Liz Claiborne Inc. Executive Severance Agreement
| FORM | Exhibit 99.1 |
Liz Claiborne Inc.
Executive Severance Agreement
Executive Severance Agreement
This Executive Severance Agreement (this “Agreement”), dated as of [INSERT
DATE] (the “Effective Date”), is by and between LIZ CLAIBORNE, INC., a Delaware
corporation (the “Company”), and [INSERT NAME OF ASSOCIATE] (the “Executive”).
WHEREAS, the Compensation Committee of the Board of Directors of Company
(“Compensation Committee”) has determined that appropriate steps should be taken to
reinforce and encourage the continued attention and dedication of the Executive to
his or her assigned duties in the face of possible distraction of the Executive by
virtue of the personal uncertainties and risks created by the possibility of
termination of, or adverse change to, his or her employment prior to a change in
control situation; and
WHEREAS, the Compensation Committee believes it is in the Company’s best
interests to assure that Executive will refrain from certain competitive activities
with the Company as described herein;
NOW, THEREFORE, to assure the Company that it will have the continued
undivided attention and services of the Executive and the availability of his or
her advice and counsel, and to induce the Executive to remain in the employ of the
Company hereinafter, for the benefit of the Company and its shareholders, and for
other good and valuable consideration, the Company and the Executive agree as
follows:
| 1. | Term of Agreement |
The term of this Agreement shall commence immediately upon the Effective Date
and end on December 31, 2010, or earlier if Executive’s employment is terminated
before December 31, 2010 in accordance with Section 2 of this Agreement (the
“Employment Period”).
| 2. | Termination |
(a) Cause. Executive’s employment may terminate immediately, with or
without Cause, at the election of the Company and upon notice from the Company to
Executive. As used herein, the term “Cause” means:
(i) Executive’s willful and intentional repeated failure or refusal,
continuing after notice that specifically identifies the breach(es)
complained of, to perform substantially his or her material duties,
responsibilities and obligations (other than a failure resulting from
Executive’s incapacity due to physical or mental illness or other
reasons beyond the control of Executive), and which failure or
refusal results in demonstrable direct and material injury to the
Company;
(ii) Any willful or intentional act or failure to act involving
fraud, misrepresentation, theft, embezzlement, dishonesty or moral
turpitude (collectively, “Fraud”) which results in demonstrable
direct and material injury to the Company; or
(iii) Conviction of (or a plea of nolo contendere to) an offense
which is a felony in the jurisdiction involved or which is a
misdemeanor in the jurisdiction involved but which involves Fraud;
(b) Standard. For purposes of this Section 2, no act, or failure to
act, on Executive’s part shall be deemed “willful” or “intentional” unless done, or
omitted to be done, by Executive without reasonable belief that Executive’s action
or omission was in the best interests of the Company.
(c) Cause Determination. Executive’s termination for Cause will be
based on the determination of the Chief Executive Officer and Chief Financial
Officer of the Company.
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(d) Death; Disability. Executive’s employment with Company will
terminate forthwith upon Executive’s death or, at the Company’s option, by written
notice to Executive (or Executive’s legal representative) upon Executive’s
Disability. As used herein the term “Disability” means any physical or mental
condition that would qualify Executive for a disability benefit under the long-term
disability plan maintained by the Company, or, if there is no such plan, a physical
or mental condition that prevents Executive from performing the essential functions
of Executive’s position (with or without reasonable accommodation) for a period of
six consecutive months. A determination of Disability will be made by a physician
satisfactory to both Executive and the Company; provided that if Executive 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 Executive and the Company. Executive, Executive’s legal
representative or any adult member of Executive’s immediate family shall have the
right to present to the Company and such physician such information and arguments
on Executive’s behalf as Executive or they deem appropriate, including the opinion
of Executive’s personal physician.
| 3. | Severance |
(a) Termination For Cause; Voluntary Termination Without Good Reason;
Termination Due to Death or Disability. In the event that Executive’s
employment is terminated due to (i) a termination by the Company for Cause, (ii)
Executive’s resignation without Good Reason (as defined herein), or (iii) a
termination of Executive’s employment due to Executive’s death or Disability, the
Company will pay to Executive an amount equal to Executive’s accrued but unpaid
base salary through the date of such termination, and, in the case of death or
Disability, shall continue the medical and dental insurance coverage for
Executive’s family as provided in Section 3(b) below.
(b) Termination Without Cause; Voluntary Termination For Good Reason.
