Exhibit 10.1

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                            Asset purchase agreement


                                  by and among

                            B.E.M. Enterprise, Ltd.,
                               Escada (USA) Inc.,
                                 Candie's, Inc.
                                       and
                          Badgley Mischka Licensing LLC


                                October 29, 2004


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                                Table of Contents


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                                                                                                               Page

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ARTICLE I            SALE AND PURCHASE OF CERTAIN OF THE COMPANY'S ASSETS.........................................1

   SECTION 1.01            Purchased Assets.......................................................................1

   SECTION 1.02            Excluded Assets........................................................................2

   SECTION 1.03            Assignment of Rights by the Company....................................................2

   SECTION 1.04            Absence of Consent.....................................................................2

ARTICLE II           PURCHASE PRICE; ASSUMPTION OF CERTAIN LIABILITIES............................................2

   SECTION 2.01            Purchase Price.........................................................................2

   SECTION 2.02            Share Payment Adjustment...............................................................3

   SECTION 2.03            Allocation of Purchase Price...........................................................3

   SECTION 2.04            Assumption of Certain Liabilities......................................................3

   SECTION 2.05            Excluded Liabilities...................................................................3

ARTICLE III          REPRESENTATIONS AND WARRANTIES OF THE SELLER PARTIES.........................................4

   SECTION 3.01            Organization; Good Standing............................................................4

   SECTION 3.02            Authority Relative to this Agreement...................................................4

   SECTION 3.03            No Conflicts; No Violations............................................................4

   SECTION 3.04            Real Property..........................................................................4

   SECTION 3.05            Intellectual Property Rights...........................................................5

   SECTION 3.06            Title to Assets; Validity of Assumed Agreements........................................6

   SECTION 3.07            Financial Statements...................................................................6

   SECTION 3.08            No Undisclosed Liabilities; No Special Customer Arrangements...........................6

   SECTION 3.09            Legal Proceedings......................................................................6

   SECTION 3.10            Securities Act Compliance..............................................................7

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   SECTION 3.11            Disclaimer.............................................................................8

ARTICLE IV           REPRESENTATIONS AND WARRANTIES OF THE BUYER PARTIES..........................................8

   SECTION 4.01            Organization; Good Standing............................................................8

   SECTION 4.02            Authority Relative to this Agreement...................................................8

   SECTION 4.03            No Violations..........................................................................9

   SECTION 4.04            Acknowledgement of Condition of Business...............................................9

   SECTION 4.05            Validity of Shares Issued..............................................................9

   SECTION 4.06            SEC Reports; Financial Statements......................................................9

   SECTION 4.07            Listing and Maintenance Requirements Compliance.......................................10


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ARTICLE V            CONDITIONS TO CLOSING.......................................................................10

   SECTION 5.01            Conditions to Obligations of the Buyer Parties........................................10

   SECTION 5.02            Conditions to Obligations of the Seller Parties.......................................11

ARTICLE VI           CLOSING.....................................................................................12

   SECTION 6.01            Closing Date..........................................................................12

   SECTION 6.02            Deliveries by the Seller Parties......................................................13

   SECTION 6.03            Deliveries by the Buyer Parties.......................................................13

ARTICLE VII SURVIVAL; INDEMNIFICATION............................................................................13

   SECTION 7.01            Survival Past Closing.................................................................13

   SECTION 7.02            Indemnification by the Seller Parties.................................................13

   SECTION 7.03            Indemnification by the Buyer Parties..................................................14

   SECTION 7.04            Limitation on Indemnification.........................................................14

   SECTION 7.05            Indemnification Procedures............................................................14

ARTICLE VIII ACTIONS AFTER CLOSING...............................................................................16

   SECTION 8.01            Books and Records.....................................................................16

   SECTION 8.02            Leased Premises and Limited Trademark License.........................................16

   SECTION 8.03            Current Information...................................................................17

   SECTION 8.04            Registration Rights...................................................................17

   SECTION 8.05            Further Assurances....................................................................17

   SECTION 8.06            Non-Disparagement.....................................................................18

   SECTION 8.07            Disposal of Existing Inventory........................................................18

ARTICLE IX NOTICES   18

ARTICLE X MISCELLANEOUS..........................................................................................19

   SECTION 10.01           Expenses..............................................................................19

   SECTION 10.02           Entire Agreement......................................................................20


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   SECTION 10.03           Amendments and Waivers................................................................20

   SECTION 10.04           Successors and Assigns................................................................20

   SECTION 10.05           Governing Law.........................................................................20

   SECTION 10.06           Severability..........................................................................20

   SECTION 10.07           No Third-Party Beneficiaries..........................................................20

   SECTION 10.08           Attorneys' Fees.......................................................................20

   SECTION 10.09           Remedies..............................................................................21

   SECTION 10.10           Captions..............................................................................21

   SECTION 10.11           Counterparts..........................................................................21

   SECTION 10.12           Certain References....................................................................21

   SECTION 10.13           Interpretation........................................................................21

   SECTION 10.14           Joint and Several Liability...........................................................21



   SECTION 10.15           Broker................................................................................22

   SECTION 10.16           Confidentiality.......................................................................22

   SECTION 10.17           Bulk Sales Laws.......................................................................22

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ANNEXES

         ANNEX A                          Defined Terms

EXHIBITS

         EXHIBITS 6.02(iii)(a) and (b)    Master Trademark Assignment Agreements

         EXHIBIT 8.04                     Registration Rights Agreement


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                            ASSET PURCHASE AGREEMENT

                  AGREEMENT (this "Agreement"), made and entered into as of this
29th day of October, 2004, by and among CANDIE'S, INC., a Delaware corporation
("Candie's"), Badgley Mischka Licensing LLC, a Delaware limited liability
company and a wholly owned subsidiary of Candie's ("Buyer", and together with
Candie's, the "Buyer Parties"), B.E.M. ENTERPRISE, LTD., a Delaware corporation
(the "Company"), and ESCADA (USA) INC., a Delaware corporation ("Escada", and
together with the Company, the "Seller Parties").


                              w i t n e s s e t h:

                  WHEREAS, the Company is engaged in the business (the
"Business") of the design, marketing and sale of high-end women's clothing,
shoes and handbags (the "Product"), and desires to sell to Buyer the Purchased
Assets (as defined below) as more specifically set forth below;

                  WHEREAS, Buyer desires to purchase from the Company the
Purchased Assets and in that connection will assume certain specified
obligations related to the Business on the terms and conditions set forth
herein; and

                  WHEREAS, all capitalized terms used and not otherwise defined
herein shall have the meanings set forth in Annex A.

                  NOW, THEREFORE, the parties hereto agree as follows:

ARTICLE I
              SALE AND PURCHASE OF CERTAIN OF THE COMPANY'S ASSETS

SECTION 1.01 Purchased Assets. Subject to the terms and conditions of this
Agreement, on the Closing Date, the Company shall sell, assign, convey, transfer
and deliver or shall cause to be sold, assigned, conveyed, transferred and
delivered to Buyer, and Buyer shall purchase, acquire, receive and accept, as
they exist on the Closing Date, the assets and properties owned by or leased to
the Company and/or Parent listed below (the "Purchased Assets"):

(a) The Trademarks and Intellectual Property;

(b) The Design and Marketing Assets;

(c) The leasehold interest of the Company, as lessee, in the retail premises
located at 2 Rodeo Drive, Beverly Hills, California (the "California Leased
Premises"), together with all fixtures and equipment of the Company located
thereon; provided, that Buyer shall have no rights, nor incur any obligations or
liabilities, with respect to the California Leased Premises, or any fixtures and
equipment of the Company located thereon, until January 1, 2005;

(d) All of the uncompleted portion and full benefit of the Assumed Agreements;
and

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(e) To the extent transferable, the insurance policies set forth on Schedule
1.01(e).

SECTION 1.02 Excluded Assets. The Seller Parties are not hereunder selling and
Buyer is not hereunder buying, receiving or accepting any assets other than the
Purchased Assets, including, but not limited to, any of the following with
respect to the Company: (i) the Company's cash on hand or in banks and any cash
equivalents as of the Closing Date; (ii) all accounts receivable of the Company
as of the Closing Date, (iii) all inventory and raw materials of the Company,
(iv) the leasehold interest of the Company, as lessee, in the office premises
located at 525 Seventh Avenue, New York, New York; (v) the corporate charter,
qualifications to conduct business as a foreign corporation, and the minute
books, stock transfer books and similar documents or records relating to the
organization, maintenance and existence of the Company as a corporation; (vi)
any of the Seller Parties' rights under this Agreement and each contract or
writing executed or delivered in connection with this Agreement, together with
any amendment or supplement to any of the foregoing (including this Agreement,
the "Transaction Documents"); and (vii) any asset specifically identified on
Schedule 1.02 (collectively, the "Excluded Assets").

