Document:

January 23, 2002

BRIGHT STAR FOOTWEAR, INC.
400 Columbus Avenue
Valhalla, NY 10595-1335

                        NOTIFICATION FACTORING AGREEMENT

Ladies and Gentlemen:

     We are pleased to confirm the terms and  conditions  that shall  govern our
full recourse funds in use accounting  factoring  arrangement with advances (the
Agreement").

     1. SALE OF ACCOUNTS

     1. You hereby sell,  assign and  transfer to us, and we hereby  purchase as
absolute  owner,  all of your  accounts  created by or arising  from the sale of
goods or rendition of services by you  (referred to herein  collectively  as the
"Accounts",  individually as an "Account").  This includes,  without limitation,
all sales made and services  rendered under any of your trade names or styles or
through  any of  your  divisions.  Anything  contained  herein  to the  contrary
notwithstanding, for purposes of paragraphs 4,5 and 6 hereof, the term `accounts
shall not  include  accounts  arising  from sales to any  subsidiary,  parent or
affiliated company of yours

     2. RISK OF NON-PAYMENT

     2. Under no  circumstances  are we to be deemed to have assumed any risk of
non-payment with respect to any Accounts,  it being understood that all Accounts
shall be at your  exclusive risk and with recourse back to you if payment is not
made on any Account for any reason whatsoever.

     3. INVOICING

     3. Each of your invoices shall bear a notice (in form and content  approved
by us)  that  the  Account  represented  thereby  has been  sold,  assigned  and
transferred to us, and is owned by and payable only to us. All invoices shall be
mailed by you to your  customers  at your  expense.  You shall  provide  us with
copies of all invoices,  and with such  confirmation of the transfer of Accounts
to us and such proof of order,  shipment  or delivery  as we may  require.  Your
printed name or rubber stamp signature on invoices and  confirmatory  assignment
schedules shall have the same legal effect as a manual  signature by one of your
authorized officers or agents. Should you for any reason defer shipment of goods
which you have sold and  invoiced  to a customer  (such  sales are also known as
bill and hold  sales)  you shall:  so advise us  promptly,  submit all  relevant
details  to us,  and  comply  with such  conditions  as we deem  necessary  as a
prerequisite to our handling the Accounts arising therefrom on our books.

     4. REPRESENTATIONS AND WARRANTIES

     4.1 You hereby  represent and warrant  that:  each Account is based upon an
actual and bona fide sale and  delivery  of goods or  rendition  of  services to
customers,  made by you in the ordinary  course of your business;  the goods and
inventory  being sold and the Accounts  created are your exclusive  property and
are  not  and  shall  not be  subject  to  any  lien,  consignment  arrangement,
encumbrance,  security interest or financing statement whatsoever, other than in
our favor;  at the time of purchase by us of the Account,  your  customers  have
accepted  the goods or services,  owe and are  obligated to pay the full amounts
stated in the invoices according to their terms, without dispute, claim, offset,
defense,  deduction,  recoupment,  counterclaim  or contra  account  (any of the
foregoing  being  referred  to herein as a  "Customer  Claim')  unless  you have
notified  pursuant to paragraph 8; all amounts are due in United States Dollars;
all  original  invoices  bear notice of the  assignment  and transfer to us; any
taxes or fees relating to your Accounts or goods are solely your responsibility;
and none of the  Accounts  factored  with us  hereunder  represent  sales to any
subsidiary, parent or affiliated company of yours.

