exhibit.htm


    
      Execution
        Copy

       

      EMPLOYMENT
        AGREEMENT

       

      AGREEMENT,
        made and entered into as of December 19, 2007 (the “Effective Date”) by and
        between THE WARNACO GROUP, INC., a Delaware corporation (together with its
        successors and assigns, the “Company”), and JOSEPH R. GROMEK (the
“Executive”).

      


      W I T N E S S E T H
        :

       

      WHEREAS,
        the Company desires to continue to employ the Executive as its President
        and
        Chief Executive Officer and to amend and restate the Executive’s current
        employment agreement dated as of December 22, 2004 embodying the terms of
        such
        continued employment and the Executive desires to enter into this amended
        and
        restated agreement and to accept such continued employment, subject to the
        terms
        and provisions of this Agreement;

      


      NOW,
        THEREFORE, in consideration of the premises and mutual covenants contained
        herein and for other good and valuable consideration, the receipt of which
        is
        mutually acknowledged, the Company and the Executive (individually a “Party” and
        together the “Parties”) agree as follows:

      


      1.      
            Definitions.

       

      (a)           “Affiliate”
        of a specified person or entity shall mean a person or entity that directly
        or
        indirectly controls, is controlled by, or is under common control with, the
        person or entity specified.

       

      (b)           “Annual
        Bonus” shall have the meaning ascribed to such term in Section 5
        below.

       

      (c)           “Base
        Salary” shall mean the annualized salary provided for in Section 4
        below.

       

      (d)           “Board”
        shall mean the Board of Directors of the Company.

       

      (e)           “Bonus
        Plan” shall have the meaning ascribed to such term in Section 5
        below.

       

      (f)           “Cause”
        shall mean:

       

      (i)           willful
        misconduct by the Executive which causes material harm to the Company’s
        interests;

       

      (ii)           willful
        and material breach of duty by the Executive in the course of his employment,
        which, if curable, is not cured within 10 days after Executive’s receipt of
        written notice from the Company;

       

      
        
           

        

        
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      (iii)           willful
        failure by the Executive, after having been given written notice from the
        Company, to perform his duties other than a failure resulting from Executive’s
        incapacity due to physical or mental illness; or

       

      (iv)           indictment
        of the Executive for a felony, a crime involving moral turpitude or any other
        crime involving the business of the Company which, in the case of such crime
        involving the business of the Company, is injurious to the business of the
        Company.

       

      For
        purposes of this Cause definition, no act or failure to act, on the part
        of the
        Executive, shall be considered willful unless it is done, or omitted to be
        done,
        by him in bad faith and without reasonable belief that his action was in
        the
        best interests of the Company.  The determination to terminate the
        Executive’s employment for Cause shall be made by the Board and prior to such
        determination the Executive shall have the right to appear before the Board
        or a
        committee designated by the Board.

      


      (g)           “Change
        in Control” shall mean any of the following:

       

      (i)           any
        “person” (as such term is used in Sections 3(a)(9) and 13(d) of the Securities
        Exchange Act of 1934) or group of persons acting jointly or in concert, but
        excluding a person who owns more than 5% of the outstanding shares of the
        Company as of the date of this Agreement, becomes a “beneficial owner” (as such
        term is used in Rule 13d-3 promulgated under that Act), of 50% or more of
        the
        Voting Stock of the Company;

       

      (ii)           all
        or substantially all of the assets of the Company are disposed of pursuant
        to a
        merger, consolidation or other transaction (unless the shareholders of the
        Company immediately prior to such merger, consolidation or other transaction
        beneficially own, directly or indirectly, in substantially the same proportion
        as they owned the Voting Stock of the Company, all of the Voting Stock or
        other
        ownership interests of the entity or entities, if any, that succeed to the
        business of the Company); or

       

      (iii)           approval
        by the shareholders of the Company of a complete liquidation or dissolution
        of
        all or substantially all of the assets of the Company.

       

      For
        purposes of this Change in Control definition, “Voting Stock” shall mean the
        capital stock of any class or classes having general voting power, in the
        absence of specified contingencies, to elect the directors of the
        Company.

      


      (h)           “Date
        of Termination” shall mean:

       

      (i)           if
        the Executive’s employment is terminated by the Company, the date specified in
        the notice by the Company to the Executive that his

       

      
        
           

        

        
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      employment
        is so terminated;

       

      (ii)           if
        the Executive voluntarily resigns his employment (including upon Retirement),
        90
        days after receipt by the Company of written notice that the Executive is
        terminating his employment (provided, that in the case of a voluntary
        resignation (other than a Retirement) the Company may accelerate the Date
        of
        Termination to an earlier date by providing the Executive with written notice
        of
        such action (which notice shall not affect the status of such termination
        as a
        voluntary resignation by the Executive), or, alternatively, the Company may
        place the Executive on paid leave (covering only Base Salary) during such
        period);

       

      (iii)           if
        the Executive’s employment is terminated by reason of death, the date of
        death;

       

      (iv)           if
        the Executive’s employment is terminated for Disability, 30 days after written
        notice is given as specified in Section 1(i) below; or

       

      (v)           if
        the Executive resigns his employment for Good Reason, 30 days after receipt
        by
        the Company of timely written notice from the Executive in accordance with
        Section 1(j) below unless the Company cures the event or events giving rise
        to
        Good Reason within 30 days after receipt of such written notice.

       

      (i)           “Disability”
        shall mean the Executive’s inability, due to physical or mental incapacity, to
        substantially perform his duties and responsibilities for a period of 180
        consecutive days as determined by a medical doctor selected by the Company
        and
        reasonably acceptable to the Executive.  In no event shall any
        termination of the Executive’s employment for Disability occur until the Party
        terminating his employment gives written notice to the other Party in accordance
        with Section 25 below.

       

      (j)           “Good
        Reason” shall mean the occurrence of any of the following without the
        Executive’s prior written consent:

       

      (i)           a
        material diminution in the Executive’s authority, duties or responsibilities as
        Chief Executive Officer of the Company or the assignment to the Executive
        of any
        duties materially inconsistent with such position;

       

      (ii)           a
        reduction in (A) Base Salary or (B) Target Bonus opportunity (as a percentage
        of
        Base Salary) or the failure of the Company to grant (C) the annual equity
        award
        in accordance with Section 6(a) below or (D) the Supplemental Award as set
        forth
        in Section 6(b) below unless, in the case of (C), the Company provides a
        similar
        target opportunity pursuant to a successor plan or otherwise, and in the
        case of
        (D), the Company awards to the Executive an annual award or awards of equivalent
        value (and

       

      
        
           

        

        
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      vesting
        provisions) to the award in respect of which there was failure to make a
        grant,
        whether pursuant to a successor plan or otherwise;

       

      (iii)           a
        change in reporting structure so that the Executive reports to someone other
        than the Board, or the Chairman of the Board as the Board’s
        designee;

       

      (iv)           the
        failure by the Company to nominate or renominate the Executive as a member
        of
        the Board, or the removal by the Company of the Executive as President and
        Chief
        Executive Officer of the Company or the removal of the Executive from the
        Board
        (other than due to a failure of shareholders of the Company to elect
        him);

       

      (v)           requiring
        the Executive to be principally based at any office or location more than
        50
        miles from mid-town Manhattan; or

       

      (vi)           the
        failure of a successor to all or substantially all of the assets of the Company
        to assume the Company’s obligations under this Agreement either as a matter of
        law or in writing within 15 days after a merger, consolidation, sale or similar
        transaction.

       

      Anything
        herein to the contrary notwithstanding, the Executive shall not be entitled
        to
        resign for Good Reason (i) if the occurrence of the event otherwise constituting
        Good Reason is the result of death, Disability, a termination by the Company
        for
        which proper notification has been given (and, if for Cause, opportunity
        to
        cure, if applicable) or a voluntary resignation (including a Retirement)
        by the
        Executive other than for Good Reason and (ii) unless the Executive gives
        the
        Company written notice of the event constituting “Good Reason” within 90 days of
        the occurrence of such event and the Company fails to cure such event within
        30
        days after receipt of such notice.

      


      (k)           “Pro-rata
        Annual Bonus” shall mean the Annual Bonus the Executive would have received had
        his employment continued through the end of the fiscal year in which his
        termination of employment occurs multiplied by a fraction, the numerator
        of
        which is the number of days during such fiscal year that the Executive is
        employed by the Company and the denominator of which is 365.

       

      (l)           “Pro-rata
        Supplemental Award” shall mean an amount equal to 30% of the total cash
        compensation used to determine the amount of the Supplemental Award granted
        immediately prior to the Date of Termination multiplied by a fraction, the
        numerator of which is the number of days that the Executive is employed by
        the
        Company during the year in which the Date of Termination occurs and the
        denominator of which is 365.

       

      (m)           “Retirement”
        shall have the meaning ascribed to such term in Section 9(f) below.

