-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, KkRjaj5L0XkRTwCtwmLpgIVK+3pccP7p7caQ5xjCdqPolPqRu/oRAi11NxSei9wR lkVHFpWAwuze38+qs3M/SQ== 0000950136-05-004900.txt : 20050812 0000950136-05-004900.hdr.sgml : 20050812 20050812060236 ACCESSION NUMBER: 0000950136-05-004900 CONFORMED SUBMISSION TYPE: 8-K PUBLIC DOCUMENT COUNT: 11 CONFORMED PERIOD OF REPORT: 20050811 ITEM INFORMATION: Entry into a Material Definitive Agreement ITEM INFORMATION: Financial Statements and Exhibits FILED AS OF DATE: 20050812 DATE AS OF CHANGE: 20050812 FILER: COMPANY DATA: COMPANY CONFORMED NAME: WARNACO GROUP INC /DE/ CENTRAL INDEX KEY: 0000801351 STANDARD INDUSTRIAL CLASSIFICATION: WOMEN'S, MISSES', CHILDREN'S & INFANTS' UNDERGARMENTS [2340] IRS NUMBER: 954032739 STATE OF INCORPORATION: DE FISCAL YEAR END: 0103 FILING VALUES: FORM TYPE: 8-K SEC ACT: 1934 Act SEC FILE NUMBER: 001-10857 FILM NUMBER: 051018974 BUSINESS ADDRESS: STREET 1: 90 PARK AVE STREET 2: 26TH FLOOR CITY: NEW YORK STATE: NY ZIP: 10016 BUSINESS PHONE: 2126611300 MAIL ADDRESS: STREET 1: 90 PARK AVENUE STREET 2: 26TH FLOOR CITY: NEW YORK STATE: NY ZIP: 10016 FORMER COMPANY: FORMER CONFORMED NAME: W ACQUISITION CORP /DE/ DATE OF NAME CHANGE: 19861117 8-K 1 file001.htm FORM 8-K

UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549

FORM 8-K

Current Report
Pursuant to Section 13 or 15(d) of
The Securities Exchange Act of 1934

Date of Report (Date of earliest event reported): August 12, 2005 (August 11, 2005)

The Warnaco Group, Inc.

(Exact name of Registrant as specified in its charter)


Delaware 001-10857 95-4032739
(State or other jurisdiction of incorporation) (Commission File Number) (IRS Employer Identification No.)
501 Seventh Avenue, New York, New York 10018
(Address of principal executive offices) (Zip Code)

Registrant's telephone number, including area code:    (212) 287-8000                    

(Former name or former address, if changed since last report.)

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions (see General Instruction A.2.):

[ ]  Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)
[ ]  Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)
[ ]  Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))
[ ]  Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))

    



Item 1.01.    Entry into a Material Definitive Agreement.

On August 11, 2005, The Warnaco Group, Inc. (the "Registrant") (i) entered into employment agreements with Roger Williams, President of the Registrant's Swimwear Group, Stanley Silverstein, Executive Vice President, Corporate Development and Chief Administrative Officer of the Registrant and Jay Galluzzo, Senior Vice President, General Counsel and Secretary of the Registrant and (ii) amended the existing employment agreements with Lawrence Rutkowski, Executive Vice President, Finance and Chief Financial Officer of the Registrant, Helen McCluskey, Frank Tworecke and Dwight Meyer, Presidents of the Registrant's Intimate Apparel Group, Sportswear Group and Global Sourcing, respectively, to provide for certain payments and benefits if such executive's employment is terminated without Cause or for Good Reason upon or within one year following a Change in Control (as defined in the applicable amendments) and the granting of the Supplemental Award as described below.

Employment Agreements with Messrs. Williams, Silverstein and Galluzzo

The employment agreements with Messrs. Williams, Silverstein and Galluzzo are each for a term of three years, subject to automatic one-year renewals unless notice of termination is given at least 180 days prior to the date on which the term would otherwise expire.

The employment agreements provide for (i) an annual base salary of $680,000 and a target bonus opportunity equal to 70% of base salary for Mr. Williams, (ii) an annual base salary of $525,000 and a target bonus opportunity equal to 85% of base salary for Mr. Silverstein and (iii) an annual base salary of $310,000 and a target bonus opportunity equal to 70% of base salary for Mr. Galluzzo. In addition, commencing with the current fiscal year, each executive will be awarded annually a supplemental award equal to a certain percentage of his prior year's total cash compensation (base salary and earned annual bonus) ("Supplemental Award"). Such percentage will be determined based on the executive's age, ranging from 6% for an executive under age 40 to 13% for an executive age 60 or older. The Supplemental Award will be granted 50% in restricted stock ("Career Shares") and 50% in the form of a credit to a bookkeeping account on the Registrant's books ("Notional Account"). Amounts credited to the Notional Account will be credited (or debited) with the deemed positive (or negative) return based on the investment alternatives approved by the Registrant for this purpose under its 401(k) plan and selected in advance by the executive to apply to such account. The Career Shares vest 50% on the earlier of the executive's 62nd birthday or upon 15 years of vesting service and 100% on the earliest of the executive's 65th birthday, 20 years of vesting service or the 10th anniversary of the grant date. The Notional Account vests 50% on the earlier of the executive's 62nd birthday or five years of vesting service and 100% on the earlier of the executive's 65th birthday or 10 years of vesting service. Vesting service is any service as an executive officer of the Registrant on or following February 4, 2003.

If the executive's employment terminates upon his death or Disability (as defined in the applicable employment agreement), he (or his legal representative or estate, as the case may be) will be entitled to (i) a pro-rata target bonus for the year of termination, (ii) immediate vesting of 50% of any unvested restricted shares (other than Career Shares) and (iii) immediate vesting of 50% of any unvested Supplemental Award.

In the case of Messrs. Silverstein and Galluzzo, if the executive's employment is terminated by the Registrant without Cause or by the executive for Good Reason (each term as defined in the applicable employment agreement) or if the Registrant provides notice of non-renewal of the employment agreement and terminates the executive's employment at the end of the term, the executive will be entitled to (i) payment of annual base salary as salary continuation for the remaining term of the employment agreement (but in no event for more than 24 or less than 12 months), (ii) immediate vesting of 50% of any unvested restricted shares (other than Career Shares), (iii) 12 months or the option term, if shorter, to exercise any vested stock options; provided such options were granted on or following the date of the employment agreement and (iv) continued participation in welfare benefit plans until the earlier of the end of the term (but in no event more than 24 or less than 12 months) or the date the executive obtains equivalent coverage from subsequent employment.



If Messrs. Silverstein's or Galluzzo's employment is terminated by the Registrant without Cause or by the executive for Good Reason upon or within one year following a Change in Control (as defined in the applicable employment agreement), the executive will be entitled to (i) payment in a lump sum of an amount equal to the greater of base salary and target bonus for the remaining term of the employment agreement or two times base salary plus target bonus, (ii) a pro rata target bonus for the year of termination, (iii) immediate vesting of all outstanding equity awards and any previously granted Supplemental Award, with any stock options granted on or following the date of the employment agreement remaining exercisable for 24 months or the option term, whichever is shorter, and (iv) continued participation in welfare benefit plans until the earlier of 24 months from the date of termination and the date the executive obtains equivalent coverage from subsequent employment. Under the applicable employment agreements, Messrs. Silverstein and Galluzzo are bound by a perpetual confidentiality covenant and are prohibited from competing with the Registrant both during employment and for 12 months following termination of their employment. Additionally, for 18 months following termination of their employment, they are prohibited from soliciting or hiring employees of the Registrant and its affiliates and from soliciting their clients.

Mr. Williams receives the same severance and entitlements as Messrs. Silverstein and Galluzzo upon a termination of his employment without Cause or for Good Reason (including within one year following a Change in Control) (each term as defined in Mr. Williams' employment agreement) or upon the Registrant providing a notice of non-renewal of his employment agreement and terminating Mr. Williams' employment at the end of the term, with the following exceptions. For a termination without Cause (whether before or following a Change in Control), the Company is required to give Mr. Williams six months' prior notice of such termination. As such, upon a termination of his employment without Cause, Mr. Williams is entitled to (i) payment of annual base salary as salary continuation for the remaining the term of the employment agreement (but in no event for more than 18 or less than six months), (ii) immediate vesting of 50% of any unvested restricted shares (other than Career Shares), (iii) six months or the option term, if shorter, to exercise any vested stock options provided such options were granted on or following the date of the employment agreement and (iv) continued participation in welfare benefit plans until the earlier of the end of the term (but in no event more than 18 or less than six months) or the date the executive obtains equivalent coverage from subsequent employment. If his employment is terminated without Cause upon or within one year following a Change in Control, Mr. Williams is entitled to (i) payment in a lump sum of an amount equal to the greater of base salary and target bonus for the remaining term of the employment agreement or 1.5 times base salary plus target bonus, (ii) a pro rata target bonus for the year of termination, (iii) immediate vesting of all outstanding equity awards and any previously granted Supplemental Award, with any stock options granted on or following the date of the employment agreement remaining exercisable for 18 months or the option term, whichever is shorter, and (iv) continued participation in welfare benefit plans until the earlier of 18 months from the date of termination and the date the executive obtains equivalent coverage from subsequent employment.

Under his employment agreement, Mr. Williams is bound by a perpetual confidentiality covenant and is prohibited from competing with the Registrant and from soliciting its clients and those of its affiliates during employment. Additionally, for 18 months following termination of his employment, Mr. Williams is prohibited from soliciting or hiring employees of the Registrant and its affiliates. Mr. Williams is required to give six months' prior notice of a voluntary resignation, and, during such period, Mr. Williams is prohibited from competing with the Registrant or its affiliates and from soliciting their clients.

If any payments, benefits or entitlements provided to Messrs. Williams, Silverstein or Galluzzo under the applicable employment agreement or otherwise are subject to federal excise tax as excess parachute payments and the executive would be in a better position on an after-tax basis, such payments, benefits or entitlements will be reduced such that no federal excise tax will apply.

Amendments to Employment Agreements of Certain Executive Officers.

The employment agreements with Messrs. Rutkowski, Tworecke and Meyer and Ms. McCluskey were amended to grant the executives the Supplemental Award described above (upon the same terms



and conditions, including vesting and treatment upon death or Disability (as defined in the applicable employment agreement, as amended)).

The amendments to each of their employment agreements also provide the following additional entitlements if the executive's employment is terminated without Cause or for Good Reason upon or within one year following a Change in Control (each term as defined in the applicable agreement, as amended): (i) in lieu of the severance under the current employment agreement, payment in a lump sum of an amount equal to the greater of base salary and target bonus for the remaining term of the employment agreement or two times base salary plus target bonus (only Mr. Meyer, however, has an employment agreement with a term longer than two years), (ii) immediate vesting of all outstanding equity awards and any previously granted Supplemental Award, with any stock options granted on or following the date of the amendment remaining exercisable for 24 months or the option term, whichever is shorter, and (iii) in lieu of the continued medical benefits under the employment agreement, continued participation in medical and dental plans until the earlier of 24 months from the date of termination and the date the executive obtains equivalent coverage from subsequent employment.

In addition, after five years of service, upon termination of Mr. Tworecke's employment (other than for Cause), Mr. Tworecke is entitled to receive an annual retirement benefit of $75,000 a year until the earlier to occur of his death or the fifteenth anniversary of his termination date. In amending Mr. Tworecke's employment agreement, the Registrant has provided that Mr. Tworecke will be entitled to this same retirement benefit upon termination of employment (other than for Cause) after five years of service, provided that the payments due to Mr. Tworecke will be reduced by the value of any Supplemental Awards that have vested as of the date of his termination.

Copies of the employment agreements with Messrs. Williams, Silverstein and Galluzzo and amendments to the employment agreements with Messrs. Rutkowski, Tworecke and Meyer and Ms. McCluskey are attached to this report as Exhibits 10.1, 10.2, 10.3., 10.4, 10.5, 10.6 and 10.7, respectively, and are incorporated herein by reference. In addition, a form of the restricted stock award agreement under the Registrant's 2005 Stock Incentive Plan to be used to grant the executives the Supplemental Award pursuant to the employment agreements or amendments to employment agreements described above is attached to this report as Exhibit 10.8 and is incorporated herein by reference. The descriptions of these agreements and amendments are qualified in their entirety by reference to the applicable agreements and amendments.



Item 9.01    Financial Statements and Exhibits.


Exhibit No. Description
Exhibit 10.1 Employment Agreement, dated as of August 11, 2005, by and between The Warnaco Group, Inc. and Roger A. Williams
Exhibit 10.2 Employment Agreement, dated as of August 11, 2005, by and between The Warnaco Group, Inc. and Stanley P. Silverstein
Exhibit 10.3 Employment Agreement, dated as of August 11, 2005, by and between The Warnaco Group, Inc. and Jay A. Galluzzo
Exhibit 10.4 Amendment to Employment Agreement, dated as of August 11, 2005, by and between The Warnaco Group, Inc. and Lawrence Rutkowski
Exhibit 10.5 Amendment to Employment Agreement, dated as of August 11, 2005, by and between The Warnaco Group, Inc. and Frank Tworecke
Exhibit 10.6 Amendment to Employment Agreement, dated as of August 11, 2005, by and between The Warnaco Group, Inc. and Dwight Meyer
Exhibit 10.7 Amendment to Employment Agreement, dated as of August 11, 2005, by and between The Warnaco Group, Inc. and Helen McCluskey
Exhibit 10.8 Form of The Warnaco Group, Inc. 2005 Stock Incentive Plan Notice of Grant of Restricted Stock


SIGNATURE

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.


     THE WARNACO GROUP, INC.
Date: August 12, 2005 By: /s/ Jay A. Galluzzo
    Name:   Jay A. Galluzzo
Title:    Senior Vice President, General
             Counsel and Secretary


EXHIBIT INDEX


Exhibit No. Description
Exhibit 10.1 Employment Agreement, dated as of August 11, 2005, by and between The Warnaco Group, Inc. and Roger A. Williams
Exhibit 10.2 Employment Agreement, dated as of August 11, 2005, by and between The Warnaco Group, Inc. and Stanley P. Silverstein
Exhibit 10.3 Employment Agreement, dated as of August 11, 2005, by and between The Warnaco Group, Inc. and Jay A. Galluzzo
Exhibit 10.4 Amendment to Employment Agreement, dated as of August 11, 2005, by and between The Warnaco Group, Inc. and Lawrence Rutkowski
Exhibit 10.5 Amendment to Employment Agreement, dated as of August 11, 2005, by and between The Warnaco Group, Inc. and Frank Tworecke
Exhibit 10.6 Amendment to Employment Agreement, dated as of August 11, 2005, by and between The Warnaco Group, Inc. and Dwight Meyer
Exhibit 10.7 Amendment to Employment Agreement, dated as of August 11, 2005, by and between The Warnaco Group, Inc. and Helen McCluskey
Exhibit 10.8 Form of The Warnaco Group, Inc. 2005 Stock Incentive Plan Notice of Grant of Restricted Stock


GRAPHIC 2 ebox.gif GRAPHIC begin 644 ebox.gif M1TE&.#EA"@`*`(```````/___R'Y!```````+``````*``H```(1A(\0RVO= - -'G1J!CDQU+'FE!0`.S\_ ` end GRAPHIC 3 spacer.gif GRAPHIC begin 644 spacer.gif K1TE&.#EA`0`!`(```````````"'Y!`$`````+``````!``$```("1`$`.S\_ ` end EX-10.1 4 file002.htm EMPLOYMENT AGREEMENT 



                              EMPLOYMENT AGREEMENT

     AGREEMENT, made and entered into as of August 11, 2005 (the "Effective
Date") by and between THE WARNACO GROUP, INC., a Delaware corporation (together
with its successors and assigns, the "Company"), and ROGER A. WILLIAMS (the
"Executive").

                                   WITNESSETH:

     WHEREAS, the Company desires to continue to employ the Executive and to
enter into an agreement embodying the terms of such continued employment and the
Executive desires to enter into this Agreement and to accept such continued
employment, subject to the terms and provisions of this Agreement;

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

     1. Certain Definitions.

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

          (b) "Board" shall mean the Board of Directors of the Company.

          (c) "Cause" shall mean:

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

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

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

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


                                       1



               (v) failure of the Executive to give 180 days prior written
               notice of a voluntary resignation (other than for Good Reason or
               Disability).

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

          (d)  "Change in Control" shall mean any of the following:

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

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

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

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

          (e) "Date of Termination" shall mean:

               (i) if the Executive's employment is terminated by the Company
               for Cause, the date specified in the notice by the Company to the
               Executive that his employment is so terminated; provided such
               notice is delivered after the Board determination as set forth in
               Section 1(c) hereof;

               (ii) if the Executive's employment is terminated by the Company
               without Cause, 180 days after the Company provides written notice
               to the


                                       2



               Executive that his employment is so terminated or, if the
               Executive shortens the required notice period in accordance with
               Section 6(i), the date of termination specified in such notice;

               (iii) if the Executive voluntarily resigns his employment, 180
               days after the Executive provides written notice to the Company
               that the Executive is terminating his employment or, if the
               Company shortens the required notice period in accordance with
               Section 6(i), the date of termination specified in such notice;

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

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

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

          (f) "Disability" shall mean the Executive's inability, due to physical
or mental incapacity, to substantially perform his essential duties and
responsibilities for a period of 180 consecutive days as determined by a medical
doctor selected by the Company and reasonably acceptable to the Executive. In no
event shall any termination of the Executive's employment for Disability occur
until the Party terminating his employment gives written notice to the other
Party in accordance with Section 14 below.

          (g) "Good Reason" shall mean the occurrence of any of the following
without the Executive's prior written consent:

               (i) a material diminution by the Company in the Executive's
               authority, duties or responsibilities as President, Swimwear
               Group or the assignment to the Executive by the Company of any
               duties materially inconsistent with such position;

               (ii) a reduction in (A) Base Salary or (B) Target Bonus
               opportunity as a percentage of Base Salary;

               (iii) in connection with or following a Change in Control, a
               change in reporting structure so that the Executive reports to
               someone other than the Chief Executive Officer of the Company;


                                       3



               (iv) the removal by the Company of the Executive as President,
               Swimwear Group or the failure by the Board to elect or reelect
               the Executive as an executive officer of the Company;

               (v) requiring the Executive to be principally based at any office
               or location more than 50 miles from his current office; or

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

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

          (h) "Notice Period" means the period from the date of a notice of
termination as set forth in Section 1(e)(ii) (for a termination without Cause by
the Company) or Section 1(e)(iii) (for a voluntary resignation by the Executive)
through the Date of Termination.

     2. Term of Employment.

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

     3. Position; Duties and Responsibilities.

     During the Term, the Executive shall be employed by the Company as
President, Swimwear Group and shall perform such duties and responsibilities as
determined by the Chief Executive Officer. The Executive shall devote
substantially all of his business time and attention to the satisfactory
performance of his duties. Anything herein to the contrary notwithstanding,
nothing shall preclude the Executive from (i) subject to the reasonable approval
of the Board, serving on the boards of directors of trade associations and/or
charitable organizations or other business corporations (provided such service
is not prohibited under Section 8(a) below),


                                       4



(ii) engaging in charitable activities and community affairs and (iii) managing
his personal investments and affairs, provided that the activities described in
the preceding clauses (i) through (iii) do not materially interfere with the
proper performance of his duties and responsibilities hereunder.

     4. Compensation.

          (a) Base Salary. During the Term, the Executive shall be paid an
annualized Base Salary of $680,000 ("Base Salary"), payable in accordance with
the regular payroll practices of the Company, subject to annual review by the
Board (or its designee, including the Compensation Committee of the Board) in
its sole discretion. During the Term the Base Salary may not be decreased
without the Executive's prior written consent. The Executive shall not be
entitled to any compensation for service as an officer or member of any board of
directors of any Affiliate. After any increase in base salary approved by the
Board or its designee, the term "Base Salary" as used in this Agreement shall
thereafter refer to the increased amount.

          (b) Annual Incentive Awards. During the Term, the Executive shall be
eligible to receive an annual incentive award (provided the Executive was
employed continuously during the applicable fiscal year) pursuant to the
Company's Incentive Compensation Plan, as amended (or such other annual
incentive plan as may be approved by the Company's shareholders), in effect for
the applicable fiscal year ("Bonus Plan"). The Executive's annual incentive
award for fiscal year 2005 and thereafter shall have a target of 70% of Base
Salary ("Target Bonus"), with a potential maximum award as set forth in the
Bonus Plan, in all events based on the Executive's achievement of annual
performance and other targets approved by the committee administering the Bonus
Plan. The amount and payment of any annual incentive award shall be determined
in accordance with the Bonus Plan and shall be payable when bonuses for the
applicable performance period are paid to other senior executives of the
Company. After any increase in the Executive's target annual bonus opportunity
as a percentage of Base Salary as approved by the Board (or its designee), the
term "Target Bonus" as used in this Agreement shall thereafter refer to the
increased target opportunity.

          (c) Long-Term Incentive Awards. During the Term, the Executive shall
be eligible to participate in the Company's equity incentive plans, including,
without limitation, the 2003 and 2005 Stock Incentive Plans, as amended from
time to time, and such other long-term incentive plan(s) as may be approved by
the Company's shareholders from time to time ("Stock Incentive Plan"). Except as
otherwise provided herein, all equity grants shall be governed by the applicable
equity plan and/or award agreement. The Executive shall be subject to the equity
ownership, retention and other requirements applicable to senior executives of
the Company.

          (d) Supplemental Award. During the Term beginning with fiscal year
2005, provided the Executive is employed by the Company, the Executive shall be
entitled to an annual award with an aggregate grant date value equal to 10% of
the sum of Base Salary plus Annual Bonus as defined in this Section 4(d) if the
Executive will be less than age 60 by the end of the applicable fiscal year and
13% of such amount if the Executive will be age 60 or older by the end of the
applicable fiscal year ("Supplemental Award"), with the first such award being
made no


                                       5



later than 60 days after the Effective Date. For this purpose, Base Salary shall
be the Base Salary paid to the Executive for the fiscal year prior to the award
year and Annual Bonus shall be the annual bonus awarded to the Executive by the
Board for such prior fiscal year. The Supplemental Award shall not be awarded to
the Executive until after the determination by the Board of the Executive's
annual bonus for the prior fiscal year (but in no event later than 60 days
thereafter for any award made after fiscal year 2005) and 50% of the value of
the Supplemental Award shall be awarded in the form of restricted shares
pursuant to the applicable Stock Incentive Plan ("Career Shares") and 50% shall
be awarded in the form of a credit to a bookkeeping account maintained by the
Company for the Executive's account (the "Notional Account"). Any Career Shares
awarded hereunder shall be governed by the applicable Stock Incentive Plan and,
if applicable, any award agreement. For purposes of this Section 4(d), each
Career Share shall be valued at the closing price of a share of the Company's
common stock ("Share") on the date that the Supplemental Award is made. For the
Notional Account, the Company shall select the investment alternatives available
to the Executive under the Company's 401(k) plan. The balance in the Notional
Account shall periodically be credited (or debited) with the deemed positive (or
negative) return based on returns of the permissible investment alternative or
alternatives under the Company's 401(k) plan as selected in advance by the
Executive (and in accordance with the applicable rules of such plan or
investment alternative) to apply to such Notional Account, with such deemed
returns calculated in the same manner and at the same times as the return on
such investment alternative(s). The Company's obligation to pay the amount
credited to the Notional Account, including any return thereon provided for in
this Section 4(d), shall be an unfunded obligation to be satisfied from the
general funds of the Company. Except as otherwise provided in Section 6 below or
the applicable Stock Incentive Plan and provided that the Executive is employed
by the Company on such vesting date, any Supplemental Award granted in the form
of Career Shares will vest as follows: 50% of the Career Shares will vest on the
earlier of the Executive's 62nd birthday or upon the Executive's obtaining 15
years of "Vesting Service" and 100% of the Career Shares will vest on the
earliest of (i) the Executive's 65th birthday, (ii) upon the Executive's
obtaining 20 years of "Vesting Service" or (iii) the 10th anniversary of the
date of grant. Except as otherwise provided in Section 6 below, and provided
that the Executive is employed by the Company on such vesting date, any
Supplemental Award granted as a credit to the Notional Account (as adjusted for
any returns thereon) ("Adjusted Notional Account")) shall vest as follows: 50%
on the earlier of the Executive's 62nd birthday or upon the Executive's
obtaining 5 years of "Vesting Service" and 100% on the earlier of the
Executive's 65th birthday and upon the Executive's obtaining 10 years of
"Vesting Service". For purposes of this Section 4(d), "Vesting Service" shall
mean the period of time that the Executive is employed by the Company as an
executive officer, provided that for these purposes only the Executive's service
from February 4, 2003 on will be counted. Subject to Section 16(b) hereof, upon
vesting the Career Shares will be delivered in the form of Shares to the
Executive. The vested balance in the Adjusted Notional Account shall not be
distributed to the Executive until he ceases to be an employee of the Company
and, at such time, shall only be distributed at the earliest time that satisfies
the requirements of this Section 4(d). Except as otherwise provided in Section 6
hereof, if the Executive's employment is terminated for any reason, any unvested
Supplemental Awards (whether in the form of Career Shares or the Adjusted
Notional Account) shall be forfeited and any vested balance in the Adjusted
Notional Account, subject to Section 16(b) hereof, shall be paid to the
Executive in a cash lump-sum


                                       6



payment immediately following the Executive's "separation from service," as
defined by Section 409A(a)(2)(A)(i) of the Internal Revenue Code of 1986, as
amended (the "Code"), with the Company; provided, however, that, except in the
case of the Executive's death, if at the time of such separation from service
the Executive is a "specified employee," as defined in Section 409A(a)(2)(B)(i)
of the Code, such distribution shall not be made until at least six months after
the date of such separation from service; provided, further, that if the
Executive's employment is terminated due to Disability and such Disability
satisfies the requirements of Section 409A(a)(2)(C) of the Code, then such
distribution may be made upon termination without regard as to whether Executive
was a "specified employee" at such time. The provisions of this Section 4(d)
shall survive expiration or termination of the Term.

