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EXHIBIT 10(z)
Liz Claiborne, Inc.
0000 Xxxxxxxx
Xxx Xxxx, XX 00000
September 26, 1996
Xx. Xxxxxx Xxxxxx
00 Xxxxxxxx Xxxx
Xxxxxxxxx, Xxxxxxxxxxx 00000
Dear Xxxxxx:
The undersigned Liz Claiborne, Inc. ("the Company") desires to
employ you in the capacity of President of the Company, and you desire to be so
employed, all subject to the terms and conditions set forth in this letter
agreement ("Agreement"). As used in this Agreement, the term the "Claiborne
Group" means and includes the Company and each of its subsidiaries and
affiliated companies and ventures from time to time.
Accordingly, in consideration of the mutual covenants hereinafter
set forth and intending to be legally bound, the Company and you hereby agree as
follows:
1. Employment; Term. The Company hereby employs you, and you hereby
accept such employment and agree to serve the Claiborne Group, upon the terms
and conditions hereinafter set forth, for a term commencing on your first day of
full time employment with the Company under this Agreement, which shall be as
soon as is practicable, but in any event within thirty days from the date first
written above ("your First Day"), and, unless sooner terminated as hereinafter
provided, expiring on September 30, 1999 (such term of employment being
hereinafter referred to as "your term of employment"). In the event that, at
March 31, 1999, you and the Company shall mutually expect and intend that your
employment with the Company will be extended beyond September 30, 1999, then you
and the Company shall thereupon enter into good faith negotiations with the aim
of extending your term of employment under this Agreement.
2. Position; Conduct.
(a) During your term of employment, you will hold the title
and office of, and serve in the position of, President of the Company, or such
equivalent or more senior title(s) and office(s) as the Board of Directors of
the Company (the "Board of
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Directors") may assign to you. In such capacities, the parties mutually intend
that you shall have overall particular responsibility for the operations
(including product development, sales and marketing management) of all of the
better women's apparel divisions of the Claiborne Group (specifically, Liz
Claiborne Casual, including LizSport, LizGolf, Lizwear and Liz & Co.; Liz
Claiborne Collection, including Liz Studio; Special Sizes, including Elisabeth
and Petites; Liz Claiborne Dresses, including Liz Claiborne Suits; and Liz
Claiborne Retail, including the operations of the Elisabeth, Liz Claiborne and
Claiborne (men's) stores) and the corporate merchandising function, and that the
executives in charge of such divisions and function shall report directly to
you. We further mutually intend that you will, over time, be assigned particular
responsibility for other Claiborne Group operating units as the Chief Executive
Officer of the Company (the "CEO") deems appropriate, with the ultimate goal of
your having general management (including P&L) responsibility for all of the
Company's operating divisions, including responsibility for product development,
sales and marketing. It is expected that additional operating unit assignments
will be made within approximately six months from your First Day, and that a
full transition of all general management responsibilities as described above
would be completed within two years from your First Day (although the parties
have mutually expressed the hope of accelerating this timeline). In addition,
you shall be a member of the senior-most management policy-making group of the
Company as constituted from time to time. You shall report to the CEO and shall
perform such specific duties and services of a senior executive nature
(including service as an officer, director or equivalent position of any
subsidiary, affiliated company or venture of the Claiborne Group, without
additional compensation) as shall be reasonably requested consistent with your
position. Your performance shall be reviewed periodically, but no less
frequently than annually, in accordance with the Company's policies applicable
to its senior most executives.
(b) During your term of employment, you shall (i) devote your
full business time and attention and best efforts to the business and affairs of
the Claiborne Group and shall faithfully and diligently perform, to the best of
your ability, all of your duties and responsibilities; (ii) abide by all
applicable policies of the Company from time to time in effect; and (iii)
conduct yourself in such manner as will tend to preserve and enhance the
reputation and goodwill of the Claiborne Group. Nothing in this paragraph shall
preclude you from devoting reasonable time and attention to (A) serving, with
the prior approval of the CEO (which shall not be unreasonably withheld), as
director, trustee or member of a committee of any organization involving no
conflict of interest with the interests of the Claiborne Group, (B) engaging in
charitable and community activities, and (C) managing your personal investments
and affairs; provided that such activities do not, individually or
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collectively, interfere with the performance of your duties and responsibilities
as contemplated under this Agreement.
3. Salary; Bonus; Equity Participation; Additional Compensation;
Perquisites and Benefits.
(a) During your term of employment, the Company will pay you a
base salary at an annual rate of not less than Six Hundred Eighty Thousand
Dollars ($680,000), subject to annual review by the CEO and the Compensation
Committee of the Company's Board of Directors (the "Compensation Committee")
and, in the discretion of such Committee, increase (but not decrease) from time
to time. Such salary shall be paid in installments in accordance with the
Company's standard practice, which is currently bi-weekly.
(b) (i) You will be eligible to earn an annual bonus each
year, commencing with the Company's 1997 fiscal year, as a participant in
accordance with and subject to the terms and conditions of, the Company's
Section 162(m) Cash Bonus Plan (the "Section 162(m) Plan"), a copy of which Plan
has been provided to you. Pursuant to the Section 162(m) Plan, you will be
eligible to earn an annual bonus each year (with your target bonus expected to
be in the range of 65-75% of your salary in effect on the first day of each
fiscal year, and which, where particularly distinguished results are generated,
could range upwards of 150% of such salary), it being expressly understood that
the actual target level set each year shall be at the discretion of the
Compensation Committee and the amount of any bonus payable shall be determined
by the Compensation Committee based upon actual performance as measured against
goals set annually by such Committee.
(ii) In lieu of the foregoing, for the Company's 1996
fiscal year, you shall be entitled to a bonus of not less than Six Hundred
Eighty Thousand Dollars ($680,000); such 1996 bonus shall be paid to you on such
date in 1997 (typically, in March) on which the Company makes its bonus payments
to the other senior executives of the Company, provided, that on your First Day,
or as soon as is practicable thereafter but in any event within two weeks of
your First Day, the Company will pay to you Three Hundred Fifty Thousand Dollars
($350,000) as an advance to be credited against the amount of such 1996 bonus.
