<Page>



                             DATED 18 DECEMBER 2001





                          MULLION INTERNATIONAL LIMITED

                                       and

                              ROYAL HOLDINGS, INC.





               --------------------------------------------------

                              AGREEMENT RELATING TO
                          THE SALE AND PURCHASE OF THE
                   ENTIRE ISSUED SHARE CAPITAL OF LMK LIMITED
                    AND SHARES IN THE CAPITAL OF PENHALIGON'S
                  & JEAVONS INVESTMENT CO LIMITED, MULMKION BV
                        AND PENHALIGON'S PACIFIC LIMITED

              -----------------------------------------------------










                    Skadden, Arps, Slate, Meagher & Flom LLP
                                One Canada Square
                                  Canary Wharf
                                     London
                                     E14 5DS





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                                    CONTENTS

<TABLE>

<S>                                                                                                 <C>
 1.    INTERPRETATION................................................................................1
 2.    SALE AND PURCHASE.............................................................................1
 3.    CONSIDERATION.................................................................................1
 4.    CONDITIONS TO COMPLETION......................................................................3
 5.    SELLER'S COVENANTS AND CONDUCT OF THE ACQUIRED BUSINESS BEFORE COMPLETION.....................5
 6.    COMPLETION....................................................................................9
 7.    SELLER'S WARRANTIES..........................................................................10
 8.    PURCHASER'S WARRANTIES.......................................................................11
 9.    PURCHASER'S UNDERTAKINGS AND ACKNOWLEDGEMENT.................................................12
10.      INTRA-GROUP GUARANTEES.....................................................................12
11.      EFFECT OF COMPLETION.......................................................................13
12.      PROTECTION OF GOODWILL.....................................................................13
13.      ACCESS.....................................................................................14
14.      REMEDIES AND WAIVERS.......................................................................15
15.      ASSIGNMENT.................................................................................15
16.      FURTHER ASSURANCE..........................................................................15
17.      ENTIRE AGREEMENT...........................................................................15
18.      NOTICES....................................................................................16
19.      ANNOUNCEMENTS..............................................................................18
20.      CONFIDENTIALITY............................................................................18
21.      COSTS AND EXPENSES.........................................................................19
22.      COUNTERPARTS...............................................................................19
23.      TIME OF ESSENCE............................................................................20
24.      INVALIDITY.................................................................................20
25.      GOVERNING LAW..............................................................................20
26.      JURISDICTION...............................................................................20
27.      SELLER'S AGENT FOR SERVICE.................................................................20
28.      PURCHASER'S AGENT FOR SERVICE..............................................................21
29.      SPECIFIC PERFORMANCE.......................................................................22
SCHEDULE 1..........................................................................................23
Interpretation......................................................................................23
SCHEDULE 2..........................................................................................30
Completion arrangements.............................................................................30
SCHEDULE 3..........................................................................................34
The Warranties......................................................................................34
1.    OWNERSHIP OF THE SHARES.......................................................................34
2.    CAPACITY OF THE SELLER........................................................................34
3.    ARRANGEMENTS BETWEEN THE GROUP AND THE SELLER'S GROUP.........................................34
4.    GROUP STRUCTURE, ETC..........................................................................35
5.    OWNERSHIP, CONDITION AND SUFFICIENCY OF ASSETS................................................36
6.    STOCK.........................................................................................36
7.    ACCURACY OF INFORMATION.......................................................................36
8.    ACCOUNTS AND MANAGEMENT ACCOUNTS..............................................................37
9.    EVENTS SINCE THE ACCOUNTS DATE................................................................37
10.      CONTRACTS AND COMMITMENTS..................................................................38
11.      BANK ACCOUNTS AND BORROWINGS...............................................................38
</TABLE>





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<TABLE>

<S>                                                                                                <C>
12.      POWERS OF ATTORNEY.........................................................................39
13.      GRANTS AND ALLOWANCES......................................................................39
14.      COMPLIANCE WITH LAWS.......................................................................39
15.      LICENCES...................................................................................39
16.      LITIGATION.................................................................................39
17.      DELINQUENT AND WRONGFUL ACTS...............................................................39
18.      OWNERSHIP OF LAND..........................................................................40
19.      INTELLECTUAL PROPERTY......................................................................40
20.      INSURANCES.................................................................................40
21.      EMPLOYMENT.................................................................................40
22.      PENSIONS...................................................................................41
23.      TAX........................................................................................41
24.      TAX RETURNS, DISPUTES, RECORDS AND CLAIMS ETC..............................................42
25.      STAMP DUTY.................................................................................42
26.      VALUE ADDED TAX............................................................................42
27.      DEDUCTIONS AND WITHHOLDINGS................................................................42
28.      RESIDENCE..................................................................................42
29.      BROKER'S FEES..............................................................................42
30.      ENVIRONMENTAL..............................................................................43
31.      UNDISCLOSED LIABILITIES....................................................................43
32.      DATA ROOM..................................................................................43
SCHEDULE 4..........................................................................................44
(Limitations on liability)..........................................................................44
1.    LIMITATION ON QUANTUM AND GENERAL.............................................................44
2.    TIME LIMITS FOR BRINGING CLAIMS...............................................................44
3.    CONDUCT OF LITIGATION.........................................................................44
4.    NO LIABILITY IF LOSS IS OTHERWISE COMPENSATED FOR.............................................45
5.    RECOVERY FROM INSURERS AND OTHER THIRD PARTIES................................................46
6.    ACTS OF PURCHASER.............................................................................46
7.    THE ACCOUNTS..................................................................................47
8.    RETROSPECTIVE LEGISLATION.....................................................................48
9.    PURCHASER'S KNOWLEDGE.........................................................................48
10.   INFORMATION MEMORANDUM, DATA ROOM AND INDEPENDENT ADVICE OF PURCHASER.........................48
11.   DISCLOSURE....................................................................................49
12.   CLAIM TO BE REDUCTION OF PURCHASE PRICE.......................................................49
13.   TAXATION......................................................................................49
PART I  PENHALIGON'S LIMITED........................................................................50
SCHEDULE 5..........................................................................................51
PART II PENHALIGON'S PACIFIC LIMITED................................................................51
SCHEDULE 6..........................................................................................52
PART I  PENHALIGON'S AND JEAVONS INVESTMENT CO LIMITED..............................................52
SCHEDULE 6..........................................................................................53
SCHEDULE 6 PART II MULMKION B.V.....................................................................53
SCHEDULE 6..........................................................................................54
PART III LMK LIMITED................................................................................54
SCHEDULE 7..........................................................................................56
The Properties......................................................................................56
SCHEDULE 8..........................................................................................58
Pro Forma Net Working Capital Statement.............................................................58
</TABLE>


                                       ii


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<TABLE>
<S>                                                                                                 <C>
SCHEDULE 9..........................................................................................59
Registered Intellectual Property....................................................................59

</TABLE>

                                      iii



<Page>




THIS AGREEMENT is made the 18th day of December, 2001

BETWEEN:

1. Mullion International Limited whose registered office is at PO Box 3186,
Roadtown, Tortola, British Virgin Islands (the "Seller");

AND

2. Royal Holdings, Inc., a Delaware corporation, whose business address is c/o
Fox Paine & Co LLC, 950 Tower Lane, Suite 1150, Foster City, California 94404
(the "Purchaser").

WHEREAS:

The Seller has agreed to sell and the Purchaser has agreed to purchase and pay
for the Shares (as defined in this Agreement) on the terms and subject to the
conditions of this Agreement.

WHEREBY IT IS AGREED as follows:

1.       INTERPRETATION

(A)      Certain words and expressions used in this Agreement are defined in
         Schedule 1.

(B)      The Schedules form part of this Agreement and shall have the same force
         and effect as if set out in the body of this Agreement and any
         reference to this Agreement shall include the Schedules.

2.       SALE AND PURCHASE

(A)      On the terms and subject to the conditions set out in this Agreement,
         the Seller shall with full title guarantee sell and the Purchaser shall
         purchase the Shares as at and with effect from Completion free from all
         claims, liens, charges and Encumbrances together with all rights
         attached or accruing to them at Completion.

(B)      The Purchaser shall from Completion be entitled to exercise all rights
         attached or accruing to the Shares including, without limitation, the
         right to receive all dividends paid or made on or after the Completion
         Date.

3.       CONSIDERATION

(A)      The total consideration for the sale of the Shares shall be the payment
         by the Purchaser of the Purchase Price subject to adjustment in
         accordance with sub-clauses 3(C) to 3(F) inclusive below. The Purchase
         Price is payable in accordance with Clause 6 (Completion) and any
         adjustment to the Purchase Price shall be payable in accordance with
         sub-clauses 3(B) to 3(G).

(B)      If the Net Working Capital Amount of the Group as agreed or determined
         pursuant to clauses 3(C) to 3(F) inclusive is:-




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         (i)      greater than 'L'1,500,000 then the Purchaser shall within
                  5 Business Days of such agreement or determination pay to the
                  Seller such sum by which the Net Working Capital Amount so
                  agreed or determined exceeds 'L'1,500,000; or

         (ii)     less than 'L'1,500,000 then the Seller shall within 5
                  Business Days of such agreement or determination pay to the
                  Purchaser such sum by which the Net Working Capital Amount so
                  agreed or determined is less than 'L'1,500,000.

(C)      The Purchaser shall, following Completion, give to the Seller or the
         Seller's accounting advisors access to all books or records (including
         materials in relation to inventories) in its or the Group's possession
         relating to the Group and the Seller shall prepare and supply to the
         Purchaser within 10 Business Days after Completion a draft Net Working
         Capital Statement for the purpose of calculating the Net Working
         Capital Amount. The draft Net Working Capital Statement shall be
         prepared in accordance with UK GAAP and using the accounting policies,
         principles, practices, evaluations, rules and procedures, methods and
         basis adopted by and applied in the same way as in the preparation of
         the Accounts. If the Seller and the Purchaser agree as to the amount of
         the Net Working Capital Amount set forth in the draft Net Working
         Capital Statement, the amount to be paid shall be determined and paid
         in accordance with clauses 3(B) and 3(G). If the Seller and the
         Purchaser do not agree as to the Net Working Capital Amount within 20
         days of delivery of the draft Net Working Capital Statement, the
         determination of the Net Working Capital Amount may be referred at the
         election of the Seller or the Purchaser to an expert agreed between the
         parties within 10 Business Days after the end of such 20 days or,
         failing such agreement, appointed by the President of the Institute of
         Chartered Accountants of England and Wales (the "Expert").

(D)      Each party shall give to the other party's accounting advisors and the
         Expert access to all books or records in its or the Group's possession
         relating to the Group and shall instruct its accountants to make
         available to the other party's accounting advisers and the Expert such
         accounts or records or audit notes held by their accounting advisers
         relating to the Group as the other party's accounting advisers or the
         Expert may reasonably require, and generally shall provide the other
         party's accounting advisers and the Experts with such other information
         and assistance as the other party's accounting advisers or the Expert
         may reasonably require. The Expert shall then calculate the Net Working
         Capital Amount in accordance with UK GAAP and using the accounting
         policies, principles, practices, evaluations, rules and procedures,
         methods and basis adopted by and applied in the same way as in the
         preparation of the Accounts as promptly as practicable.

(E)      The Expert shall be entitled (but not obliged) to disclose to one
         party, and invite its comments on, any information or material supplied
         to them by or on behalf of the other party.

(F)      In making the determination of the value of the Net Working Capital
         Amount, the Expert shall act as an expert and not as an arbitrator and
         its determination shall, in the absence of manifest error, be final and
         binding on the parties, and



                                       2




<Page>



         its fees and costs shall be borne and paid for as the Expert may
         determine or, failing such determination, by the Seller and the
         Purchaser equally.

(G)      Any amounts payable under clauses 3(B) through 3(F) shall be converted
         into US dollars based on the applicable conversion rate as published in
         the Wall Street Journal, New York Edition on the Completion Date and
         shall bear interest at a rate of 1% above the base lending rate from
         time to time in force at Lloyds TSB Bank plc. In no event shall the
         amount payable by the Purchaser or Seller under clauses 3(B) to 3(G)
         (exclusive of interest described in the immediately preceding sentence)
         exceed US$1 million. In the event that the Purchaser is entitled to a
         payment under Section 3(B) to Section 3(G) it may elect to receive such
         payment from the funds within the Escrow Account (and, if it makes such
         election, the Seller shall take all steps to assist the Purchaser in
         recovering such amount from the Escrow Agent under the Escrow
         Agreement).

4.       CONDITIONS TO COMPLETION

(A)      The respective obligations of each party to effect the transaction
         contemplated by this Agreement shall be subject to the satisfaction of
         the following Conditions:

         (i)      the obtaining by the Seller of the necessary consents of the
                  Seller's Group's lenders for the transaction under the Senior
                  Secured Super-Priority Debtor in Possession Revolving Credit
                  Agreement dated 11 June 2001 and under the Agreement,
                  Modification, Restatement and General Provisions Agreement
                  dated as of 6 October 2000;

         (ii)     execution and delivery by Warner's (United Kingdom) Limited of
                  the Warner's Deed of Release in the Agreed Form;

         (iii)    the release by each of the Seller's Group's lenders and all
                  other persons of all Encumbrances they hold over the Shares of
                  each member of the Group and such Group member's assets
                  including those in Schedule 5(B) of the Disclosure Letter and
                  all Encumbrances held by City & West End Security Centre,
                  National Westminster Bank plc, and the assumption by Warner's
                  (United Kingdom) Limited of the Bank Indebtedness in the
                  Agreed Form;

         (iv)     the termination of the deed of option dated 27 March 1997
                  between PenHal Investments, Inc., Streamchase Limited and
                  Mullion Limited and other relating to the shares in the
                  capital of Streamchase Limited and an intellectual property
                  holding company;

         (v)      the termination of the deed of option with respect to shares
                  of Mulmkion B.V. among PenHal Investments Inc., Mulmkion B.V.
                  and Mullion International Limited and Penhaligon's & Jeavons
                  Investment Co. Limited dated April 6, 1998 and all exercise
                  agreements, shareholders' agreements and articles of
                  association;



                                       3


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         (vi)     the release of all Indebtedness owing by each member of the
                  Group and all Encumbrances on the Shares and the Acquired
                  Business (and the assets and properties of each member of the
                  Group) and the release and the termination of all intercompany
                  accounts, liabilities, claims and Indebtedness (and all
                  related Encumbrances) and guarantees owed to or owed in
                  respect of the Seller, any member of the Group, Affiliates and
                  Connected Persons of the Seller by any member of the Group;

         (vii)    the Seller and each member of the Group shall have complied
                  fully with their respective obligations and covenants required
                  by this Agreement and the Completion Documents which are to be
                  performed or complied with prior to Completion;

         (viii)   the Seller and its Affiliates shall have released the Group
                  from all claims and liabilities pursuant to the Release in the
                  Agreed Form;

         (ix)     no Governmental Entity, including any supra-national or state
                  agency or regulatory body or any other person or organisation,
                  having:

                  (a)      instituted or threatened any action, suit or
                           investigation to restrain, prohibit or otherwise
                           challenge the acquisition of the Group or its assets,
                           or the Shares by the Purchaser; or

                  (b)      threatened to take any action as a result of or in
                           anticipation of the implementation of such
                           acquisition; or

                  (c)      proposed or enacted any statute or regulation which
                           would prohibit, materially restrict or materially
                           delay implementation of the acquisition of the Shares
                           or of the Group or its assets, or of the operation of
                           the Company after Completion;

         (x)      no order or judgment of any Governmental Entity, including any
                  court or governmental, statutory or regulatory body in the
                  United Kingdom or elsewhere, having been issued or made prior
                  to Completion which has the effect of making the acquisition
                  by the Purchaser of the Shares or the Group or any member of
                  the Group unlawful or otherwise prohibiting the Purchaser from
                  acquiring the Shares or the Group or its assets, or any member
                  of the Group on the Completion Date;

         (xi)     the Warranties being true, correct, complete and accurate in
                  all material respects and not materially misleading as and
                  when they are repeated at the time of Completion;

         (xii)    no fact or circumstance having occurred before the time of
                  Completion which might reasonably materially adversely affect
                  the Group, or its financial position, as a whole;

         (xiii)   all governmental consents required to transfer the Shares and
                  the Acquired Business to the Purchaser having been obtained;


                                       4


<Page>



         (xiv)    each of the arrangements, deliveries and actions required to
                  be made at Completion, including each of the arrangements set
                  forth in Schedule 2 (Completion Arrangements) shall have been
                  duly and fully made;

         (xv)     the Seller shall use its reasonable efforts to procure that
                  Michelle Stewart's employment agreement shall be assigned to
                  Penhaligon's Limited; and

         (xvi)    the promissory notes by Streamchase Limited owning to PenHal
                  Investments Inc. shall have been cancelled.

