Document:

Exhibit 10.4

                       CANDIE'S, INC. 401(K) SAVINGS PLAN

<PAGE>

                             ADOPTION AGREEMENT #005
                   NONSTANDARDIZED 401(k) PROFIT SHARING PLAN

         The undersigned, Candies, Inc. ("Employer"), by executing this Adoption
Agreement, elects to establish a retirement plan and trust ("Plan") under the
CPI Qualified Plan Consultants, Inc. Defined Contribution Prototype Plan and
Trust (basic plan document # 01 ). The Employer, subject to the Employer's
Adoption Agreement elections, adopts fully the Prototype Plan and Trust
provisions. This Adoption Agreement, the basic plan document and any attached
appendices or addenda, constitute the Employer's entire plan and trust document.
All section references within this Adoption Agreement are Adoption Agreement
section references unless the Adoption Agreement or the context indicate
otherwise. All article references are basic plan document and Adoption Agreement
references as applicable. Numbers in parenthesis which follow headings are
references to basic plan document sections. The Employer makes the following
elections granted under the corresponding provisions of the basic plan document.

                                    ARTICLE I
                                   DEFINITIONS

1. PLAN  (1.21).  The name of the Plan as adopted by the  Employer is  Candie's,
Inc. 401(k) Savings Plan.

2. TRUSTEE (1.33). The Trustee executing this Adoption Agreement is: (Choose one
of (a), (b) or (c))

[n/a](a) A discretionary Trustee. See Plan Section 10.03[A].

[X]  (b) A nondiscretionary Trustee. See Plan Section 10.03[B].

[n/a](c) A Trustee under a separate trust agreement. See Plan Section 10.03[G].

3. EMPLOYEE (1.11).  The following  Employees are not eligible to participate in
the Plan: (Choose (a) or one or more of (b) through (g) as applicable)3 p.11

[n/a] (a) No exclusions.

[n/a] (b) Collective bargaining Employees.

[n/a] (c) Nonresident aliens.

[n/a] (d) Leased Employees.

[X]  (e) Reclassified Employees.

[n/a] (f) Classifications: .

[n/a](g) Exclusions by types of contributions.  The following  classification(s)
     of Employees are not eligible for the specified contributions:

                         Employee classification:
                         Contribution type:

4. COMPENSATION (1.07). The Employer makes the following  election(s)  regarding
the  definition  of  Compensation  for purposes of the  contribution  allocation
formula under Article III: (Choose one of (a), (b) or (c))4 p.11

[n/a] (a) W-2 wages increased by Elective Contributions.

[n/a](b) Code  ss.3401(a)  federal  income tax  withholding  wages  increased by
     Elective Contributions.

[X]  (c) 415 compensation.

[Note: Each  of the  Compensation  definitions  in  (a),  (b)  and (c)  includes
     Elective  Contributions.  See Plan  Section  1.07(D).  To exclude  Elective
     Contributions, the Employer must elect (g).]

<PAGE>

Compensation  taken into account.  For the Plan Year in which an Employee  first
becomes a Participant,  the Plan  Administrator will determine the allocation of
Employer  contributions   (excluding  deferral  contributions)  by  taking  into
account: (Choose one of (d) or (e))

[X]  (d) Plan Year. The Employee's Compensation for the entire Plan Year.

[n/a](e) Compensation while a Participant.  The Employee's Compensation only for
     the  portion  of  the  Plan  Year  in  which  the  Employee  actually  is a
     Participant.

Modifications  to  Compensation  definition.  The Employer  elects to modify the
Compensation  definition  elected in (a), (b) or (c) as follows.  (Choose one or
more of (f) through (n) as  applicable.  If the Employer  elects to allocate its
nonelective contribution under Plan Section 3.04 using permitted disparity, (i),
(j), (k) and (l) do not apply):

[n/a](f) Fringe benefits.  The Plan excludes all reimbursements or other expense
     allowances,  fringe benefits (cash and noncash), moving expenses,  deferred
     compensation and welfare benefits.

[n/a](g) Elective  Contributions.  The Plan  excludes a  Participant's  Elective
     Contributions. See Plan Section 1.07(D).

[n/a] (h) Exclusion. The Plan excludes Compensation in excess of: .

[n/a] (i) Bonuses. The Plan excludes bonuses.

[n/a] (j) Overtime. The Plan excludes overtime.

[n/a] (k) Commissions. The Plan excludes commissions.

[n/a](l) Nonelective  contributions.  The following  modifications  apply to the
     definition of Compensation for nonelective contributions: .

[n/a](m)  Deferral  contributions.  The  following  modifications  apply  to the
     definition of Compensation for deferral contributions: .

[n/a](n)  Matching  contributions.  The  following  modifications  apply  to the
     definition of Compensation for matching contributions: .

5. PLAN  YEAR/LIMITATION  YEAR (1.24).  Plan Year and  Limitation  Year mean the
12-consecutive month period (except for a short Plan Year) ending every: (Choose
(a) or (b). Choose (c) if applicable)

[n/a] (a) December 31.

[X]  (b) Other: January 31 .

[n/a](c)  Short  Plan  Year:  commencing  on:  and  ending  on:_________.

6. EFFECTIVE DATE (1.10). The Employer's  adoption of the Plan is a: (Choose one
of (a) or (b))

[n/a] (a) New Plan. The Effective Date of the Plan is: .

[X]  (b) Restated  Plan.  The  restated  Effective  Date is:  February 1, 1997 .

         This Plan is an amendment and restatement of an existing retirement
         plan(s) originally established effective as of: February 1, 1995.

<PAGE>

7. HOUR OF SERVICE/ELAPSED TIME METHOD (1.15). The crediting method for Hours of
Service is: (Choose one or more of (a) through (d) as applicable)

[X]  (a) Actual Method. See Plan Section 1.15(B).

[n/a](b)  Equivalency  Method.  The  Equivalency  Method  is:  .  [Note:  Insert
     "daily," "weekly,"  "semi-monthly  payroll periods" or "monthly."] See Plan
     Section 1.15(C).

[n/a](c)  Combination  Method.  In lieu of the Equivalency  Method  specified in
     (b), the Actual Method applies for purposes of: .

[n/a](d)  Elapsed  Time  Method.  In lieu of  crediting  Hours of  Service,  the
     Elapsed Time Method applies for purposes of crediting  Service for: (Choose
     one or more of (1), (2) or (3) as applicable)

     [n/a] (1) Eligibility under Article II.

     [n/a] (2) Vesting under Article V.

     [n/a] (3) Contribution allocations under Article III.

8. PREDECESSOR  EMPLOYER SERVICE (1.30). In addition to the predecessor  service
the Plan must credit by reason of Section 1.30 of the Plan,  the Plan credits as
Service under this Plan, service with the following predecessor employer(s): N/A
..8 p.33

[Note: If the Plan does not credit any additional predecessor service under this
Section 1.30, insert "N/A" in the blank line. The Employer also may elect to
credit predecessor service with specified Participating Employers only. See the
Participation Agreement.] Service with the designated predecessor employer(s)
applies: (Choose one or more of (a) through (d) as applicable)

[n/a](a)  Eligibility.  For eligibility  under Article II. See Plan Section 1.30
     for time of Plan entry.

[n/a] (b) Vesting. For vesting under Article V.

[n/a](c) Contribution  allocation.  For contribution  allocations  under Article
     III.

[n/a] (d) Exceptions. Except for the following Service: .

                                  ARTICLE II
                           ELIGIBILITY REQUIREMENTS

9.       ELIGIBILITY (2.01).9 p.33

Eligibility  conditions.  To become a Participant  in the Plan, an Employee must
satisfy the following eligibility conditions: (Choose one or more of (a) through
(e) as  applicable)  [Note:  If the Employer does not elect (c), the  Employer's
elections under (a) and (b) apply to all types of contributions. The Employer as
to deferral  contributions  may not elect  (b)(2) and may not elect more than 12
months in (b)(4) and (b)(5).]

<PAGE>

[X] (a) Age. Attainment of age 21 (not to exceed age 21).

[X] (b) Service. Service requirement. (Choose one of (1) through (5))

     [X]      (1) One Year of Service.

     [n/a]    (2) Two Years of Service, without an intervening Break in Service.
              See Plan Section 2.03(A).

     [n/a]    (3) One Hour of Service (immediate completion of Service
              requirement). The Employee satisfies the Service requirement on
              his/her Employment Commencement Date.

     [n/a]    (4) months (not exceeding 24).

     [n/a]    (5) An Employee must complete Hours of Service within the time
              period following the Employee's Employment Commencement Date. If
              an Employee does not complete the stated Hours of Service during
              the specified time period (if any), the Employee is subject to the
              One Year of Service requirement. [Note: The number of hours may
              not exceed 1,000 and the time period may not exceed 24 months. If
              the Plan does not require the Employee to satisfy the Hours of
              Service requirement within a specified time period, insert "N/A"
              in the second blank line.]

[n/a](c)  Alternative  401(k)/401(m)  eligibility  conditions.  In  lieu  of the
     elections  in (a) and (b), the Employer  elects the  following  eligibility
     conditions for the following types of contributions:  (Choose (1) or (2) or
     both  if  the  Employer  wishes  to  impose  less  restrictive  eligibility
     conditions   for   deferral/Employee    contributions   or   for   matching
     contributions)

              (1) [n/a] Deferral/Employee contributions: (Choose one of a.
              through d. Choose e. if applicable)

              a. [n/a] One Year of Service
              b. [n/a] One Hour of Service (immediate completion of Service
              requirement)
              c. [n/a] months (not exceeding 12) d. [n/a] An Employee must
                           complete Hours of Service within the time period
                           following an Employee's Employment Commencement Date.
                           If an Employee does not complete the stated Hours of
                           Service during the specified time period (if any),
                           the Employee is subject to the One Year of Service
                           requirement. [Note: The number of hours may not
                           exceed 1,000 and the time period may not exceed 12
                           months. If the Plan does not require the Employee to
                           satisfy the Hours of Service requirement within a
                           specified time period, insert "N/A" in the second
                           blank line.]

              e. [n/a] Age (not exceeding age 21)

              (2) [n/a] Matching contributions: (Choose one of f. through i.
              Choose j. if applicable)

<PAGE>

              f. [n/a] One Year of Service
              g. [n/a] One Hour of Service (immediate completion of Service
              requirement)
              h. [n/a] months (not exceeding 24)
              i. [n/a] An Employee must complete Hours of Service within the
                       time period following an Employee's Employment
                       Commencement Date. If an Employee does not complete the
                       stated Hours of Service during the specified time period
                       (if any), the Employee is subject to the One Year of
                       Service requirement. [Note: The number of hours may not
                       exceed 1,000 and the time period may not exceed 24
                       months. If the Plan does not require the Employee to
                       satisfy the Hours of Service requirement within a
                       specified time period, insert "N/A" in the second
                       blank line.]
              j. [n/a] Age (not exceeding age 21)

[n/a](d) Service  requirements:  .

