Document:

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                                                                  Exhibit 10.29

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                         DONNA KARAN INTERNATIONAL INC.

                            EXECUTIVE INCENTIVE PLAN

                           Effective December 28, 1997

                 (Amended and restated through December 8, 2000)

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                         DONNA KARAN INTERNATIONAL INC.

                            EXECUTIVE INCENTIVE PLAN

1. Purpose. The purpose of the Plan is to enable Donna Karan International Inc.
to attract, retain and motivate certain key employees of Donna Karan
International Inc. and its Designated Parents and Designated Subsidiaries by
providing cash performance awards under the Plan.

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

      (a) "Award" means the total annual Performance Award as determined under
the Plan.

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

      (c) "Cause" means with respect to a Participant's Termination of
Employment, (1) 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.

      (d) "Change in Control" means any of the following:

            (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
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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
definition) 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 of Directors of the
Company not approved by (a) a majority of the Board prior to such change and (b)
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 thirty percent (30%)
or more of the voting power of securities of the Company.

      (e) "Code" means the Internal Revenue Code of 1986, as amended.

      (f) "Committee" means the Incentive Compensation Subcommittee of the
Compensation Committee or such other committee or subcommittee of the Board
appointed by the Board from time to time to administer the Plan on behalf of the
Company, provided that such committee shall consist of two or more members of
the Board.

      (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) "Covered Employee" means an Employee who is a covered employee as
defined under Section 162(m)(3) of the Code, determined as of the close of the
prior fiscal year of the Company, and any other Employee designated from time to
time by the Committee as a "Covered Employee" for purposes of the Plan, except
that, notwithstanding anything herein to the contrary, the Committee may decide
on an annual basis, in its sole discretion, prior to the beginning of each Plan
Year or such later date permitted by Section 162(m) of the Code, to not treat
any Employee described under this Section 1(i) as a "Covered Employee."

      (j) "Designated Parent" means any Parent which has been designated from
time to time by the Committee to participate in the Plan.

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      (k) "Designated Subsidiary" means any Subsidiary which has been designated
from time to time by the Committee to participate in the Plan.

      (l) "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.

      (m) "Employer" means the Company, any Designated Parent and any Designated
Subsidiary.

      (n) "Exchange Act" means the Securities Exchange Act of 1934, as amended.

      (o) "Individual Target Award" means the targeted performance award for a
Plan Year specified by the Committee (with regard to Covered Employees) and
Management Committee (with regard to Non-Covered Employees) as provided in
Section 5 hereof.

      (p) "Management Committee" means the committee which administers the Plan
on behalf of the Company solely with respect to Non-Covered Employees,
consisting of the chief executive officer of the Company, the most senior
executive from the human resources department, the most senior executive from
the finance department and any other individual designated by the Committee or
by the Board. To the extent that no Management Committee is appointed, the
Committee shall be the Management Committee.

      (q) "Non-Covered Employee" means a Participant who is not a Covered
Employee.

      (r) "Parent" means, other than the Company, (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.

      (s) "Participant" means any Employee selected, in accordance with Section
4 hereof, to be eligible to receive an Award in accordance with the Plan.

      (t) "Performance Award" means the amount paid or payable under Section 6
hereof.

      (u) "Plan" means the Donna Karan International Inc. Executive Incentive
Plan.

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

      (w) "Securities Act" means the Securities Act of 1933, as amended.

      (x) "Subsidiary" means, other than the Company, (i) any corporation in an
unbroken chain of corporations beginning with the Company which owns stock
possessing fifty percent (50%) or

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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.

3. Administration and Interpretation of the Plan.

      (a) The Plan shall be administered by the Committee with respect to
Covered Employees and by the Management Committee with respect to Non-Covered
Employees. The Committee with respect to Covered Employees and the Management
Committee with respect to Non-Covered Employees shall each have the exclusive
authority and responsibility to: (i) interpret the Plan; (ii) approve the
designation of eligible Participants; (iii) set the performance criteria for
Awards within the Plan guidelines; (iv) certify attainment of performance goals
and other material terms; (v) reduce Awards as provided herein; (vi) authorize
the payment of all benefits and expenses of the Plan as they become payable
under the Plan; (vii) adopt, amend and rescind rules and regulations relating to
the Plan; and (viii) make all other determinations and take all other actions
necessary or desirable for the Plan's administration including, without
limitation, correcting any defect, supplying any omission or reconciling any
inconsistency in the Plan in the manner and to the extent it shall deem
necessary to carry the Plan into effect.