     5. Employee Benefits.

          (a) Employee Benefit Programs. During the Term, subject to the
Company's right to amend, modify or terminate any benefit plan or program, the
Executive shall be entitled to participate in all employee savings and welfare
benefit plans and programs made available to the Company's senior-level
executives on a basis no less favorable than provided to other
similarly-situated executives, as such plans or programs may be in effect from
time to time, including, without limitation, savings and other retirement plans
or programs, medical, dental, hospitalization, short-term and long-term
disability and life insurance plans, accidental death and dismemberment
protection and travel accident insurance. During the Term, the Executive shall
also be entitled to a paid annual physical medical exam as approved by the
Company and Company-paid term life insurance with a benefit equal to $1 million,
provided the Company can obtain such insurance at commercially reasonable
premium levels. The Executive shall be entitled to four weeks paid vacation per
calendar year.

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

          (c) Perquisites. The Executive shall be entitled to perquisites
provided to other senior-level executives, including a monthly car allowance of
up to a maximum of $1,000.

     6. Termination of Employment. The Term of this Agreement and the
Executive's employment hereunder shall terminate as of the Date of Termination
in the following circumstances:

          (a) Termination Without Cause by the Company. In the event that during
the Term the Executive's employment is terminated without Cause by the Company
(other than due to Disability) and Section 6(e) below does not apply, the
Executive shall be entitled to:

               (i) payment of Base Salary as salary continuation for the
               remainder of the applicable Term (without regard to its earlier
               termination hereunder),


                                       7



               but in no event more than 18 months or less than 6 months
               following the Date of Termination;

               (ii) immediate vesting as of the Date of Termination of 50% of
               any restricted stock (other than Career Shares) that remains
               unvested as of the Date of Termination;

               (iii) with respect to any stock options granted on or after the
               Effective Date which are vested and outstanding as of the Date of
               Termination, continued exercisability for 6 months following the
               Date of Termination or the remainder of the option term, if
               shorter; and

               (iv) continued participation for the Executive and his eligible
               dependents in the Company's welfare benefit plans in which he and
               his eligible dependents were participating immediately prior to
               the Date of Termination until the earlier of (a) the end of the
               applicable Term (without regard to its earlier termination
               hereunder), but in no event more than 18 months or less than 6
               months following the Date of Termination, or (b) the date, or
               dates, the Executive receives equivalent coverage under the plans
               and programs of a subsequent employer.

          (b) Resignation for Good Reason by the Executive. In the event that
during the Term, the Executive resigns for Good Reason and Section 6(f) below
does not apply, the Executive shall be entitled to:

               (i) payment of Base Salary as salary continuation for the
               remainder of the applicable Term (without regard to its earlier
               termination hereunder), but in no event more than 24 months or
               less than 12 months following the Date of Termination;

               (ii) immediate vesting as of the Date of Termination of 50% of
               any restricted stock (other than Career Shares) that remains
               unvested as of the Date of Termination;

               (iii) with respect to any stock options granted on or after the
               Effective Date which are vested and outstanding as of the Date of
               Termination, continued exercisability for 12 months following the
               Date of Termination or the remainder of the option term, if
               shorter; and

               (iv) continued participation for the Executive and his eligible
               dependents in the Company's welfare benefit plans in which he and
               his eligible dependents were participating immediately prior to
               the Date of Termination until the earlier of (a) the end of the
               applicable Term (without regard to its earlier termination
               hereunder), but in no event more than 24 months or less than 12
               months following the Date of Termination, or (b)


                                       8



               the date, or dates, the Executive receives equivalent coverage
               under the plans and programs of a subsequent employer.

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

               (i) a pro-rata annual bonus determined by multiplying the amount
               of the annual bonus the Executive would have received had his
               employment continued through the end of the fiscal year in which
               the Date of Termination occurs by a fraction, the numerator of
               which is the number of days during such fiscal year that the
               Executive was employed by the Company and the denominator of
               which is 365, payable when bonuses for such fiscal year are paid
               to other Company executives;

               (ii) immediate vesting as of the Date of Termination of 50% of
               any restricted stock (other than Career Shares) that remains
               unvested as of the Date of Termination; and

               (iii) immediate vesting as of the Date of Termination of 50% of
               any previously granted Supplemental Award that remains unvested
               as of the Date of Termination, payable in accordance with Section
               4(d) above.

          (d) Termination by the Company for Cause or a Voluntary Resignation by
the Executive. In the event that during the Term the Company terminates the
Executive's employment for Cause, or the Executive voluntarily resigns in
accordance with Section 1(e)(iii), the Executive shall be entitled to his Base
Salary and employee benefits through the Date of Termination. A voluntary
resignation by the Executive of his employment shall be effective upon 180 days
prior written notice by the Executive to the Company and failure by the
Executive to provide such notice shall be deemed to be a breach of this
Agreement.

          (e) Termination without Cause by the Company Upon or Following a
Change in Control. In the event the Executive's employment is terminated without
Cause by the Company (other than due to Disability) upon or within one year
following a Change in Control (provided the Term is still in effect or has
expired during this one-year period), the Executive shall be entitled to:

               (i) an amount equal to (A) the greater of (x) the sum of Base
               Salary plus Target Bonus divided by 12, with such amount then
               multiplied by the number of months (including any partial months)
               remaining in the Term (without regard to the earlier termination
               thereof) or (y) 2 times the sum of (a) Base Salary plus (b)
               Target Bonus, minus (B) the Base Salary and the bonus earned by
               the Executive during the Notice Period, with such amount payable
               in a lump sum as soon as practicable following the Date of
               Termination (but in no event later than 60 days following such
               date);


                                       9



               (ii) a pro-rata Target Bonus for the year in which the notice of
               termination is given, determined by multiplying the Target Bonus
               by a fraction, the numerator of which is the number of days that
               have elapsed from the first day of the performance period for
               such year through the date the Company gives the Executive a
               notice of termination of his employment without Cause and the
               denominator of which is 365, payable in a lump sum as soon as
               practicable following the Date of Termination (but in no event
               later than 60 days following such date);

               (iii) immediate vesting as of the Date of Termination of all
               outstanding equity awards (other than Career Shares), with any
               stock options granted on or after the Effective Date remaining
               exercisable for 18 months following the Date of Termination or
               the remainder of the option term, if shorter;

               (iv) immediate vesting as of the Date of Termination of any
               previously granted Supplemental Award, payable in accordance with
               Section 4(d) above; and

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

          (f) Resignation for Good Reason by the Executive Upon or Following a
Change in Control. In the event that the Executive resigns for Good Reason
within one year following a Change in Control (provided the Term is still in
effect or has expired during this one-year period), the Executive shall be
entitled to:

               (i) an amount equal to the greater of (x) the sum of Base Salary
               plus Target Bonus divided by 12, with such amount then multiplied
               by the number of months (including any partial months) remaining
               in the Term (without regard to the earlier termination thereof)
               or (y) 2 times the sum of (a) Base Salary plus (b) Target Bonus,
               payable in a lump sum as soon as practicable following the Date
               of Termination (but in no event later than 60 days following such
               date);

               (ii) a pro-rata Target Bonus for the year of termination,
               determined by multiplying the Target Bonus by a fraction, the
               numerator of which is the number of days the Executive was
               employed by the Company during the year in which the Date of
               Termination occurs and the denominator of


                                       10



               which is 365, payable in a lump sum as soon as practicable
               following the Date of Termination (but in no event later than 60
               days following such date);

               (iii) immediate vesting as of the Date of Termination of all
               outstanding equity awards (other than Career Shares), with any
               stock options granted on or after the Effective Date remaining
               exercisable for 24 months following the Date of Termination or
               the remainder of the option term, if shorter;

               (iv) immediate vesting as of the Date of Termination of any
               previously granted Supplemental Award, payable in accordance with
               Section 4(d) above; and

               (v) continued participation for the Executive and his eligible
               dependents in the Company's welfare benefit plans in which he and
               his eligible dependents were participating immediately prior to
               the Date of Termination until the earlier of (a) 24 months
               following the Date of Termination, or (b) the date, or dates, the
               Executive receives substantially equivalent coverage under the
               plans and programs of a subsequent employer.

          (g) Termination of the Executive's Employment by the Company Upon the
Expiration of the Term. If the Company provides written notice to the Executive
in accordance with Section 2 above that the Term shall not renew and upon such
expiration of the Term the Company terminates the Executive's employment under
circumstances that during the Term would constitute a termination of employment
without Cause, the Executive shall be entitled to the same payments, benefits
and entitlements as a resignation for Good Reason by the Executive under Section
6(b) hereof.

          (h) Other Entitlements Upon Termination of Employment. In the event of
any termination of the Executive's employment, the Executive (or his estate or
legal representative, as the case may be) shall be entitled to:

               (i) Base Salary through the Date of Termination;

               (ii) except for a termination for Cause, payment of any annual
               bonus awarded to the Executive that remains unpaid for the fiscal
               year preceding the fiscal year in which the Date of Termination
               occurs, payable when bonuses for such performance period are paid
               to other Company executives;

               (iii) any Supplemental Award that is vested as of the Date of
               Termination, payable in accordance with Section 4(d) above;


                                       11



               (iv) any amounts owing to the Executive but not yet paid under
               Section 5(b) and 5(c) above; and

               (v) except as otherwise provided in Section 6(j) below,
               additional entitlements or treatment, if any, in accordance with
               applicable plans and programs of the Company (provided that in no
               event shall the Executive be entitled to duplication of any
               payments or benefits).

          (i) Obligations During Notice Period. In the event the Executive's
employment is terminated without Cause by the Company or the Executive
voluntarily resigns his employment (other than for Good Reason), the Executive
shall continue to be an employee of the Company during the Notice Period. As
such, his fiduciary duties and other obligations as an employee of the Company
shall continue during the Notice Period and the Executive agrees to cooperate in
the transition of his responsibilities during such period. The Company shall
have the right to direct the Executive to no longer come to work, or not to
perform any work for the Company, during the Notice Period and, if the Company
so directs, in addition to his fiduciary duties and other obligations as an
employee and his commitments pursuant to Section 7 and 8 hereof, the Executive
agrees to refrain during the Notice Period from contacting any customers,
clients, advertisers, suppliers, agents, professional advisors or employees of
the Company or any of its Affiliates. In the case of a voluntary resignation by
the Executive, the Company may shorten the Notice Period by providing written
notice to the Executive, in which event the Executive's employment shall
terminate on the date stated in such notice; provided that the Company shall
continue to pay the Executive his Base Salary through the end of the original
Notice Period. In the case of a termination without Cause by the Company, the
Executive may shorten the Notice Period by providing written notice to the
Company, in which event the Executive's employment shall terminate on the date
stated in such notice.

          (j) Exclusivity of Benefits; Releases of Claims. Any payments provided
pursuant to Section 6(a), Section 6(b), Section 6(e), Section 6(f) or Section
6(g) above shall be in lieu of any salary continuation arrangements under any
other severance program of the Company and in all events, the Executive shall
not be entitled to duplication of any benefit or entitlement. In order to be
entitled to any payments, rights and other entitlements pursuant to this
Agreement or otherwise, the Executive must comply with the covenants and/or
acknowledgements contained in Sections 7, 8, 9 and 10 of this Agreement. In
addition, in order to be entitled to any payments, rights or other entitlements
in connection with a termination covered by Section 6(a), Section 6(b), Section
6(e), Section 6(f) or Section 6(g) above (except for those payments or benefits
required to be paid or provided by applicable law), the Executive shall be
required to execute and deliver to the Company the Agreement and Release of
Claims attached hereto as Exhibit A (and not revoke such agreement within the
applicable revocation period).

          (k) Nature of Payments; No Mitigation. Any amounts due under this
Section 6 are in the nature of severance payments considered to be reasonable by
the Company and are not in the nature of a penalty. In the event of termination
of his employment for any reason in compliance with this Agreement, the
Executive shall be under no obligation to seek other employment and, except as
specifically provided for in this Section 6 with respect to continuation


                                       12



of welfare benefits, there shall be no offset against amounts or entitlements
due to him on account of any remuneration or benefits provided by any subsequent
employment he may obtain.

          (l) Resignation. Notwithstanding any other provision of this
Agreement, upon the termination of the Executive's employment for any reason or,
if earlier, upon commencement of the Notice Period, unless otherwise requested
by the Board, he shall immediately resign from the Board, if applicable, and all
boards of directors of any Affiliate of the Company of which he may be a member,
and as a trustee of, or fiduciary to, any employee benefit plans of the Company
or any Affiliate. The Executive hereby agrees to execute any and all
documentation of such resignations upon request by the Company, but he shall be
treated for all purposes as having so resigned upon termination of his
employment or upon commencement of the Notice Period, as the case may be,
regardless of when or whether he executes any such documentation.

     7. Protection of Confidential Information and Company Property.

          (a) During the Term and thereafter, other than in the ordinary course
of performing his duties for the Company or as required in connection with
providing any cooperation to the Company pursuant to Section 10 below, the
Executive agrees that he shall not disclose to anyone or make use of any trade
secret or proprietary or confidential information of the Company or any
Affiliate of the Company, including such trade secret or proprietary or
confidential information of any customer or other entity to which the Company
owes an obligation not to disclose such information, which he acquires during
the course of his employment ("Confidential Information"), including, but not
limited to, records kept in the ordinary course of business, except when
required to do so by a court of law, by any governmental agency having
supervisory authority over the business of the Company or by any administrative
or legislative body (including a committee thereof) with apparent or actual
jurisdiction to order him to divulge, disclose or make accessible such
information. "Confidential Information" shall not include information that (i)
was known to the public prior to its disclosure by the Executive; or (ii)
becomes known to the public through no wrongful disclosure by or act of the
Executive or any representative of the Executive. In the event the Executive is
requested by subpoena, court order, investigative demand, search warrant or
other legal process to disclose any Confidential Information, the Executive
agrees, unless prohibited by law or Securities and Exchange Commission
regulation, to give the Company's General Counsel prompt written notice of any
request for disclosure in advance of the Executive's making such disclosure and
the Executive agrees not to disclose such information unless and until the
Company has expressly authorized the Executive to do so in writing or the
Company has had a reasonable opportunity to object to such request or to
litigate the matter (of which the Company agrees to keep the Executive
reasonably informed) and has failed to do so.

          (b) The Executive hereby sells, assigns and transfers to the Company
all of his right, title and interest in and to all inventions, discoveries,
improvements and copyrightable subject matter (the "Rights") which during the
period of his employment are made or conceived by him, alone or with others, and
which are within or arise out of any general field of the Company's business or
arise out of any work he performs, or information he receives regarding


                                       13



the business of the Company, while employed by the Company. The Executive shall
fully disclose to the Company as promptly as available all information known or
possessed by him concerning any Rights, and upon request by the Company and
without any further remuneration in any form to him by the Company, but at the
expense of the Company, execute all applications for patents and for copyright
registration, assignments thereof and other instruments and do all things which
the Company may deem necessary to vest and maintain in it the entire right,
title and interest in and to all such Rights. The Executive hereby acknowledges
receipt of a separate written notice provided by the Company pursuant to Section
2872 of the California Labor Code, attached hereto as Exhibit B.

          (c) The Executive agrees upon termination of employment (whether
during or after the expiration of the Term and whether such termination is at
the instance of the Executive or the Company), and regardless of the reasons
therefor, or at any time as the Company may request, he will promptly deliver to
the Company's General Counsel, and not keep or deliver to anyone else, any and
all of the following which is in his possession or control: (i) Company property
(including, without limitation, credit cards, computers, communication devices,
home office equipment and other Company tangible property) and (ii) notes,
files, memoranda, papers and, in general, any and all physical matter and
computer files containing confidential or proprietary information of the Company
or any of its Affiliates, including any and all documents relating to the
conduct of the business of the Company or any of its Affiliates and any and all
documents containing confidential or proprietary information of the customers of
the Company or any of its Affiliates, except for (x) any documents for which the
Company's General Counsel has given written consent to removal at the time of
termination of the Executive's employment and (y) any information necessary for
the Executive to retain for his tax purposes (provided the Executive maintains
the confidentiality of such information in accordance with Section 7(a) above).

     8. Additional Covenants.

          (a) The Executive agrees that during his employment with the Company
or any Affiliate (whether during the Term or thereafter), including, without
limitation, during any Notice Period, he shall not, except as otherwise agreed
by the Company in writing, engage in a "Competitive Business," directly or
indirectly, as an individual, partner, shareholder, director, officer,
principal, agent, employee, trustee, consultant, or in any relationship or
capacity, in any geographic location in which the Company or any Affiliate is
engaged in business. The Executive shall not be deemed to be in violation of
this Section 8(a) by reason of the fact that he owns or acquires, solely as an
investment, up to two percent (2%) of the outstanding equity securities
(measured by value) of any entity. "Competitive Business" shall mean a business
engaged in (x) apparel design and/or apparel wholesaling or (y) retailing in
competition with any business that the Company or any Affiliate is conducting at
the time of the alleged violation.

          (b) The Executive agrees that during his employment with the Company
or any Affiliate (whether during the Term or thereafter), including, without
limitation, during any Notice Period, he shall not, other than in the ordinary
course of the Company's business or with the Company's prior written consent,
directly or indirectly, solicit or encourage any customer of


                                       14



the Company or any of its Affiliates to reduce or cease its business with the
Company or any such Affiliate or otherwise interfere with the relationship of
the Company or any Affiliate with its customers.

          (c) The Executive agrees that during his employment with the Company
or any Affiliate and for 18 months following termination of such employment for
any reason (whether during the Term or thereafter), he shall not, other than in
the ordinary course of the Company's business or with the Company's prior
written consent, directly or indirectly, hire any employee of the Company or any
of its Affiliates, or solicit or encourage any such employee to leave the employ
of the Company or its Affiliates, as the case may be.

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

     9. Injunctive and Other Relief.

          (a) The Executive acknowledges that the restrictions and commitments
set forth in Sections 7, 8 and 10 of this Agreement are necessary to prevent the
improper use and disclosure of Confidential Information and to otherwise protect
the legitimate business interests of the Company and any of its Affiliates. The
Executive further acknowledges that the restrictions set forth in Sections 7, 8
and 10 of this Agreement are reasonable in all respects, including, without
limitation, duration, territory and scope of activity. The Executive expressly
agrees and acknowledges that any breach or threatened breach by the Executive or
any third party of any obligation by the Executive under this Agreement,
including, without limitation, any breach or threatened breach of Section 7, 8
or 10 of this Agreement will cause the Company immediate, immeasurable and
irreparable harm for which there is no adequate remedy at law, and as a result
of this, in addition to its other remedies, the Company shall be entitled to the
issuance by a court of competent jurisdiction of an injunction, restraining
order, specific performance or other equitable relief in favor of itself,
without the necessity of posting a bond, restraining the Executive or any third
party from committing or continuing to commit any such violation. If the Company
defers or withholds any payment, benefit or entitlement due to the Executive
pursuant to this Agreement or otherwise based on the Executive's violation of
this Agreement and it is subsequently finally determined that the Executive did
not commit such breach, the Company shall promptly pay all such unpaid amounts,
and shall extend such rights or other entitlements, to the Executive as of the
date that it is so determined that the Executive did not commit such


                                       15



breach.

          (b) If any restriction set forth in Section 7, 8 or 10 of this
Agreement is found by any court of competent jurisdiction to be unenforceable
because it extends for too long a period of time or over too great a range of
activities or in too broad a geographic area, it will be interpreted to extend
over the maximum period of time, range of activities or geographic area as to
which it may be enforceable. If any provision of Section 7, 8 or 10 of this
Agreement is declared to be invalid or unenforceable, in whole or in part, for
any reason, such invalidity will not affect the remaining provisions of such
Section which will remain in full force and effect.

     10. Cooperation.

     Following the Executive's termination of employment for any reason (whether
during or after the expiration of the Term), upon reasonable request by the
Company, the Executive shall cooperate with the Company or any of its Affiliates
with respect to any legal or investigatory proceeding, including any government
or regulatory investigation, or any litigation or other dispute relating to any
matter in which he was involved or had knowledge during his employment with the
Company, subject to his reasonable personal and business schedules. The Company
shall reimburse the Executive for all reasonable out-of-pocket costs, such as
travel, hotel and meal expenses and reasonable attorneys' fees, incurred by the
Executive in providing any cooperation pursuant to this Section 10, as well as a
reasonable per diem amount for the Executive's time (other than for time spent
preparing for or providing testimony) which shall be based upon the Executive's
Base Salary at the Date of Termination.

     11. Tax Matters.

          (a) If any amount, entitlement, or benefit paid or payable to the
Executive or provided for his benefit under this Agreement and under any other
agreement, plan or program of the Company (such payments, entitlements and
benefits referred to as a "Payment") is subject to the excise tax imposed under
Section 4999 of the Code, or any similar federal or state law (an "Excise Tax"),
then notwithstanding anything contained in this Agreement to the contrary, to
the extent that any or all Payments would be subject to the imposition of an
Excise Tax, the Payments shall be reduced (but not below zero) if and to the
extent that such reduction would result in the Executive retaining a larger
amount, on an after-tax basis (taking into account federal, state and local
income taxes and the imposition of the Excise Tax), than if the Executive
received all of the Payments (such reduced amount is hereinafter referred to as
the "Limited Payment Amount"). Unless the Executive shall have given prior
written notice specifying a different order to the Company to effectuate the
limitations described in the preceding sentence, the Company shall reduce or
eliminate the Payments, by first reducing or eliminating those payments or
benefits which are not payable in cash and then by reducing or eliminating cash
payments, in each case in reverse order beginning with payments or benefits
which are to be paid the farthest in time from the Determination (as defined
below). Any notice given by the Executive pursuant to the preceding sentence
shall take precedence over the provisions of any other plan, arrangement or
agreement, including, but not limited to, the other provisions of this
Agreement, governing the Executive's rights and entitlements to any
compensation, entitlement


                                       16



or benefit.