(B)      The Purchaser may waive in whole or in part any of the Conditions (save
         for condition (A)(i).

(C)      This Agreement may be terminated at any time prior to Completion:

         (i)      by the written agreement of the Seller and the Purchaser;

         (ii)     by either the Purchaser or the Seller if a material breach of
                  this Agreement has been committed by the other party and such
                  breach has not been waived or cured within 20 Business Days;
                  and

         (iii)    by either the Purchaser or the Seller by giving written notice
                  of such termination to the other in circumstances where the
                  Conditions have not been fulfilled (or waived by the
                  Purchaser) by March 31, 2002 (unless the failure to satisfy
                  such Condition results primarily from a breach by the Party
                  (or its Affiliates) seeking to terminate).

(D)      If this Agreement is terminated in accordance with sub-clause (C)
         written notice thereof shall be given as promptly as practicable to the
         other party to this Agreement and this Agreement shall terminate and
         the transaction contemplated hereby shall be abandoned, without further
         action by any of the parties hereto. If this Agreement is terminated as
         provided herein, there shall be no liability or obligation on the part
         of the Seller, the Purchaser or their respective officers, directors
         and Affiliates, and all obligations of the Parties shall terminate and
         this Agreement (save for clauses 1, 15, 18, 19, 20, 21, 22, 23, 24,
         25, 26, 27 and 28) shall cease to have affect but without prejudice to
         any rights accrued for breaches of this Agreement prior to termination;
         provided, however, that a party that has committed fraud or wilfully
         breached its representations, Warranties or covenants set forth in this
         Agreement shall be liable for damages occasioned thereby, including,
         without limitation, any expenses, including the reasonable fees and
         expenses of attorneys, accountants and other agents incurred by the
         other party in connection with this Agreement and the transaction
         contemplated hereby.

5.       SELLER'S COVENANTS AND CONDUCT OF THE ACQUIRED BUSINESS BEFORE
         COMPLETION

(A)      The Seller shall procure that, between the date of this Agreement and
         Completion (or such earlier date as set forth below), each member of
         the Group will operate the Acquired Business and otherwise carry on its
         business


                                       5


<Page>



         only in the normal course consistent with past practice and, in
         particular, the Seller will procure that the Group (and each member of
         the Group) does not, except as expressly provided in this Agreement or
         with the prior written consent of the Purchaser:

         (i)      declare, make or pay any distribution of its profits or assets
                  by way of declaration or payment of dividend or otherwise;

         (ii)     lend any money outside the ordinary course of business;

         (iii)    transfer or otherwise dispose of or agree to transfer or
                  dispose of the Group, the Acquired Business or any part of it;

         (iv)     make a material change in the nature of, or cease carrying on,
                  the Acquired Business or any part of it;

         (v)      sell or otherwise dispose of any asset or property of the
                  Acquired Business or Group outside the ordinary course of
                  business;

         (vi)     enter into any material, unusual or abnormal agreement or
                  commitment, or any other agreement or commitment outside the
                  ordinary course of business, and in particular not enter into
                  any commitment for capital expenditure in excess of
                  'L'10,000 in any single case or 'L'100,000 in
                  aggregate;

         (vii)    borrow money, or draw on any credit lines, other than under
                  existing credit facilities which will be retired and fully
                  discharged, satisfied and released at Completion;

         (viii)   create, grant or issue or agree to create, grant or issue, any
                  mortgages, charges (other than liens arising by operation of
                  law), debentures or other securities;

         (ix)     create, allot or issue or agree to create, allot or issue any
                  shares or other securities convertible into shares or form any
                  subsidiary;

         (x)      fail to renew any of its insurances in force;

         (xi)     alter the provisions of its Memorandum or Articles of
                  Association (or like constitutional document of the Seller or
                  any member of the Group);

         (xii)    in relation to the Properties, agree to a new rent or fee
                  payable under a lease, tenancy or licence;

         (xiii)   commence (or determine to settle or cease defending any)
                  litigation or arbitration proceedings;

         (xiv)    make a payment out of a bank account except where the payment
                  is in the usual course of its business;



                                       6


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         (xv)     enter into any new agreement or amend the terms of any
                  existing employment, severance, or engagement of a director,
                  other officer or employee, or increase any bonus, salary or
                  other compensation payable to any director, officer or
                  employee;

         (xvi)    adopt, increase the payments or benefits under, any profit
                  sharing, bonus, defeised compensation, savings, insurance,
                  pension, retirement or other employee benefit plan for the
                  benefit of the employees of the Group; or

         (xvii)   agree, whether oral or written, to do any of the foregoing.

         PROVIDED THAT it is acknowledged by the Purchaser that nothing in this
         clause 5 shall prevent any member of the Group from distributing its
         cash to any member of the Seller's Group prior to Completion except to
         the extent that such distribution would knowingly cause the Net Working
         Capital Amount to be less than 'L'1.5 million.

(B)      Best Endeavours. The Seller and each member of the Group shall use
         their respective best endeavours to (i) obtain all material third party
         consents and consents of any Governmental Entity required to transfer
         the Shares and the Acquired Business to the Purchaser; (ii) consummate
         each of the transactions contemplated by this Agreement and the
         Completion Documents, including the satisfaction of all obligations set
         forth in clause 4 (Conditions to Completion) and the fulfillment of all
         arrangements, deliveries and actions set forth in Schedule 2
         (Completion Arrangements); and (iii) keep all of the Warranties made in
         Schedule 3 (Warranties) true, correct and complete in all material
         respects. In consideration of the Seller and each member of the Group
         exercising their aforementioned best endeavours in obtaining any
         material third party consents, the costs associated with obtaining such
         consents (including without limitation reasonable legal fees) shall be
         shared by the Seller and the Purchaser equally; provided that the
         Seller shall bear all of the costs in fulfilling the condition set
         forth in clause 4(A)(i) and the matters described in clause 5(F).

(C)      Taiwan and Singapore Stores. In so far as the retail stores at Metro
         Walk (Taiwan) and One Raffles Link (Singapore) are concerned, the
         Seller shall procure that the Metro Walk (Taiwan) is closed prior to
         Completion and shall procure that the One Raffles Link (Singapore)
         property is closed within 90 days of Completion but prior to that date
         the Purchaser shall procure that One Raffles Link (Singapore) continues
         to operate at the Seller's expense. The Seller shall transfer the
         Stock, moveable furniture and assets and fixtures at (x) the Metro Walk
         (Taiwan) store within 15 days after Completion, and (y) the One Raffles
         Link (Singapore) store within 15 days after such store is closed, to
         the Purchaser who shall bear all costs associated with freight thereof.

(D)      Supplemental Disclosure. Each of the Seller and each member of the
         Group shall have the continuing obligation until Completion to promptly
         notify the Purchaser in writing with respect to any matter hereafter
         arising or discovered which, if existing or known at the date of this
         Agreement, would have been required to be set forth or described in
         this Agreement, the Disclosure Letter,



                                       7


<Page>



         the Schedules or the other Completion Documents; provided, however,
         that, for the purpose of the rights and obligations of the parties
         hereunder, any such supplemental or amended disclosure shall not be
         deemed to have been disclosed as of the date of this Agreement unless
         so agreed in writing by the Purchaser.

(E)      No solicitation. From and after the date hereof until the Completion
         Date, the Seller shall not, and shall cause each member of the Group,
         each of its and their Affiliates, and each of its and their respective
         directors, corporate officers or agents, as the case may be, not to
         directly or indirectly, encourage, solicit, initiate or enter into any
         discussions or negotiations concerning, any disposition of any or all
         of the members of the Group (either through a sale of assets or a sale
         of stock of the Seller, or any member of the Group or otherwise), the
         Acquired Business or any portion thereof (other than pursuant to this
         Agreement), or any proposal therefor, or furnish or cause to be
         furnished any information concerning the Shares, the Group or the
         Acquired Business to any party in connection with any transaction
         involving the acquisition of the Shares or the Acquired Business by any
         person (other than Purchaser). The Seller will promptly inform
         Purchaser of any inquiry (including the terms thereof and the person
         making such inquiry) which they may receive or learn of in respect of
         any such proposal.

(F)      US Assets. The Seller undertakes within 60 days of the Completion Date
         to procure the requisite Bankruptcy Court approval for the assumption
         by the lessee and the assignment to the Purchaser (or its designee) of
         the lease of 870 Madison Avenue (and to pay all the costs associated
         therewith), and the transfer to the Purchaser of inventory, fixtures
         and fittings situated therein, assets of the Group or assets of the
         Penhaligon's division of Warnaco or the Group or Warnaco or its
         Affiliates used in or relating to the business transacted under the
         name "Penhaligon's", in each case situated in the US (including the
         assets of Penhaligon's by Request Inc. and the assets used at Saks
         Fifth Avenue) at no additional cost to the Purchaser. Upon receipt of
         the Bankruptcy Court approval, such lease will be assumed by the lessee
         and assigned to the Purchaser (or its designee) and such assets will be
         transferred to the Purchaser (or an Affiliate designated by the
         Purchaser) at no additional cost. If such approval of the Bankruptcy
         Court is obtained, the lessee under the lease shall assume the rights
         and liabilities associated with the lease of 870 Madison Avenue and
         assign the same to the Purchaser or its designee and the aforementioned
         assets of the Penhaligon's Division of Warnaco and the Group (including
         the assets of Penhaligon's by Request Inc., the assets at the store at
         870 Madison Avenue and the assets held at Saks 5th Avenue) or Warnaco
         or its Affiliates used in or relating to business transacted under the
         name "Penhaligon's" situated in the U.S. at no additional cost. If the
         Seller does not obtain the approval of the Bankruptcy Court within 60
         days of the Completion Date, the Purchaser shall be entitled to
         withdraw monies from the Escrow Account in an amount equal to the net
         book value of the inventory and other assets (excluding leasehold
         improvements) of the Penhaligon's Division of Warnaco and the Group
         (including the assets of Penhaligon's by Request Inc., the assets at
         the store at 870 Madison Avenue and the assets held at Saks 5th



                                       8


<Page>


         Avenue) or Warnaco or its Affiliates used in or relating to business
         transacted under the name "Penhaligon's" in the US as at the Completion
         Date.

(G)      If the Seller does not obtain the approval of the Bankruptcy Court
         contemplated above within 60 days with respect to the
         assignment/assumption of the lease of 870 Madison Avenue, the Purchaser
         and Seller shall use their best endeavours to effect the transfer of
         the benefits and the obligations to the Purchaser or an entity
         designated thereby pursuant to the lease by way of assignment,
         sub-lease, operating agreement or otherwise. In the event the Purchaser
         and Seller are unable to effect such transfer within 90 days after the
         Completion Date, the Purchaser and Seller shall negotiate in good faith
         to address any contingent liability of the Purchaser with respect to
         the guarantee of Penhaligon's Limited under the guarantee thereby of
         such lease and to the extent Penhaligon's Limited shall incur any
         liability or costs under such guarantee it shall be entitled to
         withdraw an amount equal to any such liability or costs from the Escrow
         Agreement; provided that, the Purchaser shall not be entitled to more
         than $400,000 for such liabilities or costs relating to such guarantee
         under the Escrow Agreement (and the Escrow Agreement shall, solely with
         respect to $400,000 in the aggregate to reimburse liabilities or costs
         incurred under such guarantee, extended until the earlier of (x)
         $400,000 has been withdrawn by the Purchaser therefrom in respect of
         such guaranty, (y) the expiration of such lease, and (z) the assumption
         of the lease by the lessee and assignment thereof to the Purchaser (or
         its designee)).

6.       COMPLETION

(A)      Completion of the sale and purchase of the Shares shall take place on
         the third Business Day following satisfaction and/or waiver of all the
         Conditions set forth in clause 4 unless another date is agreed in
         writing by the parties hereto.

(B)      At Completion the Seller and the Purchaser shall do those things
         respectively listed in respect of them in Schedule 2.

(C)      The Purchase Price (less the amount to be paid to the Escrow Agent as
         contemplated below) shall be payable by or on behalf of the Purchaser
         in immediately available funds in US dollars at Completion as referred
         to Schedule 2 provided however that US$1,700,000 of the Purchase Price
         shall be paid into the Escrow Account to be held pursuant to the Escrow
         Agreement in the Agreed Form.

(D)      Receipt of funds in accordance with sub-clause (C) shall constitute
         good discharge of the Purchaser in respect of payment made and shall
         discharge the obligations of the Purchaser under clause 2 (Sale and
         Purchase) and the Purchaser shall not have any obligation with respect
         to distribution of funds paid.

(E)      The Purchaser is not obliged to complete this Agreement unless:

         (i)      the Seller complies with all its obligations under clause 4
                  and Schedule 2; and


                                       9


<Page>



         (ii)     the purchase of all the Shares is completed simultaneously.

7.       SELLER'S WARRANTIES

(A)      Subject as provided in this Agreement, the Seller warrants to the
         Purchaser in the terms set out in Schedule 3.

(B)      The only Warranties given:

         (i)      in respect of Property are those contained in paragraphs 18
                  and 30 of Schedule 3 and each of the other Warranties shall be
                  deemed not to be given in relation to Property;

         (ii)     in respect of Intellectual Property are those contained in
                  paragraphs 19 of Schedule 3 and each of the other Warranties
                  shall be deemed not to be given in relation to Intellectual
                  Property; and

         (iii)    in respect of Tax are those contained in paragraphs 23 to 28
                  of Schedule 3 and each of the other Warranties shall be deemed
                  not to be given in relation to Tax.

(C)      Between the execution of this Agreement and Completion the Seller shall
         (i) ensure each member of the Group complies with clause 5 and (ii)
         notify the Purchaser immediately if it becomes aware of any fact or
         matter or circumstance which constitutes a breach of clause 5 or clause
         4 (A) (ix) or has caused a Warranty to become untrue or misleading at
         any time before Completion.

