Document:

<PAGE>

                                                                    EXHIBIT 10.3

                              ANALOG DEVICES, INC.

                 AMENDED AND RESTATED DEFERRED COMPENSATION PLAN

                        EFFECTIVE AS OF DECEMBER 6, 2005

                                       1
<PAGE>

                              ANALOG DEVICES, INC.

                           DEFERRED COMPENSATION PLAN

                                                               Table of Contents

<TABLE>
<S>                                                                                 <C>
ARTICLE I.....................................................................       5

INTRODUCTION..................................................................       5
     1.1  History.............................................................       5
     1.2  Statement of Purpose and Compliance with Law........................       5

ARTICLE II....................................................................       5

DEFINITIONS...................................................................       5
     2.1  Account.............................................................       6
     2.2  Administrative Procedures...........................................       6
     2.3  Base Salary.........................................................       6
     2.4  Beneficiary.........................................................       6
     2.5  Board...............................................................       6
     2.6  Bonus...............................................................       6
     2.7  Change in Control...................................................       6
     2.8  Code................................................................       6
     2.9  Committee...........................................................       7
     2.10 Compensation........................................................       7
     2.11 Company Contribution Account........................................       7
     2.12 Company Contribution Amount.........................................       7
     2.13 Company.............................................................       7
     2.14 Deferral Account....................................................       7
     2.15 Deferral Benefit....................................................       7
     2.16 Deferral Election...................................................       7
     2.17 Disability..........................................................       7
     2.18 Eligible Employee...................................................       8
     2.19 Employer............................................................       8
     2.20 Investment Return Rate..............................................       8
     2.21 Participant.........................................................       8
     2.22 Participation Election..............................................       8
     2.23 Plan................................................................       8
     2.24 Plan Year...........................................................       8
     2.25 Recordkeeper........................................................       8
     2.26 Retirement..........................................................       8
     2.27 Section 409A........................................................       9
     2.28 Selected Affiliate..................................................       9
     2.29 TIP.................................................................       9
     2.30 Unforseeable Emergency..............................................       9
     2.31 Valuation Date......................................................       9
</TABLE>

                                       2
<PAGE>

<TABLE>
<S>                                                                                 <C>
ARTICLE III...................................................................       9

ELIGIBILITY AND PARTICIPATION.................................................       9
     3.1  Eligibility.........................................................       9
     3.2  Participation.......................................................       9
     3.3  Change in Participation Status......................................      10
     3.4  Ineligible Participant..............................................      10

ARTICLE IV....................................................................      10

DEFERRAL OF COMPENSATION......................................................      10
     4.1  Amount of Deferral..................................................      10
     4.2  Crediting Deferred Compensation and Company Contribution Amounts....      10

ARTICLE V.....................................................................      10

BENEFIT ACCOUNTS..............................................................      10
     5.1  Valuation of Account................................................      11
     5.2  Crediting of Investment Return......................................      11
     5.3  Statement of Accounts...............................................      11
     5.4  Vesting of Account..................................................      11
     5.5  Investment Vehicles.................................................      11

ARTICLE VI....................................................................      11

PAYMENT OF BENEFITS...........................................................      11
     6.1  Payment of Deferral Benefit.........................................      11
     6.2  Payments to Beneficiaries...........................................      12
     6.3  Unforseeable Emergency..............................................      12
     6.4  Form of Payment.....................................................      12
     6.5  Commencement of Payments............................................      13
     6.6  Small Benefit.......................................................      13
     6.7  Changes in Form of Benefit..........................................      13
     6.8  Special 2005 Distribution and Election Changes......................      13

ARTICLE VII...................................................................      14

BENEFICIARY DESIGNATION.......................................................      14
     7.1  Beneficiary Designation.............................................      14
     7.2  Change of Beneficiary Designation...................................      14
     7.3  No Designation......................................................      14
     7.4  Effect of Payment...................................................      14

ARTICLE VIII..................................................................      14

ADMINISTRATION................................................................      14
     8.1  Committee...........................................................      14
     8.2  Agents..............................................................      15
     8.3  Binding Effect of Decisions.........................................      15
     8.4  Indemnification of Committee........................................      15

ARTICLE IX....................................................................      15

AMENDMENT AND TERMINATION OF THE PLAN.........................................      15
</TABLE>

                                       3
<PAGE>

<TABLE>
<S>                                                                                 <C>
     9.1  Amendment...........................................................      15
     9.2  Termination.........................................................      15

ARTICLE X.....................................................................      16

MISCELLANEOUS.................................................................      16
     10.1 Funding.............................................................      16
     10.2 Nonassignability....................................................      16
     10.3 Legal Fees and Expenses.............................................      17
     10.4 Captions............................................................      17
     10.5 Governing Law.......................................................      17
     10.6 Successors..........................................................      17
     10.7 Right to Continued Service..........................................      17
</TABLE>

                                       4
<PAGE>

                                   ARTICLE I

INTRODUCTION

1.1   HISTORY

The Analog Devices, Inc. Deferred Compensation Plan (the "Plan") was established
by Analog Devices, Inc. (the "Company") effective December 1, 1995 and
thereafter amended from time to time. In accordance with the provisions of
Notice 2005-1 issued by the Internal Revenue Service this Plan was amended and
restated on February 3, 2005, effective January 1, 2005, to permit certain
withdrawals and changes in deferrals as set forth in Section 6.9 and to conform
the plan in its entirety to new Section 409A of the Internal Revenue Code. This
Plan is subsequently amended and restated on December 6, 2005 effective as of
that same day to eliminate the "TIP Restoration Payment", formerly defined in
Section 2.31 of the previous amended and restated Plan. The terms of this
restatement are applicable to all account balances maintained under the Plan as
of January 1, 2005 as well as all contributions made after that date.

1.2   STATEMENT OF PURPOSE AND COMPLIANCE WITH LAW

The purpose of the Plan is to provide deferred compensation benefits to a select
group of management and highly compensated employees of the Company and the
Directors and to assist in attracting and retaining qualified individuals to
serve as officers and managers or Directors of the Company.

The Plan is intended to defer the recognition of taxable income by participants
until the distribution of amounts they have deferred or the Company has
contributed in accordance with the plan terms without the imposition of any
penalties. Therefore, the Plan is intended to comply with all applicable law
consistent with that intent, including new Section 409A of the Internal Revenue
Code of 1986, as amended and shall be operated and interpreted in accordance
with this intention and any action or failure to act which is determined to be
inconsistent with Section 409A shall be corrected as soon as possible in order
to comply with such Section 409A. To the extent of any inconsistency between
this Plan and Section 409A, Section 409A shall govern and control.

This Plan may be further amended (the "Modifications") to comply with the terms
of Section 409A (and any other applicable law). The Plan terms and its
interpretation and administration, shall be modified from time to time (whether
or not formal amendments have yet been adopted to the plan terms) to the extent
necessary in order to comply with Section 409A. In addition, Modifications made
to the plan terms may include any elective provisions permitted under applicable
law to the extent set forth in such Modifications.

                                       5
<PAGE>
                                   ARTICLE II

DEFINITIONS

When used in this Plan and initially capitalized, the following words and
phrases shall have the meanings indicated:

2.1   ACCOUNT.

"Account" means the sum of a Participant's Deferral Account and Company
Contribution Account.

2.2   ADMINISTRATIVE PROCEDURES

"Administrative Procedures" means the detailed terms governing the operation of
the Plan which are to be adopted and may thereafter be modified from time to
time by the Committee and which shall conform in their terms and operation with
Section 409A.

2.3   BASE SALARY.

"Base Salary" means a Participant's base earnings earned by an Eligible Employee
without regard to any increases or decreases in base earnings as a result of (i)
an election to defer base earnings under this Plan or (ii) an election between
benefits or cash provided under any Plan of an Employer maintained pursuant to
Section 125 or 401(k) of the Code, and as limited in the Administrative
Procedures.

2.4   BENEFICIARY.

"Beneficiary" means the person or persons designated or deemed to be designated
by the Participant pursuant to Article VII to receive benefits payable under the
Plan in the event of the Participant's death.

2.5   BOARD.

"Board" means the Board of Directors of the Company.

2.6   BONUS.

"Bonus" means a Participant's bonus or sales commission earned by an Eligible
Employee under the plans identified in the Administrative Procedures and to the
degree limited therein, without regard to any decreases as a result of (i) an
election to defer all or any portion of a bonus under this Plan or (ii) an
election between benefits or cash provided under any plan of the Employer
maintained pursuant to Section 401(k) of the Code.

2.7   CHANGE IN CONTROL.

"Change in Control" means a Change in Control Event as defined in Internal
Revenue Service Notice 2005-1, as modified from time to time.

2.8   CODE.

"Code" means the Internal Revenue Code of 1986, as amended.

                                       6
<PAGE>

2.9   COMMITTEE.

"Committee" has the meaning set forth in Section 8.1.

2.10  COMPENSATION.

"Compensation" means the Base Salary and Bonus earned by an Eligible Employee
for each Plan Year or the fees earned by any non-employee Board member in each
Plan Year.

2.11  COMPANY CONTRIBUTION ACCOUNT.

"Company Contribution Account" means the account maintained on the books of the
Employer for the purpose of accounting for the Company Contribution Amount and
the investment return credited to such Account pursuant to Article V.

2.12  COMPANY CONTRIBUTION AMOUNT.

"Company Contribution Amount" means the amount credited to a Participant's
Company Contribution Account under Section 4.2.

2.13  COMPANY.

"Company" means Analog Devices, Inc. (Analog) and any successor thereto.

2.14  DEFERRAL ACCOUNT.

"Deferral Account" means the account maintained on the books of the Employer for
the purpose of accounting for the amount of Compensation that each Participant
elects to defer under the Plan and for the amount of investment return credited
thereto for each Participant pursuant to Article V.

2.15  DEFERRAL BENEFIT.

"Deferral Benefit" means the benefit payable to a Participant or his or her
Beneficiary pursuant to Article VI.

2.16  DEFERRAL ELECTION.

"Deferral Election" means the election made by a Participant to defer
Compensation pursuant to Article IV which will be made in accordance with the
Administrative Procedures.

2.17  DISABILITY.

"Disability" means Disability as defined in Section 409A.

                                       7
<PAGE>

2.18  ELIGIBLE EMPLOYEE.

"Eligible Employee" means (i) a highly compensated or management employee of the
Company who is designated by the Committee in accordance with Section 3.1 as
eligible to participate in the Plan, or (ii) any non-employee member of the
Board serving from time to time.

2.19  EMPLOYER.

"Employer" means, with respect to a Participant, the Company or the Selected
Affiliate which pays such Participant's Compensation.

2.20  INVESTMENT RETURN RATE.

"Investment Return Rate" means the rate credited on Accounts in accordance with
the Administrative Procedures.

2.21  PARTICIPANT.

"Participant" means any Eligible Employee who elects to participate by filing a
Participation Election.

2.22  PARTICIPATION ELECTION.

"Participation Election" means the Participant's election, in whatever manner is
prescribed in the Administrative Procedures, to make Deferral Elections under
the Plan.

2.23  PLAN.

"Plan" means the Analog Devices, Inc. Amended and Restated Deferred Compensation
Plan, as amended from time to time.

2.24  PLAN YEAR.

"Plan Year" means a twelve-month period commencing January 1 and ending the
following December 31.

2.25  RECORDKEEPER

"Recordkeeper" means the organization which is responsible for maintaining the
records of the Plan from time to time.

2.26  RETIREMENT

"Retirement" means the separation from service of a Participant who has reached
age 62 and completed 10 years of vesting service under the Company's TIP as an
employee, or, 10 years of service as a non-employee member of the Board.

                                       8
<PAGE>

2.27  SECTION 409A

"Section 409A" means Section 409A of the Code and all other applicable statutes
and the regulations, notices and other guidance issued and modified from time to
time by state and federal agencies with respect to such laws.

2.28  SELECTED AFFILIATE.

"Selected Affiliate" means (1) any entity in an unbroken chain of companies
beginning with the Company if each of the companies other than the last company
in the chain owns or controls, directly or indirectly, stock possessing not less
than 50 percent of the total combined voting power of all classes of stock in
one of the other companies, or (2) any partnership or joint venture in which one
or more of such companies is a partner or venturer, each of which shall be
selected by the Committee.

2.29  TIP.

"TIP" means, with respect to a Participant, the Analog Devices, Inc. "The
Investment Partnership", a qualified retirement plan under Section 401(a) and
401(k) of the Code, or its successor, or as it may be amended from time to time

2.30  UNFORSEEABLE EMERGENCY

"Unforseeable Emergency" has the meaning set forth in Section 6.4.

2.31  VALUATION DATE.

"Valuation Date" means a date on which the Participant's Account is valued as
provided in Article V. The Valuation Date shall be the end of the Plan Year and
any other date determined in the Administrative Procedures

                                  ARTICLE III

ELIGIBILITY AND PARTICIPATION

3.1   ELIGIBILITY.

Eligibility to participate in the Plan is limited to Eligible Employees. From
time to time, and subject to Section 3.4, the Committee shall identify Eligible
Employees in accordance with the Administrative Procedures.

3.2   PARTICIPATION.

Participation in the Plan shall be limited to Eligible Employees who complete a
Participation Election in accordance with the Administrative Procedures.

                                       9
<PAGE>

3.3   CHANGE IN PARTICIPATION STATUS

A Participant may change a Participant election or terminate his or her
participation in the Plan only in accordance with the Administrative Procedures.

3.4   INELIGIBLE PARTICIPANT

Notwithstanding any other provisions of this Plan to the contrary, if the
Committee determines that any Participant may not qualify as a "management or
highly compensated employee" within the meaning of the Employee Retirement
Income Security Act of 1974, as amended ("ERISA"), or regulations thereunder,
the Committee may determine, in its sole discretion, that such Participant shall
cease to be eligible to participate in this Plan. Upon such determination and to
the extent permitted by Section 409A, the Employer shall make a lump sum payment
to the Participant equal to the vested amount credited to his Account as soon as
administratively practicable. Upon such payment, no benefit shall thereafter be
payable under this Plan either to the Participant or any Beneficiary of the
Participant, and all of the Participant's elections as to the time and manner of
payment of his Account will be deemed to be canceled.

                                   ARTICLE IV

DEFERRAL OF COMPENSATION

4.1   AMOUNT OF DEFERRAL.

With respect to each Plan Year, a Participant may make Deferral Elections of a
specified percentage of his or her Compensation in accordance with the
Administrative Procedures. Deferral Elections in effect prior to the effective
date of this amendment and restatement shall remain in effect unless modified to
the extent and in the manner permitted under the Administrative Procedures.

4.2   CREDITING DEFERRED COMPENSATION AND COMPANY CONTRIBUTION AMOUNTS.

The amount of Compensation subject to a Deferral Election under Section 4.1
shall be credited by the Employer to the Participant's Deferral Account
periodically, the frequency of which will be determined in accordance with the
Administrative Procedures. To the extent that the Employer is required to
withhold any taxes or other amounts from a Participant's deferred Compensation
pursuant to any state, federal or local law, such amounts shall be withheld from
the Participant's compensation before such amounts are credited.

For each deferral of Compensation, the Company shall credit the Company
Contribution Account of each Participant, other than a non-employee Director,
with an amount equal to (a) 7% of the amount of Compensation deferred or (b) if
the Participant has elected to defer 100% of his or her Compensation, 7% of the
total Compensation. For purposes of this paragraph, Compensation shall exclude
Company bonus but shall include sales commissions

                                       10
<PAGE>

                                   ARTICLE V

BENEFIT ACCOUNTS

5.1   VALUATION OF ACCOUNT.

As of each Valuation Date, a Participant's Account shall consist of the Account
balance as of the immediately preceding Valuation Date, plus any amounts
credited under Article IV since the immediately preceding Valuation Date, plus
investment return credited pursuant to Section 5.2 since the immediately
preceding Valuation Date, minus the aggregate amount of distributions, if any,
made from such Account since the immediately preceding Valuation Date.

5.2   CREDITING OF INVESTMENT RETURN.

As of each Valuation Date until all of a Participant's Account is distributed,
each Participant's Deferral Account and Company Contribution shall be credited
with the Investment Return Rate earned since the immediately preceding Valuation
Date as provided in the Administrative Procedures.

5.3   STATEMENT OF ACCOUNTS.

The Recordkeeper shall provide statements of account to Participants in
accordance with the Administrative Procedures.

5.4   VESTING OF ACCOUNT.

Except as provided in Sections 10.1 and 10.2, a Participant shall be 100% vested
in his or her Deferral Account at all times. A Participant's interest in his or
her Company Contribution Account shall be 100% vested as of a Change in Control
and on death or Disability. A Participant's interest in his or her Company
Contribution Account shall vest under the vesting schedule for the employer
basic contributions under TIP.

Any nonvested portion of a Participant's Company Contribution Account shall be
forfeited at separation from service. Forfeitures under the Plan shall not be
credited to other Participants.

5.5   INVESTMENT VEHICLES.

A Participant may elect, from time to time, to have his Account credited with an
Investment Return Rate as if it were invested in one or more investment vehicles
selected by the Committee and made available for such election in accordance
with the Administrative Procedures. The Committee may also establish a deemed
investment which shall apply if the Participant makes no election.

                                   ARTICLE VI

PAYMENT OF BENEFITS

6.1   PAYMENT OF DEFERRAL BENEFIT

Upon the death, Disability, or Retirement of a Participant, the Employer shall
pay to the Participant or his Beneficiary a Deferral Benefit equal to the vested
balance of his or her Account determined pursuant to Article V, less applicable
withholding, based on his election in

                                       11
<PAGE>

accordance with Section 6.4. The distribution shall be subject to any waiting
period required by Section 409A with respect to Participants who are Key
Employees as defined therein. Elections with respect to such payment made under
the Plan prior to the effective date of this amendment and restatement shall
continue in effect until changed in accordance with the provisions of this
Article VI and the Administrative Procedures.

Upon a Change in Control or upon a Participant's separation from service for
reasons other than death, Disability, or Retirement, the Employer shall pay to
the Participant a Deferral Benefit in a lump sum equal to the vested balance of
his or her Account determined pursuant to Article V, less applicable
withholdings, as soon as administratively practicable; provided that such
distribution shall be subject to any waiting period required by Section 409A
with respect to Key Employees as defined therein.

6.2   PAYMENTS TO BENEFICIARIES.

In the event of the Participant's death prior to his or her receipt of his or
her entire vested Account, the vested balance shall be distributed to his or her
Beneficiary as determined under Article VII, in a lump sum; provided that if the
Participant was receiving installment distributions at the time of death, or had
made an installment election pursuant to Section 6.4 at least 12 months prior to
death, the Beneficiary will receive the annual installments at such times as
such installments would have become distributable to the Participant.

6.3   UNFORSEEABLE EMERGENCY

In the event that the Committee, upon request of a Participant, determines, that
the Participant has suffered an Unforeseeable Emergency the Employer shall
distribute to the Participant, as soon as practicable following such
determination, the amounts provided for under this Section 6.3. Such
distribution shall consist of an amount necessary to meet the emergency, plus
amounts necessary to pay taxes reasonably anticipated as a result of the
distribution after taking into account the extent to which such hardship is or
may be relieved through reimbursement or compensation by insurance or otherwise
or by liquidation of the participant's assets (to the extent the liquidation of
such assets would not itself cause severe financial hardship), but not exceeding
the aggregate balance of such Participant's Deferral Account as of the date of
such payment. The amount of the Deferral Benefit otherwise payable under the
Plan to such Participant shall be adjusted to reflect the early payment of the
Unforseeable Emergency. Any distribution under this Section 6.3 shall be made
only to the extent that it is in compliance with Section 409A.

6.4   FORM OF PAYMENT.

The Deferral Benefit payable pursuant to Section 6.1 on death, Disability or
Retirement, shall be paid in one of the following forms as further described in
the Administrative Procedures, as elected by the Participant. The Participant
shall elect the form of such distribution at the time he or she first completes
the Participation Election and such election shall apply to the entire amount of
the Participant's vested Account.

      (a)   Installments; or,

      (b)   A lump sum.

                                       12
<PAGE>

In the event a Participant fails to make a distribution election, his or her
vested Account Balance shall be distributed as a lump sum as soon as
administratively practicable after his or her separation from service, death or
Disability; subject to such waiting period as required by Section 409A with
respect to a Key Employee as defined therein.

6.5   COMMENCEMENT OF PAYMENTS.

Notwithstanding the foregoing, the distribution of a lump sum or the
commencement of installment payments under Sections 6.1 and 6.2 of the Plan
shall begin following an event which entitles a Participant (or a Beneficiary)
to payments under the Plan and the end of any waiting period required with
respect to such Participant as required by Section 409A.

6.6   SMALL BENEFIT.

In the event the Committee determines that the vested balance of a Participant's
Account is less than $10,000 at the time of commencement of payments, or the
portion of the vested balance of the Participant's Account payable to any
Beneficiary is less than $10,000 at the time of commencement of payments to such
Beneficiary, the Committee may inform the Employer and the Employer, will pay
the entire amount in the form of a lump sum payment, notwithstanding any
Participant election to the contrary.

6.7   CHANGES IN FORM OF BENEFIT

A Participant's election to change the form in which his or her benefit is to be
paid under Section 6.1 on death, Disability or Retirement, shall, to the extent
required by Section 409A, meet the following requirements:

      (a)   the new election may not take effect until at least 12 months after
the date on which the election is made; and

      (b)   in the case of an election related to a payment other than
Disability or death, the payment with respect to which such change is made must
be deferred for a period of not less than 5 years from the date such payment
would otherwise have been made.

6.8   SPECIAL 2005 DISTRIBUTION AND ELECTION CHANGES

To the extent and in the manner permitted under Section 409A, and at the
election of any Participant, the following distributions and election changes
may be made, in accordance with the Administrative Procedures:

      (a)   All or any part of the Account may be withdrawn by any Participant
during calendar year 2005 subject to such procedures and limitations as imposed
by the Committee;

      (b)   Any deferral election for Compensation in effect during 2005 may be
cancelled in whole or in part; and

      (c)   With respect to a deferral which relates in whole or in part to
services performed on or before December 31, 2005, an election to defer receipt
of such Compensation under this

                                       13
<PAGE>

Plan may be made on or before March 15, 2005 with respect to amounts that have
not been paid or become payable at the time of the election.

                                  ARTICLE VII

BENEFICIARY DESIGNATION

7.1   BENEFICIARY DESIGNATION.

Each Participant shall have the sole right, at any time, to designate any person
or persons as his Beneficiary to whom payment under the Plan shall be made in
the event of his or her death prior to complete distribution to the Participant
of his or her Account. All Beneficiary designations must be made in the manner
required by the Committee or the Recordkeeper. Any designation of a Beneficiary
in effect under the Plan prior to this amendment and restatement shall continue
in full force and effect until changed in accordance with the terms of this
Plan.

7.2   CHANGE OF BENEFICIARY DESIGNATION.

Any Beneficiary designation may be changed by a Participant by making a new
Beneficiary designation in the manner required by the Committee or the
Recordkeeper, which will cancel all Beneficiary designations previously filed.
The designation of a Beneficiary may be made or changed at any time without the
consent of any other person.

7.3   NO DESIGNATION.

If a Participant fails to designate a Beneficiary as provided above, or if all
designated Beneficiaries predecease the Participant, then the Participant's
designated Beneficiary shall be the Participant's Beneficiary under the terms of
the TIP.

7.4   EFFECT OF PAYMENT.

Payment to a Participant's Beneficiary shall completely discharge the Employer's
obligations under the Plan. The Beneficiary shall have no right to change or in
any way modify the manner in which the Participant's Account is being paid.

                                  ARTICLE VIII

ADMINISTRATION

8.1   COMMITTEE.

The Deferred Compensation Plan Committee shall be appointed by the Board and
consist of up to three members of the Board who are not Participants in the
Plan. The Committee shall have complete discretion to (i) supervise the
administration and operation of the Plan, (ii) adopt rules and procedures
governing the Plan from time to time, (iii) make interpretive rulings with
respect

                                       14
<PAGE>

to the Plan terms and determine all questions of fact arising with respect to
the Plan terms and any Participant and (iv) to adopt and modify from time to
time the Administrative Procedures..

8.2   AGENTS.

The Committee may appoint an individual, who may be an employee of the Company,
to be the Committee's agent with respect to the day-to-day administration of the
Plan. In addition, the Committee may, from time to time, employ other agents and
delegate to them such administrative duties as it sees fit, and may from time to
time consult with counsel who may be counsel to the Company.

8.3   BINDING EFFECT OF DECISIONS.

Any decision or action of the Committee with respect to any question arising out
of or in connection with the administration, interpretation and application of
the Plan shall be final and binding upon all persons having any interest in the
Plan.

8.4   INDEMNIFICATION OF COMMITTEE.

The Company shall indemnify and hold harmless the members of the Committee and
their duly appointed agents under Section 8.2 against any and all claims, loss,
damage, expense or liability arising from any action or failure to act with
respect to the Plan, to the maximum extent permitted by law.

                                   ARTICLE IX

AMENDMENT AND TERMINATION OF THE PLAN

9.1   AMENDMENT.

The Board or the Committee, acting on behalf of the Company and of each Selected
Affiliate shall amend the terms of this Plan from time to time to comply with
Section 409A. In addition, the Board or the Committee may, on behalf of the
Company and of each Selected Affiliate, amend, suspend or reinstate any or all
of the provisions of the Plan, including, without limitation, reduce or
eliminate employer contributions or Participant deferrals under the Plan;
provided that any such amendment, suspension or reinstatement which is
inconsistent with Section 409A shall be ineffective to the extent inconsistent
with Section 409A. No amendment may reduce the value of any Participant's
Account at the end of the calendar year prior to the date such amendment is
adopted, except to the extent required for conformance with Section 409A.

9.2   TERMINATION.

The Board or the Committee, acting on behalf of the Company and of each Selected
Affiliate, may terminate this Plan at any time and for any reason whatsoever to
the extent permitted by Section 409A. If the Plan is terminated under the
provisions of this Section 9.2 all vested Accounts shall be distributed in a
lump sum to the Participants or in such other manner as is permitted under
Section 409A. A termination of the Plan shall not reduce the value of a

                                       15
<PAGE>

Participant's Account, as it existed as of the day before the effective date of
such termination except to the extent distributed to the Participant or a
Beneficiary.

                                   ARTICLE X

MISCELLANEOUS

10.1  FUNDING.

Participants, their Beneficiaries, and their heirs, successors and assigns,
shall have no secured interest or claim in any property or assets of the
Employer. The Employer's obligation under the Plan shall be merely that of an
unfunded and unsecured promise of the Employer to pay money in the future.
Notwithstanding the foregoing, the Company has a related so-called `Rabbi Trust'
to hold funds to be used in payment of the obligations of Employers under the
Plan. In the event of a Change in Control or prior thereto, the Employers shall
fund such trust in an amount equal to not less than the total value of the
Participants' Accounts under the Plan as of the Valuation Date immediately
preceding the Change in Control; provided that any funds contained therein shall
be liable for the claims of the respective Employer's general creditors as
provided therein.

10.2  NONASSIGNABILITY.

No right or interest under the Plan of a Participant or his or her Beneficiary
(or any person claiming through or under any of them) shall be assignable or
transferable in any manner or be subject to alienation, anticipation, sale,
pledge, encumbrance or other legal process or in any manner be liable for or
subject to the debts or liabilities of any such Participant or Beneficiary. If
any Participant or Beneficiary shall attempt to or shall transfer, assign,
alienate, anticipate, sell, pledge or otherwise encumber his or her benefits
hereunder or any part thereof, or if by reason of his or her bankruptcy or other
event happening at any time such benefits would devolve upon anyone else or
would not be enjoyed by him or her, then the Committee, in its discretion, may
terminate his or her interest in any such benefit (including the Deferral
Account) to the extent the Committee considers necessary or advisable to prevent
or limit the effects of such occurrence. Termination shall be effected by filing
a written "termination declaration" with the Clerk of the Company and making
reasonable efforts to deliver a copy to the Participant or Beneficiary whose
interest is adversely affected (the "terminated participant").

As long as the terminated participant is alive, any benefits affected by the
termination shall be retained by the Employer and, in the Committee's sole and
absolute judgment, may be paid to or expended for the benefit of the terminated
participant, his or her spouse, his or her children or any other person or
persons in fact dependent upon him or her in such a manner as the Committee
shall deem proper; provided that no such action shall result in any acceleration
of the payment of the Participant's Account. Upon the death of the terminated
participant, all benefits withheld from him or her and not paid to others in
accordance with the preceding sentence shall be disposed of according to the
provisions of the Plan that would apply if he or she died prior to the time that
all benefits to which he or she was entitled were paid to him or her.

                                       16
<PAGE>

10.3  LEGAL FEES AND EXPENSES.

If, after a Change in Control, (1) an Eligible Employee initiates or is required
to defend against a claim in court concerning the benefits intended to be
provided to such Eligible Employee under the Plan (the "Claim"); and (2) the
Eligible Employee prevails on the Claim, the Eligible Employee shall be entitled
to attorneys' fees and costs of the litigation.

10.4  CAPTIONS.

The captions contained herein are for convenience only and shall not control or
affect the meaning or construction hereof.

10.5  GOVERNING LAW.

The provisions of the Plan shall be construed and interpreted according to the
laws of the Commonwealth of Massachusetts. The Employee hereby irrevocably
submits to and acknowledges and recognizes the jurisdiction of a federal court
of the Commonwealth of Massachusetts without regard to conflict of law
provisions, or if jurisdiction is not appropriate in a federal court located in
Massachusetts, then a state court within the Commonwealth of Massachusetts
(which courts, for purposes of this Agreement, are the only courts of competent
jurisdiction) over any suit, action or other proceeding arising out of, under or
in connection with this Agreement or its subject matter.

10.6  SUCCESSORS.

The provisions of the Plan shall bind and inure to the benefit of the Company,
its Selected Affiliates, and their respective successors and assigns. The term
successors as used herein shall include any corporate or other business entity
which shall, whether by merger, consolidation, purchase or otherwise, acquire
all or substantially all of the business and assets of the Company or a Selected
Affiliate and successors of any such Company or other business entity.

10.7  RIGHT TO CONTINUED SERVICE.

Nothing contained herein shall be construed to confer upon any Eligible Employee
the right to continue to serve as an Eligible Employee of the Employer or in any
other capacity.

                                       17EXECUTION
COPY

AMENDED AND RESTATED CREDIT
AGREEMENT

DATED AS OF JANUARY  31, 
2006

among

WARNACO
INC.,

as Borrower

THE WARNACO
GROUP, INC.,

as a Guarantor

THE
LENDERS AND ISSUERS FROM TIME TO TIME PARTY
HERETO

CITICORP NORTH AMERICA,
INC.,

as Revolving Facility
Agent

CITICORP NORTH AMERICA,
INC.,

as Term Facility
Agent

CITICORP NORTH AMERICA,
INC.,

as Collateral Agent

JPMORGAN
CHASE BANK, N.A.

as Syndication
Agent

BANK OF AMERICA, NA,

 THE CIT
GROUP/COMMERCIAL SERVICES, INC.,

WACHOVIA CAPITAL FINANCE
CORPORATION (CENTRAL) F/K/A CONGRESS FINANCIAL CORPORATION
(CENTRAL)

as Co-Documentation
Agents

AND

CITIGROUP GLOBAL MARKETS INC.
and J.P.MORGAN SECURITIES, INC.

as Joint
Lead Arrangers and Joint Lead Book Managers

WEIL,
GOTSHAL & MANGES LLP
767 FIFTH AVENUE

 NEW YORK, NEW
YORK 10153-0119 

TABLE
OF
CONTENTS

											
	 		 		Page
	ARTICLE I 		DEFINITIONS,
INTERPRETATION AND ACCOUNTING
TERMS 		 	1 	 
	Section 1.1		Defined
Terms		 	1	 
	Section 1.2		Computation
of Time
Periods		 	32	 
	Section 1.3		Accounting
Terms and
Principles		 	32	 
	Section 1.4		Conversion
of Foreign
Currencies		 	32	 
	Section 1.5		Certain
Terms		 	32	 
	ARTICLE II 		THE
FACILITIES 		 	33	 
	Section 2.1		The
Commitments		 	33	 
	Section 2.2		Borrowing
Procedures		 	33	 
	Section 2.3		Swing
Loans		 	35	 
	Section 2.4		Letters
of
Credit		 	36	 
	Section 2.5		Reduction
and Termination of the
Commitments		 	40	 
	Section 2.6		Repayment
of
Loans		 	40	 
	Section 2.7		Evidence
of
Debt		 	41	 
	Section 2.8		Optional
Prepayments		 	42	 
	Section 2.9		Mandatory
Prepayments		 	42	 
	Section 2.10		Interest		 	44	 
	Section 2.11		Conversion/Continuation
Option		 	44	 
	Section 2.12		Fees		 	45	 
	Section 2.13		Payments
and
Computations		 	46	 
	Section 2.14		Special
Provisions Governing Eurodollar Rate
Loans		 	48	 
	Section 2.15		Capital
Adequacy		 	50	 
	Section 2.16		Taxes		 	50	 
	Section 2.17		Substitution
of
Lenders		 	52	 
	Section 2.18		Facility
Increase		 	53	 
	ARTICLE III 		CONDITIONS
TO LOANS AND LETTERS OF
CREDIT 		 	54	 
	Section 3.1		Conditions
Precedent to Initial Loans and Letters of
Credit		 	54	 
	Section 3.2		Conditions
Precedent to Each Loan and Letter of
Credit		 	57	 
	Section 3.3		Determinations
of Initial Borrowing
Conditions		 	58	 
	ARTICLE IV 		REPRESENTATIONS
AND
WARRANTIES 		 	58	 
	Section 4.1		Corporate
Existence; Compliance with
Law		 	58	 
	Section 4.2		Corporate
Power; Authorization; Enforceable
Obligations		 	58	 
	Section 4.3		Ownership
of Group, Borrower;
Subsidiaries		 	59	 
	Section 4.4		Financial
Statements		 	60	 
	Section 4.5		Material
Adverse
Change		 	60	 
	Section 4.6		Solvency		 	60	 
	Section 4.7		Litigation		 	60	 
	Section 4.8		Taxes		 	61	 
	Section 4.9		Full
Disclosure		 	61	 
	Section 4.10		Margin
Regulations		 	61	 
	Section 4.11		No
Burdensome Restrictions; No
Defaults		 	61	 
	Section 4.12		Investment
Company Act; Public Utility Holding Company
Act		 	62	 
	Section 4.13		Use
of
Proceeds		 	62	 
	Section 4.14		Insurance		 	62	 
	Section 4.15		Labor
Matters		 	62	 
	Section 4.16		ERISA		 	62	 
	Section 4.17		Environmental
Matters		 	63	 
	Section 4.18		Intellectual
Property; Material License		 	63	 
	

i

TABLE
OF
CONTENTS
 (continued)

											
	 		 		Page
	Section 4.19		Title;
Real
Property		 	64	 
	Section 4.20		Perfection
of Security Interests in the
Collateral		 	64	 
	ARTICLE V 		FINANCIAL
COVENANTS 		 	65	 
	Section 5.1		Maximum
Leverage
Ratio		 	65	 
	Section 5.2		Minimum
Fixed Charge Coverage
Ratio		 	65	 
	Section 5.3		Capital
Expenditures		 	66	 
	ARTICLE VI 		REPORTING
COVENANTS 		 	66	 
	Section 6.1		Financial
Statements		 	66	 
	Section 6.2		Default
Notices		 	68	 
	Section 6.3		Litigation		 	68	 
	Section 6.4		Asset
Sales		 	68	 
	Section 6.5		Notices
under Senior Note
Documents		 	68	 
	Section 6.6		SEC
Filings; Press
Releases		 	68	 
	Section 6.7		Labor
Relations		 	68	 
	Section 6.8		Tax
Returns		 	68	 
	Section 6.9		Insurance		 	68	 
	Section 6.10		ERISA
Matters		 	69	 
	Section 6.11		Environmental
Matters		 	69	 
	Section 6.12		Borrowing
Base
Determination.		 	69	 
	Section 6.13		Material
Licenses		 	70	 
	Section 6.14		Other
Information		 	70	 
	ARTICLE VII 		AFFIRMATIVE
COVENANTS 		 	70	 
	Section 7.1		Preservation
of Corporate Existence,
Etc		 	70	 
	Section 7.2		Compliance
with Laws,
Etc		 	70	 
	Section 7.3		Conduct
of
Business		 	70	 
	Section 7.4		Payment
of Taxes,
Etc		 	70	 
	Section 7.5		Maintenance
of
Insurance		 	71	 
	Section 7.6		Access		 	71	 
	Section 7.7		Keeping
of
Books		 	71	 
	Section 7.8		Maintenance
of Properties,
Etc		 	71	 
	Section 7.9		Application
of
Proceeds		 	71	 
	Section 7.10		Environmental		 	71	 
	Section 7.11		Additional
Personal Property Collateral and
Guaranties		 	72	 
	Section 7.12		[Intentionally
Omitted]		 	73	 
	Section 7.13		Real
Property		 	73	 
	ARTICLE VIII 		NEGATIVE
COVENANTS 		 	73	 
	Section 8.1		Indebtedness		 	74	 
	Section 8.2		Liens,
Etc		 	74	 
	Section 8.3		Investments		 	75	 
	Section 8.4		Sale
of
Assets		 	76	 
	Section 8.5		Restricted
Payments		 	77	 
	Section 8.6		Prepayment
and Cancellation of
Indebtedness		 	78	 
	Section 8.7		Restriction
on Fundamental
Changes		 	78	 
	Section 8.8		Change
in Nature of
Business		 	79	 
	Section 8.9		Transactions
with
Affiliates		 	79	 
	Section 8.10		Restrictions
on Subsidiary Distributions; No New Negative
Pledge		 	79	 
	Section 8.11		Modification
of Constituent Documents		 	80	 
	

ii

TABLE
OF
CONTENTS
 (continued)

											
	 		 		Page
	Section 8.12		Modification
of Certain Documents and Certain
Debt		 	80	 
	Section 8.13		Modification
of Debt
Agreements		 	80	 
	Section 8.14		Accounting
Changes; Fiscal
Year		 	80	 
	Section 8.15		Margin
Regulations		 	80	 
	Section 8.16		Operating
Leases; Sale and Leasebacks
Transactions		 	80	 
	Section 8.17		No
Speculative
Transactions		 	81	 
	Section 8.18		Compliance
with
ERISA		 	81	 
	Section 8.19		Environmental		 	81	 
	ARTICLE IX 		EVENTS
OF
DEFAULT 		 	81	 
	Section 9.1		Events
of
Default		 	81	 
	Section 9.2		Remedies		 	82	 
	Section 9.3		Actions
in Respect of Letters of
Credit		 	83	 
	ARTICLE X 		THE
ADMINISTRATIVE
AGENTS 		 	84 	 
	Section 10.1		Authorization
and
Action		 	84	 
	Section 10.2		Agent’s
Reliance,
Etc		 	85	 
	Section 10.3		The
Agents
Individually		 	85	 
	Section 10.4		Lender
Credit
Decision		 	85	 
	Section 10.5		Indemnification		 	85	 
	Section 10.6		Successor
Agents		 	86	 
	Section 10.7		Concerning
the Collateral and the Collateral
Documents		 	87	 
	Section 10.8		Collateral
Matters Relating to Related
Obligations		 	89	 
	Section 10.9		Posting
of Approved Electronic
Communications		 	89	 
	Section 10.10		Syndication
Agent; Co-Documentation Agents;
Arrangers		 	90	 
	ARTICLE XI 		MISCELLANEOUS 		 	90 	 
	Section 11.1		Amendments,
Waivers,
Etc		 	90	 
	Section 11.2		Assignments
and
Participations		 	93	 
	Section 11.3		Costs
and
Expenses		 	96	 
	Section 11.4		Indemnities		 	97	 
	Section 11.5		Limitation
of
Liability		 	98	 
	Section 11.6		Right
of
Set-off		 	98	 
	Section 11.7		Sharing
of Payments,
Etc		 	99	 
	Section 11.8		Notices,
Etc		 	99	 
	Section 11.9		No
Waiver;
Remedies		 	101	 
	Section 11.10		Binding
Effect		 	101	 
	Section 11.11		Governing
Law		 	101	 
	Section 11.12		Submission
to Jurisdiction; Service of
Process		 	101	 
	Section 11.13		Waiver
of Jury
Trial		 	102	 
	Section 11.14		Marshaling;
Payments Set
Aside		 	102	 
	Section 11.15		Section
Titles		 	102	 
	Section 11.16		Execution
in
Counterparts		 	102	 
	Section 11.17		Effect
on Collateral
Documents		 	102	 
	Section 11.18		Entire
Agreement		 	102	 
	Section 11.19		Confidentiality		 	103	 
	

iii

SCHEDULES 

											
	Schedule
I		-		Commitments
	Schedule
II		-		Applicable Lending Offices and Addresses for
Notices
	Schedule
4.2		-		Consents
	Schedule
4.3		-		Ownership of Warnaco
Entities
	Schedule 4.15		-		Labor
Matters
	Schedule 4.16		-		ERISA
Matters
	Schedule 4.19		-		Real
Property
	Schedule 7.14		-		Post
Closing Matters
	Schedule
8.1		-		Existing Indebtedness
	Schedule
8.2		-		Existing Liens
	Schedule
8.3		-		Existing Investments
	Schedule
8.4		-		Permitted Asset
Sales
	EXHIBITS 		 		 
	Exhibit
A		-		Form of Assignment and
Acceptance
	Exhibit B-1		-		Form of
Revolving Credit Note
	Exhibit
B-2		-		Form of Term Note
	Exhibit
C		-		Form of Notice of
Borrowing
	Exhibit D		-		Form of Letter
of Credit Request
	Exhibit E		-		Form
of Borrowing Base Certificate
	Exhibit
F		-		Form of Notice of Conversion or
Continuation
	Exhibit G		-		Form of
Opinion of Counsel for the Loan Parties
	Exhibit
H		-		Form of Compliance
Certificate
	Exhibit I		-		Form of
Pledge and Security Agreement
	Exhibit
J		-		Form of Guaranty
	Exhibit
K		-		Form of Intercreditor
Agreement
	

AMENDED
AND RESTATED CREDIT AGREEMENT, dated as of January
31,  2006, among Warnaco Inc., a Delaware corporation, (the
‘‘Borrower’’), The Warnaco
Group, Inc., a Delaware corporation
(‘‘Group’’), the Lenders (as
defined below), the Issuers (as defined below), Citicorp North America,
Inc. (‘‘CNAI’’), as
administrative agent for the Revolving Credit Facility (as defined
below) (in such capacity, the ‘‘Revolving Facility
Agent’’), as administrative agent for the Term
Loan Facility (as defined below) (in such capacity, the
‘‘Term Facility Agent’’ and
together with the Revolving Facility Agent, collectively, in such
capacities, the ‘‘Administrative
Agents’’) and as collateral agent for the Lenders
and the Issuers (in such capacity, the
‘‘Collateral Agent’’),
JPMorgan Chase Bank, N.A., as syndication agent for the Lenders and the
Issuers (in such capacity, the ‘‘Syndication
Agent’’ and together with the Administrative
Agents and the Collateral Agent, collectively, the
‘‘Agents’’) and Bank of
America, NA, The CIT Group/Commercial Services, Inc., and Wachovia
Capital Finance Corporation (Central) f/k/a Congress Financial
Corporation (Central), each as a co-documentation agent for the Lenders
and Issuers (in such capacity, collectively, the
‘‘Co-Documentation
Agents’’), which amends and restates in its
entirety the Existing Credit Agreement referred to
below.

W i t n e s s e t
h:

WHEREAS, on June 11, 2001, Group, the
Borrower and each of Group’s other Domestic Subsidiaries (as
defined below) each filed a voluntary petition for relief
(collectively, the
‘‘Cases’’) under chapter 11
of the Bankruptcy Code with the United States Bankruptcy Court for the
Southern District of New York (the ‘‘Bankruptcy
Court’’);

WHEREAS, on
October  1,  2002, Group, the Borrower and Group’s
other Domestic Subsidiaries filed a Plan of Reorganization (as amended
prior to the date hereof, the ‘‘Plan of
Reorganization’’) and related Disclosure
Statement with the Bankruptcy Court in the Cases;

WHEREAS, pursuant to the Plan of Reorganization, the
Borrower entered into that certain Credit Agreement, dated as of
February  4,  2003 (as amended, supplemented or otherwise
modified from time to time prior to the date hereof, the
‘‘Existing Credit
Agreement’’), by and among the Borrower, Group,
the financial institutions from time to time party thereto as lenders
(the ‘‘Existing Lenders’’),
the financial institutions from time to time party thereto as letter of
credit issuers, CNAI, as administrative agent and collateral agent for
the Existing Lenders (the ‘‘Existing
Agent’’), JPMorgan Chase Bank, N.A., as
syndication agent, and Bank of America, NA, The CIT Group/Commercial
Services, Inc., and Wachovia Capital Finance Corporation (Central)
f/k/a Congress Financial Corporation (Central), as co-documentation
agents;

WHEREAS, the Borrower has requested that
the Lenders and the Issuers make available to the Borrower for the
purposes specified in this Agreement (as defined below), a term loan
facility and a revolving credit and letter of credit
facility;

WHEREAS, the Lenders and Issuers are
willing to make available to the Borrower such term loan facility and
revolving credit and letter of credit facility upon the terms and
subject to the conditions set forth
herein;

WHEREAS, the Borrower has requested, and
the other parties hereto have agreed, that the Existing Credit
Agreement be amended and restated on the terms set forth herein;
and

WHEREAS, it is the intention of the parties
hereto that this Agreement does not constitute a novation of the
rights, obligations and liabilities of the respective parties
(including the Obligations) existing under the Existing Credit
Agreement or evidence payment of all or any such obligations and
liabilities;

NOW, THEREFORE, in consideration of
the premises and the covenants and agreements contained herein, the
parties hereto hereby agree as
follows:

 ARTICLE I 

 DEFINITIONS,
INTERPRETATION AND ACCOUNTING
TERMS 

Section 1.1 Defined
Terms.    As used in this Agreement, the following terms have
the following meanings (such meanings to be equally applicable to both
the singular and plural forms of the terms defined):

1

‘‘Account’’
has the meaning specified in the Pledge and Security
Agreement.

‘‘Account
Debtor’’ has the meaning specified in the Pledge
and Security Agreement.

‘‘Adjusted Orderly
Liquidation Value Rate’’ means 85% of the
Orderly Liquidation Value
Rate.

‘‘Administrative
Agents’’ has the meaning specified in the
preamble to this Agreement.

‘‘Advance
Rate’’ means the rates set forth below, in each
case up to the rate set forth opposite such category of
Collateral:

							
	CATEGORY		RATE
	Eligible
Receivables		75%
	Eligible
Finished
Inventory		69%
	Eligible Other
Inventory consisting of:		 
	Raw
Materials		27%
	Inventory
covered by Documentary Letters of
Credit		50%
	Work in
Process		5%;
	

provided,
that (a) if at any time the product of (i) the Adjusted Orderly
Liquidation Value Rate and (ii) the sum of Eligible Finished Inventory
and Eligible Other Inventory of each Loan Party (valued, in each case,
at the lower of cost and market on a first-in, first-out basis) (the
‘‘Inventory Orderly Liquidation
Value’’) is less than the aggregate Borrowing
Base attributable to such Inventory (calculated using the above Advance
Rates), then, at the sole discretion of the Revolving Facility Agent,
exercised reasonably, the effective Advance Rates for Eligible Finished
Inventory and Eligible Other Inventory will be adjusted (until delivery
of the next Appraisal) to levels that would cause such Advance Rates to
effectively equal the Adjusted Orderly Liquidation Value Rate; and (b)
any reduction in the foregoing advance rates (or any increase up to the
rates set forth above), shall be determined by the Revolving Facility
Agent in its sole discretion exercised reasonably and shall take effect
10 Business Days (or, if pursuant to clause (a) above, three (3)
Business Days) after the Revolving Facility Agent delivers written
notice thereof to the
Borrower.

‘‘Affiliate’’
means, with respect to any Person, any other Person which, directly or
indirectly, controls, is controlled by or is under common control with
such Person, each officer, director, general partner or joint-venturer
of such Person, and each Person who is the beneficial owner of
10% or more of any class of Voting Stock of such Person. For the
purposes of this definition,
‘‘control’’ means the
possession of the power to direct or cause the direction of management
and policies of such Person, whether through the ownership of voting
securities, by contract or
otherwise.

‘‘Affiliated Account
Debtor’’ means, (a) in relation to an Account
Debtor that is a Governmental Authority, any other Account Debtor that
is a Governmental Authority, and (b) in relation to an Account Debtor
that is not a Governmental Authority, each Account Debtor that is an
Affiliate of such Account
Debtor.

‘‘Agents’’ has
the meaning specified in the preamble to this
Agreement.

‘‘Agent
Affiliate’’ has the meaning specified in
Section 10.9(c).

‘‘Agreement’’
means this Amended and Restated Credit Agreement (as the same may be
amended, restated, supplemented or otherwise modified from time to
time), which amends and restates in its entirety the Existing Credit
Agreement.

‘‘Alternative
Currency’’ means the lawful currency of each of
the European Union, the United Kingdom, Canada and Hong Kong,
provided that in each case such currency is freely transferable
into Dollars.

‘‘Applicable Lending
Office’’ means, with respect to each Lender, its
Domestic Lending Office, in the case of a Base Rate Loan, and its
Eurodollar Lending Office, in the case of a Eurodollar Rate
Loan.

2

‘‘Applicable
Margin’’ means

(a) with respect to
Term Loans, (i) for Base Rate Loans, a rate equal to 0.50%
per annum and (ii) for Eurodollar Loans, a rate equal to
1.50% per annum; and

(b) with respect to
Revolving Loans and Swing Loans, as of any date of determination, a
per annum rate equal to the rate set forth below opposite the
applicable type of Loan and the then applicable Leverage Ratio of Group
(determined on the last day of the most recent Fiscal Quarter for which
Financial Statements have been delivered pursuant to
Section 6.1(b) or Section 6.1(c)) set forth
below:

											
	LEVERAGE
RATIO		BASE RATE

LOANS		EURODOLLAR

 RATE
LOANS
	Greater than or equal to 2.5 to
1		0.75%		1.75%
	Less
than 2.5 to 1 and equal to or greater than 2.25 to
1		0.50%		1.50%
	Less
than 2.25 to 1 and equal to or greater than 2.00 to
1		0.50%		1.50%
	Less
than 2.0 to
1		0.25%		1.25%
	

Changes
in the Applicable Margin resulting from a change in the Leverage Ratio
on the last day of any subsequent Fiscal Quarter shall become effective
as to all Revolving Loans 10 Business Days after delivery by the
Borrower to the Administrative Agents of new Financial Statements
pursuant to Section 6.1(b) or
Section 6.1(c) as applicable. Notwithstanding anything to
the contrary set forth in this Agreement (including the then effective
Leverage Ratio of Group), if the Borrower shall fail to deliver such
Financial Statements within any of the time periods required under
Section 6.1(b) or Section 6.1(c) (as either
such section has been amended, waived or otherwise modified), the
Applicable Margin from and including the day on which such Financial
Statements were due, to but not including the date the Borrower
delivers to the Administrative Agents such Financial Statements, shall
equal the highest possible Applicable Margin provided for by this
definition.

‘‘Applicable Unused Commitment
Fee Rate’’ means, as of any date of
determination, a per annum rate equal to the rate set forth
below opposite the then applicable Leverage Ratio of Group (determined
on the last day of the most recent Fiscal Quarter for which Financial
Statements have been delivered pursuant to Section 6.1(b)
or Section 6.1(c)) set forth
below:

							
	LEVERAGE
RATIO		UNUSED

 COMMITMENT
FEE

RATE
	Greater than or equal to 2.5 to
1		0.375%
	Less
than 2.5 to 1 and equal to or greater than 2.25 to
1		0.375%
	Less than 2.25 to 1 and
equal to or greater than 2.00 to
1		0.325%
	Less than 2.0 to
1		0.25%
	

Changes in
the Applicable Unused Commitment Fee Rate resulting from a change in
the Leverage Ratio on the last day of any subsequent Fiscal Quarter
shall become effective 10 Business Days after delivery by the Borrower
to the Administrative Agents of new Financial Statements pursuant to
Section 6.1(b) or Section 6.1(c) as
applicable. Notwithstanding anything to the contrary set forth in this
Agreement (including the then effective Leverage Ratio of Group), if
the Borrower shall fail to deliver such Financial Statements within any
of the time periods required under Section 6.1(b) or
Section 6.1(c) (as either such section has been amended,
waived or otherwise modified), the Applicable Unused Commitment Fee
Rate from and including the day on which such Financial Statements were
due, to but not including the date the Borrower delivers to the
Administrative Agents such Financial Statements, shall equal the
highest possible Applicable Unused Commitment Fee Rate provided for by
this definition.

3

‘‘Appraisal’’
means each appraisal that is conducted prior to, on or after the
Closing Date pursuant to Section 6.12(b) for purposes of
determining the Borrowing Base, in form and substance acceptable to the
Revolving Facility Agent and performed by an appraiser that is
satisfactory to the Revolving Facility
Agent.

