Document:

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                                                                  Exhibit 10.27

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                         DONNA KARAN INTERNATIONAL INC.

                            1996 STOCK INCENTIVE PLAN

               (As amended and restated through December 8, 2000)

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                               Table of Contents

                                                                          Page

I.     Purposes of the Plan..................................................1

II.    Definitions...........................................................1

III.   Effective Date........................................................5

IV.    Administration........................................................6
       A.   Duties of the Committee..........................................6
       B.   Advisors.........................................................6
       C.   Determinations...................................................6

V.     Shares; Adjustment Upon Certain Events................................7
       A.   Shares to be Delivered; Fractional Shares........................7
       B.   Number of Shares.................................................7
       C.   Adjustments; Recapitalization, etc...............................7

VI.    Terms of Options......................................................9
       A.   Grant............................................................9
       B.   Exercise Price...................................................9
       C.   Number of Shares.................................................9
       D.   Exercisability...................................................9
       E.   Exercise of Options..............................................9
       F.   Incentive Stock Option Limitations..............................10
       G.   Buy Out and Settlement Provisions...............................11
       H.   Modification, Extension and Renewal of Options..................11
       I.   Other Terms and Conditions......................................11

VII.   Restricted Shares....................................................11
       A.  Restricted Shares................................................11
       B.  Awards and Certificates..........................................11

VIII.  Acceleration Events..................................................13

IX.    Termination of Employment............................................14
       A.   General.........................................................14
       B.   Termination by Company for Cause................................14
       C.   Miscellaneous...................................................14
       D.   Cancellation of Options.........................................14

X.     Nontransferability of Awards.........................................14

XI.    Rights as a Stockholder..............................................15

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XII.   Termination, Amendment and Modification..............................15

XIII.  Use of Proceeds......................................................16

XIV.   General Provisions...................................................16
       A.   Right to Terminate Employment or Consultancy....................16
       B.   Trusts, etc.....................................................16
       C.   Notices.........................................................16
       D.   Severability of Provisions......................................17
       E.   Payment to Minors, Etc..........................................17
       F.   Headings and Captions...........................................17
       G.   Controlling Law.................................................17
       H.   Other Benefits..................................................17
       I.   Costs...........................................................17
       J.   Section 16(b) of the Exchange Act...............................17
       K.   Death/Disability................................................18

XV.    Issuance of Stock Certificates; Legends; Payment of Expenses.........18
       A.   Stock Certificates..............................................18
       B.   Legends.........................................................18

XVI.   Listing of Shares and Related Matters................................19

XVII.  Withholding of Taxes.................................................19

EXHIBIT A

       PERFORMANCE CRITERIA.................................................20

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                         Donna Karan International Inc.

                            1996 Stock Incentive Plan

I. Purposes of the Plan

            The purposes of this 1996 Stock Incentive Plan (the "Plan") are to
enable Donna Karan International Inc. (the "Company"), each Designated Parent
(as defined herein) and Designated Subsidiaries (as defined herein) to attract,
retain and motivate certain employees and consultants who are important to the
success and growth of the business of the Company, such Designated Parent and
Designated Subsidiaries and to create a long-term mutuality of interest between
such individuals and the stockholders of the Company by granting Awards (as
defined herein) under the Plan.

II. Definitions

            In addition to the terms defined elsewhere herein, for purposes of
this Plan, the following terms will have the following meanings when used herein
with initial capital letters:

            A. "Agreement" means an agreement evidencing the grant of an Award.

            B. "Award" means any Option or Restricted Shares granted pursuant to
the Plan.

            C. "Board" means the Board of Directors of the Company.

            D. "Cause" means with respect to a Participant's Termination of
Employment, (1) in the case where there is no employment or consulting agreement
between the Company, Designated Parent or Designated Subsidiary (as applicable)
and the Participant, or where there is an employment or consulting agreement,
but such agreement does not define cause (or words of like import), termination
due to a Participant's dishonesty, fraud, insubordination, willful misconduct,
gross negligence, refusal to perform services (for any reason other than illness
or incapacity) or materially unsatisfactory performance of his or her duties for
the Company, Designated Parent or Designated Subsidiary, as may be applicable,
or the Participant's conviction of a felony or other crime involving, in the
sole discretion of the Committee, moral turpitude; or (2) in the case where
there is an employment or consulting agreement between the Company, Designated
Parent or Designated Subsidiary (as applicable) and the Participant, termination
that is or would be deemed to be for cause (or words of like import) as defined
under such agreement. The Committee shall have sole discretion to determine
whether cause exists, and its determination shall be final, binding and
conclusive.
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            E. "Change In Control" means any of the following:

                  (a) the acquisition by any "person" (as such term is used in
      Section 13(d) and 14(d) of the Exchange Act) other than a person who is a
      stockholder of the Company on the effective date of the registration
      statement filed under the Securities Act relating to the first public
      offering (the "Initial Public Offering") of securities of the Company (an
      "Initial Stockholder") of 30% or more of the voting power of securities of
      Company or the acquisition by an Initial Stockholder, other than an
      affiliate of the Company that would be a Parent or a Subsidiary, of an
      additional 5% of the voting power of securities of the Company over and
      above that owned immediately after the closing date of the Initial Public
      Offering of the Company's Common Stock; excluding however, the following:
      (x) any acquisition by the Company or a Subsidiary of any of the
      foregoing, or (y) any acquisition by an employee benefit plan (or related
      trust) sponsored or maintained by the Company or a Subsidiary; or

                  (b) (i) the acquisition by any "person" (as such term is used
      in Section 13(d) and 14(d) of the Exchange Act) other than a person who,
      on the effective date of the Initial Public Offering is a holder of any
      ownership interest in Donna Karan Studio (an "Initial Licensee Interest
      Holder") of 30% or more of the voting power of Donna Karan Studio or (ii)
      the acquisition by an Initial Licensee Interest Holder, other than an
      affiliate of Gabrielle Studio, Inc. (and excluding any such acquisition
      resulting from a purchase, sale or transfer of Takihyo Inc. stock by and
      between any of the current stockholders of Takihyo Inc.) that would be a
      Parent or a Subsidiary (but substituting Gabrielle Studio, Inc. for the
      Company in such definitions) of Gabrielle Studio, Inc., of an additional
      5% of the voting power of securities of the Company over and above that
      owned immediately after the closing date of the Initial Public Offering of
      the Company's Common Stock; excluding however, the following: (x) any
      acquisition by the Company or a Subsidiary of any of the foregoing, or (y)
      any acquisition by an employee benefit plan (or related trust) sponsored
      or maintained by the Company or a Subsidiary; or

                  (c) any merger or sale of substantially all of the assets of
      the Company under circumstances where the holders of the Common Stock of
      the Company immediately prior to the transaction becoming public knowledge
      were not holders of 80% of the equity securities of the surviving entity
      resulting from such transaction; or

                  (d) any change in the composition of the Board of Directors of
      the Company not approved by (i) a majority of the Board prior to such
      change and (ii) by not less than two directors of the Company who were
      directors prior to the time any person who was not an Initial Stockholder
      acquired 30% or more of the voting power of securities of the Company.

            F. "Code" means the Internal Revenue Code of 1986, as amended and
all rules and regulations promulgated thereunder.

            G. "Committee" means the committee appointed by the Board from time
to time to administer the Plan, consisting of two or more members of the Board,
each of whom shall be a non-employee director as defined in Rule 16b-3
promulgated under Section 16(b) of the Exchange Act and an outside director as
defined under Section 162(m) of the Code. To the extent that no Committee

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exists which has the authority to administer the Plan, the functions of the
Committee shall be exercised by the Board. If for any reason the appointed
Committee does not meet the requirements of Rule 16b-3 promulgated under Section
16(b) of the Exchange Act or Code Section 162(m), such noncompliance shall not
affect the validity of the awards, grants, interpretations or other actions of
the Committee.

            H. "Common Stock" means the common stock of the Company, par value
$0.01 per share, any Common Stock into which the Common Stock may be converted
and any Common Stock resulting from any reclassification of the Common Stock.

            I. "Company" means Donna Karan International Inc., a Delaware
corporation.

            J. "Consultant" means any executive-level consultant of, or advisor
to, the Company, Designated Parent or Designated Subsidiary as determined by the
Committee.

            K. "Designated Parent" means any Parent which has been designated
from time to time by the Board to participate in the Plan.

            L. "Designated Subsidiary" means any Subsidiary which has been
designated from time to time by the Board to participate in the Plan.

            M. "Disability" means (1) in the case where there is no employment
agreement between the Company, Designated Parent or Designated Subsidiary (as
applicable) and the Participant, or where there is an employment agreement, but
such agreement does not define disability, total and permanent disability, as
defined in Section 22(e)(3) of the Code; or (2) in the case where there is an
employment agreement between the Company, Designated Parent or Designated
Subsidiary (as applicable) and the Participant, disability as defined under such
employment agreement.

            N. "Exchange Act" means the Securities Exchange Act of 1934, as
amended, and all rules and regulations promulgated thereunder.

            O. "Fair Market Value" of a share of Common Stock means, for
purposes of this Plan, unless otherwise required by any applicable provision of
the Code or any regulations issued thereunder, as of any date, the last sales
prices reported for the Common Stock on the applicable date, (i) as reported by
the principal national securities exchange in the United States on which it is
then traded, or (ii) if not traded on any such national securities exchange, as
quoted on an automated quotation system sponsored by the National Association of
Securities Dealers, or if the sale of the Common Stock shall not have been
reported or quoted on such date, on the first day prior thereto on which the
Common Stock was reported or quoted. If the Common Stock is not readily tradable
on a national securities exchange or any system sponsored by the National
Association of Securities Dealers, its Fair Market Value shall be such amount as
is set by the Committee in good faith.