     4.2 You further  represent and warrant that:  your legal name is exactly as
set forth on the signature page of this Agreement,  you are a duly organized and
validly existing business  organization  incorporated or registered in the state
of New York, and are qualified to do business in all states where required;  the
most recent financial  statements  provided by you to us accurately reflect your
financial  condition  as of that  date and there  has been no  material  adverse
change in your financial condition since the date of those financial statements.
You agree to furnish us with such  information  concerning your business affairs
and financial condition as we may reasonably request from time to time. You will
furnish to us as soon as possible,  but not later than one hundred  twenty (120)
days after the close of each of your fiscal  years,  your and your  consolidated
subsidiaries  financial statements as of the end of such year, on a consolidated
basis, audited by a firm of independent,  certified public accountants, which as
of the date of this Agreement is BDO Seidman,  LLP and which is acceptable to us
of such  date,  or such  other  firm as may be  mutually  acceptable  to us, and
consolidating  statements  certified  by  one of  your  financial  officers.  In
addition, you shall deliver to us promptly upon their becoming available, a copy
of (A) all  consultants'  reports,  investment  bankers'  reports,  accountants'
management  letters,  business  plans and similar  documents,  (b) all  reports,
financial statements or other information  delivered to your shareholders and/or
filed with the SEC or any other governmental  authority,  (C) all reports, proxy
statements,  financial statements and other information generally distributed by
you to your creditors or the financial  community in general;  and (D) any audit
or other reports submitted to you by independent  accountants in connection with
any annual, interim or special audit.

     4.3 You agree that you will promptly notify us of any change in your: name,
state of incorporation or registration, location of your chief executive office,
place(s) of business,  and legal or business structure.  Further, you agree that
you will  promptly  notify us of any change in control of the  ownership of your
business organization, and of significant law suits or proceedings against you.

     4.4 You  further  represent  and  warrant  that  (a) the  trademark  and/or
tradename "Candies" together with all related intellectual  property is owned by
you and (b) the trademark  and/or  tradename  "Bongo"  together with all related
intellectual property is owned by your wholly owned subsidiary, Michael Caruso &
Co., lnc, in each case free and clear of all liens and/or security interest. You
agree that said trademarks  and/or  tradenames  shall not be sold or transferred
without our prior written consent.

     5. PURCHASE OF ACCOUNTS

     5. We shall  purchase the  Accounts for the gross amount of the  respective
invoices,  less factoring fees or commissions  relating thereto,  trade and cash
discounts  allowable to your customers and credits and allowances (the "Purchase
Price of  Accounts").  Our  purchase of the  Accounts  shall be reflected on the
Statements  of Account which we shall render to you, and such  statements  shall
also reflect all credits and discounts made available to your customers (whether
or not  taken)  and  anticipation  earned  by your  customers.  A more  detailed
description  of these and all other  accounting  procedures  used  hereunder  is
contained in the Guide.

     6. ADVANCES

     6. At your request, and in our sole discretion, we may advance funds to you
and Candie's, Inc. ("Candies"),  under its separate Factoring Agreement with us,
in an aggregate amount of up to the lesser of (A) $20,000,000 or (B) the sum of:
(i) up to  eighty-five  percent  (85%) prior to the  collection of the Accounts,
(ii) subject to your execution and delivery of an inventory  security  agreement
supplement in form and substance  satisfactory  to us, in amounts of up to sixty
percent  (60%) of the  value  of your  Eligible  Inventory  (as  defined  in the
Inventory  Security  Agreement)  calculated on the basis of the lower of cost or
market,  with cost  calculated on a first  in-first out basis,  (iii) subject to
your execution and delivery of a letter of credit security agreement  supplement
in form and  substance  satisfactory  to us,  we will,  in our sole  discretion,
assist  you in  establishing  or opening  letters of credit for your  account or
guarantee  the  payment  or  performance  of such  letters  of  credit  up to an
aggregate face amount not exceeding  $3,000,000 at any one time  outstanding for
you and Candies and (iv) we may make  available to you and Candies,  in our sole
discretion, an overadvance accommodation of up to $5,000,000.00 in the aggregate
outstanding  at any onetime.  (For purposes  hereof,  "overadvances"  shall mean
advances in excess of the percentage limitations set forth above.). In addition,
we will establish a discretionary  line for you and Candies of up to $250,000.00
in the  aggregate  outstanding  at any one time for Ledger  Debt (as  defined in
section 11). This line will be available to you provided that (a) this Agreement
is in  full  force  and  effect,  (b) no  Event  of  Default  hereunder  is then
outstanding and (c) there is no material deterioration in your credit worthiness
in our reasonable opinion. At your request, we may in our sole discretion,  make
advances to you prior to the  collection  of  Accounts,  subject to our right to
hold any reserves we deem necessary as security for the payment and  performance
of any and all of your Obligations,  as defined herein.  All amounts owing to us
by you,  including,  without  limitation,  any advances which may be made to you
prior to  shipment  and any debit  balance in your Client  Position  Account (as
defined below), shall be payable to us on demand. We may send to you at any time
any credit  balance in your  Funds-In-Use  Account (as defined  below),  without
prior notice to you.