SECTION 1.03 Assignment of Rights by the Company. On the Closing Date, without
limiting the generality of Section 1.01, the Company shall assign to Buyer all
of the Company's rights in and to the agreements set forth on Schedule 1.03
(collectively, the "Assumed Agreements").

SECTION 1.04 Absence of Consent. Notwithstanding the foregoing, there shall not
be assigned to Buyer any Assumed Agreement, if an attempted assignment thereof
without the consent of the other party or parties thereto would constitute a
breach thereof or in any way adversely affect the rights of the Company
thereunder and such consent is not obtained, or if an attempted assignment would
be ineffective or would affect the rights of the Company thereunder so that
Buyer would not, in fact, receive the material benefits thereof. The Company
covenants and agrees that the beneficial interest in and to any such agreement
shall, to the extent permitted by the relevant agreement and/or by law, pass to
Buyer, and the Company covenants and agrees: (a) that it will hold and declare
that it holds all such agreements in trust for the benefit of Buyer, its
successors and assigns, from and after the Closing Date; (b) to use commercially
reasonable efforts to obtain and secure any and all consents and approvals that
may be necessary to effect such assignment or assignments of the same; (c) to
make or complete such assignment or assignments as soon as reasonably possible;
and (d) to cooperate with Buyer in any other reasonable arrangement designed to
provide for actions necessary to enable the Company to fulfill any such
agreements until an effective assignment thereof to Buyer can be obtained, and
the parties agree to cooperate and take all necessary actions, including
accountings between parties, to assure that Buyer shall receive all of such
benefits, rights, obligations and duties under such agreements.

ARTICLE II
                PURCHASE PRICE; ASSUMPTION OF CERTAIN LIABILITIES

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SECTION 2.01 Purchase Price. The purchase price for the Purchased Assets shall
be $950,000 (the "Purchase Price"). Subject to Section 2.02, the Purchase Price
shall be paid by delivery to the Company (or its designee) of such number of
shares (the "Share Payment") of common stock, par value $0.001, of Candie's (the
"Candie's Common Stock"), as determined by dividing (x) the Purchase Price by
(y) the closing sale price of Candie's Common Stock on the business day
immediately prior to the Closing Date (the "Closing Price") as quoted on the
National Market System of the Nasdaq Stock Market ("Nasdaq").

SECTION 2.02      Share Payment Adjustment.

(a) On the Reset Date, the Share Payment shall be subject to upward adjustment
in the event the closing sale price of the Candie's Common Stock on the Reset
Date (or, if the Reset Date is not a business day, the business day immediately
prior to the Reset Date) (the "Reset Price") as quoted on Nasdaq (or such other
securities exchange or over-the-counter market on which the Candie's Common
Stock is then listed) is less than the Closing Price. In such event, the Share
Payment shall be recalculated based on the Reset Price and Candie's shall
deliver to the Company (or its designee) a number of additional shares of
Candie's Common Stock equal to the difference between the number of shares
delivered on the Closing Date and the number of shares determined by dividing
the Purchase Price by the Reset Price.1

(b) If the Candie's Common Stock is not quoted on Nasdaq or listed on any other
securities exchange or over-the-counter market on the Reset Date, then for
purposes of Section 2.02 the closing sale price of the Candie's Common Stock on
the Reset Date shall equal its fair market value as mutually determined by
Candie's and Escada. If such parties are unable to reach agreement within a
reasonable period of time, such fair value shall be determined by an independent
appraiser experienced in valuing securities jointly selected by Candie's and
Escada. The determination of the appraiser shall be final and binding upon the
parties and Candie's and Escada shall share equally in the fees and expenses of
such appraiser.

SECTION 2.03 Allocation of Purchase Price. The parties hereto agree to allocate
the Purchase Price (and all other capitalized costs) among the Purchased Assets
as set forth in Schedule 2.03 and in accordance with Section 1060 of the Code
and the regulations promulgated thereunder (the "Allocation"). The Company and
the Buyer hereby undertake and agree to file timely any information that may be
required to be filed pursuant to treasury regulations promulgated under Section
1060 of the Code. Neither the Company nor the Buyer shall file any tax return or
other document or otherwise take any position which is inconsistent with the
Allocation determined pursuant to this Section 2.03.

SECTION 2.04 Assumption of Certain Liabilities. As additional consideration, on
the Closing Date, Buyer shall assume and become liable for all obligations and
liabilities of the Company accruing or arising after the Closing Date pursuant
to the Assumed Agreements (collectively, the "Assumed Liabilities").

SECTION 2.05 Excluded Liabilities. The liabilities assumed pursuant to Section
2.04 exclude, and Buyer does not assume or have any responsibility with respect
to, any other liabilities or obligations of any nature whatsoever of the Seller
Parties, including liabilities or obligations: (i) for taxes of any kind
whatsoever, (ii) for costs and expenses incurred in connection with negotiating
the Transaction Documents and performing the transactions contemplated thereby
and (iii) under any Transaction Document (the "Excluded Liabilities").


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1 By was of example, if the closing price of the Candie's Common Stock on the
day prior to the Closing Date is $10, the Company will receive 95,000 shares
(950,000/10). If the closing price of the Candie's Common Stock on the Reset
Date is $8, the Company will receive an additional 23,750 shares (950,000/8 =
118,750-95,000 = 23,750).

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ARTICLE III
              REPRESENTATIONS AND WARRANTIES OF THE SELLER PARTIES

                  Except as set forth on the disclosure schedule, with specific
reference to the Section or subsection of this Agreement to which the
information stated in such disclosure relates (the "Company Disclosure
Schedule"), the Seller Parties hereby represent and warrant, as follows:

SECTION 3.01 Organization; Good Standing. Escada is a corporation duly
organized, validly existing and in good standing under the laws of the State of
Delaware. The Company is a corporation duly organized, validly existing and in
good standing under the laws of the State of Delaware, with all requisite
corporate power to carry on its business as now conducted, and to own and lease
the Purchased Assets. Parent is a corporation duly organized, validly existing
and in good standing under the laws of Germany, with all requisite corporate
power to own its portion of the Purchased Assets.

SECTION 3.02 Authority Relative to this Agreement. Each of the Seller Parties
has the full legal right, power and capacity and all authority and approval
required by law to enter into this Agreement and, along with Parent, the
documents and instruments to be executed and delivered by them pursuant hereto
and to perform fully their obligations hereunder and thereunder. The execution,
delivery and performance by the Seller Parties of this Agreement and, along with
Parent, the documents and instruments to be executed and delivered by them
pursuant hereto have been duly authorized by all requisite corporate action.
This Agreement and the documents and instruments to be executed and delivered
pursuant hereto are and will be duly executed and delivered by the Seller
Parties and are and will be the legal, valid and binding obligations of the
Seller Parties and/or Parent, as applicable, enforceable against them in
accordance with their terms.

SECTION 3.03 No Conflicts; No Violations. Neither the execution and delivery of
this Agreement or the documents and instruments to be executed and delivered
pursuant hereto by the Seller Parties and Parent nor the consummation by the
Seller Parties and Parent of the transactions contemplated hereby or thereby
will (i) conflict with or result in any breach of any provision of such party's
Certificate of Incorporation or By-laws, (ii) except for the Real Property
Lease, result in a violation or breach of or constitute (with or without due
notice or lapse of time or both) a default or give rise to any right of
termination, cancellation or acceleration of or result in the creation of any
Lien (except for Permitted Liens) in or upon any of the Purchased Assets or
require any consent, approval or notice under, any license, contract, agreement,
lease or other instrument or obligation to which the Company is a party or by
which it or any of the Purchased Assets may be bound or (iii) violate any order,
writ, injunction, decree, statute, rule or regulation applicable to the Company,
the Parent, or any of the Purchased Assets.



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SECTION 3.04 Real Property. A true and correct copy of the real property lease
underlying the California Leased Premises (the "Real Property Lease") has been
delivered to Buyer. Except as set forth on Schedule 3.04, the Company has not
received notice that the Company is, and to the knowledge of Escada neither the
Company nor any other party to the Real Property Lease is, in material default
under the Real Property Lease. To Escada's knowledge, there exists no material
default or event of default by any Person party to the Real Property Lease or
event, occurrence, condition or act (including the consummation of the
transactions contemplated hereby) which, with the giving of notice, the lapse of
time or the happening of any other event or condition, would become a material
default or event of default by any Person party thereto.

SECTION 3.05      Intellectual Property Rights.

