KASPER A S L LTD, DEF 14A, 2000-01-28

KASPER A S L LTD
DEF 14A, 2000-01-28
WOMEN'S, MISSES', AND JUNIORS OUTERWEAR

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SCHEDULE 14A
(RULE 14A-101)

INFORMATION REQUIRED IN PROXY STATEMENT

SCHEDULE 14A INFORMATION
PROXY STATEMENT PURSUANT TO SECTION 14(A) OF THE
SECURITIES EXCHANGE ACT OF 1934

[x] Filed by the Registrant
[_] Filed by a Party other than the Registrant

Check the appropriate box:
[_] Preliminary Proxy Statement
[_] Confidential, for Use of the Commission Only (as permitted by Rule
14-a6(e)(2))
[x] Definitive Proxy Statement
[_] Definitive Additional Materials
[_] Soliciting Material Pursuant to Rule 14a-11(c) or Rule 14a-12

KASPER A.S.L., LTD.

(Name of Registrant as Specified in Its Charter)

(Name of Person(s) Filing Proxy Statement, if other than the Registrant)

PAYMENT OF FILING FEE (Check the appropriate box):

[x] No fee required.

[_] Fee computed on table below per Exchange Act Rules 14a-6(i) and 0-11.

1) Title of each class of securities to which transaction
applies:
2) Aggregate number of securities to which transaction
applies:
3) Per unit price or other underlying value of transaction
computed pursuant to Exchange Act Rule 0-11 (Set forth the
amount on which the filing fee is calculated and state how
it was determined.):
4) Proposed maximum aggregate value of transaction: $
5) Total fee paid: $

[_] Fee paid previously with preliminary materials.

[_] Check box if any part of the fee is offset as provided by Exchange
Act Rule 0-11(a)(2) and identify the filing for which the offsetting
fee was paid previously. Identify the previous filing by registration
statement number, or the Form or Schedule and the date of its filing.

1) Amount Previously Paid: $
2) Form, Schedule or Registration Statement No.:
3) Filing Party:
4) Date Filed:
================================================================================
NY2:\857376\14\55745.0005
<PAGE>

KASPER A.S.L., LTD
77 METRO WAY
SECAUCUS, NEW JERSEY 07094
-------------------------

NOTICE OF RE-ADJOURNMENT
OF
1999 ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD ON MARCH 14, 2000
-------------------------

January 28, 2000

To Our Stockholders:

You are cordially invited to attend the re-adjournment of the 1999
Annual Meeting of Stockholders (the "Meeting") of Kasper A.S.L., Ltd., a
Delaware corporation (the "Company"), to be held on March 14, 1999, at 10:00
a.m., Eastern time, at the offices of Weil, Gotshal and Manges LLP, 767 Fifth
Avenue, New York, New York 10153. The following matters are to be presented for
consideration at the Meeting:

(1) The election of seven directors to serve until the next Annual
Meeting of Stockholders and until their respective successors are
elected and qualified;

(2) A proposal to approve the Company's 1999 Share Incentive Plan; and

(3) The transaction of such other business as may properly come before
the Meeting and any adjournments or postponements thereof.

As previously announced, the Company's 1999 Annual Meeting was
adjourned on September 28, 1999, after the Company's stockholders had:

(1) approved an amendment to the Amended and Restated Certificate of
Incorporation of the Company to eliminate current restrictions on the
mortgage, pledge, transfer and other disposition of the assets of the
Company without obtaining the prior consent of at least 66-2/3% of
the outstanding voting stock of the Company in order to permit the
Company to enter into secured credit facilities and other financing
arrangements from time to time; and

(2) ratified the appointment of Arthur Andersen LLP as the Company's
independent auditors for the year ending January 1, 2000.

The close of business on January 26, 2000 has been fixed as the
record date for the determination of stockholders entitled to notice of, and to
vote at, the Meeting and any adjournments or postponements thereof. A list of
such stockholders of the Company as of the close of business on January 26, 2000
will be open to the examination of any stockholder for any purpose germane to
the meeting during normal business hours, for a period of at least 10 days prior
to the Meeting at the offices of Weil, Gotshal & Manges LLP at 767 Fifth Avenue,
New York, New York 10153.

By Order of the Board of Directors,
Lester E. Schreiber
Secretary

IT IS IMPORTANT THAT YOUR SHARES BE REPRESENTED AT THE MEETING. WHETHER OR NOT
YOU EXPECT TO ATTEND THE MEETING, PLEASE COMPLETE, DATE AND SIGN THE ENCLOSED
PROXY AND MAIL IT PROMPTLY IN THE ENCLOSED ENVELOPE IN ORDER TO ASSURE
REPRESENTATION OF YOUR SHARES. NO POSTAGE IS NEEDED IF MAILED IN THE UNITED
STATES.

<PAGE>

KASPER A.S.L., LTD.
77 METRO WAY
SECAUCUS, NEW JERSEY 07094
--------------------

PROXY STATEMENT
--------------------

FOR RE-ADJOURNMENT
OF
1999 ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD ON MARCH 14, 2000

January 28, 2000

This Proxy Statement is furnished to the holders (the "Stockholders")
of common stock, par value $0.01 per share (the "Common Stock"), of Kasper
A.S.L., Ltd., a Delaware corporation (the "Company"), in connection with the
solicitation of proxies by the Board of Directors of the Company to be voted at
the re-adjournment of the 1999 Annual Meeting of Stockholders of the Company
(the "Meeting") to be held on March 14, 2000 at 10:00 a.m., Eastern time, at the
offices of Weil, Gotshal and Manges LLP, 767 Fifth Avenue, New York, New York
10153 and at any adjournments or postponements thereof. The following matters
are to be presented for consideration at the Meeting:

(1) The election of seven directors to serve until the next Annual
Meeting of Stockholders and until their respective successors are
elected and qualified;

(2) A proposal to approve the Company's 1999 Share Incentive Plan; and

(3) The transaction of such other business as may properly come before
the Meeting and any adjournments or postponements thereof.

As previously announced, the Company's 1999 Annual Meeting was
adjourned on September 28, 1999, after the Company's stockholders had:

(2) ratified the appointment of Arthur Andersen LLP as the Company's
independent auditors for the year ending January 1, 2000.

The Board of Directors of the Company has fixed the close of business
on January 26, 2000 as the record date (the "New Record Date") for the
determination of the holders of the Company's Common Stock entitled to notice
of, and to vote at, the Meeting and any adjournments or postponements thereof.
Each Stockholder will be entitled to one vote per share of Common Stock held on
all matters to come before the Meeting and may vote in person or by proxy
authorized in writing. At the close of business on the New Record Date, there
were 6,800,000 shares of Common Stock issued, outstanding and entitled to vote.
The Company's mailing address is, and principal executive offices are, 77 Metro
Way, Secaucus, NJ 07094.

This Proxy Statement and the accompanying form of proxy are first
being sent to Stockholders on or about January 28, 2000. The Annual Report to
Stockholders of the Company for the fiscal year ended January 2, 1999, which
included financial statements (the "Annual Report"), was furnished to
Stockholders as of August 10, 1999, the previous record date for the 1999 Annual
Meeting. Copies of the Annual Report are being furnished concurrently herewith
only to Stockholders as of January 26, 2000 who were not Stockholders as of
August 10, 1999. The Annual Report does not form any part of the material for
solicitations of proxies.

<PAGE>

VOTING RIGHTS

QUORUM

A majority of the total of such outstanding shares of Common Stock,
represented in person or by proxy at the Meeting, is required to constitute a
quorum for the transaction of business at the Meeting. Proxies submitted which
contain abstentions or broker non-votes will be deemed present at the Meeting
for determining the presence of a quorum.

REQUIRED VOTES

(1) Election of Directors. The affirmative vote of a plurality of votes
cast at the Meeting by the holders of Common Stock will be required
for the election of directors.

(2) Approval of Company's 1999 Share Incentive Plan. The affirmative vote
of a majority of the votes cast at the Meeting by the holders of
Common Stock will be required for the approval of the Company's 1999
Share Incentive Plan (the "1999 Plan").

VOTING AND REVOCATION OF PROXIES

Stockholders are requested to complete, date, sign and promptly
return the accompanying form of proxy in the enclosed envelope. Common Stock
represented by properly executed proxies received by the Company and not revoked
will be voted at the Meeting in accordance with the instructions contained
therein. Proxies received for which instructions are not given will be voted FOR
the election of each nominee for director named herein and FOR approval of the
1999 Plan. Proxies will be voted in the discretion of those named in the proxy
with respect to any other matters as may come before the Meeting, including
matters or motions dealing with the conduct of the Meeting. The Board of
Directors is not aware of any matters which are intended to be presented for
action at the Meeting other than as set forth in the Notice of the 1999 Annual
Meeting.

Abstentions and broker non-votes are not counted in determining the
votes cast in connection with any of the matters presented for consideration at
the Meeting. Accordingly, abstentions and broker non-votes will have the
practical effect of reducing the number of votes "for" needed to approve the
election of each nominee for director named herein and the approval of the 1999
Plan.

The 177,268 shares of Common Stock issued in the name of the Plan
Administrator of the reorganization of the Leslie Fay Companies, Inc., of which
the Company had been a division ("Leslie Fay"), who holds such shares for the
benefit of the creditors of the Company pending the resolution of certain
creditor claims, will be voted in respect of each proposal submitted at the
Meeting in the same proportion as all other shares voted at the Meeting.

Any proxy signed and returned by a Stockholder may be revoked at any
time before it is voted by filing with the Secretary of the Company, at the
address of the Company set forth herein, written notice of such revocation or a
duly executed proxy bearing a later date or by attending the Meeting and voting
in person. Attendance at the Meeting will not in and of itself constitute
revocation of a proxy.

2
<PAGE>

PROPOSAL 1. ELECTION OF DIRECTORS

The Company's Amended and Restated By-laws provide that the number of
members of the Board of Directors shall be fixed from time to time pursuant to a
resolution adopted by the agreement of the whole Board of Directors but shall
not be less than seven. The Board of Directors presently consists of seven
members.

Unless authority to do so is withheld, proxies will be voted at the
Meeting FOR the election of each of the nominees named below to serve as a
Director of the Company until the next Annual Meeting of Stockholders and until
their respective successors are elected and qualified. In the event that any of
the nominees should become unavailable or unable to serve for any reason, the
persons named in the form of proxy have been advised that they will vote for
such substitute nominees as the Board of Directors of the Company may propose.
The Company does not expect that any of the nominees will be unavailable or
unable to serve as a Director.

THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR EACH NOMINEE AS A
DIRECTOR TO HOLD OFFICE UNTIL THE NEXT ANNUAL MEETING OF STOCKHOLDERS AND UNTIL
THEIR RESPECTIVE SUCCESSORS ARE ELECTED AND QUALIFIED.

INFORMATION ABOUT NOMINEES

The following table sets forth certain information concerning the
nominees for Director of the Company (as of January 31, 2000):

Name Age Position
- ---- --- --------

Arthur S. Levine 59 Chairman of the Board and Chief Executive
Officer
William J. Nightingale 70 Director
Salvatore M. Salibello 54 Director
Lester E. Schreiber 51 Chief Operating Officer and Director
Denis J. Taura 59 Director
Olivier Trouveroy 44 Director
H. Sean Mathis 52 Director Nominee

BACKGROUND OF DIRECTORS AND NOMINEES

Arthur S. Levine has served as the Chairman of the Board and Chief
Executive Officer of the Company since its separation from Leslie Fay in June
1997. Prior thereto and since 1975, he was Chief Executive Officer of Sassco
Fashions, Ltd. ("Sassco"), the Company's predecessor, which was sold to Leslie
Fay in May 1980.

William J. Nightingale has served as a Director of the Company since
its separation from Leslie Fay in June 1997. Mr. Nightingale is currently a
Senior Advisor of Nightingale & Associates, LLC, a general management consulting
firm, and has served in various capacities with that firm, including Chairman
and Chief Executive Officer, since July 1975. Mr. Nightingale is also a Director
of Furr's/Bishops, Inc. and Rings End, Inc., and a trustee of the Churchill Tax
Free Fund of Kentucky, Churchill Cash Reserves Trust and Narragansett Insured
Tax Free Bond Fund.

Salvatore M. Salibello has served as a Director of the Company since
July 1998. Mr. Salibello is a certified public accountant and founded Salibello
& Broder, an accounting/consulting firm, in 1978 and currently serves as its
Managing Partner.

Lester E. Schreiber has served as Chief Operating Officer since May
1996 and a Director of the Company since its separation from Leslie Fay in June
1997. Prior to becoming Chief Operating

3
<PAGE>

Officer of the Company, Mr. Schreiber served as Vice President of Operations
from January 1989 to April 1996.

Denis J. Taura has served as a Director of the Company since July
1998. He is a certified public accountant and a partner in Taura Flynn &
Associates, a firm specializing in reorganization and management consulting,
which he founded in April 1998. From September 1991 to March 1998, he served as
Chairman of D. Taura & Associates, a consulting firm. Mr. Taura is also a
Director of Darling International, Inc.

Olivier Trouveroy has served as a Director of the Company since its
separation from Leslie Fay in June 1997. He has served as a Managing Partner of
Hampshire Equity Partners, a private equity investment firm, since July 1994.
Mr. Trouveroy also serves as a Director of Cost Plus, Inc. Hampshire Equity
Partners, under the name ING Equity Partners, L.P. I, beneficially owns 9.4% of
the Common Stock of the Company.

