Exhibit 10.1

 

EMPLOYMENT AGREEMENT

 

THIS EMPLOYMENT AGREEMENT (this “Agreement”) is made as of April 1, 2004, among
Tommy Hilfiger Corporation, a British Virgin Islands corporation (together with
its successors and assigns, “THC”), Tommy Hilfiger U.S.A., Inc. (together with
its successors and assigns, “THUSA”), a wholly owned subsidiary of THC, and Joel
J. Horowitz (“Executive”).

 

1. Employment. THUSA agrees to employ Executive hereunder, and Executive accepts
such employment, for the period beginning as of April 1, 2004 (the “Effective
Date”) and ending as set forth in Section 1(c) hereof (the “Employment Period”).

 

(a) Position and Duties.

 

(i) Effective as of the Effective Date and during the Employment Period,
Executive shall continue in his appointment as a Director of the Board of
Directors of THUSA and shall be appointed to serve as the Executive Chairman of
THUSA, with the customary duties, responsibilities and authority of the
Executive Chairman, including, without limitation, presiding over all of the
meetings of the THUSA Board of Directors, and providing transitional support to
the THUSA CEO and President with respect to the business and operations of
THUSA. Notwithstanding the foregoing, at the direction of a majority of the
Board of Directors of THC, THUSA may reassign the titles, position, duties,
responsibilities and authority of the Executive Chairman during the Employment
Period, provided, however, that upon such reassignment, Executive shall be
considered an employee of THUSA through the Employment Period and the terms and
conditions of this Agreement shall otherwise continue in full force and effect.

 

(ii) Effective as of the Effective Date and during the Employment Period,
Executive shall continue in his appointment as a Director of the Board of
Directors of THC (the “THC Board”) and shall be appointed by the THC Board to
serve as the Executive Chairman of THC, with the customary duties,
responsibilities and authority of the Executive Chairman, including, without
limitation, presiding over all of the meetings of the THC Board of Directors,
and providing transitional support to the THC CEO and President with respect to
the business and operations of THC and its subsidiaries; provided, however, the
services performed by the Executive within the United States shall be limited to
the supervision and oversight of THC’s investment in its subsidiaries.
Notwithstanding the foregoing, upon the approval of a majority of the Board of
Directors of THC, THC may reassign the titles, position, duties,
responsibilities and authority of the Executive Chairman during the Employment
Period, provided, however, that upon such reassignment, Executive shall continue
to be considered an employee of THC through the Employment Period and the terms
and conditions of this Agreement shall otherwise continue in full force and
effect. It is the intention of the parties that upon the expiration of
Executive’s term as a Director of THC at the THC 2004 Annual Meeting, subject to
the vote of the shareholders of THC, Executive shall be elected to and serve as
a member of the THC Board for an additional 3-year term (the “New Director
Term”), with such New Director Term to run partially during the Employment
Period. Following the Employment Period, Executive may, at his discretion,
continue to serve as a Director until the end of the New Director Term.

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(iii) In his capacity as Executive Chairman of THC, Executive shall report to
the THC Board and Executive shall devote substantially all his business time and
attention to the business and affairs of THC and its subsidiaries. In his
capacity as Executive Chairman of THUSA, Executive shall report to the THUSA
Board of Directors. Anything herein to the contrary notwithstanding, nothing
shall preclude Executive from (A) serving on the boards of directors of a
reasonable number of other corporations (as disclosed to and approved by the THC
Board) or the boards of a reasonable number of trade associations and/or
charitable organizations, (B) engaging in charitable activities and community
affairs, and (C) managing his personal investments and affairs, provided that
such activities do not materially interfere with the proper performance of his
duties and responsibilities under this Agreement.

 

(b) Salary, Bonus and Benefits.

 

(i) During the Employment Period, THUSA shall pay Executive base salary at an
annualized rate of $1,000,000 in consideration for the performance of services
on the behalf of THC and THUSA. Each payment of such base salary is referred to
as “Base Salary,” and the annualized rate thereof is referred to as the “Annual
Base Salary Rate.” The Base Salary shall be payable in accordance with THUSA’s
regular payroll practices but, in any event, no less frequently than monthly.

 

(ii) For the fiscal year of THUSA ending March 31, 2005 (“FY 05”), Executive
shall be eligible to earn an annual cash bonus (the “Annual Bonus”) payable by
THUSA, on the terms and conditions set forth below. Any Annual Bonus that
becomes due hereunder shall be paid when other bonuses are paid to Senior
Executives (as defined below), but in any event not later than 90 days after the
end of FY 05.