(a) Attached hereto as Schedule 3.05 is a true and complete list of all
Trademarks. Except as disclosed on Schedule 3.05: (i) the Company or Parent, as
indicated, is the sole and exclusive owner of the Trademarks and, to the
knowledge of Escada and Parent, has the sole and exclusive right to use the
Trademarks on the Product and the goods for which trademark applications are
pending in the same manner in which they have been or are now being used, (ii)
there are no claims, demands and/or proceedings pending or, to the knowledge of
Escada and Parent, threatened, that pertain to or challenge the right of the
Company or Parent to use such Trademarks and (iii) neither the Company nor
Parent has granted any licenses or other rights and has no obligation to grant
licenses or other rights with respect thereto. All Trademarks and Intellectual
Property that are registered with, filed with or issued by any governmental
entity is listed on Schedule 3.05 attached hereto and each such registration,
filing and issuance is in full force and effect. Except as disclosed on Schedule
3.05, to the extent the design of the Product sold or to be sold by the Company
(whether generated or stored by or on a computer or otherwise) contains any
copyrightable subject matter that is not owned by the Company under the
work-made-for-hire doctrine (as defined under U.S. copyright law), any and all
authors of such copyrightable subject matter have executed written documents
which assign to the Company all of their respective rights in and to any such
copyrightable subject matter, including the right to make derivative works.

(b) Except as disclosed on Schedule 3.05, neither the Company nor Parent is a
party to any license or agreement with respect to any of the Trademarks or, to
the knowledge of Escada and Parent, to any agreement or license with respect to
Intellectual Property. Each such agreement is a binding obligation of the
Company and, to the knowledge of Escada and Parent, each of the other parties
thereto, enforceable in accordance with the terms thereof.

(c) The Company owns or has the right to use the Trademarks and Intellectual
Property. To the knowledge of Escada and Parent, the Company's use of the
Intellectual Property and the Trademarks does not infringe any intellectual
property rights of any third party. To the knowledge of Escada and Parent, there
are no existing claims, and within the past six (6) years, to the knowledge of
Escada and Parent, there has been no claim alleging, that the use of any of the
Intellectual Property or the Trademarks by the Company has infringed or
otherwise violated any intellectual property right of any third party, or
challenging the validity or effectiveness of any license or agreement listed on
Schedule 3.05 or the Company's ownership of any of the Intellectual Property or
its ownership or right to use the Trademarks. Except as disclosed on Schedule
3.05, there are no claims contemplated or outstanding by the Company or Parent
alleging infringement of the Intellectual Property or Trademarks by any third
party or relating to the validity or effectiveness of any license or other
agreement listed on Schedule 3.05.

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SECTION 3.06 Title to Assets; Validity of Assumed Agreements. All of the
Purchased Assets are owned, leased or licensed by the Company or Parent, as
indicated on Schedule 3.05, free and clear of all Liens whatsoever (except
Permitted Liens) and the consummation of the transactions contemplated by this
Agreement will not give rise to any Lien on such assets or properties. There are
not, and on the Closing Date there will not be, any outstanding agreements,
options, commitments or rights with, to or in any third party to acquire or use
any of the Purchased Assets (other than sales of goods in the ordinary course of
business and the licenses or other agreements listed on Schedule 3.05). Each of
the Purchased Assets which comprises an Assumed Agreement is in full force and
effect and is valid and enforceable in accordance with its terms. The Company
has not given or received from any customer or licensee any written notice or
other communications regarding any actual, alleged, possible or potential
violation or breach of or default under any Assumed Agreement (that has not been
cured), including but not limited to any violation or breach as a result of the
transactions contemplated by this Agreement.

SECTION 3.07 Financial Statements. The Company has delivered to Buyer: (a) an
audited balance sheet of the Company as at October 31, 2003 (including the notes
thereto, the "Balance Sheet"), and the related audited statements of income,
changes in shareholders' equity and cash flows for the fiscal year then ended,
including in each case the notes thereto, together with the report thereon of
PricewaterhouseCoopers LLP, independent certified public accountants; and (b) an
unaudited profit and loss statement and balance sheet of the Company as at
September 30, 2004 (the "Interim Balance Sheet"). Such financial statements
fairly present in all material respects the financial condition and the results
of operations of the Company as at the respective dates of and for the periods
referred to in such financial statements, all in accordance with International
Accounting Standards. The financial statements referred to in this Section 3.07
reflect the consistent application of such accounting principles throughout the
periods involved, except as disclosed in the notes to such financial statements.
The financial statements have been and will be prepared from and are in
accordance with the accounting records of the Company.

SECTION 3.08 No Undisclosed Liabilities; No Special Customer Arrangements.
Except as set forth on Schedule 3.08, the Company has no liability except for
liabilities reflected or reserved against in the Balance Sheet or the Interim
Balance Sheet and current liabilities incurred in the ordinary course of
business of the Company since the date of the Interim Balance Sheet and
executory obligations under contracts and agreements (including the Assumed
Agreements). There are no unresolved material mark down costs, sales discounts,
margin guarantees or any other similar arrangements due any customers of the
Company relating to the sales of the Product ("Mark Downs").

SECTION 3.09 Legal Proceedings. There is no pending or, to knowledge of Escada
and/or Parent, threatened legal proceeding or action of any nature whatsoever by
or against the Company or Parent as it relates to or has, or could have,
materially affected the Purchased Assets. To the knowledge of Escada and/or
Parent, no event has occurred or circumstance exists that is reasonably likely
to give rise to or serve as a basis for the commencement of any such legal
proceeding or action.

                                       6
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SECTION 3.10 Securities Act Compliance. For purposes of Candie's compliance with
Section 4(2) of the Securities Act in connection with the issuance of Candie's
Common Stock, the Company represents and warrants to the Buyer Parties the
following:

(a) the Company is (i) an "accredited investor" (as such term is defined in Rule
501(a) of Regulation D promulgated by the SEC) or (ii) together with the
Company's representatives and advisors, has such knowledge and experience in
financial and business matters that the Company is capable of evaluating the
merits and risks of acquiring the shares of Candie's Common Stock acquired or
that may be acquired by the Company pursuant to Article II herein. The Company
hereby confirms that none of the persons or entities serving as the Company's
representatives and advisors is an affiliate, director, officer or other
employee of Candie's, nor has any such representative or advisor advised the
Company that such representative or advisor has or presently contemplates
having, or has had within the past two (2) years, any material relationship with
Candie's;

(b) the Company understands and agrees that the shares of Candie's Common Stock
acquired or that may be acquired by the Company pursuant to Article II herein
have not been registered under the Securities Act, or under any state securities
laws, and that accordingly such shares may not be sold or otherwise transferred
except as permitted under various exemptions from the registration provisions of
the Securities Act contained in the Securities Act, or upon satisfaction of the
registration and prospectus delivery requirements of the Securities Act;

(c) the Company acknowledges that the Company must bear the economic risk of an
investment in shares of Candie's Common Stock acquired or that may be acquired
by the Company pursuant to Article II herein for an indefinite period of time
since such shares will not be registered under the Securities Act as of the
Closing Date and therefore cannot be sold unless such shares are subsequently
registered or an exemption from registration under the Securities Act is
available and the Company is able to bear the economic risk of an investment in
the shares;

(d) the Company understands that the shares of Candie's Common Stock acquired or
that may be acquired by the Company pursuant to Article II herein are being
offered and sold pursuant to this Agreement in reliance upon federal and state
exemptions for transactions not involving any public offering;

(e) the Company or its representatives has (i) had the opportunity to meet with
and ask questions of officers and other representatives of Candie's to discuss
its business, assets, liabilities, financial condition, cash flow, and
operations, and all such questions were answered to the full satisfaction of the
Company and its representatives and (ii) received all materials, documents, and
other information that the Company deems necessary or advisable to evaluate the
shares of Candie's Common Stock acquired or that may be acquired by the Company
pursuant to Article II herein (including, but not limited to, the filing on Form
10-K for the fiscal year ended January 31, 2004 made by Candie's with the SEC
and all periodic reports subsequently filed by Candie's with the SEC);

                                       7
<PAGE>

(f) the shares of Candie's Common Stock acquired or that may be acquired by the
Company pursuant to Article II herein are being and will be acquired by the
Company for the Company's own account, for investment only, not as a nominee or
agent, and not with a view to or in connection with any resale or distribution
thereof other than in accordance with the Securities Act and other applicable
securities laws; and

(g) the Company has no present intention of selling, granting any participation
in, or otherwise distributing the shares of Candie's Common Stock acquired or
that may be acquired by the Company pursuant to Article II herein other than in
accordance with the Securities Act and other applicable securities laws, nor
does the Company have any contract, undertaking, agreement or arrangement with
any person to sell, transfer or grant participation with respect to such shares
to such person or to any third person other than in accordance with the
Securities Act and other applicable securities laws.