Subject to Section 3(d), in the event that Executive’s employment is terminated (i)
by the Company other than for Cause and other than upon Executive’s death or
Disability or (ii) by Executive for Good Reason (as defined herein), then (A) the
Company shall pay to Executive an amount equal to Executive’s accrued but unpaid
base salary through the date of such termination, (B) so long as Executive shall
not have breached Executive’s obligations to the Company under Sections 4 and 5
hereof (without limitation to any other remedy available to the Company), the
Company shall provide Executive and Executive’s family with coverage substantially
identical to that provided to other senior executives of the Company in its
medical, dental, vision, and executive life insurance programs (subject in the case
of life insurance to insurability at standard rates) for 6 months following the
date of such termination, and (C) the Company shall pay to Executive, as and for a
severance payment, the sum of two times Executive’s then current annual base salary
and two times Executive’s target annual cash bonus for the year of Executive’s
termination, as soon as practicable but in no event later than 20 days after the
effective date of the release set forth in Paragraph (d). No bonus (pro-rata or
otherwise) will be provided under this Agreement to the Executive in respect of the
Company’s fiscal year during which the Executive’s termination occurs, and any
bonus entitlement of the Executive for such fiscal year will be determined solely
pursuant to the provisions of the Company’s relevant bonus plan.
For the purposes of this Agreement, “Good Reason” shall mean the occurrence of one
or more of the following events: (1) Executive is assigned duties inconsistent
with Executive’s position at the applicable date, without Executive’s consent; (2)
Company moves its principal executive offices by more than 35 miles, provided such
move increases Executive’s commuting distance by more than 35 miles; (3) a material
reduction in Executive’s base salary; or (4) a material breach by Company of any of
its material obligations under any employment agreement between Executive and
Company then in effect. Unless Executive shall give the Company notice of any
event which, after any applicable 30 day grace period would constitute Good Reason
within 90 days of Executive’s first knowing of the event, such event shall cease to
be an event constituting Good Reason.
(c) General. In the event that the Executive’s employment with
Company is terminated for any reason, the Company’s payment of severance as
provided in the previous paragraphs of this Section 3 (together with reimbursement
of Executive’s 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), the maintenance of continued participation in the Company’s medical,
dental, vision, and executive life insurance programs, if applicable, under this
Section 3, and the vesting,
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continuation and payment of the other compensation, perquisites and benefits as
provided in any other Company plans shall constitute complete satisfaction of all
obligations of the Company to Executive pursuant to this Agreement. Upon any such
termination, Executive shall cease to be an employee of the Company for all
purposes and except as otherwise expressly set forth in this Section 3 or Section 9
of this Agreement the Company shall have no obligation under this Agreement to
provide Executive with any employee benefits or perquisites hereunder.
(d) Release Requirement. The Company expressly conditions its
provision of all payments and benefits due to Executive pursuant to this Section 3
on receipt from Executive of a full release of all claims against the Company, and
its officers, directors, insureds and affiliates, in a form and manner reasonably
acceptable to the Company, and which must be signed by you within 21 or 45 days of
receipt of the release, as may be required by law.
(e) Sole Remedy. Executive’s rights set out in this Section 3
(including rights in the other sections of this Agreement and the other Company
plans referred to in Section 3(c)) shall constitute Executive’s sole and exclusive
rights and remedies as a result of Executive’s actual or constructive termination
of employment without Cause, and Executive hereby waives any such other claims
against the Company in such event.
(f) Compliance with Section 409A. Notwithstanding anything to the
contrary, to the extent necessary to prevent Executive from being subject to tax
under Section 409A of the Internal Revenue Code of 1986, as amended, payments to be
made following termination of employment shall not be paid until the six-month
anniversary of the Executive’s termination of employment.
(g) Additional Tax Considerations. Notwithstanding anything to the
contrary, any amount otherwise payable to Executive pursuant to Section 3 of this
Agreement shall be reduced to the extent necessary so that such payment (as so
reduced) would not result in the payment of an “excess parachute payment” within
the meaning of Section 280G of the Internal Revenue Code of 1986, as amended (the
“Code”) or give rise to an excise tax under Section 4999 of the Code (or any
corresponding provision of state, local or foreign law), provided,
that such payment shall be so reduced only if the reduction results in
Executive receiving an amount on a net after-tax basis that is no more than 15%
less than the original payment on a net after-tax basis minus the excise tax.