            P. "Incentive Stock Option" means any Option awarded under this Plan
intended to be and designated as an "Incentive Stock Option" within the meaning
of Section 422 of the Code. Notwithstanding anything herein to the contrary,
Incentive Stock Option shall be granted solely to Key Employees and shall not be
granted to Consultants.

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            Q. "Key Employee" means any person who is an officer or other
valuable employee of the Company, (regardless of title or position) a Designated
Parent or a Designated Subsidiary, as determined by the Committee in its sole
discretion.

            R. "Non-Qualified Stock Option" means any Option awarded under this
Plan that is not an Incentive Stock Option.

            S. "Option" means the right to purchase the number of shares granted
in the Option Agreement at a prescribed purchase price on the terms specified in
the Plan.

            T. "Parent" means, other than the Company, (i) any corporation in an
unbroken chain of corporations ending with the Company which owns stock
possessing 50% or more of the total combined voting power of all classes of
stock in one of the other corporations in such chain or (ii) any corporation or
trade or business (including, without limitation, a partnership or limited
liability company) which controls 50% or more (whether by ownership of stock,
assets or an equivalent ownership interest) of the Company.

            U. "Participant" means a Key Employee or Consultant who is granted
an Award under the Plan which Award has not expired.

            V. "Performance Criteria" means the criteria set forth on Exhibit A
hereto.

            W. "Performance Goals" means the performance goals, formulae or
standards set by the Committee, in its sole discretion, subject to and based on
the Performance Criteria, and used to establish the Restriction Period for
Restricted Shares which are intended to satisfy the exception for
performance-based compensation under Section 162(m) of the Code.

            X. "Restricted Shares" means shares of Common Stock or the right to
receive shares of Common Stock, as the case may be, awarded to a Key Employee of
the Company, Designated Parent or a Designated Subsidiary pursuant to Article
VII.

            Y. "Restricted Period" means the vesting period set by the Committee
which provides for the lapse of the restrictions placed on an Award of
Restricted Shares.

            Z. "Retirement" means a Termination of Employment without Cause at
or after age 65 (or, with the consent of the Committee, before age 65).

            AA. "Securities Act" means the Securities Act of 1933, as amended,
and all rules and regulations promulgated thereunder.

            BB. "Share" means a share of Common Stock.

            CC. "Subsidiary" means, other than the Company, (i) any corporation
in an unbroken chain of corporations beginning with the Company which owns stock
possessing 50% or more of the total combined voting power of all classes of
stock in one of the other corporations in such chain; (ii) any corporation or
trade or business (including, without limitation, a partnership or limited
liability

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company) which is controlled 50% or more (whether by ownership of stock, assets
or an equivalent ownership interest) by the Company or one of its Subsidiaries;
or (iii) any other entity, approved by the Board as a Subsidiary under the Plan,
in which the Company or any of its Subsidiaries has an equity or other ownership
interest.

            DD. "Ten Percent Stockholder" means a person owning at the time the
Option is granted Common Stock of the Company possessing more than ten percent
(10%) of the total combined voting power of all classes of stock of the Company
or of a Designated Parent or Designated Subsidiary.

            EE. "Termination of Employment" with respect to an individual means
that individual is no longer actively employed as an employee by the Company, a
Parent or a Subsidiary, irrespective of whether or not such employee is
receiving salary continuance pay, is continuing to participate in other employee
benefit programs or is otherwise receiving severance type payments. With respect
to a Consultant, "Termination of Employment" means that the Consultant is no
longer acting as a Consultant to the Company, Designated Parent or Designated
Subsidiary. In the event an entity shall cease to be a Subsidiary, there shall
be deemed a Termination of Employment of any individual who is not otherwise an
employee or Consultant of the Company, a Parent or another Subsidiary at the
time the entity ceases to be a Subsidiary. In the event an entity shall cease to
be a Parent, there shall be deemed a Termination of Employment of any individual
who is not otherwise an employee or Consultant of the Company, another Parent or
a Subsidiary at the time the entity ceases to be a Parent.

III.  Effective Date

      The Plan became originally effective on June 19, 1996 and the amendments
contained herein shall become effective on April 23, 1997, subject to the
approval of the Company's stockholders to the extent and in the manner provided
by applicable law. Grants of Awards by the Committee under the Plan may be made
on or after the Effective Date of the Plan.

IV. Administration

            A. Duties of the Committee. The Plan shall be administered and
interpreted by the Committee. The Committee shall have full authority to
interpret the Plan and to decide any questions and settle all controversies and
disputes that may arise in connection with the Plan; to establish, amend and
rescind rules for carrying out the Plan; to administer the Plan, subject to its
provisions; to select Participants in, and grant Awards under, the Plan; to
determine the terms, exercise price and form of exercise payment for each Option
granted under the Plan and the terms and conditions (which need not be
identical) of all Awards granted under the Plan (including but not limited to
Share price, any restriction or limitation, Performance Criteria, vesting
schedule or acceleration thereof, or any forfeiture restrictions or waiver
thereof regarding any Award and the Shares relating thereto, based on such
factors, as the Committee shall determine, in its sole discretion); when and how
an Award can be exercised and whether in whole or in installments; to determine
whether and to what extent Incentive Stock Options and Non-Qualified Stock
Options, or any

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combination thereof, are to be granted hereunder to one or more Key Employees or
Consultants; to prescribe the form or forms of instruments evidencing Awards and
any other instruments required under the Plan (which need not be uniform); and
to make all other determinations and to take all such steps in connection with
the Plan and the Awards as the Committee, in its sole discretion, deems
necessary or desirable. The Committee shall not be bound to any standards of
uniformity or similarity of action, interpretation or conduct in the discharge
of its duties hereunder, regardless of the apparent similarity of the matters
coming before it. Any determination, action or conclusion of the Committee shall
be final, conclusive and binding on all parties. Anything in the Plan to the
contrary notwithstanding, no term of this Plan relating to Incentive Stock
Options shall be interpreted, amended or altered, nor shall any discretion or
authority granted under the Plan be so exercised, so as to disqualify the Plan
under Section 422 of the Code, or, without the consent of the Participants
affected, to disqualify any Incentive Stock Option under such Section 422.

            B. Advisors. The Committee may employ such legal counsel,
consultants and agents as it may deem desirable for the administration of the
Plan, and may rely upon any advice or opinion received from any such counsel or
consultant and any computation received from any such consultant or agent.
Expenses incurred by the Committee in the engagement of such counsel, consultant
or agent shall be paid by the Company.

            C. Determinations. Each determination, interpretation or other
action made or taken pursuant to the provisions of this Plan by the Committee
shall be final, conclusive and binding for all purposes and upon all persons,
including, without limitation, the Participants, the Company, a Designated
Parent and Designated Subsidiaries, directors, officers and other employees of
the Company, a Designated Parent and Designated Subsidiaries, and the respective
heirs, executors, administrators, personal representatives and other successors
in interest of each of the foregoing.

V. Shares; Adjustment Upon Certain Events

            A. Shares to be Delivered; Fractional Shares. Shares to be issued
under the Plan shall be made available, at the sole discretion of the Board,
either from authorized but unissued Shares or from issued Shares reacquired by
the Company and held in treasury. No fractional Shares will be issued or
transferred upon the exercise of any Option. Fractional Shares resulting from
any adjustment in Awards described in Article V(C) or otherwise shall be
aggregated. With respect to any remaining fractional Share, upon exercise of any
Option, the Company shall pay a cash adjustment equal to the pro rata portion of
the Fair Market Value of one Share on the date of exercise.

            B. Number of Shares.

                  1. General Limitation. Subject to adjustment as provided in
this Article V, the maximum aggregate number of Shares that may be issued under
the Plan shall be 2,600,000. If Options are for any reason canceled, or expire
or terminate unexercised, the Shares covered by such Options shall again be
available for the grant of Options, subject to the foregoing limit. If
Restricted

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Shares are forfeited or otherwise do not become vested, the Shares covered by
such Restricted Share Agreement shall again be available for the grant of
Awards, subject to the foregoing limit.

                  2. Individual Participant Limitation. The maximum number of
Shares subject to any Option and/or Award of Restricted Shares which may be
granted under the Plan to each Participant shall not exceed 750,000 Shares
(subject to any adjustment as provided in this Article V) in each calendar year
during the entire term of the Plan.. Notwithstanding the foregoing, in order to
comply with Section 162(m) of the Code, the Committee shall take into account
that (i) if an Award is canceled, the canceled Award continues to be counted
against the maximum number of Shares for which Awards may be granted to a
Participant under this Section V(B)(2) of the Plan, and, (ii) if after the grant
of an Award, the Committee or the Board reduces the exercise price or purchase
price, the transaction is treated as a cancellation of the Award and a grant of
a new Award, and in such case, both the Award that is deemed to be canceled and
the Award that is deemed to be granted, reduce the maximum number of Shares for
which Awards may be granted to a Participant under the Plan.