 

(A) The Annual Bonus shall be payable only (1) if the minimum net revenue goal
set forth in clause (B) below (the “Minimum Net Revenue Goal”) is met, and (2)
actual Income Before Taxes for FY 05 is at least 85% of the Budgeted Amount. If
these conditions are met, the amount of the Annual Bonus shall be based upon
actual Net Revenue and actual Income Before Taxes for FY 05, as compared to the
Budgeted Amount of Net Revenue and the Budgeted Amount of Income Before Taxes
(as those terms are defined below), and computed as set forth in clauses (B)
through (F) below, based upon the amount of the Base Salary actually earned by
Executive for FY 05 or the portion thereof during which he is employed hereunder
(the “Earned Base Salary”). For these purposes: (i) “Income Before Taxes” shall
mean the income before taxes of THC and its consolidated subsidiaries for FY 05,
as reported in THC’s audited financial statements, provided that there shall be
excluded from the calculation of Income Before Taxes (x) except to the extent
reflected in the Budgeted Amount of Income Before Taxes, the cumulative effect
of changes in accounting principles, and charges for impairment of goodwill and
other intangible assets that were reflected in such audited financial statements
as of the Effective Date, (y) the effect of acquisitions and divestitures that
were not contemplated in the Budgeted Amount of Net Income Before Taxes, and (z)
the effect of items specifically identified on the face of THC’s audited income
statement as “special items” that were not contemplated in the Budgeted Amount
of Net Income Before Taxes (including any benefits resulting from such special
items); (ii) the “Net Revenue” means the net revenue of THC and its consolidated
subsidiaries for FY 05, as

 

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reported in THC’s audited financial statements; and (iii) the “Budgeted Amount”
of Income Before Taxes or of Net Revenue shall mean the budgeted amount of
Income Before Taxes or of Net Revenue, as applicable, for FY 05 (calculated on a
basis consistent with the calculations used for THC’s audited financial
statements), as approved by the THC Board (after consultation with Executive)
before the beginning of FY 05, subject to amendment by the THC Board (after
consultation with Executive) within the period of 90 days after the beginning of
the fiscal year.

 

(B) (i) The “Minimum Net Revenue Goal” shall be met only if the Net Revenue for
FY 05 is at least equal to 90% of the Budgeted Amount of Net Revenue; (ii) if
Net Revenue for FY 05 is equal to 90% or more, but less than 95%, of the
Budgeted Amount of Net Revenue, the “Net Revenue Achievement Factor” shall equal
50%; and (iii) if Net Revenue for FY 05 is equal to 95% or more of the Budgeted
Amount of Net Revenue, the “Net Revenue Achievement Factor” shall equal 100%.

 

(C) If the Minimum Net Revenue Goal is met, and actual Income Before Taxes for
FY 05 equals the Budgeted Amount of Income Before Taxes, the amount of the
Annual Bonus shall be (I) 100% of the Earned Base Salary, times (II) the Net
Revenue Achievement Factor.

 

(D) If the Minimum Net Revenue Goal is met, and actual Income Before Taxes for
FY 05 exceeds the Budgeted Amount of Income Before Taxes, the amount of the
Annual Bonus shall equal (I) a percentage of the Earned Base Salary, equal to
(x) 100% plus (y) 5% for each 1% of Income Before Taxes in excess of the
Budgeted Amount of Income Before Taxes, up to a maximum of 200% of Earned Base
Salary, times (II) the Net Revenue Achievement Factor.

 

(E) If the Minimum Net Revenue Goal is met, and actual Income Before Taxes for
FY 05 is less than the Budgeted Amount of Income Before Taxes, but not less than
85% of the Budgeted Amount of Income Before Taxes, the amount of the Annual
Bonus shall equal (I) the percentage of the Earned Base Salary based on the
table below, times (II) the Net Revenue Achievement Factor:

 

Actual Income Before Taxes as a

percentage of Budgeted Amount

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Percentage of

Earned Base Salary

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At least 95% but less than 100%

   75 %

At least 90% but less than 95%

   50 %

At least 85% but less than 90%

   25 %

 

(iii) Except as provided below, during the Employment Period, Executive shall be
entitled to participate in all employee pension and welfare benefit plans and
programs made available to the Senior Executives (as defined below) or to
employees of THUSA generally, on a basis no less favorable than the basis
provided to the Senior Executives, as such plans or programs may be in effect
from time to time, including, without limitation, pension, profit

 

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sharing, savings and other retirement plans or programs, medical, dental,
hospitalization, short-term and long-term disability and life insurance plans,
accidental death and dismemberment protection, travel accident insurance, and
any other pension or retirement plans or programs and any other employee welfare
benefit plans or programs that may be sponsored by THC or any of its affiliates
from time to time, including plans that supplement the above-listed types of
plans or programs, whether funded or unfunded; provided, however, that during
the Employment Period, Executive shall not be eligible to participate in the
Tommy Hilfiger U.S.A., Inc. Supplemental Executive Retirement Plan. For purposes
of this Agreement, the “Senior Executives” means other senior executives of THC
and THUSA, other than Tommy Hilfiger.

 

(iv) Except as provided below, during the Employment Period, Executive shall
participate in all other benefits and perquisites available to the Senior
Executives at levels, and on terms and conditions, that are commensurate with
his positions and responsibilities hereunder, and shall receive such additional
benefits and perquisites as the THC Board may, at its sole discretion, from time
to time provide.

 

(v) During the Employment Period, THUSA shall provide Executive with the use of
private aircraft in commuting between Nevada and New York, as well as an S-Class
Mercedes Benz or comparable automobile for business and personal use in New
York.

 

(vi) During the Employment Period, Executive shall not be eligible to
participate in option or restricted stock grants and any other long-term
incentive plans of THC and its affiliates, as in effect from time to time, in
which the Senior Executives are eligible to participate.

 

(vii) During the Employment Period, Executive shall keep records of sufficient
detail to permit THC and THUSA to allocate Executive’s compensation between THC
and THUSA.

