Schedule 14A
(Rule 14a-101)
INFORMATION REQUIRED IN PROXY STATEMENT
SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of the Securities
Exchange Act of 1934 (Amendment No. )
Filed by the registrant |X|
Filed by a party other than the registrant |_|
Check the appropriate box:
|_| Preliminary Proxy Statement |_| Confidential, For Use of the Commission
Only (as permitted by Rule 14a-6(e)(2))
|X| Definitive Proxy Statement
|_| Definitive Additional Materials
|_| Soliciting Material Pursuant to Rule 14a-11(c) or Rule 14a-12
Candie's, Inc.
(Name of Registrant as Specified in Its Charter)
(Name of Person(s) Filing Proxy Statement, if Other Than the Registrant)
Payment of Filing Fee (Check the appropriate box):
|X| No fee required
|_| Fee computed on table below per Exchange Act Rules 14a-6(i)(1) and 0-11.
(1) Title of each class of securities to which transaction applies:
(2) Aggregate number of securities to which transaction applies:
(3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11 (set forth the amount on which the
filing fee is calculated and state how it was determined):
(4) Proposed maximum aggregate value of transaction:
(5) Total fee paid:
|_| Fee paid previously with preliminary materials.
|_| Check box if any part of the fee is offset as provided by Exchange Act Rule
0-11(a)(2) and identify the filing for which the offsetting fee was paid
previously. Identify the previous filing by registration statement number,
or the form or schedule and the date of its filing.
(1) Amount previously paid:
(2) Form, Schedule or Registration Statement No.:
(3) Filing Party:
(4) Date Filed:
CANDIE'S, INC.
400 Columbus Avenue
Valhalla, New York 10595-1335
May 28, 2002
Dear Fellow Stockholders:
You are cordially invited to attend the Annual Meeting of Stockholders
which will be held on Monday, June 24, 2002, at 10:00 A.M., at the New York City
offices of the Company, 215 West 40th Street, New York, New York 10018.
The Notice of Annual Meeting and Proxy Statement, which follow, describe
the business to be conducted at the meeting.
Whether or not you plan to attend the meeting in person, it is important
that your shares be represented and voted. After reading the enclosed Notice of
Annual Meeting and Proxy Statement, please complete, sign, date and return your
proxy card in the envelope provided. If the address on the accompanying material
is incorrect, please advise our Transfer Agent, Continental Stock Transfer &
Trust Company, in writing, at 17 Battery Place, New York, New York 10004.
Your vote is very important, and we will appreciate a prompt return of your
signed proxy card. We hope to see you at the meeting.
Cordially,
Neil Cole
Chairman of the Board,
President and
Chief Executive Officer
CANDIE'S, INC.
400 Columbus Avenue
Valhalla, New York 10595-1335
--------------------------------------------------------------------------------
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD ON JUNE 24, 2002
--------------------------------------------------------------------------------
To the Stockholders of CANDIE'S, INC.:
NOTICE IS HEREBY GIVEN that the Annual Meeting of Stockholders of Candie's,
Inc. (the "Company") will be held on Monday, June 24, 2002, at 10:00 A.M. at the
Company's New York City offices at 215 West 40th Street, New York, New York
10018, for the following purposes:
1. To elect six directors to hold office until the next Annual Meeting of
Stockholders and until their respective successors have been duly
elected and qualified;
2. To consider and vote upon a proposal to an amendment to the Company's
Certificate of Incorporation to increase the authorized common stock
from 30,000,000 to 75,000,000 shares;
3. To approve the Company's 2002 Stock Option Plan;
4. To ratify the appointment of BDO Seidman, LLP as the Company's
independent auditors for the fiscal year ending January 31, 2003; and
5. To transact such other business as may properly come before the
meeting or any adjournment or adjournments thereof.
Only stockholders of record at the close of business on May 24, 2002 are
entitled to notice of and to vote at the Annual Meeting or any adjournments
thereof.
By Order of the Board of Directors,
Neil Cole
Chairman of the Board, President
and Chief Executive Officer
May 28, 2002
--------------------------------------------------------------------------------
IF YOU DO NOT EXPECT TO BE PRESENT AT THE MEETING:
-- ---
PLEASE FILL IN, DATE, SIGN AND RETURN THE ENCLOSED PROXY CARD IN THE ENVELOPE
PROVIDED FOR THAT PURPOSE, WHICH REQUIRES NO POSTAGE IF MAILED IN THE UNITED
STATES. THE PROXY MAY BE REVOKED AT ANY TIME PRIOR TO EXERCISE, AND IF YOU ARE
PRESENT AT THE MEETING YOU MAY, IF YOU WISH, REVOKE YOUR PROXY AT THAT TIME AND
EXERCISE THE RIGHT TO VOTE YOUR SHARES PERSONALLY.
PROXY STATEMENT
CANDIE'S, INC.
ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD ON JUNE 24, 2002
This proxy statement is furnished in connection with the solicitation of
proxies by the Board of Directors of CANDIE'S, INC. (the "Company") for use at
the Annual Meeting of Stockholders (the "Annual Meeting") to be held on June 24,
2002, including any adjournment or adjournments thereof, for the purposes set
forth in the accompanying Notice of Meeting.
Management intends to mail this proxy statement and the accompanying form
of proxy to stockholders on or about May 29, 2002.
Proxies in the accompanying form, duly executed and returned to the
management of the Company and not revoked, will be voted at the Annual Meeting.
Any proxy given pursuant to such solicitation may be revoked by the stockholder
at any time prior to the voting of the proxy by a subsequently dated proxy, by
written notification to the Secretary of the Company, or by personally
withdrawing the proxy at the meeting and voting in person.
The address and telephone number of the principal executive offices of the
Company are:
400 Columbus Avenue
Valhalla, New York 10595-1335
Telephone No.: (914) 769-8600
OUTSTANDING STOCK AND VOTING RIGHTS
Only stockholders of record at the close of business on May 24, 2002 (the
"Record Date") are entitled to notice of and to vote at the Annual Meeting. As
of the Record Date, there were issued and outstanding 23,979,639 shares of the
Company's common stock, $.001 par value per share (the "Common Stock"), the
Company's only class of voting securities. Each share of Common Stock entitles
the holder to one vote on each matter submitted to a vote at the Annual Meeting.
VOTING PROCEDURES
The directors will be elected by the affirmative vote of the holders of a
plurality of the shares of Common Stock present in person or represented by
proxy at the Annual Meeting, provided a quorum is present. Approval of the
Amendment to the Company's Certificate of Incorporation to increase its
authorized Common Stock requires the affirmative vote of the issued and
outstanding shares of Common Stock as of the Record Date. All other matters at
the Annual Meeting, including approval of the adoption of the Company's 2002
Stock Option Plan and ratification of the appointment of BDO Seidman, LLP as the
Company's independent auditors for its fiscal year ending January 31, 2003, will
be decided by the affirmative vote of the holders of a majority of the shares of
Common Stock present in person or represented by proxy at the Annual Meeting and
entitled to vote on the matter, provided a quorum is present. A quorum is
present if at least a majority of the shares of Common Stock outstanding as of
the Record Date are present in person or represented by proxy at the Annual
Meeting. Votes will be counted and certified by one or more Inspectors of
Election who are expected to be employees of the Company. In accordance with
Delaware law, abstentions and "broker non-votes" (i.e., proxies from brokers or
nominees indicating that such persons have not received instructions from the
beneficial owner or other person entitled to vote shares as to a matter with
respect to which the brokers or nominees do not have discretionary power to
vote) will be treated as present for purposes of determining the presence of a
quorum. For purposes of determining approval of a matter presented at the
meeting, abstentions will be deemed present and entitled to vote and will,
therefore, have the same legal effect as a vote "against" a matter presented at
the meeting. Broker non-votes will be deemed not entitled to vote on the subject
matter as to which the non-vote is indicated and will, therefore, have no legal
effect on the vote on that particular matter. However, because of the need to
obtain the affirmative vote of the majority of the outstanding shares of Common
Stock, failures to vote, broker non-votes and abstentions will have the same
practical effect as a vote against the proposal to amend the Company's
Certificate of Incorporation to increase the authorized shares of Common Stock.
Proxies will be voted in accordance with the instructions thereon. Unless
otherwise stated, all shares represented by a proxy will be voted as instructed.
Proxies may be revoked as noted above.
ELECTION OF DIRECTORS
At the Annual Meeting, six (6) directors will be elected to hold office for
a term expiring at the 2002 Annual Meeting of Stockholders. Each director will
be elected to serve until a successor is elected and qualified or until the
director's earlier resignation or removal.
At the Annual Meeting, proxies granted by stockholders will be voted
individually for the election, as directors of the Company, of the persons
listed below, unless a proxy specifies that it is not to be voted in favor of a
nominee for director. In the event any of the nominees listed below is unable to
serve, it is intended that the proxy will be voted for such other nominees as
are designated by the Board of Directors. Each of the persons named below, who
are presently members of the Company's Board of Directors, has indicated to the
Board of Directors of the Company that he or she will be available to serve.
Name Age Position
---- --- --------
Neil Cole 45 Chairman of the Board,
President and Chief Executive Officer
Barry Emanuel 60 Director
Steven Mendelow 59 Director
Peter Siris 57 Director
Ann Iverson 58 Director
Hubert Guez 49 Director
Neil Cole has been Chairman of the Board, President and Chief Executive
Officer of the Company since February 23, 1993. Mr. Cole's family began the
Candie's business in the late 1970's. After the brand was sold by the family,
Mr. Cole re-purchased the brand and founded the Company in 1992. From February
through April 1992, Mr. Cole served as a director and as acting President of the
Company. Mr. Cole also served as Chairman of the Board, President, Treasurer and
a director of New Retail Concepts, Inc. ("NRC"), from its inception in 1986
until it was merged with and into the Company in August 1998. Mr. Cole is an
attorney who graduated from Hofstra law school in 1982.
Barry Emanuel has been a director of the Company since May 1993. For more
than the past five years, Mr. Emanuel has served as President of Copen
Associates, Inc., a textile manufacturer located in New York, New York.