‘‘Approved Electronic
Communications’’ means each notice, demand,
communication, information, document and other material that any Loan
Party is obligated to, or otherwise chooses to, provide to any Agent
pursuant to any Loan Document or the transactions contemplated therein,
including (a) any supplement to the Guaranty, any joinder to the
Pledge and Security Agreement and any other written Contractual
Obligation delivered or required to be delivered in respect of any Loan
Document or the transactions contemplated therein and (b) any
Financial Statement, financial and other report, notice, request,
certificate and other information material, provided,
however, that, ‘‘Approved Electronic
Communication’’ shall exclude (x) any
Notice of Borrowing, Letter of Credit Request, Swing Loan Request,
Notice of Conversion or Continuation, and any other notice, demand,
communication, information, document and other material relating to a
request for a new, or a conversion of an existing, Borrowing,
(ii) any notice pursuant to Section 2.8 or
Section 2.9 and any other notice relating to the payment
of any principal or other amount due under any Loan Document prior to
the scheduled date therefor, (iii) any notice of any Default or
Event of Default and (iv) any notice, demand, communication,
information, document and other material required to be delivered to
satisfy any of the conditions set forth in Article II or
Section 2.4(a) or any other condition to any Borrowing or
other extension of credit hereunder or any condition precedent to the
effectiveness of this Agreement.

‘‘Approved
Electronic Platform’’ has the meaning specified
in Section 10.9.

‘‘Approved
Fund’’ means any Fund that is advised or managed
by (a) an Agent or a Lender, (b) an Affiliate of any
Agent or any Lender or (c) an entity or Affiliate of an entity
that administers or manages a Lender.

‘‘Arrangers’’ means
Citigroup Global Markets Inc. and J.P.Morgan Securities, Inc., as joint
lead arrangers.

‘‘Asset
Sale’’ has the meaning specified in
Section 8.4.

‘‘Assignment and
Acceptance’’ means an assignment and acceptance
entered into by a Lender and an Eligible Assignee, and accepted by the
applicable Administrative Agent, in substantially the form of
Exhibit A.

‘‘Assumption
Agreement’’ means an assumption agreement entered
into by a Lender or an Eligible Assignee pursuant to
Section 2.18, in form acceptable to the applicable
Administrative Agent.

‘‘Authentic
Receivable’’ means an Eligible Receivable owned
by Authentic Fitness Products, Inc. or a Subsidiary
thereof.

‘‘Availability
Reserves’’ means, as of three (3) Business Days
after the date of written notice of any determination thereof to the
Borrower by the Revolving Facility Agent, such amounts as the Revolving
Facility Agent may from time to time establish against the Revolving
Credit Facility, in the Revolving Facility Agent’s sole
discretion exercised reasonably, in order to (a) preserve the
value of the Collateral or the Collateral Agent’s Lien thereon
and/or (b) provide for the payment of unanticipated liabilities
of any of the Loan Parties arising after the Closing Date and/or (c)
provide for the effect, or anticipated effect, of the loss of the
benefit to the Warnaco Entities of a Material
License.

‘‘Available
Credit’’ means, at any time, (a) the
lesser of (i) the Revolving Credit Commitments in effect at such
time and (ii) the Borrowing Base (plus the amount of
Letter of Credit Obligations in respect of Cash Collateralized Letters
of Credit) at such time minus (b) the sum of
(i) the aggregate Revolving Credit Outstandings at such time and
(ii) the aggregate amount of any Availability Reserve in effect
at such time.

4

‘‘Bailee’s
Letter’’ means a letter in form and substance
acceptable to the Revolving Facility Agent and executed by any Person
(other than a Loan Party) that is in possession of Inventory on behalf
of a Loan Party pursuant to which such Person acknowledges, among other
things, the Collateral Agent’s Lien with respect
thereto.

‘‘Bankruptcy
Code’’ means title 11, United States Code,
as amended from time to time.

‘‘Bankruptcy
Court’’ shall have the meaning specified in the
recitals to this Agreement or shall mean any other court having
competent jurisdiction over the
Cases.

‘‘Base Rate’’
means, for any period, a fluctuating interest rate per annum as
shall be in effect from time to time, which rate per annum shall
be equal at all times to the highest
of:

(A) the rate of interest announced
publicly by Citibank in New York, New York, from time to time, as
Citibank’s base rate;

(B) the sum
(adjusted to the nearest 0.25% or, if there is no nearest
0.25%, to the next higher 0.25%) of (i) 0.5%
per annum plus (ii) the rate per annum obtained by
dividing (A) the latest three week moving average of secondary market
morning offering rates in the United States for three month
certificates of deposit of major United States money market banks, such
three week moving average being determined weekly on each Monday (or,
if any such day is not a Business Day, on the next succeeding Business
Day) for the three week period ending on the previous Friday by
Citibank on the basis of such rates reported by certificate of deposit
dealers to and published by the Federal Reserve Bank of New York or, if
such publication shall be suspended or terminated, on the basis of
quotations for such rates received by Citibank from three New York
certificate of deposit dealers of recognized standing selected by
Citibank, by (B) a percentage equal to 100% minus the average of
the daily percentages specified during such three week period by the
Federal Reserve Board for determining the maximum reserve requirement
(including any emergency, supplemental or other marginal reserve
requirement) for Citibank in respect of liabilities consisting of or
including (among other liabilities) three month U.S. dollar nonpersonal
time deposits in the United States, plus (iii) the average during such
three week period of the maximum annual assessment rates estimated by
Citibank for determining the then current annual assessment payable by
Citibank to the Federal Deposit Insurance Corporation (or any
successor) for insuring Dollar deposits in the United States;
and

(C) the sum of (i) 0.5%
per annum plus (ii) the Federal Funds Rate.

‘‘Base Rate Loan’’ means
any Loan during any period in which it bears interest based on the Base
Rate.

‘‘Blocked
Account’’ has the meaning specified in the Pledge
and Security Agreement.

‘‘Blocked Account
Bank’’ has the meaning specified in the Pledge
and Security Agreement.

‘‘Blocked Account
Letter’’ has the meaning specified in the Pledge
and Security
Agreement.

‘‘Borrower’’
has the meaning set forth in the preamble to this
Agreement.

‘‘Borrowing’’
means a Revolving Credit Borrowing or a Term Loan
Borrowing.

‘‘Borrowing
Base’’ means, at any time, the Dollar Equivalent
of (a) the sum of (i) the product of the Advance Rate
then in effect for Eligible Receivables and the face amount of all
Eligible Receivables of each Loan Party (calculated net of all finance
charges, late fees and other fees which are unearned, sales, excise or
similar taxes, and credits or allowances granted at such time), and
(ii) the sum of (x) the product of the Advance Rate then in
effect for each type of Eligible Finished Inventory of such Loan Party
and such type of Eligible Finished Inventory of each Loan Party
(valued, in each case, at the lower of cost and market on a first-in,
first-out basis), and (y) the product of the Advance Rate then in
effect for each type of Eligible Other Inventory of such Loan Party and
such type of Eligible Other Inventory of each Loan Party (valued, in
each case, at the lower of cost and market on a first-in, first-out
basis) minus (b) any Eligibility Reserve, and, in the
case of Eligible Receivables, any Dilution Reserve then in
effect.

5

‘‘Borrowing Base
Certificate’’ means a certificate to be executed
and delivered from time to time by the Borrower to the Revolving
Facility Agent substantially in the form of Exhibit
E.

‘‘Business
Day’’ means a day of the year on which banks are
not required or authorized to close in New York City, and, (a) in the
case of Letters of Credit Issued in Euros or within the European Union,
in London, (b) in the case of Letters of Credit Issued in Canadian
dollars or in Canada, in Canada, (c) in the case of Letters of Credit
Issued in Hong Kong dollars or in Hong Kong, in Hong Kong, and, (d) if
the applicable Business Day relates to notices, determinations,
fundings and payments in connection with the Eurodollar Rate or any
Eurodollar Rate Loans, a day on which dealings in Dollar deposits are
also carried on in the London interbank
market.

‘‘Capital
Expenditures’’ means, with respect to any Person
for any period, the aggregate of amounts that would be reflected as
additions to property, plant or equipment on a consolidated balance
sheet of such Person and its Subsidiaries on a consolidated basis
prepared in conformity with GAAP, excluding (i) interest capitalized
during construction, (ii) amounts expended on leasehold improvements
for which such Person has received a commitment of reimbursement from
the landlord; provided, that if any such amount is not
reimbursed within six months after the expenditure (the
‘‘Reimbursement Expiration Date’’),
such amount will be counted towards Capital Expenditures as if such
amount had be expended on the Reimbursement Expiration Date, (iii)
amounts credited to, or received by, any Warnaco Entity in connection
with a substantially contemporaneous trade in, (iv) reinvestments of
Net Cash Proceeds in replacement assets pursuant to Section
2.9(c)(i) and (v) amounts expended on the construction of a new
distribution facility in Pennsylvania for Calvin Klein, Intimate
Apparel and Chaps products permitted by Section 8.1(m)
(Indebtedness).

‘‘Capital
Lease’’ means, with respect to any Person, any
lease of property by such Person as lessee which would be accounted for
as a capital lease on a balance sheet of such Person prepared in
conformity with GAAP.

‘‘Capital Lease
Obligations’’ means, with respect to any Person,
the capitalized amount of all obligations of such Person or any of its
Subsidiaries under Capital Leases, as determined on a consolidated
basis in conformity with
GAAP.

‘‘Cases’’ has
the meaning specified in the recitals
hereto.

‘‘Cash Collateral
Account’’ has the meaning specified in the Pledge
and Security Agreement.

‘‘Cash
Equivalents’’ means (a) securities issued
or fully guaranteed or insured by the United States government or any
agency thereof (including, without limitation, the Federal Home Loan
Mortgage Association, the Federal Home Loan Bank, the Federal National
Mortgage Association and the Governmental National Mortgage
Association) or instrumentality thereof or obligations unconditionally
guaranteed by the full faith and credit of the government of the United
States, (b) certificates of deposit, eurodollar time deposits,
overnight bank deposits and bankers’ acceptances of any
commercial bank organized under the laws of the United States, any
state thereof, the District of Columbia, any foreign bank, or its
branches or agencies (fully protected against currency fluctuations)
which, at the time of acquisition, are rated at least
‘‘A-1’’ by Standard &
Poor’s Rating Services
(‘‘S&P’’) or
‘‘P-1’’ by Moody’s
Investors Services, Inc.
(‘‘Moody’s’’),
(c) commercial paper of an issuer rated at least
‘‘A-1’’ by S&P or
‘‘P-1’’ by Moody’s,
and (d) shares of any money market fund that (i) has at least
95% of its assets invested continuously in the types of
investments referred to in clauses (a) through (c) above, (ii) has net
assets of not less than $500,000,000 and (iii) is rated at least
‘‘A-1’’ by S&P or
‘‘P-1’’ by Moody’s;
provided, however, that the maturities of all obligations of the
type specified in clauses (a) through (c) above shall not exceed 365
days.

‘‘Cash Interest
Expense’’ means, with respect to any Person for
any period, the Interest Expense of such Person for such period
less the Non-Cash Interest Expense of such Person for such
period.

‘‘Cash Management
Obligation’’ means, as applied to any Person, any
direct or indirect liability, contingent or otherwise, of such Person
in respect of cash management services (including bank guaranties (in
an aggregate amount not to exceed the Dollar Equivalent of $5,000,000
at any time), treasury, depository, overdraft, credit or debit card,
electronic funds transfer, automatic clearing house 

6

and other cash management arrangements)
provided after the date hereof (regardless of whether these or similar
services were provided prior to the Closing Date by any Agent, Lender
or any Affiliate of any Agent or Lender) by any Agent, Lender or any
Affiliate of any Agent or Lender in connection with this Agreement or
any Loan Document, including obligations for the payment of fees,
interest, charges, expenses, attorneys’ fees and disbursements
in connection therewith.

‘‘Cash on
Hand’’ means an amount equal to the amount of
cash and Cash Equivalents on deposit in the Cash Collateral Accounts
less the aggregate amount of accounts payable and other unpaid
expenses of the Warnaco Entities which, in Group’s reasonable
judgment, are in excess of ordinary course accounts payable and unpaid
expenses as certified in a certificate of a Responsible Officer of
Group delivered to the Administrative Agents prior to the consummation
of a Proposed
Acquisition.

‘‘CERCLA’’
means the Comprehensive Environmental Response, Compensation and
Liability Act of 1980, as amended from time to
time.

‘‘CERCLIS’’
means the Comprehensive Environmental Response, Compensation and
Liability Information System maintained by the U.S. Environmental
Protection Agency.

‘‘Change of
Control’’ means any of the following: (a) Group
shall at any time cease to have legal and beneficial ownership of
100% of the capital stock of the Borrower, or, directly or
indirectly, any other Loan Party (except if such other Loan Party shall
be disposed of pursuant to an Asset Sale permitted by Section
8.4 or if such parties shall merge, liquidate or dissolve in
accordance with Section 8.7); or (b) any Person,
or two or more Persons acting in concert, shall have acquired
beneficial ownership (within the meaning of Rule 13d-3 of the
Securities and Exchange Commission under the Securities Exchange Act of
1934), directly or indirectly, of Voting Stock of Group (or other
securities convertible into such Voting Stock) representing 35%
or more of the combined voting power of all Voting Stock of Group; or
(c) any Person, or two or more Persons acting in concert shall have
acquired by contract or otherwise, or shall have entered into a
contract or arrangement that, upon consummation, will result in its or
their acquisition of, the power to exercise, directly or indirectly, a
controlling influence over the management or policies of Group, or
control over Voting Stock of Group (or other securities convertible
into such securities) representing 35% or more of combined
voting power of all Voting Stock of Group or (d) any
‘‘Change of Control’’ as
defined in the Senior Note
Indenture.

‘‘Chargeback’’
means a deduction from a Receivable taken by a
customer.

‘‘Chattel
Paper’’ has the meaning specified in the Pledge
and Security Agreement.

‘‘Citibank’’ means
Citibank, N.A., a national banking
association.

‘‘Closing
Date’’ means the first date on which each of the
conditions set forth in Section 3.1 have been
satisfied.

‘‘CNAI’’
has the meaning specified in the preamble to this
Agreement.

‘‘Co-Documentation
Agents’’ has the meaning specified in the
preamble to this
Agreement.

‘‘Code’’
means the Internal Revenue Code of 1986 (or any successor legislation
thereto), as amended from time to
time.

‘‘Collateral’’
means all property and interests in property and proceeds thereof now
owned or hereafter acquired by any Loan Party in or upon which a Lien
is granted under any Collateral Document, including the Revolving
Priority Collateral and the Specified IP
Collateral.

‘‘Collateral
Agent’’ has the meaning specified in the preamble
to this Agreement.

‘‘Collateral
Documents’’ means the Pledge and Security
Agreement, other pledge or security agreements, the Mortgages, the
Blocked Account Letters, the Restricted Account Letters, the Control
Account Agreements and any other document executed and delivered by a
Loan Party granting a Lien on any of its property to secure payment of
the Secured Obligations.

‘‘Collateralized
Letters of Credit’’ means the Letters of Credit
designated by the Borrower in writing to the Revolving Facility Agent
simultaneously with (but no more frequently than once per 

7

week) the delivery of the Borrowing Base
Certificate required by Section 6.12(a) (Borrowing Base
Determination) as ‘‘Collateralized Letters of
Credit’’ with respect to which the Borrower maintains
funds in the Special Cash Collateral Account as required by Section
2.4(m) (Letters of Credit). The Borrower may not designate any
Letter of Credit as a Collateralized Letter of Credit if a Default or
an Event of Default shall have occurred and is continuing. The Borrower
may withdraw its designation as ‘‘Collateralized
Letters of Credit’’ of one or more of the Letters of
Credit so designated by written notice to the Revolving Facility Agent
delivered simultaneously with (but no more frequently than once per
week) the delivery of the Borrowing Base Certificate required by
Section 6.12(a) (Borrowing Base
Determination).

‘‘Collections’’
means, with respect to any Receivable: (a) all funds that are received
by any Loan Party in payment of any amounts owed in respect of such
Receivable (including purchase price, finance charges, interest and all
other charges), or applied to amounts owed in respect of such
Receivable (including insurance payments and net proceeds of the sale
or other disposition of repossessed goods or other collateral or
property of the related Account Debtor or any other Person directly or
indirectly liable for the payment of such Receivable and available to
be applied thereon) and (b) all other proceeds of such
Receivable.

‘‘Commitment’’
means, with respect to any Lender, such Lender’s Revolving
Credit Commitment, if any, and such Lender’s Term Loan
Commitment, if any, and
‘‘Commitments’’ means the aggregate
Revolving Credit Commitments and Term Loan Commitments of all
Lenders.

‘‘Compliance
Certificate’’ has the meaning specified in
Section 6.1(d).

‘‘Consolidated
Current Assets’’ means, with respect to any
Person at any date, the total Consolidated current assets (other than
cash and Cash Equivalents) of such Person and its Subsidiaries at such
date.

‘‘Consolidated Current
Liabilities’’ means, with respect to any Person
at any date, all liabilities of such Person and its Subsidiaries at
such date that should be classified as current liabilities on a
Consolidated balance sheet of such Person and its Subsidiaries, but
excluding, in the case of Group the sum of (a) the principal amount of
any current portion of long-term Financial Covenant Debt and (b)
(without duplication of clause (a) above) the then outstanding
principal amount of the
Loans.

‘‘Consolidated Net
Income’’ means, for any Person for any period,
the net income (or loss) of such Person and its Subsidiaries for such
period, determined on a consolidated basis in conformity with GAAP;
provided, however, that (a) the net income of any other Person
in which such Person or one of its Subsidiaries has a joint interest
with a third party (which interest does not cause the net income of
such other Person to be consolidated into the net income of such Person
in accordance with GAAP) shall be included only to the extent of the
amount of dividends or distributions paid to such Person or Subsidiary,
(b) the net income of any Subsidiary of such Person that is subject to
any restriction or limitation on the payment of dividends or the making
of other distributions shall be excluded to the extent of such
restriction or limitation, (c) any net gain (or loss) resulting from an
Asset Sale by such Person or any of its Subsidiaries other than in the
ordinary course of business shall be excluded, and (d) extraordinary
gains and losses and any one-time increase or decrease to net income
which is required to be recorded because of the adoption of new
accounting policies, practices or standards required by GAAP shall be
excluded.

‘‘Constituent
Documents’’ means, with respect to any Person,
(a) the articles/certificate of incorporation (or the equivalent
organizational documents) of such Person, (b) the by-laws (or
the equivalent governing documents) of such Person and (c) any
document setting forth the manner of election and duties of the
directors or managing members of such Person (if any) and the
designation, amount and/or relative rights, limitations and preferences
of any class or series of such Person’s
Stock.

‘‘Contaminant’’
means any material, substance or waste that is classified, regulated or
otherwise characterized under any Environmental Law as hazardous,
toxic, a contaminant or a pollutant or by other words of similar
meaning or regulatory effect, including any petroleum or
petroleum-derived substance or waste, asbestos and polychlorinated
biphenyls.

‘‘Contractual
Obligation’’ of any Person means any obligation,
agreement, undertaking or similar provision of any Security issued by
such Person or of any agreement, undertaking, contract, lease,

8

indenture, mortgage, deed of trust or other
instrument (excluding a Loan Document) to which such Person is a party
or by which it or any of its property is bound or to which any of its
properties is subject.

‘‘Control
Account’’ has the meaning specified in the Pledge
and Security Agreement.

‘‘Control Account
Agreement’’ has the meaning specified in the
Pledge and Security Agreement.

‘‘Corporate
Chart’’ means a corporate organizational chart,
list or other similar document in each case in form reasonably
acceptable to the Administrative Agents and setting forth, for each
Person that is a Loan Party, that is subject to
Section 7.11 or that is a Subsidiary of any of them,
(a) the full legal name of such Person (and any trade name,
fictitious name or other name such Person may have had or operated
under), (b) the jurisdiction of organization, the organizational
number (if any) and the tax identification number (if any) of such
Person, (c) the location of such Person’s chief executive
office (or sole place of business) and (d) the number of shares
of each class of such Person’s Stock authorized (if applicable),
the number outstanding as of the date of delivery and the number and
percentage of such outstanding shares for each such class owned
(directly or indirectly) by any Loan Party or any Subsidiary of any of
them.

‘‘Credit and Collection
Policy’’ means, as the context may require, those
receivables credit and collection policies and practices of the Loan
Parties in effect on the Closing Date and as disclosed in writing to
the Lenders, as such credit and collection policies and practices may
be modified with the prior written consent of the Revolving Facility
Agent.

‘‘Customary Permitted
Liens’’ means, with respect to any Person, any of
the following Liens:

(a) Liens with respect to the payment
of taxes, assessments or governmental charges in all cases which are
not yet due and payable or which are being contested in good faith by
appropriate proceedings and with respect to which adequate reserves or
other appropriate provisions are being maintained to the extent
required by GAAP;

(b) Liens of landlords arising by
statute and liens of suppliers, mechanics, carriers, materialmen,
warehousemen or workmen and other liens imposed by law created in the
ordinary course of business for amounts not yet due or which are being
contested in good faith by appropriate proceedings and with respect to
which adequate reserves or other appropriate provisions are being
maintained to the extent required by GAAP, or deposits or pledges to
obtain the release of any such Liens;

(c) deposits made in
the ordinary course of business in connection with worker’s
compensation, unemployment insurance or other types of social security
benefits or to secure the performance of bids, tenders, sales,
contracts (other than for the repayment of borrowed money), public or
statutory obligations, and surety, stay, appeal, customs or performance
bonds, or similar obligations arising in each case in the ordinary
course of business;

(d) encumbrances arising by reason of
zoning restrictions, easements, licenses, reservations, covenants,
rights-of-way, utility easements, building restrictions and other
similar encumbrances or such other matters as disclosed in
Mortgagee’s Title Insurance Policy on the use of Real Property
which do not materially detract from the value of such Real Property or
interfere with the ordinary conduct of the business conducted and
proposed to be conducted at such Real
Property;

(e) encumbrances arising under leases or
subleases of Real Property which do not in the aggregate materially
detract from the value of such Real Property or interfere with the
ordinary conduct of the business conducted and proposed to be conducted
at such Real Property; and

(f) financing statements of a
lessor’s rights in and to personal property leased to such
Person in the ordinary course of such Person’s
business.

‘‘Debt
Issuance’’ means the incurrence of Indebtedness
of the type specified in clause (a) and (b) of the
definition of ‘‘Indebtedness’’ by
Group or any of its
Subsidiaries.

‘‘Default’’
means any event which with the passing of time or the giving of notice
or both would become an Event of Default.

9

‘‘Defaulted
Receivable’’ means a
Receivable:

(g) in the case of a Receivable that is not an
Extended Term Receivable, as to which any payment, or part thereof,
remains unpaid for 91 days or more from the original due date for such
payment,

(h) in the case of a Receivable that is an
Extended Term Receivable, as to which any payment, or part thereof,
remains unpaid for 30 days or more from the original due date for such
payment,

(i) the Account Debtor of such Receivable (or any
other Person obligated thereon or owning any Related Security with
respect thereto) has: (i) filed a petition for bankruptcy or any other
relief under the Bankruptcy Code or any other law relating to
bankruptcy, insolvency, reorganization or relief of debtors; (ii) made
an assignment for the benefit of creditors; (iii) had filed against it
any petition or other application for relief under the Bankruptcy Code
or any such other law; (iv) has failed, suspended business operations,
become insolvent, called a meeting of its creditors for the purpose of
obtaining any financial concession or accommodation; or (v) had or
suffered a receiver or a trustee to be appointed for all or a
significant portion of its assets or affairs,
or

(j) which, has been, or, consistent with the Credit and
Collection Policy would be, written off such Loan Party’s books
as uncollectible.

‘‘Deposit
Account’’ has the meaning given to such term in
the UCC.

‘‘Dilution’’
means, at any given time in respect of all Accounts of the Loan
Parties, 100 times a quotient, (a) the numerator of which is the
sum (for the most recent twelve months) of any net credits, rebates,
markdowns, freight charges, cash discounts, volume, early payment and
other discounts, cooperative advertising expenses, warranties,
warehouse and other allowances, disputes, chargebacks, defective
returns, other returned or repossessed goods, reductions in balance in
respect of billing errors or adjustments to estimated billing
settlements for defective products or other reasons, allowances for
early payments and other similar allowances that are made or
coordinated with the usual practices of the Borrowers owning such
Account and (b) the denominator of which is the sum (for the
most recent twelve months) of the gross amount of any sales made on
account (including, without limitation, the original balances of such
Accounts); and in any event shall be calculated monthly in accordance
with the methodology utilized in connection with the Existing Credit
Agreement.

‘‘Dilution
Reserve’’ means, effective as of three (3)
Business Days following the date of written notice of any determination
thereof to the Borrower by the Revolving Facility Agent, such amounts
as the Revolving Facility Agent may from time to time establish against
the gross amounts of Eligible Receivables, calculated in accordance
with the formula set forth in the table
below:

							
	DILUTION
REPORTED BY THE BORROWER  IN  MOST RECENT  BORROWING
BASE CERTIFICATE  DELIVERED TO  THE  REVOLVING
FACILITY
AGENT		DILUTION
RESERVE AS A PERCENTAGE OF

 ELIGIBLE
RECEIVABLES
	Less than or equal to
15%		0.00%
	Greater
than 15% and equal to or less than
17.5%		3.34%
	Greater
than 17.5% and equal to or less than
20%		6.67%
	Greater than
20% and equal to or less than
25%		13.33%
	Greater than
25% and equal to or less than
30%		20.00%
	Greater
than 30%		In the sole discretion of the Revolving
Facility Agent, exercised
reasonably
	

‘‘Document’’
has the meaning specified in Article 9 of the
UCC.

‘‘Documentary Letter of
Credit’’ means any Letter of Credit Issued by an
Issuer pursuant to Section 2.4 for the account of the
Borrower, which is drawable upon presentation of documents evidencing
the sale or shipment of goods purchased by Group or any of its
Subsidiaries in the ordinary course of its
business.

‘‘Dollar
Equivalent’’ of any amount means, at the time of
determination thereof, (a) if such amount is expressed in
Dollars, such amount, (b) if such amount is expressed in an
Alternative 

10

Currency, the equivalent of such amount in
Dollars determined by using the mid-range rate of exchange quoted by
the Wall Street Journal for such Alternative Currency under its
‘‘Exchange Rates’’ column on the
Business Day preceding the date of determination and (c) if such
amount is denominated in any other currency, the equivalent of such
amount in Dollars as determined by the Administrative Agents using any
method of determination they reasonably deem appropriate;
provided, however, if such amount is expressed in an
Alternative Currency and such amount relates to the Issuance of a
Letter of Credit by any Issuer, the ‘‘Dollar
Equivalent’’ shall mean the equivalent of such amount
in Dollars as determined by such Issuer using any customary method of
determination it reasonably deems
appropriate.

‘‘Dollars’’
and the sign ‘‘$’’ each mean
the lawful money of the United States of
America.

‘‘Domestic Lending
Office’’ means, with respect to any Lender, the
office of such Lender specified as its ‘‘Domestic
Lending Office’’ opposite its name on
Schedule II (Applicable Lending Offices and Addresses for
Notices) or on the Assignment and Acceptance by which it became a
Lender or such other office of such Lender as such Lender may from time
to time specify to the Borrower and the applicable Administrative
Agent.

‘‘Domestic
Subsidiary’’ means any Subsidiary of Group
organized under the laws of any state of the United States of America
or the District of
Columbia.

‘‘EBITDA’’
means, with respect to any Person for any period, an amount equal to
(a) Consolidated Net Income of such Person for such period plus
(b) the sum of, in each case to the extent included in the calculation
of such Consolidated Net Income but without duplication, (i) any
provision for income taxes, (ii) Interest Expense, (iii) loss
from extraordinary items, (iv) loss from the sale, exchange or other
disposition of capital assets, (v) depreciation, depletion and
amortization of intangibles or financing or acquisition costs, (vi) all
other non-cash charges and non-cash losses for such period, including
non-cash charges relating to any change in the methodology of
estimating reserves against Receivables and Inventory and (vii) any
non-recurring transition expense incurred by the Warnaco Entities in
connection with the Frankie Acquisition and the subsequent integration
of Frankie Business and the Frankie Collection Business over the first
six fiscal quarters after the Closing Date in an aggregate amount not
to exceed $10,000,000 minus (c) the sum of, in each case to the
extent included in the calculation of such Consolidated Net Income but
without duplication, (i) any credit for income tax, (ii) interest
income, (iii) gains from extraordinary items for such period, (iv) any
aggregate net gain from the sale, exchange or other disposition of
capital assets by such Person, (v) any other non-cash gains which have
been added in determining Consolidated Net Income and (vi) cash
payments for charges that have been reserved.

‘‘Eligibility Reserve’’
means, effective as of three (3) Business Days after the date of
written notice of any determination thereof to the Borrower by the
Revolving Facility Agent, such amounts as the Revolving Facility Agent,
in its sole discretion exercised reasonably, may from time to time
establish against the gross amounts of Eligible Receivables, Eligible
Finished Inventory or Eligible Other Inventory, to reflect (a) risks or
contingencies arising after the Closing Date which may affect any one
or class of such items and which have not already been taken into
account in the calculation of the Borrowing Base, (b) Cash Management
Obligations owing to the Agents that constitute Secured Obligations as
of the date of the most recent report delivered to the Revolving
Facility Agent pursuant to Section 6.12(e) and (c)(i) at any
time that Available Credit is less than $50,000,000 or during an Event
of Default, upon the written request of any Lender that is (or whose
Affiliate is) party to a Hedging Contract, the aggregate obligations of
the Borrower under such Hedging Contract calculated on a mark to market
basis or (ii) at any time that any such Hedging Contract has been
terminated, the amount due and owing pursuant to such Hedging
Contract.

‘‘Eligible
Assignee’’ means (a) a Lender or an
Affiliate or Approved Fund of any Lender or Agent, (b) a
commercial bank having total assets whose Dollar Equivalent exceeds
$5,000,000,000, (c) a finance company, insurance company or any
other financial institution or Fund, in each case reasonably acceptable
to the applicable Administrative Agent and regularly engaged in making,
purchasing or investing in loans and having a net worth, determined in
accordance with GAAP, whose Dollar Equivalent exceeds $500,000,000 (or,
to the extent net worth is less than such amount, a finance

11

company, insurance company, other financial
institution or Fund, reasonably acceptable to the applicable
Administrative Agent) or (d) a savings and loan association or
savings bank organized under the laws of the United States or any State
thereof having a net worth, determined in accordance with GAAP, whose
Dollar Equivalent exceeds
$500,000,000.

‘‘Eligible Finished
Inventory’’ means the Inventory of a Loan Party
(other than any Inventory which has been consigned by such Loan Party)
including only finished goods:

(a) which is owned solely
by a Loan Party,

(b) with respect to which the Collateral
Agent has a valid and perfected first priority
Lien,

(c) with respect to which no representation or
warranty contained in any of the Loan Documents has been
breached,

(d) which is not, in the Revolving Facility
Agent’s sole discretion exercised reasonably, obsolete or
unmerchantable,

(e) with respect to which (in respect of
any Inventory labeled with a brand name or trademark and sold by a Loan
Party pursuant to a trademark owned by a Loan Party or a license
granted to a Loan Party) the Collateral Agent would have rights
pursuant to this Agreement or any other agreement satisfactory to the
Revolving Facility Agent to sell such Inventory in connection with a
liquidation thereof, and

(f) which the Revolving Facility
Agent has not deemed to be ineligible based on such credit and
collateral considerations relating thereto as the Revolving Facility
Agent may, in its sole discretion exercised reasonably, deem
appropriate and as to which the Revolving Facility Agent provides the
Borrower three (3) Business Days prior notice.

No
Inventory of a Loan Party Borrower shall be Eligible Finished Inventory
if such Inventory consists of (i) goods returned or rejected by
customers other than goods that are undamaged or are resalable in the
normal course of business, (ii) goods to be returned to
suppliers, (iii) goods in transit or (iv) goods located,
stored, used or held at the premises of a third party unless (A) the
Collateral Agent shall have received a Landlord Waiver or
Bailee’s Letter or (B) in the case of Inventory located
at a leased premises, an Eligibility Reserve in an amount equal to the
aggregate of three months gross lease payments (or, in the case of
Eligible Finished Inventory located at the premises of Floor-Ready
Apparel Company LLC, 6 weeks of average budgeted payments) or otherwise
satisfactory to the Revolving Facility Agent shall have been
established with respect thereto.

‘‘Eligible
Foreign Account Debtor’’ means an Account Debtor
(i) who is organized under the laws of a country other than the United
States or any state thereof, (ii) whose Receivables are denominated and
payable only in Dollars in the United States, and (iii) the obligations
of which are supported by a letter of credit which letter of credit
names the Collateral Agent as beneficiary for the benefit of the
Secured Parties or in respect of which the issuer has consented to the
assignment to the Collateral Agent of the proceeds
thereof.

‘‘Eligible Other
Inventory’’ means the Inventory of a Loan Party
(other than finished goods and other than any Inventory which has been
consigned by such Loan Party) including raw materials,
works-in-process, parts and supplies:

(a) which is owned
solely by a Loan Party and with respect to which the Collateral
Agent has a valid and perfected first priority
Lien,

(b) with respect to which no representation or
warranty contained in any of the Loan Documents has been
breached,

(c) which is not, in the Revolving Facility
Agent’s sole discretion exercised reasonably, obsolete or
unmerchantable,

(d) with respect to which (in respect of
any Inventory labeled with a brand name or trademark and sold by such
Loan Party pursuant to a trademark owned by a Loan Party or a license
granted to a Loan Party) the Collateral Agent would have rights
pursuant to this Agreement or any other agreement satisfactory to the
Revolving Facility Agent to sell such Inventory in connection with a
liquidation thereof, and

12

(e) which the Revolving Facility
Agent has not deemed to be ineligible based on such credit and
collateral considerations relating thereto as the Revolving Facility
Agent may, in its sole discretion exercised reasonably, deem
appropriate and as to which the Revolving Facility Agent provides the
Borrower three (3) Business Days prior notice.

No
Inventory of a Loan Party shall be Eligible Other Inventory if such
Inventory consists of (i) goods returned or rejected by
customers other than goods that are undamaged or are resalable in the
normal course of business, (ii) goods to be returned to
suppliers, (iii) goods in transit or (iv) goods located,
stored, used or held at the premises of a third party unless (A) the
Collateral Agent shall have received a Landlord Waiver or
Bailee’s Letter or (B) in the case of Inventory located
at a leased premises, an Eligibility Reserve in an amount equal to the
aggregate of three months gross lease payments or otherwise
satisfactory to the Revolving Facility Agent shall have been
established with respect thereto. Notwithstanding the foregoing,
Eligible Other Inventory shall at any time be deemed to include
eligible Inventory in an amount equal to the aggregate undrawn amount
of Documentary Letters of Credit at such
time.

‘‘Eligible
Receivable’’ means, at any time, any
Receivable:

(a) in respect of which the Account Debtor (i)
(A) is organized under the laws of the United States or any state
thereof and has its principal place of business located in the United
States or (B) is an Eligible Foreign Account Debtor and (ii) is not an
Affiliate of Group or any of its Subsidiaries,

(b) that
does not have a stated maturity which is more than 90 days after the
original invoice date of such Receivable unless such Receivable is an
Extended Term Receivable, in which case it does not have a stated
maturity which is more than 180 days after the original invoice date of
such Receivable,

(c) that arises under a duly authorized
Sales Contract for the sale and delivery of goods and services in the
ordinary course of any Loan Party’s
business,

(d) that is a legal, valid and binding
obligation of the related Account Debtor, enforceable against such
Account Debtor in accordance with its terms,

(e) that
conforms in all material respects with all Requirements of
Law,

(f) that is not the subject of any dispute, offset,
holdback, defense, Lien (other than a Customary Permitted Lien) or
other claim other than such adjustments in the ordinary course of the
applicable Loan Party’s business as such Loan Party’s
business is conducted on the date hereof (such Receivable to be
ineligible to the extent of such dispute, offset, holdback, defense,
Lien or claim),

(g) that satisfies all applicable
requirements of the applicable Credit and Collection
Policy,

(h) that has not been modified, waived or
restructured since its creation,

(i) in which a Loan Party
owns good and marketable title, free and clear of any Lien (other than
a Customary Permitted Lien and Liens created by the Loan Documents),
and that is freely assignable by the Loan Party (including without any
consent of the related Account Debtor),

(j) for which the
Collateral Agent, for the benefit of the Secured Parties, has a valid
and enforceable perfected security interest therein and in the Related
Security and Collections with respect thereto, in each case free and
clear of any Lien (other than a Customary Permitted Lien and Liens
created by the Loan Documents),

(k) that constitutes an
account as defined in the UCC, and that is not evidenced by Instruments
or Chattel Paper,

(l) that is not a Defaulted
Receivable,

(m) that represents all or part of the sales
price of merchandise, insurance or services within the meaning of
Section 3(c)(5) of the Investment Company Act of
1940,

(n) for which the aggregate of the Defaulted
Receivables owed by the related Account Debtor and any of its
Affiliated Account Debtors does not exceed 50% of the
outstanding balance of all Receivables owed by such Account
Debtor,

13

(o) which is denominated and
payable only in Dollars in the United States,

(p) that
represents amounts earned and payable by the Account Debtor that are
not subject to the performance of additional services by any Loan
Party,

(q) that has not been rewritten, canceled or
rebilled or is not a Receivable that has resulted from a rewritten,
canceled or rebilled Receivable, and

(r) that, when taken
together with all other Eligible Receivables owed by such Account
Debtor to the Loan Parties does not exceed 20% of the Eligible
Receivables of the Loan Parties at such time (it being understood that
only the excess of such Eligible Receivables over such 20%
threshold shall be deemed ineligible pursuant to this clause, unless
such Eligible Receivable is covered by credit insurance acceptable to
the Revolving Facility Agent, in which case that portion of such
Eligible Receivable in excess of the deductible for such credit
insurance shall not be deemed ineligible pursuant to this
clause);

provided, however, that in no event shall
any Chargeback qualify as an Eligible
Receivable.

‘‘Environmental
Action’’ means any action, suit, demand, demand
letter, claim, notice of non-compliance or violation, notice of
liability or potential liability, investigation, proceeding, consent
order or consent agreement relating in any way to any Environmental
Law, any Environmental Permit or Contaminant or arising from alleged
injury or threat to health, safety or the environment, including,
without limitation, (a) by any governmental or regulatory
authority for enforcement, cleanup, removal, response, remedial or
other actions or damages and (b) by any governmental or
regulatory authority or third party for damages, contribution,
indemnification, cost recovery, compensation or injunctive
relief.

‘‘Environmental
Laws’’ means all applicable Requirements of Law
now or hereafter in effect and as amended or supplemented from time to
time, relating to pollution or the regulation and protection of human
health, safety, the environment or natural resources, including the
Comprehensive Environmental Response, Compensation, and Liability Act
of 1980, as amended (42 U.S.C. § 9601 et seq.);
the Hazardous Material Transportation Act, as amended (49 U.S.C.
§ 5101 et seq.); the Federal Insecticide,
Fungicide, and Rodenticide Act, as amended (7 U.S.C.
§ 136 et seq.); the Resource Conservation and
Recovery Act, as amended (42 U.S.C. § 6901 et
seq.); the Toxic Substance Control Act, as amended (15 U.S.C.
§ 2601 et seq.); the Clean Air Act, as amended (42
U.S.C. § 7401 et seq.); the Federal Water
Pollution Control Act, as amended (33 U.S.C. § 1251 et
seq.); the Occupational Safety and Health Act, as amended
(29 U.S.C. § 651 et seq.); the Safe
Drinking Water Act, as amended (42 U.S.C. § 300f et
seq.); and each of their state and local counterparts or
equivalents and any transfer of ownership notification or approval
statute, including the Industrial Site Recovery Act (N.J. Stat. Ann.
§ 13:1K-6 et
seq.).

‘‘Environmental Liabilities and
Costs’’ means, with respect to any Person, all
liabilities, obligations, responsibilities, Remedial Actions, losses,
damages, punitive damages, consequential damages, treble damages, costs
and expenses (including all fees, disbursements and expenses of
counsel, experts and consultants and costs of investigation and
feasibility studies), fines, penalties, sanctions and interest incurred
as a result of any claim or demand by any other Person, whether based
in contract, tort, implied or express warranty, strict liability,
criminal or civil statute and whether arising under any Environmental
Law, Permit, order or agreement with any Governmental Authority or
other Person, in each case relating to any environmental, health or
safety condition or to any Release or threatened Release and resulting
from the past, present or future operations of, or ownership of
property by, such Person or any of its
Subsidiaries.

‘‘Environmental
Lien’’ means any Lien in favor of any
Governmental Authority for Environmental Liabilities and
Costs.

‘‘Environmental
Permit’’ means any permit, approval,
identification number, license or other authorization required under
any Environmental
Law.

‘‘ERISA’’ means
the Employee Retirement Income Security Act of 1974 (or any successor
legislation thereto), as amended from time to time.

14

‘‘ERISA
Affiliate’’ means any trade or business (whether
or not incorporated) under common control or treated as a single
employer with Group or any of its Subsidiaries within the meaning of
Section 414 (b), (c), (m) or (o) of the
Code.

‘‘ERISA Event’’
means (a) a reportable event described in Section 4043(b) or
4043(c)(1), (2), (3), (5), (6), (8) or (9) of ERISA with respect to a
Title IV Plan or a Multiemployer Plan; (b) the withdrawal of the
Borrower, any of its Subsidiaries or any ERISA Affiliate from a Title
IV Plan subject to Section 4063 of ERISA during a plan year in which it
was a substantial employer, as defined in Section 4001(a)(2) of ERISA;
(c) the complete or partial withdrawal of the Borrower, any of
its Subsidiaries or any ERISA Affiliate from any Multiemployer Plan;
(d) notice of reorganization or insolvency of a Multiemployer
Plan; (e) the filing of a notice of intent to terminate a Title IV Plan
or the treatment of a plan amendment as a termination under Section
4041 of ERISA; (f) the institution of proceedings to terminate a
Title IV Plan or Multiemployer Plan by the PBGC; (g) the failure
to make any required contribution to a Title IV Plan or Multiemployer
Plan; (h) the imposition of a lien under Section 412 of the Code
or Section 302 of ERISA on Group or any of its Subsidiaries or any
ERISA Affiliate; or (i) any other event or condition which might
reasonably be expected to constitute grounds under Section 4042 of
ERISA for the termination of, or the appointment of a trustee to
administer, any Title IV Plan or Multiemployer Plan or the imposition
of any liability under Title IV of ERISA, other than for PBGC premiums
due but not delinquent under Section 4007 of
ERISA.

‘‘Eurocurrency
Liabilities’’ has the meaning assigned to that
term in Regulation D of the Federal Reserve Board, as in effect from
time to time.

‘‘Eurodollar Base
Rate’’ means, with respect to any Interest Period
for any Eurodollar Rate Loan, the rate determined by the applicable
Administrative Agent to be the offered rate for deposits in Dollars for
the applicable Interest Period which appears on the Dow Jones Markets
Telerate Page 3750 as of 11:00 a.m., London time, on the second
full Business Day next preceding the first day of each Interest Period.
In the event that such rate does not appear on the Dow Jones Markets
Telerate Page 3750 (or otherwise on the Dow Jones Markets screen), the
Eurodollar Base Rate for the purposes of this definition shall be
determined by reference to such other comparable publicly available
service for displaying eurodollar rates as may be selected by the
applicable Administrative Agent, or, in the absence of such
availability, the Eurodollar Base Rate shall be the rate of interest
determined by the applicable Administrative Agent to be the rate per
annum at which deposits in Dollars are offered by the principal
office of Citibank in London to major banks in the London interbank
market at 11:00 a.m. (London time) two (2) Business Days before the
first day of such Interest Period in an amount substantially equal to
the Eurodollar Rate Loan of Citibank for a period equal to such
Interest Period.

‘‘Eurodollar Lending
Office’’ means, with respect to any Lender, the
office of such Lender specified as its
‘‘Eurodollar Lending
Office’’ opposite its name on
Schedule II (Applicable Lending Offices and Addresses for
Notices) or on the Assignment and Acceptance by which it became a
Lender (or, if no such office is specified, its Domestic Lending
Office) or such other office of such Lender as such Lender may
from time to time specify to the Borrower and the applicable
Administrative Agent.

‘‘Eurodollar
Rate’’ means, with respect to any Interest Period
for any Eurodollar Rate Loan, an interest rate per annum equal
to the rate per annum obtained by dividing (a) the
Eurodollar Base Rate by (b) a percentage equal to 100% minus the
reserve percentage applicable two Business Days before the first day of
such Interest Period under regulations issued from time to time by the
Federal Reserve Board for determining the maximum reserve requirement
(including any emergency, supplemental or other marginal reserve
requirement) for a member bank of the Federal Reserve System in New
York City with respect to liabilities or assets consisting of or
including Eurocurrency Liabilities (or with respect to any other
category of liabilities which includes deposits by reference to which
the Eurodollar Rate is determined) having a term equal to such Interest
Period.

‘‘Eurodollar Rate
Loan’’ means any Revolving Loan or Term Loan
that, for an Interest Period, bears interest based on the Eurodollar
Rate.

15

‘‘Event of
Default’’ has the meaning specified in
Section 9.1.

‘‘Excess Cash
Flow’’ means, for Group and its Subsidiaries for
any period, (a) EBITDA of Group and its Subsidiaries for such
period plus (b) the excess, if any, of Working Capital at
the beginning of such period over Working Capital at the end of such
period minus (c) the sum of (without duplication)
(i) scheduled cash principal payments on the Loans during such
period and optional cash principal payments on the Loans during such
period (but only to the extent in the case of optional cash payments of
the Revolving Loans that the Revolving Credit Commitments are
permanently reduced by the amount of such payments), (ii) cash
principal payments made by Group or any of its Subsidiaries during such
period on other Indebtedness to the extent such other Indebtedness and
payments are permitted by this Agreement, (iii) payments made by Group
or any of its Subsidiaries during such period on Capital Lease
Obligations to the extent such Capital Lease Obligations and payments
are permitted by this Agreement, (iv) Capital Expenditures (to
the extent not financed by the incurrence of Indebtedness) made by
Group or any of its Subsidiaries during such period to the extent
permitted by this Agreement, (v) dividends or other
distributions of Group and its Subsidiaries during such period to the
extent permitted hereunder and actually paid, (vi) Restricted Payments
by Group in connection with the redemption, repurchase or other
acquisition of its common Stock in any Fiscal Year to the extent
permitted hereunder, (vii) cash payments made by Group or any of its
Subsidiaries to satisfy income tax obligations of any Warnaco Entity,
(viii) Cash Interest Expense of Group and its Subsidiaries during such
period and (ix) the excess, if any, of Working Capital at the
end of such period over Working Capital at the beginning of such
period.

‘‘Existing
Agent’’ has the meaning specified in the recitals
to this Agreement.

‘‘Existing Closing
Date’’ means February  4,  2003, the
closing date under the Existing Credit
Agreement.

‘‘Existing Collateral
Documents’’ means the
‘‘Collateral Documents’’ under and
as defined in the Existing Credit Agreement.

‘‘Existing Credit
Agreement’’ has the meaning specified in the
recitals to this Agreement.

‘‘Existing
Guaranty’’ means the
‘‘Guaranty’’ under and as defined in
the Existing Credit Agreement.

‘‘Existing
Pledge and Security Agreement’’ means the
‘‘Pledge and Security Agreement’’
under and as defined in the Existing Credit
Agreement.

‘‘Extended Term
Receivable’’ means an Authentic Receivable that
has an original stated maturity that is greater than 90 days after the
original invoice date of such Receivable and less than or equal to 180
days after the original invoice date of such
Receivable.

‘‘Facilities’’
means, collectively, (a) the Term Loan Facility and (b) the Revolving
Credit Facility.

‘‘Facility
Agents’’ means, collectively, the Administrative
Agents and the Collateral Agent.

‘‘Fair
Market Value’’ means (a) with respect to
any asset or group of assets (other than a marketable Security) at any
date, the value of the consideration obtainable in a sale of such asset
at such date assuming a sale by a willing seller to a willing purchaser
dealing at arm’s length and arranged in an orderly manner over a
reasonable period of time having regard to the nature and
characteristics of such asset (provided that in the case of
assets with a net book value in excess of $5,000,000, the
‘‘Fair Market Value’’
thereof shall be as reasonably determined pursuant to the foregoing
criteria by the Board of Directors of Group) or, if such asset shall
have been the subject of a relatively contemporaneous appraisal by an
independent third party appraiser, the basic assumptions underlying
which have not materially changed since its date, the value set forth
in such appraisal, and (b) with respect to any marketable
Security at any date, the closing sale price of such Security on the
Business Day next preceding such date, as appearing in any published
list of any national securities exchange or the NASDAQ Stock Market or,
if there is no such closing sale price of such Security, the final
price for the purchase of such Security at face value quoted on such
Business Day by a financial institution of recognized standing
regularly dealing in Securities of such type and selected by the
Administrative Agents.

16

‘‘Federal Funds
Rate’’ means, for any period, a fluctuating
interest rate per annum equal for each day during such period to
the weighted average of the rates on overnight Federal funds
transactions with members of the Federal Reserve System arranged by
Federal funds brokers, as published for such day (or, if such day is
not a Business Day, for the next preceding Business Day) by the Federal
Reserve Bank of New York, or, if such rate is not so published for any
day which is a Business Day, the average of the quotations for such day
on such transactions received by the applicable Administrative Agent
from three Federal funds brokers of recognized standing selected by
it.

‘‘Federal Reserve
Board’’ means the Board of Governors of the
Federal Reserve System, or any successor
thereto.

‘‘Fee
Letters’’ shall mean (i) the letter dated as of
December  17,  2002, addressed to the Borrower and Group
from CNAI, JPMorgan Chase Bank, N.A. and the Arrangers and accepted by
the Borrower and Group on December  17,  2002 and (ii) the
letter dated as of December  20,  2005, addressed to the
Borrower and Group from Citigroup Global Markets Inc., JPMorgan Chase
Bank, N.A. and JPMorgan Securities Inc. and accepted by the Borrower
and Group on December  20,  2005, each with respect to
certain fees to be paid on the Closing Date and otherwise from time to
time to the Administrative Agents and the Arrangers, as
applicable.

‘‘Financial Covenant
Debt’’ of any Person means Indebtedness of the
type specified in clauses (a), (b), (d),
(e), (f) and (h) of the definition of
‘‘Indebtedness,’’ non-contingent
obligations of the type specified in clause (c) of
such definition and Guaranty Obligations of any of the
foregoing.

‘‘Financial
Statements’’ means the financial statements of
Group and its Subsidiaries delivered in accordance with
Section 4.4 and
Section 6.1.

‘‘Fiscal
Quarter’’ means each of the three-month fiscal
periods ending on or about March 31, June 30,
September 30 and
December 31.

‘‘Fiscal
Year’’ means the twelve-month fiscal period
ending on or about
December 31.

‘‘Fixed Charge Coverage
Ratio’’ means, with respect to any Person for any
period, the ratio of (a) EBITDA of such Person for such period
minus (x) Capital Expenditures of such Person for such period
and (y) cash consideration paid during such period by such Person or
any of its Subsidiaries in respect of a Permitted Acquisition for such
period (in each case net of any such cash consideration which is a
reinvestment of Net Cash Proceeds arising from an Asset Sale)
minus the total income tax liability actually payable by such
Person and its Subsidiaries in respect of such period to (b) the
Fixed Charges of such Person for such
period.

‘‘Fixed
Charges’’ means, with respect to any Person for
any period, the sum, determined on a consolidated basis, of
(a) the Cash Interest Expense of such Person and its
Subsidiaries for such period and (b) the principal amount of
Financial Covenant Debt of such Person and its Subsidiaries on a
consolidated basis having a scheduled due date during such
period.

‘‘Foreign
Plan’’ means an employee benefit plan to which
any Warnaco Entity or any ERISA Affiliate has any obligation or
liability (contingent or otherwise) with respect to employees who are
not employed in the United States.

‘‘Foreign
Subsidiary’’ means a Subsidiary of Group
incorporated under the laws of a jurisdiction that is not within the
United States of America.

‘‘Frankie
Acquisition’’ means the acquisition by the
Warnaco Entities pursuant to the Frankie Acquisition Documents of the
Frankie Business and the Frankie Collection Business.

‘‘Frankie Acquisition
Agreement’’ means that certain Stock Purchase
Agreement, dated as of December  20,  2005, by and among
the Borrower, Fingen Apparel N.V., Fingen S.P.A., Euro Corma S.P.A. and
Calvin Klein, Inc., as amended by the amendment, dated January
31,  2006 and as the same may be amended, supplemented or
otherwise modified in accordance with the terms of this Agreement.

‘‘Frankie Acquisition
Documents’’ means, collectively, the Frankie
Acquisition Agreement and each of the ‘‘Ancillary
Agreements,’’ as such term is defined in the Frankie
Acquisition Agreement.

17

‘‘Frankie
Business’’ means, collectively,
‘‘Business’’ as defined under the Frankie
Acquisition Agreement.

‘‘Frankie Collection
Business’’ means, the ‘‘Collection
Business’’ as defined under the Frankie Acquisition
Agreement.

‘‘Fund’’
means any Person (other than a natural Person) that is or will be
engaged in making, purchasing, holding or otherwise investing in
commercial loans and similar extensions of credit in the ordinary
course of its
business.

‘‘GAAP’’
means generally accepted accounting principles in the United States of
America as in effect from time to time set forth in the opinions and
pronouncements of the Accounting Principles Board and the American
Institute of Certified Public Accountants and the statements and
pronouncements of the Financial Accounting Standards Board, or in such
other statements by such other entity as may be in general use by
significant segments of the accounting profession, which are applicable
to the circumstances as of the date of
determination.

‘‘General
Intangible’’ has the meaning specified in the
Pledge and Security
Agreement.

‘‘Governmental
Authority’’ means any nation, sovereign or
government, any state or other political subdivision thereof and any
entity exercising executive, legislative, judicial, regulatory or
administrative functions of or pertaining to
government.

‘‘Group’’
has the meaning specified in the preamble
hereto.