          [Note: Any  Service  requirement  the  Employer  elects in (d) must be
               available   under  other  Adoption   Agreement   elections  or  a
               combination thereof.]

[n/a](e) Dual eligibility. The eligibility conditions of this Section 2.01 apply
     solely to an Employee  employed by the Employer after . If the Employee was
     employed by the Employer by the specified  date, the Employee will become a
     Participant  on the latest of: (i) the  Effective  Date;  (ii) the restated
     Effective Date; (iii) the Employee's Employment  Commencement Date; or (iv)
     on the date the Employee attains age (not exceeding age 21).

Plan Entry Date.  "Plan Entry Date" means the Effective Date and: (Choose one of
(f) through (j). Choose (k) if applicable) [Note: If the Employer does not elect
(k), the  elections  under (f) through (j) apply to all types of  contributions.
The Employer must elect at least one Entry Date per Plan Year.]

[n/a](f) Semi-annual  Entry Dates.  The first day of the Plan Year and the first
     day of the seventh month of the Plan Year.

[n/a] (g) The first day of the Plan Year.

[n/a] (h) Employment Commencement Date (immediate eligibility).

[X]  (i) The first day of each: Plan Year quarter (e.g., "Plan Year quarter").

[n/a] (j) The following Plan Entry Dates: .

[n/a](k)  Alternative  401(k)/401(m)  Plan Entry  Date(s).  For the  alternative
     401(k)/401(m)  eligibility  conditions  under (c),  Plan Entry Date  means:
     (Choose (1) or (2) or both as applicable)

 (1)[n/a] Deferral/Employee contributions 2)[n/a] Matching contributions
          (Choose one of a. through d.)           (Choose one of e. through h.)

 a. [n/a] Semi-annual Entry Dates         e. [n/a]Semi-annual Entry Dates
 b. [n/a] The first day of the Plan Year  f. [n/a]The first day of the Plan Year
 c. [n/a] Employment Commencement Date    g. [n/a]Employment Commencement Date
          (immediate eligibility)                 (immediate eligibility)
 d. [n/a] The first day of each:          h. [n/a]The first day of each:

Time of  participation.  An Employee will become a Participant,  unless excluded
under Section  1.11, on the Plan Entry Date (if employed on that date):  (Choose
one of (l), (m) or (n). Choose (o) if  applicable):  [Note: If the Employer does
not elect  (o),  the  election  under  (l),  (m) or (n)  applies to all types of
contributions.]

[X]  (l) Immediately following or coincident with

[n/a] (m) Immediately preceding or coincident with

[n/a] (n) Nearest

[n/a](o) Alternative  401(k)/401(m)  election(s):  (Choose (1) or (2) or both as
     applicable)
<PAGE>

  (1)  [n/a]   Deferral contributions  (2)  [n/a]   Matching contributions
                                                    (Choose one of b., c. or d.)

        a. [n/a] Immediately following   b. [n/a]   Immediately following
                 or coincident with               or coincident with
                                         c. [n/a]   Immediately preceding
                                                    or coincident
                                                    with
                                         d. [n/a]   Nearest

the date the Employee completes the eligibility conditions described in this
Section 2.01. [Note: Unless otherwise excluded under Section 1.11, an Employee
must become a Participant by the earlier of: (1) the first day of the Plan Year
beginning after the date the Employee completes the age and service requirements
of Code ss.410(a); or (2) 6 months after the date the Employee completes those
requirements.]

10. YEAR OF SERVICE - ELIGIBILITY  (2.02).  (Choose (a) and (b) as  applicable):
[Note: If the Employer does not elect a Year of Service  condition or elects the
Elapsed Time Method, the Employer should not complete (a) or (b).]

[X]  (a) Year of Service.  An Employee  must  complete  1000  Hour(s) of Service
     during an  eligibility  computation  period to receive credit for a Year of
     Service under Article II: [Note:  The number may not exceed 1,000.  If left
     blank, the requirement is 1,000.]

[X]  (b)  Eligibility   computation   period.   After  the  initial  eligibility
     computation  period  described in Plan Section 2.02,  the Plan measures the
     eligibility computation period as: (Choose one of (1) or (2))

     [X]  (1) The Plan Year  beginning  with the Plan Year  which  includes  the
          first anniversary of the Employee's Employment Commencement Date.

     [n/a](2) The  12-consecutive  month period  beginning with each anniversary
          of the Employee's Employment Commencement Date.

11.  PARTICIPATION  - BREAK  IN  SERVICE  (2.03).  The one  year  hold-out  rule
described in Plan Section 2.03(B): (Choose one of (a), (b) or (c))

[X]  (a) Not applicable. Does not apply to the Plan.

[n/a] (b) Applicable. Applies to the Plan and to all Participants.

[n/a](c) Limited  application.  Applies to the Plan,  but only to a  Participant
     who has incurred a Separation from Service.

12. ELECTION NOT TO PARTICIPATE (2.06). The Plan: (Choose one of (a) or (b))

[X]  (a) Election not permitted.  Does not permit an eligible  Employee to elect
     not to participate.

[n/a](b) Irrevocable  election.  Permits an Employee to elect not to participate
     if  the  Employee  makes  a  one-time  irrevocable  election  prior  to the
     Employee's Plan Entry Date.

                                   ARTICLE III
         EMPLOYER CONTRIBUTIONS, DEFERRAL CONTRIBUTIONS AND FORFEITURES

13.  AMOUNT  AND  TYPE  (3.01).   The  amount  and  type(s)  of  the  Employer's
contribution to the Trust for a Plan Year or other specified  period will equal:
(Choose one or more of (a) through (f) as applicable)13 p.55
<PAGE>

[X]  (a) Deferral  contributions (401(k) arrangement).  The dollar or percentage
     amount  by  which  each   Participant   has   elected  to  reduce   his/her
     Compensation,  as provided in the Participant's  salary reduction agreement
     and in accordance with Section 3.02.

[X]  (b) Matching  contributions (other than safe harbor matching  contributions
     under Section 3.01(d)).  The matching contributions made in accordance with
     Section 3.03.

[X]  (c) Nonelective  contributions (profit sharing).  The following nonelective
     contribution (Choose (1) or (2) or both as applicable): [Note: The Employer
     may designate as a qualified nonelective  contribution,  all or any portion
     of its nonelective contribution. See Plan Section 3.04(F).]

     [X]  (1)  Discretionary.  An amount the Employer in its sole discretion may
          determine.

     [n/a] (2) Fixed. The following amount:

[n/a](d) 401(k)  safe harbor  contributions.  The  following  401(k) safe harbor
     contributions  described in Plan Section 14.02(D):  (Choose one of (1), (2)
     or (3). Choose (4), if applicable)

     [n/a](1) Safe harbor nonelective contribution.  The safe harbor nonelective
          contribution  equals  % of a  Participant's  Compensation  [Note:  the
          amount in the blank must be at least 3%.].

     [n/a](2) Basic safe harbor matching  contribution.  A matching contribution
          equal  to  100%  of  each  Participant's  deferral  contributions  not
          exceeding  3% of the  Participant's  Compensation,  plus  50% of  each
          Participant's deferral contributions in excess of 3% but not in excess
          of  5%  of  the   Participant's   Compensation.   For  this   purpose,
          "Compensation"  means  Compensation  for: . [Note:  The Employer  must
          complete the blank line with the applicable  time period for computing
          the Employer's basic safe harbor match, such as "each payroll period,"
          "each month," "each Plan Year quarter" or "the Plan Year".]

     [n/a](3) Enhanced safe harbor matching  contribution.  (Choose one of a. or
          b.).

               [n/a]  a.  Uniform  percentage.  An  amount  equal  to % of  each
               Participant's  deferral  contributions  not  exceeding  % of  the
               Participant's  Compensation.  For  this  purpose,  "Compensation"
               means Compensation for: . [See the Note in (d)(2).]

               [n/a]  b.  Tiered  formula.  An  amount  equal  to the  specified
               matching   percentage  for  the   corresponding   level  of  each
               Participant's deferral contribution percentage. For this purpose,
               "Compensation"  means  Compensation  for:  .  [See  the  Note  in
               (d)(2).]

               Deferral Contribution Percentage             Matching Percentage

               -------------------------------                  ----------

               -------------------------------                  ----------

               -------------------------------                  ----------

[Note: The matching percentage may not increase as the deferral contribution
percentage increases and the enhanced matching formula otherwise must satisfy
the requirements of Code ss.ss.401(k)(12)(B)(ii) and (iii). If the Employer
wishes to avoid ACP testing on its enhanced safe harbor matching contribution,
the Employer also must limit deferral contributions taken into account (the
"Deferral Contribution Percentage") for the matching contribution to 6% of Plan
Year Compensation.]

     [n/a](4) Another  plan.  The  Employer  will satisfy the 401(k) safe harbor
          contribution in the following plan: .

<PAGE>

[n/a](e) Davis-Bacon  contributions.  The amount(s) specified for the applicable
     Plan  Year  or  other  applicable  period  in  the  Employer's  Davis-Bacon
     contract(s).  The Employer will make a  contribution  only to  Participants
     covered by the contract and only with  respect to  Compensation  paid under
     the contract.  If the  Participant  accrues an  allocation  of  nonelective
     contributions  (including  forfeitures)  under the Plan in  addition to the
     Davis-Bacon  contribution,  the Plan Administrator will: (Choose one of (1)
     or (2))

     [n/a](1) Not reduce the Participant's  nonelective  contribution allocation
          by the Davis-Bacon contribution.

     [n/a](2) Reduce the Participant's  nonelective  contribution  allocation by
          the Davis-Bacon contribution.