(D)      The Seller is under no obligation to disclose to the Purchaser anything
         which is or may constitute a breach of or be inconsistent with any of
         the Warranties given in this Agreement if they were to be repeated at
         any time after the Completion Date; or to disclose to the Purchaser
         anything which is or may constitute a breach of or be inconsistent with
         any of the Warranties of which it may become aware after the Completion
         Date.

(E)      The Seller accepts that the Purchaser is entering into this Agreement
         in reliance upon the Warranties.

(F)      The Seller undertakes (if any claim is made against it in connection
         with the Warranties) to waive and not to make any claim against any
         member of the Group or any director, employee or adviser of any member
         of the Group on whom it may have relied before agreeing to any terms of
         this Agreement or the Tax Covenant or authorising any statement in the
         Disclosure Letter.

(G)      Save as stated in sub-clause (B), each of the Warranties shall be
         construed as a separate and independent Warranty and shall not be
         limited or restricted by reference to any other Warranty.

(H)      The liability of the Seller under or in relation to the Warranties
         shall be limited as set out in Schedule 4.



                                       10


<Page>


8.       PURCHASER'S WARRANTIES

(A)      The Purchaser warrants to the Seller that:

         (i)      the Purchaser has the requisite power and authority to enter
                  into and perform this Agreement and the other documents which
                  are to be executed by the Purchaser at Completion (the
                  "Completion Documents");

         (ii)     this Agreement constitutes and the Completion Documents to
                  which the Purchaser is a party will, when executed by the
                  Purchaser, constitute binding obligations of the Purchaser in
                  accordance with their respective terms;

         (iii)    the execution and delivery of, and the performance by the
                  Purchaser of its obligations under, this Agreement and the
                  Completion Documents will not:

                  (a)      result in a breach of any provision of the memorandum
                           or articles of association or by-laws of the
                           Purchaser;

                  (b)      result in a breach of, or constitute a default under,
                           any instrument to which the Purchaser is a party or
                           by which the Purchaser is bound and which is material
                           in the context of the transactions contemplated by
                           this Agreement;

                  (c)      result in a breach of any order, judgment or decree
                           of any court or Governmental Entity to which the
                           Purchaser is a party or by which the Purchaser is
                           bound and which is material in the context of the
                           transactions contemplated by this Agreement; or

                  (d)      require the Purchaser to obtain any Consent or
                           approval of, or give any notice to or make any
                           registration with, any Governmental Entity or other
                           authority which has not been obtained or made at the
                           date hereof both on an unconditional basis and on a
                           basis which cannot be revoked (save pursuant to any
                           legal or regulatory entitlement to revoke the same
                           other than by reason of any misrepresentation or
                           misstatement);

         (iv)     the Purchaser has or on the Completion Date will have
                  available sufficient cash or other sources of immediately
                  available funds or irrevocable cash commitments to meet its
                  obligations under this Agreement and the Completion Documents
                  (assuming that the Seller is not in breach of any of its
                  obligations thereunder); and

         (v)      the Purchaser is not aware at the date of this Agreement of
                  any fact matter or circumstance which would, or is reasonably
                  likely to, give rise to a claim under this Agreement or under
                  the Tax Covenant and for the purpose of this clause the
                  Purchaser shall be deemed to be aware of anything Jason
                  Hurwitz and Troy Thacker has actual knowledge.



                                       11


<Page>


9.       PURCHASER'S UNDERTAKINGS AND ACKNOWLEDGEMENT

(A)      The Purchaser agrees and undertakes that (in the absence of fraud) it
         has no rights against and shall not make any claim against any
         employee, director, agent, officer or adviser of any member of the
         Seller's Group on whom it may have relied before agreeing to any term
         of this Agreement or any other agreement or document referred to herein
         or entering into this Agreement or any other agreement or document
         referred to herein including, without prejudice, those persons named in
         the definition of "so far as the Seller is aware" in Schedule 1.

(B)      The Purchaser acknowledges that the Group intends to utilize a
         proportion of its trading losses carried forward to date to set against
         the Group's trading profits for the year ending 31 December 2001 to a
         maximum of the sum of (x)'L'600,000 and (y) the amount of
         additional trading loss carried forwards generated during the period
         from January 1, 2002 through the Completion Date (solely if the
         Completion Date occurs after January 1, 2002) (the "Usable NOL
         amount"). No member of the Group shall realize or have any income or
         earnings or revenues which are taxable ("Discharge Income") arising due
         to the satisfaction, discharge or release of any of its Indebtedness,
         liabilities, claims or obligations (including any Indebtedness,
         liabilities, claims or obligations owing to or on behalf of members of
         the Seller's Group) contemplated by the Agreement (including that
         contemplated by the Condition and Schedule 2). To the extent that more
         than the Usual NOL Amount is utilized by the members of the Group prior
         to the Completion Date to set against the Group's trading profits
         accrued through the Completion Date (the "Excess NOLs") and/or the
         members of the Group should incur Discharge Income, the Purchaser shall
         be entitled to withdraw an amount from the Escrow Agreement equal to
         the product of (x) 35 and (y) the sum of (i) the Discharge Income and
         (ii) the Excess NOLs.

10.      INTRA-GROUP GUARANTEES

The Purchaser, for itself and its successors and assigns, covenants that, at any
time and from time to time on or after Completion, it will execute and deliver
all such instruments of assumption and acknowledgments or take such other action
as the Seller may reasonably request in order to effect the release and
discharge in full of any Assurance given by any member of the Seller's Group to
any person (including any member of the Group) in respect of any obligation or
liability of any member of the Group and the Purchaser's assumption of, and the
substitution of the Purchaser as the primary obligor in respect of, each such
Assurance in each case on a non recourse basis to the Seller's Group; provided,
that, the Purchaser shall not be required to take any action with respect to the
lease relating to 870 Madison Avenue (except as contemplated specifically by
Clause 6(G)) if the Seller does not obtain the approval of the Bankruptcy Court
contemplated by Clause 6(F) on effect the transfer of such lease contemplated by
Clause 6(G). Pending such release and discharge, the Purchaser hereby agrees
with the Seller (on behalf of itself and each member of the Seller's Group) that
it will assume and pay and discharge when due, and indemnify each member of the
Seller's Group against, all such Assurances.



                                       12


<Page>


11.      EFFECT OF COMPLETION

Save as otherwise provided herein, any provision of this Agreement or of any
other document referred to herein which is capable of being performed after but
which has not been performed at or before Completion shall remain in full force
and effect notwithstanding Completion.

12.      PROTECTION OF GOODWILL

(A)      As further consideration for the Purchaser agreeing to purchase the
         Shares on the terms contained in this Agreement and with the intent of
         assuring to the Purchaser the full benefit and value of the goodwill
         and connections of the Group, the Seller shall not (and shall procure
         that no Connected Person or agent or representative thereof shall):

         (i)      for a period of two years following the Completion Date carry
                  on or be engaged or economically interested in any business
                  carrying on in competition with the business of the Acquired
                  Business anywhere in the world, save that nothing shall
                  prevent the Seller or any member of the Seller's Group (i)
                  from conducting its business to the extent currently conducted
                  by any member of the Seller's Group which may compete or be
                  similar to the business of the Acquired Group (other than
                  operating Penhaligon's stores or operations) (ii) being the
                  holder of shares (conferring not more than 10 per cent of the
                  votes which would normally be cast at a general meeting of
                  that company) which is engaged in a business similar to the
                  Acquired Business or (iii) from acquiring the whole or a part
                  of a business, the carrying on of which would otherwise amount
                  to a breach of the undertaking contained in this sub-clause
                  (i) as part of a larger acquisition or related acquisitions if
                  the acquisition is not made with the sole or main purpose of
                  acquiring such business or (iv) from trading with its existing
                  customers or any future customers provided it does not do so
                  in direct competition with any member of the Group;

         (ii)     directly or indirectly, during the period of two years from
                  the Completion Date, solicit, entice away or hire, or
                  endeavour to solicit, entice away or hire from any member of
                  the Group any person who was at the Completion Date, an
                  employee of any member of the Group whether or not such person
                  would commit a breach of his employment contract by reason of
                  leaving service, save that this clause shall not apply to (a)
                  any employee employed by any member of the Group earning less
                  than 'L'20,000 (or its equivalent) or (b) responses to job
                  advertisements in newspapers or journals or (c) unsolicited
                  approaches by any such employee to any employment agency
                  retained by any member of the Seller's Group;

         (iii)    for two years following Completion, intentionally interfere or
                  seek to interfere or take such steps as may interfere with
                  supplies to the Group from any suppliers who shall have been
                  supplying goods or services to the Group for use in connection
                  with the Acquired Business at any time during the period of
                  two years prior to the date of Completion in



                                       13


<Page>


                  each case which would have an adverse effect on the Group's
                  supply arrangements;

         (iv)     willfully disparage the Purchaser or any member of the Group.

(B)      Each of the restrictions in this clause 12 shall be enforceable
         independently of each of the others and its validity shall not be
         affected if any of the others is invalid.

(C)      Whilst the undertakings in this clause 12 are considered by the parties
         to be reasonable in all the circumstances, if any of the restrictions
         in this clause 12 is void but would be valid if some part of the
         restriction was deleted the restriction in question shall apply with
         such modification as may be necessary to make it valid.

(D)      The Seller acknowledges that the above provisions of this clause 12 are
         no more extensive than is reasonable to protect the Purchaser in
         respect of its purchase of the Shares and the other matters
         contemplated by this Agreement.

(E)      The Seller acknowledges that following Completion neither it nor any
         member of the Seller's Group shall have the right to use the name
         "Penhaligon's" nor the right to use of the Group's Intellectual
         Property provided that the Purchaser agrees that the Seller and each
         member of the Seller's Group and their respective employees shall have
         a reasonable time following Completion to change the name of any member
         of the Seller's Group prefixed with the name "Penhaligon's" or destroy
         or amend business cards and office stationery bearing the name
         "Penhaligon's".

(F)      The Seller and the Purchaser agree that the restriction contained in
         sub-clause 12(A)(i) above shall terminate and cease to be enforceable
         against the Seller or any member of the Seller's Group immediately upon
         the Seller or any member of the Seller's Group (or their respective
         assets) being acquired by a purchaser which competes with the Purchaser
         or the Group and/or is otherwise involved in the same or similar
         business as the Acquired Business.

13.      ACCESS

(A)      Prior to Completion, the Seller shall permit or cause each member of
         the Group to permit the Purchaser and its representatives to have
         reasonable access, during Working Hours and upon reasonable advance
         notice, to all employees of the Group, books, records, offices and
         warehouses and other facilities related to the Acquired Business
         subject to reasonable rules and regulations of the Seller and the
         relevant member of the Group and the Seller shall furnish or cause to
         be furnished to the Purchaser any financial or operating data and other
         information that is available with respect to the Acquired Business as
         the Purchaser shall from time to time reasonably request. In connection
         with such access, the Purchaser and its representatives shall
         co-operate with representatives of the Seller and members of the Group
         and shall use their best efforts to minimize any disruption to the
         Acquired Business;


                                       14


<Page>


(B)      Following Completion, the Purchaser shall permit or cause any member of
         the Seller's Group and its representatives and professional advisers to
         have reasonable access during Working Hours and upon reasonable advance
         notice for a period ending on the sixth anniversary of Completion to
         the Group books and accounting, tax and other records of the Group for
         tax and accounting purposes relating only to periods prior to the
         Completion; provided, that the Seller Group shall keep all information
         of the Group confidential.

14.      REMEDIES AND WAIVERS

(A)      No delay or omission on the part of either party to this Agreement in
         exercising any right, power or remedy provided by law or under this
         Agreement or any other documents referred to in it shall impair such
         right, power or remedy or operate as a waiver thereof.

(B)      The single or partial exercise of any right, power or remedy provided
         by law or under this Agreement shall not preclude any other or further
         exercise thereof or the exercise of any other right, power or remedy.

(C)      The rights, powers and remedies provided in this Agreement are
         cumulative and not exclusive of any rights, powers and remedies
         provided by law unless other stated herein.

15.      ASSIGNMENT

(A)      The benefits and obligations of the Seller under this Agreement shall
         not be assignable. The Purchaser is permitted to assign all (or part)
         of the benefit of, and any of its rights under, this Agreement
         (including under the Warranties) to its successor in title, to any of
         its Affiliates or to any purchaser or transferee from it or any of its
         Affiliates (as the case may be) provided that no such assignment shall
         relieve the Purchaser of its obligations under this Agreement.

(B)      This Agreement shall be binding upon and enure for the benefit of the
         personal representatives and permitted assigns and successors in title
         of each of the parties and references to the parties shall be construed
         accordingly.

16.      FURTHER ASSURANCE

Each of the parties shall from time to time, on being required to do so by the
other party to this Agreement and at the cost of such requesting party now or at
any time in the future, so far as each is reasonably able do or procure the
doing of all such acts and/or execute or procure the execution of all such
documents in a form reasonably satisfactory to the party concerned as they may
reasonably consider necessary to transfer the Shares to the Purchaser. If
following Completion there shall be discovered assets of the Acquired Business
not part of the Group, the Seller shall use all best efforts to transfer such
assets to the Purchaser or its designee.

17.      ENTIRE AGREEMENT

(A)      This Agreement and the Completion Documents constitute the whole and
         only agreement between the parties relating to the sale and purchase of
         the Shares



                                       15


<Page>


         and the Acquired Business and, save if and only to the extent expressly
         repeated in this Agreement, supersedes and extinguishes any prior
         drafts, agreements, undertakings, representations, warranties and
         arrangements of any nature whatsoever, whether or not in writing,
         relating thereto. The parties hereto endeavour to act in good faith to
         complete the Services Agreement, the Escrow Agreement and the other
         Completion Documents in a mutually satisfactory manner and in a manner
         consistent with this Agreement.

(B)      The Purchaser acknowledges and agrees with the Seller (on behalf of
         itself and each other member of the Seller's Group) that:

         (i)      it does not rely on and has not been induced to enter into
                  this Agreement or any other agreement or document referred to
                  herein on the basis of any Assurance made or given by or on
                  behalf of any member of the Seller's Group or any of their
                  respective agents, officers, employees or advisers other than
                  those expressly set out in this Agreement or, to the extent
                  that it has been, it has (in the absence of fraud) no rights
                  or remedies in relation thereto; and

         (ii)     no member of the Seller's Group, or any of their respective
                  agents, officers, employees or advisers, has given or made any
                  Assurance other than those expressly set out in this Agreement
                  or, to the extent that they have, the Purchaser hereby
                  unconditionally and irrevocably waives (in the absence of
                  fraud) any claim which it might otherwise have had in relation
                  thereto.

(C)      This Agreement may only be varied by a document signed by both of the
         parties and expressed to be a variation to this Agreement.

18.      NOTICES

(A)      Any notice or other communication given or made under or in connection
         with the matters contemplated by this Agreement shall be in writing.

(B)      Any such notice or other communication shall be addressed as provided
         in sub-clause (C) and, if so addressed, shall be deemed to have been
         duly given or made as follows:

         (i)      if sent by personal delivery, upon delivery at the address of
                  the relevant party;

         (ii)     if sent by facsimile, when received and confirmed by telephone
                  call that such notice was received in full;

         PROVIDED THAT if, in accordance with the above provisions, any such
         notice or other communication would otherwise be deemed to be given or
         made outside Working Hours, such notice or other communication shall be
         deemed to be given or made at the start of Working Hours on the next
         Business Day.