Steven Mendelow has been a director of the Company since December 1999 and
has been a principal with the accounting firm of Konigsberg Wolf & Co. and its
predecessor, which is located in New York, New York, since 1972. Mr. Mendelow
was a director of NRC from April 1, 1992 until NRC merged into the Company in
August 1998.
Peter Siris has been a director of the Company since March 2000 and has
been active in the apparel, retail and financial industries for over 25 years.
During the past two years, Mr. Siris has been the Managing Director of Guerrilla
Capital Management, while completing his best selling book, "Guerilla
Investing", and working as a columnist for the "New York Daily News". Between
1995 and 1997, he served as Senior Vice President of Warnaco, Inc. and Director
of Investor Relations of Authentic Fitness Corporation and Senior Vice President
of ABN-Amro Incorporated. Between 1970 and 1995, Mr. Siris served as Managing
Director of Union Bank of Switzerland, Securities, Executive Vice President and
Director of The Buckingham Research, Executive Vice President and Director of
Sirco International Corporation, President of MERIC, Inc. and President of Urban
Innovations, Inc. Mr. Siris is a director of Crown American Real Estate
Investment Trust. Mr. Siris, who earned his MBA from Harvard University, is also
an expert on trade in China and authored a novel on that subject, entitled "The
Peking Mandate".
Ann Iverson joined the Board in March 2001. Since 1998, she has been the
President and CEO of International Link, Inc., a consulting company providing
value to corporations in making strategic decisions. From June 1995 until
forming International Link, Ms. Iverson worked as the Group Chief Executive of
Laura Ashley in the United Kingdom. Prior to that she was the President and CEO
of KayBee Toy Stores and CEO of Mothercare UK, Ltd based in England. In addition
to being a member of the Company's board, Ms. Iverson currently sits on the
board of Owens Corning, Inc., a leader in the building materials systems and
composites systems industry, and serves as a member of its Audit Committee. Ms.
Iverson is also Chairman of the Board at Brooks Sports, Inc., Chairman of
Portico Bed & Bath, Inc., and a member of the Board of Trustees of Thunderbird
Graduate School of International Management. Ms. Iverson, who brings to the
Board over 40 years of experience in the fashion and retail industry, has been
the recipient of numerous industry awards, including the Ellis Island Medal of
Honor and Retailer of the Year in the United Kingdom.
Hubert Guez joined the Board in April 2002 and has been involved in the
apparel industry for over twenty-five years. From October 1998 through May 2002,
Mr. Guez was the Vice-Chairman and Manager of Unzipped Apparel, LLC, the
licensee for Bongo brand apparel. From 1996 to 1998, Mr. Guez served as
President of Commerce Clothing Company, LLC, the licensee for CK Kids. In
September, 1991, Mr. Guez founded Azteca Production International, Inc., where
he continues to serve as the Chief Executive Officer and President. From 1985
through 1991, he was employed with FX Systems, Inc., a software company that he
founded specializing in operating systems for the apparel industry. Between 1981
and 1985, Mr. Guez served as president of Sasson Jeans LA, the licensee for
Sasson women's jeans.
Board Of Directors and Committee Meetings
During the fiscal year ended January 31, 2002 ("Fiscal 2002"), the Board of
Directors held six meetings. In addition, the Board took action by unanimous
written consent in lieu of meetings. The Company does not have a standing
nominating committee of the Board of Directors or a committee performing similar
functions.
The Company has an audit committee of the Board of Directors ("Audit
Committee") consisting of Messrs. Emanuel, Mendelow and Siris and Ms. Iverson.
Each member of the Audit Committee is an "independent director" under the rules
of the National Association of Securities Dealers, Inc. The Audit Committee,
among other things, recommends the firm to be appointed as independent
accountants to audit the Company's financial statements, reviews significant
accounting and reporting issues and developments, reviews and discusses the
scope and results of each audit with the independent accountants, reviews with
management and the independent accountants the Company's interim and year-end
operating results and considers the adequacy of the internal accounting controls
and audit procedures of the Company. The Audit Committee may also conduct
inquiries into the Company's operations, including, without limitation,
inquiries to ensure compliance with applicable laws, securities rules and
regulations and accounting standards. The Audit Committee has adopted a written
charter, a copy of which was attached as Appendix A to the Company's proxy
statement filed with the Securities and Exchange Commission on July 3, 2001
relating to its annual meeting of stockholders held in August 2001. The Audit
Committee held seven meetings during Fiscal 2002.
Compensation Committee Interlocks and Insider Participation
The Company has a Compensation Committee of the Board of Directors, which
is comprised of Messrs. Emanuel, Mendelow and Siris and Ms. Iverson which makes
recommendations to the Board of Directors regarding executive compensation.
During Fiscal 2002, Mr. Cole, the Company's Chief Executive Officer, in his
capacity as a director, also engaged in Board deliberations regarding the
determination of executive officer compensation. During Fiscal 2002, none of the
executive officers of the Company served on the board of directors or the
compensation committee of any other entity.
Compliance with Section 16(a) of Securities Exchange Act of 1934
Section 16(a) of Securities Exchange Act of 1934 requires the Company
officers and directors, and persons who beneficially own more than 10 percent of
a registered class of the Company equity securities, to file reports of
ownership and changes in ownership with the SEC. Officers, directors and greater
than 10 percent owners are required by certain SEC regulations to furnish the
Company with copies of all Section 16(a) forms they file.
Based solely on the Company's review of the copies of such forms received
by it, the Company believes that during Fiscal 2002 there was compliance with
the filing requirements applicable to its officers, directors and 10%
stockholders.
EXECUTIVE OFFICERS AND KEY EMPLOYEES
The executive officers of the Company (Mr. Cole, Mr. Danderline and Ms.
Sorell Stehr), and key employee (Mr. McPhee), their positions with the Company
and certain other information, as of the Record Date, are set forth below:
Name Age Position
---- --- --------
Neil Cole 45 Chairman of the Board,
President and Chief Executive Officer
Richard Danderline 48 Executive Vice President, Finance and Operations
Deborah Sorell Stehr 39 Senior Vice President,
Secretary and General Counsel
John McPhee 39 President of Wholesale Sales
Richard Danderline joined the Company as Executive Vice President, Finance
and Operations in June 2000. For the thirteen years prior to joining the
Company, he served as Vice President, Treasurer and Chief Financial Officer of
AeroGroup International, Inc ("AeroGroup"), a privately held footwear company.
Prior to joining AeroGroup, he served as Vice President and Chief Financial
Officer of Kenneth Cole Productions, Inc., where he was part of a management-led
buyout of its What's What division, which later became AeroGroup. Mr.
Danderline's experience also includes serving as Vice President and Controller
of Energy Asserts International, Inc. and as Vice President and Controller of
XOIL Energy Resources, Inc. Mr. Danderline is certified public accountant who
began his career with Touche Ross & Co., the predecessor of Deloitte & Touche
LLP.
Deborah Sorell Stehr joined the Company in December 1998 as Vice President
and General Counsel, and was promoted to Senior Vice President in November 1999.
From September 1996 to December 1998, Ms. Sorell Stehr was Associate General
Counsel with Nine West Group Inc. ("Nine West"), a women's' footwear corporation
with sales approximating $2.0 billion, where Ms. Sorell Stehr was primarily
responsible for overseeing legal affairs relating to domestic and international
contracts, intellectual property, licensing, general corporate matters,
litigation and claims. Prior to joining Nine West, Ms. Sorell Stehr practiced
law for nine years at private law firms in New York City and Chicago in the
areas of corporate law and commercial litigation.
John J. McPhee joined the Company in October 1996 as President of the
Candie's Kids division. Mr. McPhee was promoted to President of Wholesale Sales
in March 2000. From October 1992 to October 1996, Mr. McPhee was President of
the Children's Footwear Division of Sam & Libby, Inc. Prior to Sam & Libby, Mr.
McPhee held various executive positions with Jumping-Jacks Shoes. Mr. McPhee is
a graduate of Santa Clara University.
All officers serve at the discretion of the Company's Board of Directors.
EXECUTIVE COMPENSATION
The following table sets forth all compensation paid or accrued by the
Company for Fiscal 2002, 2001 and 2000, to or for the Chief Executive Officer
and for the other persons that served as executive officers of the Company
during Fiscal 2002 whose salaries exceeded $100,000 and for John J. McPhee who
is a key employee but not an executive officer of the Company (collectively, the
"Named Persons"):
Summary Compensation Table
--------------------------------------------------------------------------
Long-Term
Annual Compensation Compensation Awards
----------------------------------- ------------------------------------
Other Securities
Name & Principal Positions Fiscal Annual Com- Underlying
Year Salary Bonus(1) pensation (2) Options
--------------------------------------------------------------------------------------------------------------------------
Neil Cole 2002 $ 500,000 $ - $ - 350,000
Chairman, President & 2001 500,000 - (3) 10,000 617,250
Chief Executive Officer 2000 500,436 - 12,500 410,000
Deborah Sorell Stehr 2002 180,000 25,000 - 40,000
Senior Vice President & 2001 166,667 25,000 - 80,000
General Counsel 2000 132,692 25,000 - 50,000
Richard Danderline 2002 214,968 50,000 - -
Executive Vice President - 2001 120,513 (4) 25,000 - 160,000
Finance & Operations
John McPhee 2002 275,000 - - 140,000
President of Wholesale Sales 2001 228,642 25,000 - 110,000
2000 243,284 25,000 - 50,000
(1) Represents bonuses accrued under employment agreements.
(2) Represents amounts earned as director's fees.
(3) As a result of the Company's restatement of certain financial statements, the $105,500 bonus to Mr. Cole previously
reported was repaid by Mr. Cole to the Company in Fiscal 2001.
(4) For the period from June 26, 2000 through January 31, 2001.
