condition, financial or otherwise, of Salant.

                  (b) As used in this Section 7.17, the term "employee pension
benefit plans," "employee benefit plans", "accumulated funding deficiency" and
"reportable event" shall have the respective meanings assigned to them in ERISA,
and the term "prohibited transaction" shall have the meaning assigned to it in
section 4975 of the Code and ERISA.

         Section 7.18 Additional Bank Accounts. Each Borrower shall not, and
shall not permit any Guarantor to, directly or indirectly, open, establish or
maintain any deposit account, investment account or any other account with any
bank or other financial institution, other than the Blocked Accounts and the
accounts set forth in Schedule 6.14 hereto, except: (a) as to any new or
additional Blocked Accounts and other such new or additional accounts which
contain any Collateral or Guarantor Collateral or proceeds thereof, with the
prior written consent of Agent and subject to such conditions thereto as Agent
may establish and (b) as to any accounts used by such Borrower or any Guarantor
to make payments of payroll, taxes or other obligations to third parties, after
prior written notice to Agent.

         Section 7.19 Notice of Default. Promptly upon becoming aware of the
existence of any condition or event that constitutes an Event of Default
pursuant to the provisions of this Agreement or the other Financing Agreements,
Borrower shall give Agent written notice thereof specifying the nature of such
condition or event and the actions that such Borrower has taken, is taking
and/or proposes to take to remedy such Event of Default.

         Section 7.20      Financial Statements and Other Information.

                  (a) Borrowers shall promptly furnish to Agent and Lenders all
such financial and other information as Agent shall reasonably request relating
to the Collateral and the Guarantor Collateral and the assets, businesses and
operations of Borrowers, and notify the auditors and accountants of Borrowers
that Agent is authorized to obtain such information directly from them. Without
limiting the foregoing, Salant shall furnish to Agent and Lenders, in such
detail as Agent shall request, the following:

<PAGE>
          (i) As soon as available,  but in any event not later than one hundred
five  (105)  days  after the close of each  fiscal  year,  audited  consolidated
balance sheet,  consolidated  statement of operations and consolidated statement
of cash flows for Salant and its  Subsidiaries  for such  fiscal  year,  and the
accompanying  notes thereto,  and, (x) if there is material business activity by
any  Subsidiary,  (y) if the assets of Salant Canada Inc. are $1,000,000 or more
at any  time  or (z) if the  assets  of any  other  Subsidiary  are at any  time
$1,000,000  or more,  unaudited  consolidating  balance  sheets,  statements  of
operations and  statements of cash flows for Salant and any such  Subsidiary for
such  fiscal  year,  and  the  accompanying  notes  thereto,  setting  forth  in
comparative form figures for the previous fiscal year, all in reasonable detail,
fairly presenting the financial position and the results of operations of Salant
and any such  Subsidiary  as at the date  thereof  and for the fiscal  year then
ended, and prepared in accordance with GAAP consistently  applied.  Such audited
consolidated  statements  of Salant and its  Subsidiaries  shall be  examined in
accordance with generally  accepted  auditing  standards by and accompanied by a
report  thereon  unqualified  as  to  scope  of  independent   certified  public
accountants selected by Salant and satisfactory to Agent.

          (ii) As soon as available,  but in any event not later than sixty (60)
days after the close of each fiscal  quarter other than the fourth  quarter of a
fiscal year (which  shall be  delivered  within one  hundred  five (105)  days),
consolidated  and  consolidating  unaudited  balance  sheets of  Salant  and its
Subsidiaries as at the end of such quarter,  and consolidated and  consolidating
unaudited  statements of operations  and  statements of cash flow for Salant and
its  Subsidiaries  for such quarter and for the period from the beginning of the
fiscal year to the end of such  quarter,  together with the  accompanying  notes
thereto, all in reasonable detail,  fairly presenting the financial position and
results of operation of Salant and its  Subsidiaries  as at the date thereof and
for such periods, prepared in accordance with GAAP consistently applied (subject
to normal year-end adjustments) provided, however, that consolidating statements
shall be  provided  only with  respect  to Salant and any  Subsidiary  which has
material  business  activity or assets in the amount of $1,000,000 or more. Such
statements  shall be certified to be correct by the chief  financial  officer of
Salant, subject to normal year-end adjustments.

          (iii) As soon as available,  but in any event no later than sixty (60)
days after the close of each  fiscal  quarter  other than the fourth  quarter of
each  fiscal  year,  the Form 10-Q filed by  Borrower  with the  Securities  and
Exchange Commission.

          (iv)  As  soon  as  available,   but  in  any  event  not  later  than
seventy-five (75) days after the end of each January,  sixty (60) days after the
end of each  February,  and thirty (30) days after the end of each other  month,
consolidated  unaudited  balance sheets of Salant and its Subsidiaries as at the
end of such month,  and  consolidated  unaudited  statements of  operations  for
Salant and its Subsidiaries for such month and for the period from the beginning
of the fiscal year to the end of such month,  all in reasonable  detail,  fairly
presenting  the  financial  position  and results of operation of Salant and its
Subsidiaries  as at the date  thereof  and for such  periods,  and  prepared  in
accordance with GAAP  consistently  applied (except that such interim  financial
statements shall not include  accompanying  notes and shall be subject to normal
year-end  adjustments).  Such statements shall be certified to be correct by the
chief financial officer of Salant, subject to normal year-end adjustments.

          (v) With each of the audited financial  statements  delivered pursuant
to Section  7.20(a)(i) above, a certificate of the independent  certified public
accountants  that examined such statements to the effect that they have reviewed
and are familiar  with the  Financing  Agreements  and that,  in examining  such
financial  statements,  they did not become aware of any fact or condition which
then  constituted an Event of Default,  except for those,  if any,  described in
reasonable detail in such certificate.

<PAGE>

          (vi)  Simultaneously  with the delivery of each of the annual  audited
financial  statements and quarterly  Form 10-Q's as set forth herein,  Agent and
Lenders shall receive a certificate of the chief financial officer of Salant (A)
setting forth in reasonable  detail the calculations  required to establish that
Salant was in compliance  with the covenants set forth in Sections  7.21,  7.22,
7.23 and 7.24 hereof during the period covered in such  financial  statements or
Form 10-Q,  as the case may be; and (B) stating  that,  except as  explained  in
reasonable  detail  in  such  certificate,   (1)  all  of  the  representations,
warranties and covenants of Borrowers  contained in this Agreement and the other
Financing Agreements are correct and complete as at the date of such certificate
and (2) no Event of Default then exists or existed  during the period covered by
such financial  statements or Form 10-Q, as the case may be. If such certificate
discloses that a representation or warranty is not correct or complete,  or that
a covenant has not been complied  with,  or that an Event of Default  existed or
exists,  such  certificate  shall set forth what action  Borrowers have taken or
proposes to take with respect thereto.

          (vii) No sooner than ninety (90) days and no later than  fifteen  (15)
days  prior  to  the  beginning  of  each  fiscal  year  of  Salant,   projected
consolidated  balance  sheets,   consolidated  statements  of  operations,   and
consolidated  statements of cash flow for Salant and its  Subsidiaries as at the
end of and for each month of such fiscal year.

          (viii)  Promptly after delivery  thereof,  any management  letters and
reports by such independent  certified public  accountants to Salant  containing
financial  information  with respect to Salant  and/or its  Subsidiaries  or any
summary or analysis thereof.

          (ix) Collateral and financial reports and schedules to be delivered by
Borrowers as and when set forth on Schedule  7.20(a)(ix)  hereto,  together with
any further financial and other information  regarding the Collateral,  as Agent
may reasonably request from time to time.

          (b) Salant will,  and will cause each  Guarantor to,  promptly  notify
Lender in writing of any investigation,  action, suit, proceeding or claim which
if adversely  determined could reasonably be expected to have a Material Adverse
Effect.

          (c) Salant will,  and will cause each Guarantor to,  promptly  provide
Lender with any material information,  notices,  requests or reports filed with,
or furnished to, or received from any  governmental  or regulatory  authority or
furnished to the shareholders of Salant.

          (d) Salant shall promptly notify Agent of any of the following events:
(i) any Material  Contract of Salant or any of its Subsidiaries is terminated or
any new Material  Contract is entered into (in which event Salant shall  provide
Agent with a copy of such Material Contract);  or (ii) any of the material terms
(other  than  price)  upon  which  material  suppliers  of  Salant or any of its
Subsidiaries do business with Salant or any Subsidiary are changed or amended in
any manner  adverse to Salant or such  Subsidiary  in any material  respect;  or
(iii) any  notification  of violation of any law or  regulation  shall have been
received by Salant or any of its Subsidiaries  from any  Governmental  Authority
the results of which are reasonably likely to have a Material Adverse Effect.

<PAGE>

          (e) Salant shall  promptly  provide  Agent and Lenders  such  budgets,
forecasts,  projections and other information respecting the business operations
and financial or other condition of Salant and its  Subsidiaries,  as Agent may,
from time to time, reasonably request.

          (f) Agent and Lenders are hereby  authorized  to deliver a copy of any
financial  statement  or  any  other  information   relating  to  the  business,
operations or financial  condition of Salant or its  Subsidiaries,  which may be
furnished to it  hereunder or  otherwise,  to any  regulatory  body or agency or
other Governmental  Authority having  jurisdiction over Agent or Lenders or upon
notice to Salant (to the extent permitted under applicable law), to any court or
to any other  Person  which  shall,  or shall have any right or  obligation  to,
succeed  to all or any  part of Agent or any  Lender's  interests  in any of the
Loans, this Agreement,  the other Financing  Agreements or the Collateral or the
Guarantor Collateral,  including,  without limitation,  any assignee pursuant to
Section  11.6  hereof or any  Participant  who shall  have  agreed to treat such
information as confidential to the extent provided in Section 10.7 hereof.

          (g) Salant hereby irrevocably  authorizes and directs all accountants,
auditors  or other  third  parties to deliver to Agent upon  Agent's  reasonable
request,  at Salant's  expense,  copies of the financial  statements,  and other
accounting  records  relating  to Salant and its  Subsidiaries  of any nature in
their  possession and to disclose to Agent and any Lender any  information  they
may have  regarding the business  affairs and financial  condition of Salant and
its Subsidiaries.

         Section 7.21 Consolidated Tangible Net Worth. Salant shall maintain as
of the end of each fiscal quarter during each period set forth below
Consolidated Tangible Net Worth in an amount not less than the amount set forth
below opposite each such period:

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

                                             Minimum Consolidated
       Period                                 Tangible Net Worth
-------------------------------------------------------------------------------
-------------------------------------------------------------------------------

Beginning of the fourth
fiscal quarter of 2000 through
the end of the third fiscal
quarter of 2001                                 $55,000,000
-------------------------------------------------------------------------------
-------------------------------------------------------------------------------

Beginning of the fourth
quarter of 2001 and thereafter                   $60,000,000
===============================================================================

         Section 7.22 Minimum Pre-Tax Income. Except for the last fiscal quarter
of 2001 and the first fiscal quarter of 2002, Salant shall achieve cumulative
pre-tax income of at least $5,000,000 for each twelve month period through the
end of each fiscal quarter during the effectiveness of this Agreement on any
renewal hereof.

Notwithstanding anything to the contrary contained in this Section 7.22,
write-offs by Salant for intangible assets (including, without limitation,
trademarks and goodwill) which Salant would otherwise be required to include in
the determination of Salant's pre-tax loss or income under this Section 7.22
shall be excluded from such determinations.

<PAGE>

         Section 7.23 Minimum Interest Coverage Ratio. Salant shall not permit
the ratio of (a) the sum of (i) the consolidated net income (including royalty
income) from continuing operations (excluding any unusual or non recurring items
of income or expense) before interest and taxes and (ii) the consolidated
depreciation and amortization expenses of Salant and its Subsidiaries for such
computation period to (b) the consolidated interest expense (including all
imputed interest on Capitalized Lease Obligations) of Salant and its
Subsidiaries during the computation period, to be less than 5.0:1.00 for the
twelve month period through the end of the fourth fiscal quarter of 2000 and for
each twelve month period through the end of each fiscal quarter thereafter.

         Section 7.24 Capital Expenditures. Salant shall not, and shall not
permit any Subsidiary to, directly or indirectly, make, whether through
purchase, capital leases or otherwise, Capital Expenditures on a limited
cumulative basis in fiscal 1999 or in any fiscal year thereafter in excess of
(i) $8,000,000, plus (ii) in each year after fiscal 1999, fifty percent (50%) of
the $8,000,000 of Capital Expenditures permitted and not made in the fiscal year
immediately preceding such fiscal year; provided, that, in no event shall any
Capital Expenditures permitted and not made in one fiscal year be carried
forward and used in any fiscal year pursuant to clause (ii) hereof other than in
the immediately succeeding fiscal year.

