CROWN CRAFTS INC, 8-K, 1995-11-13

CROWN CRAFTS INC
8-K, 1995-11-13
BROADWOVEN FABRIC MILLS, COTTON

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<PAGE> 1

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 8-K

CURRENT REPORT

PURSUANT TO SECTION 13 OR 15(d) OF THE

SECURITIES EXCHANGE ACT OF 1934

Date of Report (Date of earliest event reported): October 31, 1995
----------------------------

Crown Crafts, Inc.
- ------------------------------------------------------------------------------
(Exact name of registrant as specified in its charter)

Georgia 1-7604 58-0678148
- ------------------------------------------------------------------------------
(State or other (Commission File Number) (IRS Employer
jurisdiction of Identification
incorporation) Number)

1600 RiverEdge Parkway, Suite 200, Atlanta, Georgia 30328
- ------------------------------------------------------------------------------
(Address of principal executive offices) (Zip Code)

Registrant's telephone number, including area code: (770) 644-6400
---------------------------
<PAGE> 2

Item 2. Acquisition or Disposition of Assets

Crown Crafts, Inc., a Georgia corporation (the "Company"), CC
Acquisition Corp., a California corporation and a wholly-owned subsidiary of
the Company ("Merger Sub"), The Red Calliope and Associates, Inc., a California
corporation ("RCA"), and Neal Fohrman and Stanley Glickman, each shareholders
of RCA (collectively, the "Shareholders"), entered into a Merger Agreement
dated as of October 8, 1995, as amended by Amendment No. 1 thereto dated as of
October 31, 1995 (as amended, the "Merger Agreement"), pursuant to which the
Merger Sub was merged with and into RCA with RCA thereupon becoming a
wholly-owned subsidiary of the Company (the "Merger"). The Merger was
consummated and became effective as of October 31, 1995 (the "Closing").

Pursuant to the Merger Agreement, the issued and outstanding shares of
RCA immediately prior to the Merger (the "RCA Shares"), were converted into the
right to receive consideration, in the aggregate, of approximately $13.0
million of which $ 7.2 million was paid to certain of the holders of the RCA
Shares as of Closing in the form of cash and $ 5.8 million was paid to certain
of the holders of the RCA Shares as of Closing in the form of promissory notes
made by the Company, which notes are due and payable on January 10, 1996 and
which bear interest at a rate equal to 6.25% per annum. In addition, the
holders of the RCA Shares are entitled to receive cash in an amount equal to
the sum of: (i) the Adjustment Amount (as defined in the Merger Agreement);
(ii) the Environmental Reserve (as defined in the Merger Agreement); (iii) the
Tax Dispute Reserves (as defined in the Merger Agreement); and (iv) all Tax
Benefits (as defined in the Merger Agreement) (collectively, the "Holdback
Amounts"). The Holdback Amounts will be released to the holders of the RCA
Shares upon the happening of certain events and on certain dates all as more
fully described in the Merger Agreement.

At the Closing, Carol Glickman, the wife of Stanley Glickman, a
shareholder of RCA, entered into a consulting agreement with RCA, a copy of
which is attached to the Merger Agreement as Exhibit A. In addition, at the
Closing, each of Neal Fohrman and Nanci Freeman entered into an employment
agreement with RCA, copies of which are attached to the Merger Agreement as
Exhibits B and C, respectively.

The consideration for the Merger was determined as a result of
negotiations between the Company, RCA and the Shareholders and was approved by
the boards of directors of the Company and the Merger Sub. Prior to the
Merger, neither the Company nor any of its affiliates, directors or officers,
nor any associate of any such director or officer had any relationship with RCA
or the Shareholders.

The description contained herein of the Merger Agreement is qualified
in its entirety by reference to the Merger Agreement and the Press Release
dated November 6, 1995, which are attached hereto as Exhibits 2 and 99,
respectively, and incorporated herein by this reference.

2
<PAGE> 3

Item 7. Financial Statements, Pro Forma Financial Information and Exhibits.

(a) Financial Statements of Business Acquired. Included in this
Report are the financial statements, together with the notes thereto and
certain supplementary information, of RCA as of June 30, 1995 and the year then
ended which have been audited by the independent accounting firm of Lederman,
Zeidler & Co., whose opinion is also included herein.

(b) Pro Forma Financial Information. Included in this Report are
the unaudited pro forma condensed consolidated balance sheet and condensed
consolidated statements of earnings of the Company and the RCA, together with
the notes thereto, which give effect to the Merger as if it had occurred for
balance sheet presentation purposes as of July 2, 1995 and for statement of
earnings presentation purposes as of April 4, 1994. The pro forma condensed
consolidated statement of earnings for the year ended April 2, 1995 includes
RCA's results of operations for its fiscal year ended June 30, 1995. A pro
forma condensed consolidated statement of earnings for the quarter ended July
2, 1995 is also included.

The pro forma financial statements are provided for informational
purposes only and should not be construed to be indicative of the Company's
financial position or results of operations had the Merger been consummated on
such dates and do not project the Company's financial position or results of
operations for any future date or period.

The pro forma adjustments are based upon available information and
upon assumptions that the Company believes are reasonable in the circumstances.
The pro forma financial statements and accompanying notes should be read in
conjunction with the Consolidated Financial Statements of the Company and its
subsidiaries, including the notes thereto, and the other financial information
pertaining to the Company and RCA included elsewhere herein.

The Merger will be accounted for using the purchase method of
accounting. The total purchase price of approximately $16 million will be
allocated to the assets of RCA based on their respective fair values. Such
allocations will be made based on valuations that have not yet been finalized.
The Company believes that substantially all of the excess of purchase price
over the historical book value of net assets acquired will be allocated to
goodwill, as the historical book value of such assets approximates their fair
value. Accordingly, the pro forma condensed consolidated statement of earnings
filed herewith reflects amortization of this excess over a life of 20 years
resulting in an annual amortization charge of $559,000.

Exhibit No. 2.1 Merger Agreement
Exhibit No. 2.2 Amendment No. 1 to Merger Agreement
Exhibit No. 10.1 Consulting Agreement*
Exhibit No. 10.2 Employment Agreement (Fohrman)*

3
<PAGE> 4

Exhibit No. 10.3 Employment Agreement (Freeman)*
Exhibit No. 10.4 Tax Reporting Agreement*
Exhibit No. 10.5 Disbursement Agreement*
Exhibit No. 10.6 Promissory Note (Fohrman)
Exhibit No. 10.7 Promissory Note (Tannenbaum)
Exhibit No. 23 Consent of Lederman, Zeidler & Co.
Exhibit No. 99 Press Release

* Contained as an exhibit to the Merger Agreement

4
<PAGE> 5

THE RED CALLIOPE & ASSOCIATES, INC.

FINANCIAL STATEMENTS

with

REPORT OF CERTIFIED PUBLIC ACCOUNTANTS

JUNE 30, 1995 AND 1994

LEDERMAN, ZEIDLER & CO. Certified Public Accountants

<PAGE> 6

CONTENTS

<TABLE>
<CAPTION>
Page
----

<S> <C>
REPORT OF CERTIFIED PUBLIC ACCOUNTANTS 1-2

Financial statements
Balance sheet 3
Statement of income and retained earnings 4
Statement of cash flows 5
Notes to financial statements 6-8

Supplementary information
Summary of cost of sales and design
and royalty expenses 9
Summary of selling, general and
administrative expenses 10
</TABLE>

LEDERMAN, ZEIDLER & CO. Certified Public Accountants

<PAGE> 7

REPORT OF CERTIFIED PUBLIC ACCOUNTANTS

Board of Directors
The Red Calliope & Associates, Inc.
Los Angeles, California

We have audited the accompanying balance sheets of the Red Calliope &
Associates, Inc. as of June 30, 1995 and 1994 and the related statements of
income and retained earnings and cash flows for the years then ended. These
financial statements are the responsibility of the Company's management. Our
responsibility is to express an opinion on this financial statements based on
our audits.

We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to
obtain reasonable assurance about whether the financial statements are free of
material misstatement. An audit includes examining, on a test basis, evidence
supporting the amounts and disclosures in the financial statements. An audit
also includes assessing the accounting principles used and significant
estimates made by management, as well as evaluating the overall financial
statement presentation. We believe that our audits provide a reasonable basis
for our opinion.

<PAGE> 8

Board of Directors

In our opinion, the financial statements referred to above present
fairly, in all material respects, the financial position of The Red Calliope &
Associates, Inc. at June 30, 1995 and 1994, and the results of its operations
and its cash flows for the years then ended in conformity with generally
accepted accounting principles.

LEDERMAN, ZEIDLER & CO., CPA'S

August 10, 1995

<PAGE> 9

THE RED CALLIOPE & ASSOCIATES INC.
BALANCE SHEET

ASSETS
------
<TABLE>
<CAPTION>

JUNE 30,
----------------------------
1995 1994
------------ -------------
<S> <C> <C>
Current assets
Cash $ 267,369 $ 121,244
Account receivable, trade, net of
allowance for doubtful accounts
of $100,000 4,961,601 3,765,768
Inventories (Note 2) 7,947,520 4,753,734
Prepaid expenses 110,457 151,874
Accrued interest receivable, net of
allowance for doubtful account (Note 4) 70,379 52,327
Accrued royalties receivable 10,269 23,351
Accounts receivable, other - 54,782
Notes receivable, officers (Note 3) 180,510 180,510
Deferred income taxes 14,500 14,500
------------ ------------

Total current assets 13,562,605 9,118,090

Note receivable, officer, net of
allowance for doubtful account (Note 4) - -
Furniture, fixtures and equipment, at cost,
net of accumulated depreciation (Note 5) 202,626 250,776

Other assets

Loan origination fee net of
accumulated amortization - 22,500
Deposits 61,681 55,561
------------ ------------
$ 13,826,912 $ 9,446,927
============ ============

LIABILITIES AND STOCKHOLDERS' EQUITY
------------------------------------

Current liabilities
Accounts payable, trade $ 3,010,496 $ 2,148,839
Accrued expenses 1,405,814 745,547
Note payable, bank (Note 6) 4,998,134 2,654,564
Income taxes payable 29,505 27,503
------------ ------------

Total current liabilities 9,443,949 5,576,453
------------ ------------

Stockholders' equity
Common stock, $10 par value
Authorized - 2,500 shares
Issued and outstanding, 1,700 shares 14,330 14,330
Additional paid-in capital 63,860 63,860

Retained earnings 4,304,773 3,792,284
------------ ------------

4,382,963 3,870,474
------------ ------------

$ 13,826,912 $ 9,446,927
============ ============
</TABLE>

The accompanying accountants' notes are an
integral part of these financial statements

<PAGE> 10

THE RED CALLIOPE & ASSOCIATES INC.
STATEMENT OF INCOME AND RETAINED EARNINGS

<TABLE>
<CAPTION>
YEAR ENDED
----------------------------------------
JUNE 30, 1995 JUNE 30, 1994
------------------- -------------------
% of % of
Amount Sales Amount Sales
------------------- -------------------
<S> <C> <C> <C> <C>
Gross sales $28,595,082 104.6 $ 22,371,989 103.4
Rebates and discounts 450,791 1.6 300,227 1.4
Returns and allowances 806,637 3.0 433,410 2.0
----------- ----- ------------ -----

Net sales 27,337,654 100.0 21,638,352 100.0

Cost of sales 17,583,155 64.3 14,510,226 67.1
----------- ----- ------------ -----

Gross profit 9,754,499 35.7 7,128,126 32.9
----------- ----- ------------ -----

Operating expenses
Design and royalty 2,010,048 7.4 978,088 4.5
Shipping 1,563,059 5.7 1,075,944 4.9
Selling 1,972,593 7.2 1,460,346 6.8
General and administrative 2,415,061 8.8 2,137,156 9.9
----------- ----- ------------ -----

7,960,761 29.1 5,651,534 26.1
----------- ----- ------------ -----

Income from operations 1,793,738 6.6 1,476,592 6.8
----------- ----- ------------ -----
Other income(expense)
Interest expense (450,774) (1.7) (268,906) (1.3)
Interest income 48,119 .2 43,244 .2
Royalty income 108,166 .4 148,598 .7
Reserve for bad debt(Note 4) (30,000) (.1) (30,000) (.1)
Other income 66,740 .2 - -
----------- ----- ------------ -----

(257,749) (1.0) (107,064) (.5)
----------- ----- ------------ -----

Net income before provision for
income taxes 1,535,989 5.6 1,369,528 6.3
----------- ----- ------------ -----

Provision(credit)for income taxes
Current 23,500 .1 35,800 .1
Deferred - - (1,500) -
----------- ----- ------------ -----

23,500 .1 34,300 .1
----------- ----- ------------ -----

Net income 1,512,489 5.5 1,335,228 6.2
===== =====

Retained earnings, beginning of
period 3,792,284 3,157,056

Distributions 1,000,000 700,000
----------- ------------

Retained earnings, end of period $ 4,304,773 $ 3,792,284
=========== ============

</TABLE>

The accompanying accountants notes are an
integral part of these financial statements

<PAGE> 11

THE RED CALLIOPE & ASSOCIATES, INC.
STATEMENT OF CASH FLOWS

<TABLE>
<CAPTION>
YEAR ENDED
----------------------------
JUNE 30, 1995 JUNE 30, 1994
------------- -------------
<S> <C> <C>
Cash flows from operating activities
Net income $ 1,512,489 $ 1,335,228
Adjustments to reconcile net income to
net cash provided by operating activities
Depreciation and amortization 115,927 117,118
Reserve for bad debt 30,000 30,000
(Increase) decrease in trade accounts
receivable (1,195,833) (5,435)
(Increase) decrease in inventories (3,193,786) (544,367)
(Increase) decrease in prepaid expenses 41,417 (100,029)
(Increase) decrease in accrued interest
receivable (48,052) (42,615)
(Increase) decrease in accrued royalties
receivable 13,082 2,532
(Increase) decrease in accounts
receivable other 54,782 70,318
(Increase) decrease in loan origination fee - (22,500)
(Increase) decrease in deposits (6,120) (2,125)
(Increase) decrease in deferred taxes - (1,500)
Increase (decrease) in trade accounts payable 861,657 459,198
Increase (decrease) in accrued liabilities 660,267 1,728
Increase (decrease) in income taxes payable 2,002 22,800
----------- -----------
Net cash provided (used) by operating
activities (1,152,168) 1,320,351
----------- -----------

Cash flows from investing activities
Purchases of property and equipment (45,277) (119,361)
Proceeds from short-term notes receivable - 8,000
Increase in short term notes receivable - (55,000)
----------- -----------

Net cash used by investing activities (45,277) (166,361)
----------- -----------

Cash flows from financing activities
Increase (Decrease)in short-term debt 2,343,570 (342,918)
Stockholders' distributions (1,000,000) (700,000)
----------- -----------

Net cash provided (used) by financing
activities 1,343,570 (1,042,918)
----------- -----------

Net increase (decrease) in cash 146,125 111,072

Cash beginning of year 121,244 10,172
----------- -----------

Cash at end of period $ 267,369 $ 121,244
=========== ===========

Supplemental disclosures of cash flow
information
Interest paid (net of amounts) $ 402,655 $ 255,662
=========== ===========

Taxes $ 21,498 $ 23,460
=========== ===========
</TABLE>

The accompanying accountants' notes are an
integral part of these financial statements
<PAGE> 12

THE RED CALLIOPE & ASSOCIATES, INC.
NOTES TO FINANCIAL STATEMENTS
JUNE 30, 1995 AND 1994

1. Summary of significant accounting policies

This summary of significant accounting policies of Red Calliope
& Associates, Inc. is presented to assist in understanding the
Company's financial statements. The financial statements and the
notes are representations of the Company's management who is
responsible for their integrity and objectivity. These accounting
policies conform to generally accepted accounting principles and
have been consistently applied in the preparation of the financial
statements.

Business Activity - The Company manufactures infant bedding
products. The Company's products are sold to major department
stores and to independent juvenile bedding stores through
independent sales representatives. The Company grants credit
to customers in the juvenile bedding industry throughout the
nation. Consequently the company's ability to collect the
amounts due from customers is affected by economic fluctuations
in the juvenile bedding industry.

Inventories - Inventories are stated at lower of cost or market.
Cost is determined by the first-in, first-out method of
accounting.

Depreciation - Furniture, fixtures and equipment are stated at cost.
Depreciation is provided over their estimated useful lives using the
straight-line method of accounting. Repairs that do not materially
extend the useful life of equipment are charged to operations.

Cash and Cash Equivalents - For purposes of the statement of cash
flows, the Company considers all short-term debt securities
purchased with a maturity of three months or less to be cash
equivalents.

Concentrations of Credit Risk - Financial instruments that
potentially subject the Company to concentrations of credit risk
consist principally of trade accounts receivables. Concentrations
of credit risk with respect to trade receivables are limited due to
the large number of customers comprising the Company's customer base
and their dispersion across different industries and geographic
areas. As of June 30, 1995 the Company had no significant
concentrations of credit risk.

Income Taxes - Income taxes are providing for the tax effects of
transactions reported in the financial statements and consist of
taxes currently due plus deferred taxes related primarily to
differences between the bases of certain assets and liabilities
for financial and tax reporting. The deferred taxes represent the
future tax return consequences of those differences, which will
either be taxable or deductible when the assets and liabilities
are recovered or settled.
<PAGE> 13

7
THE RED CALLIOPE & ASSOCIATES, INC.
NOTES TO FINANCIAL STATEMENTS
JUNE 30, 1995 AND 1994

2. Inventories
-----------

Inventories are summarized
as follows:

<TABLE>
<CAPTION>
JUNE 30,
---------------------------
1995 1994
------------ ------------
<S> <C> <C>
Raw materials $ 4,316,065 $ 3,155,318
Finished goods 3,631,455 1,598,416
------------ ------------

$ 7,947,520 $ 4,753,734
============ ============

3. Notes receivable, officers
--------------------------

Notes receivable, officers,
unsecured with interest at 10%,
due on demand. $ 180,510 $ 180,510
============ ============

4. Note receivable, officer
------------------------

The officer is involved in
litigation. It is probable that
the note will not be collectible.
An allowance for doubtful accounts
has been made for the related
accrued interest income for $131,750
and $101,750 respectively.

Note receivable, officer, with
interest at 10% due on demand $ 300,000 $ 300,000

Allowance for doubtful account (300,000) (300,000)
------------ -----------

$ - $ -
============ ===========

5. Furniture, fixtures and equipment
---------------------------------

Furniture, fixtures and equipment
are summarized as follows:
March 31,
---------------------------- Estimated
Useful
1995 1994 Life
------------ ------------- --------

Computer equipment $ 232,907 $ 202,057 5 years
Furniture and fixtures 41,039 59,280 4-7 years
Machinery and equipment 521,559 595,290 4-7 years
Leasehold improvements 49,004 42,254 3-5 years
------------ ------------

844,509 903,881
Less: accumulated
depreciation 641,883 653,105
------------ ------------

$ 202,626 $ 250,776
============ ============

Current depreciation $ 93,427 $ 81,493
============ ============
</TABLE>
<PAGE> 14

THE RED CALLIOPE & ASSOCIATES, INC.
NOTES TO FINANCIAL STATEMENTS
JUNE 30, 1995 AND 1994

<TABLE>
<CAPTION>
6. Notes payable, bank
-------------------
JUNE 31,
--------------------------
1995 1994
------------ ------------
<S> <C> <C>
The Company has a revolving
line of credit secured by
accounts receivable and finished
goods inventory. The terms
of the agreement permit borrowing
to $5,000,000 and $3,000,000 at
prime plus 2.00% maturing
February 1996 and 1995 respectively. $ 4,998,134 $ 2,654,564
============ ============
</TABLE>

7. Income taxes
------------

The Company has elected by unanimous consent of its stockholders' to be taxed
under the provision for Subchapter S of the Internal Revenue Code for both
federal and state purposes. Under these provisions, the Company does not pay
federal corporate income taxes on its taxable income. Instead the
stockholders' are liable for individual federal income taxes on their
respective share of the Company's taxable income. The Company is, however,
subject to a state franchise tax based on 1.5% of the Company's taxable income.

8. Commitments
-----------

The Company is obligated under a long-term, non-capitalized lease for
its premises which expires March 31, 1996. Annual lease payments,
exclusive of property taxes and insurance are summarized as follows:

<TABLE>
<S> <C>
Year Ended
------------

June 30, 1996 $ 169,806
-----------

$ 169,806
===========
</TABLE>

9. Subsequent events

The Company is in negotiation and has signed a letter of intent regarding
the Company's possible acquisition by another company.

<PAGE> 15

SUPPLEMENTARY INFORMATION

<PAGE> 16

THE RED CALLIOPE & ASSOCIATES, INC.
SUMMARY OF COST OF SALES, DESIGN AND ROYALTY AND SHIPPING EXPENSES

<TABLE>
<CAPTION>
YEAR ENDED
-------------------------------------------
JUNE 30, 1995 JUNE 30, 1994
-------------------- --------------------
% of % of
Amount Sales Amount Sales
--------------------- ------------------
<S> <C> <C> <C> <C>
Cost of sales

Inventories, beginning
of period $ 4,753,734 17.4 $ 4,209,367 19.5
Purchases 13,367,917 48.9 9,394,471 43.4
Contract labor
Manufacturing 5,347,496 19.6 4,123,137 19.1
Packaging 271,436 1.0 159,454 .7
Manufacturing labor 202,785 .7 214,574 1.0
Packaging labor 206,980 .8 194,461 .9
Depreciation 54,952 .2 53,108 .3
Payroll taxes 46,344 .2 32,367 .2
Repairs and maintenance 28,092 .1 26,534 .1
Rent 201,984 .7 158,925 .7
Shop supplies 63,676 .2 22,381 .1
Quality control salaries 84,371 .3 - -
Packaging supplies 900,908 3.3 675,181 3.1
------------ ----- ----------- -----

25,530,675 93.4 19,263,960 89.1
Less: inventories, end of
period 7,947,520 29.1 4,753,734 22.0
------------ ----- ----------- -----

$ 17,583,155 64.3 $14,510,226 67.1
============ ===== =========== =====

Design and royalty expenses

Artwork $ 97,835 .4 $ 88,109 .4
Design salaries 131,401 .5 98,072 .5
Payroll taxes 11,157 - 6,326 -
Royalties 1,725,213 6.3 722,141 3.3
Samples 44,442 .2 63,440 .3
------------ ----- ----------- -----

$ 2,010,048 7.4 $ 978,088 4.5
============ ===== =========== =====

Shipping Expenses

Freight-out $ 487,325 1.8 $ 328,333 1.5
Payroll taxes 31,288 .1 27,438 .1
Shipping salaries 439,623 1.6 342,789 1.6
Shipping supplies 604,823 2.2 377,384 1.7
------------ ----- ----------- -----

$ 1,563,059 5.7 $ 1,075,944 4.9
============ ===== =========== =====
</TABLE>

The accompanying accountants' notes are integral
part of these financial statements
<PAGE> 17

THE RED CALLIOPE & ASSOCIATES, INC.
SUMMARY OF SELLING, GENERAL AND ADMINISTRATIVE EXPENSES

<TABLE>
<CAPTION>
YEAR ENDED
---------------------------------------------
JUNE 30, 1995 JUNE 30, 1994
---------------------- --------------------
% of % of
Amount Sales Amount Sales
---------------------- --------------------
<S> <C> <C> <C> <C>
Selling expenses

Advertising $ 106,676 .4 $ 87,887 .4
Commissions 1,605,738 5.9 1,152,859 5.3
Entertainment 9,855 - 8,318 -
Marketing expense 14,797 .1 13,399 .1
Selling and catalog expense 78,217 .3 59,335 .3
Trade shows 90,445 .3 44,208 .2
Travel 66,865 .2 94,340 .5
----------- ---- ----------- ----

$ 1,972,593 7.2 $ 1,460,346 6.8
=========== ==== =========== ====

General and administrative
expenses

Amortization $ 22,500 .1 $ 35,625 .2
Automotive 39,992 .1 34,111 .2
Collection costs 5,271 - 2,060 -
Computer expense 25,782 .1 23,995 .1
Contributions 2,375 - 948 -
Depreciation 38,475 .1 28,385 .1
Dues & subscriptions 5,585 - 6,885 -
Employee benefits 36,703 .1 - -
Insurance - group 103,176 .4 103,948 .5
- general 152,628 .6 141,071 .7
Office supplies and expense 78,794 .3 53,647 .3
Payroll taxes 78,348 .3 66,260 .3
Postage 45,962 .2 28,083 .1
Professional fees 166,320 .6 83,406 .4
Provision for bad debts 52,536 .2 62,165 .3
Quality control - - 2,066 -
Rent 127,699 .5 109,574 .5
Salaries - office 333,449 1.2 294,955 1.4
- officers'/shareholders 673,304 2.5 636,425 2.9
- officers'/other 289,009 1.0 265,955 1.2
Taxes and licenses 8,472 - 23,708 .1
Telephone and utilities 128,681 .5 133,884 .6
----------- ---- ----------- ----

$ 2,415,061 8.8 $ 2,137,156 9.9
=========== ==== =========== ====
</TABLE>

The accompanying accountants' notes are integral
part of these financial statements

<PAGE> 18

PRO FORMA CONDENSED CONSOLIDATED BALANCE SHEET
JULY 2, 1995
(DOLLARS IN 1,000'S)

<TABLE>
<CAPTION>
Crown Crafts, Inc. RCA Pro Forma Company
Historical Historical Adjustments Pro Forma
----------------- ---------- ----------- ---------
<S> <C> <C> <C> <C>
ASSETS:

Current Assets:
Cash $ 423 $ 267 $ 690
Accounts Receivable 17,143 5,655 $ (698) 22,100
Inventories 55,856 7,948 63,804
Deferred Income Taxes 735 14 749
Other Current Assets 2,259 110 2,369
------- ------- ------- --------
Total Current Assets 76,416 13,994 (698) 89,712
------- ------- ------- --------

Property, Plant and Equipment-net 66,978 203 67,181
------- ------- --------

Other Assets 4,291 62 11,185 15,538
-------- ------- ------- --------

TOTAL ASSETS $147,685 $14,259 $10,487 $172,431
======== ======= ======= ========

LIABILITIES AND SHAREHOLDERS' EQUITY

Current Liabilities:
Notes Payable $ 25,665 $ 4,998 $ 5,779 $ 36,442
Accounts Payable 14,249 3,010 17,259
Income Taxes Payable 908 30 938
Accrued Liabilities 4,526 1,406 5,932
Current Maturities of Long-Term Debt 5,502 5,502
-------- ------- ------- --------
Total Current Liabilities 50,850 9,444 $ 5,779 66,073
-------- ------- ------- --------

Long-Term Debt 3,312 $ 9,523 12,835
-------- ------- ------

Deferred Income Taxes 5,208 5,208
-------- ------

Other Liabilities 661 661
-------- ------

Shareholder's Equity
Common Stock 9,045 14 (14) 9,045
Additional Paid-ln-Capital 34,299 64 (64) 34,299
Retained Earnings 51,551 4,737 (4,737) 51,551
Common Stock Held in Treasury (7,241) (7,241)
-------- ------- ------- --------
Total Shareholders' Equity 87,654 4,815 (4,815) 87,654
-------- ------- ------- --------
TOTAL LIABILITIES AND
SHAREHOLDERS EQUITY $147,685 $14,259 $10,487 $172,431
======== ======= ======= ========
</TABLE>

See Notes to Pro Forma Condensed Consolidated Balanced Sheet

1
<PAGE> 19

NOTES TO PRO FORMA CONDENSED CONSOLIDATED BALANCE SHEET

1. The RCA historical balance for accounts receivable has been adjusted
from the amount reported in its June 30, 1995 audited financial
statements to include $432,000 of notes receivable and accrued
interest due from an officer/shareholder of RCA. This amount had been
considered uncollectible and was fully reserved at June 30, 1995,
however, it will be collected from the proceeds received by the
officer/shareholder for the sale of his stock in RCA.

2. The reduction in accounts receivable represents the repayment of notes
receivable from shareholders.

3. The increase in other assets represents the unallocated excess of
purchase price over net assets acquired. The Company believes that
substantially all of the excess will be allocated to goodwill and will
be amortized over a period of 20 years.

4. The increase in notes payable and long term debt represents the
additional debt incurred by the Company to finance the purchase price
of $16,000,000.00, including fees and expenses less the repayment of
notes receivable from shareholders.

5. The adjustments to shareholders' equity represent the elimination of
the shareholders' equity accounts of RCA.

<PAGE> 20
PRO FORMA CONDENSED CONSOLIDATED STATEMENT OF EARNINGS
YEAR ENDED APRIL 2, 1995
(DOLLARS IN 1,000'S, EXCEPT PER SHARE AMOUNTS)

<TABLE>
<CAPTION>
Crown Crafts, Inc. RCA Pro Forma Company
Historical Historical Adjustments Pro Forma
------------------ ---------- ------------ -----------
<S> <C> <C> <C> <C>
Net Sales $ 210,963 $27,338 $ 238,301

Cost of Sales 164,232 21,048 185,280
--------- ------- ---------

Gross Profit 46,731 6,290 53,021

Marketing and Administrative
Expense 27,848 4,418 32,266
--------- ------ ---------

Earnings From Operations 18,883 1,872 20,755

Other Income (Expense):

Interest Expense (1,992) (451) ($926) (3,369)

Other - Net 589 115 (559) 145
--------- ------ ------- ---------
Earnings Before Income Taxes 17,480 1,536 (1,485) 17,531
Provisions For Income Taxes 6,430 614 (370) 6,674
--------- ------ ------- ---------
Net Earnings $ 11,050 $ 922 ($1,115) $ 10,857
========= ====== ======= =========
Net Earnings Per Share $ 1.31 $ 1.28
========= =========
Average Shares Outstanding 8,457,333 8,457,333
========= =========
</TABLE>

See Notes to Pro Forma Condensed Consolidated Statement of Earnings

<PAGE> 21

NOTES TO PRO FORMA CONDENSED CONSOLIDATED STATEMENT OF EARNINGS

1. The RCA was an S Corporation and therefore not subject to corporate
federal income taxes. After the acquisition, RCA's income will become
subject to federal income taxes as part of the Company's consolidated
federal income tax return. The RCA historical balances have been
adjusted to reflect provisions for income taxes using a combined
federal and state income tax rate of 40%.

2. The increase in interest expense represents interest on the
acquisition debt for the year ended April 2, 1995 as if the
transaction had occurred on April 4, 1994. Interest expense was
computed based on an assumed rate of 7.27%, the Company's borrowing
rate on its long-term note agreement which closed October 12, 1995.
The increased interest expense was partially offset by the interest
expense reduction on the average outstanding short-term borrowings of
RCA attributable to the lower short-term borrowing rate of the
Company. The RCA average short-term borrowing rate for the period was
10.5% compared to 5.6% for the Company.

3. The adjustment to other - net represents the quarterly amortization of
goodwill over a life of 20 years.

4. The reduction of the provisions for income taxes represents the tax
savings attributable to the increase in interest expense based on a
combined federal and state income tax rate of 40%.

5. Certain amounts from the RCA June 30, 1995 financial statements have
been reclassified to conform to the Crown Crafts, Inc. classification
for these items.

<PAGE> 22

PRO FORMA CONDENSED CONSOLIDATED STATEMENT OF EARNINGS
QUARTER ENDED JULY 2, 1995
(DOLLARS IN 1,000'S, EXCEPT PER SHARE AMOUNTS)

<TABLE>
<CAPTION>
Crown Crafts RCA Pro Forma Company
Historical Historical Adjustments Pro Forma
----------- ---------- ----------- ---------
<S> <C> <C> <C> <C>
Net Sales $ 39,207 $7,553 $ 46,760

Cost of Sales 31,656 5,742 37,398
-------- ------ ---------
Gross Profit 7,551 1,811 9,362

Marketing and Administrative
Expense 6,494 1,279 7,773
-------- ------ ---------

Earnings From Operations 1,057 532 1,589

Other Income
(Expense):

Interest Expense (529) (151) ($223) (903)

Other - Net 200 12 (140) 72
-------- ------ ----- ---------
Earnings Before Income Taxes 728 393 (363) 758

Provisions For Income Taxes 272 157 (89) 340
-------- ------ ----- ---------
Net Earnings $ 456 $ 236 ($274) $ 418
========= ====== ===== =========

Net Earnings Per Share $ 0.05 $ 0.05
========= =========

Average Shares Outstanding 8,565,429 8,565,429
========= =========
</TABLE>

See Notes to Pro Forma Condensed Consolidated Statement of Earnings

<PAGE> 23

NOTES TO PRO FORMA CONDENSED CONSOLIDATED STATEMENT OF EARNINGS

2. The increase in interest expense represents interest on the
acquisition debt for the quarter ended July 2, 1995 as if the
transaction had occurred on April 4, 1994. Interest expense was
computed based on an assumed rate of 7.27%, the Company's borrowing
rate on its long-term note agreement which closed October 12, 1995.
The increased interest expense was partially offset by the interest
expense reduction on the average outstanding short-term borrowings of
RCA attributable to the lower short-term borrowing rate of the
Company. The RCA average short-term borrowing rate for the period was
11.0% compared to 6.6% for the Company.

3. The adjustment to other - net represents the quarterly amortization of
goodwill over a life of 20 years.

4. The reduction of the provisions for income taxes represents the tax
savings attributable to the increase in interest expense based on a
combined federal and state income tax rate of 40%.

5. Certain amounts from the RCA financial statements have been
reclassified to conform to the Crown Crafts, Inc. classification for
these items.

<PAGE> 24

SIGNATURE

Pursuant to the requirements of the Securities Exchange Act of 1934,
the Company has duly caused this Report to be signed on its behalf by the
undersigned, thereunto duly authorized.

CROWN CRAFTS,INC.

By: /s/ ROBERT E. SCHNELLE
------------------------
Name: Robert E. Schnelle
Title: Treasurer

Dated: November 13, 1995

<PAGE> 25

EXHIBIT INDEX

Exhibit No. Exhibit Description
- ----------- -------------------

Exhibit No. 2.1 Merger Agreement
Exhibit No. 2.2 Amendment No. 1 to Merger Agreement
Exhibit No. 10.1 Consulting Agreement*
Exhibit No. 10.2 Employment Agreement (Fohrman)*
Exhibit No. 10.3 Employment Agreement (Freeman)*
Exhibit No. 10.4 Tax Reporting Agreement*
Exhibit No. 10.5 Disbursement Agreement*
Exhibit No. 10.6 Promissory Note (Fohrman)
Exhibit No. 10.7 Promissory Note (Tannenbaum)
Exhibit No. 23 Consent of Lederman, Zeidler & Co.
Exhibit No. 99 Press Release

<PAGE> 1

EXHIBIT 2.1

MERGER AGREEMENT

BETWEEN AND AMONG

CROWN CRAFTS, INC. AND

CC ACQUISITION CORP.

AND

NEAL FOHRMAN

AND

STANLEY GLICKMAN

AND

THE RED CALLIOPE AND ASSOCIATES, INC.