H. Sean Mathis is the President of Litchfield Asset Holdings, an
investment advisory company he founded in 1983. He served as Chairman of the
Board of Allis Chalmers, Inc., an industrial manufacturer, from 1996 to 1999,
and as Chairman of Universal Gym Equipment, Inc., a private exercise equipment
manufacturer, from 1996 to 1997. In 1997, Universal Gym Equipment, Inc. filed
for protection under the United States federal bankruptcy laws. Mr. Mathis
served as a Director of Allied Digital Technologies, Corp. from 1993 to 1998; as
President of its predecessor, RCL Acquisition Corp., from 1991 to 1993; and as
President and as a Director of RCL Capital Corp. from 1993 until it was merged
into DISC Graphics, Inc. in November 1995. He currently serves as a Director of
Thousand Trails, Inc., an operator of recreational parks, and ARCH
Communications Group, Inc., a communications company.

MEETINGS OF THE BOARD OF DIRECTORS

During the fiscal year ended January 2, 1999, the Board of Directors
held 8 meetings. Each Director attended at least 75% of the meetings of the
Board of Directors that were held during the period such person served as a
director.

COMMITTEES

On June 10, 1997, the Board of Directors established an Audit
Committee, Compensation Committee and Finance Committee.

The Audit Committee is currently composed of Messrs. Nightingale,
Salibello and Larry G. Schafran. If elected to the Board of Directors, it is
currently contemplated that Mr. Mathis will serve on the Audit Committee. The
function of the Audit Committee is to make recommendations concerning the
selection each year of independent auditors of the Company, to review the
effectiveness of the Company's internal accounting methods and procedures and to
determine, through discussions with the independent auditors, whether any
restrictions or limitations have been placed upon them in connection with the
scope of their audit or its implementation and to address such other issues as
may be appropriate. The Audit Committee met 6 times in 1998, with each member
attending at least 75% of the meetings.

The Compensation Committee is currently composed of Larry G. Schafran
and Messrs. Salibello, Taura and Trouveroy. If elected to the Board of
Directors, it is currently contemplated that Mr. Mathis will serve on the
Compensation Committee. The function of the Compensation Committee is to review
and recommend to the Board of Directors policies, practices and procedures
relating to compensation of key employees and to administer employee benefit
plans. The Compensation Committee met 3 times in 1998, with each member
attending at least 75% of the meetings.

The Finance Committee is currently composed of Messrs. Nightingale,
Salibello, Schafran, Taura and Trouveroy. The function of the Finance Committee
is to evaluate and review on a continuing basis specific financing programs and
requirements to meet the near and long-term needs of the

4
<PAGE>

Company; to advise management of the Company's business plans and budgets; to
review the organization and functions of the Company's finance department; and
to participate in the development and implementation of the investment and the
investor programs. The Finance Committee did not meet in 1998, as these issues
were addressed by the Board of Directors as a whole.

COMPENSATION OF DIRECTORS

Each Director who is not an employee of the Company is paid for
service on the Board of Directors at the rate of $40,000 per annum. Each current
non-employee Director also received an option at the time of their election to
the Board of Directors to purchase 20,000 shares of Common Stock ("Director
Options"). Such options vest ratably over the first three anniversaries of the
date of the grant and are exercisable at a price of $14.00 per share of Common
Stock and vest immediately at the time a Director ceases to be a Director of the
Company. The Company also reimburses each Director for reasonable expenses in
attending meetings of the Board of Directors. Directors who are also employees
of the Company are not separately compensated for their services as Directors.

5
<PAGE>

PRESENT BENEFICIAL OWNERSHIP OF COMMON STOCK

The following table sets forth certain information regarding the
beneficial ownership of Common Stock as of January 31, 2000, based upon the most
recent information available to the Company for (i) each person known by the
Company to own beneficially more than five percent of Common Stock, (ii) each of
the Company's directors and nominees, (iii) each of the executive officers named
in the Summary Compensation Table under "Executive Compensation" and (iv) all
Directors and executive officers of the Company as a group. Unless otherwise
indicated, the business address of each person listed is c/o Kasper A.S.L.,
Ltd., 77 Metro Way, Secaucus, New Jersey 07094.

<TABLE>
<CAPTION>
NUMBER OF SHARES PERCENTAGE
NAME AND ADDRESS OF BENEFICIALLY OWNERSHIP OF
BENEFICIAL OWNER OWNED COMMON STOCK
- ---------------- ----- ------------
<S> <C> <C>
Arthur S. Levine............................... 136,740(1) 2.0%
William J. Nightingale......................... 13,534(2) *
Salvatore M. Salibello......................... 6,767(3) *
Larry G. Schafran.............................. 13,534(4) *
Lester E. Schreiber............................ 400(5) *
Denis J. Taura................................. 6,667(3) *
Olivier Trouveroy.............................. 639,535(6) 9.4%
H. Sean Mathis................................. -- --
Gregg I. Marks................................. 14,200(7) *
Dennis P. Kelly................................ 200(8) *
Barbara Bennett................................ -- --
Whippoorwill Associates, Inc................... 1,279,091(9) 18.8%
11 Martine Avenue
White Plains, NY 10606
Bay Harbor Management, L.C. ................... 760,771(10) 11.2%
777 South Harbour Island Boulevard
Ste. 270
Tampa, FL 33602
Blue Ridge L.P................................. 730,000(11) 10.7%
660 Madison Avenue
New York, NY 10021
ING Equity Partners, L.P. I.................... 639,535(6) 9.4%
520 Madison Avenue
New York, NY 10022
Officers and Directors as a group ............. 831,577(12) 12.2%
(13 persons)

- -----------------------------
* Less than one percent.

</TABLE>

6
<PAGE>

(1) Does not include approximately 709 shares of Common Stock which may
be distributed to Mr. Levine on an "if and when issued" basis from
shares of Common Stock held for the benefit of creditors (the
"Holdback") of the Company pending the resolution of certain creditor
claims.

(2) Includes 13,334 shares of Common Stock issuable upon exercise of
currently exercisable Director Options. Mr. Nightingale disclaims
beneficial ownership of 100 shares of Common Stock held by his
spouse.

(3) Includes 6,667 shares of Common Stock issuable upon exercise of
currently exercisable Director Options.

(4) Includes 13,334 shares of Common Stock issuable upon exercise of
currently exercisable Director Options. Mr. Schafran disclaims
beneficial ownership of 100 shares of Common Stock held by his
spouse.

(5) Mr. Schreiber disclaims beneficial ownership of 100 shares of Common
Stock held by his spouse and 100 shares of Common Stock held by each
of his two children.

(6) Includes 13,334 shares of Common Stock issuable upon exercise of
currently exercisable Director Options which were issued to ING
Equity Partners, L.P. I pursuant to Mr. Trouveroy's status as a
non-employee Director of the Company, a position for which he was
designated by ING Equity Partners, L.P. I. Mr. Trouveroy, a Director
of the Company, is a partner of the general partner of Hampshire
Equity Partners. He disclaims beneficial ownership of all shares of
Common Stock listed. Notwithstanding his disclaimer, Mr. Trouveroy
may be deemed to be a beneficial owner to the extent of his pecuniary
interests in the partnership. Does not include approximately 17,195
shares of Common Stock which may be distributed to ING Equity
Partners, L.P. I on an "if and when issued" basis pursuant to the
Holdback. Mr. Trouveroy's business address is c/o ING Equity
Partners, 520 Madison Avenue (33rd Floor), New York, New York 10022.

(7) Mr. Marks disclaims beneficial ownership of 100 shares of Common
Stock held by each of his two daughters.

(8) Mr. Kelly disclaims beneficial ownership of 100 shares of Common
Stock held by his son.

(9) These shares of Common Stock are owned by various limited
partnerships, a limited liability company, a trust and third party
accounts for which Whippoorwill Associates, Inc. has discretionary
authority and acts as general partner or investment manager.

(10) These shares of Common Stock are also indirectly owned by Tower
Investment Group, Inc., the majority stockholder of Bay Harbor
Management, L.C., Steven A. Van Dyke, a stockholder and President of
Tower Investment Group, Inc., and Douglas P. Teitelbaum, a
stockholder of Tower Investment Group, Inc., each of whom may also be
deemed to be a beneficial owner of such shares of Common Stock.

(11) These shares of Common Stock are also indirectly owned by JAG
Holdings, LLC, the general partner of Blue Ridge L.P., and John A.
Griffin, the Managing Member of JAG Holdings LLC, each of whom may
also be deemed to be a beneficial owner of such shares of Common
Stock.

(12) Includes 53,336 shares of Common Stock issuable upon exercise of
currently exercisable Director Options.

SECTION 16(A) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE

Section 16(a) of the Securities Exchange Act of 1934, as amended
("Section 16(a)"), requires the Company's directors and officers, and any
persons who beneficially own more than ten percent

7
<PAGE>

of the Company's Common Stock (collectively, the "Insiders"), to file forms
reporting ownership and changes in their ownership with the Securities and
Exchange Commission (the "SEC") and the Nasdaq National Market. Insiders are
also required by SEC regulations to furnish the Company with copies of all such
Section 16(a) forms they file.

Based solely upon a review of the copies of such forms furnished to
the Company or written representations from certain reporting persons that no
Forms 5 were required for those persons, the Company believes that the Insiders
complied with all applicable Section 16(a) filing requirements during fiscal
year 1998, with the exception of Messrs. Levine, Schreiber, Cohn, Nightingale,
Schafran, Sind, Trouveroy, Marks, Kelly and Ms. Bennett, each of whom filed a
late Form 3. Mr. Nightingale also filed a late Form 5 reporting two
transactions; Mr. Marks also filed two late Forms 4 reporting, in the aggregate,
four transactions; and Mr. Schafran also filed a late Form 4 reporting five
transactions.

NON-DIRECTOR EXECUTIVE OFFICERS AND KEY EMPLOYEES

The following table sets forth certain information with respect to
the executive officers and key employees of the Company (as of January 31,
2000):

Name Age Position
- ---- --- --------

Gregg I. Marks 47 President

Mary Ann Domuracki 45 Executive Vice President--Finance and
Administration

Beverly I. Katz 57 Senior Vice President, General Counsel
and Assistant Secretary (Pending
Appointment)

Barbara Bennett 47 Vice President--Design

Isaac Franco 34 Co-Creative Director and Senior Vice
President of Design for the Company's
Anne Klein division
Kenneth Kaufman 36 Co-Creative Director and Senior Vice
President of Design for the Company's
Anne Klein division

Peter Eng 44 Vice President--Piece Goods

Peter Lee 51 Managing Director--Asia Expert, Ltd.

Gregg I. Marks has served as President of the Company since its
separation from Leslie Fay in June 1997 and had been the President of Sassco,
the Company's predecessor, since January 1989, having served in a number of
other positions in Sassco since August 1983. Mr. Marks is directly responsible
for the supervision of the Kasper suit line sales staff and the heads of all
other divisions report directly to him.

Mary Ann Domuracki has served as Executive Vice President--Finance
and Administration since January 1999. Ms. Domuracki's responsibilities include
corporate finance and general administrative matters of the Company. Prior to
joining the Company, Ms. Domuracki worked as a consultant with the financial
advisory firm of Conway Del Genio Gries & Co., LLC from April 1998 to December
1998. From June 1987 to March 1998, Ms. Domuracki held several executive
positions at

8
<PAGE>

Danskin, Inc., ultimately serving as Chief Executive Officer and President from
April 1996 to March 1998. Ms. Domuracki is a certified public accountant.

Beverly I. Katz has been chosen to serve as Senior Vice President,
General Counsel and Assistant Secretary. Ms. Katz will be responsible for the
legal matters of the Company. From 1987 to September 1999, Ms. Katz was the
General Counsel of Takihyo Inc., the parent company of Anne Klein Company LLC,
and Senior Vice President, General Counsel and Secretary from November 1988.

Barbara Bennett has served as Vice President for Design since the
Company separated from Leslie Fay in June 1997, and had managed Sassco's design
division since October 1980. As head of the Company's in-house design studio,
Ms. Bennett is responsible for coordinating the input she receives from the
Company's sales staff, her design staff, and her analysis of the market to
oversee the design of each of the Company's product lines on a timely basis.

Peter Eng has served as Vice President for Piece Goods since the
Company separated from Leslie Fay in June, 1997, and had managed Sassco's piece
goods division since November 1982. Mr. Eng is responsible for the development
of new fabrics as well as variations of current fabrics.

Peter Lee has served as Managing Director for Asia Expert, Ltd. since
joining the Company in January 1997. Mr. Lee is responsible for management of
the Company's Hong Kong buying office. Prior to joining the Company, Mr. Lee
served for 25 years as Vice President in charge of administration and production
in Taiwan and the Philippines for Carnival Textiles, a publicly-traded Taiwanese
company and one of the Company's largest suppliers.

Kenneth Kaufman has served as Co-Creative Director and Senior Vice
President of Design for the Company's Anne Klein division since it was acquired
by the Company in July 1999. Previously, he was Co-Creative Director and Vice
President of Design for Anne Klein Company LLC since January 1997. Prior to
joining Anne Klein Company LLC, he was a designer for Emanuel/Emanuel Ungaro.

Isaac Franco has served as Co-Creative Director and Senior Vice
President of Design for the Company's Anne Klein division since it was acquired
by the Company in July 1999. Previously, he was Co-Creative Director and Vice
President of Design for Anne Klein Company LLC since January 1997. Prior to
joining Anne Klein Company LLC, he was a designer for Emanuel/Emanuel Ungaro.

9
<PAGE>

EXECUTIVE COMPENSATION

The following table sets forth a summary of all compensation awarded
or paid to or earned by the Chief Executive Officer and the other four most
highly compensated executive officers of the Company in the last fiscal year
(the "Named Executive Officers") for services rendered in all capacities to the
Company (including its subsidiaries) for the fiscal years ended January 2, 1999,
January 3, 1998 and December 28, 1996.

SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
LONG-TERM
COMPENSATION AWARDS
-------------------
ANNUAL COMPENSATION SECURITIES
------------------------------------- UNDERLYING ALL OTHER
NAME AND PRINCIPAL POSITION YEAR SALARY BONUS OPTIONS COMPENSATION
- --------------------------- ---- ------ ----- ------- ------------
<S> <C> <C> <C> <C> <C> <C> <C>
Arthur S. Levine................... 1998 $ 2,000,000 -- (1) -- $ 20,540 (2)
Chairman of the Board 1997 1,200,000 -- 1,240,252 1,507,635 (3)
and Chief Executive Officer 1996 100,000 $ 65,000 -- 3,418,732 (4)

Gregg I. Marks..................... 1998 $ 830,769 $ 115,000 -- $ 16,218 (5)
President 1997 500,000 370,000 171,068 16,824 (5)
1996 260,000 474,200 -- 11,228 (5)

Barbara Bennett.................... 1998 $ 623,077 $ 50,000 -- $ 1,591 (6)
Vice President--Design 1997 600,000 50,000 171,068 3,218 (6)
1996 600,000 50,000 -- 1,477 (6)

Lester E. Schreiber................ 1998 $ 258,173 $ 50,000 -- $ 17,052 (7)
Chief Operating Officer 1997 162,580 62,500 85,536 16,382 (7)
1996 100,080 131,500 -- 15,310 (7)

Dennis P. Kelly.................... 1998 $ 180,288 $ 65,000 -- $ 720 (8)
Chief Financial Officer 1997 150,000 65,000 -- 576 (8)
1996 150,000 60,000 -- 348 (8)

</TABLE>

- -------------------------
(1) Mr. Levine's employment agreement with the Company provides for a
bonus commencing in fiscal year 1998 in an amount between $500,000
and $1.5 million based upon the fulfillment of certain EBITDA hurdles
for the fiscal years 1998, 1999 and thereafter. As a result of
investments made by the Company during fiscal year 1998, the EBITDA
hurdles for fiscal year 1998 were not met and, accordingly, Mr.
Levine did not receive a bonus for that year.

(2) Includes $3,150 in Group Term Life Insurance and $17,390 in
automobile allowance.

(3) Includes $2,325 in Group Term Life Insurance, $17,390 in automobile
allowance and $1,487,920 in consulting fees which Mr. Levine received
in fiscal year 1997 as principal of two consulting firms prior to
June 4, 1997, at which time Mr. Levine became Chairman of the Board
and Chief Executive Officer of the Company.

(4) Includes $450 in Group Term Life Insurance, $15,640 in automobile
allowance and $3,402,642 in consulting fees which Mr. Levine received
in fiscal year 1996 as principal of two consulting firms

10
<PAGE>

prior to June 4, 1997, at which time Mr. Levine became Chairman of
the Board and Chief Executive Officer of the Company.

(5) Includes $1,218, $1,824 and $428 in Group Term Life Insurance and
$15,000, $15,000 and $10,800 in automobile allowance for fiscal years
1998, 1997 and 1996, respectively.

(6) Represents $1,218, $1,566 and $1,218 in Group Term Life Insurance and
a clothing allowance of $373, $2,000 and $259 for fiscal years 1998,
1997 and 1996, respectively.

(7) Includes $1,152, $482 and $160 in Group Term Life Insurance and
$15,900, $15,900 and $15,150 in automobile allowance for fiscal years
1998, 1997 and 1996, respectively.

(8) Represents $720, $576 and $348 in Group Term Life Insurance for
fiscal years 1998, 1997 and 1996, respectively.

AGGREGATED OPTION/SAR EXERCISES IN LAST FISCAL YEAR AND FISCAL YEAR END VALUE
TABLE

The following table sets forth information with respect to the Named
Executive Officers concerning the exercise of options ("Management Options")
issued pursuant to the Company's 1997 Management Stock Option Plan (the "1997
Plan") during 1998 and unexercised Management Options held as of the end of such
year. The price per share of Common Stock of the Company as of the close of
business on December 31, 1998 was $5.00, and the Management Options are
exercisable at $14.00 per share. Accordingly, none of the Named Executive
Officers would have realized any value if they had exercised their Management
Options on such date.

<TABLE>
<CAPTION>
NUMBER OF
SECURITIES VALUE OF
UNDERLYING UNEXERCISED IN-
UNEXERCISED THE-MONEY
OPTIONS AT FISCAL OPTIONS AT FISCAL
YEAR-END YEAR-END
-------- --------
NAME SHARES ACQUIRED ON EXERCISE VALUE REALIZED EXERCISABLE/ UNEXERCISABLE EXERCISABLE/ UNEXERCISABLE
- ---- --------------------------- -------------- -------------------------- --------------------------
<S> <C> <C> <C> <C>
Arthur S. Levine None N/A 496,101/744,151 $ 0.00/0.00
Gregg I. Marks None N/A 68,427/102,642 0.00/0.00
Lester E. Schreiber None N/A 34,214/51,321 0.00/0.00
Dennis P. Kelly None N/A -- 0.00/0.00
Barbara Bennett None N/A 68,427/102,642 0.00/0.00

</TABLE>

No Management Options were issued during 1998. On November 10, 1999,
all outstanding Management Options, with the exception of those Management
Options held by Peter Huang, were cancelled pursuant to an agreement between the
Company and the optionholders. These 1,710,692 Management Options were held by
Messrs. Levine, Marks, Schreiber and Eng and Ms. Bennett. Mr. Huang passed away
on October 31, 1999. Pursuant to the terms of the 1997 Plan, all 42,767
Management Options held by him vested at such time and Mr. Huang's executor has
two years from the date of his death to exercise his options. If the 1999 Plan
is approved by Stockholders, it is expected that the 1997 Plan will be
terminated and any options issued in the future will be issued under the 1999
Plan. Such options will have exercise prices not less than 100% of the fair
market value of the Common Stock on the date the option is granted.
Notwithstanding the cancellation of the 1997 Plan, Mr. Huang's options would
remain outstanding.

11
<PAGE>

EMPLOYMENT AGREEMENTS

The Company has entered into a five-year employment agreement with
Mr. Levine, dated June 4, 1997, which provides for his employment as Chief
Executive Officer and Chairman of the Board of the Company. The agreement
provides for an annual compensation of $2 million. In addition to the base
compensation, the agreement provides for a bonus commencing in fiscal year 1998
in an amount between $500,000 and $1.5 million based upon the fulfillment of
certain EBITDA hurdles for the fiscal years 1998, 1999 and thereafter. Mr.
Levine is entitled to participate in standard benefit plans, such as the
Company's option plans and medical plans. The Company does not maintain a key
person life insurance policy on the life of Mr. Levine.

The employment agreement requires Mr. Levine to provide at least 30
days' notice of intent to terminate the agreement. In addition, the employment
agreement provides that following termination, other than termination by Mr.
Levine for "good reason" (as defined in the employment agreement) or by the
Company without "cause" (as defined in the employment agreement), Mr. Levine
shall not participate or engage in, either directly or indirectly, any business
activity that is directly competitive with the Company for the balance of the
original term of the employment agreement.

The agreement provides that, upon termination for cause (as defined
in the agreement), Mr. Levine will be entitled to receive accrued but unpaid
salary and benefit payments and expense reimbursements; provided, however, that
if Mr. Levine's termination for cause arises out of his material insubordination
(as defined in the agreement), he shall also be entitled to any bonus he would
have received if he had not been terminated. The agreement also provides that,
upon termination without good reason (as defined in the agreement), Mr. Levine
will be entitled to receive a severance payment in one lump sum equal to his
base salary for the remainder of his term of employment, plus any benefits to
which he is entitled, and expense reimbursements; provided, however, that if his
termination without good reason occurs following a change in control (as defined
in the agreement), his lump sum payment of base salary shall be reduced by 43%.

1997 MANAGEMENT STOCK OPTION PLAN

On December 2, 1997, the Board of Directors approved the 1997 Plan.
To date, the Company has issued Management Options to purchase an aggregate of
1,753,459 shares of Common Stock, which upon issuance would represent
approximately 20.5% of the Company's outstanding Common Stock. Such Management
Options are exercisable at $14.00 per share and vest as follows: 25% vested
immediately and 15% vest annually thereafter on June 4 from the years 1998 to
2002. The Management Options expire on June 1, 2004. The 1997 Plan became
effective on December 2, 1997 and terminates on December 2, 2007, unless earlier
terminated by the Company.

The 1997 Plan provides for the grant of Management Options to
purchase Common Stock to officers and employees of and consultants to the
Company and its affiliates who are responsible for or contribute to the
management, growth and profitability of the Company. The total number of shares
of Common Stock for which Management Options may be granted under the 1997 Plan
is 2,500,000 shares. No participant may be granted options covering in excess of
1,500,000 shares of Common Stock over the life of the 1997 Plan. Management
Options are not transferable by the optionee other than by will or the laws of
descent and distribution or to facilitate estate planning, and each Management
Option is exercisable during the lifetime of the optionee only by such optionee.

The 1997 Plan is administered by the Compensation Committee of the
Board of Directors. Management Options granted as of the date hereof are
nonqualified stock options. The term of each Management Option granted pursuant
to the 1997 Plan may be established by the Compensation Committee, in its sole
discretion; provided, however, that the maximum term of each Management Option
granted pursuant to the 1997 Plan is six and one-half years. Management Options
shall become exercisable at such times and in such installments as the
Compensation Committee shall provide in the terms of each individual option
agreement.

12
<PAGE>

NON-EMPLOYEE DIRECTOR STOCK OPTIONS

On June 10, 1997, the Board of Directors approved the grant of stock
options to purchase 20,000 shares of Common Stock to each of its five
non-employee Directors. Each such Director Option has an exercise price of
$14.00 per share and will vest ratably over the first three anniversaries
following the date of the grant. Director Options will expire on the fifth
anniversary of the date of the grant. Director Options are not transferable by
the optionee other than by will or the laws of descent and distribution, and
each Director Option is exercisable during the lifetime of the optionee only by
such optionee. At the date of issue, the fair market value per share was $15.50.

On July 30, 1998, the Board of Directors approved the grant of stock
options to purchase 20,000 shares of Common Stock to Salvatore M. Salibello and
Denis J. Taura, its two newly elected Directors, under the same terms as the
Director Options granted on June 10, 1997. In addition, the Director Options
granted to Clifford B. Cohn and Robert L. Sind, the two outgoing Directors,
became fully vested as of that date. The market value per share on July 30, 1998
was $13.00.

The 6,766 Director Options of Larry G. Schafran which are not
currently exercisable will vest upon the election of his replacement at the
Meeting. The market value per share on January 24, 2000 was $2.36.

Director Options outstanding as of the effectiveness of the 1999 Plan
will remain outstanding if the 1999 Plan is approved by stockholders at the
Meeting. However, any future issuances of options to non-employee Directors may
be issued under the 1999 Plan.

COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION

The Compensation Committee currently consists of Messrs. Salibello,
Schafran, Taura and Trouveroy. No executive officer of the Company serves as a
member of the Board of Directors or Compensation Committee of any entity which
has one or more executive officers serving as a member of the Company's Board of
Directors or Compensation Committee.

REPORT OF THE COMPENSATION COMMITTEE

The Compensation Committee's responsibility is to review and
recommend to the Board of Directors policies, practices and procedures relating
to compensation of key employees and to administer employee benefit plans. The
Compensation Committee is presently composed of Messrs. Salibello, Schafran,
Taura and Trouveroy. If Mr. Mathis is elected to the Board of Directors, it is
currently contemplated that he will serve on the Compensation Committee.

The Company's compensation policies are designed to enable the
Company to attract, motivate and retain senior management by providing
competitive compensation opportunities based both on individual performance and
on the financial performance of the Company. Accordingly, benefits are provided
through stock option incentives and bonuses which are generally consistent with
the goal of

13
<PAGE>

coordinating rewards to management with a maximization of stockholder return. In
reviewing Company performance, consideration is given to the Company's earnings.
Also taken into account are external economic factors that affect results of
operations. An attempt is also made to maintain compensation within the range of
that afforded like executive officers of companies whose size and business is
comparable to that of the Company.

Chief Executive Officer Compensation. For the seven months of fiscal
year 1997 following the Company's emergence from bankruptcy in June 1997, the
salary of Arthur S. Levine, the Company's Chief Executive Officer and Chairman
of the Board, equaled $1,200,000; for fiscal year 1998 it equaled $2,000,000.
Mr. Levine's employment agreement with the Company provides for a bonus
commencing in fiscal year 1998 in an amount between $500,000 and $1.5 million
based upon the fulfillment of certain EBITDA hurdles for fiscal years 1998, 1999
and thereafter. As a result of investments made by the Company during fiscal
year 1998, the EBITDA hurdles for fiscal year 1998 were not met and,
accordingly, Mr. Levine did not receive a bonus for that fiscal year. The terms
of Mr. Levine's compensation for fiscal year 1998 arose out of the separation of
the Company from Leslie Fay in 1997.

The foregoing report is approved by all members of the Compensation
Committee.

Respectfully submitted,

Compensation Committee

-----------------------------------
Salvatore M. Salibello
Larry G. Schafran
Denis J. Taura
Olivier Trouveroy

CERTAIN TRANSACTIONS

On July 30, 1998, the Board of Directors approved the grant of
Director Options to purchase 20,000 shares of Common Stock to Salvatore M.
Salibello and Denis J. Taura, its two newly elected Directors, under the same
terms as the Director Options originally granted to non-employee Directors on
June 10, 1997. See "Non-Employee Director Stock Options." In addition, the
Director Options granted to Clifford B. Cohn and Robert L. Sind, the two
outgoing Directors, became fully vested as of that date. The market value per
share of Common Stock on July 30, 1998 was $13.00.