‘‘Guarantor’’
means Group and each Domestic Subsidiary of Group other than the
Borrower.

‘‘Guaranty’’
means the guaranty, in substantially the form of Exhibit J,
executed by the Guarantors, which guaranty amends and restates in its
entirety the Existing Guaranty.

‘‘Guaranty
Obligation’’ means, as applied to any Person, any
direct or indirect liability, contingent or otherwise, of such Person
with respect to any Indebtedness of another Person, if the purpose or
intent of such Person in incurring the Guaranty Obligation is to
provide assurance to the obligee of such Indebtedness that such
Indebtedness will be paid or discharged, that any agreement relating
thereto will be complied with, or that any holder of such Indebtedness
will be protected (in whole or in part) against loss in respect
thereof, including (a) the direct or indirect guaranty,
endorsement (other than for collection or deposit in the ordinary
course of business), co-making, discounting with recourse or sale with
recourse by such Person of Indebtedness of another Person and
(b) any liability of such Person for Indebtedness of another
Person through any agreement (contingent or otherwise) (i) to
purchase, repurchase or otherwise acquire such Indebtedness or any
security therefor or to provide funds for the payment or discharge of
such Indebtedness (whether in the form of a loan, advance, stock
purchase, capital contribution or otherwise), (ii) to maintain
the solvency or any balance sheet item, level of income or financial
condition of another Person, (iii) to make take-or-pay or
similar payments, if required, regardless of non-performance by any
other party or parties to an agreement, (iv) to purchase, sell
or lease (as lessor or lessee) property, or to purchase or sell
services, primarily for the purpose of enabling the debtor to make
payment of such Indebtedness or to assure the holder of such
Indebtedness against loss or (v) to supply funds to, or in any
other manner invest in, such other Person (including to pay for
property or services irrespective of whether such property is received
or such services are rendered), if in the case of any agreement
described under clause (b)(i), (ii), (iii),
(iv) or (v) above the primary purpose or intent thereof
is to provide assurance that Indebtedness of another Person will be
paid or discharged, that any agreement relating thereto will be
complied with or that any holder of such Indebtedness will be protected
(in whole or in part) against loss in respect thereof. The amount of
any Guaranty Obligation shall be equal to the amount of the
Indebtedness so guaranteed or otherwise
supported.

‘‘Hedging
Contracts’’ means all Interest Rate Contracts,
foreign exchange contracts, currency swap or option agreements, forward
contracts, commodity swap, purchase or option agreements, other
commodity price hedging arrangements, and all other similar agreements
or arrangements designed to alter the risks of any Person arising from
fluctuations in interest rates, currency values or commodity
prices.

18

‘‘Indebtedness’’
of any Person means without duplication (a) all indebtedness of
such Person for borrowed money, (b) all obligations of such
Person evidenced by notes, bonds, debentures or similar instruments or
which bear interest, (c) all reimbursement and all obligations with
respect to letters of credit, bankers’ acceptances, surety bonds
and performance bonds, whether or not matured, (d) all indebtedness for
the deferred purchase price of property or services, other than trade
payables incurred in the ordinary course of business, (e) all
indebtedness of such Person created or arising under any conditional
sale or other title retention agreement with respect to property
acquired by such Person (even though the rights and remedies of the
seller or lender under such agreement in the event of default are
limited to repossession or sale of such property), (f) all
Capital Lease Obligations of such Person, (g) all Guaranty
Obligations of such Person, (h) all obligations of such Person
to purchase, redeem, retire, defease or otherwise acquire for value any
Stock or Stock Equivalents of such Person, valued, in the case of
redeemable preferred stock, at the greater of its voluntary or
involuntary liquidation preference plus accrued and unpaid dividends,
(i) all payments that such Person would have to make in the
event of an early termination on the date Indebtedness of such Person
is being determined in respect of Hedging Contracts of such Person and
(j) all Indebtedness of the type referred to above secured by
(or for which the holder of such Indebtedness has an existing right,
contingent or otherwise, to be secured by) any Lien upon or in property
(including Accounts and General Intangibles) owned by such Person, even
though such Person has not assumed or become liable for the payment of
such
Indebtedness.

‘‘Indemnitees’’
has the meaning specified in
Section 11.4.

‘‘Instrument’’
has the meaning specified in the Pledge and Security
Agreement.

‘‘Insurance
Assets’’ means sums payable to the insured under
an insurance policy, including, any gross unearned premiums and any
payment on account of loss which results in a reduction of unearned
premium with respect to the underlying
policy.

‘‘Intellectual
Property’’ has the meaning specified in the
Pledge and Security
Agreement.

‘‘Intercreditor
Agreement’’ means an agreement, in substantially
the form of Exhibit K (Form of Intercreditor Agreement), among
the Loan Parties, the Revolving Facility Agent, the Term Facility Agent
and the Collateral Agent.

‘‘Interest
Expense’’ means, for any Person for any period,
(a) total interest expense of such Person and its Subsidiaries for such
period determined on a consolidated basis in conformity with GAAP and
including, in any event, interest capitalized during construction for
such period and net costs under Interest Rate Contracts for such period
minus (b) the sum of (i) net gains of such Person and its
Subsidiaries under Interest Rate Contracts for such period determined
on a consolidated basis in conformity with GAAP plus (ii) any
interest income of such Person and its Subsidiaries for such period
determined on a consolidated basis in conformity with
GAAP.

‘‘Interest
Period’’ means, in the case of any Eurodollar
Rate Loan, (a) initially, the period commencing on the date such
Eurodollar Rate Loan is made or on the date of conversion of a Base
Rate Loan to such Eurodollar Rate Loan and ending one, two, three or
six months thereafter, as selected by the Borrower in its Notice of
Borrowing or Notice of Conversion or Continuation given to the
applicable Administrative Agent pursuant to Section 2.2
or Section 2.11, and (b) thereafter, if such Loan
is continued, in whole or in part, as a Eurodollar Rate Loan pursuant
to Section 2.11, a period commencing on the last day of
the immediately preceding Interest Period therefor and ending one, two,
three or six months thereafter, as selected by the Borrower in its
Notice of Conversion or Continuation given to the applicable
Administrative Agent pursuant to Section 2.11;
provided, however, that all of the foregoing provisions relating
to Interest Periods in respect of Eurodollar Rate Loans are subject to
the following:

(i) if any Interest
Period would otherwise end on a day which is not a Business Day, such
Interest Period shall be extended to the next succeeding Business Day,
unless the result of such extension would be to extend such Interest
Period into another calendar month, in which event such Interest Period
shall end on the immediately preceding Business Day;

19

(ii) any
Interest Period that begins on the last Business Day of a calendar
month (or on a day for which there is no numerically corresponding day
in the calendar month at the end of such Interest Period) shall end on
the last Business Day of a calendar
month;

(iii) the Borrower may not select
any Interest Period that ends after the date of a scheduled principal
payment on the Loans as set forth in Article II (The Facilities)
unless, after giving effect to such selection, the aggregate unpaid
principal amount of the Loans for which Interest Periods end after such
scheduled principal payment shall be equal to or less than the
principal amount to which the Loans are required to be reduced after
such scheduled principal payment is
made;

(iv) the Borrower may not select
any Interest Period in respect of Loans having an aggregate principal
amount of less than $10,000,000;
and

(v) there shall be outstanding at
any one time no more than ten (10) Interest Periods in the aggregate
for all Loans.

‘‘Interest Rate
Contracts’’ means all interest rate swap
agreements, interest rate cap agreements, interest rate collar
agreements and interest rate
insurance.

‘‘Inventory’’
has the meaning specified in the Pledge and Security
Agreement.

‘‘Investment’’
means, with respect to any Person, (a) any purchase or other
acquisition by that Person of (i) any Security issued by, (ii) a
beneficial interest in any Security issued by, or (iii) any other
equity ownership interest in, any other Person, (b) any purchase
by that Person of assets constituting a business conducted by another
Person, (c) any loan, advance (other than deposits with
financial institutions available for withdrawal on demand, prepaid
expenses, accounts receivable and similar items made or incurred in the
ordinary course of business as presently conducted), or capital
contribution by that Person to any other Person, including all
Indebtedness of any other Person to that Person arising from a sale of
property by that Person other than in the ordinary course of its
business and (d) any Guaranty Obligation incurred by that Person
in respect of Indebtedness of any other
Person.

‘‘Investment Grade Debt
Securities’’ means any bond, debenture, note or
other evidence of indebtedness which is rated at least BBB−
(stable) by Standard & Poor’s Rating Services and Baa3
(stable) by Moody’s Investors Services,
Inc.

‘‘IRS’’ means the
Internal Revenue Service of the United States or any successor
thereto.

‘‘Issue’’
means, with respect to any Letter of Credit, to issue, extend the
expiry of, renew or increase the maximum face amount (including by
deleting or reducing any scheduled decrease in such maximum face
amount) of, such Letter of Credit. The terms
‘‘Issued’’ and
‘‘Issuance’’ shall have a
corresponding
meaning.

‘‘Issuer’’
means each Agent, Lender or Affiliate of such Agent or Lender that (a)
is listed on the signature pages hereof as an
‘‘Issuer’’ or (b) hereafter
becomes an Issuer with the approval of the Revolving Facility Agent and
the Borrower by agreeing pursuant to an agreement with and in form and
substance satisfactory to the Revolving Facility Agent and the Borrower
to be bound by the terms hereof applicable to
Issuers.

‘‘Landlord
Waiver’’ means a letter in form and substance
reasonably acceptable to the Revolving Facility Agent and executed by a
landlord in respect of Inventory of a Loan Party located at any leased
premises of a Loan Party pursuant to which such landlord, among other
things, waives or subordinates on terms and conditions reasonably
acceptable to the Revolving Facility Agent any Lien such landlord may
have in respect of such
Inventory.

‘‘Leases’’
means, with respect to any Person, all of those leasehold estates in
real property of such Person, as lessee, as such may be amended,
supplemented or otherwise modified from time to
time.

‘‘Lender’’ means
the Swing Loan Lender and each other financial institution or other
entity that (a) is listed on the signature pages hereof as a
‘‘Lender’’ or
(b) from time to time becomes a party hereto by execution of an
Assignment and Acceptance.

20

‘‘Lender
Consent’’ means the Acknowledgment and Consent,
in the form attached hereto as Exhibit
 .

‘‘Letter of
Credit’’ means any letter of credit Issued
pursuant to
Section 2.4(d).

‘‘Letter of
Credit Obligations’’ means, at any time, the
Dollar Equivalent of the aggregate of all liabilities at such time of
the Borrower to all Issuers with respect to Letters of Credit, whether
or not any such liability is contingent, and includes the sum of
(a) the Reimbursement Obligations at such time and
(b) the Letter of Credit Undrawn Amounts at such time; in each
case, the Dollar Equivalent of Letter of Credit Obligations denominated
in an Alternative Currency shall be determined on each day on which a
Borrowing Base Certificate is delivered pursuant to
Section 6.12.

‘‘Letter of
Credit Reimbursement Agreement’’ has the meaning
specified in
Section 2.4(e).

‘‘Letter of
Credit Request’’ has the meaning specified in
Section 2.4(c).

‘‘Letter of
Credit Sub-Limit’’ means
$150,000,000.

‘‘Letter of Credit Undrawn
Amounts’’ means, at any time, the aggregate
undrawn face amount of all Letters of Credit outstanding at such
time.

‘‘Leverage
Ratio’’ means, with respect to any Person as of
any date, the ratio of (a) consolidated Financial Covenant Debt of such
Person and its Subsidiaries outstanding as of such date minus
the aggregate amount of cash and Cash Equivalents held by such Person
and its Subsidiaries to the extent that such cash and Cash Equivalents
are held in a Deposit Account or a Securities Account over which the
Collateral Agent has a perfected Lien for the benefit of the Secured
Parties to (b) EBITDA for such Person for the last four Fiscal Quarter
period ending on or before such date (it being understood that, for the
purposes of this definition, EBITDA of the Frankie Business for (x) the
Fiscal Quarter ended September  30,  2005 is $9,475,000,
(y) the Fiscal Quarter ended December  31,  2005 is
$9,475,000 and (z) the Fiscal Quarter ending March  31,
2006 will be
$9,475,000).

‘‘Lien’’
means any mortgage, deed of trust, pledge, hypothecation, assignment,
charge, deposit arrangement, encumbrance, lien (statutory or other),
security interest or preference, priority or other security agreement
or preferential arrangement of any kind or nature whatsoever intended
to assure payment of any Indebtedness or other obligation, including
any conditional sale or other title retention agreement, the interest
of a lessor under a Capital Lease, any financing lease having
substantially the same economic effect as any of the foregoing, and the
filing of any financing statement that has been authorized by the
applicable debtor under the UCC or comparable law of any jurisdiction
naming the owner of the asset to which such Lien relates as
debtor.

‘‘Loan’’ means
any loan made by any Lender pursuant to this
Agreement.

‘‘Loan
Documents’’ means, collectively, this Agreement,
the Notes (if any), the Fee Letters, the Guaranty, the Intercreditor
Agreement, each Letter of Credit Reimbursement Agreement, the
Collateral Documents and each certificate, agreement or document
executed by a Loan Party and delivered to any Facility Agent or any
Lender in connection with or pursuant to any of the
foregoing.

‘‘Loan
Party’’ means the Borrower, Group, each
Subsidiary Guarantor and each other Subsidiary of Group that executes
and delivers a Loan Document.

‘‘Material
Adverse Change’’ means a material adverse change
in any of (a) the business, condition (financial or otherwise),
operations, performance, properties or prospects of the Loan Parties,
taken as a whole, or Group and its Subsidiaries, taken as a whole, (b)
the ability of the Loan Parties to perform their respective obligations
under the Loan Documents or (c) the ability of the Administrative
Agents, the Collateral Agent or the Lenders to enforce the Loan
Documents.

‘‘Material Adverse
Effect’’ means an effect that results in or
causes, or could reasonably be expected to result in or cause, a
Material Adverse Change.

‘‘Material Leased
Property’’ means all real estate leasehold
properties of any Warnaco Entity other than those (a) with respect to
which the aggregate rental payments under the term of the lease in any
year are less than $2,000,000 or (b) that relate to a site the loss of
which would not otherwise 

21

have a material adverse effect on the
production, distribution or sales of the Warnaco Entities, taken as a
whole, or in any material geographic region where business is conducted
at any time by a Warnaco Entity.

‘‘Material
License’’ means the license agreements relating
to the Calvin Klein trademark with respect to jeans (expiring at the
end of its renewal term on December  31,  2044) and
underwear, and the license agreements relating to the Speedo trademark,
granted to the Warnaco Entities in
perpetuity.

‘‘Material Owned Real
Property’’ means all fee-owned real property of
any Loan Party (a) having a fair market value in excess of $2,000,000
as of the Closing Date, or if later, the date of acquisition thereof or
(b) that the Administrative Agents reasonably determine is material to
the business, condition (financial or otherwise) operations,
performance or properties of the Warnaco Entities, taken as a
whole.

‘‘Maximum
Credit’’ means, at any time, (a) the lesser of
(i) the Revolving Credit Commitments in effect at such time and (ii)
the Borrowing Base (plus the amount of Letter of Credit
Obligations in respect of Collateralized Letters of Credit) at such
time, minus (b) the aggregate amount of any Availability Reserve
in effect at such time.

‘‘Mortgagee’s
Title Insurance Policy’’ has the meaning
specified in the definition of Mortgage Supporting
Documents.

‘‘Mortgage Supporting
Documents’’ means, with respect to a Mortgage for
a parcel of Real Property, each of the
following:

(a) (i) a
mortgagee’s title policy (or policies) or marked-up
unconditional binder (or binders) for such insurance (or other evidence
reasonably acceptable to the Administrative Agents proving ownership
thereof) (‘‘Mortgagee’s Title Insurance
Policy’’), dated a date reasonably satisfactory
to the Administrative Agents, and shall (A) be in an amount not
less than the appraised value (determined by references to the
applicable Appraisals) of such parcel of Real Property, (B) be
issued at ordinary rates, (C) insure that the Lien granted
pursuant to the Mortgage insured thereby creates a valid perfected Lien
on such parcel of Real Property having at least the priorities
described in Section 4.20 of this Agreement and the Collateral
Documents, free and clear of all defects and encumbrances, except for
Customary Permitted Liens and for such defects and encumbrances as may
be approved by the Administrative Agents, (D) name the
Collateral Agent for the benefit of the Secured Parties as the insured
thereunder, (E) be in the form of ALTA Loan Policy − 1992
(or such local equivalent thereof as is reasonably satisfactory to the
Administrative Agents), (F) contain a comprehensive
lender’s endorsement (including, but not limited to, a revolving
credit endorsement and a floating rate endorsement), (G) be
issued by Chicago Title Insurance Company, First American Title
Insurance Company, Lawyers Title Insurance Corporation or any other
title company reasonably satisfactory to the Administrative Agents
(including any such title companies acting as co-insurers or
reinsurers) and (H) be otherwise in form and substance
reasonably satisfactory to the Administrative Agents and (ii) a
copy of all documents referred to, or listed as exceptions to title, in
such title policy (or policies) in each case in form and substance
reasonably satisfactory to the Administrative
Agents;

(b) maps or plats of a current
as-built survey of such parcel of Real Property certified to and
received by (in a manner reasonably satisfactory to each of them) the
Administrative Agents and the title insurance company issuing the
Mortgagee’s Title Insurance Policy for such Mortgage, dated a
date reasonably satisfactory to the Administrative Agents and such
title insurance company, by an independent professional licensed land
surveyor reasonably satisfactory to the Administrative Agents and such
title insurance company, which maps or plats and the surveys on which
they are based shall be made in form and substance reasonably
satisfactory to the Administrative
Agents;

(c) an opinion of counsel in
each state in which any such Mortgage is to be recorded in form and
substance and from counsel reasonably satisfactory to the
Administrative Agents; and

(d) such
other agreements, documents and instruments in form and substance
reasonably satisfactory to the Administrative Agents as the
Administrative Agents deem necessary or 

22

appropriate to create, register or otherwise
perfect, maintain, evidence the existence, substance, form or validity
of, or enforce a valid and enforceable Lien on such parcel of Real
Property in favor of the Collateral Agent for the benefit of the
Secured Parties (or in favor of such other trustee as may be required
or desired under local law) having the priorities described in
Section 4.20 of this Agreement and the Collateral Documents and
subject only to (A) Liens permitted under
Section 8.2 and (B) such other Liens as the
Administrative Agents may reasonably
approve.

‘‘Mortgages’’
means the mortgages, deeds of trust or other real estate security
documents made or required herein to be made by a Loan Party, each in
form and substance reasonably satisfactory to the Administrative
Agents.

‘‘Multiemployer
Plan’’ means a multiemployer plan, as defined in
Section 4001(a)(3) of ERISA, to which Group, any of its Subsidiaries or
any ERISA Affiliate has any obligation or liability, contingent or
otherwise.

‘‘Net Cash
Proceeds’’ means proceeds received by Group or
any of its Subsidiaries after the Closing Date in cash or Cash
Equivalents from any (a) Asset Sale other than an Asset Sale
permitted under clauses (a), (c), (d), (e), (f), (g) and
(h) of Section 8.4, net of (i) the reasonable cash
costs of sale, assignment or other disposition, (ii) taxes paid
or payable as a result thereof and (iii) any amount required to be paid
or prepaid on Indebtedness (other than the Obligations) secured by a
perfected Lien on the assets subject to such Asset Sale; provided,
however, that the evidence of each of (i), (ii) and (iii) are
provided to the Administrative Agents in form and substance
satisfactory to them; (b) Property Loss Event and
(c) Debt Issuance other than a Debt Issuance permitted under
clauses (a) through (n) of
Section 8.1.

‘‘Non-Cash
Interest Expense’’ means, with respect to any
Person for any period, the sum of the following amounts to the extent
included in the definition of Interest Expense: (a) the amount
of debt discount and debt issuance costs amortized, (b) charges
relating to write-ups or write-downs in the book or carrying value of
existing Financial Covenant Debt, (c) interest payable in
evidences of Indebtedness or by addition to the principal of the
related Indebtedness and (d) other non-cash
interest.

‘‘Non-Funding
Lender’’ has the meaning specified in
Section 2.2(d).

‘‘Non-U.S.
Agent’’ means each Agent that is not a United
States person as defined in Section 7701(a)(30) of the
Code.

‘‘Non-U.S.
Lender’’ means each Lender or each Issuer that is
not a United States person as defined in Section 7701(a)(30) of the
Code.

‘‘Note’’ means
any Revolving Credit Note or Term Loan
Note.

‘‘Notice of
Borrowing’’ has the meaning specified in
Section 2.2(a).

‘‘Notice of
Conversion or Continuation’’ has the meaning
specified in
Section 2.11(b).

‘‘NPL’’
means the National Priorities List under
CERCLA.

‘‘Obligations’’
means the Loans, the Letter of Credit Obligations and all other
amounts, obligations, covenants and duties owing by the Borrower to any
Facility Agent, any Lender, any Issuer, an Affiliate of any of them or
any Indemnitee, of every type and description (whether by reason of an
extension of credit, opening or amendment of a letter of credit or
payment of any draft drawn or other payment thereunder, loan, guaranty,
indemnification, foreign exchange or currency swap transaction,
interest rate hedging transaction or otherwise), present or future,
arising under this Agreement, or any other Loan Document, whether
direct or indirect (including those acquired by assignment), absolute
or contingent, due or to become due, now existing or hereafter arising
and however acquired and whether or not evidenced by any note, guaranty
or other instrument or for the payment of money, and includes all
letter of credit, cash management and other fees, interest, charges,
expenses, fees, attorneys’ fees and disbursements and other sums
chargeable to the Borrower under this Agreement, any other Loan
Document, and all obligations of the Borrower to cash collateralize
Letter of Credit Obligations.

23

‘‘Orderly
Liquidation Value Rate’’ means the Dollar
Equivalent of the orderly liquidation value (net of costs and expenses
incurred in connection with liquidation) of Eligible Finished Inventory
and Eligible Other Inventory, divided by the aggregate value of
Eligible Finished Inventory and Eligible Other Inventory in each case,
determined by reference to the most recent Appraisal received by the
Revolving Facility
Agent.

‘‘PBGC’’ means
the Pension Benefit Guaranty Corporation or any successor
thereto.

‘‘Permit’’
means any permit, approval, authorization, license, variance or
permission required from a Governmental Authority under an applicable
Requirement of Law.

‘‘Permitted
Acquisition’’ means any Proposed Acquisition
subject to the satisfaction of each of the following
conditions:

(i) the Administrative
Agents shall receive at least 10 Business Days’ prior written
notice of such Proposed Acquisition, which notice shall include,
without limitation, a reasonably detailed description of such Proposed
Acquisition;

(ii) such Proposed
Acquisition shall have been approved by the applicable board of
directors of the Person constituting or owning the Proposed Acquisition
Target;

(iii) no additional Indebtedness
or other liabilities shall be incurred, assumed or otherwise be
reflected on a consolidated balance sheet of Group and the Proposed
Acquisition Target after giving effect to such Proposed Acquisition,
except (i) Loans made hereunder, (ii) ordinary course
trade payables, contingent obligations and accrued expenses and
(iii) Indebtedness of the Proposed Acquisition Target (or any
such Indebtedness assumed by a Warnaco Entity in connection with such
Proposed Acquisition) permitted under
Section 8.1.

(iv) the Dollar
Equivalent of the aggregate Permitted Acquisition Consideration
(excluding Stock and Stock Equivalents of Group forming part of such
consideration and subtracting any cash and Cash Equivalents which are
being acquired in the Proposed Acquisition) for such Proposed
Acquisition and all other Permitted Acquisitions shall not exceed an
amount equal to $35,000,000 (or, if Available Credit is at least equal
to $50,000,000 after giving effect to such Proposed Acquisition,
$200,000,000); provided, however, if on the date of consummation
of any Proposed Acquisition, no Revolving Loans are outstanding, then
the aggregate Permitted Acquisition Consideration for such Proposed
Acquisition may be increased by an amount equal to the then available
Cash on Hand;

(v) at or prior to the
closing of such Proposed Acquisition, the Warnaco Entity making such
Proposed Acquisition and the Proposed Acquisition Target shall have
executed such documents and taken such actions as may be required under
Section 7.11, Section 7.12 and
Section 7.13;

(vi) the
Borrower shall (i) have delivered to the Administrative Agents, upon
the request of any Administrative Agent, promptly upon its becoming
available, the acquisition agreement (including all schedules), all
financial information, financial analysis, projections and similar
documentation relating to the proposed acquisition, and (ii) use its
reasonable commercial efforts to provide such additional documentation
or other information relating to such Proposed Acquisition that any
Administrative Agent shall reasonably request, including, without
limitation, financial projections on a Pro Forma Basis after giving
effect to the Proposed
Acquisition;

(vii) on or prior to the
date of such Proposed Acquisition, the Administrative Agents shall have
received copies of the acquisition agreement authorizing assignment of
the rights and obligations thereunder of any Warnaco Entity to the
Collateral Agent as security for the Secured Obligations, related
Contractual Obligations and instruments and all opinions, certificates,
lien search results and other documents reasonably requested by any
Administrative Agent; and

(viii) at the
time of such Proposed Acquisition and after giving effect thereto,
(i) no Default or Event of Default shall have occurred and be
continuing, (ii) all representations and warranties contained in
Article IV and in the other Loan Documents shall be true
and correct in all material respects, and (iii) Group shall be
in compliance with all financial covenants contained in
Article V

24

for the most recent four Fiscal Quarter
period for which Financial Statements have been delivered pursuant to
Section 6.1 on a Pro Forma Basis after giving effect to such
Proposed Acquisition.

‘‘Permitted
Acquisition Consideration’’ means, with respect
to any Proposed Acquisition, as at the date of the consummation of such
Proposed Acquisition, all consideration therefor, including, without
duplication, (a) the Stock and Stock Equivalents to be
transferred by any Loan Party or any Subsidiary thereof in connection
therewith, (b) any cash and fair market value of other property
(excluding property described in clause (a) above) given
as consideration therefor (which, in the case of a trademark license,
shall include only any up-front payments not credited towards future
royalties), (c) any Indebtedness incurred, assumed or acquired
by any Loan Party or any Subsidiary thereof in connection with such
Proposed Acquisition, (d) all net additional purchase price
amounts, including in the form of earnouts, Guaranty Obligations and
other contingent obligations, (e) all consideration paid or to
be paid by any Loan Party or any Subsidiary thereof in respect of
covenants not to compete, employment, consulting and similar
agreements, and other affiliated contracts in connection with such
Proposed Acquisition, in each case not in the ordinary course of
business or consistent with the past practice of the Proposed
Acquisition Target, (f) all other consideration given by any
Loan Party or any Subsidiary thereof in connection with such Proposed
Acquisition and (g) out-of-pocket transaction costs for the
services and expenses of attorneys, accountants and other consultants
incurred in effecting such Proposed Acquisition, and other similar
transaction costs so
incurred.

‘‘Person’’
means an individual, partnership, corporation (including a business
trust), joint stock company, estate, trust, limited liability company,
unincorporated association, joint venture or other entity or a
Governmental Authority.

‘‘Plan of
Reorganization’’ has the meaning specified in the
recitals to this Agreement.

‘‘Pledge and
Security Agreement’’ means a pledge and security
agreement, in substantially the form of Exhibit I, executed by
the Borrower and each Guarantor, which pledge and security agreement
amends and restates in its entirety the Existing Pledge and Security
Agreement.

‘‘Pledged Debt
Instruments’’ has the meaning specified in the
Pledge and Security Agreement.

‘‘Pledged
Stock’’ has the meaning specified in the Pledge
and Security Agreement.

‘‘Post Closing
Reorganization’’ means a stock or other transfer
of ownership after the Closing Date of some or all of the Foreign
Subsidiaries set forth on Schedule III hereto to one or more
Warnaco Entities that are Foreign Subsidiaries.

‘‘Pro Forma Basis’’
means, with respect to any determination for any period, that such
determination shall be made giving pro forma effect to each
acquisition consummated during such period, together with all
transactions relating thereto consummated during such period (including
any incurrence, assumption, refinancing or repayment of Indebtedness),
as if such acquisition and related transactions had been consummated on
the first day of such period, in each case based on historical results
accounted for in accordance with GAAP and, to the extent applicable,
reasonable assumptions that are specified in the relevant Compliance
Certificate, Financial Statement or other document provided to the
Administrative Agents or any Lender in connection herewith in
accordance with Regulation S-X of the Securities Act of
1933.

‘‘Projections’’
means those financial projections dated January  13,  2006
covering the fiscal years ending in 2006 through 2009 inclusive, to be
delivered to the Lenders by
Group.

‘‘Property Loss
Event’’ means any loss of or damage to property
of Group or any Subsidiary thereof that results in the receipt by such
Person of proceeds of insurance in excess of $2,000,000 or any taking
of property of Group or any Subsidiary thereof that results in the
receipt by such Person of a compensation payment in respect thereof in
excess of $2,000,000.

‘‘Proposed
Acquisition’’ means the proposed acquisition by
the Borrower or any of its Subsidiaries of all or substantially all of
the assets or Stock of any Proposed Acquisition Target, or the merger
of 

25

any Proposed Acquisition Target with or into
the Borrower or any Subsidiary of the Borrower (and, in the case of a
merger with the Borrower, with the Borrower being the surviving
corporation).

‘‘Proposed Acquisition
Target’’ means any Person, any trademark
(including any trademark license in respect of which the licensee makes
an up-front payment not credited against future royalties), or any
assets constituting a business, division, branch or other unit of
operation of any Person, in each case, subject to a Proposed
Acquisition.

‘‘Protective
Advances’’ means all expenses, disbursements and
advances incurred by the Revolving Facility Agent pursuant to the Loan
Documents after the occurrence and during the continuance of an Event
of Default that the Revolving Facility Agent, in its sole discretion,
exercised reasonably, deems necessary or desirable to preserve or
protect the Collateral or any portion thereof or to enhance the
likelihood, or maximize the amount, of repayment of the
Obligations.

‘‘Ratable
Portion’’ or (other than in the expression
‘‘equally and ratably’’)
’’ratably’’ means, with respect to
any Lender, (a) with respect to the Revolving Credit Facility, the
percentage obtained by dividing (i) the Revolving Credit Commitment of
such Lender by (ii) the aggregate Revolving Credit Commitments of all
Lenders (or, at any time after the Revolving Credit Termination Date,
the percentage obtained by dividing the aggregate outstanding principal
balance of the Revolving Credit Outstandings owing to such Lender by
the aggregate outstanding principal balance of the Revolving Credit
Outstandings owing to all Lenders) and (b) with respect to the Term
Loan Facility, the percentage obtained by dividing the principal amount
of such Lender’s Term Loans by the aggregate Term Loans of all
Lenders.

‘‘Real
Property’’ means all of those plots, pieces or
parcels of land now owned, leased or hereafter acquired or leased by
Group or any of its Subsidiaries (the
‘‘Land’’), together with the right,
title and interest of any Warnaco Entity, if any, in and to the
streets, the land lying in the bed of any streets, roads or avenues,
opened or proposed, in front of, the air space and development rights
pertaining to the Land and the right to use such air space and
development rights, all rights of way, privileges, liberties,
tenements, hereditaments and appurtenances belonging or in any way
appertaining thereto, all fixtures, all easements now or hereafter
benefiting the Land and all royalties and rights appertaining to the
use and enjoyment of the Land, including all alley, vault, drainage,
mineral, water, oil and gas rights, together with all of the buildings
and other improvements now or hereafter erected on the Land, and any
fixtures appurtenant
thereto.

‘‘Receivable’’
means any indebtedness and other obligations owed to any Loan Party as
assignee of any Loan Party, or any right of any Loan Party to payment
from or on behalf of, an Account Debtor), whether constituting an
Account, Chattel Paper, Instrument or General Intangible arising in
connection with the sale of goods or the rendering of services by any
Loan Party or any Subsidiary thereof, and includes the obligation to
pay any finance charges, fees and other charges with respect
thereto.

‘‘Register’’
has the meaning specified in Section
11.2(c)(ii).

‘‘Reimbursement
Obligations’’ means all matured reimbursement or
repayment obligations of the Borrower to any Issuer with respect to
amounts drawn under Letters of
Credit.

‘‘Reinvestment Deferred
Amount’’ means, with respect to any Net Cash
Proceeds of any Reinvestment Event, the portion of such Net Cash
Proceeds subject to a Reinvestment
Notice.

‘‘Reinvestment
Event’’ means any Asset Sale or Property Loss
Event in respect of which the Borrower has delivered a Reinvestment
Notice.

‘‘Reinvestment
Notice’’ means a written notice executed by a
Responsible Officer of Group stating that no Event of Default has
occurred and is continuing and that the Borrower (directly or
indirectly through one of the Warnaco Entities) intends and expects to
use all or a specified portion of the Net Cash Proceeds of an Asset
Sale or Property Loss Event to consummate a Permitted Acquisition (in
the case of an Asset Sale only) or to acquire replacement or fixed
assets useful in its or one of the other Warnaco Entities’
businesses or, in the case of a Property Loss Event, to effect repairs
or replacements.

26

‘‘Reinvestment
Prepayment Amount’’ means, with respect to any
Net Cash Proceeds of any Reinvestment Event, the Reinvestment Deferred
Amount for such Net Cash Proceeds less any amount expended or
required to be expended pursuant to a Contractual Obligation entered
into prior to the relevant Reinvestment Prepayment Date for such Net
Cash Proceeds to consummate, to the extent otherwise permitted
hereunder, a Permitted Acquisition (in the case of an Asset Sale only)
or to acquire, to the extent otherwise permitted hereunder, replacement
or fixed assets useful in the business of the Borrower or any of its
Subsidiaries or, in the case of a Property Loss Event, to effect
repairs or replacements.

‘‘Reinvestment
Prepayment Date’’ means, with respect to any Net
Cash Proceeds of any Reinvestment Event, the earlier of (a) the
date occurring 180 days after such Reinvestment Event and
(b) the date that is five Business Days after the date on which
the Borrower shall have notified the Administrative Agents of the
Borrower’s determination not to consummate a Permitted
Acquisition (in the case of an Asset Sale only) or to acquire
replacement or fixed assets useful in the Borrower’s or a
Subsidiary’s business (or, in the case of a Property Loss Event,
not to effect repairs) with all or any portion of the relevant
Reinvestment Deferred Amount for such Net Cash
Proceeds.

‘‘Related
Security’’ means, with respect to any
Receivable:

(a) all of each Loan
Party’s interest in any goods (including returned goods), and
documentation of title evidencing the shipment or storage of any goods
(including returned goods), relating to any sale giving rise to such
Receivable,

(b) all Instruments and
Chattel Paper that may evidence such
Receivable,

(c) all other Liens and
property subject thereto from time to time purporting to secure payment
of such Receivable, whether pursuant to the Sales Contract related to
such Receivable or otherwise, together with all UCC financing
statements or similar filings relating thereto,
and

(d) all of each Loan Party’s
rights, interests and claims under the Sales Contracts and all
guaranties, indemnities and other agreements (including the related
Sales Contract) or arrangements of whatever character from time to time
supporting or securing payment of such Receivable or otherwise relating
to such Receivable, whether pursuant to the Sales Contract related to
such Receivable or
otherwise.

‘‘Release’’
means, with respect to any Person, any release, spill, emission,
leaking, pumping, injection, deposit, disposal, discharge, dispersal,
leaching or migration, in each case, of any Contaminant into the indoor
or outdoor environment or into or out of any property owned by such
Person, including the movement of Contaminants through or in the air,
soil, surface water, ground water or
property.

‘‘Remedial
Action’’ means all actions required to (a) clean
up, remove, treat or in any other way address any Contaminant in the
indoor or outdoor environment, (b) prevent the Release or threat of
Release or minimize the further Release so that a Contaminant does not
migrate or endanger or threaten to endanger public health or welfare or
the indoor or outdoor environment or (c) perform pre-remedial studies
and investigations and post-remedial monitoring and
care.

‘‘Requirement of
Law’’ means, with respect to any Person, the
common law and all federal, state, local and foreign laws, rules and
regulations, orders, judgments, decrees and other legal requirements or
determinations of any Governmental Authority or arbitrator, applicable
to or binding upon such Person or any of its property or to which such
Person or any of its property is
subject.

‘‘Requisite
Lenders’’ means, collectively, (a) on and prior
to the Closing Date, Lenders having more than fifty percent
(50%) of the aggregate outstanding amount of the Commitments,
(b) after the Closing Date and on and prior to the Revolving Credit
Termination Date, more than fifty percent (50%) of the sum of
the aggregate outstanding amount of the Revolving Credit Commitments
and the principal amount of all Term Loans then outstanding and (c)
after the Revolving Credit Termination Date, more than fifty percent
(50%) of the sum of the aggregate Revolving Credit Outstandings
and the principal amount of all Term Loans then outstanding. A
Non-Funding Lender shall not be included in the calculation of
‘‘Requisite
Lenders.’’

27

‘‘Requisite
Revolving Credit Lenders’’ means, collectively,
Revolving Credit Lenders having more than fifty percent (50%) of
the aggregate outstanding amount of the Revolving Credit Commitments
or, after the Revolving Credit Termination Date, more than fifty
percent (50%) of the aggregate Revolving Credit Outstandings. A
Non-Funding Lender shall not be included in the calculation of
‘‘Requisite Revolving Credit
Lenders.’’

‘‘Requisite
Term Loan Lenders’’ means, collectively, Term
Loan Lenders having more than 50% of the aggregate outstanding
amount of the Term Loan Commitments or, after the Closing Date, more
than fifty percent (50%) of the principal amount of all Term
Loans then outstanding.

‘‘Responsible
Officer’’ means, with respect to any Person, any
of the principal executive officers, managing members or general
partners of such Person, but in any event, with respect to financial
matters, the chief financial officer, treasurer or controller of such
Person.

‘‘Restricted
Account’’ has the meaning specified in the Pledge
and Security Agreement.

‘‘Restricted Account
Letter’’ has the meaning specified in the Pledge
and Security Agreement.

‘‘Restricted
Payment’’ means (a) any dividend,
distribution or any other payment whether direct or indirect, on
account of any Stock or Stock Equivalent of Group or any of its
Subsidiaries now or hereafter outstanding and (b) any
redemption, retirement, sinking fund or similar payment, purchase or
other acquisition for value, direct or indirect, of any Stock or Stock
Equivalent of Group or any of its Subsidiaries now or hereafter
outstanding.

‘‘Revolving Credit
Borrowing’’ means a borrowing consisting of
Revolving Loans made on the same day by the Revolving Credit Lenders
ratably according to their respective Revolving Credit
Commitments.

‘‘Revolving Credit
Commitment’’ means, with respect to each
Revolving Credit Lender, the commitment of such Revolving Credit Lender
to make Revolving Loans and to acquire interests in other Revolving
Credit Outstandings in the aggregate principal amount outstanding not
to exceed the amount set forth opposite such Revolving Credit
Lender’s name on Schedule I (Commitments) under the
caption ‘‘Revolving Credit
Commitment,’’ as amended to reflect each Assignment
and Acceptance executed by such Revolving Credit Lender and as such
amount may be adjusted pursuant to this
Agreement.

‘‘Revolving Credit
Facility’’ means the Revolving Credit Commitments
and the provisions herein related to the Revolving Loans, Swing Loans
and Letters of Credit.

‘‘Revolving Credit
Facility Register’’ has the meaning specified in
Section 11.2(c)(i).

‘‘Revolving
Credit Lender’’ means each Lender that (a) has a
Revolving Credit Commitment, (b) holds a Revolving Loan or (c)
participates in any Letter of
Credit.

‘‘Revolving Credit
Note’’ means a promissory note of the Borrower
payable to the order of any Revolving Credit Lender in a principal
amount equal to the amount of such Revolving Credit Lender’s
Revolving Credit Commitment evidencing the aggregate Indebtedness of
the Borrower to such Revolving Credit Lender resulting from the
Revolving Loans owing to such Revolving Credit
Lender.

‘‘Revolving Credit
Outstandings’’ means, at any particular time, the
sum of (a) the principal amount of the Revolving Loans outstanding at
such time, (b) the Letter of Credit Obligations outstanding at such
time and (c) the principal amount of the Swing Loans outstanding at
such time.

‘‘Revolving Credit Termination
Date’’ shall mean the earliest of (a) the
Revolving Loan Maturity Date, (b) the date of termination of the
Commitments pursuant to Section 2.5 and (c) the date on
which the Obligations become due and payable pursuant to
Section 9.2.

‘‘Revolving
Loan’’ has the meaning specified in Section
2.1(a).

‘‘Revolving Loan Maturity
Date’’ means February  3,
2009.

‘‘Revolving Priority
Collateral’’ means all of the Collateral, other
than the Specified IP Collateral.

28

‘‘Sale and Leaseback
Transaction’’ means, with respect to any Person,
any direct or indirect arrangement pursuant to which assets of such
Person are sold or transferred by such Person or a Subsidiary of such
Person and are thereafter leased back from the purchaser thereof by
such Person or one of its Subsidiaries; provided,
however, any sale and leaseback of assets that were purchased in
connection with a proposed lease financing transaction by such Person
within 45 days of such sale and leaseback transaction shall not
constitute a ‘‘Sale and Leaseback
Transaction’’.

‘‘Sales
Contract’’ means, with respect to any Receivable,
any and all sales contracts, purchase orders, instruments, agreements,
leases, invoices, notes or other writings pursuant to which such
Receivable arises or that evidence such Receivable or under which an
Account Debtor becomes or is obligated to make payment in respect of
such Receivable.

‘‘Secured
Obligations’’ means, (a) in the case of the
Borrower, the Obligations, (b) in the case of each Guarantor, the
obligations of such Loan Party under the Guaranty and the other Loan
Documents to which it is a party, and (c) in the case of each Loan
Party, (i) the obligations of such Loan Party under any Hedging
Contract entered into with any Agent, Lender or any Affiliate of any
thereof after the date hereof, and (ii) any Cash Management Obligations
owing by such Loan Party to any Agent, Lender or any Affiliate of any
thereof; provided, that in the case of clauses (i) and
(ii) above, the aggregate amount of all such Agents',
Lenders' and Affiliates'
‘‘market’’ and
‘‘credit’’ risk shall not exceed
$25,000,000 at any time.

‘‘Secured
Parties’’ means the Lenders (including the Swing
Loan Lender), the Issuers, each Administrative Agent, the Collateral
Agent, each of their respective successors and assigns, and any other
holder of any of a Secured Obligation or of any other obligations under
the Loan Documents, including the beneficiaries of each indemnification
obligation undertaken by the Loan Parties and the Facility
Agents.

‘‘Securities
Account’’ has the meaning given to such term in
the UCC.

‘‘Security’’
means any Stock, Stock Equivalent, voting trust certificate, bond,
debenture, note or other evidence of Indebtedness, whether secured,
unsecured, convertible or subordinated, or any certificate of interest,
share or participation in, or any temporary or interim certificate for
the purchase or acquisition of, or any right to subscribe to, purchase
or acquire, any of the foregoing, but shall not include any evidence of
the Obligations.

‘‘Senior Note
Documents’’ means, collectively, the Senior Note
Indenture, the Senior Notes and each certificate, agreement or document
executed by a Warnaco Entity and delivered to the Senior Note Indenture
Trustee or any Senior Noteholder in connection with or pursuant to any
of the foregoing.

‘‘Senior Note
Indenture’’ means the indenture, dated as of
June  12,  2003, among the Borrower, as issuer, Group and
each Domestic Subsidiary thereof (other than the Borrower), as
guarantors, and the Senior Note Indenture Trustee.

‘‘Senior Note Indenture
Trustee’’ means Wells Fargo Bank Minnesota,
National Association, in its capacity as indenture trustee for the
Senior Noteholders and each successor
thereto.

‘‘Senior
Noteholders’’ means each holder of a Senior
Note.

‘‘Senior Notes’’
means the 8-7/8% senior notes due 2013 issued by the Borrower
pursuant to the Senior Note
Indenture.

‘‘Solvent’’
means, with respect to any Person as of any date of determination,
that, as of such date, (a) the value of the assets of such
Person (both at fair value and present fair saleable value) is greater
than the total amount of liabilities (including contingent and
unliquidated liabilities) of such Person, (b) such Person is
able to pay all liabilities of such Person as such liabilities mature
and (c) such Person does not have unreasonably small capital. In
computing the amount of contingent or unliquidated liabilities at any
time, such liabilities shall be computed at the amount that, in light
of all the facts and circumstances existing at such time, represents
the amount that can reasonably be expected to become an actual or
matured liability.

29

‘‘Special Cash
Collateral Account’’ means that certain account
number 3060-4171 maintained with Citibank, N.A. (or such other account
maintained with the Revolving Facility Agent or an affiliate thereof
and/or under the control of the Revolving Facility Agent) for the
purpose of cash collateralizing the Collateralized Letters of
Credit.

‘‘Special Purpose
Vehicle’’ means any special purpose funding
vehicle identified in writing as such by any Lender to the applicable
Administrative Agent.

‘‘Specified IP
Collateral’’ means that portion of the Collateral
consisting of Intellectual Property.

‘‘Standby Letter of Credit’’
means any letter of credit Issued pursuant to Section 2.4
which is not a Documentary Letter of
Credit.

‘‘Stock’’
means shares of capital stock (whether denominated as common stock or
preferred stock), beneficial, partnership or membership interests,
participations or other equivalents (regardless of how designated) of
or in a corporation, partnership, limited liability company or
equivalent entity, whether voting or
non-voting.

‘‘Stock
Equivalents’’ means all securities convertible
into or exchangeable for Stock and all warrants, options or other
rights to purchase or subscribe for any Stock, whether or not presently
convertible, exchangeable or
exercisable.

‘‘Subsidiary’’
means, with respect to any Person, any corporation, partnership,
limited liability company, trust or estate or other business entity of
which an aggregate of more than 50% of (a) the outstanding
Voting Stock, (b) the interest in the capital or profits of such
partnership, joint venture or limited liability company or (c) the
beneficial interest in such trust or estate, is in any case, at the
time directly or indirectly owned or controlled by such Person, by such
Person and one or more of its other Subsidiaries or by one or more of
such Person’s other
Subsidiaries.

‘‘Subsidiary
Guarantor’’ means each Subsidiary of Group party
to or that becomes party to the
Guaranty.

‘‘Super-Majority
Lenders’’ means, collectively, the Lenders having
more than sixty-six and two-thirds percent (66 2/3%) of the
aggregate outstanding amount of the Revolving Credit Commitments. A
Non-Funding Lender that is a Lender shall not be included in the
calculation of ‘‘Super-Majority
Lenders.’’

‘‘Swing
Loan’’ has the meaning specified in
Section 2.3.

‘‘Swing Loan
Availability’’ means an aggregate principal
amount at any time outstanding of Swing Loans not to exceed the lesser
of (i) $20,000,000 and (ii) the Swing Loan Lender’s Ratable
Portion of the Available Credit plus
$10,000,000.

‘‘Swing Loan
Lender’’ means CNAI or any other Person who
becomes the Revolving Facility Agent or who agrees with the approval of
the Revolving Facility Agent and the Borrower to act as the Swing Loan
Lender hereunder.

‘‘Swing Loan
Request’’ has the meaning specified in
Section 2.3(b).

‘‘Syndication
Agent’’ has the meaning specified in the preamble
to this Agreement.

‘‘Syndication Completion
Date’’ means the earlier to occur of (a) the
90th day following the Closing Date and (b) the date upon
which the Arrangers determine in their reasonable discretion that the
primary syndication of the Term Loans has been
completed.

‘‘Tax
Affiliate’’ means, with respect to any Person,
(a) any Subsidiary of such Person, and (b) any Affiliate
of such Person with which such Person files or is eligible to file
consolidated, combined or unitary United States tax
returns.

‘‘Tax
Return’’ has the meaning specified in
Section 4.8(a).

‘‘Taxes’’
has the meaning specified in
Section 2.16(a).

‘‘Term
Loan’’ has the meaning specified in Section
2.1(b).

30

‘‘Term Loan
Borrowing’’ means a borrowing consisting of Term
Loans made on the same day by the Term Loan Lenders ratably according
to their respective Term Loan
Commitments.

‘‘Term Loan
Commitment’’ means, with respect to each Term
Loan Lender, the commitment of such Lender to make Term Loans to the
Borrower in the aggregate principal amount outstanding not to exceed
the amount set forth opposite such Lender’s name on Schedule
I (Commitments) under the caption ‘‘Term Loan
Commitment’’ as amended to reflect each Assignment
and Acceptance executed by such Lender and as such amount may be
reduced pursuant to this Agreement.

‘‘Term
Loan Facility’’ means the Term Loan Commitments
and the provisions herein related to the Term
Loans.

‘‘Term Loan Facility
Register’’ has the meaning specified in
Section 11.2(c)(ii).

‘‘Term Loan
Lender’’ means each Lender that has a Term Loan
Commitment or that holds a Term Loan.

‘‘Term
Loan Maturity Date’’ means the seventh
anniversary of the Closing Date.

‘‘Term Loan
Note’’ means a promissory note of the Borrower
payable to the order of any Term Loan Lender in a principal amount
equal to the amount of the Term Loan owing to such
Lender.

‘‘Title IV
Plan’’ means a pension plan, other than a
Multiemployer Plan, which is covered by Title IV of ERISA to which
Group, any of its Subsidiaries or any ERISA Affiliate has any
obligation or liability (contingent or
otherwise).

‘‘UCC’’
has the meaning specified in the Pledge and Security
Agreement.

‘‘Unfunded Pension
Liability’’ means, with respect to Group at any
time, the sum of (a) the amount, if any, by which the present
value of all accrued benefits under each Title IV Plan (other than any
Title IV Plan subject to Section 4063 of ERISA) exceeds the fair market
value of all assets of such Title IV Plan allocable to such benefits in
accordance with Title IV of ERISA, as determined as of the most recent
valuation date for such Title IV Plan using the actuarial assumptions
in effect under such Title IV Plan, and (b) the aggregate amount
of withdrawal liability that could be assessed under Section 4063 with
respect to each Title IV Plan subject to such Section, separately
calculated for each such Title IV Plan as of its most recent valuation
date, (c) for a period of five years following a transaction reasonably
likely to be covered by Section 4069 of ERISA, the liabilities (whether
or not accrued) that could be avoided by Group, any of its Subsidiaries
or any ERISA Affiliate as a result of such transaction and (d) with
respect to each Foreign Plan, the amount, if any, by which the present
value of all benefit obligations under such plan exceed the fair market
value of assets attributable to such plan (determined for the most
recent valuation date for such plan using the actuarial assumptions in
effect for such plan set forth in the actuarial valuation
report).

‘‘Unused Commitment
Fee’’ has the meaning specified in
Section 2.12(a).

‘‘U.S.
Lender’’ means each Lender, each Issuer and each
Agent that is a United States person as defined in Section 7701(a)(30)
of the Code.

‘‘Voting
Stock’’ means Stock of any Person having ordinary
power to vote in the election of members of the board of directors,
managers, trustees or other controlling Persons, of such Person
(irrespective of whether, at the time, Stock of any other class or
classes of such entity shall have or might have voting power by reason
of the happening of any
contingency).

‘‘Warnaco
Entity’’ means Group or any Subsidiary
thereof.

‘‘Wholly Owned
Subsidiary’’ means any Subsidiary of Group, all
of the Stock of which (other than director’s qualifying shares
or such other de minimus portion thereof to the extent required
by law) is owned by Group, either directly or indirectly through one or
more Wholly Owned Subsidiaries.

‘‘Withdrawal
Liability’’ means, with respect to the Borrower
at any time, the aggregate liability incurred (whether or not assessed)
with respect to all Multiemployer Plans pursuant to Section 4201 of
ERISA or for increases in contributions required to be made pursuant to
Section 4243 of ERISA.

31

‘‘Working
Capital’’ means, for any Person at any date, the
amount, if any, by which the Consolidated Current Assets of such Person
at such date exceeds the Consolidated Current Liabilities of such
Person at such date.

Section 1.2 Computation of
Time Periods.    In this Agreement, in the computation of
periods of time from a specified date to a later specified date, the
word ‘‘from’’ means ‘‘from
and including’’ and the words
‘‘to’’ and
‘‘until’’ each mean
‘‘to but excluding’’ and the word
‘‘through’’ means
‘‘to and
including.’’

Section
1.3 Accounting Terms and Principles.

(a) Except as
set forth below, all accounting terms not specifically defined herein
shall be construed in conformity with GAAP and all accounting
determinations required to be made pursuant hereto shall, unless
expressly otherwise provided herein, be made in conformity with
GAAP.

(b) If any change in the accounting principles used
in the preparation of the most recent Financial Statements referred to
in Section 6.1 is hereafter required or permitted by the
rules, regulations, pronouncements and opinions of the Financial
Accounting Standards Board or the American Institute of Certified
Public Accountants (or any successors thereto) and such change is
adopted by the Borrower with the agreement of its independent public
accountants and results in a change in any of the calculations required
by Article V or Article VI or in the
definitions of ‘‘Applicable Margin’’
had such accounting change not occurred, the parties hereto agree to
enter into negotiations in order to amend such provisions so as to
equitably reflect such change with the desired result that the criteria
for evaluating compliance with such covenants by the Borrower or the
determination of the ‘‘Applicable
Margin’’ shall be the same after such change as if
such change had not been made; provided, however, that no change
in GAAP that would affect a calculation that measures compliance with
any covenant contained in Article V or
Article VI or in the definitions of
‘‘Applicable Margin’’ shall be given
effect until such provisions are amended to reflect such changes in
GAAP.

(c) For purposes of making all financial
calculations to determine compliance with Article V all
components of such calculations shall be adjusted to include or
exclude, as the case may be, without duplication, such components of
such calculations attributable to any business or assets that have been
acquired or disposed of by any Warnaco Entity after the first day of
the applicable period of determination and prior to the end of such
period, as determined in good faith by Group on a Pro Forma
Basis.

