3. COMPENSATION.     As compensation for the employment services to be rendered by Executive hereunder, the Companyagrees to pay, or cause to be paid, to Executive, and Executive agrees to accept, payable inaccordance with Company normal payroll policy at the time in effect, a salary at the rate of FiveHundred Thousand Dollars ($500,000) per year. Executive shall not be entitled to any additionalcompensation for any service as a director of the Company, unless and to the extent that any otheremployee of the Company who serves as a director is compensated for such service.     4. EXPENSES.     The Company shall pay or reimburse Executive, upon presentment of suitable vouchers, for allreasonable business and travel expenses which may be incurred or paid by Executive in connectionwith his employment hereunder in accordance with Company policy. Executive shall comply with suchrequirements and shall keep such records as the Company may deem necessary to meet the requirementsof the Internal Revenue Code of 1986, as amended from time to time (the “Code”), andregulations promulgated thereunder.     5. OTHER BENEFITS.     Executive shall be entitled to four (4) weeks paid vacation per year, and to participate inthe benefit plans and arrangements and receive any other benefits customarily provided by theCompany to its senior executive personnel (including any profit sharing, pension, disabilityinsurance, hospital, major medical insurance and group life insurance plans in accordance with theterms of such plans) (the “Benefit Plans”), provided, however, that the employee share ofmajor medical premiums for Executive shall be paid by the Company from the date hereof throughDecember 31, 2005. If requested by the Company, Executive agrees to undergo a physical examinationat the Company’s expense in connection with the Company obtaining “key man” life insurance withrespect to Executive. The Company agrees to provide to Executive $2.0 million of term lifeinsurance while employed by the Company. When traveling on business, Executive shall be entitledto air travel on the same basis as other senior executives of the Company. To the fullest extentpermitted by Delaware law, the Company shall indemnify the Executive and hold him harmless from anyand all claims, losses, liabilities and expenses, including reasonable fees and disbursements ofcounsel selected by the Company, arising out of the acts and omissions of Executive as an officeror director of the Company.     6. TERMINATION OF EMPLOYMENT; EFFECT OF TERMINATION.          (a) Executive’s employment hereunder shall terminate upon the first to occur of thefollowing:               (i) upon thirty (30) days’ prior written notice to Executive upon the determinationby the Board of Directors of the Company that Executive’s employment shall be terminated for anyreason which would not constitute “justifiable cause” (as hereinafter defined);               (ii) upon written notice to Executive upon the determination by the Board ofDirectors of the Company that there is justifiable cause for such termination;
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               (iii) automatically upon the death of Executive;               (iv) in accordance with the terms of subsection (e) hereof upon the “disability” (ashereinafter defined) of Executive;               (v) upon thirty (30) days’ prior written notice by Executive to the Company of theExecutive’s voluntary termination of employment; or               (vi) upon thirty (30) days’ prior written notice by Executive to the Company of theExecutive’s termination of his employment for “good reason” (as hereinafter defined).          (b) For the purposes of this Agreement:               (i) the term “disability” shall mean the inability of Executive, due toillness, accident or any other physical or mental incapacity, substantially to perform the materialfunctions of his duties for a period of three (3) consecutive months or for a total of four (4)months (whether or not consecutive) in any twelve (12) month period during the term of thisAgreement, as reasonably determined by the Company in good faith; provided that the Company may notterminate Executive’s employment for disability unless it has first given Executive written noticeof such termination and, within fifteen (15) days after receipt of such notice, Executive has notreturned to the performance of his duties.               (ii) the term “justifiable cause” shall mean: (1) Executive’s repeatedfailure or refusal to perform his duties pursuant to, or Executive’s material breach of, thisAgreement where such conduct or material breach shall not have ceased or been remedied within ten(10) days following written warning from the Company; (2) Executive’s conviction of, or plea ofguilty or no contest to, a felony, whether or not involving money or property of the Company or anyof its affiliates (collectively, the “G-III Group”); (3) Executive’s material dishonesty inthe course of his employment or performance of any act or his failure to act which constitutesfraud upon the Company or a breach of a fiduciary trust towards the Company, including withoutlimitation, misappropriation of funds or a misrepresentation of the Company’s or the