Document:

Exhibit 10.26

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

CANDIE'S, INC., a Delaware corporation (the "Company"), pursuant to the
Company's 2002 Stock Option Plan (the "Plan") hereby grants to ____________, an
employee of the Company (the "Optionee"), as of _________, 20__, (the "Grant
Date"), a non-qualified stock option to purchase a total of _____________ shares
of the Company's common stock, par value $.001 per share ("Common Stock"), at
the price of $___ per share on the terms and conditions set forth herein and in
the Plan. This option (the "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 __________, 20__,
[insert date 10 years from Grant Date or other date as determined by Board or
appropriate committee of the Board] (the "Termination Date"), but shall be
subject to earlier termination as provided herein or in the Plan .

(c) If the Optionee ceases to be employed by the Company for any reason other
than death, disability, termination for cause, or voluntary termination by
resignation, the Option may be exercised within three (3) months after the date
the Optionee ceases to be an employee, or within [__ (__) years] [insert 10
years or other period from 1(b)] from the Grant Date 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
under the Plan 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 defined in the Plan), or by voluntary resignation by the
Optionee, 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 (the "Board") or an appropriate committee
of the Board, as the case may be, and as to the fact and date of which the
Optionee is notified by the Board or that Committee, as the case may be, 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 voluntary termination by the employee), the
Option shall be exercisable to the extent exercisable but not exercised as of

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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.

2. Price.

     The  purchase  price for each share of Common  Stock upon  exercise of this
Option is $____.

3. Non-Qualified Stock Option.

     This  Option is a  non-qualified  stock  option,  the  exercise of which is
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 or in the Plan, a written notice of exercise
substantially in the form described in Section 10. The Optionee hereby
acknowledges receipt of a copy of the Plan.

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 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.

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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, and not for resale or distribution.

7.       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.]
[Alternate-This Option may be transferable 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. Vesting Options.

(a) The amount of shares of Common Stock subject to this Option shall become
exercisable as follows: __________on the date hereof,__________ on the first
anniversary of the date hereof [and ____________ on the second anniversary of
the date hereof], subject to the provision of Section 1 hereof and the Plan. [
Alternative-The amount of shares of Common Stock subject to this Option shall
become exercisable on the date hereof, subject to the provision of Section 1
hereof and the Plan.]

(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 this 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

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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).

(e) The person exercising this 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. No 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 Option Agreement
or the Plan shall be given by registered or certified mail, return receipt
requested, addressed as follows:

                  To the Company:

                                    Candies, Inc.
                                    400 Columbus Avenue
                                    Valhalla, New York 10595

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                  To the Optionee:

                                    [Name and Address of Optionee]

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.

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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:_______________________
                                      Name:
                                     Title:

Accepted as of the date first set above.

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Signature required with return of document to the Company to formalize issuance
of agreement.

                                       6Exhibit 10.27

                              EMPLOYMENT AGREEMENT

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

                              W I T N E S S E T H:

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

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

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

1.                         EMPLOYMENT AND DUTIES

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

1.2.                       General.

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

1.2.2.                     The Executive shall devote all of his business time,
                           attention, knowledge and skills faithfully,
                           diligently and to the best of his ability, in
                           furtherance of the business and activities of the
                           Company; provided, however, that nothing in this
                           Agreement shall preclude the Executive from devoting
                           reasonable periods of time required for:
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(i)                        serving as a director or member of a committee of any
                           organization or corporation involving no conflict of
                           interest with the interests of the Company and with
                           the written consent of the Company, which consent
                           shall not be unreasonably withheld;

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

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

(iv)                       managing his personal investments;

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

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

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

2.                         COMPENSATION

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

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

2.3.                       Incentive Bonuses.

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

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

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

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

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

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

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

4.                         EMPLOYEE BENEFITS

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

4.2.                       Vacation. The Executive shall be entitled to not less
                           than four (4) weeks vacation at full pay for each
                           year during the Term. Such vacation may be taken in
                           the Executive's discretion, and at such time or times
                           as are not inconsistent with the reasonable business
                           needs of the Company.

4.3.                       Life Insurance Coverage. The Company shall use its
                           best efforts to obtain and maintain in full force and
                           effect during the Term life insurance covering the
                           life of the Executive for the benefit of his designee
                           in the amount of $5,000,000, of which up to
                           $1,000,000 may, at the option of the Executive, be a
                           whole-life policy and the remainder shall be a term
                           policy. A schedule of the current life insurance
                           policies maintained by the Company on the life of the
                           Executive is attached hereto as Exhibit A.