Section 1.4 Conversion of Foreign
Currencies.

(a) Financial Covenant
Debt.    Financial Covenant Debt denominated in any currency
other than Dollars shall be calculated using the Dollar Equivalent
thereof as of the date of the Financial Statements on which such
Financial Covenant Debt is reflected.

(b) Dollar
Equivalents.    The Administrative Agents shall determine the
Dollar Equivalent of any amount as required hereby, and a determination
thereof by such Administrative Agent shall be conclusive absent
manifest error. Each Administrative Agent may, but shall not be
obligated to, rely on any determination made by any Loan Party in any
document delivered to such Administrative Agent. Each Administrative
Agent may determine or redetermine the Dollar Equivalent of any amount
on any date either in its own discretion or upon the request of any
applicable Lender or Issuer.

(c) Rounding-Off.    The Administrative Agents may
set up appropriate rounding off mechanisms or otherwise round-off
amounts hereunder to the nearest higher or lower amount in whole Dollar
or cent to ensure amounts owing by any party hereunder or that
otherwise need to be calculated or converted hereunder are expressed in
whole Dollars or in whole cents, as may be necessary or
appropriate.

Section 1.5 Certain
Terms.

(a) The words
‘‘herein,’’
‘‘hereof’’ and
‘‘hereunder’’ and similar
words refer to this Agreement as a whole, and not to any particular
Article, Section, subsection or clause in this
Agreement.

32

(b) References in this Agreement
to an Exhibit, Schedule, Article, Section, subsection or clause refer
to the appropriate Exhibit or Schedule to, or Article, Section,
subsection or clause in this Agreement.

(c) Each agreement
defined in this Article I shall include all appendices, exhibits
and schedules thereto. If the prior written consent of the Requisite
Lenders is required hereunder for an amendment, restatement, supplement
or other modification to any such agreement and such consent is
obtained, references in this Agreement to such agreement shall be to
such agreement as so amended, restated, supplemented or
modified.

(d) References in this Agreement to any statute
shall be to such statute as amended or modified and in effect at the
time any such reference is operative.

(e) The term
‘‘including’’ when used in any Loan
Document means ‘‘including without
limitation’’, except when used in the computation of
time periods.

(f) The terms
‘‘Lender,’’
‘‘Issuer’’ and
‘‘Agent’’ include their respective
successors.

(g) Upon the appointment of any successor
Facility Agent pursuant to Section 10.6, references to
CNAI in Section 10.3 to the extent applicable to such
Facility Agent and to Citibank in the definitions of Base Rate,
Eurodollar Rate, Dollar Equivalent to the extent applicable to such
Agent shall be deemed to refer to the financial institution then acting
as such Facility Agent or one of its Affiliates if it so
designates.

(h) Terms not otherwise defined herein and
defined in the UCC are used herein with the meanings specified in the
UCC.

ARTICLE II

 THE
FACILITIES 

Section 2.1 The
Commitments.    (a) Revolving Credit Commitments. On the
terms and subject to the conditions contained in this Agreement, each
Revolving Credit Lender severally agrees to make loans in Dollars (each
a ‘‘Revolving Loan’’) to the
Borrower from time to time on any Business Day during the period from
the Existing Closing Date until the Revolving Credit Termination Date
in an aggregate principal amount not to exceed at any time outstanding
for all such loans by such Revolving Credit Lender such Revolving
Credit Lender’s Commitment; provided, however, that at no
time shall any Revolving Credit Lender be obligated to make a Revolving
Loan (i) in excess of such Revolving Credit Lender’s Ratable
Portion of the Available Credit and (ii) to the extent that the
aggregate Revolving Credit Outstandings, after giving effect to such
Revolving Loan, would exceed the Maximum Credit in effect at such time.
Within the limits of the Revolving Credit Commitment of each Revolving
Credit Lender, amounts of Revolving Loans repaid may be reborrowed
under this Section 2.1. From and including the Closing
Date, (i) the ‘‘Commitments’’ (under
and as defined in the Existing Credit Agreement) of each Revolving
Credit Lender pursuant to the Existing Credit Agreement shall be deemed
Revolving Credit Commitments under this Agreement in the respective
amounts provided herein and (ii) all ‘‘Revolving
Loans’’ (under and as defined in the Existing Credit
Agreement) shall be deemed Revolving Loans under this Agreement.

(b) Term Loan Commitments.    On the terms and
subject to the conditions contained in this Agreement, each Term Loan
Lender severally agrees to make a loan (each a ‘‘Term
Loan’’) in Dollars to the Borrower on the Closing
Date, in an amount not to exceed such Lender’s Term Loan
Commitment. Amounts of Term Loans repaid or prepaid may not be
reborrowed.

Section 2.2 Borrowing
Procedures.

(a) Each Borrowing shall be made on notice
given by the Borrower to the applicable Administrative Agent not later
than 11:00 a.m. (New York City time) (i) one Business Day, in the case
of a Borrowing of Base Rate Loans and (ii) three (3) Business Days, in
the case of a Borrowing of Eurodollar Rate Loans, prior to the date of
the proposed Borrowing. Each such notice shall be in 

33

writing in substantially the form of
Exhibit C (a ‘‘Notice of
Borrowing’’), specifying (A) the date of
such proposed Borrowing (which, in the case of the Term Loan Borrowing,
shall be the Closing Date), (B) the aggregate amount of such
proposed Borrowing, (C) whether any portion of such Borrowing
will be of Base Rate Loans or Eurodollar Rate Loans, (D) the
initial Interest Period or Periods for any such Eurodollar Rate Loans,
and (E) in the case of a proposed Borrowing of Revolving Loans, the
Available Credit (after giving effect to the proposed Borrowing).
Revolving Loans shall be made as Base Rate Loans unless (subject to
Section 2.14) the Notice of Borrowing specifies that all
or a portion thereof shall be Eurodollar Rate Loans. Each Revolving
Credit Borrowing shall be in an aggregate amount of not less than
$1,000,000 or an integral multiple of $250,000 in excess
thereof.

(b) (i) In the case of any Revolving
Credit Borrowings, the Revolving Facility Agent shall give to each
Revolving Credit Lender prompt notice of the Revolving Facility
Agent’s receipt of a Notice of Borrowing and, if Eurodollar Rate
Loans are properly requested in such Notice of Borrowing, the
applicable interest rate determined pursuant to
Section 2.14(a). Each Revolving Credit Lender shall,
before 11:00 a.m. (New York City time) on the date of the proposed
Borrowing, make available to the Revolving Facility Agent at its
address referred to in Section 11.8 in immediately
available funds, such Revolving Credit Lender’s Ratable Portion
of such proposed Borrowing. After the Revolving Facility Agent’s
receipt of such funds and (i) on the Closing Date, upon fulfillment of
the applicable conditions set forth in Section 3.1 and
(ii) at any time (including the Closing Date), upon fulfillment of the
applicable conditions set forth Section 3.2, the
Administrative Agent will make such funds available to the
Borrower.

(ii) In the case of the Term
Loan Borrowing, the Term Facility Agent shall give to each Term Loan
Lender prompt notice of the Term Facility Agent’s receipt of a
Notice of Borrowing and, if Eurodollar Rate Loans are properly
requested in such Notice of Borrowing, the applicable interest rate
determined pursuant to Section 2.14(a); provided,
however, that notwithstanding anything herein to the contrary,
no Term Loan that is a Eurodollar Rate Loan shall be permitted to have
an Interest Period that is longer than one week at any time prior to
the Syndication Completion Date. Each Person that is a Term Loan Lender
on the Closing Date shall, before 11:00 a.m. (New York City time) on
the Closing Date, make available to the Term Facility Agent at its
address referred to in Section 11.8 in immediately
available funds, such Lender’s Ratable Portion of such proposed
Borrowing. After the Term Facility Agent’s receipt of such funds
and upon fulfillment of the applicable conditions set forth in
Section 3.1 and Section 3.2, the Term
Facility Agent will make such funds available to the
Borrower.

(c) Unless the applicable Administrative Agent
shall have received notice from any applicable Lender prior to the date
of any proposed Borrowing that such Lender will not make available to
such Administrative Agent such Lender’s Ratable Portion of such
Borrowing, such Administrative Agent may assume that such Lender has
made such Ratable Portion available to such Administrative Agent on the
date of such Borrowing in accordance with this
Section 2.2 and such Administrative Agent may, in
reliance upon such assumption, make available to the Borrower on such
date a corresponding amount. If and to the extent that such Lender
shall not have so made such Ratable Portion available to the applicable
Administrative Agent, such Lender and the Borrower severally agree to
repay to the applicable Administrative Agent forthwith on demand such
corresponding amount together with interest thereon, for each day from
the date such amount is made available to the Borrower until the date
such amount is repaid to the applicable Administrative Agent, at
(i) in the case of the Borrower, the interest rate applicable at
the time to the Loans comprising such Borrowing and (ii) in the
case of such Lender, the Federal Funds Rate for the first Business Day
and thereafter at the interest rate applicable at the time to the Loans
comprising such Borrowing. If such Lender shall repay to the applicable
Administrative Agent such corresponding amount, such corresponding
amount so repaid shall constitute such Lender’s Loan as part of
such Borrowing for purposes of this Agreement. If the Borrower shall
repay to the applicable Administrative Agent such corresponding amount,
such payment shall not relieve such Lender of any obligation it may
have hereunder to the Borrower.

(d) The failure of any
Lender to make the Loans or any payment required by it on the date
specified (a ‘‘Non-Funding
Lender’’), including any payment in respect of
its participation in Swing Loans and Letter of Credit Obligations,
shall not relieve any other Lender of its obligations to make

34

such Loan or payment on such date but no
such other Lender shall be responsible for the failure of any
Non-Funding Lender to make a Loan or payment required under this
Agreement.

Section 2.3    Swing
Loans.

(a) On the terms and subject to the conditions
contained in this Agreement, the Swing Loan Lender may in its sole
discretion make loans in Dollars (each a ‘‘Swing
Loan’’) otherwise available to the Borrower under
the Revolving Credit Facility from time to time on any Business Day
during the period from the Existing Closing Date until the Revolving
Credit Termination Date in an aggregate amount at any time outstanding
at any time not to exceed the Swing Loan Availability; provided,
however, that the Swing Loan Lender shall not make any Swing Loan
to the extent that, after giving effect to such Swing Loan, the
aggregate Revolving Credit Outstandings would exceed the Maximum
Credit. The Swing Loan Lender shall be entitled to rely on the most
recent Borrowing Base Certificate delivered to the Revolving Facility
Agent. Each Swing Loan shall be a Base Rate Loan and must be repaid in
full within one Business Day of any demand by the Swing Loan Lender
therefor and shall in any event mature and become due and payable on
the Revolving Credit Termination Date. Within the limits set forth in
the first sentence of this Section 2.3(a), amounts of
Swing Loans prepaid or repaid may be reborrowed under this
Section 2.3(a).

(b) In order to request a
Swing Loan, the Borrower shall telecopy (or forward by electronic mail
or similar means) to the Revolving Facility Agent a duly completed
request, in substantially the form of Exhibit C, setting
forth the date, the requested amount and date of the Swing Loan (a
‘‘Swing Loan Request’’), to
be received by the Revolving Facility Agent not later than 1:00 p.m.
(New York City time) on the day of the proposed borrowing. The
Revolving Facility Agent shall promptly notify the Swing Loan Lender of
the details of the requested Swing Loan. Subject to the terms of this
Agreement, the Swing Loan Lender shall make a Swing Loan available to
the Revolving Facility Agent which will make such amounts available to
the Borrower on the date of the relevant Swing Loan Request. The Swing
Loan Lender shall not make any Swing Loan in the period commencing on
the first Business Day after it receives written notice from the
Revolving Facility Agent or any Revolving Credit Lender that one or
more of the conditions precedent contained in Section 3.2
shall not on such date be satisfied, and ending when such conditions
are satisfied. The Swing Loan Lender shall not otherwise be required to
determine that, or take notice whether, the conditions precedent set
forth in Section 3.2 hereof have been satisfied in
connection with the making of any Swing Loan.

(c) The
Swing Loan Lender shall notify the Revolving Facility Agent in writing
(which may be by telecopy or electronic mail) weekly, by no later than
10:00 a.m. (New York City time) on the first Business Day of each week,
of the aggregate principal amount of its Swing Loans then
outstanding.

(d) The Swing Loan Lender may demand at any
time that each Revolving Credit Lender pay to the Revolving Facility
Agent, for the account of the Swing Loan Lender, in the manner provided
in clause (e) below, such Revolving Credit Lender’s
Ratable Portion of all or a portion of the outstanding Swing Loans,
which demand shall be made through the Administrative Agent, shall be
in writing and shall specify the outstanding principal amount of Swing
Loans demanded to be paid.

(e) The Revolving Facility
Agent shall forward each notice referred to in clause (c) above
and each demand referred to in clause (d) above to each
Revolving Credit Lender on the day such notice or such demand is
received by the Revolving Facility Agent (except that any such notice
or demand received by the Revolving Facility Agent after 2:00 p.m. (New
York City time) on any Business Day or any such demand received on a
day that is not a Business Day shall not be required to be forwarded to
the Revolving Credit Lenders by the Revolving Facility Agent until the
next succeeding Business Day), together with a statement prepared by
the Revolving Facility Agent specifying the amount of each Revolving
Credit Lender’s Ratable Portion of the aggregate principal
amount of the Swing Loans stated to be outstanding in such notice or
demanded to be paid pursuant to such demand, and, notwithstanding
whether or not the conditions precedent set forth in
Section 3.2 shall have been satisfied (which conditions
precedent the Revolving Credit Lenders hereby irrevocably waive), each
Revolving Credit Lender shall, before 11:00 a.m. (New York City time)
on the Business Day next succeeding the date of such Revolving Credit
Lender’s receipt of such written statement, make available to
the Revolving Facility Agent, in immediately available funds, for the
account of the 

35

Swing Loan Lender, the amount specified in
such statement. Upon such payment by a Revolving Credit Lender, such
Revolving Credit Lender shall, except as provided in clause (g)
below, be deemed to have made a Revolving Loan to the Borrower. The
Revolving Facility Agent shall use such funds to repay the Swing Loans
to the Swing Loan Lender. To the extent that any Revolving Credit
Lender fails to make such payment available to the Revolving Facility
Agent for the account of the Swing Loan Lender, the Borrower shall
repay such Swing Loan on demand.

(f) Upon the occurrence
of a Default under Section 9.1(e), each Revolving Credit
Lender shall acquire, without recourse or warranty, an undivided
participation in each Swing Loan otherwise required to be repaid by
such Revolving Credit Lender pursuant to clause (e) above, which
participation shall be in a principal amount equal to such Revolving
Credit Lender’s Ratable Portion of such Swing Loan, by paying to
the Swing Loan Lender on the date on which such Revolving Credit Lender
would otherwise have been required to make a payment in respect of such
Swing Loan pursuant to clause (e) above, in immediately
available funds, an amount equal to such Revolving Credit
Lender’s Ratable Portion of such Swing Loan. If all or part of
such amount is not in fact made available by such Revolving Credit
Lender to the Swing Loan Lender on such date, the Swing Loan Lender
shall be entitled to recover any such unpaid amount on demand from such
Revolving Credit Lender together with interest accrued from such date
at the Federal Funds Rate for the first Business Day after such payment
was due and thereafter at the rate of interest then applicable to Base
Rate Loans.

(g) From and after the date on which any
Revolving Credit Lender (i) is deemed to have made a Revolving
Loan pursuant to clause (e) above with respect to any Swing Loan
or (ii) purchases an undivided participation interest in a Swing
Loan pursuant to clause (f) above, the Swing Loan
Lender shall promptly distribute to such Revolving Credit Lender such
Revolving Credit Lender’s Ratable Portion of all payments of
principal of and interest received by the Swing Loan Lender on account
of such Swing Loan other than those received from a Revolving Credit
Lender pursuant to clause (e) or (f)
above.

Section 2.4 Letters of
Credit.

(a) On the terms and subject to the conditions
contained in this Agreement, each Issuer agrees to Issue one or more
Letters of Credit at the request of the Borrower for the account of the
Borrower from time to time during the period commencing on the Existing
Closing Date and ending on the earlier of the Revolving Credit
Termination Date and 30 days prior to the Revolving Loan Maturity Date;
provided, however, that no Issuer shall be under any obligation
to Issue any Letter of Credit
if:

(i) any order, judgment or decree of
any Governmental Authority or arbitrator shall purport by its terms to
enjoin or restrain such Issuer from issuing such Letter of Credit or
any Requirement of Law applicable to such Issuer or any request or
directive (whether or not having the force of law) from any
Governmental Authority with jurisdiction over such Issuer shall
prohibit, or request that such Issuer refrain from, the issuance of
letters of credit generally or such Letter of Credit in particular or
shall impose upon such Issuer with respect to such Letter of Credit any
restriction or reserve or capital requirement (for which such Issuer is
not otherwise compensated) not in effect on the date of this Agreement
or result in any unreimbursed loss, cost or expense which was not
applicable, in effect or known to such Issuer as of the date of this
Agreement and which such Issuer in good faith deems material to
it;

(ii) such Issuer shall have received
written notice from the Revolving Facility Agent, any Revolving Credit
Lender or the Borrower, on or prior to the requested date of issuance
of such Letter of Credit, that one or more of the applicable conditions
contained in Section 3.1 and Section 3.2 is
not then satisfied;

(iii) after giving
effect to the issuance of such Letter of Credit, the aggregate
Revolving Credit Outstandings would exceed the Maximum Credit at such
time;

(iv) after giving effect to the
issuance of such Letter of Credit, the aggregate amount of Letter of
Credit Obligations then outstanding would exceed the Letter of Credit
Sublimit;

(v) any fees due and payable
in connection with a requested issuance have not been paid;
or

36

(vi) such Letter
of Credit is not denominated in Dollars or in an Alternative
Currency.

None of the Revolving Credit Lenders (other than
the Issuers in their capacity as such) shall have any obligation to
Issue any Letter of Credit.

(b) In no event shall the
expiration date of any Letter of Credit (i) be more than one year after
the date of issuance thereof, or (ii) be less than five days prior to
the Revolving Loan Maturity Date.

(c) In connection with
the issuance of each Letter of Credit, the Borrower shall give the
relevant Issuer and the Revolving Facility Agent at least two Business
Days’ (or such shorter period as may be agreed by such Issuer)
prior written notice, in substantially the form of
Exhibit D (or in such other written or electronic form as
is acceptable to the Issuer), of the requested issuance of such Letter
of Credit (a ‘‘Letter of Credit
Request’’). Such notice shall be irrevocable and
shall (i) specify (A) the Issuer of such Letter of Credit, the stated
amount of the Letter of Credit requested, which stated amount (or, if
such Letter of Credit is to be denominated in an Alternative Currency,
the Dollar Equivalent of such stated amount) shall not be less than
$5,000, (B) the date of issuance of such requested Letter of Credit
(which day shall be a Business Day), (C) the date on which such Letter
of Credit is to expire (which date shall be a Business Day), and (D)
the Person for whose benefit the requested Letter of Credit is to be
Issued and (ii) certify that, after issuance of the requested Letter of
Credit, the aggregate amount of the Letter of Credit Obligations then
outstanding will not exceed the Letter of Credit Sub-Limit and (C) the
sum of the aggregate principal or face amount of the then-outstanding
(I) Letter of Credit Obligations, (II) Revolving Loans and (III) Swing
Loans, will not exceed the Maximum Credit then in effect. Such notice,
to be effective, must be received by the relevant Issuer and the
Revolving Facility Agent not later than 11:00 a.m. (New York City time)
on the second (2nd) Business Day (or such shorter period as
agreed by the relevant Issuer) prior to the requested issuance of such
Letter of Credit.

(d) Subject to the satisfaction of the
conditions set forth in this clause (d) the relevant Issuer
shall, on the requested date, Issue a Letter of Credit on behalf of the
Borrower in accordance with such Issuer’s usual and customary
business practices. No Issuer shall Issue any Letter of Credit in the
period commencing on the first Business Day after it receives written
notice from Revolving Facility Agent or any Revolving Credit Lender
that one or more of the conditions precedent contained in
Section 3.2 shall not on such date be satisfied, and
ending when such conditions are satisfied. The relevant Issuer shall
not otherwise be required to determine that, or take notice whether,
the conditions precedent set forth in Section 3.2 have
been satisfied in connection with the issuance of any Letter of
Credit.

(e) If requested by the relevant Issuer, prior to
the issuance of each Letter of Credit by such Issuer, and as a
condition of such issuance and of the participation of each Revolving
Credit Lender in the Letter of Credit Obligations arising with respect
thereto, the Borrower shall have delivered to such Issuer a letter of
credit reimbursement agreement, in such form as the Issuer may employ
in its ordinary course of business for its own account (a
‘‘Letter of Credit Reimbursement
Agreement’’), signed by the Borrower, and such
other documents or items as may be required pursuant to the terms
thereof. In the event of any conflict between the terms of any Letter
of Credit Reimbursement Agreement and this Agreement, the terms of this
Agreement shall govern.

(f) Each Issuer
shall:

(i) give the Revolving Facility
Agent written notice (or telephonic notice confirmed promptly
thereafter in writing, which may be by telecopier) of the issuance or
renewal of a Letter of Credit Issued by it, of all drawings under a
Letter of Credit Issued by it and the payment (or the failure to pay
when due) by the Borrower of any Reimbursement Obligation when due
(which notice the Revolving Facility Agent shall promptly transmit by
telecopy, electronic mail or similar transmission to each Revolving
Credit Lender);

(ii) upon the request of
any Revolving Credit Lender, furnish to such Revolving Credit Lender
copies of any Letter of Credit Reimbursement Agreement to which such
Issuer is a party and such other documentation as may reasonably be
requested by such Revolving Credit Lender; and

37

(iii) no later
than 10 Business Days following the last day of each calendar month,
provide to the Revolving Facility Agent (and the Revolving Facility
Agent shall provide a copy to each Revolving Credit Lender requesting
the same) and the Borrower separate schedules for Documentary and
Standby Letters of Credit Issued by it, in form reasonably satisfactory
to the Revolving Facility Agent, setting forth the aggregate Letter of
Credit Obligations outstanding at the end of each month and any
information requested by the Borrower or the Revolving Facility Agent
relating thereto.

(g) Immediately upon the issuance by an
Issuer of a Letter of Credit in accordance with the terms and
conditions of this Agreement, such Issuer shall be deemed to have sold
and transferred to each Revolving Credit Lender, and each Revolving
Credit Lender shall be deemed irrevocably and unconditionally to have
purchased and received from such Issuer, without recourse or warranty,
an undivided interest and participation, to the extent of such
Revolving Credit Lender’s Ratable Portion of the Revolving
Credit Commitments, in such Letter of Credit and the obligations of the
Borrower with respect thereto (including all Letter of Credit
Obligations with respect thereto) and any security therefor and
guaranty pertaining thereto.

(h) The Borrower agrees to
pay to the Issuer of a Letter of Credit the amount of all Reimbursement
Obligations owing to such Issuer under a Letter of Credit when such
amounts are due and payable, irrespective of any claim, set-off,
defense or other right that the Borrower may have at any time against
such Issuer or any other Person. In the event that any Issuer makes any
payment under any Letter of Credit and the Borrower shall not have
repaid such amount to such Issuer pursuant to this clause (h) or
such payment is rescinded or set aside for any reason, such
Reimbursement Obligation shall bear interest computed from the date on
which such Reimbursement Obligation arose to the date of repayment in
full at the rate of interest applicable to Revolving Loans bearing
interest at a rate based on the Base Rate during such period, and such
Issuer shall promptly notify the Revolving Facility Agent, which shall
promptly notify each Revolving Credit Lender of the failure to repay
such Reimbursement Obligation, and each Revolving Credit Lender shall
promptly and unconditionally pay to the Revolving Facility Agent for
the account of such Issuer the amount of such Revolving Credit
Lender’s Ratable Portion of such payment in Dollars (or, if such
payment was made in an Alternative Currency, an amount in Dollars equal
to the Dollar Equivalent thereof) and in immediately available funds.
If the Revolving Facility Agent so notifies such Revolving Credit
Lender prior to 11:00 a.m. (New York City time) on any Business Day,
such Revolving Credit Lender shall make available to the Revolving
Facility Agent for the account of such Issuer its Ratable Portion of
the amount of such payment on such Business Day in immediately
available funds. Upon such payment by a Revolving Credit Lender, such
Revolving Credit Lender shall (except during the continuance of a
Default or Event of Default) notwithstanding whether or not the
conditions precedent set forth in Section 3.2 shall have
been satisfied (which conditions precedent the Revolving Credit Lenders
hereby irrevocably waive) be deemed to have made a Revolving Loan to
the Borrower in the principal amount of such payment. Whenever any
Issuer receives from the Borrower a payment of a Reimbursement
Obligation as to which the Revolving Facility Agent has received for
the account of such Issuer any payment from a Revolving Credit Lender
pursuant to this clause (h), such Issuer shall pay to the
Revolving Facility Agent and the Revolving Facility Agent shall
promptly pay to each Revolving Credit Lender, in immediately available
funds, an amount equal to such Revolving Credit Lender’s Ratable
Portion of the amount of such payment adjusted, if necessary, to
reflect the respective amounts the Revolving Credit Lenders have paid
in respect of such Reimbursement Obligation.

(i) If and to
the extent such Revolving Credit Lender shall not have so made its
Ratable Portion of the amount of the payment required by
clause (h) above available to the Revolving Facility
Agent for the account of such Issuer, such Revolving Credit Lender
agrees to pay to the Revolving Facility Agent for the account of such
Issuer forthwith on demand any such unpaid amount together with
interest thereon, for the first Business Day after payment was first
due at the Federal Funds Rate and, thereafter, until such amount is
repaid to the Revolving Facility Agent for the account of such Issuer,
at a rate per annum equal to the rate applicable to Base Rate
Loans under the Revolving Credit Facility. The failure of any Revolving
Credit Lender to make available to the Revolving 

38

Facility Agent for the account of such
Issuer its Ratable Portion of any such payment shall not relieve any
other Revolving Credit Lender of its obligation hereunder to make
available to the Revolving Facility Agent for the account of such
Issuer its Ratable Portion of any payment on the date such payment is
to be made, but no Revolving Credit Lender shall be responsible for the
failure of any other Revolving Credit Lender to make available to the
Revolving Facility Agent for the account of the Issuer such other
Revolving Credit Lender’s Ratable Portion of any such
payment.

(j) The Borrower’s obligation to pay each
Reimbursement Obligation and the obligations of the Revolving Credit
Lenders to make payments to the Revolving Facility Agent for the
account of the Issuers with respect to Letters of Credit shall be
absolute, unconditional and irrevocable, and shall be performed
strictly in accordance with the terms of this Agreement, under any and
all circumstances whatsoever, including the occurrence of any Default
or Event of Default, and irrespective
of:

(i) any lack of validity or
enforceability of any Letter of Credit or any Loan Document, or any
term or provision therein;

(ii) any
amendment or waiver of or any consent to departure from all or any of
the provisions of any Letter of Credit or any Loan
Document;

(iii) the existence of any
claim, set off, defense or other right that the Borrower, any other
party guaranteeing, or otherwise obligated with, the Borrower, any
Subsidiary or other Affiliate thereof or any other Person may at any
time have against the beneficiary under any Letter of Credit, the
Issuer, the Revolving Facility Agent or any Lender or any other Person,
whether in connection with this Agreement, any other Loan Document or
any other related or unrelated agreement or
transaction;

(iv) any draft or other
document presented under a Letter of Credit proving to be forged,
fraudulent, invalid or insufficient in any respect or any statement
therein being untrue or inaccurate in any
respect;

(v) payment by the Issuer under
a Letter of Credit against presentation of a draft or other document
that does not comply with the terms of such Letter of Credit;
and

(vi) any other act or omission to
act or delay of any kind of the Issuer, the Lenders, the Revolving
Facility Agent or any other Person or any other event or circumstance
whatsoever, whether or not similar to any of the foregoing, that might,
but for the provisions of this Section, constitute a legal or equitable
discharge of the Borrower’s obligations
hereunder.

Any action taken or omitted to be taken by the
relevant Issuer under or in connection with any Letter of Credit, if
taken or omitted in the absence of gross negligence or willful
misconduct, shall not put such Issuer under any resulting liability to
the Borrower or any Lender. In determining whether drafts and other
documents presented under a Letter of Credit comply with the terms
thereof, the Issuer may accept documents that appear on their face to
be in order, without responsibility for further investigation,
regardless of any notice or information to the contrary and, in making
any payment under any Letter of Credit (x) the Issuer may rely
exclusively on the documents presented to it under such Letter of
Credit as to any and all matters set forth therein, including reliance
on the amount of any draft presented under such Letter of Credit,
whether or not the amount due to the beneficiary thereunder equals the
amount of such draft and whether or not any document presented pursuant
to such Letter of Credit proves to be insufficient in any respect, if
such document on its face appears to be in order, and whether or not
any other statement or any other document presented pursuant to such
Letter of Credit proves to be forged or invalid or any statement
therein proves to be inaccurate or untrue in any respect whatsoever and
(y) any noncompliance in any immaterial respect of the documents
presented under such Letter of Credit with the terms thereof shall, in
each case, be deemed not to constitute willful misconduct or gross
negligence of the Issuer.

(k) Letters of Credit may be
Issued in favor of a beneficiary that is a creditor of a Subsidiary of
Group provided that the account party with respect to such Letter of
Credit is the Borrower.

(l) The amount of Revolving Credit
Commitments utilized by Letters of Credit denominated in an Alternative
Currency shall be measured by a determination by the applicable Issuer
of the Dollar 

39

Equivalent of such Letters of Credit on each
day on which a Borrowing Base Certificate is delivered. The applicable
Issuers shall notify the Revolving Facility Agent and the Borrower of
the aggregate Dollar Equivalent of such utilization in respect of the
Letters of Credit Issued by it.

(m) The Borrower shall
maintain in the Special Cash Collateral Account an amount equal to or
exceeding 100% (or, if a Default or Event of Default is
continuing, 105%) of the aggregate undrawn face amount under the
Letters of Credit that have been designated by the Borrower as
Collateralized Letters of Credit. The Revolving Facility Agent may, in
its sole discretion, from time to time after funds are deposited in the
Special Cash Collateral Account, apply funds then held in the Special
Cash Collateral Account to the payment of the then due and payable
Obligations in respect of the Collateralized Letters of Credit. If at
any time the amount of funds deposited in the Special Cash Collateral
Account exceed 100% (or, if a Default or Event of Default is
continuing, 105%) of the aggregate undrawn face amount of the
Collateralized Letters of Credit, the Revolving Facility Agent shall
upon the request of the Borrower remit the amount of such excess to the
Borrower. If at any time the aggregate amount in the Special Cash
Collateral Account is less than 100% (or, if a Default or Event
of Default is continuing, 105%) of the aggregate undrawn face
amount of the Collateralized Letters of Credit, the Borrower, after
notice (including telephonic notice) to it by the Revolving Facility
Agent, immediately shall cause the amount deposited in the Special Cash
Collateral Account to equal or exceed 100% (or, if a Default or
Event of Default is continuing, 105%) of the aggregate undrawn
face amount of the Collateralized Letters of Credit by either (i)
depositing additional funds in the Special Cash Collateral Account or
(ii) withdrawing its designation as ‘‘Collateralized
Letters of Credit’’ of one or more of the Letters of
Credit so designated. If the Borrower does not deposit additional funds
into the Special Cash Collateral Account or withdraw its designation as
‘‘Collateralized Letters of Credit’’
of one or more of the Letters of Credit, it shall not be a Default or
an Event of Default if the Revolving Facility Agent, in its sole
discretion, withdraws the designation as
‘‘Collateralized Letters of Credit’’
of one or more or all of the Letters of Credit so designated so that
the aggregate amount in the Special Cash Collateral Account equals or
exceeds 100% (or, if a Default or Event of Default is
continuing, 105%) of the aggregate undrawn face amount of the
remaining Collateralized Letters of
Credit.

Section 2.5 Reduction and
Termination of the Commitments.

The Borrower may, upon at least
five Business Days’ prior notice to the Revolving Facility
Agent, terminate in whole or reduce in part ratably the unused portions
of the respective Revolving Credit Commitments of the Revolving Credit
Lenders; provided, however, that each partial reduction shall be
in the aggregate amount of not less than $5,000,000 or an integral
multiple of $1,000,000 in excess thereof and, in the case of any
reduction of the Revolving Credit Commitments, the requirements of
Section 2.9(d) shall have been
satisfied.

Section 2.6 Repayment of
Loans.

(a) The Borrower promises to repay the entire
unpaid principal amount of the Revolving Loans and the Swing Loans and
all accrued but unpaid interest thereon on the Revolving Credit
Termination Date or earlier, if otherwise required by the terms
hereof.

40

(b) The Borrower promises to repay
the Term Loans at the dates and in the amounts set forth
below:

							
	           DATE		AMOUNT
	June
30,  2006		$	450,000	 
	September
30,  2006		$	450,000	 
	December
31,  2006		$	450,000	 
	March
31,  2007		$	450,000	 
	June
30,  2007		$	450,000	 
	September
30,  2007		$	450,000	 
	December
31,  2007		$	450,000	 
	March
31,  2008		$	450,000	 
	June
30,  2008		$	450,000	 
	September
30,  2008		$	450,000	 
	December
31,  2008		$	450,000	 
	March
31,  2009		$	450,000	 
	June
30,  2009		$	450,000	 
	September
30,  2009		$	450,000	 
	December
31,  2009		$	450,000	 
	March
31,  2010		$	450,000	 
	June
30,  201007		$	450,000	 
	September
30,  2010		$	450,000	 
	December
31,  2010		$	450,000	 
	March
31,  2011		$	450,000	 
	June
30,  2011		$	450,000	 
	September
30,  2011		$	450,000	 
	December
31,  2011		$	450,000	 
	March
31,  2012		$	450,000	 
	June
30,  2012		$	42,300,000	 
	September
30,  2012		$	42,300,000	 
	December
31,  2012		$	42,300,000	 
	January
31,
2013		$	42,300,000	 
	

provided,
however, that the Borrower shall repay the entire unpaid
principal amount of the Term Loans on the Term Loan Maturity
Date.

Section 2.7 Evidence of
Debt.

(a) Each Lender shall maintain in accordance with
its usual practice an account or accounts evidencing Indebtedness of
the Borrower to such Lender resulting from each Loan of such Lender
from time to time, including the amounts of principal and interest
payable and paid to such Lender from time to time under this
Agreement.

(b) Each Administrative Agent shall establish
and maintain a Register pursuant to Section 11.2(c) and
accounts therein in accordance with its usual practice in which it will
record (i) the amount of each applicable Loan made and, if a Eurodollar
Rate Loan, the Interest Period applicable thereto, (ii) the amount of
any principal or interest due and payable by the Borrower to each
relevant Lender hereunder and (iii) the amount of any sum received by
such Administrative Agent hereunder from the Borrower and each relevant
Lender’s share thereof, if applicable.

(c) The
entries made in the accounts maintained pursuant to clauses (a) and (b)
of this Section 2.7 shall, to the extent permitted by
applicable law, be prima facie evidence of the existence and amounts of
the obligations recorded therein; provided, however, that the failure
of any Lender or the Administrative Agent to maintain such accounts or
any error therein shall not in any manner affect the obligations of the
Borrower to repay the Loans in accordance with their
terms.

41

(d) Notwithstanding any other
provision of the Agreement, in the event that any Lender requests that
the Borrower execute and deliver a promissory note or notes payable to
such Lender in order to evidence the Indebtedness owing to such Lender
by the Borrower hereunder, the Borrower will promptly execute and
deliver a Note or Notes to such Lender evidencing any Term Loans and
Revolving Loans, as the case may be, of such Lender, substantially in
the forms of Exhibit B-1 (Form of Revolving Credit Note) or
Exhibit B-2 (Form of Term Note),
respectively.

Section 2.8 Optional
Prepayments.

(a) Revolving Loans.    The Borrower
may prepay the outstanding principal amount of the Revolving Loans and
Swing Loans in whole or in part at any time; provided,
however, that if any prepayment of any Eurodollar Rate Loan is
made by the Borrower other than on the last day of an Interest Period
for such Loan, the Borrower shall also pay any amount owing pursuant to
Section 2.14(e).

(b) Term Loans.    The
Borrower may, upon at least three (3) Business Days’ prior
notice to the Term Facility Agent stating the proposed date and
aggregate principal amount of the prepayment, prepay the outstanding
principal amount of the Term Loans, in whole or in part, together with
accrued interest to the date of such prepayment on the principal amount
prepaid; provided, however, that if any prepayment of any
Eurodollar Rate Loan is made by the Borrower other than on the last day
of an Interest Period for such Loan, the Borrower shall also pay any
amounts owing pursuant to Section 2.14(e); and, provided,
further, that each partial prepayment shall be in an aggregate
amount not less than $5,000,000 or integral multiples of $1,000,000 in
excess thereof and that any such partial prepayment shall be applied to
the remaining installments of such outstanding principal amount of the
Term Loans in the inverse order of their maturities. Upon the giving of
such notice of prepayment, the principal amount of the Term Loans
specified to be prepaid shall become due and payable on the date
specified for such prepayment unless such notice is amended or
rescinded upon one Business Day’s notice prior to such specified
date.

Section 2.9 Mandatory
Prepayments.

(a) The Borrower shall prepay the Term Loans
within 90 days after the last day of each Fiscal Year, in an amount
equal to 25% of Excess Cash Flow for such Fiscal Year (or, in
the case of Fiscal Year 2006, the period beginning on the Closing Date
and ending on the last day of such Fiscal Year); provided,
however, that if the Leverage Ratio of Group is less than 1.5 to
1.0 for such Fiscal Year, then such percentage shall be reduced to
0%. Any such mandatory prepayment shall be applied to the
remaining installments of outstanding principal amounts of the Term
Loans in the inverse order of their
maturities.

(b) Subject to clause (c) below, upon
receipt by any Warnaco Entity of Net Cash Proceeds, the Borrower shall
within one Business Day after such receipt prepay the Loans (or provide
cash collateral in respect of Letters of Credit as set forth in
clause (d) below) in an amount equal to 100% of such Net
Cash Proceeds as set forth in clause (d)
below.

(c) Notwithstanding clause (b) above, as
long as no Event of Default shall have occurred or be continuing on the
date Net Cash Proceeds are received by any Warnaco Entity, the Borrower
shall not be required to so apply an amount equal to Net Cash Proceeds
arising from a Reinvestment Event to the extent that all Net Cash
Proceeds from all Reinvestment Events do not exceed $50,000,000 (in the
aggregate since the Closing Date) and are actually used (or have been
contractually committed to be used) to consummate a Permitted
Acquisition or to purchase replacement or fixed assets (in the case of
an Asset Sale) or repair or replace (in the case of a Property Loss
Event) the sold, damaged or taken property within 180 days of the
receipt of such Net Cash Proceeds by a Warnaco Entity and, pending
application of such proceeds, the Borrower has either (i) paid an
amount equal to such Net Cash Proceeds (A) in the case of any
Reinvestment Event arising from or attributable to any assets or
property other than Specified IP Collateral, to the Revolving Facility
Agent and (B) in the case of any Reinvestment Event arising from or
attributable to any Specified IP Collateral, to the Term Facility
Agent, in each case, to be held by the applicable Administrative Agent
in a Cash Collateral Account designated by such Administrative Agent or
(ii) applied an amount equal to such Net Cash Proceeds 

42

in repayment of the Revolving Loans and the
Revolving Facility Agent shall have established an Availability Reserve
in the amount of such repayment, which reserve shall abate on the
Reinvestment Prepayment Date applicable to such Net Cash Proceeds or
earlier to the extent that Revolving Loans up to the amount of such Net
Cash Proceeds are used as set forth in the Reinvestment Notice with
respect thereto; provided, however, that to the extent
any asset subject to such Asset Sale or Property Loss Event constituted
Collateral, any replacement, fixed or alternative assets acquired with
Net Cash Proceeds shall, upon acquisition thereof by a Warnaco Entity,
be subject to a perfected Lien in favor of the Collateral Agent, for
the benefit of the applicable Secured Parties, in each case, having the
priority described in Section 4.20 of this Agreement and the
Collateral Documents (but, in the case of a Permitted Acquisition, only
to the extent required by clause (e) of the definition
thereof); provided further, however, in the event an
Event of Default has occurred and is continuing after the provisions in
this clause (c) become operative, each Administrative Agent may,
or shall at the direction of the Requisite Lenders, apply all amounts
in the Cash Collateral Account referred to above to the
Obligations;

(d) Subject to the provisions of clause
(c) above and Section 2.13(h) (Payments and
Computations), any prepayments made by the Borrower required to be
applied in accordance with this clause (d) shall be
applied as follows:

(i) If after giving
effect to such prepayment, Available Credit would be less than
$50,000,000 and/or there are Revolving Credit Outstandings,
first, to repay the outstanding principal balance of the Swing
Loans until such Swing Loans shall have been repaid in full;
second, to repay the outstanding principal balance of the
Revolving Loans until such Revolving Loans shall have been repaid in
full, third to provide cash collateral for any Letter of Credit
Obligations in the manner set forth in Section 9.3 until
all such Letter of Credit Obligations have been fully cash
collateralized in the manner set forth therein; and then, to
repay the outstanding principal balance of the Term Loans, until such
Term Loans shall have been prepaid in full;
or

(ii) If after giving effect to such
prepayment, Available Credit would be equal to or greater than
$50,000,000 and there are no Revolving Credit Outstandings,
first, to repay the outstanding principal balance of the Term
Loans, until such Term Loans shall have been prepaid in full;
second, to repay the outstanding principal balance of the Swing
Loans until such Swing Loans shall have been repaid in full;
third, to repay the outstanding principal balance of the
Revolving Loans until such Revolving Loans shall have been repaid in
full; and then, to provide cash collateral for any Letter of
Credit Obligations in the manner set forth in Section 9.3
until all such Letter of Credit Obligations have been fully cash
collateralized in the manner set forth therein.

All
repayments of the Term Loans made pursuant to this
clause (d) shall be applied to the remaining installments
of such outstanding principal amounts of the Term Loans in the inverse
order of their maturities.

(e) If at any time, the
aggregate principal amount of Revolving Credit Outstandings exceed the
Maximum Credit at such time, the Borrower shall, as soon as possible,
but in any event within one Business Day, prepay first the Swing Loans
and then the Revolving Loans then outstanding in an amount equal to
such excess. If any such excess remains after repayment in full of the
aggregate outstanding Swing Loans and the Revolving Loans, the Borrower
shall provide cash collateral for the Letter of Credit Obligations in
the manner set forth in Section 9.3 to the extent
required to eliminate such excess.

(f) Except in the case
where Section 2.13(h) shall be applicable, all available funds
in each Cash Collateral Account (other than an amount equal to any
proceeds arising from a Reinvestment Event that are held in the Cash
Collateral Account pending application of such proceeds as specified in
a Reinvestment Notice) shall be applied on a daily basis: first,
to repay the outstanding principal amount of the Swing Loans until such
Swing Loans have been repaid in full; second, to repay the
outstanding principal amount of the Revolving Loans until such
Revolving Loans have been repaid in full; third, to any other
Obligation in respect of the Revolving Credit Facility then due and
payable and then, to cash collateralize all outstanding Letter
of Credit Obligations in the manner set forth in Section 9.3.
The Facility Agents agree so to apply such funds and the Borrower
consents to such application. 

43

Notwithstanding the first sentence in this
clause (f), at any time there is no Event of Default that is
continuing, there are no Loans outstanding and no other Obligations in
respect of the Revolving Credit Facility are then due and payable each
Facility Agent shall cause any funds in any Cash Collateral Account
maintained by it to be paid at the written direction of the Borrower
for any other
purpose.

Section 2.10 Interest.

(a) Rate
of Interest. All Loans and the outstanding amount of all other
Obligations shall bear interest, in the case of Loans, on the unpaid
principal amount thereof from the date such Loans are made and, in the
case of such other Obligations, from the date such other Obligations
are due and payable until, in all cases, paid in full, except as
otherwise provided in Section 2.10(c), as
follows:

(i) if a Base Rate Loan or such
other Obligation, at a rate per annum equal to the sum of (A)
the Base Rate as in effect from time to time and (B) the Applicable
Margin for such Loans; and

(ii) if a
Eurodollar Rate Loan, at a rate per annum equal to the sum of
(A) the Eurodollar Rate determined for the applicable Interest Period
and (B) the Applicable Margin in effect from time to time during such
Interest Period.

(b) Interest Payments. Interest
accrued:

(i) on each Base Rate Loan
shall be payable in arrears (A) on the first Business Day of
each calendar quarter, commencing on the first such day following the
making of such Base Rate Loan and (B) if not previously paid in
full, at maturity (whether by acceleration or otherwise) of such Base
Rate Loan;

(ii) on Swing Loans shall be
payable in arrears on the first Business Day of the immediately
succeeding calendar quarter;

(iii) on
each Eurodollar Rate Loan shall be payable in arrears (A) on the
last day of each Interest Period applicable to such Loan and if such
Interest Period has a duration of more than three months, on each day
during such Interest Period which occurs every three months from the
first day of such Interest Period, (B) upon the payment or
prepayment thereof in full or in part, and (C) if not previously
paid in full, at maturity (whether by acceleration or otherwise) of
such Eurodollar Rate Loan; and

(iv) on
the amount of all other Obligations shall be payable on demand after
the time such Obligation becomes due and payable (whether by
acceleration or otherwise).

(c) Default
Interest.    Notwithstanding the rates of interest specified in
Section 2.10(a) or elsewhere herein, effective
immediately upon the occurrence of an Event of Default, and for as long
thereafter as such Event of Default shall be continuing, the principal
balance of all Loans and the amount of all other Obligations shall bear
interest at a rate which is two percent per annum in excess of
the rate of interest applicable to such Loans or such other Obligations
from time to time. Default interest under this clause (c) shall
be payable on demand (i) in the case of Obligations under the Revolving
Credit Facility, by the Revolving Facility Agent or the Requisite
Revolving Credit Lenders, (ii) in the case of Obligations under the
Term Loan Facility, by the Term Loan Administrative Agent or the
Requisite Term Loan Lenders and (iii) in the case of all other
Obligations, by any Administrative Agent or the Requisite
Lenders.

Section 2.11 Conversion/Continuation
Option.

(a) The Borrower may elect (i) on any
Business Day to convert Base Rate Loans (other than Swing Loans) or any
portion thereof to Eurodollar Rate Loans, or (ii) at the end of
any applicable Interest Period, to convert Eurodollar Rate Loans or any
portion thereof into Base Rate Loans or to continue such Eurodollar
Rate Loans or any portion thereof for an additional Interest Period;
provided, however, that the aggregate amount of the Eurodollar
Loans for each Interest Period must be in the amount of (x) in the case
of the Revolving Loans, at least $10,000,000 or an integral multiple of
$1,000,000 in excess thereof and (y) in the case of the Term Loans, at
least $5,000,000 or an integral 

44

multiple of $1,000,000 in excess thereof.
Each conversion or continuation shall be allocated among the Loans of
each Lender in accordance with such Lender’s Ratable
Portion.

(b) Each such election shall be in substantially
the form of Exhibit F hereto (a ‘‘Notice of
Conversion or Continuation’’) and shall be made
by giving the applicable Administrative Agent at least three (3)
Business Days’ prior written notice specifying (i) the
amount and type of Loan being converted or continued, (ii) in the case
of a conversion to or a continuation of Eurodollar Rate Loans, the
applicable Interest Period, and (iii) in the case of a conversion, the
date of conversion (which date shall be a Business Day and, if a
conversion from Eurodollar Rate Loans, shall also be the last day of
the applicable Interest Period). The applicable Administrative Agent
shall promptly notify each applicable Lender of its receipt of a Notice
of Conversion or Continuation and of the options selected
therein.

(c) Notwithstanding the foregoing, no conversion
in whole or in part of Base Rate Loans to Eurodollar Rate Loans, and no
continuation in whole or in part of Eurodollar Rate Loans upon the
expiration of any applicable Interest Period, shall be permitted at any
time at which (A) a Default or an Event of Default shall have occurred
and be continuing or (B) the continuation of, or conversion into, would
violate any of the provisions of
Section 2.14.

(d) If, within the time period
required under the terms of this Section 2.11, the
applicable Administrative Agent does not receive a Notice of Conversion
or Continuation from the Borrower containing a permitted election to
continue any Loan that is a Eurodollar Rate Loan for an additional
Interest Period or to convert any such Loan, then, upon the expiration
of the applicable Interest Period, such Loan will be automatically
converted to a Base Rate Loan.

(e) Each Notice of
Conversion or Continuation shall be
irrevocable.

Section 2.12 Fees.

(a) Unused
Commitment Fee.    The Borrower agrees to pay to each Revolving
Credit Lender a commitment fee (the ‘‘Unused
Commitment Fee’’) on the average amount by which the
Revolving Credit Commitments of such Revolving Credit Lender exceeds
such Revolving Credit Lender’s Ratable Portion of the Revolving
Credit Outstandings (excluding the amount of any outstanding Swing
Loans) from the Existing Closing Date until the Revolving Credit
Termination Date at the Applicable Unused Commitment Fee Rate, payable
in arrears on the first Business Day of each calendar quarter,
commencing on the first such day following the Closing Date and on the
Revolving Credit Termination Date.

(b) Letter of
Credit Fees.    The Borrower agrees to pay the following amounts
with respect to Letters of Credit Issued by any
Issuer:

(i) to each Issuer of a Letter
of Credit, (A) with respect to each Letter of Credit (other than
Collateralized Letters of Credit) Issued by such Issuer, an issuance
fee equal to an amount to be agreed by such Issuer and the Borrower but
in any event not greater than 0.25% per annum, and (B)
with respect to each Collateralized Letter of Credit, an issuance fee
equal to 0.125% per annum (the issuance fee set forth in
either (A) or (B), the ‘‘Issuing
Fee’’) of the maximum amount available from time to
time to be drawn under such Letter of Credit, payable in arrears
(I) on the first Business Day of each calendar quarter,
commencing on the first such day following the issuance of such Letter
of Credit and (II) on the Revolving Credit Termination
Date;

(ii) to the Revolving Facility
Agent for the ratable benefit of the Revolving Credit Lenders, with
respect to each Letter of Credit (other than Collateralized Letters of
Credit), a fee accruing at a rate per annum equal to the
Applicable Margin for Revolving Loans that are Eurodollar Rate Loans
less an amount equal to the Issuing Fee paid by the Borrower in
respect of such Letter of Credit, of the maximum amount available from
time to time to be drawn under such Letter of Credit, payable in
arrears (A) on the first Business Day of each calendar quarter,
commencing on the first such day following the issuance of such Letter
of Credit, and (B) on the Revolving Credit Termination Date;
provided, however, that during the continuance of an Event of
Default, such fee shall be increased by two percent per annum
and shall be payable on demand;

45

(iii) to the
Revolving Facility Agent for the ratable benefit of the Revolving
Credit Lenders, with respect to each Collateralized Letter of Credit, a
fee accruing at a rate per annum equal to 0.20% of the
maximum amount available from time to time to be drawn under such
Letter of Credit, payable in arrears (A) on the first Business Day of
each calendar quarter, commencing on the first such day following the
issuance of such Letter of Credit, and (B) on the Revolving Credit
Termination Date; provided, however, that during the continuance
of an Event of Default, such fee shall be increased by two percent
per annum and shall be payable on demand;
and

(iv) to the Issuer of any Letter of
Credit, with respect to the issuance, amendment or transfer of each
Letter of Credit and each drawing made thereunder, documentary and
processing charges in accordance with such Issuer’s standard
schedule for such charges in effect at the time of issuance, amendment,
transfer or drawing, as the case may be.

(c) Additional
Fees.    The Borrower has agreed to pay to the Agents and the
Arrangers additional fees, the amount and dates of payment of which are
embodied in the Fee
Letters.

Section 2.13 Payments and
Computations.

(a) The Borrower shall make each payment
hereunder (including fees and expenses) not later than 11:00 a.m. (New
York City time) on the day when due, in Dollars, to (i) in the case of
any payments in respect of the Revolving Credit Facility, the Revolving
Facility Agent and (ii) in the case of any payments in respect of the
Term Loan Facility, the Term Facility Agent, in each case, at its
address referred to in Section 11.8 in immediately
available funds without set-off or counterclaim. The applicable
Administrative Agent will promptly thereafter cause to be distributed
immediately available funds relating to the payment of principal or
interest or fees to the applicable Lenders, in accordance with the
application of payments set forth in clauses (f) and (g) of this
Section 2.13, as applicable, for the account of their
respective Applicable Lending Offices; provided, however, that
amounts payable pursuant to Section 2.14(c),
Section 2.14(e), Section 2.15 or
Section 2.16 shall be paid only to the affected Lender or
Lenders and amounts payable with respect to Swing Loans shall be paid
only to the Swing Loan Lender. Payments received by the applicable
Administrative Agent after 11:00 a.m. (New York City time) shall be
deemed to be received on the next succeeding Business
Day.

(b) All computations of interest and of fees shall be
made by the applicable Administrative Agent on the basis of a year of
360 days, in each case for the actual number of days (including the
first day but excluding the last day) occurring in the period for which
such interest and fees are payable. Each determination by the
applicable Administrative Agent of an interest rate hereunder shall be
conclusive and binding for all purposes, absent manifest
error.

(c) If and to the extent any payment owed to any
Facility Agent or any Lender is not made when due, each Loan Party
hereby authorizes such Facility Agent and such Lender, to setoff and
charge any amount so due against any deposit account maintained by such
Loan Party with such Facility Agent or such Lender, whether or not the
deposit therein is then due.