 

(c) Separations and Other Terminations.

 

(i) Except as hereinafter provided in this Section 1(c)(i), the Employment
Period shall continue until, and shall end upon, March 31, 2005. Notwithstanding
the foregoing, the Employment Period shall end early upon Executive’s death,
Disability (as defined below) or resignation in writing or at such time as the
THC Board determines to cause THUSA to terminate Executive’s employment prior to
March 31, 2005 (a “Separation”). A Separation as a result of a resignation by
Executive without Good Reason or a termination of Executive’s employment by
THUSA without Cause shall be effective upon written notice by Executive to
THUSA, or by THUSA to Executive, as applicable; provided that any such
termination by THUSA must be approved by the THC Board. Executive agrees that he
will resign from the THC Board, and from the boards of directors of any
affiliates of THC of which he may be a member, upon a Separation prior to March
31, 2005. A voluntary resignation by Executive shall not be deemed to be a
breach of this Agreement by Executive, and a termination of Executive’s
employment by THUSA shall not be deemed to be a breach of this Agreement by THC
or THUSA. The date on which any termination of Executive’s employment is
effective, including March 31, 2005 if the Employment Period ends on such date
without a prior Separation, is referred to as the “Date of Termination.”

 

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(ii) If there is a Separation as a result of the termination of Executive’s
employment by THUSA for Cause or by Executive without Good Reason, Executive
shall be entitled to (A) Base Salary through the Date of Termination, (B) the
balance of any accrued and vested amounts or benefits under Sections 1(b)(iii),
l(b)(iv), and 10(a) hereof which he would otherwise be entitled to receive as of
the Date of Termination, but which have not theretofore been paid or provided,
and (C) all other rights and benefits in which Executive is vested or entitled
to under the plans, agreements or policies of THC or any of its affiliates, as
applicable, or by law as of the Date of Termination. If the Employment Period
ends without a prior Separation, Executive shall be entitled to the payments and
benefits described in the preceding sentence, together with any Annual Bonus for
FY 05 to which Executive is entitled and that has not yet been paid.

 

(iii) If there is a Separation as a result of Executive’s death, then: (A) his
estate or beneficiaries (as the case may be) shall be entitled to (1) the
payments and benefits described in the first sentence of Section 1(c)(ii) hereof
and (2) a lump-sum payment equal to the Annual Bonus (if any) for FY 05,
calculated based on the Earned Base Salary through the Date of Termination and
the Net Revenue and Income Before Taxes for all of FY 05, and payable following
the end of FY 05, all in accordance with Section (1)(b)(ii) (a “Pro-Rata
Bonus”); and (B) Executive’s eligible dependents shall be entitled to
participate for one year in the medical plans of THUSA to the extent, and on the
same terms and conditions as, such dependents were participating in such plans
as of Executive’s death, with continuation coverage thereafter to be provided to
the extent required by the continuation coverage requirements of Section 601 et
seq. of the Employee Retirement Income Security Act of 1974, as amended, and
Section 4980B of the Code (“COBRA”).

 

(iv) “Disability” shall mean Executive’s disability within the meaning of the
long-term disability benefit plan of THC and its affiliates in which he
participates, which shall provide him with benefits not less favorable than
those that would be available to the Senior Executives upon their disability. If
there is a Separation as a result of Executive’s Disability, then in addition to
any benefits provided to Executive under such long-term disability plan: (A)
Executive shall be entitled to the payments and benefits described in the first
sentence of Section 1(c)(ii) hereof and to a Pro-Rata Bonus; and (B) Executive
and his eligible dependents shall be entitled to participate for one year in the
medical plans of THUSA to the extent, and on the same terms and conditions as,
Executive and such dependents were participating in such plans as of the Date of
Termination, with benefits thereafter to the extent required by COBRA; provided
that Executive and his spouse may continue to participate in THUSA’s or any of
its affiliates’ Senior Executive Medical Plan, as such may be in effect at the
time, at Executive’s sole cost and expense, until the earlier of Executive’s
becoming eligible to receive such benefits from a new employer or under
Medicare, or his death.

 

(v) If there is a Separation as a result of the termination of Executive’s
employment by THUSA without Cause or by Executive with Good Reason:

 

(A) Executive shall be entitled to the payments and benefits described in the
first sentence of Section 1(c)(ii) above and a lump sum payment equal to the
Annual Base Salary Rate calculated from the Date of Termination until March 31,
2005, and the Annual Bonus (if any) for FY 05, payable following the end of FY
05, all in accordance with Section 1(b)(ii);

 

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(B) Notwithstanding the foregoing, following the Date of Termination, Executive
shall continue to adhere to the covenants set forth in Section 2 and Sections 4
through 7 of this Agreement and THUSA shall have no obligation to make or
continue to make, as applicable, the payments described in this Section if
Executive commits, following the Date of Termination, any willful, material
breach of any of the covenants set forth in Section 2 and Sections 4 through 7.