         Section 7.25 After Acquired Real Property. If Salant or any of its
Subsidiaries hereafter acquires any Real Property, fixtures or any other
property that is of the kind or nature described in the Mortgages and such Real
Property, fixtures or other property at any one location has a fair market value
in an amount equal to or greater than $500,000 (or if an Event of Default, or
act, condition or event which with notice or passage of time or both would
constitute an event which with notice or passage of time or both would
constitute an Event of Default exists, then regardless of the fair market value
of such assets), or without limiting any other rights of Agent or Lenders, or
duties or obligations of Borrowers, upon Agent's request, Salant shall, or shall
cause its Subsidiary, to execute and deliver to Agent a mortgage, deed of trust
or deed to secure debt, as Agent may reasonably determine, in form and substance
substantially similar to the Mortgages and as to any provisions relating to
specific state laws satisfactory to Agent and in form appropriate for recording
in the real estate records of the jurisdiction in which such Real Property or
other property is located granting to Agent a first lien, mortgage and security
interest in such Real Property (except as would otherwise be permitted under the
Mortgages or as otherwise consented to in writing by Agent or as otherwise
permitted herein) and such other agreements, documents and instruments as Agent
may reasonably require in connection therewith.

<PAGE>

         Section 7.26 Further Assurances. Each Borrower has executed or will
contemporaneously herewith execute and deliver to Agent such of the other
Financing Agreements to which it is a party and financing statements pursuant to
the UCC, in form and substance reasonably satisfactory to Agent. Each Borrower
shall, and shall cause each Guarantor to, at Borrowers' expense, at any time or
times duly execute and deliver, or shall cause to be duly executed and
delivered, (a) such further agreements, instruments and documents, including,
without limitation, additional security agreements, mortgages, deeds of trust,
deeds to secure debt, collateral assignments, Uniform Commercial Code financing
statements or amendments or continuations thereof, and (b) on a best efforts
basis, Collateral Access Agreements with respect to the Collateral and the
Guarantor Collateral. In addition, each Borrower shall, and shall cause each
Guarantor to, do or cause to be done such further acts as may be necessary in
Agent's reasonable opinion to evidence, perfect, maintain and enforce its
security interests in the Collateral and Guarantor Collateral (other than that
portion of the Collateral and Guarantor Collateral consisting of registered or
licensed motor vehicles) and the priority thereof and to otherwise effectuate
the provisions or purposes of this Agreement or any of the other Financing
Agreements. Where permitted by law, each Borrower hereby authorizes Agent to
execute and file one or more Uniform Commercial Code financing statements
covering the Collateral and the Guarantor Collateral signed only by Agent. Upon
the request of Agent, at any time and from time to time, each Borrower shall,
and shall cause each Guarantor to, at its cost and expense, do, make, execute,
deliver and record, register or file, financing statements, mortgages, deeds of
trust, deeds to secure debt, and other instruments, acts, pledges, assignments
and transfers (or cause the same to be done) and will deliver to Agent such
instruments evidencing items of Collateral or Guarantor Collateral as may be
reasonably requested by Agent.

         Section 7.27 Borrowers Jointly and Severally Liable. Borrowers
acknowledge, covenant and agree that Borrowers are jointly and severally liable
for the payment and performance in full of all Obligations on the terms and
subject to the conditions set forth in his Agreement and the other Financing
Agreements.

SECTION 8.        EVENTS OF DEFAULT AND REMEDIES.

         Section 8.1       Events of Default

         The occurrence of any one or more of the following events shall
constitute an "Event of Default" hereunder:

                  (a) any Borrower shall fail to pay any of the Obligations when
due; or

                  (b) any representation, warranty or material statement of
fact, other than as set forth in Section 6.11 above, when made by or on behalf
of any Borrower or any Guarantor to Agent or any Lender is false or misleading
in any material respect; or

                  (c) any representation, warranty or material statement of fact
made by any Borrower as set forth in Section 6.11 above when made by or on
behalf of Borrower is false or misleading (any of the foregoing being
hereinafter referred to as a "Misrepresentation") and the actual facts and/or
circumstances with respect to which the Misrepresentation was made materially
and adversely affect the business, properties, operations or condition,
financial or otherwise, of Borrowers taken as a whole; or

                  (d) any Borrower or any Guarantor shall fail to observe or
perform any covenant or agreement contained in this Agreement, the other
Financing Agreements or in any other document or instrument referred to herein
or therein other than as described in Section 8.1(a) above; provided that if
such failure is capable of being remedied, such failure continues unremedied for
thirty (30) days after Agent has notified Salant thereof; or

<PAGE>

                  (e) an "event of default" (as defined in any of the other
Financing Agreements) shall occur; or

                  (f) Michael Setola ceases to be Chief Executive Officer of
Salant and within ninety (90) days thereof a replacement Chief Executive Officer
reasonably satisfactory to Agent is not appointed; or

                  (g) an event of default  shall occur and be continuing  under
any of the Perry Ellis Licenses that would enable Perry Ellis International Inc.
to terminate any one of the agreements set forth on Schedule 8.1(g); or

                  (h) any Borrower or any Guarantor shall default in the payment
of any amounts at any time due on any Indebtedness in excess of $1,000,000 at
any time owing to any one person other than Lenders or in the performance of any
other material term or covenant in respect of such Indebtedness or other
agreement relating thereto or securing same if the effect thereof is to
accelerate, or permit the holder(s) of such Indebtedness to accelerate the
maturity of such Indebtedness; or

                  (i) a judgment not covered by insurance of the Borrowers is
rendered against any Borrower or any Guarantor in excess of $300,000 in any one
case or in excess of $1,000,000 in the aggregate and the same shall remain
undischarged for a period in excess of forty-five (45) days or execution shall
at any time not be effectively stayed; or

                  (j) any Borrower or any Guarantor shall be generally unable to
pay its debts as they mature, suspend or discontinue doing business for any
reason, become insolvent, call a meeting of creditors or have a creditors'
committee appointed, or shall admit in writing its inability to pay its debts as
they become due or shall commence any action or proceeding for the appointment
of any trustee, receiver, custodian or liquidator of such Borrower or such
Guarantor of all or any part of their respective properties and assets; or

                  (k) any Borrower or any Guarantor shall commence any action or
proceeding for relief under the Bankruptcy Code or any reorganization,
arrangement, composition, readjustment, liquidation, dissolution or similar
relief under the Bankruptcy Code or any other present or future statute, law or
regulation or shall take any corporate action to authorize any of such actions
or proceedings; or

<PAGE>
                  (l) any Borrower or any Guarantor shall have commenced against
it any action or proceeding for relief under the Bankruptcy Code or any
reorganization, arrangement, composition, readjustment, liquidation, dissolution
or similar relief under the Bankruptcy Code or any other present or future
statute, law or regulation, or any action or proceeding for the appointment of
any trustee, receiver, custodian or liquidator of any Borrower or any Guarantor
or all or any part of their respective properties or assets, which is not
dismissed within sixty (60) days of its commencement, or any Borrower or any
Guarantor shall file any answer admitting or not contesting the allegations of a
petition filed against it in any such proceeding or by any act or omission
indicates its consent to, acquiescence in or approval of, any such action or
proceeding or if the relief requested is granted sooner; or

                  (m) any Guarantee or any other guarantee of the Obligations
shall at any time cease to be in full force and effect, or shall be declared
void or invalid or the validity or enforceability thereof shall be contested by
any Guarantor or any Guarantor shall deny it has any further liability or
obligation, or shall fail to perform its obligations, under any Guarantee; or

                  (n) any disputed claim as of the date of this Agreement of an
unsecured creditor that relates to litigation commenced against Salant prior to
the filing of Salant's chapter 11 bankruptcy case and (x) that is allowed in
Salant's chapter 11 bankruptcy case pursuant to a final order of the Bankruptcy
Court in an amount which is $3,000,000 or more than the insurance coverage, if
any, that has been agreed to by, or required to be paid by the applicable
insurance carrier for any such claim and (y) that requires payment in the amount
of $3,000,000 or more; or

                  (o) there shall be a material adverse change in the business,
properties, operations or condition, financial or otherwise, of Borrowers and
Guarantors taken as a whole after the date hereof.

         Section 8.2       Remedies.

                  (a) Without limiting Agent's rights to demand payment sooner,
for the ratable benefit of Lenders, as provided in this Agreement, upon or at
any time after the occurrence and continuance or existence of any one or more of
such Events of Default, upon termination of this Agreement or the other
Financing Agreements, or if this Agreement and the other Financing Agreements
are not renewed, in addition to any other rights Agent or any Lender may have
under the Financing Agreements or otherwise:

                         (i)  Agent  shall  at  the  request,  or may  with  the
consent,  of the  Majority  Lenders,  declare  the  Commitments  of each  Lender
terminated,  whereupon the Commitment of each Lender will terminate  immediately
(such  that no more  Loans  shall be made or  Letter  of  Credit  Accommodations
provided hereunder), without presentment for payment, demand, notice of dishonor
or notice of  protest or any other or  further  notice,  all of which are hereby
expressly waived by Borrower; and/or

                         (ii)  Agent  shall  at the  request,  or may  with  the
consent,  of the Majority  Lenders,  declare any or all of the Obligations to be
immediately  due and  payable,  together  with  interest at the highest  rate of
interest hereunder until fully and indefeasibly  paid,  without  presentment for
payment,  demand,  notice of dishonor or protest or any or other further notice,
all of which are hereby expressly waived by Borrowers (provided,  that, upon the
occurrence of any Events of Default described in Sections 8.1(k) or 8.1(l),  all
Obligations shall automatically become immediately due and payable); and

<PAGE>

                         (iii) without  further  notice to any Borrower,  Agent,
for the ratable benefit of Lenders,  may  appropriate,  set off and apply to the
payment of any or all of the Obligations,  any or all Collateral, in such manner
as Agent shall determine, enforce payment of any Collateral,  settle, compromise
or  release  in whole or in part,  any  amounts  owing on the  Collateral,  make
allowances and adjustments with respect thereto, issue credits in Agent's or any
Borrower's name, sell,  assign and deliver the Collateral (or any part thereof),
at  public or  private  sale,  at  broker's  board,  for  cash,  upon  credit or
otherwise,  at  Agent's  option  and  discretion,  and  Agent  may bid or become
purchaser at any such sale, if public,  free from any right of redemption  which
is hereby expressly waived;

                         (iv) without  limiting the generality of the foregoing,
Agent and Lenders are hereby  authorized  at any time and from time to time,  to
set off and apply any and all  deposits  (general  or  special,  time or demand,
provisional or final) at any time held and other  Indebtedness at any time owing
by Agent or any  Lender to or for the  credit  or the  account  of any  Borrower
against any and all of the Obligations, whether or not then due and payable;

                         (v) Agent,  for the ratable  benefit of Lenders,  shall
have the right,  without notice to any Borrower  (except as otherwise  expressly
provided herein),  at any time and from time to time in its discretion,  with or
without  judicial process or the aid or assistance of others and without cost to
Agent or  Lenders  (A) to  enter  upon any  premises  on or in which  any of the
Inventory or Equipment may be located and, without resistance or interference by
any Borrower,  take  possession  of the Inventory or Equipment,  (B) to complete
processing,  manufacturing  and repair of all or any portion of the Inventory or
Equipment, (C) to sell, foreclose or otherwise dispose of any part or all of the
Inventory  or Equipment on or in any premises of any Borrower or premises of any
other party, (D) to require any Borrower,  at its expense,  to assemble and make
available  to  Agent  any  part  or all of the  Inventory  or  Equipment  at any
reasonable  place and time designated by Agent,  and (E) to remove any or all of
the  Inventory  or  Equipment  from any  premises on or in which the same may be
located, for the purpose of effecting the sale, foreclosure or other disposition
thereof or for any other purpose.

                  (b) Agent, for the ratable benefit of Lenders, shall have all
of the rights and remedies of a secured party under the UCC or applicable law of
any State in which any Collateral may be situated, in addition to all of the
rights and remedies set forth in this Agreement and the other Financing
Agreements, and in any instrument or document referred to herein or therein,
and/or under any other applicable law relating to this Agreement, the other
Financing Agreements, the Obligations or the Collateral.

                  (c) Each Borrower agrees that the giving of ten (10) days
notice to such Borrower by Agent at such Borrower's address set forth below,
designating the place and time of any public sale or of the time after which any
private sale or other intended disposition of the Collateral is to be made,
shall be deemed to be reasonable notice thereof and each Borrower waives any
other notice with respect thereto.

<PAGE>

                  (d) The net cash proceeds resulting from the exercise of any
of the foregoing rights or remedies shall be applied by Agent, for the ratable
benefit of Lenders, to the payment of the Obligations in such order as Agent may
elect, and each Borrower shall remain liable to Agent and Lenders for any
deficiency. Without limiting the generality of the foregoing, if Agent, for the
ratable benefit of Lenders, enters into any credit transaction, directly or
indirectly, in connection with the disposition of any Collateral, it shall have
the option, at any time, in its discretion, to reduce the Obligations by the
principal amount of such credit transaction or to defer the reduction thereof
until actual receipt by Agent, for the ratable benefit of Lenders, of cash or
other immediately available funds in connection therewith.

                  (e) In the event Agent, for the ratable benefit of Lenders,
institutes an action to recover any Collateral or seeks recovery of any
Collateral by way of prejudgment remedy or otherwise, each Borrower hereby
irrevocably waives (i) the posting of any bond, surety or security with respect
thereto which might otherwise be required, (ii) any demand for possession prior
to the commencement of any suit or action to recover the Collateral, and (iii)
any requirement that Agent retain possession and not dispose of any Collateral
until after trial or final judgment.