14
<PAGE>

PERFORMANCE GRAPH

The following graph compares the cumulative total stockholder return
(stock price appreciation plus dividends) on the Company's Common Stock with the
cumulative total return of the Nasdaq Market Index1 and a market weighted index
of publicly traded peers. The returns are calculated by assuming an investment
in the Common Stock and each index of $100 on June 10, 1997 (the first date on
which a stock quote was available in the over-the-counter market for the
Company's Common Stock). On August 7, 1998, the Company's Common Stock was
listed and began trading on the Nasdaq National Market. The publicly traded
companies included in the peer group are: Fruit of the Loom, Inc., Liz
Claiborne, Inc., Russell Corporation and V. F. Corporation.

COMPARISON OF CUMULATIVE TOTAL RETURN
AMONG KASPER A.S.L., LTD.,
NASDAQ MARKET INDEX AND PEER INDEX

FISCAL YEAR ENDING
--------------------------------------------------
COMPANY/INDEX/MARKET 06/10/1997 01/02/1998 12/31/1998
- -------------------- ---------- ---------- ----------

Kasper A.S.L. Limited 100.00 77.42 32.26

Textiles Apparel 100.00 98.68 85.40

NASDAQ Market Index 100.00 112.57 158.77

ASSUMES $100 INVESTED ON JUNE 10, 1997
ASSUMES DIVIDEND REINVESTED
FISCAL YEAR ENDING JANUARY 2, 1999

- --------
1 The Nasdaq Market Index is calculated using all companies which trade on
the NASD National Market System or on the NASD supplemental listing. It
includes both domestic and foreign companies. The index is weighted by the
then current shares outstanding and assumes dividends reinvested. The
return is calculated on a monthly basis.

15
<PAGE>

PROPOSAL 2. APPROVAL OF THE COMPANY'S 1999
SHARE INCENTIVE PLAN

BACKGROUND

The Board of Directors is proposing for stockholder approval the 1999
Plan. For the past two years the Company has used its 1997 Plan as one means of
attracting, retaining and motivating highly competent persons as directors,
officers and key employees of, and consultants to the Company and further
aligning their interests with those of the Company's other Stockholders. The
1999 Plan is intended to replace the 1997 Plan, which is expected to be
terminated if the 1999 Plan is approved by stockholders.

The 1999 Plan is intended to provide incentives which will attract,
retain and motivate highly competent persons as non-employee Directors, officers
and key employees of, and consultants to, the Company and its subsidiaries and
affiliates, by providing them with opportunities to acquire shares of Common
Stock or to receive monetary payments based on the value of such shares pursuant
to the Benefits described herein. Such Benefits are not otherwise available
under the 1997 Plan, which is limited solely to the grant of options to acquire
Common Stock. In addition, the 1999 Plan is open to the Company's Directors and
a broad range of the Company's employees, whereas participation in the 1997 Plan
is limited to only those persons employed at the senior management level of the
Company. The 1999 Plan is intended to assist in further aligning the interests
of the Company's non-employee Directors, officers, key employees and consultants
with those of its other Stockholders. On July 28, 1999, the Compensation
Committee adopted, and the Board of Directors ratified, subject to Stockholder
approval, the 1999 Plan. In structuring the 1999 Plan, the Compensation
Committee sought to provide for a variety of awards that could be flexibly
administered to carry out the purposes of the 1999 Plan. This authority will
permit the Company to keep pace with changing developments in compensation and
make the Company competitive with those companies that offer creative incentives
to attract and retain non-employee Directors, officers, key employees and
consultants. Many other companies have addressed these same issues in recent
years and adopted an "omnibus" type of plan. The 1999 Plan grants a committee
discretion in establishing the terms and restrictions deemed appropriate for
particular awards as circumstances warrant.

THE FOLLOWING SUMMARY OF THE 1999 PLAN IS NOT INTENDED TO BE COMPLETE
AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO THE COPY OF THE 1999 PLAN
ATTACHED TO THIS PROXY STATEMENT AS ANNEX A HERETO.

TREATMENT OF OPTIONS ISSUED PURSUANT TO THE 1997 PLAN AND OPTIONS ISSUED TO
NON-EMPLOYEE DIRECTORS PRIOR TO THE EFFECTIVENESS OF THE 1999 PLAN

No Management Options were issued during 1998. On November 10, 1999,
all outstanding Management Options, with the exception of those Management
Options held by Peter Huang, were cancelled pursuant to an agreement between the
Company and the optionholders. These 1,710,692 Management Options were held by
Messrs. Levine, Marks, Schreiber and Eng and Ms. Bennett. Mr. Huang passed away
on October 31, 1999. Pursuant to the terms of the 1997 Plan, all 42,767
Management Options held by him vested at such time and Mr. Huang's executor has
two years from the date of his death to exercise his options. If the 1999 Plan
is approved by Stockholders, it is expected that the 1997 Plan will be
terminated and any options issued in the future will be issued under the 1999
Plan. Such options will have exercise prices not less than 100% of the fair
market value of the Common Stock on the date the option is granted. However,
Director Options outstanding as of the effectiveness of the 1999 Plan, as well
as the Management Options held by Mr. Huang, will remain outstanding.

SHARES AVAILABLE

The maximum number of shares of Common Stock that may be delivered to
participants under the 1999 Plan, subject to certain adjustments, is equal to
2,500,000 shares. In addition, any shares of Common Stock subject to a stock
option or stock appreciation right which for any reason is cancelled or

16
<PAGE>

terminated without having been exercised and, subject to limited exceptions, any
shares subject to stock awards, performance awards or stock units which are
forfeited, any shares subject to performance awards settled in cash or any
shares delivered to the Company as part or full payment for the exercise of a
stock option or stock appreciation right, shall again be available for Benefits
under the 1999 Plan.

During the term of the 1999 Plan, the number of shares of Common
Stock with respect to which Benefits may be granted to an individual participant
shall not exceed 1,500,000. The unanimous consent of the Compensation Committee
is required for the grant of options to any recipient if, upon that grant, the
aggregate number of shares of Common Stock underlying options held by that
recipient shall be equal to or greater than 20,000.

ADMINISTRATION

The 1999 Plan provides for administration by a committee (the
"Committee") of the Board of Directors of the Company appointed from among its
members (which may be the Compensation Committee), which is comprised, unless
otherwise determined by the Board of Directors, solely of not less than two
members who shall be (i) "Non-Employee Directors" within the meaning of Rule
16b-3(b)(3) (or any successor rule) promulgated under the Securities Exchange
Act of 1934, as amended (the "Exchange Act") and (ii) "outside directors" within
the meaning of Treasury Regulation section 1.162-27(e)(3) under Section 162(m)
of the Internal Revenue Code of 1986, as amended (the "Code"). The Committee is
authorized, subject to the provisions of the 1999 Plan, to establish such rules
and regulations as it deems necessary for the proper administration of the 1999
Plan and to make such determinations and interpretations and to take such action
in connection with the 1999 Plan and any Benefits granted as it deems necessary
or advisable. Thus, among the Committee's powers are the authority to select
officers and other key employees of the Company and its subsidiaries to receive
Benefits and to determine the form, amount and other terms and conditions of
Benefits. The Committee also has the power to modify or waive restrictions on
Benefits, to amend Benefits and to grant extensions and accelerations of
Benefits. Notwithstanding the foregoing, the Board of Directors will have the
authority for making grants of Benefits under the 1999 Plan to Directors of the
Company who are not employees of the Company or its subsidiaries, on such terms
and conditions as the Board of Directors shall determine.

ELIGIBILITY FOR PARTICIPATION

Participants will consist of such Directors, officers and key
employees of, and such consultants to, the Company and its subsidiaries and
affiliates as the Committee in its sole discretion determines to be responsible
for the success and future growth and profitability of the Company and whom the
Committee may designate from time to time to receive Benefits under the 1999
Plan. All of the Company's non-employee Directors will be eligible to
participate in the 1999 Plan. Currently, there are five non-employee Directors.
The number of officers and key employees who are eligible to participate in the
1999 Plan is estimated to be 100. An estimate of the number of consultants who
are eligible to participate in the 1999 Plan has not been made.

TYPES OF BENEFITS

The 1999 Plan provides for the grant of any or all of the following
types of benefits: (1) stock options, including incentive stock options and
non-qualified stock options; (2) stock appreciation rights; (3) stock awards;
(4) performance awards; and (5) stock units (collectively, "Benefits"). Benefits
may be granted singly, in combination or in tandem, as determined by the
Committee. Stock awards, performance awards and stock units may, as determined
by the Committee in its discretion, constitute performance-based awards, as
described below.

STOCK OPTIONS

Under the 1999 Plan, the Committee may grant awards in the form of
options to purchase shares of Common Stock. Options may either be incentive
stock options, qualifying for special tax

17
<PAGE>

treatment, or non-qualified options; however, no incentive stock option shall be
issued to a participant in tandem with a non-qualified stock option. Incentive
Stock Options may be granted only to participants who are employees of the
Company or one of its subsidiaries (within the meaning of Section 424(f) of the
Code) at the date of the grant. The Committee will, with regard to each stock
option, determine the number of shares subject to the option, the manner and
time of the option's exercise and vesting, and the exercise price per share of
stock subject to the option. The exercise price will not be less than 100% of
the fair market value of the Common Stock on the date the stock option is
granted (the "Fair Market Value"). The exercise price may be paid in cash or, in
the discretion of the Committee, by the delivery of shares of Common Stock then
owned by the participant, by the withholding of shares of Common Stock for which
a stock option is exercisable, or by a combination of these methods. In the
discretion of the Committee, payment may also be made by delivering a properly
executed exercise notice to the Company, together with a copy of irrevocable
instructions to a broker to deliver promptly to the Company the amount of sale
or loan proceeds to pay the exercise price. The Committee may prescribe any
other method of paying the exercise price that it determines to be consistent
with applicable law and the purpose of the 1999 Plan. In determining which
methods a participant may utilize to pay the exercise price, the Committee may
consider such factors as it determines are appropriate. No stock option is
exercisable later than ten years after the date it is granted except in the
event of a participant's death, in which case, the exercise period may be
extended but no later than one year after the participant's death. The Committee
may, at the time of the grant, provide for the grant of a subsequent
"restoration" stock option if the exercise price is paid for by delivering
previously owned shares of Common Stock of the Company. Restoration stock
options (i) may be granted in respect of no more than the number of shares of
Common Stock tendered in exercising the predecessor option, (ii) have an
exercise price equal to the Fair Market Value on the date the restoration stock
option is granted and (iii) have an exercise period that does not extend beyond
the remaining term of the predecessor option. As an illustration of the
foregoing, assume that an option holder holds five shares of common stock of
company X and an option to purchase ten shares of common stock of company X at
$5 per share ($50 aggregate exercise price) which expires on December 31, 2000.
In addition, assume shares of common stock of company X currently trade at $10
per share. In lieu of paying the aggregate exercise price in cash, the option
holder may pay the exercise price by delivering to company X the option holder's
five shares of company X common stock (worth $50). In exchange, company X will
issue to the option holder 10 shares of common stock and a "restoration option"
to purchase five shares of company X common stock at $10 per share, which
restoration option terminates on December 31, 2000.

STOCK APPRECIATION RIGHTS ("SARS")

The 1999 Plan authorizes the Committee to grant an SAR either in
tandem with a stock option or independent of a stock option. An SAR is a right
to receive a payment in cash, Common Stock or a combination thereof, equal to
the excess of (x) the Fair Market Value, or other specified valuation, of a
specified number of shares of Common Stock on the date the right is exercised
over (y) the Fair Market Value or other specified valuation (which shall not be
less than Fair Market Value) of such shares of Common Stock on the date the
right is granted, all as determined by the Committee. SARs may constitute
Performance-Based Awards, as described below. SARs granted under the 1999 Plan
are subject to terms and conditions relating to exercisability that are similar
to those imposed on stock options, and each SAR is subject to such terms and
conditions as the Committee shall impose from time to time.

STOCK AWARDS

The Committee may, in its discretion, grant Stock Awards (which may
include mandatory payment of bonus incentive compensation in stock) consisting
of Common Stock issued or transferred to participants with or without other
payments therefore. Stock Awards may be subject to such terms and conditions as
the Committee determines appropriate, including, without limitation,
restrictions on the sale or other disposition of such shares, the right of the
Company to reacquire such shares for no consideration upon termination of the
participant's employment within specified periods, the right of the participant
to elect to defer receipt of such Stock Award or the requirement that the
participant defer such receipt, and may constitute Performance-Based Awards, as
described below. The Stock Award will specify whether the participant will have,
with respect to the shares of Common Stock subject to a Stock Award, all

18
<PAGE>

of the rights of a holder of shares of Common Stock, including the right to
receive dividends and to vote the shares.

PERFORMANCE AWARDS

The 1999 Plan allows for the grant of performance awards which may
take the form of shares of Common Stock, stock units or any combination thereof,
and which may constitute Performance-Based Awards. Such awards will be
contingent upon the attainment over a period to be determined by the Committee
of certain performance goals. The length of the performance period, the
performance goals to be achieved and the measure of whether and to what degree
such goals have been achieved will be determined by the Committee. Payment of
earned performance awards will be made in accordance with terms and conditions
prescribed or authorized by the Committee. The participant may elect to defer,
or the Committee may require the deferral of, the receipt of performance awards,
upon such terms as the Committee deems appropriate.

