CEO Employment Agreement

EMPLOYMENT AGREEMENT


EMPLOYMENT AGREEMENT (the "Agreement"), entered into March 29, 2005 to be effective as of January 1, 2005, by and between Candie's, Inc., a Delaware corporation (the "Company"), and Neil Cole (the "Executive").


W I T N E S S E T H:


WHEREAS, the Executive possesses unique personal knowledge, experience and expertise concerning the business and operations conducted by the Company; and


WHEREAS, the Company desires to continue to employ the Executive beyond the term of the current employment agreement between the Executive and the Company, and the Executive desires to continue to be employed by the Company, upon the terms and subject to the conditions set forth this Agreement.


NOW, THEREFORE, in consideration of the covenants and agreements hereinafter set forth and other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the parties hereto agree as follows:


1. EMPLOYMENT AND DUTIES


1.1. Term of Employment. The Executive's employment under this Agreement shall
commence on January 1, 2005 (the "Start Date") and shall continue until the
third anniversary of the Start Date, unless earlier terminated or canceled
as provided in this Agreement (the "Term").


1.2. General.


1.2.1. During the Term, the Executive shall have the title
of the President and Chief Executive Officer of the
Company and shall have such duties as may be from
time to time delegated to him by the Board of
Directors of the Company (the "Board"). The Executive
shall faithfully and diligently discharge his duties
hereunder and use his best efforts to implement the
policies established by the Board. No other officer
will be appointed with authority over the executive
or business affairs of the Company and the
Executive's responsibilities shall include, among
other things, the power to enter into banking
relationships; to hire and fire employees; to order
merchandise; to engage in advertising and promotion;
and to employ outside consultants and professionals.


1.2.2. The Executive shall devote all of his business time,
attention, knowledge and skills faithfully,
diligently and to the best of his ability, in
furtherance of the business and activities of the
Company; provided, however, that nothing in this
Agreement shall preclude the Executive from devoting
reasonable periods of time required for:


(i) serving as a director or member of a committee of any
organization or corporation involving no conflict of
interest with the interests of the Company and with
the written consent of the Company, which consent
shall not be unreasonably withheld;


(ii) delivering lectures, fulfilling speaking engagements,
and any writing or publication relating to his area
of expertise;


(iii) engaging in professional organization and program
activities; and


(iv) managing his personal investments;


provided that such activities do not materially interfere with the due performance of his duties and responsibilities under this Agreement as determined by the Board.


1.2.3. During the Term, the Board shall vote to recommend
the election of the Executive by the Company's
stockholders as a director.


1.3. Reimbursement of Expenses. The Company shall pay to
the Executive the reasonable expenses incurred by him
in the performance of his duties hereunder,
including, without limitation, those incurred in
connection with the use of an automobile, business
related travel or entertainment, or, if such expenses
are paid directly by the Executive, the Company shall
promptly reimburse him for such payments, provided
that the Executive properly accounts for such
expenses in accordance with the Company's policy.


2. COMPENSATION


2.1. Base Salary. During the Term, the Executive shall be
entitled to receive a base salary ("Base Salary") at
a rate of five hundred thousand dollars ($500,000.00)
per annum during the first year of the Term, five
hundred fifty thousand dollars ($550,000.00) per
annum during the second year of the Term and six
hundred thousand dollars ($600,000.00) per annum
during the third year of the Term, which Base Salary
shall be payable in arrears in equal installments not
less frequently than on a bi-monthly basis in
accordance with the payroll practices of the Company,
with such increases as may be determined by the Board
from time to time.


2.2. Additional Salary. In addition to the Base Salary,
the Company shall pay the Executive an additional
salary during the first year of the Term of two
hundred fifty thousand dollars ($250,000.00) payable
sixty-two thousand five hundred dollars ($62,500.00)
on each of the date that this Agreement is signed by
the Executive and April 1, July 1 and October 3,
2005, provided the Executive is employed by the
Company on such respective dates.


