EX-10.1






EXHIBIT 10.1




December 23, 2008




AMENDMENT NO. 3




to the




AMENDED AND RESTATED

EMPLOYMENT AGREEMENT




          AMENDMENT (“Amendment No. 3”) dated as of the 23rd day of December 2008, by and between Polo
Ralph Lauren Corporation, a Delaware corporation (the “Corporation”), and Roger N. Farah (the
“Executive”).




          WHEREAS, the Executive currently serves as President and Chief Operating Officer of the
Corporation pursuant to an Amended and Restated Employment Agreement by and between the Corporation
and the Executive dated July 23, 2002, as amended (the “Employment Agreement”); and




          WHEREAS, the Corporation and the Executive wish to amend the Employment Agreement to bring it
into compliance with Section 409A of the Internal Revenue Code of 1986, as amended, and the
regulations issued or to be issued by the Department of the Treasury thereunder;




          NOW, THEREFORE, the parties hereby agree to amend the Employment Agreement, effective as of
January 1, 2005, as follows.




     1. Capitalized terms used herein and not otherwise defined shall have the meaning ascribed to
such terms in the Employment Agreement.



     2. The last sentence of Section 4(a)(iii) is hereby amended to read as follows:




     “Notwithstanding any provision of the Deferred Compensation Agreement, dated September
19, 2002, between the Corporation and the Executive to the contrary, the Deferred
Compensation will be payable to Executive or his estate, to the extent vested, on the
earlier of January 1, 2012 or the 45th day following the termination of the
Executive’s employment (subject to Section 6(h) of this Agreement).”



     3. Clause (A) of Section 4(g)(i) is hereby amended to read as follows:




     “(A) 250,000 Units that shall vest with respect to one-third of such Units on the last
day of the Corporation’s 2008, 2009 and 2010 fiscal years (i.e., the fiscal years ending in
those calendar years), respectively (determined without regard to any changes to the
Corporation’s fiscal year), so long as the Executive has remained in employment through the
applicable vesting date, provided, however, that notwithstanding the vesting of any such
Units, the Executive shall be issued Common Shares in respect of such Units within 45 days
following the termination of the Executive’s employment with the Corporation for any
reason, (or, if earlier, the date of a Change of Control that is also a change in the
ownership, effective control or a change in the ownership of a substantial portion



 









 







of the assets (in each case, within the meaning of Section 409A of the Internal
Revenue Code of 1986, as amended, and the regulations issued thereunder (“Section 409A”))
of the Corporation during the Executive’s employment);”



     4. The second sentence of Section 5(b) is hereby amended to read as follows:




“For purposes of this Agreement, “Good Reason” shall mean (A) a material diminution in or
adverse alteration to the Executive’s title or duties as set forth in Section 3 herein, (B)
a reduction in the Executive’s Salary or Annual Incentive Bonus opportunity or Deferred
Compensation from those provided herein or the Corporation’s electing to eliminate the EIP
without substituting therefor a plan which provides for a reasonably comparable Annual
Incentive Bonus opportunity or the Executive’s ceasing to be entitled to the payment of an
Annual Incentive Bonus as a result of the failure of the Corporation’s shareholders to
approve a plan or arrangement evidencing such Annual Incentive Bonus in a manner that
complies with the requirements of section 162(m) of the Code, (C) the relocation of the
Executive’s principal office outside of the area which comprises a fifty (50) mile radius
from New York City, (D) a failure of the Corporation to comply with any material provision
of this Agreement or (E) the Corporation requires Executive to report to other than Ralph
Lauren and/or the Board; provided that the events described in clauses (A), (B),
(C), (D) and (E) above shall not constitute Good Reason (1) until the Executive provides
notice to the Corporation of the existence of such diminution, change, reduction,
relocation, failure or requirement within ninety (90) days of it occurrence and (2) unless
such diminution, change, reduction, failure or requirement (as applicable) has not been
cured within thirty (30) days after written notice of such noncompliance has been given by
the Executive to the Corporation.”



     5. The last sentence of the last paragraph of Section 6(a)(i) is hereby replaced with the
following:




     “Any amounts paid pursuant to subsection (i)(I) and (II) shall be paid in equal
monthly installments commencing on the first day of the first month following the date of
termination over the period equal to the number of months which is 12 times the Severance
Multiplier (such period hereinafter referred to as the “Severance Period”), each of which
shall be a separate payment; provided that any amount otherwise payable prior to the
Executive’s execution of a release pursuant to Section 6(f) shall be paid no later than ten
(10) days following the execution of a release in accordance with Section 6(f). The Pro
Rata Annual Incentive Bonus shall be paid in a lump sum in cash within forty-five (45) days
following the date of the Executive’s termination of employment.”