       

      (n)           
        “Separation From Service” shall mean a termination of the
        Executive’s

       

      
        
           

        

        
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      employment
        in a manner consistent with Treasury Regulation Section
        1.409A-1(h).

       

      (o)           “Stock
        Incentive Plan” shall have the meaning ascribed to such term in Section 6(a)
        below.

       

      


      (p)           “Supplemental
        Award” shall have the meaning ascribed to such term in Section
        6(b).

       

      (q)           “Target
        Bonus” shall have the meaning ascribed to such term in Section 5
        below.

       

      (r)           “Term”
        shall have the meaning ascribed to such term in Section 2 below.

       

      2.           Term
        of Employment.

       

      The
        term of the Executive’s employment hereunder shall begin on the Effective Date
        and end at the close of business on March 1, 2011; provided, however, that
        the
        Term shall thereafter be automatically extended for additional one-year periods,
        unless either the Company or the Executive gives the other written notice
        at
        least 180 days prior to the then-scheduled expiration of the Term that such
        Party is electing not to so extend the Term (the initial term plus any extension
        thereof in accordance herewith being referred to herein as the
“Term”).  Notwithstanding the foregoing, the Term shall end on the
        date on which the Executive’s employment is terminated by either Party in
        accordance with the provisions herein.

      


      3.           Position;
        Duties and Responsibilities.

       

      During
        the Term, the Executive shall be employed as the President and Chief Executive
        Officer of the Company and shall be responsible for the general management
        of
        the affairs of the Company and shall perform such other duties and
        responsibilities as determined by the Board.  It is also the intention
        of the Parties that the Executive shall continue to be nominated as a member
        of
        the Board.  The Executive, in carrying out his duties under this
        Agreement, shall report to the Board or the Chairman of the Board as the
        Board’s
        designee.  The Executive shall devote substantially all of his
        business time and attention to the satisfactory performance of his
        duties.  Anything herein to the contrary notwithstanding, nothing
        shall preclude the Executive from (i) subject to the reasonable approval of
        the Board, serving on the boards of directors of trade associations and/or
        charitable organizations or other business corporations (provided such service
        is not prohibited under Section 11(a) below), (ii) engaging in charitable
        activities and community affairs and (iii) managing his personal
        investments and affairs, provided that the activities described in the preceding
        clauses (i) through (iii) do not materially interfere with the proper
        performance of his duties and responsibilities hereunder.

      


      4.           Base
        Salary.

       

      During
        the Term, the Executive shall be paid an annualized Base Salary of $1,000,000,
        payable in accordance with the regular payroll practices of the Company,
        subject
        to annual

       

      
        
           

        

        
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      review
        by the Board (or its designee, including the Compensation Committee of the
        Board) in its (or its designee’s) sole discretion.  During the Term
        the Base Salary may not be decreased without the Executive’s prior written
        consent.  After any increase in base salary approved by the Board or
        its designee, the term “Base Salary” as used in this Agreement shall thereafter
        refer to such increased amount.  The Executive shall not be entitled
        to any compensation for service as a member of the Board or for service as
        an
        officer or member of any board of directors of any Affiliate.

      


      5.           Annual
        Incentive Awards.

       

      During
        the Term (including for fiscal year 2007), the Executive shall be eligible
        to
        receive an annual incentive award (provided the Executive was employed
        continuously during the applicable fiscal year) pursuant to the Company’s
        Incentive Compensation Plan, as amended (or such other annual incentive plan
        as
        may be approved by the Company’s shareholders), in effect for the applicable
        fiscal year (“Bonus Plan”).  The Executive’s annual incentive award
        for fiscal year 2007 and thereafter shall have a target of 125% of Base Salary
        (“Target Bonus”) with a potential maximum award of up to two (2) times the
        Target Bonus, in all events based on the Executive’s achievement of annual
        performance and other targets approved by the committee administering the
        Bonus
        Plan.  The amount and payment of any Annual Bonus shall be determined
        in accordance with the Bonus Plan.  Any Annual Bonus shall be payable
        when bonuses for the applicable performance period are paid to other senior
        executives of the Company, but in all events no later than the 60th day
        following the end of the applicable fiscal year for which the Annual Bonus
        has
        been earned.  As used in this Agreement, “Annual Bonus” shall mean the
        annual incentive award earned by the Executive pursuant to the Bonus Plan
        for
        the applicable completed performance period.  After any increase in
        the Executive’s target annual bonus opportunity as a percentage of Base Salary
        as approved by the Board or its designee, the term “Target Bonus” as used in
        this Agreement shall thereafter refer to the increased target
        opportunity.

      


      6.           Long-Term
        Incentive Awards; Supplemental Award.

       

      (a)           During
        the Term for fiscal year 2008 and thereafter, provided the Executive is employed
        by the Company, the Executive shall be eligible to participate in the Company’s
        2003 and 2005 Stock Incentive Plans, as amended from time to time, or such
        other
        long-term incentive plan(s) as may be approved by the Company’s shareholders
        from time to time (“Stock Incentive Plan”), with grants under such plan(s)
        having an annual grant date target value, in the aggregate, equal to no less
        than 100% of total cash compensation (Base Salary plus Target
        Bonus).  For this purpose, Base Salary shall be the annualized rate of
        salary in effect on the date of the award and Target Bonus shall be the Target
        Bonus for the year in which the award is made.  Awards under any Stock
        Incentive Plan shall be made at such times as awards are generally made to
        the
        Company’s senior executives.  The Board shall have the discretion to
        decide the form of any equity award (whether it is awarded in restricted
        stock,
        stock options, other type of equity or a combination thereof).  Any
        stock option award shall be valued on the basis of Black-Scholes or the
        valuation formula used by the Company in reporting such compensation in its
        filings with the Securities and Exchange Commission.  Except as
        otherwise expressly provided herein, all equity grants shall be governed
        by the
        applicable Stock Incentive

       

      
        
           

        

        
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      Plan
        and/or award agreement.  The Executive shall be subject to the equity
        ownership, retention and other requirements applicable to senior executives
        of
        the Company.

       

      (b)           During
        the Term for fiscal year 2008 and thereafter, provided the Executive is employed
        by the Company, the Executive shall be entitled to an annual award with an
        aggregate grant date value equal to 30% of the total current cash compensation
        (Base Salary plus Annual Bonus) (“Supplemental Award”).  For this
        purpose, Base Salary shall be the Base Salary paid to the Executive for the
        prior fiscal year and Annual Bonus shall be the annual bonus awarded to the
        Executive by the Board for the prior fiscal year.  The Supplemental
        Award shall not be awarded to the Executive until after the determination
        by the
        Board of the Executive’s Annual Bonus for the prior fiscal year (but in no event
        later than 30 days thereafter) and shall be awarded in the form of restricted
        stock units (payable in shares of the Company’s common stock (“Shares”))
        pursuant to the Stock Incentive Plan (“Career Units”).  Any Career
        Units shall be governed by the applicable Stock Incentive Plan and, if
        applicable, any award agreement.  For purposes of this Section 6(b),
        each Career Unit shall be (i) equal to one Share and (ii) valued at the closing
        price of such Share on the date that the Supplemental Award is
        made.  Notwithstanding anything herein to the contrary, the Executive
        shall have the right to elect to receive up to 50% of any Supplemental Award
        in
        the form of a credit to a bookkeeping account maintained by the Company for
        the
        Executive’s account (the “Notional Account”) (and thus not have such amount
        awarded in the form of Career Units), provided the Executive delivers to
        the
        Company before the close of his taxable year preceding the year in which
        the
        Supplemental Award is earned a written election stating the percentage of
        the
        Supplemental Award (up to 50%) to be credited to the Notional
        Account.  If the Executive makes such an election, at the time the
        Supplemental Award for the year is made by the Company, the Company will
        credit
        the amount the Executive has elected to receive in accordance herewith to
        the
        Notional Account, the balance of which account shall periodically be credited
        (or debited) with the deemed positive (or negative) return based on returns
        of
        the investment alternative or alternatives under the Company’s 401(k) plan
        selected in advance (and in accordance with the applicable rules of such
        plan or
        investment alternative) by the Executive to apply to such Notional Account,
        with
        such deemed returns calculated in the same manner and at the same times as
        the
        return on such investment alternative(s).  The Company’s obligation to
        pay the amount credited to the Notional Account, including any return thereon
        provided for in this Section 6(b), and to deliver Shares in respect of the
        Career Units hereunder shall be an unfunded obligation to be satisfied from
        the
        general funds of the Company.  Except as otherwise provided in Section
        9 below, any Supplemental Award (whether in the form of Career Units or the
        Notional Account (as adjusted for any returns thereon) (“Adjusted Notional
        Account”)) granted prior to April 14, 2008 shall cliff vest 50% on April 14,
        2008 and 50% on the date the Executive reaches age 65 and any Supplemental
        Award
        (whether in the form of Career Units or the Adjusted Notional Account) made
        on
        or after April 14, 2008 shall cliff vest 100% on the date the Executive reaches
        age 65, provided that in both cases the Executive is employed by the Company
        on
        such vesting date.  In addition, provided that the Executive is
        employed by the Company on the relevant vesting date, any unvested Adjusted
        Notional Account shall vest upon a Change in Control as defined in Section
        1(g)(i) or (ii) and any unvested Career Units shall vest upon a “change in
        control event” within the meaning of Section 409A of the Internal Revenue Code
        of 1986, as amended from time to time (the “Code”) and the regulations
        promulgated thereunder (“Section 409A”) if