Division’soperating results or financial condition; (4) any intentional unauthorized disclosure by Executiveto any person, firm or corporation other than the members of the G-III Group and their respectivedirectors, managers, officers and employees, of any confidential information or trade secret of theG-III Group; (5) any action by Executive to secure any personal profit (other than (A) de minimisamounts or (B) through his ownership of equity in the Company or payments due to him under thePurchase Agreement) in connection with the business of the G-III Group (for example, withoutlimitation, using G-III Group assets to pursue other interests, diverting any business opportunitybelonging to the G-III Group to himself or to a third party, insider trading or taking bribes orkickbacks); (6) Executive’s engagement in misconduct materially damaging to the property, businessor reputation of the G-III Group; (7) Executive’s illegal use of controlled substances; (8) any actor omission by Executive involving willful malfeasance or gross negligence in the performance ofExecutive’s duties to the material detriment of the G-III Group; or (9) the entry of any order of acourt that remains in effect and is not discharged for a period of at least sixty (60) days, whichenjoins or otherwise limits or restricts the performance by Executive under this Agreement,relating to any contract, agreement
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or commitment made by or applicable to Executive in favor of any former employer or any otherperson; and               (iii) the term “good reason” shall mean any of the following events thatoccur, after expiration of any remedy or cure period, (A) a material diminution of Executive’sduties and responsibilities that result in a material adverse effect on Executive’s status andauthority, which continues unremedied for a period of thirty (30) days after Executive has givenwritten notice to the Company specifying in detail the material diminution and material adverseeffect, (B) a change in the Executive’s office location to a location more than fifty (50) milesoutside of New York City, except for such travel as the Company may reasonably require, (C) failureto timely pay Executive any component of compensation provided for in this Agreement and theCompany’s failure to cure such failure within a period of ten (10) days after written notice ofsuch failure has been given by the Executive to the Company; or (D) failure by the Buyer to pay anyamount due to Executive under Section 2.3 of the Purchase Agreement within 30 days of the due datespecified therein, and any failure by the Buyer to pay any adjusted amount due to Executive underSection 2.4 of the Purchase Agreement within thirty (30) days of the determination of such adjustedamount by the Independent Firm.          (c) Upon termination of Executive’s employment by the Company for justifiable causeor voluntarily by Executive, Executive shall not be entitled to any amounts or benefits hereunderother than such portion of Executive’s annual salary, accrued leave, reimbursement of expensespursuant to Section 4 hereof and any amounts payable to Executive under the terms of the BenefitPlans, each as have been accrued through the date of his termination of employment.          (d) If Executive should die during the term of his employment hereunder, thisAgreement shall terminate immediately. In such event, the estate of Executive shall thereupon beentitled to receive such portion of Executive’s annual salary, accrued leave and reimbursement ofexpenses pursuant to Section 4 as has been accrued through the date of his death. Executive’sestate also shall be entitled to any amounts or benefits payable to Executive under the terms ofthe Benefit Plans.          (e) Upon Executive’s disability, the Company shall have the right to terminateExecutive’s employment. Any termination pursuant to this subsection (e) shall be effective on thedate thirty (30) days after which Executive shall have received written notice of the Company’selection to terminate. In such event, Executive shall thereupon be entitled to receive suchportion of Executive’s annual salary, accrued leave and reimbursement of expenses pursuant toSection 4 as has been accrued through the date on which Executive’s employment is terminated byreason of his disability. Executive shall also be entitled to any amounts or benefits payableunder the terms of the Benefit Plans.          (f) In the event that Executive’s employment is terminated during the Term by theCompany without justifiable cause or by the Executive for good reason, the Company shall continueto pay compensation to Executive under Section 3 and to provide benefits under Section 5 for theTerm. The Company’s obligation to continue to pay such compensation and provide such benefitsshall be conditional upon (1) Executive executing a general release in the form of ExhibitA attached hereto in favor of the Company waiving claims pertaining to the