(C)      The relevant addressee, address and facsimile number of each party for
         the purposes of this Agreement, subject to sub-clause (D), are:


                                       16


<Page>



<TABLE>
<CAPTION>

         Name of party              Address                                     Facsimile No.
         -------------              -------                                     -------------

<S>                                  <C>                                             <C>
         The Seller                 PO Box 3186                                        -
                                    Roadtown
                                    Tortola
                                    British Virgin Islands

                                    For the attn. of:         The Company Secretary

         with a copies to:

         Warnaco Inc.               90 Park Avenue                              001 212 503 8536
                                    26th Floor
                                    New York
                                    NY 10016

                                    For the attn. of:         The General Counsel

         Skadden, Arps, Slate, Meagher & Flom LLP                               001 212 735 2000
                                    Four Times Square
                                    New York
                                    NY 10036

                                    For the attn. of:         Alan Myers

         Sidley, Austin, Brown & Wood                                           001 212 906 2021
                                    875 Third Avenue
                                    New York
                                    NY 10022

                                    For the attn. of:         Kelly Kornish

         The Purchaser              Fox Paine & Co LLC                          001 212 836 8000
                                    950 Tower Lane
                                    Suite 1150
                                    Foster City, CA
                                    94404

                                    For the attn. of:         Jason Hurwitz

         with a copy to:

         Kaye Scholer LLP           425 Park Avenue                             001 212 836 8000
                                    New York
                                    NY 10022

                                    For the attn. of:         Marc Rosenberg
</TABLE>

(D)      A party may notify the other parties to this Agreement of a change to
         its name, relevant addressee, address or facsimile number for the
         purposes of sub-clause (C) PROVIDED THAT such notification shall only
         be effective on:-



                                       17


<Page>



         (i)      the date specified in the notification as the date on which
                  the change is to take place; or

         (ii)     if no date is specified or the date specified is less than
                  five clear Business Days after the date on which notice is
                  given, the date falling five clear Business Days after notice
                  of any such change has been given.

(E)      For the avoidance of doubt, the parties agree that the provisions of
         this Clause shall not apply in relation to the service of any writ,
         summons, order, judgment or other document relating to or in connection
         with any Proceedings.

19.      ANNOUNCEMENTS

(A)      Subject to sub-clause (B), no announcement concerning the sale or
         purchase of the Shares or any ancillary matter shall be made by any
         party without the prior written approval of the others, such approval
         not to be unreasonably withheld or delayed.

(B)      Either party may make an announcement concerning the sale of the Shares
         or any ancillary matter if required by:-

         (i)      the law of any relevant jurisdiction;

         (ii)     any securities exchange or regulatory or Governmental Entity
                  to which either party is subject or submits, wherever
                  situated, whether or not the requirement has the force of law,
                  in which case the party concerned shall take all such steps as
                  may be reasonable and practicable in the circumstances to
                  agree the contents of such announcement with the other party
                  before making such announcement and PROVIDED THAT any such
                  announcement shall be made only after notice to the other
                  party.

(C)      The restrictions contained in this Clause shall continue to apply after
         the termination of this Agreement without limit in time.

20.      CONFIDENTIALITY

(A)      Subject to sub-clause (B) and Clause 19, each party shall treat as
         strictly confidential all information received or obtained as a result
         of entering into or performing this Agreement which relates to:-

         (i)      the provisions or the subject matter of this Agreement or any
                  document referred to herein;

         (ii)     the negotiations relating to this Agreement or any document
                  referred to herein;

         (iii)    the other party (or in the case of the Purchaser, members of
                  the Seller's Group).


                                       18


<Page>



(B)      Following Completion, the Seller shall keep confidential and shall
         cause its subsidiaries, Affiliates, Connected Persons, employees,
         officers, directors, agents, advisors and personal representatives to
         keep confidential all information relating to the Acquired Business,
         the Group and the Companies.

(C)      Either party may disclose information which would otherwise be
         confidential if and to the extent:-

         (i)      required by the law of any relevant jurisdiction;

         (ii)     required by any securities exchange or regulatory or
                  governmental body to which either party is subject or submits,
                  wherever situated, whether or not the requirement for
                  information has the force of law;

         (iii)    disclosed on a strictly confidential basis to the professional
                  advisers, auditors and bankers of that party provided such
                  professional advisers, auditors and bankers agree to abide by
                  the confidentiality undertaking set out in sub-clause 20(A)
                  above;

         (iv)     the information has come into the public domain through no
                  fault of that party; or

         (v)      the other party has given prior written approval to the
                  disclosure, such approval not to be unreasonably withheld or
                  delayed; or

         (vi)     required to enable that party to enforce its rights under this
                  Agreement,

         PROVIDED THAT any such information disclosed pursuant to paragraphs (i)
         or (ii) shall be disclosed only after notice to the other party.

         The restrictions contained in this Clause shall continue to apply after
         the termination of the sale and purchase of the Shares under this
         Agreement without limit in time and are without prejudice to the
         provisions of the confidentiality undertaking entered into between The
         Warnaco Group, Inc. (as agent for the Seller) and Fox Paine & Co LLC
         and dated 30 October 2001.

21.      COSTS AND EXPENSES

(A)      Save as otherwise stated in any other provision of this Agreement, each
         party shall pay its own costs and expenses in relation to the
         negotiations leading up to the sale of the Shares and to the
         preparation, execution and carrying into effect of this Agreement and
         all other documents referred to in it.

(B)      Without prejudice to sub-clause (A), all stamp, transfer, registration
         and other similar taxes, duties and charges payable in connection with
         the sale or purchase of the Shares under this Agreement, shall be paid
         by the Purchaser.

22.      COUNTERPARTS

(A)      This Agreement may be executed in any number of counterparts, and by
         the parties on separate counterparts, but shall not be effective until
         each party has executed at least one counterpart.



                                       19


<Page>


(B)      Each counterpart shall constitute an original of this Agreement, but
         all the counterparts shall together constitute but one and the same
         instrument.

23.      TIME OF ESSENCE

Save as otherwise expressly provided, time is of the essence of this Agreement.

24.      INVALIDITY

If at any time any provision of this Agreement is or becomes illegal, invalid or
unenforceable in any respect under the law of any jurisdiction, that shall not
affect or impair: -

         (i)      the legality, validity or enforceability in that jurisdiction
                  of any other provision of this Agreement; or

         (ii)     the legality, validity or enforceability under the law of any
                  other jurisdiction of that or any other provision of this
                  Agreement.

25.      GOVERNING LAW

This Agreement shall be governed by and construed in accordance with English
law.

26.      JURISDICTION

(A)      The parties to this Agreement irrevocably agree for the exclusive
         benefit of the Parties hereto that the courts of the State of New York
         or if it has or can obtain jurisdiction in the United States District
         Court for the Southern District of New York (and the appropriate
         appellate courts) are to have jurisdiction to settle any disputes which
         may arise out of or in connection with this Agreement and that
         accordingly any Proceedings may be brought in such courts.

(B)      Each party irrevocably waives (and irrevocably agrees not to raise) any
         objection which it may have now or hereafter to the laying of the venue
         of any Proceedings in any such court as is referred to in sub-clause
         (A) and any claim that any such Proceedings have been brought in an
         inconvenient forum and further irrevocably agrees that a judgment in
         any Proceedings brought in any court referred to in this clause shall
         (provided that there is no appeal pending or open) be conclusive and
         binding upon such party and may be enforced in the courts of any other
         jurisdiction.

27.      SELLER'S AGENT FOR SERVICE

(A)      The Seller irrevocably agrees that any Service Document may be
         sufficiently and effectively served on them in connection with
         Proceedings in New York by service on their agent Skadden, Arps, Slate,
         Meagher & Flom LLP, if no replacement agent has been appointed and
         notified to the Purchaser pursuant to sub-clause (D) below, or on the
         replacement agent if one has been appointed and notified to the
         Purchaser.


                                       20


<Page>


(B)      Any Service Document served pursuant to this clause shall be marked for
         the attention of:

         (i)      Skadden, Arps, Slate, Meagher & Flom LLP at 4 Times Square,
                  New York, NY 10036 6522 or such other address in New York as
                  may be notified to the Purchaser by the Seller; or

         (ii)     such other person as is appointed as agent for service
                  pursuant to sub-clause (D) below at the address notified
                  pursuant to sub-clause (D).

(C)      Any document addressed in accordance with sub-clause (B) above shall be
         deemed to have been duly served if:

         (i)      left at the specified address, when it is left; or

         (ii)     sent by first class post, two Business Days after the date of
                  posting.

(D)      If the agent referred to in sub-clause (A) above (or any replacement
         agent appointed pursuant to this sub-clause) at any time ceases for any
         reason to act as such, the Seller shall appoint a replacement agent to
         accept service having an address for service in New York and shall
         notify the Purchaser of the name and address of the replacement agent;
         failing such appointment and notification, the Purchaser shall be
         entitled by notice to the Seller to appoint such a replacement agent to
         act on the Seller's behalf.

(E)      A copy of any Service Document served on an agent pursuant to this
         clause shall be sent by post to the Purchaser at its address for the
         time being for the service of notices and other communications under
         clause 18 (Notices), but no failure or delay in doing so shall
         prejudice the effectiveness of service of the Service Document in
         accordance with the provisions of sub-clause (A) above.

(F)      "Service Document" means a document relating to or in connection with
         any Proceedings.

28.      PURCHASER'S AGENT FOR SERVICE

(A)      The Purchaser irrevocably agrees that any Service Document may be
         sufficiently and effectively served on it in connection with
         Proceedings in New York by service on its agent Kaye Scholer, if no
         replacement agent has been appointed and notified to the Seller
         pursuant to sub-clause (D) below, or on the replacement agent if one
         has been appointed and notified to the Seller.

(B)      Any Service Document served pursuant to this clause shall be marked for
         the attention of Kaye Scholer LLP, 425 Park Avenue, New York, New York
         10022 for the attention of Marc Rosenberg:

         (i)      or such other address in New York as may be notified to the
                  Seller by the Purchaser; or

         (ii)     such other person as is appointed as agent for service
                  pursuant to sub-clause (D) below at the address notified
                  pursuant to sub-clause (D).


                                       21


<Page>



(C)      Any document addressed in accordance with sub-clause (B) above shall be
         deemed to have been duly served if:

         (i)      left at the specified address, when it is left; or

         (ii)     sent by first class post, two Business Days after the date of
                  posting.

(D)      If the agent referred to in sub-clause (A) above (or any replacement
         agent appointed pursuant to this sub-clause) at any time ceases for any
         reason to act as such, the Purchaser shall appoint a replacement agent
         to accept service having an address for service in New York and shall
         notify the Seller of the name and address of the replacement agent;
         failing such appointment and notification, the Seller shall be entitled
         by notice to the Purchaser to appoint such a replacement agent to act
         on the Purchaser's behalf.

(E)      A copy of any Service Document served on an agent pursuant to this
         clause shall be sent by post to the Purchaser at its address for the
         time being for the service of notices and other communications under
         clause 18 (Notices), but no failure or delay in doing so shall
         prejudice the effectiveness of service of the Service Document in
         accordance with the provisions of sub-clause (A) above.

(F)      "Service Document" means a document relating to or in connection with
         any Proceedings.

29.      SPECIFIC PERFORMANCE

In addition to its right to damages and any other rights it may have, if the
Seller, or any member of the Group breaches any covenant, undertaking or
agreement contained in this Agreement or the Completion Documents, the Purchaser
shall be entitled to obtain injunctive or other equitable relief to restrain any
breach or threatened breach or otherwise to specifically enforce such covenant,
undertaking or agreement, it being agreed that money damages alone would be
inadequate to compensate the Purchaser and its Affiliates and would be an
inadequate remedy for such breach.

IN WITNESS whereof the parties have entered into this Agreement the day and year
first before written



                                       22


<Page>


                                   SCHEDULE 1

                                 Interpretation


(A)      In this Agreement and the Schedules to it:-


"Accounts"          means the audited financial statements of Penhaligon's &
                    Jeavons Investment Co Limited, Penhaligon's Limited and
                    Penhaligon's Pacific Limited for the two accounting
                    reference periods ended on the Accounts Date (a copy of each
                    of which is at Attachment I);

"Accounts Date"     means 30 December 2000;

"Acquired Business" means the business of the Companies as carried on at the
                    date of this Agreement consistent with past practices;

"Affiliate"         has the meaning set forth in Rule 12b-2 of the U.S.
                    Securities Exchange Act of 1934, as amended;

"Agreed Form"       in relation to any document means such document in the
                    form initialed for the purposes of identification only by
                    the Purchaser's Solicitors and the Seller's Solicitors;

"Assurance"         means any warranty, representation, statement, assurance,
                    covenant, agreement, undertaking, indemnity or commitment of
                    any nature whatsoever;

"Bank Deeds of
  Release"          means the deeds in the Agreed Form to be delivered to the
                    Buyer at Completion following assumption of the Bank
                    Indebtedness by Warner's (United Kingdom) Limited whereunder
                    Societe Generale releases each Encumbrance it holds over any
                    member of the Group or their respective assets and releases
                    each member of the Group from any and all obligations
                    relating to the Bank Indebtedness;

"Bank Indebtedness" all amounts owing by Penhaligon's Limited to Societe
                    Generale or its syndicates at the Completion Date
                    (including, without limitation, amount of principal debt,
                    accrued interest, accrued fees and charges);




                                       23


<Page>



"Business Day"      means a day (other than a Saturday or a Sunday) on which
                    banks are open for business in New York City and the City of
                    London;

"Companies"         means, together, Penhaligon's Limited (basic information
                    concerning which is set out in Part I of Schedule 5) and
                    Penhaligon's Pacific Limited (basic information concerning
                    which is set out in Part II of Schedule 5);

"Companies Acts"    means the Companies Act 1985, the Companies Consolidation
                    (Consequential Provisions) Act 1985, the Companies Act 1989
                    and Part V of the Criminal Justice Act 1994;

"Completion"        means completion of the sale and purchase of the Shares
                    under this Agreement;

"Completion Date"   means the date of Completion;

"Completion
Documents"          means all agreements, instruments, contracts or other
                    documents contemplated by this Agreement;

"Conditions"        means the conditions to Completion set forth in clause 4;

"Connected Person"  means a Person connected (within the meaning of
                    Section 839 Income and Corporation Taxes Act 1988) with the
                    Seller or any of the directors (or any former director) of
                    the Group

"Consent"           includes any licence, approval, authorisation, permission,
                    waiver, order or exemption;

"Data Room"         means those documents referred to in the list in the Agreed
                    Form entitled "Data Room List" and forming Attachment III;

"Disclosure Letter" means the letter dated with the same date as this agreement
                    written by the Seller to the Purchaser for the purposes of
                    paragraph 11 of Schedule 4;

"Encumbrances"      means any interest or equity of any person (including any
                    right to acquire, option or right of pre-emption or
                    conversion) or any mortgage, charge, pledge, lien,
                    assignment, hypothecation, security interest, title
                    retention or any other security agreement or arrangement, or
                    any agreement to create any of the above;


