2001 STOCK OPTION PLAN
                                       OF
                                 CANDIE'S, INC.

     1. Purpose

     Candie's,  Inc.  (the  "Company")  desires to  attract  and retain the best
available  talent and  encourage the highest  level of  performance  in order to
continue to serve the best interests of the Company, and its stockholder(s).  By
affording key personnel the opportunity to acquire proprietary  interests in the
Company and by providing  them  incentives to put forth maximum  efforts for the
success of the business, the 2001 Stock Option Plan of Candie's, Inc. (the "2001
Plan") is expected to contribute to the attainment of those objectives.

     The word  "Subsidiary"  or  "Subsidiaries"  as used herein,  shall mean any
corporation,  fifty percent or more of the voting stock of which is owned by the
Company.

     2. Scope and Duration

     Options under the 2001 Plan may only be granted in the form of nonqualified
stock  options.  No  incentive  stock  options as provided in Section 422 of the
Internal  Revenue Code of 1986, as amended (the "Code") may be granted under the
2001 Plan.  The maximum  aggregate  number of shares as to which  options may be
granted from time to time under the 2001 Plan is 2,000,000  shares of the common
stock of the Company ("Common Stock"), which shares may be, in whole or in part,
authorized but unissued shares or shares reacquired by the Company. If an option
shall  expire,  terminate  or be  surrendered  for  cancellation  for any reason
without having been  exercised in full, the shares  represented by the option or
portion  thereof not so  exercised  shall  (unless the 2001 Plan shall have been
terminated)  become available for subsequent  option grants under the 2001 Plan.
As provided in  Paragraph  12 hereof,  the 2001 Plan shall  become  effective on
December 12, 2001, and unless terminated sooner pursuant to Paragraph 13 hereof,
the 2001 Plan shall  terminate  on December  11,  2011,  and no option  shall be
granted hereunder after that date.

     3. Administration

     The 2001  Plan  shall be  administered  by the  Board of  Directors  of the
Company, or, at their discretion, by a committee which is appointed by the Board
of Directors to perform such function  (the  "Committee").  The Committee  shall
consist  solely of at least two members of the Board of Directors,  each of whom
shall  serve  at  the  pleasure  of  the  Board  of  Directors  and  shall  be a
"Non-Employee  Director"  as defined in Rule l6b-3  pursuant  to the  Securities
Exchange  Act of 1934 (the  "Exchange  Act") or any  successor  rule.  Vacancies
occurring in the  membership of the Committee  shall be filled by appointment by
the Board of Directors.

     The Board of  Directors  or the  Committee,  as the case may be, shall have
plenary  authority in its sole discretion,  subject to and not inconsistent with
the express  provisions  of the 2001 Plan,  to grant  options,  to determine the
purchase  price of the Common  Stock  covered by each  option,  the term of each
option,  the persons to whom,  and the time or times at which,  options shall be
granted and the number of shares to be covered by each option;  to interpret the
2001 Plan; to prescribe, amend and rescind rules and regulations relating to the
2001 Plan; to determine the terms and provisions of the option agreements (which
need not be identical)  entered into in  connection  with options under the 2001
Plan; and to make all other determinations deemed necessary or advisable for the
administration of the 2001 Plan. The Board of Directors or the Committee, as the
case may be, may delegate to one or more of its members or to one or more agents
such administrative duties as it may deem advisable,  and the Board of Directors
or the  Committee,  as the case may be, or any  person to whom it has  delegated
duties as aforesaid  may employ or engage one or more  persons to render  advice
with respect to any responsibility  the Board of Directors or the Committee,  as
the case may be, or such person may have under the 2001 Plan.

     4. Eligibility; Factors to be Considered in Granting Options

     Except as provided  below,  an option may be granted under the 2001 Plan to
any  person,  including,  but not  limited to,  employees,  independent  agents,
consultants and attorneys,  who the Board of Directors or the Committee,  as the
case may be, believes has contributed, or will contribute, to the success of the
Company.