      (b) Decisions made by the Committee and the Management Committee shall be
made by a majority of each of its members. The Committee shall have exclusive
and final authority in all determinations and decisions affecting Covered
Employees. All decisions of the Committee on any question concerning the
interpretation and administration of the Plan shall be final, conclusive and
binding upon all Covered Employees. The Management Committee shall have
exclusive and final authority in all determinations and decisions affecting
Non-Covered Employees. All decisions of the Management Committee on any question
concerning the interpretation and administration of the Plan shall be final,
conclusive and binding upon all Non-Covered Employees. The Committee and the
Management Committee may rely on information, and consider recommendations,
provided by the Board or the executive officers of the Company.

      (c) Notwithstanding anything herein to the contrary, the Management
Committee shall have no authority to act or make determinations or decisions
under the Plan with respect to Covered Employees (including Non-Covered
Employees who become Covered Employees).

4. Eligibility and Participation.

      (a) For each Plan Year, any Covered Employee and any Employee who has been
designated by an Employer as a Vice President level or above shall be designated
Participants in the Plan, other than the Chairman of the Board, Vice Chairman
and the Chief Executive Officer of the Company as of the effective date of the
Plan.

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      (b) Except with regard to Employees described under Section 4(a), the
Committee and the Management Committee may designate additional Employees as
Participants and may add to or delete such Employees from the list of designated
Participants at any time and from time to time, in each of their sole
discretion.

      (c) Notwithstanding any other provision to the contrary, no Employee hired
during a Plan Year may become a Participant in the Plan under Section 4(a),
unless and until the Employee has been actively employed by an Employer for at
least six (6) consecutive months following the date he or she first became an
Employee.

      (d) Except with regard to Employees described under Section 4(a), no
person shall be entitled to any Award under the Plan for any Plan Year unless he
or she is so designated as a Participant for that Plan Year.

5. Individual Target Award. A targeted performance award may be specified for
each Participant for each Plan Year. The Committee specifies a targeted
performance award for the Covered Employees and the Management Committee
specifies a targeted performance award for the Non-Covered Employees. The
Individual Target Award may be expressed, at either of the two committee's
discretion, as may be applicable, as a fixed dollar amount, a percentage of base
pay, or an amount determined pursuant to an objective formula or standard.
Establishment of an Individual Target Award for any Employee for a Plan Year
shall not imply or require that the same level Individual Target Award (if any
such award is established by either of the two committees for the relevant
Employee) be set for any subsequent Plan Year. At the time the Performance Goals
are established (as provided in subsection 6.2 below), the Committee or
Management Committee, as applicable, shall prescribe a formula to determine the
percentages (which may be greater than one-hundred percent (100%)) of the
Individual Target Award which may be payable based upon the degree of attainment
of the Performance Goals during the Plan Year.

6. Performance Award Program.

      6.1 Performance Awards. Subject to Section 7 herein, each Participant is
eligible to receive up to the achieved percentage of their Individual Target
Award for such Plan Year (or, subject to the last sentence of Section 5, such
lesser amount as determined by the Committee or the Management Committee, as
applicable, in its sole discretion) based upon the attainment of the
objective Performance Goals established pursuant to subsection 6.2 and the
formula established pursuant to Section 5. Except as specifically provided in
Section 7, no Performance Award shall be made to a Participant for a Plan Year
unless the minimum Performance Goals for such Plan Year are attained.

      6.2 Objective Performance Goals, Formulae or Standards (the "Performance
Goals").

      (a) The Committee shall establish for the Covered Employees and the
Management Committee shall establish for the Non-Covered Employees the objective
performance goals, formulae

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or standards and the Individual Target Award (if any) applicable to such
Participants for a Plan Year in writing prior to the beginning of such Plan Year
or at such later date decided by the Management Committee in its sole discretion
with regard to Non-Covered Employees or at such later date decided by the
Committee in its sole discretion. The Committee and the Management Committee, as
applicable, reserve the right to amend any and all established Performance Goals
for a Plan Year at any time 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.