       

      
        
           

        

        
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      unvested
        restricted stock awards granted under the Stock Incentive Plan also vest
        on such
        event. Finally, in the Board’s sole discretion and upon its written consent,
        previously granted Supplemental Awards that remain unvested after the Executive
        reaches age 62 may also vest.  The vested Career Units and the vested
        balance in the Adjusted Notional Account, if any, shall not be distributed
        to
        the Executive until there has been a Separation From Service or, if earlier,
        there has been a Change in Control as defined in Section 1(g)(i) or (ii)
        hereof and, at such time, shall only be distributed at the
        earliest time that satisfies the requirements of this Section
        6(b).  Upon a Change in Control as defined in Section 1(g)(i) or (ii),
        the vested Supplemental Award shall be distributed in Shares for any vested
        Career Units and in a lump-sum cash payment for any vested balance in the
        Adjusted Notional Account to the Executive.  In addition, if the
        Executive’s employment is terminated for any reason, after taking into account
        Section 9 hereof, any unvested Supplemental Awards (whether in the form of
        Career Units or the Adjusted Notional Account) shall be forfeited and the
        vested
        Supplemental Award shall be distributed in Shares for any vested Career Units
        and in a lump-sum cash payment for any vested balance in the Adjusted Notional
        Account to the Executive in January of the year following the year in which
        the
        later of the Date of Termination or the Executive’s Separation From Service
        occurs; provided, however, that if the Executive is a “specified employee” as
        determined pursuant to Section 409A as of the date of the Executive’s Separation
        From Service, such distribution shall not be made before the first business
        day
        of the seventh calendar month following the month in which the Executive’s
        Separation From Service occurs.  For purposes of Section 409A, the
        vested balance in the Adjusted Notional Account shall be deemed to be a payment
        separate and distinct from the vested Career Units.  In addition, the
        Executive can elect to delay the time of any payment under this Section 6(b),
        or
        change the form of payment for the Adjusted Notional Account, provided such
        election is delivered to the Company in writing at least 12 months before
        the
        scheduled payment date for such payment and the new payment date for such
        payment is not earlier than (i) the Executive’s death, (ii)  the
        Executive’s “disability” which satisfies the requirements of Section
        409A(a)(2)(C) of the Code and its implementing regulations, or (iii) five
        (5)
        years from the originally scheduled payment date.  The Parties
        acknowledge that pursuant to the employment agreement between the Parties
        dated
        as of December 22, 2004 (the “Prior Employment Agreement”), the Executive was
        awarded Supplemental Awards pursuant to Section 6(b) of the Prior Employment
        Agreement and such Supplemental Awards (including any Career Units or Adjusted
        Notional Account) shall be treated in accordance with Section 6(b) and the
        applicable provisions of Section 9 of this Agreement as if they had been
        granted
        hereunder.  Upon the expiration or termination of the Term, the
        vesting and payment dates in this Section 6(b) (without regard to Section
        9,
        except as otherwise expressly provided in Section 9(d) of this Agreement)
        and
        the election right in this Section 6(b) shall continue to apply to any
        outstanding Supplemental Award.

       

      7.           Employee
        Benefit Programs.

       

      During
        the Term, subject to the Company’s right to amend, modify or terminate any
        benefit plan or program, the Executive shall be entitled to participate in
        all
        employee savings and welfare benefit plans and programs made available to
        the
        Company’s senior-level executives on a basis no less favorable than provided to
        other similarly-situated executives, as such plans or programs may be in
        effect
        from time to time, including, without limitation, savings and other retirement
        plans or programs, medical, dental, hospitalization, short-term and
        long-term

       

      
        
           

        

        
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      disability
        and life insurance plans, accidental death and dismemberment protection and
        travel accident insurance.  Notwithstanding the foregoing, the
        Executive’s eligibility for and/or participation in any supplemental retirement
        plan or program, including, but not limited to, any excess benefit plan,
        shall
        be at the sole discretion of the Board.  During the Term, the
        Executive shall also be entitled to an annual Company-paid physical medical
        exam
        and Company-paid term life insurance with a benefit equal to $2 million,
        provided the Company can obtain such insurance at commercially reasonable
        premium levels.

      


      8.           Reimbursement
        of Business and Other Expenses; Perquisites; Vacations.

       

      (a)           During
        the Term, the Executive is authorized to incur reasonable expenses in carrying
        out his duties and responsibilities under this Agreement and the Company
        shall
        promptly reimburse him for all business and entertainment expenses incurred
        in
        connection with carrying out the business of the Company, subject to
        documentation in accordance with the Company’s policy.  The Executive
        shall be entitled to first class air travel when traveling on Company
        business.

       

      (b)           The
        Executive shall be entitled to perquisites provided to other senior-level
        executives, including a monthly car allowance of up to a maximum of
        $1,500.

       

      (c)           The
        Executive shall be entitled to four weeks paid vacation per calendar
        year.

       

      Notwithstanding
        anything elsewhere to the contrary, except to the extent any reimbursement,
        payment or entitlement pursuant to Section 7 or Section 8 hereof does not
        constitute a “deferral of compensation” within the meaning of Section 409A, (i)
        the amount of expenses eligible for reimbursement or the provision of any
        in-kind benefit (as defined in Section 409A) to the Executive during any
        calendar year will not affect the amount of expenses eligible for reimbursement
        or provided as in-kind benefits to the Executive in any other calendar year,
        (ii) the reimbursements for expenses for which the Executive is entitled
        shall be made on or before the last day of the calendar year following the
        calendar year in which the applicable expense is incurred and (iii) the right
        to
        payment or reimbursement or in-kind benefits may not be liquidated or exchanged
        for any other benefit.

      


      9.           Termination
        of Employment.

       

      (a)           Termination
        Without Cause by the Company or Resignation for Good Reason by the
        Executive.  In the event that during the Term the Executive’s
        employment is terminated without Cause by the Company (other than upon death
        or
        due to Disability) or the Executive resigns for Good Reason (which, for the
        avoidance of doubt, shall not include a termination described in clause (i)
        of
        the last sentence of Section 1(j) above) and Section 9(d) below does not
        apply,
        the Executive shall be entitled to:

       

      (i)           an
        amount equal to one and a half (1.5) times the sum of (a) Base Salary plus
        (b)
        Target Bonus, payable in a cash lump sum as soon as practicable following
        the
        Date of Termination (but in no event later than

       

      
        
           

        

        
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      60
        days following such date);

       

      (ii)           a
        Pro-rata Annual Bonus, payable in a cash lump sum as soon as practicable
        following the Date of Termination but in no event earlier than January 1st or later
        than March
        15th of the
        Executive’s taxable year following the taxable year in which the Date of
        Termination occurs;

       

      (iii)           immediate
        vesting as of the Date of Termination of 50% of any restricted stock that
        remains unvested as of the Date of Termination and continued exercisability
        of
        any outstanding stock options that have vested as of the Date of Termination
        for
        two years following the Date of Termination or the remainder of the option
        term,
        if shorter;

       

      (iv)           immediate
        vesting as of the Date of Termination of 50% of any previously granted Career
        Units which would have vested on the next scheduled vesting date (i.e.,
        either on April 14, 2008 or when the Executive reaches age 65) if the Executive
        had remained employed by the Company through such vesting date, with any
        vested
        Career Units payable in accordance with Section 6(b) above;

      


      (v)           if
        the Date of Termination is prior to April 14, 2008, immediate vesting as
        of the
        Date of Termination of 25% of the account balance in the Adjusted Notional
        Account, and if the Date of Termination is on or after April 14, 2008 but
        before
        the Executive’s 65th birthday,
        immediate
        vesting as of the Date of Termination of a pro-rata portion of the unvested
        account balance in the Adjusted Notional Account (determined by multiplying
        the
        unvested adjusted balance by a fraction, the numerator of which is the number
        of
        days the Executive was employed by the Company from April 14, 2008 to the
        Date
        of Termination and the denominator of which is 1262), with any vested balance
        payable in accordance with Section 6(b) above; and

       

      (vi)           continued
        participation for the Executive and his eligible dependents in the Company’s
        welfare benefit plans in which he and his eligible dependents were participating
        immediately prior to the Date of Termination until the earlier of (a) the
        18th month
        anniversary of the Date of Termination or (b) the date, or dates, the Executive
        receives equivalent coverage under the plans and programs of a subsequent
        employer.