          (b) All calculations under this Section 11 shall be made by a
nationally recognized accounting firm designated by the Company and reasonably
acceptable to the Executive (other than the accounting firm that is regularly
engaged by any party who has effectuated a Change in Control) (the "Accounting
Firm"). The Company shall pay all fees and expenses of such Accounting Firm. The
Accounting Firm shall provide its calculations, together with detailed
supporting documentation, both to the Company and the Executive within 45 days
after the Change in Control or the Date of Termination, whichever is later (or
such earlier time as is requested by the Company) and, with respect to the
Limited Payment Amount, shall deliver its opinion to the Executive that he is
not required to report any Excise Tax on his federal income tax return with
respect to the Limited Payment Amount (collectively, the "Determination").
Within 5 days of the Executive's receipt of the Determination, the Executive
shall have the right to dispute the Determination (the "Dispute"). The existence
of the Dispute shall not in any way affect the right of the Executive to receive
the Payments in accordance with the Determination. If there is no Dispute, the
Determination by the Accounting Firm shall be final binding and conclusive upon
the Company and the Executive (except as provided in subsection (c) below).

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

     12. Representations.

          (a) The Executive represents and warrants that he has the free and
unfettered right to enter into this Agreement and to perform his obligations
under it and that he knows of no agreement between him and any other person,
firm or organization, or any law or regulation, that would be violated by the
performance of his obligations under this Agreement. The Executive agrees that
he will not use or disclose any confidential or proprietary information of any
prior employer in the course of performing his duties for the Company or any of
its Affiliates.


                                       17



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

     13. Indemnification and Liability Insurance.

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

     14. Notices.

     Any notice given to a Party shall be in writing and shall be deemed to have
been given (i) when delivered personally (provided that a written
acknowledgement of receipt is obtained), (ii) three days after being sent by
certified or registered mail, postage prepaid, return receipt requested or (iii)
two days after being sent by overnight courier (provided that a written
acknowledgement of receipt is obtained by the overnight courier), with any such
notice duly addressed to the Party concerned at the address indicated below or
to such other address as such Party may subsequently designate by written notice
in accordance with this Section 14:

     If to the Company:   The Warnaco Group, Inc.
                          501 Seventh Avenue
                          New York, New York 10018
                          Attention: General Counsel

     If to the Executive: The most recent address in the Company's records.

     15. Governing Law; Exclusive Jurisdiction.


                                       18



     This Agreement shall be governed by and construed and interpreted in
accordance with the laws of New York without reference to principles of
conflicts of law. The Parties each consent to the personal and exclusive
jurisdiction of the courts of the State of New York (including the United States
District Court for the Southern District of New York) in any proceeding arising
out of, or relating to, this Agreement. Each Party further agrees not to
interpose any objection for improper venue in any such proceeding. Each Party
shall be responsible for its own costs and expenses, including attorneys' fees,
in connection with any dispute arising out of, or relating to, this Agreement.

     16. Miscellaneous Provisions.

          (a) This Agreement contains the entire understanding and agreement
between the Parties concerning the subject matter hereof and, as of the
Effective Date, shall supersede all prior agreements, understandings,
discussions, negotiations and undertakings, whether written or oral, between the
Parties with respect thereto (but not including any indemnification agreements
and/or equity agreements which remain outstanding as of the Effective Date). No
provision of this Agreement may be amended unless such amendment is agreed to in
writing and signed by the Executive and an authorized officer of the Company.
Notwithstanding the foregoing, in 2005, the Company shall have the right to
modify any provision of this Agreement (or, if requested by the Executive, shall
make such modification), including, without limitation, Section 4(d) and/or
Section 6 hereof, if, and only to the extent that, such modification shall be
required, in the reasonable opinion of the Company's and/or the Executive's
counsel, to comply with Section 409A of the Code or any regulations or similar
guidance issued by the Treasury or the Internal Revenue Service with respect to
Code Section 409A. No waiver by either Party of any breach by the other Party of
any condition or provision contained in this Agreement to be performed by such
other Party shall be deemed a waiver of a similar or dissimilar condition or
provision at the same or any prior or subsequent time. Any waiver must be in
writing and signed by the Party against whom it is being enforced (either the
Executive or an authorized officer of the Company, as the case may be). The
respective rights and obligations of the Parties hereunder, including, without
limitation, Section 4(d) (Supplemental Award), Section 7 (protection of
confidential information and company property), Section 8 (additional
covenants), Section 9 (injunctive and other relief), Section 10 (cooperation)
and Section 13 (indemnification and liability insurance), shall survive any
expiration of the Term, including expiration thereof upon the Executive's
termination of employment for whatever reason, to the extent necessary to the
intended preservation of such rights and obligations.

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

          (c) This Agreement shall be binding upon and inure to the benefit of
the Parties and their respective successors, heirs (in the case of the
Executive) and assigns. For purposes of this Section 16(c), a successor to the
Company shall be limited to an entity which


                                       19



shall have acquired all or substantially all of the business and/or assets of
the Company and shall have assumed (whether by agreement or operation of law)
the Company's rights and obligations under this Agreement. No rights or
obligations of the Executive under this Agreement may be assigned or transferred
by the Executive other than his rights to compensation and benefits, which may
be transferred only by will, operation of law or in accordance with this clause
(c). The Executive shall be entitled, to the extent permitted under applicable
plans, agreements or law, to select and change a beneficiary or beneficiaries to
receive any compensation or benefit payable hereunder following the Executive's
death by giving the Company written notice thereof. In the event of the
Executive's death or a judicial determination of his incompetence, reference in
this Agreement to the Executive shall be deemed, where appropriate, to refer to
his beneficiary, estate or other legal representative.

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

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

          (f) This Agreement may be executed in two or more counterparts.

                           [Signatures on next page.]


                                       20



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

                                   THE WARNACO GROUP, INC.


                                   By:    /s/ Joseph R. Gromek
                                       -----------------------------------------
                                   Name:  Joseph R. Gromek
                                   Title: President and Chief Executive Officer

                                   THE EXECUTIVE
                                   /s/ Roger A. Williams
                                   -------------------------------------
                                   Roger A. Williams


                                       21



                                                                       EXHIBIT A

                         AGREEMENT AND RELEASE OF CLAIMS

          THIS AGREEMENT AND RELEASE is executed by ROGER A. WILLIAMS (the
"Executive") as of the date hereof.

          WHEREAS, the Executive and The Warnaco Group, Inc. (the "Company")
entered into an employment agreement dated August 11, 2005 (the "Employment
Agreement");

          WHEREAS, the Executive has certain entitlements pursuant to the
Employment Agreement subject to the Executive's executing this Agreement and
Release and complying with its terms.

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

          The Executive, on behalf of himself and his dependents, heirs,
administrators, agents, executors, successors and assigns (the "Executive
Releasors"), hereby releases and forever discharges the Company and its
affiliated companies and their past and present parents, subsidiaries,
successors and assigns and all of the aforesaid companies' past and present
officers, directors, employees, trustees, shareholders, representatives and
agents (the "Company Releasees"), from any and all claims, demands, obligations,
liabilities and causes of action of any kind or description whatsoever, in law,
equity or otherwise, whether known or unknown, that any Executive Releasor had,
may have had or now has against the Company or any other Company Releasee as of
the date of execution of this Agreement and Release arising out of or relating
to the Executive's employment relationship, or the termination of that
relationship, with the Company (or any affiliate), including, but not limited
to, any claim, demand, obligation, liability or cause of action arising under
any Federal, state, or local employment law or ordinance (including, but not
limited to, Title VII of the Civil Rights Act of 1964, the Civil Rights Act of
1991, the Equal Pay Act, the Americans With Disabilities Act of 1991, the
Workers Adjustment and Retraining Notification Act, the Employee Retirement
Income Security Act (other than any claim for vested benefits), the Family and
Medical Leave Act, the Age Discrimination in Employment Act, as amended by the
Older Workers' Benefit Protection Act ("ADEA"), the California Fair Employment
and Housing Act, California Business and Professions Code, the California
Constitution, the California Labor Code (including, without limitation, Section
132a), the California Civil Code and the California Family Rights Act), tort,
contract, or alleged violation of any other legal obligation (collectively
"Released Executive Claims"). In addition, in consideration of the promises and
covenants of the Company, the Executive, on behalf of himself and the other
Executive Releasors, further agrees to waive any and all rights under the laws
of any jurisdiction in the United States, or any other country, that limit a
general release to any of the foregoing actions, causes of action, claims or
charges that are known or suspected to exist in the Executive's favor as of the
date of this Agreement and Release. IN THIS CONNECTION, EXECUTIVE UNDERSTANDS
AND AGREES AS PART OF THE


                                       22



INDUCEMENT FOR THE CONSIDERATION GIVEN FOR THIS RELEASE THAT THE EXECUTIVE
SPECIFICALLY WAIVES AND RELINQUISHES ALL RIGHTS AND BENEFITS AFFORDED BY THE
PROVISIONS OF SECTION 1542 OF THE CALIFORNIA CIVIL CODE, WHICH READS AS FOLLOWS:

               A GENERAL RELEASE DOES NOT EXTEND TO CLAIMS WHICH THE CREDITOR
               DOES NOT KNOW OR SUSPECT TO EXIST IN HIS FAVOR AT THE TIME OF
               EXECUTING THE RELEASE, WHICH IF KNOWN BY HIM MUST HAVE MATERIALLY
               AFFECTED HIS SETTLEMENT WITH THE DEBTOR.

EXECUTIVE ACKNOWLEDGES THAT HE UNDERSTANDS THE SIGNIFICANCE OF THIS RELEASE OF
UNKNOWN CLAIMS HEREUNDER AND THIS WAIVER OF STATUTORY PROTECTION AGAINST THE
RELEASE OF SUCH UNKNOWN CLAIMS. Anything to the contrary notwithstanding in this
Agreement and Release or the Employment Agreement, nothing herein shall release
any Company Releasee from any claims or damages based on (i) any right or claim
that arises after the date of this Agreement and Release pertaining to a matter
that arises after such date, (ii) any right the Executive may have to enforce
Sections 6, 11 and 13 of the Employment Agreement, (iii) any right or claim the
Executive may have to benefits or equity awards that have accrued or vested as
of the Date of Termination or any right pursuant to any qualified retirement
plan or (iv) any right the Executive may have to be indemnified by the Company
to the extent such indemnification by the Company or any Affiliate is permitted
by applicable law or the Company's by-laws.

          The Executive agrees that he shall continue to be bound by, and will
comply with, the provisions of Sections 7, 8 and 10 of the Employment Agreement
and the provisions of such sections, along with Section 9 of the Employment
Agreement, shall be incorporated fully into this Agreement and Release.

          The Executive acknowledges that he has been provided a period of at
least 21 calendar days (45 calendar days in the case of any termination covered
by Section 7(f)(1)(F)(ii) of ADEA) in which to consider and execute this
Agreement and Release. The Executive further acknowledges and understands that
he has seven calendar days from the date on which he executes this Agreement and
Release to revoke his acceptance by delivering to the Company written
notification of his intention to revoke this Agreement and Release. This
Agreement and Release becomes effective when signed unless revoked in writing
and in accordance with this seven-day provision and Section 14 of the Employment
Agreement. To the extent that the Executive has not otherwise done so, the
Executive is advised to consult with an attorney prior to executing this
Agreement and Release.

          This Agreement and Release shall be governed by and construed and
interpreted in accordance with the laws of New York without reference to
principles of conflicts of law. The Executive consents and submits to the
exclusive jurisdiction of the Federal and state courts of New York with respect
to any legal proceeding brought, whether by the Executive or the Company,
concerning the subject matter contained in this Agreement and Release.
Capitalized


                                       23



terms, unless defined herein, shall have the meaning ascribed to such terms in
the Employment Agreement.

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

                                            ------------------------------------
                                            Roger A. Williams

                                            Date:
                                                  ------------------------------


                                       24



                                                                       Exhibit B

     In accordance with Section 2872 of the California Labor Code, you are
hereby notified that the Invention Assignment provisions of the Employment
Agreement you have signed in connection with your employment with THE WARNACO
GROUP, INC. do not apply to an invention that qualifies fully under the
provisions of Section 2870 of the California Labor Code, which provides in
pertinent part:

          ANY PROVISION IN AN EMPLOYMENT AGREEMENT WHICH PROVIDES THAT AN
          EMPLOYEE SHALL ASSIGN, OR OFFER TO ASSIGN, ANY OF HIS OR HER RIGHTS IN
          AN INVENTION TO HIS OR HER EMPLOYER SHALL NOT APPLY TO AN INVENTION
          THAT THE EMPLOYEE DEVELOPED ENTIRELY ON HIS OR HER OWN TIME WITHOUT
          USING THE EMPLOYER'S EQUIPMENT, SUPPLIES, FACILITIES, OR TRADE SECRET
          INFORMATION EXCEPT FOR THOSE INVENTIONS THAT EITHER:

               (1)  RELATE AT THE TIME OF CONCEPTION OR REDUCTION TO PRACTICE OF
                    THE INVENTION TO THE EMPLOYER'S BUSINESS, OR ACTUAL OR
                    DEMONSTRABLY ANTICIPATED RESEARCH OR DEVELOPMENT OF THE
                    EMPLOYER; OR

               (2)  RESULT FROM ANY WORK PERFORMED BY THE EMPLOYEE FOR THE
                    EMPLOYER.

                                            RECEIPT ACKNOWLEDGED:

Dated: August 11, 2005                       /s/ Roger A. Williams
      -----------------------------         ------------------------------------
                                            Roger A. Williams


                                       25
EX-10.2 5 file003.htm EMPLOYMENT AGREEMENT 


                              EMPLOYMENT AGREEMENT

     AGREEMENT, made and entered into as of August 11, 2005 (the "Effective
Date") by and between THE WARNACO GROUP, INC., a Delaware corporation (together
with its successors and assigns, the "Company"), and STANLEY P. SILVERSTEIN (the
"Executive").

                                   WITNESSETH:

     WHEREAS, the Company desires to continue to employ the Executive and to
enter into an agreement embodying the terms of such continued employment and the
Executive desires to enter into this Agreement and to accept such continued
employment, subject to the terms and provisions of this Agreement;

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

     1. Certain Definitions.

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

          (b) "Board" shall mean the Board of Directors of the Company.

          (c) "Cause" shall mean:

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

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

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

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


                                       1



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

          (d) "Change in Control" shall mean any of the following:

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

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

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

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

          (e)  "Date of Termination" shall mean:

               (i) if the Executive's employment is terminated by the Company,
               the date specified in the notice by the Company to the Executive
               that his employment is so terminated; provided that for a
               termination for Cause such notice is delivered after the Board
               determination as set forth in Section 1(c) hereof;

               (ii) if the Executive voluntarily resigns his employment, 90 days
               after receipt by the Company of written notice that the Executive
               is terminating his employment or if the Company shortens the
               required notice period in accordance with Section 6(c), the date
               of termination specified in such


                                       2



               notice;

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

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

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

          (f) "Disability" shall mean the Executive's inability, due to physical
or mental incapacity, to substantially perform his duties and responsibilities
for a period of 180 consecutive days as determined by a medical doctor selected
by the Company and reasonably acceptable to the Executive. In no event shall any
termination of the Executive's employment for Disability occur until the Party
terminating his employment gives written notice to the other Party in accordance
with Section 15 below.

          (g) "Good Reason" shall mean the occurrence of any of the following
without the Executive's prior written consent:

               (i) a material diminution by the Company in the Executive's
               authority, duties or responsibilities as Executive Vice
               President, Corporate Development and Chief Administrative Officer
               or the assignment to the Executive by the Company of any duties
               materially inconsistent with such positions;

               (ii) a reduction in (A) Base Salary or (B) Target Bonus
               opportunity as a percentage of Base Salary;

               (iii) in connection with or following a Change in Control, a
               change in reporting structure so that the Executive reports to
               someone other than the Chief Executive Officer of the Company;

               (iv) the removal by the Company of the Executive as Executive
               Vice President, Corporate Development and Chief Administrative
               Officer or the failure by the Board to elect or reelect the
               Executive as an executive officer of the Company;

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


                                       3



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

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

     2. Term of Employment.

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

     3. Position; Duties and Responsibilities.

     During the Term, the Executive shall be employed as Executive Vice
President, Corporate Development and Chief Administrative Officer of the Company
and shall perform such duties and responsibilities as determined by the Chief
Executive Officer. The Executive shall devote substantially all of his business
time and attention to the satisfactory performance of his duties. Anything
herein to the contrary notwithstanding, nothing shall preclude the Executive
from (i) subject to the reasonable approval of the Board, serving on the boards
of directors of trade associations and/or charitable organizations or other
business corporations (provided such service is not prohibited under Section
8(a)(i) below), (ii) engaging in charitable activities and community affairs and
(iii) managing his personal investments and affairs, provided that the
activities described in the preceding clauses (i) through (iii) do not
materially interfere with the proper performance of his duties and
responsibilities hereunder.

     4. Compensation.

          (a) Base Salary. During the Term, the Executive shall be paid an
annualized Base Salary of $525,000 ("Base Salary"), payable in accordance with
the regular payroll practices of the Company, subject to annual review by the
Board (or its designee, including the Compensation Committee of the Board) in
its sole discretion. During the Term the Base Salary may not be decreased
without the Executive's prior written consent. The Executive shall not be


                                       4



entitled to any compensation for service as an officer or member of any board of
directors of any Affiliate. After any increase in base salary approved by the
Board or its designee, the term "Base Salary" as used in this Agreement shall
thereafter refer to the increased amount.

          (b) Annual Incentive Awards. During the Term, the Executive shall be
eligible to receive an annual incentive award (provided the Executive was
employed continuously during the applicable fiscal year) pursuant to the
Company's Incentive Compensation Plan, as amended (or such other annual
incentive plan as may be approved by the Company's shareholders), in effect for
the applicable fiscal year ("Bonus Plan"). The Executive's annual incentive
award for fiscal year 2005 and thereafter shall have a target of 85% of Base
Salary ("Target Bonus"), with a potential maximum award as set forth in the
Bonus Plan, in all events based on the Executive's achievement of annual
performance and other targets approved by the committee administering the Bonus
Plan. The amount and payment of any annual incentive award shall be determined
in accordance with the Bonus Plan and shall be payable when bonuses for the
applicable performance period are paid to other senior executives of the
Company. After any increase in the Executive's target annual bonus opportunity
as a percentage of Base Salary as approved by the Board (or its designee), the
term "Target Bonus" as used in this Agreement shall thereafter refer to the
increased target opportunity.

          (c) Long-Term Incentive Awards. During the Term, the Executive shall
be eligible to participate in the Company's equity incentive plans, including,
without limitation, the 2003 and 2005 Stock Incentive Plans, as amended from
time to time, and such other long-term incentive plan(s) as may be approved by
the Company's shareholders from time to time ("Stock Incentive Plan"). Except as
otherwise provided herein, all equity grants shall be governed by the applicable
equity plan and/or award agreement. The Executive shall be subject to the equity
ownership, retention and other requirements applicable to senior executives of
the Company.

          (d) Supplemental Award. During the Term beginning with fiscal year
2005, provided the Executive is employed by the Company, the Executive shall be
entitled to an annual award with an aggregate grant date value equal to 10% of
the sum of Base Salary plus Annual Bonus as defined in this Section 4(d) if the
Executive will be less than age 60 by the end of the applicable fiscal year and
13% of such amount if the Executive will be age 60 or older by the end of the
applicable fiscal year ("Supplemental Award"), with the first such award being
made no later than 60 days after the Effective Date. For this purpose, Base
Salary shall be the Base Salary paid to the Executive for the fiscal year prior
to the award year and Annual Bonus shall be the annual bonus awarded to the
Executive by the Board for such prior fiscal year. The Supplemental Award shall
not be awarded to the Executive until after the determination by the Board of
the Executive's annual bonus for the prior fiscal year (but in no event later
than 60 days thereafter for any award made after fiscal year 2005) and 50% of
the value of the Supplemental Award shall be awarded in the form of restricted
shares pursuant to the applicable Stock Incentive Plan ("Career Shares") and 50%
shall be awarded in the form of a credit to a bookkeeping account maintained by
the Company for the Executive's account (the "Notional Account"). Any Career
Shares awarded hereunder shall be governed by the applicable Stock Incentive
Plan and, if applicable, any award agreement. For purposes of this Section 4(d),
each Career Share shall be valued at the closing price of a share of the
Company's common stock


                                       5



("Share") on the date that the Supplemental Award is made. For the Notional
Account, the Company shall select the investment alternatives available to the
Executive under the Company's 401(k) plan. The balance in the Notional Account
shall periodically be credited (or debited) with the deemed positive (or
negative) return based on returns of the permissible investment alternative or
alternatives under the Company's 401(k) plan as selected in advance by the
Executive (and in accordance with the applicable rules of such plan or
investment alternative) to apply to such Notional Account, with such deemed
returns calculated in the same manner and at the same times as the return on
such investment alternative(s). The Company's obligation to pay the amount
credited to the Notional Account, including any return thereon provided for in
this Section 4(d), shall be an unfunded obligation to be satisfied from the
general funds of the Company. Except as otherwise provided in Section 6 below or
the applicable Stock Incentive Plan and provided that the Executive is employed
by the Company on such vesting date, any Supplemental Award granted in the form
of Career Shares will vest as follows: 50% of the Career Shares will vest on the
earlier of the Executive's 62nd birthday or upon the Executive's obtaining 15
years of "Vesting Service" and 100% of the Career Shares will vest on the
earliest of (i) the Executive's 65th birthday, (ii) upon the Executive's
obtaining 20 years of "Vesting Service" or (iii) the 10th anniversary of the
date of grant. Except as otherwise provided in Section 6 below, and provided
that the Executive is employed by the Company on such vesting date, any
Supplemental Award granted as a credit to the Notional Account (as adjusted for
any returns thereon) ("Adjusted Notional Account")) shall vest as follows: 50%
on the earlier of the Executive's 62nd birthday or upon the Executive's
obtaining 5 years of "Vesting Service" and 100% on the earlier of the
Executive's 65th birthday and upon the Executive's obtaining 10 years of
"Vesting Service". For purposes of this Section 4(d), "Vesting Service" shall
mean the period of time that the Executive is employed by the Company as an
executive officer, provided that for these purposes only the Executive's service
from February 4, 2003 on will be counted. Subject to Section 17(b) hereof, upon
vesting the Career Shares will be delivered in the form of Shares to the
Executive. The vested balance in the Adjusted Notional Account shall not be
distributed to the Executive until he ceases to be an employee of the Company
and, at such time, shall only be distributed at the earliest time that satisfies
the requirements of this Section 4(d). Except as otherwise provided in Section 6
hereof, if the Executive's employment is terminated for any reason, any unvested
Supplemental Awards (whether in the form of Career Shares or the Adjusted
Notional Account) shall be forfeited and any vested balance in the Adjusted
Notional Account, subject to Section 17(b) hereof, shall be paid to the
Executive in a cash lump-sum payment immediately following the Executive's
"separation from service," as defined by Section 409A(a)(2)(A)(i) of the
Internal Revenue Code of 1986, as amended (the "Code"), with the Company;
provided, however, that, except in the case of the Executive's death, if at the
time of such separation from service the Executive is a "specified employee," as
defined in Section 409A(a)(2)(B)(i) of the Code, such distribution shall not be
made until at least six months after the date of such separation from service;
provided, further, that if the Executive's employment is terminated due to
Disability and such Disability satisfies the requirements of Section
409A(a)(2)(C) of the Code, then such distribution may be made upon termination
without regard as to whether Executive was a "specified employee" at such time.
The provisions of this Section 4(d) shall survive expiration or termination of
the Term.


                                       6



     5. Employee Benefits.

          (a) Employee Benefit Programs. During the Term, subject to the
Company's right to amend, modify or terminate any benefit plan or program, the
Executive shall be entitled to participate in all employee savings and welfare
benefit plans and programs made available to the Company's senior-level
executives on a basis no less favorable than provided to other
similarly-situated executives, as such plans or programs may be in effect from
time to time, including, without limitation, savings and other retirement plans
or programs, medical, dental, hospitalization, short-term and long-term
disability and life insurance plans, accidental death and dismemberment
protection and travel accident insurance. During the Term, the Executive shall
also be entitled to a paid annual physical medical exam as approved by the
Company and Company-paid term life insurance with a benefit equal to $1 million,
provided the Company can obtain such insurance at commercially reasonable
premium levels. The Executive shall be entitled to four weeks paid vacation per
calendar year.