     5. Option Price

     The  purchase  price of the Common  Stock  covered by each option  shall be
determined by the Board of Directors or the  Committee,  as the case may be, and
shall not be less than 100% of the Fair Market Value (as defined in Paragraph 14
hereof)  of a share of the  Common  Stock on the date on  which  the  option  is
granted.  Such price shall be subject to  adjustment as provided in Paragraph 11
hereof.  The Board of  Directors  or the  Committee,  as the case may be,  shall
determine  the date on which an  option is  granted;  in the  absence  of such a
determination, the date on which the Board of Directors or the Committee, as the
case may be, adopts a resolution granting an option shall be considered the date
on which such option is granted.

     6. Term of Options

     The term of each  option  shall be not more than 10 years  from the date of
grant,  as the Board of  Directors or the  Committee,  as the case may be, shall
determine,  subject to earlier  termination  as provided in  Paragraphs 9 and 10
hereof.

     7. Exercise of Options

     (a)  Subject  to the  provisions  of the  2001  Plan and  unless  otherwise
provided  in the option  agreement,  options  granted  under the 2001 Plan shall
become exercisable as determined by the Board of Directors or Committee.  In its
sole  discretion,  the Board of Directors or the Committee,  as the case may be,
may, in any case or cases,  prescribe  that options  granted under the 2001 Plan
become  exercisable in installments or provide that an option may be exercisable
in full  immediately  upon the date of its grant.  The Board of Directors or the
Committee, as the case may be, may, in its sole discretion, also provide that an
option granted pursuant to the 2001 Plan shall immediately become exercisable in
full  upon the  happening  of any of the  following  events:  (i) a  "change  in
control" of the Company as hereafter defined;  (ii) with respect to an employee,
on his 65th  birthday;  or (iii) with respect to an employee,  on the employee's
involuntary  termination  from  employment,  except as provided  in  Paragraph 9
hereof.  In the event of a question or  controversy  as to whether or not any of
the events  hereinabove  described has taken place, a determination by the Board
of  Directors or the  Committee,  as the case may be, that such event has or has
not occurred shall be conclusive  and binding upon the Company and  participants
in the 2001 Plan.

     (b) For  purposes  of the 2001 Plan,  a "change in control of the  Company"
shall be deemed to occur,  unless  previously  consented  to in  writing  by the
optionee or any person entitled to act under  Paragraph 10 hereof,  upon (i) the
actual  acquisition  or the  execution of an agreement to acquire 15% or more of
the voting securities of the Company by any person or entity not affiliated with
the  optionee,  or any person  entitled to act under  Paragraph 10 hereof (other
than  pursuant  to a bona  fide  underwriting  agreement  relating  to a  public
distribution of securities of the Company), (ii) the commencement of a tender or
exchange offer for more than 15% of the voting  securities of the Company by any
person or entity not affiliated  with the optionee,  or any persons  entitled to
act under Paragraph 10 hereof, (iii) the commencement of a proxy contest against
the  management  for the election of a majority of the Board of Directors of the
Company if the group  conducting  the proxy contest owns, has or gains the power
to vote at least 15% of the voting securities of the Company, (iv) a vote by the
Board of Directors to merge,  consolidate,  sell all or substantially all of the
assets of the Company to any person or entity not affiliated  with the optionee,
or any persons entitled to act under Paragraph 10 hereof, or (v) the election of
directors  constituting  a majority of the Board of Directors  who have not been
nominated or approved by the  Company;  provided,  however,  for purposes of the
2001 Plan,  it shall not be deemed a change in  control  of the  Company if such
person or entity  acquires 15% or more of the voting  securities  of the Company
(A) as a result of a combination  of the Company or a subsidiary of Company with
another entity owned or controlled by such persons or entity  (whether  effected
by  a  merger,   sale  of  assets  or  exchange  of  stock  or  otherwise)  (the
"Combination")  and (B) after completion of the Combination and for a continuous
period of not less than twelve (12) months thereafter (I) executive  officers of
the Company (as  designated in the  Company's  most recent Annual Report on Form
10-K or its most recent Proxy  Statement  filed with the Securities and Exchange
Commission with respect to its Annual Meeting of Stockholders) immediately prior
to the Combination constitute not less than 50% of the executive officers of the
Company after the  Combination  or (II) the members of the Board of Directors of
Company immediately prior to the Combination constitute not less than 50% of the
membership of the Board of Directors of the Company after the  Combination.  For
purposes  of  calculating  the  executive  officers  of the  Company  after  the
Combination,  those  executive  officers who are  terminated  by the Company for
cause or who terminate their  employment  without good reason,  as determined by
the Board of  Directors  or  Committee  shall be excluded  from the  calculation
entirely.