AS OF OCTOBER 8, 1995

<PAGE> 2

<TABLE>
<CAPTION>
TABLE OF CONTENTS
-----------------
<S> <C> <C>
ARTICLE 1 DEFINITIONS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1

ARTICLE 2 THE MERGER . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10

SECTION 2.1. Surviving Corporation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10
SECTION 2.2. Articles of Incorporation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10
SECTION 2.3. Bylaws . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10
SECTION 2.4. Directors . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11
SECTION 2.5. Officers . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11
SECTION 2.6. Closing; Effective Time . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11

ARTICLE 3 CONVERSION OF SHARES . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11

SECTION 3.1. Effect of Merger . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11
SECTION 3.2. Dissenter's Rights . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12
SECTION 3.3. Closing of Transfer Books . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12
SECTION 3.4. Exchange of Red Calliope Stock . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12
SECTION 3.5. Closing Balance Sheet; Disputed Matters . . . . . . . . . . . . . . . . . . . . . . . . . . 16

ARTICLE 4 REPRESENTATIONS AND WARRANTIES OF THE COMPANY . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17

SECTION 4.1. Organization and Standing . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17
SECTION 4.2. Capitalization and Share Ownership . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17
SECTION 4.3. Authority and Binding Effect . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17
SECTION 4.4. Validity of Contemplated Transactions . . . . . . . . . . . . . . . . . . . . . . . . . . . 18
SECTION 4.5. Restrictions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18
SECTION 4.6. Third-Party Options . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18
SECTION 4.7. Financial Statements . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18
SECTION 4.8. Books of Account; Returns and Reports; Taxes . . . . . . . . . . . . . . . . . . . . . . . . 18
SECTION 4.9. Undisclosed Liabilities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19
SECTION 4.10. Accounts Receivable . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19
SECTION 4.11. Inventory . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20
SECTION 4.12. Title to Assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20
SECTION 4.13. Tangible Assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20
SECTION 4.14. Condition of Assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20
SECTION 4.15. Real Property . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20
SECTION 4.16. Environmental Matters . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21
SECTION 4.17. Contracts . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 23
SECTION 4.18. Employees . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 24

</TABLE>

i
<PAGE> 3

<TABLE>
<S> <C> <C>
SECTION 4.19. Licenses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 24
SECTION 4.20. Intellectual Property . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 24
SECTION 4.21. Compliance with Regulations and Court Orders . . . . . . . . . . . . . . . . . . . . . . . . 25
SECTION 4.22. Claims . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 25
SECTION 4.23. Insurance . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 25
SECTION 4.24. Labor Matters . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 26
SECTION 4.25. Employee Benefit Plans . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 26
SECTION 4.26. Returns . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 26
SECTION 4.27. Product Warranties . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 27
SECTION 4.28. Delivery of Documents . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 27
SECTION 4.29. No Material Adverse Developments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 27
SECTION 4.30. Material Transactions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 27
SECTION 4.31. Additional Information . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 27
SECTION 4.32. Corporate Records . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 28
SECTION 4.33. Transactions with Affiliates . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 28
SECTION 4.34. Full Disclosure . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 28
SECTION 4.35. Limitation on Representations and Warranties Due to Tax Status . . . . . . . . . . . . . . . 28

ARTICLE 5 REPRESENTATIONS AND WARRANTIES OF CROWN CRAFTS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 29

SECTION 5.1. Organization and Standing . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 29
SECTION 5.2. Authority and Binding Effect . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 29
SECTION 5.3. Validity of Contemplated Transactions . . . . . . . . . . . . . . . . . . . . . . . . . . . 29
SECTION 5.4. Business and Liabilities of Merger Sub . . . . . . . . . . . . . . . . . . . . . . . . . . . 29

ARTICLE 6 CERTAIN ADDITIONAL COVENANTS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 29

SECTION 6.1. Conduct of Business Pending Closing . . . . . . . . . . . . . . . . . . . . . . . . . . . . 29
SECTION 6.2. HSR Act . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 31
SECTION 6.3. Medical Benefits . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 32
SECTION 6.4. Confidentiality . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 32
SECTION 6.5. Best Efforts . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 32
SECTION 6.6. Intentionally Left Blank . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 32
SECTION 6.7. Noncompetition . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 32
SECTION 6.8. Nonsolicitation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 33
SECTION 6.9. Hiring of the Surviving Corporation's Employees . . . . . . . . . . . . . . . . . . . . . . 33
SECTION 6.10. No Solicitation of Transactions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 34
SECTION 6.11. Conduct of Merger Sub's Business . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 34
SECTION 6.12. Consulting Agreement . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 34
SECTION 6.13. Asbestos Remediation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 34
SECTION 6.14 Conduct of Title and Merger Litigation . . . . . . . . . . . . . . . . . . . . . . . . . . . 34

ARTICLE 7 INDEMNIFICATION . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 35
</TABLE>

<S> <C> <C>
SECTION 7.1. Indemnification Obligations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 35
SECTION 7.2. Method of Asserting Claims, Etc. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 35
SECTION 7.3. Payment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 37
SECTION 7.4. Survival of Representations and Warranties, etc. . . . . . . . . . . . . . . . . . . . . . . 37
SECTION 7.5. Limitations as to Amount . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 38
SECTION 7.6. Status of Indemnifying Parties . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 38
SECTION 7.7. Sole Remedy . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 38

ARTICLE 8 CONDITIONS PRECEDENT TO OBLIGATIONS OF CROWN CRAFTS . . . . . . . . . . . . . . . . . . . . . . . . . . . 38

SECTION 8.1. Representations True at Closing . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 38
SECTION 8.2. Performance by the Company . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 38
SECTION 8.3. Certificates . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 39
SECTION 8.4. Form and Content of Documents . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 39
SECTION 8.5. Opinions of Counsel . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 39
SECTION 8.6. Litigation Affecting Closing . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 40
SECTION 8.7. Material Adverse Changes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 40
SECTION 8.8. Regulatory Compliance and Approvals . . . . . . . . . . . . . . . . . . . . . . . . . . . . 40
SECTION 8.9. HSR Filing . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 40
SECTION 8.11. Consents . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 41
SECTION 8.12. Employment Agreements . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 41
SECTION 8.13. Tax Reporting Agreement . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 41
SECTION 8.14. Dissenting Shares . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 41
SECTION 8.15. Disbursement Agreement . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 41

ARTICLE 9 CONDITIONS PRECEDENT TO OBLIGATIONS OF THE COMPANY . . . . . . . . . . . . . . . . . . . . . . . . . . . . 41

SECTION 9.1. Representations of Crown Crafts True at Closing . . . . . . . . . . . . . . . . . . . . . . 41
SECTION 9.2. Performance by Crown Crafts . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 41
SECTION 9.3. Officer's Certificate . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 41
SECTION 9.4. Incumbency Certificate . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 41
SECTION 9.5. Form and Content of Documents . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 42
SECTION 9.6. Litigation Affecting Closing . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 42
SECTION 9.7. Regulatory Compliance and Approval . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 42
SECTION 9.8. HSR Filing . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 42
SECTION 9.9. Intentionally Left Blank . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 42
SECTION 9.10. Ancillary Agreements . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 42
SECTION 9.11. Release of Guarantees . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 42

ARTICLE 10 MISCELLANEOUS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 42

SECTION 10.1. Public Announcements . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 42
</TABLE>

iii

<S> <C>
SECTION 10.2. Payment of Expenses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 42
SECTION 10.3. Termination by Mutual Consent . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 43
SECTION 10.4. Termination for Breach . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 43
SECTION 10.5. Intentionally Left Blank . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 43
SECTION 10.6. Other Events of Termination . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 43
SECTION 10.7. Brokers' and Finders' Fees . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 44
SECTION 10.8. Assignment and Binding Effect . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 44
SECTION 10.9. Waiver . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 44
SECTION 10.10. Notices . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 44
SECTION 10.11. Governing Law . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 46
SECTION 10.12. Remedies Not Exclusive . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 46
SECTION 10.13. No Benefit to Others . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 46
SECTION 10.14. Contents of Agreement . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 46
SECTION 10.15. Section Headings and Gender . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 46
SECTION 10.16. Disclosure Schedule and Exhibits . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 46
SECTION 10.17. Cooperation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 46
SECTION 10.18. Severability . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 46
SECTION 10.19. Counterparts . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 47
SECTION 10.20. Knowledge . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 47
SECTION 10.21. Incorporation by Reference . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 47
SECTION 10.22. Costs and Attorneys' Fees . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 47
SECTION 10.23. Equitable Remedies . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 47
</TABLE>

EXHIBITS: EXHIBIT A - Carol Glickman Consulting Agreement
EXHIBIT B - Neal Fohrman Employment Agreement
EXHIBIT C - Nanci Freeman Employment Agreement
EXHIBIT D - Tax Reporting Agreement
EXHIBIT E - Disbursement Agreement

<PAGE> 6

MERGER AGREEMENT

THIS MERGER AGREEMENT, dated as of October 8, 1995
(this "Agreement"), by and among CROWN CRAFTS, INC., a Georgia
corporation ("Crown Crafts"), CC ACQUISITION CORP., a California
corporation and a wholly owned subsidiary of Crown Crafts
("Merger Sub"), THE RED CALLIOPE AND ASSOCIATES, INC., a
California corporation ("Red Calliope" or the "Company"), STANLEY
GLICKMAN, an individual resident of the State of California ("Mr.
Glickman"), and NEAL FOHRMAN, an individual resident of the State
of California ("Mr. Fohrman").

W I T N E S S E T H:

WHEREAS, the respective Boards of Directors of Crown
Crafts, Merger Sub and Red Calliope have approved this Agreement
and the merger (the "Merger") of Merger Sub with and into Red
Calliope upon the terms and conditions contained herein and in
accordance with the California General Corporation Law (the
"CGCL");

WHEREAS, the respective Boards of Directors of Crown
Crafts, Merger Sub and Red Calliope have determined that it is in
the best interests of their respective shareholders to consummate
the Merger;

WHEREAS, Crown Crafts, as the sole shareholder of
Merger Sub, has approved this Agreement, the Merger and the
transactions contemplated hereby pursuant to action taken by
unanimous written consent in accordance with the requirements of
the CBCC and the Articles of Incorporation and the Bylaws of
Merger Sub;

WHEREAS, the shareholders of Red Calliope have approved
this Agreement, the Merger and the transactions contemplated
hereby pursuant to action by written consent in accordance with
the requirements of the CGCL and the Articles of Incorporation
and Bylaws of Red Calliope; and

WHEREAS, the parties hereto desire to make certain
representations, warranties, covenants and agreements in
connection with the transactions contemplated herein;

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

ARTICLE 1
DEFINITIONS

The following words and terms as used herein shall have
the following meanings. Whenever used in this Agreement, any
noun or pronoun shall be deemed to include both the singular and
plural and to cover all genders. The name assigned this
Agreement and the section captions used herein are for
convenience of reference only and shall not affect the
interpretation or construction hereof. Unless otherwise
specified, the terms "hereof," "herein" and similar terms refer
to this Agreement as a whole, and references herein to Articles
or Sections refer to Articles or Sections of this Agreement.

<PAGE> 7

"Adjustment Amount" means an amount equal to the sum of
X and Y where X equals (i) $2,000,000, (ii) plus (a) the amount
by which Closing Retained Earnings are greater than the Target
Amount or minus (b) the amount by which Closing Retained Earnings
are less than the Target Amount, as the case may be, minus
(iii) 50% of the costs and expenses of the Arbitrator incurred by
Crown Crafts pursuant to the last sentence of Section 3.5(B),
minus (iv) an amount equal to the sum of all costs and expenses
(including, without limitation, interest, penalties, costs of
investigation and defense and reasonable attorneys' and other
professional fees and expenses), payments pursuant to any
settlement or judgment, and payments under Chapter 13 of the CGCL
incurred or made by Crown Crafts or incurred or made after the
Effective Time by the Surviving Corporation in any litigation
(other than Title Litigation) or appraisal proceedings arising
out of or relating to the Merger (the "Merger Litigation"), net
of any such Merger Litigation costs, expenses and payments
reimbursed to Crown Crafts pursuant to Section 7.1(A) or
reimbursed to Crown Crafts by any other party to the Merger
Litigation, plus (v) if there is a Dissenting Shareholder,
(a) the amount set forth in the "Closing Payment" column opposite
the name of such Dissenting Shareholder on Schedule 3.1 hereto if
the Extension Grant Date has not occurred prior to the Closing or
(b) the amount set forth in the "Adjusted Closing Payment" column
opposite such Dissenting Shareholder's name on Schedule 3.1
hereto if the Extension Grant Date has occurred prior to the
Closing, minus (vi) an amount equal to the sum of all costs and
expenses (including, without limitation, costs of investigation
and reasonable attorneys' and other professional fees and
expenses) incurred by Crown Crafts in the defense of any Title
Litigation, but (except as otherwise provided in clause (ix)
below) excluding any amounts paid in settlement of or as a
judgment, penalty or interest awarded in any Title Litigation,
net of any Title Litigation costs and expenses reimbursed
pursuant to the Disbursement Agreement or reimbursed by any other
party to the Title Litigation, minus (vii) any amounts paid by
the Surviving Corporation pursuant to Section 6.14 hereof, minus
(viii) any amounts paid by the Surviving Corporation pursuant to
Section 2.3 of the Tax Reporting Agreement, minus (ix) the lesser
of (a) any amount that Crown Crafts is required to pay in any
Title Litigation to any Person due to the payment by Crown Crafts
to Trust A (as that term is defined in the Disbursement
Agreement) and/or the estate of Elliot R. Fine pursuant to the
Disbursement Agreement or (b) $130,000, net of any such amount
that is reimbursed to Crown Crafts by any other Person; and Y
equals the amount of simple interest that would accrue at the
rate of 7.0% per annum on an amount equal to X from and including
the Closing Date to the date of payment of the Adjustment Amount
pursuant to Section 3.4(A)(ii); provided that in no event shall
the Adjustment Amount be less than zero.

"Adjustment Amount Release Date" means the later of
(i) the preparation of the Closing Balance Sheet and the final
resolution of all Disputed Matters pursuant to Section 3.5(B)
(the "Closing Balance Sheet Resolution Date"), (ii) the final,
non-appealable resolution of all Merger Litigation, (iii) the
final, non-appealable resolution of all Title Litigation, or
(iv) the filing with the IRS of all pre-Closing tax returns
pursuant to Section 2 of the Tax Reporting Agreement (the
"Required Tax Returns"), provided that if there is no Merger
Litigation and Title Litigation pending or threatened as of the
later of (1) the Closing Balance Sheet Resolution Date or (2) the
date of filing of the last of the Required Tax Returns, then the
later of such filing date or the Closing Balance Sheet Resolution
Date shall be the Adjustment Amount Release Date.

<PAGE> 8

"Agreement" means this Merger Agreement.

"Ancillary Agreements" means the Employment Agreements
(as defined in Sections 8.12) and the Tax Reporting Agreement.

"Arbitrator" has the meaning set forth in Section
3.5(B).

"Assets" means all of the Company's assets, properties,
business, goodwill and rights of every kind and description, real
and personal, tangible and intangible, wherever situated and
whether or not reflected on the Closing Balance Sheet.

"Benefit Plan" has the meaning set forth in Section
4.25(A).

"Business" means the existing business, operations,
facilities and other Assets, financial condition, results of
operations, finances, markets, products, competitive position,
raw materials and other supplies, customers and customer
relations and personnel of the Company.

"Business Day" means any calendar day which is not a
Saturday, Sunday or public holiday under the Laws of California.

"CERCLA" has the meaning set forth in the definition of
"Environmental Laws."

"Certificate" means a stock certificate that
immediately prior to the Effective Time evidenced shares of Red
Calliope Stock.

"Certificate of Merger" has the meaning set forth in
Section 2.6.

"CGCL" has the meaning set froth in the first recital
hereto.

"Claim" means any action, administrative or other
proceeding, arbitration, cause of action, claim, complaint,
demand, criminal prosecution, inquiry, hearing, investigation
(governmental or otherwise), litigation, notice (written or oral)
by any Person alleging potential liability relating to or
affecting the Company, the Business, the Assets (including,
without limitation, Contracts relating to the Company), the
Leased Real Property or the transactions contemplated by this
Agreement.

"Claim Notice" has the meaning set forth in
Section 7.2(A)(i).

"Closing" has the meaning set forth in Section 2.6.

"Closing Balance Sheet" has the meaning set forth in
Section 3.5(A).

"Closing Date" has the meaning set forth in Section
2.6.

"Closing Retained Earnings" means an amount equal to
the excess of (i) total assets of the Company as of the close of
business on the Closing Date, over (ii) total liabilities and
paid-in capital of the Company as of the close of business on the
Closing Date. As used in this

<PAGE> 9

paragraph, the terms "total assets" and "total liabilities" mean
the aggregate amount of all assets and liabilities, respectively,
of the Company (whether classifiable in accordance with GAAP as
current or long-term) and the term "paid-in capital" means the
total par value of the Shares plus additional paid-in capital of
the Company, all as determined in accordance with GAAP and
applied on a basis consistent with the Latest Year-End Balance
Sheet, except that Closing Retained Earnings shall not include
any income attributable to the repayment (or deemed repayment) of
any Shareholder Obligations.

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

"Company" has the meaning set forth in the Preamble
hereto.

"Contract" means any written or oral contract,
agreement, lease, plan, instrument, purchase order or other
document, commitment, arrangement, undertaking, practice or
authorization that is binding on any Person or its property under
applicable Law.

"Copyrights" means registered copyrights, copyright
applications and unregistered copyrights.

"Court Order" means any judgment, decree, injunction,
order or ruling of any federal, state or local court or
governmental or regulatory body or authority that is binding on
any Person or its property under applicable Law.

"Crown Crafts" has the meaning set forth in the
Preamble hereto.

"Default" means (i) a breach of or default under any
Contract, (ii) the occurrence of an event that with the passage
of time or the giving of notice or both would constitute a breach
of or default under any Contract, or (iii) the occurrence of an
event that with or without the passage of time or the giving of
notice or both would give rise to a right of termination,
renegotiation or acceleration under any Contract.

"Disbursement Agreement" has the meaning set forth in
Section 8.15.

"Disclosure Schedule" means the Disclosure Schedule
dated as of the date hereof delivered by the Company to Crown
Crafts setting forth the information called for by Section 4
hereof.

"Disputed Matters" has the meaning set forth in Section
3.5(B).

"Dissenting Shareholder" has the meaning set forth in
Section 3.2.
"Dissenting Shares" means any shares of Red Calliope
Stock with respect to which the holder thereof has perfected
appraisal rights under Chapter 13 of the CGCL prior to the
Closing Date.

"Effective Time" has the meaning set forth in Section
2.6.

<PAGE> 10

"Environmental Claim" means any Claim against the
Company, the Business or the Assets (including, without
limitation, notice or other communication written or oral by any
Person alleging potential liability for investigatory costs,
cleanup costs, private or governmental response or remedial
costs, natural resources damages, property damages, personal
injuries, or penalties) arising out of, based upon, or resulting
from (i) any Environmental Matter or (ii) any circumstances or
state of facts forming the basis of any Liability or alleged
Liability under, or violation or alleged violation of, any
Environmental Law.

"Environmental Laws" means all Laws relating to
pollution or protection of human health or the environment
(including, without limitation, ambient air, surface water,
ground water, land surface or subsurface strata), including,
without limitation, the Comprehensive Environmental Response
Compensation and Liability Act, as amended, 41 U.S.C. 9601 et
seq. ("CERCLA"), the Resource Conservation and Recovery Act, as
amended, 42 U.S.C. 6901 et seq. ("RCRA"), and other Laws relating
to emissions, discharges, releases or threatened releases of any
Hazardous Substance, or otherwise relating to the manufacture,
processing, distribution, use, treatment, storage, disposal,
transport or handling of any Hazardous Substances.

"Environmental Matter" means any matter or
circumstances related in any manner whatsoever to (i) the
emission, discharge, disposal, release or threatened release of
any Hazardous Substance into the environment, or (ii) the
transportation, treatment, storage, recycling or other handling
of any Hazardous Substance or (iii) the placement of structures
or materials into waters of the United States, or (iv) the
presence of any Hazardous Substance, including, but not limited
to, asbestos, in any building, structure or workplace or on any
of the Leased Real Property.

"Environmental Reserve" means an amount equal to
(i) $75,000 minus (ii) the costs incurred prior to June 1, 1996
by the Surviving Corporation pursuant to Section 6.13, provided
that the Environmental Reserve shall not be less than zero.

"ERISA" has the meaning set forth in Section 4.25(A).

"Extension Grant Date" means the date, if any, on which
the IRS (i) grants to the Company an extension of time to file
consents to an election on Form 2553 pursuant to Treas. Reg.
Section 1.1362-6(b)(3)(iii) and (ii) accepts such consents to
election signed by Mr. Glickman, Mrs. Glickman, and Elliot Fine.

"GAAP" means generally accepted accounting principles
consistently applied.

"Governmental Authority" means any federal, state,
county, local, foreign or other governmental or public agency,
instrumentality, commission, authority, board or body.

"Hazardous Substance" means (i) any hazardous
substance, hazardous material, hazardous waste, regulated
substance or toxic substance (as those terms are defined by any
applicable Environmental Laws) and (ii) any chemicals,
pollutants, contaminants, petroleum, petroleum products, or oil.

"Intellectual Property" means copyrights, graphic
designs, Patents, Trademarks, technology rights and licenses,
computer software (including without limitation any source or
object codes

<PAGE> 11

therefor or documentation relating thereto), trade secrets,
franchises, know-how, product specifications, inventions and
intellectual property rights.

"Interested Party" means any of Mr. Fohrman,
Mr. Glickman, Mrs. Glickman, Robert Mann, as executor of the
estate of Elliot Fine, Edward Tannenbaum, R. Todd Neilson, as
Resolution Agent for Reorganized Property Mortgage Co., Inc., and
the legal successor of any of the foregoing.

"IRS" means the Internal Revenue Service.

"Latest Year-End Balance Sheet" has the meaning set
forth in Section 4.7.

"Law" means the common law of any applicable
jurisdiction and any code, law, order, ordinance, regulation,
rule or statute of any Governmental Authority.

"Leased Real Property" means the real property leased
or subleased by the Company, as tenant, together with, to the
extent leased by the Company, all buildings and other structures,
facilities or improvements currently located thereon, all
fixtures, systems, equipment and items of personal property of
the Company attached or appurtenant thereto, and all easements,
licenses, rights and appurtenances relating to the foregoing.

"Leases" means the leases or subleases for the Leased
Real Property, copies of which have been made available by the
Company to Crown Crafts.

"Liability" means any direct or indirect liability,
indebtedness, obligation, expense, Claim, deficiency, guaranty or
endorsement of or by any Person (other than endorsements of
notes, bills and checks presented to banks for collection or
deposit) of any type, whether accrued, absolute, contingent,
matured, unmatured or other.

"Licenses" means licenses, franchises, permits,
easements, rights and other authorizations.

"Lien" means any mortgage, lien, security interest,
pledge, encumbrance, restriction on transferability, defect of
title, charge or Claim of any nature whatsoever on any property
or property interest.

"Lienholder" means the holder of or other Person
entitled to any benefits arising under any Lien.

"Litigation" means any lawsuit, action, arbitration,
administrative or other proceeding, criminal prosecution or
governmental investigation or inquiry involving or affecting the
Company, the Business, the Assets or any Contracts to which the
Company is a party or by which it or any of the Assets or the
Business may be bound or affected.

"Losses" has the meaning set forth in Section 7.1.

<PAGE> 12

"Material Adverse Effect" means any change or effect
that is materially adverse to the condition (financial or
otherwise), properties, assets, liabilities, business or
operations of the Company, the Business or the Assets taken as a
whole.

"Merger" has the meaning set froth in the first recital
hereto.

"Merger Litigation" has the meaning set forth in the
definition of "Adjustment Amount."

"Merger Sub" has the meaning set forth in the Preamble
hereto.

"Mr. Fohrman" has the meaning set forth in the Preamble
hereto.

"Mr. Glickman" has the meaning set forth in the
Preamble hereto.

"Mrs. Glickman" means Carol Glickman.

"Ms. Freeman" has the meaning set forth in
Section 8.12.

"Noncompete Period" has the meaning set forth in
Section 6.7.

"Note" means a promissory note made by Crown Crafts and
delivered pursuant to Section 3.4(A)(i) or 3.4(A)(ii) providing
for (i) simple interest on the principal amount thereof at the
annual rate of 6.25%, (ii) all principal and accrued interest to
be due and payable by wire transfer of immediately available
funds on January 10, 1996, and (iii) such other terms as Crown
Crafts and Red Calliope may agree upon prior to the Closing Date.

"Notice Period" has the meaning set forth in Section
7.2(A)(i).

"Patents" means all patents and patent applications.

"Pension Benefit Plan" has the meaning set forth in
Section 4.25(B).

"Permitted Liens" means (i) statutory liens to secure
the performance of obligations, surety or appeal bonds,
performance bonds or other obligations of a like nature
(including, without limitation, mechanic's, worker's, material
provider's and maritime liens) (exclusive of obligations in
respect of the payment of borrowed money), or for taxes,
assessments or governmental charges or claims, provided that in
each case the obligations are not yet delinquent or are being
contested in good faith by appropriate proceedings promptly
instituted and diligently conducted and any reserve or other
appropriate provision for accounting purposes as shall be
required in conformity with GAAP shall have been made therefor,
(ii) leases in respect of the real property on which facilities
owned or leased by the Company are located, (iii) Liens arising
from Uniform Commercial Code financing statements regarding
property leased by the Company, (iv) easements, rights-of-way,
navigational servitudes, restrictions, minor defects or
irregularities in title and other similar charges or encumbrances
that do not interfere in any material respect with the ordinary
conduct of the business of the Company, and (v) Liens granted by
third party lessors or fee owners with respect to real property
as to which the Company has a leasehold interest.

<PAGE> 13

"Person" means any individual, partnership, firm,
corporation, association, trust, unincorporated organization or
other entity, as well as any other syndicate or group that would
be deemed to be a person under Section 13(d)(3) of the Securities
Exchange Act of 1934, as amended.

"RCRA" has the meaning set forth in the definition of
"Environmental Laws."

"Red Calliope" has the meaning set forth in the
Preamble hereto.

"Red Calliope Stock" means the capital stock of Red
Calliope.

"Regulation" means any statute, Law, ordinance,
regulation, order or rule of any Governmental Authority,
including, without limitation, those covering environmental,
energy, safety, health, transportation, bribery, recordkeeping,
zoning, antidiscrimination, antitrust, wage and hour, and price
and wage control matters.

"Shareholder" means any Person who immediately prior to
the Effective Time holds record title to shares of Red Calliope
Stock.

"Shareholder Obligations" means all loans made by the
Company to any of its shareholders (whether or not any such loan
has been reserved against on any balance sheet of the Company)
and the accrued interest thereon.

"Shares" has the meaning set forth in Section 4.2.

"Surviving Corporation" has the meaning set forth in
Section 2.1.

"Target Amount" means an amount equal to (i)
$4,682,000, plus (ii) an amount equal to (x) $125,000 multiplied
by (y) the number of full calendar months between June 30, 1995,
and the Closing Date, plus (iii) if the Closing Date is any day
during a calendar month other than the last day of such calendar
month, an amount equal to (x) $125,000 multiplied by (y) a
fraction (1) the numerator of which will be the number of days
from and including the first day of such calendar month to and
including the Closing Date and (2) the denominator of which will
be the total number of days in such calendar month.

"Tax Benefit" means any Tax (as defined in the Tax
Reporting Agreement) refund that is received by Crown Crafts or
the Surviving Corporation, or any amount credited against Tax to
which Crown Crafts or the Surviving Corporation becomes entitled,
that relates to taxable periods or portions thereof ending on or
before the Closing Date.

"Tax Dispute Reserve" means an amount equal to the sum
of X and Y where X equals (i) $100,000, minus (ii) any amounts
paid or payable by the Surviving Corporation pursuant to
Section 4.5 of the Tax Reporting Agreement, and Y equals the
amount of simple interest that would accrue at the Variable Rate
on an amount equal to the positive balance (if any) of X from
time to time from and including the Closing Date to the date of
payment of the Tax Dispute Reserve pursuant to Section 3.4(A);
provided that in no event shall the Tax Dispute Reserve be less
than zero.

<PAGE> 14

"Tax Dispute Reserve Release Date" means the first date
on which either the Designated Date (as defined below) has
occurred or the IRS has completed its audit with respect to each
of fiscal years 1992, 1993, 1994 and 1995. For purposes of this
Agreement, the Designated Date for fiscal years 1992, 1993, 1994
and 1995 shall be March 15, 1996, 1997, 1998 and 1999,
respectively.

"Tax Reporting Agreement" has the meaning set forth in
Section 8.13.

"Tax Reserves" means the 1992 Tax Reserve, the 1993 Tax
Reserve, the 1994 Tax Reserve and the 1995 Tax Reserve,
collectively.

"Third Party" has the meaning set forth in Section
7.2(A)(i).

"Third Party Transaction" means an acquisition of the
Company pursuant to a merger, consolidation, share exchange,
business combination, tender or exchange offer or other similar
transaction.

"Title Litigation" means any Litigation relating to the
payment of Merger proceeds to or on behalf of Mr. Glickman or any
of his creditors or affiliates, including, without limitation,
any payments made pursuant to the Disbursement Agreement.

"Trademarks" means registered trademarks, registered
service marks, trademark and service mark applications and
unregistered trademarks and service marks.

"Variable Rate" means (i) the "prime rate" as reported
from time to time by Wachovia Bank of Georgia, N.A. minus
(ii) 200 basis points.

"1992 Tax Reserve" means an amount equal to the sum of
X and Y where X equals (i) $538,000, minus (ii) all taxes
(including interest, penalties and additions to taxes) paid or
payable after the Closing Date by the Surviving Corporation to
the IRS and the California Franchise Tax Board with respect to
the income tax liability of Red Calliope for the fiscal year
ended June 30, 1992, and Y equals the amount of simple interest
that would accrue at the Variable Rate on an amount equal to the
positive balance (if any) of X from time to time from and
including the Closing Date to the date of payment of the 1992 Tax
Reserve pursuant to Section 3.4(A); provided that in no event
shall the 1992 Tax Reserve be less than zero and, provided
further, that if the Extension Grant Date occurs prior to the
Closing, the 1992 Tax Reserve shall equal zero.

"1993 Tax Reserve" means an amount equal to the sum of
X and Y where X equals (i) $702,000, minus (ii) all taxes
(including interest, penalties and additions to taxes) paid or
payable after the Closing Date by the Surviving Corporation to
the IRS and the California Franchise Tax Board with respect to
the income tax liability of Red Calliope for the fiscal year
ended June 30, 1993, and Y equals the amount of simple interest
that would accrue at the Variable Rate on an amount equal to the
positive balance (if any) of X from time to time from and
including the Closing Date to the date of payment of the 1993 Tax
Reserve pursuant to

<PAGE> 15

Section 3.4(A); provided that in no event shall the 1993 Tax
Reserve be less than zero and, provided further, that if the
Extension Grant Date occurs prior to the Closing, the 1993 Tax
Reserve shall equal zero.

"1994 Tax Reserve" means an amount equal to the sum of
X and Y where X equals (i) $764,000, minus (ii) all taxes
(including interest, penalties and additions to taxes) paid or
payable after the Closing Date by the Surviving Corporation to
the IRS and the California Franchise Tax Board with respect to
the income tax liability of Red Calliope for the fiscal year
ended June 30, 1994, and Y equals the amount of simple interest
that would accrue at the Variable Rate on an amount equal to the
positive balance (if any) of X from time to time from and
including the Closing Date to the date of payment of the 1994 Tax
Reserve pursuant to Section 3.4(A); provided that in no event
shall the 1994 Tax Reserve be less than zero and, provided
further, that if the Extension Grant Date occurs prior to the
Closing, the 1994 Tax Reserve shall equal zero.

"1995 Tax Reserve" means an amount equal to the sum of
X and Y where X equals (i) $829,000, minus (ii) all taxes
(including interest, penalties and additions to taxes) paid or
payable after the Closing Date by the Surviving Corporation to
the IRS and the California Franchise Tax Board with respect to
the income tax liability of Red Calliope for the fiscal year
ended June 30, 1995, and Y equals the amount of simple interest
that would accrue at the Variable Rate on an amount equal to the
positive balance (if any) of X from time to time from and
including the Closing Date to the date of payment of the 1995 Tax
Reserve pursuant to Section 3.4(A); provided that in no event
shall the 1995 Tax Reserve be less than zero and, provided
further, that if the Extension Grant Date occurs prior to the
Closing, the 1995 Tax Reserve shall equal zero.

ARTICLE 2
THE MERGER

SECTION 2.1. Surviving Corporation. Subject to the
provisions of this Agreement, the CGCL, at the Effective Time,
Merger Sub shall be merged with and into Red Calliope and the
separate corporate existence of Merger Sub shall cease. Red
Calliope shall be the surviving corporation in the Merger
(hereinafter sometimes called the "Surviving Corporation") and
shall continue its corporate existence under the Laws of the
State of California. The Merger shall have the effects set forth
in Section 1107 of the CGCL.

SECTION 2.2. Articles of Incorporation. The Articles
of Incorporation of Red Calliope as in effect immediately prior
to the Effective Time shall be the Articles of Incorporation of
the Surviving Corporation until thereafter duly amended in
accordance with their terms and the CGCL.

SECTION 2.3. Bylaws. The Bylaws of Red Calliope as in
effect immediately prior to the Effective Time shall be the
Bylaws of the Surviving Corporation until thereafter duly amended
in accordance with their terms and the CGCL.

<PAGE> 16

SECTION 2.4. Directors. The directors of the
Surviving Corporation shall consist of the directors of Merger
Sub immediately prior to the Effective Time, such directors to
hold office from the Effective Time until their respective
successors are duly elected and qualified.

SECTION 2.5. Officers. The officers of the Surviving
Corporation shall consist of the officers of Merger Sub
immediately prior to the Effective Time, such officers to hold
office from the Effective Time until their respective successors
are duly elected and qualified.

SECTION 2.6. Closing; Effective Time. The closing of
the Merger (the "Closing") shall, unless another date, time or
place is agreed to in writing by all parties hereto, take place
at the offices of Gibson, Dunn & Crutcher, 333 South Grand
Avenue, Los Angeles, California 90071 at 8:00 a.m., Los Angeles
time, on October 31, 1995 (the "Closing Date"). If, on or before
the Closing Date, all the conditions set forth in Articles 8 and
9 shall have been fulfilled or waived in accordance with the
terms hereof and this Agreement shall not have been terminated in
accordance with Section 10.3, 10.4 or 10.6, then the parties
hereto shall cause a Certificate of Merger meeting the
requirements of the CGCL (the "Certificate of Merger") to be
properly executed and filed on the Closing Date with the
Secretary of State of the State of California. The Merger shall
become effective as of the time of filing of the properly
executed Certificate of Merger. The date and time when the
Merger becomes effective is herein referred to as the "Effective
Time."

ARTICLE 3
CONVERSION OF SHARES

SECTION 3.1. Effect of Merger. As of the Effective
Time, by virtue of the Merger and without any action on the part
of any holder thereof:

(i) The shares of Red Calliope Stock of each
Shareholder that are issued and outstanding immediately
prior to the Effective Time (other than any Dissenting
Shares) shall be converted into the right to receive
(x)(1) cash in the amount set forth in the "Closing
Payment" column opposite such Shareholder's name on
Schedule 3.1 hereto if the Extension Grant Date has not
occurred prior to the Closing or (2) cash in the amount
set forth in the "Adjusted Closing Payment" column
opposite such Shareholder's name on Schedule 3.1 hereto
if the Extension Grant Date has occurred prior to the
Closing, and (y) cash in an amount equal to (a) the sum
of the Adjustment Amount plus the Environmental Reserve
plus the Tax Reserves plus the Tax Dispute Reserve plus
all Tax Benefits, multiplied by (b) a fraction
(expressed as a percentage carried out four (4) decimal
places), (1) the numerator of which is the number of
shares of Red Calliope Stock of such Shareholder issued
and outstanding immediately prior to the Effective Time
and (2) the denominator of which is the aggregate
number of shares (other than Dissenting Shares) of Red
Calliope Stock issued and outstanding immediately prior
to the Effective Time;

(ii) Each share of common stock of Merger Sub
that is issued and outstanding immediately prior to the
Effective Time shall be converted into one (1) share of
common stock of the Surviving Corporation;

<PAGE> 17

(iii) Each share of Red Calliope Stock issued
and outstanding immediately prior to the Effective Time
that is then held in the treasury of Red Calliope shall
be canceled and retired and all rights in respect
thereof shall cease to exist, without any conversion
thereof or payment of any consideration therefor;

(iv) Each warrant, stock option or other
right, if any, to purchase shares of Red Calliope Stock
issued and outstanding immediately prior to the
Effective Time shall be canceled (whether or not such
warrant, option or other right is then exercisable) and
all rights in respect thereof shall cease to exist,
without any conversion thereof or payment of any
consideration therefor; and

(v) Each Shareholder Obligation shall be
deemed to have been repaid in full.

SECTION 3.2. Dissenter's Rights. Notwithstanding
anything in this Agreement to the contrary, shares of Red
Calliope Stock that are issued and outstanding immediately prior
to the Effective Time that are held by any Shareholder (a
"Dissenting Shareholder") who has delivered a written demand for
appraisal of such shares in the manner provided in, and has
otherwise complied with, Chapter 13 of the CGCL shall not be
converted into the right to receive the consideration provided in
Section 3.1 and shall not receive any payment under Section 3.4,
unless and until such Dissenting Shareholder shall have failed to
perfect or shall have effectively withdrawn or lost his right to
appraisal and payment under the CGCL, as the case may be. If
such Dissenting Shareholder shall have so failed to have
perfected or shall have effectively withdrawn or lost such right,
his shares shall no longer be Dissenting Shares and shall
thereupon be deemed to have been converted into, at the Effective
Time, the right to receive the consideration provided in Section
3.1. Red Calliope shall give Crown Crafts notice of any such
demand made by or on behalf of any such Dissenting Shareholder,
as provided in Chapter 13 of the CGCL. After the Effective Time,
Crown Crafts and the Surviving Corporation shall conduct and
direct all negotiations, proceedings and ultimate disposition
with respect to any such demands in any manner that Crown Crafts
and the Surviving Corporation may elect, provided that such
negotiations, proceedings and disposition shall be conducted by
Crown Crafts and the Surviving Corporation in good faith and in a
manner reasonably calculated to maximize the Adjustment Amount,
and provided further that counsel for Crown Crafts and the
Surviving Corporation in connection with such negotiations,
proceedings and disposition shall have been approved by Red
Calliope prior to the Effective Time.

SECTION 3.3. Closing of Transfer Books. At the
Effective Time, the transfer books for Red Calliope Stock shall
be closed, and no transfers of shares of Red Calliope Stock shall
thereafter be made on such books.

SECTION 3.4. Exchange of Red Calliope Stock.