                  (f) Agent may, at its option, cure any default by any Borrower
under any agreement with any Person, which constitutes, or with notice or
passage of time or both would constitute, an Event of Default hereunder or under
any of the other Financing Agreements, or pay or bond on appeal any judgment
entered against any Borrower (irrespective of the amount of said judgment or the
time elapsed since entry thereof), and charge such Borrower's account(s)
therefor, such amounts to be repayable by such Borrower on demand, together with
interest thereon at the highest rate of interest payable hereunder; provided,
however, Agent shall be under no obligation to effect such cure, payment or
bonding and shall not, by making any payment for such Borrower's account(s), be
deemed to have assumed any obligation or liability of such Borrower.

                  (g) The enumeration of the foregoing rights and remedies is
not intended to be exclusive, and such rights and remedies are in addition to
and not by way of limitation of any other rights or remedies Agent may have
under the UCC or other applicable law. Agent shall have the exclusive right to
determine which rights and remedies, and in which order any of the same, are to
be exercised, and to determine which Collateral is to be proceeded against and
in which order, and the exercise of any right or remedy shall not preclude the
exercise of any others, all of which shall be cumulative.

                  (h) No act, failure or delay by Agent or any Lender shall
constitute a waiver of any of the rights and remedies of Agent and Lenders. No
single or partial waiver by Agent or Lenders of any provision of this Agreement
or any of the other Financing Agreements, or breach or default thereunder, or of
any right or remedy which Agent and Lenders may have shall operate as a waiver
of any other provision, breach, default, right or remedy or of the same
provision, breach, default, right or remedy on a future occasion.

<PAGE>

                  (i) Each Borrower waives presentment, notice of dishonor,
protest and notice of protest of all instruments included in or evidencing any
of the Obligations or the Collateral and any and all notices or demands
whatsoever (except as expressly provided herein). Agent may, at all times, for
the ratable benefit of Lenders, proceed directly against Borrower to enforce
payment of the Obligations and shall not be required to take any action of any
kind to preserve, collect or protect any rights in the Collateral

SECTION 9.        COLLECTION AND ADMINISTRATION

         Section 9.1       Collections; Management of Collateral.

                  (a) All invoices evidencing Accounts shall indicate that
remittances with respect thereto are to be made to Borrowers at the address of a
lock box controlled by the Agent pursuant to an agreement between Agent and the
Reference Bank (as it may be amended, the "Lock Box Agreement"), of which
address if different from the address of such lock box to which remittances are
currently made, Agent shall notify Salant in writing. All such remittances shall
be deposited in Agent's account with the Reference Bank pursuant to the Lock Box
Agreement (the "Payment Account").

                  (b) Any checks or other forms of remittance which may be
received directly by any Borrower in respect of the Accounts and other
Collateral shall not be commingled with such Borrower's property, but shall be
segregated, held by such Borrower in trust for Agent as the exclusive property
of Agent, for the ratable benefit of Lenders, and immediately deposited by such
Borrower, in the identical form received, with proper endorsements, into such
account or accounts as Agent may designate from time to time. All funds received
by Agent in respect of Accounts or other Collateral by wire transfer of federal
funds or in other immediately available funds will be credited to the Payment
Account upon receipt of such funds. All amounts received by Agent in respect of
Accounts or other Collateral in remittances which are not immediately available,
will be credited to the Payment Account as and when such remittances have become
immediately available. All bank fees and expenses relating to the Payment
Account, the Lock Box Agreement and the Blocked Accounts (as defined below)
shall be charged to any of Borrower's account(s) maintained by Agent. Each
Borrower shall jointly and severally indemnify and hold Agent harmless from and
against any and all losses, costs, damages and expenses (including reasonable
attorneys' fees and disbursements) incurred by Agent in connection with the Lock
Box Agreement, the Blocked Accounts or the ownership or maintenance of such lock
box or the deposit, collection or processing of any item deposited therein.

<PAGE>
                  (c) In addition to, and not in limitation of the provisions
contained in Sections 9.1(a) and (b) hereof, each Borrower shall, at its
expense, in the manner requested by Agent from time to time, direct that all
proceeds of Accounts, letters of credit, banker's acceptances and other proceeds
of Collateral (i) be payable to a lock box or post office box designated by
Agent and under its control and/or deposited into an account maintained in
Agent's name and under its control and in connection therewith shall execute
such lock box and other agreement as Agent in its discretion shall specify,
and/or (ii) be remitted to blocked accounts ("Blocked Accounts") with such banks
as are acceptable to Agent. The banks at which the Blocked Accounts are
established shall enter into an agreement, in form and substance satisfactory to
Agent, providing that all items received or deposited in the Blocked Accounts
are the property of Agent and Lenders according to their interests hereunder,
that the depository bank has no lien upon, or right to setoff against, the
Blocked Accounts, the items received for deposit therein, or the funds from time
to time on deposit therein and that the depository bank will wire, or otherwise
transfer, in immediately available funds, on a daily basis, all funds received
or deposited into the Blocked Accounts to such bank account of Agent as Agent
may from time to time designate for such purpose. Each Borrower agrees that all
payments made to such Blocked Accounts or other funds received and collected by
Agent, whether on the Accounts or as proceeds of Inventory, Equipment or other
Collateral or otherwise shall be the property of Agent and Lenders according to
their interests hereunder.

         Section 9.2       Payments.

                  (a) All Obligations shall be payable to the Payment Account as
designated under Section 9.1 or such other place as Agent may designate from
time to time. The Obligations shall be payable upon the effective date of
termination or non-renewal or maturity of the Credit Facility, or earlier upon
an Event of Default, or otherwise as provided elsewhere herein or in the other
Financing Agreements. Agent may apply payments received or collected from any
Borrower or for the account of any Borrower (including, without limitation, the
monetary proceeds of collections or of realization upon any Collateral) to such
of the Obligations in respect of the Loans, whether or not then due, and to such
other Obligations then due, in each case in such order and manner as Agent
determines. Agent shall have the continuing and exclusive right to apply and
reverse and reapply any and all such proceeds and payments to any portion of the
Obligations. Upon the request of Agent, each Borrower shall execute and deliver
to Agent one or more promissory notes, in form and substance satisfactory to
Agent, to evidence further the Loans, or any portion thereof.

                  (b) Except as otherwise provided in this Section 9.2(b),
aggregate principal and interest payments shall be apportioned among all
outstanding Loans to which such payments relate and payments of the fees
required to be paid by Borrowers to Agent for the account of the Lenders
hereunder shall, as applicable, be apportioned ratably among the Lenders, in
each case according to their Pro Rata Shares. All payments shall be remitted to
Agent. Agent shall distribute to each Lender at its primary address set forth on
the appropriate signature page hereof, or at such other address as such Lender
may designate in writing to Agent, such funds as it may be entitled to receive
in the manner provided in Section 3.12. The foregoing apportionment of payments
is solely for the purpose of determining the obligations of Borrowers hereunder
and, notwithstanding such apportionment, any Lender may on its books and records
allocate payments received by it in a manner different from that contemplated
hereby. No such different allocation shall alter the rights and obligations of
Borrowers under this Agreement determined in accordance with the apportionments
contemplated by this Section 9.2(b).

<PAGE>

                 (c) If after receipt of any payment of, or proceeds applied to
the payment of, all or any part of the Obligations, Agent or any Lender is for
any reason required to surrender such payment or proceeds to any Person, because
such payment or proceeds is invalidated, declared fraudulent, set aside,
determined to be void or voidable as a preference, or a diversion of trust
funds, or for any other reason, then the Obligations or any part thereof
intended to be satisfied shall be revived, reinstated and continue and this
Agreement shall continue in full force as if such payment or proceeds had not
been received by Agent or such Lender and Borrowers shall be jointly and
severally liable to pay to Agent or such Lender, and hereby does indemnify Agent
and Lenders and hold them harmless for the amount of such payment or proceeds
surrendered. The provisions of this Section 9.2(c) shall be and remain effective
notwithstanding any contrary action which may have been taken by Agent or any
Lender in reliance upon such payment or proceeds, and any such contrary action
so taken shall be without prejudice to the rights of Agent and Lenders under
this Agreement and shall be deemed to have been conditioned upon such payment or
proceeds having become final and irrevocable. The provisions of this Section
9.2(c) shall survive the termination of this Agreement and the other Financing
Agreements.

                  (d) At Agent's option, all principal, interest, fees,
commissions, costs, expenses, or other charges hereunder, under the other
Financing Agreements or in connection herewith or therewith, and any and all
Loans, may be charged directly to any account(s) of any Borrower maintained by
Agent.

                  (e) Each Borrower shall make all payments in respect of the
Obligations free and clear of, and without deduction or withholding for or on
account of, any setoff, counterclaim, defense, duties, taxes, levies, imposts,
fees, deductions, withholdings, restrictions or conditions of any kind or nature
whatsoever.

         Section 9.3       Sharing of Payments, Etc.

                  (a) Each Borrower agrees that, in addition to (and without
limitation of) any right of setoff, banker's lien or counterclaim Agent or any
Lender may otherwise have, each Lender shall be entitled, at its option, to
offset balances held by it for the account of such Borrower at any of its
offices, in dollars or in any other currency, against any principal of or
interest on any Loans owed to such Lender or any other amount payable to such
Lender hereunder, that is not paid when due (regardless of whether such balances
are then due to such Borrower), in which case it shall promptly notify such
Borrower and Agent thereof; provided, that, such Lender's failure to give such
notice shall not affect the validity thereof.

<PAGE>
                  (b) If any Lender (including Agent) shall obtain from any
Borrower payment of any principal of or interest on any Loan owing to it or
payment of any other amount under this Agreement or any other Financing
Agreement through the exercise of any right of setoff, banker's lien or
counterclaim or similar right or otherwise (other than from Agent as provided
herein), and, as a result of such payment, such Lender shall have received more
than its Pro Rata Share of the principal of or interest on the Loans or such
other amounts then due hereunder by Borrowers to such Lender, it shall promptly
pay to Agent, for the benefit of Lenders, the amount of such excess and
simultaneously purchase from such other Lenders a participation in the Loans or
such other amounts, respectively, owing to such other Lenders (or in interest
due thereon, as the case may be) in such amounts, and make such other
adjustments from time to time as shall be equitable, to the end that all Lenders
shall share the benefit of such excess payment (net of any expenses that may be
incurred by such Lender in obtaining or preserving such excess payment) in
accordance with their respective Pro Rata Shares. Amounts received by Agent
under this Section 9.3 shall be treated as payments received from Borrowers
under Section 9.2 hereof. To such end all Lenders shall make appropriate
adjustments among themselves (by the resale of participation sold or otherwise)
if such payment is rescinded or must otherwise be restored.

                  (c) Each Borrower agrees that any Lender so purchasing such a
participation (or direct interest) may exercise, in a manner consistent with
this Section 9.3, all rights of setoff, banker's lien, counterclaim or similar
rights with respect to such participation as fully as if such Lender were a
direct holder of Loans or other amounts (as the case may be) owing to such
Lender in the amount of such participation.

                  (d) Nothing contained herein shall require any Lender to
exercise any such right or shall affect the right of any Lender to exercise, and
retain the benefits of exercising, any such right with respect to any other
indebtedness or obligation of Borrowers. If, under any applicable bankruptcy,
insolvency or other similar law, any Lender receives a secured claim in lieu of
a setoff to which this Section 9.3 applies, such Lender shall, to the extent
practicable, assign such rights to Agent for the benefit of Lenders and, in any
event, exercise its rights in respect of such secured claim in a manner
consistent with the rights of Lenders entitled under this Section 9.3 to share
in the benefits of any recovery on such secured claim.

         Section 9.4 Borrower's Loan Account. (A) Subject to the provisions of
subsection(B) of this Section 9.4, Agent shall maintain one or more loan
account(s) on its books in which shall be recorded (a) all Loans, Letter of
Credit Accommodations and other Obligations and the Collateral, (b) all payments
made by or on behalf of any Borrower and (c) all other appropriate debits and
credits as provided in this Agreement, including, without limitation, fees,
charges, costs, expenses and interest. All entries in the loan account(s) shall
be made in accordance with Agent's customary practices as in effect from time to
time. All Collateral or other collateral security held by or granted to Agent or
Lenders by any Borrower or any third persons shall be security for the payment
and performance of any and all Obligations of Borrowers to Agent and Lenders
(including, but not limited to, the Loans), notwithstanding the maintenance of
separate accounts for each Borrower or third persons or the existence of the
Revolving Credit Notes or any other notes.