     7. PAYMENT OF ACCOUNTS

     7. Checks and other proceeds  received by us in payment of Accounts will be
promptly  applied  to your  account  with us  after  crediting  your  customer's
account;  however,  we shall debit your account monthly with the cost of two (2)
additional business days on all such amounts. The foregoing shall be computed at
the rate charged by us on debit balances, as set forth in paragraph 13.1 hereof.
No checks,  drafts or other  instruments  received by us shall  constitute final
payment of an  Account  unless and until such  instruments  have  actually  been
collected.

     8. CUSTOMER CLAIMS AND CHARGEBACKS

     8. You  shall  notify  us  promptly  of any  matter  affecting  the  value,
enforceability  or  collectability  of any Account and of all  Customer  Claims,
returns and rejections. You shall issue credit memoranda promptly upon accepting
returns or granting  allowances,  (and upon our request,  send duplicates and/or
confirm the assignment of such credit memoranda to us). We may at any time debit
or charge back to your  account the amount of: any Account  which is not paid in
full when due for any reason and any Account  with respect to which we determine
that there has been a breach of any  representation or warranty  hereunder.  Any
deduction taken by a customer shall be charged back to your account immediately,
and we may at any time debit or charge  back to your  account the amount of: (i)
payments we receive on Accounts which we are required  thereafter to turnover or
return;  (ii)  any  and all  expenses  and  attorneys'  fees  incurred  by us in
collecting  or  attempting  to collect  any Account  charged  back to you or any
Obligation  hereunder;  and (iii)  any  expenses  incurred  by us as a result of
remittances  made by  customers  on  Accounts  that are not  finally  paid,  for
whatever  reason.  Further,  we shall be entitled to charge you a reasonable fee
for each  Account  which we may place with a  collection  agency or attorney for
collection,  which fee shall be charged to your  account in addition to any fees
or  expenses  of such  collection  agency  or  attorney.  We may  bring  suit or
otherwise enforce collection, in your name or ours, and generally shall have all
other rights respecting said Accounts,  including, without limitation, the right
to:  accelerate  or extend  the time of  payment  modify  the terms of  payment,
settle,  compromise,  release in whole or in part any amounts  owing,  and issue
credits in your name or ours. To the extent applicable, you hereby waive any and
all claims and defenses based on suretyship. We may endorse or sign your name or
ours on any checks or other instruments or documents with respect to Accounts or
the goods covered thereby.

     9. STATEMENTS OF ACCOUNT

     9. After the end of each month, within ten (10) business days on the end of
each month,  we shall send to you one or more reports showing the accounting for
sales,  charges,  advances and other  transactions  between us during that month
(herein the "Reports").  The Reports sent to you each month will include,  among
other things,  a Statement of Account which will reflect  transactions  in three
accounts: an accounts receivable account (the "Accounts Receivable Account"),  a
client  position  account (the "Client  Position  Account")  and a  funds-in-use
account (the "Funds-In-Use Account"). All financial transactions between us will
be reflected  on these  monthly  Reports.  The monthly  Reports  shall be deemed
correct and binding upon you and shall  constitute an account stated between us,
unless we receive a written statement of your exceptions within thirty (30) days
after the date the same are received by you.