 

(vi) In addition to the other benefits set forth in this Section 1(c), if there
is a Separation as a result of the termination of Executive’s employment by
THUSA without Cause or by Executive with Good Reason, then Executive shall be
entitled to the following: Until the earlier to occur of (A) Executive becoming
eligible to receive such benefits from a new employer or under Medicare, or (B)
24 months following the Date of Termination, Executive and his spouse may
participate, at the same cost and expense as other similarly situated Senior
Executives, in THUSA’s or any of its affiliates’ Senior Executive Medical Plan
and life insurance benefit plan, as such may be in effect from time to time,
with benefits comparable to benefits provided to the Senior Executives; provided
that Executive and his spouse may continue to participate in such Senior
Executive Medical Plan, as such may be in effect at the time, at Executive’s
sole cost and expense, until the earlier of Executive’s becoming eligible to
receive such benefits from a new employer or under Medicare, or his death. If
this Agreement expires by its terms on March 31, 2005 without a prior
Separation, Executive and his spouse may also continue to participate in such
Plan, as such may be in effect at the time, at Executive’s sole cost and
expense, until the earlier of Executive’s becoming eligible to receive such
benefits from a new employer or under Medicare, or his death.

 

(viii) For purposes hereof, “Cause” means:

 

  (1) Executive is convicted of or enters a plea of nolo contendere to a felony,
or a majority of the independent members of the THC Board determines in good
faith, based on reliable and substantial evidence, that Executive has committed
a felony;

 

  (2) Executive commits any willful breach of any of the covenants set forth in
Section 2 and Sections 4 through 6 below, provided that such breach has
resulted, or the THC Board determines in good faith in writing that such breach
is likely to result, in material harm to THC or any of its affiliates;

 

  (3) Any of the representations by Executive set forth in Section 8 below shall
not have been true as of the Effective Date (determined as if the phrase “to the
best of his knowledge” did not appear in Section 8), provided that such failure
to have been true results in material harm to THC or any of its affiliates;

 

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  (4) Executive’s willful failure or refusal to perform any of his material
duties or responsibilities under this Agreement, or to carry out reasonable
lawful directions from the THC Board or from the THUSA Board with the
concurrence of the THC Board in writing; provided that THUSA has given Executive
notice of such failure or refusal and the steps to be taken to cure such failure
or refusal, and Executive has failed to take reasonable steps to cure such
failure or refusal within ten days after receiving such notice;

 

  (5) Executive engages in conduct that constitutes, theft, misappropriation of
funds, embezzlement, material dishonesty or deliberate fraud (other than any
violation of law committed in good faith by Executive and in a manner he
reasonably believed to be in or not opposed to the best interests of THC and its
affiliates and with respect to which he had no reasonable cause to believe his
conduct was unlawful at the time the action was taken); provided that in any
such case, the THC Board determines in good faith in writing that such conduct
or violation has resulted, or is likely to result, in material harm to THC or
any of its affiliates; or

 

  (6) Executive commits willful gross neglect of, or willful gross misconduct in
carrying out, his duties under this Agreement.

 

An action or failure to act by Executive shall not be considered “willful” for
these purposes if Executive believed in good faith that his action or failure to
act was in, or not opposed to, the best interests of THC and its affiliates. A
termination for Cause shall be effective on the date specified in a written
notice to Executive by THUSA (as approved by a majority of the THC Board other
than Executive), but not before Executive has been given written notice
describing in detail the grounds on which the proposed termination is based and
a reasonable opportunity to be heard, with his counsel, at a meeting of the THC
Board. If THUSA terminates Executive’s employment in a purported termination for
Cause, but it is subsequently determined by an arbitrator that the termination
was not for Cause, the termination shall be considered to have been without
Cause. A requirement that the THC Board do anything hereunder “in writing” shall
be satisfied by a resolution or minutes of the THC Board (without limitation).

 

(ix) For purposes hereof, “Good Reason” means the occurrence of any of the
following events without the written consent of Executive:

 

  (A) A reduction of the Annual Base Salary Rate or the target bonus opportunity
as set forth in Section 1(b)(ii) above;

 

  (B) A failure of the shareholders of THC to elect Executive to the THC Board
in 2004, unless he is re-appointed to the THC Board within 60 days after such
election takes place; or

 

  (C) Any material breach by THC or THUSA of this Agreement.

 

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A termination of employment by Executive with Good Reason shall be effective on
the date specified in a written notice to THUSA by Executive, but not before (x)
Executive has given written notice to THUSA of his intention to terminate his
employment with Good Reason, such notice to describe in detail the grounds on
which the proposed termination is based, and (y) THUSA and THC have failed to
cure such grounds within thirty days after the date that such written notice has
been given to THUSA.

 

(d) No Mitigation; No Offset. In the event of any termination of Executive’s
employment, Executive shall be under no obligation to seek other employment and
there shall be no offset against amounts due Executive under this Agreement on
account of any remuneration attributable to any subsequent employment that he
may obtain.

 

(e) Nature of Payments. Any amounts due under Section 1(c) hereof are in the
nature of severance payments considered to be reasonable by THC and THUSA and
are not in the nature of a penalty, and are intended as liquidated damages for
THUSA’s termination of Executive’s employment without Cause or the action
constituting Good Reason, and shall be the sole remedy therefor.