5.                         TERMINATION OF EMPLOYMENT

5.1.                       General. The Executive's employment under this
                           Agreement may be terminated without any breach of
                           this Agreement only on the following circumstances:

5.1.1.                     Death. The Executive's employment under this
                           Agreement shall terminate upon his death.

5.1.2.                     Disability. If, as a result of the Executive's
                           Disability (as defined below), the Executive shall
                           have been absent from his duties under this Agreement
                           for sixty (60) consecutive days, the Company may
                           terminate the Executive's employment upon thirty (30)
                           days prior written notice; provided that the
                           Executive has not returned to full time performance
                           of his duties during such thirty (30) day period. For
                           purposes hereof, "Disability" shall mean that the
                           Executive is unable to perform his normal and
                           customary duties hereunder as a result of physical or
                           mental illness.

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5.1.3.                     Good Reason. The Executive may terminate his
                           employment for Good Reason at any time. For purposes
                           of this Agreement, "Good Reason" shall mean:

(i)                        the failure by the Company to comply with its
                           material obligations and agreements contained in this
                           Agreement;

(ii)                       a material diminution of the responsibilities or
                           title of the Executive with the Company without the
                           express written consent of the Executive;

(iii)                      a reduction by the Company in the Base Salary as in
                           effect on the date hereof, or as the same may be
                           increased from time to time, without the express
                           written consent of the Executive; or

(iv)                       the re-location of the Executive to an office outside
                           of the greater New York metropolitan area, unless
                           mutually agreed to;

provided, however, that the Executive shall have provided the Company with
written notice that such actions are occurring and the Company has been afforded
a reasonable opportunity of at least thirty (30) days to cure same.

5.1.4.                     Cause. The Company may terminate the Executive's
                           employment under this Agreement for Cause.
                           Termination for "Cause" shall mean termination of the
                           Executive's employment because of the occurrence of
                           any of the following as determined by the Board:

(i)                        the willful and continued failure by the Executive to
                           substantially perform his obligations under this
                           Agreement (other than any such failure resulting from
                           the Executive's incapacity due to physical or mental
                           illness); provided, however, that the Company shall
                           have provided the Executive with written notice that
                           such actions are occurring and the Executive has been
                           afforded a reasonable opportunity of at least thirty
                           (30) days to cure same, or

(ii)                       the indictment of the Executive for a felony or other
                           crime involving moral turpitude or dishonesty; or

(iii)                      the willful engaging in misconduct (including theft,
                           fraud, embezzlement, and securities law violations)
                           which is injurious to the Company, monetarily, or
                           otherwise. For purposes of this Section 5.1.4(iii),
                           no act, or failure to act, on the part of the
                           Executive shall be considered "willful" unless done,
                           or omitted to be done, by him in bad faith and
                           without reasonable belief that his action or omission
                           was in the best interest of the Company.

5.2.                       Notice of Termination. Any termination of the
                           Executive's employment by the Company or by the
                           Executive (other than termination by reason of the
                           Executive's death) shall be communicated by written
                           Notice of Termination to the other party of this
                           Agreement. For purposes of this Agreement, a "Notice

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                           of Termination" shall mean a notice which shall
                           indicate the specific termination provision in this
                           Agreement relied upon and shall set forth in
                           reasonable detail the facts and circumstances claimed
                           to provide a basis for termination of the Executive's
                           employment under the provision so indicated. 5.3.
                           Date of Termination. The "Date of Termination" shall
                           mean (a) if the Executive's employment is terminated
                           by his death, the date of his death, (b) if the
                           Executive's employment is terminated pursuant to
                           subsection 5.1.2 above, thirty (30) days after Notice
                           of Termination is given (provided that the Executive
                           shall not have returned to the performance of his
                           duties on a full-time basis during such thirty (30)
                           day period), (c) if the Executive's employment is
                           terminated pursuant to subsections 5.1.3 or 5.1.4
                           above, the date specified in the Notice of
                           Termination after the expiration of any applicable
                           cure periods, and (d) if the Executive's employment
                           is terminated for any other reason, the date on which
                           a Notice of Termination is given; provided that if
                           within thirty (30) days after any Notice of
                           Termination is given the party or parties receiving
                           such Notice of Termination notifies the other party
                           or parties that a dispute exists concerning such
                           termination, the Date of Termination shall be the
                           date on which the dispute is finally determined by a
                           binding and final arbitration award or by a final
                           judgment, order or decree of a court of competent
                           jurisdiction (the time for appeal therefrom having
                           expired and no appeal having been perfected).

