8-K

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

FORM 8-K

CURRENT REPORT

Pursuant to Section 13 or 15(d) of the

Securities Exchange Act of 1934

Date of Report (Date of earliest event reported): June 7, 2005

PERRY ELLIS INTERNATIONAL, INC.

(Exact name of registrant as specified in its charter)

Florida	0-21764	59-1162998
(State or other jurisdiction of incorporation)	(Commission File Number)	(I.R.S. Employer Identification No.)

3000 N.W. 107th Avenue Miami, Florida	33172
(Address of principal executive offices)	(Zip Code)

Registrant’s telephone number, including area code: (305) 592-2830

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:

¨ Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)

¨ Soliciting material pursuant to Rule 14a-12 under the Securities Act (17 CFR 240.14a-12)

¨ Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))

¨ Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))

Item 1.01 Entry into a Material Definitive Agreement.

Employment Agreements

The independent members of the Company’s Board of Directors, which includes all of the members of the Compensation Committee, met on June 7, 2005 and approved employment agreements for George Feldenkreis and Oscar Feldenkreis, which are attached hereto as Exhibits 10.70 and 10.71, respectively. The employment agreement for Mr. George Feldenkreis is effective as of February 1, 2005, expires in January 2010, and provides for an initial annual salary of $900,000 and eligibility for an annual bonus. George Feldenkreis also shall participate in the Company’s annual incentive compensation plan and receive a bonus thereunder based on a percentage of his base salary if the Company achieves certain goals established by the Company’s Compensation Committee (the “Committee”). George Feldenkreis’ potential bonuses will range from 60%, if the Company achieves the threshold goal, to 100%, if the Company achieves the target goal, to 180%, if the Company achieves the maximum goal.

If the Company terminates Mr. Feldenkreis’ employment without cause or he terminates his employment for good reason, he is entitled to, among other things, a severance payment equal to one year’s salary, all earned incentive compensation awards, a pro rata portion of all performance-based compensation payable in cash and based on non-stock price metrics, a pro rata target bonus, and immediate vesting of all restricted stock, restricted stock units, performance shares, performance units, stock options, stock appreciation rights and other equity based awards. If the Company terminates Mr. Feldenkreis’ employment without cause or he terminates his employment for good reason during the six-month period immediately following the date of a change of control, as defined in the employment agreement, he is entitled to, among other things, a severance payment equal to 300% of his annual salary and target bonus, all earned incentive compensation awards, a pro rata portion of all performance-based compensation payable in cash and based on non-stock price metrics, a pro rata target bonus, and immediate vesting of all restricted stock, restricted stock units, performance shares, performance units, stock options, stock appreciation rights and other equity based awards. In addition, if any payments, entitlements or benefits received by Mr. Feldenkreis under his agreement or otherwise are subject to the excise tax on excess parachute payments, he is entitled to an additional payment to restore him to the after-tax position that he would have been in if the excise tax had not been imposed. Mr. Feldenkreis may not engage in any competitive activity or solicit the Company’s employees for a period of one year following the expiration of his agreement or for a period of two years following his separation from the Company due to a disability, a termination for cause, a termination without cause, a termination for good reason, a termination without good reason, or a termination in connection with a change of control.

The employment agreement for Mr. Oscar Feldenkreis is effective as of February 1, 2005, expires in January 2010, and provides for an annual salary of $800,000 for the first year of the agreement, but not less than $900,000 during the remainder of the term. Oscar Feldenkreis shall also participate in the Company’s annual incentive compensation plan and shall receive a bonus thereunder based on a percentage of his base salary if the Company achieves certain goals established by the Committee. Oscar Feldenkreis’ potential bonuses will range from 60%, if the

Company achieves the threshold goal, to 100%, if the Company achieves the target goal, to 180%, if the Company achieves the maximum goal. If any payments, entitlements or benefits received by Oscar Feldenkreis under his agreement or otherwise are subject to the excise tax on excess parachute payments, he is entitled to an additional payment to restore him to the after-tax position that he would have been in if the excise tax had not been imposed. Mr. Oscar Feldenkreis’ employment agreement contains termination and restrictive covenant provisions similar to those set forth in Mr. George Feldenkreis’ agreement except that if Oscar Feldenkreis is terminated without cause or terminates his agreement for good reason he is entitled to a severance payment equal to two years’ salary.

Compensation Plans

In March 2005, the Company’s Board of Directors adopted the Company’s 2005 Long Term Incentive Compensation Plan (the “Long Term Plan”) and, in April 2005, the Board of Directors adopted the 2005 Management Incentive Compensation Plan (the “Management Plan”), each subject to shareholder approval. On June 7, 2005, the Board of Directors amended the 2005 Long Term Plan with respect to the vesting of “full-value” awards.

On June 7, 2005, at the Company’s annual meeting of shareholders, the shareholders of the Company approved the 2005 Long Term Plan and the 2005 Management Plan. A summary of the terms of each plan was provided in the Company’s proxy statement as filed with the Securities and Exchange Commission on May 3, 2005. A copy of the 2005 Long Term Plan was provided as Annex A and a copy of the 2005 Management Plan was provided as Annex B in such proxy statement. The 2005 Long Term Plan, as amended, and the 2005 Management Plan are attached hereto as Exhibits 10.72 and 10.73, respectively.

Item 8.01 Other Events.

As a result of Mr. Balmuth’s decision not to stand for re-election to the Company’s Board of Directors at the Company’s June 7, 2005 Annual Meeting, a vacancy on the Company’s Audit Committee was created. The Company’s Board of Directors on June 7, 2005 appointed Mr. Gary Dix, an independent director who has served on the Company’s Board of Directors since May 1993, to the Audit Committee.

The Audit Committee is now comprised of three members: Joseph P. Lacher, Chairman of the Committee, Gary Dix and Leonard Miller.

Item 9.01 Financial Statements and Exhibits.

Exhibit No.	Description
10.70	Employment Agreement dated June 7, 2005 between George Feldenkreis and the Company
10.71	Employment Agreement dated June 7, 2005 between Oscar Feldenkreis and the Company
10.72	2005 Long Term Incentive Compensation Plan, as amended
10.73	2005 Management Incentive Compensation Plan

SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.

	PERRY ELLIS INTERNATIONAL, INC.
Date: June 10, 2005	By:	/s/ Rosemary B. Trudeau
	Name:	Rosemary B. Trudeau
	Title:	VP Finance

EXHIBIT INDEX

Exhibit No.	Description
10.70	Employment Agreement dated June 7, 2005 between George Feldenkreis and the Company
10.71	Employment Agreement dated June 7, 2005 between Oscar Feldenkreis and the Company
10.72	2005 Long Term Incentive Compensation Plan, as amended
10.73	2005 Management Incentive Compensation Plan

EX-10.70

Exhibit 10.70

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EMPLOYMENT AGREEMENT

AGREEMENT, made and entered into as of the 7^th day of June, 2005, by and between Perry Ellis International, Inc., a Florida corporation (together with its successors and assigns permitted under this Agreement, the “Company”), and George Feldenkreis (the “Executive”).

W I T N E S S E T H

WHEREAS, the Executive is currently serving as the Chairman of the Board of Directors and Chief Executive Officer of the Company;

WHEREAS, the Company desires to continue the employment of the Executive as its Chairman and Chief Executive Officer and to enter into an employment agreement embodying the terms of such employment (this “Agreement”);

WHEREAS, Executive desires to enter into this Agreement and to accept such employment, subject to the terms and provisions of this Agreement;

WHEREAS, the Company and the Executive have entered into an employment agreement dated September 19, 1995 (the “Existing Employment Agreement”) that automatically renews the employment term for another year unless and until the Company or the Executive notify one another at least 90 days prior to May 28 of the applicable year that it or he does not want the term to so renew;

WHEREAS, the Existing Employment Agreement is currently scheduled to expire on May 28, 2006 if the Company or the Executive notify one another at least 90 days prior to May 28, 2006 that it or he does not want the term to so renew;

WHEREAS, the Company and the Executive desire to change the existing employment arrangements between the Company and the Executive including, inter alia, changing the automatically renewing employment term to a term having a fixed number of years; and

WHEREAS, the Company and the Executive desire that this Agreement replace the Existing Employment Agreement in its entirety;

NOW, THEREFORE, in consideration of the premises and mutual covenants contained herein and for other good and valuable consideration, the receipt of which is mutually acknowledged, the Company and the Executive (individually a “Party” and together the “Parties”) agree as follows:

1. Definitions.

(a) “Accelerated Equity Award Gains” shall mean the sum of (x) the Accelerated Option and SAR Gains and (y) the Accelerated Share Award Gains.

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(b) “Accelerated Options” shall mean those unvested stock options that become vested in accordance with Sections 11(d), 11(e) or 11(g).

(c) “Accelerated Option and SAR Gains” shall mean:

(1) in the case of any Accelerated Option, or any Accelerated SAR that is settled in shares of the Company’s common stock, the product of:

(A) the number of shares of the Company’s common stock acquired by the Executive upon exercise of any Accelerated Option or Accelerated SAR, multiplied by

(B) the difference between (x) the fair market value per share of the Company’s common stock underlying such Accelerated Option or Accelerated SAR as of the date on which the Executive exercised the Accelerated Option or Accelerated SAR less (y) the exercise price or grant price (as equitably adjusted) of such Accelerated Option or Accelerated SAR; or

(2) in the case of any Accelerated SAR that is settled in cash or in property, other than shares of the Company’s common stock, the amount of cash and fair market value of any property paid or transferred to the Executive with respect to the Accelerated SAR.

(d) “Accelerated Share Award Gains” shall mean the aggregate value of the Accelerated Shares based on the closing price the Company’s common stock value determined on whichever of the following dates produces the greatest value:

(1) the Termination Date;

(2) the date on which the Executive breaches Sections 13(a) or 13(b) below; or

(3) the date on which the Executive transfers or otherwise disposes of the Accelerated Shares.

(e) “Accelerated SARs” shall mean those unvested stock appreciation rights that become vested in accordance with Sections 11(d), 11(e), or 11(g).

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(f) “Accelerated Shares” shall mean those shares of the Company’s common stock granted by the Company to the Executive as compensation for services that would have been forfeited in the event that the Executive’s employment with the Company had been terminated by the Company for Cause in accordance with Section 11(c) below.

(g) “Base Salary” shall mean the Executive’s base salary as determined in accordance with Section 4 below.

(h) “Board” shall mean the board of directors of the Company.

(i) “Bonus Opportunity” shall mean the Executive’s Threshold Bonus opportunity, Target Bonus opportunity and Maximum Bonus opportunity as described in Section 5 below.

(j) “Cause” shall mean:

(1) a conviction of the Executive, or a plea of nolo contendere, to a felony involving moral turpitude; or

(2) willful misconduct or gross negligence by the Executive resulting, in either case, in material economic harm to the Company; or

(3) a willful continued failure by the Executive to carry out the reasonable and lawful directions of the Board; or

(4) fraud, embezzlement, theft or dishonesty of a material nature by the Executive against the Company or any Subsidiary or a willful material violation by the Executive of a policy or procedure of the Company, resulting, in any case, in material economic harm to the Company; or

(5) a willful material breach by the Executive of this Agreement.

An act or failure to act shall not be “willful” if (i) done by the Executive in good faith or (ii) the Executive reasonably believed that such action or inaction was in the best interests of the Company.

(k) “Change in Control” shall mean:

(1) the acquisition by any person, entity or “group” (as defined in Section 13(d) of the Exchange Act) (other than by (i) any subsidiary or affiliate of the Company, (ii) any entity owned, directly or indirectly, 50% or more by the Company, (iii) any employee benefit plan of any such entity, or (iv) the Feldenkreis Family and/or any entity for their benefit), through one transaction

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or a series of related transactions of 50% or more of the combined voting power of the then outstanding voting securities of the Company; or

(2) the liquidation or dissolution of the Company (other than a dissolution occurring upon a merger or consolidation thereof); or

(3) the sale, transfer or other disposition of all or substantially all of the assets of the Company through one transaction or a series of related transactions to one or more persons or entities that are not, immediately prior to such sale, transfer or other disposition, affiliates of the Company.

(l) “COBRA” shall mean the federal law with respect to continuation of health coverage created under the Consolidated Omnibus Budget Reconciliation Act of 1985, as amended from time to time.

(m) “Code” shall mean the Internal Revenue Code of 1986, as amended from time to time.

(n) “Competitive Activity” shall mean an activity in which the Executive engages directly or indirectly (whether as a principal, agent, partner, employee, investor, owner, consultant, board member or otherwise) that is in material direct competition with the Company or any of its Subsidiaries in any of the States within the United States, or countries within the world, in which the Company or any of its Subsidiaries conducts business with respect to a business in which the Company or any of its Subsidiaries engaged during the Term of Employment; provided, however, that an ownership interest of 1% or less in any publicly held company shall not constitute a Competitive Activity; and further provided, however, that the Executive may be employed by or otherwise associated with a business or entity of which a subsidiary, division, segment, unit, etc. is in material direct competition with the Company or any Subsidiary but as to which such subsidiary, division, segment, unit, etc. the Executive has no direct or indirect responsibilities or involvement so long as the Executive does not breach the covenant of confidentiality contained in Section 12 below.

(o) “Disability” shall mean the Executive’s inability to substantially perform his essential duties and responsibilities under this Agreement, with or without reasonable accommodation, for a period of (i) 6 consecutive months or (ii) 180 days in any 12-month period, as determined by a licensed physician mutually selected by the Company and the Executive. If the Parties cannot so agree on a licensed physician, each Party shall select a licensed physician and the two licensed physicians shall select a third licensed physician who shall make such determination for this purpose.

(p) “Effective Date” shall mean February 1, 2005.

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(q) “Exchange Act” shall mean the Securities Exchange Act of 1934, as amended from time to time.

(r) “Existing Employment Agreement” shall mean the employment agreement by and between the Company and the Executive dated September 19, 1995.

(s) “Feldenkreis Family” shall mean (i) the Executive, (ii) any spouse, parent, sibling or descendant of the Executive, and (iii) any spouse or descendant of any parent, sibling or descendent of the Executive.

(t) “Good Reason” shall mean, without the Executive’s prior written consent, the occurrence of any of the following events or actions within the 90-day period preceding a termination of employment by the Executive:

(1) a reduction of the Executive’s Base Salary or Bonus Opportunity (i.e. – not a reduction of any actual bonus amount (if any) paid from year to year); or

(2) an actual relocation of the Executive’s principal office that is more than 25 miles from Miami, Florida; or

(3) a diminution of the Executive’s title, authority, duties or responsibilities, or the assignment to the Executive of titles, authority, duties or responsibilities that are materially inconsistent with his titles, authority, duties and/or responsibilities under Section 3 below, other than an isolated, insubstantial and inadvertent action not taken in bad faith and which is promptly remedied; or

(4) a failure to re-elect the Executive as a member of the Board; or

(5) a failure of the Company to obtain the assumption in writing of its obligations under this Agreement by any successor to all or substantially all of the assets of the Company within 15 days after a merger, consolidation, sale or similar transaction; or

(6) a material breach by the Company of this Agreement.

(u) “LTIC” shall mean long-term incentive compensation.

(v) “Maximum Bonus” shall mean the maximum annual incentive award opportunity described in Section 5 below.

(w) “Noncompetition Period” shall mean the period commencing on the Effective Date and ending on (i) if the Executive’s employment is terminated in accordance with

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Section 11(b), 11(c), 11(d), 11(e), 11(f) or 11(g) below during the Term of Employment, then the 2^nd anniversary of the Termination Date, (ii) if the Executive’s employment is terminated on account of the Executive’s death in accordance with Section 11(a), then the date of the Executive’s death, or (iii) if the Term of Employment ends and the Executive’s employment has not been terminated in accordance with Section 11 below, then the 5^th anniversary of the Effective Date.

(x) “Nonsolicitation Period” shall mean the period commencing on the Effective Date and ending on (i) if the Executive’s employment is terminated in accordance with Section 11(b), 11(c), 11(d), 11(e), 11(f) or 11(g) below during the Term of Employment, then the 2^nd anniversary of the Termination Date, (ii) if the Executive’s employment is terminated on account of the Executive’s death in accordance with Section 11(a), then the date of the Executive’s death, or (iii) if the Term of Employment ends and the Executive’s employment has not been terminated in accordance with Section 11 below, then the 6^th anniversary of the Effective Date.

(y) “Subsidiary” shall mean a corporation of which the Company owns more than 50% of the Voting Stock or any other business entity in which the Company directly or indirectly has an ownership interest of more than 50%.

(z) “Target Bonus” shall mean the target annual incentive award opportunity described in Section 5 below.

(aa) “Threshold Bonus” shall mean the threshold annual incentive award opportunity described in Section 5 below.

(bb) “Term of Employment” shall mean the period specified in Section 2 below.

(cc) “Termination Date” shall mean the date that the Executive’s employment is terminated (either by death, by the Company or by the Executive) in accordance with Section 11 below.

(dd) “Voting Stock” shall mean capital stock of any class or classes having general voting power under ordinary circumstances, in the absence of contingencies, to elect the directors of a corporation.

2. Term of Employment.

The Company hereby employs the Executive, and the Executive hereby accepts such employment, for the period commencing on the Effective Date and ending on the earlier of (i) the 5^th anniversary of the Effective Date or (ii) the Termination Date. The Company and the Executive shall both notify the other Party in writing on or about the 4^th anniversary of the Effective Date that the Term of Employment will end in 1 year.

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3. Position, Duties and Responsibilities; Reporting.

(a) As of the Effective Date and continuing for the remainder of the Term of Employment, the Executive shall be employed as the Chairman and Chief Executive Officer of the Company and shall be responsible for the operations and other general management of the affairs of the Company. The Executive shall serve the Company faithfully, conscientiously and to the best of the Executive’s ability and shall promote the interests and reputation of the Company. Unless prevented by sickness or Disability, the Executive shall devote a majority of the Executive’s time, attention, knowledge, energy and skills, during normal working hours, and at such other times as the Executive’s duties may reasonably require, to the duties of the Executive’s employment. The Executive, in carrying out his duties under this Agreement, shall report solely and directly to the Board. Provided that the following activities do not materially interfere with the Executive’s duties and responsibilities as Chairman and Chief Executive Officer of the Company, the Executive may (i) engage in charitable and community affairs, so long as such activities are consistent with his duties and responsibilities under this Agreement, (ii) manage his personal investments, and (iii) serve on the boards of directors of other companies (but not more than 3 public companies without the Board’s prior written consent).

(b) It is the intention of the Parties that the Executive shall serve as a member of the Board at all times during the Term of Employment.

4. Base Salary.

During the 1^st year of the Term of Employment, the Executive shall be paid an annualized Base Salary of not less than $900,000. The Base Salary shall be payable in accordance with the regular payroll practices of the Company. The Base Salary shall be reviewed no less frequently than annually for purposes of increase in the discretion of the Board; provided, however, that the Base Salary, if increased, shall never be decreased from such increased amount unless the Executive provides his prior written consent to such decrease.

5. Annual Incentive Compensation Programs.

During the Term of Employment, the Executive shall participate in the Company’s annual incentive compensation plan, program and/or arrangements applicable to senior-level executives as established and modified from time to time by the Board in its sole discretion. During the Term of Employment, the Executive shall have a Threshold Bonus opportunity under such plan or program equal to 60% of his current Base Salary, a Target Bonus opportunity under such plan or program equal to 100% of his current Base Salary, and a Maximum Bonus under such plan or program equal to 180% of his current Base Salary, in each case based on satisfaction of performance criteria to be established by the Compensation Committee of the Board within the first 3 months of each fiscal year that begins during the Term of Employment. Payment of annual incentive compensation awards shall be made in the same manner and at the same time that other senior-level executives receive their annual incentive compensation awards.

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6. Long-Term Incentive Compensation Programs.

During the Term of Employment, the Executive shall be eligible to participate in the Company’s applicable long-term incentive compensation plan as may be established and modified from time to time by the Board in its sole discretion commensurate with his titles and position, and shall be eligible to receive awards under that plan in such form and amounts, and subject to such conditions, as the Compensation Committee shall determine each year.

7. Employee Benefit Programs.

(a) During the Term of Employment, the Executive shall be entitled to participate in all employee welfare and pension benefit plans, programs and/or arrangements applicable to the senior-level executives.

(b) During the Term of Employment, the Company shall provide and/or pay for a life insurance policy on the Executive’s life with a $5 million death benefit. The Executive shall designate in his sole discretion the beneficiary under such policy. If the life insurance cannot be purchased at standard rates, then the Company shall provide and/or pay for that amount of insurance that can be purchased for premiums equal to the coverage specified above at standard rates.

8. Reimbursement of Business Expenses.

During the Term of Employment, the Executive is authorized to incur reasonable business expenses in carrying out his duties and responsibilities under this Agreement, and the Company shall promptly reimburse him for all such reasonable business expenses incurred in connection with carrying out the business of the Company, subject to documentation in accordance with the Company’s policy. The Company shall pay directly or reimburse the Executive for all attorney’s fees, disbursements and costs incurred by the Executive in connection with the negotiation, preparation and execution of this Agreement, up to a maximum of $35,000, subject to proper documentation.

9. Perquisites.

During the Term of Employment, the Executive shall be entitled to participate in the Company’s executive perquisite and fringe benefit programs applicable to the Company’s senior-level executives in accordance with the terms and conditions of such arrangements as are in effect from time to time. Notwithstanding anything contained in this Agreement to the contrary, the Executive shall be entitled to commercial first-class air travel and accommodations when traveling on Company business.

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10. Vacation.

The Executive shall be entitled to at least 30 paid vacation days per calendar year in accordance with the Company’s vacation policy in effect from time to time, including but not limited to the policies with respect to carryover or forfeiture of unused vacation days.

11. Termination of Employment.

(a) Termination of Employment Due to Death. In the event of the Executive’s death during the Term of Employment, the Term of Employment shall end as of the date of the Executive’s death and his estate and/or beneficiaries, as the case may be, shall be entitled to the following:

(1) Base Salary earned but not paid prior to the date of the Executive’s death, payable within 15 days of the Termination Date;

(2) all annual incentive compensation awards with respect to any year prior to the year in which the date of the Executive’s death occurs that have been earned but not paid, payable (i) if the amount of the award had been determined as of or prior to the Termination Date, then within 15 days of the Termination Date or (ii) if the amount of the award had not been determined as of or prior to the Termination Date, then at such time as such awards would have been paid in the absence of such termination of employment;

(3) a pro rata Target Bonus, payable within 15 days of the Termination Date;

(4) all restricted stock, restricted stock units, performance shares, performance units, stock options, stock appreciation rights and all other equity-based LTIC awards shall immediately vest as of the Termination Date and be paid or distributed, as the case may be, within 15 days of the Termination Date;

(5) all performance-based compensation payable in cash and based on a performance metric other than stock price shall be paid on a pro rata basis based on the portion of the performance period completed as of the Termination Date and assuming, for these purposes, that all target goals had been achieved as of the Termination Date, payable within 15 days of the Termination Date;

(6) all stock options held by the Executive as of the date of the Executive’s death and that were granted prior to the Effective Date shall remain exercisable until such times as they terminate in accordance with the terms of the applicable stock option agreements;

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(7) all stock options held by the Executive as of the date of the Executive’s death and that were granted on or after the Effective Date shall remain exercisable until the earlier of:

(A) the stock option’s originally scheduled expiration date, or

(B) the end of the 1-year period immediately following the Termination Date;

(8) all premiums on health insurance for his spouse and his dependents shall be fully paid by the Company for as long as they are eligible for COBRA coverage under the Company’s heath plan;

(9) any amounts earned, accrued or owing to the Executive but not yet paid under Section 7, 8, 9 or 10 above; and

(10) such other or additional benefits, if any, as may be provided under applicable plans, programs and/or arrangements of the Company.

