


<PAGE>

                     AMENDMENT NO. 1 TO THE RIGHTS AGREEMENT


                   Amendment No. 1 to the Rights Agreement, dated as of August
19, 1999 (the "Amendment"), by and between Authentic Fitness Corporation, a
Delaware corpora tion (the "Company"), and The Bank of New York, a New York
banking corporation (the "Rights Agent").

                   WHEREAS, on August 19, 1999, the Company and the Rights Agent
entered into a Rights Agreement (the "Agreement");

                   WHEREAS, pursuant to Section 27 of the Agreement, the Company
has determined to amend the terms of the Agreement.

                   NOW, THEREFORE, in consideration of the premises and mutual
agreements herein set forth, and intending to be legally bound hereby, the
parties hereto agree that the Agreement shall be and hereby is amended in the
following manner:

           Section 1. Amendment of "Certain Definitions" Section.

                   (a) The last sentence of Section 1(e) of the Agreement is
hereby amended to read in its entirety as follows:

                    For purposes of this Agreement, Beneficial Ownership shall
                    not include (x) any options, shares acquired pursuant to
                    grants of stock options, restricted stock or other equity
                    based awards, acquired, in each case under any of the
                    Company's stock option or equity compensation plans or (y)
                    any shares with respect to which either Pentland Ventures,
                    Ltd. ("Pentland") or General Electric Capital Corporation
                    ("GECC"), as the case may be, has a right of first offer
                    pursuant to the Amended and Restated Right of First Offer
                    Letter Agreement, dated as of July 2, 1992, between GECC and
                    Pentland (the "Letter Agreement"), prior to the acceptance
                    by GECC (in the case of a right of first offer by Pentland)
                    or Pentland (in the case of a right of first offer by GECC)
                    of the other party's Offer to Purchase (as such term is
                    defined in the Letter Agreement).

                   (b) Section 1(p) of the Agreement is hereby amended to read
in its entirety as follows:


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           "Exempt Persons" shall mean

                   (i) Linda J. Wachner (or in the event of her incompetence or
death, her estate, heirs, executor, administrator, committee or other personal
representative (collectively, "heirs")) or any Person controlled, directly or
indirectly, by Linda J. Wachner or her heirs, so long as, after the date hereof,
such Persons do not acquire Beneficial Ownership of additional shares of Common
Stock representing one percent (1%) or more of the shares of Common Stock then
outstanding; or

                   (ii) Pentland, so long as, after the date hereof, Pentland
does not acquire Beneficial Ownership of additional shares of Common Stock
representing one percent (1%) or more of the shares of Common Stock then
outstanding; provided, however, that Pentland may also acquire shares of Common
Stock held by GECC or by GECC's Permitted Transferees as of June 30, 1992
pursuant to the Letter Agreement; or

                   (iii) GECC, if, as a result of acquiring shares of Common
Stock held by Pentland or Pentland's Permitted Transferees as of June 30, 1992
pursuant to the Letter Agreement, GECC would otherwise become an Acquiring
Person, but only if, after the date hereof (whether prior or subsequent to its
acquisition of shares of Common Stock pursuant to the Letter Agreement), GECC
does not acquire Beneficial Ownership of one percent (1%) or more of the shares
of Common Stock then outstanding.

                (c) The following new Sections 1(kk) and 1(ll) are hereby
inserted in the Agreement immediately following Section1(jj) thereof:

                    (kk) "Letter Agreement" shall have the meaning set forth in
                    Section 1(e) hereof.

                    (ll) "Permitted Transferees" shall be as defined in the
                    Letter Agreement.

                   Section 2. "Agreement" as Amended. The term "Agreement" as
used in the Agreement shall be deemed to refer to the Agreement as amended
hereby, and all references to the Agreement shall be deemed to include this
Amendment.

                   Section 3. Effectiveness. This Amendment shall be effective
as of the date first written above, and except as set forth herein, the
Agreement shall remain in full force and effect and otherwise shall be
unaffected hereby.


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                   Section 4. Counterparts. This Amendment may be executed in
two or more counterparts, each of which shall be deemed an original but all of
which together shall constitute one and the same instrument.

                   IN WITNESS WHEREOF, the parties hereto have caused this Amend
ment to be duly executed and attested as of the date first written above.

<TABLE>
<S>                                   <C>
Attest:                               AUTHENTIC FITNESS CORPORATION

/s/ Michael P. Mc Hugh                /s/ Stanley P. Silverstein
- ---------------------------           ------------------------------
Name:  Michael P. Mc Hugh              Name:  Stanley P. Silverstein
Title: Senior Vice President           Title: Acting General Counsel
       and Chief Financial
       Officer


Attest:                               THE BANK OF NEW YORK



/s/ James Dimino                      /s/ Steven Myers
- ---------------------------           ------------------------------
Name:   James Dimino                  Name:  Steven Myers
Title:  Vice President                Title:  Assistant Vice President
</TABLE>


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