Option Grants in Fiscal 2002 Year
The following table provides information with respect to individual stock
options granted during Fiscal 2002 to each of the Named Persons who received
options during Fiscal 2002:
Shares % of Total Potential Realizable Value
Underlying Options Granted at Assumed Annual Rates
Options to Employees Exercise Expiration of Stock Price Appreciation
Name Granted (1) in Fiscal Year Price Date for Option Term (2)
-----------------------------------------------------------------------------------------------------------------------------------
5% 10%
---------------- --------------
Neil Cole 350,000 21.9% $2.300 10/26/11 $506,260 $1,282,963
Deborah Sorell Stehr 40,000 2.5 1.700 09/21/11 42,765 108,374
Richard Danderline - - - - - -
John McPhee 100,000 7.1 2.125 11/11/06 4,468 61,287
40,000 2.5 1.700 09/21/11 42,765 108,374
(1) Mr. Cole's options vested in full on October 26, 2001. The options
granted to Ms. Stehr and the 40,000 options granted to Mr. McPhee vest
as to one-third on each of September 21, 2001, 2002 and 2003.
(2) The potential realizable value columns of the table illustrate values
that might be realized upon exercise of the options immediately prior
to their expiration, assuming the Company's Common Stock appreciates
at the compounded rates specified over the term of the options. These
amounts do not take into account provisions of options providing for
termination of the option following termination of employment or
non-transferability of the options and do not make any provision for
taxes associated with exercise. Because actual gains will depend upon,
among other things, future performance of the Common Stock, there can
be no assurance that the amounts reflected in this table will be
achieved.
Aggregated Fiscal Year-End Option Values
The following table sets forth information as of January 31, 2002, with
respect to exercised and unexercised stock options held by the Named Persons. No
options were exercised by any of the Named Persons during Fiscal 2002. On
December 11, 2001, 10,000 options owned by Neil Cole expired.
Number of Securities Value of Unexercised
Underlying Unexercised In-The-Money
Options at January 31, 2002 Options at January 31, 2002(1)
------------------------------------------ -------------------------------------------
Name Exercisable Unexercisable Exercisable Unexercisable
---------------------------------- ------------------ --------------------- ---------------------- ------------------
Neil Cole 3,091,000 - $ 771,104 $ -
Deborah Sorell Stehr 143,333 56,667 104,550 41,400
Richard Danderline 60,000 100,000 52,665 77,880
John McPhee 233,333 66,667 122,000 49,500
------------------------------------------------------------------------------------------------------------------------------
(1) An option is "in-the-money" if the year-end closing market price per
share of the Company's Common Stock exceeds the exercise price of such
options. The closing market price on January 31, 2002 was $2.06.
Employment Contracts and Termination and Change-in-Control Arrangements
In April 2002, the Company entered into a new employment agreement with
Neil Cole to serve as President and Chief Executive Officer for a term expiring
on December 31, 2005, at an annual base salary of $500,000. Under the new
employment agreement, if the Company meets at least 66 2/3% of its net income
target (as determined by the Board) for the fiscal year, the Company will pay to
Mr. Cole a bonus in an amount equal to his base salary multiplied by a fraction,
the numerator of which is the actual net income for such fiscal year and the
denominator of which is the target net income for such fiscal year. Mr. Cole
also entitled to customary benefits, including participation in management
incentive and benefit plans, reimbursement for automobile expenses, reasonable
travel and entertainment expenses and a life insurance policy to benefit Mr.
Cole's designated beneficiaries in the amount of $3,000,000, $4,000,000, and
$5,000,000, respectively, for each year in the term. The employment agreement
provides that Mr. Cole would receive an amount equal to three times his annual
compensation, plus accelerated vesting or payment of deferred compensation,
options, stock appreciation rights or any other benefits payable to Mr. Cole in
the event that within twelve months of a "Change in Control", as defined in the
agreement, Mr. Cole is terminated by the Company without "Cause" or if Mr. Cole
terminates his agreement for "Good Reason", as such terms are defined in his
employment agreement. If the Company is sold, Mr. Cole will receive a payment
equal to 5% of the sale price in the event that sale price is at least $5 per
share or equivalent with respect to an asset sale. In connection with his new
employment agreement, Mr. Cole was granted under one of the Company's stock
option plans, options to purchase 600,000 shares of Common Stock at $2.75 per
share, which options vest over a three year period.
In February 2002, the Company entered into a two year employment
arrangement with Deborah Sorell Stehr for a term expiring on January 31, 2004 at
a base salary of $225,000 for the first year and $235,000 for the second year.
Ms. Sorell Stehr is also eligible for a bonus pursuant to the Company's
executive bonus program and to customary benefits, including participation in
management incentive and benefit plans, reimbursement for automobile expenses,
reasonable travel and entertainment expenses and a life insurance policy. The
agreement provides that Ms. Sorell Stehr would receive an amount equal to $100
less than three times her annual compensation, plus accelerated vesting or
payment of deferred compensation, options, stock appreciation rights or any
other benefits payable to Ms. Sorell Stehr in the event that within twelve
months of a "Change in Control", Ms. Sorell Stehr is terminated by the Company
without "Cause" or Ms. Sorell Stehr terminates her agreement for "Good Reason",
as such terms are defined in her employment agreement.
On or about May 19, 2000, the Company entered into an employment agreement
with Richard Danderline for a term expiring on June 26, 2002, at an annual base
salary of $200,000 for the period ended June 26, 2001, and $225,000 for the 12
months ended June 26, 2002. Mr. Danderline is entitled to receive a bonus up to
an amount of $100,000 the first year and $150,000 the second year calculated as
one half of 1% of the pre-tax profit of the Company for every 1% that selling,
general and administrative expenses of the Company decrease as a percentage of
revenues using Fiscal 2001 as the base year, but in no event less than $50,000
for each year of employment. In connection with his employment, Mr. Danderline
received a grant of 150,000 options, vesting over a period of five years. Mr.
Danderline is also entitled to customary benefits, including participation in
management incentive and benefit plans, reimbursement for automobile expenses,
reasonable travel and entertainment expenses and a life insurance policy. In the
event of a "change in control", defined as the cessation of Neil Cole being the
Chairman of the Board, or a sale or merger of the Company with a non-affiliate,
Mr. Danderline `s options vest immediately.
On or about March 1, 2000, the Company entered into an employment agreement
with John McPhee for a term expiring on January 31, 2003, at an annual base
salary of $200,000 for the two months ended March 15, 2000, $225,000 for the
period from March 16, 2000 through January 21, 2001, $275,000 for the 12 months
ending January 31, 2002, and $325,000 for the 12 months ending January 31, 2003.
Pursuant to the employment agreement, Mr. McPhee serves as President of
Wholesale Sales for the Company devoting substantially all of his business time
and his best efforts to the business of the Company. Mr. McPhee is also entitled
to an annual bonus during the term of the agreement equal to one percent of the
Company's income before income taxes but in no event less than $25,000 for
Fiscal 2000. Under the agreement, Mr. McPhee receives customary benefits,
including participation in management incentive and benefit plans, reimbursement
for automobile expenses, reasonable travel and entertainment expenses and a life
insurance policy. Pursuant to the agreement, Mr. McPhee is entitled to his full
base salary for one year or through the term of the agreement, whichever is
greater, if there is a "Change of Control in the Company" or if he leaves the
Company for "Good Reason" as those terms are defined in the agreement.
Compensation of Directors
During Fiscal 2002, Messrs. Emanuel, Mendelow and Siris and Ms. Iverson
(each an "Outside Directors") each received a grant of Common Stock from the
Company under the Non-Employee Director Stock Incentive Plan having a value of
$10,000 in compensation for attending board meetings. Each Outside Director also
received $500 for each Committee meeting that he or she attended. Each Outside
Director is also entitled to an additional grant of Common Stock having a value
of $20,000 during Fiscal 2003.
Under the Company's 2000 Stock Option Plan (the "2000 Plan") and 1997 Stock
Option Plan (the "1997 Plan"), non-employee directors are eligible to be granted
non-qualified stock options.
The Company's Board of Directors, or the Stock Option Committee of the 2000
Plan or the 1997 Plan, if one is appointed, has discretion to determine the
number of shares subject to each non-qualified option (subject to the number of
shares available for grant under the 2000 Plan or the 1997 Plan, as applicable),
the exercise price thereof (provided such price is not less than the par value
of the underlying shares of the Company's Common Stock under the 2000 Plan or
not less than the fair value of Common Stock under the 1997 Plan), the term
thereof (but not in excess of 10 years from the date of grant, subject to
earlier termination in certain circumstances), and the manner in which the
option becomes exercisable (amounts, intervals and other conditions). No
non-qualified options were granted to non-employee directors under the 2000 Plan
or the 1997 Plan during Fiscal 2002.
Report on Executive Compensation
Compensation of the Company's executive officers is determined by the Board
of Directors pursuant to recommendations made by the Compensation Committee and
in accordance with the terms of the respective employment agreements of certain
executive officers in effect prior to the formation of the Compensation
Committee. There is no formal compensation policy for the Company's executive
officers, other than the employment agreements described above. Compensation for
executive officers consists of base salary, bonus and stock option awards.
Base Salary. The base salary of the Company's executives are fixed pursuant
to the terms of their respective employment agreements with the Company. The
Compensation Committee reviews the salary of executive officers for
reasonableness based on job responsibilities and a limited review of
compensation practices for comparable positions at corporations which compete
with the Company in its business or are of comparable size and scope of
operations. The Committee's recommendations to the Board of Directors are based
primarily on informal judgments reasonably believed to be in the best interests
of the Company. In determining the base salaries of certain of the Company's
executives whose employment agreements were up for renewal, the Committee
considered the Company's performance and growth plans.
Bonuses. Under a recently adopted executive bonus plan, the Committee
determines bonuses based on the Company's overall performance, profitability,
working capital management and other qualitative and quantitative measurements.
In determining the amount of bonuses awarded, the Committee considers the
Company's revenues and profitability for the applicable period and each
executive's contribution to the success of the Company. The Company's executive
officers received bonuses which were deemed appropriate based upon existing
employment agreements and the Company's operating results during the fiscal
year.
Stock Options. Stock option awards are intended to attract, retain and
motivate personnel by affording them an opportunity to receive additional
compensation based upon the performance of the Company's Common Stock. The size
and grant of actual awards is determined by the Committee on an informal basis.
The Committee's determination as to the size of actual awards to individual
executives is subjective, after taking into account the relative
responsibilities and contributions of the individual executives.