     10. GRANT OF SECURITY INTEREST

     10.1 In  addition  to the  sale of  Accounts  hereunder,  and  without  the
necessity of any further formality, writing or evidence, you hereby transfer and
assign to us and grant us a security  interest in all of your  right,  title and
interest in and to all of your now existing and future (herein  collectively the
"Collateral'):  (a) accounts (including the Accounts),  instruments,  documents,
chattel  paper  (including   electronic  chattel  paper),   general  intangibles
(including  all payment  intangibles  and all other rights to payment),  and any
other   obligations   owing  to  you;  (b)  unpaid  seller's  rights  (including
rescission,  repossession,  replevin,  reclamation and stoppage in transit); (c)
rights to any inventory  represented  by the  foregoing,  including  returned or
repossessed  goods;  (d) reserves and credit  balances  arising  hereunder;  (e)
guarantees,  collateral, supporting obligations and letter of credit rights with
respect to the foregoing; (0 insurance policies,  proceeds or rights relating to
the  foregoing;  (g) federal,  state and local income tax refunds;  (h) cash and
non-cash proceeds of the foregoing; (i) Books and Records (defined in section 12
below)  evidencing or pertaining to the foregoing;  and (j) all now existing and
future patents and trademarks,  including those  registered in the United States
Patent  and  Trademark  Office,  the  goodwill  of the  business  in  connection
therewith,  and any and all proceeds,  royalties and other fees which are or may
become due  therefrom or for the use thereof..  (It is understood  that we shall
have no  obligation  to perform in any respect,  any  contracts  relating to any
Accounts).

     10.2 You agree to comply with all  applicable  laws to perfect our security
interest in collateral pledged to us hereunder, and to execute such documents as
we may require to effectuate the foregoing and to implement this Agreement.  You
irrevocably  authorize us to file  financing  statements  and all amendments and
continuations with respect thereto, all in order to create,  perfect or maintain
our security  interest in the Collateral,  and you hereby ratify and confirm any
and all financing  statement,  amendments and continuations with respect thereto
heretofore and hereafter filed by us pursuant to the foregoing authorization.

     11. OBLIGATIONS SECURED

     11.  The  security  interest  granted  hereunder  and any lien or  security
interest that we now or hereafter  have in any of your other assets,  collateral
or property,  secure the payment and performance of all of your now existing and
future  indebtedness  and  obligations  to us,  whether  absolute or contingent,
whether  arising  under this  Agreement or any other  agreement  or  arrangement
between us, by operation of law or otherwise  ("Obligations").  Obligations also
include ledger debt (which means  indebtedness for goods and services  purchased
by you from any party whose accounts  receivable are factored or financed by us)
("Ledger Debt"), and indebtedness arising under any guaranty, credit enhancement
or other credit support granted by you in our favor. Any reserves or balances to
your  credit  and any  other  assets,  collateral  or  property  of yours in our
possession constitutes security for any and all Obligations.

     12. BOOKS AND RECORDS AND EXAMINATIONS

     12. You agree: to make your records, files and books of account (including,
without  limitation,  paper  records,  computer-based  data,  records  or media,
electronic  records,  tapes, discs, etc., and all programs and procedure manuals
relating  thereto)  (all of the  foregoing  referred  to herein  as  "Books  and
Records") available to us on request; to permit us to visit your premises during
business hours to examine the same and to make copies or extracts  thereof;  and
to conduct such  examinations as we deem necessary.  In order to cover costs and
expenses  we may incur in  connection  with any such  examinations,  we shall be
entitled  to charge you a fee of $750.00  for each day or part  thereof for each
examiner during which such examination is conducted,  which fee shall be charged
to your account, in addition to any out-of-pocket costs and expenses we incur as
a result of conducting said examinations.