      (b) These Performance Goals shall be based on one or more of the following
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 Designated Subsidiary, Designated 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 Designated Subsidiary, Designated 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 or 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 or the Management Committee,
as applicable; (iv) the achievement of a certain level of, reduction of, or
other specified objectives with regard to limiting the level of, or increase in,
all or a portion of controllable expenses or other expenses of the Company (or a
Designated Subsidiary, Designated Parent, division or other operational unit of
the Company); (v) the attainment of a specified percentage increase in earnings
per share or earnings per share from continuing operations of the Company (or a
Designated Subsidiary, Designated Parent, division or other operational unit of
the Company); (vi) 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 Designated Subsidiary, Designated Parent, division, or other
operational unit of the Company); (vii) 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 Designated Subsidiary, Designated Parent,
division, or other operational unit of the Company); (viii) 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 Designated Subsidiary,
Designated Parent, division or other operational unit of the Company); (ix) 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 (any Designated Subsidiary, Designated Parent, division or other
operational unit of the Company; (x) the attainment of certain target levels in
the fair market value of the shares of Common Stock; and (xi) the growth in the
value of an investment in the Common Stock assuming the reinvestment of
dividends.

      In addition, such Performance Goals may be based upon the attainment of
specified levels of Company (or Designated Subsidiary, Designated 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. The Management Committee and the Committee may: (i)

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designate additional business criteria on which the Performance Goals may be
based or (ii) adjust, modify or amend the aforementioned business criteria.

      6.3 Maximum Nondiscretionary Award. The maximum Performance Award payable
to a Participant for any Plan Year is $1,500,000.

      6.4 Payment Date; Committee Certification. The Performance Award will be
paid as soon as administratively feasible after the Plan Year in which it is
earned, but not before the Committee or Management Committee, as applicable,
certifies in writing that the Performance Goals specified (except as provided in
Section 7 with regard to death, disability or Change in Control of the Company
or certain other termination situations) pursuant to subsection 6.2 were, in
fact, satisfied, except as may otherwise be agreed by a Participant and the
Company in a written agreement executed prior to the beginning of the fiscal
year to which the Performance Award relates in accordance with any deferred
compensation program in effect applicable to such Participant. The Company's
independent accountants shall examine as of the close of the Plan Year and
communicate the results of such examination to the Committee and the Management
Committee as to the appropriateness of the payment of Performance Awards under
the Plan for the Plan Year. The Committee and the Management Committee, as
applicable, shall use their best efforts to make a determination with regard to
satisfaction of the Performance Goals within one hundred twenty (120) days after
the end of each Plan Year. The Participant shall have no right to receive
payment of any deferred amount until he or she has a right to receive such
amount under the terms of the applicable deferred compensation program.

7. Employment at Year End Generally Required for Award.

      (a) No Award shall be made to any Participant who is not an active
Employee of the Company, a Designated Parent or Designated Subsidiary at the end
of the Plan Year; provided, however, that the Committee or the Management
Committee, as applicable, in its sole and absolute discretion, may make Awards
to Participants for a Plan Year in circumstances that the Committee or
Management Committee, as applicable, deems appropriate including, but not
limited to, a Participant's death, disability, retirement or other termination
of employment during such Plan Year and the Committee or Management Committee,
as applicable, shall be required to make at least a pro-rata Award through the
date of a Change in Control of the Company to each Participant who is a
Participant at the time of such Change in Control of the Company. All such
Awards shall be based on achievement of the Performance Goals for the Plan Year,
except that, in the case of death, disability or Change in Control of the
Company during the Plan Year, an amount equal to or less than the Individual
Target Awards may be made by the Committee or the Management Committee, as
applicable, either during or after the Plan Year without regard to actual
achievement of the Performance Goals. Furthermore, upon a Change in Control of
the Company, the Committee or the Management Committee, as applicable, may in
its sole discretion make an award (payable immediately) equal to a pro-rata
portion (through the date of the Change in Control of the Company) of the
Individual Target Award payable upon achieving, but not surpassing, the
Performance Goals for the relevant Plan Year. Any such immediate pro-rata
payment shall reduce any other Award made for such Plan Year under the Plan by
the amount of the pro-rata payment.