(d) Each payment by the
Borrower of any Loan, Reimbursement Obligation (including interest or
fees in respect thereof) and each reimbursement of various costs,
expenses or other Obligation shall be made in the currency in which
such Loan was made, such Letter of Credit Issued or such cost, expense
or other Obligation was incurred; provided, however, that
(i) the Letter of Credit Reimbursement Agreement for a Letter of
Credit may specify another currency for the Reimbursement Obligation in
respect of such Letter of Credit and (ii) other than for
payments in respect of a Loan or Reimbursement Obligation, Loan
Documents duly executed by the Administrative Agents or any Hedging
Contract may specify other currencies of payment for Obligations
created by or directly related to such Loan Document or Hedging
Contract.

(e) Whenever any payment hereunder shall be
stated to be due on a day other than a Business Day, such payment shall
be made on the next succeeding Business Day, and such extension of time
shall in such case be included in the computation of payment of
interest or fees, as the case may be; provided, however, that if
such extension would cause payment of interest on or principal of any
Eurodollar Rate Loan to be made in the next calendar month, such
payment shall be made on the 

46

immediately preceding Business Day. All
repayments of any Revolving Loans or Term Loans shall be applied
first to repay such Loans outstanding as Base Rate Loans and
then to repay such Loans outstanding as Eurodollar Rate Loans
with those Eurodollar Rate Loans which have earlier expiring Eurodollar
Interest Periods being repaid prior to those which have later expiring
Eurodollar Interest Periods.

(f) Unless the Revolving
Facility Agent (in the case of payments under the Revolving Credit
Facility) or the Term Facility Agent (in the case of payments under the
Term Loan Facility) shall have received notice from the Borrower to the
applicable Lenders prior to the date on which any payment is due
hereunder that the Borrower will not make such payment in full, such
Administrative Agent may assume that the Borrower has made such payment
in full to such Administrative Agent on such date and such
Administrative Agent may, in reliance upon such assumption, cause to be
distributed to each relevant Lender on such due date an amount equal to
the amount then due such Lender. If and to the extent the Borrower
shall not have made such payment in full to such Administrative Agent,
each relevant Lender shall repay to such Administrative Agent forthwith
on demand such amount distributed to such Lender together with interest
thereon at the Federal Funds Rate, for the first Business Day, and,
thereafter, at the rate applicable to Base Rate Loans, for each day
from the date such amount is distributed to such Lender until the date
such Lender repays such amount to such Administrative
Agent.

(g) Subject to the provisions of clause (h)
of this Section 2.13 (and except as otherwise provided in
Section 2.9), all payments and any other amounts received
by any Administrative Agent from or for the benefit of the Borrower or
any other Loan Party shall be applied first, in the case of
payments under the Revolving Credit Facility, to pay principal of and
interest on any portion of the Loans which the Revolving Facility Agent
may have advanced pursuant to the express provisions of this Agreement
on behalf of any Revolving Credit Lender, for which the Revolving
Facility Agent has not then been reimbursed by such Lender or the
Borrower; second, to pay all other Obligations then due and
payable; and then, as the Borrower so designates. Payments in
respect of Swing Loans received by the Revolving Facility Agent shall
be distributed to the Swing Loan Lender; payments in respect of
Revolving Loans received by the Revolving Facility Agent shall be
distributed to each Revolving Credit Lender in accordance with such
Lender’s Ratable Portion of the Revolving Credit Commitments;
payments in respect of the Term Loans received by the Term Facility
Agent shall be distributed to each Term Loan Lender in accordance with
such Lender’s Ratable Portion of the Term Loans; and all
payments of fees and all other payments in respect of any other
Obligation shall be allocated among such of the Lenders and the Issuers
as are entitled thereto, and, if to the Lenders, in proportion to their
respective Ratable Portions.

(h) The Borrower hereby
irrevocably waives the right to direct the application of any and all
payments in respect of the Secured Obligations and any proceeds of
Collateral after the occurrence and during the continuance of an Event
of Default, and agrees that upon the termination of the Commitments or
the acceleration of the Obligations pursuant to
Section 9.2, (i) the Facility Agents shall apply all
payments made to or received by any Facility Agent, any Lender or any
Issuer constituting proceeds of Collateral (including all funds on
deposit in any Cash Collateral Account (including all proceeds arising
from a Reinvestment Event that are held in the Cash Collateral Account
pending application of such proceeds as specified in a Reinvestment
Notice)) in accordance with the Intercreditor Agreement and (ii) all
other payments made to or received by any Facility Agent, any Lender or
any Issuer shall be applied by the Facility Agents in the following
order:

first, to pay interest on and
then principal of any portion of the Revolving Loans which the
Revolving Facility Agent may have advanced on behalf of any Revolving
Credit Lender for which the Revolving Facility Agent has not then been
reimbursed by such Lender or the
Borrower;

second, to pay interest on and
then principal of any Swing Loan;

third,
to pay Secured Obligations in respect of any expense reimbursements
(including indemnities) or Cash Management Obligations then due to the
Facility Agents;

fourth, to pay Secured
Obligations in respect of any expense reimbursements (including
indemnities) then due to the Lenders and the Issuers;

47

fifth, to pay
Secured Obligations in respect of any fees then due to the Facility
Agents, the Lenders and the Issuers;

sixth, to pay interest then due and payable
in respect of the Loans and Reimbursement Obligations;

seventh, to pay or prepay principal
payments on the Loans and Reimbursement Obligations, to provide cash
collateral for outstanding Letter of Credit Undrawn Amounts in the
manner described in Section 9.3 and to pay or prepay
principal amounts on Secured Obligations in respect of Hedging
Contracts and Cash Management Obligations, ratably to the
aggregate principal amount of such Loans, Reimbursement Obligations,
Letter of Credit Undrawn Amounts, Hedging Contracts and Cash Management
Obligations;

eighth, to the ratable
payment of all other Secured Obligations;
and

ninth, as directed by the
Borrower.

provided, however, that if sufficient
funds are not available to fund all payments to be made in respect of
any of the Obligations described in any of the foregoing clauses
first through eighth, the available funds being applied
with respect to any such Obligation (unless otherwise specified in such
clause) shall be allocated to the payment of such Obligations ratably,
based on the proportion of the applicable Agent’s and each
applicable Lender’s or Issuer’s interest in the aggregate
outstanding Obligations described in such clauses; provided,
however, that payments that would otherwise be allocated to the
Revolving Credit Lenders shall be allocated first to repay
Protective Advances and Swing Loans pro rata and then to
the Lenders; provided, further, that any funds on deposit in the
Special Cash Collateral Account shall be applied first to
Obligations in respect of the Collateralized Letters of Credit (and to
the extent such Collateralized Letters of Credit are undrawn, to
continue to collateralize such Collateralized Letters of Credit) and
then in the order of priority set forth above in clauses
first through ninth. The order of priority set forth in
clauses first through eighth of this Section
2.13(h) may at any time and from time to time be changed by the
agreement of the Requisite Lenders and each adversely affected Lender
without necessity of notice to or consent of or approval by the
Borrower, any Secured Party that is not a Lender or an Issuer, or any
other Person. The order of priority set forth in clauses first
through fifth of this Section 2.13(h) may be changed only
with the prior written consent of the Administrative Agents and in
addition to the Requisite Lenders.

(i) At the option of
the Revolving Facility Agent, principal on the Swing Loans,
Reimbursement Obligations, interest, fees, expenses and other sums due
and payable in respect of the Revolving Loans and Protective Advances
may be paid from the proceeds of Swing Loans or Revolving Loans. The
Borrower hereby authorizes the Swing Loan Lender to make such Swing
Loans pursuant to Section 2.3(a) and the Revolving Credit
Lenders to make Revolving Loans pursuant to
Section 2.2(a) from time to time in the amounts of any
and all principal payable with respect to the Swing Loans,
Reimbursement Obligations, interest, fees, expenses and other sums
payable in respect of the Revolving Loans and Protective Advances, and
further authorizes the Revolving Facility Agent to give the Revolving
Credit Lenders notice of any Borrowing with respect to such Swing Loans
and Revolving Loans and to distribute the proceeds of such Swing Loans
and Revolving Loans to pay such amounts. The Borrower agrees that all
such Swing Loans and Revolving Loans so made shall be deemed to have
been requested by it (irrespective of the satisfaction of the
conditions in Section 3.2 which conditions the Revolving
Credit Lenders irrevocably waive) and directs that all proceeds thereof
shall be used to pay such
amounts.

Section 2.14 Special Provisions
Governing Eurodollar Rate Loans.

(a) Determination of
Interest Rate.    The Eurodollar Rate for each Interest Period
for Eurodollar Rate Loans shall be determined by the applicable
Administrative Agent pursuant to the procedures set forth in the
definition of ‘‘Eurodollar
Rate.’’ Such Administrative Agent’s
determination shall be presumed to be correct, absent manifest error,
and shall be binding on the Borrower.

(b) Interest Rate
Unascertainable, Inadequate or Unfair.    In the event that: (i)
any Administrative Agent determines that adequate and fair means do not
exist for ascertaining the 

48

applicable interest rates by reference to
which the Eurodollar Rate then being determined is to be fixed; or (ii)
the Requisite Lenders notify the Administrative Agents that the
Eurodollar Rate for any Interest Period will not adequately reflect the
cost to the applicable Lenders of making or maintaining such Loans for
such Interest Period, the applicable Administrative Agent shall
forthwith so notify the Borrower and the applicable Lenders, whereupon
each Eurodollar Loan will automatically, on the last day of the current
Interest Period for such Loan, convert into a Base Rate Loan and the
obligations of the applicable Lenders to make Eurodollar Rate Loans or
to convert Base Rate Loans into Eurodollar Rate Loans shall be
suspended until the applicable Administrative Agent shall notify the
Borrower that the Requisite Revolving Credit Lenders or the Requisite
Term Loan Lenders, as the case may be have determined that the
circumstances causing such suspension no longer
exist.

(c) Increased Costs.    If at any time any
Lender shall determine that the introduction of or any change in or in
the interpretation of any law, treaty or governmental rule, regulation
or order (other than any change by way of imposition or increase of
reserve requirements included in determining the Eurodollar Rate or
with respect to taxes (payment with respect to which shall be governed
by Section 2.16)) or the compliance by such Lender with
any guideline, request or directive from any central bank or other
Governmental Authority (whether or not having the force of law), there
shall be any increase in the cost to such Lender of agreeing to make or
making, funding or maintaining any Eurodollar Rate Loans, then the
Borrower shall from time to time, upon demand by such Lender (with a
copy of such demand to the applicable Administrative Agent), pay to the
applicable Administrative Agent for the account of such Lender
additional amounts sufficient to compensate such Lender for such
increased cost. A certificate as to the amount of such increased cost,
submitted to the Borrower and the applicable Administrative Agent by
such Lender, shall be conclusive and binding for all purposes, absent
manifest
error.

(d) Illegality.    Notwithstanding any
other provision of this Agreement, if any Lender determines that the
introduction of or any change in or in the interpretation of any law,
treaty or governmental rule, regulation or order after the date of this
Agreement shall make it unlawful, or any central bank or other
Governmental Authority shall assert that it is unlawful, for any Lender
or its Eurodollar Lending Office to make Eurodollar Rate Loans or to
continue to fund or maintain Eurodollar Rate Loans, then, on notice
thereof and demand therefor by such Lender to the Borrower through the
applicable Administrative Agent, (i) the obligation of such
Lender to make or to continue Eurodollar Rate Loans and to convert Base
Rate Loans into Eurodollar Rate Loans shall be suspended, and each such
Lender shall make a Base Rate Loan as part of any requested Borrowing
of Eurodollar Rate Loans and (ii) if the affected Eurodollar Rate Loans
are then outstanding, the Borrower shall immediately convert each such
Loan into a Base Rate Loan. If at any time after a Lender gives notice
under this Section 2.14(d) such Lender determines that it
may lawfully make Eurodollar Rate Loans, such Lender shall promptly
give notice of that determination to the Borrower and the applicable
Administrative Agent, and the applicable Administrative Agent shall
promptly transmit the notice to each other applicable Lender. The
Borrower’s right to request, and such Lender’s
obligation, if any, to make Eurodollar Rate Loans shall thereupon be
restored.

(e) Breakage Costs.    In addition to
all amounts required to be paid by the Borrower pursuant to
Section 2.10, the Borrower shall compensate each Lender,
upon demand, for all losses, expenses and liabilities (including any
loss or expense incurred by reason of the liquidation or reemployment
of deposits or other funds acquired by such Lender to fund or maintain
such Lender’s Eurodollar Rate Loans to the Borrower but
excluding any loss of the Applicable Margin on the relevant Loans)
which such Lender may sustain (i) if for any reason a proposed
Borrowing, conversion into or continuation of Eurodollar Rate Loans
does not occur on a date specified therefor in a Notice of Borrowing or
a Notice of Conversion or Continuation given by a Borrower or in a
telephonic request by it for borrowing or conversion or continuation or
a successive Interest Period does not commence after notice therefor is
given pursuant to Section 2.11, (ii) if for any
reason any Eurodollar Rate Loan is prepaid (including mandatorily
pursuant to Section 2.9) on a date which is not the last
day of the applicable Interest Period, (iii) as a consequence of
a required conversion of a Eurodollar Rate Loan to a Base Rate Loan as
a result of any of the events indicated in
Section 2.14(d), or (iv) as a consequence of any
failure by a Borrower to repay Eurodollar Rate Loans when required by
the 

49

terms hereof. The Lender making demand for
such compensation shall deliver to the Borrower concurrently with such
demand a written statement as to such losses, expenses and liabilities,
and this statement shall be conclusive as to the amount of compensation
due to that Lender, absent manifest
error.

Section 2.15 Capital
Adequacy.    If at any time any Lender determines that
(a) the adoption of or any change in or in the interpretation of
any law, treaty or governmental rule, regulation or order after the
date of this Agreement regarding capital adequacy, (b) compliance with
any such law, treaty, rule, regulation, or order, or
(c) compliance with any guideline or request or directive from
any central bank or other Governmental Authority regarding capital
adequacy (whether or not having the force of law) shall have the effect
of reducing the rate of return on such Lender’s (or any
corporation controlling such Lender’s) capital as a consequence
of its obligations hereunder or under or in respect of any Letter of
Credit to a level below that which such Lender or such corporation
could have achieved but for such adoption, change, compliance or
interpretation, then, upon demand from time to time by such Lender
(with a copy of such demand to the applicable Administrative Agent),
the Borrower shall pay to the applicable Administrative Agent for the
account of such Lender, from time to time as specified by such Lender,
additional amounts sufficient to compensate such Lender for such
reduction. A certificate as to such amounts submitted to the Borrower
and the applicable Administrative Agent by such Lender shall be
conclusive and binding for all purposes, absent manifest
error.

Section 2.16 Taxes.

(a) Except
as otherwise provided in this Section 2.16, any and all
payments by any Loan Party under each Loan Document shall be made free
and clear of and without deduction for any and all present or future
taxes, levies, imposts, deductions, charges or withholdings, and all
liabilities with respect thereto, excluding (i) in the case of each
Lender, each Issuer and each Agent (A) taxes measured by its net
income, and franchise taxes imposed on such Person, and similar taxes
imposed by the jurisdiction (or any political subdivision thereof)
under the laws of which such Lender, such Issuer or such Agent (as the
case may be) is organized,(B) any United States withholding taxes
payable with respect to payments under the Loan Documents under laws
(including any statute, treaty or regulation) in effect on the Closing
Date (or, in the case of (w) an Eligible Assignee, the date of the
Assignment and Acceptance, (x) a successor Agent, the date of the
appointment of such Facility Agent, (y) a successor Issuer, the date
such Issuer becomes an Issuer) applicable to such Lender, such Issuer
or such Agent and (z) the designation of a new Applicable Lending
Office, as the case may be, but not excluding any United States
withholding taxes payable as a result of any change in such laws
occurring after the Closing Date (or the date of such Assignment and
Acceptance or the date of such appointment of such Agent or the date
such Issuer becomes an Issuer) and (C) all liabilities, penalties and
interest with respect to any of the foregoing and (ii) in the case of
each Agent, each Lender and each Issuer, taxes measured by its net
income, franchise and similar taxes imposed on it as a result of a
present or former connection between such Agent, such Lender or such
Issuer (as the case may be) and the jurisdiction of the Governmental
Authority imposing such tax or taxing authority thereof or therein (all
such non-excluded taxes, levies, imposts, deductions, charges,
withholdings and liabilities being hereinafter referred to as
‘‘Taxes’’). Except as
otherwise provided in this Section 2.16, if any Taxes
shall be required by law to be deducted from or in respect of any sum
payable under any Loan Document to any Lender, any Issuer or any Agent
(i) the sum payable shall be increased as may be necessary so
that after making all required deductions (including deductions
applicable to additional sums payable under this
Section 2.16) such Lender, such Issuer or such Agent (as
the case may be) receives an amount equal to the sum it would have
received had no such deductions been made, (ii) the applicable
Loan Party shall make such deductions, (iii) the Loan Parties
shall pay the full amount deducted to the relevant taxing authority or
other authority in accordance with applicable law, and (iv) the
Loan Parties shall deliver to the Agents evidence of such
payment.

(b) In addition, the Borrower agrees to pay any
present or future stamp or documentary taxes or any other excise or
property taxes, charges or similar levies imposed by any state, county,
city or other political subdivision within the United States (but not
United States federal taxes, payment with respect to which shall be
governed by clause (a) above) or by any applicable foreign
jurisdiction, and 

50

all liabilities with respect thereto, which
arise from any payment made under any Loan Document or from the
execution, delivery or registration of, or otherwise with respect to,
any Loan Document (collectively, ‘‘Other
Taxes’’).

(c) Each Loan Party will,
jointly and severally, indemnify each Lender, each Issuer and each
Agent for the full amount of Taxes and Other Taxes (including any Taxes
and Other Taxes imposed by any jurisdiction on amounts payable under
this Section 2.16) paid by such Lender, such Issuer or
such Agent (as the case may be) and any liability (including for
penalties, interest and expenses) arising therefrom or with respect
thereto, whether or not such Taxes or Other Taxes were correctly or
legally asserted. This indemnification shall be made within 30 days
from the date such Lender, such Issuer or such Agent (as the case may
be) makes written demand therefor setting forth in reasonable detail
the basis and calculations of such amounts.

(d) Within 30
days after the date of any payment of Taxes or Other Taxes, the
Borrower will furnish to the Agents, at their respective addresses
referred to in Section 11.8, the original or a certified
copy of a receipt evidencing payment thereof.

(e) Without
prejudice to the survival of any other agreement of any Loan Party
hereunder or under the Guaranty, the agreements and obligations of the
Loan Parties contained in this Section 2.16 shall survive
the payment in full of the Secured
Obligations.

(f) (i) Each Non-U.S. Lender
or Non-U.S. Agent that is entitled to an exemption from U.S.
withholding tax, or that is subject to such tax at a reduced rate under
an applicable tax treaty, shall (v) on or prior to the Closing Date in
the case of each Non-U.S. Lender or Non-U.S. Agent that is a signatory
hereto, (w) on or prior to the date of the Assignment and Acceptance
pursuant to which such Non-U.S. Lender becomes a Lender, the date a
successor Issuer becomes an Issuer or the date a successor Agent
becomes a Agent hereunder, (x) on or prior to the date on which any
such form or certification expires or becomes obsolete, (y) after the
occurrence of any event requiring a change in the most recent form or
certification previously delivered by it to the Borrower and the
applicable Administrative Agent, and (z) from time to time if requested
by the Borrower or the applicable Administrative Agent, provide the
applicable Administrative Agent and the Borrower with two completed
originals of each of the following, as
applicable:

(A) Form W-8ECI (claiming
exemption from U.S. withholding tax because the income is effectively
connected with a U.S. trade or business) or any successor
form;

(B) Form W-8BEN (claiming exemption
from, or a reduction of, U.S. withholding tax under an income tax
treaty) or any successor form;

(C) Form
W-8IMY (claiming exemption from, or a reduction of, U.S. withholding
tax for foreign intermediaries, foreign flow-through entities or U.S.
branches of certain foreign banks or foreign insurance companies) or
any successor form;

(D) in the case of a
Non-U.S. Lender or Non-U.S. Agent claiming exemption under Sections
871(h) or 881(c) of the Code, a Form W-8BEN (claiming exemption from
U.S. withholding tax under the portfolio interest exemption) or any
successor form and a certificate establishing such Non-U.S. Lender or
Non-U.S. Agent's entitlement to such exemption;
and/or

(E) any other applicable form,
certificate or document prescribed by the IRS certifying as to such
Non-U.S. Lender’s entitlement to such exemption from U.S.
withholding tax or reduced rate with respect to all payments to be made
to such Non-U.S. Lender or Non-U.S. Agent under the Loan
Documents.

Unless the Borrower and the applicable Administrative
Agent have received forms, documents and/or other evidence satisfactory
to them indicating that payments under any Loan Document to or for a
U.S. Lender, Non-U.S. Lender or Non-U.S. Agent are not subject to U.S.
withholding tax or are subject to such tax at a rate reduced by an
applicable tax treaty, the Loan Parties and the applicable
Administrative Agent shall withhold amounts required to be withheld by
applicable Requirements of Law from such payments at the applicable
statutory rate.

51

(ii) Each U.S.
Lender shall (v) on or prior to the Closing Date in the case of each
U.S. Lender that is a signatory hereto, (w) on or prior to the date of
the Assignment and Acceptance pursuant to which such U.S. Lender
becomes a Lender, on or prior to the date a successor Issuer becomes an
Issuer or on or prior to the date a successor Agent becomes a Agent
hereunder, (x) on or prior to the date on which any such form or
certification expires or becomes obsolete, (y) after the occurrence of
any event requiring a change in the most recent form or certification
previously delivered by it to the Borrower and the applicable
Administrative Agent, and (z) from time to time if requested by the
Borrower or the applicable Administrative Agent, provide the applicable
Administrative Agent and the Borrower with two completed originals of
Form W-9 (certifying that such U.S. Lender is entitled to an exemption
from U.S. backup withholding tax) or any successor form. Solely for
purposes of this Section 2.16(f), a U.S. Lender shall not
include a Lender, an Issuer or a Agent that may be treated as an exempt
recipient based on the indicators described in Treasury Regulation
section 1.6049-4(c)(1)(ii) except to the extent that such Person is
required to deliver a withholding form under Treasury Regulation
section 1.1441-1 to establish its withholding status.

Unless the
Borrower and the applicable Administrative Agent have received forms,
documents and/or other evidence satisfactory to them indicating that
payments under any Loan Document to or for a U.S. Lender, Non-U.S.
Lender or Non-U.S. Agent are not subject to U.S. withholding tax or are
subject to such tax at a rate reduced by an applicable tax treaty, the
Loan Parties and the applicable Administrative Agent shall withhold
amounts required to be withheld by applicable Requirements of Law from
such payments at the applicable statutory rate.

(g) For
any period with respect to which an Agent, Lender or Issuer has failed
to provide the Borrower with the appropriate forms required under
Section 2.16(f), such Facility Agent, such Lender or such
Issuer shall not be entitled to indemnification or increased amounts
under Section 2.16(a) or (c) with respect to Taxes
imposed by the United States by reason of such failure except to the
extent withholding is required as a result of a change in law occurring
after the applicable time described in paragraph (f), in which case
Borrower shall be required to gross-up or indemnify for such amounts
resulting solely from such change in law.

(h) Any Lender
or Issuer claiming any additional amounts payable pursuant to this
Section 2.16 shall use its reasonable efforts (consistent
with its internal policy and legal and regulatory restrictions) to
change the jurisdiction of its Applicable Lending Office if the making
of such a change would avoid the need for, or reduce the amount of, any
such additional amounts which would be payable or may thereafter accrue
and would not, in the sole determination of such Lender or Issuer, be
otherwise disadvantageous to such Lender or Issuer.

(i) If
any Lender or any Issuer changes its residence, place of business or
Applicable Lending Office or takes any other similar action, and the
effect of such change or action, as of the date thereof, would be to
increase the additional amounts that the Loan Parties are obligated to
pay under this Section 2.16, the Loan Parties shall not
be obligated to pay the amount of such increase.

(j) If
any Agent or Lender determines in its sole discretion that it has
actually received any refund of tax in connection with any deduction or
withholding or payment of any additional amount by the Loan Parties
pursuant to this Section 2.16, such Person shall
reimburse the Borrower in an amount equal to such refund, after tax,
and net of all expenses incurred by the such Person in connection with
such refund. The Borrower shall return such amount to the applicable
Person in the event that such Person is required to repay such refund
of tax. Nothing contained in this paragraph shall interfere with the
right of each of the Agents and the Lenders to arrange its tax affairs
in whatever manner it thinks fit, nor to disclose any information or
any computations relating to its tax affairs or to do anything that
would prejudice its ability to benefit from other credits, relief,
remissions or repayments to which it may be
entitled.

Section 2.17    Substitution of
Lenders.    In the event that (a)(i) any Lender makes a claim
under Section 2.14(c) or Section 2.15, or
(ii) it becomes illegal for any Lender to continue to fund or make any
Eurodollar Rate Loan and such Lender notifies the Borrower pursuant to
Section 2.14(d), or (iii) the Borrower is required to
make any payment pursuant to Section 2.16 that is
attributable to any 

52

Lender, or (iv) any Lender is a Non-Funding
Lender, (b) in the case of clause (a)(i) above, as a consequence
of increased costs in respect of which such claim is made, the
effective rate of interest payable to such Lender under this Agreement
with respect to its Loans materially exceeds the effective average
annual rate of interest payable to the Requisite Lenders under this
Agreement and (c) except with respect to clause (a)(iii)
above, Lenders holding at least 75% of the sum of the Revolving
Credit Commitments and the principal amount of the Term Loans then
outstanding are not subject to such increased costs or illegality,
payment or proceedings (any such Lender, an
‘‘Affected Lender’’), the
Borrower may substitute another financial institution for such Affected
Lender hereunder, upon reasonable prior written notice (which written
notice must be given within 90 days following the occurrence of any of
the events described in clauses (a)(i), (ii), (iii) or
(iv) by the Borrower to the applicable Administrative Agent and the
Affected Lender that the Borrower intends to make such substitution,
which substitute financial institution must be an Eligible Assignee
and, if not a Lender, reasonably acceptable to the applicable
Administrative Agent; provided, however, that if more than one Lender
claims increased costs, illegality or right to payment arising from the
same act or condition and such claims are received by the Borrower
within 30 days of each other then the Borrower may substitute all, but
not (except to the extent the Borrower has already substituted one of
such Affected Lenders before the Borrower’s receipt of the other
Affected Lenders’ claims) less than all, Lenders making such
claims. In the event that the proposed substitute financial institution
or other entity is reasonably acceptable to the applicable
Administrative Agent and the written notice was properly issued under
this Section 2.17, the Affected Lender shall sell and the
substitute financial institution or other entity shall purchase,
pursuant to an Assignment and Acceptance, all rights and claims of such
Affected Lender under the Loan Documents and the substitute financial
institution or other entity shall assume and the Affected Lender shall
be relieved of its Commitments and all other prior unperformed
obligations of the Affected Lender under the Loan Documents (other than
in respect of any damages (other than exemplary or punitive damages, to
the extent permitted by applicable law) in respect of any such
unperformed obligations) and such sale and purchase shall be recorded
in the Register maintained by the applicable Administrative Agent. Upon
the effectiveness of such sale, purchase and assumption (which, in any
event shall be conditioned upon the payment in full by the Borrower to
the Affected Lender in cash of all fees, unreimbursed costs and
expenses and indemnities accrued and unpaid through such effective
date), the substitute financial institution or other entity shall
become a ‘‘Lender’’
hereunder for all purposes of this Agreement having a Commitment in the
amount of such Affected Lender’s Commitment assumed by it and
such Commitments of the Affected Lender shall be terminated, provided
that all indemnities under the Loan Documents shall continue in favor
of such Affected
Lender.

Section 2.18 Facility
Increase.

(a) The Borrower may (no more frequently than
two times after the Closing Date (in minimum increments of $50,000,000)
during the term of the Revolving Credit Facility) request the Lenders
or other Eligible Assignees to provide additional Commitments up to an
aggregate amount not in excess of $150,000,000 (a
‘‘Facility Increase’’);
provided, however, that (i) the Borrower shall have given
the Revolving Facility Agent at least 60 days notice of its intention
to effect the Facility Increase and the desired amount of such Facility
Increase (other than in respect of the $50,000,000 Facility Increase to
occur on the Closing Date), (ii) the conditions precedent to a
Borrowing set forth in Section 3.2 are satisfied as of the
Facility Increase Effective Date (as defined below), (iii) an opinion
of counsel to the Loan Parties in form and substance and from counsel
satisfactory to the Revolving Facility Agent and addressed to the
Facility Agents, the Issuers and the Lenders dated the Facility
Increase Effective Date and addressing such matters as the Revolving
Facility Agent may reasonably request shall be delivered to the
Administrative Agents, (iv) the Borrower shall have paid to the
Revolving Facility Agent a fee to be determined (but in any event
reasonably acceptable to Group) and (v) the Borrower shall have paid to
the Revolving Credit Lenders providing the Facility Increase a fee
required in order to clear the market in an amount to be
determined.

(b) The Borrower shall have the right to offer
such increase to (x) the Revolving Credit Lenders, and each Revolving
Credit Lender will have the right, but not the obligation, to commit to
all or a portion of the proposed Facility Increase or (y) any
institution that would be an Eligible 

53

Assignee; provided, however,
that the minimum additional Revolving Credit Commitment of each
Eligible Assignee equals or exceeds $5,000,000 and such Revolving
Credit Lender or Eligible Assignee executes an Assumption Agreement
pursuant to which such Revolving Credit Lender or Eligible Assignee
agrees to commit to all or a portion of such Facility Increase and, in
the case of an Eligible Assignee, to be bound by the terms of this
Agreement as a Lender.

(c) On the effective date provided
for in the Assumption Agreements providing for a Facility Increase
(each a ‘‘Facility Increase Effective
Date’’), the Revolving Credit Commitments will be
increased by the additional amount committed to by each Revolving
Credit Lender or Eligible Assignee on the Facility Increase Date.

(d) In the event there are Revolving Credit Lenders and
Eligible Assignees that have committed to a Facility Increase in excess
of the maximum amount requested (or permitted), then the Arrangers
(with the consent of the Borrower which shall not be unreasonably
withheld) shall have the right to allocate such commitments, first to
Lenders and then to Eligible Assignees.

ARTICLE III

CONDITIONS TO
LOANS AND LETTERS OF
CREDIT

Section 3.1 Conditions
Precedent to Initial Loans and Letters of Credit. The
obligation of each Lender to make the initial Loans requested to be
made by it on or after the Closing Date and the obligation of each
Issuer to Issue the initial Letters of Credit on or after the Closing
Date is subject to the satisfaction of all of the following conditions
precedent:

(a) Certain Documents.    The
Administrative Agents shall have received on the Closing Date each of
the following, each dated the Closing Date unless otherwise indicated
or agreed to by the Administrative Agents, in form and substance
satisfactory to the Administrative Agents and each Lender and each of
their respective counsel, in sufficient copies for each
Lender:

(i) this Agreement, duly
executed and delivered by the Borrower and
Group;

(ii) Lender Consents, duly
executed and delivered by the
‘‘Lenders’’ constituting
‘‘Requisite Lenders’’ (each under
and as defined in the Existing Credit Agreement);

(iii) for the account of each Lender
requesting the same, a Note of the Borrower conforming to the
requirements set forth herein;

(iv) the
Guaranty, duly executed by each
Guarantor;

(v) the Pledge and Security
Agreement, duly executed by the Borrower and each Guarantor, together
with each of the following:

(A) evidence
satisfactory to the Administrative Agents that, upon the filing and
recording of instruments delivered on the Closing Date, the Collateral
Agent (for the benefit of the Secured Parties) shall have a valid and
perfected security interest in the Collateral having the priority
described in Section 4.20 of this Agreement and the Collateral
Documents, including (x) such documents duly executed by each
Loan Party as the Administrative Agents may request with respect to the
perfection of the Collateral Agent’s security interests in the
Collateral (including financing statements under the UCC, patent,
trademark and copyright security agreements suitable for filing with
the Patent and Trademark Office or the Copyright Office, as the case
may be, and other applicable documents under the laws of any
jurisdiction with respect to the perfection of Liens created by the
Pledge and Security Agreement) and (y) copies of UCC search
reports as of a recent date listing all effective financing statements
that name any Loan Party as debtor, together with copies of such
financing statements, none of which shall cover the Collateral, except
for those that shall be terminated on the Closing Date or are otherwise
permitted hereunder;

(B) all
certificates, instruments and other documents representing all Pledged
Stock being pledged pursuant to such Pledge and Security Agreement and
stock powers for such certificates, instruments and other documents
executed in blank;

54

(C) all
instruments representing Pledged Debt Instruments being pledged
pursuant to such Pledge and Security Agreement duly endorsed in favor
of the Collateral Agent or in blank;
and

(vi) amendments to all Mortgages for
all of the Material Owned Real Properties of the Loan Parties
identified on Schedule 4.19 (Real Property) (except as may be
agreed to by the Administrative Agent), together with all Mortgage
Supporting Documents relating thereto;

(vii) a Borrowing Base Certificate dated on
or about the Closing Date;

(viii) a
favorable opinion of (A) Skadden, Arps, Slate, Meagher & Flom, LLP,
counsel to the Loan Parties, in substantially the form of Exhibit G
(Form of Opinion of Counsel for the Loan Parties), and addressing
such other related matters as any Lender through the Administrative
Agent may reasonably request, including opinions as to the
enforceability of the Loan Documents, compliance with all laws and
regulations (including Regulation U of the Board of Governors of the
Federal Reserve System), the perfection of all security interests
purported to be granted pursuant to the Collateral Documents and no
conflicts with material agreements, and (B) counsel to the
Administrative Agent as to the enforceability of this Agreement and the
other Loan Documents to be executed on the Closing
Date;

(ix) the Intercreditor Agreement
duly executed by the Administrative Agents, the Collateral Agent and
the Loan Parties;

(i) (A) a copy
of the articles or certificate of incorporation (or equivalent
Constituent Document) of each of Group and the Borrower, certified as
of a recent date by the Secretary of State (or local equivalent, if
applicable) of its jurisdiction of organization and (B) a
certificate of the Secretary or an Assistant Secretary of each of Group
and the Borrower certifying (1) the by-laws (or equivalent
Constituent Document) of each of Group and the Borrower as in effect on
the date of such certification, (2) the resolutions of each of
Group’ and the Borrower’s Board of Directors (or
equivalent governing body) approving and authorizing the execution,
delivery and performance of this Agreement and the other Loan Documents
to which each of Group and the Borrower is a party and (D) that
there have been no changes in the certificate of incorporation (or
equivalent Constituent Document) of each of Group and the Borrower from
the certificate of incorporation (or equivalent Constituent Document)
delivered pursuant to clause (A)
above;

(ii) a certificate of the
Secretary or an Assistant Secretary of each of Group and the Borrower
certifying the names and true signatures of each officer of each of
Group and the Borrower who has been authorized to execute and deliver
this Agreement and any Loan Document or other document required
hereunder to be executed and delivered by or on behalf of each of Group
and the Borrower;

(iii) a certificate of
the Secretary or an Assistant Secretary of each Loan Party (other than
each of Group and the Borrower) certifying (A) for each Loan
Party other than each of Group and the Borrower, that each officer of
such Loan Party who has been authorized to execute and deliver any Loan
Document (as defined in the Existing Credit Agreement) is authorized to
execute each Loan Document executed in connection herewith,
(B) that there have been no changes (other than as may be
attached to such certificate of the Secretary or Assistant Secretary)
to the certificate of incorporation or by-laws (or, in each case,
equivalent Constituent Document) from the certificate of incorporation
or by-laws (or, in each case, equivalent Constituent Document)
delivered pursuant to the Existing Credit Agreement on the Original
Closing Date and (C) that the resolutions of such Loan
Party’s Board of Directors (or equivalent governing body)
delivered pursuant to the Existing Credit Agreement on the Original
Closing Date approving and authorizing the execution, delivery and
performance of the Loan Documents (as defined in the Existing Credit
Agreement) to which it is a party remain in full force and effect and
have not been amended, supplemented or modified in any way and
authorize the execution of the Loan Documents executed in accordance
herewith;

(x) a certificate of the chief
financial officer of Group, stating that the Borrower is Solvent and
that the Borrower and the Subsidiary Guarantors (taken as a whole), are
Solvent, in each 

55

case, after giving effect to the initial
Loans and Letters of Credit, the application of the proceeds thereof in
accordance with Section 7.9, the payment of all estimated
legal, accounting and other fees related hereto and thereto and the
consummation of the Frankie Acquisition and the other transactions
contemplated hereby;

(xi) a certificate
of a Responsible Officer of Group to the effect that (A) the
conditions set forth in Section 3.2 have been satisfied
and (B) there are no pending or threatened actions, suits,
investigations, litigation or proceedings pending or threatened in any
court or before any arbitrator or Governmental Authority that (I) in
the aggregate could reasonably be expected to have a Material Adverse
Effect or (II) restrain, prevent or impose, or can reasonably be
expected to impose, materially adverse conditions upon the Frankie
Acquisition, the Facilities or the transactions contemplated
thereby.

(xii) evidence satisfactory to
the Administrative Agents that the insurance policies required by
Section 7.5 and any Collateral Document are in full force
and effect, together with, unless otherwise agreed by the
Administrative Agents, endorsements naming the Collateral Agent, on
behalf of the Secured Parties, as an additional insured or loss payee
under all insurance policies to be maintained with respect to the
properties of each Loan Party;

(xiii) receipt of a valuation by the Agents
(by a nationally recognized appraisal firm, valuation consultant or
investment banking firm) of all Intellectual Property associated
therewith of Group and its Subsidiaries prior to giving effect to the
Frankie Acquisition, which in no event shall be less than $400,000,000;
and

(xiv) such other certificates,
documents, agreements and information respecting any Loan Party as any
Lender through the applicable Administrative Agent may reasonably
request.

(b) Consummation of Frankie
Acquisition.

(i) a copy of each
Frankie Acquisition Document as in effect as of the Closing Date
certified as being complete and correct by a Responsible Officer of
Group;

(ii) the Administrative Agents
shall be reasonably satisfied with the structure of the Frankie
Acquisition, including the corporate and capital structure of Group and
its Subsidiaries after giving effect to the Frankie Acquisition and all
legal and tax aspects related thereto;

(iii) the Administrative Agents shall be
reasonably satisfied that the Frankie Acquisition Documents are
in full force and effect;

(iv) the
Administrative Agents shall have received a certificate, in form and
substance reasonably satisfactory to them, from a Responsible Officer
of the Borrower, for the benefit of the Agents, the Lenders and the
Issuers certifying on behalf of the Borrower that the Frankie
Acquisition has been consummated or shall be consummated simultaneously
with the making of the initial Loans under this Agreement in accordance
with the terms hereof, the terms of the Frankie Acquisition Documents
and applicable Requirements of Law (other than certain
non-discretionary consents, authorizations, filings, registrations and
other similar actions or approvals which by their nature may only be
made after the Closing Date and which will be made as soon as practical
after the Closing Date); and

(v) the
Administrative Agents shall be reasonably satisfied with any material
amendments to the Frankie Acquisition Agreement and the schedules
thereto and any other Frankie Acquisition Document if such amendments
are adverse to the Lenders.

(c) Financial
Statements.    The Lenders shall have received and be satisfied
with (i) a pro forma estimated balance sheet of Group and its
Subsidiaries at September  30,  2005 giving effect to the
Frankie Acquisition and the transactions contemplated thereby, (ii) the
‘‘Italian GAAP Financials’’ as such term is
defined under the Frankie Acquisition Agreement, (iii) unaudited
consolidating (by business unit) income statement and balance sheet and
audited consolidated financial statements of Group and its Subsidiaries
for each fiscal quarter ending on or after January  1,
2005 for which such financial statements are available in final form
and (iv) Group’s projections which shall include a 

56

financial forecast on a monthly basis for
the first twelve months after the Closing Date and on an quarterly
basis thereafter through the year of the Term Loan Maturity Date
prepared by Group’s
management.

(d) Availability.    As of the
Closing Date, Available Credit shall be not less than $75,000,000
(after giving effect to the Borrowings and issuances of Letters of
Credit requested to be made on the Closing
Date).

(e) Consents, Etc.    Each Warnaco Entity
shall have received all material consents and authorizations required
pursuant to any material Contractual Obligation with any other Person
and shall have obtained all Permits of, and effected all notices to and
filings with, any Governmental Authority, in each case, as may be
necessary to allow each of the Warnaco Entities lawfully (i) to
execute, deliver and perform, in all material respects, their
respective obligations hereunder and under the Loan Documents to which
each of them, respectively, is, or shall be, a party and each other
agreement or instrument to be executed and delivered by each of them,
respectively, pursuant thereto or in connection therewith,
(ii) to create and perfect the Liens on the Collateral to be
owned by each of them in the manner and for the purpose contemplated by
the Loan Documents or the transactions contemplated thereby and (iii)
to consummate the Frankie Acquisition (other than certain
non-discretionary consents, authorizations, filings, registrations and
other similar actions or approvals which by their nature may only be
made after the Closing Date and which will be made as soon as practical
after the Closing Date).

(f) Fees and Expenses
Paid.    There shall have been paid to the Administrative Agent,
for the account of the Administrative Agent, the Arrangers, and the
Lenders, as applicable, all fees and expenses (including reasonable
fees and expenses of counsel) due and payable on or before the Closing
Date (including all such fees described in the Fee
Letters).

Section 3.2 Conditions Precedent to
Each Loan and Letter of Credit. The obligation of each
Lender on any date (including the Closing Date) to make any Loan and of
each Issuer on any date (including the Closing Date) to Issue any
Letter of Credit is subject to the satisfaction of all of the following
conditions precedent:

(a) Request for Borrowing or
Issuance of Letter of Credit.    With respect to (i) the Term
Loans, the Term Facility Agent shall have received a duly executed
Notice of Borrowing, (ii) any Revolving Loan, the Revolving Facility
Agent shall have received a duly executed Notice of Borrowing, (iii)
any Swing Loan, the Revolving Facility Agent shall have received a duly
executed Swing Loan Request and (iv) any Letter of Credit, the
Administrative Agent and the Issuer shall have received a duly executed
Letter of Credit Request, in each case, dated on or before such
date.

(b) Representations and Warranties; No
Defaults.    The following statements shall be true on the date
of such Loan or issuance of such Letter of Credit, both before and
after giving effect thereto and, in the case of any Loan, to the
application of the proceeds therefrom:

(i) The representations and warranties set
forth in Article IV and in the other Loan Documents shall
be true and correct on and as of the Closing Date and shall be true and
correct in all material respects on and as of any such date after the
Closing Date with the same effect as though made on and as of such
date, except to the extent such representations and warranties
expressly relate to an earlier date, in which case such representations
and warranties shall have been true and correct in all material
respects as of such earlier date;
and

(ii) no Default or Event of Default
has occurred and is continuing.

(c) Borrowing
Base.    The Borrower shall have delivered the Borrowing Base
Certificate required to be delivered by Section 6.12.
After giving effect to the Loans or the Letters of Credit requested to
be made or Issued on any such date and the use of proceeds thereof, the
Revolving Credit Outstandings shall not exceed the Maximum Credit at
such time.

(d) No Legal Impediments.    The
making of the Loans or the issuance of such Letter of Credit on such
date does not violate any Requirement of Law on the date of or
immediately following such Loan or issuance of such Letter of Credit
and is not enjoined, temporarily, preliminarily or permanently.

57

(e) Additional
Matters.    The applicable Administrative Agent shall have
received such additional documents, information and materials as any
applicable Lender, through such Administrative Agent, may reasonably
request in order to confirm the (i) accuracy of the
representations and warranties of the Loan Parties in the Loan
Documents, (ii) timely compliance by the Loan Parties with the
terms, covenants and agreements set forth in the Loan Documents, and
(iii) absence of any Default or Event of Default under the Loan
Documents.

Each submission by the Borrower to the
applicable Administrative Agent of a Notice of Borrowing or a Swing
Loan Request and the acceptance by the Borrower of the proceeds of each
Loan requested therein, and each submission by the Borrower to an
Issuer of a Letter of Credit Request and the issuance of each Letter of
Credit requested therein, shall be deemed to constitute a
representation and warranty by the Borrower as to the matters specified
in Section 3.2(b) on the date of the making of such Loan
or the issuance of such Letter of
Credit.

Section 3.3 Determinations of Initial
Borrowing Conditions.    For purposes of determining
compliance with the conditions specified in Section 3.1,
each Lender shall be deemed to have consented to, approved, accepted or
be satisfied with, each document or other matter required thereunder to
be consented to or approved by or acceptable or satisfactory to the
Lenders unless an officer of the applicable Administrative Agent
responsible for the transactions contemplated by the Loan Documents
shall have received notice from such Lender prior to the initial
Borrowing, borrowing of Swing Loans or Issuance or deemed Issuance
hereunder specifying its objection thereto and such Lender shall not
have made available to the applicable Administrative Agent such
Lender’s Ratable Portion of such Borrowing or Swing
Loans.

 ARTICLE IV 

 REPRESENTATIONS
AND WARRANTIES 

To induce the Lenders, the
Issuers, the Administrative Agents and the Collateral Agent to enter
into this Agreement, Group represents and warrants as to each Warnaco
Entity, and the Borrower represents and warrants as to itself and as to
each of its Subsidiaries, to the Lenders, the Issuers, the
Administrative Agents and the Collateral Agent that, on and as of the
Closing Date, after giving effect to the making of the Loans and other
financial accommodations on the Closing Date and on and as of each date
as required by
Section 3.2(b)(i):

Section 4.1 Corporate
Existence; Compliance with Law. Each Warnaco Entity
(a) is duly organized, validly existing and in good standing
under the laws of the jurisdiction of its organization; (b) is
duly qualified as a foreign entity and in good standing under the laws
of each jurisdiction where such qualification is necessary, except
where the failure to be so qualified or in good standing would not, in
the aggregate, have a Material Adverse Effect; (c) has all
requisite power and authority and the legal right to own, pledge,
mortgage and operate its properties, to lease the property it operates
under lease and to conduct its business as now or currently proposed to
be conducted; (d) is in compliance with its Constituent
Documents; (e) is in compliance with all applicable Requirements
of Law, except where the failure to be in compliance would not in the
aggregate, have a Material Adverse Effect; and (f) has all
necessary licenses, permits, consents or approvals from or by, has made
all necessary filings with, and has given all necessary notices to,
each Governmental Authority having jurisdiction, to the extent required
for such ownership, operation and conduct, except for licenses,
permits, consents, approvals or filings which can be obtained or made
by the taking of ministerial action to secure the grant or transfer
thereof or the failure to obtain or make would not, in the aggregate,
have a Material Adverse
Effect.

Section 4.2 Corporate Power;
Authorization; Enforceable Obligations.

(a) The
execution, delivery and performance by each Warnaco Entity of the Loan
Documents to which it is a party and the consummation of the
transactions contemplated thereby, including the obtaining of the Loans
and the creation and perfection of the Liens on the Collateral as
security therefor:

58

(i) are within
such Warnaco Entity’s corporate, limited liability company,
partnership or other powers;

(ii) have
been or, at the time of delivery thereof pursuant to
Article III will have been, duly authorized by all
necessary corporate action, including the consent of shareholders,
partners and members where
required;

(iii) do not and will not
(A) contravene such Warnaco Entity’s or its Subsidiaries
respective Constituent Documents, (B) violate any other
Requirement of Law applicable to such Warnaco Entity (including
Regulations T, U and X of the Federal Reserve Board), or any order or
decree of any Governmental Authority or arbitrator applicable to such
Warnaco Entity, (C) conflict with or result in the breach of, or
constitute a default under, or result in or permit the termination or
acceleration of, any Contractual Obligation of such Warnaco Entity or
any of its Subsidiaries, or (D) result in the creation or
imposition of any Lien upon any of the property of such Warnaco Entity
or any of its Subsidiaries, other than those in favor of the Secured
Parties pursuant to the Loan Documents;
and

(iv) do not require the consent of,
authorization by, approval of, notice to, or filing or registration
with, any Governmental Authority or any other Person, other than those
listed on Schedule 4.2 (Consents) and which have been or will
be, prior to the Closing Date, obtained or made (without the imposition
of any conditions that are not reasonably acceptable to the Agents),
copies of which have been or will be delivered to the Administrative
Agent pursuant to Section 3.1, and each of which on the
Closing Date will be in full force and effect and, with respect to the
Collateral, filings required to perfect the Liens created by the
Collateral Documents.

(b) This Agreement has been, and
each of the other Loan Documents and Frankie Acquisition Documents will
have been upon delivery thereof hereunder, duly executed and delivered
by each Warnaco Entity party thereto.

(c) This Agreement
is, and the other Loan Documents and the Frankie Acquisition Documents
will be, when delivered hereunder, the legal, valid and binding
obligation of each Warnaco Entity party thereto, enforceable against
such Warnaco Entity in accordance with its
terms.

Section 4.3 Ownership of Group,
Borrower; Subsidiaries.

(a) The authorized capital
stock of the Borrower consists of 100,000 shares of common stock, $1.00
par value per share, of which 100,000 shares are issued and
outstanding. All of the outstanding capital stock of the Borrower has
been validly issued, is fully paid and non-assessable and is owned
beneficially and of record by Group, free and clear of all Liens other
than the Lien in favor of the Collateral Agent for the benefit of the
Secured Parties created under the Loan Documents. No Stock of the
Borrower is subject to any option, warrant, right of conversion or
purchase or any similar right. There are no agreements or
understandings to which the Borrower is a party with respect to the
voting, sale or transfer of any shares of Stock of the Borrower or any
agreement restricting the transfer or hypothecation of any such
shares.

(b) Set forth on Schedule 4.3 (Ownership
of Warnaco Entities) is a complete and accurate list of all
Subsidiaries of Group on the Closing Date, showing (as to each such
Subsidiary) the jurisdiction of its incorporation or organization, the
number of shares of each class of its Stock or Stock Equivalents
authorized, and the number outstanding, on the Closing Date and the
percentage of each such class of its Stock or Stock Equivalents owned
(directly or indirectly) by such Loan Party and the number of shares
covered by all outstanding options, warrants, rights of conversion or
purchase and similar rights at the Closing Date. All of the outstanding
Stock or Stock Equivalents in each Subsidiary of Group has been validly
issued, is fully paid and non-assessable and is owned by a Warnaco
Entity (except as described on Schedule 4.3 (Ownership of
Warnaco Entities)) free and clear of all Liens, except those
created under the Loan Documents. No Stock of any Warnaco Entity is
subject to any outstanding option, warrant, right of conversion or
purchase or any similar right. No Warnaco Entity is a party to, or has
knowledge of, any agreement restricting the transfer or hypothecation
of any Stock of any such Subsidiary, other than the Loan Documents.
Group does not own or hold, directly or indirectly, any 

59

Stock of any Person other than the
Subsidiaries set forth on Schedule 4.3 (Ownership of Warnaco
Entities) and the Investments permitted by
Section 8.3.

Section 4.4 Financial
Statements.

(a) The consolidated balance sheet of
Group and its Subsidiaries as at December 31, 2004, and the
related consolidated statements of income, retained earnings and cash
flows of Group and its Subsidiaries for the fiscal year then ended,
certified by Deloitte & Touche LLP, and the unaudited consolidating
balance sheets of Group and its Subsidiaries as at December
31,  2004, and the related consolidated statements of income,
retained earnings and cash flows of Group and its Subsidiaries for the
Fiscal Year or Fiscal Quarter then ended, copies of which have been
furnished to each Lender, fairly present, subject, in the case of said
consolidated and consolidating balance sheets as at December
31,  2004, and said consolidating or consolidated statements of
income, retained earnings and cash flows for the Fiscal Year or Fiscal
Quarter then ended, to the absence of footnote disclosure and normal
recurring year-end audit adjustments, the consolidated and
consolidating, as the case may be, financial condition of Group and its
Subsidiaries as at such dates and the consolidated and consolidating,
as the case may be, results of the operations of Group and its
Subsidiaries for the period ended on such dates, all in conformity with
GAAP.

(b) Neither Group nor any of its Subsidiaries has
any material obligation, contingent liability or liability for taxes,
long-term leases or unusual forward or long-term commitment which is
not reflected in the Financial Statements referred to in clause(a)
above, in the notes thereto or permitted by this
Agreement.

(c) The Projections have been prepared by Group
in light of the past operations of its business, and reflect
projections for the fiscal periods covered thereby. The Projections are
based upon estimates and assumptions stated therein, all of which Group
believes to be reasonable and fair in light of current conditions and
current facts known to Group and, as of the Closing Date, reflect
Group’s good faith and reasonable estimates of the future
financial performance of Group and its Subsidiaries and of the other
information projected therein for the periods set forth
therein.

(d) The unaudited consolidated and consolidating
balance sheet of Group and its Subsidiaries, a copy of which has been
delivered to each Lender pursuant to Section 3.1(c), has
been prepared as at the September  30,  2005, reflects as
of such date, on a Pro Forma Basis, the consolidated and consolidating
financial condition of Group and its Subsidiaries, and the assumptions
expressed therein were reasonable based on the information available to
Group at the time so furnished and on the Closing
Date.

Section 4.5 Material Adverse
Change. Since December  31,  2004, there has
been no Material Adverse Change and there have been no events or
developments that in the aggregate have had a Material Adverse
Effect.

Section 4.6 Solvency.