     (c) Any  option  at any time  granted  under  the 2001  Plan may  contain a
provision to the effect that the optionee (or any persons  entitled to act under
Paragraph  10 hereof)  may, at any time at which Fair Market Value of a share of
Common  Stock is in excess of the  exercise  price and prior to  exercising  the
option,  in whole or in part,  request  that  the  Company  purchase  all or any
portion  of the  option as shall  then be  exercisable  at a price  equal to the
difference  between (i) an amount  equal to the option price  multiplied  by the
number of shares  subject to that portion of the option in respect of which such
request  shall  be made and  (ii) an  amount  equal  to such  number  of  shares
multiplied by the Fair Market Value of the Common Stock on the date of purchase.
The  Company  shall have no  obligation  to make any  purchase  pursuant to such
request,  but if it elects to do so, such  portion of the option as to which the
request is made shall be surrendered to the Company.  The purchase price for the
portion of the option to be so  surrendered  shall be paid by the Company,  less
any applicable withholding tax obligations imposed upon the Company by reason of
the purchase, at the election of the Board of Directors or the Committee, as the
case may be,  either in cash or in shares of Common Stock (valued as of the date
and in the manner provided in clause (ii) above),  or in any combination of cash
and  Common  Stock,  which  may  consist,  in  whole or in part,  of  shares  of
authorized  but  unissued  Common  Stock or shares of Common  Stock  held in the
Company's  treasury.  No  fractional  share of Common  Stock  shall be issued or
transferred  and any fractional  share shall be  disregarded.  Shares covered by
that  portion  of any  option  purchased  by the  Company  pursuant  hereto  and
surrendered  to the Company  shall not be available  for the granting of further
options  under  the 2001  Plan.  All  determinations  to be made by the  Company
hereunder shall be made by the Board of Directors or the Committee,  as the case
may be.

     (d) An option may be exercised, at any time or from time to time, as to any
or all full  shares as to which the  option  has  become  exercisable  until the
expiration of the period set forth in Paragraph 6 hereof, by the delivery to the
Company,  at its principal place of business,  of (i) written notice of exercise
in the form  specified by the Board of Directors or the  Committee,  as the case
may be,  specifying  the number of shares of Common  Stock with respect to which
the option is being exercised and signed by the person  exercising the option as
provided  herein,  (ii) payment of the purchase price; and (iii) payment in cash
of all  withholding  tax  obligations  imposed  on the  Company by reason of the
exercise of the option.  Upon  acceptance of such notice,  receipt of payment in
full, and receipt of payment of all  withholding  tax  obligations,  the Company
shall cause to be issued a certificate  representing  the shares of Common Stock
purchased.  In the event the person  exercising  the option  delivers  the items
specified in (i) and (ii) of this  Subsection (d), but not the item specified in
(iii) hereof, if applicable, the option shall still be considered exercised upon
acceptance  by the  Company  for the full  number  of  shares  of  Common  Stock
specified in the notice of exercise but the actual number of shares issued shall
be reduced by the smallest  number of whole  shares of Common Stock which,  when
multiplied  by the  Fair  Market  Value of the  Common  Stock as of the date the
option is exercised, is sufficient to satisfy the required amount of withholding
tax.

     (e) Any option  granted under the 2001 Plan may also contain a provision to
the effect that the payment of the exercise price may be made by delivery to the
Company by the optionee of an executed  exercise form together with  irrevocable
instructions  to a broker-dealer  to sell or margin a sufficient  portion of the
shares sold or margined and deliver the sale or margin loan proceeds directly to
the Company to pay for the exercise price.

     (f) The  purchase  price of the  shares as to which an option is  exercised
shall be paid in full at the time of  exercise.  Payment  shall be made in cash,
which may be paid by check or other  instrument  acceptable  to the Company;  in
addition,  subject to compliance  with  applicable laws and regulations and such
conditions as the Board of Directors or the  Committee,  as the case may be, may
impose, the Board of Directors or the Committee, as the case may be, in its sole
discretion,  may on a  case-by-case  basis elect to accept  payment in shares of
Common Stock of the Company which are already owned by the option holder, valued
at the Fair Market Value thereof (as defined in Paragraph 14 hereof) on the date
of exercise;  provided, however, that no such discretion may be exercised unless
the option  agreement  permits the payment of the purchase  price in that manner
and no  discretion  may be exercised if it would result in an adverse  effect on
the Company's earnings under then applicable accounting rules.