(A) From and after the Effective Time, each Shareholder
(other than a Dissenting Shareholder) shall be entitled to
receive, in exchange for a Certificate or Certificates, the
following:

<PAGE> 18

(i) upon (A) surrender to Crown Crafts of
such Certificate or Certificates duly endorsed in
blank, which shall forthwith be canceled, and (B)(1) in
the case of any Shareholder, other than a Shareholder
holding a Certificate or Certificates for the benefit
of Mr. Glickman, delivery of a duly executed letter, in
form and substance reasonably acceptable to Crown
Crafts, to the effect that such Shareholder has good
title to the Shares represented by such Certificate or
Certificates with full power and authority to surrender
the same, free and clear of all Liens, (or, if such
letter identifies any Lien, delivery of a release by
the Lienholder of such Lien, such release to be in form
and substance reasonably acceptable to Crown Crafts),
or (2) in the case of a Shareholder holding a
Certificate or Certificates for the benefit of
Mr. Glickman, delivery of a duly executed letter, in
form and substance reasonably acceptable to Crown
Crafts, to the effect that such Shareholder has good
title to the Shares represented by such Certificate or
Certificates with full power and authority to surrender
the same, free and clear of all Liens other than Liens
disclosed in the Disbursement Agreement, a Note
(subject to the proviso to this clause (i)) in a
principal amount equal to (x)(1) the amount set forth
in the "Closing Payment" column opposite such
Shareholder's name on Schedule 3.1 hereto if the
Extension Grant Date has not occurred prior to the
Closing or (2) cash in the amount set forth in the
"Adjusted Closing Payment" column opposite such
Shareholder's name on Schedule 3.1 hereto if the
Extension Grant Date has occurred prior to the Closing,
multiplied by (y) a fraction (expressed as a percentage
carried out four (4) decimal places) (1) the numerator
of which is the number of shares of Red Calliope Stock
evidenced by such Certificate or Certificates and
(2) the denominator of which is the total number of
shares of Red Calliope Stock issued and outstanding
immediately prior to the Effective Time and owned by
such Shareholder; provided, however, that, in lieu of a
Note, such Shareholder shall receive cash in
immediately available funds in an amount equal to the
amount payable under this clause (i) if such
Shareholder, at the time he approved the Merger,
elected to receive such amount in cash rather than a
Note;

(ii) within three Business Days after the
Adjustment Amount Release Date, a Note (subject to the
proviso to this clause (ii)) in a principal amount
equal to (x) the Adjustment Amount multiplied by (y) a
fraction (expressed as a percentage carried out four
(4) decimal places), (1) the numerator of which is the
number of shares of Red Calliope Stock that immediately
prior to the Effective Time were represented by such
Certificate or Certificates and (2) the denominator of
which is the aggregate number of shares (other than
Dissenting Shares) of Red Calliope Stock issued and
outstanding immediately prior to the Effective Time;
provided, however, that, in lieu of a Note, such
Shareholder shall receive cash in immediately available
funds in an amount equal to the amount payable under
this clause (ii) if either (A) such Shareholder, at the
time he approved the Merger, elected to receive such
amount in cash rather than a Note or (B) the Adjustment
Amount Release Date occurs on or after January 1, 1996;

(iii) on June 5, 1996, a check equal to (x) the
Environmental Reserve multiplied by (y) a fraction
(expressed as a percentage carried out four (4) decimal
places), (1) the numerator of which is the number of
shares of Red Calliope Stock that immediately prior to
the Effective Time were represented by such Certificate
or Certificates and (2) the denominator of which is the
aggregate number of shares (other than Dissenting
Shares) of Red Calliope Stock issued and outstanding
immediately prior to the Effective Time;

<PAGE> 19

(iv) within five Business Days after the
Extension Grant Date (unless the Extension Grant Date
shall have occurred prior to the Closing), cash in
immediately available funds in an amount equal to (x)
the Tax Reserves (minus any amounts paid pursuant to
clause (v) through (viii) below) multiplied by (y) a
fraction (expressed as a percentage carried out to four
(4) decimal places), (1) the numerator of which is the
number of shares of Red Calliope Stock that immediately
prior to the Effective Time were represented by such
Certificate or Certificates and (2) the denominator of
which is the aggregate number of shares (other than
Dissenting Shares) of Red Calliope Stock issued and
outstanding immediately prior to the Effective Time;

(v) on March 15, 1996, cash in immediately
available funds in an amount equal to (x) the 1992 Tax
Reserve multiplied by (y) a fraction (expressed as a
percentage carried out four (4) decimal places),
(1) the numerator of which is the number of shares of
Red Calliope Stock that immediately prior to the
Effective Time were represented by such Certificate or
Certificates and (2) the denominator of which is the
aggregate number of shares (other than Dissenting
Shares) of Red Calliope Stock issued and outstanding
immediately prior to the Effective Time;

(vi) on March 15, 1997, cash in immediately
available funds in an amount equal to (x) the 1993 Tax
Reserve multiplied by (y) a fraction (expressed as a
percentage carried out four (4) decimal places),
(1) the numerator of which is the number of shares of
Red Calliope Stock that immediately prior to the
Effective Time were represented by such Certificate or
Certificates and (2) the denominator of which is the
aggregate number of shares (other than Dissenting
Shares) of Red Calliope Stock issued and outstanding
immediately prior to the Effective Time;

(vii) on March 15, 1998, cash in immediately
available funds in an amount equal to (x) the 1994 Tax
Reserve multiplied by (y) a fraction (expressed as a
percentage carried out four (4) decimal places),
(1) the numerator of which is the number of shares of
Red Calliope Stock that immediately prior to the
Effective Time were represented by such Certificate or
Certificates and (2) the denominator of which is the
aggregate number of shares (other than Dissenting
Shares) of Red Calliope Stock issued and outstanding
immediately prior to the Effective Time;

(viii) on March 15, 1999, cash in immediately
available funds in an amount equal to (x) the 1995 Tax
Reserve multiplied by (y) a fraction (expressed as a
percentage carried out four (4) decimal places),
(1) the numerator of which is the number of shares of
Red Calliope Stock that immediately prior to the
Effective Time were represented by such Certificate or
Certificates and (2) the denominator of which is the
aggregate number of shares (other than Dissenting
Shares) of Red Calliope Stock issued and outstanding
immediately prior to the Effective Time;

<PAGE> 20

(ix) promptly after Crown Crafts or the
Surviving Corporation becomes aware that it is entitled
to a Tax Benefit, a check equal to (x) such Tax Benefit
multiplied by (y) a fraction (expressed as a percentage
carried out four (4) decimal places), (1) the numerator
of which is the number of shares of Red Calliope Stock
that immediately prior to the Effective Time were
represented by such Certificate or Certificates and (2)
the denominator of which is the aggregate number of
shares (other than Dissenting Shares) of Red Calliope
Stock issued and outstanding immediately prior to the
Effective Time; and

(x) on the Tax Dispute Reserve Release Date,
a check equal to (x) the Tax Dispute Reserve multiplied
by (y) a fraction (expressed as a percentage carried
out four (4) decimal places), (1) the numerator of
which is the number of shares of Red Calliope Stock
that immediately prior to the Effective Time were
represented by such Certificate or Certificates and (2)
the denominator of which is the aggregate number of
shares (other than Dissenting Shares) of Red Calliope
Stock issued and outstanding immediately prior to the
Effective Time.

Except as otherwise provided herein, no interest will be paid or
accrued on the cash payable upon the surrender of any
Certificate. If any portion of the consideration to be received
pursuant to Section 3.1 upon exchange of a Certificate is to be
issued or paid to a person other than the person in whose name
the Certificate surrendered in exchange therefor is registered,
it shall be a condition of such issuance and payment that the
person requesting such exchange shall pay in advance any transfer
or other taxes required by reason thereof or establish to the
satisfaction of Crown Crafts that such tax has been paid or that
such tax is not applicable. If the surrendering Shareholder is
not identified on Schedule 3.1 hereto, such Shareholder shall
furnish to Crown Crafts an opinion of counsel in form and
substance reasonably acceptable to Crown Crafts to the effect
that such surrendering Shareholder acquired his or her Shares in
compliance with all applicable securities Laws. From the
Effective Time until surrender in accordance with the provisions
of this Section 3.4, the Certificates shall represent for all
purposes only the right to receive the consideration provided in
Section 3.1. All payments in respect of shares of Red Calliope
Stock that are made in accordance with the terms hereof shall be
deemed to have been made in full satisfaction of all rights
pertaining to such securities.

(B) In the case of any lost, mislaid, stolen or
destroyed Certificate, the record holder thereof may be required,
as a condition precedent to delivery to such holder of the
consideration described in Section 3.1, to deliver to Crown
Crafts a bond in such reasonable sum or a satisfactory indemnity
agreement as Crown Crafts may direct as indemnity against any
claim that may be made against Crown Crafts or the Surviving
Corporation with respect to the Certificate alleged to have been
lost, mislaid, stolen or destroyed.

(C) After the Effective Time, there shall be no
transfers on the stock transfer books of the Surviving
Corporation of the shares of Red Calliope Stock that were
outstanding immediately prior to the Effective Time. If, after
the Effective Time, Certificates are presented to the Surviving
Corporation for transfer, they shall be canceled and, unless
representing Dissenting Shares, exchanged for the consideration
described in Section 3.1.

<PAGE> 21

(D) Any cash due Shareholders pursuant to Section 3.1
hereof that remains unclaimed by such Shareholders for six months
after the same shall become due and payable hereunder shall be
held by Crown Crafts, and any Shareholder who has not theretofore
complied with Section 3.4 (a) shall thereafter look only to Crown
Crafts for the payment of any consideration to which such holder
has become entitled pursuant to the provisions of Section 3.1;
provided, however, that neither Crown Crafts nor any party hereto
shall be liable to a Shareholder for any amount required to be
paid to a public official pursuant to any applicable abandoned
property, escheat or similar law.

(E) Notwithstanding anything to the contrary herein,
Crown Crafts shall disburse all cash otherwise payable to or for
the account of Mr. Glickman or his creditors or affiliates in
accordance with the terms of the Disbursement Agreement.

SECTION 3.5. Closing Balance Sheet; Disputed Matters.

(A) As soon as practicable (but in no event later
than forty-five (45) days following the Closing Date), (i) the
Surviving Corporation shall prepare a balance sheet for the
Company as of the close of business on the Closing Date (the
"Closing Balance Sheet"). The Closing Balance Sheet shall be
prepared in accordance with GAAP, using the same methods and
criteria employed by the Company in connection with its
preparation of its Latest Year-End Balance Sheet to the extent
such methods are consistent with GAAP, and shall present fairly
the Company's financial position as of the close of business on
the day immediately preceding the Closing Date. Without limiting
the generality of the foregoing, the Closing Balance Sheet shall
include an accrual for C corporation taxes for the period from
and including July 28, 1995 to and including the Closing Date.
Upon completion of the Closing Balance Sheet, copies thereof
shall promptly be provided to each Interested Party.

(B) If, within fifteen (15) days after receipt of the
Closing Balance Sheet, any Interested Party shall notify Crown
Crafts or Crown Crafts shall notify each of the Interested
Parties that he or it disputes any matter with respect to the
Closing Balance Sheet, then any such matters (the "Disputed
Matters") shall be submitted to arbitration in Los Angeles,
California, within fifteen (15) days after such notice unless the
parties agree in writing to extend such fifteen (15) day period
in an attempt to negotiate a settlement of such Disputed Matters.
The arbitrator (the "Arbitrator") shall be any one of the
nationally recognized independent accounting firms which is on
the date hereof among the six largest such firms (the "Big Six
accounting firms") mutually agreed to by a majority of the
Interested Parties and Crown Crafts. Any reference herein to the
Big Six accounting firms shall be deemed to include a reference
to any member or employee thereof (who is a certified public
accountant) which any such firm may designate as the Arbitrator
on its behalf. If within ten (10) days following the expiration
of the fifteen (15) day period referred to above or any extension
thereof a majority of the Interested Parties and Crown Crafts
shall have failed to agree upon the selection of the Arbitrator
or any such Arbitrator selected by them shall not have agreed to
perform the services called for hereunder, the Arbitrator shall
thereupon be selected in accordance with the rules of the
American Arbitration Association, with preference being given to
any one of the Big Six accounting firms or any member or employee
thereof (who is a certified public accountant) which or who may
be willing to perform such services, other than any such firm
which is then employed by the Surviving Corporation or Crown
Crafts or any affiliate thereof. The Arbitrator shall consider
only the Disputed Matters

<PAGE> 22

and the arbitration shall be conducted in accordance with the
rules of the American Arbitration Association then in effect.
The Arbitrator shall act promptly to resolve all Disputed Matters
and its decision with respect to all Disputed Matters shall be
final and binding upon the parties hereto and shall not be
appealable to any court. The costs and expenses of the
Arbitrator shall be paid by Crown Crafts.

ARTICLE 4
REPRESENTATIONS AND WARRANTIES OF THE COMPANY

Subject to Section 4.35 and except as set forth on a
DISCLOSURE SCHEDULE, each of which exceptions shall be deemed to
be representations and warranties as if made hereunder, the
Company hereby represents and warrants to Crown Crafts as
follows:

SECTION 4.1. Organization and Standing. The Company
is a corporation duly organized, validly existing and in good
standing under the Laws of California, having full power and
authority to carry on the Business as it has been and is now
being conducted and to own, lease and operate the Assets. The
Company is duly qualified to do business and is in good standing
in every jurisdiction in which the Business or the character of
the Assets requires such qualification, except where the failure
to be so qualified would not have a Material Adverse Effect. All
jurisdictions in which the Company is qualified to do business.
are disclosed in the DISCLOSURE SCHEDULE. The Company does not
have, nor has it ever had, any predecessors or subsidiaries or
any stock or other equity or ownership interest (whether
controlling or not) in any corporation, association, partnership,
joint venture or other entity.

SECTION 4.2. Capitalization and Share Ownership. The
Company's authorized capital stock consists of 2,500 shares of
Common Stock. There are 1,433 shares of the Company's Common
Stock presently outstanding (the "Shares"), all of which have
been duly authorized and validly issued, are fully paid and
nonassessable, were not issued in violation of the terms of any
Contract binding upon the Company, and were issued in compliance
with all applicable charter documents of the Company and all
applicable federal and state securities or "blue sky" Laws and
regulations. No equity securities of the Company, other than the
Shares, are issued or outstanding. There are, and have been, no
preemptive rights with respect to the issuance of the Shares.
There are (i) no existing Contracts, subscriptions, options,
warrants, calls, commitments or rights of any character to
purchase or otherwise acquire any capital shares or other
securities of the Company, whether or not presently issued or
outstanding, from the Company, at any time, or upon the happening
of any stated event and (ii) no Contracts, subscriptions,
options, warrants, calls, commitments or rights to purchase or
otherwise acquire from the Company any such convertible or
exchangeable securities.

SECTION 4.3. Authority and Binding Effect. The
Company, Mr. Fohrman and Mr. Glickman have the full power and
authority to execute, deliver and perform this Agreement, to
perform fully their respective obligations hereunder and to
consummate the transactions contemplated hereby and, except for
approval by the requisite vote of the holders of the outstanding
shares of Red Calliope stock entitled to vote thereon and filings
by the Company required by Title II of the Hart-Scott-Rodino
Antitrust Improvements Act of 1976, as amended (the "HSR Act"),
have taken all actions necessary to secure all approvals required
in connection herewith. The execution and delivery by the
Company of this Agreement and the consummation

<PAGE> 23

of the transactions herein contemplated have been duly authorized
by all corporate action of the Company. The Company, Mr. Fohrman
and Mr. Glickman have duly executed and delivered this Agreement,
and it constitutes the legal, valid and binding obligation of the
Company, Mr. Fohrman and Mr. Glickman, enforceable against each
of them in accordance with its terms.

SECTION 4.4. Validity of Contemplated Transactions.
Neither the execution and delivery of this Agreement by Mr.
Fohrman, Mr. Glickman or the Company nor the consummation of the
transactions contemplated hereby will contravene or violate the
Articles of Incorporation or Bylaws of the Company or any
Regulation or Court Order which is applicable to the Company, Mr.
Fohrman or Mr. Glickman, or will result in a Default under, or
require the consent or approval of any party to, any Contract
relating to the Business or the Assets or to or by which the
Company, Mr. Fohrman or Mr. Glickman is a party or otherwise
bound or affected, or require the Company or Mr. Fohrman or
Mr. Glickman to notify or obtain any License from any federal,
state, local or other court or governmental agency or body or
from any other regulatory authority, except as required by the
HSR Act.

SECTION 4.5. Restrictions. Neither the Company, Mr.
Fohrman, nor Mr. Glickman is a party to any Contract or subject
to any restriction or any Court Order or Regulation which
(i) adversely affects the Company, the Assets or the Business,
except for any of the foregoing generally applicable to a Person
conducting a business similar to the Business, or (ii) affects or
restricts the ability of the Company to consummate the Merger.

SECTION 4.6. Third-Party Options. There are no
existing Contracts, options, commitments or rights with, to or in
any Person to acquire the Company, any of the Assets or any
interest therein or in the Business, other than Contracts to
acquire Assets in the ordinary course of business and other than
Liens on Shares.

SECTION 4.7. Financial Statements. The Company has
delivered to Crown Crafts (i) the Company's year-end balance
sheets at June 30, 1993, 1994 and 1995, (ii) its related
statements of income, retained earnings and cash flows for the
fiscal years then ended, and (iii) all related notes and
schedules, each of which has been audited by Lederman, Zeidler &
Co. All Liabilities of the Company at June 30, 1995 required to
be reflected or reserved for by GAAP are fully reflected or
reserved for in the Company's balance sheet at June 30, 1995 (the
"Latest Year-End Balance Sheet"). June 30, 1995 is referred to
as the "Latest Year-End Balance Sheet Date" in other parts of
this Agreement. All of the financial statements referred to in
this Section 4.7 were prepared in accordance with GAAP and,
subject to any qualifications set forth in the applicable notes
and schedules, fairly present the financial position and results
of operations of the Company at the dates and for the periods
covered and include all adjustments that are necessary for a fair
presentation of the information shown.

SECTION 4.8. Books of Account; Returns and Reports;
Taxes. The books of account of the Company fairly reflect
(i) all transactions relating to the Company and (ii) all items
of income and expense, assets and liabilities and accruals
relating to the Company. The Company has not engaged in any
transaction, maintained any bank account or used any corporate
funds except for transactions, bank accounts and funds which have
been and are reflected in the normally maintained books and
records of the Company. From and including July 1, 1982 to and
including July 27, 1995, the Company was continuously an "S"
corporation within the meaning

<PAGE> 24

of Section 1361 of the Code and the equivalent provisions of all
applicable state income tax statutes. The Company has duly filed
all federal, state, local and foreign tax returns required to be
filed by it through the date hereof and has duly paid or made
adequate provision for the payment of all taxes which are due and
payable for taxable years ending on or before the Closing Date.
The liability for taxes reflected in the Latest Year-End Balance
Sheet (excluding any reserve for deferred taxes or portion
thereof which is attributable to differences between the timing
of income or deductions for tax and financial accounting
purposes) is sufficient for the payment of all accrued but unpaid
taxes, whether or not disputed, for the period ended June 30,
1995 and for all years and periods ended prior thereto. All
deficiencies asserted as a result of any examinations conducted
by the IRS or any other taxing authority prior to the date hereof
have been paid, fully settled or adequately provided for in the
Latest Year-End Balance Sheet. There are no pending claims
asserted for taxes of the Company or outstanding agreements or
waivers extending the statutory period of limitation applicable
to any tax return of the Company for any period. The Company has
made all estimated income tax deposits through the date hereof
and all other required tax payments or deposits and has complied
for all prior periods in all material respects with the tax
withholding provisions of all applicable federal, state, local,
foreign and other laws. The Company has made available to Crown
Crafts true, complete and correct copies of its federal income
tax returns for the last three (3) taxable years and made
available such other tax returns as have been requested by Crown
Crafts.

SECTION 4.9. Undisclosed Liabilities. The Company
has no Liabilities except for:

(i) those Liabilities adequately and
specifically set forth or reserved for on the Latest
Year-End Balance Sheet and not heretofore paid or
discharged;

(ii) those Liabilities arising in the
ordinary course of its business consistent with past
practice under any Contract specifically disclosed on
the DISCLOSURE SCHEDULE (or not required to be
disclosed because of the term or amount involved);

(iii) those Liabilities incurred, consistent
with past business practice, in the ordinary course of
its business since the Latest Year-End Balance Sheet
Date and not heretofore paid or discharged; and

(iv) Liabilities (other than those described
in clauses (i), (ii) and (iii) above) not exceeding
$10,000 in the aggregate.

SECTION 4.10. Accounts Receivable. All accounts
receivable as set forth on the list of accounts receivable
included in the Disclosure Schedule have arisen only in the
ordinary course of business consistent with past practice for
goods sold and delivered or services performed. All accounts
receivable of the Company reflected on the Closing Balance Sheet
shall be collectible in full at the recorded amounts thereof
(free of any, and subject to no, defenses, setoffs or
counterclaims) in the ordinary course of business (without resort
to Litigation or assignment to a collection agency), but in no
event later than ninety (90) days after the Closing Date, net of
any allowance for doubtful accounts reflected in the Closing
Balance Sheet.

<PAGE> 25

SECTION 4.11. Inventory. All inventory of the Company
used in the conduct of the Business reflected on the Latest Year-
End Balance Sheet or arising since the Latest Year-End Balance
Sheet Date was acquired and has been maintained in accordance
with the regular business practices of the Company, consists of
new and unused items of a quality and quantity usable or saleable
in the ordinary course of business of the Company consistent with
past practice, and is valued at reasonable amounts based on the
ordinary course of business of the Company within the past six
(6) months at prices equal to the lower of cost or market valued
on a first-in-first-out basis. No material portion of such
inventory is subject to any write-down or write-off or is
obsolete, unusable, slow-moving, damaged or unsalable in the
ordinary course of the Company's business consistent with past
practice.

SECTION 4.12. Title to Assets. The Company owns
outright and has good and marketable title to all of the Assets,
including, without limitation, the assets and properties set
forth on the Latest Year-End Balance Sheet (except for such as
may have been disposed of in the ordinary course of business
since the Latest Year-End Balance Sheet Date), free and clear of
all Liens, except Permitted Liens.

SECTION 4.13. Tangible Assets. The DISCLOSURE
SCHEDULE sets forth accurate lists and summary descriptions of
all tangible Assets where the value of an individual item exceeds
$5,000, or where an aggregate of similar items exceeds $10,000,
and of all leases, Licenses and other Contracts to which the
Company is a party or is otherwise bound which relate in whole or
in part to such Assets. The Assets listed on the DISCLOSURE
SCHEDULE have been grouped by type and constitute substantially
all of the tangible assets used in or necessary to the conduct of
the Business.

SECTION 4.14. Condition of Assets. All tangible
assets and properties which are part of the Assets are in good
operating condition and repair, reasonable wear and tear
excepted, and are usable in the ordinary course of the Business
consistent with past practice and conform in all material
respects to all applicable Regulations relating to their
construction, use and operation. There are no developments
materially affecting any such Asset which reasonably could be
expected to curtail the present or future use thereof for the
purpose for which it was acquired. Except pursuant to leases
described on the DISCLOSURE SCHEDULE, no Person other than the
Company owns any vehicles, equipment or other tangible Assets
situated on the facilities used by the Company in the Business
(other than immaterial items of personal property owned by the
Company's employees and other than fixtures and improvements on
the Real Property) or necessary to the operation of the Business.

SECTION 4.15. Real Property.

(A) The Company does not own, nor has it at any time
owned, any real property.

(B) The Disclosure Schedule lists each parcel of
Leased Real Property. As of the date of this Agreement, (i) the
Company has a valid and subsisting leasehold interest in each
Lease; (ii) the Company is in undisturbed possession of all space
that it is currently entitled to possess

<PAGE> 26

under each such Lease and no rights adverse to the rights of the
Company have, to the best of the Company's knowledge, been
asserted by any third Persons; (iii) the Company has not
subleased or assigned any interest in any such Lease; (iv) the
Company has not received any written notice of material default
under any such Lease which is still in effect; (v) each Lease is
valid, binding and enforceable in accordance with its terms with
respect to the Company and, to the best of the Company's
knowledge, with respect to each of the other parties thereto;
(vi) there is no existing material default or breach of a
material covenant by the Company under any Lease or any
condition, event or act that with notice or the lapse of time (or
both) would constitute a material default by the Company; and
(vii) there is not under any Lease any non-material default or
breach of a non-material covenant by the Company that gives the
other party to such Lease the right to terminate or cancel such
Lease without first providing the Company with notice thereof and
an opportunity to cure such default or breach of covenant.

(C) Each of the Leased Premises and equipment used or
operated by the Company is in good condition and repair,
reasonable wear and tear excepted, and the present use and
occupation thereof conforms in all material respects with all
Laws, and the Company has not received notice of any breach or
violation of such Laws.

SECTION 4.16. Environmental Matters.

(A) There are no Environmental Claims (or any Claim
against any Person whose Liability, or any portion thereof, for
Environmental Matters or under any Environmental Laws the Company
has or may have retained or assumed contractually or by operation
of Law) pending or, to the best of the Company's knowledge,
threatened with respect to (i) the ownership, use, condition or
operation of the Business, the Assets, the Leased Real Property
or any asset formerly held for use or sale by the Company, or
(ii) any violation or alleged violation of or liability or
alleged liability under any Environmental Law or any Court Order
related to Environmental Matters. There are no existing
violations by the Company or, to the Company's best knowledge,
any other Person, of (i) any Environmental Law, or (ii) any Order
related to Environmental Matters, with respect to the ownership,
use, condition or operation of the Business, the Assets, the
Leased Real Property or any asset formerly held for use or sale
by the Company. There are no past or present actions,
activities, circumstances, conditions, events or incidents,
including, without limitation, any Environmental Matter, with
respect to the Company or, to the best of the Company's
knowledge, any other Person, that reasonably could be expected to
form the basis of any Environmental Claim against the Company,
the Assets or any asset formerly held for use or sale by the
Company. There are no past or present actions, activities,
circumstances, conditions, events or incidents, including,
without limitation, any Environmental Matter, with respect to the
Company or, to the best of the Company's knowledge, any other
Person, that reasonably could be expected to form the basis of
(i) any Environmental Claim against the Company, or (ii) any
Claim against any Person whose Liability (or any portion thereof)
for Environmental Matters or under any Environmental Laws the
Company has or may have retained or assumed contractually or by
operation of Law.

<PAGE> 27

(B) Neither the Company nor, to the best of the
Company's knowledge, any other Person has used any Assets or
Leased Real Property of the Company or any part thereof for the
handling, treatment, storage, or disposal of any Hazardous
Substances except for handling, treatment, storage, or disposal
of Hazardous Substances in accordance with applicable
Environmental Laws.

(C) No material release, discharge, spillage or
disposal of any Hazardous Substances has occurred or is occurring
at any Assets or Leased Real Property of the Company or any part
thereof while or, to the best of the Company's knowledge, before
such Assets or Leased Real Property were owned, leased, operated,
or managed, directly or indirectly, by the Company.

(D) No material amount of soil or water in, under or,
to the best of the Company's knowledge, adjacent to any Assets or
Leased Real Property of the Company or assets formerly held for
use or sale by the Company has been contaminated by any Hazardous
Substance while or, to the best of the Company's knowledge,
before such assets or premises were owned, leased, operated or
managed, directly or indirectly, by the Company.

(E) No material amount of waste containing any
Hazardous Substances has been generated, used, handled, stored,
treated or disposed of, directly or indirectly, by the Company
except for waste generated, used, handled, stored, treated and
disposed of in accordance with applicable Environmental Laws.

(F) There are no underground tanks or other
underground storage facilities presently or, to the best of the
Company's knowledge, previously located at any Leased Real
Property.

(G) All material amount of waste, hazardous or
otherwise, has been removed from all Leased Real Property.

(H) The Company has complied with all applicable
reporting requirements under all Environmental Laws concerning
the disposal or release of Hazardous Substances and has not been
required under such Environmental Laws to make any reports
concerning any Leased Real Property or concerning the operations
or activities of the Company.

(I) No Leased Real Property contains any asbestos-
containing materials that, based on their present condition or
location, are required to be removed under applicable
Environmental Laws.

(J) Without limiting the generality of any of the
foregoing, the Company has not stored, disposed or arranged for
the disposal of any material amount of Hazardous Substances
except for storage or disposal of Hazardous Substances in
accordance with applicable Environmental Laws.

(K) The Company is not aware of any environmental
site assessment or other study relating to the investigation of
the possibility of the presence or existence of any Environmental
Matter with respect to the Business, the Assets or any of the
Leased Real Property.

(L) The Company has delivered to Crown Crafts copies
of all Licenses issued to the Company pursuant to any
Environmental Law and all written communications between the

<PAGE> 28

Company or its representatives and any Governmental Authority
concerning any Environmental Matter.

SECTION 4.17. Contracts.

(A) The DISCLOSURE SCHEDULE sets forth complete and
accurate lists or descriptions of (i) all Benefit Plans and (ii)
all consents or approvals required under any Contracts to which
the Company is a party that are necessary for the Company to
complete the Merger or to avoid a Default under such Contracts.

(B) None of the Assets is leased by the Company from
any Person, whether affiliated or unaffiliated with the Company.

(i) Contract with any present or former
employee or consultant;

(ii) Contract for the future purchase of, or
payment for, supplies or products or services except
for purchase orders placed with vendors in the ordinary
course of business and except for Contracts for
services not in excess of $5,000;

(iii) Contract to sell or supply products or
to perform services except for purchase orders accepted
from vendees in the ordinary course of business;

(iv) representative or sales agency Contract;

(v) Contract limiting or restraining it from
engaging or competing in any lines or business with any
Person;

(vi) license, franchise, distributorship or
other agreement, including those which relate in whole
or in part to any ideas, technical assistance or other
know-how of or used by the Company; or

(vii) material Contract not otherwise
disclosed herein.

(D) All of the Contracts to which the
Company is party or by which it or any of the Assets is
bound or affected are valid, binding and enforceable in
accordance with their terms with respect to the Company
and, to the best of the Company's knowledge, with
respect to each of the other parties thereto. The
Company has fulfilled, or taken all action necessary to
enable it to fulfill when due, all of its material
obligations under each of such Contracts. The Company
and, to the Company's best knowledge, all other parties
to such Contracts have complied in all material
respects with the provisions thereof, and no notice of
any Claim (other than any Claim of the type identified
in Section 4.26) or Default has been given to the
Company. There are no developments materially developing
materials affecting any such Contract which reasonably could be
expected to prevent the Company from realizing the
benefits thereof whether before or after the completion
of the Merger.

<PAGE> 29

SECTION 4.18. Employees. The DISCLOSURE SCHEDULE sets
forth the names and current annual salary rates or current hourly
wages of all present employees of the Company, together with the
average number of hours worked per week, the date of the last
salary increase, the date of commencement of employment of each
employee with the Company, and a summary of salary, bonuses and
other compensation, if any, paid or payable to each of such
Persons for or in respect of that portion of the 1995 calendar
year ending on August 31, 1995, and a list of all insurance
premiums paid on their behalf. The DISCLOSURE SCHEDULE also sets
forth the earnings for each of such employees as reflected on
Form W-2 for the 1994 calendar year.

SECTION 4.19. Licenses. The DISCLOSURE SCHEDULE sets
forth a complete list of all Licenses used in the operation of
the Business or otherwise held by the Company. The Company owns,
possesses or lawfully uses in the operation of its Business all
Licenses which are necessary to conduct the Business as now
conducted or to the ownership of the Assets, free and clear of
all Liens except for Permitted Liens and Liens for the benefit of
the licensor of any such License. The Company is not in Default,
nor has it received any notice of any Claim of Default, with
respect to any such License. Except as otherwise governed by
Law, all such Licenses are renewable by their terms or in the
ordinary course of business without the need to comply with any
special qualification procedures or to pay any amounts other than
routine filing fees and will not be adversely affected by the
completion of the Merger.

SECTION 4.20. Intellectual Property.

(A) No employee of the Company is, or is now expected
to be, in default under any term of any employment contract,
agreement or arrangement relating to any Intellectual Property or
noncompetition arrangement, or any other Contract or restrictive
covenant relating to the right of any such officer or employee to
be employed by the Company because of the nature of the Business
or relating to the use of any Intellectual Property of others,
and the continued employment of the Company's officers and
employees does not subject the Company to any liability resulting
from such a violation. The Intellectual Property owned by the
Company was developed entirely by its employees during the time
they were employees only of the Company, and such Intellectual
Property does not include any inventions of the employees made
prior to the time such employees became employees of the Company
nor any Intellectual Property of any previous employer of such
employee.

(B) The Company owns or has a valid right to use the
Intellectual Property being used to conduct the business of the
Company, and the conduct of its business as now operated does not
conflict with valid Intellectual Property rights of others. The
Company has not received any written communication alleging that
the Company has violated or, by conducting its business as
proposed, would violate any of the Intellectual Property rights
of any other Person. The Company does not have any obligation to
compensate any Person for the use of any such Intellectual
Property rights nor has the Company granted to any Person any
license, option or other rights to use in any manner any of the
Intellectual Property of the Company, whether requiring the
payment of royalties or not.

(C) All Patents, Copyrights, Trademarks and computer
software used in the Business or owned by the Company are listed
in the DISCLOSURE SCHEDULE.

<PAGE> 30

(D) The computer software of the Company included in
the Intellectual Property functions as intended, is in machine-
readable form, is fully licensed, and is the only software used
by the Company in the conduct of the Business.

SECTION 4.21. Compliance with Regulations and Court
Orders. The Company is not in violation of any Court Order or
Regulation, and the Assets have not been used or operated by the
Company or any other Person in violation of any Regulation or
Court Order except for violations that reasonably could not be
expected to have a Material Adverse Effect. All Court Orders to
which the Company is a party or subject are listed in the
DISCLOSURE SCHEDULE. The Company has made all filings or
notifications required to be made by it under any Regulations
applicable to the Company, the Business or the Assets. The
Company and all products sold by it, presently or at any time in
the past, and their respective packaging, markings, and
registrations, if any, were and are in full compliance with all
consumer protection Laws and Regulations applicable thereto at
the time of such sales, including, without limitation, California
Proposition 65 and the Consumer Product Safety Act. Neither the
Company nor any officer, employee or agent of, or consultant to,
the Company, while acting in his or her capacity as such officer,
employee, agent or consultant, has unlawfully offered, paid, or
agreed to pay, directly or indirectly, any money or anything of
value to, or for the benefit of, any individual who is or was a
candidate for public office, or an official or employee of any
Governmental Authority.

SECTION 4.22. Claims. There is no Litigation pending
or, to the best of the Company's knowledge, threatened against
the Company, the Business or the Assets. No Claim has been
asserted and no event has occurred that reasonably could be
expected to result in Litigation against the Company, the
Business or the Assets. To the best of the Company's knowledge,
there is no reasonable basis for any such Claim. All pending or
threatened Litigation against the Company, the Business or the
Assets of which the Company is aware, if any, is fully covered by
insurance.

SECTION 4.23. Insurance. The DISCLOSURE SCHEDULE
contains a true and complete description of the current insurance
coverage applicable to the Company, the Business and the Assets,
including amounts and lines of coverage, loss experience history
by line of coverage for the past three (3) years, and a
description of all Claims in excess of $10,000 for the past three
(3) years. To the best of the Company's knowledge, all insurance
coverage applicable to the Company, the Business and the Assets
is in full force and effect and is valid, binding and enforceable
in accordance with its terms against the respective insurers.
All insurance coverage applicable to the Company, the Business
and the Assets insures the Company in reasonably sufficient
amounts against all risks usually insured against by Persons
operating similar businesses or properties in the localities
where such businesses or properties are located and has been
issued by insurers of recognized responsibility. There is no
Default under any such coverage nor has there been any failure to
give notice or present any Claim under any such coverage in a due
and timely fashion. There are no outstanding unpaid premiums
except in the ordinary course of business and no notice of
cancellation or nonrenewal of any such coverage has been
received. There are no provisions in such insurance policies for
retroactive or retrospective premium adjustments. To the best of
the Company's knowledge, no event has occurred that reasonably
could be expected to form the basis of a bona fide Claim against
the Company, the Business or the Assets or which reasonably could
be expected to materially increase the insurance premiums payable
for any such coverage. All products liability and general
liability insurance policies ever

<PAGE> 31

maintained by the Company have been occurrence policies and not
claims made policies. There are no outstanding performance bonds
covering or issued for the benefit of the Company. At no time
since it commenced operations has the Company been without
general liability insurance or workers compensation insurance.

SECTION 4.24. Labor Matters. The Company has no
collective bargaining agreement with any labor union or other
representative of employees. No strike, slowdown, picketing or
work stoppage by any union or other group of employees against
the Company or the Assets wherever located, and no secondary
boycott with respect to their products, lockout by them of any of
their employees or any other labor trouble or other occurrence,
event or condition of a similar character, has occurred or been
threatened. Neither the Company nor, to the best of the
Company's knowledge, any Person that manufactures or produces any
of the Company's products, employs any minors or any unauthorized
or illegal aliens.

SECTION 4.25. Employee Benefit Plans.

(A) The DISCLOSURE SCHEDULE sets forth a complete
list and description of each pension, retirement, deferred
compensation, bonus, stock purchase, stock option, profit
sharing, insurance or employee benefit or welfare plan,
agreement, arrangement or informal understanding for the benefit
of employees or former employees, their dependents, survivors or
beneficiaries, whether or not legally binding (collectively,
"Benefit Plans"), established or maintained, or contributed to,
by the Company. Each Benefit Plan that is subject to the
Employee Retirement and Income Security Act of 1974 ("ERISA") is
in substantial compliance therewith. No employee of the Company
is covered by any collective bargaining agreement.

(B) No employee pension benefit plans ("Pension
Benefit Plan"), within the meaning of Section 3(2) of ERISA, of
the Company nor any trust thereunder has been terminated, nor
have there been any "reportable events" as to any Pension Benefit
Plan of the Company (as that term is defined in Section 4043 of
ERISA) since the effective date of ERISA, and all reports
required to be filed by the Company pursuant to ERISA have been
filed and all notices required to be given by ERISA pursuant to
ERISA have been given.