5.4.                       Compensation Upon Termination.

5.4.1.                     Termination for Cause. If the Executive's employment
                           shall be terminated for Cause, the Company shall pay
                           the Executive his Base Salary through the Date of
                           Termination, at the rate in effect at the time Notice
                           of Termination is given, and all expenses and accrued
                           Benefits arising prior to such termination which are
                           payable to the Executive pursuant to this Agreement
                           through the Date of Termination and the Company shall
                           have no further obligation with respect to this
                           Agreement.

5.4.2.                     Termination without Cause or For Good Reason. Subject
                           to the provisions of subsection 5.4.3 hereof, if,
                           prior to the expiration of the Term, the Executive's
                           employment hereunder is terminated by the Executive
                           for Good Reason or by the Company without Cause
                           (other than a termination by reason of Disability),
                           the Company shall pay to the Executive all expenses
                           and accrued Benefits arising prior to such
                           termination which are payable to the Executive
                           pursuant to this Agreement through the Date of
                           Termination and the Company shall continue to pay the
                           Executive his Base Salary as then in effect for the
                           greater of (i) the remainder of the original Term or
                           (ii) a period of one year (1) year from the Date of
                           Termination (such period being referred to
                           hereinafter as the "Severance Period"), payable in
                           monthly installments. In addition, during the
                           Severance Period, the Executive shall be entitled to
                           continue to participate in all employee benefit plans
                           that the Company provides (and continues to provide)
                           generally to its senior executives. The Company shall
                           also pay all indemnity payments and all legal fees
                           and expenses incurred by the Executive as a result of
                           such termination (including all such fees and
                           expenses, if any, incurred in contesting or disputing
                           any such termination or in seeking to obtain or
                           enforce any right or benefit provided by this
                           Agreement).

                                       6
<PAGE>

5.4.3.                     Death During Severance Period. In the event of the
                           Executive's death during the Severance Period,
                           payments of Base Salary under this Section 5.4 and
                           payments under the Company's employee benefit plan(s)
                           shall continue to be made in accordance with their
                           terms during the remainder of the Severance Period to
                           the beneficiary designated in writing for such
                           purpose by the Executive or, if no such beneficiary
                           is specifically designated, to the Executive's
                           estate.

5.4.4.                     Termination Following Change in Control.

(i)                        Anything contained herein to the contrary
                           notwithstanding, in the event the Executive's
                           employment hereunder is terminated within twelve (12)
                           months following a Change in Control (as defined
                           below) by the Company without Cause, or any joint
                           venturer or partner of the Company existing as of the
                           date hereof, or by the Executive with Good Reason,
                           then the Company shall pay to the Executive in
                           complete satisfaction of its obligations under this
                           Agreement, as severance pay and as liquidated damages
                           (because actual damages are difficult to ascertain),
                           in a lump sum, in cash, within fifteen (15) days
                           after the Date of Termination, an amount equal to
                           $100 less than three times the Executive's
                           "annualized includable compensation for the base
                           period" (as defined in Section 280G of the Internal
                           Revenue Code of 1986); provided, however, that if
                           such lump sum severance payment, either alone or
                           together with other payments or benefits, either cash
                           or non-cash, that the Executive has the right to
                           receive from the Company, including, but not limited
                           to, accelerated vesting or payment of any deferred
                           compensation, options, stock appreciation rights or
                           any benefits payable to the Executive under any plan
                           for the benefit of employees, which would constitute
                           an "excess parachute payment" (as defined in Section
                           280G of the Internal Revenue Code of 1986), then such
                           lump sum severance payment or other benefit shall be
                           reduced to the largest amount that will not result in
                           receipt by the Executive of a parachute payment. The
                           determination of the amount of the payment described
                           in this subsection shall be made by the Company's
                           independent auditors at the sole expense of the
                           Company. For purposes of clarification the value of
                           any options described above will be determined by the
                           Company's independent auditors using a Black-Scholes
                           valuation methodology.