 

2. Inventions and Other Intellectual Property. Executive agrees that all
inventions, innovations, improvements, developments, methods, designs, analyses,
drawings, reports, trademarks, slogans, product or other designs, business
plans, logos, advertising or marketing programs, and all similar or related
information which relate to THUSA’s or any of its affiliates’ business, research
and development being conducted or products or services being sold or under
development, at the time Executive’s employment terminates, and which are
conceived, developed or made by Executive, whether alone or jointly with others,
while employed hereunder (“Work Product”) belong to THC and THUSA. Executive
shall promptly disclose such Work Product to THUSA and perform, at THUSA’s sole
expense, all actions reasonably requested by THUSA (whether during or after the
Employment Period) to establish and confirm such ownership (including, without
limitation, assignments, consents, powers of attorney and other instruments). In
addition, THUSA shall reimburse Executive for any reasonable fees and expenses
of his counsel to review any documentation required pursuant to this Section 2.

 

3. Limitation. Section 2 of this Agreement regarding the ownership of inventions
and other intellectual property does not apply to the extent application thereof
is prohibited by any law the benefits of which cannot be waived by Executive.
Executive hereby waives the benefits of any such law to the maximum extent
permitted by law.

 

4. Confidential Information. Executive acknowledges that the information,
observations and data obtained by him during the course of his employment
hereunder concerning the business and affairs of THC and its affiliates,
including without limitation information concerning acquisition opportunities in
or reasonably related to the business or industry of THC and its affiliates, of
which Executive becomes aware during his employment hereunder are the property
of THC and its affiliates. Therefore, during and following the Employment
Period, other than in the course of performing his duties for THC or any of its
affiliates (including pursuant to Section 6 hereof), Executive agrees that he
will not intentionally disclose to any unauthorized person or use for his own
account any of such information, observations or data without the THC Board’s
written consent, unless and to the extent that (x)

 

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he is required to do so by law or by a court, governmental agency, legislative
body, or other person (including any committee of any such agency, body or other
entity) with apparent jurisdiction to order him to divulge, disclose or make
accessible such information, (y) it is necessary to enforce his rights under
this Agreement or any other agreement with THC or any of its affiliates or (z)
the aforementioned matters become generally known to and available for use by
the public or within the relevant trade or industry other than as a result of
Executive’s violation of this Section 4; provided that before disclosing any
such information, observations and data in reliance on clause (x), Executive
shall give notice to THUSA as far in advance of the required disclosure as is
lawful and practicable, shall use his best efforts to cooperate with THC and
THUSA, at their sole expense, in their efforts to prevent such disclosure from
being compelled, and shall use his best efforts to limit his disclosure to the
minimum compelled by law or court order, except to the extent THC or THUSA
agrees otherwise in writing. Executive agrees to deliver to THC at a Separation
or any other termination of his employment, or at any other time as THC may
reasonably request in writing, all memoranda, notes, plans, records, reports and
other documents (and copies thereof) relating to the business of THC and its
affiliates (including, without limitation, all acquisition prospects, lists and
contact information) which he may then possess or have under his control;
provided that Executive may retain for his personal use (and not for any use in
violation of this Section 4 or Section 5 hereof) his personal papers and other
materials of a personal nature, including diaries, calendars and Rolodexes, any
information he reasonably believes may be necessary for tax purposes, any
information showing his compensation or relating to reimbursement of expenses
and copies of plans, programs and agreements relating to his employment or the
termination thereof.

 

5. Non-Compete, Non-Solicitation.

 

(a) Executive acknowledges that in the course of his employment hereunder, he
will become familiar with trade secrets and customer lists of and other
confidential information concerning THC and its affiliates and may become
familiar with trade secrets of predecessors of THC and its affiliates, and that
his services will be of special, unique and extraordinary value to THC and
THUSA.

 

(b) Executive agrees that during the Employment Period, and, thereafter, until
September 30, 2005, he shall not directly or indirectly, through any person,
firm or corporation, alone or as a member of a partnership or as an officer,
director, stockholder, investor, employee or consultant of or in any other
corporation or enterprise or otherwise, engage or be engaged in, or assist any
other person, firm, corporation or enterprise in engaging or being engaged in,
the wholesale distribution, licensing or outlet retailing of better designer
apparel (consisting of men’s and women’s sportswear, jeanswear and/or children’s
wear), accessories, footwear, fragrance and/or home furnishings in any
geographic area in which THC or any of its affiliates is actively conducting
such business both during the Employment Period and at the time Executive
engages in such conduct (a “Competitive Business”). Anything herein to the
contrary notwithstanding, Executive shall not be deemed to be in violation of
this Section 5(b) if he provides services to (i) a subsidiary, division or
affiliate of a Competitive Business if such subsidiary, division or affiliate is
not itself engaged in a Competitive Business and Executive does not provide, and
continues not to provide, services or assistance to, and does not have, and
continues not to have, any responsibilities regarding, the Competitive Business
or (ii) a private equity investment or consulting business that has investments
in, or clients which are involved

 

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in, a Competitive Business, so long as Executive does not provide, and continues
not to provide, services or assistance to, and does not have, and continues not
to have, any responsibilities regarding, such Competitive Business.