(C) The Company has not maintained or contributed to
any "multi-employer plan," within the meaning of Section 3(37) of
ERISA. No liability under Title IV of ERISA has been or is
expected to be incurred by the Company attributable to the period
ending on the Closing Date with respect to any plan currently or
formerly maintained or contributed to it or any ERISA Affiliate
(as defined in Section 4001 of ERISA).

(D) Each Pension Benefit Plan of the Company meets
the requirements of Section 401(a) of the Code and the trust, if
any, forming part of such plan is exempt from federal income tax
under Section 501(a) of the Code.

SECTION 4.26. Returns. All Claims against the Company
demanding allowances or seeking to return to the Company
merchandise shipped on or prior to the Closing Date by reason of
alleged overshipments, defective merchandise, billing errors,
customer errors or otherwise shall be reflected on the Closing
Balance Sheet.

<PAGE> 32

SECTION 4.27. Product Warranties. Except for
warranties under applicable Law, (i) the Company has made no
warranties, express or implied, written or oral, with respect to
the Business, and (ii) there is no Claim pending or, to the best
of the Company's knowledge, threatened against the Company under
any such warranty of the Company and, to the best of the
Company's knowledge, there is no basis for any such Claim, and
(iii) the Company has no Liability with respect to any such
warranty, whether known or unknown, absolute, accrued, contingent
or otherwise and whether due or to become due.

SECTION 4.28. Delivery of Documents. The Company has
delivered to Crown Crafts true, correct and complete copies of
the Company's Articles of Incorporation and By-Laws and all
material written Contracts and other documents (including,
without limitation, all amendments, supplements, modifications or
waivers currently in effect) described in this Agreement or in
the DISCLOSURE SCHEDULE.

SECTION 4.29. No Material Adverse Developments. Since
the Latest Year-End Balance Sheet Date, there has been no actual
or, to the best of the Company's knowledge, threatened change in
the Business or any event, condition or state of facts, in
either case that is or reasonably could be expected to be
material and adverse to the Company or the Assets.

SECTION 4.30. Material Transactions. Since the Latest
Year-End Balance Sheet Date, the Business has been operated in
the manner described in Section 6.1, and the Company has not
taken any action that would have been prohibited by Section 6.1
had that Section been effective since the Latest Year-End Balance
Sheet Date.

SECTION 4.31. Additional Information. The DISCLOSURE
SCHEDULE contains accurate lists and summary descriptions of the
following as of the date hereof:

(i) all accounts receivable of the Company
as of September 28, 1995 specifying the account debtor
and the face amount of each receivable;

(ii) all accounts payable and accrued
expenses of the Company reflected on the Latest Year-
End Balance Sheet, specifying the payee, the face
amount of each payable, the age of each payable
regardless of classification on the balance sheet
account, any defenses, setoffs or counterclaims that
may exist with respect thereto, and reconciling the
aggregate value of all accounts payable as of the
Latest Year-End Balance Sheet Date to the amount of
such category set forth on the Latest Year-End Balance
Sheet;

(iii) the names of all present officers and
directors of the Company;

(iv) the names and addresses of every bank
and other financial institution in which the Company
maintains an account (whether checking, savings or
otherwise), lock box or safe deposit box, and the
account numbers and names of Persons having signing
authority or other access thereto;

<PAGE> 33

(v) the names of all Persons authorized to
borrow money or incur or guarantee indebtedness on
behalf of the Company;

(vi) the names of all Persons holding powers
of attorney from the Company and a summary statement of
the terms thereof; and

(vii) all names under which the Company has
ever conducted any Business or which it has otherwise
ever used.

SECTION 4.32. Corporate Records. The minute books of
the Company are current and contain correct and complete copies
of all charter documents of the Company, including all amendments
thereto and restatements thereof, and of all minutes of meetings,
resolutions and other actions and proceedings of its shareholders
and board of directors and all committees thereof, duly signed by
the Secretary or an Assistant Secretary, and the stock record
book of the Company is also current, correct and complete.

SECTION 4.33. Transactions with Affiliates. No
shareholder or director of the Company, or any Person with whom
any such shareholder or director has any direct or indirect
relation by blood, marriage or adoption, or any entity in which
any such person owns any beneficial interest (other than a
publicly held corporation whose stock is traded on a national
securities exchange or in the over-the-counter market and less
than 1% of the stock of which is beneficially owned by all such
Persons) has any interest in (i) any contract, arrangement or
understanding with, or relating to, the Business, (ii) any loan,
arrangement, understanding, agreement or contract for or relating
to indebtedness of the Company, or (iii) any property (real,
personal or mixed, tangible or intangible) used, or currently
intended to be used, in the Business.

SECTION 4.34. Full Disclosure. There are and will be
no material misstatements in any of the representations and
warranties made by the Company in this Agreement or in any of the
certificates and instruments delivered or to be delivered by the
Company pursuant to this Agreement, including, without
limitation, in the DISCLOSURE SCHEDULE, and the Company has not
omitted to state any fact necessary to make such representations
and warranties not materially misleading.

SECTION 4.35. Limitation on Representations and
Warranties Due to Tax Status. Notwithstanding the foregoing,
until the Extension Grant Date occurs the Company shall not be
deemed to have made any representations or warranties under this
Article IV to the extent, but only to the extent, that such
representations or warranties would be incorrect if the Company,
at any time during the period from July 1, 1982 to and including
July 27, 1995, were not an "S" corporation within the meaning of
Section 1361 of the Code and the equivalent provisions of all
applicable state income tax statutes. If the Extension Grant
Date occurs, then from and after the Extension Grant Date the
portions of the representations and warranties that are deemed to
have not been made pursuant to the first sentence of this Section
4.35 shall be deemed to have been made as of the date hereof.

<PAGE> 34

ARTICLE 5
REPRESENTATIONS AND WARRANTIES OF CROWN CRAFTS

Crown Crafts hereby represents and warrants to the
Company as follows:

SECTION 5.1. Organization and Standing. Crown Crafts
and Merger Sub are corporations duly organized, validly existing
and in good standing under the Laws of Georgia and California,
respectively, having all requisite corporate power and authority
to perform their obligations under this Agreement.

SECTION 5.2. Authority and Binding Effect. Crown
Crafts and Merger Sub have the corporate power and authority to
execute, deliver and perform this Agreement and, except for
filings required by the HSR Act, have taken all actions necessary
to secure all approvals required in connection therewith. The
execution, delivery and performance of this Agreement by Crown
Crafts and Merger Sub have been duly authorized by all necessary
corporate action on the part of Crown Crafts and Merger Sub.
This Agreement constitutes the legal, valid and binding
obligation of Crown Crafts and Merger Sub, enforceable against
each of Crown Crafts and Merger Sub in accordance with its terms.

SECTION 5.3. Validity of Contemplated Transactions.
Neither the execution and delivery of this Agreement by Crown
Crafts or Merger Sub nor the consummation of the transactions
contemplated hereby by Crown Crafts or Merger Sub will contravene
or violate any Regulation or Court Order which is applicable to
Crown Crafts or Merger Sub, or the Articles of Incorporation or
By-Laws of Crown Crafts or Merger Sub, or will result in a
Default under any Contract to which Crown Crafts or Merger Sub is
a party or by which it is otherwise bound.

SECTION 5.4. Business and Liabilities of Merger Sub.
Merger Sub has not conducted any business since its date of
incorporation and has not incurred any liabilities other than
minimum franchise tax liabilities.

ARTICLE 6
CERTAIN ADDITIONAL COVENANTS

SECTION 6.1. Conduct of Business Pending Closing.
Until the Closing Date, except as may be approved by Crown Crafts
in writing or as otherwise expressly provided in this Agreement,
the Company shall:

(i) operate the Business only in the
ordinary course and in substantially the same manner as
it has been operated in the past and not sell any of
the Assets except for sales in the ordinary course of
business, provided that the Company may take any action
not material to the Business whether or not such action
is in the ordinary course of business;

(ii) not issue, repurchase or redeem or
commit to issue, repurchase or redeem, any shares of
its capital stock, any options or other rights to
acquire such stock or any securities convertible into
or exchangeable for such stock;

<PAGE> 35

(iii) not (a) incur any amount of long or
short-term debt for money borrowed, (b) guarantee or
agree to guarantee the obligations of others, (c)
indemnify or agree to indemnify others, or (d) incur
any other Liabilities other than those incurred in the
ordinary course of business consistent with past
practice, provided that the Company may incur any
Liability not material to the Business whether or not
such occurrence is in the ordinary course of business;

(iv) keep in full force and effect insurance
covering the Company, the Assets and the Business
comparable in amount and scope of coverage to that now
maintained;

(v) maintain the tangible Assets in good
condition and working order, ordinary wear and tear
excepted;

(vi) use its reasonable best efforts to
retain the Company's employees and maintain the
Business so that such employees will remain available
to the Company on the Closing Date and to maintain
existing relationships with suppliers, customers and
others having business dealings with the Company and
otherwise to preserve the goodwill of the Business so
that such relationships and goodwill will be preserved
on the Closing Date;

(vii) not amend its Articles of Incorporation
or By-Laws;

(viii) not merge with or into any other Person
or sell, assign, transfer, pledge or encumber any
material part of the Assets outside the ordinary course
of business or agree to do any of the foregoing;

(ix) not enter into any Contract that is
material, nor amend or terminate any material Contract;

(x) not waive any rights of value or rights
that would otherwise accrue to the Company after the
Closing Date;

(xi) not increase the salaries of, or make
any bonus or similar payments to or establish any
Benefit Plans for, any of the Company's directors,
officers or employees or enter into or modify any
employment, consulting or similar Contracts with any
such Persons or agree to do any of the foregoing;

(xii) continue to maintain all Benefit Plans
in accordance with applicable Regulations and ensure
that no Benefit Plan, nor any trust related thereto,
shall be amended or terminated prior to the Closing
Date, except for any amendment as may be required to
comply with applicable Regulations;

(xiii) collect its accounts receivable in the
ordinary course of business consistent with past
practice;

<PAGE> 36

(xiv) pay its accounts payable in the ordinary course
of business consistent with past practice and not fail to pay
or discharge when due any Liabilities except where any such
account payable or Liability is the subject of a good faith
dispute;

(xv) use its reasonable best efforts to
complete the Merger and obtain the satisfaction of the
conditions specified in Article 8;

(xvi) promptly notify Crown Crafts of any
Default, the threat or commencement of any Litigation,
or any development that occurs before the Closing that
could have a Material Adverse Effect;

(xvii) use its reasonable best efforts to
obtain any consents or approvals required under any
Contracts or otherwise that are necessary to complete
the Merger or to avoid a Default under any such
Contract, provided that Red Calliope shall not be
required to make payments in excess of an aggregate of
$125,000 in order to obtain such consents and
approvals;

(xviii) comply with all Regulations applicable
to it and to the conduct of the Business, except where
the failure to so comply could not have a Material
Adverse Effect;

(xix) provide Crown Crafts with such financial
and other reports of the Business as may be reasonably
requested;

(xx) not make, or commit itself to make, any
capital expenditures in excess of $5,000;

(xxi) (a) give to Crown Crafts' officers,
employees, counsel, accountants and other
representatives free and full access to and the right
to inspect, during normal business hours, all of the
Assets, records, Contracts and other documents relating
to the Business, (b) permit them to consult with the
officers, employees, accountants, counsel and agents of
the Company for the purpose of making such
investigation of the Company, the Business and the
Assets as Crown Crafts shall desire to make, provided
that such investigation shall not unreasonably
interfere with the Company's operational business, and
(c) furnish to Crown Crafts all such documents and
copies of documents and records and information with
respect to the Company's affairs and copies of any
working papers relating thereto as Crown Crafts shall
from time to time reasonably request; and

(xxii) promptly disclose to Crown Crafts in
writing any information set forth in the DISCLOSURE
SCHEDULE hereto which no longer is correct and any
information of the nature of that set forth in the
DISCLOSURE SCHEDULE which arises after the date hereof
and which would have been required to be included in
the DISCLOSURE SCHEDULE if such information had
obtained on the date hereof.

SECTION 6.2. HSR Act. Each of Crown Crafts, Merger
Sub and the Company has prepared and filed with the Federal Trade
Commission ("FTC") and the Antitrust Division of the Department
of Justice ("DOJ") all notifications required by the HSR Act, and
each of them agrees hereafter to file, as promptly as
practicable, all responses to requests for information required
by the HSR Act. Crown Crafts, Merger Sub and the Company will
cooperate as required to prepare

<PAGE> 37

each separate filing, and to supply any additional information
which may be submitted to the FTC or the DOJ relating to the
status of the transactions contemplated hereby under the
antitrust laws, whether or not such additional information is
requested or required under the HSR Act. Crown Crafts, Merger
Sub and the Company shall each request early termination of the
waiting period under the HSR Act.

SECTION 6.3. Medical Benefits. Crown Crafts agrees
that immediately following the Closing all employees of the
Company (other than Mr. and Mrs. Glickman) to whom the Company
has provided medical benefits (the "Company Plan") as of the
Closing Date shall either (i) continue to be covered under the
Company Plan, or (ii) be covered under Crown Crafts' medical plan
(the "Crown Crafts Plan") and not be subject to any exclusion in
the Crown Crafts Plan regarding pre-existing conditions to the
extent that such exclusion exceeds in nature or duration any
exclusion to which such employees are subject immediately prior
to the Closing under the Company Plan. Nothing in this Section
6.3 shall be construed (i) as giving any employee of the Company
the right to be employed by the Company or Crown Crafts for any
period after the Closing or restrict the right of the Company or
Crown Crafts to discharge any such person or an employee at any
time, (ii) as restricting the right of Crown Crafts to change or
modify the Company Plan or Crown Crafts' Plan in any respect, or
(iii) as obligating Crown Crafts to continue to provide any
medical insurance or benefits to the Company's employees.

SECTION 6.4. Confidentiality. Subject to the
requirements of applicable Law, Crown Crafts and Merger Sub will
keep confidential, and will cause their representatives to keep
confidential, all information and documents obtained by them from
the Company in connection herewith except as otherwise consented
to by the Company; provided, however, that neither Crown Crafts
nor Merger Sub shall be precluded from making any disclosure
which (based on advice of counsel) it deems required by Law in
connection with the transactions contemplated by this Agreement.
In the event Crown Crafts or Merger Sub is required to disclose
any information or documents pursuant to the immediately
preceding sentence, it shall promptly give written notice of such
disclosure that is proposed to be made to the Company so that the
parties can work together to limit the disclosure to the greatest
extent possible and, in the event that Crown Crafts or Merger Sub
is legally compelled to disclose any information, to seek a
protective order or other appropriate remedy or both. Upon any
termination of this Agreement, Crown Crafts and Merger Sub will
collect and deliver to the Company all documents obtained
pursuant to this Agreement or otherwise from the Company by them
or its representatives then in their possession and any copies
thereof.

SECTION 6.5. Best Efforts. Each of Crown Crafts and
Merger Sub shall use its reasonable best efforts to accomplish
the Merger and obtain the satisfaction of the conditions
specified in Section 9.

SECTION 6.6. Intentionally Left Blank.

SECTION 6.7. Noncompetition. Mr. Fohrman agrees
that, from the Closing Date until the fifth anniversary of the
termination for any reason whatsoever of his employment (the
"Noncompete Period"), unless acting in accordance with Crown
Crafts' prior written consent and except as an employee or
director of the Company or Crown Crafts, he will not (directly or
indirectly), (i) own, manage, operate, join, control, finance or
participate in the ownership,

<PAGE> 38

management, operation, control or financing of, or (ii) be
connected as an officer, director, employee, principal, agent,
representative, consultant, investor, owner, partner, manager,
venturer or otherwise with, or permit his name to be used by or
in connection with, any Person engaged in (or that proposes to
engage in) the business of designing, manufacturing,
distributing, selling, importing, sourcing, marketing or
producing any type of infant bedding product, textile crib
accessory or house furnishing for infant bedrooms in any county
in the State of California or any other state of the United
States; provided, however, that the provisions of this Section
6.7 shall not be deemed to prohibit the ownership by Mr. Fohrman
of not more than one percent (1%) of any class of securities of
any corporation having a class of securities registered pursuant
to the Securities Exchange Act of 1934, as amended. Mr. Fohrman
acknowledges that (i) he has intimate knowledge of the Business
which, if exploited by him, in contravention of this Agreement,
would seriously adversely and irreparably affect the value of the
Surviving Company to Crown Crafts and the ability of Crown Crafts
to continue to operate the Business following the Closing,
(ii) the provisions of this Section 6.7 and Sections 6.8 and 6.9
are reasonable and necessary to protect the legitimate interests
of Crown Crafts, (iii) the provisions of this Section 6.7 and
Sections 6.8 and 6.9 are reasonable and necessary to protect the
goodwill of the Business and the other Assets acquired by Crown
Crafts hereunder, (iv) any violation of this Section 6.7 or
Sections 6.8 and 6.9 will result in irreparable injury to Crown
Crafts and the Surviving Corporation and that damages at Law
would not be reasonable or adequate compensation to Crown Crafts
and the Surviving Corporation for a violation of this Section 6.7
or Sections 6.8 or 6.9, and (v) Crown Crafts and the Surviving
Corporation shall be entitled to have the provisions of this
Section 6.7 and Sections 6.8 and 6.9 specifically enforced by
preliminary and permanent injunctive relief without the necessity
of proving actual damages and without posting bond or other
security as well as to an equitable accounting of all earnings,
profits and other benefits arising out of any such violation,
including, without limitation, future earnings estimated upon a
basis of seven (7) years as the anticipated average tenure of a
customer with the Surviving Corporation. In the event that the
provisions of this Section 6.7 or Sections 6.8 or 6.9 should ever
be deemed to exceed the time, geographic, product or any other
limitations permitted by applicable Law, then such provisions
shall be deemed reformed to the maximum extent permitted by
applicable Law.

SECTION 6.8. Nonsolicitation. Mr. Fohrman agrees
that, for the Noncompete Period, he will not (directly or
indirectly) call on or solicit for the purpose of providing any
goods or services competitive with those offered by the Surviving
Corporation to, or divert or take away from the Surviving
Corporation the business of (including, without limitation, by
divulging to any competitor or potential competitor of the
Surviving Corporation or Crown Crafts the name of), any Person
who or which at the Closing Date was, or at any time during the
three (3) years preceding the Closing Date had been, a customer
of the Company or whose identity is known to Mr. Fohrman at the
Closing Date as one whom the Surviving Corporation intends to
solicit within the succeeding year. Nothing contained in this
Section 6.8 shall be deemed to affect in any manner any other
provision of this Agreement.

SECTION 6.9. Hiring of the Surviving Corporation's
Employees. During the Noncompete Period, Mr. Fohrman will not
(directly or indirectly) hire or offer employment to, or assist
any other Person in employing, any employee of the Surviving
Corporation (whether or not such employment is full time or is
pursuant to a written contract with the Surviving Corporation)
unless the Surviving Corporation or Crown Crafts first terminates
the employment

<PAGE> 39

of such employee. Nothing contained in this Section 6.9 shall
affect or be deemed to affect in any manner any other provision
of this Agreement.

SECTION 6.10. No Solicitation of Transactions. The
Company shall not, directly or indirectly, through any officer,
director, agent or otherwise, (i) initiate or solicit or
knowingly encourage (including by way of furnishing non-public
information or assistance), or take any other action to
facilitate knowingly, any inquiries or the making of any proposal
that constitutes, or may reasonably be expected to lead to, any
Third Party Transaction, or (ii) enter into or maintain or
continue discussions or negotiate with, or furnish any non-public
information or assistance to, any Person in connection with any
Third Party Transaction, or (iii) agree to or endorse any Third
Party Transaction, or (iv) authorize or permit any of its
officers, directors or employees or any investment banker,
financial advisor, attorney, accountant or other representative
retained by the Company to take any action described in clause
(i), (ii) or (iii) above. The Company shall notify Crown Crafts
orally (within two (2) Business Days) and in writing (as promptly
as practicable) of all relevant details relating to all inquiries
and proposals which it or any other such officer, director,
employee, investment banker, financial advisor, attorney,
accountant or other representative may receive relating to any of
such matters and if such inquiry or proposal is in writing, the
Company shall forthwith deliver to Crown Crafts a copy of such
inquiry or proposal.

SECTION 6.11. Conduct of Merger Sub's Business. Prior
to the Closing, Merger Sub shall not engage in any activities
other than activities directly related to the consummation of the
Merger.

SECTION 6.12. Consulting Agreement. At the Closing,
the Company shall execute and deliver to Mrs. Glickman a
consulting agreement in substantially the form of Exhibit A
hereto.

SECTION 6.13. Asbestos Remediation. If between the
Effective Time and June 1, 1996 the Surviving Corporation shall
be required under Environmental Laws to remove any asbestos from
buildings or tenant improvements located on either of the parcels
of Leased Real Property occupied by the Company as of the date
hereof, such removal shall be conducted in a manner intended to
minimize the cost thereof to the greatest extent reasonably
possible under the circumstances while still complying with
Environmental Laws relating to such removal.

SECTION 6.14 Conduct of Title and Merger Litigation.
All Title Litigation and, from and after the Closing Date, all
Merger Litigation shall be conducted by Crown Crafts, subject to
the terms of the Disbursement Agreement in the case of Title
Litigation, and shall be conducted in good faith and in a manner
reasonably calculated to maximize the Adjustment Amount.
Mr. Fohrman shall have the right, but not the obligation, to
participate in, but not control, any such Title Litigation or
Merger Litigation; provided, however, that Mr. Fohrman shall not
have the right to participate in Title Litigation during any time
that any party to the Disbursement Agreement, other than Crown
Crafts, is controlling such Title Litigation pursuant to the
terms of the Disbursement Agreement. During any period that
Mr. Fohrman does not have the right to participate in Title
Litigation due to the proviso to the preceding sentence, Crown
Crafts shall keep Mr. Fohrman informed of the status of such
Title Litigation and shall share with him all information
relating thereto that is not protected by the attorney-client
privilege or

<PAGE> 40

attorney work product privilege. All fees and expenses
(including attorneys' fees) incurred by Mr. Fohrman in connection
with this Section 6.14 shall be paid by Red Calliope. Legal
counsel utilized by Crown Crafts in connection with the Title
Litigation and Merger Litigation shall be reasonably acceptable
to Mr. Fohrman. In the event of any conflict between this
Section 6.14 and the terms of the Disbursement Agreement, the
terms of the Disbursement Agreement shall control.

ARTICLE 7
INDEMNIFICATION

SECTION 7.1. Indemnification Obligations.

(A) Prior to the Closing Date, the Company shall
indemnify and hold harmless Crown Crafts, and each Person who
controls Crown Crafts, within the meaning of the Securities Act
of 1933, as amended (the "Securities Act"), and each officer and
director of Crown Crafts and any such controlling Person (each an
"indemnified party") from, against and in respect of any and all
damages (including special and consequential), losses, demands,
claims, actions, causes of action, assessments, deficiencies,
Liabilities, costs and expenses, including, without limitation,
interest, penalties, cost of investigation and defense and
reasonable attorneys' and other professional fees and expenses
(collectively, "Losses") resulting from, relating to or arising
out of any Merger Litigation.

(B) From and after the Closing Date, Mr. Fohrman and
Mr. Glickman (the "indemnifying parties"), jointly and severally,
shall indemnify and hold harmless each indemnified party from,
against and in respect of any and all Losses resulting from,
relating to or arising out of (i) any inaccuracy, untruth or
incompleteness of any representation or warranty of the Company
contained in or made pursuant to this Agreement, regardless of
whether the same was deliberate, reckless, innocent or
unintentional, or (ii) any taxes, interest or penalties imposed
by the IRS or the California Franchise Tax Board or any other
governmental authority against the Surviving Corporation with
respect to periods prior to and including the Closing Date to the
extent that such taxes, interest and penalties are not offset
against the Tax Reserves; provided, however, that in the case of
Sections 4.3, 4.4 and 4.5, an indemnifying party shall have no
liability hereunder for any Losses to the extent that such Losses
result from, relate to or arise out of any inaccuracy, untruth or
incompleteness of any representation or warranty as to the other
indemnifying party.

SECTION 7.2. Method of Asserting Claims, Etc.

(A) All Claims for indemnification under this Article
7 shall be asserted and resolved as follows:

(i) In the event that any Claim for which
the indemnifying parties would be liable to an
indemnified party hereunder is asserted or sought to be
collected by any Person other than an indemnified party
(a "Third Party"), such indemnified party shall
promptly notify the indemnifying parties of such Claim,
specifying the nature of such Claim and the amount or
the estimated amount thereof to the extent then
feasible (which estimate shall not be conclusive of the
final amount of such Claim) (the "Claim Notice").

<PAGE> 41

The indemnifying parties shall have ten (10) days from
their receipt of the Claim Notice (the "Notice Period")
to notify such indemnified party (x) whether or not
they dispute their Liability to such indemnified party
hereunder with respect to such Claim, and (y) if the
indemnifying parties do not dispute such Liability,
whether or not they desire, at their sole cost and
expense, to defend such indemnified party against such
Claim; provided, however, that such indemnified party
is hereby authorized prior to and during the Notice
Period to file any motion, answer or other pleading
which such indemnified party shall reasonably deem
necessary or appropriate to protect its interests so
long as such pleading does not admit any liability or
otherwise compromise the possible defenses to such
Claim. In the event that either or both of the
indemnifying parties notifies such indemnified party
within the Notice Period that such indemnifying party
does not dispute such Liability and desires to defend
against such Claim, then, except as hereinafter
provided, such indemnifying party shall have the right
to defend by appropriate proceedings, which proceedings
shall be conducted in such manner as such indemnifying
party shall determine in his reasonable discretion,
taking into consideration, among other things, the
desire of the indemnified party to minimize the risk of
such indemnified party becoming subject to Liability
for any other matter. If such indemnified party
desires to participate in, but not control, any such
defense or settlement it may do so at its sole cost and
expense. If, in the reasonable opinion of such
indemnified party, any such Claim involves an issue or
matter which is likely to have a material adverse
effect on the business, operations, assets, properties
or prospects of the Business, Crown Crafts shall have
the right to control the defense or settlement of any
such Claim, and such indemnified party's reasonable
costs and expenses thereof shall be included as part of
the indemnification obligations of the indemnifying
parties; provided, however, if Crown Crafts elects to
control the defense or settlement of any Claim pursuant
to this sentence, (1) the indemnifying parties shall
have the right to participate in, but not control, such
defense, (2) Crown Crafts may not settle any such Claim
without the prior written consent of the indemnifying
parties, which consent may not be unreasonably
withheld, and (3) if Crown Crafts receives a settlement
proposal from the Person asserting such Claim and is
notified by either of the indemnifying parties that
such indemnifying party wants to accept such settlement
proposal, the Liability, if any, of the indemnifying
parties with respect to such Claim shall equal the
lesser of (x) the amount offered in such settlement
proposal or (y) the amount of the actual Losses of the
indemnified parties with respect to such Claim. If
both of the indemnifying parties dispute their
Liability with respect to such Claim or demand or elect
not to defend against such Claim, whether by not giving
timely notice as provided above or otherwise, then the
amount of any such Claim, or, if the same be contested
by either of the indemnifying parties or by such
indemnified party (but such indemnified party shall not
have any obligation to contest any such Claim), then
that portion thereof as to which such defense is
unsuccessful, shall be conclusively deemed to be a
Liability of the indemnifying parties hereunder
subject, if either of the indemnifying parties has
timely disputed liability, to a final adjudication that
the disputed liability is covered by these
indemnification provisions.

(ii) In the event that an indemnified party
should have a Claim against the indemnifying parties
hereunder which does not involve a Claim being asserted
against or sought to be collected from such indemnified
party by a Third Party, such indemnified party shall
promptly send a Claim Notice with respect to such Claim
to the indemnifying

<PAGE> 42

parties. If the indemnifying parties do not notify
such indemnified party within the Notice Period that
they dispute such Claim, the amount of such Claim shall
be conclusively deemed a liability of the indemnifying
parties.

(iii) Nothing herein shall be deemed to
prevent any indemnified party from making a Claim
hereunder for potential or contingent Claims or demands
provided the Claim Notice sets forth the specific basis
for any such potential or contingent Claim or demand
and the estimated amount thereof to the extent then
feasible and the indemnified party has reasonable
grounds to believe that such a Claim or demand will be
made.

SECTION 7.3. Payment.

(A) In the event that either indemnifying party is
required to make any payment under this Article 7, such
indemnifying party shall promptly pay the indemnified party the
amount so determined. If there should be a dispute as to the
amount or manner of determination of any indemnity obligation
owed under this Article 7, the party from whom indemnification is
due shall nevertheless pay when due such portion, if any, of the
obligation as shall not be subject to dispute. The difference,
if any, between the amount of the obligation ultimately
determined as properly payable under this Article 7 and the
portion, if any, theretofore paid shall bear interest as provided
in Section 7.3(B). Upon the payment in full of any Claim, either
by setoff or otherwise, the party making payment shall be
subrogated to the rights of the indemnified party against any
Person with respect to the subject matter of such Claim.

(B) If all or part of any indemnification obligation
under this Agreement is not paid when due, then the indemnifying
party obligated to make such payment shall pay the indemnified
party or parties interest on the unpaid amount of the obligation
for each day from the date the amount became due until payment in
full, payable on demand, at the fluctuating rate per annum which
at all times shall be the lowest rate of interest generally
charged from time to time by Wachovia Bank of Georgia, N.A. and
publicly announced by such bank as its so-called "prime rate."

SECTION 7.4. Survival of Representations and
Warranties, etc. All of the representations, warranties,
covenants and agreements contained in this Agreement or in any
attachment, Exhibit, the DISCLOSURE SCHEDULE, certificate,
document or list delivered in connection with the Merger shall
survive the Closing, any examination by or on behalf of the
parties and the consummation of the transactions contemplated
herein, but only to the extent specified below:

(i) except as set forth in clauses (ii) and
(iii) below, the representations and warranties
contained in Article 4 hereof shall survive for a
period of one (1) year following the Closing Date;

(ii) the representations and warranties
contained in Sections 4.1 through and including 4.6,
Sections 4.8 and 4.27 and in Article 5 shall survive as
to any claim covered thereby for so long as any statute
of limitations for such claim remains open, in whole or
in part, including, without limitation, by reason of
waiver or extension of such statute of limitations; and

<PAGE> 43

(iii) the representations and warranties
contained in Sections 4.16 and 4.25 shall survive for a
period of three (3) years following the Closing Date.

SECTION 7.5. Limitations as to Amount.

(A) The indemnifying parties shall not have any
liability with respect to the matters described in Section 7.1
(B) until the total of all Losses with respect thereto exceeds
$50,000 in which event the indemnifying parties shall be
obligated to indemnify the indemnified party as provided herein
for all such Losses, subject to Section 7.5(B).

(B) Except with respect to Claims based upon
intentional misrepresentation or intentional breach of warranty
by the Company, (i) the liability of an indemnifying party under
Section 7.1(B) shall in no event exceed the consideration paid to
such indemnifying party pursuant to Section 3.1 and (ii) the
collective liability of the indemnifying parties under
Section 7.1(B) shall in no event exceed $7,000,000.

(C) If the allowance for doubtful accounts set forth
on the Closing Balance Sheet exceeds the aggregate amount of
accounts receivable reflected on the Closing Balance Sheet that
ultimately are uncollectable, such excess allowance shall be
credited against any amount that the indemnifying parties would
otherwise be obligated to pay pursuant to Section 7.1(B).

SECTION 7.6. Status of Indemnifying Parties. The
indemnification obligations set forth in this Article 7 are the
direct and primary obligations of the indemnifying parties and do
not constitute a guaranty of any obligation of the Company or any
other Person.

SECTION 7.7. Sole Remedy. Except as otherwise
provided in this Agreement, this Article 7 is the sole remedy of
Crown Crafts with respect to Losses resulting from, relating to
or arising out of any inaccuracy, untruth or incompleteness of
any representation or warranty of the Company contained in or
made pursuant to this Agreement.

ARTICLE 8
CONDITIONS PRECEDENT TO OBLIGATIONS OF CROWN CRAFTS

Subject to waiver as set forth in Section 10.9, the
obligations of Crown Crafts under this Agreement are subject to
the fulfillment prior to or at the Closing of each of the
following conditions:

SECTION 8.1. Representations True at Closing. The
representations and warranties of the Company set forth in
Article 4 shall be true and correct on the Closing Date with the
same effect as if made at that time.

SECTION 8.2. Performance by the Company. The Company
shall have performed and satisfied all agreements and conditions
which it is required by this Agreement to perform or satisfy
prior to or on the Closing Date.

<PAGE> 44

SECTION 8.3. Certificates. Crown Crafts shall have
received certificates from the Company dated the Closing Date
certifying in such detail as Crown Crafts may reasonably request
that each of the conditions described in Sections 8.1 and 8.2 has
been fulfilled.

SECTION 8.4. Form and Content of Documents. The form
and content of all documents, certificates and other instruments
to be delivered by the Company shall be reasonably satisfactory
to Crown Crafts.

SECTION 8.5. Opinions of Counsel.

(A) Crown Crafts shall have received the written
opinion, dated the Closing Date, of Gibson, Dunn & Crutcher,
counsel for the Company, in form and substance reasonably
satisfactory to Crown Crafts, to the effect that:

(i) The Company is validly organized,
existing and in good standing in the State of
California and has all requisite corporate power and
authority to own and operate its properties and to
carry on its business as currently conducted and is
duly qualified to do business in each other state in
which the failure to so qualify would have a material
adverse effect on its operations in such state.

(ii) The Company has full corporate power and
authority to enter into this Agreement and to
consummate the transactions contemplated hereby.

(iii) The Company has taken all requisite
action to authorize, approve and carry out this
Agreement and the transactions on the part of the
Company contemplated hereby, and this Agreement
constitutes a legal, valid and binding agreement of the
Company enforceable against it in accordance with its
terms, except as such enforcement may be limited by (x)
bankruptcy, insolvency, reorganization, moratorium, and
other Laws and legal and equitable principles of
general application affecting the rights or remedies of
creditors, including, without limitation, statutory or
other laws regarding fraudulent conveyances or
preferential transfers, and (y) general principles of
equity upon the specific enforceability of any of the
remedies, covenants or other provisions of this
Agreement and upon the availability of injunctive
relief or other equitable remedies and the application
of principles of equity (regardless of whether
enforcement is considered in proceedings at law or in
equity) as such principles relate to, limit or affect
the enforcement of creditors' rights generally.

(iv) The execution, delivery and performance
of this Agreement by the Company and the consummation
of the transactions on the part of the Company
contemplated hereby (x) will not result in any breach,
violation, default or acceleration of the obligations
of the Company under the Articles of Incorporation or
By-Laws of the Company or under any judgment, decree,
order, lease, license, contract or other agreement
which is applicable to the Company and of which such
counsel is aware, and (y) to the

<PAGE> 45

best of such counsel's knowledge, violate any Law,
authorization, approval, judgment, decree, order or
Regulation applicable to the Company.

(v) The consummation of the transactions on
the part of the Company contemplated by this Agreement
does not require the consent, approval, authorization
or order, giving of notice to, or the registration
with, any court or any Governmental Authority or any
other Person of which such counsel is aware other than
any of the foregoing obtained or made on or prior to
the Closing Date.

(vi) To the best of such counsel's knowledge,
no action or proceeding against the Company is pending
before any court, or before or by any Governmental
Authority, to restrain, prohibit, invalidate or obtain
damages with respect to or otherwise question or attack
the transactions contemplated by this Agreement.

(vii) The Shares have been validly issued by
the Company and are fully paid and non-assessable and
represent all of the issued and outstanding Red
Calliope Stock.

(B) Crown Crafts shall have received the written
opinion, dated the Closing Date, of Jones, Day, Reavis & Pogue,
counsel for Mr. Fohrman, in a form reasonably to be negotiated,
and in any event subject to customary exceptions and to factual
representations by Mr. Fohrman to Jones, Day, Reavis & Pogue, to
the effect that Article VII (except for Section 7.6 thereof, as
to which no opinion need be given) is enforceable against Mr.
Fohrman in accordance with its terms.

SECTION 8.6. Litigation Affecting Closing. No Court
Order shall have been issued or entered which would be violated
by the completion of the Merger. No Person who or which is not a
party to this Agreement shall have commenced or threatened to
commence any Litigation seeking to restrain or prohibit, or to
obtain substantial damages in connection with, this Agreement or
the transactions contemplated by this Agreement, and no
Litigation, the unfavorable resolution of which could reasonably
be expected to have a Material Adverse Effect shall be pending
against the Company.

SECTION 8.7. Material Adverse Changes. From the date
hereof to the Closing Date, there shall have been no event or
occurrence having a Material Adverse Effect, nor shall there be
any conditions existing or threatened that could reasonably be
expected to have a Material Adverse Effect.

SECTION 8.8. Regulatory Compliance and Approvals.
Crown Crafts shall be satisfied that all approvals required under
any Regulations to carry out the Merger shall have been obtained
and that the parties shall have complied with all Regulations
applicable to the Merger.

SECTION 8.9. HSR Filing. All filings required to be
made under the HSR Act shall have been made, and the waiting
period thereunder shall have expired or been terminated.

SECTION 8.10. Intentionally Left Blank.

