ESCROW AGREEMENT
ESCROW AGREEMENT made this day of September 24, 1998 between CANDIE'S,
INC., a Delaware corporation with its principal place of business at 0000
Xxxxxxxxxxx Xxxxxx, Xxxxxxxx, Xxx Xxxx 00000 (the "Corporation") Xxxxxxx
Xxxxxx, as Trustee of the Claudio Trust dated February 2, 1990 residing at
0000 Xxxxxxxx Xxxxx Xxxx, Xxxxxxx, Xxxxxxx 00000, Xxxx Xxxxxxxxx, residing
0000 Xxxxxxxx Xxxxxx Xxxxx, Xxxxxxxxx, XX 00000 (each a "Shareholder" and
collectively the "Shareholders") and Xxxxxx Xxxxxxxxxx LLP, as escrow agent
(the "Escrow Agent").
WHEREAS, the Corporation, Xxxxxxx Xxxxxx & Co., Inc., and the
Shareholders have entered into a stock purchase agreement dated the date
hereof (the "Stock Purchase Agreement") pursuant to which the Corporation,
through its wholly owned subsidiary, will purchase all of the outstanding
capital stock of Xxxxxxx Xxxxxx & Co., Inc. in consideration for a certain
number of shares of the Corporation's common stock; and
WHEREAS, it is a condition of the Stock Purchase Agreement that the
Shareholders pledge a certain number of shares of the Corporation's Common
Stock received by them in the Acquisition by depositing such shares into
escrow with Escrow Agent;
NOW, THEREFORE, in consideration of the mutual covenants contained
herein and for good and valuable consideration, the receipt and sufficiency
of which are hereby acknowledged, it is hereby agreed:
1. DEPOSIT - Simultaneously with the execution of this Escrow
Agreement, the Shareholders shall place into escrow the stock certificate(s)
of the Shareholders representing the number of Shares set forth in Schedule A
together with endorsed stock powers attached thereto (the "Pledged Candie's
Shares").
2. DISTRIBUTION OF ESCROWED SHARES - The Pledged Candie's Shares shall
be held by Escrow Agent as security for the indemnification obligations of
the Shareholders as set forth in Paragraph 8 of the Stock Purchase Agreement.
Promptly after the date which is one (1) year from the date hereof, Escrow
Agent shall release to the Shareholders one half of the originally Pledged
Candie's Shares less the number of Pledged Candie's Shares having an
aggregate value equal to the amount of any outstanding indemnification
obligations which have been claimed by Candie's or Buyer in accordance with
Paragraph 8 of the Stock Purchase Agreement (the "Indemnification Shares"),
and (ii) promptly after the date which is two (2) years from the date hereof,
Escrow Agent shall release to the Shareholders the
remaining Pledged Candie's Shares, less the number of Indemnification Shares,
if any, necessary, at such date, to satisfy outstanding indemnification
obligations claimed by Candie's. For purposes of determining the number of
Pledged Candie's Shares released or applied under the previous sentence, the
value of each share of Candie's Common Stock shall be deemed to be the
greater of (i) the closing sale price of a share of Candie's Common Stock on
the Closing Date, or (ii) the closing sale price of a share of Candie's
Common Stock on the date on which the Pledged Candie's Shares are released or
applied by Escrow Agent in payment of the indemnification obligations in
question.
3. DUTIES OF THE ESCROW AGENT
a. The Escrow Agent, by executing this Escrow Agreement, signifies
its agreement to hold the Pledged Candie's Shares for the purposes as
provided in this Escrow Agreement. In the event of any dispute or conflict
between the Corporation and Shareholders as to the release of the Pledged
Candie's Shares, such dispute or conflict shall be determined by appropriate
court action. During the pendency of any disputes and until the final
adjudication of such dispute (including expiration of time for appeal and
petition for rehearing), the Escrow Agent shall be entitled to retain
possession of the Pledged Candie's Shares.
b. The Corporation and the Shareholders shall indemnify defend and
hold Escrow Agent harmless from and against any and all loss, damage, tax,
liability and expense that may be incurred arising out of this Agreement
(including reasonable legal fees and expenses) except Escrow Agent's gross
negligence or willful misconduct, notwithstanding that Escrow Agent has acted
as counsel for the Corporation under the Stock Purchase Agreement. In all
questions arising under this Escrow Agreement, the Escrow Agent may rely on
the advice of counsel, and for anything done, omitted or suffered in good
faith by the Escrow Agent based on such advice, the Escrow Agent shall not be
liable to anyone. The Escrow Agent shall not be required to take any action
hereunder involving any expenses unless the payment of such expense shall be
made or provided for in a manner satisfactory to it.
4. TERM - This Escrow Agreement shall remain in full force and
effect for a term of two years or until all of the Pledged Candie's Shares
have been distributed in accordance with the provisions hereof.
5. NOTICES - All notices hereunder by any party to another shall be
sent by telecopy, certified mail, return receipt requested, by overnight
courier, or by personal delivery, addressed as set forth on the first page of
this Escrow Agreement. Notices shall be deemed served (i) if sent by
overnight courier, on the date of delivery of the notice by such overnight
courier, and (ii) if sent by personal delivery, or by telecopy on the date of
delivery if delivered or received prior
to 5:00 P.M., and on the next business day if delivered or received after
5:00 P.M., or, if sent by certified mail, when received. A copy of all
notices under this Escrow Agreement shall be given to Escrow Agent, 000
Xxxxxxxxx Xxxxxx, Xxx Xxxx, Xxx Xxxx 00000.
6. ENTIRE AGREEMENT MODIFICATION; BINDING EFFECT - This Escrow
Agreement, together with the Stock Purchase Agreement dated the date hereof
between the Corporation and the Shareholders, constitutes the entire
agreement between the parties with respect to the subject matter hereof, and
may not be assigned by either party or changed or modified except in a
writing executed by the Corporation and the Shareholders.
7. GOVERNING LAW - This Escrow Agreement shall be governed by the
laws of the State of New York. The Corporation and Shareholder agree that,
should there be any litigation relating to this Escrow Agreement, they shall
bring such litigation in New York County, New York.
IN WITNESS WHEREOF, the parties hereto have executed this Escrow
Agreement as of the day and year first above written.
CANDIE'S, INC.
By: /s/ Xxxx Xxxx
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Xxxx Xxxx
XXXXXX XXXXXXXXXX LLP, as Escrow Agent
By: /s/ XXXXXX XXXXXXXXXX LLP
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SHAREHOLDERS:
/s/ Xxxxxxx Xxxxxx
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Xxxxxxx Xxxxxx, Trustee of the Claudio
Trust dated February 2, 1990
/s/ Xxxx Xxxxxxxxx
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Xxxx Xxxxxxxxx