| 4. | Confidentiality |
(a) The Company 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 Company to Executive, but also information developed
or learned by Executive during the course or as a result of employment hereunder,
which information Executive acknowledges is and shall be the sole and exclusive
property of the Company. Confidential Information includes all proprietary
information that has or could have commercial value or other utility in the
business in which the Company is engaged or contemplates engaging, and all
proprietary information of which the unauthorized disclosure could be detrimental
to the interests of the Company, whether or not such information is specifically
labeled as Confidential Information by the Company. By way of example and without
limitation, Confidential Information includes any and all information developed,
obtained or owned by the Company concerning trade secrets, techniques, know-how
(including designs, plans, procedures, merchandising know-how, 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 information which (i) was generally known or generally available to the
public prior to its disclosure to Executive; (ii) becomes generally known or
generally available to the public subsequent to disclosure to Executive through no
wrongful act of any person or (iii) which Executive are required to disclose by
applicable law, regulation, or legal process (provided that, unless prohibited by
law, Executive provides the Company with prior notice of the
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contemplated disclosure and reasonably cooperates with the Company at the Company’s
expense in seeking a protective order or other appropriate protection of such
information).
(b) Executive acknowledges and agrees that in the performance of Executive’s
duties hereunder the Company will from time to time disclose to Executive and
entrust Executive with Confidential Information. Executive also acknowledges and
agrees that the unauthorized disclosure of Confidential Information, among other
things, may be prejudicial to the Company’s interests, an invasion of privacy and
an improper disclosure of trade secrets. Executive agrees that Executive 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 Executive’s assigned duties and for the benefit of the
Company, any Confidential Information, either during the Employment Period or
thereafter.
(c) In the event Executive’s employment with the Company ceases for any
reason, Executive will not remove from the Company’s premises without its prior
written consent any records, files, drawings, documents, equipment, materials or
writings received from, created for or belonging to the Company, including those
which relate to or contain Confidential Information, or any copies thereof. Upon
request or when Executive’s employment with the Company terminates, Executive will
immediately deliver the same to the Company.
(d) During the Employment Period, Executive will disclose to the Company all
designs, inventions and business strategies or plans developed by Executive during
such period which relate directly or indirectly to the business of the Company,
including without limitation any process, operation, product or improvement.
Executive agrees that all of the foregoing are and will be the sole and exclusive
property of the Company and that Executive will at the Company’s request and cost
do whatever is necessary to secure the rights thereto, by patent, copyright or
otherwise, to the Company.
(e) Executive and the Company agree that Executive shall not disclose to the
Company or use for the Company’s benefit, any information which may constitute
trade secrets or confidential information of third parties, to the extent Executive
have any such secrets or information.
(f) The provisions of this Section 4 shall survive the termination of this
Agreement and the Employment Period.
| 5. | Restrictive Covenants |
(a) Executive acknowledges and agrees (i) that the services to be rendered by
Executive for the Company are of a special, unique, extraordinary and personal
character, (ii) that Executive has and will continue to develop a personal
acquaintance and relationship with one or more of the Company’s customers,
employees, suppliers and independent contractors, which may constitute the
Company’s primary or only contact with such customers, employees, suppliers and
independent contractors, and (iii) that Executive will be uniquely identified by
customers, employees, suppliers, independent contractors and retail consumers with
the Company’s products. Consequently, Executive agrees that it is fair, reasonable
and necessary for the protection of the business, operations, assets and reputation
of the Company that Executive makes the covenants contained in this Section 8.
(b) Executive agrees that, during the Employment Period and for a period of 18
months thereafter, Executive 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 5(b) shall prevent Executive from owning less than 2% of the voting stock
of a publicly held corporation for investment purposes. For purposes of this
Section 5(b), the term “Competing Business” shall mean any of the companies or
their respective affiliates that, during the term of this Agreement, Company
discloses in the proxy as peer group companies. For illustrative purposes, the
current proxy peer group companies are listed in Exhibit A.
(c) Executive agrees that, during the Employment Period and for a period of 18
months thereafter, Executive shall not, directly or indirectly,
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(i) persuade or seek to persuade any customer of the Company to cease
to do business or to reduce the amount of business which any customer
has customarily done or contemplates doing with the Company, whether
or not the relationship between the Company and such customer was
originally established in whole or in part through Executive’s
efforts;
(ii) seek to employ or engage, or assist anyone else to seek to employ
or engage, any person who at any time during the year preceding the
termination of Executive’s employment hereunder was in the employ of
the Company or was an independent contractor providing material
manufacturing, marketing, sales, financial or management consulting
services in connection with the business of the Company and with whom
Executive had regular contact; or
(iii) interfere in any manner in the relationship of the Company with
any of its suppliers or independent contractors, whether or not the
relationship between the Company and such supplier or independent
contractor was originally established in whole or in part by
Executive’s efforts.