     6. The second and third sentences of Section 6(a)(ii) are hereby replaced with the following:




     “The Executive shall be entitled to exercise any vested Initial Options until the
earliest to occur of (x) the first anniversary of the date of such



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termination, (y) the tenth anniversary of the date of grant of the stock options and
(z) the expiration of the original option term. The Executive shall be entitled to
exercise any Additional Options until the earliest to occur of (I) the later of the
expiration of the Term (determined without regard to any earlier termination or further
extensions hereunder) or the first anniversary of the date of such termination, (II) the
tenth anniversary of the date of grant of the stock options and (III) the expiration of the
original option term.”



     7. Section 6(a)(v) is hereby amended by adding the following at the end thereof:




     “; provided, however, that any amounts due to the Executive during the first six
months of the Severance Period shall be paid to him in a lump sum on the day following the
six-month anniversary of the date of termination of the Executive’s employment.”



     8. The first sentence of Section 6(a)(vi) is hereby replaced in its entirety with the
following:




     “If a Change of Control that is also a change in the ownership, effective control or a
change in the ownership of a substantial portion of the assets (in each case, within the
meaning of Section 409A) of the Corporation shall have occurred prior to the date of
termination, subject to Section 6(g) and 6(h) below, the Executive shall (A) be entitled to
receive the equivalent of the Salary and Annual Incentive Bonus payments pursuant to
subsection (i) above in two equal lump sum installments, the first payable within
forty-five (45) days of the date of termination and the second on the first anniversary of
the date of termination, each of which shall be a separate payment; and (B) immediately be
100% vested in all Initial Options, Additional Options and Restricted Shares awarded to the
Executive. Such Initial Options shall be exercisable by him until the earliest to occur of
the first anniversary of the date of such termination, the tenth anniversary of the date of
grant of the Stock options, and the expiration of the original option term. Such
Additional Options shall be exercisable by him until the earliest to occur of (I) the later
of the expiration of the Term (determined without regard to any earlier termination or
further extensions hereunder) or the first anniversary of such Change of Control, (II) the
tenth anniversary of the date of grant of the stock options and (III) the expiration of the
original option term.”



     9. The fourth sentence of Section 6(a)(vii) is hereby replaced with the following:




     “In the event the COBRA coverage expires, the Corporation shall reimburse the
Executive for any premium costs paid by the Executive for health care coverage for any
portion of the Severance Period during which the Executive would otherwise be entitled to
continued health benefits. Any reimbursement for such health care coverage premiums shall
be made no later than the end of the calendar year following the calendar year in which
such costs were incurred by



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the Executive. The Executive shall not be entitled to reimbursement under this
Section 6(a) during any portion of the six month period following his termination of
employment to the extent such reimbursement is prohibited by Section 409A, in which case
any amounts he would be entitled to be reimbursed shall be paid to him in a lump sum on the
day following the six-month anniversary of the date of termination of the Executive’s
employment.”



     10. The first sentence of Section 6(b) is hereby amended to read as follows:




     “If the Executive’s employment is terminated by his death or by the Corporation due to
the Executive’s Disability (as defined below), the Corporation shall pay any amounts due to
the Executive through the date of his death or the date of his termination due to
Disability, including a Pro Rata Annual Incentive Bonus for the year of termination, in a
lump sum within forty-five (45) days following such termination of employment.”



     11. The first sentence of Section 6(c) is hereby amended to read as follows:




     “If the Executive’s employment shall be terminated by the Corporation pursuant to
Section 6(d)(iii) for Cause or by the Executive for other than Good Reason, the Corporation
shall pay the Executive his full Salary through the date of termination at the rate in
effect prior to such termination, in a lump sum within forty-five (45) days following such
termination of employment, and except as provided in this Section 6(c), the Corporation
will have no further obligation to the Executive under this Agreement following the
Executive’s termination of employment under the circumstances described in this Section
6(c).”



     12. The first sentence of Section 6(e) is hereby amended to read as follows:




     “If the Executive’s employment with the Corporation shall terminate due to either the
Corporation’s or the Executive’s election not to extend the Term of this Agreement by
delivery of a NonExtension Notice as contemplated by Section 2, then the Executive shall be
entitled to receive his full Salary through the date of termination, payable in accordance
with the Corporation’s payroll practices, plus the Annual Incentive Bonus, if any, that the
Executive would have been entitled to receive had he remained in the Corporation’s
employment through the end of the fiscal year, prorated to the date of termination, payable
in a lump sum in cash within forty-five (45) days following the termination of the
Executive’s employment.”