     (g)  Except  as  provided  in  Paragraphs  9 and 10  hereof,  or  except as
otherwise provided in writing by the Board or Committee,  as the case may be, no
option  granted to an employee  may be  exercised  at any time by such  employee
unless such employee is then an employee of the Company or a Subsidiary.

     8. Non-Transferability of Options

     Except as may be otherwise  provided in writing by the Board or  Committee,
as the case may be,  or in the  option  agreements  with  respect  to an  option
granted  under the 2001 Plan,  options  granted under the 2001 Plan shall not be
transferable otherwise than by will or the laws of descent and distribution, and
options  may be  exercised  during  the  lifetime  of the  optionee  only by the
optionee. No transfer of an otherwise non-transferable option by the optionee by
will or by the laws of descent and  distribution  shall be effective to bind the
Company unless the Company shall have been furnished with written notice thereof
and a copy of the will and such other evidence as the Company may deem necessary
to establish the validity of the transfer and the  acceptance by the  transferor
or transferees of the terms and conditions of such option.

     9. Termination of Employment

     In the event that the  employment of an employee to whom an option has been
granted  under  the  2001  Plan  shall be  terminated  (except  as set  forth in
Paragraph 10 hereof),  such option may be, subject to the provisions of the 2001
Plan,  exercised  (to the extent that the  employee was entitled to do so at the
termination  of his  employment)  at any time within three (3) months after such
termination,  but not  later  than  the  date on which  the  option  terminates;
provided, however, that any option which is held by an employee whose employment
is  terminated  for  cause  or due to the  resignation  of the  employee  or the
retirement  of the  employee  prior to the age of 65 shall,  to the  extent  not
theretofore exercised,  automatically terminate as of the date of termination of
employment.  As used  herein,  "cause"  shall mean  conduct  amounting to fraud,
dishonesty,  negligence, the employee's failure to perform his or her duties and
responsibilities   required  by  the  Company  or  engaging  in  competition  or
solicitations  in  competition  with the Company and breaches of any  applicable
employment  agreement  between the Company and the optionee.  Options granted to
employees  under the 2001 Plan shall not be  affected by any change of duties or
position so long as the holder continues to be a regular employee of the Company
or any of its current or future Subsidiaries.  Any option agreement or any rules
and  regulations  relating to the 2001 Plan may contain such  provisions  as the
Board of Directors  or the  Committee,  as the case may be,  shall  approve with
reference to the determination of the date employment  terminates and the effect
of leaves of absence.

     10. Death or Disability of Employee

     If an employee to whom an option has been granted under the 2001 Plan shall
die while  employed by the Company or a  Subsidiary  or within  three (3) months
after the  termination of such  employment  (other than  termination  for cause,
resignation,  or  retirement  prior  to  the  age of  65),  such  option  may be
exercised,  to the extent exercisable by the employee on the date of death, by a
legatee or legatees of the employee  under the  employee's  last will, or by the
employee's personal representative or distributees,  at any time within one year
after the date of the employee's death, but not later than the date on which the
option  terminates.  In the event that the  employment of an employee to whom an
option has been granted under the 2001 Plan shall be terminated as the result of
a disability,  such option may be exercised,  to the extent  exercisable  by the
employee on the date of such termination,  at any time within one year after the
date of such  termination,  but not  later  than the date on  which  the  option
terminates.

     11. Adjustments Upon Changes in Capitalization, Etc.

     Notwithstanding  any  other  provision  of the  2001  Plan,  the  Board  of
Directors  or the  Committee,  as the case may be,  may,  at any  time,  make or
provide for such adjustments to the 2001 Plan, to the number and class of shares
issuable  thereunder or to any outstanding  options as it shall deem appropriate
to prevent dilution or enlargement of rights, including adjustments in the event
of  changes  in the  outstanding  Common  Stock by  reason  of stock  dividends,
split-ups, recapitalizations, mergers, consolidations, combinations or exchanges
of shares, separations, reorganizations, liquidations and the like. In the event
of any offer to holders of Common Stock generally relating to the acquisition of
their shares,  the Board of Directors or the Committee,  as the case may be, may
make such adjustment as it deems equitable in respect of outstanding options and
rights,  including in its sole  discretion  revision of outstanding  options and
rights so that they may be  exercisable  for the  consideration  payable  in the
acquisition transaction. Any such determination by the Board of Directors or the
Committee,  as the case may be, shall be conclusive and binding upon the Company
and the participants in the 2001 Plan. Any fractional shares resulting from such
adjustments shall be eliminated.