       

      (b)           Termination
        upon Death or due to Disability.  In the event that during the
        Term the Executive’s employment is terminated upon death or due to Disability,
        the Executive (or his estate or legal representative, as the case may be)
        shall
        be entitled to:

       

      (i)           a
        Pro-rata Annual Bonus, payable in a cash lump sum as soon as practicable
        following the Date of Termination but in no event earlier than January 1st or later
        than March
        15th of the
        Executive’s taxable year

       

      
        
           

        

        
          10

          
            

          

        

        
           

        

      

       

      following
        the taxable year in which the Date of Termination occurs;

       

      (ii)           a
        Pro-rata Supplemental Award, payable in a cash lump sum as soon as practicable
        following the Date of Termination (but in no event later than 60 days following
        such date);

       

      (iii)           immediate
        vesting as of the Date of Termination of all outstanding equity awards (other
        than Career Units), with any vested stock options remaining exercisable for
        two
        years following the Date of Termination or the remainder of the option term,
        if
        shorter; and

       

      (iv)           immediate
        vesting as of the Date of Termination of any previously granted Supplemental
        Award, payable in accordance with Section 6(b) above.

       

      (c)           Termination
        by the Company for Cause or a Voluntary Resignation by the
        Executive.  In the event that during the Term the Company
        terminates the Executive’s employment for Cause or the Executive voluntarily
        resigns other than upon Retirement, the Executive shall be entitled to any
        vested Supplemental Award, payable in accordance with Section 6(b)
        above.  Any restricted stock, stock options, Career Units and other
        equity awards as well as any account balance in the Adjusted Notional Account
        that remain unvested as of the Date of Termination shall be
        forfeited.  A voluntary resignation by the Executive of his employment
        shall be effective upon 90 days prior written notice by the Executive to
        the
        Company, subject to earlier termination by the Company (without affecting
        the
        status of such termination as a voluntary resignation) as provided in Section
        1(h)(ii) above, and, provided such notice is given by the Executive, shall
        not
        be deemed a breach of this Agreement.

       

      (d)           Termination
        without Cause by the Company or Resignation for Good Reason by the Executive
        in
        Connection with a Change in Control.  In the event that during the
        Term, (i) the Executive’s employment is terminated without Cause by the Company
        (other than upon death or due to Disability) or the Executive resigns for
        Good
        Reason (which, for the avoidance of doubt, shall not include a termination
        described in clause (i) of the last sentence of Section 1(j) above), in both
        cases upon or within one year following a Change in Control (provided the
        Term
        is still in effect or has expired during this one-year period) or (ii) the
        Executive’s employment is terminated without Cause by the Company within 90 days
        prior to a Change in Control (provided the Term is still in effect or has
        expired during this 90-day period) and such termination is in connection
        with,
        or in anticipation of, the Change in Control, the Executive shall be entitled
        to:

       

      (i)           an
        amount equal to three (3) times the sum of (a) Base Salary plus (b) Target
        Bonus, payable in a cash lump sum as soon as practicable following the Date
        of
        Termination (but in no event later than 60 days following such
        date);

       

      (ii)           a
        Pro-rata Annual Bonus, payable in a cash lump sum as soon as practicable
        following the Date of Termination but in no event earlier than

       

      
        
           

        

        
          11

          
            

          

        

        
           

        

      

       

      January
        1st or later
        than March 15th
        of the Executive’s taxable year following the taxable year in which the Date of
        Termination occurs;

       

      (iii)           an
        amount equal to 90% of the total cash compensation used to determine the
        value
        of the Supplemental Award granted immediately prior to the Date of Termination,
        payable in a lump sum as soon as practicable following the Date of Termination
        (but in no event later than 60 days following such date);

       

      (iv)           immediate
        vesting as of the Date of Termination of all outstanding equity awards (other
        than Career Units), with vested stock options remaining exercisable for the
        remainder of their original terms;

       

      (v)           immediate
        vesting as of the Date of Termination of any previously granted Supplemental
        Award, payable in accordance with Section 6(b) above; and

       

      (vi)           continued
        participation for the Executive and his eligible dependents in the Company’s
        welfare benefit plans in which he and his eligible dependents were participating
        immediately prior to the Date of Termination until the earlier of (a) 36
        months
        following the Date of Termination, or (b) the date, or dates, the Executive
        receives substantially equivalent coverage under the plans and programs of
        a
        subsequent employer.

       

      For
        purposes of the payment date in clause (iii), and the vesting dates in clauses
        (iv) and (v), of this Section 9(d), the “Date of Termination” shall mean the
        actual Date of Termination or the date of the Change in Control, whichever
        is
        later.  In addition, if the Executive’s employment is terminated
        without Cause by the Company within 90 days prior to a Change in Control
        (provided the Term is still in effect or has expired during this 90-day period),
        such termination is in connection with, or in anticipation of, the Change
        in
        Control and the Date of Termination is prior to the date the Change in Control
        occurs, then: (1) the payments under clause (i) of this Section 9(d) shall
        be
        paid to the Executive as follows:  an amount equal to one and a half
        (1.5) times the sum of (a) Base Salary plus (b) Target Bonus, payable in
        a cash
        lump sum as soon as practicable following the Date of Termination (but in
        no
        event later than 60 days following such date) and an amount equal to one
        and a
        half (1.5) times the sum of (a) Base Salary plus (b) Target Bonus, payable
        in a
        cash lump sum on the later of the date the Change in Control occurs or the
        60th day
        following the Date of Termination; and (2) as of the Date of Termination,
        the
        Executive shall also be entitled to the treatment of his equity and Supplemental
        Awards in accordance with clauses (iii), (iv) and (v) of Section 9(a), with
        any
        additional vesting under clauses (iv) and (v) of this Section 9(d) occurring
        on
        the date of the Change in Control.

       

      (e)           Termination
        of the Executive’s Employment by the Company Upon the Expiration of the
        Term.  If the Company provides written notice to the Executive in
        accordance with Section 2 above that the Term shall not renew and upon such
        expiration of the Term the Company terminates the Executive’s employment under
        circumstances that during the Term

       

      
        
           

        

        
          12

          
            

          

        

        
           

        

      

       

      would
        constitute a termination of employment without Cause, the Executive shall
        be
        entitled to the same payments, benefits and entitlements as a Termination
        without Cause under Section 9(a) hereof; provided if such termination occurs
        on
        or within one year following a Change in Control, the Executive shall be
        entitled to the payments, benefits and entitlements under Section 9(d)
        hereof.

       

      (f)           Termination
        of the Executive’s Employment Upon Retirement.  In the event that
        during the Term the Executive’s employment terminates by reason of Retirement
        (as defined below), the Executive shall be entitled to:

       

      (i)           continued
        vesting for stock options granted to the Executive on or after the Effective
        Date as if the Executive had remained an active employee of the Company through
        the applicable vesting date, with any stock options granted after the Effective
        Date which are exercisable as of the Date of Termination remaining exercisable
        until the earlier of the one year anniversary of the Date of Termination
        or the
        original expiration date for such options and any stock options vesting pursuant
        to this clause (i) remaining exercisable until the earlier of the one year
        anniversary of the date such stock options vest or the original expiration
        date
        for such options; 

       

      (ii)           in
        the event that on the Date of Termination less than a majority of the members
        of
        the Board are members who were members of the Board on the Effective Date
        and
        provided that the Board has not already exercised its discretion to accelerate
        vesting of such Supplemental Awards and/or restricted stock, (1) the account
        balance in the Adjusted Notional Account shall immediately vest and be paid
        out
        in accordance with Section 6(b) above and (2) any outstanding restricted
        stock
        and any Career Units granted to the Executive on or after the Effective Date
        will immediately vest as of the Date of Termination, with the Career Units
        payable in accordance with Section 6(b) above, provided that except to the
        extent necessary to pay any taxes on the vesting of such shares or Career
        Units,
        the Executive shall be restricted from selling such shares until the date
        such
        restricted stock or Career Units would have vested absent the application
        of
        this Section 9(f)(ii); and

       

      (iii)           any
        Supplemental Award vested as of the Date of Termination, payable in accordance
        with Section 6(b) above.

       

      For
        purposes of this Agreement, Retirement shall be any voluntary termination
        of the
        Executive’s employment on or after he reaches age 63 (other than on account of
        Good Reason, death or Disability).  A Retirement by the Executive
        shall be effective upon 90 days prior written notice by the Executive to
        the
        Company.