[n/a](f) Frozen  Plan.  This Plan is a frozen Plan  effective:  . For any period
     following the specified date, the Employer will not contribute to the Plan,
     a Participant  may not contribute and an otherwise  eligible  Employee will
     not become a Participant in the Plan.

14. DEFERRAL  CONTRIBUTIONS (3.02). The following limitations and terms apply to
an Employee's deferral  contributions:  (If the Employer elects Section 3.01(a),
the Employer must elect (a). Choose (b) or (c) as applicable)14 p.66

[X]  (a) Limitation on amount. An Employee's deferral  contributions are subject
     to the  following  limitation(s)  in addition to those imposed by the Code:
     (Choose (1), (2) or (3) as applicable)

     [X]  (1) Maximum deferral amount: 75% of Compensation .

     [n/a] (2) Minimum deferral amount: . ------------

     [n/a] (3) No limitations.

For the Plan Year in which an Employee  first  becomes a  Participant,  the Plan
Administrator will apply any percentage limitation the Employer elects in (1) or
(2) to the  Employee's  Compensation:  (Choose  one  of  (4) or (5)  unless  the
Employer elects (3))

     [n/a](4)  Only for the  portion  of the Plan  Year in  which  the  Employee
          actually is a Participant.

     [X]  (5) For the entire Plan Year.

[n/a](b)  Negative  deferral  election.  The Employer  will  withhold % from the
     Participant's   Compensation   unless  the  Participant   elects  a  lesser
     percentage  (including zero) under his/her salary reduction agreement.  See
     Plan Section 14.02(C).  The negative election will apply to: (Choose one of
     (1) or (2))

     [n/a](1) All  Participants  who have not  deferred  at least the  automatic
          deferral amount as of: .

     [n/a](2)  Each  Employee  whose  Plan  Entry  Date is on or  following  the
          negative election effective date.

[X]  (c) Cash or  deferred  contributions.  For each  Plan  Year for  which  the
     Employer  makes a  designated  cash or  deferred  contribution  under  Plan
     Section  14.02(B),  a Participant may elect to receive directly in cash not
     more than the following  portion (or, if less,  the 402(g)  limitation)  of
     his/her proportionate share of that cash or deferred contribution:  (Choose
     one of (1) or (2))

     [X]  (1) All or any portion.       [n/a] (2) %. --------

Modification/revocation of salary reduction agreement. A Participant
prospectively may modify or revoke a salary reduction agreement, or may file a
new salary reduction agreement following a prior revocation, at least once per
Plan Year or during any election period specified by the basic plan document or
required by the Internal Revenue Service. The Plan Administrator also may
provide for more frequent elections in the Plan's salary reduction agreement
form.

15. MATCHING  CONTRIBUTIONS  (INCLUDING  ADDITIONAL SAFE HARBOR MATCH UNDER PLAN
SECTION  14.02(D)(3))  (3.03).  The Employer  matching  contribution is: (If the
Employer elects Section 3.01(b), the Employer must elect one or more of (a), (b)
or (c) as applicable. Choose (d) if applicable)15 p.77

<PAGE>

[n/a](a) Fixed  formula.  An amount  equal to % of each  Participant's  deferral
     contributions.

[X]  (b)  Discretionary  formula.  An amount (or  additional  amount) equal to a
     matching  percentage  the Employer from time to time may deem  advisable of
     the  Participant's  deferral  contributions.  The  Employer,  in  its  sole
     discretion, may designate as a qualified matching contribution,  all or any
     portion of its  discretionary  matching  contribution.  The  portion of the
     Employer's   discretionary  matching  contribution  for  a  Plan  Year  not
     designated  as a  qualified  matching  contribution  is a regular  matching
     contribution.

[n/a](c) Multiple  level formula.  An amount equal to the following  percentages
     for each level of the  Participant's  deferral  contributions.  [Note:  The
     matching percentage only will apply to deferral  contributions in excess of
     the previous  level and not in excess of the stated  deferral  contribution
     percentage.]

               Deferral Contribution Percentage             Matching Percentage

               -------------------------------                  ----------

               -------------------------------                  ----------

               -------------------------------                  ----------

[n/a](d) Related Employers.  If two or more Related Employers contribute to this
     Plan,  the Plan  Administrator  will allocate  matching  contributions  and
     matching  contribution   forfeitures  only  to  the  Participants  directly
     employed by the contributing  Employer.  The matching  contribution formula
     for the other  Related  Employer(s)  is: . [Note:  If the Employer does not
     elect (d), the Plan Administrator will allocate all matching  contributions
     and  matching  forfeitures  without  regard to which  contributing  Related
     Employer directly employs the Participant.]

Time period for matching contributions. The Employer will determine its matching
contribution  based on deferral  contributions  made during each: (Choose one of
(e) through (h))

[X]  (e) Plan Year.

[n/a] (f) Plan Year quarter.

[n/a] (g) Payroll period.

[n/a](h)  Alternative  time period:  . [Note:  Any  alternative  time period the
     Employer  elects in (h) must be the same for all  Participants  and may not
     exceed the Plan Year.]

Deferral  contributions  taken into  account.  In  determining  a  Participant's
deferral  contributions taken into account for the  above-specified  time period
under the  matching  contribution  formula,  the  following  limitations  apply:
(Choose one of (i), (j) or (k))

[n/a](i) All  deferral  contributions.  The Plan  Administrator  will  take into
     account all deferral contributions.

[n/a](j) Specific  limitation.  The Plan  Administrator  will disregard deferral
     contributions  exceeding % of the  Participant's  Compensation.  [Note:  To
     avoid the ACP test in a safe harbor  401(k) plan,  the Employer  must limit
     deferrals  and Employee  contributions  which are subject to match to 6% of
     Plan Year Compensation.]

[X]  (k)  Discretionary.  The Plan  Administrator  will  take into  account  the
     deferral contributions as a percentage of the Participant's Compensation as
     the Employer determines.

Other matching contribution  requirements.  The matching contribution formula is
subject to the following additional requirements:  (Choose (l) or (m) or both if
applicable)

<PAGE>

[X]  (l) Matching  contribution limits. A Participant's  matching  contributions
     may not exceed: (Choose one of (1) or (2))

     [X]  (1) an amount to be determined by the Plan  Administrator . [Note: The
          Employer may elect (1) to place an overall dollar or percentage  limit
          on matching contributions.]

     [n/a](2) 4% of a  Participant's  Compensation  for the Plan Year  under the
          discretionary matching contribution formula.  [Note: The Employer must
          elect (2) if it elects a discretionary  matching formula with the safe
          harbor 401(k) contribution formula and wishes to avoid the ACP test.]

[n/a](m) Qualified matching contributions.  The Plan Administrator will allocate
     as qualified matching  contributions,  the matching contributions specified
     in Adoption  Agreement  Section: . The Plan Administrator will allocate all
     other matching contributions as regular matching  contributions.  [Note: If
     the  Employer  elects two  matching  formulas,  the Employer may use (m) to
     designate one of the formulas as a qualified matching contribution.]

16. CONTRIBUTION ALLOCATION (3.04).16 p.88

Employer  nonelective   contributions   (3.04(A)).The  Plan  Administrator  will
allocate  the   Employer's   nonelective   contribution   under  the   following
contribution  allocation formula:  (Choose one of (a), (b) or (c). Choose (d) if
applicable)

[X]  (a) Nonintegrated (pro rata) allocation formula.

[n/a](b) Permitted  disparity.  The following  permitted  disparity  formula and
     definitions apply to the Plan: (Choose one of (1) or (2). Also choose (3))

     [n/a] (1) Two-tiered allocation formula.

     [n/a] (2) Four-tiered allocation formula.

     [n/a](3) For  purposes  of Section  3.04(b),  "Excess  Compensation"  means
          Compensation in excess of: (Choose one of a. or b.)

         [n/a]    a.          % of the taxable wage base in effect on the first
                      --------
                      day of the Plan Year, rounded to the next highest
                      $         (not exceeding the taxable wage base).
                       --------

         [n/a]    b. The following integration level: .
                     [Note: The integration level cannot exceed the taxable wage
                     base in effect for the Plan Year for which this Adoption
                     Agreement first is effective.]

[n/a](c) Uniform points allocation formula.  Under the uniform points allocation
     formula,  a  Participant  receives:  (Choose  (1) or  both  (1)  and (2) as
     applicable)

     [n/a](1)   point(s) for each Year of Service.  Year of Service means:     .
             ---                                                          -----

     [n/a](2) One point for each $      [not to exceed  $200]  increment of Plan
                                  ------
              Year Compensation.
<PAGE>

[n/a](d)  Incorporation of contribution  formula.  The Plan  Administrator  will
     allocate  the  Employer's   nonelective   contribution   under   Section(s)
     3.01(c)(2),  (d)(1)  or (e) in  accordance  with the  contribution  formula
     adopted by the Employer under that Section.

Qualified  nonelective  contributions.  (3.04(F)).  The Plan  Administrator will
allocate the Employer's qualified  nonelective  contributions to: (Choose one of
(e) or (f))

[X]  (e) Nonhighly compensated Employees only.

[n/a] (f) All Participants.

Related Employers. (Choose (g) if applicable)

[n/a](g) Allocate only to directly employed Participants. If two or more Related
     Employers  adopt  this  Plan,  the Plan  Administrator  will  allocate  all
     nonelective  contributions  and  forfeitures  attributable  to  nonelective
     contributions   only  to  the   Participants   directly   employed  by  the
     contributing  Employer.  If a Participant  receives  Compensation from more
     than one contributing  Employer,  the Plan Administrator will determine the
     allocations   under  this  Section  3.04  by  prorating  the  Participant's
     Compensation between or among the participating  Related Employers.  [Note:
     If the  Employer  does  not  elect  3.04(g),  the Plan  Administrator  will
     allocate all nonelective  contributions  and forfeitures  without regard to
     which contributing  Related Employer directly employs the Participant.  The
     Employer may not elect 3.04(g) under a safe harbor 401(k) Plan.]

17.  FORFEITURE  ALLOCATION  (3.05).  The Plan  Administrator  will  allocate  a
Participant  forfeiture:  (Choose one or more of (a), (b) or (c) as  applicable)
[Note:  Even if the Employer  elects  immediate  vesting,  the  Employer  should
complete Section 3.05. See Plan Section 9.11.]17 p.99

[X]  (a)  Matching  contribution  forfeitures.  To the  extent  attributable  to
     matching contributions: (Choose one of (1) through (4))

     [n/a] (1) As a discretionary matching contribution.

