ASSETS PURCHASE AGREEMENT

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1.1    “Acquisition Proposal” means any inquiry, offer or proposal concerning any (a) merger, consolidation, share exchange, amalgamation, reorganization, recapitalization, business combination or similar transaction involving any Seller; (b) sale, lease, exchange, mortgage, transfer, pledge or other disposition directly or indirectly of assets of any Seller representing twenty percent (20%) or more of the consolidated assets of any Seller in a single transaction or series of related transactions; (c) issuance, sale, or other disposition of (including by way of merger, consolidation, business combination, share exchange, joint venture, or any similar transaction) securities (or options, rights or warrants to purchase, or securities convertible into or exchangeable for such securities) representing twenty percent (20%) or more of the voting power of any Seller; (d) any tender offer or exchange offer for securities representing twenty percent (20%) or more of the voting power of any Seller in a transaction or series of related transactions; (e) transaction or series of related transactions in which any Person or group propose to acquire control of the assets of any Seller having a fair market value equal to or greater than twenty percent (20%) of the fair market value of all of the assets of the Sellers, taken as a whole, immediately prior to such transaction; (f) any transaction or series of transactions in which any Person or group shall acquire beneficial ownership, or the right to acquire beneficial ownership of twenty percent (20%) or more of the outstanding voting capital stock of any Seller; (g) any combination of the foregoing (other than the transactions contemplated by this Agreement); or (h) any public announcement of a proposal, plan or intention to do any of the foregoing or any agreement to engage in any of the foregoing (other than the transactions contemplated by this Agreement).

1.2    “Act” means the Securities Act of 1933, as amended.

1.3    “Affiliate” means, with respect to a specified Person, any other Person that directly or indirectly through one or more intermediaries controls, is controlled by, or is under common control with, the specified Person.

1.4    “Business” means the business conducted by Sellers and their respective operations, prospects and condition (financial and otherwise), solely as it relates to the designing, marketing, licensing and/or managing the DANSKIN® brand of marks and related names for use in connection with a wide variety of goods everywhere in the world excluding Japan.

1.5    “Buyer Basket” means Two Hundred Fifty Thousand Dollars ($250,000).

1.6    “Buyer Material Adverse Change” means a material adverse change in the ability of Buyer to consummate the transactions contemplated by this Agreement.

1.7    “Closing” means the closing of the transactions contemplated by this Agreement.

1.8    “Claim” has the meaning set forth in Section 10.3.

1.9    “Closing Date” means the date on which the Closing occurs.

1.10    “Code” means the Internal Revenue Code of 1986, as amended.

1.11    “Consent” means any consent, approval, order or authorization of, or any declaration, filing or registration with, or any application or report to, or any waiver by, or any other action (whether similar or dissimilar to any of the foregoing) of, by or with, any Person, which is necessary in order to take a specified action or actions in a specified manner and/or to achieve a specified result or to avoid the occurrence of a default.

1.12    “Contract” means any written or oral contract, agreement, instrument, order, commitment or binding arrangement of any nature whatsoever.

1.13    “Contract Right” means any right, power or remedy under any Contract, including but not limited to rights to receive property or services or otherwise to derive benefits from the payment, satisfaction or performance of another party’s obligations.

1.14    “Dan River Agreement” means the agreement between the Company and Dan River, Inc., dated September 28, 1977, as amended by amendments dated December 30, 1983 and October 5, 1995.

1.15    “DGCL” means the General Corporation Law of the State of Delaware.

1.16    “Documents” means and includes any document, agreement, instrument, certificate, notice, Consent, affidavit, correspondence (by letter, electronic mail, telex or otherwise), written statement, schedule or exhibit whatsoever.

1.17    “Employee Benefit Plan” means any employee benefit plan as defined in Section 3(3) of ERISA, any “voluntary employees’ beneficiary association” within the meaning of Section 501(c)(9) of the Code, “welfare benefit fund” within the meaning of Section 419 of the Code, or “qualified asset account” within the meaning of Section 419A of the Code, and any other plan, program, policy or arrangement for or regarding bonuses, commissions, incentive compensation, severance, vacation, deferred compensation, pensions, profit sharing, retirement, payroll savings, stock options, stock purchases, stock awards, stock ownership, phantom stock, stock appreciation rights, equity compensation, medical/dental expense payment or reimbursement, disability income or protection, sick pay, group insurance, self insurance, death benefits, employee welfare or fringe benefits of any nature, including those benefiting retirees or former employees.

