According to the Company's FORM 10-K For The Fiscal Year Ended January 3, 1999, on August 14, 1998, the Court granted the Company and the Underwriter defendants motions to dismiss, and dismissed the action in all respects. The Court offered plaintiffs the opportunity to file a motion seeking leave to file an amended complaint. Plaintiffs did not file such a motion and the Court entered judgment dismissing the action. According to the December 15, 1998 docket, on October 13, 1998, plaintiffs filed a notice of appeal. Then on December 15, 1998, in the Mandate of USCA the Plaintiffs-Appellants and Defendants-Appellees hereby agree and stipulate to dismiss the appeal in this action. Plaintiffs and Defendants stipulate that each party shall bear its respective costs and that each party will take no further steps or actions, including, without limitation, any existing or potential claims, cross-claims, motions or requests arising out of or based upon the maintenance and production of this action.

The complaint alleges that on September 30, 1996, the beginning of the Class Period, PR Newswire reported that DKI entered into a license agreement with Designer Holdings, Inc. ("Designer Holdings"), for the production, sale and distribution of its DKNY jeanswear collection. Designer Holdings is a sportswear manufacturer that develops, sources and markets designer sportswear lines for men, women and children under variations of the Calvin Klein jeanswear label pursuant to a license agreement with Calvin Klein, Inc. This was viewed as a remarkably positive development for DKI since Designer Holdings was well regarded in the apparel industry and widely recognized for its accomplishment of boosting sales volume of the Calvin Klein jeanswear label fourfold, from $120 million to $640 million, after taking over the license in 1994. On March 5, 1996, DKI shocked the public with an announcement reported by PR Newswire, headlined "Donna Karan International Inc. and Designer Holdings Ltd. Terminate DKNY Jeanswear License Agreement." What, seemingly were benign negotiations concerning an "amendment" to the agreement arising from "unexpected difficulties" affecting only "some portions" of the DKNY jeanswear line, were in fact critical negotiations concerning the viability of the agreement, and culminating in its termination.