(b) Termination of Employment Due to Disability. If the Executive’s employment is terminated due to Disability during the Term of Employment, either by the Company or by the Executive, the Term of Employment shall end as of the date of the termination of the Executive’s employment and the Executive shall be entitled to the following:

(1) Base Salary earned but not paid prior to the Termination Date, payable within 15 days of the Termination Date;

(2) all annual incentive compensation awards with respect to any year prior to the year in which the Termination Date occurs that have been earned but not paid, payable (i) if the amount of the award had been determined as of or prior to the Termination Date, then within 15 days of the Termination Date or (ii) if the amount of the award had not been determined as of or prior to the Termination Date, then at such time as such awards would have been paid in the absence of such termination of employment;

(3) a pro rata Target Bonus, payable within 15 days of the Termination Date;

(4) all restricted stock, restricted stock units, performance shares, performance units, stock options, stock appreciation rights and all other equity-based LTIC awards shall immediately vest as of the Termination Date and be paid or distributed, as the case may be, within 15 days of the Termination Date;

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(5) all performance-based compensation payable in cash and based on a performance metric other than stock price shall be paid on a pro rata basis based on the portion of the performance period completed as of the Termination Date and assuming, for these purposes, that all target goals had been achieved as of the Termination Date, payable within 15 days of the Termination Date;

(6) all stock options held by the Executive as of the Termination Date and that were granted prior to the Effective Date shall remain exercisable until such times as they terminate in accordance with the terms of the applicable stock option agreements;

(7) all stock options held by the Executive as of the Termination Date and that were granted on or after the Effective Date shall remain exercisable until the earlier of:

(A) the stock option’s originally scheduled expiration date, or

(B) the end of the 1-year period immediately following the Termination Date;

(8) all premiums on health insurance for himself, his spouse and his dependents shall be fully paid by the Company for as long as they are eligible for COBRA coverage under the Company’s heath plan;

(9) any amounts earned, accrued or owing to the Executive but not yet paid under Section 7, 8, 9 or 10 above; and

(10) such other or additional benefits, if any, as may be provided under applicable plans, programs and/or arrangements of the Company.

In no event shall a termination of the Executive’s employment for Disability occur unless the Party terminating the Executive’s employment gives written notice to the other Party in accordance with Section 26 below.

(c) Termination of Employment by the Company for Cause. If the Company terminates the Executive’s employment for Cause during the Term of Employment, the Term of Employment shall end as of the date of the termination of the Executive’s employment for Cause and the Executive shall be entitled to the following:

(1) Base Salary earned but not paid prior to the Termination Date;

(2) any amounts earned, accrued or owing to the Executive but not yet paid under Section 7, 8, 9 or 10 above; and

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(3) such other or additional benefits, if any, as are provided under applicable plans, programs and/or arrangements of the Company.

In no event shall a termination of the Executive’s employment for Cause occur unless the Company gives written notice to the Executive in accordance with Section 26 below stating with specificity the events or actions that constitute Cause and providing the Executive with an opportunity to cure (if curable) within a reasonable period of time. No termination of the Executive’s employment for Cause shall be permitted unless the Termination Date occurs during the 120-day period immediately following the date that the events or actions constituting Cause first become known to the Board. Cause shall in no event be deemed to exist except upon a finding reflected in a resolution of the Board, whose finding shall not be binding upon any decision-maker ruling on this Agreement, at a meeting to which the Executive (and the Executive’s counsel) shall be invited upon proper notice. If the Executive’s employment is terminated by the Company under this Section 11(c) based on Cause pursuant to Section 1(j)(1) above and the Executive’s conviction is overturned on appeal, then the Executive’s employment shall be deemed to have been terminated by the Company without Cause in accordance with Section 11(d) below.

(d) Termination of Employment by the Company Without Cause. If the Executive’s employment is terminated by the Company without Cause, other than due to death or Disability, the Term of Employment shall end as of the date of the termination of the Executive’s employment without Cause and the Executive shall be entitled to the following:

(1) Base Salary earned but not paid prior to the Termination Date, payable within 15 days of the Termination Date;

(2) all annual incentive compensation awards with respect to any year prior to the year in which the Termination Date occurs that have been earned but not paid, payable (i) if the amount of the award had been determined as of or prior to the Termination Date, then within 15 days of the Termination Date or (ii) if the amount of the award had not been determined as of or prior to the Termination Date, then at such time as such awards would have been paid in the absence of such termination of employment;

(3) a pro rata Target Bonus, payable within 15 days of the Termination Date;

(4) a lump sum cash amount equal to 100% of the sum of (i) the greater of (x) the Base Salary in effect on the Termination Date or (y) the Base Salary immediately prior to any reduction that would constitute Good Reason, plus (ii) the greater of (a) the Target Bonus in effect on the Termination Date or (b) the Target Bonus immediately prior to any reduction that would constitute Good Reason, payable within 15 days of the Termination Date;

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(5) all restricted stock, restricted stock units, performance shares, performance units, stock options, stock appreciation rights and all other equity-based LTIC awards shall immediately vest as of the Termination Date and be paid or distributed, as the case may be, within 15 days of the Termination Date;

(6) all performance-based compensation payable in cash and based on a performance metric other than stock price shall be paid on a pro rata basis based on the portion of the performance period completed as of the Termination Date and assuming, for these purposes, that all target goals had been achieved as of the Termination Date, payable within 15 days of the Termination Date;

(7) all stock options held by the Executive as of the Termination Date and that were granted prior to the Effective Date shall remain exercisable until such times as they terminate in accordance with the terms of the applicable stock option agreements;

(8) all stock options held by the Executive as of the Termination Date and that were granted on or after the Effective Date shall remain exercisable until the earlier of:

(A) the stock option’s originally scheduled expiration date, or

(B) the end of the 1-year period immediately following the Termination Date;

(9) all premiums on health insurance for himself, his spouse and his dependents shall be fully paid by the Company for as long as they are eligible for COBRA coverage under the Company’s heath plan;

(10) any amounts earned, accrued or owing to the Executive but not yet paid under Section 7, 8, 9 or 10 above; and

(11) such other or additional benefits, if any, as are provided under applicable plans, programs and/or arrangements of the Company.

In no event shall a termination of the Executive’s employment without Cause occur unless the Company gives written notice to the Executive in accordance with Section 26 below.

(e) Termination of Employment by the Executive for Good Reason. The Executive may terminate his employment for Good Reason, provided that the Termination Date occurs during the 120-day period immediately following the date that the events or actions constituting Good Reason first become known to the Executive. Upon a termination by the Executive of his employment for Good Reason, the Term of Employment shall end as of the date

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of the termination of the Executive’s employment for Good Reason and the Executive shall be entitled to the same payments and benefits as provided in Section 11(d) above. In no event shall a termination of the Executive’s employment for Good Reason occur unless the Executive gives written notice to the Company in accordance with Section 26 below stating with specificity the events or actions that constitute Good Reason and providing the Company with an opportunity to cure (if curable) within a reasonable period of time.

(f) Voluntary Termination of Employment by the Executive Without Good Reason. If the Executive voluntarily terminates his employment without Good Reason, other than a termination of employment due to death or Disability, the Term of Employment shall end as of the date of the termination of the Executive’s employment without Good Reason and the Executive shall be entitled to the same payments and benefits as provided in Section 11(c) above, provided that the Executive shall be entitled to all annual incentive compensation awards with respect to any year prior to the year in which the Termination Date occurs that have been earned but not paid, payable at such time as such awards would have been paid in the absence of such termination of employment. In no event shall a voluntary termination of the Executive’s employment without Good Reason occur unless the Executive gives written notice to the Company in accordance with Section 26 below at least 30 days prior to the date of the actual date of the termination of the Executive’s employment. A termination of the Executive’s employment under this Section 11(f) shall not be a breach of this Agreement.

(g) Termination of Employment in Connection with a Change in Control. If the Executive’s employment is terminated by the Company without Cause or by the Executive for Good Reason during (i) the 6-month period immediately preceding the date of the Change in Control or (ii) the 2-year period immediately following the date of the Change in Control, the Term of Employment shall end as of the date of the termination of the Executive’s employment without Cause or for Good Reason, as the case may be, and Executive shall be entitled to the following:

(1) Base Salary earned but not paid prior to the Termination Date, payable within 15 days of the Termination Date;

(2) all annual incentive compensation awards with respect to any year prior to the year in which the Termination Date occurs that have been earned but not paid, payable (i) if the amount of the award had been determined as of or prior to the Termination Date, then within 15 days of the Termination Date or (ii) if the amount of the award had not been determined as of or prior to the Termination Date, then at such time as such awards would have been paid in the absence of such termination of employment;

(3) a pro rata Target Bonus, payable within 15 days of the Termination Date;

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(4) a lump sum cash amount equal to 300% of the sum of (i) the greater of (x) the Base Salary in effect on the Termination Date or (y) the Base Salary immediately prior to any reduction that would constitute Good Reason, plus (ii) the greater of (a) the Target Bonus in effect on the Termination Date or (b) the Target Bonus immediately prior to any reduction that would constitute Good Reason, payable within 15 days of the Termination Date;

(5) all restricted stock, restricted stock units, performance shares, performance units, stock options, stock appreciation rights and all other equity-based LTIC awards shall immediately vest as of the Termination Date and be paid or distributed, as the case may be, within 15 days of the Termination Date;

(6) all performance-based compensation payable in cash and based on a performance metric other than stock price shall be paid on a pro rata basis based on the portion of the performance period completed as of the Termination Date and assuming, for these purposes, that all target goals had been achieved as of the Termination Date, payable within 15 days of the Termination Date;

(7) all stock options held by the Executive as of the Termination Date and that were granted prior to the Effective Date shall remain exercisable until such times as they terminate in accordance with the terms of the applicable stock option agreements;

(8) all stock options held by the Executive as of the Termination Date and that were granted on or after the Effective Date shall remain exercisable until the earlier of:

(A) the stock option’s originally scheduled expiration date, or

(B) the end of the 1-year period immediately following the Termination Date;

(9) all premiums on health insurance for himself, his spouse and his dependents shall be fully paid by the Company for as long as they are eligible for COBRA coverage under the Company’s health plan;

(10) any amounts earned, accrued or owing to the Executive but not yet paid under Section 7, 8, 9 or 10 above; and

(11) such other or additional benefits, if any, as are provided under applicable plans, programs and/or arrangements of the Company.

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In no event shall a termination of the Executive’s employment without Cause in connection with a Change in Control occur unless the Company gives written notice to the Executive in accordance with Section 26 below.

(h) Golden Parachute Tax Gross-Up. If during or after the Term of Employment, the Executive becomes subject to the excise tax imposed by Code Section 4999 (the “Parachute Excise Tax”), the Company and the Executive agree that:

(1) If the aggregate of all “parachute payments” (as such term is used under Code Section 280G) exceeds 300% of the “base amount” (as such term is used under Code Section 280G) by less than $50,000, then the parachute payment shall be reduced to 299.99% of such base amount;

(2) If the aggregate of all parachute payments exceeds 300% of the base amount by $50,000 or more, then the Company shall pay to the Executive a tax gross-up payment so that after payment by or on behalf of the Executive of all federal, state, and local excise, income, employment, Medicare and any other taxes (including any related penalties and interest) resulting from the payment of the parachute payments and the tax gross-up payments to the Executive by the Company, the Executive retains on an after-tax basis an amount equal to the amount that the Executive would have retained if he had not been subject to the Parachute Excise Tax;

(3) The computation of the excess parachute payment in accordance with Code Section 280G shall be done by a nationally recognized and reputable independent accounting or valuation firm mutually selected by the Executive and the Company, and if the Parties cannot so agree on the selection of a firm, then each Party shall select a firm and the two selected firms shall select a third firm that shall make the computations for this purpose;

(4) The Executive shall notify the Company in writing of any claim by the Internal Revenue Service that, if successful, would require the payment by the Company of any tax gross-up payments. Such notification shall be given as soon as practicable but no later than 10 business days after the Executive is informed in writing of such claim and shall apprise the Company of the nature of such claim and the date on which such claim is requested to be paid. The Executive shall not pay such claim prior to the expiration of the 30-day period following the date on which he gives such notice to the Company (or such shorter period ending on the date that any payment of taxes with respect to such claim is due). If the

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Company notifies the Executive in writing prior to the expiration of such period that it desires to contest such claim, the Executive shall:

a. give the Company any information reasonably requested by the Company relating to such claim,

b. take such action in connection with contesting such claim as the Company shall reasonably request in writing from time to time, including, without limitation, accepting legal representation with respect to such claim by an attorney reasonably selected by the Company,

c. cooperate with the Company in good faith in order effectively to contest such claim, and

d. permit the Company to participate in any proceedings relating to such claim;

provided, however, that the Company shall bear and pay directly all costs and expenses (including additional interest and penalties) incurred in connection with such contest and shall indemnify and hold the Executive harmless, on an after-tax basis, for any excise tax or income tax (including interest and penalties with respect thereto) imposed as a result of such representation and payment of costs and expenses. Without limitation on the foregoing provisions of this Section 11(h), the Company shall control all proceedings taken in connection with such contest and, at its sole option, may pursue or forego any and all administrative appeals, proceedings, hearings and conferences with the taxing authority in respect of such claim and may, at its sole option, either direct the Executive to pay the tax claimed and sue for a refund or contest the claim in any permissible manner, and the Executive agrees to prosecute such contest to a determination before any administrative tribunal, in a court of initial jurisdiction and in one or more appellate courts, as the Company shall determine; provided, however, that if the Company directs the Executive to pay such claim and sue for a refund, the Company shall advance the amount of such payment to the Executive, on an interest-free basis and shall indemnify and hold the Executive harmless, on an after-tax basis, from any excise tax or income tax (including interest or penalties with respect thereto) imposed with respect to such advance or with respect to any imputed income with respect to such advance; and further provided that any extension of the statute of limitations relating to

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payment of taxes for the taxable year of the Executive with respect to which such contested amount is claimed to be due is limited solely to such contested amount. Furthermore, the Company’s control of the contest shall be limited to issues with respect to which a gross-up payment would be payable hereunder and the Executive shall be entitled to settle or contest, as the case may be, any other issue raised by the Internal Revenue Service or any other taxing authority; and

(5) If, after the receipt by the Executive of an amount advanced by the Company pursuant to Section 11(h)(2), the Executive becomes entitled to receive any refund with respect to such claim, the Executive shall (subject to the Company’s complying with the requirements of Section 11(h)) promptly pay to the Company the amount of such refund (together with any interest paid or credited thereon after taxes applicable thereto). If, after the receipt by the Executive of an amount advanced by the Company pursuant to Section 11(h)(2), a determination is made that the Executive shall not be entitled to any refund with respect to such claim and the Company does not notify the Executive in writing of its intent to contest such denial of refund prior to the expiration of 30 days after such determination, then such advance shall be forgiven and shall not be required to be repaid and the amount of such advance shall offset, to the extent thereof, the amount of gross-up payment required to be paid.

(i) Clawback of Certain Compensation and Benefits. If, after the termination of the Executive’s employment with the Company for any reason other than by the Company for Cause:

(1) it is determined in good faith by the Board and in accordance with the due process requirements of Section 11(c) that the Executive’s employment could have been terminated by the Company for Cause under Section 11(c) above; or

(2) the Executive breaches Sections 13(a) or 13(b) below; then

(3) in addition to any other remedy that may be available to the Company in law or equity and/or pursuant to any other provisions of this Agreement, the Executive’s employment shall be deemed to have been terminated for Cause retroactively to the Termination Date and the Executive shall also be subject to the following provisions:

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(i) the Executive shall be required to pay to the Company, immediately upon written demand by the Board, all amounts paid to him by the Company, whether or not pursuant to this Agreement, on or after the Termination Date (including the pre-tax cost to the Company of any benefits (other than those described in clause (iii) of this Section 11(i)(3)) provided by the Company) that are in excess of the total amount that the Company would have been required to pay (and the pre-tax cost of any benefits (other than those described in clause (iii) of this Section 11(i)(3)) that the Company would have been required to provide) to the Executive if the Executive’s employment with the Company had been terminated by the Company for Cause in accordance with Section 11(c) above;

(ii) all vested and unvested stock options then held by the Executive shall immediately expire; and

(iii) the Executive shall be required to pay to the Company, immediately upon written demand by the Board, an amount equal to all Accelerated Equity Award Gains that the Executive has received.

Notwithstanding anything contained in this Agreement to the contrary, this Section 11(i) shall not apply if the Board knew or should have known as of or prior to the Termination Date that the Executive’s employment could have been terminated for Cause in accordance with Section 11(c) above.

(j) No Mitigation; No Offset. In the event of any termination of the Executive’s employment under this Section 11, the Executive shall be under no obligation to seek other employment and there shall be no offset against amounts due the Executive under this Agreement on account of any compensation attributable to any subsequent employment that he may obtain except as specifically provided in this Section 11. Notwithstanding anything contained in this Agreement to the contrary, all compensation and benefits payable under this Section 11 shall be reduced by any other compensation and benefits payable under any severance or change-in-control plan, program, policy or arrangement of the Company in which the Executive is a participant and under which he has actually and previously received compensation and/or benefits.

(k) Return of Company Property. Following the Termination Date, the Executive or his personal representative shall return all Company property in his possession, including but not limited to all computer equipment (hardware and software), telephones, facsimile machines, palm pilots and other communication devices, credit cards, office keys, security access cards, badges, identification cards and all copies (including drafts) of any

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documentation or information (however stored) relating to the business of the Company, its customers and clients or its prospective customers and clients (provided that the Executive may retain a copy the addresses contained in his rolodex, palm pilot, PDA or similar device).

(l) Resignation as an Officer and Director. On or before the Termination Date, the Executive shall submit to the Company in writing his resignation as (i) an officer of the Company and of all Subsidiaries and (ii) a member of the Board and of the board of directors of all Subsidiaries.

(m) Nature of Payments. Any amounts due under this Section 11 are in the nature of severance payments considered to be reasonable by the Company and are not in the nature of a penalty.

(n) Waiver and Release. If the termination of the Executive’s employment is subject to Section 11(d), 11(e), or 11(g), the Executive and the Company agree that each Party shall execute a waiver and release substantially in the form attached to this Agreement as Schedule A, and the Executive’s rights to receive any payments or benefits pursuant to Section 11(d)(3) through 11(d)(9) or Section 11(g)(3) through 11(g)(9) above shall be subject to and conditioned upon the Executive’s execution of such waiver and release.

(o) Cooperation. Following the Term of Employment, the Executive shall give his assistance and cooperation willingly, upon reasonable advance notice with due consideration for his other business or personal commitments, in any matter relating to his position with the Company, or his expertise or experience as the Company may reasonably request, including his attendance and truthful testimony where deemed appropriate by the Company, with respect to any investigation or the Company’s defense or prosecution of any existing or future claims or litigations or other proceedings relating to matters in which he was involved or potentially had knowledge by virtue of his employment with the Company. In no event shall his cooperation materially interfere with his services for a subsequent employer or other similar service recipient. To the extent permitted by law, the Company agrees that (i) it will promptly reimburse the Executive for his reasonable and documented expenses in connection with his rendering assistance and/or cooperation under this Section 11(o) upon his presentation of documentation for such expenses and (ii) the Executive will be reasonably compensated for any continued material services as required under this Section 11(o).

12. Confidentiality: Assignment of Rights.

(a) During the Term of Employment and thereafter, the Executive shall not disclose to anyone or make use of any trade secret or proprietary or confidential information of the Company, including such trade secret or proprietary or confidential information of any customer or other entity to which the Company owes an obligation not to disclose such information, which he acquires during the Term of Employment, including but not limited to records kept in the ordinary course of business, except (i) as such disclosure or use may be required or appropriate in connection with his work as an employee of the Company, (ii) when required to do so by a court of law, by any governmental agency having supervisory authority over the

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business of the Company or by any administrative or legislative body (including a committee thereof) with apparent jurisdiction to order him to divulge, disclose or make accessible such information, (iii) as to such confidential information that becomes generally known to the public or trade without his violation of this Section 12(a), or (iv) to the Executive’s spouse, attorney and/or his personal tax and financial advisors as reasonably necessary or appropriate to advance the Executive’s tax, financial and other personal planning (each an “Exempt Person”), provided, however, that any disclosure or use of any trade secret or proprietary or confidential information of the Company by an Exempt Person shall be deemed to be a breach of this Section 12(a) by the Executive. For purposes of this Agreement, confidential information includes all trade secrets and information disclosed to the Executive or known by the Executive as a consequence of or through the unique position of his employment with the Company (including information conceived, originated, discovered or developed by the Executive and any information acquired by the Company from others) prior to or after the Effective Date, and not generally or publicly known, (other than as a result of unauthorized disclosure by the Executive), with respect to the Company or the Company’s business, and including proprietary or confidential information received by the Company from third parties subject to an obligation on the Company’s part to maintain the confidentiality of the information. If any person or authority makes a demand on the Executive purporting to legally compel him to divulge any confidential information, the Executive shall give notice of the demand to the Company within a reasonable period of time so that the Company may first assess whether to challenge the demand prior to the Executive’s divulging of such confidential information. The Executive shall not divulge such confidential information (unless compelled to do so by law or apparent legal authority) until the Company either has concluded not to challenge the demand, or has exhausted its challenge, including appeals, if any. Upon request by the Company, the Executive shall deliver promptly to the Company upon termination of his services for the Company, or at any time thereafter as the Company may request, all memoranda, notes, records, reports, manuals, drawings, designs, computer files in any media and other documents (and all copies thereof) relating to the Company containing such confidential information and all property of the Company or any other Company affiliate, which he may then possess or have under his control.

(b) The Executive hereby sells, assigns and transfers to the Company all of his right, title and interest in and to all inventions, discoveries, improvements and copyrightable subject matter (the “rights”) which during the Term of Employment are made or conceived by him, alone or with others, and which are within or arise out of any general field of the Company’s business or arise out of any work he performs or information he receives regarding the business of the Company while employed by the Company. The Executive shall fully disclose to the Company as promptly as available all information known or possessed by him concerning the rights referred to in the preceding sentence, and upon request by the Company and without any further compensation in any form to him by the Company, but at the expense of the Company, execute all applications for patents and for copyright registration, assignments thereof and other instruments and do all things which the Company may deem necessary to vest and maintain in it the entire right, title and interest in and to all such rights.

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13. Noncompetition; Nonsolicitation.

(a) The Executive covenants and agrees that during the Noncompetition Period he shall not at any time, without the prior written consent of the Company directly or indirectly, engage in a Competitive Activity or call on, solicit or do business with any customer or client of the Company or any Subsidiary with respect to a Competitive Activity.

(b) The Executive covenants and agrees that during the Nonsolicitation Period he shall not at any time, directly or indirectly, for himself or for any other person, firm, corporation, partnership, association or other entity, employ or attempt to employ any employee of the Company or any Subsidiary (other than his personal administrative assistant(s)) for the purpose of causing such employee to terminate his or her employment with the Company or such Subsidiary.

(c) The Parties acknowledge that in the event of a breach or threatened breach of Section 13(a) and/or Section 13(b) above, the Company shall not have an adequate remedy at law. Accordingly, and notwithstanding anything contained in this Agreement to the contrary, in the event of any breach or threatened breach of Section 13(a) and/or Section 13(b) above, the Company shall be entitled to seek such equitable and injunctive relief as may be available to restrain the Executive and any business, firm, partnership, individual, corporation or entity participating in the breach or threatened breach from the violation of the provisions of Section 13(a) and/or Section 13(b) above. Nothing in this Agreement shall be construed as prohibiting the Company from pursuing any other remedies available at law or in equity for breach or threatened breach of Section 13(a) and/or Section 13(b) above, including the recovery of damages.

14. Indemnification.

(a) The Company agrees that if the Executive is made a party, or is threatened to be made a party, to any action, suit or proceeding, whether civil, criminal, administrative or investigative (a “Proceeding”), by reason of the fact that he is or was a director, officer or employee of the Company or is or was serving at the request of the Company as a director, officer, member, employee or agent of another corporation, partnership, joint venture, trust or other enterprise, including service with respect to employee benefit plans, whether or not the basis of such Proceeding is the Executive’s alleged action in an official capacity while serving as a director, officer, member, employee or agent, the Executive shall be indemnified and held harmless by the Company to the fullest extent legally permitted or authorized by the Company’s certificate of incorporation or bylaws or resolutions of the Board and any applicable laws, or, if greater, and not precluded by applicable laws, by the laws of the State of Florida, against all cost, expense, liability and loss (including, without limitation, attorney’s fees, judgments, fines, ERISA excise taxes or penalties and amounts paid or to be paid in settlement) reasonably incurred or suffered by the Executive in connection therewith, and such indemnification shall continue as to the Executive even if he has ceased to be a director, member, employee or agent of the Company or other entity and shall inure to the benefit of the Executive’s heirs, executors and administrators. The Company shall advance to the Executive all reasonable costs and expenses incurred by him in connection with a Proceeding within 20 days after receipt by the Company of

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a written request for such advance. Such request shall include an undertaking by the Executive to repay the amount of such advance if it shall ultimately be determined that he is not entitled to be indemnified against such costs and expenses.