1.18    “Encumbrance” means any lien, security interest, pledge, mortgage, easement, leasehold, assessment, covenant, restriction, or any other encumbrance, claim, burden or charge of any kind or nature whatsoever.

1.19    “Environmental Law” means any federal, state or local law, statute, code, ordinance, rule, regulation or requirement relating to the environment and/or to the impact thereof on human health or safety, or governing, regulating or pertaining to the generation, treatment, storage, handling, transportation, use or disposal of any Hazardous Substance.

1.20    “ERISA” means the Employee Retirement Income Security Act of 1974, as amended.

1.21    “ERISA Affiliate” means any entity, trade or business (whether or not incorporated) that is part of the same controlled group with, common control with, part of an affiliated service group with, or part of another arrangement that includes, a Seller or any ERISA Affiliate within the meaning of Code Section 414(b), (c), (m) or (o).

1.22    “Excluded Liabilities” has the meaning set forth in Section 2.4.

1.23    “Governmental Entity” means any government or agency, district, bureau, board, commission, court, department, official, political subdivision, tribunal, taxing authority or other instrumentality of any government, whether federal, state or local, domestic or foreign.

1.24    “Hazardous Substance” means any substance or material defined in or governed by any Environmental Law as a dangerous, toxic or hazardous pollutant, contaminant, chemical, waste, material or substance, and also expressly includes ureaformaldehyde, polychlorinated biphenyls, dioxin, radon, asbestos, asbestos containing materials, nuclear fuel or waste, radioactive materials, explosives, carcinogens and petroleum products, including but not limited to crude oil or any fraction thereof, natural gas, natural gas liquids, gasoline and synthetic gas, or any other waste, material, substance, pollutant or contaminant which would subject the owner or operator of the Real Property to any damages, penalties or liabilities under any applicable Environmental Law.

1.25    “HSR Act” has the meaning set forth in Section 4.10.

1.26    “HSR Filing” has the meaning set forth in Section 4.10.

1.27    “Indebtedness” means all items which, in accordance with GAAP, are required to be included as indebtedness in determining total liabilities as shown on the liability side of a balance sheet as of the date Indebtedness is to be determined.

1.28    “Insurance Policies” means any policy or binder for fire, public liability, product liability, general liability, life, hospital, medical, disability, comprehensive, automobile, property damage, workmen’s compensation, key man, fidelity bond, theft, forgery, vehicular, or errors and omissions insurance, or for any other insurance of any nature whatsoever.

1.29    “Intangibles” means, throughout the world, all trademarks, including the Marks (as defined in Section 1.37), licenses, designs, patterns, pressbooks, promotional material, artwork, trade dress, copyrights, copyright applications, copyright registrations; web sites, including the content contained therein, domain names, trade secrets, permits, know-how, patents, patent applications, formula, invention, technology, database or other intangible assets of any nature (whether in use, operational, active, under development or design, non-operative, or inactive, owned, marketed, maintained, supported, used, licensed or otherwise held for use by, or licensed to or with respect to which rights are granted to a Person), and all goodwill, whether or not related to the foregoing, whether arising under statutory or common law in any jurisdiction or otherwise, and includes, without limitation, any and all Intellectual Property Rights in and to the foregoing.

1.30    “Intellectual Property Right(s)” means any and all proprietary rights (throughout the universe, in all media, now existing or created in the future, and for the entire duration of such rights) arising under statutory or common law, contract, or otherwise, and whether or not perfected, including without limitation, all (a) rights in and to trademarks, service marks, trade names, logos, symbols, and the like; (b) rights associated with works of authorship including, but not limited to, copyrights, moral rights, design rights, copyright applications, copyright registrations, and rights to prepare derivative works; (c) rights relating to the protection of trade secrets and confidential information; (d) rights associated with patents, reissues and reexamined patents, and patent applications, whenever filed and wherever issued, and all priority rights resulting from such applications; (e) product rights; (f) rights analogous to those set forth in this definition and any and all other proprietary rights relating to Intangibles not already included herein; (g) rights associated with divisions, divisionals, continuations, continuations-in-part, substitutes, renewals, reissues and extensions of the foregoing (as and to the extent applicable) now existing, hereafter filed, issued, or acquired; and (h) the right to sue for past infringement of any Intangible and/or Intellectual Property Rights, provided any such Intellectual Property Right is related to the Business.