The Compensation Committee:
Barry Emanuel
Steven Mendelow
Peter Siris
Anne Iverson
Stock Performance Graph
The following line graph compares from February 1, 1997 to January 31,
2002, the cumulative total stockholder return on the Company's Common Stock with
the cumulative total return on stocks of companies comprising the NASDAQ Market
Index and a Peer group assuming $100 was invested on February 1, 1997 in the
Company's Common Stock and in each of the foregoing indices and assumes
reinvestment of all dividends, if any, paid on such securities. The Company has
not paid any cash dividends and, therefore, the cumulative total return
calculation for the Company is based solely upon stock price appreciation and
not upon reinvestment of cash dividends. The Peer Group consists of K-Swiss,
Inc., the Company and Stride Rite Corporation which is based upon companies
classified under the Footwear, except Rubber, Standard Industrial Classification
number. Historical stock price is not necessarily indicative of future stock
price performance.
[STOCK PERFORMANCE GRAPH APPEARS HERE]
--------------------------------------FISCAL YEAR ENDING---------------------------
COMPANY/INDEX/MARKET 1/31/1997 1/31/1998 1/31/1999 1/31/2000 1/31/2001 1/31/2002
Candie's, Inc. $100.00 $95.18 $66.27 $19.28 $21.09 $39.71
SIC Code Index $100.00 $99.27 $93.55 $57.98 $84.43 $97.42
NASDAQ Market Index $100.00 $117.79 $183.83 $274.99 $196.89 $138.71
VOTING SECURITY OWNERSHIP OF
CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The following table sets forth certain information as of the Record Date,
based on information obtained from the persons named below, with respect to the
beneficial ownership of shares of Common Stock by (i) each person known by the
Company to be the beneficial owner of more than 5% of the outstanding shares of
Common Stock; (ii) each of the Named Persons; (iii) each of the Company's
directors; and (iv) all executive officers and directors as a group:
Amount and
Nature of Percentage of
Name and Address of Beneficial Beneficial
Beneficial Owner (1) Ownership (2) Ownership
-------------------------------------------------- ------------------------------ ------------------------------------
Neil Cole 3,553,925(3) 13.1%
Claudio Trust dated February 2, 1990 1,886,597 7.9%
2925 Mountain Maple Lane
Jackson, WY 83001
Michael Caruso 1,986,597(4) 8.3%
Barry Emanuel 98,063(5) *
Steven Mendelow 144,063(6) *
Deborah Sorell Stehr 133,333(7) *
Richard Danderline 85,000(8) *
John McPhee 245,883(9) 1.0%
Peter Siris 79,938(10) *
Ann Iverson 77,938(11) *
Sweet Sportswear, LLC 3,000,000(12) 12.5%
Hubert Guez
All executive officers and directors as a 7,172,260 (3) (5) (6) (7) 26.0%
group (eight persons) (8) (10) (11) (12)
-------------------------------------------------- ------------------------------ ------------------------------------
* Less than 1%
(1) Unless otherwise indicated, each beneficial owner has an address at
400 Columbus Avenue, Valhalla, New York 10595-1335.
(2) A person is deemed to have beneficial ownership of securities that can
be acquired by such person within 60 days of the Record Date, upon
exercise of warrants or options. Consequently, each beneficial owner's
percentage ownership is determined by assuming that warrants or
options held by such person (but not those held by any other person)
and which are exercisable within 60 days from the Record Date have
been exercised. Unless otherwise noted, the Company believes that all
persons referred to in the table have sole voting and investment power
with respect to all shares of Common Stock reflected as beneficially
owned by them.
(3) Includes 3,091,000 shares of Common Stock issuable upon exercise of
options owned by Neil Cole. Also includes 462,925 shares of Common
Stock owned by Mr. Cole's former wife over which Mr. Cole has certain
voting rights but no rights to dispose of or pecuniary interest.
(4) Represents shares held by Claudio Trust dated February 2, 1990, of
which Mr. Caruso is the trustee and includes 100,000 shares of Common
Stock issuable upon exercise of options owned by Michael Caruso.
(5) Includes 17,938 shares of Common Stock issued to Mr. Emanuel and
80,125 shares of Common Stock issuable upon exercise of options .
(6) Includes 17,938 shares of Common Stock issued to Mr. Mendelow, 60,750
shares of Common Stock owned by C&P Associates, of which Mr. Mendelow
and his wife are affiliated and 65,375 shares of Common Stock issuable
upon exercise of options.
(7) Represents shares of Common Stock issuable upon exercise of options.
(8) Represents shares of Common Stock issuable upon exercise of options.
(9) Represents 228,333 shares of Common Stock issuable upon exercise of
options and 17,550 shares of Common Stock owned by Mr. McPhee.
(10) Represents 7,938 shares of Common Stock issued to Mr. Siris, 70,000
shares of Common Stock issuable upon exercise of options and 2,000
shares of Common Stock owned by Mr. Siris' minor daughter.
(11) Includes 7,938 shares of Common Stock issued to Ms. Iverson and 70,000
shares of Common Stock issuable upon the exercise of options.
(12) Represents shares of Common Stock held by Sweet Sportswear, LLC. Mr.
Guez, a recently appointed member of the Company's Board of Directors,
is a managing member of Sweet Sportswear.
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
During Fiscal 2002, the Company purchased approximately $16 million of
footwear through Redwood Shoe Inc., a company with which Mark Tucker, a former
director of the Company who resigned as of June 2001, is affiliated. The Company
is no longer purchasing footwear through Redwood Shoe Inc.
During Fiscal 2002, Neil Cole, Chairman of the Board, President and CEO of
Candie's, Inc. founded the Candie's Foundation ("the Foundation"), a charitable
foundation whose purpose is to raise national awareness concerning to the
problems of teenage pregnancy. During the year, the Company advanced an
aggregate of $1,058,0000 to the Foundation on which interest is being charged at
a rate per annum that is equal to the prime rate, and at January 31, 2002 had a
balance due of $699,000. The Company has reserved $350,000 against this
receivable. Although the Company believes that the amount due will be recovered
in full, the reserve was established because of the Foundation's limited
operating history in fund raising activities.
AUDIT COMMITTEE REPORT
In January 2002, the Audit Committee met with management and
representatives of BDO Seidman, LLP to review and discuss the audit and the
procedures and timing of the audit. In April 2002, the Audit Committee met with
management and representatives of BDO Seidman, LLP to review and discuss the
audited financial statements. The Audit Committee also conducted discussions
with the Company's independent auditors, BDO Seidman, LLP, regarding the matters
required by the Statement on Auditing Standards No. 61. As required by
Independence Standards Board Standard No. 1, "Independence Discussion with Audit
Committees," the Audit Committee has discussed with and received the required
written disclosures and confirming letter from BDO Seidman, LLP regarding its
independence and has discussed with BDO Seidman, LLP its independence. Based
upon the review and discussions referred to above, the Audit Committee
recommended to the Board of Directors that the audited financial statements be
included in the Company's Annual Report on Form 10-K for the year ended January
31, 2002.
The Audit Committee -
Barry Emanuel, Ann Iverson, Steven Mendelow, Peter Siris
PROPOSAL I
AMENDMENT TO CERTIFICATE OF INCORPORATION
TO EFFECT AN INCREASE IN
AUTHORIZED SHARES OF COMMON STOCK
The Company's Certificate of Incorporation currently provides for
authorized capital consisting of 30,000,000 shares of Common Stock, $.001 par
value and 5,000,000 shares of Preferred Stock, $.01 par value. At the Annual
Meeting, the stockholders will be asked to vote upon an amendment to the
Certificate of Incorporation of the Company (the "Proposed Amendment") to
increase the number of authorized shares of Common Stock, $.001 par value per
share, from 30,000,000 to 75,000,000 shares. The number of shares of authorized
Preferred Stock will remain unchanged. Approval of this amendment requires the
affirmative vote of the holders of a majority of the Shares of Common Stock of
the Company that are issued and outstanding as of the Record Date. The Proposed
Amendment would amend Article FOURTH of the Company's Certificate of
Incorporation. The Proposed Amendment is set forth in full as Exhibit A to this
Proxy Statement.
The Board of Directors considers the Proposed Amendment advisable in order
to provide flexibility for future capital requirements. The development of the
Company to date has been financed in part through the issuance of its Common
Stock or securities convertible into Common Stock and the Board of Directors
believes that it would be beneficial to the Company to be in a position to make
additional issuances of such Common Stock or convertible securities if
circumstances warrant such issuances. Of the 30,000,000 shares of Common Stock
currently authorized, 23,979,639 have been issued and approximately 8,051,400
shares have been reserved for issuance upon exercise of outstanding options and
warrants. The Company, therefore, would not have sufficient authorized but
unissued shares of Common Stock to satisfy its current contractually obligations
if it were to issue all of the shares of Common Stock currently reserved for
issuance upon exercise of options and warrants outstanding and available for
future grant under its stock option plans. Mr. Neil Cole, the Company's Chief
Executive Officer has advised the Company that he will not exercise certain
options owned by him until such time as the Company's authorized shares of
Common Stock is increased or the aggregate number of outstanding shares of
Common Stock and securities convertible into Common Stock are less than the
number of shares of Common Stock then authorized. Approval by the stockholders
of the Proposed Amendment at the Annual Meeting will avoid the possible need to
call and hold a special meeting for that purpose at a later date on an
accelerated timetable. The Board of Directors is empowered to authorize the
issuance of the additional shares of Common Stock at such time or times, to such
persons and for such consideration as the Board deems appropriate, without
further shareholder action. Although such additional shares could be used to
dilute the share ownership of persons seeking to obtain control of the Company,
approval of the Proposed Amendment is not being sought for that purpose. The
Company has no current plans to issue the additional shares of Common Stock that
are the subject of the Proposed Amendment other than with respect to any
obligation it has under existing options and warrants that are outstanding or
available for future grant pursuant to the Company's stock option plans, and in
connection with the Company's requirement to issue shares of its Common Stock as
a final payment in the settlement of the Willow Creek class action.
None of the Company's Common Stock has any pre-emptive rights.
Recommendation
THE BOARD OF DIRECTORS BELIEVES THAT THE PROPOSED AMENDMENT IS
IN THE BEST INTEREST OF THE COMPANY AND RECOMMENDS A VOTE FOR THE PROPOSED
AMENDMENT.