(c) During your term of employment, you will participate, on
the same basis as the other most highly compensated senior executives of the
Company, in accordance with and subject to the respective terms and conditions
thereof as to eligibility and otherwise, in (i) the Company's existing Profit-
Sharing Retirement Plan, 401(k) Savings Plan and Supplemental Executive
Retirement Plan relating to the Profit-Sharing and Savings Plans, as well as the
Company's medical, dental, long-
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term disability and life insurance programs (subject to insurability at standard
rates) and (ii) such other Company benefit programs as are from time to time
made generally available to the other most highly compensated senior executives
of the Company. You understand that you will become eligible to participate in
certain of the Company's plans and programs only after the expiration of certain
periods following your commencement of employment; for example, participation in
the Company's Profit Sharing Retirement Plan and 401(k) Savings Plan require
completion of one year's service.
(d) You shall be eligible for stock option grants from time to
time pursuant to the Company's 1992 Stock Incentive Plan (the "Company Stock
Plan") in accordance with the terms and conditions thereof. Pursuant to such
Plan, the Compensation Committee has granted to you, effective upon your First
Day, options covering 20,000 shares of Company common stock ("Common Stock"), as
set forth in the Option Agreement between the Company and you attached as Annex
A, subject to the terms and conditions set forth therein. The CEO shall
recommend to the Compensation Committee that you be granted additional options
covering 12,000 shares of Common Stock, on such date during late 1996 or early
1997 on which the Compensation Committee makes its general annual granting of
options to the senior executives of the Company. The CEO shall also recommend to
the Compensation Committee that you be granted, in respect of each subsequent
year of your term of employment (commencing with the granting made to senior
Company executives around the close of the Company's 1997 fiscal year),
additional options in an amount commensurate with your position and achievements
and in line with the grants made to the other senior-most executives of the
Company. Although the present expectation is that such recommendation with
respect to future option grants will cover between 15,000 and 20,000 shares of
Common Stock annually, you understand and agree that the Compensation
Committee's award of options each year is made in its discretion and that no
assurances can be given in regard to the level of any future option grant. All
such options shall be subject to such vesting schedule and other terms as are
applicable to options generally granted to other senior Company executives.
(e) The Compensation Committee has granted to you under the
Company Stock Plan, in consideration of your entry into this Agreement and
effective as of your First Day, (i) 5,000 issued and outstanding shares of
Common Stock held in the Company's treasury, and (ii) 10,000 shares of
restricted stock as set forth in the Restricted Stock Agreement between the
Company and you attached as Annex B, subject to the terms and conditions set
forth therein. The Company and you acknowledge as a common goal that you will,
over time, accumulate a personal holding of unrestricted, unencumbered shares of
Common Stock having a market value of at least $1 million, it being understood
and agreed that such goal is a long-term goal and need not be met during your
initial term of employment hereunder and that your failure to
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meet such goal shall not give rise to any right of the Company to terminate you
for Cause (as defined below) hereunder. You agree that in working toward such
goal, you will not (except for the withholding of shares to pay taxes in
accordance with the Restricted Stock Agreement) sell, transfer, give, pledge,
deposit, alienate, or otherwise encumber or dispose of (as used in this
paragraph, collectively, "transfer") any shares of Common Stock (or any
securities issued as a dividend or distribution on such shares, or in respect of
such shares in connection with a recombination or recapitalization of the Common
Stock) issued to you pursuant to the Restricted Stock Agreement if, following
such transfer, you would not be the sole beneficial owner of at least $1 million
worth of Common Stock as aforesaid.
(f) As you are aware, the Compensation Committee has
instituted a so-called "Career Share" program for selected senior executives
under the Company Stock Plan. Although you will not be a participant in the
current program, should a similar program be instituted in the future, you shall
be entitled to participate therein on a basis competitive with similarly
situated senior executives of the Company.
(g) The Company will reimburse you, in accordance with its
standard policies from time to time in effect, for such reasonable and necessary
receipted out-of-pocket business expenses as may be incurred by you during your
term of employment in the performance of your duties and responsibilities under
this Agreement. You shall be entitled to a monthly car allowance of $850.
(h) You shall be entitled to a vacation period to be credited
and taken in accordance with Claiborne Group policy from time to time in effect
for similarly situated senior executives, which in any event shall not be less
than a total of four weeks per annum.
(i) You shall be entitled to an annual clothing allowance of
$4,000, which shall be applied by you to the purchase of Company products at
discounted prices in accordance with the Company's standard policies with
respect thereto from time to time in effect.
(j) You shall be entitled, if you so desire, to receive
financial counseling services provided by a third-party group which has been
retained by the Company, on such terms as are made available to certain other
senior Company executives similarly situated.
(k) Your rights under this Agreement with respect to the
Company's Section 162(m) Cash Bonus Plan, Profit-Sharing Retirement Plan, 401(k)
Savings Plan, Supplemental Executive Retirement Plan, 1992 Stock Incentive Plan,
medical, dental, long-term disability and life insurance programs and other
programs, perquisites and policies shall not preclude the Claiborne Group
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from modifying or terminating any such program, perquisite or policy, subject to
your right, in accordance with the terms of this Agreement, to participate in or
be eligible for such program, perquisite or policy as so modified or any
replacement thereof.
4. Termination.
(a) Your term of employment under this Agreement will
terminate at the election of the Company for Cause immediately upon notice of
termination, after expiration of any applicable cure period provided for in
subparagraphs (i) through (v) below, from the Company to you. As used herein,
the term "Cause" means:
(i) Your willful or intentional failure or refusal to
perform or observe any of your material duties,
responsibilities or obligations covered by this
Agreement, if such breach is not cured, if curable,
within 30 days after notice thereof to you by the
Company;
(ii) Any willful or intentional act or failure to act
involving fraud, theft, embezzlement, dishonesty, moral
turpitude, or material misrepresentation (collectively,
"Fraud") affecting the Claiborne Group or any customer,
supplier or employee of the Claiborne Group, if such
breach is not cured, if curable, within five days after
notice thereof to you by the Company;
(iii) Conviction of (or a plea of nolo contendere to) an
offense which is a felony in the jurisdiction involved;
(iv) Any willful or intentional act which would reasonably be
expected to materially injure the reputation, business
or business relationships of the Claiborne Group, or
your business reputation or relationships, if such
breach is not cured, if curable, within 30 days after
notice thereof to you by the Company; or
(v) Your willful or intentional failure to comply with any
reasonable request or direction of the Board of
Directors or the CEO of the Company not contrary to the
provisions of this Agreement, if such breach is not
cured, if curable, within 30 days after notice thereof
to you by the Company.
