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================================================================================


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

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

                                    FORM 10-K
                  ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d)
                     OF THE SECURITIES EXCHANGE ACT OF 1934

FOR THE FISCAL YEAR ENDED DECEMBER 31, 2000          COMMISSION FILE NO.: 1-4814


                              ARIS INDUSTRIES, INC.
             (Exact name of registrant as specified in its charter)


                NEW YORK                                         22-1715274
      (State or other jurisdiction                            (I.R.S. Employer
   of incorporation or organization)                         Identification No.)

    463 SEVENTH AVENUE, NEW YORK, NY                                10018
(Address of principal executive offices)                         (Zip code)

        REGISTRANT'S TELEPHONE NUMBER, INCLUDING AREA CODE: 646-473-4200

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

           SECURITIES REGISTERED PURSUANT TO SECTION 12(b) OF THE ACT:
                                      None

           SECURITIES REGISTERED PURSUANT TO SECTION 12(g) OF THE ACT:
                     Common Stock, par value $.01 per share

     Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during then preceding 12 months (or for such shorter period that the
registrant was required to file such reports), and (2) has been subject to such
filing requirement for the past 90 days.

     Yes  X          No
         ---

     Indicate by check mark if disclosure of delinquent filers pursuant to Item
405 of Regulation S-K is not contained herein, and will not be contained, to be
the best of registrant's knowledge, in definitive proxy or information
statements incorporated by reference in Part III of this Form 10-K or any
amendment to the Form 10-K.

     Yes  X          No
         ---

     As of March 8, 2001, 82,186,265 shares of the Registrant's Common Stock
were outstanding. The aggregate market value of the 17,762,414 shares of voting
stock of the Registrant held by non-affiliates of the Registrant at March 8,
2001 was $9,236,455.00.

     Documents incorporated by reference: None.



================================================================================

<PAGE>

                              ARIS INDUSTRIES, INC.

                                TABLE OF CONTENTS

<TABLE>
<CAPTION>
                                                                                                               Page
                                                                                                               ----
<S>      <C>                                                                                                   <C>
PART I............................................................................................................1
         Item 1.  Business........................................................................................1
         Item 2.  Properties......................................................................................4
         Item 3.  Legal Proceedings...............................................................................4
         Item 4.  Submission of Matters to a Vote of Security Holders.............................................6

PART II...........................................................................................................6
         Item 5.  Market for Registrant's Common Equity  and Related Security Holder Matters......................6
         Item 6.  Selected Financial Data.........................................................................7
         Item 7.  Management's Discussion and Analysis of Financial Condition and
                   Results of Operations..........................................................................8
         Item 7A. Quantitative and Qualitative Disclosures about Market Risk ....................................13
         Item 8.  Financial Statements and Supplementary Data....................................................14
         Item 9.  Changes in and Disagreements with Accountants on Accounting and Financial Disclosure...........14

Part III.........................................................................................................15
         Item 10. Directors and Executive Officers of the Registrant.............................................15
         Item 11. Executive Compensation.........................................................................17
         Item 12. Security Ownership of Certain Beneficial Owners and Management.................................21
         Item 13. Certain Relationships and Related Transactions.................................................23

PART IV..........................................................................................................26
         Item 14. Exhibits, Financial Statements Schedules and Reports on Form 8-K...............................26

SIGNATURES.......................................................................................................30
</TABLE>

                                       -i-
<PAGE>


                                     PART I

ITEM 1.  BUSINESS.

INTRODUCTION AND CURRENT BUSINESS

     Calendar 2000 and the early part of 2001 was a time of change for Aris
Industries, Inc. (the "Company", the "Registrant" or "Aris"). During 2000, Aris,
through its wholly owned subsidiaries, designed, manufactured, imported and sold
sportswear, outerwear and loungewear under a variety of tradenames, some of
which are owned by the Company and some of which were licensed from others. In
early 2001, Aris entered into an agreement (the "Grupo Agreement"), which became
effective March 1, 2001, with Grupo Xtra of New York, Inc. ("Grupo"), an
unaffiliated third party, giving Grupo the exclusive right in the United States,
Puerto Rico, the Caribbean Islands and Israel, to manufacture and sell, subject
to Aris' design and quality approvals, women's clothing, jeanswear and
sportswear under the XOXO(R) and Fragile(R) trademarks and sportswear and
outerwear under the Members Only trademark. In addition, Aris granted Grupo the
right to manufacture and sell products covered by its license agreements for
Brooks Brothers Golfwear and Baby Phat sportswear. In exchange, Grupo agreed to
purchase substantially all of Aris's inventory of such products, pay royalties
based on its sales of such products and assume certain of Aris's overhead
obligations and contracts. The Grupo Agreement provides for royalties ranging
from 7% to 9% of Grupo's net sales. Minimum annual royalties are $8,100,000 for
2001 and increase by 14% per year until they reach $13,500,000. The term of the
Grupo Agreement is for five years, with options by Grupo for four additional
five year periods.

     As a result of the Grupo Agreement, Aris intends to concentrate on growing
its brands through licensing arrangements for wider categories of products on a
global scale, and by expanding its XOXO(R) retail business. The Company will no
longer be engaged in the manufacture and wholesale distribution business. See
Item 7. Management Discussion and Analysis of Financial Condition and Results of
Operations below.

     During 2000, the Company terminated its license relationships with Perry
Ellis and FUBU. The Company also abandoned its efforts to develop Cynthia Rowley
and Stetson sportswear pursuant to license agreements with the owners of those
trademarks.

     The Company was incorporated in the State of New York in 1947. Reference to
the Company includes its subsidiaries, where applicable. The Company's principal
executive offices are located at 463 Seventh Avenue, New York, NY. Its phone
number at such offices is 646-473-4200.

LICENSING AND TRADEMARKS

     The Company has registered the trademark "Members Only" in the United
States and 47 other countries, principally for use in connection with apparel
and other men's clothing. In addition to selling products under the "Members
Only" name, the Company licenses it to others. See "Member's Only Licensing."

     The Company is the registered owner of the XOXO(R) and Fragile(R)
trademarks in the United States. It is also the registered owner of XOXO(R) in
24 other countries in various classifications, and


                                      -1-
<PAGE>


has registrations pending in 23 other countries for XOXO(R) principally for use
in connection with the manufacture and sale of women's sportswear and
accessories.

     The Company considers its Trademarks to be of material importance to its
business.

MEMBERS ONLY LICENSING

     In addition to the Grupo Agreement, the Company has granted licenses of the
Members Only(R) trademark for the manufacture and sale of men's sportswear,
men's tailored suits and sportcoats, eyeglasses, and, in Canada, men's
outerwear. During 1999, it also granted a master license for the use of the
Members Only(R) trademark in Mexico.

XOXO(R) LICENSING

     In addition to the Grupo agreement, the Company has granted licenses to use
XOXO(R) and, in some cases, Fragile(R) for the manufacture and sale of the
following product categories in the United States only: eyewear, activewear
essentials, outerwear, shoes, swimwear, handbags, leather and suede sportswear,
girls sportswear (0-16), girls swimwear, girls outerwear and school supplies. In
addition, the Company has granted master licenses for use of the XOXO(R)
trademark in Mexico, Central America, portions of South America, Japan and the
Middle East. The Company is in discussions with a prospective master licensee
for Central Europe, and on a domestic basis, for watches, jewelry, phone
accessories and intimate apparel.

LICENSE AGREEMENTS FOR TRADEMARKS OWNED BY OTHERS

     BROOKS BROTHERS GOLF. In November 1999, the Company entered into a license
agreement with Brooks Brothers, Inc. to sell menswear, knits, sweaters, bottoms,
outerwear, woven apparel, ties, headwear, hosiery, underwear and footwear solely
in private and public golf course pro shops and resort pro shops worldwide. The
term of such license expires on March 31, 2006 (which is extendable by the
Company until March 31, 2011 if it achieves certain minimum sales for the
contract year April 1, 2004 - March 31, 2005). Pursuant to the agreement, the
Company is obligated to pay royalties equal to 6% of net sales. The minimum
guaranteed royalty ranges from $510,000 in year one of the license agreement to
$1,500,000 in years six through ten; the advertising payments by the Company are
the greater of 3% of net sales or $255,000 in year one up to $750,000 in years
six through ten.

     BABY PHAT. The Company has entered into a license agreement with Phat
Fashions LLC to manufacture and sell casual apparel for women in all fabrics,
excluding swimwear and accessories, under the Baby Phat(R) trademark for a term
which commenced on July 1, 1999 and expires on December 31, 2004. The Company
was granted ten renewal terms of five years each. Pursuant to the agreement, the
Company is obligated to pay a royalty equal to 8% of its net sales of regularly
priced products, and 6% of net sales at outlet stores, or for items sold at 25%
or more below the Company's regular selling prices. Pursuant to the agreement,
the Company's minimum guaranteed royalties range from $960,000 in the first year
of the agreement to $1,920,000 in 2004. Its minimum advertising payments equal
3% of the minimum sales requirements.

     The Company has assigned the Brooks Brothers Golf and Baby Phat license to
Grupo. The Company remains responsible for the obligations under such
agreements, but is entitled to indemnification from Grupo if it fails to perform
those obligations.


                                      -2-
<PAGE>

DESIGN, MANUFACTURING AND IMPORTATION

     The following discusses the Company's business as conducted prior to the
Grupo Agreement.

     Many of the Company's products were manufactured overseas by independent
factories, each of which was required to satisfy the Company's quality and
delivery standards, pursuant to design samples and specifications provided by
the Company. The Company imported products from Hong Kong, Korea, China,
Guatemala, the Philippines, Bangladesh, Sri Lanka, Indonesia, India, Taiwan,
United Arab Emirates, Cambodia, Nepal, Mexico, Thailand and the Dominican
Republic. In addition, XOXO utilized its own cutting facilities in California
and contracted with unaffiliated domestic third parties to finish its garments.

CUSTOMERS, MARKETING AND DISTRIBUTION

     The Company's products are sold primarily to department and specialty
stores and national retail chains. The Company had sales to two customers,
namely Federated Department Stores and May Department Stores that represented
15% and 11%, respectively of net sales for the year ended December 31, 2000. The
Company had sales to J.C.Penney that represented 4% and 13% of net sales for the
years ended December 31, 1999 and 1998, respectively.

COMPETITION

     The Company's products are sold in markets which place a premium on
identifiable brand names. The Company competes with other apparel manufacturers
based on style, quality, value and brand recognition. Although the Company sells
its products to retail customers, it also competes with the "private label"
apparel lines of its retail customers. The Company's apparel products, which are
sold on the main selling floors of its retail store customers, are facing
increasing competition from the expanded dedication of retail floor space to
"designer collections".

THE APPAREL INDUSTRY

     The apparel industry is volatile and unpredictable due to changes in
consumer buying patterns, weather conditions and other factors.

SEASONALITY

     The Company's outerwear business is particularly impacted by unusually warm
weather or the late arrival of cold weather. Other aspects of the Company's
business may also be adversely effected by unusual weather patterns and fashion
trends.

MATERIALS AND SUPPLIES

     The principal raw materials used by the Company's apparel manufacturing
contractors are fabrics made from natural fibers, leather, synthetics and
blends. In addition, such manufacturers use yarn, thread and accessories such as
buttons, snaps, elastic and zippers which are purchased from many suppliers. The
Company believes the raw materials currently used in its products are readily
available at comparable prices and quality from sources other than those now
being used.


                                      -3-
<PAGE>


EMPLOYEES

     As of December 31, 2000, the Company and its subsidiaries had approximately
683 full and part-time employees and as of March 2001 has approximately 551 full
and part-time employees on its payroll, most of whom perform services for Grupo
and for which Grupo reimburses the Company. The Company's employees at its New
Bedford, Massachusetts warehouse are represented by a labor union. The Company
negotiated, but did not sign, a collective bargaining agreement with such union.
The Company currently plans to close such warehouse and to terminate the
workforce there, and is negotiating a plant termination agreement with the
union. The Company owes pension and health and welfare benefits to the union and
is in the process of negotiating for a settlement of such amounts owed together
with a schedule of payments.

FOREIGN SALES

     Although the Company sells products in Canada, Mexico and South America,
such sales have not comprised a significant portion of the Company's sales.

BUSINESS SEGMENT DATA

     The Company is engaged in one business, the design and manufacture or
importation of sportswear, outerwear, activewear and loungewear. The Company's
business is conducted domestically, with substantially all of its net sales
derived from domestic customers, although it contracts with others to
manufacture certain of its products overseas. Commencing March 1, 2001, most of
the Company's revenues will be derived from licensing royalties and retail
sales.

ITEM 2. PROPERTIES.

     The Company currently has approximately 53,000 square feet of leased space
for its executive and sales offices and showrooms at 1411 Broadway and 463
Seventh Avenue in New York City, approximately 11,615 square feet of office and
showroom space at 1466 Broadway in New York City for XOXO and approximately
212,939 square feet in Commerce and Los Angeles, California for office,
showroom, manufacturing and distribution use in connection with XOXO's business.
The Company has retail outlets in the following locations: Virginia, Florida,
California, New Jersey, New York, Nevada, Illinois and Pennsylvania of
approximately 37,921 square feet, as well as full-price retail stores in New
York and California of approximately 14,700 square feet. Grupo has agreed to
assume the leases for, and to operate, the outlet stores. The Company leases
approximately 300,000 square feet of warehouse space in New Bedford,
Massachusetts.

ITEM 3. LEGAL PROCEEDINGS.

     The Company, in the ordinary course of its business, is party to various
legal actions the outcome of which the Company believes will not have a material
adverse effect on its consolidated financial position and results of operations
at December 31, 2000. In addition, the Company is subject to the following:

     DORFMAN AND HEIMSOHEN V. ARIS INDUSTRIES, INC.: An action was commenced in
the United States District Court by the plaintiffs, claiming they were dismissed
as sales representatives in violation of the Age Discrimination and Employment
Act. The case is in its initial stages and the Company has denied the
allegations of the complaint and intends to vigorously defend the action.

     PERRY ELLIS INTERNATIONAL V. ARIS INDUSTRIES, ET AL.: Perry Ellis has
commenced an action in the Supreme Court of the State of New York seeking
royalties in the amount of approximately $1.3 million claimed to be due under
various licensing agreements with the Company and/or several of its
subsidiaries. The Company has answered the complaint and has interposed a
counterclaim which


                                      -4-
<PAGE>


alleges that Perry Ellis International breached the license agreement. The case
is in its initial stages and its outcome is difficult to predict.

     SARA LEE CORPORATION V. ARIS INDUSTRIES, INC.: Sara Lee has sued Aris to
enjoin it from using the name "Wonder Pant" in connection with the marketing and
sale of pants by the Company. The United States District Court for the Southern
District of New York granted plaintiff's motion for a preliminary injunction.
The Company has not commenced selling product under the Wonder Pant name.

     CORONET GROUP, INC. V. EUROPE CRAFT IMPORTS, INC.: Coronet has sued Europe
Craft Imports, Inc., a wholly-owned subsidiary of the Company, in the Supreme
Court of the State of New York, County of New York, claiming that Europe Craft
breached a license agreement as Licensor of the Members Only trademark to
Coronet, and seeking damages in the amount of approximately $1,000,000. Europe
Craft has counterclaimed for unpaid future royalties under the agreement and
intends to vigorously dispute Coronet's claims.

     DELLA FEMINA, ROTHSCHILD, JEARY & PARTNERS V. ARIS INDUSTRIES: Della Femina
has brought an action against Aris in the Supreme Court of the State of New
York, County of New York, for fees of approximately $400,000 claimed to be due
in connection with advertising services performed by Della Femina. The Company
admits that it owes the agency some, but not all, of the full amount claimed to
be due.

     CALIFORNIA DISPLAY COMPANY V. ECI SPORTSWEAR, INC.: California Display
brought an action in the Superior Court of California for the County of Los
Angeles seeking the sum of $42,000 for plaques it claims to have manufactured
for ECI. ECI received some but not all of the plaques and intends to defend the
claim on that basis. The Company has made a motion to dismiss the motion for
lack of personal jurisdiction in California.

     XOXO DEPARTMENT OF LABOR CLAIMS: J.S. Fashion. J.S. Fashion is a contractor
with whom XOXO has contracted to sew its goods for over two years. Moreover,
J.S. Fashion has exclusively worked for XOXO for the last year and one-half. One
of J.S. Fashion's employees filed a complaint with the Division of Labor
Standards Enforcement ("DLSE") claiming that she had not been paid $23,507.87 in
regular and overtime wages from January 5, 1998, until August 16, 2000. The DSLE
investigator examined the J.S. Fashion payroll records and determined that the
employee was entitled to $12,924.25 of regular wages and $9,683.25 of overtime
wages for a total of $22,607.50. Under a recently enacted law in California, a
garment manufacturer is liable as the guarantor for any unpaid wages owed to an
employee from January 1, 2000 to present. Therefore, if J.S. Fashion had not
paid the liability assessment, XOXO would have been liable. However, J.S.
Fashion proposed a settlement to the complainant which she accepted. As of yet,
XOXO does not have any details of the settlement; however, the DSLE has agreed
to furnish courtesy copies to us. At present, XOXO has no liability in this
matter.

     MARTINEZ & SONS: Martinez & Sons was a contractor with whom XOXO did a
substantial amount of sewing. Martinez & Sons went bankrupt, and therefore
failed to pay employees. In December of 2000, XOXO settled with the DOL on
behalf of 23 employees. XOXO paid $17,433.44 to settle these claims. Other
employees sued, and XOXO settled that case in the amount of $62,000. Some of the
claimants of the DOL settlement, as well as two other employees, filed a
complaint with the DLSE for unpaid wages totaling $22,318.62. They asserted that
they had not been paid any wages and claimed that they were owed more money than
paid in settlement with the DOL. The Company is in the process of investigating
these matters. The Company received a demand letter from a law firm claiming to
represent some of the same individuals involved in the Martinez & Sons DOL
settlement and the DLSE investigation. The attorney representing these 16 former
employees have demanded $660,000 from XOXO. The attorney for these individuals
has stated that he may file a claim under Business and Professions Code 17200 et
seq. This statute


                                      -5-
<PAGE>


allows individuals to sue for unfair business practices, and penalties include
treble damages. It is too premature at this time to assess liability in this
matter.

     NATIONAL LABOR RELATIONS BOARD: On February 6, 2001, the Union representing
employees at the Company's New Bedford warehouse filed a complaint with the
National Labor Relations Board accusing the Company of failing to negotiate in
good faith with the Union and failing to make contributions to an employee
benefit trust fund contemplated by a proposed collective bargaining agreement in
the amount of $389,000. Although the case is in its initial stages, the Company
is in the process of negotiating for a settlement of all amounts owed, together
with a schedule of payments.

ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS.

     No matters were submitted to a vote of security holders during the fourth
quarter ended December 31, 2000.


                                     PART II

ITEM 5. MARKET FOR REGISTRANT'S COMMON EQUITY AND RELATED SECURITY HOLDER
        MATTERS.

     The Company's Common Stock is traded in the over-the-counter (OTC) market
under the symbol AISI. Set forth below are the high and low bid prices for a
share of the Common Stock for each fiscal quarter during the prior two fiscal
years, as reported in published financial sources. Pursuant to the terms of the
Company's loan agreements, the Company has agreed not to declare or pay any
dividends (other than stock dividends) on the Common Stock without the prior
written consent of its lenders. The Company has not paid any dividends during
the last two fiscal years and does not intend to pay any cash dividends in the
foreseeable future. The price quotations set forth below reflect inter-dealer
prices, without retail markup, markdown or commission and may not necessarily
represent actual transactions.

                                     High                        Low
                                    -------                     -------
1999     First Quarter              $3.6875                     $0.6250
         Second Quarter              3.0000                      1.5625
         Third Quarter               3.4375                      2.0000
         Fourth Quarter              3.3125                      2.0000

2000     First Quarter              $2.0000                     $1.0000
         Second Quarter              1.0625                      0.7500
         Third Quarter               0.9375                      0.4000
         Fourth Quarter              0.4000                      0.1400

     There were approximately 3,736 shareholders of record as of March 8, 2001.

RECENT SALES OF UNREGISTERED SECURITIES

     In October 2000, in connection with the settlement of a dispute with the
owner of the FUBU trademark and the termination of the license for such
trademark, the Company issued 1,000,000 shares of its common stock to the
trademark owner. The issuance of such shares was exempt from registration under
Section 4(2) of the Securities Act as a transaction not involving a public
offering.


                                      -6-
<PAGE>


     On January 17, 2001, the Company agreed to issue to Grupo Xtra of New York,
Inc., in connection with a license agreement between the parties, at the
beginning of each year during the initial five-year term of the Agreement,
shares of its common stock having a market value of $1,000,000, based on the
average closing price of such common stock for the five trading days immediately
preceding the date on which such shares are to be issued. To date, such shares
have not been issued. The issuance of such shares are exempt from registration
under Section 4(2) of the Securities Act as a transaction not involving a public
offering.

     In February 2001, the Company entered into a Securities Purchase Agreement
with KC Aris Fund I, L.P. ("KC") pursuant to which the Company is to issue
Convertible Debentures for $10,000,000 to KC. Pursuant to the Debentures, which
mature in three years and bear interest at the rate of 8.5% per annum payable
quarterly in arrears, KC may convert the unpaid principal and any accrued
interest into shares of common stock at a conversion price of $.46 per share. To
date, KC has purchased $7,000,000 of Debentures and has advised the Company that
it intends to purchase the balance in the near term. The issuance and sale of
the Debenture were exempt from registration under Section 4(2) of the Securities
Act as a transaction not involving a public offering.

     In March 2001, in settlement of a disputed claim with Tarrant Apparel
Group, Inc., the Company issued 1,500,000 shares of its common stock to Tarrant.
The Company agreed that, in the event the market value of such shares as of
December 31, 2001 is less than $3,300,000, the Company will either, at its
option (x) pay to Tarrant in cash an amount, or (y) issue to Tarrant additional
shares of common stock having a share value, equal to the difference between
$3,300,000 and the greater of the share value as of December 31, 2001 and
$1,050,000. The issuance of shares to Tarrant was exempt from registration under
Section 4(2) of the Securities Act as a transaction not involving a public
offering.

ITEM 6. SELECTED FINANCIAL DATA

<TABLE>
<CAPTION>
                                                       (In thousands except for per share data)
======================================================================================================================
                                       Year Ended      Year Ended      Year Ended       Year Ended    11 Months Ended
----------------------------------------------------------------------------------------------------------------------
<S>                                     <C>           <C>               <C>            <C>               <C>
                                        12/31/00      12/31/99(4)       12/31/98       12/31/97(3)       12/31/96 (1)
----------------------------------------------------------------------------------------------------------------------
Net sales                               $199,439        $175,359        $127,680         $94,539         $130,155
----------------------------------------------------------------------------------------------------------------------
(Loss) income before extraordinary
items                                   (36,480)        (10,583)         (4,250)           2,333            2,104
----------------------------------------------------------------------------------------------------------------------
Net (loss) income                       (36,480)        (10,583)         (3,728)           2,333           12,966 (2)
----------------------------------------------------------------------------------------------------------------------
Net (loss) earnings per share
before extraordinary items - basic        (.46)          (.19)            (.29)            .18              .18
----------------------------------------------------------------------------------------------------------------------
Net (loss) earnings per share
before extraordinary items - diluted      (.46)          (.19)            (.29)            .16              .17
----------------------------------------------------------------------------------------------------------------------
Net (loss) earnings per share - basic     (.46)          (.19)            (.25)            .18             1.09
----------------------------------------------------------------------------------------------------------------------
Net (loss) earnings per share - diluted   (.46)          (.19)            (.25)            .16             1.07
----------------------------------------------------------------------------------------------------------------------
Total assets                             100,209        106,117          77,332           73,837           44,855
----------------------------------------------------------------------------------------------------------------------
Long-term obligations                     5,242          14,342          16,438           16,930           16,702
----------------------------------------------------------------------------------------------------------------------
Working capital/(deficit)               (33,283)         7,419            9,551           11,738           12,370
----------------------------------------------------------------------------------------------------------------------
Stockholders' equity                      3,486          39,251          14,092           17,814           14,755
======================================================================================================================
</TABLE>

1.   On December 10, 1996, the Company determined to change its fiscal year to
     the calendar year ending December 31st, rather than a 52-53 week year
     ending on the Saturday closest to January 31st. The period


                                      -7-
<PAGE>


     ended December 31, 1996 is a transitional period of approximately eleven
     months from February 4, 1996 to December 31, 1996.

2.   For the eleven months ended December 31, 1996, the Company had net income
     of $12,966,000 or $1.09 per share, inclusive of (i) a gain of $7,786,000 on
     the sale of the stock of its wholly owned subsidiary, Perry Manufacturing
     Company, on September 30, 1996 (reduced by the write off of the cumulative
     effect of foreign currency translation adjustments of $1,108,000 arising
     from the Perry Sale), and (ii) an extraordinary gain of $10,862,000
     associated with the reduction in the Company's debt to its then senior
     secured lender, Heller Financial, Inc., from $53,384,000 to $1,665,000,
     including principal of $1,000,000 and capitalized interest of $665,000.

3.   Includes results of operations and assets and liabilities of Davco from its
     acquisition on July 15, 1997.

4.   Includes results of operations and assets and liabilities of XOXO from its
     acquisition on August 10, 1999.

ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
        OF OPERATIONS.

INTRODUCTION

     The following discussion and analysis of the Company's financial
condition and results of operations should be read in conjunction with the
consolidated financial statements, including the notes thereto, and the
"Selected Financial Data" included on pages 7-8, and pages F-1 through F-24,
respectively, of this Annual Report.

FORWARD LOOKING STATEMENTS

     Statements included in Management's Discussion and Analysis of Financial
Condition and Results of Operations which are not historical in nature, are
intended to be, and are hereby identified as, "forward looking statements" for
purposes of the safe harbor provided by Section 21E of the Securities Exchange
Act of 1934, as amended by Public Law 104-67. The Company cautions readers that
forward looking statements, including without limitation, those relating to the
Company's future business prospects, revenues, working capital, liquidity,
capital needs, interest costs, and income, are subject to certain risks and
uncertainties that could cause actual results to differ materially from those
indicated in the forward looking statements, due to factors discussed in this
Report, and other risks and factors identified from time to time in the
Company's reports filed with the Securities and Exchange Commission ("SEC").

FINANCIAL CONDITION

LIQUIDITY AND CAPITAL EXPENDITURES

     As of December 31, 2000, the Company had a working capital deficit of
approximately $33,283,000 as compared to a working capital surplus of
approximately $ 7,419,000 at December 31, 1999. The decrease was primarily due
to the Company's net loss incurred in the twelve months ended December 31, 2000,
and a reclassification of the long term position of its term loan in the amount
of $6,000,000 to current liabilities. These conditions are further discussed
below. During the year, the Company financed its operations principally through
its Credit Facility as supplemented by the Letter of Credit Agreement between a
company owned by the Company's chief executive officer and its principal
commercial lender.

     On February 26, 1999, simultaneous with the closing of the Simon Purchase
Transaction, the Company and its subsidiaries entered into a Financing Agreement
with CIT Commercial Services Group, Inc. ("CIT") and certain other financial
institutions, whereby such lenders agreed to provide


                                      -8-
<PAGE>


a revolving credit facility (the "Credit Facility") of up to $65,000,000 for
working capital loans and letters of credit financing, which expires on February
26, 2002. In connection with the XOXO transaction, the Company's Financing
Agreement was amended to increase the revolving credit line to $80,000,000, and
to provide for a term loan of $10,000,000. The term loan bore interest, which is
paid monthly, at prime plus one-half percent and principal is payable in
quarterly installments of $500,000, which commenced on January 1, 2000, with a
balloon payment of $5,500,000 on February 26, 2002, the maturity date. The
Company is required to make certain mandatory prepayments based upon "excess
cash flows" as defined in the amendment to the loan agreement.

     The obligations under the Financing Agreement are collateralized by
substantially all of the assets of the Company. Loans under the revolving credit
facility may be designated as revolving credit loans or Eurodollar loans. For
revolving credit loans, interest accrued at the bank's prime rate. For
Eurodollar loans, interest accrued at a rate per annum equal to the Eurodollar
rate plus 2.5%. The Financing Agreement contains various financial and other
covenants and conditions, including, but not limited to, limitations on paying
dividends, making acquisitions and incurring additional indebtedness.

     During April 2000, the Company entered into an amendment of the Financing
Agreement, under which the lenders waived compliance with certain covenant
requirements for 1999 which the Company was not in compliance with and amended
the covenants for the year ended December 31, 2000. In addition, the amendment
provides an overadvance facility based on seasonal needs. The amendment also
increased the interest rate on the Company's revolving credit facility to prime
plus one-quarter percent and increased the interest rate on the Company's term
loan to prime plus three-quarter percent. In connection with the waivers and
amendment, the Company's chief executive officer agreed to provide a personal
guarantee on $3 million of indebtedness outstanding under the Financing
Agreement. This guaranty, which initially was to expire on December 6, 2000, has
been extended to May 4, 2001, provided the Company is not in default under the
Financing Agreement at that time.

     In November 2000, the Financing Agreement was further amended to waive
compliance with additional covenant provisions and require the Company to raise
equity financing of $10,000,000 prior to January 10, 2001 and an additional
$10,000,000 prior to February 15, 2001.

     The Company was not in compliance, as of December 31, 2000, with certain
covenants contained in its loan agreements. The Company's lenders have indicated
that they have no current intention to take action with respect to such
non-compliance but have not waived the covenant


                                      -9-
<PAGE>


violations. As a result, the Company has classified the long term portions of
its term loan as a current liability.

     In June 2000, First A.H.S. Acquisition Corp. ("AHS") a company owned by the
Company's chief executive officer, entered into an agreement (the "Letter of
Credit Agreement") with the Company's principal commercial lender to facilitate
the opening of up to $17,500,000 in letters of credit for inventory for the
Company. Pursuant to the Letter of Credit Agreement, the chief executive officer
entered into a guaranty agreement limited to $7,000,000 of the reimbursement of
AHS' obligations under the Letter of Credit Agreement. AHS owes its lender
approximately $8.6 million under the Letter of Credit Agreement, and the Company
owes AHS the same amount.

     As a result of the Grupo Agreement, the Company no longer needs financing
to purchase inventory or to finance future accounts receivable. The Company is
currently reducing its revolving line of credit through the collection of
accounts receivable and the sale of inventory to Grupo pursuant to the Grupo
Agreement. The Company expects that the collection of its accounts receivable
and sale of inventory to Grupo will generate sufficient funds to substantially
pay off the revolving line of credit and the term loan.

     The Company intends to finance its ongoing operations from the following
sources: (i) royalty revenues from Grupo and other licenses; (ii) excess funds
over the amount necessary to satisfy the revolving line of credit generated from
collection of accounts receivable and sale of inventory; (iii) $10 million for
the sale of the Convertible Debentures of which $7 million was received in
February 2001 and $3 million is expected to be received in the near term; and
(iv) negotiated reductions in amounts due to, and extended payment terms with,
certain creditors of the Company. Each of these factors is equally important to
the Company's ability to fund its operations during 2001. The Company may also
seek alternative sources of financing, but has no current plans to do so and no
assurance can be given that such financing would be available.

     The Company's long-term indebtedness consists, in part, of its obligations
to BNY Financial Corporation ("BNY") under the Series A Junior Secured Note
Agreement dated June 30, 1993, pursuant to which BNY is owed $6,942,000,
including $1,042,000, representing the quarterly interest payments that were
deferred for the period February 1, 1996 through January 31, 1998 by agreement
with BNY in September 1997, plus interest at the rate of 7% per annum, with a
final maturity date of November 3, 2002. The Company received a forbearance on
the $600,000 principal payment that was due on November 3, 2000. The Company
paid the $600,000 principal payment on February 2, 2001. The principal of BNY's
Note is payable on November 3 of each year as follows:

                      YEAR                         AMOUNT
                      ----                         ------

                      2001                       $1,100,000
                      2002                       $5,242,000

BNY is also entitled to receive mandatory prepayments based upon 50% of certain
"excess cash flows" of the Company as defined in the Company's note agreements
with BNY.

CAPITAL EXPENDITURES. Capital expenditures were $4,608,000 for the year ended
December 31, 2000 compared to $4,289,000 in the year ended December 31, 1999.
The increase was due to the construction expenses incurred with the store build
out of the outlet operations and equipment purchases incurred in connection with
the consolidation of the Company's office, showroom and distribution facilities.
By virtue of the change in the nature of the Company's operations, the Company's
capital budget for 2001 is immaterial.

RESULTS OF OPERATIONS:

2000 Compared to 1999

     NET INCOME. The Company reported a net loss of $36,480,000 for the twelve
months ended December 31, 2000 compared to a net loss of $ 10,583,000 for the
twelve months ended December 31, 1999. The Company's results in 2000 were
negatively impacted by the termination of the Company's "Fubu" license which
resulted in the Company's incurring substantial markdowns in



                                      -10-
<PAGE>


order to liquidate remaining inventory. In addition, the Company also incurred
markdowns on its Perry Ellis product lines in connection with the termination of
the Company's relationship with Perry Ellis. The loss in 2000 also included
restructuring and other charges of $7,040,000 consisting of (i) severance costs,
and (ii) occupancy charges relating to termination of leases as part of the
consolidation of facilities along with the write-off of the related abandoned
assets pertaining to terminated facilities. In addition, the Company incurred
$1,862,000 in start-up costs associated with new licensing arrangements some of
which have subsequently been cancelled. Additionally, interest expense increased
due to interest on the Company's $10,000,000 term loan dated August 10, 1999, an
increase in borrowings on the Company's revolving credit facility and increases
in the borrowing rate from 7.75% to 9.5% by December 31, 2000.

     The loss in 1999 included restructuring and other charges, consisting of
(i) $2,401,000 in severance payments pursuant to the Retention Agreement
between the Company and its former President, (ii) a nonrecurring charge of
$3,749,000 in connection with the write-off of impaired goodwill, and, (iii)
additional charges of $2,811,000 relating to the consolidation of the Company's
operations and facilities. The 1999 loss also included start-up costs associated
with new licensing arrangements of $2,235,000. Additionally, due to the adverse
retail environment the Company gave accommodations, in the form of markdowns, to
customers to help them alleviate the generally poor sales at the retail level.
This loss was partially offset by an improvement in operations attributable to
increased sales and margins along with a reduction of interest expense due to
the conversion of Apollo debt to equity and the reduction of borrowing due to
the infusion of funds from the Simon Purchase Transaction

     NET SALES. The Company's net sales increased from $175,359,000 during the
twelve months ended December 31, 1999 to $199,439,000 during the twelve months
ended December 31, 2000. This increase of $24,080,000 was due to an increase in
sales of XOXO products of $55,262,000, including XOXO outlet and retail store
sales (XOXO was acquired by the Company on August 10, 1999 and its sales were
included in 1999 revenues only from that date). In addition, the Company's net
sales were positively impacted by $9,946,000 in sales attributable to the roll
out of the Company's new "Baby Phat" product line and $2,505,000 attributable to
the roll out of the Company's "Brooks Brothers Golf" product line. These
increases in sales were offset by sales decreases of $23,365,000 in the "Fubu"
product line, $12,442,000 in the Company's "Members Only" product lines,
$6,381,000 in private label sales and $1,445,000 related to "Perry Ellis" and
other discontinued product lines.

     GROSS PROFIT. Gross Profit for the twelve months ended December 31, 2000
was $55,200,000 or 27.7% of net sales compared to $50,534,000 or 28.8 % for the
twelve months ended December 31, 1999. Gross profit was positively impacted by
sales of higher margin XOXO branded products for the entire year along with
higher margins on the Company's "Baby Phat" product lines. These increases were
offset by the significant markdowns taken in liquidating the Company's "FUBU"
product lines. In addition, the Company also incurred markdowns on its Perry
Ellis product lines in connection with the termination of the Company's
relationship with Perry Ellis. Margins on the Company's own Members Only product
line were negatively impacted by warming temperatures throughout the country
during its peak selling season which resulted in increased inventory levels
requiring the Company to markdown excess inventory to facilitate its sale.

     SELLING AND ADMINISTRATIVE EXPENSES. Selling and administrative expenses
were $78,703,000 or 39.5% of net sales for the twelve months ended December 31,
2000 compared to $48,057,000 or 27.4% of net sales for the twelve months ended
December 31, 1999. The increase in selling and administrative expenses was
attributable to the inclusion of XOXO's selling and administrative expenses
which included approximately $4,055,000 of depreciation and goodwill
amortization including XOXO retail and outlet store operations. In addition,
selling and


                                      -11-
<PAGE>


administrative expenses increased due to the inclusion of the XOXO retail and
outlet stores which have incurred significant expenses as a percentage of sales
due to the stores' limited market exposure in the short time that they have been
operating. Also, the Company incurred $2,021,000 of selling and administrative
expenses attributable to the Company's "Brooks Brothers Golf" and "Baby Phat"
product lines.

     START-UP COSTS. During the twelve months ended December 31, 2000 the
Company incurred start-up costs of $1,862,000 relating to various license
agreements for newly launched and terminated product lines. These start-up costs
consist of salaries, samples and related supplies directly attributable to newly
licensed operations.

     During the twelve months ended December 31, 1999 the Company incurred
$1,181,000 of start-up costs relating to various license agreements without any
related revenue. These start-up costs consist of salaries, samples and related
supplies directly attributable to the newly licensed operations. In addition,
the Company incurred $1,054,000 of start up costs in connection with the
relocation of its warehouse facilities.

     INTEREST EXPENSE. Interest expense for the twelve months ended December 31,
2000 increased by $2,594,000 or 62% compared to the twelve months ended December
31, 1999. This increase was due to interest on the Company's $10,000,000 Term
Loan dated August 10, 1999, an increase in borrowings on the Company's revolving
credit facility, and increases in the prime lending rate from 7.75% as of
December 31, 1999 to 9.5% as of December 31, 2000. In addition, the amendment to
the Company's financing agreement increased the interest rate on the Company's
revolving credit facility from prime to prime plus one-quarter percent and
increased the interest rate on the Company's term loan from prime plus one-half
to prime plus three-quarter percent.

1999 Compared to 1998

     NET INCOME. The Company reported a net loss of $10,583,000 for the twelve
months ended December 31, 1999 compared to a net loss of $ 3,728,000 for the
twelve months ended December 31, 1998. The loss in 1999 included restructuring
and other charges, consisting of (i) $2,401,000 in severance payment pursuant
to the Retention Agreement between the Company and its former President, (ii) a
nonrecurring charge of $3,749,000 in connection with the write-off of impaired
goodwill, (iii) additional charges of $2,811,000 relating to the consolidation
of the Company's operations and facilities, and (iv) $2,235,000 in start-up
costs associated with new licensing arrangements. Additionally, due to the
adverse retail environment the Company gave accommodations, in the form of
markdowns, to customers to help them alleviate the generally poor sales at the
retail level. This loss was partially offset by an improvement in operations
attributable to increased sales and margins along with a reduction of interest
expense due to the conversion of Apollo debt to equity and the reduction of
borrowing due to the infusion of funds from the Simon Purchase Transaction.

     NET SALES. The Company's net sales increased from $127,680,000 during the
twelve months ended December 31, 1998 to $175,359,000 during the twelve months
ended December 31, 1999. This increase of $47,679,000 was a result of increased
sales of products under the "FUBU" license which amounted to $22,713,000 during
the twelve months ended December 31, 1999 as compared to the twelve months ended
December 31, 1998 which reflected the Company's initial shipment of the "FUBU"
products. In addition, there was an increase in sales due to the inclusion of
XOXO sales of $42,913,000 from August 10, 1999, the date of the XOXO
acquisition. These increases in sales were partially offset by a decrease in
sales of the Members Only(R) product line in the amount of approximately
$10,908,000, a reduction of $1,466,000 in the Company's "Perry Ellis" product
lines which suffered a lack of consumer demand along with a reduction of private
label sales and the


                                      -12-
<PAGE>


phase out of the "Jeffrey Banks" product lines resulting in a decrease of sales
in the approximate amount of $5,573,000.

     GROSS PROFIT. Gross Profit for the twelve months ended December 31, 1999
was $50,534,000 or 28.8% of net sales compared to $29,540,000 or 23.1 % for the
twelve months ended December 31, 1998. Gross profit was positively impacted by
sales of higher margin XOXO(R) branded products included from August 10, 1999
the date of the XOXO acquisition and sales of the Company's "FUBU" product lines
partially offset by the weak performance of the Company's "Perry Ellis America"
brand which suffered from a lack of consumer demand which caused the Company to
liquidate prior season inventory at reduced prices.

     SELLING AND ADMINISTRATIVE EXPENSES. Selling and administrative expenses
were $48,057,000 or 27.4% of net sales for the twelve months ended December 31,
1999 compared to $29,950,000 or 23.5% of net sales for the twelve months ended
December 31, 1998. The increase in Selling and administrative was attributable
to the inclusion of XOXO's Selling and Administrative expenses included from
August 10, 1999 the date of the acquisition along with increased fixed and
variable expenses relating to the " FUBU" licensed product line. The increase in
selling and administrative expenses as a percentage of net sales was primarily
due to the inclusion of XOXO's selling and administrative expenses from the date
of acquisition.

     START-UP COSTS. Commencing with the third quarter ended September 30, 1999,
the Company incurred $1,181,000 of start-up costs relating to various license
agreements without any related revenue. These start-up costs consist of
salaries, samples and related supplies directly attributable to the newly
licensed operations. The Company expects to continue to incur such costs during
2000 in connection with several of its new license arrangements. In addition,
the Company incurred $1,054,000 of start up costs in connection with the
relocation of its warehouse facilities.