SECTION 3.11 Disclaimer. EXCEPT FOR THE REPRESENTATIONS AND WARRANTIES CONTAINED
IN THIS AGREEMENT, NEITHER THE SELLER PARTIES NOR ANY OF THEIR AFFILIATES MAKE
OR HAVE MADE ANY REPRESENTATION OR WARRANTY, EXPRESS OR IMPLIED, WITH RESPECT TO
THE PURCHASED ASSETS (INCLUDING THE VALUE, CONDITION, OR USE OF ANY PURCHASED
ASSET), THE BUSINESS OR OTHERWISE WITH RESPECT TO ANY OTHER INFORMATION PROVIDED
TO BUYERS, WHETHER ON BEHALF OF THE SELLER PARTIES OR THEIR AFFILIATES,
INCLUDING AS TO (A) MERCHANTABILITY OR FITNESS FOR ANY PARTICULAR USE OR
PURPOSE, (B) THE OPERATION OF THE BUSINESS BY BUYERS AFTER THE CLOSING IN ANY
MANNER OR (C) THE PROBABLE SUCCESS OR PROFITABILITY OF THE OWNERSHIP, USE OR
OPERATION OF THE PURCHASED ASSETS BY BUYER AFTER THE CLOSING.

ARTICLE IV
               REPRESENTATIONS AND WARRANTIES OF THE BUYER PARTIES

                  The Buyer Parties hereby represent and warrant as follows:

SECTION 4.01 Organization; Good Standing. Candie's is a corporation duly
organized, validly existing and in good standing under the laws of the State of
Delaware. Buyer is a limited liability company duly organized, validly existing
and in good standing under the laws of the State of Delaware and is duly
authorized to do business, and in good standing, under the laws of the State of
New York.

SECTION 4.02 Authority Relative to this Agreement. Each of the Buyer Parties has
the full legal right and power and all authority and approval required by law to
enter into this Agreement and the documents and instruments to be executed and
delivered by them pursuant hereto and to perform fully their obligations
hereunder and thereunder. The execution, delivery and performance by the Buyer
Parties of this Agreement and the documents and instruments to be executed and
delivered by them pursuant hereto have been duly authorized by all necessary
corporate action. This Agreement and the documents and instruments to be
executed and delivered pursuant hereto by the Buyer Parties are and will be the
legal, valid and binding obligations of the Buyer Parties enforceable against
them in accordance with their terms.

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SECTION 4.03 No Violations. Neither the execution and delivery of this Agreement
or the documents and instruments to be executed and delivered pursuant hereto by
the Buyer Parties nor the consummation by the Buyer Parties of the transactions
contemplated hereby or thereby will (i) conflict with or result in any breach of
any provision of the organizational documents of such party, (ii) require any
consent, approval or notice under, any license, contract, agreement, lease or
other instrument or obligation to which either of the Buyer Parties is a party
or by which either of them or any of their properties or assets may be bound or
(iii) violate any order, writ, injunction, decree, statute, rule or regulation
applicable to the Buyer Parties or any of their properties or assets, except in
the case of (ii) or (iii) for violations, breaches or defaults which would not,
in the aggregate, reasonably be expected to materially impair the ability of the
Buyer Parties to consummate the transactions contemplated hereby.

SECTION 4.04 Acknowledgement of Condition of Business. The Buyer Parties
acknowledge that (i) the Business has incurred significant net operating losses
since the inception of the Business, (ii) following the Closing Date, the Seller
Parties shall not provide any cash, credit or other resources to fund the use
and operation of the Purchased Assets and (iii) substantial working capital will
be required to use and operate the Purchased Assets in the Business as a going
concern. The Buyer Parties further acknowledge that the Purchased Assets do not
constitute all of the assets necessary to operate the Company's Business as it
is currently being operated by Seller Parties as a going concern.

SECTION 4.05 Validity of Shares Issued. The shares of Candie's Common Stock to
be delivered to the Holders in accordance with Article II hereof will upon
issuance be validly issued, fully paid and nonassessable, free and clear of all
liens, and will be listed on the Nasdaq subject only to official notice of
issuance.

SECTION 4.06 SEC Reports; Financial Statements. Since January 31, 2003, Candie's
has timely filed with the Securities and Exchange Commission (the "SEC") all
reports and other documents (collectively, the "SEC Reports") required to be
filed by it under the Securities Exchange Act of 1934, as amended (the "Exchange
Act"), or the Securities Act of 1933, as amended (the "Securities Act"), and is
otherwise eligible to file a registration statement on Form S-3 covering the
resale of the Candie's Common Stock. As of their respective dates, or, if
amended, as of the date of such amendment, the SEC Reports complied in all
material respects with the requirements of the Exchange Act or the Securities
Act, as the case may be, and the rules and regulations of the SEC promulgated
thereunder applicable to such SEC Reports. As of their respective dates, or, if
amended, as of the date of such amendment, the SEC Reports did not contain any
untrue statement of a material fact or omit to state a material fact required to
be stated therein or necessary in order to make the statements therein, in light
of the circumstances under which they were made, not misleading. The financial
statements (including the related notes) included in the SEC Reports, as amended
through the date hereof, comply as to form in all material respects with
applicable accounting requirements and the published rules and regulations of
the SEC with respect thereto in effect at the time of filing, have been prepared


                                       9
<PAGE>

in accordance with generally accepted accounting principles ("GAAP") (except, in
the case of unaudited statements, as permitted by Form 10-Q of the SEC) applied
on a consistent basis during the periods involved (except as may be indicated in
the notes thereto) and fairly present in all material respects the consolidated
financial position of Candie's and its consolidated subsidiaries as of the dates
thereof and their consolidated results of operations and cash flows for the
periods then ended (subject, in the case of unaudited statements, to normal and
recurring year-end audit adjustments and the absence of footnotes otherwise
required under GAAP).

SECTION 4.07 Listing and Maintenance Requirements Compliance. Nasdaq is the
principal market on which the Candie's Common Stock is currently traded.
Candie's has not in the past three years received notice (written or oral) from
Nasdaq (or any stock exchange, market or trading facility on which the Candie's
Common Stock is or has been listed or quoted) to the effect that Candie's is not
in compliance with the listing or maintenance requirements of such market or
exchange. Candie's is not aware of any facts which would reasonably lead to
delisting or suspension of the Candie's Common Stock by Nasdaq. After giving
effect to the transactions contemplated by this Agreement to the knowledge of
Candie's, Candie's is and will be in compliance with all such maintenance
requirements.

ARTICLE V
                              CONDITIONS TO CLOSING

SECTION 5.01 Conditions to Obligations of the Buyer Parties. The obligations of
the Buyer Parties to close the transactions contemplated by this Agreement are
subject to the prior fulfillment of each of the following conditions; provided,
however, that the Buyer Parties may waive in writing any one or more of such
conditions:

(a) Performance of Obligations. The Seller Parties shall have each complied with
and performed in all material respects all the terms, covenants and conditions
of this Agreement required to be complied with and performed by them on or prior
to the Closing Date and shall have made all of the deliveries required to have
been made hereunder by them on or prior to the Closing Date.

(b) Representations and Warranties. All of the representations and warranties
made by the Seller Parties contained in this Agreement shall be true and correct
on the Closing Date, as if made on the Closing Date (other than representations
and warranties that address matters only as of a particular date, which shall be
true and correct as of such date).

(c) Closing Certificates. The Seller Parties shall have furnished Buyer with a
certificate, dated as of the Closing Date and executed by an executive officer
of each of the Seller Parties, certifying that each of the conditions set forth
in Sections 5.01(a) and (b) has been satisfied.

(d) Resolutions. The Seller Parties shall have each delivered to the Buyer
Parties the resolutions of their respective Board of Directors and the
shareholders of the Company authorizing the execution, delivery and performance
of this Agreement and the documents and instruments to be executed and delivered
by the Seller Parties pursuant hereto and the transactions contemplated hereby
and thereby, certified by the secretary of each of the Seller Parties, as
applicable, and dated the Closing Date.

                                       10
<PAGE>

(e) Proceedings and Documents. All corporate and other proceedings in connection
with the transactions contemplated hereby and all documents incident thereto
will be reasonably satisfactory in form and substance to the Buyer Parties and
their counsel, and they will have received all such counterpart original and
certified or other copies of such documents as they may reasonably request.

(f) Employment Agreements. Buyer shall have entered into employment agreements
with Mr. Mark Badgley and Mr. James Mischka on such terms and conditions as are
acceptable to Buyer in its sole discretion.

(g) Compliance with Law. No provision of any applicable law or regulation and no
judgment, injunction, order or decree shall be in effect that would have the
effect of restraining or prohibiting Buyer's ownership or operation of the
Purchased Assets.

(h) Consents, etc. All actions by (including any authorization, consent or
approval) or in respect of (including notice to), or filings with, any
Governmental Entity or other Person that are required to consummate the
transactions contemplated hereby will have been obtained or made, in a manner
reasonably satisfactory in form and substance to the Buyer, and no such
authorization, consent or approval will have been revoked.

(i) Consent under Real Property Lease. Buyer shall have received evidence
satisfactory to it that the landlord under the Real Property Lease has consented
to the assignment of the Real Property Lease.

SECTION 5.02 Conditions to Obligations of the Seller Parties. The obligations of
the Seller Parties to close the transactions contemplated by this Agreement are
subject to the prior fulfillment of each of the following conditions; provided,
however, that the Seller Parties may waive in writing any one or more of such
conditions:

(a) Performance of Obligations. The Buyer Parties shall have each complied with
and performed in all material respects all the terms, covenants and conditions
of this Agreement required to be complied with and performed by them on or prior
to the Closing Date and shall have made all of the deliveries required to have
been made hereunder by them on or prior to the Closing Date.