            C. Adjustments; Recapitalization, etc.

                  1. The existence of the Plan and the Awards granted hereunder
shall not affect in any way the right or power of the Board or the stockholders
of the Company to make or authorize any adjustment, recapitalization,
reorganization or other change in the Company's capital structure or its
business, any merger or consolidation of the Company, any issue of bonds,
debentures, preferred or prior preference stocks ahead of or affecting Common
Stock, the dissolution or liquidation of the Company, a Designated Parent or
Designated Subsidiary, any sale or transfer of all or part of their assets or
business or any other corporate act or proceeding. The Committee may make or
provide for such adjustments in the maximum number of Shares specified in
Article V(B), in the number of Shares covered by outstanding Awards granted
hereunder, and/or in the exercise price, grant price or Purchase Price
applicable to such Awards or such other adjustments in the number and kind of
securities received upon the exercise of Options, as the Committee in its sole
discretion may determine is equitably required to prevent dilution or
enlargement of the rights of Participants or to otherwise recognize the effect
that otherwise would result from any stock dividend, stock split, combination of
shares, recapitalization or other change in the capital structure of the
Company, merger, consolidation, spin-off, reorganization, partial or complete
liquidation, issuance of rights or warrants to purchase securities or any other
corporate transaction or event having an effect similar to any of the foregoing.

                  2. In the event of a merger or consolidation in which the
Company or a Designated Parent is not the surviving entity or in the event of
any transaction that results in the acquisition of substantially all of the
Company's or a Designated Parent's outstanding Common Stock by a single person
or entity or by a group of persons and/or entities acting in concert, or in the
event of the sale or transfer of all of the Company's or a Designated Parent's
assets (the foregoing being referred to as "Acquisition Events"), then the
Committee may in its sole discretion terminate all outstanding Options effective
as of the consummation of the Acquisition Event by delivering notice of
termination to each Participant at least 20 days prior to the date of
consummation of the Acquisition Event; provided that, during the period from the
date on which such notice of termination is delivered to the consummation of the
Acquisition Event, each Participant shall have the right to exercise in full all
the Options that are then outstanding (without regard to limitations on exercise
otherwise contained

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in the Options) but contingent on occurrence of the Acquisition Event, and,
provided that, if the Acquisition Event does not take place within a specified
period after giving such notice for any reason whatsoever, the notice and
exercise shall be null and void.

                  Notwithstanding the foregoing, at the discretion of the
Committee, the provisions contained in this subsection shall be adjusted as they
apply to Options granted to Participants within six months before the occurrence
of an Acquisition Event if the holder of such Option is subject to the reporting
requirements of Section 16(a) of the Exchange Act in such manner as determined
by the Committee, including without limitation, terminating Options at specific
dates after the Acquisition Event, in order to give the Participant the benefit
of the Option. If an Acquisition Event occurs, to the extent the Committee does
not terminate the outstanding Options pursuant to this Article V(C)(2), then the
provisions of Article V(C)(1) shall apply.

                  3. Except as hereinbefore expressly provided, the issuance by
the Company of shares of stock of any class, or securities convertible into
shares of stock of any class, for cash, property, labor or services, upon direct
sale, upon the exercise of rights or warrants to subscribe therefor or upon
conversion of shares or other securities, and in any case whether or not for
fair value, shall not affect, and no adjustment by reason thereof shall be made
with respect to, the number and class of shares and/or other securities or
property subject to Awards theretofore granted or the exercise price, grant
price or Purchase Price (as hereinafter defined).

VI. Terms of Options

            A. Grant. The Committee may grant Non-Qualified Stock Options or
Incentive Stock Options, or any combination thereof to Key Employees and may
grant Non-Qualified Stock Options to Consultants. Notwithstanding the foregoing,
in no event shall the Committee grant Options to Stephan Weiss, Donna Karan,
Frank R. Mori and Tomio Taki. Each Option shall be evidenced by an Option
Agreement in such form as the Committee shall approve from time to time.

            B. Exercise Price. The purchase price per Share (the "Purchase
Price") deliverable upon the exercise of a Non-Qualified Stock Option shall be
determined by the Committee and set forth in a Participant's Option Agreement,
provided that the Purchase Price shall not be less than 100% of the Fair Market
Value of a Share at the time of grant; provided, however, if an Incentive Stock
Option is granted to a Ten Percent Stockholder, the Purchase Price shall be no
less than 110% of the Fair Market Value of a Share.

            C. Number of Shares. With respect to an Option granted to a
Participant, the Option Agreement shall specify the number of Shares underlying
such Option, as determined by the Committee in its sole discretion.

            D. Exercisability. At the time of grant, the Committee shall specify
when and on what terms the Options granted shall be exercisable. In the case of
Options not immediately exercisable in full, the Committee may at any time
accelerate the time at which all or any part of the Options may be exercised and
may waive any other conditions to exercise. No Option shall be exercisable after
the expiration of ten years from the date of grant; provided, however, the term
of an

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Incentive Stock Option granted to a Ten Percent Stockholder may not exceed five
years. Each Option shall be subject to earlier termination as provided in
Article IX below. Other than on a Change In Control, no Option which is granted
to a Participant who is subject to Section 16(b) of the Exchange Act shall be
exercisable before six months after it is granted solely to the extent required
by Section 16(b) of the Exchange Act.

            E. Exercise of Options.

                  1. A Participant may elect to exercise all or any portion of
the Participant's Option by giving written notice to the Committee of such
election and of the number of Shares with respect to such Option which
Participant has elected to purchase, accompanied by payment in full of the
aggregate Purchase Price for the number of Shares for which the Option is being
exercised.

                  2. Shares purchased pursuant to the exercise of Options shall
be paid for at the time of exercise as follows:

                  (a) in cash or by check, bank draft or money order payable to
      the order of Company;

                  (b) if the Shares are traded on a national securities
      exchange, through the delivery of irrevocable instructions to a broker to
      deliver promptly to the Company an amount equal to the aggregate Purchase
      Price; or

                  (c) on such other terms and conditions as may be acceptable to
      the Committee (which may include payment in full or in part by the
      transfer of Shares which, if owned by a Participant who is subject to
      Section 16(b) of the Exchange Act, have been held by the Participant for
      at least six months solely to the extent required by Section 16(b) of the
      Exchange Act, or the surrender of vested Options owned by the Participant)
      and in accordance with applicable law.

            F. Incentive Stock Option Limitations. To the extent that the
aggregate Fair Market Value (determined as of the time of grant) of the Common
Stock with respect to which Incentive Stock Options are exercisable for the
first time by the Participant during any calendar year under the Plan and/or any
other stock option plan of the Company or any subsidiary or parent corporation
(within the meaning of Section 424 of the Code) exceeds $100,000, such Options
shall be treated as Options which are not Incentive Stock Options. To the extent
that any Option does not qualify as an Incentive Stock Option (whether because
of its provisions or the time or manner of its exercise or otherwise), such
Option or the portion thereof which does not qualify, shall constitute a
separate Non-Qualified Stock Option.

            To the extent permitted under Section 422 of the Code, or the
applicable regulations thereunder or any applicable Internal Revenue Service
pronouncement, if (i) a Participant's employment with the Company or Designated
Subsidiary is terminated by reason of death, Disability, Retirement or
Termination of Employment without Cause (except as otherwise provided herein),
and (ii) the portion of any Incentive Stock Option that would be exercisable
during the post-termination period specified under Article IX but for the
$100,000 limitation currently contained in Section 422(d)

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of the Code, is greater than the portion of such Stock Option that is
immediately exercisable as an `incentive stock option' during such
post-termination period under Section 422, such excess shall be treated as a
Non-Qualified Stock Option. If the exercise of an Incentive Stock Option is
accelerated for any reason, any portion of such Option that is not exercisable
as an Incentive Stock Option by reason of the $100,000 limitation contained in
Section 422(d) of the Code shall be treated as a Non-Qualified Stock Option.

            Should any of the foregoing provisions not be necessary in order for
the Stock Options to qualify as Incentive Stock Options, or should any
additional provisions be required, the Committee may amend the Plan accordingly,
without the necessity of obtaining the approval of the shareholders of the
Company, except as otherwise required by law.

            G. Buy Out and Settlement Provisions. The Committee may at any time
on behalf of the Company offer to buy out an Option previously granted, based on
such terms and conditions as the Committee shall establish and communicate to
the Participant at the time that such offer is made.

            H. Modification, Extension and Renewal of Options. The Committee may
modify, extend or renew outstanding Options granted under the Plan, or accept
the surrender of outstanding Options (up to the extent not theretofore
exercised) and authorize the granting of new Options in substitution therefor
(to the extent not theretofore exercised).

            I. Other Terms and Conditions. Options may contain such other
provisions, which shall not be inconsistent with any of the foregoing terms of
the Plan, as the Committee shall deem appropriate including, without limitation,
permitting "reloads" such that the same number of Options are granted as the
number of shares used to pay for the exercise price of Options or shares used to
pay withholding taxes ("Reloads"). With respect to Reloads, the exercise price
of the new Stock Option shall be the Fair Market Value on the date of the
"reload" and the term of the Stock Option shall be the same as the remaining
term of the Options that are exercised, if applicable, or such other exercise
price and term as determined by the Committee.

VII. Restricted Shares

            Awards granted pursuant to this Article VII shall be evidenced by an
Award Agreement in such form as the Committee shall from time to time approve
and the terms and condi tions of such Awards shall be set forth therein.
Restricted Shares may be issued either alone or in addition to other Awards
granted under the Plan.

            A. Restricted Shares. The Committee shall determine the eligible
persons to whom, and the time or times at which, grants of Restricted Shares
will be made, the number of Shares to be awarded, the price (if any) to be paid
by the recipient, the time or times within which such Awards may be subject to
forfeiture, the vesting schedule and rights to acceleration thereof, and all
other terms and conditions of the Awards. Notwithstanding the foregoing, in no
event shall the Committee grant Restricted Shares to Stephan Weiss, Donna Karan,
Frank R. Mori and Tomio Taki. The Committee may condition the grant of
Restricted Shares upon the attainment of specified performance goals or such
other factors as the Committee may determine, in its sole discretion.