PROPOSAL II
ADOPTION OF 2002
STOCK OPTION PLAN
At the Annual Meeting, the Company's stockholders will be asked to approve
the adoption of the Company's 2002 Stock Option Plan and to provide for
2,000,000 shares of Common Stock to be reserved for issuance under the 2002
Stock Option Plan.
The Board believes that in order to enable the Company to continue to
attract and retain personnel of the highest caliber, provide incentive for
officers, directors, key employees and other key persons and continue to promote
the well-being of the Company, it is in the best interest of the Company and its
stockholders to provide to officers, directors, key employees, consultants and
other independent contractors who perform services for the Company, through the
granting of stock options, the opportunity to participate in the value and/or
appreciation in value of the Company's Common Stock. The Board has found that
the grant of options under stock option plans has proven to be a valuable tool
in attracting and retaining key employees. It believes that such authority, in
view of the substantial growth of the Company and need to continue to grow,
should be expanded to include the adoption of the 2002 Stock Option Plan. The
Board believes that such authority will provide the Company with significant
means to continue to attract and retain talented personnel and maintain current
key employees.
To date, no options have been granted under the 2002 Stock Option Plan. If
the 2002 Stock Option Plan is approved by the Company's stockholders, options to
purchase up to 2,000,000 shares of Common Stock may be granted under the plan by
the Board or a Committee of the Board responsible for administering the plan.
The timing and specific terms of any grants and the recipients of any grants
cannot be determined at this time.
The following table sets forth certain information as of the Record Date
regarding outstanding options, warrants and other rights to purchase Common
Stock that were outstanding on the Record Date.
------------------------------ ------------------------ ------------------------- ------------------------------
(a) (b) (c)
------------------------------ ------------------------ ------------------------- ------------------------------
Plan Category Number of securities Weighted-average Number of securities
to be issued upon exercise price of remaining for future
exercise of outstanding options, issuance under equity
outstanding options, warrants and rights compensation plans
warrants and rights (excluding securities
reflected in column (a))
------------------------------ ------------------------ ------------------------- ------------------------------
Equity compensation plans 5,099,275 2.44 88,125
approved by security holders
Equity compensation plans 905,000 2.48 1,070,000
not approved by security
holders*
Acquired/Assumed equity -- -- --
compensation plans
(Aggregated)
Individual Arrangements 889,000 1.72 --
(Aggregated)
------------------------------ ------------------------ ------------------------- ------------------------------
Total 6,893,275 2.35 1,158,125
------------------------------ ------------------------ ------------------------- ------------------------------
* Represents options granted under the Company's 2001 Stock Option
Plan which plan provides for the grant of non-qualified options to
purchase up to 2,000,000 shares of the Company's Common Stock at
exercise prices equal to the fair market value of the Common Stock on
the date of grant. The terms of the options and the persons to whom
the options are issued is determined by the administration of the 2001
Stock Option Plan which is administered by either the Company's Board
of Directors or a committee of at least two Board members. The 2001
Plan expires in December 2011.
The following summary of the 2002 Stock Option Plan does not purport to be
complete and is qualified in its entirety by reference to the full text of the
2002 Stock Option Plan attached as Exhibit B to this Proxy Statement.
Summary of the 2002 Stock Option Plan
In May 2002, the Board of Directors approved the 2002 Stock Option Plan,
and recommended that the Company's stockholders adopt the 2002 Stock Option Plan
at the Annual Meeting of Stockholders. Pursuant to the 2002 Stock Option Plan,
officers, directors, employees and consultants of the Company will be eligible
to receive incentive stock options ("Incentive Stock Options") as provided in
Section 422 of the Internal Revenue Code of 1986, as amended, (the "Code"), and
"non-qualified" stock options to purchase up to an aggregate of 2,000,000 shares
of Common Stock. The number of shares of Common Stock that may be granted and
the timing of grants to executive officers and non-executive officers of the
Company under the 2002 Stock Option Plan is subject to the discretion of the
Board of Directors or a Committee of the Board that will administer the plan. On
May 24, 2002, the closing price of the Company's Common Stock as reported by
NASDAQ was $ 4.28.
The 2002 Stock Option Plan will be administered by the Board or a Committee
appointed by the Board. The Board or Committee will determine, among other
things, the persons to whom options will be granted, the types of options
granted, the number of shares subject to options and the exercise price,
provided that the exercise price of all Incentive Stock Options and
non-qualified stock options granted must be at least equal to 100% of the fair
market value of the Common Stock on the date of grant (110% in the case of
Incentive Stock Options granted to stockholders who own more than 10% of the
outstanding Common Stock) or earlier as determined by the Board or Committee or
as otherwise set forth in the plan. The Board or Committee also determines the
term of each option, the restrictions or limitations thereof and the manner in
which each option may be exercised. Options granted under the plan will expire
not later than the tenth anniversary of the date of grant (the fifth anniversary
in the case of Incentive Stock Options granted to stockholders who own more than
10% of the outstanding Common Stock). With certain limited exceptions, in the
event that an option holder ceases to be employed by the Company, such option
holder's options terminate. Pursuant to the provisions of the 2002 Stock Option
Plan, the aggregate fair market value, determined as of the date(s) of grant,
for which Incentive Stock Options are first exercisable by an option holder
during any calendar year cannot exceed $100,000.
Certain Federal Income Tax Consequences of the 2002 Stock Option Plan
The following is a brief summary of the Federal income tax aspects of
grants made under the 2002 Stock Option Plan based upon statutes, regulations
and interpretations in effect on the date hereof. This summary is not intended
to be exhaustive, and does not describe state or local tax consequences.
1. Incentive Stock Options. The participant will recognize no taxable
income upon the grant or exercise of an Incentive Stock Option. Upon a
disposition of the shares after the later of two years from the date of grant
and one year after the transfer of the shares to the participant, (i) the
participant will recognize the difference, if any, between the amount realized
and the exercise price as long-term capital gain or long-term capital loss (as
the case may be) if the shares are capital assets in his or her hands; and (ii)
the Company will not qualify for any deduction in connection with the grant or
exercise of the options. The excess, if any, of the fair market value of the
shares on the date of exercise of an Incentive Stock Option over the exercise
price will be treated as an item of adjustment for his or her taxable year in
which the exercise occurs and may result in an alternative minimum tax liability
for the participant. In the case of a disposition of shares in the same taxable
year as the exercise where the amount realized on the disposition is less than
the fair market value of the shares on the date of exercise, there will be no
adjustment since the amount treated as an item of adjustment, for alternative
minimum tax purposes, is limited to the excess of the amount realized on such
disposition over the exercise price which is the same amount included in regular
taxable income.
If Common Stock acquired upon the exercise of an Incentive Stock Option is
disposed of prior to the expiration of the holding periods described above, (i)
the participant will recognize ordinary compensation income in the taxable year
of disposition in an amount equal to the excess, if any, of the lesser of the
fair market value of the shares on the date of exercise or the amount realized
on the disposition of the shares, over the exercise price paid for such shares;
and (ii) the Company will qualify for a deduction equal to any such amount
recognized, subject to the requirements of Section 162(m) of the Code and that
the compensation be reasonable. The participant will recognize the excess, if
any, of the amount realized over the fair market value of the shares on the date
of exercise, if the shares are capital assets in his or her hands, as short-term
or long-term capital gain, depending on the length of time that the participant
held the shares, and the Company will not qualify for a deduction with respect
to such excess.
Subject to certain exceptions for disability or death, if an Incentive
Stock Option is exercised more than three months following the termination of
the participant's employment, the option will generally be taxed as a
Non-Qualified Stock Option.
2. Non-Qualified Stock Options. With respect to non-qualified stock options
(i) upon grant of the option, the participant will recognize no income; (ii)
upon exercise of the option (if the shares are not subject to a substantial risk
of forfeiture), the participant will recognize ordinary compensation income in
an amount equal to the excess, if any, of the fair market value of the shares on
the date of exercise over the exercise price, and the Company will qualify for a
deduction in the same amount, subject to the requirements of Section 162(m) of
the Code and that the compensation be reasonable; (iii) the Company will be
required to comply with applicable Federal income tax withholding requirements
with respect to the amount of ordinary compensation income recognized by the
participant; and (iv) on a sale of the shares, the participant will recognize
gain or loss equal to the difference, if any, between the amount realized and
the sum of the exercise price and the ordinary compensation income recognized.
Such gain or loss will be treated as short-term or long-term capital gain or
loss if the shares are capital assets in the participant's hands depending upon
the length of time that the participant held the shares.
Recommendation
THE BOARD OF DIRECTORS BELIEVES THAT THE 2002 STOCK OPTION
PLAN IS IN THE BEST INTERESTS OF THE COMPANY AND ITS STOCKHOLDERS AND
UNANIMOUSLY RECOMMENDS A VOTE FOR THE APPROVAL OF THE 2002 STOCK OPTION PLAN.
PROPOSAL III
RATIFICATION OF THE
APPOINTMENT OF INDEPENDENT AUDITORS
BDO Seidman, LLP has audited and reported upon the financial statements of
the Company for Fiscal 2002. The Board of Directors has re-appointed BDO
Seidman, LLP as the Company's independent accountants for the Company's fiscal
year ending January 31, 2003. Although stockholder approval of the Board of
Directors' appointment of BDO Seidman, LLP is not required by law, the Board of
Directors believes that it is advisable to give stockholders an opportunity to
ratify this appointment. Furthermore, although the Board of Directors is
submitting the appointment of BDO Seidman, LLP for stockholder ratification, it
reserves the right, even after ratification by stockholders, to change the
appointment of BDO Seidman, LLP as auditors, at any time during the 2003 fiscal
year, if it deems such change to be in the best interests of the Company. A
representative of BDO Seidman, LLP is expected to be present at the Annual
Meeting with the opportunity to make a statement if he or she desires to do so
and is expected to be available to respond to appropriate questions.
Audit Fees. The aggregate fees billed by BDO Seidman, LLP for professional
services rendered for the audit of the Company's annual financial statements for
Fiscal 2002 and the reviews of the financial statements included in the
Company's Form 10-Q's for Fiscal 2002 totaled $224,000.