     INTEREST EXPENSE. Interest expense for the year ended December 31, 1999 was
$4,185,000, a decrease of $1,035,000 or 19.8% compared to interest expense of
$5,220,000 for the year ended December 31, 1998. The decrease was primarily due
to the conversion of Apollo debt to equity and the reduction of borrowings
resulting from the infusion of funds from the Simon Purchase Transaction, offset
partially by interest on the Company's $ 10,0000,00 Term Loan. Interest expense
on the Company's working capital facility increased due to an increase in the
prime lending rate from 7.75% to 8.50% during the twelve months ended December
31, 1999.

EFFECT OF INFLATION

     The Company does not believe that inflation has had any material impact on
its operating results for any of the fiscal periods discussed in the
management's discussion and analysis.

ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

     Not applicable.


                                      -13-
<PAGE>


ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA.

     QUARTERLY FINANCIAL DATA.

                          (Unaudited) (in thousands except per share data)

<TABLE>
<CAPTION>
                                                                                Per Share
                                                                            --------------------
Quarter               Net Sales   Gross Profit      Net Income/(Loss)       Basic        Diluted
--------------------------------------------------------------------------------------------------
<S>                    <S>             <C>                  <C>           <C>             <C>
2000
  First                $ 42,886        $15,152              $ (7,094)     $(0.09)         $(0.09)
  Second                 44,200         15,166                (5,528)      (0.07)          (0.07)
  Third                  58,262         16,513                (3,362)      (0.04)          (0.04)
  Fourth                 54,091          8,369               (20,496)      (0.26)          (0.26)
                       --------        -------              --------
                       $199,439        $55,200              $(36,480)
                       ========        =======              ========

1999
 First                  $28,133         $6,660               $(7,324)     $(0.28)         $(0.28)
 Second                  25,324          6,908                (3,083)      (0.07)          (0.07)
 Third                   62,869         18,318                 3,275        0.05            0.05
 Fourth                  59,033         18,648                (3,451)      (0.04)          (0.04)
                       --------        -------              --------
                       $175,359        $50,534              $(10,583)
                       ========        =======              ========
</TABLE>

     The financial statements listed in the accompanying Index at Part IV, Item
14(a)1 are filed as a part of this report.

ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND
        FINANCIAL DISCLOSURE.

     On April 19, 1999, the Company engaged PricewaterhouseCoopers LLP ("PwC")
as the Registrant's independent accountants for 1999, replacing Deloitte &
Touche LLP (the "Former Accountants") as the Registrant's independent auditors.
The change was approved by the Registrant's board of directors.

     The Former Accountants' report on the Registrant's consolidated financial
statements for 1998 did not contain any adverse opinion or disclaimer of opinion
and was not qualified as to uncertainty, audit scope or accounting principles.

     During the Registrant's two most recent fiscal years and any subsequent
interim period, there were no disagreements between the Registrant and the
Former Accountants on any matter of accounting principles or practices,
financial statement disclosures or auditing scope or procedures, nor were there
any "Reportable Events" within the meaning of Item 304(a)(1)(iv) of Regulation
S-K.

     Prior to its engagement as the Company's independent accountant, PwC had
not been consulted by the Company with respect to the application of accounting
principles to a specific transaction or the type of audit opinion that might be
rendered on the Company's financial statements.

     The Former Accountants filed a letter with the Commission agreeing with the
foregoing statement.


                                      -14-
<PAGE>


                                    PART III

ITEM 10.  DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT.

     Set forth below are the names, ages and principal occupations of the
current members of the Board of Directors and the executive officers of the
Company, their positions with the Company, their business experience during the
last five years and the year each was first elected a director of the Company.
Directors hold office until the next Annual Meeting of Shareholders and until
their respective successors are elected and qualify, provided that vacancies
occurring in the Board of Directors may be filled by vote of the Directors.
Officers of the Company serve at the pleasure of the Board of Directors of the
Company.

<TABLE>
<CAPTION>

====================================================================================================================
<S>                                <C>       <C>
NAME                               AGE       POSITION
--------------------------------------------------------------------------------------------------------------------
Arnold H. Simon                    55        Director, Chairman, Chief Executive Officer and President of the
                                             Company.
--------------------------------------------------------------------------------------------------------------------
Robert A. Katz                     34        Director.
--------------------------------------------------------------------------------------------------------------------
Debra Simon                        44        Director.
--------------------------------------------------------------------------------------------------------------------
Howard Schneider                   73        Director.
--------------------------------------------------------------------------------------------------------------------
Mark Weiner                        46        Director.
--------------------------------------------------------------------------------------------------------------------
Maurice Dickson                    56        Executive Vice President, Chief Operating Officer.
--------------------------------------------------------------------------------------------------------------------
Paul Spector                       59        Senior Vice President, Chief Financial Officer, Treasurer and
                                             Secretary.
--------------------------------------------------------------------------------------------------------------------
Gregg Fiene                        49        Vice Chairman and Director of the Company and Chief Executive Officer
                                             of XOXO Clothing Company
--------------------------------------------------------------------------------------------------------------------
Steven Feiner                      33        Director and President of XOXO.
--------------------------------------------------------------------------------------------------------------------
Joseph Purritano                   42        Vice President - Sales.
--------------------------------------------------------------------------------------------------------------------
Tom Nastos                         42        Vice President - Production.
--------------------------------------------------------------------------------------------------------------------
</TABLE>

     ARNOLD H. SIMON became Chairman of the Board of Directors and Chief
Executive Officer of the Company, ECI and ECI Sportswear on February 26, 1999.
From 1985 until December 1997, Mr. Simon was president of Rio Sportswear, Inc.,
and from 1994 until December 1997, he was President, Chief Executive Officer and
a Director of Designer Holdings Ltd., which he founded. Mr. Simon has an
aggregate of 30 years of experience in the apparel industry. Mr. Simon is the
Managing Member of The Simon Group and has sole voting and investment power with
respect to the shares of the Company owned by The Simon Group. Mr. Simon
currently owns a majority of the membership interests in the Simon Group. Mr.
Simon is married to Debra Simon.

     ROBERT A. KATZ has been a Director of the Company since June 1993. Mr. Katz
is an officer of Apollo Advisors, L.P. and of Lion Advisors, L.P., with which he
has been associated with since 1990. Mr. Katz is also a director of Vail
Resorts, Inc., QDI, Inc., Clark Retail Group, Inc. and Horizon PCS, Inc.


                                      -15-
<PAGE>


     DEBRA SIMON became a Director of the Company on March 18, 1999. Ms. Simon
was Executive Vice-President and a Director of Designer Holdings Ltd. from March
1994 until December 1997, and was Vice-President of Rio Sportswear, Inc. from
1985 until 1997. Ms. Simon is the wife of Arnold H. Simon.

     HOWARD SCHNEIDER became a Director of the Company on March 18, 1999. Mr.
Schneider has been engaged as a Certified Public Accountant with the firm
Schneider, Schechter & Yoss, an accounting firm based in Lake Success, New York,
for the past 30 years. Mr. Schneider performs accounting services for The Simon
Group and Mr. and Ms. Simon personally.

     MARK S. WEINER became a Director of the Company on June 17, 2000. He is
currently, and for more than the past five years has been, president of
Financial Innovations, Inc., a private marketing and merchandising company. Mr.
Weiner was deputy treasurer of the Democratic National Committee from 1989 to
1993 and currently serves as treasurer of the Democratic National Governors
Association.

     PAUL SPECTOR has been Senior Vice President and Chief Financial Officer of
the Company since May 1992 and Treasurer and Secretary of the Company since
August 1991. From 1986 until May 1992, Mr. Spector was Vice President of the
Company and from 1983 until August 1991 Mr. Spector was Controller of the
Company.

     MAURICE DICKSON has been Executive Vice President and Chief Operating
Officer of the Company since May 2000. From February 2000 until he assumed his
full time responsibilities with the Company, Mr. Dickson served as a consultant
to the Company. From October 1997 until February 2000, Mr. Dickson was
semi-retired. From October 1995 until October 1997, Mr. Dickson was chief
financial officer of Designer Holdings, Ltd. From 1981 until October 1995, Mr.
Dickson was chief financial officer of Ellen Tracy, Inc.

     GREGG FIENE has been vice chairman of the Company's board of directors and
chief executive officer of the Company's XOXO subsidiary since August 10, 1999.
For more than five years prior to its acquisition by the Company, Mr. Fiene was
the chairman and chief executive officer and a principal shareholder of the
predecessor to XOXO.

     STEVEN FEINER was appointed to the Board on March 23, 2000 to fill the
vacancy created by the death of David Fidlon. Mr. Feiner was appointed president
of XOXO in June 2000. Prior thereto, Mr. Feiner had been for more than the prior
five years, the owner and operator of various privately held apparel concerns.

     JOSEPH PURRITANO has been Vice President of Sales of the Company since June
1999. From 1993 to 1997, Mr. Purritano was vice president of Calvin Klein
Jeanswear and from 1997 until June 1999, he was president of Calvin Klein
Jeanswear, which was acquired by Warnaco Group, Inc. in 1997.

     TOM NASTOS has been Vice President of Production of the Company since July
1998. From 1990 to 1998, Mr. Nastos was President and Chief Operating Officer of
Synergy, Inc., a private label supplier of apparel.

SECTION 16(a) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE

     Section 16(a) of the Exchange Act requires the Company's executive
officers, directors and persons who beneficially own more than 10% of a
registered class of the Company's equity securities to file with the Commission
initial reports of ownership and reports of changes in ownership of


                                      -16-
<PAGE>


Common Stock and other equity securities of the Company. Such persons are
required by Commission regulations to furnish the Company with copies of all
Section 16(a) forms they filed.

     To the Company's knowledge, based solely on the Company's review of Forms 3
(Initial Statement of Beneficial Ownership of Securities), Forms 4 (Statement of
Changes in Beneficial Ownership) and Forms 5 (Annual Statement of Changes in
Beneficial Ownership) furnished to the Company with respect to the fiscal year
ended December 31, 2000, no persons failed to file any such form in a timely
manner.

ITEM 11. EXECUTIVE COMPENSATION.

     The following table presents the compensation paid to the Chief Executive
Officer of the Company and the four most highly compensated executive officers
of the Company as of December 31, 2000 who received compensation in excess of
$100,000.

<TABLE>
<CAPTION>
-----------------------------------------------------------------------------------------------------------------------------
                                                                                              Long-Term
                                                        Annual Compensation                 Compensation
-----------------------------------------------------------------------------------------------------------------------------
                                                                             Other           Securities
          Name and            Fiscal                                        Annual        Underlying Stock       All Other
     Principal Position        Year         Salary ($)    Bonus ($)     Compensation($)       Options (#)     Compensation($)
-----------------------------------------------------------------------------------------------------------------------------
<S>                            <C>          <C>           <C>             <C>                <C>                 <C>
Arnold H. Simon, Chairman,     2000         734,615            --         177,611(7)         1,250,000           52,275(6)
Chief Executive Officer of     1999         634,615(1)    181,000         189,800(5)         1,000,000           26,137(6)
the Company and President
-----------------------------------------------------------------------------------------------------------------------------
Maurice Dickson, Executive     2000         235,817(8)         --                            1,000,000
Vice President and Chief
Operating Officer
-----------------------------------------------------------------------------------------------------------------------------
Tom Nastos, Vice President     2000         404,000            --                                   --
- Manufacturing                1999         382,666            --                              750,000(4)
                               1998         330,000            --                              250,000(4)
-----------------------------------------------------------------------------------------------------------------------------
Gregg Fiene,                   2000         749,996            --                              500,000
Vice Chairman, Chief           1999         281,250(2)         --                            1,150,000
Executive Officer of XOXO
Clothing Company
-----------------------------------------------------------------------------------------------------------------------------
Joseph Purritano,              2000         529,230            --              --                   --
Vice President - Sales         1999         288,462(3)    250,000(3)           --              750,000
-----------------------------------------------------------------------------------------------------------------------------
</TABLE>

(1)  Represents salary from date of Simon Purchase Transaction, February 26,
     1999.

(2)  Represents salary since date of XOXO Transaction, August 10, 1999.

(3)  Mr. Purritano joined the Company on June 10, 1999, and received a "signing"
     bonus at that time.

(4)  In connection with Mr. Nastos' joining the Company, his employment
     agreement provided for the grant of 1,000,000 options.

(5)  Includes $87,800 in tax and accounting services and $102,000 in automobile
     expenses paid on behalf of Mr. Simon pursuant to his employment agreement.

(6)  Represents pro rata share of premiums for a life insurance policy a portion
     of which Mr. Simon has the right to designate the beneficiary.


                                      -17-
<PAGE>


(7)  Includes $147,775 in tax and accounting services and $29,836 in automobile
     expenses paid on behalf of Mr. Simon pursuant to his employment agreement.

(8)  Mr. Dickson joined the Company as an employee in May, 2000.

Option Grants

     The following table sets forth information regarding grants of stock
options to the Named Executive Officers during the last fiscal year. No SARs
were granted during the last fiscal year.

<TABLE>
<CAPTION>
                                                                                          POTENTIAL REALIZABLE VALUE
                                           % OF OPTIONS/                                    AT ASSUMED ANNUAL RATES
                                            SARS GRANTED     WEIGHTED                       OF STOCK APPRECIATION
                                            TO EMPLOYEES      AVERAGE                        FOR OPTION TERM ($)
                           OPTIONS/SARS    DURING FISCAL     EXERCISE     EXPIRATION      -----------------------------
NAME                          GRANTED          YEAR         PRICE/SHARE      DATE          5% per year    10% per year
----                       -------------   -------------    -----------   ----------      -------------   -------------
<S>                          <C>               <C>            <C>         <C>                <C>           <C>
Arnold H. Simon              1,250,000         21.9%          $0.51       11/30/2010         $401,000      $1,016,000

Maurice Dickson              1,000,000         17.5%          $0.57       11/30/2010          359,000         909,000

Tom Nastos                       --              --             --           --                  --              --

Gregg Fiene                    500,000          8.8%          $0.30       11/30/2010           94,000         239,000

Joseph Purritano                 --              --             --           --                  --              --
</TABLE>

Exercised/Unexercised Stock Options and Fiscal Year End Option Values

     The following table sets forth, with respect to the named Executive
Officers of the Company, the fiscal year-end value as at December 31, 2000 of
unexercised options, as well as options exercised by such executive officers
during the 2000 Fiscal Year. All options referred to below were granted under
the 1993 Stock Incentive Plan.

<TABLE>
<CAPTION>
                                                   AGGREGATED OPTION EXERCISES IN LAST FISCAL YEAR
                                                              AND FY-END OPTION VALUES
                         ------------------------------------------------------------------------------------------------------
                         Shares
                         Acquired                      Number of Securities Underlying       Value of Unexercised
                         on Exercise  Value Realized   Unexercised Options at FY-End (#)     In-the-Money Options at FY-End ($)
Name                     (#)          ($)              Exercisable/Unexercisable             Exercisable/Unexercisable(1)
----                     -----------  --------------   ---------------------------------     ----------------------------------
<S>                          <C>            <C>                  <C>                                     <C>
Arnold H. Simon              -0-            -0-                  833,333/1,416,667                       $-0-/$277,500

Maurice Dickson              -0-            -0-                    250,000/750,000                       $-0-/$185,000

Tom Nastos                   -0-            -0-                    500,000/500,000                          $-0-/$-0-

Gregg Fiene                  -0-            -0-                  1,150,000/500,000                       $-0-/$185,000

Joseph Purritano             -0-            -0-                    250,000/500,000                          $-0-/$-0-
</TABLE>
----------

(1)  The value of unexercised in-the-money options was calculated by determining
     the difference between the closing price of the Company's common stock on
     December 31, 2000 and the exercise price of the options.


                                      -18-
<PAGE>


Compensation of Directors

     During the twelve months ended December 31, 2000, each outside director
(i.e., one not employed by the Company or any of its subsidiaries) was entitled
to receive director's fees at the rate of $18,000 per annum. The Company
suspended these payments in April 2000. Each of these directors was also
entitled to receive reimbursement for expenses incurred in attending meetings of
the Board or committees thereof on which they serve. In addition, each outside
director was entitled to receive $500 per meeting of the Committees of the Board
to which they are assigned. No executive officer received additional
compensation for service as a Director.

Employment Agreements

     The Company has an employment agreement effective as of March 1, 1999 with
Mr. Simon, pursuant to which Mr. Simon is to serve as chairman and chief
executive officer of the Company and its subsidiaries. The term of the agreement
is for three years, expiring on February 28, 2002. Pursuant to the agreement,
Mr. Simon's base salary is $750,000 per annum, subject to annual review for
increase (but not decrease) at the discretion of the Board. In addition, the
agreement provides for annual bonuses equal to 2% of adjusted EBITDA if adjusted
EBITDA is between $5 million and $10 million, and 3% of adjusted EBITDA if
adjusted EBITDA is in excess of $10 million.

     The agreement entitles Mr. Simon to terminate the agreement for a "good
reason", which includes any diminution of his duties under the agreement, the
Company's failure to perform its obligations under the agreement, if the
Company's principal office or Mr. Simon's own office is relocated to a location
not within Manhattan, or if there are certain changes of control. In the event
of termination of Mr. Simon for good reason or if he is terminated without
cause, Mr. Simon is entitled to a lump sum payment in an amount equal to his
highest annual base salary during the term of the agreement multiplied by 2.99
and a lump sum payment in an amount equal to the average bonus paid or payable
to Mr. Simon with respect to the then-immediately-preceding three fiscal years
multiplied by 2.99.

     The Company is party to an employment agreement with Joseph Purritano
effective as of June 7, 1999, pursuant to which Mr. Purritano is to serve as
Executive Vice President in charge of sales for the Company and its subsidiaries
for a 3-year term expiring on June 6, 2002. Pursuant to the agreement, Mr.
Purritano is to receive an annual base salary of $500,000 in the first year of
the term, $550,000 per annum in the second year of the term, and $600,000 in the
third year of the term. In addition, he is entitled to an annual bonus based
upon the Company achieving certain EBITDA targets. As inducement to join the
Company, the Company agreed to grant Mr. Purritano 750,000 options to purchase
shares under the Company's stock option plan, and further paid Mr. Purritano a
bonus of $250,000.

     Mr. Purritano has the right to terminate the agreement for "good reason",
which includes the assignment of any duties or responsibilities inconsistent in
any material respect with the contemplated scope of Mr. Purritano's services,
the Company's failure to substantially perform any material term of his
employment agreement, relocation of the Company's principal office or Mr.
Purritano's own office to a location not within Manhattan, a "change of control"
as defined in the agreement. In the event Mr. Purritano terminates the Agreement
for good reason or if his employment is terminated without cause, Mr. Purritano
is entitled to a lump sum payment in an amount equal to 150% of his annual base
salary then in effect.

     In connection with the acquisition of XOXO, the Company entered into an
employment agreement dated as of August 10, 1999 with Gregg Fiene pursuant to
which Mr. Fiene is to serve as


                                      -19-
<PAGE>


Vice Chairman of the Board of Directors of the Company, Chief Executive Officer
of the Company's XOXO subsidiary and all divisions of the Company (present and
future) engaged in the female apparel industry and related ancillary industries,
and as chief executive officer, president, or in such other senior executive
position with respect to any of the Company's current or future subsidiaries as
he and the Chairman of the Board of Directors of the Company shall mutually
determine. Pursuant to the agreement, Mr. Fiene's base salary is $750,000 per
annum, and he is entitled to an annual bonus if the Company meets certain EBITDA
targets. The term of Mr. Fiene's agreement is for five years, ending on August
9, 2004. In the event Mr. Fiene is terminated without cause, or if he terminates
for "good reason", which includes any diminution of his duties under the
agreement, certain changes of control, he is entitled to a lump sum payment
equal to his highest annual base salary during the term multiplied by 2.99, and
a lump sum payment in an amount equal to his average annual bonus with respect
to the immediately preceding three fiscal years multiplied by 2.99.

     Also in connection with the acquisition of XOXO, the Company entered into
an employment agreement with Hollis Fiene, pursuant to which Ms. Fiene is to
serve as the Vice President, Design and Merchandising, for the Company's XOXO
subsidiary, and any other current or future subsidiaries or divisions of the
Company engaged in the design of women's apparel. The term of Ms. Fiene's
agreement is for three years, ending on August 9, 2002. Pursuant to the
agreement Ms. Fiene's base salary is $300,000 per annum, and she is entitled to
such annual discretionary bonus as the Board of Directors may determine. If her
employment is terminated by the Company without cause or if she terminates for
"good reason", which includes the termination of Gregg Fiene's employment by the
Company without cause or by Mr. Fiene for good reason, the assignment of the
duties and responsibilities inconsistent in any material respect with the scope
of the duties and responsibilities associated with Ms. Fiene's position, the
Company's failure to substantially perform material provisions of the employment
agreement and in the event of certain changes of control, she shall be entitled
to receive a lump sum amount equal to 150% of her base salary then in effect.

     In April 1998, the Company entered into an employment agreement with Tom
Nastos, pursuant to which Mr. Nastos was to serve as the president and chief
executive officer of an outerwear company the Company was contemplating buying,
and as the president of the private label business of the Company's ECI
subsidiary. The acquisition never occurred. Pursuant to a letter agreement with
Mr. Nastos, if the acquisition did not occur by July 31, 1998, he was to be
employed in an executive capacity with ECI. Under the employment agreement as
modified by the letter agreement, Mr. Nastos' term of employment expires
December 31, 2001, and he is entitled to a base salary of $400,000 per annum. In
addition, pursuant to the Agreement, the total of 1,000,000 options were to be
granted to Mr. Nastos with the first 250,000 vesting in three equal installments
and the remaining 750,000 options vesting eight years from the closing of the
acquisition.

     In May, 2000, the Company entered into an employment agreement expiring
February 28, 2003 with Maurice Dickson to serve as Executive Vice President and
Chief Operating Officer of the Company at an annual base salary of $375,000,
subject to annual review, and an annual bonus equal to 1% of adjusted EBITDA if
adjusted EBITDA is between $5 million and $10 million, and 1.5% of adjusted
EBITDA if adjusted EBITDA is in excess of $10 million. The agreement entitles
Mr. Dickson to terminate the agreement for a "good reason", which includes any
diminution of his duties under the agreement, the Company's failure to perform
its obligations under the agreement, if the Company's principal office or Mr.
Dickson's own office is relocated to a location not within Manhattan or Los
Angeles, or if there are certain changes of control. In the event the
termination of Mr. Dickson is for good reason or if he is terminated without
cause, Mr. Dickson is entitled to a lump sum payment in an amount equal to his
highest annual base salary during the term of the agreement multiplied by 2.99
and a lump sum payment in an amount equal to the average bonus paid or payable
to Mr. Dickson with respect to the then-immediately-preceding three fiscal years
multiplied by 2.99.


                                      -20-
<PAGE>


401(k) Plan

     The Company has no pension plan but affords its executive officers the
opportunity to participate in a 401(k) Plan established for all of the Company's
employees, for which the Company may make a discretionary matching contribution
of up to 25% of a maximum of four percent (4%) of salary (up to $150,000)
contributed by the employee.

Compensation Committee Interlocks and Insider Participation

     The members of the Company's Compensation and Stock Option Committee (the
"Committee") as of December 31, 2000 were Messrs. Simon, Schneider and Weiner.
Other than Mr. Simon, neither Committee member was (i) during the twelve months
ended December 31, 2000, an officer or employee of the Company or any of its
subsidiaries or (ii) formerly an officer of the Company or any of its
subsidiaries.

ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT.

     The table below sets forth the beneficial ownership of the Common Stock as
of March 1, 2001 by persons who are either (i) beneficial owners of 5% or more
of the Common Stock, (ii) named executive officers or directors of the Company,
and (iii) and all executive officers and directors as a group.

<TABLE>
<CAPTION>
--------------------------------------------------------------------------------------------------------------------
                       Name and Address                                                               Percent
                   of Beneficial Owner (1)                          Shares of Common Stock            of Class
--------------------------------------------------------------------------------------------------------------------
<S>                                                                   <C>                              <C>
Arnold Simon                                                          44,745,045 (2)(3)                56.3%
463 Seventh Avenue
New York, New York 10018
--------------------------------------------------------------------------------------------------------------------
Robert Katz                                                           16,818,806 (3)(5)                21.2%
Apollo Aris Partners, L.P.
AIF, L.P.
c/o Apollo Advisors, L.P.
Two Manhattanville Road
Purchase, New York 10577
--------------------------------------------------------------------------------------------------------------------
Maurice Dickson                                                          416,447 (6)                     *
463 Seventh Avenue
New York, New York 10018
--------------------------------------------------------------------------------------------------------------------
Paul Spector                                                             106,666 (6)                     *
463 Seventh Avenue
New York, New York 10018
--------------------------------------------------------------------------------------------------------------------
Gregg Fiene                                                            4,176,667 (6)                    5.0%
6000 Sheila Street
Commerce, CA 90040
--------------------------------------------------------------------------------------------------------------------
Joseph Purritano                                                         250,000 (4)(6)                  *
463 Seventh Avenue
New York, NY 10018
--------------------------------------------------------------------------------------------------------------------
Debra Simon                                                               33,333 (6)                     *
463 Seventh Avenue
New York, NY 10018
--------------------------------------------------------------------------------------------------------------------
</TABLE>

                                                        -21-
<PAGE>

<TABLE>
<CAPTION>
--------------------------------------------------------------------------------------------------------------------
                       Name and Address                                                               Percent
                   of Beneficial Owner (1)                          Shares of Common Stock            of Class
--------------------------------------------------------------------------------------------------------------------
<S>                                                                  <C>                           <C>
Howard Schneider                                                          33,333 (6)                     *
Schneider Schechter & Yoss
1979 Marcus Avenue, Suite 232
Lake Success, NY 11042
--------------------------------------------------------------------------------------------------------------------
Mark Weiner                                                               33,333 (6)                     *
Weingeroff Enterprises
1 Weingeroff Boulevard
Cranson, RI 02910
--------------------------------------------------------------------------------------------------------------------
Tom Nastos                                                               500,000 (6)                     *
463 Seventh Avenue
New York, NY 10018
--------------------------------------------------------------------------------------------------------------------
Steven Feiner                                                            750,000 (6)
6000 Sheila Street
Commerce, CA 90040
--------------------------------------------------------------------------------------------------------------------
All persons who are executive officers or directors of the            49,070,045 (6)                   60.1%
Company, as a group (4 persons)
--------------------------------------------------------------------------------------------------------------------
</TABLE>

*    Less than 1%

(1)  Except as noted in these footnotes or as otherwise stated above, each
     person has sole voting and investment power.

(2)  Includes 9,170,204 shares of Common Stock which were sold to two
     unaffiliated third parties by The Simon Group LLC, but over which Mr. Simon
     has voting and certain dispositive power. Includes 35,574,841 shares owned
     by The Simon Group. Arnold Simon, the Managing Member of The Simon Group,
     has sole voting and investment power with respect to the shares of the
     Company held of record by The Simon Group.

(3)  These shares are subject to the 1999 Shareholders Agreement and 1999 Equity
     Registration Rights Agreement described in Item 13 below, containing
     certain voting and other arrangements as to shares covered thereby.

(4)  Excludes shares owned by The Simon Group, in which such person holds a
     membership interest. Such person has no power or authority to vote or
     dispose of any shares held by The Simon Group, LLC, and disclaims
     beneficial ownership of such shares.

(5)  This table does not reflect any beneficial ownership by Mr. Katz, a
     Director of the Company, associated with Apollo. Mr. Katz does not directly
     own any shares of Common Stock, and disclaims beneficial ownership of all
     shares held by Apollo Aris Partners, L.P. and AIF, L.P.

(6)  Includes options to purchase the following numbers of shares of Common
     Stock of the Company under the 1993 Stock Incentive Plan which are
     exercisable or will become exercisable within 60 days: Paul Spector
     (106,666), Tom Nastos (500,000), and Gregg Fiene (1,316,667), Maurice
     Dickson (416,447), Joseph Purritano (250,000), Debra Simon (33,333), Howard
     Schneider (33,333), Mark Weiner (33,333) and Steven Feiner (750,000).


                                      -22-
<PAGE>


(7)  Mrs. Simon disclaims beneficial ownership of shares beneficially owned by
     Arnold H. Simon.

ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS.

     At the closing of the Simon Purchase Transaction on February 26, 1999, (i)
The Simon Group acquired 24,107,145 shares of Common Stock and 2,093,790 shares
of Series A Preferred Stock (convertible into 20,937,900 shares of Common Stock)
for $20,000,000 in cash, and (ii) the Company redeemed from AIF the Series B
Junior Secured Note of the Company including all accrued interest thereon
(representing total indebtedness as of January 31, 1999 of $10,658,000), in
exchange for $4,000,000 in cash plus 5,892,856 shares of Common Stock and
512,113 shares of Series A Preferred Stock (which are convertible into 5,121,130
shares of Common Stock). Effective July 1999, all of the Series A Preferred
Stock converted into common stock.

     During the latter part of 2000, First AHS Corporation, a company wholly
owned by Mr. Simon, opened up letters of credit for merchandise that the Company
required for sale to fulfill its orders. When the goods subject to those letters
of credit were received, First AHS sold them to the Company at cost. Currently,
the Company owes First AHS approximately $8.6 million in connection with these
purchases and sales. In addition, Mr. Simon guaranteed $7 million of First AHS's
obligations to the Company's lenders in connection with the letter of credit
facility.

     During 2000 and continuing to the present, Mr. Simon has guaranteed $3
million of the Company's indebtedness to its principal lender under its
financing agreement. The guaranty is due to expire May 4, 2001, provided that
the Company is not in default under the credit agreement at that time.

     During 2000, the Company had sales of approximately $14,286,000 to Humane,
Inc., a company wholly owned by Steven Feiner. In addition, Humane acted as
agent for the Company in connection with sales of certain of the Company's
products to retailers in the United States. As of December 31, 2000, the Company
had receivables from Humane of $787,000 and incurred commissions of $572,259
during 2000 and $593,734 in 1999.

     In late January 2001, Mr. Simon loaned the Company $2,000,000. Such loan
bears interest at prime plus 1/4% per annum and is repayable upon demand by Mr.
Simon.

1999 Shareholders Agreement

     At the Closing of the Simon Purchase Transaction, the Company, The Simon
Group, Apollo and Charles S. Ramat entered into a Shareholder Agreement (the
"1999 Shareholders Agreement") pursuant to which, among other things, the
parties agreed to certain limitations on sales of their shares of Common Stock
and Series A Preferred Stock in the manner set forth therein and to vote their
shares of the Company for the designees nominated by The Simon Group, provided
that such nominations must include one individual nominated by Apollo (so long
as Apollo beneficially owns at least 50% of the shares of Common Stock
beneficially owned by it on such closing date).

     The 1999 Shareholders Agreement provides that Apollo and Ramat and their
permitted transferees ("Non-Simon Subject Shareholders") are required to give
The Simon Group a right of first offer to match the proposed sale price on any
transfers of shares of Common Stock owned by such Non-Simon Subject
Shareholders, other than transfer of shares issued or issuable pursuant to an
employee stock option or employee purchase plan; transfers to family group
members (as defined in


                                      -23-
<PAGE>


the 1999 Shareholders Agreement) or other affiliates of such Non-Simon Subject
Shareholders; transfers by a Non-Simon Subject Shareholder's estate; transfers
pursuant to offerings registered under the Securities Act; transfers in
compliance with Rule 144 of the Securities Act; and transfers not exceeding an
annual aggregate of 10% of the shares of Common Stock owned by such Non-Simon
Subject Shareholder on the closing of the Simon Purchase Transaction.

     The 1999 Shareholders Agreement provides that, subject to certain
limitations, the Non-Simon Subject Shareholders have the right to "tag along"
proportionately in accordance with their beneficial ownership of shares of
Common Stock with certain non-public transfers by The Simon Group of its shares
of Common Stock, at the same consideration per share of Common Stock to be
received by The Simon Group in such transfers. Such tag-along rights will also
apply to certain transfers by Arnold Simon or his affiliates of their beneficial
ownership in The Simon Group after six months from the closing of the Simon
Purchase Transaction.

     The 1999 Shareholders Agreement also grants The Simon Group the right to
"bring along" the Non-Simon Subject Shareholders which are parties thereto in a
non-public transfer by The Simon Group of 100% of its ownership of Common Stock,
at the same consideration per share of Common Stock to be received by The Simon
Group in such transfer, provided that such consideration is entirely in cash or
in "Marketable Securities" (of issuers listed on the New York Stock Exchange,
American Stock Exchange or NASDAQ National Market with a market capitalization
for such marketable securities of more than $500,000,000), or a combination
thereof.

1999 Equity Registration Rights Agreement

     At the Closing of the Simon Purchase Transaction, the Company entered into
an agreement with The Simon Group, Apollo and Charles S. Ramat pursuant to which
the Company granted registration rights with respect to the Common Stock held by
The Simon Group, Apollo, Charles Ramat and their respective permitted
transferees (the "1999 Equity Registration Rights Agreement"). Each of such
shareholders will have unlimited "piggyback" registration rights with respect to
their shares of Common Stock, and The Simon Group and Apollo will each have the
right, on three occasions, to demand that the Company register their Common
Stock for sale under the Securities Act of 1933, as amended (the "Securities
Act"). This Agreement supercedes the demand registration rights afforded Apollo
pursuant to the 1993 Registration Rights Agreement, but does not eliminate the
"piggyback registration rights" of the other parties thereto who are no longer
affiliates of the Company.

The XOXO Shareholders Agreement

     In connection with the XOXO Transaction, the Company, The Simon Group, LLC,
and each of the former shareholders of Lola, Inc. entered into a shareholders
agreement which provides that each Lola shareholder will vote his or her shares
for the election of directors nominated by Arnold Simon. The Agreement also
provides that during its term, Simon shall nominate and vote all of its shares
of common stock for the election of Gregg Fiene as a director of the Company
provided that at such time Mr. Fiene is employed as an executive officer of the
Company. The Agreement contains certain restrictions on the sale by Gregg Fiene
and one other former Lola shareholder of the Aris shares received in the XOXO
Transaction and provides for certain "tag-along" and "drag-along" rights in
connection with such shares. The Agreement also provides that in the event the
Company registers any shares of its Common Stock under the Securities Act of
1933, as amended, each former Lola shareholder has the right to include a
certain amount of his or her shares in such registration statement. The term of
the shareholders' agreement is for ten years unless sooner terminated in
accordance with its terms.


                                      -24-
<PAGE>


     During 1999 and 2000, the Company reimbursed Mr. Simon for accounting and
tax services provided to Mr. Simon by Mr. Schneider's accounting firm in the
amount of $87,800 and $147,775, respectively. In addition, Mr. Schneider's firm
provided services to the Company amounting to approximately $28,000 and $45,050
during 1999 and 2000, respectively.


                                      -25-
<PAGE>


                                     PART IV


ITEM 14. EXHIBITS, FINANCIAL STATEMENTS, SCHEDULES AND REPORTS ON FORM 8-K.

(a) The following documents are filed as part of this report:


                                                                            Page
                                                                            ----
1.   Financial Statements and Independent Accountants' Report
     Independent Accountants' Report......................................  F-1
     Independent Auditor's Report.........................................  F-1A

     Financial Statements:
     Consolidated Balance Sheets as of December 31, 2000 and 1999.........  F-2
     Consolidated Statements of Operations for the Years Ended
       December 31, 2000, 1999 and 1998...................................  F-3
     Consolidated Statements of Stockholders' Equity for the Years
       Ended December 31, 2000, 1999 and 1998.............................  F-4
     Consolidated Statements of Cash Flows for the Years Ended
       December 31, 2000, 1999 and 1998...................................  F-5
     Notes to Consolidated Financial Statements...........................  F-7

2.   Financial Statement Schedule

     The following financial statement schedule should be read in
     conjunction with the consolidated financial statements in Item 8 of
     this Annual Report on Form 10-K:

     Schedule II--Valuation and Qualifying Accounts.......................  S-1

     All other schedules are omitted because they are not applicable or because
     the required information is included in the financial statements or notes
     thereto.

(b) Reports on Form 8-K

     There were none filed during the fourth calendar quarter ended December 31,
2000.


(c)      INDEX TO EXHIBITS
         -----------------

<TABLE>
<CAPTION>
                                                                                          Filed as Indicated
                                                                                          Exhibit to Document
                                                                                             Referenced in
    Exhibit No.                               Description                                     Footnote No.
    -----------                               -----------                                     ------------
<S>                  <C>                                                                         <C>
        3.3          Restated Certificate of Incorporation filed on June 30, 1993                 (3)

        3.4          Amended and Restated By-Laws effective June 30, 1993                         (3)

        3.5          Amendment to the Restated Certificate of Incorporation filed                 (20)
                     with the Secretary of State on July 29, 1999

        3.6          Amendment to the Restated Certificate of Incorporation filed                 (21)
                     with the Secretary of State in January 2001

       10.67         Series A Junior Secured Note Agreement dated as of June 30,                  (3)
                     1993 between Registrant and BNY Financial Corporation.

       10.68         Series A Junior Secured Note dated as of June 30, 1993 issued                (3)
                     by Registrant to BNY Financial Corporation.

       10.72         Secondary Pledge Agreement dated as of June 30, 1993 between                 (3)
                     Registrant, BNY Financial Corporation and AIF II, L.P.

       10.81         Form of Indemnification Agreement dated as of June 30, 1993                  (3)
                     between Registrant and each member of Registrant's Board of
                     Directors.

       10.99         Warrant dated September 30, 1996 issued by Aris Industries,                  (10)
                     Inc. to Heller Financial, Inc.
</TABLE>

                                      -26-
<PAGE>

<TABLE>
<CAPTION>
                                                                                          Filed as Indicated
                                                                                          Exhibit to Document
                                                                                             Referenced in
    Exhibit No.                               Description                                     Footnote No.
    -----------                               -----------                                     ------------
<S>                  <C>                                                                         <C>
      10.111         Securities Purchase Agreement, dated as of February 26, 1999,                (17)
                     between Aris Industries, Inc., Apollo Aris Partners, L.P.,
                     AIF, L.P., The Simon Group, L.L.C. and Arnold Simon.

      10.112         Shareholders Agreement, dated as of February 26, 1999,                       (17)
                     between Aris Industries, Inc., Apollo Aris Partners, L.P.,
                     AIF, L.P., The Simon Group, L.L.C. and Charles S. Ramat.

      10.113         Equity Registration Rights Agreement, dated as of February                   (17)
                     26, 1999, between Aris Industries, Inc., Apollo Aris
                     Partners, L.P., AIF, L.P., The Simon Group, L.L.C. and
                     Charles S. Ramat.

      10.115         Financing Agreement dated February 26, 1999 by and among the                 (18)
                     Company and its Subsidiaries and CIT Commercial Group, Inc.
                     and the other Financial Industries named therein.

      10.116         Agreement and Plan of Merger dated July 19, 1999 by and among                (19)
                     Aris Industries, Inc., XOXO Acquisition Corp. and Lola, Inc.
                     and its shareholders ("Agreement and Plan of Merger").  The
                     exhibits and schedules to the Agreement and Plan of Merger
                     are listed on the last page of such Agreement.  Such exhibits
                     and schedules have not been filed by the Registrant, who
                     hereby undertakes to file such exhibits and schedules upon
                     request of the Commission.

      10.117         Amendment No. 1 to Agreement and Plan of Merger.                             (19)

      10.118         Employment Agreement by and among the Registrant, Europe                     (19)
                     Craft Imports, Inc., ECI Sportswear, Inc., XOXO and Gregg
                     Fiene, dated August 10, 1999.

      10.119         Employment Agreement by and among the Registrant, ECI, ECI                   (19)
                     Sportswear, Inc., XOXO and Gregg Fiene, dated August 10, 1999.

      10.120         Shareholders' Agreement by and among the Registrant, The                     (19)
                     Simon Group, LLC, Gregg Fiene, Michele Bohbot and Lynne
                     Hanson, dated August 10, 1999.
</TABLE>

                                      -27-
<PAGE>

<TABLE>
<CAPTION>
                                                                                          Filed as Indicated
                                                                                          Exhibit to Document
                                                                                             Referenced in
    Exhibit No.                               Description                                     Footnote No.
    -----------                               -----------                                     ------------
<S>                  <C>                                                                          <C>
      10.121         Amendment No. 2 to Financing Agreement by and among Aris                     (19)
                     Industries, Inc., Europe Craft Imports, Inc., ECI Sportswear,
                     Inc., Stetson Clothing Company, Inc., XOXO; the Financial
                     Institutions from time to time party to the Financing
                     Agreement, as Lenders; and The CIT Group/Commercial Services,
                     Inc. as Agent, dated
                     August 10, 1999.

      10.122         Amended and Restated 1993 Stock Option Plan                                  (16)

      10.123         Employment Agreement with Steven Feiner                                      (21)

      10.124         Employment Agreement with Maurice Dickson                                    (21)

      10.125         Agreement between the Company and certain of its subsidiaries                (21)
                     and Grupo Xtra dated January, 2001

      10.126         Form Securities Purchase Agreement Dated as of February, 2001                (21)
                     between the Company and KC Aris Fund I, L.P.

        21.          List of Subsidiaries                                                         (21)

        23.          Consent of PricewaterhouseCoopers LLP                                        (21)

       23.1          Consent of Deloitte & Touche LLP                                             (21)
</TABLE>

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


(1)        Filed as the indicated Exhibit to the Annual Report of the Company on
           Form 10-K for the fiscal year ended February 2, 1991 and incorporated
           herein by reference.

(2)        Omitted.

(3)        Filed as the indicated Exhibit to the Report on Form 8-K dated June
           30, 1993 and incorporated herein by reference.

(4) - (9)  Omitted.

(10)       Filed as the indicated Exhibit to the Report on Form 8-K dated
           September 30, 1996 and incorporated herein by reference.

(11)       Omitted.