     13. INTEREST, FACTORING FEES OR COMMISSIONS AND OTHER CHARGES

     13.1  Interest  shall be  charged  as of the last day of each  month on the
debit  balance in your  Funds-In-Use  Account  each day during that  month.  The
amount that appears in your Funds-In-Use  Account is the difference  between the
balance in your  Accounts  Receivable  Account  and the  balance in your  Client
Position Account.  Interest is charged as of the last day of each month based on
the daily debit balances in your Funds In Use account for that month,  at a rate
equal to the sum of one percent (1%) plus the Chase Prime Rate (defined  below).
The Chase Rate is the per annum rate of interest publicly announced by The Chase
Manhattan Bank in New York,  New York from time to time as its prime rate.  (The
prime rate is not  intended  to be the lowest  rate of  interest  charged by The
Chase  Manhattan  Bank to its  borrowers.)  Any  change in the rate of  interest
hereunder due to a change in the Chase Rate shall take effect as of the first of
the month following such change in the Chase Rate.  Interest shall be calculated
based on a 360 day year  Interest  shall be  credited as of the last day of each
month on any credit  balance in your  Funds-In-Use  Account each day during that
month,  at a rate four percent (4%) per annum below the Chase Rate being used to
calculate interest hereunder for the period. In no event, shall the rate charged
hereunder  exceed the highest rate permitted under  applicable law. In the event
however,  that we do receive  interest  hereunder  in excess of the highest rate
permissible,  you agree that your sole remedy shall be to seek repayment of such
excess,  and you hereby waive any and all other rights and remedies which may be
available to you under law or in equity.

     13.2 If you, as a client of ours,  purchase  goods or services from another
client of ours and your payments on these  invoices are not timely  received,  a
late interest  payment,  at our then late interest rate, will be charged to your
account with us and shall be deemed an Obligation under this Agreement.

     13.3 For our services hereunder,  you will pay us a factoring fee or charge
of  one-quarter  of one percent  (.25%) of the gross face amount of all Accounts
factored with us but in no event less than $1.00 per invoice. All factoring fees
or  charges  are due and  charged  to your  account  upon  our  purchase  of the
underlying  Account.  Commencing on even date herewith,  if the actual factoring
fees or  charges  paid to us by you  during  any  Contract  Year,  is less  than
$100,000.00  ("Minimum  Factoring Fees"), we shall charge your account as of the
end of such  Contract  Year with an amount equal to the  difference  between the
actual  factoring  fees or charges  paid  during  such  Period and said  Minimum
Factoring Fees.  "Contract Year" shall mean the period ending on the last day of
the month occurring one year from the date of this Agreement and each subsequent
Contract  Year shall be the twelve month  period  ending on the same day in each
year thereafter.

     13.4 In addition  to the  foregoing,  you shall pay all costs and  expenses
incurred by us in connection with the preparation, execution, administration and
enforcement of this Agreement,  including,  without  limitation,  all reasonable
fees  and  expenses  attributable  to the  services  of our  attorneys  (whether
in-house or outside), all search fees and the cost of all public record filings.
Furthermore,  you shall pay to us a  reasonable  fee for:  all  special  reports
prepared by us at your  request and all wire  transfers.  All such fees shall be
charged to your  account  and may be changed by us from time to time upon notice
to  you.  Notwithstanding  the  foregoing,  in  no  event  shall  the  fees  for
preparation and execution of this Agreement exceed $1000 in the aggregate,  plus
all search and filing fees.

     13.5 In addition to the fees and charges under this Agreement, you and your
affiliate, Bright Star Footwear, Inc., jointly and severally agree to pay us, as
of the date hereof, a Documentation  Fee, set forth in 13.4 above, in the amount
of $10,000 in the aggregate to  compensate us for the use of our in-house  legal
department and facilities in documenting this Agreement.

     13.6  If any tax by any  governmental  authority  (other  than  income  and
franchise taxes imposed on us which are not related to any  transaction  between
us) is or may be imposed on, or arises as a result of, any transactions  between
us, any sales made by you, or any inventory or goods relating to such sales, and
we are or may be  required  to  withhold  or pay  such tax and any  interest  or
penalties  related thereto,  you shall indemnify and hold us harmless in respect
thereof and pay to us the amount of any such tax, interest or penalties.