     [X]  (2) To reduce matching contributions.

     [n/a] (3) As a discretionary nonelective contribution.

     [n/a] (4) To reduce nonelective contributions.

[X]  (b) Nonelective  contribution  forfeitures.  To the extent  attributable to
     Employer nonelective contributions: (Choose one of (1) through (4))

     [n/a] (1) As a discretionary nonelective contribution.

     [X]  (2) To reduce nonelective contributions.

     [n/a] (3) As a discretionary matching contribution.

     [n/a] (4) To reduce matching contributions.

[n/a](c) Reduce administrative expenses. First to reduce the Plan's ordinary and
     necessary  administrative  expenses for the Plan Year and then allocate any
     remaining forfeitures in the manner described in Sections 3.05(a) or (b) as
     applicable.

Timing  of  forfeiture   allocation.   The  Plan   Administrator  will  allocate
forfeitures under Section 3.05 in the Plan Year: (Choose one of (d) or (e))

[n/a] (d) In which the forfeiture occurs.

[X]  (e) Immediately following the Plan Year in which the forfeiture occurs.

<PAGE>

18. ALLOCATION CONDITIONS (3.06)

Allocation  conditions.  The Plan does not apply any  allocation  conditions  to
deferral contributions, 401(k) safe harbor contributions (under Section 3.01(d))
or to Davis-Bacon  contributions  (except as the Davis-Bacon contract provides).
To receive an allocation of matching contributions,  nonelective  contributions,
qualified nonelective  contributions or Participant  forfeitures,  a Participant
must satisfy the following allocation  condition(s):  (Choose one or more of (a)
through (i) as applicable)

[X]  (a) Hours of Service condition.  The Participant must complete at least the
     specified  number of Hours of Service (not exceeding 1,000) during the Plan
     Year: 1000 .

[X]  (b) Employment condition.  The Participant must be employed by the Employer
     on the last day of the Plan Year (designate time period).

[n/a] (c) No allocation conditions.

[n/a](d)  Elapsed  Time  Method.  The  Participant  must  complete  at least the
     specified  number  (not  exceeding  182) of  consecutive  calendar  days of
     employment with the Employer during the Plan Year: .

[n/a](e)  Termination  of  Service/501  Hours  of  Service  coverage  rule.  The
     Participant  either must be employed by the Employer on the last day of the
     Plan Year or must  complete  at least 501 Hours of Service  during the Plan
     Year.  If the Plan uses the Elapsed Time Method of crediting  Service,  the
     Participant  must  complete  at  least  91  consecutive  calendar  days  of
     employment with the Employer during the Plan Year.

[n/a](f)  Special  allocation   conditions  for  matching   contributions.   The
     Participant  must complete at least Hours of Service  during the (designate
     time period) for the matching contributions made for that time period.

[n/a](g) Death,  Disability or Normal Retirement Age. Any condition specified in
     Section 3.06 applies if the  Participant  incurs a Separation  from Service
     during the Plan Year on account of:___ (e.g.,  death,  Disability or Normal
     Retirement Age)

[X]  (h)  Suspension of allocation  conditions  for coverage.  The suspension of
     allocation conditions of Plan Section 3.06(E) applies to the Plan.

[X]  (i) Limited allocation  conditions.  The Plan does not impose an allocation
     condition for the following types of contributions:  matching contributions
     . [Note: Any election to limit the Plan's allocation  conditions to certain
     contributions  must  be  the  same  for  all  Participants,  be  definitely
     determinable   and  not   discriminate  in  favor  of  Highly   Compensated
     Employees.]

                                   ARTICLE IV
                            PARTICIPANT CONTRIBUTIONS

19. EMPLOYEE (AFTER TAX) CONTRIBUTIONS  (4.02). The following elections apply to
Employee contributions:  (Choose one of (a) or (b). Choose (c) if applicable) 19
p.1010

[X]  (a) Not permitted. The Plan does not permit Employee contributions.

[n/a](b)  Permitted.  The Plan  permits  Employee  contributions  subject to the
     following  limitations:  . [Note: Any designated  limitation(s) must be the
     same for all Participants,  be definitely determinable and not discriminate
     in favor of Highly Compensated Employees.]

[n/a](c) Matching  contribution.  For each Plan Year,  the  Employer's  matching
     contribution made with respect to Employee contributions is: .

<PAGE>

                                    ARTICLE V
                              VESTING REQUIREMENTS

20. NORMAL/EARLY  RETIREMENT AGE (5.01). A Participant attains Normal Retirement
Age (or Early  Retirement  Age, if  applicable)  under the Plan on the following
date: (Choose one of (a) or (b). Choose (c) if applicable)20 p.1111

[X]  (a) Specific age. The date the Participant  attains age 65___.  [Note:  The
     age may not exceed age 65.]

[n/a](b) Age/participation.  The later of the date the Participant attains years
     of age or the  anniversary  of the  first day of the Plan Year in which the
     Participant  commenced  participation  in the Plan.  [Note: The age may not
     exceed age 65 and the anniversary may not exceed the 5th.]

[n/a](c) Early  Retirement  Age.  Early  Retirement Age is the later of: (i) the
     date a  Participant  attains  age or (ii)  the date a  Participant  reaches
     his/her  anniversary  of the  first  day of the  Plan  Year  in  which  the
     Participant commenced participation in the Plan.

21.  PARTICIPANT'S  DEATH OR DISABILITY (5.02). The 100% vesting rule under Plan
Section 5.02 does not apply to: (Choose (a) or (b) or both as applicable)

[n/a] (a) Death.

[n/a] (b) Disability.

22. VESTING  SCHEDULE  (5.03).  A Participant  has a 100% Vested interest at all
times in his/her deferral  contributions,  qualified nonelective  contributions,
qualified  matching   contributions,   401(k)  safe  harbor   contributions  and
Davis-Bacon  contributions  (unless  otherwise  indicated in (f)). The following
vesting  schedule  applies to Employer  regular  matching  contributions  and to
Employer  nonelective  contributions:  (Choose  (a) or choose one or more of (b)
through (f) as applicable)22 p.1111

[n/a](a) Immediate vesting.  100% Vested at all times.  [Note: The Employer must
     elect (a) if the Service  condition  under Section 2.01 exceeds One Year of
     Service or more than twelve months.]

[X]  (b) Top-heavy  vesting  schedules.  [Note:  The Employer must choose one of
     (b)(1), (2) or (3) if it does not elect (a).]

     [n/a](1) 6-year graded as specified      [X](3) Modified top-heavy schedule
              in the Plan.
     [n/a](2) 3-year cliff as specified in
              the Plan.

                                             Years of                   Vested
                                              Service                Percentage

                                              Less than 1 ...........       0%
                                                        1 ...........      25%
                                                        2 ...........      50%
                                                        3 ...........      75%
                                                        4 ...........     100%
                                                        5 ...........     100%
                                                        6 or more ...     100%

<PAGE>

[n/a](c) Non-top-heavy  vesting schedules.  [Note: The Employer may elect one of
     (c)(1), (2) or (3) in addition to (b).]

[n/a](1)7-year graded as specified. [n/a] (3)  Modified non-top-heavy schedule
        in the Plan
[n/a](2)5-year cliff as specified
        in the Plan.

                                             Years of                   Vested
                                              Service                Percentage

                                              Less than 1 ...........     ___%
                                                        1 ...........     ___%
                                                        2 ...........     ___%
                                                        3 ...........     ___%
                                                        4 ...........     ___%
                                                        5 ...........     ___%
                                                        6 ...........     ___%
                                                        7 or more ...     ___%

If the Employer does not elect (c), the vesting schedule elected in (b) applies
to all Plan Years. [Note: The modified top-heavy schedule of (b)(3) must satisfy
Code ss.416. If the Employer elects (c)(3), the modified non-top-heavy schedule
must satisfy Code ss.411(a)(2).]

[n/a](d) Separate vesting election for regular matching  contributions.  In lieu
     of the election under (a), (b) or (c), the following vesting
         schedule applies to a Participant's regular matching contributions:
         (Choose one of (1) or (2))

     [n/a] (1) 100% Vested at all times.

     [n/a](2) Regular matching vesting  schedule:  . [Note: The vesting schedule
          completed under (d)(2) must comply with Code ss.411(a)(4).]

[n/a](e) Application of top-heavy schedule.  The non-top-heavy  schedule elected
     under (c)  applies in all Plan  Years in which the Plan is not a  top-heavy
     plan.  [Note:  If the Employer  does not elect (e), the  top-heavy  vesting
     schedule  will apply for the first Plan Year in which the Plan is top-heavy
     and then in all subsequent Plan Years.]

[n/a](f) Special vesting  provisions:  . [Note:  Any special  vesting  provision
     must  satisfy  Code  ss.411(a).  Any  special  vesting  provision  must  be
     definitely  determinable,  not discriminate in favor of Highly  Compensated
     Employees and not violate Code ss.401(a)(4).]

23. YEAR OF SERVICE - VESTING (5.06). (Choose (a) and (b)): [Note: If the
Employer elects the Elapsed Time Method or elects immediate vesting, the
Employer should not complete (a) or (b).]

[X]  (a) Year of  Service.  An  Employee  must  complete  at least 1000 Hours of
     Service during a vesting computation period to receive credit for a Year of
     Service  under Article V. [Note:  The number may not exceed 1,000.  If left
     blank, the requirement is 1,000.]

[X]  (b) Vesting  computation period. The Plan measures a Year of Service on the
     basis of the following  12-consecutive month period:  (Choose one of (1) or
     (2))

     [X] (1) Plan Year.

     [n/a] (2) Employment year (anniversary of Employment Commencement Date).

24. EXCLUDED YEARS OF SERVICE - VESTING (5.08). The Plan excludes the following
Years of Service for purposes of vesting: (Choose (a) or choose one or more of
(b) through (f) as applicable)24 p.1212

<PAGE>

[X]  (a) None. None other than as specified in Plan Section 5.08(a).

[n/a](b) Age 18. Any Year of Service  before  the Year of Service  during  which
     the Participant attained the age of 18.

[n/a](c) Prior to Plan establishment.  Any Year of Service during the period the
     Employer did not maintain this Plan or a predecessor plan.

