Stock Purchase Agreement With Tko

STOCK PURCHASE AGREEMENT


June 9, 2004


TKO Apparel Licensing, Inc. 1175 Northeast 125th Street Suite 102 North Miami, Florida 33161


Attention: Mr. J. Kenneth Tate, President


Gentlemen:


This Agreement sets forth the agreement of Candie's, Inc., a Delaware corporation (the "Company") and TKO Apparel Licensing, Inc., a Florida corporation ("TKO"), or permitted assigns (collectively with TKO, the "Purchasers") with respect to the purchase of the Shares (as hereinafter defined) by the Purchasers.


1. Purchase and Sale of Shares.


On the Closing Date (as defined in Section 2.1 hereof), the Company hereby agrees to sell to the Purchasers an aggregate of 1,000,000 shares (the "Shares") of common stock, $.001 par value (the "Common Stock"), of the Company and the Purchasers hereby agree to purchase from the Company the Shares for a purchase price per Share equal to $2.20 (the "Purchase Price"). The Shares shall be free and clear of all liens, claims, encumbrances, restrictions, or legends (except as specifically allowed within this Agreement and except for any liens, claims, encumbrances, restrictions or legends created by virtue of any action of the Purchasers).


2. Closing.


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2.1. Closing Date. The closing of the purchase and sale of the Shares provided for herein (the "Closing") shall take place at 2:00 pm, New York time, on or before June 17, 2004 at the offices of Blank Rome LLP, New York City, New York or at such other place, time and date as may hereafter be mutually agreed upon by the parties (such time and date of Closing being hereinafter called the "Closing Date"). No later than two business days prior to the Closing Date the Purchasers shall provide the Company with the name, address and tax identification or social security number of each of the Purchasers and the number of shares being purchased at the Closing Date by each of the Purchasers. The Purchasers shall pay the Purchase Price on the Closing Date by wire transfer of immediately available funds to an account designated by the Company.


3. Restrictions on Transfer; Penalty Provisions. 3.1. Each Purchaser acknowledges and understands that the Shares are "restricted securities" within the meaning of Rule 144 promulgated under the Securities Act of 1933, as amended (the "Act").


3.2. Each Purchaser acknowledges and understands that the certificate(s) representing the Shares will bear a restrictive legend thereon substantially as follows:


"THE SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN
REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE
"ACT"), OR ANY OTHER APPLICABLE SECURITIES LAWS, AND ARE
RESTRICTED SECURITIES AS THAT TERM IS DEFINED UNDER RULE 144
PROMULGATED UNDER THE ACT. THESE SECURITIES MAY NOT BE SOLD,
PLEDGED, TRANSFERRED, DISTRIBUTED OR OTHERWISE DISPOSED OF IN
ANY MANNER UNLESS THEY ARE REGISTERED UNDER THE ACT AND ANY
APPLICABLE SECURITIES LAWS, OR UNLESS THE REQUEST FOR TRANSFER
IS ACCOMPANIED BY AN OPINION OF COUNSEL OR OTHER EVIDENCE,
REASONABLY SATISFACTORY TO THE COMPANY, STATING THAT SUCH
TRANSFER IS EXEMPT FROM REGISTRATION UNDER THE ACT AND ANY
OTHER SECURITIES LAWS."


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3.3. Each Purchaser acknowledges and understands that Company will direct the transfer agent for the Common Stock to place a stop transfer instruction against the certificates representing the Shares and will instruct the transfer agent to refuse to effect any transfer thereof in the absence of a registration statement declared effective by the Securities and Exchange Commission ("SEC") with respect to the Shares or a favorable opinion of counsel, satisfactory to the Company, that such transfer is exempt from registration under the Act and any other applicable state securities laws ("Other Securities Laws").