                                       10
<PAGE>

            B. Awards and Certificates. The prospective Participant selected to
receive Restricted Shares shall not have any rights with respect to such Award,
unless and until such Participant has delivered a fully executed copy of the
Award Agreement to the Company and has otherwise complied with the applicable
terms and conditions of such Award. Further, such Award shall be subject to the
following conditions:

                  1. Purchase Price. The purchase price for Restricted Shares
shall be fixed by the Committee and may be less than their par value and may be
zero, to the extent permitted by applicable law.

                  2. Acceptance. Awards of Restricted Shares must be accepted
within a period of sixty (60) days (or such shorter period as the Committee may
specify at grant) after the Award date, by executing a Restricted Share Award
Agreement and by paying whatever price (if any) the Committee has designated
thereunder.

                  3. Certificates. Upon an Award of Restricted Shares, the
Committee may, in its sole discretion, decide to either have the Company or
other agent appointed by the Committee hold the share certificates representing
such Restricted Shares in escrow or issue share certificates to the Participant,
unless the Committee elects to use another system, such as book entries by the
transfer agent , as evidencing ownership of a Restricted Share Award. If a
certificate is issued, such certificate shall be registered in the name of such
Participant, and shall bear an appropriate legend referring to the terms,
conditions, and restrictions applicable to such Award, substantially in the
following form.

      "The anticipation, alienation, attachment sale, transfer, assignment,
      pledge, encumbrance or charge of the shares of stock represented hereby
      are subject to the terms and conditions (including forfeiture) of the
      Donna Karan International Inc. (the "Company") 1996 Stock Incentive Plan
      and an Agreement entered into between the registered owner and the Company
      dated . Copies of such Plan and Agreement are on file at the principal
      office of the Company."

If a stock certificate is held in custody by the Company, the Committee may
require, as it determines in its sole discretion, to have the Participant
deliver a duly signed stock power, endorsed in blank, relating to the Restricted
Shares.

                  4. Restrictions/Vesting. Restricted Shares may not be sold,
assigned, trans ferred, pledged, hypothecated or otherwise disposed of, except
by will or the laws of descent and distribution within the six (6) month period
following the date the Award is granted or such other period as determined by
the Committee (including no period). Any attempt to dispose of any such Shares
of stock in contravention of such restrictions shall be null and void and
without effect.

                  The applicable Award Agreement shall set forth the events
and/or dates upon which Restricted Shares granted to a Participant shall vest
(the "Restriction Period"). Within these limits, based on service, attainment of
objective performance goals established pursuant to Section VII(B)(5) below
and/or such other factors or criteria as the Committee may determine, in its
sole discretion, the Committee may provide for the lapse of such restrictions in
installments in whole or

                                       11
<PAGE>

in part, or may accelerate the vesting of all or any part of any Award of
Restricted Shares and/or waive the deferral limitations for all or any part of
any Award of Restricted Shares.

                  5. Objective Performance Goals, Formulae or Standards (the
"Performance Goals"). If the grant of Restricted Shares or the lapse of
restrictions is based exclusively on the attainment of Performance Goals, the
Committee shall establish the objective Performance Goals and the applicable
vesting percentage of the Award of Restricted Shares applicable to each
Participant or class of Participants in writing prior to the beginning of the
applicable calendar year or at such later date as otherwise determined by the
Committee (as permitted under Section 162(m) of the Code if the Award is
intended to comply with Section 162(m) of the Code) and while the outcome of the
Performance Goals are substantially uncertain. Such Performance Goals may
incorporate provisions for disregarding (or adjusting for) changes in accounting
methods, corporate transactions (including, without limitation, dispositions and
acquisitions) and other similar type events or circumstances. With regard to an
Award of Restricted Shares that is intended to comply with Section 162(m) of the
Code, to the extent any such provision would create impermissible discretion
under Section 162(m) of the Code or otherwise violate Section 162(m) of the
Code, such provision shall be of no force or effect. The applicable Performance
Goals shall be based on one or more of the Performance Criteria set forth in
Exhibit A hereto.

                  6. Ownership. Except to the extent otherwise set forth in the
Award Agree ment, the Participant shall possess all incidents of ownership of
such shares, subject this Article VII, including the right to receive dividends
with respect to such Shares, the right to vote such Shares, and , subject to and
conditioned upon the full vesting of Restricted Shares, the right to tender such
Shares. The Committee, in its sole discretion, as determined at the time of the
Award, may permit or require the payment of dividends to be deferred.

VIII. Acceleration Events

            Unless otherwise provided in the applicable Agreement, all Options
granted and not previously exercisable shall become vested and fully exercisable
immediately upon the occurrence of a Change In Control and the restrictions to
which Restricted Shares granted prior to the Change In Control are subject shall
lapse as if the applicable Restriction Period had ended upon such Change In
Control.

            The Committee, in its sole discretion, may provide, as part of the
Agreement or otherwise, for the purchase of any Option granted under the Plan by
the Company, a Designated Parent or a Designated Subsidiary for an amount of
cash equal to the excess of the Change In Control Price (as defined herein) of
the shares of Common Stock covered by such Option, over the aggregate exercise
price or purchase price of such Option. For purposes of this Plan, Change In
Control Price shall mean the higher of (i) the highest price per share of Common
Stock paid in any transaction related to a Change In Control, or (ii) the
highest Fair Market Value at any time during the 60-day period preceding a
Change In Control.

                                       12
<PAGE>

IX. Termination of Employment

            A. General. Unless otherwise provided in the applicable Agreement,
if a Participant's employment or consultancy shall terminate due to Retirement,
Disability or for any reason other than for Cause prior to the complete exercise
of an Option (or deemed exercise thereof), then such Option shall thereafter be
exercisable to the extent such Option is vested and shall remain exercisable for
1 year; provided, however, that no Option may be exercised after the scheduled
expiration date of such Option. Solely with regard to Awards of Restricted
Shares granted prior to April 23, 1997, unless otherwise provided in the
Restricted Share Agreement, if a Participant's employment or consultancy shall
terminate due to Retirement, Disability or for any reason other than for Cause
at any time, Restricted Shares shall not be forfeited for any reason and the
restrictions in Article VII(B)(4) shall continue to apply to such Restricted
Shares. With regard to Awards of Restricted Shares granted on or after April 23,
1997, subject to the applicable provisions of a Restricted Share Agreement, upon
a Participant's termination of employment or consultancy for any reason (other
than for Cause) during the relevant Restriction Period, all Restricted Shares
still subject to restriction shall vest or be forfeited in accordance with the
conditions established by the Committee at grant or thereafter. Any termination
of employment or consultancy by the Company for Cause will be treated in
accordance with the provisions of paragraph (B) below.

            B. Termination by Company for Cause. Unless otherwise provided in
the applicable Agreement, if a Participant's employment or consultancy with the
Company, Parent or a Subsidiary shall be terminated by the Company, Parent or
such Subsidiary for Cause, then all outstanding Options held by such Participant
shall immediately terminate and rights to all Restricted Shares shall be
forfeited immediately.

            C. Miscellaneous. The Committee may determine whether any given
leave of absence constitutes a Termination of Employment. Awards granted under
the Plan shall not be affected by any change of employment so long as the
Participant continues to be an employee of the Company, Parent or a Subsidiary.

            D. Cancellation of Options. Except as otherwise provided in Article
VIII, no Options that were not exercisable during the period of employment shall
thereafter become exercisable upon a Termination of Employment for any reason or
no reason whatsoever, and such Options shall terminate and become null and void
upon a Termination of Employment, unless the Committee determines in its sole
discretion that such Options shall be exercisable.

X. Nontransferability of Awards

            No Award shall be transferable by the Participant otherwise than by
will or under applicable laws of descent and distribution, and during the
lifetime of the Participant may be exercised only by the Participant or his or
her guardian or legal representative. Notwithstanding the foregoing, effective
July 25, 1997, the Committee may determine at the time of grant or thereafter
that a Non-Qualified Stock Option, that is otherwise not transferable pursuant
to this Article X, is transferable in whole or in part and in such
circumstances, and under such conditions, as specified by the Committee. In
addition, except as provided above, no Award shall be assigned, negotiated,
pledged

                                       13
<PAGE>

or hypothecated in any way (whether by operation of law or otherwise), and no
Award shall be subject to execution, attachment or similar process. Upon any
attempt to transfer, assign, negotiate, pledge or hypothecate any Award, or in
the event of any levy upon any Award by reason of any execution, attachment or
similar process contrary to the provisions hereof, such Award shall immediately
terminate and become null and void.

XI. Rights as a Stockholder

            A Participant shall have no rights as a stockholder with respect to
any Shares covered by such Participant's Award until such Participant shall have
become the holder of record of such Shares, and no adjustments shall be made for
dividends in cash or other property or distributions or other rights in respect
to any such Shares, except as otherwise specifically provided in this Plan.

XII. Termination, Amendment and Modification

            The Plan shall terminate at the close of business on the tenth
anniversary of the Effective Date (the "Termination Date"), unless terminated
sooner as hereinafter provided, and no Award shall be granted under the Plan on
or after that date. The termination of the Plan shall not terminate any
outstanding Awards that by their terms continue beyond the Termination Date. At
any time prior to the Termination Date, the Committee or Board may amend or
terminate the Plan or suspend the Plan in whole or in part.