Both
before and after giving effect to (a) the Loans and Letter of
Credit Obligations to be made or extended on the Closing Date or such
other date as Loans and Letter of Credit Obligations requested
hereunder are made or extended, (b) the disbursement of the
proceeds of such Loans pursuant to the instructions of the Borrower,
(c) the consummation of the transactions contemplated by the
Frankie Acquisition and (d) the payment and accrual of all
transaction costs in connection with the foregoing, the Borrower is
Solvent and the Borrower and the Subsidiary Guarantors, taken as a
whole, are Solvent.

Section 4.7 Litigation. There are no
pending or, to the knowledge of Group or the Borrower, threatened
actions, suits, investigations, litigation or proceedings pending or
threatened in any court or before any arbitrator or Governmental
Authority that in the aggregate could reasonably be expected to have a
Material Adverse Effect. The performance of any action by any Loan
Party required or contemplated by any of the Loan Documents or, to the
knowledge of Group or the Borrower, the Frankie Acquisition Documents
is not and could not reasonably be expected to be restrained or
enjoined (either temporarily, preliminarily or
permanently).

60

Section 4.8 Taxes.

(a) All
federal, and material state, local and foreign income, franchise and
other tax returns, reports and statements (collectively, the
‘‘Tax Returns’’) required to
be filed by Group or any of its Tax Affiliates have been filed with the
appropriate Governmental Authorities in all jurisdictions in which such
Tax Returns are required to be filed, all such Tax Returns are true and
correct in all material respects, and all taxes, charges and other
impositions reflected therein or which are material and otherwise due
and payable have been paid prior to the date on which any fine,
penalty, interest, late charge or loss may be added thereto for
non-payment thereof except where contested in good faith and by
appropriate proceedings if adequate reserves therefor have been
established on the books of Group or such Tax Affiliate in conformity
with GAAP. Proper and accurate amounts have been withheld by Group and
each of its Tax Affiliates from their respective employees for all
periods in full and complete compliance with the tax, social security
and unemployment withholding provisions of applicable Requirements of
Law and such withholdings have been timely paid to the respective
Governmental Authorities.

(b) None of Group or any of its
Tax Affiliates has (i) executed or filed with the IRS or any
other Governmental Authority any agreement or other document extending,
or having the effect of extending, the period for the filing of any
material Tax Return or the assessment or collection of any material
taxes or other charges relating thereto; (ii) any obligation under any
tax sharing agreement or arrangement other than that to which the
Administrative Agent has a copy prior to the date hereof; or (iii) been
a member of an affiliated, combined or unitary group other than the
group of which Group (or its Tax Affiliate) is the common parent other
than, prior to the acquisition by Group thereof, Warnaco Swimwear, Inc.
and its Subsidiaries and Designer Holdings Limited and its
Subsidiaries.

(c) Each Foreign Subsidiary owned directly
or indirectly by Group is either a ‘‘controlled
foreign corporation’’, as defined under Section 957
of the Code, or owned, directly or indirectly, by one or more
‘‘controlled foreign
corporations’’.

Section 4.9    Full
Disclosure.    (i) The written information prepared or furnished
by or on behalf of any Warnaco Entity (other the information described
in clause (ii) below) in connection with this Agreement or the
consummation of the financing, taken as a whole, does not contain any
untrue statement of a material fact or omit to state a material fact
necessary to make the statements contained therein or herein not
misleading. All facts known to Group or the Borrower which are material
to an understanding of the financial condition, business, properties or
prospects of Group and its Subsidiaries taken as one enterprise have
been disclosed to the Lenders.

(ii) The financial
information relating to the Frankie Business and the Frankie Collection
Business prepared by (x) a non-Warnaco Entity (at the time of
preparation) or (y) a Warnaco Entity (at the time of preparation) based
primarily on information which was furnished by a non-Warnaco Entity
(at the time of preparation)) does not, to the knowledge of any Warnaco
Entity as of the Closing Date, contain any untrue statement of a
material fact or omit to state a material fact necessary to make the
statements contained therein or herein not misleading.

Section 4.10 Margin Regulations. No
Warnaco Entity is engaged in the business of extending credit for the
purpose of purchasing or carrying margin stock (within the meaning of
Regulation U of the Federal Reserve Board), and no proceeds of any
Borrowing will be used to purchase or carry any margin stock or to
extend credit to others for the purpose of purchasing or carrying any
margin stock in contravention of Regulation T, U or X of the Federal
Reserve Board.

Section 4.11 No Burdensome
Restrictions; No Defaults.

(a) No Warnaco Entity (i)
is a party to any Contractual Obligation the compliance with which
would have a Material Adverse Effect or the performance of which by any
thereof, either unconditionally or upon the happening of an event,
would result in the creation of a Lien (other than a Lien permitted
under Section 8.2) on the property or assets of any
thereof or (ii) is subject to any charter or corporate or other
similar restriction that would have a Material Adverse
Effect.

(b) No Warnaco Entity is in default under or with
respect to any Contractual Obligation owed by it and, to the knowledge
of Group and the Borrower, no other party is in default under or with

61

respect to any Contractual Obligation owed
to any Warnaco Entity, other than, in either case, those defaults which
in the aggregate would not have a Material Adverse
Effect.

(c) No Default or Event of Default has occurred
and is continuing.

(d) To the best knowledge of Group and
the Borrower, there is no Requirement of Law applicable to any Warnaco
Entity the compliance with which by such Warnaco Entity would have a
Material Adverse Effect.

Section 4.12    Investment
Company Act; Public Utility Holding Company Act. No Warnaco
Entity is (a) an ‘‘investment company’’ or
an ‘‘affiliated person’’ of, or
‘‘promoter’’ or ‘‘principal
underwriter’’ for, an ‘‘investment
company,’’ as such terms are defined in the Investment
Company Act of 1940, as amended or (b) a ‘‘holding
company’’ or an ‘‘affiliate’’
of a ‘‘holding company’’ or a
‘‘subsidiary company’’ of a
‘‘holding company’’, as each such term is
defined and used in the Public Utility Holding Company Act of 1935, or,
as the case may be, the Public Utility Holding Company Act of 2005,
enacted as part of the Energy Policy Act of 2005, Pub. L. No. 109-58 at
§§ 1261 et seq, and the regulations adopted thereunder as
of the effective date of this
Agreement.

Section 4.13 Use of
Proceeds.    (a) The proceeds of the Revolving Loans and
the Letters of Credit are being used by the Borrower (and, to the
extent distributed by the Borrower, each other Warnaco Entity) solely
as follows: (i) to provide working capital from time to time for the
Warnaco Entities and (ii) for other general and corporate purposes of
the Warnaco Entities.

(b) The proceeds of the Term Loan
are being used by the Borrower (i) to finance the Frankie Acquisition,
(ii) to pay related transaction costs, fees and expenses, (iii) to
provide working capital from time to time for Group and its
subsidiaries and (iv) for other general corporate
purposes.

Section 4.14 Insurance. All
policies of insurance of any kind or nature of any Warnaco Entity,
including policies of life, fire, theft, product liability, public
liability, property damage, other casualty, employee fidelity,
workers’ compensation and employee health and welfare insurance,
are in full force and effect and are of a nature and provide such
coverage as is sufficient and as is customarily carried by businesses
of the size and character of such Person. No Warnaco Entity has been
refused insurance for any material coverage which it had applied or,
prior to the date hereof, had any policy of insurance terminated (other
than at its request). Each insurance policy maintained by each Loan
Party includes endorsements naming the Collateral Agent, on behalf of
the Secured Parties, as an additional insured or loss payee
thereunder.

Section 4.15 Labor
Matters.

(a) There are no strikes, work stoppages,
slowdowns or lockouts pending or threatened against or involving any
Warnaco Entity, other than those which in the aggregate would not have
a Material Adverse Effect.

(b) There are no unfair labor
practices, grievances or complaints pending, or, to Group’s
knowledge, threatened against or involving any Warnaco Entity, nor are
there any arbitrations or grievances threatened involving any Warnaco
Entity, other than those which, in the aggregate, if resolved adversely
to such Warnaco Entity, would not have a Material Adverse
Effect.

(c) Except as set forth on Schedule 4.15 (Labor
Matters), as of the Closing Date, there is no collective bargaining
agreement covering any employee of any Warnaco
Entity.

(d) Schedule 4.15 (Labor Matters) sets
forth, as of the Closing Date, all material consulting agreements,
executive employment agreements, executive compensation plans, deferred
compensation agreements, employee stock purchase and stock option plans
and severance plans of any Warnaco
Entity.

Section 4.16 ERISA.

(a) Schedule
4.16 (ERISA Matters) separately identifies as of the date hereof
all Title IV Plans, all Multiemployer Plans and all of the employee
benefit plans within the meaning of Section 3(3) of ERISA to which any
Warnaco Entity has any obligation or liability, contingent or
otherwise.

62

(b) Each employee benefit plan of
each Warnaco Entity which is intended to qualify under Section 401 of
the Code does so qualify, and any trust created thereunder is exempt
from tax under the provisions of Section 501 of the Code, except where
such failures in the aggregate would not have a Material Adverse
Effect.

(c) Each Title IV Plan is in compliance in all
material respects with applicable provisions of ERISA, the Code and
other Requirements of Law except for non-compliances that in the
aggregate would not have a Material Adverse
Effect.

(d) There has been no, nor is there reasonably
expected to occur, any ERISA Event which would have a Material Adverse
Effect

(e) Other than as set forth on Schedule 4.16
(ERISA Matters), there are no Unfunded Pension
Liabilities.

(f) Other than as set forth on Schedule
4.16 (ERISA Matters), no Warnaco Entity or any ERISA Affiliate
thereof would have any Withdrawal Liability as a result of a complete
withdrawal as of the date hereof from any Multiemployer
Plan.

Section 4.17 Environmental
Matters.

(a) The operations and properties of each
Warnaco Entity comply, except to the extent non-compliance would not
have a Material Adverse Effect, with all applicable Environmental Laws
and Environmental Permits, all material past non-compliance with such
Environmental Laws and Environmental Permits has been resolved without
ongoing material obligations or costs, and no circumstances exist that
would be reasonably likely to (A) form the basis of an
Environmental Action against any Warnaco Entity or any of their
properties that could be reasonably expected to have a Material Adverse
Effect or (B) cause any such property to be subject to any
material restrictions on ownership, occupancy, use or transferability
under any Environmental Law.

(b) None of the properties
currently or formerly owned or operated by any Warnaco Entity is, to
the knowledge of Group or the Borrower with respect to formerly owned
properties, listed or proposed for listing on the NPL or on the CERCLIS
or any analogous foreign, state or local list or is adjacent to any
such property, except where such listing would not reasonably be
expected to have a Material Adverse Effect; there are no and never have
been any underground or aboveground storage tanks or any surface
impoundments, septic tanks, pits, sumps or lagoons in which
Contaminants are being or have been treated, stored or disposed on any
property currently owned or operated by any Warnaco Entity or, to the
best of its knowledge, on any property formerly owned or operated by
any Warnaco Entity that in any case could reasonably be expected to
have a Material Adverse Effect; there is no asbestos or
asbestos-containing material on any property currently owned or
operated by any Warnaco Entity that in any case could reasonably be
expected to have a Material Adverse Effect; and Contaminants have not
been released, discharged or disposed of on any property currently or,
to the best knowledge of Group and the Borrower, formerly owned or
operated by any Warnaco Entity that in any case could reasonably be
expected to have a Material Adverse Effect.

(c) No Warnaco
Entity is undertaking, and has not completed, either individually or
together with other potentially responsible parties, any investigation
or assessment or remedial or response action relating to any actual or
threatened release, discharge or disposal of Contaminants at any site,
location or operation, either voluntarily or pursuant to the order of
any governmental or regulatory authority or the requirements of any
Environmental Law that in any case could reasonably be expected to have
a Material Adverse Effect; and all Contaminants generated, used,
treated, handled or stored at, or transported to or from, any property
currently or formerly owned or operated by any Warnaco Entity have been
disposed of in a manner not reasonably expected to result in material
liability to any Warnaco
Entity.

Section 4.18 Intellectual Property;
Material License.

(a) The Warnaco Entities own or
license or otherwise have the right to use all Intellectual Property
and other intellectual property rights that are necessary for the
operations of their respective businesses, without, to the best of
Group’s knowledge, infringing upon or conflict with the rights
of 

63

any other Person with respect thereto,
including all trade names associated with any private label brands of
any Warnaco Entity. To Group’s knowledge, no Intellectual
Property now employed by any Warnaco Entity infringes upon or conflicts
with any rights owned by any other Person, and no claims or litigation
regarding any of the foregoing are pending or threatened, where such
infringements, conflicts, claims or litigation would have, in the
aggregate, a Material Adverse Effect.

(b) Each Material
License is in full force and effect as of the Closing
Date.

Section 4.19 Title; Real
Property.

(a) Each Warnaco Entity has good and
marketable title to all Material Owned Real Property and good title to
all personal property purported to be owned by it, including those
reflected on the most recent Financial Statements delivered by Group,
and none of such properties and assets is subject to any Lien, except
Liens permitted under Section 8.2. Each Warnaco Entity
has received all deeds, assignments, waivers, consents, non-disturbance
and recognition or similar agreements, bills of sale and other
documents, and have duly effected all recordings, filings and other
actions necessary to establish, protect and perfect such Warnaco
Entity’s right, title and interest in and to all such Material
Owned Real Property.

(b) Set forth on Schedule 4.19
(Real Property) hereto is a complete and accurate list of all
Material Owned Real Property and all Material Leased Property, showing
as of the Closing Date, the street address, county or other relevant
jurisdiction, state, and record owner.

(c) As of the
Closing Date, no portion of any Material Owned Real Property or any
Material Leased Property has suffered any material damage by fire or
other casualty loss which has not heretofore been completely repaired
and restored to its original condition. No portion of any Real Property
owned or leased by any Warnaco Entity is located in a special flood
hazard area as designated by any federal Governmental Authority (unless
flood insurance has been obtained).

(d) All Permits
required to have been issued or appropriate to enable all real property
owned or leased by any Warnaco Entity to be lawfully occupied and used
for all of the purposes for which they are currently occupied and used
have been lawfully issued and are in full force and effect, other than
those which, in the aggregate, would not have a Material Adverse
Effect.

(e) No Warnaco Entity has received any notice, or
has any knowledge, of any pending, threatened or contemplated
condemnation proceeding affecting any Real Property owned or leased by
any Warnaco Entity or any part thereof, except those which, in the
aggregate, would not have a Material Adverse
Effect.

Section 4.20 Perfection of Security
Interests in the Collateral.

(a) The Collateral
Documents create valid Liens on the Revolving Priority Collateral
purported to be covered thereby, which Liens are perfected Liens and
(i) in the case of the Liens in favor of the Collateral Agent for the
benefit of the Secured Parties in respect of the Revolving Credit
Facility, prior to all other Liens (other than Customary Permitted
Liens having priority over such Liens) and (ii) in the case of the
Liens in favor of the Collateral Agent for the benefit of the Secured
Parties in respect of the Term Loan Facility, prior to all other Liens
(other than (x) the Liens in favor of the Collateral Agent for the
benefit of the Secured Parties in respect of the Revolving Credit
Facility and (y) Customary Permitted Liens having priority over such
Liens of the Collateral Agent).

(b) The Collateral
Documents create valid Liens on the Specified IP Collateral purported
to be covered thereby, which Liens are perfected Liens and (i) in the
case of Liens in favor of the Collateral Agent for the benefit of the
Secured Parties in respect of the Term Loan Facility, prior to all
other Liens (other than Customary Permitted Liens having priority over
such Liens) and (ii) in the case of the Liens in favor of the
Collateral Agent for the benefit of the Secured Parties in respect of
the Revolving Credit Facility, prior to all other Liens (other than (x)
the Liens in favor of the Collateral Agent for the benefit of the
Secured Parties in respect of the Term Loan Facility and (y) Customary
Permitted Liens having priority over such Liens of the Collateral
Agent).

Section 4.21    Hedging Contracts;
Cash Management Obligations.    To the best knowledge of Group
and the Borrower, the aggregate amount of
‘‘market’’ and
‘‘credit’’ risk of all Agents,
Lenders 

64

and Affiliates thereof from (i) Hedging
Contracts and (ii) Cash Management Obligations entered into with or
provided to the Warnaco Entities that are Secured Obligations does not
exceed
$25,000,000.

 ARTICLE V 

 FINANCIAL
COVENANTS 

As long as any of the Obligations or
the Commitments remain outstanding, unless the Requisite Lenders
otherwise consent in writing, Group and the Borrower agree with the
Lenders and the Facility Agents
that:

Section 5.1 Maximum
Leverage Ratio

(a) Prior to the repayment in full in
cash of the Term Loans and the termination of all Obligations under the
Term Loan Facility, Group shall maintain, on the last day of each
Fiscal Quarter set forth below (and on each day of the subsequent
Fiscal Quarter ending prior to the last day of such subsequent Fiscal
Quarter), a Leverage Ratio of not more than the maximum ratio set forth
below opposite such Fiscal Quarter:

(b) After repayment in
full in cash of the Term Loans and the termination of all Obligations
under the Term Loan Facility, Group shall maintain a Leverage Ratio,
for any Fiscal Quarter in which Available Credit has been less than
$50,000,000 on any day (determined as of 5:00 PM New York City time on
that day), as determined as of the last day of the preceding Fiscal
Quarter set forth below ended closest to such day, for the four Fiscal
Quarters ending on such day of not more than the maximum ratio set
forth below opposite such Fiscal Quarter:

							
	FISCAL
QUARTER ENDING ON

 OR ABOUT		MAXIMUM
LEVERAGE

RATIO
	June
30,
2006		3.00 to
1
	September  30,  2006		3.00 to
1
	December  31,  2006		3.00 to
1
	March  31,  2007		2.75 to
1
	June  30,  2007		2.75 to
1
	September  30,  2007		2.75 to
1
	December  31,  2007		2.75 to
1
	March  31,  2008		2.50 to
1
	June  30,  2008		2.50 to
1
	September  30,  2008		2.50 to
1
	December  31,  2008		2.50 to
1
	March  31,  2009 and each Fiscal
Quarter thereafter		2.25 to
1
	

Section 5.2 Minimum
Fixed Charge Coverage Ratio

(a) Prior to the
repayment in full in cash of the Term Loans and the termination of all
Obligations under the Term Loan Facility, Group shall maintain a Fixed
Charge Coverage Ratio, as determined as of the last day of the Fiscal
Quarter set forth below ended closest to such day, for the four Fiscal
Quarters ending on such day, of at least the minimum ratio set forth
below opposite such Fiscal Quarter:

(b) After repayment in
full in cash of the Term Loans and the termination of all Obligations
under the Term Loan Facility, Group shall maintain a Fixed Charge
Coverage Ratio, for any Fiscal Quarter in which Available Credit has
been less than $50,000,000 on any day (determined as of 5:00 PM New
York City time on that day), as determined as of the last day of the
preceding Fiscal Quarter set forth below ended closest to such day, for
the four Fiscal Quarters ending on such day of at least the minimum
ratio set forth below opposite such Fiscal Quarter:

65

							
	FISCAL
QUARTER ENDING ON

 OR ABOUT 		MINIMUM
FIXED CHARGE COVERAGE
RATIO 
	June
30,
2006		2.50 to
1
	September  30,  2006		2.50 to
1
	December  31,  2006		2.50 to
1
	March  31,  2007		2.50 to
1
	June  30,  2007		2.50 to
1
	September  30,  2007		2.50 to
1
	December  31,  2007		2.50 to
1
	March  31,  2008		2.75 to
1
	June  30,  2008		2.75 to
1
	September  30,  2008		2.75 to
1
	December  31,  2008		2.75 to
1
	March  31,  2009 and each Fiscal
Quarter thereafter		3.00 to
1
	

Section 5.3 Capital
Expenditures.

(a) Prior to the repayment in full in
cash of the Term Loans and the termination of all Obligations under the
Term Loan Facility, Group will not permit Capital Expenditures by the
Borrower and the other Subsidiaries of Group to be made or incurred
during any Fiscal Year to exceed $45,000,000; provided, however,
that to the extent that actual Capital Expenditures for such Fiscal
Year shall be less than $45,000,000 (without giving effect to the
carryover permitted by this proviso), the amount of such shortfall (not
to exceed 50% of the available amount for such Fiscal Year)
shall be, in addition, available for Capital Expenditures in the next
succeeding Fiscal Year.

(b) After repayment in full in
cash of the Term Loans and the termination of all Obligations under the
Term Loan Facility, Group will not permit Capital Expenditures by the
Borrower and the other Subsidiaries of Group, for any Fiscal Year in
which Available Credit has been less than $50,000,000 on any day, to be
made or incurred during any Fiscal Year to exceed
$45,000,000;provided, however, that to the extent that actual
Capital Expenditures for such Fiscal Year shall be less than
$45,000,000 (without giving effect to the carryover permitted by this
proviso), the amount of such shortfall (not to exceed 50% of the
available amount for such Fiscal Year) shall be, in addition, available
for Capital Expenditures in the next succeeding Fiscal
Year.

 ARTICLE VI 

 REPORTING
COVENANTS 

As long as any of the Obligations or
Commitments remain outstanding, unless the Requisite Lenders otherwise
consent in writing, Group and the Borrower agree with the Lenders and
the Facility Agents that:

Section 6.1 Financial
Statements. Group shall furnish to each Administrative
Agent (with a copy for each applicable Lender requesting same) the
following:

(a) Monthly Reports. As soon as
available and in any event within 40 days after the end of each of the
first two months in each Fiscal Quarter, consolidated balance sheets of
Group and its Subsidiaries as of the end of such month and consolidated
statements of income and cash flow statements of Group and its
Subsidiaries for the period commencing at the end of the previous month
and ending with the end of such month, setting forth in each case in
comparative form the corresponding figures for the corresponding period
of the preceding Fiscal Year and the corresponding figures for the
corresponding period set forth in the Projections and duly certified
(subject to year-end audit adjustments) by a Responsible Officer of
Group as having been prepared in accordance with
GAAP;

(b) Quarterly Reports.    As soon as
available and in any event within 50 days after the end of each of the
first three Fiscal Quarters of each Fiscal Year, consolidated balance
sheets of Group and 

66

its Subsidiaries as of the end of such
Fiscal Quarter and consolidated statements of income and consolidated
statements of cash flows of Group and its Subsidiaries for the period
commencing at the end of the previous Fiscal Year and ending with the
end of such Fiscal Quarter, and also setting forth a variance analysis
of monthly results during such Fiscal Quarter as compared to monthly
budgeted amounts specified in the forecast for such Fiscal Quarter
previously delivered pursuant to clause (e) below, duly
certified (subject to year-end audit adjustments) by a Responsible
Officer of Group as having been prepared in accordance with GAAP and
certifying compliance with the terms of this Agreement and setting
forth in reasonable detail the calculations necessary to demonstrate
compliance with Article V;

(c) Annual
Consolidated Reports.    As soon as available and in any event
within 95 days after the end of each Fiscal Year of Group, (i) a copy
of the annual audit report for such year for Group and its
Subsidiaries, containing the consolidated balance sheet of Group and
its Subsidiaries as of the end of such Fiscal Year and consolidated
statements of income and cash flows of Group and its Subsidiaries for
such Fiscal Year, in each case accompanied by an opinion (without
qualification as to the scope of the audit) of Deloitte & Touche
LLP or by other independent public accountants acceptable to the
Administrative Agent stating that (x) such financial statements fairly
present the consolidated financial position of Group and its
Subsidiaries as at the dates indicated and the results of their
operations and cash flows for the periods indicated in conformity with
GAAP applied on a basis consistent with prior years (except for changes
with which such independent certified public accountants shall concur
and which shall have been disclosed in the notes to the financial
statements) and (y) to the extent permitted by accounting rules and
guidelines, the examination by such accountants in connection with such
consolidated financial statements has been made in accordance with
generally accepted auditing standards, and a certificate of a
Responsible Officer of Group as to compliance with the terms of this
Agreement and setting forth in reasonable detail the calculations
necessary to demonstrate compliance with Article V and
(ii) financial information regarding each business unit consisting of
consolidating balance sheets of such business unit as of the end of
such year and related statements of income and cash flows of such
business unit for such Fiscal Year, all prepared in conformity with
GAAP and certified by a Responsible Officer of Group as fairly
presenting the financial position of such business unit as at the dates
indicated;

(d) Compliance
Certificate.    Together with each delivery of any financial
statement pursuant to clauses (b) and (c) of this
Section 6.1, a certificate of a Responsible Officer of
Group substantially in the form of Exhibit H hereto (each, a
‘‘Compliance Certificate’’)
(i) showing in reasonable detail the calculations used in demonstrating
compliance with each of the financial covenants contained in
Article V which is tested on a quarterly basis, (ii)
showing in reasonable detail the calculations necessary to determine
the Applicable Margin, and (iii) stating that no Default or Event of
Default has occurred and is continuing or, if a Default or an Event of
Default has occurred and is continuing, stating the nature thereof and
the action which Group proposes to take with respect
thereto;

(e) Business Plan.    Not later than 45
days after the end of each Fiscal Year (beginning with the end of
Fiscal Year 2006), and containing substantially the types of financial
information contained in the Projections, (i) the annual business plan
of Group for the next succeeding Fiscal Year approved by the Board of
Directors of Group with updates thereof provided to the Lenders prior
to each July 31, (ii) schedules of all letters of credit, (iii)
forecasts (including availability forecasts) prepared by management of
Group for each fiscal month in each of the succeeding Fiscal Years
through the Fiscal Year in which the Term Loan Maturity Date is
scheduled to occur, and (iv) forecasts prepared by management of Group
for each of the succeeding Fiscal Years through the Fiscal Year in
which the Term Loan Maturity Date is scheduled to occur, including, in
each instance described in clause (ii) and clause (iii)
above, (A) a projected year-end consolidated balance sheet and income
statement and statement of cash flows and (B) a statement of all of the
material assumptions on which such forecasts are based and in each case
prepared by management of Group and satisfactory in form to the
Administrative Agents;

(f) Intercompany Loan
Balances.    Together with each delivery of any financial
statement pursuant to clause (b) and clause (c) of
this Section 6.1, a summary of the outstanding balance of
all intercompany Indebtedness of any Subsidiary to any Loan Party as of
the last day of the Fiscal 

67

Quarter or Fiscal Year covered by such
financial statement, certified by a Responsible Officer of Group;
provided that such balances between Loan Parties shall only be required
to be delivered annually, as early as practicable;
and

(g) Corporate Chart.    Together with each
delivery of any Financial Statement pursuant to clause (c)
above, a certificate of a Responsible Officer of Group certifying
that the Corporate Chart attached thereto or the last Corporate Chart
delivered pursuant to this clause (g) is true, correct,
complete and current as of the date of such Financial
Statement.

Section 6.2 Default
Notices. As soon as practicable, and in any event within
two Business Days after a Responsible Officer of any Loan Party has
actual knowledge of the existence of any Default, Event of Default or
any other event which has had a Material Adverse Effect, Group shall
give each Administrative Agent notice specifying the nature of such
Default or Event of Default or other event, including the anticipated
effect thereof, which notice, if given by telephone, shall be promptly
confirmed in writing on the next Business
Day.

Section 6.3 Litigation. Promptly
after the commencement thereof, Group shall give each Administrative
Agent written notice of the commencement of all actions, suits and
proceedings before any domestic or foreign Governmental Authority or
arbitrator, affecting any Warnaco Entity, which in the reasonable
judgment of Group, if adversely determined, would be reasonable likely
to have a Material Adverse
Effect.

Section 6.4 Asset Sales. No
later than 10 days prior to any Asset Sale anticipated to generate in
excess of $15,000,000 (or its Dollar Equivalent) in Net Cash Proceeds,
Group shall send the Administrative Agents a notice (a) describing such
Asset Sale or the nature and material terms and conditions of such
transaction and (b) stating the estimated Net Cash Proceeds anticipated
to be received by Group or any of its
Subsidiaries.

Section 6.5 Notices under Senior
Note Documents. Promptly after the sending or filing
thereof, the Borrower shall send the Administrative Agents copies of
all material notices, certificates or reports delivered pursuant to, or
in connection with, any Senior Note
Document.

Section 6.6 SEC Filings; Press
Releases. Promptly after the sending or filing thereof,
Group shall send the Administrative Agents copies of (a) all reports
which any Warnaco Entity sends to its security holders generally, (b)
all reports and registration statements which any Warnaco Entity files
with the Securities and Exchange Commission or any national securities
exchange, (c) all press releases, (d) all other statements concerning
material changes or developments in the business of any Warnaco Entity
made available by any Warnaco Entity to the public and (e) all notices
of investigation or proceedings received from the Securities and
Exchange Commission or any national securities
exchange.

Section 6.7 Labor
Relations. Promptly after becoming aware of the same, Group
shall give the Administrative Agents written notice of (a) any material
labor dispute to which any Warnaco Entity is or may become a party,
including any strikes, lockouts or other disputes relating to any of
such Person’s plants and other facilities, and (b) any Worker
Adjustment and Retraining Notification Act or related liability
incurred with respect to the closing of any plant or other facility of
any such Person.

Section 6.8 Tax
Returns. Upon the request of any Lender, through the
applicable Administrative Agent, Group will provide copies of all
federal, state, local tax returns and reports (other than foreign tax
returns and reports) filed by any Warnaco Entity in respect of taxes
measured by income (excluding sales, use and like
taxes).

Section 6.9 Insurance. As
soon as is practicable and in any event within 90 days after the end of
each Fiscal Year, Group will furnish the Administrative Agents (in
sufficient copies for each of the Lenders and the Collateral Agent)
with (a) a report in form and substance satisfactory to the
Administrative Agents and the Lenders outlining all material insurance
coverage maintained as of the date of such report by the Warnaco
Entities and the duration of such coverage and (b) an insurance
broker’s statement that all premiums then due and payable with
respect to such coverage have been 

68

paid and that all such insurance names the
Collateral Agent on behalf of the Secured Parties as additional insured
or loss payee, as appropriate, and provides that no cancellation,
material addition in amount or material change in coverage shall be
effective until after 30 days’ written notice thereof to the
Facility Agents.

Section 6.10 ERISA
Matters. Group shall furnish the Administrative Agents
(with a copy for each applicable Lender requesting
same):

(a) promptly and in any event within 30 days after
any Warnaco Entity or any ERISA Affiliate knows or has reason to know
that any ERISA Event has occurred written notice describing such
event;

(b) promptly and in any event within 10 days after
Warnaco Entity or any ERISA Affiliate knows or has reason to know that
a request for a minimum funding waiver under Section 412 of the Code
has been filed with respect to any Title IV Plan or Multiemployer Plan,
a written statement of a Responsible Officer of Group describing such
ERISA Event or waiver request and the action, if any, which such
Warnaco Entity and the ERISA Affiliates propose to take with respect
thereto and a copy of any notice filed with the PBGC or the IRS
pertaining thereto; and

(c) simultaneously with the date
that any Warnaco Entity or any ERISA Affiliate files a notice of intent
to terminate any Title IV Plan, if such termination would require
material additional contributions in order to be considered a standard
termination within the meaning of Section 4041(b) of ERISA, a copy of
each notice.

Section 6.11 Environmental
Matters. Group shall provide promptly after the assertion
or occurrence thereof, notice of any Environmental Action against or of
any noncompliance by any Warnaco Entity with any Environmental Law or
Environmental Permit that would reasonably be expected to (i) have a
Material Adverse Effect or (ii) cause any Material Real Property
or Material Leased Property to be subject to any material restrictions
on ownership, occupancy, use or transferability under any Environmental
Law.

Section 6.12 Borrowing Base
Determination.

Until the Revolving Credit Termination
Date:

(a) Not less than once each week, the Borrower shall
deliver to the Revolving Facility Agent a Borrowing Base Certificate,
as of the Business Day immediately prior to the day of delivery and
executed by a Responsible Officer of Group.

(b) Group and
the Borrower agree (i) that the Revolving Facility Agent, on behalf of
the Revolving Credit Lenders, may appoint an independent or an internal
third party appraiser to conduct and conclude quarterly field audits
with respect to Inventory owned by any Loan Party and (ii) Group shall
conduct, or shall cause to be conducted, and upon request of the
Revolving Facility Agent, and present to the Revolving Facility Agent
for approval, such appraisals and reviews as the Revolving Facility
Agent shall reasonably request, all upon notice and at such times
during normal business hours and as often as may be reasonably
requested, in each case at the expense of Group and for the purpose of
determining the Borrowing Base. Group and the Borrower shall furnish to
the Revolving Facility Agent any information which the Revolving
Facility Agent may reasonably request regarding the determination and
calculation of the Borrowing Base including correct and complete copies
of any invoices, underlying agreements, instruments or other documents
and the identity of all Account Debtors in respect of Accounts referred
to therein. Group and the Borrower further agree to use their
reasonable best efforts to assist each appraiser appointed by the
Revolving Facility Agent to conduct and conclude such field
audits.

(c) The Revolving Facility Agent may, at the sole
cost and expense of Group and the Borrower, make test verifications of
the Accounts in any manner and through any medium that the Revolving
Facility Agent considers advisable, and Group and the Borrower shall
furnish all such assistance and information as the Revolving Facility
Agent may require in connection therewith.

(d) Each of
Group and the Borrower shall, and shall cause each of its respective
Subsidiaries to, use its reasonable best efforts to assist an
independent third party appraiser appointed by the 

69

Revolving Facility Agent to conduct and
conclude (i) field audits with respect to Inventory owned by any Loan
Party not more frequently than four times in any 12 month-period and
(ii) Appraisals, as reasonably requested by the Revolving Facility
Agent (which, in the case of Inventory and Receivables shall be
conducted not less frequently than once during each 12 month-period),
in each case at the sole expense of the Group and the
Borrower.

(e) Not less than once each week, the Borrower
shall deliver to the Administrative Agents a certificate, as of the day
immediately prior to the day of delivery and executed by a Responsible
Officer of Group, that sets forth the aggregate amount of Cash
Management Obligations owing to the Agents or Lenders (or such other
Persons as the Administrative Agents may reasonably consent to) that
constitute Secured Obligations as of such date;

(f) In
connection with the consummation of a Permitted Acquisition, no
Eligible Receivables, Eligible Finished Inventory and Eligible Other
Inventory of any Proposed Acquisition Target acquired in connection
with such Permitted Acquisition may be included in the Borrowing Base
to the extent provided for in this Agreement unless and until the
Administrative Agent shall have received the results of the appraisals,
field audits, test verifications and other evaluations of such
Collateral as it may reasonably request of the type specified in
clauses (b), (c) and (d) above, at the sole cost and
expense of Group and the
Borrower.

Section 6.13 Material
Licenses. Promptly after any Loan Party becoming aware of
the same, the Borrower shall give the Administrative Agent written
notice of any cancellation, termination or loss of any Material
License.

Section 6.14 Other
Information. Group and the Borrower shall provide the
Administrative Agents or any Lender with such other information
respecting the business, properties, condition, financial or otherwise,
or operations of any Warnaco Entity as any Lender through the
applicable Administrative Agent may from time to time reasonably
request.

 ARTICLE VII 

 AFFIRMATIVE
COVENANTS 

As long as the Obligations or the
Commitments remain outstanding, unless the Requisite Lenders otherwise
consent in writing, each of Group and the Borrower agree with the
Lenders and the Facility Agents
that:

Section 7.1 Preservation of Corporate
Existence, Etc. Each of Group and the Borrower shall, and
shall cause each of its respective Subsidiaries to, preserve and
maintain its legal existence, rights (charter and statutory) and
franchises, except as permitted by Section 8.3,
Section 8.4 and Section 8.7; provided,
however, no Warnaco Entity shall be required to preserve any
right, permit, license, approval, privilege or franchise if the Board
of Directors (or equivalent governing body) of such Warnaco Entity
shall determine that the preservation thereof is no longer desirable in
the conduct of the business of such Warnaco Entity and that the loss
thereof is not disadvantageous in any material respect to the Warnaco
Entities (taken as whole) or the Secured
Parties.

Section 7.2 Compliance with Laws,
Etc. Each of Group and the Borrower shall, and shall cause
each of its respective Subsidiaries to, comply with all applicable
Requirements of Law, Contractual Obligations and Permits, except where
the failure so to comply would not, in the aggregate, have a Material
Adverse Effect.

Section 7.3 Conduct of
Business. Each of Group and the Borrower shall, and shall
cause each of its respective Subsidiaries to, (a) conduct its
business in the ordinary course and (b) use its reasonable
efforts, in the ordinary course and consistent with past practice, to
preserve its business and the goodwill and business of the customers,
advertisers, suppliers and others having business relations with any
Warnaco Entity, except in each case where the failure to comply with
the covenants in each of clauses (a) and (b) above would not, in the
aggregate, have a Material Adverse
Effect.

Section 7.4 Payment of Taxes,
Etc. Each of Group and the Borrower shall, and shall cause
each of its respective Subsidiaries to, pay and discharge before the
same shall become delinquent, all lawful 

70

governmental claims, federal and material
state, local and non-U.S. taxes, assessments, charges and levies,
except where contested in good faith, by proper proceedings and
adequate reserves therefor have been established on the books of the
appropriate Warnaco Entity in conformity with GAAP, unless and until
any Liens resulting from such contested items attach to its property
and become enforceable against its other
creditors.

Section 7.5 Maintenance of
Insurance. Each of Group and the Borrower shall (i)
maintain, and cause to be maintained for each of its respective
Subsidiaries, insurance with responsible and reputable insurance
companies or associations in such amounts and covering such risks as is
usually carried by companies engaged in similar businesses and owning
similar properties in the same general areas in which such Warnaco
Entity operates, and such other insurance as may be reasonably
requested by the Requisite Lenders, and, in any event, all insurance
required by any Loan Document, and (ii) cause all such insurance to
name the Collateral Agent on behalf of the Secured Parties as
additional insured or loss payee, as appropriate, and to provide that
no cancellation, material addition in amount or material change in
coverage shall be effective until after 30 days’ written notice
thereof to the Facility
Agents.

Section 7.6 Access. Each of
Group and the Borrower shall, and shall cause each of its respective
Subsidiaries to, from time to time permit each Facility Agent and the
Lenders, or any agents or representatives thereof, within two Business
Days after written notification of the same to the Borrower (except
that during the continuance of an Event of Default, no such notice
shall be required) to (a) examine and make copies of and
abstracts from the records and books of account of any Warnaco Entity,
(b) visit the properties of any Warnaco Entity,
(c) discuss the affairs, finances and accounts of such any
Warnaco Entity with any of their respective officers or directors, and
(d) communicate directly with any Warnaco Entity’s
independent certified public accountants (with Group having the right
to have a representative present at all such communications). Each of
Group and the Borrower shall, and shall cause each of its respective
Subsidiaries to, authorize its independent certified public accountants
to disclose to any Facility Agent or any Lender any and all financial
statements and other information of any kind, as such Facility Agent or
Lender reasonably requests from any Warnaco Entity and which such
accountants may have with respect to the business, financial condition,
results of operations or other affairs of such Warnaco Entity or any of
its Subsidiaries.

Section 7.7 Keeping of
Books. Each of Group and the Borrower shall, and shall
cause each of its respective Subsidiaries to, keep proper books of
record and account, in which full and correct entries shall be made in
conformity with GAAP of all financial transactions and the assets and
business of such Warnaco
Entity.

Section 7.8 Maintenance of Properties,
Etc. Each of Group and the Borrower shall, and shall cause
each of its respective Subsidiaries to, maintain and preserve
(a) all of its properties which are necessary in the conduct of
its business in good working order and condition, (b) all
rights, permits, licenses, approvals and privileges (including all
Permits) which are used or useful or necessary in the conduct of its
business, and (c) all Intellectual Property with respect to the
business of the Warnaco Entities; except where the failure to so
maintain and preserve would not in the aggregate have a Material
Adverse Effect.

Section 7.9 Application of
Proceeds. The Borrower (and, to the extent distributed by
the Borrower, each other Warnaco Entity) shall use the proceeds of the
Loans as provided in
Section 4.13.

Section 7.10 Environmental.

(a) Each
of Group and Borrower shall comply, and shall cause each of its
respective Subsidiaries and all lessees and other Persons operating or
occupying its properties to comply, in all material respects, with all
applicable Environmental Laws and Environmental Permits; obtain and
renew and cause each of its Subsidiaries to obtain and renew all
material Environmental Permits necessary for its operations and
properties; and conduct, and cause each of its Subsidiaries to conduct,
any investigation, study, sampling and testing, and undertake any
cleanup, removal, remedial or other action necessary to remove and
clean up all Contaminants from any of its properties, in accordance

71

with and to the extent required by all
applicable Environmental Laws, to the extent the failure to do any of
the foregoing would have a Material Adverse Effect; provided,
however, that no Warnaco Entity shall be required to undertake any
such cleanup, removal, remedial or other action to the extent that its
obligation to do so is being contested in good faith and by proper
proceedings and appropriate reserves are being maintained with respect
to such circumstances.

(b) At the request of any
Administrative Agent after receipt of a notice of the type specified in
Section 6.11, Group will provide to the Administrative
Agents and each Lender within 60 days after such request, at the
expense of Group and the Borrower, an environmental assessment report
for the applicable property described in such notice, prepared by an
environmental consulting firm reasonably acceptable to the
Administrative Agents, indicating the presence of Contaminants that
could reasonably be expected to give rise to a material liability and
the estimated cost of any compliance, removal or remedial action in
connection with any Contaminants that could reasonably be expected to
give rise to a material liability on such properties; without limiting
the generality of the foregoing, if such Administrative Agent
determines at any time that a material risk exists that any such report
will not be provided within the time referred to above, such
Administrative Agent may retain an environmental consulting firm to
prepare such report at the expense of Group and the Borrower, and Group
and the Borrower each hereby grants and agrees to cause any other
Warnaco Entity that owns any property described in such request to
grant at the time of such request to such Administrative Agent, such
firm and any agents or representatives thereof an irrevocable
non-exclusive license, subject to the rights of tenants, to enter onto
their respective properties to undertake such an assessment, and to, or
to cause its respective Subsidiaries to, cooperate in all reasonable
respects with the preparation of such
assessment.

Section 7.11 Additional
Personal Property Collateral and Guaranties.

To the extent
not delivered to the applicable Facility Agents on or before the
Closing Date (including in respect of after-acquired property and
Persons that become Subsidiaries of any Loan Party after the Closing
Date), each of Group and the Borrower agrees promptly to do, or cause
each of its respective Subsidiaries to do, each of the following,
unless otherwise agreed by the Administrative
Agents:

(a) deliver to the Facility Agents such
duly-executed supplements and amendments to the Guaranty, in each case
in form and substance reasonably satisfactory to the Administrative
Agents and as the Administrative Agents deem necessary or advisable in
order to ensure that each Domestic Subsidiary of Group (other than the
Borrower and) guaranties, as primary obligor and not as surety, the
full and punctual payment when due of the Obligations or any part
thereof;

(b) deliver to the Facility Agents such
duly-executed joinder and amendments to the Pledge and Security
Agreement and, if applicable, other Collateral Documents, in each case
in form and substance reasonably satisfactory to the Administrative
Agents and as the Administrative Agents deem necessary or advisable in
order to effectively grant to the Collateral Agent, for the benefit of
the Secured Parties, a valid, perfected and enforceable security
interest having the priority described in Section 4.20 of this
Agreement and the Collateral Documents in all personal property
interests and other assets (including the Stock and Stock Equivalents
and other debt Securities) of each Loan Party; provided,
however, that in no event shall any Warnaco Entity be required to
pledge in excess of 65% of the outstanding Voting Stock of any
Non-U.S. Person that is a direct Subsidiary of Group or of any Domestic
Subsidiary, unless (x) the Borrower and the Administrative
Agents otherwise agree; (y)  such Voting Stock has been granted
as security in respect of other Indebtedness of a Warnaco Entity having
substantially similar tax consequences to the Loan Parties under
Section 956 of the Code or (z) such pledge or grant can be made
without resulting in any material adverse tax consequences for the
Warnaco Entities, taken as a whole (including any Person that becomes a
Loan Party as a result of such pledge or grant);

(c) to
take such other actions necessary or advisable to ensure the validity
or continuing validity of the guaranties required to be given pursuant
to clause (a) above or to create, maintain or perfect the
security interest required to be granted pursuant to
clause (b) above, including the filing of UCC

72

financing statements in such jurisdictions
as may be required by the Collateral Documents or by law or as may be
reasonably requested by the Administrative Agents;
and

(d) if requested by any Administrative Agent, deliver
to the Administrative Agents legal opinions relating to the matters
described above, which opinions shall be in form and substance, and
from counsel, reasonably satisfactory to the Administrative
Agents.

Section 7.12 [Intentionally
Omitted].

Section 7.13 Real
Property.

(a) Each of Group and the Borrower shall,
and shall cause each of its respective Subsidiaries to,
(i) provide the Administrative Agents with a copy of each notice
of default under any Lease with respect to any Material Leased Property
received by any Warnaco Entity immediately upon receipt thereof and
deliver to the Administrative Agents a copy of each notice of default
sent by any Warnaco Entity under any Lease with respect to any Material
Leased Property simultaneously with its delivery of such notice under
such Lease and (ii) notify the Administrative Agents at least 14
days prior to the date any Warnaco Entity takes possession of, or
becomes liable under, any new Lease with respect to any Material Leased
Property, whichever is earlier.

(b) At least 15 Business
Days prior to acquiring any Material Owned Real Property, each of Group
and the Borrower shall, and shall cause each of its respective
Subsidiaries to, provide the Administrative Agents written notice
thereof and, upon written request of any Administrative Agent, each of
Group and the Borrower shall, and shall cause each of its respective
Subsidiaries to provide Phase I environmental reports on such Material
Owned Real Property showing no condition that could give rise to
material Environmental Costs and Liabilities.

(c) To the
extent not previously delivered to the Collateral Agent or the
Administrative Agents, upon written request of any Administrative
Agent, each of Group and the Borrower shall, and shall cause each other
Loan Party to, execute and deliver to the Collateral Agent and the
Administrative Agents, promptly and in any event not later than 45 days
after receipt of such notice (or, if such notice is given by the
Administrative Agents prior to the acquisition of such Material Owned
Real Property, immediately upon such acquisition), a Mortgage in favor
of the Collateral Agent, for the benefit of the Secured Parties, on
such Material Owned Real Property of such Loan Party, together with
(i) if requested by the Administrative Agents and such Material
Owned Real Property is located in the United States, all Mortgage
Supporting Documents relating thereto or (ii) otherwise,
documents similar to Mortgage Supporting Documents deemed by the
Administrative Agents to be appropriate in the applicable jurisdiction
to obtain the equivalent in such jurisdiction of a first-priority
mortgage on such Material Owned Real Property; provided,
however, that in no event shall any Warnaco Entity that is not a
Loan Party be required to enter into a Mortgage in respect of Material
Owned Real Property, unless (x) the Borrower and the
Administrative Agents otherwise agree, (y)  such Mortgage has
been provided as security in respect of other Indebtedness of a Warnaco
Entity having substantially similar tax consequences under Section 956
of the Code or (z) such pledge or grant can be made without
resulting in any material adverse tax consequences for the Warnaco
Entities, taken as a whole (including any Person that becomes a Loan
Party as a result of providing such
Mortgage).

Section 7.14 Post Closing
Matters.    Each of Group and the Borrower shall, and
shall cause each of their respective Subsidiaries to, satisfy the
requirements set forth on Schedule 7.14 on or before the date
set forth opposite such requirement or such later date as consented to
by the Administrative
Agent.

 ARTICLE VIII 

 NEGATIVE
COVENANTS 

As long as any of the Obligations or
the Commitments remain outstanding, without the written consent of the
Requisite Lenders, each of Group and the Borrower agrees with the
Lenders and the Facility Agents that:

73

Section 8.1 Indebtedness. Each
of Group and the Borrower will not, and will not permit any of its
respective Subsidiaries to, directly or indirectly create, incur,
assume or otherwise become or remain directly or indirectly liable with
respect to any Indebtedness, except:

(a) the Secured
Obligations (other than in respect of Hedging
Contracts);

(b) the Senior Notes in an aggregate
outstanding principal amount not to exceed $210,000,000;

(c) Indebtedness existing on the Closing Date and disclosed
on Schedule 8.1 (Existing
Indebtedness);

(d) (i) Guaranty Obligations
incurred by a Loan Party in respect of Indebtedness of another Loan
Party otherwise permitted by this Section 8.1,
(ii) Guaranty Obligations incurred by any Foreign Subsidiary in
respect of the Indebtedness of a Foreign Subsidiary otherwise permitted
by this Section 8.1 and (iii) unsecured Guaranty
Obligations incurred by a Loan Party in respect of the Indebtedness of
a Foreign Subsidiary permitted by clause (g) of this
Section 8.1;

(e) Capital Lease Obligations
and purchase money Indebtedness incurred by a Warnaco Entity to finance
the acquisition or construction of fixed assets in an aggregate
outstanding principal amount not to exceed the Dollar Equivalent of
$40,000,000 at any time; provided, however, that the Capital
Expenditure related thereto is otherwise permitted by
Section 5.3;

(f) Renewals, extensions,
refinancings and refundings of Indebtedness permitted by clauses
(b), (c) and (e) of this Section 8.1;
provided, however, that any such renewal, extension, refinancing
or refunding is in an aggregate principal amount not greater than the
principal amount of, and is on terms no less favorable to the Warnaco
Entity obligated thereunder (subject to market rates), including as to
weighted average maturity and final maturity, than the Indebtedness
being renewed, extended, refinanced or
refunded;

(g) Indebtedness of the Foreign Subsidiaries of
Group not otherwise permitted under this Section 8.1;
provided, however, that (x) such Indebtedness shall be
owing to Persons that are Agents or Lenders under the Facilities (or
their respective Affiliates) (or, solely in the case of Indebtedness
acquired in connection with the Frankie Acquisition, other Persons) and
shall be on terms reasonably acceptable to the Administrative Agents,
and (y) the Dollar Equivalent of the aggregate outstanding principal
amount of all such Indebtedness shall not exceed $85,000,000 at any
time;

(h) a Sale and Leaseback Transaction permitted
pursuant to Section 8.16, to the extent such transaction
would constitute Indebtedness;

(i) Indebtedness arising
from intercompany loans from any Warnaco Entity to any other
Warnaco Entity, provided, that such Investment is permitted to
be made by such Warnaco Entity under
Section 8.3(a);

(j) Indebtedness incurred
for the sole purpose of financing the payment of insurance premiums in
the ordinary course of business, in an aggregate amount not to exceed
$15,000,000 at any one time outstanding;

(k) Indebtedness
arising under any performance or surety bond entered into in the
ordinary course of business;

(l) Obligations under Hedging
Contracts permitted under
Section 8.17;

(m) Indebtedness incurred for
the sole purpose of financing the construction of a new distribution
facility in Pennsylvania for Calvin Klein, Intimate Apparel and Chaps
products in an aggregate amount not to exceed $30,000,000;
and

(n) other Indebtedness the aggregate Dollar Equivalent
of the principal amount of which shall not exceed $20,000,000 at any
time.

Section 8.2 Liens, Etc. Each
of Group and the Borrower will not, and will not permit any of its
respective Subsidiaries to, create or suffer to exist, any Lien upon or
with respect to any of its properties or assets, whether now owned or
hereafter acquired, or assign any right to receive income, except
for:

74

(a) Liens created pursuant to the
Loan Documents;

(b) Liens granted by a Foreign Subsidiary
of Group securing the Indebtedness permitted under
Section  8.1 (g);

(c) Liens
existing on Closing Date and disclosed on Schedule 8.2 (Existing
Liens);

(d) Customary Permitted
Liens;

(e) purchase money Liens granted by a Warnaco
Entity (including the interest of a lessor under a Capital Lease and
purchase money Liens to which any property is subject at the time of
such Warnaco Entity’s acquisition thereof or promptly
thereafter) securing Indebtedness permitted under
Section 8.1(e) and Section 8.1(m) and limited in
each case to the property purchased with the proceeds of such purchase
money Indebtedness or subject to such Capital
Lease;

(f) any Lien securing the renewal, extension,
refinancing or refunding of any Indebtedness secured by any Lien
permitted by clause (c) or (e) of this
Section 8.2 as long as such Lien does not cover any
assets not subject to the Lien securing indebtedness being renewed,
extended, refinanced or refunded;

(g) Liens in favor of
lessors securing operating leases or, to the extent such transactions
create a Lien hereunder, sale and leaseback transactions, in each case
to the extent such operating leases or sale and leaseback transactions
are permitted hereunder;

(h) Liens not otherwise permitted
under this Section 8.2, other than in favor of the PBGC,
arising out of judgments or awards in respect of which the applicable
Warnaco Entity shall in good faith be prosecuting an appeal or
proceedings for review and in respect of which it shall have secured a
subsisting stay of execution pending such appeal or proceedings for
review; provided it shall have set aside on its books adequate
reserves, in accordance with GAAP, with respect to such judgment or
award and; provided, further, that any such judgment shall not
give rise to an Event of Default;

(i) Liens on any bills
of lading, airway bills, receipts and other applicable documents of
title (and inventory and goods covered thereby) delivered with respect
to letters of credit issued for the benefit of suppliers of inventory
pursuant to facilities provided to a Foreign Subsidiary and in respect
of which all inventory and goods are located outside the United
States;

(j) Liens securing Indebtedness incurred under
Section 8.1(j); provided that such Liens shall only
encumber Insurance Assets that relate directly to the Indebtedness such
assets secure and that have an aggregate value not in excess of
$15,000,000; and

(k) other Liens not otherwise permitted
under this Section 8.2, securing obligations in an amount
not to exceed $20,000,000 in an aggregate amount outstanding at any
time.