                           For purposes of this Agreement, a "Change in Control"
shall be deemed to occur (i) when any "person" as defined in Section 3(a)(9)
of the Securities Exchange Act of 1934, as amended (the "Exchange Act"),
and as used in Section 13(d) and 14(d) thereof, including a "group" as
defined in Section 13(d) of the Exchange Act, but excluding the Executive,
the Company or any subsidiary or any affiliate of the Company or any
employee benefit plan sponsored or maintained by the Company or any subsidiary
of the Company (including any trustee of such plan acting as trustee), becomes
the "beneficial owner" (as defined in Rule 13(d)(3) under the Exchange Act) of
securities of the Company representing 15% or more of the combined voting power
of the Company's then outstanding securities; or (ii) when, during any period of
twenty-four (24) consecutive months, the individuals who, at the beginning of
such period, constitute the Board of Directors (the "Incumbent Directors") cease
for any reason other than death to constitute at least a majority thereof;
provided, however, that a director who was not a director at the beginning of
such twenty-four (24) month period shall be deemed to have satisfied such
twenty-four (24) month requirement (and be an Incumbent Director) if such
director was elected by, or on the recommendation of or with the approval of, at
least two-thirds (2/3) of the directors who then qualified as Incumbent
Directors either actually (because they were directors at the beginning of such
twenty-four (24) month period) or through the operation of this proviso; or
(iii) the occurrence of a transaction requiring stockholder approval for the
acquisition of the Company by an entity other than the Company or a subsidiary
or an affiliated company of the Company through purchase of assets, or by
merger, or otherwise.

                                       7
<PAGE>

(ii) If within twelve (12) months after the occurrence of a Change in Control,
the Company shall terminate the Executive's employment without Cause or the
Executive terminates his employment for Good Reason, then notwithstanding the
vesting and exercisability schedule in any stock option agreement between the
Company and the Executive, all unvested stock options granted by the Company to
the Executive pursuant to such agreement shall immediately vest and become
exercisable and shall remain exercisable for not less than 180 days thereafter.

5.4.5. Termination upon Death or Retirement. In the event of the termination of
the Executive's employment by reason of death or retirement, the Company shall
pay the Executive his Base Salary through the Date of Termination, at the rate
then in effect, and all expenses or accrued Benefits arising prior to such
termination which are payable to the Executive pursuant to this Agreement
through the Date of Termination. In addition, the Executive and/or his
beneficiaries shall be entitled to such other benefits as shall be determined in
accordance with the benefit plans maintained by the Company, including, without
limitation, any benefits to which they are entitled under the life insurance
policy provided for in Section 4.3 hereof.

5.4.6. Termination upon Disability. In the event of the termination of the
Executive's employment by reason of Disability in accordance with the provisions
of Section 5.1.2 hereof, the Company shall pay to the Executive a lump sum cash
payment in an amount equal to the present value of the Base Salary that would
have been payable to the Executive during the remainder of the original Term had
the Agreement not been so terminated, together with all expenses and accrued
Benefits arising prior to such termination which are payable to the Executive
pursuant to this Agreement through the Date of Termination. In addition, the
Executive and/or his beneficiaries shall be entitled to such other benefits as
shall be determined in accordance with the benefit plans maintained by the
Company.

5.4.7. The Executive shall not be required to mitigate the amount of any payment
provided for in this Section 5.4 by seeking other employment or otherwise, nor
shall the amount of any payment provided for in this Section 5.4 be reduced by
any compensation earned by the Executive as the result of employment by another
employer or business or by profits earned by the Executive from any other source
at any time before and after the Date of Termination.

6. INSURABILITY; RIGHT TO INSURE

                  During the continuance of the Executive's employment
hereunder, the Company shall have the right to maintain key man life insurance
in its own name covering the Executive's life in such amount as shall be
determined by the Company, for a term ending on the termination or expiration of
this Agreement. The Executive shall aid in the procuring of such insurance by
submitting to the required medical examinations, if any, and by filling out,
executing and delivering such applications and other instrument in writing as
may be reasonably required by an insurance company or companies to which
application or applications for insurance may be made by or for the Company.