                                       24


<Page>


"Environmental
 Laws"              all applicable statutes and subordinate legislation and
                    other supranational, national, federal, state and local
                    laws, civil code or common law, industry agreements,
                    guidance notes or codes of conduct insofar as they relate to
                    or apply to Environmental Matters which have the force of
                    law at the date of this Agreement;

"Environmental
 Matters"           all matters related to pollution, contamination, human
                    health and/or the environment, including but not limited to
                    those matters relating to radiation, health and safety,
                    waste, nuisance, discharges, emissions, deposits, disposals
                    and releases to land, air and water, and the sale, import,
                    export, manufacture, use, treatment, storage, handling,
                    deposit, transport or disposal of chemicals, wastes,
                    radioactive substances or any other polluting, dangerous,
                    hazardous or toxic substances or materials or forms of
                    energy;

"Escrow Account"    shall mean the account maintained by the Escrow Agent under
                    the Escrow Agreement;

"Escrow Agent"      shall mean the escrow agent (as shall be agreed by the
                    parties) under the Escrow Agreement;

"Governmental
 Entity"            means any federal, state, city, provincial, local, county or
                    municipal government, governmental, judicial, regulatory or
                    administrative agency, commission, board, tribunal, bureau
                    or other authority or instrumentality, domestic or foreign;

"Group"             means, together, the Companies and Penhaligon's & Jeavons
                    Investment Co Limited, Mulmkion BV and LMK Limited, (basic
                    information concerning which is set out in Parts I, II and
                    III of Schedule 6) and where the context so requires,
                    includes any one or more of such companies;

"ICTA 1988"         means the Income and Corporation Taxes Act 1988;

"Indebtedness"      of any person shall mean all obligations of such Person
                    (whether for principal, interest, premiums, prepayment fees,
                    penalties or otherwise) (i) for or in respect of borrowed
                    money, (ii) evidenced by notes, bonds, debentures or similar
                    instruments, (iii) for or in respect of the deferred
                    purchase price of goods



                                       25


<Page>



                    or services (other than trade payables or accruals incurred
                    in the ordinary course of business), (iv) under or arising
                    from leases which are required to be capitalized in
                    accordance with UK GAAP or letters of credit or (v) in the
                    nature of guarantees of any of the obligations described in
                    clauses (i) through (iv) above of any other Person;

"Information
 Memorandum"        means the information memorandum relating to the Acquired
                    Business prepared by The Warnaco Group Inc. on behalf of the
                    Seller and dated September 2001;

"Intellectual
 Property"          means patents, trade marks and service marks, rights in
                    designs, trade or business names or signs, copyrights
                    (including rights in computer software) and topography
                    rights (whether or not any of these is registered and
                    including applications for registration of any such thing)
                    and rights under licences and consents in relation to any
                    such thing and all rights or forms of protection of a
                    similar nature or having equivalent or similar effect to any
                    of these which may subsist anywhere in the world;

"Management
 Accounts"          the unaudited management accounts of each member of the
                    Group for the ten month period ended 31 October 2001;

"Material Contract" means any arrangement, understanding, commitment, agreement
                    or contract calling for payments by any party thereto in
                    excess of 'L'100,000 in any one year;

"Net Working
 Capital Amount"    means the consolidated current assets and debtors of the
                    Group less the amount of the Group's creditors and
                    provisions for liabilities as at the close of business on
                    the Completion Date determined in accordance with clauses
                    3(C) to 3(F) and Schedule 8;

"Net Working Capital
 Statement"         means a statement of the Net Working Capital Amount to be
                    prepared in accordance with clauses 3(C) to 3(F) in the
                    format set out in Schedule 8;

"Proceedings"       means any proceeding, suit or action arising out of or in
                    connection with this Agreement;



                                       26


<Page>



"Properties"        means leasehold properties specified in Schedule 7;

"Purchase Price"    means US$11 million (eleven million US dollars);

"Purchaser's Group" means the Purchaser, its subsidiaries (including each member
                    of the Group), any holding company of the Purchaser and all
                    other subsidiaries of any such holding company from time to
                    time;

"Purchaser's
 Solicitors"        means Kaye Scholer LLP of 425 Park Avenue, New York, New
                    York 10022 and 10th Floor, 88 Wood Street, London EC2V 7RS;

"Seller's Group"    means the Seller and any of its subsidiary (other than
                    members of the Group) and subsidiary undertakings, any
                    affiliate and any holding company of the Seller and all
                    other subsidiaries and affiliates of any such holding
                    company from time to time;

"Seller's
 Solicitors"        means Skadden, Arps, Slate, Meagher & Flom LLP; One Canada
                    Square, Canary Wharf, London E14 5DS;

"Senior Employee"   means any one of the Employees who is entitled to emoluments
                    at a rate (or in the case of fluctuating amounts) an average
                    annual rate over the last three financial years, in excess
                    of 'L'30,000 per annum and every director who is also an
                    employee;

"Shares"            means, together, all the issued shares in the capital of LMK
                    Limited, 41 ordinary shares in the capital of Penhaligon's &
                    Jeavons Investment Co. Limited (being 51 per cent. of its
                    issued share capital), 20,400 ordinary shares in the capital
                    of Mulmkion BV (being 51 per cent. of its issued share
                    capital) and 50 ordinary shares in the capital of
                    Penhaligon's Pacific Limited (being 50 per cent. of its
                    issued share capital);

"so far as the
 Seller is aware"   means so far as is within the actual knowledge (having made
                    reasonable enquiry) of the persons whose names are set out
                    below in this definition at the time of the execution of the
                    Disclosure Letter by the Seller:



                                       27


<Page>


                    Charlie Wong, Michelle Stewart, Gregg Holst

                    and all other phrases in this Agreement relating to the
                    knowledge, information and belief or awareness of the Seller
                    shall be construed as a reference to "so far as the Seller
                    is aware" as so defined;

"Stock"             raw materials, consumables, finished goods and goods for
                    resale held by the Companies on the date hereof;

"Tax" or "Taxation" means any form of tax or any levy, impost, duty,
                    contribution or withholding in the nature of tax (whether of
                    the United Kingdom or elsewhere) imposed, collected or
                    assessed by, or payable to, a Tax authority and all
                    penalties and interest included in or relating to any of the
                    above and any objections under any agreement or arrangements
                    with respect of any Tax;

"Tax Authority"     means any domestic or foreign revenue, customs or fiscal
                    governmental, federal, state, community, municipal or city
                    or local regional authority, body or person competent to
                    impose or collect Tax;

"Tax Covenant"      means the tax deed of covenant in the Agreed Form set out in
                    Attachment IV;

"Tax Liability"     has the meaning in the Tax Covenant;

"Tax Warranties"    means the Warranties which mention or relate to Tax;

"TCGA 1992"         means the Taxation of Chargeable Gains Act 1992;

"VATA 1994"         means the Value Added Tax Act 1994;

"Warner's Deed of
 Release"           means the deed in the Agreed Form to be entered into at
                    Completion by Warner's (United Kingdom) Limited and
                    Penhaligon's Limited releasing Penhaligon's from all
                    obligations and liabilities to repay the Warner's
                    Indebtedness;

"Warner's
 Indebtedness"      means the debt owed by Penhaligon's Limited to Warner's
                    (United Kingdom) Limited and any interest related thereto
                    and any guarantee related thereto;


                                       28


<Page>



"Warranties"        means the warranties set out in Schedule 3 and "Warranty"
                    shall be construed accordingly; and

"Working Hours"     means 9.30 a.m. to 5.30 p.m. on a Business Day.

(A)      In this agreement, unless otherwise specified:-

         (i)      references to Clauses, Schedules and Attachments are to
                  Clauses, Schedules and Attachments to this Agreement;

         (ii)     a reference to a sub-clause is to a sub-clause of the Clause
                  in which such reference appears, to a paragraph is to a
                  paragraph of the sub-clause in which such reference appears
                  and to a sub-paragraph is to a sub-paragraph of the paragraph
                  in which such reference appears;

         (iii)    a reference to any statute or statutory provision shall be
                  construed as a reference to the same as it may have been, or
                  may from time to time be, amended, modified or re-enacted
                  except to the extent that any amendment or modification made
                  after the date of this Agreement would increase or alter the
                  liability of the Seller under this Agreement;

         (iv)     references to a "company" shall be construed so as to include
                  any company, corporation or other body corporate, wherever and
                  however incorporated or established;

         (v)      references to a "person" shall be construed so as to include
                  any individual, firm, company, Government Entity, state or
                  agency of a state or any joint venture, association or
                  partnership (whether or not having separate legal
                  personality);

         (vi)     the expressions "holding company", "subsidiary" and
                  "wholly-owned subsidiary" shall have the meaning given in the
                  Companies Act 1985;

         (vii)    a person shall be deemed to be connected with another if that
                  person is connected with another within the meaning of section
                  839 ICTA 1988;

         (viii)   references to writing shall include any modes of reproducing
                  words in a legible and non-transitory form;

         (ix)     references to times of the day are to London time;

         (x)      headings are for convenience only and do not affect the
                  interpretation of this Agreement; and

         (xi)     references to any English legal term for any action, remedy,
                  method of judicial proceeding, legal document, legal status,
                  court, official, or any legal concept or thing shall in
                  respect of any jurisdiction other than England be deemed to
                  include what most nearly approximates in that jurisdiction to
                  the English legal term.



                                       29


<Page>




                                   SCHEDULE 2

                             Completion arrangements


At Completion:

         (i)      the Seller shall deliver to the Purchaser or the Purchaser's
                  Solicitors such duly executed transfers in respect of the
                  Shares in favour of the Purchaser or such nominee of the
                  Purchaser as the Purchaser may nominate and share certificates
                  for the Shares in the name of the relevant transferors and any
                  power of attorney under which any transfer is executed on
                  behalf of the Seller;

         (ii)     the Seller shall duly execute and deliver the Tax Covenant to
                  the Purchaser and the Purchaser shall duly execute and deliver
                  a counterpart of it to the Seller;

         (iii)    the Seller shall deliver to the Purchaser an original Warner's
                  Deed of Release duly executed on behalf of Warner's (United
                  Kingdom) Limited and Penhaligon's Limited;

         (iv)     the Seller shall deliver to the Purchaser a Services Agreement
                  executed by Warnaco Inc. and Warner's (United Kingdom) Limited
                  in the Agreed Form and the Purchaser shall deliver a
                  counterpart of it to the Seller under which the relevant
                  member of the Seller's Group will provide certain services,
                  including those pursuant to which the Purchaser shall manage
                  the catalogue operations and operation at 870 Madison Avenue
                  of the Acquired Business (for its own profit and loss), and
                  office space to the Purchaser at the current cost charged to
                  the relevant members of the Group by the relevant members of
                  the Seller's Group for a period of one year terminable by
                  either party on 90 days notice;

         (v)      the Seller shall deliver to the Purchaser a duly executed
                  sub-lease or licence in the Agreed Form in respect of office
                  space with respect to (i) 149 Madison Avenue, New York; (ii)
                  Unit 5-7 Blenheim Court, Brewery Road, London N7; and (iii)
                  the Shop, 9 Princes Building, Hong Kong from Warnaco (HK)
                  Limited; and Seller cause its Affiliates not to take any
                  action which could adversely effect the rights of the
                  Purchaser to use the premises described in clauses (ii) and
                  (iii);

         (vi)     the Seller shall deliver to the Purchaser originals of the
                  Bank Deed of Release duly executed by or on behalf of the
                  relevant lenders of the Group;

         (vii)    the Seller shall deliver to the Purchaser or the Purchaser's
                  Solicitors such of the following as the Purchaser may require:

                  (a)      the statutory books (which shall be written up to but
                           not including the Completion Date), the certificate
                           of incorporation



                                       30


<Page>


                           (and any certificate of incorporation on change of
                           name) and common seal (if any) of each member of the
                           Group;

                  (b)      title deeds relating to Properties so far as they are
                           in the possession of the Seller; and

                  (c)      a copy of the minutes of a duly held meetings of the
                           directors of the Seller authorising the execution by
                           the Seller of this Agreement and the Tax Covenant and
                           any other documents (such copy minutes being
                           certified as correct by the secretary of the Seller).

         (viii)   the Seller shall deliver to the Purchaser certificates in
                  respect of all issued shares in the capital of each of the
                  members of the Group and subsidiaries of any member of the
                  Group and duly executed transfers of all shares in any member
                  of the Group and any subsidiary held by any person other than
                  the Seller in favour of such persons as the Purchaser shall
                  direct;

         (ix)     the Seller shall deliver to the Purchaser such waivers,
                  consents or other documents (including any power of attorney
                  under which any document required to be delivered under this
                  Schedule has been executed) in the Agreed Form as are required
                  to enable the Purchaser and its nominee(s) to be registered as
                  the holders of the Shares and to acquire all of the assets of
                  the Acquired Business (including all Contracts and Permits)
                  without creating a default under any contract, agreement,
                  lease or other instrument to which any member of the Group as
                  a party or to which its assets are subject;

         (x)      the Seller shall deliver to the Purchaser all charges,
                  mortgages, debentures and guarantees to which any member of
                  the Group or any of their subsidiaries is a party together
                  with duly sealed discharges and (where applicable) deeds of
                  release (in the Agreed Form) and forms No. 403a duly sworn and
                  completed in respect of them and any covenants in connection
                  with them;

         (xi)     the Seller shall deliver to the Purchaser certificates from
                  each of the banks at which the members of the Group and each
                  of their subsidiaries maintains an account of the amount
                  standing to the credit or debit of all such accounts as at the
                  close of business on the last Business Day before the
                  Completion meeting;

         (xii)    the Seller shall deliver to the Purchaser the cash book
                  balances of the Group and each of the subsidiaries as at
                  Completion with statements reconciling such cash book balances
                  and the relevant cheque books with the balances on the bank
                  accounts of the members of the Group and each of their
                  subsidiaries as shown by the certificates referred to in
                  paragraph (xi) above;

         (xiii)   the Seller shall deliver to the Purchaser the cheque books
                  relating to all the bank accounts of the members of the Group
                  and each of their


                                       31


<Page>



                  subsidiaries, together with confirmation that no cheques have
                  been written by any member of the Group or any of their
                  subsidiaries since preparation of the statements referred to
                  in paragraph (xii);

         (xiv)    the Seller shall deliver to the Purchaser evidence in the
                  Agreed Form that (a) all debts and accounts between any member
                  of the Group or any Affiliate of any member of the Group (of
                  the one part) and the Seller or any Connected Person or any
                  Affiliate of the Seller, excluding any member of the Group (of
                  the other part), have been fully paid, settled and all
                  liability with respect thereto had been released and (b) all
                  guarantees or other undertakings with respect to any
                  obligations, covenants, liabilities or Indebtedness of the
                  Seller or any connected Person or any Affiliate of the Seller
                  by any member of the Group have been fully released and
                  terminated at or prior to the Completion Date;

         (xv)     each of the parties to the Escrow Agreement shall have
                  executed and delivered the Escrow Agreement which will provide
                  for payment for breaches of the Agreement and payment of
                  certain amounts contemplated by the Agreement;

         (xvi)    the Seller shall have delivered the release of all claims and
                  rights against the members of the Group in the Agreed Form;

         (xvii)   the Seller shall procure Michelle Stewart, Jocelyn Broughton,
                  Rosemary Kemp, Stanley Silverstein, Linda Wachner, James
                  Colclough, Richard Ireson, Edward Noel, Ian Crosby and
                  Laurence Hart to resign their offices as directors and
                  secretary of the relevant members of the Group, such
                  resignations to be tendered at the board meetings referred to
                  in paragraph (xxiv) below;

         (xviii)  (if required by the Purchaser) the Seller shall procure the
                  present auditors of each member of the Group to resign their
                  office as such, and to deposit at the registered office of the
                  relevant member of the Group a letter notifying their
                  resignation;

         (xix)    the Seller shall use its reasonable efforts to eliminate
                  Warnaco Inc. as a party to the Distribution Agreement among
                  Penhaligon's Limited, Warnaco Inc. and Morris Profumi - Div.
                  Henkel SPA and the Agreement with Pacific Direct Limited,
                  Warnaco Inc. and Penhaligon's Limited;

         (xx)     the deed of option, dated March 27, 1997, between PenHal
                  Investments, Inc., Streamchase Limited and Mullion
                  International Limited and other relating to the shares in
                  capital of Streamchase Limited and an intellectual property
                  holding company shall have been released;

         (xxi)    the deed of option with respect to shares of Mulmkion B.V.
                  among PenHal Investments Inc., Mulmkion B.V. and Mullion
                  International Limited and Penhaligon's & Jeavons Investment
                  Co. Limited dated



                                       32


<Page>


                  April 6, 1998 and all exercise agreements, shareholders'
                  agreements and articles of association shall be terminated.