(b) Representations and Warranties. All of the representations and warranties
made by the Buyer Parties contained in this Agreement shall be true and correct,
in all material respects, on the Closing Date, as if made on the Closing Date
(other than representations and warranties that address matters only as of a
particular date, which shall be true and correct as of such date).

(c) Closing Certificate. The Buyer Parties shall have each furnished the Seller
Parties with a certificate, dated as of the Closing Date and executed by an
executive officer of each of the Buyer Parties, respectively, certifying that
each of the conditions set forth in Sections 5.02(a) and (b) has been satisfied.

                                       11
<PAGE>

(d) Resolutions. The Buyer Parties shall have each delivered to the Seller
Parties resolutions of its respective Board of Directors authorizing the
execution, delivery and performance by each of them of this Agreement and the
documents and instruments to be executed and delivered by the Buyer Parties
pursuant hereto and the transactions contemplated hereby and thereby, certified
by the secretary of each of the Buyer Parties, respectively, and dated the
Closing Date.

(e) Releases under the Employment Agreements. The Seller Parties shall have
received evidence satisfactory to them that they have been released from any and
all obligations accruing or arising after the Closing Date under the respective
employment agreements between the Company and each of Mr. Mark Badgley and Mr.
James Mischka.

(f) Certain Consents. Mr. Mark Badgley and Mr. James Mischka shall have given
their consent to the transactions contemplated hereby to the extent required by
the shareholders' agreement of the Company.

(g) Proceedings and Documents. All corporate and other proceedings in connection
with the transactions contemplated hereby and all documents incident thereto
will be reasonably satisfactory in form and substance to the Seller Parties and
their counsel, and they will have received all such counterpart original and
certified or other copies of such documents as they may reasonably request.

(h) Consents, etc. All actions by (including any authorization, consent or
approval) or in respect of (including notice to), or filings with, any
Governmental Entity that are required to consummate the transactions
contemplated hereby will have been obtained or made, in a manner reasonably
satisfactory in form and substance to the Company, and no such authorization,
consent or approval will have been revoked.

(i) Consent under Real Property Lease. The Seller Parties shall have received
evidence satisfactory to them that the landlord under the Real Property Lease
has consented to the assignment of the Real Property Lease and that they have
been released from any and all obligations accruing or arising after the Closing
Date under the Real Property Lease.

(j) Termination of License Agreement. The License Agreement dated March 27, 2002
by and between  Escada AG (as licensor)  and the Company (as licensee)  shall be
terminated on or before the Closing Date.

ARTICLE VI
                                     CLOSING

SECTION 6.01 Closing Date. The closing of the transaction contemplated by this
Agreement (the "Closing") shall take place at the offices of Akin Gump Strauss
Hauer & Feld LLP, 590 Madison Avenue, New York, New York 10022, at 10:00 a.m.
simultaneously with the execution of this Agreement, or such other time and
place as the parties may mutually agree. The date on which the Closing actually
occurs will be referred to herein as the "Closing Date".

                                       12
<PAGE>

SECTION 6.02 Deliveries by the Seller Parties. At the Closing, the Seller
Parties and Parent (as applicable) shall execute and deliver the following:

(i)                                         such bills of sale, assignments, and
                                            other instruments of transfer or
                                            conveyance as Buyer may reasonably
                                            request or as may be otherwise
                                            necessary to evidence and effect the
                                            sale, assignment, transfer,
                                            conveyance, and delivery of the
                                            Purchased Assets to Buyer;

(ii)                                        the certifications referred to in
                                            Sections 5.01(c) and (d);

(iii)    an assignment of the Trademarks, in the form attached hereto as
                                            Exhibits 6.02(iii)(a) and (b); and

(iv)                                        the Registration Rights Agreement.

SECTION 6.03 Deliveries by the Buyer Parties. At the Closing, the Buyer Parties
(as applicable) shall:

(i)                                         pay the Purchase Price, which shall
                                            consist of certificates representing
                                            the shares of Candie's Common Stock
                                            duly registered in the name of the
                                            Company;

(ii)                                        execute and deliver the
                                            certifications referred to in
                                            Sections 5.02(c) and (d); and

(iii)                                       execute and deliver the Registration
                                            Rights Agreement.

ARTICLE VII
                            SURVIVAL; INDEMNIFICATION

SECTION 7.01 Survival Past Closing. Any investigation or examination by the
Buyer Parties of the business, properties or affairs of the Company shall not
affect the representations and warranties of the Seller Parties herein
contained. The representations and warranties of the parties herein contained
shall survive the Closing until the Reset Date.

SECTION 7.02      Indemnification by the Seller Parties.

(a) The Seller Parties shall indemnify, defend and hold the Buyer Parties and
their respective officers, directors, subsidiaries and Affiliates harmless from
and against any and all liabilities, losses, damages, claims, fines, penalties,
costs and expenses, including, without limitation, reasonable attorneys' and
accounting fees (collectively, "Losses") incurred by either of the Buyer Parties
or any of their respective officers, directors, subsidiaries or Affiliates,
arising out of or resulting from (i) any breach of any representation or
warranty made by the Seller Parties and/or Parent contained in this Agreement,
(ii) the nonpayment or nonperformance of any covenant or obligation to be
performed by the Seller Parties and/or Parent under this Agreement, (iii) the
Excluded Assets or (iv) the Excluded Liabilities.

                                       13
<PAGE>

(b) If any claim for indemnification is asserted by the Buyer Parties against
either of the Seller Parties and either of the Buyer Parties is covered by an
insurance policy for such Losses, the Buyer Parties shall use their commercially
reasonable efforts to seek indemnification or other payment under the applicable
insurance policy or policies; provided, however, that the Buyer Parties shall
not be obligated to commence any legal proceedings against any insurance
provider for such purpose. The Buyer Parties shall give the Seller Parties
notice of their intention to seek indemnification for such Losses from
applicable insurance policies and, provided such notice is delivered in a timely
manner, such notice shall also constitute notice for purposes of Section 7.05.
In the event that the Buyer Parties are unable to collect sufficient insurance
proceeds to be fully indemnified for their Losses, the Buyer Parties shall (i)
be entitled to receive indemnification pursuant to this Article VIII; provided,
that, the Seller Parties shall have the option, in their sole discretion, to pay
such indemnification in Candie's Common Stock in an amount based on the value of
the Common Stock as determined pursuant to Section 2.01; and (ii) as promptly as
practicable, assign to the Seller Parties, without recourse, their respective
claims for the uncollected Losses against the insurance provider or providers.

SECTION 7.03 Indemnification by the Buyer Parties. The Buyer Parties shall
indemnify, defend and hold the Seller Parties and their respective Affiliates
harmless from and against any and all Losses incurred by the Seller Parties or
their Affiliates arising out of or resulting from (i) any breach of any
representation or warranty made by the Buyer Parties contained in this
Agreement, (ii) the nonpayment or nonperformance of any covenant or obligation
to be performed by either of the Buyer Parties under this Agreement, (iii) any
failure to pay any of the Assumed Liabilities (including the Real Property Lease
for all periods after January 1, 2005) or (iv) the use or operation of the
Purchased Assets or the conduct of business related thereto after the Closing.

SECTION 7.04      Limitation on Indemnification.

(a) Neither the Seller Parties pursuant to Section 7.02 nor the Buyer Parties
pursuant to Section 7.03 shall be obligated to indemnify the other against any
Losses until the Buyer Parties, on the one hand, or the Seller Parties, on the
other hand, have incurred aggregate Losses in excess of $50,000 (the "Basket");
provided, that the Basket shall not be applicable to claims for indemnification
against the Buyer Parties for breaches of Section 2.04 hereof. At such time as
the aggregate Losses incurred by the Buyer Parties, on one hand, or Losses
incurred by the Seller Parties, on the other hand, shall exceed the Basket, such
party shall be entitled to receive the full amount of its Losses which is in
excess of the Basket.

(b) From and after the Closing Date, the provisions of this Article VIII shall
be the sole and exclusive remedy for monetary damages arising out of or
resulting from the breach of any representations or warranties made pursuant to
this Agreement; provided, however, that the foregoing limitation shall not apply
in cases of fraud, intentional misrepresentation or willful misconduct.

SECTION 7.05      Indemnification Procedures.