                                       8
<PAGE>

7. CONFIDENTIALITY; NONCOMPETITION; NONSOLICITATION; NONDISPARAGEMENT

7.1. The Company and the Executive acknowledge that the services to be performed
by the Executive under this Agreement are unique and extraordinary and, as a
result of such employment, the Executive shall be in possession of confidential
information relating to the business practices of the Company. The term
"confidential information" shall mean any and all information (oral and written)
relating to the Company or any of its affiliates, or any of their respective
activities, other than such information which (i) can be shown by the Executive
to be in the public domain (such information not being deemed to be in the
public domain merely because it is embraced by more general information which is
in the public domain) other than as the result of breach of the provisions of
this paragraph 7 or (ii) the Executive is required to disclose under any
applicable laws, regulations or directives of any government agency, tribunal or
authority having jurisdiction in the matter or under subpoena or other process
of law. The Executive shall not, during the Term and for a period of two (2)
years thereafter, except as may be required in the course of the performance of
his duties hereunder, directly or indirectly, use, communicate, disclose or
disseminate to any person, firm or corporation any confidential information
regarding the clients, customers or business practices of the Company acquired
by the Executive, without the prior written consent of the Company; provided,
however, that the Executive understands that Executive shall be prohibited from
misappropriating any trade secret at any time during or after the Term.

7.2. Upon the termination of the Executive's employment for any reason
whatsoever, all documents, records, notebooks, equipment, price lists,
specifications, programs, customer and prospective customer lists and other
materials which refer or relate to any aspect of the business of the Company
which are in the possession of the Executive, including all copies thereof,
shall be promptly returned to the Company.

7.3. The Executive hereby agrees that he shall not, during the Term, and, in the
event that the Executive's employment hereunder is terminated by the Company for
Cause or by the Executive without Good Reason, for a period of two years after
the date of such termination, directly or indirectly, within any county (or
adjacent county) in any State within a fifty (50) mile radius of the location of
any of the Company's offices, engage, have an interest in or render any services
to any business (whether as owner, manager, operator, licensor, licensee,
lender, partner, stockholder, joint venturer, employee, consultant or otherwise)
competitive with the business activities conducted by the Company, its
subsidiaries, or affiliates during the Term. Notwithstanding the foregoing,
nothing herein shall prevent the Executive from owning stock in a publicly
traded corporation whose activities compete with those of the Company's,
provided that such stock holdings are not greater than five percent (5%) of such
corporation.

7.4. The Executive shall not, during the Term, and, in the event that the
Executive's employment hereunder is terminated by the Company for Cause or by
the Executive without Good Reason, for a period of two years after the date of
such termination, directly or indirectly, take any action which constitutes an
interference with or a disruption of any of the Company's business activities
including, without limitation, the solicitations of the Company's customers, or
persons listed on the personnel lists of the Company.

7.5. For purposes of clarification, but not of limitation, the Executive hereby
acknowledges and agrees that the provisions of Sections 7.3 and 7.4 above shall
serve as a prohibition against him from, during the period referred to therein,
directly or indirectly, hiring, offering to hire, enticing, soliciting or in any
other manner persuading or attempting to persuade any officer, employee, agent,
lessor, lessee, licensor, licensee or customer of the Company (but only those
suppliers existing during the time of the Executive's employment by the Company,
or at the termination of his employment), to discontinue or alter his, her or
its relationship with the Company.

                                       9
<PAGE>

7.6. At no time during or after the Term shall either party hereto, directly or
indirectly, disparage the commercial, business, professional or financial, as
the case may be, reputation of the other party.

7.7. Without intending to limit the remedies available to the Company, the
Executive acknowledges that a breach of any of the covenants contained in this
paragraph 7 may result in material and irreparable injury to the Company, or its
affiliates or subsidiaries, for which there is no adequate remedy at law, that
it will not be possible to measure damages for such injuries precisely and that,
in the event of such a breach or threat the Company shall be entitled to seek a
temporary restraining order and/or a preliminary or permanent injunction
restraining the Executive from engaging in activities prohibited by this
paragraph 7 or such other relief as may be required specifically to enforce any
of the covenants in this paragraph 7. If for any reason it is held that the
restrictions under this paragraph 7 are not reasonable or that consideration
therefor is inadequate, such restrictions shall be interpreted or modified to
include as much of the duration and scope identified in this paragraph as will
render such restrictions valid and enforceable.

8. RIGHTS OF INDEMNIFICATION

8.1. The Company shall indemnify the Executive to the fullest extent permitted
by the General Corporation Law of the State of Delaware, as amended from time to
time, for all amounts (including without limitation, judgments, fines,
settlement payments, expenses and attorney's fees) incurred or paid by the
Executive in connection with any action, suit, investigation or proceeding
arising out of or relating to the performance by the Executive of services for,
or the acting by the Executive as a director, officer or employee of the
Company, or any other person or enterprise at the Company's request.