Financial Information Systems Design and Implementation Fees. There were no
fees billed to the Company by BDO Seidman, LLP for professional services related
to financial information systems design and implementation by BDO Seidman, LLP
for Fiscal 2002.
All Other Fees. The aggregate fees billed for services rendered by BDO
Seidman, LLP, other than for audit and information technology services,
described in the preceding two paragraphs, totaled $356,000 for Fiscal 2002, of
which $336,000 related to tax services and $20,000 related to all other
services.
The Audit Committee has considered whether the provision of services
covered in the preceding two paragraphs is compatible with maintaining BDO
Seidman, LLP's independence.
Recommendation
THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR RATIFICATION OF
THE APPOINTMENT OF BDO SEIDMAN, LLP AS THE COMPANY'S INDEPENDENT AUDITORS FOR
THE FISCAL YEAR ENDING JANUARY 31, 2003.
STOCKHOLDER PROPOSALS FOR 2003 ANNUAL MEETING
Stockholders who wish to present proposals appropriate for consideration at
the Company's annual meeting of stockholders to be held in the year 2003 must
submit the proposal in proper form to the Company at its address set forth on
the first page of this proxy statement and in accordance with applicable
regulations of the SEC not later than January 27, 2003 in order for the
proposition to be considered for inclusion in the Company's proxy statement and
form of proxy relating to such annual meeting. Any such proposals, as well as
any questions related thereto, should be directed to the Secretary of the
Company.
After the January 27, 2003 deadline, a stockholder may present a proposal
at the Company's 2002 annual meeting if it is submitted to the Company's
Secretary at the address set forth above no later than April 13, 2003. If timely
submitted, in proper form, the stockholder may present the proposal at the 2003
annual meeting, but the Company is not obligated to include the matter in its
proxy statement.
OTHER INFORMATION
Proxies for the Annual Meeting will be solicited by mail and through
brokerage institutions and all expenses involved, including printing and
postage, will be paid by the Company.
A COPY OF THE COMPANY'S ANNUAL REPORT FOR THE FISCAL YEAR ENDED JANUARY 31,
2002 ON FORM 10-K IS BEING FURNISHED HEREWITH TO EACH STOCKHOLDER OF RECORD AS
OF THE CLOSE OF BUSINESS ON MAY 24, 2002. ADDITIONAL COPIES OF SUCH ANNUAL
REPORT WILL BE PROVIDED FOR A NOMINAL CHARGE UPON WRITTEN REQUEST TO:
CANDIE'S, INC.
400 COLUMBUS AVENUE
VALHALLA, NEW YORK 10595-1335
ATTENTION: DEBORAH SORELL STEHR
The Board of Directors is aware of no other matters, except for those
incident to the conduct of the Annual Meeting, that are to be presented to
stockholders for formal action at the Annual Meeting. If, however, any other
matters properly come before the Annual Meeting or any adjournments thereof, it
is the intention of the persons named in the proxy to vote the proxy in
accordance with their judgment.
By order of the Board of Directors,
Neil Cole,
Chairman of the Board,
President and Chief Executive Officer
May 28, 2002
EXHIBIT A
FORM OF AMENDMENT TO
CERTIFICATE OF INCORPORATION
The Certificate of Incorporation of the Corporation has been amended as
follows by striking out the first sentence of Article FOURTH as it now exists
and inserting in lieu and instead thereof a new first sentence of Article
FOURTH, reading as follows:
"The total number of shares of stock which the Corporation
shall have authority to issue is eighty million (80,000,000) shares, of
which seventy-five million (75,000,000) shares shall be common stock,
of the par value of $.001 per share, and five million (5,000,000)
shares shall be preferred stock, of the par value of $.01 per share."
EXHIBIT B
2002 STOCK OPTION PLAN
OF
CANDIE'S, INC.
1. Purpose. Candie's, Inc. (the "Company") desires to attract and retain
the best available talent and encourage the highest level of performance
in order to continue to serve the best interests of the Company, and its
stockholders. By affording key personnel and other persons who are expected to
contribute to the success of the Company the opportunity to acquire proprietary
interests in the Company and by providing them incentives to put forth maximum
efforts for the success of the Company, the 2002 Stock Option Plan of the
Company (the "2002 Plan") is expected to contribute to the attainment of those
objectives.
The word "Subsidiary" or "Subsidiaries", as used herein, shall have the
meaning set forth in Section 424(f) of the Internal Revenue Code of 1986, as
amended (the "Code"), or any successor thereto.
The word "Parent" as used herein, shall have the meaning set forth in
Section 424(e) of the Code, or any successor thereto.
2. Scope and Duration. Options under the 2002 Plan may be granted in the
form of incentive stock options ("Incentive Options") as provided in Section 422
of the Code, or in the form of nonqualified stock options ("Non-Qualified
Options"). (Unless otherwise indicated, references in the 2002 Plan to "options"
include Incentive Options and Non-Qualified Options.) The maximum aggregate
number of shares as to which options may be granted from time to time under the
2002 Plan is 2,000,000 shares of the common stock of the Company ("Common
Stock"), which shares may be, in whole or in part, authorized but unissued
shares or shares reacquired by the Company. The maximum number of shares with
respect to which options may be granted under the 2002 Plan to any individual
employee of the Company or a subsidiary of the Company during the term of the
2002 Plan is 1,000,000. If an option shall expire, terminate or be surrendered
for cancellation for any reason without having been exercised in full, the
shares represented by the option or portion thereof not so exercised shall
(unless the 2002 Plan shall have been terminated) become available for
subsequent option grants under the 2002 Plan. As provided in Paragraph 13
hereof, the 2002 Plan shall become effective on May 8, 2002, and unless
terminated sooner pursuant to Paragraph 14 hereof, the 2002 Plan shall terminate
on May 8, 2012, and no option shall be granted hereunder after that date.
3. Administration. The 2002 Plan shall be administered by the Board of
Directors of the Company, or, at their discretion, by a committee that is
appointed by the Board of Directors to perform such function (the "Committee").
The Committee shall consist solely of at least two members of the Board of
Directors, each of whom shall serve at the pleasure of the Board of Directors
and shall be a "Non-Employee Director" as defined in Rule l6b-3 pursuant to the
Securities Exchange Act of 1934 (the "Act") or any successor rule and, if
practicable, shall be "outside directors" as defined in Section 162(m) of the
Code. Vacancies occurring in the membership of the Committee shall be filled by
appointment by the Board of Directors.
The Board of Directors or the Committee, as the case may be, shall have
plenary authority in its sole discretion, subject to and not inconsistent with
the express provisions of the 2002 Plan, to grant options, to determine the
purchase price of the Common Stock covered by each option, the term of each
option, the persons to whom, and the time or times at which, options shall be
granted and the number of shares to be covered by each option; to designate
options as Incentive Options or Non-Qualified Options; to interpret the 2002
Plan; to prescribe, amend and rescind rules and regulations relating to the 2002
Plan; to determine the terms and provisions of the option agreements (which need
not be identical) entered into in connection with options under the 2002 Plan;
and to make all other determinations deemed necessary or advisable for the
administration of the 2002 Plan. The Board of Directors or the Committee, as the
case may be, may delegate to one or more of its members or to one or more agents
such administrative duties as it may deem advisable, and the Board of Directors
or the Committee, as the case may be, or any person to whom it has delegated
duties as aforesaid may employ or engage one or more persons to render advice
with respect to any responsibility the Board of Directors or the Committee, as
the case may be, or such person may have under the 2002 Plan.
4. Eligibility; Factors to be Considered in Granting Options. Incentive
Options shall be limited to persons who are employees of the Company or its
present and future Subsidiaries or, if applicable, its present and future Parent
and at the date of grant of any option are in the employ of the Company or its
present and future Subsidiaries or Parent. In determining the employees to whom
Incentive Options shall be granted and the number of shares to be covered by
each Incentive Option, the Board of Directors or the Committee, as the case may
be, shall take into account the nature of employees' duties, their present and
potential contributions to the success of the Company and such other factors as
it shall deem relevant in connection with accomplishing the purposes of the 2002
Plan. An employee who has been granted an option or options under the 2002 Plan
may be granted an additional option or options, subject, in the case of
Incentive Options, to such limitations as may be imposed by the Code on such
options. Except as provided below, a Non-Qualified Option may be granted to any
person, including, but not limited to, employees, independent agents,
consultants, attorneys and advisors, who the Board of Directors or the
Committee, as the case may be, believes has contributed, or will contribute, to
the success of the Company.
5. Option Price. The purchase price of the Common Stock covered by each
option shall be determined by the Board of Directors or the Committee, as the
case may be, and shall not be less than 100% of the Fair Market Value (as
defined in Paragraph 15 hereof) of a share of the Common Stock on the date on
which the option is granted. Such price shall be subject to adjustment as
provided in Paragraph 12 hereof. The Board of Directors or the Committee, as the
case may be, shall determine the date on which an option is granted; in the
absence of such a determination, the date on which the Board of Directors or the
Committee, as the case may be, adopts a resolution granting an option shall be
considered the date on which such option is granted.
6. Term of Options. The term of each option shall be not more than 10 years
from the date of grant, as the Board of Directors or the Committee, as the case
may be, shall determine, subject to earlier termination as provided in
Paragraphs 10 and 11 hereof.
7. Exercise of Options. (a) Subject to the provisions of the 2002 Plan,
options granted under the 2002 Plan shall become exercisable as determined by
the Board of Directors or Committee, as the case may be. In its sole discretion,
the Board of Directors or the Committee, as the case may be, may, in any case or
cases, prescribe that options granted under the 2002 Plan become exercisable in
installments or provide that an option may be exercisable in full immediately
upon the date of its grant or at a later date. The Board of Directors or the
Committee, as the case may be, may, in its sole discretion, also provide that an
option granted pursuant to the 2002 Plan shall immediately become exercisable in
full upon the happening of any of the following events or such other events as
the Board of Directors or the Committee, as the case may be, determines: (i) a
"change in control" of the Company as hereafter defined; or (ii) with respect to
an employee, on his 65th birthday. In the event of a question or controversy as
to whether or not any of the events hereinabove described has taken place, a
determination by the Board of Directors or the Committee, as the case may be,
that such event has or has not occurred shall be conclusive and binding upon the
Company and participants in the 2002 Plan.