                                       14
<PAGE>

(a) If the Buyer Parties, on the one hand, or the Seller Parties, on the other
hand, shall receive notice of any matter which such party or any of its
officers, directors, subsidiaries, employees, agents, subsidiaries or Affiliates
(any of the foregoing, an "Indemnitee"), has determined has given or, with
respect to any matters, is reasonably likely to result in, a right of
indemnification under this Agreement, the Indemnitee shall promptly give the
indemnifying party (the "Indemnitor") written notice of such claim, stating the
amount of the Losses, if known and method of computation thereof, all with
reasonable particularity and including documentary proof, if available and
containing a reference to the provisions of this Agreement in respect of which
such right of indemnification is claimed or arises; provided, however, that
failure to so notify the Indemnitor shall not relieve the Indemnitor from any
liability which it may have on account of the claim, except to the extent the
Indemnitor shall have been prejudiced by such failure.

(b) If an Indemnitee shall receive notice of any claim or proceeding initiated
by a third party which is or may be subject to indemnification (each, a "Third
Party Claim"), the Indemnitee shall promptly give the Indemnitor written notice
of such Third Party Claim; provided, however, that failure to so notify the
Indemnitor shall not relieve the Indemnitor from any liability which it may have
on account of the Third Party Claim, except to the extent the Indemnitor shall
have been prejudiced by such failure. In such event the Indemnitee shall permit
the Indemnitor, at its option, to participate in the defense of such Third Party
Claim by counsel of its own choice and at its own expense. If, however, the
Indemnitor acknowledges in writing its obligation to indemnify the Indemnitee
hereunder against all Losses that may result from such Third Party Claim and the
Indemnitee is reasonably satisfied that the Indemnitor has sufficient funds
available to pay any Losses resulting from such Third Party Claim, then the
Indemnitor shall be entitled, at its option, to assume and control the defense
of such claim by counsel of its own choice and at its own expense, provided that
the Indemnitor and its counsel shall proceed with diligence and good faith with
respect thereto. Notwithstanding the foregoing, the Indemnitee shall have the
right to employ separate counsel in any Third Party Claim and the fees and
expenses of such counsel shall be at the expense of such Indemnitor if (i) the
Indemnitor has failed to promptly assume the defense and employ counsel or (ii)
the named parties to any such Third Party Claim (including any impleaded
parties) include such Indemnitee and any Indemnitor and such Indemnitee shall
have been advised by its counsel that there is a conflict of interest between
the Indemnitor and such Indemnitee with respect to such Third Party Claim or
with respect to any legal defense which may be available; provided, however,
that the Indemnitor shall not in such event be responsible hereunder for the
fees and expenses of more than one firm of separate counsel in connection with
any claim or proceeding.

(c) In the event the Indemnitor exercises its right to undertake the defense of
any Third Party Claim, the Indemnitee shall cooperate with the Indemnitor in
such defense and make available to the Indemnitor witnesses, pertinent records,
materials and information in its possession or under its control relating
thereto as are reasonably requested by the Indemnitor. Similarly, in the event
the Indemnitee is, directly or indirectly, conducting the defense against any
Third Party Claim, the Indemnitor shall cooperate with the Indemnitee in such
defense and make available to the Indemnitee witnesses, pertinent records,
materials and information in its possession or under its control relating
thereto as are reasonably requested by the Indemnitee. No Third Party Claim may
be settled by the Indemnitor without the written consent of the Indemnitee,


                                       15
<PAGE>

which consent shall not be unreasonably withheld or delayed; provided, however,
that the Indemnitor may settle such Third Party Claim without the consent of the
Indemnitee so long as the settlement (x) includes an unconditional release of
the Indemnitee, in form and substance reasonably satisfactory to the Indemnitee,
from the third party claimant, (y) does not impose any liabilities or
obligations on the Indemnitee and (z) with respect to any non-monetary provision
of any settlement of a claim in which either of the Buyer Parties is the
Indemnitee, does not impose conditions upon the Indemnitee which, in the
Indemnitee's good faith judgment, could have a material adverse effect on the
business, operations, assets, properties or prospects of the Indemnitee. No
Third Party Claim which is being defended in good faith by the Indemnitee alone
or jointly with the Indemnitor, shall be settled by the Indemnitee without the
written consent of the Indemnitor, which consent shall not be unreasonably
withheld; provided, however, that the Indemnitee may settle such claim without
the consent of the Indemnitor so long as the settlement (x) includes an
unconditional release of the Indemnitor, in form and substance reasonably
satisfactory to the Indemnitor, from the claim by the Indemnitee and the third
party claimant and (y) does not impose any liabilities or obligations on the
Indemnitor.

ARTICLE VIII
                              ACTIONS AFTER CLOSING

SECTION 8.01 Books and Records. From the Closing Date, Buyer shall maintain such
books and records of the Business as have been delivered to it by the Seller
Parties until the time for the taking of any federal tax audit of the Company,
or any group of which the Company is a member, for its fiscal year 2004 shall
have expired and shall provide the Seller Parties and their representatives
reasonable access thereto in order to enable the Company to (a) prepare its
financial statements, (b) prepare its tax returns, and (c) perform any other
acts reasonably related to the Seller Parties' former interest in the Business.

SECTION 8.02      Leased Premises and Limited Trademark License

                           (a) The Seller Parties hereby covenant and agree that
the Company will not terminate the Real Property
Lease, or dispose of any fixtures and equipment of the Company located at the
California Leased Premises, prior to January 1, 2005, and will cease all of its
operations at the California Leased Premises as of January 1, 2005. The Seller
Parties agree that all use of Trademarks by the Company and Parent shall cease
from the Closing Date, except as set forth in this Section 8.02 and Section
8.07.

                           (b) The Buyer hereby grants to the Company a limited,
royalty free license to utilize the Trademark in
conjunction solely with operating the California Leased Premises until January
1, 2005, in a manner substantially similar to the manner it was operated prior
to the Closing Date, as further described below.

     (c)  The  Buyer  expressly  recognizes  the  Company's  prior  use  of  the
Trademarks  and the quality,  integrity,  goodwill and  reputation of the goods,
including the Existing  Inventory,  and services associated with the Trademarks.
The Company  agrees to continue to offer goods and services under the Trademarks
in the same quality manner in which it has offered its goods and services in the
past. In  connection  with this  assurance of quality,  the Buyer shall have the
right,  during  reasonable  business  hours to  inspect  the  California  Leased
Premises.  Should the Buyer ever notify the Company  that any of the products or
services offered under the Trademarks fail to comply with the agreed  standards,
the  Company  shall  promptly  (but in no event  later than 60 days)  proceed to
correct such defects in  accordance  with the  instructions  from the Buyer with
respect thereto.

                                       16
<PAGE>

                           (d) The Company recognizes the Buyer's title in and
to the Trademarks from and after the Closing Date, and all use of the Trademarks
by the Company shall at all times inure to the benefit of the Buyer.

SECTION 8.03 Current Information. With a view to making available to the Company
the benefits of Rule 144 promulgated under the Securities Act and other rules
and regulations of the SEC that may at any time permit the Company to sell
Candie's Common Stock to the public without registration, Candie's covenants
that it shall, for the period commencing on the date hereof and until the
earlier to occur of (i) the sale by the Company of the shares of Candie's Common
Stock issued hereunder to the Company or (ii) such time as such shares are
eligible to be sold by the Company under the provisions of Rule 144(k) of the
Securities Act, or any successor rule thereto, maintain its listing on Nasdaq
(or the Nasdaq SmallCap Market), and use its commercially reasonable efforts to
(x) file in a timely manner all reports required to be filed by it under Rule 13
or 15(d) of the Exchange Act and the rules and regulations adopted by the SEC
thereunder and (y) take such further action as the Company may reasonably
request (including, but not limited to, providing any information necessary to
comply with Rule 144), all to the extent required from time to time to enable
the Company to sell Candie's Common Stock without registration under the
Securities Act within the limitation of the exemptions provided by Rule 144
under the Securities Act, as such rule may be amended from time to time. Upon
the written request of the Company, Candie's shall deliver to the Company a
written statement as to whether it has complied with such requirements.

SECTION 8.04 Registration Rights. Candie's shall use its commercially reasonable
efforts to cause all of the shares of Candie's Common Stock received by the
Company pursuant to Article II herein (both on the Closing Date and the Reset
Date) to be registered for sale by the Company (or its transferees) on a shelf
registration statement on Form S-3 or another applicable form available to
Candie's (the "Registration Statement"). The Registration Statement shall be
filed by Candie's with the SEC not later than twenty (20) days following the
Closing. Candie's shall use its commercially reasonable efforts to cause the
Registration Statement to be declared effective by the SEC as soon as
practicable following the filing thereof. On the Closing Date, Candies and the
Company shall enter into a registration rights agreement substantially in the
form annexed hereto as Exhibit 8.04 (the "Registration Rights Agreement").

SECTION 8.05 Further Assurances. The parties hereto shall cooperate reasonably
with each other and with their respective representatives in connection with any
steps required to be taken as part of their respective obligations under this
Agreement, and shall (a) furnish upon request to each other such further
reasonably available Trademark information and such other non-confidential
information; (b) execute and deliver to each other such other documents
(including, but not limited to, the execution of such documents to the extent
necessary to evidence and effect recordation of the assignment of all of the
Trademarks after the Closing Date should recording of the Trademark Assignments
in any country require the execution or re-execution of any additional
documents); and (c) do such other acts and things, all as the other party may
reasonably request for the purpose of carrying out the intent of this Agreement
and the transactions contemplated thereby.