(b) Neither the failure of the Company (including its board of directors, independent legal counsel or stockholders) to have made a determination prior to the commencement of any proceeding concerning payment of amounts claimed by the Executive under Section 14(a) above that indemnification of the Executive is proper because he has met the applicable standard of conduct, nor a determination by the Company (including its board of directors, independent legal counsel or stockholders) that the Executive has not met such applicable standard of conduct, shall create a presumption that the Executive has not met the applicable standard of conduct.

(c) The Company agrees to continue and maintain a directors and officers’ liability insurance policy covering the Executive to the extent the Company provides such coverage for its other executive officers.

(d) The Company agrees that it will not, without the Executive’s prior written consent, take any action that would result in the imposition of tax upon the Executive under Code Section 409A, and that it will hold the Executive harmless if any action it takes results in the imposition of such tax.

15. Assignability; Binding Nature.

This Agreement shall be binding upon and inure to the benefit of the Parties and their respective successors, heirs (in the case of the Executive) and assigns. No rights or obligations of the Company under this Agreement may be assigned or transferred by the Company except that such rights or obligations may be assigned or transferred pursuant to a merger or consolidation in which the Company is not the continuing entity, or the sale or liquidation of all or substantially all of the assets of the Company; provided, however, that the assignee or transferee is the successor to all or substantially all of the assets of the Company and such assignee or transferee assumes the liabilities, obligations and duties of the Company, as contained in this Agreement, either contractually or as a matter of law. The Executive may not assign or transfer any of his rights or obligations under this Agreement.

16. Representation.

The Company represents and warrants that it is fully authorized and empowered to enter into this Agreement and that the performance of its obligations under this Agreement will not violate any agreement between it and any other person, firm or organization. The Executive represents and warrants that no agreement exists between him and any other person, firm or organization that would be violated by the performance of his obligations under this Agreement.

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17. Entire Agreement.

This Agreement contains the entire understanding and agreement between the Parties concerning the subject matter hereof and supersedes all prior agreements, understandings, discussions, negotiations and undertakings, whether written or oral, between the Parties with respect thereto. The Parties agree that as of the Effective Date, the Existing Employment Agreement is null and void and shall have no further force nor effect.

18. Amendment or Waiver.

No provision in this Agreement may be amended unless such amendment is agreed to in writing and signed by the Executive and an authorized officer of the Company. No waiver by either Party of any breach by the other Party of any condition or provision contained in this Agreement to be performed by such other Party shall be deemed a waiver of a similar or dissimilar condition or provision at the same or any prior or subsequent time. Any waiver must be in writing and signed by the Executive or an authorized officer of the Company, as the case may be.

19. Withholding.

The Company may withhold from any amounts payable under this Agreement such federal, state and local taxes as may be required to be withheld pursuant to any applicable law or regulation.

20. Severability.

In the event that any provision or portion of this Agreement shall be determined to be invalid or unenforceable for any reason, in whole or in part, the remaining provisions of this Agreement shall be unaffected thereby and shall remain in full force and effect to the fullest extent permitted by law. If such invalidity or unenforceability is caused by length of time or size of area, or both, the otherwise invalid provision shall be considered to be reduced to a period or area which would cure such invalidity.

21. Survivorship.

The respective rights and obligations of the Parties hereunder shall survive any termination of the Executive’s employment hereunder, including without limitation, the Company’s obligations under Sections 11 and 14 above and the Executive’s obligations under Sections 12 and 13 above, and the expiration of the Term of Employment, to the extent necessary to the intended preservation of such rights and obligations.

22. Controlling Document.

If any provision of any agreement, plan, program, policy, arrangement or other written document between or relating to the Company and the Executive conflicts with any provision of this Agreement, the provision of this Agreement shall control and prevail.

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23. Beneficiaries/References.

The Executive shall be entitled, to the extent permitted under any applicable law, to select and change a beneficiary or beneficiaries to receive any compensation or benefit payable hereunder following the Executive’s death by giving the Company written notice thereof. In the event of the Executive’s death or a judicial determination of his incompetence, reference in this Agreement to the Executive shall be deemed, where appropriate, to refer to his beneficiary, estate or other legal representative.

24. Governing Law/Jurisdiction.

This Agreement shall be governed by and construed and interpreted in accordance with the laws of the State of Florida without reference to principles of conflict of laws unless superseded by federal law.

25. Resolution of Disputes.

Any disputes arising under or in connection with this Agreement shall be resolved by binding arbitration, to be held in Miami, Florida or any other location mutually agreed to by the Parties in accordance with the rules and procedures of the American Arbitration Association governing employment disputes. The Executive and the Company shall mutually select the arbitrator. If the Executive and the Company cannot agree on the selection of an arbitrator, each Party shall select an arbitrator and the two arbitrators shall select a third arbitrator who shall resolve the dispute. Judgment upon the award rendered by the arbitrator may be entered in any court having jurisdiction thereof. All arbitration costs shall be shared equally by the Parties, and all other costs shall be borne by the Party incurring such cost.

26. Notices.

All notices shall be in writing, shall be sent to the following addresses listed below or to such other address as either Party shall request by notice to the other in accordance with this Section 26, using a reputable overnight express delivery service, and shall be deemed to be received when sent.

If to the Company:	Perry Ellis International, Inc.
	3000 N.W. 107th Avenue
	Miami, Florida 33172
	Attention: General Counsel
	with a copy to:
	Steven B. Lapidus, Esq.
	Greenberg Traurig, P.A.
	122 Brickell Avenue
	Miami, Florida 33131

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If to the Executive:	The Executive’s last known address
	on file with the Company
	with a copy to:
	Stewart Reifler, Esq.
	Vedder, Price, Kaufman & Kammholz, P.C.
	805 Third Avenue
	New York, New York 10022

27. Headings.

The headings of the sections contained in this Agreement are for convenience only and shall not be deemed to control or affect the meaning or construction of any provision of this Agreement.

28. Counterparts.

This Agreement may be executed in two or more counterparts, and such counterparts shall constitute one and the same instrument. Signatures delivered by facsimile shall be deemed effective for all purposes to the extent permitted under applicable law.

REMAINDER OF PAGE INTENTIONALLY LEFT BLANK

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

PERRY ELLIS INTERNATIONAL, INC.
By:	/s/ Joseph P. Lacher
Name:	Joseph P. Lacher
Title:	Chairman of the Compensation Committee
	/s/ George Feldenkreis
	George Feldenkreis

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SCHEDULE A

RELEASE

This RELEASE (“Release”) dated as of this                      day between Perry Ellis International, Inc., a Florida corporation (the “Company”), and George Feldenkreis (the “Executive”).

WHEREAS, the Company and the Executive previously entered into an employment agreement dated June 7, 2005 under which the Executive was employed to serve as the Company’s Chairman and Chief Executive Officer (the “Employment Agreement”); and

WHEREAS, the Executive’s employment with the Company (has been) (will be) terminated effective                     ; and

WHEREAS, pursuant to Section 11 of the Employment Agreement, the Executive is entitled to certain compensation and benefits upon such termination, contingent upon the execution of this Release;

NOW, THEREFORE, in consideration of the premises and mutual agreements contained herein and in the Employment Agreement, the Company and the Executive agree as follows:

1. Subject to Paragraph 3 below, the Executive, on his own behalf and on behalf of his heirs, estate, beneficiaries and assigns, does hereby release the Company, and any of its Subsidiaries or affiliates, and each past or present officer, director, agent, employee, shareholder, and insurer of any such entities, from any and all claims made, to be made, or which might have been made of whatever nature, whether known or unknown, from the beginning of time, including those that arose as a consequence of his employment with the Company, or arising out of the severance of such employment relationship, or arising out of any act committed or omitted during or after the existence of such employment relationship, all up through and including the date on which this Release is executed, including, but not limited to, those which were, could have been or could be the subject of an administrative or judicial proceeding filed by the Executive or on his behalf under federal, state or local law, whether by statute, regulation, in contract or tort, and including, but not limited to, every claim for front pay, back pay, wages, bonus, fringe benefit, any form of discrimination (including but not limited to, every claim of race, color, sex, religion, national origin, disability or age discrimination), wrongful termination, emotional distress, pain and suffering, breach of contract, compensatory or punitive damages, interest, attorney’s fees, reinstatement or reemployment. If any court rules that such waiver of rights to file, or have filed on his behalf, any administrative or judicial charges or complaints is ineffective, the Executive agrees not to seek or accept any money damages or any other relief upon the filing of any such administrative or judicial charges or complaints. The Executive relinquishes any right to future employment with the Company and the Company shall have the right to refuse to re-employ the Executive without liability. The Executive acknowledges and

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agrees that even though claims and facts in addition to those now known or believed by him to exist may subsequently be discovered, it is his intention to fully settle and release all claims he may have against the Company and the persons and entities described above, whether known, unknown or suspected.

2. Subject to Paragraph 3 below, the Company releases and forever discharges, and by this instrument releases and forever discharges, the Executive from all debts, obligations, promises, covenants, agreements, endorsements, bonds, controversies, suits, actions, causes of action, judgments, damages, expenses, claims or demands of any kind whatsoever (whether known or unknown), in law or in equity, which it ever had, now has, or which may arise in the future regarding any matter arising on or before the execution of this Release regarding the Executive’s employment with or the Executive’s leaving the employment of the Company.

3. The Company and the Executive acknowledge and agree that the release contained in Paragraphs 1 and 2 does not, and shall not be construed to, release or limit the scope of any existing obligation of the Company (i) to pay or provide any compensation or benefit required to be paid or provided under the Employment Agreement, (ii) to indemnify the Executive for his acts as an officer or director of the Company in accordance with the bylaws of the Company and the policies and procedures of the Company that are presently in effect including Section 14 of the Employment Agreement, or (iii) to the Executive and his eligible, participating dependents or beneficiaries under any existing welfare, retirement or other fringe-benefit plan or program of the Company in which the Executive and/or such dependents are participants. The Company and the Executive acknowledge and agree that the release contained in Paragraphs 1 and 2 does not apply to any causes of action arising under or in connection with (x) the Executive’s willful misconduct or any similar action or actions not known by the Company as of the date of this Release nor (y) any post-termination of employment obligations of the Company or the Executive under the Employment Agreement.

4. The Executive acknowledges that he has been provided at least 21 days to review the Release and has been advised to review it with an attorney of his choice. In the event the Executive elects to sign this Release prior to this 21 day period, he agrees that it is a knowing and voluntary waiver of his right to wait the full 21 days. The Executive further understands that he has 7 days after the signing hereof to revoke it by so notifying the Company in writing, such notice to be received by                          within the 7-day period. The Executive further acknowledges that he has carefully read this Release, and knows and understands its contents and its binding legal effect. The Executive acknowledges that by signing this Release, he does so of his own free will and act and that it is his intention that he be legally bound by its terms.

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IN WITNESS WHEREOF, the parties have executed this Release on the date first above written.

PERRY ELLIS INTERNATIONAL, INC.
By:
Name:
Title:
	George Feldenkreis

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EX-10.71

Exhibit 10.71

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EMPLOYMENT AGREEMENT

AGREEMENT, made and entered into as of the 7^th day of June, 2005, by and between Perry Ellis International, Inc., a Florida corporation (together with its successors and assigns permitted under this Agreement, the “Company”), and Oscar Feldenkreis (the “Executive”).

W I T N E S S E T H

WHEREAS, the Executive is currently serving as the Vice Chairman of the Board of Directors, President and Chief Operating Officer of the Company;

WHEREAS, the Company desires to continue the employment of the Executive as its Vice Chairman, President and Chief Operating Officer and to enter into an employment agreement embodying the terms of such employment (this “Agreement”);

WHEREAS, Executive desires to enter into this Agreement and to accept such employment, subject to the terms and provisions of this Agreement;

WHEREAS, the Company and the Executive have entered into an employment agreement dated September 19, 1995 (the “Existing Employment Agreement”) that automatically renews the employment term for another year unless and until the Company or the Executive notify one another at least 90 days prior to May 28 of the applicable year that it or he does not want the term to so renew;

WHEREAS, the Existing Employment Agreement is currently scheduled to expire on May 28, 2006 if the Company or the Executive notify one another at least 90 days prior to May 28, 2006 that it or he does not want the term to so renew;

WHEREAS, the Company and the Executive desire to change the existing employment arrangements between the Company and the Executive including, inter alia, changing the automatically renewing employment term to a term having a fixed number of years; and

WHEREAS, the Company and the Executive desire that this Agreement replace the Existing Employment Agreement in its entirety;

NOW, THEREFORE, in consideration of the premises and mutual covenants contained herein and for other good and valuable consideration, the receipt of which is mutually acknowledged, the Company and the Executive (individually a “Party” and together the “Parties”) agree as follows:

1. Definitions.

(a) “Accelerated Equity Award Gains” shall mean the sum of (x) the Accelerated Option and SAR Gains and (y) the Accelerated Share Award Gains.

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(b) “Accelerated Options” shall mean those unvested stock options that become vested in accordance with Sections 11(d), 11(e) or 11(g).

(c) “Accelerated Option and SAR Gains” shall mean:

(1) in the case of any Accelerated Option, or any Accelerated SAR that is settled in shares of the Company’s common stock, the product of:

(A) the number of shares of the Company’s common stock acquired by the Executive upon exercise of any Accelerated Option or Accelerated SAR, multiplied by

(B) the difference between (x) the fair market value per share of the Company’s common stock underlying such Accelerated Option or Accelerated SAR as of the date on which the Executive exercised the Accelerated Option or Accelerated SAR less (y) the exercise price or grant price (as equitably adjusted) of such Accelerated Option or Accelerated SAR; or

(2) in the case of any Accelerated SAR that is settled in cash or in property, other than shares of the Company’s common stock, the amount of cash and fair market value of any property paid or transferred to the Executive with respect to the Accelerated SAR.

(d) “Accelerated Share Award Gains” shall mean the aggregate value of the Accelerated Shares based on the closing price the Company’s common stock value determined on whichever of the following dates produces the greatest value:

(1) the Termination Date;

(2) the date on which the Executive breaches Sections 13(a) or 13(b) below; or

(3) the date on which the Executive transfers or otherwise disposes of the Accelerated Shares.

(e) “Accelerated SARs” shall mean those unvested stock appreciation rights that become vested in accordance with Sections 11(d), 11(e), or 11(g).

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(f) “Accelerated Shares” shall mean those shares of the Company’s common stock granted by the Company to the Executive as compensation for services that would have been forfeited in the event that the Executive’s employment with the Company had been terminated by the Company for Cause in accordance with Section 11(c) below.

(g) “Base Salary” shall mean the Executive’s base salary as determined in accordance with Section 4 below.

(h) “Board” shall mean the board of directors of the Company.

(i) “Bonus Opportunity” shall mean the Executive’s Threshold Bonus opportunity, Target Bonus opportunity and Maximum Bonus opportunity as described in Section 5 below.

(j) “Cause” shall mean:

(1) a conviction of the Executive, or a plea of nolo contendere, to a felony involving moral turpitude; or

(2) willful misconduct or gross negligence by the Executive resulting, in either case, in material economic harm to the Company; or

(3) a willful continued failure by the Executive to carry out the reasonable and lawful directions of the Board; or

(4) fraud, embezzlement, theft or dishonesty of a material nature by the Executive against the Company or any Subsidiary or a willful material violation by the Executive of a policy or procedure of the Company, resulting, in any case, in material economic harm to the Company; or

(5) a willful material breach by the Executive of this Agreement.

An act or failure to act shall not be “willful” if (i) done by the Executive in good faith or (ii) the Executive reasonably believed that such action or inaction was in the best interests of the Company.

(k) “Change in Control” shall mean:

(1) the acquisition by any person, entity or “group” (as defined in Section 13(d) of the Exchange Act) (other than by (i) any subsidiary or affiliate of the Company, (ii) any entity owned, directly or indirectly, 50% or more by the Company, (iii) any employee benefit plan of any such entity, or (iv) the Feldenkreis Family and/or any entity for their benefit), through one transaction

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or a series of related transactions of 50% or more of the combined voting power of the then outstanding voting securities of the Company; or

(2) the liquidation or dissolution of the Company (other than a dissolution occurring upon a merger or consolidation thereof); or

(3) the sale, transfer or other disposition of all or substantially all of the assets of the Company through one transaction or a series of related transactions to one or more persons or entities that are not, immediately prior to such sale, transfer or other disposition, affiliates of the Company.

(l) “COBRA” shall mean the federal law with respect to continuation of health coverage created under the Consolidated Omnibus Budget Reconciliation Act of 1985, as amended from time to time.

(m) “Code” shall mean the Internal Revenue Code of 1986, as amended from time to time.

(n) “Competitive Activity” shall mean an activity in which the Executive engages directly or indirectly (whether as a principal, agent, partner, employee, investor, owner, consultant, board member or otherwise) that is in material direct competition with the Company or any of its Subsidiaries in any of the States within the United States, or countries within the world, in which the Company or any of its Subsidiaries conducts business with respect to a business in which the Company or any of its Subsidiaries engaged during the Term of Employment; provided, however, that an ownership interest of 1% or less in any publicly held company shall not constitute a Competitive Activity; and further provided, however, that the Executive may be employed by or otherwise associated with a business or entity of which a subsidiary, division, segment, unit, etc. is in material direct competition with the Company or any Subsidiary but as to which such subsidiary, division, segment, unit, etc. the Executive has no direct or indirect responsibilities or involvement so long as the Executive does not breach the covenant of confidentiality contained in Section 12 below.

(o) “Disability” shall mean the Executive’s inability to substantially perform his essential duties and responsibilities under this Agreement, with or without reasonable accommodation, for a period of (i) 6 consecutive months or (ii) 180 days in any 12-month period, as determined by a licensed physician mutually selected by the Company and the Executive. If the Parties cannot so agree on a licensed physician, each Party shall select a licensed physician and the two licensed physicians shall select a third licensed physician who shall make such determination for this purpose.

(p) “Effective Date” shall mean February 1, 2005.

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(q) “Exchange Act” shall mean the Securities Exchange Act of 1934, as amended from time to time.

(r) “Existing Employment Agreement” shall mean the employment agreement by and between the Company and the Executive dated September 19, 1995.

(s) “Feldenkreis Family” shall mean (i) George Feldenkreis, (ii) any spouse, parent, sibling or descendant of George Feldenkreis, and (iii) any spouse or descendant of any parent, sibling or descendent of George Feldenkreis

(t) “Good Reason” shall mean, without the Executive’s prior written consent, the occurrence of any of the following events or actions within the 90-day period preceding a termination of employment by the Executive:

(1) a reduction of the Executive’s Base Salary or Bonus Opportunity (i.e. – not a reduction of any actual bonus amount (if any) paid from year to year); or

(2) an actual relocation of the Executive’s principal office that is more than 25 miles from Miami, Florida; or

(3) a diminution of the Executive’s title, authority, duties or responsibilities, or the assignment to the Executive of titles, authority, duties or responsibilities that are materially inconsistent with his titles, authority, duties and/or responsibilities under Section 3 below, other than an isolated, insubstantial and inadvertent action not taken in bad faith and which is promptly remedied; or

(4) a failure to re-elect the Executive as a member of the Board; or

(5) a failure to promote the Executive to Chief Executive Officer of the Company (“Promotion”) if George Feldenkreis ceases to serve as the chief executive officer of the Company for any reason (other than a termination of George Feldenkreis’s employment by the Company for “Cause” (as such term is defined in the employment agreement between George Feldenkreis and the Company dated June 7, 2005) in accordance with Section 11(c) of such employment agreement), and following such Promotion, a failure by the Company to retain the Executive as Chief Executive Officer of the Company from the date of the Promotion to the end of the Term of Employment; or

(6) a failure of the Company to obtain the assumption in writing of its obligations under this Agreement by any successor to all or substantially all of the assets of the Company within 15 days after a merger, consolidation, sale or similar transaction; or

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(7) a material breach by the Company of this Agreement.

(u) “LTIC” shall mean long-term incentive compensation.

(v) “Maximum Bonus” shall mean the maximum annual incentive award opportunity described in Section 5 below.

(w) “Noncompetition Period” shall mean the period commencing on the Effective Date and ending on (i) if the Executive’s employment is terminated in accordance with Section 11(b), 11(c), 11(d), 11(e), 11(f) or 11(g) below during the Term of Employment, then the 2^nd anniversary of the Termination Date, (ii) if the Executive’s employment is terminated on account of the Executive’s death in accordance with Section 11(a), then the date of the Executive’s death, or (iii) if the Term of Employment ends and the Executive’s employment has not been terminated in accordance with Section 11 below, then the 5^th anniversary of the Effective Date.

(x) “Nonsolicitation Period” shall mean the period commencing on the Effective Date and ending on (i) if the Executive’s employment is terminated in accordance with Section 11(b), 11(c), 11(d), 11(e), 11(f) or 11(g) below during the Term of Employment, then the 2^nd anniversary of the Termination Date, (ii) if the Executive’s employment is terminated on account of the Executive’s death in accordance with Section 11(a), then the date of the Executive’s death, or (iii) if the Term of Employment ends and the Executive’s employment has not been terminated in accordance with Section 11 below, then the 6^th anniversary of the Effective Date.

(y) “Subsidiary” shall mean a corporation of which the Company owns more than 50% of the Voting Stock or any other business entity in which the Company directly or indirectly has an ownership interest of more than 50%.

(z) “Target Bonus” shall mean the target annual incentive award opportunity described in Section 5 below.

(aa) “Threshold Bonus” shall mean the threshold annual incentive award opportunity described in Section 5 below.

(bb) “Term of Employment” shall mean the period specified in Section 2 below.

(cc) “Termination Date” shall mean the date that the Executive’s employment is terminated (either by death, by the Company or by the Executive) in accordance with Section 11 below.

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(dd) “Voting Stock” shall mean capital stock of any class or classes having general voting power under ordinary circumstances, in the absence of contingencies, to elect the directors of a corporation.

2. Term of Employment.

The Company hereby employs the Executive, and the Executive hereby accepts such employment, for the period commencing on the Effective Date and ending on the earlier of (i) the 5^th anniversary of the Effective Date or (ii) the Termination Date. The Company and the Executive shall both notify the other Party in writing on or about the 4^th anniversary of the Effective Date that the Term of Employment will end in 1 year.

3. Position, Duties and Responsibilities; Reporting.

(a) As of the Effective Date and continuing for the remainder of the Term of Employment, the Executive shall be employed as the Vice Chairman, President and Chief Operating Officer of the Company and shall be responsible for the operations and other general management of the affairs of the Company. The Executive shall serve the Company faithfully, conscientiously and to the best of the Executive’s ability and shall promote the interests and reputation of the Company. Unless prevented by sickness or Disability, the Executive shall devote substantially all of the Executive’s time, attention, knowledge, energy and skills, during normal working hours, and at such other times as the Executive’s duties may reasonably require, to the duties of the Executive’s employment. The Executive, in carrying out his duties under this Agreement, shall report solely and directly to the Chief Executive Officer of the Company. Provided that the following activities do not materially interfere with the Executive’s duties and responsibilities as Vice Chairman, President and Chief Operating Officer of the Company, the Executive may (i) engage in charitable and community affairs, so long as such activities are consistent with his duties and responsibilities under this Agreement, (ii) manage his personal investments, and (iii) serve on the boards of directors of other companies (but not more than 3 public companies without the Board’s prior written consent).

(b) It is the intention of the Parties that the Executive shall serve as a member of the Board at all times during the Term of Employment.

4. Base Salary.

During the 1^st year of the Term of Employment, the Executive shall be paid an annualized Base Salary of not less than $800,000, and during the remaining 4 years of the Term of Employment, the Executive shall be paid an annualized Base Salary of not less than $900,000. The Base Salary shall be payable in accordance with the regular payroll practices of the Company. The Base Salary shall be reviewed no less frequently than annually for purposes of increase in the discretion of the Board; provided, however, that the Base Salary, if increased, shall never be decreased from such increased amount unless the Executive provides his prior written consent to such decrease.

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5. Annual Incentive Compensation Programs.

During the Term of Employment, the Executive shall participate in the Company’s annual incentive compensation plan, program and/or arrangements applicable to senior-level executives as established and modified from time to time by the Board in its sole discretion. During the Term of Employment, the Executive shall have a Threshold Bonus opportunity under such plan or program equal to 60% of his current Base Salary, a Target Bonus opportunity under such plan or program equal to 100% of his current Base Salary, and a Maximum Bonus under such plan or program equal to 180% of his current Base Salary, in each case based on satisfaction of performance criteria to be established by the Compensation Committee of the Board within the first 3 months of each fiscal year that begins during the Term of Employment. Payment of annual incentive compensation awards shall be made in the same manner and at the same time that other senior-level executives receive their annual incentive compensation awards.