(13)       Omitted

(14)       Omitted

(15)       Omitted


                                      -28-
<PAGE>


(16)       Filed as Annex A to the Company's Proxy Statement filed with the
           Commission on May 27, 1999, and incorporated herein by reference.

(17)       Filed as the indicated Exhibit to the Report on Form 8-K dated
           February 26, 1999 and incorporated herein by reference.

(18)       Filed as Exhibit 10.115 to the Annual Report on Form 10-K filed with
           the Commission on or about April 13, 1999 and incorporated herein by
           reference.

(19)       Filed as Exhibit to the Report on Form 8-K dated August 24, 1999.

(20)       Omitted.

(21)       Filed herewith.

----------

*    The Schedules and Exhibits to such Agreements have not been filed by the
     Company, who hereby undertakes to file such schedules and exhibits upon
     request of the Commission.


                                      -29-
<PAGE>


                                   SIGNATURES

Pursuant to the requirements of Sections 13 or 15(d) of the Securities Exchange
Act of 1934, the Registrant has duly caused this report to be signed on its
behalf by the undersigned, thereunto duly authorized.


                                 ARIS INDUSTRIES, INC.


                                 By: /S/ ARNOLD H. SIMON
                                     ---------------------------
                                     Arnold H. Simon
                                     Chairman and
                                     Chief Executive Officer

                                 By: /S/ PAUL SPECTOR
                                     ---------------------------
                                     Paul Spector
                                     Senior Vice President
                                     Chief Financial Officer

                                 By: /S/ VINCENT F. CAPUTO
                                     ---------------------------
                                     Vincent F. Caputo
                                     Principal Accounting Officer

Date: April 16, 2001

Pursuant to the requirements of the Securities Exchange Act of 1934, this report
has been signed below by the following persons on behalf of the Registrant and
in the capacities and on the date indicated.


/S/ARNOLD SIMON                                                April 16, 2001
----------------------------------
Arnold Simon, Chairman of the Board
and Chief Executive Officer; Director


/S/STEVEN FEINER                                               April 16, 2001
----------------------------------
Steven Feiner, Director


/S/GREGG FIENE                                                 April 16, 2001
----------------------------------
Gregg Fiene, Director


                                                                April __, 2001
----------------------------------
Robert Katz, Director


/S/DEBRA SIMON                                                 April 16, 2001
----------------------------------
Debra Simon, Director


/S/HOWARD SCHNEIDER                                            April 16, 2001
----------------------------------
Howard Schneider, Director


/S/MARK WEINER                                                 April 16, 2001
----------------------------------
Mark Weiner, Director



                                      -30-
<PAGE>


                        REPORT OF INDEPENDENT ACCOUNTANTS

To the Board of Directors and Stockholders of Aris Industries, Inc.:


In our opinion, the consolidated financial statements listed in the index
appearing under item 14(a)(1) on page 26 present fairly, in all material
respects, the financial position of Aris Industries, Inc. and Subsidiaries at
December 31, 2000 and 1999, and the results of their operations and of their
cash flows for each of the two years in the period ended December 31, 2000 in
conformity with accounting principles generally accepted in the United States of
America. In addition, in our opinion, the financial statement schedule listed in
the index appearing under item 14(a)(2) on page 26 presents fairly, in all
material respects, the information set forth therein when read in conjunction
with the related consolidated financial statements. These financial statements
and the financial statement schedule are the responsibility of the Company's
management; our responsibility is to express an opinion on these financial
statements and the financial statement schedule based on our audits. We
conducted our audits of these statements in accordance with auditing standards
generally accepted in the United States of America, which 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, assessing the accounting principles used and significant estimates
made by management, and evaluating the overall financial statement presentation.
We believe that our audits provides a reasonable basis for our opinion.

The accompanying consolidated financial statements have been prepared assuming
that the Company will continue as a going concern. As described in Note 1 to the
financial statements, the Company has incurred recurring losses and negative
cash flows from operations and has a working capital deficit at December 31,
2000. These matters raise substantial doubt about the Company's ability to
continue as a going concern. Management's plans in regard to these matters are
also described in Note 1. The financial statements do not include any
adjustments that might result from the outcome of this uncertainty.




New York, New York
March 28, 2001

/s/ PricewaterhouseCoopers LLP

                                      F-1
<PAGE>


INDEPENDENT AUDITORS' REPORT

Board of Directors and Stockholders of
  Aris Industries, Inc.
New York, New York

We have audited the consolidated statements of operations, stockholders' equity,
and cash flows of Aris Industries, Inc. and Subsidiaries for the year ended
December 31, 1998. These financial statements are the responsibility of the
Company's management. Our responsibility is to express an opinion on these
financial statements based on our audit.

We conducted our audit in accordance with auditing standards generally accepted
in the United States of America. 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 audit provides a
reasonable basis for our opinion.

In our opinion, such consolidated financial statements present fairly, in all
material respects, the results of operations and cash flows of Aris Industries,
Inc. and Subsidiaries for the year ended December 31, 1998, in conformity with
accounting principles generally accepted in the United States of America.


Deloitte & Touche LLP


March 31, 1999
Parsippany, New Jersey


                                      F-1A
<PAGE>
ARIS INDUSTRIES, INC. AND SUBSIDIARIES                                       F-2
CONSOLIDATED BALANCE SHEETS
DECEMBER 31, 2000 AND 1999
(IN THOUSANDS, EXCEPT PER SHARE DATA)
--------------------------------------------------------------------------------

                                                            2000         1999
                                                         ---------    ---------
ASSETS

Current assets:
   Cash and cash equivalents                             $   2,389    $   1,109
   Receivables, net                                         33,888       34,004
   Inventories                                              15,919       18,233
   Prepaid expenses and other current assets                 1,359        2,509
                                                         ---------    ---------
        TOTAL CURRENT ASSETS                                53,555       55,855

Property and equipment, net                                  9,963       10,752
Goodwill, net                                               36,151       37,894
Other assets                                                   540        1,616
                                                         ---------    ---------
        TOTAL ASSETS                                     $ 100,209    $ 106,117
                                                         =========    =========

LIABILITIES AND STOCKHOLDERS' EQUITY

Current liabilities:
   Borrowings under revolving credit facility            $  38,679    $  25,485
   Current portion of long-term debt                         9,700        2,600
   Current portion of capitalized lease obligations          1,150        1,755
   Accounts payable                                         26,354       14,591
   Accrued expenses and other current liabilities           10,955        4,005
                                                         ---------    ---------
        TOTAL CURRENT LIABILITIES                           86,838       48,436

Long-term debt                                               5,242       14,342
Capitalized lease obligations                                1,478        1,818
Other liabilities                                            3,165        2,270
                                                         ---------    ---------
        TOTAL LIABILITIES                                   96,723       66,866
                                                         ---------    ---------

Commitments and contingencies

Stockholders' equity:
   Preferred stock, par value $.01,
     authorized 10,000 shares, none issued
   Common stock, par value $.01, 100,000 shares
     authorized, 80,665 shares issued
     and outstanding at December 31, 2000
     and 79,434 shares issued and outstanding
     at December 31, 1999                                      807          795
   Additional paid-in capital                               80,753       80,323
   Accumulated deficit                                     (77,879)     (41,399)
   Unearned compensation                                      (195)        (468)
                                                         ---------    ---------
        TOTAL STOCKHOLDERS' EQUITY                           3,486       39,251
                                                         ---------    ---------
        TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY       $ 100,209    $ 106,117
                                                         =========    =========


                See notes to consolidated financial statements.

<PAGE>
ARIS INDUSTRIES, INC. AND SUBSIDIARIES                                       F-3
CONSOLIDATED STATEMENTS OF OPERATIONS
FOR THE YEARS ENDED DECEMBER 31, 2000, 1999 AND 1998
(IN THOUSANDS, EXCEPT PER SHARE DATA)
--------------------------------------------------------------------------------

<TABLE>
<CAPTION>
                                                         2000         1999         1998
                                                      ---------    ---------    ---------
<S>                                                   <C>          <C>          <C>
Net sales                                             $ 199,439    $ 175,359    $ 127,680

Cost of sales                                           144,239      124,825       98,140
                                                      ---------    ---------    ---------
Gross profit                                             55,200       50,534       29,540

Commission and licensing income                           2,737        2,571        1,570
                                                      ---------    ---------    ---------
Income before operating expenses, interest expense,
   income tax provision and extraordinary item           57,937       53,105       31,110
Operating expenses:
   Selling and administrative expenses                   78,703       48,057       29,950
   Start-up costs                                         1,862        2,235         --
   Restructuring and other charges                        7,040        8,961         --
                                                      ---------    ---------    ---------
(Loss) income before interest expense, income tax
   provision and extraordinary item                     (29,668)      (6,148)       1,160
Interest expense, net                                     6,779        4,185        5,220
                                                      ---------    ---------    ---------
Loss before income tax provision
   and extraordinary item                               (36,447)     (10,333)      (4,060)
Income tax provision                                         33          250          190
                                                      ---------    ---------    ---------
Loss before extraordinary item                          (36,480)     (10,583)      (4,250)
Extraordinary item:
   Gain on early extinguishment of debt, net               --           --            522
                                                      ---------    ---------    ---------
      NET LOSS                                        $ (36,480)   $ (10,583)   $  (3,728)
                                                      =========    =========    =========
BASIC NET LOSS PER SHARE:

   Loss before extraordinary item                     $   (0.46)   $   (0.19)   $   (0.29)
   Extraordinary item                                      --           --            .04
                                                      ---------    ---------    ---------
   Net loss                                           $   (0.46)   $   (0.19)   $   (0.25)
                                                      =========    =========    =========

DILUTED NET LOSS PER SHARE:

   Loss before extraordinary item                     $   (0.46)   $   (0.19)   $   (0.29)
   Extraordinary item                                      --           --            .04
                                                      ---------    ---------    ---------
   Net loss                                           $   (0.46)   $   (0.19)   $   (0.25)
                                                      =========    =========    =========
Per share data:
   Weighted average shares outstanding - basic           79,777       55,374       14,912
   Weighted average shares outstanding - diluted         79,777       55,374       14,912

</TABLE>
                See notes to consolidated financial statements.

<PAGE>
ARIS INDUSTRIES, INC. AND SUBSIDIARIES                                       F-4
CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY
FOR THE YEARS ENDED DECEMBER 31, 2000, 1999 AND 1998
(IN THOUSANDS)
--------------------------------------------------------------------------------
<TABLE>
<CAPTION>

                                                                  COMMON STOCK      ADDITIONAL
                                                              --------------------    PAID-IN   ACCUMULATED   UNEARNED
                                                               SHARES      AMOUNT     CAPITAL     DEFICIT   COMPENSATION   TOTAL
                                                              --------    --------    --------    --------  ------------  --------
<S>                                                            <C>       <C>         <C>         <C>         <C>         <C>
Balance at December 31, 1997                                    14,905    $    150    $ 44,752    $(27,088)               $ 17,814
Stock options exercised                                             51           1           5                                   6
Net loss                                                          --          --          --        (3,728)                 (3,728)
                                                              --------    --------    --------    --------    --------    --------

Balance, December 31, 1998                                      14,956         151      44,757     (30,816)                 14,092
Common stock issued in connection with Simon
   Transaction, net of transaction costs of $1,468              57,009         570      24,107        --                    24,677
Stock options exercised                                            969           9         429        --                       438
Common stock issued in connection with Lola, Inc.
   acquisition                                                   6,500          65       9,685        --                     9,750
Issuance of stock options in connection with
   Lola, Inc. acquisition                                         --          --           805        --                       805
Issuance of stock options to employees/consultants                --          --           540        --      $   (540)       --
Amortization of unearned compensation on
   stock options                                                  --          --          --          --            72          72
Net loss                                                          --          --          --       (10,583)       --       (10,583)
                                                              --------    --------    --------    --------    --------    --------

Balance, December 31, 1999                                      79,434         795      80,323     (41,399)       (468)     39,251

Stock options exercised                                            231           2         114        --          --           116
Common stock issued in connection with
   settlement of FUBU royalty obligations                        1,000          10         290        --          --           300
Issuance of stock options to consultants                          --          --           300        --          (300)       --
Cancellation of compensatory stock options
   issued to employees                                            --          --          (274)       --           274        --
Amortization of unearned compensation on
   stock options                                                  --          --          --          --           299         299
Net loss                                                          --          --          --       (36,480)       --       (36,480)
                                                              --------    --------    --------    --------    --------    --------

Balance, December 31, 2000                                      80,665    $    807    $ 80,753    $(77,879)   $   (195)   $  3,486
                                                              ========    ========    ========    ========    ========    ========

</TABLE>
                See notes to consolidated financial statements.

<PAGE>
ARIS INDUSTRIES, INC. AND SUBSIDIARIES                                       F-5
CONSOLIDATED STATEMENTS OF CASH FLOWS
FOR THE YEARS ENDED DECEMBER 31, 2000, 1999 AND 1998
(IN THOUSANDS)
--------------------------------------------------------------------------------

<TABLE>
<CAPTION>
                                                                  2000        1999        1998
                                                                --------    --------    --------
<S>                                                             <C>         <C>         <C>
Cash flows from operating activities:
   Net loss                                                     $(36,480)   $(10,583)   $ (3,728)
   Adjustments to reconcile net loss to net cash
     used in operating activities:
      Extraordinary gain on early extinguishment of debt            --          --          (522)
      Gain on settlement of licensing royalty obligations         (1,500)       --          --
      Loss on disposal of property and equipment                   1,538         733        --
      Depreciation and amortization of property and equipment      4,115       1,515         601
      Amortization of goodwill                                     1,868       1,037       1,110
      Amortization of deferred financing costs                       864          79        --
      Provision for allowances on receivables                      1,807       2,773        --
      Provision for obsolescence on inventory                      3,912        (453)       --
      Provision for restructuring charges                          4,187        --          --
      Impairment of goodwill                                        --         3,749        --
      Issuance of notes in lieu of interest                         --           108         276
      Deferred income taxes                                         --           137         151
      Non-cash stock based compensation                              299          72        --
      Changes in assets and liabilities:
        Increase in receivables                                   (1,691)    (11,393)        (52)
        (Increase) decrease in inventories                        (1,598)     18,376      (6,873)
        Decrease (increase) in prepaid expenses and
         other current assets                                      1,150        (575)        390
        Decrease (increase) in other assets                          517        (241)      1,187
        Increase (decrease) in accounts payable                   12,652      (2,685)     (2,626)
        Increase (decrease) in accrued expenses and
         other current liabilities                                 4,563      (4,811)       (500)
        Increase (decrease) in other liabilities                     895         510        (748)
                                                                --------    --------    --------
           Net cash used in operating activities                  (2,902)     (1,652)    (11,334)
                                                                --------    --------    --------
Cash flows from investing activities:

   Capital expenditures                                           (4,608)     (4,289)       (233)
   Acquisition of businesses, net of cash acquired                  --       (10,320)     (2,659)
                                                                --------    --------    --------
           Net cash used in investing activities                  (4,608)    (14,609)     (2,892)
                                                                --------    --------    --------
Cash flows from financing activities:

   Book overdraft                                                   (889)      1,544        --
   Proceeds from issuance of common stock                           --        20,000        --
   Common stock issuance costs paid                                 --        (1,468)       --
   Stock options exercised                                           116         438           6
   Proceeds from long-term debt                                     --        10,000        --
   Deferred financing costs paid                                    (430)       (406)       --
   Payments of long-term debt and capitalized leases              (3,201)     (5,435)     (1,335)
   Increase (decrease) in borrowings under revolving
     credit facility                                              13,194      (8,415)     15,295
                                                                --------    --------    --------
           Net cash provided by financing activities               8,790      16,258      13,966
                                                                --------    --------    --------
Increase (decrease) in cash and cash equivalents                   1,280          (3)       (260)

Cash and cash equivalents, beginning of year                       1,109       1,112       1,372
                                                                --------    --------    --------
Cash and cash equivalents, end of year                          $  2,389    $  1,109    $  1,112
                                                                --------    --------    --------

</TABLE>
                See notes to consolidated financial statements.

<PAGE>
ARIS INDUSTRIES, INC. AND SUBSIDIARIES                                       F-6
CONSOLIDATED STATEMENTS OF CASH FLOWS, CONTINUED
FOR THE YEARS ENDED DECEMBER 31, 2000, 1999 AND 1998
(IN THOUSANDS)
--------------------------------------------------------------------------------

                                                     2000      1999     1998
                                                   -------   -------   -------
Supplemental disclosures of cash flow information:

   Cash paid during the year for:
     Interest                                      $ 6,267   $ 4,242   $ 4,229
                                                   -------   -------   -------
     Income taxes                                  $    33   $   254   $    63
                                                   -------   -------   -------
Supplemental schedule of non-cash investing and
  financing activities:
     Issuance of common stock in connection with
      settlement of Fubu royalty obligations       $   300
                                                   -------
     Capitalized lease obligations                 $   256   $ 1,995
                                                   -------   -------
     Acquisition of business:
      Fair value of the assets acquired                      $40,568
      Liabilities assumed                                     19,540
      Common stock and stock options issued                   10,555
      Cash acquired                                              153
                                                             -------
        Cash paid for acquisition, net                       $10,320
                                                             -------
     Exchange of Series B Junior Secured Note
       for common stock                                      $ 4,864
                                                             -------

                See notes to consolidated financial statements.

<PAGE>


ARIS INDUSTRIES, INC. AND SUBSIDIARIES                                       F-7
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

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

1.   DESCRIPTION OF BUSINESS AND BASIS OF PRESENTATION

     DESCRIPTION OF BUSINESS

     Aris Industries, Inc. and Subsidiaries (collectively, the "Company") has
     been engaged in the business of designing, manufacturing and marketing
     men's and boys' outerwear and activewear, women's sportswear, loungewear
     and swimwear under a variety of tradenames which are owned and licensed
     from others. These products were distributed and marketed in the United
     States, primarily in department stores, specialty stores and national
     retain chains, as well as Company-owned retail and outlet stores. In
     addition, the Company has granted licenses to use Company-owned tradenames
     for the manufacture and sale of various products. During 2000, the Company
     terminated its licensing relationships with Perry Ellis and Fubu and
     abandoned its efforts to develop licensed businesses under the Stetson and
     Cynthia Rowley tradenames.

     On January 17, 2001, the Company entered into a multi-year licensing
     agreement (the "Agreement") with Grupo Xtra of New York, Inc. ("Grupo").
     Under the terms of the Agreement, Grupo will have the exclusive rights in
     the United States, Puerto Rico, Israel and the Caribbean Islands to license
     for production, marketing, advertising and distribution all products under
     the tradenames owned by the Company, which include XOXO, Fragile and
     Members Only, as well as tradenames currently licensed by the Company,
     which include both Baby Phat and Brooks Brothers Golf (collectively, the
     "Licensed Products").

     The Agreement has an initial term of five years and can be extended for
     four additional five-year periods, provided Grupo is in substantial
     compliance with its obligations under the Agreement. The Agreement provides
     for minimum royalties, which aggregate to $53,360,000 over its initial
     five-year term. The Agreement is subject to early termination under certain
     circumstances.

     BASIS OF PRESENTATION

     The accompanying financial statements have been prepared on a going concern
     basis, which contemplates the realization of assets and satisfaction of
     liabilities in the normal course of business. During the three-year period
     ended December 31, 2000, the Company experienced losses and negative cash
     flows from operations. As of December 31, 2000, the Company has a working
     capital deficit and was not in compliance with certain covenants contained
     in its credit facility. As a result, the Company has classified the
     long-term portion of its term loan under the credit facility as a current
     liability.

     In response to these declining financial conditions, the Company reduced
     planned spending in fiscal 2000 and, in the fourth quarter, initiated a
     plan to consolidate its operations into its existing XOXO facilities
     located in California. As a result of the Agreement, in 2001, the Company
     has substantially reduced its workforce and terminated its production and
     sales operations. During this transition, the Company expects to continue
     to incur operating losses and recognize additional restructuring charges,
     principally related to additional severance, in the first quarter of 2001.

     The Company plans to finance its transition to a licensing and brand
     management business through (i) cash received from the turnover of
     inventory, realization of receivables and royalties under the Agreement and
     other licenses; (ii) additional financing in the form of convertible
     debentures and a loan from the Company's principal stockholder; (iii)
     negotiated reductions in amounts due to, and extended payment terms with,
     certain creditors of the Company; and, (iv) the negotiation of the
     continued availability of financing under the Company's existing credit
     facility until such time as such indebtedness can be repaid. In this

<PAGE>


ARIS INDUSTRIES, INC. AND SUBSIDIARIES                                       F-8
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

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

     connection, the Company has receivables and inventory aggregating
     $49,807,000 at December 31, 2000, which are expected to be realized in
     2001. In addition, the Agreement provides for minimum royalties of
     $8,100,000 in 2001, although the Company expects such royalties to exceed
     the minimum amount. With respect to additional financing, the Company
     entered into an agreement for the issuance of $10,000,000 in convertible
     debentures to a private investor in 2001. In February 2001, the Company
     received $7,000,000 in convertible debenture proceeds which was used to pay
     down its revolving line of credit and expects to receive the remaining
     $3,000,000 which will be used to further paydown the revolving line of
     credit. Also, in January 2001, the Company received a $2,000,000 loan from
     its principal stockholder which is payable on demand. Although the Company
     is not in compliance with certain covenants of its credit facility, the
     lenders have allowed the financing to continue under the facility with the
     expectation that borrowings under the facility will be substantially repaid
     in 2001.

     The Company believes that the financing discussed above will be sufficient
     to transition and sustain its operations as a licensing and brand
     management business and to payoff indebtedness under the credit facility,
     however, there can be no assurance that the Company's lenders will continue
     the credit facility or that the timing of cash receipts to be realized from
     working capital and operations will be sufficient to meet obligations as
     they become due. These factors raise substantial doubt about the entity's
     ability to continue as a going concern. The financial statements do not
     include any adjustments relating to the recoverability and classification
     of asset carrying amounts or the amount and classification of liabilities
     that might be necessary should the Company be unable to continue as a going
     concern.

2.   SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

     CONSOLIDATION

     The consolidated financial statements include the accounts of Aris
     Industries, Inc. and its wholly-owned subsidiaries after elimination of all
     significant intercompany transactions and balances.

     USE OF ESTIMATES

     The preparation of the Company's financial statements in conformity with
     generally accepted accounting principles requires management to make
     estimates and assumptions that affect the reported amounts of assets and
     liabilities and disclosures relating to contingent assets and liabilities
     at the date of the financial statements, and the reported amounts of
     revenues and expenses for the reporting period. The most significant
     estimates relate to the allowances for sales returns, discounts, credits
     and doubtful accounts, inventory valuation allowances, recoverability of
     long-lived assets and valuation allowances on deferred tax assets. Actual
     results could differ from those estimates.

     CASH AND CASH EQUIVALENTS

     The Company considers all highly liquid investments with an original
     maturity of three months or less to be cash equivalents. The Company
     maintains its cash in bank deposit accounts which, at times, may exceed
     federally insured limits.

     INVENTORIES

     Inventories are stated at the lower of cost (weighted average basis) or
     market.

     PROPERTY AND EQUIPMENT

     Property and equipment are stated at cost. Depreciation is computed on a
     straight-line basis over the estimated useful lives of the related assets.
     Leasehold improvements are amortized over the shorter

<PAGE>


ARIS INDUSTRIES, INC. AND SUBSIDIARIES                                       F-9
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

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

     of the life of the lease or the improvement. Expenditures for maintenance,
     repairs and minor renewals are expensed as incurred. When property or
     equipment is sold or otherwise disposed of, the related cost and
     accumulated depreciation are removed from the respective accounts and the
     gain or loss realized on disposition is reflected in operations.

     GOODWILL

     Goodwill represents the excess of purchase price over the fair values of
     identifiable net assets of businesses acquired, which includes intangible
     assets related to certain tradenames and licensing arrangements. Goodwill
     is amortized on a straight-line basis over periods of 20 to 40 years.

     At December 31, 2000 and 1999, goodwill is stated net of accumulated
     amortization of $9,863,513 and $7,995,358, respectively.

     LONG-LIVED ASSETS

     The Company reviews long-lived assets for impairment whenever events or
     changes in business circumstances indicate that the carrying amount of the
     assets may not be fully recoverable. The Company performs undiscounted
     operating cash flow analyses to determine if an impairment exists. If an
     impairment is determined to exist, any related impairment loss is
     calculated based on fair value.

     In 1999, the Company recorded an impairment charge of $3,749,000 with
     respect to goodwill associated with its Perry Ellis licenses as a result of
     a change in the terms of the licenses (see Note 5). At December 31, 2000,
     goodwill consists of the costs associated with the acquisition of the
     Company's XOXO and Members Only tradenames. In January 2001, the Company
     entered into the Agreement and commenced a transition to a licensing and
     brand management business. Based on the expected cash flows from this
     business, the Company concluded that the carrying amount of goodwill would
     be fully recovered over its remaining amortization periods. However, the
     Company will continue to evaluate the actual and expected results from this
     business and reassess its conclusions with respect to any potential
     impairment of goodwill in 2001. If it is determined that goodwill is
     impaired, then an impairment charge will be recorded to reduce goodwill to
     its fair value. Such charge could have a material adverse effect on the
     Company's financial position and results of operations.

     FAIR VALUE OF FINANCIAL INSTRUMENTS

     The carrying amounts of cash and cash equivalents, receivables, accounts
     payable and accrued expenses, approximate fair value due to the short
     maturity of these assets and liabilities. The interest on substantially all
     of the Company's borrowings are adjusted regularly to reflect current
     market rates. Accordingly, the carrying amounts of such borrowing
     approximate fair value. The fair value of the Company's subordinated
     long-term debt was determined using valuation techniques that considered
     cash flows discounted at current market rates. The estimated fair value of
     this instrument at December 31, 2000 approximated $5,606,000.

     CONCENTRATION OF CREDIT RISK

     The Company assigns a substantial portion of its receivables to a factor
     which assures the credit risk with respect to collection of non-recourse
     receivables. Ongoing customer credit evaluations are performed with respect
     to the Company's trade receivables not factored and collateral is not
     required.

<PAGE>


ARIS INDUSTRIES, INC. AND SUBSIDIARIES                                      F-10
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

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


     REVENUE RECOGNITION

     Revenue from the sale of merchandise is recognized at the date of shipment
     to the customer. Allowances for sales returns, discounts and credits are
     provided when the sale is recorded.

     Commission and licensing income is based upon a percentage of the
     licensee's net sales, as defined in the underlying agreements, and is
     recognized as earned.

     START-UP COSTS

     Start-up costs are expensed as incurred. During 2000 and 1999, the Company
     incurred $1,862,000 and $1,181,000, respectively, for start-up costs
     relating to various licensing agreements. These start-up costs consist of
     salaries, samples and related supplies directly attributable to newly
     licensed operations. During 1999, the Company also incurred approximately
     $1,054,000 of start-up expenses for its new distribution facility prior to
     the commencement of operations.

     ADVERTISING COSTS
     Advertising costs are charged to expense as incurred. Advertising costs
     amounted to $5,547,000 in 2000, $3,190,000 in 1999 and $1,941,000 in 1998.

     EARNINGS PER SHARE

     Basic (loss) income per common share is computed by dividing net (loss)
     income available for common shareholders, by the weighted average number of
     shares of common stock outstanding during each period. Diluted (loss)
     income per share is computed assuming the conversion of stock options and
     warrants with a market value greater than the exercise price.

     INCOME TAXES

     The Company uses the asset and liability method of accounting for income
     taxes. Under the asset and liability method, deferred tax assets and
     liabilities are recognized for the estimated future tax consequences
     attributable to differences between the financial statement carrying
     amounts of existing assets and liabilities and their respective tax bases.
     Deferred tax assets are reduced by a valuation allowance when, in the
     opinion of management, it is more likely than not that some portion or all
     of the deferred tax assets will not be realized.

     IMPACT OF NEW ACCOUNTING PRONOUNCEMENTS

     During 1998, the Financial Accounting Standards Board ("FASB") issued
     Statement of Financial Accounting Standard ("SFAS") No. 133, "Accounting
     for Derivative Instruments and Hedging Activities" which had an initial
     adoption date of January 1, 2000. During 1999, the FASB postponed the
     required adoption date of SFAS No. 133 until January 1, 2001. In addition,
     during 2000, the FASB issued SFAS No. 138 "Accounting for Certain
     Derivative Instruments and Certain Hedging Activities," which amends the
     requirements of SFAS No. 133. These standards require that all derivative
     financial instruments be recorded on consolidated balance sheets at fair
     value as either assets or liabilities. Changes in the fair value of
     derivatives will be recorded each period in earnings or other comprehensive
     earnings, depending on whether a derivative is designated and effective as
     part of a hedge transaction and, if it is, the type of hedge transaction.
     Gains and losses on derivative instruments reported in other comprehensive
     earnings will be reclassified as earnings in the periods in which earnings
     are affected by the hedged item. Initial adoption of these new standards on
     January 1, 2001 will have an insignificant impact on the Company's
     consolidated financial position and results of operations.

<PAGE>


ARIS INDUSTRIES, INC. AND SUBSIDIARIES                                      F-11
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

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


     RECLASSIFICATIONS

     Certain reclassifications have been made to conform prior year amounts to
     the current year presentation.

3.   THE SIMON TRANSACTION

     On February 26, 1999, the Company issued (i) 24,107,145 shares of common
     stock of the Company and 2,093,790 shares of Series A Preferred Stock of
     the Company (which shares were converted into 20,937,900 shares of common
     stock on July 29, 1999), for $20,000,000 and (ii) redeemed the Series B
     Junior Secured Note (which represented a total indebtedness of $10,658,000)
     in exchange for $4,000,000 in cash and an aggregate of 5,892,856 shares of
     common stock and 512,113 shares of Series A Preferred Stock (which shares
     were converted into 5,121,130 shares of common stock on July 29, 1999),
     (the "Simon Purchase Transaction"). In connection with the Simon Purchase
     Transaction, the Company also issued 700,000 shares of common stock to a
     third party as a condition to its consent to the transaction. In addition,
     the Company paid approximately $1,468,000 in cash, issued 250,000 shares of
     common stock to cover the costs associated with the transaction and paid
     principal and interest of $4,830,000 on its existing debt facilities. As a
     result of this transaction, the Company received net proceeds of
     approximately $13,702,000.

4.   ACQUISITION

     On August 10, 1999, the Company completed the acquisition of Lola, Inc.
     ("Lola"), a California corporation, with and into Europe Craft Imports,
     Inc. ("ECI"), a New Jersey corporation, that is wholly owned by the
     Company. Concurrent with the closing, ECI contributed all of the assets
     formerly owned by Lola to XOXO Clothing Company, Incorporated, a Delaware
     corporation ("XOXO") that is wholly owned by ECI. Lola's business consisted
     principally of the manufacture and sale of women's apparel and accessories
     principally under the "XOXO" name.

     In connection with the acquisition, Lola's shareholders received
     $10,000,000 in cash, 6,500,000 shares of the Company's common stock, valued
     at $1.50 per share at the time of the acquisition, and options to purchase
     1,150,000 shares of the Company's common stock (valued at $805,000). In
     addition, the Company incurred acquisition expenses which approximated
     $473,000. The acquisition was accounted for under the purchase method of
     accounting, and, accordingly, the operating results have been included in
     the Company's consolidated results of operations from the date of
     acquisition. The excess of the purchase price over the fair values of
     assets acquired and liabilities assumed amounted to $22,774,000 and has
     been recorded as goodwill. In conjunction with the merger, the Company
     obtained a $10,000,000 term loan and increased its line of credit from
     $65,000,000 to $80,000,000 with a financial institution (see Note 9).

     The table below reflects unaudited pro forma combined results of the
     Company as if the acquisition of Lola had taken place on January 1, 1999
     (in thousands, except per share data):

     Net sales                                                      $221,804
     Net loss                                                        (15,001)
     Net loss per diluted share                                     $  (0.25)

<PAGE>


ARIS INDUSTRIES, INC. AND SUBSIDIARIES                                      F-12
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

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

     The unaudited pro forma results of operations have been prepared for
     informational purposes only and include certain adjustments, such as
     additional amortization expense as a result of goodwill and increased
     interest expense on acquisition debt. They do not purport to be indicative
     of the results of operations which actually would have resulted had the
     acquisition occurred on the date indicated, or which may result in the
     future.

5.   RESTRUCTURING AND OTHER CHARGES

     In connection with the continued restructuring of its corporate office and
     distribution facilities, the Company, through September 30, 2000, recorded
     a restructuring charge of $1,315,000. The charges consisted of employee
     severance costs and other administrative facility costs. During the fourth
     quarter of 2000, the Company's board of directors approved and the Company
     announced a revised restructuring plan which includes moving and
     consolidating its headquarters, showrooms and warehouses into its existing
     XOXO facilities located in California. This plan resulted in a charge of
     $5,725,000. The charge consisted of property and equipment write-downs of
     $1,538,000, net of salvage costs, and lease termination costs of
     $4,187,000. At December 31, 2000, the Company had a remaining liability of
     $4,187,000 related to lease termination costs which amounts are included in
     accrued expenses.

     During 1999, the Company recorded charges of $5,212,000 associated with the
     restructuring of its corporate office and distribution facilities. These
     charges before taxes include employee severance costs of $2,583,000, asset
     write-downs of $733,000, and rent and other exit costs of $1,896,000.

     In connection with the Simon Purchase Transaction (see Note 3), the Company
     was required to obtain consents from the licensor of its Perry Ellis
     licenses. As a condition to granting its consent, such licensor required
     that the term of its licenses be shortened. Based on the negative future
     undiscounted net cash flows expected to be derived from these licenses over
     their revised terms, the remaining intangible assets associated with the
     acquisition of these licenses of $3,749,000 (included in goodwill) was
     deemed impaired and written-off in 1999.

6.   RECEIVABLES

     Receivables consist of the following (in thousands):

                                                           DECEMBER 31,
                                                        -----------------
                                                          2000     1999
                                                        -------   -------
     Due from factor                                    $37,693   $36,866
     Trade receivables                                    5,336     4,472
                                                        -------   -------

                                                         43,029    41,338
     Less allowances for sales returns, discounts,
       credits and doubtful accounts                      9,141     7,334
                                                        -------   -------

                                                        $33,888   $34,004
                                                        =======   =======
<PAGE>


ARIS INDUSTRIES, INC. AND SUBSIDIARIES                                      F-13
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

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


     The Company has an agreement with a commercial finance company which
     provides for the factoring of certain trade receivables. The receivables
     are factored without recourse as to credit risk but with recourse for any
     claims by the customer for adjustments in the normal course of business
     relating to pricing errors, vendor allowances, shortages, damaged goods,
     and other claims. All factored receivables and related proceeds are the
     property of the commercial finance company. The Company is charged a
     factoring commission of .4% of factored trade receivables. The Company
     receives payment based upon the actual maturity dates of the receivables.
     The Company holds no collateral with respect to amounts due from the
     commercial finance company.

7.   INVENTORY

     Inventory consists of the following (in thousands):

                                                          DECEMBER 31,
                                                   ------------------------
                                                     2000             1999
                                                   -------          -------
     Raw materials                                 $ 3,784          $ 2,997
     Work-in-process                                 3,515            1,196
     Finished goods                                  8,620           14,040
                                                   -------          -------

                                                   $15,919          $18,233
                                                   =======          =======


     Finished goods inventory includes in-transit amounts of approximately
     $4,036,000 at December 31, 1999.

8. PROPERTY AND EQUIPMENT

     Property and equipment consists of the following (in thousands):

<TABLE>
<CAPTION>
                                                            ESTIMATED      DECEMBER 31,
                                                          USEFUL LIVES  -----------------
                                                            IN YEARS      2000     1999
                                                          ------------  -------   -------
<S>                                                         <C>         <C>       <C>
     Furniture, fixtures and equipment                      3 - 7       $15,256   $12,381
     Leasehold improvements                                 5 - 10        3,605     4,615
                                                                        -------   -------

                                                                         18,861    16,996
     Less accumulated depreciation and amortization                       8,898     6,244
                                                                        -------   -------

                                                                        $ 9,963   $10,752
                                                                        =======   =======
</TABLE>
     As of December 31, 2000 and 1999, property and equipment include amounts
     for equipment leased under capital leases with an original cost of
     $4,363,000 and $4,185,000, respectively. As of December 31, 2000 and 1999,
     accumulated depreciation and amortization include $1,426,000 and

<PAGE>


ARIS INDUSTRIES, INC. AND SUBSIDIARIES                                      F-14
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

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

          $726,000, respectively, associated with these leased assets.

9.   FINANCING

     The following amounts represent borrowings outstanding (in thousands):

                                              DECEMBER 31,
                                           -----------------
                                            2000      1999
                                           -------   -------

     Revolving Credit Facility (a)         $38,679   $25,485
                                           -------   -------

     Long-term debt:
        Term Loan (a)                      $ 8,000   $10,000
        Series A Junior Secured Note (b)     6,942     6,942
                                           -------   -------

                                            14,942    16,942
     Less current portion                    9,700     2,600
                                           -------   -------

                                           $ 5,242   $14,342
                                           =======   =======

     a.   During February 1999, the Company entered into a Financing Agreement
          with CIT Commercial Services Group, Inc. ("CIT") and certain other
          financial institutions, whereby such lenders agreed to provide a
          revolving credit facility up to $65,000,000 for working capital loans
          and letters of credit financing. In connection with the XOXO
          transaction (see Note 4), the Company's Financing Agreement was
          amended to increase the revolving credit facility to $80,000,000, and
          provide a term loan of $10,000,000.

          Availability under the revolving credit facility is based on a formula
          of eligible receivables and inventory, as defined. At December 31,
          2000, outstanding letters of credit amounted to $1,490,000 and there
          was $803,000 available for use under the credit facility. At the
          Company's option, loans under the revolving credit facility may be in
          the form of revolving credit loans or Eurodollar loans. For revolving
          credit loans, interest was accrued at the bank's prime rate. For
          Eurodollar loans, interest was accrued at a rate per annum equal to
          the Eurodollar rate (as defined) plus 2.5%.

          The term loan bore interest at prime plus one-half percent (9.5% at
          December 31, 2000) and is payable in quarterly installments of
          $500,000, plus interest, with a final payment of $5,500,000 due on
          February 26, 2002, the maturity date. The Company is required to make
          certain mandatory prepayments based upon "excess cash flows" as
          defined in the amendment to the agreement.

<PAGE>


ARIS INDUSTRIES, INC. AND SUBSIDIARIES                                      F-15
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

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

          Borrowings under the credit agreement are collateralized by
          substantially all of the assets of the Company. The agreement contains
          restrictive covenants that, among other requirements, restrict the
          payment of dividends, additional indebtedness, leases, capital
          expenditures, investments and the sale of assets or merger of the
          Company with another entity. The covenants also require the Company to
          meet certain financial ratios and maintain minimum levels of net
          worth.

          In April 2000, the Company entered into an amendment of its Financing
          Agreement, under which the lenders waived compliance with certain
          covenant violations at December 31, 1999, and increased the interest
          rates on the Company's revolving credit facility to prime plus
          one-quarter percent and the term loan to prime plus three-quarter
          percent. At December 31, 2000 and 1999, the weighted average interest
          rate on borrowings was 9.5% and 8.5%, respectively. The amendment also
          provided for an overadvance facility based on seasonal needs.

          In November 2000, the Financing Agreement was further amended to waive
          compliance with additional covenant provisions and require the Company
          to raise equity financing of $10,000,000 prior to January 10, 2001 and
          an additional $10,000,000 prior to February 15, 2001.

          In connection with the amendments, the Company's chief executive
          officer agreed to provide a personal guarantee on $3,000,000 of
          indebtedness outstanding under the Financing Agreement which presently
          expires on the earlier of (i) the date on which all borrowings are
          paid in full and all letters of credit are cancelled or cash
          collateralized after the termination of the commitment; (ii) May 4,
          2001, unless the lenders have made a demand for payment prior to such
          date; and, (iii) the date on which the full amount of the guarantee
          has been paid.

          At December 31, 2000, the Company was not in compliance with certain
          covenants contained in the amended Financing Agreement. The Company's
          lenders have indicated that they have no current intention to take
          action with respect to such non-compliance but have not waived the
          covenant violations. The lenders have allowed the continuance of
          financing under the revised terms of the Financing Agreement with the
          expectation that borrowings under the facility will be substantially
          repaid in 2001. As a result, the Company has classified the long-term
          portion of its term loan under the Financing Agreement as a current
          liability.

     b.   On June 30, 1993, the Company entered into a Series A Junior Secured
          Note Agreement with BNY Financial Corporation ("BNY"), pursuant to
          which BNY received a nine-year, $7,000,000 note. On September 17,
          1997, the Company and BNY entered into an amendment of the BNY note
          which provided that scheduled interest accruing under the note for the
          period February 1, 1996 through January 31, 1998 be deferred and added
          to the principal. The note bears interest at 7% per annum and requires
          annual principal payments of $1,100,000 and $5,242,000 for fiscal 2001
          and 2002, respectively. During November 2000, the Company received a
          forbearance on the $600,000 principal payment that was due. The due
          date for the principal payment was extended to February 1, 2001 at
          which time the Company paid the outstanding amount. BNY is also
          entitled to receive mandatory prepayments based upon "excess cash
          flows" of the Company, as defined in the Company's note agreements
          with BNY.