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(b) For purposes of this Section 4, no act, or failure to act,
on your part shall be deemed "willful" or "intentional" if reasonable under the
circumstances and done, or omitted to be done, by you with reasonable belief
that your action or omission was in the best interests of the Claiborne Group.
(c) In the event that the events or circumstances underlying
the Company's right to terminate your employment for Cause hereunder are based
on an allegation of willfull or intentional misconduct, or in the event the
Company determines it necessary or appropriate under the circumstances, the
Company shall provide you with a prompt hearing before the Board of Directors or
a duly constituted committee thereof (at which you may be accompanied by
counsel) prior to any termination for Cause hereunder, it being understood and
agreed that notice to you of any such hearing shall be sufficient if it provides
you with at least 48 hours' prior notice of such hearing time and place, and
that your failure to appear at such hearing at the appointed time and place
(except upon a clear showing medical or similar good cause) shall constitute a
waiver of your right to any such hearing.
(d) Your term of employment will terminate forthwith upon your
death or, at the Claiborne Group's option, upon your Disability. As used herein
the term "Disability" means your inability to perform your duties and
responsibilities as contemplated under this Agreement for a period of more than
180 consecutive days, or for a period aggregating more than 240 days, whether or
not continuous, during any 360-day period, due to physical or mental incapacity
or impairment. A determination of Disability will be made by a physician
satisfactory to both you and the Company; provided that if you and the Company
cannot agree as to a physician, then each will select a physician and these two
together will select a third physician, whose determination as to Disability
will be binding on you and the Company. You, your legal representative or any
adult member of your immediate family shall have the right to present to the
Company and such physician such information and arguments on your behalf as you
or they deem appropriate, including the opinion of your personal physician.
Should you become incapacitated, your employment shall continue and all base
salary and other compensation otherwise due to you hereunder shall be continued
through the date on which your employment is terminated for Disability.
(e) Your term of employment will terminate if you resign
without Good Reason (as hereinafter defined), provided that you shall in all
events give the Company not less than sixty (60) days' prior written notice
thereof. You understand and agree that once you give the Company notice of your
intention to so terminate your employment hereunder, then notwithstanding any
provision to the contrary in this Agreement, the Company may (i) terminate this
Agreement at any time prior to the expiration of
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such notice period, and upon such termination the Company will pay to you the
amount provided in paragraph 5(a) below (with the effect provided in paragraph
5(e) below), and (ii) at any time prior to such termination, reassign any or all
of your title(s), duties and/or responsibilities hereunder to such other
person(s) as it may in its discretion determine, and you shall no longer have
any right to terminate your employment hereunder for Good Reason.
5. Severance.
(a) In the event that your term of employment is terminated
for Cause, or if you resign without Good Reason, the Company will pay to you an
amount equal to your accrued but unpaid base salary through the date of such
termination and, if such termination occurs on or prior to December 31, 1997,
you shall repay to the Company one half of any amount received by you pursuant
to Section 3(b)(ii).
(b) In the event that your term of employment is terminated
(other than upon your death or Disability) during your term of employment (i) by
the Company other than for Cause or (ii) by you for Good Reason, then the
Company shall pay to you an amount equal to your accrued but unpaid base salary
through the date of such termination and, if such termination occurs on or prior
to December 31, 1997, you shall repay to the Company one half of any amount
received by you pursuant to Section 3(b)(ii). In addition, so long as you shall
not have breached your obligations to the Claiborne Group under Sections 6 and 7
hereof, or your representation under Section 11 hereof (without limitation to
any other remedy available to the Company), the Company shall pay to you, as and
for a severance payment, (1) upon receipt from you of your duly executed and
delivered general release of the Company and the other entities then comprising
the Claiborne Group, and their respective officers, directors, agents and
representatives, in form and substance reasonably satisfactory to the Company,
within 20 days after being provided with a form thereof ("your General
Release"),(A) in substantially equal monthly installments over the period from
the date of such termination until August 30, 1999, an aggregate amount equal to
the greater of (i) what your base salary would have been for said period (using
for such purpose the base salary rate in effect on the date of termination) or
(ii) $1 million and (B) the amount of your out-of-pocket costs for your cost of
continued medical coverage through August 30, 1999 pursuant to Section 4980B of
the Internal Revenue Code of 1986, as amended; or (2) in the event that you do
not deliver your General Release as aforesaid, a lump sum payment of $170,000.
For the purpose of this Agreement, termination of employment hereunder by you
for "Good Reason" shall mean your termination of your employment upon notice to
the Company following assignment to you of duties inconsistent with your
position as described in Section 2(a) or your being removed from such position,
in either case without your consent, which termination shall be effective 30
days after prompt notice of
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such circumstances by you to the Company, if such circumstances have not been
cured prior to such date.
(c) In the event that your term of employment is terminated
(i) on account of your death or Disability, or (ii) upon the expiration of this
Agreement on September 30, 1999 in accordance with its terms without renewal,
and you then immediately leave the employ of the Company, the Company will pay
to you (or if such termination is on account of Death, your estate) an amount
equal to your accrued but unpaid base salary through the date of such
termination, plus a portion of the annual bonus which you would have earned
under the provisions of paragraph 3(b) hereof, prorated through the date of such
termination.
(d) In the event that your term of employment is terminated
for any reason, the Company's payment of salary as provided in the previous
paragraphs of this Section 5 (together with reimbursement of your reasonable and
necessary out-of-pocket business expenses incurred through such date in
accordance with the Company's standard policy in effect at such time) shall
constitute complete satisfaction of all obligations of the Company to you
pursuant to the express terms of this Agreement. Upon any such termination, you
shall cease to be an employee of the Company for all purposes and (except as
otherwise expressly set forth in paragraph 5(b)), the Company shall have no
obligation to provide you with any employee benefits or perquisites hereunder.