 

(c) Executive further agrees that during the Employment Period, and, for a
period of two years following any Separation or other termination of his
employment hereunder, he shall not directly or indirectly solicit any Covered
Employee (as defined below) to quit or abandon his or her employ with THC or
such affiliate, for any purpose whatsoever. Anything herein to the contrary
notwithstanding, upon the request of any employee of THC or its affiliates,
Executive may provide personal references for such employee, including for
employment with another entity with which Executive is not affiliated. For these
purposes, a “Covered Employee” means (1) until the expiration of 180 days
following a Separation or other termination of Executive’s employment, any
employee of THC or of any of its affiliates, and (2) thereafter, any such
employee with the title of vice president or above. THC and THUSA each
acknowledges that its employees may join entities with which Executive is
affiliated and that such event shall not constitute a violation of this Section
5(c) if Executive was not involved in soliciting such employee or directly or
indirectly in hiring such employee or identifying such employee as a potential
recruit.

 

(d) Nothing in this Section 5 shall prohibit Executive from being: (i) a
stockholder in a mutual fund or a diversified investment company or (ii) a
passive owner of not more than two percent of the outstanding stock of any class
of a corporation, so long as Executive has no active participation in the
business of such corporation.

 

(e) To the extent permitted by law, if, at the time of enforcement of this
Section 5, a court or arbitrator holds that the restrictions stated herein are
unreasonable under circumstances then existing, the parties hereto agree that
the maximum period, scope or geographical area reasonable under such
circumstances shall be substituted for the stated period, scope or area and that
the court or arbitrator shall be allowed to revised the restrictions contained
herein to cover the maximum period, scope and area permitted by law; provided
that in no event shall such period, scope or area be broader than as set forth
in this Section 5.

 

6. Cooperation. During and following the Employment Period, Executive shall
cooperate with THC and its affiliates in connection with any litigation or
governmental or regulatory investigation or proceeding, against or involving THC
or any of its affiliates, whether administrative, civil or criminal in nature,
in which and to the extent THC or such affiliate reasonably deems Executive’s
cooperation necessary; provided that following the Employment Period, such
cooperation shall only be required with respect to matters relating to his
responsibilities for THC or THUSA (or any of their affiliates) or of which
Executive has knowledge, and shall be subject to his other personal and business
commitments. Executive shall be reimbursed by THUSA for his reasonable expenses,
including without limitation travel and attorneys’ fees if Executive reasonably
determines that separate representation is necessary, incurred in providing such
cooperation. In addition, Executive shall be compensated for any such
cooperation that occurs after the Relevant Date (as defined below) at the rate
of $5,000 per day. For these purposes, the “Relevant Date” means (a) if there is
a Separation as a result of the termination of Executive’s employment by THUSA
without Cause or by Executive with Good Reason, the last day of the Salary
Continuation Period, and (b) in all other cases, the Date of

 

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Termination. Executive agrees that, in the event he or anyone acting on his
behalf is served with any subpoena, order, directive or other legal process
involving THC or any of its affiliates, he or his attorney shall use their best
efforts promptly to notify THUSA’s Executive Vice President of Human Resources
of such service and of the content of any testimony or information to be
provided pursuant to such subpoena, order, directive or other legal process and
as soon as reasonably practicable, send to THUSA’s Executive Vice President of
Human Resources via overnight delivery (at the THUSA’s expense) a copy of said
documents served upon him or someone acting on his behalf.

 

7. Nondisparagement. Following the Employment Period, Executive shall not make
any public statements, written or oral, that disparage THC or any of its
affiliates, or any of their respective then-current directors or senior
executives. THC and THUSA agree that during and following the Employment Period,
they shall not, and each of them shall direct its then-current directors and
senior executives not to, make any public statements, written or oral, that
disparage Executive. Notwithstanding the foregoing, nothing in this Section 7
shall prohibit Executive, THC or THUSA or their respective directors and senior
executives, from (a) responding publicly to incorrect, disparaging or derogatory
public statements by a party hereto, to the extent reasonably necessary to
correct or refute such public statement or (b) making any truthful statement to
the extent (i) required by law or by any court, arbitrator, mediator or
administrative or legislative body (including any committee thereof) with actual
or apparent jurisdiction to order such party to make such truthful statements or
(ii) necessary in any litigation, arbitration or mediation involving this
Agreement. In addition, nothing in this Section 7 shall prohibit THC or THUSA
from making any truthful and factual press release or public filing that is
approved by a majority of the independent directors of THC.

 

8. Executive Representations. Executive represents and warrants to THC and THUSA
that to the best of his knowledge, (a) the execution, delivery and performance
of this Agreement by Executive does not and will not conflict with, breach,
violate or cause a default under any contract, agreement, instrument, order,
judgment or decree to which Executive is a party or by which he is bound as of
the Effective Date, (b) Executive is not a party to or bound by any legally
binding contract or agreement as of the Effective Date that would prevent or
hinder his performance of his obligations hereunder, and (c) upon the execution
and delivery of this Agreement by the parties, this Agreement shall be the valid
and binding obligation of Executive, enforceable in accordance with its terms.

 

9. Notices. Any notice provided for in this Agreement must be in writing and
must be personally delivered, mailed by first class mail (postage prepaid and
return receipt requested), or sent by reputable overnight courier service
(charges prepaid) to the address below indicated, or sent by facsimile to the
number below indicated:

 

If to THC or THUSA:

 

Tommy Hilfiger U.S.A., Inc.