<PAGE> 46

SECTION 8.11. Consents. The Company shall have
delivered to Crown Crafts all consents required to be obtained in
connection with the Merger in order to avoid a Default under any
Contract to which the Company is a party or by which it may be
bound, except where the failure to obtain such consent would not
have a Material Adverse Effect. Each of the foregoing must be
free from burdensome restrictions and conditions not applicable
to the Company prior to the date of this Agreement, and all fees
payable in connection with obtaining any such consents shall have
been paid by the Company prior to the Closing Date.

SECTION 8.12. Employment Agreements. Neal Fohrman and
Nanci Freeman ("Ms. Freeman") shall have entered into Employment
Agreements substantially in the form of Exhibit B and C hereto,
respectively (the "Employment Agreements").

SECTION 8.13. Tax Reporting Agreement. A Tax
Reporting Agreement substantially in the form of Exhibit D hereto
(the "Tax Reporting Agreement") shall have been entered into by
all the parties thereto other than Crown Crafts.

SECTION 8.14. Dissenting Shares. Holders of not more
than fifteen percent (15%) of the Shares shall have elected and
perfected their appraisal rights under Chapter 13 of the CGCL
prior to the Closing.

SECTION 8.15. Disbursement Agreement. Each of the
parties to the Disbursement Agreement attached hereto as Exhibit
E (the "Disbursement Agreement") (with the exception of Crown
Crafts and Merger Sub) shall have performed and satisfied all
agreements and conditions which it is required thereby to perform
or satisfy prior to or on the Closing Date.

ARTICLE 9
CONDITIONS PRECEDENT TO OBLIGATIONS OF THE COMPANY

Subject to waiver as set forth in Section 10.9, the
obligations of the Company under this Agreement are subject to
the fulfillment prior to or at the Closing of each of the
following conditions:

SECTION 9.1. Representations of Crown Crafts True at
Closing. The representations and warranties of Crown Crafts set
forth in Article 4 shall be true and correct on the Closing Date
with the same effect as if made at that time.

SECTION 9.2. Performance by Crown Crafts. Crown
Crafts shall have performed and satisfied all agreements and
conditions which it is required by this Agreement to perform or
satisfy prior to or on the Closing Date.

SECTION 9.3. Officer's Certificate. The Company
shall have received a certificate from an appropriate officer of
Crown Crafts dated the Closing Date certifying in such detail as
the Company may reasonably request that each of the conditions
described in Sections 9.1 and 9.2 has been fulfilled.

SECTION 9.4. Incumbency Certificate. The Company
shall have received a certificate of the Secretary or an
Assistant Secretary of Crown Crafts dated the Closing Date

<PAGE> 47

certifying to the incumbency of the officers of Crown Crafts
signing for it and as to the authenticity of their signatures.

SECTION 9.5. Form and Content of Documents. The form
and content of all documents, certificates and other instruments
to be delivered by Crown Crafts shall be reasonably satisfactory
to the Company.

SECTION 9.6. Litigation Affecting Closing. No Court
Order shall have been issued or entered which would be violated
by the completion of the Merger. No Person who or which is not a
party to this Agreement shall have commenced or threatened to
commence any Litigation seeking to restrain or prohibit, or to
obtain substantial damages in connection with, this Agreement or
the transactions contemplated by this Agreement.

SECTION 9.7. Regulatory Compliance and Approval. The
Company shall be satisfied that all approvals required under any
Regulations to carry out the Merger shall have been obtained and
that the parties have complied with all Regulations applicable to
the Merger.

SECTION 9.8. HSR Filing. All filings required to be
made under the HSR Act shall have been made, and the waiting
period thereunder shall have expired or been terminated.

SECTION 9.9. Intentionally Left Blank.

SECTION 9.10. Ancillary Agreements. The Company shall
have entered into each of the Ancillary Agreements.

SECTION 9.11. Release of Guarantees. Mr. Fohrman
shall have been released from all personal guarantees with
respect to Liabilities of the Company, or Crown Crafts shall have
fully indemnified Mr. Fohrman with respect thereto.

ARTICLE 10
MISCELLANEOUS

SECTION 10.1. Public Announcements. No party hereto
will, at any time, without the prior written consent of Crown
Crafts and the Company, make any announcement, issue any press
release or make any statement to any Third Party with respect to
this Agreement or any of the terms or conditions hereof except as
may be necessary to comply with any Law, Regulation or order and
then only after prior written notice to Crown Crafts of the
timing, context and content of such announcement, press release
or statement.

SECTION 10.2. Payment of Expenses. Each of the
Company, Mr. Fohrman, Mr. Glickman and Crown Crafts will pay all
legal, accounting and other fees and expenses which such party
incurs in connection with this Agreement and the transactions
contemplated hereby, and none of the expenses of Mr. Fohrman, Mr.
Glickman or any other shareholder of the Company shall be paid by
the Company or out of any of the Assets, provided that all such
fees and expenses of the Company (including, without limitation,
fees and expenses relating to professional services provided by
the Company's independent accountants, Lederman, Zeidler & Co.,
and the Company's legal counsel, Gibson, Dunn & Crutcher) shall
be paid by the Company

<PAGE> 48

prior to Closing so that the entire amount thereof is reflected
on the Closing Balance Sheet. Notwithstanding the foregoing, if
(i) the Merger is not consummated by October 31, 1995 due to (x)
the breach by the Company, Mr. Glickman or Mr. Fohrman of any
covenant contained herein, (y) the failure of any condition to
Closing, other than any failure due to the action or inaction of
Crown Crafts or any failure due to the refusal of an independent
Third Party (other than any signatory to Exhibit E hereto, any
court with jurisdiction over, or any creditors committee acting
in connection with, the reorganization of Property Mortgage Co.,
Inc. or the personal bankruptcy of any shareholder of the
Company) to give any necessary consent, approval or clearance, or
(z) the action or inaction of the Company or any shareholder of
the Company or Mr. R. Todd Neilson (or his successor) as
Resolution Agent for Reorganized Property Mortgage Co., Inc. and
(ii) Crown Crafts is not then in breach of any of its covenants
contained herein, then the Company shall reimburse Crown Crafts
for (x) its actual, documented out-of-pocket expenses (including
attorneys fees and expenses) incurred in connection with the
Acquisition but not to exceed $125,000 and (y) the filing fee
paid by Crown Crafts with respect to any filing required under
the HSR Act in connection herewith.

SECTION 10.3. Termination by Mutual Consent. This
Agreement may be terminated at any time on or prior to the
Closing Date by mutual consent of the parties hereto.

SECTION 10.4. Termination for Breach. Crown Crafts
may terminate its obligations under this Agreement at any time on
or prior to the Closing Date if the Company shall have breached
any of its representations, warranties or other obligations under
this Agreement in any material respect and such breach shall not
have been cured within five (5) days after receipt of notice from
Crown Crafts of such breach. The Company may likewise terminate
its obligations under this Agreement at any time on or prior to
the Closing Date if Crown Crafts shall have breached any of its
representations, warranties or other obligations under this
Agreement in any material respect and such breach shall not have
been cured within five (5) days after receipt of notice from Red
Calliope of such breach. Such termination may be effected by
written notice from either Crown Crafts or the Company, as
appropriate, citing the reasons for termination and shall not
subject the terminating party to any liability for any valid
termination.

SECTION 10.5. Intentionally Left Blank.

SECTION 10.6. Other Events of Termination. This
Agreement may be terminated and the Merger may be abandoned by
(i) action of the Board of Directors of Crown Crafts if the
Merger shall not have been consummated by October 31, 1995 or
(ii) action of the Board of Directors of either the Company or
Crown Crafts (1) if the Merger shall not have been consummated
and this Agreement shall not have been terminated prior to
December 31, 1995, or (2) a United States federal or state court
of competent jurisdiction or Untied States federal or state
governmental, regulatory or administrative agency or commission
shall have issued an order, decree or ruling or taken any other
action permanently restraining, enjoining or otherwise
prohibiting the transactions contemplated by this Agreement and
such order, decree, ruling or other action shall have become
final and non-appealable and the party seeking to terminate this
Agreement pursuant to this clause (ii) shall have used all
reasonable efforts to remove such injunction, order or decree,
whereupon all of the rights and obligations of the parties under
this Agreement shall terminate without liability, except as
provided in Section 10.2 and except for

<PAGE> 49

liability in the event the Closing does not occur and this
Agreement terminates by reason of a default or breach by any
party hereto.

SECTION 10.7. Brokers' and Finders' Fees. The Company
and Crown Crafts each to the other represents and warrants that
all negotiations relative to this Agreement have been carried on
by them directly without the intervention of any Person, firm,
corporation or other entity who or which may be entitled to any
brokerage fee or other commission in respect of the execution of
this Agreement or the consummation of the transactions
contemplated hereby, and each of them shall indemnify and hold
the other or any affiliate of them harmless against any and all
Claims, losses, liabilities or expenses which may be asserted
against any of them as a result of any dealings, arrangements or
agreements by the indemnifying party with any such Person, firm,
corporation or other entity.

SECTION 10.8. Assignment and Binding Effect. This
Agreement may not be assigned prior to the Closing by any party
hereto without the prior written consent of the other parties.
Subject to the foregoing, all of the terms and provisions of this
Agreement shall be binding upon and inure to the benefit of and
be enforceable by the successors and assigns of the Company and
Crown Crafts and by the heirs, executors, legal representatives,
successors and assigns of Mr. Fohrman and Ms. Freeman.

SECTION 10.9. Waiver. Any term or provision of this
Agreement may be waived at any time by the party entitled to the
benefit thereof by a written instrument executed by such party.
Notwithstanding the foregoing, Crown Crafts may not waive the
Company's compliance with Section 6.12 without the prior written
consent of Mrs. Glickman.

SECTION 10.10. Notices. Any notice, request, demand,
waiver, consent, approval or other communication which is
required or permitted hereunder shall be in writing and shall be
deemed given only if delivered personally to the address set
forth below (to the attention of the Person identified below) or
sent by telegram or by registered or certified mail, postage
prepaid, as follows:

If to Crown Crafts or Merger Sub, to:

Crown Crafts, Inc.
1600 River Edge Parkway
Suite 200
Atlanta, Georgia 30328
Attention: President

With required copies to:

Rogers & Hardin
2700 Cain Tower, Peachtree Center
229 Peachtree Street, N.E.
Atlanta, Georgia 30303
Attention: Steven E. Fox, Esq.

<PAGE> 50

If to the Company, to:

The Red Calliope & Associates, Inc.
1303 South Figueroa Street
Los Angeles, California 90601
Attention: President

With required copies to:

Gibson, Dunn & Crutcher
333 South Grand Avenue
Los Angeles, California 90071-3197
Attention: Aulana Peters, Esq.

If to Mr. Fohrman:

Neal Fohrman
1536 Skylark Lane
Los Angeles, California 90069

With required copies to:

Jones, Day, Reavis & Pogue
2603 Main Street, 9th Floor
Irvine, California 92714
Attention: Leonard J. McGill, Esq.

If to Mr. Glickman

Mr. Stanley Glickman
132 South Spaulding, Apt. 216
Beverly Hills, California 90212

With required copies to:

Leonard, Dicker & Schreiber
9430 Olympic Boulevard, Suite 400
Beverly Hills, California 90212-4552
Attention: Lee T. Dicker, Esq.

or to such other address as the addressee may have specified in a
notice duly given to the sender and to counsel as provided
herein. Such notice, request, demand, waiver, consent, approval
or

<PAGE> 51

other communication will be deemed to have given as of the date
so delivered or telegraphed or, if mailed, five (5) business days
after the date so mailed.

SECTION 10.11. Governing Law. This Agreement shall be
governed by and interpreted and enforced in accordance with the
Laws of California without reference to the conflict of laws
principles thereof.

SECTION 10.12. Remedies Not Exclusive. Except as
provided in Section 7.5, nothing in this Agreement shall be
deemed to limit or restrict in any manner other rights or
remedies that any party may have against any other party at law,
in equity or otherwise.

SECTION 10.13. No Benefit to Others. The
representations, warranties, covenants and agreements contained
in this Agreement are for the sole benefit of the parties hereto
and their respective heirs, executors, legal representatives,
successors and assigns, and they shall not be construed as
conferring and are not intended to confer any rights on any other
Persons.

SECTION 10.14. Contents of Agreement. This Agreement,
together with any documents referred to herein, sets forth the
entire agreement of the parties hereto with respect to the
transactions contemplated hereby. This Agreement may not be
amended except by an instrument in writing signed by the parties
hereto, and no claimed amendment, modification, termination or
waiver shall be binding unless in writing and signed by the party
against whom or which such claimed amendment, modification,
termination or waiver is sought to be enforced.

SECTION 10.15. Section Headings and Gender. All
section headings and the use of a particular gender are for
convenience only and shall in no way modify or restrict any of
the terms or provisions hereof. Any reference in this Agreement
to a Section, Exhibit or the DISCLOSURE SCHEDULE shall be deemed
to be a reference to a Section, Exhibit or the DISCLOSURE
SCHEDULE of this Agreement unless the context otherwise expressly
requires.

SECTION 10.16. Disclosure Schedule and Exhibits. All
attachments, Exhibits and the DISCLOSURE SCHEDULE referred to
herein are intended to be and hereby are specifically made a part
of this Agreement. An item disclosed in the DISCLOSURE SCHEDULE
in response to one Section of this Agreement shall be deemed
disclosed in response to any other Section.

SECTION 10.17. Cooperation. Subject to the provisions
hereof, the parties hereto shall use their best efforts to take,
or cause to be taken, such action, to execute and deliver, or
cause to be executed and delivered, such additional documents and
instruments and to do, or cause to be done, all things necessary,
proper or advisable under the provisions of this Agreement and
under applicable Law to consummate and make effective the
transactions contemplated by this Agreement.

SECTION 10.18. Severability. Any provision of this
Agreement which is invalid or unenforceable in any jurisdiction
shall be ineffective to the extent of such invalidity or
unenforceability without invalidating or rendering unenforceable
the remaining provisions hereof, and any such invalidity or
unenforceability in any jurisdiction shall not invalidate or
render unenforceable such provision in any other jurisdiction.

<PAGE> 52

SECTION 10.19. Counterparts. This Agreement may be
executed in two or more counterparts, each of which is an
original and all of which together shall be deemed to be one and
the same instrument. This Agreement shall become binding when
one or more counterparts taken together shall have been executed
and delivered by all of the parties. It shall not be necessary
in making proof of this Agreement or any counterpart hereof to
produce or account for any of the other counterparts.

SECTION 10.20. Knowledge. As used in this Agreement,
the terms "to the best of the Company's knowledge," "to the
Company's best knowledge," "known to the Company," "of which the
Company is aware," or words of similar import used herein shall
mean the actual knowledge or awareness of each officer and
director of the Company, together with the knowledge or awareness
a reasonable business person in the position of such officer or
director would have obtained after making reasonable inquiry of
all employees and directors of the Company and after exercising
reasonable diligence with respect to any knowledge so obtained.

SECTION 10.21. Incorporation by Reference. The
Exhibits and Schedules identified in this Agreement are
incorporated herein by reference and made a part hereof.

SECTION 10.22. Costs and Attorneys' Fees. In the event
that any dispute among the parties hereto should result in
litigation, the prevailing party shall have and recover against
the other parties, in addition to all court costs, expert witness
fees and other disbursements, such sum as the court may determine
to be a reasonable attorney's fee, and such recovery may include
reasonable fees and costs incurred in connection with the matter
but prior to the commencement of the action.

SECTION 10.23. Equitable Remedies. The parties hereto
agree that any violation of this Agreement by Crown Crafts on the
one hand or Red Calliope on the other hand will result in
irreparable injury to the non-breaching party and that damages at
Law would not be reasonable or adequate compensation to such non-
breaching party for a violation of this Agreement, and the non-
breaching party shall be entitled to have the provisions of this
Agreement specifically enforced by preliminary and permanent
injunctive relief without the necessity of proving actual damages
and without posting bond or other security.

<PAGE> 53

IN WITNESS WHEREOF, each of Mr. Glickman and Mr.
Fohrman has duly executed and delivered this Agreement, and each
of the Company, Merger Sub and Crown Crafts has caused this
Agreement to be duly executed and delivered on its behalf by an
officer thereunto duly authorized, all as of the date first
written above.

CROWN CRAFTS, INC.

By: /s/ Paul A. Criscillis, Jr.
-------------------------------------
Its: Vice President
---------------------------------

Attest: /s/ Roger D. Chittum
---------------------------------
Its: Secretary
---------------------------------

[CORPORATE SEAL]

CC ACQUISITION CORP.

By: /s/ Paul A. Criscillis, Jr.
-------------------------------------
Its: Vice President
---------------------------------

Attest: /s/ Roger D. Chittum
---------------------------------
Its: Secretary
---------------------------------

[CORPORATE SEAL]

48
<PAGE> 54

THE RED CALLIOPE & ASSOCIATES, INC.

By: /s/ Neal Fohrman
-------------------------------------
Its: President
---------------------------------

Attest: /s/ Nanci Freeman
---------------------------------
Its: Secretary
---------------------------------

[CORPORATE SEAL]

/s/ Neal Fohrman
----------------------------------------
NEAL FOHRMAN, Individually

/s/ Stanley Glickman
----------------------------------------
STANLEY GLICKMAN, Individually

<PAGE> 55

SCHEDULE 3.1

<TABLE>
<CAPTION>
ADJUSTED
SHAREHOLDER CLOSING PAYMENT CLOSING PAYMENT
----------- --------------- ---------------
<S> <C> <C>
Neal Fohrman, as voting trustee under that certain Voting
Trust Agreement dated as of February 16, 1993 between
Mr. Fohrman as trustee and the Stanley and Carol Glickman
Family Trust as beneficiary $3,980,214 $5,136,741

Neal Fohrman, individually $4,033,997 $5,152,964

Robert Mann, as executor of the estate of Elliot Fine $1,625,179 $2,050,228

Edward Tannenbaum $ 493,910 $ 626,367
</TABLE>

<PAGE> 1
EXHIBIT 2.2

AMENDMENT NO. 1 TO MERGER AGREEMENT

THIS AMENDMENT NO. 1 TO MERGER AGREEMENT (this
"Amendment") is entered into as of October 31, 1995, by and among
CROWN CRAFTS, INC., a Georgia corporation ("Crown Crafts"), CC
ACQUISITION CORP., a California corporation and a wholly owned
subsidiary of Crown Crafts ("Merger Sub"), THE RED CALLIOPE AND
ASSOCIATES, INC., a California corporation ("Red Calliope" or the
"Company"), STANLEY GLICKMAN, an individual resident of the State
of California ("Mr. Glickman"), and CAROL GLICKMAN, an individual
resident of the State of California ("Mrs. Glickman") (Mr.
Glickman and Mrs. Glickman, individually and as trustees of the
Glickman Family Trust and as partners in the Glickman Family
Investment Partnership, being referred to collectively as the
"Glickmans"), and NEAL FOHRMAN, an individual resident of the
State of California ("Mr. Fohrman").

W I T N E S S E T H:

WHEREAS, the parties hereto (other than Mrs. Glickman)
have entered into that certain Merger Agreement (the "Merger
Agreement"), dated as of October 8, 1995, by and among Crown
Crafts, Merger Sub, Red Calliope, Mr. Glickman and Mr. Fohrman;

WHEREAS, the parties hereto have determined that it is
desirable to amend the Merger Agreement;

NOW, THEREFORE, in consideration of the foregoing and the
provisions set forth below, the parties hereto hereby agree as
follows:

SECTION 1. AMENDMENT OF SECTION 2.6. Section 2.6
of the Agreement is hereby amended to read in its entirety as
follows:

<PAGE> 2

SECTION 2.6. CLOSING; EFFECTIVE TIME. The closing of
the Merger (the "Closing") shall, unless another date, time or place
is agreed to in writing by all parties hereto, take place at the
offices of Gibson, Dunn & Crutcher, 333 South Grand Avenue, Los
Angeles, California 90071 at 8:00 a.m., Los Angeles time, on October
31, 1995 (the "Closing Date"). If, on or before the Closing Date, all
the conditions set forth in Articles 8 and 9 shall have been fulfilled
or waived in accordance with the terms hereof and this Agreement shall
not have been terminated in accordance with Section 10.3, 10.4 or
10.6, then the parties hereto shall cause to be properly executed and
filed on the Closing Date with the Secretary of State of the State of
California an agreement of merger and accompanying certificates of
approval conforming to law (collectively, the "Certificate of
Merger"). The Merger shall become effective as of the time of filing
of the properly executed Certificate of Merger. The date and time
when the Merger becomes effective is herein referred to as the
"Effective Time." Notwithstanding anything to the contrary herein, if
at the Effective Time the condition set forth in Section 8.15 hereof
is not satisfied, then Crown Crafts may terminate this Agreement,
whereupon all of the rights and obligations of the parties under this
Agreement shall terminate without liability, except as provided in
Section 10.2 and except for liability due to a default or breach by
any party.

SECTION 2. AMENDMENT OF SECTION 6.1(XVII). Section
6.1(xvii) of the Agreement is hereby amended to read in its entirety as follows:

(xvii) use its reasonable best efforts to
obtain any consents or approvals required under any
Contracts or otherwise that are necessary to complete the
Merger or to avoid a Default under any such Contract,
provided that Red Calliope shall not be required to make
payments in excess of an aggregate of $200,000 in order
to obtain such consents and approvals;

SECTION 3. AMENDMENT OF SECTION 7.1. Section 7.1
of the Agreement is hereby amended by adding new paragraph (C) as follows:

(C) Notwithstanding the foregoing, from and
after the Closing Date the Glickmans, jointly and
severally, and Mr. Fohrman shall indemnify and hold
harmless each indemnified party from, against and in
respect of any and all Losses resulting from, relating to
or arising out of any inaccuracy, untruth or
incompleteness of any representation or warranty of the
Company contained in the third sentence of Section 4.2
hereof, regardless of whether the same was deliberate,
reckless, innocent or unintentional. For purposes of
this Agreement, but solely as it pertains to actions
pursuant to this Section 7.1(C),

<PAGE> 3

(i) such third sentence of
Section 4.2 shall be deemed to be amended at the end
thereof to add the words "and the Glickmans further
represent and warrant that they have never sold or
otherwise transferred any shares of the capital stock of
the Company other than shares sold or otherwise
transferred to the Glickman Family Trust, the Glickman
Family Investment Partnership, Edward Tannenbaum, Mr.
Fohrman, Elliot Fine (to whom they sold, or otherwise
transferred, 215 shares in or about 1991 and to whom they
made no other sales or transfers) or the Company"; and

(ii) the term "indemnifying parties"
shall mean Mr. Fohrman and the Glickmans.

Any other indemnity and hold harmless provision appearing
elsewhere in this Agreement purporting to apply to the third
sentence of Section 4.2 hereof shall be subject to and qualified
by this Section 7.1(C) and by all other clauses and provisions
referring to this Section 7.1(C).

SECTION 4. AMENDMENT OF SECTION 7.2. Section 7.2 of the
Agreement is hereby amended by adding new paragraph (B) as follows:

(B) Notwithstanding the foregoing, in
connection with any Claim arising pursuant to Section
7.1(C) hereof, the indemnified parties shall follow the
procedures required pursuant to Section 7.2(A)(i) hereof,
but in the event it is determined that any of the
indemnifying parties is required to make a payment to the
indemnified parties pursuant to Section 7.1(C), the
indemnified parties shall first exhaust all remedies
legally available to them to collect such amount from the
Glickmans, and only thereafter shall the indemnified
parties be entitled to collect any such amounts from Mr.
Fohrman, and then only to the extent of the balance not
paid by the Glickmans.

SECTION 5. AMENDMENT OF SECTION 7.4. Section 7.4 of the
Agreement is hereby amended to read in its entirety as follows:

SECTION 7.4. SURVIVAL OF REPRESENTATIONS AND
WARRANTIES, ETC. All of the representations, warranties,
covenants and agreements contained in this Agreement or
in any attachment, Exhibit, the DISCLOSURE SCHEDULE,
certificate, document or list delivered in connection
with the Merger shall survive the Closing, any
examination by or on behalf of the parties and the
consummation of the transactions contemplated herein, but
only to the extent specified below:

<PAGE> 4

(i) except as set forth in
clauses (ii), (iii) and (iv) below, the
representations and warranties contained in
Article 4 hereof shall survive for a period of
one (1) year following the Closing Date;

(ii) the representations and
warranties contained in Sections 4.1 through and
including 4.6, Sections 4.8 and 4.27 and in
Article 5 shall survive as to any claim covered
thereby for so long as any statute of limitations
for such claim remains open, in whole or in part,
including, without limitation, by reason of
waiver or extension of such statute of
limitations;

(iii) the representations and
warranties contained in Sections 4.16 and 4.25
shall survive for a period of three (3) years
following the Closing Date; and

(iv) notwithstanding the
foregoing, the representation and warranty
contained in the third sentence of Section 4.2,
for which indemnification is provided in
Section 7.1(C) hereof, shall survive as to any
claim covered thereby for so long as any statute
of limitations for such claim remains open, in
whole or in part, including, without limitation,
by reason of waiver or extension of such statute
of limitations.

SECTION 6. AMENDMENT OF SECTION 7.5. Section 7.5
of the Agreement is hereby amended to read in its entirety as follows:

SECTION 7.5. LIMITATIONS AS TO AMOUNT.

(A) Mr. Glickman and Mr. Fohrman
shall not have any liability with respect to the
matters described in Section 7.1 (B) until the
total of all Losses with respect thereto (not
including Losses with respect to the matters
described in Section 7.1(C)) exceeds $50,000 in
which event Mr. Glickman and Mr. Fohrman shall be
obligated to indemnify the indemnified party as
provided herein for all such Losses, subject to
Section 7.5(B).

(B) Except with respect to Claims
based upon intentional misrepresentation or
intentional breach of warranty by the Company,
(i) the liability of Mr. Glickman or Mr. Fohrman
under Section 7.1(B) and (C) shall in no event
exceed the consideration paid to or on behalf of
Mr. Glickman or Mr. Fohrman, as relevant,
pursuant to Section 3.1 and (ii) the collective
liability of Mr. Glickman and Mr. Fohrman under
Section 7.1(B) and (C) shall in no event exceed
$7,000,000.

<PAGE> 5

(C) If the allowance for doubtful
accounts set forth on the Closing Balance Sheet
exceeds the aggregate amount of accounts
receivable reflected on the Closing Balance Sheet
that ultimately are uncollectible, such excess
allowance shall be credited against any amount
that Mr. Glickman and Mr. Fohrman would otherwise
be obligated to pay pursuant to Section 7.1(B).

(D) Notwithstanding the foregoing, except with
respect to Claims based upon intentional misrepresentation
or intentional breach of warranty by Mrs. Glickman, the
liability of Mrs. Glickman under Section 7.1(C) shall in
no event exceed $360,000.

SECTION 7. AMENDMENT OF SECTION 10.6. Section 10.6
of the Agreement is hereby amended to read in its entirety as follows:

SECTION 10.6. OTHER EVENTS OF TERMINATION. This
Agreement may be terminated and the Merger may be
abandoned by (i) action of the Board of Directors of
Crown Crafts if the Effective Time shall not have
occurred by the close of business on November 10, 1995 or
(ii) action of the Board of Directors of either the
Company or Crown Crafts (1) if the Effective Time shall
not have occurred and this Agreement shall not have been
terminated prior to December 31, 1995, or (2) a United
States federal or state court of competent jurisdiction
or United States federal or state governmental,
regulatory or administrative agency or commission shall
have issued an order, decree or ruling or taken any other
action permanently restraining, enjoining or otherwise
prohibiting the transactions contemplated by this
Agreement and such order, decree, ruling or other action
shall have become final and non-appealable and the party
seeking to terminate this Agreement pursuant to this
clause (ii) shall have used all reasonable efforts to
remove such injunction, order or decree, whereupon all of
the rights and obligations of the parties under this
Agreement shall terminate without liability, except as
provided in Section 10.2 and except for liability in the
event the Closing does not occur and this Agreement
terminates by reason of a default or breach by any party
hereto.

SECTION 8. RATIFICATION. Except as expressly
amended by the terms hereof, the Agreement is hereby reaffirmed
by each of the parties hereto.

IN WITNESS WHEREOF, each of Mr. Glickman, Mrs. Glickman
and Mr. Fohrman has duly executed and delivered this Amendment,
and each of the Company, Merger Sub and Crown Crafts has caused
this Amendment to be duly executed and delivered

<PAGE> 6

on its behalf by an officer thereunto duly authorized, all as of
the date first written above.

CROWN CRAFTS, INC.

By:
-------------------------------
Name: E. Randall Chestnut
Title: Vice President

CC ACQUISITION CORP.

By:
-------------------------------
Name: E. Randall Chestnut
Title: President

THE RED CALLIOPE AND ASSOCIATES, INC.

By:
-------------------------------
Name: Neal Fohrman
Title: President

NEAL FOHRMAN, Individually

STANLEY GLICKMAN, Individually and as
trustee of the Glickman Family Trust and
as a partner in the Glickman Family
Investment Partnership

CAROL GLICKMAN, Individually and as
trustee of the Glickman Family Trust and
as a partner in the Glickman Family
Investment Partnership

<PAGE> 1

EXHIBIT 10.1

EXHIBIT A

CONSULTING AGREEMENT

THIS CONSULTING AGREEMENT (the "Agreement"), is made and
dated as of ______________, 1995, by and between THE RED CALLIOPE
AND ASSOCIATES, INC., a California corporation (the "Company"),
and CAROL GLICKMAN, an individual resident of California
("Consultant").

W I T N E S E T H:

WHEREAS, execution of this Agreement is a condition to
closing under that certain Merger Agreement dated as of October
8, 1995 (the "Merger Agreement") between the Company, Crown
Crafts, Inc. and certain other parties (the "Merger");

WHEREAS, Consultant is a founder of the Company and has
made valuable contributions to the profitability and financial
strength of the Company;

WHEREAS, the Company desires to encourage Consultant to
continue to make valuable contributions to the Company's business
operations after the Merger; and

WHEREAS, the Company desires to provide fair and
reasonable benefits to Consultant on the terms and subject to the
conditions set forth in this Agreement.

NOW, THEREFORE, in consideration of these premises, the
mutual covenants and undertakings herein contained, each
intending to be legally bound, Consultant and the Company
covenant and agree as follows:

1. DUTIES.

In consideration of the payments to be made by the
Company to Consultant as provided in Section 2 below, Consultant
shall during the first three years of the Term (as hereinafter
defined) provide up to twelve (12) hours of consulting services
per month, and during each of the remaining years of the Term
provide up to eight (8) hours of consulting services per month,
to the Company on such matters pertaining to the business of the
Company as may, from time to time, be requested of her by the
Chief Executive Officer of the Company. In this regard,
Consultant shall be available throughout the Term at reasonable
times, and upon reasonable notice, to meet with the Board of
Directors or the Chief Executive Officer of the Company, for the
purposes of providing such consulting services. Further,
Consultant shall, in connection with such consulting services and
subject to reasonable scheduling conflicts, including

<PAGE> 2

religious holidays and Consultant's other employment, if any,
attend such meetings, consult with such persons and engage in
such activities to promote the business and image of the Company,
as the Chief Executive Officer of the Company shall reasonably
request; provided, however, that Consultant shall only obligated
to perform consulting services commensurate with her status as a
founder of the Company and only those services which the Chief
Executive Officer of the Company believes, in good faith, to be
fairly requested and to be of benefit to the Company; and
provided further that the foregoing shall not be deemed to
restrict Consultant from accepting part or full-time employment
from, or providing consulting services to, someone other than the
Company so long as such activities are not inconsistent with
Consultant's obligations under Section 7 hereof and do not
otherwise interfere with the responsible performance of
Consultant's duties hereunder.

2. COMPENSATION.

(A) For the consulting services to be provided by the
Consultant hereunder, the Company shall pay to the Consultant the
annual sum of Fifty Nine Thousand Dollars ($59,000.00) for each
of the first three (3) years of the Term and Thirty Nine Thousand
Dollars ($39,000.00) for each of the remaining years of the Term,
which sum shall be paid in equal monthly installments on the last
business day of each month.

(B) In performing her consulting services hereunder,
Consultant shall be an independent contractor and shall not be,
or be deemed to be, an employee or agent of the Company. Except
as may be specifically authorized in a writing in advance by the
Chief Executive Officer of the Company, Consultant shall have no
right or authority to act for or on behalf of the Company or
otherwise to enter into any agreements or make any commitments
with third parties binding upon the Company.

(C) The amounts payable under Section 2(A) above
shall be paid without deduction for state or federal withholding
taxes, social security or other like sums and, by virtue of being
an independent contractor hereunder, Consultant alone shall be
responsible for the payment of all such taxes and sums levied or
assessed with respect to the amounts paid to Consultant
hereunder; provided, however, if it is determined that Consultant
is an employee for purposes of the Federal Insurance
Contributions Act, federal or state unemployment compensation
taxes or other like taxes or levies, notwithstanding her status
as an independent contractor hereunder, Consultant shall not be
liable for any such taxes or levies to the extent they are by
applicable law imposed on employers and not withheld from
employee compensation.

(D) Consultant shall be entitled to receive
reimbursement for all reasonable expenses incurred by her in
connection with the fulfillment of her duties hereunder upon
presentation of appropriate vouchers therefor, provided that
Consultant has complied with all reasonable policies and
procedures relating to

2
<PAGE> 3

the reimbursement of such expenses as shall, from time to time,
be established by the Company.

3. TERM. The term of this Agreement shall begin on
the date hereof (the "Effective Date") and, unless otherwise
earlier terminated pursuant to Section 5 hereof, shall end on the
date which is ten (10) years following the Effective Date (the
"Term").

4. TERMINATION. Subject to the respective
continuing obligations of the parties, including, but not limited
to, those set forth in Section 5 hereof, this Agreement may be
terminated as follows:

(A) The Company, by action of the Board and upon
written notice to Consultant, may terminate this
Agreement immediately for cause. For purposes of
this Subsection 4(A), "cause" for termination of
this Agreement hereunder shall exist (a) if the
Consultant is convicted of (from which no appeal
may be taken), or pleads guilty to, any act of
fraud, misappropriation or embezzlement, or any
felony, (b) if, in the determination of the
Board, the Consultant has engaged in gross or
willful misconduct materially damaging to the
business of the Company (it being understood,
however, that unintentional physical damage to
any property of the Company by Consultant shall
not be a ground for such a determination by the
Board), or (c) if Consultant has failed, without
reasonable cause (it being understood that
Consultant's inability to perform her duties
hereunder due to death, injury, illness or
disability (mental or physical) shall constitute
reasonable cause hereunder), to follow material,
reasonable written instructions of the Board or
the Chief Executive Officer consistent with
Consultant's position and her duties hereunder
and after written notice from the Company of such
failure, Consultant at any time thereafter again
so fails.

(B) Consultant, upon thirty (30) days written notice
to the Company, may terminate this Agreement for
any reason.

5. NOTICE OF TERMINATION AND DATE OF TERMINATION.
Any termination of this Agreement as contemplated by Section 4
hereof shall be communicated by written "Notice of Termination"
by the terminating party to the other party hereto. Any "Notice
of Termination" pursuant to Subsection 4(A) shall indicate the
specific provisions of this Agreement relied upon and shall set
forth in reasonable detail the facts and circumstances claimed to
provide a basis for such termination. For purposes of this
Agreement, "Date of Termination" shall mean the date specified in
the Notice of Termination; provided, however, that if within
thirty (30) days after any such Notice of Termination is given,
the party

<PAGE> 4

receiving such Notice of Termination notifies the other party
that a dispute exists concerning the termination, the Date of
Termination shall be the date on which the dispute is finally
resolved, either by mutual agreement of the parties or by a final
judgment, order or decree of a court of competent jurisdiction
(the time for appeal therefrom having expired and no appeal
having been perfected).

6. REPRESENTATIONS AND WARRANTIES.

(A) Consultant represents and warrants to
the Company hereto that: (a) she has the full power and
authority to execute, deliver and perform this Agreement, and
that she has taken all actions necessary to secure all approvals
required in connection herewith; (b) this Agreement has been duly
executed and delivered by her and constitutes her valid and
binding agreement, enforceable against her in accordance with its
terms; and (c) the execution, delivery and performance of this
Agreement and the consummation of the transaction contemplated
hereby will not, with the passage of time or the giving of notice
or both, violate or conflict with, constitute a breach of or
default under, result in the loss of any material benefit under,
or permit the acceleration of or entitle any party to accelerate
any obligation under or pursuant to, any material mortgage, lien,
leases, agreement, instrument, order, arbitration award, judgment
or decree to which she is a party or by which she or any of her
assets are bound.

(B) The Company hereby represents and
warrants to Consultant that: (a) this Agreement has been duly
authorized, executed and delivered by it, and constitutes the
valid and binding agreement of the Company, enforceable against
it in accordance with its terms; (b) it has the full power and
authority to execute, deliver and perform this Agreement and has
taken all actions necessary to secure all approvals required in
connection herewith; and (c) the execution, delivery and
performance of this Agreement and the consummation of the
transactions contemplated hereby will not, with the passage of
time or the giving of notice or both, violate or conflict with,
constitute a breach of or default under, result in the loss of
any material benefit under, or permit the acceleration of or
entitle any party to accelerate any obligation under or pursuant
to, its Articles of Incorporation or By-Laws or any material
mortgage, lien, lease, agreement, instrument, order, arbitration
award, judgment or decree to which the Company is a party or by
which it or any of its assets are bound.