(e) Your rights set out in this Section 5 shall constitute
your sole and exclusive rights and remedies as a result of your actual or
constructive termination of employment without Cause, and you hereby waive any
such other claims against the Claiborne Group, its officers, directors, agents
and representatives, in such event; it being agreed that the foregoing
provisions of this paragraph 5(e) shall not apply in the case of a for Cause
termination of your employment hereunder.
6. Confidential Information.
(a) The Claiborne Group owns and has developed and compiled,
and will own, develop and compile, certain proprietary techniques and
confidential information which have great value to its business (referred to in
this Agreement, collectively, as "Confidential Information"). Confidential
Information includes not only information disclosed by the Claiborne Group to
you, but also information developed or learned by you during the course or as a
result of employment hereunder, which information you acknowledge is and shall
be the sole and exclusive property of the Claiborne Group. Confidential
Information includes all proprietary information that has or could have
commercial value or other utility in the business in which the Claiborne Group
is engaged or contemplates engaging, and all proprietary information of which
the unauthorized disclosure could be detrimental to the
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interests of the Claiborne Group, whether or not such information is
specifically labelled as Confidential Information by the Claiborne Group. By way
of example and without limitation, Confidential Information includes any and all
information developed, obtained or owned by the Claiborne Group concerning trade
secrets, techniques, know-how (including designs, plans, procedures, processes
and research records), software, computer programs, innovations, discoveries,
improvements, research, development, test results, reports, specifications,
data, formats, marketing data and plans, business plans, strategies, forecasts,
unpublished financial information, orders, agreements and other forms of
documents, price and cost information, merchandising opportunities, expansion
plans, designs, store plans, budgets, projections, customer, supplier and
subcontractor identities, characteristics and agreements, and salary, staffing
and employment information. Notwithstanding the foregoing, Confidential
Information shall not in any event include (A) your personal knowledge and
know-how relating to merchandising and business techniques which you have
developed over your career in the apparel business and of which you were aware
on your First Day, or (B) information which (i) was generally known or generally
available to the public prior to its disclosure to you; (ii) becomes generally
known or generally available to the public subsequent to disclosure to you
through no wrongful act of any person or (iii) which you are required to
disclose by applicable law or regulation (provided that you provide the Company
with prior notice of the contemplated disclosure and reasonably cooperate with
the Company at the Company's expense in seeking a protective order or other
appropriate protection of such information).
(b) You acknowledge and agree that in the performance of your
duties hereunder the Claiborne Group will from time to time disclose to you and
entrust you with Confidential Information. You also acknowledge and agree that
the unauthorized disclosure of Confidential Information, among other things, may
be prejudicial to the Claiborne Group's interests, an invasion of privacy and an
improper disclosure of trade secrets. You agree that you shall not, directly or
indirectly, use, make available, sell, disclose or otherwise communicate to any
corporation, partnership, individual or other third party, other than in the
course of your assigned duties and for the benefit of the Claiborne Group, any
Confidential Information, either during your term of employment or thereafter.
The Company acknowledges that your spouse is a senior apparel executive whose
current affiliation is with a business that competes with certain of the
Company's businesses.
(c) In the event your employment with the Company ceases for
any reason, you will not remove from the Claiborne Group's premises without its
prior written consent any records, files, drawings, documents, equipment,
materials or writings received from, created for or belonging to the Claiborne
Group, including those which relate to or contain Confidential Informa-
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tion, or any copies thereof. Upon request or when your employment with the
Company terminates, you will immediately deliver the same to the Company.
(d) During your term of employment, you will disclose to the
Company all designs, inventions and business strategies or plans developed by
you during such period which relate directly or indirectly to the business of
the Claiborne Group, including without limitation any process, operation,
product or improvement. You agree that all of the foregoing are and will be the
sole and exclusive property of the Claiborne Group and that you will at the
Company's request and cost do whatever is necessary to secure the rights
thereto, by patent, copyright or otherwise, to the Claiborne Group.
(e) You and the Company agree that you shall not disclose to
the Claiborne Group or use for the Claiborne Group's benefit, any information
which may constitute trade secrets or confidential information of third parties,
to the extent you have any such secrets or information.
(f) The provisions of this Section 6 shall survive the
termination of this Agreement and your term of employment.
7. Restrictive Covenants.
(a) You acknowledge and agree (i) that the services to be
rendered by you for the Claiborne Group are of a special, unique, extraordinary
and personal character, (ii) that you have and will continue to develop a
personal acquaintance and relationship with one or more of the Claiborne Group's
customers, employees, suppliers and independent contractors, which may
constitute the Claiborne Group's primary or only contact with such customers,
employees, suppliers and independent contractors, and (iii) that you will be
uniquely identified by customers, employees, suppliers, independent contractors
and retail consumers with the Claiborne Group's products. Consequently, you
agree that it is fair, reasonable and necessary for the protection of the
business, operations, assets and reputation of the Claiborne Group that you make
the covenants contained in this Section 7.
(b) You agree that, during your term of employment and for a
period of 3 months thereafter, you shall not, directly or indirectly, own,
manage, operate, join, control, participate in, invest in or otherwise be
connected or associated with, in any manner, including as an officer, director,
employee, partner, consultant, advisor, proprietor, trustee or investor, any
Competing Business in the United States; provided however that nothing contained
in this Section 7(b) shall prevent you from owning less than 2% of the voting
stock of a publicly held corporation for investment purposes; and provided
further that the foregoing 3-month non-compete covenant shall not apply in the
case where you leave the employ of the Company immediately upon
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the expiration of this Agreement on September 30, 1999 in accordance with its
terms without renewal. For purposes of this Section 9(b), the term "Competing
Business" shall mean those businesses engaged in the design, manufacture,
distribution or marketing of apparel or related products bearing one or more of
the competitive trademarks/brands listed on Schedule A hereto.