[n/a](d) Parity Break in Service.  Any Year of Service  excluded  under the rule
     of parity. See Plan Section 5.10.

[n/a](e) Prior Plan terms.  Any Year of Service  disregarded  under the terms of
     the Plan as in effect prior to this restated Plan.

[n/a](f)  Additional  exclusions.  Any Year of  Service  before:  .  [Note:  Any
     exclusion  specified  under (f) must  comply  with Code  ss.411(a)(4).  Any
     exclusion must be definitely  determinable,  not  discriminate  in favor of
     Highly  Compensated  Employees  and not violate Code  ss.401(a)(4).  If the
     Employer elects immediate vesting, the Employer should not complete Section
     5.08.]

                                   ARTICLE VI
                         DISTRIBUTION OF ACCOUNT BALANCE

25. TIME OF PAYMENT OF ACCOUNT BALANCE (6.01). The following time of
distribution elections apply to the Plan:25 p.1313

Separation from Service/Vested Account Balance not exceeding $5,000. Subject to
the limitations of Plan Section 6.01(A)(1), the Trustee will distribute in a
lump sum (regardless of the Employer's election under Section 6.04) a separated
Participant's Vested Account Balance not exceeding $5,000: (Choose one of (a)
through (d))

[X]  (a)  Immediate.  As  soon as  administratively  practicable  following  the
     Participant's Separation from Service.

[n/a](b) Designated  Plan Year. As soon as  administratively  practicable in the
     Plan Year beginning after the Participant's Separation from Service.

[n/a](c) Designated Plan Year quarter. As soon as  administratively  practicable
     in the Plan Year quarter beginning after the Participant's  Separation from
     Service.

[n/a](d) Designated  distribution.  As soon as  administratively  practicable in
     the:  following  the  Participant's  Separation  from Service.  [Note:  The
     designated  distribution  time  must be the same for all  Participants,  be
     definitely  determinable,  not discriminate in favor of Highly  Compensated
     Employees and not violate Code ss.401(a)(4).]

Separation from Service/Vested Account Balance exceeding $5,000. A separated
Participant whose Vested Account Balance exceeds $5,000 may elect to commence
distribution of his/her Vested Account Balance no earlier than: (Choose one of
(e) through (i). Choose (j) if applicable)

[X]  (e)  Immediate.  As  soon as  administratively  practicable  following  the
     Participant's Separation from Service.

[n/a](f) Designated  Plan Year. As soon as  administratively  practicable in the
     Plan Year beginning after the Participant's Separation from Service.

[n/a](g) Designated Plan Year quarter. As soon as  administratively  practicable
     in the Plan  Year  quarter  following  the Plan Year  quarter  in which the
     Participant elects to receive a distribution.

[n/a](h) Normal  Retirement Age. As soon as  administratively  practicable after
     the  close  of the  Plan  Year in  which  the  Participant  attains  Normal
     Retirement Age and within the time required under Plan Section 6.01(A)(2).

[n/a](i) Designated  distribution.  As soon as  administratively  practicable in
     the:  following  the  Participant's  Separation  from Service.  [Note:  The
     designated  distribution  time  must be the same for all  Participants,  be
     definitely  determinable,  not discriminate in favor of Highly  Compensated
     Employees and not violate Code ss.401(a)(4).]

[n/a](j) Limitation on Participant's right to delay distribution.  A Participant
     may not elect to delay  commencement  of  distribution  of  his/her  Vested
     Account  Balance  beyond  the  later  of  attainment  of age  62 or  Normal
     Retirement Age. [Note: If the Employer does not elect (j), the Plan permits
     a Participant  who has Separated from Service to delay  distribution  until
     his/her required beginning date. See Plan Section 6.01(A)(2).]

<PAGE>

Participant elections prior to Separation from Service. A Participant,  prior to
Separation from Service may elect any of the following  distribution  options in
accordance with Plan Section  6.01(C).  (Choose (k) or choose one or more of (l)
through  (o) as  applicable).  [Note:  If the  Employer  elects  any  in-service
distributions  option,  a  Participant  may  elect  to  receive  one  in-service
distribution  per Plan Year  unless  the  Plan's  in-service  distribution  form
provides for more frequent in-service distributions.]

[n/a](k) None.  A  Participant  does not have any  distribution  option prior to
     Separation  from  Service,  except as may be  provided  under Plan  Section
     6.01(C).

[X]  (l)  Deferral  contributions.  Distribution  of  all  or  any  portion  (as
     permitted by the Plan) of a Participant's  Account Balance  attributable to
     deferral  contributions  if:  (Choose  one or more  of  (1),  (2) or (3) as
     applicable)

     [X]  (1) Hardship (safe harbor hardship rule). The Participant has incurred
          a hardship in accordance with Plan Sections 6.09 and 14.11(A).

     [X]  (2) Age. The Participant has attained age 59 1/2 (Must be at least age
          59 1/2).

     [n/a] (3) Disability. The Participant has incurred a Disability.

[n/a](m)     Qualified     nonelective      contributions/qualified     matching
     contributions/safe harbor contributions. Distribution of all or any portion
     of a Participant's  Account Balance  attributable to qualified  nonelective
     contributions,  to  qualified  matching  contributions,  or to 401(k)  safe
     harbor contributions if: (Choose (1) or (2) or both as applicable)

     [n/a](1) Age.  The  Participant  has  attained age (Must be at least age 59
          1/2).

     [n/a] (2) Disability. The Participant has incurred a Disability.

[n/a](n) Nonelective contributions/regular matching contributions.  Distribution
     of  all  or  any  portion  of  a   Participant's   Vested  Account  Balance
     attributable   to  nonelective   contributions   or  to  regular   matching
     contributions if: (Choose one or more of (1) through (5) as applicable)

     [n/a](1)  Age/Service  conditions.  (Choose one or more of a. through d. as
          applicable):

         [n/a]    a. Age. The Participant has attained age .

         [n/a]    b. Two-year allocations. The Plan Administrator has allocated
                  the contributions to be distributed for a period of not less
                  than Plan Years before the distribution date. [Note: The
                  minimum number of years is 2.]

         [n/a]    c. Five years of participation. The Participant has
                  participated in the Plan for at least Plan Years. [Note: The
                  minimum number of years is 5.]

         [n/a]    d. Vested. The Participant is % Vested in his/her Account
                  Balance. See Plan Section 5.03(A). [Note: If an Employer makes
                  more than one election under Section 6.01(n)(1), a Participant
                  must satisfy all conditions before the Participant is eligible
                  for the distribution.]

     [n/a](2) Hardship.  The  Participant  has incurred a hardship in accordance
          with Plan Section 6.09.

     [n/a](3)  Hardship  (safe  harbor  hardship  rule).   The  Participant  has
          incurred  a  hardship  in  accordance  with  Plan  Sections  6.09  and
          14.11(A).

     [n/a] (4) Disability. The Participant has incurred a Disability.

     [n/a](5) Designated condition.  The Participant has satisfied the following
          condition(s):  . [Note: Any designated  condition(s)  must be the same
          for all Participants,  be definitely determinable and not discriminate
          in favor of Highly Compensated Employees.]

[X]  (o)  Participant  contributions.  Distribution  of all or any  portion of a
     Participant's  Account Balance  attributable  to the following  Participant
     contributions  described in Plan Section  4.01:  (Choose one of (1), (2) or
     (3))
<PAGE>

     [X]  (1) All Participant contributions.

     [n/a] (2) Employee contributions only.

     [n/a] (3) Rollover contributions only.

Participant loan default/offset. See Section 6.08 of the Plan.

26. DISTRIBUTION METHOD (6.03). A separated Participant whose Vested Account
Balance exceeds $5,000 may elect distribution under one of the following
method(s) of distribution described in Plan Section 6.03: (Choose one or more of
(a) through (d) as applicable)26 p.1414

[X]  (a) Lump sum.

[n/a] (b) Installments.

[X]  (c) Installments for required minimum distributions only.

[n/a](d)  Annuity  distribution  option(s):  .  [Note:  Any  optional  method of
     distribution may not be subject to Employer,  Plan Administrator or Trustee
     discretion.]

27.  JOINT AND  SURVIVOR  ANNUITY  REQUIREMENTS  (6.04).  The joint and survivor
annuity  distribution  requirements of Plan Section 6.04:  (Choose one of (a) or
(b))

[X]  (a) Profit sharing plan  exception.  Do not apply to a Participant,  unless
     the Participant is a Participant described in Section 6.04(H) of the Plan.

[n/a] (b) Applicable. Apply to all Participants.

                                   ARTICLE IX
       PLAN ADMINISTRATOR - DUTIES WITH RESPECT TO PARTICIPANTS' ACCOUNTS

28. ALLOCATION OF NET INCOME, GAIN OR LOSS (9.08). For each type of contribution
provided under the Plan, the Plan allocates net income, gain or loss using the
following method: (Choose one or more of (a) through (e) as applicable)

[X]  (a) Deferral contributions/Employee  contributions.  (Choose one or more of
     (1) through (5) as applicable)

     [X]      (1) Daily valuation method. Allocate on each business day of the
              Plan Year during which Plan assets for which there is an
              established market are valued and the Trustee is conducting
              business.

     [n/a]    (2) Balance forward method. Allocate using the balance forward
              method.

     [n/a]    (3) Weighted average method. Allocate using the weighted average
              method, based on the following weighting period: . See Plan
              Section 14.12.

     [n/a]    (4) Balance forward method with adjustment. Allocate pursuant to
              the balance forward method, except treat as part of the relevant
              Account at the beginning of the valuation period % of the
              contributions made during the following valuation period: .

     [n/a]    (5) Individual account method. Allocate using the individual
              account method. See Plan Section 9.08.

<PAGE>

[X]  (b)  Matching  contributions.  (Choose  one or more of (1)  through  (5) as
     applicable)

     [X]      (1) Daily valuation method. Allocate on each business day of the
              Plan Year during which Plan assets for which there is an
              established market are valued and the Trustee is conducting
              business.

     [n/a]    (2) Balance forward method. Allocate using the balance forward
              method.

     [n/a]    (3) Weighted average method. Allocate using the weighted average
              method, based on the following weighting period: . See Plan
              Section 14.12.