3.4. The Company agrees to use its reasonable best efforts to register the Shares under the Act for re-sale by the Purchasers (the effect of which will allow the Shares to be freely and publicly traded by the Purchasers under the Act) within 120 days after the Closing Date (the "Required Effective Date"). The Company further agrees that if the Registration Statement (defined below) or another registration statement filed by the Company and covering the re-sale of the Shares under the Act has not been declared effective by the SEC by the Required Effective Date, then the Company, within ten days thereafter, shall pay to the Purchasers (on a pro rata basis) an aggregate stock restriction fee (the "First Year Stock Restriction Fee") in the amount of $50,000. Furthermore, if after the Required Effective Date the Shares have not been registered for resale under the Act under the Registration Statement or another registration statement, or if any such registration statement is declared effective by the SEC but such effectiveness is not continuously maintained, the Company will pay to the Purchasers (on a pro rata basis) additional First Year Stock Restriction Fees in the aggregate amount of $25,000 for each full month period that no effective registration statement is in place with respect to re-sale of the Shares until the earlier of the date on which (a)the Shares are subject to an effective and continuous registration statement; (b) the Shares have been sold by the respective Purchaser; or (c) registration under the Act is no longer required for the public sale of the Shares under Rule 144(k) promulgated under the Act or under Rule 144 promulgated under the Act without any volume restrictions. Notwithstanding the foregoing, in no event will the Company be obligated to pay aggregate First Year Stock Restriction Fees that exceed a total


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of $250,000. Moreover, if the Shares are not subject to an effective registration statement under the Act one year from the Closing Date, then the Company agrees that on or after the 100th day thereafter, upon receiving a written request from TKO (on behalf of the Purchasers) (the "Payment Request"), it will pay to the Purchasers (on a pro rata basis) within 10 days of the Payment Request a stock restriction fee (the "Second Year Stock Restriction Fee") in the aggregate amount of $100,000 (or pro rata portion thereof if less than such amount is due as determined below), with additional Second Year Stock Restriction Fees in the aggregate amount of $100,000 (or pro rata portion if less than such amount is due as determined below) each to be paid every 30 days thereafter until such time as the Purchasers have been paid (on a pro rata basis) in the aggregate $2.2 million (inclusive of (i) all First Year Stock Restriction Fees and Second Year Stock Restriction Fees previously paid to the Purchasers; (ii) the net proceeds from any of the Shares that the respective Purchaser has sold prior to the time of the Payment Request; and (iii) the Market Value (as hereinafter defined) of any of the remaining Shares that Purchasers are able to sell at the time of the Payment Request but have chosen not to). "Market Value" shall be based upon the closing sales price of the Common Stock on the last trading day immediately prior to the date the Payment Request is received by the Company.


3.5. Upon any registration statement under the Act covering the re-sale of the Shares being declared effective by the SEC or in the event the Shares are freely tradeable under Rule 144(k) promulgated under the Act, the Company will (i) inform the transfer agent for the Common Stock of such fact and (ii) instruct the transfer agent that upon the transfer agent's receipt of representation letter(s) from the broker for the seller of said Shares that the Shares have been sold for the account of the seller pursuant to the terms of the registration statement and that the prospectus delivery requirements have been complied with in connection with such sales (provided that the Company has made available to such broker sufficient copies of the prospectus necessary to comply with such requirement, if applicable), that it may remove the restrictive legends and any stop transfer orders under the Act from the certificates representing such sold Shares.


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3.6. Notwithstanding the foregoing, it is agreed that the Company shall not be subject to, or required to pay, any First Year Stock Restriction Fee or any Second Year Stock Restriction fee set forth in Section 3.4 above if (i) an Act of God prevents a registration statement from becoming effective, but only so long as such Act of God remains in effect; (ii) the registration statement cannot be declared effective based solely upon the acts or omissions of the Purchasers hereunder; or (iii) the Shares may be publicly sold pursuant to Rule 144 without volume limitations.


3.7. Any payment by the Company of any First Year Stock Restriction Fee or Second Year Stock Restriction Fee shall be paid to an account or accounts designated by each respective Purchaser in writing. In regard to any payment made pro-rata to the Purchasers pursuant to the terms of this Section 3, the pro-ration shall be based upon the relative percentage of Shares held by each respective Purchaser in relation to the total number of Shares held by all Purchasers at the time of each such payment.


4. Registration Rights.


4.1. The Company will include the Shares in a registration statement on Form S-3 (the "Registration Statement") which the Company will prepare and file with the SEC under the Act within 30 days after the Closing Date, and use commercially reasonable efforts to have the Registration Statement declared effective as soon as practical so as to permit the public trading of the Shares.


4.2. Once the Registration Statement has been declared effective by the SEC, the Company will cause the Registration Statement to remain continuously effective until the e ...