<PAGE>


ARIS INDUSTRIES, INC. AND SUBSIDIARIES                                      F-16
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

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

     Annual maturities of long-term debt are as follows (in thousands):

     2001                                            $ 9,700
     2002                                              5,242
                                                     -------

                                                     $14,942
                                                     =======

10.  EARNINGS PER SHARE

     The computation of basic and diluted (loss) per share from continuing
     operations for each year is as follows (in thousands, except per share
     data):

                                               2000        1999       1998
                                             --------    --------    -------
     Numerator:
        Net loss before extraordinary item   $(36,480)   $(10,583)   $(4,250)
                                             --------    --------    -------

     Denominator:
        Basic and diluted weighted average
          shares outstanding                   79,777      55,374     14,912
                                             --------    --------    -------

     Basic loss per share                    $  (0.46)   $  (0.19)   $ (0.29)
                                             ========    ========    =======

     Diluted loss per share                  $  (0.46)   $  (0.19)   $ (0.29)
                                             ========    ========    =======

     In 2000, 1999 and 1998, options and warrants to purchase 6,474,877,
     3,543,511 and 1,140,000 shares of common stock, respectively, were
     anti-dilutive and were excluded from the calculation of diluted weighted
     average shares outstanding.

11.  STOCK INCENTIVE PLAN

     The 1993 Stock Incentive Plan (the "Plan"), as amended, authorizes the
     Company's Board of Directors (or a committee thereof), to award to
     employees and directors of, and consultants to, the Company and its
     subsidiaries: (i) options to acquire common stock at prices determined when
     the options are granted, (ii) stock appreciation rights (entitling the
     holder to a payment equal to the appreciation in market value of a
     specified number of shares of common stock over a specified period), (iii)
     restricted shares of common stock whose vesting is subject to terms and
     conditions specified at the time of grant, and (iv) performance shares of
     common stock that are granted upon achievement of specified performance
     goals. Options granted pursuant to the Plan may be either "incentive stock
     options" within the meaning of Section 422A of the United States Internal
     Revenue Code of 1986, as amended, or non-qualified options. In April 1999,
     the Company's Board of Directors approved an amendment to the Plan to allow
     for the granting of options to purchase an additional 3,500,000 shares
     under the Plan for a total of 7,000,000 shares. Additionally, in 2000, the
     Company received approval from its board of directors and shareholders to
     increase the number of shares for which options may be granted to
     10,000,000.

     The Plan provides that options which are cancelled or expire remain subject
     to future grant under the

<PAGE>


ARIS INDUSTRIES, INC. AND SUBSIDIARIES                                      F-17
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

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


     Plan. In general, options granted provide for vesting in three equal annual
     installments from the date of grant and are exercisable for a period of 10
     years from the grant date.

     Transactions in stock options under the Plan are summarized as follows:

<TABLE>
<CAPTION>
                                           2000                         1999                       1998
                                 -------------------------     -----------------------     -----------------------
                                                  WEIGHTED                    WEIGHTED                    WEIGHTED
                                                   AVERAGE                    AVERAGE                      AVERAGE
                                    NUMBER        EXERCISE      NUMBER        EXERCISE       NUMBER       EXERCISE
                                  OF OPTIONS        PRICE     OF OPTIONS       PRICE       OF OPTIONS       PRICE
                                 -----------      --------    ----------      --------     ----------     --------
<S>                              <C>               <C>         <C>             <C>         <C>             <C>
Outstanding, January 1            8,621,316        $ 1.70      1,803,000       $ 0.76      1,695,000       $ 0.70
   Granted                        5,698,500          0.58      7,888,350         1.73        280,000         0.96
   Exercised                       (231,166)         0.50       (968,834)        0.45        (51,333)        0.13
   Expired/Cancelled               (863,050)         1.97       (101,200)        1.61       (120,667)        0.66
                                 ----------        ------      ---------       ------      ---------       -------

Outstanding, December 31         13,225,600        $ 1.20      8,621,316       $ 1.70      1,803,000       $ 0.76
                                 ==========        ======      =========       ======      =========       ======

Options Exercisable, December 31  5,890,532        $ 1.29      2,959,166       $ 1.05        622,666       $ 0.45
                                 ==========        ======      =========       ======      =========       ======
</TABLE>

     Stock options outstanding and exercisable at December 31, 2000 are as
     follows:

                                                                   WEIGHTED
                                                   WEIGHTED         AVERAGE
     RANGE OF                   SHARES              AVERAGE        REMAINING
     EXERCISE                    UNDER               PRICE        CONTRACTUAL
      PRICES                    OPTION             PER SHARE     LIFE IN YEARS
---------------               ----------           ---------     -------------

Outstanding:
   under $1.00                 6,248,000            $ 0.53            9.1
  $1.00 - $1.50                1,915,000              1.30            7.8
  $1.51 - $2.00                5,062,600              2.00            8.6
                              ----------            ------            ---
                              13,225,600            $ 1.20            8.7
                              ==========            ======            ===

Exercisable:
   under $1.00                 2,288,000            $ 0.75            7.8
  $1.00 - $1.50                1,915,000              1.30            7.8
  $1.51 - $2.00                1,687,532              2.00            8.6
                              ----------            ------            ---
                               5,890,532            $ 1.29            8.0
                              ==========            ======            ===

     The Plan provides for the immediate vesting of outstanding options upon a
     change of control of the Company. Accordingly, on the date of the Simon
     Purchase Transaction, options to purchase 1,803,000 shares of common stock
     became fully vested and exercisable.

<PAGE>


ARIS INDUSTRIES, INC. AND SUBSIDIARIES                                      F-18
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

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


     The Company applies the intrinsic value method in accounting for its
     stock-based compensation plan. Had the Company measured compensation under
     the fair value based method for stock options granted, the Company's net
     (loss) and net (loss) per share-diluted would have been as follows (in
     thousands, except per share data):

<TABLE>
<CAPTION>
                                                  2000             1999            1998
                                                --------         --------         --------
<S>                                             <C>              <C>              <C>
     Net loss from continuing operations
        As reported                             $(36,480)        $(10,583)        $ (4,250)
        Pro forma                                (40,857)         (14,774)          (4,478)

     Net loss per share from continuing
        operations - diluted
        As reported                             $  (0.46)        $  (0.19)        $  (0.29)
        Pro forma                                  (0.51)           (0.27)           (0.30)
</TABLE>

     The fair value of each option grant was estimated on the date of grant
     using the Black-Scholes Option pricing model with the following assumptions
     for fiscal 2000, 1999 and 1998, respectively: Risk-free interest rates of
     6.2%, 5.8% and 5.5%; dividend yield of 0% for each year; expected lives of
     5 years for each year; and, volatility of 140%, 180% and 150%.

12.  INCOME TAXES

     The provision for income taxes consists of the following (in thousands):

                                         DECEMBER 31,
                               ----------------------------
                               2000        1999        1998
                               ----        ----        ----
     Current:
        Federal                $--         $--         $--
        State and local          33         113          39
                               ----        ----        ----
                                 33         113          39
                               ----        ----        ----
     Deferred:
        Federal                 --          --           75
        State and local         --          137          76
                               ----        ----        ----
                                --          137         151
                               ----        ----        ----
                               $ 33        $250        $190
                               ====        ====        ====

<PAGE>


ARIS INDUSTRIES, INC. AND SUBSIDIARIES                                      F-19
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

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


     A reconciliation of the statutory Federal income tax rate to the Company's
     effective tax rate is summarized as follows:

                                                      DECEMBER 31,
                                             ------------------------------
                                             2000         1999         1998
                                             ----         ----         ----
     Federal statutory income tax rate        (34)%        (34)%        (34)%
     State and local income taxes             --             1            1
     Goodwill amortization                      1            3            7
     Valuation allowance                       32           32           28
     Other, individually less than 5%           1          --             3
                                             ----         ----         ----
                                              --             2%           5%
                                             ====         ====         ====

     The components of deferred tax assets and liabilities are as follows (in
     thousands):

<TABLE>
<CAPTION>
                                                                           DECEMBER 31,
                                                                     -------------------------
                                                                         2000             1999
                                                                     --------         --------
<S>                                                                  <C>              <C>
     Deferred tax assets:
        Current:
          Restructuring charge                                       $  1,801         $    723
          Inventories                                                   2,891               89
          Allowance for sales returns, discounts, credits and
            doubtful accounts                                           3,930            1,318
          Accruals                                                      1,304             --
          Other                                                            78              416
                                                                     --------         --------
                                                                       10,004            2,546
                                                                     --------         --------
        Noncurrent:
          Net operating loss carryforwards                             37,998           33,365
          Goodwill                                                      1,408            1,440
          Alternative minimum tax credit carryforward                     846              846
          Other tax credit carryforwards                                   37               37
          Other                                                           605              460
                                                                     --------         --------
                                                                       40,894           36,148
                                                                     --------         --------
                                                                       50,898           38,694
     Valuation allowance                                              (50,322)         (38,321)
                                                                     --------         --------

     Total deferred tax assets                                       $    576         $    373
                                                                     ========         ========
</TABLE>

<PAGE>


ARIS INDUSTRIES, INC. AND SUBSIDIARIES                                      F-20
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

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

                                                     DECEMBER 31,
                                                  ----------------
                                                  2000        1999
                                                  ----        ----
     Deferred tax liabilities:
        Property and equipment                    $576        $373
                                                  ----        ----

            Total deferred tax liabilities        $576        $373
                                                  ====        ====

            Net deferred tax asset                $--         $--
                                                  ====        ====

     At December 31, 2000, the Company has available net operating loss
     carryforwards for federal income tax purposes of approximately $88,368,000
     which expire during fiscal 2001 through 2020. As a result of the change in
     control of the Company caused by the Simon Purchase Transaction, the
     utilization of net operating loss carryforwards generated prior to the this
     transaction are limited by Section 382 of the Internal Revenue Code to
     approximately $1,500,000 annually through 2019. Accordingly, the Company
     expects that a significant portion of these net operating loss
     carryforwards will expire unused.

13.  COMMITMENTS AND CONTINGENCIES

     LEASE COMMITMENTS

     Future minimum rental payments under capital leases and noncancelable
     operating leases that have initial or remaining lease terms in excess of
     one year as of December 31, 2000 are as follows (in thousands):

<TABLE>
<CAPTION>
     YEAR ENDING                                                  OPERATING        CAPITAL
     DECEMBER 31,                                                  LEASES           LEASES
     -----------                                                  ---------        -------
<S>                                                               <C>              <C>
          2001                                                    $  6,154         $ 1,242
          2002                                                       4,739             855
          2003                                                       4,779             810
          2004                                                       3,875             492
          2005                                                       2,628               3
          Thereafter                                                 1,288              --
                                                                  --------         -------
          Total minimum lease payments                            $ 23,463           3,402
                                                                  ========
          Less amount representing interest                                            774
                                                                                   -------
          Present value of minimum lease payments (including
            short-term portion of $1,150)                                          $ 2,628
                                                                                   =======
</TABLE>

     The Company has various operating leases in effect primarily for retail and
     outlet stores, offices and warehouses. The store leases expire over the
     next ten years, the office leases expire over the next ten years and the
     warehouse leases expire over the next four years. The store leases contain
     clauses whereby the stores are assessed additional rents based on a
     percentage of sales. For the years ended

<PAGE>


ARIS INDUSTRIES, INC. AND SUBSIDIARIES                                      F-21
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

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

     December 31, 2000, 1999 and 1998, the stores were not charged rent as a
     percentage of sales. Most of the operating leases contain renewal options
     to extend the lease terms. Total rental expense under all operating leases
     was approximately $6,782,000, $4,385,000 and $2,282,000 for fiscal 2000,
     1999 and 1998, respectively.

     LICENSE AGREEMENTS

     The Company has been granted several licensing agreements to manufacture
     and distribute men's, women's and boys' outerwear, sportswear and
     activewear products bearing the licensors' labels. The agreements expire at
     various dates through 2011. The Company is required to make royalty and
     advertising payments based on a percentage of sales, as defined in the
     respective agreements, subject to minimum payment thresholds. Royalty and
     advertising expenses under these licensing agreements totaled $7,990,845,
     $6,920,000 and $5,600,000 for the years ended December 31, 2000, 1999 and
     1998, respectively.

     Future minimum royalty and advertising payments required under the license
     agreements are as follows (in thousands):

     YEAR ENDING
     DECEMBER 31,
     -------------
        2001                               $ 1,985
        2002                                 2,534
        2003                                 2,670
        2004                                 2,820
        2005                                 1,264
     Thereafter                              7,835
                                           -------
     Total minimum royalty payments        $19,108
                                           =======

     In April 2000, Perry Ellis International and the Company mutually agreed
     not to continue the "Perry Ellis America" jeanswear and loungewear licenses
     after the year 2000.

     On October 24, 2000, the Company signed an agreement providing for the
     termination of the Company's license to produce and market products under
     the "Fubu" name. The licensor forgave approximately $1,800,000 in license
     royalty obligations in exchange for the termination of the license and
     1,000,000 shares of the Company's common stock (estimated market value
     $300,000). This settlement resulted in a gain of approximately $1,500,000
     which is reflected in selling and administrative expenses. Additionally,
     the licensor accepted responsibility for certain shipments of "Fubu"
     products.

     The Company also abandoned its efforts to develop sportswear under the
     Stetson and Cynthia Rowley tradenames pursuant to license agreements with
     the owners of the trademarks.

     As described in Notes 1 and 17, the Company has assigned or sublicensed its
     remaining licenses to Grupo, however, remains as the primary obligor under
     the license agreements.

<PAGE>


ARIS INDUSTRIES, INC. AND SUBSIDIARIES                                      F-22
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

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

     EMPLOYMENT CONTRACTS

     The Company has entered into employment contracts with certain senior
     executives for periods of three to five years, expiring no later than
     August 2004. Under the agreements, the executives are entitled to a
     specified salary over the contract period. Bonuses are payable based upon
     profitability and cash flows of the Company for each period. The estimated
     future minimum obligation under these contracts as of December 31, 2000 is
     $7,750,417. In addition, upon certain events of termination or change in
     control of the Company, certain of these agreements contain lump sum
     payment provisions, as defined within the respective agreements.

     LITIGATION

     The Company, in the ordinary course of its business, is the subject of, or
     a party to, various pending or threatened legal actions involving private
     interests. While it is not possible at this time to predict the outcome of
     these legal actions, in the opinion of management, the dispositions of
     these matters will not have a material adverse effect on financial position
     or results of operations. However, depending upon the amount and timing of
     such dispositions, the Company's cash flows could be materially affected in
     a particular period.

14.  RETIREMENT PLANS

     The Company participates in a defined contribution plan pursuant to Section
     401(k) of the Internal Revenue Code. All employees are eligible to
     participate. Employer contributions are discretionary. Participants vest
     immediately in their own contributions and after seven years of service in
     employer contributions. The Company made no contributions in 2000, 1999 and
     1998.

     The Company's union employees, at its leased warehouse and distribution
     facility in New Bedford, Massachusetts, participate in a multi-employer
     defined benefit pension plan. The Company's obligations with respect to the
     plan will be determined based on a settlement which is presently being
     negotiated.

15.  RELATED PARTY TRANSACTIONS

     In June 2000, First A.H.S. Acquisition Corp. ("AHS"), a company owned by
     the Company's chief executive officer, entered into an agreement (the
     "Letter of Credit Agreement") with the Company's principal commercial
     lender to facilitate the opening of up to $17,500,000 in letters of credit
     for the purchase of inventory. Pursuant to the Letter of Credit Agreement,
     AHS will purchase inventory which will be held at the Company's warehouse
     facilities. Such inventory will be sold to the Company at cost when the
     Company is ready to ship the merchandise to the customer. As of and for the
     year ended December 31, 2000, the Company purchased $19,482,988 from AHS,
     owes AHS $8,579,000 and AHS is holding $2,981,000 of inventory which the
     Company will purchase in 2001. In connection with the Letter of Credit
     Agreement, the Chief Executive Officer of the Company has guaranteed up to
     $7,000,000 of AHS obligations to the Company's principal commercial lender.

     The Company has utilized the services of Schneider, Schecter & Yoss, an
     accounting firm, of which Howard Schneider, a director of the Company, is a
     partner. During 2000 and 1999, total fees paid were $193,010 and $115,800,
     respectively.

     During 2000, the Company had sales of approximately $14,286,000 to Humane
     Incorporated

<PAGE>


ARIS INDUSTRIES, INC. AND SUBSIDIARIES                                      F-23
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

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

     ("Humane") of which Steven Feiner, a director of the Company, is the owner.
     As of December 31, 2000, the Company had receivables from Humane of
     approximately $787,000. In addition, Humane acted as agent for the Company
     in connection with sales of certain of the Company's products to retailers
     in the United States for which it received commissions of approximately
     $572,000 and $594,000 in 2000 and 1999, respectively.

     During January 2001, the Company's chief executive officer loaned the
     Company $2,000,000. The loan is payable on demand and bears interest at
     prime plus 1/4%.

16.  BUSINESS SEGMENT DATA

     The Company is organized and managed as one business segment that offers
     distinct men's, women's and boys' apparel products to its customers. Its
     operations are conducted domestically and substantially all of its net
     sales are derived from domestic customers. Additionally, all of the
     Company's assets are located within the United States. The Company had
     sales to two customers that represent 15% and 11% of net sales for the year
     ended December 31, 2000. The Company had sales to one customer that
     represent 4% and 13% of net sales for the years ended December 31, 1999 and
     1998, respectively.

17.  SUBSEQUENT EVENTS

     On January 4, 2001, the stockholders of the Company amended its Certificate
     of Incorporation by increasing the authorized common shares to 200,000,000.

     On January 17, 2001, the Company entered into a trademark license with
     Grupo. Grupo has received the exclusive right, for an initial term of 5
     years (the "Initial Term"), renewable at its option for four additional
     5-year periods, to manufacture, market and distribute at wholesale to
     retailers XOXO women's jeanswear and sportswear, Fragile women's jeanswear
     and sportswear, Member's Only sportswear and outerwear, and, subject to
     Aris' rights as a licensee with respect thereto, Baby Phat apparel and
     Brooks Brothers Golf apparel (the "Licensed Products") in Puerto Rico, the
     United States, the Caribbean Islands and Israel. The Grupo Agreement
     provides for minimum royalties, which aggregate to $53,360,000 over its
     initial five-year term.

     Grupo is to be solely responsible for manufacturing, marketing, and
     distributing the Licensed Products sold thereunder, subject to Aris'
     rights, as licensor or sublicensor, to approve all designs and otherwise
     act to maintain the integrity of the licensed trademarks. As a result,
     certain key members of the Company will continue to be actively involved in
     the design and marketing of the Licensed Products. Grupo also agreed to
     assume substantially all of the Company's future contractual commitments,
     other than those relating to its existing licensing business, corporate
     functions, warehouse operations in New Bedford, Massachusetts, loans under
     the Company's credit facility and its Series A Junior Secured Note and
     retained employees.

     In connection with the Agreement, the Company agreed to issue to Grupo, at
     the beginning of each year during the initial five-year term of the
     Agreement, shares of its common stock having a market value of $1,000,000,
     based on the average closing price of such common stock for the five
     trading days immediately preceding the date on which such shares are to be
     issued.

     During February 2001, the Company entered into a securities purchase
     agreement with KC Aris Fund I, L.P. pursuant to which the Company will
     issue convertible debentures in the aggregate sum of $10,000,000. The
     Company subsequently received $7,000,000 of this financing and expects to
     receive the remaining $3,000,000. The debentures mature in three years,
     bear interest at the rate of 8.5% per annum, payable quarterly, and are
     convertible into shares of common stock at the rate of $.46 per share. The
     Company has used the proceeds to pay down a portion of borrowings under its
     revolving credit facility.

<PAGE>


ARIS INDUSTRIES, INC. AND SUBSIDIARIES                                      F-24
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

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

     During March 2001, in settlement of a disputed claim with Tarrant Apparel
     Group, Inc., the Company issued 1,500,000 shares of its common stock to
     Tarrant. The Company agreed that, in the event the market value of such
     shares as of December 31, 2001 is less than $3,300,000, the Company will
     either, at its option (x) pay to Tarrant in cash an amount, or (y) issue to
     Tarrant additional shares of common stock having a share value, equal to
     the difference between $3,300,000 and the greater of the share value as of
     December 31, 2001 and $1,050,000.

<PAGE>



ARIS INDUSTRIES, INC. AND SUBSIDIARIES                                       S-1
SCHEDULE II - VALUATION AND QUALIFYING ACCOUNTS

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

<TABLE>
<CAPTION>

COLUMN A                                          COLUMN B          COLUMN C            COLUMN D            COLUMN E
-----------------------------------------------------------------------------------------------------------------------
                                                                    ADDITIONS
                                                   BALANCE         CHARGED TO                                BALANCE
                                                AT BEGINNING        COSTS AND                                 AT END
CLASSIFICATION                                    OF PERIOD         EXPENSES           DEDUCTIONS           OF PERIOD
                                               ---------------    --------------     ---------------       ------------
<S>                                               <C>              <C>                  <C>                <C>
Year ended December 31, 2000:
    Allowance for sales returns, discounts,       $  7,334,000     $  1,807,000         $     --           $  9,141,000
      credits and doubtful accounts
    Inventory reserves                               2,105,000        3,912,000               --              6,017,000
                                                  ------------     ------------         -----------        ------------
                                                  $  9,439,000     $  5,719,000         $     --           $ 15,158,000
                                                  ============     ============         ===========        ============

Year ended December 31, 1999:
    Allowance for sales returns, discounts,
      credits and doubtful accounts               $  4,561,000     $  9,935,000  (1)    $ 7,162,000 (2)    $  7,334,000
    Inventory reserves                               2,558,000          597,000           1,050,000 (3)       2,105,000
                                                  ------------     ------------         -----------        ------------
                                                  $  7,119,000     $ 10,532,000         $ 8,212,000        $  9,439,000
                                                  ============     ============         ===========        ============

Year ended December 31, 1998:
    Allowance for sales returns, discounts,
      credits and doubtful accounts               $  1,832,000     $ 10,440,000         $ 7,711,000        $  4,561,000
    Inventory reserves                                 268,000        1,240,000                  --           1,508,000
    Reserve for price allowances                       880,000        1,075,000             905,000           1,050,000
                                                  ------------     ------------         -----------        ------------
                                                  $  2,980,000     $ 12,755,000         $ 8,616,000        $  7,119,000
                                                  ============     ============         ===========        ============
</TABLE>

(1) Includes assumed allowances in connection with the XOXO acquisition.

(2) Write-off of receivables.

(3) Write-off of inventory.


</TEXT>
</DOCUMENT>
<DOCUMENT>
<TYPE>EX-3.6
<SEQUENCE>2
<FILENAME>0002.txt
<DESCRIPTION>CERTIFICATE OF AMENDMENT
<TEXT>


                                                                     EXHIBIT 3.6

                            CERTIFICATE OF AMENDMENT

                                       OF

                          CERTIFICATE OF INCORPORATION

                                       OF

                              ARIS INDUSTRIES, INC.

               (Under Section 805 of the Business Corporation Law)


     We, the undersigned, being the Vice President and Assistant Secretary,
respectively, of Aris Industries, Inc., hereby certify that:

     FIRST: The name of the corporation (hereinafter referred to as the
"Corporation") is ARIS INDUSTRIES, INC.

     SECOND: The Certificate of Incorporation of the Corporation was filed with
the Department of State on March 6, 1947 under the name Uniroy of Hempstead,
Inc. The Restated Certificate of Incorporation of the Corporation was filed on
June 30, 1993.

     THIRD: The amendment of the Certificate of Incorporation of the Corporation
effected by this Certificate of Amendment is to increase the number of shares of
common stock, par value $.01 per share, that the Corporation is authorized to
issue, from 100,000,000 to 200,000,000 shares.

     FOURTH: To accomplish the foregoing amendment, Article "THIRD" of the
Certificate of Incorporation of the Corporation with respect to capital stock of
the Corporation is amended by deleting Paragraphs 1(a) and (b) and replacing
them with the following:


<PAGE>


          1. The aggregate number of shares of the capital stock which the
     Corporation shall have authority to issue is Two Hundred Ten Million
     (210,000,000) shares, consisting of:

               (a) Two Hundred Million (200,000,000) shares of Common Stock, par
          value $.01 per share (the "Common Stock"); and

               (b) Ten Million (10,000,000) shares of Preferred Stock, par value
          $.01 per share (the "Preferred Stock").

     FIFTH: The foregoing amendment of the Certificate of Incorporation of the
Corporation was authorized by the Board of Directors of the Corporation, at a
duly called and convened meeting on December 14, 2000, followed by the
affirmative vote of a majority of all outstanding shares of the Corporation
entitled to vote at a duly called and convened meeting of shareholders on
January 4, 2001.

     IN WITNESS WHEREOF, we have subscribed this document on the set forth
below, and do hereby affirm, under the penalty of perjury on this 24th day of
January, 2001.



                                        ---------------------------------------
                                        Maurice Dickson, Vice President


                                        ---------------------------------------
                                        Robert W. Forman, Assistant Secretary
</TEXT>
</DOCUMENT>
<DOCUMENT>
<TYPE>EX-10.123
<SEQUENCE>3
<FILENAME>0003.txt
<DESCRIPTION>EMPLOYMENT AGREEMENT
<TEXT>

                                                                  EXHIBIT 10.123

                                                                  EXECUTION COPY


                              EMPLOYMENT AGREEMENT

     This Agreement (the "Agreement") effective as of June 13, 2000 is made by
and among Aris Industries, Inc., a New York corporation (the "Company"), Europe
Craft Imports, Inc. and ECI Sportswear, Inc. (the "Subsidiaries"), and Steven
Feiner (the "Executive"). The Company and the Subsidiaries are collectively
referred to in this Agreement as the "Company" unless otherwise required by the
specific context of a particular provision hereof.


                                R E C I T A L S:
                                 - - - - - - - -

     A. The Executive is currently providing services to the Company and the
Subsidiaries and was appointed as a director of the Company.

     B. The Company desires to continue the services of the Executive as an
Executive Vice President of the Company and the Subsidiaries.

     C. The Executive is willing to serve as Executive Vice President of the
Company and the Subsidiaries (so long as they are subsidiaries of the Company)
and is willing to accept employment by the Company on the terms set forth
herein.

     NOW, THEREFORE, in consideration of the premises and mutual covenants
herein contained, and other good and valuable consideration, the Company, the
Subsidiaries and the Executive hereby agree as follows:

     1. Definitions.


<PAGE>
     1.1 "Affiliate" means any Person controlling, controlled by or under common
control with the Company.

     1.2 "Board" means the Board of Directors of the Company and/or the
Subsidiaries.

     1.3 "Cause" means (a) the Executive is convicted of or pleads guilty to a
felony involving dishonesty as against the Company or the Subsidiaries, (b) the
Executive is convicted of a felony not involving the Company, and after
exhausting all rights of appeal, is obligated to serve ten (10) or more days in
prison or pay a fine of more than Five Hundred Thousand ($500,000) Dollars, or
(c) the Executive, in carrying out the Executive's duties and responsibilities
under this Agreement, is guilty of gross neglect or gross misconduct resulting,
in either case, in material economic harm to the Company and/or the
Subsidiaries, unless such act, or failure to act, was reasonably believed by the
Executive in good faith, using reasonable judgment under the circumstances, to
be in the best interests of the Company and/or the Subsidiaries.

     1.4 "Date of Termination" means (a) in the case of a termination for which
a Notice of Termination (as hereinafter defined in Section 6.6) is required, the
date of actual receipt of such Notice of Termination or, if later, the date
specified therein, as the case may be, and (b) in all other cases, the actual
date on which the Executive's employment terminates during the Term of
Employment (as hereinafter defined in Section 3) (it being understood that
nothing contained in this definition of "Date of Termination" shall affect any
of the cure rights provided to the Executive or the Company in this Agreement).

     1.5 "Disability" means the Executive's inability to render, for a period of
nine consecutive months, services hereunder.


                                      -2-
<PAGE>


     1.6 "Adjusted EBITDA" means for any fiscal year the sum of (a) the net
income of the Company and its subsidiaries on a consolidated basis for such
fiscal year as determined in accordance with GAAP except as specifically noted
below in this definition, (b) taxes in respect of income, (c) interest for money
borrowed, (d) depreciation, (e) amortization and (f) factoring fees, charges and
expenses, provided that the following shall be excluded from Adjusted EBITDA:
(A) extraordinary, unusual or non-recurring expenses including, without
limitation, restructuring charges, severance payments, duplicative lease
payments and write-downs of any assets on the Company's books as of December 31,
1999, (B) gains and losses from financing transactions and (C) losses from the
sale or other disposition of material assets (other than inventory) outside of
the ordinary course of business; and (D) to the extent that, in connection with
or otherwise related to the performance of a material arrangement with a
licensor in the year such license arrangement is entered into the revenues, if
any, associated with such license are exceeded by the costs and expenses
(including general and administrative expenses related thereto) associated with
such license (thereby resulting in a net reduction in Adjusted EBITDA). It is
understood and agreed that there shall be an appropriate calculation so that the
amount of any bonus payable in respect of any fiscal year pursuant to Section
5.2 shall not reduce the Adjusted EBITDA for the purpose of calculating the
bonus under Section 5.2.

     1.7 "Good Reason" means and shall be deemed to exist if (a) without the
Executive's express prior written consent, the Executive is assigned any duties
or responsibilities inconsistent in any material respect with the scope of the
duties or responsibilities associated with the Executive's title or positions,
as set forth and described in Article 4 of this Agreement; (b) without the
Executive's express prior written consent, the Executive suffers, in any
material respect, a reduction in the duties, responsibilities or effective
authority associated


                                      -3-
<PAGE>


with Executive's titles and positions as set forth and described in Article 4 of
this Agreement; (c) without the Executive's express prior written consent, the
Executive is not appointed to and/or elected to, or is removed from, the offices
or positions provided for in Section 4.1 of this Agreement; (d) the Company
fails to substantially perform or otherwise substantially breaches any material
term or provision of this Agreement; (e) without the Executive's express prior
written consent, and except as provided in Section 5.2 hereof, the Executive's
compensation under this Agreement is decreased, or the Executive's benefits
under employee benefit or health or welfare plans or programs of the Company are
in the aggregate materially decreased; (f) the Company's principal office or the
Executive's own office location is relocated to a location not within 20 miles
of Manhattan, or within Los Angeles County provided however, if Employee's
office is relocated to Los Angeles county, the Company shall reimburse Executive
for all expenses incurred in moving his family and possessions to Los Angeles
County; (g) the Company fails to obtain the full assumption of this Agreement by
a successor entity in accordance with Section 12.2 of this Agreement; (h) the
Company fails to use reasonable efforts to maintain, or cause to be maintained,
directors and officers liability insurance coverage for the Executive as
provided in Section 13.10 of this Agreement; (i) the Company purports to
terminate the Executive's employment for Cause and the Company is not entitled
to terminate this Agreement for Cause; (j) there shall occur (1) any liquidation
of the Company or the sale of substantially all of the assets of the Company, or
(2) any merger, consolidation or other business combination of the Company (a
"Transaction") or any combination of any such Transactions, other than a
Transaction immediately after which the stockholders of the Company who were
stockholders immediately prior to the Transaction continue to own beneficially,
directly or indirectly, more than fifty percent (50%) of the then outstanding
voting securities of the


                                      -4-
<PAGE>


Company and the Subsidiaries in which the Company's common stockholders receive
consideration of at least $2 per share; (k) any Person or group (as such term is
defined in Rule 13d-5 of the Securities Exchange Act of 1934, as amended (the
"Exchange Act")) of related Persons, which is not an Affiliate of the Company as
of the Commencement Date shall beneficially own, directly or indirectly, more
than 50% of the then outstanding voting stock of the Company or the
Subsidiaries; or (l) Arnold Simon ceases to be Chief Executive Officer of the
Company.

     1.8 "Person(s)" means any individual or entity of any kind or nature,
including any other person as defined in Section 3(a)(9) of the Exchange Act,
and as used in Sections 13(d) and 14(d) thereof.

     2. Employment. Subject to the terms and provisions set forth in this
Agreement, the Company and each Subsidiary hereby employs the Executive during
the Term of Employment as the Executive Vice President and Chief Operating
Officer of the Company and the Subsidiaries, and the Executive hereby accepts
such employment.

     3. Term of Employment. The term of employment (the "Term) under this
Agreement shall be deemed to commence as of the date hereof (the "Commencement
Date") and, unless terminated earlier pursuant to the terms hereof, shall
terminate on February 28, 2003 (the "Initial Term of Employment"). The Term
shall automatically renew for successive one-year periods after the Initial Term
unless either party gives notice to the other at least six months, but no longer
than nine months, before the end of the then-applicable Term.

     4. Positions, Responsibilities and Duties.

     4.1 Positions. During the Term of Employment, the Executive shall be


                                      -5-
<PAGE>


employed as Executive Vice President of the Company and the Subsidiaries (for
such period as they continue to be subsidiaries). In such position, the
Executive shall have the duties, responsibilities and authority normally
associated with such office and position and shall report to the Chief Executive
Officer and Board of Directors of the Company.

     4.2 Duties. During the Term of Employment, the Executive shall devote
substantially all of Executive's business time and attention to the business of
the Company and shall perform faithfully and efficiently the duties and
responsibilities contemplated by this Agreement, provided, however, Executive
may continue to engage in such other business in which he is currently engaged.

     5. Compensation and Other Benefits.

     5.1 Base Salary. During the Term of Employment, the Executive shall receive
a base salary of no less than $150,000 per annum ("Base Salary") payable in
equal monthly installments. Such Base Salary shall be reviewed annually for
increase (but not decrease) in the sole discretion of the Board. In conducting
any such annual review, the Board shall take into account any change in the
Executive's responsibilities, increases in the compensation of other executives
of the Company or the Subsidiaries or of competitors of either, the performance
of the Executive and other pertinent factors. The increased Base Salary shall
then constitute the "Base Salary" for purposes of this Agreement.

     5.2 Annual Bonus. For each Calendar Year during the Term in which Executive
is employed by the Company as of June 30 of such year, the Executive shall be
entitled to receive an annual cash bonus payment (the "Bonus") determined as
follows:


                                      -6-
<PAGE>


       If Adjusted EBITDA is:                    Amount of Bonus
       ----------------------                    ---------------

        Less than $5 million                          -0-
        Between $5 million -                 1% of Adjusted EBITDA
            $10 million
          Over $10 million                  1.5% of Adjusted EBITDA

     The Annual Bonus shall be paid to the Executive in cash as soon as
practicable after the end of the fiscal year to which it relates, but in any
event no later than one hundred five (105) calendar days after the end of such
fiscal year (and, to the extent there is any disagreement as to the amount
thereof any amount acknowledged as payable by the Company shall be paid by such
date).

     5.3 Intentionally Omitted.

     5.4 Incentive, Retirement, and Savings Plans. During the Term of
Employment, the Executive shall be entitled to participate in all incentive,
pension, retirement, savings and other employee benefit plans and programs
maintained by the Company and/or the Subsidiaries for the benefit of senior
executives.

     5.5 Welfare Benefit Plans. During the Term of Employment, the Executive,
the Executive's spouse and their eligible dependents, if any, shall be entitled
to participate in and be covered under all the welfare benefit plans or programs
maintained by the Company and/or the Subsidiaries, including, without
limitation, all term life insurance, long term disability insurance, medical,
hospitalization, dental, disability, accidental death and dismemberment and
travel accident insurance plans and programs.

     5.6 Intentionally Omitted.


                                      -7-
<PAGE>


     5.7 Expense Reimbursement. In addition to the expense reimbursement set
forth on Schedule 5.8, during the Term of Employment, the Executive shall be
entitled to receive prompt reimbursement for all reasonable expenses incurred by
the Executive in performing the Executive's duties and responsibilities
hereunder in accordance with the policies and procedures of the Company. At the
end of each fiscal year, the Executive and the Company shall in good faith
reconcile any differences and disputes with respect to timing, right to
reimbursement, reasonableness or documentation of any items of expense
reimbursement, it being agreed that no dispute respecting any of the foregoing
shall constitute a basis for the Executive or the Company (including the
Subsidiaries) terminating or attempting to terminate this Agreement.

     5.8 Vacation and Fringe Benefits. During the Term of Employment, the
Executive shall be entitled to such paid vacation, fringe benefits and
perquisites as set forth in Schedule 5.8.

     6. Termination.

     6.1 Termination Due to Death or Disability. The Company or the Executive
may terminate the Executive's employment hereunder due to his death or
Disability. In the event the Executive's employment is terminated due to death
Disability, the Executive's estate or Executive's legal representative, as the
case may be, shall be entitled to:

          (a) (i) in the case of death or disability, Base Salary continuation
     at the rate in effect (as provided for by Section 5.1 of this Agreement) on
     the Date of Termination for a period of six (6) months after the Date of
     Termination.

          (b) any Base Salary accrued or any Annual Bonus earned but not yet
     paid;

          (c) a pro rata Annual Bonus for the calendar year in which death or
     Disability occurs (determined and payable in accordance with Section 5.2 of
     this Agreement);


                                      -8-
<PAGE>


          (d) any deferred compensation not yet paid to the Executive
     (including, without limitation, interest or other credits on such deferred
     amounts) and any accrued vacation pay;

          (e) reimbursement pursuant to Section 5.7 hereof or any other
     provision of this Agreement for expenses incurred but not yet paid prior to
     such death or Disability;

          (f) in the case of death, any other compensation and benefits as may
     be provided in accordance with the terms and provision of any applicable
     plans and programs of the Company and/or the Subsidiaries; and

          (g) in the case of Disability, (i) continuation of the Executive's
     health and welfare benefits (as described in section 5.5 of this Agreement)
     at the level in effect (as provided for by Section 5.5) on the Date of
     Termination through the end of the three-year period following the
     termination of the Executive's employment due to Disability (or the Company
     shall provide the economic equivalent thereof), and (ii) any other
     compensation and benefits as may be provided in accordance with the terms
     and provisions of any applicable plans and programs of the Company.

     With respect to the deferred compensation arrangements referred to in
Sections 6.1(d), 6.2(c) and 6.3(d), to the extent that such deferred
compensation arrangements provide by their terms for any deferral of payments in
the event of death or Disability; termination with Cause or termination without
Cause or for Good Reason, such payments shall be deferred in accordance with
such arrangements to the extent required by the type of termination of this
Agreement. With respect to the other benefits referred to in Sections 6.1(g),
6.2(e) and 6.3(g), to the extent that such other benefit arrangements provide by
their terms for any deferral of payments in the event of death or Disability,
termination with Cause or termination without Cause or for Good


                                      -9-
<PAGE>


Reason, such payments shall be deferred in accordance with such arrangements to
the extent required by the type of termination of this Agreement.

     6.2 Termination by the Company for Cause. The Company may terminate the
Executive's employment hereunder for Cause as provided in this Section 6.2;
provided that no act or omission referred to in Section 1.3(b) hereof occurring
prior to the Commencement Date shall constitute Cause. If the Company terminates
the Executive's employment hereunder for Cause, the Executive shall be entitled
to:

          (a) the Executive's Base Salary at the rate in effect (as provided for
     by Section 5.1 of this Agreement) at the time of such termination through
     the Date of Termination;

          (b) any Annual Bonus for the prior fiscal year not yet paid together
     with a pro-rata portion of the Annual Bonus for the calendar year in which
     termination occurs through the Date of Termination;

          (c) any deferred compensation (including, without limitation, interest
     or other credit on such deferred amounts) and any accrued vacation pay;

          (d) reimbursement pursuant to Section 5.7 hereof or any other
     provision of this Agreement for expenses incurred, but not yet paid prior
     to such termination of employment; and

          (e) any other compensation and benefits as may be provided in
     accordance with the terms and provisions of any applicable plans and
     programs of the Company and/or the Subsidiaries.

     In any case described in this Section 6.2, the Executive shall be given
written notice, authorized (with Executive abstaining) by a vote of at least two
thirds (2/3) of the members of the entire Board (excluding Executive), that the
Company intends to terminate the


                                      -10-
<PAGE>


Executive's employment for Cause. Such written notice, given in accordance with
Section 6.6 of this Agreement, shall specify the particular act or acts, or
failure to act, which is or are the basis for the decision to so terminate the
Executive's employment for Cause. The Executive shall be given the opportunity
within ten (10) calendar days of the receipt of such notice to meet with the
Board to defend such act or acts, or failure to act, and the Executive shall be
given twenty (20) business days after such meeting to correct such act, acts or
failure(s) to act, provided that the Executive shall not have the right to cure
the acts described in Section 1.3(a) hereof. Upon failure of the Executive,
within such latter twenty (20) business day period, to correct such act, acts or
failure(s) to act, the Executive's employment by the Company shall automatically
be terminated under this Section 6.2 for Cause as of the date determined in
Section 1.4 of this Agreement.

     6.3 Termination Without Cause or Termination with Good Reason. The Company
may terminate the Executive's employment hereunder without Cause and the
Executive may terminate the Executive's employment hereunder for Good Reason. If
the Company terminates the Executive's employment hereunder without Cause, other
than due to death or Disability, or if the Executive terminates Executive's
employment for Good Reason, the Executive shall be entitled to the following:

          (a) A lump sum payment in an amount equal to Executive's highest
     annual Base Salary (including non-accountable expense allowance) during the
     Term of Employment multiplied by 2.99 (two hundred and ninety nine
     percent).

          (b) Subject to the provisions of Section 6.3(a), a lump sum payment in
     an amount equal to Executive's average annual bonus paid or payable to the
     Executive with respect to the then immediately preceding three (3) fiscal
     years (determined in accordance with


                                      -11-
<PAGE>


     Section 6.9 hereof) multiplied by 2.99 (299%). Notwithstanding the previous
     sentence, if the payments pursuant to Sections 6.3(a), 6.3(b) and 6.3(c)
     together with any other payments considered to be parachute payments within
     the meaning of Section 280G of the Internal Revenue Code of 1986, as
     amended from time to time (the "Internal Revenue Code") or any successor
     provision shall cause the Executive to incur an excise tax pursuant to
     Section 4999 of the Internal Revenue Code (or any successor provision) or
     any similar tax, the payments payable pursuant to Section 6.3(a), this
     Section 6.3(b) and Section 6.3(c) shall be reduced to an amount which would
     not cause such excise or similar tax to be incurred.