     14. TERMINATION

     14. Except as otherwise  provided herein,  you may terminate this Agreement
for any  reason  whatsoever,  but only as of an  Anniversary  Date,  as  defined
herein, and then only by giving us at least sixty (60) days prior written notice
of termination. We may terminate this Agreement for any reason whatsoever at any
time by giving you written notice stating a termination date not less than sixty
(60) days from the date such notice is given, or immediately at any time without
prior  notice to you upon and after the  occurrence  of an Event of Default  (as
defined below).  This Agreement  continues  uninterrupted  unless  terminated as
herein provided.  As used herein, the term "Anniversary Date shall mean the last
day of the month  occurring three years from the date hereof or the same date in
any year  thereafter.  In the event you  terminate  this  Agreement  prior to an
Anniversary  Date you shall pay to us and we shall be  entitled  to  receive  an
amount equal to the difference  between the actual  commissions paid to us under
paragraph  13.3 hereof and the aggregate of the Minimum  Factoring  Fees for the
Contract  Year during which this  Agreement is  terminated  and each  additional
Contract Year occurring  thereafter prior to the next Anniversary Date; provided
however,  no  termination  fees of any kind shall be imposed in the event of any
replacement  of this  factoring  agreement by us.  Unless sooner  demanded,  all
Obligations shall become due and payable upon termination of this Agreement and,
pending a final accounting,  we may withhold any balances in your account unless
supplied with an indemnity satisfactory to us to cover all Obligations.  All our
rights,  liens and security  interests  hereunder  shall  continue and remain in
effect after  termination of this  Agreement,  whether said  termination is upon
notice or as a result of the  occurrence  of an Event of Default,  and you shall
continue to assign accounts  receivable to us and to remit to us all collections
on accounts receivable,  until all Obligations have been paid in full or we have
been supplied with an indemnity satisfactory to us to cover all Obligations.

     15. EVENTS OF DEFAULT AND REMEDIES UPON DEFAULT

     15.1 An "Event of  Default"  shall be deemed to have  occurred  under  this
Agreement  upon:  (a) the cessation of your business or the calling of a meeting
of your creditors;  (b) your failure to meet your debts as they mature;  (c) the
commencement  by or  against  you of any  bankruptcy,  insolvency,  arrangement,
reorganization,  receivership or similar  proceedings under any federal or state
law;  (d) breach by you of any  representation,  warranty or covenant  contained
herein  or in any  other  agreement  between  us;  (e) your  failure  to pay any
Obligation within five (5) days of the due date thereof or (f) the occurrence of
an Event of  Default  under  or  termination  of our  Factoring  Agreement  with
Candies.

     15.2 Upon and after the  occurrence of an Event of Default,  this Agreement
may be terminated by us immediately  at anytime,  without notice to you, and all
Obligations  shall,  at our option and without notice or demand of any kind (all
of which you  hereby  expressly  waive),  become  due and  payable  immediately.
Further, we may remove, from any premises where the same may be located, any and
all documents,  instruments,  Books and Records (and any receptacles or cabinets
containing the same)  pertaining to the Accounts or other  collateral  hereunder
and/or we may use (at your expense) such of your  personnel,  supplies and space
at your  place  of  business  or  elsewhere,  as may be  necessary  to  properly
administer  and  enforce  our rights in the  Accounts  and any other  collateral
hereunder,  and to facilitate the collection thereof and realization thereon. We
may  sell,  assign  or  otherwise  dispose  of the  Accounts  and any  returned,
reclaimed or repossessed  inventory,  goods or other property  relating thereto,
whether held by you or by us, at public or private sale,  for cash, on credit or
otherwise,  at such  price  and on  such  terms  as we in our  sole  option  and
discretion may determine,  and we may bid or become purchasers at any such sale,
or acquire an interest in or dispose of said  property.  You hereby  acknowledge
that you have no right to notice,  or to an  accounting  or right of  redemption
with respect to any such sale or other disposition of the aforesaid  Accounts or
aforesaid  goods.  With respect to any other  property or collateral in which we
have a security  interest,  we shall have all of the  rights and  remedies  of a
secured  party under  Article 9 of the  Uniform  Commercial  Code.  If notice of
intended  disposition  of any of said property or collateral is required by law,
it is agreed that ten (10) days notice shall constitute  reasonable  notice. The
net cash proceeds  resulting  from the exercise of any of the foregoing  rights,
after deducting all charges, costs and expenses (including reasonable attorneys'
fees) shall be applied by us to the payment or satisfaction of the  Obligations,
whether  due or to become  due,  in such  order as we may  elect,  and you shall
remain liable to us for any  deficiencies.  Upon and after the  occurrence of an
Event of Default,  or in the event of a termination  of this Agreement by us, we
are hereby authorized by you to notify postal  authorities at any time to change
the address for delivery of mail to you to such address as we may designate, and
to receive and open mail  addressed  to you to enable us to carry out our rights
under this Agreement.