STOCK UNITS

The Committee may, in its discretion, grant Stock Units to
participants, which may constitute Performance-Based Awards. A "Stock Unit"
means a notional account representing one share of Common Stock. The Committee
shall determine the criteria for the vesting of Stock Units and may provide for
payment in shares of Common Stock, in cash or in any combination of shares of
Common Stock and cash, at such time as the award agreement shall specify. In
addition, the Committee may determine whether a participant granted a Stock Unit
shall be entitled to Dividend Equivalent Rights (as defined in the 1999 Plan).
Upon vesting of a Stock Unit, unless the Committee has determined to defer
payment with respect to such unit or a participant has elected to defer payment,
shares of Common Stock representing the Stock Units will be distributed to the
participant unless the Committee provides for the payment of the Stock Units in
cash or partly in cash and partly in shares of Common Stock equal to the value
of the shares of Common Stock which would otherwise be distributed to the
participant.

PERFORMANCE-BASED AWARDS

Certain Benefits granted under the 1999 Plan may be granted in a
manner such that the Benefit qualifies for the performance-based compensation
exemption to Section 162(m) of the Code ("Performance-Based Awards"). As
determined by the Committee in its sole discretion, either the granting or
vesting of such Performance-Based Awards will be based upon the achievement of
hurdle rates and/or growth in one or more of the following business criteria:
(i) net earnings; (ii) earnings per share; (iii) net sales growth; (iv) market
share; (v) net operating profit; (vi) expense targets; (vii) working capital
targets relating to inventory and/or accounts receivable; (viii) operating
margin; (ix) return on equity; (x) return on assets; (xi) planning accuracy (as
measured by comparing planned results to actual results); (xii) market price per
share; (xiii) total return to stockholders; (xiv) divisional sales and
profitability; (xv) earnings before interest and taxes; (xvi) earnings before
interest, taxes, depreciation and amortization; (xvii) market expansion; and
(xviii) entering into new markets. In addition, Performance-Based Awards may
include comparisons to the performance of other companies, such performance to
be measured by one or more of the foregoing criteria. With respect to
Performance-Based Awards, the Committee shall establish in writing (x) the
performance goals applicable to a given period, and such performance goals shall
state, in terms of an objective formula or standard, the method for computing
the amount of compensation payable to the participant if such performance goals
are obtained and (y) the individual employees or class of employees to which
such performance goals apply no later than 90 days after the commencement of
such period (but in no event after 25% of such period has elapsed). No
Performance-Based Award shall be payable to, or vest with respect to, as the
case may be, any participant for a given fiscal period until the Committee
certifies in writing that the objective performance goals (and any other
material terms) applicable to such period have been satisfied.

19
<PAGE>

EFFECTIVE DATE

The 1999 Plan shall be effective as of July 28, 1999, the date on
which the 1999 Plan was adopted by the Committee (the "Effective Date"),
provided that the 1999 Plan is approved by the stockholders of the Company at an
annual meeting or any special meeting of stockholders of the Company within 12
months of the Effective Date, and such approval of stockholders shall be a
condition to the right of each participant to receive any Benefits hereunder.
Any Benefits granted under the 1999 Plan prior to such approval of stockholders
shall be effective as of the date of the grant (unless, with respect to any
Benefit, the Committee specifies otherwise at the time of the grant), but no
such Benefit may be exercised or settled and no restrictions relating to any
Benefit may lapse prior to such stockholder approval, and if stockholders fail
to approve the 1999 Plan as specified hereunder, any such Benefit shall be
cancelled. The 1999 Plan terminates on July 28, 2009, and no Benefit may be
granted after July 28, 2009 (unless sooner terminated by the Company).

OTHER TERMS

The 1999 Plan provides that Benefits may be transferred by will or
the laws of descent and distribution. The Committee determines the treatment to
be afforded to a participant in the event of termination of employment for any
reason including death, disability or retirement. In addition to the foregoing,
other than with respect to incentive stock options, the Committee may permit the
transferability of a Benefit by a participant to certain members of the
participant's immediate family or trusts for the benefit of such persons or
other entities owned by such person.

Upon the grant of any Benefit under the 1999 Plan, the Committee may,
by way of an agreement with the participant, establish such other terms,
conditions, restrictions and/or limitations covering the grant of the Benefit as
are not inconsistent with the 1999 Plan. The Committee reserves the right to
amend, suspend or terminate the 1999 Plan at any time. However, no amendment may
be made without approval of the stockholders of the Company if the amendment
will: (i) disqualify any incentive stock options granted under the plan; (ii)
increase the aggregate number of shares of Common Stock that may be delivered
through stock options under the plan; (iii) increase either of the maximum
amounts which can be paid to an individual participant under the plan; (iv)
change the types of business criteria on which Performance-Based Awards are to
be based under the plan; or (v) modify the requirements as to eligibility for
participation in the plan.

The 1999 Plan contains provisions for equitable adjustment of
Benefits in the event of a merger, consolidation, reorganization,
recapitalization, stock dividend, stock split, reverse stock split, split up,
spinoff, combination of shares, exchange of shares, dividend in kind or other
like change in capital structure or distribution (other than normal cash
dividends) to stockholders of the Company. In addition, if there is a Change in
Control (as defined in the 1999 Plan) of the Company, all then outstanding
Benefits that have not vested or become exercisable at the time of such Change
in Control shall immediately vest and become exercisable and all performance
targets relating to such Benefits shall be deemed to have been satisfied at the
time of such Change in Control. In the discretion of the Committee, upon a
Change in Control, each holder shall receive (i) with respect to each share of
Common Stock that is subject to a Stock Option or SAR, an amount equal to the
excess of the Fair Market Value of such share of Common Stock immediately prior
to the occurrence of such Change in Control over the exercise price per share of
such Stock Option or SAR (as the case may be) and (ii) with respect to each
share of Common Stock that is subject to a Stock Award or Stock Unit, the Fair
Market Value of such share of Common Stock immediately prior to the occurrence
of such Change in Control; such amount to be payable in cash, in one or more
kinds of property (including the property, if any, payable in the transaction)
or in a combination thereof.

The Committee may grant Benefits to participants who are subject to
the tax laws of nations other than the United States, which Benefits may have
terms and conditions as determined by the Committee as necessary to comply with
applicable foreign laws. The Committee may take any action which it deems
advisable to obtain approval of such Benefits by the appropriate foreign
governmental

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entity; provided, however, that no such Benefits may be granted, and no action
may be taken which would violate the Exchange Act, the Code or any other
applicable law.

CERTAIN FEDERAL INCOME TAX CONSEQUENCES

The statements in the following paragraphs of the principal U.S.
federal income tax consequences of Benefits under the 1999 Plan are based on
statutory authority and judicial and administrative interpretations, as of the
date of this Proxy Statement, which are subject to change at any time (possibly
with retroactive effect). The law is technical and complex, and the discussion
below represents only a general summary.

Incentive Stock Options. Incentive stock options ("ISOs") granted
under the 1999 Plan are intended to meet the definitional requirements of
Section 422(b) of the Code for "incentive stock options." An employee who
receives an ISO does not recognize any taxable income upon the grant of such
ISO. Similarly, the exercise of an ISO generally does not give rise to federal
income tax to the employee, provided that (i) the federal "alternative minimum
tax," which depends on the employee's particular tax situation, does not apply
and (ii) the employee is employed by the Company from the date of grant of the
option until three months prior to the exercise thereof, except where such
employment terminates by reason of disability (where the three month period is
extended to one year) or death (where this requirement does not apply). If an
employee exercises an ISO after these requisite periods, the ISO will be treated
as an NSO (as defined below) and will be subject to the rules set forth below
under the caption "Non-Qualified Stock Options and Stock Appreciation Rights."
Further, if after exercising an ISO, an employee disposes of the Common Stock so
acquired more than two years from the date of grant and more than one year from
the date of transfer of the Common Stock pursuant to the exercise of such ISO
(the "applicable holding period"), the employee will generally recognize capital
gain or loss equal to the difference, if any, between the amount received for
the shares and the exercise price. If, however, an employee does not hold the
shares so acquired for the applicable holding period -- thereby making a
"disqualifying disposition" -- the employee would recognize ordinary income
equal to the excess of the fair market value of the shares at the time the ISO
was exercised over the exercise price and the balance, if any, would generally
be treated as capital gain. If the disqualifying disposition is a sale or
exchange that would permit a loss to be recognized under the Code (were a loss
in fact to be realized), and the sales proceeds are less than the fair market
value of the shares on the date of exercise, the employee's ordinary income
therefrom would be limited to the gain (if any) realized on the sale. An
employee who exercises an ISO by delivering Common Stock previously acquired
pursuant to the exercise of another ISO is treated as making a "disqualifying
disposition" of such Common Stock if such shares are delivered before the
expiration of their applicable holding period. Upon the exercise of an ISO with
previously acquired shares as to which no disqualifying disposition occurs,
despite some uncertainty, it appears that the employee would not recognize gain
or loss with respect to such previously acquired shares. The Company will not be
allowed a federal income tax deduction upon the grant or exercise of an ISO or
the disposition, after the applicable holding period, of the Common Stock
acquired upon exercise of an ISO. In the event of a disqualifying disposition,
the Company generally will be entitled to a deduction in an amount equal to the
ordinary income included by the employee, provided that such amount constitutes
an ordinary and necessary business expense to the Company and is reasonable and
the limitations of Sections 280G and 162(m) of the Code (discussed below) do not
apply.

Non-Qualified Stock Options and Stock Appreciation Rights.
Non-qualified stock options ("NSOs") granted under the 1999 Plan are options
that do not qualify as ISOs. An employee who receives an NSO or an SAR will not
recognize any taxable income upon the grant of such NSO or SAR. However, the
employee generally will recognize ordinary income upon exercise of an NSO in an
amount equal to the excess of the fair market value of the shares of Common
Stock at the time of exercise over the exercise price. Similarly, upon the
receipt of cash or shares pursuant to the exercise of an SAR, the individual
generally will recognize ordinary income in an amount equal to the sum of the
cash and the fair market value of the shares received. As a result of Section
16(b) of the Exchange Act, under certain circumstances, the timing of income
recognition may be deferred (the "Deferral Period") for any individual who is an
executive officer or director of the Company or a beneficial owner of more than
ten percent (10%) of any class of equity securities of the Company. Absent a
Section 83(b) election (as described below under

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"Other Awards"), recognition of income by the individual will be deferred until
the expiration of the Deferral Period, if any. The ordinary income recognized
with respect to the receipt of shares or cash upon exercise of an NSO or an SAR
will be subject to both wage withholding and other employment taxes. In addition
to the customary methods of satisfying the withholding tax liabilities that
arise upon the exercise of an SAR for shares or upon the exercise of an NSO, the
Company may satisfy the liability in whole or in part by withholding shares of
Common Stock from those that otherwise would be issuable to the individual or by
the employee tendering other shares owned by him or her, valued at their fair
market value as of the date that the tax withholding obligation arises. A
federal income tax deduction generally will be allowed to the Company in an
amount equal to the ordinary income included by the individual with respect to
his or her NSO or SAR, provided that such amount constitutes an ordinary and
necessary business expense to the Company and is reasonable and the limitations
of Sections 280G and 162(m) of the Code do not apply. If an individual exercises
an NSO by delivering shares of Common Stock, other than shares previously
acquired pursuant to the exercise of an ISO which is treated as a "disqualifying
disposition" as described above, the individual will not recognize gain or loss
with respect to the exchange of such shares, even if their then fair market
value is different from the individual's tax basis. The individual, however,
will be taxed as described above with respect to the exercise of the NSO as if
he or she had paid the exercise price in cash, and the Company likewise
generally will be entitled to an equivalent tax deduction.

Other Awards. With respect to other Benefits under the 1999 Plan that
are settled either in cash or in shares of Common Stock that are either
transferable or not subject to a substantial risk of forfeiture (as defined in
the Code and the regulations thereunder), employees generally will recognize
ordinary income equal to the amount of cash or the fair market value of the
Common Stock received. With respect to Benefits under the 1999 Plan that are
settled in shares of Common Stock that are restricted as to transferability or
subject to a substantial risk of forfeiture -- absent a written election
pursuant to Section 83(b) of the Code filed with the Internal Revenue Service
within 30 days after the date of transfer of such shares pursuant to the award
(a "Section 83(b) election") -- an individual will recognize ordinary income at
the earlier of the time at which (i) the shares become transferable or (ii) the
restrictions that impose a substantial risk of forfeiture of such shares lapse,
in an amount equal to the excess of the fair market value (on such date) of such
shares over the price paid for the award, if any. If a Section 83(b) election is
made, the individual will recognize ordinary income, as of the transfer date, in
an amount equal to the excess of the fair market value of the Common Stock as of
that date over the price paid for such award, if any. The ordinary income
recognized with respect to the receipt of cash, shares of Common Stock or other
property under the 1999 Plan will be subject to both wage withholding and other
employment taxes. The Company generally will be allowed a deduction for federal
income tax purposes in an amount equal to the ordinary income recognized by the
employee, provided that such amount constitutes an ordinary and necessary
business expense and is reasonable and the limitations of Sections 280G and
162(m) of the Code do not apply.

Dividends and Dividend Equivalents. To the extent Benefits under the
1999 Plan earn dividends or dividend equivalents, whether paid currently or
credited to an account established under the 1999 Plan, an individual generally
will recognize ordinary income with respect to such dividends or dividend
equivalents.

Change in Control. In general, if the total amount of payments to an
individual that are contingent upon a "change of control" of the Company (as
defined in Section 280G of the Code), including payments under the 1999 Plan
that vest upon a "change in control," equals or exceeds three times the
individual's "base amount" (generally, such individual's average annual
compensation for the five calendar years preceding the change in control), then,
subject to certain exceptions, the payments may be treated as "parachute
payments" under the Code, in which case a portion of such payments would be
non-deductible to the Company and the individual would be subject to a 20%
excise tax on such portion of the payments.