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termination of his employment and other customary employment-related claims and (2)Executive’s compliance with his obligations under Sections 8, 9, 10 and 11 hereof.          (g) Upon Executive’s termination of his employment hereunder, this Agreement (otherthan Sections 4, 6(g), 8, 9, 10, 11 and 14, which shall survive in accordance with their terms)shall terminate. In such event, except as provided in Section 6(f), Executive shall be entitled toreceive such portion of Executive’s annual salary and vacation as has been accrued to date andshall be entitled to reimbursement of expenses pursuant to Section 4 hereof and to continue toparticipate in the Benefit Plans to the extent participation by former employees is required by lawor permitted by such plans, with the expense of such participation to be as specified in such plansfor former employees. Executive shall also be entitled to any amounts or benefits payable underthe terms of the Benefit Plans. For the avoidance of doubt, if the Executive’s employment isterminated by the Executive for good reason, the first sentence of this Section 6(g) and theprovisions of Section 6(f) shall be applicable thereto.          (h) Upon the Company giving notice of termination pursuant to Section 6(a)(i) or(ii) or Executive giving notice of termination pursuant to Section 6(a)(v) or (vi), the Company mayrequire that Executive immediately leave the Company’s premises, but such requirement shall notaffect the effective date of termination of employment.     7. REPRESENTATIONS AND AGREEMENTS OF EXECUTIVE.     Executive represents and warrants that he is free to enter into this Agreement and to performthe duties required hereunder, and that there are no employment contracts or understandings,restrictive covenants or other restrictions, whether written or oral, preventing the performance ofhis duties hereunder.     8. NON-COMPETITION.          (a) In view of the unique and valuable services expected to be rendered by Executiveto the Company, Executive’s knowledge of the trade secrets and other proprietary informationrelating to the business of the Company and the Division and in consideration of the compensationto be received hereunder, Executive agrees that until the later of (i) January 31, 2009 and (ii) aperiod of one (1) year following the termination of Executive’s employment hereunder (the“Non-Competition Period”), Executive shall not, whether for compensation or withoutcompensation, directly or indirectly, as an owner, principal, partner, member, shareholder,independent contractor, consultant, joint venturer, investor, licensor, lender or in any othercapacity whatsoever, alone, or in association with any other Person, carry on, be engaged or takepart in, or render services (other than services which are generally offered to third parties) oradvice to, own, share in the earnings of, invest in the stocks, bonds or other securities of, orotherwise become financially interested in, any Person engaged in the manufacture, distribution,sale, design, production or promotion of men’s outerwear, women’s outerwear or women’s suits;provided, however, that if Executive voluntarily terminates his employment, the Non-CompetitionPeriod under this Agreement shall end one (1) year following such voluntary termination ofemployment. The record or beneficial ownership by Executive of up to the lesser of (i) $400,000 or(ii) 1.0% of the shares of any corporation whose shares are publicly traded on a nationalsecurities exchange or in the over-the-counter market shall not of
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itself constitute a breach hereunder. In addition, Executive shall not, directly orindirectly, during the Non-Competition Period, request or cause any customers with whom the G-IIIGroup has a business relationship to cancel or terminate any such business relationship with anymember of the G-III Group or solicit, interfere with, entice from or hire from any member of theG-III Group any employee (or former employee) of any member of the G-III Group.          (b) If any portion of the restrictions set forth in this Section 8 should, for anyreason whatsoever, be declared invalid by a court of competent jurisdiction, the validity orenforceability of the remainder of such restrictions shall not thereby be adversely affected.          (c) Executive acknowledges that the provisions of this Section 8 were a materialinducement to the Company to enter into this Agreement, and that the Company would not enter intothis Agreement but for the agreements and covenants contained herein. Executive furtheracknowledges that the limitations set forth in this Section 8 are reasonable and properly requiredfor the adequate protection of the business of the G-III Group. Executive hereby waives, to theextent permitted by law, any and all right to contest the validity of this Section 8 on the groundsof breadth of its geographic or product or service coverage or length of term. In the event anysuch limitation hereunder is deemed to be unreasonable by a court of competent jurisdiction,Executive agrees to the reduction of the territorial or time limitation to the area or time periodwhich such court shall deem reasonable.          (d) Nothing contained in this Agreement shall require the Company to utilizeExecutive’s services under this Agreement, the Company’s only obligation to Executive being paymentof his compensation, benefits and expenses under this Agreement during the Initial Term.     9. INVENTIONS AND DISCOVERIES.          (a) Executive shall promptly and fully disclose to the Company, with all necessarydetail for a complete understanding of the same, all developments, know-how, improvements,concepts, ideas, designs, sketches, writings, processes and methods (whether copyrightable,patentable or otherwise) made, received, conceived, developed, acquired or written during workinghours, or otherwise, by Executive (whether or not at the request or upon the suggestion of theCompany) during the Employment Term, solely or jointly with others, using the G-III Group’sresources, or relating to any current or proposed business or activities of the G-III Group knownto him as a consequence of his employment or the rendering of services hereunder (collectively, the“Subject Matter”).          (b) Executive hereby assigns and transfers, and agrees to assign and transfer, tothe Company all his rights, title and interest in and to the Subject Matter, and Executive furtheragrees to deliver to the Company any and all drawings, notes, specifications and data relating tothe Subject Matter, and to execute, acknowledge and deliver all such further papers, includingapplications for trademarks, copyrights or patents, as may be necessary to obtain trademarks,copyrights and patents for the Subject Matter in any and all countries and to vest title thereto inthe Company. Executive shall assist the Company in obtaining such trademarks, copyrights orpatents during the term of this Agreement, and any time thereafter on reasonable notice and atmutually convenient times, and Executive agrees to testify in any prosecution or
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litigation involving any of the Subject Matter; provided, however, that following terminationof employment Executive shall be reasonably compensated for his time and reimbursed his reasonableout-of-pocket expenses incurred in rendering such assistance or giving or preparing to give suchtestimony if it is required after the Non-Competition Period.     10. NON-DISCLOSURE OF CONFIDENTIAL INFORMATION.          (a) Executive shall not, during the term of this Agreement, or at any time followingexpiration or termination of this Agreement, directly or indirectly, disclose or permit to be known(other than as is required in the regular course of his duties (including without limitationdisclosures to the Company’s advisors and consultants) or as is required by law (in which caseExecutive shall give the Company prior written notice of such required disclosure) or with theprior written consent of the Company, to any person, firm or corporation, any ConfidentialInformation (as hereinafter defined) acquired by him during the course of, or as an incident to,his employment hereunder, relating to the G-III Group, any client of the G-III Group, or anycorporation, partnership or other entity owned or controlled, directly or indirectly, by any of theforegoing, or in which any of the foregoing has a beneficial interest, including, but not limitedto, the business affairs of each of the foregoing (“G-III Confidential Information”). Asused herein, the term “Confidential Information” shall mean proprietary technology, tradesecrets, designs, sketches, know-how, market studies and forecasts, competitive analyses, pricingpolicies, employee lists, personnel policies, manufacturing sources, the substance of agreementswith customers, suppliers and others, marketing arrangements, licensing agreements, servicing andtraining programs and arrangements, customer lists and any other documents embodying suchconfidential information. This confidentiality obligation shall not apply to any G-IIIConfidential Information which becomes publicly available other than in violation of this Section10.          (b) All information and documents relating to the G-III Group as hereinabovedescribed shall be the exclusive property of the G-III Group, and Executive shall use hisreasonable best efforts to prevent any publication or disclosure thereof. Upon termination ofExecutive’s employment with the Company, all documents, records, reports, writings and othersimilar documents containing confidential information, including copies thereof, then inExecutive’s possession or control shall be returned and left with the Company.     11. SPECIFIC PERFORMANCE.     Executive agrees that if he breaches, or threatens to commit a breach of, any of theprovisions of Sections 8, 9 or 10 (the “Restrictive Covenants”), the Company shall have, inaddition to, and not in lieu of, any other rights and remedies available to the Company under lawand in equity, the right to injunctive relief and/or to have the Restrictive Covenants specificallyenforced by a court of competent jurisdiction, without the posting of any bond or other security,it being agreed that any breach or threatened breach of the Restrictive Covenants would causeirreparable injury to the G-III Group and that money damages would not provide an adequate remedyto the Company. Notwithstanding the foregoing, nothing herein shall constitute a waiver byExecutive of his right to contest whether a breach or threatened breach of any Restrictive Covenanthas occurred.