As used in this Section 5, 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 Company 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) Executive agrees that, during the Employment Period and for a period of 18
months thereafter, Executive will take no action which is intended, or would
reasonably be expected, to harm the Company or its reputation or which would
reasonably be expected to lead to unwanted or unfavorable publicity to the Company.
(e) The provisions of this Section 5 shall survive the termination of this
Agreement and the Employment Period.
6. Specific Performance
Executive acknowledges that the Company would sustain irreparable injury in the
event of a violation by Executive as of any of the provisions of sections 4 or 5
hereof, and by reason thereof Executive consents and agrees that if Executive
violates any of the provisions of said Sections 4 or 5, 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 Executive 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 subject to paragraph 9,without the necessity
of proving actual damages, posting any bond, or seeking arbitration in any forum.
7. 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.
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8. 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. Any notice to the Company shall be addressed
to the Chief Financial Officer, Liz Claiborne, Inc., Xxx Xxxxxxxxx Xxxxxx, Xxxxx
Xxxxxx, XX 00000, or at such other address as the Company may hereafter designate
to the Executive by notice as provided in this Section 8. Any notice to be given
to the Executive shall be addressed to the Executive’s home address of record, or
at such other address as the Executive may hereafter designate to the Company by
notice as provided herein. Notices which are delivered personally, by confirmed
facsimile transmission, or by courier as aforesaid, will be effective on the date
of delivery. Notices delivered by mail will be deemed effectively given upon the
fifth calendar day subsequent to the postmark date thereof.
9. 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) 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 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.
(c) 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.
(d) Any controversy arising out of or relating to this Agreement or the breach
hereof shall be settled by JAMS arbitration in the City of New York in accordance
with the rules then obtaining and judgment upon the award rendered may be entered
in any court having jurisdiction thereof, except that in the event of any
controversy relating to any violation or alleged violation of any provision of
Section 4 or 5 hereof, the Company in its sole discretion shall be entitled to seek
injunctive relief from a court of competent jurisdiction without any requirement to
seek arbitration. The parties hereto agree that any arbitral award may be enforced
against the parties to an arbitration proceeding or their assets wherever they may
be found. In the event that (i) Executive makes a claim against the Company under
this Agreement, (ii) the Company disputes such claim, and (iii) Executive prevails
with respect to such disputed claim, then the Company shall reimburse Executive for
Executive’s reasonable costs and expenses (including reasonable attorney’s fees)
incurred by Executive in pursuing such disputed claim.
(e) The Section headings contained herein are for purposes of convenience only
and are not intended to define or list the contents of the Sections.
(f) The provisions of this Agreement which by their terms call for performance
subsequent to termination of Executive’s employment, or termination of this
Agreement, shall so survive such termination.
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(g) Executive shall not be required to mitigate, by seeking employment or
otherwise, the amount of any payment or benefit provided for in this Agreement, or
under the Incentive Plan, RIAP, Section 162(m) Cash Bonus Plan, or other plan
maintained by the Company, including without limitation any payment or benefit made
or vested upon or as a result of the termination of Executive’s employment, nor
will any compensation, income, or other benefit from any source whatsoever create
any mitigation, offset or reduction against any such payment or benefit.
IN WITNESS WHEREOF, the parties have caused this Agreement to be executed and
delivered as of the day and year first above set forth.
| LIZ CLAIBORNE, INC. |
||||
| By: | ||||
| Xxxxxxxxx Xxxxxx, SVP Chief Human Resources Officer | ||||
| Executive: | ||||
| [INSERT NAME OF ASSOCIATE] | ||||
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EXHIBIT A
LIST OF COMPETING BUSINESSES
Abercrombie & Fitch, American Eagle Outfitters, Xxx Xxxxxx Store Corporation, Coach, Inc.,
Dillards, Inc., The Gap, Inc., Xxxxx Apparel Group, Inc., Kellwood Company, Limited Brands, Inc.,
NIKE, Inc., Nordstrom, Inc., Philips Van-Heusen Corporation, Xxxx Xxxxx Xxxxxx Corporation,
Quicksilver, Saks, The Talbots, Inc., and VF Corporation.
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