          (c) any Base Salary accrued or Annual Bonus earned but not yet paid as
     of the actual termination of this Agreement, and a pro rata Annual Bonus
     for the calendar year in which such termination occurs.

          (d) any deferred compensation (including, without limitation, interest
     or other credits on the deferred amounts) and any accrued vacation pay;

          (e) reimbursement pursuant to Section 5.7 hereof or any other
     provision of this Agreement for expenses incurred, but not paid prior to
     such termination of employment;

          (f) continuation of the pre-existing benefits of the Executive,
     including, without limitation, health, welfare, life and any long-term
     disability insurance heretofore provided or otherwise generally provided to
     senior executives of the Company (including the Subsidiaries), all at the
     level in effect (as provided for by Section 5.5 of this Agreement) on the
     Date of Termination through the end of the three (3) year period following
     such


                                      -12-
<PAGE>


     termination of employment (or the Company shall provide the economic
     equivalent thereof); and

          (g) any other compensation and benefits as may be provided in
     accordance with the terms and provisions of any applicable plans or
     programs of the Company and/or the Subsidiaries.

     If the Executive seeks to terminate the Executive's employment hereunder
for Good Reason, the Company shall be given written notice that the Executive
intends to terminate the Executive's employment for Good Reason. Such written
notice, given in accordance with Section 6.6 of this Agreement, shall specify
the particular act or acts, or failure(s) to act, which is or are the basis for
the Executive's decision to so terminate the Executive's employment for Good
Reason. The Company shall be given the opportunity within ten (10) calendar days
of the receipt of such notice to meet with the Executive to defend such act or
acts, or failure(s) to act, and the Company shall be given twenty (20) business
days after such meeting to correct such act, acts or failure(s) to act provided
that the Company shall not have the right to correct the acts or failure(s) to
act specified in clauses (c) and (i) of the definition of Good Reason. Upon
failure of the Company, within such latter twenty (20) business day period, to
correct such act, acts or failure(s) to act, the Executive's employment by the
Company shall automatically be terminated under this Section 6.3 for Good Reason
as of the date of actual termination provided that the date of actual
termination shall be ten (10) calendar days after receipt of the Executive's
notice if the Company does not have the right to correct such act(s) or
failure(s) to act.

     6.4 Intentionally omitted.

     6.5 No Mitigation; No Offset. In the event of any termination of employment
under this Section 6, the Executive shall be under no obligation to seek other
employment and


                                      -13-
<PAGE>


there shall be no offset against any amounts paid or payable the Executive under
this Agreement on account of any remuneration attributable to any subsequent
employment that the Executive may obtain. Any amounts due under this Section 6
are in the nature of severance payments, or liquidated damages, or both, and are
not in the nature of a penalty.

     6.6 Notice of Termination. Any termination of the Executive by the Company
or by the Executive for Good Reason shall be communicated by a notice of
termination to the other party hereto given in accordance with Section 15.3 of
this Agreement (the "Notice of Termination"). Such notice shall (a) indicate the
specific termination provision in this Agreement relied upon, (b) set forth in
reasonable detail the facts and circumstances claimed to provide a basis for
termination of the Executive's employment under the provision so indicated, and
(c) if the termination date is other than the date of receipt of such notice,
specify the date on which the Executive's employment is to be terminated (which
date shall not be earlier than the date on which such notice is given).

     6.7 Payment. Except as otherwise provided in this Agreement, any payments
to which the Executive shall be entitled under this Section 6, including,
without limitation, any economic equivalent of any benefit, shall be made as
promptly as possible following the Date of Termination. If the amount of any
payment due to the Executive cannot be finally determined within thirty (30)
days after the Date of Termination (by way of example only, pro rata bonuses
determined pursuant to Section 6.10 hereof), such amount shall be estimated on a
good faith basis by the Company and the estimated amount shall be paid no later
than thirty (30) days after such Date of Termination. As soon as practicable
thereafter, the final determination of the amount due shall be made and any
adjustment requiring a payment to or from the Executive shall be made as
promptly as practicable.


                                      -14-
<PAGE>


     6.8 Disclosure of Termination. Subject to the requirements of any Exchange
on which securities of the Company may be listed or the securities laws, and
except for terminations for Cause or the death or Disability of the Executive,
any public disclosure of the termination of this Agreement by the Company shall
be subject to prior review and approval by the Executive, which review and
approval shall not be unreasonably withheld or delayed.

     6.9 Pro Rata Calculations. For the purposes of this Article 6 (except
Section 6.2(b)), all calculations of the Annual Bonus on a pro rata basis shall
mean that the Annual Bonus shall be based on the bonus that would have been
payable for the entire calendar year multiplied by a fraction, the numerator of
which is the number of days from January 1 in such year through the date of the
termination of this Agreement and the denominator of which is 365.

7. Intentionally Omitted.

     8. Non-exclusivity of Rights. Except as provided in Section 5.4 hereof,
nothing in this Agreement or any other provision of this Agreement shall prevent
or limit the Executive's continuing or future participation in any benefit,
bonus, incentive or other plan or program provided or maintained by the Company,
the Subsidiaries or any other Affiliate and for which the Executive may qualify,
nor shall anything herein limit or otherwise prejudice such rights as the
Executive may have under any other existing or future agreements with the
Company, the Subsidiaries or any Affiliate, including, without limitation, any
change of control agreements or any stock option or restricted stock agreements.
Except as otherwise expressly provided for in this Agreement, amounts which are
vested benefits or which the Executive is otherwise entitled to receive under
any plans or programs of the Company, the Subsidiaries or any other Affiliate at
or subsequent to the Date of Termination shall be payable in accordance with
such plans or programs.


                                      -15-
<PAGE>


     9. Full Performance. The Company's obligation to make the payments provided
for in this Agreement and otherwise to perform its obligations hereunder shall
not be affected by any circumstances, including, without limitation, any
set-off, counterclaim, recoupment, defense or other right which the Company may
have against the Executive or others.

     10. Fees and Expenses. In the event that a claim for payment or benefits
under this Agreement is disputed, the Company shall advance and pay all
reasonable accounting and legal fees and expenses of the Executive, at the
regular hourly rate charged by the accountants and attorneys of the Executive in
connection with any such dispute (whether such dispute is litigated or
arbitrated including, without limitation, in connection with claims that are
settled) incurred by the Executive in pursuing or defending such claim. The
Executive shall not have an obligation to repay any such advances to the Company
except to the extent that a court of competent jurisdiction issues a final,
nonappealable judgment ordering the Executive to reimburse the Company for a
portion (or, if so ordered, all) of legal fees and expenses previously advanced
by the Company, based upon such court's determination of what is reasonable
under all applicable facts and circumstances including which party prevailed on
each of the issues disputed. The Company shall in addition pay or reimburse the
Executive for all reasonable legal fees and expenses incurred by the Executive
in connection with the preparation and negotiation of this Agreement and the
matters related thereto.

     11. Confidential Information. The Executive shall not, during the Term of
Employment and thereafter, without the prior express written consent of the
Company, disclose any confidential information, knowledge or data relating to
the Company, which (a) was obtained by the Executive in the course of the
Executive's employment with the Company, and (b) which is not information,
knowledge or data otherwise in the public domain (other than by reason of a


                                      -16-
<PAGE>


breach of this provision by the Executive), unless required to do so by a court
of law or equity or by a governmental agency or other authority.

     12. Successors.

     12.1 The Executive. This Agreement is personal to the Executive and,
without the prior express written consent of the Company, shall not be
assignable by the Executive, except that the Executive's rights to receive any
compensation or benefits under this Agreement may be transferred or disposed of
pursuant to testamentary disposition, intestate succession or a qualified
domestic relations order or in connection with a Disability. This Agreement
shall inure to the benefit of and be enforceable by the Executive's estate,
heirs, beneficiaries and/or legal representatives.

     12.2 The Company. This Agreement shall inure to the benefit of and be
binding upon the Company and its successors and assigns. The Company shall
require any successor to all or substantially all of the business and/or assets
of the Company or the Subsidiaries, whether direct or indirect, by purchase,
merger, consolidation, acquisition of stock, or otherwise, by an agreement in
form and substance satisfactory to the Executive, expressly to assume and agree
to perform this Agreement in the same manner and to the same extent as the
Company would be required to perform had no such succession taken place.

     13. Indemnification.

     13.1 General. The Company agrees that if the Executive is made a party or
is threatened to be made a party to any action, suit or proceeding, whether
civil, criminal, administrative or investigative (a "Proceeding"), by reason of
the fact that Executive is or was a director or officer of the Company, the
Subsidiaries and/or any other Affiliate or is or was serving at the request of
the Company, the Subsidiaries and/or any other Affiliate as a director,


                                      -17-
<PAGE>

officer, member, employee or agent of another corporation or of a partnership,
joint venture, trust or other enterprise, including, without limitation, service
with respect to employee benefit plans, whether or not the basis of such
Proceeding is alleged action in an official capacity as a director, officer,
member, employee or agent while serving as a director, officer, member, employee
or agent, Executive shall be indemnified and held harmless by the Company to the
fullest extent authorized by New York law, as the same exists or may hereafter
be amended, against all Expenses (as hereinafter defined in Section 13.2)
incurred or suffered by the Executive in connection therewith, and such
indemnification shall continue as to the Executive even if the Executive has
ceased to be an officer, director or agent, or is no longer employed by the
Company and shall inure to the benefit of Executive's heirs, executors and
administrators.

     13.2 Expenses. As used in this Article, the term "Expenses" shall include,
without limitation, damages, losses, judgments, liabilities, fines, penalties,
excise taxes, settlements and costs, reasonable attorneys' fees, reasonable
accountants' fees, and disbursements and costs of attachment or similar bonds,
investigations, and any reasonable expenses of establishing a right to
indemnification under this Agreement.

     13.3 Enforcement. If a claim or request under this Article is not paid by
the Company fifteen (15) days after a written claim or request has been received
by the Company, the Executive may at any time thereafter bring suit against the
Company to recover the unpaid amount of the claim or request and if successful
in whole or in part, the Executive shall be entitled to be paid also the
expenses of prosecuting such suit. The burden of proving that the Executive is
not entitled to indemnification for any reason shall be upon the Company.

     13.4 Subrogation. In the event of payment under this Article, the Company
shall be subrogated to the extent of such payment to all the rights of recovery
of the Executive.


                                      -18-
<PAGE>


     13.5 Partial Indemnification. If the Executive is entitled under any
provision of this Article to indemnification by the Company for some or a
portion of any Expenses, but not, however, for the total amount thereof, the
Company shall nevertheless indemnify the Executive for the portion of such
Expenses to which the Executive is entitled.

     13.6 Advances of Expenses. Expenses incurred by the Executive in connection
with any Proceeding shall be paid by the Company in advance upon request of the
Executive that the Company pay such Expenses, provided that prior to such
advance the Executive shall provide the Company with a written undertaking to
repay such advances to the Company if it shall ultimately be determined that he
is not entitled to be indemnified as authorized under the New York Business
General Corporation Law.

     13.7 Notice of Claim. The Executive shall give to the Company notice of any
claim made against the Executive for which indemnity will or could be sought
under this Article. In addition, the Executive shall give the Company such
information and cooperation as it may reasonably require and as shall be within
the Executive's power and at such times and places as are convenient for the
Executive.

     13.8 Defense of Claim. With respect to any Proceeding as to which the
Executive notifies the Company of the commencement thereof:

     13.8.1 The Company will be entitled to participate therein at its own
expense; and

     13.8.2 Except as otherwise provided below, to the extent that it may wish,
the Company jointly with any other indemnifying party similarly notified will be
entitled to assume the defense of the Executive, with counsel satisfactory to
the Executive. The Executive also shall have the right to employ the Executive's
own counsel in such action, suit or Proceeding


                                      -19-
<PAGE>

and the reasonable fees and expenses of such counsel shall be at the expense of
the Company. The Company shall not be entitled to assume the defense of any
action, suit or Proceeding brought by or on behalf of the Company or the
Subsidiaries or as to which the Executive shall have concluded that there may be
a conflict of interest between the Company or the Subsidiaries and the Executive
in the conduct of the defense of such action.

     13.8.3 The Company shall not be liable to indemnify the Executive under
this Agreement for any amounts paid in settlement of any action or claim
effected without its written consent. The Company shall not settle any action or
claim in any manner which would impose any penalty or limitation on the
Executive without Executive's written consent. Neither the Company nor the
Executive will unreasonably withhold or delay their consent to any proposed
settlement.

     13.9 Non-exclusivity. The right to indemnification and the payment of
expenses incurred in defending a Proceeding in advance of its final disposition
conferred in this Section 13 shall not be exclusive of any other right which the
Executive may have or hereafter may acquire under any statute, provision of the
certificate of incorporation or by-laws of the Company or the Subsidiaries,
agreement, vote of stockholders or disinterested directors or otherwise.

     14. Miscellaneous.

     14.1 Applicable Law. Except as may be otherwise provided herein, this
Agreement shall be governed by and construed in accordance with the laws of the
State of New York, applied without reference to principles of conflict of laws.


                                      -20-
<PAGE>


     14.2 Amendments. This Agreement may not be amended or modified otherwise
than by a written agreement executed by the parties hereto or their respective
successors and legal representatives.

     14.3 Notices. All notices and other communications hereunder shall be in
writing and shall be given by hand-delivery to the other party or by registered
or certified mail, return receipt requested, postage prepaid, addressed as
follows:

                  If to the Executive:       Steven Feiner
                                             1411 Broadway
                                             New York, New York 10018

                  and to:                    Steven Feiner
                                             1417 Bluebird Avenue
                                             Los Angeles, CA 90069

                  If to the Company:         Aris Industries, Inc.
                                             1411 Broadway
                                             New York, New York 10018
                                             Attention: Chairman

                  with a copy to:            Robert W. Forman
                                             Shapiro Forman & Allen LLP
                                             380 Madison Ave., 25th Floor
                                             New York, NY 10017

or to such other address as either party shall have furnished to the other in
writing in accordance herewith. Notices and communications shall be effective
when actually received by the addressee.

     15.4 Withholding. The Company may withhold from any amounts payable under
this Agreement such federal, state and local income, unemployment, social
security and similar employment related taxes and similar employment related
withholdings as shall be required to be withheld pursuant to any applicable law
or regulation.

     15.5 Severability. The invalidity or unenforceability of any provision of
this


                                      -21-
<PAGE>


Agreement shall not affect the validity or enforceability of any other provision
of this Agreement, and any such provision which is not valid or enforceable in
whole shall be enforced to the maximum extent permitted by law. 15.6 Captions.
The captions of this Agreement are not part of the provisions
hereof and shall have no force or effect.

     15.7 Entire Agreement. This Agreement contains the entire agreement among
the parties concerning the subject matter hereof and supersedes all prior
agreements, understandings, discussions, negotiations and undertakings, whether
written or oral, between the parties with respect thereto.

     15.8 Representation. Each party to this Agreement represents and warrants
that it is fully authorized and empowered to enter into this Agreement and that
the performance of its obligations under this Agreement will not violate any
agreement between it and any other person, firm or organization or any
applicable laws or regulations.

     15.9 Survivorship. The respective rights and obligations of the parties
hereunder shall survive any termination of this Agreement or the Executive's
employment hereunder to the extent necessary to the intended preservation of
such rights and obligations.


                                      -22-
<PAGE>


     15.10 Joint and Several Obligations. Anything to the contrary
notwithstanding in this Agreement, all of the monetary and non-monetary
obligations of the Company in this Agreement shall be and are the joint and
several obligations of the Company and the Subsidiaries.

     15.11 Joint Efforts/Counterparts. Preparation of this Agreement shall be
deemed to be joint effort of the parties hereto and shall not be construed more
severely against any party. This Agreement may be signed in two or more
counterparts, each of which shall be deemed an original and all of which
together shall constitute one and the same instrument.

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


                                  ARIS INDUSTRIES, INC.


                                  By
                                    ------------------------------
                                       Arnold H. Simon
                                       Chief Executive Officer

                                  ECI SPORTSWEAR, INC.


                                  By
                                    ------------------------------
                                       Arnold H. Simon
                                       Chief Executive Officer

                                  EUROPE CRAFT IMPORTS, INC.


                                  By
                                    ------------------------------
                                       Arnold H. Simon
                                       Chief Executive Officer



                                  --------------------------------
                                  Steven Feiner


                                      -23-
<PAGE>


                                  SCHEDULE 5.8

                         PERQUISITES AND FRINGE BENEFITS


     o    Four (4) weeks of paid vacation for each calendar year, to be taken
          cumulatively




















                                      -24-
</TEXT>
</DOCUMENT>
<DOCUMENT>
<TYPE>EX-10.124
<SEQUENCE>4
<FILENAME>0004.txt
<DESCRIPTION>EMPLOYMENT AGREEMENT
<TEXT>


                                                                  EXHIBIT 10.124

                                                                  EXECUTION COPY


                              EMPLOYMENT AGREEMENT

     This Agreement (the "Agreement") effective as of May 26, 2000 is made by
and among Aris Industries, Inc., a New York corporation (the "Company"), Europe
Craft Imports, Inc. and ECI Sportswear, Inc. (the "Subsidiaries"), and Maurice
Dickson (the "Executive"). The Company and the Subsidiaries are collectively
referred to in this Agreement as the "Company" unless otherwise required by the
specific context of a particular provision hereof.

                                R E C I T A L S:
                                - - - - - - - -

     A. The Executive is currently a consultant to the Company and the
Subsidiaries.

     B. The Company desires to continue the services of the Executive as
Executive Vice President and Chief Operating Officer of the Company and the
Subsidiaries.

     C. The Executive is willing to serve as Executive Vice President and Chief
Operating Officer of the Company and the Subsidiaries (so long as they are
subsidiaries of the Company) and is willing to accept employment by the Company
on the terms set forth herein.

     NOW, THEREFORE, in consideration of the premises and mutual covenants
herein contained, and other good and valuable consideration, the Company, the
Subsidiaries and the Executive hereby agree as follows:

     1. Definitions.

     1.1 "Affiliate" means any Person controlling, controlled by or under common
control with the Company.


                                      -1-
<PAGE>


     1.2 "Board" means the Board of Directors of the Company and/or the
Subsidiaries.

     1.3 "Cause" means (a) the Executive is convicted of or pleads guilty to a
felony involving dishonesty as against the Company or the Subsidiaries, (b) the
Executive is convicted of a felony not involving the Company, and after
exhausting all rights of appeal, is obligated to serve ten (10) or more days in
prison or pay a fine of more than Five Hundred Thousand ($500,000) Dollars, or
(c) the Executive, in carrying out the Executive's duties and responsibilities
under this Agreement, is guilty of gross neglect or gross misconduct resulting,
in either case, in material economic harm to the Company and/or the
Subsidiaries, unless such act, or failure to act, was reasonably believed by the
Executive in good faith, using reasonable judgment under the circumstances, to
be in the best interests of the Company and/or the Subsidiaries.

     1.4 "Date of Termination" means (a) in the case of a termination for which
a Notice of Termination (as hereinafter defined in Section 6.6) is required, the
date of actual receipt of such Notice of Termination or, if later, the date
specified therein, as the case may be, and (b) in all other cases, the actual
date on which the Executive's employment terminates during the Term of
Employment (as hereinafter defined in Section 3) (it being understood that
nothing contained in this definition of "Date of Termination" shall affect any
of the cure rights provided to the Executive or the Company in this Agreement).

     1.5 "Disability" means the Executive's inability to render, for a period of
nine consecutive months, services hereunder.

     1.6 "Adjusted EBITDA" means for any fiscal year the sum of (a) the net
income of the Company and its subsidiaries on a consolidated basis for such
fiscal year as


                                      -2-
<PAGE>


determined in accordance with GAAP except as specifically noted below in this
definition, (b) taxes in respect of income, (c) interest for money borrowed, (d)
depreciation, (e) amortization and (f) factoring fees, charges and expenses,
provided that the following shall be excluded from Adjusted EBITDA: (A)
extraordinary, unusual or non-recurring expenses including, without limitation,
restructuring charges, severance payments, duplicative lease payments and
write-downs of any assets on the Company's books as of December 31, 1999, (B)
gains and losses from financing transactions and (C) losses from the sale or
other disposition of material assets (other than inventory) outside of the
ordinary course of business; and (D) to the extent that, in connection with or
otherwise related to the performance of a material arrangement with a licensor
in the year such license arrangement is entered into the revenues, if any,
associated with such license are exceeded by the costs and expenses (including
general and administrative expenses related thereto) associated with such
license (thereby resulting in a net reduction in Adjusted EBITDA). It is
understood and agreed that there shall be an appropriate calculation so that the
amount of any bonus payable in respect of any fiscal year pursuant to Section
5.2 shall not reduce the Adjusted EBITDA for the purpose of calculating the
bonus under Section 5.2.

     1.7 "Good Reason" means and shall be deemed to exist if (a) without the
Executive's express prior written consent, the Executive is assigned any duties
or responsibilities inconsistent in any material respect with the scope of the
duties or responsibilities associated with the Executive's title or positions,
as set forth and described in Article 4 of this Agreement; (b) without the
Executive's express prior written consent, the Executive suffers, in any
material respect, a reduction in the duties, responsibilities or effective
authority associated with Executive's titles and positions as set forth and
described in Article 4 of this Agreement; (c) without the Executive's express
prior written consent, the Executive is not appointed to and/or


                                      -3-
<PAGE>


elected to, or is removed from, the offices or positions provided for in Section
4.1 of this Agreement; (d) the Company fails to substantially perform or
otherwise substantially breaches any material term or provision of this
Agreement; (e) without the Executive's express prior written consent, and except
as provided in Section 5.2 hereof, the Executive's compensation under this
Agreement is decreased, or the Executive's benefits under employee benefit or
health or welfare plans or programs of the Company are in the aggregate
materially decreased; (f) the Company's principal office or the Executive's own
office location is relocated to a location not within 20 miles of Manhattan, or
within Los Angeles County provided however, if Employee's office is relocated to
Los Angeles county, the Company shall reimburse Executive for all expenses
incurred in moving his family and possessions to Los Angeles County; (g) the
Company fails to obtain the full assumption of this Agreement by a successor
entity in accordance with Section 12.2 of this Agreement; (h) the Company fails
to use reasonable efforts to maintain, or cause to be maintained, directors and
officers liability insurance coverage for the Executive as provided in Section
13.10 of this Agreement; (i) the Company purports to terminate the Executive's
employment for Cause and the Company is not entitled to terminate this Agreement
for Cause; (j) there shall occur (1) any liquidation of the Company or the sale
of substantially all of the assets of the Company, or (2) any merger,
consolidation or other business combination of the Company (a "Transaction") or
any combination of any such Transactions, other than a Transaction immediately
after which the stockholders of the Company who were stockholders immediately
prior to the Transaction continue to own beneficially, directly or indirectly,
more than fifty percent (50%) of the then outstanding voting securities of the
Company and the Subsidiaries in which the Company's common stockholders receive
consideration of at least $2 per share; (k) any Person or group (as such term is
defined in Rule


                                      -4-
<PAGE>


13d-5 of the Securities Exchange Act of 1934, as amended (the "Exchange Act"))
of related Persons, which is not an Affiliate of the Company as of the
Commencement Date shall beneficially own, directly or indirectly, more than 50%
of the then outstanding voting stock of the Company or the Subsidiaries; or (l)
Arnold Simon ceases to be Chief Executive Officer of the Company.

     1.8 "Person(s)" means any individual or entity of any kind or nature,
including any other person as defined in Section 3(a)(9) of the Exchange Act,
and as used in Sections 13(d) and 14(d) thereof.

     Employment. Subject to the terms and provisions set forth in this
Agreement, the Company and each Subsidiary hereby employs the Executive during
the Term of Employment as the Executive Vice President and Chief Operating
Officer of the Company and the Subsidiaries, and the Executive hereby accepts
such employment.

     3. Term of Employment. The term of employment (the "Term) under this
Agreement shall be deemed to commence as of the date hereof (the "Commencement
Date") and, unless terminated earlier pursuant to the terms hereof, shall
terminate on February 28, 2003 (the "Initial Term of Employment"). The Term
shall automatically renew for successive one-year periods after the Initial Term
unless either party gives notice to the other at least six months, but no longer
than nine months, before the end of the then-applicable Term. Notwithstanding
the foregoing, at any time commencing on or after three months before the end of
the Initial Term and continuing thereafter, Executive, upon 90 days prior
written notice (the "Consulting Notice") may elect to convert his status from
employee to consultant for a period of three years following the effective date
of such Notice, in which case, (x) Executive shall make himself available not
more than 20 hours per week to consult with the Company's Chief Executive
Officer, and (y) his


                                      -5-
<PAGE>


Base Salary then in effect shall be reduced by 50% and he shall not be entitled
to a bonus for any year after the year in which the Consulting Notice becomes
effective. In the event the Company elects not to renew the Term, it shall pay
to Executive during the three years following the end of the Term, at regular
payroll intervals, 50% of his then applicable base salary.

     4. Positions, Responsibilities and Duties.

     4.1 Positions. During the Term of Employment, the Executive shall be
employed as Chief Operating Officer of the Company and the Subsidiaries (for
such period as they continue to be subsidiaries). In such position, the
Executive shall have the duties, responsibilities and authority normally
associated with the office and position of Chief Operating Officer of a company.
The Executive shall report to the Chief Executive Officer and Board of Directors
of the Company.

     4.2 Duties. During the Term of Employment, the Executive shall devote
substantially all of Executive's business time and attention to the business of
the Company and shall perform faithfully and efficiently the duties and
responsibilities contemplated by this Agreement, provided, however, Executive
may continue to engage in such other business in which he is currently engaged.

     5. Compensation and Other Benefits.

     5.1 Base Salary. During the Term of Employment, the Executive shall receive
a base salary of no less than $375,000 per annum ("Base Salary") payable in
equal monthly installments. Such Base Salary shall be reviewed annually for
increase (but not decrease) in the sole discretion of the Board. In conducting
any such annual review, the Board shall take into account any change in the
Executive's responsibilities, increases in the compensation of other executives
of the Company or the Subsidiaries or of competitors of either, the performance
of the


                                      -6-
<PAGE>


Executive and other pertinent factors. The increased Base Salary shall then
constitute the "Base Salary" for purposes of this Agreement.

     5.2 Annual Bonus. For each Calendar Year during the Term in which Executive
is employed by the Company as of June 30 of such year, the Executive shall be
entitled to receive an annual cash bonus payment (the "Bonus") determined as
follows:

       If Adjusted EBITDA is:                    Amount of Bonus
       ----------------------                    ---------------
        Less than $5 million                          -0-

        Between $5 million -                 1% of Adjusted EBITDA
            $10 million

          Over $10 million                  1.5% of Adjusted EBITDA

     The Annual Bonus shall be paid to the Executive in cash as soon as
practicable after the end of the fiscal year to which it relates, but in any
event no later than one hundred five (105) calendar days after the end of such
fiscal year (and, to the extent there is any disagreement as to the amount
thereof any amount acknowledged as payable by the Company shall be paid by such
date).

     5.3 Intentionally Omitted.

     5.4 Incentive, Retirement, and Savings Plans. During the Term of
Employment, the Executive shall be entitled to participate in all incentive,
pension, retirement, savings and other employee benefit plans and programs
maintained by the Company and/or the Subsidiaries for the benefit of senior
executives.

     5.5 Welfare Benefit Plans. During the Term of Employment, the Executive,
the Executive's spouse and their eligible dependents, if any, shall be entitled
to participate in and be covered under all the welfare benefit plans or programs
maintained by the Company and/or


                                      -7-
<PAGE>


the Subsidiaries, including, without limitation, all term life insurance, long
term disability insurance, medical, hospitalization, dental, disability,
accidental death and dismemberment and travel accident insurance plans and
programs.

     5.6 Intentionally Omitted.

     5.7 Expense Reimbursement. In addition to the expense reimbursement set
forth on Schedule 5.8, during the Term of Employment, the Executive shall be
entitled to receive prompt reimbursement for all reasonable expenses incurred by
the Executive in performing the Executive's duties and responsibilities
hereunder in accordance with the policies and procedures of the Company. At the
end of each fiscal year, the Executive and the Company shall in good faith
reconcile any differences and disputes with respect to timing, right to
reimbursement, reasonableness or documentation of any items of expense
reimbursement, it being agreed that no dispute respecting any of the foregoing
shall constitute a basis for the Executive or the Company (including the
Subsidiaries) terminating or attempting to terminate this Agreement.

     5.8 Vacation and Fringe Benefits. During the Term of Employment, the
Executive shall be entitled to such paid vacation, fringe benefits and
perquisites as set forth in Schedule 5.8.

     6. Termination.

     6.1 Termination Due to Death or Disability. The Company or the Executive
may terminate the Executive's employment hereunder due to his death or
Disability. In the event the Executive's employment is terminated due to death
Disability, the Executive's estate or Executive's legal representative, as the
case may be, shall be entitled to:


                                      -8-
<PAGE>


          (a) (i) in the case of death or disability, Base Salary continuation
     at the rate in effect (as provided for by Section 5.1 of this Agreement) on
     the Date of Termination for a period of six (6) months after the Date of
     Termination.

          (b) any Base Salary accrued or any Annual Bonus earned but not yet
     paid;

          (c) a pro rata Annual Bonus for the calendar year in which death or
     Disability occurs (determined and payable in accordance with Section 5.2 of
     this Agreement);

          (d) any deferred compensation not yet paid to the Executive
     (including, without limitation, interest or other credits on such deferred
     amounts) and any accrued vacation pay;

          (e) reimbursement pursuant to Section 5.7 hereof or any other
     provision of this Agreement for expenses incurred but not yet paid prior to
     such death or Disability;

          (f) in the case of death, any other compensation and benefits as may
     be provided in accordance with the terms and provision of any applicable
     plans and programs of the Company and/or the Subsidiaries; and

          (g ) in the case of Disability, (i) continuation of the Executive's
     health and welfare benefits (as described in section 5.5 of this Agreement)
     at the level in effect (as provided for by Section 5.5) on the Date of
     Termination through the end of the three-year period following the
     termination of the Executive's employment due to Disability (or the Company
     shall provide the economic equivalent thereof), and (ii) any other
     compensation and benefits as may be provided in accordance with the terms
     and provisions of any applicable plans and programs of the Company.

     With respect to the deferred compensation arrangements referred to in
Sections 6.1(d), 6.2(c) and 6.3(d), to the extent that such deferred
compensation arrangements provide by their


                                      -9-
<PAGE>


terms for any deferral of payments in the event of death or Disability;
termination with Cause or termination without Cause or for Good Reason, such
payments shall be deferred in accordance with such arrangements to the extent
required by the type of termination of this Agreement. With respect to the other
benefits referred to in Sections 6.1(g), 6.2(e) and 6.3(g), to the extent that
such other benefit arrangements provide by their terms for any deferral of
payments in the event of death or Disability, termination with Cause or
termination without Cause or for Good Reason, such payments shall be deferred in
accordance with such arrangements to the extent required by the type of
termination of this Agreement.

     6.2 Termination by the Company for Cause. The Company may terminate the
Executive's employment hereunder for Cause as provided in this Section 6.2;
provided that no act or omission referred to in Section 1.3(b) hereof occurring
prior to the Commencement Date shall constitute Cause. If the Company terminates
the Executive's employment hereunder for Cause, the Executive shall be entitled
to:

          (a) the Executive's Base Salary at the rate in effect (as provided for
     by Section 5.1 of this Agreement) at the time of such termination through
     the Date of Termination;

          (b) any Annual Bonus for the prior fiscal year not yet paid together
     with a pro-rata portion of the Annual Bonus for the calendar year in which
     termination occurs through the Date of Termination;

          (c) any deferred compensation (including, without limitation, interest
     or other credit on such deferred amounts) and any accrued vacation pay;

          (d) reimbursement pursuant to Section 5.7 hereof or any other
     provision of this Agreement for expenses incurred, but not yet paid prior
     to such termination of employment; and


                                      -10-
<PAGE>


          (e) any other compensation and benefits as may be provided in
     accordance with the terms and provisions of any applicable plans and
     programs of the Company and/or the Subsidiaries.

     In any case described in this Section 6.2, the Executive shall be given
written notice, authorized (with Executive abstaining) by a vote of at least two
thirds (2/3) of the members of the entire Board (excluding Executive), that the
Company intends to terminate the Executive's employment for Cause. Such written
notice, given in accordance with Section 6.6 of this Agreement, shall specify
the particular act or acts, or failure to act, which is or are the basis for the
decision to so terminate the Executive's employment for Cause. The Executive
shall be given the opportunity within ten (10) calendar days of the receipt of
such notice to meet with the Board to defend such act or acts, or failure to
act, and the Executive shall be given twenty (20) business days after such
meeting to correct such act, acts or failure(s) to act, provided that the
Executive shall not have the right to cure the acts described in Section 1.3(a)
hereof. Upon failure of the Executive, within such latter twenty (20) business
day period, to correct such act, acts or failure(s) to act, the Executive's
employment by the Company shall automatically be terminated under this Section
6.2 for Cause as of the date determined in Section 1.4 of this Agreement.

     6.3 Termination Without Cause or Termination with Good Reason. The Company
may terminate the Executive's employment hereunder without Cause and the
Executive may terminate the Executive's employment hereunder for Good Reason. If
the Company terminates the Executive's employment hereunder without Cause, other
than due to death or Disability, or if the Executive terminates Executive's
employment for Good Reason, the Executive shall be entitled to the following:


                                      -11-
<PAGE>


          (a) A lump sum payment in an amount equal to Executive's highest
     annual Base Salary (including non-accountable expense allowance) during the
     Term of Employment multiplied by 2.99 (two hundred and ninety nine
     percent).

          (b) Subject to the provisions of Section 6.3(a), a lump sum payment in
     an amount equal to Executive's average annual bonus paid or payable to the
     Executive with respect to the then immediately preceding three (3) fiscal
     years (determined in accordance with Section 6.9 hereof) multiplied by 2.99
     (299%). Notwithstanding the previous sentence, if the payments pursuant to
     Sections 6.3(a), 6.3(b) and 6.3(c) together with any other payments
     considered to be parachute payments within the meaning of Section 280G of
     the Internal Revenue Code of 1986, as amended from time to time (the
     "Internal Revenue Code") or any successor provision shall cause the
     Executive to incur an excise tax pursuant to Section 4999 of the Internal
     Revenue Code (or any successor provision) or any similar tax, the payments
     payable pursuant to Section 6.3(a), this Section 6.3(b) and Section 6.3(c)
     shall be reduced to an amount which would not cause such excise or similar
     tax to be incurred.

          (c) any Base Salary accrued or Annual Bonus earned but not yet paid as
     of the actual termination of this Agreement, and a pro rata Annual Bonus
     for the calendar year in which such termination occurs.

          (d) any deferred compensation (including, without limitation, interest
     or other credits on the deferred amounts) and any accrued vacation pay;

          (e) reimbursement pursuant to Section 5.7 hereof or any other
     provision of this Agreement for expenses incurred, but not paid prior to
     such termination of employment;


                                      -12-
<PAGE>


          (f) continuation of the pre-existing benefits of the Executive,
     including, without limitation, health, welfare, life and any long-term
     disability insurance heretofore provided or otherwise generally provided to
     senior executives of the Company (including the Subsidiaries), all at the
     level in effect (as provided for by Section 5.5 of this Agreement) on the
     Date of Termination through the end of the three (3) year period following
     such termination of employment (or the Company shall provide the economic
     equivalent thereof); and

          (g) any other compensation and benefits as may be provided in
     accordance with the terms and provisions of any applicable plans or
     programs of the Company and/or the Subsidiaries.

         If the Executive seeks to terminate the Executive's employment
hereunder for Good Reason, the Company shall be given written notice that the
Executive intends to terminate the Executive's employment for Good Reason. Such
written notice, given in accordance with Section 6.6 of this Agreement, shall
specify the particular act or acts, or failure(s) to act, which is or are the
basis for the Executive's decision to so terminate the Executive's employment
for Good Reason. The Company shall be given the opportunity within ten (10)
calendar days of the receipt of such notice to meet with the Executive to defend
such act or acts, or failure(s) to act, and the Company shall be given twenty
(20) business days after such meeting to correct such act, acts or failure(s) to
act provided that the Company shall not have the right to correct the acts or
failure(s) to act specified in clauses (c) and (i) of the definition of Good
Reason. Upon failure of the Company, within such latter twenty (20) business day
period, to correct such act, acts or failure(s) to act, the Executive's
employment by the Company shall automatically be terminated under this Section
6.3 for Good Reason as of the date of actual termination provided that the date


                                      -13-
<PAGE>


of actual termination shall be ten (10) calendar days after receipt of the
Executive's notice if the Company does not have the right to correct such act(s)
or failure(s) to act.

     6.4 Intentionally omitted.

     6.5 No Mitigation; No Offset. In the event of any termination of employment
under this Section 6, the Executive shall be under no obligation to seek other
employment and there shall be no offset against any amounts paid or payable the
Executive under this Agreement on account of any remuneration attributable to
any subsequent employment that the Executive may obtain. Any amounts due under
this Section 6 are in the nature of severance payments, or liquidated damages,
or both, and are not in the nature of a penalty.

     6.6 Notice of Termination. Any termination of the Executive by the Company
or by the Executive for Good Reason shall be communicated by a notice of
termination to the other party hereto given in accordance with Section 15.3 of
this Agreement (the "Notice of Termination"). Such notice shall (a) indicate the
specific termination provision in this Agreement relied upon, (b) set forth in
reasonable detail the facts and circumstances claimed to provide a basis for
termination of the Executive's employment under the provision so indicated, and
(c) if the termination date is other than the date of receipt of such notice,
specify the date on which the Executive's employment is to be terminated (which
date shall not be earlier than the date on which such notice is given).

     6.7 Payment. Except as otherwise provided in this Agreement, any payments
to which the Executive shall be entitled under this Section 6, including,
without limitation, any economic equivalent of any benefit, shall be made as
promptly as possible following the Date of Termination. If the amount of any
payment due to the Executive cannot be finally determined within thirty (30)
days after the Date of Termination (by way of example only, pro rata bonuses



                                      -14-
<PAGE>


determined pursuant to Section 6.10 hereof), such amount shall be estimated on a
good faith basis by the Company and the estimated amount shall be paid no later
than thirty (30) days after such Date of Termination. As soon as practicable
thereafter, the final determination of the amount due shall be made and any
adjustment requiring a payment to or from the Executive shall be made as
promptly as practicable.

     6.8 Disclosure of Termination. Subject to the requirements of any Exchange
on which securities of the Company may be listed or the securities laws, and
except for terminations for Cause or the death or Disability of the Executive,
any public disclosure of the termination of this Agreement by the Company shall
be subject to prior review and approval by the Executive, which review and
approval shall not be unreasonably withheld or delayed.

     6.9 Pro Rata Calculations. For the purposes of this Article 6 (except
Section 6.2(b)), all calculations of the Annual Bonus on a pro rata basis shall
mean that the Annual Bonus shall be based on the bonus that would have been
payable for the entire calendar year multiplied by a fraction, the numerator of
which is the number of days from January 1 in such year through the date of the
termination of this Agreement and the denominator of which is 365.

     7. Intentionally Omitted.

     8. Non-exclusivity of Rights. Except as provided in Section 5.4 hereof,
nothing in this Agreement or any other provision of this Agreement shall prevent
or limit the Executive's continuing or future participation in any benefit,
bonus, incentive or other plan or program provided or maintained by the Company,
the Subsidiaries or any other Affiliate and for which the Executive may qualify,
nor shall anything herein limit or otherwise prejudice such rights as the
Executive may have under any other existing or future agreements with the
Company, the Subsidiaries or any Affiliate, including, without limitation, any
change of control agreements


                                      -15-
<PAGE>


or any stock option or restricted stock agreements. Except as otherwise
expressly provided for in this Agreement, amounts which are vested benefits or
which the Executive is otherwise entitled to receive under any plans or programs
of the Company, the Subsidiaries or any other Affiliate at or subsequent to the
Date of Termination shall be payable in accordance with such plans or programs.

     9. Full Performance. The Company's obligation to make the payments provided
for in this Agreement and otherwise to perform its obligations hereunder shall
not be affected by any circumstances, including, without limitation, any
set-off, counterclaim, recoupment, defense or other right which the Company may
have against the Executive or others.

     10. Fees and Expenses. In the event that a claim for payment or benefits
under this Agreement is disputed, the Company shall advance and pay all
reasonable accounting and legal fees and expenses of the Executive, at the
regular hourly rate charged by the accountants and attorneys of the Executive in
connection with any such dispute (whether such dispute is litigated or
arbitrated including, without limitation, in connection with claims that are
settled) incurred by the Executive in pursuing or defending such claim. The
Executive shall not have an obligation to repay any such advances to the Company
except to the extent that a court of competent jurisdiction issues a final,
nonappealable judgment ordering the Executive to reimburse the Company for a
portion (or, if so ordered, all) of legal fees and expenses previously advanced
by the Company, based upon such court's determination of what is reasonable
under all applicable facts and circumstances including which party prevailed on
each of the issues disputed. The Company shall in addition pay or reimburse the
Executive for all reasonable legal fees and expenses incurred by the Executive
in connection with the preparation and negotiation of this Agreement and the
matters related thereto.


                                      -16-
<PAGE>


     11. Confidential Information. The Executive shall not, during the Term of
Employment and thereafter, without the prior express written consent of the
Company, disclose any confidential information, knowledge or data relating to
the Company, which (a) was obtained by the Executive in the course of the
Executive's employment with the Company, and (b) which is not information,
knowledge or data otherwise in the public domain (other than by reason of a
breach of this provision by the Executive), unless required to do so by a court
of law or equity or by a governmental agency or other authority.