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

          (c) Perquisites. The Executive shall be entitled to perquisites
provided to other senior-level executives, including a monthly car allowance of
up to a maximum of $1,000.

     6. Termination of Employment. The Term of this Agreement and the
Executive's employment hereunder shall terminate as of the Date of Termination
in the following circumstances:

          (a) Termination Without Cause by the Company or Resignation for Good
Reason by the Executive. In the event that during the Term the Executive's
employment is terminated without Cause by the Company (other than due to
Disability) or the Executive resigns for Good Reason and Section 6(d) below does
not apply, the Executive shall be entitled to:

               (i) payment of Base Salary as salary continuation for the
               remainder of the applicable Term (without regard to its earlier
               termination hereunder), but in no event more than 24 months or
               less than 12 months following the Date of Termination;

               (ii) immediate vesting as of the Date of Termination of 50% of
               any restricted stock (other than Career Shares) that remains
               unvested as of the Date of Termination;


                                       7



               (iii) with respect to any stock options granted on or after the
               Effective Date which are vested and outstanding as of the Date of
               Termination, continued exercisability for 12 months following the
               Date of Termination or the remainder of the option term, if
               shorter; and

               (iv) continued participation for the Executive and his eligible
               dependents in the Company's welfare benefit plans in which he and
               his eligible dependents were participating immediately prior to
               the Date of Termination until the earlier of (a) the end of the
               applicable Term (without regard to its earlier termination
               hereunder), but in no event more than 24 months or less than 12
               months following the Date of Termination, or (b) the date, or
               dates, the Executive receives equivalent coverage under the plans
               and programs of a subsequent employer.

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

               (i) a pro-rata annual bonus determined by multiplying the amount
               of the annual bonus the Executive would have received had his
               employment continued through the end of the fiscal year in which
               the Date of Termination occurs by a fraction, the numerator of
               which is the number of days during such fiscal year that the
               Executive was employed by the Company and the denominator of
               which is 365, payable when bonuses for such fiscal year are paid
               to other Company executives;

               (ii) immediate vesting as of the Date of Termination of 50% of
               any restricted stock (other than Career Shares) that remains
               unvested as of the Date of Termination; and

               (iii) immediate vesting as of the Date of Termination of 50% of
               any previously granted Supplemental Award that remains unvested
               as of the Date of Termination, payable in accordance with Section
               4(d) above.

          (c) Termination by the Company for Cause or a Voluntary Resignation by
the Executive. In the event that during the Term the Company terminates the
Executive's employment for Cause or the Executive voluntarily resigns, the
Executive shall be entitled to his Base Salary and benefits through the Date of
Termination. A voluntary resignation by the Executive of his employment shall be
effective upon 90 days prior written notice by the Executive to the Company
("Notice Period"), subject to earlier termination by the Company in accordance
herewith. Failure by the Executive to provide the required notice shall be
deemed to be a breach of this Agreement. During the Notice Period, the Executive
shall continue to be an employee of the Company and his fiduciary duties and
other obligations as an employee of the Company shall continue. The Executive
shall cooperate in the transition of his responsibilities; provided that the
Company shall have the right to direct the Executive to no longer come to work


                                       8



or not to perform any work for the Company during the Notice Period. If the
Company so directs, in addition to his fiduciary duties and other obligations as
an employee and his commitments pursuant to Section 7 and 8 hereof, the
Executive agrees to refrain during the Notice Period from contacting any
customers, clients, advertisers, suppliers, agents, professional advisors or
employees of the Company or any of its Affiliates. The Company shall also have
the right to shorten the Notice Period by providing written notice to the
Executive, in which event the Executive's employment shall terminate on the date
stated in such notice.

          (d) Termination without Cause by the Company or Resignation for Good
Reason by the Executive Upon or Following a Change in Control. In the event that
(i) the Executive's employment is terminated without Cause by the Company (other
than due to Disability) or the Executive resigns for Good Reason, in both cases
upon or within one year following a Change in Control (provided the Term is
still in effect or has expired during this one-year period), the Executive shall
be entitled to:

               (i) an amount equal to the greater of (x) the sum of Base Salary
               plus Target Bonus divided by 12, with such amount then multiplied
               by the number of months (including any partial months) remaining
               in the Term (without regard to the earlier termination thereof)
               or (y) 2 times the sum of (a) Base Salary plus (b) Target Bonus,
               payable in a lump sum as soon as practicable following the Date
               of Termination (but in no event later than 60 days following such
               date);

               (ii) a pro-rata Target Bonus for the year of termination,
               determined by multiplying the Target Bonus by a fraction, the
               numerator of which is the number of days the Executive was
               employed by the Company during the year in which the Date of
               Termination occurs and the denominator of which is 365, payable
               in a lump sum as soon as practicable following the Date of
               Termination (but in no event later than 60 days following such
               date);

               (iii) immediate vesting as of the Date of Termination of all
               outstanding equity awards (other than Career Shares), with any
               stock options granted on or after the Effective Date remaining
               exercisable for 24 months following the Date of Termination or
               the remainder of the option term, if shorter;

               (iv) immediate vesting as of the Date of Termination of any
               previously granted Supplemental Award, payable in accordance with
               Section 4(d) above; and

               (v) continued participation for the Executive and his eligible
               dependents in the Company's welfare benefit plans in which he and
               his eligible dependents were participating immediately prior to
               the Date of Termination until the earlier of (a) 24 months
               following the Date of


                                       9



               Termination, or (b) the date, or dates, the Executive receives
               substantially equivalent coverage under the plans and programs of
               a subsequent employer.

          (e) Termination of the Executive's Employment by the Company Upon the
Expiration of the Term. If the Company provides written notice to the Executive
in accordance with Section 2 above that the Term shall not renew and upon such
expiration of the Term the Company terminates the Executive's employment under
circumstances that during the Term would constitute a termination of employment
without Cause, the Executive shall be entitled to the same payments, benefits
and entitlements as a Termination without Cause under Section 6(a) hereof.

          (f) Other Entitlements Upon Termination of Employment. In the event of
any termination of the Executive's employment, the Executive (or his estate or
legal representative, as the case may be) shall be entitled to:

               (i) Base Salary through the Date of Termination;

               (ii) except for a termination of employment pursuant to Section
               6(c) above, payment of any annual bonus awarded to the Executive
               that remains unpaid for the fiscal year preceding the fiscal year
               in which the Date of Termination occurs, payable when bonuses for
               such performance period are paid to other Company executives;

               (iii) any Supplemental Award that is vested as of the Date of
               Termination, payable in accordance with Section 4(d) above;

               (iv) any amounts owing to the Executive but not yet paid under
               Section 5(b) and 5(c) above; and

               (v) except as otherwise provided in Section 6(g) below,
               additional entitlements or treatment, if any, in accordance with
               applicable plans and programs of the Company (provided that in no
               event shall the Executive be entitled to duplication of any
               payments or benefits).

          (g) Exclusivity of Benefits; Releases of Claims. Any payments provided
pursuant to Section 6(a), Section 6(d) or Section 6(e) above shall be in lieu of
any salary continuation arrangements under any other severance program of the
Company and in all events, the Executive shall not be entitled to duplication of
any benefit or entitlement. In order to be entitled to any payments, rights and
other entitlements pursuant to this Agreement or otherwise, the Executive must
comply with the covenants and/or acknowledgements contained in Sections 7, 8, 9
and 10 of this Agreement. In addition, in order to be entitled to any payments,
rights or other entitlements in connection with a termination covered by Section
6(a), Section 6(d) or Section 6(e) above (except for those payments or benefits
required to be paid or provided by applicable law), the Executive shall be
required to execute and deliver to the Company the Agreement and Release of
Claims attached hereto as Exhibit A (and not revoke such agreement


                                       10



within the applicable revocation period).

          (h) Nature of Payments; No Mitigation. Any amounts due under this
Section 6 are in the nature of severance payments considered to be reasonable by
the Company and are not in the nature of a penalty. In the event of termination
of his employment for any reason in compliance with this Agreement, the
Executive shall be under no obligation to seek other employment and, except as
specifically provided for in this Section 6 with respect to continuation of
welfare benefits, there shall be no offset against amounts or entitlements due
to him on account of any remuneration or benefits provided by any subsequent
employment he may obtain.

          (i) Resignation. Notwithstanding any other provision of this
Agreement, upon the termination of the Executive's employment for any reason or
the Executive being directed not to come to work or not to perform services for
the Company in accordance with Section 6(c) hereof, unless otherwise requested
by the Board, he shall immediately resign from the Board, if applicable, and all
boards of directors of any Affiliate of the Company of which he may be a member,
and as a trustee of, or fiduciary to, any employee benefit plans of the Company
or any Affiliate. The Executive hereby agrees to execute any and all
documentation of such resignations upon request by the Company, but he shall be
treated for all purposes as having so resigned upon termination of his
employment or upon the date the Company directs him not to come to work or
perform services for the Company, regardless of when or whether he executes any
such documentation.

     7. Protection of Confidential Information and Company Property.

          (a) During the Term and thereafter, other than in the ordinary course
of performing his duties for the Company or as required in connection with
providing any cooperation to the Company pursuant to Section 10 below, the
Executive agrees that he shall not disclose to anyone or make use of any trade
secret or proprietary or confidential information of the Company or any
Affiliate of the Company, including such trade secret or proprietary or
confidential information of any customer or other entity to which the Company
owes an obligation not to disclose such information, which he acquires during
the course of his employment ("Confidential Information"), including, but not
limited to, records kept in the ordinary course of business, except when
required to do so by a court of law, by any governmental agency having
supervisory authority over the business of the Company or by any administrative
or legislative body (including a committee thereof) with apparent or actual
jurisdiction to order him to divulge, disclose or make accessible such
information. "Confidential Information" shall not include information that (i)
was known to the public prior to its disclosure by the Executive; or (ii)
becomes known to the public through no wrongful disclosure by or act of the
Executive or any representative of the Executive. In the event the Executive is
requested by subpoena, court order, investigative demand, search warrant or
other legal process to disclose any Confidential Information, the Executive
agrees, unless prohibited by law or Securities and Exchange Commission
regulation, to give the Company's General Counsel prompt written notice of any
request for disclosure in advance of the Executive's making such disclosure and
the Executive agrees not to disclose such information unless and until the
Company has expressly authorized the Executive to do so in writing or the
Company has had a reasonable opportunity to


                                       11



object to such request or to litigate the matter (of which the Company agrees to
keep the Executive reasonably informed) and has failed to do so.

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

          (c) The Executive agrees upon termination of employment (whether
during or after the expiration of the Term and whether such termination is at
the instance of the Executive or the Company), and regardless of the reasons
therefor, or at any time as the Company may request, he will promptly deliver to
the Company's General Counsel, and not keep or deliver to anyone else, any and
all of the following which is in his possession or control: (i) Company property
(including, without limitation, credit cards, computers, communication devices,
home office equipment and other Company tangible property) and (ii) notes,
files, memoranda, papers and, in general, any and all physical matter and
computer files containing confidential or proprietary information of the Company
or any of its Affiliates, including any and all documents relating to the
conduct of the business of the Company or any of its Affiliates and any and all
documents containing confidential or proprietary information of the customers of
the Company or any of its Affiliates, except for (x) any documents for which the
Company's General Counsel has given written consent to removal at the time of
termination of the Executive's employment and (y) any information necessary for
the Executive to retain for his tax purposes (provided the Executive maintains
the confidentiality of such information in accordance with Section 7(a) above).

     8. Additional Covenants.

          (a) The Executive acknowledges that in his capacity in management the
Executive has had or will have a great deal of exposure and access to the
Company's trade secrets and Confidential Information. Therefore, to protect the
Company's trade secrets and other Confidential Information, the Executive agrees
as follows:

               (i) during his employment with the Company or any Affiliate and
               for 12 months following termination of such employment (whether
               during the Term or thereafter), the Executive shall not, other
               than in the ordinary course of performing his duties hereunder or
               as agreed by the Company in writing, engage in a "Competitive
               Business," directly or indirectly, as an


                                       12



               individual, partner, shareholder, director, officer, principal,
               agent, employee, trustee, consultant, or in any relationship or
               capacity, in any geographic location in which the Company or any
               of its Affiliates is engaged in business. The Executive shall not
               be deemed to be in violation of this Section 8(a) by reason of
               the fact that he owns or acquires, solely as an investment, up to
               two percent (2%) of the outstanding equity securities (measured
               by value) of any entity. "Competitive Business" shall mean a
               business engaged in (x) apparel design and/or apparel wholesaling
               or (y) retailing in competition with any business that the
               Company or its Affiliates is conducting at the time of the
               alleged violation; and

               (ii) during his employment with the Company or any Affiliate and
               for 18 months following termination of such employment for any
               reason (whether during the Term or thereafter), the Executive
               shall not, other than in the ordinary course of the Company's
               business or with the Company's prior written consent, directly or
               indirectly, solicit or encourage any customer of the Company or
               any of its Affiliates to reduce or cease its business with the
               Company or any such Affiliate or otherwise interfere with the
               relationship of the Company or any Affiliate with its customers.

          (b) The Executive agrees that during his employment with the Company
or any Affiliate and for 18 months following termination of such employment for
any reason (whether during the Term or thereafter), he shall not, other than in
the ordinary course of the Company's business or with the Company's prior
written consent, directly or indirectly, hire any employee of the Company or any
of its Affiliates, or solicit or encourage any such employee to leave the employ
of the Company or its Affiliates, as the case may be.

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

     9. Injunctive and Other Relief.

          (a) The Executive acknowledges that the restrictions and commitments
set forth in Sections 7, 8 and 10 of this Agreement are necessary to prevent the
improper use and disclosure of Confidential Information and to otherwise protect
the legitimate business interests of the Company and any of its Affiliates. The
Executive further acknowledges that the restrictions set forth in Sections 7, 8
and 10 of this Agreement are reasonable in all respects,


                                       13



including, without limitation, duration, territory and scope of activity. The
Executive expressly agrees and acknowledges that any breach or threatened breach
by the Executive or any third party of any obligation by the Executive under
this Agreement, including, without limitation, any breach or threatened breach
of Section 7, 8 or 10 of this Agreement will cause the Company immediate,
immeasurable and irreparable harm for which there is no adequate remedy at law,
and as a result of this, in addition to its other remedies, the Company shall be
entitled to the issuance by a court of competent jurisdiction of an injunction,
restraining order, specific performance or other equitable relief in favor of
itself, without the necessity of posting a bond, restraining the Executive or
any third party from committing or continuing to commit any such violation. If
the Company defers or withholds any payment, benefit or entitlement due to the
Executive pursuant to this Agreement or otherwise based on the Executive's
violation of this Agreement and it is subsequently finally determined that the
Executive did not commit such breach, the Company shall promptly pay all such
unpaid amounts, and shall extend such rights or other entitlements, to the
Executive as of the date that it is so determined that the Executive did not
commit such breach.

          (b) If any restriction set forth in Section 7, 8 or 10 of this
Agreement is found by any arbitrator or court of competent jurisdiction to be
unenforceable because it extends for too long a period of time or over too great
a range of activities or in too broad a geographic area, it will be interpreted
to extend over the maximum period of time, range of activities or geographic
area as to which it may be enforceable. If any provision of Section 7, 8 or 10
of this Agreement is declared to be invalid or unenforceable, in whole or in
part, for any reason, such invalidity will not affect the remaining provisions
of such Section which will remain in full force and effect.

     10. Cooperation.

     Following the Executive's termination of employment for any reason (whether
during or after the expiration of the Term), upon reasonable request by the
Company, the Executive shall cooperate with the Company or any of its Affiliates
with respect to any legal or investigatory proceeding, including any government
or regulatory investigation, or any litigation or other dispute relating to any
matter in which he was involved or had knowledge during his employment with the
Company, subject to his reasonable personal and business schedules. The Company
shall reimburse the Executive for all reasonable out-of-pocket costs, such as
travel, hotel and meal expenses and reasonable attorneys' fees, incurred by the
Executive in providing any cooperation pursuant to this Section 10, as well as a
reasonable per diem amount for the Executive's time (other than for time spent
preparing for or providing testimony) which shall be based upon the Executive's
Base Salary at the Date of Termination.

     11. Tax Matters.

          (a) If any amount, entitlement, or benefit paid or payable to the
Executive or provided for his benefit under this Agreement and under any other
agreement, plan or program of the Company (such payments, entitlements and
benefits referred to as a "Payment") is subject to the excise tax imposed under
Section 4999 of the Code, or any similar federal or state law (an "Excise Tax"),
then notwithstanding anything contained in this Agreement to the contrary, to
the


                                       14



extent that any or all Payments would be subject to the imposition of an Excise
Tax, the Payments shall be reduced (but not below zero) if and to the extent
that such reduction would result in the Executive retaining a larger amount, on
an after-tax basis (taking into account federal, state and local income taxes
and the imposition of the Excise Tax), than if the Executive received all of the
Payments (such reduced amount is hereinafter referred to as the "Limited Payment
Amount"). Unless the Executive shall have given prior written notice specifying
a different order to the Company to effectuate the limitations described in the
preceding sentence, the Company shall reduce or eliminate the Payments, by first
reducing or eliminating those payments or benefits which are not payable in cash
and then by reducing or eliminating cash payments, in each case in reverse order
beginning with payments or benefits which are to be paid the farthest in time
from the Determination (as defined below). Any notice given by the Executive
pursuant to the preceding sentence shall take precedence over the provisions of
any other plan, arrangement or agreement, including, but not limited to, the
other provisions of this Agreement, governing the Executive's rights and
entitlements to any compensation, entitlement or benefit.

          (b) All calculations under this Section 11 shall be made by a
nationally recognized accounting firm designated by the Company and reasonably
acceptable to the Executive (other than the accounting firm that is regularly
engaged by any party who has effectuated a Change in Control) (the "Accounting
Firm"). The Company shall pay all fees and expenses of such Accounting Firm. The
Accounting Firm shall provide its calculations, together with detailed
supporting documentation, both to the Company and the Executive within 45 days
after the Change in Control or the Date of Termination, whichever is later (or
such earlier time as is requested by the Company) and, with respect to the
Limited Payment Amount, shall deliver its opinion to the Executive that he is
not required to report any Excise Tax on his federal income tax return with
respect to the Limited Payment Amount (collectively, the "Determination").
Within 5 days of the Executive's receipt of the Determination, the Executive
shall have the right to dispute the Determination (the "Dispute"). The existence
of the Dispute shall not in any way affect the right of the Executive to receive
the Payments in accordance with the Determination. If there is no Dispute, the
Determination by the Accounting Firm shall be final binding and conclusive upon
the Company and the Executive (except as provided in subsection (c) below).

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


                                       15



term rate, as defined under Section 1274(d) of the Code and as in effect on the
first date that such amount should have been paid to the Executive under this
Agreement, from such date until the date that such Underpayment is made to the
Executive.

     12. Representations.

          (a) The Executive represents and warrants that he has the free and
unfettered right to enter into this Agreement and to perform his obligations
under it and that he knows of no agreement between him and any other person,
firm or organization, or any law or regulation, that would be violated by the
performance of his obligations under this Agreement. The Executive agrees that
he will not use or disclose any confidential or proprietary information of any
prior employer in the course of performing his duties for the Company or any of
its Affiliates.

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

     13. Indemnification and Liability Insurance.

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


                                       16



     14. Resolution of Disputes.

     Except as otherwise provided in Section 9 above, any controversy, dispute
or claim arising under or relating to this Agreement, the Executive's employment
with the Company or any Affiliate or the termination thereof shall, at the
election of the Executive or the Company (unless otherwise provided in an
applicable Company plan, program or agreement), be resolved by confidential,
binding and final arbitration, to be held in the borough of Manhattan in New
York City in accordance with the rules and procedures of the Commercial
Arbitration Rules of the American Arbitration Association. Judgment upon the
award rendered by the arbitrator may be entered in any court having jurisdiction
thereof and shall be binding upon the Parties. The Executive consents to the
personal and exclusive jurisdiction of the Courts of the State of New York
(including the United States District Court for the Southern District of New
York) in any proceedings for equitable relief. The Executive further agrees not
to interpose any objection for improper venue in any such proceeding. Each Party
shall be responsible for its own costs and expenses, including attorneys' fees,
and neither Party shall be liable for punitive or exemplary damages, provided
that if the Executive substantially prevails with respect to all claims that are
the subject matter of the dispute, his costs, including reasonable attorneys'
fees, shall be borne by the Company.

     15. Notices.

     Any notice given to a Party shall be in writing and shall be deemed to have
been given (i) when delivered personally (provided that a written
acknowledgement of receipt is obtained), (ii) three days after being sent by
certified or registered mail, postage prepaid, return receipt requested or (iii)
two days after being sent by overnight courier (provided that a written
acknowledgement of receipt is obtained by the overnight courier), with any such
notice duly addressed to the Party concerned at the address indicated below or
to such other address as such Party may subsequently designate by written notice
in accordance with this Section 15:

     If to the Company:     The Warnaco Group, Inc.
                            501 Seventh Avenue
                            New York, New York 10018
                            Attention: General Counsel

     If to the Executive:   The most recent address in the Company's records.

     16. Governing Law.

     This Agreement shall be governed by and construed and interpreted in
accordance with the laws of New York without reference to principles of
conflicts of law, provided, however, that Federal law shall apply to the
interpretation or enforcement of the arbitration provisions of Section 14
hereof.


                                       17



     17. Miscellaneous Provisions.

          (a) This Agreement contains the entire understanding and agreement
between the Parties concerning the subject matter hereof and, as of the
Effective Date, shall supersede all prior agreements, understandings,
discussions, negotiations and undertakings, whether written or oral, between the
Parties with respect thereto (but not including any indemnification agreements
and/or equity agreements which remain outstanding as of the Effective Date). No
provision of this Agreement may be amended unless such amendment is agreed to in
writing and signed by the Executive and an authorized officer of the Company.
Notwithstanding the foregoing, in 2005, the Company shall have the right to
modify any provision of this Agreement (or, if requested by the Executive, shall
make such modification), including, without limitation, Section 4(d) and/or
Section 6 hereof, if, and only to the extent that, such modification shall be
required, in the reasonable opinion of the Company's and/or the Executive's
counsel, to comply with Section 409A of the Code or any regulations or similar
guidance issued by the Treasury or the Internal Revenue Service with respect to
Code Section 409A. No waiver by either Party of any breach by the other Party of
any condition or provision contained in this Agreement to be performed by such
other Party shall be deemed a waiver of a similar or dissimilar condition or
provision at the same or any prior or subsequent time. Any waiver must be in
writing and signed by the Party against whom it is being enforced (either the
Executive or an authorized officer of the Company, as the case may be). The
respective rights and obligations of the Parties hereunder, including, without
limitation, Section 4(d) (Supplemental Award), Section 7 (protection of
confidential information and company property), Section 8 (additional
covenants), Section 9 (injunctive and other relief), Section 10 (cooperation),
Section 13 (indemnification and liability insurance) and Section 14 (resolution
of disputes), shall survive any expiration of the Term, including expiration
thereof upon the Executive's termination of employment for whatever reason, to
the extent necessary to the intended preservation of such rights and
obligations.

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

          (c) This Agreement shall be binding upon and inure to the benefit of
the Parties and their respective successors, heirs (in the case of the
Executive) and assigns. For purposes of this Section 17(c), a successor to the
Company shall be limited to an entity which shall have acquired all or
substantially all of the business and/or assets of the Company and shall have
assumed (whether by agreement or operation of law) the Company's rights and
obligations under this Agreement. No rights or obligations of the Executive
under this Agreement may be assigned or transferred by the Executive other than
his rights to compensation and benefits, which may be transferred only by will,
operation of law or in accordance with this clause (c). The Executive shall be
entitled, to the extent permitted under applicable plans, agreements or law, to
select and change a beneficiary or beneficiaries to receive any compensation or
benefit payable hereunder following the Executive's death by giving the Company
written notice thereof. In the event of the Executive's death or a judicial
determination of his incompetence, reference


                                       18



in this Agreement to the Executive shall be deemed, where appropriate, to refer
to his beneficiary, estate or other legal representative.