     13. The third sentence of Section 6(e) is hereby amended to read as follows:




     “In addition, if the Corporation was the party that so elected not to extend the Term
of this Agreement as described above, then the Executive shall also be entitled to receive
an amount, payable in equal monthly installments over a one year period, equal to the sum
of (x) one times his Salary, plus (y) one times the Target Annual Incentive Bonus; provided
that any payment due prior to the Executive’s execution of a release pursuant to Section
6(f) shall be paid no later



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than ten (10) days following the execution of a release in accordance with Section
6(f).”



     14. Section 6(f) is hereby amended by adding the following provision at the end thereof:




     “; but in no later than thirty (30) days following the date of termination of the
Executive’s employment.”



     15. Section 6(g)(B) shall be amended to read in its entirety as follows:




     “(B) If the determination made pursuant to clause (A) above results in a reduction of
the payments that would otherwise be paid to the Executive except for the application of
this Section 6(g), then the entitlement by the Executive to any payments of cash under
Section 6(a)(i) shall be eliminated or reduced to the extent necessary so that the
Parachute Amount is equal to 2.99 times the Executive Base Amount. Within ten days
following such determination hereunder, the Corporation shall pay or distribute to or for
the benefit of the Executive such amounts as are then due to the Executive under this
Agreement and shall promptly pay or distribute to or for the benefit of the Executive such
amounts as become due to the Executive under, and in accordance with the terms of, this
Agreement.”



     16. Section 6(g)(C) is hereby amended by adding the following at the end thereof:




     “; but in no event later than the Executive’s taxable year following the year in which
such final determination or change is made.”



     17. A new Section 6(h) is hereby added to read in its entirety as follows:




     “(h) Notwithstanding any provision of this Agreement to the contrary, the following
rules shall apply:




     (i) The distribution of any amounts that constitute “deferred compensation”
payable to the Executive due to his “separation from service” within the meaning of
Section 409A, shall not be made before six months after such separation from
service or the Executive’s death, if earlier (the “Six Month Limitation”), if the
Executive is a Key Employee (as defined below). At the end of such six-month
period, payments that would have been made but for the Six Month Limitation shall
be paid in a lump sum. For purposes hereof, Key Employee shall mean an employee
treated as a “specified employee” under Code Section 409A(a)(2)(B)(i), i.e., a key
employee of the Corporation (as defined in Code Section 416(i), without regard to
paragraph (5) thereof). The Corporation shall determine which employees shall be
deemed Key Employees using December 31st as an identification date.



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     (ii) All reimbursements and in-kind benefits provided under this Agreement
shall be made or provided in accordance with the requirements of Section 409A to
the extent that such reimbursements or in-kind benefits are subject to Section
409A.




     (iii) All expenses or other reimbursements paid pursuant herewith that are
taxable income to the Executive shall in no event be paid later than the end of the
calendar year next following the calendar year in which the Executive incurs such
expense or pays such related tax.




     (iv) With regard to any provision in this Agreement that provides for
reimbursement of costs and expenses or in-kind benefits, unless permitted by Code
Section 409A, (A) the right to reimbursement or in-kind benefits shall not be
subject to liquidation or exchange for another benefit and (B) the amount of
expenses eligible for reimbursement, or in-kind benefits, provided during any
taxable year shall not affect the expenses eligible for reimbursement, or in-kind
benefits to be provided, respectively, in any other taxable year; provided
that the foregoing clause shall not be violated with regard to expenses reimbursed
under any arrangement covered by Section 105(b) of the Code solely because such
expenses are subject to a limit related to the period the arrangement is in effect,
and (C) such payments shall be made on or before the last day of the Executive’s
taxable year following the taxable year in which the expense occurred.




     (v) Any tax gross-up payable by the Corporation in respect of any expenses or
other reimbursements paid under this Agreement that are taxable income to the
Executive shall be made no later than the end of the calendar year next following
the calendar year in which the Executive remits the related tax.”



     18. A new Section 18 is hereby added that reads as follows:




     “18. Internal Revenue Code Section 409A. The parties hereto recognize that
certain provisions of this Agreement may be affected by Section 409A. This Agreement is
intended to comply with Section 409A and any ambiguities should be interpreted in such a
way as to comply with Section 409A.”



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          IN WITNESS WHEREOF, the Corporation has caused this Amendment to be duly executed and the
Executive has hereunto set his hand, effective as of the date hereof, subject to the conditions set
forth herein.




	 	 	 	 	 
	 	POLO RALPH LAUREN CORPORATION

 	 
	 	By:  	/s/ Mitchell Kosh
 	 
	 	 	Name:  	Mitchell Kosh 	 
		 	Title:  	Senior Vice President
 	 
	 	 	Date:	January 9, 2009 	 
	 
	 	 	 
	 	                        /s/ Roger N. Farah
 	 
	 	Executive: 	Roger N. Farah	 
	 	Date: 	January 6, 2009	 
	 




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