       

      (g)           Other
        Entitlements Upon Termination of Employment.  In the event of any
        termination of the Executive’s employment, the Executive (or his estate or legal
        representative,

       

      
        
           

        

        
          13

          
            

          

        

        
           

        

      

       

      as
        the case may be) shall be entitled to:

       

      (i)           Base
        Salary through the Date of Termination, payable on the first regularly scheduled
        payroll date following the Date of Termination;

       

      (ii)           except
        for a termination of employment pursuant to Section 9(c) above, payment of
        any
        unpaid Annual Bonus for any fiscal year preceding the Date of Termination,
        payable when bonuses for such fiscal year are paid to other Company
        executives;

       

      (iii)           any
        amounts earned or owing to the Executive but not yet paid under Section 8
        above,
        payable in accordance with such section; and

       

      (iv)           except
        as otherwise provided in Section 9(h) below, additional entitlements, if
        any, in
        accordance with applicable plans and programs of the Company (provided that
        in
        no event shall the Executive be entitled to duplication of any payments or
        benefits).

       

      (h)           Exclusivity
        of Benefits; Releases of Claims.  Any payments provided pursuant
        to Section 9(a), Section 9(d) or Section 9(e) above shall be in lieu of any
        salary continuation arrangements under any other severance program of the
        Company.  In order to be entitled to the payments, rights and other
        entitlements in Section 9(a), Section 9(b) (but only in the event of a
        termination for Disability and, in this event, only as a condition for the
        Pro-rata Supplemental Award in Section 9(b)(ii) and the vesting of the
        Supplemental Award in Section 9(b)(iv)), Section 9(d), Section 9(e) or Section
        9(f) (but only in the case of clauses (i) and (ii) of such Section 9(f))
        above,
        the Executive shall be required to execute and deliver a release of claims
        against the Company in the form of Exhibit A attached hereto no later than
        45
        days following the Date of Termination and not revoke such release within
        the
        applicable revocation period.  Upon the execution by the Executive and
        delivery to the Company of such release of claims (provided the Executive
        does
        not revoke such release within the applicable revocation period), the Company
        agrees to execute a release of claims against the Executive in the form of
        Exhibit B attached hereto and to deliver such release to the Executive. 

       

      (i)           Nature
        of Payments.  Any amounts due under this Section 9 are in the
        nature of severance payments considered to be reasonable by the Company and
        are
        not in the nature of a penalty.

       

      (j)           No
        Mitigation; No Offset.  In the event of termination of his
        employment for any reason, the Executive shall be under no obligation to
        seek
        other employment and, except as specifically provided for in this Section
        9,
        there shall be no offset against amounts due to him on account of any
        remuneration or benefits provided by any subsequent employment he may
        obtain.

       

      (k)           Resignation.  Notwithstanding
        any other provision of this Agreement, upon the termination of the Executive’s
        employment for any reason, unless otherwise requested by the Board, he shall
        immediately resign from the Board, from all boards of directors of
        any

       

      
        
           

        

        
          14

          
            

          

        

        
           

        

      

       

      Affiliate
        of the Company of which he may be a member, and as a trustee of, or fiduciary
        to, any employee benefit plans of the Company or any Affiliate.  The
        Executive hereby agrees to execute any and all documentation of such
        resignations upon request by the Company, but he shall be treated for all
        purposes as having so resigned upon termination of his employment, regardless
        of
        when or whether he executes any such documentation.

       

      (l)           Section
        409A.  Notwithstanding anything to the contrary in this Agreement
        or elsewhere (except for Section 6(b) of this Agreement), if the Executive
        is a
“specified employee” as determined pursuant to Section 409A as of the date of
        the Separation From Service and if any payment, benefit or entitlement provided
        for in this Agreement or otherwise both (x) constitutes a “deferral of
        compensation” within the meaning of Section 409A and (y) cannot be paid or
        provided in a manner otherwise provided herein or otherwise without subjecting
        the Executive to additional tax, interest or penalties under Section 409A,
        then
        any such payment, benefit or entitlement that is payable during the first
        six
        months following the Executive’s Separation From Service shall be paid or
        provided to the Executive in a cash lump-sum on the earlier of the Executive’s
        death or the first business day of the seventh calendar month following the
        month in which the Executive’s Separation From Service occurs.  In
        addition, any payment, benefit or entitlement due upon a termination of the
        Executive’s employment that represents a “deferral of compensation” within the
        meaning of Section 409A (other than any payments due pursuant to Section
        6(b) of
        this Agreement) shall only be paid or provided to Executive upon a Separation
        From Service, in which case any reference to “Date of Termination” in connection
        with such payment, benefit or entitlement shall be deemed to be a reference
        to
“Separation From Service”, and the actual payment date within the time specified
        in the applicable provision of Section 9 shall be within the Company’s sole
        discretion.  Notwithstanding anything to the contrary in this Section
        9 or otherwise, any payment or benefit under this Section 9 or otherwise
        which
        is exempt from Section 409A pursuant to Treasury Regulation Section
        1.409A-1(b)(9)(v)(A) or (C) shall be paid or provided to the Executive only
        to
        the extent the expenses are not incurred or the benefits are not provided
        beyond
        the last day of the second taxable year of the Executive following the taxable
        year of the Executive in which the Separation From Service occurs; and provided
        further that the Company reimburses such expenses no later than the last
        day of
        the third taxable year following the taxable year of the Executive in which
        the
        Separation From Service occurs. Finally, to the extent
        that the provision of any benefit pursuant to Section 9(a)(vi) or Section
        9(d)(vi) hereof is taxable to the Executive, any such reimbursement shall
        be
        paid to the Executive on or before the last day of the Executive’s taxable year
        following the taxable year in which the expense is incurred and such
        reimbursement shall not be subject to liquidation or exchange for any other
        benefit.

       

      10.           Confidentiality;
        Assignment of Rights; Return of Company Property.

       

      (a)           During
        the Term and thereafter, other than in the ordinary course of performing
        his
        duties for the Company or as required in connection with providing any
        cooperation to the Company pursuant to Section 13 below, the Executive agrees
        that he shall not disclose to anyone or make use of any trade secret or
        proprietary or confidential information of the Company or any Affiliate of
        the
        Company, including such trade secret or proprietary or confidential information
        of any customer or other entity to which the Company owes an obligation not
        to
        disclose such information, which he acquires during the course of
        his

       

      
        
           

        

        
          15

          
            

          

        

        
           

        

      

       

      employment
        (“Confidential Information”), including, but not limited to, records kept in the
        ordinary course of business, except when required to do so by a court of law, by
        any governmental agency having supervisory authority over the business of
        the
        Company or by any administrative or legislative body (including a committee
        thereof) with apparent or actual jurisdiction to order him to divulge, disclose
        or make accessible such information.  “Confidential Information” shall
        not include information that (i) was known to the public prior to its
        disclosure by the Executive; or (ii) becomes known to the public through no
        wrongful disclosure by or act of the Executive or any representative of the
        Executive.  In the event the Executive is requested by subpoena, court
        order, investigative demand, search warrant or other legal process to disclose
        any Confidential Information, the Executive agrees, unless prohibited by
        law or
        Securities and Exchange Commission regulation, to give the Company’s General
        Counsel prompt written notice of any request for disclosure in advance of
        the
        Executive’s making such disclosure and the Executive agrees not to disclose such
        information unless and until the Company has expressly authorized the Executive
        to do so in writing or the Company has had a reasonable opportunity to object
        to
        such request or to litigate the matter (of which the Company agrees to keep
        the
        Executive reasonably informed) and has failed to do so.

       

      (b)           The
        Executive hereby sells, assigns and transfers to the Company all of his right,
        title and interest in and to all inventions, discoveries, improvements and
        copyrightable subject matter (the “Rights”) which during the period of his
        employment are made or conceived by him, alone or with others, and which
        are
        within or arise out of any general field of the Company’s business or arise out
        of any work he performs, or information he receives regarding the business
        of
        the Company, while employed by the Company.  The Executive shall fully
        disclose to the Company as promptly as available all information known or
        possessed by him concerning any Rights, and upon request by the Company and
        without any further remuneration in any form to him by the Company, but at
        the
        expense of the Company, execute all applications for patents and for copyright
        registration, assignments thereof and other instruments and do all things
        which
        the Company may deem necessary to vest and maintain in it the entire right,
        title and interest in and to all such Rights.

       

      (c)           The
        Executive agrees that at the time of the termination of his employment (whether
        during or after the expiration of the Term), whether at the instance of the
        Executive or the Company, and regardless of the reasons therefor, he will
        promptly deliver to the Company’s General Counsel, and not keep or deliver to
        anyone else, any and all of the following which is in his possession or control:
        (i) Company property (including, without limitation, credit cards, computers,
        communication devices, home office equipment and other Company tangible
        property) and (ii) notes, files, memoranda, papers and, in general, any and
        all
        physical matter and computer files containing confidential or proprietary
        information of the Company or any of its Affiliates, including any and all
        documents relating to the conduct of the business of the Company or any of
        its
        Affiliates and any and all documents containing confidential or proprietary
        information of the customers of the Company or any of its Affiliates, except
        for
        (x) any documents for which the Company’s General Counsel has given written
        consent to removal at the time of termination of the Executive’s employment and
        (y) any information necessary for the Executive to retain for his tax purposes
        (provided the Executive maintains the confidentiality of such information
        in
        accordance with Section 10(a) above).