(c) You agree that, during your term of employment and for a
period of 12 months thereafter, you shall not, directly or indirectly,
(i) seek to employ or engage, or assist anyone else to seek to
employ or engage, any individual who at any time during the year
preceding the termination of your employment hereunder (A) was in
the employ of the Claiborne Group or (B) was engaged or utilized as
an independent contractor providing material manufacturing,
marketing, sales, financial or management consulting services in
connection with the business of the Claiborne Group and with whom
you had regular contact, provided that the restriction set out in
clause (B) shall not apply to any individual who was at any time
during the two-year period immediately preceding the date of
termination of employment, or is on such date of termination,
engaged by or utilized by your new employer without prior
recommendation by you; or
(ii) interfere in the relationship of the Claiborne Group with
any of its suppliers or independent contractors, whether or not the
relationship between the Claiborne Group and such supplier or
independent contractor was originally established in whole or in
part by your efforts; provided that you shall not be deemed to have
breached the restrictions set out in this subparagraph 7(c)(ii) by
virtue of the fact that you are employed during such 12 month period
by a competitor of the Company and in the discharge of your duties
for such new employer you engage in the normal and regular types of
activities which by their nature involve competing with companies,
including the Company, within the apparel and related products
marketplace.
As used in this Section 7, the terms "customer" and "supplier" shall mean and
include any individual, proprietorship, partnership, corporation, joint venture,
trust or any other form of business entity which is then a customer or supplier,
as the case may be, of the Claiborne Group or which was such a customer or
supplier at any time during the one-year period immediately preceding the date
of termination of employment.
(d) You agree that, during your term of employment and for a
period of 18 months thereafter, you will take no
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action which is intended, or would reasonably be expected, to harm the Claiborne
Group or its reputation or which would reasonably be expected to lead to
unwanted or unfavorable publicity to the Claiborne Group.
(e) The provisions of this Section 7 shall survive the
termination of this Agreement and your term of employment.
8. Specific Performance. You acknowledge that the Company would
sustain irreparable injury in the event of a violation by you of any of the
provisions of Sections 6 or 7 hereof, and by reason thereof you consent and
agree that if you violate any of the provisions of said Sections 6 or 7, in
addition to any other remedies available, the Company shall be entitled to a
decree specifically enforcing such provisions, and shall be entitled to a
temporary and permanent injunction restraining you from committing or continuing
any such violation, from any arbitrator duly appointed in accordance with the
terms of this Agreement or any court of competent jurisdiction, without the
necessity of proving actual damages, posting any bond, or seeking arbitration in
any forum.
9. Life Insurance. You agree that the Claiborne Group will have the
right to obtain and maintain life insurance on your life, at its expense, and
for its benefit; provided that the Company shall not obtain any such life
insurance if you are advised by insurance professionals of national repute that,
in their opinion, in doing so, the Company would unreasonably restrict the
amount of life insurance which you or your family beneficiaries could personally
maintain on your life. Subject to the foregoing, you agree to cooperate fully
with the Claiborne Group in obtaining such life insurance, to sign any necessary
consents, applications and other related forms or documents and to take any
required medical examinations.
10. Withholding. The parties understand and agree that all
payments to be made by the Company pursuant to this Agreement shall be subject
to all applicable tax withholding obligations of the Company.
11. No Conflict. You represent and warrant that you are not party to
or subject to any agreement, contract, understanding, covenant, judgment or
decree or under any obligation, contractual or otherwise, in any way restricting
or adversely affecting your ability to enter into this Agreement, perform your
obligations under this Agreement, or otherwise act for the Claiborne Group in
all of the respects contemplated hereby. Based upon the foregoing, the Company
agrees to reimburse you for your reasonable legal fees and expenses incurred
during your term of employment in defending any litigation which may be brought
by your former employer alleging that your employment by the Company constitutes
a breach of your employment agreement with such former employer (your "Prior
Agreement"). Contingent upon the
13
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truth and accuracy of the foregoing representation and warranty and upon your
compliance with your covenant set forth in Section 6(e) hereof, the Company
agrees to hold you harmless against damages required to be paid by you by reason
of a finding that your employment by the Company constitutes a breach of your
Prior Agreement.
12. Notices. All notices required or permitted hereunder will be
given in writing by personal delivery; by confirmed facsimile transmission; by
express delivery via any reputable express courier service; or by registered or
certified mail, return receipt requested, postage prepaid, in each case
addressed to the parties at the respective addresses set forth in Exhibit A or
at such other address as may be designated in writing by either party to the
other in the manner set forth herein. Notices delivered personally or by courier
as aforesaid, will be deemed effectively given on the date of delivery. Notices
delivered by confirmed facsimile transmission will be deemed effectively given
one day after the date of delivery. Notices delivered by mail will be deemed
effectively given upon the fifth calendar day subsequent to the postmark date
thereof.
13. Miscellaneous.
(a) The failure of either party at any time to require
performance by the other party of any provision hereunder will in no way affect
the right of that party thereafter to enforce the same, nor will it affect any
other party's right to enforce the same, or to enforce any of the other
provisions in this Agreement; nor will the waiver by either party of the breach
of any provision hereof be taken or held to be a waiver of any prior or
subsequent breach of such provision or as a waiver of the provision itself.
(b) This Agreement is a personal contract calling for the
provision of unique services by you, and your rights and obligations hereunder
may not be sold, transferred, assigned, pledged or hypothecated by you. In the
event of any attempted assignment or transfer of rights hereunder by you
contrary to the provisions hereof (other than as may be required by law), the
Company will have no further liability for payments hereunder. The rights and
obligations of the Company hereunder will be binding upon and run in favor of
the successors and assigns of the Company.
(c) Each of the covenants and agreements set forth in this
Agreement are separate and independent covenants, each of which has been
separately bargained for and the parties hereto intend that the provisions of
each such covenant shall be enforced to the fullest extent permissible. Should
the whole or any part or provision of any such separate covenant be held or
declared invalid, such invalidity shall not in any way affect the validity of
any other such covenant or of any part or provision of the same covenant not
also held or declared invalid. If any
14
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covenant shall be found to be invalid but would be valid if some part thereof
were deleted or the period or area of application reduced, then such covenant
shall apply with such minimum modification as may be necessary to make it valid
and effective.