     12. Successors.

     12.1 The Executive. This Agreement is personal to the Executive and,
without the prior express written consent of the Company, shall not be
assignable by the Executive, except that the Executive's rights to receive any
compensation or benefits under this Agreement may be transferred or disposed of
pursuant to testamentary disposition, intestate succession or a qualified
domestic relations order or in connection with a Disability. This Agreement
shall inure to the benefit of and be enforceable by the Executive's estate,
heirs, beneficiaries and/or legal representatives.

     12.2 The Company. This Agreement shall inure to the benefit of and be
binding upon the Company and its successors and assigns. The Company shall
require any successor to all or substantially all of the business and/or assets
of the Company or the Subsidiaries, whether direct or indirect, by purchase,
merger, consolidation, acquisition of stock, or otherwise, by an agreement in
form and substance satisfactory to the Executive, expressly to assume and agree
to perform this Agreement in the same manner and to the same extent as the
Company would be required to perform had no such succession taken place.

     13. Indemnification.


                                      -17-
<PAGE>


     13.1 General. The Company agrees that if the Executive is made a party or
is threatened to be made a party to any action, suit or proceeding, whether
civil, criminal, administrative or investigative (a "Proceeding"), by reason of
the fact that Executive is or was a director or officer of the Company, the
Subsidiaries and/or any other Affiliate or is or was serving at the request of
the Company, the Subsidiaries and/or any other Affiliate as a director, officer,
member, employee or agent of another corporation or of a partnership, joint
venture, trust or other enterprise, including, without limitation, service with
respect to employee benefit plans, whether or not the basis of such Proceeding
is alleged action in an official capacity as a director, officer, member,
employee or agent while serving as a director, officer, member, employee or
agent, Executive shall be indemnified and held harmless by the Company to the
fullest extent authorized by New York law, as the same exists or may hereafter
be amended, against all Expenses (as hereinafter defined in Section 13.2)
incurred or suffered by the Executive in connection therewith, and such
indemnification shall continue as to the Executive even if the Executive has
ceased to be an officer, director or agent, or is no longer employed by the
Company and shall inure to the benefit of Executive's heirs, executors and
administrators.

     13.2 Expenses. As used in this Article, the term "Expenses" shall include,
without limitation, damages, losses, judgments, liabilities, fines, penalties,
excise taxes, settlements and costs, reasonable attorneys' fees, reasonable
accountants' fees, and disbursements and costs of attachment or similar bonds,
investigations, and any reasonable expenses of establishing a right to
indemnification under this Agreement.

     13.3 Enforcement. If a claim or request under this Article is not paid by
the Company fifteen (15) days after a written claim or request has been received
by the Company, the Executive may at any time thereafter bring suit against the
Company to recover the unpaid


                                      -18-
<PAGE>


amount of the claim or request and if successful in whole or in part, the
Executive shall be entitled to be paid also the expenses of prosecuting such
suit. The burden of proving that the Executive is not entitled to
indemnification for any reason shall be upon the Company.

     13.4 Subrogation. In the event of payment under this Article, the Company
shall be subrogated to the extent of such payment to all the rights of recovery
of the Executive.

     13.5 Partial Indemnification. If the Executive is entitled under any
provision of this Article to indemnification by the Company for some or a
portion of any Expenses, but not, however, for the total amount thereof, the
Company shall nevertheless indemnify the Executive for the portion of such
Expenses to which the Executive is entitled.

     13.6 Advances of Expenses. Expenses incurred by the Executive in connection
with any Proceeding shall be paid by the Company in advance upon request of the
Executive that the Company pay such Expenses, provided that prior to such
advance the Executive shall provide the Company with a written undertaking to
repay such advances to the Company if it shall ultimately be determined that he
is not entitled to be indemnified as authorized under the New York Business
General Corporation Law.

     13.7 Notice of Claim. The Executive shall give to the Company notice of any
claim made against the Executive for which indemnity will or could be sought
under this Article. In addition, the Executive shall give the Company such
information and cooperation as it may reasonably require and as shall be within
the Executive's power and at such times and places as are convenient for the
Executive.

     13.8 Defense of Claim. With respect to any Proceeding as to which the
Executive notifies the Company of the commencement thereof:


                                      -19-
<PAGE>


     13.8.1 The Company will be entitled to participate therein at its own
expense; and

     13.8.2 Except as otherwise provided below, to the extent that it may wish,
the Company jointly with any other indemnifying party similarly notified will be
entitled to assume the defense of the Executive, with counsel satisfactory to
the Executive. The Executive also shall have the right to employ the Executive's
own counsel in such action, suit or Proceeding and the reasonable fees and
expenses of such counsel shall be at the expense of the Company. The Company
shall not be entitled to assume the defense of any action, suit or Proceeding
brought by or on behalf of the Company or the Subsidiaries or as to which the
Executive shall have concluded that there may be a conflict of interest between
the Company or the Subsidiaries and the Executive in the conduct of the defense
of such action.

     13.8.3 The Company shall not be liable to indemnify the Executive under
this Agreement for any amounts paid in settlement of any action or claim
effected without its written consent. The Company shall not settle any action or
claim in any manner which would impose any penalty or limitation on the
Executive without Executive's written consent. Neither the Company nor the
Executive will unreasonably withhold or delay their consent to any proposed
settlement.

     13.9 Non-exclusivity. The right to indemnification and the payment of
expenses incurred in defending a Proceeding in advance of its final disposition
conferred in this Section 13 shall not be exclusive of any other right which the
Executive may have or hereafter may acquire under any statute, provision of the
certificate of incorporation or by-laws of the Company or the Subsidiaries,
agreement, vote of stockholders or disinterested directors or otherwise.


                                      -20-
<PAGE>


     14. Miscellaneous.

     14.1 Applicable Law. Except as may be otherwise provided herein, this
Agreement shall be governed by and construed in accordance with the laws of the
State of New York, applied without reference to principles of conflict of laws.

     14.2 Amendments. This Agreement may not be amended or modified otherwise
than by a written agreement executed by the parties hereto or their respective
successors and legal representatives.

     14.3 Notices. All notices and other communications hereunder shall be in
writing and shall be given by hand-delivery to the other party or by registered
or certified mail, return receipt requested, postage prepaid, addressed as
follows:

                  If to the Executive:        Maurice Dickson
                                              1411 Broadway
                                              New York, New York 10018

                  and to:                     Maurice Dickson
                                              Upper Birchcreek Road
                                              Highmount, NY 12441


                  If to the Company:          Aris Industries, Inc.
                                              1411 Broadway
                                              New York, New York 10018
                                              Attention: Chairman

                  with a copy to:             Robert W. Forman
                                              Shapiro Forman & Allen LLP
                                              380 Madison Ave., 25th Floor
                                              New York, NY 10017

or to such other address as either party shall have furnished to the other in
writing in accordance herewith. Notices and communications shall be effective
when actually received by the addressee.


                                      -21-
<PAGE>


     15.4 Withholding. The Company may withhold from any amounts payable under
this Agreement such federal, state and local income, unemployment, social
security and similar employment related taxes and similar employment related
withholdings as shall be required to be withheld pursuant to any applicable law
or regulation.

     15.5 Severability. The invalidity or unenforceability of any provision of
this Agreement shall not affect the validity or enforceability of any other
provision of this Agreement, and any such provision which is not valid or
enforceable in whole shall be enforced to the maximum extent permitted by law.

     15.6 Captions. The captions of this Agreement are not part of the
provisions hereof and shall have no force or effect.

     15.7 Entire Agreement. This Agreement contains the entire agreement among
the parties concerning the subject matter hereof and supersedes all prior
agreements, understandings, discussions, negotiations and undertakings, whether
written or oral, between the parties with respect thereto.

     15.8 Representation. Each party to this Agreement represents and warrants
that it is fully authorized and empowered to enter into this Agreement and that
the performance of its obligations under this Agreement will not violate any
agreement between it and any other person, firm or organization or any
applicable laws or regulations.

     15.9 Survivorship. The respective rights and obligations of the parties
hereunder shall survive any termination of this Agreement or the Executive's
employment hereunder to the extent necessary to the intended preservation of
such rights and obligations.


                                      -22-
<PAGE>


     15.10 Joint and Several Obligations. Anything to the contrary
notwithstanding in this Agreement, all of the monetary and non-monetary
obligations of the Company in this Agreement shall be and are the joint and
several obligations of the Company and the Subsidiaries.

     15.11 Joint Efforts/Counterparts. Preparation of this Agreement shall be
deemed to be joint effort of the parties hereto and shall not be construed more
severely against any party. This Agreement may be signed in two or more
counterparts, each of which shall be deemed an original and all of which
together shall constitute one and the same instrument.

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

                                         ARIS INDUSTRIES, INC.


                                         By
                                           -------------------------------
                                                  Arnold H. Simon
                                                  Chief Executive Officer

                                         ECI SPORTSWEAR, INC.


                                         By
                                           -------------------------------
                                                  Arnold H. Simon
                                                  Chief Executive Officer

                                         EUROPE CRAFT IMPORTS, INC.


                                         By
                                           -------------------------------
                                                  Arnold H. Simon
                                                  Chief Executive Officer


                                         ---------------------------------
                                         Maurice Dickson


                                      -23-
<PAGE>



                                  SCHEDULE 5.8

                         PERQUISITES AND FRINGE BENEFITS


          o    Reimbursement of $25,000 of a non-accountable expense allowance

          o    Four (4) weeks of paid vacation for each calendar year, to be
               taken cumulatively



                                      -24-
</TEXT>
</DOCUMENT>
<DOCUMENT>
<TYPE>EX-10.125
<SEQUENCE>5
<FILENAME>0005.txt
<DESCRIPTION>TRADEMARK LICENSE
<TEXT>


                                                                  EXHIBIT 10.125

                                                                  EXECUTION COPY


                                TRADEMARK LICENSE


     This Trademark License and Operating Agreement is made and entered into
this ___ day of January, 2001 by and between, Aris Industries, Inc., a New York
corporation ("Aris"), XOXO Clothing Company, Incorporated, a Delaware
corporation ("XOXO"), BP Clothing Company, Inc., a Delaware corporation, ("BP"),
Europe Craft Imports, Inc., a New Jersey corporation ("ECI") and Marcade Realty
Corp., a New York corporation ("Marcade"), on the one hand, and Grupo Extra of
New York, Inc., a New York corporation, with an address at c/o Mark Stern, 141
West 36th Street, New York, NY ("Licensee"), on the other.

                                    RECITALS

     A. XOXO, BP, ECI and Marcade are direct or indirect wholly owned
subsidiaries of Aris.

     B. XOXO is the owner of the trademarks XOXO(R)and Fragile(R).

     C. ECI is the owner of the trademark Members Only(R).

     D. BP is the licensee of the name Baby Phat(R) under a license agreement
dated as of July 1, 1999 for the manufacture and sale of women's sportswear (the
"BP License Agreement").

     E. ECI is the licensee of the name Brooks Brothers Golf(R) under a license
agreement made as of November 10, 1999 (the "BB License Agreement").

     F. Each of XOXO, BP and ECI are referred to herein as a Licensor to the
extent it has rights in the Trademarks as listed in Recitals B through E, above.

     G. Marcade is the tenant under leases for twelve XOXO Outlet Stores
identified on Schedule B (the "Outlet Stores").

     H. Licensee is in the business of manufacturing, selling and distributing,
among other products, sportswear, outerwear, golf wear and denim bottoms.

     I. Licensee desires to obtain from Licensor an exclusive license to
manufacture, market, sell, distribute and advertise the Licensed Products using
the Trademarks in the Licensed Territory, all as set forth on Schedule "A," and
to purchase all of Licensors' inventory of Licensed Products, assume certain of
its leases and other agreements, and absorb certain of their overhead structure.


<PAGE>


     J. The parties desire that this Agreement be effective as of February 1,
2001 (the "Effective Date").

     K. Licensee represents that it has the ability to manufacture, market,
sell, distribute and advertise the Licensed Products in the territory set forth
on Schedule "A" hereto (the "Licensed Territory") and to use the Trademarks on
or in association with the Licensed Products.

     NOW, THEREFORE, in consideration of their respective promises and
agreements made herein, the parties agree as follows:

     1. LICENSE

     1.1 Grant of License. Subject to the terms and conditions of this
Agreement, as of the Effective Date, each Licensor hereby grants to Licensee
(either by itself or through other entities under common control with Licensee)
the exclusive right and license (the "License") to use the Trademarks in which
it has the rights described in Recitals B through E solely to manufacture,
market, advertise, promote, sell and distribute the Licensed Products in the
Territory during the Term of this Agreement. The License created hereby only
allows the Licensee to market, sell, distribute and advertise the Licensed
Products for sale at wholesale solely to retailers located in the Licensed
Territory and does not permit Licensee to engage in the retail sale and/or
retail marketing of the Licensed Products except for the Outlet Stores and such
other outlet stores as Aris may approve in writing, which approval will not be
unreasonably withheld, delayed or conditioned.

     1.2 Determination of Licensed Products; Right of First Offer.

     1.2.1 Determination of Licensed Products. Licensee agrees that it will not
manufacture, market, sell, distribute or advertise, either directly or
indirectly, any style, design or product not in effect on the date hereof which
Licensor, in its reasonable discretion, has not expressly approved.

     1.2.2 Right of First Offer. In the event a Licensor decides to grant a
license for any of the Trademarks in connection with the manufacture and sale in
the Licensed Territory of products not included in the Licensed Products or for
any products in Mexico or South America (other than pursuant to existing license
agreements), it shall first offer (the "Offer") such license to Licensee,
stating the term, royalty rate, minimum guaranteed sales and royalties and
channels of distribution for which it proposes to grant such license. For the
next 30 days, if Licensee desires to accept such license, Licensor shall
negotiate exclusively with Licensee for such license. If, after such 30 day
period, the parties have not reached agreement with respect to such license,
Licensor may enter into a license for such product, in the 180 period following
expiration of the 30 day period, on terms and conditions not materially more
favorable to the licensee than are contained in the Offer.


                                      -2-
<PAGE>


     1.3 Approval Regarding Other Products Etc. Licensee acknowledges that
Licensor may grant additional licenses in the future for territories, products
and categories not presently licensed and not within the scope of this License.
Permission of Licensor for Licensee to manufacture a particular style, design or
product, or to distribute the Licensed Products within an area, which is not, in
the reasonable opinion of the Licensor, within the scope of the License, shall
not constitute a continuing approval or a waiver of the right of Licensor to
later disapprove any style, design, product, or distribution area.

     1.4 Use/Ownership of Trademarks. Other than as expressly set forth in this
License, Licensee has absolutely no right, title or interest in or to the
Trademarks or the use thereof. Licensee acknowledges that it is only acquiring
the right to use the Trademarks in connection with the manufacture, marketing,
advertising, promotion, distribution and sale of the Licensed Products in the
Licensed Territory, for the Term set forth in this Agreement and subject to the
terms hereof. Upon termination of the License, Licensee shall cease all use of
the Trademarks except as provided in Paragraph 18. Licensee shall not apply
anywhere in the world, to register any copyright, trademark or trade name that
in any way mentions or uses the Trademarks or any trademark or trade name that
is confusingly similar to the Trademarks or trade names licensed hereunder,
without the express prior written consent of Aris.

     1.5 Ownership of Trademarks. Each Licensor hereby represents and warrants
that it is the sole owner of the Owned Trademarks, free and clear of all claims,
liens and encumbrances other than an existing lien in favor of CIT Commercial
Group Services, Inc. ("CIT") to secure a term loan with a current outstanding
principal balance of $7.5 million. Licensee agrees that the Trademarks and all
rights, registrations and entitlement thereto, together with all applications,
registrations and filings are and shall remain the sole and exclusive property
of Licensor.

     1.6 Use of Names. Except as authorized pursuant to this License, and only
to that extent, Licensee shall not use the Trademarks or any confusingly similar
or substantially similar word or names in its business name or otherwise in any
other manner, without the prior written consent of Aris.

     1.7 Best Efforts. Licensee shall use its best efforts to manufacture,
market, sell, distribute and advertise the Licensed Products in order to meet
the demand for the Licensed Products in the Licensed Territory and to uphold,
protect and defend the image and reputation of the Licensed Products and the
integrity of the Trademarks. Licensee further agrees to use its best efforts to
manufacture and ship not less than 75% of all approved, confirmed orders for
Licensed Products within a reasonable time of receipt of approved orders, as
hereinafter defined, or by the delivery date specified in such orders. Licensee
shall maintain a sales organization that will sell the Licensed Products and
that will be capable of effectively soliciting orders for sales of the Licensed
Products in the Territory.

     1.8 Assignment. As of the Effective Date, ECI and BP will transfer and
assign unto Licensee all of their respective right, title and interest in the BB
License Agreement and BP


                                      -3-
<PAGE>

License Agreement, respectively, subject to any and all terms and conditions set
forth therein, and Licensee hereby assumes and agrees to fully and faithfully
perform all of the obligations, duties, and responsibilities of ECI and BP under
such License Agreements from and after the Effective Date. Licensee agrees to
hold ECI and BP harmless from and against all claims, losses, liabilities and
expenses, including reasonable attorney's fees, incurred as a result of or in
connection with any failure of Licensee to adhere to the aforementioned
covenant. ECI and BP each hereby agrees to hold Licensee harmless from and
against all claims, losses, liabilities and expenses arising under such License
Agreements as a result of their activities prior to the Effective Date. BP and
ECI shall pay actual royalties to the respective licensor under the BP and BB
License Agreements for sales made between January 1, 2001 and the Effective
Date. In connection with such assignments, Licensee shall, upon execution
hereof, pay to Aris for payment to the licensors under the BP and BB License
Agreements, the Minimum Guaranteed Royalty due for the first quarter of 2001 in
the amount of $495,000 and $127,500, respectively. Each party shall cooperate
with the other to obtain the consents of the licensors under the BP and BB
License Agreements.

     2. LICENSED TERRITORY.

     2.1 The Licensed products shall only be sold, marketed, distributed or
delivered exclusively by Licensee, either directly or indirectly, in the
Licensed Territory.

     2.2 Licensee shall not, directly or indirectly, sell, market, distribute or
deliver, the Licensed Products outside of the Licensed Territory without prior
written consent of Licensor, which consent may be withheld in the sole and
absolute discretion of the Licensor. Licensee shall not, directly or indirectly,
sell, distribute or otherwise deliver or cause to be sold, distributed or
delivered, the Licensed Products to any individual or entity whom Licensee
knows, or reasonably believes might, sell the Licensed Products outside the
Licensed Territory.

     2.3 Nothing contained herein shall in any way restrict or prohibit Licensor
from licensing, marketing, manufacturing, selling or distributing the Licensed
Products outside the Licensed Territory and Licensee shall have no rights
therein.

     3. TERM.

     3.1 Term. The initial term of this License shall begin on the Effective
Date and terminate on December 31, 2005 ("Term" or "Initial Term"). The First
Annual Period shall begin on the Effective Date and end on December 31, 2001.
Each Annual Period thereafter shall commence on January 1 and end on December 31
for each year respectively.

     3.2 Renewal. Licensee has the right to extend the term of this License for
four additional five year Terms of five years (each, a "Renewal Term"). Said
right must be exercised by providing written notice to Licensor at least six (6)
months and no more than nine (9) months, prior to the end of the Initial Term
and any Renewal Term. Said right may only be exercised if Licensee is in
substantial compliance with its obligations under this Agreement as of the time
of exercise of the option and as of the date of commencement of the Option. In
the event of any extension or renewal of this Agreement as provided herein, all
terms and conditions of this


                                      -4-
<PAGE>


Agreement shall remain in full force and effect, except as otherwise set forth
in this Agreement. Should Licensor, in accordance with the terms of this
Agreement, exercise its right under this Agreement to terminate the rights of
Licensee hereunder, thereafter Licensee shall not have any option to extend the
term of this Agreement.

     4. ROYALTY PAYMENTS. In consideration for the license granted pursuant to
this Agreement, the Licensee shall pay to Licensor, a royalty based on Net Sales
of the Licensed Products ("Royalty") as follows:

                  Licensed Product:                           Royalty Rate:
                  ----------------                            ------------

                  XOXO(R)                                     9%
                  Members Only(R)                             8%
                  Fragile(R)                                  9%
                  Baby Phat(R)                                7%
                  Brooks Brothers Golf(R)                     7%

The Royalty for Brooks Brothers Golf(R) and Baby Phat(R) Products shall be in
addition to the amounts payable by Licensee under the BP and BB License
Agreements. Sales to off-price channels of distribution of Licensed Products
with respect to the Owned Trademarks may not exceed twenty-five (25%) percent of
the total sales of Licensed Product during each Contract Year. Licensee may only
sell Licensed Products under the Owned Trademarks at twenty (20%) percent or
more off its normal wholesale selling price thirty days or more after such
Licensed Products have been marked down at retail unless Licensor has approved
such earlier markdown in writing. The Royalty for closeouts, seconds or
irregulars up to 25% of Annual Net Sales shall be one-half of the applicable
Royalty Rate. The Royalty on any such sales in excess of that amount shall be at
the Royalty Rates set forth in the table above. Licensee may only sell
irregulars as they develop as long as they are clearly marked "irregular."

     4.1 Advance Payment of Royalty. On execution hereof the Licensee shall pay
to Licensor an advance in the amount of $3,160,000 which payment shall be
credited against the Guaranteed Minimum Royalty Payment due for the first
quarter and a portion of the second quarter of the First Year of the Term,
pursuant to Paragraph 4.4 below.

     4.2 Net Sales. As used herein, "Net Sales" shall mean Licensee's gross
sales (as determined by the gross invoice amount billed to customers) of the
Licensed Products, whether or not actually paid for, less actual returns,
freight and bona fide trade discounts actually granted by Licensee. No costs
incurred in the manufacturing, selling, advertising and/or distribution of the
Licensed Products or in the payment by Licensee of any taxes of any nature
whatsoever shall be deducted from the gross sales amounts or from any royalty
payable to Licensor, except in the event of a withholding tax on royalties due
to Licensor, nor shall any deduction be allowed for any uncollectible accounts
or allowances. Licensee shall provide Licensor reasonable documentation
evidencing any allowances, deductions, returns, credits, etc. Net Sales shall
not include sales to or by the Outlet Stores.


                                      -5-
<PAGE>


     4.3 Minimum Sales. Licensee shall achieve the Minimum Net Sales in each
Year of the Term as follows:

         Year ended December 31                        Minimum Sales
         ----------------------                        -------------
                  2001                                 $  90,000,000
                  2002                                 $ 102,600,000
                  2003                                 $ 116,964,000
                  2004                                 $ 133,338,960
                  2005                                 $ 150,000,000

     4.4 Guaranteed Minimum Royalty Payment. Licensee shall pay to Licensor a
Guaranteed Minimum Royalty Payment for each year during the term hereof, in
accordance with the terms of Schedule "A" attached hereto (the "Guaranteed
Minimum Royalty"). For each year, the Guaranteed Minimum Royalty shall be
payable in equal quarterly installments on the first day of each quarter of the
year. On April 1, 2001, Licensee shall pay Licensor that sum of $890,000,
representing the balance of the Minimum Guaranteed Royalty for the first two
quarters of 2001.

     4.5 Manner of Payment; Quarterly Statements. The Royalties due Licensor
shall be calculated and paid within 30 calendar days of the end of each calendar
quarter during the term hereof, for Net Sales invoiced and delivered during the
immediately preceding calendar quarter, (the "Royalty Period). Concurrently with
the payment of each Royalty Payment, Licensee shall deliver to Licensor a
written statement showing any pre-payment of royalties made by Licensee to
Licensor and all of the Licensed Products sold and delivered during the
applicable period covered by the Royalty Payment together with such
documentation including, without limitation, bills of lading and letters of
credit, requested by Licensor to demonstrate the GPP on the Net Sales covered by
the Royalty Payment. Said statement shall be in the form and shall contain the
information as Licensor may from time to time direct. If the Licensor shall
change the form of and information required on the statement, then Licensor must
give the Licensee at least ninety (90) days notice of such change. Such royalty
statement shall be certified as accurate by a duly authorized officer of
Licensee, reciting on a customer by customer basis, the stock number, item,
units sold, description, quantity shipped, gross invoice, amount billed
customers less discounts, allowances, returns and reportable sales for each
Licensed Product. Such statements shall be furnished to Licensor whether or not
any Licensed Products were sold during the Royalty Period. If payment is not
timely made, an interest charge of prime plus 3% shall be added to the unpaid
balance following a cure period of ten (10) days until said balance, plus
accrued interest is paid in full.

     4.5.1 Licensee's obligation to pay Licensor the Royalty Payment shall
accrue upon the sale of the Licensed Products regardless of the time of
collection by Licensee. For purposes of this Agreement, a Licensed Product shall
be considered "sold" upon the date when such Licensed Product is billed,
invoiced, shipped or paid for, whichever event occurs first.

     4.5.2 If Licensee sells any Licensed Products to any party affiliated with
Licensee, or in any way directly or indirectly related to or under the common
control with Licensee, at a price less that the regular price charged to other
parties, the Royalty Payment


                                      -6-
<PAGE>


payable to Licensor shall be computed on the basis of the regular price charged
to the other parties.

     4.5.3 Upon five days prior written notice to Aris, Licensee may pay to CIT
on behalf of Aris any regularly scheduled principal installment then due under
the Term Loan. Such loan is payable in quarterly installments of $500,000 on the
first day of each calendar quarter. Any such payment shall be credited against
Royalties due as of such payment date.

     4.6 Liquidated Damages. In the event that this License Agreement is
terminated as a result of Licensee's default, in addition to any amounts due for
Royalties (including Guaranteed Minimum Royalties), as liquidated damages,
Licensee shall pay Aris, within 30 days of termination, an amount equal to the
Guaranteed Minimum Royalty in effect for the year in which the Agreement is
terminated.

     4.7 Books, Records and Reports. Licensee shall keep true and accurate books
of accounts and records in accordance with generally accepted accounting
principles (GAAP) with respect to all transactions involving the Licensed
Products. Should the generally accepted accounting principles applied in the
Territory differ from US GAAP, Licensee will provide, to the satisfaction of
Licensor, conversion to US GAAP requirements.

     4.8 Annual Reports of Sales. For each Annual Period during the term hereof,
Licensee shall submit to Licensor an annual statement for the period ending
December 31. The year-end statement shall be submitted by March 15th of each
year for the previous calendar year. Each statement shall include a detailed and
cumulative account of all transactions of the Licensed Products, including,
without limitation, all sales, all returns, all bona fide trade discounts, the
direct cost of goods sold for Products included in Net Sales for such Year, all
royalties paid and payable, all Licensed Products returned as substandard, and
all orders canceled for non-delivery and such other information as Licensor may
from time to time reasonably request. The Chief Executive Officer and the Chief
Financial Officer of Licensee shall jointly and severally certify this report to
be correct.

     4.9 Purchase of Inventory; Transfer of Orders. Within four months of the
Effective Date, Licensee shall purchase, and Licensor shall sell, F.O.B.
Licensor's warehouses, all inventory (the "Inventory") of the Licensed Product
on hand as of the Effective Date, at Licensor's cost, substantially as set
forth on Schedule C, less a reserve for obsolete inventory determined in
accordance with GAAP. The Inventory as of the Effective Date shall consist of
the Inventory as of December 31, 2000 plus such items purchased, and minus such
items sold in the ordinary course of business since that date. Licensor's
inventory of Licensed Products as of December 31, 2000 is set forth on Schedule
C. Licensor shall update such Schedule as of the close of business on the day
immediately preceding the Effective Date. Licensee shall pay for the Inventory
purchased hereunder within two business days of its shipment from Licensor's
warehouse. Licensee shall use its best efforts to use the Inventory to fill
existing orders and any new orders for Licensed Products. Any Inventory not
purchased within four months of the Effective Date to fill orders shall be
purchased by, and paid for, by Licensee within 5 days after


                                      -7-
<PAGE>


the expiration of such four month period. The Inventory will be delivered free
and clear of any claims, liens and encumbrances.

     5. ADVERTISING. Licensee shall not implement any advertising program or
place any advertisement using the Trademark or for the License Product not
pre-approved, in writing, by Licensor, which approval shall not be unreasonably
withheld or delayed.

     6. AUDIT. Licensee shall keep complete and accurate books and records at
its principal place of business covering all transactions relating to this
Agreement. Licensor and/or its duly authorized representatives shall have the
right, at reasonable business hours and upon seven (7) business days notice, at
the place where such records are normally maintained, to inspect, audit, examine
and make copies of such books and records and all other documents and material
in Licensee's possession or control regarding any transactions relating to this
Agreement. Licensor may not audit Licensee more than once in any Contract Year
unless prior audits have uncovered Royalty underpayments of five percent (5%) or
more.

     6.1 All books and records of Licensee relating to this Agreement shall be
retained by Licensee, and made available for Licensor review, for at least three
(3) years following termination of this Agreement.

     6.2 The receipt or acceptance by Licensor of any of the statements
furnished or any payments made by Licensee pursuant to this Agreement shall not
preclude Licensor from reviewing the books and records or from questioning the
accuracy thereof. Licensor shall have the right no more than one time per annual
period to audit Licensee's books to determine the correctness of
payments/amounts due Licensor hereunder. The cost of said audit shall be borne
by Licensor. However, if any audit reveals an underpayment by Licensee of five
percent (5%) or more, Licensee shall pay forthwith (and in no event later than
five (5) days after completion of said audit), the cost of the audit, and all
payments found to be due, with interest thereon, at the rate of prime plus 3%,
computed from the date said unpaid payments/amounts would have been due had they
been properly accounted for until the date they are actually paid.

     6.3 In the event that an audit or investigation of Licensee's books and
records is made, certain confidential and proprietary information of Licensee
may necessarily be made available to the person(s) conducting such audit or
investigation. It is agreed that such confidential and proprietary information
shall be retained in confidence by Licensor and its agents, employers and
representatives, and shall not be used by Licensor and its agents, employers and
representatives or disclosed to any third party without the prior written
consent of Licensee, unless otherwise required by law. Notwithstanding the
foregoing, such information may be used in any proceeding based on Licensee's
failure to pay its actual Royalty Payments or other obligations to Licensor.

     7. QUARTERLY FINANCIAL STATEMENTS. Not later than one hundred twenty (120)
days after Licensee's fiscal year-end, Licensee shall furnish Licensor with a
balance sheet as of the end of such fiscal year of Licensee certified by the
Chief Financial Officer of Licensee as being prepared in accordance with GAAP.


                                      -8-
<PAGE>


     8. PRODUCT STANDARDS. Licensee shall not sell, distribute or otherwise
market the Licensed Products unless each product has received the prior written
approval of Licensor prior to distribution thereof, subject to the terms and
conditions of this Paragraph 8.

     8.1 Omitted.

     8.2 Approval of Design Concept. As soon as Licensee has developed a design
for a Licensed Product that it desires to produce, sell and market, Licensee
shall submit one (1) design sample or drawings thereof if samples are not
available, at no cost to Licensor, of said product, along with color and fabric
samples, if applicable, to Licensor for approval, along with one (1) complete
set of all promotional and advertising material associated therewith.

     8.2.1 Within ten (10) working days following the confirmed receipt of any
design sample, Licensor shall either approve or disapprove the product or
indicate changes to be made. Failure by Licensor to so note approval,
disapproval or changes within said ten (10) working days shall be deemed
approval. In the event changes are required, Licensee shall be required to
resubmit the revised design sample or drawings thereof if samples were not
originally submitted, for approval with the recommended changes. Subsequent
re-submissions shall occur until Licensor either approves or rejects the design
in question, subject to the foregoing 10 day period. However, in the event that
a dispute arises as to the determination of same, Licensor shall have the final
decision with respect thereto. Licensee shall not produce a Licensed Product for
manufacturing, marketing, sale, distribution, advertising or otherwise, which
has not received the approval of the Licensor as set forth herein. Once the
Licensor has approved the design samples, Licensee shall not materially depart
therefrom without Licensor's prior written consent.

     8.3 Approval of Production Samples. As soon as Licensee has produced its
samples for sale of any proposed Licensed Product that has received design
approval as set forth above; Licensee shall submit one sample of each Licensed
Product in the form that Licensee plans to have produced to Licensor for
approval, ("Sample"). All submissions of Samples for approval by Licensor shall
be at the sole expense of the Licensee. Licensee shall use such sample approval
forms and supply Licensor with such information in connection therewith, as
Licensor shall from time to time reasonably direct. Within ten (10) business
days following confirmed receipt, Licensor shall either approve, disapprove or
indicate changes to be made in the Sample. Failure by Licensor to so note
approval, disapproval or changes within said ten (10) business days shall be
deemed approval. In the event changes are required, the approval form shall be
resubmitted for approval with the recommended changes. Subsequent re-submissions
shall occur until Licensor either approves or rejects the sample in question,
subject to the foregoing 10 day period. All approvals shall be at Licensor's
reasonable discretion. An approved Sample of each Licensed Product shall be
provided to Licensor for its historical sample line at Licensee's cost. The
approved Samples shall be the standard by which future production quality shall
be judged. The Licensed Products produced for sale and/or delivery to any
customer of Licensee or anyone else, shall be of at least the same or better
quality than that which was approved by Licensor as a production sample
hereunder.


                                      -9-
<PAGE>


          (a) Licensee shall be responsible for making all prototypes and
     samples as well as for the production of Articles, and Licensee will bear
     all cost in connection therewith.

     8.4 Approval Prior to Delivery. Licensee shall deliver no Licensed Product
to a customer unless it has received the design and sample approvals required by
paragraphs 8.1 and 8.2 above.

     8.5 Omitted.

     8.6 "Off Priced" Goods. During the Term of this Agreement, Off-Priced Goods
shall mean any Licensed Products that are either not sold by Licensee during the
normal course of business, seconds, overruns, damaged, off-priced, discontinued
or otherwise Licensed Products that are not sold during the selling season for
same (hereinafter referred to as "off-priced goods"). (1) Any and all
disposition of Licensed Products or articles constituting close-outs, damages,
off-price goods, excess inventory, irregulars or other items constituting other
than regular full price products sold to retail customers in the Territory, must
be approved by Licensor prior to disposition, which approval shall not be
unreasonably withheld, conditioned or delayed.

     (2) All identification shall be removed from all Licensed Products sold by
Licensee as other than first-quality merchandise unless to do so would render
such goods unsalable, in which case Licensee shall mark them to clearly
indicate, in a form acceptable to Licensor, that they are "irregular"; and such
Licensed Products and all close-out products shall be sold only if there is no
advertising or promotion of the Licensed Products in connection with the
irregular articles or close-out articles.

     9. QUALITY CONTROL. Licensor has the right to make on site inspections at
any reasonable time and on reasonable notice at manufacturing and distribution
facilities of Licensee or any of its third party manufacturers to ensure the
ongoing quality of the Licensed Products. If, at any time, Licensor reasonably
determines that a Licensed Product is of lesser quality than the production
sample approved pursuant to Paragraph 8.2 hereof, Licensor shall give Licensee
written notice thereof. Licensee shall take immediate steps to restore the
quality of and cure the defects upon receipt of said notice and cease production
and distribution of that Licensed Product until its quality is improved to the
satisfaction of Licensor.

     10. LABELING. All Licensed Products and all promotional and advertising
material shall contain all appropriate notices, whether copyright, trademark or
otherwise as required by Licensor and as may be required by law. On all labels
and hang tags, and Licensed Products the circle (R) or (TM) as appropriate shall
appear denoting United States Trademark registration or pending registration,
and where applicable, and subject to the direction of Licensor, all items
subject to copyright protection shall bear a proper and complete circle (C)
copyright notice as specified by law. Licensor shall have the right from time to
time to designate the exact symbols or language to be used by Licensee to denote
ownership by Licensor of any intellectual property, be it Trademarks, copyrights
or other property. Licensee understands the importance of


                                      -10-
<PAGE>


maintaining the security and integrity of all trademarked labeling used on the
Licensed Products. Licensee further agrees to take commercially reasonable
efforts to maintain a strict, accurate, and current inventory of all labels
throughout the manufacturing process of the Licensed products so as to preclude
any diversion of the labels to other than authorized licensees. No additional
labels, hang tags or identification shall appear on the Licensed Products unless
prior written approval of Licensor is obtained, however, Licensee may include a
separate label of its sole choice for care, content, size and country of origin.

     10.1 Label Inventory. In each annual or year-end statement, Licensee shall
furnish to Licensor a current inventory of all labels designated in Paragraph
10.

     11. TRADEMARKS & COPYRIGHTS. Licensor may seek, in its own name and at its
own expense, appropriate patent, trademark or copyright protection for the
Licensed Products.

     11.1 It is understood and agreed that Licensor shall retain all right,
title and interest in the Trademarks and copyrights and designs of the Licensed
Products, as well as any modifications or improvements made thereto by Licensee.
Upon termination or expiration of this Agreement, Licensor shall be permitted to
make use of same for any purpose whatsoever, and Licensee shall have no right to
any of the foregoing.

     11.2 Licensee agrees to execute any documents reasonably requested by
Licensor to effect any of the above provisions.

     11.3 Licensee acknowledges Licensor's exclusive rights in the Trademarks
and designs and further acknowledges that the designs and/or the Trademarks are
unique and original to Licensor and that Licensor is the owner thereof. Licensee
shall not, at any time during or after the effective Term of the Agreement
dispute or contest, directly or indirectly, Licensor's exclusive right and title
to the designs and/or the Trademarks or the validity thereof. Licensor however,
makes no representation or warranty with respect to the validity of any patent,
trademark or copyright, which may issue or be granted therefrom.

     11.4 Licensee acknowledges that the Trademarks have acquired secondary
meaning.

     11.5 Licensee agrees that its use of the designs of the Licensed Products
and/or the Trademarks inures to the benefit of Licensor and that the Licensee
shall not acquire any rights in the designs of the Licensed Products and/or the
Trademarks.

     11.6 The parties acknowledge that the faithful representation of the
Trademarks, as they appear in the applications and registration of the Office of
the Patent and Trademark Office of the United States and in applications and
registration in the Licensed Territory, is mandatory on the part of Licensee
with respect to any reproduction used by Licensee, whether it appears on the
Licensed Products or in print or is otherwise displayed in the media. Licensee
further agrees that the Trademarks will always be faithfully and exactly
reproduced, unless prior written authorization for modification thereof is
received from Licensor.


                                      -11-
<PAGE>


     11.6.1 Each first use of the Trademarks by Licensee shall be submitted to
Licensor for approval as set forth in this Agreement.

     11.7 Copyright or Trademark Infringement or Misuse & Litigation. If
Licensee becomes aware of any infringement of Licensor's copyrights or
Trademarks or if Licensee becomes aware of any marks confusingly or
substantially similar to the Trademarks, Licensee shall immediately notify
Licensor thereof.

     11.7.1 Prosecution of Infringement Action. Licensor shall have the first
option in its discretion, to institute and prosecute lawsuits against third
persons for infringement of the Trademarks. Licensor shall not be required to
institute legal action if, in its sole and absolute discretion, the probability
of success therein or results of successful litigation do not justify the time
and expense thereof. In the event that Licensor determines in its sole and
absolute discretion not to prosecute any such litigation within 45 days of
receiving a written request from Licensee to commence such action, then in such
event Licensee shall have the right, in its discretion, to institute and
prosecute lawsuits against third persons for infringement of the rights licensed
in this Agreement only. Each party shall cooperate fully with each other in any
proceeding to protect the Trademarks and copyrights and other intellectual
property rights granted herein.

     11.8 Corporate Name. Licensee shall not be permitted to use any of
Licensor's trademarks or anything substantially similar thereto as part of its
corporate name.

     12. WARRANTIES & OBLIGATIONS.

     12.1 Each Licensor represents and warrants that; (a) it has the right and
power to grant the licenses herein; and (b) that it is not party to any other
agreements in conflict herewith, (c) each Licensor is a corporation duly
organized, validly existing and in good standing under the laws of the
jurisdiction of its incorporation and is duly qualified to do business as a
foreign corporation in each additional jurisdiction where the failure to so
qualify would have a material adverse effect. Each Licensor has all requisite
power and authority (corporate and otherwise) to own its properties and to carry
on its business as now being conducted and to execute, deliver and perform its
obligations under this Agreement and to consummate the transactions contemplated
hereby; (d) the execution, delivery and performance by each Licensor of this
Agreement and the transactions contemplated hereby have been duly authorized by
all necessary corporate action on the part of each Licensor; (e) this Agreement
has been duly executed and delivered by each Licensor, and (assuming due
execution and delivery by Purchaser) constitutes a valid and binding obligation
of each Licensor, enforceable against each Licensor in accordance with its
terms, except as such enforceability may be limited by bankruptcy, insolvency,
reorganization or similar laws affecting creditors' rights generally or by
general equitable principles; and (f) no other person or entity has any claims
or rights in or to any interest being granted to Licensee hereunder.

     12.2 To the best of Licensor's knowledge, it has no actual knowledge that
the Trademarks infringe any valid right of any third party, and no claims have
been made or actions commenced with respect thereto.


                                      -12-
<PAGE>


     12.3 Licensee shall be solely responsible for the manufacture, production,
sale and distribution of the Licensed Products and will bear all related costs
associated therewith.

     12.4 Licensee represents and warrants that it has the right and power to
enter into this Agreement and that there are no other agreements with any other
party in conflict herewith. 12.5 Other than with respect to the amounts due for
first quarter minimum guaranteed royalties as set forth in Section 1.8, neither
ECI nor BP is in default under the BP or BB License Agreement.

     12.6 Brooks Brothers has informed ECI that it may sell excess inventory of
products covered by the BB Agreement to off-price retailers.