     12. Effective Date

     The 2001 Plan shall become  effective  on December  12,  2001,  the date of
adoption by the Board of Directors of the Company.

     13. Termination and Amendment

     The Board of  Directors of the Company may  suspend,  terminate,  modify or
amend the 2001 Plan. No suspension,  termination,  modification  or amendment of
the 2001 Plan may,  without  the  consent of the person to whom an option  shall
theretofore have been granted,  adversely affect the rights of such person under
such option.

     14. Miscellaneous

     As said term is used in the 2001 Plan,  the "Fair Market  Value" of a share
of Common  Stock on any day means:  (a) if the  principal  market for the Common
Stock  is  a  national  securities  exchange  or  the  National  Association  of
Securities  Dealers Automated  Quotations  System  ("NASDAQ),  the closing sales
price of the Common  Stock on such day as  reported  by such  exchange or market
system,  or on a consolidated  tape reflecting  transactions on such exchange or
market  system,  or (b) if the  principal  market for the Common  Stock is not a
national  securities  exchange and the Common Stock is not quoted on NASDAQ, the
mean  between the highest bid and lowest  asked  prices for the Common  Stock on
such day as reported by the National  Quotation Bureau,  Inc.;  provided that if
clauses (a) and (b) of this  paragraph  are both  inapplicable,  or if no trades
have been made or no quotes are available for such day, the Fair Market Value of
the Common Stock shall be determined by the Board of Directors or the Committee,
as the case may be, and shall be  conclusive  as to the Fair Market Value of the
Common Stock.

     The Board of Directors or the  Committee,  as the case may be, may require,
as a condition to the exercise of any options  granted under the 2001 Plan, that
to the extent  required at the time of exercise,  (i) the shares of Common Stock
reserved  for  purposes  of the 2001 Plan shall be duly  listed,  upon  official
notice of issuance,  upon stock exchange(s) on which the Common Stock is listed,
(ii) a Registration Statement under the Securities Act of 1933, as amended, with
respect to such shares shall be  effective,  and/or (iii) the person  exercising
such option deliver to the Company such documents, agreements and investment and
other  representations  as the Board of Directors or the Committee,  as the case
may be, shall determine to be in the best interests of the Company.

     During the term of the 2001 Plan,  the Board of Directors or the Committee,
as the case may be, in its sole discretion, may offer one or more option holders
the  opportunity to surrender any or all unexpired  options for  cancellation or
replacement.  If any options are so  surrendered,  the Board of Directors or the
Committee,  as the case may be, may then grant new  Non-Qualified  or  Incentive
Options to such holders for the same or different numbers of shares at higher or
lower exercise prices than the surrendered options.  Such new options may have a
different  term and shall be subject to the provisions of the 2001 Plan the same
as any other option.

     Anything herein to the contrary notwithstanding,  the Board of Directors or
the  Committee,  as the case may be,  may, in its sole  discretion,  impose more
restrictive conditions on the exercise of an option granted pursuant to the 2001
Plan;  however,  any and all such  conditions  shall be  specified in the option
agreement limiting and defining such option.

     Nothing in the 2001 Plan or in any option granted pursuant to the 2001 Plan
shall  confer  upon any  employee  any right to  continue  in the  employ of the
Company  or any  of its  Subsidiaries  or  parent  or  affiliated  companies  or
interfere  in any way with the right of the  Company or any such  Subsidiary  or
parent or affiliated companies to terminate such employment at any time.

     15. Compliance with SEC Regulations.

     It is the  Company's  intent that the 2001 Plan comply in all respects with
Rule 16b-3 of the Exchange Act and any regulations  promulgated  thereunder.  If
any provision of the 2001 Plan is later found not to be in compliance  with said
Rule, the provisions shall be deemed null and void.