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

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

          (f) This Agreement may be executed in two or more counterparts.

                           [Signatures on next page.]


                                       19



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

                                    THE WARNACO GROUP, INC.


                                    By:    /s/ Joseph R. Gromek
                                        ----------------------------------------
                                    Name:  Joseph R. Gromek
                                    Title: President and Chief Executive Officer

                                    THE EXECUTIVE

                                    /s/ Stanley P. Silverstein
                                    --------------------------------------------
                                    Stanley P. Silverstein


                                       20



                                                                       EXHIBIT A

                         AGREEMENT AND RELEASE OF CLAIMS

          THIS AGREEMENT AND RELEASE is executed by STANLEY P. SILVERSTEIN (the
"Executive") as of the date hereof.

          WHEREAS, the Executive and The Warnaco Group, Inc. (the "Company")
entered into an employment agreement dated August 11, 2005 (the "Employment
Agreement");

          WHEREAS, the Executive has certain entitlements pursuant to the
Employment Agreement subject to the Executive's executing this Agreement and
Release and complying with its terms.

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

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


                                       21



Sections 6, 11 and 13 of the Employment Agreement, (iii) any right or claim the
Executive may have to benefits or equity awards that have accrued or vested as
of the Date of Termination or any right pursuant to any qualified retirement
plan or (iv) any right the Executive may have to be indemnified by the Company
to the extent such indemnification by the Company or any Affiliate is permitted
by applicable law or the Company's by-laws.

          The Executive agrees that he shall continue to be bound by, and will
comply with, the provisions of Sections 7, 8, 10 and 14 of the Employment
Agreement and the provisions of such sections, along with Section 9 of the
Employment Agreement, shall be incorporated fully into this Agreement and
Release.

          The Executive acknowledges that he has been provided a period of at
least 21 calendar days (45 calendar days in the case of any termination covered
by Section 7(f)(1)(F)(ii) of ADEA) in which to consider and execute this
Agreement and Release. The Executive further acknowledges and understands that
he has seven calendar days from the date on which he executes this Agreement and
Release to revoke his acceptance by delivering to the Company written
notification of his intention to revoke this Agreement and Release in accordance
with Section 15 of the Employment Agreement. This Agreement and Release becomes
effective when signed unless revoked in writing and in accordance with this
seven-day provision. To the extent that the Executive has not otherwise done so,
the Executive is advised to consult with an attorney prior to executing this
Agreement and Release.

          This Agreement and Release shall be governed by and construed and
interpreted in accordance with the laws of New York without reference to
principles of conflicts of law. Capitalized terms, unless defined herein, shall
have the meaning ascribed to such terms in the Employment Agreement.

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

                                             -----------------------------------
                                             Stanley P. Silverstein

                                             Date:
                                                   -----------------------------


                                       22
EX-10.3 6 file004.htm EMPLOYMENT AGREEMENT 




                              EMPLOYMENT AGREEMENT
                              --------------------

         AGREEMENT, made and entered into as of August 11, 2005 (the "Effective
Date") by and between THE WARNACO GROUP, INC., a Delaware corporation (together
with its successors and assigns, the "Company"), and JAY A. GALLUZZO (the
"Executive").

                              W I T N E S S E T H :
                               - - - - - - - - - -

         WHEREAS, the Company desires to continue to employ the Executive and to
enter into an agreement embodying the terms of such continued employment and the
Executive desires to enter into this Agreement and to accept such continued
employment, subject to the terms and provisions of this Agreement;

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

         1.    Certain Definitions.
               --------------------

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

               (b)  "Board" shall mean the Board of Directors of the Company.

               (c)  "Cause" shall mean:

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

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

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

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

                                       1


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

               (d) "Change in Control" shall mean any of the following:

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

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

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

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

               (e) "Date of Termination" shall mean:

                    (i) if the Executive's employment is terminated by the
                    Company, the date specified in the notice by the Company to
                    the Executive that his employment is so terminated; provided
                    that for a termination for Cause such notice is delivered
                    after the Board determination as set forth in Section 1(c)
                    hereof;

                    (ii) if the Executive voluntarily resigns his employment, 90
                    days after receipt by the Company of written notice that the
                    Executive is terminating his employment or if the Company
                    shortens the required notice period in accordance with
                    Section 6(c), the date of termination specified in such
                    notice;

                                       2


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

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

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

               (f) "Disability" shall mean the Executive's inability, due to
physical or mental incapacity, to substantially perform his duties and
responsibilities for a period of 180 consecutive days as determined by a medical
doctor selected by the Company and reasonably acceptable to the Executive. In no
event shall any termination of the Executive's employment for Disability occur
until the Party terminating his employment gives written notice to the other
Party in accordance with Section 15 below.

               (g) "Good Reason" shall mean the occurrence of any of the
following without the Executive's prior written consent:

                    (i) a material diminution by the Company in the Executive's
                    authority, duties or responsibilities as Senior Vice
                    President, General Counsel and Secretary or the assignment
                    to the Executive by the Company of any duties materially
                    inconsistent with such positions;

                    (ii) a reduction in (A) Base Salary or (B) Target Bonus
                    opportunity as a percentage of Base Salary;

                    (iii) in connection with or following a Change in Control, a
                    change in reporting structure so that the Executive reports
                    to someone other than the Chief Executive Officer of the
                    Company;

                    (iv) the removal by the Company of the Executive as Senior
                    Vice President, General Counsel and Secretary of the Company
                    or the failure by the Board to elect or reelect the
                    Executive as an executive officer of the Company;

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

                                       3


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

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

         2.    Term of Employment.
               -------------------

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

         3.    Position; Duties and Responsibilities.
               --------------------------------------

               During the Term, the Executive shall be employed as Senior Vice
President, General Counsel and Secretary of the Company and shall perform such
duties and responsibilities as determined by the Chief Executive Officer. The
Executive shall devote substantially all of his business time and attention to
the satisfactory performance of his duties. Anything herein to the contrary
notwithstanding, nothing shall preclude the Executive from (i) subject to the
reasonable approval of the Board, serving on the boards of directors of trade
associations and/or charitable organizations or other business corporations
(provided such service is not prohibited under Section 8(a)(i) below), (ii)
engaging in charitable activities and community affairs and (iii) managing his
personal investments and affairs, provided that the activities described in the
preceding clauses (i) through (iii) do not materially interfere with the proper
performance of his duties and responsibilities hereunder.

         4.    Compensation.
               -------------

               (a) Base Salary. During the Term, the Executive shall be paid an
annualized Base Salary of $310,000 ("Base Salary"), payable in accordance with
the regular payroll practices of the Company, subject to annual review by the
Board (or its designee, including the Compensation Committee of the Board) in
its sole discretion. During the Term the Base Salary may not be decreased
without the Executive's prior written consent. The Executive shall not be


                                       4


entitled to any compensation for service as an officer or member of any board of
directors of any Affiliate. After any increase in base salary approved by the
Board or its designee, the term "Base Salary" as used in this Agreement shall
thereafter refer to the increased amount.

               (b) Annual Incentive Awards. During the Term, the Executive shall
be eligible to receive an annual incentive award (provided the Executive was
employed continuously during the applicable fiscal year) pursuant to the
Company's Incentive Compensation Plan, as amended (or such other annual
incentive plan as may be approved by the Company's shareholders), in effect for
the applicable fiscal year ("Bonus Plan"). The Executive's annual incentive
award for fiscal year 2005 and thereafter shall have a target of 70% of Base
Salary ("Target Bonus"), with a potential maximum award as set forth in the
Bonus Plan, in all events based on the Executive's achievement of annual
performance and other targets approved by the committee administering the Bonus
Plan. The amount and payment of any annual incentive award shall be determined
in accordance with the Bonus Plan and shall be payable when bonuses for the
applicable performance period are paid to other senior executives of the
Company. After any increase in the Executive's target annual bonus opportunity
as a percentage of Base Salary as approved by the Board (or its designee), the
term "Target Bonus" as used in this Agreement shall thereafter refer to the
increased target opportunity.

               (c) Long-Term Incentive Awards. During the Term, the Executive
shall be eligible to participate in the Company's equity incentive plans,
including, without limitation, the 2003 and 2005 Stock Incentive Plans, as
amended from time to time, and such other long-term incentive plan(s) as may be
approved by the Company's shareholders from time to time ("Stock Incentive
Plan"). Except as otherwise provided herein, all equity grants shall be governed
by the applicable equity plan and/or award agreement. The Executive shall be
subject to the equity ownership, retention and other requirements applicable to
senior executives of the Company.

               (d) Supplemental Award. During the Term beginning with fiscal
year 2005, provided the Executive is employed by the Company, the Executive
shall be entitled to an annual award with an aggregate grant date value equal to
6% of the sum of Base Salary plus Annual Bonus as defined in this Section 4(d)
if the Executive will be less than age 40 by the end of the applicable fiscal
year, 8% of such amount if the Executive will be age 40 and over and less than
age 50 by the end of the applicable fiscal year, 10% of such amount if the
Executive will be age 50 and over and less than age 60 by the end of the
applicable fiscal year and 13% of such amount if the Executive will be age 60 or
older by the end of the applicable fiscal year ("Supplemental Award"), with the
first such award being made no later than 60 days after the Effective Date. For
this purpose, Base Salary shall be the Base Salary paid to the Executive for the
fiscal year prior to the award year and Annual Bonus shall be the annual bonus
awarded to the Executive by the Board for such prior fiscal year. The
Supplemental Award shall not be awarded to the Executive until after the
determination by the Board of the Executive's annual bonus for the prior fiscal
year (but in no event later than 60 days thereafter for any award made after
fiscal year 2005) and 50% of the value of the Supplemental Award shall be
awarded in the form of restricted shares pursuant to the applicable Stock
Incentive Plan ("Career Shares") and 50% shall be awarded in the form of a
credit to a bookkeeping account maintained by the Company for the Executive's
account (the "Notional Account"). Any Career Shares awarded hereunder shall be
governed by

                                       5


the applicable Stock Incentive Plan and, if applicable, any award agreement. For
purposes of this Section 4(d), each Career Share shall be valued at the closing
price of a share of the Company's common stock ("Share") on the date that the
Supplemental Award is made. For the Notional Account, the Company shall select
the investment alternatives available to the Executive under the Company's
401(k) plan. The balance in the Notional Account shall periodically be credited
(or debited) with the deemed positive (or negative) return based on returns of
the permissible investment alternative or alternatives under the Company's
401(k) plan as selected in advance by the Executive (and in accordance with the
applicable rules of such plan or investment alternative) to apply to such
Notional Account, with such deemed returns calculated in the same manner and at
the same times as the return on such investment alternative(s). The Company's
obligation to pay the amount credited to the Notional Account, including any
return thereon provided for in this Section 4(d), shall be an unfunded
obligation to be satisfied from the general funds of the Company. Except as
otherwise provided in Section 6 below or the applicable Stock Incentive Plan and
provided that the Executive is employed by the Company on such vesting date, any
Supplemental Award granted in the form of Career Shares will vest as follows:
50% of the Career Shares will vest on the earlier of the Executive's 62nd
birthday or upon the Executive's obtaining 15 years of "Vesting Service" and
100% of the Career Shares will vest on the earliest of (i) the Executive's 65th
birthday, (ii) upon the Executive's obtaining 20 years of "Vesting Service" or
(iii) the 10th anniversary of the date of grant. Except as otherwise provided in
Section 6 below, and provided that the Executive is employed by the Company on
such vesting date, any Supplemental Award granted as a credit to the Notional
Account (as adjusted for any returns thereon) ("Adjusted Notional Account"))
shall vest as follows: 50% on the earlier of the Executive's 62nd birthday or
upon the Executive's obtaining 5 years of "Vesting Service" and 100% on the
earlier of the Executive's 65th birthday and upon the Executive's obtaining 10
years of "Vesting Service". For purposes of this Section 4(d), "Vesting Service"
shall mean the period of time that the Executive is employed by the Company as
an executive officer, provided that for these purposes only the Executive's
service from February 4, 2003 on will be counted. Subject to Section 17(b)
hereof, upon vesting the Career Shares will be delivered in the form of Shares
to the Executive. The vested balance in the Adjusted Notional Account shall not
be distributed to the Executive until he ceases to be an employee of the Company
and, at such time, shall only be distributed at the earliest time that satisfies
the requirements of this Section 4(d). Except as otherwise provided in Section 6
hereof, if the Executive's employment is terminated for any reason, any unvested
Supplemental Awards (whether in the form of Career Shares or the Adjusted
Notional Account) shall be forfeited and any vested balance in the Adjusted
Notional Account, subject to Section 17(b) hereof, shall be paid to the
Executive in a cash lump-sum payment immediately following the Executive's
"separation from service," as defined by Section 409A(a)(2)(A)(i) of the
Internal Revenue Code of 1986, as amended (the "Code"), with the Company;
provided, however, that, except in the case of the Executive's death, if at the
time of such separation from service the Executive is a "specified employee," as
defined in Section 409A(a)(2)(B)(i) of the Code, such distribution shall not be
made until at least six months after the date of such separation from service;
provided, further, that if the Executive's employment is terminated due to
Disability and such Disability satisfies the requirements of Section
409A(a)(2)(C) of the Code, then such distribution may be made upon termination
without regard as to whether Executive was a "specified employee" at such time.
The provisions of this Section 4(d) shall survive expiration or termination of
the Term.

                                       6


         5.    Employee Benefits.
               ------------------

               (a) Employee Benefit Programs. During the Term, subject to the
Company's right to amend, modify or terminate any benefit plan or program, the
Executive shall be entitled to participate in all employee savings and welfare
benefit plans and programs made available to the Company's senior-level
executives on a basis no less favorable than provided to other
similarly-situated executives, as such plans or programs may be in effect from
time to time, including, without limitation, savings and other retirement plans
or programs, medical, dental, hospitalization, short-term and long-term
disability and life insurance plans, accidental death and dismemberment
protection and travel accident insurance. During the Term, the Executive shall
also be entitled to a paid annual physical medical exam as approved by the
Company and Company-paid term life insurance with a benefit equal to $1 million,
provided the Company can obtain such insurance at commercially reasonable
premium levels. The Executive shall be entitled to four weeks paid vacation per
calendar year.

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

               (c) Perquisites. The Executive shall be entitled to perquisites
provided to other senior-level executives, including a monthly car allowance of
up to a maximum of $1,000.

         6.    Termination of Employment. The Term of this Agreement and the
               Executive's employment hereunder shall terminate as of the Date
               of Termination in the following circumstances:

               (a) Termination Without Cause by the Company or Resignation for
Good Reason by the Executive. In the event that during the Term the Executive's
employment is terminated without Cause by the Company (other than due to
Disability) or the Executive resigns for Good Reason and Section 6(d) below does
not apply, the Executive shall be entitled to:

                    (i) payment of Base Salary as salary continuation for the
                    remainder of the applicable Term (without regard to its
                    earlier termination hereunder), but in no event more than 24
                    months or less than 12 months following the Date of
                    Termination;

                    (ii) immediate vesting as of the Date of Termination of 50%
                    of any restricted stock (other than Career Shares) that
                    remains unvested as of the Date of Termination;

                                       7


                    (iii) with respect to any stock options granted on or after
                    the Effective Date which are vested and outstanding as of
                    the Date of Termination, continued exercisability for 12
                    months following the Date of Termination or the remainder of
                    the option term, if shorter; and

                    (iv) continued participation for the Executive and his
                    eligible dependents in the Company's welfare benefit plans
                    in which he and his eligible dependents were participating
                    immediately prior to the Date of Termination until the
                    earlier of (a) the end of the applicable Term (without
                    regard to its earlier termination hereunder), but in no
                    event more than 24 months or less than 12 months following
                    the Date of Termination, or (b) the date, or dates, the
                    Executive receives equivalent coverage under the plans and
                    programs of a subsequent employer.

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

                    (i) a pro-rata annual bonus determined by multiplying the
                    amount of the annual bonus the Executive would have received
                    had his employment continued through the end of the fiscal
                    year in which the Date of Termination occurs by a fraction,
                    the numerator of which is the number of days during such
                    fiscal year that the Executive was employed by the Company
                    and the denominator of which is 365, payable when bonuses
                    for such fiscal year are paid to other Company executives;

                    (ii) immediate vesting as of the Date of Termination of 50%
                    of any restricted stock (other than Career Shares) that
                    remains unvested as of the Date of Termination; and

                    (iii) immediate vesting as of the Date of Termination of 50%
                    of any previously granted Supplemental Award that remains
                    unvested as of the Date of Termination, payable in
                    accordance with Section 4(d) above.

               (c) Termination by the Company for Cause or a Voluntary
Resignation by the Executive. In the event that during the Term the Company
terminates the Executive's employment for Cause or the Executive voluntarily
resigns, the Executive shall be entitled to his Base Salary and benefits through
the Date of Termination. A voluntary resignation by the Executive of his
employment shall be effective upon 90 days prior written notice by the Executive
to the Company ("Notice Period"), subject to earlier termination by the Company
in accordance herewith. Failure by the Executive to provide the required notice
shall be deemed to be a breach of this Agreement. During the Notice Period, the
Executive shall continue to be an employee of the Company and his fiduciary
duties and other obligations as an employee of the Company shall continue. The
Executive shall cooperate in the transition of his responsibilities; provided
that the Company shall have the right to direct the Executive to no longer come
to work

                                       8


or not to perform any work for the Company during the Notice Period. If the
Company so directs, in addition to his fiduciary duties and other obligations as
an employee and his commitments pursuant to Section 7 and 8 hereof, the
Executive agrees to refrain during the Notice Period from contacting any
customers, clients, advertisers, suppliers, agents, professional advisors or
employees of the Company or any of its Affiliates. The Company shall also have
the right to shorten the Notice Period by providing written notice to the
Executive, in which event the Executive's employment shall terminate on the date
stated in such notice.

               (d) Termination without Cause by the Company or Resignation for
Good Reason by the Executive Upon or Following a Change in Control. In the event
that (i) the Executive's employment is terminated without Cause by the Company
(other than due to Disability) or the Executive resigns for Good Reason, in both
cases upon or within one year following a Change in Control (provided the Term
is still in effect or has expired during this one-year period), the Executive
shall be entitled to:

                    (i) an amount equal to the greater of (x) the sum of Base
                    Salary plus Target Bonus divided by 12, with such amount
                    then multiplied by the number of months (including any
                    partial months) remaining in the Term (without regard to the
                    earlier termination thereof) or (y) 2 times the sum of (a)
                    Base Salary plus (b) Target Bonus, payable in a lump sum as
                    soon as practicable following the Date of Termination (but
                    in no event later than 60 days following such date);

                    (ii) a pro-rata Target Bonus for the year of termination,
                    determined by multiplying the Target Bonus by a fraction,
                    the numerator of which is the number of days the Executive
                    was employed by the Company during the year in which the
                    Date of Termination occurs and the denominator of which is
                    365, payable in a lump sum as soon as practicable following
                    the Date of Termination (but in no event later than 60 days
                    following such date);

                    (iii) immediate vesting as of the Date of Termination of all
                    outstanding equity awards (other than Career Shares), with
                    any stock options granted on or after the Effective Date
                    remaining exercisable for 24 months following the Date of
                    Termination or the remainder of the option term, if shorter;

                    (iv) immediate vesting as of the Date of Termination of any
                    previously granted Supplemental Award, payable in accordance
                    with Section 4(d) above; and

                    (v) continued participation for the Executive and his
                    eligible dependents in the Company's welfare benefit plans
                    in which he and his eligible dependents were participating
                    immediately prior to the Date of Termination until the
                    earlier of (a) 24 months following the Date of

                                       9


                    Termination, or (b) the date, or dates, the Executive
                    receives substantially equivalent coverage under the plans
                    and programs of a subsequent employer.

               (e) Termination of the Executive's Employment by the Company Upon
the Expiration of the Term. If the Company provides written notice to the
Executive in accordance with Section 2 above that the Term shall not renew and
upon such expiration of the Term the Company terminates the Executive's
employment under circumstances that during the Term would constitute a
termination of employment without Cause, the Executive shall be entitled to the
same payments, benefits and entitlements as a Termination without Cause under
Section 6(a) hereof. (f) Other Entitlements Upon Termination of Employment. In
the event of any termination of the Executive's employment, the Executive (or
his estate or legal representative, as the case may be) shall be entitled to:

                    (i) Base Salary through the Date of Termination;

                    (ii) except for a termination of employment pursuant to
                    Section 6(c) above, payment of any annual bonus awarded to
                    the Executive that remains unpaid for the fiscal year
                    preceding the fiscal year in which the Date of Termination
                    occurs, payable when bonuses for such performance period are
                    paid to other Company executives;

                    (iii) any Supplemental Award that is vested as of the Date
                    of Termination, payable in accordance with Section 4(d)
                    above;

                    (iv) any amounts owing to the Executive but not yet paid
                    under Section 5(b) and 5(c) above; and

                    (v) except as otherwise provided in Section 6(g) below,
                    additional entitlements or treatment, if any, in accordance
                    with applicable plans and programs of the Company (provided
                    that in no event shall the Executive be entitled to
                    duplication of any payments or benefits).

               (g) Exclusivity of Benefits; Releases of Claims. Any payments
provided pursuant to Section 6(a), Section 6(d) or Section 6(e) above shall be
in lieu of any salary continuation arrangements under any other severance
program of the Company and in all events, the Executive shall not be entitled to
duplication of any benefit or entitlement. In order to be entitled to any
payments, rights and other entitlements pursuant to this Agreement or otherwise,
the Executive must comply with the covenants and/or acknowledgements contained
in Sections 7, 8, 9 and 10 of this Agreement. In addition, in order to be
entitled to any payments, rights or other entitlements in connection with a
termination covered by Section 6(a), Section 6(d) or Section 6(e) above (except
for those payments or benefits required to be paid or provided by applicable
law), the Executive shall be required to execute and deliver to the Company the
Agreement and Release of Claims attached hereto as Exhibit A (and not revoke
such agreement

                                       10


within the applicable revocation period).

               (h) Nature of Payments; No Mitigation. Any amounts due under this
Section 6 are in the nature of severance payments considered to be reasonable by
the Company and are not in the nature of a penalty. In the event of termination
of his employment for any reason in compliance with this Agreement, the
Executive shall be under no obligation to seek other employment and, except as
specifically provided for in this Section 6 with respect to continuation of
welfare benefits, there shall be no offset against amounts or entitlements due
to him on account of any remuneration or benefits provided by any subsequent
employment he may obtain.

               (i) Resignation. Notwithstanding any other provision of this
Agreement, upon the termination of the Executive's employment for any reason or
the Executive being directed not to come to work or not to perform services for
the Company in accordance with Section 6(c) hereof, unless otherwise requested
by the Board, he shall immediately resign from the Board, if applicable, and all
boards of directors of any Affiliate of the Company of which he may be a member,
and as a trustee of, or fiduciary to, any employee benefit plans of the Company
or any Affiliate. The Executive hereby agrees to execute any and all
documentation of such resignations upon request by the Company, but he shall be
treated for all purposes as having so resigned upon termination of his
employment or upon the date the Company directs him not to come to work or
perform services for the Company, regardless of when or whether he executes any
such documentation.