8.2. The Company shall use its best efforts to obtain and maintain in full force
and effect during the Term, directors' and officers' liability insurance
policies providing full and adequate protection to the Executive for his
capacities, provided that the Board shall have no obligation to purchase such
insurance if, in its opinion, coverage is available only on unreasonable terms.

                                       10
<PAGE>

9. MISCELLANEOUS

9.1. Notices. All notices or communications hereunder shall be in writing,
addressed as follows:

                 To the Company:Candie's, Inc.
                                215 West 40th Street
                                6th Floor
                                New York, NY 10018
                                Attn:Deborah Sorell Stehr
                                Senior Vice President and General Counsel

                 with a copy to:Blank Rome LLP
                                405 Lexington Avenue
                                New York, NY 10174
                                Attn: Robert J. Mittman, Esq.

               To the Executive:Neil Cole
                                525 East 72nd Street
                                Apt 30D
                                New York, NY 10021

                  All such notices shall be conclusively deemed to be received
and shall be effective (i) if sent by hand delivery, upon receipt, (ii) if sent
by telecopy or facsimile transmission, upon confirmation of receipt by the
sender of such transmission, (iii) if sent by overnight courier, one business
day after being sent by overnight courier, or (iv) if sent by registered or
certified mail, postage prepaid, return receipt requested, on the fifth day
after the day on which such notice is mailed.

9.2. Severability. Each provision of this Agreement shall be interpreted in such
manner as to be effective and valid under applicable law, but if any provision
of this Agreement is held to be prohibited by or invalid under applicable law,
such provision will be ineffective to the extent of such prohibition or
invalidity, without invalidating the remainder of such provision or the
remaining provisions of this Agreement.

9.3. Binding Effect; Benefits. Executive may not delegate his duties or assign
his rights hereunder. This Agreement shall inure to the benefit of, and be
binding upon, the parties hereto and their respective heirs, legal
representatives, successors and permitted assigns.

9.4. Entire Agreement. This Agreement represents the entire agreement of the
parties and shall supersede any and all previous contracts, arrangements or
understandings between the Company and the Executive, including, without
limitation, that certain Employment Agreement dated February 1, 2002 between the
Company and the Executive, which shall be deemed to have terminated on December
31, 2004 . This Agreement may be amended at any time by mutual written agreement
of the parties hereto. In the case of any conflict between any express term of
this Agreement and any statement contained in any employment manual, memo or
rule of general applicability of the Company, this Agreement shall control.

                                       11
<PAGE>

9.5. Withholding. The payment of any amount pursuant to this Agreement shall be
subject to applicable withholding and payroll taxes, and such other deductions
as may be required under the Company's employee benefit plans, if any.

9.6. Governing Law. This Agreement and the performance of the parties hereunder
shall be governed by the internal laws (and not the law of conflicts) of the
State of New York. Any claim or controversy arising out of or in connection with
this Agreement, or the breach thereof, shall be adjudicated exclusively by the
Supreme Court, New York County, State of New York, or by a federal court sitting
in Manhattan in New York City, State of New York. The parties hereto agree to
the personal jurisdiction of such courts and agree to accept process by regular
mail in connection with any such dispute.

9.7. Legal Fees and Court Costs. In the event that any action, suit or other
proceeding in law or in equity is brought to enforce the provisions of this
Agreement, and such action results in the award of a judgment for money damages
or in the granting of any injunction in favor of the Company, all expenses
(including reasonable attorneys' fees) of the Company in such action, suit or
other proceeding shall be paid by the Executive. In the event that any action,
suit or other proceeding in law or in equity is brought to enforce the
provisions of this Agreement, and such action results in the award of a judgment
for money damages or in the granting of any injunction in favor of the
Executive, all expenses (including reasonable attorneys' fees and travel
expenses) of the Executive in such action, suit or other proceeding shall be
paid by the Company.

                  IN WITNESS WHEREOF, the Company has caused this Agreement to
be duly executed and the Executive has hereunto set his hand, as of the day and
year first above written,

                                    THE COMPANY:CANDIE'S, INC

                                             By:/s/Warren Clamen
                                                --------------------------------
                                                Warren Clamen
                                                Executive Vice President -
                                                Chief Financial Officer

                                      EXECUTIVE:/s/ Neil Cole
                                                --------------------------------
                                                Neil Cole

                                       12

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