6. Long-Term Incentive Compensation Programs.

During the Term of Employment, the Executive shall be eligible to participate in the Company’s applicable long-term incentive compensation plan as may be established and modified from time to time by the Board in its sole discretion commensurate with his titles and position, and shall be eligible to receive awards under that plan in such form and amounts, and subject to such conditions, as the Compensation Committee shall determine each year.

7. Employee Benefit Programs.

(a) During the Term of Employment, the Executive shall be entitled to participate in all employee welfare and pension benefit plans, programs and/or arrangements applicable to the senior-level executives.

(b) During the Term of Employment, the Company shall provide and/or pay for a life insurance policy on the Executive’s life with a $5 million death benefit. The Executive shall designate in his sole discretion the beneficiary under such policy. If the life insurance cannot be purchased at standard rates, then the Company shall provide and/or pay for that amount of insurance that can be purchased for premiums equal to the coverage specified above at standard rates.

(c) During the Term of Employment, the Company shall provide and/or pay for a long-term disability insurance policy on the Executive with an annual benefit of not less than $500,000. If the long-term disability insurance cannot be purchased at standard rates, then the Company shall provide and/or pay for that amount of insurance that can be purchased for premiums equal to the coverage specified above at standard rates.

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8. Reimbursement of Business Expenses.

During the Term of Employment, the Executive is authorized to incur reasonable business expenses in carrying out his duties and responsibilities under this Agreement, and the Company shall promptly reimburse him for all such reasonable business expenses incurred in connection with carrying out the business of the Company, subject to documentation in accordance with the Company’s policy. The Company shall pay directly or reimburse the Executive for all attorney’s fees, disbursements and costs incurred by the Executive in connection with the negotiation, preparation and execution of this Agreement, up to a maximum of $35,000, subject to proper documentation.

9. Perquisites.

During the Term of Employment, the Executive shall be entitled to participate in the Company’s executive perquisite and fringe benefit programs applicable to the Company’s senior-level executives in accordance with the terms and conditions of such arrangements as are in effect from time to time. Notwithstanding anything contained in this Agreement to the contrary, the Executive shall be entitled to commercial first-class air travel and accommodations when traveling on Company business.

10. Vacation.

The Executive shall be entitled to at least 30 paid vacation days per calendar year in accordance with the Company’s vacation policy in effect from time to time, including but not limited to the policies with respect to carryover or forfeiture of unused vacation days.

11. Termination of Employment.

(a) Termination of Employment Due to Death. In the event of the Executive’s death during the Term of Employment, the Term of Employment shall end as of the date of the Executive’s death and his estate and/or beneficiaries, as the case may be, shall be entitled to the following:

(1) Base Salary earned but not paid prior to the date of the Executive’s death, payable within 15 days of the Termination Date;

(2) all annual incentive compensation awards with respect to any year prior to the year in which the date of the Executive’s death occurs that have been earned but not paid, payable (i) if the amount of the award had been determined as of or prior to the Termination Date, then within 15 days of the Termination Date or (ii) if the amount of the award had not been determined as of or prior to the Termination Date, then at such time as such awards would have been paid in the absence of such termination of employment;

(3) a pro rata Target Bonus, payable within 15 days of the Termination Date;

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(4) all restricted stock, restricted stock units, performance shares, performance units, stock options, stock appreciation rights and all other equity-based LTIC awards shall immediately vest as of the Termination Date and be paid or distributed, as the case may be, within 15 days of the Termination Date;

(5) all performance-based compensation payable in cash and based on a performance metric other than stock price shall be paid on a pro rata basis based on the portion of the performance period completed as of the Termination Date and assuming, for these purposes, that all target goals had been achieved as of the Termination Date, payable within 15 days of the Termination Date;

(6) all stock options held by the Executive as of the date of the Executive’s death and that were granted prior to the Effective Date shall remain exercisable until such times as they terminate in accordance with the terms of the applicable stock option agreements;

(7) all stock options held by the Executive as of the date of the Executive’s death and that were granted on or after the Effective Date shall remain exercisable until the earlier of:

(A) the stock option’s originally scheduled expiration date, or

(B) the end of the 1-year period immediately following the Termination Date;

(8) all premiums on health insurance for his spouse and his dependents shall be fully paid by the Company for as long as they are eligible for COBRA coverage under the Company’s heath plan;

(9) any amounts earned, accrued or owing to the Executive but not yet paid under Section 7, 8, 9 or 10 above; and

(10) such other or additional benefits, if any, as may be provided under applicable plans, programs and/or arrangements of the Company.

(b) Termination of Employment Due to Disability. If the Executive’s employment is terminated due to Disability during the Term of Employment, either by the Company or by the Executive, the Term of Employment shall end as of the date of the termination of the Executive’s employment and the Executive shall be entitled to the following:

(1) Base Salary earned but not paid prior to the Termination Date, payable within 15 days of the Termination Date;

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(2) all annual incentive compensation awards with respect to any year prior to the year in which the Termination Date occurs that have been earned but not paid, payable (i) if the amount of the award had been determined as of or prior to the Termination Date, then within 15 days of the Termination Date or (ii) if the amount of the award had not been determined as of or prior to the Termination Date, then at such time as such awards would have been paid in the absence of such termination of employment;

(3) a pro rata Target Bonus, payable within 15 days of the Termination Date;

(4) all restricted stock, restricted stock units, performance shares, performance units, stock options, stock appreciation rights and all other equity-based LTIC awards shall immediately vest as of the Termination Date and be paid or distributed, as the case may be, within 15 days of the Termination Date;

(5) all performance-based compensation payable in cash and based on a performance metric other than stock price shall be paid on a pro rata basis based on the portion of the performance period completed as of the Termination Date and assuming, for these purposes, that all target goals had been achieved as of the Termination Date, payable within 15 days of the Termination Date;

(6) all stock options held by the Executive as of the Termination Date and that were granted prior to the Effective Date shall remain exercisable until such times as they terminate in accordance with the terms of the applicable stock option agreements;

(7) all stock options held by the Executive as of the Termination Date and that were granted on or after the Effective Date shall remain exercisable until the earlier of:

(A) the stock option’s originally scheduled expiration date, or

(B) the end of the 1-year period immediately following the Termination Date;

(8) all premiums on health insurance for himself, his spouse and his dependents shall be fully paid by the Company for as long as they are eligible for COBRA coverage under the Company’s heath plan;

(9) any amounts earned, accrued or owing to the Executive but not yet paid under Section 7, 8, 9 or 10 above; and

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(10) such other or additional benefits, if any, as may be provided under applicable plans, programs and/or arrangements of the Company.

In no event shall a termination of the Executive’s employment for Disability occur unless the Party terminating the Executive’s employment gives written notice to the other Party in accordance with Section 26 below.

(c) Termination of Employment by the Company for Cause. If the Company terminates the Executive’s employment for Cause during the Term of Employment, the Term of Employment shall end as of the date of the termination of the Executive’s employment for Cause and the Executive shall be entitled to the following:

(1) Base Salary earned but not paid prior to the Termination Date;

(2) any amounts earned, accrued or owing to the Executive but not yet paid under Section 7, 8, 9 or 10 above; and

(3) such other or additional benefits, if any, as are provided under applicable plans, programs and/or arrangements of the Company.

In no event shall a termination of the Executive’s employment for Cause occur unless the Company gives written notice to the Executive in accordance with Section 26 below stating with specificity the events or actions that constitute Cause and providing the Executive with an opportunity to cure (if curable) within a reasonable period of time. No termination of the Executive’s employment for Cause shall be permitted unless the Termination Date occurs during the 120-day period immediately following the date that the events or actions constituting Cause first become known to the Board. Cause shall in no event be deemed to exist except upon a finding reflected in a resolution of the Board, whose finding shall not be binding upon any decision-maker ruling on this Agreement, at a meeting to which the Executive (and the Executive’s counsel) shall be invited upon proper notice. If the Executive’s employment is terminated by the Company under this Section 11(c) based on Cause pursuant to Section 1(j)(1) above and the Executive’s conviction is overturned on appeal, then the Executive’s employment shall be deemed to have been terminated by the Company without Cause in accordance with Section 11(d) below.

(d) Termination of Employment by the Company Without Cause. If the Executive’s employment is terminated by the Company without Cause, other than due to death or Disability, the Term of Employment shall end as of the date of the termination of the Executive’s employment without Cause and the Executive shall be entitled to the following:

(1) Base Salary earned but not paid prior to the Termination Date, payable within 15 days of the Termination Date;

(2) all annual incentive compensation awards with respect to any year prior to the year in which the Termination Date occurs that have

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been earned but not paid, payable (i) if the amount of the award had been determined as of or prior to the Termination Date, then within 15 days of the Termination Date or (ii) if the amount of the award had not been determined as of or prior to the Termination Date, then at such time as such awards would have been paid in the absence of such termination of employment;

(3) a pro rata Target Bonus, payable within 15 days of the Termination Date;

(4) a lump sum cash amount equal to 200% of the sum of (i) the greater of (x) the Base Salary in effect on the Termination Date or (y) the Base Salary immediately prior to any reduction that would constitute Good Reason, plus (ii) the greater of (a) the Target Bonus in effect on the Termination Date or (b) the Target Bonus immediately prior to any reduction that would constitute Good Reason, payable within 15 days of the Termination Date;

(5) all restricted stock, restricted stock units, performance shares, performance units, stock options, stock appreciation rights and all other equity-based LTIC awards shall immediately vest as of the Termination Date and be paid or distributed, as the case may be, within 15 days of the Termination Date;

(6) all performance-based compensation payable in cash and based on a performance metric other than stock price shall be paid on a pro rata basis based on the portion of the performance period completed as of the Termination Date and assuming, for these purposes, that all target goals had been achieved as of the Termination Date, payable within 15 days of the Termination Date;

(7) all stock options held by the Executive as of the Termination Date and that were granted prior to the Effective Date shall remain exercisable until such times as they terminate in accordance with the terms of the applicable stock option agreements;

(8) all stock options held by the Executive as of the Termination Date and that were granted on or after the Effective Date shall remain exercisable until the earlier of:

(A) the stock option’s originally scheduled expiration date, or

(B) the end of the 1-year period immediately following the Termination Date;

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(9) all premiums on health insurance for himself, his spouse and his dependents shall be fully paid by the Company for as long as they are eligible for COBRA coverage under the Company’s heath plan;

(10) any amounts earned, accrued or owing to the Executive but not yet paid under Section 7, 8, 9 or 10 above; and

(11) such other or additional benefits, if any, as are provided under applicable plans, programs and/or arrangements of the Company.

In no event shall a termination of the Executive’s employment without Cause occur unless the Company gives written notice to the Executive in accordance with Section 26 below.

(e) Termination of Employment by the Executive for Good Reason. The Executive may terminate his employment for Good Reason, provided that the Termination Date occurs during the 120-day period immediately following the date that the events or actions constituting Good Reason first become known to the Executive. Upon a termination by the Executive of his employment for Good Reason, the Term of Employment shall end as of the date of the termination of the Executive’s employment for Good Reason and the Executive shall be entitled to the same payments and benefits as provided in Section 11(d) above. In no event shall a termination of the Executive’s employment for Good Reason occur unless the Executive gives written notice to the Company in accordance with Section 26 below stating with specificity the events or actions that constitute Good Reason and providing the Company with an opportunity to cure (if curable) within a reasonable period of time.

(f) Voluntary Termination of Employment by the Executive Without Good Reason. If the Executive voluntarily terminates his employment without Good Reason, other than a termination of employment due to death or Disability, the Term of Employment shall end as of the date of the termination of the Executive’s employment without Good Reason and the Executive shall be entitled to the same payments and benefits as provided in Section 11(c) above, provided that the Executive shall be entitled to all annual incentive compensation awards with respect to any year prior to the year in which the Termination Date occurs that have been earned but not paid, payable at such time as such awards would have been paid in the absence of such termination of employment. In no event shall a voluntary termination of the Executive’s employment without Good Reason occur unless the Executive gives written notice to the Company in accordance with Section 26 below at least 30 days prior to the date of the actual date of the termination of the Executive’s employment. A termination of the Executive’s employment under this Section 11(f) shall not be a breach of this Agreement.

(g) Termination of Employment in Connection with a Change in Control. If the Executive’s employment is terminated by the Company without Cause or by the Executive for Good Reason during (i) the 6-month period immediately preceding the date of the Change in Control or (ii) the 2-year period immediately following the date of the Change in Control, the Term of Employment shall end as of the date of the termination of the Executive’s employment

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without Cause or for Good Reason, as the case may be, and Executive shall be entitled to the following:

(1) Base Salary earned but not paid prior to the Termination Date, payable within 15 days of the Termination Date;

(2) all annual incentive compensation awards with respect to any year prior to the year in which the Termination Date occurs that have been earned but not paid, payable (i) if the amount of the award had been determined as of or prior to the Termination Date, then within 15 days of the Termination Date or (ii) if the amount of the award had not been determined as of or prior to the Termination Date, then at such time as such awards would have been paid in the absence of such termination of employment;

(3) a pro rata Target Bonus, payable within 15 days of the Termination Date;

(4) a lump sum cash amount equal to 300% of the sum of (i) the greater of (x) the Base Salary in effect on the Termination Date or (y) the Base Salary immediately prior to any reduction that would constitute Good Reason, plus (ii) the greater of (a) the Target Bonus in effect on the Termination Date or (b) the Target Bonus immediately prior to any reduction that would constitute Good Reason, payable within 15 days of the Termination Date;

(5) all restricted stock, restricted stock units, performance shares, performance units, stock options, stock appreciation rights and all other equity-based LTIC awards shall immediately vest as of the Termination Date and be paid or distributed, as the case may be, within 15 days of the Termination Date;

(6) all performance-based compensation payable in cash and based on a performance metric other than stock price shall be paid on a pro rata basis based on the portion of the performance period completed as of the Termination Date and assuming, for these purposes, that all target goals had been achieved as of the Termination Date, payable within 15 days of the Termination Date;

(7) all stock options held by the Executive as of the Termination Date and that were granted prior to the Effective Date shall remain exercisable until such times as they terminate in accordance with the terms of the applicable stock option agreements;

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(8) all stock options held by the Executive as of the Termination Date and that were granted on or after the Effective Date shall remain exercisable until the earlier of:

(A) the stock option’s originally scheduled expiration date, or

(B) the end of the 1-year period immediately following the Termination Date;

(9) all premiums on health insurance for himself, his spouse and his dependents shall be fully paid by the Company for as long as they are eligible for COBRA coverage under the Company’s health plan;

(10) any amounts earned, accrued or owing to the Executive but not yet paid under Section 7, 8, 9 or 10 above; and

(11) such other or additional benefits, if any, as are provided under applicable plans, programs and/or arrangements of the Company.

In no event shall a termination of the Executive’s employment without Cause in connection with a Change in Control occur unless the Company gives written notice to the Executive in accordance with Section 26 below.

(h) Golden Parachute Tax Gross-Up. If during or after the Term of Employment, the Executive becomes subject to the excise tax imposed by Code Section 4999 (the “Parachute Excise Tax”), the Company and the Executive agree that:

(1) If the aggregate of all “parachute payments” (as such term is used under Code Section 280G) exceeds 300% of the “base amount” (as such term is used under Code Section 280G) by less than $50,000, then the parachute payment shall be reduced to 299.99% of such base amount;

(2) If the aggregate of all parachute payments exceeds 300% of the base amount by $50,000 or more, then the Company shall pay to the Executive a tax gross-up payment so that after payment by or on behalf of the Executive of all federal, state, and local excise, income, employment, Medicare and any other taxes (including any related penalties and interest) resulting from the payment of the parachute payments and the tax gross-up payments to the Executive by the Company, the Executive retains on an after-tax basis an amount equal to the amount that the Executive would have retained if he had not been subject to the Parachute Excise Tax;

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(3) The computation of the excess parachute payment in accordance with Code Section 280G shall be done by a nationally recognized and reputable independent accounting or valuation firm mutually selected by the Executive and the Company, and if the Parties cannot so agree on the selection of a firm, then each Party shall select a firm and the two selected firms shall select a third firm that shall make the computations for this purpose;

(4) The Executive shall notify the Company in writing of any claim by the Internal Revenue Service that, if successful, would require the payment by the Company of any tax gross-up payments. Such notification shall be given as soon as practicable but no later than 10 business days after the Executive is informed in writing of such claim and shall apprise the Company of the nature of such claim and the date on which such claim is requested to be paid. The Executive shall not pay such claim prior to the expiration of the 30-day period following the date on which he gives such notice to the Company (or such shorter period ending on the date that any payment of taxes with respect to such claim is due). If the Company notifies the Executive in writing prior to the expiration of such period that it desires to contest such claim, the Executive shall:

a. give the Company any information reasonably requested by the Company relating to such claim,

b. take such action in connection with contesting such claim as the Company shall reasonably request in writing from time to time, including, without limitation, accepting legal representation with respect to such claim by an attorney reasonably selected by the Company,

c. cooperate with the Company in good faith in order effectively to contest such claim, and

d. permit the Company to participate in any proceedings relating to such claim;

provided, however, that the Company shall bear and pay directly all costs and expenses (including additional interest and penalties) incurred in connection with such contest and shall indemnify and hold the Executive harmless, on an after-tax basis, for any excise tax or income tax (including interest and penalties with respect thereto) imposed as a result of such representation and payment of costs and expenses. Without limitation on the foregoing provisions

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of this Section 11(h), the Company shall control all proceedings taken in connection with such contest and, at its sole option, may pursue or forego any and all administrative appeals, proceedings, hearings and conferences with the taxing authority in respect of such claim and may, at its sole option, either direct the Executive to pay the tax claimed and sue for a refund or contest the claim in any permissible manner, and the Executive agrees to prosecute such contest to a determination before any administrative tribunal, in a court of initial jurisdiction and in one or more appellate courts, as the Company shall determine; provided, however, that if the Company directs the Executive to pay such claim and sue for a refund, the Company shall advance the amount of such payment to the Executive, on an interest-free basis and shall indemnify and hold the Executive harmless, on an after-tax basis, from any excise tax or income tax (including interest or penalties with respect thereto) imposed with respect to such advance or with respect to any imputed income with respect to such advance; and further provided that any extension of the statute of limitations relating to payment of taxes for the taxable year of the Executive with respect to which such contested amount is claimed to be due is limited solely to such contested amount. Furthermore, the Company’s control of the contest shall be limited to issues with respect to which a gross-up payment would be payable hereunder and the Executive shall be entitled to settle or contest, as the case may be, any other issue raised by the Internal Revenue Service or any other taxing authority; and

(5) If, after the receipt by the Executive of an amount advanced by the Company pursuant to Section 11(h)(2), the Executive becomes entitled to receive any refund with respect to such claim, the Executive shall (subject to the Company’s complying with the requirements of Section 11(h)) promptly pay to the Company the amount of such refund (together with any interest paid or credited thereon after taxes applicable thereto). If, after the receipt by the Executive of an amount advanced by the Company pursuant to Section 11(h)(2), a determination is made that the Executive shall not be entitled to any refund with respect to such claim and the Company does not notify the Executive in writing of its intent to contest such denial of refund prior to the expiration of 30 days after such determination, then such advance shall be forgiven and shall not be required to be repaid and the amount of such advance shall offset, to the extent thereof, the amount of gross-up payment required to be paid.

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(i) Clawback of Certain Compensation and Benefits. If, after the termination of the Executive’s employment with the Company for any reason other than by the Company for Cause:

(1) it is determined in good faith by the Board and in accordance with the due process requirements of Section 11(c) that the Executive’s employment could have been terminated by the Company for Cause under Section 11(c) above; or

(2) the Executive breaches Sections 13(a) or 13(b) below; then

(3) in addition to any other remedy that may be available to the Company in law or equity and/or pursuant to any other provisions of this Agreement, the Executive’s employment shall be deemed to have been terminated for Cause retroactively to the Termination Date and the Executive shall also be subject to the following provisions:

(i) the Executive shall be required to pay to the Company, immediately upon written demand by the Board, all amounts paid to him by the Company, whether or not pursuant to this Agreement, on or after the Termination Date (including the pre-tax cost to the Company of any benefits (other than those described in clause (iii) of this Section 11(i)(3)) provided by the Company) that are in excess of the total amount that the Company would have been required to pay (and the pre-tax cost of any benefits (other than those described in clause (iii) of this Section 11(i)(3)) that the Company would have been required to provide) to the Executive if the Executive’s employment with the Company had been terminated by the Company for Cause in accordance with Section 11(c) above;

(ii) all vested and unvested stock options then held by the Executive shall immediately expire; and

(iii) the Executive shall be required to pay to the Company, immediately upon written demand by the Board, an amount equal to all Accelerated Equity Award Gains that the Executive has received.

Notwithstanding anything contained in this Agreement to the contrary, this Section 11(i) shall not apply if the Board knew or should have known as of or prior to the Termination Date that the Executive’s employment could have been terminated for Cause in accordance with Section 11(c) above.

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(j) No Mitigation; No Offset. In the event of any termination of the Executive’s employment under this Section 11, the Executive shall be under no obligation to seek other employment and there shall be no offset against amounts due the Executive under this Agreement on account of any compensation attributable to any subsequent employment that he may obtain except as specifically provided in this Section 11. Notwithstanding anything contained in this Agreement to the contrary, all compensation and benefits payable under this Section 11 shall be reduced by any other compensation and benefits payable under any severance or change-in-control plan, program, policy or arrangement of the Company in which the Executive is a participant and under which he has actually and previously received compensation and/or benefits.

(k) Return of Company Property. Following the Termination Date, the Executive or his personal representative shall return all Company property in his possession, including but not limited to all computer equipment (hardware and software), telephones, facsimile machines, palm pilots and other communication devices, credit cards, office keys, security access cards, badges, identification cards and all copies (including drafts) of any documentation or information (however stored) relating to the business of the Company, its customers and clients or its prospective customers and clients (provided that the Executive may retain a copy the addresses contained in his rolodex, palm pilot, PDA or similar device).

(l) Resignation as an Officer and Director. On or before the Termination Date, the Executive shall submit to the Company in writing his resignation as (i) an officer of the Company and of all Subsidiaries and (ii) a member of the Board and of the board of directors of all Subsidiaries.

(m) Nature of Payments. Any amounts due under this Section 11 are in the nature of severance payments considered to be reasonable by the Company and are not in the nature of a penalty.

(n) Waiver and Release. If the termination of the Executive’s employment is subject to Section 11(d), 11(e), or 11(g), the Executive and the Company agree that each Party shall execute a waiver and release substantially in the form attached to this Agreement as Schedule A, and the Executive’s rights to receive any payments or benefits pursuant to Section 11(d)(3) through 11(d)(9) or Section 11(g)(3) through 11(g)(9) above shall be subject to and conditioned upon the Executive’s execution of such waiver and release.

(o) Cooperation. Following the Term of Employment, the Executive shall give his assistance and cooperation willingly, upon reasonable advance notice with due consideration for his other business or personal commitments, in any matter relating to his position with the Company, or his expertise or experience as the Company may reasonably request, including his attendance and truthful testimony where deemed appropriate by the Company, with respect to any investigation or the Company’s defense or prosecution of any existing or future claims or litigations or other proceedings relating to matters in which he was involved or potentially had knowledge by virtue of his employment with the Company. In no

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event shall his cooperation materially interfere with his services for a subsequent employer or other similar service recipient. To the extent permitted by law, the Company agrees that (i) it will promptly reimburse the Executive for his reasonable and documented expenses in connection with his rendering assistance and/or cooperation under this Section 11(o) upon his presentation of documentation for such expenses and (ii) the Executive will be reasonably compensated for any continued material services as required under this Section 11(o).