            The Committee or Board may at any time, and from time to time, amend
in whole or in part, any or all of the provisions of the Plan (including any
amendment deemed necessary to ensure that the Company complies with any
regulatory requirements referred to in Article XIV), or suspend or terminate it
entirely, retroactively or otherwise; provided, however, that, unless otherwise
required by law or specifically provided herein, the rights of a Participant
with respect to Awards granted prior to such amendment, suspension or
termination, may not be materially impaired without the consent of such
Participant and, provided further, without the approval of the stockholders of
the Company entitled to vote, solely to the extent required by Section 16(b) of
the Exchange Act, Section 162(m) of the Code, or with regard to Incentive Stock
Options, Section 422 of the Code, no amendment may be made which would (i)
increase the aggregate number of Shares that may be issued under this Plan
(except by operation of Article V) or, with respect to Awards; (ii) increase the
maximum individual Participant limitations for a calendar year under Section
V(B)(2); (iii) change the classification of employees eligible to receive Awards
under this Plan; (iv) decrease the minimum purchase price of any Award; (v)
extend the maximum period during which an option may be exercised under Article
VI(D); or (vi) effect any change that would require stockholder approval in
order for the Plan to comply with the applicable provisions, if any, of Section
16(b) of the Exchange Act, Section 162(m) of the Code, or, with regard to
Incentive Stock Options, Section 422 of the Code.

            The Committee or the Board may amend the terms of any Award granted,
prospectively or retroactively, but, subject to Article VIII above or as
otherwise provided herein, no such amendment or other action by the Committee or
the Board shall materially impair the rights of any Participant without the
Participant's consent. No modification of an Award shall adversely affect the

                                       14
<PAGE>

status of an Incentive Stock Option as an incentive stock option under Section
422 of the Code. Notwithstanding the foregoing and solely to the extent required
by Section 16(b) of the Exchange Act or Section 162(m) of the Code, neither the
Board nor the Committee may make any determination or interpretation or take any
other action which would cause any member of the Committee to cease to be a
non-employee director for purposes of Section 16(b) of the Exchange Act or an
outside director for purposes of Section 162(m) of the Code.

XIII. Use of Proceeds

            The proceeds of the sale of Shares subject to Awards under the Plan
are to be added to the general funds of Company and used for its general
corporate purposes as the Board shall determine.

XIV. General Provisions

            A. Right to Terminate Employment or Consultancy. Neither the
adoption of the Plan nor the grant of Awards shall impose any obligation on the
Company, a Designated Parent or Designated Subsidiaries to continue the
employment or consultancy of any Participant, nor shall it impose any obligation
on the part of any Participant to remain in the employ of the Company,
Designated Parent or Designated Subsidiaries.

            B. Trusts, etc. Nothing contained in the Plan and no action taken
pursuant to the Plan (including, without limitation, the grant of any Award
thereunder) shall create or be construed to create a trust of any kind, or a
fiduciary relationship, between the Company and any Participant or the executor,
administrator or other personal representative or designated beneficiary of such
Participant, or any other persons. If and to the extent that any Participant or
such Participant's executor, administrator or other personal representative, as
the case may be, acquires a right to receive any payment from the Company
pursuant to the Plan, such right shall be no greater than the right of an
unsecured general creditor of the Company.

            C. Notices. Any notice to the Company required by or in respect of
this Plan will be addressed to Donna Karan International Inc. at 550 Seventh
Avenue, New York, New York 10018, Attention: General Counsel (or such other
place of business as shall become Donna Karan International Inc. principal
executive offices from time to time). Each Participant shall be responsible for
furnishing the Committee with the current and proper address for the mailing to
such Participant of notices and the delivery to such Participant of agreements,
Shares and payments. Any such notice to the Participant will, if the Company has
received notice that the Participant is then deceased, be given to the
Participant's personal representative if such representative has previously
informed the Company of his status and address (and has provided such reasonable
substantiating information as the Company may request) by written notice under
this Article XIV. Any notice required by or in respect of this Plan will be
deemed to have been duly given when delivered in person or when dispatched by
telecopy or one business day after having been dispatched by a nationally
recognized overnight courier service or three business days after having been
mailed by United States registered or certified mail, return receipt requested,
postage prepaid. The Company assumes no responsibility

                                       15
<PAGE>

or obligation to deliver any item mailed to such address that is returned as
undeliverable to the addressee and any further mailings will be suspended until
the Participant furnishes the proper address.

            D. Severability of Provisions. If any provisions of the Plan shall
be held invalid or unenforceable, such invalidity or unenforceability shall not
affect any other provisions of the Plan, and the Plan shall be construed and
enforced as if such provisions had not been included.

            E. Payment to Minors, Etc. Any benefit payable to or for the benefit
of a minor, an incompetent person or other person incapable of receipt thereof
shall be deemed paid when paid to such person's guardian or to the party
providing or reasonably appearing to provide for the care of such person, and
such payment shall fully discharge the Committee, the Company and their
employees, agents and representatives with respect thereto.

            F. Headings and Captions. The headings and captions herein are
provided for reference and convenience only. They shall not be considered part
of the Plan and shall not be employed in the construction of the Plan.

            G. Controlling Law. The Plan shall be construed and enforced
according to the laws of the State of Delaware, without giving effect to rules
governing the conflicts of laws.

            H. Other Benefits. No payment under this Plan shall be considered
compensation for purposes of computing benefits under any retirement plan of the
Company, a Designated Parent or a Designated Subsidiary nor affect any benefits
under any other benefit plan now or subsequently in effect under which the
availability of benefits is related to the level of compensation.

            I. Costs. The Company shall bear all expenses included in
administering this Plan, including expenses of issuing Common Stock pursuant to
any Awards hereunder.

            J. Section 16(b) of the Exchange Act. All elections and transactions
under the Plan by persons subject to Section 16 of the Exchange Act involving
shares of Common Stock shall be intended to comply with any applicable condition
under Rule 16b-3 as then in effect. In such event, the Committee may at any time
impose any limitations upon the exercise of an Option or issuance of Shares or
other conditions which, in the Committee's discretion, are necessary or
desirable in order to comply with Section 16(b) and the rules and regulations
thereunder and may establish and adopt written administrative guidelines,
designed to facilitate compliance with Section 16(b) of the Exchange Act, as it
may deem necessary or proper for the administration and operation of the Plan
and the transaction of business thereunder.

            K. Death/Disability. The Committee may in its discretion require the
transferee of a Participant to supply it with written notice of the
Participant's death or Disability and to supply it with a copy of the will (in
the case of the Participant's death) or such other evidence as the Committee
deems necessary to establish the validity of the transfer of an Award. The
Committee may also require that the agreement of the transferee to be bound by
all of the terms and conditions of the Plan.

                                       16
<PAGE>

XV. Issuance of Stock Certificates; Legends; Payment of Expenses

            A. Stock Certificates. Upon any exercise of an Option and payment of
the exercise price as provided in such Option or lapse of restriction on a
Restricted Share, a certificate or certificates for the Shares as to which such
Award has been granted shall be issued by the Company in the name of the person
or persons receiving such Award and shall be delivered to or upon the order of
such person or persons.

            B. Legends. All certificates for shares of Common Stock delivered
under the Plan shall be subject to such stock transfer orders and other
restrictions as the Committee may deem advisable under the rules, regulations
and other requirements of the Securities and Exchange Commission, any stock
exchange upon which the Stock is then listed or any national securities
association system upon whose system the Stock is then quoted, any applicable
federal or state securities law, and any applicable corporate law, and the
Committee may cause a legend or legends to be put on any such certificates to
make appropriate reference to such restrictions.

                  If the Board or the Committee determines in its sole
discretion, each Participant shall, upon any exercise or conversion of an Award,
execute and deliver to the Company a written statement, in form satisfactory to
the Company, representing and warranting that such Participant is purchasing or
accepting the Shares then acquired for such Participant's own account and not
with a view to the resale or distribution thereof, that any subsequent offer for
sale or sale of any such Shares shall be made either pursuant to (i) a
registration statement on an appropriate form under the Securities Act, which
registration statement shall have become effective and shall be current with
respect to the Shares being offered and sold, or (ii) a specific exemption from
the registration requirements of the Securities Act, and that in claiming such
exemption the Participant will, prior to any offer for sale or sale of such
Shares, obtain a favorable written opinion, satisfactory in form and substance
to the Company, from counsel approved by the Company as to the availability of
such exception.

XVI. Listing of Shares and Related Matters

            If the Company determines, in its discretion, that the listing,
registration, or qualification of the Award or the Shares subject to the Award
upon any securities exchange or under any state or federal securities or other
law or regulation, or the exemption from such listing, registration or
qualification requirements, or the consent or approval of any governmental
regulatory body is necessary or desirable as a condition to or in connection
with the granting of an Option, the exercisability of an Award or the issue or
purchase of Shares thereunder or the vesting of Restricted Shares, no Shares
shall be issued upon the exercise of the Option unless the listing,
registration, qualification, exemption, consent or approval has been effected or
obtained free of any conditions not acceptable to the Company. The holder of the
Option or Restricted Share will supply the Company with certificates,
representations, and information that the Company requests and shall otherwise
cooperate with the Company in obtaining the listing, registration,
qualification, exemption, consent or approval. Without limiting the foregoing,
no Shares shall be issued upon the exercise of an Option or vesting of
Restricted Shares if the Company or the Committee determines that the issuance
of shares upon exercise or vesting does not comply with any applicable federal
and state securities laws. The Committee in its sole discretion may require as a
condition of exercise of any Option, an opinion of

                                       17
<PAGE>

counsel for the holder of the Option that shares to be issued upon exercise of
the Option are exempt from registrations under the Securities Act or applicable
state "blue sky" laws. If the Company or the Committee, as part of an offering
of securities or otherwise, finds it desirable, because of federal or state
regulatory requirements, to reduce the period during which any Options may be
exercised, the Company or the Committee may, in its discretion and without the
Participant's consent, reduce the exercise period on not less than 15 days'
written notice to the Participant.