         7.    Protection of Confidential Information and Company Property.
               ------------------------------------------------------------

               (a) During the Term and thereafter, other than in the ordinary
course of performing his duties for the Company or as required in connection
with providing any cooperation to the Company pursuant to Section 10 below, the
Executive agrees that he shall not disclose to anyone or make use of any trade
secret or proprietary or confidential information of the Company or any
Affiliate of the Company, including such trade secret or proprietary or
confidential information of any customer or other entity to which the Company
owes an obligation not to disclose such information, which he acquires during
the course of his employment ("Confidential Information"), including, but not
limited to, records kept in the ordinary course of business, except when
required to do so by a court of law, by any governmental agency having
supervisory authority over the business of the Company or by any administrative
or legislative body (including a committee thereof) with apparent or actual
jurisdiction to order him to divulge, disclose or make accessible such
information. "Confidential Information" shall not include information that (i)
was known to the public prior to its disclosure by the Executive; or (ii)
becomes known to the public through no wrongful disclosure by or act of the
Executive or any representative of the Executive. In the event the Executive is
requested by subpoena, court order, investigative demand, search warrant or
other legal process to disclose any Confidential Information, the Executive
agrees, unless prohibited by law or Securities and Exchange Commission
regulation, to give the Company's Chief Executive Officer prompt written notice
of any request for disclosure in advance of the Executive's making such
disclosure and the Executive agrees not to disclose such information unless and
until the Company has expressly authorized the Executive to do so in writing or
the Company has had a reasonable


                                       11


opportunity to object to such request or to litigate the matter (of which the
Company agrees to keep the Executive reasonably informed) and has failed to do
so.

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

               (c) The Executive agrees upon termination of employment (whether
during or after the expiration of the Term and whether such termination is at
the instance of the Executive or the Company), and regardless of the reasons
therefor, or at any time as the Company may request, he will promptly deliver to
the Company's Chief Executive Officer, and not keep or deliver to anyone else,
any and all of the following which is in his possession or control: (i) Company
property (including, without limitation, credit cards, computers, communication
devices, home office equipment and other Company tangible property) and (ii)
notes, files, memoranda, papers and, in general, any and all physical matter and
computer files containing confidential or proprietary information of the Company
or any of its Affiliates, including any and all documents relating to the
conduct of the business of the Company or any of its Affiliates and any and all
documents containing confidential or proprietary information of the customers of
the Company or any of its Affiliates, except for (x) any documents for which the
Company's Chief Executive Officer has given written consent to removal at the
time of termination of the Executive's employment and (y) any information
necessary for the Executive to retain for his tax purposes (provided the
Executive maintains the confidentiality of such information in accordance with
Section 7(a) above).

         8.    Additional Covenants.
               ---------------------

               (a) The Executive acknowledges that in his capacity in management
the Executive has had or will have a great deal of exposure and access to the
Company's trade secrets and Confidential Information. Therefore, to protect the
Company's trade secrets and other Confidential Information, the Executive agrees
as follows:

                    (i) during his employment with the Company or any Affiliate
                    and for 12 months following termination of such employment
                    (whether during the Term or thereafter), the Executive shall
                    not, other than in the ordinary course of performing his
                    duties hereunder or as agreed by the Company in writing,
                    engage in a "Competitive Business," directly or indirectly,
                    as an

                                       12


                    individual, partner, shareholder, director, officer,
                    principal, agent, employee, trustee, consultant, or in any
                    relationship or capacity, in any geographic location in
                    which the Company or any of its Affiliates is engaged in
                    business. The Executive shall not be deemed to be in
                    violation of this Section 8(a) by reason of the fact that he
                    owns or acquires, solely as an investment, up to two percent
                    (2%) of the outstanding equity securities (measured by
                    value) of any entity. "Competitive Business" shall mean a
                    business engaged in (x) apparel design and/or apparel
                    wholesaling or (y) retailing in competition with any
                    business that the Company or its Affiliates is conducting at
                    the time of the alleged violation; and

                    (ii) during his employment with the Company or any Affiliate
                    and for 18 months following termination of such employment
                    for any reason (whether during the Term or thereafter), the
                    Executive shall not, other than in the ordinary course of
                    the Company's business or with the Company's prior written
                    consent, directly or indirectly, solicit or encourage any
                    customer of the Company or any of its Affiliates to reduce
                    or cease its business with the Company or any such Affiliate
                    or otherwise interfere with the relationship of the Company
                    or any Affiliate with its customers.

               (b) The Executive agrees that during his employment with the
Company or any Affiliate and for 18 months following termination of such
employment for any reason (whether during the Term or thereafter), he shall not,
other than in the ordinary course of the Company's business or with the
Company's prior written consent, directly or indirectly, hire any employee of
the Company or any of its Affiliates, or solicit or encourage any such employee
to leave the employ of the Company or its Affiliates, as the case may be.

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

                                       13


         9.    Injunctive and Other Relief.
               ----------------------------

               (a) The Executive acknowledges that the restrictions and
commitments set forth in Sections 7, 8 and 10 of this Agreement are necessary to
prevent the improper use and disclosure of Confidential Information and to
otherwise protect the legitimate business interests of the Company and any of
its Affiliates. The Executive further acknowledges that the restrictions set
forth in Sections 7, 8 and 10 of this Agreement are reasonable in all respects,
including, without limitation, duration, territory and scope of activity. The
Executive expressly agrees and acknowledges that any breach or threatened breach
by the Executive or any third party of any obligation by the Executive under
this Agreement, including, without limitation, any breach or threatened breach
of Section 7, 8 or 10 of this Agreement will cause the Company immediate,
immeasurable and irreparable harm for which there is no adequate remedy at law,
and as a result of this, in addition to its other remedies, the Company shall be
entitled to the issuance by a court of competent jurisdiction of an injunction,
restraining order, specific performance or other equitable relief in favor of
itself, without the necessity of posting a bond, restraining the Executive or
any third party from committing or continuing to commit any such violation. If
the Company defers or withholds any payment, benefit or entitlement due to the
Executive pursuant to this Agreement or otherwise based on the Executive's
violation of this Agreement and it is subsequently finally determined that the
Executive did not commit such breach, the Company shall promptly pay all such
unpaid amounts, and shall extend such rights or other entitlements, to the
Executive as of the date that it is so determined that the Executive did not
commit such breach.

               (b) If any restriction set forth in Section 7, 8 or 10 of this
Agreement is found by any arbitrator or court of competent jurisdiction to be
unenforceable because it extends for too long a period of time or over too great
a range of activities or in too broad a geographic area, it will be interpreted
to extend over the maximum period of time, range of activities or geographic
area as to which it may be enforceable. If any provision of Section 7, 8 or 10
of this Agreement is declared to be invalid or unenforceable, in whole or in
part, for any reason, such invalidity will not affect the remaining provisions
of such Section which will remain in full force and effect.

         10.   Cooperation.
               ------------

         Following the Executive's termination of employment for any reason
(whether during or after the expiration of the Term), upon reasonable request by
the Company, the Executive shall cooperate with the Company or any of its
Affiliates with respect to any legal or investigatory proceeding, including any
government or regulatory investigation, or any litigation or other dispute
relating to any matter in which he was involved or had knowledge during his
employment with the Company, subject to his reasonable personal and business
schedules. The Company shall reimburse the Executive for all reasonable
out-of-pocket costs, such as travel, hotel and meal expenses and reasonable
attorneys' fees, incurred by the Executive in providing any cooperation pursuant
to this Section 10, as well as a reasonable per diem amount for the Executive's
time (other than for time spent preparing for or providing testimony) which
shall be based upon the Executive's Base Salary at the Date of Termination.

                                       14


         11.   Tax Matters.
               ------------

                  (a) If any amount, entitlement, or benefit paid or payable to
the Executive or provided for his benefit under this Agreement and under any
other agreement, plan or program of the Company (such payments, entitlements and
benefits referred to as a "Payment") is subject to the excise tax imposed under
Section 4999 of the Code, or any similar federal or state law (an "Excise Tax"),
then notwithstanding anything contained in this Agreement to the contrary, to
the extent that any or all Payments would be subject to the imposition of an
Excise Tax, the Payments shall be reduced (but not below zero) if and to the
extent that such reduction would result in the Executive retaining a larger
amount, on an after-tax basis (taking into account federal, state and local
income taxes and the imposition of the Excise Tax), than if the Executive
received all of the Payments (such reduced amount is hereinafter referred to as
the "Limited Payment Amount"). Unless the Executive shall have given prior
written notice specifying a different order to the Company to effectuate the
limitations described in the preceding sentence, the Company shall reduce or
eliminate the Payments, by first reducing or eliminating those payments or
benefits which are not payable in cash and then by reducing or eliminating cash
payments, in each case in reverse order beginning with payments or benefits
which are to be paid the farthest in time from the Determination (as defined
below). Any notice given by the Executive pursuant to the preceding sentence
shall take precedence over the provisions of any other plan, arrangement or
agreement, including, but not limited to, the other provisions of this
Agreement, governing the Executive's rights and entitlements to any
compensation, entitlement or benefit.

                  (b) All calculations under this Section 11 shall be made by a
nationally recognized accounting firm designated by the Company and reasonably
acceptable to the Executive (other than the accounting firm that is regularly
engaged by any party who has effectuated a Change in Control) (the "Accounting
Firm"). The Company shall pay all fees and expenses of such Accounting Firm. The
Accounting Firm shall provide its calculations, together with detailed
supporting documentation, both to the Company and the Executive within 45 days
after the Change in Control or the Date of Termination, whichever is later (or
such earlier time as is requested by the Company) and, with respect to the
Limited Payment Amount, shall deliver its opinion to the Executive that he is
not required to report any Excise Tax on his federal income tax return with
respect to the Limited Payment Amount (collectively, the "Determination").
Within 5 days of the Executive's receipt of the Determination, the Executive
shall have the right to dispute the Determination (the "Dispute"). The existence
of the Dispute shall not in any way affect the right of the Executive to receive
the Payments in accordance with the Determination. If there is no Dispute, the
Determination by the Accounting Firm shall be final binding and conclusive upon
the Company and the Executive (except as provided in subsection (c) below).

                  (c) If, after the Payments have been made to the Executive, it
is established that the Payments made to, or provided for the benefit of, the
Executive exceed the limitations provided in subsection (a) above (an "Excess
Payment") or are less than such limitations (an "Underpayment"), as the case may
be, then the provisions of this subsection (c) shall apply. If it is established
pursuant to a final determination of a court or an Internal Revenue Service (the

                                       15


"IRS") proceeding which has been finally and conclusively resolved, that an
Excess Payment has been made, the Executive shall repay the Excess Payment to
the Company on demand. In the event that it is determined by (i) the Accounting
Firm, the Company (which shall include the position taken by the Company, or
together with its consolidated group, on its federal income tax return) or the
IRS, (ii) pursuant to a determination by a court, or (iii) upon the resolution
to the satisfaction of the Executive of the Dispute, that an Underpayment has
occurred, the Company shall pay an amount equal to the Underpayment to the
Executive within 10 days of such determination or resolution together with
interest on such amount at the applicable federal short-term rate, as defined
under Section 1274(d) of the Code and as in effect on the first date that such
amount should have been paid to the Executive under this Agreement, from such
date until the date that such Underpayment is made to the Executive.

         12.   Representations.
               ----------------

               (a) The Executive represents and warrants that he has the free
and 0 unfettered right to enter into this Agreement and to perform his
obligations under it and that he knows of no agreement between him and any other
person, firm or organization, or any law or regulation, that would be violated
by the performance of his obligations under this Agreement. The Executive agrees
that he will not use or disclose any confidential or proprietary information of
any prior employer in the course of performing his duties for the Company or any
of its Affiliates.

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

         13.   Indemnification and Liability Insurance.
               ----------------------------------------

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

                                       16


commercially reasonable efforts to obtain and maintain directors' and officers'
liability insurance covering the Executive to the same extent as the Company
covers its other officers and directors.

         14.   Resolution of Disputes.
               -----------------------

         Except as otherwise provided in Section 9 above, any controversy,
dispute or claim arising under or relating to this Agreement, the Executive's
employment with the Company or any Affiliate or the termination thereof shall,
at the election of the Executive or the Company (unless otherwise provided in an
applicable Company plan, program or agreement), be resolved by confidential,
binding and final arbitration, to be held in the borough of Manhattan in New
York City in accordance with the rules and procedures of the Commercial
Arbitration Rules of the American Arbitration Association. Judgment upon the
award rendered by the arbitrator may be entered in any court having jurisdiction
thereof and shall be binding upon the Parties. The Executive consents to the
personal and exclusive jurisdiction of the Courts of the State of New York
(including the United States District Court for the Southern District of New
York) in any proceedings for equitable relief. The Executive further agrees not
to interpose any objection for improper venue in any such proceeding. Each Party
shall be responsible for its own costs and expenses, including attorneys' fees,
and neither Party shall be liable for punitive or exemplary damages, provided
that if the Executive substantially prevails with respect to all claims that are
the subject matter of the dispute, his costs, including reasonable attorneys'
fees, shall be borne by the Company.

         15.   Notices.
               --------

         Any notice given to a Party shall be in writing and shall be deemed to
have been given (i) when delivered personally (provided that a written
acknowledgement of receipt is obtained), (ii) three days after being sent by
certified or registered mail, postage prepaid, return receipt requested or (iii)
two days after being sent by overnight courier (provided that a written
acknowledgement of receipt is obtained by the overnight courier), with any such
notice duly addressed to the Party concerned at the address indicated below or
to such other address as such Party may subsequently designate by written notice
in accordance with this Section 15:

         If to the Company:    The Warnaco Group, Inc.
                               501 Seventh Avenue
                               New York, New York 10018
                               Attention:  Chief Executive Officer

         If to the Executive:  The most recent address in the Company's records.

         16.   Governing Law.
               --------------

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

                                       17


Section 14 hereof.

         17.   Miscellaneous Provisions.
               -------------------------

                  (a) This Agreement contains the entire understanding and
agreement between the Parties concerning the subject matter hereof and, as of
the Effective Date, shall supersede all prior agreements, understandings,
discussions, negotiations and undertakings, whether written or oral, between the
Parties with respect thereto (but not including any indemnification agreements
and/or equity agreements which remain outstanding as of the Effective Date). No
provision of this Agreement may be amended unless such amendment is agreed to in
writing and signed by the Executive and an authorized officer of the Company.
Notwithstanding the foregoing, in 2005, the Company shall have the right to
modify any provision of this Agreement (or, if requested by the Executive, shall
make such modification), including, without limitation, Section 4(d) and/or
Section 6 hereof, if, and only to the extent that, such modification shall be
required, in the reasonable opinion of the Company's and/or the Executive's
counsel, to comply with Section 409A of the Code or any regulations or similar
guidance issued by the Treasury or the Internal Revenue Service with respect to
Code Section 409A. No waiver by either Party of any breach by the other Party of
any condition or provision contained in this Agreement to be performed by such
other Party shall be deemed a waiver of a similar or dissimilar condition or
provision at the same or any prior or subsequent time. Any waiver must be in
writing and signed by the Party against whom it is being enforced (either the
Executive or an authorized officer of the Company, as the case may be). The
respective rights and obligations of the Parties hereunder, including, without
limitation, Section 4(d) (Supplemental Award), Section 7 (protection of
confidential information and company property), Section 8 (additional
covenants), Section 9 (injunctive and other relief), Section 10 (cooperation),
Section 13 (indemnification and liability insurance) and Section 14 (resolution
of disputes), shall survive any expiration of the Term, including expiration
thereof upon the Executive's termination of employment for whatever reason, to
the extent necessary to the intended preservation of such rights and
obligations.

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

               (c) This Agreement shall be binding upon and inure to the benefit
of the Parties and their respective successors, heirs (in the case of the
Executive) and assigns. For purposes of this Section 17(c), a successor to the
Company shall be limited to an entity which shall have acquired all or
substantially all of the business and/or assets of the Company and shall have
assumed (whether by agreement or operation of law) the Company's rights and
obligations under this Agreement. No rights or obligations of the Executive
under this Agreement may be assigned or transferred by the Executive other than
his rights to compensation and benefits, which may be transferred only by will,
operation of law or in accordance with this clause (c). The Executive shall be
entitled, to the extent permitted under applicable plans, agreements or law, to
select and change a beneficiary or beneficiaries to receive any compensation or
benefit payable hereunder following the Executive's death by giving the Company
written notice thereof. In the event of the Executive's death or a judicial
determination of his incompetence, reference

                                       18


in this Agreement to the Executive shall be deemed, where appropriate, to refer
to his beneficiary, estate or other legal representative.

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

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

               (f) This Agreement may be executed in two or more counterparts.


                               [Signatures on next


                                       19



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



                                    THE WARNACO GROUP, INC.



                                    By:    /s/ Joseph R. Gromek
                                        ---------------------------------
                                    Name:  Joseph R. Gromek
                                    Title: President and Chief Executive Officer



                                    THE EXECUTIVE


                                    /s/ Jay A. Galluzzo
                                    -------------------------------------
                                    Jay A. Galluzzo


                                       20



                                                                       EXHIBIT A

                         AGREEMENT AND RELEASE OF CLAIMS


         THIS AGREEMENT AND RELEASE is executed by JAY A. GALLUZZO (the
"Executive") as of the date hereof.

         WHEREAS, the Executive and The Warnaco Group, Inc. (the "Company")
entered into an employment agreement dated August 11, 2005 (the "Employment
Agreement");

         WHEREAS, the Executive has certain entitlements pursuant to the
Employment Agreement subject to the Executive's executing this Agreement and
Release and complying with its terms.

         NOW, THEREFORE, in consideration of the payments set forth in Section 6
of the Employment Agreement and other good and valuable consideration, the
Executive agrees as follows:

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

                                       21


Sections 6, 11 and 13 of the Employment Agreement, (iii) any right or claim the
Executive may have to benefits or equity awards that have accrued or vested as
of the Date of Termination or any right pursuant to any qualified retirement
plan or (iv) any right the Executive may have to be indemnified by the Company
to the extent such indemnification by the Company or any Affiliate is permitted
by applicable law or the Company's by-laws.

         The Executive agrees that he shall continue to be bound by, and will
comply with, the provisions of Sections 7, 8, 10 and 14 of the Employment
Agreement and the provisions of such sections, along with Section 9 of the
Employment Agreement, shall be incorporated fully into this Agreement and
Release.

         The Executive acknowledges that he has been provided a period of at
least 21 calendar days (45 calendar days in the case of any termination covered
by Section 7(f)(1)(F)(ii) of ADEA) in which to consider and execute this
Agreement and Release. The Executive further acknowledges and understands that
he has seven calendar days from the date on which he executes this Agreement and
Release to revoke his acceptance by delivering to the Company written
notification of his intention to revoke this Agreement and Release in accordance
with Section 15 of the Employment Agreement. This Agreement and Release becomes
effective when signed unless revoked in writing and in accordance with this
seven-day provision. To the extent that the Executive has not otherwise done so,
the Executive is advised to consult with an attorney prior to executing this
Agreement and Release.

         This Agreement and Release shall be governed by and construed and
interpreted in accordance with the laws of New York without reference to
principles of conflicts of law. Capitalized terms, unless defined herein, shall
have the meaning ascribed to such terms in the Employment Agreement.

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


                                                    ----------------------------
                                                    Jay A. Galluzzo

                                                    Date:
                                                         -----------------------


                                       22
EX-10.4 7 file005.htm AMENDMENT TO EMPLOYMENT AGREEMENT 



                        AMENDMENT TO EMPLOYMENT AGREEMENT

     This Agreement, made and entered into as of August 11, 2005 by and between
The Warnaco Group, Inc., a Delaware corporation (together with its subsidiaries,
divisions and affiliates, the "Company"), and Lawrence Rutkowski ("you"), amends
the letter agreement relating to your employment with the Company dated as of
September 11, 2003 (the "Employment Agreement"). Except as otherwise stated
herein, all definitions used in this Amendment shall have the meaning ascribed
to such term in the Employment Agreement.

     In consideration of the premises contained herein and for other good and
valuable consideration, the receipt of which is mutually acknowledged, the
Company and you agree as follows:

     1. Paragraph 3 of the Employment Agreement is amended by adding a new
clause (d) as follows:

          "d.  During the Term beginning with fiscal year 2005, provided you are
               employed by the Company, you shall be entitled to an annual award
               with an aggregate grant date value equal to 8% of the sum of Base
               Salary plus Annual Bonus as defined in this paragraph 3(d) if you
               will be less than age 50 by the end of the applicable fiscal
               year, 10% of such amount if you will be age 50 and over and less
               than age 60 at the end of the applicable fiscal year and 13% of
               such amount if you will be age 60 or older by the end of the
               applicable fiscal year ("Supplemental Award"), with the first
               such award being made no later than 60 days after the Effective
               Date. For this purpose, Base Salary shall be the Base Salary paid
               to you for the fiscal year prior to the award year and Annual
               Bonus shall be the annual bonus awarded to you by the Board for
               such fiscal year. The Supplemental Award shall not be awarded to
               you until after the determination by the Board of your annual
               bonus for the prior fiscal year (but in no event later than 60
               days thereafter for any award made after fiscal year 2005) and
               50% of the value of the Supplemental Award shall be awarded in
               the form of restricted shares pursuant to the applicable Stock
               Incentive Plan ("Career Shares") and 50% shall be awarded in the
               form of a credit to a bookkeeping account maintained by the
               Company for your account (the "Notional Account"). Any Career
               Shares awarded hereunder shall be governed by the applicable
               Stock Incentive Plan and, if applicable, any award agreement. For
               purposes of this paragraph 3(d), each Career Share shall be
               valued at the closing price of a share of the Company's common
               stock ("Share") on the date that the Supplemental Award is made.
               For the Notional Account, the Company shall select the investment
               alternatives available to you under the Company's 401(k) plan.
               The balance in the Notional Account shall periodically be
               credited (or debited) with the deemed positive (or negative)
               return based on returns of the permissible investment alternative
               or alternatives under the Company's 401(k) plan as selected in
               advance by you (and


                                       1



               in accordance with the applicable rules of such plan or
               investment alternative) to apply to such Notional Account, with
               such deemed returns calculated in the same manner and at the same
               times as the return on such investment alternative(s). The
               Company's obligation to pay the amount credited to the Notional
               Account, including any return thereon provided for in this
               paragraph 3(d), shall be an unfunded obligation to be satisfied
               from the general funds of the Company. Except as otherwise
               provided in paragraphs 6 or 8 below or the applicable Stock
               Incentive Plan and provided that you are employed by the Company
               on such vesting date, any Supplemental Award granted in the form
               of Career Shares will vest as follows: 50% of the Career Shares
               will vest on the earlier of your 62nd birthday or upon your
               obtaining 15 years of "Vesting Service" and 100% of the Career
               Shares will vest on the earliest of (i) your 65th birthday, (ii)
               upon your obtaining 20 years of "Vesting Service" or (iii) 10th
               anniversary of the date of grant. Except as otherwise provided in
               paragraphs 6 or 8 below, and provided that you are employed by
               the Company on such vesting date, any Supplemental Award granted
               as a credit to the Notional Account (as adjusted for any returns
               thereon) ("Adjusted Notional Account")) shall vest as follows:
               50% on the earlier of your 62nd birthday or upon your obtaining 5
               years of "Vesting Service" and 100% on the earlier of the your
               65th birthday and upon your obtaining 10 years of "Vesting
               Service". For purposes of this paragraph 3(d), "Vesting Service"
               shall mean the period of time that you are employed by the
               Company as an executive officer. Subject to paragraph 27 hereof,
               upon vesting the Career Shares will be delivered to you in the
               form of Shares. The vested balance in the Adjusted Notional
               Account shall not be distributed to you until you cease to be an
               employee of the Company and, at such time, shall only be
               distributed at the earliest time that satisfies the requirements
               of this paragraph 3(d). Except as otherwise provided in
               paragraphs 6 or 8 hereof, if your employment is terminated for
               any reason, any unvested Supplemental Awards (whether in the form
               of Career Shares or the Adjusted Notional Account) shall be
               forfeited and any vested balance in the Adjusted Notional
               Account, subject to paragraph 27 hereof, shall be paid to you in
               a cash lump-sum payment immediately following your "separation
               from service," as defined by Section 409A(a)(2)(A)(i) of the
               Internal Revenue Code of 1986, as amended (the "Code"), with the
               Company; provided, however, that, except in the case of your
               death, if at the time of such separation from service you are a
               "specified employee," as defined in Section 409A(a)(2)(B)(i) of
               the Code, such distribution shall not be made until at least six
               months after the date of such separation from service; provided,
               further, that if your employment is terminated due to Disability
               and such Disability satisfies the requirements of Section
               409A(a)(2)(C) of the Code, then such distribution may be made
               upon termination without regard as to whether you were a
               "specified employee" at such time. The provisions of this
               paragraph 3(d) shall survive expiration or termination of the
               Term."