Section 8.3 Investments. Each
of Group and the Borrower will not, and will not permit any of its
respective Subsidiaries to, directly or indirectly make or maintain any
Investment except:

(a) Investments (i) by any
Warnaco Entity in any Warnaco Entity in an amount not exceeding the
amount outstanding on the Closing Date and as set forth on Schedule
8.3, and (ii)  additional Investments by (A) any Warnaco
Entity in a Loan Party, (B)  any Warnaco Entity that is not a
Loan Party in any other Warnaco Entity, and (C) any Loan Party in a
Warnaco Entity that is not a Loan Party (1) to the extent
required by applicable law to fulfill statutory capital requirements in
a maximum aggregate amount up to $10,000,000, and (2) solely for the
purposes of funding (x) the operations of such Foreign
Subsidiary (including Standby Letters of Credit Issued for the benefit
of such Foreign Subsidiaries), not to exceed in the aggregate
$25,000,000 at any time outstanding under this subclause
(a)(ii)(C)(2)(x), (y) the repayment of Indebtedness owed by such
Warnaco Entity to any Loan Party and (z) operating expenses of
Foreign Subsidiaries in Hong Kong, Central America and Mexico and (3)
to the extent necessary for such entity to pay taxes that are due and
payable; provided, that in each case (other than investments
made as capital contributions pursuant to subclause (ii)(C)(1))
such Investment shall be evidenced by a promissory note in form and
substance satisfactory to the Administrative Agents, the Collateral
Agent shall have a perfected security interest in such promissory note
and no Event of Default shall have occurred and be continuing at the
time 

75

such Investment is made or would result
therefrom; provided, further, that in the case of investments
made as capital contributions pursuant to subclause (ii)(C)(1)
such Investment shall be permitted only to the extent that
substantially concurrently with such Investment the Borrower shall have
complied with the requirements of Section 7.11(b) (Additional
Personal Property Collateral and
Guaranties);

(b) Investments in (i) cash and Cash
Equivalents; provided that such cash and Cash Equivalents held
by a Loan Party are held in a Blocked Account, a Restricted Account, a
Control Account, or otherwise in compliance with Section 4.7 of
the Pledge and Security Agreement, and (ii) Investment Grade Debt
Securities; provided that Investment Grade Debt Securities held
by a Loan Party are held in a Securities Account, or otherwise in
compliance with Section 4.4 of the Pledge and Security
Agreement;

(c) Investments existing on the Closing Date
and described on Schedule 8.3 (Existing Investments)
hereto;

(d) Investments in payment intangibles,
chattel paper (each as defined in the UCC) and Accounts, notes
receivable (including but not limited to those notes receivable held by
the Borrower or its Subsidiaries pursuant to clause (b) of
Section 8.4) and similar items arising or acquired in the
ordinary course of business consistent with the past practice of the
Borrower and its Subsidiaries;

(e) Investments consisting
of Stock or Stock Equivalents, obligations, securities or other
property received in a bankruptcy proceeding or in settlement of claims
arising in the ordinary course of business;

(f) (i)
advances or loans to directors or employees of the Warnaco Entities
that do not exceed $2,000,000 in the aggregate at any one time
outstanding (other than any loans or advances to any director or
executive officer (or equivalent thereof) that would be in violation of
Section 402 of the United States Sarbanes-Oxley Act of 2002),
and (ii) advances for employee travel, relocation and other similar and
customary expenses incurred in the ordinary course of business that do
not exceed $3,000,000 in the aggregate at any one time outstanding;

(g) Investments consisting of promissory notes received in
connection with an Asset Sale permitted pursuant to
Section 8.4(b); provided that such promissory
notes are pledged to the Collateral Agent within three (3) Business
Days’ of the receipt thereof by any Loan Party as additional
Collateral pursuant to the Pledge and Security
Agreement;

(h) Guaranty Obligations permitted by
Section 8.1;

(i) Investments by the Borrower
or any Subsidiary Guarantor in Permitted Acquisitions;

(j) Investment by the Borrower in any Warnaco Entity to the
extent that such funds are used to consummate the Frankie
Acquisition;

(k) other Investments in an aggregate amount
invested not to exceed the Dollar Equivalent of $5,000,000 at any time;
and

(l) Investments constituting Post Closing
Reorganizations.

Section 8.4 Sale of
Assets. Each of Group and the Borrower will not, and will
not permit any of its respective Subsidiaries to, sell, convey,
transfer, lease or otherwise dispose of, any of its assets or any
interest therein (including the sale or factoring at maturity or
collection of any Accounts) to any Person, or permit or suffer any
other Person to acquire any interest in any of its assets or, in the
case of any Subsidiary of Group, issue or sell any shares of such
Subsidiary’s Stock or Stock Equivalent (any such disposition
being an ‘‘Asset Sale’’),
except:

(a) the sale or disposition of inventory in the
ordinary course of business;

(b) the sale of any asset or
assets (including, without limitation, a Subsidiary’s Stock) by
a Warnaco Entity as long as (i) the purchase price paid to such
Warnaco Entity for such asset shall be no less than the Fair Market
Value of such asset at the time of such sale, (ii) no less than
100% of the purchase price for such asset shall be paid in cash
(provided that in the case of an Asset Sale consummated when no
Loan or Loans or unreimbursed amounts in respect of drawn Letters of
Credit 

76

are outstanding, 50% of the purchase
price for such asset may be paid in cash and the remaining amount paid
in notes receivable (which notes receivable shall be in form and
substance reasonably satisfactory to the Administrative Agents, for the
benefit of the Lenders), (iii) neither the seller of such assets nor
any of its Affiliates shall have any subsequent payment obligations in
respect of such sale, other than customary and standard indemnity
obligations and as set forth in subclause (ii) above, (iv) no
Default or Event of Default has occurred and is continuing at the time
of such sale or would result from such sale, and (v) the
aggregate purchase price paid to all Warnaco Entities for all assets
sold since the Closing Date pursuant to this clause (b) shall
not exceed $30,000,000 in the aggregate;

(c) transfers of
assets from (i) any Loan Party to any other Loan Party, (ii) any
Loan Party to any Warnaco Entity that is not a Loan Party,
provided that the aggregate Fair Market Value of assets sold,
leased, transferred or otherwise disposed of pursuant to this
subclause (ii) shall not exceed $5,000,000 in the aggregate
plus the Fair Market Value of any equipment and inventory owned
on the Closing Date by a Loan Party in connection with its domestic
manufacturing operations that are subsequently transferred to a Foreign
Subsidiary, and (iii) any Warnaco Entity that is not a Loan Party to
any other Warnaco Entity;

(d) the licensing or
sublicensing of trademarks and trade names by any Warnaco Entity (i)
for an initial term not in excess of 7 years and (ii) in respect of
which the aggregate up-front payments and minimum guaranteed royalties
are not in excess of $7,500,000 for any transaction or $25,000,000 in
the aggregate for all such transactions; provided, however, that
any such licensing to a Person other than a Loan Party shall take place
on an arm’s-length basis;

(e) the rental by the
Warnaco Entities, as lessors or sub-lessors, in the ordinary course of
their respective businesses, on an arm’s-length basis, of real
property and personal property, in each case under leases (other than
Capital Leases);

(f) the sale or disposition of machinery
and equipment no longer used or useful in the business of the Warnaco
Entities;

(g) any sale of fixed assets not in connection
with a Sale and Leaseback Transaction that were purchased in connection
with a proposed lease financing transaction within 45 days of such
Asset Sale, which assets are subsequently leased back by the Borrower
or one of its Subsidiaries;

(h) any Asset Sale permitted
by Section 8.7;

(i) any Asset Sale in
connection with a Sale and Leaseback Transaction permitted pursuant to
Section 8.16(b); and

(j) any Asset Sale by a
Warnaco Entity to another Warnaco Entity necessary in connection with
any Post Closing Reorganization permitted pursuant to Section
8.3 (Investments); provided that the Borrower
complies with the provisions of Section 7.11 (Additional Collateral
and Guaranties) in connection therewith and that no Event of
Default has occurred and is continuing at the time such Asset Sale is
consummated or would result
therefrom.

Section 8.5 Restricted
Payments. Each of Group and the Borrower will not, and will
not permit any of its respective Subsidiaries to, directly or
indirectly, declare, order, pay, make or set apart any sum for any
Restricted Payment except for the
following:

(a) Restricted Payments by any Subsidiary of
the Borrower to the Borrower or any Subsidiary of the Borrower that
owns Stock of such Subsidiary;

(b) dividends and
distributions declared and paid on the common Stock of Group and
payable only in common Stock of Group;

(c) cash dividends
on the Stock of the Borrower to Group paid and declared in any Fiscal
Year solely for the purpose of funding the
following:

(i) ordinary operating
expenses of Group to cover, inter alia, fees and expenses of
directors, directors’ and officers’ insurance, and costs
associated with regulatory compliance, not in excess of $5,500,000 in
the aggregate in any Fiscal Year;

77

(ii) payments by
Group in respect of foreign, federal, state or local taxes owing by
Group in respect of the Warnaco Entities, but not greater than the
amount that would be payable by the Borrower, on a consolidated basis,
if the Borrower were the taxpayer;
and

(iii) Restricted Payments by Group
permitted by clauses (d) and (e)
below.

(d) cash dividends on common Stock of Group
paid and declared in any Fiscal Year and Restricted Payments by Group
in connection with the redemption, repurchase or other acquisition of
its common Stock in any Fiscal Year; provided, however, that (i)
such cash dividends and Restricted Payments shall not exceed an amount
equal to twenty-five percent (25%) of Group’s
Consolidated Net Income for the then most recently completed Fiscal
Year and (ii) after giving effect to each such Restricted Payment and
cash dividend, Available Credit is at least equal to $50,000,000;
and

(e) Restricted Payments by any Warnaco Entity up to an
aggregate amount, together with any payment made under Section
8.6(b)(vi), of $50,000,000, if after giving effect to such
Restricted Payment, Cash on Hand is at least equal to
$50,000,000;

provided, however, that the Restricted
Payments described in subclause (c)(i) and clauses (d)
and (e) shall not be permitted if either (A) an Event
of Default or Default shall have occurred and be continuing at the date
of declaration or payment thereof or would result therefrom or
(B) such Restricted Payment is prohibited under the terms of any
Indebtedness (other than the Obligations) of any Warnaco Entity (as in
effect on the Closing
Date).

Section 8.6 Prepayment and
Cancellation of Indebtedness.

(a) Neither Group nor
the Borrower shall, nor shall they permit any of their respective
Subsidiaries to, cancel any claim or Indebtedness owed to any of them
except in the ordinary course of business consistent with past
practice.

(b) Neither Group nor the Borrower shall, nor
shall they permit any of their respective Subsidiaries to, prepay,
redeem, purchase, defease or otherwise satisfy prior to the scheduled
maturity thereof in any manner, or make any payment in violation of any
subordination terms of, any Indebtedness; provided, however,
that any Warnaco Entity may: (i) prepay the Obligations in accordance
with the terms of this Agreement, (ii) make regularly scheduled or
otherwise required repayments or redemptions of Indebtedness, (iii)
make permitted repayments of any Indebtedness permitted by Section
8.1 hereof solely to the extent that such Indebtedness is
‘‘revolving’’, (iv) prepay any intercompany
Indebtedness payable to the Borrower or any of its Subsidiaries by the
Borrower or any of its Subsidiaries, (v) repurchase the Senior Notes in
the open market using then available Cash On Hand in an aggregate
amount not to exceed $10,000,000, and (vi) renew, extend, refinance and
refund Indebtedness, as long as such renewal, extension, refinancing or
refunding is permitted under Section 8.1(f) and (vii) prepay,
redeem, purchase, defease or otherwise satisfy prior to the scheduled
maturity thereof any Indebtedness of any Warnaco Entity up to an
aggregate amount, together with any payment made under Section
8.5(e) (but not including any payments on Indebtedness permitted in
clauses (i) through (v) above), of $50,000,000, if after
giving effect to such payment, Cash on Hand is at least equal to
$50,000,000.

Section 8.7 Restriction on
Fundamental Changes.    Each of Group and the Borrower
will not, and will not permit any of its respective Subsidiaries to,
merge with any Person, consolidate with any
Person, dissolve, acquire all or substantially all of the Stock
or Stock Equivalents of any Person, acquire all or substantially all of
the assets constituting a business, division, branch or other unit of
operation or trademark of any Person, enter into any joint
venture or partnership with any Person, or acquire or create any
Subsidiary, except that:

(a) any Warnaco Entity may merge
into or consolidate with any Loan Party; provided, however,
that, in the case of any such merger or consolidation, the Person
formed by such merger or consolidation shall be a Loan
Party;

(b) any Warnaco Entity that is not a Loan Party may
merge into or consolidate with any other Warnaco Entity that is not a
Loan Party; provided, however, that, in the case of any such
merger or consolidation, the Person formed by such merger or
consolidation shall be a Wholly Owned Subsidiary of
Group;

78

(c) any Warnaco Entity may form a
new Wholly Owned Subsidiary; provided, however, that, in case of
any such formation, the Subsidiary formed shall be an indirect Wholly
Owned Subsidiary of Group, and, in the case of a Domestic Subsidiary,
shall become a Loan Party;

(d) any Warnaco Entity which
is inactive or dormant (meaning that on the date of determination and
on a consolidated basis with its Subsidiaries, it has assets with an
aggregate Fair Market Value of less than $100,000) may be dissolved,
provided that if such Warnaco Entity is a Loan Party, all assets
distributed upon dissolution shall be distributed to another Loan
Party;

(e) any Warnaco Entity may consummate the Frankie
Acquisition and any Permitted Acquisition; and

(f) any
Warnaco Entity that is a Foreign Subsidiary may merge into, consolidate
with or acquire all or substantially all of the stock of any other
Warnaco Entity that is a Foreign Subsidiary in connection with a Post
Closing Reorganization;

provided, however, that in
each case under this Section 8.7 both before and
immediately after giving effect thereto, no Default or Event of Default
shall have occurred and be continuing or would result
therefrom.

Section 8.8 Change in Nature
of Business.

(a) Each of Group and the Borrower will
not, and will not permit any of its respective Subsidiaries to, make
any material change in the nature or conduct of its business as carried
on at the date hereof.

(b) Group shall not engage in any
business or activity other than (i) holding shares in the Stock
of the Borrower, (ii) paying taxes, (iii) preparing
reports to Governmental Authorities and to its shareholders and
(iv) holding directors and shareholders meetings, preparing
corporate records and other corporate activities required to maintain
its separate corporate
structure.

Section 8.9 Transactions with
Affiliates. Each of Group and the Borrower will not, and
will not permit any of its respective Subsidiaries to, except as
otherwise expressly permitted herein, do any of the following:
(a) make any Investment in an Affiliate of Group which is not a
Warnaco Entity; (b) transfer, sell, lease, assign or otherwise dispose
of any asset to any Affiliate of Group which is not a Warnaco Entity;
(c) merge into or consolidate with or purchase or acquire assets
from any Affiliate of Group which is not a Warnaco Entity;
(d) repay any Indebtedness to any Affiliate of Group which is
not a Warnaco Entity; or (e) enter into any other transaction
directly or indirectly with or for the benefit of any Affiliate of
Group which is not a Warnaco Entity (including guaranties and
assumptions of obligations of any such Affiliate), except for
(i) transactions in the ordinary course of business on a basis
no less favorable to such Warnaco Entity as would be obtained in a
comparable arm’s length transaction with a Person not an
Affiliate and (ii) salaries and other employee compensation to
officers or directors of any Warnaco
Entity.

Section 8.10 Restrictions on Subsidiary
Distributions; No New Negative Pledge. Other than (x)
pursuant to the Loan Documents, the Senior Note Documents, the
documents governing any Indebtedness permitted under,
Section 8.1(g) (without limiting the approval rights of
the Administrative Agents under Section 8.1(g)), or any
agreements governing any purchase money Indebtedness or Capital Lease
Obligations permitted by Section 8.1(e) or
Section 8.1(f) (in which case, any prohibition or
limitation shall only be effective against the assets financed
thereby), (y) any restrictions consisting of customary non-assignment
provisions that are entered into in the ordinary course of business
consistent with prior practice to the extent that such provisions
restrict the transfer or assignment of such contract or (z) with
respect to any asset that is subject to a contract of sale permitted by
Section 8.4 or which contract acknowledges that a waiver
under Section 8.4 is necessary, each of Group and the
Borrower will not, and will not permit any of its respective
Subsidiaries to:

(a) agree to enter into or suffer to
exist or become effective any consensual encumbrance or restriction of
any kind on the ability of such Subsidiary to pay dividends or make any
other distribution or transfer of funds or assets or make loans or
advances to or other Investments in, or pay any Indebtedness owed to,
any other Warnaco Entity, or

79

(b) enter into or suffer to exist
or become effective any agreement which prohibits or limits the ability
of any Warnaco Entity to create, incur, assume or suffer to exist any
Lien upon any of its property, assets or revenues, whether now owned or
hereafter acquired, to secure the Obligations, including any agreement
which requires other Indebtedness or Contractual Obligation to be
equally and ratably secured with the Secured
Obligations.

Section 8.11 Modification of
Constituent Documents. Each of Group and the Borrower will
not, and will not permit any of its respective Subsidiaries to, change
its capital structure (including in the terms of its outstanding Stock)
or otherwise amend its Constituent Documents, except for changes and
amendments which do not materially and adversely affect the rights and
privileges of any Warnaco Entity, or the interests of the Facility
Agents or the Secured Parties under the Loan Documents or in the
Collateral.

Section 8.12 Modification
of Certain Documents and Certain Debt.

Neither Group nor the
Borrower shall, nor shall they permit any of their respective
Subsidiaries to, (a) alter, rescind, terminate, amend,
supplement, waive or otherwise modify any provision of the Frankie
Acquisition Agreement or any document governing Indebtedness permitted
pursuant to Section 8.1(b) and
Section 8.1(g), except for modifications to the terms of
such Indebtedness (or any indenture or agreement in connection
therewith) permitted under Section 8.13 (Modification of Debt
Agreements) and modifications that do not materially adversely
affect the interests of the Secured Parties under the Loan Documents or
in the Collateral or (b) permit any breach or default to exist
under the Frankie Acquisition Agreement or take or fail to take any
action thereunder, if to do so could reasonably be expected to have a
Material Adverse
Effect.

Section 8.13 Modification of
Debt Agreements.

Neither Group nor the Borrower shall, nor
shall they permit any of their respective Subsidiaries to, change or
amend the terms of the Senior Note Documents (or any indenture,
agreement or other material document entered into in connection
therewith) if the effect of such amendment is to (a) increase
the interest rate payable in cash on such Indebtedness,
(b) change the dates upon which payments of principal or
interest are due on such Indebtedness other than to extend such dates,
(c) change any default or event of default other than to delete
or make less restrictive any default provision therein, or add any
covenant with respect to such Indebtedness unless a corresponding
covenant is added hereunder, (d) change the subordination
provisions, if any, of such Indebtedness, (e) change the
redemption or prepayment provisions of such Indebtedness other than to
extend the dates therefor or to reduce the premiums payable in
connection therewith or (f) change or amend any term (including
any covenant) if such change or amendment would increase the
obligations of the obligor or confer additional rights to the holder of
such Indebtedness or Security in a manner materially adverse to any
Warnaco Entity, the Facility Agents or any
Lender.

Section 8.14 Accounting Changes; Fiscal
Year. Each of Group and the Borrower will not, and will not
permit any of its respective Subsidiaries to, change its (a) accounting
treatment and reporting practices, except as required by GAAP, the
Financial Accounting Standards Board or any Requirement of Law and
disclosed to the Lenders and the Administrative Agents or (b) Fiscal
Year.

Section 8.15 Margin
Regulations. Neither Group nor the Borrower shall, nor
shall they permit any of their respective Subsidiaries to, use all or
any portion of the proceeds of any credit extended hereunder to
purchase or carry margin stock (within the meaning of
Regulation U of the Federal Reserve Board) in contravention of
Regulation U of the Federal Reserve
Board.

Section 8.16 Operating Leases; Sale and
Leasebacks Transactions.

(a) The aggregate amount of
rents paid by the Warnaco Entities (without duplication, as lessee or
guarantor or other surety) under operating leases (other than (i)
operating leases entered into prior to the Closing Date and any
renewals, extensions or replacements of such operating leases on market
terms, (ii) leases permitted to be incurred pursuant to clause
(b) below and (iii) any operating leases entered into in connection
with a new distribution facility in Pennsylvania for Calvin Klein,
Intimate Apparel and Chaps products) shall not exceed the Dollar
Equivalent of $10,000,000 in any Fiscal Year.

80

(b) Each of Group and the Borrower
will not, and will not permit any of its respective Subsidiaries to,
enter into any Sale and Leaseback Transaction if, after giving effect
to such Sale and Leaseback Transaction, the Dollar Equivalent of the
aggregate Fair Market Value of all properties covered by Sale and
Leaseback Transactions would exceed
$10,000,000.

Section 8.17 No Speculative
Transactions. Each of Group and the Borrower will not, and
will not permit any of its respective Subsidiaries to, engage in any
speculative transaction or in any transaction involving Hedging
Contracts except for the sole purpose of hedging in the normal course
of business and consistent with industry
practices.

Section 8.18 Compliance with
ERISA. Each of Group and the Borrower will not, and will
not permit any of its respective Subsidiaries to, or cause or permit
any ERISA Affiliate to, cause or permit to occur (a) an event which
could result in the imposition of a Lien under Section 412 of the IRC
or Section 302 or 4068 of ERISA or (b) an ERISA Event that would have a
Material Adverse
Effect.

Section 8.19 Environmental. Each
of Group and the Borrower will not, and will not permit any of its
respective Subsidiaries to, allow a Release of any Contaminant in
violation of any Environmental Law; provided, however, that no
Warnaco Entity shall be deemed in violation of this
Section 8.19 if, as the consequence of all such Releases,
the Warnaco Entities would not incur Environmental Liabilities and
Costs in excess of $5,000,000 in the
aggregate.

 ARTICLE IX 

 EVENTS
OF DEFAULT 

Section 9.1 Events
of Default.    Each of the following events shall be an
Event of Default:

(a) The Borrower shall (i) fail to pay
any principal of any Loan or any Reimbursement Obligation under any
Loan Document when the same becomes due and payable or (ii) shall fail
to pay interest or fees under any Loan Document when due and such
payment default shall continue for three (3) Business Days;
or

(b) any representation or warranty made or deemed made
by any Loan Party in any Loan Document or by any Loan Party (or any of
its officers) in connection with any Loan Document shall prove to have
been incorrect in any material respect when made or deemed made;
or

(c) any Loan Party shall fail to perform or observe (i)
any term, covenant or agreement contained in Article V,
Section 6.1, Section 6.2,
Section 6.12, Section 7.1,
Section 7.6, Section 7.9,
Section 7.11, or Article VIII, or Section
4.7 of the Pledge and Security Agreement, or (ii) any other
term, covenant or agreement contained in this Agreement or in any other
Loan Document if such failure under this clause (ii) shall
remain unremedied for 30 days after the earlier of the date on which
(A) a Responsible Officer of the Group or the Borrower becomes
aware of such failure and (B) written notice thereof shall have
been given to the Borrower by any Administrative Agent or any Lender;
or

(d) (i) any Warnaco Entity shall fail to make any
payment on any Indebtedness (other than the Obligations) of any Warnaco
Entity (or any Guaranty Obligation in respect of Indebtedness of any
other Person) having a principal amount of $10,000,000 or more, when
the same becomes due and payable (whether by scheduled maturity,
required prepayment, acceleration, demand or otherwise); or (ii) any
other event shall occur or condition shall exist under any agreement or
instrument relating to any such Indebtedness, if the effect of such
event or condition is to accelerate, or to permit the acceleration of,
the maturity of such Indebtedness; or (iii) any such Indebtedness shall
become or be declared to be due and payable, or required to be prepaid
or repurchased (other than by a regularly scheduled required prepayment
or, in connection with the Senior Notes, a provision requiring a
prepayment or repurchase in the event of the receipt by a Warnaco
Entity of proceeds of a Debt Issuance, equity issuance or an Asset
Sale), prior to the stated maturity thereof;
or

(e) (i) any Warnaco Entity shall generally not
pay its debts as such debts become due, shall admit in writing its
inability to pay its debts generally or shall make a general assignment
for the 

81

benefit of creditors, (ii) any
proceeding shall be instituted by or against any Warnaco Entity seeking
to adjudicate it a bankrupt or insolvent, or seeking liquidation,
winding up, reorganization, arrangement, adjustment, protection, relief
or composition of it or its debts, under any Requirement of Law
relating to bankruptcy, insolvency or reorganization or relief of
debtors, or seeking the entry of an order for relief or the appointment
of a custodian, receiver, trustee or other similar official for it or
for any substantial part of its property; provided,
however, that, in the case of any such proceedings instituted
against a Warnaco Entity (but not instituted by a Warnaco Entity),
either such proceedings shall remain undismissed or unstayed for a
period of 30 days or more or any action sought in such proceedings
shall occur or (iii) any Warnaco Entity shall take any corporate
action to authorize any action set forth in clauses (i)
and (ii) above; or

(f) any provision of any
Loan Document after delivery thereof shall for any reason fail or cease
to be valid and binding on, or enforceable against, any Loan Party
party thereto, or any Loan Party shall so state in writing;
or

(g) any Collateral Document shall for any reason fail
or cease to create a valid and enforceable Lien on any Collateral
purported to be covered thereby or, except as permitted by the Loan
Documents, such Lien shall fail or cease to be a perfected Lien having
the priority described in Section 4.20 of this Agreement
and the Collateral Documents, or any Loan Party shall so state in
writing; or

(h) one or more judgments or orders (or other
similar process) involving, in any single case or in the aggregate, an
amount in excess of $10,000,000 in the case of a money judgment, to the
extent not covered by insurance, shall be rendered against one or more
Warnaco Entity and shall remain unpaid and either
(i) enforcement proceedings shall have been commenced by any
creditor upon such judgment or order or (ii) there shall be any
period of 30 consecutive days during which a stay of enforcement of
such judgment or order, by reason of a pending appeal or otherwise,
shall not be in effect; or

(i) an ERISA Event shall occur
and the amount of all liabilities and deficiencies resulting therefrom,
whether or not assessed, exceeds $10,000,000 in the aggregate;
or

(j) there shall occur a Change of Control;
or

(k) a Warnaco Entity shall have entered into one or
more consent or settlement decrees or agreements or similar
arrangements with a Governmental Authority or one or more judgments,
orders, decrees or similar actions shall have been entered against a
Warnaco Entity based on or arising from the violation of or pursuant to
any Environmental Law, or the generation, storage, transportation,
treatment, disposal or Release of any Contaminant and, in connection
with all the foregoing, the Warnaco Entities are likely to incur
Environmental Liabilities and Costs in excess of $10,000,000 in the
aggregate.

Section 9.2 Remedies.    During
the continuance of any Event of
Default,

(a) (i) the Revolving Facility Agent may,
and at the request of the Requisite Revolving Credit Lenders, shall, by
notice to the Borrower, declare that all or any portion of the
Commitments be terminated, whereupon the obligation of each Revolving
Credit Lender to make any Revolving Loan and each Issuer to Issue any
Letter of Credit shall immediately terminate;
and

(ii) the Revolving Facility Agent
shall at the request, or may with the consent, of the Requisite
Revolving Credit Lenders, by notice to the Borrower, declare the
Revolving Loans, all interest thereon and all other amounts and
Obligations (other than the Obligations under the Term Loan Facility)
payable under this Agreement to be forthwith due and payable, whereupon
all such Loans, all such interest and all such amounts and Obligations
shall become and be forthwith due and payable, without presentment,
demand, protest or further notice of any kind, all of which are hereby
expressly waived by the Borrower.

(b) the Term Facility
Agent shall at the request, or may with the consent, of the Requisite
Term Loan Lenders, by notice to the Borrower, declare the Term Loans,
all interest thereon and all other amounts and Obligations under the
Term Loan Facility payable under this Agreement to be forthwith

82

due and payable, whereupon such Loans, all
such interest and all such amounts and Obligations shall become and be
forthwith due and payable, without presentment, demand, protest or
further notice of any kind, all of which are hereby expressly waived by
the Borrower;

provided, however, that upon the
occurrence of the Events of Default specified in
Section 9.1(e) with respect to any Loan Party,
(x) the Commitments of each Lender to make Loans and the
commitments of each Lender and Issuer to Issue or participate in
Letters of Credit shall each automatically be terminated and
(y) the Loans, all such interest and all such amounts and
Obligations shall automatically become and be due and payable, without
presentment, demand, protest or any notice of any kind, all of which
are hereby expressly waived by the Borrower; and provided,
further, that in addition to the remedies set forth above and
subject to and in accordance with the Intercreditor Agreement, the
Facility Agents and the Lenders shall be entitled to exercise all of
their respective rights and remedies under the Loan Documents,
including, without limitation, in the case of the Collateral Agent, all
rights and remedies with respect to the Collateral provided under the
Collateral Documents and in the case of all Agents, any other remedies
provided by applicable law.

Section 9.3 Actions
in Respect of Letters of Credit. Upon the Revolving Credit
Termination Date, or as required by Section 2.9,
the Borrower shall pay to the Revolving Facility Agent in immediately
available funds at the Revolving Facility Agent’s office
referred to in Section 11.8, for deposit in a Cash
Collateral Account, the amount required to ensure that, after such
payment, the aggregate funds on deposit in the Cash Collateral Accounts
equals or exceeds 105% of the sum of all outstanding Letter of
Credit Obligations. The Revolving Facility Agent may, from time to time
after funds are deposited in any Cash Collateral Account, apply funds
then held in such Cash Collateral Account to the payment of any
amounts, in accordance with Section 2.13(h), as shall
have become or shall become due and payable by the Borrower to the
Issuers or the Lenders in respect of the Letter of Credit Obligations.
The Revolving Facility Agent shall promptly give written notice of any
such application; provided, however, that the failure to give
such written notice shall not invalidate any such
application.

83

 ARTICLE X 

 THE
ADMINISTRATIVE AGENTS 

Section 10.1 Authorization and
Action.

(a) (i) Each Revolving Credit Lender, the
Swing Loan Lender and each Issuer hereby appoints CNAI as the Revolving
Facility Agent hereunder and each such Revolving Credit Lender, the
Swing Loan Lender and each Issuer authorizes the Revolving Facility
Agent to take such action as agent on its behalf and to exercise such
powers under this Agreement and the other Loan Documents as are
delegated to the Revolving Facility Agent under such agreements and to
exercise such powers as are reasonably incidental thereto. Without
limiting the foregoing, each Revolving Credit Lender, the Swing Loan
Lender and each Issuer hereby authorizes the Revolving Facility Agent
to execute and deliver, and to perform its obligations under, each of
the Loan Documents to which the Revolving Facility Agent is a party, to
exercise all rights, powers and remedies that the Revolving Facility
Agent may have under such Loan Documents.

(ii) Each Term Loan Lender hereby appoints
CNAI as the Term Facility Agent hereunder and each such Term Loan
Lender authorizes the Term Facility Agent to take such action as agent
on its behalf and to exercise such powers under this Agreement and the
other Loan Documents as are delegated to the Term Facility Agent under
such agreements and to exercise such powers as are reasonably
incidental thereto. Without limiting the foregoing, each Term Loan
Lender hereby authorizes the Term Facility Agent to execute and
deliver, and to perform its obligations under, each of the Loan
Documents to which the Term Facility Agent is a party, to exercise all
rights, powers and remedies that the Term Facility Agent may have under
such Loan Documents.

(iii) Each
Administrative Agent, each Lender and each Issuer hereby appoints CNAI
as the Collateral Agent hereunder and each Administrative Agent, each
Lender and each Issuer authorizes the Collateral Agent to take such
action as agent on its behalf and to exercise such powers under this
Agreement and the other Loan Documents as are delegated to the
Collateral Agent under such agreements and to exercise such powers as
are reasonably incidental thereto. Without limiting the foregoing, each
Administrative Agent, each Lender and each Issuer hereby authorizes the
Collateral Agent to execute and deliver, and to perform its obligations
under, each of the Loan Documents to which the Collateral Agent is a
party, to exercise all rights, powers and remedies that the Collateral
Agent may have under such Loan Documents and, in the case of the
Collateral Documents, to act as agent for the Administrative Agents,
the Lenders, each Issuer and the other Secured Parties under such
Collateral Documents.

(b) As to any matters not expressly
provided for by this Agreement and the other Loan Documents (including
enforcement or collection), no Facility Agent shall be required to
exercise any discretion or take any action, but shall be required to
act or to refrain from acting (and shall be fully protected in so
acting or refraining from acting) upon the instructions of the
Requisite Lenders, Requisite Revolving Credit Lenders or the Requisite
Term Loan Lenders, as the case may be, and such instructions shall be
binding upon all Lenders and each Issuer; provided, however,
that no Facility Agent shall be required to take any action which
(i) such Facility Agent in good faith believes exposes it to
personal liability unless such Facility Agent receives an
indemnification satisfactory to it from the Lenders and the Issuers
with respect to such action or (ii) is contrary to this
Agreement, the Intercreditor Agreement or applicable Requirements of
Law. Each Facility Agent agrees to give to each other Facility Agent,
each Lender and each Issuer prompt notice of each notice given to it by
any Loan Party pursuant to the terms of this Agreement or the other
Loan Documents.

(c) In performing its functions and duties
hereunder and under the other Loan Documents, (i) the Revolving
Facility Agent is acting solely on behalf of the Swing Loan Lender, the
Revolving Credit Lenders and the Issuers, (ii) the Term Facility Agent
is acting solely on behalf of the Term Loan Lenders and (iii) the
Collateral Agent is acting solely on behalf of the Administrative
Agents, the Lenders and the Issuers, except, in the cases of the
Administrative Agents, to the limited extent provided in Section
2.7(b) and Section 11.2(c), and each of their respective
duties are entirely 

84

administrative in nature. No Facility Agent
assumes, and shall not be deemed to have assumed, any obligation other
than as expressly set forth herein and in the other Loan Documents or
any other relationship as agent, fiduciary or trustee of or for any
other Agent, Lender, Issuer or holder of any other Obligation. Any
Facility Agent may perform any of its duties under any of the Loan
Documents by or through its agents or employees.

Section
10.2    Agent’s Reliance, Etc. None of the
Facility Agents, any of their respective Affiliates, or any of their
respective directors, officers, agents or employees shall be liable for
any action taken or omitted to be taken by it, him, her or them under
or in connection with this Agreement or the other Loan Documents,
except for its, his, her or their own gross negligence or willful
misconduct. Without limiting the foregoing, each Administrative Agent
and, other than in the case of clause (a), the Collateral Agent:
(a) may treat the payee of any Note as its holder until such
Note has been assigned in accordance with Section 11.2;
(b) may rely on the Register to the extent set forth in
Section 11.2(c); (c) may consult with legal
counsel (including counsel to the Borrower or any other Loan Party),
independent public accountants and other experts selected by it and
shall not be liable for any action taken or omitted to be taken in good
faith by it in accordance with the advice of such counsel, accountants
or experts; (d) makes no warranty or representation to any other
Agent, any Lender or any Issuer and shall not be responsible to any
other Agent, any Lender or any Issuer for any statements, warranties or
representations made by or on behalf of Group or any of its
Subsidiaries in or in connection with this Agreement or any of the
other Loan Documents; (e) shall not have any duty to ascertain
or to inquire either as to the performance or observance of any of the
terms, covenants or conditions of this Agreement or any of the other
Loan Documents or the financial condition of any Loan Party, or the
existence or possible existence of any Default or Event of Default;
(f) shall not be responsible to any other Agent, any Lender or
any Issuer for the due execution, legality, validity, enforceability,
genuineness, sufficiency or value of, or the attachment, perfection or
priority of any Lien created or purported to be created under or in
connection with, this Agreement, any of the other Loan Documents or any
other instrument or document furnished pursuant hereto or thereto; and
(g) shall incur no liability under or in respect of this
Agreement or any of the other Loan Documents by acting upon any notice,
consent, certificate or other instrument or writing (which may be by
telecopy or electronic mail) or any telephone message believed by it to
be genuine and signed or sent by the proper party or
parties.

Section 10.3 The Agents
Individually. With respect to its respective Ratable
Portion, CNAI shall have and may exercise the same rights and powers
hereunder and is subject to the same obligations and liabilities as and
to the extent set forth herein for any other Lender. The terms
‘‘Lenders’’,
‘‘Revolving Credit Lenders’’,
‘‘Term Loan Lenders’’,
‘‘Requisite Lenders’’,
‘‘Requisite Term Loan Lenders’’ or
‘‘Requisite Revolving Credit
Lenders’’ or any similar terms shall, unless the
context clearly otherwise indicates, include each Facility Agent in its
individual capacity as a Lender, Revolving Credit Lender or Term Loan
Lender, or as one of the Requisite Lenders, Requisite Revolving Credit
Lenders, Requisite Term Loan Lenders, as the case may be. CNAI and its
Affiliates may accept deposits from, lend money to, and generally
engage in any kind of banking, trust or other business with any Loan
Party as if it were not acting as a Facility Agent hereunder or under
the Loan Documents.

Section 10.4 Lender Credit
Decision. Each Lender and each Issuer acknowledges that it
shall, independently and without reliance upon any Facility Agent or
any other Lender conduct its own independent investigation of the
financial condition and affairs of the Borrower and each other Loan
Party in connection with the making and continuance of the Loans and
with the issuance of the Letters of Credit. Each Lender and each Issuer
also acknowledges that it will, independently and without reliance upon
any Facility Agent or any other Lender and based on such documents and
information as it shall deem appropriate at the time, continue to make
its own credit decisions in taking or not taking action under this
Agreement and other Loan
Documents.

Section 10.5 Indemnification. Each
(a) Revolving Credit Lender and the Swing Loan Lender agrees to
indemnify the Collateral Agent and the Revolving Facility Agent and
each of its respective Affiliates, and each of their respective
directors, officers, employees, agents and advisors (to the extent not
reimbursed by a Loan Party) and (b) each Term Loan Lender agrees to
indemnify the Collateral 

85

Agent and the Term Facility Agent and each of
its respective Affiliates, and each of their respective directors,
officers, employees, agents and advisors (to the extent not reimbursed
by a Loan Party), from and against such Lender’s aggregate
Ratable Portion of any and all liabilities, obligations, losses,
damages, penalties, actions, judgments, suits, costs, expenses and
disbursements (including fees and disbursements of legal counsel) of
any kind or nature whatsoever which may be imposed on, incurred by, or
asserted against, the applicable Facility Agent or any of its
Affiliates, directors, officers, employees, agents and advisors in any
way relating to or arising out of this Agreement, the other Loan
Documents or any action taken or omitted by the applicable Facility
Agent under this Agreement, the other Loan Documents; provided,
however, that no Lender shall be liable for any portion of such
liabilities, obligations, losses, damages, penalties, actions,
judgments, suits, costs, expenses or disbursements resulting from the
applicable Facility Agent’s or such Affiliate’s gross
negligence or willful misconduct. Without limiting the foregoing, each
Lender agrees to reimburse each applicable Facility Agent promptly upon
demand for its ratable share of any out-of-pocket expenses (including
fees and disbursements of legal counsel) incurred by such Facility
Agent in connection with the preparation, execution, delivery,
administration, modification, amendment or enforcement (whether through
negotiations, legal proceedings or otherwise) of, or legal advice in
respect of its rights or responsibilities under, this Agreement, the
other Loan Documents, to the extent that such Facility Agent is not
reimbursed for such expenses by a Loan
Party.

Section 10.6 Successor
Agents.

(a) Revolving Facility Agent.    The
Revolving Facility Agent may resign at any time by giving written
notice thereof to the other Facility Agents, the Revolving Credit
Lenders, the Swing Loan Lender, the Issuers and the Borrower and shall,
immediately upon giving such notice, be discharged from its duties and
obligations under this Agreement and the other Loan Documents;
provided, however, that if the Person acting as Revolving
Facility Agent is not also acting as Term Facility Agent, the retiring
Revolving Facility Agent shall be discharged from its duties and
obligations under this Agreement and the other Loan Documents solely
upon the acceptance of any appointment as Revolving Facility Agent as
provided below. Upon any such resignation by the Revolving Facility
Agent, the Requisite Revolving Credit Lenders shall have the right to
appoint a successor Revolving Facility Agent, provided that such
successor shall be United States person as defined in Section
7701(a)(30) of the Code. If no successor Revolving Facility Agent shall
have been so appointed by the Requisite Revolving Credit Lenders and
shall have accepted such appointment, within 30 days after the retiring
Revolving Facility Agent’s giving of notice of resignation, then
the retiring Revolving Facility Agent may, on behalf of the Revolving
Credit Lenders, the Swing Loan Lender and the Issuers appoint a
successor Revolving Facility Agent, selected from among the Revolving
Credit Lenders. Such appointment shall be subject to the prior written
approval of the Borrower (which approval may not be unreasonably
withheld and shall not be required upon the occurrence and during the
continuance of an Event of Default). Upon the acceptance of any
appointment as Revolving Facility Agent by a successor Revolving
Facility Agent, such successor Revolving Facility Agent shall succeed
to and become vested with all the rights, powers, privileges and duties
of the retiring Revolving Facility Agent, and the retiring Revolving
Facility Agent shall be discharged from its duties and obligations
under this Agreement and the other Loan Documents. Prior to any
retiring Revolving Facility Agent’s resignation hereunder as
Revolving Facility Agent, the retiring Revolving Facility Agent shall
take such action as may be reasonably necessary to assign to the
successor Revolving Facility Agent its rights as Revolving Facility
Agent under the Loan Documents. At any time after the discharge of a
retiring Revolving Facility Agent from its duties and obligations under
this Agreement and prior to any Person accepting its appointment as a
successor Revolving Facility Agent, the Requisite Revolving Credit
Lenders shall assume and perform all of the duties of such retiring
Revolving Facility Agent hereunder until such time, if any, as a
successor Revolving Facility Agent shall become the Revolving Facility
Agent hereunder. After its resignation, the retiring Revolving Facility
Agent shall continue to have the benefit of this
Article X as to any actions taken or omitted to be taken
by it while it was Revolving Facility Agent under this Agreement or the
other Loan Documents.

86

(b) Term Facility
Agent.     The Term Facility Agent may resign at any time by
giving written notice thereof to the other Facility Agents, the Term
Loan Lenders and the Borrower and shall, immediately upon giving such
notice, be discharged from its duties and obligations under this
Agreement and the other Loan Documents; provided,
however, that if the Person acting as Term Facility Agent is not
also acting as Revolving Facility Agent, the retiring Term Facility
Agent shall be discharged from its duties and obligations under this
Agreement and the other Loan Documents solely upon the acceptance of
any appointment as Term Facility Agent as provided below. Upon any such
resignation by the Term Facility Agent, the Requisite Term Loan Lenders
shall have the right to appoint a successor Term Facility Agent,
provided that such successor shall be United States person as
defined in Section 7701(a)(30) of the Code. If no successor Term
Facility Agent shall have been so appointed by the Requisite Term Loan
Lenders and shall have accepted such appointment, within 30 days after
the retiring Term Facility Agent’s giving of notice of
resignation, then the retiring Term Facility Agent may, on behalf of
the Term Loan Lenders, appoint a successor Term Facility Agent,
selected from among the Term Loan Lenders. Such appointment shall be
subject to the prior written approval of the Borrower (which approval
may not be unreasonably withheld and shall not be required upon the
occurrence and during the continuance of an Event of Default). Upon the
acceptance of any appointment as Term Facility Agent by a successor
Term Facility Agent, such successor Term Facility Agent shall succeed
to and become vested with all the rights, powers, privileges and duties
of the retiring Term Facility Agent, and the retiring Term Facility
Agent shall be discharged from its duties and obligations under this
Agreement and the other Loan Documents. Prior to any retiring Term
Facility Agent’s resignation hereunder as Term Facility Agent,
the retiring Term Facility Agent shall take such action as may be
reasonably necessary to assign to the successor Term Facility Agent its
rights as Term Facility Agent under the Loan Documents. At any time
after the discharge of a retiring Term Facility Agent from its duties
and obligations under this Agreement and prior to any Person accepting
its appointment as a successor Term Facility Agent, the Requisite Term
Loan Lenders shall assume and perform all of the duties of such
retiring Term Facility Agent hereunder until such time, if any, as a
successor Term Facility Agent shall become the Term Facility Agent
hereunder. After its resignation, the retiring Term Facility Agent
shall continue to have the benefit of this Article X as
to any actions taken or omitted to be taken by it while it was Term
Facility Agent under this Agreement or the other Loan
Documents.

(c) Collateral Agent.    The
Collateral Agent may resign as set forth in the Intercreditor
Agreement. After such resignation, the retiring Collateral Agent shall
continue to have the benefit of this Article X as to any
actions taken or omitted to be taken by it while it was Collateral
Agent under this Agreement or the other Loan
Documents.

Section 10.7 Concerning the
Collateral and the Collateral Documents.

(a) (i) The
Swing Loan Lender, each Revolving Credit Lender and each Issuer agrees
that any action taken by the Revolving Facility Agent or the Requisite
Lenders (or, where required by the express terms of this Agreement, a
greater proportion of the Lenders) in accordance with the provisions of
this Agreement or of the other Loan Documents, and the exercise by the
Revolving Facility Agent or the Requisite Lenders (or, where so
required, such greater proportion) of the powers set forth herein or
therein, together with such other powers as are reasonably incidental
thereto, shall be authorized and binding upon the Swing Loan Lender and
all of the Revolving Credit Lenders, the Issuers and the other
applicable Secured Parties. Without limiting the generality of the
foregoing, the Revolving Facility Agent shall have the sole and
exclusive right and authority to act as the disbursing and collecting
agent for the Revolving Credit Lenders and the Issuers with respect to
all payments and collections arising in connection with the Revolving
Credit Facility; provided, however, that notwithstanding
anything to the contrary herein, the Revolving Facility Agent shall
have the right to manage, supervise and otherwise deal with the
Collateral included in the Borrowing Base, including the right to make
Protective Advances in an aggregate amount not to exceed the lesser of
$10,000,000 and the aggregate amount of the unused Revolving Credit
Commitments.

(ii) Each Term Loan Lender
agrees that any action taken by the Term Facility Agent or the
Requisite Lenders (or, where required by the express terms of this
Agreement, a greater 

87

proportion of the Lenders) in accordance with
the provisions of this Agreement or of the other Loan Documents, and
the exercise by the Term Facility Agent or the Requisite Lenders (or,
where so required, such greater proportion) of the powers set forth
herein or therein, together with such other powers as are reasonably
incidental thereto, shall be authorized and binding upon all of the
Term Loan Lenders and the other applicable Secured Parties. Without
limiting the generality of the foregoing, the Term Facility Agent shall
have the sole and exclusive right and authority to act as the
disbursing and collecting agent for the Term Loan Lenders with respect
to all payments and collections arising in connection with the Term
Loan Facility or any other Obligation (other than in respect of the
Revolving Credit Facility or any Obligations in respect of hedging
agreements or cash management
documents).

(iii) Each Administrative
Agent, each Lender and each Issuer agrees that any action taken by the
Collateral Agent or the Requisite Lenders (or, where required by the
express terms of this Agreement, a greater proportion of the Lenders)
in accordance with the provisions of this Agreement or of the other
Loan Documents, and the exercise by the Collateral Agent or the
Requisite Lenders (or, where so required, such greater proportion) of
the powers set forth herein or therein, together with such other powers
as are reasonably incidental thereto, shall be authorized and binding
upon all of the Administrative Agents, the Lenders, the Issuers and the
other Secured Parties. Without limiting the generality of the
foregoing, the Collateral Agent shall have the sole and exclusive right
and authority to (i) act as the disbursing and collecting agent
for the Lenders and the Issuers with respect to all payments and
collections arising in connection with the Collateral Documents;
provided, that the Collateral Agent shall pay such amounts to
the applicable Administrative Agent for application in accordance with
the provisions of this Agreement and the other Loan Documents,
(ii) execute and deliver each Collateral Document and accept
delivery of each such agreement delivered by the Borrower or any of its
Subsidiaries, (iii) act as collateral agent for the
Administrative Agents, the Lenders, the Issuers and the other Secured
Parties for purposes of the perfection of all security interests and
Liens created by such agreements and all other purposes stated therein;
provided, however, that the Collateral Agent hereby
appoints, authorizes and directs each Administrative Agent, Lender and
Issuer to act as collateral sub-agent for the Collateral Agent, the
Administrative Agents, the Lenders and the Issuers for purposes of the
perfection of all security interests and Liens with respect to the
Collateral, including any Deposit Account maintained by a Loan Party
with, and cash and Cash Equivalents held by, such Administrative Agent,
such Lender or such Issuer, (iv) manage, supervise and otherwise
deal with the Collateral, (v) take such action as is necessary
or desirable to maintain the perfection and priority of the security
interests and Liens created or purported to be created by the
Collateral Documents and (vi) except as may be otherwise
specifically restricted by the terms hereof or of any other Loan
Document, exercise all remedies given to the Collateral Agent, the
Lenders, the Issuers and the other Secured Parties with respect to the
Collateral under the Loan Documents relating thereto, applicable
Requirements of Law or otherwise.

(b) Each of the
Administrative Agents, the Lenders and the Issuers hereby consents to
the release and hereby directs the Collateral Agent (without any
further notice or consent) to promptly release or subordinate any Lien
held by the Collateral Agent for the benefit of the Administrative
Agents, the Lenders, the Issuers and the other Secured Parties as set
forth in the Intercreditor Agreement.

(c) Each of the
Administrative Agents, the Lenders and the Issuers hereby directs, in
accordance with the terms hereof, the Collateral Agent to release any
Subsidiary Guarantor from its obligations under the Guaranty if the
Stock of such Subsidiary Guarantor is being dissolved pursuant to
Section 8.7(d) or sold or disposed of, if such sale or
disposition is permitted by this Agreement (or permitted pursuant to a
waiver or consent of a transaction otherwise prohibited by this
Agreement) (other than an Asset Sale pursuant to
Section 8.4(c)), or, if not pursuant to such sale or
disposition, if such release is consented to by the Lenders required to
consent thereto under Section 11.1.

(d) Each
of the Administrative Agents, the Lenders and the Issuers hereby
directs the Collateral Agent to execute and deliver or file such
termination and partial release statements and do such other things as
are necessary to release Liens to be released pursuant to this
Section 10.7

88

promptly upon the effectiveness of any such
release. Unless expressly permitted by a Loan Document (or permitted
pursuant to a waiver of or consent to a transaction otherwise
prohibited by this Agreement), the Collateral Agent shall not release
any Lien or any Subsidiary Guarantor from its obligations under the
Guaranty.

(e) Each Lender hereby acknowledges that it has
fully reviewed the Intercreditor Agreement and, by its execution of
this Agreement, hereby consents to the execution and delivery of the
Intercreditor Agreement by the applicable Administrative Agent and the
Collateral Agent and agrees to comply with the terms thereof (which
terms are incorporated herein by reference in their entirety) as if
such Lender were a direct signatory
thereto.

Section 10.8 Collateral Matters
Relating to Related Obligations. The provisions of this
Agreement and the other Loan Documents relating to the Collateral shall
extend to and be available in respect of any Secured Obligation arising
under any Hedging Contract or Cash Management Obligation or that is
otherwise owed to Persons other than the Facility Agents, the Lenders
and the Issuers (collectively, ‘‘Related
Obligations’’) solely on the condition and
understanding, as among the Facility Agents and all Secured Parties,
that (a) the Related Obligations shall be entitled to the
benefit of the Collateral to the extent expressly set forth in this
Agreement and the other Loan Documents and to such extent the Facility
Agents shall hold, and have the right and power to act with respect to,
the Guaranty and the Collateral on behalf of and as agent for the
holders of the Related Obligations, but each Facility Agent is
otherwise acting solely as agent for the Lenders and the Issuers and
shall have no fiduciary duty, duty of loyalty, duty of care, duty of
disclosure or other obligation whatsoever to any holder of Related
Obligations, (b) all matters, acts and omissions relating in any
manner to the Guaranty, the Collateral, or the omission, creation,
perfection, priority, abandonment or release of any Lien, shall be
governed solely by the provisions of this Agreement and the other Loan
Documents and no separate Lien, right, power or remedy shall arise or
exist in favor of any Secured Party under any separate instrument or
agreement or in respect of any Related Obligation, (c) each
Secured Party shall be bound by all actions taken or omitted, in
accordance with the provisions of this Agreement and the other Loan
Documents, by any of the Facility Agents and the Requisite Lenders,
each of whom shall be entitled to act at its sole discretion and
exclusively in its own interest given its own Commitments and its own
interest in the Loans, Letter of Credit Obligations and other
Obligations to it arising under this Agreement or the other Loan
Documents, without any duty or liability to any other Secured Party or
as to any Related Obligation and without regard to whether any Related
Obligation remains outstanding or is deprived of the benefit of the
Collateral or becomes unsecured or is otherwise affected or put in
jeopardy thereby, (d) no holder of Related Obligations and no
other Secured Party (except the Facility Agents, the Lenders and the
Issuers, to the extent set forth in this Agreement) shall have any
right to be notified of, or to direct, require or be heard with respect
to, any action taken or omitted in respect of the Collateral or under
this Agreement or the Loan Documents and (e) no holder of any
Related Obligation shall exercise any right of setoff, banker’s
lien or similar right except to the extent provided in
Section 11.6 and then only to the extent such right is
provided for under the documents governing such Related Obligation and
exercised in compliance with
Section 11.7.

Section 10.9 Posting
of Approved Electronic Communications.

(a) Each of
the Agents, Lenders, the Issuers and Group and the Borrower agree, and
Group shall cause each other Loan Party to agree, that each
Administrative Agent and the Collateral Agent may, but shall not be
obligated to, make the Approved Electronic Communications available to
the applicable Lenders and Issuers by posting such Approved Electronic
Communications on IntraLinksTM or a substantially similar
electronic platform chosen by the Agents to be their electronic
transmission system (the ‘‘Approved Electronic
Platform’’).