XVII. Withholding of Taxes

            The Company shall have the right to deduct from any payment to be
made to a Participant, or to otherwise require, prior to the issuance or
delivery of any shares of Common Stock or the payment of any cash hereunder,
payment by the Participant of, any Federal, state or local taxes required by law
to be withheld.

            The Committee may permit any such withholding obligation with regard
to any Participant to be satisfied by reducing the number of shares of Common
Stock otherwise deliverable or by delivering shares of Common Stock already
owned. Any fraction of a share of Common Stock required to satisfy such tax
obligations shall be disregarded and the amount due shall be paid instead in
cash by the Participant.

                                       18
<PAGE>

                                    EXHIBIT A

                              PERFORMANCE CRITERIA

            Performance Goals established for purposes of the grant of or
vesting of performance-based Awards of Restricted Shares shall be based on one
or more of the following performance criteria ("Performance Criteria"): (i) the
attainment of certain target levels of, or a percentage increase in, after-tax
or pre-tax profits of the Company including, without limitation, that
attributable to continuing and/or other operations of the Company (or in any
case a Subsidiary, Parent, division, or other operational unit of the Company);
(ii) the attainment of certain target levels of, or a specified increase in,
operational cash flow of the Company (or a Subsidiary, Parent, division, or
other operational unit of the Company); (iii) the achievement of a certain level
of, reduction of, or other specified objectives with regard to limiting the
level of increase in, all or a portion of, the Company's bank debt or other
long-term or short-term public or private debt or other similar financial
obligations of the Company, which may be calculated net of such cash balances
and/or other offsets and adjustments as may be established by the Committee;
(iv) the attainment of a specified percentage increase in earnings per share or
earnings per share from continuing operations of the Company (or a Subsidiary,
Parent, division or other operational unit of the Company); (v) the attainment
of certain target levels of, or a specified percentage increase in, revenues,
net income or earnings before income tax of the Company (or a Subsidiary,
Parent, division, or other operational unit of the Company); (vi) the attainment
of certain target levels of, or a specified increase in return on capital
employed or return on invested capital of the Company (or any Subsidiary,
Parent, division, or other operational unit of the Company); (vii) the
attainment of certain target levels of, or a percentage increase in, after-tax
or pre-tax return on stockholders' equity of the Company (or any Subsidiary,
Parent, division or other operational unit of the Company); (viii) the
attainment of certain target levels of, or a specified increase in, economic
value added targets based on cash flow return on investment formula of the
Company (or any Subsidiary, Parent, division or other operational unit of the
Company; (ix) the attainment of certain target levels in the Fair Market Value
of the shares of Common Stock; and (x) the growth in the value of an investment
in the Common Stock assuming the reinvestment of dividends.

            In addition, such Performance Criteria may be based upon the
attainment of specified levels of Company (or Subsidiary, Parent, division or
other operational unit of the Company) performance under one or more of the
measures described above relative to the performance of other corporations. To
the extent permitted under Section 162(m) of the Code, but only to the extent
permitted under Section 162(m) of the Code (including, without limitation,
compliance with any requirements for stockholder approval), the Committee may:
(i) designate additional business criteria on which the Performance Goals may be
based or (ii) adjust, modify or amend the aforementioned business criteria.

                                       19<PAGE>

                                                                  Exhibit 10.28

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

                         DONNA KARAN INTERNATIONAL INC.

                            WEALTH ACCUMULATION PLAN

                           Effective December 28, 1997

                 (Amended and restated through December 8, 2000)

--------------------------------------------------------------------------------
<PAGE>

                         DONNA KARAN INTERNATIONAL INC.
                            WEALTH ACCUMULATION PLAN

            The Plan is established in order to provide deferred compensation to
a select group of management and highly compensated employees of Donna Karan
International Inc. and its Affiliates. The benefits are intended to supplement
the benefits payable under the Qualified Plan, a plan qualified under Section
401(a) of the Code, maintained for the employees of Donna Karan International
Inc. and its Affiliates.

1. Definitions. For purposes of the Plan, the following definitions apply:

      (a) "Affiliate" means such corporations and other entities (including,
without limitation, partnerships and limited liability companies), presently or
in the future existing, which are members of the controlled group which includes
the Company or are under common control with the Company, as such terms are
defined in Sections 414(b) and 414(c) of the Code, but only during such period
as such corporations or entities are members of the controlled group which
includes the Company or are under common control with the Company.

      (b) "Beneficiary" means, unless otherwise specified by the Participant in
a written election filed with the Committee, the person or persons (if any)
designated by the Participant under the Qualified Plan (or otherwise determined
under the terms of the Qualified Plan if no such designation is made) to receive
his or her benefits under the Qualified Plan in the event of the Participant's
death.

      (c) "Board" means the Board of Directors of the Company.

      (d) "Cause" means with respect to a Participant's Termination of
Employment, (i) in the case where there is no employment agreement between an
Employer and the Participant, or where there is an employment agreement, but
such agreement does not define cause (or words of like import), termination due
to a Participant's dishonesty, fraud, insubordination, willful misconduct, gross
negligence, refusal to perform services (for any reason other than illness or
incapacity) or materially unsatisfactory performance of his or her duties for an
Employer, or the Participant's conviction of a felony or other crime involving,
in the sole discretion of the Committee, moral turpitude; or (2) in the case
where there is an employment agreement between an Employer and the Participant,
termination that is or would be deemed to be for cause (or words of like import)
as defined under such agreement. The Committee shall have sole discretion in
determining whether cause exists, and its determination shall be final, binding
and conclusive.

      (e) "Code" means the Internal Revenue Code of 1986, as amended (or any
successor statute).
<PAGE>

      (f) "Committee" means the committee, if any, appointed by the Board from
time to time to administer the Plan on behalf of the Company. To the extent that
no committee is appointed, the Board shall be deemed to be the Committee.

      (g) "Common Stock" means the common stock of the Company, par value $0.01
per share, any common stock into which the Common Stock may be converted and any
common stock resulting from any reclassification of the Common Stock.

      (h) "Company" means Donna Karan International Inc., a Delaware
corporation, and any successor thereto.

      (i) "Compensation" means, for any Plan Year, the base salary and bonus
paid by an Employer to an Employee while a Participant during the Plan Year
including contributions by an Employer on behalf of a Participant pursuant to a
salary reduction agreement between an Employer and a Participant under Code
Section 401(k) or 125, if any.

      (j) "Detrimental Activity" means (1) in the case where there is an
employment agreement between an Employer and the Participant which contains
restrictive covenants, any breach of such restrictive covenants, including,
without limitation, a breach of confidentiality, non-solicitation or
non-disparagement or any other material breach of such employment agreement; or
(2) in the case where there is no employment agreement between an Employer and
the Participant, or where there is an employment or consulting agreement, but
such agreement does not contain any restrictive covenants (i) the disclosure to
anyone outside the Company or its Affiliates, or the use in any manner other
than in the furtherance of the Company's or its Affiliate's business, without
written authorization from the Company, of any confidential information or
proprietary information, relating to the business of the Company or its
Affiliates or their respective officers, directors, executives or employees, or
of any customer, supplier or licensee of the Company or its Affiliates that is
acquired by a Participant prior to a Participant's Termination of Employment;
(ii) any attempt to, directly or indirectly, hire, engage or retain, or aid or
assist any other person or entity to hire, engage, or retain (A) (x) any
designers of the Company or its Affiliates, (y) any person who held the position
of director or any equivalent or more senior position at the Company or any of
its Affiliates, or (z) any person who acted as one of the Company's or its
Affiliates' outside consultants or (B) any person employed by a licensee of the
Company or its Affiliates who worked on the Donna Karan or DKNY brand; (iii) any
attempt to, directly or indirectly, induce any person or entity that supplied
piece goods or designs to, or that manufactured or sold apparel to, the Company
or any of its Affiliates to terminate its relationship with the Company or its
Affiliates; or (iv) a Participant's Disparagement, or inducement of others to do
so, of the Company or its Affiliates or their past and present officers,
directors, executives or employees or of any customer, supplier or licensee of
the Company or its Affiliates. Notwithstanding the foregoing, in determining
whether an act in question is within the definition of Detrimental Activity, the
individuals and entities described in subparagraph (2)(ii) or (iii) above shall
refer to those individuals and entities at the time of the act if the
Participant is then an employee of the Company or an Affiliate or, if the act in
question occurs on or after the Participant's Termination of Employment, those
individuals and entities at the time of the Participant's Termination of
Employment or within the six-month period prior thereto. The Committee shall
have authority to provide a Participant with written authorization to engage in
the activities contemplated herein and no other person shall have authority to
provide a Participant with such authorization.

                                       2
<PAGE>

      (k) "Disability" means (i) in the case where there is no employment
agreement between an Employer and the Participant, or where there is an
employment agreement, but such agreement does not define disability, a total and
permanent disability, as defined in Section 22(e)(3) of the Code; or (2) in the
case where there is an employment agreement between an Employer and the
Participant, disability as defined under such employment agreement.

      (l) "Disparagement" means making comments or statements to the press, the
Company's or its Affiliates' officers, directors, executives or employees, or
any customer, supplier or licensee of the Company or its Affiliates which could
reasonably be expected to adversely affect in any manner: (i) the conduct of the
business of the Company or its Affiliates (including, without limitation, any
products or business plans or prospects); or (ii) the business reputation of the
Company or its Affiliates, or any of their products, or their past or present
officers, directors, executives or employees, or of any customer, supplier or
licensee of the Company or its Affiliates.