1.31    “Judgment” means any order, writ, injunction, fine, citation, award, decree or any other judgment of any kind whatsoever of any Governmental Entity.

1.32    “Knowledge” shall mean the actual knowledge of the persons listed in Schedule 1.32 after having made the due inquiry of those individuals who would be responsible for the matter to be represented or warranted to in this Agreement.

1.33    “Law” means any provision of any law, statute, ordinance, order, constitution, charter, treaty, rule or regulation enacted, approved or adopted by any Governmental Entity, including common law.

1.34    “Liabilities” means any direct or indirect Indebtedness, liability, claim, loss, damage, Judgment, deficiency or obligation, known or unknown, fixed or inchoate, liquidated or unliquidated, secured or unsecured, accrued, absolute, contingent or otherwise whether or not of a kind required by GAAP to be set forth on financial statements.

1.35    “License Agreement” means that certain License Agreement dated as of the Closing Date between the Company and Buyer.

1.36    “Losses” means any and all Liabilities, Proceedings, causes of action, costs and expenses including, without limitation, costs of investigation, actual interest costs, penalties and attorneys’ fees.

1.37    “Marks” means all names, corporate names, domain names, fictitious names, trademarks, trademark applications, trademark registrations, service marks, service mark applications, service mark registrations; trade names, brand names, product names, logos, trade dress, symbols, slogans or other designations owned or used by any Seller in commerce or in connection with the Business.

1.38    “Permit” means any license, permit, certificate, Consent, right or privilege of any kind or nature whatsoever granted, issued, approved or allowed by any Governmental Entity.

1.39    “Person” means any individual, sole proprietorship, joint venture, partnership, corporation, limited liability company, association, joint-stock company, unincorporated organization, cooperative, trust, estate, Governmental Entity or authority (including any branch, subdivision or agency thereof), administrative or regulatory authority, or any other entity of any kind or nature whatsoever.

1.40    “Proceeding” means any claim, suit, action, equitable action, litigation, investigation, arbitration, trademark opposition, cancellation action, administrative hearing or any other judicial or administrative proceeding of any kind or nature whatsoever, or any formal demand which might lead to any of the foregoing.

1.41    “Property” means real, personal or mixed property.

1.42    “Real Property” means any real estate, land, building, structure, improvement or other real property of any kind or nature whatsoever owned, leased or occupied by any Seller, all shares of stock or other ownership interests through which interests in real estate may be held, and all appurtenant and ancillary rights thereto, including, without limitation, easements, covenants, water rights, sewer rights and utility rights.

1.43    “SEC” means the United States Securities and Exchange Commission.

1.44    “Sellers Basket” means Two Hundred Fifty Thousand Dollars ($250,000).

1.45    “Sellers’ Material Adverse Change” means a material adverse change: (i) in the properties, results of operations or financial condition of the Assets taken as a whole or (ii) in the ability of Sellers to consummate the transactions contemplated by this Agreement.

1.46    “Subsidiaries” with respect to any Person, means any other Person or business entity, with respect to whom 50% or more of the equity interest (or debt or other interest convertible into an equity interest) is owned directly or indirectly by such Person.

1.47    “Superior Proposal” means a bona fide Acquisition Proposal (except that references in the definition of Acquisition Proposal to the percentage “twenty percent (20%)” shall be deemed to be “fifty percent (50%)” for the purposes of this definition) that the Company determines in its good faith business judgment (after consultation with its financial advisors and legal counsel) would result in a transaction that is more favorable to Sellers, from a financial point of view, than the transactions contemplated by this Agreement (including any amendments hereto).

1.48    “Tangible Property” means any machinery, buildings, fixtures, equipment, parts, furniture, leasehold improvements, office equipment, vehicles, tools, forms, supplies or other tangible property of any kind or nature whatsoever.

1.49    “Tax” or “Taxes” means all taxes and governmental impositions of any kind in the nature of (or similar to) taxes, payable to any federal, state, local or foreign taxing authority or other governmental authority, including, but not limited to, those on or measured by or referred to as income, franchise, profits, gross receipts, capital, ad valorem , custom duties, alternative or add-on minimum taxes, estimated, environmental, disability, registration, value added, sales, use, service, real or personal property, capital stock, license, payroll, withholding, employment, social security, workers’ compensation, unemployment compensation, utility, severance, production, excise, stamp, occupation, premiums, windfall profits, transfer and gains taxes, and interest, penalties and additions to tax imposed with respect thereto.