25 West 39th Street

New York, New York 10018

Facsimile: 212-548-1818

Attention: Chief Executive Officer and President

 

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With a copy to:

 

Tommy Hilfiger U.S.A., Inc.

25 West 39th Street

New York, New York 10018

Facsimile: 212-548-1660

Attention: Executive Vice President of Human Resources

 

If to Executive:

 

c/o Tommy Hilfiger U.S.A., Inc.

25 West 39th Street

New York, New York 10018

Facsimile: 212-548-1660

 

or such other address or number or to the attention of such other person as the
recipient party shall have specified by prior written notice to the sending
party. Any notice under this Agreement shall be deemed to have been given (a)
when personally delivered to the recipient with written acknowledgment of
receipt, (b) three days after mailing by first class mail, (c) two days after
being sent by a nationally recognized overnight courier with written
acknowledgment of receipt or (d) when sent by facsimile with a printed record of
completed transmission being obtained by the sender.

 

10. General Provisions.

 

(a) Expenses. Executive is authorized to incur reasonable expenses in carrying
out his duties and responsibilities under this Agreement and THUSA shall
promptly reimburse him for all legitimate business expenses incurred in
connection with carrying out the business of THC and its affiliates, subject to
documentation and in accordance with THUSA’s reimbursement polices.

 

(b) Severability. Whenever possible, each provision of this Agreement shall be
interpreted in such manner as to be effective and valid under applicable law,
but if any provision of this Agreement is held to be invalid, illegal or
unenforceable in any respect under any applicable law or rule in any
jurisdiction, such invalidity, illegality or unenforceability shall not affect
any other provision or any other jurisdiction, but this Agreement shall be
reformed, construed and enforced in such jurisdiction as if such invalid,
illegal or unenforceable provision had never been contained herein; provided
that any reformation shall be effective only if the economic or legal substance
of the transactions contemplated hereby would not thereby be affected in any
manner materially adverse to any party hereunder; and provided, further, that
Section 5(e) shall supersede this Section 10(b) with respect to the matters set
forth herein, to the extent the two sections are inconsistent.

 

(c) Complete Agreement. It is acknowledged and agreed that the Amended and
Restated Employment Agreement dated as of June 30, 1992, by and between THUSA
and Executive, as amended as of March 8, 1994, August 7, 1998 and August 3, 2003
(the “Prior Agreement”), has expired as of March 31, 2004. This Agreement
embodies the complete agreement and understanding among the parties with respect
to the subject matter hereof and

 

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supersedes and preempts any prior understandings, agreements or representations
among the parties, written or oral, which may have related to the subject matter
hereof in any way, except for payment of any amounts that became due to
Executive under the Prior Agreement before its expiration that remain unpaid. In
the event of any inconsistency between any provision of this Agreement and any
provision of any plan, employee handbook, personnel manual, program, policy,
arrangement or agreement of THC or any of its affiliates applicable to
Executive, the provisions of this Agreement shall control to the extent more
favorable to Executive.

 

(d) Counterparts. This Agreement may be executed in separate counterparts, each
of which is deemed to be an original and all of which taken together constitute
one and the same agreement.

 

(e) Successors and Assigns. This Agreement shall be binding upon and inure to
the benefit of the parties and their respective successors, heirs (in the case
of Executive) and assigns. No rights or obligations of THC or THUSA under this
Agreement may be assigned or transferred by them except that such rights or
obligations may be assigned or transferred pursuant to a merger or
consolidation, or the sale or liquidation of all or substantially all of the
assets of THC or THUSA, as the case may be, provided in either case that the
successor, assignee or transferee is the successor to all or substantially all
of the assets of THC or THUSA and such successor, assignee or transferee assumes
the liabilities, obligations and duties of THC or THUSA, as contained in this
Agreement, either internally or as a matter of law. THC and THUSA each further
agrees that, in the event of a sale of assets or liquidation as described in the
preceding sentence, it shall take whatever action it legally can in order to
cause such assignee or transferee to assume its liabilities, obligations and
duties hereunder. No rights or obligations of Executive under this Agreement may
be assigned or transferred by Executive other than his rights to compensation
and benefits which may be transferred only by will, operation of law or as
provided below in this Section 10(e) or in any applicable plan, program, grant
or agreement of THC or any of its affiliates. Executive shall be entitled, to
the extent permitted under any applicable law, to select and change a
beneficiary or beneficiaries to receive any compensation or benefit payable
hereunder following Executive’s death by giving THUSA written notice thereof. In
the event of Executive’s death or a judicial determination of his incompetence,
references in this Agreement or any other agreement to Executive shall be
deemed, where appropriate, to refer to his beneficiary or beneficiaries, estate
or other legal representative.

 

(f) Tax Withholding. THC and THUSA may withhold from any and all payments and
benefits under this Agreement all federal, state, city, or other taxes to the
extent required pursuant to any law or governmental regulation or ruling;
provided that the payment of any such taxes with respect to equity awards shall
be governed by the applicable plan or award agreement.

 

(g) Choice of Law. All questions concerning the construction, validity and
interpretation of this Agreement and the exhibits hereto shall be governed by
and construed in accordance with the internal laws of the State of New York,
without giving effect to any choice of law or conflict of law provision or rule
(whether of the State of New York or any other jurisdiction) that would cause
the application of the laws of any jurisdiction other than the State of New
York.