       

      
        
           

        

        
          16

          
            

          

        

        
           

        

      

       

      11.           Non-Competition;
        Non-Solicitation; Non-Disparagement.

       

      (a)           The
        Executive acknowledges that in his capacity in management the Executive has
        had
        or will have a great deal of exposure and access to the Company’s trade secrets
        and confidential and proprietary information.  Therefore, during the
        Term and thereafter (provided the Executive is employed by the Company) and
        for
        12 months (24 months in the case of the Executive’s Retirement) following the
        Executive’s termination of employment (whether during or after the expiration of
        the Term) to protect the Company’s trade secrets and other confidential and
        proprietary information, the Executive agrees that he shall not, other than
        in
        the ordinary course of performing his duties hereunder or as agreed by the
        Company in writing, engage in a “Competitive Business,” directly or indirectly,
        as an individual, partner, shareholder, director, officer, principal, agent,
        employee, trustee, consultant, or in any relationship or capacity, in any
        geographic location in which the Company or any of its Affiliates is engaged
        in
        business.  The Executive shall not be deemed to be in violation of
        this Section 11(a) by reason of the fact that he owns or acquires, solely
        as an
        investment, up to two percent (2%) of the outstanding equity securities
        (measured by value) of any entity.  “Competitive Business” shall mean
        a business engaged in (x) apparel design and/or apparel wholesaling or (y)
        retailing in competition with any business that the Company is conducting
        at the
        time of the alleged violation.

       

      (b)           The
        Executive agrees that for a period of 18 months (24 months in the case of
        the
        Executive’s Retirement) following the Executive’s termination of employment
        (whether during or after the expiration of the Term), he will not, without
        the
        prior written consent of the Company, directly or indirectly, hire any employee
        of the Company or any of its Affiliates, or solicit or encourage any such
        employee to leave the employ of the Company or its Affiliates, as the case
        may
        be.

       

      (c)           The
        Executive agrees that for a period of 18 months (24 months in the case of
        the
        Executive’s Retirement) following the Executive’s termination of employment
        (whether during or after the expiration of the Term), he will not, without
        the
        prior written consent of the Company, directly or indirectly, solicit or
        encourage any customer of the Company or any of its Affiliates to reduce
        or
        cease its business with the Company or any such Affiliate or otherwise interfere
        with the relationship of the Company or any Affiliate with its
        customers.

       

      (d)           The
        Executive and the Company each agree to refrain from making any statements
        or
        comments, whether oral or written, of a defamatory or disparaging nature
        to
        third parties regarding each other (and, in the case of the Executive’s
        commitment hereunder, the “Company” shall include an Affiliate of the Company
        and the Company’s officers, directors, personnel and products).  The
        Executive and the Company each understand that either party should be entitled
        to respond truthfully and accurately to statements about such party made
        publicly by the Executive or the Company, as the case may be, provided that
        such
        response is consistent with the responding party’s obligations not to make any
        statements or comments of a defamatory or disparaging nature as set forth
        herein.

       

      12.           Injunctive
        and Other Relief.

       

      The
        Executive expressly agrees and acknowledges any breach or threatened breach
        of
        any

       

      
        
           

        

        
          17

          
            

          

        

        
           

        

      

       

      obligation
        under Section 10 or Section 11 above will cause the Company immeasurable
        and
        irreparable harm for which there is no adequate remedy at law, and as a result
        of this the Company shall be entitled to seek the issuance by a court of
        competent jurisdiction of an injunction, restraining order or other equitable
        relief in favor of itself, without the necessity of posting a bond, restraining
        the Executive from committing or continuing to commit any such
        violation.  Any payment, benefit of entitlement due to the Executive
        under this Agreement shall be subject to forfeiture if the Executive materially
        breaches any provision of Section 10, Section 11 or Section 13 of this
        Agreement.

      


      13.           Cooperation.

       

      Following
        the Executive’s termination of employment (whether during or after the
        expiration of the Term), upon reasonable request by the Company, the Executive
        shall cooperate with the Company or any of its Affiliates with respect to
        any
        legal or investigatory proceeding, including any government or regulatory
        investigation, or any litigation or other dispute relating to any matter
        in
        which he was involved or had knowledge during his employment with the Company,
        subject to his reasonable personal and business schedules.  The
        Company shall reimburse the Executive for all reasonable out-of-pocket costs,
        such as travel, hotel and meal expenses and reasonable attorneys’ fees, incurred
        by the Executive in providing any cooperation pursuant to this Section 13;
        provided such expenses shall be paid to the Executive as soon as practicable
        but
        in no event later than the end of the calendar year following the calendar
        year
        in which the expenses are incurred, subject in all cases to the Executive
        providing appropriate documentation to the Company.  The Company shall
        also pay the Executive a reasonable per diem amount for the Executive’s time
        (other than for time spent preparing for or providing testimony) which shall
        be
        based upon the Executive’s Base Salary at the Date of Termination, with such per
        diem paid to the Executive in the calendar month following the month in which
        he
        provides such assistance.  Any reimbursement or payment under this
        Section 13 shall not affect the amount of the reimbursement or payment to
        the
        Executive in any other taxable year.  The right to payment or
        reimbursement pursuant to this Section 13 shall not be liquidated or exchanged
        for any other benefit.

      


      14.           Tax
        Matters.

       

      (a)           If
        any amount, entitlement, or benefit paid or payable to the Executive or provided
        for his benefit under this Agreement and under any other agreement, plan
        or
        program of the Company (such payments, entitlements and benefits referred
        to as
        a “Payment”) is subject to the excise tax imposed under Section 4999 of the Code
        or any similar federal or state law (an “Excise Tax”), then notwithstanding
        anything contained in this Agreement to the contrary, to the extent that
        any or
        all Payments would be subject to the imposition of an Excise Tax, the Payments
        shall be reduced (but not below zero) if and to the extent that such reduction
        would result in the Executive retaining a larger amount, on an after-tax
        basis
        (taking into account federal, state and local income taxes and the imposition
        of
        the Excise Tax), than if the Executive received all of the Payments (such
        reduced amount is hereinafter referred to as the “Limited Payment
        Amount”).  The Company shall reduce or eliminate the Payments, by
        first reducing or eliminating those payments or benefits which are payable
        in
        cash and then by reducing or eliminating non-cash payments, in each case
        in
        reverse order beginning with payments or

       

      
        
           

        

        
          18

          
            

          

        

        
           

        

      

       

      benefits
        which are to be paid the farthest in time from the Determination (as defined
        below).  Any notice given by the Executive pursuant to the preceding
        sentence shall take precedence over the provisions of any other plan,
        arrangement or agreement, including, but not limited to, the other provisions
        of
        this Agreement, governing the Executive’s rights and entitlements to any
        compensation, entitlement or benefit.

       

      (b)           All
        calculations under this Section 14 shall be made by a nationally recognized
        accounting firm designated by the Company and reasonably acceptable to the
        Executive (other than the accounting firm that is regularly engaged by any
        party
        who has effectuated a Change in Control) (the “Accounting Firm”).  The
        Company shall pay all fees and expenses of such Accounting Firm.  The
        Accounting Firm shall provide its calculations, together with detailed
        supporting documentation, both to the Company and the Executive within 45
        days
        after the Change in Control or the Date of Termination, whichever is later
        (or
        such earlier time as is requested by the Company) and, with respect to the
        Limited Payment Amount, shall deliver its opinion to the Executive that he
        is
        not required to report any Excise Tax on his federal income tax return with
        respect to the Limited Payment Amount (collectively, the
“Determination”).  Within 5 days of the Executive’s receipt of the
        Determination, the Executive shall have the right to dispute the Determination
        (the “Dispute”).  The existence of the Dispute shall not in any way
        affect the right of the Executive to receive the Payments in accordance with
        the
        Determination.  If there is no Dispute, the Determination by the
        Accounting Firm shall be final binding and conclusive upon the Company and
        the
        Executive (except as provided in subsection (c) below).

       

      (c)           If,
        after the Payments have been made to the Executive, it is established that
        the
        Payments made to, or provided for the benefit of, the Executive exceed the
        limitations provided in subsection (a) above (an “Excess Payment”) or are less
        than such limitations (an “Underpayment”), as the case may be, then the
        provisions of this subsection (c) shall apply.  If it is established
        pursuant to a final determination of a court or an Internal Revenue Service
        (the
“IRS”) proceeding which has been finally and conclusively resolved, that an
        Excess Payment has been made, the Executive shall repay the Excess Payment
        to
        the Company within 20 days following the determination of such Excess
        Payment.  In the event that it is determined by (i) the Accounting
        Firm, the Company (which shall include the position taken by the Company,
        or
        together with its consolidated group, on its federal income tax return) or
        the
        IRS, (ii) pursuant to a determination by a court, or (iii) upon the resolution
        to the satisfaction of the Executive of the Dispute, that an Underpayment
        has
        occurred, the Company shall pay an amount equal to the Underpayment to the
        Executive within 10 days of such determination or resolution together with
        interest on such amount at the applicable federal short-term rate, as defined
        under Section 1274(d) of the Code and as in effect on the first date that
        such
        amount should have been paid to the Executive under this Agreement, from
        such
        date until the date that such Underpayment is made to the
        Executive.