12. Confidentiality: Assignment of Rights.

(a) During the Term of Employment and thereafter, the Executive shall not disclose to anyone or make use of any trade secret or proprietary or confidential information of the Company, including such trade secret or proprietary or confidential information of any customer or other entity to which the Company owes an obligation not to disclose such information, which he acquires during the Term of Employment, including but not limited to records kept in the ordinary course of business, except (i) as such disclosure or use may be required or appropriate in connection with his work as an employee of the Company, (ii) when required to do so by a court of law, by any governmental agency having supervisory authority over the business of the Company or by any administrative or legislative body (including a committee thereof) with apparent jurisdiction to order him to divulge, disclose or make accessible such information, (iii) as to such confidential information that becomes generally known to the public or trade without his violation of this Section 12(a), or (iv) to the Executive’s spouse, attorney and/or his personal tax and financial advisors as reasonably necessary or appropriate to advance the Executive’s tax, financial and other personal planning (each an “Exempt Person”), provided, however, that any disclosure or use of any trade secret or proprietary or confidential information of the Company by an Exempt Person shall be deemed to be a breach of this Section 12(a) by the Executive. For purposes of this Agreement, confidential information includes all trade secrets and information disclosed to the Executive or known by the Executive as a consequence of or through the unique position of his employment with the Company (including information conceived, originated, discovered or developed by the Executive and any information acquired by the Company from others) prior to or after the Effective Date, and not generally or publicly known, (other than as a result of unauthorized disclosure by the Executive), with respect to the Company or the Company’s business, and including proprietary or confidential information received by the Company from third parties subject to an obligation on the Company’s part to maintain the confidentiality of the information. If any person or authority makes a demand on the Executive purporting to legally compel him to divulge any confidential information, the Executive shall give notice of the demand to the Company within a reasonable period of time so that the Company may first assess whether to challenge the demand prior to the Executive’s divulging of such confidential information. The Executive shall not divulge such confidential information (unless compelled to do so by law or apparent legal authority) until the Company either has concluded not to challenge the demand, or has exhausted its challenge, including appeals, if any. Upon request by the Company, the Executive shall deliver promptly to the Company upon termination of his services for the Company, or at any time thereafter as the Company may request, all memoranda, notes, records, reports, manuals, drawings, designs, computer files in any media and other documents (and all copies thereof) relating to the Company containing such confidential information and all property of the Company or any other Company affiliate, which he may then possess or have under his control.

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(b) The Executive hereby sells, assigns and transfers to the Company all of his right, title and interest in and to all inventions, discoveries, improvements and copyrightable subject matter (the “rights”) which during the Term of Employment are made or conceived by him, alone or with others, and which are within or arise out of any general field of the Company’s business or arise out of any work he performs or information he receives regarding the business of the Company while employed by the Company. The Executive shall fully disclose to the Company as promptly as available all information known or possessed by him concerning the rights referred to in the preceding sentence, and upon request by the Company and without any further compensation in any form to him by the Company, but at the expense of the Company, execute all applications for patents and for copyright registration, assignments thereof and other instruments and do all things which the Company may deem necessary to vest and maintain in it the entire right, title and interest in and to all such rights.

13. Noncompetition; Nonsolicitation.

(a) The Executive covenants and agrees that during the Noncompetition Period he shall not at any time, without the prior written consent of the Company directly or indirectly, engage in a Competitive Activity or call on, solicit or do business with any customer or client of the Company or any Subsidiary with respect to a Competitive Activity.

(b) The Executive covenants and agrees that during the Nonsolicitation Period he shall not at any time, directly or indirectly, for himself or for any other person, firm, corporation, partnership, association or other entity, employ or attempt to employ any employee of the Company or any Subsidiary (other than his personal administrative assistant(s)) for the purpose of causing such employee to terminate his or her employment with the Company or such Subsidiary.

(c) The Parties acknowledge that in the event of a breach or threatened breach of Section 13(a) and/or Section 13(b) above, the Company shall not have an adequate remedy at law. Accordingly, and notwithstanding anything contained in this Agreement to the contrary, in the event of any breach or threatened breach of Section 13(a) and/or Section 13(b) above, the Company shall be entitled to seek such equitable and injunctive relief as may be available to restrain the Executive and any business, firm, partnership, individual, corporation or entity participating in the breach or threatened breach from the violation of the provisions of Section 13(a) and/or Section 13(b) above. Nothing in this Agreement shall be construed as prohibiting the Company from pursuing any other remedies available at law or in equity for breach or threatened breach of Section 13(a) and/or Section 13(b) above, including the recovery of damages.

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14. Indemnification.

(a) The Company agrees that if the Executive is made a party, or is threatened to be made a party, to any action, suit or proceeding, whether civil, criminal, administrative or investigative (a “Proceeding”), by reason of the fact that he is or was a director, officer or employee of the Company or is or was serving at the request of the Company as a director, officer, member, employee or agent of another corporation, partnership, joint venture, trust or other enterprise, including service with respect to employee benefit plans, whether or not the basis of such Proceeding is the Executive’s alleged action in an official capacity while serving as a director, officer, member, employee or agent, the Executive shall be indemnified and held harmless by the Company to the fullest extent legally permitted or authorized by the Company’s certificate of incorporation or bylaws or resolutions of the Board and any applicable laws, or, if greater, and not precluded by applicable laws, by the laws of the State of Florida, against all cost, expense, liability and loss (including, without limitation, attorney’s fees, judgments, fines, ERISA excise taxes or penalties and amounts paid or to be paid in settlement) reasonably incurred or suffered by the Executive in connection therewith, and such indemnification shall continue as to the Executive even if he has ceased to be a director, member, employee or agent of the Company or other entity and shall inure to the benefit of the Executive’s heirs, executors and administrators. The Company shall advance to the Executive all reasonable costs and expenses incurred by him in connection with a Proceeding within 20 days after receipt by the Company of a written request for such advance. Such request shall include an undertaking by the Executive to repay the amount of such advance if it shall ultimately be determined that he is not entitled to be indemnified against such costs and expenses.

(b) Neither the failure of the Company (including its board of directors, independent legal counsel or stockholders) to have made a determination prior to the commencement of any proceeding concerning payment of amounts claimed by the Executive under Section 14(a) above that indemnification of the Executive is proper because he has met the applicable standard of conduct, nor a determination by the Company (including its board of directors, independent legal counsel or stockholders) that the Executive has not met such applicable standard of conduct, shall create a presumption that the Executive has not met the applicable standard of conduct.

(c) The Company agrees to continue and maintain a directors and officers’ liability insurance policy covering the Executive to the extent the Company provides such coverage for its other executive officers.

(d) The Company agrees that it will not, without the Executive’s prior written consent, take any action that would result in the imposition of tax upon the Executive under Code Section 409A, and that it will hold the Executive harmless if any action it takes results in the imposition of such tax.

15. Assignability; Binding Nature.

This Agreement shall be binding upon and inure to the benefit of the Parties and their respective successors, heirs (in the case of the Executive) and assigns. No rights

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or obligations of the Company under this Agreement may be assigned or transferred by the Company except that such rights or obligations may be assigned or transferred pursuant to a merger or consolidation in which the Company is not the continuing entity, or the sale or liquidation of all or substantially all of the assets of the Company; provided, however, that the assignee or transferee is the successor to all or substantially all of the assets of the Company and such assignee or transferee assumes the liabilities, obligations and duties of the Company, as contained in this Agreement, either contractually or as a matter of law. The Executive may not assign or transfer any of his rights or obligations under this Agreement.

16. Representation.

The Company represents and warrants that it is fully authorized and empowered to enter into this Agreement and that the performance of its obligations under this Agreement will not violate any agreement between it and any other person, firm or organization. The Executive represents and warrants that no agreement exists between him and any other person, firm or organization that would be violated by the performance of his obligations under this Agreement.

17. Entire Agreement.

This Agreement contains the entire understanding and agreement between the Parties concerning the subject matter hereof and supersedes all prior agreements, understandings, discussions, negotiations and undertakings, whether written or oral, between the Parties with respect thereto. The Parties agree that as of the Effective Date, the Existing Employment Agreement is null and void and shall have no further force nor effect.

18. Amendment or Waiver.

No provision in this Agreement may be amended unless such amendment is agreed to in writing and signed by the Executive and an authorized officer of the Company. No waiver by either Party of any breach by the other Party of any condition or provision contained in this Agreement to be performed by such other Party shall be deemed a waiver of a similar or dissimilar condition or provision at the same or any prior or subsequent time. Any waiver must be in writing and signed by the Executive or an authorized officer of the Company, as the case may be.

19. Withholding.

The Company may withhold from any amounts payable under this Agreement such federal, state and local taxes as may be required to be withheld pursuant to any applicable law or regulation.

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20. Severability.

In the event that any provision or portion of this Agreement shall be determined to be invalid or unenforceable for any reason, in whole or in part, the remaining provisions of this Agreement shall be unaffected thereby and shall remain in full force and effect to the fullest extent permitted by law. If such invalidity or unenforceability is caused by length of time or size of area, or both, the otherwise invalid provision shall be considered to be reduced to a period or area which would cure such invalidity.

21. Survivorship.

The respective rights and obligations of the Parties hereunder shall survive any termination of the Executive’s employment hereunder, including without limitation, the Company’s obligations under Sections 11 and 14 above and the Executive’s obligations under Sections 12 and 13 above, and the expiration of the Term of Employment, to the extent necessary to the intended preservation of such rights and obligations.

22. Controlling Document.

If any provision of any agreement, plan, program, policy, arrangement or other written document between or relating to the Company and the Executive conflicts with any provision of this Agreement, the provision of this Agreement shall control and prevail.

23. Beneficiaries/References.

The Executive shall be entitled, to the extent permitted under any applicable law, to select and change a beneficiary or beneficiaries to receive any compensation or benefit payable hereunder following the Executive’s death by giving the Company written notice thereof. In the event of the Executive’s death or a judicial determination of his incompetence, reference in this Agreement to the Executive shall be deemed, where appropriate, to refer to his beneficiary, estate or other legal representative.

24. Governing Law/Jurisdiction.

This Agreement shall be governed by and construed and interpreted in accordance with the laws of the State of Florida without reference to principles of conflict of laws unless superseded by federal law.

25. Resolution of Disputes.

Any disputes arising under or in connection with this Agreement shall be resolved by binding arbitration, to be held in Miami, Florida or any other location mutually agreed to by the Parties in accordance with the rules and procedures of the American Arbitration Association governing employment disputes. The Executive and the Company shall mutually select the arbitrator. If the Executive and the Company cannot agree on the selection of an arbitrator, each Party shall select an arbitrator and the two arbitrators shall select a third arbitrator who shall resolve the dispute. Judgment upon the award rendered by the arbitrator may be entered in any court having jurisdiction thereof. All arbitration costs shall be shared equally by the Parties, and all other costs shall be borne by the Party incurring such cost.

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26. Notices.

All notices shall be in writing, shall be sent to the following addresses listed below or to such other address as either Party shall request by notice to the other in accordance with this Section 26, using a reputable overnight express delivery service, and shall be deemed to be received when sent.

If to the Company:	Perry Ellis International, Inc.
	3000 N.W. 107th Avenue
	Miami, Florida 33172
	Attention: General Counsel
	with a copy to:
	Steven B. Lapidus, Esq.
	Greenberg Traurig, P.A.
	122 Brickell Avenue
	Miami, Florida 33131
If to the Executive:	The Executive’s last known address on file with the Company
	with a copy to:
	Stewart Reifler, Esq.
	Vedder, Price, Kaufman & Kammholz, P.C.
	805 Third Avenue
	New York, New York 10022

27. Headings.

The headings of the sections contained in this Agreement are for convenience only and shall not be deemed to control or affect the meaning or construction of any provision of this Agreement.

28. Counterparts.

This Agreement may be executed in two or more counterparts, and such counterparts shall constitute one and the same instrument. Signatures delivered by facsimile shall be deemed effective for all purposes to the extent permitted under applicable law.

REMAINDER OF PAGE INTENTIONALLY LEFT BLANK

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

PERRY ELLIS INTERNATIONAL, INC.
By:	/s/ Joseph P. Lacher
Name:	Joseph P. Lacher
Title:	Chairman of the Compensation Committee
	/s/ Oscar Feldenkreis
	Oscar Feldenkreis

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SCHEDULE A

RELEASE

This RELEASE (“Release”) dated as of this                      day between Perry Ellis International, Inc., a Florida corporation (the “Company”), and Oscar Feldenkreis (the “Executive”).

WHEREAS, the Company and the Executive previously entered into an employment agreement dated June 7, 2005 under which the Executive was employed to serve as the Company’s Vice Chairman, President and Chief Operating Officer (the “Employment Agreement”); and

WHEREAS, the Executive’s employment with the Company (has been) (will be) terminated effective                     ; and

WHEREAS, pursuant to Section 11 of the Employment Agreement, the Executive is entitled to certain compensation and benefits upon such termination, contingent upon the execution of this Release;

NOW, THEREFORE, in consideration of the premises and mutual agreements contained herein and in the Employment Agreement, the Company and the Executive agree as follows:

1. Subject to Paragraph 3 below, the Executive, on his own behalf and on behalf of his heirs, estate, beneficiaries and assigns, does hereby release the Company, and any of its Subsidiaries or affiliates, and each past or present officer, director, agent, employee, shareholder, and insurer of any such entities, from any and all claims made, to be made, or which might have been made of whatever nature, whether known or unknown, from the beginning of time, including those that arose as a consequence of his employment with the Company, or arising out of the severance of such employment relationship, or arising out of any act committed or omitted during or after the existence of such employment relationship, all up through and including the date on which this Release is executed, including, but not limited to, those which were, could have been or could be the subject of an administrative or judicial proceeding filed by the Executive or on his behalf under federal, state or local law, whether by statute, regulation, in contract or tort, and including, but not limited to, every claim for front pay, back pay, wages, bonus, fringe benefit, any form of discrimination (including but not limited to, every claim of race, color, sex, religion, national origin, disability or age discrimination), wrongful termination, emotional distress, pain and suffering, breach of contract, compensatory or punitive damages, interest, attorney’s fees, reinstatement or reemployment. If any court rules that such waiver of rights to file, or have filed on his behalf, any administrative or judicial charges or complaints is ineffective, the Executive agrees not to seek or accept any money damages or any other relief upon the filing of any such administrative or judicial charges or complaints. The Executive relinquishes any right to future employment with the Company and the Company shall have the

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right to refuse to re-employ the Executive without liability. The Executive acknowledges and agrees that even though claims and facts in addition to those now known or believed by him to exist may subsequently be discovered, it is his intention to fully settle and release all claims he may have against the Company and the persons and entities described above, whether known, unknown or suspected.

2. Subject to Paragraph 3 below, the Company releases and forever discharges, and by this instrument releases and forever discharges, the Executive from all debts, obligations, promises, covenants, agreements, endorsements, bonds, controversies, suits, actions, causes of action, judgments, damages, expenses, claims or demands of any kind whatsoever (whether known or unknown), in law or in equity, which it ever had, now has, or which may arise in the future regarding any matter arising on or before the execution of this Release regarding the Executive’s employment with or the Executive’s leaving the employment of the Company.

3. The Company and the Executive acknowledge and agree that the release contained in Paragraphs 1 and 2 does not, and shall not be construed to, release or limit the scope of any existing obligation of the Company (i) to pay or provide any compensation or benefit required to be paid or provided under the Employment Agreement, (ii) to indemnify the Executive for his acts as an officer or director of the Company in accordance with the bylaws of the Company and the policies and procedures of the Company that are presently in effect including Section 14 of the Employment Agreement, or (iii) to the Executive and his eligible, participating dependents or beneficiaries under any existing welfare, retirement or other fringe-benefit plan or program of the Company in which the Executive and/or such dependents are participants. The Company and the Executive acknowledge and agree that the release contained in Paragraphs 1 and 2 does not apply to any causes of action arising under or in connection with (x) the Executive’s willful misconduct or any similar action or actions not known by the Company as of the date of this Release nor (y) any post-termination of employment obligations of the Company or the Executive under the Employment Agreement.

4. The Executive acknowledges that he has been provided at least 21 days to review the Release and has been advised to review it with an attorney of his choice. In the event the Executive elects to sign this Release prior to this 21 day period, he agrees that it is a knowing and voluntary waiver of his right to wait the full 21 days. The Executive further understands that he has 7 days after the signing hereof to revoke it by so notifying the Company in writing, such notice to be received by                      within the 7-day period. The Executive further acknowledges that he has carefully read this Release, and knows and understands its contents and its binding legal effect. The Executive acknowledges that by signing this Release, he does so of his own free will and act and that it is his intention that he be legally bound by its terms.

REMAINDER OF PAGE INTENTIONALLY LEFT BLANK

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EXECUTION COPY

IN WITNESS WHEREOF, the parties have executed this Release on the date first above written.

PERRY ELLIS INTERNATIONAL, INC.
By:
Name:
Title:
	Oscar Feldenkreis

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EX-10.72

Exhibit 10.72

PERRY ELLIS INTERNATIONAL, INC.

2005 LONG-TERM INCENTIVE COMPENSATION PLAN

PERRY ELLIS INTERNATIONAL, INC.

2005 LONG-TERM INCENTIVE COMPENSATION PLAN

TABLE OF CONTENTS

1.	Purpose	1
2.	Definitions	1
3.	Administration	6
4.	Shares Subject to Plan	7
5.	Eligibility; Per-Person Award Limitations	8
6.	Specific Terms of Awards	9
7.	Certain Provisions Applicable to Awards	15
8.	Code Section 162(m) Provisions	16
9.	Change in Control	17
10.	General Provisions	20

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PERRY ELLIS INTERNATIONAL, INC.

2005 LONG-TERM INCENTIVE COMPENSATION PLAN

1. Purpose. The purpose of this PERRY ELLIS INTERNATIONAL, INC. 2005 LONG-TERM INCENTIVE COMPENSATION PLAN (the “Plan”) is to assist Perry Ellis International, Inc., a Florida corporation (the “Company”), and its Related Entities (as hereinafter defined) in attracting, motivating, retaining and rewarding high-quality executives and other key employees, officers, directors, consultants and other persons who provide services to the Company or its Related Entities by enabling such persons to acquire or increase a proprietary interest in the Company in order to strengthen the mutuality of interests between such persons and the Company’s shareholders, and providing such persons with performance incentives to expend their maximum efforts in the creation of shareholder value.

2. Definitions. For purposes of the Plan, the following terms shall be defined as set forth below, in addition to such terms defined in Section 1 hereof.

(a) “Award” means any Option, Stock Appreciation Right, Restricted Stock Award, Deferred Stock Award, Share granted as a bonus or in lieu of another award, Dividend Equivalent, Other Stock-Based Award or Performance Award, together with any other right or interest, granted to a Participant under the Plan.

(b) “Award Agreement” means any written agreement, contract or other instrument or document evidencing any Award granted by the Committee hereunder.

(c) “Beneficiary” means the person, persons, trust or trusts that have been designated by a Participant in his or her most recent written beneficiary designation filed with the Committee to receive the benefits specified under the Plan upon such Participant’s death or to which Awards or other rights are transferred if and to the extent permitted under Section 10(b) hereof. If, upon a Participant’s death, there is no designated Beneficiary or surviving designated Beneficiary, then the term Beneficiary means the person, persons, trust or trusts entitled by will or the laws of descent and distribution to receive such benefits.

(d) “Beneficial Owner” shall have the meaning ascribed to such term in Rule 13d-3 under the Exchange Act and any successor to such Rule.

(e) “Board” means the Company’s Board of Directors.

(f) “Cause” shall, with respect to any Participant, have the meaning specified in the Award Agreement. In the absence of any definition in the Award Agreement, “Cause” shall have the equivalent meaning or the same meaning as “cause” or “for cause” set forth in any employment, consulting, or other agreement for the performance of services between the Participant and the Company or a Related Entity or, in the absence of any such agreement or any such definition in such agreement, such term shall mean (i) the failure by the Participant to perform, in a reasonable manner, his or her duties as assigned by the Company or a Related Entity, (ii) any violation or breach by the Participant of his or her employment, consulting or other similar agreement with the Company or a Related Entity, if any, or any policies and

procedures established from time to time by the Company or any Related Entity, (iii) any violation or breach by the Participant of any non-competition, non-solicitation, non-disclosure and/or other similar agreement with the Company or a Related Entity, (iv) any act by the Participant of dishonesty or bad faith with respect to the Company or a Related Entity, (v) use of alcohol, drugs or other similar substances in a manner that adversely affects the Participant’s work performance, or (vi) the commission by the Participant of any act, misdemeanor, or crime reflecting unfavorably upon the Participant or the Company or any Related Entity. The good faith determination by the Committee of whether the Participant’s Continuous Service was terminated by the Company for “Cause” shall be final and binding for all purposes hereunder.

(g) “Change in Control” means a Change in Control as defined with related terms in Section 9(b) of the Plan.

(h) “Code” means the Internal Revenue Code of 1986, as amended from time to time, including regulations thereunder and successor provisions and regulations thereto.

(i) “Committee” means a committee designated by the Board to administer the Plan; provided, however, that if the Board fails to designate a committee or if there are no longer any members on the committee so designated by the Board, then the Board shall serve as the Committee. The Committee shall consist of at least two directors, and each member of the Committee shall be (i) a “non-employee director” within the meaning of Rule 16b-3 (or any successor rule) under the Exchange Act, unless administration of the Plan by “non-employee directors” is not then required in order for exemptions under Rule 16b-3 to apply to transactions under the Plan, (ii) an “outside director” within the meaning of Section 162(m) of the Code, and (iii) “Independent”.

(j) “Consultant” means any person (other than an Employee or a Director, solely with respect to rendering services in such person’s capacity as a director) or entity who is engaged by the Company or any Related Entity to render consulting or advisory services to the Company or such Related Entity.

(k) “Continuous Service” means the uninterrupted provision of services to the Company or any Related Entity in any capacity of Employee, Director, Consultant or other service provider. Continuous Service shall not be considered to be interrupted in the case of (i) any approved leave of absence, (ii) transfers among the Company, any Related Entities, or any successor entities, in any capacity of Employee, Director, Consultant or other service provider, or (iii) any change in status as long as the individual remains in the service of the Company or a Related Entity in any capacity of Employee, Director, Consultant or other service provider (except as otherwise provided in the Award Agreement). An approved leave of absence shall include sick leave, military leave, or any other authorized personal leave.

(l) “Covered Employee” means an Eligible Person who is a “covered employee” within the meaning of Section 162(m)(3) of the Code, or any successor provision thereto.

(m) “Deferred Stock” means a right to receive Shares, including Restricted Stock, cash or a combination thereof, at the end of a specified deferral period.

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(n) “Deferred Stock Award” means an Award of Deferred Stock granted to a Participant under Section 6(e) hereof.

(o) “Director” means a member of the Board or the board of directors of any Related Entity.

(p) “Disability” means a permanent and total disability (within the meaning of Section 22(e) of the Code), as determined by a medical doctor satisfactory to the Committee.

(q) “Dividend Equivalent” means a right, granted to a Participant under Section 6(g) hereof, to receive cash, Shares, other Awards or other property equal in value to dividends paid with respect to a specified number of Shares, or other periodic payments.

(r) “Effective Date” means the effective date of the Plan, which shall be the date on which the Plan is approved by the Compensation Committee of the Board.

(s) “Eligible Person” means each officer, Director, Employee, Consultant and other person who provides services to the Company or any Related Entity. The foregoing notwithstanding, only employees of the Company, or any parent corporation or subsidiary corporation of the Company (as those terms are defined in Sections 424(e) and (f) of the Code, respectively), shall be Eligible Persons for purposes of receiving any Incentive Stock Options. An Employee on leave of absence may be considered as still in the employ of the Company or a Related Entity for purposes of eligibility for participation in the Plan.

(t) “Employee” means any person, including an officer or Director, who is an employee of the Company or any Related Entity. The payment of a director’s fee by the Company or a Related Entity shall not be sufficient to constitute “employment” by the Company.

(u) “Exchange Act” means the Securities Exchange Act of 1934, as amended from time to time, including rules thereunder and successor provisions and rules thereto.

(v) “Fair Market Value” means the fair market value of Shares, Awards or other property as determined by the Committee, or under procedures established by the Committee. Unless otherwise determined by the Committee, the Fair Market Value of a Share as of any given date shall be the closing sale price per Share reported for stock listed on the principal stock exchange or market on which Shares are traded on the date as of which such value is being determined or, if there is no sale on that date, then on the last previous day on which a sale was reported.