(d) This Agreement has been made and will be governed in all
respects by the laws of the State of New York applicable to contracts made and
to be wholly performed within such state and the parties hereby irrevocably
consent to the jurisdiction of the courts of the State of New York and federal
courts located therein for the purpose of enforcing this Agreement.
(e) In the event that (i) you make a claim against the Company
under this Agreement, (ii) the Company disputes such claim, and (iii) you
prevail with respect to such disputed claim, then the Company shall reimburse
you for your reasonable legal fees and expenses incurred by you in pursuing such
disputed claim.
(f) This Agreement (which includes the Exhibits and Annexes
hereto) sets forth the entire understanding between the parties as to the
subject matter of this Agreement and merges and supersedes all prior agreements,
commitments, representations, writings and discussions between the parties with
respect to that subject matter. This Agreement may be terminated, altered,
modified or changed only by a written instrument signed by both parties hereto.
(g) The Section headings contained herein are for purposes of
convenience only and are not intended to define or list the contents of the
Sections .
(h) The provisions of this Agreement which by their terms call
for performance subsequent to termination of your term of employment hereunder,
or of this Agreement, shall so survive such termination.
Please confirm your agreement with the foregoing by signing and
returning the enclosed copy of this letter, following
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16
which this will be a legally binding agreement between us as of the date first
written above.
Very truly yours,
Liz Claiborne, Inc.
By:/s/Xxxx X. Xxxxxxx
---------------------------------------
Name: Xxxx X. Xxxxxxx
Title: Chairman of the Board/President/
Chief Executive Officer
Accepted and Agreed:
/s/ Xxxxxx X. Xxxxxx
---------------------
Xx. Xxxxxx Xxxxxx
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EXHIBIT A
to Employment Agreement,
dated as of September , 1996
between
Liz Claiborne, Inc.
and
Xx. Xxxxxx Xxxxxx
Addresses for Notice
If to Liz Claiborne, Inc.:
Liz Claiborne, Inc.
0000 Xxxxxxxx
Xxx Xxxx, XX 00000
Attention: Chairman
Facsimile: (000) 000-0000
Confirm: (000) 000-0000
- and -
Liz Claiborne, Inc.
Xxx Xxxxxxxxx Xxxxxx
Xxxxx Xxxxxx, XX 00000
Attention: General Counsel
Facsimile: (000) 000-0000
Confirm: (000) 000-0000
If to You:
To your address set forth on the first page of this Agreement
Facsimile:
Confirm:
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18
SCHEDULE A
to Employment Agreement,
dated as of September , 1996
between
Liz Claiborne, Inc.
and
Xx. Xxxxxx Xxxxxx
The competitive trademarks/brands referred to in the definition of
the term "Competing Business" in Section 7(b) shall be the following:
Xxxxx Xxxxx
Xxxxxxx
Xxxxx New York
Xxxxx Lauren
Xxxxx Xxxxxxxx
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19
Annex A: Stock Option Agreement
Annex B: Restricted Stock Agreement
19
20
9496
19200/0001 ANNEX A
LIZ CLAIBORNE, INC.
1992 STOCK INCENTIVE PLAN
NONQUALIFIED STOCK OPTION AGREEMENT
NONQUALIFIED STOCK OPTION AGREEMENT (the "Agreement"), dated as of
September , 1996, between LIZ CLAIBORNE, INC., a Delaware corporation (the
"Company"), and Xxxxxx Xxxxxx, an employee of the Company (the "Optionee").
The Compensation Committee of the Board of Directors of the Company has
determined that the objectives of the Company's 1992 Stock Incentive Plan (the
"Plan") will be furthered by granting to the Optionee a nonqualified stock
option pursuant to the Plan.
Notwithstanding any provision hereof, this Agreement shall become effective
only as, when and if the Grantee shall have executed and delivered to the
Company both (i) this Agreement, and (ii) the Employment Agreement dated as of
the date hereof between the Company and the Optionee.
In consideration of the foregoing and of the mutual undertakings set forth
in this Agreement, the Company and the Optionee agree as follows:
21
SECTION 1. Grant of Option.
The Company hereby grants to the Optionee a nonqualified stock option (the
"Option") to purchase 20,000 shares of common stock of the Company ("Common
Stock") at a purchase price of $XX.YY per share, equal to the Fair Market Value
thereof (as defined under the Plan) on the date hereof. It is intended that the
Option shall not qualify as an "incentive stock option" as defined in section
422 of the Internal Revenue Code of 1986, as amended to date.
SECTION 2. Exercisability.
Subject to the further terms of this Agreement, the Option shall become
exercisable with respect to twenty five percent (25%) of the shares of Common
Stock initially subject thereto on the first anniversary of the date of this
Agreement and with respect to an additional twenty five percent (25%) and fifty
percent (50%) of such shares on the second and third anniversaries,
respectively, of the date of this Agreement, provided that the Optionee is then
an employee of the Company. Unless earlier terminated pursuant to the provisions
of the Plan, the unexercised portion of the Option shall expire and cease to be
exercisable at 12:01 am on the tenth anniversary of the date of this Agreement.
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SECTION 3. Method of Exercise.
The Option or any part thereof may be exercised only by the giving of
written notice to the Company on such form and in such manner as the Committee
shall prescribe. Such written notice must be accompanied by payment of the full
purchase price for the number of shares with respect to which the Option is
being exercised. Such payment may be made by one or a combination of the
following methods: (a) by a check acceptable to the Company; (b) with the
consent of the Committee, by delivery of unrestricted shares of Common Stock
having a Fair Market Value on the exercise date equal to part or all of the
purchase price; or (c) by such other method as the Committee may authorize. The
date of exercise of the Option shall be the date on which written notice of
exercise is hand delivered to the Company, during normal business hours, at its
address as provided in Section 6 of this Agreement, or, if mailed, the date on
which it is postmarked, provided such notice is actually received.
SECTION 4. Termination of Employment; Death.
4.1 Upon termination of the Optionee's employment for any reason, the
Option shall terminate and expire except as provided in Section 4.2 or 4.3 of
this Agreement.