       

      15.           Representations
        and Covenants.

       

      (a)           The
        Executive represents and warrants that he has the free and unfettered right
        to
        enter into this Agreement and to perform his obligations under it and that
        he
        knows of no agreement between him and any other person, firm or organization,
        or
        any law or regulation, that would be violated by the performance of his
        obligations under this Agreement.  The Executive

       

      
        
           

        

        
          19

          
            

          

        

        
           

        

      

       

      agrees
        that he will not use or disclose any confidential or proprietary information
        of
        any prior employer in the course of performing his duties for the Company
        or any
        of its Affiliates.

       

      (b)           The
        Company represents that (i) the execution of this Agreement and the granting
        of
        the benefits and awards hereunder have been authorized by the Company,
        including, where necessary, by the Board, (ii) the execution, delivery and
        performance of this Agreement does not violate any law, regulation, order,
        decree, agreement, plan or corporate governance document of the Company and
        (iii) upon the execution and delivery of this Agreement by the Parties, it
        shall
        be the valid and binding obligation of the Company enforceable against it
        in
        accordance with its terms, except to the extent that enforceability may be
        limited by applicable bankruptcy, insolvency or similar laws affecting the
        enforcement of creditors’ rights generally.

       

      16.           Assignability;
        Binding Nature.

       

      This
        Agreement shall be binding upon and inure to the benefit of the Parties and
        their respective successors, heirs (in the case of the Executive) and
        assigns.  For purposes of this Section 16, a successor to the Company
        shall be limited to an entity which shall have acquired all or substantially
        all
        of the business and/or assets of the Company and shall have assumed (whether
        by
        agreement or operation of law) the Company’s rights and obligations under this
        Agreement.  No rights or obligations of the Executive under this
        Agreement may be assigned or transferred by the Executive other than his
        rights
        to compensation and benefits, which may be transferred only by will, operation
        of law or in accordance with Section 22 below.

      


      17.           Entire
        Agreement.

       

      This
        Agreement contains the entire understanding and agreement between the Parties
        concerning the subject matter hereof and, as of the Effective Date, shall
        supersede all prior agreements, understandings, discussions, negotiations
        and
        undertakings, whether written or oral, between the Parties with respect thereto
        (including the Prior Employment Agreement as well as the employment agreement
        between the Parties dated as of April 14, 2003 but not including any equity
        awards or related equity agreements which remain outstanding as of the Effective
        Date).

      


      18.           Amendment
        or Waiver.

       

      No
        provision of this Agreement may be amended unless such amendment is agreed
        to in
        writing and signed by the Executive and an authorized officer of the
        Company.  Notwithstanding the foregoing, the Company agrees to
        cooperate and work in good faith to amend this Agreement prior to January
        1,
        2009 to comply with Section 409A if such amendment is in the reasonable opinion
        of the Executive’s counsel required to prevent the Executive from incurring any
        additional tax, interest or penalties under Section 409A.  No waiver
        by either Party of any breach by the other Party of any condition or provision
        contained in this Agreement to be performed by such other Party shall be
        deemed
        a waiver of a similar or dissimilar condition or provision at the same or
        any
        prior or subsequent time.  Any waiver must be in writing and signed by
        the Party against whom it is being enforced (either the Executive or an
        authorized officer of the Company, as the case may be).

      


      
        
           

        

        
          20

          
            

          

        

        
           

        

      

       

      19.           Severability.

       

      In
        the event that any provision or portion of this Agreement shall be determined
        to
        be invalid or unenforceable by an arbitrator or court of competent jurisdiction
        for any reason, in whole or in part, the remaining provisions of this Agreement
        shall be unaffected thereby and shall remain in full force and effect to
        the
        fullest extent permitted by law.

      


      
        
           

        

        
          21

          
            

          

        

        
           

        

      

       

      20.           Survivorship.

       

      The
        respective rights and obligations of the Parties hereunder, including, without
        limitation, Section 6(b), Section 9 (termination of employment), Section
        10
        (confidentiality; assignment of rights; return of Company property), Section
        11
        (non-competition; non-solicitation; non-disparagement), Section 12 (injunctive
        and other relief), Section 13 (cooperation), Section 14 (tax matters), Section
        21 (indemnification and liability insurance) and Section 24 (resolution of
        disputes), shall survive any expiration of the Term, including expiration
        thereof upon the Executive’s termination of employment for whatever reason, to
        the extent necessary to the intended preservation of such rights and
        obligations.

      


      21.           Indemnification
        and Liability Insurance.

       

      The
        Company hereby agrees during, and after termination of, his employment to
        indemnify the Executive and hold him harmless, both during the Term and
        thereafter, to the fullest extent permitted by law and under the certificate
        of
        incorporation and by-laws of the Company against and in respect of any and
        all
        actions, suits, proceedings, claims, demands, judgments, costs, expenses
        (including reasonable attorneys’ fees), losses, amounts paid in settlement to
        the extent approved by the Company, and damages resulting from the Executive’s
        good faith performance of his duties as an officer or director of the Company
        or
        any Affiliate of the Company.  The Company shall reimburse the
        Executive for expenses incurred by him in connection with any proceeding
        hereunder upon written request from the Executive for such reimbursement
        and the
        submission by the Executive of the appropriate documentation associated with
        these expenses.  Such request shall include an undertaking by the
        Executive to repay the amount of such advance or reimbursement if it shall
        ultimately be determined that he is not entitled to be indemnified hereunder
        against such costs and expenses.  The Company shall use commercially
        reasonable efforts to obtain and maintain directors’ and officers’ liability
        insurance covering the Executive to the same extent as the Company covers
        its
        other officers and directors.

      


      22.           Beneficiaries/References.

       

      The
        Executive shall be entitled, to the extent permitted under applicable plans,
        agreements or law, to select and change a beneficiary or beneficiaries to
        receive any compensation or benefit payable hereunder following the Executive’s
        death by giving the Company written notice thereof.  In the event of
        the Executive’s death or a judicial determination of his incompetence, reference
        in this Agreement to the Executive shall be deemed, where appropriate, to
        refer
        to his beneficiary, estate or other legal representative.

      


      23.           Governing
        Law.

       

      This
        Agreement shall be governed by and construed and interpreted in accordance
        with
        the laws of New York without reference to principles of conflicts of law,
        provided, however, that Federal law shall apply to the interpretation or
        enforcement of Section 24 below.

      


      24.           Resolution
        of Disputes.

       

      
        
           

        

        
          22

          
            

          

        

        
           

        

      

       

      Except
        as otherwise provided in Section 12 above, any controversy, dispute or claim
        arising under or relating to this Agreement, the Executive’s employment with the
        Company or any Affiliate or the termination thereof shall, at the election
        of
        the Executive or the Company (unless otherwise provided in an applicable
        Company
        plan, program or agreement), be resolved by confidential, binding and final
        arbitration, to be held in the borough of Manhattan in New York City in
        accordance with the rules and procedures of the Commercial Arbitration Rules
        of
        the American Arbitration Association.  Judgment upon the award
        rendered by the arbitrator may be entered in any court having jurisdiction
        thereof and shall be binding upon the Parties.  The Executive consents
        to the personal jurisdiction of the Courts of the State of New York (including
        the United States District Court for the Southern District of New York) in
        any
        proceedings for equitable relief.  The Executive further agrees not to
        interpose any objection for improper venue in any such
        proceeding.  Each Party shall be responsible for its own costs and
        expenses, including attorneys’ fees, and neither Party shall be liable for
        punitive or exemplary damages, provided that if the Executive substantially
        prevails with respect to all claims that are the subject matter of the dispute,
        his costs, including reasonable attorneys’ fees, shall be borne by the Company;
        provided that if such costs are not reimbursed in connection with a dispute
        exempt from Section 409A pursuant to Treasury Regulation Section 1.409A-1(b)(11)
        then such payment shall be made by the Company to the Executive in the year
        following the year in which the dispute is resolved.

      


      25.           Notices.

       

      Any
        notice given to a Party shall be in writing and shall be deemed to have been
        given (i) when delivered personally (provided that a written
        acknowledgement of receipt is obtained), (ii) three days after being sent
        by certified or registered mail, postage prepaid, return receipt requested
        or
        (iii) two days after being sent by overnight courier (provided that a written
        acknowledgement of receipt is obtained by the overnight courier), with any
        such
        notice duly addressed to the Party concerned at the address indicated below
        or
        to such other address as such Party may subsequently designate by written
        notice
        in accordance with this Section 25:

      


      
        	 	
                If
                  to the Company:

              	
                The
                  Warnaco Group, Inc.