<PAGE>

                  B. In order to utilize the collective borrowing powers of the
Borrowers (collectively the "Collective Borrowers") in the most efficient and
economical manner, and in order to facilitate the handling of the accounts of
the Collective Borrowers on the Agent's books, the Collective Borrowers have
requested, and the Agent has agreed, notwithstanding anything to the contrary
contained in this Agreement, to handle accounts of the Collective Borrowers on
the Agent's books on a combined basis, all in accordance with the following
provisions: (a) In lieu of maintaining separate accounts on the Agent's books in
the name of each of the Collective Borrowers, the Agent shall maintain one
account under the name: Salant (herein the "Collective Account"). Confirmatory
assignments of Accounts will continue to be made to the Agent by each of the
Collective Borrowers. Loans and advances made by the Agent to any of the
Collective Borrowers will be charged to the Collective Account indicated above,
along with any charges and expenses under this Agreement. The Collective Account
will be credited, with all amounts received by the Agent from any of the
Collective Borrowers or from others for their account including all amounts
received by the Agent in payment of Accounts assigned to the Agent as provided
in this Agreement; (b) Each month the Agent will render to the Collective
Borrowers one extract of the combined Collective Account, which shall be deemed
to be an account stated as to each of the Collective Borrowers and which will be
deemed correct and accepted by all of the Collective Borrowers unless the Agent
receives a written statement of exceptions from them within sixty (60) days
after such extract has been mailed by the Agent. It is expressly understood and
agreed by each of the Collective Borrowers that the Agent shall have no
obligation to account separately to any of the Collective Borrowers; (c)
Requests for Loans and advances may be made by Salant as agent for the
Collective Borrowers and the Agent is hereby authorized and directed to accept,
honor and rely on such instructions and requests, subject to the limitation and
provisions set forth in this Agreement. It is expressly understood and agreed by
each of the Collective Borrowers that the Agent shall have no responsibility to
inquire into the correctness of the apportionment, allocation, or disposition of
(x) any Loans and advances made to any of the Collective Borrowers or (y) any of
the Agent's expenses and charges relating thereto. All Loans and advances are
made for the Collective Account; (d) The Collective Borrowers jointly and
severally unconditionally guarantee to the Agent and the Lenders the prompt
payment in full of (A) all Loans and advances made and to be made by the Agent
and/or the Lenders to any of them under this Agreement, as well as (B) all other
Obligations of the Collective Borrowers to the Agent and/or the Lenders and
hereby expressly confirm in all respects the Guaranties executed by each of the
Collective Borrowers in the Agent's and/or the Lenders' favor as more fully set
forth therein; (e) All Accounts assigned to the Agent for the benefit of the
Lenders by any of the Collective Borrowers and any other collateral security now
or hereafter given to the Agent and/or the Lenders by any of the Collective
Borrowers (be it Accounts or otherwise), shall secure all Loans and advances
made by the Agent and/or the Lenders to any of the Collective Borrowers, and
shall be deemed to be pledged to the Agent as security for any and all other
Obligations of the Collective Borrowers to the Agent and/or the Lenders as set
forth under this Agreement, the Guaranties, or any other agreements between the
Agent and/or the Lenders and any of the Collective Borrowers; (f) It is
understood that the handling of the accounts of the Collective Borrowers in a
combined fashion, as more fully set forth herein, is done solely as an
accommodation to the Collective Borrowers and at their request, and that the
Agent shall incur no liability to the Collective Borrowers as a result hereof.
To induce the Agent and the Lenders to do so, and in consideration thereof, each
of the Collective Borrowers hereby agrees to indemnify the Agent and the Lenders
and hold the Agent and the Lenders harmless against any and all liability,
expense, loss or claim of damage or injury, made against the Agent and/or the
Lenders by any of the Collective Borrowers or by any third party whosoever,
arising from or incurred solely by reason of (1) the method of handling the
accounts of the Collective Borrowers as herein provided, (2) the Agent relying
on any instructions of any of the Collective Borrowers, or (3) any other action
taken by the Agent in accordance with this subparagraph (b) of Paragraph 3.6 of
Section 3 of this Agreement; and (g) The foregoing request was made because the
Collective Borrowers are engaged in an integrated operation that requires
financing on a basis permitting the availability of credit from time to time to
each of the Collective Borrowers as required for the continued successful
operation of each of the Collective Borrowers. Each of the Collective Borrowers
expects to derive benefit, directly or indirectly, from such availability since
the successful operation of each of the Collective Borrowers is dependent on the
continued successful performance of the functions of the integrated group. In
addition, the Companies have informed the Agent that:

<PAGE>

         (A) Salant, in order to increase the efficiency and productivity of
         each of the other Collective Borrowers, has centralized in itself a
         cash management system which entails, in part, central disbursement and
         operating accounts in which it provides the working capital needs of
         each of the other Collective Borrowers and manages and timely pays the
         accounts payable of each of the other Collective Borrowers;

         (B) Salant, is further enhancing the operating efficiencies of the
         other Collective Borrowers by purchasing, or causing to be purchased,
         in its name for its account all materials, supplies, inventory and
         services required by the other Collective Borrower which will result in
         reducing the operating costs of the other Collective Borrowers; and

         (C) Since all of the Collective Borrowers are now engaged in an
         integrated operation that requires financing on an integrated basis and
         since each Collective Borrower expects to benefit from the continued
         successful performance of such integrated operations and in order to
         best utilize the collective borrowing powers of each Collective
         Borrower in the most effective and cost efficient manner and to avoid
         adverse effects on the operating efficiencies of each Collective
         Borrower and the existing back-office practices of the Collective
         Borrowers, each Collective Borrower has requested that all Loans and
         advances be disbursed solely upon the request of Salant and to bank
         accounts managed solely by Salant and that Salant will manage for the
         benefit of each Collective Borrower the expenditure and usage of such
         funds.

         Section 9.5       [Intentionally Omitted]

         Section 9.6 Right of Inspection; Access. Agent, Lenders and their
representatives shall, at any time during regular business hours after
reasonable notice to Salant prior to an Event of Default and at any time and
without notice on or after an Event of Default, have free access to and right of
inspection of the Collateral and have full access to and the right to examine
and make copies of the books and records of Borrowers to confirm and verify all
Accounts, to perform general audits and to do whatever else Agent or any Lender
deems necessary to protect the interests of Agent and Lenders. Agent may at any
time after the declaration by Agent of an Event of Default, and during the
continuance thereof, remove from the premises of any Borrower or require any
Borrower or any accountants and auditors employed by any Borrower to deliver any
books and records and Agent and Lenders may, without cost or expense to any of
them, use such of any Borrower's personnel, supplies, computer equipment and
space at its places of business as may be necessary for the handling of
collections.

<PAGE>

         Section 9.7 Accounts Documentation. Each Borrower shall maintain its
shipping forms, invoices and other related documents in a form satisfactory to
Agent and each Borrower shall maintain its books, records and accounts in
accordance with GAAP consistently applied. Each Borrower shall keep and
maintain, at its cost and expense, satisfactory and complete books and records
of all Accounts, all payments received or credits granted thereon, and all other
dealings therewith. At such times as Agent may request, each Borrower shall
deliver to Agent, all original documents evidencing the sale and delivery of
goods or the performance of services which created any Accounts, including, but
not limited to, all contracts, orders, invoices, bills of lading, warehouse
receipts, delivery tickets and shipping receipts, together with schedules
describing the Accounts and/or written confirmatory assignments to Agent of each
Account, in form and substance satisfactory to Agent and duly executed by
Borrower, together with such other information as Agent may request. In no event
shall the making or the failure to make or the content of any schedule or
assignment or any Borrower's failure to comply with the provisions hereof be
deemed or construed as a waiver, limitation or modification of the security
interest in, lien upon and assignment of the Collateral or the representations,
warranties or covenants under this Agreement or the other Financing Agreements.

         Section 9.8 Specific Powers. Each Borrower hereby constitutes Agent and
its designees, as such Borrower's attorney-in-fact, with power of substitution,
at the cost and expense of such Borrower, to exercise at any time all or any of
the following powers which appointment, being coupled with an interest, shall be
irrevocable until all Obligations have been indefeasibly paid in full: (a) to
receive, take, endorse, assign, deliver, accept and deposit, in the name of
Agent or such Borrower, any and all checks, notes, drafts, remittances and other
instruments and documents or chattel paper relating to the Collateral; (b) on or
after the occurrence of an Event of Default, or an act, condition or event which
with notice, passage of time or both would constitute an Event of Default, to
receive, open and dispose of all mail addressed to such Borrower and to notify
postal authorities to change the address for delivery thereof to such address as
Agent designates; (c) to transmit to Account Debtors notice of Agent's interest
therein and to request from such Account Debtors at any time, in the name of
Agent or such Borrower or that of Agent's designee, information concerning the
Collateral and the amounts owing thereon; (d) on or after the occurrence of an
Event of Default, or an act, condition or event which with notice, passage of
time or both would constitute an Event of Default, to notify Account Debtors to
make payment directly to Agent; (e) on or after the occurrence of an Event of
Default, or an act, condition or event which with notice, passage of time or
both would constitute an Event of Default, to take or bring, in the name of
Agent or such Borrower, all steps, actions, suits or proceedings deemed by Agent
necessary or desirable to effect collection of the Collateral; and (f) to
execute in such Borrower's name and on its behalf any UCC financing statements
or amendments thereto. Each Borrower hereby releases Agent and its officers,
employees and designees, from any liability arising from any act or acts under
this Agreement or in furtherance thereof, whether of omission or commission, and
whether based upon any error of judgment or mistake of law or fact, except for
acts of gross negligence or wilful misconduct of Agent as determined pursuant to
a final non-appealable order of a court of competent jurisdiction.

<PAGE>

         Section 9.9 Returns, Credits and Allowances. Each Borrower agrees to
issue credit memoranda promptly upon accepting returns or granting allowances,
and may continue to do so until (i) the occurrence and during the continuance of
an Event of Default and (ii) Agent has notified Salant that such credits or
allowances are to be made only after Agent's prior written approval. Upon the
occurrence and during the continuance of an Event of Default and on notice from
Agent, each Borrower agrees that all returned, reclaimed or repossessed
merchandise or goods shall be set aside by such Borrower, marked with Agent's
name and held by such Borrower for Agent's account as owner and assignee for the
ratable benefit of Lenders. If Agent so requests, each Borrower agrees promptly
to pay Agent the fair market value thereof, or if Agent so elects, such Borrower
will deliver such merchandise or goods to Agent or sell same for such Borrower's
account; provided, however, that prior to the occurrence of an Event of Default,
such Borrower shall have the right to sell or otherwise dispose of such goods on
terms acceptable to such Borrower without notice to Agent.

SECTION 10        EFFECTIVE DATE; TERMINATION; COSTS

         Section 10.1      Term.

                  (a) This Agreement and the other Financing Agreements shall
become effective as of the date hereof and shall continue in full force and
effect for a term ending on May 11, 2002 (the "Renewal Date") and from year to
year thereafter, unless sooner terminated pursuant to the terms hereof;
provided, that, Agent, any Lender (as to such Lender), or Borrower may terminate
this Agreement and the other Financing Agreements effective on the Renewal Date
or on the anniversary of the Renewal Date in any subsequent year by giving to
the other parties hereto at least forty-five (45) days prior written notice;
provided that, upon payment of the early termination fee provided for in Section
10.1(e) hereof, Salant may terminate this Agreement and the other Financing
Agreements at any time by giving the other parties hereto at least forty-five
(45) days prior written notice of such termination; provided, that, in the event
any one Lender shall send a notice of its intention to terminate this Agreement
as to such Lender, any of the other Lenders may upon receipt of such notice
purchase the Commitment of the Lender sending such notice of termination. Upon
the exercise of the option to purchase such Commitment by any Lender and upon
payment in full to the terminating Lender of the amounts owing to it by the
purchasing Lender in accordance with Section 11.6, the Lender sending such
notice of termination shall assign its rights and obligations under this
Agreement and the other Financing Agreements to the Lender exercising such
option in accordance with Section 11.6 hereof. This Agreement and all other
Financing Agreements must be terminated simultaneously.

                  (b) In addition, Agent may, upon the consent of the Majority
Lenders, and upon the direction of the Majority Lenders shall, terminate this
Agreement and the other Financing Agreements, or terminate only the provisions
of this Agreement as to future Loans and Letter of Credit Accommodations,
immediately at any time upon the occurrence of an Event of Default or an act,
condition or event which with notice or passage of time or both would constitute
an Event of Default.

<PAGE>

                  (c) Upon the effective date of termination or non-renewal of
the Financing Agreements (the "Termination Date"), Borrowers shall pay to Agent
for the account of Lenders in full, all outstanding and unpaid Obligations
(including, but not limited to, the Loans and all interest, fees charges,
expenses and other amounts provided for hereunder, under the other Financing
Agreements or otherwise) and shall furnish cash collateral to Agent in such
amounts as Agent determines are reasonably necessary to secure Agent and Lenders
from loss, cost, damage or expense, including reasonable attorneys' fees and
legal expenses, in connection with any contingent Obligations, including Letter
of Credit Accommodations and any checks or other payments provisionally credited
to the Obligations and/or as to which Agent or any Lender has not yet received
full and final payment. Such payments in respect of the Obligations and cash
collateral shall be remitted by wire transfer in Federal funds to such bank
account of Agent, as Agent may, in its discretion, designate in writing to
Salant for such purpose. Interest at the Interest Rate shall be due until and
including the next Business Day, if the amounts so paid by Salant to the bank
account designated by Agent are received in such bank account later than 12:00
noon, New York, New York time.

                  (d) No termination of the Financing Agreements or the
Commitments shall relieve or discharge any of Borrowers or Guarantors of their
respective duties, obligations and covenants under the Financing Agreements
until all Obligations have been fully discharged and paid, and the continuing
security interests of Agent in the Collateral shall remain in effect until all
such Obligations have been fully discharged and paid.