      (m) "Earnings" means, for any Plan Year, earnings on amounts in the
Supplemental Account computed in accordance with Section 6 hereof.

      (n) "Eligible Employee" means an Employee who has been designated by an
Employer as a Vice President or above.

      (o) "Employee" means any person employed by an Employer excluding any
"leased employee," as defined in Section 414(n) of the Code, any independent
contractor or agent.

      (p) "Employer" means the Company and any Affiliate.

      (q) "ERISA" means the Employee Retirement Income Security Act of 1974, as
amended.

      (r) "Exchange Act" means the Securities Exchange Act of 1934, as amended,
and all rules and regulations promulgated thereunder.

      (s) "Parent" means (i) any corporation in an unbroken chain of
corporations ending with the Company which owns stock possessing fifty percent
(50%) or more of the total combined voting power of all classes of stock in one
of the other corporations in such chain; or (ii) any corporation or trade or
business (including, without limitation, a partnership or limited liability
company) which controls fifty percent (50%) or more (whether by ownership of
stock, assets or an equivalent ownership interest) of the Company.

      (t) "Participant" means any Eligible Employee who shall have become a
Participant in the Plan.

      (u) "Plan" means the Donna Karan International Inc. Wealth Accumulation
Plan.

      (v) "Plan Year" means the fiscal year of the Company.

                                       3
<PAGE>

      (w) "Qualified Plan" means the Company's 401(k) Retirement Plan, as
restated effective as of January 1, 1997 and as amended from time to time
thereafter.

      (x) "Securities Act" means the Securities Act of 1933, as amended, and all
rules and regulations promulgated thereunder.

      (y) "Subsidiary" means (i) any corporation in an unbroken chain of
corporations beginning with the Company which owns stock possessing fifty
percent (50%) or more of the total combined voting power of all classes of stock
in one of the other corporations in such chain; (ii) any corporation or trade or
business (including, without limitation, a partnership or limited liability
company) which is controlled fifty percent (50%) or more (whether by ownership
of stock, assets or an equivalent ownership interest) by the Company or one of
its Subsidiaries; or (iii) any other entity, approved by the Board as a
Subsidiary under the Plan, in which the Company or any of its Subsidiaries has
an equity or other ownership interest.

      (z) "Supplemental Account" means the individual account established by the
Company for a Participant to which a Participant's benefits under the Plan are
credited.

      (aa) "Supplemental Benefit" means the benefit payable under the Plan,
which shall be payable in accordance with Section 7 hereof.

      (bb) "Termination of Employment" or "Terminates Employment" means
termination of employment as an Employee of the Company and all Affiliates for
any reason whatsoever, including but not limited to death, retirement,
resignation or firing (with or without Cause).

2. Effective Date. The Plan shall become effective as of December 28, 1997.

3. Participation. An Eligible Employee shall become a Participant in the Plan on
the later of the effective date of the Plan or the date he or she becomes an
Eligible Employee.

4. Contributions and Amount of Supplemental Benefits.

      (a) The Company shall make a book entry contribution to the Supplemental
Account of each Participant who is actively employed on the last day of a Plan
Year in an amount equal to five percent (5%) of the total amount of a
Participant's Compensation earned while a Participant during the applicable Plan
Year.

With respect to each Plan Year, the Company shall credit the book entry
contribution as of the last day of such Plan Year and shall make such book entry
contribution as soon as administratively feasible following the end of the Plan
Year, but in no event later than one hundred twenty (120) days following the end
of the Plan Year. Notwithstanding any provision of the Plan to the contrary, no
book entry contribution will be made for any Participant with respect to any
Plan Year in which the Company has

                                       4
<PAGE>

not realized a net profit or would not realize a net profit if such book entry
contribution were made for all Participants in such Plan Year.

      (b) Earnings shall be credited to a Participant's Supplemental Account as
provided in Section 6 below.

      (c) A Participant's Supplemental Benefit shall consist of the vested
balance in his or her Supplemental Account.

5. Vesting. A Participant's Supplemental Account shall become vested solely
after participating as a Participant in the Plan for at least five (5) full
years commencing on the date the Participant became a Participant in the Plan.
Notwithstanding anything herein to the contrary, a Participant's vested
Supplemental Account shall be forfeited and not paid in the event the
Participant Terminates Employment for Cause, as determined by the Committee.

6. Measurement of Earnings.

      (a) The measuring alternative used for the measurement of Earnings on the
amounts in a Participant's Supplemental Account shall be selected by each
Participant in writing, on a form prescribed by the Committee, from among the
various measuring alternatives offered by the Committee. Each Participant may
change the selection of his or her measuring alternative as of the beginning of
any calendar quarter (or at such other times and in such manner as prescribed by
the Committee, in its sole discretion), subject to such notice and other
administrative procedures as established by the Committee. The Committee shall
credit the Earnings computed under this Section to the balance in each
Participant's Supplemental Account as of the last business day of each calendar
quarter, or such other dates as are selected by the Committee, in its sole
discretion, at a rate equal to the performance of the measuring alternative
selected by the Participant for the calendar quarter (or such other applicable
period) to which such selection relates.

      (b) The Committee may, in its sole discretion, establish rules and
procedures for the crediting of Earnings and the election of measuring
alternatives pursuant to this Section 6.

7. Payment of Supplemental Benefit.

      (a) A Participant hereunder shall receive his or her Supplemental Benefit
from the Plan in accordance with the following Schedule with the lump sum
payment or first installment payment to be paid commencing on the earlier of (i)
first anniversary of his or her Termination of Employment or (ii) the date he or
she incurs a Disability.

               ---------------------------------------------
               Amount of Supplemental     Number of Years of
               Benefit (Vested Interest)  Annual Installments
               ---------------------------------------------

                                       5
<PAGE>

               ---------------------------------------------
               $1,000,000 plus            10 years
               ---------------------------------------------
               $500,000 to $999,999       5 years
               ---------------------------------------------
               $100,000 to $499,999       3 years
               ---------------------------------------------
               $1 to $99,999              One lump sum
               ---------------------------------------------

The Supplemental Account of a Participant who receives annual installment
payments in accordance with the Schedule above shall continue to be credited
with Earnings until the final installment is paid. Notwithstanding the
foregoing, the Committee, in its sole discretion, may accelerate payment of all
or a portion of the Supplemental Benefit to a Participant in any manner.

      (b) If a Participant dies prior to receiving his or her total Supplemental
Benefit, the unpaid portion of such Supplemental Benefit shall be paid to the
Participant's Beneficiary in a single lump sum, as soon as administratively
feasible following the Participant's death.

      (c) Notwithstanding anything hereto to the contrary, no Supplemental
Benefit shall be required to be paid to a Participant until the last
contribution required to be made hereunder with respect to such Participant is
actually made in accordance with Section 4(a) of the Plan.

      (d) In accordance with administrative procedures established by the
Committee in its sole discretion, a Participant may request the payment of all
or a portion of such Participant's vested Supplemental Account which has been
credited by the Company as a book entry for at least five fiscal years as of the
date payment is made to the Participant. Any request made pursuant to this
Section 7(d) must be made in writing to the Committee during the fiscal year
prior to the fiscal year during which such payment is to be made to a
Participant. Any payment requested pursuant to this Section 7(d) shall be made
in the form of a single lump sum cash payment on the first anniversary of the
date the Committee receives the written request for such payment.

      (e) Notwithstanding anything herein to the contrary, a Participant's
vested Supplemental Account shall be forfeited in its entirety and not paid to a
Participant in the event he or she engages in Detrimental Activity while
employed by the Company or an Affiliate or during the period commencing on the
Participant's Termination of Employment and ending one (1) year thereafter,
unless the Committee, in its sole discretion, determines otherwise.

8. Claims Procedure.

      (a) The Committee shall be responsible for determining all claims for
benefits under the Plan by the Participants or their Beneficiaries. Within
ninety (90) days after receiving a claim (or within up to one hundred eighty
(180) days, if the claimant is notified of the need for additional time,
including notification of the reason for the delay), the Committee shall notify
the Participant or Beneficiary of its decision in writing, giving the reasons
for its decision if adverse to the claimant. If the decision is adverse to the
claimant, the Committee shall advise him or her of the Plan provisions involved,
of any additional information which he or she must provide to perfect his or her
claim and why, and of his or her right to request a review of the decision.

                                       6
<PAGE>

      (b) A claimant may request a review of an adverse decision by written
request to the Committee made within sixty (60) days after receipt of the
decision. The claimant, or his or her duly authorized representative, may review
pertinent documents and submit written issues and comments.

      (c) Within sixty (60) days after receiving a request for review (or up to
one hundred twenty (120) days after such receipt if the Participant is notified
of the delay and the reasons therefor), the Committee shall notify the claimant
in writing of (i) its decision, (ii) the reasons therefore, and (iii) the Plan
provisions upon which it is based.

      (d) The Committee may at any time alter the claims procedure set forth
above, so long as the revised claims procedure complies with the ERISA, and the
regulations issued thereunder.

      (e) The Committee shall have the full power and authority to interpret,
construe and administer the Plan in its sole discretion based on the provisions
of the Plan and to decide any questions and settle all controversies that may
arise in connection with the Plan. The Committee's interpretations and
construction thereof, and actions thereunder, made in the sole discretion of the
Committee, including any valuation of the Supplemental Benefit, any
determination under this Section 9, or the amount of the payment to be made
hereunder, shall be final, binding and conclusive on all persons. No member of
the Committee shall be liable to any person for any action taken or omitted in
connection with the interpretation and administration of the Plan.