7. RESTRICTIVE COVENANTS. Consultant agrees to be
bound by and subject to Sections 6.7, 6.8 and 6.9 of the Merger
Agreement to the same extent as Neal Fohrman is bound thereby
except that, as to Consultant, the duration of the "Noncompete
Period" shall be equal to the duration of the Term hereunder.

<PAGE> 5

8. NOTICES. For purposes of this Agreement, notices
and all other communications provided for herein shall be in
writing and shall be deemed to have been given when delivered or
mailed by United States registered or certified mail, return
receipt requested, postage prepaid, addressed as follows:

If to Consultant: Carol Glickman
c/o Kopple & Klinger
2029 Century Park East
Suite 10210
Los Angeles, California 90067
Attn: Robert C. Kopple, Esq.

If to the Company: The Red Calliope & Associates, Inc.
13003 South Figueroa Street
Los Angeles, California 90061
Attention: President

or to such address as either party hereto may have furnished to
the other party in writing in accordance herewith, except that
notices of change of address shall be effective only upon
receipt.

9. GOVERNING LAW. The validity, interpretation, and
performance of this Agreement shall be governed by the laws of
the State of California without giving effect to the conflicts of
laws principles thereof.

10. MODIFICATION. No provision of this Agreement may
be modified, waived or discharged unless such waiver,
modification or discharge is agreed to in writing signed by
Consultant and the Company. No waiver by either party hereto at
any time of any breach by the other party hereto of, or
compliance with, any condition or provision of this Agreement to
be performed by such other party shall be deemed a waiver of
dissimilar provisions or conditions at the same or any prior
subsequent time. No agreements or representation, oral or
otherwise, express or implied, with respect to the subject matter
hereof have been made by either party which are not set forth
expressly in this Agreement.

11. SEVERABILITY. The invalidity or unenforceability
of any provisions of this Agreement shall not affect the validity
or enforceability of any other provisions of this Agreement which
shall remain in full force and effect.

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

13. ASSIGNMENT. This Agreement is personal in nature
and neither party hereto shall, without consent of the other,
assign or transfer this Agreement or any rights or obligations
hereunder;

<PAGE> 6

provided, however, that nothing herein shall limit Consultant
from assigning or transferring, by pledge, creation of a security
interest or otherwise, any or all of Consultant's right to
receive the Compensation provided in Section 2(A) hereof.

14. ENTIRE AGREEMENT. This Agreement, together with
that certain Voting Agreement of even date herewith and that
certain Disbursement Agreement of even date herewith, as to each
of which Consultant is a party, constitute the entire agreement
between the parties hereto and supersede all prior agreements, if
any, understandings and arrangements, oral or written, between
the parties hereto with respect to the subject matter hereof.

15. ATTORNEYS' FEES. If any action shall be brought
by either party hereto to enforce the provisions of this
Agreement, the prevailing party shall be entitled to receive
reasonable attorneys' fees and costs from the losing party in
such action.

IN WITNESS WHEREOF, Consultant has executed and delivered
this Agreement, and the Company has caused this Agreement to be
executed and delivered, all as of the day and year first above
set forth.

THE RED CALLIOPE AND ASSOCIATES, INC.

By:
----------------------------------
Its:

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

Attest:
-------------------------------
Its:
----------------------------------

[CORPORATE SEAL]

(SEAL)
---------------------------
CAROL GLICKMAN

<PAGE> 1

EXHIBIT 10.2

EXHIBIT B

EMPLOYMENT AGREEMENT

This Employment Agreement (the "Agreement") is effective
as of October 27, 1995, by and between Crown Crafts, Inc., a
Georgia corporation ("Crown Crafts"), The Red Calliope &
Associates, Inc., a California corporation (the "Company"), and
Neal Fohrman (the "Executive").

WHEREAS, Crown Crafts is acquiring the entire equity
interest of the Company by means of a merger pursuant to a Merger
Agreement dated as of October 8, 1995 the ("Merger Agreement");
and

WHEREAS, Executive is the President and Chief Executive
Officer of the Company and desires to continue his employment
with the Company in such capacity; and

WHEREAS, Crown Crafts desires that Executive continue to
serve in the capacity of President and Chief Executive Officer of
the Company; and

WHEREAS, Crown Crafts, the Company and Executive, in
conjunction with and pursuant to the terms of the Purchase
Agreement, desire to set forth in writing the terms and
conditions of Executive's continued employment with the Company.

NOW, THEREFORE, in consideration of the premises and the
mutual covenants and agreements contained herein, and other good
and valuable consideration, the receipt and sufficiency of which
are hereby acknowledged, the parties hereby agree as follows:

1. Employment and Duties.

(a) The Company hereby agrees to continue to
employ Executive and Executive agrees to continue employment in
his capacity as President and Chief Executive Officer of the
Company to act in accordance with the terms and conditions set
forth herein. Upon the promotion of Nanci Freeman to the
position of President and Chief Executive Officer, Executive
agrees to resign from such positions and to assume a title
commensurate with his experience and contribution to the Company.
Executive also consents to serve without additional compensation,
if elected, as a director of the Company. During the term of
this Agreement, Executive agrees that this position will be his
principal employment, that he will serve the Company faithfully
and to the best of his ability and that he will devote his full
business time, attention and skills to the operation of the
Business of the Company (as defined herein), subject to
reasonable absences for vacation and illness, and that he will
perform such duties, functions and

<PAGE> 2

responsibilities in connection with such position and consistent
with the foregoing as are from time to time delegated to
Executive by the Board of Directors of the Company; provided,
however, that the foregoing shall not be deemed to restrict
Executive from devoting a reasonable amount of time and attention
to the management of his personal affairs and investments, so
long as such activities do not interfere with the responsible
performance of Executive's duties hereunder. Executive shall
provide the Board with periodic reports on, and keep them
informed on a current basis concerning, the business and affairs
of the Company. For purposes of this Agreement, the Business of
the Company shall be defined as designing, manufacturing,
distributing and selling infant and juvenile bedding products.

(b) In addition, the Company shall provide
Executive as his principal office with a private office,
secretarial and administrative assistance, office equipment,
supplies and other facilities and services suitable to
Executive's position and located at 13003 South Figueroa Street,
Los Angeles, California 90061, or at a comparable location within
Los Angeles County.

2. Term. The term ("Term") of this Agreement shall
commence on the date hereof and shall continue until October 26,
1999.

3. Compensation. In consideration of the services
to be rendered by Executive to the Company hereunder, the Company
hereby agrees to pay or otherwise provide Executive the following
compensation and benefits, it being understood that the Company
shall have the right to deduct therefrom all taxes which may be
required to be deducted or withheld under any provision of
applicable law (including, without limitation, Social Security
payments, income tax withholding and other required deductions
now in effect or which may become effective by law anytime during
the Term):

(a) Salary. Executive shall receive an annual
salary of ("Salary") of (i) $300,000 for the first twelve months
hereof, (ii) $315,000 for the second twelve months hereof, (iii)
$330,000 for the third twelve months hereof, and (iv) $350,000
for the fourth twelve months hereof, to be paid in equal
installments in accordance with the Company's salary payment
practices in effect from time to time for executives of the
Company.

(b) Bonus Payment. In addition to Salary,
Executive shall receive periodic bonus payments (payable within
ninety (90) days of the end of the applicable fiscal year) as
follows:

(i) Budgeted Pre-tax Profit (as defined
below) of the Company is $2,900,000 for the fiscal

<PAGE> 3

year ended June 30, 1996; $3,400,000 for the fiscal year ended
June 30, 1997; $3,900,000 for the fiscal year ended June 30,
1998; and $4,500,000 for the fiscal year ended June 30, 1999.

(ii) A bonus ("Bonus") shall be paid to
Executive on each anniversary hereof as follows (subject to
Section 3(b)(iii) below): $350,000 if budgeted Pre-tax Profit is
realized for the fiscal year ended June 30, 1996; $350,000 if
budgeted Pre-tax Profit is realized for the fiscal year ended
June 30, 1997; $350,000 if budgeted Pre-tax Profit is realized
for the fiscal year ended June 30, 1998; and $350,000 if budgeted
Pre-tax profit is realized for the fiscal year ended June 30,
1999.

(iii) In the event that less than 100%,
but at least 80% of budgeted Pre-tax Profit is realized for any
such year, a bonus (in lieu of the full amount of the Bonus
payable pursuant to Section 3(b)(ii), above) equal to 30% of the
Bonus for such year shall be paid on each respective anniversary
hereof, and for each 1/100 of 1% of the budgeted Pre-tax Profit
above 80% an additional 35/1,000 of 1% of the Bonus (converted to
the nearest 1/100) (each full 1% of budgeted Pre-tax Profit
therefore converting into 3.5% of Bonus) shall likewise be paid
on each respective anniversary hereof, up to an maximum of 100%
of Bonus.

(iv) By way of example of the
foregoing, if Pre-tax Profit in fiscal year ended June 30, 1996
is $2,860,270, the bonus payable for Executive with respect to
such year shall be calculated as follows:

$2,860,270 (actual Pre-tax Profit)
divided by $2,900,000 (budgeted Pre-tax Profit) x 100 = 98.63% of
budget; and

98.63% of budget converts into 95.21% of
Bonus as follows:

18% of budget in excess of 80% of budget
converts (at a rate of 3.5% of Bonus for each 1% of budget) to
63% (3.5 times 18) of Bonus in excess of 30% (63% plus 30% then
equals 93%),

and .63% of budget converts (at a rate
of 35/1,000 of 1% of Bonus to each 1/100 of 1% of budget) into an
additional 2.205% (rounded off to 2.21%) of Bonus, for a total
(93% plus 2.21%) of 95.21% of Bonus.

(v) "Pre-tax Profit" is defined as
profit before taxes calculated in accordance with generally
accepted accounting principles, consistently applied, consistent
with the Company's prior practice, adjusted to exclude:

A. all acquisition expenses,
payments, amortization of goodwill, and adjustments relating to
the acquisition of the Company by Crown Crafts;

<PAGE> 4

B. costs of meeting accounting and
legal requirements imposed on the Company by Crown Crafts as a
result of Crown Crafts being a public company;

C. any interest expense incurred
with respect to borrowings obtained to finance the acquisition by
Crown Crafts of the Company;

provided, however, that the Company will not be charged for
services provided by Crown Crafts, except that any expense
savings achieved by the merger pursuant to the Merger Agreement
(including, without limitation, any reduction in purchasing
expenses, accounting expenses or overhead) will be calculated as
follows: 85% of the actual savings on the books of the Company
will accrue to the benefit of Crown Crafts (by means of a charge
to the Company's expenses) and 15% will accrue to the benefit of
the Company for the purpose of calculating the Bonus; and

provided, further, that with respect to any products created or
designed by Crown Crafts, Pre-tax Profit as defined herein shall
be adjusted upward as follows: (x) if such product is sold or
distributed by the Company, the Company shall receive a
additional credit of 5% of the sales commission paid with respect
to such sale, and (y) if such product is sold or distributed by
Crown Crafts but the product is based on a design or pattern
created by the Company, the Company shall be credited with a
monthly royalty of 5% of the sale; and

provided, further, that, for one year after the date hereof, in
no event will Crown Crafts alter the assignments, job
descriptions, duties or other terms or conditions of employment
of Ric Traylor, or otherwise take any action that has the effect
of making it materially more difficult for such person to
continue to sell the Company's merchandise in the manner in
which, and for the customers to whom, he sold such merchandise
prior to the acquisition of the Company by Crown Crafts; and

provided, further, that any Bonus payable with respect to the
fiscal year ending June 30, 1996, shall be reduced dollar-for-
dollar by the amount of any bonus paid to Executive by the
Company on or before the Closing Date (as defined in the Merger
Agreement) with respect to any portion of such fiscal year; and

provided, further, that Pre-Tax Profit shall include a charge for
a reasonable estimate of the amount of bonus payable to Executive
under this Agreement and to Nanci Freeman under her employment
agreement; and

<PAGE> 5

amount, if any, accrued on the books of the Company as of the
Closing Date with respect to Executive for the period from June
30, 1995 to the Closing Date; and

provided, further, that for purposes of calculating Pre-Tax
Profit, the Company will be charged at a rate of $4.00 per
warrant with respect to any warrant issued by Crown Crafts to The
Disney Company in connection with the renewal of licenses for
Classic Pooh, Pooh and Baby Mickey & Co., such charges to be
applied ratably over the term of the warrants.

(c) Benefit Plans. In addition to, and not in
limitation of, the compensation set forth above, Executive shall
be entitled to participate in all benefit programs provided by
the Company, including, without limitation, any health, accident,
disability and life insurance programs, vacation and sick leave
benefits, and any other fringe benefit program, which the Company
may adopt and implement for the benefit of the Company's
employees. Notwithstanding the foregoing, however, nothing
contained herein shall be construed as an obligation of the
Company to implement any benefit program, or if implemented, to
maintain any program for any period of time for any employee.

(d) Expenses. Executive shall be entitled to receive
reimbursement for all reasonable expenses incurred by him in
connection with the fulfillment of his duties hereunder, upon
receipt of appropriate vouchers therefor, provided, however, that
Executive has complied with all reasonable policies and
procedures relating to the reimbursement of such expenses as
shall, from time to time, be established by the Company.

(e) Automobile. The Company shall provide Executive
with the use of an automobile with a purchase price (new) of
approximately $30,000, and shall pay all the reasonable expenses
of operation, maintenance and service thereof, including
gasoline, insurance and repair.

4. Termination.

(a) This Agreement shall terminate on the
earliest to occur of the following events: (i) on the mutual
agreement of the Company and Executive; (ii) the death of
Executive or Executive's voluntary retirement; (iii) Executive
becoming unable to perform a substantial portion of his duties as
described herein due to injury, illness or disability (mental or
physical) as determined by an independent physician selected by
the Company and reasonably satisfactory to Executive for a period
of three (3) consecutive months or any aggregate period of six
(6) months in any eighteen (18) month period ("Disability"); or
(iv) immediately upon the Company giving written notice to
Executive of termination for Cause (as defined herein).

<PAGE> 6

(b) The Company may terminate Executive's
employment under this Agreement at any time for Cause. The
termination shall be evidenced by written notice to Executive,
which shall specify the cause for termination. "Cause" shall
exist if: (i) Executive is convicted of (from which no appeal
may be taken), or pleads guilty to, any act of fraud,
misappropriation or embezzlement, or any felony, (ii) in the
reasonable determination of the Board, the Executive has engaged
in conduct or activity materially damaging to the business of the
Company (it being understood, however, that unintentional
physical damage to any property of the Company by Executive shall
not be a ground for such a determination by the Board), or
(iii) Executive has failed, without reasonable cause, to devote
his full business time and best efforts to the Business of the
Company as provided in Section 1(a) hereof and, after written
notice from the Company of such failure, Executive at any time
thereafter again so fails.

5. Representations and Warranties.

(a) Executive represents and warrants to the
Company that: (i) he has the full power and authority to
execute, deliver and perform this Agreement, and that he has
taken all actions necessary to secure all approvals required in
connection herewith and therewith; (ii) this Agreement has been
duly authorized, executed and delivered by him and constitute his
valid and binding agreement, enforceable against him in
accordance with its terms; and (iii) the execution, delivery and
performance of this Agreement and the consummation of the
transactions contemplated hereby will not, with the passage of
time or the giving of notice or both, violate or conflict with,
constitute a breach of or default under, result in the loss of
any material benefit under, or permit the acceleration of or
entitle any party to accelerate any obligation under or pursuant
to, any material mortgage, lien, leases, agreement, instrument,
order, arbitration award, judgment or decree to which she is a
party or by which he or any of his assets are bound.

(b) Crown Crafts and the Company respectively
hereby each represent and warrant to Executive that: (i) this
Agreement has been duly authorized, executed and delivered by
them, and constitutes the valid and binding agreement of them,
enforceable against them in accordance with its terms; (ii) they
have the full power authority to execute, deliver and perform
this Agreement and have taken all necessary to secure all
approvals required in connection herewith; and (iii) the
execution, delivery and performance of this Agreement and the
consummation of the transactions contemplated hereby will not,
with the passage of time or the giving of notice or both, violate
or conflict with, constitute a breach of or default under, result
in the loss of any material benefit under, or permit the
acceleration of or entitle any party to accelerate any obligation
under or pursuant to, their Articles of Incorporation or By-Laws
or any material mortgage, lien, lease, agreement, instrument,
order, arbitration award, judgment or decree to which they are a
party or by which they or any of their assets are bound.

6
<PAGE> 7

6. Confidentiality.

(a) Executive recognizes and acknowledges
that in the course of his employment with the Company, as
contemplated by this Agreement, and as a result of the position
of trust that he will hold under this Agreement, he will obtain
private and confidential information and proprietary data
relating to Crown Crafts, the Company and other affiliates of
Crown Crafts, including without limitation, financial
information, product and design information, marketing
information, product and design information, marketing
information, customer lists and other data that are valuable
assets and property rights of the Company and Crown Crafts and
its affiliates (collectively referred to as "Confidential
Information"). Executive agrees that he will not, during the
term of this Agreement or any time after the termination of this
Agreement, either directly or indirectly, disclose or use any
Confidential Information acquired during his employment with the
Company, unless (i) the Confidential Information has been made
public through no action or fault of the Executive, or (ii) its
disclosure is requested or compelled by applicable law or
regulatory agency. Executive further agrees that after the
termination of this Agreement, or at such other time as the
Company requests, Executive will return to the Company all
documents, papers and records constituting Confidential
Information, and all copies of same in Executive's possession and
control.

(b) Executive acknowledges that irreparable
loss and injury would result to Crown Crafts and the Company upon
the breach of any of the covenants contained in this Section 6
and that damages arising out of such breach would be difficult to
ascertain. Executive agrees that, in addition to all other
remedies provided at law or at equity, the Company may petition
and obtain from a court of law or equity both temporary and
permanent injunctive relief without the necessity of proving
actual damages and without posting bond or other security to
prevent a breach by Executive of any covenant contained in this
Section 6, as well as to an equitable accounting of all earnings
and profits and other benefits arising out of any such
violations.

7. Notices. Any notice or other communication
required or permitted to be given hereunder shall be in writing
and deemed to have been given when delivered in person or when
dispatched by telegram or electronic facsimile transfer
(confirmed in writing by mail, registered or certified, return
receipt requested, postage prepaid, simultaneously dispatched) to
the addresses specified below.

If to Executive: Neal Fohrman
1536 Skylark Lane
Los Angeles, California 90069

<PAGE> 8

If to Crown Crafts or Crown Crafts, Inc.
the Company: 1600 RiverEdge Parkway
Suite 200
Atlanta, Georgia 30328
Attn: President

or to such other address or fax number as either party may from
time to time designate in writing to the other.

8. Entire Agreement. This Agreement constitutes the
entire agreement between the parties hereto relating to the
subject matter hereof, and supersedes all prior agreements and
understandings, whether oral or written, with respect to the
same; provided, however, that nothing herein shall affect the
validity of Sections 6.7, 6.8 or 6.9 of the Merger Agreement. No
modification, alteration, amendment or recision of or supplement
to this Agreement shall be valid or effective unless the same is
in writing and signed by both parties hereto.

9. Governing Law. This Agreement and the rights and
duties of the parties hereunder shall be governed by, construed
under and enforced in accordance with the laws of the State of
California.

10. Assignment. This Agreement shall inure to the
benefit of and be binding upon the parties hereto and their
respective heirs, personal representatives, successors and
permitted assigns. The rights, duties and obligations under this
Agreement are assignable by the Company to a successor of all or
substantially all of the business or assets of the Company. The
rights, duties and obligations of Executive under this Agreement
shall not be assignable.

11. Survival. The respective obligations of the
parties under Section 6 hereof shall survive the termination of
this Agreement.

IN WITNESS WHEREOF, the parties have executed this
Agreement as of the day and year first above written.

CROWN CRAFTS, INC.

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

<PAGE> 9

THE RED CALLIOPE & ASSOCIATES, INC.

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

-----------------------------------
Neal Fohrman

<PAGE> 1

EXHIBIT 10.3

EXHIBIT C

EMPLOYMENT AGREEMENT

This Employment Agreement (the "Agreement") is effective
as October 27, 1995, by and between Crown Crafts, Inc., a Georgia
corporation ("Crown Crafts"), The Red Calliope & Associates,
Inc., a California corporation (the "Company"), and Nanci Freeman
(the "Executive").

WHEREAS, Crown Crafts is acquiring the entire equity
interest of the Company by means of a merger pursuant to a Merger
Agreement dated as of October 8, 1995 the ("Merger Agreement");
and

WHEREAS, Executive is the Executive Vice President-Sales
and Marketing of the Company and desires to continue her
employment with the Company in such capacity; and

WHEREAS, Crown Crafts desires that Executive continue to
serve in the capacity of Vice President-Operations of the
Company; and

WHEREAS, Crown Crafts, the Company and Executive desire
to set forth in writing the terms and conditions of Executive's
continued employment with the Company.

1. Employment and Duties.

(a) The Company hereby agrees to continue to
employ Executive and Executive agrees to continue employment in
her capacity as Executive Vice President-Sales and Marketing of
the Company to act in accordance with the terms and conditions
set forth herein. Executive also consents to serve without
additional compensation, if elected, as a director of the
Company. During the term of this Agreement, Executive agrees
that this position will be her principal employment, that she
will serve the Company faithfully and to the best of her ability
and that she will devote her full business time, attention and
skills to the operation of the Business of the Company (as
defined herein), subject to reasonable absences for vacation and
illness, and that she will perform such duties, functions and
responsibilities in connection with such position and consistent
with the foregoing as are from time to time delegated to
Executive by the Board of Directors or Chief Executive Officer of
the Company; provided, however, that the foregoing shall not be
deemed to restrict Executive from devoting a reasonable

<PAGE> 2

amount of time and attention to the management of her personal
affairs and investments, so long as such activities do not
interfere with the responsible performance of Executive's duties
hereunder. Executive shall provide the Board with periodic
reports on, and keep them informed on a current basis concerning,
the business and affairs of the Company. For purposes of this
Agreement, the Business of the Company shall be defined as
designing, manufacturing, distributing and selling infant and
juvenile bedding products.

(b) In addition, the Company shall provide
Executive as her principal office with a private office,
secretarial and administrative assistance, office equipment,
supplies and other facilities and services suitable to
Executive's position and located at 13003 South Figueroa Street,
Los Angeles, California 90061, or at a comparable location within
Los Angeles County.

2. Term. The term ("Term") of this Agreement shall
commence on the date hereof and shall continue until October 26,
1999.

(a) Salary. Executive shall receive an annual
salary of ("Salary") of (i) $140,000 for the first twelve months
hereof, (ii) $145,000 for the second twelve months hereof, (iii)
$150,000 for the third twelve months hereof, and (iv) $155,000
for the fourth twelve months hereof, to be paid in equal
installments in accordance with the Company's salary payment
practices in effect from time to time for executives of the
Company.

(b) Bonus Payment. In addition to Salary,
Executive shall receive periodic bonus payments (payable within
ninety (90) days of the end of the applicable fiscal year) as
follows:

(i) Budgeted Pre-tax Profit (as defined
below) of the Company is $2,900,000 for the fiscal year ended
June 30, 1996; $3,400,000 for the fiscal year ended June 30,
1997; $3,900,000 for the fiscal year ended June 30, 1998; and
$4,500,000 for the fiscal year ended June 30, 1999.

(ii) A bonus ("Bonus") shall be paid to
Executive on each anniversary hereof as follows (subject to
Section 3(b)(iii) below): $60,000 if

<PAGE> 3

budgeted Pre-tax Profit is realized for the fiscal year ended
June 30, 1996; $65,000 if budgeted Pre-tax Profit is realized for
the fiscal year ended June 30, 1997; $70,000 if budgeted Pre-tax
Profit is realized for the fiscal year ended June 30, 1998; and
$75,000 if budgeted Pre-tax profit is realized for the fiscal
year ended June 30, 1999.

(iii) In the event that less than 100%
but at least 80% of budgeted Pre-tax Profit is realized for any
such year, a bonus (in lieu of the full amount of the Bonus
payable pursuant to Section 3(b)(ii), above) equal to 30% of the
Bonus for such year shall be paid on each respective anniversary
hereof, and for each 1/100 of 1% of the budgeted Pre-tax Profit
above 80% an additional 35/1,000 of 1% of the Bonus (converted to
the nearest 1/100) (each full 1% of budgeted Pre-tax Profit
therefore converting into 3.5% of Bonus) shall likewise be paid
on each respective anniversary hereof, up to an maximum of 100%
of Bonus.

(iv) By way of example of the
foregoing, if Pre-tax Profit in fiscal year ended June 30, 1996
is $2,860,270, the bonus payable for Executive with respect to
such year shall be calculated as follows:

$2,860,270 (actual Pre-tax Profit)
divided by $2,900,000 (budgeted Pre-tax Profit) x 100 = 98.63% of
budget; and

98.63% of budget converts into 95.21% of
Bonus as follows:

18% of budget in excess of 80% of budget
converts (at a rate of 3.5% of Bonus for each 1% of budget) to
63% (3.5 times 18) of Bonus in excess of 30% (63% plus 30% then
equals 93%),

(v) Notwithstanding the foregoing,
regardless of Pre-tax Profit, the Company agrees to pay Executive
a Bonus of $40,000 on each of the first two anniversaries hereof.

(vi) "Pre-tax Profit" is defined as
profit before taxes calculated in accordance with generally
accepted accounting principles, consistently applied, consistent
with the Company's prior practice, adjusted to exclude:

A. all acquisition expenses,
payments, amortization of goodwill and, adjustments relating to
the acquisition of the Company by Crown Crafts;

<PAGE> 4

B. costs of meeting accounting and
legal requirements imposed on the Company by Crown Crafts as a
result of Crown Crafts being a public company;

C. any interest expense incurred
with respect to borrowings obtained to finance the acquisition by
Crown Crafts of the Company;

provided, further, that with respect to any products created,
designed or manufactured by Crown Crafts, Pre-tax Profit as
defined herein shall be adjusted upward as follows: (x) if such
product is sold or distributed by the Company, the Company shall
receive a additional credit of 5% of the sales commission paid
with respect to such sale, and (y) if such product is sold or
distributed by Crown Crafts but the product is based on a design
or pattern created by the Company, the Company shall be credited
with a monthly royalty of 5% of the sale; and

provided, further, that notwithstanding anything appearing
elsewhere herein, the Bonus payable with respect to the fiscal
year ending June 30, 1996, shall be the greater of (i) the amount
calculated pursuant to Section 3(b) hereof or (ii) the amount, if
any, accrued on the books of the Company as of the Closing Date
with respect to Executive for the period from June 30, 1995 to
the Closing Date; and

provided, further, that Pre-Tax Profit shall include a charge for
a reasonable estimate of the amount of bonus payable to Executive
under this Agreement and to Neal Fohrman under his employment
agreement; and

<PAGE> 5

(d) Expenses. Executive shall be entitled to receive
reimbursement for all reasonable expenses incurred by her in
connection with the fulfillment of her duties hereunder upon
receipt of appropriate vouchers therefor, provided, however, that
Executive has complied with all reasonable policies and
procedures relating to the reimbursement of such expenses as
shall, from time to time, be established by the Company.

(f) Options. Executive shall be granted non-qualified
stock options to purchase 10,000 shares of Crown Crafts common
stock, exercisable for five years, such options to be granted as
of the date hereof, pursuant to the Crown Crafts, Inc. 1995 Stock
Option Plan. Executive shall be eligible for future grants of
stock options in amounts and on terms substantially similar to
those options awarded executives of Crown Crafts with similar
positions or salaries to Executive.

(g) Promotion. Unless this Agreement has been otherwise
earlier terminated pursuant to Section 4 hereof, Executive will
be promoted to President and Chief Executive Officer of the
Company not later than October 26, 1997, at which time her salary
shall be increased by an additional $40,000 per annum.

4. Termination.

(a) This Agreement shall terminate on the
earliest to occur of the following events: (i) on the mutual
agreement of the Company and Executive; (ii) the death of
Executive or Executive's voluntary retirement; (iii) Executive
becoming unable to perform a substantial portion of her duties as
described herein due to injury, illness or disability (mental or
physical) as determined by an independent physician selected by
the Company and reasonably satisfactory to Executive for a period
of three (3) consecutive months or any aggregate period of six
(6) months in any eighteen (18) month period ("Disability"); or
(iv) immediately upon the

<PAGE> 6

Company giving written notice to Executive of termination for
Cause (as defined herein).

(b) The Company may terminate Executive's
employment under this Agreement at any time for Cause. The
termination shall be evidenced by written notice to Executive,
which shall specify the cause for termination. "Cause" shall
exist if: (i) Executive is convicted of (from which no appeal
may be taken), or pleads guilty to, any act of fraud,
misappropriation or embezzlement, or any felony, (ii) in the
reasonable determination of the Board, the Executive has engaged
in conduct or activity materially damaging to the business of the
Company (it being understood, however, that unintentional
physical damage to any property of the Company by Executive shall
not be a ground for such a determination by the Board), or
(iii) Executive has failed, without reasonable cause, to devote
her full business time and best efforts to the Business of the
Company as provided in Section 1(a) hereof and, after written
notice from the Company of such failure, Executive at any time
thereafter again so fails.

5. Representations and Warranties.

(a) Executive represents and warrants to the
Company that: (i) she has the full power and authority to
execute, deliver and perform this Agreement, and that she has
taken all actions necessary to secure all approvals required in
connection herewith and therewith; (ii) this Agreement has been
duly authorized, executed and delivered by her and constitute her
valid and binding agreement, enforceable against her in
accordance with its terms; and (iii) the execution, delivery and
performance of this Agreement and the consummation of the
transactions contemplated hereby will not, with the passage of
time or the giving of notice or both, violate or conflict with,
constitute a breach of or default under, result in the loss of
any material benefit under, or permit the acceleration of or
entitle any party to accelerate any obligation under or pursuant
to, any material mortgage, lien, leases, agreement, instrument,
order, arbitration award, judgment or decree to which she is a
party or by which she or any of her assets are bound.

<PAGE> 7

to, their Articles of Incorporation or By-Laws or any material
mortgage, lien, lease, agreement, instrument, order, arbitration
award, judgment or decree to which they are a party or by which
they or any of their assets are bound.

6. Confidentiality.

(a) Executive recognizes and acknowledges that
in the course of her employment with the Company, as contemplated
by this Agreement, and as a result of the position of trust that
she will hold under this Agreement, she will obtain private and
confidential information and proprietary data relating to Crown
Crafts, the Company and other affiliates of Crown Crafts,
including without limitation, financial information, product and
design information, marketing information, customer lists and
other data that are valuable assets and property rights of the
Company and Crown Crafts and its affiliates (collectively
referred to as "Confidential Information"). Executive agrees
that she will not, during the term of this Agreement or any time
after the termination of this Agreement, either directly or
indirectly, disclose or use any Confidential Information acquired
during her employment with the Company, unless (i) the
Confidential Information has been made public through no action
or fault of the Executive, or (ii) its disclosure is requested or
compelled by applicable law or regulatory agency. Executive
further agrees that after the termination of this Agreement, or
at such other time as the Company requests, Executive will return
to the Company all documents, papers and records constituting
Confidential Information, and all copies of same in Executive's
possession and control.

(b) Executive acknowledges that irreparable
loss and injury would result to Crown Crafts and the Company upon
the breach of any of the covenants contained in this Section 6
and that damages arising out of such breach would be difficult to
ascertain. Executive agrees that, in addition to all other
remedies provided at law or at equity, the Company may petition and
obtain from a court of law or equity both temporary and permanent
injunctive relief without the necessity of proving actual damages
and without posting bond or other security to prevent a breach by
Executive of any covenant contained in this Section 6, as well as
to an equitable accounting of all earnings and profits and other
benefits arising out of any such violations.

7. Restrictive Covenants. Executive agrees to be
bound by and subject to Sections 6.7, 6.8 and 6.9 of the Merger
Agreement to the same extent as Neal Fohrman is bound thereby
except that, as to Executive, the duration of the "Noncompete
Period" shall be equal to the length of the Term hereunder unless
Executive is terminated prior thereto other than for Cause (and
if Executive is so terminated other than for Cause the Noncompete
Period shall lapse).

<PAGE> 8

8. Notices. Any notice or other communication
required or permitted to be given hereunder shall be in writing
and deemed to have been given when delivered in person or when
dispatched by telegram or electronic facsimile transfer
(confirmed in writing by mail, registered or certified, return
receipt requested, postage prepaid, simultaneously dispatched) to
the addresses specified below.

If to Executive: Nanci Freeman
2652 Via Olivera
Palos Verdes Estates
Los Angeles, California 90274

If to Crown Crafts or Crown Crafts, Inc.
the Company: 1600 RiverEdge Parkway
Suite 200
Atlanta, Georgia 30328
Attn: President

or to such other address or fax number as either party may from
time to time designate in writing to the other.

9. Entire Agreement. This Agreement constitutes the
entire agreement between the parties hereto relating to the
subject matter hereof, and supersedes all prior agreements and
understandings, whether oral or written, with respect to the
same; provided, however, that nothing herein shall affect the
validity of Sections 6.7, 6.8 or 6.9 of the Merger Agreement. No
modification, alteration, amendment or recision of or supplement
to this Agreement shall be valid or effective unless the same is
in writing and signed by both parties hereto.

10. Governing Law. This Agreement and the rights and
duties of the parties hereunder shall be governed by, construed
under and enforced in accordance with the laws of the State of
California.

11. Assignment. This Agreement shall inure to the
benefit of and be binding upon the parties hereto and their
respective heirs, personal representatives, successors and
permitted assigns. The rights, duties and obligations under this
Agreement are assignable by the Company to a successor of all or
substantially all of the business or assets of the Company. The
rights, duties and obligations of Executive under this Agreement
shall not be assignable.

12. Survival. The respective obligations of the
parties under Section 6 hereof shall survive the termination of
this Agreement.

<PAGE> 9

IN WITNESS WHEREOF, the parties have executed this
Agreement as of the day and year first above written.

CROWN CRAFTS, INC.

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

THE RED CALLIOPE & ASSOCIATES, INC.

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

-----------------------------------
Nanci Freeman

<PAGE> 1

EXHIBIT 10.4

TAX REPORTING AGREEMENT

THIS TAX REPORTING AGREEMENT (the "Agreement"), dated as
of October 31, 1995, is made by and among CROWN CRAFTS, INC., a
Georgia corporation ("Crown Crafts"), THE RED CALLIOPE AND
ASSOCIATES, INC., a California corporation ("Red Calliope"), and
NEAL FOHRMAN, an individual resident of California (the
"Designated Party").

W I T N E S E T H :

WHEREAS, Crown Crafts, Red Calliope and the Designated
Party are parties to that certain Merger Agreement, dated as of
October 8, 1995, as amended by Amendment No. 1 thereto dated as
of October 31, 1995 (the "Merger Agreement"), pursuant to which a
wholly owned subsidiary of Crown Crafts, concurrently herewith,
is merging with and into Red Calliope (the "Merger");

WHEREAS, Crown Crafts is the common parent of an
affiliated group of corporations within the meaning of Section
1504 of the Internal Revenue Code of 1986, as amended (the
"Code") filing consolidated returns;

WHEREAS, Red Calliope timely filed an election (the
"Election") on Form 2553 to be treated as an S corporation within
the meaning of Section 1361(a) of the Code effective for its
taxable year beginning on July 1, 1982 and has consistently filed
tax returns as an S corporation on Form 1120S since July 1, 1982;

WHEREAS, the shareholders of Red Calliope (the
"Shareholders") have filed their tax returns in a manner
consistent with Red Calliope's treatment as an S Corporation
since July 1, 1982;

WHEREAS, certain consents to the Election, which may have
been required at the time of the Election, were not obtained at
such time;

WHEREAS, to resolve any doubt as to the validity of the
Election, Red Calliope has submitted to the Internal Revenue
Service a request for an extension of time to file consents to
the Election pursuant to Treasury Regulations Section
1.1362-6(b)(3)(iii), which extension has been granted;

WHEREAS, Red Calliope ceased to be a "small business
corporation" within the meaning of Section 1361(b) of the Code on
July 28, 1995; and

WHEREAS, pursuant to the terms of the Merger Agreement
and as a condition precedent to the obligations of the parties
under the Merger Agreement, the parties hereto have reached
certain agreements concerning the filing of Red Calliope's tax
returns for federal, state and local tax purposes as set forth in
detail herein;
<PAGE> 2

NOW, THEREFORE, in consideration of the premises and of
the mutual covenants and agreements set forth herein, the parties
hereto agree as follows:

1. Definitions.

1.1 Capitalized terms used but not otherwise
defined herein shall have the meanings ascribed to such terms in
the Merger Agreement.

1.2 "Designated Party" means Neal Fohrman.

1.3 "Red Calliope Income Taxes" means the
federal, state and local income tax of, together with any
interest, penalties and additions to tax imposed on, Red Calliope
with respect to its taxable income by any governmental authority
responsible for the imposition of such tax.

1.4 "Red Calliope Income Tax Return" means
any Tax Return of Red Calliope with respect to Red Calliope
Income Taxes.

1.5 "Red Calliope Tax Return" means any Tax
Return of Red Calliope with respect to Red Calliope Taxes.

1.6 "S Corporation Return" means any Tax
Return of Red Calliope with respect to the taxable income of Red
Calliope for taxable periods beginning on or after July 1, 1982
and ending on or before July 27, 1995.