     [n/a]    (4) Balance forward method with adjustment. Allocate pursuant to
              the balance forward method, except treat as part of the relevant
              Account at the beginning of the valuation period % of the
              contributions made during the following valuation period: .

     [n/a]    (5) Individual account method. Allocate using the individual
              account method. See Plan Section 9.08.

[X]  (c) Employer nonelective contributions.  (Choose one or more of (1) through
     (5) as applicable)

     [X]      (1) Daily valuation method. Allocate on each business day of the
              Plan Year during which Plan assets for which there is an
              established market are valued and the Trustee is conducting
              business.

     [n/a]    (2) Balance forward method. Allocate using the balance forward
              method.

     [n/a]    (3) Weighted average method. Allocate using the weighted average
              method, based on the following weighting period: . See Plan
              Section 14.12.

     [n/a]    (4) Balance forward method with adjustment. Allocate pursuant to
              the balance forward method, except treat as part of the relevant
              Account at the beginning of the valuation period % of the
              contributions made during the following valuation period: .

     [n/a]    (5) Individual account method. Allocate using the individual
              account method. See Plan Section 9.08.

[n/a](d) Specified  method.  Allocate pursuant to the following method: . [Note:
     The specified method must be a definite  predetermined formula which is not
     based on Compensation,  which satisfies the nondiscrimination  requirements
     of  Treas.  Reg.  ss.1.401(a)(4)  and  which is  applied  uniformly  to all
     Participants.]

[n/a](e) Interest rate factor.  In  accordance  with Plan Section  9.08(E),  the
     Plan includes  interest at the following  rate on  distributions  made more
     than 90 days after the most recent valuation date: .

                                    ARTICLE X
                    TRUSTEE AND CUSTODIAN, POWERS AND DUTIES

29. INVESTMENT POWERS (10.03).  The following  additional  investment options or
limitations apply under Plan Section 10.03: The Employer Matching  Contributions
will be made in 90% qualifying  Employer  securities and 10% cash . [Note: Enter
"N/A" if not applicable.]

30. VALUATION OF TRUST (10.15). In addition to the last day of the Plan Year,
the Trustee must value the Trust Fund on the following valuation date(s):
(Choose one of (a) through (d))

[X]  (a) Daily valuation dates. Each business day of the Plan Year on which Plan
     assets for which there is an established  market are valued and the Trustee
     is conducting business.

[n/a](b) Last day of a specified period.  The last day of each of the Plan Year.

[n/a] (c) Specified dates: .

[n/a] (d) No additional valuation dates.

<PAGE>

                                 Execution Page

The  Trustee  (and  Custodian,  if  applicable),   by  executing  this  Adoption
Agreement,   accepts  its  position  and  agrees  to  all  of  the  obligations,
responsibilities  and duties imposed upon the Trustee (or  Custodian)  under the
Prototype Plan and Trust.  The Employer  hereby agrees to the provisions of this
Plan and Trust,  and in  witness  of its  agreement,  the  Employer  by its duly
authorized officers, has executed this Adoption Agreement,  and the Trustee (and
Custodian, if applicable) has signified its acceptance, on: .

                         Name of Employer:   Candies, Inc.
                                           -------------------------------------
                           Employer's EIN:   11-2481903
                                           -------------------------------------
                                   Signed: /s/ Deborah Sorell Stehr
                                           -------------------------------------
                                                 Deborah Sorell Stehr, Secretary

                         Name(s) of
                           Trustee:
                                             Deborah Sorell Stehr
                                             Neil Cole
                                             Trust EIN (Optional):

                                   Signed: /s/ Deborah Sorell Stehr
                                           -------------------------------------
                                                     Deborah Sorell Stehr

                                   Signed: /s/ Neil Cole
                                           -------------------------------------
                                                         Neil Cole

             Name of Custodian (Optional):
                                   Signed:
                                           -------------------------------------
                                                        [Name/Title]

31. Plan Number. The 3-digit plan number the Employer assigns to this Plan for
ERISA reporting purposes (Form 5500 Series) is: 002 .

Use of Adoption Agreement. Failure to complete properly the elections in this
Adoption Agreement may result in disqualification of the Employer's Plan. The
Employer only may use this Adoption Agreement in conjunction with the basic plan
document referenced by its document number on Adoption Agreement page one.

Execution for Page Substitution Amendment Only. If this paragraph is completed,
this Execution Page documents an amendment to Adoption Agreement Section(s)
effective , by substitute Adoption Agreement page number(s) . Prototype Plan
Sponsor. The Prototype Plan Sponsor identified on the first page of the basic
plan document will notify all adopting employers of any amendment of this
Prototype Plan or of any abandonment or discontinuance by the Prototype Plan
Sponsor of its maintenance of this Prototype Plan. For inquiries regarding the
adoption of the Prototype Plan, the Prototype Plan Sponsor's intended meaning of
any Plan provisions or the effect of the opinion letter issued to the Prototype
Plan Sponsor, please contact the Prototype Plan Sponsor at the following address
and telephone number: 1809 24th Street, Great Bend, KS 67530, (620) 793-8473 .
Reliance on Sponsor Opinion Letter. The Prototype Plan Sponsor has obtained from
the IRS an opinion letter specifying the form of this Adoption Agreement and the
basic plan document satisfy, as of the date of the opinion letter, Code ss.401.
An adopting Employer may rely on the Prototype Sponsor's IRS opinion letter only
to the extent provided in Announcement 2001-77, 2001-30 I.R.B. The Employer may
not rely on the opinion letter in certain other circumstances or with respect to
certain qualification requirements, which are specified in the opinion letter
and in Announcement 2001-77. In order to have reliance in such circumstances or
with respect to such qualification requirements, the Employer must apply for a
determination letter to Employee Plans Determinations of the Internal Revenue
Service.

<PAGE>

                             PARTICIPATION AGREEMENT

                             [n/a] Check here if not applicable and do not
complete this page.

The undersigned Employer, by executing this Participation  Agreement,  elects to
become a  Participating  Employer in the Plan  identified in Section 1.21 of the
accompanying  Adoption  Agreement,  as if  the  Participating  Employer  were  a
signatory to that Adoption Agreement.  The Participating  Employer accepts,  and
agrees to be bound by, all of the elections  granted under the provisions of the
Prototype  Plan as made by the Signatory  Employer to the Execution  Page of the
Adoption   Agreement,   except  as  otherwise  provided  in  this  Participation
Agreement.

45. EFFECTIVE DATE (1.10).  The Effective Date of the Plan for the Participating
Employer is: February 1, 1997 .

46. NEW  PLAN/RESTATEMENT.  The Participating  Employer's  adoption of this Plan
constitutes: (Choose one of (a) or (b))

[n/a] (a) The adoption of a new plan by the Participating Employer.

[X]  (b) The  adoption  of an  amendment  and  restatement  of a plan  currently
     maintained by the  Participating  Employer,  identified as:  Candies,  Inc.
     401(k) Savings Plan , and having an original effective date of: February 1,
     1995 .

47. PREDECESSOR  EMPLOYER SERVICE (1.30). In addition to the predecessor service
credited  by reason of  Section  1.30 of the Plan,  the Plan  credits as Service
under this Plan, service with this Participating Employer (Choose one or more of
(a)  through  (d) as  applicable):  [Note:  If the  Plan  does  not  credit  any
additional  predecessor  service  under  Section  1.30  for  this  Participating
Employer, do not complete this election.]

[n/a](a)  Eligibility.  For eligibility  under Article II. See Plan Section 1.30
     for time of Plan entry.

[n/a] (b) Vesting. For vesting under Article V.

[n/a](c) Contribution  allocation.  For contribution  allocations  under Article
     III.

[n/a] (d) Exceptions. Except for the following Service: .

Name of Plan:                                   Name of Participating Employer:
Candie's, Inc. 401(k) Savings Plan              Brightstar Footwear, LLC
-----------------------------------             ------------------------

                                    Signed:  /s/ Deborah Sorell Stehr
                                            -------------------------------
                                            Deborah Sorell Stehr, Secretary

                                               [Date]

              Participating Employer's EIN:   45-0463536
                                            -------------------------------

Acceptance by the Signatory Employer to the Execution Page of the Adoption
Agreement and by the Trustee.

Name of Signatory Employer:                 Name(s) of Trustee:
Candie's, Inc.                              Deborah Sorell Stehr and Neil Cole

                                Signed:
                                            Deborah Sorell Stehr

Signed: /s/ Deborah Sorell Stehr             Signed:/s/ Neil Cole
        -------------------------------             ----------------------------
        Deborah Sorell Stehr, Secretary             Neil Cole

[Date]  [Date]  [Note:  Each  Participating  Employer  must  execute a  separate
Participation Agreement. If the Plan does not have a Participating Employer, the
Signatory Employer may delete this page from the Adoption Agreement.]

<PAGE>

                                   APPENDIX A
                    TESTING ELECTIONS/EFFECTIVE DATE ADDENDUM

35. The following testing  elections and special effective dates apply:  (Choose
one or more of (a) through (n) as applicable)

[X]  (a) Highly  Compensated  Employee  (1.14).  For Plan Years  beginning after
     January 31, 2003 , the Employer makes the following  election(s)  regarding
     the definition of Highly Compensated Employee:

     (1)  [X] Top paid group election.

     (2)  [n/a] Calendar year data election  (fiscal year plan).  [X] (b) 401(k)
          current year testing. The Employer will apply the current year testing
          method in  applying  the ADP and ACP tests  effective  for Plan  Years
          beginning after: January 31, 1997 . [Note: For Plan Years beginning on
          or after the  Employer's  execution  of its  "GUST"  restatement,  the
          Employer  must use the same testing  method  within the same Plan Year
          for both the ADP and ACP tests.]

[n/a](c) Compensation. The Compensation definition under Section 1.07 will apply
     for Plan Years beginning after: .

[X]  (d) Election not to  participate.  The  election not to  participate  under
     Section 2.06 is removed effective: February 1, 2003 .

[n/a](e) 401(k) safe harbor.  The 401(k) safe harbor  provisions  under  Section
     3.01(d) are effective:_________.

[n/a](f)  Negative  election.  The negative  election  provision  under  Section
     3.02(b) is effective: .

[n/a](g)  Contribution/allocation  formula.  The specified  contribution(s)  and
     allocation method(s) under Sections 3.01 and 3.04 are effective: .