                                       17
<PAGE>

SECTION 8.06 Non-Disparagement. For a period of two (2) years after the Closing
Date, neither the Seller Parties nor any of their officers, employees, agents or
shareholders shall take any action with the intent of diminishing the value of
the Purchased Assets or any action that would materially interfere with the
business of Buyer to be engaged in immediately after the Closing Date, including
disparaging the business of Buyer.

SECTION 8.07 Disposal of Existing Inventory(a) In connection with the assignment
and assumption of the Real Property Lease, on January 1, 2005 Buyer shall
purchase the Fall 2004 "left-to-sell" inventory or the remaining Fall 2004
inventory, which shall include any apparel, handbags and shoes but exclude any
bridalwear (the "Existing Inventory"). The purchase price for the Existing
Inventory shall be paid in cash in an amount equal to 17.5% of the original full
retail price of the Existing Inventory. Such purchase price shall be paid by
certified check or by wire in immediately available funds to an account
designated by the Company within three (3) business days of the receipt by Buyer
of a report setting forth the results of a physical count of the Existing
Inventory certified by the Chief Financial Officer of the Company.

(b) The Company shall be permitted to sell any remaining inventory not purchased
pursuant to Section 8.07(a) at sample sales and through such other outlets as
Buyer may consent to, such consent not to be unreasonably withheld or delayed.

(c) The Seller Parties agree to satisfy any and all Mark Downs prior to January
1, 2005.

ARTICLE IX
                                     NOTICES

                  Any notice required or permitted to be given by any party
under this Agreement shall be given in writing and shall be deemed effectively
given upon personal delivery to the party to be notified, on the next business
day after delivery to a nationally recognized overnight courier service, when
sent by confirmed facsimile if sent during normal business hours of the
recipient, if not, then on the next business day or five (5) days after deposit
with the United States Post Office, by registered or certified mail, postage
prepaid and addressed to the party to be notified at the address or facsimile
number indicated below for such party or at such other address as such party may
designate upon written notice to the other parties (except that notice of change
of address shall be deemed given upon receipt).

                                       18
<PAGE>

(a) In the case of the Buyer Parties:

                                 Candie's, Inc.
                                 215 West 40th Street
                                 6th Floor
                                 New York, New York 10018
                                 Attn: Senior Vice President and General Counsel
                                 Facsimile: 212-391-2057

                                 With a copy to:

                                 Blank Rome LLP
                                 405 Lexington Avenue
                                 New York, New York 10174
                                 Attn.: Robert Mittman, Esq.
                                 Facsimile:  212-885-5001

(b) In the case of the Seller Parties:

                                 B.E.M. Enterprise, Ltd.
                                 c/o Escada (USA) Inc.
                                 10 Mulholland Drive
                                 Hasbrouck Heights, New Jersey 07604
                                 Attn:   Chief Financial Officer
                                         and General Counsel
                                 Facsimile:       201-462-6440
                                 Telephone:       201-462-6000

                                 With a copy to:
                                 Akin, Gump, Strauss, Hauer, & Feld, LLP
                                 590 Madison Avenue
                                 New York, New York 10022
                                 Attn: Steven H. Scheinman
                                 Facsimile:       212-872-1002

ARTICLE X
                                  MISCELLANEOUS

SECTION 10.01 Expenses. Irrespective of whether the Closing is effected and
except as otherwise expressly provided herein, the Buyer Parties shall pay all
costs and expenses that they incur and the Seller Parties shall pay all costs
and expenses that they incur, including, but not limited to, legal, accounting,
financial advisory and investment banking fees and expenses, with respect to the
negotiation and execution of this Agreement and any other documents or
instruments to be executed and delivered pursuant hereto and the performance of
any covenants to be performed by such party and satisfaction of any conditions
to be satisfied by such party which are contained herein or therein. The
provisions of this Section 10.01 shall survive any termination of this
Agreement.

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<PAGE>

SECTION 10.02 Entire Agreement. This Agreement, together with the Company
Disclosure Schedule and Exhibits hereto and the documents and instruments to be
executed and delivered pursuant hereto, constitute the entire understanding and
agreement by and among the parties hereto with respect to the subject matter
hereof and supersedes all prior negotiations, agreements and understandings
among such parties with respect to the subject matter hereof.

SECTION 10.03 Amendments and Waivers. Any term of this Agreement may be amended
and the observance of any term of this Agreement may be waived (either generally
or in a particular instance and either retroactively or prospectively), only by
an instrument in writing and signed by the party against whom such amendment or
waiver is sought to be enforced. The waiver by any party hereto of a breach of
any provision of this Agreement shall not operate or be construed as a further
or continuing waiver of such breach or as a waiver of any other or subsequent
breach. No failure on the part of any party hereto, to exercise and no delay in
exercising, any right, power or remedy hereunder shall operate as a waiver
thereof, nor shall any single or partial exercise of such right, power or remedy
by any party hereto, preclude any other or further exercise thereof or the
exercise of any other right, power or remedy.

SECTION 10.04 Successors and Assigns. Neither this Agreement nor any rights
hereunder may be assigned by any party without the prior written consent of the
other parties hereto. This Agreement shall be binding upon and shall inure to
the benefit of the parties hereto and their respective successors and permitted
assigns.

SECTION 10.05 Governing Law. This Agreement, including the validity hereof and
the rights and obligations of the parties hereunder and all amendments and
supplements hereof and all waivers and consents hereunder, shall be construed in
accordance with and governed by the domestic substantive laws of the State of
New York without giving effect to any choice of law or conflicts of law
provision or rule that would cause the application of the domestic substantive
laws of any other jurisdiction.

SECTION 10.06 Severability. If any provision of this Agreement, as applied to
any part or to any circumstance, shall be adjudged by a court to be invalid or
unenforceable, the same shall in no way affect any other provision of this
Agreement, the application of such provision in any other circumstances or the
validity or enforceability of this Agreement.

SECTION 10.07 No Third-Party Beneficiaries. Nothing in this Agreement, express
or implied, shall create or confer on any person other than the parties or their
respective successors and permitted assigns, any rights, remedies, obligations
or liabilities, except as expressly provided herein.

SECTION 10.08 Attorneys' Fees. If any action at law or in equity is necessary to
enforce or interpret the terms of this Agreement or any other document or
instrument to be executed or delivered pursuant hereto, the prevailing party
shall be entitled to reasonable attorneys' fees, costs and disbursements in
addition to any other relief to which such party may be entitled.

                                       20
<PAGE>

SECTION 10.09 Remedies. In case any one or more of the covenants and/or
agreements set forth in this Agreement shall have been breached by any party
hereto, the party or parties entitled to the benefit of such covenants or
agreements may, except as may otherwise be expressly provided in this Agreement,
proceed to protect and enforce their rights either by suit in equity and/or by
action at law, including, but not limited to, an action for damages as a result
of any such breach and/or an action for specific performance of any such
covenant or agreement contained in this Agreement. The rights, powers and
remedies of the parties under this Agreement are cumulative and not exclusive of
any other right, power or remedy which such parties may have under any other
agreement or law. No single or partial assertion or exercise of any right, power
or remedy of a party hereunder shall preclude any other or further assertion or
exercise thereof. From and after the Closing Date, the provisions contained in
Article VIII herein shall be the sole and exclusive remedy for monetary damages
arising out of or resulting from the breach of any representations or warranties
made pursuant to Articles III or IV of this Agreement, absent fraud or
intentional misrepresentation.

SECTION 10.10 Captions. The headings and captions used in this Agreement are
used for convenience only and are not to be considered in construing or
interpreting this Agreement.

SECTION 10.11 Counterparts. This Agreement may be executed in counterparts, each
of which shall be deemed an original, but all of which taken together shall
constitute one and the same instrument.

SECTION 10.12 Certain References. Whenever the context may require, any pronoun
used in this Agreement shall include the corresponding masculine, feminine or
neuter forms and the singular form of nouns, pronouns and verbs shall include
the plural and vice versa. The terms "herein", "hereof" or "hereunder" or
similar terms as used in this Agreement refer to this entire Agreement and not
to the particular provision in which the term is used. Unless otherwise stated,
all references herein to Articles, Sections, subsections or other provisions are
references to Articles, Sections, subsections or other provisions of this
Agreement. All references to the term "business day" shall mean any day on which
banking institutions in New York are not required or permitted to be closed.
When the phrase "to the knowledge of" or similar phrases are used in this
Agreement, the term "knowledge" shall be defined to mean the actual knowledge of
the officers, directors, managers or partners of the entity referenced thereby,
after conducting a reasonable investigation regarding the accuracy of the
representation and warranty made herein by such entity or individual.