1.50    “Tax Return” shall mean any return (including any information return), report, statement, declaration, estimate, schedule, notice, notification, form, election, certificate or other document or information (including any amendments thereto) that is, has been or may in the future be filed with or submitted to, or required to be filed with or submitted to, any governmental authority in connection with the determination, assessment, collection or payment of any Tax or in connection with the administration, implementation or enforcement of or compliance with any Law relating to any Tax.

1.51    “Trading Date” means the earlier to occur of (i) the date on which a registration statement, filed pursuant to the Registration Rights Agreement and covering the applicable Earn-Out Shares, is declared effective by the SEC or (ii) the date on which all of such Earn-Out Shares may be publicly sold without volume restrictions pursuant to Rule 144(k) under the Act, or any successor rule, as determined by written opinion of counsel to Buyer.

1.52    “Transaction Documents” means this Agreement together with all schedules and exhibits hereto, and all other documents executed and delivered pursuant to this Agreement.

1.53    “Wal-Mart Agreement” means the agreement between Danskin Now and Wal-Mart Stores, Inc. (“Wal-Mart”) dated January 9, 2004.

2.    Sale and Purchase of Assets .

2.1    Assets . At the Closing, Sellers shall sell, transfer, convey, assign and deliver to Buyer, and Buyer shall purchase and acquire from Sellers, all right, title and interest in and to the following assets of Sellers related to the Business, and rights of every nature, kind and description with respect to such assets, wheresoever located and whether or not reflected on the books and records of Sellers (all of which being hereinafter collectively referred to as the “Assets”):

(a)    All Intangibles owned by Sellers (except as listed on Schedule 2.1(a)) and all Intellectual Property Rights associated therewith, all goodwill, licenses and sublicenses granted or obtained with respect thereto, and rights thereunder, remedies against infringements thereof, and rights to protection of interests therein under the laws of all jurisdictions;

(b)    All of Sellers’ rights, powers and privileges in and to the Contracts described on Schedule 2.1(b) (the “Specified Contracts”) and all Contract Rights thereunder;

(c)    All historical samples, sample books, prototypes, archive files or other similar items used in or related to the Business that are not Intangibles or Excluded Assets (defined below);

(d)    All prepaid assets (including the pro rata portion of advances or guaranteed minimum royalty and advertising payments (including any amounts received or receivable pursuant to the Wal-Mart Agreement (the “Wal-Mart Payment Amounts”)) relating to periods after the Closing Date under the Specified Contracts or payments under terminated license agreements related to the Marks (which are Assets) with payments due post-Closing and any liquidated damages under the Specified Contracts) and expenses other than rent escrows and security deposits; and

(e)    All of Sellers’ claims, causes of action and other legal rights and remedies, whether or not known as of the Closing, relating to Sellers’ ownership of the Assets, but excluding claims against Buyer with respect to the transactions contemplated herein.

2.2    Excluded Assets . Notwithstanding anything to the contrary contained herein, there is excluded from the sale and purchase contemplated by this Agreement all other assets owned or used by the Sellers (the “Excluded Assets”), including those Intangibles set forth on Schedule 2.1(a) . Without limiting the generality of the foregoing, Contracts other than Specified Contracts are, and shall be deemed, Excluded Assets.

2.3    Assumption of Certain Liabilities . On the terms set forth herein, on and after the Closing Date, Buyer shall assume, perform and pay the following Liabilities (“Assumed Liabilities”) but only to the extent the same are not incurred or resulting from (directly or indirectly) any breach or default by Sellers under any Contract with any Person or any representation, warranty or covenant of Sellers noted herein: all Liabilities of Sellers arising and relating to periods after the Closing in the nature of services to be performed, payments to be made, actions to be taken under the Specified Contracts and Assets transferred pursuant to this Agreement, other than all Excluded Liabilities.