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      (b) The Management Committee, as applicable, may, in its sole and absolute
discretion, make a pro-rata Award to any Participant who has been designated as
and automatically becomes a Participant who is a Non-Covered Employee during
such Plan Year under Section 4(a) of the Plan. Such pro-rata Award shall be a
proportionate amount of the amount of Award the Participant would have received,
pursuant to Section 6 above, had the Employee been a Participant for the entire
Plan Year, which shall be calculated by multiplying the actual Performance Award
which would have been payable had the Employee remained a Participant for the
entire Plan Year by a fraction, the numerator of which is the number of months
during the Plan Year the Employee was a Participant under Section 4(a) and the
denominator of which is 12. All pro-rata Awards shall be payable in the same
manner and at the same time as Performance Awards. This Section 7(b) shall not
apply to Covered Employees.

8. Forfeiture of Award. Notwithstanding anything else contained herein to the
contrary, a Participant's right to receive any unpaid Award otherwise payable
hereunder shall be automatically forfeited and shall not be paid in the event
the Participant's employment is terminated for Cause.

9. Non-Alienation of Benefits. The Awards 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 or given effect by the Company.

10. 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 a Covered Employee or as an Employee 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.

11. Amendment or Termination. The Board (or a duly authorized committee thereof)
may, in its sole and absolute discretion, amend, suspend or terminate the Plan
or adopt a new plan in place of the Plan from time to time and at any time in
such manner as it deems appropriate or desirable. Furthermore, no amendment,
suspension or termination shall, without the consent of the Participant, alter
or impair a Participant's right to receive payment of an Award for a Plan Year
otherwise payable hereunder.

12. 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.

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13. 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 the
payment of an Award pursuant to the Plan.

14. 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 Delaware.

15. 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.

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

17. 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.

                                       10<PAGE>

                                                                  Exhibit 10.30

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                        DONNA KARAN INTERNATIONAL INC.

               1998 NON-EMPLOYEE DIRECTOR RESTRICTED STOCK 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........................................................4

IV.    Administration........................................................4
       A.   Duties of the Committee..........................................4
       B.   Advisors.........................................................4
       C.   Determinations...................................................4

V.     Shares; Adjustment Upon Certain Events................................5
       A.   Shares to be Delivered; Fractional Shares........................5
       B.   Adjustments; Recapitalization, etc...............................5

VI.    Restricted Stock......................................................5
       A.   Restricted Stock.................................................5
       B.   Awards and Certificates..........................................6

VII.   Acceleration Events...................................................7

VIII.  Termination of Directorship...........................................7
       A.   General..........................................................7
       B.   Forfeiture.......................................................7

IX.    Nontransferability of Awards..........................................7

X.     Termination, Amendment and Modification...............................8

XI.    General Provisions....................................................8
       A.   Right to Terminate Directorship..................................8
       B.   Trusts, etc......................................................8
       C.   Notices..........................................................9
       D.   Severability of Provisions.......................................9
       E.   Payment to Minors, Etc...........................................9
       F.   Headings and Captions............................................9
       G.   Controlling Law..................................................9
       H.   Costs............................................................9
       I.   Section 16(b) of the Exchange Act................................9

XII.   Issuance of Stock Certificates; Legends; Payment of Expenses.........10
       A.   Stock Certificates..............................................10

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                                                                          Page
                                                                          ----

       B.   Legends.........................................................10

XIII.  Listing of Shares and Related Matters................................10

XIV.   Withholding of Taxes.................................................11

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                         Donna Karan International Inc.
                1998 Non-Employee Director Restricted Stock Plan

I. Purposes of the Plan

            The purposes of this 1998 Non-Employee Director Restricted Stock
Plan (the "Plan") are to enable Donna Karan International Inc. (the "Company")
to attract, retain and motivate the directors who are important to the success
and growth of the business of the Company and to create a long-term mutuality of
interest between such individuals and the stockholders of the Company by
granting the directors Restricted Stock (as defined herein).

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. "Award" means any Restricted Stock granted pursuant to the Plan.

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

            C. "Cause" means with respect to an Eligible Director's Termination
of Directorship, an act or failure to act that constitutes "cause" for removal
of a director under applicable Delaware law.