     15.3 Anything  contained herein to the contrary  notwithstanding  you shall
have the right to terminate this Agreement without the imposition of any Minimum
Factoring Fees or other  termination fees if we have not offered you a term loan
facility substantially on the terms set forth in our proposal letter of December
21, 2001 in the amount of not less $12,500,000  within ninety (90) days from the
date first written above on the terms and conditions set forth therein.

     16.  MISCELLANEOUS  PROVISIONS

     16.1 This Agreement,  and all attendant  documentation,  as the same may be
amended  from time to time,  constitutes  the entire  agreement  between us with
regard to the subject  matter  hereot and  supersedes  any prior  agreements  or
understandings. Furthermore, unless specifically provided otherwise herein, this
Agreement can be changed only by a writing  signed by both of us, and shall bind
and benefit each of us and our  respective  successors  and  assigns,  provided,
however, that you may not assign this Agreement or your rights hereunder without
our  prior  written  consent.  Our  failure  or delay in  exercising  any  right
hereunder shall not constitute a waiver thereof or bar us from exercising any of
our rights at anytime.  The validity,  interpretation  and  enforcement  of this
Agreement shall be governed by the laws of the State of New York Jurisdiction to
be in New York County.

     16.2 If any provision of this Agreement (including, without limitation, any
provision relating to charges constituting  interest payable by you) is contrary
to, prohibited by, or deemed invalid under applicable laws or regulations,  such
provision  shall be  inapplicable  and deemed omitted to the extent so contrary,
prohibited or invalid, but the remainder hereof shall not be invalidated thereby
and shall be given effect so far as possible.

     16.3 Paragraph headings are for convenience only and shall not be deemed to
be a controlling part of this Agreement.

     [Remainder of page intentionally left blank]

<PAGE>

     17. JURY TRIAL WAIVER

     17. To the extent permitted by applicable law, you and we each hereby waive
any right to a trial by jury in any action or  proceeding  arising  directly  or
indirectly out of this Agreement,  or any other agreement or transaction between
us or to which we are both parties.

     If the foregoing is in  accordance  with,  and  accurately  reflects,  your
understanding,  please so indicate by signing and  returning  to us the original
and one copy of this Agreement.  This Agreement shall take effect as of the date
set forth above,  but only after being  accepted below by one of our officers in
New York,  New York,  after which,  we shall forward your fully executed copy to
you for your files.

                                         Very truly yours,

                                         THE CIT GROUP/COMMERCIAL SERVICES, INC.

                                         By:/s/ Richard Lyons
                                         -------------------------------------
                                         Name:  Richard Lyons
                                         Title: Vice President

Read and Agreed:

BRIGHT STAR FOOTWEAR, INC

By:/s/ Richard Danderline
-----------------------------------
Name:  Richard Danderline
Title: Executive Vice President

                                         Accepted at New York, New York
                                         THE CIT GROUP/COMMERCIAL SERVICES, INC.

                                         By:/s/ Jonathan A. Lucas
                                         -------------------------------------
                                         Name:  Jonathan A. Lucas
                                         Title: Senior Vice President2001 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.

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