         (xxii)   the Seller shall procure board meetings of each member of the
                  Group to be held at which:-

                  (a)      it shall be resolved that each of the transfers
                           relating to the Shares shall be approved for
                           registration and ((if appropriate) subject only to
                           the transfer being duly stamped) each transferee
                           registered as the holder of the Shares concerned in
                           the register of members;

                  (b)      each of the persons nominated by the Purchaser shall
                           be appointed directors and/or secretary, as the
                           Purchaser shall direct;

                  (c)      the resignations of the directors and secretary
                           referred to in paragraph (v) shall be tendered and
                           accepted so as to take effect at Completion;

                  (d)      the situation of the registered office of the members
                           of the Group shall be changed to such address as the
                           Purchaser may nominate;

                  (e)      such other business as the Purchaser may reasonably
                           require shall be conducted; and

                  that minutes of each duly held board meeting, certified as
                  correct by the secretary of the relevant company and the
                  resignations and acknowledgements, referred to are delivered
                  to the Purchaser's Solicitors; and

         (xxiii)  the Purchaser shall:-

                  (a)      pay the Purchase Price (less the amount to be paid to
                           the Escrow Agent as contemplated below) to the
                           Seller's bank account (as it shall notify the
                           Purchaser prior to Completion) by way of telegraphic
                           transfer and pay US$1,700,000 to the Escrow Agent to
                           be held pursuant to the Escrow Agreement;

                  (b)      deliver to the Seller a copy (certified by the
                           secretary of the Purchaser to be a true copy of a
                           resolution in force at Completion) of the resolution
                           of the directors of the Purchaser which authorised
                           the execution and delivery of this Agreement and all
                           other relevant agreements and documents referred to
                           herein.


                                       33


<Page>



                                   SCHEDULE 3

                                 The Warranties


1.       Ownership of the Shares

(A)      The Seller is the sole legal and beneficial owner of the Shares.

(B)      There is no option, right to acquire, mortgage, charge, pledge, lien or
         other form of security or Encumbrance or equity on, over or affecting
         the Shares or the shares of Penhaligon's Limited (or any of them) and
         there is no agreement or commitment to give or create any.

2.       Capacity of the Seller

(A)      The Seller has the requisite power and authority to enter into and
         perform this Agreement.

(B)      This Agreement constitutes, and the other documents to be executed by
         the Seller at Completion will when executed constitute, binding
         obligations of the Seller in accordance with its respective terms.

(C)      The execution and delivery of, and the performance by the Seller of its
         obligations under, this Agreement will not:-

         (i)      result in a breach of any provision of the memorandum or
                  articles of association of the Seller or any member of the
                  Group;

         (ii)     result in a breach of, or constitute a default under, any
                  instrument to which the Seller or any member of the Group is a
                  party or by which the Seller or any member of the Group is
                  bound and which is material in the context of the transactions
                  contemplated by this Agreement; or

         (iii)    result in a breach of any order, judgment or decree of any
                  court or governmental agency to which the Seller or any member
                  of the Group is a party or by which the Seller is bound and
                  which is material in the context of the transactions
                  contemplated by this Agreement.

3.       Arrangements between the Group and the Seller's Group

(A)      No material contract or arrangement other than on arm's length terms is
         outstanding between any member of the Group and any member of the
         Seller's Group or any person who is a director of or connected with any
         such member of the Seller's Group.

(B)      As at the Completion Date, there will be no Indebtedness, claims,
         liabilities, rights, guarantees or other entitlements outstanding
         against any member of the Group.



                                       34


<Page>



4.       Group structure, etc.

(A)      The Shares comprise the whole of the issued and allotted share capital
         of LMK Limited, 51 per cent. of the issued and allotted share capitals
         of Penhaligon's & Jeavons Investment Co Limited and Mulmkion BV and 50
         per cent. of the issued and allotted share capital of Penhaligon's
         Pacific Limited, and all of them are fully paid up.

(B)      LMK Limited is the sole legal and beneficial owner of the issued and
         allotted share capital of Penhaligon's & Jeavons Investment Co Limited,
         Mulmkion BV and Penhaligon's Pacific Limited not comprising the Shares.

(C)      Penhaligon's Limited is a wholly-owned subsidiary of Penhaligon's &
         Jeavons Co. Limited.

(D)      There is no agreement or commitment outstanding entered into by any
         member of the Seller's Group which calls for the allotment, issue or
         transfer of, or accords to any person the right to call for the
         allotment or issue of, any shares (including the Shares) or debentures
         in or securities of any member of the Group.

(E)      The information given in Schedules 5 and 6 is true and accurate in all
         material respects.

(F)      No member of the Group has any interest in the share capital of any
         company which is not a member of the Group.

(G)      No member of the Group acts or carries on business in partnership with
         any other person or is a member (otherwise than through the holding of
         share capital) of any corporate or unincorporated body, undertaking or
         association (other than a trade association) or holds or is liable on
         any share or security which is not fully paid up or which carries any
         liability.

(H)      Save as disclosed, no member of the Group has any branch, agency, place
         of business or permanent establishment outside the United Kingdom.

(I)      No member of the Group trades under a name other than its corporate
         name (excluding trademarks registered in a name other than its
         corporate name).

(J)      There is no Encumbrance on, over or affecting any of the Shares or any
         issued shares (which are all held by Seller or another member of the
         Group) or any unissued shares, debentures or other securities of any
         member of the Group and no person has the right (exercisable now or in
         the future and whether contingent or not) to call for the issue of any
         share or loan capital of any member of the Group. There is no agreement
         or commitment outstanding entered into by any member of the Group or
         any other person which calls for the allotment, issue or transfer of,
         or accords to any person the right to call for the allotment or issue
         of, any shares (including the Shares) or debentures in or securities of
         any member of the Group. There are no shareholders agreement, voting
         rights, tag-along, drag-along, put, call or other similar agreements
         affecting the securities of any member of the Group.



                                       35


<Page>


(K)      The shares in the subsidiaries of any member of the Group or any member
         of the Group which are not Shares are in each case held by a member of
         the Group free from all Encumbrances and with all rights attaching to
         them, no member of the Group owns or has agreed to acquire any shares,
         loan capital or other securities (legally or beneficially) in any other
         company.

5.       Ownership, Condition and Sufficiency of Assets

(A)      Each of the material assets included in the Accounts or acquired by
         relevant member of the Group since the Accounts Date (other than
         current assets sold, realised or applied in the normal course of
         trading) is owned both legally and beneficially by relevant member of
         the Group and each of those assets capable of possession is in the
         possession of the relevant member of the Group. The assets held by the
         Group constitute all of the assets necessary to conduct the Business of
         the Group in a manner consistent with past practices and will be all of
         the assets necessary for the Purchaser to conduct the business,
         consistent with past practices, following Completion.

(B)      Upon Completion, no option, right to acquire, mortgage, charge, pledge,
         lien (other than a lien arising by operation of law in the ordinary
         course of trading) or other form of security or Encumbrance or equity
         on, over or affecting the whole or any part of the assets of any member
         of the Group will be outstanding (other than any asset acquired in the
         ordinary course of business on terms that the property does not pass
         until payment is made) and there will be no agreement or commitment
         entered into by any member of the Group to give or create any and no
         claim has been made against any member of the Group by any person to be
         entitled to any.

(C)      Save as disclosed, the Group owns, possesses or has rights to use all
         tangible and intangible assets, Intellectual Property, know-how and
         Properties:

         (i)      for it to operate its business as it has been operated in the
                  past; and

         (ii)     (following Completion) to enable the Purchaser to conduct the
                  Acquired Business in the same manner as the Group conducted
                  the Acquired Business prior to Completion.

6.       Stock

Save for a de minimus amount, the stock is undamaged and (to the extent it is
finished goods for resale) it is in merchantable condition.

7.       Accuracy of information

(A)      The statutory books (including all registers and minute books) of each
         member of the Group have in all material respects been properly kept
         and contain a record of the matters which should be dealt with in those
         books and no notice in writing that any of them is materially incorrect
         or should be rectified has been received by any member of the Group.


                                       36


<Page>



(B)      The copies of the memorandum and articles of association or other like
         constitutional documents of each member of the Group contained in the
         Data Room are complete and accurate copies in all material respects.

8.       Accounts and Management Accounts

(A)      So far as the Seller is aware, the Accounts when taken as a whole:-

         (i)      were prepared in accordance with accountancy practices
                  generally accepted in the relevant jurisdiction of the
                  relevant member of the Group at the time they were audited;
                  and

         (ii)     (insofar as the accounts for the year ended 31 December 2000
                  are concerned) show a true and fair view of the assets and
                  liabilities of the relevant member of the Group as at the
                  Accounts Date and of their profits or losses for the financial
                  period ended on that date, provided that the foregoing shall
                  not constitute an Assurance as to any particular item in the
                  Accounts.

(B)      So far as the Seller is aware, the Management Accounts have been
         prepared using the same accounting policies and principles as the
         Accounts of the relevant member of the Group to which they refer and
         reasonably accurately state the level of turnover and expenditure for
         the relevant period and reasonably accurately reflect the state of
         affairs and financial position of the Group for the ten months ended 31
         October 2001.

9.       Events since the Accounts Date

Since the Accounts Date:-

         (i)      so far as the Seller is aware, there has been no material
                  adverse change in the financial position of the Companies;

         (ii)     so far as the Seller is aware, the Acquired Business has in
                  all material respects been carried on in the ordinary course;

         (iii)    no asset of a value in excess of 'L'10,000 of the
                  Companies has been acquired or disposed of on capital account
                  or has been agreed to be acquired or disposed of;

         (iv)     no resolution of any member of the Group in general meeting
                  has been passed other than resolutions relating to the routine
                  business of annual general meetings;

         (v)      no member of the Group has declared, authorised, made or paid
                  to its members any dividend or other similar distribution;

         (vi)     no member of the Group has allotted or issued or agreed to
                  issue or granted an option or other right to acquire any share
                  capital;

         (vii)    no member of the Group has redeemed or purchased or offered or
                  agreed to redeem or purchase any of its share capital; and


                                       37


<Page>



         (viii)   LMK Limited, Mulmkion BV and Penhaligon's & Jeavons Investment
                  Co Limited have not carried on any trading activity.

10.      Contracts and commitments

(A)      The Data Room contains or refers to each outstanding contract or
         arrangement entered into by any member of the Group which:

         (i)      is a Material Contract;

         (ii)     restricts it from carrying on the business of that member of
                  the Group in any part of the world;

         (iii)    is a joint venture agreement or arrangement under which it is
                  to participate with any other person in any business;

         (iv)     is an agency or distributorship contract or arrangement; or

         (v)      is made with any member of the Seller's Group.

(B)      The Disclosure Letter has attached to it a copy of each Material
         Contract.

(C)      No member of the Group is a party to any contract or arrangement which
         is not contained or referred to in the Data Room and which:

         (i)      is a contract or arrangement which has an unexpired term of
                  three or more years and which is material in relation to the
                  Acquired Business;

         (ii)     can be terminated by any other party thereto in the event of a
                  change of control of that member of the Group and which is
                  material in relation to the Acquired Business; or

         (iii)    makes it liable to make any investment in securities or make
                  any loan (other than trade credit) to any person.

(D)      So far as the Seller is aware, no member of the Group is in material
         breach of any contract or arrangement which is material in the context
         of the Acquired Business and, so far as the Seller is aware, no other
         party to any such contract or arrangement is in material breach of any
         such contract or arrangement.

11.      Bank accounts and borrowings

(A)      Details of all bank accounts maintained by any member of the Group
         (comprising, in each case, the name and address of the bank with whom
         the account is kept and the number and nature of the account) are set
         out in or attached to the Disclosure Letter.

(B)      The Data Room contains the terms of each overdraft, loan and other
         similar financial facility available to each member of the Group other
         than from a member of the Seller's Group.


                                       38


<Page>



(C)      The total amount borrowed by each member of the Group does not exceed
         any limitation in its financial facilities or articles of association.

12.      Powers of attorney

No member of the Group has given any power of attorney, proxy or similar
authority (other than such given to an officer of a member of the Group in the
ordinary course of the business of that member of the Group) which is still
outstanding.

13.      Grants and allowances

No member of the Group has received any grant, allowance, aid or subsidy from
any supranational, national or local authority or government agency during the
last three years which is currently repayable as a result of any act or failure
to act by the member of the Group concerned or which would be repayable as a
result of the sale of the Shares to the Purchaser.

14.      Compliance with laws

Since 1 January 1999, neither the Seller nor any members of the Group has
received any notice of a failure to comply with any applicable laws material to
the Acquired Business as currently conducted and, so far as the Seller is aware,
no material contravention or allegation of a material contravention of any
applicable law is known to any member of the Group or the Seller.

15.      Licences

So far as the Seller is aware, all governmental licences, consents, permissions
and approvals which are material and necessary to the on going operations of any
member of the Group are held by the relevant member of the Group.

16.      Litigation

(A)      No member of the Group is engaged in any litigation or arbitration,
         administrative or criminal proceedings, whether as plaintiff, defendant
         or otherwise which is material in the context of the Acquired Business
         as a whole.

(B)      So far as the Seller is aware, no such litigation or arbitration,
         administrative or criminal proceedings as are referred to in paragraph
         (A) above are pending or threatened.

17.      Delinquent and wrongful acts

(A)      So far as the Seller is aware, no member of the Group has committed any
         criminal or illegal act which would have a material adverse effect on
         the Acquired Business as a whole.

(B)      So far as the Seller is aware, no member of the Group has received
         notification that any investigation or inquiry is being or has been
         conducted by any supranational, national or local authority or
         governmental agency in respect of the business or affairs of any member
         of the Group.


                                       39


<Page>


18.      Ownership of land

(A)      The legal estate in the Properties is vested in the relevant member of
         the Group specified in column 3 of the relevant section of Schedule 7.