[X]  (h) Allocation  conditions.  The allocation  conditions of Section 3.06 are
     effective:  3.06(g) removed effective  February 1,2003.

[n/a](i) Benefit payment  elections.  The  distribution  elections of Section(s)
     are effective:_______________.

[n/a](j) Election to continue  pre-SBJPA  required beginning date. A Participant
     may not elect to defer  commencement of the  distribution of his/her Vested
     Account Balance beyond the April 1 following the calendar year in which the
     Participant attains age 70 1/2. See Plan Section 6.02(A).

[n/a](k)  Elimination  of  age  70  1/2  in-service   distributions.   The  Plan
     eliminates  a  Participant's  (other  than a more than 5%  owner)  right to
     receive in-service  distributions on April 1 of the calendar year following
     the  year in  which  the  Participant  attains  age 70 1/2 for  Plan  Years
     beginning after: .

[n/a](l)  Allocation  of earnings.  The  earnings  allocation  provisions  under
     Section 9.08 are effective: .

[n/a](m)  Elimination  of  optional  forms  of  benefit.   The  Employer  elects
     prospectively to eliminate the following optional forms of benefit: (Choose
     one or more of (1), (2) and (3) as applicable)

     [n/a](1) QJSA and QPSA  benefits as described in Plan Sections  6.04,  6.05
          and 6.06 effective:___.

     [n/a](2) Installment  distributions as described in Section 6.03 effective:
          ___.

     [n/a](3) Other  optional  forms of benefit (Any election to eliminate  must
          be consistent with Treas. Reg. ss.1.411(d)-4): .

[X]  (n)  Special  effective  date(s):  Section  1.11(e)  Reclassified  employee
     effective February 1, 2003. Section 2.01(b) Service  requirement  effective
     June 1, 2001. Section 2.02 Years of service effective June 1, 2001. Section
     3.02 Deferral  limitation  effective February 1, 2002. Section 3.03(e) Time
     Period for Matching Contributions  effective February 1, 2003. Section 3.05
     Forfeiture allocation effective February 1, 2003 .

For periods prior to the  above-specified  special effective  date(s),  the Plan
terms in effect prior to its  restatement  under this  Adoption  Agreement  will
control for purposes of the designated provisions.  A special effective date may
not result in the delay of a Plan  provision  beyond the  permissible  effective
date under any applicable law.

<PAGE>

                                   APPENDIX B
                    GUST Remedial Amendment Period Elections

36. The following GUST restatement  elections apply:  (Choose one or more of (a)
through (j) as applicable)36 p.2020

[n/a](a)  Highly  Compensated   Employee  elections.   The  Employer  makes  the
     following  remedial  amendment  period elections with respect to the Highly
     Compensated Employee definition:

(1) 1997:[n/a] Top paid group election.       [n/a] Calendar year election.
         [n/a] Calendar year data election.
(2) 1998:[n/a] Top paid group election.       [n/a] Calendar year data election.
(3) 1999:[n/a] Top paid group election.       [n/a] Calendar year data election.
(4) 2000:[n/a] Top paid group election.       [n/a] Calendar year data election.
(5) 2001:[n/a] Top paid group election.       [n/a] Calendar year data election.
(6) 2002:[n/a] Top paid group election.       [n/a] Calendar year data election.

[X]  (b) 401(k)  testing  methods.  The Employer  makes the  following  remedial
     amendment  period  elections with respect to the ADP test and the ACP test:
     [Note: The Employer may use a different  testing method for the ADP and ACP
     tests  through the end of the Plan Year in which the Employer  executes its
     GUST restated Plan.]

<TABLE>
<CAPTION>
                                    ADP test                                         ACP test
<S>           <C> <C>    <C>             <C>    <C>             <C>     <C>                 <C>  <C>
              (1) 1997:  [n/a]prior year  [X]   current year      1997:  [n/a]prior year    [X]  current year
              (2) 1998:  [n/a]prior year  [X]   current year      1998:  [n/a]prior year    [X]  current year
              (3) 1999:  [n/a]prior year  [X]   current year      1999:  [n/a]prior year    [X]  current year
              (4) 2000:  [n/a]prior year  [X]   current year      2000:  [n/a]prior year    [X]  current year
              (5) 2001:  [n/a]prior year  [X]   current year      2001:  [n/a]prior year    [X]  current year
              (6) 2002:  [n/a]prior year  [X]   current year      2002:  [n/a]prior year    [X]  current year
</TABLE>

[X]  (c) Delayed  application  of SBJPA  required  beginning  date. The Employer
     elects  to  delay  the  effective  date  for the  required  beginning  date
     provision of Plan Section 6.02 until Plan Years beginning  after:  December
     31, 2002 .

[X]  (d) Model Amendment for required minimum distributions. The Employer adopts
     the IRS Model Amendment in Plan Section 6.02(E) effective  February 1, 2001
     . [Note: The date must not be earlier than January 1, 2001.]

         Defined Benefit Limitation

[n/a](e) Code ss.415(e) repeal.  The repeal of the Code ss.415(e)  limitation is
     effective for Limitation  Years  beginning  after . [Note:  If the Employer
     does not make an election under (e), the repeal is effective for Limitation
     Years beginning after December 31, 1999.]

Code ss.415(e) limitation. To the extent necessary to satisfy the limitation
under Plan Section 3.17 for Limitation Years beginning prior to the repeal of
Code ss.415(e), the Employer will reduce: (Choose one of (f) or (g))

[n/a](f) The  Participant's  projected  annual benefit under the defined benefit
     plan.

[n/a](g) The Employer's  contribution or allocation on behalf of the Participant
     to the defined contribution plan and then, if necessary,  the Participant's
     projected annual benefit under the defined benefit plan.

Coordination  with top-heavy minimum  allocation.  The Plan  Administrator  will
apply the  top-heavy  minimum  allocation  provisions  of  Article  XII with the
following modifications: (Choose (h) or choose (i) or (j) or both as applicable)

[n/a] (h) No modifications.

[n/a](i) For Non-Key  Employees  participating  only in this Plan, the top-heavy
     minimum allocation is the minimum  allocation  determined by substituting %
     (not less than 4%) for "3%,"  except:  (Choose one of (1) or (2)) [n/a] (1)
     No  exceptions.  [n/a] (2) Plan Years in which the top-heavy  ratio exceeds
     90%.

[n/a](j) For Non-Key  Employees also  participating in the defined benefit plan,
     the  top-heavy  minimum  is:  (Choose  one of (1) or (2))  [n/a]  (1) 5% of
     Compensation  irrespective  of the  contribution  rate of any Key Employee:
     (Choose one of a. or b.) [n/a] a. No exceptions.  [n/a] b.  Substituting "7
     1/2%" for "5%" if the  top-heavy  ratio does not exceed 90%.  [n/a] (2) 0%.
     [Note: The defined benefit plan must satisfy the top-heavy  minimum benefit
     requirement for these Non-Key Employees.]

Actuarial assumptions for top-heavy calculation. To determine the top-heavy
ratio, the Plan Administrator will use the following interest rate and mortality
assumptions to value accrued benefits under a defined benefit plan: .

<PAGE>

                        CHECKLIST OF EMPLOYER INFORMATION
                      AND EMPLOYER ADMINISTRATIVE ELECTIONS

Commencing with the       2003       Plan Year

     The Prototype Plan permits the Employer to make certain administrative
elections not reflected in the Adoption Agreement. This form lists those
administrative elections and provides a means of recording the Employer's
elections. This checklist is not part of the Plan document.

37.   Employer Information.
       Candies, Inc.
     [Employer Name]
       400 Columbus Ave.
     [Address]
       Valhalla, New York 10595                      (914) 769-8600
     -----------------------------         ------------------------------------
     [City, State and Zip Code]                     [Telephone Number]

38. Form of Business.

(a)  [X] Corporation (b) [n/a] S Corporation (c) [n/a] Limited Liability Company
     (d) [n/a] Sole Proprietorship (e) [n/a] Partnership (f) [n/a]

39. Section 1.07(F) - Nondiscriminatory definition of Compensation. When testing
nondiscrimination  under  the  Plan,  the  Plan  permits  the  Employer  to make
elections regarding the definition of Compensation.  [Note: This election solely
is for purposes of  nondiscrimination  testing. The election does not affect the
Employer's  elections  under Section 1.07 which apply for purposes of allocating
Employer contributions and Participant forfeitures.]

(a)  [X] The Plan will "gross up" Compensation for Elective Contributions.

(b)  [n/a] The Plan will exclude Elective Contributions.

40. Section 4.04 - Rollover contributions.40 p.2121

(a)  [X] The Plan accepts rollover contributions.

(b)  [n/a] The Plan does not accept rollover contributions.

41.  Section  8.06  -  Participant  direction  of  investment/404(c).  The  Plan
authorizes  Participant  direction of investment  with Trustee  consent.  If the
Trustee  permits  Participant  direction  of  investment,  the  Employer and the
Trustee should adopt a policy which  establishes  the applicable  conditions and
limitations,  including  whether  they  intend  the Plan to  comply  with  ERISA
ss.404(c).41 p.2121

(a)  [X] The Plan permits  Participant  direction of investment  and is a 404(c)
     plan.

(b)  [n/a] The Plan does not permit Participant  direction of investment or is a
     non-404(c) plan.

42.  Section  9.04[A]  -  Participant   loans.  The  Plan  authorizes  the  Plan
Administrator  to adopt a written  loan  policy to permit  Participant  loans.42
p.2121

(a)  [X] The Plan permits Participant loans subject to the following conditions:
     (1)  [X]  Minimum  loan  amount:  $  1,000.
     (2)  [X]  Maximum  number of  outstanding  loans:  two .
     (3)  [X]  Reasons  for  which a  Participant  may request a loan:

         a. [X] Any purpose. b. [n/a] Hardship events. c. [n/a] Other:

     (4)  [X] Suspension of loan repayments:
         a. [n/a] Not permitted.
         b. [X] Permitted for non-military leave of absence.
         c. [X] Permitted for military service leave of absence.

     (5) [X] The Participant must be a party in interest.

(b)  [n/a] The Plan does not permit Participant loans.

43. Section 11.01 - Life insurance.  The Plan with Employer approval  authorizes
the Trustee to acquire life insurance.43 p.2121

(a)  [n/a] The Plan will invest in life insurance contracts.