                  (e) If this Agreement terminates upon the occurrence of an
Event of Default or at the request of Salant prior to the Renewal Date, in view
of the impracticality and extreme difficulty of ascertaining actual damages and
by mutual agreement of the parties as to a reasonable calculation of the lost
profits of Agent and Lenders as a result thereof, Borrowers hereby agree to pay
to Agent for the ratable benefit of Lenders, upon the effective date of such
termination, an early termination fee in an amount equal to:

                         (i) two (2%)  percent of the  average  aggregate  daily
balance of Loans and Letter of Credit Accommodations  outstanding for the twelve
(12)  month  period  prior  to the  Termination  Date,  if such  termination  is
effective after the date of this Agreement but on or prior to May 11, 2001; or

                         (ii) one (1%)  percent of the average  aggregate  daily
balance of Loans and Letter of Credit Accommodations  outstanding for the twelve
(12)  month  period  prior  to the  Termination  Date,  if such  termination  is
effective after May 11, 2001 but prior to May 11, 2002.

Such early termination fee shall be presumed to be the amount of damages
sustained by said early termination and each Borrower agrees that it is
reasonable under the circumstances currently existing. The early termination fee
provided for in this Section 10.1 shall be deemed included in the Obligations.

         Section 10.2      Expenses and Additional Fees.

<PAGE>

                  (a) Borrowers shall pay to Agent on demand all reasonable
costs and expenses that Agent or any Lender may pay or incur in connection with
the negotiation, preparation, consummation, administration, enforcement, and
termination of this Agreement and the other Financing Agreements, including,
without limitation: (i) reasonable attorneys' and paralegals' fees and
disbursements of counsel to Agent, Lenders and any Participant; (ii) costs and
expenses (including reasonable attorneys' and paralegals' fees and
disbursements), and for any amendment, supplement, waiver, consent, or
subsequent closing in connection with the Financing Agreements and the
transactions contemplated thereby; (iii) costs and expenses of lien and title
searches and title insurance; (iv) taxes, fees and other charges for recording
any agreements or documents with the Office of Patents and Trademarks, the
Copyright Office or any other governmental authority, and the filing of UCC
financing statements and continuations, and other actions to perfect, protect,
and continue the security interests and liens of Lenders in the Collateral; (v)
sums paid or incurred to pay any amount or take any action required of any
Borrower under the Financing Agreements that such Borrower fails to pay or take;
(vi) costs of appraisals, environmental audits, inspections, and verifications
of the Collateral, including, without limitation, travel, lodging, and meals for
inspections of the Collateral and each Borrower's operations by Agent, any
Lender or their agents, plus a charge of $750 per person per day for the field
examiners of Agent and any Lender; (vii) costs and expenses of forwarding loan
proceeds, collecting checks and other items of payment, and establishing and
maintaining payment accounts and lock boxes; (viii) costs and expenses of
preserving and protecting the Collateral; and (ix) costs and expenses (including
reasonable attorneys' and paralegals' fees and disbursements) paid or incurred
to obtain payment of the Obligations, enforce the security interests and liens
of Agent, sell or otherwise realize upon the Collateral, and otherwise enforce
the provisions of this Agreement and the other Financing Agreements, or to
defend any claims made or threatened against Agent or any Lender arising out of
the transactions contemplated hereby (including, without limitation,
preparations for and consultations concerning any such matters). The foregoing
shall not be construed to limit any other provisions of the Financing Agreements
regarding costs and expenses to be paid by any Borrower.

                  (b) Borrowers shall pay to Agent all of its customary charges
and fees in connection with (i) any payment, claim or refund relating to the
dishonor of any checks or other items of any Borrower or Account Debtors, and
(ii) wire transfers to any Borrower.

                  (c) All sums provided for in this Section 10.2 shall be part
of the Obligations, shall be payable on demand, and shall accrue interest after
demand for payment thereof at the applicable rate of interest then payable
hereunder. Agent is hereby irrevocably authorized to charge any amounts payable
hereunder directly to any of the account(s) maintained by Agent with respect to
Borrowers.

         Section 10.3 Survival of Agreement. All agreements, representations and
warranties contained herein or made in writing by the parties hereto in
connection with the transactions contemplated hereby shall survive the execution
and delivery of this Agreement, the other Financing Agreements and the
consummation of the transactions contemplated herein or therein regardless of
any investigation made by or on behalf of Agent or any Lender.

<PAGE>

         Section 10.4 No Waiver; Cumulative Remedies. No failure to exercise,
and no delay in exercising on the part of Agent or any Lender any right, power
or privilege under this Agreement or under any of the other Financing Agreements
or other documents referred to herein or therein shall operate as a waiver
thereof; nor shall any single or partial exercise of any right, power or
privilege hereunder or thereunder preclude any other or further exercise thereof
or the exercise of any other right, power and privilege. No notice to or demand
on any of Borrowers or Guarantors required hereunder or any under the other
Financing Agreements shall entitle any of Borrowers or Guarantors to any other
or further notice or demand in similar or other circumstances or constitute a
waiver of the rights of Agent or any Lender to any other or further action in
any circumstances without notice or demand. The rights and remedies of Agent and
Lenders under this Agreement, the other Financing Agreements and any other
present and future agreements between Agent and/or Lenders and any Borrower or
Agent and/or Lenders and Guarantors are cumulative and not exclusive of any
rights or remedies provided by law or under any of the Financing Agreements or
such other agreements and all such rights and remedies may be exercised
successively or concurrently.

         Section 10.5 Notices. All notices, requests and demands hereunder shall
be in writing and, if made to Salant, shall constitute a notice, request or
demand, as the case may be, to or upon Holdings to the extent applicable to
Holdings, and shall be (a) made to the applicable party at its address set forth
on the signature page hereof, or to such other address as either party may
designate by written notice to the other in accordance with this provision, and
(b) deemed to have been given or made: if delivered in person, immediately upon
delivery; if by telex, telegram or facsimile transmission, immediately upon
sending and upon confirmation of receipt; if by nationally recognized overnight
courier service with instructions to deliver the next Business Day, one (1)
Business Day after sending; and if by certified mail, return receipt requested,
ten (10) days after mailing.

         Section 10.6 Entire Agreement. This Agreement (which amends and
restates the Existing Credit Agreement in its entirety), the other Financing
Agreements, any supplements hereto or thereto, and any instruments or documents
delivered or to be delivered in connection herewith or therewith represent the
entire agreement and understanding concerning the subject matter hereof and
thereof between the parties hereto, and, except for (i) existing UCC-1 Financing
Statements heretofore filed by CIT against Salant and Guarantors and (ii) the
Mortgages supersede all other prior and contemporaneous agreements,
understandings, negotiations and discussions, representations, warranties,
commitments, offers and contracts concerning the subject matter hereof and
thereof, whether oral or written.

         Section 10.7      Confidentiality.

                  (a) Agent and each Lender shall use all reasonable efforts to
keep confidential, in accordance with its customary procedures for handling
confidential information and safe and sound lending practices, any non-public
information supplied to it by any Borrower pursuant to this Agreement which is
clearly and conspicuously marked as confidential at the time such information is
furnished by such Borrower to Agent and Lenders, provided, that, nothing
contained herein shall limit the disclosure of any such information: (i) to the
extent required by statute, rule, regulation, subpoena or court order, (ii) to
bank examiners and other regulators, auditors and/or accountants, (iii) in
connection with any litigation to which Agent or any Lender is a party, (iv) to
any Affiliate of Agent or any Lender, (v) to any assignee or Participant (or
prospective assignee or Participant) so long as such assignee or Participant (or
prospective assignee or Participant) shall have first agreed in writing to treat
such information as confidential in accordance with this Section 10.7, or (vi)
to counsel for Agent or any Lender or any Participant or assignee (or
prospective Participant or assignee).

<PAGE>
                  (b) In no event shall this Section 10.7 or any other provision
of this Agreement or applicable law be deemed: (i) to apply to or restrict
disclosure of information that has been or is made public by any Borrower or any
third party without breach of this Section 10.7 or otherwise becomes generally
available to the public other than as a result of a disclosure in violation
hereof, (ii) to apply to or restrict disclosure of information that was or
becomes available to Agent or any Lender on a non-confidential basis from a
person other than a Borrower, (iii) require Agent or any Lender to return any
materials furnished by a Borrower to Agent or such Lender or (iv) prevent Agent
or any Lender from responding to routine informational requests in accordance
with the Code of Ethics for the Exchange of Credit Information promulgated by
The Robert Morris Associates or other applicable industry standards relating to
the exchange of credit information. The obligations of Agent and Lenders under
this Section 10.7 shall supersede and replace the obligations of (i) CIT under
the Existing Agreement and (ii) Agent and Lenders under any confidentiality
letter signed prior to the date hereof.

         Section 10.8 Partial Invalidity. If any provision of this Agreement or
the other Financing Agreements is held to be invalid or unenforceable, such
invalidity or unenforceability shall not invalidate this Agreement or the other
Financing Agreements as a whole but this Agreement or the particular Financing
Agreement, as the case may be, shall be construed as though it did not contain
the particular provision or provisions held to be invalid or unenforceable and
the rights and obligations of the parties shall be construed and enforced only
to such extent as shall be permitted by law.

         Section 10.9      Headings.  The headings used herein are for
convenience only and do not constitute  matters to be considered in interpreting
this Agreement.

         Section 10.10     [Intentionally Omitted]

         Section 10.11     Counterparts. This Agreement may be executed in any
number of counterparts, and by Agent, Lenders and Borrowers in separate
counterparts, each of which shall be an original, but all of which shall
together constitute one and the same agreement.

SECTION 11.       JURY TRIAL WAIVER; OTHER WAIVERS
                  AND CONSENTS; GOVERNING LAW

         Section 11.1      Governing Law; Choice of Forum; Service of Process;
Jury Trial Waiver.

                  (a) The validity, interpretation and enforcement of this
Agreement and the other Financing Agreements (other than the Mortgages to the
extent otherwise specifically provided therein) and any dispute arising out of
the relationship between the parties hereto, whether in contract, tort, equity
or otherwise, shall be governed by the internal laws of the State of New York
(without giving effect to principles of conflicts of law).

<PAGE>
                  (b) Borrowers, Agent and Lenders each hereby irrevocably
consent and submit to the non-exclusive jurisdiction of the Supreme Court of the
State of New York in New York County and the United States District Court for
the Southern District of New York and the courts of any jurisdiction in which
any of the Collateral is located and waive any objection based on venue or forum
non conveniens with respect to any action instituted therein arising under this
Agreement or any of the other Financing Agreements or in any way connected with
or related or incidental to the dealings of the parties hereto in respect of
this Agreement or any of the other Financing Agreements or the transactions
related hereto or thereto, in each case whether now existing or hereafter
arising, and whether in contract, tort, equity or otherwise, and agree that any
dispute with respect to any such matters shall be heard only in the courts
described above.

                  (c) Each Borrower hereby waives personal service of any and
all process upon it and consents that all such service of process may be made by
registered mail, postage prepaid, directed to its address set forth on the
signature pages hereof and service so made shall be deemed to be completed ten
(10) days after the same shall have been so deposited in the U.S. mails,
registered mail, postage prepaid, or, at Agent's option, by service upon such
Borrower in any other manner provided under the rules of any of the foregoing
courts. Within thirty (30) days after such service, such Borrower shall appear
in answer to such process, failing which such Borrower shall be deemed in
default and judgment may be entered by Agent against such Borrower for the
amount of the claim and other relief requested.

                  (d) BORROWERS, AGENT AND LENDERS EACH HEREBY WAIVES ANY RIGHT
TO TRIAL BY JURY OF ANY CLAIM, DEMAND, ACTION OR CAUSE OF ACTION (i) ARISING
UNDER THIS AGREEMENT OR ANY OF THE OTHER FINANCING AGREEMENTS OR (ii) IN ANY WAY
CONNECTED WITH OR RELATED OR INCIDENTAL TO THE DEALINGS OF THE PARTIES HERETO IN
RESPECT OF THIS AGREEMENT OR ANY OF THE OTHER FINANCING AGREEMENTS OR THE
TRANSACTIONS RELATED HERETO OR THERETO IN EACH CASE WHETHER NOW EXISTING OR
HEREAFTER ARISING, AND WHETHER IN CONTRACT, TORT, EQUITY OR OTHERWISE.
BORROWERS, AGENT AND LENDERS EACH HEREBY AGREES AND CONSENTS THAT ANY SUCH
CLAIM, DEMAND, ACTION OR CAUSE OF ACTION SHALL BE DECIDED BY COURT TRIAL WITHOUT
A JURY AND THAT ANY BORROWER OR AGENT OR ANY LENDER MAY FILE AN ORIGINAL
COUNTERPART OF A COPY OF THIS AGREEMENT WITH ANY COURT AS WRITTEN EVIDENCE OF
THE CONSENT OF THE PARTIES HERETO TO THE WAIVER OF THEIR RIGHT TO TRIAL BY JURY.