            D. "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 Related Person, 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 Related Person 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 Related Person; 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
<PAGE>

      Takihyo Inc. stock by and between any of the current stockholders of
      Takihyo Inc.) that would be a Related Person (but substituting Gabrielle
      Studio, Inc. for the Company in such definition) 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 Related Person 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 Related
      Person; 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.

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

            F. "Committee" means the Board or a 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. 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, such noncompliance shall not affect the
validity of the Awards, grants, interpretations or other actions of 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. "Effective Date" has the meaning set forth in Article III.

            J. "Eligible Director" means a director of the Company who is not an
active employee of the Company or Related Person and who is not an officer,
director or employee of (i) any entity which, directly or indirectly,
beneficially owns or controls 5% or more of the combined voting power of the
then outstanding voting securities of the Company (or any Related Person)
entitled to vote generally in the election of directors or (ii) any entity
controlling, controlled by or under common control (within the meaning of Rule
405 of the Securities Act) with any such entity.

                                       2
<PAGE>

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

            L. "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 Nasdaq Stock Market,
Inc., 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.

            M. "Participant" means an Eligible Director who is granted an Award
under the Plan, which Award has not expired.

            N. "Related Person" means, other than the Company (a) any
corporation that is defined as a subsidiary corporation in Section 424(f) of the
Code; (b) any corporation or trade or business (including, without limitation, a
partnership or limited liability company) which is controlled 50% or more by the
Company or one of its subsidiaries (whether by ownership of stock, assets or an
equivalent ownership interest); (c) any corporation that is defined as a parent
corporation in Section 424(e) of the Code; or (d) any corporation or trade or
business (including, without limitation, a partnership or limited liability
company) which controls 50% or more of the Company (whether by ownership of
stock, assets or an equivalent ownership interest).

            O. "Restricted Stock" means shares of Common Stock or the right to
receive shares of Common Stock, as the case may be, granted to an Eligible
Director of the Company pursuant to Article VI.

            P. "Restricted Stock Agreement" means an agreement evidencing the
grant of an Award.

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

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

            S. "Termination of Directorship" with respect to an individual means
that individual is no longer acting as a director (whether a non-employee
director or employee director) of the Company.

                                       3
<PAGE>

III. Effective Date

            The Plan shall become effective on May 1, 1998 (the "Effective
Date").

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 prescribe the form or forms of instruments evidencing Awards and
any other instruments required under the Plan and to change such forms from time
to time; 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.

            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, directors,
officers and other employees of the Company, 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 only from issued Shares reacquired by the
Company and held in treasury. No fractional Shares will be issued or transferred
in connection with the vesting of Restricted Stock. With respect to any
remaining fractional Share, no payment will be paid to the Participant and such
remaining fractional Share shall be cancelled.

            B. Adjustments; Recapitalization, etc.

                  1. The existence of the Plan and the Restricted Stock 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 or any sale or
transfer of all or part of its assets or business, or any other corporate act or
proceeding. The Committee may make or provide for such adjustments in the number
of Shares covered by outstanding Awards granted hereunder to recognize the
effect that otherwise

                                       4
<PAGE>

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. 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 purchase price (as
hereinafter defined).

VI. Restricted Stock

            Restricted Stock granted pursuant to this Article VI shall be
evidenced by a Restricted Stock Agreement in such form as the Committee shall
from time to time approve and the terms and conditions of such grants shall be
set forth therein.

            A. Restricted Stock. Without further action by the Board or the
Committee (except as provided in Article X) of the Company, each year, as of the
first day of the month following the annual meeting of the stockholders of the
Company, each Eligible Director shall be automatically granted 500 shares of
Restricted Stock, subject to the terms of the Plan, provided that no such Award
shall be granted if on the date of grant the Company has liquidated, dissolved
or merged or consolidated with another entity in such a manner that it is not
the surviving entity (unless the Plan has been assumed by such surviving entity
with regard to future grants).

            B. Awards and Certificates. An Eligible Director shall not have any
rights with respect to a future award of Restricted Stock, unless and until such
Eligible Director has delivered a fully executed copy of the Restricted Stock
Agreement to the Company and has otherwise com plied with the applicable terms
and conditions of such Restricted Stock Agreement. Further, such Restricted
Stock shall be subject to the following conditions:

                  1. Purchase Price. The purchase price for Restricted Stock
shall be their par value or, to the extent permitted by applicable law, zero.