      (f) The Committee shall determine, subject to the provisions of the Plan
(i) the additional Employees who shall participate in the Plan from time to time
and (ii) when an Employee shall cease to be a Participant.

9. Construction of Plan.

      (a) The Plan is "unfunded" and any Supplemental Benefit payable hereunder
shall be paid by the Company out of its general assets. Participants and their
designated Beneficiaries shall not have any interest in any specific asset of
the Company as a result of the Plan. Nothing contained in the Plan and no action
taken pursuant to the provisions of the Plan shall create or be construed to
create a trust of any kind, or a fiduciary relationship between the Company and
the Participants, their designated Beneficiaries or any other person. Any funds
which may be invested under the provisions of the Plan shall continue for all
purposes to be part of the general funds of the Company and no person other than
the Company shall by virtue of the provisions of the Plan have any interest in
such funds. To the extent that any person acquires a right to receive payments
from the Company under the Plan, such right shall be no greater than the right
of any unsecured general creditor of the Company. The Company may, in its sole
discretion, establish a "rabbi trust" to pay Supplemental Benefits hereunder.

      (b) All expenses incurred in administering the Plan shall be paid by the
Company.

10. Minors and Incompetents. If the Committee shall find that any person to whom
payment is payable under the Plan is unable to care for his or her affairs
because of illness or accident, or is a minor, any payment due (unless a prior
claim therefore shall have been made by a duly appointed

                                       7
<PAGE>

guardian, committee or other legal representative) may be paid to the spouse, a
child, parent, or brother or sister, or to any person deemed by the Committee to
have incurred expense for such person otherwise entitled to payment, in such
manner and proportions as the Committee may determine it its sole discretion.
Any such payment shall be a complete discharge of the liabilities of the
Company, the Committee and the Board under the Plan.

11. Limitation of Rights. Nothing contained herein shall be construed as
conferring upon an Employee the right to continue in the employ of any Employer
as an Employee on or above a Vice President level or in any other capacity or to
interfere with the Employer's right to discharge him or her at any time for any
reason whatsoever.

12. Payment Not Salary. Any Supplemental Benefit payable under the Plan shall
not be deemed salary or other compensation to the Employee for the purposes of
computing benefits to which he or she may be entitled under any pension plan or
other arrangement of any Employer maintained for the benefit of its Employees.

13. Severability. In case any provision of the Plan shall be illegal or invalid
for any reason, said illegality or invalidity shall not affect the remaining
parts hereof, but the Plan shall be construed and enforced as if such illegal
and invalid provision never existed.

14. Withholding. The Company shall have the right to make such provisions as it
deems necessary or appropriate to satisfy any obligations it may have to
withhold federal, state or local income or other taxes incurred by reason of
payments or accruals pursuant to the Plan.

15. Assignment. The Plan shall be binding upon and inure to the benefit of the
Company, its successors and assigns and the Participants and their heirs,
executors, administrators and legal representatives. In the event that the
Company sells all or substantially all of the assets of its business and the
acquiror of such assets assumes the obligations hereunder, the Company shall be
released from any liability imposed herein and shall have no obligation to
provide any benefits payable hereunder.

16. Non-Alienation of Benefits. The benefits payable under the Plan shall not be
subject to alienation, transfer, assignment, garnishment, execution or levy of
any kind, and any attempt to cause any benefits to be so subjected shall not be
recognized.

17. Governing Law. To the extent legally required, the Code and ERISA shall
govern the Plan and, if any provision hereof is in violation of any applicable
requirement thereof, the Company reserves the right to retroactively amend the
Plan to comply therewith. To the extent not governed by the Code and ERISA, the
Plan shall be governed by the laws of the State of New York.

                                       8
<PAGE>

18. Amendment or Termination of Plan. The Board (or a duly authorized committee
thereof) may, in its sole and absolute discretion, amend the Plan from time to
time and at any time in such manner as it deems appropriate or desirable, and
the Board (or a duly authorized committee thereof) may, in its sole and absolute
discretion, terminate the Plan for any reason from time to time and at any time
in such manner as it deems appropriate or desirable. No amendment or termination
shall reduce or terminate the then vested benefit of any Participant or
Beneficiary. Upon an amendment or termination, the Company shall not be required
to distribute a Participant's Supplemental Benefit prior to the Participant's
Termination of Employment or the date he or she incurs a Disability, but, in the
event of a termination of the Plan, may do so in a lump sum at the discretion of
the Company. Notwithstanding the foregoing, in no event shall any amendment made
after November 30, 2000 reducing the benefits provided hereunder or any Plan
termination be effective during the period commencing on the date of the Change
in Control (as defined below) and ending one (1) year thereafter.

19. Non-Exclusivity. The adoption of the Plan by the Company shall not be
construed as creating any limitations on the power of the Company to adopt such
other supplemental retirement income arrangements as it deems desirable, and
such arrangements may be either generally applicable or limited in application.

20. Non-Employment. The Plan is not an agreement of employment and it shall not
grant the Employee any rights of employment.

21. Headings and Captions. The headings and captions herein are provided for
reference and convenience only. They shall not be considered part of the Plan
and shall not be employed in the construction of the Plan.

22. Change in Control. The following provisions shall apply in the event of a
Change in Control:

      (a) Except as otherwise provided in this Section 22, a Participant's
Supplemental Account shall become 100% vested upon the occurrence of a Change in
Control and a Participant shall receive his or her Supplemental Benefit from the
Plan in the form of a single lump sum cash payment as soon as administratively
feasible following the occurrence of a Change in Control.

      (b) Notwithstanding the provisions of Section 22(a), if the Company
receives written notice at least five (5) business days prior to the anticipated
closing date of the transaction giving rise to the Change in Control from the
successor to all or a substantial portion of the Company's business and/or
assets that such successor is willing as of the closing to assume and agree to
perform the Company's obligations under this Plan in the same manner and to the
same extent that the Company is hereby required to perform, then, the provisions
of Section 22(a) shall not apply and a Participant shall vest in his or her
Supplemental Account in accordance with the provisions of Section 5 hereof and
shall receive his or her Supplemental Benefit from the Plan in accordance with
the provisions of Section 7 hereof; provided, however, that if a Participant is
terminated without Cause during the period commencing on the date ninety (90)
days prior to the effective date of a Change in Control and

                                       9
<PAGE>

ending on the first anniversary of such Change in Control, then, the
Participant's Supplemental Account shall become 100% vested upon such
termination and a Participant shall receive his or her Supplemental Benefit from
the Plan in the form of a single lump sum cash payment as soon as
administratively feasible following such termination.

      (c) For purposes of this Plan, a "Change in Control" shall be deemed to
have occurred if any of the following shall have occurred:

            (i) the acquisition by any "person" (as such term is used in Section
13(d) and 14(d) of the Exchange Act) other than a person who is a stockholder of
the Company on the effective date of the registration statement filed under the
Securities Act relating to the first public offering (the "Initial Public
Offering") of securities of the Company (an "Initial Stockholder") of 30% or
more of the voting power of securities of Company or the acquisition by an
Initial Stockholder, other than an affiliate of the Company that would be a
Parent or a Subsidiary, of an additional 5% of the voting power of securities of
the Company over and above that owned immediately after the closing date of the
Initial Public Offering of the Company's Common Stock; excluding however, the
following: (x) any acquisition by the Company or a Subsidiary of any of the
foregoing, or (y) any acquisition by an employee benefit plan (or related trust)
sponsored or maintained by the Company or a Subsidiary; or

            (ii) (A) the acquisition by any "person" (as such term is used in
Section 13(d) and 14(d) of the Exchange Act) other than a person who, on the
effective date of the Initial Public Offering is a holder of any ownership
interest in Donna Karan Studio (an "Initial Licensee Interest Holder") of 30% or
more of the voting power of Donna Karan Studio or (B) the acquisition by an
Initial Licensee Interest Holder, other than an affiliate of Gabrielle Studio,
Inc. (and excluding any such acquisition resulting from a purchase, sale or
transfer of Takihyo Inc. stock by and between any of the current stockholders of
Takihyo Inc.) that would be a Parent or a Subsidiary (but substituting Gabrielle
Studio, Inc. for the Company in such definitions) of Gabrielle Studio, Inc., of
an additional 5% of the voting power of securities of the Company over and above
that owned immediately after the closing date of the Initial Public Offering of
the Company's Common Stock; excluding however, the following: (x) any
acquisition by the Company or a Subsidiary of any of the foregoing, or (y) any
acquisition by an employee benefit plan (or related trust) sponsored or
maintained by the Company or a Subsidiary; or

            (iii) any merger or sale of substantially all of the assets of the
Company under circumstances where the holders of the Common Stock of the Company
immediately prior to the transaction becoming public knowledge were not holders
of 80% of the equity securities of the surviving entity resulting from such
transaction; or

            (iv) any change in the composition of the Board not approved by (x)
a majority of the Board prior to such change and (y) by not less than two
directors of the Company who were directors prior to the time any person who was
not an Initial Stockholder acquired 30% or more of the voting power of
securities of the Company.

23. Legal Fees. To the fullest extent permitted by law, on or after the
occurrence of a Change in Control, the Company shall promptly pay upon
submission of statements all legal and other professional fees, costs of
litigation, prejudgment interest, and other expenses incurred by a

                                       10
<PAGE>

Participant in connection with any dispute concerning payments, benefits or any
other entitlements under this Plan; provided, however, the Company shall be
reimbursed by the Participant for the fees and expenses advanced in the event
the Participant's claim is, in a material manner, in bad faith or frivolous and
the arbitrator or court, as applicable, determines that the reimbursement of
such fees and expenses is appropriate.

                                       11

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