                  (e) Neither Agent nor any Lender shall have any liability to
any Borrower or any Guarantor (whether in tort, contract, equity or otherwise)
for losses suffered by any Borrower or any Guarantor in connection with, arising
out of, or in any way related to the transactions or relationships contemplated
by this Agreement, or any act, omission or event occurring in connection
herewith, unless it is determined by a final and non-appealable judgment by a
court of competent jurisdiction that the losses were the result of such party's
own acts or omissions constituting gross negligence or willful misconduct. In
any such litigation, Agent and each of Lenders shall be entitled to the benefit
of the rebuttable presumption that it acted in good faith and with the exercise
of ordinary care in the performance by it of the terms of this Agreement.

<PAGE>

         Section 11.2 Waiver of Notices. Each Borrower hereby expressly waives
demand, presentment, protest and notice of protest and notice of dishonor with
respect to any and all instruments and commercial paper, included in or
evidencing any of the Obligations or the Collateral, and any and all other
demands and notices of any kind or nature whatsoever with respect to the
Obligations, the Collateral and this Agreement, except such as are expressly
provided for herein. No notice to or demand on any Borrower which Agent may
elect to give shall entitle such Borrower to any other or further notice or
demand in the same, similar or other circumstances. Without limiting the
generality of the foregoing, each Borrower waives (a) notice prior to Agent's
taking possession or control of any of the Collateral or any bond or security
which might be required by any court prior to allowing Agent to exercise any of
Agent's remedies, including the issuance of an immediate writ of possession and
(b) the benefit of all valuation, appraisement and exemption laws.

         Section 11.3      Amendments and Waivers.

<PAGE>

                  (a) No amendment or modification of any provision of this
Agreement or of any of the other Financing Agreements shall be effective without
the written agreement of the Majority Lenders and Borrowers and no termination
or waiver of any provision of this Agreement or of any of the Financing
Agreements, or consent to any departure by any Borrower therefrom, shall in any
event be effective without the written concurrence of the Majority Lenders,
which the Majority Lenders shall have the right to grant or withhold at their
discretion; except that any amendment, modification, or waiver (i) of any
provision of Section 3 hereof, which amendment, modification or waiver increases
the Commitment of any Lender, reduces the principal of, or interest on, the
Loans or the Letter of Credit Accommodations, reduces the amount of any fee
payable for the account of any Lender, or postpones or extends any date fixed
for any payment of principal of, or interest or fees on the Loans or Letter of
Credit Accommodations payable to any Lender, (ii) that increases the aggregate
amount of the Commitments of the Lenders, (iii) that increases the advance
percentages for Eligible Accounts or Eligible Inventory provided for in Section
3.1(a) hereof or the amount set forth in Section 3.1(a)(ii)(B), (iv) that
increases the limit on Letter of Credit Accommodations set forth in Section
3.2(d) hereof or that increases the Maximum Credit, (v) of the definitions of
"Renewal Date", "Majority Lenders" or "Pro Rata Shares", (vi) of the definitions
of "Eligible Accounts" or "Eligible Inventory" if the effect of such amendment,
modification or waiver is to increase the amount of the Loans and/or Letter of
Credit Accommodations available to Borrowers under the Lending Formulas, (vii)
of any provision of this Agreement or any of the Financing Agreements that would
permit security interests in or liens upon on the Collateral or release any
Collateral (except as set forth in Section 12.12 hereof or except as otherwise
permitted herein) or release any guarantee of the Obligations, (viii) of the
provisions contained in this Section 11.3, shall be effective only if evidenced
by a writing signed by or on behalf of (A) any Lender affected thereby in the
case of the amendments, modifications or waivers described in clause (i) above
or (B) all Lenders in the case of the amendments to definitions or waivers
described in clauses (ii) through (viii) above. No amendment, modification,
termination or waiver of any provision of Section 11 or any other provision
referring to Agent shall be effective without the written concurrence of Agent.
Any waiver or consent shall be effective only in the specific instance and for
the specific purpose for which it was given. No notice to or demand on any
Borrower in any case shall entitle such Borrower to any other or further notice
or demand in similar or other circumstances. Any amendment, modification, waiver
or consent effected in accordance with this Section 11.3 shall be binding on
each Lender, each future Lender, and, if signed by Borrowers, on the Borrowers.

                  (b) Notwithstanding anything to the contrary contained in
Section 11.3(a), in the event that Borrowers request that this Agreement or any
other Financing Agreements be amended or otherwise modified in a manner which
would require the unanimous consent of all of the Lenders and such amendment or
other modification is agreed to by the Majority Lenders, then, with the consent
of Borrowers and the Majority Lenders, Borrowers and the Majority Lenders may
amend this Agreement without the consent of the Lender or Lenders which did not
agree to such amendment or other modification (collectively, the "Minority
Lenders") to provide for (i) the termination of the Commitment of each of the
Minority Lenders, (ii) the addition to this Agreement of one or more other
Lenders, or an increase in the Commitment of one or more of the Majority
Lenders, so that the Commitments, after giving effect to such amendment, shall
be in the same aggregate amount as the Commitments immediately before giving
effect to such amendment, (iii) if any Loans are outstanding at the time of such
amendment, the making of such additional Loans by such new Lenders or Majority
Lenders, as the case may be, as may be necessary to repay in full the
outstanding Loans of the Minority Lenders immediately before giving effect to
such amendment and (iv) the payment of all interest, fees and other Obligations
payable or accrued in favor of the Minority Lenders and such other modifications
to this Agreement as Borrowers and the Majority Lenders may determine to be
appropriate.

                  (c) Agent and Lenders shall not, by any act, delay, omission
or otherwise be deemed to have expressly or impliedly waived any of the rights,
powers and/or remedies of Agent or Lenders unless such waiver shall be in
writing and signed as provided in Section 11.3(a) above. Any such waiver shall
be enforceable only to the extent specifically set forth therein. Neither this
Agreement nor any provision hereof shall be amended, modified, waived or
discharged orally or by course of conduct, but only by a written agreement
approved as required under this Section 11.3. A waiver by Agent or Lenders of
any right, power and/or remedy on any one occasion shall not be construed as a
bar to or waiver of any such right, power and/or remedy which Agent or any
Lender would otherwise have on any future occasion, whether similar in kind or
otherwise.

         Section 11.4 Waiver of Counterclaims. Each Borrower waives all rights
to interpose any claims, deductions, setoffs or counterclaims of any nature
(other than compulsory counterclaims) in any action or proceeding with respect
to this Agreement, the Obligations, the Collateral or any matter arising
therefrom or relating hereto or thereto.

<PAGE>

         Section 11.5 Indemnification. Borrowers shall jointly and severally
indemnify and hold Agent, Lenders and their respective officers, directors,
agents, employees and counsel, harmless from and against any and all losses,
claims, damages, liabilities, costs or expenses imposed on, incurred by or
asserted against any of them in connection with any litigation, investigation,
claim or proceeding commenced or threatened related to the negotiation,
preparation, execution, delivery, enforcement, performance or administration of
this Agreement, any other Financing Agreements, or any undertaking or proceeding
related to any of the transactions contemplated hereby or any act, omission,
event or transaction related or attendant thereto, including, without
limitation, amounts paid in settlement, court costs, and the fees and expenses
of counsel except to the extent resulting directly from the gross negligence or
wilful misconduct of Agent or Lenders as determined pursuant to a final
non-appealable order of a court of competent jurisdiction, provided, that, such
gross negligence or wilful misconduct of any one Lender shall not affect the
obligations of Borrowers hereunder as to Agent or any other Lender. To the
extent that the undertaking to indemnify, pay and hold harmless set forth in
this Section may be unenforceable because it violates any law or public policy,
Borrowers shall pay the maximum portion which it is permitted to pay under
applicable law to Agent and/or the affected Lender(s) in satisfaction of
indemnified matters under this Section. The foregoing indemnity shall survive
the payment of the Obligations and the termination or non-renewal of this
Agreement.

         Section 11.6      Assignments; Participations.

                  (a) Each Lender may with the written consent of the Agent,
which consent shall not be unreasonably withheld, and after prior notice to
Salant, assign to one or more commercial banks or other financial institutions a
portion of its rights and obligations under this Agreement (including, without
limitation, a portion of its Commitment, the Loans owing to it and its rights
and obligations as a Lender with respect to the Letter of Credit Accommodations)
and the other Financing Agreements; provided, that, (i) each such assignment
shall be in a principal amount of not less than $10,000,000 and in integral
multiples of $1,000,000 in excess thereof (or the remainder of such Lender's
Commitment), and (ii) the parties to each such assignment shall execute and
deliver to Agent, for its acceptance and recording in the Register an Assignment
and Acceptance.

                  (b) Upon such execution, delivery, acceptance and recording,
from and after the effective date specified in each Assignment and Acceptance,
(i) the assignee thereunder shall be a party hereto and to the other Financing
Agreements and, to the extent that rights and obligations hereunder have been
assigned to it pursuant to such Assignment and Acceptance, have the rights and
obligations (including, without limitation, the obligation to participate in
Letter of Credit Accommodations) of a Lender hereunder and thereunder and (ii)
the assigning Lender shall, to the extent that rights and obligations hereunder
have been assigned by it pursuant to such Assignment and Acceptance, relinquish
its rights and be released from its obligations under this Agreement.

<PAGE>
                  (c) By executing and delivering an Assignment and Acceptance,
the assignor and assignee thereunder confirm to and agree with each other and
the other parties hereto as follows: (i) other than as provided in such
Assignment and Acceptance, the assigning Lender makes no representation or
warranty and assumes no responsibility with respect to any statements,
warranties or representations made in or in connection with this Agreement or
any of the other Financing Agreements or the execution, legality,
enforceability, genuineness, sufficiency or value of this Agreement or any of
the other Financing Agreements furnished pursuant hereto, (ii) the assigning
Lender makes no representation or warranty and assumes no responsibility with
respect to the financial condition of Borrowers, Guarantors or any of their
Subsidiaries or the performance or observance by Borrowers or Guarantors of any
of the Obligations; (iii) such assignee confirms that it has received a copy of
this Agreement and the other Financing Agreements, together with such other
documents and information it has deemed appropriate to make its own credit
analysis and decision to enter into such Assignment and Acceptance, (iv) such
assignee will, independently and without reliance upon the assigning Lender, the
Agent or any other Lender and based on such documents and information as it
shall deem appropriate at the time, continue to make its own credit decisions in
taking or not taking action under this Agreement and the other Financing
Agreements, (v) such assignee appoints and authorizes Agent to take such action
as agent on its behalf and to exercise such powers under this Agreement and the
other Financing Agreements as are delegated to Agent by the terms hereof and
thereof, together with such powers as are reasonably incidental thereto, and
(vi) such assignee agrees that it will perform in accordance with their terms
all of the obligations which by the terms of this Agreement and the other
Financing Agreements are required to be performed by it as a Lender. Agent and
Lenders may furnish any information concerning Borrowers, Guarantors or their
Subsidiaries in the possession of Agent or any Lender from time to time to (x)
assignees and (y) Participants who have entered into a confidentiality agreement
with Salant in form and substance reasonably satisfactory to Salant.

                  (d) Agent shall maintain at its address referred to on the
signature page hereto, a copy of each Assignment and Acceptance delivered to and
accepted by it and a register for the recordation of the names and addresses of
Lenders and the Commitment of each Lender from time to time (the "Register").
The entries in the Register shall be conclusive and binding for all purposes,
absent manifest error, and Borrowers, Agent and Lenders shall treat each Person
whose name is recorded in the Register as a Lender hereunder for all purposes of
this Agreement. The Register shall be available for inspection by Borrowers and
any Lender at any reasonable time and from time to time upon reasonable prior
notice.

                  (e) Upon its receipt of an Assignment and Acceptance executed
by an assigning Lender and an assignee Lender, together with the Revolving
Credit Note subject to such assignment, Agent shall, if such Assignment and
Acceptance has been completed and is in substantially the form of Exhibit A
hereto, (i) accept such Assignment and Acceptance, (ii) give prompt notice
thereof to Salant and (iii) record the information contained therein in the
Register. Within five (5) Business Days after its receipt of such notice,
Borrowers, at its expense, shall execute and deliver to Agent in exchange for
the surrendered Revolving Credit Note, a new Revolving Credit Note to the order
of such assignee Lender in an aggregate principal amount equal to the Commitment
assumed by it pursuant to such Assignment and Acceptance, and a new Revolving
Credit Note to the order of the assigning Lender in an aggregate principal
amount equal to the Commitment retained by it hereunder, in each case prepared
by or on behalf of the Agent. Such new Revolving Credit Note(s) shall be in an
aggregate principal amount equal to the aggregate principal amount of such
surrendered Revolving Credit Note, shall be dated the date of Agent's acceptance
of such assignment and acceptance and shall otherwise be in substantially the
form of the Revolving Credit Notes as in effect on the date hereof.

<PAGE>

                  (f) Each Lender may sell participations to one or more
commercial banks or other financial institutions in or to all or a portion of
its rights and obligations under this Agreement and the other Financing
Agreements (including, without limitation, all or a portion of its Commitments
and the Loans owing to it and its participation in the Letter of Credit
Accommodations); provided, that, (i) such Lender's obligations under this
Agreement (including, without limitation, its Commitment hereunder) and the
other Financing Agreements shall remain unchanged, and (ii) such Lender shall
remain solely responsible to the other parties hereto for the performance of
such obligations, and Borrowers, Agent and the other Lenders shall continue to
deal solely and directly with such Lender in connection with such Lender's
rights and obligations under this Agreement and the other Financing Agreements.
Each Lender shall inform Agent of the persons who have purchased such
participations.