Certain Limitations on Deductibility of Executive Compensation. With
certain exceptions, Section 162(m) of the Code denies a deduction to publicly
held corporations for compensation paid to certain executive officers in excess
of $1 million per executive per taxable year (including any deduction with
respect to the exercise of an NSO or SAR or the disqualifying disposition of
stock purchased pursuant to an ISO). One such exception applies to certain
performance-based compensation

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<PAGE>

provided that such compensation has been approved by stockholders in a separate
vote and certain other requirements are met. If approved by its stockholders,
the Company believes that Stock Options, SARs and Performance-Based Awards
granted under the 1999 Plan should qualify for the performance-based
compensation exception to Section 162(m) of the Code.

OTHER INFORMATION

The closing price of a share of Common Stock on January 24, 2000 was
$2.36 per share. Approval of the 1999 Plan requires the affirmative vote of a
majority of the votes cast by the holders of the shares of Common Stock of the
Company voting in person or by proxy at the Meeting. If the 1999 Plan is not
approved by Stockholders, the Company will reconsider the alternatives available
with respect to the compensation of non-employee Directors, employees and others
who are not eligible to receive awards under the 1997 Plan.

THE BOARD OF DIRECTORS BELIEVES THAT THE 1999 PLAN IS IN THE BEST
INTEREST OF THE COMPANY AND ITS STOCKHOLDERS AND THEREFORE RECOMMENDS THAT
STOCKHOLDERS VOTE FOR THE APPROVAL OF THE 1999 PLAN.

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<PAGE>

MISCELLANEOUS

PROXY PROCEDURES AND EXPENSES OF SOLICITATION

The Company will hold the votes of all Stockholders in confidence
from the Company, its Directors, officers and employees except: (i) as necessary
to meet applicable legal requirements and to assert or defend claims for or
against the Company; (ii) in case of a contested proxy solicitation; (iii) in
the event that a Stockholder makes a written comment on the proxy card or
otherwise communicates his/her vote to management; or (iv) to allow the
inspectors of election or transfer agent of the Company to certify the results
of the vote.

The cost of preparing, assembling and mailing the proxy materials is
to be borne by the Company. The Company will also reimburse brokers, fiduciaries
and custodians for their expenses in forwarding proxies and proxy soliciting
materials to the beneficial owners of Common Stock held in their names. The
Company has retained Innisfree M&A Incorporated to assist the Company in
connection with the solicitation of proxies at a cost of approximately $10,000
plus reimbursement of reasonable out-of-pocket expenses. In addition to the use
of the mails, proxies may be solicited without extra compensation by Directors,
officers and employees of the Company by telephone, telecopy, telegraph or
personal interview.

STOCKHOLDER PROPOSALS

Proposals of Stockholders intended to be presented at the 2000 Annual
Meeting of Stockholders must be received by the Company at 77 Metro Way,
Secaucus, New Jersey 07094, Attention: Secretary on or before April 1, 2000, to
be eligible for inclusion in the Company's Proxy Statement and form of proxy
relating to that meeting.

According to the Company's Amended and Restated By-laws, for
nominations of business to be properly brought before an annual meeting by a
Stockholder, the Stockholder must have given timely notice thereof in writing
(in the form specified in the Amended and Restated By-laws) to the Secretary of
the Company, and such business must otherwise be a proper matter for Stockholder
action. To be timely, a Stockholder's notice shall be delivered to the Secretary
at the principal office of the Company not less than seventy days nor more than
ninety days prior to the first anniversary of the preceding year's annual
meeting; provided, however, that in the event the date of an annual meeting is
advanced by more than thirty days or delayed by more than seventy days from the
first anniversary date of the previous year's annual meeting, notice by the
Stockholder to be timely must be so delivered not earlier than the ninetieth day
prior to such annual meeting and not later than the close of business on the
later of the seventieth day prior to such annual meeting or the tenth day
following the day on which public announcement of the date of such meeting is
first made by the Company.

PREVIOUSLY ADJOURNED 1999 ANNUAL MEETING OF STOCKHOLDERS HELD ON SEPTEMBER 28,
1999

As previously announced, the Company's 1999 Annual Meeting was
adjourned on September 28, 1999, at which time the Company's stockholders:

(2) ratified the appointment of Arthur Andersen LLP as the Company's
independent auditors for the year ending January 1, 2000.

The proposal to approve the amendment to the Amended and Restated
Certificate of Incorporation of the Company was approved by the following vote:
(a) 5,077,191 votes were cast "for" the

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<PAGE>

matter; (b) 9,468 votes were cast "against" the matter; and (c) 901 votes
"abstained" from voting on the matter. There were 1,077,825 broker non-votes.

The proposal to ratify the appointment of Arthur Andersen LLP as the
Company's independent certified public accountants for the fiscal year ending
January 1, 2000 was approved by the following vote: (a) 4,821,781 votes were
cast "for" the matter; (b) 76,642 votes were cast "against" the matter; and (c)
1,083 votes "abstained" from voting on the matter.

ADDITIONAL INFORMATION

Management of the Company does not know of any matters other than
those referred to in the accompanying Notice of Re-adjournment of 1999 Annual
Meeting of Stockholders which may properly come before the meeting or other
matters incident to the conduct of the meeting. As to any other matter or
proposal that may properly come before the meeting, including voting for the
election of any person as a Director in place of a nominee named herein who
becomes unable to serve or for good cause will not serve and voting on a
proposal omitted from this Proxy Statement pursuant to the rules of the SEC, it
is intended that proxies received will be voted in accordance with the
discretion of the proxy holders.

The form of Proxy and Proxy Statement have been approved by the Board
of Directors and are being mailed and delivered to Stockholders by its
authority.

By Order of the Board of Directors,

Lester E. Schreiber
Secretary

New York, New York
January 28, 2000

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

THE ANNUAL REPORT TO STOCKHOLDERS OF THE COMPANY FOR THE FISCAL YEAR
ENDED JANUARY 2, 1999, WHICH INCLUDED FINANCIAL STATEMENTS, WAS FURNISHED TO
STOCKHOLDERS AS OF AUGUST 10, 1999, THE PREVIOUS RECORD DATE FOR THE 1999 ANNUAL
MEETING. COPIES OF THE ANNUAL REPORT ARE BEING FURNISHED CONCURRENTLY HEREWITH
ONLY TO STOCKHOLDERS AS OF JANUARY 26, 2000 WHO WERE NOT STOCKHOLDERS AS OF
AUGUST 10, 1999. THE ANNUAL REPORT DOES NOT FORM ANY PART OF THE MATERIAL FOR
SOLICITATIONS OF PROXIES.

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

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ANNEX A
KASPER A.S.L., LTD.

1999 SHARE INCENTIVE PLAN

1. PURPOSE. The Kasper A.S.L., Ltd. 1999 Share Incentive Plan (the
"Plan") is intended to provide incentives which will attract, retain and
motivate highly competent persons as non-employee directors, officers, and key
employees of, and consultants to, Kasper A.S.L., Ltd. (the "Company") and its
subsidiaries and affiliates, by providing them opportunities to acquire shares
of Common Stock, par value $0.01 per share, of the Company ("Common Stock") or
to receive monetary payments based on the value of such shares pursuant to the
Benefits (as defined below) described herein. Additionally, the Plan is intended
to assist in further aligning the interests of the Company's non-employee
directors, officers, key employees and consultants to those of its other
stockholders.

2. ADMINISTRATION.

(a) The Plan will be administered by a committee (the
"Committee") appointed by the Board of Directors of the Company from among its
members (which may be the Compensation Committee) and shall be comprised, unless
otherwise determined by the Board of Directors, solely of not less than two
members who shall be (i) "Non-Employee Directors" within the meaning of Rule
16b-3(b)(3) (or any successor rule) promulgated under the Securities Exchange
Act of 1934, as amended (the "Exchange Act") and (ii) "outside directors" within
the meaning of Treasury Regulation Section 1.162-27(e)(3) under Section 162(m)
of the Internal Revenue Code of 1986, as amended (the "Code"). The Committee is
authorized, subject to the provisions of the Plan, to establish such rules and
regulations as it deems necessary for the proper administration of the Plan and
to make such determinations and interpretations and to take such action in
connection with the Plan and any Benefits granted hereunder as it deems
necessary or advisable. All determinations and interpretations made by the
Committee shall be binding and conclusive on all participants and their legal
representatives. No member of the Committee and no employee of the Company shall
be liable for any act or failure to act hereunder, except in circumstances
involving his or her bad faith, gross negligence or willful misconduct, or for
any act or failure to act hereunder by any other member or employee or by any
agent to whom duties in connection with the administration of this Plan have
been delegated. The Company shall indemnify members of the Committee and any
agent of the Committee who is an employee of the Company, a subsidiary or an
affiliate against any and all liabilities or expenses to which they may be
subjected by reason of any act or failure to act with respect to their duties on
behalf of the Plan, except in circumstances involving such person's bad faith,
gross negligence or willful misconduct.

(b) The Committee may delegate to one or more of its
members, or to one or more agents, such administrative duties as it may deem
advisable, and the Committee, or any person to whom it has delegated duties as
aforesaid, may employ one or more persons to render advice with respect to any
responsibility the Committee or such person may have under the Plan. The
Committee may employ such legal or other counsel, consultants and agents as it
may deem desirable for the administration of the Plan and may rely upon any
opinion or computation received from any such counsel, consultant or agent.
Expenses incurred by the Committee in the engagement of such counsel, consultant
or agent shall be paid by the Company, or the subsidiary or affiliate whose
employees have benefited from the Plan, as determined by the Committee.

(c) Notwithstanding the foregoing, the Board of Directors
shall have the authority to make grants of Benefits under the Plan to directors
of the Company who are not employees of the Company or its subsidiaries, on such
terms and conditions as the Board of Directors shall determine.

3. PARTICIPANTS. Participants will consist of such directors,
officers and key employees of, and such consultants to, the Company and its
subsidiaries and affiliates as the Committee in its sole discretion determines
to be responsible for the success and future growth and profitability of the
Company and whom the Committee may designate from time to time to receive
Benefits under the Plan. Designation of a participant in any year shall not
require the Committee to designate such person to receive a Benefit in any other
year or, once designated, to receive the same type or amount of Benefit as
granted to the

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participant in any other year. The Committee shall consider such factors as it
deems pertinent in selecting participants and in determining the type and amount
of their respective Benefits.

4. TYPE OF BENEFITS. Benefits under the Plan may be granted in any
one or a combination of (a) Stock Options, (b) Stock Appreciation Rights, (c)
Stock Awards, (d) Performance Awards and (e) Stock Units (each as described
below, and collectively, the "Benefits"). Stock Awards, Performance Awards, and
Stock Units may, as determined by the Committee in its discretion, constitute
Performance-Based Awards, as described in Section 11 hereof. Benefits shall be
evidenced by agreements (which need not be identical) in such forms as the
Committee may from time to time approve; provided, however, that in the event of
any conflict between the provisions of the Plan and any such agreements, the
provisions of the Plan shall prevail.

5. COMMON STOCK AVAILABLE UNDER THE PLAN. The aggregate number of
shares of Common Stock that may be subject to Benefits, including Stock Options,
granted under the Plan shall be 2,500,000 shares of Common Stock, which may be
authorized and unissued or treasury shares, subject to any adjustments made in
accordance with Section 13 hereof. The maximum number of shares of Common Stock
with respect to which Benefits may be granted or measured to any individual
participant under the Plan during the term of the Plan shall not exceed
1,500,000; provided, however, that the maximum number of shares of Common Stock
with respect to which Stock Options or Stock Appreciation Rights may be granted
to any individual participant under the Plan during the term of the Plan shall
not exceed 1,500,000 (in each case, subject to adjustments made in accordance
with Section 13 hereof). Any shares of Common Stock subject to a Stock Option or
Stock Appreciation Right which for any reason is cancelled or terminated without
having been exercised, any shares subject to Stock Awards, Performance Awards or
Stock Units which are forfeited, any shares subject to Performance Awards
settled in cash or any shares delivered to the Company as part or full payment
for the exercise of a Stock Option or Stock Appreciation Right shall again be
available for Benefits under the Plan. The preceding sentence shall apply only
for purposes of determining the aggregate number of shares of Common Stock
subject to Benefits but shall not apply for purposes of determining the maximum
number of shares of Common Stock with respect to which Benefits (including the
maximum number of shares of Common Stock subject to Stock Options and Stock
Appreciation Rights) that may be granted to any individual participant under the
Plan. The unanimous consent of the Compensation Committee is required for the
grant of options to any recipient if, upon that grant, the aggregate number of
shares of Common Stock underlying options held by that recipient shall be equal
to or greater than 20,000.

6. STOCK OPTIONS. Stock Options will consist of awards from the
Company that will enable the holder to purchase a number of shares of Common
Stock at set terms. Stock Options may be "incentive stock options" ("Incentive
Stock Options"), within the meaning of Section 422 of the Code, or Stock Options
which do not constitute Incentive Stock Options ("Nonqualified Stock Options").
The Committee will have the authority to grant to any participant one or more
Incentive Stock Options, Nonqualified Stock Options, or both types of Stock
Options (in each case with or without Stock Appreciation Rights). Each Stock
Option shall be subject to such terms and conditions consistent with the Plan as
the Committee may impose from time to time, subject to the following
limitations:

(a) EXERCISE PRICE. Each Stock Option granted hereunder
shall have such per-share exercise price as the Committee may determine at the
date of the grant; provided, however, subject to subsection (d) below, that the
per-share exercise price shall not be less than 100% of the Fair Market Value
(as defined below) of the Common Stock on the date the Stock Option is granted.