2.4    Non-Assumption of Excluded Liabilities . Buyer is assuming only the Assumed Liabilities from the Sellers and is not assuming any other Liability of the Company or any of its Subsidiaries of whatever nature, whether presently in existence or arising hereafter. Notwithstanding anything herein capable of interpretation to the contrary, except for the Assumed Liabilities, Sellers shall pay or otherwise fully discharge, as the same shall become due, all of their Liabilities existing as of the Closing Date or thereafter whether or not disclosed to Buyer on any Schedule hereto, and Buyer does not assume and shall in no event be liable for any such Liabilities (the “Excluded Liabilities”), including without limitation, the following (which shall be Excluded Liabilities):

(a)    all Liabilities to the extent arising out of or relating to the operation or conduct by the Company or any of its Subsidiaries of any retained businesses and all Liabilities to the extent arising out of or relating to any Excluded Asset;

(b)    all Liabilities and commitments of the Company and its Subsidiaries in respect of Taxes;

(c)    all Liabilities and commitments relating to current or former employees of the Company or any of its Subsidiaries, including without limitation (i) any compensation or benefits payable to present or past employees of the Company or any of its Subsidiaries, including without limitation, any Liabilities arising under any Seller Employee Benefit Plan or other employee benefit plan and any of the Company’s or its Subsidiaries’ Liabilities for vacation, holiday or sick pay, and (ii) any Liabilities under any employment, consulting or non-competition agreement, change of control agreement, indemnity agreement, any retention or performance-based bonus or other compensation agreement, and any similar agreements, whether written or oral, and any Liabilities arising out of the termination by the Company of any of its employees in anticipation or as a consequence of, or following, consummation of the transactions contemplated by the Transaction Documents;

(d)    all indebtedness and capital lease obligations of the Company and its Subsidiaries;

(e)    all Liabilities to any broker, finder or agent or similar intermediary for any broker’s fee, finders fee or similar fee or commission relating to the transactions contemplated by this Agreement for which the Sellers are responsible pursuant to Section 4.21;

(f)    all Liabilities with respect to any Environmental Law or environmental conditions, events, or circumstances, including with respect to any release of Hazardous Substances after the Closing Date to the extent said Liabilities arise from or in connection with conditions, events or circumstances occurring on or before the Closing Date, including without limitation the migration of Hazardous Substances which were released on or prior to the Closing Date;

(g)    all Liabilities relating to any Real Property owned or leased (or formerly owned or leased) by or for the Sellers or any Affiliates thereof

(h)    any Liabilities of the Company and any of its Affiliates relating to or arising out of state and federal securities laws, rules, and regulations, fiduciary duties; and

(i)    any Liabilities of the Company, its Subsidiaries or current or former Affiliates thereof, if any, other than the Assumed Liabilities.

2.5    Delivery of Certain Assets . At the Closing, each Seller shall deliver all of its right, title and interest in the Assets directly to Studio IP Holdings LLC, a Delaware limited liability company and Subsidiary of Buyer (“Studio IP Holdings”). The parties hereto acknowledge and agree that, notwithstanding this Section, all of the Assets, including the Assets subject to this Section, are being acquired by Buyer hereunder and the delivery by Sellers of the Assets, subject to this Section, to Studio IP Holdings shall be deemed to be a delivery of such Assets initially to Buyer followed by a contribution of such Assets by Buyer to the capital of Studio IP Holdings.

3.    Closing; Purchase Price .

3.1    Closing . The Closing of the transactions contemplated by this Agreement shall take place at the offices of Blank Rome LLP, 405 Lexington Avenue, New York, New York 10174 at 10:00 a.m. on the business day after all conditions to the parties’ obligations set forth in Section 7 herein have been satisfied or waived by the party entitled to the benefit of such condition, or at such other place and on such other date as is mutually agreeable to Buyer and Sellers. All transactions occurring at the Closing shall be deemed to occur concurrently.

3.2    Purchase Price . On the terms and subject to the conditions set forth in this Agreement, as full payment for the transfer of the Assets by Sellers to Buyer, at the Closing,

(a)    Buyer shall deliver to Sellers an aggregate of Seventy Million Dollars ($70,000,000), payable in immediately available funds by wire transfer to such account as previously designated in writing by Sellers;

(b)    Buyer shall assume all of the Assumed Liabilities pursuant to Section 2.3 hereof; and

(c)    Buyer shall grant to Seller the right to receive the Earn-Out Consideration (as herein defined), which right shall be subject to the fulfillment of the conditions specified in Section 3.3 hereof.

The consideration set forth in Section 3.2(a), (b) and (c) shall collectively be referred to as the “Purchase Price”.

3.3    Earn-Out Consideration .

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