         Section 11.7 Successors and Assigns. This Agreement, the other
Financing Agreements and any other document referred to herein or therein shall
be binding upon and inure to the benefit of and be enforceable by the parties
hereto and their respective successors and assigns, except that no Borrower may
not assign its rights under this Agreement, the other Financing Agreements and
any other document referred to herein or therein without the prior written
consent of the Majority Lenders.

SECTION 12.  THE AGENT

         Section 12.1      Appointment.

<PAGE>

                  (a) Each Lender hereby irrevocably appoints and authorizes
Agent as its agent to exercise on such Lender's behalf the following, and Agent
shall have the sole and exclusive right to take the following actions on behalf
of Lenders: (i) to receive on behalf of each Lender any payment of principal of
or interest on the Revolving Credit Notes outstanding hereunder and all other
amounts accrued hereunder for the account of the Lenders and paid to Agent, and,
subject to Section 3.12 of this Agreement, to distribute promptly to each Lender
its Pro Rata Share of all payments so received, (ii) to distribute to each
Lender copies of all material notices and agreements received by the Agent and
not required to be delivered to each Lender pursuant to the terms of this
Agreement, provided, that, the Agent shall not have any liability to Lenders for
the Agent's failure to distribute any such notice or agreements to Lenders and
(iii) subject to Section 11.3 of this Agreement, to take such action as Agent
deems appropriate on its behalf to administer the Loans, Letter of Credit
Accommodations and this Agreement and the other Financing Agreements and to
exercise such other powers delegated to Agent by the terms hereof and the other
Financing Agreements (including, without limitation, the power to give or to
refuse to give notices, waivers, consents, approvals and instructions and the
power to make or to refuse to make determinations and calculations) together
with such powers as are reasonably incidental thereto to carry out the purposes
hereof and thereof. As to any matters not expressly provided for by this
Agreement and the other Financing Agreements (including, without limitation,
enforcement or collection of the Revolving Credit Notes), Agent shall not be
required to exercise any discretion or take any action, but shall be required to
act or to refrain from acting (and shall be fully protected in so acting or
refraining from acting) upon the instructions of the Majority Lenders, and such
instructions of the Majority Lenders shall be binding upon all Lenders;
provided, that, Agent shall not be required to take any action which, in the
reasonable opinion of the Agent, exposes the Agent to liability or which is
contrary to this Agreement, any of the other Financing Agreements or applicable
law. The provisions of this Section 12 are solely for the benefit of Agent and
Lenders. Borrowers and Guarantors shall not have any rights as a third party
beneficiary of any of the provisions contained in this Section 12.
Notwithstanding anything to the contrary contained in Section 11.3 hereof, no
amendments to this Section 12 shall require the written agreement of any
Borrower or Guarantor.

                  (b) Without limiting the generality of the foregoing, or of
any other provision of this Agreement or the other Financing Agreements that
provides rights or powers to Agent, Lenders agree that Agent shall have the
right to exercise the following powers as long as this Agreement remains in
effect: (i) maintain, in accordance with its customary business practices,
ledgers and records reflecting the status of the Loans, the Letter of Credit
Accommodations, the Collateral, and related matters; (ii) execute and/or file
any and all financing or similar statements or notices, amendments, renewals,
supplements, documents, instruments, proofs of claim, notices and other written
agreements with respect to this Agreement and the other Financing Agreements;
(iii) make Loans for itself or on behalf of Lenders as provided herein; (iv)
exclusively receive, apply and distribute proceeds of the Collateral as provided
herein; (v) open and maintain such bank accounts and lock boxes as Agent deems
necessary and appropriate in accordance with this Agreement and the other
Financing Agreements for the foregoing purposes and with respect to the
Collateral and proceeds thereof; (vi) perform, exercise and enforce any and all
other rights and remedies of the Lenders with respect to Borrowers, Guarantors,
the Loans and the Collateral, or otherwise related to any of same as provided
herein and in the other Financing Agreements; and (vii) incur and pay such costs
and expenses as Agent may deem necessary or appropriate for the performance and
fulfillment of its functions and powers pursuant to this Agreement and the other
Financing Agreements.

         Section 12.2 Nature of Duties. Agent shall have no duties or
responsibilities except those expressly set forth in this Agreement or in the
other Financing Agreements. The duties of Agent shall be mechanical and
administrative in nature. Agent shall not have by reason of this Agreement or
any of the other Financing Agreements a fiduciary relationship in respect of any
Lender. Nothing in this Agreement or any of the other Financing Agreements,
express or implied, is intended to or shall be construed to impose upon Agent
any obligations in respect of this Agreement or any of the other Financing
Agreements except as expressly set forth herein or therein. Each Lender shall
make its own independent investigation of the financial condition and affairs of
Borrowers, Guarantors and any other Obligor in connection with the making and
the continuance of the Loans hereunder and the issuance of the Letter of Credit
Accommodations and shall make its own appraisal of the creditworthiness of
Borrowers, Guarantors and any other Obligor and the value of the Collateral, and
Agent shall have no duty or responsibility, either initially or on a continuing
basis, to provide any Lender with any credit or other information with respect
thereto, whether coming into its possession before the date hereof or at any
time or times hereafter, provided, that, upon the reasonable request of a
Lender, Agent shall provide to such Lender any documents or reports delivered to
Agent by Borrowers pursuant to the terms of this Agreement or any of the other
Financing Agreements. If Agent seeks the consent or approval of the Majority
Lenders to the taking or refraining from taking any action hereunder, Agent
shall send notice thereof to each Lender. Agent shall promptly notify each
Lender any time that the Majority Lenders have instructed Agent to act or
refrain from acting pursuant hereto.

<PAGE>

         Section 12.3 Delegation of Duties. Except as otherwise provided in this
section, Agent may execute any of its duties under this Agreement or any of the
other Financing Agreements by or through agents, employees or attorneys-in-fact
and shall be entitled to advice of counsel concerning all matters pertaining to
such duties. Agent shall not be responsible for the negligence or misconduct of
any agent or attorney-in-fact that it selects as long as such selection was made
in compliance with this Section and without gross negligence or willful
misconduct.

<PAGE>

         Section 12.4 Rights, Exculpation, Etc. Agent and its directors,
officers, agents or employees shall not be liable for any action taken or
omitted to be taken by it or them under or in connection with this Agreement or
any of the other Financing Agreements, except for their own gross negligence or
willful misconduct as determined by a final non-appealable order of a court of
competent jurisdiction. Without limiting the generality of the foregoing, Agent
(a) may treat the payee of any Revolving Credit Note as the holder thereof until
Agent receives written notice of the assignment or transfer thereof, pursuant to
Section 11.6 hereof, signed by such payee and in form satisfactory to the Agent;
(b) may consult with legal counsel, independent public accountants and other
experts selected by it and shall not be liable for any action taken or omitted
to be taken in good faith by it in accordance with the advice of such counsel,
accountants or experts; (c) makes no warranty or representation to any Lender
and shall not be responsible to any Lender for any statements, certificates,
warranties or representations made in or in connection with this Agreement or
any of the other Financing Agreements; (d) shall not have any duty to ascertain
or to inquire as to the performance or observance of any of the terms, covenants
or conditions of this Agreement or any of the other Financing Agreements; (e)
shall not have any duty to ascertain or to inquire as to the performance or
observance of any of the terms, covenants or conditions of this Agreement or any
of the other Financing Agreements on the part of any Person, the existence or
possible existence of any Event of Default, or act, condition or event which
with notice or passage of time or both would constitute an Event of Default, or
to inspect the Collateral or other property (including, without limitation, the
books and records) of any Person; (f) shall not be responsible to any Lender for
the due execution, legality, validity, enforceability, genuineness, sufficiency
or value of this Agreement or any of the other Financing Agreements or any other
instrument or document furnished pursuant hereto or thereto; and (g) shall not
be deemed to have made any representation or warranty regarding the existence,
value or collectibility of the Collateral, the existence, priority or perfection
of the security interest in, or mortgage or lien upon, any of the Collateral, or
the Loans available to Borrowers or any certificate prepared by any Borrower or
any Guarantor in connection therewith, nor shall Agent be responsible or liable
to the Lenders for any failure to monitor or maintain availability of Loans
hereunder or any portion of the Collateral. Agent shall not be liable for any
apportionment or distribution of payments made by it in good faith pursuant to
Section 9.2, and if any such apportionment or distribution is subsequently
determined to have been made in error the sole recourse of any Lender to whom
payment was due but not made, shall be to recover from other Lenders any payment
in excess of the amount which they are determined to be entitled. Agent may at
any time request instructions from the Lenders with respect to any actions or
approvals which by the terms of this Agreement or of any of the other Financing
Agreements Agent is permitted or required to take or to grant, and if such
instructions are promptly requested, Agent shall be absolutely entitled to
refrain from taking any action or to withhold any approval hereunder or under
any of the other Financing Agreements until it shall have received such
instructions from the Majority Lenders. Without limiting the foregoing, no
Lender shall have any right of action whatsoever against Agent as a result of
Agent acting or refraining from acting under this Agreement or any of the other
Financing Agreements in accordance with the instructions of the Majority
Lenders.

         Section 12.5 Reliance. Agent shall be entitled to rely, and shall be
fully protected in relying, upon any writing, resolution, notice, consent,
certificate, affidavit, letter, telegram, facsimile, telex or telephone message,
statement or other document or conversation believed by it to be genuine and
correct and to have been signed, sent or made by the proper Person or Persons,
and upon advice and statements of legal counsel, independent accountants and
other experts selected by Agent. Agent shall be fully justified in failing or
refusing to take any action under this Agreement or any of the other Financing
Agreements unless it shall first receive such advice or concurrence of the
Lenders as it deems appropriate and until such instructions are received, Agent
shall act, or refrain from acting, as it deems advisable so long as it is not
grossly negligent or guilty of wilful misconduct. If Agent so requests, it shall
first be indemnified to its reasonable satisfaction by Lenders against any and
all liability and expense which may be incurred by it by reason of taking or
continuing to take any such action. Agent shall in all cases be fully protected
in acting, or in refraining from acting, under this Agreement or any of the
other Financing Agreements in accordance with a request or consent of the
Lenders and such request and any action taken or failure to act pursuant thereto
shall be binding upon all of the Lenders.

         Section 12.6 Notice of Event of Default. Agent shall not be deemed to
have knowledge or notice of the occurrence of any Event of Default, except with
respect to defaults in the payment of principal, interest, fees, and expenses
required to be paid to Agent for the account of the Lenders and with respect to
Events of Default of which Agent has actual knowledge, unless Agent shall have
received written notice from a Lender or a Borrower referring to this Agreement,
describing such Event of Default, and stating that such notice is a "notice of
default." Agent promptly will notify the Lenders of its receipt of any such
notice or of any Event of Default of which Agent has, or is deemed to have,
actual knowledge. If any Lender obtains actual knowledge of any Event of
Default, such Lender promptly shall notify the other Lenders and Agent of such
Event of Default. Each Lender shall be solely responsible for giving any notices
to its Participants, if any.

<PAGE>

         Section 12.7 Credit Decision. Each Lender acknowledges that the Agent
has not made any representation or warranty to it, and that no act by Agent
hereinafter taken, including any review of the affairs of Salant and its
Subsidiaries or Affiliates, shall be deemed to constitute any representation or
warranty by Agent to any Lender. Each Lender represents to Agent that it has,
independently and without reliance upon Agent and based on such documents and
information as it has deemed appropriate, made its own appraisal of and
investigation into the business, prospects, operations, property, financing and
other condition and creditworthiness of Borrowers and any other Person (other
than any Lender) party to any of the other Financing Agreements, and all
applicable bank regulatory laws relating to the transactions contemplated
hereby, and made its own decision to enter into this Agreement and to extend
credit to Borrowers. Each Lender also represents that it will, independently and
without reliance upon Agent and based on such documents and information as it
shall deem appropriate at the time, continue to make its own credit analysis,
appraisals and decisions in taking or not taking action under this Agreement and
any of the other Financing Agreements, and to make such investigations as it
deems necessary to inform itself as to the business, prospects, operations,
property, financing and other condition and creditworthiness of Borrowers and
any other Person (other than any Lender) party to this Agreement or any of the
other Financing Agreements. Except for notices, reports and other documents
expressly herein required to be furnished to the Lenders by Agent, Agent shall
not have any duty or responsibility to provide any Lender with any credit or
other information concerning the business, prospects, operations, property,
financial and other condition or creditworthiness of Borrowers and any other
Person party to this Agreement or any of the other Financing Agreements that may
come into the possession of Agent.