4.2 If the Optionee's employment terminates for any reason other than
death, dismissal for "cause" as defined in the Optionee's employment agreement
with the Company or resignation
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without the Company's prior consent, the Option shall be exercisable but only to
the extent it was exercisable at the time of such termination and only until the
earlier of the expiration date of the Option, determined pursuant to Section 2
of this Agreement, or the expiration of either (a) three months following
employment termination or, (b) in the case of Retirement (as defined) there
years following the date of Retirement. "Retirement" shall mean the Optionee
ceasing to be employed by the Company and any of its affiliates on or after (a)
Optionee's 65th birthday, (b) the date on which the Optionee has attained age 60
and completed at least six years of Vesting Services (as defined in and
determined under the Liz Claiborne Profit Sharing Plan, as the same has been and
may from time to time be amended), or, (c) if approved by the Committee, the
date the Optionee has completed at least 20 years of Vesting Service.
4.3 If the Optionee dies while employed by the Company or after employment
terminates but during a period in which the Option is exercisable pursuant to
Section 4.2 of this Agreement, the Option shall be exercisable but only to the
extent it was exercisable at the time of death and only until the earlier of the
expiration date of the Option, determined pursuant to Section 2 of this
Agreement, or the first anniversary of the date of the Optionee's death.
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SECTION 5. Plan Provisions to Prevail.
This Agreement is subject to all of the terms and provisions of the Plan.
Without limiting the generality of the foregoing, by entering into this
Agreement the Optionee agrees that no member of the Committee shall be liable
for any action or determination made in good faith with respect to the Plan or
any award thereunder or this Agreement. In the event that there is any
inconsistency between the provisions of this Agreement and of the Plan, the
provisions of the Plan shall govern.
SECTION 6. Notices.
Any notice to be given to the Company hereunder shall be in writing and
shall be addressed to the Senior Vice President-Finance or Vice
President-Financial Operations of the Company at Liz Claiborne, Inc., Xxx
Xxxxxxxxx Xxxxxx, Xxxxx Xxxxxx, X.X. 00000, or at such other address as the
Company may hereafter designate to the Optionee by notice as provided in this
Section 6. Any notice to be given to the Optionee hereunder shall be addressed
to the Optionee at the address set forth beneath his or her signature hereto, or
at such other address as the Optionee may hereafter designate to the Company by
notice as provided herein. A notice shall be deemed to have been duly given when
personally delivered or mailed by registered or certified mail to the party
entitled to receive it.
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SECTION 7. Successors and Assigns.
This Agreement shall be binding upon and inure to the benefit of the
parties hereto and the successors and assigns of the Company and, to the extent
consistent with Section 4.1 of this Agreement and with the Plan, the heirs and
personal representatives of the Optionee.
SECTION 8. Governing Law.
This Agreement shall be interpreted, construed and administered in
accordance with the laws of the State of Delaware as they apply to contracts
made, delivered and to be wholly performed in the State of Delaware.
IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of
the date and year first written above.
LIZ CLAIBORNE, INC.
ATTEST: By:
---------------------------- ------------------------------------
Title:
Xxxxxx Xxxxxx, Optionee
---------------------------------------
Address:
-------------------------------
---------------------------------------
---------------------------------------
Social Security Number
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9496
19200/0001 ANNEX B
LIZ CLAIBORNE, INC.
1992 STOCK INCENTIVE PLAN
RESTRICTED STOCK AGREEMENT
RESTRICTED STOCK AGREEMENT (the "Agreement"), dated as of September ,
1996, between LIZ CLAIBORNE, INC., a Delaware corporation (the "Company"), and
Xxxxxx Xxxxxx, an employee of the Company (the "Grantee").
The Compensation Committee of the Board of Directors of the Company (the
"Committee") has determined that the objectives of the Company's 1992 Stock
Incentive Plan (the "Plan") will be furthered by the grant to the Grantee of
10,000 issued and outstanding shares of Common Stock of the Company currently
held by the Company, subject to the restrictions set out in this Agreement (the
"Restricted Shares").
Notwithstanding any provision hereof, this Agreement shall become effective
only as, when and if the Grantee shall have executed and delivered to the
Company (i) this Agreement, (ii) the stock powers referenced below, and (iii)
the Employment Agreement dated the date hereof between the Company and the
Grantee.
In connection with the grant of the Restricted Shares, the Grantee has
delivered to the Company herewith stock powers duly endorsed in blank, each of
which will be returned to the
27
Grantee when all restrictions on the Restricted Shares covered thereby have
expired as provided in Section 2.
In consideration of the foregoing and of the mutual undertakings set forth
in this Agreement, the Company and the Grantee agree as follows:
SECTION 1. Issuance of Restricted Shares. As soon as practicable after
receipt from the Grantee of this executed Agreement, the Company shall cause to
be issued under the Plan in the name of the Grantee two Restricted Share stock
certificates, each representing 5,000 shares of Common Stock. Each such
certificate shall remain in the possession of the Company until the Restricted
Shares represented thereby are free of the restrictions set forth in Section 2.
Upon the issuance of such certificates, the Grantee shall have the rights of a
stockholder with respect to the Restricted Shares, subject to the restrictions
set forth in this Agreement and the Plan.
SECTION 2. Restrictions.
2.1 Restricted Shares may not be sold, assigned, transferred, pledged or
otherwise encumbered or disposed of prior to the date provided for in Section
2.2 or 2.3. These restrictions shall apply as well to any shares of Common Stock
or other securities of the Company which may be acquired by the Grantee in
respect of the Restricted Shares as a result of any stock split,
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stock dividend, combination of shares or other change, or any exchange,
reclassification or conversion of securities.
2.2 Unless sooner terminated pursuant to the terms hereof, the restrictions
set forth in Section 2.1 shall, provided that the Grantee is then an employee of
the Company, expire on the last day of each of the Company's fiscal years 1997
and 1998 (the "Vesting Dates") with respect to the number of Restricted Shares
listed below next to each Vesting Date:
Vesting Date: Number of
Last business day Restricted Shares
of fiscal year as to Which Restrictions Expire
-------------- -------------------------------
1997 5,000
1998 5,000
As soon as practicable after each Vesting Date, the Company shall deliver to the
Grantee, subject to the provisions of Section 4, a stock certificate
representing the Restricted Shares which became free of restrictions on such
Vesting Date.