 

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(h) Remedies. Executive acknowledges that the provisions of Section 2 and
Sections 4 through 7 above are reasonable and necessary for the protection of
THC and its affiliates, and that they may be materially and irrevocably damaged
if these provisions are not specifically enforced. Accordingly, Executive agrees
that, in addition to any other relief or remedies available to THC and THUSA,
and notwithstanding Section 10(l) below, THC and THUSA shall be entitled to seek
an appropriate injunctive or other equitable remedy (including without
limitation temporary, preliminary or permanent injunctive relief), which rights
shall be in addition to any damages and any other rights or remedies to which it
may be entitled, for the purposes of restraining Executive from any actual or
threatened breach of, or otherwise enforcing such provisions, and no bond or
security shall be required in connection therewith. THC and THUSA acknowledge
that their covenants under Section 7 above are reasonable and necessary for the
protection of Executive, and that he may be materially and irrevocably damaged
if such covenants are not specifically enforced. Accordingly, THC and THUSA each
agrees that, in addition to any other relief or remedies available to Executive,
and notwithstanding Section 10(l) below, Executive shall be entitled to seek an
appropriate injunctive or other equitable remedy (including without limitation
temporary, preliminary or permanent injunctive relief), which rights shall be in
addition to any damages and any other rights or remedies to which he may be
entitled, for the purposes of restraining THC or THUSA from any actual or
threatened breach of, or otherwise enforcing, such covenants, and no bond or
security shall be required in connection therewith.

 

(i) Amendment and Waiver. No provision in this Agreement may be amended unless
such amendment is agreed to in writing and signed by Executive and an authorized
officer of THC or THUSA. No waiver by either party of any breach by the other
party of any condition or provision contained in this Agreement to be performed
by such other party shall be deemed a waiver of a similar or dissimilar
condition or provision at the same or any prior or subsequent time. Any waiver
must be in writing, must specifically refer to the provision being waived, and
must be signed by Executive or an authorized officer of either THC or THUSA, as
applicable.

 

(j) Business Days. If any time period for giving notice or taking action
hereunder expires on a day which is a Saturday, Sunday or holiday in the state
in which THUSA’s main executive offices are located, the time period shall be
automatically extended to the business day immediately following such Saturday,
Sunday or holiday.

 

(k) Survival. The respective rights and obligations of the parties hereunder
shall survive any termination of Executive’s employment, and/or the expiration
of the Employment Period in accordance with Section 1(c) hereof, in each case to
the extent necessary to the intended preservation of such rights and
obligations. It is specifically acknowledged and agreed between the parties that
the provisions of, and the restrictions and covenants set forth in, Section 2
and Sections 4 through 7 of this Agreement shall survive the termination of this
Agreement and/or the termination of the Executive’s employment for any reason.

 

(l) Resolution of Disputes. Any dispute or claim between THC or THUSA and
Executive arising out of, or, in connection with this Agreement, any other
agreement

 

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between Executive and THC and/or THUSA or in connection with Executive’s
employment or termination thereof shall be resolved by binding arbitration,
except as provided in Section 10(h) above. The arbitration shall take place in
New York City and shall be before a neutral arbitrator in accordance with the
Commercial Arbitration Rules of the American Arbitration Association, subject to
modification by the National Rules for the Resolution of Employment Disputes to
the extent the dispute or claim relates to employment discrimination. To the
extent that Executive is the prevailing party in any such arbitration, as
determined by the arbitrator, THUSA shall reimburse him for his reasonable
attorneys’ fees, costs and disbursements in such proceeding. All costs of the
arbitration shall be borne equally by THC and/or THUSA, on the one hand, and
Executive on the other hand. The decision or award of the arbitrator shall be
final and binding upon the parties hereto. The parties shall abide by all awards
recorded in such arbitration proceedings, and all such awards may be entered and
executed upon in any court having jurisdiction over the party against whom or
which enforcement of such award is sought. In no event shall any party hereto be
liable for punitive or exemplary damages in any such dispute.

 

(m) Contractual Rights and Obligations. This Agreement establishes contractual
rights and obligations of Executive, THC and THUSA. Nothing herein shall be
deemed to require THC or THUSA to segregate, earmark or otherwise set aside any
funds or other assets, in trust or otherwise, for any payments that may be
required hereunder.

 

11. Indemnification and Directors’ and Officers’ Liability Insurance.

 

(a) Executive shall be covered by directors’ and officers’ liability insurance
on the same terms and conditions as the other officers and directors of THC and
THUSA.

 

(b) Nothing in this Section 11 shall be construed as reducing or waiving any
right to indemnification or advancement of expenses that Executive would
otherwise have under THC’s or THUSA’s corporate governance documents or under
applicable law.

 

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IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of the
date first written above.

 

TOMMY HILFIGER CORPORATION

/s/ David F. Dyer

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    By:   David F. Dyer     Its:   Chief Executive Officer and President TOMMY
HILFIGER U.S.A., INC.

/s/ David F. Dyer

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

    By:   David F. Dyer     Its:   Chief Executive Officer and President

/s/ Joel J. Horowitz

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

    Joel J. Horowitz

 

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