1.7 "Shareholder Income Taxes" means the
federal, state and local income tax of, together with any
interest, penalties and additions to tax imposed on, any
Shareholder with respect to his or her taxable income by any
governmental authority responsible for the imposition of such
tax.

1.8 "Shareholder Income Tax Return" means
any Tax Return of a Shareholder with respect to Shareholder
Income Taxes.

1.9 "Tax" (including with correlative
meaning, the terms "Taxes" and "Taxable") means any income, gross
receipts, ad valorem, premium, excise, value-added, sales, use,
transfer, franchise, license, severance, stamp, occupation,
service, lease, withholding, employment, payroll, property or
windfall profits tax, alternative or add-on minimum tax, or other
tax, fee or assessment, together with any interest and any
penalty, addition to tax or additional amount imposed by any
governmental authority responsible for the imposition of any such
tax.

1.10 "Tax Return" means any return, report,
statement, information statement and the like required to be
filed with any authority with respect to Taxes.

<PAGE> 3

2. Filing of Pre-Closing Red Calliope Tax Returns.

2.1 The Designated Party shall be
responsible for the preparation and filing of all Red Calliope
Tax Returns for all taxable periods ending on or before the
Closing Date, including Red Calliope Tax Returns for such periods
that are due after the Closing Date and any amended Red Calliope
Tax Return. Red Calliope shall be responsible for the payment of
all Taxes shown to be due thereon. For purposes of this Section
2.1, any taxable period for Red Calliope Taxes that includes but
does not end on the Closing Date shall be treated as ending on
the Closing Date and the items of income, gain, loss, deduction
and credit shall be determined based on the closing of Red
Calliope's books and records as maintained for Tax purposes at
the end of business on the Closing Date. The Designated Party
shall submit such Tax Returns to Crown Crafts for its review and
comment thirty (30) days before filing and shall make such
revisions to such Tax Returns as are reasonably requested by
Crown Crafts.

2.2 The Designated Party shall cause to be
prepared and filed Red Calliope Income Tax Returns for taxable
periods ending on June 30, 1995 and July 27, 1995 ("S Corporation
Returns") in a manner consistent with its election to be treated
as an S corporation for federal, state and local income tax
purposes.

2.3 All fees and expenses incurred by the
Designated Party in connection with the preparation and filing of
Red Calliope Tax Returns (other than amended Red Calliope Tax
Returns, fees and expenses with respect to which are covered by
Section 4.5 hereof) for taxable periods ending on or before the
Closing Date shall be paid by Red Calliope.

2.4 Neither Crown Crafts, nor Red Calliope
shall amend any Red Calliope Tax Returns for taxable period
ending on or before the Closing Date without the prior written
consent of the Designated Party.

2.5 It is acknowledged and agreed that an
election under Section 338 of the Code shall not be made with
respect to the acquisition by Crown Crafts of Red Calliope
pursuant to the Merger Agreement. Notwithstanding anything to
the contrary in this Agreement or the Merger Agreement, Crown
Crafts shall pay and hold the Shareholders harmless from and
against all Red Calliope Taxes not incurred in the ordinary
course of business attributable to acts or omissions of Crown
Crafts occurring after the Effective Time but on the Closing
Date.

3. FILING OF POST-CLOSING RED CALLIOPE TAX RETURNS.
Crown Crafts shall, at its sole cost and expense, be responsible
for the preparation and filing of all Red Calliope Tax Returns
for taxable periods beginning after the Closing Date, and shall
pay or cause to be paid all Taxes shown to be due thereon.

<PAGE> 4

4. Control of Tax Proceedings.

4.1 It is acknowledged and agreed that the
Designated Party shall, pursuant to Section 6244 of the Code,
serve as the "tax matters person" for Red Calliope for taxable
years ending on or prior to July 27, 1995.

4.2 Except as specifically provided in this
Agreement, it is acknowledged and agreed that the Designated
Party shall have the sole authority to deal with any matters
relating to Taxes of Red Calliope attributable to taxable periods
ending on or before the Closing Date (as determined under Section
2.1), including but not limited to the filing of amended Red
Calliope Tax Returns.

4.3 Whenever any taxing authority asserts a
claim, makes an assessment or otherwise disputes the amount of
Red Calliope Taxes (including any claim involving any Subchapter
"S" item (as defined in Section 6245 of the Code and the Treasury
Regulations thereunder) (an "S Claim") brought against Red
Calliope) attributable to taxable periods ending on or before the
Closing Date (a "Pre-Closing Dispute"), Crown Crafts shall
promptly inform the Designated Party, who shall thereafter
promptly inform the other Shareholders. The Designated Party
shall have the sole right and authority to control any resulting
proceedings and, except as provided in Section 4.4, to determine
whether and when to settle any Pre-Closing Dispute. The
Designated Party shall keep each Shareholder informed of any such
proceedings or settlements.

4.4 Notwithstanding anything to the contrary
in this Agreement, the Designated Party shall not file any
amended Red Calliope Tax Return or settle any Pre-Closing Dispute
without the prior written consent (not to be unreasonably
withheld or delayed) of (i) Crown Crafts if such action would
increase Red Calliope Taxes for taxable periods ending after the
Closing Date, or (ii) any Shareholder who would be subject to
additional Shareholder Income Taxes in excess of $10,000 as a
result of such action.

4.5 All fees and expenses incurred by the
Designated Party in connection with the filing of any amended Red
Calliope Tax Return or control or conduct of any Pre-Closing
Dispute under Section 4.3 (the "Covered Matters") shall be paid
by Red Calliope and Red Calliope shall indemnify and hold
harmless the Designated Party from and against any and all
claims, damages, liabilities, expenses (including reasonable
attorneys fees), costs and assessments (including actual and
punitive damages) incurred by or imposed upon the Designated
Party in connection with his action or inaction with respect to
the Covered Matters so long as the Designated Party substantially
complies in good faith with his obligations with respect to the
Covered Matters and does not act fraudulently; provided, however,
that Red Calliope shall have no obligation to pay in excess of
$100,000 pursuant to this Section 4.5. All such fees and
expenses incurred by the

<PAGE> 5

Designated Party which are not paid or reimbursed by Red Calliope
pursuant to the preceding sentence shall be paid pursuant to that
certain Agreement Re Post-Merger Administration dated as of
October 9, 1995.

5. COOPERATION. The Designated Party and Crown
Crafts shall cooperate with each other in a timely manner in the
preparation and filing of any Tax Returns, payment of any Taxes
in accordance with this Agreement and the Merger Agreement, and
the conduct of any audit or other proceeding. Each party shall
execute and deliver such powers of attorney and make available
such other documents as are necessary to carry out the intent of
this Agreement and the Merger Agreement.

6. RETENTION OF RECORDS. Crown Crafts shall, until
the expiration of the applicable statute of limitations or
extensions thereof, (i) retain records, documents, accounting
data and other information (including computer data) necessary
for the preparation and filing of all Tax Returns or the audit of
such returns, and (ii) give to the Designated Party reasonable
access to such records, documents, accounting data and other
information (including computer data) and to its personnel
(insuring their cooperation) and premises, for the purpose of the
preparation and filing or audit of such returns.

7. SPECIFIC PERFORMANCE. The parties hereto each
acknowledge that the rights of each party hereunder are special,
unique and of extraordinary character, and that, in the event
that any party violates or fails or refuses to perform any
covenant or agreement made by it herein, the non-breaching party
may be without an adequate remedy at law. The parties each
agree, therefore, that in the event that any party violates or
fails or refuses to perform any covenant or agreement made by
such party herein, the non-breaching party or parties may,
subject to the terms of this Agreement and in addition to any
remedies at law for damages or other relief, institute and
prosecute an action in any court of competent jurisdiction to
enforce specific performance of such covenant or agreement or
seek any other equitable relief.

8. REPRESENTATIONS AND WARRANTIES OF THE DESIGNATED
PARTY. The Designated Party hereby represents and warrants to
each other party hereto that:

(a) this Agreement has been duly authorized,
executed and delivered by the Designated Party and constitutes
the valid and binding agreement of the Designated Party
enforceable against the Designated Party in accordance with its
terms, subject to applicable bankruptcy, insolvency and other
similar laws affecting the enforcement of creditors, rights
generally, general equitable principles and the discretion of
courts in granting equitable remedies; and

<PAGE> 6

(b) the execution, delivery and performance
of this Agreement and the consummation of the transactions
contemplated hereby will not, with the passing of time or the
giving of notice or both, violate or conflict with, constitute a
breach of or default under, result in the loss of any material
benefit under, or permit the acceleration of or entitle any party
to accelerate any obligation under or pursuant to any material
mortgage, lien, lease, agreement, instrument, order, arbitration
award, judgment or decree to which the Designated Party is a
party or by which he or any of his assets are bound.

9. REPRESENTATIONS AND WARRANTIES OF CROWN CRAFTS.
Crown Crafts hereby represents and warrants to each other party
hereto that:

(a) this Agreement has been duly authorized,
executed and delivered by Crown Crafts, and constitutes the valid
and binding agreement of Crown Crafts, enforceable against Crown
Crafts in accordance with its terms, subject to applicable
bankruptcy, insolvency and other similar laws affecting the
enforcement of creditors, rights generally, general equitable
principles and the discretion of courts in granting equitable
remedies; and

(b) the execution, delivery and performance
of this Agreement and the consummation of the transactions
contemplated hereby will not, with the passing of time or the
giving of notice or both, violate or conflict with, constitute a
breach of or default under, result in the loss of any material
benefit under, or permit the acceleration of or entitle any party
to accelerate any obligation under or pursuant to any material
mortgage, lien, lease, agreement, instrument, order, arbitration
award, judgment or decree to which Crown Crafts is a party or by
which it or any of its assets are bound.

10. REPRESENTATIONS AND WARRANTIES OF RED CALLIOPE.
Red Calliope hereby represents and warrants to each other party
hereto that:

(a) this Agreement has been duly authorized,
executed and delivered by Red Calliope, and constitutes the valid
and binding agreement of Red Calliope, enforceable against Red
Calliope in accordance with its terms, subject to applicable
bankruptcy, insolvency and other similar laws affecting the
enforcement of creditors, rights generally, general equitable
principles and the discretion of courts in granting equitable
remedies; and

<PAGE> 7

arbitration award, judgment or decree to which Red Calliope is a
party or by which it or any of its assets are bound.

11. NOTICES. The provisions of Section 10.10 of the
Merger Agreement shall apply to this Agreement.

12. MISCELLANEOUS. Nothing in this Agreement is
intended to or shall confer upon anyone other than the parties
hereto any legal or equitable right, remedy or claim. This
Agreement shall be governed by, and its provisions construed in
accordance with, the laws of the State of California (without
reference to California's choice of law rules) applicable to
contracts made and to be wholly performed within such state and
may be modified only in writing signed by each of the parties
hereto. This Agreement may be executed simultaneously in two or
more counterparts, each of which shall be deemed an original, and
all such counterparts shall constitute one and the same
instrument. Paragraph headings contained in this Agreement are
solely for convenience of reference and shall not affect the
meaning or interpretation of any term or provision hereof.

12. SEVERABILITY. If any provision of this Agreement
or the application of any such provision to any person or
circumstance shall be held invalid, illegal or unenforceable in
any respect by a court of competent jurisdiction, such
invalidity, illegality or unenforceability shall not affect any
other provision hereof.

13. COUNTERPARTS. This Agreement may be executed in
two or more counterparts, each of which is an original and all of
which together shall be deemed to be one and the same instrument.
This Agreement shall become binding when one or more counterparts
taken together shall have been executed and delivered by all of
the parties. It shall not be necessary in making proof of this
Agreement or any counterpart hereof to produce or account for any
of the other counterparts.

IN WITNESS WHEREOF, the Designated Party has duly
executed and delivered this Agreement, and Crown Crafts and Red
Calliope hereto have caused this Agreement to be executed and
delivered on its behalf by an officer thereunto duly authorized,
all as of the date first above written.

------------------------
NEAL FOHRMAN

<PAGE> 8

CROWN CRAFTS, INC.

By:
-----------------------------
E. Randall Chestnut
Vice President

THE RED CALLIOPE AND ASSOCIATES,
INC.

By:
-----------------------------
Neal Fohrman
President

<PAGE> 1

EXHIBIT 10.5

DISBURSEMENT AGREEMENT

This Disbursement Agreement (the "Agreement") is
entered into as of this 8th day of October, 1995, by and among
(i) Leonard, Dicker & Schreiber ("LDS"), a California
partnership, Kopple & Klinger, a California partnership, Stutman,
Treister & Glatt, a California law corporation, and Chaleff &
English, a California partnership, for itself and as successor-
in-interest to Chaleff, English & Catalano (collectively, the
"Lawyer Group"); (ii) The Red Calliope and Associates, Inc., a
California corporation ("Red Calliope"); (iii) Neal Fohrman, in
his capacity as Voting Trustee (the "Voting Trustee") pursuant to
that certain Voting Trust Agreement dated as of February 13, 1992
[sic] (the "Voting Trust Agreement"); (iv) Stanley Glickman and
Carol Glickman, individually, as trustees of the Glickman Family
Trust (the "Glickman Trust") and as general partners of the
Glickman Family Investment Partnership ("GFIP") (collectively,
the "Glickmans"); (v) Crown Crafts, Inc. and CC Acquisition
Corp. (collectively, "Crown Crafts"), both of which are Georgia
corporations; (vi) Mitchell Silberberg & Knupp, a California
partnership ("MSK"); (vii) R. Todd Nielson, in his capacity as
Resolution Agent of Reorganized Property Mortgage Co., Inc. (the
"Resolution Agent"); (viii) Robert Mann ("E. Fine Trustee"), in
his capacity as trustee of the Elliot Fine Trust, U/D/T dated
February 28, 1980, as amended August 5, 1994 ("Trust A"); (ix)
the signatories hereto on behalf of Shirley Fine Trust B ("Trust
B"); (x) Ross, Sacks & Glazier, a California partnership
("Ross"); and (xi) Robert C. Kopple, Esq., individually, and
Robert C. Kopple, a Professional Corporation (collectively,
"Kopple"). The signatories hereto on behalf of Trust B are, in
said capacities, sometimes hereinafter collectively referred to
as the "Trust B Parties". MSK, the Lawyer Group, the Resolution
Agent, the E. Fine Trustee, the Trust B Parties and Ross are
hereinafter sometimes collectively referred to as the "Secured
Parties".

WHEREAS, MSK claims a security interest (the "MSK
Security Interest"), directly or indirectly, in 585 shares of
common stock (the "Securities"), issued by Red Calliope, the
certificate for which is held by the Voting Trustee pursuant to
the Voting Trust Agreement, as collateral for the performance of
certain obligations of one or more of the Glickmans (said
obligations, together with other secured obligations of the
Glickmans to the other Secured Parties, are hereinafter referred
to as the "Obligations"), pursuant to a Security Agreement dated
February 6, 1991 (the "MSK Security Agreement"), which MSK
Security Interest secures Obligations in the sum of $750,000; and

WHEREAS, the Lawyer Group claims a security
interest (the "First Security Interest"), directly or indirectly,
in the Securities as collateral for the performance of certain of
the Obligations, pursuant to a Pledge Agreement dated November 1,
1993 (the "First Security Agreement"), which First Security
Interest secures Obligations in the sum of $750,000; and

<PAGE> 2

WHEREAS, Chaleff & English claims an additional
security interest (the "Second Security Interest"), directly or
indirectly, in the Securities, as further collateral for the
performance of certain of the Obligations, pursuant to a Security
Agreement dated September 13, 1995 (the "Second Security
Agreement"), which Second Security Interest secures Obligations
in the sum of $350,000; and

WHEREAS, one of the Trust B Parties is the
Trustee of Trust B and, in said capacity, is authorized to act as
trustee of Trust B and, on behalf of Trust B, claims a security
interest (the "Trust B Security Interest"), directly or
indirectly, in the Securities, as collateral for the performance
of certain of the Obligations, pursuant to a Pledge Agreement
dated December 17, 1993 (the "Trust B Security Agreement"), which
Trust B Security Interest secures Obligations in the sum of
$250,000 plus interest thereon; and

WHEREAS, the E. Fine Trustee, in his capacity as
such, claims a security interest (the "Fine Security Interest"),
directly or indirectly, in the Securities, as collateral for the
performance of certain of the Obligations, pursuant to a Security
Agreement dated February 14, 1991 (the "Fine Security
Agreement"), which Fine Security Interest secures Obligations in
the sum of $360,000; and

WHEREAS, Elliot R. Fine ("Fine") assigned to the
Resolution Agent a $200,000 interest in and to the $360,000
Obligation secured by the Fine Security Interest and in said Fine
Security Interest; and

WHEREAS, by a written "General Assignment of
Personal Property", dated August 5, 1994, Fine transferred all of
his remaining interest in said Obligation and said Fine Security
Interest to Trust A; and

WHEREAS, the Internal Revenue Service (the "IRS")
and the California Franchise Tax Board (the "FTB") assert liens
for federal and state taxes against the Securities, directly or
indirectly, pursuant to various notices of lien (the "Tax
Liens"), which Tax Liens are in the sums of $1,934,623 and
$693,434, respectively; and

WHEREAS, the Secured Parties, the IRS and the FTB
claim such security interests and liens in, to or against,
without limitation, the Securities, any evidence of any
beneficial ownership in the Securities, any voting trust
certificate issued pursuant to the Voting Trust Agreement, and
any promissory notes and security agreements of GFIP
(collectively, the "Collateral");

WHEREAS, Crown Crafts and Red Calliope are
parties to a proposed merger (the "Merger") pursuant to which,
inter alia, the Securities will be surrendered in exchange for
cash, upon terms and conditions specified in a written merger
agreement of even date herewith (the "Merger Agreement"),

<PAGE> 3

NOW, THEREFORE, the parties hereto agree as
follows:

1. Undefined capitalized terms used herein
shall have the meanings set forth in the Merger Agreement.

2. This Agreement shall be void and of no
effect if the Merger Agreement is terminated, or if the Merger
contemplated by the Merger Agreement shall fail to close on or
before the Closing Date, including, without limitation, if the
Resolution Agent shall fail to obtain approval by the Bankruptcy
Court of this Agreement.

3. The Glickmans acknowledge and agree
that, as of the date hereof, they are indebted to the parties
listed on Schedule "3" hereto (the "Consensual Lienors") in the
respective amounts set forth therein; that such indebtedness is
now due and owing; and that the Consensual Lienors have valid and
subsisting security interests or other liens in, to or against
the Collateral in the respective amounts and in the respective
priorities set forth in said Schedule "3" (the "Consensual
Liens"). As of October 31, 1995, the Glickmans anticipate that
the total of the Consensual Liens will be approximately
$4,672,000, not including any additional liens of which the IRS
or the FTB may hereafter give notice. Subject to adjustment as
provided in the Merger Agreement and assuming (i) that there is
no Merger Litigation or Title Litigation, (ii) that Red Calliope
timely filed an election on Form 2553 with the IRS to be treated
as an S corporation effective for its taxable year beginning on
July 1, 1992 and (iii) that all Tax Reserves and Environmental
Reserves are paid to the Shareholders, then, of the cash proceeds
of the Merger distributable with respect to the Securities (the
"Glickman Proceeds"), the portion remaining after satisfaction of
the Consensual Liens and exclusive of any new liens in favor of
the IRS or the FTB is expected to be approximately $1,200,000 (as
adjusted pursuant to the Merger Agreement, the "Glickman
Equity").

3.1 The Glickmans and the Secured Parties agree
that all of the Obligations are valid and are due and owing by the
Glickmans to the respective Consensual Lienors, that each of the
Consensual Liens is a valid and subsisting security interest or other
lien in, to or against the Collateral in the respective amounts and
in the respective priorities set forth in said Schedule "3", and that
each of the Secured Parties' security interests is duly perfected;
PROVIDED, HOWEVER, that the Resolution Agent does not take any
position with respect to the Obligations to Chaleff & English
relating to the Second Security Agreement or to Ross, or to the
validity, priority or perfection of the Second Security Interest or
the Consensual Lien of Ross, or to the right of Chaleff & English or
Ross to receive any of the Glickman Proceeds on account or in
satisfaction of said Second Security Interest or Consensual Lien of
Ross, and expressly reserves all rights, claims and remedies with
respect thereto.

<PAGE> 4

3.2 Crown Crafts and Red Calliope make no
representation, warranty or covenant as to what a court would hold as
to the validity, perfection or priority of any of the Consensual
Liens or the rights of the Secured Parties with respect thereto or as
to the proceeds thereof.

4. Crown Crafts, Red Calliope and the
Voting Trustee, in said capacity only (hereinafter, collectively,
the "Distributors"), jointly and severally agree that at and
concurrently with the Closing (or at such later times as may be
expressly provided by the Merger Agreement), they shall cause the
Glickman Proceeds to be distributed, to the extent available, in
the order and in the manner hereinafter set forth.

4.1 First, to MSK, the sum of $182,228.78.
In connection therewith:

4.1.1 The Glickmans and MSK agree
that such distribution is in full satisfaction
and discharge of any and all Obligations of the
Glickmans to MSK and shall discharge the MSK
Security Interest in its entirety; and that
simultaneously with such distribution, the
Glickmans and MSK shall execute and deliver
limited releases of one another in the form of
Exhibit "4.1.1" hereto. All Secured Parties
other than MSK expressly waive any claims which
any of them may have against the Distributors or
MSK by reason of such distributions to MSK.

4.1.2 The Glickmans and the
Secured Parties agree that upon distribution of
the Glickman Proceeds as provided in this
paragraph 4, MSK shall deliver the Voting Trust
Certificate to the Voting Trustee, for surrender
to Crown Crafts pursuant to the Merger Agreement,
and that upon such surrender, all of the
Obligations other than the Obligations to MSK
(which shall be discharged as provided in
paragraph 4.1.1, above) shall remain outstanding
and all Consensual Liens in the Collateral (but
not in the proceeds of the Collateral) shall be
released and such Consensual Liens (other than
the MSK Security Interest in the Securities)
shall continue in and attach to the Glickman
Proceeds in the same order of priority and
perfection as existed in the Collateral
immediately prior to the Merger regardless of
whether the Glickman Proceeds are distributed
outright, held in trust, or deposited in the
Interpleader Action (as defined in paragraph
4.3.1, below) as provided in this paragraph 4.

4.1.3 Effective only upon the
distribution to MSK as provided in this paragraph
4.1, and except with respect to the obligations
created by or arising out of this Agreement, each
of MSK, for itself and its heirs, successors,
partners and assigns, and each of them,

<PAGE> 5

on the one hand, and the Distributors, and their
respective heirs, successors, partners and
assigns, and each of them, on the other hand,
hereby releases, absolves, remises and forever
discharges the other, and each of them, from any
and all actions and causes of action, claims,
suits, demands, debts, obligations, liabilities,
damages, dues, accounts, bonds, covenants,
contracts, agreements, judgments, costs and
expenses whatsoever, whether known or unknown,
suspected or unsuspected, at law or in equity of
every kind and nature whatsoever, which any of
them ever had, now has, or may or could hereafter
have against the other, or any of them, by reason
of any fact, matter, cause, act or omission
whatever, existing at any time prior to or
through the date of this Agreement. Each of MSK
and the Distributors acknowledges that he is
familiar with Section 1542 of the Civil Code of
the State of California, which provides as
follows:

"A general release does not extend
to claims which the creditor does not know
or suspect to exist in his favor at the time
of executing the release, which if known
by him must have materially affected his
settlement with the debtor."

Each of MSK and the Distributors specifically
waives the benefits of Section 1542 of the Civil
Code of the State of California and any similar
provision of the State of Georgia to the fullest
extent permitted by law. Nothing contained in
this Agreement shall constitute or be deemed to
constitute a release of any of the Glickmans by
MSK.

4.2 Second, to the IRS, the sum of
$1,934,623 plus applicable interest and penalties, if
any, and to the FTB, the sum of $693,434 plus applicable
interest and penalties, if any. Those Secured Parties
other than MSK whose security interests are or may be
senior to the Tax Liens, by not objecting to or seeking
to enjoin said distributions, are not waiving any right,
claim or interest they may have with respect to the
Glickman Proceeds distributed to the IRS or the FTB, and
expressly reserve all such rights, claims or interests.
All Secured Parties expressly waive any claims which any
of them may have against the Distributors or MSK by
reason of such distributions to the IRS and the FTB.

4.3 Third, the sum of $250,000 plus
interest thereon ($279,837.90 as of October 31, 1995), in
respect of all Obligations of the Glickmans to Trust B
which are secured by the Trust B Security Interest, shall
be delivered to LDS, for deposit into a segregated,
interest-bearing deposit account in a financial
institution chosen by LDS, in the name of LDS, in trust
for the benefit of Trust B.

<PAGE> 6

4.3.1 If no Claims are asserted by any Third
Parties prior to the Closing ("Third Party Claims"), with
respect to the validity or priority of said Obligation or the
Trust B Security Interest, and if the total of all Third Party
Claims is less than the sum of the Glickman Equity plus all
Consensual Liens other than the MSK Security Interest and the
Tax Liens, LDS is hereby authorized and instructed to withdraw
said portion of the Glickman Proceeds and to deliver said
portion of the Glickman Proceeds to the trustee of Trust B
until either (A) all of such portion of the Glickman Proceeds
has been delivered; or (B) the total of the Third Party Claims
is equal to the sum of the undelivered portion of such
Glickman Proceeds plus the other Consensual Liens (other than
the MSK Security Interest and the Tax Liens) plus the Glickman
Equity, whichever shall first occur. Otherwise, all the
parties hereto agree that LDS, in its sole discretion, subject
to any Court order, may either interplead said funds in the
Interpleader Action (as defined below in this paragraph
4.3.1); or hold said funds, plus all interest earned thereon,
in trust in said deposit account, for the benefit of Trust B,
pending a final determination by the Court (as defined below
in this paragraph 4.3.1) or another court of competent
jurisdiction, which determination is not subject to further
appeal (a "Final Determination"), with respect to said portion
of the Glickman Proceeds and the rights of Trust B and any
Third Parties therein. All the parties hereto agree that they
will not make any demands on said portion of the Glickman
Proceeds other than in the Interpleader Action or a
Declaratory Relief Action (as defined in paragraph 4.5.2.1.2,
below). Upon such Final Determination, and unless LDS has
interpled said portion of the Glickman Proceeds, LDS shall
distribute said portion of the Glickman Proceeds as provided
by such Final Determination. As used in this Agreement, the
"Interpleader Action" shall mean an action in interpleader
commenced by any of the Distributors or any of the Lawyer
Group, which shall be commenced, if at all, only in the
Superior Court for the State of California for the County of
Los Angeles, Central District (the "Court"), and which shall
be brought, if at all, pursuant to California Code of Civil
Procedure section 386; PROVIDED, HOWEVER, that in the event of
any conflict between the provisions of this paragraph 4.3.1
and any applicable statute, rule or law pertaining to Claims
asserted by the IRS or the FTB in addition to the existing Tax
Liens, such applicable statutes, rules or laws shall control,
and the term "Interpleader Action" shall be deemed to include
any suit, action or proceeding commenced pursuant to such
applicable statutes, rules or laws.

4.3.2 The Glickmans and Secured Parties agree
that, unless and until said portion of the Glickman Proceeds
is paid to Trust B, the Obligations to Trust B remain
outstanding. The Glickmans and the

<PAGE> 7

Secured Parties agree that all of the Glickman
Proceeds constitute cash proceeds of the
Collateral and that upon the Merger, the Trust B
Security Interest in the Collateral (but not in
the proceeds of the Collateral) shall be
released and such security interest shall
continue in and attach to the Glickman Proceeds,
including without limitation the sums distributed
pursuant to this paragraph 4.3, in the same order
of priority and perfection as existed in the
Collateral immediately prior to the Merger
regardless of whether the Glickman Proceeds are
distributed outright, held in trust, or deposited
in the Interpleader Action as provided in this
paragraph 4. The Glickmans agree to execute any
documents reasonably necessary to maintain the
continuous perfection of the Trust B Security
Interest.

4.4 Fourth, the sum of $360,000, in
respect of all Obligations of the Glickmans which are
secured by the Fine Security Interest, shall be paid to
the E. Fine Trustee, for the benefit of Trust A, and the
Resolution Agent, as tenants in common, with Trust A
having a four-ninths undivided interest therein, and the
Resolution Agent having a five-ninths undivided interest
therein.

4.4.1 The Glickmans, the E. Fine
Trustee and the Resolution Agent agree that such
distribution is in full satisfaction and
discharge of any Obligations of the Glickmans to
Fine or Trust A to the extent such Obligations
were secured by the Fine Security Interest and
shall discharge the Fine Security Interest in its
entirety. The Lawyer Group, Ross and the Trust B
Parties expressly waive any claims which any of
them may have against the Distributors, the E.
Fine Trustee, Trust A or the Resolution Agent by
reason of such distributions to the E. Fine
Trustee, for the benefit of Trust A, and the
Resolution Agent.

4.4.2 The Glickmans and the
Secured Parties agree that, unless and until said
portion of the Glickman Proceeds is paid to the
Resolution Agent and the E. Fine Trustee, said
Obligations to Trust A, the E. Fine Trustee and,
as assignee of Fine, the Resolution Agent, remain
outstanding. The parties agree that all of the
Glickman Proceeds constitute cash proceeds of the
Collateral and that upon the Merger, the Fine
Security Interest in the Collateral (but not in
the proceeds of the Collateral) shall be released
and such security interest shall continue in and
attach to the Glickman Proceeds, including
without limitation the sums distributed pursuant
to this paragraph 4.4, in the same order of
priority and perfection as existed in the
Collateral immediately prior to the Merger
regardless of whether the Glickman Proceeds are
distributed outright, held in trust, or deposited
in the Interpleader Action as provided in this
paragraph 4. The Glickmans agree to execute any
documents

<PAGE> 8

reasonably necessary to maintain the continuous
perfection of the Fine Security Interest.

4.4.3 Effective only upon the
distribution as provided in this paragraph 4.4,
and except with respect to the obligations
created by or arising out of this Agreement or
the Merger Agreement or any agreements executed
in connection therewith, the Resolution Agent,
for himself and his heirs, successors, and
assigns, and each of them, on the one hand, and
the Distributors, and their respective heirs,
successors and assigns, and each of them, on the
other hand, hereby releases, absolves, remises
and forever discharges the other, and each of
them, from any and all actions and causes of
action, claims, suits, demands, debts,
obligations, liabilities, damages, dues,
accounts, bonds, covenants, contracts,
agreements, judgments, costs and expenses
whatsoever, whether known or unknown, suspected
or unsuspected, at law or in equity of every kind
and nature whatsoever, which any of them ever
had, now has, or may or could hereafter have
against the other, or any of them, by reason of
any fact, matter, cause, act or omission
whatever, existing at any time prior to or
through the date of this Agreement. Each of the
Resolution Agent and the Distributors
acknowledges that he is familiar with Section
1542 of the Civil Code of the State of
California, which provides as follows:

Each of the Resolution Agent and the Distributors
specifically waives the benefits of Section 1542
of the Civil Code of the State of California and
any similar provision of the laws of the State of
Georgia to the fullest extent permitted by law.

4.4.4 Effective only upon the
distribution as provided in this paragraph 4.4,
and except with respect to the obligations
created by or arising out of this Agreement or
the Merger Agreement or any agreements executed
in connection therewith, each of the E. Fine
Trustee, for himself (in said capacity only),
Trust A and their respective successors and
assigns, and each of them, in their capacities as
such, on the one hand, and the Distributors, and
their respective heirs, successors and assigns,
and each of them, on the other hand, hereby
releases, absolves, remises and forever
discharges the other, and each of them, from any
and all actions and causes of action, claims,
suits, demands,

<PAGE> 9

debts, obligations, liabilities, damages, dues,
accounts, bonds, covenants, contracts,
agreements, judgments, costs and expenses
whatsoever, whether known or unknown, suspected
or unsuspected, at law or in equity of every kind
and nature whatsoever, which any of them ever
had, now has, or may or could hereafter have
against the other, or any of them, by reason of
any fact, matter, cause, act or omission
whatever, existing at any time prior to or
through the date of this Agreement. Each of the
E. Fine Trustee and the Distributors acknowledges
that he is familiar with Section 1542 of the
Civil Code of the State of California, which
provides as follows:

Each of the E. Fine Trustee and the Distributors
specifically waives the benefits of Section 1542
of the Civil Code of the State of California and
any similar provision of the laws of the State of
Georgia to the fullest extent permitted by law.

4.5 Fifth, to the Lawyer Group, the sum of $750,000,
to be divided among the Lawyer Group as they shall direct, by written
notice to Crown Crafts not less than five business days prior to the
Closing. Said sum shall be distributed as hereinafter set forth in
this paragraph 4.5. The Glickmans and the Secured Parties agree that
all of the Glickman Proceeds constitute cash proceeds of the Collateral
and that upon the Merger, the First Security Interest in the Collateral
(but not in the proceeds of the Collateral) shall be released and such
security interest shall continue in and attach to the Glickman Proceeds,
including without limitation the sums distributed pursuant to this
paragraph 4.5, in the same order of priority and perfection as existed
in the Collateral immediately prior to the Merger regardless of whether
the Glickman Proceeds are distributed outright, held in trust, or
deposited in the Interpleader Action as provided in this paragraph 4.
The Glickmans agree to execute any documents reasonably necessary to
maintain the continuous perfection of the First Security Interest. As
used in this Agreement, "Adjusted Third Party Claims" shall mean the sum
of all Third Party Claims, less the amount of any Third Party Claims as
to which the Third Parties asserting such Claims acknowledge, in
writing, that their right to the Glickman Proceeds is junior to all
Consensual Liens other than the Second Security Interest and the
Consensual Lien of Ross. If the Adjusted Third Party Claims exceed the
Glickman Equity by more than $450,000, then, if any of the Distributors
commences any Interpleader Action, the Distributor commencing such

<PAGE> 10

Interpleader Action shall, concurrently therewith and to
the extent known to such Distributor, give written notice
to the Lawyer Group of the total amount of the Adjusted
Third Party Claims and the identity of each person or
entity asserting such a claim, and, if ascertainable,
whether the Lawyer Group's entitlement to the portion of
the Glickman Proceeds allocable to the First Security
Interest is contested (the "Contested Distributions").
In making such determination, the Distributor shall
assume that there will be no change in the priority of
the Consensual Liens as set forth on Schedule "3".

4.5.1 Any distributions to the
Lawyer Group which are not Contested
Distributions as defined in paragraph 4.5, above
(the "Uncontested Distributions") shall not be
subject to any restrictions or limitations, and
may be used, applied, spent or transferred by the
Lawyer Group in their sole discretion. Such
Uncontested Distributions shall discharge the
Obligations to the Lawyer Group pro tanto;
PROVIDED, HOWEVER, that the Glickmans and the
Secured Parties agree that, in the event that,
after the Closing, any member of the Lawyer Group
(hereinafter, a "Law Firm") is required to
disgorge any Uncontested Distributions, the
Obligations to said Law Firm shall be revived pro
tanto, and the Lawyer Group shall retain their
First Security Interest in all Glickman Proceeds
(other than those distributed to Consensual
Lienors senior to the Lawyer Group) as security
for the Obligations to the Lawyer Group against
any Claim by any Third Party that any of the
Lawyer Group is required to disgorge any
Uncontested Distributions.

4.5.2 As to Contested
Distributions, the Lawyer Group may elect among
any one or more of the following as to all or any
portion of the Contested Distributions. The
Glickmans authorize and direct each Law Firm to
pay or distribute any such Contested
Distributions as any court of competent
jurisdiction may direct upon a Final
Determination, and to move Contested
Distributions among or between any one or more of
the following to the extent permitted by this
Agreement, as that Law Firm may determine in its
sole discretion:

4.5.2.1 Delivery directly to
one or more of the Lawyer Group (in each
case, the "Recipient"), as payment and
in discharge, pro tanto, of the
Obligations to such Recipient. The
parties hereto agree that the Recipient
receiving any such distributions (the
"Direct Distributions") shall own such
Direct Distributions free and clear of
any claim by any other party to this
Agreement, other than, if applicable,
another of the Lawyer Group. The
Glickmans and the Secured Parties agree
that, in the event that, after the
Closing, any of the Lawyer Group is
required to disgorge any Contested or
Uncontested Distributions, the

<PAGE> 11

Obligations to said Law Firm shall
be revived pro tanto; and the Lawyer
Group shall retain their First Security
Interest in all Glickman Proceeds (other
than those distributed to Consensual
Lienors senior to the Lawyer Group) as
security for the Obligations to the
Lawyer Group against any Claim by any
Third Party that any of the Lawyer Group
is required to disgorge any Contested or
Uncontested Distributions, including any
Direct Distributions. As an
accommodation to Crown Crafts, and
without admitting any obligation to
limit its use of the Direct
Distributions, each Recipient further
agrees as follows with respect to such
Direct Distributions made to such
Recipient:

4.5.2.1.1 The Direct
Distributions distributed to the
Recipient shall be deposited in a
bank, savings and loan association,
brokerage house or other financial
institution of Recipient's choice
("Depositary Institution"), in a
segregated, interest-bearing
deposit account ("Deposit
Account"), payable upon the
Recipient's written demand.
Recipient may withdraw up to 45% of
the principal amount so deposited,
by checks payable to the IRS or
FTB, to pay bona fide taxes or
estimated taxes due on or
attributable to the Direct
Distributions.