                  2. Acceptance. Awards of Restricted Stock must be accepted
within a period of sixty (60) days after the grant date, by executing a
Restricted Stock Agreement and by paying the purchase price, if any.

                  3. Vesting. Shares of Restricted Stock granted to a
Participant shall be fully vested as of the one (1) year anniversary of the date
the Award is granted (the "Restriction Period").

                                       5
<PAGE>

                  4. Certificates. Upon a grant of Restricted Stock, 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 Stock 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 grant of Restricted Stock. 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 Restricted Stock, substantially
in the following form.

      "The anticipation, alienation, attachment sale, transfer, assignment,
      pledge, encumbrance or charge of the shares of Common Stock represented
      hereby are subject to the terms and conditions (including forfeiture) of
      the Donna Karan International Inc. (the "Company") 1998 Non-Employee
      Director Restricted Stock Plan and the Restricted Stock Agreement entered
      into between the registered owner and the Company dated _______________.
      Copies of such Plan and Restricted Stock 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
Stock.

                  5. Ownership. Except to the extent otherwise set forth in the
Restricted Stock Agreement, the Participant shall possess all incidents of
ownership of such Shares, subject to this Article VI, 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 Stock, the
right to tender such Shares. Any stock dividend that is issued on Restricted
Stock or if Restricted Stock is split or any other shares, securities, moneys or
property representing a dividend is issued on Restricted Stock (other than
regular cash dividends) or represents a distribution or return of capital upon
or in respect of Restricted Stock or any part thereof, or results from a
split-up, reclassification or other like changes of Restricted Stock, or
otherwise is issued in exchange therefor, and any warrants, rights or options
issued in respect of Restricted Stock shall be subject to the same restrictions,
including that of this Article VI, as Restricted Stock with regard to which they
are issued and shall herein be encompassed within the term "Restricted Stock."

VII. Acceleration Events

            Unless otherwise provided in the applicable Restricted Stock
Agreement, the restrictions to which Restricted Stock granted prior to the
Change In Control are subject shall lapse as if the applicable Restriction
Period had ended upon such Change In Control.

                                       6
<PAGE>

VIII. Termination of Directorship

            A. General. If a Participant incurs a Termination of Directorship
for any reason including, without limitation, death, disability, resignation,
failure to stand for reelection or for Cause during the relevant Restriction
Period, all rights to all Restricted Stock shall be forfeited immediately.

            B. Forfeiture. A Participant shall be entitled to no compensation
upon the forfeiture of rights to Restricted Stock, other than repayment of par
value paid for such Restricted Stock, if any.

IX. 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. In addition, except as provided above, no
Award shall be assigned, negotiated, pledged 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.

X. 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 XII), 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.

            The Committee or the Board may amend the terms of any Award granted,
prospectively or retroactively, but, subject to Article VII 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. Notwithstanding the foregoing and solely to the extent
required by Section 16(b) of the Exchange Act, 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.

                                       7
<PAGE>

XI. General Provisions

            A. Right to Terminate Directorship. Neither the adoption of the Plan
nor the grant of Restricted Stock hereunder shall impose any obligation on the
Company to retain any Participant as a director nor shall it impose any
obligation on the part of any Participant to remain as a director of the
Company.

            B. Trusts, etc. Nothing contained in the Plan and no action taken
pursuant to the Plan 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 XII. 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 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.

                                       8
<PAGE>

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

            I. 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 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 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.

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

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

            B. Legends. All certificates for Shares 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
Common Stock is then listed or any national securities association system upon
whose system the Common 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

                                       9
<PAGE>

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.

XIII. Listing of Shares and Related Matters

            If the Board 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 vesting of Restricted Stock, no Shares shall be issued upon the lapse
of restrictions on any Restricted Stock unless the listing, registration,
qualification, exemption, consent or approval has been effected or obtained free
of any conditions not acceptable to the Board. The holder of Restricted Stock
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 lapse of
restrictions on any Restricted Stock if the Company or the Committee determines
that the issuance of Shares upon vesting does not comply with any applicable
Federal and state securities laws.

XIV. 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 or the payment of any cash hereunder, payment by the
Participant of, any Federal, state or local taxes required by law to be
withheld.

                                       10

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