(b)  [X] The Plan will not invest in life insurance contracts.

44. Surety bond company:              . Surety bond amount:  $
                         -------------                        ----------

Distribution of cash or property.

(a)  [n/a] The lump sum distribution will be available as cash only.

(b)  [X] The lump sum distribution will be available as cash and in-kind.

<PAGE>

EGTRRA - EmployerExhibit 10.5

                                 CANDIE'S, INC.
                      NON-QUALIFIED STOCK OPTION AGREEMENT

CANDIE'S,  INC., a Delaware  corporation  (the "Company")  hereby grants to Neil
Cole,  (the  "Optionee"),  as  of  November  29,  1999  (the  "Grant  Date"),  a
non-qualified  stock  option  to  purchase  a total  of  400,000  shares  of the
Company's common stock, par value $.001 per share ("Common Stock"), at the price
of $1.50 per share on the terms and conditions set forth herein.  This option is
intended to be a non-qualified  stock option,  i.e., this option is not intended
to be, nor is it, an  incentive  stock  option as defined in Section  422 of the
Internal Revenue Code of 1986, as amended (the "Code").

1.       Duration.
         --------

(a) This option was granted as of the Grant Date.

(b) This option shall expire at the close of business on November 29, 2004, (the
"Termination  Date"),  but shall be subject to earlier  termination  as provided
herein.

(c) If the  Optionee  ceases to be employed by the Company for any reason  other
than death, disability,  termination for cause, or voluntary termination without
the consent of the Company,  the Option may be exercised within three (3) months
after the date the  Optionee  ceases to be an  employee,  or within ten 10 years
from the granting of the Option,  whichever is earlier, but may not be exercised
thereafter.  In such event,  the Option shall be exercisable  only to the extent
that the right to purchase  shares of Common  Stock has accrued and is in effect
at the date of such cessation of employment.

     In the event the  Optionee's  employment  is  terminated by the Company for
"cause" (as determined by the Board of Directors of the Company or as defined in
any employment  agreement between the Optionee and the Company),  or voluntarily
by the Optionee  without the consent of the  Company,  the  Optionee's  right to
exercise any unexercised portion of this Option shall cease forthwith,  and this
Option shall thereupon terminate.

     In the event of disability  of the Optionee (as  determined by the Board of
Directors  of the Company  and as to the fact and date of which the  Optionee is
notified by the Board in writing),  the Option shall be  exercisable  within one
(1) year after the date of such  disability or, if earlier,  the term originally
prescribed by this Agreement.  In such event, the Option shall be exercisable to
the extent that the right to purchase the shares of Common Stock  hereunder  has
accrued on the date the  Optionee  becomes  disabled and is in effect as of such
determination date.

     In the event of the death of the Optionee  while an employee of the Company
or within  three (3) months  after the  termination  of  employment  (other than
termination  for cause or without the consent of the Company),  the Option shall
be  exercisable  to the extent  exercisable  but not exercised as of the date of
death and in such event, the Option must be exercised, if at all, within one (1)
year  after  the  date of death of the  Optionee  or,  if  earlier,  within  the
originally prescribed term of the Option.

(d) For purposes of this Section 1 the term "Company"  refers to Candie's,  Inc.
and any  subsidiary  at  least a  majority  of whose  capital  stock is owned by
Candie's, Inc.
<PAGE>

2.       Price.
         -----

     The  purchase  price for each share of Common  Stock upon  exercise of this
option is 1.50.

3.       Qualification as Incentive Stock Option.
         ---------------------------------------

     These options are non-qualified stock options, subject to Section 83 of the
Code.

4.       Written Notice of Exercise.
         --------------------------

     This  option,  to the extent it is  exercisable  as  provided in Section 10
herein,  may be exercised  only by delivering  to the Company,  at its principal
office  within  the time  specified  in  Section  1 or such  shorter  time as is
otherwise provided for herein, a written notice of exercise substantially in the
form described in Section 10.

5.       Anti-Dilution Provisions.
         ------------------------

(a) If there is any stock  dividend  or  recapitalization  resulting  in a stock
split, or combination or exchange of shares of Common Stock of the Company,  the
number  of  shares  of  Common   Stock  then  subject  to  this  option  may  be
proportionately and appropriately adjusted by the Board of Directors;  provided,
however,  that any fractional shares resulting from any such adjustment shall be
eliminated.

(b) If there is any other change in the Common  Stock of the Company,  including
capitalization,  reorganization, sale or exchange of assets, exchange of shares,
offering  of  subscription  rights,  or a merger or  consolidation  in which the
Company is the surviving  corporation,  an adjustment,  if any, shall be made in
the shares then subject to this option as the Company's  Board of Directors (the
"Board") in its sole  discretion may deem  appropriate.  Failure of the Board to
provide for an adjustment  pursuant to this subparagraph  prior to the effective
date of any Company action referred to herein shall be conclusive  evidence that
no adjustment  has been approved by the Board in  consequence of such action and
that no such adjustment will be made in consequence of such action.

6.       Investment Representation .
         --------------------------

     The Optionee agrees that until such time as a registration  statement under
the  Securities  Act of 1933,  as amended (the "Act"),  becomes  effective  with
respect to this option and/or the shares of Common Stock underlying this option,
the  Optionee is taking  this  option and shall take the shares of Common  Stock
underlying this option,  for the Optionees own account,  for investment,  or not
for resale or distribution.

<PAGE>

7.       Non-Transferability.

     This option shall not be transferable by the Optionee other than by will or
by the laws of descent and distribution,  and is exercisable during the lifetime
of the Optionee only by the Optionee.

8.       Certain Rights Not Conferred by Option.
         --------------------------------------

     The Optionee  shall not, by virtue of holding  this option,  be entitled to
any rights of a stockholder in the Company .

9.       Transfer Taxes.
         --------------

     The Company shall pay all original issue and transfer taxes with respect to
the  issuance  and  transfer of shares of Common  Stock of the Company  pursuant
hereto provided that the shares are issued in the name of the Optionee.

10.      Exercise of Options.
         -------------------

(a) The amount of shares of Common Stock to this option shall become exercisable
as follows: 400,000 on the date hereof.

(b) An Option shall be exercisable  by written  notice of such exercise,  in the
form prescribed by the Board to the Company,  at its principal executive office.
The  notice  shall  specify  the  number of shares for which the option is being
exercised, be signed by the Optionee and shall be accompanied by payment in cash
or by check of the amount of the full  purchase  price of such shares or in such
manner as the Board shall deem acceptable  consistent with the provisions of the
Plan.

(c) No shares  shall be  delivered  upon  exercise of any option until all laws,
rules and  regulations  which the Board may deem  applicable  have been complied
with.  If a  registration  statement  under the Act is not then in  effect  with
respect to the shares issuable upon such exercise,  the Company may require as a
condition  precedent.,  among other  things (i) that the person  exercising  the
option  give  to  the  Company  a  written   representation   and   undertaking,
satisfactory in form and substance to the Company, that such person is acquiring
the  shares  for his  own  account  for  investment  and not  with a view to the
distribution  thereof  and/or  (ii) an opinion of  counsel  satisfactory  to the
Company with respect to the  existence  of an  exemption  from the  registration
requirements of the Act, in which event the person(s) acquiring the Common Stock
shall be bound by the provisions of the following legend which shall be endorsed
upon the  certificate(s)  evidencing  his option shares issued  pursuant to such
exercise:

          "The shares  represented by this  certificate have not been registered
          under the Securities Act of 1933, as amended (the "Act").  Such shares
          may not be sold, transferred or otherwise disposed of unless they have
          first been  registered  under the Act or,  unless,  in the  opinion of
          counsel  satisfactory to the Company's  counsel,  such registration is
          not required."

(d) Without  limiting the  generality  of the  foregoing,  the Company may delay
issuance of the shares of Common Stock  underlying this option until  completion
of any action or  obtaining of any consent,  which the Company  deems  necessary
under any applicable law (including without limitation state securities or "blue
sky" laws).

<PAGE>

(e) The person  exercising  an option shall not be considered a record holder of
the stock so  purchased  for any purpose  until the date on which such person is
actually recorded as the holder of such stock in the records of the Company.

11.      Continued Employment.
         --------------------

     Nothing  herein  shall be deemed  to create  any  employment  agreement  or
guaranty of continued  service as an employee or limit in any way the  Company's
right to terminate Optionee's status as an employee at any time.

12.      Notices.
         -------

     Any notice  required or permitted by the terms of this  Agreement  shall be
given by registered or certified mail,  return receipt  requested,  addressed as
follows:

                  To the Company:

                                    Candies, Inc.
                                    2975 Westchester Avenue
                                    Purchase, New York  10577

                  To the Optionee:

                                    Neil R. Cole
                                    c/o the Company

or to such other address or addresses of which notice in the same manner has
previously been given when mailed in accordance with the foregoing provisions.
Either party hereto may change the address to which such notices shall be given
by providing the other party hereto with written notice of such change.

13.      Tax Withholding.
         ---------------

     Not later than the date as of which an amount first  becomes  includable in
the gross income of the Optionee or other holder for federal income tax purposes
with  respect to this  option,  the  Optionee or other  holder  shall pay to the
Company, or make arrangements  satisfactory to the Company regarding the payment
of,  any  federal,  state  and  local  taxes of any kind  required  by law to be
withheld or paid with respect to such  amount.  The  obligations  of the Company
under this Agreement shall be conditional  upon such payment or arrangements and
the Company shall, to the extent  permitted by law, have the right to deduct any
such  taxes  from any  payment  of any kind  otherwise  due to the holder of the
option from the Company or any of its subsidiaries.

14.      Benefit of Agreement.
         --------------------

     This  Agreement  shall be for the benefit of and shall be binding  upon the
heirs, executors, administrators and successors of the parties hereto.

15.      Governing Law.
         -------------

     This option  agreement  shall be construed and enforced in accordance  with
the law of the State of New  York,  except  to the  extent  that the laws of the
State of Delaware may be applicable.

                                                     CANDIE'S,  INC.

                                                     By:/s/Deborah K. Sorell
                                                        Deborah K. Sorell

Accepted as of the date first set above.
/s/ Neil Cole
----------------
Signature required with return of document to company to formalize issuance of
agreement.

Source: [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00052-of-00352.parquet"}, [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00052-of-00352.parquet"}]]