(w) “Good Reason” shall, with respect to any Participant, have the meaning specified in the Award Agreement. In the absence of any definition in the Award Agreement, “Good Reason” shall have the equivalent meaning or the same meaning as “good reason” or “for good reason” set forth in any employment, consulting or other agreement for the performance of services between the Participant and the Company or a Related Entity or, in the absence of any such agreement or any such definition in such agreement, such term shall mean (i) the assignment to the Participant of any substantial duties or responsibilities inconsistent in any material respect with the Participant’s duties or responsibilities as assigned by the Company or a

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Related Entity, excluding for this purpose any action not taken in bad faith and which is remedied by the Company or a Related Entity promptly after receipt of notice thereof given by the Participant; (ii) any material failure by the Company or a Related Entity to comply with its obligations to the Participant as agreed upon, other than any failure not occurring in bad faith and which is remedied by the Company or a Related Entity promptly after receipt of notice thereof given by the Participant; or (iii) the Company’s or Related Entity’s requiring the Participant to be based at any office or location outside of fifty miles from the location of employment or service as of the date of Award, except for travel reasonably required in the performance of the Participant’s responsibilities.

(x) “Incentive Stock Option” means any Option intended to be designated as an incentive stock option within the meaning of Section 422 of the Code or any successor provision thereto.

(y) “Independent”, when referring to either the Board or members of the Committee, shall have the same meaning as used in the rules of the Nasdaq Stock Market or any national securities exchange on which any securities of the Company are listed for trading, and if not listed for trading, by the rules of the Nasdaq Stock Market.

(z) “Incumbent Board” means the Incumbent Board as defined in Section 9(b)(ii) of the Plan.

(aa) “Option” means a right granted to a Participant under Section 6(b) hereof, to purchase Shares or other Awards at a specified price during specified time periods.

(bb) “Optionee” means a person to whom an Option is granted under this Plan or any person who succeeds to the rights of such person under this Plan.

(cc) “Other Stock-Based Awards” means Awards granted to a Participant under Section 6(i) hereof.

(dd) “Participant” means a person who has been granted an Award under the Plan which remains outstanding, including a person who is no longer an Eligible Person.

(ee) “Performance Award” shall mean any Award of Performance Shares or Performance Units granted pursuant to Section 6(h).

(ff) “Performance Period” means that period established by the Committee at the time any Performance Award is granted or at any time thereafter during which any performance goals specified by the Committee with respect to such Award are to be measured, provided that such period shall be in excess of twelve (12) months.

(gg) “Performance Share” means any grant pursuant to Section 6(h) of a unit valued by reference to a designated number of Shares, which value may be paid to the Participant by delivery of such property as the Committee shall determine, including cash, Shares, other property, or any combination thereof, upon achievement of such performance goals during the Performance Period as the Committee shall establish at the time of such grant or thereafter.

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(hh) “Performance Unit” means any grant pursuant to Section 6(h) of a unit valued by reference to a designated amount of property (including cash) other than Shares, which value may be paid to the Participant by delivery of such property as the Committee shall determine, including cash, Shares, other property, or any combination thereof, upon achievement of such performance goals during the Performance Period as the Committee shall establish at the time of such grant or thereafter.

(ii) “Person” shall have the meaning ascribed to such term in Section 3(a)(9) of the Exchange Act and used in Sections 13(d) and 14(d) thereof, and shall include a “group” as defined in Section 13(d) thereof.

(jj) “Prior Plan” means the Perry Ellis International, Inc. 2002 Equity Compensation Plan, as amended and restated effective as of March 5, 2003.

(kk) “Related Entity” means any Subsidiary, and any business, corporation, partnership, limited liability company or other entity designated by Board in which the Company or a Subsidiary holds a substantial ownership interest, directly or indirectly.

(ll) “Restricted Stock” means any Share issued with the restriction that the holder may not sell, transfer, pledge or assign such Share and with such risks of forfeiture and other restrictions as the Committee, in its sole discretion, may impose (including any restriction on the right to vote such Share and the right to receive any dividends), which restrictions may lapse separately or in combination at such time or times, in installments or otherwise, as the Committee may deem appropriate.

(mm) “Restricted Stock Award” means an Award granted to a Participant under Section 6(d) hereof.

(nn) “Rule 16b-3” means Rule 16b-3, as from time to time in effect and applicable to the Plan and Participants, promulgated by the Securities and Exchange Commission under Section 16 of the Exchange Act.

(oo) “Shareholder Approval Date” means the date on which this Plan is approved by shareholders of the Company eligible to vote in the election of directors, by a vote sufficient to meet the requirements of Code Sections 162(m) (if applicable) and 422, Rule 16b-3 under the Exchange Act (if applicable), applicable requirements under the rules of any stock exchange or automated quotation system on which the Shares may be listed on quoted, and other laws, regulations and obligations of the Company applicable to the Plan.

(pp) “Shares” means the shares of common stock of the Company, par value $0.01 per share, and such other securities as may be substituted (or resubstituted) for Shares pursuant to Section 10(c) hereof.

(qq) “Stock Appreciation Right” means a right granted to a Participant under Section 6(c) hereof.

(rr) “Subsidiary” means any corporation or other entity in which the Company has a direct or indirect ownership interest of 50% or more of the total combined voting power of

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the then outstanding securities or interests of such corporation or other entity entitled to vote generally in the election of directors or in which the Company has the right to receive 50% or more of the distribution of profits or 50% or more of the assets on liquidation or dissolution.

(ss) “Substitute Awards” shall mean Awards granted or Shares issued by the Company in assumption of, or in substitution or exchange for, awards previously granted, or the right or obligation to make future awards, by a company acquired by the Company or any Related Entity or with which the Company or any Related Entity combines.

3. Administration.

(a) Authority of the Committee. The Plan shall be administered by the Committee, except to the extent the Board elects to administer the Plan, in which case the Plan shall be administered by only those directors who are Independent Directors, in which case references herein to the “Committee” shall be deemed to include references to the Independent members of the Board. The Committee shall have full and final authority, subject to and consistent with the provisions of the Plan, to select Eligible Persons to become Participants, grant Awards, determine the type, number and other terms and conditions of, and all other matters relating to, Awards, prescribe Award Agreements (which need not be identical for each Participant) and rules and regulations for the administration of the Plan, construe and interpret the Plan and Award Agreements and correct defects, supply omissions or reconcile inconsistencies therein, and to make all other decisions and determinations as the Committee may deem necessary or advisable for the administration of the Plan. The terms and conditions prescribed by the Committee in any Award Agreement may include, in the discretion of the Committee, provisions requiring that a Participant forfeit and/or repay to the Company all or any portion of the value of any Award in the event that the Participant violates any noncompetition, nonsolicitation, confidentiality or other agreement with the Company or any Related Entity. In exercising any discretion granted to the Committee under the Plan or pursuant to any Award, the Committee shall not be required to follow past practices, act in a manner consistent with past practices, or treat any Eligible Person or Participant in a manner consistent with the treatment of other Eligible Persons or Participants.

(b) Manner of Exercise of Committee Authority. The Committee, and not the Board, shall exercise sole and exclusive discretion on any matter relating to a Participant then subject to Section 16 of the Exchange Act with respect to the Company to the extent necessary in order that transactions by such Participant shall be exempt under Rule 16b-3 under the Exchange Act. Any action of the Committee shall be final, conclusive and binding on all persons, including the Company, its Related Entities, Participants, Beneficiaries, transferees under Section 10(b) hereof or other persons claiming rights from or through a Participant, and shareholders. The express grant of any specific power to the Committee, and the taking of any action by the Committee, shall not be construed as limiting any power or authority of the Committee. The Committee may delegate to officers or managers of the Company or any Related Entity, or committees thereof, the authority, subject to such terms as the Committee shall determine to perform such functions, including administrative functions as the Committee may determine, to the extent that such delegation will not result in the loss of an exemption under Rule 16b-3(d)(1) for Awards granted to Participants subject to Section 16 of the Exchange Act in respect of the Company and will not cause Awards intended to qualify as “performance-based

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compensation” under Code Section 162(m) to fail to so qualify. The Committee may appoint agents to assist it in administering the Plan.

(c) Limitation of Liability. The Committee and the Board, and each member thereof, shall be entitled to, in good faith, rely or act upon any report or other information furnished to him or her by any officer or Employee, the Company’s independent auditors, Consultants or any other agents assisting in the administration of the Plan. Members of the Committee and the Board, and any officer or Employee acting at the direction or on behalf of the Committee or the Board, shall not be personally liable for any action or determination taken or made in good faith with respect to the Plan, and shall, to the extent permitted by law, be fully indemnified and protected by the Company with respect to any such action or determination.

4. Shares Subject to Plan.

(a) Limitation on Overall Number of Shares Available for Delivery Under Plan. Subject to adjustment as provided in Section 10(c) hereof, the total number of Shares available for delivery under the Plan shall be 1,500,000, reduced by any awards outstanding under the Prior Plan on the Shareholder Approval Date. Any Shares that are subject to Awards of Options or Stock Appreciation Rights shall be counted against this limit as one (1) Share for every one (1) Share granted. Any Shares that are subject to Awards other than Options or Stock Appreciation Rights shall be counted against this limit as two (2) Shares for every one (1) Share granted. Any Shares delivered under the Plan may consist, in whole or in part, of authorized and unissued shares or treasury shares.

(b) Application of Limitation to Grants of Award. No Award may be granted if the number of Shares to be delivered in connection with such an Award or, in the case of an Award relating to Shares but settled only in cash (such as cash-only Stock Appreciation Rights), the number of Shares to which such Award relates, exceeds the number of Shares remaining available for delivery under the Plan, minus the number of Shares deliverable in settlement of or relating to then outstanding Awards. The Committee may adopt reasonable counting procedures to ensure appropriate counting, avoid double counting (as, for example, in the case of tandem or substitute awards) and make adjustments if the number of Shares actually delivered differs from the number of Shares previously counted in connection with an Award.

(c) Availability of Shares Not Delivered under Awards and Adjustments to Limits.

(i) If any Shares subject to an Award, or to an award under the Prior Plan that is outstanding on the Shareholder Approval Date of the Plan, are forfeited, expire or otherwise terminate without issuance of such Shares, the Shares shall, to the extent of such forfeiture, expiration, or termination, again be available for Awards under the Plan, subject to Section 4(c)(v) below.

(ii) In the event that any Option or other Award granted hereunder is exercised through the tendering of Shares (either actually or by attestation) or by the withholding of Shares by the Company, or withholding tax liabilities arising from such Option or other Award are satisfied by the tendering of Shares (either actually or by attestation) or by the

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withholding of Shares by the Company, then only the number of Shares issued net of the Shares tendered or withheld shall be counted for purposes of determining the maximum number of Shares available for grant under the Plan. In the event that any option or award granted under the Prior Plan that is outstanding on the Shareholder Approval Date of the Plan, is exercised through the tendering of Shares (either actually or by attestation) or by the withholding of Shares by the Company, or withholding tax liabilities arising from such options or awards are satisfied by the tendering of Shares (either actually or by attestation) or by the withholding of Shares by the Company, then the Shares so tendered or withheld shall again be available for Awards under the Plan.

(iii) Substitute Awards shall not reduce the Shares authorized for grant under the Plan or authorized for grant to a Participant in any period. Additionally, in the event that a company acquired by the Company or any Related Entity or with which the Company or any Related Entity combines has shares available under a pre-existing plan approved by shareholders and not adopted in contemplation of such acquisition or combination, the shares available for delivery pursuant to the terms of such pre-existing plan (as adjusted, to the extent appropriate, using the exchange ratio or other adjustment or valuation ratio or formula used in such acquisition or combination to determine the consideration payable to the holders of common stock of the entities party to such acquisition or combination) may be used for Awards under the Plan and shall not reduce the Shares authorized for delivery under the Plan; provided that Awards using such available shares shall not be made after the date awards or grants could have been made under the terms of the pre-existing plan, absent the acquisition or combination, and shall only be made to individuals who were not Employees or Directors prior to such acquisition or combination.

(iv) Any Shares that again become available for grant pursuant to this Section 4(c) shall be added back as one (1) Share if such Shares were subject to Options or Stock Appreciation Rights granted under the Plan or options or stock appreciation rights granted under the Prior Plan, and two (2) Shares if such Shares were subject to Awards other than Options or Stock Appreciation Rights granted under the Plan.

(v) Notwithstanding anything in this Section 4(c) to the contrary and solely for purposes of determining whether Shares are available for the delivery of Incentive Stock Options, the maximum aggregate number of shares that may be granted under this Plan shall be determined without regard to any Shares restored pursuant to this Section 4(c) that, if taken into account, would cause the Plan to fail the requirement under Code Section 422 that the Plan designate a maximum aggregate number of shares that may be issued.

(d) No Further Awards Under Prior Plan. In light of the adoption of this Plan, no further awards shall be made under the Prior Plan after the Shareholder Approval Date.

5. Eligibility; Per-Person Award Limitations. Awards may be granted under the Plan only to Eligible Persons. Subject to adjustment as provided in Section 10(c), in any fiscal year of the Company during any part of which the Plan is in effect, no Participant may be granted (i) Options or Stock Appreciation Rights with respect to more than 250,000 Shares or (ii) Restricted Stock, Deferred Stock, Performance Shares and/or Other Stock-Based Awards with respect to more than 250,000 Shares. In addition, the maximum dollar value payable to any one

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Participant with respect to Performance Units for any Performance Period is $5,000,000 multiplied by the number of full years in the Performance Period. The limit in the foregoing sentence shall apply separately to each Performance Period, even though Performance Periods may overlap in time.

6. Specific Terms of Awards.

(a) General. Awards may be granted on the terms and conditions set forth in this Section 6. In addition, the Committee may impose on any Award or the exercise thereof, at the date of grant or thereafter (subject to Section 10(e)), such additional terms and conditions, not inconsistent with the provisions of the Plan, as the Committee shall determine, including terms requiring forfeiture of Awards in the event of termination of the Participant’s Continuous Service and terms permitting a Participant to make elections relating to his or her Award. The Committee shall retain full power and discretion to accelerate, waive or modify, at any time, any term or condition of an Award that is not mandatory under the Plan. Except in cases in which the Committee is authorized to require other forms of consideration under the Plan, or to the extent other forms of consideration must be paid to satisfy the requirements of Florida law, no consideration other than services may be required for the grant (but not the exercise) of any Award.

(b) Options. The Committee is authorized to grant Options to any Eligible Person on the following terms and conditions:

(i) Exercise Price. Other than in connection with Substitute Awards, the exercise price per Share purchasable under an Option shall be determined by the Committee, provided that such exercise price shall not be less than 100% of the Fair Market Value of a Share on the date of grant of the Option and shall not, in any event, be less than the par value of a Share on the date of grant of the Option. If an Employee owns or is deemed to own (by reason of the attribution rules applicable under Section 424(d) of the Code) more than 10% of the combined voting power of all classes of stock of the Company (or any parent corporation or subsidiary corporation of the Company, as those terms are defined in Sections 424(e) and (f) of the Code, respectively) and an Incentive Stock Option is granted to such employee, the exercise price of such Incentive Stock Option (to the extent required by the Code at the time of grant) shall be no less than 110% of the Fair Market Value a Share on the date such Incentive Stock Option is granted. Other than pursuant to Section 10(c), the Committee shall not be permitted to (A) lower the exercise price per Share of an Option after it is granted, (B) cancel an Option when the exercise price per Share exceeds the Fair Market Value of the underlying Shares in exchange for another Award (other than in connection with Substitute Awards), or (C) take any other action with respect to an Option that may be treated as a repricing, without approval of the Company’s shareholders.

(ii) Time and Method of Exercise. The Committee shall determine the time or times at which or the circumstances under which an Option may be exercised in whole or in part (including based on achievement of performance goals and/or future service requirements), the time or times at which Options shall cease to be or become exercisable following termination of Continuous Service or upon other conditions, the methods by which the exercise price may be paid or deemed to be paid (including in the discretion of the Committee a

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cashless exercise procedure to the extent that it does not violate the prohibition on personal loans to executive officers and Directors imposed by the Sarbanes-Oxley Act of 2002), the form of such payment, including, without limitation, cash, Shares, other Awards or awards granted under other plans of the Company or a Related Entity, or other property (including notes or other contractual obligations of Participants to make payment on a deferred basis provided that such deferred payments are not in violation of the Sarbanes-Oxley Act of 2002, or any rule or regulation adopted thereunder or any other applicable law), and the methods by or forms in which Shares will be delivered or deemed to be delivered to Participants. Except under certain circumstances contemplated by Section 9 or as may be set forth in an Award Agreement with respect to the death or Disability of a Participant, Options shall not be exercisable before the expiration of one year from the date the Option is granted.

(iii) Incentive Stock Options. The terms of any Incentive Stock Option granted under the Plan shall comply in all respects with the provisions of Section 422 of the Code. Anything in the Plan to the contrary notwithstanding, no term of the Plan relating to Incentive Stock Options (including any Stock Appreciation Right issued in tandem therewith) shall be interpreted, amended or altered, nor shall any discretion or authority granted under the Plan be exercised, so as to disqualify either the Plan or any Incentive Stock Option under Section 422 of the Code, unless the Participant has first requested, or consents to, the change that will result in such disqualification. Thus, if and to the extent required to comply with Section 422 of the Code, Options granted as Incentive Stock Options shall be subject to the following special terms and conditions:

(A) the Option shall not be exercisable more than ten years after the date such Incentive Stock Option is granted; provided, however, that if a Participant owns or is deemed to own (by reason of the attribution rules of Section 424(d) of the Code) more than 10% of the combined voting power of all classes of stock of the Company (or any parent corporation or subsidiary corporation of the Company, as those terms are defined in Sections 424(e) and (f) of the Code, respectively) and the Incentive Stock Option is granted to such Participant, the term of the Incentive Stock Option shall be (to the extent required by the Code at the time of the grant) for no more than five years from the date of grant; and

(B) the aggregate Fair Market Value (determined as of the date the Incentive Stock Option is granted) of the Shares with respect to which Incentive Stock Options granted under the Plan and all other option plans of the Company (and any parent corporation or subsidiary corporation of the Company, as those terms are defined in Sections 424(e) and (f) of the Code, respectively) during any calendar year exercisable for the first time by the Participant during any calendar year shall not (to the extent required by the Code at the time of the grant) exceed $100,000.

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(c) Stock Appreciation Rights. The Committee may grant Stock Appreciation Rights to any Eligible Person in conjunction with all or part of any Option granted under the Plan or at any subsequent time during the term of such Option (a “Tandem Stock Appreciation Right”), or without regard to any Option (a “Freestanding Stock Appreciation Right”), in each case upon such terms and conditions as the Committee may establish in its sole discretion, not inconsistent with the provisions of the Plan, including the following:

(i) Right to Payment. A Stock Appreciation Right shall confer on the Participant to whom it is granted a right to receive, upon exercise thereof, the excess of (A) the Fair Market Value of one Share on the date of exercise over (B) the grant price of the Stock Appreciation Right as determined by the Committee. The grant price of a Stock Appreciation Right shall not be less than the Fair Market Value of a Share on the date of grant, in the case of a Freestanding Stock Appreciation Right, or less than the associated Option exercise price, in the case of a Tandem Stock Appreciation Right. Other than pursuant to Section 10(c), the Committee shall not be permitted to (A) lower the grant price per Share of a Stock Appreciation Right after it is granted, (B) cancel a Stock Appreciation Right when the grant price per Share exceeds the Fair Market Value of the underlying Shares in exchange for another Award (other than in connection with Substitute Awards), or (C) take any other action with respect to a Stock Appreciation Right that may be treated as a repricing, without shareholder approval. A Freestanding Stock Appreciation Right shall not be exercisable before the expiration of one year from the date of grant, except under certain circumstances contemplated by Section 9 or as may be set forth in an Award Agreement with respect to the death or Disability of a Participant.

(ii) Other Terms. The Committee shall determine at the date of grant or thereafter, the time or times at which and the circumstances under which a Stock Appreciation Right may be exercised in whole or in part (including based on achievement of performance goals and/or future service requirements), the time or times at which Stock Appreciation Rights shall cease to be or become exercisable following termination of Continuous Service or upon other conditions, the method of exercise, method of settlement, form of consideration payable in settlement (recognizing that settlement in cash or property other than Shares may cause the Award to be treated as a liability and therefore subject to potentially unfavorable financial accounting treatment), method by or forms in which Shares will be delivered or deemed to be delivered to Participants, whether or not a Stock Appreciation Right shall be in tandem or in combination with any other Award, and any other terms and conditions of any Stock Appreciation Right.

(iii) Tandem Stock Appreciation Rights. Any Tandem Stock Appreciation Right may be granted at the same time as the related Option is granted or, for Options that are not Incentive Stock Options, at any time thereafter before exercise or expiration of such Option. Any Tandem Stock Appreciation Right related to an Option may be exercised only when the related Option would be exercisable and the Fair Market Value of the Shares subject to the related Option exceeds the exercise price at which Shares can be acquired pursuant to the Option. In addition, if a Tandem Stock Appreciation Right exists with respect to less than the full number of Shares covered by a related Option, then an exercise or termination of such Option shall not reduce the number of Shares to which the Tandem Stock Appreciation Right applies until the number of Shares then exercisable under such Option equals the number of Shares to which the Tandem Stock Appreciation Right applies. Any Option related to a Tandem Stock Appreciation Right shall no longer be exercisable to the extent the Tandem Stock Appreciation Right has been exercised, and any Tandem Stock Appreciation Right shall no longer be exercisable to the extent the related Option has been exercised.

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(d) Restricted Stock Awards. The Committee is authorized to grant Restricted Stock Awards to any Eligible Person on the following terms and conditions:

(i) Grant and Restrictions. Restricted Stock Awards shall be subject to such restrictions on transferability, risk of forfeiture and other restrictions, if any, as the Committee may impose, or as otherwise provided in this Plan, covering a period of time specified by the Committee (the “Restriction Period”). The terms of any Restricted Stock Award granted under the Plan shall be set forth in a written Award Agreement which shall contain provisions determined by the Committee and not inconsistent with the Plan. The restrictions may lapse separately or in combination at such times, under such circumstances (including based on achievement of performance goals and/or future service requirements), in such installments or otherwise, as the Committee may determine at the date of grant or thereafter. Except to the extent restricted under the terms of the Plan and any Award Agreement relating to a Restricted Stock Award, a Participant granted Restricted Stock shall have all of the rights of a shareholder, including the right to vote the Restricted Stock and the right to receive dividends thereon (subject to any mandatory reinvestment or other requirement imposed by the Committee). During the Restriction Period, subject to Section 10(b) below, the Restricted Stock may not be sold, transferred, pledged, hypothecated, margined or otherwise encumbered by the Participant.

(ii) Forfeiture. Except as otherwise determined by the Committee, upon termination of a Participant’s Continuous Service during the applicable Restriction Period, the Participant’s Restricted Stock that is at that time subject to a risk of forfeiture that has not lapsed or otherwise been satisfied shall be forfeited and reacquired by the Company; provided that the Committee may provide, by rule or regulation or in any Award Agreement, or may determine in any individual case, that forfeiture conditions relating to Restricted Stock Awards shall be waived in whole or in part in the event of terminations resulting from specified causes.

(iii) Certificates for Stock. Restricted Stock granted under the Plan may be evidenced in such manner as the Committee shall determine. If certificates representing Restricted Stock are registered in the name of the Participant, the Committee may require that such certificates bear an appropriate legend referring to the terms, conditions and restrictions applicable to such Restricted Stock, that the Company retain physical possession of the certificates, and that the Participant deliver a stock power to the Company, endorsed in blank, relating to the Restricted Stock.

(iv) Dividends and Splits. As a condition to the grant of a Restricted Stock Award, the Committee may require or permit a Participant to elect that any cash dividends paid on a Share of Restricted Stock be automatically reinvested in additional Shares of Restricted Stock or applied to the purchase of additional Awards under the Plan. Unless otherwise determined by the Committee, Shares distributed in connection with a stock split or stock dividend, and other property distributed as a dividend, shall be subject to restrictions and a risk of forfeiture to the same extent as the Restricted Stock with respect to which such Shares or other property have been distributed.

(v) Minimum Vesting Period. Except for certain limited situations (including termination of employment, a Change in Control referred to in Section 9, grants to new hires to replace forfeited compensation, grants representing payment of earned Performance Awards or other incentive compensation, or grants to Directors), Restricted Stock Awards subject solely to future service requirements shall have a Restriction Period of not less than three years from date of grant (but permitting pro-rata vesting over such time).