(b) PAYMENT OF EXERCISE PRICE. The option exercise price
may be paid in cash or, in the discretion of the Committee, by the delivery of
shares of Common Stock of the Company then owned by the participant, by the
withholding of shares of Common Stock for which a Stock Option is exercisable or
by a combination of these methods. In the discretion of the Committee, payment
may also be made by delivering a properly executed exercise notice to the
Company together with a copy of irrevocable instructions to a broker to deliver
promptly to the Company the amount of sale or loan proceeds to pay the exercise
price. To facilitate the foregoing, the Company may enter into agreements for
coordinated procedures with one or more brokerage firms. The Committee may
prescribe any other method of paying

A-2
<PAGE>

the exercise price that it determines to be consistent with applicable law and
the purpose of the Plan, including, without limitation, in lieu of the exercise
of a Stock Option by delivery of shares of Common Stock of the Company then
owned by a participant, providing the Company with a notarized statement
attesting to the number of shares owned, whereupon verification by the Company,
the Company would issue to the participant only the number of incremental shares
to which the participant is entitled upon exercise of the Stock Option. The
Committee may, at the time of the grant, provide for the grant of a subsequent
Restoration Stock Option if the exercise price is paid for by delivering
previously owned shares of Common Stock of the Company. Restoration Stock
Options (i) may be granted in respect of no more than the number of shares of
Common Stock tendered in exercising the predecessor Stock Option, (ii) shall
have an exercise price equal to the Fair Market Value on the date the
Restoration Stock Option is granted, and (iii) may have an exercise period that
does not extend beyond the remaining term of the predecessor Stock Option. In
determining which methods a participant may utilize to pay the exercise price,
the Committee may consider such factors as it determines are appropriate.

(c) EXERCISE PERIOD. Stock Options granted under the Plan
shall be exercisable at such time or times and subject to such terms and
conditions as shall be determined by the Committee; provided, however, that no
Stock Option shall be exercisable later than ten years after the date it is
granted except in the event of a participant's death, in which case, the
exercise period of such participant's Stock Options may be extended beyond such
period but no later than one year after the participant's death. All Stock
Options shall terminate at such earlier times and upon such conditions or
circumstances as the Committee shall in its discretion set forth in such option
agreement at the date of grant.

(d) LIMITATIONS ON INCENTIVE STOCK OPTIONS. Incentive Stock
Options may be granted only to participants who are employees of the Company or
one of its subsidiaries (within the meaning of Section 424(f) of the Code) at
the date of the grant. The aggregate Fair Market Value (determined as of the
time the Stock Option is granted) of the Common Stock with respect to which
Incentive Stock Options are exercisable for the first time by a participant
during any calendar year (under all option plans of the Company and of any
parent corporation or subsidiary corporation (as defined in Sections 424(e) and
(f) of the Code, respectively)) shall not exceed $100,000. For purposes of the
preceding sentence, Incentive Stock Options will be taken into account in the
order in which they are granted. The per-share exercise price of an Incentive
Stock Option shall not be less than 100% of the Fair Market Value of the Common
Stock on the date of the grant, and no Incentive Stock Option may be exercised
later than ten years after the date it is granted; provided, however, that
Incentive Stock Options may not be granted to any participant who, at the time
of the grant, owns stock possessing (after the application of the attribution
rules of Section 424(d) of the Code) more than 10% of the total combined voting
power of all classes of stock of the Company or any parent or subsidiary
corporation of the Company, unless the exercise price is fixed at not less than
110% of the Fair Market Value of the Common Stock on the date of the grant and
the exercise of such option is prohibited by its terms after the expiration of
five years from the date of the grant of such option. In addition, no Incentive
Stock Option may be issued to a participant in tandem with a Nonqualified Stock
Option.

7. STOCK APPRECIATION RIGHTS.

(a) The Committee may, in its discretion, grant Stock
Appreciation Rights to the holders of any Stock Options granted hereunder. In
addition, Stock Appreciation Rights may be granted independently of, and without
relation to, Stock Options. A Stock Appreciation Right means a right to receive
a payment in cash, Common Stock or a combination thereof, in an amount equal to
the excess of (x) the Fair Market Value, or other specified valuation, of a
specified number of shares of Common Stock on the date the right is exercised
over (y) the Fair Market Value, or other specified valuation (which shall be no
less than the Fair Market Value) of such shares of Common Stock on the date the
right is granted, all as determined by the Committee; provided, however, that if
a Stock Appreciation Right is granted in tandem with or in substitution for a
Stock Option, the designated Fair Market Value in the award agreement may be the
Fair Market Value on the date such Stock Option was granted. Stock Appreciation
Rights may constitute Performance-Based Awards, as described in Section 11
hereof. Each Stock Appreciation Right shall be subject to such terms and
conditions as the Committee shall impose from time to time.

A-3
<PAGE>

(b) Stock Appreciation Rights granted under the Plan shall
be exercisable at such time or times and subject to such terms and conditions as
shall be determined by the Committee; provided, however, that no Stock
Appreciation Rights shall be exercisable later than ten years after the date it
is granted except in the event of a participant's death, in which case, the
exercise period of such participant's Stock Appreciation Rights may be extended
beyond such period but no later than one year after the participant's death. All
Stock Appreciation Rights shall terminate at such earlier times and upon such
conditions or circumstances as the Committee shall in its discretion set forth
in such right at the date of grant.

8. STOCK AWARDS. The Committee may, in its discretion, grant Stock
Awards (which may include mandatory payment of bonus incentive compensation in
stock) consisting of Common Stock issued or transferred to participants with or
without other payments therefor. Stock Awards may be subject to such terms and
conditions as the Committee determines appropriate, including, without
limitation, restrictions on the sale or other disposition of such shares, the
right of the Company to reacquire such shares for no consideration upon
termination of the participant's employment within specified periods, the right
of the participant to elect to defer receipt of such Stock Award or the
requirement that the participant defer such receipt, and may constitute
Performance-Based Awards, as described in Section 11 hereof. The Committee may
require the participant to deliver a duly signed stock power, endorsed in blank,
relating to the Common Stock covered by such an Award. The Committee may also
require that the stock certificates evidencing such shares be held in custody or
bear restrictive legends until the restrictions thereon shall have lapsed. The
Stock Award shall specify whether the participant shall have, with respect to
the shares of Common Stock subject to a Stock Award, all of the rights of a
holder of shares of Common Stock of the Company, including the right to receive
dividends and to vote the shares.

9. PERFORMANCE AWARDS.

(a) Performance Awards may be granted to participants at
any time and from time to time, as shall be determined by the Committee.
Performance Awards may constitute Performance-Based Awards, as described in
Section 11 hereof. The Committee shall have complete discretion in determining
the number, amount and timing of awards granted to each participant. Such
Performance Awards may be in the form of shares of Common Stock or Stock Units.
Performance Awards may be awarded as short-term or long-term incentives.
Performance targets may be based upon, without limitation, Company-wide,
divisional and/or individual performance.

(b) With respect to those Performance Awards that are not
intended to constitute Performance-Based Awards, the Committee shall have the
authority at any time to make adjustments to performance targets for any
outstanding Performance Awards which the Committee deems necessary or desirable
unless at the time of establishment of such targets the Committee shall have
precluded its authority to make such adjustments.

(c) Payment of earned Performance Awards shall be made in
accordance with terms and conditions prescribed or authorized by the Committee.
The participant may elect to defer, or the Committee may require or permit the
deferral of, the receipt of Performance Awards upon such terms as the Committee
deems appropriate.

10. STOCK UNITS.

(a) The Committee may, in its discretion, grant Stock Units
to participants hereunder. The Committee shall determine the criteria for the
vesting of Stock Units and may provide for payment in shares of Common Stock, in
cash or in any combination of shares of Common Stock and cash, at such time as
the award agreement shall specify. Stock Units may constitute Performance-Based
Awards, as described in Section 11 hereof. Shares of Common Stock issued
pursuant to this Section 10 may be issued with or without other payments
therefor as may be required by applicable law or such other consideration as may
be determined by the Committee. The Committee shall determine whether a
participant granted a Stock Unit shall be entitled to a Dividend Equivalent
Right (as defined below).

A-4
<PAGE>

(b) Upon vesting of a Stock Unit, unless the Committee has
determined to defer payment with respect to such unit or a participant has
elected to defer payment under subsection (c) below, shares of Common Stock
representing Stock Units shall be distributed to the participant unless the
Committee provides for the payment of the Stock Units in cash or partly in cash
and partly in shares of Common Stock equal to the value of the shares of Common
Stock which would otherwise be distributed to the participant.

(c) Prior to the year with respect to which a Stock Unit
may vest, the Committee may, in its discretion, permit a participant to elect
not to receive shares of Common Stock and/or cash, as applicable, upon the
vesting of such Stock Unit and for the Company to continue to maintain the Stock
Unit on its books of account. In such event, the value of a Stock Unit shall be
payable in shares of Common Stock and/or cash, as applicable, pursuant to the
agreement of deferral.

(d) A "Stock Unit" means a notional account representing
one share of Common Stock. A "Dividend Equivalent Right" means the right to
receive the amount of any dividend paid on the share of Common Stock underlying
a Stock Unit, which shall be payable in cash or in the form of additional Stock
Units at the time or times specified by the Committee or as the award agreement
shall specify.

11. PERFORMANCE-BASED AWARDS. Certain Benefits granted under the Plan
may be granted in a manner such that the Benefits qualify for the
performance-based compensation exemption of Section 162(m) of the Code
("Performance-Based Awards"). As determined by the Committee in its sole
discretion, either the granting or vesting of such Performance-Based Awards
shall be based on achievement of hurdle rates and/or growth rates in one or more
business criteria that apply to the individual participant, one or more business
units or the Company as a whole. The business criteria shall be as follows,
individually or in combination: (i) net earnings; (ii) earnings per share; (iii)
net sales growth; (iv) market share; (v) net operating profit; (vi) expense
targets; (vii) working capital targets relating to inventory and/or accounts
receivable; (viii) operating margin; (ix) return on equity; (x) return on
assets; (xi) planning accuracy (as measured by comparing planned results to
actual results); (xii) market price per share; (xiii) total return to
stockholders; (xiv) divisional sales and profitability; (xv) earnings before
interest and taxes; (xvi) earnings before interest, taxes, depreciation and
amortization; (xvii) market expansion; and (xviii) entering into new markets. In
addition, Performance-Based Awards may include comparisons to the performance of
other companies, such performance to be measured by one or more of the foregoing
business criteria. With respect to Performance-Based Awards, (i) the Committee
shall establish in writing (x) the performance goals applicable to a given
period, and such performance goals shall state, in terms of an objective formula
or standard, the method for computing the amount of compensation payable to the
participant if such performance goals are obtained and (y) the individual
employees or class of employees to which such performance goals apply no later
than 90 days after the commencement of such period (but in no event after 25% of
such period has elapsed) and (ii) no Performance Based Awards shall be payable
to or vest with respect to, as the case may be, any participant for a given
period until the Committee certifies in writing that the objective performance
goals (and any other material terms) applicable to such period have been
satisfied. With respect to any Benefits intended to qualify as Performance-Based
Awards, after establishment of a performance goal, the Committee shall not
revise such performance goal or increase the amount of compensation payable
thereunder (as determined in accordance with Section 162(m) of the Code) upon
the attainment of such performance goal. Notwithstanding the preceding sentence,
the Committee may reduce or eliminate the number of shares of Common Stock or
cash granted or the number of shares of Common Stock vested upon the attainment
of such performance goal.

12. FOREIGN LAWS. The Committee may grant Benefits to individual
participants who are subject to the tax laws of nations other than the United
States, which Benefits may have terms and conditions as determined by the
Committee as necessary to comply with applicable foreign laws. The Committee may
take any action which it deems advisable to obtain approval of such Benefits by
the appropriate foreign governmental entity; provided, however, that no such
Benefits may be granted pursuant to this Section 12 and no action may be taken
which would result in a violation of the Exchange Act, the Code or any other
applicable law.

A-5
<PAGE>

13. ADJUSTMENT PROVISIONS; CHANGE IN CONTROL.

(a) If there shall be any change in the Common Stock of the
Company, through merger, consolidation, reorganization, recapitalization, stock
dividend, stock split, reverse stock split, split up, spin-off, combination of
shares, exchange of shares, dividend in kind or other like change in capital
structure or distribution (other than normal cash dividends) to stockholders of
the Company, an adjustment shall be made to each outstanding Stock Option and
Stock Appreciation Right such that each such Stock Option and Stock Appreciation
Right shall thereafter be exercisable for such securities, cash and/or other
property as would have been received in respect of the Common Stock subject to
such Stock Option or Stock Appreciation Right had such Stock Option or Stock
Appreciation Right been exercised in full immediately prior to such change or
distribution, and such an adjustment shall be made successively each time any
such change shall occur. In addition, in the event of any such change or
distribution, in order to prevent dilution or enlargement of participants'
rights under the Plan, the Committee will have authority to adjust, in an
equitable manner, the number and kind of shares that may be issued under the
Plan, the number and kind of shares subject to outstanding Benefits, the
exercise price applicable to outstanding Benefits, and the Fair Market Value of
the Common Stock and other value determinations applicable to outstanding
Benefits; provided, however, that any such arithmetic adjustment to a
Performance-Based Award shall not cause the amount of compensation payable
thereunder to be increased from what otherwise would have been due upon
attainment of the unadjusted award. Appropriate adjustments may also be made by
the Committee in the terms of any Benefits under the Plan to reflect such
changes or distributions and to modify any other terms of outstanding Benefits
on an equitable basis, including modifications of performance targets and
changes in the length of performance periods; provided, however, that any such
arithmetic adjustment to a Performance-Based Award shall not cause the amount of
compensation payable thereunder to be increased from what otherwise would have
been due upon attainment of the unadjusted award. In addition, other than with
respect to Stock Options, Stock Appreciation Rights, and other awards intended
to constitute Performance-Based Awards, the Committee is authorized to make
adjustments to the terms and conditions of, and the criteria included in,
Benefits in recognition of unusual or nonrecurring events affecting the Company
or the financial statements of the Company, or in response to changes in
applicable laws, regulations, or accounting principles. Notwithstanding the
foregoing, (i) each such adjustment with respect to an Incentive Stock Option
shall comply with the rules of Section 424(a) of the Code, and (ii) in no event
shall any adjustment be made which would render any Incentive Stock Option
granted hereunder other than an incentive stock option for purposes of Section
422 of the Code.