(b) For purposes of the 2002 Plan, a "change in control of the Company"
shall be deemed to occur, unless previously consented to in writing by the
optionee or any person entitled to act under Paragraph 11 hereof, upon (i) the
actual acquisition or the execution of an agreement to acquire 15% or more of
the voting securities of the Company by any person or entity not affiliated with
the grantee, or any person entitled to act under Paragraph 11 hereof (other than
pursuant to a bona fide underwriting agreement relating to a public distribution
of securities of the Company), (ii) the commencement of a tender or exchange
offer for more than 15% of the voting securities of the Company by any person or
entity not affiliated with the grantee, or any persons entitled to act under
Paragraph 11 hereof, (iii) the commencement of a proxy contest against the
management for the election of a majority of the Board of Directors of the
Company if the group conducting the proxy contest owns, has or gains the power
to vote at least 15% of the voting securities of the Company, (iv) a vote by the
Board of Directors to merge, consolidate, sell all or substantially all of the
assets of the Company to any person or entity not affiliated with the grantee,
or any persons entitled to act under Paragraph 11 hereof, or (v) the election of
directors constituting a majority of the Board of Directors who have not been
nominated or approved by the Company; provided, however, for purposes of the
2002 Plan, it shall not be deemed a change in control of the Company if such
person or entity acquires 15% or more of the voting securities of the Company
(A) as a result of a combination of the Company or a wholly-owned subsidiary of
Company with another entity owned or controlled by such persons or entity
(whether effected by a merger, sale of assets or exchange of stock or otherwise)
(the "Combination") and (B) after completion of the Combination and for a
continuous period of not less than twelve (12) months thereafter (I) executive
officers of the Company (as designated in the Company's most recent Annual
Report on Form 10-K or its most recent Proxy Statement filed with the Securities
and Exchange Commission with respect to its Annual Meeting of Stockholders)
immediately prior to the Combination constitute not less than 50% of the
executive officers of the Company after the Combination or (II) the members of
the Board of Directors of Company immediately prior to the Combination
constitute not less than 50% of the membership of the Board of Directors of the
Company after the Combination. For purposes of calculating the executive
officers of the Company after the Combination, those executive officers who are
terminated by the Company for cause or who terminate their employment without
good reason, as determined by the Board of Directors or Committee shall be
excluded from the calculation entirely.
(c) Any option at any time granted under the 2002 Plan may contain a
provision to the effect that the optionee (or any persons entitled to act under
Paragraph 11 hereof) may, at any time at which Fair Market Value is in excess of
the exercise price and prior to exercising the option, in whole or in part,
request that the Company purchase all or any portion of the option as shall then
be exercisable at a price equal to the difference between (i) an amount equal to
the option price multiplied by the number of shares subject to that portion of
the option in respect of which such request shall be made and (ii) an amount
equal to such number of shares multiplied by the fair market value of the
Company's Common Stock (within the meaning of Section 422 of the Code and the
treasury regulations promulgated thereunder) on the date of purchase. The
Company shall have no obligation to make any purchase pursuant to such request,
but if it elects to do so, such portion of the option as to which the request is
made shall be surrendered to the Company. The purchase price for the portion of
the option to be so surrendered shall be paid by the Company, less any
applicable withholding tax obligations imposed upon the Company by reason of the
purchase, at the election of the Board of Directors or the Committee, as the
case may be, either in cash or in shares of Common Stock (valued as of the date
and in the manner provided in clause (ii) above), or in any combination of cash
and Common Stock, which may consist, in whole or in part, of shares of
authorized but unissued Common Stock or shares of Common Stock held in the
Company's treasury. No fractional share of Common Stock shall be issued or
transferred and any fractional share shall be disregarded. Shares covered by
that portion of any option purchased by the Company pursuant hereto and
surrendered to the Company shall not be available for the granting of further
options under the 2002 Plan. All determinations to be made by the Company
hereunder shall be made by the Board of Directors or the Committee, as the case
may be.
Any option granted under the 2002 Plan may also contain a provision to the
effect that the payment of the exercise price may be made by delivery to the
Company by the optionee of an executed exercise form together with irrevocable
instructions to a broker-dealer to sell or margin a sufficient portion of the
shares sold or margined and deliver the sale or margin loan proceeds directly to
the Company to pay for the exercise price.
(d) An option may be exercised, at any time or from time to time (subject,
in the case of Incentive Options, to such restrictions as may be imposed by the
Code), as to any or all full shares as to which the option has become
exercisable until the expiration of the period set forth in Paragraph 6 hereof,
by the delivery to the Company, at its principal place of business, of (i)
written notice of exercise in the form specified by the Board of Directors or
the Committee, as the case may be, specifying the number of shares of Common
Stock with respect to which the option is being exercised and signed by the
person exercising the option as provided herein, (ii) payment of the purchase
price; and (iii) in the case of Non-Qualified Options, payment in cash of all
withholding tax obligations imposed on the Company by reason of the exercise of
the option. Upon acceptance of such notice, receipt of payment in full, and
receipt of payment of all withholding tax obligations, the Company shall cause
to be issued a certificate representing the shares of Common Stock purchased. In
the event the person exercising the option delivers the items specified in (i)
and (ii) of this Subsection (d), but not the item specified in (iii) hereof, if
applicable, the option shall still be considered exercised upon acceptance by
the Company for the full number of shares of Common Stock specified in the
notice of exercise but the actual number of shares issued shall be reduced by
the smallest number of whole shares of Common Stock which, when multiplied by
the Fair Market Value of the Common Stock as of the date the option is
exercised, is sufficient to satisfy the required amount of withholding tax.
(e) If the payment of the purchase price is to be made in cash, the cash
purchase price of the shares as to which an option is exercised shall be paid in
full at the time of exercise. Payment shall be made in cash, which may be paid
by check or other instrument acceptable to the Company; in addition, subject to
compliance with applicable laws and regulations and such conditions as the Board
of Directors or the Committee, as the case may be, may impose, the Board of
Directors or the Committee, as the case may be, in its sole discretion, may on a
case-by-case basis elect to accept payment in shares of Common Stock of the
Company which are already owned by the option holder and have been owned by the
option holder for at least six months (or such other period as the Board or
Committee, as the case may be, determines), valued at the Fair Market Value
thereof (as defined in Paragraph 15 hereof) on the date of exercise; provided,
however, that with respect to Incentive Options, no such discretion may be
exercised unless the option agreement permits the payment of the purchase price
in that manner.
(f) Except as provided in Paragraphs 10 and 11 hereof, no option granted to
an employee may be exercised at any time by such employee unless such employee
is then an employee of the Company or a Subsidiary or Parent.
8. Incentive Options. (a) With respect to Incentive Options granted, the
aggregate Fair Market Value (determined in accordance with the provisions of
Paragraph 15 hereof at the time the Incentive Option is granted) of the Common
Stock or any other stock of the Company or its current or future Subsidiaries or
Parent with respect to which incentive stock options, as defined in Section 422
of the Code, are exercisable for the first time by any employee during any
calendar year (under all incentive stock option plans of the Company and its
parent and subsidiary corporations, as those terms are defined in Section 424 of
the Code) shall not exceed $100,000.
(b) No Incentive Option may be awarded to any employee who immediately
prior to the date of the granting of such Incentive Option owns more than 10% of
the combined voting power of all classes of stock of the Company or any of its
Subsidiaries unless the exercise price under the Incentive Option is at least
110% of the Fair Market Value of the Common Stock on the date of grant and the
option expires within 5 years from the date of grant.
(c) In the event of amendments to the Code or applicable regulations
relating to Incentive Options subsequent to the date hereof, the Company may
amend the provisions of the 2002 Plan, and the Company and the employees holding
options may agree to amend outstanding option agreements, to conform to such
amendments
9. Non-Transferability of Options. Except as may be otherwise provided by
the Board or Committee at or after the date of grant with respect to a
Non-Qualified Option, options granted under the 2002 Plan shall not be
transferable otherwise than by will or the laws of descent and distribution, and
options may be exercised during the lifetime of the optionee only by the
optionee. No transfer of an option by the optionee by will or by the laws of
descent and distribution shall be effective to bind the Company unless the
Company shall have been furnished with written notice thereof and a copy of the
will and such other evidence as the Company may deem necessary to establish the
validity of the transfer and the acceptance by the transferor or transferees of
the terms and conditions of such option.
10. Termination of Employment. In the event that the employment of an
employee to whom an option has been granted under the 2002 Plan shall be
terminated (except as set forth below or in Paragraph 11 hereof), such option
may be, subject to the provisions of the 2002 Plan, exercised (to the extent
that the employee was entitled to do so at the termination of his employment) at
any time within three (3) months after such termination (or such longer or
shorter period as may be determined by the Board or Committee, as the case may
be, at or at any time after the date of grant of the option), but not later than
the date on which the option terminates; provided, however, that any option
which is held by an employee whose employment is terminated for cause or
voluntarily without the consent of the Company (for purposes of the 2002 Plan
termination due to retirement at or after age 65 shall be deemed to be with the
consent of the Company) shall, to the extent not theretofore exercised,
automatically terminate as of the date of termination of employment. As used
herein, "cause" shall mean conduct amounting to fraud, dishonesty, negligence,
or engaging in competition or solicitations in competition with the Company and
breaches of any applicable employment agreement between the Company or any
Subsidiary or Parent and the optionee. Options granted to employees under the
2002 Plan shall not be affected by any change of duties or position so long as
the holder continues to be a regular employee of the Company or any of its
current or future Subsidiaries. Any option agreement or any rules and
regulations relating to the 2002 Plan may contain such provisions as the Board
of Directors or the Committee, as the case may be, shall approve with reference
to the determination of the date employment terminates and the effect of leaves
of absence. The Board of Directors, or Committee, as the case may be, shall, in
its sole discretion, determine for purposes of the 2002 Plan whether the Company
has consented to the departure of an employee who voluntarily leaves the employ
of the Company.