(b) Although the
Approved Electronic Platform and its primary web portal are secured
with generally-applicable security procedures and policies implemented
or modified by the Agents from time to time (including, as of the
Closing Date, a dual firewall and a User ID/Password Authorization
System) and the Approved Electronic Platform is secured through a
single-user-per-deal authorization method whereby each user may access
the Approved Electronic Platform only on a deal-by-deal basis,

89

each of the Lenders, the Issuers, Group and
the Borrower acknowledges and agrees, and Group shall cause each other
Loan Party to acknowledge and agree, that the distribution of material
through an electronic medium is not necessarily secure and that there
are confidentiality and other risks associated with such distribution.
In consideration for the convenience and other benefits afforded by
such distribution and for the other consideration provided hereunder,
the receipt and sufficiency of which is hereby acknowledged, each of
the Facility Agents, the Lenders, the Issuers, Group and the Borrower
hereby approves, and Group shall cause each other Loan Party to
approve, distribution of the Approved Electronic Communications through
the Approved Electronic Platform and understands and assumes, and Group
shall cause each other Loan Party to understand and assume, the risks
of such distribution.

(c) THE APPROVED ELECTRONIC PLATFORM
AND THE APPROVED ELECTRONIC COMMUNICATIONS ARE PROVIDED
‘‘AS IS’’ AND ‘‘AS
AVAILABLE’’. NONE OF THE FACILITY AGENTS OR ANY OF THEIR
AFFILIATES OR ANY OF THEIR RESPECTIVE OFFICERS, DIRECTORS, EMPLOYEES,
AGENTS, ADVISORS OR REPRESENTATIVES (THE ‘‘AGENT
AFFILIATES’’) WARRANT THE ACCURACY, ADEQUACY OR
COMPLETENESS OF THE APPROVED ELECTRONIC COMMUNICATIONS OR THE APPROVED
ELECTRONIC PLATFORM AND EACH EXPRESSLY DISCLAIMS LIABILITY FOR ERRORS
OR OMISSIONS IN THE APPROVED ELECTRONIC PLATFORM AND THE APPROVED
ELECTRONIC COMMUNICATIONS. NO WARRANTY OF ANY KIND, EXPRESS, IMPLIED OR
STATUTORY, INCLUDING, WITHOUT LIMITATION, ANY WARRANTY OF
MERCHANTABILITY, FITNESS FOR A PARTICULAR PURPOSE, NON-INFRINGEMENT OF
THIRD PARTY RIGHTS OR FREEDOM FROM VIRUSES OR OTHER CODE DEFECTS, IS
MADE BY THE AGENT AFFILIATES IN CONNECTION WITH THE APPROVED ELECTRONIC
PLATFORM OR THE APPROVED ELECTRONIC
COMMUNICATIONS.

(d) Each of the Lenders, the Issuers,
Group and the Borrower agree, and Group shall cause each other Loan
Party to agree, that each Facility Agent may, but (except as may be
required by applicable law) shall not be obligated to, store the
Approved Electronic Communications on the Approved Electronic Platform
in accordance with such Agent’s generally-applicable document
retention procedures and
policies.

Section 10.10 Syndication Agent;
Co-Documentation Agents; Arrangers. Neither the Syndication
Agent, the Co-Documentation Agents nor the Arrangers shall have any
obligations or duties whatsoever in such capacity under this Agreement,
any other Loan Document and shall incur no liability hereunder or
thereunder in such capacity. Without limiting the foregoing, none of
the Syndication Agent, the Co-Documentation Agents nor the Arrangers
shall have or be deemed to have any fiduciary relationship with any
Lender. Each Lender acknowledges and agrees that it has not relied, and
will not rely, on any of the Arrangers, the Syndication Agent, the
Co-Documentation Agents or the other Lenders in deciding whether to
enter into this Agreement or in taking or not taking action
hereunder.

 ARTICLE XI 

 MISCELLANEOUS 

Section 11.1 Amendments,
Waivers, Etc.

(a) Except as expressly provided
otherwise in the Intercreditor Agreement, no amendment or waiver of any
provision of this Agreement or any other Loan Document nor consent to
any departure by any Loan Party therefrom shall in any event be
effective unless the same shall be in writing and (x) in the case of
any such waiver or consent, signed by the Requisite Lenders (or by the
Administrative Agents with the consent of the Requisite Lenders) and
(y) in the case of any other amendment, by the Requisite Lenders (or by
the Administrative Agents with the consent of the Requisite Lenders)
and the Borrower, and then any such waiver or consent shall be
effective only in the specific instance and for the specific purpose
for which given; provided, however, that:

90

(i) no amendment,
waiver or consent with respect to the provisions contained in
Section 2.13(h) shall be effective, unless in writing and
signed by each Agent or Lender required under the terms of such section
to have consented thereto;

(ii) no
amendment, waiver or consent under this Agreement shall be effective to
add any category of Collateral to the Borrowing Base unless in writing
and signed by the Revolving Facility Agent and the Syndication Agent
and the Super-Majority Lenders;

(iii) no amendment, waiver or consent shall
be effective to increase any Advance Rate above the applicable maximum
set forth in the definition thereof, unless in writing and signed by
each Revolving Credit Lender affected thereby, in addition to the
Requisite Lenders; and

(iv) no
amendment, waiver or consent with respect to the terms and conditions
of the Collateral Documents shall be effective, unless in writing and
signed by the Collateral
Agent;

(v) except to the extent any such
amendment, waiver or consent would result in an increase of the
aggregate Revolving Credit Commitments (it being understood that any
Facility Increase does not constitute such an increase in Revolving
Credit Commitments), no amendment, waiver or consent shall be effective
with respect to (A) the terms and provisions under Article
II  and any other provisions related solely to Revolving
Credit Borrowings (including any conditions to such Borrowings or the
Facility Increase and increases to interest rates and fees) and payment
procedures under the Revolving Credit Facility and (B) matters solely
affecting the relative rights, remedies, obligations and priorities
among the Revolving Credit Lenders, which do not materially and
adversely affect any Term Loan Lender, unless in writing and signed by
the Revolving Facility Agent and the Requisite Revolving Credit
Lenders;

(vi) except to the extent any
such amendment, waiver or consent would result in an increase of the
aggregate Term Loan Commitments or the aggregate outstanding principal
amount of the Term Loans, no amendment, waiver or consent shall be
effective with respect to (A) the terms and provisions under Article
II  and any other provisions related solely to the Term Loan
Borrowing (including any conditions to such Borrowing and increases to
interest rates and fees) and payment procedures under the Term Loan
Facility and (B) matters solely affecting the relative rights,
remedies, obligations and priorities among the Term Loan Lenders, which
do not materially and adversely affect any Revolving Credit Lender,
unless in writing and signed by the Term Facility Agent and the
Requisite Term Loan Lenders;

(vii) no
amendment, waiver or consent shall, unless in writing and signed by
each Lender affected thereby, in addition to the Requisite Lenders, do
any of the following:

(A)  waive
any of the conditions specified in Section 3.1 (subject
to Section 3.3) or Section 3.2 except with
respect to a condition based upon another provision hereof, the waiver
of which requires only the concurrence of the Requisite
Lenders;

(B)  increase the
Commitments of such Lender or subject such Lender to any additional
obligation;

(C)  extend the
scheduled final maturity of any Loan owing to such Lender, or waive,
reduce, or postpone any scheduled date fixed for, the payment of
principal, interest or fees owing to such Lender (it being understood
that Section 2.9 does not provide for scheduled dates
fixed for payment) or for the reduction of such Lender’s
Commitments;

(D) reduce the principal
amount of any Loan or Reimbursement Obligation (other than by the
payment or prepayment thereof) owing to such
Lender;

(E)  reduce the rate of
interest on any Loan or Reimbursement Obligations owing to such Lender
or any fee payable hereunder to such Lender or waive any such
obligation (other than with respect to default
interest);

(F)  change the
aggregate Ratable Portions of the Lenders which shall be required for
the Lenders or any of them to take any action
hereunder;

(G)  release all or
substantially all of the Collateral or release any Guarantor from its
obligations under the Guaranty except as provided in
Section 10.7 or as expressly provided under the Guaranty;
or

91

(H)  amend
Section 11.7 or this Section 11.1 or the
definition of the terms ‘‘Requisite
Lenders,’’ ‘‘Requisite Revolving
Credit Lenders,’’ ‘‘Requisite Term
Loan Lenders,’’ ‘‘Ratable
Portion;’’ or "Super-Majority
Lenders’’; provided, that in connection with any
Facility Increase, this Section 11.1 and the definition
of "Ratable Portion,’’
‘‘Requisite Lenders,’’
‘‘Requisite Revolving Credit
Lenders,’’ ‘‘Requisite Term Loan
Lenders’’ and ‘‘Super-Majority
Lenders’’ shall be deemed to be amended in order to
provide the Lenders of such additional loans with voting rights
proportionate to the Commitments of such new Lenders;
and

provided, further,
that:

(i) any modification of the
application of payments to the Term Loans pursuant to Section
2.9 shall require the consent of the Requisite Term Loan Lenders
and any such modification of the application of payments to the
Revolving Loans pursuant to Section 2.9 or the reduction of the
Revolving Credit Commitments pursuant to Section 2.5 shall
require the consent of the Requisite Revolving Credit
Lenders;

(ii) no amendment, waiver or
consent shall, unless in writing and signed by any Special Purpose
Vehicle that has been granted an option pursuant to Section
11.2(e), affect the grant or nature of such option or the right or
duties of such Special Purpose Vehicle
hereunder;

(iii) no amendment, waiver or
consent shall, unless in writing and signed by the applicable Facility
Agent in addition to the Lenders required above to take such action,
affect the rights or duties of such Facility Agent under this Agreement
or the other Loan Documents; and

(iv) no
amendment, waiver or consent shall, unless in writing and signed by the
Swing Loan Lender in addition to the Lenders required above to take
such action, affect the rights or duties of the Swing Loan Lender under
this Agreement or the other Loan Documents;
and

provided, further, that the
Administrative Agents may, with the consent of the Borrower, amend,
modify or supplement this Agreement or any other Loan Document to cure
any ambiguity, omission, defect or inconsistency, so long as such
amendment, modification or supplement does not adversely affect the
rights of any Lender or any Issuer.

(b) Each
Administrative Agent may, but shall have no obligation to, with the
written concurrence of any applicable Lender, execute amendments,
modifications, waivers or consents on behalf of such Lender. Any waiver
or consent shall be effective only in the specific instance and
for the specific purpose for which it was given. No notice to or
demand on the Borrower in any case shall entitle the Borrower to any
other or further notice or demand in similar or other
circumstances.

(c) In connection with any proposed
amendment, modification, waiver or termination (a
‘‘Proposed Change’’)
requiring the consent of all affected Lenders or of the Super-Majority
Lenders, if the consent of Requisite Lenders is obtained, but the
consent of other applicable Lenders whose consent is required is not
obtained (any such Lender whose consent is not obtained as described in
this Section 11.1 being referred to as a
‘‘Non-Consenting Lender’’),
then, as long as each Lender that is acting as an Administrative Agent
is not a Non-Consenting Lender, at the Borrower’s request, the
applicable Administrative Agent or an Eligible Assignee that is
acceptable to the applicable Administrative Agent shall have the right
with such Administrative Agent’s consent and in such
Administrative Agent’s sole discretion (but shall have no
obligation) to purchase from such Non-Consenting Lender, and such
Non-Consenting Lender agrees that it shall, upon such Administrative
Agent’s request, sell and assign to the Lender that is acting as
the applicable Administrative Agent or such Eligible Assignee, all of
the Revolving Credit Commitments and Revolving Credit Outstandings of
such Non-Consenting Lender if such Non-Consenting Lender is a Revolving
Credit Lender and all of the Term Loans of such Non-Consenting Lender
if such Non-Consenting Lender is a Term Loan Lender, in each case for
an amount equal to the principal balance of all such Revolving Loans or
Term Loans, as applicable, held by the Non-Consenting Lender and all
accrued and unpaid interest and fees with respect thereto through the
date of sale; provided, however, that such purchase and
sale shall be recorded in the Register maintained by each applicable
Administrative Agent and not be effective until (x) such Administrative
Agent shall have received from such Eligible Assignee an agreement in
form and substance satisfactory to such 

92

Administrative Agent and the Borrower
whereby such Eligible Assignee shall agree to be bound by the terms
hereof and (y) such Non-Consenting Lender shall have received payments
of all Revolving Loans or Term Loans, as applicable, held by it and all
accrued and unpaid interest and fees with respect thereto through the
date of the sale. Each Lender agrees that, if it becomes a
Non-Consenting Lender, it shall execute and deliver to the applicable
Administrative Agent an Assignment an Acceptance to evidence such sale
and purchase and shall deliver to the applicable Administrative Agent
any Note (if the assigning Lender’s Loans are evidenced by
Notes) subject to such Assignment and Acceptance; provided,
however, that the failure of any Non-Consenting Lender to execute
an Assignment and Acceptance shall not render such sale and purchase
(and the corresponding assignment) invalid and such assignment shall be
recorded in the
Register.

Section 11.2 Assignments and
Participations.

(a) Each Lender may sell, transfer,
negotiate or assign to one or more Eligible Assignees all or a portion
of its rights and obligations hereunder (including all of its rights
and obligations with respect to the Term Loans, the Revolving Loans,
the Swing Loans and the Letters of Credit); provided, however,
that:

(i) if any such assignment shall
be of the assigning Lender’s Revolving Credit Outstandings and
Revolving Credit Commitments, such assignment shall cover the same
percentage of such Lender’s Revolving Credit Outstandings and
Revolving Credit Commitment;

(ii) the
aggregate amount being assigned pursuant to each such assignment
(determined as of the date of the Assignment and Acceptance with
respect to such assignment) shall in no event (if less than the
Assignor’s entire interest) be less than (A) in the case of the
Revolving Credit Facility, $5,000,000 or an integral multiple of
$1,000,000 in excess thereof or (B) in the case of the Term Loan
Facility, $2,500,000 or an integral multiple of $1,000,000 in excess
thereof, except, in either case, (I) with the consent of the Borrower
and the applicable Administrative Agent or (II) if such assignment is
being made to a Lender or an Affiliate or Approved Fund of such Lender;
and

(iii) if such Eligible Assignee is
not, prior to the date of such assignment, a Lender or an Affiliate or
Approved Fund of a Lender, such assignment shall be subject to the
prior consent of the applicable Administrative Agent and the Borrower
(which consents shall not be unreasonably withheld or delayed);

and provided, further, that, notwithstanding
any other provision of this Section 11.2, the consent of the
Borrower shall not be required for any assignment occurring when any
Event of Default shall have occurred and be continuing. Any such
assignment need not be ratable as among the Term Loan Facility and the
Revolving Credit Facility.

(b) The parties to each
assignment shall execute and deliver to the applicable Administrative
Agent, for its acceptance and recording in the applicable Register, an
Assignment and Acceptance, together with any Note (if the assigning
Lender’s Loans are evidenced by a Note) subject to such
assignment. Upon such execution, delivery, acceptance and recording in
the Register and the receipt by the Administrative Agent from the
assignee of an assignment fee in the amount of $3,500 (other than in
the case of an assignment by a Lender to an Affiliate of such Lender or
by any Agent or their respective Affiliates) from and after the
effective date specified in such Assignment and Acceptance,
(i) the assignee thereunder shall become a party hereto and, to
the extent that rights and obligations under the Loan Documents have
been assigned to such assignee pursuant to such Assignment and
Acceptance, have the rights and obligations of a Lender, and if such
Lender were an Issuer, of such Issuer hereunder and thereunder, and
(ii) the assignor thereunder shall, to the extent that rights
and obligations under this Agreement have been assigned by it pursuant
to such Assignment and Acceptance, relinquish its rights (except those
which survive the payment in full of the Obligations) and be released
from its obligations under the Loan Documents, other than those
relating to events or circumstances occurring prior to such assignment
(and, in the case of an Assignment and Acceptance covering all or the
remaining portion of an assigning Lender’s rights and
obligations under the Loan Documents, such Lender shall cease to be a
party hereto).

93

(c) (i) The Revolving
Facility Agent shall maintain at its address referred to in
Section 11.8 a copy of each Assignment and Acceptance
delivered to and accepted by it and a register for the recording of the
names and addresses of the Revolving Credit Lenders and the Issuers,
the Revolving Credit Commitments of and principal amount of the
Revolving Loans, Swing Loans and Letter of Credit Obligations
(specifying the Reimbursement Obligations) owing to each such Lender
and each Issuer from time to time (the ‘‘Revolving
Credit Facility Register’’). The entries in the
Revolving Credit Facility Register shall be conclusive and binding for
all purposes, absent manifest error, and the Loan Parties, the
Revolving Facility Agent, the Revolving Credit Lenders and the Issuers
shall treat each Person whose name is recorded in the Revolving Credit
Facility Register as a Revolving Credit Lender or as an Issuer, as the
case may be, for all purposes of this Agreement. The Revolving Credit
Facility Register shall be available for inspection by the Borrower and
the Facility Agents at any reasonable time and from time to time upon
reasonable prior notice. No Revolving Loan, Swing Loan, Letter of
Credit Obligation, Reimbursement Obligation, nor any Assignment and
Acceptance, shall be effective unless it is entered in the Register in
due course.

(ii) The Term Facility Agent
shall maintain at its address referred to in Section 11.8
a copy of each Assignment and Acceptance delivered to and accepted by
it and a register for the recording of the names and addresses of the
Term Loan Lenders, the Term Loan Commitments of and principal amount of
the Term Loans owing to each such Lender from time to time (the
‘‘Term Loan Facility
Register’’ and together with the Revolving Credit
Facility Register, collectively, the
‘‘Register’’). The entries
in the Term Loan Facility Register shall be conclusive and binding for
all purposes, absent manifest error, and the Loan Parties, the Term
Facility Agent and the Term Loan Lenders shall treat each Person whose
name is recorded in the Term Loan Facility Register as a Term Loan
Lender for all purposes of this Agreement. The Term Loan Facility
Register shall be available for inspection by the Borrower and the
Facility Agents at any reasonable time and from time to time upon
reasonable prior notice. No Term Loan, nor any Assignment and
Acceptance, shall be effective unless it is entered in the Register in
due course.

(d) Notwithstanding anything to the contrary
contained in clause (b) above, the Loans (including the
Notes evidencing the Loans) and drawn Letters of Credit are registered
obligations and the right, title, and interest of the Lenders and
Issuers, as the case may be, and their assignees in and to such Loans
or drawn Letters of Credit, as the case may be, shall be transferable
only upon notation of such transfer in the applicable Register. A Note
shall only evidence a Lender’s or registered assignee’s
right, title and interest in and to the related Loan, and in no event
is any such Note to be considered a bearer instrument or obligation.
This Section 11.2 shall be construed so that the Loans
and drawn Letters of Credit are at all times maintained in
‘‘registered form’’ within the
meaning of Sections 163(f), 871(h)(2) and 881(c)(2) of the Code
and any related regulations (or any other relevant or successor
provisions of the Code or such regulations). Solely for purposes of
this Section 11.2 and for tax purposes only, the
Administrative Agents shall act as the Borrower’s agent for
purposes of maintaining the Register and such notations of transfer in
the Register.

(e) Upon its receipt of an Assignment and
Acceptance executed by an assigning Lender and an assignee, the
applicable Administrative Agent shall, if such Assignment and
Acceptance has been completed, (i) accept such Assignment and
Acceptance, (ii) record the information contained therein in the
applicable Register and (iii) give prompt notice thereof to the
Borrower. Within five Business Days after its receipt of such notice,
the Borrower, at its own expense, shall, if requested by such assignee,
execute and deliver to the applicable Administrative Agent, new Notes
to the order of such assignee in an amount equal to the Commitments and
Loans assumed by it pursuant to such Assignment and Acceptance and, if
the assigning Lender has surrendered any Note for exchange in
connection with the assignment and has retained Commitments or Loans
hereunder, new Notes to the order of the assigning Lender in an amount
equal to the Commitments and Loans retained by it hereunder. Such new
Notes shall be dated the same date as the surrendered Notes and be in
substantially the form of Exhibit B-1 (Form of Revolving Credit
Note) or Exhibit B-2 (Form of Term Note), as applicable.

(f) In addition to the other assignment rights provided in
this Section 11.2, each Lender may do each of the
following:

94

(i) grant to a
Special Purpose Vehicle the option to make all or any part of any Loan
that such Lender would otherwise be required to make hereunder and the
exercise of such option by any such Special Purpose Vehicle and the
making of Loans pursuant thereto shall satisfy (once and to the extent
that such Loans are made) the obligation of such Lender to make such
Loans thereunder, provided, however, that (x) nothing
herein shall constitute a commitment or an offer to commit by such a
Special Purpose Vehicle to make Loans hereunder and no such Special
Purpose Vehicle shall be liable for any indemnity or other Obligation
(other than the making of Loans for which such Special Purpose Vehicle
shall have exercised an option, and then only in accordance with the
relevant option agreement) and (y) such Lender’s
obligations under the Loan Documents shall remain unchanged, such
Lender shall remain responsible to the other parties for the
performance of its obligations under the terms of this Agreement and
shall remain the holder of the Obligations for all purposes hereunder;
and

(ii) assign, as collateral or
otherwise, any of its rights under this Agreement, whether now owned or
hereafter acquired (including rights to payments of principal or
interest on the Loans), to (A) without notice to or consent of
the Administrative Agents or the Borrower, any Federal Reserve Bank
(pursuant to Regulation A of the Federal Reserve Board) and
(B) without consent of the Administrative Agents or the
Borrower, (1) any holder of, or trustee for the benefit of, the
holders of such Lender’s Securities and (2) any Special
Purpose Vehicle to which such Lender has granted an option pursuant to
clause (i) above;

provided,
however, that no such assignment or grant shall release such Lender
from any of its obligations hereunder except as expressly provided in
clause (i) above and except, in the case of a subsequent
foreclosure pursuant to an assignment as collateral, if such
foreclosure is made in compliance with the other provisions of this
Section 11.2 other than this clause (f) or
clause (g) below. Each party hereto acknowledges and
agrees that, prior to the date that is one year and one day after the
payment in full of all outstanding commercial paper or other senior
debt of any such Special Purpose Vehicle, such party shall not
institute against, or join any other Person in instituting against, any
Special Purpose Vehicle that has been granted an option pursuant to
this clause (f) any bankruptcy, reorganization,
insolvency or liquidation proceeding (such agreement shall survive the
payment in full of the Obligations). The terms of the designation of,
or assignment to, such Special Purpose Vehicle shall not restrict such
Lender’s ability to, or grant such Special Purpose Vehicle the
right to, consent to any amendment or waiver to this Agreement or any
other Loan Document or to the departure by the Borrower from any
provision of this Agreement or any other Loan Document without the
consent of such Special Purpose Vehicle except, as long as the
Administrative Agents and the Lenders, Issuers and other Secured
Parties shall continue to, and shall be entitled to continue to, deal
solely and directly with such Lender in connection with such
Lender’s obligations under this Agreement, to the extent any
such consent would reduce the principal amount of, or the rate of
interest on, any Obligations, amend this clause (e) or
postpone any scheduled date of payment of such principal or interest.
Each Special Purpose Vehicle shall be entitled to the benefits of
Section 2.14(d), Section 2.15, and
Section 2.16 as if it were such Lender; provided,
however, that anything herein to the contrary notwithstanding, no
Borrower shall, at any time, be obligated to make under
Section 2.14(d), Section 2.15, or
Section 2.16 to any such Special Purpose Vehicle and any
such Lender any payment in excess of the amount the Borrower would have
been obligated to pay to such Lender in respect of such interest if
such Special Purpose Vehicle had not been assigned the rights of such
Lender hereunder. In addition, each Lender granting a Special Purpose
Vehicle the option to make all or any part of any Loan that such Lender
would otherwise be required to make pursuant to clause (i)
above, (x) shall keep a register, meeting the requirements of Treasury
Regulation Section 5f.103-1(c), of each Special Purpose Vehicle which
has funded all or any part of any Loans that such Lender would
otherwise be obligated to make pursuant to this Agreement, specifying
such Special Purpose Vehicle’s entitlement to payments of
principal and interest with respect to such Loans and (y) shall collect
(and deliver copies thereof to each of the Administrative Agents and
the Borrower), prior to the time such Special Purpose Vehicle receives
payments with respect to such funded Loans, from each Special

95

Purpose Vehicle the appropriate forms,
certificates and statements described in Section 2.16(f)
(and updated as required by Section 2.16(f)) as if such
Special Purpose Vehicle were a Lender under
Section 2.16(f).

(g) Each Lender may sell
participations to one or more Persons in or to all or a portion of its
rights and obligations under the Loan Documents (including all its
rights and obligations with respect to the Term Loans, Revolving Loans
and Letters of Credit). The terms of such participation shall not, in
any event, require the participant’s consent to any amendments,
waivers or other modifications of any provision of any Loan Documents,
the consent to any departure by any Loan Party therefrom, or to the
exercising or refraining from exercising any powers or rights such
Lender may have under or in respect of the Loan Documents (including
the right to enforce the obligations of the Loan Parties), except if
any such amendment, waiver or other modification or consent would (i)
reduce the amount, or postpone any date fixed for, any amount (whether
of principal, interest or fees) payable to such participant under the
Loan Documents, to which such participant would otherwise be entitled
under such participation or (ii) result in the release of all or
substantially all of the Collateral other than in accordance with
Section 10.7(b). In the event of the sale of any participation
by any Lender, (w) such Lender’s obligations under the Loan
Documents shall remain unchanged, (x) such Lender shall remain solely
responsible to the other parties for the performance of such
obligations, (y) such Lender shall remain the holder of such
Obligations for all purposes of this Agreement and (z) the Borrower,
the Agents and the other Lenders shall continue to deal solely and
directly with such Lender in connection with such Lender’s
rights and obligations under this Agreement. Each participant shall be
entitled to the benefits of Sections 2.14(d), Section 2.15 and
Section 2.16 as if it were a Lender; provided, however,
that anything herein to the contrary notwithstanding, the Borrower
shall not, at any time, be obligated to make any payment under
Sections 2.14(d), Section 2.15 and Section 2.16 to the
participants in the rights and obligations of any Lender (together with
such Lender) in excess of the amount the Borrower would have been
obligated to pay to such Lender in respect of such interest had such
participation not been sold; and provided, further, that such
participant in the rights and obligations of such Lender shall have no
direct right to enforce any of the terms of this Agreement against the
Borrower, any Agent or the other Lenders.

(h) Any Issuer
may at any time assign its rights and obligations hereunder to any
other Lender by an instrument in form and substance satisfactory to the
Borrower, the Revolving Facility Agent, such Issuer and such Lender,
subject to the provisions under this Section 11.2 relating to
notations of transfer in the Register.

(i) For purposes of
this Section 11.2, with respect to each Letter of Credit,
if an Issuer transfers its rights with respect to the Borrower’s
Reimbursement Obligation with respect to a Letter of Credit such Issuer
shall give notice of such transfer to the Revolving Facility Agent for
notation in the Revolving Credit Facility Register. If any Issuer
ceases to be a Lender hereunder by virtue of any assignment made
pursuant to this Section 11.2, then, as of the effective
date of such cessation, such Issuer’s obligations to Issue
Letters of Credit pursuant to Section 2.4 shall terminate
and such Issuer shall be an Issuer hereunder only with respect to
outstanding Letters of Credit Issued prior to such
date.

Section 11.3 Costs and
Expenses.

(a) Group and the Borrower agree, jointly
and severally, upon demand to pay, or reimburse each Agent and each
Arranger for, all of such Agent’s and Arranger’s
reasonable internal and external audit, legal, appraisal, valuation,
filing, document duplication and reproduction and investigation
expenses and for all other reasonable out-of-pocket costs and expenses
of every type and nature (including the reasonable fees, expenses and
disbursements of the Arrangers’ and the Agents’ counsel,
Weil, Gotshal & Manges LLP, local legal counsel, auditors,
accountants, appraisers, printers, insurance advisers, and other
consultants and agents) incurred by the Arrangers or the Agents in
connection with (i) each Arranger’s and each Agent’s
audit and investigation of the Warnaco Entities in connection with the
preparation, negotiation and execution of the Loan Documents and the
Revolving Facility Agent’s periodic audits of the Warnaco
Entities, as the case may be; (ii) the preparation, negotiation,
execution and interpretation of this Agreement (including, without
limitation, the 

96

satisfaction or attempted satisfaction of
any of the conditions set forth in Article III), the Loan
Documents and any proposal letter or commitment letter issued in
connection therewith and the making of the Loans hereunder; (iii) the
creation, perfection or protection of the Liens under the Loan
Documents (including, without limitation, any reasonable fees and
expenses for local counsel in various jurisdictions); (iv) the ongoing
administration of this Agreement and the Loans, including consultation
with attorneys in connection therewith and with respect to the rights
and responsibilities of each Facility Agent hereunder and under the
other Loan Documents; (v) the protection, collection or enforcement of
any of the Secured Obligations or the enforcement of any of the Loan
Documents; (vi) the commencement, defense or intervention in any
court proceeding relating in any way to the Secured Obligations, any
Warnaco Entity, this Agreement, any of the other Loan Documents;
(vii) the response to, and preparation for, any subpoena or
request for document production with which any Arranger or any Agent is
served or deposition or other proceeding in which any Arranger or any
Agent is called to testify, in each case, relating in any way to the
Obligations, any Warnaco Entity, this Agreement, any of the other Loan
Documents; and (viii) any amendments, consents, waivers, assignments,
restatements, or supplements to any of the Loan Documents and the
preparation, negotiation, and execution of the
same.

(b) Group and the Borrower further agree, jointly
and severally, to pay or reimburse each Arranger, each Agent and each
of the Lenders and Issuers upon demand for all out-of-pocket costs and
expenses, including, without limitation, reasonable attorneys’
fees (including allocated costs of internal counsel and costs of
settlement), incurred by such Arranger, such Agent, such Lender or such
Issuer (i) in enforcing any Loan Document, or Secured Obligation or any
security therefor or exercising or enforcing any other right or remedy
available by reason of an Event of Default; (ii) in connection with any
refinancing or restructuring of the credit arrangements provided
hereunder in the nature of a
‘‘work-out’’ or in any
insolvency or bankruptcy proceeding; (iii) in commencing, defending or
intervening in any litigation or in filing a petition, complaint,
answer, motion or other pleadings in any legal proceeding relating to
the Secured Obligations, any Warnaco Entity and related to or arising
out of the transactions contemplated hereby, or by any of the other
Loan Documents; and (iv) in taking any other action in or with respect
to any suit or proceeding (bankruptcy or otherwise) described in
clauses (i) through (iii)
above.

Section 11.4 Indemnities.

(a) Group
and the Borrower agree, jointly and severally, to indemnify and hold
harmless each Arranger, each Agent, each Lender and each Issuer and
each of their respective Affiliates, and each of the directors,
officers, employees, agents, representative, attorneys, consultants and
advisors of or to any of the foregoing (including those retained in
connection with the satisfaction or attempted satisfaction of any of
the conditions set forth in Article III) (each such
Person being an
‘‘Indemnitee’’) from and
against any and all claims, damages, liabilities, obligations, losses,
penalties, actions, judgments, suits, costs, disbursements and expenses
of any kind or nature (including reasonable fees and disbursements of
counsel to any such Indemnitee) which may be imposed on, incurred by or
asserted against any such Indemnitee in connection with or arising out
of any investigation, litigation or proceeding, whether or not any such
Indemnitee is a party thereto, whether direct, indirect, or
consequential and whether based on any federal, state or local law or
other statutory regulation, securities or commercial law or regulation,
or under common law or in equity, or on contract, tort or otherwise, in
any manner relating to or arising out of this Agreement, any other Loan
Document, any Secured Obligation, any Letter of Credit, any Frankie
Acquisition Document, or any act, event or transaction related or
attendant to any thereof, or the use or intended use of the proceeds of
the Loans or Letters of Credit or in connection with any investigation
of any potential matter covered hereby (collectively, the
‘‘Indemnified Matters’’);
provided, however, that neither Group nor the Borrower shall not
have any obligation under this Section 11.4 (i) to an
Indemnitee with respect to any Indemnified Matter caused by or
resulting from the gross negligence or willful misconduct of that
Indemnitee, as determined by a court of competent jurisdiction in a
final non-appealable judgment or order, and (ii) with respect to taxes
(and amounts relating thereto), the indemnification for which shall be
governed solely and exclusively by Section 2.16. Without
limiting the foregoing, Indemnified Matters include (i) all
Environmental Liabilities and Costs arising from or connected with the
past, 

97

present or future operations of any Warnaco
Entity involving any property subject to a Collateral Document, or
damage to real or personal property or natural resources or harm or
injury alleged to have resulted from any Release of Contaminants on,
upon or into such property or any contiguous real estate; (ii) any
costs or liabilities incurred in connection with any Remedial Action
concerning any Warnaco Entity; (iii) any costs or liabilities incurred
in connection with any Environmental Lien; (iv) any costs or
liabilities incurred in connection with any other matter under any
Environmental Law, including CERCLA and applicable state property
transfer laws, whether, with respect to any of such matters, such
Indemnitee is a mortgagee pursuant to any leasehold mortgage, a
mortgagee in possession, the successor in interest to any Warnaco
Entity, or the owner, lessee or operator of any property of any Warnaco
Entity by virtue of foreclosure, except, with respect to those matters
referred to in clauses (i), (ii), (iii) and (iv) above, to the extent
incurred following (A) foreclosure by any Facility Agent, any Lender or
any Issuer, or any Facility Agent, any Lender or any Issuer having
become the successor in interest to any Warnaco Entity, and
(B) attributable solely to acts of the Arrangers, the Facility
Agents, such Lender or such Issuer or any agent on behalf of the
Facility Agents or such Lender.

(b) Group and the Borrower
shall, jointly and severally, indemnify the each Agent, each Arranger,
each Lender and each Issuer for, and hold each Agent, each Arranger,
each Lender and each Issuer harmless from and against, any and all
claims for brokerage commissions, fees and other compensation made
against any Agent, Arranger, Lender or any Issuer for any broker,
finder or consultant with respect to any agreement, arrangement or
understanding made by or on behalf of any Warnaco Entity in connection
with the transactions contemplated by this
Agreement.

(c) Group and the Borrower agree, jointly and
severally, that any indemnification or other protection provided to any
Indemnitee pursuant to this Agreement (including pursuant to this
Section 11.4) or any other Loan Document shall
(i) survive payment in full of the Secured Obligations and
(ii) inure to the benefit of any Person who was at any time an
Indemnitee under this Agreement or any other Loan
Document.

Section 11.5 Limitation of
Liability.

(a) Group and the Borrower agree, jointly
and severally, that no Indemnitee shall have any liability (whether
direct or indirect, in contract, tort or otherwise) to any Warnaco
Entity or any equity holders or creditors of any Warnaco Entity for or
in connection with the transactions contemplated hereby and in the
other Loan Documents, except to the extent such liability is found in a
final judgment by a court of competent jurisdiction to have resulted
from such Indemnitee’s gross negligence or willful misconduct.
In no event, however, shall any Indemnitee be liable on any theory of
liability for any special, indirect, consequential or punitive damages
and each of Group and the Borrower hereby waives, releases and agrees
(for itself and on behalf of its Subsidiaries) not to sue upon any such
claim for any such damages, whether or not accrued and whether or not
known or suspected to exist in its favor.

(b) IN NO EVENT
SHALL ANY AGENT AFFILIATE HAVE ANY LIABILITY TO ANY LOAN PARTY, LENDER,
ISSUER OR ANY OTHER PERSON FOR DAMAGES OF ANY KIND, INCLUDING DIRECT OR
INDIRECT, SPECIAL, INCIDENTAL OR CONSEQUENTIAL DAMAGES, LOSSES OR
EXPENSES (WHETHER IN TORT OR CONTRACT OR OTHERWISE) ARISING OUT OF ANY
LOAN PARTY OR ANY AGENT AFFILIATE’S TRANSMISSION OF APPROVED
ELECTRONIC COMMUNICATIONS THROUGH THE INTERNET OR ANY USE OF THE
APPROVED ELECTRONIC PLATFORM, EXCEPT TO THE EXTENT SUCH LIABILITY OF
ANY AGENT AFFILIATE IS FOUND IN A FINAL NON-APPEALABLE JUDGMENT BY A
COURT OF COMPETENT JURISDICTION TO HAVE RESULTED PRIMARILY FORM SUCH
AGENT AFFILIATE’S GROSS NEGLIGENCE OR WILLFUL
MISCONDUCT.

Section 11.6 Right of
Set-off. Upon the occurrence and during the continuance of
any Event of Default, each Lender and each Affiliate of a Lender is
hereby authorized at any time and from time to time, to the fullest
extent permitted by law, to set off and apply any and all deposits
(general or 

98

special, time or demand, provisional or
final) at any time held and other Indebtedness at any time owing by
such Lender or its Affiliates to or for the credit or the account of a
Loan Party against any and all of the Secured Obligations now or
hereafter existing whether or not such Lender shall have made any
demand under this Agreement or any other Loan Document and although
such Secured Obligations may be unmatured. Each Lender agrees promptly
to notify the Borrower after any such set-off and application made by
such Lender or its Affiliates; provided, however, that the failure to
give such notice shall not affect the validity of such set-off and
application. The rights of each Lender under this
Section 11.6 are in addition to the other rights and
remedies (including other rights of set-off) which such Lender may
have.

Section 11.7 Sharing of Payments,
Etc.

(a) Subject to the terms of the Intercreditor
Agreement, if any Lender (directly or through an Affiliate thereof)
shall obtain any payment (whether voluntary, involuntary, through the
exercise of any right of set-off or otherwise) on account of the Loans
owing to it (including any interest or fees in respect thereof or
amounts due pursuant to Section 11.3 or
Section 11.4) or derived from Collateral ( in each case,
other than pursuant to Section 2.14,
Section 2.15 or Section 2.16) in excess of its
Ratable Portion of payments obtained by all the Lenders on account of
such Obligations, such Lender (each, a
‘‘Purchasing Lender’’) shall
forthwith purchase from the other Lenders (each, a
‘‘Selling Lender’’) such
participations in their Loans or other Obligations as shall be
necessary to cause such Purchasing Lender to share the excess payment
ratably with each of them.

(b) If any Lender shall, after
the sharing of payments as set forth in clause (a) above,
hold payments in excess of its Loans, such Lender shall pay such
amounts to the applicable Administrative Agent for application pursuant
to Section 2.13(h).

(c) If all or any
portion of any payment received by a Purchasing Lender is thereafter
recovered from such Lender, such purchase from each applicable Selling
Lender shall be rescinded and such Lender shall repay to such
Purchasing Lender the purchase price to the extent of such recovery
together with an amount equal to such Selling Lender’s ratable
share (according to the proportion of (i) the amount of such
Selling Lender’s required repayment to (ii) the total
amount so recovered from such Purchasing Lender) of any interest or
other amount paid or payable by such Purchasing Lender in respect of
the total amount so recovered.

(d) The Borrower agrees
that any Purchasing Lender so purchasing a participation from a Selling
Lender pursuant to this Section 11.7  may, to the
fullest extent permitted by law, exercise all its rights of payment
(including the right of set-off) with respect to such participation as
fully as if such Lender were the direct creditor of the Borrower in the
amount of such
participation.

Section 11.8    Notices,
Etc.

(a) Notices.    All notices, demands,
requests and other communications provided for in this Agreement shall
be given in writing, or by any telecommunication device capable of
creating a written record, and addressed to the party to be notified as
follows:

(i) if to Group or the
Borrower:

c/o The Warnaco Group Inc.
501 7th
Avenue
New York, NY 10018
Attention: Chief Financial
Officer
Telecopy no: (212) 287-8546

with a
copy to the General Counsel of
Group
Email:        jgalluzzo@warnaco.com

(ii) if
to any Lender, at its Domestic Lending Office specified opposite its
name on Schedule  II (Applicable Lending Offices and Addresses
for Notices) or on the signature page of any applicable Assignment
and Acceptance;

(iii) if to any Issuer,
at the address set forth under its name on Schedule II (Applicable
Lending Offices and Addresses for Notices);

99

(iv) if to the
Revolving Facility Agent:

Citicorp North America,
Inc.
388 Greenwich Street, 19th Floor
New York, New
York 10013
Attention: Keith
Gerding
Email:  keith.r.gerding@citigroup.com
Telecopy
no: (212) 816-2613

with a copy
to:

Weil, Gotshal & Manges LLP
767 Fifth
Avenue
New York, New York 10153-0119
Attention: Daniel
S.
Dokos
Email:  daniel.dokos@weil.com
Telecopy
no: (212) 310-8007

(v) if to the
Term Facility Agent:

Citicorp North America,
Inc.
388 Greenwich Street, 19th Floor
New York, New
York 10013
Attention: Paul
Sharkey
Email:  paul.sharkey@citigroup.com
Telecopy
no: (212) 723-8590

with a copy
to:

Weil, Gotshal & Manges LLP
767 Fifth
Avenue
New York, New York 10153-0119
Attention: Daniel
S.
Dokos
Email:  daniel.dokos@weil.com
Telecopy
no: (212)
310-8007

and

(vi) if to
the Collateral Agent:

Citicorp North America,
Inc.
388 Greenwich Street, 19th Floor
New York, New
York 10013
Attention: Keith
Gerding
Email:  keith.r.gerding@citigroup.com
Telecopy
no: (212) 816-2613

with a copy
to:

Weil, Gotshal & Manges LLP
767 Fifth
Avenue
New York, New York 10153-0119
Attention: Daniel
S.
Dokos
Email:  daniel.dokos@weil.com
Telecopy
no: (212) 310-8007

or at such other address as
shall be notified in writing (i) in the case of Group, the Borrower and
the Facility Agents, to the other parties and (ii) in the case of all
other parties, to the Borrower and Facility Agents. All such notices
and communications shall be effective upon (1) personal delivery (if
delivered by hand, including any overnight courier service), (2) when
deposited in the mails (if sent by mail), (3) if delivered by posting
to an Approved Electronic Platform, an internet website or a similar

100

telecommunication device requiring a user
prior access to such Approved Electronic Platform, website or other
device, when such notice, demand, request, consent and other
communication shall have been made generally available on such Approved
Electronic Platform, Internet website or similar device to the class of
Person being notified (regardless of whether any such Person must
accomplish, and whether or not any such Person shall have accomplished,
any action prior to obtaining access to such items, including
registration, disclosure of contact information, compliance with a
standard user agreement or undertaking a duty of confidentiality) and
(4) if delivered by electronic mail or any other
telecommunications device, when transmitted to an electronic mail
address (or by another means of electronic delivery) as provided above;
provided, however, that notices and communications to the
Administrative Agents pursuant to Article II or
Article X shall not be effective until received by the
applicable Administrative Agent.

(b) Use of Electronic
Platform.    Notwithstanding clause (a) above
(unless the Administrative Agent requests that the provisions of
clause (a) above be followed) and any other provision in
this Agreement or any other Loan Document providing for the delivery
of, any Approved Electronic Communication by any other means, the Loan
Parties shall deliver all Approved Electronic Communications to the
Facility Agents by transmitting such Approved Electronic Communications
electronically (in a format acceptable to the applicable Facility
Agent) to oploanswebadmin@citigroup.com or such other electronic
mail address (or similar means of electronic delivery) as such Facility
Agent may notify the Borrower. Nothing in this clause (b)
shall prejudice the right of any Facility Agent or any Lender or Issuer
to deliver any Approved Electronic Communication to any Loan Party in
any manner prescribed in this
Agreement.

Section 11.9 No Waiver;
Remedies. No failure on the part of any Lender, Issuer or
any Facility Agent to exercise, and no delay in exercising, any right
hereunder shall operate as a waiver thereof; nor shall any single or
partial exercise of any such right preclude any other or further
exercise thereof or the exercise of any other right. The remedies
herein provided are cumulative and not exclusive of any remedies
provided by law.

Section 11.10 Binding
Effect. This Agreement shall become effective when it shall
have been executed by Group, the Borrower and the Facility Agents and
when each Administrative Agent shall have been notified by each
applicable Lender that such Lender has executed it and thereafter shall
be binding upon and inure to the benefit of Group, the Borrower, the
Facility Agents and each Lender and their respective successors and
assigns, except that neither Group nor the Borrower shall have the
right to assign its rights hereunder or any interest herein without the
prior written consent of the
Lenders.

Section 11.11 Governing
Law. This Agreement and the rights and obligations of the
parties hereto shall be governed by, and construed and interpreted in
accordance with, the law of the State of New
York.

Section 11.12 Submission to Jurisdiction;
Service of Process.

(a) Any legal action or
proceeding with respect to this Agreement or any other Loan Document
may be brought in the courts of the State of New York or of the United
States of America for the Southern District of New York, and, by
execution and delivery of this Agreement, the Group and the Borrower
hereby each accepts for itself and in respect of its property,
generally and unconditionally, the jurisdiction of the aforesaid
courts. The parties hereto hereby irrevocably waive any objection,
including any objection to the laying of venue or based on the grounds
of forum non conveniens, that any of them may now or hereafter
have to the bringing of any such action or proceeding in such
respective jurisdictions.

(b) Each of Group and the
Borrower hereby irrevocably consents to the service of any and all
legal process, summons, notices and documents in any suit, action or
proceeding brought in the United States of America arising out of or in
connection with this Agreement or any of the other Loan Documents by
the mailing (by registered or certified mail, postage prepaid) or
delivering of a copy of such process to Group and the Borrower at its
address specified in Section 11.8. Each of 

101

Group and the Borrower agrees that a final
judgment in any such action or proceeding shall be conclusive and may
be enforced in other jurisdictions by suit on the judgment or in any
other manner provided by law.

(c) Nothing contained in
this Section 11.12 shall affect the right of any Facility
Agent or any Lender to serve process in any other manner permitted by
law or commence legal proceedings or otherwise proceed against the
Borrower or any other Loan Party in any other
jurisdiction.

(d) If for the purposes of obtaining
judgment in any court it is necessary to convert a sum due hereunder in
Dollars into another currency, the parties hereto agree, to the fullest
extent that they may effectively do so, that the rate of exchange used
shall be that at which in accordance with normal banking procedures the
Administrative Agents could purchase Dollars with such other currency
at the spot rate of exchange quoted by the applicable Administrative
Agent at 11:00 a.m. (New York time) on the Business Day preceding that
on which final judgment is given, for the purchase of Dollars, for
delivery two Business Days
thereafter.

Section 11.13 Waiver of Jury
Trial.    EACH FACILITY AGENT, EACH OF THE LENDERS, THE
ISSUERS, GROUP AND THE BORROWER IRREVOCABLY WAIVES TRIAL BY JURY IN ANY
ACTION OR PROCEEDING WITH RESPECT TO THIS AGREEMENT OR ANY OTHER LOAN
DOCUMENT.

Section 11.14 Marshaling;
Payments Set Aside. None of the Facility Agents, any Lender
or any Issuer shall be under any obligation to marshal any assets in
favor of any Loan Party or any other party or against or in payment of
any or all of the Obligations. To the extent that any Loan Party makes
a payment or payments to any Facility Agent, the Lenders or the Issuers
or any of such Persons receives payment from the proceeds of the
Collateral or exercise their rights of setoff, and such payment or
payments or the proceeds of such enforcement or setoff or any part
thereof are subsequently invalidated, declared to be fraudulent or
preferential, set aside or required to be repaid to a trustee, receiver
or any other party, then to the extent of such recovery, the obligation
or part thereof originally intended to be satisfied, and all Liens,
right and remedies therefore, shall be revived and continued in full
force and effect as if such payment had not been made or such
enforcement or setoff had not
occurred.

Section 11.15 Section
Titles. The section titles contained in this Agreement are
and shall be without substantive meaning or content of any kind
whatsoever and are not a part of the agreement between the parties
hereto.

Section 11.16 Execution in
Counterparts. This Agreement may be executed in any number
of counterparts and by different parties in separate counterparts, each
of which when so executed shall be deemed to be an original and all of
which taken together shall constitute one and the same agreement.
Signature pages may be detached from multiple separate counterparts and
attached to a single counterpart so that all signature pages are
attached to the same
document.

Section 11.17    Effect on Collateral
Documents. Each of the parties hereto acknowledges and
agrees that from and after the Closing Date, all references to the
‘‘Administrative Agent’’ in any
Existing Collateral Document that is not being amended, amended and
restated or otherwise modified in connection with the consummation of
the transactions contemplated by this Agreement shall be deemed to be
references to the Collateral Agent.

Section 11.18 Entire Agreement. This
Agreement may be executed in any number of counterparts and by
different parties in separate counterparts, each of which when so
executed shall be deemed to be an original and all of which taken
together shall constitute one and the same agreement. Signature pages
may be detached from multiple separate counterparts and attached to a
single counterpart so that all signature pages are attached to the same
document. Delivery of an executed signature page of this Agreement by
facsimile transmission, electronic mail or by posting on the Approved
Electronic Platform shall be as effective as delivery of a manually
executed counterpart hereof. A set of the copies of this Agreement
signed by all parties shall be lodged with the Borrower and each
Administrative Agent. In the event of any conflict between the terms of
this Agreement and any other Loan Document (except for the
Intercreditor Agreement), the terms of this Agreement shall govern.
This Agreement and each other Loan Document are subject to the terms
and conditions 

102

set forth in the Intercreditor Agreement in
all respects and, in the event of any conflict between the terms of the
Intercreditor Agreement and this Agreement or any other Loan Document,
the terms of Intercreditor Agreement shall
govern.

Section 11.19 Confidentiality.

(a) No
Agent or any Lender may disclose to any Person any confidential,
proprietary or non-public information of the Warnaco Entities furnished
to the Agents or the Lenders by Group or the Borrower (such information
being referred to collectively herein as the
‘‘Borrower Information’’),
except that each of the Agents and each of the Lenders may disclose
Borrower Information (i) to its and its Affiliates’
employees, officers, directors, agents and advisors (it being
understood that the Persons to whom such disclosure is made will be
informed of the confidential nature of such Borrower Information and
instructed to keep such Borrower Information confidential on
substantially the same terms as provided herein), (ii) to the
extent requested by any regulatory authority, (iii) to the
extent required by applicable laws or regulations or by any subpoena or
similar legal process, (iv) to any other party to this
Agreement, (v) if reasonably necessary in connection with the
exercise of any remedies hereunder or under any other Loan Document or
any suit, action or proceeding relating to this Agreement or any other
Loan Document or the enforcement of rights hereunder or thereunder,
(vi) subject to an agreement containing provisions substantially
the same as those of this Section 11.19, to any assignee
of or participant in, or any prospective assignee of or participant in,
any of its rights or obligations under this Agreement, (vii) to the
extent such Borrower Information (A) is or becomes generally available
to the public on a non-confidential basis other than as a result of a
breach of this Section 11.19 by such Agent or such
Lender, or (B) is or becomes available to such Agent or such Lender on
a nonconfidential basis from a source other than a Warnaco Entity and
(viii) with the prior written consent of Group or the
Borrower.

(b) Neither Group nor the Borrower may disclose
to any Person the amount or terms of any fees payable to any Agent, any
Arranger or any Lender (such information being collectively referred to
herein as the ‘‘Facility
Information’’), except that Group or the Borrower
may disclose the Facility Information (i) to its and its respective
Affiliates’ employees, officers, directors, agents and advisors
who have a need to know the Facility Information in connection with
this Agreement and the transactions contemplated hereby or (ii) to the
extent required by applicable laws or regulations or by any subpoena or
similar legal process.

103

IN WITNESS
WHEREOF, the parties hereto have caused this Agreement to be executed
by their respective officers thereunto duly authorized, as of the date
first above written.

		WARNACO INC.,
as Borrower

	
															
	By:		/s/
Lawrence R.
Rutkowski
	 		 		Name:		Lawrence
R. Rutkowski
	 		 		Title:		Chief
Financial Officer
	

		THE
WARNACO GROUP INC., as Group

	
															
	By:		/s/
Lawrence R. Rutkowski
	 		 		Name:		Lawrence R.
Rutkowski
	 		 		Title:		Chief
Financial
Officer
	

		CITICORP NORTH
AMERICA INC., as Revolving Facility Agent, Term Facility
Agent, Collateral Agent and
Lender

	
															
	By:		/s/
Keith R. Gerding
	 		 		Name:		Keith R.
Gerding
	 		 		Title:		Vice
President
	

		JPMORGAN CHASE
BANK, N.A., as Syndication Agent and
Lender

	
															
	By:		/s/
Barry Bergman
	 		 		Name:		Barry
Bergman
	 		 		Title:		Managing
Director
	

		Citibank, N.A., as
Issuer

	
															
	By:		/s/
Keith R. Gerding
	 		 		Name:		Keith R.
Gerding
	 		 		Title:		Vice
President
	

		BANK OF AMERICA,
N.A., as Co-Documentation Agent, Issuer and
Lender

	
															
	By:		/s/
Kevin W. Corcoran
	 		 		Name:		Kevin W.
Corcoran
	 		 		Title:		Vice
President
	

		THE CIT
GROUP/COMMERCIAL SERVICES, INC., as Co-Documentation Agent
and
Lender

	
															
	By:		/s/
Jeffrey Kremberg
	 		 		Name:		Jeffrey
Kremberg
	 		 		Title:		Vice
President
	

		WACHOVIA CAPITAL
FINANCE CORPORATION

 (CENTRAL) F/K/A CONGRESS FINANCIAL

CORPORATION (CENTRAL), as
 Co-Documentation Agent and
Lender

	
															
	By:		/s/
Steve
Linderman
	 		 		Name:		Steve
Linderman
	 		 		Title:		Managing
Director

Source: [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00097-of-00352.parquet"}, [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00097-of-00352.parquet"}]]