SECTION 10.13 Interpretation. This Agreement shall be construed reasonably to
carry out its intent without presumption against or in favor of either party.

SECTION 10.14 Joint and Several Liability. Except as otherwise noted, the
obligations and liabilities under this Agreement of the Seller Parties, on the
one hand, and the Buyer Parties, on the other hand, shall be joint and several.

                                       21
<PAGE>

SECTION 10.15 Broker. The Seller Parties and the Buyer Parties represent and
warrant to the other that they have not dealt with any other broker or finder in
connection with this transaction. The Seller Parties and the Buyer Parties agree
to indemnify and hold the other harmless from and against all liabilities
(including but not limited to reasonable attorney's fees) incurred by the other
by reason of any claims or suits by any person or persons for brokerage
commission, finder's fees or other compensation on account of a breach of the
foregoing representation.

SECTION 10.16 Confidentiality. Each party hereto agrees that, except with the
prior written consent of the other parties, it shall at all times keep
confidential and not divulge, furnish or make accessible to anyone any
confidential information, knowledge or data concerning or relating to the
business, operations or affairs of the other parties hereto to which such party
has been or shall become privy by reason of the Transaction Documents,
discussions or negotiations relating thereto, the performance of its obligations
thereunder or the ownership of the Purchased Assets purchased hereunder. No
press release or public announcement relating to this Agreement or the
transactions contemplated hereby shall be made without the approval of Escada
and Candie's, except as may be required by applicable law or any listing
arrangement with any securities exchange.

SECTION 10.17 Bulk Sales Laws. The Buyer Parties and the Seller Parties hereby
waive compliance with the bulk sales laws and any other similar laws in any
applicable jurisdiction in respect of the transactions contemplated by this
Agreement.



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<PAGE>



032140.0007 EAST  7268846 v9
                  In witness whereof, the parties hereto have executed this
Agreement as of the date first above written.


CANDIE'S:                                          CANDIE'S, INC.

                                               By: /s/ Neil Cole
                                             Name: Neil Cole
                                            Title: President, CEO


BUYER:                                             BADGLEY MISCHKA LICENSING LLC

                                               By: /s/ Neil Cole
                                             Name: Neil Cole
                                                   Title: President, CEO


COMPANY:                                           B.E.M. ENTERPRISE, LTD.

                                               By: /s/ Christian D. Marques
                                             Name: Christian D. Marques
                                            Title: CFO


ESCADA:                                            ESCADA (USA) INC.

                                               By: /s/ Lawrence C. DeParis
                                             Name: Lawrence C. DeParis
                                            Title: President



<PAGE>





                                     ANNEX A

                                  Defined Terms

                  The following terms used in this Agreement shall have the
meanings set forth in the corresponding Articles, Sections or subsections of
this Agreement:

         "Agreement"                                          Heading Paragraph
         "Allocation"                                         Section 2.03
         "Assumed Agreements"                                 Section 1.03
         "Assumed Liabilities"                                Section 2.04
         "Balance Sheet"                                      Section 3.07
         "Basket"                                             Section 7.04(a)
         "Business"                                           Whereas Clause 1
         "Buyer"                                              Heading Paragraph
         "Buyer Parties"                                      Heading Paragraph
         "California Leased Premises"                         Section 1.01(c)
         "Candie's"                                           Heading Paragraph
         "Candie's Common Stock"                              Section 2.01
         "Closing"                                            Section 6.01
         "Closing Date"                                       Section 6.01
         "Closing Price"                                      Section 2.01
         "Company"                                            Heading Paragraph
         "Company Disclosure Schedule"                        Article III
         "CPA Firm"                                           Section 2.03
         "Escada"                                             Heading Paragraph
         "Exchange Act"                                       Section 4.06
         "Excluded Assets"                                    Section 1.02
         "Excluded Liabilities"                               Section 2.05
         "Existing Inventory"                                 Section 8.06(a)
         "GAAP"                                               Section 4.06
         "Indemnitee"                                         Section 7.05(a)
         "Indemnitor"                                         Section 7.05(a)
         "Interim Balance Sheet"                              Section 3.07
         "Losses"                                             Section 7.02(a)
         "Mark Downs"                                         Section 3.08
         "Nasdaq"                                             Section 2.01
         "Product"                                            Whereas Clause 1
         "Purchase Price"                                     Section 2.01
         "Purchased Assets"                                   Section 1.01
         "Real Property Lease"                                Section 3.04
         "Registration Rights Agreement"                      Section 8.04
         "Registration Statement"                             Section 8.04
         "Release Consideration"                              Section 2.04
         "Reset Price"                                        Section 2.02(a)
         "SEC"                                                Section 4.06



<PAGE>

         "SEC Reports"                                        Section 4.06
         "Securities Act"                                     Section 4.06
         "Seller Parties"                                     Heading Paragraph
         "Share Payment"                                      Section 2.01
         "Third Party Claim"                                  Section 7.05(b)
         "Transaction Documents"                              Section 1.02

When used in this Agreement, the following terms shall have the respective
meanings specified therefor below (such meanings to be equally applicable to
both the singular and the plural forms of the terms defined):

"Affiliate" shall mean, with respect to any Person, any other Person which,
directly or indirectly, owns, or is owned by, or is under common ownership with,
such Person. For purposes of this definition, the term "own" (including, with
correlative meanings, "owned by" and "under common ownership with") as applied
to any Person means the ownership of more than 50% of the voting securities (or
their equivalent) of such Person.

"Design and Marketing Assets" shall mean all of the following used by the
Company in connection with the Business, whether presently used or in
development in any and all media, including, without limitation, computer
storage media, written or hard copy, sketches, photographic form, silk screens,
transparencies, audio recording, or other form: (i) all samples, patterns, press
books, designs and art work; (ii) all marketing promotional sales and
advertising materials; (iii) all catalogues; (iv) all marketing information,
including without limitation, all market research and focus group reports; and
(v) all archive garments set forth on Schedule A.

"Governmental Entity" shall mean any public body or authority, including courts
of competent jurisdiction, domestic or foreign.

"Intellectual Property" shall mean all intellectual property owned by the
Company in connection with the Business, including, without limitation, all of
the following categories of assets: (i) all statutory and common law trademarks
(other than the Trademarks), service marks, trademark rights, trade names, trade
dress, trade styles, brand names and logos, all variations and derivatives
thereof and all associated goodwill symbolized thereby or connected therewith,
as well as all rights corresponding thereto throughout the world; (ii) all
copyrights and all other intellectual property whether registered or
unregistered; (iii) all patents, design patents, design registrations and common
law rights; (iv) any and all trade secrets, specifications and know-how,
including artwork, drawings and specifications; (v) all domain names registered
by the Company, including badgley-mischka.com; (vi) any and all present and
future claims, causes of action and choses in action relating to the
Intellectual Property; (vii) all formulae, processes and the like, including,
without limitation, all formulations and processes necessary to produce
fragrances that have been or are presently part of the Company's product lines;
(viii) proprietary and technical information and data, methods, procedures, as
well as refinements thereof and improvements thereof; and (ix) all goodwill
related to the Business or any of the foregoing.

                                       2
<PAGE>

"Lien" shall mean pledges, mortgages, security interests, claims, charges and
other encumbrances of any kind or nature whatsoever.

"Parent" shall mean Escada AG, a German corporation and the sole stockholder of
Escada.

"Permitted Liens" shall mean Liens for taxes, assessments or governmental
charges or landlords', mechanics', materialmen's or supplier's Liens, in each
(i) case that are not delinquent, (ii) which are being contested in good faith
and (iii) which are not material.

"Person" shall mean and include an individual, a partnership, a joint venture, a
corporation, a trust, an unincorporated organization and a government or other
department or agency thereof.

"Reset Date" shall mean the date that is 180 calendar days immediately following
the Closing Date.

"Trademarks" shall mean all trademarks, service marks, trade names, trade
styles, brand names and logos listed on Schedule 3.05, and all associated
goodwill symbolized thereby or connected therewith, and all registrations and
applications listed therein, as well as all rights corresponding thereto
throughout the world any and all present and future claims, causes of action and
choses in action relating to the Trademarks.


                                       3
<PAGE>


Pursuant to Item 601(b)(2) of Regulation S-K, the following is a list of omitted
schedules and exhibits to the Asset Purchase Agreement.  Candies, Inc. agrees to
provide complete copies of the foregoing schedules upon request.

 Schedule A                               Archive Garments
 Schedule 1.01(e)                         Insurance Policies
 Schedule 1.02                            Excluded Assets
 Schedule 1.03                            Assumed Agreements
 Schedule 2.03                            Allocation of Purchase Price
 Schedule 3.04                            Real Property
 Schedule 3.05                            Intellectual Property and Trademarks

 Exhibit 6.02(iii)(a) and (b)             Master Trademark Assignment Agreements
 Exhibit 8.04                             Registration Rights Agreement





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