2.3 Dividends that become payable on Restricted Shares shall be held by the
Company in escrow in accordance with the provisions of this Agreement. In this
connection, on each Common Stock dividend payment date while any Restricted
Shares remain outstanding and restricted hereunder (each, a "RS Dividend Date"),
the Company shall be deemed to have reinvested any cash dividend otherwise then
payable on the Restricted Shares in a number of phantom shares of Common Stock
(including any fractional share) equal to the quotient of such dividend divided
by the
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29
Fair Market Value of a share of Common Stock on such RS Dividend Date and to
have credited such shares to an unfunded book account in the Grantee's name (the
"Dividend Escrow Account"). As of each subsequent RS Dividend Date, the phantom
shares then credited to the Dividend Escrow Account shall be deemed to receive a
dividend at the then applicable dividend rate, which shall be reinvested in the
same manner in such Account in the form of additional phantom shares. If any
dividend payable on any RS Dividend Date is paid in the form of Common Stock,
then any such stock dividend shall be treated as additional Restricted Shares
under this Agreement, pursuant to Section 2.1 above, with such additional
Restricted Shares being subject to the same vesting and other restrictions as
the Restricted Shares with respect to which such dividends became payable, and
with any fractional share being treated as a cash dividend that is subject to
the escrow and reinvestment procedures in this Section 2.3. Any other non-cash
dividends credited with respect to Restricted Stock shall be subject to the
escrow and reinvestment procedures in this Section 2.3, and shall be valued for
purposes of this Section 2.3 at the fair market value thereof as of the relevant
RS Dividend Date, as determined by the Committee in its sole discretion. At each
Vesting Date, the Company shall deliver out of escrow to the Grantee that number
of shares of Common Stock equal to the number of phantom shares then credited to
the Dividend Escrow Account as the result of the deemed investment and
reinvestment in phantom shares of the dividends attributable
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to the Restricted Shares on which restrictions lapse at such Vesting Date.
SECTION 3. Forfeiture. Effective upon termination of the Grantee's
employment with the Company for any reason, the Company shall cancel the stock
certificate(s) representing any Restricted Shares on which the restrictions have
not expired, and the Dividend Escrow Account shall thereupon be terminated, it
being understood and agreed that Grantee shall not be entitled to any payment
whatsoever under this Agreement or provisions of the Plan relating to this
Agreement (including without limitation Section 2.6(e) thereof) in connection
with such cancellation and termination.
SECTION 4. Withholding Taxes.
4.1 Whenever a stock certificate representing Restricted Shares that have
vested in accordance with the terms hereof is to be delivered to the Grantee
pursuant to Section 2.2, the Company shall be entitled to require as a condition
of such delivery that the Grantee remit to the Company an amount sufficient in
the opinion of the Company to satisfy all federal, state and other governmental
tax withholding requirements related to the expiration of restrictions on the
shares represented by such certificate. The Company shall, upon the request of
the Grantee, withhold from delivery shares having a Fair Market Value on the
Vesting Date equal to the amount of tax to be withheld. Fractional share amounts
shall be settled in cash.
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4.2 If the Grantee makes the election permitted under section 83(b) of the
Internal Revenue Code (that is, an election to include in gross income in the
year of transfer the amounts specified in section 83(b)), she shall notify the
Company of such election within 10 days of filing notice of the election with
the Internal Revenue Service and shall within the same 10-day period remit to
the Company an amount sufficient in the opinion of the Company to satisfy all
federal, state and other governmental tax withholding requirements related to
such inclusion in Grantee's income.
SECTION 5. Nature of Payments. The grant of the Restricted Shares hereunder
is in consideration of services to be performed by the Grantee for the Company
and constitutes a special incentive payment and the parties agree that it is not
to be taken into account in computing the amount of salary or compensation of
the Grantee for the purposes of determining (i) any pension, retirement,
profit-sharing, bonus, life insurance or other benefits under any pension,
retirement, profit-sharing, bonus, life insurance or other benefit plan of the
Company, or (ii) any severance or other amounts payable under any other
agreement between the Company and the Grantee.
SECTION 6. Plan Provisions to Prevail. This Agreement is subject to all of
the terms and provisions of the Plan. Without limiting the generality of the
foregoing, by entering into this Agreement the Grantee agrees that no member of
the
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Committee shall be liable for any action or determination made in good faith
with respect to the Plan or any award thereunder or this Agreement. In the event
that there is any inconsistency between the provisions of this Agreement and of
the Plan, the provisions of the Plan shall govern.
SECTION 7. Miscellaneous.
7.1 Section Headings. The Section headings contained herein are for
purposes of convenience only and are not intended to define or limit the
contents of the Sections.
7.2 Notices. Any notice to be given to the Company hereunder shall be in
writing and shall be addressed to the Company's Senior Vice President, Finance,
or Vice President of Financial Operations, at Xxx Xxxxxxxxx Xxxxxx, Xxxxx
Xxxxxx, XX 00000, or at such other address as the Company may hereafter
designate to the Grantee by notice as provided in this Section 7.2. Any notice
to be given to the Grantee hereunder shall be addressed to the Grantee at the
address set forth beneath his signature hereto, or at such other address as he
may hereafter designate to the Company by notice as provided herein. A notice
hereunder shall be deemed to have been duly given when personally delivered or
mailed by registered or certified mail to the party entitled to receive it.
7.3 Successors and Assigns. This Agreement shall be binding upon and inure
to the benefit of the parties hereto and
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the successors and assigns of the Company and, to the extent consistent with
Sections 2 and 3 of this Agreement, the heirs and personal representatives of
the Grantee.
7.4 Governing Law. This Agreement shall be interpreted, construed and
administered in accordance with the laws of the State of Delaware as they apply
to contracts made, delivered and to be wholly performed in the State of
Delaware.
IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of
the date and year first above written.
LIZ CLAIBORNE, INC.
ATTEST: By:
---------------------------- ------------------------------------
Title:
Xxxxxx Xxxxxx, Grantee
---------------------------------------
Address:
-------------------------------
---------------------------------------
---------------------------------------
Social Security Number
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