(b) Notwithstanding any other provision of this Plan, if
there is a Change in Control of the Company, all then outstanding Benefits that
have not vested or become exercisable at the time of such Change in Control
shall immediately vest and become exercisable and all performance targets
relating to such Benefits shall be deemed to have been satisfied as of the time
of such Change in Control. For purposes of this Section 13(b), a "Change in
Control" of the Company shall be deemed to have occurred upon any of the
following events:

(i) During any period of two (2) consecutive years, the
individuals who at the beginning of such period constitute the Company's Board
of Directors or any individuals who would be "Continuing Directors" (as
hereinafter defined) cease for any reason to constitute at least a majority
thereof; or

(ii) The Company's Common Stock shall cease to be
publicly traded; or

(iii) The Company's Board of Directors shall approve a
sale of all or substantially all of the assets of the Company, and such
transaction shall have been consummated; or

(iv) The Company's Board of Directors shall approve any
merger, consolidation, or like business combination or reorganization of the
Company, the consummation of which would result in the occurrence of any event
described in Section 13(b)(i) or (ii) above, and such transaction shall have
been consummated.

A-6
<PAGE>

For purposes of this Section 13(b), "Continuing Directors" shall mean
(x) the directors of the Company in office on the Effective Date (as defined
below) and (y) any successor to any such director and any additional director
who after the Effective Date was nominated or selected by a majority of the
Continuing Directors in office at the time of his or her nomination or
selection.

The Committee, in its discretion, may determine that, upon the
occurrence of a Change in Control of the Company, each Benefit outstanding
hereunder shall terminate within a specified number of days after notice to the
holder, and such holder shall receive (i) with respect to each share of Common
Stock subject to a Stock Option or Stock Appreciation Right, an amount equal to
the excess of the Fair Market Value of such share of Common Stock immediately
prior to the occurrence of such Change in Control over the exercise price per
share of such Stock Option or Stock Appreciation Right (as the case may be) and
(ii) with respect to each share of Common Stock that is subject to a Stock Award
or Stock Unit, the Fair Market Value of such share of Common Stock immediately
prior to the occurrence of such Change in Control; such amount to be payable in
cash, in one or more kinds of property (including the property, if any, payable
in the transaction) or in a combination thereof, as the Committee, in its
discretion, shall determine. The provisions contained in the preceding sentence
shall be inapplicable to a Benefit granted within six (6) months before the
occurrence of a Change in Control if the holder of such Benefit is subject to
the reporting requirements of Section 16(a) of the Exchange Act and no exception
from liability under Section 16(b) of the Exchange Act is otherwise available to
such holder.

14. NONTRANSFERABILITY. Each Benefit granted under the Plan to a
participant shall not be transferable otherwise than by will or the laws of
descent and distribution, and shall be exercisable during the participant's
lifetime only by the participant. In the event of the death of a participant,
each Stock Option or Stock Appreciation Right theretofore granted to him or her
shall be exercisable during such period after his or her death as the Committee
shall in its discretion set forth in such option or right at the date of the
grant and then only by the executor or administrator of the estate of the
deceased participant or the person or persons to whom the deceased participant's
rights under the Stock Option or Stock Appreciation Right shall pass by will or
the laws of descent and distribution. Notwithstanding the foregoing, at the
discretion of the Committee, an award of a Benefit other than an Incentive Stock
Option may permit the transferability of a Benefit by a participant solely to
the participant's spouse, siblings, parents, children and grandchildren or
trusts for the benefit of such persons or partnerships, corporations, limited
liability companies or other entities owned solely by such persons, including
trusts for such persons, subject to any restriction included in the award of the
Benefit.

15. OTHER PROVISIONS. The award of any Benefit under the Plan may
also be subject to such other provisions (whether or not applicable to the
Benefit awarded to any other participant) as the Committee determines
appropriate, including, without limitation, for the installment purchase of
Common Stock under Stock Options, for the installment exercise of Stock
Appreciation Rights, to assist the participant in financing the acquisition of
Common Stock, for the forfeiture of, or restrictions on resale or other
disposition of, Common Stock acquired under any form of Benefit, for the
acceleration of exercisability or vesting of Benefits in the event of a Change
in Control of the Company, for the payment of the value of Benefits to
participants in the event of a Change in Control of the Company, or to comply
with federal and state securities laws, or understandings or conditions as to
the participant's employment (including, without limitation, any restrictions on
the ability of the partipicant to engage in activities that are competitive with
the Company) in addition to those specifically provided for under the Plan.

16. FAIR MARKET VALUE. For purposes of this Plan and any Benefits
awarded hereunder, Fair Market Value shall be the closing price of the Company's
Common Stock on the date of calculation (or on the last preceding trading date
if Common Stock was not traded on such date) if the Company's Common Stock is
readily tradeable on a national securities exchange or other market system, and
if the Company's Common Stock is not readily tradeable, Fair Market Value shall
mean the amount determined in good faith by the Committee as the fair market
value of the Common Stock of the Company.

17. WITHHOLDING. All payments or distributions of Benefits made
pursuant to the Plan shall be net of any amounts required to be withheld
pursuant to applicable federal, state and local tax withholding requirements. If
the Company proposes or is required to distribute Common Stock pursuant to

A-7
<PAGE>

the Plan, it may require the recipient to remit to it or to the corporation that
employs such recipient an amount sufficient to satisfy such tax withholding
requirements prior to the delivery of any certificates for such Common Stock. In
lieu thereof, the Company or the employing corporation shall have the right to
withhold the amount of such taxes from any other sums due or to become due from
such corporation to the recipient as the Committee shall prescribe. The
Committee may, in its discretion and subject to such rules as it may adopt
(including any as may be required to satisfy applicable tax and/or non-tax
regulatory requirements), permit an optionee or award or right holder to pay all
or a portion of the federal, state and local withholding taxes arising in
connection with any Benefit consisting of shares of Common Stock by electing to
have the Company withhold shares of Common Stock having a Fair Market Value
equal to the amount of tax to be withheld, such tax calculated at rates required
by statute or regulation.

18. TENURE. A participant's right, if any, to continue to serve the
Company or any of its subsidiaries or affiliates as an officer, employee, or
otherwise, shall not be enlarged or otherwise affected by his or her designation
as a participant under the Plan.

19. UNFUNDED PLAN. Participants shall have no right, title, or
interest whatsoever in or to any investments which the Company may make to aid
it in meeting its obligations under the Plan. Nothing contained in the Plan, and
no action taken pursuant to its provisions, shall create or be construed to
create a trust of any kind, or a fiduciary relationship between the Company and
any participant, beneficiary, legal representative or any other person. To the
extent that any person acquires a right to receive payments from the Company
under the Plan, such right shall be no greater than the right of an unsecured
general creditor of the Company. All payments to be made hereunder shall be paid
from the general funds of the Company and no special or separate fund shall be
established and no segregation of assets shall be made to assure payment of such
amounts except as expressly set forth in the Plan. The Plan is not intended to
be subject to the Employee Retirement Income Security Act of 1974, as amended.

20. NO FRACTIONAL SHARES. No fractional shares of Common Stock shall
be issued or delivered pursuant to the Plan or any Benefit. The Committee shall
determine whether cash, Benefits or other property shall be issued or paid in
lieu of fractional shares or whether such fractional shares or any rights
thereto shall be forfeited or otherwise eliminated.

21. DURATION, AMENDMENT AND TERMINATION. No Benefit shall be granted
more than ten years after the Effective Date. The Committee may amend the Plan
from time to time or suspend or terminate the Plan at any time. No amendment of
the Plan may be made without approval of the stockholders of the Company if the
amendment will: (i) disqualify any Incentive Stock Options granted under the
Plan; (ii) increase the aggregate number of shares of Common Stock that may be
delivered through Stock Options under the Plan; (iii) increase either of the
maximum amounts which can be paid to an individual participant under the Plan as
set forth in Section 5 hereof; (iv) change the types of business criteria on
which Performance-Based Awards are to be based under the Plan; or (v) modify the
requirements as to eligibility for participation in the Plan.

22. GOVERNING LAW. This Plan, Benefits granted hereunder and actions
taken in connection herewith shall be governed and construed in accordance with
the laws of the State of New York (regardless of the law that might otherwise
govern under applicable New York principles of conflict of laws).

23. EFFECTIVE DATE.

(a) The Plan shall be effective as of July 28, 1999, the
date on which the Plan was adopted by the Committee (the "Effective Date"),
provided that the Plan is approved by the stockholders of the Company at an
annual meeting or any special meeting of stockholders of the Company within 12
months of the Effective Date, and such approval of stockholders shall be a
condition to the right of each participant to receive any Benefits hereunder.
Any Benefits granted under the Plan prior to such approval of stockholders shall
be effective as of the date of the grant (unless, with respect to any Benefit,
the Committee specifies otherwise at the time of the grant), but no such Benefit
may be exercised or settled and no restrictions relating to any Benefit may
lapse prior to such stockholder approval, and if stockholders fail to approve
the Plan as specified hereunder, any such Benefit shall be cancelled.

A-8
<PAGE>

(b) This Plan shall terminate on July 28, 2009 (unless
sooner terminated by the Committee).

A-9
<PAGE>

ANNEX B

- --------------------------------------------------------------------------------
KASPER A.S.L., LTD.

PROXY FOR RE-ADJOURNMENT OF THE ANNUAL MEETING OF STOCKHOLDERS
MARCH 14, 2000
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS

The undersigned, revoking all previous proxies, hereby constitutes and appoints
as proxies for the undersigned, ARTHUR S. LEVINE, LESTER E. SCHREIBER and MARY
ANN DOMURACKI, or any one of them, with full power of substitution, to vote all
shares of the common stock of Kasper A.S.L., Ltd. (the "Company") which the
undersigned is entitled to vote at the Re-Adjournment of the Annual Meeting of
Stockholders of the Company to be held on Tuesday, March 14, 2000, at 10:00
a.m., Eastern time, at the offices of Weil, Gotshal & Manges LLP, 767 Fifth
Avenue, New York, New York 10153, and at any adjournments or postponements
thereof, receipt of Notice of which Re-Adjournment of the Meeting and the Proxy
Statement accompanying the same being hereby acknowledged by the undersigned,
upon the matters described in the Notice of Re-Adjournment of the Meeting and
Proxy Statement and upon such other business as may properly come before the
Meeting and any adjournments or postponements thereof, and otherwise in their
discretion, hereby revoking any proxies heretofore given.

EACH PROPERLY EXECUTED PROXY WILL BE VOTED IN ACCORDANCE WITH THE
SPECIFICATION MADE ON THE REVERSE SIDE HEREOF. IF NO SPECIFICATIONS ARE MADE,
THE PROXIES WILL BE VOTED FOR EACH LISTED NOMINEE TO SERVE AS A DIRECTOR AND FOR
PROPOSAL 2.

(CONTINUED AND TO BE SIGNED ON THE REVERSE SIDE)
- --------------------------------------------------------------------------------

NY2:\871603\01\55745.0005
<PAGE>

PLEASE DATE, SIGN AND MAIL YOUR
PROXY CARD BACK AS SOON AS POSSIBLE!

RE-ADJOURNMENT OF THE ANNUAL MEETING OF STOCKHOLDERS
KASPER A.S.L., LTD

MARCH 14, 2000

~/ PLEASE DETACH AND MAIL IN THE ENVELOPE PROVIDED ~/
<TABLE>

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

<S> <C> <C> <C> <C> <C>
A |X| Please mark your votes as in this example.

FOR each nominee
listed at right WITHHOLD
(except AUTHORITY
as marked to the to vote for all nominees
contrary below) listed at right

1. ELECTION OF [ ] [ ]
DIRECTORS
(check one box only)

FOR, except vote withheld
from the following nominee(s):

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

THE BOARD OF DIRECTORS RECOMMENDS THAT YOU VOTE "FOR" THE NOMINEES AND THE PROPOSAL LISTED
BELOW.

Nominees: Arthur S. Levine
For Against Abstain
H. Sean Mathis
William J. Nightingale 2 To approve the Company's 1999 Share Incentive Plan [ ] [ ] [ ]
Salvatore M. Salibello
Lester E. Schreiber
Denis J. Taura
Olivier Trouveroy

PLEASE DATE AND SIGN THIS PROXY AND MAIL IT PROMPTLY IN THE ENCLOSED ENVELOPE.
NO POSTAGE IS REQUIRED IF MAILED IN THE UNITED STATES.

- ---------------------------------------------- -------------------------------------------- Dated: ________________, 2000
SIGNATURE (TITLE, IF ANY) SIGNATURE, IF HELD JOINTLY

NOTE: Please sign exactly as name appears on the certificate or certificates
representing shares to be voted by this proxy, as shown on the label
above. When signing as executor, administrator, attorney, trustee, or
guardian, please give full title as such. If a corporation, please sign
full corporation name by president or other authorized officer. If a
partnership, please sign in partnership name by authorized person(s)

- -----------------------------------------------------------------------------------------------------------------------------------
</TABLE>