     12.7 Following the Effective Date, Licensors shall continue advertising the
Licensed Products covered by the Owned Trademarks to the same extent currently
advertised and to the extent reasonably necessary to support continued growth of
the sales of Licensed Products at its sole cost and expense.

     12.8 Licensee represents, warrants and agrees that, as of the Effective
Date and during the Initial Term, it has, and will have, capital of no less than
$7 million.

     13. INDEMNITY.

     13.1 Licensor shall indemnify, defend and hold Licensee, its officers,
directors, employees and agents harmless from any and all liability, reasonable
attorney's fees, costs and expenses from any claims asserted against Licensee or
Licensor with respect to Licensee's use of the Trademarks only in accordance
with the terms of this Agreement. Notwithstanding the foregoing, this indemnity
shall only be applicable in the event of a final decision by a court of
competent jurisdiction from which no appeal of right exists. This indemnity does
not cover any modifications or changes made to the Trademarks by Licensee.
Licensor shall be entitled, at its option to provide legal counsel to represent
Licensee, reasonably acceptable to Licensee, at Licensor's cost. Licensor shall
not be required to pay for Licensee's independent legal counsel, if Licensor
provides legal counsel to represent Licensee with respect to any claim. Nothing
herein is intended to nor shall it relieve Licensee from liability for its own
acts, omissions, or negligence.

     13.2 Licensee shall defend and indemnify Licensor, its officers, directors,
agents, and employees against all costs, expenses and losses (including
reasonable attorney fees and costs) incurred through claims of third parties
against Licensor or Licensee based on the manufacture, marketing, sale,
advertising (except to the extent that any claim arises out of any advertising
expressly approved in writing by Licensor), distribution of the Licensed
Products designed by Licensee including, but not limited to, actions founded on
product liability on all products manufactured by Licensee.


                                      -13-
<PAGE>


     13.3 Each party will promptly notify the other of any claims or actions to
which the foregoing indemnification may apply. Licensee shall not settle any
claim with respect to the Trademarks or the Licensed Products without the prior
written consent of Licensor, which shall not be unreasonably withheld.

     14. GOODWILL. Licensee recognizes the great value of the publicity and
goodwill associated with the Trademarks, Copyrights and designs of the Licensed
Products, and agrees that the value of the goodwill exclusively belongs to
Licensor.

     15. COPYRIGHT NOTICE. Licensee shall place a legally sufficient copyright
notice which protects the rights of Licensor on each and every design, style,
garment, creation or writing which is capable of protection pursuant to the
copyright laws of the United States of America and the Licensed Territory. Any
public distribution of goods bearing copyrightable works of Licensor by Licensee
without a copyright notice as required above, is unauthorized and a violation of
this Agreement.

     16. STOCK ISSUANCES. (a) Five days following the Effective Date and on each
of the first four anniversary dates of Effective Date. Aris shall issue to
Licensee such number of shares of its common stock determined by dividing
$1,000,000 by the average closing price of such Common Stock for the five
trading days immediately preceding the date on which such shares are to be
issued. (b) Licensee hereby represents and warrants to Aris that: (i) the Shares
to be acquired by Licensee pursuant to this Agreement are being, and will be,
acquired for its own account and with no intention of distributing or reselling
such Shares or any part thereof in any transaction that would be in violation of
the securities laws of the United States; (ii) Licensee understands that the
Shares have not been registered under the Securities Act of 1933, as amended
(the "Act"), and cannot be resold unless they are subsequently registered under
the Act or unless an exemption from such registration is available thereunder;
and (iii) Licensee is an "accredited investor" within the meaning of Rule 501(a)
under the Act, and by reason of its business and financial experience.

     17. TERMINATION. The following termination rights are in addition to the
termination rights provided elsewhere in this Agreement.

     17.1 Immediate Right of Termination. Licensor shall have the right to
immediately terminate this Agreement by giving written notice to Licensee in the
event that Licensee does any of the following:

     17.1.1 Licensee fails to pay the Royalties (whether actual or Minimum
Guaranteed) or amounts due on the Inventory Note within fifteen (15) days of
their due date upon five (5) days prior notice.

     17.1.2 Licensee, after having commenced the sale of the Licensed Products,
fails to continuously sell Licensed Products for two (2) consecutive selling
seasons;

     17.1.3 Licensee files a petition in bankruptcy or is adjudicated a bankrupt
or insolvent, or makes an assignment for the benefit of creditors, or an
arrangement pursuant any


                                      -14-
<PAGE>


bankruptcy law, or if the Licensee discontinues its business or a receiver is
appointed for the Licensee or for the Licensee's business and such receiver is
not discharged within ninety (90) days;

     17.2 Termination After Notice. Subject to the provisions contained in
Paragraph 17.7 below, Licensor shall have the right to terminate this Agreement
upon the occurrence of the following events:

     17.2.1 Omitted.

     17.2.2 Licensee breaches any provision of this Agreement, (other than those
specifically noted in Paragraph 17.1 above) including, but not limited to, the
unauthorized assertion of rights in the designs and/or the Trademarks;

     17.2.3 Licensee fails to promptly discontinue the distribution or sale of
the Licensed Products, Trademarks or Copyrights or the use of any packaging or
promotional material which does not contain the requisite notices or labels;

     17.2.4 Licensee has not taken steps to restore the quality of and cure the
defects with respect to the Licensed Products in accordance with Paragraph 9 of
this Agreement.

     17.2.5 Licensee fails to obtain the approval of Licensor for any Licensed
Products as required by Paragraph 8 above, or Licensee sells, manufactures or
distributes a Licensed Product without the prior approval of Licensor as
required by the terms of this Agreement.

     17.3 Intentionally Omitted.

     17.4 Intentionally Omitted.

     17.5 Default. Subject to the provisions of Paragraph 17.7, in addition to
the foregoing rights of Licensor, either party may terminate this Agreement and
the rights of the other party if either party is in default or has materially
breached any of the terms of this Agreement, or any additional or supplemental
agreements that may be entered into between the parties.

     17.6 Acts Detrimental to the Brand. Licensee acknowledges that it is only
one of multiple licensees of the Trademark; that its actions and omissions can
greatly impact the business of Licensor, the business of other licensees of
Licensor and the value of the Trademark(s); and that the quality of Licensee's
production, timely delivery of approved orders, and conduct of its business can
greatly impact the business of other licensees of Licensor and the value of the
Trademarks. As a result, in the event that the Licensee takes any action which
is, in the reasonable opinion of Licensor, materially harmful to the Trademarks
or the business of Licensor, Licensor's other licensees, or the Trademarks, then
Licensor shall have the right to terminate all rights of Licensee under this
Agreement.


                                      -15-
<PAGE>


     17.7 Cure Period. Before Licensor terminates the rights of Licensee under
this Agreement, (except with respect to the provisions contained in Paragraph
17.1 which are grounds for immediate termination), Licensor shall give Licensee
written notice, setting forth the basis for such termination, default or failure
to perform. Licensee shall have twenty-one (21) days from and after mailing of
such written notice to cure such default, breach or failure to perform. In the
event that such breach, default or failure to perform is not cured within said
twenty-one (21) days (or, if not capable of being cured within such period,
adequate steps to cure have not been commenced within such period, provided
Licensee diligently continues to pursue such curative steps) then Licensor may
forthwith terminate all of Licensee's rights hereunder.

     18. POST TERMINATION RIGHTS. All of the following rights and duties shall
be applicable upon any termination of Licensee's rights under this Agreement,
whether by expiration of the term hereof or by earlier termination pursuant to
the provisions hereof.

     18.1 Inventory. Not less than thirty (30) days prior to the expiration of
this Agreement or earlier termination thereof, Licensee shall provide Licensor
with a complete inventory of all inventory of the Licensed Products then on-hand
and all piece goods for same (the "Inventory").

     18.2 Deletion of Trademark. Upon expiration or earlier termination of this
Agreement, Licensee shall take all steps necessary to delete any references to
the Trademarks and similar words from any signs, business names, or any use in
advertising, print or otherwise, consistent with its liquidation rights
contained in Section 18.4. Notwithstanding the foregoing, in the event that this
Agreement is terminated for cause as provided in Paragraphs 17.1 and 17.2 above,
then Licensee shall delete any references to the Trademarks and similar words
anywhere same is used within thirty (30) days from and after the date of such
termination.

     18.3 Disposition of Samples, Patterns, Markers, Labels and Fasteners on
Termination. Any samples, patterns, markers and labels or fasteners (snaps,
buttons, etc.) on which the Trademarks appear, which are not affixed to a
finished Licensed Products or necessary for work in process at the time of
termination, shall be delivered to Licensor by Licensee within sixty (60) days
of the expiration or termination of this Agreement, except as provided in
Paragraph 18.4 below. An inventory of such items on hand upon expiration or
termination of this Agreement shall be delivered to Licensor within twenty (20)
days of the expiration or termination. All such items of inventory shall be used
in accordance with this provision and no other disposition of these items shall
occur. Licensor shall pay Licensee for all such labels and fasteners at a price
equal to Licensee's cost thereof, including freight, and at no cost other than
freight for such samples, patterns and markers; such payment to be made within
sixty (60) days after delivery.

     18.4 Liquidation of Goods. Upon the expiration or termination of Licensee's
rights under this Agreement, Licensee shall have the right to complete all work
in process, and to complete bona fide purchase orders in hand on the date of
such expiration or termination. Licensee shall have the right to use the items
of inventory listed in Paragraph 18.3 above for completion of work in process.
Licensee shall no longer have the right to use the Trademarks in any form or in
any manner, except for the purpose of selling off the existing inventory of the


                                      -16-
<PAGE>


Licensed Products. Licensee shall have one hundred eighty (180) days from the
date of termination of this Agreement to dispose of its inventory of the
Licensed Products. If any of the Licensed Products remain unsold after the
expiration of one hundred eighty (180) days, Licensee shall then remove the
Licensed Products from its inventory and return such unsold inventory to
Licensor at no cost to Licensor, other than freight. All sales of the remaining
inventory shall be sold in accordance with the terms of this Agreement, and the
accounting and payment shall be made within thirty (30) days after the close of
the one hundred eighty (180) day sell off period.

     18.5 Except as provided in Section 18.4 above, upon expiration or earlier
termination of this Agreement, all of the rights of Licensee under this
Agreement shall forthwith terminate and immediately revert to Licensor and
Licensee shall immediately discontinue all use of the property and the like, at
no cost whatsoever to Licensor.

     18.6 Licensee hereby agrees that, at the expiration or earlier termination
of this Agreement for any reason, Licensee will be deemed automatically to have
assigned, transferred and conveyed to Licensor any and all rights, goodwill or
other right, title or interest in and to the Trademarks, trade dress,
copyrights, designs or any other intellectual property rights which may have
been obtained by Licensee as a result of this License.

     19. ASSUMPTION OF CERTAIN OPERATIONS AND OBLIGATIONS.

     19.1 Assumption of Operations. Licensee shall assume and discharge in due
course all liabilities arising from and after the Effective Date with respect to
the operations of XOXO, BP and ECI (as related to Members Only(R) and Brooks
Brothers Golf(R)) as they relate to the manufacture, marketing, promotion, sale
and distribution of Licensed Products including, without limitation, all payroll
and related benefits, work in process and open letters of credit, which letters
of credit are set forth on Schedule D. In connection with the foregoing,
commencing four weeks after the Effective Date, all of the employees involved
with such operations shall become employees of Licensee except for those
persons: (x) employed at Licensor's New Bedford, Massachusetts warehouse; (y) by
the retail stores (other than at the outlet stores); and (z) by Aris in a
corporate or finance capacity. Notwithstanding the foregoing, Licensee shall
advance to Licensor, one day prior to its payment date, the full amount of all
payroll and payroll related costs incurred in connection with the operations
which become due after the Effective Date. Licensee shall have full control and
authority with respect to operations including, without limitation, decisions to
employ or terminate employment. With respect to obligation subject to
contractual commitments, Licensee may terminate the services or property subject
to such commitments without liability to Licensee, but must pay for any such
assets or services while using them. Notwithstanding the foregoing, from and
after the Effective Date, Licensee hereby agrees to assume and fully and
faithfully perform all of the obligations, duties and responsibilities of the
tenant under (A) the Lease Agreements listed on Schedule E (except that, upon
thirty days written notice to Aris given 60 days after the Effective Date, it
may elect not to continue the lease for the Brooks Brothers Golf premises); (B)
the employment agreements with Holly Fiene, Gregg Fiene, Steven Feiner, George
Gatesy and Tom Rail (but with respect to Rail for the six months following the
Effective Date unless Licensee elects to continue to employ him); and (C) the
other leases or agreements set forth on Schedule F. Notwithstanding the
foregoing, Licensee shall not be responsible for any severance payments to Holly
Fiene, Gregg


                                      -17-
<PAGE>

Fiene or Steven Feiner under their respective employment agreements. One-half of
the amount payable to Steven Feiner (up to $250,000 per year) shall be credited
against the royalties due, which shall be taken in equal quarterly installments.
Licensee shall assume the leases and other agreements identified on Schedule G
that relate to operations in California for the 90 days following the Effective
Date. In addition, for the 90 days following the Effective Date, Licensee shall
reimburse Aris, on demand, for one-half of all costs, expenses and payment due
under the agreements and leases identified on Schedule G that relate to
operations in New York. Thereafter, Licensee will be deemed to have assumed each
such lease or agreement (whether relating to California or New York) unless,
within 60 days after the Effective Date, it shall have given written notice to
Aris that it elects not to assume such lease or agreement after the 90th day, in
which case it shall deliver possession to Aris of the premises or equipment
covered by such lease or agreement. Licensee agrees to hold the respective
tenant and Aris harmless from and against all claims, losses, liabilities and
expenses, including reasonable attorney's fees, incurred as a result of or in
connection with any failure of Licensee to perform any obligation under this
Section. Aris hereby agrees to hold Licensee harmless from and against all
claims, losses, liabilities and expenses arising under such Lease as a result of
the respective tenant's activities prior to the Effective Date. Licensee has
permission to hire Joseph Puritano on an "at will" basis without assuming his
Agreement.

     19.2 Sublet of Outlet Store Leases and Business. As of the Effective Date,
Marcade shall license to Licensee all of the Outlet Stores identified on
Schedule B. Licensee agrees to hold Aris harmless from and against all claims,
losses, liabilities and expenses, including reasonable attorney's fees, incurred
as a result of or in connection with any failure of Licensee to adhere to the
aforementioned covenant. Aris hereby agrees to hold Licensee harmless from and
against all claims, losses, liabilities and expenses arising under the Leases as
a result of Marcade's activities prior to the Effective Date. On the Effective
Date, the employees of the Outlet Stores shall become Licensee's employees, and
Licensee shall have full control and authority over such employees and the
operations of such Stores and shall pay all costs associated with the operation
of such Stores.

     19.3 Reimbursement by Licensor. Licensor shall reimburse Licensee for any
"markdown money" or similar credit demanded by any of Licensor's customers with
respect to sales made by Licensor prior to the Effective Date. As a condition to
being entitled to such credit, Licensee shall provide Licensor with prompt
written notice of any such claimed credit and Licensor shall be given an
opportunity to negotiate such claimed credit with the customer. If Aris does not
cause the customer to reverse the chargeback or credit within 30 days of
Licensee's notice to Licensor of the chargeback or credit, Licensee may credit
it against the next Royalty Payment due.

     19.4 Continued Support for XOXO Licensees. Licensee shall provide such
assistance to XOXO's existing licensees as XOXO is required to provide under its
license agreements.

     19.5 Sales to XOXO Retail Stores. With respect to any XOXO Retail Stores
owned or controlled by Licensor, Licensee shall sell to Licensor any Licensed
Products manufactured by Licensee pursuant to this Agreement and ordered by
Licensor in reasonable


                                      -18-
<PAGE>


quantities and same shall be delivered to Licensor's Retail Stores in accordance
with the terms of such order(s). The price to Licensor for such Products shall
be 20% less than Licensee's regular wholesale prices. All Licensed Products so
ordered by Licensor shall be paid by Licensor to Licensee within 120 days of the
sale of same. No Royalty Payments shall be due with respect to such sales.

     19.6 Cooperation. The parties will cooperate with each other to avoid
defaults under any assumed agreement by virtue of any assignment or assumption
without obtaining any consent from the other party to such agreement.

     20. NON-ASSIGNABILITY. Neither this Agreement nor any of the Licensee's
rights hereunder are assignable by Licensee, without the prior written consent
of Licensor, which shall not be unreasonably withheld or delayed. The transfer
of more than fifty (50%) percent in the aggregate of the shares of beneficial
ownership of Licensee will be deemed an assignment. Upon notice to Licensee,
Licensor may assign its rights under this Agreement or the payments to be made
by Licensee to Licensor hereunder.

     20.1 Sublicense. Licensee may not sublicense its rights under this
Agreement without the prior written consent of Licensor, which approval or
disapproval shall be subject to the sole and absolute discretion of Licensor.
Any sublicense or attempted sublicensing by Licensee without the prior written
consent of Licensor shall constitute a breach of this Agreement. Any sublicense
consented to by Licensor must provide that the sublicensee shall be bound by all
of the terms and conditions of this Agreement. Approval by Licensor to one
sublicense shall not relieve the Licensee of any of its obligations under this
Agreement, including, without limitation, its obligations set forth on Schedule
"A".

     20.2 Manufacturing. Licensee shall have the right to subcontract the actual
manufacture of the Licensed Products, provided that all such subcontractors
agree to be bound by the terms and conditions of this Agreement in all respects
or such sub-contractor Agreement as may be provided by Licensor to Licensee
specifically for use by Licensee's sub-contractors. Prior to any third party
manufacturing any Licensed Product, it must enter into an Agreement in the Form
attached hereto as Schedule C. Licensee must provide Licensor with the
appropriate acknowledgment of the terms of this Agreement or such sub-contractor
Agreement as prepared by Licensor, from such subcontractor prior to using such
subcontractor. In the event Licensee does its own manufacturing, it must comply
with all of the terms and conditions of the Manufacturing Agreement.

     20.3 No Hypothecation. Licensee shall not pledge, hypothecate, mortgage,
grant liens in or upon, grant security interests in, or use as collateral any of
Licensee's rights with respect to the Trademarks under this Agreement.

     21. GENERAL PROVISIONS.

     21.1 Notices. Any notice required to be given hereunder shall be in writing
and delivered personally to the other designated party at the address set forth
below or mailed by certified or registered mail, return receipt requested or
delivered by a recognized national


                                      -19-
<PAGE>


overnight courier service, in a sealed envelope, with postage thereon fully paid
and addressed as follows:

         If to Licensor:   Mr. Arnold Simon                   cc: Sam Wilson
                           Aris Industries
                           1411 Broadway, 12th Floor
                           New York, New York  10018
                           Fax:  (212) 642-4597

         With copies to:   Mr. Robert Forman
                           Shapiro, Forman & Allen
                           380 Madison Avenue
                           New York, New York  10017
                           Fax:  (212) 557-1275

         If to Licensee:   Mark Stern, President
                           Eagle Apparel Group/ Groupa Xtra
                           141 West 36th Street
                           New York, NY
                           Fax: (212) 971-0877

         With copies to:   Stephen Fuerst, Esq.
                           6617 Avenue T
                           Brooklyn, NY 11234
                           Fax: (718) 972-9110

     Either party may change the address to which notice or payment is to be
sent by written notice to the other in accordance with the provisions of this
Paragraph.

     21.2 Entire Agreement. This Agreement constitutes the entire understanding
between the parties with respect to the subject matter hereof and supersedes all
prior negotiations, dealings, agreements and understandings of the parties in
connection therewith and is intended as a final expression of their Agreement.

     21.3 Severability. The invalidity or unenforceability of any provision
hereof shall not affect the other provisions hereof, and this Agreement shall be
construed in all respects as if such invalid or unenforceable provisions were
omitted.

     21.4 Amendment. No amendment, modification or alteration of this Agreement
shall be valid unless it is in writing and signed by all parties hereto.

     21.5 No Agency or Joint Venture. This Agreement does not constitute and
shall not be construed as constituting an agency, partnership or joint venture
between the parties. Licensee shall have no right to obligate or bind Licensor
in any manner whatsoever, and nothing herein contained shall give, or is
intended to give, any rights of any kind to any third persons.


                                      -20-
<PAGE>


     21.6 Consent to Injunction. Each party acknowledges that the rights and
privileges granted hereunder are of a special, unique and extraordinary nature
and character, and that a breach of any provision hereof would cause the other
party irreparable injury and damage, the measure of which could not be
adequately compensated at law. Neither this provision nor the exercise by a
party of any of its rights hereunder shall constitute a waiver by such party of
any other rights which it may have to damages or otherwise.

     21.7 Governing Law. Each party irrevocably submits to the exclusive
jurisdiction and venue of any New York State or United States Federal Court
sitting in the City and County of New York over any suit, action or proceeding
arising out of or related to this Agreement or the transactions contemplated
hereby, and waives any objection to venue of such courts.

     21.8 Service of Process. Service of process on any party hereto in any
action arising out of or relation to this Agreement shall be effective if sent
in accordance with the procedures set forth in Section 21.1.

     21.9 Attorney Fees and Costs. If either party to this Agreement shall bring
any action against the other, declaratory or otherwise, arising out of this
Agreement, the losing party shall pay to the prevailing party a reasonable sum
for attorney fees incurred in bringing or defending such suit and/or enforcing
any judgment granted therein, all of which shall be deemed to have accrued upon
the commencement of such action and shall be paid whether or not such action is
prosecuted to judgment. Any judgment or order entered in such action shall
contain a specific provision providing for the recovery of attorney fees and
costs incurred in enforcing such judgment. For the purposes of this section,
attorney fees shall include, without limitation, fees incurred in the following:
(1) post judgment motions; (2) contempt proceedings; (3) garnishment, levy, and
debtor and third party examinations; (4) discovery; and (5) bankruptcy
litigation.

     21.10 Interpretation. The parties hereto are sophisticated and have been
represented by lawyers throughout this transaction, who have carefully
negotiated the provisions hereof. As a consequence, the parties do not believe
that any presumptions relating to the interpretation of contracts against the
drafter of any particular clause should be applied in this case and therefore
waive its effects.

     21.11 Recitals. The recitals set forth on the first page of this Agreement
are incorporated herein by this reference as though fully set forth herein.

     21.12 Successors and Assigns. This Agreement shall be binding upon and
shall inure to the benefit of Licensee and its successors and assigns and shall
also be binding upon and shall inure to the benefit of Licensor and its
successors and assigns.

     21.13 Headings. The subject headings of the Sections of this Agreement are
included for purposes of convenience only and shall not affect the construction
or interpretation of any term or provisions hereof.


                                      -21-
<PAGE>


     21.14 Parties Benefitted. Nothing in this Agreement, whether express or
implied, is intended to confer any rights or remedies under or by reason of this
Agreement on any persons other than the parties to it and their respective
successors and assigns, nor is anything in this Agreement intended to relieve or
discharge the obligation or liability of any third persons to any party to this
Agreement, nor shall any provisions give any third persons any right of
subrogation or action against any party to this Agreement.

     21.15 Confidentiality. The parties hereto agree that the terms of this
Agreement shall be kept confidential and not disclosed to any third party except
in the ordinary course of business or if required by law, without the prior
written consent of the other party hereto. The parties acknowledge that prior to
and/or during the term of this Agreement that they may be given access to or
become acquainted with "Confidential Information" (as such term is defined
below), which is of great value to the other party. The parties further
acknowledge that maintaining the confidentiality of all such Confidential
Information is critically important to each party. As a result of the foregoing
the parties shall not either during or after the term of this Agreement, use or
disclose, directly or indirectly, to anyone other than representatives of the
other or other persons designated by such party, any information, data,
documents, customer list(s), designs and styles, manufacturing procedures,
company policies, or other materials of any kind or nature in any way related to
each party, their business affairs or operations, even if acquired by either
party in the course of the performance of their obligations hereunder and even
if provided to such party by the other ("Confidential Information"). The parties
acknowledge that a breach of the provisions of this paragraph will cause the
non-breaching party irreparable harm for which there is no adequate remedy at
law, and therefore, in addition to any and all other rights or remedies
available to the non-breaching party, the non-breaching party shall be entitled
to injunctive relief and all other remedies provided by law or equity. Such
remedies shall include, without limitation, the right to prevent dissemination
of any Confidential Information.

     21.16 Further Action. Each party hereto agrees to perform any further acts
and to execute and deliver any documents, which may be reasonably necessary to
carry out the provisions hereof.

     21.17 Counterparts. This Agreement may be executed in two or more
counterparts, each of which shall be deemed an original, which shall be deemed
to constitute one and the same instrument.

     21.18 No Implied Waivers. The failure of either party at any time to
require performance by the other party of any provision hereof shall not affect
in any way the full right to require such performance at any time thereafter.
The waiver by either party of a breach of any provision hereof shall not be
construed or held to be a waiver of the provision itself.

     22. SHOWROOM FOR LICENSED PRODUCTS AND TRADE SHOWS. Licensee acknowledges
the importance of providing customers with the ability to view all of the
Licensee's Licensed Products in one location, and will provide a segregated
portion of its showroom exclusively for the display of Licensed Products. With
respect to Licensee's showroom, Licensee shall provide, display and maintain
complete current sample lines of all its Licensed Products.


                                      -22-
<PAGE>


     IN WITNESS WHEREOF, the parties hereto, have entered into this Agreement
effective on the day and year set forth above.

     LICENSOR:

       EUROPE CRAFT IMPORTS, INC.



       ---------------------------------
       By: Arnold Simon, Chief Executive Officer       Dated: January ___, 2001
       BP CLOTHING COMPANY, INC.




       ---------------------------------
       By: Arnold Simon, Chief Executive Officer       Dated: January ___, 2001
       ARIS INDUSTRIES, INC.




       ---------------------------------
       By: Arnold Simon, Chief Executive Officer       Dated: January ___, 2001
       XOXO CLOTHING COMPANY, INCORPORATED




       ---------------------------------
       By: Arnold Simon, Chief Executive Officer       Dated: January ___, 2001
       MARCADE REALTY CORP.




       ---------------------------------
       By: Arnold Simon, Chief Executive Officer       Dated: January ___, 2001



     LICENSEE:

       GRUPO EXTRA OF NEW YORK, INC.


       ---------------------------------
       By: Mark Stern                                  Dated: January ___, 2001


                                      -23-
<PAGE>



                                   SCHEDULE"A"

     1. TRADEMARKS:

          Members Only(R), XOXO(R), Fragile(R), Brooks Brothers Golf(R) and Baby
     Phat(R)

     2. LICENSED TERRITORY:

          United States of America, Puerto Rico, the Caribbean Islands and
     Israel

     3. LICENSED PRODUCTS:

          Under the XOXO trademark: women's clothing, jeanswear and sportswear

          Under the Fragile trademark: jeanswear and sportswear

          Under the Members Only trademark: sportswear and outerwear

          Under the Brooks Brothers Golf trademark: only as permitted in the BB
     License Agreement.

          Under the Baby Phat trademark: only as permitted in the BP License
     Agreement.

XOXO(R), Fragile(R) and Members Only(R) are sometimes referred to as the "Owned
Trademarks."


     4. GUARANTEED MINIMUM ROYALTY:

                  Annual Period Ending               Minimum Royalty
                  --------------------               ---------------

                  December 31, 2001                  $   8,100,000

                  December 31, 2002                  $   9,234,000

                  December 31, 2003                  $  10,526,000

                  December 31, 2004                  $  12,000,500

                  December 31, 2005                  $  13,500,000

     For each year thereafter, the Guaranteed Annual Minimum Royalty shall be
the greater of $13,500,000 or the Royalties due based on sales in the
immediately preceding year.


                                      -24-

</TEXT>
</DOCUMENT>
<DOCUMENT>
<TYPE>EX-10.126
<SEQUENCE>6
<FILENAME>0006.txt
<DESCRIPTION>SECURITIES PURCHASE AGREEMENT
<TEXT>


                                                                  EXHIBIT 10.126

                                                                  EXECUTION COPY



                          SECURITIES PURCHASE AGREEMENT

                         dated as of February ____, 2001

                                  by and among

                              ARIS INDUSTRIES, INC.

                                       and

                       XOXO CLOTHING COMPANY, INCORPORATED



                                       and

                              KC ARIS FUND I, L.P.

<PAGE>




     SECURITIES PURCHASE AGREEMENT, dated as of February ___, 2001 (the
"Agreement"), between Aris Industries, Inc., a New York corporation (the
"Company"), and its indirect wholly-owned subsidiary, XOXO Clothing Company,
Incorporated, a Delaware corporation ("XOXO"), on the one hand, and KC Aris Fund
I, L.P., a California limited partnership ("Purchaser"), on the other.

     WHEREAS, XOXO is a wholly-owned subsidiary of ECI, which is a wholly-owned
subsidiary of the Company;

     WHEREAS, XOXO's business generates a majority of the Company's revenues;

     WHEREAS, the Company and XOXO are in need of capital; and

     WHEREAS, the Purchaser is willing to provide such capital on the terms and
conditions set forth herein;

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


                                    ARTICLE I

                                   DEFINITIONS

     1.1  Definitions. As used in this Agreement, and unless the context clearly
requires a different meaning, the following terms have the meanings respectively
indicated:

          "Act" means the Securities Act of 1933, as amended, or any successor
act or statute regulating the transactions contemplated hereby that were
formerly regulated under said Act that may be enacted after the date hereof, and
the rules and regulations promulgated thereunder.

          "Affiliate" of any specified Person means any other Person directly or
indirectly controlling or controlled by or under direct or indirect common
control with such specified Person. For the purposes of this definition,
"control," when used with respect to any Person, means the power to direct the
management and policies of such Person, directly or indirectly, whether through
the ownership of voting securities, by contract or otherwise; and the terms
"controlling" and "controlled" have meanings correlative to the foregoing.

          "Agreement" means this Agreement, as the same may be amended,
supplemented or modified in accordance with the terms hereof.


                                      -1-

<PAGE>

          "Business Day" means any day which is not a Saturday or Sunday, or a
day on which banking institutions are authorized or required to close in the
city of Los Angeles, California.

          "Closing" has the meaning provided therefor in Section 2.1 of this
Agreement.

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

          "Commission" means the Securities and Exchange Commission or any
similar agency then having jurisdiction to enforce the Act.

          "Common Stock" means the Common Stock, $.01 par value, of the Company.

          "Company" means Aris Industries, Inc., a New York corporation.

          "ECI" shall mean Europe Craft Imports, Inc., a New Jersey corporation.

          "GAAP" shall mean United States Generally Accepted Accounting
Principles.

          "Governmental Authority" shall have the meaning provided therefor in
Section 3.6 of this Agreement.

          "Note" means the Convertible Debenture to be issued by XOXO hereunder
in the form attached hereto as Exhibit A.

          "Person" shall mean any individual, corporation, company, partnership,
limited liability company, joint venture, association, joint stock company,
unincorporated organization or government or other agency or political
subdivision thereof.

          "Purchaser" shall have the meaning set forth in the preamble to this
Agreement.

          "Security Agreement" shall mean a Security Agreement in the form
attached hereto as Exhibit B.

          "Shares" shall mean the shares of Common Stock into which the Note may
be converted.

          "Significant Subsidiaries" shall mean ECI, and its wholly-owned
subsidiary, ECI Sportswear, Inc., a New York corporation, and XOXO.

          "Subsidiary" shall mean any corporation or other entity of which at
least a majority of the outstanding capital stock or equity interest having
voting power in ordinary circumstances to elect directors (or persons having
similar responsibilities) of such corporation or

                                      -2-


<PAGE>



other entity shall at the time be held, directly or indirectly, by the Company,
by the Company and any one or more Subsidiaries, or by one or more Subsidiaries.

          "Taxes" shall mean all taxes, charges, fees, duties, levies, or other
similar assessments imposed by any taxing Governmental Authority, including, but
not limited to, income, gross receipts, excise, property, sales, gain, use,
license, capital stock, transfer, franchise, payroll, withholding, social
security or other taxes, including any interest or penalties attributable
thereto.

          "Tax Return" shall mean any return, report or information return
(including any related or supporting information) required to be filed with any
taxing Governmental Authority with respect to Taxes.

          "XOXO" shall have the meaning set forth in the preamble to this
Agreement.

          The foregoing definitions shall be equally applicable to both the
singular and plural forms of the defined terms.

                                   ARTICLE II

                              PURCHASE OF THE NOTE

      2.1 Purchase of Securities; the Closing. Subject to the terms and
conditions herein set forth:

          (a) Note Purchase. The Purchaser agrees to purchase, XOXO agrees to
issue, and the Company agrees to cause XOXO to issue, a Convertible Debenture
(the "Note"), in the principal amount of $10,000,000 (the "Purchase Price"), in
the form attached hereto as Exhibit A. The Note will be issued at the closing of
the transactions contemplated by this Agreement (the "Closing").

          (b) Closing. The Closing will take place at the offices of Shapiro
Forman & Allen, LLP, 380 Madison Avenue, New York, New York 10017, within three
(3) Business Days after the satisfaction of all closing conditions applicable
thereto set forth in Article V below. The date on which the Closing occurs is
referred to herein as the "Closing Date". On the Closing Date, Purchaser shall
wire transfer an amount in cash equal to the Purchase Price to an account or
accounts specified by the Company. Delivery of the Note to be purchased by
Purchaser pursuant to this Agreement shall be made at the Closing by the
Company.

          (c) Legends. Purchaser acknowledges and agrees that the Note and any
certificate evidencing the Shares shall be imprinted with customary legends to
reflect the applicability of Federal and state securities laws limitations on
the transfer of the Shares.

                                      -3-

<PAGE>

                                   ARTICLE III

                  REPRESENTATIONS AND WARRANTIES OF THE COMPANY

          The Company hereby represents and warrants to Purchaser, as of the
date hereof except where otherwise specified, that:

      3.1 Corporate Existence and Power; Subsidiaries. Each of the Company
and the Significant Subsidiaries is a corporation duly organized, validly
existing and in good standing under the laws of the jurisdiction of its
incorporation and is duly qualified to do business as a foreign corporation in
each additional jurisdiction where the failure to so qualify would have a
material adverse effect on (i) the assets, liabilities, cash flows, financial
condition, results of operations, or business of the Company and the Significant
Subsidiaries taken as a whole or (ii) the ability of the Company to consummate
the transactions contemplated hereby (each, a "Material Adverse Effect"). The
jurisdiction of incorporation of the Company and the Subsidiaries are set forth
on Schedule 3.1 hereto. Except as set forth on Schedule 3.1 hereto, the Company
has no Subsidiaries, nor are there any other businesses in which the Company has
an equity stake, other than the Significant Subsidiaries and inactive
Subsidiaries. Each of the Company and the Significant Subsidiaries has all
requisite power and authority (corporate and otherwise) to own its properties
and to carry on its business as now being conducted and, in the case of the
Company and XOXO, to execute, deliver and perform its obligations under this
Agreement and to consummate the transactions contemplated hereby. All of the
issued and outstanding securities of XOXO are owned by ECI, and all of the
issued and outstanding securities of ECI are owned by the Company.


      3.2 Corporate Authority. The execution, delivery and performance by the
Company and XOXO of this Agreement and the transactions contemplated hereby have
been duly authorized by all necessary corporate action on the part of,
respectively, the Company and XOXO.

      3.3 Binding Effect. This Agreement has been duly executed and delivered by
the Company and XOXO, and (assuming due execution and delivery by Purchaser)
constitutes a valid and binding obligation of, respectively, the Company and
XOXO, enforceable against, respectively, the Company and XOXO in accordance with
its terms, except as such enforceability may be limited by bankruptcy,
insolvency, reorganization or similar laws affecting creditors' rights generally
or by general equitable principles.

      3.4 No Required Consents, etc. Other than in connection with
satisfaction of conditions precedent to the Closing, and as set forth in
Schedule 3.4 hereto, no consent, approval or authorization of or declaration,
registration or filing with any Governmental Authority (as defined in Section
3.6 hereof) or any non-governmental Person is required to be obtained or made by
the Company or the Significant Subsidiaries in connection with the execution,
delivery

                                      -4-

<PAGE>


and performance of this Agreement or the transactions contemplated hereby other
than those which, if not obtained or made, would not have a Material Adverse
Effect.

      3.5 No Conflicting Agreements, etc. Except as set forth on Schedule
3.5 hereto, neither the execution and delivery of this Agreement nor the
consummation of the transactions contemplated hereby, will conflict with, or
result in a breach of the terms, conditions or provisions of, or constitute (or
with notice or lapse of time would constitute) a default under, or result in any
violation of, or give rise to any right of termination, cancellation or
acceleration under, the certificate of incorporation or by-laws (or similar
organizational documents) of the Company or any of the Significant Subsidiaries,
any contract, agreement, mortgage, bond, note, credit agreement, indenture,
license, lease, instrument, order, statute, law, rule or regulation to which the
Company or any of the Significant Subsidiaries is party or subject or by which
any of their respective businesses, properties or assets may be bound, or result
in the creation of any lien, claim, charge or encumbrance (collectively,
"Liens") on any properties or assets of the Company or the Significant
Subsidiaries other than such Liens the existence of which would not have a
Material Adverse Effect.

      3.6 Litigation; No Violation of Government Orders or Laws. No actions,
suits or proceedings are pending or, to the knowledge of the Company,
threatened, nor is there any investigation pending or, to the knowledge of the
Company, threatened, against or affecting the Company or any Significant
Subsidiary which seeks to enjoin, or otherwise prevent the consummation of, any
of the transactions contemplated by this Agreement or to recover any damages or
obtain any relief as a result of any of the transactions contemplated hereby in
any court or before any arbitrator of any kind or before or by any Governmental
Authority (as defined below), other than those which would not have a Material
Adverse Effect. Except as set forth in Schedule 3.6, there are no pending or, to
the knowledge of the Company, threatened, investigations, by any Federal, state,
local, foreign or other governmental department, commission, board, bureau,
agency or instrumentality (each, a "Governmental Authority") with respect to the
Company or any of the Significant Subsidiaries (an "Investigation"), other than
Investigations which, if the resolution thereof were adverse, would not,
individually or in the aggregate, reasonably be expected to have a Material
Adverse Effect. Except as set forth in Schedule 3.6, (i) there are no actions or
proceedings pending or, to the knowledge of the Company, threatened, against the
Company or any of the Significant Subsidiaries before any court or before any
administrative agency, whether Federal, state, local or foreign, which, if
adversely determined, would reasonably be expected to have a Material Adverse
Effect, and (ii) there are no outstanding domestic or foreign judgments, decrees
or orders against the Company or any of the Significant Subsidiaries.

      3.7 Capitalization. The Company's entire authorized capital stock
consists of 200,000,000 shares of Common Stock and 10,000,000 shares of
preferred stock. There are (a) 79,506,735 shares of Common Stock issued and
outstanding, (b) approximately 13,000,000 shares of Common Stock reserved for
issuance upon exercise of outstanding stock options granted under the 1993 Stock
Incentive Plan (as defined infra), (c) 584,345 shares of Common

                                      -5-

<PAGE>




Stock reserved for issuance upon exercise of the Heller Warrant (as defined
infra), and (d) no shares of preferred stock issued or outstanding. All of the
outstanding shares of Common Stock are duly authorized and validly issued, fully
paid, nonassessable and were not issued in violation of any preemptive rights.
Except for (i) the conversion rights under the Note, (ii) the Warrant granted by
the Company to Heller Financial, Inc. on September 30, 1996 (the "Heller
Warrant"), and (iii) stock options granted prior to the date hereof pursuant to
and in accordance with the terms and conditions of the Aris Industries, Inc.
1993 Stock Incentive Plan (the "1993 Stock Incentive Plan"), there will, on the
Closing Date, be no outstanding options or warrants exercisable into, rights to
subscribe to, calls or commitments relating to, or securities or rights
convertible into, or exercisable for, shares of capital stock of the Company, or
contracts, commitments or arrangements obligating the Company to issue
additional shares of its capital stock or options, warrants or rights to
purchase or acquire any shares of its capital stock.

     3.8  Intentionally Omitted.

     3.9  Status of Shares upon Issuance. Upon conversion of the Note, the
Shares will be duly authorized, validly issued and outstanding, fully paid and
non-assessable, and not subject to preemptive or any other similar rights of the
Company, its shareholders or others.

     3.10 SEC Documents. (a) The Company has delivered to the Purchaser true and
complete copies of its Annual Reports on Form 10-K for the fiscal years ended
December 31, 1998 and December 31, 1999 (the "Annual Reports"); and its
Quarterly Reports on Form 10-Q for the fiscal quarters ended March 31, 2000,
June 30, 2000 and September 30, 2000 (collectively, "SEC Documents"). Each of
the SEC Documents has been duly filed, and when filed was in substantial
compliance with the requirements of the applicable form of the Commission.

          (b) Each of the SEC Documents was complete and correct in all material
respects as of its date and each of the SEC Documents did not contain any untrue
statement of a material fact or omit to state a material fact required to be
stated therein or necessary in order to make the statements made therein, in the
light of the circumstances in which made, not misleading. The financial
statements of the Company included in the SEC Documents fairly present the
consolidated financial position of the Company and the Significant Subsidiaries
as at the respective dates thereof and the consolidated results of their
operations and cash flows for the respective periods then ended, in each case in
accordance with GAAP consistently applied with prior periods.

    3.10A Inventory. All inventory of the Company as of January 31, 2001
consisted (as of that date) of current and marketable products or raw material
usable in the ordinary course of business of the Company. As of that date, such
inventory was valued on the Company's internal balance sheet at the lower of
cost or market in accordance with GAAP, in an aggregate amount, net of the
reserve therefor, of $21,422,686.