4.5.2.1.2 Each Recipient
electing to receive Direct
Distributions shall intervene in
any pending Interpleader Action,
or, if there is none, shall
commence its own action for
declaratory relief in the Court, to
establish its right, title and
interest in and to the Direct
Distributions to such Recipient
(the "Declaratory Relief Action"),
naming as defendants in such action
any Third Party identified by Crown
Crafts or Red Calliope as having
actually asserted or indicated an
intention to assert any Adjusted
Third Party Claims.

4.5.2.1.3 Pending a Final
Determination in the Interpleader
Action or the Declaratory Relief
Action, as the case may be, by
final judgment, settlement or
otherwise, no Recipient shall
remove any of the funds from its
Deposit Account except upon order
of the Court; PROVIDED, HOWEVER,
that any Recipient may at any time
remove funds from its Deposit
Account (A) to the extent permitted
by paragraph 4.5.2.1.1, above; (B)
to deposit such funds in trust
pursuant to the provisions of
paragraph 4.5.2.2 below, in which
event the First Security Interest
in

<PAGE> 12

the Glickman Proceeds shall
continue in and attach to any funds
so deposited; or (C) to interplead
such Direct Distributions pursuant
to the provisions of paragraph
4.5.2.3, below, in which event the
First Security Interest in the
Glickman Proceeds shall continue in
and attach to any funds so
interpled.

4.5.2.2 Delivery of all or any
part of the Contested Distributions to a
Depositary Institution of such Law
Firm's choice, for deposit into a
segregated, interest-bearing trust
account maintained by such Law Firm
("Trust Account"), in trust for the
benefit of the Glickmans subject to the
First Security Interest attaching to
such deposit. The Glickmans and the
Secured Parties agree that the
Obligations to such Law Firm continue
and are not discharged or released by
the Merger or such deposit, and that the
First Security Interest, and such Law
Firm's interest therein, continues in
and attaches to the Glickman Proceeds,
including without limitation the
Glickman Proceeds in such Trust Account
(the "Proceeds Held in Trust"). Such
Law Firm shall thereupon intervene in
any pending Interpleader Action or shall
commence a Declaratory Relief Action, as
provided in paragraph 4.5.2.1.2, above.
Pending a Final Determination, by final
judgment, settlement or otherwise, in
such Interpleader Action or Declaratory
Relief Action, as the case may be, as to
the rights of such Law Firm, the Law
Firm shall not remove or allow to be
removed any Proceeds Held in Trust from
such Trust Account except upon order of
the Court; PROVIDED, HOWEVER, that such
Law Firm may at any time remove Proceeds
Held in Trust from such Trust Account
for the purpose of (A) transferring such
Proceeds Held in Trust to a Deposit
Account to become Direct Distributions
subject to the provisions of paragraph
4.5.2.1, above; or (B) interpleading
such Proceeds Held in Trust pursuant to
the provisions of paragraph 4.5.2.3,
below. The First Security Interest in
the Glickman Proceeds shall continue in
and attach to any funds so deposited or
interpled.

4.5.2.3 Interplead some or all
of the Contested Distributions in the
Interpleader Action, subject to the
First Security Interest. Nothing
contained herein shall require a Secured
Party which has elected to interplead
Contested Distributions to disclaim any
interest in such Contested
Distributions, or to waive any security
interest which attaches to such
Contested Distributions. The Glickmans
and the Secured Parties agree that such
interpleaded funds constitute cash
proceeds of the Collateral

<PAGE> 13

and that upon the Merger and the
interpleading of such funds, the First
Security Interest in the Collateral (but
not in the proceeds of the Collateral)
shall be released and such security
interest shall continue in and attach to
the Glickman Proceeds, including without
limitation the sums interpled pursuant
to this paragraph 4.5.2.3, in the same
order of priority and perfection as
existed in the Collateral immediately
prior to the Merger regardless of
whether the Glickman Proceeds are
distributed outright, held in trust, or
deposited in the Interpleader Action as
provided in this paragraph 4. As to any
Contested Distributions interpleaded by
or at the request of any Law Firm, such
Law Firm shall be exonerated from any
and all liability to any other party
hereto to the extent of the Contested
Distributions so interpled.

4.6 Sixth, in respect of the $350,000
Obligation to Chaleff & English.

4.6.1 If no Third Party asserts a
Claim with respect to the validity or priority of
said Obligation or the Second Security Interest,
and if the total of all Third Party Claims is
less than the sum of the Second Security
Interest, plus the Consensual Liens junior to the
Second Security Interest, plus the Glickman
Equity, then Glickman Proceeds shall be
distributed to Chaleff & English in satisfaction
of the Obligations secured by the Second Security
Interest until (A) the sum of $350,000 has been
distributed; or (B) the total of the Third Party
Claims is equal to the sum of the unsatisfied
portion of the Second Security Interest plus the
Consensual Liens junior to the Second Security
Interest plus the Glickman Equity, whichever
shall first occur; PROVIDED, HOWEVER, that Crown
Crafts shall interplead pursuant to paragraph
4.5.2.3, above, any amount otherwise
distributable to Chaleff & English pursuant to
this paragraph 4.6.1 if and to the extent a Third
Party asserts any Claim with respect thereto. As
to all Glickman Proceeds received by Chaleff &
English pursuant to this paragraph 4.6.1, the
Glickmans and Chaleff & English agree that such
distribution is in satisfaction of and discharges
pro tanto the Obligations of the Glickmans to
Chaleff & English which are secured by the Second
Security Interest; PROVIDED, HOWEVER, that the
Glickmans and the Secured Parties agree that, in
the event that, after the Closing, Chaleff &
English is required to disgorge any Glickman
Proceeds distributed to it, the Obligations to
Chaleff & English shall be revived pro tanto, and
Chaleff & English shall retain the Second
Security Interest in all Glickman Proceeds (other
than those distributed to Consensual Lienors
senior to Chaleff & English), if and to the
extent valid, as security for the

<PAGE> 14

Obligations to Chaleff & English against any
Claim by any Third Party that Chaleff & English
is required to disgorge any Glickman Proceeds.

4.6.2 The parties hereto
acknowledge that one or more of the Glickmans may
hereafter become obligated to Chaleff & English
in additional amounts, and that Chaleff & English
claim that the Second Security Interest secures
all such obligations in addition to the
Obligations already owing; and that upon the
Merger, the Second Security Interest in the
Collateral (but not the proceeds of the
Collateral) shall be released and such security
interest, if and to the extent valid, shall
continue in and attach to the Glickman Proceeds,
including without limitation the sums distributed
pursuant to this paragraph 4.6, in the same order
of priority and perfection as existed in the
Collateral immediately prior to the Merger. The
Glickmans agree to execute any documents
reasonably necessary to maintain the continuous
perfection of the Second Security Interest.
Nothing contained herein shall limit the right of
the Resolution Agent to contest the validity or
priority of the Second Security Interest, except
that the Resolution Agent expressly waives the
right to contend that the Merger or any of the
other transactions contemplated hereby affect the
validity, priority or perfection of the Second
Security Interest, or that, if such Second
Security Interest was valid and subsisting as to
the Collateral immediately prior to the Merger,
it is not valid and subsisting as to the Glickman
Proceeds.

4.7 Seventh, in respect of the $100,000
Obligation to Ross.

4.7.1 If no Third Party asserts a
Claim with respect to the validity or priority of
said Obligation or the Consensual Lien of Ross
(the "Ross Security Interest"), and if the total
of all Third Party Claims is less than the sum of
the Ross Security Interest, plus the Consensual
Liens junior to the Ross Security Interest, plus
the Glickman Equity, then Glickman Proceeds shall
be distributed to Ross in satisfaction of the
Obligations secured by the Ross Security Interest
until (A) the sum of $100,000 has been
distributed; or (B) the total of the Third Party
Claims is equal to the sum of the unsatisfied
portion of the Ross Security Interest plus the
Consensual Liens junior to the Ross Security
Interest plus the Glickman Equity, whichever
shall first occur; PROVIDED, HOWEVER, that Crown
Crafts shall interplead pursuant to paragraph
4.5.2.3, above, any amount otherwise
distributable to Ross hereunder if and to the
extent a Third Party asserts any Claim with
respect thereto. As to all Glickman Proceeds
received by Ross pursuant to this paragraph
4.7.1, the Glickmans and Ross agree that such
distribution is in satisfaction of and discharges
pro tanto the Obligations of the Glickmans to
Ross which

<PAGE> 15

are secured by the Ross Security Interest;
PROVIDED, HOWEVER, that the Glickmans and the
Secured Parties agree that, in the event that,
after the Closing, Ross is required to disgorge
any Glickman Proceeds distributed to it, the
Obligations to Ross shall be revived pro tanto,
and Ross shall retain the Ross Security Interest
in all Glickman Proceeds (other than those
distributed to other Consensual Lienors), if and
to the extent valid, as security for the
Obligations to Ross against any Claim by any
Third Party that Ross is required to disgorge any
Glickman Proceeds.

4.7.2 The parties hereto
acknowledge that one or more of the
Glickmans may hereafter become obligated
to Ross in additional amounts, and that
Ross claims that the Ross Security
Interest secures all such obligations in
addition to the Obligations already
owing; and that upon the Merger, the
Ross Security Interest in the Collateral
(but not the proceeds of the Collateral)
shall be released and such security
interest, if and to the extent valid,
shall continue in and attach to the
Glickman Proceeds, including without
limitation the sums distributed pursuant
to this paragraph 4.7, in the same order
of priority and perfection as existed in
the Collateral immediately prior to the
Merger. The Glickmans agree to execute
any documents reasonably necessary to
maintain the continuous perfection of
the Ross Security Interest. Nothing
contained herein shall limit the right
of the Resolution Agent to contest the
validity or priority of the Ross
Security Interest, except that the
Resolution Agent expressly waives the
right to contend that the Merger or any
of the other transactions contemplated
hereby affect the validity, priority or
perfection of the Ross Security
Interest, or that, if such Ross Security
Interest was valid and subsisting as to
the Collateral immediately prior to the
Merger, it is not valid and subsisting
as to the Glickman Proceeds.

4.8 Lastly, if there are no Third Party
Claims asserted prior to the Closing, the Glickman Equity
shall be distributed to the Glickmans as they may direct
in writing not less than five business days prior to the
Closing. If there are any Third Party Claims asserted
prior to the Closing, then Crown Crafts shall interplead
the Glickman Proceeds in the Interpleader Action in an
amount equal to the lesser of: (i) the Third Party
Claims; or (ii) the sum of the Glickman Equity plus
$450,000.

5. Each of the Lawyer Group, MSK and Ross
respectively agrees, severally but not jointly, to indemnify and
hold harmless the Distributors from and against any suit, action
or proceeding, or any damage or loss resulting therefrom
(including without limitation from and against actual costs and
reasonable attorneys'

<PAGE> 16

fees incurred in connection with the defense of such suit, action
or proceeding), solely with respect to the Glickman Proceeds
distributed to MSK, Ross or such Law Firm, as the case may be,
brought against any of the Distributors by any Third Party,
asserting that a payment, in the case of MSK or Ross or, as to
the Lawyer Group, a Direct Distribution to such Law Firm, or the
delivery of Proceeds Held in Trust to such Law Firm, was wrongful
or otherwise not permitted by reason of such Third Party's Claim;
PROVIDED, HOWEVER, that (i) such indemnification shall be limited
to $182,228.78 plus simple interest at seven percent (7%) per
annum ("Interest") in the case of MSK, or, as to Ross, to the
amount of any payment made to Ross, plus Interest, or, as to any
Law Firm, to the amount of any Direct Distributions received by
such Law Firm, plus any Proceeds Held in Trust delivered to such
Law Firm, less any such Direct Distributions or Proceeds Held in
Trust remitted by such Law Firm to Crown Crafts or to any Third
Party upon a Final Determination of the Court or upon a good-
faith settlement of any claim in the Interpleader Action or the
Declaratory Relief Action, or interpleaded by such Law Firm in
the Interpleader Action, plus Interest; (ii) such Law Firm shall
be entitled to conduct the defense of the Distributors in
connection with any such suit, action or proceeding, as to claims
relating to distributions to or for the benefit of such Law Firm,
and may conduct such defense, including without limitation, in
the Interpleader Action or the Declaratory Relief Action, at its
own expense, by itself or by other counsel selected in its
reasonable discretion and approved by Crown Crafts, which
approval shall not unreasonably be withheld or delayed; and (iii)
the Distributors shall not settle any such suit, action or
proceeding without the written consent of any Law Firm affected
thereby, which consent shall not unreasonably be withheld or
delayed. If a Law Firm elects to interplead all Glickman
Proceeds distributable to it pursuant to paragraph 4.5.2.3,
above, then it shall be exonerated and discharged from any
obligations pursuant to this paragraph 5, except as to attorneys'
fees and costs incurred by any Distributor in the defense of any
suit, action or proceeding relating to or arising from any Direct
Distributions to that Law Firm, which attorneys' fees or costs
were incurred prior to interpleading such Direct Distributions.

6. Carol Glickman, for herself and not in
any other capacity, agrees to indemnify and hold harmless the
Distributors from and against any suit, action or proceeding or
any damage or loss resulting therefrom, including without
limitation from and against actual costs and reasonable
attorneys' fees incurred in connection with the defense of such
suit, action or proceeding, brought against Crown Crafts by any
Third Party, asserting that a Direct Distribution to one or more
of the Lawyer Group was wrongful or otherwise not permitted by
reason of such Third Party's Claim. Such indemnification shall
be subject to the following terms and conditions:

6.1 The foregoing indemnification shall
be without recourse except as to amounts in excess of
$750 per month payable by Red Calliope to Carol Glickman
pursuant to that certain Consulting Agreement between Red

<PAGE> 17

Calliope and Carol Glickman to be executed at Closing
substantially in the form of Exhibit A to the Merger
Agreement (the "Consulting Agreement").

6.2 The foregoing indemnification shall
be solely with respect to the portion of any Direct
Distributions which are withdrawn by the Recipient from
the Deposit Account as provided in paragraph 4.5.2.1.1,
above, and shall be reduced to the extent such Direct
Distributions are (i) returned to the Deposit Account,
with interest thereon at the rates earned in the Deposit
Account; (ii) returned or paid to Crown Crafts or
interpleaded in the Interpleader Action; or (iii) paid
to a Third Party on account of a Claim, either pursuant
to a Final Determination of the Court or pursuant to a
good faith settlement.

6.3 Carol Glickman shall have no
obligation pursuant to said indemnity unless and until
the Law Firm whose Direct Distributions gave rise to such
indemnity obligation shall have failed to reimburse Crown
Crafts or Red Calliope for an out-of-pocket loss of Crown
Crafts or Red Calliope, as the case may be, after fifteen
days' written notice to such Law Firm and to Carol
Glickman; and Crown Crafts or Red Calliope, as the case
may be, shall have given fifteen days' written notice to
Carol Glickman of such failure to reimburse Crown Crafts,
and neither such Law Firm nor Carol Glickman shall have
cured such failure.

6.4 To secure Carol Glickman's
performance hereunder, Carol Glickman hereby grants the
Distributors a first security interest in the amounts in
excess of $750 per month payable to her pursuant to the
Consulting Agreement (the "Secured Portion"). In
connection therewith, Carol Glickman further agrees as
follows:

6.4.1 Carol Glickman shall
execute such documents as the Distributors may
reasonably require to perfect their security
interest in the Secured Portion.

6.4.2 In the event there are
Third Party Claims asserting that the Direct
Distributions were wrongful as to such Third
Party, Red Calliope is hereby directed and
authorized to withhold payment of the Secured
Portion to Carol Glickman, and to deposit such
payments into an interest bearing deposit account
in the names of Carol Glickman and Crown Crafts,
until the amount in said deposit account equals
the lesser of (A) such Third Party Claims or (B)
the total of all Direct Distributions which were
withdrawn by the Recipients from Deposit
Accounts, with interest thereon.

6.4.3 Crown Crafts and Red
Calliope agree to release their interest in said
withheld payments and in the deposit account into
which

<PAGE> 18

they were placed, and to release their security
interest in the Secured Portion and any proceeds
thereof, and to execute all documents reasonably
required to effect such releases, upon the first
to occur of: (A) the resolution of all
Declaratory Relief Actions, and the return, to
Crown Crafts or any Third Parties entitled
thereto, of any Direct Distributions determined
to have been wrongfully paid, if any; (B) the
exhaustion of all indemnification obligations of
all of the Lawyer Group pursuant to paragraph 5,
above; or (C) the reduction of the amount of such
indemnification to zero pursuant to paragraph
6.2, above.

7. Except with respect to the obligations
created by or arising out of this Agreement, the Lawyer Group,
MSK, the Resolution Agent, the E. Fine Trustee (in his capacity
as such), each of the Trust B Parties (but only to the extent
such Trust B Party is a trustee of Trust B, and only in his
capacity as such) and Ross (collectively, the "Covenanting
Parties") covenant not to commence any suit, action or
proceeding, at law or in equity, against any of the Distributors
by reason of anything relating to or arising out of the Merger,
the Collateral or the Covenanting Parties' right to all or any
part of the Glickman Proceeds. Without in any way limiting the
generality of the foregoing, the Covenanting Parties covenant not
to commence any suit, action or proceeding, at law or in equity,
against any of the Distributors by reason of any of the
following:

7.1 To the extent permitted by the
Merger Agreement or this Agreement, the commencement of
the Interpleader Action or the delivery of any or all of
the Glickman Proceeds to the Court or to the Depositary
Institution in lieu of payment to any of the Covenanting
Parties;

7.2 Any disputes among the Covenanting
Parties, or between any Covenanting Party and any person
or entity not a party hereto with respect to such
Covenanting Parties' interest in or entitlement to the
Glickman Proceeds, including without limitation with
respect to the amount, validity or priority of the
Covenanting Parties' respective security interests; or

7.3 If any person or entity other than
one of the Distributors defeats or subordinates a
Covenanting Party's interest in the Glickman Proceeds, in
whole or in part, the fact that the Obligations to such
Covenanting Party were not paid in full out of the
Glickman Proceeds.

8. If, after the Closing, any person or
entity commences any suit, action or proceeding against any of
the Distributors with respect to the payment of all or any part
of the Glickman Proceeds to MSK, the Resolution Agent or any of
the Lawyer Group pursuant to paragraph 4, above, MSK, the
Resolution Agent and each of the Law Firms respectively agree,
severally but not jointly, to indemnify and hold harmless each of
the Distributors from and against any such suit, action or

<PAGE> 19

proceeding, or any damage or loss resulting therefrom (including
without limitation from and against actual costs and reasonable
attorneys' fees incurred in connection with the defense of such
suit, action or proceeding), solely with respect to the Glickman
Proceeds distributed to MSK or such Law Firm, as the case may be;
PROVIDED, HOWEVER, that (i) such indemnification shall be limited
to $182,228.78 in the case of MSK, shall be limited to $200,000
in the case of the Resolution Agent, and, as to any Law Firm,
shall be limited to the amount of any Direct Distributions
received by such Law Firm, plus any Proceeds Held in Trust
delivered to such Law Firm, less any such Direct Distributions or
Proceeds Held in Trust remitted by such Law Firm to Crown Crafts
or to any Third Party upon a Final Determination of the Court or
upon a good-faith settlement of any claim in the Interpleader
Action or the Declaratory Relief Action, or interpleaded by such
Law Firm in the Interpleader Action; (ii) such Law Firm shall be
entitled to conduct the defense of the Distributors in connection
with any such suit, action or proceeding, as to claims relating
to distributions to or for the benefit of such Law Firm, and may
conduct such defense, including without limitation, in the
Interpleader Action or the Declaratory Relief Action, at its own
expense, by itself or by other counsel selected in its reasonable
discretion and approved by Crown Crafts, which approval shall not
unreasonably be withheld or delayed; and (iii) the Distributors
shall not settle any such suit, action or proceeding without the
written consent of any Law Firm affected thereby, which consent
shall not unreasonably be withheld or delayed. If a Law Firm
elects to interplead all Glickman Proceeds distributable to it
pursuant to paragraph 4.5.2.3, above, then it shall be exonerated
and discharged from any obligations pursuant to this paragraph 8,
except as to attorneys' fees and costs incurred by the
Distributors in the defense of any suit, action or proceeding
relating to or arising from any Direct Distributions to that Law
Firm, which attorneys' fees or costs were incurred prior to
interpleading such Direct Distributions.

9. The Glickmans warrant and represent that
there are no consensual liens or consensual security interests in
or to the Collateral or the Securities other than the Consensual
Liens, and that, between the execution hereof and the Closing,
they shall not voluntarily cause any other consensual liens or
consensual security interests to be granted in or to the
Collateral or the Securities, without the prior written consent
of Crown Crafts and the Resolution Agent; PROVIDED, HOWEVER, that
in the event there is a threat of any additional involuntary
liens being placed against any of the Collateral, the Glickmans
may grant, create, or assist in granting or creating, additional
liens in favor of the IRS or the FTB with respect to 1995 taxes
or estimated taxes payable by the Glickmans. Nothing contained
herein shall preclude the Glickmans from responding to requests,
notices, conduct or actions initiated by the IRS or the FTB.

10. MSK warrants and represents, without any
duty of investigation, that, as of the date hereof, it is not
aware of any liens or security interests in, to or against the
Collateral or the Securities other than the Consensual Liens.
MSK agrees

<PAGE> 20

that if, prior to the Closing, it becomes aware of any such liens
or security interests other than the Consensual Liens, it will
give written notice thereof within three business days to Crown
Crafts, Red Calliope, the Lawyer Group and the Resolution Agent.

11. Each of MSK and Kopple agrees, severally
but not jointly, that neither it nor, in the case of MSK, any
partner of MSK, shall assert any claim that either the Merger
Agreement or this Agreement constitutes a settlement as between
the Resolution Agent and any of the Glickmans, or that the
provisions of Franklin v. Kaypro Corp., 884 F.2d 1222 (9th Cir.
1989), cert. denied, 498 U.S. 890 (1990) ("Kaypro"), apply to the
Merger Agreement or this Agreement. In consideration thereof,
the Resolution Agent agrees that, as to any Glickman Proceeds
actually received by any PMC-Related Entity (other than the
portion of the Glickman Proceeds distributable to the Resolution
Agent pursuant to paragraph 4.4, above), or hereafter attached by
or subjected to a lien in favor of any PMC-Related Entity, in his
capacity as such, and as to which such PMC-Related Entity, in his
capacity as such, has obtained a judgment against Stanley
Glickman, MSK and Kopple shall receive dollar-for-dollar credit
therefor against any judgment against either or both of them in
any pending or future litigation against either of them brought
by the Resolution Agent or the additional signatories on page 24
hereof. For purposes of this paragraph 11, a "PMC-Related
Entity" shall mean and include any of: the Resolution Agent, in
his capacity as such, the class of plaintiffs approved for
purposes of settlement in Karatz, et al. v. Fine, et al., Case
No. CV-92-2172-WJR, in the United States District Court for the
Central District of California (the "Class"), any member of the
Class, in any capacity which causes him to be a member of the
Class, the "New Committee" in the Chapter 11 cases of Property
Mortgage Co., Inc. ("PMC") and SLGH Investments, Inc. ("SLGH"),
any creditor of the estates of PMC or SLGH, in his capacity as
such, or any named plaintiff in any of the following cases (the
"Investor Actions") pending in Los Angeles Superior Court
("LASC") or United States District Court for the Central District
of California ("USDC"): Carmel, et al. v. Glickman, et al., LASC
Case No. BC 090898, Altman, et al. v. Glickman, et al., LASC Case
No. BC 094624, Bass, et al. v. Glickman, et al., LASC Case No. BC
098540, Friedman, et al. v. Glickman, et al., LASC Case No. BC
103971, Abrams, et al. v. Glickman, et al., LASC Case No. BC
098875, Berman, et al. v. Glickman, et al., LASC Case No. BC
129453, Karatz, et al. v. Fine, et al., USDC Case No. CV-92-2172-
WJR, Gore, et al. v. Groman, et al., LASC Case No. BC 098664.
MSK and Kopple reserve the right to assert that any agreement
(other than this Agreement, the Merger Agreement, or any other
agreements executed in connection with the Merger) should be
treated as a settlement with the Glickmans and/or should be
subject to the provisions of Kaypro, and the Resolution Agent and
counsel for the plaintiffs in the Investor Actions reserve the
right to assert otherwise. The provisions of this paragraph
shall be of no force or effect unless counsel for the plaintiffs
in the Investor Actions signs this Agreement as provided on page
24 hereof.

<PAGE> 21

12. This Agreement shall be governed,
construed, interpreted and enforced by the laws of the State of
California without regard to choice of law provisions.

13. In the event of any suit, action or
proceeding between or among any parties hereto relating to or
arising out of this Agreement or the transaction contemplated
hereby, the prevailing party in such suit, action or proceeding
shall be entitled to recover its actual costs and reasonable
attorneys' fees incurred therein; PROVIDED, HOWEVER, that the
foregoing shall not affect the rules and procedures governing
costs and attorneys' fees in interpleader actions, provided
that such interpleader action was permitted by the Merger
Agreement or this Agreement.

14. All notices or other communications
required or permitted to be given to any party hereunder shall be
in writing (except as otherwise provided herein) and shall be
deemed duly given when received by delivery in person, by
telecopy, telex or telegram or by certified mail, postage
prepaid, or by an overnight courier service, addressed to such
party at its address set forth on the signature page hereof.

15. This Agreement, together with the
documents expressly referred to herein, constitute the entire
agreement between the parties hereto with respect to the subject
matter contained herein and supersede all prior agreements and
understandings among the parties with respect to such subject
matter.

16. This Agreement shall be binding upon and
inure to the benefit of the parties hereto and their respective
heirs, successors, assigns and personal representatives, but
neither this Agreement nor any of the rights, interests or
obligations hereunder shall be assigned by any of the parties
hereto without the prior written consent of the other parties.

17. This Agreement may be executed in any
number of counterparts, each of which shall be deemed to be an
original and all of which together shall constitute one and the
same document.

18. Any term or provision of this Agreement
which is invalid or unenforceable in any jurisdiction shall, as
to such jurisdiction, be ineffective to the extent of such
invalidity or unenforceability without rendering invalid or
unenforceable the remaining terms and provisions of this
Agreement in any other jurisdiction. If any provision of this
Agreement is so broad as to be unenforceable, such provision
shall be interpreted to be only so broad as is enforceable.

19. Each party hereto shall execute and
deliver such additional documents as may be necessary or
desirable to consummate the transactions contemplated by this
Agreement.

<PAGE> 22

20. This Agreement may be amended, modified
and supplemented only by a written document executed by all of
the parties hereto.

21. Whenever used in this Agreement, any
noun or pronoun shall be deemed to include both the singular and
the plural and to cover all genders.

22. Each individual signing this Agreement,
and any other documents executed in connection with this
Agreement, whether signed individually or on behalf of any person
or entity, warrants and represents that he or she has full
authority to so execute the Agreement on behalf of the party or
parties on whose behalf he or she so signs.

REST OF PAGE INTENTIONALLY LEFT BLANK

SIGNATURE PAGE FOLLOWS IMMEDIATELY HEREAFTER

<PAGE> 23

IN WITNESS WHEREOF, the parties have executed and
delivered this Agreement as of the date first set forth above.

LEONARD, DICKER & SCHREIBER

By:
----------------------------------
Its:
-------------------------------
Address:
-----------------------------------

KOPPLE & KLINGER

By:
----------------------------------
Its:
-------------------------------
Address:
-----------------------------------

STUTMAN, TREISTER & GLATT

By:
----------------------------------
Its:
-------------------------------
Address:
-----------------------------------

CHALEFF & ENGLISH

By:
----------------------------------
Its:
-------------------------------
Address:
-----------------------------------

23
<PAGE> 24

THE RED CALLIOPE AND ASSOCIATES, INC.

By:
----------------------------------
Its:
-------------------------------
Address:
-----------------------------------
-----------------------------------

-------------------------------------
NEAL FOHRMAN, as Voting Trustee pursuant
to that certain Voting Trust Agreement
dated as of February 13, 1992 [sic]

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

--------------------------------------
STANLEY GLICKMAN, individually, as
Trustee of the Glickman Family Trust and
as a general partner of the Glickman
Family Investment Partnership

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

--------------------------------------
CAROL GLICKMAN, individually, as Trustee
of the Glickman Family Trust and as a
general partner of the Glickman Family
Investment Partnership

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

<PAGE> 25

CROWN CRAFTS, INC.

By:
----------------------------------
Its:
-------------------------------
Address:
-----------------------------------
-----------------------------------

CC ACQUISITION CORP.

By:
----------------------------------
Its:
-------------------------------
Address:
-----------------------------------
-----------------------------------

MITCHELL SILBERBERG & KNUPP

By:
----------------------------------
Its:
-------------------------------
Address:
-----------------------------------
-----------------------------------

-------------------------------------
R. TODD NIELSON, in his capacity as
Resolution Agent of Reorganized Property
Mortgage Co., Inc.

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

<PAGE> 26

-------------------------------
ROBERT MANN, in his capacity as
Trustee of Elliot Fine Trust A

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

ROSS, SACKS & GLAZIER

By:
----------------------------------
Its:
-------------------------------
Address:
-----------------------------------
-----------------------------------

ROBERT C. KOPPLE, A PROFESSIONAL
CORPORATION

By:
----------------------------------
Its:
-------------------------------
Address:
-----------------------------------
-----------------------------------

---------------------------------
ROBERT C. KOPPLE, an individual

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

<PAGE> 27

THE TRUST B PARTIES, to the extent,
if any, they have the capacity to
act on behalf of Trust B:

-------------------------------
ROBERT MANN

-------------------------------
STANLEY GLICKMAN

-------------------------------
CAROL GLICKMAN

Agreed to for purposes of Paragraph 11 only.

The named plaintiffs in the following actions:
Carmel, et al. v. Glickman, et al., LASC Case No. BC 090898
Altman, et al. v. Glickman, et al., LASC Case No. BC 094624
Bass, et al. v. Glickman, et al., LASC Case No. BC 098540
Friedman, et al. v. Glickman, et al., LASC Case No. BC 103971
Abrams, et al. v. Glickman, et al., LASC Case No. BC 098875
Berman, et al. v. Glickman, et al., LASC Case No. BC 129453
Karatz, et al. v. Fine, et al., USDC Case No. CV-92-2172-WJR
Gore, et al. v. Groman, et al., LASC Case No. BC 098664

By Strange & Hoey, their counsel

By
---------------------------
Brian Strange

<PAGE> 1

EXHIBIT 10.6

PROMISSORY NOTE

$5,152,964.00 October 31, 1995

For value received, the undersigned, CROWN CRAFTS, INC., a
Georgia corporation ("Maker"), hereby promises to pay to the
order of NEAL FOHRMAN, an individual ("Holder"), at such place as
Holder may designate, in lawful money of the United States of
America, the principal sum of Five Million One Hundred Fifty-two
Thousand Nine Hundred Sixty-four Dollars ($5,152,964.00),
together with interest thereon from the date hereof. Interest on
the principal sum shall accrue at the rate of six and one-quarter
percent (6.25%) per annum. The entire balance of principal, and
all interest accrued thereon, shall be due and payable in full on
January 10, 1996 (the "Maturity Date"). Payment of the entire
balance of principal, and all interest accrued thereon, shall be
by wire transfer of immediately available funds to an account
designated by Holder prior to the Maturity Date.

If this Note is not paid by the Maturity Date, Maker promises to
pay all costs of collection, including, but not limited to,
reasonable attorneys' fees.

Maker expressly waives presentment, protest and demand, notice of
protest, demand and dishonor and nonpayment of this Note and all
other notices of any kind. To the fullest extent permitted by
law, the defense of the statute of limitations in any action on
this Note is waived by the undersigned.

This Note has been executed and delivered in the State of
California and is to be governed by and construed according to
the laws thereof, except to the extent that such laws are
preempted by federal law.

No single or partial exercise of any power hereunder shall
preclude other or further exercise thereof or the exercise of any
other power. No delay or omission on the part of Holder in
exercising any right hereunder shall operate as a waiver of such
right or of any other right under this Note. Acceptance of any
sum by Holder that is less than full payment shall not be
construed as a waiver of any default in the payment of this Note.

All agreements between Maker and Holder are expressly limited so
that in no contingency or event whatsoever, whether by reason of
advancement of the proceeds hereof, acceleration of maturity of
the unpaid principal balance hereof, or otherwise, shall the
amount paid or agreed to be paid to Holder for the use,
forbearance or detention of the money to be advanced hereunder
exceed the highest lawful rate permissible under applicable usury
laws. If, from any circumstances whatsoever, fulfillment of any
provision hereof, at the time performance of such provision shall
be due, shall involve transcending the limit of validity
prescribed by law that a court of competent jurisdiction may deem
applicable hereto, then ipso facto, the obligation to be
fulfilled shall be reduced to the limit of such validity, and if
from any circumstances Holder shall ever receive

<PAGE> 2

as interest an amount that would exceed the highest lawful rate,
such amount that would be excessive interest shall be applied to
the reduction of the unpaid principal balance due hereunder and
not to the payment of interest.

CROWN CRAFTS, INC.

By:
------------------------
Name: E. Randall Chestnut
Its: Vice President

<PAGE> 1

EXHIBIT 10.7

PROMISSORY NOTE

$626,367.00 October 31, 1995

For value received, the undersigned, CROWN CRAFTS, INC., a
Georgia corporation ("Maker"), hereby promises to pay to the
order of EDWARD TANNENBAUM, an individual ("Holder"), at such
place as Holder may designate, in lawful money of the United
States of America, the principal sum of Six Hundred Twenty-six
Thousand Three Hundred Sixty-seven Dollars ($626,367.00),
together with interest thereon from the date hereof. Interest on
the principal sum shall accrue at the rate of six and one-quarter
percent (6.25%) per annum. The entire balance of principal, and
all interest accrued thereon, shall be due and payable in full on
January 10, 1996 (the "Maturity Date"). Payment of the entire
balance of principal, and all interest accrued thereon, shall be
by wire transfer of immediately available funds to an account
designated by Holder prior to the Maturity Date.

If this Note is not paid by the Maturity Date, Maker promises to
pay all costs of collection, including, but not limited to,
reasonable attorneys' fees.

<PAGE> 2

CROWN CRAFTS, INC.

By:
------------------------
Name: E. Randall Chestnut
Its: Vice President

<PAGE> 1
EXHIBIT 23

(LEDERMAN, ZEIDLER & CO. LETTERHEAD)

INDEPENDENT AUDITORS' CONSENT

We consent to the incorporation by reference in Registration Statement No.
33-87586 of Crown Crafts, Inc. on Form S-8 of our report dated August 10,
1995 appearing in the Current Report on Form 8-K of Crown Crafts, Inc. dated
on or about November 10, 1995 and relating to the consolidated financial
statement of the Red Calliope and Associates, Inc. as of June 30, 1995 and
for the year ended June 30, 1995.

/s/ Lederman, Zeidler & Co.
-----------------------------
LEDERMAN, ZEIDLER & CO.

Beverly Hills, California
November 9, 1995

<PAGE> 1
EXHIBIT 99

(Crown Craft Logo)

CROWN CRAFTS, INC.
1600 RiverEdge Parkway
Suite 200
Atlanta, GA 30328
NEWS RELEASE

November 6, 1995

FOR IMMEDIATE RELEASE

CROWN CRAFTS COMPLETES ACQUISITION OF THE RED CALLIOPE

Atlanta, Georgia -- Crown Crafts, Inc. (NYSE:CRW) announced today that it has
completed its previously-announced acquisition of The Red Calliope and
Associates, Inc., for approximately $16 million in cash and short-term notes,
subject to certain post-closing adjustments. The Red Calliope, formerly a
privately-owned company, is a leading designer, manufacturer and marketer of
infant bedding products and related accessories.

"We are extremely pleased to be entering the infant bedding market through
the acquisition of such a well-respected name in the industry," commented
Michael H. Bernstein, Crown Crafts' President and Chief Executive Officer. "We
have already begun developing new products to introduce at the upcoming
Juvenile Products Manufacturers' Association trade show which will be held in
Dallas the week of November 12."

Expanding on this topic, E. Randall Chestnut, Crown Crafts' Vice President of
Development, stated, "As a result of this acquisition, The Red Calliope will
bring two new product lines to this year's JPMA show. First, by combining The
Red Calliope's expertise in infant bedding with Crown Crafts' expertise in
luxury linens, a new upscale line of products will be sold under the Crown
Baby(C) name. Also, utilizing Crown Crafts' significant jacquard-weaving
expertise, a line of more than 25 infant and juvenile throws will be
introduced incorporating The Red Calliope's popular designs. For many years,
Crown Crafts has been a fashion leader in the adult bedroom. Now, with the
acquisition of The Red Calliope, we are the fashion leader in the infant's
room as well."

The Red Calliope's merchandise offerings include several significant products
as part of the Baby Mickey & Co.(C), Pooh(C) and Classic Pooh(C) brand.

Crown Crafts, headquartered in Atlanta, Georgia, designs, manufactures, and
markets bed covering products and related home fashion accessories. The
Company's two principal product categories are comforters and coordinated
accessories and jacquard-woven cotton products.

Contact: Paul A. Criscillis, Jr. E. Randall Chestnut
Vice President, Chief Financial Officer Vice President of Development
(770) 644-6230 (770) 644-6263