(B)      The Properties are the only immovable property used by the Group in
         conducting the Acquired Business.

(C)      So far as the Seller's aware, each of the Properties is in a reasonable
         state of repair and condition fair wear and tear excepted.

19.      Intellectual Property

(A)      Details of all registered Intellectual Property owned by any member of
         the Group are set out in Schedule 9.

(B)      All renewal fees and steps required for the maintenance or protection
         of the rights disclosed pursuant to paragraph (A) above have been paid
         or taken and none of such rights are subject to any challenge or attack
         by a third party or competent authority of which the Seller has been
         notified.

(C)      No member of the Group nor any other party is, so far as the Seller is
         aware, in breach of any licence.

(D)      So far as the Seller is aware, the processes and methods employed, the
         services provided, the businesses conducted and the products
         manufactured, used or dealt in by each member of the Group do not
         infringe the rights of any other person in any Intellectual Property.

(E)      So far as the Seller is aware, there is no unauthorised use or
         infringement by any person of any Intellectual Property owned or
         otherwise required for the business of any member of the Group.

20.      Insurances

Copies of the insurance policies in respect of which any member of the Group has
an interest are set out in the Disclosure Letter and, so far as the Seller is
aware, no claims are outstanding thereunder.

21.      Employment

(A)      A list of the names, jobs and terms of employment (including the
         emoluments and material benefits) of each Senior Employee are set out
         in the Disclosure Letter.

(B)      Save as disclosed and set out in the Disclosure Letter, any contract of
         employment with any Employee to which any member of the Group is a
         party can be terminated by the employing company without damages or
         compensation (other than that payable under the Employment Rights Act
         1996) by giving at any time only the minimum statutory notice under the
         Employment Rights Act 1996.



                                       40


<Page>


(C)      No Senior Employee has given notice terminating his contract of
         employment or is under notice of dismissal and no amount due to or in
         respect of any such Senior Employee director or employee or former
         Senior Employee is in arrears and unpaid other than his salary for the
         month current at the date of this Agreement.

(D)      Since the Accounts Date, no material change has been made in the
         emoluments or other terms of employment of any Senior Employee save for
         increases in emoluments made in accordance with the normal practice of
         the Seller's Group.

(E)      So far as the Seller is aware there is no material dispute between any
         member of the Group and any trade union or other organisation formed
         for a similar purpose existing, pending or threatened in writing to any
         member of the Group and there is no collective bargaining agreement
         (whether binding or not) to which any member of the Group is a party.

(F)      So far as the Seller is aware no member of the Group has outstanding
         any material undischarged liability to pay to any governmental or
         regulatory authority in any jurisdiction any contribution, Taxation or
         other impost arising in connection with the employment or engagement in
         that jurisdiction of personnel by any member of the Group.

22.      Pensions

(A)      Copies of the explanatory booklet issued to employees who are members
         of the personal pension schemes comprising the general personal pension
         scheme ("GPP") have been disclosed to the Purchaser.

(B)      Details of the rates of employer and member contributions currently
         payable in respect of the personal pension schemes comprising the GPP
         have been disclosed to the Purchaser and all such contributions which
         have fallen due have been paid.

(C)      The personal pension schemes comprising the GPP are approved under
         Chapter IV of Part XIV of the Income and Corporation taxes Act 1988.

23.      Tax

(A)      All tax for which a member of the Group is liable or for which a member
         of the Group is liable to account has been duly paid (insofar as it
         ought to have been paid including (without limitation) payments under
         the Corporation Tax (Installment Payments) Regulations 1998).

(B)      The corporation tax return for the year ended 31 January 1999 for
         Penhaligon's Limited showed a trading loss carry forward of 'L'12.6
         million which was settled with the Inland Revenue. The corporation tax
         return for the eleven months ended 31 December 1999 for Penhaligon's
         Limited showed a trading loss carry forward of 'L'3 million which
         has been filed with, but not been settled by, the Inland Revenue. The
         corporation tax return for the year ended 31 December 2000 for
         Penhaligon's Limited shows a trading loss carry


                                       41


<Page>



         forward of 'L'12,595,716 which has not yet been filed with the Inland
         Revenue. So far as the Seller is aware, the figures for trading loss
         carry forward which have not been approved by the Inland Revenue
         represent the trading loss carry forward position at the relevant year
         end.

24.      Tax returns, disputes, records and claims etc.

(A)      Each member of the Group has made or caused to be made all proper
         returns required to be made, and has supplied or caused to be supplied
         all information required to be supplied, to any Tax Authority. All such
         submitted items are true and accurate in all material respects.

(B)      No member of the Group is involved in any current material dispute with
         any Tax Authority nor has any member of the Group since 1 January 1999
         been the subject of any non-routine investigation, audit or visit by
         any Tax Authority and so far as the Seller is aware, there are no facts
         which might cause such an investigation, audit or visit to be
         instituted.

25.      Stamp duty

All material documents which are required to be stamped and which are in the
possession of any member of the Group have been duly stamped.

26.      Value added tax

Penhaligon's Limited has made, given, obtained and kept all material records,
invoices and other documents appropriate or required for the purposes of VATA
1994 and is not in arrears with any payments or returns due and has not been
required by the Commissioners of Customs & Exercise to give security under
paragraph 4 of Schedule 11 to VATA 1994.

27.      Deductions and withholdings

Each member of the Group has made all deductions in respect, or on account, of
any tax from any payments made by it which it is obliged to make and has
accounted in full to the appropriate Tax Authority for all amounts so deducted.

28.      Residence

The country which is given in Schedule 5 or Schedule 6 as the tax residence of
each member of the Group is the only country whose Tax Authorities seek to
charge tax on the worldwide profits or gains of that member of the Group and no
member of the Group has ever paid tax on income profits or gains to any tax
authority in any other country except that mentioned in Schedule 5 or Schedule 6
in respect of it.

29.      Broker's fees

There is no investment banker, broker, finder or other intermediary that has
been retained by or is authorised to act on behalf of the Seller that might be
entitled to any fee or commission from the Seller or any member of the Group in
connection with the transactions contemplated by this Agreement.



                                       42


<Page>


30.      Environmental

So far as the Seller is aware, neither the Group nor any of the Properties is
subject to any order or notice issued under any Environmental Law and each
member of the Group and each of the Properties comply in all material respects
with Environmental Laws.

31.      Undisclosed Liabilities

So far as the Seller is aware, save for liabilities provided for the Accounts or
in the relevant Management Accounts, no member of the Group has an individual
liability (or series of related liabilities) which would have a material adverse
effect on the Group as a whole.

32.      Data Room

The documents and information comprising the Data Room as augmented from time to
time following the requests of the Purchaser as made available to the Purchaser
are accurate and complete in all material respects and are not misleading and
constitute all the documents and the information material for inclusion in the
Data Room as is reasonable and customary to include.




                                       43


<Page>




                                   SCHEDULE 4

                           (Limitations on liability)


1.       Limitation on quantum and general

(A)      The Purchaser shall not be entitled in any event to damages or other
         payment in respect of any claim or claims under any of the Warranties
         or the Tax Covenant in respect of any individual claim (or series of
         related claims with respect to related facts or circumstances):

         (i)      for less than US$25,000; or

         (ii)     unless and until the aggregate amount of all such claims
                  (taking no account of those referred to in paragraph (i)
                  above) exceeds US$200,000.

(B)      The total aggregate liability of the Seller under the Warranties and
         the Tax Covenant shall not in any event exceed an amount equal to
         US$1,700,000.

(C)      The Purchaser shall not be entitled to claim for any indirect or
         consequential loss (including loss of profit).

(D)      Each provision of this Schedule shall be read and construed without
         prejudice to each of the other provisions of this schedule.

2.       Time limits for bringing claims

         No claim shall be brought against the Seller in respect of any of the
         Warranties or under the Tax Covenant unless the Purchaser shall have
         given to the Seller written notice of such claim specifying (in
         reasonable detail) the matter which gives rise to the claim, the nature
         of the claim and the amount claimed in respect thereof (detailing the
         Purchaser's calculation of the loss thereby alleged to have been
         suffered by it) on or before the date falling on the first anniversary
         of the Completion Date or on the objection deadline date with respect
         to a hearing on the disclosure statement associated with the plan of
         reorganization of the Warnaco Group proposed by or filed with the
         concurrence of debtors (whichever is the earlier) PROVIDED that the
         liability of the Seller in respect of such claim shall absolutely
         determine (if such claim has not been previously satisfied, settled or
         withdrawn) if legal proceedings in respect of such claim shall not have
         been commenced within 6 months of the service of such notice and for
         this purpose proceedings shall not be deemed to have been commenced
         unless they shall have been properly issued and validly served upon the
         Seller.

3.       Conduct of litigation

(A)      Upon the Purchaser or any member of the Purchaser's Group becoming
         aware of any claim, action or demand against it or any other matter
         likely to give rise to any claim in respect of any of the Warranties
         (other than the Tax



                                       44


<Page>


         Warranties, to which Clause 8 of the Tax Covenant shall apply), the
         Purchaser shall:-

         (i)      as soon as practicable notify the Seller by written notice as
                  soon as it appears to the Purchaser that any assessment or
                  claim of a third party received by or coming to the notice of
                  the Purchaser or any member of the Purchaser's Group may
                  result in a claim under the Warranties;

         (ii)     subject to the Seller indemnifying the Purchaser in a form
                  reasonably satisfactory to the Purchaser against any
                  liability, cost, damage or expense which may be incurred
                  thereby, take such action and give such information and access
                  to personnel, premises, chattels, documents and records to the
                  Seller and its professional advisers as they may reasonably
                  request and the Seller shall be entitled to require any
                  relevant company to take such reasonable action and give such
                  reasonable information and assistance in order to avoid,
                  dispute, resist, mitigate, settle, compromise, defend or
                  appeal any claim in respect thereof or adjudication with
                  respect thereto;

         (iii)    at the request of the Seller, allow the Seller to take the
                  sole conduct of such actions as the Seller may deem
                  appropriate in connection with any such assessment or claim in
                  the name of the Purchaser or any relevant company and in that
                  connection the Purchaser shall give or cause to be given to
                  the Seller all such assistance as the Seller may require in
                  avoiding, disputing, resisting, settling, compromising,
                  defending or appealing any such claim and shall instruct such
                  solicitors or other professional advisors as the Seller may
                  nominate to act on behalf of the Purchaser or any relevant
                  company, as appropriate, but to act in accordance with the
                  Seller's sole instructions;

         (iv)     make no admission of liability, agreement, settlement or
                  compromise with any third party in relation to any such claim
                  or adjudication without the prior written consent of the
                  Seller; and

         (v)      take all reasonable action to mitigate any loss suffered by it
                  or any member of the Purchaser's Group in respect of which a
                  claim could be made under the Warranties.

(B)      The Seller shall be entitled at any stage and at its sole discretion to
         settle any such third party assessment or claim.

4.       No liability if loss is otherwise compensated for

(A)      The Purchaser shall not be entitled to recover damages or otherwise
         obtain reimbursement or restitution more than once in respect of any
         individual breach of the Warranties.

(B)      No liability shall attach to the Seller by reason of any breach of any
         term of the Warranties to the extent that the same loss has been
         recovered by the Purchaser under any other terms of this Agreement or
         any other document referred to herein.



                                       45


<Page>


(C)      The Seller shall not be liable for breach of any of the Warranties to
         the extent that the subject of the claim has been or is made good or is
         otherwise compensated for without cost to the Purchaser or any other
         member of the Purchaser's Group.

5.       Recovery From Insurers and other Third Parties

(A)      If, in respect of any matter which would give rise to a claim under the
         Warranties, any member of the Purchaser's Group is entitled (or would
         have been so entitled had any of them maintained in force the policies
         of insurance maintained by or on behalf of the relevant member of the
         Group immediately prior to Completion or policies providing equivalent
         cover thereto) to claim under any policy of insurance, then no such
         matter shall be the subject of a claim under the Warranties unless and
         until the appropriate member of the Purchaser's Group shall have made a
         claim against its insurers and used all reasonable endeavours to pursue
         such claim and any such insurance claim (or any claim which could have
         been made had such policies or their equivalents been maintained as
         aforesaid) shall then reduce by the amount recovered or extinguish any
         such claims under the Warranties.

(B)      Where the Purchaser or any member of the Purchaser's Group is at any
         time entitled to recover from some other person any sum in respect of
         any matter giving rise to a claim under the Warranties (other than the
         Tax Warranties, to which the provisions of Clause 5 of the Tax Covenant
         shall apply) the Purchaser shall, and shall procure that the member of
         the Purchaser's Group concerned shall, take all reasonable steps to
         enforce such recovery prior to taking action against the Seller (other
         than to notify the Seller of the claim against the Seller) and, in the
         event that the Purchaser or any member of the Purchaser's Group shall
         recover any amount from such other person, the amount of the claim
         against the Seller shall be reduced by the amount recovered.

(C)      If the Seller pays at any time to the Purchaser or any member of the
         Purchaser's Group an amount pursuant to a claim in respect of the
         Warranties (other than the Tax Warranties, to which the provisions of
         Clause 5 of the Tax Covenant shall apply) or under any provision of
         this Agreement and the Purchaser or member of the Purchaser's Group
         subsequently recover from some other person any sum in respect of any
         matter giving rise to such claim, the Purchaser shall, and shall
         procure that the other member of the Purchaser's Group repay to the
         Seller the lesser of (i) the amount paid by the Seller to the Purchaser
         or other member of the Purchaser's Group and (ii) the sum (including
         interest (if any)) recovered from such other person.

6.       Acts of Purchaser

(A)      Subject to paragraph 6(C), no claim shall lie against the Seller under
         or in relation to the Warranties to the extent that such claim is
         attributable to:

         (i)      any voluntary act, omission, transaction, or arrangement
                  carried out at the request of or with the consent of the
                  Purchaser or by a member of


                                       46


<Page>



                  the Purchaser's Group before Completion or under the terms of
                  this Agreement or any other agreement contemplated by it;

         (ii)     any voluntary act, omission, transaction, or arrangement
                  carried out by the Purchaser or by a member of the Purchaser's
                  Group on or after Completion; or

         (iii)    any admission of liability made in breach of the provisions of
                  this schedule after the date hereof by the Purchaser or on its
                  behalf or by persons deriving title from the Purchaser or by a
                  member of the Purchaser's Group on or after Completion.

(B)      Subject to paragraph 6(C), the Seller shall not be liable for any
         breach of any Warranty which would not have arisen but for any
         reorganisation or change in ownership of any member of the Purchaser's
         Group after Completion or any accounting basis on which any member of
         the Purchaser's Group values its assets or any accounting policy or
         practice of any member of the Purchaser's Group which is different from
         that adopted or used in the preparation of the Accounts.

(C)      Paragraphs (A) and (B) shall not apply to the Tax Warranties (which
         instead shall be governed by the provisions of the Tax Covenant).

7.       The Accounts

(A)      No matter shall be the subject of a claim under the Warranties (other
         than the Tax Warranties, to which the provisions of Clause 3 of the Tax
         Covenant shall apply) to the extent that allowance, provision or
         reserve in respect of such matter shall have been made in the debtors
         in the Accounts or shall have been otherwise taken account of or
         reflected in the Accounts.