                                      -6-


<PAGE>


    3.10B Accounts Receivable. The accounts receivable of the Company as of
January 31, 2001 as summarized on Schedule 3.10B attached hereto, in an
aggregate principal amount of $28,610,855, (i) arose from bona fide sales
transactions in the ordinary course of business and are payable on ordinary
trade terms, (ii) are (to the extent not fully collected by the Company prior to
the date hereof), and will be, legal, valid and binding obligations of the
respective account debtors enforceable in accordance with their terms, (iii) are
not, to the best knowledge of the Company, subject to any valid set-off or
counterclaim, and (iv) do not represent obligations for goods sold on
consignment, on approval or on a sale-or-return basis or subject to any other
repurchase or return arrangement.

    3.10C Projections. Attached hereto as Schedule 3.10C are statements of
projected results of operations of the Company for the fiscal years ending
December 31, 2001, 2002 and 2003 (the "Projected Financial Statements"). The
Projected Financial Statements are reasonable, taken as a whole, and
mathematically accurate, and the assumptions underlying the Projected Financial
Statements provide a reasonable basis for the projections set forth therein. The
factual data used to prepare the Projected Financial Statements are true and
correct in all material respects. The Projected Financial Statements reflect the
Company's projection that the worldwide licensing rights attached to the
Company's "XOXO" trademark will generate an aggregate minimum of $50 million in
licensing fees and royalties for the Company during the three year period
covered by the Projected Financial Statements.

     3.11 Material Agreements. Neither the Company nor the Significant
Subsidiaries, except as set forth on Schedule 3.11 hereto, are a party to or
bound by any written, oral or implied contact, agreement, license, lease or
other commitment material to the businesses, properties, assets, results of
operations or financial condition of the Company and the Significant
Subsidiaries, taken as a whole (each a "Material Agreement"), including, without
limitation: (i) loan agreements, credit lines, promissory notes, mortgages,
pledges, guarantees, security agreements, factoring agreements and other
agreements relating to indebtedness of such Persons for borrowed money; (ii)
real property leases; (iii) personal property leases involving annual payments
in excess of $250,000; (iv) trademark or other intellectual property licenses;
(v) employment, management, or severance agreements; (vi) contracts or other
agreements to undertake capital expenditures or to acquire any property (other
then in the ordinary course of business) in an aggregate amount exceeding
$250,000; (vii) pledges, guarantees, contracts or other agreements of such
Persons to loan money or to extend credit, other than (a) vendor deposits, (b)
unfactored accounts receivable and (c) any extension of credit in the ordinary
course of business in an amount not greater than $250,000 to any Person or group
of related Persons; (viii) contracts or other agreements which would restrict
the Company or the Significant Subsidiaries from carrying on any business or
which would restrict the products or services which the Company or the
Significant Subsidiaries may sell or the customers to whom they may sell; (ix)
contracts or other agreements involving any consultant in which the per annum
compensation payable thereunder exceeds $250,000; (x) contracts or other
agreements involving the sale of any of the assets or properties of the Company
or the Significant Subsidiaries, other

                                      -7-

<PAGE>


than in the ordinary course of business consistent with past practices, or the
grant to any Person of any preferential right to purchase any of the assets or
properties of the Company or the Significant Subsidiaries; (xi) contracts or
other agreements pursuant to which the Company or the Significant Subsidiaries
agree to share or otherwise indemnify the tax liability of any party; (xii)
contracts or other agreements or arrangements between the Company or the
Significant Subsidiaries and any of their respective officers, directors or
affiliates; (xiii) contracts or agreements (other than purchase orders for
inventory and supplies in the ordinary course of business) pursuant to which
there is either a current or future obligation of the Company or the Significant
Subsidiaries to make payments in excess of $250,000 in the aggregate to any
party or related group of parties; and (xiv) insurance policies. Neither the
Company nor the Significant Subsidiaries own any real property. Except as set
forth in Schedule 3.11, all of the Company's and the Significant Subsidiaries'
Material Agreements are valid, binding and enforceable by or against the Company
and the Significant Subsidiaries, as applicable, which are parties thereto in
accordance with their respective terms. Except as set forth in Schedule 3.11,
there is no breach or violation of, or default under, any such Material
Agreement on the part of the Company or the Significant Subsidiaries, and no
event has occurred which, with notice or lapse of time or both, would constitute
a breach, violation or default on the part of the Company or the Significant
Subsidiaries of, or give rise to a right of termination, modification,
cancellation, prepayment or acceleration under, any such Material Agreement,
other than such breaches, violations or defaults which would not have a Material
Adverse Effect.

     3.12 Tax Matters. Except as set forth in the SEC Documents:

          (i) Each of the Company and the Significant Subsidiaries has (x) duly
and timely filed (or there has been filed on its behalf) with the appropriate
Governmental Authorities all Tax Returns required to be filed by it, and all
such Tax Returns are true, correct and complete and (y) timely paid (or there
has been paid on its behalf) all Taxes due or claimed to be due from it by any
taxing authority;

          (ii) Each of the Company and the Significant Subsidiaries has complied
in all respects with all applicable laws relating to the payment and withholding
of Taxes (including withholding of Taxes pursuant to Sections 1441 and 1442 of
the Code) and has, within the time and manner prescribed by law, withheld and
paid over to the proper Governmental Authorities all amounts required to be
withheld and paid over under all applicable laws;

          (iii) There are no Liens for Taxes upon the assets or properties of
any of the Company or the Significant Subsidiaries except for statutory liens
for Taxes not yet due;

          (iv) Neither the Company nor any of the Significant Subsidiaries has
requested an extension of time within which to file any Tax Return in respect of
any taxable year, which Tax Return has not since been filed;

                                      -8-

<PAGE>


          (v) No federal, state, local or foreign audits or other administrative
proceedings have formally commenced or are presently pending with regard to any
Taxes or Tax Returns of or including the Company or any Significant Subsidiary,
and no notification has been received by either the Company or any Significant
Subsidiary that such an audit or other proceeding is pending or threatened with
respect to any Taxes due from or with respect to the Company or any Significant
Subsidiary or any Tax Return filed by or with respect to the Company or any
Significant Subsidiary;

          (vi) Neither the Company nor any of the Significant Subsidiaries has
changed any method of accounting, received a ruling from any taxing authority or
signed an agreement with any taxing authority which would have an adverse effect
on the Company or any Significant Subsidiary;

          (vii) No deficiency for any Tax has been assessed with respect to the
Company or any Significant Subsidiary which has not been paid in full;

          (viii) Neither the Company nor any of the Significant Subsidiaries is
a party to, has an obligation under, or is bound by, any Tax sharing or
indemnification agreement or similar contract or arrangement or has a potential
liability or obligation to any Person as a result of, or pursuant to, any such
agreement, contract or arrangement;

          (ix) No jurisdiction where either the Company or any of the
Significant Subsidiaries does not file a Tax Return has made a claim that the
Company or any of the Significant Subsidiaries is required to file a Tax Return
for such jurisdiction; and

          (x) No power of attorney which is currently in force has been granted
by or with respect to the Company or any Significant Subsidiary with respect to
any matter relating to Taxes.

     3.13 Compliance. Except as set forth on Schedule 3.13 hereto, each of the
Company and the Significant Subsidiaries (i) is in material compliance with all
federal, state, local and foreign laws, ordinances, regulations and orders
applicable to it, or its business or the ownership of its assets, and (ii) has
all federal, state, local and foreign governmental licenses and permits material
to and necessary in the conduct of its business as currently being conducted.

     3.14 Offering Exemption. Subject to the accuracy of the representations and
warranties of Purchaser set forth under Article IV of this Agreement, the
offering and sale of the Note to be issued hereunder are exempt from
registration under the Act, pursuant to Section 4(2) thereof.

     3.15 Intentionally Omitted.

                                      -9-

<PAGE>



     3.16 Intellectual Property and Related Contracts. Except as set forth on
Schedule 3.16 hereto, the Company and each of the Significant Subsidiaries (x)
own, free and clear of all Liens, the trademarks, service marks (including
common law names and marks and federally registered names and marks), trade
names, service names, copyrights, patents, technology, know-how and processes
(collectively, "Intellectual Property") as respectively set forth on Schedule
3.16 under the heading "Owned Intellectual Property," and (y) is licensed to use
all of the Intellectual Property as respectively set forth on Schedule 3.16
under the heading "Licensed Intellectual Property." The Intellectual Property as
respectively described in clauses (x) and (y) is all of the Intellectual
Property used in or necessary for the conduct of the Company's and the
Significant Subsidiaries' business as currently conducted or material to the
condition (financial and other), business, or operations of the Company and the
Significant Subsidiaries taken as a whole. Except as set forth on Schedule 3.16,
(i) the use of such Intellectual Property by the Company, the Significant
Subsidiaries and their respective agents or licensees does not infringe on the
rights of any Person, and (ii) , to the knowledge of the Company no person is
infringing on any right of the Company, any of the Significant Subsidiaries or
their respective agents or licensees with respect to any such Intellectual
Property. There are no agreements, written or oral, except as set forth on
Schedule 3.16, which in any material respect limit or otherwise relate to any
rights by the Company to use any of its Intellectual Property.

     3.17 Absence of Undisclosed Liabilities. Neither the Company nor any of the
Significant Subsidiaries has any liabilities (whether absolute, accrued,
contingent or otherwise), except: (a) liabilities, obligations or contingencies
that are accrued and reserved against in the consolidated balance sheet of the
Company and the Significant Subsidiaries, or reflected in the notes thereto,
included in the Company's Form 10-Q filed for the quarter ended September 30,
2000, (b) liabilities incurred since September 30, 2000 in the ordinary course
of business, (c) liabilities disclosed in Schedule 3.17 hereto, (d) liabilities
otherwise disclosed in the SEC Documents, (e) liabilities under executory
contracts entered into in the ordinary course of business or (f) liabilities
otherwise disclosed on the Schedules to this Agreement.

     3.18 Changes. Since September 30, 2000, except (i) as set forth in the SEC
Documents, (ii) as otherwise disclosed in Schedule 3.18 hereto or (iii) as
otherwise provided by this Agreement:

          (a) there has been no event or events giving rise to, or reasonably
likely to give rise to, a Material Adverse Effect on the financial condition,
business or prospects of the Company;

          (b) there has been no direct or indirect redemption, purchase or other
acquisition of any shares of Company capital stock, or any declaration, setting
aside or payment of any dividend or other distribution by the Company in respect
of any Company capital stock, or any issuance of any shares of capital stock of
the Company (other than pursuant to the exercise of options and warrants
pursuant to their terms), or, except in the ordinary course of business, any

                                      -10-

<PAGE>


grant to any person of any option to purchase or other right to acquire shares
of capital stock of the Company or any stock split or other change in the
Company's capitalization;

          (c) neither the Company nor any of the Significant Subsidiaries has
entered into or agreed to enter into any new or amended contract with any of the
officers thereof or, except in the ordinary course of business, otherwise
increased the compensation payable to the officers or directors of any such
entity; and

          (d) neither the Company nor any of the Significant Subsidiaries has
(i) entered into or amended any bonus, incentive compensation, deferred
compensation, profit sharing, retirement, pension, group insurance or other
employee benefit plan (including, without limitation, the 1993 Stock Incentive
Plan) except as required by law or regulations or (ii) made any contribution to
any such plan except for contributions specifically required by law or pursuant
to the terms of such plans.

     3.19 Labor Matters. Except as set forth on Schedule 3.19 hereto, (i) none
of the Company and the Significant Subsidiaries is a party to, or bound by, any
collective bargaining agreement, contract or other understanding with a labor
union or labor organization, (ii) there are no material controversies, strikes,
slowdowns or work stoppages pending or, to the knowledge of the Company,
threatened, between the Company or any of the Significant Subsidiaries and any
of their respective employees, and (iii) to the knowledge of the Company, there
are no organizational efforts presently being made involving any of the
employees of the Company or the Significant Subsidiaries.

                                   ARTICLE IV

                   REPRESENTATIONS AND WARRANTIES OF PURCHASER

     Purchaser hereby represents and warrants to the Company, as of the date
hereof, that:

     4.1  Organization, Existence, Qualification and Authority of Purchaser.
Purchaser is a limited partnership, duly organized, validly existing and, if
applicable, in good standing under the laws of the State of California, and has
the power and authority to enter into this Agreement and perform its obligations
hereunder. The execution, delivery and performance of this Agreement by
Purchaser has been duly and validly authorized by all requisite limited
partnership action and this Agreement has been duly executed and delivered by
Purchaser. This Agreement is legal, valid and binding upon Purchaser and is
(assuming due execution and delivery by the Company and XOXO ) enforceable
against Purchaser in accordance with its terms, except as such enforceability
may be limited by bankruptcy, insolvency, reorganization or similar laws
affecting creditors' rights generally or by general equitable principles.

     4.2  No Breach or Default. The execution, delivery and performance of this
Agreement by Purchaser and the consummation by Purchaser of the transactions
contemplated by

                                      -11-


<PAGE>



this Agreement do not and will not: (i) violate Purchaser's charter documents;
(ii) violate any law or regulation applicable to Purchaser; (iii) result in the
breach of, or constitute a default under, any indenture, mortgage, deed of
trust, lease or sublease, contract or other agreement or instrument to which
Purchaser is a party or by which Purchaser or any of its properties is bound;
(iv) result in the creation or imposition of any Lien upon any of the property
of Purchaser; or (v) except as set forth on Schedule 4.2 hereto, require the
Purchaser to procure or obtain the consent or approval of, or make any filing
with, any Governmental Authority.

     4.3  Purchase for Own Account.

          (a) The Note to be acquired by Purchaser pursuant to this Agreement
and the Shares, are being, and will be, acquired for its own account and with no
intention of distributing or reselling such Note or Shares or any part thereof
in any transaction that would be in violation of the securities laws of the
United States, without prejudice, however, to Purchaser's rights at all times to
sell or otherwise dispose of all or any part of such Note or Shares under a
registration statement under the Act or under an applicable exemption from the
registration requirements of the Act.

          (b) Purchaser understands that neither the Note nor the Shares have
been registered under the Act, and cannot be resold unless they are subsequently
registered under the Act or unless an exemption from such registration is
available thereunder.

     4.4  Investor Sophistication. Purchaser is an "accredited investor" within
the meaning of Rule 501(a) under the Act, and by reason of its business and
financial experience, or the business and financial experience of those Persons
retained by it to advise it with respect to its investment in the Note being
acquired pursuant to this Agreement, has such knowledge, sophistication and
experience in business and financial matters so as to be capable of evaluating
the merits and risks of the prospective investment therein, is able to bear the
economic risk of such investment, and, at the present time, is able to afford a
complete loss of such investment.

     4.5  Brokers. No broker, investment banker, financial advisor or other
Person is entitled to any broker's, finder's, financial advisor's or other
similar fee or commission in connection with the transactions contemplated by
this Agreement based on arrangements made by or on behalf of Purchaser.

                                    ARTICLE V

                         CONDITIONS PRECEDENT TO CLOSING

     5.1  Conditions Precedent to Obligations of Purchaser. The obligations of
Purchaser to purchase the Note hereunder are subject to the satisfaction of each
of the following conditions at the Closing Date:

                                      -12-

<PAGE>


          (a) The representations and warranties made by the Company herein
shall be true and correct in all material respects on and as of the Closing Date
with the same effect as though such representations and warranties had been made
on and as of the Closing Date (except where the specific representation or
warranty by its terms applies to an earlier date);

          (b) The Company shall have performed and complied in all material
respects with all covenants, agreements and conditions set forth herein which
are required to be performed or complied with by it on or prior to the Closing
Date;

          (c) The purchase of and payment for the Note to be purchased hereunder
shall not (i) be prohibited by any applicable law or governmental regulation,
(ii) subject Purchaser to any penalty or other onerous condition pursuant to any
applicable law or governmental regulation, or (iii) be enjoined;

          (d) All authorizations, consents, approvals, permits and licenses and
filings with, by or in respect of any Governmental Authority, court or other
body required to be taken, given or obtained that are necessary in connection
with the transactions contemplated hereby and in the other documents related
hereto, shall have been taken, given or obtained, be in full force and effect
and not be subject to any pending proceedings or appeals, administrative,
judicial or otherwise, other than those the pendency of which would not have a
Material Adverse Effect;

          (e) All consents and approvals to be obtained by the Company from
third parties (including licensors, lessors and others), including without
limitation those set forth on Schedule 3.4 hereto, that are required in
connection with the transactions contemplated hereby and in the other documents
related hereto, shall have been given or obtained and be in full force and
effect, and in form and substance satisfactory to the Purchaser;

          (f) The Certificate of Amendment to the Company's certificate of
incorporation increasing to 200,000,000 the authorized number of shares of the
Common Stock the Company may issue (the "Certificate of Amendment") shall have
been accepted for filing by the Department of State of the State of New York;

          (g) There shall not have occurred any material adverse change in the
financial condition or business of the Company and the Significant Subsidiaries
taken as a whole since the date of this Agreement; and

          (h) Purchaser shall have received duly executed originals or copies,
as applicable, of the documents set forth in Section 8.1 hereof.

     5.2  Conditions Precedent to Obligations of the Company and XOXO. The
obligations of XOXO to issue and sell the Note pursuant to this Agreement, and
the obligations of the Company to cause XOXO to take such action, are subject,
at the Closing Date, to the satisfaction of each of the following conditions:

                                      -13-

<PAGE>



          (a) The representations and warranties made by Purchaser herein shall
be true and correct in all material respects on and as of the Closing Date with
the same effect as though such representations and warranties had been made on
and as of the Closing Date (except where the specific representation or warranty
by its terms applies to an earlier date);

          (b) Purchaser shall have performed and complied in all material
respects with all covenants, agreements and conditions set forth herein which
are required to be performed or complied with by it on or prior to the Closing
Date;

          (c) All authorizations, consents, approvals, permits and licenses and
filings with, by or in respect of any Governmental Authority, court or other
body required to be taken, given or obtained that are necessary in connection
with the transactions contemplated hereby and in the other documents related
hereto, shall have been taken, given or obtained, be in full force and effect
and not be subject to any pending proceedings or appeals, administrative,
judicial or otherwise, other than those the pendency of which would not have a
Material Adverse Effect; and

          (d) All consents and approvals to be obtained by the Company from
third parties (including licensors, lessors and others), including without
limitation those set forth on Schedule 3.4 hereto, that are required in
connection with the transactions contemplated hereby and in the other documents
related hereto, shall have been given or obtained and be in full force and
effect, and in form and substance satisfactory to the Company.

                                   ARTICLE VI

                    COVENANTS RELATING TO CONDUCT OF BUSINESS

     6.1  Conduct of Businesses Prior to the Closing Date. Except as expressly
contemplated or permitted by this Agreement, or as required by applicable law,
rule or regulation, or with the consent of Purchaser, during the period from the
date of this Agreement to the Closing Date, each of the Company and the
Significant Subsidiaries shall (i) conduct its business in the usual, regular
and ordinary course consistent with past practice, and (ii) use reasonable good
faith efforts to maintain and preserve intact its business organization,
employees and advantageous business relationships and retain the services of its
officers and key employees.

     6.2  Forbearance. Without limiting Section 6.1 hereof, except as expressly
contemplated or permitted by this Agreement, or as required by applicable law,
rule or regulation, during the period from the date of this Agreement to the
Closing Date, neither the Company nor any of the Significant Subsidiaries shall,
without the prior written consent of Purchaser:

          (a) adjust, split, combine or reclassify any of its capital stock;
make, declare or pay any dividend or make any other distribution on, or directly
or indirectly redeem, purchase

                                      -14-

<PAGE>


or otherwise acquire, any shares of its capital stock or any securities or
obligations convertible into or exchangeable for any shares of its capital
stock; issue, deliver or sell any shares of its capital stock or any securities
convertible into or exercisable for, or any rights, options or warrants to
acquire, any such shares or securities (whether for cash or property), except
for (i) the issuance of shares of Common Stock issuable on the exercise of stock
options granted prior to the date hereof pursuant to the 1993 Stock Incentive
Plan, which options become vested and exercisable on or prior to the Closing
Date, (ii) the issuance of shares of Common Stock issuable upon the exercise of
the Heller Warrant; or (iii) the issuance of shares of Common Stock in exchange
for the extinguishment of any obligation of the Company;

          (b) sell, lease, transfer, or otherwise dispose of any of its
properties or assets, or cancel, release or assign any material indebtedness
owed to it or any material claim held by it, except (i) in the ordinary course
of business consistent with past practice, (ii) as required under any agreement
relating to indebtedness for borrowed money to which the Company or the
Significant Subsidiaries are party or (iii) pursuant to contracts or agreements
in force as of the date of this Agreement;

          (c) make any material acquisition or investment either by purchase of
stock or securities, merger or consolidation, contributions to capital, property
transfers, or purchases of any property or assets of any other individual,
corporation or other entity other than a wholly- owned Subsidiary;

          (d) increase in any material respect the compensation or fringe
benefits of any of its employees or pay any bonus, pension or retirement
allowance not required by any existing plan, program or agreement to any such
employees or become a party to, amend or commit itself to any pension,
retirement, profit-sharing or welfare benefit plan or agreement or employment
agreement with or for the benefit of any employee or accelerate the vesting of
any stock options or other stock-based compensation;

          (e) except for the filing on behalf of the Company of the Certificate
of Amendment, amend its certificate of incorporation, bylaws or similar
governing documents, as the case may be;

          (f) enter into any line of business other than the importation,
manufacturing, distribution, and merchandising of apparel, the licensing (as
licensee) of trademarks relating thereto, and the licensing (as licensor) of the
Company's and Significant Subsidiaries' owned trademarks;

          (g) take any action that is intended or may reasonably be expected to
result in any of its representations and warranties set forth in this Agreement
being or becoming untrue in any material respect at any time prior to the
Closing Date, or in any of the conditions to the transactions contemplated
hereby set forth in Article V not being satisfied, or in a violation of any
provision of this Agreement; or

                                      -15-

<PAGE>



          (h) agree to, or make any commitment to, take any of the actions
prohibited by this Section 6.2.

                                  ARTICLE VI A

                             POST-CLOSING COVENANTS

     6A.1 Board Representation. From and after the Closing, for so long as
either (i) any indebtedness is outstanding under the Note, or (ii) the Purchaser
(alone or in conjunction with one or more of its Affiliates) owns not less than
50% of the Shares issuable upon conversion of the Note, the Company and Arnold
H. Simon, in his individual capacity, on behalf of himself and his Affiliates
that he controls that are shareholders of the Company, hereby agree to exert
their respective best efforts to cause and maintain the election to the Board of
Directors of the Company of two designees of the Purchaser, who shall initially
be Ryan Kavanaugh and Brian Sullivan.

     6A.2 Implementation of Security Agreement. The Company hereby agrees to
take all actions necessary or desirable to cause XOXO to comply with all of its
duties and obligations under the Security Agreement and to take all other
actions, whether or not expressly requested by Purchaser, reasonably in
furtherance of Purchaser's effectuation of its rights thereunder.

                                   ARTICLE VII

                              ADDITIONAL AGREEMENTS

     7.1 Access to Information.

          (a) Upon reasonable notice, the Company shall, and shall cause the
Significant Subsidiaries to, afford to the representatives of Purchaser during
normal business hours during the period prior to the Closing Date, access to all
its properties, books, contracts, commitments and records, and to its officers,
employees, accountants, counsel and other representatives and, during such
period, the Company shall, and shall cause the Significant Subsidiaries to, make
available to the Purchaser all information concerning their business, properties
and personnel as the Purchaser may reasonably request. Neither the Company nor
the Significant Subsidiaries shall be required to provide access to or to
disclose information where such access or disclosure would, in the opinion of
its counsel, waive the attorney-client privilege of the Person in possession or
control of such information or contravene any law, rule, regulation, order,
judgment, decree, fiduciary duty or binding agreement entered into prior to the
date of this Agreement. The parties hereto will make appropriate substitute
disclosure arrangements under circumstances in which the restrictions of the
preceding sentence apply.

                                      -16-


<PAGE>


          (b) All information furnished by the Company or the Significant
Subsidiaries to Purchaser pursuant to this Agreement (the "Confidential
Information") shall be treated as the sole property of the Company and, if this
Agreement shall be terminated, the Purchaser shall upon request promptly return
to the Company all of such written information and all documents, notes,
summaries or other materials containing, reflecting or referring to, or derived
from, such information. The Purchaser shall keep confidential all such
information, will use such information solely for the purpose of evaluating the
transactions contemplated by this Agreement and shall not directly or indirectly
use such information for any competitive or other commercial purpose.

          (c) The obligation to keep confidential the Confidential Information
as such shall not apply to (i) any information which (A) was already in the
Purchaser's possession on a non-confidential basis prior to the disclosure
thereof by the furnishing party, (B) was then publicly available or generally
known to the public other than as a result of disclosure by the Purchaser in
violation of the provisions hereof, or (C) was disclosed to the Purchaser by a
third party not bound by any obligation of confidentiality or (ii) disclosures
made as required by law. If the Purchaser is requested or required (by oral
question or request for information or documents in legal proceedings,
interrogatories, subpoena, civil investigative demand or similar process) to
disclose any Confidential Information concerning the Company or any Significant
Subsidiary, the Purchaser will promptly notify the furnishing party of such
request or requirement so that the furnishing party may seek an appropriate
protective order and/or waive the Purchaser's compliance with the provisions of
this Agreement. It is further agreed that, if in the absence of a protective
order or the receipt of a waiver hereunder the Purchaser is nonetheless, in the
opinion of its counsel, compelled to disclose information concerning the
furnishing party to any tribunal or governmental body or agency or else stand
liable for contempt or suffer other censure or penalty, the Purchaser may
disclose such information to such tribunal or governmental body or agency to the
extent necessary to comply with such order as advised by counsel without
liability hereunder.

          (d) The Purchaser understands and agrees that the applicable
furnishing party will suffer immediate, irreparable harm in the event the
Purchaser fails to comply with any of its obligations of confidentiality under
this Agreement, that monetary damages will be inadequate to compensate the
furnishing party for such breach and that such furnishing party shall be
entitled to specific performance as a remedy for any such breach without the
necessity of posting a bond or proving special damages. Such remedy shall not be
deemed to be the exclusive remedy in the event of any such breach by the
Purchaser, but shall be in addition to all other remedies available to the
furnishing party at law or in equity.

          (e) No representations or warranties are made by the Company, the
Significant Subsidiaries, or any Affiliate thereof except as expressly set forth
in this Agreement.

     7.2  Further Assurances. In case at any time after the Closing Date any
further action, or the execution and delivery of any additional documents or
instruments, is necessary or

                                      -17-

<PAGE>


desirable to carry out the purposes of this Agreement, the parties hereto shall
take such actions and execute and deliver such additional documents and
instruments as may be reasonably requested by the Company or the Purchaser.

     7.3  Advice of Changes. Each of the parties hereto shall promptly advise
each other party hereto of any change or event which, individually or in the
aggregate with other such changes or events, would, or would be reasonably
likely to, cause or constitute a material breach of any of its representations,
warranties or covenants contained herein. From time to time prior to the
Closing, each party hereto shall promptly supplement or amend the disclosure
schedules attached hereto relating to such party, to reflect any matter which,
if existing, occurring or known at the date of this Agreement, would have been
required to be set forth or described in such disclosure schedules or which is
necessary to correct any information in such disclosure schedules which has been
rendered inaccurate thereby. No supplement or amendment to such disclosure
schedules shall have any effect for the purpose of determining the accuracy of
any party's representations and warranties contained herein, the satisfaction of
any of the conditions in Article V hereof, or the compliance by any party with
its covenants or agreements contained herein.

     7.4  Public Announcements. Purchaser shall not make any announcement or
disclosure of the transactions contemplated hereby without the prior consent of
the Company. Any such announcement or disclosure made by the Company shall be
subject to the prior review and reasonable approval of the Purchaser.

     7.5  Closing Covenant. The parties hereto agree to act in good faith in
taking any and all commercially reasonable actions necessary to facilitate the
Closing and the other transactions contemplated by this Agreement, including,
without limitation, the satisfaction of the respective closing conditions of the
parties set forth herein. Each party hereto further agrees not to take any
action that is intended or may reasonably be expected to result in any of its
representations and warranties set forth in this Agreement being or becoming
untrue in any material respect at any time prior to the Closing Date, or in any
of the conditions to the transactions contemplated hereby not being satisfied,
or in a violation of any provision of this Agreement.

                                  ARTICLE VIII

                                CLOSING DOCUMENTS

     8.1 The Company's Obligations. At the Closing, the Company shall deliver to
the Purchaser the following:

          (a) Resolutions. Copies of resolutions of the Company's and of XOXO's
Boards of Directors certified by the Secretary or Assistant Secretary of the
Company and XOXO, as the case may be, authorizing the execution, delivery and
performance of this Agreement and

                                      -18-


<PAGE>




the transactions contemplated hereby, and in form and substance reasonably
satisfactory to the Purchaser;

          (b) Note. An original of the Note, duly executed by XOXO and the
Company and registered in the name of Purchaser;

          (c) Compliance Certificate. A duly executed original of a certificate
of an officer of the Company certifying that all representations and warranties
of the Company contained in this Agreement are true and correct in all material
respects as of the Closing Date, and that the Company has fully performed in all
material respects all obligations, agreements, conditions and commitments
required to be fulfilled by the Company pursuant to the terms hereof on or prior
to the Closing Date;

          (d) Opinion of Counsel. A duly executed original of an opinion of
counsel for the Company and XOXO in the form attached hereto as Exhibit 8.1(d);
and

          (e) Security Agreement. An original of the Security Agreement duly
executed by XOXO.

     8.2 The Purchaser's Obligations. At the Closing, the Purchaser shall
deliver to the Company the following:

          (a) Payment. Funds in the amount and payable as set forth in Section
2.1 hereof and all other payments required to be made by the Purchaser on or
prior to the Closing Date pursuant to the provisions of this Agreement; and

          (b) Compliance Certificate. A duly executed original of a certificate
of an officer of Purchaser certifying that all representations and warranties of
the Purchaser contained in this Agreement are true and correct in all material
respects as of the Closing Date, and that Purchaser has fully performed in all
material respects all obligations, agreements, conditions and commitments
required to be fulfilled by the Purchaser on or prior to the Closing Date.

                                   ARTICLE IX

                                  MISCELLANEOUS

     9.1 Indemnification and Related Provisions.

          (a) Indemnification. Each of the Company and the Purchaser (each, as
such, an "Indemnifying Party") agrees and covenants to hold harmless and
indemnify the other party (including any Affiliate, director, officer, employee,
agent or controlling Person of such party) (each of the foregoing Persons being
an "Indemnified Person"), from and against any losses, claims, damages,
liabilities and expenses (including reasonable attorneys' fees and expenses of

                                      -19-

<PAGE>



investigation) incurred by such Indemnified Person after the Closing Date
(collectively, "Indemnifiable Costs and Expenses") arising out of or based upon
any breach by the Indemnifying Party of any of its representations, warranties
or covenants contained herein.

          (b) Adjustment of Indemnity. The amount by which an Indemnified Person
shall be indemnified for any Indemnifiable Costs and Expenses shall be reduced
by (i) any insurance proceeds or indemnity, contribution, warranty or other
similar payments recoverable by such Indemnified Person and (ii) any right to
income tax or other Tax savings that reduce or will reduce the impact to such
Indemnified Person of such Indemnifiable Costs and Expenses (provided, however,
that in the event that any Indemnified Person seeking indemnification hereunder
is unable to collect a payment with respect to such right to such insurance
proceeds, indemnity, contribution, warranty or other similar payments (other
than as a result of a waiver, settlement or failure to use commercially
reasonable efforts to diligently prosecute such right by such party), then, at
the time such right under clause (i) or (ii) hereof is unenforceable or it
becomes evident that such right is unenforceable (regardless of when such time
occurs), the amount of Indemnifiable Costs and Expenses will be increased by the
amount such Indemnifiable Costs and Expenses were previously reduced on account
of such right).

          (c) Period of Survival of Representations and Warranties of the
Company. All representations and warranties of the Company contained in this
Agreement shall terminate and expire eighteen (18) months after the Closing
Date.

          (d) Limitations. Notwithstanding any provision to the contrary
contained in this Agreement, neither the Purchaser nor the Company (including
its related Indemnified Persons) shall be entitled to indemnification from the
other for breaches, inaccuracy or nonfulfillment or nonperformance of
representations, warranties, covenants or agreements under this Agreement, until
the dollar amount of all such claims shall exceed $200,000 (Two Hundred Thousand
Dollars) (the "Basket Amount"). If such claims exceed the Basket Amount, the
Indemnifying Party shall be liable only for the portion of such claims which
exceed the Basket Amount.

     9.2  Termination; Amendment; Extension; Waiver.

          (a) Termination. This Agreement may be terminated at any time prior to
the Closing Date:

               (i) by mutual consent of Purchaser, the Company and XOXO in a
written instrument;

               (ii) by Purchaser or the Company if the transactions contemplated
hereby shall not have been consummated on or before March 15, 2001, unless the
failure of such consummation to occur by such date shall be due to the failure
of the party seeking to terminate

                                      -20-

<PAGE>



this Agreement to perform or observe the covenants and agreements of such party
set forth herein; and

               (iii) by Purchaser or the Company, provided that the terminating
party is not then in material breach of any representation, warranty, covenant
or other agreement contained herein, if the other party shall have breached in
any material respect (i) any of the covenants or agreements made by such other
party herein or (ii) any of the representations or warranties made by such other
party herein; provided, however, that neither party shall have the right to
terminate this Agreement pursuant to this Section 9.2 (iii) unless the breach of
any representation or warranty, together with all other such breaches, would
involve a claim in excess of $200,000 and such breach is not cured within
fifteen (15) days following written notice to the party committing such breach,
or, by its nature, cannot be cured prior to the Closing.

          (b) Effect of Termination. In the event of termination of this
Agreement by Purchaser or the Company in accordance with the terms hereof,
neither Purchaser nor the Company shall have any further liability of any nature
whatsoever hereunder, or in connection with the transactions contemplated
hereby, provided however, that neither party shall be relieved or released from
any liabilities or damages arising out of its prior breach of any provision of
this Agreement.

          (c) Amendment; Extension; Waiver. The parties hereto may (i) amend any
provision of this Agreement, (ii) extend the time for the performance of any of
the obligations or other acts of another party hereto, (iii) waive any
inaccuracies in the representations and warranties of another party contained
herein or in any document delivered pursuant hereto, and (iv) waive compliance
by another party with any of the agreements or conditions contained herein. Any
agreement on the part of a party hereto to any such amendment, extension or
waiver shall be valid only if set forth in a written instrument signed on behalf
of such party, but any extension or waiver or failure to insist on strict
compliance with an obligation, covenant, agreement or condition shall not
operate as a waiver of, or estoppel with respect to, any subsequent or other
failure. No failure or delay by a party in exercising any right, power or remedy
hereunder shall operate as a waiver thereof, nor shall any single or partial
exercise of any such right, power or remedy preclude any other or further
exercise thereof or the exercise of any other right, power or remedy.

         9.3 Entire Agreement. This Agreement constitutes the entire agreement
of the parties with respect to the transactions contemplated hereby and
supersedes all prior agreements and understandings with respect thereto. No
representations or warranties are made by any party hereto except as expressly
set forth in this Agreement, and no party hereto is entitled to rely on any
statement, oral or written, or document or instrument delivered outside of this
Agreement or the schedules or exhibits hereto.

         9.4 Communications. All notices, demands and other communications
provided for hereunder shall be in writing, and, if to Purchaser, c/o Kavanaugh
Consulting, Inc., 100 Wilshire

                                      -21-

<PAGE>



Boulevard, Suite 940, Santa Monica, CA 90401, telecopier No. (310) 917-2881,
Attn: Ryan Kavanaugh, and shall be given by telecopy, courier service or
personal delivery, so addressed to Purchaser, or to such other address as
Purchaser may designate to the Company in writing and, if to the Company or
XOXO, shall be given by similar means at 1411 Broadway, New York, New York
10017, telecopier No. (212) 642-4265, and 6000 Sheila St., Commerce City, CA
90040, telecopier No. (323) 838-7873, Attention: Arnold H. Simon, or to such
other address as the Company may designate in writing, with a copy to Robert W.
Forman, Shapiro Forman & Allen LLP, 380 Madison Avenue, New York, New York
10017, telecopier No. (212) 557-1275, and shall be deemed given when received.

     9.5 Execution in Counterparts. This Agreement may be executed in any number
of counterparts and by different parties hereto on separate counterparts, each
of which counterparts, when so executed and delivered, shall be deemed to be an
original and all of which counterparts, taken together, shall constitute but one
and the same Agreement.

     9.6  Assignment. The rights and obligations of Purchaser under this
Agreement may not be assigned to any other Person, other than an Affiliate of
Purchaser, except with the consent of the Company. The rights and obligations of
the Company and XOXO under this Agreement may not be assigned to any other
Person, except with the consent of Purchaser.

     9.7  Governing Law. This Agreement shall be deemed to be a contract made
under the laws of the State of California, and for all purposes shall be
construed in accordance with the laws of said State, without regard to
principles of conflict of laws. Each of the parties hereto agrees to submit to
the jurisdiction of the federal or state courts located in the City of Los
Angeles in any action or proceeding arising out of or relating to this
Agreement.

     9.8 Severability of Provisions. Any provision of this Agreement which is
prohibited or unenforceable in any jurisdiction shall, as to such jurisdiction,
be ineffective to the extent of such prohibition or unenforceability without
invalidating the remaining provisions hereof or affecting the validity or
enforceability of such provision in any other jurisdiction.

     9.9 Headings. The Article and Section headings used or contained in this
Agreement are for convenience of reference only and shall not affect the
construction of this Agreement.

     9.10 Waiver of Jury Trial. The parties hereto hereby irrevocably waive all
right to a trial by jury in any action, proceeding or counterclaim arising out
of or relating to this Agreement or the transactions contemplated hereby.

     9.11 Absence of Third Party Beneficiary Rights. Except as expressly
provided in this Article IX with respect to Indemnified Persons, the provisions
of this Agreement are solely for the benefit of the parties hereto and no
provision of this Agreement is intended, nor will any provision be interpreted,
to provide or create any third party beneficiary rights or any other rights of
any kind in any shareholder, creditor, customer, lessor, lessee, licensor,
licensee, employee or any other person or entity not a party hereto.

                                      -22-

<PAGE>


          IN WITNESS WHEREOF, the parties hereto have caused this Securities
Purchase Agreement to be executed by their respective officers hereunto duly
authorized, as of the date first above written.

                                        ARIS INDUSTRIES, INC.



                                        By:
                                           ------------------------------------
                                            Name:  Arnold H. Simon
                                            Title: Chairman and Chief Executive
                                                   Officer


                                        XOXO CLOTHING COMPANY, INCORPORATED



                                        By:
                                           ------------------------------------
                                            Name:  Arnold H. Simon
                                            Title: Chief Executive Officer


                                        KC ARIS FUND I, L.P.

                                        By: KC Aris Group I, Inc.,
                                            its general partner


                                        By:
                                           ------------------------------------
                                            Name:  Ryan Kavanaugh
                                            Title: Chief Executive Officer

AGREED AND ACKNOWLEDGED
AS TO SECTION VI A ONLY:



By:
   -------------------------------------
          Arnold H. Simon




                                      -23-

<PAGE>




                                    Schedules



3.1       All Subsidiaries

3.4       Required Consents, etc.

3.5       Conflicting Agreements

3.6       Litigation, etc.

3.10(B)   Accounts Recievable

3.10(C)   Projected Financial Statements

3.11      Material Agreements

3.13      Compliance With Laws

3.16      Intellectual Property

3.17      Undisclosed Liabilities

3.18      Changes Since September 30, 2000

3.19      Labor Matters


                                      -24-


</TEXT>
</DOCUMENT>
<DOCUMENT>
<TYPE>EX-21
<SEQUENCE>7
<FILENAME>0007.txt
<DESCRIPTION>LIST OF SUBSIDIARIES
<TEXT>

                                                                      EXHIBIT 21


                              LIST OF SUBSIDIARIES


Name of Subsidiary                                 Jurisdiction of Incorporation
------------------                                 -----------------------------
Europe Craft Imports, Inc.                         New Jersey

ECI Sportswear, Inc.                               New York

XOXO Clothing Company, Incorporated                Delaware



All other subsidiaries of the Registrant, considered in the aggregate as a
single subsidiary, do not constitute a significant subsidiary as of the end of
the year covered by this Annual Report, and, therefore, their names have been
omitted.

</TEXT>
</DOCUMENT>
<DOCUMENT>
<TYPE>EX-23
<SEQUENCE>8
<FILENAME>0008.txt
<DESCRIPTION>CONSENT OF INDEPENDENT ACCOUNTANTS
<TEXT>



                                                                      Exhibit 23


                       CONSENT OF INDEPENDENT ACCOUNTANTS


We hereby consent to the incorporation by reference in the Registration
Statement on Form S-8 (No. 333-63411) of Aris Industries, Inc. of our report
dated March 28, 2001 relating to the financial statements and financial
statement schedule, which appears in this Form 10-K.



                                            PricewaterhouseCoopers LLP



New York, New York
April 16, 2001


</TEXT>
</DOCUMENT>
<DOCUMENT>
<TYPE>EX-23.1
<SEQUENCE>9
<FILENAME>0009.txt
<DESCRIPTION>INDEPENDENT AUDITORS REPORT
<TEXT>

                                                                    EXHIBIT 23.1


                          INDEPENDENT AUDITORS' CONSENT

We consent to the incorporation by reference in Registration Statement No.
333-63411 of Aris Industries, Inc. and Subsidiaries on Form S-8 of our report
dated March 31, 1999, appearing in this Annual Report on Form 10-K of Aris
Industries, Inc. and Subsidiaries for the fiscal year ended December 31, 2000.




Deloitte & Touche LLP


Parsippany, New Jersey
April 16, 2001





</TEXT>
</DOCUMENT>
</SUBMISSION>