Notwithstanding the foregoing, the Board of Directors or Committee, as the
case may be, either at or any time after the date of grant of an option, may, in
its discretion, provide for longer or shorter periods than the periods specified
above during which an option held by an employee may be exercised by the
employee after the employee ceases to be employed by the Company or a Subsidiary
or Parent. Any such determination shall be based upon such factors as the Board
of Directors or the Committee, as the case may be, shall determine, provided,
however, that no such discretion shall be exercised with respect to an employee
whose employment with the Company or Subsidiary or Parent has been terminated
for cause.
11. Death or Disability of Employee. If an employee to whom an option has
been granted under the 2002 Plan shall die while employed by the Company or a
Subsidiary or Parent or within three (3) months (or such longer or shorter
period as the Board of Directors, or the Committee, as the case may be, shall
determine at or any time after the date of grant of the option) after the
termination of such employment (other than termination for cause or voluntary
termination without the consent of the Company), such option may be exercised,
to the extent exercisable by the employee on the date of death, by a legatee or
legatees of the employee under the employee's last will, or by the employee's
personal representative or distributees, at any time within one year after the
date of the employee's death, but not later than the date on which the option
terminates. In the event that the employment of an employee to whom an option
has been granted under the 2002 Plan shall be terminated as the result of a
disability (the determination of which shall be made by the Board of Directors
or Committee, as the case may be), such option may be exercised, to the extent
exercisable by the employee on the date of such termination, at any time within
one year after the date of such termination, but not later than the date on
which the option terminates.
Notwithstanding the foregoing, the Board of Directors, or Committee, as the
case may be, either at or at any time after the date of grant of an option, may,
in its discretion, provide for longer or shorter periods than the one year
period specified above in which an option held by an employee who ceases to be
employed by the Company as a result of death or disability may be exercised. Any
such determination shall be based upon such factors as the Board or the
Committee, as the case may be, shall determine, provided, however, that no such
discretion shall be exercised with respect to an employee who dies after the
employee's employment with the Company or Parent or Subsidiary has been
terminated for cause.
12. Adjustments Upon Changes in Capitalization, Etc. Notwithstanding any
other provision of the 2002 Plan, the Board of Directors or the Committee, as
the case may be, may, at any time, make or provide for such adjustments to the
2002 Plan, to the number and class of shares issuable thereunder or to any
outstanding options as it shall deem appropriate to prevent dilution or
enlargement of rights, including adjustments in the event of changes in the
outstanding Common Stock by reason of stock dividends, split-ups,
recapitalizations, mergers, consolidations, combinations or exchanges of shares,
separations, reorganizations, liquidations and the like. In the event of any
offer to holders of Common Stock generally relating to the acquisition of their
shares, the Board of Directors or the Committee, as the case may be, may make
such adjustment as it deems equitable in respect of outstanding options and
rights, including in its sole discretion revision of outstanding options and
rights so that they may be exercisable for the consideration payable in the
acquisition transaction. Any such determination by the Board of Directors or the
Committee, as the case may be, shall be conclusive and binding upon the Company
and the participants in the 2002 Plan. Any fractional shares resulting from such
adjustments shall be eliminated.
13. Effective Date. The 2002 Plan shall become effective on May 8, 2002,
the date of adoption by the Board of Directors of the Company, provided,
however, that no Incentive Option may be granted under the 2002 Plan unless the
2002 Plan is adopted by the stockholders of the Company on or before May 7,
2003.
14. Termination and Amendment. The Board of Directors of the Company may
suspend, terminate, modify or amend the 2002 Plan, provided that any amendment
that would increase the aggregate number of shares which may be issued under the
2002 Plan or materially modify the requirements as to eligibility for
participation in the 2002 Plan, shall be subject to the approval of the
Company's stockholders, except that any such increase or modification that may
result from adjustments authorized by Paragraph 12 hereof does not require such
approval. No suspension, termination, modification or amendment of the 2002 Plan
may, without the consent of the person to whom an option shall theretofore have
been granted, adversely affect the rights of such person under such option.
15. Miscellaneous. As said term is used in the 2002 Plan, the "Fair Market
Value" of a share of Common Stock on any day means: (a) if the principal market
for the Common Stock is a national securities exchange or the National
Association of Securities Dealers Automated Quotations System ("NASDAQ), the
closing sales price of the Common Stock on such day as reported by such exchange
or market system, or on a consolidated tape reflecting transactions on such
exchange or market system, or (b) if the principal market for the Common Stock
is not a national securities exchange and the Common Stock is not quoted on
NASDAQ, the mean between the highest bid and lowest asked prices for the Common
Stock on such day as reported by the National Quotation Bureau, Inc.; provided
that if clauses (a) and (b) of this paragraph are both inapplicable, or if no
trades have been made or no quotes are available for such day, the Fair Market
Value of the Common Stock shall be determined by the Board of Directors or the
Committee, as the case may be, and shall be conclusive as to the Fair Market
Value of the Common Stock.
In the event the Company is the subject of an acquisition, merger or
consolidation or similar transaction where the Company is not the surviving
entity, the Board or Committee, as the case may be, may in its sole discretion,
but shall not be required to, request that as a condition of the transaction the
surviving entity assume the obligations of the Company with respect to the
options then outstanding under the 2002 Plan.
The Board of Directors or the Committee, as the case may be, may require,
as a condition to the exercise of any options granted under the 2002 Plan, that
to the extent required at the time of exercise, (i) the shares of Common Stock
reserved for purposes of the 2002 Plan shall be duly listed, upon official
notice of issuance, upon stock exchange(s) on which the Common Stock is listed,
(ii) a Registration Statement under the Securities Act of 1933, as amended, with
respect to such shares shall be effective, and/or (iii) the person exercising
such option deliver to the Company such documents, agreements and investment and
other representations as the Board of Directors or the Committee, as the case
may be, shall determine to be in the best interests of the Company.
During the term of the 2002 Plan, the Board of Directors or the Committee,
as the case may be, in its sole discretion, may offer one or more option holders
the opportunity to surrender any or all unexpired options for cancellation or
replacement. If any options are so surrendered, the Board of Directors or the
Committee, as the case may be, may then grant new Non-Qualified or Incentive
Options to such holders for the same or different numbers of shares at higher or
lower exercise prices than the surrendered options. Such new options may have a
different term and shall be subject to the provisions of the 2002 Plan the same
as any other option.
Anything herein to the contrary notwithstanding, the Board of Directors or
the Committee, as the case may be, may, in its sole discretion, impose more
restrictive conditions on the exercise of an option granted pursuant to the 2002
Plan, including the ability of an option holder to exercise an option after
cessation of employment; however, any and all such conditions shall be specified
in the option agreement limiting and defining such option. The Board of
Directors or the Committee, as the case may be, may also amend the terms of any
option previously granted under the 2002 Plan, provided that the terms of any
such amended option are not inconsistent with any provisions of the 2002 Plan
and that no such amendment shall adversely affect the rights of the person to
whom the option has been granted without the consent of such person or, if
applicable, the permitted transferee of such optionee or any person entitled to
act under Paragraph 11 hereof.
Nothing in the 2002 Plan or in any option granted pursuant to the 2002 Plan
shall confer upon any employee any right to continue in the employ of the
Company or any of its Subsidiaries or parent or affiliated companies or
interfere in any way with the right of the Company or any such Subsidiary or
parent or affiliated companies to terminate such employment at any time.
16. Compliance with SEC Regulations. It is the Company's intent that the
2002 Plan comply in all respects with Rule 16b-3 of the Act or any successor
rule and any regulations promulgated thereunder. If any provision of the 2002
Plan is later found not to be in compliance with said Rule, the provisions shall
be deemed null and void.
CANDIE'S, INC.
400 Columbus Avenue
Valhalla, New York 10595-1335
PROXY FOR ANNUAL MEETING OF STOCKHOLDERS TO BE HELD JUNE 24, 2002.
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
The undersigned hereby appoints NEIL COLE and RICHARD DANDERLINE, and each
of them, Proxies, with full power of substitution in each of them, in the name,
place and stead of the undersigned, to vote at the Annual Meeting of
Stockholders of Candie's, Inc. (the "Company") on Monday, June 24, 2002, at the
New York City offices of the Company, 215 West 40th Street, New York , NY 10018
or at any adjournment or adjournments thereof, according to the number of votes
that the undersigned would be entitled to vote if personally present, upon the
following matters:
1. ELECTION OF DIRECTORS:
|_| FOR all nominees listed below |_| WITHHOLD AUTHORITY
(except as marked to the contrary below). to vote for all nominees listed below.
Neil Cole, Barry Emanuel, Steven Mendelow, Peter Siris, Ann Iverson and Hubert Guez.
(INSTRUCTION: To withhold authority to vote for any individual nominee, write that nominee's name in the space below.)
-----------------------------------------------------------------------------------------------------------------------
(Continued and to be signed on reverse side)
2. Approval of an amendment to the Certificate of Incorporation to increase
the Company's authorized common stock.
|_| FOR |_| AGAINST |_| ABSTAIN
3. Approval of the Company's 2002 Stock Option Plan.
|_| FOR |_| AGAINST |_| ABSTAIN
4. Ratification the appointment of BDO Seidman, LLP as the Company's
independent auditors for the fiscal year ending January 31, 2003.
|_| FOR |_| AGAINST |_| ABSTAIN
5. In their discretion, the Proxies are authorized to vote upon such other
business as may properly come before the meeting.
THIS PROXY WILL BE VOTED IN ACCORDANCE WITH THE INSTRUCTIONS GIVEN ABOVE. IF NO
INSTRUCTIONS ARE GIVEN, THIS PROXY WILL BE VOTED FOR THOSE NOMINEES AND THE
PROPOSALS LISTED ABOVE.
DATED: ________________________________, 2002
Please sign exactly as name
appears hereon. When shares are
held by joint tenants, both
should sign. When signing as
attorney,executor,administrator,
trustee or guardian, please
give full title as such. If a
corporation, please sign in
full corporate name by President
or other authorized officer. If
a partnership, please sign in
partnership name by authorized
person.
--------------------------------
Signature
--------------------------------
Signature if held jointly
Please mark, sign, date and return this proxy card promptly using the
enclosed envelope.