(B)      Notwithstanding sub-paragraph (A), if at any time after Completion the
         amount of any allowance, provision or reserve made in the Accounts or
         otherwise taken account of or reflected therein is found to be in
         excess of the matter for which such allowance, provision or reserve was
         made, the amount of such excess (the "Excess Amount") shall be applied
         in the following manner:-

         (i)      if the Seller shall, prior to the date on which the Excess
                  Amount is ascertained, have made any payment or payments in
                  respect of the Warranties then the Purchaser shall forthwith
                  repay to the Seller a sum equal to such part of the Excess
                  Amount as does not exceed the aggregate of such prior payments
                  by the Seller as shall not have been previously refunded
                  pursuant to this sub-clause; and

         (ii)     where sub-paragraph (B) (i) above does not apply or where such
                  sub- paragraph does apply but there remains a balance of the
                  Excess Amount after the application of that sub-paragraph,
                  then the Excess Amount or the balance remaining, as the case
                  may be, shall be applied in reducing any liability of the
                  Seller that may subsequently arise under the Warranties.


                                       47


<Page>



(C)      If any assets of any member of the Group which are represented in the
         Accounts and are therein ascribed a valuation are disposed of for a
         consideration which exceeds the said ascribed value in the Accounts,
         then the amount by which such consideration exceeds the said ascribed
         valuation shall forthwith be applied towards repaying to the Seller any
         amounts which the Seller shall have previously paid in respect of any
         claims under the Warranties and, if any balance remains thereafter, in
         reducing any liability of the Seller that may subsequently arise under
         the Warranties.

(D)      If any liabilities of any member of the Group which are represented in
         the Accounts and are therein ascribed a valuation are settled or
         satisfied for a consideration which is below the amount of the said
         valuation ascribed to them in the Accounts, then the amount by which
         such valuation exceeds the consideration given for the satisfaction of
         the said liabilities shall forthwith be applied towards repaying to the
         Seller any amounts which the Seller shall have previously paid in
         respect of any claims under the Warranties and, if any balance remains
         thereafter, in reducing any liability of the Seller that may
         subsequently arise under the Warranties.

8.       Retrospective legislation

No liability shall arise in respect of any breach of any of the Warranties to
the extent that liability for such breach occurs or is increased directly or
indirectly as a result of any legislation not in force on or prior to the date
of this Agreement or as a result of the withdrawal of any extra-statutory
concession or other agreement or arrangement currently granted by or made with
any governmental authority or as a result of any change after the date of this
Agreement of any generally accepted interpretation or application of any
legislation. This paragraph shall not apply to the Tax Warranties.

9.       Purchaser's knowledge

Without prejudice to paragraph 12, the Seller shall not be liable under the
Warranties in relation to any matter forming the basis of the claim of which the
Purchaser was aware on or before the date of this Agreement. For this purpose,
the Purchaser shall be deemed to have knowledge of those matters which could
fairly be deduced from the contents of any of the Data Room, the Disclosure
Letter, any due diligence report (in draft or final form) prepared by or for the
Purchaser which in any such case have been delivered to the Purchaser on or
prior to the date of this Agreement and of those matters which could have been
deduced had further reasonable enquiry been made in relation to the matters set
out in any of such documents.

10.      Information Memorandum, Data Room and independent advice of Purchaser

Without prejudice to the Assurances expressly set out in this Agreement, the
Purchaser acknowledges and agrees with the Seller (on behalf of itself and each
other member of the Seller's Group and on behalf of their respective officers,
employees and advisers) that:

(A)      the discussions with them regarding the purchase of the Shares and the
         provision of information relating to the Group (including, without
         prejudice to the generality of the foregoing, the Information
         Memorandum and the


                                       48


<Page>



         information in the Data Room) was made by the Seller and accepted by
         the Purchaser and this Agreement is entered into, on the basis and
         condition that no member of the Seller's Group or any of their
         respective officers, employees and advisers has made or makes any
         representation or warranty as to the accuracy or completeness of such
         information, or accepts any duty of care in relation to the Purchaser
         or any member of the Purchaser's Group or any provider of finance to
         any such person in respect of the provision of any such information and
         that none of such persons shall be under any liability to any such
         person in the event that, for whatever reason, any such information is
         or becomes inaccurate, incomplete or misleading in any particular and
         that, in the absence of fraud, the Purchaser agrees and undertakes that
         it shall have no rights or remedies in relation to any of the foregoing
         save as otherwise expressly set out in this Agreement; and

(B)      the Purchaser has had independent legal, financial and technical advice
         relating to the purchase of the Shares and to the terms of this
         Agreement and the documents to be executed pursuant to it.

11.      Disclosure

The Purchaser shall not be entitled to claim that any fact, matter or
circumstance causes any of the Warranties to be breached if fairly disclosed in
the Disclosure Letter or in the Data Room or in any document referred to in the
Disclosure Letter or delivered or deemed to be delivered with it.

12.      Claim to be Reduction of Purchase Price

Any payment made by the Seller or any other person in respect of any claim under
the Warranties shall be deemed to be a reduction of the Purchase Price.

13.      Taxation

In calculating the liability of the Seller for any breach of the Warranties
there shall be taken into account the amount by which any Taxation for which the
Purchaser, any member of the Purchaser's Group and the Group is now or in the
future accountable or liable to be assessed is actually reduced or extinguished
as a result of the matter giving rise to the liability.



                                       49


<Page>



                                   SCHEDULE 5

                                     Part I

                              Penhaligon's Limited

<TABLE>

<S>                                               <C>
1.    Registered number                   :        2110619

2.    Date of incorporation               :        13 March 1987

3.    Place of incorporation              :        England

4.    Address of registered office        :        41 Wellington Street, Covent Garden
                                                   London  WC2E 7BN

5.    Authorised share capital            :        'L'17,000,000 dividend into
                                                    17,000,000 shares of'L'1 each

6.    Issued share capital                :        'L'16,377,485

7.    Directors:

      Full Name                   Usual residential address           Nationality
      ---------                   -------------------------           -----------
      Michelle Elizabeth Stewart  [Home Address]                      British

      Jocelyn Moira Boughton      [Home Address]                      British

      Rosemary Kemp               [Home Address]                      British

      Stanley Parker Silverstein  [Home Address]                      American


8.    Secretary:

      Full Name                   Usual residential address
      ---------                   ------------------------
      Rosemary Kemp               [Home Address]

9.    Accounting reference date           :        1st January

10.   Auditors                            :        Deloitte & Touche

11.   Tax residence                       :        United Kingdom

</TABLE>





                                       50


<Page>




                                SCHEDULE 5

                                  Part II

                       Penhaligon's Pacific Limited

<TABLE>
<S>                                                <C>
1.    Registered number                   :        618748

2.    Date of incorporation               :        30 July 1997

3.    Place of incorporation              :        Hong Kong

4.    Address of registered office        :        10th Floor, One Harbour Front
                                                   18 Tak Fung Street
                                                   Hunghom, Kowloon

5.    Authorised share capital            :        HK$10,000 divided into 10,000
                                                   shares of HK$1.00 each

6.    Issued share capital                :        HK$100.00

7.    Directors:                          :

      Full Name                   Usual residential address           Nationality
      ---------                   -------------------------           -----------
      Stanley Parker Silverstein  [Home Address]                      American

      Philip Chan                 [Home Address]                      Chinese

8.    Secretary:

      Full Name                   Usual residential address
      ---------                   -------------------------
      Snap Services (H.K.)        [Home Address]
      Limited

9.    Accounting reference date           :        1st January

10.   Auditors                            :        Deloitte Touche Tohmatsu

11.   Tax residence                       :        Hong Kong

</TABLE>


                                       51


<Page>





                                SCHEDULE 6

                                  Part I

              Penhaligon's and Jeavons Investment Co Limited
<TABLE>

<S>                                                <C>
1.    Registered number                   :        3333043

2.    Date of incorporation               :        13 March 1997

3.    Place of incorporation              :        England

4.    Address of registered office        :        Crusador Estate, 167 Hermitage
                                                   Road London N4 1LZ

5.    Authorised share capital            :        'L'100 divided into 100 shares of'L'1
                                                   each

6.    Issued share capital                :        'L'100

7.    Directors:                          :

      Full Name                   Usual residential address           Nationality
      ---------                   -------------------------           -----------
      Jocelyn Moira Boughton      [Home Address]                      British

      Michelle Elizabeth Stewart  [Home Address]                      British

8.    Secretary:

      Full Name                   Usual residential address
      ---------                   -------------------------
      Rosemary Kemp               [Home Address]

9.    Accounting reference date           :        31st March

10.   Auditors                            :        Deloitte & Touche

11.   Tax residence                       :        United Kingdom

</TABLE>



                                       52


<Page>





                                SCHEDULE 6

                                  Part II

                               Mulmkion B.V.
<TABLE>

<S>                                                        <C>
1.    Registered number                           :        33.29.52.58 (Register of the Chamber of Commerce of Amsterdam)

2.    Date of incorporation                       :        16 April 1985

3.    Place of incorporation                      :        Amsterdam

4.    Address of registered office                :        J. Geesinkweg 601
                                                           P.O. Box 71003
                                                           1008 BA Amsterdam
                                                           The Netherlands

5.    Authorised share capital                    :        200,000 DGL of 1 Dutch Guilder each

6.    Issued share capital                        :        40,000 DGL

7.    Directors:                                  :

      Full Name                   Usual residential address           Nationality
      ---------                   -------------------------           -----------
      Stanley Parker Silverstein  [Home Address]                      American

      Rosemary Kemp               [Home Address]                      British

      Linda Joy Wachner           [Home Address]                      American

8.    Secretary:

      None - institute unknown in The Netherlands


9.    Accounting reference date                   :        31 December

10.   Auditors                                    :        Arenthals Grant Thornton

11.   Tax residence                               :        Amsterdam

</TABLE>



                                       53


<Page>





                                SCHEDULE 6

                                 Part III

                                LMK Limited
<TABLE>

<S>                                                        <C>
1.    Registered number                           :        67962

2.    Date of incorporation                       :        26 March 1997

3.    Place of incorporation                      :        Jersey

4.    Address of registered office                :        Sir Walter Raleigh House
                                                           48/50 Esplanade
                                                           St. Helier, Jersey  JE1 4HH
                                                           Channel Islands

5.    Authorised share capital                    :        'L'10,000 divided into 10,000
                                                           shares of 'L'1 each

6.    Issued share capital                        :        'L'100

7.    Directors:

      Full Name                            Usual residential address              Nationality
      ---------                            -------------------------              -----------
      James Samuel Colclough              [Home Address]                         British

      Richard Ernest                      [Home Address]                         British
      Giles Ireson

      Edward James Noel                   [Home Address]                         British

      Ian Christopher Crosby              [Home Address]                         South Africa

      Laurence Leslie Hart                [Home Address]                         British
</TABLE>


                                       54


<Page>





<TABLE>

<S>                                       <C>
8.    Secretary:

      Full Name                            Usual residential address
      ---------                            -------------------------
      Clarendon Secretaries Limited        [Home Address]

9.    Accounting reference date                   :        31st March

10.   Auditors                                    :        Le Sueur, Ireson & Co

11.   Tax residence                               :        Jersey

</TABLE>


                                       55


<Page>





                                   SCHEDULE 7

                                 The Properties

<TABLE>
<CAPTION>

(1)                          (2)                        (3)                        (4)
Property                     Tenure                     Tenant                     Landlord

<S>                           <C>                       <C>                        <C>
Shop G9                      Leasehold                  Warnaco (HK) Limited       HKL (Prince's Building)
Princes Building                                                                   Limited
Hong Kong

Basement and ground floor    Leasehold                  Penhaligon's Limited       Burford Acquisitions
41 Wellington Street                                                               Limited
London

110A New Bond Street (20A    Leasehold                  Penhaligon's Limited       Maruito UK Limited
Brook Street)
London W1

Units 16/17 Burlington       Leasehold                  Penhaligon's Limited       The Prudential Assurance
Arcade                                                                             Company Limited
London W1

Unit 8                       Leasehold                  Penhaligon's Limited       Rolls-Royce Pension
The Royal Exchange                                                                 Trust Limited

22 Eastgate Row South        Leasehold                  Penhaligon's Limited       The Scottish Provident
Chester                                                                            Institution

23 Princes Square            Leasehold                  Penhaligon's Limited       Clerical Medical
Glasgow                                                                            Investment Group Limited
                                                                                   and Britel Fund Trustees
                                                                                   Limited

</TABLE>


                                       56







<Page>

<TABLE>
<CAPTION>


(1)                          (2)                        (3)                        (4)
Property                     Tenure                     Tenant                     Landlord

<S>                           <C>                       <C>                        <C>
Unit 11                      Leasehold                  Penhaligon's Limited       Clerical Medical
Princes Square                                                                     Investment Group Limited
Glasgow                                                                            and Britel Fund Trustees
                                                                                   Limited

33 George Street             Leasehold                  Penhaligon's Limited       Charles Gordon
Edinburgh                                                                          Sivewright and Mrs
                                                                                   Marlene Agnes Sivewright

Unit 6B                      Leasehold                  Penhaligon's Limited       Bicester Nominees
Bicester Village Bicester                                                          Limited and Bicester II
                                                                                   Nominees Limited

Ground Floor Shop            Leasehold                  Penhaligon's Limited       Mohammad Ali Nafissi
18 Beauchamp Place
London SW3

Unit 61                      Leasehold                  Penhaligon's Limited       AXA Equity & Law Life
Windsor Royal Station                                                              Assurance Society Plc
Windsor

Unit 13                      Leasehold                  Penhaligon's Limited       Second Industrial
Crusader Industrial Estate                                                         Partnership
Hermitage Road
London N4

12 Northumberland Place      Leasehold                  Penhaligon's Limited       Courts Nominees Limited
Bath

870 Madison Avenue           Leasehold                  Warnaco Inc.               Lawrence Friedland and
New York                                                                           Melvin Friedland

</TABLE>



                                       57


<Page>




                                   SCHEDULE 8

                     Pro Forma Net Working Capital Statement

<TABLE>
<CAPTION>

                                                                                        'L''000

<S>                                                                                      <C>
Current Assets
Raw materials and consumables                                                            [ ]
Finished goods and goods for resale                                                      [ ]
less: stock provision                                                                    [ ]

Debtors
Trade debtors                                                                            [ ]
Amounts owed by parent and subsidiary undertakings                                       [ ]
Other debtors                                                                            [ ]
Prepayments and accrued income                                                           [ ]

Less: creditors (amounts falling due within one year)
Trade creditors                                                                          [ ]
Taxes and social security costs                                                          [ ]
Other creditors                                                                          [ ]
Accruals and deferred income                                                             [ ]

Less: provisions for liabilities and charges
Balance at completion                                                                    [ ]

Working Capital

</TABLE>



                                       58


<Page>





                                   SCHEDULE 9

                        Registered Intellectual Property




                                       59


<Page>






IN WITNESS whereof the parties have entered into this Agreement the day and year
first before written.


Signed by                  )
for and on behalf of       )         /s/ Stanley Silverstein
                                     -----------------------

Mullion International      )
Limited                    )


Signed by                  )
for and on behalf of       )         /s/ Jason Hurwitz
                                     -----------------

Royal Holdings, Inc.       )


                                       60