2.3. Incentive Bonuses.


2.3.1. In addition to the Base Salary (and, in the first
year of the Term, in addition to the Additional
Salary), the Executive shall receive in each fiscal
year of the Company during the Term that the Company
meets (as derived from the Company's Annual Report on
Form 10-K ("10-K") for such fiscal year) at least
100% of its earnings before interest, taxes,


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depreciation and amortization of fixed assets and
intangible assets ("EBITDA") target for such fiscal
year as determined by the Board (the "Target"), an
incentive bonus (the "Fixed Incentive Bonus") in the
amount of one hundred thousand dollars ($100,000.00)
per annum during the first year of the Term, one
hundred fifty thousand dollars ($150,000.00) per
annum during the second year of the Term and two
hundred thousand dollars ($200,000.00) per annum
during the third year of the Term. The Fixed
Incentive Bonus, if applicable, shall be due and
payable by the Company to the Executive within thirty
(30) days after the filing by the Company of its 10-K
with the Securities and Exchange Commission ("SEC")
with respect to such fiscal year. The Target for the
Company's fiscal year ending December 31, 2005 has
been presented by the Board to the Executive on the
date hereof. The Target for each fiscal year of the
Company thereafter shall be proposed by the
Executive, subject to the approval of the Board, such
approval or alternative Target to be provided in
writing to the Executive at least ten days prior to
the commencement of each such fiscal year of the
Company.


2.3.2. In addition to the Base Salary (and, in the first
year of the Term, in addition to the Additional
Salary) and the Fixed Incentive Bonus, if any, the
Executive shall receive an incentive bonus (the
"Percentage Incentive Bonus"), equal to 5% of the
amount, if any, by which the Company's actual EBITDA
for the fiscal year for which the Percentage
Incentive Bonus is paid (as derived from the 10-K for
such fiscal year) exceeds the greater of (a) the
Target (as defined in Section 2.3.1 hereof) for such
fiscal year, and (b) the highest amount of actual
EBITDA previously achieved during the Term, provided
that the amounts of any negative EBITDA for all prior
years during the Term in which the Company had such
negative EBITDA (and which negative EBITDA was not
previously used in the calculation described in this
proviso) shall reduce EBITDA in the year for which
the calculation is made in determining whether and by
how much (a) and (b) were exceeded. The Percentage
Incentive Bonus, if applicable, shall be due and
payable by the Company to the Executive within thirty
(30) days after the filing by the Company of its 10-K
with the SEC with respect to such fiscal year.


2.4. Early Termination. Anything contained in this Section
2 to the contrary notwithstanding, in the event that
the Executive's employment hereunder is terminated by
the Company without Cause or by the Executive for
Good Reason (as such terms are defined in Section 5.1
hereof) prior to the end of a fiscal year and the
Executive would have been entitled to Incentive
Bonuses under Section 2.3 for such fiscal year but
for such termination, the Executive shall be entitled
to a pro rata portion of the Incentive Bonuses that
would have been payable but for such termination
through the Date of Termination (as defined in
Section 5.3 hereof).


2.5. Stock Options. In addition to the Base Salary,
Additional Salary and the Incentive Bonuses, if any,
the Executive shall receive, as incentive
compensation, options ("Options") to purchase up to
an aggregate of 800,000 shares (the "Shares") of
common stock of the Company, pursuant to and upon the
terms and conditions set forth in the Company's 2002
Stock Option Plan ("Plan"). The Options shall vest
immediately and be exercisable at any time during the
ten year period commencing upon the date of grant,
subject to earlier termination as provided in the
Plan and the option agreement between the Company and
the Executive, at an exercise price per share equal
to the last sales price for the Company's common
stock on the date hereof.


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2.6. Additional Compensation. In addition to the Base
Salary, Additional Salary and the Incentive Bonuses,
if any, and the Options, the Executive shall be
entitled to receive such other cash bonuses and such
other compensation in the form of stock, stock
options or other property or rights as may from time
to time be awarded him by the Board during or in
respect of his employment hereunder.


3. PLACE OF PERFORMANCE. In connection with his
employment by the Company, the Executive shall be
based at the Company's principal executive offices in
New York, New York, subject to the mutual agreement
of the Executive and the Company to relocate him to
another office of the Company. Subject to the
foregoing, in connection with any relocation or
transfer of the Executive outside of the greater New
York metropolitan area, the Company will promptly pay
(or reimburse the Executive for) all reasonable
moving and moving-related expenses (including any
losses incurred as a result of the sale of the
Executive's personal residence) incurred by the
Executive as a consequence of a change of his
principal residence in connection with any such
relocation or transfer.


4. EMPLOYEE BENEFITS


4.1. Benefit Plans. The Executive shall, during the Term,
be included to the extent eligible thereunder in all
employee benefit plans, programs or arrangements of
general application (including, without limitation,
any plans, programs or arrangements providing for
retirement benefits, options and other equity-based
incentive compensation, profit sharing, bonuses,
disability benefits, health and life insurance, or
vacation and paid holidays) which shall be
established by the Company or any affiliate of the
Company, for, or made available to, their respective
senior executives ("Benefits"). During the Term, the
Benefits described in this paragraph 4 may only be
redu ...