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     12. AMENDMENT OR ALTERATION.     No amendment or alteration of the terms of this Agreement shall be valid unless made inwriting and signed by both of the parties hereto.     13. GOVERNING LAW.     This Agreement shall be governed by and construed in accordance with the laws of the State ofNew York applicable to agreements made and to be performed therein.     14. SEVERABILITY.     The holding of any provision of this Agreement to be invalid or unenforceable by a court ofcompetent jurisdiction shall not affect any other provision of this Agreement, which shall remainin full force and effect.     15. WITHHOLDING.     The Company may deduct and withhold from the payments to be made to Executive hereunder anyamounts required to be deducted and withheld by the Company under the provisions of any applicablestatute, law, regulation or ordinance now or hereafter enacted.     16. NOTICES.     Any notices required or permitted to be given hereunder shall be sufficient if in writing, andif delivered by hand or overnight courier, or sent by certified mail, return receipt requested, tothe addresses set forth above or such other address as either party may from time to time designatein writing to the other, and shall be deemed given as of the date of the delivery or at theexpiration of three days in the event of a mailing.     17. COUNTERPARTS AND FACSIMILE SIGNATURES.     This Agreement may be signed in counterparts with the same effect as if the signatures to eachcounterpart were upon a single instrument, and all such counterparts together shall be deemed anoriginal of this Agreement. For purposes of this Agreement, a facsimile copy of a party’ssignature shall be sufficient to bind such party.     18. WAIVER OR BREACH.     It is agreed that a waiver by either party of a breach of any provision of this Agreementshall not operate, or be construed, as a waiver of any subsequent breach by that same party.     19. ENTIRE AGREEMENT AND BINDING EFFECT.     This Agreement contains the entire agreement of the parties with respect to the subject matterhereof, supersedes all prior and contemporaneous agreements, both written and oral, between theparties with respect to the subject matter hereof, other than provisions of the Purchase Agreement,and may be modified only by a written instrument signed by each of the
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parties hereto. This Agreement shall be binding upon and inure to the benefit of the partieshereto and their respective legal representatives, heirs, distributors, successors and assigns;provided, however, that Executive shall not be entitled to assign or delegate any of his rights orobligations hereunder without the prior written consent of the Company. It is intended thatSections 8, 9, 10 and 11 benefit each of the Company and each other member of the G-III Group, eachof which is entitled to enforce the provisions of Sections 8, 9, 10 and 11.     20. SURVIVAL.     The termination of Executive’s employment hereunder or the expiration of this Agreement shallnot affect the enforceability of Sections 8, 9, 10 and 11 hereof.     21. FURTHER ASSURANCES.     The parties agree to execute and deliver all such further documents, agreements andinstruments and take such other and further action as may be necessary or appropriate to carry outthe purposes and intent of this Agreement.     22. CONSTRUCTION OF AGREEMENT.     No provision of this Agreement or any related document shall be construed against orinterpreted to the disadvantage of any party hereto by any court or other governmental or judicialauthority by reason of such party having or being deemed to have structured or drafted suchprovision.     23. HEADINGS.     The Section headings appearing in this Agreement are for the purposes of easy reference andshall not be considered a part of this Agreement or in any way modify, demand or affect itsprovisions.     IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of the date andyear first above written.      G-III APPAREL GROUP, LTD.