         Section 12.8 Indemnification. To the extent that Agent is not
reimbursed and indemnified by Borrowers, the Lenders will reimburse and
indemnify the Agent for and against any and all liabilities, obligations,
losses, damages, penalties, actions, judgments, suits, costs, expenses, advances
or disbursements of any kind or nature whatsoever which may be imposed on,
incurred by, or asserted against Agent in any way relating to or arising out of
this Agreement or any of the other Financing Agreements or any action taken or
omitted by Agent under this Agreement or any of the other Financing Agreements,
in proportion to each Lender's Pro Rata Share, provided, that, no Lender shall
be liable for any portion of such liabilities, obligations, losses, damages,
penalties, actions, judgments, suits, costs, expenses, advances or disbursements
for which there has been a final non-appealable order of a court of competent
jurisdiction that such resulted from Agent's gross negligence or willful
misconduct. The obligations of the Lenders under this Section 12.8 shall survive
the payment in full of the Obligations and the termination or non-renewal of
this Agreement.

         Section 12.9 CIT in its Individual Capacity. With respect to its Pro
Rata Share of the Commitments hereunder, the Loans made by it and the Revolving
Credit Note issued to or held by it, CIT shall have and may exercise the same
rights and powers hereunder and is subject to the same obligations and
liabilities as and to the extent set forth herein as any other Lender or holder
of a Revolving Credit Note. The terms "Lenders" or "Majority Lenders" or any
similar terms shall, unless the context clearly otherwise indicates, include CIT
in its individual capacity as a Lender or one of the Majority Lenders. CIT and
its Affiliates may accept deposits from, lend money to and generally engage in
any kind of banking, trust or other business with Borrowers, Guarantors or any
of its or their Subsidiaries or Affiliates as if it were not acting as Agent
pursuant hereto without any duty to account to Lenders.

         Section 12.10     Successor Agent.

                  (a) Agent may resign from the performance of all its functions
and duties hereunder and under the other Financing Agreements at any time by
giving at least thirty (30) Business Days' prior written notice to Salant and
each Lender. Such resignation shall take effect upon the acceptance by a
successor Agent of appointment pursuant to Sections 12.10(b) and 12.10(c) below
or as otherwise provided below.

<PAGE>

                  (b) Upon any such notice of resignation, the Majority Lenders
shall appoint a successor Agent. The successor Agent must be reasonably
satisfactory to Salant. Upon the acceptance of any appointment as Agent
hereunder by a successor Agent, such successor Agent shall thereupon succeed to
and become vested with all the rights, powers, privileges and duties of the
retiring Agent, and the retiring Agent shall be discharged from its duties and
obligations under this Agreement and the other Financing Agreements. After any
Agent's resignation hereunder as the Agent, the provisions of this Section 12
shall inure to its benefit as to any actions taken or omitted to be taken by it
while it was Agent under this Agreement and the other Financing Agreements.

                  (c) If a successor Agent shall not have been so appointed
within such thirty (30) Business Day period, the retiring Agent, with the
consent of Salant, shall then appoint a successor Agent who shall serve as Agent
until such time, if any, as the Majority Lenders, with the consent of the
Salant, appoint a successor Agent as provided above.

         Section 12.11     Withholding Tax.

                  (a) If any Lender is a "foreign corporation, partnership or
trust" within the meaning of the Code (or is otherwise not a United States
Person within the meaning of Section 7701(a)(30) of the Code) and such Lender
claims exemption from, or a reduction of, U.S. withholding tax under Sections
1441 or 1442 of the Code, such Lender agrees with and in favor of Agent and
Borrowers, to deliver to Agent and Salant:

                         (i) if such  Lender  claims  an  exemption  from,  or a
reduction  of,  withholding  tax  under a United  States  tax  treaty,  properly
completed  IRS Forms  1001 and W-8 or  applicable  successor  forms  before  the
payment of any interest in the first calendar year and before the payment of any
interest in each third  succeeding  calendar  year during which  interest may be
paid under this Agreement, or at such earlier time as may be necessary to ensure
the continuing validity of such form;

                         (ii) if such  Lender  claims that  interest  paid under
this  Agreement  is exempt  from  United  States  withholding  tax because it is
effectively connected with a United States trade or business of such Lender, two
properly completed and executed copies of IRS Form 4224 or applicable  successor
forms  before the payment of any  interest is due in the first  taxable  year of
such Lender and in each  succeeding  taxable  year of such Lender  during  which
interest  may be paid under this  Agreement  or at such  earlier  time as may be
necessary to ensure the continuing validity of such form, and IRS Form W-9; and

                         (iii) such other form or forms as may be required under
the Code or other laws of the United States as a condition to exemption from, or
reduction of, United States withholding tax.

Such Lender agrees to promptly notify Agent and Salant of any change in
circumstances which would modify or render invalid any claimed exemption or
reduction.

<PAGE>

                  (b) If any Lender is entitled to a reduction in the applicable
withholding tax, Borrowers and Agent may, without duplication, withhold from any
interest payment to such Lender an amount equivalent to the applicable
withholding tax after taking into account such reduction. If the forms or other
documentation required by subsection (a) of this Section are not delivered to
Salant and Agent, then Borrowers and Agent may, without duplication, withhold
from any interest payment to such Lender not providing such forms or other
documentation an amount equivalent to the applicable withholding tax.

                  (c) If the Internal Revenue Service or any other Governmental
Authority of the United States of America or other jurisdiction asserts a claim
that Borrowers or Agent did not properly withhold tax from amounts paid to or
for the account of any Lender or Participant (because the appropriate form was
not delivered, was not properly executed, or because such Lender failed to
notify Salant or Agent of a change in circumstances which rendered the exemption
from, or reduction of, withholding tax ineffective, or for any other reason)
such Lender shall indemnify Borrower and Agent fully for all amounts paid,
directly or indirectly, by Borrowers or Agent as tax or otherwise, including
penalties and interest, and including any taxes imposed by any jurisdiction on
the amounts payable to Borrowers or Agent under this Section, together with all
costs and expenses (including attorneys' fees and expenses). The obligations of
the Lenders under this subsection shall survive the payment of all Obligations
and the resignation or replacement of Agent.

         Section 12.12     Collateral Matters.

                  (a) In addition to, and not in limitation of the provisions of
Section 3.1(f) above, Agent may from time to time, at any time on or after the
occurrence of an Event of Default and for so long as the same is continuing,
make such disbursements and advances ("Agent Advances") which Agent, in its sole
discretion, deems necessary or desirable either (i) to preserve or protect the
Collateral or Guarantor Collateral or any portion thereof, (ii) to enhance the
likelihood or maximize the amount of repayment by Borrowers and Guarantors of
the Loans and other Obligations or (iii) to pay any other amount chargeable to
Borrowers pursuant to the terms of this Agreement, including, without
limitation, costs, fees and expenses as described in Section 10.2 and payments
to any issuer of Letter of Credit Accommodations. Agent Advances shall be
repayable on demand and be secured by the Collateral. Agent Advances shall not
constitute Loans but shall otherwise constitute Obligations hereunder. Agent
shall notify each Lender and Salant in writing of each such Agent Advance, which
notice shall include a description of the purpose of such Agent Advance. Without
limitation of its obligations pursuant to Section 12.5, each Lender agrees that
it shall make available to Agent, upon Agent's demand, in immediately available
funds, the amount equal to such Lender's Pro Rata Share of each such Agent
Advance. If such funds are not made available to Agent by such Lender, Agent
shall be entitled to recover such funds, on demand from such Lender together
with interest thereon, for each day from the date such payment was due until the
date such amount is paid to Agent, at the Interest Rate.

<PAGE>

                  (b) Lenders hereby irrevocably authorize Agent, at its option
and in its discretion to release any security interest in, mortgage or lien
upon, any of the Collateral upon termination of the Commitments and payment and
satisfaction of all of the Obligations and delivery of cash collateral as
provided in Section 10.1 above; or constituting property being sold or disposed
of if Salant certifies to Agent that the sale or disposition is made in
compliance with Section 7.11 hereof (and Agent may rely conclusively on any such
certificate, without further inquiry); or constituting property in which no
Borrower owned any interest at the time the security interest, mortgage or lien
was granted or at any time thereafter; or if approved, authorized or ratified in
writing by the Majority Lenders. Except as provided above, Agent will not
release any security interest in, mortgage or lien upon, any of the Collateral
without the prior written authorization of the Majority Lenders; provided, that,
Agent may not release such security interests in, mortgage or lien upon, any of
the Collateral having a value in excess of $5,000,000, without the prior written
authorization of all of the Lenders. Upon request by Agent at any time, the
Lenders will confirm in writing Agent's authority to release particular types or
items of Collateral pursuant to this Section 12.12.

                  (c) Without in any manner limiting Agent's authority to act
without any specific or further authorization or consent by the Majority
Lenders, each Lender agrees to confirm in writing, upon request by Agent, the
authority to release Collateral conferred upon Agent under this Section 12.12.
So long as no Event of Default is then continuing, upon receipt by Agent of
confirmation from the Majority Lenders of its authority to release any
particular item or types of Collateral, and upon at least five (5) Business
Day's prior written request by Salant, Agent shall (and is hereby irrevocably
authorized by Lenders to) execute such documents as may be necessary to evidence
the release of the security interest, mortgage or liens granted to Agent for the
benefit of the Lenders upon such Collateral; provided, that, (i) Agent shall not
be required to execute any such document on terms which, in Agent's opinion,
would expose Agent to liability or create any obligations or entail any
consequence other than the release of such security interest, mortgage or liens
without recourse or warranty and (ii) such release shall not in any manner
discharge, affect or impair the Obligations or any security interest, mortgage
or lien upon (or obligations of Borrower in respect of) the Collateral retained
by Borrowers.

                  (d) Agent shall have no obligation whatsoever to any Lender to
assure that the Collateral exists or is owned by any Borrower, any Guarantor or
any Obligor (as the case may be) or is cared for, protected or insured or has
been encumbered or that the security interest, mortgage or lien granted to Agent
pursuant to any of the Financing Agreements has been properly or sufficiently or
lawfully created, perfected, protected or enforced or is entitled to any
particular priority, or to exercise at all or in particular manner or under any
duty of care, disclosure or fidelity, or to continue exercising, any of the
rights, authorities and powers granted or available to Agent in this Section 12
or in any of the other Financing Agreements, it being understood and agreed that
in respect of the Collateral, or any act, omission or event related thereto,
Agent may act in any manner it may deem appropriate, in its sole discretion,
given Agent's own interest in the Collateral as one of the Lenders and that
Agent shall have no duty or liability whatsoever to any other Lender.

<PAGE>

         Section 12.13 Agency for Perfection. Agent and each Lender hereby
appoints each other Lender as agent for the purpose of perfecting the security
interests in and liens upon the Collateral of Agent for itself and the ratable
benefit of Lenders in assets which, in accordance with Article 9 of the UCC, can
be perfected only by possession. Should any Lender obtain possession of any such
Collateral, such Lender shall notify Agent thereof, and, promptly upon Agent's
request therefor shall deliver such Collateral to Agent or in accordance with
Agent's instructions.

         Section 12.14 [Intentionally Omitted.]

         Section 12.15 Concerning the Collateral and the Related Financing
Agreements. Each Lender authorizes and directs Agent to enter into this
Agreement and the other Financing Agreements relating to the Collateral, for the
ratable benefit of Lenders and Agent. Each Lender agrees that any action taken
by Agent or Majority Lenders in accordance with the terms of this Agreement or
the other Financing Agreements relating to the Collateral, and the exercise by
the Agent or Majority Lenders of their respective powers set forth therein or
herein, together with such other powers that are reasonably incidental thereto,
shall be binding upon all of the Lenders.

         Section 12.16 Field Audit and Examination Reports; Disclaimer by
Lenders. By signing this Agreement, each Lender:

                  (a) is deemed to have requested that Agent furnish Lender,
promptly after it becomes available, a copy of each field audit or examination
report (each a "Report" and collectively, "Reports") prepared by Agent;

                  (b) expressly agrees and acknowledges that Agent (i) does not
make any representation or warranty as to the accuracy of any Report, or (ii)
shall not be liable for any information contained in any Report;

                  (c) expressly agrees and acknowledges that the Reports are not
comprehensive audits or examinations, that Agent or other party performing any
audit or examination will inspect only specific information regarding Borrowers
and will rely significantly upon Borrowers' books and records, as well as on
representations of Borrowers' personnel; and

                  (d) agrees to keep all Reports confidential and strictly for
its internal use in accordance with the terms of Section 10.7 hereof, and not to
distribute or use any Report in any other manner.

                                    [REMAINDER OF PAGE INTENTIONALLY LEFT BLANK]
<PAGE>

                  IN WITNESS WHEREOF, Agent, Lenders, Borrower and Guarantor
have caused these presents to be duly executed as of the day and year first
above written.


AGENT                               ........BORROWERS

THE CIT GROUP/COMMERCIAL            ........SALANT CORPORATION
 SERVICES, INC., as Agent

By:                                          By:

Title:                                       Title:


Address                                              Chief Executive Office:

1211 Avenue of the Americas                          1114 Avenue of the Americas
New York, New York 10036                             New York, New York 10036


LENDERS

THE CIT GROUP/COMMERCIAL                    SALANT HOLDING CORPORATION
 SERVICE, INC.

By:                                         By:

Title:                                      Title:

Address:                                    Chief Executive Office:

1211 Avenue of the Americas                 1114 Avenue of the Americas
New York, New York 10036                    New York, New York 10036


Commitment:

$85,000,000


Commitment Percentage:

100%