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(e) Deferred Stock Award. The Committee is authorized to grant Deferred Stock Awards to any Eligible Person on the following terms and conditions:

(i) Award and Restrictions. Satisfaction of a Deferred Stock Award shall occur upon expiration of the deferral period specified for such Deferred Stock Award by the Committee (or, if permitted by the Committee, as elected by the Participant). In addition, a Deferred Stock Award shall be subject to such restrictions (which may include a risk of forfeiture) as the Committee may impose, if any, which restrictions may lapse at the expiration of the deferral period or at earlier specified times (including based on achievement of performance goals and/or future service requirements), separately or in combination, in installments or otherwise, as the Committee may determine. A Deferred Stock Award may be satisfied by delivery of Shares, cash equal to the Fair Market Value of the specified number of Shares covered by the Deferred Stock, or a combination thereof, as determined by the Committee at the date of grant or thereafter. Prior to satisfaction of a Deferred Stock Award, a Deferred Stock Award carries no voting or dividend or other rights associated with Share ownership.

(ii) Forfeiture. Except as otherwise determined by the Committee, upon termination of a Participant’s Continuous Service during the applicable deferral period or portion thereof to which forfeiture conditions apply (as provided in the Award Agreement evidencing the Deferred Stock Award), the Participant’s Deferred Stock Award that is at that time subject to a risk of forfeiture that has not lapsed or otherwise been satisfied shall be forfeited; provided that the Committee may provide, by rule or regulation or in any Award Agreement, or may determine in any individual case, that forfeiture conditions relating to a Deferred Stock Award shall be waived in whole or in part in the event of terminations resulting from specified causes, and the Committee may in other cases waive in whole or in part the forfeiture of any Deferred Stock Award.

(iii) Dividend Equivalents. Unless otherwise determined by the Committee at date of grant, any Dividend Equivalents that are granted with respect to any Deferred Stock Award shall be either (A) paid with respect to such Deferred Stock Award at the dividend payment date in cash or in Shares of unrestricted stock having a Fair Market Value equal to the amount of such dividends, or (B) deferred with respect to such Deferred Stock Award and the amount or value thereof automatically deemed reinvested in additional Deferred Stock, other Awards or other investment vehicles, as the Committee shall determine or permit the Participant to elect.

(f) Bonus Stock and Awards in Lieu of Obligations. The Committee is authorized to grant Shares to any Eligible Persons as a bonus, or to grant Shares or other Awards in lieu of obligations to pay cash or deliver other property under the Plan or under other plans or compensatory arrangements, provided that, in the case of Eligible Persons subject to Section 16 of the Exchange Act, the amount of such grants remains within the discretion of the Committee to the extent necessary to ensure that acquisitions of Shares or other Awards are exempt from liability under Section 16(b) of the Exchange Act. Shares or Awards granted hereunder shall be subject to such other terms as shall be determined by the Committee.

(g) Dividend Equivalents. The Committee is authorized to grant Dividend Equivalents to any Eligible Person entitling the Eligible Person to receive cash, Shares, other

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Awards, or other property equal in value to the dividends paid with respect to a specified number of Shares, or other periodic payments. Dividend Equivalents may be awarded on a free-standing basis or in connection with another Award. The Committee may provide that Dividend Equivalents shall be paid or distributed when accrued or shall be deemed to have been reinvested in additional Shares, Awards, or other investment vehicles, and subject to such restrictions on transferability and risks of forfeiture, as the Committee may specify.

(h) Performance Awards. The Committee is authorized to grant Performance Awards to any Eligible Person payable in cash, Shares, or other Awards, on terms and conditions established by the Committee, subject to the provisions of Section 8 if and to the extent that the Committee shall, in its sole discretion, determine that an Award shall be subject to those provisions. The performance criteria to be achieved during any Performance Period and the length of the Performance Period shall be determined by the Committee upon the grant of each Performance Award; provided, however, that a Performance Period shall be more than 12 months and not more than 5 years. Except as provided in Section 9 or as may be provided in an Award Agreement, Performance Awards will be distributed only after the end of the relevant Performance Period. The performance goals to be achieved for each Performance Period shall be conclusively determined by the Committee and may be based upon the criteria set forth in Section 8(b), or in the case of an Award that the Committee determines shall not be subject to Section 8 hereof, any other criteria that the Committee, in its sole discretion, shall determine should be used for that purpose. The amount of the Award to be distributed shall be conclusively determined by the Committee. Performance Awards may be paid in a lump sum or in installments following the close of the Performance Period or, in accordance with procedures established by the Committee, on a deferred basis.

(i) Other Stock-Based Awards. The Committee is authorized, subject to limitations under applicable law, to grant to any Eligible Person such other Awards that may be denominated or payable in, valued in whole or in part by reference to, or otherwise based on, or related to, Shares, as deemed by the Committee to be consistent with the purposes of the Plan. Other Stock-Based Awards may be granted to Participants either alone or in addition to other Awards granted under the Plan, and such Other Stock-Based Awards shall also be available as a form of payment in the settlement of other Awards granted under the Plan. The Committee shall determine the terms and conditions of such Awards. Shares delivered pursuant to an Award in the nature of a purchase right granted under this Section 6(i) shall be purchased for such consideration, (including without limitation loans from the Company or a Related Entity and cashless exercise programs, provided that such loans and cashless exercise programs are not in violation of the Sarbanes-Oxley Act of 2002, or any rule or regulation adopted thereunder or prohibiting personal loans to executive officers and Directors of the Company and certain Related Entities any other applicable law) paid for at such times, by such methods, and in such forms, including, without limitation, cash, Shares, other Awards or other property, as the Committee shall determine. Except for certain limited situations (including termination of employment, a Change in Control referred to in Section 9, grants to new hires to replace forfeited compensation, grants representing payment of earned Performance Awards or other incentive compensation, or grants to Directors), Other Stock-Based Awards subject solely to future service requirements shall be subject to restrictions for a period of not less than three years from date of grant (but permitting pro-rata vesting over such time).

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7. Certain Provisions Applicable to Awards.

(a) Stand-Alone, Additional, Tandem, and Substitute Awards. Awards granted under the Plan may, in the discretion of the Committee, be granted either alone or in addition to, in tandem with, or in substitution or exchange for, any other Award or any award granted under another plan of the Company, any Related Entity, or any business entity to be acquired by the Company or a Related Entity, or any other right of a Participant to receive payment from the Company or any Related Entity. Such additional, tandem, and substitute or exchange Awards may be granted at any time. If an Award is granted in substitution or exchange for another Award or award, the Committee shall require the surrender of such other Award or award in consideration for the grant of the new Award. In addition, Awards may be granted in lieu of cash compensation, including in lieu of cash amounts payable under other plans of the Company or any Related Entity, in which the value of Stock subject to the Award is equivalent in value to the cash compensation (for example, Deferred Stock or Restricted Stock), or in which the exercise price, grant price or purchase price of the Award in the nature of a right that may be exercised is equal to the Fair Market Value of the underlying Stock minus the value of the cash compensation surrendered (for example, Options or Stock Appreciation Right granted with an exercise price or grant price “discounted” by the amount of the cash compensation surrendered).

(b) Term of Awards. The term of each Award shall be for such period as may be determined by the Committee; provided that in no event shall the term of any Option or Stock Appreciation Right exceed a period of ten years (or in the case of an Incentive Stock Option such shorter term as may be required under Section 422 of the Code).

(c) Form and Timing of Payment Under Awards; Deferrals. Subject to the terms of the Plan and any applicable Award Agreement, payments to be made by the Company or a Related Entity upon the exercise of an Option or other Award or settlement of an Award may be made in such forms as the Committee shall determine, including, without limitation, cash, Shares, other Awards or other property, and may be made in a single payment or transfer, in installments, or on a deferred basis. Any installment or deferral provided for in the preceding sentence shall, however, be subject to the Company’s compliance with the provisions of the Sarbanes-Oxley Act of 2002, the rules and regulations adopted by the Securities and Exchange Commission thereunder, and all applicable rules of the Nasdaq Stock Market or any national securities exchange on which the Company’s securities are listed for trading and, if not listed for trading on either the Nasdaq Stock Market or a national securities exchange, then the rules of the Nasdaq Stock Market. The settlement of any Award may be accelerated, and cash paid in lieu of Stock in connection with such settlement, in the discretion of the Committee or upon occurrence of one or more specified events (in addition to a Change in Control). Installment or deferred payments may be required by the Committee (subject to Section 10(e) of the Plan, including the consent provisions thereof in the case of any deferral of an outstanding Award not provided for in the original Award Agreement) or permitted at the election of the Participant on terms and conditions established by the Committee. Payments may include, without limitation, provisions for the payment or crediting of a reasonable interest rate on installment or deferred payments or the grant or crediting of Dividend Equivalents or other amounts in respect of installment or deferred payments denominated in Shares.

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(d) Exemptions from Section 16(b) Liability. It is the intent of the Company that the grant of any Awards to or other transaction by a Participant who is subject to Section 16 of the Exchange Act shall be exempt from Section 16 pursuant to an applicable exemption (except for transactions acknowledged in writing to be non-exempt by such Participant). Accordingly, if any provision of this Plan or any Award Agreement does not comply with the requirements of Rule 16b-3 then applicable to any such transaction, such provision shall be construed or deemed amended to the extent necessary to conform to the applicable requirements of Rule 16b-3 so that such Participant shall avoid liability under Section 16(b).

(e) Code Section 409A. If and to the extent that the Committee believes that any Awards may constitute a “nonqualified deferred compensation plan” under Section 409A of the Code, the terms and conditions set forth in the Award Agreement for that Award shall comply with, and be interpreted in a manner consistent with, the applicable requirements of Section 409A of the Code.

8. Code Section 162(m) Provisions.

(a) Covered Employees. The Committee, in its discretion, may determine at the time an Award is granted to an Eligible Person who is, or is likely to be, as of the end of the tax year in which the Company would claim a tax deduction in connection with such Award, a Covered Employee, that the provisions of this Section 8 shall be applicable to such Award.

(b) Performance Criteria. If an Award is subject to this Section 8, then the lapsing of restrictions thereon and the distribution of cash, Shares or other property pursuant thereto, as applicable, shall be contingent upon achievement of one or more objective performance goals. Performance goals shall be objective and shall otherwise meet the requirements of Section 162(m) of the Code and regulations thereunder including the requirement that the level or levels of performance targeted by the Committee result in the achievement of performance goals being “substantially uncertain.” One or more of the following business criteria for the Company, on a consolidated basis, and/or for Related Entities, or for business or geographical units of the Company and/or a Related Entity (except with respect to the total shareholder return and earnings per share criteria), shall be used by the Committee in establishing performance goals for such Awards: (1) earnings per share; (2) revenues or margins; (3) royalties; (4) cash flow; (5) operating margin; (6) return on assets, net assets, investment, capital, operating revenue or equity; (7) economic value added; (8) direct contribution; (9) income; net income; pretax earnings; earnings before interest and taxes; earnings before interest, taxes, depreciation and amortization; earnings after interest expense and before extraordinary or special items; operating income; net operating income; income before interest income or expense, unusual items and income taxes, local, state or federal and excluding budgeted and actual bonuses which might be paid under any ongoing bonus plans of the Company; (10) working capital or working capital management, including inventory turnover and days sales outstanding; (11) management of fixed costs or variable costs; (12) identification or consummation of investment opportunities or completion of specified projects in accordance with corporate business plans, including strategic mergers, acquisitions or divestitures; (13) total shareholder return; (14) debt reduction; (15) market share; (16) entry into new markets, either geographically or by business unit; (17) customer retention and satisfaction; (18) strategic plan development and implementation, including turnaround plans; and (19) stock price. Any of the

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above goals may be determined on an absolute or relative basis (e.g. growth in earnings per share) or as compared to the performance of a published or special index deemed applicable by the Committee including, but not limited to, the Standard & Poor’s 500 Stock Index or a group of companies that are comparable to the Company. The Committee shall exclude the impact of an event or occurrence which the Committee determines should appropriately be excluded, including without limitation (i) restructurings, discontinued operations, extraordinary items, and other unusual or non-recurring charges, (ii) an event either not directly related to the operations of the Company or not within the reasonable control of the Company’s management, or (iii) a change in accounting standards required by generally accepted accounting principles.

(c) Performance Period; Timing For Establishing Performance Goals. Achievement of performance goals in respect of such Performance Awards shall be measured over a Performance Period of more than 12 months and not more than five years, as specified by the Committee. Performance goals shall be established not later than the earlier of (i) 90 days after the beginning of any Performance Period applicable to such Performance Awards, or (ii) the date on which 25% of the days in the Performance Period have elapsed, or at such other date as may be required or permitted for “performance-based compensation” under Code Section 162(m).

(d) Adjustments. The Committee may, in its discretion, reduce the amount of a settlement otherwise to be made in connection with Awards subject to this Section 8, but may not exercise discretion to increase any such amount payable to a Covered Employee in respect of an Award subject to this Section 8. The Committee shall specify the circumstances in which such Awards shall be paid or forfeited in the event of termination of Continuous Service by the Participant prior to the end of a Performance Period or settlement of Awards.

(e) Committee Certification. No Participant shall receive any payment under the Plan unless the Committee has certified, by resolution or other appropriate action in writing, that the performance criteria and any other material terms previously established by the Committee or set forth in the Plan, have been satisfied to the extent necessary to qualify as “performance based compensation” under Code Section 162(m).

(f) Shareholder Reapproval of Performance Criteria. If and to the extent required in order to qualify as “performance based compensation” under Code Section 162(m), the performance criteria set forth in paragraph (a) of this Section 8 and any other material terms of the performance goals used to measure Performance Awards subject to this Section 8, shall be disclosed to and reapproved by shareholders of the Company not later than the first meeting of shareholders of the Company that occurs in the fifth year following the year in which the Company’s shareholders previously approved the performance goals.

9. Change in Control.

(a) Effect of “Change in Control.” Subject to Section 9(a)(iv), and if and only to the extent provided in the Award Agreement, or to the extent otherwise determined by the Committee, upon the occurrence of a “Change in Control,” as defined in Section 9(b):

(i) Any Option or Stock Appreciation Right that was not previously vested and exercisable as of the time of the Change in Control, shall become immediately vested and exercisable, subject to applicable restrictions set forth in Section 10(a) hereof.

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(ii) Any restrictions, deferral of settlement, and forfeiture conditions applicable to a Restricted Stock Award, Deferred Stock Award or an Other Stock-Based Award subject only to future service requirements granted under the Plan shall lapse and such Awards shall be deemed fully vested as of the time of the Change in Control, except to the extent of any waiver by the Participant and subject to applicable restrictions set forth in Section 10(a) hereof.

(iii) With respect to any outstanding Award subject to achievement of performance goals and conditions under the Plan, the Committee may, in its discretion, deem such performance goals and conditions as having been met as of the date of the Change in Control.

(iv) Notwithstanding the foregoing, if in the event of a Change in Control the successor company assumes or substitutes for an Option, Stock Appreciation Right, Restricted Stock Award, Deferred Stock Award or Other Stock-Based Award, then each outstanding Option, Stock Appreciation Right, Restricted Stock Award, Deferred Stock Award or Other Stock-Based Award shall not be accelerated as described in Sections 9(a)(i), (ii) and (iii). For the purposes of this Section 9(a)(iv), an Option, Stock Appreciation Right, Restricted Stock Award, Deferred Stock Award or Other Stock-Based Award shall be considered assumed or substituted for if following the Change in Control the award confers the right to purchase or receive, for each Share subject to the Option, Stock Appreciation Right, Restricted Stock Award, Deferred Stock Award or Other Stock-Based Award immediately prior to the Change in Control, the consideration (whether stock, cash or other securities or property) received in the transaction constituting a Change in Control by holders of Shares for each Share held on the effective date of such transaction (and if holders were offered a choice of consideration, the type of consideration chosen by the holders of a majority of the outstanding shares); provided, however, that if such consideration received in the transaction constituting a Change in Control is not solely common stock of the successor company or its parent or subsidiary, the Committee may, with the consent of the successor company or its parent or subsidiary, provide that the consideration to be received upon the exercise or vesting of an Option, Stock Appreciation Right, Restricted Stock Award, Deferred Stock Award or Other Stock-Based Award, for each Share subject thereto, will be solely common stock of the successor company or its parent or subsidiary substantially equal in fair market value to the per share consideration received by holders of Shares in the transaction constituting a Change in Control. The determination of such substantial equality of value of consideration shall be made by the Committee in its sole discretion and its determination shall be conclusive and binding. Notwithstanding the foregoing, on such terms and conditions as may be set forth in an Award Agreement, in the event of a termination of a Participant’s employment in such successor company (other than for Cause) within 24 months following such Change in Control, each Award held by such Participant at the time of the Change in Control shall be accelerated as described in Sections 9(a)(i), (ii) and (iii) above.

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(b) Definition of “Change in Control”. Unless otherwise specified in an Award Agreement, a “Change in Control” shall mean the occurrence of any of the following:

(i) The acquisition by any Person of Beneficial Ownership (within the meaning of Rule 13d-3 promulgated under the Exchange Act) of more than fifty percent (50%) of either (A) the then outstanding shares of common stock of the Company (the “Outstanding Company Common Stock”) or (B) the combined voting power of the then outstanding voting securities of the Company entitled to vote generally in the election of directors (the “Outstanding Company Voting Securities) (the foregoing Beneficial Ownership hereinafter being referred to as a “Controlling Interest”); provided, however, that for purposes of this Section 9(b), the following acquisitions shall not constitute or result in a Change of Control: (v) any acquisition directly from the Company; (w) any acquisition by the Company; (x) any acquisition by any Person that as of the Effective Date owns Beneficial Ownership of a Controlling Interest; (y) any acquisition by any employee benefit plan (or related trust) sponsored or maintained by the Company or any Subsidiary; or (z) any acquisition by any corporation pursuant to a transaction which complies with clauses (A), (B) and (C) of subsection (iii) below; or

(ii) During any period of two (2) consecutive years (not including any period prior to the Effective Date) individuals who constitute the Board on the Effective Date (the “Incumbent Board”) cease for any reason to constitute at least a majority of the Board; provided, however, that any individual becoming a director subsequent to the Effective Date whose election, or nomination for election by the Company’s shareholders, was approved by a vote of at least a majority of the directors then comprising the Incumbent Board shall be considered as though such individual were a member of the Incumbent Board, but excluding, for this purpose, any such individual whose initial assumption of office occurs as a result of an actual or threatened election contest with respect to the election or removal of directors or other actual or threatened solicitation of proxies or consents by or on behalf of a Person other than the Board; or

(iii) Consummation of a reorganization, merger, statutory share exchange or consolidation or similar corporate transaction involving the Company or any of its Subsidiaries, a sale or other disposition of all or substantially all of the assets of the Company, or the acquisition of assets or stock of another entity by the Company or any of its Subsidiaries (each a “Business Combination”), in each case, unless, following such Business Combination, (A) all or substantially all of the individuals and entities who were the Beneficial Owners, respectively, of the Outstanding Company Common Stock and Outstanding Company Voting Securities immediately prior to such Business Combination beneficially own, directly or indirectly, more than fifty percent (50%) of the then outstanding shares of common stock and the combined voting power of the then outstanding voting securities entitled to vote generally in the election of directors, as the case may be, of the corporation resulting from such Business Combination (including, without limitation, a corporation which as a result of such transaction owns the Company or all or substantially all of the Company’s assets either directly or through one or more subsidiaries) in substantially the same proportions as their ownership, immediately prior to such Business Combination of the Outstanding Company Common Stock and Outstanding Company Voting Securities, as the case may be, (B) no Person (excluding any employee benefit plan (or related trust) of the Company or such corporation resulting from such Business Combination or any Person that as of the Effective Date owns Beneficial Ownership of a Controlling Interest) beneficially owns, directly or indirectly, fifty percent (50%) or more of the then outstanding shares of common stock of the corporation resulting from such Business

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Combination or the combined voting power of the then outstanding voting securities of such corporation except to the extent that such ownership existed prior to the Business Combination and (C) at least a majority of the members of the Board of Directors of the corporation resulting from such Business Combination were members of the Incumbent Board at the time of the execution of the initial agreement, or of the action of the Board, providing for such Business Combination; or

(iv) Approval by the shareholders of the Company of a complete liquidation or dissolution of the Company.

10. General Provisions.

(a) Compliance With Legal and Other Requirements. The Company may, to the extent deemed necessary or advisable by the Committee, postpone the issuance or delivery of Shares or payment of other benefits under any Award until completion of such registration or qualification of such Shares or other required action under any federal or state law, rule or regulation, listing or other required action with respect to any stock exchange or automated quotation system upon which the Shares or other Company securities are listed or quoted, or compliance with any other obligation of the Company, as the Committee, may consider appropriate, and may require any Participant to make such representations, furnish such information and comply with or be subject to such other conditions as it may consider appropriate in connection with the issuance or delivery of Shares or payment of other benefits in compliance with applicable laws, rules, and regulations, listing requirements, or other obligations.

(b) Limits on Transferability; Beneficiaries. No Award or other right or interest granted under the Plan shall be pledged, hypothecated or otherwise encumbered or subject to any lien, obligation or liability of such Participant to any party, or assigned or transferred by such Participant otherwise than by will or the laws of descent and distribution or to a Beneficiary upon the death of a Participant, and such Awards or rights that may be exercisable shall be exercised during the lifetime of the Participant only by the Participant or his or her guardian or legal representative, except that Awards and other rights (other than Incentive Stock Options and Stock Appreciation Rights in tandem therewith) may be transferred to one or more Beneficiaries or other transferees during the lifetime of the Participant, and may be exercised by such transferees in accordance with the terms of such Award, but only if and to the extent such transfers are permitted by the Committee pursuant to the express terms of an Award Agreement (subject to any terms and conditions which the Committee may impose thereon). A Beneficiary, transferee, or other person claiming any rights under the Plan from or through any Participant shall be subject to all terms and conditions of the Plan and any Award Agreement applicable to such Participant, except as otherwise determined by the Committee, and to any additional terms and conditions deemed necessary or appropriate by the Committee.

(c) Adjustments.

(i) Adjustments to Awards. In the event that any extraordinary dividend or other distribution (whether in the form of cash, Shares, or other property), recapitalization, forward or reverse split, reorganization, merger, consolidation, spin-off,

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combination, repurchase, share exchange, liquidation, dissolution or other similar corporate transaction or event affects the Shares and/or such other securities of the Company or any other issuer such that a substitution, exchange, or adjustment is determined by the Committee to be appropriate, then the Committee shall, in such manner as it may deem equitable, substitute, exchange or adjust any or all of (A) the number and kind of Shares which may be delivered in connection with Awards granted thereafter, (B) the number and kind of Shares by which annual per-person Award limitations are measured under Section 5 hereof, (C) the number and kind of Shares subject to or deliverable in respect of outstanding Awards, (D) the exercise price, grant price or purchase price relating to any Award and/or make provision for payment of cash or other property in respect of any outstanding Award, and (E) any other aspect of any Award that the Committee determines to be appropriate.

(ii) Adjustments in Case of Certain Corporate Transactions. In the event of any merger, consolidation or other reorganization in which the Company does not survive, or in the event of any Change in Control, any outstanding Awards may be dealt with in accordance with any of the following approaches, as determined by the agreement effectuating the transaction or, if and to the extent not so determined, as determined by the Committee: (a) the continuation of the outstanding Awards by the Company, if the Company is a surviving corporation, (b) the assumption or substitution for, as those terms are defined in Section 9(b)(iv) hereof, the outstanding Awards by the surviving corporation or its parent or subsidiary, (c) full exercisability or vesting and accelerated expiration of the outstanding Awards, or (d) settlement of the value of the outstanding Awards in cash or cash equivalents or other property followed by cancellation of such Awards (which value, in the case of Options or Stock Appreciation Rights, shall be measured by the amount, if any, by which the Fair Market Value of a Share exceeds the exercise or grant price of the Option or Stock Appreciation Right as of the effective date of the transaction). The Committee shall give written notice of any proposed transaction referred to in this Section 10(c)(ii) a reasonable period of time prior to the closing date for such transaction (which notice may be given either before or after the approval of such transaction), in order that Participants may have a reasonable period of time prior to the closing date of such transaction within which to exercise any Awards that are then exercisable (including any Awards that may become exercisable upon the closing date of such transaction). A Participant may condition his exercise of any Awards upon the consummation of the transaction.

