Kasper ASL, Ltd.

December 1, 2003

      Compass Advisers, LLP ("Compass") was retained as financial advisor and investment banker to the Official Committee of Equity Security Holders (the "Equity Committee") of Kasper A.S.L., Ltd. ("Kasper") during the Chapter 11 reorganization and sale of the company.  At the time, Kasper was a leading branded women's apparel company in the United States, designing, marketing, sourcing, manufacturing and distributing apparel and accessories under such names as Albert Nipon, Anne Klein New York, A.K. Anne Klein, Kasper and Le Suit.  The company's products were distributed in approximately 3,200 retail locations throughout the United States, with additional distribution in Canada and Europe.

      When Kasper filed for Chapter 11 on February 5, 2002, the company was publicly-traded, with liabilities consisting of 13.00% Senior Notes (in the initial principal aggregate amount of $110 million) and new financing of $160 million.  On August 7, 2003, an auction for the sale of Kasper's business was conducted with Jones Apparel Group, Inc. ("Jones"), the winning bidder.  Jones' bid, in which they agreed to pay $204 million cash, assumed certain liabilities, and adjusted for any changes in working capital.  On October 20, 2003, the Equity Committee filed its objections to confirmation of the sale, which was contained in the Plan of Reorganization (the "POR") and, on the same day, selected Compass as its financial advisor and investment banker.

      At the initiation of Compass' involvement in these cases, Kasper and the creditors committee were committed to a strategy that did not include any incentive for increasing the value to equity holders even though Kasper's solvency had been firmly established upon conclusion of the auction.  Kasper and the creditors committee had a strategy to confirm the POR as quickly as possible.  There appeared to be no reconsideration of the benefits to equity holders of remaining as an independent entity or seeking to revisit the sale price with Jones.  Moreover, with the apparent intractability of Kasper and the creditors committee, the Equity Committee seemed to have little initial choice but to pursue a litigation strategy and attempt to have the POR voted down by unsecured creditors.

      One significant avenue to maximize the value of equity holder recoveries was to succeed in a litigation strategy in which the Bankruptcy Court could rule in favor of the Equity Committee's position on the appropriate interest rate to be paid on unsecured creditors' post-petition indebtedness.  Compass provided Equity Committee counsel with the financial information and analyses required to support any such litigation regarding the resolution of the post-petition interest rate issue.  It was ultimately apparent to all parties that the threat of a ruling in favor of the Equity Committee's position was an important catalyst for achieving a settlement, and that increasing value for equity holders would be the best alternative for all.  Compass assumed a prominent role in these negotiations, to achieve a consensual settlement rather than pursue costly litigation and other initiatives that would have denied confirmation and the sale to Jones.

      Compass assisted the Equity Committee in outlining a detailed negotiating strategy seeking an increase in the purchase price from Jones – a strategy designed to leverage the Equity Committee's legal position and to extract value from Jones and also the creditor constituency.  In a four week period, Compass was instrumental in raising the purchase price for Kasper by $17 million, and helped improve equity holder recoveries by more than $34 million.  A final POR was approved by the Bankruptcy Court, and Kasper exited Chapter 11 on December 1, 2003.