              
	 	 	
                501
                  Seventh Avenue

              
	 	 	
                New
                  York, New York 10018

              
	 	 	
                Attention:  General
                  Counsel

              
	 	 	 
	 	
                If
                  to the Executive:

              	
                The
                  most recent address in the Company’s
                  records.

              


      

      


      26.           Withholdings.

       

      The
        Company may withhold from any amounts payable under this Agreement such Federal,
        state, local or other taxes as shall be required to be withheld pursuant
        to any
        applicable law or regulation.

      


      
        
           

        

        
          23

          
            

          

        

        
           

        

      

      


      27.           Headings.

       

      The
        headings of the sections contained in this Agreement are for convenience
        only
        and shall not be deemed to control or affect the meaning or construction
        of any
        provision of this Agreement.

      


      28.           Counterparts.

       

      This
        Agreement may be executed in two or more counterparts.

       

      
        
           

        

        
          24

          
            

          

        

        
           

        

      

       

      IN
        WITNESS WHEREOF, the undersigned have executed this Agreement as of the date
        first written above.

      


      


      


      
        	 	
                THE
                  WARNACO GROUP, INC.

              	 
	 	 	 	 
	 	 	 	 
	 	 	 	 
	 	
                By:

              	
                   /s/
                  Jay A. Galluzzo

              	 
	 	
                Name:

              	
                Jay
                  A. Galluzzo

              	 
	 	
                Title:

              	
                Senior
                  Vice President – Corporate Development,

              
	 	 	
                General
                  Counsel and Secretary

              	 
	 	 	 	 
	 	 	 	 
	 	 	 	 
	 	
                THE
                  EXECUTIVE

              	 
	 	 	 	 
	 	 	 	 
	 	 	 	 
	 	
                /s/
                  Joseph R. Gromek

              	 
	 	
                Joseph
                  R. Gromek

              	 


      

      


      


      
        
           

        

        
          25

          
            

          

        

        
           

        

      

      


      Exhibit
        A

      AGREEMENT
        AND RELEASE OF CLAIMS

      


       

      THIS
        AGREEMENT AND RELEASE is executed by JOSEPH R. GROMEK (the “Executive”) as of
        the date of this Agreement and Release.

      


      WHEREAS,
        the Executive and The Warnaco Group, Inc. (the “Company”) entered into an
        employment agreement dated December 19, 2007, as amended from time to time
        (the
“Employment Agreement”);

      


      WHEREAS,
        the Executive has certain entitlements pursuant to the Employment Agreement
        subject to the Executive’s executing this Agreement and Release.

      


      NOW,
        THEREFORE, in consideration of the ­payments set forth in Section 9 of the
        Employment Agreement and other good and valuable consideration, the Executive
        agrees as follows:

      The
        Executive, on behalf of himself and his dependents, heirs, administrators,
        agents, executors, successors and assigns (the “Executive Releasors”), hereby
        releases and forever discharges the Company and its affiliated companies
        and
        their past and present parents, subsidiaries, successors and assigns and
        all of
        the aforesaid companies’ past and present officers, directors, employees,
        trustees, shareholders, representatives and agents (the “Company Releasees”),
        from any and all claims, demands, obligations, liabilities and causes of
        action
        of any kind or description whatsoever, in law, equity or otherwise, whether
        known or unknown, that any Executive Releasor had, may have had or now has
        against the Company or any other Company Releasee as of the date of execution
        of
        this Agreement and Release arising out of or relating to the Executive’s
        employment relationship, or the termination of that relationship, with the
        Company (or any affiliate), including, but not limited to, any claim, demand,
        obligation, liability or cause of action arising under any Federal, state,
        or
        local employment law or ordinance (including, but not limited to, Title VII
        of
        the Civil Rights Act of 1964, the Civil Rights Act of 1991, the Equal Pay
        Act,
        the Americans With Disabilities Act of 1991, the Workers Adjustment and
        Retraining Notification Act, the Employee Retirement Income Security Act
        (other
        than any claim for vested benefits), the Family and Medical Leave Act, and
        the
        Age Discrimination in Employment Act, as amended by the Older Workers’ Benefit
        Protection Act), tort, contract, or alleged violation of any other legal
        obligation (collectively “Released Executive Claims”).  Anything to
        the contrary notwithstanding in this Agreement and Release or the Employment
        Agreement, nothing herein shall release any Company Releasee from any claims
        or
        damages based on (i) any right the Executive may have to enforce this Agreement
        and Release or any right provided pursuant to Section 9 or Section 20 of
        the
        Employment Agreement, or (ii) any right or claim that arises after the date
        of
        this Agreement and Release.

      


      The
        Executive acknowledges that he has been provided a period of at least 21
        calendar days in which to consider and execute this Agreement and
        Release.  The Executive further acknowledges and understands that he
        has seven calendar days from the date on which he executes this Agreement
        and
        Release to revoke his acceptance by delivering to the Company

       

      
        
           

        

        
          26

          
            

          

        

        
           

        

      

       

      written
        notification of his intention to revoke this Agreement and
        Release.  This Agreement and Release becomes effective when signed
        unless revoked in writing and in accordance with this seven-day
        provision.  To the extent that the Executive has not otherwise done
        so, the Executive is advised to consult with an attorney prior to executing
        this
        Agreement and Release.

      


      This
        Agreement and Release shall be
        governed by and construed and interpreted in accordance with the laws of
        New
        York without reference to principles of conflicts of law.

      


      IN
        WITNESS WHEREOF, the Executive has
        executed this Agreement and Release as of the date written below.

      


      


      


      
        	 	 	 
	 	
                Joseph
                  R. Gromek

              	 
	 	 	 
	 	 	 
	 	 	 
	 	
                Date:____________________________

              	 


      

       

      
 

      
        
           

        

        
          27

          
            

          

        

        
           

        

      

       

      Exhibit
        B

      AGREEMENT
        AND RELEASE OF CLAIMS

      


       

      THIS
        AGREEMENT AND RELEASE is executed by THE WARNACO GROUP, INC. (the “Company”) as
        of the date of this Agreement and Release.

      


      WHEREAS,
        the Company and Joseph R. Gromek (the “Executive”) entered into an employment
        agreement dated December 19, 2007, as amended from time to time (the “Employment
        Agreement”);

      


      WHEREAS,
        the Executive has certain entitlements pursuant to the Employment Agreement
        subject to the Executive’s executing a release of claims against the Company in
        the form of Exhibit A to the Employment Agreement (“Executive
        Release”);

      


      WHEREAS,
        the Executive has executed and delivered the Executive Release to the Company
        and has not revoked such release within the applicable revocation
        period;

      


      NOW,
        THEREFORE, in consideration of the mutual promises contained in the Employment
        Agreement and other good and valuable consideration, the Company agrees as
        follows:

      The
        Company, on behalf of itself and its affiliated companies and their past
        and
        present parents, subsidiaries, officers, directors and successors and assigns
        but excluding the Executive (the “Company Releasors”), hereby releases and
        forever discharges the Executive from any and all claims, demands, obligations,
        liabilities and causes of action of any kind or description whatsoever, in
        law,
        equity or otherwise, that any Company Releasor has, may have had or now has
        against the Executive as of the date of execution of this Agreement and Release
        arising out of or relating to the Executive’s employment relationship, or the
        termination of that relationship, with the Company (or any affiliate),
        including, but not limited to, any claim, demand, obligation, liability or
        cause
        of action arising under any Federal, state, or local statute, regulation,
        ordinance or order or any claim based on tort or contract law, other than
        any
        claim, demand, obligation, liability or cause of action that is based on
        any
        fraudulent act or on facts unknown to the Company or any Company Releasor
        on or
        prior to the date of this Agreement and Release.  Anything to the
        contrary notwithstanding in this Agreement and Release or the Employment
        Agreement, nothing herein shall release the Executive or any other person
        released herein from any claims or damages based on (i) any right the Company
        or
        any of its affiliates may have to enforce this Agreement and Release or any
        right as provided pursuant to Section 20 of the Employment Agreement or
        (ii) any right or claim that arises after the date of this Agreement and
        Release.

      


      This
        Agreement and Release shall be
        governed by and construed and interpreted in accordance with the laws of
        New
        York without reference to principles of conflicts of law.

       

      
        
           

        

        
          28

          
            

          

        

        
           

        

      

       

      IN
        WITNESS WHEREOF, the Company has
        executed this Agreement and Release as of the date written below.

      


      
        	 	
                THE
                  WARNACO GROUP, INC.

              	 
	 	 	 	 
	 	
                By:

              	 	 
	 	 	 	 
	 	
                Name:

              	 	 
	 	 	 	 
	 	
                Title:

              	 	 
	 	 	 	 
	 	
                Date:

              	 	 


      

      
 

       

      29