(iii) Other Adjustments. The Committee (and the Board if and only to the extent such authority is not required to be exercised by the Committee to comply with Section 162(m) of the Code) is authorized to make adjustments in the terms and conditions of, and the criteria included in, Awards (including Performance Awards, or performance goals relating thereto) in recognition of unusual or nonrecurring events (including, without limitation, acquisitions and dispositions of businesses and assets) affecting the Company, any Related Entity or any business unit, or the financial statements of the Company or any Related Entity, or in response to changes in applicable laws, regulations, accounting principles, tax rates and regulations or business conditions or in view of the Committee’s assessment of the business strategy of the Company, any Related Entity or business unit thereof, performance of comparable organizations, economic and business conditions, personal performance of a Participant, and any other circumstances deemed relevant; provided that no such adjustment shall be authorized or made if and to the extent that such authority or the making of such adjustment would cause

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Options, Stock Appreciation Rights, Performance Awards granted pursuant to Section 8(b) hereof to Participants designated by the Committee as Covered Employees and intended to qualify as “performance-based compensation” under Code Section 162(m) and the regulations thereunder to otherwise fail to qualify as “performance-based compensation” under Code Section 162(m) and regulations thereunder.

(d) Taxes. The Company and any Related Entity are authorized to withhold from any Award granted, any payment relating to an Award under the Plan, including from a distribution of Shares, or any payroll or other payment to a Participant, amounts of withholding and other taxes due or potentially payable in connection with any transaction involving an Award, and to take such other action as the Committee may deem advisable to enable the Company or any Related Entity and Participants to satisfy obligations for the payment of withholding taxes and other tax obligations relating to any Award. This authority shall include authority to withhold or receive Shares (recognizing that if and to the extent that the Shares withheld exceed certain minimum statutory withholding requirements, such withholding may cause the Award to be treated as a liability subject to potential unfavorable financial accounting treatment) or other property and to make cash payments in respect thereof in satisfaction of a Participant’s tax obligations, either on a mandatory or elective basis in the discretion of the Committee.

(e) Changes to the Plan and Awards. The Board may amend, alter, suspend, discontinue or terminate the Plan, or the Committee’s authority to grant Awards under the Plan, without the consent of shareholders or Participants, except that any amendment or alteration to the Plan shall be subject to the approval of the Company’s shareholders not later than the annual meeting next following such Board action if such shareholder approval is required by any federal or state law or regulation (including, without limitation, Rule 16b-3 or Code Section 162(m)) or the rules of any stock exchange or automated quotation system on which the Shares may then be listed or quoted, and the Board may otherwise, in its discretion, determine to submit other such changes to the Plan to shareholders for approval; provided that, without the consent of an affected Participant, no such Board action may materially and adversely affect the rights of such Participant under any previously granted and outstanding Award. The Committee may waive any conditions or rights under, or amend, alter, suspend, discontinue or terminate any Award theretofore granted and any Award Agreement relating thereto, except as otherwise provided in the Plan; provided that, without the consent of an affected Participant, no such Committee or the Board action may materially and adversely affect the rights of such Participant under such Award. Notwithstanding anything to the contrary, the Committee shall be authorized to amend any outstanding Option and/or Stock Appreciation Right to reduce the exercise price or grant price without the prior approval of the shareholders of the Company. In addition, the Committee shall be authorized to cancel outstanding Options and/or Stock Appreciate Rights replaced with Awards having a lower exercise price without the prior approval of the shareholders of the Company.

(f) Limitation on Rights Conferred Under Plan. Neither the Plan nor any action taken hereunder shall be construed as (i) giving any Eligible Person or Participant the right to continue as an Eligible Person or Participant or in the employ or service of the Company or a Related Entity; (ii) interfering in any way with the right of the Company or a Related Entity to terminate any Eligible Person’s or Participant’s Continuous Service at any time, (iii) giving an

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Eligible Person or Participant any claim to be granted any Award under the Plan or to be treated uniformly with other Participants and Employees, or (iv) conferring on a Participant any of the rights of a shareholder of the Company unless and until the Participant is duly issued or transferred Shares in accordance with the terms of an Award.

(g) Unfunded Status of Awards; Creation of Trusts. The Plan is intended to constitute an “unfunded” plan for incentive and deferred compensation. With respect to any payments not yet made to a Participant or obligation to deliver Shares pursuant to an Award, nothing contained in the Plan or any Award shall give any such Participant any rights that are greater than those of a general creditor of the Company; provided that the Committee may authorize the creation of trusts and deposit therein cash, Shares, other Awards or other property, or make other arrangements to meet the Company’s obligations under the Plan. Such trusts or other arrangements shall be consistent with the “unfunded” status of the Plan unless the Committee otherwise determines with the consent of each affected Participant. The trustee of such trusts may be authorized to dispose of trust assets and reinvest the proceeds in alternative investments, subject to such terms and conditions as the Committee may specify and in accordance with applicable law.

(h) Nonexclusivity of the Plan. Neither the adoption of the Plan by the Board nor its submission to the shareholders of the Company for approval shall be construed as creating any limitations on the power of the Board or a committee thereof to adopt such other incentive arrangements as it may deem desirable including incentive arrangements and awards which do not qualify under Section 162(m) of the Code.

(i) Payments in the Event of Forfeitures; Fractional Shares. Unless otherwise determined by the Committee, in the event of a forfeiture of an Award with respect to which a Participant paid cash or other consideration, the Participant shall be repaid the amount of such cash or other consideration. No fractional Shares shall be issued or delivered pursuant to the Plan or any Award. The Committee shall determine whether cash, other Awards or other property shall be issued or paid in lieu of such fractional shares or whether such fractional shares or any rights thereto shall be forfeited or otherwise eliminated.

(j) Governing Law. The validity, construction and effect of the Plan, any rules and regulations under the Plan, and any Award Agreement shall be determined in accordance with the laws of the State of Florida without giving effect to principles of conflict of laws, and applicable federal law.

(k) Non-U.S. Laws. The Committee shall have the authority to adopt such modifications, procedures, and subplans as may be necessary or desirable to comply with provisions of the laws of foreign countries in which the Company or its Subsidiaries may operate to assure the viability of the benefits from Awards granted to Participants performing services in such countries and to meet the objectives of the Plan.

(l) Plan Effective Date and Shareholder Approval; Termination of Plan. The Plan shall become effective on the Effective Date, subject to subsequent approval, within 12 months of its adoption by the Board, by shareholders of the Company eligible to vote in the election of directors, by a vote sufficient to meet the requirements of Code Sections 162(m) (if

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applicable) and 422, Rule 16b-3 under the Exchange Act (if applicable), applicable requirements under the rules of any stock exchange or automated quotation system on which the Shares may be listed or quoted, and other laws, regulations, and obligations of the Company applicable to the Plan. Awards may be granted subject to shareholder approval, but may not be exercised or otherwise settled in the event the shareholder approval is not obtained. The Plan shall terminate at the earliest of (a) such time as no Shares remain available for issuance under the Plan, (b) termination of this Plan by the Board, or (c) the tenth anniversary of the Effective Date. Awards outstanding upon expiration of the Plan shall remain in effect until they have been exercised or terminated, or have expired.

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FIRST AMENDMENT TO THE

PERRY ELLIS INTERNATIONAL, INC.

2005 LONG-TERM INCENTIVE COMPENSATION PLAN

THIS FIRST AMENDMENT, made effective as of this 7th day of June, 2005, by PERRY ELLIS INTERNATIONAL, INC., a Florida corporation (the “Company”) to the PERRY ELLIS INTERNATIONAL, INC. 2005 LONG-TERM INCENTIVE COMPENSATION PLAN (the “Plan”).

W I T N E S S E T H:

WHEREAS, the Company did establish the Plan for the purpose of attracting, motivating, retaining and rewarding high-quality executives and other key employees, officers, directors, consultants and other persons who provide services to the Company by enabling such persons to acquire or increase a proprietary interest in the Company in order to strengthen the mutuality of interests between such persons and the Company’s stockholders, and providing such persons with performance incentives to expend their maximum efforts in the creation of shareholder value.

WHEREAS, pursuant to Section 10(e) of the Plan, the Company reserved the right to amend said Plan;

NOW, THEREFORE, effective as of the Effective Date of the Plan, shall be amended as follows:

1. A new paragraph (e) shall be inserted under Section 4 of the Plan to read as follows:

“(e) Additional Limitations for Certain Types of Awards.

The aggregate number of Shares that may be delivered under the Plan for any of the following shall not exceed 150,000 Shares, subject to adjustments as provided in Section 10(c):

(i) Restricted Stock Awards, Deferred Stock Awards, Bonus Stock and Other Stock-Based Awards that are awarded for future service

and that do not provide for a minimum vesting period of 3 years (with exceptions to such minimum vesting for vesting on account of termination of Continuous Service for any reason or by reason of death or Disability, or on account of a Change in Control, grants in payment of earned Performance Awards or other incentive compensation) (the foregoing minimum vesting period, subject to the foregoing exceptions, is referred to as the “Minimum Vesting Requirements”);

(ii) Any grants of Shares to new hires that do not comply with the Minimum Vesting Requirements; and

(iii) Any Awards described in (i) and (ii) above that are granted in a manner that complies with the Minimum Vesting Requirements that are subsequently amended or modified in a manner that would no longer satisfy the Minimum Vesting Requirements (and that would not qualify for any of the exceptions referred to in this provision).

The foregoing restrictions shall not apply with respect to Shares granted in lieu of compensation (e.g., bonuses or director’s retainer fees) that otherwise would be payable in cash or any other obligations of the Company to pay cash or deliver other property under the Plan or under other plans or compensatory arrangements.”

2. The last two sentences in paragraph (e) of Section 10 of the Plan, shall be deleted and the following shall be substituted in their place:

“Notwithstanding the foregoing, any amendment to increase the number of Shares available under Section 4 for delivery under the Plan shall be subject to the approval of the Company’s shareholders no later than the annual meeting next following such amendment.”

3. In all other respects, the Plan shall remain unchanged by this Amendment.

EX-10.73

Exhibit 10.73

PERRY ELLIS INTERNATIONAL, INC.

2005 Management Incentive Compensation Plan

Section 1. Purpose of Plan

The purpose of the Plan is to promote the success of Perry Ellis International, Inc. by providing performance-based cash bonus incentives to its participating key employees.

Section 2. Definitions and Terms

2.1. Accounting Terms. Except as otherwise expressly provided or the context otherwise requires, financial and accounting terms are used as defined for purposes of, and shall be determined in accordance with, generally accepted accounting principles.

2.2. Specific Terms. The following words and phrases as used herein shall have the following meanings:

“Bonus” means a cash payment or payment opportunity as the context requires.

“Bonus Formula” means the formula, determined by the Committee in its discretion, that is a function of the Business Criteria selected by the Committee, to determine each Participant’s Bonus for a Performance Period.

“Business Criteria” means, with respect to a Bonus that the Committee has determined shall qualify under Section 162(m), one or more of the following business criteria for the Company, on a consolidated basis, and/or for Related Entities, or for business or geographical units of the Company and/or any Related Entity (except with respect to the total shareholder return and earnings per share criteria): (1) earnings per share; (2) revenues or margins; (3) royalties; (4) cash flow; (5) operating margin; (6) return on assets, net assets, investment, capital, operating revenue or equity; (7) economic value added; (8) direct contribution; (9) income; net income; pretax earnings; earnings before interest and taxes; earnings before interest, taxes, depreciation and amortization; earnings after interest expense and before extraordinary or special items; operating income; net operating income; income before interest income or expense, unusual items and income taxes, local, state or federal and excluding budgeted and actual bonuses which might be paid under any ongoing bonus plans of the Company; (10) working capital or working capital management, including inventory turnover and days sales outstanding; (11) management of fixed costs or variable costs; (12) identification or consummation of investment opportunities or completion of specified projects in accordance with corporate business plans, including strategic mergers, acquisitions or divestitures; (13) total shareholder return; (14) debt reduction; (15) market share; (16) entry into new markets, either geographically or by business unit; (17) customer retention and satisfaction; (18) strategic plan development and implementation, including turnaround plans; and (19) stock price. Any of the above goals may be determined on an absolute or relative basis or as compared to the performance of a published or special index deemed applicable by the Committee including, but not limited to, the Standard & Poor’s 500 Stock Index or a group of companies that are comparable to the Company. The Committee shall exclude the impact of an event or occurrence which the Committee determines should appropriately be excluded, including without limitation (i) restructurings, discontinued operations, extraordinary items, and other unusual or non-recurring charges, (ii) an event either not directly related to the operations of the Company or not within the reasonable control of the Company’s management, or (iii) a change in accounting standards required by generally accepted accounting principles. With respect to a Bonus that the Committee has not determined shall qualify under Section 162(m), “Business Criteria” means any of the above criteria or any other business indicator of the Company, on a consolidated basis, and/or for Related

Entities, or for business or geographical units of the Company and/or any Related Entity, or any other objective or subjective criteria, that the Committee in its discretion shall determine.

“Code” means the Internal Revenue Code of 1986, as amended.

“Committee” means the Compensation Committee of the Board.

“Company” means Perry Ellis International, Inc. a Florida corporation, and any successor whether by merger, ownership of all or substantially all of its assets or otherwise.

“Continuous Service” means the uninterrupted provision of services to the Company or any Related Entity in any capacity of employee, director, consultant or other service provider. Continuous Service shall not be considered to be interrupted in the case of (i) any approved leave of absence, (ii) transfers among the Company, any Related Entities, or any successor entities, in any capacity of employee, director, consultant or other service provider, or (iii) any change in status as long as the individual remains in the service of the Company or a Related Entity in any capacity of employee, director, consultant or other service provider (except as otherwise determined by the Committee). An approved leave of absence shall include sick leave, military leave, or any other authorized personal leave.

“Covered Employee” means a Participant who is a “covered employee” within the meaning of Section 162(m)(3) of the Code, or any successor provision thereto.

“Effective Date” means February 1, 2005.

“Executive” means a key employee (including any officer) of the Company.

“Outside Director” means an “outside director” within the meaning of Section 162(m) of the Code or any successor provision thereto.

“Participant” means an Executive selected to participate in the Plan by the Committee.

“Performance Period” means the period (not to exceed 12 months) established by the Committee with respect to which the Business Criteria and Bonus Formulas are set by the Committee.

“Plan” means this 2005 Management Incentive Compensation Plan, as may be amended from time to time.

“Related Entity” means any corporation or other entity in which the Company has a direct or indirect ownership interest of 50% or more of the total combined voting power of the then outstanding securities or interests of such corporation or other entity entitled to vote generally in the election of directors or in which the Company has the right to receive 50% or more of the distribution of profits or 50% or more of the assets on liquidation or dissolution, and any business, corporation, partnership, limited liability company or other entity designated by the Company’s Board of Directors in which the Company holds a substantial ownership interest, directly or indirectly.

Section 3. Bonus Provisions

3.1. Selection of Participants. The Committee shall determine those Executives who will be Participants in the Plan for each Performance Period.

3.2. Establishment of Performance Periods, Business Criteria, and Bonus Formulas. The Committee, in its discretion, shall establish Performance Periods, and shall set the Business Criteria and the Bonus Formulas that will be used to determine the amount of the Bonuses that will be payable to a Participant for a Performance Period. Bonus Formulas shall be established not later than the earlier of (i) 90 days after the beginning of any Performance Period applicable to such Bonuses, or (ii) the date on which 25% of the days in the Performance Period have

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elapsed, or on such other date as may be required or permitted for “performance-based compensation” under Code Section 162(m). The Committee, in its discretion, may, but need not, establish different Performance Periods, different Business Criteria, and different Bonus Formulas with respect to one or more Participants.

3.3. Determination of Bonus; Limitation. Subject to the provisions of this Section, each Participant may receive a Bonus, generally determined by applying the Bonus Formula applicable to the Participant, to the Business Criteria results for the Bonus Period. However, Bonuses shall be subject to adjustment as provided in Section 3.5, below. In addition, the maximum dollar value payable to any one Participant under this Plan in any year with respect to any 12-month Performance Period is $5,000,000. If the Performance Period is fewer than 12 months long, the maximum dollar value payable to anyone with respect to the Performance Period is $5,000,000, divided by 12, and multiplied by the number of full months in the Performance Period.

3.4. Committee Discretion to Determine Conditions. The Committee may at any time establish additional conditions and terms of payment of Bonuses (including but not limited to the achievement of additional financial, strategic or individual goals, which may be objective or subjective) as it may deem desirable in carrying out the purposes of the Plan and may take into account such other factors as it deems appropriate in administering any aspect of the Plan.

3.5. Adjustments. The Committee may, in its discretion, reduce the amount of a Bonus otherwise payable pursuant to this Plan, but may not exercise discretion to increase any such amount payable to a Covered Employee. The Committee shall specify the circumstances in which such Bonuses shall be paid or forfeited in the event of termination of Continuous Service by the Participant prior to the end of a Performance Period or settlement of the Bonus awards.

3.6. Bonus Pools. The Committee, in its discretion, may establish bonus pools, the amount of which may be determined with regard to formulas involving Business Criteria, from which Bonuses may be paid. If the Committee establishes a bonus pool, it shall determine a bonus percentage for each Participant for the Performance Period during which the bonus pool applies, which shall represent that Participant’s share of the Bonus Pool. The Committee may determine the bonus percentage for each Participant using the subjective and objective factors the Committee, in its sole discretion, deems appropriate. Bonus percentages shall be determined at such times as may be required to comply with Section 162(m) of the Code.

3.7. Termination of Continuous Service During Performance Period. Unless otherwise determined by the Committee or required by pursuant to any employment agreement between the Company or any Related Entity and any Participant or by applicable law, no Bonus shall be payable to an Executive whose Continuous Service terminates prior to the last day of the Performance Period for which the Bonus is otherwise payable.

3.8. Accounting Changes. If, after the Bonus Formulas are established for a Performance Period, a change occurs in the applicable accounting principles or practices, the amount of the Bonuses paid under this Plan for such Performance Period shall be determined without regard to such change.

3.9. Committee Certification. No Participant shall receive any payment under the Plan unless the Committee has certified, by resolution or other appropriate action in writing, that the Business Criteria and any other material terms previously established by the Committee or set forth in the Plan have been determined, that the amount of the Bonus has been determined, and that the Bonus for each Participant has been determined in accordance with the terms, conditions and limits of the Plan.

3.10. Time and Manner of Payment. Any Bonuses granted by the Committee under the Plan shall be paid as soon as practicable following the Committee’s determinations and the certification of the Committee’s findings. Any such payment shall be in cash or cash equivalents, subject to applicable withholding requirements. Notwithstanding the foregoing, the Committee, in its sole discretion, may make payment of any Bonus to a Participant in a number of annual installments determined by the Committee or at such time or times as the Committee determines will not result in the Company’s deduction for any such payment being reduced by operation of §162(m) of the Code.

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Section 4. Administration of the Plan

4.1. The Committee. The Plan shall be administered by the Committee.

4.2. Powers of the Committee. The Committee shall have the sole authority to select the Executives who are eligible to be Participants for any Performance Period and the Business Criteria and Bonus Formula that will be used to determine each Participant’s Bonus for the applicable Performance Period, and determine the amount of each Participant’s Bonus. Additionally, the Committee shall otherwise be responsible for the administration of the Plan, in accordance with its terms. The Committee shall have the authority to construe and interpret the Plan (except as otherwise provided herein) and any agreement or other document relating to any Bonus under the Plan, may adopt rules and regulations governing the administration of the Plan, and shall exercise all other duties and powers conferred on it by the Plan, or which are incidental or ancillary thereto.

4.3. Requisite Action. A majority (but not fewer than two) of the members of the Committee shall constitute a quorum. The vote of a majority of those present at a meeting at which a quorum is present or the unanimous written consent of the Committee shall constitute action by the Committee.

4.4. Express Authority to Change Terms and Conditions of Bonus. Without limiting the Committee’s authority under other provisions of the Plan, the Committee shall have the authority to accelerate a Bonus, and to waive restrictive conditions for a Bonus (including any forfeiture conditions), in such circumstances as the Committee deems appropriate.

4.5. Section 162(m) Conditions; Bifurcation of Plan. It is the intent of the Company that the Plan and Bonuses paid hereunder satisfy and be interpreted in a manner, that, in the case of Participants who are or may be Covered Employees subject to Section 162(m), satisfies any applicable requirements as performance-based compensation. Notwithstanding anything to the contrary in the Plan, the provisions of the Plan may at any time be bifurcated by the Board or the Committee in any manner so that certain provisions of the Plan or any Bonus intended or required in order to satisfy the applicable requirements of Section 162(m) are only applicable to persons whose compensation is subject to Section 162(m).

Section 5. General Provisions

5.1. No Right to Bonus or Continued Service. Neither the establishment of the Plan nor the provision for or payment of any amounts hereunder nor any action of the Company (including, for purposes of this Section 5.1, any predecessor or subsidiary), the Board of Directors of the Company or the Committee in respect of the Plan, shall be held or construed to confer upon any person any legal right to receive, or any interest in, a Bonus or any other benefit under the Plan, or any legal right to continued service with the Company and its Related Entities. The Company and the Related Entities expressly reserve any and all rights to discharge an Executive in its or their sole discretion, without liability of any person, entity or governing body under the Plan or otherwise, except to the extent otherwise provided in any written employment agreement between the Company or Related Entity and the Executive. Notwithstanding any other provision hereof, the Company shall have no obligation to pay any Bonus hereunder, unless the Committee otherwise expressly provides by written contract or other written commitment.

5.2. Discretion of Company, Board of Directors, and Committee. Any decision made or action taken by the Company or by the Board of Directors of the Company or by the Committee arising out of or in connection with the creation, amendment, construction, administration, interpretation and effect of the Plan shall be within the absolute discretion of such entity and shall be conclusive and binding upon all persons.

5.3. Absence of Liability. A member of the Board of Directors of the Company or a member of the Committee or any officer of the Company shall not be liable for any act or inaction hereunder, whether of commission or omission. The Company shall indemnify and hold harmless each member of the Committee and each other director or employee of the Company or its Related Entities and to whom any duty or power relating to the administration or interpretation of the Plan has been delegated, for any cost or expense, including attorneys’ fees, or liability arising out of or in connection with any action, omission, or determination relating to the Plan, unless such action, omission, or determination was taken or made in bad faith.

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5.4. No Funding of Plan. The Company shall not be required to fund or otherwise segregate any cash or any other assets which may at any time be paid to Participants under the Plan. The Plan shall constitute an “unfunded” plan of the Company. The Company shall not, by any provisions of the Plan, be deemed to be a trustee of any property, and any obligations of the Company to any Participant under the Plan shall be those of a debtor and any rights of any Participant or former Participant shall be limited to those of a general unsecured creditor.

5.5. Non-Transferability of Benefits and Interests. Except as expressly provided by the Committee, no benefit payable under the Plan shall be subject in any manner to anticipation, alienation, sale, transfer, assignment, pledge, encumbrance or charge, and any such attempted action shall be void and no such benefit shall be in any manner liable for or subject to debts, contracts, liabilities, engagements or torts of any Participant or former Participant. This Section 5.5 shall not apply to an assignment of a contingency or payment due after the death of the Executive to the deceased Executive’s legal representative or beneficiary.

5.6. Law to Govern. All questions pertaining to the construction, regulation, validity and effect of the provisions of the Plan shall be determined in accordance with the internal laws of the State of Florida.

5.7. Non-Exclusivity. The Plan does not limit the authority of the Company, the Board or the Committee, or any subsidiary of the Company, to grant awards or authorize any other compensation under any other plan or authority, including, without limitation, awards or other compensation based on the same Business Criteria used under the Plan. In addition, Executives not selected to participate in the Plan may participate in other plans of the Company.

Section 6. Effective Date, Amendments, Suspension or Termination of Plan

The Plan shall be effective as of the Effective Date, subject to its approval by the shareholders of the Company after the Effective Date. The Board of Directors or the Committee may from time to time amend, suspend or terminate in whole or in part, and if suspended or terminated, may reinstate, any or all of the provisions of the Plan. Notwithstanding the foregoing, no amendment may be effective without Board of Directors and/or shareholder approval if such approval is necessary to comply with the applicable rules under Section 162(m) of the Code or other applicable law. Termination of the Plan shall not affect any Bonuses due and outstanding on the date of termination and such Bonuses shall continue to be subject to the terms of the Plan notwithstanding its termination.

To the extent necessary to comply with the requirements under Section 162(m), the material terms of the Plan shall be submitted to the shareholders of the Company for re-approval at the annual meeting of shareholders that occurs in the 5^th year following the year in which the Plan was originally submitted to shareholders. Unless the shareholders re-approve the material terms of the Plan at such shareholders’ meeting, no Bonuses shall be paid under the Plan with respect to Performance Periods that began after such shareholders’ meeting, unless the Committee determines that such Bonuses shall not be intended to qualify under Section 162(m).

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