                                       2



     2. Paragraph 6 of the Employment Agreement is amended by adding a new
clause (e) as follows:

          "e.  Immediate vesting as of the Date of Termination of 50% of any
               previously granted Supplemental Award that remains unvested as of
               the Date of Termination, payable in accordance with paragraph
               3(d) above."

     3. Paragraph 8 of the Employment Agreement is amended as follows:

          (a)  Deleting paragraph 8(b) in its entirety and replacing it with the
               following:

               "b.  Payment of an amount equal to 2 times the sum of (a) Base
                    Salary plus (b) Target Bonus, payable in a lump sum as soon
                    as practicable following the Date of Termination (but in no
                    event later than 60 days following such date)."

          (b)  Deleting paragraph 8(c) in its entirety and replacing it with the
               following:

               "c.  A pro-rata Target Bonus for the year of termination,
                    determined by multiplying the Target Bonus by a fraction,
                    the numerator of which is the number of days that you were
                    employed by the Company during the year in which the Date of
                    Termination occurs and the denominator of which is 365,
                    payable in a lump sum as soon as practicable following the
                    Date of Termination (but in no event later than 60 days
                    following such date)."

          (c)  Amending paragraph 8(d) by adding the following at the end of
               such paragraph:

               "and immediate vesting as of the Date of Termination of all other
               outstanding equity awards (other than Career Shares), with any
               stock options granted on or after the Amendment Date remaining
               exercisable for 24 months following the Date of Termination or
               the remainder of the option term, if shorter."

          (d)  Renumbering paragraph 8(e), 8(f) and 8(g) to be paragraphs 8(f),
               8(g) and 8(h), respectively, and amending the new paragraph 8(f)
               by replacing "12" with "24".

          (e)  Adding a new paragraph 8(e) as follows:

               "e.  Immediate vesting as of the Date of Termination of any
                    previously granted Supplemental Award, payable in accordance
                    with paragraph 3(d) above."


                                       3



     4. Paragraph 23 of the Employment Agreement is amended by adding the
following provision at the end of such paragraph:

          "Notwithstanding the foregoing, in 2005, the Company shall have the
          right to modify any provision of this Agreement (or, if requested by
          you, shall make such modification), including, without limitation,
          paragraph 3 and paragraphs 5 through 9 hereof, if, and only to the
          extent that, such modification shall be required, in the reasonable
          opinion of the Company's and/or your counsel, to comply with Section
          409A of the Code or any regulations or similar guidance issued by the
          Treasury or the Internal Revenue Service with respect to Code Section
          409A."

     5. A new paragraph 28 is added to the Employment Agreement as follows:

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

     6. A new paragraph 29 is added to the Employment Agreement as follows:

          "29.

          a.   If any amount, entitlement, or benefit paid or payable to you or
               provided for your benefit under this agreement and under any
               other agreement, plan or program of the Company (such payments,
               entitlements and benefits referred to as a "Payment") is subject
               to the excise tax imposed under Section 4999 of the Code or any
               similar federal or state law (an "Excise Tax"), then
               notwithstanding anything contained in this agreement to the
               contrary, to the extent that any or all Payments would be subject
               to the imposition of an Excise Tax, the Payments shall be reduced
               (but not below


                                       4



               zero) if and to the extent that such reduction would result in
               your retaining a larger amount, on an after-tax basis (taking
               into account federal, state and local income taxes and the
               imposition of the Excise Tax), than if you received all of the
               Payments (such reduced amount is hereinafter referred to as the
               "Limited Payment Amount"). Unless you give prior written notice
               specifying a different order to the Company to effectuate the
               limitations described in the preceding sentence, the Company
               shall reduce or eliminate the Payments, by first reducing or
               eliminating those payments or benefits which are not payable in
               cash and then by reducing or eliminating cash payments, in each
               case in reverse order beginning with payments or benefits which
               are to be paid the farthest in time from the Determination (as
               defined below). Any notice given by you pursuant to the preceding
               sentence shall take precedence over the provisions of any other
               plan, arrangement or agreement, including, but not limited to,
               the other provisions of this agreement, governing your rights and
               entitlements to any compensation, entitlement or benefit.

          b.   All calculations under this paragraph 29 shall be made by a
               nationally recognized accounting firm designated by the Company
               and reasonably acceptable to you (other than the accounting firm
               that is regularly engaged by any party who has effectuated a
               Change in Control) (the "Accounting Firm"). The Company shall pay
               all fees and expenses of such Accounting Firm. The Accounting
               Firm shall provide its calculations, together with detailed
               supporting documentation, both to the Company and you within 45
               days after the Change in Control or the Date of Termination,
               whichever is later (or such earlier time as is requested by the
               Company) and, with respect to the Limited Payment Amount, shall
               deliver its opinion to you that you are not required to report
               any Excise Tax on your federal income tax return with respect to
               the Limited Payment Amount (collectively, the "Determination").
               Within 5 days of your receipt of the Determination, you shall
               have the right to dispute the Determination (the "Dispute"). The
               existence of the Dispute shall not in any way affect your right
               to receive the Payments in accordance with the Determination. If
               there is no Dispute, the Determination by the Accounting Firm
               shall be final binding and conclusive upon the Company and you
               (except as provided in clause (c) below).

          c.   If, after the Payments have been made to you, it is established
               that the Payments made to you, or provided for your benefit,
               exceed the limitations provided in clause (a) above (an "Excess
               Payment") or are less than such limitations (an "Underpayment"),
               as the case may be, then the provisions of this clause (c) shall
               apply. If it is established pursuant to a final determination of
               a court or an Internal Revenue Service (the "IRS") proceeding
               which has been finally and conclusively resolved, that an Excess
               Payment has been made, you shall repay the Excess Payment to the


                                       5



               Company on demand. In the event that it is determined by (i) the
               Accounting Firm, the Company (which shall include the position
               taken by the Company, or together with its consolidated group, on
               its federal income tax return) or the IRS, (ii) pursuant to a
               determination by a court, or (iii) upon the resolution to your
               satisfaction of the Dispute, that an Underpayment has occurred,
               the Company shall pay an amount equal to the Underpayment to you
               within 10 days of such determination or resolution together with
               interest on such amount at the applicable federal short-term
               rate, as defined under Section 1274(d) of the Code and as in
               effect on the first date that such amount should have been paid
               to you under this agreement, from such date until the date that
               such Underpayment is made to you."

     7. Exhibit A to the Employment Agreement is amended as follows:

          (a)  By adding the following new definition:

               "Amendment Date" shall mean August 11, 2005.

          (b)  By deleting the definition of "Change in Control" in its entirety
               and replacing it with the following definition:

               "Change in Control" shall mean any of the following:

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

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

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

               For purposes of this Change in Control definition, "Voting Stock"
               shall mean the capital stock of any class or classes having
               general voting power,


                                       6



               in the absence of specified contingencies, to elect the directors
               of the Company."

     This Amendment contains the entire understanding and agreement between the
parties concerning the subject matter hereof and, as of the Amendment Date,
shall supersede all prior agreements, understandings, discussions, negotiations
and undertakings, whether written or oral, between the parties with respect to
any non-qualified retirement or pension benefits or any benefits upon or
following a Change in Control. Except as otherwise provided herein, the
Employment Agreement remains in full force and effect.

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

                                   THE WARNACO GROUP, INC.


                                   By:   /s/ Joseph R. Gromek
                                       -----------------------------------------
                                   Name: Joseph R. Gromek
                                   Title: President and Chief Executive Officer

                                   THE EXECUTIVE

                                   /s/ Lawrence Rutkowski
                                   ---------------------------------------------
                                   Lawrence Rutkowski


                                        7
EX-10.5 8 file006.htm AMENDMENT TO EMPLOYMENT AGREEMENT 



                        AMENDMENT TO EMPLOYMENT AGREEMENT

     This Agreement, made and entered into as of August 11, 2005 by and between
The Warnaco Group, Inc., a Delaware corporation (together with its subsidiaries,
divisions and affiliates, the "Company"), and Frank Tworecke ("you"), amends the
letter agreement relating to your employment with the Company dated as of April
21, 2004 (the "Employment Agreement"). Except as otherwise stated herein, all
definitions used in this Amendment shall have the meaning ascribed to such term
in the Employment Agreement.

     In consideration of the premises contained herein and for other good and
valuable consideration, the receipt of which is mutually acknowledged, the
Company and you agree as follows:

     1. Paragraph 3 of the Employment Agreement is amended by adding a new
clause (d) and (e) as follows:

          "d.  During the Term beginning with fiscal year 2005, provided you are
               employed by the Company, you shall be entitled to an annual award
               with an aggregate grant date value equal to 10% of the sum of
               Base Salary plus Annual Bonus as defined in this paragraph 3(d)
               if you will be less than age 60 by the end of the applicable
               fiscal year and 13% of such amount if you will be age 60 or older
               by the end of the applicable fiscal year ("Supplemental Award"),
               with the first such award being made no later than 60 days after
               the Effective Date. For this purpose, Base Salary shall be the
               Base Salary paid to you for the fiscal year prior to the award
               year and Annual Bonus shall be the annual bonus awarded to you by
               the Board for such fiscal year. The Supplemental Award shall not
               be awarded to you until after the determination by the Board of
               your annual bonus for the prior fiscal year (but in no event
               later than 60 days thereafter for any award made after fiscal
               year 2005) and 50% of the value of the Supplemental Award shall
               be awarded in the form of restricted shares pursuant to the
               applicable Stock Incentive Plan ("Career Shares") and 50% shall
               be awarded in the form of a credit to a bookkeeping account
               maintained by the Company for your account (the "Notional
               Account"). Any Career Shares awarded hereunder shall be governed
               by the applicable Stock Incentive Plan and, if applicable, any
               award agreement. For purposes of this paragraph 3(d), each Career
               Share shall be valued at the closing price of a share of the
               Company's common stock ("Share") on the date that the
               Supplemental Award is made. For the Notional Account, the Company
               shall select the investment alternatives available to you under
               the Company's 401(k) plan. The balance in the Notional Account
               shall periodically be credited (or debited) with the deemed
               positive (or negative) return based on returns of the permissible
               investment alternative or alternatives under the Company's 401(k)
               plan as selected in advance by you (and in accordance with the
               applicable rules of such plan or investment alternative) to apply
               to such Notional Account, with such


                                        1



               deemed returns calculated in the same manner and at the same
               times as the return on such investment alternative(s). The
               Company's obligation to pay the amount credited to the Notional
               Account, including any return thereon provided for in this
               paragraph 3(d), shall be an unfunded obligation to be satisfied
               from the general funds of the Company. Except as otherwise
               provided in paragraphs 6 or 8 below or the applicable Stock
               Incentive Plan and provided that you are employed by the Company
               on such vesting date, any Supplemental Award granted in the form
               of Career Shares will vest as follows: 50% of the Career Shares
               will vest on the earlier of your 62nd birthday or upon your
               obtaining 15 years of "Vesting Service" and 100% of the Career
               Shares will vest on the earliest of (i) your 65th birthday, (ii)
               upon your obtaining 20 years of "Vesting Service" or (iii) 10th
               anniversary of the date of grant. Except as otherwise provided in
               paragraphs 6 or 8 below, and provided that you are employed by
               the Company on such vesting date, any Supplemental Award granted
               as a credit to the Notional Account (as adjusted for any returns
               thereon) ("Adjusted Notional Account")) shall vest as follows:
               50% on the earlier of your 62nd birthday or upon your obtaining 5
               years of "Vesting Service" and 100% on the earlier of the your
               65th birthday and upon your obtaining 10 years of "Vesting
               Service". For purposes of this paragraph 3(d), "Vesting Service"
               shall mean the period of time that you are employed by the
               Company as an executive officer. Subject to paragraph 27 hereof,
               upon vesting the Career Shares will be delivered to you in the
               form of Shares. The vested balance in the Adjusted Notional
               Account shall not be distributed to you until you cease to be an
               employee of the Company and, at such time, shall only be
               distributed at the earliest time that satisfies the requirements
               of this paragraph 3(d). Except as otherwise provided in
               paragraphs 6 or 8 hereof, if your employment is terminated for
               any reason, any unvested Supplemental Awards (whether in the form
               of Career Shares or the Adjusted Notional Account) shall be
               forfeited and any vested balance in the Adjusted Notional
               Account, subject to paragraph 27 hereof, shall be paid to you in
               a cash lump-sum payment immediately following your "separation
               from service," as defined by Section 409A(a)(2)(A)(i) of the
               Internal Revenue Code of 1986, as amended (the "Code"), with the
               Company; provided, however, that, except in the case of your
               death, if at the time of such separation from service you are a
               "specified employee," as defined in Section 409A(a)(2)(B)(i) of
               the Code, such distribution shall not be made until at least six
               months after the date of such separation from service; provided,
               further, that if your employment is terminated due to Disability
               and such Disability satisfies the requirements of Section
               409A(a)(2)(C) of the Code, then such distribution may be made
               upon termination without regard as to whether you were a
               "specified employee" at such time. The provisions of this
               paragraph 3(d) shall survive expiration or termination of the
               Term.

          e.   If you remain actively employed with the Company until the fifth
               anniversary of the date you commenced employment with the Company
               then following termination of your employment with the Company
               (other than for Cause), the Company will pay you an amount
               annually in equal monthly


                                        2



               installments equal to $75,000 minus the "Value of the
               Supplemental Awards," with the first installment being paid
               within 30 days of your date of termination until the earlier to
               occur of (i) your death or (ii) the fifteenth anniversary of your
               date of termination; provided that if at the time you terminate
               employment you are a "specified employee," as defined in Section
               409A(a)(2)(B)(i) of the Code, the first such payment shall not be
               made until at least six months after your date of termination
               and, at such time, you shall receive a lump-sum amount equal to
               the amount of the installments that would otherwise have been
               made during this six-month period. Notwithstanding the foregoing,
               the amount payable hereunder shall be pro-rated for the year of
               termination and the year in which you die based on the number of
               days that elapsed in such year after your date of termination or
               prior to your date of death, as the case may be. The "Value of
               the Supplemental Awards" shall equal (x) the number of vested
               Career Shares as of your date of termination multiplied by the
               applicable "Share Price" plus (y) the Adjusted Notional Account
               balance as of your date of termination, (z) divided by 9.75. For
               purposes of this paragraph 3(e), "Share Price" shall mean (a) for
               any vested Career Shares for which the Share was sold prior to
               the date you terminate employment, the sale price for such Share,
               with such price increased by 7/12ths of 1% per month from the
               date of sale to your date of termination and (b) for any vested
               Career Share for which the Share has not been sold prior to your
               date of termination, the closing price of the Share on the date
               you terminate employment. The provisions of this paragraph 3(e)
               shall survive expiration or termination of the Term."

     2. Paragraph 6 of the Employment Agreement is amended by adding a new
clause (e) as follows:

          "e.  Immediate vesting as of the Date of Termination of 50% of any
               previously granted Supplemental Award that remains unvested as of
               the Date of Termination, payable in accordance with paragraph
               3(d) above."

     3. Paragraph 8 of the Employment Agreement is amended as follows:

          (a)  Deleting paragraph 8(b) in its entirety and replacing it with the
               following:

               "b.  Payment of an amount equal to 2 times the sum of (a) Base
                    Salary plus (b) Target Bonus, payable in a lump sum as soon
                    as practicable following the Date of Termination (but in no
                    event later than 60 days following such date)."

          (b)  Deleting paragraph 8(c) in its entirety and replacing it with the
               following:

               "c.  A pro-rata Target Bonus for the year of termination,
                    determined by multiplying the Target Bonus by a fraction,
                    the numerator of which is the number of days that you were
                    employed by the Company during the year in which the Date of
                    Termination occurs and the


                                        3



                    denominator of which is 365, payable in a lump sum as soon
                    as practicable following the Date of Termination (but in no
                    event later than 60 days following such date)."

          (c)  Amending paragraph 8(d) by adding the following at the end of
               such paragraph:

               "and immediate vesting as of the Date of Termination of all other
               outstanding equity awards (other than Career Shares), with any
               stock options granted on or after the Amendment Date remaining
               exercisable for 24 months following the Date of Termination or
               the remainder of the option term, if shorter."

          (d)  Renumbering paragraph 8(e), 8(f) and 8(g) to be paragraphs 8(f),
               8(g) and 8(h), respectively, and amending the new paragraph 8(f)
               by replacing "18" with "24".

          (e)  Adding a new paragraph 8(e) as follows:

               "e.  Immediate vesting as of the Date of Termination of any
                    previously granted Supplemental Award, payable in accordance
                    with paragraph 3(d) above."

     4. Paragraph 23 of the Employment Agreement is amended by adding the
following provision at the end of such paragraph:

          "Notwithstanding the foregoing, in 2005, the Company shall have the
          right to modify any provision of this Agreement (or, if requested by
          you, shall make such modification), including, without limitation,
          paragraph 3 and paragraphs 5 through 9 hereof, if, and only to the
          extent that, such modification shall be required, in the reasonable
          opinion of the Company's and/or your counsel, to comply with Section
          409A of the Code or any regulations or similar guidance issued by the
          Treasury or the Internal Revenue Service with respect to Code Section
          409A."

     5. A new paragraph 28 is added to the Employment Agreement as follows:

          "28. The Company hereby agrees during, and after termination of, your
               employment to indemnify you and hold you harmless, both during
               the Term and thereafter, to the fullest extent permitted by law
               and under the certificate of incorporation and by-laws of the
               Company against and in respect of any and all actions, suits,
               proceedings, claims, demands, judgments, costs, expenses
               (including reasonable attorneys' fees), losses, amounts paid in
               settlement to the extent approved by the Company, and damages
               resulting from your good faith performance of your duties as an
               officer or director of the Company or any affiliate of the
               Company. The


                                        4



               Company shall reimburse you for expenses incurred by you in
               connection with any proceeding hereunder upon your written
               request for such reimbursement and your submission of the
               appropriate documentation associated with these expenses. Such
               request shall include an undertaking by you to repay the amount
               of such advance or reimbursement if it shall ultimately be
               determined that you are not entitled to be indemnified hereunder
               against such costs and expenses. The Company shall use
               commercially reasonable efforts to obtain and maintain directors'
               and officers' liability insurance covering you to the same extent
               as the Company covers its other officers and directors."

     6. A new paragraph 29 is added to the Employment Agreement as follows:

          "29.

          a.   If any amount, entitlement, or benefit paid or payable to you or
               provided for your benefit under this agreement and under any
               other agreement, plan or program of the Company (such payments,
               entitlements and benefits referred to as a "Payment") is subject
               to the excise tax imposed under Section 4999 of the Code or any
               similar federal or state law (an "Excise Tax"), then
               notwithstanding anything contained in this agreement to the
               contrary, to the extent that any or all Payments would be subject
               to the imposition of an Excise Tax, the Payments shall be reduced
               (but not below zero) if and to the extent that such reduction
               would result in your retaining a larger amount, on an after-tax
               basis (taking into account federal, state and local income taxes
               and the imposition of the Excise Tax), than if you received all
               of the Payments (such reduced amount is hereinafter referred to
               as the "Limited Payment Amount"). Unless you give prior written
               notice specifying a different order to the Company to effectuate
               the limitations described in the preceding sentence, the Company
               shall reduce or eliminate the Payments, by first reducing or
               eliminating those payments or benefits which are not payable in
               cash and then by reducing or eliminating cash payments, in each
               case in reverse order beginning with payments or benefits which
               are to be paid the farthest in time from the Determination (as
               defined below). Any notice given by you pursuant to the preceding
               sentence shall take precedence over the provisions of any other
               plan, arrangement or agreement, including, but not limited to,
               the other provisions of this agreement, governing your rights and
               entitlements to any compensation, entitlement or benefit.

          b.   All calculations under this paragraph 29 shall be made by a
               nationally recognized accounting firm designated by the Company
               and reasonably acceptable to you (other than the accounting firm
               that is regularly engaged by any party who has effectuated a
               Change in Control) (the "Accounting Firm"). The Company shall pay
               all fees and expenses of such Accounting


                                        5



               Firm. The Accounting Firm shall provide its calculations,
               together with detailed supporting documentation, both to the
               Company and you within 45 days after the Change in Control or the
               Date of Termination, whichever is later (or such earlier time as
               is requested by the Company) and, with respect to the Limited
               Payment Amount, shall deliver its opinion to you that you are not
               required to report any Excise Tax on your federal income tax
               return with respect to the Limited Payment Amount (collectively,
               the "Determination"). Within 5 days of your receipt of the
               Determination, you shall have the right to dispute the
               Determination (the "Dispute"). The existence of the Dispute shall
               not in any way affect your right to receive the Payments in
               accordance with the Determination. If there is no Dispute, the
               Determination by the Accounting Firm shall be final binding and
               conclusive upon the Company and you (except as provided in clause
               (c) below).

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

     7. Exhibit A to the Employment Agreement is amended as follows:

          (a)  By adding the following new definition:

               "AMENDMENT DATE" shall mean August 11, 2005.

          (b)  By deleting the definition of "CHANGE IN CONTROL" in its entirety
               and replacing it with the following definition:


                                        6



               "CHANGE IN CONTROL" shall mean any of the following:

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

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

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

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

     This Amendment contains the entire understanding and agreement between the
parties concerning the subject matter hereof and, as of the Amendment Date,
shall supersede all prior agreements, understandings, discussions, negotiations
and undertakings, whether written or oral, between the parties with respect to
any non-qualified retirement or pension benefits or any benefits upon or
following a Change in Control, including, without limitation, the letter
agreement between the Company and you dated as of April 16, 2004 relating to a
certain retirement benefit. Except as otherwise provided herein, the Employment
Agreement remains in full force and effect.


                                        7



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

                                        THE WARNACO GROUP, INC.


                                        By:    /s/ Joseph R. Gromek
                                            ------------------------------------
                                        Name:  Joseph R. Gromek
                                        Title: President and Chief Executive
                                               Officer

                                        THE EXECUTIVE

                                        /s/ Frank Tworecke
                                        ----------------------------------------
                                        Frank Tworecke


                                        8
EX-10.6 9 file007.htm AMENDMENT TO EMPLOYMENT AGREEMENT 



                        AMENDMENT TO EMPLOYMENT AGREEMENT

     This Agreement, made and entered into as of August 11, 2005 by and between
The Warnaco Group, Inc., a Delaware corporation (together with its subsidiaries,
divisions and affiliates, the "Company"), and Dwight Meyer ("you"), amends the
letter agreement relating to your employment with the Company dated as of April
6, 2005 (the "Employment Agreement"). Except as otherwise stated herein, all
definitions used in this Amendment shall have the meaning ascribed to such term
in the Employment Agreement.

     In consideration of the premises contained herein and for other good and
valuable consideration, the receipt of which is mutually acknowledged, the
Company and you agree as follows:

     1. Paragraph 3 of the Employment Agreement is amended by adding a new
clause (d) as follows:

          "d.  During the Term beginning with fiscal year 2005, provided you are
               employed by the Company, you shall be entitled to an annual award
               with an aggregate grant date value equal to 10% of the sum of
               Base Salary plus Annual Bonus as defined in this paragraph 3(d)
               if you will be less than age 60 by the end of the applicable
               fiscal year and 13% of such amount if you will be age 60 or older
               by the end of the applicable fiscal year ("Supplemental Award"),
               with the first such award being made no later than 60 days after
               the Effective Date. For this purpose, Base Salary shall be the
               Base Salary paid to you for the fiscal year prior to the award
               year and Annual Bonus shall be the annual bonus awarded to you by
               the Board for such fiscal year. The Supplemental Award shall not
               be awarded to you until after the determination by the Board of
               your annual bonus for the prior fiscal year (but in no event
               later than 60 days thereafter for any award made after fiscal
               year 2005) and 50% of the value of the Supplemental Award shall
               be awarded in the form of restricted shares pursuant to the
               applicable Stock Incentive Plan ("Career Shares") and 50% shall
               be awarded in the form of a credit to a bookkeeping account
               maintained by the Company for your account (the "Notional
               Account"). Any Career Shares awarded hereunder shall be governed
               by the applicable Stock Incentive Plan and, if applicable, any
               award agreement. For purposes of this paragraph 3(d), each Career
               Share shall be valued at the closing price of a share of the
               Company's common stock ("Share") on the date that the
               Supplemental Award is made. For the Notional Account, the Company
               shall select the investment alternatives available to you under
               the Company's 401(k) plan. The balance in the Notional Account
               shall periodically be credited (or debited) with the deemed
               positive (or negative) return based on returns of the permissible
               investment alternative or alternatives under the Company's 401(k)
               plan as selected in advance by you (and in accordance with the
               applicable rules of such plan or investment alternative) to apply
               to such Notional Account, with such


                                       1



               deemed returns calculated in the same manner and at the same
               times as the return on such investment alternative(s). The
               Company's obligation to pay the amount credited to the Notional
               Account, including any return thereon provided for in this
               paragraph 3(d), shall be an unfunded obligation to be satisfied
               from the general funds of the Company. Except as otherwise
               provided in paragraphs 6 or 8 below or the applicable Stock
               Incentive Plan and provided that you are employed by the Company
               on such vesting date, any Supplemental Award granted in the form
               of Career Shares will vest as follows: 50% of the Career Shares
               will vest on the earlier of your 62nd birthday or upon your
               obtaining 15 years of "Vesting Service" and 100% of the Career
               Shares will vest on the earliest of (i) your 65th birthday, (ii)
               upon your obtaining 20 years of "Vesting Service" or (iii) 10th
               anniversary of the date of grant. Except as otherwise provided in
               paragraphs 6 or 8 below, and provided that you are employed by
               the Company on such vesting date, any Supplemental Award granted
               as a credit to the Notional Account (as adjusted for any returns
               thereon) ("Adjusted Notional Account")) shall vest as follows:
               50% on the earlier of your 62nd birthday or upon your obtaining 5
               years of "Vesting Service" and 100% on the earlier of the your
               65th birthday and upon your obtaining 10 years of "Vesting
               Service". For purposes of this paragraph 3(d), "Vesting Service"
               shall mean the period of time that you are employed by the
               Company as an executive officer. Subject to paragraph 27 hereof,
               upon vesting the Career Shares will be delivered to you in the
               form of Shares. The vested balance in the Adjusted Notional
               Account shall not be distributed to you until you cease to be an
               employee of the Company and, at such time, shall only be
               distributed at the earliest time that satisfies the requirements
               of this paragraph 3(d). Except as otherwise provided in
               paragraphs 6 or 8 hereof, if your employment is terminated for
               any reason, any unvested Supplemental Awards (whether in the form
               of Career Shares or the Adjusted Notional Account) shall be
               forfeited and any vested balance in the Adjusted Notional
               Account, subject to paragraph 27 hereof, shall be paid to you in
               a cash lump-sum payment immediately following your "separation
               from service," as defined by Section 409A(a)(2)(A)(i) of the
               Internal Revenue Code of 1986, as amended (the "Code"), with the
               Company; provided, however, that, except in the case of your
               death, if at the time of such separation from service you are a
               "specified employee," as defined in Section 409A(a)(2)(B)(i) of
               the Code, such distribution shall not be made until at least six
               months after the date of such separation from service; provided,
               further, that if your employment is terminated due to Disability
               and such Disability satisfies the requirements of Section
               409A(a)(2)(C) of the Code, then such distribution may be made
               upon termination without regard as to whether you were a
               "specified employee" at such time. The provisions of this
               paragraph 3(d) shall survive expiration or termination of the
               Term."

     2. Paragraph 6 of the Employment Agreement is amended by adding a new
clause (e) as follows:


                                       2



          "e.  Immediate vesting as of the Date of Termination of 50% of any
               previously granted Supplemental Award that remains unvested as of
               the Date of Termination, payable in accordance with paragraph
               3(d) above."

     3. Paragraph 8 of the Employment Agreement is amended as follows:

          (a)  Deleting paragraph 8(b) in its entirety and replacing it with the
               following:

               "b.  Payment of an amount equal to the greater of (x) the sum of
                    Base Salary plus Target Bonus divided by 12, with such
                    amount then multiplied by the number of months (including
                    any partial months) remaining in the Term (without regard to
                    the earlier termination thereof) or (y) 2 times the sum of
                    (a) Base Salary plus (b) Target Bonus, payable in a lump sum
                    as soon as practicable following the Date of Termination
                    (but in no event later than 60 days following such date)."

          (b)  Deleting paragraph 8(c) in its entirety and replacing it with the
               following:

               "c.  A pro-rata Target Bonus for the year of termination,
                    determined by multiplying the Target Bonus by a fraction,
                    the numerator of which is the number of days that you were
                    employed by the Company during the year in which the Date of
                    Termination occurs and the denominator of which is 365,
                    payable in a lump sum as soon as practicable following the
                    Date of Termination (but in no event later than 60 days
                    following such date)."

          (c)  Amending paragraph 8(d) by adding the following at the end of
               such paragraph:

               "and immediate vesting as of the Date of Termination of all other
               outstanding equity awards (other than Career Shares), with any
               stock options granted on or after the Amendment Date remaining
               exercisable for 24 months following the Date of Termination or
               the remainder of the option term, if shorter."

          (d)  Renumbering paragraph 8(e), 8(f) and 8(g) to be paragraphs 8(f),
               8(g) and 8(h), respectively, and amending the new paragraph 8(f)
               by replacing "12" with "24".

          (e)  Adding a new paragraph 8(e) as follows:

               "e.  Immediate vesting as of the Date of Termination of any
                    previously granted Supplemental Award, payable in accordance
                    with paragraph 3(d) above."


                                       3



     4. Paragraph 23 of the Employment Agreement is amended by adding the
following provision at the end of such paragraph:

          "Notwithstanding the foregoing, in 2005, the Company shall have the
          right to modify any provision of this Agreement (or, if requested by
          you, shall make such modification), including, without limitation,
          paragraph 3 and paragraphs 5 through 9 hereof, if, and only to the
          extent that, such modification shall be required, in the reasonable
          opinion of the Company's and/or your counsel, to comply with Section
          409A of the Code or any regulations or similar guidance issued by the
          Treasury or the Internal Revenue Service with respect to Code Section
          409A."

     5. A new paragraph 28 is added to the Employment Agreement as follows:

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

     6. Exhibit A to the Employment Agreement is amended by adding the following
new definition:

          "AMENDMENT DATE" shall mean August 11, 2005.

     This Amendment contains the entire understanding and agreement between the
parties concerning the subject matter hereof and, as of the Amendment Date,
shall supersede all prior agreements, understandings, discussions, negotiations
and undertakings, whether written or oral, between the parties with respect to
any non-qualified retirement or pension benefits or any


                                       4



benefits upon or following a Change in Control. Except as otherwise provided
herein, the Employment Agreement remains in full force and effect.

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

                                    THE WARNACO GROUP, INC.


                                    By:    /s/ Joseph R. Gromek
                                        ----------------------------------------
                                    Name:  Joseph R. Gromek
                                    Title: President and Chief Executive Officer

                                    THE EXECUTIVE

                                    /s/ Dwight Meyer
                                    --------------------------------------------
                                    Dwight Meyer


                                       5
EX-10.7 10 file008.htm AMENDMENT TO EMPLOYMENT AGREEMENT 



                        AMENDMENT TO EMPLOYMENT AGREEMENT

     This Agreement, made and entered into as of August 11, 2005 by and between
The Warnaco Group, Inc., a Delaware corporation (together with its subsidiaries,
divisions and affiliates, the "Company"), and Helen McCluskey ("you"), amends
the letter agreement relating to your employment with the Company dated as of
June 15, 2004 (the "Employment Agreement"). Except as otherwise stated herein,
all definitions used in this Amendment shall have the meaning ascribed to such
term in the Employment Agreement.

     In consideration of the premises contained herein and for other good and
valuable consideration, the receipt of which is mutually acknowledged, the
Company and you agree as follows:

     1. Paragraph 3 of the Employment Agreement is amended by adding a new
clause (d) as follows:

          "d.  During the Term beginning with fiscal year 2005, provided you are
               employed by the Company, you shall be entitled to an annual award
               with an aggregate grant date value equal to 10% of the sum of
               Base Salary plus Annual Bonus as defined in this paragraph 3(d)
               if you will be less than age 60 by the end of the applicable
               fiscal year and 13% of such amount if you will be age 60 or older
               by the end of the applicable fiscal year ("Supplemental Award"),
               with the first such award being made no later than 60 days after
               the Effective Date. For this purpose, Base Salary shall be the
               Base Salary paid to you for the fiscal year prior to the award
               year and Annual Bonus shall be the annual bonus awarded to you by
               the Board for such fiscal year. The Supplemental Award shall not
               be awarded to you until after the determination by the Board of
               your annual bonus for the prior fiscal year (but in no event
               later than 60 days thereafter for any award made after fiscal
               year 2005) and 50% of the value of the Supplemental Award shall
               be awarded in the form of restricted shares pursuant to the
               applicable Stock Incentive Plan ("Career Shares") and 50% shall
               be awarded in the form of a credit to a bookkeeping account
               maintained by the Company for your account (the "Notional
               Account"). Any Career Shares awarded hereunder shall be governed
               by the applicable Stock Incentive Plan and, if applicable, any
               award agreement. For purposes of this paragraph 3(d), each Career
               Share shall be valued at the closing price of a share of the
               Company's common stock ("Share") on the date that the
               Supplemental Award is made. For the Notional Account, the Company
               shall select the investment alternatives available to you under
               the Company's 401(k) plan. The balance in the Notional Account
               shall periodically be credited (or debited) with the deemed
               positive (or negative) return based on returns of the permissible
               investment alternative or alternatives under the Company's 401(k)
               plan as selected in advance by you (and in accordance with the
               applicable rules of such plan or investment alternative) to apply
               to such Notional Account, with such


                                        1



               deemed returns calculated in the same manner and at the same
               times as the return on such investment alternative(s). The
               Company's obligation to pay the amount credited to the Notional
               Account, including any return thereon provided for in this
               paragraph 3(d), shall be an unfunded obligation to be satisfied
               from the general funds of the Company. Except as otherwise
               provided in paragraphs 6 or 8 below or the applicable Stock
               Incentive Plan and provided that you are employed by the Company
               on such vesting date, any Supplemental Award granted in the form
               of Career Shares will vest as follows: 50% of the Career Shares
               will vest on the earlier of your 62nd birthday or upon your
               obtaining 15 years of "Vesting Service" and 100% of the Career
               Shares will vest on the earliest of (i) your 65th birthday, (ii)
               upon your obtaining 20 years of "Vesting Service" or (iii) 10th
               anniversary of the date of grant. Except as otherwise provided in
               paragraphs 6 or 8 below, and provided that you are employed by
               the Company on such vesting date, any Supplemental Award granted
               as a credit to the Notional Account (as adjusted for any returns
               thereon) ("Adjusted Notional Account")) shall vest as follows:
               50% on the earlier of your 62nd birthday or upon your obtaining 5
               years of "Vesting Service" and 100% on the earlier of the your
               65th birthday and upon your obtaining 10 years of "Vesting
               Service". For purposes of this paragraph 3(d), "Vesting Service"
               shall mean the period of time that you are employed by the
               Company as an executive officer. Subject to paragraph 27 hereof,
               upon vesting the Career Shares will be delivered to you in the
               form of Shares. The vested balance in the Adjusted Notional
               Account shall not be distributed to you until you cease to be an
               employee of the Company and, at such time, shall only be
               distributed at the earliest time that satisfies the requirements
               of this paragraph 3(d). Except as otherwise provided in
               paragraphs 6 or 8 hereof, if your employment is terminated for
               any reason, any unvested Supplemental Awards (whether in the form
               of Career Shares or the Adjusted Notional Account) shall be
               forfeited and any vested balance in the Adjusted Notional
               Account, subject to paragraph 27 hereof, shall be paid to you in
               a cash lump-sum payment immediately following your "separation
               from service," as defined by Section 409A(a)(2)(A)(i) of the
               Internal Revenue Code of 1986, as amended (the "Code"), with the
               Company; provided, however, that, except in the case of your
               death, if at the time of such separation from service you are a
               "specified employee," as defined in Section 409A(a)(2)(B)(i) of
               the Code, such distribution shall not be made until at least six
               months after the date of such separation from service; provided,
               further, that if your employment is terminated due to Disability
               and such Disability satisfies the requirements of Section
               409A(a)(2)(C) of the Code, then such distribution may be made
               upon termination without regard as to whether you were a
               "specified employee" at such time. The provisions of this
               paragraph 3(d) shall survive expiration or termination of the
               Term."

     2. Paragraph 6 of the Employment Agreement is amended by adding a new
clause (e) as follows:


                                        2



          "e.  Immediate vesting as of the Date of Termination of 50% of any
               previously granted Supplemental Award that remains unvested as of
               the Date of Termination, payable in accordance with paragraph
               3(d) above."

     3. Paragraph 8 of the Employment Agreement is amended as follows:

          (a)  Deleting paragraph 8(b) in its entirety and replacing it with the
               following:

               "b.  Payment of an amount equal to 2 times the sum of (a) Base
                    Salary plus (b) Target Bonus, payable in a lump sum as soon
                    as practicable following the Date of Termination (but in no
                    event later than 60 days following such date)."

          (b)  Deleting paragraph 8(c) in its entirety and replacing it with the
               following:

               "c.  A pro-rata Target Bonus for the year of termination,
                    determined by multiplying the Target Bonus by a fraction,
                    the numerator of which is the number of days that you were
                    employed by the Company during the year in which the Date of
                    Termination occurs and the denominator of which is 365,
                    payable in a lump sum as soon as practicable following the
                    Date of Termination (but in no event later than 60 days
                    following such date)."

          (c)  Amending paragraph 8(d) by adding the following at the end of
               such paragraph:

               "and immediate vesting as of the Date of Termination of all other
               outstanding equity awards (other than Career Shares), with any
               stock options granted on or after the Amendment Date remaining
               exercisable for 24 months following the Date of Termination or
               the remainder of the option term, if shorter."

          (d)  Renumbering paragraph 8(e), 8(f) and 8(g) to be paragraphs 8(f),
               8(g) and 8(h), respectively, and amending the new paragraph 8(f)
               by deleting the phrase "but in no event less than the period that
               you are eligible to receive salary continuation" in its entirety
               and replacing it with "but in no event less than 24 months".

          (e)  Adding a new paragraph 8(e) as follows:

               "e.  Immediate vesting as of the Date of Termination of any
                    previously granted Supplemental Award, payable in accordance
                    with paragraph 3(d) above."


                                        3



     4. Paragraph 23 of the Employment Agreement is amended by adding the
following provision at the end of such paragraph:

          "Notwithstanding the foregoing, in 2005, the Company shall have the
          right to modify any provision of this Agreement (or, if requested by
          you, shall make such modification), including, without limitation,
          paragraph 3 and paragraphs 5 through 9 hereof, if, and only to the
          extent that, such modification shall be required, in the reasonable
          opinion of the Company's and/or your counsel, to comply with Section
          409A of the Code or any regulations or similar guidance issued by the
          Treasury or the Internal Revenue Service with respect to Code Section
          409A."

     5. A new paragraph 28 is added to the Employment Agreement as follows:

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

     6. A new paragraph 29 is added to the Employment Agreement as follows:

          "29.

          a.   If any amount, entitlement, or benefit paid or payable to you or
               provided for your benefit under this agreement and under any
               other agreement, plan or program of the Company (such payments,
               entitlements and benefits referred to as a "Payment") is subject
               to the excise tax imposed under Section 4999 of the Code or any
               similar federal or state law (an "Excise Tax"), then
               notwithstanding anything contained in this agreement to the
               contrary, to the extent that any or all Payments would be subject
               to the imposition of an Excise Tax, the Payments shall be reduced
               (but not below


                                        4



               zero) if and to the extent that such reduction would result in
               your retaining a larger amount, on an after-tax basis (taking
               into account federal, state and local income taxes and the
               imposition of the Excise Tax), than if you received all of the
               Payments (such reduced amount is hereinafter referred to as the
               "Limited Payment Amount"). Unless you give prior written notice
               specifying a different order to the Company to effectuate the
               limitations described in the preceding sentence, the Company
               shall reduce or eliminate the Payments, by first reducing or
               eliminating those payments or benefits which are not payable in
               cash and then by reducing or eliminating cash payments, in each
               case in reverse order beginning with payments or benefits which
               are to be paid the farthest in time from the Determination (as
               defined below). Any notice given by you pursuant to the preceding
               sentence shall take precedence over the provisions of any other
               plan, arrangement or agreement, including, but not limited to,
               the other provisions of this agreement, governing your rights and
               entitlements to any compensation, entitlement or benefit.

          b.   All calculations under this paragraph 29 shall be made by a
               nationally recognized accounting firm designated by the Company
               and reasonably acceptable to you (other than the accounting firm
               that is regularly engaged by any party who has effectuated a
               Change in Control) (the "Accounting Firm"). The Company shall pay
               all fees and expenses of such Accounting Firm. The Accounting
               Firm shall provide its calculations, together with detailed
               supporting documentation, both to the Company and you within 45
               days after the Change in Control or the Date of Termination,
               whichever is later (or such earlier time as is requested by the
               Company) and, with respect to the Limited Payment Amount, shall
               deliver its opinion to you that you are not required to report
               any Excise Tax on your federal income tax return with respect to
               the Limited Payment Amount (collectively, the "Determination").
               Within 5 days of your receipt of the Determination, you shall
               have the right to dispute the Determination (the "Dispute"). The
               existence of the Dispute shall not in any way affect your right
               to receive the Payments in accordance with the Determination. If
               there is no Dispute, the Determination by the Accounting Firm
               shall be final binding and conclusive upon the Company and you
               (except as provided in clause (c) below).

          c.   If, after the Payments have been made to you, it is established
               that the Payments made to you, or provided for your benefit,
               exceed the limitations provided in clause (a) above (an "Excess
               Payment") or are less than such limitations (an "Underpayment"),
               as the case may be, then the provisions of this clause (c) shall
               apply. If it is established pursuant to a final determination of
               a court or an Internal Revenue Service (the "IRS") proceeding
               which has been finally and conclusively resolved, that an Excess
               Payment has been made, you shall repay the Excess Payment to the


                                        5



               Company on demand. In the event that it is determined by (i) the
               Accounting Firm, the Company (which shall include the position
               taken by the Company, or together with its consolidated group, on
               its federal income tax return) or the IRS, (ii) pursuant to a
               determination by a court, or (iii) upon the resolution to your
               satisfaction of the Dispute, that an Underpayment has occurred,
               the Company shall pay an amount equal to the Underpayment to you
               within 10 days of such determination or resolution together with
               interest on such amount at the applicable federal short-term
               rate, as defined under Section 1274(d) of the Code and as in
               effect on the first date that such amount should have been paid
               to you under this agreement, from such date until the date that
               such Underpayment is made to you."

     7. Exhibit A to the Employment Agreement is amended as follows:

          (a)  By adding the following new definition:

               "AMENDMENT DATE" shall mean August 11, 2005.

          (b)  By deleting the definition of "CHANGE IN CONTROL" in its entirety
               and replacing it with the following definition:

               "CHANGE IN CONTROL" shall mean any of the following:

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

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

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

               For purposes of this Change in Control definition, "Voting Stock"
               shall mean the capital stock of any class or classes having
               general voting power,


                                        6



               in the absence of specified contingencies, to elect the directors
               of the Company."

     This Amendment contains the entire understanding and agreement between the
parties concerning the subject matter hereof and, as of the Amendment Date,
shall supersede all prior agreements, understandings, discussions, negotiations
and undertakings, whether written or oral, between the parties with respect to
any non-qualified retirement or pension benefits or any benefits upon or
following a Change in Control. Except as otherwise provided herein, the
Employment Agreement remains in full force and effect.

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

                                    THE WARNACO GROUP, INC.


                                    By:    /s/ Joseph R. Gromek
                                       -----------------------------------------
                                    Name:  Joseph R. Gromek
                                    Title: President and Chief Executive Officer

                                    THE EXECUTIVE

                                    /s/ Helen McCluskey
                                    --------------------------------------------
                                    Helen McCluskey


                                        7
EX-10.8 11 file009.htm 2005 STOCK INCENTIVE PLAN 


                                      FORM OF
                             THE WARNACO GROUP, INC.
                            2005 STOCK INCENTIVE PLAN
                       NOTICE OF GRANT OF RESTRICTED STOCK

Grantee:            [Name]

     This Agreement is to certify that the Grantee named below has been granted
the number of shares of Restricted Stock set forth below under the terms and
conditions set forth in this Agreement (this Award, the "Restricted Stock"). The
Restricted Stock and this Agreement are subject to and incorporate by reference
the terms and conditions of The Warnaco Group, Inc. 2005 Stock Incentive Plan
(the "Plan") and the Employment Agreement (the "Employment Agreement"), dated as
of [ ], between the Grantee and The Warnaco Group, Inc. (the "Company"), to the
extent that the terms of the Employment Agreement relate to the terms and
conditions of the award granted under this Agreement. The Restricted Stock is
referred to under the Employment Agreement as "Career Shares". Capitalized terms
used but not defined herein are defined in the Plan.

Number of                          [    ]
Restricted Stock Shares

Grant Date:                        [    ]

Vesting Schedule:                  50% on the earlier of (i) Grantee's 62nd
                                   birthday or (ii) upon the Grantee's
                                   obtaining fifteen (15) years of Vesting
                                   Service (as defined in the Employment
                                   Agreement); and 100% on the earliest of (i)
                                   the Grantee's 65th birthday, (ii) the tenth
                                   anniversary of the Grant Date or (iii) upon
                                   the Grantee obtaining twenty (20) years of
                                   Vesting Service.

Payment of Shares:                 Certificates representing vested shares
                                   shall be issuable immediately upon vesting.
                                   Except as otherwise provided in the
                                   Employment Agreement or the Plan, unvested
                                   shares will be forfeited upon Grantee's
                                   termination of employment.

Termination of                     See Section [  ] of the Employment Agreement.
Employment

Additional Terms:                  See the Plan and Employment Agreement. In
                                   addition:

     The Restricted Stock may not be assigned, alienated, pledged, attached,
sold or otherwise transferred or encumbered by the Grantee otherwise than by
will or by the laws of descent and distribution, and any such purported
assignment, alienation, pledge, attachment, sale, transfer or encumbrance shall
be void and unenforceable against the Company and any Affiliate; provided that
the designation by the Grantee of a beneficiary shall not constitute an
assignment, alienation, pledge, attachment, sale, transfer or encumbrance.

     By signing this Agreement, the Grantee acknowledges that he has received a
copy of the Plan and has had an opportunity to review the Plan and agrees to be
bound by all the terms and



provisions of the Plan including, but not limited to, Section 11(l) thereof
(relating to compliance with applicable law and regulations).

     Nothing in the Plan or in this Agreement shall confer upon the Grantee any
right to continue in the employ of the Company or any subsidiary or shall
interfere with or restrict in any way the right of the Company and its
subsidiaries, which is hereby expressly reserved, to remove, terminate or
discharge the Grantee at any time for any reason whatsoever, with or without
Cause.

     The terms of this Agreement shall be binding upon and inure to the benefit
of the Company, its successors and assigns, and of the Grantee and the
beneficiaries, executors, administrators, heirs and successors of the Grantee.

     This Agreement and the rights of the Grantee hereunder shall be construed
and determined in accordance with the laws of the State of Delaware.

     This Agreement may be executed in counterparts, each of which shall be
deemed an original, but all of which together shall constitute one and the same
instrument.

     IN WITNESS WHEREOF, this Agreement has been executed and delivered by the
parties hereto as of the        day of          , 200_.



                                               THE WARNACO GROUP, INC.


                                               By:
                                                  ------------------------------


                                               Its:
                                                   -----------------------------


                                               [Name]


                                               ---------------------------------
                                                 Signature


                                               Address:
                                                       -------------------------


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


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